Congratulations! You Have Given Birth To A Debt

Development in technology and the need of an exquisite lifestyle were the parents that gave birth to the era of plastic money. Credit card is now a versatile tool used for convenience of shopping, receiving points and discounts. And everyone has at least half a dozen of them. However, this plastic money used as convenience becomes the most inconvenient asset, or rather liability, when one fails to pay the minimum bill every month.

The group of people that suffers the most is graduates. They are already laden by debts of student loans and other loans for education where now the credit card debt is adjoined even before they start their work life. Debt enters quite early in student’s life. An astonishing piece of news some decades ago, credit card among high-school kids is quite common these days.

Is studying so expensive these days? Yes, if it is equipped with latest thingamajig they buy to outdo their classmates or room full of designer clothes. Starting their career with enormous debt is a bad idea and this has led many among this generation to go broke.

Recent research says that a debt through credit card is now a trend among college students. An average balance of this age group is over $2000. This is just an average figure. Many of these students have an amount of more than $5000 unpaid, the high interest rates of which keeps accumulating, digging a giant hole for themselves.

The fact is that college kids are not much aware about the consequences of high debts and not much serious about the repayment of the loans, at the time when they use the money. And let’s face the fact for a moment. A college kid cannot really comprehend it. He is glad after buying his new cell phone, outfits, college books, breakfast, and starts studying for his semester now because he wants to practice basketball later in the evening. He is quite sure that the large numbers of his credit card debt would be paid as soon as he graduates and accepts a top-notch job. He is not taught by the college professors about the outcomes of not repaying the debt nor will he listen to his parents. How can you blame this innocent guy or the entire generation?

Young people are noticed paying the minimum amount every month for infinite years. They do not realize that the already high interest rate keeps bounding with every minimum payment as they are not contributing much to the capital amount. They are not informed that a poor credit score or late payments are quite big reasons that can keep them from getting a decent job. Almost all companies now-a-days perform a background check and view your credit history before hiring any employee at any level. They still think they will grab the top-notch job.

Today, times are tough. We are barely out of recession. High paying jobs are limited and we have witnessed many employers turning insolvent. Almost every working employee has experienced pay cuts. In such situations, if a graduate doesn’t have decent savings, he is sure to further entangle in the web of debts. For the rest of his life, instead of trying to buy a car or new house, he will keep fighting to survive and pay the bills regularly.

Am I scaring the youths? Nope. I am warning them about the severe consequences they could face. But it isn’t late yet. A good piece of advice I can provide to avoid these consequences is – calculate how much the aggregate debt is and start paying it off quickly. Do not try to acquire further loan or shop much on your credit card. It would be a wise decision if you don’t think of any loan or debt until you start working and are able to repay the amount. Start saving today. Don’t spend unnecessarily on useless gadgets and parties. Remind yourself about the real difficulties that you could face later.

Are we living our lives just to strive and pay the bills regularly? Don’t we deserve something better? Focus on investing early rather than piling early debts. You have a pretty long life ahead. Start investing a small amount like $80 per month and you will enjoy fabulous benefits during your retirement. Do you want to continue this bill-fighting even when you are 65?

Another tip is to learn a bit about managing your money like debt management, budgeting, etc.

The best way to avoid entrapping yourself is to pay the credit card amount in full.