Graduating and In Debt - What to do Now!

Congratulations to all the recent college graduates and welcome to the real world of job hunting, learning to live on your own, and paying off that debt you racked up.

It has been reported that the average college graduate leaves college with $3,000 in credit card debt and at least four credit cards. While $3,000 may not sound like a lot, a surprising few, even with a college degree, have stopped to figure how long it is going to take to pay off that debt while quite probably going further in debt financing a car, buying a new wardrobe for that new job, etc. That $3,000 may only be the tip of the iceberg for those with the added burden of student loans. Paying only the minimum monthly payment on the $3,000 balance (assuming 4% minimum payments), it will take over 11 years to pay off. And that assumes no further charges!

Unfortunately, there are a surprising number of students who have more than $10,000 in credit card debt and as many as ten-twelve cards. How does this happen?

It is amazing to see the ease with which mere kids are able to obtain credit with little to no disposable income. Even more amazing are the number of students who admit they were never educated on the cost of credit – how credit cards work in terms of how interest is calculated, late fees, penalties and how it all affects a person’s credit score. Few knew that the spring break trip they charged is going to affect the interest rate they pay to finance their new car or determine whether they can even get approved to rent an apartment. They simply operated under the premise that upon graduation, they would start to pay off their debts. It never occurred to them that the $10 pizza they charged could end up costing a $100 or more depending on the interest rate charged and any late fees or penalties that apply if late on even one payment or unable to pay the minimum.

Why are so many willing to hand out credit like candy? Because they are all fighting to gain your loyalty as early as possible and ultimately your long-term financial business for auto loans, mortgages, credit lines, and of course, your ongoing credit card purchases. (See what Robert Manning, author of Credit Card Nation, has to say about the tactics of credit card companies.)

Decide now to become a financially responsible adult.

1. Read my blogs dated October 2006 on Credit Card Gotchas.
2. Then read your credit card statements carefully so you understand the terms you have agreed to and exactly what you are paying in interest, late fees, etc.
3. Set up a plan to pay down that debt as quickly as you can, starting with your highest interest credit card, without being late on any of your other cards.

Parents, if you care about your young adults starting out on the right foot, help them get their finances on solid ground. Sit down with them and go through the above steps together, with understanding (not recrimination) and encouragement.

Think You Might Be in Serious Credit Card Trouble? If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. For more information, read my blog dated September 29, 2006.

Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S.

You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt.