Bad Debt Talks

When I first started university, I wasn’t too concerned about my finances – in fact, I didn’t really know much about them! Providing I kept my balance above £0, I was happy and didn’t worry about a thing.

However, when my parents told me about student debt I started paying attention. They told me the average amount of debt a student now leaves university with is over £20,000.

This took me by surprise and made me think carefully about how I would spend my money at university. I didn’t want to leave with a mountain of debt, I just wanted to enjoy myself, get my degree and then leave – preferably with as little debt as possible.

And that is what I did. I have recently left university with just a few thousand pounds of debt.

So how did I do it? Well, it’s all about planning. If you plan out what you are going to spend each week, then you might be able to remain in control of your financial situation. You can plan out exactly how much money you need to spend on your food, studies, travel and social life.

I did this every week. I spent half an hour every Sunday writing down exactly what I needed for the next week, and planned what I would spend my money on:

• £20 would go towards food/drink
• £10 would go towards travel costs
• £20 would go towards socialising.

This would come to £50 week in, week out. By doing this, I could work out how much money I would spend in a month (£200), and then how much I would spend in a term (around £600) – so I knew exactly how much money I would need throughout my degree and could avoid getting into debt unnecessarily!

If you are a student or a graduate looking at your finances / debt, you may find these websites useful:

http://www.push.co.uk/
http://www.interstudent.co.uk/student-money/stop-student-debt.html
http://www.thinkmoney.com/debt/
http://www.moneysavingexpert.com/loans/student-loans-repay

Consolidate your debt can be seen as the quickest way to fix its financial problems, but in reality sometimes can be digging in a financial mess even worse. Advertising on debt consolidation promises not only cut interest rates but to lower their monthly payments by almost 50%, but this is surely to attract customers. Here are some of the disadvantages of building programs.

1. Must be up to date on all your debts: Most programs require that building is up to date on all payments. If you are in arrears in installments on any of your accounts may be difficult to enter the program.
2. Administrative charges for entering the program: consolidation companies will charge for their services, this money could be used to repay the debt.
4. Affects the credit score. your credit score will be affected by joining a consolidation program.
5. Timely payments: if there is delay in payment on a monthly payment can be taken out of the program.
6. It does not help eliminate the debt, the reality is that most people do not complete the entire program because they see that this debt is eliminated. Lower interest rates mean lower monthly interest and lower monthly amount paid over long does it take to pay the entire loan. Basically the amount you pay each month goes to pay interest and not to pay the debt. Many individuals are more indebted than before entering the program because all they have succeeded in joining the program is to extend its debt for a period of time.

The only truth to eliminate your debt is to change their spending habits. Consolidating debt can be a solution in theory for its financial problems, but unfortunately does not help individuals to strengthen their financial habits, they become a temporary solution to a problem much bigger.
Finally if you are in financial trouble and is considering a consolidation among other options, is a sign that you should seek professional advice, an expert who can help you organize a plan to achieve economic independence as its special case. For more information on the advantages and disadvantages of debt consolidation you might find this helpful.

The credit score is a scientific method that uses statistical models to assess the credit it deserves an individual and is based on credit history and current accounts.

This evaluation system was developed in the 1950’s, its increased use in the past two decades.

In the early’80s, the three major credit records, Equifax, Experian and Trans Union worked with the company Fair Isaac Company to develop generic models to enable each to offer credit record credit information of an individual. (more…)