Debt Relief: An unexpected loan forgiveness
I’ve had a change in fortunes since the last time I wrote. My last post was an angry missive regarding some issues and confusion over a personal loan from a family member. You can catch up here. Then the next day I accidentally paid the CRA (Canada Revenue Agency) a sum of money instead of my credit card bill. It’s going to take 3-6 weeks to return the money. Needless to say, I started the week quite upset. But within 48 hours of that post I received the equivalent of a windfall.
I was awarded debt relief from the OSOG. For those not from Ontario, that is the Ontario Student Opportunity Grant, a grant that provides debt relief for people who qualify and received a loan in excess of about $7,300 for two terms. I knew about the OSOG but there’s not a lot of clear information about when it’s paid out. My grace period ends next month so this came a little last minute and I just assumed I didn’t qualify. Once I stopped counting on it, I focused my attention on paying back my loan as fast as possible. But now that I have it, I’m in an interesting position because all the debt I accrued from my post-graduate diploma is almost completely paid off! All I have left is the lingering debt from my first university degree.
But what does this mean right now?
I had carefully planned out my loan repayment to take three and a half years at the most, taking into account that while my income might increase in the next year, that my rent will also increase if/when we move. This means my debt would be cleared a few months after I turned 30. I was satisfied with this result but not the happiest, I know 30 is just a number but I wanted this debt killed a lot quicker.
This loan forgiveness means that I can comfortably pay this off just after my 29th birthday, maybe before my birthday if I have a few aggressive months here or there (winter-hibernation much?) This changes some things though. When I knew this was a three year plan, I had set up a slow but steady contribution to my savings and RRSP, but knowing how quickly I could chop this down now, I could possibly sacrifice my short-term-savings (beyond my emergency fund) and pay this off even quicker. The only problem is that this makes my dream for a ‘Euro-Trip’ for my 29th birthday a little less secure, so I’m not sure what to do.
I think this will take a little more budgeting to sort out, but I’m really excited about this development. My net worth is still in the red, but it’s now four digits, not five, and that is a huge relief. I’ve been stubborn about my student loan in the past, and I’ve even refused six month payment deferrals, insisting on paying as much debt off as I could. It’s great to see that all my frugality is finally paying off.
Have you had a windfall that changed your plans? What did you do to squash your debt quicker?