Get out of Debt ASAP!
Many college graduates start out with a staggering load of college student loan and credit card debt. Here are some smart strategies for tackling it — and erasing it altogether.
The average college student is now more than $20,000 in debt at graduation. The average salary for a newly earned graduate, meanwhile, is $30,000.
No wonder so many graduates say “the heck with it” and simply take on more debt — buying new cars, carrying credit card balances and paying back as little of their college student loans as they can get away with.
If you are smart, though, you will make a conscious effort to get out of debt now — while you are still young enough to make it count.
Why should you care about debt? Well, for one, every dollar you spend on interest for credit cards and college student loans is a dollar you do not have for other, better uses: saving, investing, spending on something fun.
Moreover, the longer you put off erasing your debts, the more interest you will pay. Make the minimum payments on the average graduate’s $3,262 in credit card debt, for example, and you will end up paying more than twice the original amount by the time you send in the last payment — 18 years later. Is the pizza and beer you charged last month really worth nearly two decades of payments?
Debt can cause you problems later in life, as well:
• The more debt you have when you are ready to buy a home, the smaller the mortgage you are likely to get. That may mean settling for a smaller house in a less desirable neighborhood than you would really like.
• You may not be able to save enough for retirement.
• If you get behind on your payments, you could wind up with a trashed credit rating, which will make your debt even more expensive.
Why should I take care of this now? I just graduated and got that great job. Do I really need to worry about this now? Well, yes. Don’t you deserve to kick back and have a little fun, now that you are finally making some money? Of course. But there will never be a better time for you to make a real dent in your debt. Here’s why:
• You are used to living on the cheap. If you can refrain from upgrading your lifestyle, even for a few years, you can make a big dent in your debt and put your finances well ahead of those of your peers.
• You are flexible. You are probably willing to do stuff, like have a roommate or take the bus, which would make you crazy when you are older.
• You do not have a mortgage to pay. Your income will rise in the future, but so will your expenses — and many of those expenses will be pretty hefty, like your mortgage, braces for the kids or payments on the minivan.
• You will get used to living within your means. Sound boring? It is the key to a successful financial life, but many people never learn it. They live paycheck to paycheck their entire lives and never get ahead.
The sooner you are debt free, the faster you will be on the road to financial success — and the less you will have to worry about living a starving student lifestyle when you are middle aged.
So, now is the right time to take care of those college student loans and credit card debt. You have endured the school years to get yourself on the right path for success. Keep going you are almost there.
