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player ready...For young people graduating college this spring, starting off on the right track with their debt loads could improve their lives in other ways.
Take the case of Stacy Betts and Ronnie Armijo, a couple from Austin, Texas, who each handled their debts in opposite ways when they were younger.
Armijo, 28, racked up credit card debt during college and had trouble repaying it. The difficulties this caused him after college in “everyday things,” such as renting an apartment or a car, made him determined that his fiance, who is four years younger, not make the same mistakes.
The result: Betts has had it much easier. She was able to get a cellphone and rent an apartment right after school, while Armijo was stuck with expensive down payments or downright rejections.
Today’s graduates may be leaving school more debt-laden than ever.
According to a 2003 study by Nellie Mae, a national provider of higher-education loans, undergraduate student-loan debt has increased 66 percent since 1997 to $18,900 from $11,400. Meanwhile, credit card debts also are mounting, with the average 2001 credit card balance up 15 percent from 2000.
Despite the rising debt levels, most graduates are able to get on the list of good debtors, even if they have had some problems, said Howard Dvorkin, president of Consolidated Credit Counseling Service in Ft. Lauderdale. The most important thing is to always pay your bills. With credit cards, you need to make at least the minimum payments on debt every month. Student loan companies, on the other hand, usually offer a grace period of six months before debtors need to make the first payment.
Also, always keep in contact with creditors when you move. Young people just starting out tend to do a lot of moving around. But not informing creditors of these changes could cause bills to be late.
One of the most common reasons people fall into debt problems is they spend beyond their means.
The best way to know how much you spend is to track expenses daily for 30 days, said Rudy Cavanos, a spokesman for Money Management International, a Houston-based non-profit debt-education service. If you find that you’re spending more than you can afford, you will need to cut down on the non-essential expenses such as cable TV and daily coffees.
If you take these steps and still feel overwhelmed, find a non-profit credit counselor. For help finding a good credit counselor, look to the Federal Trade Commission guide, “Fiscal Fitness: Choosing a Credit Counselor.”