Racking up credit card debt in college
Did you rack up a big credit card debt in college? You have to remember that it takes a long time to Remove Negative Items from your Credit Report! One of my roommates had $5000 in credit card debt. Of course he also wore polo shirts and designer jeans. I think he also had a car payment. My car cost $700 and lasted me for like 3 years. This video is has some good lessons in it about credit card debt. I like the saying "if you live like a professional in college you will live like a college student after you get out of college." What happens is you have fun paying for things like spring break, dinners out, and material items. You rack up a huge debt and you end up pay for it for a long time. One of my spring break trips consisted of a buddy of mine and I driving to Daytona and Fort Lauderdale and sleeping in the back of our truck. It was great we didn't know any better and we were on SPRING BREAK. The trip was cheap.
Did you know if you have $7000 in credit card debt at 25% interest rate you end up having an interest charge of $1750 per year! That $145 per month just in interest that doesn't even count the principle payments.
A few guidelines to remember and these don't just apply to college students.
- Don't pay for things that don't last more than a few years with a credit card if you are unable to payoff the card each month. For example, if you don't have the money for the dinner out. Don't put in on the card.
- Don't borrow money long term from a credit card company. Borrow money from a bank not a credit card. The rates are much, much lower.
- If you cannot get credit borrow money from your parents or relatives. When I say borrow I really mean it. You have to keep track of what you owe them and have a written agreement on how you are going to pay them back.
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