Using Personal Loan as Backup Money for University Exchange

Beejay on 26/03/2016 - 16:59

Here's the situation, I am looking at going on exchange overseas next year. It will be for semester 1 and 2 (which will pretty much cover the whole year, as it includes the European summer break). I should have $30000 including OS-Help loans available to me to cover the whole trip. However I am worried that either I will run out of money over there, or I would have to forego some things that I would like to do / places I would like to visit on exchange because I wouldn't be able to afford it.

So I would like to know whether it is a sensible idea at all to get say a $10000 personal loan over a 2 or 3 year period just before I go, as back up money, and once I return to Australia after a year, return to work at my casual job and repay the remainder of the loan.

Or is there a better option available to a student?

Thanks in advance

Financial

Comments

  • Htu08 on 26/03/2016 - 18:36
    +1

    Personal overdraft on your bank account for 10k?
    That way, you won't happen to have to pay the juice unless you really gotta….

    only problem is the rate isn't cheap when you have to pay tho. ~24% p.a.

    • Beejay on 26/03/2016 - 22:39
      +1

      Hadn't thought of that, thanks. I think this is probably the best option. It shouldn't be needed, but this would give me peace of mind about it (would hate to be stressing about it while over there). And if I do end up using it, it should be towards the end of the exchange, so I wouldn't be too long before I was back home working to pay it back. So hopefully not much interest/debt would accumulate.

      Would it be better to get a credit card (commonwealth bank do a student credit card) or a personal overdraft? Or is it a much more complicated question than that?

      • chill on 27/03/2016 - 03:06

        Have you got a 28 degrees card?

        I would say get that as you will need it anyway. (and citi plus)

        Then at the end of your trip you have it there if you need it with no commitments (fees) unless you use it.

        Obviously try to use it for purchases rather than drawing cash, but at the same time if you do draw cash it is only 3% but you will get the market rate unlike CBA.

        I guess my point is you have it as a fall back but have it in the back of the mind to smash the balance once you get back home as the interest rate is high.

        • Beejay on 27/03/2016 - 04:50

          I haven't got one yet, but I have heard it praised a lot on Ozbargain. At the moment I just have my money in an ING Direct savings account, as they had the best interest rate.

          I will definitely be getting the 28 degrees card for the good exchange rates, but do you reckon it's a good idea to use it to go into credit if I need it? and if so, would I be able to transfer any debt at the end of the exchange on the 28 degrees card to the commomwealth bank student credit card (5.99% p.a. for 5 months on balance transfers)? Sorry if that's a silly question, I've never had to deal with credit stuff before.

        • chill on 27/03/2016 - 09:56

          @Beejay: Actually the best idea would be to get the 28 degrees now.

          Then before you go get a 0% balance transfer card (aim for the longest/cheapest) and have that put onto the 28degrees card, putting the 28 degrees into credit.

          Then spend that credit balance first.

          would I be able to transfer any debt at the end of the exchange on the 28 degrees card

          Yes

      • Htu08 on 27/03/2016 - 10:15

        I just have a personal overdraft so couldn't really help you with the credit card question :(
        Credit card just has a stigma associated with it in my head :P

        Yah, personal overdrafts are very helpful in a pinch, sometimes you're just unable to transfer money from a savings to a spending account etc etc

  • Ultramup on 26/03/2016 - 19:03
    +2

    if you're not earning income for 1 year it might be hard to apply for a loan even if you currently have savings

  • altomic on 26/03/2016 - 20:09
    +2

    Start working now.

    • Beejay on 26/03/2016 - 23:34

      The $30k included what I expect to make from my part time job before I would leave. so basically $17k from work and $13k from OS-Help loans.

  • Findo on 26/03/2016 - 20:32

    Don't live beyond your means

  • StewBalls on 26/03/2016 - 21:29
    +5

    Going off your nick, it sounds like you should have easy moneymaking pretty well covered…

  • [Deactivated] on 26/03/2016 - 21:39
    +2

    30K is more than enough to explore australia for a year and buy a car. I am sure it will be enough for many places in europe if you budget it properly. Exploring a country does not mean staying in 4 star ensuite accommodations either. Plenty of time to do that after you start working.

  • sa5ha on 26/03/2016 - 22:44

    Get a part time job and save every cent you can between now and when you leave!

    • Beejay on 26/03/2016 - 23:34
      +1

      The $30k included what I expect to make from my part time job before I would leave. so basically $17k from work and $13k from OS-Help loans.

  • Candour on 27/03/2016 - 07:46

    if you aced your uni grades here you might get a scholarship overseas. personal loans are going to be a pain to pay off unless you ace a top job as a result of your first class hons efforts. a friend had first class hons and only got a job on work experience and then was paid lower than Mc Donalds by a leading edge NGO. initially till they needed her enough to create a job and funds for her. are university exchanges valued by employers? like the grand tour of europe? enjoy your life but try not to add more loans to your noose.

    • Ayanami on 27/03/2016 - 12:21

      In my experience, employers are very interested in and see the benefit of going on exchange. Every interview I had for about 5 years after I graduated raised it and asked detailed questions about it. The two employers I had over that time all told me that it played a significant part on their decision to hire me.

      YMMV, and it may depend on the industry you're in, but I think it's worth it.

  • Ayanami on 27/03/2016 - 12:18
    +4

    I went on exchange to Canada for a semester and did some US and European travel on the way there and back. One of the best times of my life. I too was adverse to taking on debt for the purposes of the trip. Whilst I did end up borrowing a small amount of money towards the end, I paid for the great majority of it from accumulated savings and working whilst away.

    To date, my biggest regrets in life are a) working too much while travelling and b) not borrowing more for the trip. Being on exchange is literally a once (or a twice if you're lucky) in a lifetime opportunity. It's very unlikely you'll get the chance to experience college/university life overseas again, where your marks don't really matter (at my uni, all that got recorded on the transcript were whether you passed or failed exchange units, actual marks did not count. It probably stopped me from getting honours but the pressure release well worth it. Plus I've found that employers don't really care about your exchange marks; what they really wanted to know about was the experience and "worldly" knowledge you tend to get from going on exchange).

    The people you meet will be your best friends for the time you're on exchange, but you're unlikely to ever see most of them again due to Australia's remoteness. The internet helps but only goes so far. There may be one or two people that you actually keep in touch with (I even tried to do a long distance relationship for about a year and a half afterwards. It didn't work out but, again, it was worth it), but otherwise that's it.

    Looking back, I wish I'd taken more opportunities whilst away to share experiences with those people. Don't get me wrong, I did a heck of a lot of nights out, weekends away and cultural events with my exchange friends. But I remember all too vividly those times that I had to say no: I couldn't afford it or I needed to work. You won't get the opportunities on exchange again and, if I had my time over, I'd borrow much more aggressively just to ensure I maximised those opportunities. It means you'll have to live quite frugally for maybe a year or so when you get back, but so what?

    Another point of advice: don't gravitate towards the other Australians on exchange. You don't go to a foreign country to spend time with people you could meet here. Hang out with the foreign students on exchange or with the locals :D

    • Beejay on 29/03/2016 - 03:36

      Thanks for all the info/advice, lots for me to think about. I had been tossing up the idea of working while over there, but yeah now that you mention it, I will probably have enough on my plate between uni and socialising/little holidays.

      • Ayanami on 29/03/2016 - 22:49

        No worries. Feel free to message me if you have any other lingering questions.

  • hymio on 30/03/2016 - 07:28
    +1

    (Sorry in advance if this is a bit nonsensical and jumpy! Typing in bed with bluetooth keyboard and phone. Sleepy but can't get back to sleep.)

    I did some of Europe during Nov 2012 - Feb 2013 and loved the experience. I wasn't on exchange and all up I spent around $5000 - $6000 plus flights and travel insurance for about 11 weeks. I spent maybe a month of that in the UK, mostly London, where I found the cost of living to be similar to Sydney?? I was working full time for a while before the trip so I had a decent amount saved up and I didn't have to keep track of my spending too much but I was still trying to travel budget style.

    I'm not sure how different the exchange rate is now but I think $30000 is quite do-able especially if you're at uni at the same time as you won't be "travelling" constantly. Most of my money went to accommodation, food (SO MUCH FOOD. I DID NOT SKIMP HERE. I burnt a lot of it off walking instead of using public transport.), experiences. I bought lots of small personal souvenirs from everywhere I visited but didn't make any large/major purchases otherwise.

    Stay in hostels when you travel (Avg $20/night in London, half that in Eastern Europe. Sometimes more expensive on weekends/clubbing nights. VERY expensive NYE.) You meet an amazing variety of people there!

    Don't break laws, even if it's just not buying a ticket. Some places, like Prague, ticket checking people (what are they even called???) are very aggressive about checking your ticket especially if you don't look local. I was in Prague for like 10 minutes and had already had my ticket checked. Make sure you get the right ticket and that you've paid enough for your trip. Make sure you validate your ticket before travelling. Not worth the risk of a hefty fine.

    I got something called a Eurolines Pass. http://www.eurolines.com/en/eurolines-pass/ Basically an unlimited Eurolines coach pass for 14 or 30 days BUT you can't do the same trip more than once. I really loved it and it was the main reason I went to as many cities as I did!
    Pros: Good for budgeting as you have paid a fixed amount for 14/30 days. Cheap. Can bring all your luggage with you (I didn't have a "home base" so budget air travel became pricey as I had to bring 20kg with me everywhere). Covers many big cities all across Europe!! Coaches stop at bus terminals usually in the middle of the city whereas airports are not. Go to cities you wouldn't normally choose to because they're on the way and you might as well.
    Cons: Much slower than train/plane so not a good idea if you don't have time to spare. Many of the drivers in Eastern Europe don't speak much English. Sometimes stopped for passport/stowaway checks. Can't do same route twice.
    I'd splurge for a similar train pass next time but the coaches were usually pretty empty and it was a really good time to be introspective I guess? I wish I had a tablet + powerbanks at the time to marathon TV shows though.

    Skip Paris. Or just spend a day or two there at max to see major sights. It's expensive, filled with tourists, actually kinda dirty, locals are haughty (obviously not all of them but people aren't joking when they say they're rude). You're better off visiting one of the other cities in France!

    Visit Auschwitz if you get the chance to. It was a harrowing but very worthwile experience. Actually seeing the place and learning about what went on there as you're physically in the room really puts what you learn at school into perspective.

    Do lots of walking tours! Most cities have free ones where it's heavily suggested you tip the guide at the end, which you should definitely do for what you get out of it in my opinion.

    Bring some decent padlocks with you. You'll need one to secure luggage in most hostels and they'll charge $5-$10 for one at the counter. I'd also bring my own laundry detergent (1/2 price BioZet Attack!) next time around! Ditto towels. Also thongs for the showers.

    You WILL inevitably buy new clothes. Especially winter clothes if you don't own a winter wardrobe already. I brought old clothes with me that I was happy to chuck which was a good way of keeping my luggage light. Some of my friends on exchange had to post/buy extra luggage allowance for clothes and books and general stuff they bought. AVOID DOING THAT.

    Christmas markets are magical and will tempt your wallet. Keep thine arse tight. Do not spend all your money on mulled wine.

    (UK) Poundland is a dollar shop place which is good. Megabus/Megatrain do very cheap fares sometimes for intercity trips (like £5 ones).

    I don't use credit cards but I can vouch for Citibank Plus and its lack of fees being an absolute godsend. Just make sure you call ahead and explain you're going overseas! I had most of my money in my account and had around AUD$1000 (exchanged into pounds) in cash when I set off. I didn't have much trouble finding fee-free ATMs and I'd withdraw enough for a few days at a time.

    LOOK AFTER YOUR STUFF. BE AWARE OF YOUR SURROUNDINGS. LOCK SHIT UP. DON'T TRUST PEOPLE TOOOOOO MUCH. Don't even give people the opportunity to steal. Replacing tech/passport/stuff in wallet is expensive. If you know you're going to get blackout drunk don't take your entire wallet and $1000 dollar phone with you. It might even be a good idea to bring a cheap phone (like a $29 Nokia Lumia 530???) and use it when you go clubbing. This sounds paranoid but my friend had her iphone stolen from her bag at a club. When we went to the front desk, a few other girls were there reporting the same. Tourist scams/pickpockets are a much bigger problem in Europe than in Australia so be wary of sudden situations in public/authority figures. Read up on some scams before you leave.

    Okay, time to fall back asleep! I hope some of this helps. Everything Ayanami said up there rings true, especially the last 2 paragraphs. Also don't be afraid to travel alone or do your own thing - I met up with friends who were overseas too and it was really fun but I liked travelling solo more! Plus, you meet lots of lovely people in hostels. It's also nice to just stay in bed on a rainy day to recharge; don't feel like you need to be "on" or doing something all the time or you'll wear yourself out.

    (Feel free to message me too if you have any questions about Europe, especially London. I'm not able to travel at the moment but I love to live vicariously through others!)

    • Beejay on 01/04/2016 - 04:26
      +1

      Thanks for all the advice! It's funny, the other day I was just thinking how I really don't have any intention of going to Paris. I think I would much rather explore the south of France. There's quite a few war related landmarks that I want to see over in Europe, Auschwitz is definitely on the list.

      At the moment there's just so much research I have to do. I'm still at the stage of picking what two universities I want to go to. It becomes a lot of work when you have to look at cost of living, availability of courses, accommodation and everything for every university you are considering. I haven't even really started looking at where I want to go in the summer holidays yet!

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