Laertes’s Lesson

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry

Lord Polonius to his son Laertes in Shakespeare’s Hamlet, 1603.

This was good advice to the young student, Laertes, in Shakespeare’s time and it is still good advice today. Never lend friend money that you can’t afford to lose and be very careful when you get offered a loan that sounds too good to be true.

But there is such a thing as “good credit”, that is a loan taken to finance an investment which will reap future rewards, such as an education leading to rewarding employment. So the question for today’s student is….

To borrow or not to borrow…(abject apologies to Shakespeare).

Should you, as a cash-starved seeker of knowledge, take up your banker’s friendly offer for a credit card and/or a line of credit, to “supplement” your government student loan?

First of all, figure out if you are a “spender” or a “scrimper”

If you are a spender- and you know if you are if you shop “to relax”, or like to buy tickets for every new show or find yourself drawn to the latest gadget-and stay away from those too good to be true credit offers. Stick to your plain vanilla student loan and one, only one, emergency credit card (to be kept out of sight in your wallet). Do not, I repeat, do not take a line of credit because it will only tempt you to spend money “cheaply” that you do not have.

But what if the student loan/ your savings/mom and dad’s stipend are not enough? Get a part-time job. In fact, get a fun part time job, like at a student bar featuring live bands or a funky cafe because it will kill two birds with one stone, you’ll earn income while being entertained. I do not understand the argument that students should not be “distracted” from their studies; you are young, energetic and hormones are raging. It is not a question of whether or not you will be distracted, but how, and at least while working you are not spending money but earning it.

If you are a scrimper on the other hand, you may have sufficient funds to support your quasi-monastic lifestyle but perhaps you are not taking full advantage of the offers that come your way. Do apply for the “no interest until you graduate” student loan and learn how to invest the funds prudently but for profit until you are ready to pay back the principal. Do apply for a credit card and use it regularly, but always repaying the balance in full each month, in order to build up your credit (something impossible to do as a student 25 years ago, ask your parents). But you are too smart to take up the line of credit offer unless you had a valid reason to do so I don’t even need to advise you about that.

What if you are already up to your ears in debt? Do not put your head in the sand and hope it will go away. Make yourself a strong pot of coffee, sit down in a quiet place and look at your bills with an objective eye. No time for regrets now. List your debts (creditor, total amount, monthly payment with due date, annual interest, fees being charged) on one piece of paper ranked from the highest interest rate to the lowest interest rate (you can do this on a computer of course, but there is nothing like a sharp pencil and a manual calculator to focus one’s attention to the task at hand). What is your monthly income? What is your “what I need to live” budget? Whatever surplus you have after paying for your room and board must be applied to your highest ranked debt with minimum payments made to the other debts until you knock each one off. No surplus? Think about getting that fun part-time job discussed earlier. Still cannot make ends meet? Then see your campus financial counsellor (if you haven’t already) and discuss your options frankly.

Remember, there is a reason why all the banks want you as a customer: you are young, smart and have great earning potential ahead of you. But don’t allow yourself to become a marketing victim, take charge of your finances now and, as Lord Polonius so wisely said, “to thine own self be true”