Subscribe to Entrepreneur for $5

5 tips to avoid asking for a loan before going back to school

For this return to school, families will spend more than 5,000 pesos for each girl and boy in the purchase of uniforms, backpack, shoes, tennis, school supplies and sanitizing material.

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process. Opinions expressed by Entrepreneur contributors are their own.

The 2021-2022 school year for the basic education level will start next Monday, August 30 in the Mexican Republic. Students will return to face-to-face classes after an absence of more than a year and a half, and mothers and fathers will have to make a large expense to meet the needs of their daughters and sons.

Enrique Alfaro vía Facebook

According to figures from the National Alliance of Small Merchants (ANPEC), for this return to school, families will spend more than 5,000 pesos for each girl and boy in the purchase of uniforms, backpack, shoes, tennis, school supplies, fees for school, medical certificate and sanitizing material. To this must be added the enrollment and tuition, for those who study in private school, in addition to the cost of books and extracurricular activities.

It must be considered that during the past school year, parents had to make a significant expense to buy computers or other devices so that students could take distance classes. In many cases they also had to hire new internet services to facilitate the learning work.

Tips to avoid having to ask for a loan

Returning to school can be a pressing situation, so those in charge of managing family finances should explore various alternatives to meet these expenses without compromising others.

Acquiring a loan without taking into account previous indebtedness increases existing debt, makes it difficult to pay it off and can lead to a poor credit score, which can affect access to financing in the future.

According to fintechs Coru and Solve Your Debt, these are 5 tips to avoid a loan before going back to school:

Approach an expert . Going back to school always means a significant expense for parents. In this scenario, instead of taking out a new loan to pay debts, it is advisable to approach experts who can advise you to make a payment plan to settle them in more accessible terms and amounts.

Consolidate debt . Many people make the mistake of paying one card with another or borrowing to pay off their debt. To get out of this situation, it is best to consolidate the debt, this means that the various debts of a user, credit cards or loans, are grouped into a single payment amount. When consolidating the debt, it is important to choose the one with the lowest interest rate, so paying it will be easier.

Financial education . Prevention is key and with financial education users understand what financial products and services are, how they work, what their advantages and risks are. A good financial education allows people to save more, make better decisions when investing, use their credits more intelligently, reduce their debt levels and aspire to have a better quality of life.

Returning to classes always means a significant expense for parents / Image: Enrique Alfaro via Facebook

Make a budget . Before thinking about applying for a new loan, make a budget. In this way you will know what your net income and your fixed expenses are. With this exercise you can identify what you are overspending on and what items you can save on. Review what the priorities are and focus on paying off debts. Remember to make payments in the agreed terms to avoid late interest.

Look for a new income . Going into debt to cover debt can become a vicious cycle. If the debts exceed your ability to pay, it is important that in addition to cutting expenses, you obtain more income. You can look for options like freelance , work overtime or get a second job temporarily.