When you’re a student it can be tough to avoid debt altogether, as you may find yourself taking out a student loan which automatically means you’re going to have a significant amount of debt to pay off once you graduate. It may be possible to avoid taking out a loan if you have wealthy parents or you decide to work for a few years so you can save up enough money to go to university. However, the chances are you will have a certain amount of debt after three or four years at university. The main thing is to control how much debt you get yourself into.
First of all, you don’t want to find yourself running up loads of credit card debt. When you’re a student banks and credit card companies will seem to offer you favourable deals, but if you bother to read the small print you will usually find there is a catch somewhere. While you’re at university the interest you have to pay may be relatively little, but as soon as you finish your studies the interest rate is likely to shoot up and you are the one who is going to have to pay the debt off. You might think that this will be no problem, since you’ll be earning lots of money and that you’ll be able to get rid of all your debt within a few years.
However, what if you have difficulty finding a job? Just because you’ve been to university doesn’t mean you’ll be able to jump straight into a well-paying job and so if you struggle to find employment the interest on your debt is just going to keep on increasing. Thus, you want to avoid going overdrawn if you can help it. Again, you may be offered a reasonable deal on an overdraft facility when you’re a student, but this all changes once you graduate and you’re left with huge bills to pay.
Of course, to avoid running up huge amounts of debt in the first place you have to consider what you’re spending money on and avoid making extravagant purchases. You can’t expect to go out every night, buy expensive clothing and eat at fancy restaurants using just your student loan. You therefore have to work out what essential purchases you need to make and how you can save money by choosing cheaper alternatives. If you get into the habit of budgeting in this way you won’t have so much difficulty avoiding excessive debt when you’re a student.