Apr 3, 2007

The art of finances: staying out of debt during college

by Stephen Nelson, Opinion Reporter
Over the course of the four (or more) years dubiously called “the college years,” there are a number of trials and challenges students must face. Keeping grades up, maintaining a social life and actually graduating in time before old age sets in are just a few.

One that affects all college students and even those post-college years is money—or for some, the lack thereof. Staying out of debt is a serious issue. Many students in today’s generation have poor money-managing skills, which can result in debt and mountains of bills later in life. The key to avoiding this is to learn about money early on, and create good habits. It’s easier than you think.  

After four years of sleepless nights, semi-good food, loads of effort and hard work, a sparkling diploma is also accompanied by thousands of dollars of credit card debt. According to CNN, this has become a recurring problem with college students. CNN talked to Shalonda Jones of the National Foundation for Credit Counseling, who said, “Too many college students go off to school without understanding finances.

Parents make the mistake of not introducing financial literacy to children at a young age and most parents are equally clueless as to what it takes to remain financially stable.” Finding financial balance is not only crucial in battling credit card debt but in maintaining stability in finances much later down the road.  

The first step is to avoid credit cards. Credit card companies target students, because they need money and they are easy to persuade. If you are capable of paying the credit card bill, remember to look over its stats carefully. Beware of fees — annual fees can be up to $50, and a company can change its fixed rate with a 15-day advance warning. Most importantly, check out that interest rate. Alternatives to credit cards are debit cards.  Most banks have debit cards in relation to checking accounts. Instead of paying later, money is deducted from your account. Not only does this eliminate debt, it is a great way to practice and perfect budgeting. 

Create a budget now. Be wise — amaze your friends with your money-saving techniques.  Take a moment and think about where your money is going to—rent, utilities, tithing, miscellaneous needs and food. Oh yeah, food. Everybody’s gotta eat. If you live on campus, take advantage of that meal plan. If a meal plan doesn’t suit your needs, buy groceries. Avoid constantly eating out at all costs. Eating out all the time is like dropping a nuclear bomb on your bank account.

The dollars will disappear. Moderate yourself in spending.  Also, avoid paying for food with credit. It is just another thing you have to pay back. At YoungMoney.com, a resource geared towards young adults on financial issues, experts reported that the average college student has a credit card debt of $2,700 and 75 percent have $3,000 in debt, while about 10 percent have as much as $7,000 in debt.

A handful of good decisions and personal boundaries will make sure debt doesn’t come knocking at your door. Money managing is just as important as English and physics.  College is not only a place to earn a degree—it’s also the time when adulthood sneaks up saying, “Guess who?”  Independence comes at a price—but with some frugal awareness, the cost can be pretty low.  

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