Categorized | College

Dealing with Debt

Posted on 28 September 2008

4 Months into college life and scared to hear the rattle of bank letters coming through your letterbox? You probably aren’t the only one! Make it easy on yourself, have a look at this lot..

Before you blow a fuse, sit yourself down and have a nice cuppa. There. Better? First rule of debt is not to panic! You can’t deal with debts efficiently if you are in a state of distress. We’ve been there, we know how it feels.

Make a log

Feeling calm? Good. It’s time to have a look at income and expenditure. This way you can see where the shortfall is, and you can identify areas where you can save cash.

Get a file or a notebook, and write down where every penny you spend goes. EVERYTHING. Do it for a whole month to get a detailed picture, and you can see where your lolly is disappearing to.

When you start this, write to your bank manager (and any other debtors likely to send the boys round to remove your cd collection) telling them you are analysing your finances and will contact them to outline your plans in due course – 6 weeks should do it. By then you should have been able to properly assess your finances and can give a realistic plan for a repayment schedule. This will buy you valuable time, and work to your favour should things turn nasty later and you end up in court.

Now you know where it’s all going…

Ok, so now fast forward one month.
You should now have a record of where your cash goes. Time to make some decisions: this is necessary as you are going to be in the red by an average of about £4000 per year at the current rate. Yep, that’s about £80 a week. Or £11 a day. Scary, No?

Next thing to do is work out your income for the next six months or year. Or whatever period you choose. This will almost certainly be less than your expenditure figure.

Now, this is really obvious I know, but subtract one from the other and you’ve got the amount you’ve got to make up. If you are lucky your loan will cover the amount and you can get back to enjoying life. If not then read on…
In another exercise in stating the obvious there are two ways to do this. Either cut your expenditure or raise your income. Both of which are covered in more detail by another article on the site.

Deal with it

Once you have worked out where you are, go and talk to your bank manager and any other debtors. Tell them what your situation is and explain how and when you are going to pay back the cash you owe them. They’ll be more helpful if you have gone through the processes earlier in this piece. Don’t forget that they are there to sell their products and you might get a better rate elsewhere, especially if you choose to go down the path of loan consolidation.

If you still need further help or can’t sort out your income and expenditure, go to your local Citizens Advice Bureau, who will have free debt counsellors to help you out. They’re quite friendly people really, honest.

And when you’ve done all that a celebratory cup of tea using the week old tea bag is in order.

Good luck!

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1 Comments For This Post

  1. Evelyn Guzman says:

    I say wow to this. You’ve given the debtors the step-by-step guide on what to do with the money they owe instead of pushing the panic button. Every debtor should read this so they can be helped on what to do to face the responsibility to get out of debt.

    Evelyn Guzman
    Debt Challenger

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