Students falling back on plastic
August 27th, 2008A recent survey by the Halifax has found students owe an average of nearly £220 on credit cards - adding to the potential long-term debt they’ll graduate with.
Here’s another statistic (for what statistics are worth!). The average student leaves uni owing some thirteen grand! Incurring this kind of major debt seems to have become an accepted part of education these days.
If you’re about to start a degree yourself, here are a few tips to bear in mind…
- Minimise student loans by only taking out what you need, not the maximum available
- Try taking out small Wonga loans for occasional emergency costs, but only when you know you can repay the cash comfortably within a month. That way you clear the debt within 30 days, not some years after you graduate
- Draw up a budget of your income and outgoings - and stick to it
- Shop around for banks offering student accounts with no charges
- Make the most of student discounts - many retailers offer them and you won’t get these kind of reductions again until you hit retirement age!
October 7th, 2008 at 12:08 pm
So you are off to university, college or perhaps about too? Look at all those enticing offers the banks make, a bit spoiled for choice? Well that really is only the beginning friend, your going to have be very clever over the time you are in full time education and having a financial strategy is simply a must (unless you are loaded of course). Now what do I know about all this you may be asking? Well the answer to that is I have just completed an MSC at university, which lasted for one year and believe me by successfully keeping tight control over finances I managed to stay ahead of the game. At 38 I thought I was a bit old for University life, but it was something that I needed to do for myself and my career, I wasn’t the oldest in the cohort though, which was pretty good and nice to see that education is not ageist, my fellow students some only ½ my age were fabulous, we learned from one another, I brought my life experience to the table and they brought their academic experience. I did still work (though part time) with a cut in pay of around 10K. Adjusting to my new life both academically and financially was a huge shock to the system. I knew early on I was really going to struggle financially but I was determined to avoid any long-term debt or evil bank charges! The first thing is to avoid bank charges like the plague; you just do not want them or need them its really like taking £30 or so and simply throwing it in the fire, great business for the banks but disaster for a student or indeed anyone in a low income bracket. What makes these charges even more detrimental is the fact they can have a knock on effect and very often they do, increasing month after month. If you search many of the consumer forums you will find horror stories where people have ended up paying hundreds and in some cased even thousands of pounds over a short period of time. How does one avoid them then? The easiest way of course is to ensure you have sufficient funds to pay your direct debits, any account charge or interest in your account at all times. This doesn’t always happen though, being human we are all prone to a lapse in memory or maybe an emergency has occurred and you need instant access to your cash despite the fact it is there to pay bills. What I did was open up a savings account and then discovered I could actually pay my direct debits through it, but the best part was that since you cannot go over drawn on a savings account you cannot therefore have any charges levied (as this would create an unauthorised overdraft). Next on my current account, I asked the bank to debit my monthly account fee (I have a Royalty account) at the beginning of each month. This way I knew I could not forget to leave enough money in the account, as it would be whisked out pretty early on in the month. A big tip here, drop into your branch to set this up and ask for written confirmation there and then, the banks don’t like doing this but they will and it will save you from any possible mistakes (which rarely happens according to them), sure! They messed mine up, but as I had written confirmation they could not levy charges, they actually did it three times in a row and I ended up after writing a complaint with a case of wine and an apology. Do not accept any mistakes they make under any circumstances or think just because they increased your overdraft it is better to let it lie, fight for your money, it is yours! If you use a call centre then remember any conversation you have or promise cannot be backed up it really comes down to whose word the bank believes, their agents or yours. Finally I used Wonga to cover cash shortfalls, which has helped tremendously, actually I will admit without this service I doubt I could have managed as I did. I am now back full time at work and still using the service because it will take me a few months to fully get back on my feet. To sum up, I took a 10K pay cut completed my course and my total debt is £300 overdraft, £250 credit card and at present £250 loan with Wonga. In my book that is pretty good going. I ended up with 0 bank charges, all direct debits paid on time and no bank charges. I meant to add please ensure you use Internet banking, its quick and easy and lets you see at a glance what is going on. Remember though, the Internet can be a risk so use security software to protect yourself. I hope some might find this post useful and my thanks go to the Wonga team!