4 Ways to Avoid Debt this Coming School YearJul 05, 2018
Whether you’re a first year university student or returning, chances are you want to avoid debt and get through the year without starving. Even though it’s the middle of summer, it’s a good idea to prepare now so you’ll have less to worry about in September.
Set yourself up for success
You already know that student debt in Canada is a big deal. Most students graduate owing just under $30,000 in loans which takes about 10 years to pay off.
Crawling out from under that kind of debt can be tricky and it can also keep you from meeting other financial goals. That’s why adopting a few good money habits now can literally save you thousands down the road. Here’s how:
- Create a simple budget
Have you been saving up your summer job money? Now is the time to lay out a spending plan that will cover all your upcoming expenses. You’ll need to account for all things school-related such as rent, food, transportation, clothing, phone bills, laundry and entertainment. Check out this example of a straightforward student budget.
- Borrow only what you need
If you have an RESP to pay for post-secondary, that’s great! If not, borrow only the amount you need to cover your costs. You may be approved for a large loan to sustain you throughout the school year, but it’s all money that will need to be paid back eventually. Instead, take on a part-time job during the school year so you can stay on top of your bills and still have some spending money.
- Be cautious about credit
It’s true that in order to build a good credit history, you must use credit. However, relying on a credit card to fund your “wants” will soon end in debt you don’t need at this time of your life.
The best way to avoid high consumer debt is to only use your credit card for purchases you can pay off quickly. For instance, set up your Netflix subscription or cell phone bill to withdraw from your credit card each month and pay it off.
When you carry a balance on your cards, you’ll end up paying hundreds of your hard-earned dollars into interest payments each year. Keep the money in your pocket and use credit wisely.
- Find frugal ways to get through the year
You don’t want to have to worry about finances while focusing on your studies. That’s why you should find ways to save wherever you can. Here are some tips:
- Buy used textbooks from other students or online. Sometimes you can find your textbooks in digital format for cheaper too.
- Share a home with your friends. If you’re not fortunate enough to attend school in your own city, rent a house with some friends and split the costs. This is a win-win because it also gives you the chance to cook your own meals and avoid expensive campus meal plans.
- Carpool whenever possible. If you don’t have a car, find someone who does and call in some favours. Alternately, your student fees may cover a Upass for all transit routes.
- Use the campus gym. Don’t bother with costly gym memberships. Get in shape for free or for a nominal fee!
- Buy used. This can apply to clothing, electronics or anything you need. Use Kijiji, Facebook groups or thrift stores before paying full price.
Student debt isn’t ideal, but sometimes it’s unavoidable.
If you find yourself feeling overwhelmed with student loans or credit card debt, talk to a debt help professional or compare your debt relief options with this calculator.
You can also find some great motivational tips by following finance bloggers who have been there. Kerry Taylor paid off her student loans in six months and offers awesome advice to her readers about how they can get there too.