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5 Money Hacks for Reducing Student Debt

09/18/2015 08:10 EDT | Updated 09/18/2016 05:12 EDT
Alexandr Dubovitskiy via Getty Images
Vector concept of investment in education with coins bag

Hey Money Champs,

It's back-to-school time and I thought I'd share with you some of the things I did (years ago!) to stay on top of my money when at school. If you start building your good money habits when you're in school, they should stick with you for the rest of your life. The reverse is true as well. Build horrible money skills, and you could be stuck with them OR the debt you accumulate due to them.

The average Canadian comes out of school with around $27,000 worth of debt and, based on an entry level job, the monthly payment will take up a significant amount of your disposable income. When I graduated, I traveled Europe for three months and then bought my first condo. It was all because of the steps I had taken when I was in school. Make sure that you sow the seeds of your financial success now.

Here are my big back-to-school money tricks that made me a money champ.

1. Don't use your line of credit or student loans.

If you don't need to borrow the money, don't. Do everything you can to come out of school without any debt. Work 35 hours and go to school (like I did), apply for every grant and scholarship out there, eat Kraft dinner or noodles every night, do whatever you can do to minimize your debt.

Not only will debt limit what fun-time funds you'll have when you're out, it'll be a ball and chain for many years after school. The average Canadian student takes 10 years to pay back their student debts! You'll have $300 dollar payments or more right off the bat just to pay back your debt. If that $300 went into an TFSA at age 23, you'd have $48,000 at a conservative six per cent! Which would you rather have?

2. Get a job that will help you when you graduate.

Loads of my friends got jobs as beer reps or bartenders when I was in school. They were way cooler than me (then), and I know for sure those jobs got them more social perks (booze and booty). But I can guarantee my part-time job working at Merrill Lynch is still paying perks to me now. Plus, I have the nicest car at school reunions.

Not only did I learn how to invest like the big guys and make way more than a bartender, but I also made connections that got me a job when I graduated. Who needs four years of booty and booze when I have an entire life of money skills!

3. Get a money mentor.

I had a mentor when I was in school who really helped and guided me. It's easy to get absorbed into a student mentality and wake up on pizza boxes every day. All the parties, dating and hooliganism can get you to fall of the wagon. Keeping monthly chats with your mentor will keep you motivated to get good grades, take the correct classes and know that one day you'll be at the other end of the tunnel. Plus, they can help you get a job when you graduate in your chosen area.

4. Build your credit early.

Get a credit card as soon as you can and set up an auto charging service like internet or your cell phone. Then, call your credit card company and ask them to take the payment out of your bank account every month when it is due. Then put the credit card in a safe place and don't retrieve it until you are out of school and have a job. This will build your credit without ever paying interest or missing a payment. All you have to do is make sure you always have money in your account like you do for all of your other bills. Having great credit will help you get a cheaper interest rate, rent an apartment, or get credit when you graduate, so build and protect your credit like a champ.

5. Don't take your credit card to the bar.

If you are thinking of doing this, #staaaaap!

Love your time at school and start being a money champ!

Dave

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