Whether it’s a study loan you are carrying with or a consumer credit, it is possible to melt that credit mountain in no time. How I am bold enough to say that? I’ve done it. And if I can do it, you can do it too.
When I took up my study loan it wasn't a spontaneous decision. I was desperate. I had just started my studies when my husband and I got separated. He hadn’t been a fan of my studies in the first place, but after covering my living costs for the first few months after our break-up, he was not further willing to pay for my studies. Fair enough. All of a sudden I had to pay for my studies and my leisure activities. And after a while for my living costs as well. I must admit that up to that point, even though I had worked different jobs before, I had never been in the situation where I HAD to make a living to survive. My parents wouldn’t pay for me and I knew that I didn’t have the energy to take a part-time job on the side while dealing with the trauma of divorce and yet succeeding in my studies.
It really doesn’t matter what personality type you are and what you believe about debt: When you are in need, you take the credit. That’s as easy as psychology gets. But how can one become desperate for a consumer credit you may ask? Pretty simple to answer. Just imagine your flatmate asks you to move out asap and you find no furnished place to stay. You have no friend you can go to. You are lucky enough to find an apartment. You are starting a new job, that will eventually become very demanding. When you are coming home after work, you want to be able to relax. You need furniture. At least a couch or a chair. That is what happened to me.
I would never encourage anyone to take on a loan but there are times when we have to do it. No shame.
There are 3 things you must avoid at all means once you have the money:
1. Overspend. It is such a relieving feeling to have some cash. And being able to pay the bills is just wonderful. But there is always the temptation to overspend. You have waited for such a long time to buy this or that, and now that you are seeing some cash flow, it would be AMAZING to live a normal life, feel normal, do normal. And with normal I mean going out with friends, buying takeaways and coffee to go. Watching Netflix, going to the movies, getting Spotify Premium and so on. You get the point. Whether a student loan or a consumer credit, a credit card or an overdraft: It’s not your money. And it allows you to pay the necessary but not to live in luxury. The earlier you learn this, the better. You will not be able to pay the loan off in a given time if you do not learn to live on a minimum of expenses until the credit is paid off. Sorry, girl. I wish it was any different, but it’s not. When I took the consumer credit, I wrote down every single detail I needed for my apartment and then classified every item into an A to C priority. I summed up all the A priorities and allowed myself to add two B priorities. Then knew the exact amount I needed. Don’t even think about taking a higher credit than you actually need.
2. Take time to find the perfect job. Once you are done with your studies, you will very likely fall into the trap of expecting to find the perfect job. For some, that might be the case. But the reality is that most people need 6 to 12 months to find an occupation in their field. Once you’ve finished your last exam or oral, you might also want to allow yourself to take some time off to relax. I suggest that you will do that for no longer than 14 days, and then find a job – any job that supports your living. You might not see the benefit of it, but believe me: You will thank your future-self that you have started supporting yourself as soon as possible.
3. Maximise out your payment plan. That is one of the worst things you can do. For my consumer credit, I only got a 96 months payment plan because I had no securities at that time. But if you want to expand the payback rate, you will first of all pay more in the end and secondly will not experience true financial freedom as long as you are bound to that commitment. For me, it was clear from the very beginning that I would try to do unscheduled repayments regularly. Philipp and I sold stuff that we didn’t need. We refused to go to certain restaurants even if that meant that we couldn’t always meet our friends at night. We wanted to be debt-free as fast as possible. And the reward is unbelievable. It’s not only great to be free, but we also got a refund from an insurance contract that I had to sign to get the loan. We will use this extra money to go on vacation.
I know, getting out of debt isn’t always easy. It costs discipline at all times, but it is very rewarding. Don’t give up! Set straight goals and tap yourself on your back for every act of discipline. You will see, with a great attitude it will become much easier to endure!