What Strategies Should Grads Adopt to Avoid Debt Problems?Jun 18, 2018
June is a time for fun in the sun, but for new grads it’s the beginning of when they will need to start planning to pay off student debt. We know from our 2017 Student Debt Poll that two-out-of-three graduates will have student debt; and from that over 75 per cent regret taking on that debt.
In this edition of the BDO podcast, our Licensed Insolvency Trustees (LIT) provide answers to questions that new grads will need to be thinking about when it comes to student debt, including:
- 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?
Let’s dive deeper into strategies for grads to help avoid creating debt problems.
A recent report found that Generation Z are borrowing money at a faster rate than other generations and 80 per cent of that debt is on credit cards. The impact of high-interest credit card debt is well documented.
What strategies can help them to reduce credit card debt?
Doug Jones, an LIT out of the BDO Barrie office, gives his advice on this topic and recommends:
- Using credit cards strategically and sparingly.
- Be aware of your credit limit and your ability to pay it off, as it’s tempting and easy to overspend when using plastic.
- Don’t open too many credit cards all at once.
- Always make your payment, and when possible pay more than the minimum.
- Good use of a credit card can help you build a good credit history.
- Consider a rewards card that offers cash back or other reward incentives, but remember to use it strategically.
Following these tips from Doug, it can help you remain focused on your effort to reduce debt and avoid creating debt problems for yourself.