Poorer Than You » College

Three Quick Financial Fixes for College Students

Guest Author — Thu, 19 Nov 2009 00:03:21 +0000

Stephanie is still sick, but recovering and will be back soon. In the meantime, we have a very special guest poster: Jim Wang! Jim writes about personal finance and other money issues at his personal finance blog Bargaineering.com.

We all know what it’s like to be busy. Whether you’re taking classes or working a 9-to-5, it’s difficult to take a look at your finances when you have so many other things to worry about. Between assignments, long projects, tests, and reviews, it’s understandable that your money issues take a back seat to the things you have to do to make more of it!

That’s why today I’m glad to offer up a few quick financial wins that you can do right now. They don’t take a lot of time, less than half an hour, and they have a big impact on your finances. All of them are free, so they won’t cost you anything, and if you do only one of the things on the list, you’ll have put yourself on the right path. You don’t have to do them all, just pick one.

Check Your Credit History & Score

The single most valuable thing you can do for your finances is to check your credit history and perhaps your score. Identity theft, while not as common as the news would like you to think, is more common than we’d like to admit. It’s important, especially when you’re young, to check your credit history for fraud as well as inaccuracies. Whenever you go out to get a loan to buy a car or perhaps a house, you don’t have to discover errors or identity theft when you’re shopping for interest rates.

Never pay for a credit report, you can get it free by government mandate at AnnualCreditReport.com. You can get a copy from all three bureaus every 12 months, I like to separate my reports every four months so I can get fresh information. If you want to get your credit score, it’ll be a little trickier because you’ll need to sign up for a trial service to see your free FICO credit scores but you can cancel the service immediately. If you want to avoid the hassle of canceling, you can always go with a free service like Credit Karma.

Boost Your Savings

I know it’s hard to save money when you’re in college but if you do, give them a boost by going with a high yield savings account at an online bank like ING Direct. Regular savings accounts earn you practically nothing, whereas an online savings account will give you at least a percent and a half right now.

Online banks are very streamlined right now, you can open a bank account in probably fifteen minutes if you have all the paperwork. It’ll take a few days for the accounts to link up but once they do, you’ll be glad you took the time.

Start An Emergency Fund

You’ll never know when a disaster will strike and with the economy in such a funk lately, I wouldn’t be surprised if more and more emergencies crop up. That’s why it’s important to put a little away into an emergency fund. Emergency funds are funds you put aside to pay for emergencies (easy right?) so that you don’t turn to credit cards or other dangerous short term loans. Emergency funds don’t have to be huge, they can be just a couple dollars, but it’s important you start that fund so that you can weather the disasters.

These are just three very quick wins you can do right now that don’t cost you a penny and could save your butt down the road.

Have an Idea for How Twitter Can Improve the World?

Stephanie — Mon, 26 Oct 2009 14:00:00 +0000

If you’ve got an idea for how Twitter can be used to improve the world, and you can communicate it in less than 140 characters, up to $1,400 could be yours!

CollegeScholarships.org, the organization that once gave me a $100 scholarship for this blog (really!) is sponsoring something new called The 140 Scholarship. The entry requirements (from the site):

Currently attending full-time in post-secondary education; and

If you win, you must be willing to allow us to list your name, your picture, and your twitter username, and your winning Tweet on this page.

To enter, you’ll need to tweet your idea for how Twitter can be used to improve the world, and then put out a second tweet @Scholarship with the hashtag #Scholarship and a link to your tweet about how to improve the world.

Hint: to get the link to your tweet to post in your second tweet, click the time (ex. “2 minutes ago”) underneath your first tweet, then copy the address from your address bar when that tweet is alone on the page.

Hurry! The final day to submit your tweet is Thursday, October 29th 2009 – winners will be chosen and announced on October 30th.

The 140 Scholarship from CollegeScholarships.org

Also, you can follow me on Twitter: @stephonee

College Students: Get a Credit Card RIGHT NOW

Stephanie — Fri, 02 Oct 2009 15:30:47 +0000

I’m a big advocate for college students having at least one credit card. Which is funny, because I got myself into a decent amount of trouble and credit card debt in college. But I do strongly believe that responsible credit card use in college is possible… and even necessary! But new government legislation is going to make getting a credit card and building a credit history very difficult for some college students. If you’re one of them, you’ll want to get a credit card now, before the new laws take effect!

You Need to Build a Credit History

I just graduated from college this year. I’m starting to build my life and get all of the “adult” things that go along with that. Including some really dull things like “renters insurance” to protect my belongings in my new apartment. But when I got my renters insurance a few weeks ago, it came with a letter stating:

Thank you for trusting us as your insurance company. We are committed to your satisfaction and providing you with a competitive rate. Many factors are taken into account to rate insurance, including a credit based insurance score. We recently accessed data from the consumer reporting agency… to price your policy. In part, based on the information provided, you did not receive our lowest rate… [emphasis added]

In plain English: my credit history wasn’t long enough, and my credit score not high enough, to get the lowest rate they offer on renters insurance. And I’m no “credit spring chicken!” I’ve had student loans on my report for five years, and I have two credit cards, each with more than two years of history. Someone with no credit history at all would probably pay far more than I do for renters insurance.

Why? Because no credit history is viewed as just as bad as a bad credit history! Unproven customers are scary to insurance agents and loan officers. Just like a 16-year-old with no driving record is charged a lot for car insurance, a new borrower with no credit history is going to be charged a lot for a loan.

Need more examples? How about my friend who just bought a car, but didn’t get a low car loan rate because he’s only had one credit card for one year? Or how about the fact that in addition to loan officers and insurance companies, your credit history and score might be checked by landlords and employers. Yes, they two can decide whether to rent to you or hire you based on your credit history. Ouch.

You Need to Act Now

The CARD Act, passed by Congress and signed by President Obama in May of this year, will severely limit your ability to get a credit card if you’re under 21. The Congressional Research Service summarizes the relevant portion of the new law as this:

Section 301 -

Amends TILA to prohibit extensions of credit to consumers under age 21, unless the consumer has submitted a written application that meets specified requirements. Requires any such application to be signed by a cosigner, including the parent, legal guardian, spouse, or any other individual who has attained the age of 21 having a means to repay debts incurred by the consumer in connection with the account.

In other words, you’ll need a parent to co-sign your credit card and take responsibility for it if you fail to pay. While this is a good idea in theory, it leaves out in the cold many college students who don’t have a good relationship with their parents (or anyone else over 21). This amendment is set to take effect in February of 2010, but (and this is a big but), a few members of Congress have requested that the new laws take effect December 1st, 2009!

That’s good news for the many other consumer protections the CARD Act offers, but bad news for any college students who don’t yet have a credit card, and would have trouble convincing someone to co-sign for them. If that’s you, your time is limited – build credit now!

Other ways to build credit: A credit card may not be right for you, or you may be reading this article too late to act before the CARD Act takes effect. Either way, MSN Money’s Liz Pulliam Weston has a great list of ways to build credit without credit cards. Any application for credit should be taken seriously – you don’t want to start doing these things willy-nilly. But a charge card or a small federal student loan may be worth it for the benefit to your credit history.

Why You Must Neither a Borrower nor a Lender Be

Stephanie — Wed, 23 Sep 2009 16:32:10 +0000

This guest article was written by Adrienne Carlson, who regularly writes on the topic of accredited online universities. Adrienne welcomes your comments and questions at her email address: adrienne.carlson83@yahoo.com

I’m sure it’s every college student’s dream to live life king-size, but when you’re hampered by the basic fact that you have no money, you only hope you’re never reduced to the position of a pauper. Most students, unless they’re born with silver and golden spoons in their mouths, are barely able to eke out a comfortable existence in college because most of their money goes towards their tuition fees and the cost of books. So the primary aim of ever college student (besides that of studying, of course) is to enjoy four years of college without getting into that black hole called debt, and to do this, you must neither a borrower nor a lender be.

When you borrow money – or even other stuff like books, items of clothing and jewelry – you are at a disadvantage because:

You are in debt, even if it is to your friends.
When you don’t repay debts to friends, you risk losing the friendship forever.
If you lose borrowed items that are financially valuable or that have sentimental value to the owner, you feel a sense of guilt that is hard to erase. Besides, you also risk the embarrassment of a dressing down or angry words from the owner of said items.
You will be perceived as a perpetual borrower, someone who your friends and acquaintances will start to avoid sooner or later because of your borrowing habits (especially if you never return stuff).

When you lend your friends and fellow students money or your belongings, you stand to lose because:

From a financial standpoint, it is a bad decision to loan small amounts of money to friends because of the high probability that they will never be paid back. If you insist on payment for amounts as low as $10 or $15, you’re going to be considered a cheapskate who hounds people for money, even if it is your own.
It’s hard to keep track of your belongings when you lend them out to people, and if you don’t remember who borrowed a book (or some other object that is absolutely necessary) from you or if the person denies borrowing it, you are left in the unenviable position of having to spend more money and buy it again.
If your friends lose your belongings, you cannot take them to task and are also forced to spend what little money you have to buy essential items.

When you decide to never borrow or lend and hold firm to the policy, you’ll find that college becomes much more financially friendly.

Stephanie’s note: What do you guys think – are you okay with lending and borrowing? Please share your experiences in the comments!

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$25,000 for College from Upromise

Stephanie — Sat, 19 Sep 2009 12:55:00 +0000

Upromise and Sallie Mae are giving away five $5,000 scholarships? Awesome! And this time around, it couldn’t be easier to enter. Just:

Join Upromise, if you haven’t already – it’s free!
Install the TurboSaver Toolbar

Now, ordinarily, I am not a fan of browser toolbars. I don’t like a lot of third-party things crowding up the area between my “Back” button and the website I’m looking at. But TurboSaver is a toolbar I actually recommend. Why? Because of the number of times I’ve seen people make a purchase online, and then about a day later say “Whoops, should have done that through Upromise! It would have given me 3% cash back!”

Yep, people who are already Upromise members miss the crucial step of going through Upromise to make purchases online. Not to name names (isn’t it funny how we always say that before we name names?), but my mother does this all the time! And my mother is a smart, tech-savvy lady. She just forgets which sites are affiliated with Upromise. Who can blame her? The list is really long and constantly growing!

So in this case, I believe in the power of the toolbar. Because all the toolbar does is alert you when you’re on an online shopping site that’s affiliated with Upromise. It’ll remind you to log in, so that you don’t miss out on any cashback from things you were about to buy anyway. (Which is what I really love, being a personal finance blogger and all.)

So even without the $5,000 prizes up for grabs, I’d recommend the TurboSaver toolbar. But because there is prize money up for grabs, you should definitely go get the toolbar now! (The sweepstakes ends October 15th, 2009 – so hurry up!)

Saving Money on Entertainment

Guest Author — Wed, 02 Sep 2009 16:00:41 +0000

This is a guest post from new College Money Network member Studenomist of Studenomics. Enough was mentioned about him the other day so we will just jump right into the post, which is a part of the Back to School Shuffle for a Shuffle.

The new college semester is about to start. You have selected your courses. You have paid your tuition. You have purchased your textbooks. Now it’s time to figure out this social life situation. Wait, what’s so difficult about figuring out your social life? Well if you fail to plan then you plan to fail. Saving money while trying to have a social life is a hot topic amongst 20 somethings these days. As a result I figured I would share some tips on saving money on entertainment:

Contact the establishment ahead of time

If you’re heading out in a large group then you should call the place ahead of time to confirm. Not only should you make reservations but you should swing some sort of savings. I mean after all you’re bringing the place your business (and the business of your friends). Some clubs will throw in free cover for the group and priority seating. The best we have ever been able to swing is a free limo pickup and free cover for a group of 10+.

Have a few drinks before you go out

If you guys are planning to go out strictly for drinks only then you should have a few drinks before you head out. This way you will drink less at the club/bar where the drinks are more expensive. Predrinking can save you thousands of dollars through your college career. Of course you don’t want to get intoxicated to the point that you make a fool of yourself but hopefully you know your limits by now. If not, you live you learn.

Use your student status for discounts

You can head out to the campus pub where drinks and food are traditionally cheaper. You can also go to bars that have special designated college nights. Another great option is to carry your student ID card on you because many places give student discounts. At most restaurants, if you can’t get a deal on drinks you can probably get a lower price on the food.

When it comes to movies, consider renting & staying in

Instead of paying $15 each to see a new release at the local movie theatre you should try having a movie night at someone’s house. One person rents the movie, someone else brings the food, another friend brings the drinks and you got a great night going. Believe me there are many movies out there to rent so don’t feel like your options are limited. I would like to personally recommend “old school” nights. Rent a movie you enjoyed many many years ago and watch it again. The Weekend At Bernie’s, Goodfellas, Terminator, just to name a few classics. Nothing wrong with a trip down memory lane.

I know there are more creative options for saving money on entertainment but this is where you the readers interact and get involved!

College Money Tip #18: Open a Retirement Account

Stephanie — Fri, 21 Aug 2009 15:00:00 +0000

Is retirement the last thing on your mind right now? Fair enough! With textbooks, professors, and homework assignments taking up all of your brain power, it’s hard to think about starting your career, let alone ending it! But hear me out:

Did you ever have a math teacher ask you which you would rather have, $100 now, or a penny that doubles every day for a month? Did you take the $100?

Silly you. If you’ve got a penny that grows at 100% interest (which is what doubling is) per day, you’ll have $5,368,709.12 at the end of the month. That is the awesome power of compound interest.

Of course, if you can find an investment that truly returns 100% per day for 30 days, I’ll hire you as my financial advisor and we’ll start building our Scrooge McDuck money bin! But even 8% or 10% growth per year can net you a sweet future, especially if you let the money sit around for say, 40 years. Try playing around with this retirement calculator, keeping in mind that the stock market (as a whole) generally returns between 8 and 10%.

So if you start investing $3,000 per year at age 18 as a freshman, you’ll have $1,358,700 at age 65. After inflation, that works out to $534,358 in spending power (in today’s dollars). Not bad for $250 per month! But what if you wait? Wait until you’ve graduated from school and had a few years to establish yourself?

To get that same $1,358,700, you have to contribute $5,245 per year if you wait until age 25 to start investing. That’s $437 per month, or nearly twice as much just for waiting seven years!

Are you ready to get this show on the road and see big returns on your money? If you’ve followed all of the previous college money tips, you are. Because you’ll have a reasonable level of student loan debt (or none!), no credit card debt, and you’ll already be saving for your short and medium term goals. Which means if you’ve still got money left over, it’s time to think long term and open a retirement account.

For a college student, a Roth IRA is the type of retirement account you want to get. To learn what you need to do, I recommend the Get Rich Slowly Guide to Roth IRAs. Written by J.D. Roth (no relation to “Roth IRA”) of Get Rich Slowly, it covers everything you need to know to get started. It’s a really easy read at only 31 pages, but it packs a lot of punch.

The ebook costs only $7 – the cost of a combo meal at a fast food place. And if spending that $7 gets you investing now instead of waiting until after graduation… well, you do the math.

Check out all of the College Money Tips!

College Money Tip #17: Rent Some Textbooks

Stephanie — Fri, 14 Aug 2009 14:00:00 +0000

If you’ll take a moment, please note that the title of this tip is “Rent Some Textbooks” not “Rent Your Textbooks” and especially not “Rent All Your Textbooks.” Here’s why: every time I write about renting textbooks, someone comes along and says “But Stephanie! I actually want to keep most of my textbooks! They’re for my major and they’ll be helpful in a later class, or after college!”

I know this. I still have several books from several classes in college, even though I walked the stage and got my diploma in May. I’ve got some film textbooks to help me make better movies, and I’ve got my personal finance textbook to refer to while writing this site. And I’ve got Randy Pauch’s The Last Lecture – yes, that was an assigned textbook for a class!

So yeah, there are some books you just shouldn’t rent, because you’ll want them later. But you’ll take some general education or liberal arts classes, too. And while those classes may indeed be interesting, you can usually tell from the name of the book whether or not it’s something you’ll want to keep past finals week. Chemistry in Context? While I admit this was one of the more interesting science textbooks I’ve read, I really didn’t need it when I was done. It was nice to be able to just send it back, rather than trying to sell it after finals.

Again, renting is not the best practice for every single textbook you need. It’s just for the ones you’re reasonably sure you won’t need after the class is over. And for those books, renting can save you a bundle.

I’ll give you some real-life examples. Because I’m a nut, I still have a worksheet lying around from when I bought textbooks last spring:

Fundamentals of Financial Management, Concise Edition (a book I totally knew I wouldn’t want after the class was over!)
Bookstore used: $95.50
Bookmaid: $40 – $85
Chegg rental: $46.42

Bookmaid is a website specifically for my school (RIT) which allows RIT students to buy and sell books to each other. So in this case, the best action for me to take was to buy one of the used copies being sold by another student through Bookmaid. Not only was it the cheapest price, but no shipping or shipping cost! So that was an easy choice.

Another example:

Internet Marketing and e-Commerce (probably not a book I would want after the class)
Bookstore used: $107.25
Amazon.com used: $84 (with shipping)
Chegg rental: $51.61

In this case, I went with Chegg. I could have gone with the Amazon.com used price, which would have been a savings compared to the bookstore, and tried to sell the book on Bookmaid when I was done. But the next offering of that class wasn’t until spring of the next year. I didn’t want to wait a year and then try to sell the book! Chegg was the clear choice for me here.

There are other books on the worksheet, but they all demonstrate the same principle: there’s no end-all-be-all-perfect place to get all of your textbooks. Yes, you can simplify the process by getting all of your textbooks from one place but that’s going to cost you. In the case of the bookstore, it’s going to cost you a lot.

If renting some of your textbooks sounds like a good deal to you, I highly recommend Chegg. There are other textbook rental websites, but Chegg is the only one I can honestly recommend, because it’s the only one I’ve used. But having used Chegg for two years out of my college career (for some of my books), I can say that I’ve been thoroughly pleased with their prices, their customer service, and their speed in getting books to me.

And they plant a tree for every book you rent, which I think is pretty awesome. If you decide to go with Chegg, use the coupon code press09 when you check out. It’ll give you 10% off of any rental order. (Expires 12/31/2009)

College Money Tip #16: Incoming Freshman

Stephanie — Fri, 07 Aug 2009 14:03:00 +0000

Welcome to college! At the risk of sounding like one of your orientation coordinators, I’m going to tell you that the next four (or so) years of your life may well be the best years of your life. But you generally don’t get a crash course in finances during orientation (I sure didn’t), so I’m here to help.

There might be some instruction about money in your “First Year Enrichment” class (or whatever they call it at your school), but by the time they cover that topic, most of your classmates will have already made the three big freshman money mistakes. Ouch. Be cooler than your peers: avoid these mistakes!

Mistake #1: Buying textbooks from the school bookstore.
I’ve yet to meet a college freshman that shopped around for their textbooks. They all (including me, at that time) shuffle into the school bookstore like lemmings, and pay the premium that the school bookstore charges. Get your textbooks from Amazon, Chegg, or used from another student on campus, and you can easy save $150 (or more!) each term. You can find my super-secret, ultra-refined formula for saving money on textbooks in the College Freshman Checklist.

Mistake #2: Getting bank accounts and credit cards for free t-shirts.
Free stuff is awesome! But you’ve got to know, in the back of your mind, that there’s a reason that these guys are giving you a free t-shirt (or candy bar, or Frisbee). The reason they do it is because they will make way more money off of you over the years than the cost of that freebie. In most cases the money they make off of you is in the form of awful fees, which you could have avoided if you got a proper bank account.

So don’t be like your friends, who’ll line the pockets of banks and credit card companies in exchange for a cheep Frisbee with the bank’s logo on it! Get a checking account that is a truly fee-free student account, with ATMs on or near campus. This might be the type of account the guys with the free t-shirts are offering, or it might not be. Trust me, the money you save in fees will buy you much cooler shirts!

As for the credit card, I’m all for college students establishing a credit history by getting a credit card. However, the one being pitched on campus with a freebie probably isn’t the best one you could get. Get a proper credit card with no annual fee and spending rewards. (See College Money Tip #9: Establish Credit.)

Mistake #3: Ignoring student loans.

Chances are, you’ve taken out some student loans to help pay for school. You might be tempted to take this lightly, since it seems like everyone has student loans, and you’ve got a long time before you’ve got to start paying them back. But your best bet is to pay some attention to those bad boys, before they get out of hand.

You’d be amazed at how easy it is to take out more money than you should. Student loan companies are not likely to tell you if you’ve taken out more than you can reasonably pay back, and that includes the Federal government! I took out way more in loans than I could handle, and all of my loans are Federal student loans, so don’t think you’re safe just by avoiding private loans.

Keep track of your student loans starting now and you can save yourself a whole lot of hurt come graduation. And it will be ten times easier to track them if you do it from the beginning than if you try to start keeping records halfway through. Just put all of your loan paperwork in one file folder, and put a piece of paper in it where you add up all the money you’ve borrowed and keep a running total. And use this loan calculator to make sure you’re not going to borrow more than you can handle. That’s it!

Upperclassmen: could you chime in with some sage wisdom for the incoming class in the comments?

This post is a part of the weekly series College Money Tips. Previous College Money Tip: Get Savings.

Take Some College Courses This Summer

Guest Author — Wed, 13 May 2009 09:52:03 +0000

This is a guest post from the blogger behind Studenomics a personal finance blog that offers common sense advice for college students and recent graduates. Studenomics is the ultimate resource for young people looking for advice on how to survive this current recession, grow their careers, manage their finances, and still be able to enjoy the weekends.

I know the last thing anyone wants to do in the summer is to go back for more school, but hear me out please. I used to look forward to the day I wrote my last exam and summer began. The first few weeks you will relax and enjoy the freedom, but then you will eventually find yourself completely bored. As time went on I realized the benefits of taking college courses in the summer:

1. Finish college early. Even just by taking a few courses every summer you could graduate college earlier than all of your friends. Even if you enroll in one or two courses all summer that last a couple of hours in the morning during the week, you will still have the ability to earn some money and have enough time to enjoy the summer. The earlier you graduate the earlier you can start making money or better yet go on that trip to Europe.

2. Avoid school in the winter. I don’t know about you guys but I absolutely hate traveling to school when there is 10 inches of snow on the ground or when there is snow blowing in my face all of the time. By attending summer school in 2007 I was able to work the following winter semester and not have to travel to school through the treacherous weather.

3. Less time for going out/going drinking. I personally think that all college students should keep themselves busy because if you don’t then you may find yourself spending money foolishly. We as college students need to create barriers that prevent us from spending money. People thought I was insane when I took a full course load at college a couple of years ago. I ended up saving more money than anyone else and I still had fun on the weekends. The only negative was that my schedule was packed Monday to Friday. Unless you have the ability to practice strict discipline, odds are that school is needed to help you focus this summer.

We all want to have a productive summer but we just don’t know where to start. Here’s a little secret: you can start by reading The Summer of George- The Most Productive Summer a College Student Will Ever Have:

Summer of George Introduction @ Studenomics.com
Work Abroad This Summer @ CashMoneyLife.com
Enjoy Cheap Summer Activities @ MoneySmartLife.com
Learn a New Language @ TotalCandor.com
Take Up a Sport and Become Good At It @ FreeFromBroke.com
Help Your Local Church @ GatherLittleByLittle.com
Take Some College Courses This Summer @ PoorerThanYou.com
Summer Jobs With Little Startup Funding Required- Part 1 @ MoneyNing.com
Summer Jobs With Little Startup Funding Required- Part 2 @ PTMoney.com
Take Control Of Your Financial Situation @ Bargaineering.com

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