How to manage your debt as a new graduate in Alberta

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After years of hard work, dedication, and late-night study sessions, you’ve graduated. You expected the next step to be landing a full-time job, starting your career, and paying off your student loans. Instead, after months of job searching and submitting applications, you haven’t had a single interview. Your bills are piling up, and you’re desperate to find something. If this sounds familiar, you aren’t alone.

Outside of the pandemic, youth unemployment in Canada is at its highest point since 2010, according to Statistics Canada. While today’s market can be challenging for recent graduates, it’s still possible to find work, but it might take time. Here are tips to help you manage your bills and student debt while you search for a job.

Protect your finances during your job search

In this market, finding a job can take time. Here’s what you can do to stay on top of your bills and minimize debt while you look for your next opportunity.

Track your expenses

To take control of your money, you need to know how much you have and where it’s going. Start tracking your income and expenses to understand how much money you have coming in and where you’re spending it each month.

Review the last three to six months of your bank statements and credit card bills to get an idea of how you’re spending your money. Then create a budget. You can do this the old-fashioned way, with a paper and pen or an Excel spreadsheet, or take advantage of the many budgeting apps available. You don’t need to track every dollar, but you need to have an understanding of how much money you have available to spend each month.

Focus on the essentials

Prioritizing your bills while you are job searching can help you stick to your budget. Until you find a steady paycheque, focus on your essentials – rent, utilities, insurance, and debt payments. Give yourself permission to cancel or pause your non-essentials for the short term.

Non-essentials are things like eating out, streaming service, getting your nails done, or attending concerts. It’s not ideal, but it’s not forever. Reducing your expenses in the short term can help you keep your debt under control.

Avoid high-interest debt and keep credit usage low

Now is not the time to add more debt. Do your best to avoid using credit cards or taking on high-interest loans. The goal is to keep your credit usage low. Your credit usage is the amount of total available credit that you’re currently using.

For example, if you have $5,000 in available credit and you’re using $4,000, you have a high credit utilization ratio of 80%. Ideally, you want to keep your credit utilization under 30%. This shows creditors that you can manage credit and you’re not overextending yourself. A low credit utilization is good for your credit score. Once you find a job and you’re in a position to rent an apartment or buy a car, a good credit score can help you achieve these goals.

Find ways to make money

To stay on top of your bills and student loans, and prevent more debt, you need some way of making money while you search for your next opportunity. This could be a part-time job at a coffee shop or restaurant. Or you could use the skills you developed in school to start a side hustle.

This isn’t meant to be permanent or detour you from your career goals; it’s just to help you stay financially afloat while you search. Plus, it’s easier to find work when you’re already working. You’re out in the world, meeting new people, and it keeps something on your resume, so you don’t have to try and explain any gaps.

Understand student loan repayment

To manage your student loans, make sure you understand your loan repayment schedule. If you have both provincial and federal loans, these are managed differently.

With Alberta provincial loans, you have 12 months after you graduate or leave school before you have to start repaying your loans, with interest. At this time, the government will automatically set up a monthly repayment schedule.

With Canadian student loans, repayment begins six months after you graduate, and there’s no interest on loans acquired after April 1, 2023. Like provincial loans, the government will automatically set up a repayment schedule.

Consider the Repayment Assistance Plan

If you’re at a point where you need to start repaying your loans and it’s a struggle, help is available. The Repayment Assistance Plan (RAP) is for grads with provincial or federal student loans. If you’re eligible, RAP can help to reduce your monthly payments to a more affordable amount, based on your income and family size. The program is offered in six-month chunks, and you’ll need to reapply for help after that.

To qualify, your loans need to be in good standing, and you have to show that you’re having a hard time affording your payments. For more information, or to apply for RAP, visit the Government of Alberta.

Ask for help

Trying to look for a job in a tough market, while you work to pay your bills and manage your student loan repayments, can feel like a lot. If you’re having a hard time staying on top of your bills or you’re worried your debt is getting out of control, reach out for help. There’s no shame. This is a hard time to be graduating and looking for work, and we’re here to support you.

Don’t wait for a financial crisis before you ask for help. Our Certified Financial Counsellors assist Alberta grads with these issues all the time. We can help make your money feel more manageable. When you’re ready, give us a call at 1-888-294-0076 or complete our online contact form.

The call is completely free, and there’s no pressure to move forward. We’re here to answer your questions and provide you with the help you need.