By Swoozey Chartier
From the time you are young, you hear adults discussing money, finances, and debt and none of it makes sense to a young mind that is focused on the present instead of the future. Fast forward ten years: you’re a young adult making decisions that will impact the rest of your life. What college counselors don’t tell you about those student loans is their habit of haunting your financial choices for years to come. So, what do you do? Going to college is just as much of an obligation as paying off the debt you agreed to take on. The risky part of being an adult is knowing right from wrong and having to find out the smart choices for yourself—usually by learning it the hard way the first time around.
Take a young college student, about to enter the workforce after graduation, for example. A young person in their early twenties is starting to understand that student loan debt is not an easy payment to commit to—especially for a decade or more. This is the time that most young adults are looking forward to when they can get married, travel, start a career and have a family. Setting up for the future is just as much of an obligation to the government as it is to yourself, and the only way to get out of the government’s side is to get rid of debt. Famed radio host, author and businessman, Dave Ramsey, has been an inspiration to millions of adults who are burdened with debt and financial struggles.
One of Ramsey’s most famed quotes can apply to many young Americans, coming out of college and entering the real-world with debt trailing behind them: “Life will not make allowances for you, but it will pay you what you earn.” While this seems to be a difficult pill to swallow when having entry-level salaries, it is good advice for young people who feel the pressure of debt and everyday expenses to make the ends meet within a paycheck. Take the person who went to college for six years, received a medical degree and certification and now they are ready to start working, but also start paying their student loan debt. What options are there for someone who must climb through the ranks of a job before they can get paid what they know they can eventually earn within that profession?
This is the reality for millions of college graduates who see the entry-level salaries for the profession they received a degree in and immediately panic. What if they make a low wage for years and the student loan debt along with living expenses means they struggle financially with no light at the end of the tunnel? One of the greatest advantages of seeking counsel and guidance from someone like Ramsey is seeing how easy it can be to take the cards you are dealt and find other ways to make your life easier while still paying down debt. This starts with learning about Ramsey’s Debt Snowball, which outlines a way to pay off the smallest debt first and work up to the largest debt—that usually being a mortgage.
For example, let’s say Jack has a credit card with a $1,000 balance, a car loan with a $5,000 balance, and student loans with a $50,000 balance. If Jack takes Ramsey’s approach to paying off debt, he will need to tackle this debt in order of smallest to largest. One of Ramsey’s biggest suggestions is a “rice and beans diet” meaning you cut back on the luxuries like eating out, vacations, adding on even small debt, and lavish gift giving. While it can be hard to do, when all expenses are having to be accounted for, it becomes clear how quickly debt can be paid down when extra expenses are cut out. To achieve this easily, Ramsey has created the EveryDollar app which makes budgeting quick and easy on any electronic device. Now, when any purchase is made, it will be accounted for through the app and can even be linked directly to bank accounts so there’s no need to type in calculations.
While a young adult may see debt as a monster that will always be looming in their future, it doesn’t have to be that way. Once budgeting begins, it becomes second nature and even exciting to see the debt amounts lower with each new payment. Before a year has passed, your future of saying you are debt-free becomes a reality that isn’t as far away as you once thought it would be. It may be overwhelming at first—to enter the workforce and have monetary responsibilities to worry about. It may even be hard to see your salary and know you are not getting paid what you expected. It’s important to keep in mind that debt can be paid off, and no matter your wage, it is possible. With the right mindset and the determination to be debt-free, your future couldn’t be brighter!
