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Mistakes I Made When Financing My Loan

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All in all, I think I’ve been pretty good with money my adult life.

And by good, I mean I haven’t caused myself any financial trauma.

I moved out of home at 17, bright eyed and with very little experience with money. The first thing I did? Signed up for a substantial loan.

I think most 17 year olds have very little concept of what $10,000 or $30,000 is really worth. I understood what I could buy with that amount of money, but I had never earned anywhere close to that amount, so had no idea how long or how hard it would be to pay it back.

My first and only personal loan was a student loan. It is something that I do not regret, even though I don’t use my degree. However, there were a few mistakes I made when financing my loan.

1) Took as Much as I Could

During my first year of university, I started to ski. As a student, I didn’t really have enough spare money around to buy skis, so how did I get them? I put them on my loan! You could get living costs and a cash allowance each year as part of the loan system. NINE years later and I still owe money for those skis. Whoops!

2) Never Worried About Paying It Back

Since getting my loan 9 years ago (I still can’t believe it) I have only paid about $2,000 back out of the $31,000 I took out. That’s a repayment rate of around $220 a year – a bit of a joke. The truth is, the loan was interest free while I was living in New Zealand so there was simply no incentive to pay it back. While I was studying I was earning under the threshold and so I didn’t have to make payments.

3) Didn’t Make Small Payments Even When I Could Afford to

If over the past 9 years I had set up an automatic payment of $20 a week, I would have paid off $9,000 and my loan would be around 1/3 of its current size. I doubt I would have noticed $20 out of my account each week, but I certainly would be standing a little easier if I had whacked $9,000 off my loan by this point in time.

I have recently read a story from my friend Will of FirstQuarterFinance and am embarrassed (and impressed) to read he finished college with $100,000 in savings. While I haven’t wound up bankrupt or ruined my credit rating, I certainly didn’t leave college in such a great position.

Have you ever had a personal loan or financial loan? Did you make any cringe worthy mistakes? I’d love to hear them!