As a dental student, you may not be worth much on paper right now. In fact, when you tally the figures you may discover that you owe more than you own. If most of your debt is related to pursuing your dental education, it’s not all bad news. According to Statistics Canada, those with professional degrees, including degrees in dentistry, are among the top fifth of high net worth individuals.
You can receive financial planning advice† on a variety of issues to help you start your career on solid footing, including budgeting, investment basics, preparing for a home purchase, retirement planning and more. Your investment planning advisor at CDSPI Advisory Services Inc. can also explain that some forms of debt are better than others and provide strategies to help you tackle your debt, such as prioritizing your debt repayment plan and making use of available financial assistance. For example, your education loan may offer an extended interest-free period. A government tax credit could also reimburse some of the interest charges you pay on student loans.
†Due to restrictions on advisory services, investment planning advice is not available to residents of Quebec.
In contrast, you should avoid high-interest consumer debt such as credit card debt. You may be surprised to learn just how quickly interest charges can add up when you consistently carry a credit card balance from month to month. Let's say, for example, that your average monthly credit card balance is $1,000 and the interest rate charged on outstanding balances is 18.5 per cent. You'll accumulate total interest charges of $185 in the first year. If you continue to carry the same balance, after five years, you'll owe $1,337 in interest alone. That's in addition the $1,000 owing for your original purchase.
To avoid these high interest rates, pay your account in full when you receive your monthly credit card statement. If you're currently carrying a balance, to pay down the amount owed faster, consider transferring your existing balance to another card with lower interest charges or approach your banker about a loan or line of credit at a more favourable rate.