11 Ways to Fail Financially While in College
Academics are not the only thing you should worry about as you grind through the horrendous prison that is college — parties, booze, spring break — oh, the horror!
According to a recent study by Sallie Mae, the average college student will graduate with $4,100 worth of credit card debt, a staggering amount in addition to what they’re already owing from their student loan and other college related expenses.
If starting a new life after graduation with unnecessary debt isn’t your idea of awesomeness, here’s a list of 11 ways you can fail financially while you’re in college: avoid the actions listed below and you just might come out financially ahead when you graduate!
Taking an Excessive Long Time to Finish School
“I’m on the special six-years program,” my friend will often say as people ask him whether if he was a junior or senior in college. While some people will often joke about being a “super senior,” many times there are negative financial consequences if you prolong your stay in college.
Although its perfectly reasonable to switch major as you discover your true passion, lingering while in college can increase your overall tuition cost and prevent you from stepping into your “wage earning years.” For those that are juggling multiple projects or part/full-time jobs while in college, this can especially be a problem as you try and balance between work and academics.
Signing Up for Unnecessary Credit Card Accounts
The Sallie Mae study revealed that on average, college students have 4.6 credit cards, and half of college students had four or more credit cards. The number of cards a student carry also dramatically increases as a student progress through the years in college.
Keep it simple and avoid tackling on additional debts by sticking with one credit card through your college years. If you’re unsure of your ability to properly and wisely use credit, consider opting for a debit card instead — you get the same conveniences, and if your debit/check card is from a major national bank, you get the same level of fraud protection from a credit card.
Doing a Poor Job in Managing Your Financial Accounts
One reason to avoid carrying an excessive amount of credit cards — beyond the risk of increasing your credit card debt — is that managing financial accounts are simply not one of the major priorities for most college students. You can keep the organization simple by using online account access that are provided by most major banking institutions. Many of these online accounts offer bill alerts via email or SMS; they also offer online bill pay along with automatic bill payment — two modern conveniences that should make paying your bill late obsolete. The more you avoid overdue bills, the less late fees you’ll pay, the more reasonable your interest rate will stay and the better your credit history will look.
Letting Your Vices Consume Your Money and Time
Beyond alcohols and other nefarious substances, your vices can be anything that consumes an unhealthy amount of your money or time: massive multiplayer online games, gambling — heck, maybe even your significant other (yeah we said it). Your college life certainly doesn’t have to be 100% about school work, but when 90% of your time is spent solely on one particular activity, you may be doing yourself a disservice that not only threatens your financial outlook but potentially your very own well-being.
Failing Academically While on Scholarship
Although looking like a stash of colorful curtain when you graduate will certainly make your parents proud, not everyone needs to graduate cum laude. You should, however, do well academically especially if you’re on scholarship or grants. Remember that you’ve earned the scholarship or grants due to hard work — don’t let the free money slip away by neglecting your studies. Even if you’re not on an academic scholarship of sorts, you should still keep academic probation at bay, simply because it will eat up more of your time and money.
Choosing Expensive Out-of-Campus / Away-from-Home Housing
Fact is, some college dorm rooms are just out right horrible. We understand that. But college is also a time where you need to keep the belt tight and the wallet even tighter. Many people make the mistake of taking out additional student loans in order to live in more upscale neighborhoods or housings. Some even move out of the house even though the school may be less than an hour drive away. Being able to find independence is all fine and well, but having to go back to your parents to help with your loans because of your college housing choice probably won’t be a good first step toward independence.
Opting for a Brand New Car Instead of Cheaper Alternatives
Everyone loves a new ride. The soothing chemicals from a new car smell… ahhh. Problem is, new cars are a known depreciating asset. The minute you drive it off the lot, a good percentage of its value disappears into the misty air. Many time it will be practical just to purchase a reliable use car over a brand new car. You can do one step better by grabbing an out-right beater or skipping a vehicle altogether if you attend a college with plenty of public transportations.
Attempt to Keep Up with Peers on Materialistic Possessions
It can get easy to get carried away when you get in the “Keeping up with the Joneses” mentality, especially in our younger years when image may be important. But spending the time and money in order to keep up with your peers on materialistic possessions will only rack up the credit card debt. If you find yourself constantly feeling like you need to buy certain products or apparel just to feel like you belong to a crowd, it may be time to start seeking friends that value you beyond your possessions!
Using Your Student Loans Excessively on Other Purposes
The majority of your student loans should be spent on your tuition and tution related expenses: housing for college, books, transportation and food. Your student loan shouldn’t be spent on a lavish spring break trip to the carribeans, nor should it be spent on a set of snowboard along with snowboard racks for the car. The minute you start allocating your student loan for purchases that are far from daily necessity, you will head down a slippery slope of debt accumulation.
Living it Up (Beyond the Means of a College Student)
Everyone can probably agree that college life is more than just academics; after all, if you subject yourself to hours and hours of studies without taking the occasional break to enjoy life, college can quickly become a tiresome experience. But enjoying life should be met with some sensible amount of balance. Just because you know an acquaintance that frequently take trips to Europe during spring break doesn’t mean you should do the same. Living beyond your means is always a bad idea, living beyond your means when you’re a poor college student? Even worse of an idea.
Borrowing Too Much in Student Loans
It is a known fact that the cost of college tutition has been increasing at a rapid pace in recent years. A problem many college student face today when graduating is that they grossly overestimate their expected starting salary, often finding themselves not earning enough to pay their costly student loans. Here’s a good rule of thumb: if your total student loan debt exceeds your expected starting salary for your first year in your career, you’re borrowing too much. Be realistic with your expected salary and plan ahead on how you’ll cover the cost of college.
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11 Ways to Fail Financially While in College
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