Most recent print edition: Jan 13

– Last updated: Today

• About Us
• |
• Contact Us
• |
• Advertising
• |
• Submissions

Columnists

Modern Yuppie: Getting out of debt

Amber Yake - News Editor

Generation Y has more debt than any generation before. Tuition fees are higher than ever before and the average 20-something is graduating from college with $20,000 plus in student loans, and other debt and credit card debt is a major problem too.

Check out some statistics: • The median credit-card debt of low- and middle-income people aged 18 to 34 is $8,200. • The average college debt for recent grads is more than $20,000 and rising. • People between the ages of 25 and 34 make up 22.7 per cent of all U.S. bankruptcies (but just 14 per cent of the population at large), according to a recent report.

The fact that Generation Y is so in debt really sucks. But what sucks more is that so many people ignore their debt and hope it will go away. It won’t, and the more you ignore it the worse it will get.

Student loan debt is a “good” kind of debt, it’s like a mortgage, and it’s something that people get because they have to. But credit card debt is a “bad” kind of debt.

It’s understandable to have debt when you’re a student, but you want to correct that as soon as possible once you enter the working world, or else it might haunt you for the rest of your life. Here are some tips for saving money and getting out of credit card debt.

1. Make more than the minimum payment

It might be tempting to just put the minimum, $10 payment, on your credit card every month. But in reality, that’s doing nothing for you; you’re likely just paying down the interest.

2. Concentrate on paying down the card with the highest interest first

I know it can be overwhelming to have several credit card balances to pay down. But, as said in the first step, if you’re just doing the minimum payment it’s not doing anything for you. Pick the card with the highest interest and work at paying it down. Once you’ve paid it off—and this step is key—CLOSE the account. You don’t need 2 or 3 credit cards and if you have other credit cards you can certainly get rid of the one with the highest interest.

3. Learn to live on cash

Remember on Confessions of a Shopaholic when she freezes her credit cards? Yeah, that might be a good idea for you too if you have trouble NOT using them. Living off of credit cards is a bad idea so learn to live on cash instead. Every time you get paid take out your “allowance” for the next two weeks in cash.

4. Delay the gratification

Going out for dinner or drinks might seem like a good idea at the time, but if it’s just getting you further in debt then it’s obviously a bad idea in the long run. You can go out with friends and not spend money, but if you don’t have that kind of willpower, it’s best to just stay in. It’ll be worth it in a few months when you’re out of debt. Promise.