Student Loan Dodgers

Small amounts of money add up fast. Don’t make the mistake of dismissing the opportunity to save a little bit. Here are a few ideas to help you pinch your pennies a bit harder.

Don’t take your loose change for granted! Most people end up with a jar or container in which they store their loose change. As time goes on, the nickels dimes and quarters can really add up. If you don’t believe it, set up your own change jar. Over the course of a school year, add your change to it each night. At the end of the year, roll your change and take it back to your bank or credit union. You’ll be surprised what your “pocket change” has amounted to.

If you don’t pay for your purchases with cash, the experiment won’t mean much to you, but if you regularly use cash, your pennies will turn into dollars before your eyes. Don’t take your coins to one of those coin machines you see in the grocery store. It’s relatively easy to roll your change by hand, and it’s all yours! Don’t waste it on a “service” you can perform yourself for free.

Likewise, if you live in a state that has a bottle deposit law, return your bottles regularly. You’ll benefit from the extra space and you’ll have some extra cash in your pocket. As long as we’re talking about bottles, if you regularly drink soda, buy a two-liter bottle of your favorite soda and pour out of that. You can get a two-liter bottle for about the same cost as a 20 oz bottle in a convenience store or vending machine. You’ll get three times as much soda for the same price. Better yet, make Kool-Aid. You’ll get twice as much drink for about the same cost as a two-liter bottle of soda, and you won’t generate junk for the landfill. Better still, drink tap water.

If you shop at a supermarket, clip coupons and take advantage of whatever special offers you can. Keep track of the money you save with the coupons and transfer it into your savings account every month.

By themselves, small amounts aren’t much, but put them together and they’ll add up to big savings. Get into the habit of looking for ways to save money. Even if you save only five percent of what you would have spent, it’s your five percent!

One of the biggest financial mistakes students make is not setting aside money in savings. Saving money is not only a good habit to get into, it will also help stabilize your finances when unexpected expenses (or opportunities) arise.

The simplest approach to saving is to deposit cash into a savings account. Some people choose to save a certain percentage of their income each time they get paid. If you regularly save 5 to 10 percent of your paycheck, no matter how small the check might be, you’ll soon discover that you’ve accumulated a healthy sum.

Once you’ve established a nice balance in your savings account, you can move into other savings and investment vehicles. The safest savings options include savings bonds, treasury bills and certificates of deposit. You can buy savings bonds and treasury bills directly from the Federal government with no additional fees or charges. Treasury bills (also called “T-bills”) can mature quickly – in as little as 13 weeks for individual investors. Savings bonds take several years to mature. When you sell either of these securities, you will be liable for taxes on the gains. Savings bonds issued by the Federal government are exempt from state and local taxes, but you still have to pay Federal taxes on your earnings.

Certificates of deposit are available through a bank, and require depositors to leave their money invested for some fixed period of time, usually 6 or 12 months. Some CDs have longer maturity periods. Usually with CDs, you can’t withdraw your money early without incurring a penalty, so you’ll need to be sure that you can afford to tie up your savings for the designated period of time. CDs usually pay a higher interest rate than regular savings accounts do.

Student borrowers who develop a repayment strategy stand a better chance of getting out of debt and staying out of debt than those who don’t. As you accumulate debt in college, developing a financial strategy is one of the best things you can do for yourself.

Repaying $30,000, $40,000 or even more student loan debt can seem like a daunting task, It can be done, however, and student borrowers can learn some invaluable lifetime lessons while they repay their student loans.

While you’re in college, try to minimize the amount of borrowing you do. This may mean cutting a lot of corners on your expenses. Living expenses are the hardest to budget for, since they’re the least predictable. Develop healthy spending (and savings) habits while you’re in college. Avoid “deficit spending” on credit cards and budget religiously.

Once you’re out of college and have joined the world of work, employ additional strategies to reduce the overall amount of your student loan repayment. Consider student loan consolidation, making additional payments, and taking advantage of any incentive that lowers your monthly interest rate, like automatic payment plans, and on-time payment plan incentives.

Once you begin working, you’ll be tempted to take on additional debt. Don’t! Determine exactly what you’re willing to borrow for and what you’re not. Big ticket items, like houses and cars probably qualify. These loans are usually fixed interest rate loans and take into account your ability to repay them with regard to the rest of your debt. Don’t borrow for vacations, holiday gift-giving, luxury items like boats or second houses until you’ve paid off your student loans.

Get into the habit of making cash payments for everything. Also develop a savings plan that will help you make a cushion in case you lose your job, or encounter unexpected expenses.

Going out to the movies is hyper-expensive, so don’t plan to see too many evening shows. Hit the matinees, or better yet, wait until your movie comes to the dollar-theater. Don’t visit the concession stands. It’s the only place I know of, other than the stadium, where you can pay $5 for a glass of soda. Bring your own or do without.

Rent movies instead. You can subscribe to services like NetFlix, which will allow you to create a playlist of the movies you’re most interested in and have them delivered to your door. You can host private screenings with friends, pop your own popcorn and return the movie all for just a few dollars.

Use iTunes to set up playlists for your iPod or for your computer. You can substitute better quality speakers on your computer and have a tolerable stereo system that plays all of your favorite music.

Try the on-campus entertainment. Shows, films, concerts and comedy can be found for a few bucks, or even for free. These events may not feature big-name stars, but they can be just as entertaining. Also, try volunteering for theatrical performances. You’ll get to see all of the performances you work for free.

Use online gaming sites to play free computer games. You can also check out places like Second Life if you’re looking for personal interaction. You’ll be able to find others who share your interests and you won’t spend a dime doing it.

If you’re a college student, you need to become very good about handling money. That’s the unfortunate reality of college life. Most kids come to college unprepared to handle finances, and that usually spells trouble.

If you find yourself in this situation, learn as much as you can as fast as you can about managing money. Check with your Financial Aid office, groups on campus, banks, credit unions and even the local community colleges to see if they can recommend courses on personal financial planning. Also check online for resources that you can use free of charge.

Develop a long term plan for managing your money. Set some goals and create strategies that will help you accomplish your long-term plans. Part of your plan may be setting limits on how much you’ll borrow, devoting time to seeking out grants and scholarships, and researching student loans to make sure you’re getting the best deal possible. Your long-term plan might cover the next two years, or even the entire time you’re in college.

Develop a medium-term plan. Know what expenses you have to address in the next six to nine months and figure out how you’re going to cover those while still making progress on your long-term goals. Looking ahead will help you avoid being blind-sided by expenses you may have overlooked.

Develop a short-term plan. Know what expenses you have to address in the next three to six months. Develop a plan for covering those expenses, in light of your medium- and long-term spending plan.

Develop an immediate plan. Know what expenses you have immediately. Also keep your regular monthly expenses in mind. These can include rent, transportation, loan and credit card payments, food and utilities. Understand how much money you need to have each month to pay these regular expenses, and figure out how much additional you’ll need to have to reach your long-term goals.

If you plan in these stages, your needs and resources will become apparent, and you can avoid being surprised. You can also begin to apply some financial discipline to your spending, if you have a clear picture of how much your lifestyle really costs.