How Important Is Paying Down Debt Right Away?Jun 18, 2018
You’ve got a lot to think about after graduation. Where does debt fall on your “to-do” list?
That’s the question we are asking in this month’s podcast. According to our Student Debt Confession poll, two in three Canadian graduates finished college or university carrying student debt. Here’s the advice our LIT’s have for recent grads and how much priority they should assign to debt repayment.
What do I need to know in order to pay back my debt?
You’ve got a lot of decisions to make now that you’re out of school and how you’ll pay down your debt is an important one to look into. Here’s where to start:
- Map out your finances – Create a budget so you can see your income and identify your expenses. Based on your budget, how much can you put toward your student debt each month? You may not be able to make extra payments on your student loans yet, but it’s important to pay more than the minimum payments whenever you can on your debts such as credit cards and loans. Doing so will save you loads in interest charges.
- Don’t forget about savings – The reason savings are an essential part of debt repayment is because they will keep you afloat when you encounter unexpected costs. Start by automating your savings and funnel them into a high-interest savings account. Build up an emergency fund that will include 3-6 months’ worth of expenses.
- Pay off high-interest debt first – Paying back your debt should be a high priority as the sooner you pay back your debts, you’ll be able to reassign that money to other financial goals. The good news is that you don’t need to put loads of money onto your debts to make a difference. Start slowly using the Debt Snowflake Method and use any extra money to put toward high-interest debt.
Whether you’re living at home to reduce debt or living on your own, your debt repayment should be a high financial priority. As your income increases, keep crushing those balances and make sure to keep an eye on spending so you’re not hindering your efforts.