Typically, when we think about college life we think freedom and fun. However, frequently stressing over finances is definitely not "fun" and being chained to an ever-growing heap of debt is not my idea of "freedom". Managing your money is a necessary part of a stress-free college life. You're going to have to start sometime in your life and the sooner the better.
What students should know about managing their money:
In order to manage your money properly you must create a budget. The purpose of a budget is to outline a practical plan for spending the limited money that most college students have. Due to the fact that your income and expenses are constantly fluctuating, whichever budget you choose must allow for flexibility.
First, write down where all your income comes from. This can include income from a job, grants, scholarships, allowance from home, etc. The next step is to outline your expenses. Split them into two catagories: fixed and flexible.
Fixed expenses are exact amounts that are due on specific dates. Flexible expenses are ever changing amounts of money that you spend on your wants and needs.
Example Fixed Expenses:
* Housing
* Car payment (including insurance)
* Health insurance
* College Tuition
* Cell phone
Example Flexible Expenses:
* Books
* Gasoline and maintenance for your car
* Going over on your cell phone minutes or long distance telephone calls
* Social expenses (movies, dates, football games, etc)
* Personal expenses (clothes, groceries, doctor and/or dentist bills, domestic supplies, haircuts, etc.)
Add up the amount of income and expenses you have. Look at your paper. Do you have more expenses than your income can cover? If this is the case, think about what you can do to increase your income or decrease your expenses. This may seem elementary, but it's essential if you wish to stay out of debt while you are attending school.
Lowering your expenses will probably require some sacrifice. Many college students are used to spending their money impulsively. This sort of poor money management leads to financial bondage. If you are ready to lower your expenses try some of these tips:
- Pay your bills on time
- Watch out for peer pressure
- Purchase used text books
- Avoid impulse buying
- Look for sales
- Don't eat out and stop buying junk food
- Go to matinees instead of evening shows
Everybody is going to need a different type of budget to fit his or her individual needs. However, you can find basic budgets online, in financial books or just ask your parents to give you some ideas. Don't let debt to enslave you. Find a budget, use it, and be willing to sacrifice to stay out of debt.
Low Minimum Credit Card Payments Lead To Debt Sentence
Consumers have been warned by one price comparison website that only paying the minimum amount on a credit card balance each month could lead to an increased “debt sentence”.
According to uSwitch, those borrowers who choose credit cards over cheap loans - and opt to only pay off the minimum amount each month - risk extending the time it takes to repay debt by up to 30 years. The warning follows news that both Barclaycard and M&S Money have dropped their minimum payment amounts to less than 2.5 per cent.
Barclays is currently asking customers for a monthly installment of 2.25 per cent, down from 2.5 per cent, while borrowers with M&S Money credit cards can pay as little as 2.5 per cent a month, down from three per cent. Incidentally, the price comparison service suggests that to help negate debt management problems, the credit card industry should introduce a minimum repayment limit of three per cent.
“There is little justification for setting minimum repayments at just two per cent and we believe that it is time that the industry agreed a standard minimum repayment amount of at least three per cent on all credit cards,” said uSwitch personal finance expert Mike Naylor.
He added that despite moves to put ‘health warnings’ on credit card statements and to make literature easier to understand, the majority of borrowers still do not comprehend the problems associated with only paying the minimum amount each month. Mr Naylor suggested that by only paying off credit card debt in small amounts consumers could end up paying off mortgages and secured loans before clearing card balances.
“In an environment of rising interest rates where personal debt in the UK has reached a staggering £1,325 billion, of which credit card debt accounts for £54 billion, consumers could now finish repaying their mortgage before their credit card, despite the huge disparity in sums borrowed,” he elaborated.
uSwitch.com's research found that 3.5 million Britons could spend 30 years struggling with debt management if choosing to only make minimum repayments. However paying a little more each month could see borrowers cut their “debt sentence” by 15 years and generate collective interest savings of £5.5 billion.
Figures released today by the British Bankers Association (BBA) suggest that borrowers are slowly beginning to turn away from credit cards and seek out cheap loans for their financial needs instead. Lending on plastic fell by £0.1 billion over the course of June, the association revealed, while personal loans remained popular. Borrowing on loans and overdrafts was up by £0.1 billion last month and secured loan lending grew by an underlying £5.1 billion.
Meanwhile, Toby Clark, senior finance analyst at Mintel, recently said that Britons are “wildly underestimating” how much money they owe on credit cards and personal loans. The expert was speaking after research from the firm revealed that 21 million consumers owe £100 billion more than they estimate.
According to uSwitch, those borrowers who choose credit cards over cheap loans - and opt to only pay off the minimum amount each month - risk extending the time it takes to repay debt by up to 30 years. The warning follows news that both Barclaycard and M&S Money have dropped their minimum payment amounts to less than 2.5 per cent.
Barclays is currently asking customers for a monthly installment of 2.25 per cent, down from 2.5 per cent, while borrowers with M&S Money credit cards can pay as little as 2.5 per cent a month, down from three per cent. Incidentally, the price comparison service suggests that to help negate debt management problems, the credit card industry should introduce a minimum repayment limit of three per cent.
“There is little justification for setting minimum repayments at just two per cent and we believe that it is time that the industry agreed a standard minimum repayment amount of at least three per cent on all credit cards,” said uSwitch personal finance expert Mike Naylor.
He added that despite moves to put ‘health warnings’ on credit card statements and to make literature easier to understand, the majority of borrowers still do not comprehend the problems associated with only paying the minimum amount each month. Mr Naylor suggested that by only paying off credit card debt in small amounts consumers could end up paying off mortgages and secured loans before clearing card balances.
“In an environment of rising interest rates where personal debt in the UK has reached a staggering £1,325 billion, of which credit card debt accounts for £54 billion, consumers could now finish repaying their mortgage before their credit card, despite the huge disparity in sums borrowed,” he elaborated.
uSwitch.com's research found that 3.5 million Britons could spend 30 years struggling with debt management if choosing to only make minimum repayments. However paying a little more each month could see borrowers cut their “debt sentence” by 15 years and generate collective interest savings of £5.5 billion.
Figures released today by the British Bankers Association (BBA) suggest that borrowers are slowly beginning to turn away from credit cards and seek out cheap loans for their financial needs instead. Lending on plastic fell by £0.1 billion over the course of June, the association revealed, while personal loans remained popular. Borrowing on loans and overdrafts was up by £0.1 billion last month and secured loan lending grew by an underlying £5.1 billion.
Meanwhile, Toby Clark, senior finance analyst at Mintel, recently said that Britons are “wildly underestimating” how much money they owe on credit cards and personal loans. The expert was speaking after research from the firm revealed that 21 million consumers owe £100 billion more than they estimate.
Career Development Loan Applications Still Credit Checked
Britons looking to take out a loan for the purpose of career development will find themselves judged in the same way as applying for a personal loan at a bank, a spokesperson for the Co-operative Bank has said.
Career development loans can be used to help people acquire new job skills, training, qualifications or experience integral to them getting a new job or even launching a new career, according to the Directgov website, yet Andy Hammerton from Co-operative Bank has ruled out any suspicion that it is easier to get a career development loan than a personal loan when it comes down to the matter of credit history.
“If they [an applicant] had a very, very poor credit history then we wouldn’t accept them just because it’s a career development loan, they still have to be credit scored. We have to be a responsible lender,” Mr Hammerton said. “A credit score in the past is usually a good indication of what’s going to happen in the future, so if somebody’s been a poor credit risk previously, just because they’re taking a course doesn’t necessarily mean they’re going to be a sound credit risk in the future. They need to have a reasonable credit record.”
The Co-operative Bank is just one of the lenders offering career development loans, according to the government website, with the Royal Bank of Scotland (RBS) and Barclays also providing these specialist credit options. Such loans range anywhere from £300 to £8,000 and cover a maximum of three years of learning.
Also highlighted by Mr Hammerton was that a career development loan was not the route to take for consumers looking for the cheapest loans on the market, with personal loans providing a much more likely route to cheap credit for British borrowers. He said that due to the personal loans sector being “a very competitive market at the moment”, there were “cheaper” loans available than the career development-specific ones.
However, if competition is the driving force behind loan costs, it is unlikely that the cost of career development loans is going to fall in the near future. As the spokesperson noted, there are only three “players” in the market, with RBS, Barclays and the Co-operative Bank having not been joined by any newer entrants. “There’s nowhere near the competition that you see in the [personal] loan market,” Mr Hammerton added, although he did suggest that loans could be found “for six per cent, seven per cent” if you were looking to pay the loan back quickly.
In May this year, Moneysupermarket.com said that loans were at their cheapest rate for four years, with the company’s head of loans, Tim Moss, going further by saying that loans had “never been so cheap”. This was calculated on the difference between the base rate of interest, set by the Bank of England’s monetary policy committee, and the interest rate on the cheapest loan. Mr Moss added that profit margins for the providers of such financial products were “narrower than ever”.
Career development loans can be used to help people acquire new job skills, training, qualifications or experience integral to them getting a new job or even launching a new career, according to the Directgov website, yet Andy Hammerton from Co-operative Bank has ruled out any suspicion that it is easier to get a career development loan than a personal loan when it comes down to the matter of credit history.
“If they [an applicant] had a very, very poor credit history then we wouldn’t accept them just because it’s a career development loan, they still have to be credit scored. We have to be a responsible lender,” Mr Hammerton said. “A credit score in the past is usually a good indication of what’s going to happen in the future, so if somebody’s been a poor credit risk previously, just because they’re taking a course doesn’t necessarily mean they’re going to be a sound credit risk in the future. They need to have a reasonable credit record.”
The Co-operative Bank is just one of the lenders offering career development loans, according to the government website, with the Royal Bank of Scotland (RBS) and Barclays also providing these specialist credit options. Such loans range anywhere from £300 to £8,000 and cover a maximum of three years of learning.
Also highlighted by Mr Hammerton was that a career development loan was not the route to take for consumers looking for the cheapest loans on the market, with personal loans providing a much more likely route to cheap credit for British borrowers. He said that due to the personal loans sector being “a very competitive market at the moment”, there were “cheaper” loans available than the career development-specific ones.
However, if competition is the driving force behind loan costs, it is unlikely that the cost of career development loans is going to fall in the near future. As the spokesperson noted, there are only three “players” in the market, with RBS, Barclays and the Co-operative Bank having not been joined by any newer entrants. “There’s nowhere near the competition that you see in the [personal] loan market,” Mr Hammerton added, although he did suggest that loans could be found “for six per cent, seven per cent” if you were looking to pay the loan back quickly.
In May this year, Moneysupermarket.com said that loans were at their cheapest rate for four years, with the company’s head of loans, Tim Moss, going further by saying that loans had “never been so cheap”. This was calculated on the difference between the base rate of interest, set by the Bank of England’s monetary policy committee, and the interest rate on the cheapest loan. Mr Moss added that profit margins for the providers of such financial products were “narrower than ever”.
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