What You Need to Know About Consumer Proposals and Student DebtDec 20, 2016
As the average student debt has climbed over $25,000, the financial life of many young Canadians has started to revolve around paying it off. As 2017 approaches, this is a goal that’s either ongoing or just beginning for recent graduates. Your strategy in getting out of debt could include talking with a debt relief professional about the viability of options like repayment assistance plans or consumer proposals for resolving student debt, but it should also be so much more than that. Reducing student debt takes a multi-pronged approach, and reaching your goal is about knowing about and using the resources available to you.
This year, set a goal to increase your financial knowledge as a means to reducing student debt. While Canadian money know-how ranks pretty high on the global stage, young people are less likely to score well on a basic financial literacy test. By boosting your knowledge, you’ll find it less intimidating to set goals for paying off student debt. Not having this debt accelerates your path to other goals too – like buying a house or starting a family.
Here are some places to start in order to increase your financial knowledge.
- Speak to a financial professional. If your debt is affecting your quality of life, sitting down with a Licensed Insolvency Trustee (LIT) for a one-on-one consultation can be a good place to begin. These professionals can explain debt solutions like credit counselling, debt management, consolidation, the consumer proposal process and filing for bankruptcy. You’ll also find valuable info on how a LIT can assist you by reading about these debt options or reviewing these consumer proposal FAQs. For instance, did you know that you must be out of school for seven years or more to be able to file a consumer proposal? Knowing more about these solutions and how they apply to your debt situation is a fantastic addition to your knowledge base.
- Visit a financial literacy website. Making sense of saving, investing, and debt can be mentally exhausting. To help make sense of it, there are financial literacy websites out there to answer your basic questions. ca is one of those, providing unbiased tools and resources to boost your literacy – including how to invest and how to plan for financial emergencies. The Financial Consumer Agency of Canada (FCAC) is another, as their Financial Goal Calculator can tailor resources to your financial picture.
- Find a favourite finance column. Canadian personal debt is an ever-changing topic, and finance columns help make sense of small details and the bigger picture. Rob Carrick’s posts in The Globe & Mail are an example, and reading about how big picture topics like the housing boom can affect your bottom line are a great way of shrinking the national to the personal.
- Download a money management app. Technology is like your financial literacy study buddy, providing flash cards to help you ace your next “test.” One of these buddies is the money management app Mint. The concept is simple: it securely takes your banking and credit card info, then breaks down your budget for you to see your spending habits. From there, you can change your allotment based on your goals. For those looking to make extra payments on student debt, Mint can help enlighten you to which areas of your spending life are primed for cutbacks – like eating out, entertainment, or groceries.
- Get social. If you’re already using Twitter to get the latest news, following financial accounts like @FCACan can pepper you with financial tips you can use in your everyday life. Recent tweets from this account include how credit card interest rates are charged, how to create a holiday budget, and how to read your payroll deductions.
Using a couple (or more) of these resources will have an immediate impact on your financial literacy. From there, you can start setting smarter, more achievable goals for 2017. For many Canadians in their 20s and 30s, that will include paying down their student debt. Whether it’s a consumer proposal, or something less formal like a simple change in your budget, having that base of financial literacy is critical to making informed decisions.
Are you looking to get more financially literate in the year ahead? Join the conversation on social media by using the hashtag #BDOdebtrelief.