Financial choices come back to bite
Many students this month will be making arrangements for the funding of another (or new) year of student life.
Here's my story of the financial choices I made five years ago when I began studying, and how these choices affect me today.
I'm lucky enough to have lived comfortably with my parents all my life. Not once have they insisted or suggested I contribute financially to the household. For me, my cost of living was effectively zero.
I remember in 2007, signing up for my student loan and being sucked in by the notion of an easy $150 a week, interest free, for the next four years.
Against strong opposition from my parents, I went ahead and claimed living costs for $150 a week without them knowing. Every week. For the next four years.
Not for rent, or food, transport. For booze, and iPhones, and MacBooks with unnecessarily high specs for basic word processing.
No doubt, this was and is the most profoundly stupid decision I have ever made.
The effects of my decision? Over 50 per cent of my total student loan is from optional and unnecessary claims on living costs. At minimum payments at my current salary, I’ll be paying off my student loan for the next 18 years.
Having lived in New Zealand for a quarter of my usable life, I'm keen to get the hell out of here. Nope, move abroad (even to Australia) for more than six months and I’ll be nailed with interest.
If I could do it all again today, here's what I’d consider doing (taking into account the 10 per cent Bonus from voluntary repayments coming to an end in April):
- (If I could resist the urge to touch) Claim the maximum living costs and course related costs and have it funneled directly into a high interest savings account. By the end of four years, I would have accumulated a healthy little stack of interest to cover maybe one or two courses.
- Or alternatively, if I had holes in my wallet, I'd not be a complete idiot, not claim living costs, and avoid a whole load of unnecessary debt.
Today, still privileged enough to live with my parents, I'm currently throwing a little under 90 per cent of my salary into voluntary repayments and hope to have my entire loan paid off in mid-2014. This year I get to learn all about being frugal.
I didn't manage my money responsibly, so for now my money manages me.
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