5 Debt Mistakes to Avoid Freshman Year of College

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Save more, spend smarter, and make your money go further

Let me start by sharing that I personally know a thing or two about making debt mistakes in college! When I graduated a few years ago, I had a total of $20,000 in debt. Now, you might be thinking, “That is normal for student loan debt.” But the thing is, only $5,000 of my debt was for student loans and the rest was credit card debt! Yup, I was a financial mess and had no guidance when it came to money. I tried to figure it out on my own and that has its pros and cons, but one thing is for sure: I definitely learned the most from these debt mistakes during my freshman year of college:

  1. Relying on Student Credit Cards
  2. Using Student Loan Money for Spring Break   
  3. Not Having a Savings Account
  4. Making Only Minimum Payments on Debt
  5. Spending Money to Impress Others 
  6. Relying on Student Credit Cards

So you already know that I had about $15,000 of credit card debt from my college years, but the first year alone I owed about $7,000 just from purchasing a laptop, books, supplies, clothes and dorm room decorations. While some of those things were legitimate needs, many others were nonessential purchases that I made without thinking them through too deeply. I thought it was a sweet deal to not have to pay back the credit cards right away. So I didn’t actually do the math to calculate how much I would end up paying in fees the longer I waited to make my payments. It wasn’t until after graduation that I sat with my accounts and found out that my student credit card was actually not a great deal for a student at all. Businesses could get better interest rates for credit cards, working professionals who travel a lot could cheaper interest rates — almost everyone could get a credit card with a lower interest rate than the student credit card that I had. And the worst part about this is that it hasn’t changed much since I was in college. 

In 2019, student credit card interest rates are higher than those on business credit cards and balance transfer cards! While most companies are out there offering student discounts, banks are not about that life. My average interest rate across 4 different credit cards in 2013 was 22%. That means that every $100 I spent on credit would need to be paid back plus an additional $22 of interest if not paid back by the end of the year. I really wish I could go back in time and tell my 18-year-old self this information because I would have used my credit cards very differently! Due to my ridiculously high-interest rates, the $11,000 that I spent on credit grew to become more than $15,000 in just a few years!  

  1. Using Student Loan Money for Spring Break

One of the biggest regrets I have from my freshman year is borrowing money to go away for spring break with my friends and my boyfriend at that time. To my 19-year-old self, it seemed like everyone and their momma was going away for spring break and I felt the pressure to travel too. But the reality was that I could not afford a trip with just a few hundred dollars saved up from my job at the pizzeria, not to mention that I had a few thousand dollars of credit card debt! My grants and scholarships had covered the tuition costs for my first year so I really had no need to borrow money for school at all. But, I thought it would be easy to get my hands on a few thousand dollars if I said it was for educational expenses… and I was right! I applied for a student loan online and got access to the money within two weeks. I used the money to book a trip to Mexico including the flight, hotel, a dolphin excursion and more. The interest on that loan began to accrue right away but since I didn’t have a clear understanding of what that meant or how it worked, I wasn’t even worried about it. In hindsight, I am glad that I didn’t use my credit cards though because the credit cards had an interest rate of 22% while the student loan was 6%. 

In any case, it wasn’t until my senior year was almost over that I finally started to go over my loans and realized that the original loan amount for my first spring break trip was now more than $1,000 higher than the amount I actually borrowed. My trip ended up costing way more than I thought it would. I know personally how tempting it can be to get your hands on student loan money and then use it for other purposes, but I urge you not to do this. You’ll just end up paying way more for those purchases years later when you barely even remember what the purchases were for. Student loans should be reserved for all things related to you being a student, not to random things that you really want in order to “live your best life.”

  1. Not Having a Savings Account

I know that even if I had a savings account I would not have been able to grow my money all that much. In 2012, the national average yield on a 5-year certificate of deposit savings account was about 1.1%. But that’s not the point! The real reason why I regret not having a savings account is that it enabled me to spend more and more. If I had more money than usual in a checking account at any given point in time, I thought that I could spend a bit more than usual and treat myself since times were good. That often led to me spending more and eventually pulling out the credit cards again. What would have happened if I had a savings account? I can’t help but think that it would have planted the seed in my mind that SAVING is something that I should prioritize since I have a whole account for it! 

Many young people struggle to save up for big-ticket items like a car, vacation or graduation costs but if more students were able to secure savings accounts earlier in their lives and were routinely in the habit of putting a few dollars away from every paycheck, these goals would be a little bit more attainable! If I’d had a few hundred dollars saved up by the time college graduation came around, then I could have made a lump sum payment to my highest interest rate debt and kickstarted a habit of aggressively paying down debt. If you’re reading this and you do not yet have a savings account, consider it your homework assignment for tonight! You have got to open a high yield online savings account and begin saving for your future goals. Every little bit helps! But more importantly, you’ll be building the most important financial habit that anyone could have: wealth accumulation.

  1. Making Only Minimum Payments

Every month, I’d get a PDF statement emailed to me from each of my credit cards and I would look at one number and one number only… the minimum balance due. That is the worst number to focus on when you want to avoid being trapped in debt. By making the minimum payments, I was essentially agreeing that it was cool with me to allow the credit card company to charge the rest of my balance at an annual interest rate of 22%. That is insanely high and if I understood this, I would not have done that so often. Minimum payments make you think that you are able to manage your debt because the payment is smaller each month which gives you a false sense of security since you then keep most of your money in your pocket each month. This is a lie! At the end of the term (for me it was 7 years) you actually end up paying significantly more to the credit card because of the interest fees. 

For all my visual people reading this, here’s a quick example of how long it can take you to pay off a $5,000 credit card growing at a 17% interest rate if you stop using the card to make new purchases. Below you can see what happens if you pay only the minimum balance due versus paying off double the minimum payment due. (Spoiler: In this case, you’d save over $1,000 by doubling the minimum!) 

Total Balance: $5,000 $5,000
Interest Rate: 17% 17%
Minimum Balance Due: $150 $150
Actual Monthly Payment: $150 $300
Years to Pay Off: 3.8 years 1.7 years
Total Paid in the End:  $6,814.81 

($1,814.81 for interest)


($744.09 for interest)


  1. Spending Money to Impress Others

My first year in college was the most difficult to predict or plan for financially because I had never done college before! I did not see the peer pressure coming. I thought I knew what I liked and didn’t like, but once the coolest kids on campus started wearing certain boots or carrying a specific brand-name back-pack, I felt like I just had to have it too. Data shows that it wasn’t just me! College freshmen tend to spend more than they need to as a result of having independence for the first time. Living away from home is new and the excitement of having so much freedom might tempt you to spend more than you normally would. 

The biggest instance reported where college students struggle to save and not give in to peer pressure is when it comes to going out to eat. One Chipotle burrito bowl here and a few slices of pizza there really do add up quicker than you might think. I do have regrets when it comes to my food budget in college and if I could go back in time and do it all over again, here’s what I’d do differently: make a budget for food outside of the meal plan I had, chip in for big orders with my friends rather than everyone buying individual meals all the time and finally I’d take full advantage of the campus cafeterias and bring food and snacks back to my dorm room for all those late-night cravings!

Save more, spend smarter, and make your money go further