Debt Mangement – The Bike That Crashed Me Financially

A year earlier, the motorcycle bug bit me. I’m in college, had no idea about debt management, and the thought of just grabbing that new sports bike and showing it off to all my female accomplices was too cool to resist. I went to the dealership and bought my new bike for $6000, taking out a loan from the dealership at an interest rate designed to bring the student to financial flinders. It was all good until I realized what I had just done.

1. I am in college and earning less than 300 bucks from my part time job.
2. My parents are paying the tuition and not my living expenditures.
3. Gas prices have gone up.

Nonetheless, I was determined to pay off the loan in due time. However, I lost that part time job and had nothing to give back to the loan. I wrecked my credit history and the thought of running away and living on an island, away from the bank calls was being engraved in my mind.

I finally had to ask my parents for help and was bailed out by my dad.

The lesson learned: No matter how much some things may tempt you during college, if you have to borrow money to buy it, you can’t afford it right now. Unless you have a firm and guaranteed plan for paying it all back, practice debt management .

Mint’s Takeaway:

Sure, it’s common knowledge that college is an especially important period to live on a budget — especially if you’re going to be paying off student loans for tuition. But the college atmosphere also hides the darker side of that social climate: whether you’re aware of it or not, peer pressure can severely affect you in your financial decisions.

When your dorm buddies or sorority sisters are going out every night or buying new toys to occupy their time, it can be tempting to follow suit. It might even turn out that you have the budget to do so, but stop and think first. Consider your budget before leaping into new purchases.

Mint can help you keep on top of your spending. With alerts to unusual spendings and methods to see your spending patterns, you can better keep on top of where your money is going, so you can direct it to where you really want it to go.

For long-time Mint readers:

What past Train Wreck stories does this college student’s plight remind you of? What did he learn that others may not have?

Train Wreck Tuesdays are a weekly post of horrible financial mistakes. They are posted anonymously. Submit your story; if you’re selected, you get a free personal finance book. The best comment gets the same prize! Check out past Train Wreck stories here.