A Little Self Control Goes a Long Way

“I’m going to be paying on my college debt for the rest of my life!”

I can’t tell you how many times I’ve heard this complaint. Heck, I’ve even uttered it myself a few times. The fact is that the overwhelming majority of college graduates have to deal with paying off their education over the course of many years. For most, it’s difficult to see the light at the end of the tunnel. These are the ones from which you will hear the most complaints.

But what most of these complainers have in common is that they don’t have a real plan for getting rid of their college debt. For most people, the plan is simply to keep applying for forebearances and deferments until their student loan companies start demanding their money back.

Consider the following steps to make wiping out your college debt a no-brainer:

1. Avoid Credit Cards. I know this goes against everything your parents might have told you about establishing a good credit record, but if you don’t have any self control, then credit cards will hurt you more than they will help you.

This is something I know from experience. When you first graduate from college and land your first job, the possibilities seem endless. You suddenly feel financially independent. You feel like you can buy whatever you want. And whatever you can’t afford right away, you can just throw it on a credit card. After all, the monthly payments aren’t that bad!

The problem with this trap is that credit card debt can creep up on you and overwhelm you before you know what’s happening. It starts with something small, like an iPad or a new bicycle, but before you know it, you’ve got $10,000 in credit card debt, and you’re shelling out $250 a month just to meet your minimum payments.

If you were to use that extra $250 a month to start paying down your student loans (in addition to your regular payments), you could easily get rid of your college debt in just a couple of years, if not quicker.

Don't buy that iPad until you can pay for it with cash.

2. Live Below Your Means. It’s hard to tell a fresh college graduate not to spend all of his or her paycheck. For most recent grads, a full-timer’s salary is a whole new experience. Suddenly, you can afford to eat anywhere you want, and when you go apartment shopping for the first time, there is an overwhelming temptation to spring for the fancy 3-bedroom with wooden floors, a personal garage, and racquetball courts. And since you just bought a fancy new flat panel television, it’s now absolutely essential that you purchase all the premium HD channels with your cable package.

Slow down. This kind of thinking is what gets that snowball of debt rolling so quickly that you end up paying for it for the rest of your life. Remember that the more you practice self-control now, the more you will be able to enjoy the fruits of your labor later. Don’t spend every spare penny you make. Many will tell you to live within your means, but I’m telling you to live below your means.

3. Guard Your Optimism. One of the biggest mistakes I made after graduating from college was that I made financial decisions based on where I thought I would be in the future. I bought a new car that advertised no payments for a year, even though I already had a vehicle that ran perfectly and was almost paid off. The monthly payment for the new car seemed a little pricey at the time, but I was sure that in one year, I would have no problems making the payments.

The problem is that you have no idea what the future holds. Unfortunately for me, shortly after my car payments kicked in, the small web design firm I was working for collapsed, and the wretched man I worked for left me with an unexpected $7000 tax bill. I was only a couple years out of college in a waning job market with a $420 monthly car payment. Can you guess how much I was paying towards my college debt? That’s right–not a cent.

Even though it may go against everything you want to do, I want to challenge you to avoid applying for deferments. Use your deferments and forebearance requests as a last resort. Live below your means, pay extra towards your student loans, and in just a few years, you’ll be extremely glad you did!