Student with lots of stupid debt!

thecatsbarking

Hi all! Been a lurker on this site for about 1 year now and after much burying the head in the sand I've decided to go 'public' about my financial situation in the hope I can get advice and support!

I will start by saying im going into my final year of uni so have accrued lots of student loan debts, which from the many students I know is quite a 'normal' thing and after reading one of Martin's articles is one of the better loans to have. So I am not really concerned about that debt just yet.

I work 22.5 hours a week in a call centre, for which I get paid £636 after tax. I live at home and the kind parents dont ask for a penny to live here, this makes me feel a lot worse about getting in debt, considering, for a student I'm getting a hell-of-alot of income per month. The only outgoings I am supposed to have are:

• Car repayment (not on finance, £5000 loan taken out in the parents name so I repay them who repay the loan) this is £114 per month.
• Contact Lenses: £13
• Mobile phone: £70 (I work for a mobile phone company but their staff plan is not enough for what I use so I have an additional plan)
• Mobile insurance: £8.99

However, since I started to get paid monthly my spending has been really hard to keep track of, to put it simple: I'm useless with cash. I wish I had a good financial head (which I why I finally decided to post!!) Part of the reason Im posting here is the annonymity, Im scared to tell my parents, because, as far as they are concerned, HOW can I be in so much debt!

Anyway, I have had 3 credit cards with a total of £2700, 2 of these were MBNA cards and were getting charged at 15% apr, so after really reviewing my options last month I applied for a Mint card which give me 0% on purchases and balance transfers till March 2008 with a credit limit of £3100. So now I am saving a little in not having to pay the interest on them. Now I have this £2700 with Mint which, like I say is interest free till March.

I also have a student overdraft with HSBC, currently I am into that by £700 which is a regular occurance. I really get depressed, because of my association with money, when I get paid every month and it just pays my OD and I don't appear to be getting anywhere. I have a 'savings' account with Egg which has £400 in it, obviously it is not savings as I owe money out!

I suppose the crux of this post is just for advice about how I can stop spending in excess of £500 each month, my main expenses are petrol then I just seem to waste money. Cany anyone give me any tips on how I can build up OD so that when I get paid it goes into credit instead of debit and how I can also start repaying my credit card without crippling my OD to the max. I really hope I have made sense here and I realise alot, sorry, ALL of this is down to me!

Thanks for reading, and you guys are excellent here, one of the best support groups around I'd say!

OliveOyl_2

Hi, welcome, you know that you're in the right place!

The very first thing you do HAS to be to start a spending diary!
Find yourself a notebook that you can carry around with you and write down EVERYTHING that you spend money on. The takeaway coffee, the magazine, the petrol, just everything.

This has two immediate benefits, you can see where your money goes, and you thnk twice about each and every spend.

Look forward to seeing how you get on.:D

HairyHandofDartmoor

Got to agree with the other posters. Stop using the mobile so much so you can reduce the cost, and keep a spending diary so you can see what you are wasting money on.

You must get on top of this now before you have rent, bills, etc, to pay. Unless you want to live at home for ever! lol. It takes a bit of self discipline to stop spending, but so does studying so you know you've got it in you.

Jacks_xxx

Hiya sweetie,

Forgive me, but I'm going to be a bit bossy!

Those student loans will kick in and become a millstone sooner than you think so it's vital that you get rid of all the other debt asap.

AND... how long is it until your lectures start again? Could you get a second job in a bar or something for the next 6 weeks (or however long it is) and really work at clearing some debt? :beer: You'd spend less if you were busier too.

Also honey, your mobile phone costs are really high. I know you "young'uns" always want the latest phones etc, but if you're serious about getting straight financially then I think that's an area you could look at. If having a flash phone and using it a lot is an essential part of your life then I think you are going to have to cut back else where and / or earn more dosh to pay for it. My son's costs £240 a year versus your £950 and he's on it constantly! :rolleyes:

• Definitely keep track of your spending. You'll be horrified how much money you fritter away on useless crap.
• Throw your savings at the overdraft (It may be a student account but you're paying interest on it with HSBC I think,)
• Sort the phone out. What you're paying is crazy.
• You need to pay off £450 a month on the CC to clear it before the interest kicks in in March. Set up a Standing Order for that amount to go out when you get paid - and manage on what's left until you get paid again! (Simple!) :eek:

If you can increase your earnings and reduce your spending you can be consumer debt free by March - then you've just got the Student Loans to worry about!

The thing about debt is that at your stage it's totally doable. If you leave it another year or two the numbers will all be bigger, the interest free deals will have dried up, the student loan payments will have kicked in, and it'll all be much, much harder to get out from under it.

Do it now honey! (We'll all help.)

Love Jacks xxx

Richard_MoneySaver

Action:
1) Shuffle your credit card debts (sounds like you may have done this already) so that it's all at 0% with as low a balance transfer fee as possible.

2)Get a cashback credit card - will pay you around 1% on EVERYTHING you buy with it - so use it for everything - clothes, cinema, petrol (you seem to spend a lot here!) This means that all of your cash earnings go straight to your overdraft. I have found that making yourself pay for eveything using a card actually makes you realise every time you are spending money. Set up a direct debit to pay it off in full each month so you never have to remember to make the payment (so never miss it!) Articles on this site explain how to do this.
Also, because the credit card won't have to be repaid until the payment date each month (sometimes up to 56 days after you made the payment for whatever you bought), the money which you earn in the meantime is sitting in your bank account earning interest for you (or is at least reducing your overdraft, meaning you're paying out less interest on this).
If you have a fear of credit cards (most of our society does!), learn to get over it and find out how they can work for you. CC's are tools to assist your cashflow and make you better off, if you use them properly (as described here and in the MSE site.) I should add - if you can't trust yourself with CC's (you know if this is you or not!) then stay clear of this one - or you'll become your own worst enemy. It is up to you.

3) At the end of your phone contracts, get a new contract with a company that will give you cashback. I have been doing this for several years and get all calls, texts and line rental totally free. Send me a private message if you want to know more about this.

4) This site is full of ways to help yourself and you have to do just that - help yourself. It will take a little organisation but it is up to you. Make the choice and act, either way. If you swing things in your favour, you will not regret it - but you have to take the steps yourself and put in the "leg work" before you see the savings or cashback.

Finally the most important step is to look at the reality of money - your money and other peoples' - and see which direction it is going in in your life -and then which direction you would like it to go in! You have to go against the flow (or otherwise just follow the pack and be like everyone else!)

Good luck, oh - and enjoy. It is fun - especially when you begin to see money flying back into your bank account!

floss2

Do you only work during the holidays or term time also?

If you work all year, then manage on your £636 a month & use your student loan this year to clear your debts. Py off your overdraft, put the rest of your loan payments into your savings account & pay minimum payments until the 0% finishes, then clear the balance.

By the way, £636 in your hand each month over a year is a lot more than a student gets in loans - £7632, almost double an average student loan!

thecatsbarking

Hi thanks for your replies! Thanks everyone for taking the time out to reply,

Jacks, I start back 24th September so Im going to try and do as much overtime as I can till then. Thanks for your advice, Ive never thought about how I can begin to pay back so thanks for those words of wisdom! Ive read other posts by you and you totally know what your talking about!!

OliveOyl, going out today so will from now on note everything that I spend, I really need to stop buying useless crap!

Re my mobile, Im stuck on that price plan now for another 6 months and cant reduce it, so I guess I'll have to do on that one. I know what you mean it is totally too much.

Richard, thanks for your support, Im actually excited about busting those debts!!

Floss, thats a great idea, in the mist of it all I forgot about this years student loan credits, I will begin to pay off with them. I know I am fortunate enough to have a well paid job and this is what is making me finally act on not bury my head in the sand, I have had no reason to be in as much debt.

Thanks again everyone, keep the suggestions coming and Ill let you know how I get on!!

CharliesAngel

Jacks_xxx wrote: »

Hiya sweetie,

Forgive me, but I'm going to be a bit bossy!

Those student loans will kick in and become a millstone sooner than you think so it's vital that you get rid of all the other debt asap.

Not necessarily... I'm on 17k and only pay back £2 a month through PAYE for a loan of over 12k (four years at uni)... and definitely don't class it as a debt. Education should be free!

Jacks_xxx

CharliesAngel wrote: »

Not necessarily... I'm on 17k and only pay back £2 a month through PAYE for a loan of over 12k (four years at uni)... and definitely don't class it as a debt. Education should be free!

Education should be free sweetie. You'll get no argument from me there.

..but it's still a millstone around your neck whether you're paying it off fast or very very slo-o-o-owly! (You've got to pay them back eventually haven't you?)

And wouldn't it be easier to just have student loans to deal with and not have lots of other debts as well?

I think a lot of people get to the marriage and babies stage still owing for most of their student loans, plus having built up a ton of other debt as well, and wish they'd got it under better control when they were students and had loads of time on their hands.

A friend of mine just got turned down for a work visa in Australia because of his debts - which are mainly his student loans.
And how long does it take to pay back £12k at £2 a month anyway???? :eek:

Love Jacks xxx:D

CharliesAngel

I'm not counting and plan to forget about it... it gets written off after 25 years, if you move abroad or if you die...

CharliesAngel

but that's another thread lol...