Sense to Save

Throw Away the How-To Guide and Learn from Experience

This guest post was provided by Brittany at SavvyStudent.com, a site that helps students discover ways to pay for their college education with private student loans and other resources. They also provide information regarding alternative ways to celebrate college, so students don’t have to think about a private college loan.

Being not even halfway through my college career, I know that there is much to learn in terms of saving, spending, budgeting and so on. But so far the experience has been far greater than the logistics of what a book can teach me on financial lessons. Some would beg to differ, but I choose to stay firm in this belief. I’m an English major, not an accounting guru. Yet the knowledge and skills I have acquired over time has been more beneficial because I have experienced the hands-on emotions, lessons and trials of being in debt, and paying off that debt.

I’ve learned that money well earned is money well spent. Being a full-time student with a social life and personal life is enough. But adding a job on top of that can be overwhelming at times. And it is during those times of struggle to keep up that I learn to prioritize my savings.

I would like to say that I am a very intentional person, but since balancing several different aspects of life during college, I have learned that spending money that isn’t going towards practical purposes is detrimental; as if I am losing the benefits I’ve worked so hard for. Having a job has taught me to value the things I consume, and I have become more aware as a consumer in what items I purchase and where I purchase them.

Having a job has taught me to value my education more than, I would argue, not having a job while in college. Because I am paying for my own tuition added along with federal, private, and university student loans, grants and scholarships, I am more thankful for what I am learning.

I am not so aware that I calculate how much each hour of a course is costing me, but I am aware that having a job is leading me to a further understanding of the world through academics, and that is invaluable. It’s invaluable because the fact of knowing and achieving goals through the knowledge attained during these college years and beyond is worth more than attaining a certain wage or high-profile position in the business world.

I’ve learned to be conscious, but not worry, about the money I am spending on tuition. Yes, thousands of dollars are being spent for me to partake in a core curriculum, some classes of which I will never open my mind to again. Yet thousands of dollars more are digging a hole for the classes being taken that actually do go towards my major. But I am convinced that living in the present, focusing on discipline and diligence will be enough to worry about.

Though I would not suggest worrying, for it only brings more issues. So for the time being I have learned to be content with the debt I am descending into. And is that an unaware way to live? Should I be focusing on paying off debt right NOW that I already have? I think there is a time and place to pay off debt, which is after graduation. It should be constantly be in the back of our minds, but we shouldn’t let it prevent us from getting the most out of the tuition dollars we are paying whether that be now or later.

Overall, my experience that is still in ever-flowing movement is teaching me about financial responsibility, and it’s preparing me for my future in paying off student loans. I am learning through raw experience of work, school and personal life that being financially responsible is most beneficial when coming from personal experience as opposed to something that is taught through a book or brochure on how to be financially successful.

—

Note from Kacie: Thanks, Brittany! You mentioned that you haven’t calculated how much each course costs. I did that once, and I was floored! It was something like $100 per class (for a twice weekly class). It provided more motivation to attend and get something out of it, even if it was a beautiful day out and I’d rather go for a walk, or if it was 4 degrees and I’d rather not go anywhere.

Part 3: Update on Courtney’s finances

For a refresher on Courtney’s story, see part 1 and part 2.

My pal Courtney has really been bitten by the get-out-of-debt bug! She’s inspired by Dave Ramsey and is really hitting the ground running.

Here’s just a few things she’s been up to in the last week:

• Lowered her cell phone bill by $22/month
• Canceled Netflix (around $9/month)
• Unplugged all appliances that don’t need to be constantly drawing electricity
• She’s been avoiding restaurants
• Sold a treadmill for $200
• They’re planning on selling things at two huge garage sales soon
• They’re moving in with a friend for a few months after their house sells to save money and to pay rent to the friend (helping everyone out!). They’ll put the profits toward building an emergency fund and paying off some debts, as well as building up savings for another down payment.
• They’ve substantially downgraded the amount of house they’re looking to buy next. A smaller, lower-cost house will mean a lower monthly payment, lower property taxes, and probably lower utilities. If they find they need more space later, they can always move at that time. A house at this price point (and after paying off their credit cards and saving some money) will be affordable to them, instead of a huge stretch.
• She thinks that they can be debt-free (except for a mortgage) in about 3.5 years, as well as have a complete emergency fund.

They’re doing a modified debt snowball for now. Courtney tells me that some of her cards have really high interest rates and are close to being maxed out, so initially she’s going to work to bring down those balances so she won’t be slammed with overage fees. Once those are a little more manageable, it’s time to work that snowball Dave’s way.

Here’s an excerpt of an e-mail from Courtney (printed with permission):

“My husband and I are keeping each other in check, too! I wanted to go out for ice cream last night (we have $50 for eating out/entertainment) and my husband said, NO! Eat something from the candy jar! It’s only March 10th and we’ve already spent $30 of that fund! I loved it! I really was too proud/happy and remembered the “delaying pleasure is a sign of maturity” from Dave Ramsey!

Anyway, I’m just really pumped and excited, and my husband is NOT a theory guy, so when I show him my spreadsheets he gets excited! It feels more like something tangible and not a completely unreachable idea!

I really cannot say thank you enough to you! I know all of this stuff is common sense, and I’ve had abstract ideas about what I should/shouldn’t do, but you have hellped me buckle down and put my money where my mouth is!”

—

Don’t you love her energy and enthusiasm? She’s making me want to  find new ways to save money out of our own budget. Love it! Can’t wait to write part 4.

Saving to buy things that’ll save you $ in the long run

There are plenty of items out there where if you spend a little bit of money, you’ll save quite a bit in the long run. Typically, such items are also eco-friendly. If you can reuse an item repeatedly, then you don’t have to buy it every time, and you don’t have to throw it out each time, either.

You know, things like cloth diapers, dinner napkins, cloth shopping bags, a coffee pot, a water filter, a clothesline or drying rack, CFL bulbs, rechargeable batteries, a programmable thermostat, Diva Cups/Keepers, cloth pads, electric razors, food canning equipment, sewing machines … you get the picture.

And then there’s also things like memberships to warehouse clubs, or buying things in bulk at other distributors.

All of these things can help save you money, but there is a start-up expense, and that can be a challenge if you’re living on a tight budget.

If you have an item like this in mind but can’t afford it right away, start saving for it specifically! You can create a subaccount within ING Direct if you bank with them, or use a separate savings account with any bank, really. Even $10 or $20 per month set aside will help your cause.

Or, find something to sell and commit the proceeds to purchase that item.