Soaring debt is a big problem for today’s college graduates. And not just student loans. Some leave college with tons of consumer debt, too. Today on MoneyWise, we’ll discuss how you or a loved one can graduate college with minimal debt.
The average graduate with student loans owes around $37,000, a sum that could take 20 years to pay off.
Proverbs 22:7 warns, “The rich rules over the poor, and the borrower is slave of the lender.” So every penny saved during your college years is a penny you won’t have to earn later to pay off debt.
TIPS TO MINIMIZE CONSUMER DEBT
Now, how do you do that? The only way anyone can stay on top of their finances is by making a monthly budget and sticking to it.
If you’re in school, you’re probably thinking, “I don’t make enough money to budget.” But that’s one of the biggest fallacies about finances. Budgets are important for everyone, and the less you make, the more critical it is to have a spending plan.
A budget will help keep you focused on your spending as you try to stay on track. You’ll have a much better idea of where your money is going. And to compliment that … it’s a good idea in the first few months to write down everything you spend. That alone will help you spend less.
If you haven’t downloaded the free MoneyWise app … do it today. It will not only help you set up a budget … it’ll track all of your spending in real time. And as we often say … if you’re watching your spending … you’ll naturally do less of it.
And that’s what you want to do … cut out all unnecessary spending. Paying $3 a day for designer coffee will cost you close to $100 a month.
And when you’re rushing from one class to the next, it’s always tempting to just buy your lunch somewhere. But packing a sandwich and apple before you head out in the morning will save you a fortune.
Next, think discounts. Most schools offer discounts to their students for things like concerts, plays and sporting events. But a lot of off-campus places, like restaurants and theaters, also offer special breaks and promotions for students. So, no matter where you go, pull out your student I.D. and ask for a discount.
This next one is a little dicey, so we recommend it only if you’ve worked up your budget and you’ve been sticking to it for several months. But if you’ve done that, you can take advantage of award credit cards for students.
You have to have at least an average credit score, but several of the big issuers have a special card for students. So, when you’re paying your rent, utilities, groceries or any number of things, you can get a little something back.
If you don’t trust yourself with a regular credit card, you can get a secured card. They also offer rewards, so that’s another way you can get cash back on your purchases without the risk of going into debt. With a secured card, you have to deposit cash into the account first and you can only spend up to that limit.
Also, consider downloading an app that’ll help you save money. Coupons.com is a good place to start, but many others like Shopsavvy, Coupon Cabin and Honey may also save you money.
There are also plenty of campus network apps that help you share costs with other students. Look for GroupMe, WeChat, and Kik.
And since you need electives, why not take a class in personal finances, if one is offered? That’s one course that will start paying dividends immediately.
MINIMIZING STUDENT DEBT
We've talked a lot about consumer debt, but by far the bigger problem facing today’s graduates is student loan debt.
One way to minimize debt is to hunt relentlessly for every possible available college scholarship.
Another way is by getting a part time job while you’re in school. Maybe you can earn enough to pay for food and a few other expenses. Full-time school plus a part-time job is a lot to handle, but plenty of students manage to work their way through school and keep their grades up. You’ll be glad you did it later on when you graduate with less debt than many of your friends!
On this program, Rob also answers listener questions:
Should you hang on to physical precious metal or sell it?
When can you get private mortgage insurance removed from your home loan?
When does it make sense to move investments into a fixed annuity?
How do you determine whether it’s best to keep your aging vehicle or buy a newer car?
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