Credit Card EducationWe send our kids to college for an education, or we goto college for an education but often times while we are in the process of going to school, we cripple ourselves with credit card debt.
At any stage of your life, if you are in college or some type of higher education institution, chances are you are on a limited budget. In many cases, the easiest option is simply to put most expenses that you seemingly cannot cover on a credit card. This can be a huge mistake!
In many cases we see students leaving the confines of education now saddled with thousands of dollars of credit card debt that they must attempt to pay off. Before you go down this common path and make this mistake, here are a few things to remember:
Live within your means – the first step to determining how to live within your means, is to define a budget. A budget does not need to be complicated, it is simply your expenditures over a set period of time. The easiest length of time to define a budget is monthly. However, you do not want to forget about those expenses that occur annually or semi-annually, such as car insurance.
Track your expenses – it is easy to get into debt if you do not know what you are really spending. In this day and time, it is easier than ever to track your expenses. Most every credit card company and bank has a website where you can track your expenses. Remember to take advantage of these services.
Pay your bills on time – Missing payments is bad for two reasons. First, it can damage your credit score. This is problematic because it can take months or years to repair it, and this makes it difficult the next time you try and apply for a credit card or another type of loan. Second, missed payments usually mean late fees. So, in addition to the credit card balance that you are trying to pay off, you now have late fees on top of that. Usually late fees are higher than $20 per late charge, so it is easy to see why you do not miss a payment.
IMPORTANT: Even the most diligent person may sometimes send a payment in late or even forget about a payment. However, if you have a good track record of payment history, some credit card issuers may waive the late charge once as a courtesy. If you miss a payment, and have a good payment history, it may be to your advantage to call the number on the back of your credit card and ask the support representative to waive the late charge as a courtesy, and they just might do it!
Reward yourself if you are successful – periodically you should assess how you are doing. If you are not doing so well, it may be time to solicit some help or advice. Perhaps a parent or friend can offer lend a helping hand or be a sounding board about your situation. If you are doing well, and managing your purchases and debt, reward your success (within reason of course!)
Finally, remember to keep your budget within reason both on the low and high side. While some debt is certainly acceptable while you are in school, do your best to keep it low. Often times jobs are not as plentiful or high paying as you might expect when you complete your education, so be wise.