Most of the statistics show how financially crippled people between 20 and 40 years of age are. 10 years after college, they are still unable to make a huge dent on their student loans. That means they are unable to invest in other purchases that can increase their personal growth – like their own business, a home or a car. This caused a lot of them to continue living with their parents. It also let to them not contributing anything to their 401(k) – having chosen to pay off student debts instead.
These have caused some high school students to rethink their perception of a college education. In fact, a lot of them are foregoing higher education and are just opting to enter the workforce early. While some of them can find jobs, most of it are blue collar jobs with no clear path towards career growth. Unlike college graduates, those who work immediately have limited opportunities to earn big salaries.
It seems that the decision is actually more difficult to make. Will you choose to put yourself in debt so you can get a higher education and thus have better opportunities to earn more? Or should you stay away from the debt and be stuck with low paying blue collar jobs?
The truth is, you don’t have to be scared of debt at all. While it has all the potential to destroy your life, there are things you can do to avoid that. It all boils down to proper financial management and making smart decisions towards debt.
For instance, limit your debt. Make sure the debt that you will get can contribute to your personal growth and wealth. Student loans have all the potential to be good because it increases your knowledge and skills. You can keep your student loans as your only debt – at least until you have paid off a significant amount already. People are in a financial crisis because their student debt is combined with credit card debts and other personal loans. If you can avoid it, do not use your credit cards because it will really drag you down a debt pit with its high interest rates. If you are able to pay for things in cash, then you will be better off with that spending habit.
Another habit that will keep student debt from destroying you is to boost your savings. This way, you don’t have to use your debt payment fund for any emergency expense. That will keep you from racking up unnecessary interest and penalty fees. Grow your savings as soon as you start earning. Do not make the mistake of thinking that it is too early to start. There is no such thing. In fact, the earlier you start, the chances of you landing in a financial crisis is more unlikely to happen.
And if you are currently in debt already, you should aim to eliminate your other debts by opting for a debt relief program. For instance, debt management can help simplify and lower your other monthly dues (e.g. credit card debt) by stretching what you currently owe over an extended payment period. Know your options so that the load of your other debts will be lessened.