Yay! You graduated! Congrats! You've worked very hard to complete your degree and that is a huge accomplishment. I just recently witnessed my sister's convocation and I couldn't be more proud.
For many of us, the transition from school to the workplace full time will be a scary change! But rest assure: it is a new chapter you'll learn a lot from.
Now that you're looking for or have found a job, you'll be making some money! Time to splurge and enjoy that pay cheque, right?
Not so fast: you still got that OSAP money to pay back, remember?
Don't wait to start paying it off.
You remember how you have that "six month grace period" after graduation? Who cares: you still owe money. If you can start paying off some of your loan now or even before graduation, you'll be ahead of the game!
Interest accrues daily on each dollar owed even during the six month grace period. Those dollars will add up. Instead of leaving that money in the bank to make zero interest (unless you read my previous post here), put it towards paying down your loan. Those summer job earnings you saved could be put to work right now. This way, you will reduce the original loan amount, meaning, you will owe less interest moving forward.
Make extra payments (no matter how little) and pay a little more than the minimum.
Every bit counts.
With OSAP loans, there are no penalties to paying down your loan more than the monthly stated amount.
After six months, the National Student Loans Service Centre will send you a statement with the principal owing, accrued interest, and estimated monthly payment plan to pay off your student debt.
When you get this, you know it's time to keep up with those monthly payments. But if you can, why not double or triple the monthly payment? Or make that minimum payment, but twice a month on the 15th and 30th, or on each pay day?
With online banking, you can set up recurring bill payments. You can set up a system where $20 every week is paid to your OSAP loan, on top of your monthly minimum.
Whether it's weekly, biweekly or monthly, the point is to try to make a few extra payments when you can to pay your debt off sooner. The faster you are to pay it down, the less you'll owe in interest later.
Use your tax refund to pay down your OSAP loan.
Since you paid tuition over the past years, you've most likely accumulated quite a bit of tuition tax credits. The Government of Canada allows you to refund some of your taxes already paid with tuition tax credits.
For every dollar you spent on tuition, you'll be able to recover $0.15 of the taxes you already paid for that year. So when you get your first job after college/university, get ready: our team at Aryandale Financial will be making you smile come tax season, letting you know to expect a nice, juicy tax refund.
When you get that refund, pay down some more of that debt, okay? You'll be happy to see those hundreds or even thousands come back into your bank account come tax season, but sad to see it go to pay off your OSAP... But in the long run, you'll thank yourself.
There are no magic tricks when it comes down to paying off student debt.
Honestly, you just gotta pay them down fast.
Time is everything. Starting sooner rather than later for paying off debts will hurt less in the long run. It's about using time and money effectively and efficiently.
Pay sooner, pay often. Don't let time and interest grow that balance to a beast you cannot tame. Student loans don't disappear from bankruptcy in most cases, too... They are with you for life. So tame the beast and pay it off.
You can do it.
It's time to have the talk about bank fees.
Why are you still paying them? Really, why?
Why It Doesn't Make Sense For Me To Pay Bank Fees
So, as you can tell: I don't think you should pay for bank fees when you're a millennial, like me. Let me explain.
What a week! To recap on the series, I wanted to provide you with a quick 2 minute guide on what these investments are!
And there you have it! Hope you check out the posts in full.
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Knowledge is power. Invest in yourself with financial knowledge to take care of the future you. We'll be here by your side for the journey.
Ah, the last of this week's five part series: Mutual Funds.
There is no question that you haven't heard of Mutual Funds. Many advisors, banks, financial institutions, and more have access to some of the world's best mutual funds. But I bet you they all will tell you to buy buy buy! But not why why why.
Yes, here at Aryandale Financial, we do offer Mutual Funds as well. However, I have no interest in telling you to buy buy buy. My interest is to teach teach teach, and in turn, when you are ready, you will take charge of your financial future and have an idea of WHAT you want to buy buy buy.
Our advisors provide ADVICE and ACCESS to the best products. We help you build a financial foundation with knowledge and guidance: you call the shots, and we help you make it happen.
With that being said, whether it's individual stocks, bonds, REITs, low cost ETFs or low cost mutual funds, you now have the basic understanding of what each product can do and a bit of how they work. This was the point of the 5 part series: to educate, on a basic level, what is available to you out there for investments.
With that said, let's wrap up this series with Mutual Funds!
What are Mutual Funds?
ETF: Exchange Traded Fund.
Now that you know what the acronym stands for, let's talk about what they do!
What are ETFs?
ETFs are investment funds traded on stock exchanges which allow investors, like you and I, to purchase a basket of stocks, commodities, currencies or bonds at a unit price set on the net asset value of the fund.
What do ETFs invest in?
ETFs are structured in various ways. There are index ETFs that track market indices, ETFs that hold stock in certain industries, ETFs that hold gold or other commodities, and more. Basically, ETFs can invest in any arrangement of stock, bonds, currencies or commodities.
Why should I bother with ETFs?