How to reconcile projects and debts

While they're generally better equipped to find information on financial issues than previous generations, young adults--whether they're students or starting a career--are not immune to indebtedness. To avoid this trap, or to get out of it, the first step is to determine what kind of consumer you are, using a budget to find out where your money is going.

A good understanding of your expenses will make it easier to find the cash to pay back unexpected debts. Here are a few more strategies to explore. 

  • Consolidate all your debts into one to make it easier to manage the repayments, since you'll only have one set payment to make. You can do it yourself online, or an advisor at your financial institution can help. 
  • Look for the lowest interest rate and use a more cost-effective credit tool. Credit cards issued by retailers often come with a higher interest rate; it's better to choose a card with a low interest rate, or even a line of credit when possible. The lower the interest rate, the faster you can pay off the capital on your debt. 
  • Look for financing options associated with your professional or student status. It's worthwhile to speak with an advisor who can help you find out if you're eligible for specific advantages, such as a credit card for students.
  • Have an emergency fund equivalent to 3 to 6 months of your net monthly income to prepare for the unexpected and avoid falling back into debt. The best way to get there is to make a budget (we keep coming back to that!) and set up an automatic transfer to your emergency fund.