You did the thing, now what?

So you got the money, you did the thing and your diploma is on the wall. Remember all that money you borrowed to go to the keggers and class, hopefully, well you need to give it back now… and then some. It’s time to pay off some debt.

First things first

Start at square one, what do you owe? What did you take out in student loans, what is your credit card situation like, who did you borrow money from? Then figure out what needs to get done first, prioritizing your debt payments will help you set an overall goal and pay it faster. 

Start small if that helps you or start with the money you borrowed from your family. That will probably make holidays way less awkward and your uncles and aunts will make way less passive-aggressive jokes about the new shirt you bought… 

After you make that judgment call look at the interest rates and what has built up, this can also help in understanding where to start. The last thing you want is to neglect debt that continues to grow.

Interest

While you were in class losing interest, your loans were gaining it. Interest can come in many shapes and sizes depending on the loans you took out. You need to keep that in mind when you are planning on budgeting. Account for the number to grow over time and make the appropriate payments according to that. 

The range of interest varies from where you get your money, OSAP runs an interest rate of 2.75% (starting after graduation) on average where CIBC will usually ask for an interest rate of 2.20% minimum. Now, this is an average. Who’s to say what the interest rate will actually be. Part of it depends on how aggressively you want to pay it off and others depend on your risk factors. I wouldn’t put it past big banks to try and rip you off so be wary of that.

Do yourself a favor

Do yourself a big favor and take a deep breath, it’s a lot I know but there are tools you can use to make it more digestible. Definitely find a personal loan calculator, the government has them for their loan services and so do the banks. Then it’s time to figure out how much you need to pay at a time and break that off into monthly payments. 

Budget for now

Now, this is probably a no-duh moment, but when you go to start paying back your debt one of the best things you can do is make a budget. Try and create a budget in excel, one that is manageable and meets your monthly needs. If you need more organization in your life then do one on a weekly basis. Budgeting, for now, will give you more money for later. Just do what’s best for your situation and try and set aside some money to have fun too. You are probably going to be depressed about what you owe anyways, no need to make that worse. 

Money will probably be tight to start off, but making a budget will help you plan out your expenses and make your money last longer. It seems like a lot, but if you are responsible enough your debt will shrink faster than you realize.