Financial plan, budgeting, debt Flashcards
how do OSAP and federal loans change while you’re in school vs out?
During school
* Interest free during school
* No payments necessary
After school
* Interest rate can be higher
> E.g., Prime +1% (ON portion of OSAP)
* May get tax credit on interest
what type of payments will you make on bank loans while in school? interest and range?
- interest only payments during school
- accrues interest as soon as withdrawn
- ranges from prime -0.25% to prime +1%
difference between government loans and bank loans during school
- Some government loans interest free
- Most bank loans accrue interest
Snowball vs. Avalanche debt repayment methods? which is better?
- Smallest debt first, moving to bigger
debts (snowball) - Highest interest debt first, using savings to pay lower interest debt (avalanche)
<><> - Both Are Good
- Consider your own preferences
- Avalanche method a bit better financially, but slower to see progress
- Snowball method costs more, but psychological rewards of clearing accounts
how much does average new grad pay on debt?
Average New Grad repays $737/month
how long does a new grad typically take to pay off a loan? how much interest?
~ 60,000 loan
- 8.8 years to pay off
- total interest ~17,232
new grad average income and expenses per month
- New Grad Median Income $105,000
> After taxes/deductions $6,333/month - New Grad Expenditure $3,061/month
> Includes student debt repayment - $3,271 monthly income unaccounted for
> Use to pay down debt faster
how much can we save by putting more money towards loan and paying it faster?
- pay in ~4 years instead of ~9, save 10,000
- pay in ~2 years, save 13,000
Tools to Help
You Budget
- YNAB (You Need A Budget)
- Mint
- Excel or Google Sheets
emergency fund - why have this? how much?
In Case of Job Loss, Big Expenses, etc.
* 3-6 months of average expenses
* Spend $3,500 per month
* Emergency fund of $10,500 to $21,000
<><>
Held In a Safe Account
* Savings account
* Easy to access
