‘Budgeting is another word for a plan’

By Amanda Lorbetski

BELLEVILLE – Cody Boying’s student debt is catapulting him into the workforce years earlier than expected, denying him his dream of a university education.

The second-year Loyalist College social-service worker student said his diploma was supposed to be a stepping-stone on the path to university. But Boying said he’s accepted that university’s no longer an option because he is now trying to put a dent in what two years of college have cost him.

Loyalist College admissions receptionist Kathy Luffman helps second-year social-service-worker student Cody Boying during his visit to the financial-aid office. Photo by Amanda Lorbetski

“Right now I’m looking at it with my eyes wide open, looking at how I’m going to repay” my debt, he said. “I don’t know how, but hopefully what (awards) Loyalist offers me will turn that around and I’ll be able to pay it back in the end.”

He was the recipient of a $500 award this semester, which he said went a long way toward textbooks. But not all students are as fortunate.

With the cost of education rising, Loyalist students are feeling the financial crunch.

Rebecca Sudano is a bankruptcy trustee and vice-president of accounting firm BDO Canada Limited in the Quinte Mall office tower.  She said students should research the earning potential of post-secondary programs they’re considering, to determine whether they could afford to repay their OSAP (Ontario Student Assistance Program) loan upon graduation.

“If you’re going to borrow money to go into social services, you need to research what is the income level to be able to repay that debt,” said Sudano. “OSAP can be good debt because you’re making an investment into your future.”

She has yet to come across someone who gets into debt knowing they can’t repay it, she said. Then, said Sudano, life gets in the way.

“My big quote – ‘Life happens,’ and you can’t necessarily control what happens in your future,” she said. “Car accident, illness, job loss.”

Although a plan won’t fix these situations, having one is the best way to be prepared when they do happen, she said. The most common mistake post-secondary students make when leaving the nest is being financially uneducated, said Sudano.

“The biggest piece of advice I would give is set a budget – and if you don’t know what a budget is, call me. Budgeting is not a financial diet. Budgeting is another word for a plan.”

Sudano is scheduled to make money-management presentations at Loyalist next week.  As far as advice for students, she offers some tips, starting with car maintenance.

“If you own a vehicle, you know it’s going to need repairs. Plan for those repairs instead of waiting for the repair to happen, using credit to pay for it,” she said. “Once you’ve done it once, now you’re going to spend the time repaying what has already happened.  And by the time you’ve done that, the next repair’s come.”

Next comes your first paycheque following graduation.

“When you graduate and get your first paycheque, don’t spend it all. Budget. Plan how you are going to spend that money.”

She said students must differentiate between a need and a want and should refuse to buy on impulse.

“If you are looking to make big purchases like a vehicle, plan for three months what those expenses would be,” she said. “For three months you take out of your paycheque those amounts of money and you put them in a bank account. At the end of three months you ask yourself, ‘Did that hurt?’ If the answer’s ‘Yes,’ don’t go buy the car. If the answer’s ‘No,’ now you know what it’s going to cost.”

Gail Vaz-Oxlade, the former host of television show Til Debt Do Us Part, partnered with the Canadian Federation of Independent Business to launch Credit Free Friday recently. The initiative urges Canadians to swap their credit cards for cash once a week.

Vaz-Oxlade gave QNet News her own money advice for Loyalist students. First up is budgeting.

“Start tracking your spending using a spending journal,” Vaz-Oxlade said in an interview. “Use a budget to plan how you’ll use your money, and track whether your plan is working.”

The next step is repaying OSAP: “Never default to the minimum payment on your student debt; you’ll be in debt for a decade and pay for your education twice.”

Whether you are a student or not, there are some clear warning signs that debt is piling up, she said.

“If you don’t even bother opening your bills, resort to asking family or friends to bail you out, or hit a pay-advance store, you’re in deep doodoo.”

As for Cody Boying, he’s at a fork in the road – debt-free or a degree. He said he’s confident that he’s making the right choice, for now.

“I don’t want to get too much in debt, so I’m not going to go any further with my education. I think it’s a smart decision on my part.”