Friday, 28 August 2015

STUDENT | Debt diaries

Pictures of me as a student
Me from my student days :)

Back years ago when I was in uni, I got into a real financial pickle.  And with students about to go back to uni or start uni, I thought now would be an apt time to talk about what I went through, and how I got myself out of it.

My first year in uni wasn't a happy one.  I was seriously home-sick and didn't make any friends in the halls I was in, quite the opposite.  I ended up spending money to try and make myself feel better, but like a lot of these splurges, it was a temporary high and after a splurge buyers remorse would set in and I'd feel even worse than before.

Fast forward 2 years and I'd calmed my spending down, but still had a mountain of debt thanks to me needing to cash bad cheques (for things like food and rent) that put me firmly outside of my overdraft.  Even after leaving uni and getting a resolve loan to sort out my debt, I still needed help as I wasn't earning enough to really live off.  I was earning about £750 a month and my rent was nearly £400.  The resolve loan took over £80 a month of my wages, leaving me only £270 for council tax, water, electricity, gas, phone, TV license, internet and food.  At the end of every month I'd be firmly down to my last pennies, if not worse.

Things eased up when the boyfriend got a proper job and we moved in together, but debt still followed me.  We had quite a few unexpected bills for the car we had and ended up owing a couple thousand on our credit card.  After a couple years of paying the minimum and not really seeing the amount owed going down we decided to go for a balance transfer credit card - we still paid the same amount off each month, but instead of it being 90% interest, every penny we paid was paying the balance off. This was a much quicker way to pay off the debt, and with each month it was paid, it was helping my credit score.

TIP - never taking on any debt won't give you a good credit score.  But taking on some debt, like a credit card or overdraft and using it and paying it off regularly will, just make sure you don't have any late payments, because that won't help :)

That being said, you need to be really careful if you are considering getting a credit card by making sure the interest rate isn't extortionate - store cards are terrible for it and often can have rates as high as 25-30%, whereas a credit card from the bank is likely to be under 20% - that may not sound like a lot, but it really adds up fast.

Another tip is that if you find yourself really struggling and getting into debt, it can be really scary, but go and speak to your bank.  Ultimately, they'll want their money back, so are usually willing to help even if that's setting up an affordable payment plan for you.  I was so lucky to get a resolve loan, that was all because I went in to speak to them, otherwise I could have faced bankruptcy, and you definitely want to avoid that.

I hope this somehow helps - just remember, no store cards and no payday loans and if you're in financial trouble, speak to your bank :)
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