Avoiding credit card debt like a plague
Recently, I read an article on CNN about students leaving the US, not to go off on a holiday, but to flee from their creditors. On average, students graduate with over $2,000 in credit card debt, but in extreme cases this could balloon to $160,000. That’s pretty mind-boggling. It’s sad to know that some people could be trapped in this predicament so early in their life. However, this situation can and should be avoided. Living within your means has never been more important.
In a nutshell, your expenses must not exceed your income. For some, it’s a given. For others, it takes a lot of getting used to, especially if you come from a certain background and expect to maintain a certain lifestyle. In my opinion, if you have the cash, then spend it as you please. The problem with credit cards is they fool you into thinking you have more money than you really do. Usually, it’s too late when you realize you bit off more than you can chew.
That’s why it’s important to have a monthly budget. Scale back and prioritize. Fire up an Excel spreadsheet (or a free variant like ThinkFree or OpenOffice) so you’re aware about where your money goes, if you’re going overboard, or if you have savings left for a rainy day. Set up goals like “at least 20% savings every month”, or “reduce non-essential spending”.
Experiment with things that could stretch your budget like cooking your own meal instead of always eating out. The side benefit is that you can eat healthier, have more options, and even impress a date. If you wanna watch a film, find a theater that offers student discounts. Same goes for other establishments. Buy used CDs and books or swap with your friends. If you don’t live that far from campus, ride a bike instead of a car.
For many people, there’s no choice but to get a college loan. Be diligent in finding the best deal for you with the lowest interest rate, and take only what you absolutely need. Don’t go to a school just because it’s popular even if it’s way expensive. There are probably schools out there that offers the same quality of education for less. A good-looking resume is an advantage, but it’s what you have between your ears that will really matter in crunch time.
As much as you can, pay cash. Credit card can be convenient for some purchases, especially online, but it make it too easy to buy items on impulse. Before you know it, you owe the credit card company a ton of money, plus interest. Personally, I’ve tried to stay away from credit cards purchases. When I like something, I save for it, and then I buy it. Call it old fashioned, but it works for me.
Share your thoughts!!!