How to Manage Your Post-Grad Debt
February 13, 2014
For many students, myself included, college is drawing to a close and graduation is creeping up. This is both exciting and intimidating! It’s exciting because we are starting a new chapter in life, but intimidating because we are coming face-to-face with our student loans. According to CNN Money, college graduates had an average of $35,200 in student debt in 2013, which increased significantly from the average of $29,400 it reported for 2012. Student debt is increasing each year, while post-graduate employment is hard to find. For those of you who are fearful and anxious, here are some ways that you can start planning to manage your debt:
1) First and foremost, know EXACTLY how much you owe and be very familiar with the interest rate(s) associated with your loan(s). Think about how you will pay this back as soon as possible. If you are attending graduate school, it may be possible to defer (delay) your loans until you obtain your Master’s. Some employers also have certain deals to help deal with your debt.
2) Take advantage of your grace period (if you have one)! Most lenders issue a grace period of approximately 6 months until students must begin making payments. Get a part-time or full-time job/internship over the summer so you can start saving right after you graduate! You can also use this time create your repayment plan. Ask yourself how much can I afford and how can I budget rent, food and other living expenses with this plan?
3) DO NOT PROCRASTINATE in payments! There are extremely serious consequences for ignoring or neglecting your debt. Over time, this ruins your credit, which makes it very difficult to rent an apartment or buy a car. If you end up defaulting on a loan, the remaining balance will be due in full immediately. Don’t let this happen to you! If you are having problems with payments, talk with your lender as soon as possible and see if they have any alternatives for you.
It may be frightening to come to terms with the “real world” so soon, but with much planning and preparation, you might be able to reduce the stress and hassle of post-graduate student debt!
–Muna Malin, Student Blogger
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Using Credit Cards Wisely
November 19, 2013
Every coin has two sides, so do credit cards. College students often believe that they will be able to make the payments on their credit cards when they get a job after graduation, and it might not be true. According to Credit.com, 91% of undergraduates have at least one credit card; the average undergrad carries $3,173 in credit card debt; and 7.2% of students drop out of college due to debt or financial pressures.
Gordon Putman, a Standard-Examiner Columnist, says not all students can pay back the debt they’ve accumulated. Here is why:
“The worst part about college students having so much credit card debt is that it takes so long to pay it off. Even if an individual is able to make the minimum payments, it would take more than 12 years and $1,115 in interest to pay off a $1,000 bill on a card with an 18 percent annual rate,” he said. “If students fall behind in their payments, they get slammed with high late fees. And it’s easy for things to get out of hand.”
However, he also agrees that most college students start out with little or no credit, and having a credit card seems to be a good idea since they can start building a credit history.
To keep college students out of credit card debt, it’s vital to know the advantages and disadvantages of credit cards. Below are some top pros and cons of credit cards according to Yahoo! and Investopedia:
- Practicality and Flexibility
- Credit cards are widespread and people can use them practically everywhere.
- They can boost people’s purchasing power because they can be used to buy goods and services over the phone, through the mail, and online.
- They provide financial backup in the event of an emergency, such as an unexpected healthcare cost, job loss, or auto repair.
- They allow people to purchase items and pay them off in monthly installments.
- By using credit cards, people can dispute billing errors and defective merchandise.
- Many credit cards now offer discounts at stores and rewards. For instance, when you make purchases using credit card you can collect reward points; these points accumulate and can be used to get free items, such as airline tickets.
- Some cards may offer cash back as an incentive to use the card.
- They can help build credit history.
- They can help improve people’s credit score, such as the FICO credit score, when they pay balances down by the due date. This improved credit history paves the way for lower rates borrowing rates on other loans, including a mortgage.
- It’s easier to keep track with spending. They keep a record of people’s expenses, helping them to monitor their financial activities. This can help people to control how much they can spend.
- Improper Use
- Some people will spend more money than they should have with credit cards, since it’s easier, faster, and more convenient to make transactions with credit cards.
- When people default on credit card payments, they are charged with late fees and interest, increasing their debt load.
- Acquiring too much credit card debt can harm people’s credit scores.
Credit cards can be good and bad. In other words, people’s financial habits determine whether a credit card is beneficial to them or not. As Putman said, the key to avoid credit card debt is to learn money management skills.
–Yuchen Wu, Student Blogger
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4 Financial Pitfalls to Avoid
June 24, 2013
Erase your debt starting today!
Are you in debt? Are you wondering how you got there? Whether it’s student loan or credit card debt, getting out from underneath as soon as possible is a good idea. Here are some reasons why many stay in debt for years and some solutions to put that debt behind you:
1. Spending more than you earn
This is one of the main reasons people get into debt. A few dollars here and there doesn’t seem like much, but it can sure add up over time. Track your spending throughout the month and try to stop spending if your account balance gets too low to comfortably pay your bills on time.
2. Not having a budget
It may seem boring, but keeping a budget can be easy and painless. There are many ways to make and keep a budget, such as using pen and paper, creating an Excel spreadsheet, or using website such as mint.com that practically does all the work for you (come to our upcoming workshop “Money Apps and Websites for Students” to learn more!). No matter what you do, make a budget and stick to it!
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