May 21

Weekly Spending – 5/12/13 – 5/18/13

It’s that time of the week once again…let’s see how I did! My weekly spending for this week consists of the following:

Sunday 5/12:
Mother’s Day Dinner – $15

Monday 5/13:
None

Tuesday 5/14:
None

Wednesday 5/15:
None

Thursday 5/16:
Gas – $17

Friday 5/17:
Train Tickets – $30

Saturday 5/18:
Parking – $10

Total Week Spending: $72

My total spending for this week ended up at $72 , under last week’s total of $88 which is always a good trend. I split the bill for going out for dinner with my Dad for our Mother’s Day celebration, we ended up using one of the gift certificates that I had touched on a previous post which is what kept the cost down.

Spent $17 on gas to fill my tank on Thursday, and then $30 on train tickets to visit my girlfriend as well as the return trip. I also chipped in for $10 in parking as we went to the concert that I had bought tickets for last month. I’m aiming to keep my total ‘extra’ spending for this month under $350, so let’s see if I can meet that goal. With basically two full weeks left in the month, we’ll see how it goes.

Photo Credits for this post: Pixabay

May 20

Recent Student Loan Developments in the News

Recently there have been some developments regarding student loans in the news dealing with both the current and future interest rates. The current rates for subsidized student loans are 3.4% and unsubsidized loans are locked in at 6.8%, with many private loans coming in at rates even higher than this. Right now the 3.4% interest rate loans are set to double as of July 1, though there are bills on the table to prevent this rise from occuring

Then there is other end of the spectrum – Senator Elizabeth Warren is actually campaigning to get the rates on student loans lowered.

http://www.warren.senate.gov/
As you can see from the above image, she wants students to be able to get loans for the “same rate as the banks”. I personally find this a bit ridiculous, as the 0.75% rate is the overnight lending rate to the banks. These loans are not being held for 4+ years and it would be impossible to even break even at these rates. Trust me, I am no fan of the banks but I just don’t see this strategy being feasible or sustainable. Whoever is loaning you money needs to either profit (private), or be able to break even (government or non-profit).
I’m not 100% sure about all these rate changes, because I’m not sure how much subsidized loans actually come back to the taxpayers but I do agree that student loans should be able to pay a competitive rate. You can get a mortgage around 3% in the current environment and car loans and other loans can also give much better rates when compared to the current student loan market, especially on the private side of things.
I know there is a lack of collateral behind student loans when comparing it to mortgage or a car loan, but there is also the fact that student loans are very rarely discharged in bankruptcy – they are with you for life! A better campaign would be to try and keep the subsidized loans at a rate of 3.4% in the current environment, and focus on getting the rest of the student loan rates below 5%. I think this would be a fairly reasonable solution and would help out a lot of students. Of course, we all know what happens when reasonable and Congress are brought up in the same sentence. We end up with two extreme stances and have to hope they somehow to end up on that reasonable solution.

I still personally believe the biggest thing that needs to be done about student loans is education as I had said in a previous post. General education on personal finance, taxes, and credit in general would be great too! This topic in general is of great interest to me, because the interest rate on my student loans is what really makes me want to get rid of them. The fact that I’m losing so much extra money each month on top of the money I borrowed is what really is driving me to pay them off as soon as possible.

What is your opinion on the current state of the student loan interest rates? Do you think lowering them is the correct solution? 

Further reading on this topic: 
LA Times – Elizabeth Warren Proposal
NY Times – Preventing Student Loan Rate Increase

May 13

Weekly Spending – 5/05/13 – 5/11/13

It’s that time of the week once again…let’s see how I did! My weekly spending for this week consists of the following:

Sunday 5/05:
Mother’s Day Gift – $12
Oil – $6

Monday 5/06:
Gas – $20

Tuesday 5/07:
None

Wednesday 5/08:
None

Thursday 5/09:
Haircut – $20
Fundraiser – $10

Friday 5/10:
Gas – $20

Saturday 5/11:
None

Total Week Spending: $88

My total spending for this week ended up at $88 which is pretty good. Not as good as I did last week, but I doubt that’s going to happen most weeks! And it’s problem not going to be nearly that low as the summer months approach.

I bought a charm for my Mom that she had been wanting to put on this bracelet she had, I also chipped in on going out to eat on Mother’s Day (but that will be on next weeks spending).

I spent around $40 in gas, I didn’t fill up the week before so this carried over to this week. I also visited my grandma so that was extra mileage compared to usual.

I got a haircut for $20, which I know adds up over the course of the year. I plan on learning how to cut my own hair and saving that money once I move out. Unfortunately my barber’s son has been fighting cancer, and it had been in remission but it came back. I bought two of the 50/50 raffle tickets to support him because I’ve been getting my hair cut at pretty much the same place for 10+ years. I always see an opportunity to help someone out as money well spent, you never know when you might need that help yourself.

Photo Credits for this post: Pixabay

May 11

Student Loan Education

I personally believe the biggest thing that needs to be done about student loans is education about what exact these student loans mean for your life after college. I personally had no idea the extent the amount of debt I was piling up while at school or how exactly it would affect me after graduation. I definitely didn’t have much knowledge on personal finance, investing, or anything of the sort – and I’m still a novice at this.

My parents did teach me the importance of saving money, not wasting money, looking for deals, and never abusing credit. For this I thank them; I have never built up a credit card debt and always pay the full amount each month.

But when it came to student loans, this was brand new to all of us. My parents had never went to college, and my high school guidance counselor never even hinted there was another option. I had great grades and student loans were just part of the process of going to college in my mind.

Most 17-18 year old seniors in high school have no idea the concept of a huge sum of money. The extent of their personal finance probably comes from car payments, car insurance, gas money, and money to hang out with friends. They most likely do not have a mortgage and hopefully don’t have a huge credit card debt to their name. The concept and size of $25,000+ student loan debt is foreign to them.

A few things that I think can prevent situations like my own, or even worse case scenarios is full education on student loans:

  •  Guidance Counselors in High School and parents should be able to tell students that college isn’t the end all solution. It IS possible to learn a trade, get job experience, and still be just as successful within certain professions.
  • Community college is a great option, especially if you are unsure of what you want to do. A majority of people switch majors, so you can save here by making the change at a lower cost.
  • Many state schools have great reputations and can be a lot cheaper per year compared to private schools
  • Before accepting any loan students should be given a screen showing how much they are taking out for that year and then the following calculations would also be mandatory for the lender to show before the borrower accepts: 

      1. We’ll go with an example of $5,000 a year. First of all, the student should be shown how much this $5,000 debt will actually be if it is unsubsidized loan. If that loan is taken out freshman year, it will be closer to $6,500-$7,500 by the time the student graduates. The borrower should be made aware of this amount!
      2. The borrower should be given an estimation of their 4 year cost of going to school based on this first loan. So if they are taking out $5,000 for the first year, it should show them that they will most likely end up with $25,000-$30,000 total in debt after graduation. I believe that seeing the total amount gives a much better perspective than the individual amounts being taken out each year
      3. The borrower should then be given an estimation of how much their minimum monthly payments would be based on that calculated total debt. I think it should also show them an estimate of how much is going to principal each payment, and how much would be going to interest.
      4. The last thing would be that they are able to select various degrees and the area of the country they are in and be given salary estimates. Based on these salary estimates, the net income for each month should be shown and then the student loan payments should be subtracted from that total. The borrower would then be able to see how much money they would have leftover each month after those minimum payments. 

          I believe that if this transparency was shown before every student took out a loan, you would see a lot of people rethinking their choices. That $50,000 graduating salary doesn’t look as good when you have to give half your take home pay to paying that loan off! Just being able to see the huge amount and the effect it will have on you in front of your face would be a huge deal.

          Do you think that education and transparency about student loans would help reduce the amount of debt that students are graduating with?

            Photo Credits for this post: Pixabay

            May 08

            Frugal Tips: If you have to go out to eat!

            Today I’ll be continuing my weekly spending posts as a summary to keep tracking of my extra spending. My weekly spending for this week consists of the following:

            I know, I know – you are probably reading the title and right away you are thinking that nobody HAS to go out to eat. Eating at home can be healthier because you are preparing the food yourself and you know exactly what the ingredients are and you can control exactly what is being added in. A lot of the chain restaurants are notorious for using a huge amount of sodium and who knows what else, and then of course it is up to actual chef. I will definitely agree with all of those points, but I feel like there are sometimes when it is okay to treat yourself.

            But even after all those points, If you are inclined to eating out I’m here to give you some tips that you may have not heard of yet. When my family goes out to eat, we never spend full price if it’s just us (or at least I can’t remember the last time we did). The #1 reason for this is because of a great website called restaurant.com. You can always get gift certificates on this website for 50% off or even more! You just plug in your zip code or local area, then search for the participating restaurants.

            If you are just two people, there are plenty of gift certificates that are $25 for only $15 or $10. At $5 a person – that’s not bad at all for going out to eat. That’s probably around the full price you’d pay for lunch so you are definitely getting your money’s worth depending on the restaurant – thought obviously not as good as eating in. If you are in a larger group, there are plenty of gift certificates that are $50 for $25 or even $70 gift cards for only $30.

            Another thing to check out is all the local deal sites like Groupon, Living Social, etc. Just make sure not to get suckered in to always buying these “deals” and the other ones they have – those expenses add up. They are always offering something like this with a lot of restaurants not featured on that website – more of one time deals.

            Now the most important thing in my opinion is that if you do go out to eat you definitely want to limit those times! If you are going out once a week, make sure you are getting a good deal – but also try to cut that down to once every two weeks and so on. Before you know it – you’ll be eating most of your meals at home.

            I have personally cut down on going out to eat almost completely. The only time I really do it is for necessary social times, like when people from work want to go out or my friends absolutely can’t be convinced to just hang out at home. I almost exclusively make my lunch from work or take leftovers from home if there happens to be any. My senior year at college I prepared a lot of meals with leftovers in mind, it’s necessary a lot of times when cooking for one person. Sometimes I check out the soup in the cafeteria but I haven’t bought a full lunch from there in over a month.

            Photo Credits for this post: Pixabay