It all started when I went to university. During Freshers’ Week, several events are put on to acclimatise you to life at your university and student life in general and some of the many vendors at the events included banks and credit card companies trying to sell you on student bank accounts and student credit cards.
It’s a little too tempting. A credit card / loan designed just for me and my needs as a student? It can’t hurt to sign up. I’ll just pay off the balance every month.
It really is a slippery slope. When I went to university my fees were paid for because my family had a low income so I only needed money to live. Given that I was living at home and had a job, I didn’t really need the student loan that was available to me, but again, everyone else was doing it and who would turn down a loan that doesn’t accrue interest until you leave university, has an interest rate equivalent to the inflation rate (a few percent) and only gets paid back once you’re earning a moderate wage?
Thankfully, I didn’t get into too much debt at university. Between a couple of small credit cards and my student loan, I took on about £10,000 of debt. While I very much regret taking on that debt at all, I know people, particularly in America, who have taken on far greater sums, sometimes even 6-figure amounts.
And while I’m still working at paying that down, I’m in a fairly good situation with my finances owing largely to a decent job, almost a decade of work experience under my belt, being diligent and owning my own business.
With all that said, I really wish I hadn’t taken on any debt in the first place. I really didn’t have to and if I had more strength of character when I was 18 I might not have done but I saw it as a quick and easy way to have some fun while I was at university. In retrospect, it really wasn’t worth it though. I could have had fun without the debt and without it still impacting my daily life into my 30s.
When you first get out of university, your need for cash is fairly substantial. You need a house/apartment, a car and all the “things” that one needs in life. This is all while you’re earning an entry-level wage so your disposable income is somewhat tight, which makes paying back student debt a burden.
In the last few years, as those initial life expenses have dwindled and as my income has increased commensurate with experience, my ability to pay back debt is much better. Similarly, if I had no debt in the first place, I’d be in a much better position to save more (and play more) with a real view to retiring early.
I think I’m fairly wise, but at the same time I can’t believe I’d have been stupid enough to take on the debt that I did. I wish more than anything that I had been more thoughtful about how much money I needed at university and stuck to a budget instead of just taking what was offered to me, enjoying it for a couple of years and regretting it for the next 15.
Debt really is a nasty thing and if I were you, I’d avoid it at all costs. It’s a message that we hear over and over again by those who know better, but we ignore it, pretending like it will somehow be different for us.
Trust me: try to live within your means and all in all you’ll be in a much better financial position throughout your life without the burden of debt over your head.
