Student Debt and Credit Education Blog

Ready? Here it is:

Relax and take a deep breath.

When faced with financial troubles remember that it’s only money, a man-made symbol of value which is traded for other items with perceived values. It’s not your life, your health, your family, your pet or anything that nourishes your spirit. It’s not always easy but if you can remember that and keep financial troubles from getting you down and letting your emotions rule your head you’ll come out of them far better off than if you let yourself get so down and depressed that you can’t see all the options in front of you.

The surest way to get into a financial bind is to let a small financial scratch become a major wound due to panicking or over-reacting with an emotional response. In other words very few financial struggles need to be resolved in 5 minutes unless they have to do with “Vinnie the Bookie” finally catching up with you in a dark alley. In most cases there’s a short term band aid and a longer term solution needed. It’s always a good idea to write an issue down on paper and then sleep on the problem or at least wait until your emotions subside about whatever it is. You’ll find your perspective will be a little different and you’ll see options you didn’t see before.

I have a friend who recently got into a bind with making a couple of late payments to some credit cards. He had a handful of cards between store cards and regular credit cards and was having trouble making his payments. He panicked went out and signed up for a consolidation loan with an interest rate higher than his credit cards had but it offered only one payment and a lower total payment than he was currently required to pay. For that benefit the loan was also going to make him pay more than double what he borrowed when all was said and done.

When he told me what happened I sat down with him and he said he didn’t have a budget so we downloaded the budget from http://www.studentplatinum.com/budget-template/ and started to look at his income and expenses. Once it was all in front of him he saw that he made more than enough money to cover his credit card payments and by listing them on his budget he was able to remember their due dates. I then gave him the credit card debt reduction plan and he figured out the smart way to pay off his credit cards. He took the money from the loan and paid back the loan and then started using a simple budget. Four months later he sent me an email telling me he paid off 4 of his 5 credit cards and was able to get the interest rate lowered on the fifth and was doing great.

The lesson is that there were two problems, one short term and one long term. He made a couple of late payments and that’s bad. In the short terms he needed to make the payments, call and see about getting the fees refunded but then calm down and take a look at the big picture. Long term he had to decide why was struggling? He thought he didn’t have enough money but really didn’t know where his money was going. In his panic he almost did something that was going to cost him a lot more money in the end to fix a problem that was really just a behavioral issue with the way he managed his money (it might have helped if he won a scholarship on www.ScholarshipPoints.com by entering the code: BESTIPEVR worth 10 points).

So remember relax, it’s only money. If you get yourself into hot water you can get yourself out. There will be penalties but you’ll want to make them as small as possible and to do that you need all the time available and a clear head to get the right solution. This doesn’t just apply to debt either. Letting your emotions cause you to buy a stock, a pair of $500 shoes or that timeshare in Kosovo is bad news. Think it over first and decide when you’ve had time to do a sanity check.

---

5 Most Recent Student Credit Card Blog Posts:

• Do I need a credit card for college?
• Online Banking for College Students
• Annual Percentage Rates vs. Annual Percentage Yield
• 3 Student Debt Reduction Strategies
• Sorting Through Student Credit Card Offers