When I graduated last June, finding out
that I owed the National Student Loan Centre (NSLC) a whopping $22,000, I was oddly
relieved to be just under the average
payback amount.
But I was still horrified.
And that only grew when I learned that my
payback time estimate was a whole nine years away. That really put things into
perspective for me. I instantly thought of the hold it would put on reaching
important milestones in my life—home ownership, marriage, children, travel,
peace of mind and much, much more.
I spent hours on end thinking of how I
could eliminate this massive financial burden from my life until I finally came
up with a master plan that would have me debt free just one year after
graduating. But once I got the ball rolling, I cut that time in half and was
paid in full just six months after shimmying across the stage (literally, I danced
off the stage at Convocation Hall the day I graduated).
Here’s how I did it.
Stayed
at home
I
stayed home for school, despite high school
teachers insisting the best education was one obtained by leaving home. By
staying in my city, I saved thousands per semester on residence, tuition (if
you’re an international student), and everyday costs like laundry, food, gas
and parking.
I stayed
home on weekends. Sure, I went out once in a while. But I was sure to know
in advance whether there was a cover charge, and if I could get in free by a
certain time I was in there like swimwear.
And despite wanting to own a home like most
people out there, I stayed at home after
graduating. Most millennials can’t wait to leave the nest. But moving out
before student loans are cleared can have a devastating impact on your finances
and make it extra hard to get ahead. Unfortunately, some people have no choice.
Depending on where your family lives, what your relationship with them is, or a
long list of other factors, living at home is just not an option.
Withdrew
money from my savings account
While in school, I was earning an (almost)
full-time paycheque every two weeks. About two and a half years before
finishing school, I set up automatic savings deposits of $100, and that money
grew quickly. In addition, I deposited
my tax returns directly into my tax-free savings account (TFSA). Once I
graduated, I withdrew nearly everything
to make the biggest dent in my debt possible. And it worked!
If you can get ahead while you’re in school
and start saving, putting that money toward your student loan when you finish
school is a great way to get a head start on repayment. It’s a strange feeling emptying
your savings account to put towards a loan that will likely still not be paid
in full, but you end up saving a ton of money on interest by using money that
wouldn’t earn you half as much in
interest anyway.
Worked
two jobs
I scored a well-paying job in my field as a
freelance digital content editor a few weeks before graduation. And remember
that job I had throughout school and did 32 hours a week at? I kept that one
too.
This meant that many of my workdays kept me
out of the house from seven in the morning to midnight. I was often tired,
cranky and just exhausted. But in my
eyes, grinding it out for a few months was worth the financial freedom it
ultimately brought.
In total, I was funneling (my term for
making massive monthly payments) about $2,000 per month to the NSLC. For most
people, this is their monthly net income.
I knew that if I did this for just a few months, I would be able to free
up that extra cash to replenish the savings that I cleared out to pay down my
loan in the first place.
Stuck
with my old car
I have a love-hate relationship with my
2006 Honda Civic, Benji. I love that he’s paid in full. I love that when I turn
him on, he starts and gets me from point A to point B safely.
But Benji takes really long to heat up. He
doesn’t have seat heaters. And there’s no place for me to charge my phone while
I drive.
These things pale in comparison to what it
might cost me to have these luxuries.
If you have a car that does it’s primary
job of getting you from place to place, stick with it. And until you absolutely
must get a new car, stick with what
you’ve got. Monthly payments and the administrative fees of getting a car on
the road can add up quickly, taking away from money you could be putting
towards paying off your loan.
Low-interest
balance transfer
When one of my credit card companies that I
hadn’t used in a while called me up and offered me a special promotion, I
instantly turned it down. But after crunching some numbers, I saw a golden
opportunity.
MBNA Mastercard offered me a 0.99 per cent
balance transfer rate of up to $7,500, while the NSLC was charging me a 5.2 per
cent floating interest rate on just under the same amount.
I called them back a few days later to let
them know I was interested and redirected the money that I would’ve been paying
five times more for. Then, I paid off the credit card just as aggressively as I
had been paying off the NSLC.
Cancelled
a bucket list vacation
I got impulsive just after graduation and
decided my partner and I were going to Trinidad for carnival. I found a great
deal on flights and a day after booking, did some number crunching. Needless to
say, we were not going to Trinidad
for carnival.
This was a deeply personal sacrifice for
me. It had been number one on my bucket list since the age of 14. But Trinidad
would always be there. Was that what I wanted for my debt?
The point is, traveling is nice, but everything
comes at a cost, beyond the cost of the vacation itself.
In sum, it took a lot out of me. But six
months of long days, fatigue and changing my lifestyle entirely to relieve such
a large amount of student debt so soon after graduating was entirely worth it. And
if it’s not for you, that’s okay!
Part of making a debt repayment plan is
knowing yourself, really understanding your finances, your discipline, what
you’re capable of and what you’re not. So have a conversation with yourself, be
open and honest. Then, you decide your action plan and
pursue it.
Labels: debt repayment, financial freedom, millennial finances, NSLC, OSAP, tuition