It’s that season again, where all thousands of people are getting ready to start their university career. Whether you’re going away or opted to stay at home, it’s exciting and nerve wracking at the same time. If you’re anything like I was, you’re thinking about how you’re going to decorate your new room, did you pick the right course, your nervous about meeting all these new people, but most of all your excited about starting this new phase in your life. I know I’ve written previously about my uni experience and it was truly a great time, but if I have one regret – which I am still paying for now – it is about how I managed my finances whilst I was away at university!
What is an Overdraft?
“A deficit in a bank account caused by drawing more money than the account holds” (Google)
In essence, it allows you to withdraw money to a limit when you do not have any money in your account or your account is already in minus.
My overdraft and I
There are so many schemes that you can take part in as a student. One of them is getting a student account. I remember a couple of months before I was set to go to uni, I started looking at different bank schemes and comparing the perks. Santander gave you a free 16-25 young persons railcard – and they were also my bank, so I decided to go with them and at the time they also gave you a hefty overdraft of 1500 Great British Pounds. Of course I said I wouldn’t use it, I would be smart, it would be emergency money… You know where this is going don’t you. That lasted all of 5 minutes. Pimping out my uni room became imperative, not getting the freshers package was unthinkable. A lot of “emergencies” started popping up.
I always planned to pay it off when the next cheque came in. But, would you know it, when debt clearing day came I had more pressing things the money needed to go to! Soon the hole got deeper and darker until I couldn’t see a way out. It was this thing that I pushed to the back of my mind, it just was, it was just there, it would get sorted later. But, the longer I had it the more anxious I became. I am not financially uneducated. I knew at some point this interest-free overdraft would no longer be interest free. And that interest would be high. Something had to be done, before I was forced to start making crazy payments. I came to this conclusion in 2nd year and I started clearing it off slowly. At one point I had brought it down to like £600. But by my 4th and final year I had reached a new low, I was £1,800 deep into my now £2k overdraft allowance (could you believe they increased it! Couldn’t they see I can’t be trusted?)
So here I was, university over, unemployed and £1.8k in debt. I can’t even blame ignorance, because I knew better I just lacked the self-discipline to keep me in the black. I am thankful to say that I am writing this from a better place, It’s been hard but ever since my first pay check I have been depositing lump sums to make sure that grey cloud is cleared. But I wish I had someone to tell me their experience at the start of my journey. Whilst I knew it wasn’t a great idea to dip into my overdraft I didn’t truly understand why, I didn’t realise how easy it would feel and how hard it would be to come out again. I am learning that it is better to say no today so you can have a better tomorrow. Having the latest crepts or going to amazing places wasn’t worth the anxiety or the nights spent strategizing how to get myself out of a hole I digged myself. We often want to “live our best lives” and YOLO but there are always consequences. And if you are considering using that shiny overdraft that comes with your student account – or any account for that matter – I am asking you to think twice. Living in minus is not nice.
This one was a hard one for me to write because it’s not often that we speak about finances and our experiences with it. But it is a conversation that needs to be had. I am constantly trying to improve my understanding of money management. What are your experiences with overdrafts? Or help us out and let us know (whether in the comments or on social media) how do you stay in the black? Your experience may help someone else.