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Student: I think the biggest financial challenges that students face are pretty similar. They're tuition fees, residential fees, transportational fees. But for me personally it was tuition fees.
Jaclyn: Hi, I'm Jaclyn, and I'm your podcast host. Our podcast topic for today is Coping with Financial Challenges: When bad finances happen to good people.
Students can regularly face serious cash flow problems. There simply may not be enough money to cover your basic every day expenses such as rent and food, let alone expenses such as going to the movies or new clothes.
In this podcast we will look at way that you can cope and recover when finances get tight for reasons that may be out of your control. We discussed better budgeting in a different podcast.
To answer some questions on this topic is Gord Tyndle, Branch Manager at RBC Royal Bank.
Hi Gord.
Gord: Hi Jaclyn, how are you today?
Jaclyn: Good thanks, how are you?
Gord: Wonderful, great to be with you.
Jaclyn: Thanks for coming out.
So what are some typical examples of student financial issues?
Gord: One of them Jaclyn, are personal problems that could affect the student. There may be health problems, or other issues including depression, loneliness and gambling that cause impact on the overall financial situation.
Credit card misuse is another problem that can lead to financial problems. Some people feel that spending money on credit cards is very easy and very painless. They may make purchases without fully considering how they will make the payments at the end of the month.
Jaclyn: So credit cards are really not a way to solve any problems. It's not a magic card.
Gord: Exactly. It's not magic card, as you say. And I've heard to many times people say, "I owe $900 now, so what's another $100?" That's not the right way to look at it.
Ah, students may have also counted on parents to help them out with their expenses. However circumstances may change in the life of the parent, as well, and for some reason they are unable to help. So you gotta keep that in mind.
Jaclyn: So what are some of the results of these financial issues?
Gord: The number one, the stress associated with financial problems can have severe negative affects on the students health. This can directly affect their ability to study and do work properly. The last thing they want to do, is become so burdened down by the financial aspects that they lose all interest in studying.
Jaclyn: Yeah. You really want studying to be your first priority, so having your money issues in order should be very important.
Gord: It should be very important. It should be number one.
Sometimes if they run into financial issues they may have to look for help from charities and friends. And the last thing you want to do is go to a friend and ask to borrow money.
Students may also look to use cash advances or pay day loans to cover their debt. Ah, that compounds the initial problem. Pay day loans are short term loans, issued against a future pay cheque and they typically range in the $100 to $200 range. In some cases the interest on the pay day loans can be over 1000%, depending on a variety of factors such as credit ratings, amount and payback terms on the loan.
Jaclyn: So this is really a very, very last resort. It's not a good solution to any financial problem.
Gord: Not a good solution at all, Jaclyn, and I would say it's the absolute last resort.
You know if students also get too impacted by the financial, as we touched upon earlier, it may affect their health. Some get so burdened down by the financial issues that they may leave school completely, and that defeats everything that they've worked for.
Jaclyn: So if I wanted to get help, where do I start, once I realize that I am coming up short?
Gord: When you first realize that you're dealing with financial hardships, don't ignore it, Jaclyn, jump right at it. By not dealing with the problem the problem will not go away.
Some options are to seek assistance from the school, because many schools have emergency loans to help students. Meet with a financial advisor if you can.
For your rent, I would talk to your landlord immediately, and work out an alternative way to pay. And if your bills are piling up talk to the electricity company, phone company, gas company, cell phone company. Talk to them to negotiate repayment to avoid disconnection and fees.
Jaclyn: So you always want to be preemptive, instead of just letting it get worse and worse.
Gord: Absolutely, that's perfect, Jaclyn. You know exactly what the process is. I've always said, "Be proactive!" Phone your landlord, phone the utility company, phone your bank, phone your credit card company. Don't wait for them to phone you.
Jaclyn: So how can I start to recover and get things back on track?
Gord: Well, number one, you could contact a representative at your local RBC Royal Bank branch and they'd be more than happy to help you.
Jaclyn, you may have to look for a part time job. Students who are, just full time students, without working, you may have to look for that part time job.
One option is certain research companies recruit students to be part of focus groups, to provide feedback on products and services. So that might be an opportunity.
Now, Jaclyn, what I would also say, you'll have to learn how to budget your expenses properly. Make a list of your essential monthly expenses, including your rent, your utilities, school fees, groceries, etc. With this total, you will know how much money you'll need to cover the necessary expenses.
One thing that may be hard to do, you need to cut back on all unnecessary expenses immediately. Which will involve making serious life-style choices. Do you really need the expense of coffee every day? Do you need lunches out on a regular basis? Do you need those new clothes? And I know that we've talked about going out to dinner or going out to the bar and those kinds of things, you may have to sacrifice that out. Sacrifice that.
Jaclyn: So in order to get back on track you really have to make some serious decisions and look at what your priorities should be.
Gord: Absolutely. Because people don't realize it, small expenses do add up.
And I'd also say, avoid using your credit cards to cover your debts, if at all possible. Because you're paying a high rate of interest and it's going to, again, compound the factor.
Jaclyn: What about after I graduate? What if I have trouble repaying my student loans then?
Gord: Well, Jaclyn, the first thing, government, federal or provincial, government student loans have to be paid. Payments begin six months after you stop being a student. Now if you're running into difficulty on the outset and you can't make those payments, find out about interest relief. The federal and provincial governments may pay the interest, but not the principle, on your student loan, for a limited time if you do qualify for these plans. Now this varies by province, but you can find out more information on these programs by going to the Canada Benefits site at www.canadabenefits.gc.ca Pick your province, select "I'm a student" or "A just graduated student" you can go for the information from there.
But definitely there are a lot of programs out there to help. Take the time to look for them.
Jaclyn: Yeah. So you can just find something, some program, like this that might help you while you're looking for work, of you might not be making enough money at the outset to be paying off your loans, and paying for everything else.
Gord: Exactly. Exactly.
Jaclyn: That was a great overview on coping with financial challenges. Thank Gord, for your time and for joining us today.
Gord: You're more than welcome, it's been great to be with you.
Jaclyn: We realize that every student's situation is unique. If you have questions about coping with unexpected financial challenges contact a representative at your RBC Royal Bank branch or give us a call at 1-800 ROYAL® 1-1 or (1 800 769-2511) today.
We're very interested in hearing what you think. If you have any comments, questions about dealing with money or ideas for future podcasts contact us today at studentpodcasts@rbc.com
We won't be able to respond directly to questions or comments, but we may use your input for future shows.
For a transcript of this podcast, please visit www.rbcroyalbank.com/studentpodcast
Of course every student's situation is different. In this podcast, we mean to give you information that most students will find helpful, but you should speak to someone who knows your unique financial situation before implementing a plan.
Also, the testimonials at the beginning of the podcast are the unscripted opinions of the people who spoke them - not ours.
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