How To Deal With Debt After University

It was at university that I found I didn’t need a boyfriend to make me happy, it was at university that I made friends that I would keep for life and it was at university that I learned how to be more self-sufficient on a budget. But if you had asked me five years ago whether I wanted to go to university, I would have laughed in your face. The sixteen year old me was taught that life after school did not mean further education, but it meant that I would have to buck my ideas up and go into full time work. You see, my role models were quite traditionalist and believed that education was only beneficial until a certain point-that being GSCES- and that full time work was the pathway I should embark on. After all many had the assumption that me ‘wanting to further’ my education was because I was being lazy and didn’t want to get a job while the other 50 % simply didn’t believe in me. Which is laughable really considering I got a first in my degree but there you go. But I proved everyone wrong and got top grades, across all academic levels and one day it just clicked that I had been influenced by those around me and actually wanted to go to university after all.

 

I got offers from good universities but I went with my gut feeling and sought out the university that made me feel the most welcome. It didn’t matter to me what position it was on the league table, nor did it matter what % of their students passed or failed. All that mattered was that it was an educational home that I would be proud to be a part of. And I had a great time; they always say that ‘university is the happiest time of your life’ and to an extent it was true. I made true friends who appreciated me for me,worked on self-development and the actual course itself was fascinating and well taught. But there was the downside; toxic friends tried taking advantage of my kindness, I struggled to manage my finances and found life after university a struggle. I was and still am in debt, but until I earn over 21,000 a year my £40,000 + debt to society remains untouched and will be written off after 30 years. However because of having to use savings on taking out student loans and creating an over draft in my graduate account, I am still nevertheless paying interest on my account every month, because I am not earning enough to clear out my over draft. It can be difficult because I am not what you would call the ‘best with money’ and due to my account I have had to sacrifice a lot of things and turn down a lot of opportunities because of my struggles with finances but I am working on my relationship with money. And I have improved. Three years ago I would use the majority of my university loans on rent, parties and shopping/meals out. And now the money I earn quite literally goes on rent, travel, food , but it’s still not enough to clear my overdraft. And I am ok with that, creating a stable relationship with money is never easy and now that I am a ‘freelancer’ my rate of pay just change each month. A scary thought but below I have compiled a list of what has helped me deal with my debt after university.

 

1. Prioritize what you spend your money on!

This was one of the biggest lessons that I had to learn. Excuse my French but I f**ked away a lot of my university savings, especially in 1st and second year because A. I was addicted to spending money on clothes and B. disposable income was great and as I had never had that sort of money before, I was spending it like it was on tap. I mentioned that I did not have a great relationship with money and in part that was because of my struggle to understand maths, which naturally money came into. I never kept track of what I was spending money on and as for budgeting what the f**k was that?! So on days where I quite literally didn’t have a penny to my name I would shit bricks and would have no idea who to turn to. When friends spent money they would turn to their parents, but as I was brought up in a care it was an entirely different story altogether. Not to mention I was too proud to ask for help, so instead would stress myself out until I became physically ill, which was in part due to my money anxiety. Sometimes I was not eating properly and skipping meals and in general it was not a nice situation to be in. Third year was a little better, but it was moving to London a year ago that helped me get better at managing finances.

My issue however is ‘consistiency’ I really try hard but sometimes I struggle to maintain momentum which means I go from one extreme to the other. I can either budget and count my bean counters and other times I am paying for things I can’t afford. But in recent months I have been better and considering fashion used to be my greatest vice the fact of me not even buying clothes since January might be something to be proud of. Not to mention I don’t have much choice anyhow as my rent is expensive and I need to have a little bit saved each month in case of fiascos like August, where I only earned £300.

Here is what you should prioritize your money on:

• Rent- It goes without saying unless you want to be kicked out of your house which is never fun
• Food- I do a monthly shop, as soon as I have enough money in my bank account and then try and limit my spendings at resturants/cafes ect so that I don’t waste any food or my bank balance.
• Travel- when I was working three jobs alongside my blog, I was spending a heck of a lot of money on travelling, but then again I was also earning enough to get by on. Now as a freelancer it is a struggle, which is why I only attend events occasionally, I turn down expensive outings and try and limit how much I spend on travel so that I have more money for when I need to go back home or visit friends outside of London/ attend meetings.

Of course if you are a parent, it can be even harder to priortize money, especially when growing bubbas need new clothes, new nappies and more.But an allocated sum of money just for ‘clothes’ i.e rompers, shoes, nappies ect can be a great way of keeping costs in line. And don’t forget about apps like Depop which sell second hand and nearly new clothes for a fraction of a price.

For those who need ‘extra help’ i.e. the January taxes are due and you don’t have enough money do not worry.Even if you have a low credit score, don’t panic, there are loans for bad credit available. Because let’s face it, we can all get caught up in having to provide for our families and ourselves, but luckily there are companies out there who do understand. While I have a credit card, I do not trust myself to use it but knowing that my graduate account changes into a classic account next year, meaning that the interest rates I am paying now might be even higher is a future option that I might have to pursue.

 

2. Create A Budget And Stick To It

Yes I know I said it, the B word. I only started tracking receipts, creating a meal price plan and adding up expenses a few months ago and it really shed light on ways to handle my debt after university. Even if it means turning down opportunities, or cancelling on friends be honest and show that while you are not letting debt hold you back at the same time, you need a time period where you can slowly build up some savings and it will take time.

How to create a budget

Create an excel spreadsheet and title it ‘expenses for the month’. Keep receipts and log how much you are spending on travel, food and bills each week and calculate an average cost per month. Then look at how much your rent is and create a ‘forecast of how much you should be earning that month’. For example lets say my rent is £600, I spent £200 on food and travel that month and the added cost of all my bills in total is £100, that means that overall my ‘monthly expenses’ including rent is ‘ £900 which might sound expensive but then again these are estimated London prices. The issue is that after looking at your monthly report, you can see that you are only earning £1000-1200 a month, meaning that you can have anything between £100- £300 left over and sometimes less if you are a freelancer. But by doing this you can log exactly how much each expense is costing and then see how you can minimize that cost and get greater value for money. For example you might be spending £60 on food each month, because you are buying branded products, but what happens is a lot of the food goes to waste and you are spending money on luxuries you don’t need. Plus brand own is just as good and much healthier on your wallet.

So you have worked out how much your expenses are costing each month so now you need to create another spreadsheet and log your earnings, especially if you are a freelancer. Break it up into categories; I create a calendar within the spreadsheet chronicling ‘definite sponsored posts’ possible sponsored posts and times of the month where each company is meant to pay me. Not to mention I also have a section for freelance payments, events and press trips, so I can keep track of everything blogging related. So say for this month you are forecast to earn £1400 but you are spending £900 on expenses, it means you have £500 left over. But remember now matter how much you earn each month, always save a bit of money each month. So out of that £500 save £200 to be transferred over to the next month and the £300 left can be used for ‘luxury items’ like dining out, holidays and more.

3. Work Out How Much You Need to Earn Each Month And Create An Action Plan To Hit Your Targets 

As a freelancer, you do tend to earn a different amount each month, whereas in a 9-5 contract that says you are going to earn x amount per month, its a guarantee that is how much you will be earning. But for us freelancers, who need to prospect clients or have a different amount of clients each month it can be very easy to pull the short straw and give up at the next hurdle. Well not today; even if you are in 40,000 worth of debt and are earning over 21,00o each month a certain percentage gets taken out of your wages each month, meaning that you need to work out how much of your wage you will have left over after loan payment. So if you are earning less than 21,000 or even if you are earning over 21,000 working out how much  you need to earn each month and creating an action plan that will enable you to hit your targets is so crucial to managing your student debt.

If you are earning less than 21,000 and are in the Freelancer income bracket there are several things that you need to take into consideration

• Single household vs Family. If you are a single person, providing for yourself only, you will tend to have more left over to save or spend. Family units however can mean that it is incredibly hard to stretch any money earned and single parent households mean that it is even harder. You have to provide for children and it can be expensive but it is ok. You can manage it. Work out what the average cost of a baby shop would be i.e. nappies, food, milk, clothing ect and create a neccessity list and price plan of what you need each month. For example, say the average amount that you need to spend on one baby aged 0-24 months is £250 and that includes food, clothing and milk ect. Now round that number up to £300, so that extra £50 will be something that you can put torwards next month shop and again keep saving this small amount of money to save up money towards things like Christmas presents and days out ect.  So lets say you earn £1000 in September and your rent is £500, that means you are then left with £200, after the £300 for baby necessities have been sorted. But what if a £200 extra is not enough, what if the washing machine needs fixing or the council tax needs paying. Which is where envisioning your perfect wage comes in; for example I earned £300 in August-which is not enough to pay my rent- but instead of fixating on the poor income, I worked on prospecting clients for September and it worked. My point being is, pitching a certain number of ‘relevant’ clients per day and creating the perfect wage in your head can help you earn more money in the long run. And don’t beat yourself up if you don’t succeed at hitting your targets. Just keep trying.

But how do you create an action plan. For me I create a spreadsheet and have a pool of brands that I plan to target for the month, as well as creating a rate card and media kit that can secure me collaborations. So lets say you want to work with a restaurant but are worried that they can’t pay you because they are offering you ‘food’ ask anyway. Its ok to ask and you never know they might say yes! The problem is many think its cheeky to ask for payment, even when they are getting offered something like a product but its not bad at all and the sooner you stop being nice, the more money you can hopefully be earning. Even if you are not a blogger but some other sort of freelancer, creating a ‘pool’ of clients and reaching out to them can help you generate more work. More work less debt!

 

Do You Have Any Tips For Debt Management?

Disclaimer

*Please note this is a sponsored post but all research and thoughts are my own.