How to Avoid Excess Debt While You’re Still Young
Thursday, August 9, 2018, 6:00 PM | Leave Comment
After graduating high school and stepping into the world outside of your parent’s house, you may be tempted to live lavishly on expensive trips, shop ‘til you drop and spend way more than you can possibly afford.
That freedom of being out of the house can be liberating, but it can also be dangerous if you end racking up enormous credit card bills.
According to Doable Finance, “Americans roughly owe $2.4 trillion in combined debt, which is nearly $8,000 per citizen.”
To eliminate some of that worry, try out these tips on how to avoid acquiring debt and falling into a deep hole of owed payments.
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Don’t Pay More Than You Need
You might want to go to that fancy, out-of-state college after high school but you may be surprised to find out you can get the same kind of education for way less by attending a trade school and applying for their scholarships. Several institutions offer trade school scholarships and programs to help students pay for their education costs.
According to Delta Technical College, their program gave out a total of 158 scholarships for various amounts, ranging from $2,000 to $10,000, with some students receiving a full ride.
If you know the type of trade you want to pursue, there are scholarships available to you for your specific interest, such as welding training from the American Welding Society.
Scholarships sponsored by companies is another useful avenue. For instance, those interested in cosmetology programs are recommended to look into scholarship opportunities by companies such as Great Clips.
There are scholarships available to your specific demographic as well, specifically for those with a certain ethnic or racial backgrounds or those with a disability.
There are also third-party scholarship options for students based on their background and affiliation with specific groups such as the military or LGBTQ+ community.
Government-funded grants can also be a useful option for students, especially FAFSA, which stands for Free Application for Federal Student Aid. FAFSA is considered a pell grant, which is an amount of money that’s given to students to use for their education.
There are several third-party scholarships available to students as well, as long as you meet the eligibility requirements. With a bit of research online, you can find scholarships for just about everyone, no matter where you come from.
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Develop a Healthy and Stable Credit
After high school, acquiring a credit card can be enticing. Yet it’s dangerously easy to rack up excessive debt through credit card purchases and incredibly difficult to pay off interest, especially during college.
There are many misconceptions about credit card debt, surrounding areas such as minimum payments, fixed interest rates and credit scores. Many people think that if they pay their minimum balance, they won’t acquire any interest, but this is a common myth. Even if you consistently pay your minimum balance, your remaining credit balance will still accrue interest.
As Doable Finance points out, it’s best to pay the entire balance on your credit card within the next month so you don’t acquire interest. Understanding how to avoid interest and late payments is essential for building good credit.
Here is a helpful and insightful video from Credit Repair Pros on how to build credit and establish a healthy one.
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Create a Budget to Manage Your Finances Better
When heading off to college, it’s important to remember what your expenses are and prepare accordingly.
By creating a budget, you can manage your money better and become smarter with your financial choices. It can also help to create a payment schedule so you can make sure you’re paying bills on time and have enough funds in your bank account.
RetailMeNot created a helpful guide on what students and parents of students can do to help n in providing a financially stable future and creating a debt-free life.
According to their guide, parents should start early with their kids in talking about finances and discuss the responsibilities of credit cards with their children. It’s important for parents and their kids to discuss who’s responsible for paying for what and keeping it consistent.
As RetailMeNot points out, it’s valuable to know the consequences of overspending on credit cards and being able to pay interest if it occurs on your account.
By following these simple and easy tips, you will become a smarter consumer, develop a healthy credit and have a debt-free and worry-less life!
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