The First Thing a New Grad Should Know About DebtJun 27, 2018
Summer has arrived and as new graduates begin their careers, they’ll soon be faced with paying off student debt. Our Licensed Insolvency Trustees (LITs) from around the country have come together to explain four things every graduate should know about debt.
Here’s an overview of what the LITs cover in this episode of our podcast series:
What’s the first thing a new grad should know if they’re finishing school with a debt load?
Where should paying off debt fall in their list of priorities?
What credit card strategies should you adopt to avoid debt problems?
What should you know when you just can’t keep up with paying your debt?
What are the first steps new grads should take when it comes to managing their debt?
Start by taking stock of your current financial circumstances, including:
- Your total debt load
- Your monthly obligation to pay off that debt
- Your existing expenses, like rent, mortgage, utilities, groceries, etc.
- Your current income and/or your expected income (if you’re starting a new job soon)
Use this information to create a realistic debt repayment plan that fits your current budget (that’s built around your current financial circumstances).
Make sure you understand how interest is calculated on your student loans and any other debt you owe. A basic understanding of interest is actually a crucial part of your financial knowledge, and can help save you money in the long run.
Here are a few quick tips to get your debt repayment plan rolling:
- Start making payments during your student loan grace period to save on interest charges.
- Consider setting up automated payments to avoid missing payments that can negatively affect your credit score and rating.
- Get into the habit of putting even small amounts of available cash towards debt repayment. Just a few cents or a few dollars each day or each week can make a difference. Check out Bridget Casey’s explanation of how effective the Debt Snowflake method can be.