How College Students Can Avoid or Solve Credit Card Debt
Many college students graduate with credit card debt in addition to their student loan debt. Too much credit card debt can be crippling. The problem is so serious that Congress passed a law requiring that anyone under the age of 21 have a co-signer on a credit card application beginning in 2009. However helpful the law is, students are still graduating with credit card debt.
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Budget to Avoid Credit Card Debt
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Students can create a budget to avoid credit card debt. The budget should take into account basic living expenses and list all sources of income the student has. This may include money from summer jobs, scholarships, grants and student loans that were taken out to cover living expenses. At the beginning of the year determine the amount you will have to cover school for the year, subtract your tuition, fees and the estimated amount for your books and divide the amount left by the number of months you will be in school. List your monthly expenses such as food, rent, transportation and entertainment costs. The amount you have left should be equal to your expenses, if it is less than your expenses you will need to make up the difference.
Work to Avoid Credit Card Debt
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There are many good part-time jobs available for students. In your first year, you may have an on-campus job to help cover expenses. As you go further in your major, you may have the opportunity to work in the field you are studying and your wages will likely be higher than minimum wage. There are paid internships available, and usually your professor or a departmental office can let you know about them. UPS and other companies offer benefits to part-time workers along with a competitive wage. Another option is to work long hours over the summer break and save enough so you will not need to work during the school year.
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Don't Use Your Credit Cards
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Instead of having a credit card to cover emergencies, set aside at least $1,000 in an emergency fund. This will cover a trip to the emergency room, the cost of repairing your car or an unexpected traffic ticket, and it will prevent you from using your credit cards. Acknowledge the fact you are in college and broke, and stop spending money you do not have. Do not buy a new outfit every week or go out to eat every day if you do not have the cash to pay for those expenses. Paying for those things with interest make them a lot more expensive.
Set Up a Payment Plan
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If you already have credit card debt, work to pay it off now. Cut back on your spending and get on a budget. Then list your debts from the highest interest rate to the lowest. Take on an extra job and put the money towards the credit card debt. You may only need to work for a few months to take care of the debt.
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References
- Photo Credit credit card and pen image by PaulPaladin from Fotolia.com
