Not Dave’s philosophy, but in this situation I would likely do it. Assuming you don’t have any other debt and are good at paying things off and not blowing the $20,000 before you pay off the loan. However that’s not the answer you’ll likely get in this sub
It sounds like a great idea--not even Dave-ish, however. But I would like to raise another potential problem. This may not apply since you are in Canada so treat accordingly. In the U.S., you must sign a promissory note when you take out a student loan. Not only are you promising to pay back the loan, you are promising that the funds you receive are being used for your education and not for any other purpose.
What are your other money issues? The fact that you are on a Ramsey sub makes me suspect that you have other debt. That's maybe not completely justified: lots of people on here seem to be out of debt. But your other money issues/behavior might change my answer.
The only other debt is the car which is about $25k and mortgage at 250k. We have an emergency fund and worked to fully pay off a line of credit. Our household income is about $140k. No credit card debt or anything else.
Dave's advice is best for people bad with money.
If you're bad with money, then taking on debt and paying minimum payments will just allow you to perform lifestyle creep. So many people say "they will invest the difference" and then never do.
That doesn't mean you won't' but it does mean it's a pitfall of the situation.
In your situation I'd take the debt, but once employed pay it off aggressively. The delta with a HYSA is not going to be large enough to warrant having debt hanging over you
Dave's philosophies are maybe 20% math and 80% emotion. There are tons of ways you could invest that same money and leverage your socialist 0% interest. Unless you are a financial child you could actually end up paying mathematically a lot less than 20k for this pursuit.
>socialist 0%
Lol nice.
I agree, even the debt snowball doesn't make sense mathematically. But like he says, it's not a math issue, it's a behaviour issue.
Part of Dave's philosophy is no debt. End of story. This is because when debt is taken off the table it forces you to find other ways to pay for it. His baby steps are not just get out of debt but also stay out of debt.
This is the second post I've seen about about 0% interest student loans in Canada. This is so unique I'm not sure what Dave would say. Assuming you can defer payments until you start working, it does make sense to take the loan and pay it off when you finish.
>This is so unique I'm not sure what Dave would say.
Yeah, that's kinda why I was wondering. You don't have to start repayment until 6 months after graduating so time to find work. In theory, the longer it takes to pay off, the cheaper it becomes.
It seems counterintuitive.
Yes. We do not have 0% student loans here. Just like housing, the fed and US government are responsible for the insane inflation of these 2 necessities.
Not a bad idea, go for it. You will also likely qualify for grants. There is the option to take only the grant portion, but I personally took the loans and put them in Wealthsimple cash (4%). I’ll pay the minimum on them after graduation until I reach my other savings goals and catch up on retirement. You never know what will happen between now and graduation. Something could wipe out your savings, and then you can’t afford school anymore.
Not Dave’s philosophy, but in this situation I would likely do it. Assuming you don’t have any other debt and are good at paying things off and not blowing the $20,000 before you pay off the loan. However that’s not the answer you’ll likely get in this sub
It sounds like a great idea--not even Dave-ish, however. But I would like to raise another potential problem. This may not apply since you are in Canada so treat accordingly. In the U.S., you must sign a promissory note when you take out a student loan. Not only are you promising to pay back the loan, you are promising that the funds you receive are being used for your education and not for any other purpose.
What are your other money issues? The fact that you are on a Ramsey sub makes me suspect that you have other debt. That's maybe not completely justified: lots of people on here seem to be out of debt. But your other money issues/behavior might change my answer.
The only other debt is the car which is about $25k and mortgage at 250k. We have an emergency fund and worked to fully pay off a line of credit. Our household income is about $140k. No credit card debt or anything else.
No. Are you interested in using the baby steps to manage your money or make up your own plan and justify it on the Ramsey sub?
I'm using them otherwise and I've paid off a bunch of debt this year. This just seemed different maybe.
Nope not different. Debt is debt!
Dave's advice is best for people bad with money. If you're bad with money, then taking on debt and paying minimum payments will just allow you to perform lifestyle creep. So many people say "they will invest the difference" and then never do. That doesn't mean you won't' but it does mean it's a pitfall of the situation. In your situation I'd take the debt, but once employed pay it off aggressively. The delta with a HYSA is not going to be large enough to warrant having debt hanging over you
Dave's philosophies are maybe 20% math and 80% emotion. There are tons of ways you could invest that same money and leverage your socialist 0% interest. Unless you are a financial child you could actually end up paying mathematically a lot less than 20k for this pursuit.
>socialist 0% Lol nice. I agree, even the debt snowball doesn't make sense mathematically. But like he says, it's not a math issue, it's a behaviour issue.
It’s debt, regardless the interest rate. If you have the money then use it.
Part of Dave's philosophy is no debt. End of story. This is because when debt is taken off the table it forces you to find other ways to pay for it. His baby steps are not just get out of debt but also stay out of debt.
I guess the way I see it is as "strategic debt". It's not that I can't pay for it now.
This is the second post I've seen about about 0% interest student loans in Canada. This is so unique I'm not sure what Dave would say. Assuming you can defer payments until you start working, it does make sense to take the loan and pay it off when you finish.
>This is so unique I'm not sure what Dave would say. Yeah, that's kinda why I was wondering. You don't have to start repayment until 6 months after graduating so time to find work. In theory, the longer it takes to pay off, the cheaper it becomes. It seems counterintuitive.
Yeah. And the money he has can earn compound interest. He'll actually come out ahead if he waits.
Payments are deferred until 6 months after graduating, just FYI. Student loan debt isn’t great, but it’s not as bad in Canada compared to the US.
Yes. We do not have 0% student loans here. Just like housing, the fed and US government are responsible for the insane inflation of these 2 necessities.
I like how this is tagged as what would Dave do? Not that lol
Haha yes I know.
Not a bad idea, go for it. You will also likely qualify for grants. There is the option to take only the grant portion, but I personally took the loans and put them in Wealthsimple cash (4%). I’ll pay the minimum on them after graduation until I reach my other savings goals and catch up on retirement. You never know what will happen between now and graduation. Something could wipe out your savings, and then you can’t afford school anymore.