Every year during the holidays, students increasingly face the same dilemma: how to conserve their money and avoid debt without feeling stingy during the holidays.
More undergraduates are paying with plastic than ever before, contributing to a rising epidemic of student credit card debt.
Since 1998, the amount of students carrying a credit card has increased 24 percent. The average college student is between $3,000 and $7,000 in debt, not including student loans.
Nationwide, 83 percent of undergraduate students own at least one credit card, according to a recent study by Nellie Mae. Interest rates are often high for student cardholders and many can only afford the minimum monthly payments.
Young Money magazine recommends that students only allow themselves one credit card with a low spending limit. This practice will help avoid the temptation to overspend but still allows for budget flexibility and money for emergencies.
Kim Rebel, a certified credit counselor for the Consumer Credit Counseling Service, reported to the Kansas State Collegian that using credit cards can help students build their credit, but that many fall behind in their payments on high balances.
"I always tell people, if you can eat it, wear it or drink it, it is not an emergency," Rebel said.
If a student spends $1,000 on holiday gifts this year and only makes the minimum monthly payment it will take more than 15 years to pay off. That totals $2,329, including interest.
"I use those numbers as a wake-up call for some students," she said.
More students are coming up with solutions to avoid the debt crisis and survive the holidays unscathed. Many hope to focus more on relaxing and spending time with friends and family instead of maxing out their credit cards.
Avoid overspending by trying some of these gift-giving remedies:
Making a gift:
This idea can work for anyone, even if you didn’t win the award for most creative in grade school. Look for simple projects at the craft store. Get a group of friends to work together and share ideas. You could make picture ornaments, hand-made cards, magnets, decorate pictures frames, knit scarves or put together a photo album. People will always remember the gifts you made and not the gifts you bought. If all else fails, buy handmade by shopping at craft bazaars all over town.
Print off coupons:
Cheesy? Yes, but it works and it shows you at least thought of the person. Use your talent or hobby to give the gift of service. Print off slips of paper that read things like "Free Hug" or "Free Backrub." And, if you really feel like making something useful, try "Free House Cleaning" or "Free Babysitting." Hey, it’s the thought that counts.
Burn a CD:
It’s cheap, it’s easy and perhaps you can influence your friend’s rancid taste in music. Burn your top 20 hits and decorate the CD cover with meaningful pictures of you and your friends. The beauty of it? You can make the same mix for everyone on your list and be done in the amount of time it takes to burn, baby, burn!
The beauty of making food is that even if it’s burnt or it all tastes like chicken you’ll still get an A for effort. People appreciate a good meal or snack. Make cookies, pie or invite over a group of friends for a whole dinner party to celebrate the end of dead week.
Shop on eBay.com:
Avoid overspending at the mall and shop online instead. Buy from online auctions to snag rare gifts at an affordable price. Even items you’d find in the store are probably cheaper on eBay. You still have to pay shipping but you avoid long lines, looking for a parking spot and the crowds of crazed shop-a-holics lunging for the last 50-percent-off DVD player.
We’re college students. People expect us to be poor and busy. So prove it this holiday by forking over enough time and money on a card. You don’t even have to write "Happy Holidays" because it’s usually already printed on the inside. Just sign your name! To spice it up a bit, include a current photo of yourself or a personal message. Some include a one-page letter summarizing their year to let family and friends know how you have been doing. Oh, and buy packaged cards. They’re cheaper.