Starting Off with Debt

Study by MC Quinn
Study by MC Quinn

According to the latest news, tuition fees in Canada have been on a steep rise for over 20 years. True, the increase has somewhat slowed in the last decade, but the growth of tuition fees is still double our inflation figure and makes education increasingly expensive for students and their families.

Accumulating thousands in debt as a teenager is not an easy burden to live with. This means that all your prospects, your future outlooks as far as you can see, have you pay back what you've once spent in a quest to improving your life. The imperative of loan premiums slashes your discretionary income (that is, the money left in your pocket after you've paid all your necessary recurring expenses) and leaves you with virtually nothing but the anticipation of your next paycheque.

If this is indeed your case, you will have quite a hard time qualifying for a mortgage big enough to buy you the condo or house of which you've dreamt. According to Statistics Canada, it takes students about 7.4 years to pay back their education-related loans. This is quite a long time, and there are people who take even longer to rid themselves of this immense burden. This means that many people with university education may not be ready for a major new obligation until they are thirty.

In these cases, it is crucial that the young person manage her or his finances meticulously in order to keep her or his credit rating on a good level. Good credit rating may allow the young person to take on a larger mortgage sooner when her or his salary increases enough to allow for this additional expense.

Fortunately, when one takes on mortgage, there is no more rent to pay; what used to be rent money can go straight to the mortgage payment. Also, there is no need to purchase life insurance until there are people dependent on the breadwinner (children, spouse, or relatives). Hopefully, your degree will help you land a higher paying job that will in turn earn you your financial freedom faster.

So even if you are flooded with debt, don't give up. If you have been disciplined enough thus far, chances are you can withstand the indebtedness period and move on with your life soon. It's up to you to make all the sweat worth it. We'll be crossing our fingers for you and we'll be keeping an eye on your dream house for you so you can buy it as soon as you're ready. Good luck!

Learn everything you need to know about buying Toronto houses and condos here and get in touch if you have questions.

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