SubscribeSmart Ways for College Grads to Minimize Debt
(This is a guest article by Omar Adams*)
If there’s one thing that most college students are graduating with these days, it’s a mountain of debt. And even though they know this situation is bound to arise when they take out a student loan to cover their tuition costs, they don’t realize that it is compounded several times because of the way they use their credit cards and rack up other unnecessary expenses. It’s not that hard to graduate debt-free or at least with a relatively low amount of debt; the only hitch is that collegians have to plan and execute even before they start their four years on campus. If you’re a high school student hoping to minimize your debt when you graduate from college even as you enjoy most of what college has to offer, here are a few tips that are sure to help:
- Choose your college with care. Remember, a prestigious name is not going to help you when you’re faced with a mountain of debt on graduation. So unless you want to spend the better part of your adult life slogging away to pay your student loans, think carefully before you make the choice. While you don’t have to go to the other extreme and choose a community college, opt for a university that’s close to home or where you have friends you can stay with. This way, you cut back on accommodation costs. If that’s not possible, choose a degree at a college that’s reasonably affordable and which doesn’t demand that you pay through your nose.
- Work while you study. College is not all about fun and games, parties and sororities. You need to adopt a more serious attitude if you want to graduate without a care in the world. When you assume responsibility for your debt right from your first year by getting a job that allows you to pay for your extraneous expenses and also settle some of your student debt, you not only prevent your debt from accumulating, you also reduce the interest on the amount that’s outstanding.
- Use credit cards judiciously. I’m sure every college student has been given this piece of advice; even so, it falls by the wayside more often than not. While I’m not saying you must avoid credit cards altogether, it’s best to use them wisely – charge all your expenses to them if needed, but ensure that you have enough money to cover the entire payment every month on or before the due date. The best way to avoid racking up huge credit card debts is to get a secured card, one where you’ve paid a sum in advance and which is your spending limit. Also, if you have a savings account, tie it up to your credit card and set up an automatic debit facility the day your bill is due. This way, you don’t have to worry about going overboard or racking up a huge interest because you’ve forgotten to pay your bill, and even if you don’t have money to take care of your bill, the amount you paid upfront is enough to take care of it.
*About the author: This guest post is contributed by Omar Adams, he writes on the topic of online accounting degree programs. He welcomes your comments at his email id: omaradams47@gmail.com.
*Image Credit: Photograph by upsuportsmouth [via Flickr Creative Commons]
Investing in stock... sounds scary? Many of us do not have much idea about stocks at all. Especially the youngsters who are just starting out, often inquire about how to start investing. Let’s start out with simple answers to the basic questions.
Debt collectors can be very difficult to deal with. They get paid based on their ability to collect a debt, so they have a pretty big incentive to get the money owed. Creditors (like credit card companies, mortgage holders, etc) outsource these debt collections to collection agencies. These agencies get paid based on what they collect, so they are determined to get that fee. I've recently read that in one instance a collector called a debtor at work 80 times in 1 day. Sometimes a collector's efforts to collect a debt can turn into harassment. This is why you need to know your legal rights.
Recession has affected a lot of us in disastrous ways. Businesses big and small have gone bankrupt all around the world. Being in debt itself creates a lot of pressure on human minds. To top it, if you are in knee deep debt, you may feel perplexed about the various options available for the repayment of your debt. Many people do not give this problem much of a thought. Instead, they file for bankruptcy, thinking it to be the easiest and safest way out of debt. However, bankruptcy is not a viable option. It should rather be the last resort that you choose.
Bankruptcy filings are climbing and are expected to total 1.5 million before the end of the year. If the economic crisis has you considering bankruptcy as well, there are several things you can do now to manage your debt and avoid being forced into filing bankruptcy like so many others. 
As a student, your financial picture is a bit unique. You have few assets and few hours to devote to a job, thus little income. You have little credit history (good or bad) but some limited access to revolving credit and other loans. Because of this, the years between matriculation and graduation are somewhat of a testing ground for your creditworthiness. Lenders give students just enough rope to hang themselves – and during those crucial four or so years, you can either establish a firm foothold on your way up to excellent lifelong credit or scar your credit rating for life with poor decisions. But by being an early adopter of responsible spending habits, you can save yourself from a lifetime of debt and sorrow. Your continued fiscal auspiciousness should be dictated by a series of don’ts. For example:
Often when a child leaves to enter further education, they will not have had to budget or manage their own money before. This can be quite a shock to the system and some young adults will deal with this more responsibly then others. Unfortunately, some will leave with considerably more debt than others. In many cases, this will be because the temptations of having money are all too much. 
College students are increasingly relying on student credit cards to make ends meet. According to student lending giant Sallie Mae (SLM), average credit card debts carried by graduating college seniors jumped $1,200 between 2004 and 2008. The same study also shows that only a shocking 15% of college students do not carry any credit cards.
There were times when I used to allow my heart to rule as far as my personal finances are concerned. I thought it was the coolest approach that I could ever have until I realized that it wasn't a good idea after all! Well, I had to admit that one doesn't get into a debt situation in a jiffy because it builds up gradually and seeps into one's finances in a clandestine manner. Guess what? It even took me a long time to get out of it! 
Specifically should you talk to your children if you are experiencing a financial hardship? Just as each family is different each situation is unique and there is not one easy answer to this question. I have a three year old and while we ran to the store this weekend to pick up a new router for my new work at home job, I was faced with some difficult questions from my toddler (since this is my only child, I am still amazed at how hard it is to answer some of his questions). It made me think: how much do our kids have to know about our finances? Is it possible to give them too much or too little information? In my case, the answer is a bit simpler. There is only so much a three year old can wrap his head around. There is no need to go into budgets, the credit crunch or why mommy has to wait and see how her new job pans out before spending money that might be needed for other things. He simply doesn't care and doesn't have the ability to comprehend you can only have ONE thing and it can't cost more than ten dollars. I get that. But what if you have older children.....kids old enough to have the basic gist of how money works and how important it is in keeping the household running? 
It’s hard to open a news site or newspaper without hearing more about the economic woes besetting the world in general and the States in particular. From credit crunch to housing crisis, it seems like everything that could go wrong now officially has. It’s no wonder the airwaves are full of heated debates disputing the meaning of the ‘R’ word, and whether or not we can officially use it (yet).
In the personal finance blogging world, when you bring up the question of whether your primary focus should be on building an emergency fund or paying off your debt first, you will likely get a very strong passionate response supporting one or the other. Those belonging to the emergency fund first camp argue that without an emergency fund, it is easy to slip into the murky world of more debt when unexpected circumstances strike. On the other hand, those belonging to the pay debt first camp argue that to get the best mileage out of your money, use it to pay off high interest debt, instead of letting it sit around in a low interest savings account (and compared to the hay days, even the best online savings accounts look like low interest savings accounts these days!). We definitely belong to the latter camp. For us, debt feels like a constantly nagging thorn on our side and during the past couple of months we pretty much wiped out our emergency funds to pay off our debt. While there were heavy psychological and emotional overtones to this decision, it was not made lightly. I would like to lay out our reasoning here, in case someone else is in a similar boat and finds it interesting.
One of the items that seems to continually go up in cost is education. It's up there with food, health care and gas. Only you don't usually have to take loans out to buy those other things. The rising cost of higher education pretty much guarantees that you will need to take out student loans in order to help fund your degree. 
It is college application time. While kids scamper to put the application packages together, parents fret and worry about the choice of degree and choice of colleges. While the kids are busy rating how "party" friendly the different schools are, parents are busy trying to figure out how "pocket" friendly they will be. A teenager's idea of a cool career is bound to be different from their parents' idea. Unsurprisingly, this could lead to a lot of flare ups when parents don't quite agree with their children's choice and the children don't want their parents to interfere. 
After several years of being debt-free (apart from the mortgage), we now have an auto loan. 
It used to be that parents would blush with pride when their children were accused of being “born with a silver spoon in their mouth”. I am not talking about the likes of super brats like Paris Hilton or Nicole Ritchie here. Just regular people like you and me, who would strive to make a good living for themselves and have something left over for the future generations.