DEBT-FREE ME!

Ladies and gentlemen,

I am very PROUD to announce that after 3 years of student loan repayments, I am finally DEBT-FREE today! 😀 All before turning 25 as planned!

It hadn’t been easy and at times, it was truly depressing, but I’ve come out of this a more financially stable and happy person. I would like to share my tips and lessons I’ve learned from my 7 years with student loans.

I started uni in autumn 2006 and not long after, I received my student loans from the national and provincial student loan centres. What I should have done is transferred a lump sum of the money to my parents to cover the tuition fees they had paid for and save some for other necessary expenditures (books, student fees, extracurriculars, food, etc.). Unfortunately, I was a foolish girl and went shopping like a shopaholic. I felt like money was no issue and spent on whatever I desired (namely, beauty products and clothing). To be fair, my clothing purchases were long-term, though some of these were later donated or swapped in recent years.

It wasn’t long before I started panicking when I realised that the numbers in my bank account were dwindling. I still had some for 2nd year, but it wouldn’t be enough to last me. I believe I was approved for another loan in my 2nd year but sadly, that would not last very long either. Thank goodness for all the scholarships I could get that would cover part of my tuition, as well as the bursaries (student work programmes) that would help me get by. Thank goodness too that I could receive a scholarship from the student loan bureaus, lowering the total amount I would have to pay back. I am happy to say, at least the total amount of student loans was considerably less than what others had to pay.

As I’d wanted to spend my final semester in Vancouver for the Winter Games, I made sure that I took an extra semester between 2nd and 3rd year. I received a nasty surprise halfway through my 4th year when I realised that I would have to start paying back my student loans, now that I was a part-time student. Suddenly, life became hell on earth. I was juggling a very difficult online course (on a subject I knew very little of) and an onerous financial debt. Very well, the monthly amount was not awful but the minimum payment of C$89 every month was too much for a starving student* with no income. (*I was not a starving student. I lived at Hotel Mamma & Pappa with free room and board.) Luckily, after I sent a desperate request to NSLSC, I was offered a 6 month grace period. Thus, I was able to finish the rest of my semester in relative peace and to find some temp work.

I wonder now if I would have finished paying off my student loans earlier had I found a full-time job in Vancouver instead of spend a year in Munich. Probably. However, I do not regret my year abroad in Munich, gaining some international work experience though barely surviving on very little income. Furthermore, I spent the following year (after Munich) just temping every now and then, sometimes going bankrupt, sometimes barely afloat. When I started my first full-time job last August, I decided it was time to start paying more. I raised the monthly payment to $200 but discovered, to my dismay, that it would still take 6-8 years to pay back all of my student loans. That is terribly depressing!

Last year, I finally paid off my provincial student loans. It was a fraction of my national student loans but one less burden sitting on my shoulders.

Not too long ago, I decided I would take the risk and raise the amount to $450/month. That would be nearly a quarter of my monthly income. I would have to prepare myself to live very frugally but at least I would be done by the end of the 2013 year. I opened a new bank account at ING for their no-monthly-fees and $25 bonus in your bank account (for your first $100 deposit) was far too tempting to resist. ING gave me peace of mind, I tell you. When tax season came around, I was elated that I would be receiving more than I’d expected (forgotten about the tuition credits we could get back). Some people put their tax money into their savings account or RRSP. As I did not have the latter and I was desperate to be done with my student loans as soon as possible, I gave it all back to the government (as in the national student loan bureau), shortening the end date by at least 2-3 months.

Originally, I was going to ask the NSLSC to withdraw the final amount in its entirety on the last day of the month (as usual). When I learned that it would then be $2 more, I was surprised.

“I’m quite certain it was $454.79 the last time I checked (on Sunday),” I said.

Today, it was $454.99. I wasn’t going to risk waiting until pay day Friday to find that I have to pay $455 or more. Yes, call me a Scrooge. That one penny will make a difference to me!

So if you are paying back your student loans, I suggest you pay back as much as you can afford and as soon as you can. Then, when you’re done, CELEBRATE! 😀

Tips

Avoid asking for too much loan money. If you do receive a lot for your 1st year, make sure you can use it for at least 2 years.
When you receive your student loans, pay back the tuition fee to your parents (whatever they paid for).
Budget wisely. Set aside an amount for rent, food, extracurriculars, flight/ride home, etc. Then you’ll know how much entertainment money you have.
Every month, put some money in your savings account. That’s money you don’t touch! (Unless it really is an emergency!)
Keep yourself so busy that you have little time to shop.
Eat at home or bring a lunchbox to work. Eating out can be quite costly and turned out to be the biggest culprit on my credit card bills!
Pay back your student loans as soon as possible, as much (as you can afford) as possible!

Important info

As soon as you stop becoming a full-time student, you have to start repaying your loans. I was shocked to learn that as a part-time student, I would have to start paying back my student loans. How cruel. As if part-time students have the money!
Interest is not your best friend when you have to pay back. The earlier you pay, the lower you keep your interest.
When you are done, the student loans bureau will send you a letter confirming that all is paid. Yay!

To show my gratitude for education, I will be: