Eating Frugally

Unfortunately with all of the advertising and marketing that is thrown our way (meaning recent college grads and college students in general) it is difficult to cut down on excessive spending. Especially when one of your friends is telling you how great their new gadget or outfit is.

The same can be said when you are in need of an energy boost in the form of some sort of energy drink or other caffeinated beverage or when you do not have time to pack a lunch.

Ipod: $200, Mocha Frap: $5, Jimmy Johns: $10
Not being able to figure out why it is going to take you 3000 years to pay back your college debt... priceless.

It sounds funny, but the numbers really don't lie. If you fare on the more excessive side and eat out for all three meals you are probably spending around $5 for breakfast, $10 for lunch and $10-15 for dinner. Maybe at the same time you do get a coffee, pop or other snack totaling another $5 dollars. Your final number is about $35.... for one day! Multiply that by 30 and you are up to over $1000! If you are making $40000/yr out of college you are spending almost 40% of your income on food and snacks. Of course most people may only eat out once a day, but it still adds up:

5 X Sandwiches for lunch at a deli @ $6 = $30

1 Loaf of bread + deli meat/cheese = $10

If you really want to go the extra mile you can take the free packets of dressing from cafeterias, etc. My point is, even in this example you can save 66% and brown bag it.

Exit Loan Counseling

Although a lot of it is repetitive and not necessarily ground breaking, exit loan counseling can indeed provide some insight into your financial future after college. I found the question "Do I have to pay my student loans back?" to be a little silly, but there are at least some terms and explanations that I found useful. Hopefully I can help save you from reading every single detail. Here is what I found useful:

Repayment Options:

1)Standard repayment
2)Extended, long-term, Graduated repayment
3)Income-sensitive repayment (for Federal Stafford loans)
4)Income-contingent repayment (for Federal Direct Stafford Loans and Federal Plus loans)

Really, the names do a good job of summarizing what each type means.

Standard repayment comes down to equal monthly payments for up to 10 years (excluding periods of deferment and forbearance - more on these later). It's relative simple or "standard". This tends to be best if you can afford the payments. Typically it is ideal for people who have lower balances or people that can afford to pay higher balances. It is also ideal for minimizing the interest you will pay (it has the shortest term).

Extended/Long-term extends your repayment period so your monthly payments are less (and you have better cashflow). The problem is you will pay more in interest the more you drag the loan out. You also need to make sure your loans can be extended (guaranteed Stafford loans have to be consolidated first). This would be better if you really need the cash flow and cannot afford higher payments.

Graduated repayment is tricky because you do not have to be graduated!It just means your payments start low and increase over time. I personally do not recommend this route unless you can 100% guarantee you will be making significantly more money in the future (and I don't mean you hope you will). The problem is you can end up having large payments sneak up on you over time. This happens to a lot of mortgage owners that choose balloon payments!

Income-Sensitive Repayment is based off of your annual income. The benefit is that you will probably never have to worry about not being able to afford your loan payment. The downside is that you could potentially accrue the most interest and lose the most over time. Of course, in my opinion, why not choose this option and pay more towards your loan if you have the cash? At least it gives you the flexibility to say you cannot afford it in a month that you are strapped for funds.

Income-Contingent Repayment is for federal direct Stafford loans and is adjusted each year based on your income.

This is a great resource for answering any questions you may have, of course you can always ask me as well: https://www.dlssonline.com/borrower/BorrowerWelcomePage.jsp

Deferment/Cancellation/Forbearance

I'll get more into these later but to sum things up:

Deferment: Pospones principal and interest payments for specific periods of time when you meet the certain conditions. The conditions are typically set by the government and are usually based on financial need. This is the one you want though because the government is making payments for you. The payments are on the interest, however, not the principal (so they are saving you a minimal amount and some time).

Cancellation: Total or partial forgiveness of a loan for specific reasons. This could be like your school evaporates or closes its doors. This rarely happens.

Forbearance: A temporary suspension of payments, an extension of time for making payments, or a temporary reduction in the monthly payment amount. Most people end up getting forbearance if they get anything. Your loan companies will want to give you forbearance if it means getting payments on time. Typically they will work with you (as long as you are persistent) because it really is in both your and their best interests. You do not want to default or look like you made any late payments because it will damage your credit score.


Well hopefully that saves everyone some time, let me know if there are any questions (remember I am still learning a lot of this stuff as well!).

Independence versus BILLS

I recently decided that independence was overrated and saving a few hundred bucks (rent, utilities, internet and major groceries) was the logical choice. Of course, after like 2 weeks, I'm about to pull my hair out! To be honest, my parents are not the smothering type, well not in most ways, but once you get a taste of independence it is really hard to accept any intrusion. For example:

There is a bathroom right next to the room I'm using, it is not really "mine" but technically nothing is :D. Anyway, it’s like when I notice all the stuff is rearranged, even if someone cleans it "for me". There are also those moments when you hear the door close and it doesn't open for 10 minutes... ohh yeah.

I think it was Flight of the Conchords where one of the character's friend was talking about his "roommates" and how they are so annoying, eventually there is that awkward moment (like in all the episodes) when one of the main characters says "You mean your mom?". Ironically, you have to establish rules and boundaries like you do a roommate, otherwise everyone ends up frustrated. Can you really get upset when your dad steals your socks or eats all of the cereal you bought? I mean if you have no or discounted "rent" it doesn't give you much to stand on. Now an actual roommate situation is a little different…

At the end of the day you just have to have some understanding, and it probably will be worth the headache (at least financially) in the long run.