Wipe Out Your Debt the Fast and Easy Way

by Donna Freedman

Dear Recent Grads,

A lot of you may feel you don’t have much money, and a lot of you may be right. But a whole bunch of people want to get such funds as you do have, by hook or by crook (or on the installment plan).

That’s why if I could give you one piece of advice, it would be this: Don’t sign.

Don’t sign an apartment lease or an auto lease. Don’t sign a contract for upgraded cell service. Don’t sign a store credit card application or a “90 days same as cash” contract.

Don’t sign for a car loan, personal loan or more student loans for graduate school. (Hint: A master’s degree should be essential to your career rather than a strategy for putting your loans on hold.)

Some or all of the above look mighty attractive. Some might even be necessary. But do not — and again I say, do not — sign for any of it.

Instead, stop and think about what you’re doing. Specifically, think about what you’re promising: months or years of your young lives spent repaying obligations to which you haven’t given sufficient thought or research.

Of course you need things. Everyone does. What you don’t need is to spend indiscriminately, drunk with newfound freedom — my own apartment! my own credit card! my own closet organizing system! — but without the experience to anticipate the financial hangover that will follow.

For example: Taking the first or second apartment you see (it’s so perfect!) means you’re saying “no thanks” to the possibility of cheaper digs. And have you considered the possibility of a roommate or moving back home? Yes, I get it, you’re tired of living with other people. But what would even one more year of half-rent payments do for your bottom line?

Ixnay on the cell phone upgrade, too, if your current model and plan work well enough. I get that, too: You’re bombarded with commercials and social media buzz about how the latest version will improve your life. Guess what else will improve your life right now? A paid-for phone. These devices change almost hourly, and each iteration promises to do everything but steam the milk for your morning mocha. You can’t keep up, and at this point in your financial life you shouldn’t try.

And for heaven’s sake stay out of auto dealerships. Some savvy salesperson is going to explain why you need a hot car to make the right impression on your clients, your bosses or, you know, girls. Yessir, a two-year auto lease will have everybody thinking you’re doing well enough to own a “new” car. (Except that you aren’t. You’re just renting a facade with wheels.)

So keep that old beater as long as you can. Until your finances even out a bit, a car with no payments is by definition a great car. A reasonably priced apartment (especially one for which you pay only half or one-third the rent) is quite the prize, too; so is a cell phone or computer that still does its job.

Don’t think of it as deprivation. Think of it as giving yourself time to weigh your options. Which brings me to the second part of this unsolicited lecture: Don’t sign anything without first doing some research.

Whereas my generation had only libraries and, maybe, a subscription to Consumer Reports, you guys have the whole of cyberspace to help you hang on to your dough:

Let’s review: Don’t take the first offer you see for anything. Don’t be swayed by a salesperson’s promises. (Hint: They’re paid to sell you stuff.) Don’t make any serious decisions without some serious thought.

And don’t think of this as deprivation — think of it as making smart financial decisions. You don’t need to have every bright shiny object you see. You’re not a 9-year-old set loose in a comic book store; you’re an adult who needs to weigh all current obligations (including retirement planning) before you John-Hancock-block yourself into financial turmoil.

You can, however, have ice cream for breakfast if you want. Just don’t tell your mom.

Donna Freedman writes the Frugal Nation daily column for MSN Money, and blogs at DonnaFreedman.com.


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