Debt by degrees
Financial Post - over 5 years
How much debt can you handle?
Here is a simple calculation to figure out if you will have a prudent debt load on graduation, provided by Jeannine Mitchell, author and founder of debt101.ca:
Look up the Canadian income range for your field. To be safe, use the lower levels of that income. For example, if your field pays $35,000-$50,000, use $35,000-$40,000 as your expected wage for the purposes of calculating.
The higher numbers could take you 10 years to earn and you want your debt gone by then;
Ask your student loan lender how big your monthly payments will be on the student debt you already have. Since payments vary by income, tell them to assume you are earning the income calculated above;
Add up your other monthly payments for non-student loan debt you now have;
Total these “debt servicing costs” and compare them to your expected income;
If your debt servicing costs will eat up more than 35% of your gross income, you have hit the ceiling.
Gabi Hager was 30 year...
Article Link: Financial Post article