"If your only goal is to become rich, you will never achieve it." - John D. Rockefeller

SavingAdvice.com Blog

Bridging the gap between saving money and investing

College

Living on Campus vs Commuting: Which is Cheaper?

By Leave a Comment

Living on Campus vs Commuting
The price of college tuition is startling and, frankly, stressful for many parents and teens headed to school. That is before they even begin to consider the cost of housing in college, which exceeds $10,000 at many public universities in the United States. What is the difference between living on campus vs commuting when it comes to cost?

How Much Does It Cost to Live on Campus?

The main expense when it comes to living on campus is room and board. This usually includes your lodging and a meal plan for the year. For public colleges and universities, the average room and board fees are $10,440. Private schools charge around $11,890 for room and board, on average.

There is potential for saving money here though. You can pay less for fewer meals each week. Most of the time, college kids don’t even wind up using their meal plans anyway.

Other Miscellaneous Costs of Living on Campus

  • Room and board costs don’t cover 365 days of the year. Dorms oftentimes close during holidays and school breaks. Some schools won’t allow you to stay in the dorm and, if you do, it will cost additional money.
  • If you are aiming to go home over holidays and breaks you’ll also need to budget money for the trip home, whether you’re flying, driving, or taking another type of transportation.
  • Living on campus requires you to spend money on things like sheets, pillows, toiletries, desk and school supplies, hampers, and other items you’d otherwise have in your home. You may also need a mini-fridge, TV, or bed. These things can add up quickly.
  • Students moving from one extreme climate to another may also incur significant costs when it comes to preparing their wardrobe. Moving to a colder climate will require purchases like winter coats, snow boots, gloves, hats, sweaters, warm socks, etc.
  • Although there are free events on campus, there may be some social expenses as well. You may need to pay dues to join a fraternity or sorority. It is also possible you may want to go off campus for social events that may come at an additional cost as well.
  • Most schools also require you to pay a fee for parking on campus. Depending on the school, this can cost hundreds of dollars per year.
  • The school may also require you to pay a health fee for providing on-campus health care.
  • You will have an additional line underneath your room and board costs for technology as well. This covers the WiFi, computers, and other available technology on campus you can use.

With each of those costs in mind, students and parents often consider taking out additional loans to cover these costs. However, you should carefully consider the total cost of the loan after interest before taking one out for sorority dues and other miscellaneous costs.

Living on Campus vs Commuting: What They Don’t Tell You

While living on campus may seem expensive, unless you are continuing to live with your parents, commuting is just as much a burden when it comes to your finances. Commuters who rent their own apartment have to stress about paying rent each month. They’ll also likely need to hold a job, spend money on gas traveling to-and-from school, and buy their own groceries. However, if you are planning to stay somewhere off campus free-of-charge and bring your lunch each day, you could stand to save some serious cash.

One spectacular example of this is Katie Thompson. Thompson bunked with family members and lived off campus her entire college career. She paid off her small student loan (only $5,500) within two years of graduating. While she acknowledges that living off campus may have had an impact on her overall experience, Thompson said she can’t argue with the financial stability it has provided her in adulthood.

All in all, deciding between living on campus vs commuting will depend on your own personal needs as well as your financial standing.

Readers, did you live on campus in college? How much did you pay?

Read More

Should You Buy Your College Student a Car?

By Leave a Comment

cars and college students
Preparing for college can be stressful. Oftentimes, many questions arise that you’ve never considered, like should you buy your child a car for college? When it comes to cars and college students, there are a number of things to consider before making a decision.

Financial Considerations

Whether or not your child needs a car at school depends on a number of things. Obviously, you want them to be able to travel to-and-from the grocery store and visit home without any mishaps. However, it may not be all that necessary for them to have a car on campus. In fact, many schools prohibit first-year students from having a vehicle on campus.

This is to promote freshmen to be more involved on campus and not travel home as much but it can have its financial benefits as well.

The average 18-year-0ld pays $3,148 in insurance each year. Annually, you can also expect to spend more than $1,200 on gas, $800 on maintenance, and around $700 on licenses, taxes, and registration. Not to mention that if your child decides to bring a car on campus they will also have to pay for a parking pass as well as other parking costs.

It is also good to consider the financial perks of having a car on campus as well. Although having a car may be expensive, on-campus stores usually charge high prices for snack items. Having a car can help save money on groceries. It can also provide a way for them to save money when traveling home for the holidays. Instead of an expensive plane ticket, they’ll be able to drive their car.

All in all, you will need to weigh out how much you stand to save vs how much you stand to lose when sending your child to school with a car. This should determine whether or not you decide to do so.

Best Cars for College Students

If you’re going to spend the money on it though, it is a good idea to do research and determine which car may be a good fit for your child. Luckily, Edmunds releases a list of best used cars for college students each year. Parents considering purchasing their college student a car should think about the options listed below.

  • 2014 Honda Accord Hybrid: On average, a newer used Honda Accord runs about $16,430. It gets 49 mpg city and 45 mpg highway. It is a popular car amongst college students because of its fuel efficiency and utility (seating up to five).
  • 2013 Volkswagen GTI: The GTI has an appeal to people who love cars. You can get a 2013 GTI for around $13,826. This model gets 24 mpg city and 33 mpg highway.
  • 2014 Mazda 3: Comparable to the GTI, a Mazda 3 is a bit more affordable at an average price of $12,770. It also gets better gas mileage at 29 mpg in the city and 39 mpg on the highway.
  • 2016 Toyota Rav4: For students looking for a bit more space and utility in their vehicle, there is the Toyota Rav4. You can get a 2016 model for around $21,235. It isn’t as great on gas mileage (23 city/30 highway) but you’ll have plenty of space for road trips.

When it comes to finding a car that will be safe and provide value for your student, you’ll want to go newer but used. Each of the options above, along with a number of other used cars may be the perfect fit for your child. The key to finding the right car is determining what will fit your budget, shopping around, and comparing prices as well as weighing needs and wants.

Readers, do you think you should buy your college student a car? 

Read More

The Current State of Student Loan Debt

By Leave a Comment

The current state of student loan debt

America has reached a new economic milestone – or maybe a millstone – of $1.52 trillion. Which of the following does this number represent?

1. The latest contract for a professional athlete
2. Your current credit card balance
3. America’s collective student loan debt

While the first choice sounds strangely plausible, and some days you may feel like the second choice is correct, $1.52 trillion represents America’s total outstanding student loan debt as of March 2018 – according to the new consumer credit report from the New York Federal Reserve.

Rising Fast

For perspective on how fast student loan debt is rising, consider that in 2013, the total student loan debt was under $1.15 trillion. Over the past five years, total student loan debt has increased by almost 33 percent.

Roughly one in four Americans — 45 million people — owe money on student loans.

The average student loan debt per borrower is $26,700, according to ValuePenguin.

Delinquency rates of student loans are over 11 percent, which is higher than any other form of consumer debt, even credit cards.

Interest Rates

Average student loan interest rates are 4.45 percent for undergraduate students and 6 percent for graduate students for the 2017-2018 academic year.

That’s certainly lower than average credit card interest rates (16.71 percent), and in line with the average interest rate on a thirty-year fixed mortgage (4.78 percent as of this writing).

Even so, many Americans with student loans are in the worst position to pay them, starting out their careers with lower-paying entry level positions – if they can find work at all.

Average Debt

The average student loan debt for 2017 college graduates was $39,400. The average monthly student loan payment for a borrower between the ages of 20 and 30 is $351 – not unmanageable, but difficult if you are just starting out and dealing with other life expenses.

“For many borrowers, the promise of going to school for a well-paying job hasn’t panned out,” said Miranda Marquit, a money expert with financial education website Student Loan Hero.

She continued, “When you consider that the Federal Reserve reports that almost half of Americans can’t meet a $400 emergency, suddenly that $351 a month has a more ominous meaning.”

Struggling with Student Loans

Anyone struggling with student loan debt should check repayment options at the Federal Student Aid website run by the U.S. Department of Education.

The site provides links to repayment options, including income-based plans that scale payments to discretionary income. An online repayment estimator allows you to compare options.

“If you qualify for income-driven repayment, you might be able to get your payments down,” Marquit said. “However, the interest still accrues and you need to be careful about the long-term cost of debt, which can be increased when you put off paying on your loans.”

Deferment and Forebearance

If you simply can’t pay at all, deferment and forbearance options are also covered. However, be careful not to use these options as anything more than a temporary crutch.

Adam Carroll, the founder and chief education officer of National Financial Educators, notes that graduates can “kick the can down the road… by the time they start paying back it has capitalized on itself where the interest is now the principal… They may have borrowed $40,000 and it’s ballooned to $70,000.”

If you’ll be starting college soon, remember that the best way to deal with student loan debt is to avoid it as much as possible. Look into grants instead of financial aid tied to loans.

Review scholarship options at your preferred schools. Look over the long list of specialized scholarships that target individual interests.

Choose Wisely

Try not to let finances dictate your choice of college but get value from your choice. Will your desired degree from your favorite school produce enough income to pay off student loans with relative ease?

Compare graduation rates and average incomes at schools for the same degree to help you assess value.

“These days, it’s less about getting the piece of paper and more about your return on education investment,” said Marquit. “Be realistic about your degree, the school you choose, and your prospects when you finish.”

Maybe you’ll be lucky: Perhaps you’ll get an athletic scholarship to cover college costs and be the first athlete to sign a $1.52 trillion contract. If you do, we still suggest using your money wisely. It may cost that much to send your children to college by then.

This article was provided by our partners at moneytips.com. Photo ©iStockphoto.com/Milkos

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Read More

5 Credit Tips for Recent College Grads

By Leave a Comment

5 Credit Tips for New College Grads
Congratulations to the class of 2018. We have a graduation present for you: five credit tips for recent college grads.

One of your first post-graduate lessons should be on the proper use of credit. Poor early decisions regarding credit can have adverse effects for years. Here comes some credit tips for college grads.

In the words of millennial money expert Stefanie O’Connell, “It’s really important for millennials to understand what a critical role credit plays in your life … it’s critical at every life phase.”

To begin your credit education, we offer these five tips.

1. Set Up a Credit Plan

You should not avoid credit. Potential creditors will look for evidence that you manage debts well, and when gauging risk, having no history is almost as bad as having a poor history.

Use a credit plan to carefully build a positive credit history and a good credit score, which Adam Carroll, Founder and Chief Education Officer of National Financial Educators, calls “hugely important when it comes to making major life decisions.”

Start by thinking about how many credit cards you really need, and when you plan to use them. Stick to one or two cards such as a gas station card and/or a starter credit card (with terms designed for limited credit).

Verify that all cards report account activity to the credit bureaus. Make small purchases with these cards and pay them off monthly without burdening your budget. Using this method, you can build a solid credit history in a short time and qualify for better terms.

2. Research Your Choices

There’s more to choosing a credit card than seeking the best interest rate. A wide variety of cards are available that cater to individual markets.

Online comparisons and reviews are available to help you assess the positives and negatives of each card. Seek the card that best matches your preferences and perks.

If you take advantage of introductory offers, make sure that you fully understand how things change after the introductory period expires (such as the effect on interest rates and repayment terms), and what actions you might take that would void your great deal. For example, a single missed payment could trigger a high penalty interest rate.

3. Always Pay Bills on Time

You don’t have to pay your credit card bill in full each month – although if you can, you should, to avoid interest charges – but you should always pay at least the minimum payment amount on time, without fail.

Payment history accounts for a large portion of your credit score, and missed payments count against your credit score for a long time.

Payments that are late by at least 90 days stay on your credit report for 7 years. Multiple missed payments compound the effect.

Don’t forget other debts like utility bills — phone, cable, and Internet — and even student loans. Missing payments on any regularly scheduled bill or installment loan will also damage your credit score.

4. Don’t Max Out Your Credit

If you spend near your credit limits, your credit score will suffer even if you pay the bill off in full every month.

Lenders look at credit utilization, the amount of credit you use as a percentage of your credit limit, to assess the risk involved in lending you money. Credit utilization accounts for another large chunk of your credit score.

With a limited credit history and being near your credit limit, lenders assume a few unplanned expenses could push you over the edge. Try to keep your balance below 30% of your credit limit at all times.

5. Create a Budget

As a new graduate, you are likely to have significant student loan debt and probably not enough income to cover all your spending wants.

It’s too easy to use credit cards as a crutch to prevent hard budgeting decisions. Find out quickly at what rate you can refinance your student loan.

Lay out a realistic budget for the upcoming year that incorporates all your regular payments and new expenses that you are likely to require as you start your post-graduate life.

Rent, furniture, insurance, new work-related expenses, taxes … it’s easy to lose track of your cash flow and fall back on credit to handle mistakes.

 

Ask friends and recent graduates for help if necessary. Mom and Dad may also be happy to help you lay out a sample budget. They were young once, too.

You’re off to a great start! It’s time to venture out into the real world and test your credit knowledge, but feel free to use all your available resources for help at any time. Continuous learning usually leads to the best decisions, in credit or any other aspect of life.

This article was provided by our partners at moneytips.com. Photo ©iStockphoto.com/andres

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Read More

How Much Do Sororities Cost?

By Leave a Comment

How much do sororities cost
It’s fall, which means that many young adults are beginning college classes. Some college students will also be looking at the glamorous Greek Life on campus. What you may not know is being a member of Greek Life can be pretty costly. So, how much do sororities cost? Is it worth it?

How Much Do Sororities Cost?

The cost of Greek Life varies from university-to-university. Some private universities may have higher fees for sorority and fraternity members, while more public universities may have cheaper fees. Below are the median costs of joining a sorority or fraternity in the United States.

When it comes to paying to be a member of Greek Life, you’re probably looking at the following expenses:

  • Recruitment – You may have to pay to even join in on the recruitment process. Some universities’ Greek Life chapters charge around $50 for individuals to participate in recruitment.
  • Cost of Joining – If you’re accepted into a sorority or fraternity you’ll have to pay another fee to join. The median cost of joining a sorority sits around $1,000. Joining isn’t where most of the expenses come from though.
  • Fees – To remain a member of a sorority or fraternity you’ll have to pay a fee every semester. This fee sits around $600 for fraternity members and $1,200 for sorority members ($1,200 and $2,400 a year, respectively.)
  • Fines – Sorority and fraternity members are required to perform well in their classes as well as attend regular meetings. Most organizations also have fines and penalties if you don’t keep maintain their standards. For instance, you may be fined $5 if you miss a chapter meeting or put on probation for academic reasons (making it so you can’t attend sorority events you’ve already paid for).
  • Recurring Expenses – On top of those expenses, you will also have other recurring costs. You’ll have to buy arts and crafts supplies to make gifts for your Little, shell out cash for a Winter Formal gown and you’ll HAVE to have the newest Sigma t-shirt when it comes out. Annually, most sorority and fraternity members spend hundreds on miscellaneous Greek Life expenses.

So, how much do sororities cost? Well, it depends on where you attend college. However, most sorority and fraternity members spend thousands of dollars every year on Greek Life.

Is Greek Life Worth It?

Now that you know the answer to “how much do sororities cost” you may be wondering if Greek Life is worth it. For many people, no matter the cost, becoming a member of a fraternity or sorority is what helped them find their place in college. It gives members a sense of community and a sense of family they may not have had otherwise. So, in short, for many people, being a member of sorority or fraternity is worth every penny.

How to Save on Greek Life

There are always ways to save money though, even when it comes to Greek Life. Here are just a few ways you can trim the cost of becoming a member of your campus’ Greek community:

  • Charitable Events – Some sororities and fraternities will reward members with lower fees or cash if they can participate in charitable events. If you’re able to man all of the events, you could potentially get some of your fees covered.
  • Making Shirts and Items – Instead of purchasing your sorority or fraternity’s clothing, why not make your own? Hang out with other members and make t-shirts and other items with your sorority’s symbol on them. It saves a ton of money and you could even potentially sell them to other members if you’re good at it.
  • Trim Other College Costs – If you can’t cut the cost of joining a sorority you may want to try and trim other costs. For instance, head to the dining hall and use your meal swipe instead of ordering a pizza or eat breakfast in your dorm room (bananas are super cheap).
  • Part-Time Job – Last but not least, if you’re having trouble pulling together the cash for your Greek Life fees, consider snagging a part-time job in the library or close to campus. While this isn’t helping you save money on Greek Life, it will help you better manage your finances in college.

Going to college is a great experience and, for many people, Greek Life is a huge part of what makes it so great. Although sororities can cost thousands of dollars a year, the sense of family and memories created last a lifetime.

Have more ideas on how to save on Greek Life? Let us know in the comments!

Photo: Capital University