Personal Finance

Guy pays off $26500 student loan in less than 2 years

  • Last Updated:
  • Nov 24th, 2013 12:32 pm
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Newbie
Sep 6, 2012
89 posts
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Kasakato wrote:
Jan 13th, 2013 1:30 pm
Summer income, 4 months.
And you are touching yourself the remaining 8 months or what?
[OP]
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Jun 14, 2012
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Chalif wrote:
Jan 13th, 2013 1:18 pm
Around 20-25 during school and 45-50 during summer/holidays
Taking your lower figures:
45 hrs/week x 13 $/hr x 16 weeks in the summer = $9360
20 hrs/week x 13 $/hr x 32 weeks the rest of the year = $8320
For a total of $17680 before tax
According to income tax calculator http://lsminsurance.ca/calculators/canada/income-tax
That is $16092 after tax.

Taking your higher figures:
50 hrs/week x 13 $/hr x 16 weeks in the summer = $10,400
25 hrs/week x 13 $/hr x 32 weeks the rest of the year = $10,400
For a total of $20,800 before tax
That's $18587 after tax.

So even if a student was able to work as many hours as that (highly unlikely if they're taking something hard like engineering) they still wouldn't net 20k a year at $13/hr. And actually min wage is only $10.50/hr.
Not even hard
What's not even hard?
Member
Aug 26, 2009
200 posts
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Chalif wrote:
Jan 13th, 2013 1:36 pm
And you are touching yourself the remaining 8 months or what?
I only worked for the first 2 and a half years during school, only on the weekends for minimum wage. 5 hours per shift, took home around 80 a week, net. Last year of school I quit to focus on school as the work load increased and exams got more challenging. 80 dollars a week < school. Its hard to work more than fri/sat/sun when youre a full time student.

EDIT: my min wage was 10.25 an hour from 2009-2011
[OP]
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Jun 14, 2012
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Kasakato wrote:
Jan 13th, 2013 1:30 pm
Summer income, 4 months.
What summer job will net you 20k? Maybe an internship at Google but how many students can get that?
Newbie
Sep 6, 2012
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Xiaohaibao wrote:
Jan 13th, 2013 1:44 pm
Taking your lower figures:
45 hrs/week x 13 $/hr x 16 weeks in the summer = $9360
20 hrs/week x 13 $/hr x 32 weeks the rest of the year = $8320
For a total of $17680 before tax
According to income tax calculator http://lsminsurance.ca/calculators/canada/income-tax
That is $16092 after tax.

Taking your higher figures:
50 hrs/week x 13 $/hr x 16 weeks in the summer = $10,400
25 hrs/week x 13 $/hr x 32 weeks the rest of the year = $10,400
For a total of $20,800 before tax
That's $18587 after tax.

So even if a student was able to work as many hours as that (highly unlikely if they're taking something hard like engineering) they still wouldn't net 20k a year at $13/hr. And actually min wage is only $10.50/hr.


What's not even hard?
Summer is 18 weeks + 2 weeks off in xmas + 2 weeks from automn break and spring break = 22 weeks

and why are you accounting taxes?
[OP]
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Jun 14, 2012
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Chalif wrote:
Jan 13th, 2013 1:50 pm
Summer is 18 weeks + 2 weeks off in xmas + 2 weeks from automn break and spring break = 22 weeks
That doesn't make sense, if it's 18 weeks + 2 weeks off then that's 16 weeks like I said, the rest of the year is probably even less than 32 weeks because someone is not gonna work on weeks when he has midterms/finals, and will probably be sick at least some days, if anything I overestimated the hours, I didn't underestimate them.
and why are you accounting taxes?
What do you mean why am I accounting taxes? Don't you know you have to pay taxes on money you earn? Or are you refering to something else?
Newbie
Oct 23, 2012
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Kasakato wrote:
Jan 13th, 2013 10:01 am
40-50k?? OSAP is capped at around 30k for Ontario students. Most programs can be complete well under 30k.
Lucky Ontario students, then.
Member
Aug 26, 2009
200 posts
23 upvotes
Chalif wrote:
Jan 13th, 2013 1:50 pm
Summer is 18 weeks + 2 weeks off in xmas + 2 weeks from automn break and spring break = 22 weeks

and why are you accounting taxes?
What kind of bird courses are you taking because no one has the time to work every single week they have off

EDIT: And I also doubt a student would want to work every single day they have a day off from school
Newbie
Sep 6, 2012
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blammy wrote:
Jan 13th, 2013 1:58 pm
What kind of bird courses are you taking because no one has the time to work every single week they have off

EDIT: And I also doubt a student would want to work every single day they have a day off from school
Me :D
Newbie
Sep 6, 2012
89 posts
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Xiaohaibao wrote:
Jan 13th, 2013 1:56 pm
That doesn't make sense, if it's 18 weeks + 2 weeks off then that's 16 weeks like I said, the rest of the year is probably even less than 32 weeks because someone is not gonna work on weeks when he has midterms/finals, and will probably be sick at least some days, if anything I overestimated the hours, I didn't underestimate them.


What do you mean why am I accounting taxes? Don't you know you have to pay taxes on money you earn? Or are you refering to something else?
18 weeks in summer, 2 at xmax, 2 lecture week = 24

With that type of salary roll, you get all the taxes back in april bro
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Mar 25, 2005
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Chalif wrote:
Jan 13th, 2013 1:36 pm
And you are touching yourself the remaining 8 months or what?
In school?
Jr. Member
Mar 18, 2007
125 posts
2 upvotes
philharmonic wrote:
Jan 13th, 2013 1:10 pm
Paying off your student loan, especially one this small isn't necessarily the smartest financial move.

Student debt is the best debt an employed person with a middle-class income can have. It's the only type of debt in Canada, where you can write off the interest. If I had student debt and a mortgage, I'd pay only the minimum amount I could.

Granted, this wasn't the scenario for the person in the article, but just FYI for those of you in a situation where this debt can actually be beneficial.
Student loan debt gets a small tax advantage,yes- but that doesn't mean it's not a smart financial move to pay it off.

My student loan, like most others, uses the floating interest rate. That's currently 5.5%. You get a 15% tax credit (not a deduction!) for student loan interest paid. This means the interest rate is effectively 4.675%, AFTER taking into account the tax benefits. For example, I pay $315 a month for my student loan, which means about $1000 per year in interest. My student loan gets me $150 back at tax time; nice, but hardly a reason to keep the loan around.

Even if you have no other debt, paying down a Canada student loan is a smart move. Paying down your loan is equivalent to getting a 4.675% guaranteed rate of return, which blows every other guaranteed-return option out of the water. Plus that return is in after-tax dollars, which makes it even more attractive.

Paying down your mortgage instead of your student loan would be a very large mistake. Mortgage rates are currently in the range of 3.0%. Your student loan, even after the tax benefits, is 4.675%. Paying the mortgage down first in this situation- as you suggested- is lighting money on fire.
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Aug 13, 2002
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deal_with_singh wrote:
Jan 13th, 2013 11:34 am
I don't understand why most people just don't save money while they're in school?
It's a tradeoff. Either live really frugally and basically have a more crappy life for a few years and be debt free maybe with some small savings, or live more normally while in school and get a well paid job afterwards that will take care of any remaining debt in a short amount of time. Of course, you'll say that not everyone can do this, but then everyone should weigh the tradeoffs based on their own personal situation.
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Sep 7, 2003
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Edmonton
Not impressed at all:
[QUOTE]I got rid of cable and replaced it with an AT&T U-Verse Internet connection and streaming Netflix account -- slashing my bill from $135 to just $55 a month. An employee discount helped me cut my cell phone bill from $100 to $70 a month. And by living only a couple of miles from the office my commute cost me just $40 a month in gas. [/QUOTE]

Didn't need to have cable or netflix... replace with library card
Cell phone bill that high?... replace with pay as you go cell phone and limit self to $10 a month
Few miles from office... replace with bus pass, get rid of car, save on insurance too.

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