Paying off my debts: How to come out ahead?

In the red
But the satisfaction of finally reaching this point in your life can be quickly clouded by the student debt you have accumulated during your undergraduate and postgraduate studies. This largely predictable situation can be mitigated in different ways.

In your day-to-day life, it’s easy to forget that routine spending, like buying a coffee or eating at a restaurant, can have a major impact on your budget.

Do the math
Keep track of these small expenditures for some time and you’ll see what your daily habits are really costing you on a yearly basis. The results will surprise you and may prompt you to change your routines.

Examining your habits will give you better control of your spending and enable you to make informed choices.

Make a budget
You know your income. But do you really know how much you spend per week, per month and per year? How much you can save to pay off your debts or use for special projects?

To get a clear picture of your situation, categorize your expenses. Typical categories are:

• Home
• Food
• Travel
• Health and insurance
• Children
• Recreation
• Miscellaneous
• Savings

This exercise will tell you exactly where your money is going. Do it!

Do you have a student line of credit? Your financial institution may make available to you a substantial sum of money. The credit limit granted will depend on your needs.

A platter of money
According to your educational program, you may be offered a line of credit of as much as $150,000 or $200,000. With this facility, you won’t be short of money. It can also be used as leverage to help you save, obtain a mortgage, or buy items like a car. Wise use of your credit line can serve many of these purposes. Bear in mind, though, that this money doesn’t belong to you and that one day, it will have to be repaid.

Your interest
Depending on the amount, it can take a several years to pay back the money you have borrowed against your credit line. The monthly payments will depend on prevailing interest rates, which will apply only to the amounts drawn. Make your payments on time, otherwise the unpaid interest will accumulate and will increase the size of the loan.

Are you receiving loans and bursaries to pay for your education? While bursaries are not repayable, student loans are another story. That’s why the government offers attractive repayment terms.

Meet the deadlines
Under certain conditions, government programs will reduce or suspend your loan repayment:

• Loan Remission Program
  The government forgives 15% of your loan if you complete your university program within the prescribed period.
• Deferred Payment Plan
  For a six-month period, eligible students can benefit from favourable repayment terms, according to their financial capacity and their family situation.

Claim your credits
If you paid interest on a student loan, you are entitled to non-refundable tax credits. You can claim the amount on your yearly tax return or carry forward the cumulative amount.

Having debts at the beginning of your career is normal. What you have to avoid is overindebtedness, a trap that is easy to fall into if you’re not careful.

Guidelines
Key steps to take:

• Prepare a personal financial statement
• Make a realistic budget
• Control your spending
• Determine your current cost of living
• Assess your repayment capacity

Have a clear mind
Then establish your priorities:

1. Balanced budget
2. Gradual repayment of debts
3. Savings

The Financial offers you a turnkey solution by giving you access to all the resources you need and by helping you make the right choices.

Come out ahead
Benefit from the expertise of a team of advisors who will help you:

• Determine your objectives
• Prepare a personal financial statement and a budget
• Manage your financial obligations
• Establish your action plan
• Do regular follow-ups