Posts filed under 'budget & finances'
So, you’ve weighed the options and decided to get a credit card. Congrats! This is just one more step into adulthood. Unfortunately it’s also another step into responsibility. Here are a few thoughts on choosing and using credit cards that should (hopefully!) make the process a little smoother. (Remember, I’m not an expert, but I have had some life experience!)
Choosing a Card
Your first card should have:
- The lowest interest rate possible. You should always try to pay your card off completely every month, but if you have an emergency and can’t pay off your balance, high interest rates can make your debt add up fast.
- No annual fee. Some credit cards-especially “rewards” cards-charge you a fee every year for the privilege of using them. You don’t need another drain on your already sparse savings, so look for a card that won’t charge that fee!
- No hidden charges. Read the fine print!
Since this is your first card-meaning you probably don’t have much credit built up yet-it might be hard for you to get approved for a card. If this is the case, you can start by trying to get a student card at your bank, or start with a department-store or gas card (which Kiplinger says are easier to get).
You can search cards by interest rate or other qualifiers at a site like http://www.bankrate.com/ or http://www.creditcards.com/, but remember to look for the information instead of getting distracted by the ads. (Bankrate also has some great articles on credit card basics!)
Using a Card
- Only spend what you have in real money. In other words, use your credit card like a debit card. Keep track of every penny you charge so you don’t end up being unable to afford your payment. It may seem obsessive, but it will help you learn to manage your credit.
- Pay on time, every month. Remember, late payments can lower your credit score AND cost you an arm and a leg in late fees, so do whatever it takes to make your payments on time. You can add it to your calendar, have Google Calendar send you a reminder, or set your card up to auto-debit your bank account.
- Pay off your entire balance every billing period. The problem with credit cards is that some people spend more than they can afford to pay off-which means getting slapped with late payments or accruing interest charges. If you followed step 1, you should have no problem paying off your balance, because you’ve spent only what you have to spend. Better yet, make a bank transfer to your card after every purchase so you really know where your bank account stands.
- Keep your receipts. One of the best ways to keep yourself safe from fraudsters is to check your receipts against your statement at the end of each month. If you decide to get rid of the receipts after comparing, be sure you shred any identifying information (like the last 4 digits of your card).
- Don’t go over your limit. This is kind of a “duh” statement, especially if you’ve followed the first three tips, but don’t spend more than your credit limit allows unless you want to get hit with an over-limit fee, or be embarrassed when your purchase transaction is declined!
photo: Credit Card / Gold & Platinum by LotusHead
July 3rd, 2008
Handling your own finances isn’t easy (in fact, far too many full-fledged adults still struggle with it) but luckily for you, there are a plethora of resources you can turn to for help. From books to blogs and everywhere in between, money advice for new grads abounds!
Here are a few of my favorite recent articles from around the web to help you out as you start to figure out the how-to’s of money management:
The New York Times’ article A Primer for Young People Starting Their First Job
Ooooh, a job with “benefits!” Health insurance and a retirement plan–that must be awesome, right? If you’re like most new grads, you probably don’t know a good insurance plan from a bad one, or how to start planning for retirement. Click through the above link and two pages of reading later, you’ll find yourself just a little more prepared for the reality of the real world.
Surviving College Life’s article on How to Set Your First Budget
Um… is it cheating to refer you to my own article? Hopefully not, because I think it’s a relatively important topic to wrap your head around (plus I created a free budget worksheet for you.) If you want some off-site budgeting help you can also try Gather Little by Little’s tips about how to Create a Budget AND Follow It.
Being Frugal’s clues about Frugal Living for Beginners
Once you’ve started budgeting, these five simple steps can help you start whittling down your excess expenditures-fairly painlessly-so you have more to live on (and to save!). One suggestion I should start following is #4 Carry your own water with you. A bottle of water should cost a few cents, but at a coffee shop (or, say, a very very warm graduation ceremony) you’ll pay more like $2!
Get Rich Slowly’s special post Life After School: Advice for New Graduates
I love that this article covers money-management from a more emotional standpoint-it takes into account the natural human reactions to things like finding a job and getting a raise, and tells you how to overcome the impulses that will drag you down financially. (You should also check out the article there about paying yourself first–it will get you started saving. Did somebody say “early retirement?”)
Do you have any great advice to share–or bookmarks with other people’s money tips?
photo: City 2 by woodsy
June 30th, 2008
Mother’s Day is Sunday-do you have an armful of flowers, cards, and gifts ready? If not, don’t worry! I’ve got quite a few DIY gift ideas for Mom, so start clicking through (or check out my “DIY Gifts for the Ladies on your List” post from November) and see what you can get done in the next few days!
FOR MOMS WHO LOVE FABRIC GOODIES
Little Owls. Is mama a fan of nature, animals, or even wisdom itself? Whip up a couple of these adorable stuffed owls using this handy photo-tutorial courtesy of Moonstitches. Make just one or get ambitions and sew a whole parliament of owls (did you know a group of owls is called a parliament? Random!).
Easy Peasy Fabric Flowers. These cute fabric flowers are the perfect accent to mom’s jacket, bag, or really anything else-plus they last longer than (AND aren’t as pricey as) real flowers! Templates, photos, and instructions are all included-all you need are your supplies and a little bit of time.
FOR MOMS WHO LOVE CHOCOLATE
DIY Chocolate Magic Shell. True chocolate fans know that nothing is more magical than some quick-hardening chocolate sauce on a bowl of ice cream. Want to know how to make it yourself (and try some yummy new flavors, too)? Looks like it’s your lucky day (and mom’s, too, of course)!
“Better Than Chocolate” Body Scrub. Moms probably need a little pampering more than anyone, so why not whip up this easy chocolatey body scrub for her? All you need is a few ingredients, something to mix with, and an airtight container to store the end result.
Homemade Recipes for Popular Candy Bars, The oh-so-lovely people of Chow have made it super simple for you to make dozens of mom’s favorite candy bars yourself. Their easy recipes for popular candy bars make all that mouthwatering chocolatey goodness attainable and fun. Wrap these up in a cute wrapper or box & give Mom a big smile.
FOR MOMS WHO STILL HANG YOUR ARTWORK ON THE FRIDGE
Jewel Case Photo Frames. These easy photo frames are easy to make, easy to swap photos out of, and a cool new way for Mom to display whatever artwork she wants to eyeball this week. They’re also kind to your pocketbook. : )
Ribbon Striped Bulletin Board. Make all that artwork a little more portable with this ribbon-striped bulletin board-it’s a classier display space than the fridge, and might help Mom keep track of bills, phone numbers, and the dates of your finals weeks a little easier.
Happy Mother’s Day to all your mothers or mother-figures!
photo: new players from Moonstitches’ blog
May 9th, 2008
Ah, budgeting-possibly one of the least exciting things about moving off to college-but usually one of the most necessary!
It’s completely normal to feel confused or even frustrated by the idea of having to juggle all the bills that Mom or Dad once handled themselves. The easiest way to tackle them all at once, and make sure you have some change at the end of the month, is to start a budget.
Where to Start
The easiest way to make a budget that works is to save all your receipts, pay stubs, and bills-all of them!-for a month. At the end of the month, tally up your costs and your income. If your income is less than your expenses, you either need to increase your income (by getting a job, for example), decrease your expenses (check out these 50 ways to save $$ in college), or both!
Once you’ve seen what you earn and spend, you can set up a “Planned Budget” for next month. Estimate your income and expenses, and write them down. Use this free budget worksheet from Fox College Funding to get started-it’s straightforward and might remind you of some expenses you’d forgotten about!
So, you’ve made your “Planned Budget,” now what?
You guessed it. Save your receipts, bills, and pay stubs… AGAIN. At the end of the month, enter everything into your budget worksheet, and see how close your actual income and spending came to your estimates. Decide how you want to change your budget plan for next month to fit better with your priorities.
Making it Work
So… You’ve planned out your budget-and you really, really tried to stick to it-but somehow you spent a lot more this month than you thought you did. It’s tempting to think the only solution is to make more money (good luck figuring a second job between your first one, friends, studies, and classes) but the best solution? You need to control your spending.
I’m a big fan of the envelope system-you budget out a certain amount of cash per week for things like groceries, clothes, etc. and literally put them in separate envelopes. Then when the cash is gone, you’re DONE spending for that week.
Don’t want to have cash lying around in envelopes? Here are some other ways you might be able to make a version of the envelope system work for you:
- Keep your weekly budget of cash in your wallet, but clip money together in separate paper clips labeled with what that cash is earmarked for.
- Buy gift cards to places you frequent (Starbucks) and use them to set your budget for the week/month. You could also buy prepaid credit cards or a Visa gift card for items like groceries or clothes-just write the use & balance on the back with a permanent marker.
- Give yourself an “allowance” in cash for entertainment or other socializing so you don’t overspend when you go out with friends.
- If you find yourself swiping your credit or debit cards too often, hide them so you can only use them for emergencies!
Remember, the goal of a strong budget is to make sure you have more money coming in than you do going out!
April 10th, 2008
It has been a little over two years since I wrote a check for my first car payment–I bought it the summer before my junior year of college, and because of some hard work (and the help of a trade-in) I was able to keep the payment low enough that I could afford it even on a college student’s miniscule budget.
To celebrate my 50th post here at Surviving College Life, I’m going to let you in on the ten car-shopping tips that helped me really drop the price of my car!
- Know What You Want. If you’re on a budget, you probably aren’t buying your dream car, but it is still important to know what you want. Know the exact specs of your future car–not just the make and model, but the details, too–how many airbags and cup holders, power steering, manual or automatic transmission, manual or power windows, alarm or not, everything. Choosing exactly what you want beforehand will give you the confidence to tell a dealer NO when they try to sell you something “bigger and better.” (And they WILL try to do that!)
- Know What It’s Worth. Too many people walk on to a car lot with only a vague idea of what the car they want is worth, making impossible for them to spot a good (or bad!) deal. Whether you’re buying new or used, you should find out the current value of the car you want to purchase. The Kelley Blue Book‘s list of car values is a great place to start.
- Pre-Set Your Monthly Payments. Before you even set foot in a dealership, you need to figure out your ideal numbers, especially if you will be financing your purchase. Pencil out how much you can afford to put down, and how much you can afford to pay each month. Find your “upper limit” number for a monthly payment, but don’t tell the dealer a number that high! Don’t forget to figure it tax, license, and registration. When you’re sitting down with your sales rep, make him figure out your total monthly payments and give it to you in writing.
- Shop Around (and Don’t Be Shy About It). I’d recommend going to at least 3 dealerships when you’re looking for a good deal. Make sure you get the exact same car so you can compare prices accurately, and if you can, get the number in writing before you move on to the next. Also, don’t be shy about letting salesmen know that you’re shopping around–it can sometimes get them to give you a better deal if they feel a little insecure.
- Ask for a LOW, LOW Price. For some reason, a lot of people don’t do this. In fact, a lot of people walk in to a dealership ready to pay the retail price. But to get the best price, you need to start low. Lower than you think they’re willing to go. Then you work up from there, negotiating until you get a price you like. Salesmen will NOT offer you a price unless it works out well for them, so you just need to worry about getting a price that works out for you.
- Be Ready to Walk Away. Nothing makes the point that you are serious about your price requests more than your readiness to walk away. I continually repeated to my sales rep that if we couldn’t get the price I was looking for, I didn’t want to spend any more time there–and I meant it. I could just have easily bought a car somewhere else, some other day. No rush. He responded by getting the price down to where I wanted it, and even figured out how to include a car alarm without raising my price by more than a couple dollars a month.
- Bring in Backup. Bring someone along when you go shopping–or at least during final negotiations. (Preferably someone who knows about cars!) Having someone to back you up will give you a confidence boost, and give you someone to talk to if you’re tempted to make an impulse buy. Salesmen can be intimidating, so it can really help to have someone on your side.
- Get a Co-Signer With Great Credit. You’ve probably seen car commercials offering something like “a 4.5% APR on approved credit.” That means if you have a high enough credit score, you can get a really low interest rate if you finance your car. If you’re in college or even your early twenties, you probably don’t have a perfectly stellar credit score yet. Instead of forfeiting those savings, try to get a parent or grandparent with a good score to co-sign for you so you can get their low interest rate.
- Shop Summer for the “Clearance” Advantage. The new year model cars usually appear on the lot around the end of summer, and that means that dealerships want to get rid of their current year’s stock ASAP! Shopping towards the middle of June through the middle of July can garner you great deals on current year stock, because they basically go “on clearance.” Plus, it’s still a brand new car!
- Shop Sunsets. Timing is everything when it comes to car shopping–not just the time of year, either, but also the time of day. If you want to up your odds of getting a good deal, go in to make your final purchase towards the end of the day. Salesmen work on commission, and they’ll want to get their last sales of the day wrapped up–that means they’ll be more likely to work through a deal quickly and maybe even negotiate down more. (Shopping on the last day of the month can also result in a lower price out the door since dealerships want to meet quotas for dealer discounts given to them by car manufacturers if they sell a certain volume of cars for the month!)
Happy car shopping!
photo: Keys 1 by tap78
March 27th, 2008
Now that you know what a credit score is, it’s time to figure out how you can make yours stronger. The nice thing about credit scores is that they’re pretty easy to build–it really doesn’t take a lot of effort on your part.
Here are a couple of ways you can build your credit.
Open a Checking and a Savings Account
You can’t get a credit card until you are 18, but some banks will allow you to open accounts with them at a younger age, so this is a great way to get a head start. You could also consider opening a joint account with an adult if your bank won’t let you open one on your own.
Have a Credit Card
Okay, first of all, credit cards can be dangerous for college students. Once you have one, it’s tempting to use it for anything and everything, and that leads a lot of students into debt. So, my advice would be to get one card (only one!), and use it ONLY OCCASIONALLY and ONLY like a debit card–only spend money you already have in the bank, and pay off your entire balance at the end of each month.
Caution: Paying your card of on time will build your credit. Overspending on your card will put you in debt. Be careful.
Pay Off a Loan
I’m not saying to rush out and get a loan–if you don’t need a loan, don’t get one just to build credit. But, if you already have a loan on a car, or if you have student loans, the simple act of paying your bill on time will help with your credit. Easy!
So, the bottom line on building credit is–Pay your bills on time! That’s basically zero effort, since really you should be doing that anyway.
Having trouble getting everything in order by the payment due date? Check with your bank, credit card company, lender, and other companies you pay bills to, and see if you can set up auto-bill-pay. All you have to do then is make sure you have enough money in your bank account every month, and the company will withdraw the payment for you. (Need to save more money to fill that bank account? Check out these 50 ways to save money in college!)
photo: number 540 by Scyza
January 31st, 2008