College is one of the best times of a young person’s life – and also a time when most students understand the meaning of “broke AF”. Even if you receive grants and scholarships, the prices of textbooks, social events, organizations, transportation, bills and saving all add up. Sometimes it can feel like you are being drowned in debt when it is often hard to juggle good grades, a social life and a part-time job all at the same time. I have gathered a few ways to help you start tackling your debt step-by-step in order to graduate as debt-free as possible.
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1. The 50-30-20 method
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With this particular method, you are assigning a certain percentage to your income that will dictate which category your money goes into. Take a look at the average income that you bring in – this may be difficult if you work irregular hours based on classes and after-school activities, but use your best guess! 50% of your income will go straight to fixed expenses, such as tuition, rent, phone bill, etc. 30% will go towards your wants, which may include happy hour drinks, going to the movies or new clothes. 20% is dedicated to your savings; if you are dying to get the newest iPhone, this is your opportunity to start putting money away! You can also place money for an emergency fund or paying off your student loan debt in this category.
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2. The debt snowball method
If you find yourself stressing out because you owe so much money on your credit cards and other bills, I would recommend this method. Write down all of your debts and start tackling the one with the smallest amount owed first and put minimum payments towards your debts with larger balances. For example, if you owe $66 on a Victoria’s Secret credit card and owe $450 on your Discover card, try to pay off as much as you can on the Victoria’s Secret credit card in one payment to eliminate it as fast as possible, so you can then put more money towards the Discover card. The feeling of completely paying off a debt is indescribable and once you experience it, it is almost addicting and makes you believe that you can really take control of your money.
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3. Tracking your expenses
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When you hold yourself accountable for what you spend, it is much easier to gain control over your finances. This is a practice that you want to start and keep in place. You can write down everything that you purchase (keep track of the price, what the item was and where you bought it from) or download an app like Dave Ramsey’s EveryDollar (my personal favorite) to assign every dollar to a certain category, such as, food, transportation or cell phone bill. Looking at what you spent can help you determine if there is room to cut spending from a category, depending on the largest percentage that eats up your income.
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Start making smart financial decisions while you’re still in college to better prepare you for your future and make sure that you aren’t freaking out about how to make ends meet. Imagine how great it will feel after graduation knowing that you only have $3,000 instead of $30,000 – or amazing it would be to be completely debt-free! Using these tips, take control of your finances, instead of letting them control you.