• College Students: Credit Card Debt Trap for a college student
• Instead of a New Year's resolution, make debt reduction a goal for life.
• Why is paying the Minimum Monthly Payment not enough?
• Holiday Spending: How to keep your debt load down
• Is there an alternative to debt consolidation and/or personal bankruptcy?

College Students: Credit Card Debt Trap for a college student

More and more college students have credit cards than ever before. According to this Nellie Mae study, the average balance of an undergraduate student with a credit card is rose from $1,879 in the 1998 to $2,748 in 2000. While credit cards may present a good way to establish credit and learn financial discipline, too often many students amass a significant amount of debt by the time they graduate. Couple this with student loan payments, and the credit card debt becomes a burden. Additionally, at the high interest rates charged to students, it may take years to pay it off by paying only the monthly minimum.

How should a student with debt troubles cope with this? Stop charging! By continuing to use your credit card, you increase your debt load. Start using cash to pay for the things you would normally use your credit card and reserve that troublesome plastic for emergency purposes. Pay more than the monthly minimum. The monthly minimum barely covers the interested charged on your debt. Paying more than the monthly minimum, is money paid towards interest and your balance. The more you pay, the more your money goes towards your debt! Get help from family. Sometimes, you may need to ask family members or a trusted friend to help you pay it down. It is possible that they can lend you money at a much better rate than the APR on your credit cards. 1% is much better than 19%! Debt Consolidation can help you reduce debt. If you have exhausted your resources, there are many debt consolidation programs and credit counseling agencies that can help you reduce your debt. They will negotiate with your creditors and setup a financial plan to pay off your debt.

If you're a college student overwhelmed with debt, it's not to late! Reducing your debt can improve your credit score and give you advantages when purchasing things like a new car or a new home. So don't hesitate, start a debt free life today.

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Instead of a New Year's resolution, make debt reduction a goal for life.

Every year, many Americans make resolutions to improve themselves. New Year's Resolutions become quite the marketing ploy as many people spend money on diets, gym memberships, and books on self-improvement. If debt reduction is on your list, along with others like the ones noted above, you may want to consider this: by spending more money, you may start the New Year with more debt.

Before you start the New Year, you may want to create a budget that includes a debt reduction plan. This first step in living debt free: creating a budget to curb overspending. By sticking to your budget, your debt will gradually decrease. Once your debt has been paid off, you can put all that extra cash into a savings account, IRA, or invest in the stock market. Soon your "resolution" will become a life long goal of a fiscal responsible consumer!

When setting up your new budget, plan on paying more than your minimum monthly payment required of credit cards. Sometimes the monthly minimum only covers the interest charged on the account. By paying more than the monthly payment, you will pay down your principal. The lower the principal, the lower the interest charges. With a new budget in hand, you can factor in other resolution expenses like gym membership, house renovation, or that new career you have been considering.

If you are living with an overwhelming amount of debt, you may want to consider a debt consolidation program from a non-profit organization. They may be able to reduce your interest rates, allowing you to pay off debt more quickly than if you did yourself.

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Why is paying the Minimum Monthly Payment not enough?

Credit card companies figure a minimum payment amount based on a percentage of your current balance, usually 2%, or flat figure. Paying this minimum amount keeps your account in good standing with the credit card company.

If your credit card balance is large, it may take years to pay off your credit card by only paying the minimum payment. The higher your interest rate, the longer it takes to pay off your balance. In some cases, your minimum payment may only cover the interest charged on the remaining balance. For example, lets say that you have a $5000 balance on your credit card with an 19.9% annual percentage rate (APR). If you pay a montly minimum payment of $100, it will take you almost 10 years to pay off the balance!

What is the solution? Pay more than your minimum monthly payment. If you cannot afford to pay more than your montly minimum, then you may need to consider a debt consolidation program or a credit counseling program. Many of these organizations like CareOne Credit Counseling, CuraDebt, and Debt Guru are non-profits organizations with counselers that want to help you live a debt-free life. They will contact your creditors, renegotiate your debts, and lower your interest rate. You will be required to send one monthly payment to the credit counseling organization and they will disperse the amount paid to your creditors. With a lower interest rate, you will pay off your creditors faster than if you continued to pay your minimum monthly payment.

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Holiday Spending: How to keep your debt load down

Over the holidays, many consumers have a tendency to spend lots of money. There are parties to host, family to visit, and gifts to purchase. This can be a troublesome situation if you are already in debt. It is tough not buying that special gift for that special person. Plus, you have other obligations to consider, like paying for plane tickets to visit family. How do you financially deal with these situations?

Keep a budget for holiday spending. Try to limit your spending on gifts as much as possible without over extending yourself. Sometimes, it is easy to say "I'm already in debt, what is a few hundred dollars more?" This may tempt you to spend more than you probably should. Depending on your interest rate, these few hundred dollars will translate to paying more in interest. And more debt, is still debt. You will eventually have to pay it off.

Try limit your spending by capping on how you will spend. Use the Internet to find great deals on gifts. eBay is a great resource to finding neat, personal gifts at great prices. Amazon also has tons of items on-sale. Don't forget to use on-line coupons!

A holiday budget is a great way to keep your debt in check. Additionally, a holiday budget can provide the discipline to keep a budget year round! Have an enjoyable and safe holiday season!

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Is there an alternative to debt consolidation and/or personal bankruptcy?

Some people decide that the need debt consolidation when they are unable to pay credit card bills. Still, there are some things to consider before you embark on the road to debt consolidation.

Firstly, how bad is your debt? Are you paying more that then monthly minimum? If you are able, try spending more than the monthly payment. Most of the time, when you pay your monthly minimum, you're mostly paying interest on your balance. That means only a small percentage of your payment is going to the actual debt owed to the credit card company. If possible, you should try to pay more than the monthly minimum payment. This may mean cutting back on some of those things you splurge on. In the end you'll pay off your debt faster and save hundreds on interest.

How many credit cards do you have? Do you have any with no balance on them? Is their APR lower than the one you're currently paying off? You may want to consider transferring a balance to this card and pay a lower interest rate. Contact the bank that you will transfer your balance to and see what offers they have. If you have good credit, you may want to find a balance transfer credit card offer and move your balances to the new card. As low as interest rates are now, its easy to find a great offer. You may also want to check your credit score to see if you would qualify for such offers.

Do you have any cash lying around? Take money out of your savings account and use it towards your debt. If the return on your savings is less than the interest you pay on your debt, this is probably your best option. Try using this savings calculator vs. credit card interest payment calculator. No cash lying around? You may want to ask family for help!

Are you a homeowner? You can always take out a home equity loan from the equity you have in your home. This is a great way to pay off debt! There are many offers out there that can help you get the best home equity loan.

If these options are not available to you, you may want to consider a debt consolidation program or non-profit credit counseling. They can help negotiate your debt with your creditors and lower your interest rate.

If you need assistance negotiating your debt, you may want to consider a debt settlement program, or credit repair assistance.

There are other tips out there that can help you make your final decision. The Motley Fool has a great resource on what to do before you decide to declare bankruptcy.

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