Katie's Blog


Financing a Higher Education, Part II

This week I'd like to talk about what I wish I had done or knew (or what I now wish my students knew) DURING college (or graduate school):

1.  Budget and estimate how much financial aid you will need.  Even though it may seem like "free" money, don't take out more loans than you need.

2.  If you receive more loan money than you need, know that you can immediately pay back the extra.  Loan money can certainly be used for other school expenses (like a computer, supplies, gas money, or living expenses), but if it's not needed, it's in your interest to pay back immediately and reduce the principle right away.

3.  Speaking of paying back principle, make it a goal to begin paying the interest right away, so that it doesn't get added to the principle. If you get in the habit to pay a small amount on a monthly basis (even if it's just $25 a month), you'll shorten the life of your loan and the interest accrued on it!

4. Apply for FAFSA every year.  Sometimes students forget that this is a yearly thing you must do.  I encourage all students to do their FAFSA at the same time that they and their parent's file their taxes.

5.  Don't wait until August to turn in any missing financial aid materials.  Many materials need to go through multiple check points and therefore it can take a few weeks to process.  When turning in materials last minute, students risk not having their financial aid process in time for tuition deadlines.

6. Know the disbursement dates and plan accordingly.  At my school, we do not disburse financial aid until after the tenth day of class.  Therefore, if a student has expenses in early September (like rent or books), they need to make sure they have saved enough money from their summer job to cover those immediate expenses.

7.  Get a job on campus.  Campus positions are often very convenient and allow students to study while working.  Just as my belief that high school students should have a job, I believe college students should as well.  In my experience, having a 10-20 hour a week position helps a student time manage better (besides helping them save money for school expenses and giving them spending money).  When I was in college, I worked for UW-Madison's Union Theater.  It was a great job!  I got to select the shows I wanted to work and could do my homework while the movie played or show was performed. 

8.  Be creative.  My senior year, I went home over January break and didn't work so I had little money in savings upon returning to school.  I didn't want to ask my parents for money for books, so I got creative!  First, I checked out as many of my books from the school's library and those that were available through the public library system. I also made note of any that were available on reserve (meaning they could only be checked out for a few hours or for use in the library).  One of my boyfriend's roommates was also in my program and we shared nearly every class; he, too, had limited funds that semester, so we decided to share all books that we couldn't get from the libraries.  We had a system where I had one set of books from Sunday through Tuesday/Wednesday and then we would swap sets.  It worked fabulously and we ended up only spending about $20 each on books (plus some printing costs when we made copies of readings from reserved books).


Financing a Higher Education, Part I

Having earned three different degrees and now working as an Academic Advisor, I’ve definitely changed my perspective on student loans and issues related to financing education.  Even though I have ended up focusing my debt elimination strategy on reducing my credit card loan debt first, my student loan debt is what originally propelled me into the Project Money challenge in the first place.  Therefore, I feel it’s appropriate to spend a few blogs talking about “what I wish I’d known” prior to starting my educational journeys.  (Note: many of these ideas were originally generated by email and phone conversations I had with Amy Crowe, Financial Education Specialist for Summit Credit Union).

For this blog, let’s talk about what I wish I had done or knew (or what I now wish my students knew) BEFORE beginning college (or graduate school):

  1. Work during high school and save a portion of your earnings.  It’s a personal philosophy of mine that all high school students should have some sort of job, be it a regular baby-sitting gig, an evening/weekend position, or something they do over the summer.  Honestly, I see no reason for a student would graduate from high school with no work experience and no money of their own to their name.  Work teaches a student personal responsibility as well as financial responsibility, since I think it’s important for students to also begin being responsibility for small “bills” (i.e. paying for their cell phone, gas money, movies with friends).  Too often, I see high school students viewing their work money as completely disposable income (I was one such student), so they do not save for larger expenses (like school).  A portion of each paycheck should certainly go into savings and this can be used for future school expenses.
  2. As a family, talk about the costs of school and decide how school will be financed.  It’s my experience as an academic advisor that most first year students have little understanding of the costs of college and the reality of how it is being paid.  Since tuition costs seem to be rising exponentially, I think it’s important for families to discuss this cost (as well as room and board) and try to compare different options.  Having now worked at UW-Waukesha for a number of years, I am a full supporter of beginning at a community college and then transferring to a four-year school.  I witness on a daily basis just how much money students are saving in tuition, room, and board expenses even by choosing to stay just one year on our campus!  When it came time for me to enter college, my parents agreed that they would pay for room/board costs if I paid for my tuition (for undergraduate; for graduate school, I paid entirely on my own).  This incentivized my desire to seek out scholarships and try to minimize the loans I needed for undergrad.  My parents made this agreement with each of my siblings.  I didn’t realize the ingeniousness of this idea (I’m not sure how much my parents did either) until one of my siblings wasn’t doing so well in school and my parents pulled the funding of room and board; my sibling essentially had no choice but to move home, transfer schools and study under my parent’s roof (where they subsequently began getting a 4.0).
  3. For parents, set up a 529 plan early in a child’s life.  Again, with rising costs of school, a 509 plan can help alleviate the burden of costs down the road and reduce the number of loans taken out.  Even by just setting aside $25 or $50 a month, this type of fund can grow to a substantial amount.  Grandparents and other relatives can also open a 529 plan in a child’s name; perhaps  annual contributions could be made in place of holiday or birthday gifts.  Every little bit helps.
  4. Fill out the FAFSA regardless of what you earn.  I often see students in my office who are scared about their finances.  It’s a good thing for them to be concerned about incurring debt and wanting to avoid loans; however, many of these students have been told by their parents that they are “not eligible” for financial aid because their family “makes too much.”  This is a false statement; there is no such thing as “making too much!”  More than likely, the parents are misunderstanding the difference between grant and loan aid and, yes, there are income ceilings for grant aid eligibility.  But, just about any student (there are a few exceptions) can get at least an unsubsidized loan.  While I certainly do not encourage a student to take out loans if they do not need them, I do encourage all families to fill out the FAFSA to see what they’re eligible for and to have the option.  After all, we never know what the year may hold for ourselves.  And, if a family runs into financial difficulty and cannot pay the way they had originally intended to, it’s nice to have the option of taking out a loan.
  5. Apply for scholarships!  I was fortunate enough to get a number of scholarships during my undergraduate years.  What many of my fellow students didn’t realize is that I was getting these scholarships mostly because others weren’t applying for them!  I have also served on the scholarship committee at my school and, even given my experience from my undergraduate year, it’s surprising how many students don’t apply for scholarships.  I’ve read a few statistics in the past about the financial efficiency of applying for scholarships, and while I can’t quote them verbatim, the general gist is that if someone spends 30-50 hours filling out scholarship applications and writing scholarship essays, even if they only receive one or two scholarships, they’ve usually made more money from the scholarships than had they spent those hours working a part-time job (not to negate my claim in lesson #1).
  6. Explore alternative ways to achieve your goals.  As I mentioned in lesson #2, attending atraditional four-year residential university is not the only way to pursue a higher education.  Students beginning at a technical or community college and transferring is becoming a very common occurrence now.  And, in fact, a bachelor’s degree is not necessarily for everyone; perhaps a technical associate’s degree is a better fit for one’s career path (and usually much cheaper).  Joining the military or accepting public service grants (such as Americorps) are also ways to have a portion or all of your education paid for.  One thing that I am still kicking myself for is not doing more research and applying to more schools for graduate school.  Had I done so, I likely could have found a school that would have paid 100% of my tuition through a graduate assistantship.  Unfortunately, hindsight is 20/20.



Murphy visits again!

While my No-Spend September comes to a close this coming week and continued along nicely last week ($37.73 on groceries and a Christmas gift for my brother-in-law), Murphy's Law hit me again.  Just when things are going smoothly, something bad is bound to happen!  For those of you who have just started reading this blog, Murphy came to visit when Project Money first began in June: I broke a Kindle I had rented from my local library and broke a headlamp that I use quite a bit over the summer. 

Here's how he showed back up: on Monday, my roommate broke the news to me that he wanted to move out as soon as possible; Dave's been a great roommate and I'm very sad to see him go, but happy about where his life is taking him.  According to the lease, he's obligated to pay through November unless I find someone sooner.  While this gives me a few weeks to get everything in order, it's always bit scary to face the unknown of trying to find a new roommate and ensure that I continue to have rental income. 

Second, this weekend, my garbage disposal decided it was time to take its final churn.  At first, I thought perhaps it was an electrical issue.  I read a few "fix it yourself" websites and tried the suggestions listed, but nothing seemed to help.  I then called my personal handyman (my dad) and he gave me a few more suggestions to test out… nothing.  So, now I need to decide when I should replace it.  While I could probably wait until the competition is over, I am very used to using the disposal and am fearful that I'll undoubtedly dump something into the disposal creating an even bigger problem, so I'm tempted to just fix it sooner rather than later.

On the bright side, I'll be meeting with Adam this week.  I'm sure I'll be weighing the pros and cons of a disposal purchase, but the other big thing he and I need to discuss is how to allocate my next paycheck.  One very exciting (yet frustrating) thing about my job is that my paycheck fluctuates depending on whether I am teaching during a semester, so my paychecks in the fall are always the largest (when I'm teaching three or four classes) while my summer paychecks are the smallest (when I'm not teaching at all).  So, my first "big" paycheck is just a few days away!  I'll let you know what we decide to do in next week's blog!


Update on My No-Spend September

My no-spend September continues to be going well, although I broke the rules three times this week and spent a total of $16.73!  I mentioned a few blogs ago that I've sold some items on Facebook.  Well, a coworker of mine is also on one particular site and has posted two items that are going to be perfect Christmas presents for my niece; those purchases constituted $16 of them $16.73.  The 73 cents came from a Dunkin Donuts purchase; I was have a rough day and I REALLY wanted an iced coffee.  I had a coupon for a free donut and some money off the purchase, so I decided to "splurge" for 73 cents.

This weekend was fun-filled and very easy on the wallet; it was Doors Open Milwaukee weekend!  This is a two-day event across the city when doors to many local businesses and historical buildings are opened to the public to get a "behind-the-scenes" look at the architecture and history of the building.  I spent both Saturday and Sunday touring some very neat places!  I had the opportunity to see: an old schoolhouse, the Central Library, the top of the US Bank building, the revolving floor of the Hilton, the renovated Pritzlaff building, and the top of the Gas Light building.  I also got to listen to a lecture on the history of Milwaukee by John Gurda, a local historian.  The best part about the whole weekend?  Everything was FREE!


Surround Yourself with Cheerleaders

My no-spend September is half-way done and coming along well!  So far, besides gas, I've only spent $22 on perishable groceries- fruit, veggies, milk and some coffee.  If you think I'm starving myself or living a hermit lifestyle, don't worry, I'm not.  I've been able to be creative with the meals I've made by continuing to be aware of what's in my pantry and freezer.  I've even attended three events where I had to bring a dish to pass!

This week, the 31-Days of Spending Zero plan mostly consisted of tasks related to cleaning.  I did do some of the cleaning tasks (I'm still reveling in the versatility of vinegar!) but most of my tasks were actually ones related to the later part of the plan.   First, I joined three Waukesha-area Facebook groups that focus on buying and selling rummage.  I was able to sell three items that I hadn't been able to sell at my rummage sales during the summer: a printer, a wireless keyboard, and a litter box.  These sales resulted in an extra $40 in my pocket (and less clutter in my basement)!  Second, I still have some landscaping that I'd like to get done yet this year.  But, given my commitment to no-spend September, I can't buy any new plants.  So, I did some searches on Craigslist and was able to find someone giving away some of their perennials.  I also decided to see if anyone was interested in doing a perennial swap at work.  Turns out, a few are!  Even better, one of the librarians at school brought me three different varieties of coneflowers to plant- no swap required!

So, why did I title this blog: "surround yourself with cheerleaders"?  Because that's one of the biggest lessons I've learned in recent weeks!  I feel very successful so far in my Project Money challenge and most of this can be attributed to all the support I've received from friends, family, and coworkers.  First of all, my family has been unconditionally supportive, especially my parents who have borrowed me various tools or taught me how to fix things so that I don't have to spend money on new items.  My friends are always inquiring about how things are going, listening to my stories and suggestions, and sending me encouraging messages. 

Many have gone above and beyond the call of duty to help me out in my challenge: Alissa changed her birthday plans so that we could go to a restaurant that we had coupons for; John (a garage door repairman) replaced a spring in my garage door and also found a new-to-me used garage door opener that he's going to install in my garage in the near future; my camping friends agreed to adjust the menu so that we had a cheaper food bill.  Lastly, my coworkers have been fabulous.  Many are following my blog and inquiring about my progress. 

In addition to my one coworker that is doing the no-spend September with me, another two joined the endeavor last week!  As mentioned before, one of the librarians brought me plants.  And, our Assistant Dean of Business Services offered to meet with me to discuss strategy.  It's awesome to be in a challenge like this and having such great cheerleaders cheering you on!


No-Spend September

This month, two friends of mine and I are doing a no-spend September, following the "31 days of Living Well and Spending Zero" plan laid out on the Living Well, Spending Less website.  So far, I've only bought a tank of gas besides paying my bills!

 The rule is relatively simple: no spending money on anything other than absolute essentials.  But, the point isn't just to spend nothing.  I really like what the author wrote in her introduction, so rather than paraphrasing, I want to share her goal in creating this plan: "this month is not just about spending ZERO, although that will be our main goal.  It will also be about living WELL while we do it.  It will be about finding out just how much we already have and how little more we really need.  And hopefully, by the end of them month, my definition of “living well” will also be yours:  A life rich with faith, family, friends, & creativity, secure in the idea that a life well lived has nothing to do with what we have but who we are."

Week 1:  One of the first tasks you're asked to complete is an inventory of your pantry, fridge and freezer so that you know what you have on hand and can create a list of meal options using the ingredients you already have.  I forgot I had a box of couscous and I made that the other night and enjoyed it over a salad (made from greens and cucumbers from my garden); yum!

Another task is to learn something new. This week, I've learned two new things- how to harness the power of vinegar and baking soda and how to use all the tomatoes in my garden!  I've only used vinegar and baking soda to make volcano eruptions before; but do you know that it unclogs drains very well and removes pet odors?     I also have an abundance of tomatoes in my garden.  I decided to learn how to peel them (score and boil them for one minute) and make homemade spaghetti sauce.  In turn, this will allow me to accomplish another part of the plan- sharing meals with others!  I'll be sharing the sauce with the two friends who are doing the challenge with me.  They also will each receive some fresh tomatoes from my garden!  (I'll also be bringing my wealth of tomatoes to share with friends at a party and my coworkers at school). 



The Importance of Smart Car Choices

My father has always encouraged me to find a good mechanic and stick with him (or her) and I can't pass on this advice enough. Not only is it helpful for the mechanic to get to know you and the car, but it also helps your budget!

Since I moved back to Milwaukee in 2008 (I used to live on Boston, where also I had the same mechanic the entire time), I've been with Keppen's Kar Kare in Waukesha. I get my oil changed every three months, knowing that when I do, Mike will make appropriate suggestions. Each time I go in, he'll let me know what repairs or regular maintenance he'd like to schedule over the next 3-12 months. His suggestions help me budget so that I know what I need to save for. My car has over 200,000 miles and it's running unbelievably well; I believe that the regular maintenance helps it run at it's peak and will hopefully keep it running well for a few more years!

I've owned my car since 2008 and it's been paid off since 2010. I also can't stress the importance of buying a used car and paying for it in full or as close to full as possible. Not having a car payment is great for my budget and savings (hence why I'm hoping to keep my car running well for a few more years!). If anyone's read Dave Ramsey, you know that one of his suggestions is to always buy used; he does not believe that buying a new car is a wise investment.  I have never bought new and never intend to.

Lastly, one of the changes I made to the management of my Summit Credit Union savings account was to open a separate account for the car. Each month, I deposit $125 into this account. My goal is that when I need to pay for car repairs, or a new-to-me car in the future, I will not be surprised or concerned about the cost because I will have planned for it. In fact, I enjoyed this outcome this past week when I got my oil changed and the repair done that Mike had told me to plan for (new spark plugs and a tire  rotation). My engine light also went on a few weeks ago and it turned out that my gas cap and tube needed to have rust removed from it. In total, for all parts and service, my total came to $315. Since I had $375 saved for car repairs, this amount didn't scare me nor did it force me to reach for a credit card, which I may have done in the past! Thank you Project Money for helping me realize the value of planning for future expenses! 


A Project Money Blooper: Don’t Try This At Home

It’s always good to not take ourselves too seriously, so I figure it would be good to share my Project Money blooper of the week.  Hopefully, no one else will have to learn the hard way about what not to do when trying to save money!

I have been reading a lot about minimalism this summer and shifting my focus away from wants, materialism, and “keeping up with the Jones’.”  This also means trying to eliminate waste and excess.  In doing so, I’ve been watching the amount of food I throw away and have been trying to use up all meals.  Unfortunately, this week I tried to use up all the food from a party last weekend by eating it for a few lunches this week.  Lo and behold, I gave myself a bit of food poisoning because I left the food out too long and also let it sit in the fridge for longer than recommended.  I’ve never had food poisoning before, so I find it pretty funny that the one time I try to “push the boundaries,” I got sick! Note to self: don’t try to extend shelf-life at risk of health; instead, freeze unused food and follow food storage guidelines.

For anyone that’s wondering about shelf-life, here’s the low-down: http://www.stilltasty.com/ [According to this website, the shelf-life of cooked chicken is 3-4 days and it’s recommended that it gets thrown away after sitting out for two hours.  The chicken I ate had been sitting out for about 3 hours at the party and I ate it on the 7th day.  Oops!  I also ate some avocado that was about 6 days old (but smelled fine!); recommended time on that fruit is 2-3 days.]  Needless to say, I’ve learned my lesson!  


Updating your wardrobe without spending any money!

For nearly my entire life, I have considered time and dates relative to an academic calendar.  I live semester to semester and have developed habits that correspond to the school year.  For instance, I have grown accustomed to purchasing clothing only during certain times of the year, most notably the beginning of the school year; I'm sure many parents can relate!  Ever since I was a little girl, I can remember going on shopping trips to purchase new shoes, jeans, and a special first day outfit.  Even as I moved into my professional career, it was not uncommon that I would purchase a few new pieces of clothing to add to my wardrobe at the beginning of the school year. 

Over the past year, though, I have actually bought very few new items and, to be honest, it's been relatively refreshing realizing that I don't need to purchase new items and that I can be creative in making older items look new by pairing them in new combinations.

I have also been fortunate to be able to update my wardrobe by participating in clothes swaps with friends and family.  This past weekend, in fact, my sister gave me a bag of clothing that no longer fit or that she was no longer interested in wearing.  I brought this to a dinner party and my friends and I sorted through the clothes and each selected a few items.

The idea of a clothes swap (also known as a "Naked Lady Party" amongst my friends) is something that we started doing a few years ago: with each season, we'd go through our closets and remove items that we no longer wanted and then bring them to a swap.  Any clothes left over get donated to a local charity.  It's a great way to update your closet without spending any money!  


The Trouble with Credit Cards: Part II

In last week's post, I wrote that I had reduced my credit card debt to $10,120.  However, only $7511 is still actually on credit cards; the other $2609 is now in the form of a car loan.  In this week’s blog, I am going to explain exactly how I'm addressing my credit card debt and the problems that exist with trying to pay off credit cards.

Problem #1: Having high interest rates
How I'm addressing the problem: When I began Project Money, I had five credit cards with balances on them.  One card I paid off every month (a Menards card), so when the competition began, I paid it off as I normally would.  I also have one card that I used to purchase the flooring of my recent basement remodel, which has 0% interest until March 2015; I am paying a fixed amount each month on this card so that it will be paid off in full by that time.  My other three cards, though, each had balances with varying APRs.  My two Chase cards, at 10.24% and 11.99%, totaled just about $3000; Adam suggested that we take out a $3000 loan against my car at 2.79%.  I did not know that this was possible, but it is!  This solution is now saving me about $20 a month in interest on these cards!

Problem #2: Having a card with multiple balances
How I'm addressing the problem: Since I (stupidly) took advantage of Discover's "kind offers" of 0% interest on various purchases and/or balance transfers, I'm now stuck with a big problem: my card has multiple balances, each with their own APR.  Discover (wisely) applies your payment to the interest first and then to the balance with the lowest APR.  So, unfortunately, my payments are going towards balances with 0% APR, not towards the $2200 balance that sits at 15.99% APR.  Ugh. 

Adam and I have wrestled with "what to do" about this for most of the past month and we've concluded that it's best to just put all extra money towards this card and pay off the card's entire balance as quickly as possible.  We did explore other options: taking out a home equity loan (1.9% for 6 months and then 3.4% thereafter) or doing a balance transfer to another card (0% for 12 months).  But with both options I'd need to pay loan or transfer fees and we calculated that these fees would end up being almost the exact same amount that I'd pay in interest if I just paid off the card in the same time frame.  So, paying it off as quickly as possible is what I'll be doing!

Katie's Posts

Follow Their Journeys...