If you are in your twenties or thirties and you have a college degree you likely have some college debt. If you are like most people, you just accept this debt as part of life and the ten or twenty years that accompany paying off the debt. Imagine the immediate raise you’d get (that’s what it is) once that loan is paid off. For some of you that would be $200 a month and for some it could be $500 a month. Many people have been conditioned to accept the conventional wisdom that debt is normal; everyone has it, right?
Well I’m here to tell you that that college loan debt is crippling your ability to accumulate wealth. One of the best financial advice quotes I have ever heard is “it’s not how much you save, it’s how long you save.” The 22-year-old can begin saving $100 a month and stop at age 30 whereas the 30-yr-old can start at age 30 saving that same $100 a month and NEVER catch the 21-year-old’s snowball growing into a avalanche of cash by retirement.
Other money moves that a recent college graduate should not do include:
- buying a brand new car (this will absorb a decent portion of your precious new income from your first job)
- financing new furniture or electronics for your apartment
- charging up big clothing bills
Many students take the attitude that “I worked so hard in college I deserve this purchase.” Well, guess what? You don’t deserve that purchase. Is there really a time when you are allowed to make bad money decisions? Going into debt right when you are starting out in life is not a good time to go into debt. Frankly, I cannot think of any good time to go into debt.
Develop a game plan to pay off the typical ten-year student loan in half the time or even sooner. You’ll get a huge jump on accumulating wealth very early in life.