October 2010 Archives

One of the scariest words to me is "debt"!

*Jaws music plays in the background*

Seriously, being in too much debt is a looming, scary thing that everyone should try to climb out of or just avoid. While I don't have a mortgage (yet!), I definitely do have a student loan I'm still paying back. And a credit card, of course. It may sound like common sense, but here are a couple easy ways I've learned to manage my debt:

• Find my total. By adding up everything I owe, I know exactly how much I'm dealing with, which makes it so much easier to figure out a monthly payment plan.
• Pay my credit card off on time. Why subject myself to late fees? Or maybe even a higher interest rate? No thanks!

I also try to plan ahead and change my spending habits in order to prevent adding even more debt. For me, it's about buying one less item at that cute little boutique if I need to cut something out. Not to mention those extra accessories or nifty cool iPads! I can always save up for and buy those things in full.

Remember: Just because the thought of being in debt over your head is scary doesn't mean that there aren't ways to avoid and get out of it! Where there's a will, there's a way, right? Your main weapons are planning, saving and budgeting!

Have you ever had found yourself in too much debt and had to dig yourself out? How'd you do it? Share your story with us!

Obviously we want all our readers to be financially savvy, which is why we talk with you about having a plan and sticking to your budget. Sometimes, though, folks don't have the financial know-how they need before they get into money trouble.

Being in debt over your head is a scary place. But if you or someone you know is there, the most important thing to remember is that there are ways to dig out. Take a breath, along with a few first steps to see where you stand:

1. Figure out just how much you owe. List out your debts. Get the numbers in front of you so you can see the whole picture. Depending on your situation it might be very difficult to see that total number, but you have to know where you're starting.
2. Prioritize your payments. You have to understand the terms of your debts to decide which should be paid first. Where are you being charged the most interest? What is having the greatest negative impact on your credit? Are any of your debts with a collection agency? A number of factors will affect your payment priorities.
3. Calculate what you can pay. Here's a tough step, because it's where you need to do some major reality checking. You what expenses you can cut in order to have more money to pay your debts. It may also come down to finding another income source.

There are a lot of financial experts with a number of different solutions to help people pay off debt and manage their money. But it comes down to finding a plan that will work for you. Do a little research, talk to a financial planner, whatever helps you get a handle on how to tackle your debt. And remember to take it one day at a time.

Have any of you created a plan to get out of debt or know someone who has? Tell us about it.

You know those days when you walk by a display window and something catches your eye? There's a small voice in your head that says, "You HAVE to get that! You were BORN to wear that!"

Yeah, that voice gets me in trouble once in a while too. It's always hard saving up to buy cool stuff.Not to mention the holidays are going to swoop right in and surprise us before we know it! If you want to buy your mom, dad, friends, sister or brother presents for the holidays, you should probably start saving and comparing prices for those things now.

If you want to get a big ticket item, then you have to make a plan. I know, I know...that can be tough at times. But it really does pay off in the long run! Plus, budgeting takes away a lot of stress and worry you'll have leading up to buying that certain something — you know, those "I don't think I'll be able to buy it by then" or "It's just too expensive for me" thoughts.

Sure, there are things that are obviously out of my reach. But for all the ones that are within reach, I'm going to make a plan and start saving towards that goal. Try it! You'll start building healthy spending habits, AND you'll get to pick up that special item you were saving for!

How cool is that?

Have you ever planned for, saved and then bought something great? Tell us how you did it!

A 50-inch flat-screen TV, an adorable modern sofa, a fully functional automobile...we all have certain items on our shopping list with a heftier price tag (OK, you guessed right — those are all on mine). Whether it's a need or a want, you can usually plan ahead for big purchases, and you should!

When you know a larger than normal purchase is in your future, do you anticipate what you'll need to spend? If you know what an item will cost early on, you can start saving for it.

You may be asking yourself, "Why not just swipe my credit card for some instant gratification?" Well, let's call up my old friend "The Pro/Con List" to see which side the financial items fall under.

And the cons have it! It makes more financial sense to save up for your purchase rather than get it right away with money you don't have.

Now, of course there are times when an emergency situation requires you to put some expenses on your credit card. But if you can wait and save up for that thing you want to buy, that's usually the best decision.

Becoming disciplined about saving can be tricky, but it's worth it. Find what motivates you to save. For me, I save automatically with each paycheck and check my balance from time to time. Seeing your progress can be a great motivator. I sometimes even chip in a little extra after checking my total to hit a saving milestone (like taking $475 over the $500 mark).

Do you save for big items? Tell us your savings strategy!

We all know there's the battle between needs vs. wants when it comes to spending. But even once you've distinguished between the two there are ways to ensure you're making smart decisions when it comes to the "needs." Sometimes it's better to plan for what you know you'll need and hunt for a bargain rather than buying something the moment you know you need it.

Oh, the impulse purchase. I'm a recovering victim. I tend to struggle with spending. And as folks who've been reading the Student LoanDown for a while know, I create some interesting deterrents to swiping my card — like giving up spending on stuff, calculating how long I'd have to work to buy a particular item.

But there are some tried and true methods that can help you find bargains on the needs and avoid the wants.

• The list. Shopping lists are the best way to ensure you only get what you need from the store. If it's not on the list, either don't get it or be accountable for deviating from the list so you know your weaknesses or memory lapses (don't just tack it on the end of the list!). Make your list in conjunction with the next method and it'llll be even more powerful!
• Sales and coupons. What's better than buying just the things you need? Finding the things you need on sale or getting a discount with a coupon! But make sure you aren't buying things just because they are on sale or you have a coupon.
• Pros and cons. I'm a big believer in the pro/con list (Once, I was gifted one of these). Weighing the benefits and detriments of a thing or situation can really put some perspective around it. If "Would have to skip lunch a couple times to pay for it" is on the con side, you probably want to rethink your purchase.

Have you used other methods to find bargains rather than impulse buys?

Sigh. Yeah, me too.

Okay, so here's the skinny. I do have hobbies that can be...well, dangerous on the pocket book.

For example, I love snowboarding! Luckily, it's free on Stagecoach Island®, but in real life the costs can add up really quickly — there's the equipment rental, the lift tickets, and the overpriced food at the ski lodges. You can definitely drop a pretty penny on it.

How do I budget for that? How do I know I'm not spending way more than my wallet can handle?

Easy! I just have to plan and be aware of my spending habits. If I'm hitting the slopes this week, then it probably isn't a fabulous idea to buy that new Sony PlayStation® UNLESS I know that I've already budgeted for it or that I won't need the extra cash for bills or something else important. Or until I get my next paycheck.

Also, I always try to make sure I'm bargain hunting more than impulse buying. I mean, I don't HAVE to buy the new PlayStation® today — better to research it online and see if there are places that will price match or sell it for a little less. Every little bit adds up!

What are your hobbies? And what strategies do you use to budget around them? Let me know!

Okay, so I'm a little behind the times. I missed some hoopla from last year about the luxury dorm rooms being offered at a few colleges across the country.

I actually started thinking about luxury dorms in relation to a story I heard on NPR (of course!). I can't seem to find a link for it now, but it was about the rising cost of college tuition. One caller mentioned that the extra amenities offered at colleges these days — like luxury dorms — might be a contributing factor.

Silly me. When I heard "luxury dorms" I immediately thought of a suite with its own bathroom that three or four people share. Nothing like this came to mind. I had no visions of maid service and completely private bathrooms. I know students pay more to live this way, but still!

What do you think about luxury dorms?

The future is something we tend to think about as an ideal state, right? You see an end vision of what you want to become your reality. For example, I like to think about myself in shape enough to run a 10K (If only I had the physique of my Stagecoach Island® avatar in real life!).

What I don't think about as I'm picturing myself crossing that finish line is the hours I'll spend on a treadmill or the gym membership costs it's going to take to get there. In the back of my mind I know they exist, but it kind of puts a damper on the overall picture. But eventually I have to wake up and deal with the reality it will take to reach my vision.

The same goes for thinking about your career. Folks might picture themselves as Attorney General, but until the time comes to make it a reality, things like the cost of law school or taking the bar exam might not be top of mind.

While there are a number of factors to answering the question "What do I want to be when I grow up," at some point the question of how you're going to pay for the education you will need will come up.

So how do you weigh the costs of your future? Here are a couple things to keep in mind:

• Assistance is available. Most students receive some type of financial aid. It could be scholarships, grants, student loans or a combination. So when you look at tuition costs, remember that it might look very different when you consider financial aid assistance.
• You'll have to pay it back. If you borrow to pay for your education, remember you'll be responsible for repaying that money. Anticipate what you'll be making in your future career so you know what you'll be able to afford in student loan payments.
• Consider your options. Don't downplay a lower cost option to get to your future (like a state school or community college). If you can reach the same outcome without overextending yourself you'll be better off once you reach that vision!
• Do what you love; love what you do. At the end of the day, your career choice should be something you can picture yourself doing and enjoying. A quarter of your adult life will be spent working — make sure it's on a path that makes sense for you!

Who's made these kinds of decisions recently? Tell us what factored into your decision.

That's such a big question! I always used to think it as a kid, and had a really long list of things I wanted to be: ballerina, movie star, astronaut, clothing designer, director. Of course, then I had to figure out, okay, if these are the things I want to do, what kind of schools and training will I need to prepare?

So I did my research and started looking at programs, colleges, and universities, only to realize that most of the things I wanted to do required attending a specialized training college. Which isn't a bad thing at all, mind you, but they do tend to be a little pricier when it comes to tuition.

With all these things in my mind, I set about seeing what was available out there for me. It's never a simple, easy process, and sometimes it can take a long time to figure out all the details. But if you're in the same boat as I was, you should ask yourself a few important questions:

1. How are you going to start budgeting for this?
2. Am I going to be paying off too much debt when I finish school? (This is the biggie.)

Now I know I didn't realize that there are times when paying $200k for tuition is just taking on way too much debt. I mean, how long would I have to work after I graduate to pay THAT off? Yikes.

Just remember, education doesn't have to be expensive. Definitely apply to schools you like and are interested in, but make sure you also look into available scholarships and grants, and put together a budget before you bite off a really big student loan. You know, one that could follow and haunt you for the next 10 years after you leave school!

What sorts of careers are you thinking about? And how is your planning process going? Let us know!

Editor's note: Please help us welcome Katie, who will be guest-blogging on The Student LoanDown throughout October!

Being sick is never a picnic, but it's even worse when you're in college. And I'm just talking your common colds and stomach flu here — nothing major.

That first time you get sick can be tough — dorms and college apartments are naturally loud and communal places. Not a great place to rest and recuperate. But try to make the best of it. Your roommate doesn't want to catch what you've got, so it's likely he or she will get lost while you recover. Just keep your cell phone handy in case you really need something.

If you're feeling too bad to drag yourself down to food service, ask a friend to bring you the basics. When I was in college, food service offered a "sick tray" that could be brought up to your room. It was pretty much what Mom would have made: broth, Jell-o®, crackers and tea — and it did the trick.

Let your professors know what's going on, if you really can't get to class. Keep your friends in the loop, too, so they know to check in on you, and not assume you're hiding in the library writing a paper. If things turn serious, you want someone on alert to get you to student health services, or the hospital, if need be. These things happen in college — one of my friends had to have an emergency appendectomy during sophomore year. Make sure your friends know enough to look out for you.

Once you're on the mend, do a thorough cleaning of your room to minimize germs — you don't want your roommate or visitors getting sick, too. Wash your bedding, disinfect doorknobs, empty the trash — you get the idea.

Have you been sick since while you're at school? How did you get through it?