DEBT MANAGEMENT

If you are one of the few students who can avoid getting into any debt, count yourself lucky. For the rest of us, it is essential to know how to cope with our debt how to get out of debt once you have graduated.

COPING WITH DEBT

Of course, some level of debt is inevitable for almost all students, but when things start to get out of control you need to take action. It is no use to ignore the problem and hope it goes away – that will probably make it worse. It is important not to keep it to yourself.

The first step may be to talk to your parents about it and explain the situation. They may or may not be able to help you financially but will point you in the right direction in terms of advice and repaying the debt.

Your university or college should operate a hardship fund designed to help out students who get into financial difficulties. Get in touch with your finance office or the appropriate department who will provide more information on how to apply and may put you in touch with someone who can offer debt advice.

Occasionally, it may be useful to contact your bank and explain your situation. They may be able to extend your interest free overdraft or credit limit which will prevent you from paying high charges on your debt.

HOW TO GET OUT OF DEBT

How to tackle your debts obviously depends on the size of the debt and its proportion to your income. For small amounts of debt it may be enough to make a few simple sacrifices and cut backs on your daily expenses. For more serious cases, more drastic measures will have to be taken.

The first step is to work out how much you owe. It can be one of the hardest parts in beating debt because it’s something you never seem to get round to doing. Specify a time, and sit and work out what you owe and who you owe it to.

Budgeting is essential to managing your financial position and repaying debt. Sorting out what you can and can’t afford is best done in the way of a budget. See our section on budgeting for more information.

Sort out priority debts. Find out which of your debts is the most urgent and carries the harshest penalty for default. Repay these debts first to avoid being whacked with ridiculous rates. For example, you can afford to repay all your other debts before your student loan as it has the lowest rate of interest.

Get rid of any store cards you have. Store cards charge the highest rates for credit by far – getting rid of them will stop your temptation to use them. If you can’t afford to buy some new jeans with cash, then you probably can’t afford them at all.

Don’t give up. It takes both time and willpower to get out of debt. You did not get into this situation overnight so it will take some time to get your finances back on track.

Remember there are many people in the same situation to you and persistence and focus will lead you on the road to a more positive financial future and a lot less sleepless nights.