Personal Finance

OSAP debt payment advice

  • Last Updated:
  • Nov 10th, 2017 7:08 am
Jr. Member
Sep 9, 2016
165 posts
53 upvotes
Toronto
Any debt you have, will reduce the amount of money available to buy a house and given the real estate prices these days, you may need it.

Financing a new car from a dealer is way cheaper than the interest you are paying to OSAP.

Psychologically, that 44k of the 57k is not your money as long as you owe OSAP. The longer you hold on to it, the more attached you get to it and the more likely life will happen and you end up spending it.

If i was you, i would only be thinking i have 13k in savings.

You can use the money you were paying to OSAP every month toward a car.
Deal Addict
Sep 23, 2009
3912 posts
1105 upvotes
Given that you have $57k liquid assets versus $44k of debt and a job today, I would be inclined to pay off the debt and rebuild savings. If you had less than $50k versus $44k, than I would consider alternatives.

Such as ....

If your employment situation isn't that great, OSAP will let you delay paying it off - they may cover all of the interest.

Of course, if you do have a good job, they won't give you a break and will charge interest.

I would rather pay OSAP 6% now while working (0% while not) then paying some credit card company 20+% between work.
Sr. Member
User avatar
Mar 31, 2009
969 posts
378 upvotes
Unless your TFSA is earning you a better return than your OSAP is costing you, pay off the OSAP. You'd still have more than $10,000 on the side, to cover emergencies if something comes up. Do it before the end of the year so that your TFSA contribution room for 2018 goes back up and you can re-contribute to the TFSA throughout the year.

Then you just tailor spending to ensure that you save enough for future purchases (you're both working, should not be an issue). Don't buy the car until you have enough saved for it, simple as that. It sounds like 'would be nice' suggests that you don't actually need a new car anyway.

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