Most students are confused between what exactly a good debt is and what a bad debt is and it’s this confusion that ultimately leads students to rack up a whole lot of bad debt. Basically, the first thing you’ve got to understand is the fact that student loan happens to be a “good debt”. This is one of those debts that’ll be deducted from your paycheck in future once you start earning. Of course, the more you earn, faster would you be able to pay off debts.
5 Ways by which you could use to stay out of bad debt
Now, as for other kinds of debt like say credit card debt, then they’re definitely bad. Here are 5 ways which you could adopt to stay out of bad debt for good.
- Stick to a budget: Don’t be under the impression that just because you’re a student, hence you don’t need to follow any budget. It’s a wrong notion for a budget is essential to keep you from overspending and getting into unnecessary debt.
- Stay away from credit cards: This is extremely important. Being reckless with credit card usage can literally bury you in the debt grave permanently. Credit card is definitely bad, bad debt! Use your credit cards for such purchases only if you’re sure that you’ll be able to pay off that money immediately. Losing control over your credit card payments is sure to end in disaster.
- Go for a student loan: Since you’re a student and you’d need funds for your education, hence you can go for student loans instead of trying any other means. Even better would be if you could get federal scholarships, for then there’s no question of paying them back once you qualify.
- Debit directly from your loan: If you feel that you’re terrible with your finances and can’t handle transactions properly, then you can remove the temptation to spend. This would be quite easy by not holding all your money in 1 account. Set up a separate account where you can deposit a specific amount each week and set up a direct debit from it. In this way, you curb overspending.
- Look for a part time job: It’s always good to earn extra and that too for more reasons than one. As a student you’re sure to find a plethora of part time jobs which you could take up.
Stick to the 5 ways discussed above and you could easily stay out of bad debt as a student all the way.