It’s All My Fault

As an adult in debt that is not related to absolute necessity (i.e. medical debt), I am fully aware that my debt is my fault. Not my parents’ fault because they didn’t tell me what to do with my money, not my school’s fault because proper financial education was not required, and not the big bad credit card companies’ fault for giving me credit when I was young and irresponsible. Mine.

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At the age of 18, we are officially declared adults. We can vote, smoke, have holes drilled into our bodies, and obtain credit with little to no income. I did all of these things. With this power comes great responsibility (thank you, Uncle Ben!). Adults are in charge of themselves. Therefore, whatever happens to them is directly influenced by the way they choose to live their lives.

Sallie Mae did not hide the fact that I would eventually owe the money I was borrowing back with interest. Neither did Visa. They gave me paperwork that laid this information out, and I signed it.

I am in a heap of debt. While it’s frustrating sometimes, the one thing I don’t do is play the victim. If you blame everything and everyone around you and do not take responsibility for your debt, you are essentially saying “I am not an adult. I am a child who ate too much candy and got a tummy ache.”

Grow. The. Fuck. Up.

If I may quote a movie (and I may because I’m the one writing this), “Stop feeling sorry for yourself. Okay, ‘cause I don’t associate with people who blame the world for their problems. Because you’re your problem Annie, and you’re also your solution.” If you don’t know which movie this came from, we probably can’t be friends. It’s not personal, I just really can’t associate with people who don’t watch awesome movies.

Own every decision you make in adulthood. You should be proud of and/or learn from every single thing you do. When I get mad about my HUGE amount of debt, it’s at myself. No one else spent that money for me. No one else over drafted my checking account like twenty times freshman year. No one else decided to max out my credit card buying spray paint. I did ALL of it and I own it. Because blaming it on someone else would be me waving the white flag to adulthood. It would be saying, “I can’t make my own decisions”. It would be the easy way out and I would lose all respect for myself.

So please, stop blaming:

Your parents

Your teachers

The economy

Marketers

Credit card companies

Banks

God/Allah/Buddha/Satan/Nature/Dave Ramsey/Me/Whomever or whatever the hell you believe in

You’re your problem. And you’re also your solution. Decide today to own your life.

Wanna save money? Get married young!

Truth time: 80% of the reason I decided to write this article is because I knew Bridget would go into stat overload when she saw it. I know, I know. There is a 50% divorce rate, that percentage increases for younger couples, yadda yadda yadda.

(Bridget: ….. lol, Erin.)

In my introduction post, one reader pointed out that I am the youngest writer on the site but the only one that is married. While more of my peers are getting engaged and married now, it was not normal when I got married at the tender age of 20. From a purely statistical standpoint, getting married at such a young age is a terrible idea. (Right, Bridget?) However, it does come with some serious financial benefits.*

- Financial aid. If your parents make a decent income but aren’t helping you with tuition, you get screwed over in financial aid. I didn’t have an issue getting loans (evidenced by the $40,000 of student loan debt I managed to accumulate), but grants were much harder to come by. As soon as I got married, financial aid was based solely upon mine and my husband’s income. Two college kids aren’t really flush with cash so I started getting the maximum amount of grants. If only I didn’t take out additional student loans to pay for…whatever the hell I blew them on.

- Double the (meager) income. College students do not make anything much. But when you go from one meager income paying for your crap apartment to two meager incomes paying for your crap apartment, it really does make a difference. Same goes for utilities, cable, Internet, what have you. Aren’t roommates the same thing? No, because unless you are super close you will need extra space, i.e. a second bedroom. Which costs extra money. Also, they get mad when you eat their food. I prefer the “what’s yours is mine” relationship that can typically only be found in committed relationships.

- Taxation. When you are making the salary of one adult combined but claiming the exemptions of two, your tax liability is slim to none. It’s beautiful. While popping out children young can also be beneficial for tax purposes, I don’t recommend this as a way to save money (to the dismay of my mother and MIL). I’m not sure if you know this, but the cost of a child actually outweighs the $3,800 exemption. I’m pretty sure that only pays for like three weeks of diapers…

So that’s my financial advice for the day to you young college students. Just get married!**

Did you get married young? Do you have any additional financial benefits to share? Everyone else: share your favorite “raining on someone else’s parade” statistic!

*I am well aware that marrying young can come with a host of downsides as well, many of which are financial. But in a world of hyper-responsible PFers, I wanted to offer the rebel perspective. Because let’s be honest, we aren’t always going to make our decisions based on statistics and plenty of us “irresponsible youngins” turn out just fine.

**Please do not get married young just because you want to reap the financial benefits or because I’m your idol and you want to be just like me. Marriage is kinda a big deal and should not be taken lightly. Unless you are a celebrity, in which case it’s not really a big deal. Go nuts.

Bridget: remember this:

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How to get, spend and pay back your student loans

The very heart of Money After Graduation is my own journey out of student loan debt. I started with nearly $21,000 and now with less than $5,000 to go, I’m nearly at the end of my journey — but plenty of others are just beginning or in the middle of theirs! With the average student loan debt upon graduation approaching $27,000, graduating in the red is not uncommon. In my Googling I found this nifty counter that actually shows the $15 billion+ student loan balance in Canada  growing at an alarming pace. Ack!

Since the student loan system isn’t necessarily the most straightforward, I figured a short summary post of the process might be in order.

How to get a student loan in Canada

In Canada, student loans are administered by the provincial and federal governments. This means you apply directly to them to secure funding for your post-secondary education. In some provinces, it takes only one application for both the federal and provincial student loan services, but depending where you live you might need to fill out two applications.

Many students that are just beginning their university career think that they go through their school for the student loan application process. While some universities might offer services to help you work through your student loan application, some might not. The information on how to apply for student loans in your province is available here.

While the ideal is obviously to get through school without borrowing, but as the cost of a post-secondary education rises, that becomes less of a feasible option for many students. Personally, my parents didn’t save any money for my university education and earning enough to pay for it, even though I worked throughout my degree, wasn’t possible either. Student loans can be a positive investment if money is what is keeping you from getting an education you need.

How to spend your student loan

Sometimes, your student loan disbursement will go directly to the school, and then if there’s anything left over, it will be deposited into your bank account or a cheque will be mailed to you. How you should spend any leftover money after your tuition is paid is on living expenses — don’t be like me and spend it on clothes and dinners out! I think I’d owe half of what I did if I had just spent it more carefully throughout my undergrad. While I eventually caught on to more responsible ways and saved a bit of my student loans, I could still have spent more wisely.

While a somewhat untraditional route, I encourage students to treat their student loans like income and save a portion of the funds, just as they would a percentage of their paycheque. This not only builds the habit of saving early on, it lets you graduate with some financial assets that you can then use to pay off your student loan at graduation. By saving some of my student loan money, I was able to make a $5,000 student loan payment at one point, which significantly reduced my overall balance and saved me a whack of interest.

How to pay off your student loan

Generally, immediately after you graduate your student loans enter a grace period where they’ll be accumulating interest but no payments will actually be due. At the end of the grace period, you’ll have the option to make a lump sum payment of the interest that accumulated during the grace period or to roll it into your student loan. I STRONGLY encourage you not to take advantage of the no-payment grace period and just start paying your student loans right away. It doesn’t matter if you’re not in a glamorous career or if you’re just working part-time, start paying right away. This not only gets you into the habit of making payments, it reduces your student loan balance and thus also reduces the amount of interest you pay over the term of the loan. During the grace period, I managed to pay down $2,500 of my student loan debt — more than 10% of the total balance! It may not seem like it made a huge difference but I certainly appreciate that my current debt isn’t $2,500 + interest now.

Likewise, making the minimum payment will get you nowhere. You should always make more the minimum payment on your loans. In fact, you should pay as much as you can while still meeting your other financial obligations and not stretching yourself too thin (and in my opinion, also keeping some semblance of balance and fun in your life).

If you borrowed from multiple lenders, particularly as private loans as opposed to government ones, it might be worthwhile to consolidate your debts at a lower interest rate. Ultimately your main goal should be to pay off your student loan as quickly and painlessly as possible.

Long story short: borrow as little as you need and pay it off as quickly as you can.

My student loan debt is below $5,000

Filing my income taxes this year was both easier and harder than last. Easier because I only had to receive a T4 from a single employer instead of multiple, harder because I had to claim all my blogging/writing as self-employment income. Based on my tax refund estimator I actually had to pay taxes this year for the first time ever, which meant that while I got a large tax return, I definitely didn’t get back everything I paid in! The trials of being a contributing citizen.. Oh well. Nevertheless, I did benefit financially this tax season and I’m happy to report that I put it to good use. When my income tax refund was deposited into my bank account, the first thing I did was make a $3,100 student loan payment.

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me doing something right, and the PF community cheering me on

 This means my new balance owing is below $5,000 — which is less than 1 month’s gross income for me.

Craziness. The $4,941 remaining doesn’t even feel like that much owing — and why would it? That total used to be over $20,000. With over $16,000 already paid off, the remainder of my student debt almost looks like petty change.

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Well, not really, but it’s certainly easier to swallow.

If you’re interested in following my student loan payoff progress, you can always check out my charts HERE.

I’m a BIG advocate of using your income tax refunds to pay down your student debt. Because I paid for my university education, I racked up tons of tuition credits that gave me significant tax breaks in 2011 and 2012. This is the reason why my income tax refund was so big. It only makes sense to use your large income tax refund that you received solely because you went to university, to pay down the student loans you borrowed to attend university.

Essentially you paid the government money (because most universities are government-funded institutions in Canada, so paying tuition is paying the government), then they pay it back to you in your income tax refund, and then you pay the government again by paying down your student loan.

Ok, so the government wins monetarily but you’ve got this great educated mind now. Huzzah!

So next year I probably won’t get an income tax refund, but I won’t have any student loan debt either. My plan to tackle the remaining $5K I owe is simple: just pay it off.

February and March are spendy months for me this year because of booking various work and personal trips. Once the dust settles for flights, hotels and rental cars, all my money can be funnelled towards the student loan. I’m not a huge fan of deprivation in the name anything, but debt-freedom is a worthy cause and at this point, I wouldn’t have to suffer for long. Besides, if I ever get really annoyed, I can always do a gigantamous transfer of funds from savings and wipe out my remaining debt.

I’m always a sprinter at the finish-line, even if I strolled and lolly-gagged the rest of the race up until that point!

In any case, I’m almost done, guys! I’M ALMOST DONE.

Gillian : An Introduction

I stand (okay, I sit) here before you a university graduate roughly $60,000 in student debt.  I know, this number seems astronomical. And let’s be real, it is. Let me explain the story of how I came to be in such a financial mess…

How it happened.

Although I was smart, I was the typical head-in-the-sand high school student who felt like the real world was miles away. I did not have passion towards any area, but excelled in my accounting classes and felt that I could make a good living doing this. I decided to go to a decent school close to home, and went off on my merry way.

I quickly realized I did not want to be an accountant. Ever. I was still very unsure about everything. I have always dealt with anxiety, but at this point did not know what was “wrong” with me. All I knew was that I dreaded school and had panic attacks doing things as simple as riding the bus to school. I mentally broke down, and left school by the end of November. One semester’s tuition and an entire year of rent (my landlord was not understanding at all) left me my first $5000 in debt.

I worked through a lot of my anxiety issues, evaluated what I wanted out of life and decided to go to school for something I truly enjoyed: fashion merchandising. The next Fall I headed off to college. School went a lot smoother for me, but living in Toronto cost a LOT. My two-year program cost me $25,000.

While in college, I realized that I wanted university after all. I attended university for marketing management. It was truly enjoyable and I am happy with my choice. Tack on the final $30,000 in debt.

I was a complete idiot with my finances. I made very little money in the summers because I could not usually find full-time work. I had a problem with spending. I knew I was majorly in debt but I thought I could easily make $50,000/year straight out of school and pay it back in two years tops. I liked a lot of stuff – M.A.C. make-up, lots of clothing, and going out to dinner multiple times a week. Once summer hit and I had a bit more income coming in, I felt like I DESERVED extra stuff and extra fun.

How I plan to pay it back.

It has been a very harsh reality check realizing that I am making more like $25,000-30,000/year, and am going to need to pay down at least $600/month in student debt to get out of this hole in eight years. It’s tough to look back at the frivolous way I lived, but all I can do at this point is move forward and not ever get back to that place. There are so many things I’d like to do soon; getting married and starting a family are something I’d like to do in the next five years and my debt is holding me back from being able to achieve those goals.

I have already started working to get out of debt by lowering my fixed expenses, cutting back on variable expenses (good-bye clothes, it was nice knowing ya!) and doing freelance work to increase my income. I am trying to be as frugal as possible without over-doing it.  I do not want to get debt burn-out since I’ve got quite a few years left of repayment. My goal is to be paying $1000/month (hopefully more!) towards my loan eventually. I’d like to eventually get a better paying day job so I have been taking steps with that. Even though my debt is lowering at a snail’s pace, this is the worst of it. Now instead of shopping, in my spare time I read/write blog posts, budget, figure out better ways to spend (or not spend) my money… and watch Dexter.