My Guide to Student Finance

Broke_Student

mrsmith wrote: »

yeh i guess ur rite abt the paying back overdrafts thing...i know i will get a good job (£31,000 a yr 2 b exact!) at the end so even if i had say £15,000 worth of debt i can pay it bak in a yr and just live on 15k for a year, since i've bin living on less as a student!

That's fine but just remember tax, tax and more tax! Bills, bills, bills...
Income tax, N.I., Council tax.
Then possibly moving costs, MUCH higher rent costs/mortgage (plus new belongings?), cost of car (plus mot, insurance, servicing, fuel, petrol).
For most graduates expenditure will almost certainly be nothing like when living as students.

But i don't really understand..if u can get a free phone with careful effort, why not?

A good example is with my sister last week (ironically). MobileConnections (and the other two companies under it's unbrella) went bust (after 3 years of giving cashback) and she lost out on most of her cashback! The cashback schemes which give most of your money back are by their very nature pyramid schemes and usually companies providing the cashback must eventually go bust!

So how would i live on a £50 overdraft?

I don't know.
You yourself suggested asking the bank for an account that does not let you go overdrawn! I am suggesting you get a £50 overdraft on top of that anyway so you don't have declined direct debits.

the student loan is not enough, and ther much better than credit cards

This is sound and how the student overdraft should be used (if not investing) - for expenditure when your money runs out (as is common with many students). The other post seems to contradict this by advising that you budget the loan into your weekly expenditure then allow yourself to use it as normal income.
Then what do they do in emergencies if the overdraft is used up? More expensive debt?

I think what you are doing is fine as long it works for you, but your circumstances seem, from my experience, far from the typical student/graduate.
Your methods are tailored too much to your situationt. The problem is that you have presented it as general advice and it doesn't seem like good long term advice for the typical graduate.

ashy_mashy

mrsmith wrote: »

10. Phone--visit http://www.lotsofmobiles.co.uk/index.php?L=12#pops to get a mobile phone almost completely free! There 12 month contract clearance phones, which means u pay the monthly bill but then claim it all back every few months. Get one with lots of minutes eg: O2 with 800 call mins and 500 txts a month, pay it using ur overdraft, claim it all back and voila, all ur phones and txts for the yr cost u nothing! Make all ur calls on there and don't pay ur share of the phone bill in the house. The best phones are 11 months free rental with 12 month contract so u just en up paying £45 or something. NB make sure u claim it back!! They make it fiddly to try and catch people out, so set an alarm on the calendar of ur phone 4 wen u hav 2 fill in the form, and phone the company u bought the phone from 2 make abs sure u hav done everything rite! Send it off with recorded delivery also.

I think this should be taken out. Alot of students will think they will claim when they come to it, but most never will because they forget, are too lazy, don't get the time, loose forms etc! Point 10 will lose students alot of money despite all warnings you may give them, first thing they will read is that it's free and makes them blank everything else.

Lavendyr

mrsmith wrote: »

i know i will get a good job (£31,000 a yr 2 b exact!) at the end so even if i had say £15,000 worth of debt i can pay it bak in a yr and just live on 15k for a year, since i've bin living on less as a student!

Nope, sorry, doesn't work like that.

On 31k per annum, you will be earning £2,583.33 per month BEFORE tax and NIC contributions. However after tax, this will be reduced to just £1,896.59, which works out as a total yearly income of £22759. Big difference. Could you still live on £7759 for a year?

And that's without student loan repayments - so from the April after you graduate, your take-home would be reduced by a further £1440 per annum. Try living on just £6319 per annum.

mrsmith wrote: »

If u can get a massive overdraft (aslong as u can pay it back), why not?

Because you are not always going to be certain that you can pay it back when you are asked, and because you may need that overdraft one day for an emergency but won't have it because you frittered it away. A bank can demand the FULL payment of an overdraft at ANY time. That money is NEVER yours, it always belongs to the bank. You do not seem to understand this.

I graduated last year. I have a good credit history and a well-paid job. I *could* buy a house worth £200k, get an 80% interest-only mortgage, numerous credit cards and personal loans. But just because I can doesn't mean I should, because one day I might realise that my debts have become so numerous that I can't keep up with it any longer. Or I might lose my job through sickness. And suddenly, I'm stuck with thousands of pounds of debt that I just can't pay. Does that sound like a good place to be?

mrsmith wrote: »

All my income during term-time is taken out 2 pay for my rent--that's student loan,parental contribution,part-time job. I use the overdraft/credit card for the phone bill and all my other expenditure, then wen the holidays come along i work alot and over the year it all adds up. So how would i live on a £50 overdraft? And no, i don't have thousands sitting in a bank i can just bung into a savings account.

This is how I did it. But I regret having that attitude towards my overdraft now. I took the maximum loan each year of £4000. I got a parental contribution of £200 per month and I worked throughout my holidays. I still ended up in my overdraft, but it wasn't because I wasn't earning enough, it was because I was spending too much and didn't have the right attitude towards my overdraft - I thought it was mine to use however I wanted. That came back to bite me when I graduated and started living in "the real world". Suddenly I had to put up money for a rental deposit, had to buy myself everything I needed to live by myself away from home that I'd never bought before, had to pay bills like Council tax, gas, electricity, water, internet, telephone - everything I'd never needed to think about at uni. And I was on £18k per annum, and I'd wound up with a full overdraft and £16k of student debt (four-year course).

I still have that £16k debt as I am not paying my student loan any quicker than I have to. But I paid off the overdraft as soon as I could and have not touched it again. And rather than paying off my loan I am saving the equivalent amount into a high-interest savings account and mini ISA, meaning I have more money to put down outright should I want to buy a house in the future - it's better to have a student debt than a bigger mortgage, after all.

But I can't recommend living through uni like I did. I spent far too freely and I didn't care about it because I didn't feel I'd ever really earned the money. It came to me easily so I spent it easily. You seem to advocate a similar attitude and having been there and felt the consequences (and on a minor scale compared to some, I am sure), I cannot recommend that.

mrsmith wrote: »

I dunno, i just think overdrafts r a great idea, way i see it is most students hav 2 get in2 debt, the student loan is not enough, and ther much better than credit cards...its all frozen till a yr after u graduate, so perfect!

It's not necessarily frozen until a year after you graduate and it's not something you should rely on. You can never be sure that you will be able to pay things off in one year, either. Even if you have a job lined up now, there may just be that unforeseen circumstance that will change everything you had planned. Better to be careful now than rely on being able to fix it later.

beambeam

Is that true that you can open as many student accounts as you wish? I thought you were only able to hold one - though I do know several who have opened student accounts on the same day at different banks and managed to successfully run two overdrafts... but always thought you had to be sly to achieve this and that in my case, a student account holder with TSB for 4+ years now couldn't just open a second one?

Lavendyr

Some T&Cs state that you can only hold one (i.e. theirs) but not all state this - some say that you have to pay your student loan directly into their account, others just say you must fund your account regularly...it depends totally on the T&Cs.

Broke_Student

beambeam wrote: »

Is that true that you can open as many student accounts as you wish? I thought you were only able to hold one - though I do know several who have opened student accounts on the same day at different banks and managed to successfully run two overdrafts... but always thought you had to be sly to achieve this and that in my case, a student account holder with TSB for 4+ years now couldn't just open a second one?

The technicalities of whether or not it is allowed have just been covered by Lavendyr above.

In reality if you do choose to open another account, it is as straight forward as logging into the website and filling out a form or going into branch and doing it there.
If you get approved then that's that. Just make sure you fund the account regularly.
If you get declined the account make no further applications for atleast 6 months as too many credit searches will damage your credit score in the short term.

In my experience the banks do not make in depth cheques and I am not sure whether your credit file shows them exactly what type of other account you hold elsewhere (only that you have the credit available). They also cannot exchange details with each other due to data protection laws.

bwgames

The advice about the overdraft is a very bad idea.

As well - the NatWest CC, I got declined for the student one 3 times (despite having a very good record with NW, been with them since I was 14, never overdrawn) yet got accepted for a £2000 limit on another card!

The overdraft should only be used after you have exhausted loan and other regular income, not treated as part of it. Yes, practically every student will use it, that doesn't mean it should be factored in though

If you think you have more money than you really do, you WILL spend it, and then you'll have no overdraft, and be in a worse off position.

Case in point - last year (until May this year), I had an income of circa £550 *excluding the loan and overdraft* per month, so I should have had no problems, right? Wrong, I came out with £1000 on a credit card, maxed out overdrafts (£750 one with Nationwide too), and obviously no loan left.
Now, with a few weeks to go before uni starts again, I've just got myself back to ~£0 again, and plan to finish this year with a degree ( ), and no debt beyond student loan, and maybe even some savings!

mrsmith_3

and mr smith leaps in again to defend his now mutilated guide...

ok, ok, i do admit i am probably quite naive! thanx 4 the reevaluation of my 15k a yr thing that was a bit startling! But a 15,000 debt was exagerrated,would be abt 7,000 i'd have 2 pay off in my first yr (that's still terrible, i hear u cry!)

But u have 2 give me some credit, i do live in private accomodation so bills are already a reality..i cook all the time on a low food bill and do not throw away my money on takeaways and Starbucks..i keep all my receipts,i have a set budget, spreadsheets, online banking. I have £1000 a yr as back up for any surprise expenses...everything is planned out, even if you totally disagree with my plans! I would never ever go over the authorised overdraft limits, bcos i hav a budget that is comfortable and allows for things. I would never forget to claim my cashback and i would never go overboard with a credit card. Yes, i use my overdraft,but in full knowledge of what i am doing,i know what i am spending it on, it is not due to out of control spending or splurging on clothes, takeouts etc.


But i do realise this is risky and u seem 2 be saying that most students a)can afford not to have overdrafts b)would not b able 2 pay them back and c)are not so good with spending/money planning, so... mayb steps 1 to 3 should b changed to, "If u can at all possibly afford it, take out one student account, probably halifax, and do not factor this into ur budget, only ur loan and salary and any parental help. However, if u can in no way afford this and need to borrow more money, use the halifax overdraft and if necessary smile and natwests overdrafts also, as this is better than credit cards.

Unless u (think you) know u r going 2 get a good job at the end of this, could get by without the overdrafts by living like a pauper and not being able 2 at all enjoy 'the best years of ur life', and are both a careful planner and quite a big risk-taker!" (No,i hear u shout at the computer screen!)

As for the phone thing, i admit getting an 800/500 deal with O2 does involve quite a lot of risk if u somehow lose the deal and have to pay for it...so again, i suggest, for the most lazy and careless students who do not use their phone much, get a pay as you go deal. However,if you can try not 2 go over you allotted minutes and talk/txt more, definitely go for a contract phone as this is always cheaper! I still suggest going for a 12 month free line-rental but ONLY with the tarriff that you would normally get anyway. That way, if it goes right, you get a free phone bill, if it doesn't, you pay as you would normally.

NB if you have a contract, make sure it includes minutes across networks and at all times, and make sure u know which kind of minutes are NOT included eg: overseas,0870s, and never dial them!

And again, if u want 2 try to screw the system and get away with a completely free phone bill in the yr, go for the big minutes, but at ur own personal risk that could leave you with a hefty bill!

dmg24

Unless u (think you) know u r going 2 get a good job at the end of this, could get by without the overdrafts by living like a pauper and not being able 2 at all enjoy 'the best years of ur life', and are both a careful planner and quite a big risk-taker!" (No,i hear u shout at the computer screen!)

so again, i suggest, for the most lazy and careless students who do not use their phone much, get a pay as you go deal.

You're just being stupid now. People have offered solid (sensible) advice, and your replies have just become sarcastic.

melancholly

mrsmith wrote: »

Unless u (think you) know u r going 2 get a good job at the end of this, could get by without the overdrafts by living like a pauper and not being able 2 at all enjoy 'the best years of ur life', and are both a careful planner and quite a big risk-taker!" (No,i hear u shout at the computer screen!)

i said this on another thread last week, but the most important lesson i've learnt from MSE is that you don't have to spend money to enjoy life and be happy!

i'd also be very cautious about being certain about your good job - i graduated in 2002, and the job market was awful after 9/11 and the financial uncertainty. i knew plenty of people who were offered jobs but then the offers were removed as the companies all went on a recruitment freeze. not fun at all!!

the best advice for students is to spend only the money you have to and to be careful with it, rather than working out how much you could possibly have and deciding to spend it all.

(also, can you cut the text speak down a bit, it can make your posts a little hard to follow?!)