Today, I have a post from Stephen at Saving From Scratch. I’ll let him take it away 🙂
We all have those friends. Know the type I’m talking about? The ones that just don’t seem to get it. The ones that have thousands racked up in credit card debt, but are in no hurry to pay it down. The ones that just can’t say “no” to some shopping, despite the fact that they’re already in overdraft. The ones that take that all-inclusive trip south even though the interest payments just started on their student loans. The ones that are like my friend, Brendan*.
Brendan graduated with a Masters in Public Relations in 2011, and is now about one year into his first full-time gig. He worked some odd jobs throughout university, but he certainly didn’t make proactive debt repayment a priority. Over five years of university (spread out over six), he accumulated the grand total of $50,000 (CAD) in debt.
To make matters worse, he lives in Canada’s most expensive city, he is spending close to $20 a day on breakfasts and lunches while at work, and he just bought a car – despite the fact that he lives on the subway line. Now I’m no prize myself. I also graduated with debt (over $22,000) and I occasionally forget to pack a lunch for work, as well. What I do know is that I definitely can’t afford a car.. Not yet.
So what should Brendan have done? Better yet, what should you do?
1. Curtail the damage in advance! Working before and through college and university will go a long way in preparing for the hefty expenses of post-secondary education. (If you’re already in a bit of a mess, just skip below to #2.)
2. Pay down debt early. Be proactive! Don’t wait for the payments to become mandatory. The earlier you can get that monkey off your back, the better.
3. Live within your means. Don’t buy a car when transit would work. Don’t fund a trip through credit. Don’t buy that snowboard when you’re already in overdraft. You get the point.
4. Pay yourself first. This works really well when you’re officially saving, but it also works when you’re paying back debt. Have a sizable chunk taken off each paycheque to go automatically into your debt. It’s amazing how much progress you can make in a short period of time.
5. Don’t stress it. Nearly everyone graduates with some debt. Don’t freak out – you’ve made a great investment in yourself and your future! Just take a deep breath and get at it. Good luck!
Save, support, share!
*Oh, don’t worry: this isn’t his real name.