5 things I wish I'd done at age 20 to avoid racking up $15,000 in debt

5 issues I want I’d achieved at age 20 to keep away from racking up $15,000 in debt

As a 20 yr outdated, I wasn’t well-versed in private finance. In truth, my 20-year-old self was in over $15,000 of debt and had no concept methods to handle cash. Most of that debt was student loans, which I took out although my monetary assist lined all of my tuition and books.

As I look again, I can undoubtedly attest to the notion that hindsight is 20/20.

Despite being in a a lot more healthy monetary state now, I can not assist however consider how a lot additional alongside I might be if I’d simply made the precise selections once I was 20.

Here are the 5 issues I want I may inform my 20-year-old self about cash and credit playing cards.

1. Credit card limits are NOT free cash

When I obtained my first credit card, I used to be tremendous excited. I bear in mind calling my mother and telling her the excellent news. It was like I’d gained the lottery.

Except it wasn’t.

The “free” cash I assumed I’d obtained was cash I needed to pay again — with curiosity. The minimal funds I made would inevitably entice me in a debt cycle for years.


I did not have the knowledge to know methods to use a credit card correctly. I spent cash I did not have. I charged purchases I could not afford. I did not know any higher, so I realized the onerous means.

I’d advise my youthful self to learn to use credit appropriately (there’s a proper means). Then, solely cost objects you may afford in money and repay the steadiness in full each. single. month.

2. Avoid paying curiosity

Along the traces of understanding methods to navigate credit playing cards, I had no concept about curiosity and the way a lot it may really value me.

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I wasn’t conscious of the minimum-payment entice, the place paying the minimal due simply helps keep your steadiness however does little to truly repay your principal. Or that compound curiosity (which is curiosity in your steadiness plus any collected curiosity) on credit playing cards may dig me deeper into debt.

I mindlessly spent cash on credit and solely paid the minimal that was requested of me. A few years later, these balances had been primarily the identical, whereas my payments and different tasks began to pile up.

So my recommendation is to remain one step forward by paying off your steadiness in full. If you are behind and have a excessive rate of interest, think about transferring your steadiness to a promotional card with a 0% APR for a set period of time.

Lastly, cease making purchases till your balances are zero.


As the clever Albert Einstein mentioned, ”

Compound curiosity
is the eighth marvel of the world. He who understands it, earns it. He who would not, pays it.”

Be the one who understands it and you’ll reap the benefits.

3. You don’t have to go into debt to build credit

As a 20-year-old, I had the notion that if you wanted to build credit, you had to first build debt, and you needed to make monthly payments (but not pay off your balance) to build your credit history.

Both statements are false.

Essentially, to build credit, you need to show creditors that you’re capable of making on-time payments. Your credit history collects this information over time. So you absolutely do not need to make minimum monthly payments and stay in debt to build your credit. You can pay your balance in full and still have excellent credit and payment history.

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4. A budget is your best friend

A budget was not even part of my vocabulary in my 20s. My mom never talked about a budget and I didn’t even know how a budget worked.

All I thought was the more money I made, the more I could spend.

What I didn’t know at the time was that a budget was an important tool to help me control my money.

Once I started sticking to a budget, I was able to pay off my debt and start saving money for the things that mattered to me. I used the zero-based budget, making sure every dollar I earned had a particular “job.” Using a zero-based budget helped me put more towards my debt — money I would have otherwise wasted on non-essential spending.

Now, I preach about having a budget to anyone who will listen, because it really is that important.

To my 20-year-old self: MAKE A BUDGET … NOW!

Your 30-year-old self will thanks profusely.

5. Invest early whilst you nonetheless have time

The beauty of being in your 20s is that you’ve a present that solely comes round as soon as: time.

If you employ your time correctly by investing early, the potential compound curiosity could make your cash develop exponentially.

As an added bonus, you get to speculate much less in your 20s and earn more money than in case you wait to spend money on your 30s. The additional 10 years of compound curiosity will work in your favor and develop your cash whilst you sleep.

Learning as a lot as you may and utilizing the following pointers might help you side-step the widespread pitfalls most younger individuals face. Establishing a wholesome monetary path in your early 20s can set you as much as reap huge monetary rewards down the highway. So use your time correctly.

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