“I have never let my schooling interfere with my education” — Mark Twain
The following is a guest post from Martin of Studenomics, where he aims to help you be financially free before you hit 30. You need to check out the site to see what he has been working on!
The time is here. You somehow survived college and now you’re free. What do you do? How do you figure out this whole money thing now that you’re supposed to be an adult? How do you behave now?
This is my story of how I’ve been working on mastering my finances in the two years since I’ve been out of school.
I’m not the brightest guy nor do I have a great attention span. So if I can save money, anyone can. Wait, what was I talking about?
Oh right, my story of trying to master my finances.
The first thing I need to mention is that it’s key to be proactive!
Now I understand that things happen. I was lucky. I found a decent part-time job in college, stayed at home, and worked like an animal. I didn’t know any better. I didn’t realize how fun college could be until I started visiting my cousin and my younger brother went away. I wouldn’t recommend this for everyone. Moving away is good. Staying at home worked out for me.
Not everyone will be as lucky as me. I get it. So if you’re younger or in the position to do so, it’s important to be proactive and start planning now.
I shared how I graduated from college debt-free if you want to read it. Let’s move forward.
The five steps to mastering life after college are:
Find an income.
Luckily for me, Studenomics started making me money when I was in college. I never really thought anything of it. I figured that since I wasn’t in debt, I could blog in my spare time and be a professional lounger during the day. I ended up blogging like crazy. Thankfully, my blog income rose over time.
The point of this is that:
You need to make money.
The first step is to find an income. Any income. Any source of money coming in.
You don’t have to blog for money. I was lucky. You can find a part-time job. Two side jobs. A full-time job. Anything that brings you money.
Then you can move forward to the next step…
Kill your debt.
Once you have money coming in, it’s going to be tempting to spend it. I have no idea on Earth how I’ve managed to not buy an iPad yet. I did splurge on a Macbook Air. No iPad yet.
Before you start spending your money on all of those cool things, I have to be the bad guy and remind you that you need to deal with your debt first.
I won’t get into debt strategies on here. I’ve thankfully been able to avoid debt, but I do know how tough it is to stay in the positives. I kindly encourage you to start killing your debt ASAP after college.
My focus is now on debt-avoidance. I want everything. I fight with myself every single day to not use my credit card on random crap.
Build for the future.
What’s next for you? Don’t worry, I just recently started thinking about five year plans. When I was younger I didn’t even have a five week plan.
A few weeks ago an older mentor presented the idea of a five year plan to me. This really opened my eyes. I was clueless. I just want to make money and survive another day. Now I’m doing my best to build towards the future and think about what’s next. I realize that one day I will be thirty and I will be married.
The point here is that we need to remember to think about the future. In the last two years I have been building, but not really thinking about the future. Turning 25 was a kind reminder that I won’t be young forever.
Shopping around on comparison sites and online department stores (AU readers see oo.com.au) can save you big money. I would suggest comparing two-three stores at least and finding the best deal for you.
Now I have to talk about a term that I sort-of can’t stand.
Networking is a scary term for most young folks.
Do we have to wear a suit when we visit a buddy? Does it mean that we must attending networking events?
It doesn’t have to.
For me, networking is about mixing business with pleasure. It’s about making friends out of strangers. It’s about turning business partners into buddies.
I believe in transparency. I’m not one of those people who will have three separate Facebook accounts for every area of life.
Over the last two years, I have gone out of my way to step outside of my comfort zone to meet new people, interesting characters, and folks I have nothing in common with. I’ve gone on trips alone and I’ve turned strangers into solid friends.
I perhaps am a bit too extreme with this.
I do encourage you to get out there and make new friends. You don’t have to go on trips with people you don’t even know that well or hang out with friends from the gym like I do, but you can try meeting one new person per month.
Oh and why bother with meeting new people? You never know who can help you or who you can help.
Get wasted/have fun/play board games/let loose.
I don’t want to credit getting wasted for my results, but it does deserve some recognition.
Telling you not to have fun is the dieting equivalent of banning cheat days. It’s not going to happen. You can’t deprive yourself in life.
If you want to get ahead, you really need to budget in the fun stuff. It’s important to have something to look forward it.
Thanks for joining me on my story of what I’ve been trying to do since college to get ahead.
What does your story look like?
Don’t forget to check out Studenomics!
The following is a guest post from Kimberly Kesterke, a new blogger on financial abundance, budgeting and financial creativity. Feel free to visit her blog at www.rockyourmoney.com. You can also e-mail @ firstname.lastname@example.org Just remember it is NEW, but all self-created to provide a valuable and useful information.
Call me crazy, but in 2009 I decided to finally move forward with a Masters of Business Administration program (MBA). Call me even crazier, I vowed to do it debt-free. Here is my story and my advice on how YOU can tackle a large expenditure- one day at a time!
First of all, I realize that there is a vast amount of funding programs available at low interest rates and I have nothing against a student loan. However, when I was done with the MBA program, I wanted to feel free and not have a large obligation to pay off. For me, it would have added undue stress, and the biggest goal for me after the program was to launch my career, not to have to worry how I would pay for it after the fact.
So the year before, I started stocking away cash. I had an idea of a program I wanted to attend, however did not know how much I would actually need. I took my GMAT test, and started applying. When I got accepted to University of Georgia (Go DAWGS), I immediately accepted. That’s when all the fun started!!
I had enough savings to get me through the first semester, but then after that, I had to come up with $1850.00 per month additional for the next 18 months. UGH! For being such a frugal gal, why did I pick such an expensive program?
Well, for starters, I knew that the network of people would be strong, UGA offered amazing free programs, and finally I figured that if I wanted to change my career, there would be great resources to do so. Plus, I was 28 at the time and figured,” It’s now or never baby! Put those budgeting skills to the test!” And that I did.
The golden rule of budgeting is spending less than what you make. If you can’t skim anymore out of your expenses, then frankly, you have to find ways to earn more. I was in a situation where I had to bring in more income and spend less. Oh yeah, and still have somewhat of a life.
I have to admit; I was extremely overwhelmed and wondered if I could really do it without going into debt. So, I made a plan that I vowed to stick to. This was a commitment to find the income I needed to continue paying for the program. After looking at what I could trim I realized I had to find an additional $1000.00/ month to pull this thing off. Being in sales, I could definitely sell more, but there were certain months I couldn’t always count on that, so it required getting extremely entrepreneurial!
Creative Ways to “Find” the Money
As soon as I had the number I needed to hit, I started looking at every single scholarship site known! I searched fastweb.com, scholarships.com, nawmba.org, and many others. Interestingly enough, the awards I ended up finding were through the University of Georgia, and the National Association of Women MBAs. Yes, there was a lot of work involved, but this shaved of $4K off the total amount I had to pay. (4 Months)
Tip: Look into every scholarship program you can think of. Go to Google.com, type in Scholarships and let the magic happen! Also, your local library has thousands of resources on local community groups who provide funding for students and government grants for non-traditional students. Also, look into your own University scholarship offerings and see what you can qualify for.
2. Re-selling Items on Ebay
In my younger years, I used to play an instrument and was able to sell a few used items, as well as did a huge deep clean of my closet. I found things I did not even think would sell, but overall sold enough to pay for three months of school (3 Months)
Tip: if you are looking for extra money, think of an item that you really like and know is worth something. Go onto Ebay’s website, look at past auctions and see what it has sold for. Then go scour every garage sale, thrift store and Goodwill store to find that item, or the list of items you brainstormed and researched. Then, get selling!! Yes, you will have to pay taxes on the profits, but the expenses are tax deductible. Try it out and you will find that you can bring in a minimum of a couple hundred bucks a month.
3. Pet Sitting
Pet sitting in my area is extremely competitive, and I simply got lucky by finding a couple whom loved to travel and trusted me with their pets. Between the three different visits, I cleared enough for three months, so was able to add that to the overall budget. (3 Months)
Tip: If you are active in your local community, let your network know you are available to take care of their pets! First of all, you get great exercise by walking various dogs, and if you include house-sitting in your list of services, then you can earn a nice chunk of change. Try it out! You will be surprised how easy and fun this side project can be.
4. Cutlery Demonstrations
Although I do not do these anymore, this was a very fun way to bring in cash during the month. Not only did it help me improve my customer relations skills, but I was able to show off some very expensive, high quality cutlery! It was an absolute blast! The even better thing was that these demonstrations were in great stores such as Williams Sonoma, Sur La Table and Crate and Barrel. It was a fun, low key way to earn income. After taxes, I cleared enough to cover an additional 5 months of tuition. ( 5 months)
Tip: Brainstorm your hobbies and see if you can do a presentation in your community to attract customers, find a side job as an employee, or market your skills to bring in more income! Millions of people do it every day, so why can’t you? If you enjoy engaging in your hobby, why not earn extra income doing so?
5. Great Selling Months.
The remaining amount came from digging deep and getting motivated to increase my sales. It was not easy, but there were some great months that I was able to apply the excess to my tuition payments. To earn more, I had to become better. This meant refining my sales skills – pushing the envelope and stepping out of my comfort zone. By having a sound plan of action, I was able to relax which caused my customers to relax around me. I truly believe I sold more because I knew what my goals, how they were going to be reached, and did not use selling more as my only plan. Diversification is what kept the stress levels down.
Tip: Are there areas in your job that you could bring in more income? Could this be via bonuses, overtime, extra commissions, or a promotion? Seriously look at where you could generate a bit more income and then GO for it! To be honest, bosses LOVE employees with an initiative. Have you seen a need in your organization? Then create a detailed action plan to fill that need and present your plan to your boss. Word of advice, do things like this a couple of times, and you will be primed for more money. Period.
May 15, 2012, I graduated with a Masters of Business Administration from the University of Georgia DEBT FREE!!! I don’t know if I was happier to have the education or no debt…. I’m pretty sure both!
I was able to change careers and started my first management role. I believe that the MBA taught me much more than Finance, Marketing, Information Technology and Accounting degrees. It taught me how to work with a team, taught me the art of budgeting, and taught me how to earn more income than what my job provided. Those skills are invaluable.
Living without debt provides the creativity to achieve those dreams and goals you formulate. You see, with a credit card always in our back pocket, or loans readily available, it limits our creativity to what we really can achieve. It puts us in a mentality of lack rather than a mentality of abundance and creativity! Next time you are ready to make that big purchase, ask yourself two questions. “Can I make a plan?” and “What creative activities can I do to generate the income I need?” Make a list for your goal, take action and achieve your goals bigger and better than you ever thought possible!!
Crystal’s Comments: You made a plan, stuck to it, and succeeded. That’s the true secret of success, right? There isn’t magic. There’s just some stick-to-it and a dash of luck. In your case, you made your own luck with a solid plan. Congratulations!
The following guest post is from long-time reader Rebecca in response to my friend Isabelle’s new budget. I thought anyone with student loans may be interested. Thanks Rebecca!
Our Student Loans
I wanted to provide some unsolicited input for Isabelle regarding her student loans. I don’t know what interest rate Loan #2 is at, or who her student loans are with, but I do have quite a bit of experience with student loans in general. My husband and I actually have quite a bit of them, but luckily they are at a combined fixed rate of less than 2%, so they are not a priority for us to pay down. Anyway, back to Isabelle.
I am going to assume at least one of her loans is with Sallie Mae, since they have a large share of the market. If she does not have Sallie Mae, most student loan servicers probably offer similar options. Sallie Mae has quite a few options to help individuals who are currently struggling with their payments. Some of these require proof of income, and others don’t. In either case, I would suspect she would qualify. In her account, there should be a link for “lower my payment” that will take her to a screen that offers various options.
In the past there was an option to essentially change your student loans to interest only for up to 5 years. From what I recall, there were no income requirements to elect this option. You were also not prohibited from making additional payments, so if it is still available, this option can be use to essentially allow her to shift the principal portion of the Loan #2 payment to Loan #1. I can’t tell if that option is available anymore, it doesn’t appear on my screen but that could be because we already exhausted our 5 years of this.
Outside of this particular option, there are income based repayment plans that she might be able to take advantage of, especially if there is a significant difference in the rates of her loans. If she could shift say $100 of payments from loan 2 to 1, My guess is that Loan 1 is on a 15 year repayment and loan 2 is on a 20 year repayment at 3.4% so this would allow her to say about 4% in interest on the extra payments.
Also, just in case you or she wasn’t aware, there are programs specifically for individuals who work in teaching and certain other public sector jobs to forgive portions of student loans for service. I believe these progams are particularly generous for teachers in low income/inner city schools. If this type of position is one Isabelle is considering, you guys should look into the programs more.
Best of Luck to Isabelle in her job hunt!
Crystal’s Comments: This is why I love blogging! I don’t have any experience with student loans so I didn’t have any good advice, but this community is so awesome and we can all learn from each other! Thanks Rebecca!
The following is a guest post from Emily Guy Birken. She is a freelance writer, occasional BFS guest poster, and regular contributor to PTMoney: Personal Finance. She lives in Lafayette, Indiana, with her mechanical engineer husband and toddler son. Her musings on life, parenting, and money can be found at The SAHMnambulist and Live Like a Mensch.
Our Views on College
For the nine years we have known each other, my husband and I have disagreed about the point of an undergraduate degree. I, who attended idyllic Kenyon College and double majored in English (with an emphasis in Creative Writing) and French Literature, feel that college is supposed to be a time of learning and growing without worrying about what comes next. My husband, who graduated from Rochester Institute of Technology with a B.S. in Mechanical Engineering (and walked from the commencement stage into a great job with a major auto manufacturer), feels that you go to school so that you can get a job.
In effect, we represent the two ends of the philosophical spectrum of higher education. While I’d be taking the fate of my marriage in my hands if I were to try (again) to argue for the rightness of one of these positions (mine), I do think it’s important to examine the pros and cons of each. In my capacity as a personal finance writer, I have been known to advise people to save money on college by living at home, going to community college for the pre-requisites, or putting college off—so I think I ought to explain why I did none of those things. And why I have no regrets.
What I Lost By Being a Prototypical College Student
When I graduated from college in 2001, I carried over $18,000 in student loan debt, nearly $2,000 in credit card debt, and my beloved but impractical majors meant I had no job and no prospects when I received my degree. It took me nearly three months to find the job I would end up keeping off and on over the next four years—working as a bookseller for Barnes & Noble for $8.25/hour ($16,500/year).
I lived paycheck to paycheck for several years. While I was able to build up a $1000 emergency fund, pay off my credit card debt, and always pay my student loan each month, I also hit up the bank of Mom and Dad more often than I care to admit and I did not put a single cent away for retirement.
This was also a tough time for me psychologically. Many of my friends who had gone into different fields seemed to be making a mark, while I was simply improving my reading list.
What I Gained From the College Experience
On the other hand, even as I was jealous of friends who seemed closer to being “real grownups,” I never regretted my time at a small liberal arts school studying something without an obvious practical application. While I was always a pretty good student, being able to choose my majors helped me kick my studying into overdrive. I spent four years immersed in academic pursuits that I found fascinating, and I worked my rear end off because of it. That experience has taught me what kind of work ethic I can expect from myself—provided I’m interested in the topic. It also showed me the importance of doing work you care about, because then you never work a day in your life.
I also formed some incredible relationships during my college years, which would have been impossible had I been focused on a job or financial goal. When I got married at Kenyon in 2008, my favorite professor hosted our rehearsal dinner on his front lawn, and two of my bridesmaids were girls who lived down the hall from me Freshman year.
My time at Kenyon is inseparable from who I am as an adult. It helped to shape my intellect, personality, loves, relationships, and work ethic. I cannot imagine my life without my time at Kenyon.
The Bottom Line
I recognize that not everyone can have the incredible college experience that I had. I also know that I did pay a price during my twenties for my four years at college. I would do it all again in a heartbeat, for the same $20,000 price tag. But as I read about students graduating with $25,000, $60,000 and even $200,000 in student loan debt, I know that there is an upper limit to what a college experience is worth. I also know that I could not have made the decisions I did without the help and financial support of my family.
If you can afford the college experience, both during your four years at university and as you pay down student debt afterwards, then I certainly feel that personal growth is an important part of becoming an adult. But if money is tight, recognize that the education you receive does not have to be expensive to be worthwhile—and there will always be opportunities to learn more about yourself throughout your life. I was lucky, and I know it.
(Note to my husband: This still does not mean that you are right.)
Crystal’s Comments: I am torn. I know that my college experience was odd. I worked all the way through…heck, I spent my last semester taking 12 hours of classes on Tuesdays and Thursdays and working 3 part-time jobs Monday-Saturday for a total of 50-60 hours per week depending on the week. And I had multiple scholarships. But I still graduated with $8000 of debt to my parents that they forgave a few months after graduation (didn’t even have to go to Friday Friday for cash, lol). So, I definitely saw college as a way to get a job or I wouldn’t have attended.
BUT, I also met some amazing people, including my husband. And I laughed and cried in the dorms and the on-campus apartments as friendships formed and ended. So I completely think that college is a place to grow and form relationships too.
Overall, I am pro-college for whatever reason works for you.
How do you see college?
The following is a long-awaited guest post from Mr. BFS. He was thinking about his own college education expenses and how his parents handled it. That got him thinking about windfalls in general. And wonders never cease, he actually wrote it all out for BFS. Thanks sweety! I will say in advance that I only made minor edits like spelling and bolding the titles…this is all hubby. My comments are in italics like this.
You did it! They said it would be nearly impossible, but you did it! You have saved enough money to put your child through college! The acceptance letters are coming in and you breathe a sigh of relief because you’ve got it covered. There is enough to cover tuition, room, and board. Today you are on top of the savings world.
But then you hear the news, she got a scholarship – a big one. Awesome!
(I always knew if we have a kid that he wants a girl…)
This can be both a wonderful and nerve racking experience – having saved and saved for ten, fifteen, or even eighteen years, you now realize that you don’t need (or only need a part of) all of that savings. So what do you do now? The answer to this question has a lot to do with how you got to where you are today.
One common thing is for parents to save for their child’s college fund by skimping on their own retirement savings. If this is the case, now is the time to catch up. Depending on your age, many retirement vehicles allow for an additional catch-up contribution in the years before the “normal” retirement age. Alternatively, if you participate in an employer sponsored 401K, consider significantly upping your contributions for a year or two - making up the difference with the college fund.
Depending on what you have been using to grow that college fund, you may find it more beneficial to leave it there and let it grow. In this case it can become a retirement savings plan in and of itself. Whatever your specific situation, look to retirement first.
If your retirement situation is looking good, you have been a skilled saver. Perhaps though, there is that nagging debt still hanging around. Credit cards, cars, home, all of the above – whatever your particular poison, if there is debt in your life, now may be the time to reduce or eliminate it entirely.
Here it is simply a numbers game. Take a look at the balance and interest rate of all outstanding debt and create a plan of action. You may be in a position to eliminate all of your debt and still have money left over to do something else. Perhaps you noticed you could pay off the remaining balance of that old credit card and put the rest toward retirement. Maybe you simply need to make a big dent in those very old student loans. Whatever your situation, take a look at the numbers and find what works best for you.
Another alternative to consider (perhaps after retirement and debts are seen to) is to give the money to your child as a gift. No I don’t mean write a check.
Sometime soon after college, she will be looking for a home of her own. Consider getting her off to a great financial start by turning the college fund into a down payment on her first home. Perhaps a wedding is on the horizon. Funding the dream wedding/honeymoon may be something that you have both wanted. This could be the way to make it work. Is she business minded with that entrepreneurial spirit? Perhaps you could provide a boost to her first business.
Many of these decisions depend on the child, but it can be a wonderful boost to their quality of life to begin their adult lives with such a huge advantage.
Don’t Forget About You
Don’t forget who saved all that money! Who sacrificed? Who drove the kid to practice every day? Uphill! Both ways!
When a big windfall hits, it is tempting to either completely overlook a small reward for yourself or to go to the other extreme and get a little extravagant. If there is something that you have been wanting and putting off, especially if you have been specifically putting it off for the purpose of saving for your kid’s college education, now may be the time. This may be the retirement or debt I mentioned earlier, or it may be new carpet, a second honeymoon, your emergency fund, or even a new pinball machine. Now may be the time.
The important thing is not to take this as an opportunity to blow what you have spent years saving in a shopping blitz. Make sure that your self-splurge lives up to the time and effort that went into saving the money that you are now spending.
Every situation is different and no one formula can calculate how much to allocate to everything. If you have experienced a sudden windfall from unused college savings or any other cause, take a good long look at your own situation and prioritize what areas of your life need the most attention. Give special consideration to your retirement savings (it will be here before you know it) and any outstanding debts. The most likely outcome is that you will see a need for a little here and a little there. Take advantage of the opportunity to improve your situation – find the weakest point in your financial health and address that area.
What would my vote be? Assuming the number make sense, there is much to be said for starting your child off on the right foot. My parents used my college savings as a down payment on our first house. It allowed us to get out of renting faster than most others our age and put us in a great position to pay off the house much earlier than expected. It also seemed to give us a sense that we wanted to live up to the gift – we wanted to make sure that we did not squander that incredible help.
Thank you so much to my inlaws for greatly helping us toward our 20% downpayment! And thank you to my parents for supplying all of our main appliances! We would have had to wait 2 more years for home ownership without all of that help. We also made sure that we would never need further assistance. We each wanted both sets of our parents to know that we were going to be more than okay. That is one reason we have always prioritized savings and debt freedom. We hope our parents know that they did a great job with us.
What would you do with a windfall?
We are staying with the college-themed guest posts this week. The following is a guest post by Jon the Saver, a Christian personal finance blogger and founder of Free Money Wisdom. He is passionate about helping average Americans reach their financial goals and live a life free of debt. In his down time he loves a mean game of Scrabble. Be sure to subscribe to stay connected with Free Money Wisdom!
Here’s the deal everyone, do you want to retire early? I’m guessing you just answered with a profoundly loud “YES.” Well why not start in college? Yes, college is a great time of parties, football games, social gatherings and memory making. However, your financial life is at stake and you really need to think about saving your money during college for your future. No, it’s not sexy. No, it’s not fun. But do you really want to be working when you are 65, 70, or even 75? I’ve seen one too many grandpas working at Home Depot, I’m not going to be one of them and I’m sure you don’t want to be either.
So, if you’re a student in college, what can you do? Before you get too excited, you should start with the small stuff. Yes you heard me right, the “small stuff.” This is not a situation where the “go big or go home” motto applies.
Cut back on Extra Spending and Invest in an IRA
C’mon, I know you can cut back somewhere, we all can! I remember how I was just terrible about spending too much money on eating out and not cooking at home. Shame on me! If I was smart, I would have cooked at home and invested the extra savings in a Roth-IRA. So, what can you do to start saving for your future retirement? How about those late night drinking binges? Why not avoid the alcohol and not only improve your personal health but your financial life also! It’s the small things that matter in college. It’s not rocket science, just start saving now before it’s too late.
Work at Least one Job
It’s funny because this seems like a no-brainer to me. Work hard, get paid, and invest a portion of that money toward your retirement savings. As I’ve gotten older, I guess the vast majority of people don’t follow this simple pearl of wisdom! Look, do you want to be in debt or broke at graduation? I’m sure you don’t so save yourself some headaches by getting a job or even two jobs to start investing for your future. No, it’s not glamorous, heck, you may even miss some football game. But at the end of the day you will be sitting pretty when it comes to an early retirement.
Start an Emergency Fund
Even though this is not related to retirement savings, an emergency fund could shave off a couple of your gainfully employed years. Let me explain. With this flat lined economy, there is a good chance you may not get a job right out of school. The average college student will take out a credit card and start spending like it was cash and get them into some debt trouble. If you’re smart, you would have saved money during college for an emergency fund. Instead of taking on debt you could spend the cash that you have. Then, after landing your dream job you could start making bank and be back on schedule for your retirement savings. No interest and no payments to a big bank.
Stop Whining and Start Saving
Do you want to watch American Idol or retire early? If you really want to watch American idol, well, have fun working in your 70′s… For the rest of you, start saving now! I hope this has been some inspiration to get you going with your retirement savings. If it was the swift kick in the butt that was needed, it was my pleasure. Remember, retirement savings are up to you and only you. Don’t rely on Social Security. You can kiss that good buy because it’s already bankrupt. You need to rely on Roth-IRA and 401k savings. Start during college or else. THE END.
Crystal’s Comments: I wasn’t able to save anything during college, but I was able to stay debt free, which meant that I was able to save as soon as I made my last school payment.