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Would you ever date someone who had debt?

I’m talking about a lot of debt. Like, $40,000+ in student loans, or thousands of dollars in credit card debt – without a solid plan to get themselves out. Or what if you’re a saver, and they’re a spender?

It’s obvious that the financial habits of your significant other can play a huge role in defining what kind of life you would have with that person – both short-term and long-term. But are poor financials a big enough reason to eliminate someone as a potential mate? According to a new survey by Match.com, almost half of Canadians would not date someone who is in debt. At all. That’s huge.

Now, I usually don’t write about press releases or surveys that I get sent, but I thought this one was fun, and also pretty interesting. Here are a few more results:

  • 57% of singles have stopped dating because of their own lack of money.
  • 50% of singles have stopped dating someone else because of a partner’s lack of money.
  • 75% of singles would not borrow money from a partner
  • 42% of singles say they have lent money to a partner in the past

Related: Could you ever marry for money?

I’ve dated guys in the past with wildly different financial histories and ways of managing money. One was extremely frugal, to the point where it was sometimes frustrating. One was incredibly bad with his money, and didn’t seem to think it was an issue. One had a weakness for expensive cars. One had more money than he knew what to do with.

I think that I could date someone with a moderate amount debt, as long as they had a reasonable plan in place to get themselves out of debt.

But there are definitely big differences in the type of debt that someone has.

For example, maybe you’d date someone that had $12,000 in credit card debt, but had a plan to be debt-free within a year.

But would you date someone that had just $5,000 in credit card debt (and was currently sinking further into debt), but had no plan (and no means) to pay it off? Maybe. Maybe not.

Would you date someone with $100,000 in student loans, knowing that their debt would likely have a significant effect on the timing of buying a house, getting married, having children, travel, etc?

When I was $20,000+ in the hole, I hope nobody would have dismissed me as a potential match just because of my financial situation. I knew my debt was a burden, but I had a plan to get myself out of that mess. And it definitely would have been nice if I had found the courage to confide in my partner at the time about my debt (and the serious stress I had because of it). But instead, I hid it because I was ashamed. However, if I had $200,000 in debt, maybe that’d be a different story. I would never want my debt to hold someone else back from achieving their goals in life.

And it’s not just being in debt as a potential factor in determining whether someone is (financially) compatible. Debt is just part of it. I think it’s important to have open discussions about money, debt, and goals on a regular basis – and if that doesn’t happen, regardless of the person’s financial situation – in my opinion, the relationship is likely doomed from the start.

Related: Talking about money with your partner

Could you date someone who has debt?

An open letter to high school students

Dear high school students,

Congrats on graduating! :) Be proud of yourself and all that you have accomplished so far. It must feel good to be done with school, right? After all those final exams, essays, and assignments, you’re now enjoying the freedom of summer. But for those of you moving onto post-secondary school, there’s a lot to think about. Your parents have probably tried to talk to you about “your future,” but since it’s hard to listen to parents sometimes, maybe this letter from me might help instead.

Since I was the older sister, and one of the oldest cousins in my family, I didn’t have many people to get advice from. I made a lot of mistakes over the years, and I had to learn the hard way. But now that I’m closing in on 30 (or the first anniversary of my 29th birthday), hopefully I can offer you the words of wisdom I wish I had been given when I was your age.

Start saving

We all know that we should be putting some of the money we earn – whether it’s through a part-time job or gifted money – into a savings account. But it’s not just something adults do – it’s something we all need to be doing as soon as we start to buy things on our own.

You don’t need to make big bucks to open up a savings account – just start small. If you only think you can save $10 from each pay cheque, that’s okay. Putting that money into the bank is the smartest thing you can do for yourself. While it might not seem like much, you’re developing the habit of saving money, and that’s what’s really important.

Think ahead in life – past university

What will you do with your degree? How will you earn a living and pay back your student loans?

So many of my friends went to University for degrees in subjects that they were interested in – not degrees that they could cultivate into work after they graduated. It’s great to be passionate about what you’re studying, but you have to be realistic. Have a plan of attack.

Whatever it is you’re majoring in – understand what kind of jobs you can get from those degrees, and make sure it’s what you want to be doing when you graduate. If you’re a communication major, what are you going to do with that degree? Sure, it’s a fun topic to learn about every day, but how will you make money with that degree? What kind of job can you get, and will you be able to make the sort of money you will need to pay back your loans, and live the life you want for yourself?

I know it’s hard to think about right now, but you really need to be smart about an education that will likely put you tens of thousands of dollars into debt. Remember – education is only an investment if you can develop a career out of it.

Understand how student loans work

If you are applying for student loans, once you are approved, you might notice that the value of your loans will usually far exceed the cost of your tuition. Free money, right!? Wrong. Student loans are not free money. You will eventually have to pay it back (and yes, you will be charged interest on the loan), so be smart with how you spend that leftover money. I blew through my student loan money every semester, ended up having to take out a line of credit, maxed out my credit card, and then had to fix the mess I had created once I graduated. Don’t make the same mistakes as me.

Be careful with credit cards

Those free t-shirts and frisbees that credit card companies try to offer students sure are tempting, aren’t they? I fell for one when I was a student. I received a free t-shirt right away, and a few months later, I received a maxed out credit card bill in the mail. That card sat maxed out for years. YEARS. So that free t-shirt ended up being totally worth it, right?

A credit card can help you start to build a credit history – which you will need for many things later on in life. But it will only be a benefit if you use your credit card responsibly. Being reckless and keeping a balance on your card, missing payments, and getting into consumer debt will only make your life more difficult and stressful. Make a budget, and don’t buy things that you cannot afford to pay off immediately.

Work while you go to school

Having a part-time job while you go to school is a smart idea for most students. Not only will you have to take out less student loans, but you could potentially graduate with little to no student debt at all. If you’re worried about a part-time job being too hard while taking full-time classes, there is no law that says your post-secondary education must take 4 years. If taking a little longer means you won’t have to borrow any money, then do it.

The extra year or two it might take to finish your degree will be worth it when you graduate debt-free, and your peers are saddled with student loan debt for the next decade. Nothing feels better than landing your first “real world” job, and knowing all of that money belongs to you – and not the government.

Consider community colleges

Try not to dismiss community colleges. A lot of them offer great hands-on programs not offered at universities. After going to a university for 2 years, I ended up going to a community college instead. The program at college provided me with a much more hands-on education. Instead of sitting in a lecture hall, I gained real-world experience working and learning beside industry professionals, and I truly believe my community college education is what sets me apart from other people in my field.

Plus, not only is a community college much, much cheaper than a university, but many of the courses will transfer into a university degree program. Some colleges work in partnership with local universities, where you can do your first 2 years before transferring to do your last 2 years at the university.

I wish you the best of luck in your studies come September, or whenever you decide to go to post-secondary school. Study hard, don’t take anything for granted, and have fun. :)

Sincerely,

K.

P.S. yes, that really is a picture of me from my high school graduation celebration!

Related Posts:

What advice do you have for today’s high school students?

 

My student line of credit disaster

When I was a 20-year old student, my mom co-signed a $7,000 line of credit for me because I couldn’t get approved for one on my own. My original intention was to use $2,000 and buy a used car, because I needed (looking back, this was true – I did actually need one) a car to shuttle me back and forth between school and my three part-time jobs. But by my 21st birthday, I had borrowed the entire $7,000 and lived with a maxed out line of credit for the next three years of my life. Yeah. :|

Aside from the $1,600 I ended up spending on a used car, I couldn’t figure out what I spent the rest of my money on. So when I finally graduated college, not only did I end up owing $14,000 in student loans and $2,100 on a maxed out credit card, but I had put myself an additional $7,000 behind by maxing out my line of credit as well. And for what? I didn’t have a single thing to show for it, except for a crappy car that was almost as old as I was.

I finally hit rock bottom when I couldn’t afford to put gas in my car, and I didn’t have enough money to take the bus to get to work. I had a major problem, and it was that moment that made me want to change my life forever. I created a plan, and gave myself 12 months to become completely debt-free.

Once I got around to tackling my line of credit debt (I got to it last, because it had the lowest interest rate), I realized I had made four crucial mistakes which led to my downfall:

1. I used my line of credit like a chequing account

For years, I abused the line of credit because I didn’t think I could pay it off without sacrificing my lifestyle  – and I hated the feeling of being broke. So instead of paying the balance down, I would deposit my entire pay cheque into the account to satisfy my monthly payment obligations. Then, I would spend out of my line of credit, just like a chequing account. And when my pay cheque wasn’t enough to cover my monthly expenses, I freely spent more than what I made because I had the credit there to supplement my income.

The Fix: I stopped the cycle by creating a debt-repayment plan, living on a budget, and increasing my income. My goal was to be completely debt-free in 12 months, so I broke down my $7,000 debt into bi-weekly payments of around $270.

2. The limit on my line of credit was too high

When I first inquired about a line of credit from TD Canada Trust, I only asked for a $2,000 loan. I didn’t get approved for it on my own, so when my mom agreed to co-sign my loan, I was approved for up to $7,000. I didn’t need that much, but the financial advisor at the bank and my mom both recommended I take the entire $7,000 loan “just in case of an emergency.” Little did I know that my emergencies would end up being lattes and clothing!

The Fix: Every time I paid off $500 on my line of credit, I would call the bank to have my limit lowered by the same amount. It meant that I remained maxed out as I paid off my debt, but it also meant I wouldn’t be tempted to fall back into old habits and use credit to supplement my income.

3. Asking my mom to co-sign the line of credit

Getting declined for the loan on my own should have been a sign that I was not ready to take on the financial responsibility that came with the line of credit. And putting my mom’s financial reputation on the line like that – while it was one of the nicest things she has ever done for me – was not fair of me to ask her to do.

The Fix: Once I paid off my line of credit, I called the bank and asked to put the loan under my own name.

4. I kept consolidating my credit card debt

Whenever I did end up being successful in paying down my line of credit by a few hundred dollars, I would use the credit room I had created to help pay off my constantly maxed out credit card. Then I would spend until my credit card was maxed out again. This vicious cycle meant that every time I tried to get ahead, I ended up even farther behind.

The Fix:  Because the interest rate on my line of credit was so low, I consolidated my credit card debt one last time, and created an aggressive debt-repayment plan. By being able to pay down both my line of credit and remaining credit card balance at the same time, I eliminated the need for another consolidation.

Even though it can be easy to spend more than you can afford to pay back with a line of credit, it is a great tool to have because it can provide you with a low-interest way to borrow money when you need it. But because it is also so accessible, so many people fall into the trap of abusing their line of credit. It took me less than a year to max out my line of credit, and over 4 years living with the weight of that debt hanging over my head.

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