“My parents pay for my college but I have $7,493 in credit card debt.” I need help managing debt at 18. How can I get back on track?

Hi Money Minder,

I’m in a bit of a financial pickle here. My name is Lana, and I’m an 18-year-old living in Hawaii getting ready to start college at GCU in January (completely on my parents’ dime). Right now, I’ve got $7,493 in credit card debt and $2,936 left to pay on a personal loan I took out for my car about 6 months ago. On top of that, there’s a vehicle loan in my mom’s name for a 2020 Camry with $22k still owing.

I’m making around $33k a year from my full-time job, pulling in $500-$700 every week. I need your help to figure out how to tackle this debt. Should I consolidate everything into one loan and close those pesky credit card accounts to bump up my credit score? Or is there a better way to pay it all off? Honestly, the car loan doesn’t keep me up at night – it’s really the credit card and personal loan that are stressing me out.

My parents are separated, and my mom handles most of the bills. Since I’m living with her, my main expenses are just gas and those monthly payments for all my credit.

Appreciate any advice you can offer!

Take care,
Lana

Response from THE MONEY MINDER:

Hello There,

Congratulations on starting your college journey and being proactive about managing your finances. It’s great that your parents are supporting your education, but it’s important to also take charge of your debt situation. With $7,493 in credit card debt and $2936 remaining on a personal loan, it’s crucial to come up with a plan to tackle this debt.

Consolidating your debt into one loan can be a good idea, especially if you can secure a lower interest rate than what you’re currently paying on your credit cards. This can potentially save you money in the long run and make it easier to manage your payments. However, be sure to carefully compare the terms and conditions of any consolidation loan to ensure it’s the right choice for you.

In the meantime, focus on creating a budget that prioritizes paying off your debts. Since you only have gas and your credit payments as expenses, you should have some room to allocate more towards your debt payments. Consider increasing your income by picking up extra hours at work or exploring additional sources of income. Every extra dollar you can put towards your debt will help you get closer to being debt-free.

Closing your credit card accounts after paying them off can show responsible credit behavior and may have a positive impact on your credit score. Just be mindful not to accumulate new debt once the cards are paid off.

Lastly, don’t be afraid to seek financial advice from a professional if you feel overwhelmed or unsure about the best course of action. Remember, this is a common challenge that many young adults face, and with determination and a solid plan, you can overcome it. All the best from THE MONEY MINDER.