Cash Crisis?

Making ends meet at Uni is tough. Here's what an expert advises from a news article I picked up.

Keith Tondeur, director of the money education charity, Credit Action, answers questions on how to manage student debt and handle your finances.

What do you think is a manageable level of debt for a student?
It is very difficult to give an accurate figure to this question! Nearly all students will come out of university with some debt and if they have not been able to get help from their parents or work in the vacations it is likely to be significant. It is important to remember that you will only have to repay this once you earn over a certain figure and so some students may never have to repay. The figure at which you start repaying is increasing and by the time you graduate it is likely that you will have to pay back 9% of everything you earn over £15,000.Try and budget but ensure you allow yourself some "leisure" money. Going to uni is more than non-stop study!

An old electricity bill from a student house I lived in last year has resurfaced in the shape of a letter from a bailiff addressed to me at my parent's home. Obviously I'm going to pay it immediately, but I was told this might affect my future credit rating' Is this something I should be worried about?
If you have an old bill that was in your name and you did not pay it on time it is likely that that is why you have now heard from the dreaded bailiff. It is important that you not only pay it straight away (and there might be substantial add-on costs) but also find out whether the bailiff is involved because of court action. It is quite possible that your credit rating is already adversely affected by this and if so you could struggle to get credit for six years. Write to a Credit Reference Agency, either Equifax (0207 298 3000) or Experian (0207 623 3860) and send them £2 and they will send a copy of your file to you.If you find there is a problem and you do have a County Court Judgement (CCJ) against you, you can go to court and make a Statutory Declaration that you had moved and this was the first you knew about the bill. You do this on oath and if you follow this route the CCJ will be set aside. This is very serious so please act swiftly and try and reach agreement as soon as possible.

Apart from a short-term job as a shop assistant, I have been out of work since I left university over a year ago. Can I declare myself bankrupt and get rid of my student debts'?
Technically you can declare yourself bankrupt at this current time though the Government is planning to close this loophole shortly. However, you do need to think of the consequences seriously. Going bankrupt can mean that you will struggle to get credit in the future and certain jobs may become impossible to consider once you have taken this step.In addition student loans only have to be repaid once you start earning serious money and in the mean time only increase with the rate of inflation. If student loans were your only debt therefore I would hesitate to recommend this route. However if you have a range of other loans as well it may be worth exploring. Whatever you do seek advice beforehand. I would recommend you contact the Consumer Credit Counselling Service on 0800 1381111 for totally free and confidential adviceI'm just starting university and want to avoid having any debt when I finish, if at all possible.

I have a part-time job and have managed so far with the help of some money from my parents. Is my aim of staying out of debt realistic? Do you have any tips?
It may be unrealistic to expect to leave uni totally debt free but that doesn't mean you can't do all you can to achieve this! Firstly however, make sure your part-time job does not get in the way of your studies. As pressures increase so does the tiredness and it can become easy to start to miss lectures and then your work can suffer.There are also certain things you can do and they are all to be found in Credit Action's booklet " A Students Guide to Better Money Management".

• Draw up a realistic budget for the academic year including items such as accommodation, food, transport, books and leisure.
• Control impulse spending and try and keep miscellaneous spending to as little as possible!
• Take full advantage of your bank's free overdraft offers.
• If you have to borrow more talk to your bank and get an agreed higher overdraft rather than go overdrawn without permission
• Be wary of credit and store cards- even those that offer "interest free" periods or transfers. If you do not keep on top of these they could eventually prove to be expensive.
  

If you find you are unable to avoid debt do not get depressed but talk to your parents or the Student Welfare Officers at your university.

My parents pay for my accommodation at university but I am relying on the money I earned over the summer and will be taking out a student loan to keep me going through the year. I admit I don't have much of a concept of money, so do you have any advice on how to budget properly for the year ahead?

Budgeting is a very important thing to consider not just when you are at university but for the rest of your life. By doing it correctly it can save you a fortune over the years and enable you to avoid spending a huge amount on unnecessary interest.Take a notebook with you whenever you go out and try and keep a record of what you spend on every different item over a four-week period. I appreciate that after the tenth pint this becomes a bit difficult! This will give you a pattern of your spending which you will need to put into categories such as food and travel and so you can estimate reasonably accurately what money you need for the rest of the year.Use your budget to borrow sensibly as necessary (and to prove to your parents that you are doing all you can to handle money wisely).Ensure you stretch your income over the full year and therefore try not to spend too much on today's wants only to find you have nothing left for tomorrow's needs.Plan things like trips to the supermarket. Go with a list but be prepared to swap items on it for any real bargains you see.

I'm studying an MA and unfortunately am not eligible for any financial help from my university. I am reluctant to take a Career Development Loan as I already have two student loans to repay. Are there any other government schemes or options available to me to help with the cost of my MA?

Unfortunately there are not many options here, as the Government does not have any financial schemes to help. The bets thing to do is to determine what career you intend to follow once you have completed your MA. What lenders are interested in is your future ability to repay any loans you take out.It is therefore worth doing some homework as to the likely salary level you will be achieving on the completion of your MA and also your likely expenses. So go along to your bank and sell your future to them! If they think you are a good risk and have done some careful planning you might be pleasantly surprised.Another option would be to go to potential employers and undertake the same exercise and see if they would be prepared to support you through your MA if you agreed to join them afterwards.

I have a credit card that I originally was only going to use for emergencies, but have ended up spending nearly £1,000 on it. The interest is pretty hefty and I'd like to get rid of it completely. As I already have my maximum number of student loans, are there any other options open to me to pay it off in one go, or maybe transfer it?

It is very easy to pile up interest on some credit cards and they are not the best way of borrowing for a hard-up student. There are some new players in the card market who offer cheap or even 0% interest deals for a time. Many of us are lazy and tend to stick to our own bankcards even though they are often quite expensive when compared to others.I am unsure from your question as to whether you have exhausted your interest free overdraft at the bank, but if you have go and talk to them and try and get it extended or even take out a small loan as this is still likely to be cheaper.If you are really struggling then talk to one of your Student Welfare Officers at college. Nearly all universities have such funds and they can make all the difference between sinking and swimming. Go to them with a proposal and be honest with them as to what you need and why. Also try and show that you are doing your bit by taking a job in the holidays if possible.

I expect that after I leave university, even if I get a good job, I will be in debt for most of life. This is a worrying thought, as I've grown up to believe being in debt is an insecure way to live. Do you have any advice on how to cope, not just with managing debt, but also dealing with the psychological side of living with debt?

I really would like to reassure you that you are unlikely to be in debt for the rest of your life. If you don't get a well-paid job you still technically owe your student loans but they only really become a debt when you are earning enough to start paying them off. If you do get a good income then yes, you will certainly notice the repayment but it should never be at a crippling level.Most of us have debts such as a mortgage but they only become a problem when for whatever reason we cannot pay them and so fall behind on our payments and thus get into debt. Credit can also be very useful in smoothing out the peaks and troughs of everyday life.Because you have identified this as a source of worry it is a good idea to conquer this fear. You can do this by ensuring you get to grips with the basics of understanding money and building your confidence in this area. One of the best ways of doing this is too learn how to budget. Remember to include some fun spending money!However it is very easy to waste money and Credit Action also has a booklet in the Better Money Management series packed full of Money Saving Ideas that will also help with budgeting tips. It also would be worth trying to build up, however slowly, a rainy day account. A useful idea would be to try and get this up to three months expenses over time.Lastly if you are worrying talk to someone who can reassure you and give helpful, free and confidential advice. Debt can be harmful but if you manage it carefully, borrow only when necessary and at the cheapest rates you can find, and then repay as quickly as you can then you can feel confident that you are controlling money rather than letting it control you.