Escaping College Debt
Students often go into debt to get a college education. Tuition, fees, and
living expenses all add up while many students have little time for work.
For most students, a college education is well worth it. College graduates
will likely earn a million dollars more in a lifetime than high school grads.
Mean income for college grads is $52,462 according to the College Board, versus
$28,816 for high school graduates.
However, for recent graduates, it can be a very difficult time financially.
The National Project on Student Debt reports that most recent college grads have
about $19,000 in student loans. Pile on the estimated $2700 in credit card debt
that the average student graduates with and it creates a heavy burden.
Many recent graduates are not yet in a position to earn substantial income
when they begin their first job out of college. A few feel the need to give the
outward appearance of success and therefore are willing to overspend. After just
a couple of years, credit card debt can really start to become a more
substantial percentage of your expenditures.
Even raises and promotions sometimes fail to keep up with the demands of
paying ever higher credit card debt. Debt payments steadily increase as many try
to improve their standard of living. A nicer apartment and car bring substantial
increases to expenses.
The key is eliminating that credit card debt early. It will end up costing
you plenty in the long run. Suppose you are trying to buy your first home, but
have $10,000 in credit card debt. Imagine getting married and trying to explain
to your new spouse that you owe a third of your annual salary on credit cards.
A total balance of $2700 may not seem like much, but neither does that
snowball at the top of the mountain. They key to building wealth is letting your
money work for you. If you fail to eliminate this debt early, you will be
working for it instead. You must make a decision to do this now, or it will only
get tougher later on.
The best approach is to limit your spending on plastic. It will allow you to
realize what you have to work with on a monthly basis and to make accelerated
debt payments. Keep sending in as much as you can without sacrificing your
emergency savings. The goal is independence from short-term credit. Once you
have made some progress by paying down at least $500 of your balance, call your
credit card company to request a lower interest
rate. This could allow you to pay down your balances even faster.
If you find that you are unable to make higher payments and are in danger of
falling behind, seek help from a reputable credit counseling organization.
Getting help now before you wreck your credit can help you get back on your feet
and on your way to a solid financial future.
© 2004-2010 Vision Credit Education, Inc. All rights reserved.
Privacy
|
Legal
|
