Interesting Article

I found this article a few days ago on the Washington Post website and thought it was interesting (you may have to create a free account with washingtonpost.com to view the entire piece). While it didn’t really give me much new information (student debt and credit cards being an interest of mine), I thought it did a good job of providing a general picture of the situation while bringing to light the less discussed issue of student credit cards.

I mainly found it interesting that many colleges and even local governments are going a long way to prevent credit card companies from marketing on their campuses. I remember that in my first days as a freshman at the University of Maryland, I was constantly passing tables where credit card companies offered t-shirts, free food coupons and other freebies for applying for a credit card. I signed up for a few giving fake info so I could walk away with a t-shirt, but for one or two I gave real information and am fairly sure that one of my current accounts started there.

I was happy to see that four years later, the state of Maryland has banned credit card companies from offering students gifts on college campuses and stopped universities from giving out student information so they can be directly solicited. The University of Maryland has also done its part by preventing credit card companies on campus.

The story also provided two good resources for people shopping around for credit cards. CardRatings.com allows you to compare credit card offers and find the best one for you if you absolutely need one or want to look for a lower interest rate offer to pay off a current one. Credit.com provides all kinds of financial advice on a wide range of topics, including credit cards and loans.

Spend Less: Free Entertainment

Being in debt is no fun. Working all the time to pay off said debt is even less fun. But what’s really not fun is feeling like you can never do anything with your free time because all your money should go toward paying down debt. It’s a Saturday night and I’m doing just that (I currently have 2.35 euros in my wallet, about enough for one drink and a bus ride one-way here in inexpensive Spain). Since I don’t feel like going out with that little money to any of my known options, I decided to compile a list of free (or very inexpensive) ways to entertain my poor self. Hope some of them are useful.

• Start with Google, my go-to resource for everything. Search for “free entertainment” or “free events” plus your city. A search like this for Washington, D.C. turned up tons of free concerts, festivals
  and exhibits. Unfortunately, it’s hard to find absolutely free nighttime entertainment because, let’s face it, alcohol doesn’t come cheap, but trying searching “happy hour” or “bar specials” to find some reduced price drinking events. Or be super-classy and carry your own alcohol in your bag…
• After Google, Craigslist is my favorite site. I frequent the free items page in the for sale section, which occasionally has landed me a cute end table or lamp. I know it’s silly, but I’m poor and even if I don’t really need something, there’s no reason I shouldn’t indulge if it’s free, plus the trip to go pick it up is always entertaining as you try to find your way to this person’s house! You may also find free events and classes using this site, so explore. Another recent find of mine (which I have yet to actually try) is Totally Free Stuff. The site promises everything from coupons to t-shirts to calendars, sent right to your house or e-mail, often in exchange for answering a few sponsor questions. Just be careful of who you’re giving your information to if you decide to try that one out.
• If you plan to stay at home, two of my best suggestions are Bored.com, which has tons of free games, quizzes and other time-wasters to entertain you. You could also watch an online movie or TV shows at any number of video streaming sites, my favorite being AllUC.

As always, I’d love to hear your comments and suggestions.

Making a Budget

A few months ago, my boyfriend and I made budgets for each other- he wrote one for me and I wrote one for him. It was mostly for our own entertainment because we both knew that our meager English teachers’ salaries didn’t require much budgeting. At least in my case, every penny would go to paying my various debts and essential living expenses, whereas his would unfortunately go toward filling in the gaps and providing us with low cost entertainment. Since we rarely spend money on anything more than a cheap bottle of wine or a few inexpensive drinks with friends (and I do mean inexpensive because here in Spain a beer or glass of wine is only about 2 euros), we didn’t need the budgets to rein in our spending, so we soon forgot about our little budgets.

Now that our year of teaching is winding down, however, I’ve been thinking more and more about making a real budget to go with what I hope will soon be a real income. While I don’t anticipate my spending increasing with my income, I would like to have a plan for how I can pay off my debt and build up some savings. To that end, I’ve done a little research and found some good budgeting tools online that will hopefully be helpful to others as well.

• The Nest Budgeting Tool: Okay, I know this comes from a website that isn’t exactly centered on finances, but I found this easy to use and perfect for me, since my boyfriend and I live together and therefore share most expenses. I also thought the categories were pretty thorough and the information provided- the extra money you have to spend after expense were paid- to be useful. The downside is that you can’t print or save it, making it harder to stick to.
• American Consumer Credit Counseling Household Budget: A good one which provides you with an Excel document to save or print. Also made me feel slightly better about my situation, since it provides lines for eight credit cards and I only have three!
• This Is Money Calculator: This one seems more valuable for analyzing you past spending than for planning future spending, but both are important. It’s from the UK, so it’s in pounds and is not especially thorough in listing expenses, but it’s a good jumping off point for tracking what percentage of your monthly income goes to various things, which is helpful in seeing where you need to cut back.

If anyone knows of other helpful budgeting websites, please feel free to comment with them!

Tax Time!

My state income tax refund arrived the other day and I´m expecting my federal refund to show up any day now, too. I also think I may be eligible for a little bit of the money the government is handing out to bail us out of this economic crisis, so in total I may be looking at a little over $1,000, which is pretty good considering I was a student working part-time for most of the tax year. While my initial reaction was to use the entire amount to pay off debt and bills, I decided to do some research to see what the experts have to say about it.

This article in the Boston Globe suggests that someone with lots of credit card debt and no savings put about one third of the money into an emergency fund and use the rest to pay off debt. In my case, I could pay off $666 of a credit card (I want to get rid of them before I focus on my loans) and put the other $333 into savings, which I know would make me feel more secure anyway. The problem is that I think that savings might be immediately depleted the next time I have a tight month and so might it be better just to use it now for the same debt I´ll probably use (at least part of it) for later?

This post on Sound Money Matters also suggests saving, but includes investing the money as a possible option as well, which is something I had considered. While I´ve no desire to blow it on something risky, opening an IRA could be a good way to save the money and have it earn something on the side. The problem is, I have no idea how to do that, so it´s something I´ll have to look into.

The other option I have considered is to put the entire amount into a savings account. $1,000 in savings would be great to have, especially because with all of my bills, I often have months where I can´t pay something on time. As a result, I end up paying late fees or overdraft fees, plus my interest rate goes up. If I had a decent amount of money to fall back on and could avoid ever paying another fee or rate increase, I could potentially save thousands a year and it would help my sanity a lot. The problem with this is I´d want to find a savings account with a decent interest rate, no minimum balance and one that will allow we as many withdrawals as I want. Does that even exist or would I be better off sticking the cash under my mattress?

 As always, your comments and opinions are welcomed and appreciated (especially if you´re a CPA and want to give me free advice on this!) 

And We’re Back…

Many apologies for not posting in the last two weeks or so. My family was here in Spain, visiting me over Easter, so I was away from my computer for quite awhile. Since I’m still mostly in vacation mode, I’m not going to get too far into annoying debt-related issues in this post.

Instead, I want to pose a question that I’ve been thinking about as a result of something that happened at the start of my vacation: are some people just unlucky with money? The point of this blog is obviously about things I (and everyone) can do to take control of our money, but is it possible that for some people (me?) it’s just there’s something working against us that makes it a lot more difficult?

The event that made me think about this is this: when my family arrived, I took the train up to meet them in Madrid. From the train station, I jumped on the Metro into the city to their hotel, but the Metro train I was on happened to get really, really crowded so I found myself struggling just to stay standing with my suitcase. My purse was under my arm, but because the train was so crowded I couldn’t see whether the zipper was in front, where I can see it and where I am careful to keep it, or in the back, where anyone could open it, nor could I move it even if I had noticed that the zipper was in the back. Instead, I just held the purse closely and didn’t notice anything unusual on the train, but when I got out I checked my bag just in case and of course, my wallet was missing. Luckily, it only had about 50 euros cash in it and I managed to cancel my ATM card and the one emergency credit card I carry before they were used, but I was still upset and irritated that someone had managed to rob me when I consider myself both careful with money and experienced with big city transportation (having lived in DC for a year, using the metro nearly daily).

This annoying experience made me think about several other “unlucky” experiences I’ve had with money in the past few years and while I know everyone has these sometimes, I’ve had several people comment that I have more bad luck than others. In addition, I never seem to have any good luck with money, like those people who are always winning prizes or finding money on the sidewalk. I think my boyfriend agrees, because during our trip he bought me a little clay witch from a souvenir shop that’s supposed to make you lucky with money. She even has a tiny piece of gold (there were others with different items that promised luck in other areas). I’m going to keep her in my purse to see if she brings me good luck. If nothing else, I made the person who was selling them that much luckier. They’ve got my 2 euros

While we’re waiting to see if my witch makes me luckier with money, I’d love to read your comments about luck and money!

Personal Finance 101?

Colleges and universities have a large (and often negative) impact on the finances of their students and graduates. Of course, much of this is out of the control of the schools and is simply a fact of life for those who want a college education, but does that mean that schools shouldn’t prepare students for the effects? In my opinion, one of the best things colleges and universities could do for their students is to offer a personal finance class and make it mandatory for all students.In my senior year, I took a personal finance class which gave me a lot of information on savings, credit, mortgages and retirement planning. Though I don’t remember any of the formulas I was given to calculate things like how much I need to save now to retire with enough, I know they exist and can look for them later. I can’t remember exactly what the difference is between fixed and variable interest rates, but again, I know there is an important one and will be more likely to consider it when I have to decide. The class was useful mainly because it gave me a greater awareness of my finances and more information about my financial options. The problem with this class was that not nearly enough students could squeeze it into their schedule among all of the other requirements for it to benefit them.

If schools are going to require things like English 101 (how to write a college essay, which you’ll never use outside college) and Math for Dummies (x + 2 = 4, find x), why not require students to learn about their own money, which they will use everyday? Even better, why not allow students to take a class like this in place of another requirement, like a basic economics or sociology class?

As always, I’d love to hear your comments!

What I Wish I’d Done

One of the biggest mistakes I made when figuring out how to finance my education was not checking out scholarships very thoroughly. I applied to a few of the big ones offered by my state which didn’t require much in the way of an application, were very competitive and of course, turned me down despite the fact I was a good student. Most of my friends did the same and got the same results- we all used loans (and whatever grant money we could get from the FASFA) and are now broke after graduation.

One friend, however, spent hours during his senior year applying for literally hundreds of scholarships. Some required only a simple form, others asked for more time-consuming things like essays and recommendation letters. He applied for any he was eligible for, bugged his teachers for letters and spent time writing essays (though he was able to use both the letters and essays for multiple applications). The scholarships tended to be small, usually anywhere from $100 to $1,000 one-time, but $500 here and $200 there quickly adds up. Because not a lot of people took the time to apply for these small beans, his chances of getting them were greatly improved and get them he did. This friend, through these scholarships and state financial aid, paid for four years of college, room and board, books, and then some at the same university as me.

So if you’re in high school or the parent of someone in high school, check these out. A few hours spent now could save you thousand of dollars later.  

What a Good Idea!

I just came across this very unique idea for helping graduates pay off debt. Ian Wallace, a graduate in the UK, had the idea that students could participate in corporate sponsored charity work and in exchange, the company would pay off a portion of the student’s debt (in this case, up to £9,000).

This idea is so simple, yet seems to benefit everyone. Companies want to make charitable contributions to boost their image with consumers, students and graduates want to pay off their debt and often already participate in volunteer work. If you can match, for example, a local student with a local company, it’s an added PR boost for the company (“Local Company Helps Joe Student”) and a great way for the student and charity to benefit.

The site has only recently launched and is currently down, so I don’t have a ton of info on this but I’ll keep an eye out. Right now this is only available (on a very small scale) in the UK, but one article said they want to go international once they’re up and running, so we’ll see if this may be available to US graduates sometime in the future.     

Earn More: Participate in Studies and Market Research

If you’ve got debt, you probably spend a lot of time looking for ways to save money. While that’s important, it’s also really important to find ways to earn more money, which can be a little trickier. I’ve been looking into ways to earn more and whenever I come across decent ideas, I’ll try to post them here.Today’s idea is to participate in studies. You’re probably picturing yourself jogging on a treadmill with electrodes strapped to your chest or taking some weird medication with unknown side effects, which is an option, but it’s not exactly what I’m suggesting.

While I do know people who have done (sometimes scary or annoying) medical studies, there are some easier ways to earn extra cash through studies. The first and simplest is to check notice boards around your college, especially in departments like psychology and sociology, for study ads. Most of these studies are run by grad or PhD students as part of their theses, though some might also be run by faculty. Pay ranges anywhere from $5 for a simple survey to $25 or $50 an hour for more complicated research. Most studies only require an hour or so of your time and are conducted right on campus. They’re non-invasive and generally simple- you might fill out a questionnaire, do activities on a computer or answer interview questions. I participated in many of these during my first few years of college and they’re a great way to earn a little extra spending money in between classes.

Another good idea is to check out some of the large market research companies that may exist in your area. These aren’t online surveys or scams. They’re actual companies who have been hired by businesses to find out the opinions of consumers. The best way to find these is to search online with the name of your city or state and “research” or “market research.” You’ll usually need to register and provide some demographic info on their website and then keep an eye out for e-mails or phone calls inviting you to participate in surveys or focus groups. These tend to pay better because you usually have to go to their offices and may require more time, but I’ve seen studies paying anywhere from $75 for about an hour to $200 for a few hours.

Surveys are great ways to earn more because you don’t really have to do anything but provide your opinions, ideas and a little of your time.

Three Obvious Ways to Lower Your College Debt

In doing research on student debt, there are three things that repeatedly come up as ways to lower your debt before, during and after college. They aren’t tricks or secrets and they seem really obvious if you think about it. Unfortunately, it seems that many people either aren’t aware of these ideas or aren’t trying them out, so to reiterate, here are the three best ways I’ve come across to avoid or lower college debt:

If you’re a high school student looking at colleges… consider community college! A lot of people wrinkle their noses at this idea because they think community college lacks the prestige of a four-year school and a lot of others aren’t even aware of community college as an option because guidance counselors don’t tell them about it (mine certainly didn’t). This is unfortunate, because there are huge savings to be had by attending community college for two years, then transferring to a university for the last two years. Community college tuition averages about 40% of the cost of a four-year public school, meaning a 60% savings on your first two years of school (and more if you plan to attend a private school). Since the first two years of college tend to be general education classes like English 101, basic math and beginner foreign language, there’s no point paying full price- it’s like buying expensive toilet paper. Once you’ve filled the basic reqs, you can switch to a four-year school (some states even offer guaranteed state university admission to their state community college grads) and leave with the prestigious name on the diploma. If two years at community college doesn’t appeal to you, I still suggest trying to take a few summer or winter term courses there, which could save you hundreds or even thousands of dollars in the long run.    

If you do look into community college, do be careful when planning. Be sure that the community college classes you take will be transferable once you switch to a four-year so you don’t waste time and money, and keep your grades high throughout so you ensure your admission to the university of your choice.

If you’re a current college student… graduate in four years (or less)! With college costs soaring and student debt reaching all-time highs, I do not understand why so many students are taking five, six and even seven years to graduate. Personal crises and extremely difficult programs aside, unless you’re independently wealthy, plan to win the lottery soon or are named Van Wilder, what are you doing? Most undergrad programs require 120 credits, which means an easy 15 credits per semester for four years. If you came in with any AP credits or have classes that give more than three credits, you could graduate even graduate a little early or at least coast along on only 12 credits for a few semesters. If you’re serious about reducing your post-college debt load, get into your advisor’s office early and often to figure out how you can make four years happen.

If you’ve already graduated… consolidate. You’ve probably been getting bulk mailings from your loan companies already, so don’t just throw them away. Many companies offer incentives for consolidation, such as a lower interest rate, but these are often contingent on perfect repayment for a certain period, which many people aren’t able to take advantage of, but consolidation still has its pros. The main one is that it’s a lot easier to keep track of one or two monthly payments (as opposed to several), which makes it more likely you’ll remember to pay on time and avoid fees. You’ll also be able to contact your lenders more easily if there are fewer of them, so you can ask questions, explain a problem or even request deferral or forbearance more easily. The key is to shop around by calling a few different loan companies to find out what they offer and why you should consolidate with them. Also keep in mind that if you consolidate your loans during college or at the start of your grace period, you may lose that grace period, so try to do it toward the end of your six months.

Ok, enough of my soapbox. As always, I’d love to hear your thoughts!