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With graduation comes a fair share of celebration and changes. From grad parties to finding your first job to possibly a major move, life moves pretty fast during that first year out of school. While you’re busy setting up a new life, you may not even have time to think about those student loans you might’ve taken out for school.

When it comes to student loans, however, it’s not as easy as out of sight, out of mind. You might be busy setting up the next phase of your life, but don’t forget that your loan repayment will come calling, and likely sooner than you think.

Graduate students and undergrads currently leave school owing $29,200 on average, but the total amount you’ll pay back will depend on things like the interest rates on your student loans, the length of the loan term, and any loan forgiveness you may be eligible for. If you used student loans to get through college, you’re one of the 45 million Americans sharing the load of the country’s $1.6 trillion-plus student loan debt.

These figures are certainly daunting, especially for students who may face uncertainty about job prospects or find themselves having to leave school unfinished due to financial hardships or other reasons.

But one possible avenue for debt relief is that many student loans come with a grace period. A grace period is the length of time before you have to start student loan repayment, and the clock typically starts six months after you:

•   graduate
•   leave school
•   drop below part-time credit hours

Typically, you can use a grace period once per loan. During the grace period, you’re not required to make payments on your student loans. Most federal student loan grace periods are six months, but the Federal Perkins loan has a grace period of nine months. Some federal student loan grace periods can be extended even longer, for active duty military for instance. PLUS loans do not offer a grace period.

A grace period is different from other loan payment delays, such as deferments or forbearance, which have to be requested (grace periods typically begin automatically for those loans that have them)..

One important note: Grace periods are usually only available on federal student loans, and not all federal student loans have grace periods.

If you take out a private student loan some lenders, such as SoFi, may allow those with existing student loans in pre-repayment grace period status to align their first payment date with the soonest scheduled first payment date of those existing loans (up to a maximum of 180 days from the date of approval). In other cases, you may have to start repayment as soon as you graduate or leave school.

Theoretically, the grace period is there to give you time to get yourself financially settled and solidly employed, and for many students who are just leaving the campus life, a grace period feels like a no-brainer.

That said, there are other options during your grace period: You can get a jumpstart on your student loans and start paying them immediately, or start saving up to pay them. As with any financial decision, though, there are pros and cons to consider.

Here are some questions to consider during your grace period.

Some Advantages of Student Loan Grace Periods

The biggest advantage of the grace period is that you have a cushion of time before you have to start making loan payments, usually around six months after graduation/leaving school/dropping to part-time enrollment. Under certain circumstances, you may qualify for an extension.

Exceptions for most federal student loans include:

•   Active military duty. If you’re called for duty more than a month before the end of your grace period, you’ll have a full six-month grace period when you return.

•   Going back to school. If you go back to school before the end of your grace period, even just part-time, your grace period will reset to six months after you stop attending school.

•   Consolidating the loan. If you choose to consolidate your eligible federal student loans before your grace period ends, you’ll forfeit the rest of your grace period. In that situation, your payments will begin in about two months after the consolidation loan is disbursed.

Federal loans that have a six-month grace period include:

•   Direct Subsidized Loans
•   Direct Unsubsidized Loans
•   Subsidized Federal Stafford Loans
•   Unsubsidized Federal Stafford Loans

If you received a Federal Perkins Loan before the program expired, the average grace period is around nine months. You may want to check with your school to be certain.

The only federal loans that don’t offer a grace period are PLUS loans, which are reserved for:

•   graduate students
•   professional students
•   parents of dependent undergraduates

PLUS repayment begins immediately, but borrowers may be eligible for deferment. (Not sure what type of loan you have? Check the National Student Loan Data System .)

Used wisely, the grace period can serve its intended purpose — to give you some breathing room to find your first job, get settled, and build up a bit of income.

The bills come quickly during that first foray into post-college life, including moving costs, rental deposits, utility setup, groceries, decorations, and business attire. The grace period may give you adequate time to take care of all those necessities and get a few paychecks into your bank account before starting to pay back your loans.

Some Disadvantages of Student Loan Grace Periods

Even when you’re not required to make payments during your grace period, you’ll likely still accrue interest on your federal student loans. If your loan was large to begin with, this accumulation of interest could put you at even more of a disadvantage right out of the gate.

The exception to this rule is if you have federal Direct Subsidized Loans—these will not accrue interest during the grace period.

To make matters even more complicated, some loans simply accrue interest, while others capitalize unpaid interest into the principal balance of the loan, which means you effectively pay interest twice. Making interest payments on a student loan, even if you decide to use the grace period, may help you avoid any unpleasant surprises.

On top of that, graduation, moving, and getting a job can come with a bunch of unexpected spending. While emergencies and unanticipated bills come up, especially during your first year out of school, it’s encouraged to keep expenses down.

Remember when the grace period is up, you’ll have to start making monthly payments, or risk penalties such as delinquent marks on your credit report and late fees.

Choosing How to Handle Your Grace Period

If you decide that the pros of the student loan grace period outweigh the cons, you could use that payment-free time to start setting aside funds for later. During your grace period you can:

•   Use a student loan calculator to determine your monthly payments.
•   Work with your lender/servicer to see what your payments will be.
•   Make it a goal to try and put away at least a partial amount each month.

If you get used to living on a budget that doesn’t include your student loan payment, you may be setting yourself up for future stress. Instead, you could consider:

•   Waiving the grace period and starting student loan payments immediately. If you have enough wiggle room in your budget, you can start paying your loans down immediately. Since your loan wouldn’t be accruing unpaid interest during the grace period, it could lead to savings in the long term.

•   Setting aside a part of your monthly paycheck to start paying down the interest. If your budget doesn’t allow for monthly payments yet, you could try saving what you can to pay off some of the interest on your student loans during the grace period. Even a small contribution can make a difference.

But if your budget doesn’t allow for any payments during your grace period, don’t sweat it. Your grace period is there for a reason, to give you some breathing room while you sort things out financially.

Some Ways Refinancing Can Help

Although you might be stuck with the debt, you aren’t necessarily stuck with the terms of the original loan you took out. It may be possible to refinance your student loans to terms that work better for you. Refinancing lets you take out a brand-new loan with a new interest rate and new loan terms.

When refinancing, you may be able to qualify for a lower interest rate than the one you are currently paying. Refinancing student loan debt could also offer you the opportunity to shorten your term length or lower your monthly payment (possibly by extending your term).

If you are managing a number of student loans, refinancing may help to simplify your life by giving you one loan to pay, instead of multiple loans to remember.

Keep in mind that if and when you refinance your federal student loans, you will be losing out on potential benefits that come with them.

These benefits, like Public Service Loan Forgiveness (PSLF), income-driven repayment plans, or deferment or forbearance, can also save you money and stress, so make sure to do your research before deciding to refinance.

If you choose to refinance your student loan, you might consider doing it with SoFi. With flexible terms and low- or fixed-variable rates, SoFi can make it easy to save while repaying your student loans. There are no application or origination fees, and you can do it all online.

Don’t let your grace period’s end catch you off guard. If you plan ahead, and plan for future payments, you could end up on more solid financial footing.

About SoFi

SoFi offers student loan refinancing which may help you lower your monthly payments or shorten your loan term. Discover the different student loan refinancing options to see if refinancing could be a good option for you.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SLR18175

Despite all of the conversation the student loan crisis has inspired in recent years, one important piece of the puzzle is often missing from the dialogue. While most headlines have focused on undergraduate borrowers and their student debt, the percentage of graduate student loan debt has been steadily increasing.

Today people take on a larger amount of debt for master’s, MBA, law, and medical programs than ever before. So what do borrowers need to know about the current state of graduate student loans? Here are some essentials:

The Increase in Graduate Borrowing

According to a 2018 report from the New America Foundation, debt for students who earned a range of master’s and professional degrees has surged in recent years. There isn’t one specific reason for this, of course, but one impetus for going back to school seems to be that some regard a master’s degree as the new bachelor’s degree.

It should come as no shock then that the average graduate student loan debt has skyrocketed. In the 2017 to 2018 school year, graduate school loan disbursements accounted for more than a third of the total federal loan program. In fact, more than $37 billion was disbursed to grad students that school year.

And for those pursuing professional degrees, including those studying law or medicine, the current average debt load was around $145,000 (for law) and around $196,000 per student in 2018. But the increase in graduate student debt isn’t necessarily due to a higher number of borrowers—it’s that students are borrowing more for graduate school.

And while people with graduate degrees tend to earn higher salaries and experience lower unemployment rates than their counterparts with undergraduate degrees, the earning potential for each type of degree can vary widely.

As with any investment, borrowers may want to consider their likely return on investment (in the form of future salary potential) when choosing how much debt to take on for higher education.

Grad Students Are Taking on More Debt than Undergrads

While undergrads have limits on how much they can borrow in federal loans, qualifying students pursuing graduate or professional degrees can use federal Grad PLUS loans to cover the entire cost of attendance (determined by the school), minus any other financial assistance received.

Students in professional degree programs have the “highest rates of annual borrowing, taking on an average of $40,624 from all sources for a single academic year.”

Graduate Loans Come with Higher Interest Rates

According to Sallie Mae’s report, “How America Pays for Graduate School,” 53% of graduate students borrow money to help cover graduate school costs. Graduate students have two options available to them through the federal Direct Loan program.

Graduate or professional Direct Unsubsidized loans have a 6.08% interest rate for the 2019-2020 school year. Direct PLUS loans currently available to graduate students through the federal government carry a 7.08% interest rate for the 2019-2020 school year. (There are also loan fees to factor in.)

Beyond this, some students may dip into higher-interest private loans. That’s compared with undergraduate federal loans, which are currently at 4.53% (until June 30, 2020).

The Cost of Going Back to School

Even with the staggering costs associated with graduate school, for some individuals it can be a beneficial step toward future success. Everyone’s situation is different, so whether or not you choose to pursue a graduate degree is a personal decision.

There are a number of different factors to sort through and evaluate as you determine if going back to school is worth the cost. Here are a few questions to help you navigate your decision making process.

Is the investment in this degree worth the cost?

One way to determine this is to calculate the financial return on education (ROE). An initial step might be to calculate the average lifetime earning potential for graduates in your chosen field of study.

If a graduate degree can lead to strong career growth, it can be well worth it. But that the market for graduate degrees can be inconsistent.

Programs can vary widely by cost, and schools have a lot of leeway to develop programs and price them with little oversight. So doing your due diligence on your school or schools of choice before going full steam ahead towards a graduate degree is probably wise.

Could the degree help your career path?

How will graduate school fit into your overall career goals? Sometimes it can further your current career. In other cases, a graduate degree can help you pivot into a related field.

There are a few ways to gather intel on this, such as talking to trusted friends and mentors in your desired field of study. Do they have any insight to share?

Another resource to check out is LinkedIn, where you can look at individual profiles of people who work for companies you admire. What was their career path?

While everyone’s journey is different, you may glean some valuable information about the type of experience and degrees those in positions you aspire to hold.

In some cases, a graduate degree will be required for a career in a certain field. Careers in medicine, law, and others may require some form of additional education.

Could a graduate degree improve overall life satisfaction?

If you’re interested in getting a graduate degree, you probably have some outcomes and goals in mind. Perhaps you want to improve your earning potential or get a promotion. Beyond financials, consider how an advanced degree might improve your overall happiness.

Much of what makes people happy at work is made up of intangibles—corporate culture, coworkers you enjoy, a boss you work well with and can learn from, work-life balance, and a sense of self-worth, which differs from person to person.

Will a degree move you toward a career that you’ll find more rewarding? These are all extremely personal factors that could influence your decision to pursue a graduate degree.

Financing Your Graduate Degree

If ultimately, you decide to go back to school to get a master’s or other professional degree, you’ll likely have to find a way to pay for it. Graduate degrees can be expensive—as we’ve shown above—here are a few ideas for financing your degree.

Looking for Scholarships and Grants

It may be worth searching for potential graduate school scholarships or grants available for grad students. Typically you can search by field, demographic, location, or even by school.

There are a variety of databases that aggregate scholarships online that can provide a starting point for your search. A good rule of thumb is to track your scholarship applications so you can streamline the process.

Keeping track of questions you’ve already answered so you can repurpose them for future applications may be helpful, since it could cut down the time it takes to apply. Tracking each application can help you easily keep tabs on where you’ve applied and who you’ve heard back from.

There are fewer scholarships available for graduate school than there are for undergrad degrees, covering just 15% of total grad school costs, according to Sallie Mae.

But since scholarships and grants don’t need to be repaid, even just a small sum can be helpful in making ends meet as you find a way to pay for grad school. Hey, $1,000 in scholarships is $1,000 less you’d need to borrow in loans.

Searching for Fellowships or Assistantships

Many schools offer fellowships or assistantships to graduate students. These are typically merit-based—things like a high GPA in college could help you qualify.

Graduate student assistantships are usually either research-based or teaching-based. The benefits may vary by school but could include help with tuition, a living stipend, or both. The assistantship typically requires students to work for 15 to 20 hours a week in their specified role.

Some schools also have graduate resident assistants. In this role, students generally work in an on-campus residence hall (often helping undergrads). In return, they might get free room and board or a stipend. Specifics will vary by school.

Fellowships are similar to assistantships but generally don’t require a set number of work hours on-campus.

Assistantship and fellowship opportunities vary by school and there are usually different application processes. You may want to review the websites of the schools you are planning on applying to for more information.

Taking Advantage of Employer Programs

Some employers offer education benefits to their employees. If available to you, this could be a valuable tool to help you pay for your graduate degree.

Tuition reimbursement programs will vary by lender, so you may want to check in with HR or the program administrator to get the details on the application process and how much you might qualify for.

Also, it may be worth finding out if there are any contingencies associated with the reimbursement. For example, some companies may require you to stay with the company for a certain period of time after graduation. Others may only provide assistance for select programs.

Borrowing Student Loans

When the above options aren’t enough, student loans can come into play. A good way to get started is to fill out the Free Application for Federal Student Aid (FAFSA®). This is how you can apply for federal aid including work-study and federal student loans. Federal student loans are the most common source of funding for graduate students.

In the case that federal student loans aren’t enough, private loans may be an option. Private lenders will review personal information like your credit history and more in order to determine the terms and interest rates you may qualify for. Borrowers with a strong credit history (among other financial metrics that vary by lender) could qualify for competitive rates.

How Refinancing Can Help

Many borrowers are aware that they can refinance private student loans, but it may come as a surprise to many that they may also be able to refinance federal student loans with a private lender.

Even a small change in interest rate can make a big difference in the long run. Refinancing student loans at a lower rate may allow borrowers to save money on interest or free up some cash flow by extending their loan term to lower their monthly payments.

Since federal loan benefits (like forbearance, income-driven repayment plans, and loan forgiveness) don’t transfer to private lenders, borrowers would be wise to first check to see if they’re eligible for one of the government’s loan benefits (should they want to take advantage) before deciding to refinance.

But for borrowers who are looking for a potentially lower interest rate and have improved their financial situations since leaving school, refinancing can be a great option.

For many grad school borrowers, student loans can be a powerful investment in their career and financial future. But a big loan balance means big responsibility, making it important to balance the cost of an advanced degree program with its related earning potential.

If and when the time comes, refinancing can help borrowers knock out more of their loans and move on to bigger and better things.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SLR14104

Even in the age of furnaces and smart thermostats, the fireplace is still a focal point of the home. It’s not necessarily keeping you toasty in the cold months, but it is serving as the visual frame of reference in a living space.

So when your fireplace is boarded up, or drably dated, remodeling it can breathe new life and warmth into the entire area.

Not only that, it could bring you some extra cash. An Angie’s List survey of real estate agents revealed that more than 68% believe that having a fireplace in the home increases its value.

So before you try to board it up or knock it down, explore trends and tips for how to remodel a fireplace.

Your fireplace might be housed in a brick wall, meaning you have not only the fire box to contend with, but an entire brick wall to reimagine. While exposed brick is on trend, it can also make a room feel dark or small.

Reimagining your brick wall and brick fireplace may seem daunting, but there are several ways to update the brick, or remodel over it for a fresh new look.

Before you commit to a remodeling plan for your fireplace, consider the following questions:

•   Do I mind if this is permanent? Some fireplace updates won’t be reversible, so you may want to sleep on it before you dive into something you’re not in love with.

•   Do I want wood, gas or both options? Some areas or individuals prefer gas over wood burning options. Wood burning can add to poor air quality in some cases.

•   How much do I want to spend on the project? Materials, installation, and time can be costly, and some updates are more affordable than others.

•   Are you updating the fireplace for potential sellers or yourself? Answering this question might give you a better idea of how much you want to spend, and which style might appeal to a future buyer.

Depending on what you have in mind for your hearth, options for updating may vary. Warm yourself up with these fresh takes on the fireplace.

Painting the Fireplace

Painting your fireplace is likely the most affordable way to give the room an update. Paint can cost anywhere between $30 to $100 per gallon , depending on where you live and what type and brand you go with.

1. Applying a coat of paint to the fireplace shouldn’t take more than an afternoon, but some professionals recommend you prep with these steps beforehand:

2. Brush the wall to clear off mortar or debris.

3. Vacuum the debris from the brick.

4. Clean and degrease the fireplace brick with a sponge.

5. Choose indoor, latex, heat resistant paint (200 degrees).

There are seemingly endless colors and types to choose from, but many designers recommend a neutral black, gray, or white.

A white or neutral tone can have a space-opening effect, making the room seem larger. Some colors will make the room look smaller, and might turn off potential buyers in the future. Flat, semigloss or gloss can be used.

Remodeling the Mantel

Adding a mantel or remodeling your existing one can change the entire look of a fireplace. Your mantel could include additional built-ins around the fireplace, or a simple minimalist board above the firebox.

Switching up your mantel is typically an easy remodel since it’s just a frame for the fireplace itself. The costs associated with it are likely tied to how ornate your plans are. Out-of-the-box mantel kits start around $180 , and can be assembled and installed in a day by a DIY novice.

If you have more ambitious plans for your mantel, it’ll likely cost you. Stone and marble mantels start at $3,000 , and a custom mantel costs a similar amount. The more complicated the design, the higher the price of creation and installation.

Mantel installation can be pricey, but in many cases it can also be reversed, making it an appealing option in the event that you decide to sell the home down the line.

Tiling Over the Existing Fireplace

If you’re looking to refinish your fireplace, tiling might be the right choice for you. Try a white subway tile for a sleek, modern finish, or a printed tile for a unique pop of color in your space.

The cost of remodeling your fireplace with tile will vary widely based on the size of your fireplace, as well as the cost of tile per square foot.

Tile installation averages around $1,500 for a project this size. However, depending on the condition of your fireplace, you might choose to consult with a brick mason in addition to a tiling professional.

A mason can let you know if its possible for the brick to be covered evenly. But, be warned—once you start tiling over your fireplace, you likely can’t reverse the process.

Covering Your Brick Fireplace with Stone

If you’re looking for a natural but updated treatment on your fireplace, stone might be the right fit. However, if your brick is already painted, it’s likely the mortar required to attach the stone won’t adhere. Consult with a masonry professional to see if your brick is porous enough to cover over.

If your fireplace is a good candidate for stone work, you’ll want to install a cement board over the existing brick as a template for the stone. The resurfacing process costs on average, $1,100 for labor , but depending on which stone you use, expenses can balloon.

•   Artificial stone veneer is the most common choice for most fireplace projects. Although it might look like real stone, it’s not as heavy as the real thing. Installation is similar to that of real stone, but on average, it costs less than real rock.

•   Natural stone veneer is the priciest and trickiest stone to install. It’s heavy, hard to come by, and expensive. Additionally, since it’s more difficult to work with than the alternatives, you may want to work closely with a professional.

•   Faux stone is affordable, lightweight, and has no actual stone. Instead of installing piece by piece, faux stone can be installed in larger panels. However, unlike artificial stone veneer, faux stone bears less resemblance to the real thing and is often hollow.

Drywalling Over the Fireplace

You might be done with brick entirely, and just want a white wall to work with. In that case, drywalling over most of the fireplace might be the solution for you.

With drywall, you can choose to cover all, or a portion of the brick wall and fireplace. You might choose to reveal some bricks, but minimize the overall look of exposed brick in the space.

To drywall around the fireplace, you’ll use two-by-fours and attach sheetrock to them. From there, you’ll paint and have a new wall.

But, be warned, this method can leave your room slightly smaller. Work with a contractor to get a better idea how room dimensions might change. Typically, installing drywall costs $1.50 per square foot, and jobs cost $1,711 on average .

Financing Your Fireplace without Burning up Your Budget

Depending on the route you choose to take, updating your fireplace could turn into a pricey venture.

Remodels can sometimes take longer and creep outside your budget. If you don’t have wiggle room in your savings, you might consider an installment loan with SoFi.

SoFi offers unsecured personal loans for loan amounts up to $100k, it won’t be a lien against your property and you could receive the funds you need in as little as 3 days. with low rates and no fees required, you can focus on your focal point for the fireplace of your dreams.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL19061

Investing can be intimidating, especially if you’re a beginner. There are lots of terms, concepts to understand, and a variety of regulations that oversee the industry.

As a novice investor, navigating the intricacies of the investing world can be overwhelming. But investing can be part of a financial plan to help you grow your wealth in the long term.

One way to make something less intimidating? Educating yourself on the subject. Taking the time to learn a few investing basics can make the entire concept seem less frightening.

Here are some basic investing definitions and ideas to help make investing more approachable.

How Saving and Investing Are Different

You may think if you’re saving money you don’t need to invest, but in reality the two concepts are different. Saving is when you incrementally set aside money for emergencies or the future.

Your savings are typically kept in a savings account or another cash equivalent where the money can be easily accessed when you need it.

When you invest, you use your money to buy stocks, bonds, mutual funds, or real estate. The hope is that those investments will earn a return. This strategy can be used to reach long-term goals.

Setting Your Financial Goals

One way to start is by understanding your financial goals. The goal you are saving for can inform how you invest and the types of assets you invest in. If you’re in your 20s and you’re investing toward your retirement, your strategy might be different than someone who is in their mid-40s and investing toward the same goal.

People sometimes have multiple goals they are working toward simultaneously, like saving for retirement, buying a house, or putting their children through college in the future.

Understanding Risk v. Return

In finance, risk refers to the degree of uncertainty about the rate of return on an asset and the acknowledgment that there is the potential for the financial returns to be less than you expected.

For example, an asset could perform incredibly well and make a great return for the investor. But there’s also the chance that the asset could underperform, leading to a financial loss for the investor. Generally, as investment risks rise, investors seek a higher rate of return to compensate them for taking on additional risk.

Each of your investing goals will have a different time horizon, which is the amount of time an asset is held until it is liquidated. Typically, the longer the time horizon, the more risk you can stand to take on.

For example, in your 20s you’re likely able to build a riskier retirement portfolio. As you age and get closer to retirement, you may want to adjust your investment strategy so that it is more conservative.

Diversification Can Minimize Risk

There’s really no way around risk when you’re investing, but there are strategies that can help investors minimize risk. Having a diversified portfolio is one way to reduce risk.

Portfolio diversification is spreading your investments over many different asset classes, business sectors, companies, industries, or countries.

Typically risks don’t impact all asset classes in the same way so diversifying your assets is generally less risky than concentrating your money in one asset or one asset class. A diversified portfolio can’t eliminate risk, but it can help minimize risk, especially in the long-term.

Active Investing v. Passive Investing

Active investing is a hands-on approach to investing. It’s what portfolio managers do every day. Essentially they analyze and then select investments based on worth. Typically active investing comes at a cost since you’ll usually need to rely on a team of professionals to actively manage the investments.

Passive investing is a lower-maintenance approach to investing. Instead of assessing individual assets one at a time, your goal is to match the performance of certain market indexes that already exist. Passive investing typically has lower fees than active investing.

Passive funds have been growing in popularity. There are pros and cons to investing using each approach. The markets are changing constantly, so one aspect of smart investing is staying informed.

In some cases, having a financial professional on your side to help you proactively manage your funds can help alleviate stress.

When you invest with SoFi Invest®, you’ll have the option to choose between active or automated investing options as well as the opportunity to consult with certified financial advisors who can help you develop your investment strategy and navigate the ins and outs of investing.

How Can I Start Investing?

There are a variety of options when you’re ready to get started. If your employer offers a 401(k), that can be one of the easiest ways to start investing.

A 401(k) is an employee-sponsored plan designed to help you save for retirement. It allows both you and your employer to make contributions. Another option for retirement is an IRA or individual retirement account.

You could also open a brokerage account for financial goals outside of retirement. It’s an investment account that allows you to buy and sell investments like stocks, bonds, and mutual funds.

When you’re ready to start investing you may want to speak with a qualified financial advisor who can help you establish your savings goals and risk tolerance and help you develop a personalized investment strategy.

If you choose to go this route, there will likely be a cost associated. One option to consider is SoFi Invest.

When you open an account with SoFi Invest, you’ll receive a complimentary consultation with a certified financial advisor who can help you make a plan to tackle your goals. Plus, we’ve eliminated pesky management fees.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Getting an education, driving your new car off the lot, buying a home—it can sometimes feel like every big life step comes with a little thing called debt.

And while it’s often accumulated while making investments and purchases that can help you reach your personal and professional goals and build the future you want, it’s no secret that debt also has the potential to have negative consequences.

Though your initial purchase may bring with it an initial rush of excitement and adrenaline, eventually reality sets in: You will eventually have to pay off your debt over a period of time, perhaps with variable interest, often with an added mix of financial anxiety and chest pains.

But debt repayment doesn’t have to be so stressful—sometimes it can even be empowering. It all depends on how you think about it and how you plan ahead.

Many folks may have a combination of shorter-term debts, like credit cards, and longer-term debts, like student loans and a mortgage.

Just making all the different monthly payments can become a chore that takes hours off your life, not to mention a big chunk of your paycheck. And if you’re just making the minimum monthly payments, it might seem like you’ll be repaying your debts forever.

Choosing a debt payoff strategy can ease your mind—and maybe even your wallet. A successful debt payoff strategy is typically one that helps you feel empowered and in control of your finances, while keeping you motivated to get out of debt as soon as possible.

Ahead, we’ll take a look at some popular payoff methods, including the snowball, avalanche, and snowflake strategies. We will also explore the loan consolidation strategy.

Keep in mind that each option has its benefits and drawbacks; choosing the right strategy will ultimately come down to your specific financial situation and what will most effectively inspire you to get debt-free.

The Debt Snowball Method by Dave Ramsey

The first of these snow-themed repayment methods is called the snowball method. Popularized by financial self-help guru Dave Ramsey , the concept behind this strategy is that paying off your smallest debt first (regardless of the interest rate) will give you a feeling of accomplishment that will increase your motivation to pay off your next biggest debt and, eventually, tackle all of your existing debt.

Though this method may offer a valuable morale boost that can potentially help you feel more empowered in getting your finances back on track, this method probably won’t save you as much money as paying off your debts with higher interest rates first.

Even so, it’s worth noting that a 2016 study published in the Harvard Business Review found that people using this method paid off credit card debt faster than those using other methods, for the simple reason that it’s typically easier to stay motivated when you see progress in your pursuits.

How it works: Make a list or spreadsheet of your debts (list the debt with the smallest principal balance first) along with the minimum payment amount for each of them. While making the monthly minimum payments on all debts, the strategy has you start throwing as much extra money as you can afford to spare towards the smallest of your debts.

Once you have paid this portion of your debt off, this strategy suggests you take the minimum payment you were paying on that debt and reallocate it to the minimum payment of your next-smallest debt (there’s the snowball).

The idea is that, by paying off your smallest debt and increasing the amount you’re able to put towards your next smallest debt, you’ll be able to keep your momentum going and continue repeating the process until you are debt-free.

The Debt Avalanche Method

This next method is also known as the “ladder” or “debt-stacking” method. Unlike the snowball method, which is structured around behavior and motivation, the avalanche method is about streamlining your debt repayment so that you can save the most money on interest.

The avalanche strategy can sometimes require more discipline, and the initial results may sometimes seem a bit less tangible. Even so, keeping track of how much you are saving in interest can be a great motivator for many people dealing with debt.

How it works: Make a list of all your debts by order of interest rate, from the highest percentage to the lowest. While continuing to make all your minimum monthly payments on your existing debts, the avalanche method suggests that you also “attack” the highest interest rate loan with as many extra payments as you can.

In other words, send an avalanche of extra money towards the debt that’s costing you the most.

For extra motivation, you can use an extra payment loan calculator like this one to keep track of how much you’re saving in interest.

The Debt Snowflake Method

Taking the snow metaphor even further, the “snowflake” method can be used on its own or in conjunction with another method, such as the snowball or avalanche. The snowflake method involves finding extra income on top of your usual income to help pay down your debt faster.

Side gigs and extra work are often seen as ways to afford extra purchases or make a bit of extra cash to spend on the finer things in life. But instead of using this extra money on pleasure expenses, the snowflake strategy encourages individuals to find an additional income stream that can be dedicated specifically to paying off debts more quickly.

How it works: Scrape together extra micro-payments by any means possible: using credit card rewards cash, taking those cans of spare change to the bank, selling old textbooks or collectibles online, or even taking on a few side gigs. From there, the method suggests putting the extra cash from these projects toward extra debt payments.

Consolidating Debt Under a Single Loan

One final strategy for paying down debt is converting all your various debts into a single loan, commonly referred to as loan consolidation (no snow metaphor here).

This method has the potential to dramatically simplify your loan repayment process. Instead of multiple loans and multiple interest rates, you’d have one loan and one interest rate. And ideally, this new interest rate will be close to the average of all your interest rates combined—or maybe even lower.

How it works: Start by shopping around for the best loan consolidation or personal loan offer you can find. Once you find one and are accepted, your lender will grant you a personal loan that you can use to pay off your existing qualifying loans or debts in full. Then you’d pay back the personal loan, which is just a single monthly payment.

One potential downside to consolidating your loans is that your overall repayment period may get extended, meaning you could pay more in interest over time if you only make minimum payments on your personal loan.

This said, when you take out a personal loan, you can make sure to choose a loan term that doesn’t extend your repayment period and find an option that works for you, your debt, and your financial situation.

Remember, even if you decide to consolidate some of your debt with a personal loan, you can always use the snowflake method or other strategies on the remainder of your debt.

Whatever plan you end up choosing, making consistent extra payments on your personal loan whenever possible can help you get out of debt even faster (just watch out for prepayment penalties—that’s why it’s so key to always do your research before you sign on the dotted line).

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Guest Participation: The individuals interviewed for this article were not compensated for their participation. Their advice is educational in nature, is not individualized, and may not be applicable to your unique situation. It is not intended to serve as the primary or sole basis for your financial decisions.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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