How to Pay Down Debt After GraduationJun 01, 2018
Final exams are over and you’re filled with a sense of pride…but also, student debt. Most grads can relate to that overwhelming, yet exciting feeling of “what’s next?” after school, and debt shouldn’t stand in the way of your goals.
That’s why this month, we want to help you tackle your debt by finding a solution that fits you, so you can move on to bigger and better things, without looming financial stress.
More than you bargained for?
That fancy new degree or diploma didn’t come for free. You put in time, dedication and a heck of a lot of money in to earn it. And chances are, on top of tuition, you borrowed some money to cover your living costs while in school.
The good news is that for six months after you graduate, your student debt repayment is on hold. The bad news? Whether you’re employed or not, you still need to pay back those personal loans and credit card debt.
How to repay your debt without the stress
When you’re paying back a large balance of debt, whether it’s student debt, consumer debt or a mix, break it down into digestible pieces. Here’s how:
- Take advantage of your grace period. OSAP gives you six months’ time before you need to start making payments, and the Ontario portion of your debt does not accrue interest during that time. If you are starting your own business, you can apply for a one year grace period.
During this time, focus on hammering away at those other debt balances. Check out Christine Drummond’s blog for more resources about student debt repayment.
- Lean on support. That means, if Mom and Dad are willing to let you move home and pay back your debts, go for it. Take that time to look for a good job, save up money and get your debts under control. Just don’t overstay your welcome!
- Consider consolidation. When you have multiple debts, it can feel like you’re always juggling your money. Instead, talk to a debt professional such as a Licensed Insolvency Trustee (LIT), or compare your debt relief options using this debt options calculator. You may be able to consolidate your debts into an easier monthly payment, allowing you to save more and meet more goals.
- Follow a budget. Too much avocado toast and lattes can add up over time. Make a budget and set yourself up with a detailed spending plan so you know where your money is going and you’re getting all your bills paid on time.
Check out more tools to help you pay back debt in our blog.
- Get motivated. Follow financial bloggers on social media that will inspire you to meet your goals. For starters, check out Jordann Brown who paid off $38,000 in student debt and has some great tips to offer. Jessica Moorhouse also has some great ways to pay down debt, live frugally and save money. Follow her Mo’ Money podcast to get motivated.
Keep your momentum going
Practicing healthy financial habits now will keep you on track for years to come. Find ways to constantly improve your financial health by adding to savings, keeping consumer debt to a minimum, paying bills on time, and setting SMART goals for yourself.
All these practices can have a huge benefit as you get older and decide to start a family, get married or purchase a home. By doing this now, you’ll be able to meet more milestones instead of delaying them because of financial setbacks or debt.