Toronto Sun to Students: Be Wary of Payday Loans, Spend Graduate Money Wisely
By J.J. CameronPayday Loan Writer
Student loan debt is a problem outside the U.S., too. In Canada, recent graduates are being urged to spend their new paychecks wisely. Set a budget, states a recent Toronto Sun article.
New grads often make commitments based on their gross annual salary and are shocked when they see their take-home pay. As a result, they're forced to consider supposed fiscal saviors such as payday loans online.
"Creating a budget is a tool, not a financial handcuff," says Debby Fowles of about.com financial planning guide.
Begin by taking a hard look at your discretionary spending, such as cellphone packages and expensive jeans, along with non-discretionary expenses such as food, rent and transit pass, advises Alexis Mantell of RBC Royal Bank in Toronto. Don't be tempted by a quick payday loan fix if problems arise.
"Financial planning should revolve around cash flow," Mantell says. "Determine a monthly student debt re-payment amount that will allow you to live comfortably while making a significant dent in your debt load. Synchronize your loan payment date with payday to ensure it always gets paid off the top."
Look for ways to reduce your cost of borrowing. If you're carrying a credit card balance each month, or you're short of cash and have overdraft protection on your bank account, consolidate all debt into the vehicle with the lowest rate of interest - likely a line of credit. Only consider a quick cash loan if you must. Set a goal.
"Determine a time line for completion of repayment. Set aside a small fund to reward yourself for meeting that milestone," Mantell says.
Your payment period will depend on the amount of debt outstanding and how it's negotiated. It will also have a lot to do with the type of job you possess and your living situation. A single working professional can lower balances more quickly than one who is married.
Moreover, those having difficulty making payments may be eligible for interest relief. If your application is approved, the government will pay the interest on your student loan for a period of time, possibly as long as 36 months, Mantel says. This would be another cash advance alternative.