Intro to Being Broke: Out of Debt, Out of Stress
When you go to college, you are constantly in debt. You’re in debt to your parents, your friends, your loan company, your parents, your credit card company, your parents. See what I mean? So, you know you’re going to graduate in a couple of years. You don’t want to be in debt to everyone and your mother.
Professionals say that the best way to get a good credit score is to establish credit. They also say the best way to establish credit is to get a credit card. This, I agree with to a point.
The newfound freedom that comes with college also brings the huge burden of budgeting, which I will provide more details on another day. You start to use the credit card innocently. You use it to pay for dinner for you and your friends when you get off campus, you think you need a new shirt, you go on EBay and/or Amazon and go on a shopping spree (This is what killed me; I have a certain affinity toward shopping at home).
Soon, you are three thousand dollars in credit card debt. Okay, at least I was. I was so frazzled that I didn’t quite know what to do. So, what did I do? Paid the minimum payment. Agh! I ended up rotating that debt for 4 years. When I finished my bachelor’s degree, I was still that far in debt and struggling to pay my living expenses. I paid endless amounts of fees, and the thing that was supposed to “help my credit score” (getting a credit card) ended up destroying it.
So what do I want you to learn from my mistakes?
- Good idea: Getting a credit card. Bad Idea: Getting 3 of them. Yes, that was part of my problem; when one was full, I just used a different one. Each had a $1000 limit, thank goodness, or I would have ended up in a bigger mess than I was.
- Don’t only pay minimum payments. Because of our friend they call “interest,” you will eventually pay off your credit card… 3 times over. With interest, more of your minimum payment goes toward the interest than the principle. You’ll be paying it off, but not how you want to. If you can do more than the minimum, then do it. Then those months you can only do the minimum you won’t be suffering as badly.
- Allow someone to keep you accountable. My parental units only knew about one of my credit cards and thought I had it maxed out. They couldn’t hold me accountable for something they didn’t know about. Yes, I understand you’re an adult, but we all need people to watch our backs.
- Try to set payment goals. When I was paying off my last card, I set goals in my budget for how far I wanted to be in paying it off. I paid it off 3 months before getting my Master’s degree, and during my unemployment, that’s one less bill I had to worry about.
So, lesson one done. Credit cards aren’t a bad thing, and if you’re responsible and use them correctly, they can bolster your credit score and be something to fall back on if you really need it. If not, you can get yourself in a bigger mess than you started with.
