Poor Student No More

I have applied for and received two credit cards since I’ve been in college. The first I got during freshman year when I purchased some of my text books off of Amazon. There was a special offer (anyone surprised?) that lured me in — it gave me $60 off of my purchase. I could basically buy the books I needed for free.

WRONG.

The special offer wasn’t applicable until after I received the card in the mail. So I paid for my books out of my checking account and after receiving the card, tucked it away for about a year.

I never used the card until one weekend when I went back to New York for the premier of my sister’s documentary. I left my cell phone in my car along with my debt card. Once I arrived at the movie theater, I paid the cab fare with that credit card. This is where it all began.

Honestly, if I had never started using that credit card that day, I probably wouldn’t have gotten another one. I applied for my second card this past March to ensure I had overdraft protection on my checking account. Then I started paying for doctors’ appointment fees, prescriptions and gas on this card. Then it spilled over to dinners and scented candles for my room.

When you purchase items on a credit card, you end up paying much more for them in the long run. Is a $40  framed photograph of Marilyn Monroe to hang on your college room wall really worth the $300 you will end up paying for it over the 4 years it takes you to pay off your credit card? Didn’t think so.

It was a slippery slope, and I tumbled down head first. My balances are not outrageous, but high enough that I have to make monthly payments on these cards. This is not helping my plight to get out of debt — only making it much longer and more difficult. A few weeks ago, I had finally had enough — the cards faced death by scissors.

I always try to pay more than the minimum payment each month, but sometimes cannot afford to because of that particular month’s earnings. Paying more than the minimum payment improves your credit score and will pay off your card in less time, but make sure you do not short yourself for the month’s other expenses. Pay more when you can.

Consolidation is definitely an option, but be careful. Check the interest rates, terms and any other possible options you may have (refer to the earlier post on consolidation).

Stop using the cards — If you can’t pay cash, don’t buy it. Unless of course it is necessary for your survival.

Come up with a payment plan and try to stick to it for as many months as possible. It’s ok it you can’t follow the plan every now and then, but make sure you budget for your credit card payment plan as often as possible.

Credit isn’t evil and it’s not even a bad idea –  unless you are a college student. Remember what happened to the U.S. economy at the end of 2008? Don’t get yourself into a situation in which you are calling your family and friends asking for an economic bailout.

One more tip — if your credit cards are higher interest than your student loans, pay these off first. Pay off your debts in order of interest rates (highest to lowest).

Peace, love and loans,

Jess

It has been six weeks since my decision to get out of debt before I graduate and since my first post on my introduction to debt.  Since then, I have successfully set up and learned how to use Google Analytics and Google Adsense, learned how to optimize my use of keywords for search engines, and written 14 posts on student debt, debt consolidation, good debt and my plan to get out of debt.

My Progress

• To date, I have made $26.05.

• I have had 115 visits, 188 pageviews, and 91 absolute unique visitors.

• Out of the 115 visits, 14 are direct traffic, 28 are from search engines, and 73 are from referring sites (Twitter, Stumbleupon, Twellow).

• I have increased my Twitter followers from zero to 467 in about two weeks and started tweeting about my journey, which has driven the majority of traffic to my site.

So what’s next?

I am hoping that with more legitimate and valuable content, my site will rise in the search engine ranks under keywords like “student debt,” “student loans,” and “debt consolidation.”  To make this process a bit quicker, I am planning on building links on other websites, encouraging feedback and comments from readers, creating an email list-serv, and continuing to use social media for direct marketing (Twitter, Facebook, and Stumbleupon).  The goal is to increase the amount of “organic traffic,” or visitors that come from search engines.

I am also planning to learn more about online marketing techniques that can be valuable in driving more traffic to my website.  I am very new to online marketing and have not yet figured out how to optimally reach my target audience.

As the weeks go on, I am learning extensive information about student debt and college loans — things that I should have known long before I got myself into this mess.  Ultimately, I hope that this will eventually help others look before they leap into the black hole of student debt.

Peace, love and loans,

Jess

Most Recent Posts:

• October 17, 2009: Student Debt in Politics (1 Comment)
• September 16, 2009: A visceral emotional response to my debt. (2 Comments)
• September 16, 2009: Video Post 3 (4 Comments)
• September 9, 2009: Interest Rates and Debt (No Comments)
• September 2, 2009: How To Build Credit (2 Comments)

I began reading Rich Dad, Poor Dad based on a recommendation from my boyfriend.  Before reading this book, I despised money — I hated the inequality it created, the manipulation it took to get it, the corruption it perpetuated, and the waste it produced.  However, this book granted me the ability to change my opinion greatly.  The main theme: Make your money work for you, don’t work for your money.

Based on this book, the constant financial discussions with my entrepreneur boyfriend and my own financial struggles, I realized that I needed to figure out how to earn a passive income before I graduated.  I want the financial independence to follow my passion in life — I do not want to be limited by debt and the need for a steady paycheck and health care.  I made the decision to take action and began thinking about and discussing my options.  I knew I had to act quickly.

So here’s my action plan for getting out of debt within 12 months:

1. Create a website designed to provide info on my own personal journey out of student debt.  Provide value to others in a similar situation.
2. Through website traffic and advertising, generate income.
3. The better my blog, the more traffic.  More traffic = more income.

Sound simple?  It is.  If you want to get out of debt and start earning a passive income (an income that eventually becomes guaranteed without you having to work), there are so many ways to do it.  First, brainstorm ideas for a product or service that provides some value to others.  This is the most important part - it must provide some kind of value that others demand. Find a medium to transfer that value to others and begin your work.

In my personal case, I decided that student debt, loans and consolidation would be my particular topic.  There are probably thousands upon thousands of other students who, just like me, don’t really know the impact debt can have or how to get out of it for that matter.  Then, I decided that the best way to explain this process was to chronicle my own journey through a blog on my own website.