I am a third-year college student who, up until now, has not been good at all with money. In addition to my student loans, I am about $5,000 in credit card debt. Some of it wasn’t my fault–my mom is a single parent and when things beyond my control happen (e.g. a $250 housing deposit for my university, or not being able to drive my car without a pair of $60 rotors and $50 brake pads), I turn to my credit accounts for help–but the rest of it is totally and utterly my doing. A large amount of my credit debt is due to my own reckless spending, thinking “It’s okay, I’m working, I’ll pay it off later.”
Well lately, I haven’t been able to do much at all for my credit cards. My interest rates are high, and I only get a little chunk of my paycheck–the vast majority of it goes to school. Twenty-five percent goes to me–and it always goes straight to my credit cards. When I think I’m starting to get some headway on the bills, something comes and wipes it out.
I’ve resorted to selling off a couple textbooks and charging used ones to my student account, all to get money to keep the creditors at bay. There’s little my mom can do, as she’s got her own financial hardship–and is helping pay for my education. I’ve started to consider going to the site of Money Management International, but I’m wary and don’t know whether or not it’s legitimate….
What can I do? How can I get out of this? I feel like I’m constantly treading water, or struggling for oxygen, and it’s horrible. I’ve learned my lesson, and to any youth who see this and want a credit card, or have one: Credit cards are good. When used properly, they help build your financial reputation. NEVER SPEND RECKLESSLY. Only use them if you know you’re good for the money, or in an emergency. I’m only 21, and this is financial hell for me. You don’t want to be here; it’s maddening.
I just want to get out of this. I GUARANTEE that I will never, EVER let myself get into this situation again.
I think you’ve reached the teachable moment with your credit card. Just remember this pain and it will serve you well to use credit but maintain a safety net.
Money Management International is a legitimate credit counseling group but I’m not certain how much they will be able to lower your payment. You see your balance isn’t that high right now and with the service fees they may charge I don’t see it being a huge difference. However, like other credit counseling groups, they may be able to lower the interest rate depending on who the credit card company is.
Ultimately what we have here is an income issue rather than a debt issue. From what you shared it seems your income is small and unable to support you. I understand how tough it is to work and go to school. But it might be time to look for other employment or a second job and slog your way through this.
You’ve done a good job with cutting expenses, like textbooks. Recently I heard a good tip to lower them even more. Ask your instructors if you need to have the latest edition of the textbook. Copies that are a version old will sell for nearly pennies and save you a bunch.
As you try to pay down this debt just remember that you need to save money at the same time. If you try to send more than you can afford toward your debt each month you’ll find yourself using the card again to make ends meet.
Getting out of debt is a balancing act between income, expenses, and prudence.
Let’s focus first on increasing your income, even if it means cutting back on a class to give you more time to work.
Please post your responses and follow-up messages to me on this in the comments section below.