Financial Advice

How to Repay your Loan before your 30’s

During university, student loans seem like an endless pit of money that funds partying until 6am and regular shopping sprees with just enough left over to
fill the cupboards up with canned beans and Super Noodles. What feels like a fun bicycle ride down a steep hill is actually a one-way trip to the bottom of,

 

‘Debt Mountain’.

 

It seems to be news to many students, but loans are not a free -or-all, every cent borrowed must be returned… and with interest. Here are a few pointers to
make that journey from poor graduate to debt-free financial kingpin that much quicker.

 

Shopkeeper by Day, Crime Fighting Super Hero at Night

 

Organisations offer flexible working conditions for students to suit their study time tables, so get a part-time job. Being a barman or waiter tends to be the popular pick, but, ideally, students should look for employment within the industry they wish to continue working in after university. This way they’ll kill two birds with one stone: industry work experience and earning money! Running a blog could help. Bloggers are get freebies all the time and a blog can be turned into an online portfolio. Also, a good site can be maintained way into the future and is a continued source of free goodies.

 

The Damage

 

The average student starts their first job with an estimated £23,700 of debt. Assuming a graduate leaves school at the age of 22, they would need to repay £2,962.50 each year to beat the loan by the time they were 30 and this calculation excludes any interest.

 

Don’t Act Rich Until You Are Rich

 

The common mistake graduates make is that once they nail the first job, they think they’re rich! Yes, in comparison to the previous months there is a lot more cash flow, but these days a graduates’ debt is more than their starting salary. This is not a hazard sign saying ‘Turn around NOW’, more a notice-board ‘reality check’ warning. However, frugality, money consciousness and determination can help beat the debt before anyone reaches the big three-O.

 

No More Student Night Discounts

 

It’s a natural part of British culture to head down the pub every Friday night and it is a great opportunity to make a good impression on colleagues and get to know the team on a personal level. Graduates, please remember that most of the group will be earning a lot more money than you and can afford the late night shenanigans. A) Pick the optimum moment to buy a round (when most of the party-goers drinks are full) and for heaven sakes B) do not buy a ‘Jaga bomb’ round! Leaving at a reasonable time is also a way to avoid over-spending on the night and any chance of embarrassing yourself. This tactic will help for years to come, just remember that this is still ‘going out’ and should be deducted from the monthly “fun” allowance in the budget (which we will come to later).

 

Homemade is Well Played

 

Ignore the food chains that swarm around office buildings; eating lunch out every day is a luxury well-earned when promotions kick in and earnings increase. A massive saving can be made and put towards loan repayments by simply bringing in coffee and lunch from home.

 

It is also a great opportunity to learn new recipes and spice up the basics – pasta, soups, salads and sandwiches – to ensure a tasty and sufficient meal each day. This will come in handy when you have a family to feed!

 

Repayment terms

 

Repayments for student loans do not start until the income beats the benchmark of £16,365. A 9% charge is calculated on the difference between said amount and the salary P.A.

 

BUDGET, BUDGET, BUDGET

 

The problem is people accept the repayment terms and move on. Graduates (and everyone else) please do all the calculations yourself; it will help provide a better understanding of the lifeline of the loan. Improve this by setting a reasonable but frugal budget and increase your loan repayments. To put matters into perspective, a monthly repayment of £60 will knock a big £720 off the yearly goal – there is STILL £2,242.50 to go before reaching target!

 

Prudence and smart spending are essential for all working professionals, some people just don’t realise it yet. Bank services like ISA cash savings account, which offers tax-free interest on savings, can help increase one-off payments.

 

Now You See It, Now You Don’t

 

Some of us are fortunate to receive company bonuses and spend the full amount before it reaches our bank. My advice is to throw half the bonus into an ISA account and don’t speak of it again. The other half of the bonus… well, that should be spent like anyone else who just received a lump sum of cash – holidays, shopping and parties!

 

Let Me Check with My Roomies

 

If you’re sure your parents are happy with the idea, live at home for as long as possible. A small boarding fee is a lot cheaper than living on your own. Our parents had it lucky, all university expenses were paid for and property was cheap, but times are tough for us 90’s kids. You will save massive amounts of cash through not paying your own rent, bills or even for washing powder.

This will really help put a dent in Debt Mountain; it would be like a cable car hitchhike to 200 feet.

 

How Does This Work?

 

As the years pass it will become easier to reach the yearly repayment target, income and bonuses are bound to increase and one day, it will all be gone. Just stay frugal and be money smart but still remember to have fun!

 

Giveaway Next Voucher worth £50

 

To stand a chance to win a Next voucher, tell us your student loan story. Whether you are mid-way through your repayment plan, paying it off or apart to embark on the journey, we want to hear your top tips, inspirations, dos and don’ts.

This article was provided by Bozzle Blog.