Overcoming Young Debt


Overcoming Young Debt
Guest Post by John Napuunoa

Overcoming Young Debt

It has only been two months since my last college loan payment was made. It only required a couple clicks of the mouse and the feeling of successfully extinguishing my college debt was finally realized.

Successful college loan eradication may seem like a fairy tale to many college students today. In fact, the horrible fate for many young people is that they will never overcome their college indebtedness. At 25 years of age, I was able to do what many have not been able to do.

I like to focus on the practical nature of finance, and the same practical nature can be implemented in managing debt. For me, I have always tried to live conservatively in my finances. I dislike debt to an extreme, and I have never knowingly paid interest on my credit cards. Perhaps this is where I differ from most financial advisers.

I believe credit cards are useful, but paying off the credit cards must be done on a weekly basis. I also recommend having a credit card that is attached to your bank account. This setup will allow you to view both your bank account balance and credit card balance. It is a pretty simple setup, but it works wonders in determining your financial arrangements.

A web site that I use frequently is Mint.com. It allows you to track your finances like a company balance sheet. Using the data in Mint.com it is possible to measure your finances statistically over the course of time. This feature will assist you in overcoming financial mistakes that you may have made in the past.

When it comes to extinguishing debt, the trick is to manage your income and pay off loans on a consistent basis. It is difficult to extinguish debt when there is no job or possibility of getting a job. This is where determination comes in. Being open and honest about your situation is required before any jump into paying off debts. In the Bible there is an answer to finding help. James 1:5 says, “If any of you lack wisdom, let him ask of God, that giveth to all men liberally, and upbraideth not; and it shall be given him.”

Setting a reasonable time frame for eliminating the debt is very important. If you consider your current income and expect to pay a certain amount every paycheck then extrapolate it out over a period of time, it is easier to manage the debt and it will help relieve a lot of stress. A big chunk of money is nice to pay off debt, but the problem is that a big chunk of money does not come around every day. Using what you have to your advantage is important, and this is how people are able to successfully manage their debt.

I run into people who get so worried that they cannot pay off their debt that they choose to only pay off the minimum every month. As a result, their loan hardly shrinks. Interest is something that either works for you or against you. The banks are not willing to pay out high interest rates on savings accounts, but they will charge high rates on loans that they hope to capitalize on.

Unfortunately for many college students the thought of paying off loans does not arrive until after college graduation. According to FinAid.org, “the average student loan debt among graduating seniors was $23,186.” There is a serious problem that is happening in our American collegiate system.

Colleges seem to be demanding more from students, but students are increasingly raising their debt levels to maintain enrolled. On popecenter.org’s Fast Facts page it lists the increasing debt levels, with a debt level increase of 24% from 2004 to 2008. It sure does not seem as if college students are getting much wiser.

Although debt is a burden to many students, it does not have to be a weight on your shoulders if you have a plan to eradicate it over the course of a specific time period. Sure, events in life are unpredictable, but what is predictable in our life? I hate debt to an extreme, and I hope you get to the point where debt has no hold on your finances.

In closing, remember Romans 13:8 as you plan on eliminating the debt in your life, “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”