Last night, I participated in one of my favorite Twitter Chats, #Millennialtalk.
And it got me thinking about debt, college students, and just how terrible it is that most students start their lives off in debt because of the insane costs of higher education.
Because I really do think it’s terrible.
Like, really really super terrible.
But at the same time, I think we need to start taking a little more responsibility for the AMOUNT of debt we actually have.
Because some of it’s our own fault.
Now wait a second!!! Before you throw rocks at me, listen… I’m not at all saying that ALL the debt we have is our own fault…I still believe that college costs are out of control, big time. But what I AM saying is that we often have a lot more debt than we need to have because of the choices that we make.
So here are 5 things you can do to decrease the amount of debt you incur in college, to hopefully make it a bit more manageable once you graduate, and help you get rich raster.
1. Stay in state.
When we’re in high school, we can’t wait to get the heck out of of our houses! No more mom and dad and our stupid curfew!! So we seem to think that the best way to gain that freedom that we’re craving is to attend college as far away from home as possible. But you know what? That’s not the only option! And quite frankly, I don’t think it’s the smartest one.
Attending an out-of-state school, in most cases, will cost you a LOT more money. If you need to get away from your parents, you can still do that in-state. You can move to another city entirely, or you can attend a school within walking distance from your house, and live in the dorms if you really want that freedom. But in the long run, you’ll be saving tons of money.
2. Live with your parents if you can. If you need a break from the parentals, find roommates and understand that you’re not going to live in a mansion.
Yea, you’re parents are annoying most of the time. And yea, I get it…you don’t want to be told to be home by 2am. But if you can deal with them a little longer, STAY AT HOME. Because rent is super expensive. And my friends…it’s not just rent that you have to pay for when you move out. It’s:
- Food (this alone can make you super poor)
- Shampoo, Conditioner, Toothpaste – you know, those things your mom usually buys for you which really add up, btw.
You also have to do your laundry which is a pain. You also have to deal with things like your A/C breaking or having a water leak – those beautiful, unexpected costs.
But okay, let’s say you can deal with this. Let’s say that you can afford to move out of mom and dad’s house… if you’re ready to do that, then you’re going to need roommates. Because owning or even renting a property all on your own is usually unaffordable. At least, here in Miami it is.
So instead of taking out a loan to pay for a nice, big, gorgeous place, find roommates and share the cost. Even with roommates, your house or apartment isn’t going to be a mansion. ACCEPT IT! It’s not going to look like the houses do on HGTV. Nope. Chances are it’s going to be a tiny hole in the wall. And you know why? Because it’s all you’re going to be able to afford!
And that’s OK! You’re in your early twenties! You don’t have much work experience! You’re not making all that much money! So don’t pretend that you have more money than you really do.
Pretending that you’re a millionaire when you’re not is the quickest way to find yourself $100K in debt.
So just don’t do it.
3. Get a job while you’re studying.
Ugh!!! But I can’t go to school and get a job! It’s way too hard! Then I won’t have time to roam around on campus and find cute guys on Tinder…
Here’s the reality. Some people don’t NEED to work while they’re in college. Some people can afford not to. But I would HIGHLY encourage it. Even if it’s 5 hours a week. Even if it’s just two hours. Money is money, people.
When I was a Freshman in college, I was a campus tour guide. I gave tours to students and their parents in the hot blazing Miami sun for maybe four hours a day, twice a week. Making $7/hr. But you know what? That was about $50 a week more than I would have had if I wasn’t working. And that adds up.
So do you have to work while in college? Not necessarily. Could you instead use the time to be free of work and just hang out with your friends and study for your classes? Absolutely. But understand that it’s a choice you’re making.
You’re making a choice to not make money. And by not making money, that’s more debt that you’re collecting.
4. Don’t buy things you don’t need.
If you don’t have a job, and you don’t have any money, do you really need $200 headphones and new speakers for your car? Nope…ya don’t.
Do you need food, and your books for school, and gas for your car, and all the other basic life necessities? Yea, quite obviously.
So…you see? There’s a big difference here.
One of the fastest ways to add to your post-college debt is to buy things that you don’t need. Whenever you’re about to buy something, ask yourself… “Is this something I really need?” If the answer is no, then put it down and walk away. You’ll thank yourself later, I promise.
Now, that’s not to say that you can’t ever treat yourself to something! You definitely CAN and you should! But if you get into the habit of restraining yourself and not buying things that aren’t really necessary, your debt-to-income ratio will be a lot less scary when you’re ready to step out into the real world.
5. Do not EVER use the phrase, “Well…I’ve already got X amount of debt, so what’s another X amount of dollars added to that?”
I can’t even tell you how many times I’ve heard this one. And I cringe each and every single time.
So many of my friends just laughed it off… “Oh, I’ve already got $50k worth of debt, so what’s another $300 for this purse?” Um… it’s another $300, lady! $300 here and $500 there and another $1000 on that spring break trip that you can’t afford…. all of that adds up! And all of that…YOU HAVE TO PAY FOR IT AT SOME POINT!
It’s easy and it’s tempting to say, “Well…what’s the difference between $50k of debt and $75k?? I’ll pay for it eventually when I graduate and have a job.”
But it’s such a dangerous mind frame to have.
First of all, there’s a big difference between $50k and $75k. Ask anyone who’s currently trying to pay off even $1k of debt.
And secondly, let’s see…you know how hard it is to pay off $75k of debt when you land a job and you’re making $40k if you’re lucky? Let’s do the math. If you’re lucky enough these days to be making about $40k right out of college, and you owe $75k…even if every single penny of every single paycheck that you got went into paying off your debt, you wouldn’t have enough.
(And that’s not even talking about the interest on that debt.)
But realistically speaking, you can’t do that. You can’t use your entire paycheck to pay off debt. You need your paycheck to pay for your car and your car insurance and your rent and your gas and your food and your health insurance and your other day-to-day living kind of stuff. So once all the bills are paid, I promise you, more often than not, you’re not gunna have even $1k left over to put towards that debt.
So what’s my point?
Keep your debt as minimal as possible. Debt isn’t like this imaginary thing that you’ll never have to pay for once you graduate. It’s not even something that you’ll be able to pay off in a few MONTHS once you graduate and have a job (unless you’re like some super kick-ass lawyer or nuclear physicist).
It’s your responsibility to pay for every single thing that you swipe your credit card for, so with every swipe that you can’t afford, you’re doing your future self a HUGE disservice.
Be smart about this.
And yea, I get it. We’re broke at that point in our lives. Believe me, I got it back then, and I STILL get it. But if that’s the case, then we shouldn’t be blowing $100 on alcohol every Thursday-Sunday. And we shouldn’t keep buying the latest iPhone. And we shouldn’t have a wardrobe that looks like Kim Kardashian’s.
Because we got no monaaay, honaay!
But we’ll get there, eventually. With time.
And if you keep your debt to a minimal in college, you’ll find yourself way ahead of your friends when you DO graduate and get a job.
And you’ll be rich that much faster!
I graduated college with zero debt. I was lucky, but I was also smart. I made smart financial decisions. I don’t own Christian Louboutins, even though I want some really really badly. I didn’t and still don’t go to fancy dinners all the time. Friday nights consist of Publix $3.99 pizzas- which I LOVE.
But I’m 24 years old and I’ve got over $40k already put away towards retirement. And when I hit 30, that number will be even higher.
So, stay in state.
Live with your parents.
Get a job while you study.
Don’t buy things you don’t need.
And understand that debt adds up. FAST.
Any other suggestions??
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