It is not uncommon to find student with a small debt or a big one in college. When contemplating how to get out of debt and ultimately, transition into the ability to become an investor, one has to make a dramatic shift in their finances in order to get ahead. Consider the following recommended steps to get out of debt and then position yourself in order to make a substantial amount of capital.
Debt elimination is the first necessary step a student should take before deciding to invest. It is essential to pay off high interest credit cards that typically have a 30% interest rate before even considering saving and investing. Additionally, it is beneficial to pay off personal loans or any student loan that have high interest rates before trying to pay money into a savings account. Once the debt is eliminated, it is wise to then set money aside for a savings cushion in order to pay your future college tuition payment or to allow for the unexpected to happen.
Three Months of Wages in Savings
Before investing in any options, it is best to have at least three months of wages in savings. Once there is enough in savings, then one can consider the best way to invest other money. Those students that fail to save will find it very difficult to get out of debt in the long term because they will never have a support system of finances to assist them should them need it. Their savings is vital should they decide to avoid high interest credit cards and personal loans all together.
The Recommended Quantity of Savings per Month for Students
In determining what is the proper amount of capital to save every month, it is essential to ascertain what one’s income from their part time student job, in relation to what their realistic living expenses are including their college tuition payments. The recommended savings amounts can range anywhere from $10 to $500. What is important to consider with this calculation is that even saving smaller amounts of capital per month absolutely is worthwhile because it will add up in the long term. What makes saving difficult is that the smaller amounts of savings are going to take longer to amount to a substantial amount of money. Typically, it is only through saving amounts in excess of $500 should one look into the possibility of entertaining the notion of investment and forex trading. The reason for this is that the currency trading market has very high stakes and the prospective investor should not be worrying about losing capital in order to be ready to be making such expensive and high profile trades that have very high risks associated with them. Perhaps an investment with low risk can be more adequate for students at this point. However, one can choose to make an investment with higher return. Be sure to know that the risk is higher as well.
High Risk Investments
For those student who are more advanced investors and that do have the potential to lose a great deal, currency trading and binary options are the latest potential ways to make a substantial amount of money. Currency trading requires specific level of knowledge in order to make substantial gains. Where this type of trading becomes very high risk is between individuals that do not know enough about the market in order to make sound trading decisions.
Binary options are a form of investing that should be avoided because there is a great deal of risk associated with these transactions that makes it very difficult to make substantial gains without incurring a great deal of loss. Binary options are reserved for the experienced traders that work at reputable companies. Should one have any doubt about the integrity of a financial company, they should not trust their binary options are very unregulated in markets that are outside of the United States. Where binary options are quite difficult to get ahead is that they are the notion of buying an option on a stock that will be profitable if the market swings in a certain way. Thus, there is a potential that an investor may not even make a profit. Instead of utilizing binary options, investors should be focusing on a more ownership based strategy to do well in investing.
Concluding Remarks on the Subject
To conclude, it can be quite difficult to get out of debt, especially in college. The reason that it is so difficult to get out of the red is that there is a vicious cycle that continues when a student spends more than they have and then pays subsequent interest on those charges. The best way to get out of debt is to pay off the high interest debt, save at least three months of wages, and then consider the amount of savings per month towards investing should the student have the requisite capital to do so. Then, if he has sufficient capital to invest, they will then be able to get ahead in their investments with potential currency trading strategies. That being said, these strategies are best left to the experts in order to get the best possible results for financially qualified individuals.