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Advice on debt and budgeting by Blackbullion

Student Money Week 2017

Struggling with debt? Vivi is here to help.

Vivi is the founder of Blackbullion, the online financial education company. She’s a public speaker, media commentator and flat-white fanatic.

Please be aware all answers will be posted on Thursday 9 February.

(edited 7 years ago)

Reply 1

anon531

I initially went to university straight after sixth form. In hindsight I wasn't ready for it and felt pretty burnt out with education (as my disappointing results showed) but with the changes to fees being made I stupidly went through clearing and attended university. My A level results were A, B, C (History, Physics, Maths) having been predicted A, A, A. Retrospectively I was probably suffering from mental health problems at the time.

Anyway I attended university, passed the first year with few problems.

First semester of second year went well and then I well and truly ended up in a rut after christmas. My mental health declined quite rapidly, I had chronic migraines and just struggled with living. I got medicated for the migraines and ended up being granted a repeat year due to mitigating circumstances.

That summer I had counselling provided by an adoption charity (I was adopted as a baby and they had services available at the time) and stupidly reasoned I was 'fixed' and returned to have a second shot of my second year. This went terribly and I dropped out properly that January to start an advanced apprenticeship (with a company that went bust a year later, leaving me high and dry). I got an HNC in mechanic engineering as a consolation prize for the modules I completed.

I am now in my mid 20s, and having done a few jobs, started a small business and generally grown to be quite happy and confident with myself I feel like higher education is something I should return to. My lack of degree has held me back significantly (which led to me starting my own business, the alternative is minimum wage and zero hour contracts in unskilled work) and I feel I need to change this.

tl;dr:
Completed first year of university
Failed Second year
Granted repeat year due to mitigating circumstances
Dropped out while repeating year
Would like to return to university

My financial situation:
I have no savings, I live invoice to invoice.
I believe I can get 1 more year of student finance for my final year of whatever I study.
My student debt is pre-2011.

What are my options as far as student finance is concerned? Can I claim back those two years where I struggled with my mental health? Would I be better off seeking other avenues of financing higher education?

Thanks for your help.

Reply 2

tut123

7

I have been considering doing a hnd which would leave me 10k in this so called 'debt'.

However a student loan seems pretty much like a grant that you don't have to pay a good amount back on until tour earning pretty good ££££

Is there any cons about student loans or any bad effects from them that people don't really know about that could affect a person in future.

Reply 3

Vivi Friedgut

Original post by tut123

I have been considering doing a hnd which would leave me 10k in this so called 'debt'.

However a student loan seems pretty much like a grant that you don't have to pay a good amount back on until tour earning pretty good ££££

Is there any cons about student loans or any bad effects from them that people don't really know about that could affect a person in future.

Hey there Tut
So remember, it's not "so called" debt, it is ACTUAL debt! :smile:

But you are spot on that you don't start paying it back until you are earning over £21k and even then the repayments are a small proportion of your take-home pay.

Student loans are some of the "best" loans available.

The main con is the unknown. For example as things stand student loans don't count on your credit score but they might impact on a banks view of your suitability (and ability to repay the loan)

If you feel that there is value in doing the hnd then the student loan is (probably) the best way to fund it.

Lots of luck!

Original post by anon531

I initially went to university straight after sixth form. In hindsight I wasn't ready for it and felt pretty burnt out with education (as my disappointing results showed) but with the changes to fees being made I stupidly went through clearing and attended university. My A level results were A, B, C (History, Physics, Maths) having been predicted A, A, A. Retrospectively I was probably suffering from mental health problems at the time.

Anyway I attended university, passed the first year with few problems.

First semester of second year went well and then I well and truly ended up in a rut after christmas. My mental health declined quite rapidly, I had chronic migraines and just struggled with living. I got medicated for the migraines and ended up being granted a repeat year due to mitigating circumstances.

That summer I had counselling provided by an adoption charity (I was adopted as a baby and they had services available at the time) and stupidly reasoned I was 'fixed' and returned to have a second shot of my second year. This went terribly and I dropped out properly that January to start an advanced apprenticeship (with a company that went bust a year later, leaving me high and dry). I got an HNC in mechanic engineering as a consolation prize for the modules I completed.

I am now in my mid 20s, and having done a few jobs, started a small business and generally grown to be quite happy and confident with myself I feel like higher education is something I should return to. My lack of degree has held me back significantly (which led to me starting my own business, the alternative is minimum wage and zero hour contracts in unskilled work) and I feel I need to change this.

tl;dr:
Completed first year of university
Failed Second year
Granted repeat year due to mitigating circumstances
Dropped out while repeating year
Would like to return to university

My financial situation:
I have no savings, I live invoice to invoice.
I believe I can get 1 more year of student finance for my final year of whatever I study.
My student debt is pre-2011.

What are my options as far as student finance is concerned? Can I claim back those two years where I struggled with my mental health? Would I be better off seeking other avenues of financing higher education?

Thanks for your help.

Hi anon

Thanks for your question. Vivi is only able to help in relation to budgeting and debt so can't give any information relating to student finance or mental health.

From what I can see, it looks as though you've already had three years of student finance.

The calculation we use to work out what you can get is as follows: duration of new course + 1 (gift year) - years of previous study = your entitlement.

So in your case, assuming you want to study a three-year degree, it would be 3 + 1 - 3 = 1 year of entitlement remaining, meaning you wouldn't be able to get a Tuition Fee Loan for the first and second years of your new course.

However, if you were to provide evidence of your mitigating circumstances in your second year and your repeat of your second year, you may be able to get full funding for all three years of your new course. This could be things like medical evidence from your doctor or letters from yur university.

I hope this helps you. If you'd like any advice about mental health or similar, you might find the mental health forum on TSR useful. If you've got any more questions about student finance, you might like to post them in our student finance surgery.

Thanks

Michael

Reply 5

ben344

if I have multiple debts (ie overdrafts and credit cards) what would you advise? i have no idea where to start!

Reply 6

jamie445

i keep having to borrow to repay debts - what's the first thing you would suggest to try and get out of this?

Reply 7

anon531

To continue on from my previous post (which I think was moved here from another forum) I am currently running a small business.

I wish to expand and I was wondering whether I could get any advice on the best means to increase my spending power. Should I be looking at business loans, credit cards or what? What is the best value 'debt' I can get hold of to cover my living expenses while I invest in my business?

Reply 8

Vivi Friedgut

Original post by ben344

if I have multiple debts (ie overdrafts and credit cards) what would you advise? i have no idea where to start!

Hi there Ben
Well firstly well done for asking. Loads of people are in your situation (or worse) but take a "head in the sand" approach. So :clap2:

These are the steps I recommend you consider:
[1] how much debt (ie the ££) do you have in each card, overdraft, loan etc (list them on a piece of paper)
[2] how big is the interest on each (ie the %)
[3] now rank them by priority - the higher the interest rate the more that particular debt is costing you each month (ie the £1000 you owe on the 0% overdraft is far less expensive to service - which is what we call paying off the debt - than the £500 on the 19% credit card) You want to get rid of the most expensive debt first
[4] now you know your actual situation
[5] if you have access to a 0% credit card offer (there are loads out there) consider moving as much as your expensive debt on to it - this is NOT an excuse to spend, it just gives you a breather
[6] the trick to debt is to pay off the most expensive debt first while paying the minimum on all the others - we call this the snowball. So you pay the minimum required into the 0% overdraft and all the money you can spare into the 19% credit card.

Once you pay off all the debt that is costing you money through interest you can pump as much as possible into the 0%. Remember though, that no matter what you are doing you absolutely MUST pay at least the minimum each month

Good luck!

Reply 9

Vivi Friedgut

Original post by jamie445

i keep having to borrow to repay debts - what's the first thing you would suggest to try and get out of this?

Hey there Jamie
If you are borrowing to cover debt then you might be at the start of what we call a debt spiral.

A debt spiral is when you have to borrow debt to cover a previous debt and as that debt gets bigger and the interest gets bigger you have to borrow more and more to just stay in the same position.

This kind of situation can very quickly get out of control and can begin to impact far more than just your pocket.

The very best thing you can do is get some help. Latest stats show that almost 2m people in the UK are in a dangerous debt situation so you are certainly not along, but luckily there are loads of people that can help you.

Your student money advisers could be the first point of call or if you would prefer something more anonymous get in touch with https://www.citizensadvice.org.uk or https://www.stepchange.org

You CAN get in control of your money Jamie, I promise, you are the master of your money, not it's slave..

You just need a bit of a helping hand to make sense of it and get a handle on how to deal with it.

You've taken a great first step asking the question, take the second step right now, and ask for help.

Good luck!

Reply 10

Vivi Friedgut

Original post by anon531

To continue on from my previous post (which I think was moved here from another forum) I am currently running a small business.

I wish to expand and I was wondering whether I could get any advice on the best means to increase my spending power. Should I be looking at business loans, credit cards or what? What is the best value 'debt' I can get hold of to cover my living expenses while I invest in my business?

Hi Anon,
So we are talking business tomorrow which is why they might have moved your question.

There are a bunch of questions I would want answered in order to give the most sensible response to your question. For example what kind of business, why are you expanding if you are not yet able to cover your expenses, how would you pay back any loan if your business failed, do you already have debt... etc..

So without knowing any of that... as a general rule I would strongly advise against debt for living expenses.

That kind of debt creates a personal liability and it will attract interest which, if you are already borrowing to cover living expenses, will just mean you need to borrow more to cover it.

If you are looking to expand your business look at getting a business loan (or Funding Circle or similar might be an option) which will be a loan against the business and not against you.

Make an appointment with a bank (or your accountant, some accountants will give you a free hour as a consultation)

I hope that's helpful. There are many stories about tech companies that started by maxing out multiple credit cards... I would be very wary of following that path!

Lots of luck to you...

Thanks for your questions! Vivi is back tomorrow at 2pm.

Advice on debt and budgeting by Blackbullion

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