Although some people are able to fund college entirely with their own money and grants, most people graduate with at least a little student debt. Paying off student loans can take years and set you back financially when you enter the workforce. You don’t want to compound the problem by adding consumer debt to the mix. Credit cards have high interest rates and can easily seduce shoppers into living beyond their means, causing major financial strain. Here are a few tips for getting through college without relying on credit:
1. Understand how interest works.
It’s hard to appreciate just how ruinous credit card debt can be without knowing how interest is compounded. Take some time to learn about credit cards and see how the interest can quickly multiply a purchase beyond its original price. Seeing actual figures will really help to put things in perspective.
2. Make a budget.
Tracking all of your expenses might not sound like much fun, but it’s the first step to taking control of your spending. Don’t think of it as a way to limit yourself; think of it as a way to make sure you can afford the things you really want. Write down all of your expenses and set limits for how much you will spend in a given month on certain categories. When you reach your limit, you have to stop spending or take the money from another category. This way you’re sure to only spend the money that you have without borrowing.
3. Use layaway.
Instead of financing purchases, save up for them or use layaway programs whenever possible. By saving up for a purchase a little bit at a time, you can be sure you’re not paying more than you need to for expensive interest rates or hidden fees. You can also save money by buying used goods or finding low-price alternatives to expensive brand names.
4. If you do get a credit card, make it a good one.
You may never get as many offers for credit as you do in college. Take advantage of the variety by choosing a credit card with a low interest rate, reasonable spending limit and no annual fees. Maintaining this one single line of credit will help improve your credit score and make it easier for you to get a car loan or mortgage later.
If you are still strapped for cash after attempting the aforementioned tips, then it is time to consider online school. Web-based colleges allow you to not only learn on your own time, but also to save a significant amount of money on room and board, travel, supplies, and sometimes even tuition. Most brick and mortar universities allow online credits to go toward their degree, so it can’t hurt to see if this option will work for you. Requesting more information is free and it can make the difference between a successful career and crippling debt, so don’t hesitate to look into it.
5. Always pay off your balance.
If you have a credit card, be sure to pay off the balance of your purchases every month instead of carrying a running balance on the card. This will keep interest prices down and looks great on your credit score.
Credit card companies frequently target college students with appealing offers, and it can be hard to resist apparently free money when you’re a struggling student. Don’t allow yourself to be lulled into accepting all the credit card offers you receive, though. By learning to live within your means in college, you make the first step toward financial freedom for the rest of your life.