Four (maybe five… or more) years of college behind me and I am finally ready to start earning money in the real world. I got myself a real “adult” job and can’t wait for payday. I know in the back of my mind that I should probably deal with those credit card bills that come each month, and, thankfully, I have six months before I have to start paying the student loans. Payday comes and the money goes: rent, utilities, Internet, cell phone, food, fun, etc., etc., etc. Where did it all go?
A few months go by. Work, paycheck, bills. Work, paycheck, bills. Slowly I see my credit card balance rise even though I keep making those minimum payments. I go home for the holidays. Parents tell me that I should start putting money in a savings account for emergencies. Grandpa tells me I should open up an IRA and start saving for retirement. I tell myself I should get that sweet flat screen I saw at Best Buy. I don’t know how I can do any of these things when I don’t have any money left over after payday.
A friend suggests I start paying more than the minimum payments to the credit card bills. I’m paying 19 percent in interest to the credit card companies, way more than the 6.8 percent on the student loans and the 2.9 percent on my car loan. Instead of the minimum, I double it: $50 instead of $25. A few less trips to Starbucks. Over the next few months I do this again and again and again. I get a raise! I can already see that new flat screen on the wall of my bedroom! But instead, I take half my raise and put it toward the credit card bill, and the other half I save to buy the TV later. I’m really seeing the balance on my card dropping, and it’s addictive.
Birthday comes and I get some more money from the parents and grandparents. I do that same trick: half to the credit card and the other half toward my new TV. I’m almost there. A few hundred dollars left and I’ll be free! Christmas comes and thankfully I get more money from the grandparents. I make my last payment to the credit card company and can’t believe it.
My balance is $0. I kept living my life, had some fun (even bought a new TV) and was able to do it step by step.
Maybe this will work with my student loans…