Student Loans: Don’t Let Them Ruin You

So it’s no secret that I’ve financially screwed myself over in the last few years. I’m sitting here watching people all around me pay off their debts, or even graduate with hardly any debt at all, while I feel like I’m sitting in the corner with a huge dunce cap covered in dollar signs.

What infuriates me, though, is when these same people talk to me about how they did that. So many of them were there with me when I was screwing myself royally, and not a single one offered any useful advice! Now they’re all like, “Well I mean I OBVIOUSLY paid the interest off every semester. Doesn’t everyone?”

No! We don’t! Because we didn’t know that was a thing that we should be doing! Those of us who are in the financial sinking ship I’m trapped in had no idea how bad things would be. I mean, I knew the basics about spending and saving and such. I read The Wealthy Barber in college, and got my obligatory copy of The Debt Free Graduate at orientation. I had the knowledge. I just had no clue how bad things could get after school was done.

Like so many others, I had the “I’ll have a degree and that will get me a job” fallacy stuck in my head. I thought that once I was working, I’d make enough money to get a dinky little apartment and start paying off my loans pretty quickly. I didn’t think that I’d be making $100K right out of the gate or anything, but I at least thought that I’d have a full-time job in something related to my degree that paid me enough to live AND treat myself sometimes AND pay off my debts.

**queue laughter**

I know, I know: I was so naive!! Looking back, I should’ve done so much more research into my finances, my financial options, and financial obligations. Obviously I didn’t, and instead relied on the horrible advice I was so prone to taking from well-meaning friends. So what were some of the things I didn’t know back in the day?

1) YOU CAN MAKE PAYMENTS ON YOUR OSAP (STUDENT LOANS) BEFORE YOU’RE DONE SCHOOL

I blissfully collected my student loans (OSAP, where I’m from) for 5 whole years. When I had a bit of money left over at the end of the semester, I’d think, “Gee, isn’t this great!  A few hundred bucks I didn’t manage to blow on energy drinks and 7-11 hotdogs! I’d better spend it now before the next loans come out.”

Dumbest. Idea. Ever.

It doesn’t matter how big or how small the payment you can make: if you have ANY money you can put towards your loans before you absolutely have to pay them back, put it towards your loans! It doesn’t matter if it’s a government loan, line of credit, or private loan. If, for whatever reason, you know you absolutely CANNOT put money towards your loan a bit early (penalties, contract terms, etc), put what you COULD put towards it into a savings account. Then, that very first payment you can make will be a bigger one with all of that extra money put towards this.

Why does this help? I mean, what’s the point of paying back money if they’re just going to give you more money anyways, right? Well, because of INTEREST, my darlings. If you get a $1,000 loan, and can pay $150 towards it right away, that leave only $850 collecting interest. Interest which you will have to pay back later. Every little bit counts when you’re trying to pay things back.

2) JUST BECAUSE YOU HAVE MONEY DOESN’T MEAN YOU HAVE TO SPEND IT ALL.

Ok, so this goes back to the first point a little. I didn’t need my splurges. Yes, everyone needs to treat themselves sometimes. And I honestly thought I was doing very good with the budgeting. Every semester I would divide up my money, and only give myself access to what I had budgeted each month. I’d have enough for rent, phone, credit card bills (mostly), and other little things like groceries and transportation. I thought managing my money like this made me a Real Grown-Up.

Now, I had some friends who blew through their money fast on big ticket items. They bought crappy used cars that barely ran, a brand new mattress (when they had a perfectly good one already), state-of-the-art computers, and Texas Mickeys (those comically large  bottle of booze at the liquor store that come with a pump because they’re too big to pour from, for those who don’t know). Compared to them, I was a flippin financial genius.

But just because I seemed financially savvy compared to them didn’t mean I actually WAS. I blew money on the stupidest things sometimes. I mean, just the amount I blew on energy drinks, over-priced take-out food, over-priced lattes, and bottles of wine that were outside of my price-range……. well, I think I might just cry right now thinking about that. And all of that money still needs to be paid back!

I used to tell myself, “Well, the money is there. I’ll be able to pay it back later. I may as well enjoy myself now before I end up some corporate shrill who forgets what fun is.” Yeah, that doesn’t happen. On graduation day, you are still the same person you always were, with the same ideas of fun, but now you have that debt hanging over your head. Would I still like to splurge on a nice bottle of Ravenswood Zinfandel and a pair of Doc Martens’? Oh hell yes! Can I afford that now, after racking up all that debt which was partially made up of things like that? Not a freakin chance!

3) A DEGREE DOES NOT EQUAL A JOB. AND A JOB DOES NOT MEAN YOU CAN PAY BACK YOUR LOANS RIGHT AWAY.

I was one of the many who lived under the delusion that having my BA(H) would mean companies would be falling all over themselves to hire me. I mean, I have a degree! An honours degree! I should be making the big bucks here!

Yeah, I’m a Customer Service Representative at a government -owned specialty store. And I’m not the only one with a degree working here! I lost track of the number of other CSR’s I’ve met just in my city who are educated people, with degrees (PLURAL, EACH!!!!!) who are still working behind a cash register. Not that it’s a horrible job or anything…….. but we were under the assumption that we would be a bit higher up the food chain once we shelled out all that money for a degree. At least, that’s what we were constantly told anyway.

At my current job, I make under the provincially mandated minimum annual wage to be forced into making payments on my loan. This means I make so little money, the government basically says, “Here, you need this more than we do. Keep your change for now.” I have been out of school 3 1/2 years and have not yet had to make a payment (not that I haven’t, but that’s a whole other post).  I keep a roof over my head, food in my belly, and nip on my cat’s scratching post. But not much more than that.

Even with two degrees, a college certificate, and advanced Microsoft training, the competition is so fierce for jobs that I can’t find a better paying job at the moment. I know that will change. I know that someday (soon, hopefully) I will be making enough to not only be FORCED to make payments on my loan, but to AFFORD to make them. But it’s going on 4 years now of job hunting. I know people who are 5 and 6 years in, still working retail or call centers. It sucks, especially after shelling out all the (borrowed) money. But it’s reality, Sunshine.

 

Well, it’s getting late. Amazingly Awesome Boyfriend is passed out in bed (he has to be up in 6 hours for yet another 10 hour day at work), and my baby Bowser kitten is right by his side. I’d better finish up this post, and this glass of Cab Sauv, and curl up with them while there’s still some bed left to sleep on. I know this post seems a little depressing, but it’s meant as a warning. Don’t make the same mistakes I did: let me be the terrible warning for you! You just do your thing, keep on keeping on, and try to do life the very best you can. Until next time, keep on smiling Sunshine.

A Quick Word

I’m sitting here, waiting for my hair dye to do its think, checking Pinterest on my phone. While looking up pins on budgeting, organizing, and getting out of debt, I found a common theme to a good 80% of pins, and it is really starting to piss me off.

Now, let me start by saying that these people who write these articles and make these pins really do mean well. They’re passing on things what really worked well for them, and hoping they’ll work for the rest of us.

That being said, holy tap dancing squirrel turds, these posts are hurting my brain!

“If you want to save money every month, just cut back on your cable bill! Why  pay all that extra for premium packages, when you can just spend a bit more for a good Internet package and stream everything!”

(Well, I already do that. If my current place didn’t have basic cable included in the price, I wouldn’t have it. Haven’t had cable for myself in years.)

“Who needs fancy take-out coffee every day when  you can buy a Keurig! You can make your own coffee and drink it at home instead of spending $5 on a cup of coffee at a coffee shop every afternoon!”

(First off, who the hell is spending at least $25 on coffee each week and wondering why they have no money? I’ve been brewing my own damn coffee for years. Having coffee from a coffee shop is something for first dates and the odd especially crazy day at work. And even then, $5? Hell no! My medium one milk two sweetener is $1.50 at most!”)

“Do you really need a newer vehicle? There are plenty of good, reliable used cars out there! Why not trade yours in, and sink that extra money into your loans?”

(Probably because I can’t afford a used car, let alone a new one to trade in for a used one. I walk, and when I can afford it, I take the bus.  I know that car payments, insurance, gas, and maintenance are expensive, so I don’t have any of those!)

“Set a plan and go big! Sure $100 a month towards your debt seems like a great idea. But what about $1,000? Or $2,000? Or even $5,000? Sounds crazy, but going all in like this is the only way to tackle bigger debts sometimes!”

(Some months, I don’t even make $1,000. How the hell am I going to make $900, but pay $2,000 on one debt? And if I was making enough money that I had an extra $5,000 to throw down on my student loans, I don’t think that loan would be as huge of a problem to me as it is now!)

Are you seeing the trend I’m seeing here?

All of these articles that I’m finding online about paying down your debts seem to think that we are all actually making enough money to do it their way!

Now, I’ll be straight up and honest with all ya’ll. I did 5 years of university, going full year instead of just two semesters, all with student loans. Then when I got out of school, I had a hell of a time finding a job. I lived off my credit cards for a while. Now that I have a job, it doesn’t pay enough to pay all of my bills AND leave me money for things like groceries and bus fair. So I still find myself putting things like groceries and cat food on a credit card. I have so much debt that it feels like I will never get out of it.

That being said, I’ve already made most of the changes these articles are talking about, much like many of you out there have too. We don’t go out buying new cars, and expensive cable packages, and designer clothes. The whole reason we’re reading these articles is to figure out how to do more than we already are doing. We’re already scrimping and saving and living on the bare minimum. We want to know what else to do.

These articles make it all seem so easy too. They have titles like “How I Paid of $60,000 in Debt in A Year” or “I Paid Off $27,000 in 6 Months”. I don’t even make that much in a year, and you’re telling me how easy it is to pay out that much extra in a matter of months?

In the end, I still keep reading these damn articles. If you read them close enough, reading between all of the crap you’re probably already doing, you can still find random little nuggets of hope that you too can work off your debts. Like me, though, you just need to keep in mind that not every suggestion will work for everyone. I couldn’t move back in with my parents, no matter how many times they offer that as a solution to my rent problems, because I’m a 34 year old stubborn woman who just wants to be able to afford her own place. While my current situation is less than ideal, it is still more independent and “grown up” than moving back in to my old bedroom at their house. For someone who lives in an area with horrible internet provider options, or no cable hookups, a satellite may  be your only option for at-home entertainment. And video game systems, while a pretty big expense for we broke-as-hell folk, the hours upon hours upon hours of entertainment some video games and Netflix can provide may be worth the expense.

What I’m trying to say, Sunshine, is you know what I’ve said before: you know what works best for you. While I need my crappy little room in a student rental and a big collection of booze and cheap wine to get me through this crazy little thing we call life and adulthood, your needs may be different. Just be sure your needs are within your means, and you can do this. No buying $40 bottles of wine when you can only afford a $5 bottle; no buying designer threads when you’re on a Goodwill budget. You figure out your best path to a debt-free life, and you work it the best you can.

And whatever you do, NEVER compare yourself to the people who paid off $60,000 in a year. Unless you have that much disposable income to throw down on your debt already, you are in a much different boat than them. And just because their boat is bigger DOESN’T mean they’re better off. Remember: it was the people in those little life boats that survived the sinking of the Titanic, not the people who were still on that massive ship. The size of your ship doesn’t prove your worth.

So keep your heads up, Sunshine! We can all get through this together!

A Crash Course in Credit

I once knew a woman, a very smart woman, who got a credit card her first month of University. The credit card people were set up with with a booth in the student centre during all the welcome week activities, during clubs week, and randomly throughout that first entire semester. They had a cute little spiel ready for students, telling them that now that they’re adults they need to learn how to spend like adults. They didn’t ask these students if they had a credit card already, or if they knew how to use credit. They didn’t explain interest rates, or cash back fees, or penalty fees. And they apparently didn’t explain how payments work, either.

Later that year, while hanging out with this woman in the library, her phone rang and she ignored it. She seemed to be ignoring calls quite regularly, actually, so I asked her about it.

“Oh, it’s just the collection agency again. I told them I don’t owe them anything, so they should stop calling, but they don’t.”

After asking her a few dozen times over the next week, she finally told me why they were calling, and why she claimed she didn’t owe them anything.

“I had a credit card, and it got maxed out. But I don’t have the card any more, so I don’t have to pay it. They said that when I got it. It’s not my responsibility, and they can’t keep harassing me.”

Was it stolen? Lost? No, it seems that when she had maxed the card out, she then cut it up and destroyed it. Now, when she had signed up for the card, they had told her that if any charges were made and she didn’t have the card, then she wouldn’t be responsible for any charges made. Of course, they meant that if the card was stolen, and someone else used it, she wouldn’t have to pay for what they bought. That’s not the way she understood it, though, and she never read her paperwork for clarification. She honestly thought that she didn’t owe any money to the credit card people (or the people at collections) because she cut up the card. And no amount of trying to explain that credit card companies do not make money by giving away free money would convince her otherwise.

So here she was, just a year into her post-secondary education, with student loans already mounting, and her credit already being ruined because of this one credit card.

So, how do you avoid this? Well, I may be both the first AND the last person you would ever want financial advice from. I didn’t read my paperwork when I got my student loans, I don’t make enough at my job to pay my rent AND buy groceries, so groceries have been going on a credit card that is almost maxed out. I have multiple cards, with balances, AND a line of credit to help me pay them all off. Basically, I’m financially screwed right now. I also know exactly what I did wrong, and when, and can point out every single mistake I made so that others can avoid them.

So, with that in mind…..

Know Your Interest Rates

There are no interest-free cards out there. Every card has an interest rate, and most start out around 19.99%. That means that, for every purchase you make on your card that you do not pay in full at the end of your billing cycle, you will wind up paying an extra 20% on that purchase. So those jeans you just had to have because they were 30% off? If you don’t pay them off in full at the end of the month, they were only 10% off. And if you don’t pay them off by the end of the NEXT month, you paid an extra 10% on them.

For every purchase you make, you wind up paying interest if you don’t pay off your card in full at the end of your billing cycle. And if you keep carrying a balance, you keep gaining interest. That initial $100 purchase gained $20 after the first month, bringing it up to $120. Now the 19.99% interest is being charged on the $120. So now you’re paying $23.99 in interest that month, making your bill $143.99.  The next month the interest goes up to $28.78, brining your total owed up to $172.77. See how the amount goes up every month? Every time you don’t pay your credit card bill in full, the amount you owe goes up. And then the interest is paid on the total amount you OWE, not the total amount you SPENT. You may have only spent $100, but three months later you’re owing more than $170 because of interest charges.

Fees, Charges, and Penalties

Some cards have an annual fee attached to them. At the moment, I have a card with an unusually high credit limit, which I carry a pretty high balance on. I pay an annual fee of $25 in order to get a lower interest rate (11.99%, as opposed to the 21.99% the card had before). This annual fee means I save roughly $100 a month in interest fees per $1000 in balance on the card. Since this card carries a high balance, which I cannot pay off very quickly, the annual fee makes sense. If I were to be carrying no balance on the card, or a balance so small that the saved interest did not matter, then paying a fee wouldn’t make any sense. So check to see if any card you’re looking into has any sort of annual fee.

Some cards have fees or charges that differ depending on how you use them. A card might have an interest rate of 19.99% for any credit card purchases, but 23.99% for any cash advances. I didn’t know there was a different interest rate just for cash advances in my first year of university, and took out quite a few one semester when my cash flow ran dry. Looking back, that was a completely stupid idea.

There can also be penalties your credit card company will hand down for things like late payments, short payments, or no payments at all. Want a little more incentive to pay your bills on time every month, other than the threat of financial penalties? How about lower interest rates, better loan prospects, high credit ratings, and a much more understanding bank? I was able to get my card switched to a lower rate with an annual fee because, even when money is ridiculously tight, I make sure I make my payments on time every single month. Banks and credit card companies like to reward things like that.

You NEED Good Credit!!!

Credit cards count as “bad credit” when you have your finances assessed. If you carry a lot of credit card debt, don’t make payments, or have things wind up in collections (your credit card company sells your debt to another company, they harass you until you pay everything off, and you get massive black marks on your credit report for years), your entire credit score is effected. Now, I don’t know much about how to read or assess credit scores. I had it explained to me once, but right now I’m too scared to get my credit report. Between the credit cards, line of credit, student loans, and my extremely low income, it can’t be too wonderful. I know it won’t be too awful either, though. My student loan is read as a different type of credit as my cards, and I’ve always been on time with my payments, which are all good things. But right now, with my debt, I can never buy a home, or get an auto loan, or a small business loan.

Every little bit of credit you get affects your credit score, which affects how much money banks will be willing to lend you. With a good score, you can buy a house with a decent interest rate, maybe buy a nice car too. With my credit, I might be able to buy a house in a few years, but my interest rate on the mortgage will be pretty high. And for my friend who just cut up her card, she let things get so bad that she can’t even get a mortgage at all now!

Rewards Cards

I got an American Express just because I can collect Airmiles with it. I only use it places where I can already collect Airmiles with my Airmiles card, so I wind up getting double the Airmiles. I’m a very active points collector, though. I save up Airmiles to spend on their website on things I really want, like an expensive straightening iron or a big fancy mixer for the kitchen. I collect Optimum points from Shoppers Drug Mart in an almost obsessive manner. I have almost 3 times the maximum points level right now, and just keep saving. I know that in January, my hours at work will be cut drastically, so I use the points then to buy things I need but can’t afford. I also have a credit cards that collects Optimum points as well.

If you know you will be paying off the card, then go ahead an get a rewards card. Just make sure it’s for something you will actually use. Why collect flight miles if you don’t fly?

 

So that’s just a bit of what I’ve learned over the years, from screwing up my own financial situation so badly. I hope it helps you out, so you don’t wind up like me, sunshine.

Things to Look For/Do When Looking to Rent; Pt. 1

Not that I have actually done most of these things. No woman in my family had ever moved out of the house until they were married, so no one was really forthcoming with advice for me when I announced I was going to move out. So, I basically thought it was going to be easy. I looked at a few places with different friends, and then decided to move into a place with my best friend (and her fiancée, and her mother, and their 6 cats, and their ferret). I moved a few more times in the years after that while in school, and am currently starting the long journey to FINALLY moving into a place that is just mine (no roommates other than my cat). With each new place, I learned from my mistakes. And damn, were there ever a tonne of mistakes.

So, before you actually start physically looking at places, or touring places, here’s a few things you should be considering (which I probably did not):

1 ) What is your budget?

Now, this will be different to figure out, depending on your income. For people who work a set amount of hours every day/week/month, this is simply figuring out how much money you make, and how much you can spend on rent. Many experts recommend looking at your budget as a whole, and working from there. Gal Vaz Oxlade (from tv show Till Debt Do Us Part, and the infuriating to watch yet amazing to gather tips from tv show Princess), has some great worksheets in her Resources section of her website ( http://www.gailvazoxlade.com/resources.html ) to help you do different types of budget and budget analysis.

One of the sheets in this resource section deals specifically with students (the Student Lump Sum Money Worksheet). For many students, the majority of your money for each semester is given to you in one lump sum through your student loans, bursaries, scholarships, and grants. This worksheet can help you work out your total budget for the semester, and break it down into a monthly budget.

Basically, you need to look at your money situation to make sure you can afford the place you want to live in. What would happen if you rented an apartment for $600 a month, but only had enough in your budget to afford $380? That’s $220 each and every month that you would have to make up for in some way, or risk being evicted.

2 ) Pick you basic location

This doesn’t mean “find an apartment building”. This means “look at the area you want to move into, that is most convenient for you”. For students, this is most likely in the immediate area of their school. Take a look through this area and take a good look at the housing situation. Are there more apartments, or private homes being rented? Are things run mostly by rental agencies? Is the area safe? What is around this area?

I know some of this sounds stupid, but hear me out. In apartment buildings, you’re more likely to be able to find a one bedroom or bachelor place, where you can live totally by yourself without any roommates. There’s also the option of a two bedroom place, that you can share with a close friend. House rental could mean renting an entire house with a group of people, or renting a room in a random house that has other random people living there. Also, there are more likely to be things like house parties at houses (obviously) than apartments, meaning there are more likely to be loud nights at your neighbour’s place.

Safety should be a huge concern for you when looking for a place. I don’t care if you’re not even 90lbs soaking wet, or the 350lbs linebacker for the school’s football team: you need to worry about your safety. Many local police websites have a section where you can look at crimes and crime rates throughout the city. Now, no area will ever bee 100% free of crime. It is always a good idea, though, to look at what you may be getting yourself into. Is that nice apartment building you saw surrounded by drug busts in the recent past? 27 murders in the building last year? Or is the worse you would likely see around there probably a loud party, or bike thief? It’s always better to know these things ahead of time, than to just take a place and find out the hard way.

And what is around this area is a HUGE thing you should be looking at. Obviously, if you’re trying to stay close to school or work, they will be near your chosen area. But what else is there? Things you should look for are grocery stores, laundromats, bus stops, restaurants, shopping centres, hair salons, banks, and any other type of business you would need in your life.

3 ) Know what you want.

Now that you know what’s in the area, and the types of places around, and the amount of money you can spend each month on rent, you can start looking at what you want in the area. I suggest looking at ads for a variety of types of places first (rooms for rent, bachelor, one bedroom, two bedroom), just to see what the prices are like. Sites like Kijiji often times have pictures of the properties, so you can see the size and condition of the places you are looking at. Also, they tell you if things like utilities (water, electricity, gas) are included in the rent, or if they are extra. This is SUPER important to know before renting a place, because it impacts your budget hugely.

Now, you can decide what it is you want. What do you want more: privacy, or a cheap place to live. I always went the cheaper route, and didn’t look into things that I now know are essential to me. I would rather give up a little bit of my privacy, for example, and have a roommate if that means I can have A/C in my place. I live in one of the most humid cities in all of Canada, and suffer from eczema that is made worse by sweating in the humidity. I spent one horrible summer in a dingy little apartment with no A/C, because it was an apartment and I only had to have one roommate while I was living there. After that, I moved into a house with 6 other random people just to escape the heat and to live in a basement room with no A/C controls (meaning it was absolutely freezing all year). Right now, I have my A/C and I’m down to 3 roommates (all males) in my current house, plus my cat. While this is not ideal for me right now (I miss being able to watch TV in my underpants and sing in the shower), there are certain benefits to it (A/C, utilities included, everyone loves that cat, house is in good condition, no infestations of any sort, no mould, and I get my own private bar fridge in my room for my wine, cheese strings, and candy bars). I know that I cannot afford all of these things if I were to move into an apartment right now. You need to know your necessities, and where you are willing to compromise. Some people don’t need A/C, or are so frugal with their utilities that they don’t mind paying them separately (many places offer cheaper rent if you will pay your own utilities).

And remember, if you decide you don’t need something, make sure you are really ok without it. If you opt for a place that does not have on-site laundry facilities, for example, you damn well better make sure you have a laundromat nearby that you can easily get to. There is nothing fun about carrying a month’s worth of laundry and sheets on the bus to get to the laundromat that’s too far to walk to.

4 ) Start looking

Now that you know more about the area, what you can afford, and what you are willing to compromise on, you can start seriously looking at places. I’ll have a whole other post on what to do when you’re inside the place, checking it out. Right now, you’re just looking at a bunch of possible places.

You’ll want to look at places that fit your budget (obviously), meet your standards of privacy, are clean and infestation-free, and are in the general area you’re looking in. Don’t get too narrow of a focus (can only look at one-bedroom apartments on the 5th floor or above with a balcony, A/C, and in-suite laundry, for example), but don’t make it too broad either (somewhere, anywhere, where there isn’t a tonne of mould and the neighbours aren’t running a house of ill repute, for example).

Also, you’ll want to look at some rather specific things. If you have a pet, make sure the place is pet-friendly before you decide to go see it. If you have issues with mobility, you would want to make sure the building and apartment/room are accessible to you. Basically, you need to make sure you can actually live in a place before you try to live in a place.

So that’s the basics for part one of Things to Look For/Do When Looking to Rent.  In my next post, I will be going into what you should be doing once you actually pick a few places to look at (yes, you should look at more than one, just in case the one you have your heart set on turns out to be a bust).

Budgeting Part 2: Student Loan Edition

When you have a steady income (or any income at all), it’s a little easier to make a budget. Basically, you make sure that “money going out” is never more than “money coming in”, and that all your bills are paid. But what about when you get paid only once?

For many students, the lump-sum student loan is their only real source of income for an entire semester. Somehow, these students need to make sure that this money last them for months at a time, while still paying for essentials like rent and food. While it’s difficult to do, it’s entirely possible (just damn near impossible) to do this.

1) Pay off ALL the school things

That money is for your education. Before you drop a dime on anything else, make sure your education is paid up. That means paying your tuition, buying (or renting) your textbooks, paying for any incidental fees (meal plan, residence fees for on-campus living, health plans, etc)…… ANYTHING that would impact your ability to go to classes and then stay in school until your degree/diploma is done. Some schools won’t let you register for the next semester until all your fees are paid up.

And, before you ask, yes you will need textbooks. You can’t (for the most part) just copy down notes from class and learn from there. Depending on your school, you could have a lot of options. Some schools have a used bookstore, or let you rent books. Others keep a copy of every textbook in the library.  Make sure you know all of your options and make a real, possible to follow, plan of action for your semester (ie., don’t just think you can photocopy other people’s books).

2) Now for monthly expenses

Make sure you have money for all those bills you need to pay off every month. Add up your monthly bills, then multiply that number by the number of months your loan has to last you. THAT number is how much you need to set aside, at the very least, to get you paid off each and every month.

3) Divide up what’s left 

Any and all money you have left after taking out the monthly expenses….. THAT is what you have to work with for the rest of the semester.  This is your groceries, your coffees, your shopping, your emergency money, your going out money. So how do you manage this?

With math!

Take the money, and just divide it. You could divide it by the number of months it has to last, or the number of weeks. Hell, divide it by the number of days you need it to last, if you really want to go that far. No matter how you work it, just divide it up and stick with that number. So you get $350 a month? Then that’s it, that’s all you get for each entire month.

Now, divide that number up however you want. Do you want just a set number you can spend each week? Then divide by the number of weeks in the month, and there you go! Another great idea is to divide your money up by what you need it for. Figure out what you’ll need/want to spend money on (food, clothing, going out, emergency fund, etc). Then, figure out how much you need for each of these things. You can always reassess your needs each month and adjust things if you need to (say, you realize you need more than $15 a week for groceries, or you can’t spend $0 on entertainment and not feel like you’re going crazy).

4) DON’T GO OVER BUDGET!!!!

Every time you go over budget this month, that’s less money you have every month for the rest of the term! If you have no other source of income, then you have to steal from your future self to pay off your present self. Want to overspend on this month’s clothing budget? Then it comes out of your clothing budget for next month. Same goes for groceries, entertainment, and every other little thing you spend money on.

Remember, it’s always better to under spend than over spend. If you have extra money left over at the end of the month, you don’t have to run out and spend it right away. Add it to next month’s budget. Stick it in your piggy bank (you’re never too old for a piggy bank). Save it for the end of the semester, to use to blow off some steam after exams. It’s always better to have that little extra left to save for later, than to be scrambling to get by on $75 for your whole last month because you kept over spending.

Basics of the Budget

The first few weeks of school are pretty damn exciting. There’s welcoming events, moving, meeting new people, new classes, and, for a growing number of students these days, a giant student loan deposit in the bank. For many students, that lump sum payment is more money than they’ve ever had at one time.

Having that much money all at once can be a little overwhelming for some. Seeing that there are possibly thousands of dollars in your account can feel like you will never run out of money this semester. Once tuition is paid for the term, everything that’s left seems like fun money. Suddenly you can eat out, hit the bars, shop, and do all the things real grown ups like to do.

Except, you can’t.

You see, once that money is gone, IT’S GONE. Unless you have another source of income, you have to make that money last you. Hell, even if you DO have another source of income, you can’t run around blowing money on every little whim. You have to make (and stick to) a budget.

I know, that’s such an evil little word. “Budget” means “I have money, and I want to spend money, but I’m not allowed to spend money, so life just freakin sucks”. It also means, though, “I can afford to keep my bills paid off every month, have a bit of money to play with, don’t have to live in fear of eviction or not having money to spend on food, AND I get to practice this whole ‘being a grown up’ thing a little more”.

Before we get into how to make one loan payment stretch a whole semester, let’s go over the very basics of what a budget is, and how you can make one of your own.

1) Figure out how much it costs you to live every month.

Do you have to pay rent the first of the month? What about utilities (heat, electricity, water)? Internet? Phone? Look at every single thing you have to pay for every month. This isn’t just your living expenses, either. If you have a car, then you need to include any bills for that. If you have a balance on your credit cards, then payments need to be included too. Basically, any bill you have that needs to be paid off every month needs to be included.

The easiest way to do this is to just make a list. On one side of the page, list out all these expenses. On the other side, put how much they cost. Do you have something, like a cell phone or internet bill, that is a little different each month? Err on the side of caution, and write down what a more expensive month would cost you. Now, add everything up and…. voila! You have your basic bills!

2) How much money do you actually have?

Take into consideration every single way you get your money, whether it’s student loans, a part-time job, or an allowance from your parents. If it’s money coming in, then keep track of it! Again, just make a list of everything and add it all up. Do you have enough to even cover the costs of your basic bills?  If not, go right to step #6. If you do, then just read on.

3) What’s left for everything else?

I know, you want to take everything that’s left and go have some fun with it. And you can…….. possibly, in moderation. First, you need to figure out what you’ll need to spend on food every month.  Don’t kid yourself and say, “I can live on $5 a day” or “I can eat nothing but ramen all term”. Go to a real grocery store, look at the food. Figure out what you need, and budget for it.

Once you have food covered, then you can look at spending some on a little fun. Just don’t spend it all at once.  While it might feel great to go out one night and buy drinks for all your friends, that could cost you your whole month’s budget, leaving you stuck at home the rest of the month while everyone else is out having fun. Wouldn’t it feel better to just have a drink or two, and then save the rest for………. more nights out? Or a bit of shopping? Maybe you have a latte addiction you want to spend it on, or like to take cabs everywhere. You need to account for, and prepare for, all of this in your budget.

4) Where can you cut your costs?

Buying a coffee (or seven) every day can get pretty damn expensive. Same goes for taking cabs, eating out, using vending machines, and dozens of other things we tend to do every day. If you find yourself guzzling coffee, invest in a coffee pot and a few good (and large) travel mugs. If you cab it everywhere, grab a copy of the local public transit schedules to keep with you. All of these little things can start to add up and really eat away at your budget.  You need to find a way to cut back on these expenses, without totally depriving yourself (but that’s a topic for a whole other posting).

5) No matter your age, but a little something aside and try to be prepared.

You don’t have to open an RRSP and make big monthly contributions right now, but you should be saving something. Many students think that just because they’re not saving for retirement right now, they don’t have to save for anything. Well, that’s just damn wrong.

Do you want to buy Christmas gifts? What about big expenses, like clothes for a formal event or wedding? Will you be needing to get plane, train, or bus tickets once a semester? These are all things you need to plan for now. Saving part of the cost each and every month makes it easier to handle than letting it eat up a huge chunk of your budget one month.

Also, it is always a great idea to stash some money away for emergencies. Pretty much all the experts agree that you should have at least 6 months living expenses stashed away, in case your cash flow stops coming in for whatever reason. I know that seems like a lot, so just start small.  But a little aside at a time. Throw your change in a piggy bank. Have a portion of your pay check put directly into your savings. You can build up this emergency fund bit by bit now so that, when you need it most, it’s there for you.

6) Don’t have enough money to pull all this off? 

Well unless you find a way to cover all your costs, you are pretty much screwed.  There is no way to sugar coat this: you need to get off your ass, stop reading this blog, and go find more money NOW. Apply for scholarships, bursaries, grants, anything you may qualify for.  Start applying for jobs. Get (more) financial aid. Ask family members for help. Believe me, the LAST thing you want to do is start making up the difference with credit cards! At first, you think “Well it’s just a few hundred dollars, and I can’t just NOT buy groceries, so I’ll pay it off when I get more money”. The next thing you know, you’re getting ready to graduate, and have thousands in credit card debt ON TOP OF your school debt.

It’s not going to be easy, but there are ways you can get more money each month. Talk to a financial counsellor (if your school provides them), or someone you know who is great with money. There are also a lot of great resources out there (Gail Vaz Oxlaid, The Wealthy Barber, bank websites) that can give you more ideas and help than I ever could.

So that’s it: your basic budgetting. Now that you have it on paper, try to stick with it. I admit, it won’t always be easy, but it will definitely be worth it.