What Every Grad Should Know: How To Prioritize Your DebtJun 18, 2018
After graduation, a completely new set of decisions and competing priorities arise. As a recent graduate, you’ll be deciding on jobs to take or not, places to live, and how or when to repay your student debt.
We tackle the Four Things Every New Graduate Should Know About Debt in this podcast. Along with planning your debt repayment plan, strategies for seeing it through, and identifying your options if you can’t make your payments, we talk about how to prioritize debt repayment among your other financial priorities without overwhelming yourself.
Make your minimum payments
It can feel overwhelming if you have competing financial priorities, or haven’t secured a steady income, but making minimum payments will keep you in your lenders’ good graces and keep your debt moving downward.
If you have an Ontario provincial loan, the OSAP online debt calculator shows you what your payment will be. The Canada federal student loans also has it’s own online debt calculator. It’s important to respect these payments to maintain a good credit score, which will down the line help you with your other financial goals like getting a car loan or buying a home.
Also, if you can make more than minimum payments, do it. This will not only help you pay your debts faster, but making more than minimum payments is good for your debt plan, and it’s good for your credit.
Tackle high interest debts first
Whether it’s a student loan, a bank loan, or a credit card, paying down your balance can feel scary. One way to alleviate some of this stress is by focusing on your highest interest debts first, also known as the debt avalanche method.
The major advantage of using the debt avalanche method is that it minimizes the amount of interest you pay, as long as you stick to the plan. It also minimizes the total amount of time it takes to get out of debt since interest doesn’t accumulate as quickly.
You can also check out the 31 Quick and Dirty Tips to Get Your Finances in Shape for 2018. When it feels like there’s no end in sight for your debt, these easy strategies can help you make an impact and keep your motivation high, even if your post-grad income isn’t.
If you do manage to secure a job out of school, think about some of these tactics to make an impact on your debt. Our blog on How To Pay Off Student Debt After Starting Your First Job can help.
A lot of grads have debt regrets, but you don’t have to have regrets about your repayment plan. Find the best way to make debt repayment a priority in your financial plan and eliminate your debt faster.