Taking a year off to pay down debt before finishing school

Simmons Says: Hockey Night In Canada has a new name, but an old host A tale of two U.S. ambassadors: Hoekstra and Heyman see Canada very differently Taking a year off to pay down debt before finishing school It takes discipline, a solid plan, and a candid money conversation with the people at home. Photo by Osarieme Eweka / Getty Images/iStockphoto Article content Q: I'm almost 21 and just wrapped up my second year of a business program. My parents let me live at home rent free the whole time so I could focus on school, but between an unexpected laptop replacement, pricier textbooks than I budgeted for, and honestly too many nights out with friends, I've racked up close to $4,500 on two credit cards. I've decided to take next year off, work full-time, and get it paid off before I continue with school, because the payments stress me out. The part I'm dreading is asking my parents if I can keep living at home for cheap, or free, while I do it. I don't want them to think I'm taking advantage of them, but I also can't pay off debt and full rent on one income. How do I bring this up, and what should I actually be asking for? ~Mia Advertisement 2 Story continues below This advertisement has not loaded yet, but your article continues below. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY Subscribe now to read the latest news in your city and across Canada. Exclusive articles by top sports columnists Patrick Johnston, Ben Kuzma, J.J. Abrams and others. Plus, Canucks Report, Sports and Headline News newsletters and events. Unlimited online access to The Province and 15 news sites with one account. The Province ePaper, an electronic replica of the print edition to view on any device, share and comment on. Daily puzzles and comics, including the New York Times Crossword. Support local journalism. SUBSCRIBE TO UNLOCK MORE ARTICLES Subscribe now to read the latest news in your city and across Canada. 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Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Sign In or Create an Account Email Address Continue or View more offers Article content A: Living at home during your post-secondary education can be an excellent way to keep costs down, but unexpected expenses and everyday spending can still lead to debt. Taking a planned year away from school to work full-time and pay off your credit cards is not a step backward. It is a responsible reset that can reduce stress and put you in a stronger position when you return. The key is to treat the year as a defined financial project with clear expectations at home, a realistic repayment schedule, and safeguards against slipping back into debt. Article content Recommended Videos tap here to see other videos from our team. Try refreshing your browser, or Taking a year off to pay down debt before finishing school Back to video tap here to see other videos from our team. Try refreshing your browser, or Play Video Article content Bring your parents a clear, written proposal Ask your parents for a dedicated time to talk, then give them a one-page proposal rather than making an open-ended request. Include your expected work hours and take-home pay, the amount you will put toward the cards each payday, a target payoff date, and what you can contribute at home. You might propose six months rent free followed by modest rent, a reduced monthly amount, or non-cash contributions such as cooking twice a week, buying some groceries, taking responsibility for specific chores, or driving a family member to appointments. Canucks Report Essential reading for hockey fans who eat, sleep, Canucks, repeat. There was an error, please provide a valid email address. Sign Up By signing up you consent to receive the above newsletter from Postmedia Network Inc. Thanks for signing up! A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Canucks Report will soon be in your inbox. Please try again Article content Advertisement 3 Story continues below This advertisement has not loaded yet, but your article continues below. Article content If your parents can afford to do so, another option is for them to set aside some or all of any rent you pay and return it later for tuition, but only if everyone agrees upfront that this is a gift, not an obligation. You could also offer to give them a brief monthly update on your progress. That shows you are following through on the plan without giving up your financial privacy. Most importantly, agree in advance on what happens if your hours drop, paying off the debt takes longer than planned, or the arrangement no longer feels fair. Should Working, Adult Children Who Live at Home Pay Rent? Turn the year into a 12-month plan Give the year a firm start date, a target return-to-school date, and monthly milestones. Calculate your expected take-home pay, subtract transportation, phone, food, household contributions, and a small amount for personal spending, then assign the rest before it can disappear. Set up separate accounts or labelled savings envelopes for debt payments, emergencies, and school costs. Once the cards are paid off, keep transferring the same amount each payday into a school fund as a 'practice tuition payment.' This tests whether your budget is sustainable and helps cover next year's books, fees, and reduced work hours. It also prevents the money freed up by the final card payment from becoming new spending. Advertisement 4 Story continues below This advertisement has not loaded yet, but your article continues below. Article content 12 Ways to Get Out of Debt Automate the repayment and make progress visible Pay at least the minimum on both cards, then direct every extra dollar to the card with the higher interest rate. Schedule the extra payment for the day after each payday so the money is not sitting in your account waiting to be spent. Call each card issuer and ask whether they can lower your interest rate, waive a fee, change your due date to better match your pay schedule, or move you to a lower-rate product. Remove the cards from your phone wallet and shopping accounts and consider storing the physical cards somewhere inconvenient rather than carrying them with you. Track the falling balance on a calendar or chart and celebrate milestones with low-cost rewards, such as your favourite take-out meal. If temptation remains a problem, ask the issuer to reduce the credit limit after the balance comes down. However, keep enough available credit for practical needs and avoid doing anything that could trigger fees. Debt Relief Options Available in Canada Increase income without letting work derail school Look for work that does more than provide a pay cheque. A role related to your business program could strengthen your resume, build contacts, and possibly lead to a co-op placement or future part-time work. Ask about predictable hours, overtime, employee discounts, tuition assistance, education benefits, or the option to reduce your hours when school resumes. You could also sell unused textbooks and electronics, take short-term event shifts, or offer a practical service such as bookkeeping help, tutoring, pet sitting, or social media support for a small business. Advertisement 5 Story continues below This advertisement has not loaded yet, but your article continues below. Article content 4 Reality Checks to Make Before Starting a Side Hustle Put any windfalls, such as tax refunds, gifts, rebates, or overtime pay, toward the debt rather than building them into your regular budget. Keep side work simple and low-cost, and avoid buying equipment, paying upfront fees, or turning it into another source of debt. If repayment is still not moving as expected, you may want to explore credit card debt relief options. A free conversation with a non-profit credit counsellor can help you assess the choices without pressure to commit. Protect your credit and close the spending gaps Set automatic minimum payments as a backup, even if you plan to pay more manually. Review the last three months of statements for subscriptions, fees, and spending patterns you can change, then total the amount you recover so it has a clear purpose in your repayment plan. Check your credit reports for errors and keep balances comfortably below their limits while you repay them. Unless a card has an unaffordable fee or is driving continued overspending, you might want to avoid closing it. Freezing it, lowering its limit, or changing to a no-fee product may be more useful. This guide on how to rebuild credit in Canada explains the habits that support a healthy credit history over time. Advertisement 6 Story continues below This advertisement has not loaded yet, but your article continues below. Article content Build a buffer before returning to school Do not wait until the debt reaches zero to think about the next emergency. Build a starter cushion of perhaps $500 while making your regular debt payments, then grow it toward $1,000 or one month of essential expenses once the highest interest balance is under control. Create a separate 'back-to-school' fund for textbooks, technology, transportation, and the first month when your work hours may fall. Before enrolling, do a 30-day rehearsal: live on the amount you expect to have as a student and save the difference. That practice month can reveal budget gaps while you still have full-time income to fix them. Here's Why Savings Is An Important Expense The bottom line on making a debt pay down year a launch pad, not a pause A working gap year can be a smart financial strategy when it has a clear purpose and an end date. Schedule brief check-ins with your parents periodically to review the balance, household contributions, and whether the arrangement still works for everyone. Stay connected to your program as well: confirm re-entry deadlines, ask whether you must reapply, keep copies of academic records, and check whether scholarships, grants, co-op opportunities, or transfer credits will be available when you return. Consider taking one low-cost course, attending an industry event, or keeping in touch with a professor so the transition back feels less abrupt. Your goal is not only to return without credit card debt, but also with an emergency fund, a workable student budget, and habits that can carry you through graduation. Related reading: 9 Smart Money Moves to Make in Your 20's Money Management, Debt and Credit Tips for College and University Students 8 Best Side Hustles in Canada Peta Wales is President and CEO of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Peta by email, check nomoredebts.org or call 1-888-527-8999. Article content Share this article in your social network Latest National Stories