Finance: How to manage debt
Debt is an inevitable part of student life but, with a little know-how, there are ways to manage it
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Your support makes all the difference.For mamy students money isn't just an issue, it's an ongoing trauma. A loan - which works out at about £50-a-week spending money - teamed with free time and new friends, doesn't make for the easiest financial planning. But there are ways to ease the burden, whether it's taking charge of your own cashflow or knowing where to look for help. We've also got in-depth advice on managing your student loan and fees and an indispensable listings page detailing where you can make student savings.
Bills, bills, bills
First things first, though. Bills are an unavoidable side of student life, even in halls; there's rent, the TV licence, internet and telephone charges (times two if you have a mobile and a landline). These are costs that have to be paid, no matter how much you have in the bank. If you've gone straight into private housing, it can be surprising just how large a percentage household gas and electricity can add to the rent, particularly if you're sharing a house with habitual computer users who like to stay up late with the lights on.
The best way to deal with bills is to remember that they will need paying, know when they will need paying and work them into your budget accordingly. That way, final reminders, or suddenly finding out you're £50 poorer than you thought you would be, should both be avoidable. Also look to set up direct debit from your account where possible, which breaks the bills down into manageable chunks.
Shop around
Make sure you invest in the best deals. It really is worth getting obsessive about price checking, particularly when it comes to bills you'll be paying regularly, such as phone and the internet. The difference between one supplier and another can be huge over the course of a year, and it's now easier than ever to price-check over the internet.
Checking all the options doesn't necessarily mean opting for the cheapest. Instead, you should double-check what you're getting for your money and be realistic. Getting a cheap phone contract with limited calls, for example, can cost you much more if you go over the limit. You could find you're better off investing more in items that need to last the duration too, such as travel bags or equipment for your course.
Whether you go for the cheapest option or spend a few more pounds, make sure you've explored every single last option before parting with your cash; you could save a lot in the long run.
'Good' borrowing
Most students make their peace with borrowing when they sign up for a university course; in fact, once you've committed yourself to a student loan of £10,000 or so, everything can become a bit hazy in the personal finances department. But even though you have taken on this deficit, it's important to be clear about the very large distinction between borrowing from the Student Loans Company at a preferential rate, and taking on debts in the real world.
The "loan" you take from the Government is factored at payback rates you would never see in usual banking. "It is vital that students are able to differentiate between 'good' and 'bad' debt," says money-saving expert Martin Lewis. "Lending comes in many shapes and sizes: bank loans, hire purchase, credit cards and store cards. Most of these will be at commercial rates of interest, anything from 5 per cent to 30 per cent. As students have limited income, anything more than the minimum payment is unlikely to be repaid. The best thing you can do is not borrow on top of your student loan. But if you have to, always check the interest rate. "
SSG suggests...
Pitch in with other students to take advantage of bulk-buy supermarket offers. You can get some great deals when you buy large quantities.
Become a second-hand fan. Clothes, books, furniture and kitchen equipment are all bargain buys from charity shops.
Take advantage of student nights. At £1.50 a pint it's much harder to make a serious dent in your loan!
Don't make a cocktail bar or high-end club your habitual Friday night hang-out. Even dressing the part will cost you most of your weekly spending money.
Bear in mind that a 10 per cent student discount is not a reason to buy 50 per cent more new clothes!
WEB AID
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