Should I save when I have debt?
Dear Cheryl&Mack,
I’ve been out of school for five years now, and I paid for University and my post-grad myself. I have $20,000 left in OSAP and another $30,000 on my line of credit.
My friends around me are all travelling the world or buying a house and I still live at home.
I feel like I just can’t get ahead or even enjoy life because all my money is going toward debt.
At this rate, I’ll be paying off my debt for the next three years, but that will put me even more behind.
How can I afford to do other things I love?
Signed,
Desperate For Fun
Dear Desperate For Fun,
It's completely understandable to feel overwhelmed by debt and also want to spend money and have fun. I feel you.
When I was paying off my student debt, I was hyper-focused on just paying off the debt.
I was living at home, and every extra penny was going to my OSAP loan and student line of credit.
My mistake was that I wasn’t saving anything. Although my debt was decreasing, I always felt so broke.
I realized that once my debt was paid down, I’d have to start over again from the ground $0.
So, I made a change.
I started to save $100/month while also paying down my debt so that my bank account was increasing while my student debt was decreasing. In other words, my assets were increasing as my liabilities were decreasing.
When I finally paid off all my student debt, I had a positive net worth!
Although some may think this is redundant, I needed to see my money accumulating to decrease my temptation to overspend.
It worked for me, and it might work for you.
One more thing—don't be too hard on yourself when comparing your situation to your friends. You put yourself through school, and that’s an incredible accomplishment.
Everyone's financial journey is different, and it's important to focus on your progress and goals.