Fun Facts Friday

Student Debt: Stats and Helpful Hints!

The average debt from all sources in constant 2007 dollars among members of the 2005 cohort that owed student-related debt did not differ greatly from the class of 2000. Graduates from 2005 with student debt had lower average debt levels than their 2000 counterparts: doctorate graduates owed about $1,300 less on average, while college graduates owed about $700 less.

In 2007, two years after graduation, loans exceeded $20,000 on average for graduates with student debt (both government and non-government) at the bachelor's and doctorate levels.

In 2007, graduates with a doctorate still owed the highest amount from all sources, $22,500 on average, while bachelor's graduates had an average debt owing of $20,400. Master's graduates owed an average of $19,500, while college grads had the smallest debt in 2007, an average of $11,800.

Graduates who were still paying off their government debt two years after graduation earned less on average than those who had completely paid off their student loans. Bachelor's graduates who had paid off their debt earned over $8,000 more, or roughly 23% more, than those who still had debt two years after graduation.

So you want to get out of your student debt? Some of these tips can help!

1. Spend less than you earn.
2. When debt is closed out, put 60% in savings and enjoy the remain 40%.
3. Have only one credit card with a low limit, and only one loan with monthly payment not exceeding 25% of income.
4. Build up an emergency fund first. If you come into extra money (tax returns, etc.), use it to build an emergency fund and pay off debt after that.
5. Cut up your credit cards.
6. Avoid eating out. Cook your own meals, except on very special occasions.
7. For entertainment, visit friends and be creative on how to entertain yourselves and your family without spending a dime.
8. Don’t pay off your credit card balance from the emergency account. Don’t touch the emergency account at all — it doesn’t exist!
9. Look for expenses coming up in the future and plan for them, so you don’t have to go into debt when they come up.
10. Make a budget – Purpose every dollar (including some buffer).
11. Recognize your spending tendencies (and your family’s) and place limits on them. Develop good habits instead.
12. Keep trying and don’t give up. Make a commitment, and if you aren’t getting out of debt slowly but surely, revisit that commitment. Change is difficult and it takes drastic change in mindset and behaviors to get out of debt. Anyone can do it – as long as you really want to do it.
13. Stop spending! You have to really, truly want to do this. Otherwise, you’ll put yourself on a financial diet and then crash and burn and find yourself justifying why you deserve to spend so much money on a new iPhone when you have a perfectly good phone and $20,000 in debt.
14. Praise yourself for every small accomplishment. But, don’t praise yourself by spending frivolously.
15. Find the tools that work for you and stick to them. If the tools aren’t working, find new tools. There are plenty of tools and ideas out there – for free.
16. Be realistic. If you started accumulating debt three or four years ago, realize that it will probably take you more then three or four years to get out of debt and stay out of debt.
17. Create a realistic budget. Put as much money as you can towards paying down debt and having an emergency fund, but allow for a little bit of. Only the truly dedicated can live with no social/recreational activities for the amount of time it takes to become debt-free.
18. Eliminate. Take a hard look at what’s truly necessary, and be willing to make compromises. Cable TV, satellite radio, and lunches in the office cafeteria are not necessities. If you have a hard time letting go of these things, run your numbers through a debt calculator twice – once with your current budget, and once with additional money currently paying for niceties. You’ll be amazed at how much of a difference those few extra dollars make.
19. Get creative. If there’s something you think you don’t have time to do more frugally, find a way around it. For example, cooking at home is much cheaper than eating out. If you don’t have time to cook, try investing in a crock pot.
20. Be patient. Debt reduction is a long, slow process. Depending on the method you use, you may see no significant progress at first, but it will happen.

Have any of your own tips? Comment and let us know!

http://www.statcan.gc.ca/daily-quotidien/090422/dq090422a-eng.htm, http://zenhabits.net/73-great-debt-elimination-tips/