WORST COLLEGE MONEY MISTAKES FEATURING WEALTHY WISHING

College life is complicated and with so many changes going on in our lives at the time we begin college we often feel lost and confused. We must choose a major, pay for college, learn to do many things on our own that we have never done before and finance it all with very little money and time. If only we had a magic wand or three wishes from a genie to help us through these many obstacles. Well I don’t have a magic wand or wishes to grant, however I have something that can be beneficial to help you through this trying time.

I have asked a few great bloggers to help me create some posts to hopefully help you recognize and avoid some errors we all make. This series will provide you with some short stories of times where we made a financial mistake in college, and how we overcame them. I am hopeful that you may be able to learn from our mistakes and that we can help you potentially prevent some of the same mistakes. If you like us have already made some of these same mistakes, I am hopeful that this series may help you to realize that you are not alone. Even with mistakes like these, we can turn our financial situations around and begin to build a brighter future Today’s featured blogger is the owner and blogger at Wealthy Wishing.com

America’s student loan debt is at $1.3 trillion and climbing. Can you believe that? The sad and unfortunate reality is that some people who take on student loans never recover for them. On average, University graduates may obtain more financially rewarding careers, but it’s not a guarantee. Living in Canada, student loans are slightly less worrisome than in countries like the USA or UK. The average student debt in Canada is $26,000, compared to $37,000 in the US and a whopping $55,000 in the UK. A recent poll in Canada shows that 77% of University graduates between ages 21-39 have regrets about taking on student loans. Am I one of those people? You bet!

My Story

My student loan debt story is a little different than the average person. First off, my debt upon graduating was only $12,000, which is a heck of a lot less than the average $26,000. Secondly, I didn’t really need the money. I worked my butt off in high school to save up money and was pretty good at stashing it away. During the summers from Grade 10 until University graduation, I worked at a golf course on the maintenance crew. The pay wasn’t great ($10-13/hr), but I was working about 55 hours a week so it would add up. On top of that, I started my own small business cutting local lawns on the side after work. I had 3 clients all whom paid me between $30-40 per lawn. Doesn’t sound like much, but that would give me an extra $100 cash per week in the summers. The only downside of this was the brutal farmer’s tan I’d end up with every year.

My parents managed to save money for my college fund, even though we were a lower middle-class family. With the money I was saving during the summers, and their help, I could have gotten through University without any student loans. However, for some reason, I decided to apply to the Ontario Student Assistance Program (OSAP) in my first two years which got me a grand total of $12,000 in loans. Thinking back, it was my parents who suggested I get some student loans as a ‘just in case’ measure. I’m assuming they suggested this in case they ever had to use the money they saved for me for an emergency of their own, which I can understand. With OSAP, the interest doesn’t start to accumulate until 6 months after you finish your studies. Therefore, if I didn’t touch the money, I could just do a lump sum back to OSAP when I graduated.

One problem. Life happened. Life for an immature 17-year-old who suddenly saw thousands of dollars in his bank account and forwent paying attention to a budget (A budget? What’s that!?). Once that money is in there, it’s almost like you forget where it came from and you feel like it’s yours. I was in school for a total of 5 years. Four years of undergraduate studies and then a one year post-graduate program. That’s an average of $2,400 loaned per year. Let me tell you, it’s pretty easy for someone 17-21 years old to spend $2,400 a year on clubs, alcohol, clothes, electronics, etc. It’s so easy in fact, that I did it without even thinking. I was immature with my money and I have no one to blame but myself. I wasn’t properly educated about the reality of student loans and it’s not something you think to research until you’re actually in trouble.

Thankfully, after graduating I landed my first job right away. It was decent paying and I was living with my sister which allowed me to pay off my entire debt within the 6-month grace period, interest free. I understand a lot of people are not this fortunate, and that interest can start eating away at your savings for years and years.

I think it’s part of our duty now to try to educate young students on the reality of student loans. The government pushes it because it’s money in their pockets, but it’s truly hurting the citizens of their country. Here are some of my top tips based of my experiences.

5 Tips for Student Loans:

1. Educate Yourself

This one is difficult for high school students. Deciding to pursue a college degree and taking out student loans is one of the biggest decisions you’ll ever make, and you’ll be making it when you’re a teenager. With so many resources available now, the next generation needs to make sure that they educate themselves on finances. Not just student loans, but also budgeting and investing as this can help keep your loans to a minimum. I also believe it should be on the schooling system to provide unbiased education on student loans, but... government money.

2. Only Apply If You Must

This was part one of my mistake. I took out a student loan as a ‘just in case’ measure. In hindsight, I would have been better off not applying first year since I already knew it was paid for. I should have done it on a year by year basis after consulting with my parents and my own savings to see if I’d be able to pay for everything each semester. It sounds so easy looking back now!

3. Only Touch What You Truly Need

Part two of my mistake. When you have money in your accounts, you feel like it’s yours, even when it’s borrowed. If you have a loan, it should be to cover for costs that you cannot afford by any means.

4. Prioritize Your Debt

Sounds obvious right? It is, but often people get caught up in life after school that they don’t put together a solid plan to pay back their debt. You need to make sure you prioritize paying back your debt as soon as possible. Just because you’re making money now doesn’t mean you should go out and buy your dream car or a rolex. Prioritize your debt.

5. Take a Deep Breath

Student loans can ruin a lot of lives. There’s people out there who can’t seem to escape them. Money is important, but life, family, and health is more important. Sometimes you just need to take a deep breath and look at the bigger picture. If you’ve come up with a good plan to pay back your student loans, stick to it and one day you’ll be free. If you need help putting together a plan, then don’t wait and seek advice from a trusted expert.

I hope you enjoyed reading about my story. You learn from your mistakes, and I hope you can learn from mine.

About the Author

This incredible post was written by the owner and blogger at wealthywishing.com

Please check out the website and follow them on Twitter @WealthyWishing

Another great post from Wealthy wishing you might find helpful is Roommate – Should You Get One?