How to get out of Debt

[minsbang]

Hi,
I am a senior at Penn State Univ. and I owe some money to my credit card company. I have consolidated two accounts into one and now I owe two grand. By this age, I realize how important it is on knowing how to manage and spend money wisely.
I have been extremely cheap, thrifty, whatever you wanna call it, and I am still frustrated with my credit card bill. My paycheck goes to fuel and rent.
What are the suggestions that I might want to consider in order to get back on track?
I am current a full time student (18 credits), part time un-paid intern(25hr/week), and part time cook/manager of restaurant (13 hr/week.. $9/hr)
My friends suggest that I become a street pharmacist but they are kidding around.
Oh, and some of you may wonder How I owe two grand to the credit card company; I used my credit card for school expenses and food.

 

[Dave Hardy]

...part time un-paid intern(25hr/week), and part time cook/manager of restaurant (13 hr/week.. $9/hr)

Replace the unpaid hours with paid hours. Also - $9 / hr isn't bad for part time work, but it isn't really good either. If you could get 20 hrs @ $12 / hr (very reasonable for a college senior with a full load) you would double your income.

 

[Malibu Rapper]

You're doing OK, I wish I only owed 2k on my credit card when I got out of college and I know many ppl who would kill to reduce their CC debt to 2k.

The internship is killing your time to earn money but may pay off in the long run. If you can quit it and earn instead, then you could easily repay the 2k in not too long a timeline. But really you understand your situation better than anyone else.

Basics on the credit card is to always pay more than the minimum. Take advantage of interest reduction transfer programs and ensure you have the lowest rate available (sometimes it just takes a phonecall for rate reduction). Or switch to new credit cards that offer better rates, sometimes they will give you 0% interest for several months.

Maybe figure out a side business to earn extra income. eBay, consulting, etc. After you get out of college and start earning a decent income, you'll come to see that the $2k in debt you have is really quite small. It seems a lot larger when you're a student but will be chump change when you're earning your 6 figures later on. You're doing fine!

I have friends that owe over 25k on their cards and really don't have a good strategy to pay it off. This guy I met on a plane was telling me about some expensive hotel he stayed in on vacation and in a later conversation he was complaining about how he owed 50k on his cards.

Nowadays my credit cards pay me. I earn up to 2% back on my Discover and Capital One card + mileage for the Delta skymiles program. I charge up everything I can and pay it off every month.

Bottom line, don't stress out too much over it because there are a lot of people way worse off. But don't get careless with using it either...

 

[dynatac]

Only 2K? I don't think that's very bad.
I was in the same boat not too long ago.

Call up your credit card company right now just to make conversation...
Ask them "What is the current status of my account?"
If they state you're in good standing, then ask "Then how can I lower my interest rate?"

That's a start.
If you're one to actually read fine print and understand it, see if one of your cards has a lower interest than your other card for balance transfers, and just put it all on one card. (Keep in mind the rate may not be fixed so watch this) Then of course, always pay more than the minimum.

While you're at it, find out if you're being charged anything extra, like a "protection" program or something possibly unneccessary.

Good luck.


edit: I just read Malibu Rapper's post and realized I'm echoing his statement. :biggrin:

 

[caseycarson]

2K is the best you could do??? :biggrin:

I would kill to only have 2K in credit card debt.

The only way you're gonna do it is to make more and/or spend less. That is stupid advice, but it's kinda true. :tongue:


AND JUST A NOTE....MY CPA TOLD ME THE AVERAGE CREDIT CARD DEBT FOR AMERICANS IS 15K.....SOUNDS ABOUT RIGHT :smile:

 

[steveny]

Never borrow money for something that won't make you money in return.

 

[NRG]

The 2K you have on your credit card is a good legitimate expenses on food and school. Just don't go out and buy yourself a new flat plasma TV for your room, etc . Most independent students in college owes a lot of money on school expenses. By the time you graduate from college and making $$$, you'll be able to pay it off. Just control your spending...and you'll be okay.

Oh...do you have a brother or sister in the family who can let you borrow the 2K so you can pay it off early? That's another reason why it's a good idea to have a good relationship with members in the family. I offered to loan my sister 10K just to pay off her car payment so she didn't need to pay interest on the loan, but she rather be independent.

 

[flaminio]

Like the others said, at $2000, you're OK. Make sure you pay at least the minimum payment every month; more if possible, but never less. At some point you'll graduate and get a "real" job, and that $2K will evaporate in months.

Just make sure you don't splurge on luxuries and you'll be fine.

 

[dave22]

Never borrow money for something that won't make you money in return.

Wow. That's good advice. I never thought of things that way.

 

[Doc C]

There is NO sin in using a credit card for your education. That knowledge will make you more money than you can imagine. That is a legitimate expense for a CC. $2,000 is nothing to worry about. Just keep current and pay extra over the minimum amount. Also, sometimes you can use some of your student loans (if you have them) to pay down your CC. The rationale is that you defer pmts until you have a job, and the interest rate is usually WAY lower. The interest rate on my student loans has been less than 4%. Like someone said, only use CC for emergencies, or on things that will make you money. You're going to do fine. It won't be long until you are ready to spend $2,000 cash on an exhaust and other accessories for your NSX!!!!