Guest post from Rebecca of Change Your Life in 100 Days
I can’t believe how naive I have always been about money my whole life. That just goes to show how much parents need to be teaching their kids about spending, saving, and earning money. I didn’t have any education at all about finances and I am definitely paying for it now.
I also strongly believe every student who starts their freshmen year of college should be required to sit down with a financial adviser provided by the campus. College students need to be taught about school loans, interest, planning for their financial future and paying loans back later when they graduate.
I, again, didn’t have this knowledge presented to me so I was the typical college student who took out more than necessary because it seemed great at the time. Now this, too, is a tremendous issue in my financial life.
Fact: I paid $240.91 last month for just one of my student loans.
Fact: Only $27.78 went to principal.
This makes me want to punch my debt in the face.
The positive is that I am still in my late 20’s and I am finally figuring out how to face this debt head on and trample it out as fast as I can. All my thanks goes to Dave Ramsey for being such an amazing educator on financial freedom. My hope is to be able to say I have financial “freedom” as well in the coming years.
Here is my family’s plan for getting out of debt:
- Use our tax return this year to pay off a consolidation loan (and tax returns in the future to pay off student loans).
- Use my husband’s bonus this year to pay off our last credit card (and bonus in the future to pay off student loans).
- Use all of this year’s extra summer income (tutoring, nannying, part-time side job) to pay off one of three student loans.
- Take money out of savings to pay off our car and start putting money aside to pay cash for a car in the future.
- Lower our cable bill by $30 a month by switching to satellite TV (I wish we could only purchase ESPN…if it wasn’t for that for my husband we wouldn’t need cable at all).
- Stop going out to eat unless it is a very special celebration. We’ve learned to love cooking at home together so this eliminates the desire to want to go out for dinner.
- Stop shopping. We buy all our son’s toddler clothes either on sale or at consignment sales. Why would we pay full price for something he’ll grow out of in two months?
- Stop traveling on the weekends. We have saved so much money every month by staying home. If we are home we don’t spend the necessary money on gas, food, and shopping.
- Learn to say no. If your friends are really your friends they will understand when you say you can’t go to dinner, get your nails done, or on a weekend trip because you’re trying to get out of debt.
The one thing we will not stop paying is our monthly 10% tithe. God has shown us in the past two years just how much he blesses us when we tithe. We will continue to tithe diligently and honor Him with our firsts because He deserves all the glory.
One day I will be debt-free and be able to scream from the mountain tops “I am free!”
Rebecca is a wife, new mother, full time teacher, mentor, and runner. Her goal is to be more intentional with every aspect of her life – her relationship with God, her family and friends, her job, her time, her finances, her workouts, her eating habits, her relaxing time, etc. She wants to live an intentional, purposeful life that follows God’s plan. Follow her blog at Change Your Life in 100 Days.
I feel the same way with my husband and our satellite! He is a huge sports fan, and watches every sport there is, so we have satellite for him. I could do with just Netflix.
My husband and I took the Financial Peace University class last year and I must say it has changed our lives and the way we look at our money. I have always been able to keep a budget and have an idea on how to manage our money. I thank my mom for that since a little girl she always thought me how to budget and keep track of spending. But with Dave’s class we learned all of the little things that we were missing to be able to help us get out of debt once and for all. I cannot wait until we can live like no one else. Your plan sounds great and your true friends will understand if you have to cancel a trip or a dinner. We have done that a couple of time. Good luck on your debt free journey.
I have a $600 month student loan payment. On a 28K salary. I manage to make the payment every month, but there’s simply nothing else to cut, nowhere else to get extra money to get rid of it. I feel so trapped.
Cas, you might want to look into Income Based Repayment. If you have Federal loans (not private), you may qualify. Your payment may be greatly reduced, based on your income. Some may disagree, but through this program, if you make income based payments for 25 years, any remaining debt is forgiven. I know 25 years is a long time, but depending on how much your debt is, this is an affordable way to pay what you can. Just google “IBR” or “Income Based Repayment”. Good luck!
Unfortunately the $600 is only my private loans (my principal is twice what I actually borrowed). My federal loans are already in income-based repayment. Nothing anyone can do about private student loan debt financed at 17%. At the time I thought I was making the right choice (I only borrowed 16,000 to cover the rest of my private school tuition after the Stafford loans), but clearly I was not. I may have gone to a prestigious school, but my Sociology major did not afford me a high enough salary to pay it back. Also, as someone with parents who couldn’t afford to contribute or take out a loan themselves, I was forced to make the choice of either dropping out of school or financing at 17% interest.
Please, encourage any young person you know to never take out private student loans, especially not from Sallie Mae.
What a bummer that they’re private loans. It should be a crime to charge 17% interest on student loans, even if they’re private.
I have an outrageous amount of student loan debt, but fortunately, none of them are private. When they come out of deferment in the fall, I’m hoping and praying that I qualify for IBR.
I don’t regret my education, but I WISH I had more financial sense and education when I took out all those loans to pay for it! I’ve been learning all I can about personal finance for the last 5 – 6 years, and I plan to teach my children well.
Best wishes to you.
Yes, it should definitely be illegal to take advantage of students with astronomical interest rates. There needs to be legislation that puts a cap on student loan interest, regardless if the loan is coming from the government or a private bank.
Same here as far as wishing I had the financial education at the time. I’ve sure made up for it since, though! I have done a lot of work lately advocating for schools in my state to provide counseling to students whose financial aid packages incorporate loans. I think a lot less people would be in our situation if programs that counseled students were implemented.
There is a calculator at ibrinfo.org/calculator that is very accurate in calculating whether you qualify for income-based repayment based on your adjusted gross income and family size. Remember that your AGI is typically lower than your gross income because it takes into account certain deductions (such as the max $2500 deduction for student loan interest paid the prior year.)
Such practical tips and a great reminder that the small changes do add up.
Rebecca, thanks for sharing your story. Having put it out there the way you did, you will find extra determination to get the debt job done!
Last fall I ran across a blog called “No More Harvard Debt” – the blogger had over $90,000 in student loan debt from earning an MBA (!!) at Harvard. His goal was to pay off his loans in 10 months. As of Day 214 on the blog he is student loan free!
His situation was different from yours and most of Crystal’s readers, but he had to do most of the same things to gain his freedom – namely, delineate wants from needs, cut lifestyle, etc. I wonder how much faster he would have progressed if he was tithing. You might take a look at his blog – he got lots of encouragement from his readers.
I would say he must have a pretty good salary to pay $9,000 a month on student loans. He must have other living expenses as well. I paid off $50,000 plus interest in a little under 5 years on a variable and student rate loan. I was proud of that. Although, it sounds like his blog was inspiring most people cannot afford to pay even close to that amount a month on their loans. So, this example would be a bit unrealistic for most. I get the point though.
Keep working towards your goal you will get there. I graduated with around $50,000 in debt from college. I consolidated the loans into one variable and one fixed rate loan. My husband was lucky enough to get an education in VA where they have great in-state rates and the Army National Guard and his parents paid for the rest. Of course we did sacrifice a year together as he was sent to Iraq to serve with the Nation Guard in the war from 2004-2005. We also had no credit card debt. I learned from my parents’ mistakes. They got into credit card debt twice when I was living at home and they did not do it buying extravagant things. My husband was also lucky enough to have a car his mother bought him. He bought me my first car and we paid cash. My goal was to pay off my student loans within five years, particularly focusing on my larger variable rate loan first. (I have heard Dave Ramsey promotes paying off the smaller loans first, but I don’t totally agree. Since I only had student loans and no smaller debts it made more sense to pay off the higher variable rate loan because it would accrue more interest than the lower fixed rate loan). I graduated in May 2004 and was really able to focus my salary towards my loan in September of 2006. My husband and I decided to focus most of my salary towards my loans while he used his salary for rent, utilities and other expenses. I also covered groceries, some vet bills, my own clothing and things for our home. I still contributed towards our expenses, but on a smaller scale. Like you, bonues, and pay increases went towards my loan. I pushed myself to continually try and throw more money at my loan. I got into couponing in January 2009 when I started to look for more ways to add to my income and thus add more money to my loans. Couponing helped me to meet my goals a lot. I also brought my lunch to work about 98% of the time and still do. I shop a lot less for things such as clothes and try to use gift money to buy things for myself. I always buy things at rock bottom prices, but I still made it a point to shop less. We have taken smaller, more affordable vacations. (We live in Richmond, VA and drive about 5 hours away to Myrtle Beach. We get an efficiency with a kitchen and bring most of our food. We do a few activities and eat out a few times). When the economy started to tank a few years back the variable rates were pretty low, so I made it a point to continually add more each month to pay off that loan. Also in 2009 my company (at the time) started laying people off, so I threw even more money at the loan. I paid off my higher variable rate loan in August of 2009, $30,000 plus interest. I had made it a goal to then pay off the rest of my low fixed rate loan in another year. Of course, things happened in life and it didn’t work out quite as planned. My car had several problems and the transmission was dying. It was becoming an unsafe car to drive 30 min. each way to work in heavy traffic. So, we decided to get a 2009 used Honda Civic. I had planned to buy the car in another year after paying off the last of my loans and saving for a down payment for it. Unfortunately, as I said that did not happen as planned and I had to get the car sooner than expected. I decided to go with a newer used car and take out a loan because I wanted a dependable car that would have little maintenace and last a long time. After we bought the car, I continued to put extra money towards my last fixed rate loan as planned. In April of 2010, I was laid off in the last group of layoffs in my company. So, I was very happy that I made my goal to pay off the larger, variable rate loan before this happened. During my layoff I had to stop paying the extra I had paid to the last of my loans. I was laid off for seven months, but because we were used to using most of my husband’s salary toward our expenses, we did not have any financial complications because of the lay off. I just didn’t have much extra for my loan and only paid a little over the minimum payment during that time. I continued to pay for all of my other household expenses during the lay off as before. In February 0f 2011 I got a job. I was hoping after the lay off I would have an opportunity to find my dream job and something that was 100% related to my degree not like the job I had that was 75% related to my college degree. But again the job I took was not 100% what I wanted instead I took a job that was a good offer and again about 75% related to my degree. I was flexible because jobs were scarce, it was a good offer, it would be a resume builder and provide another good future job reference. The big picture of paying off the last of my loans was also a big motivater to take the job. So, once I worked a month at my job, I put everything extra I could towards the last of my loans. My low fixed rate loan of $20,000 plus interest was paid off in July of 2011. Next up, I wanted to tackle my car loan. I had a goal to pay if off in another year, but pushed myself to pay it off sooner. My car was paid off in January 2012. I believe I basically met my five year goal of paying off my school loans, paying the bulk of the debt from September 2006 – July of 2011 (even though I graduated in 2004) when I had a salary that allowed me to focus on the debt. I also went through seven months of unemployment and had to buy a car. Yes, there were setbacks, but I made my goals and continued to push myself to pay more on my debts monthly. I sometimes even paid two large payments a month on my student and car loans. My husband’s 2007 Charger (we traded his paid for car in for something larger, family friendly) will be paid off in a few months. We just purchased a home we were renting from my mother-in-law in March. So, in a few months we will be debt free besides our home loan. I turned 30 in February. We are celebrating with a cruise in May and hopefully the start of our family. I am so proud of our financial accomplishments. We still buy things we want, take vacations and go out with friends, but we plan for those things and do them afforadably. It takes work and sacrifice, but you will get there. I am proof.
my pastor actually just finished doing a whole series on money and more than once he mentioned that we are called to tithe the full 10% but he also reminded us that 10% is only the beginning and that we should give above and beyond that as we feel called by God to give. My husband and I have NO MONEY. We barely pay all our bills each month and only get $10/week for blow money but we still pay a little more than 10% each week to our local church AND on top of that we each give $25/month to our favorite ministry. Like Crystal has mentioned especially after her trip to the Dominican Republic we have SO much here in the US even when we think we don’t.
Denise
Love this title!!!!!
I’m very thankful I had a great college scholarship that allowed me to get my Master’s with minimal debt. If I had high school kids, I would seriously reconsider the idea of sending them to a four-year school to “follow their dreams.” I have a lot of friends who loved getting their degree, but now they’re in huge debt with a degree without much earning potential.
I am always interested to see people with giant college loans. It makes no sense to me to go to a very expensive college to become a teacher. You can earn the same degree at much lower prices. If you can afford a BMW or expensive college then by all means go for it. But 120K in debt to make 30K a year teaching seems crazy to me. If you are going to school to “get a good job” you ought to do at least the most basic research. In other words find out what is the hire rate and what is the income potential. If education is an investment you should consider if it is a profitable one. If you comparison shop for a $2 tube of toothpaste seems like you ought to devote at least that much energy to college shopping.
Plenty of us who ended up in similar situations didn’t come from middle class families who would help us with our debt or who would understand loans. My family certainly didn’t, and I, at 17, had no clue about colleges. I went to a state school because my state has one of the best schools in the nation, but my parents tried to push me into a private school and living with them because they wanted that control over me. I would have spent easily triple that way.
A lot of these comments come from a place of privilege, and they make me uncomfortable. While yes, of course you want to scold us for not making the choices you would, you have to understand that at 17, with no family support, you need to do whatever you can. I didn’t go to an expensive school, but it was mostly because I wanted to be far away from my family.
Thanks for the uplifting post, but one thing has been bothering me for a few weeks now. You mentioned Dave Ramsey, I’m not sure why but his name has popped up almost every day for me in the last few weeks. I’ve researched on him but I’m just not willing to go further into debt to buy his stuff, and that’s the only way I could afford it would be to put it on a credit card. I noticed someone said that they listen to him daily, is that because you already own his stuff or is there someplace that I can get it for free? It’s been almost a year since I lost my job and my husband has picked up 2 part time jobs and his full time job to make ends meet. After tithing, paying bills, gas and food there isn’t anything left to make extra payments. I’ve been following this site for almost a year, reading everything I can find to make our life better and I still feel so completely lost.
If you go to Dave Ramsey’s website, they have a tool to find a radio station that carries his show in a year. There are also a number of free articles on his website, including a beginner section for those not familiar with his ideas.
You can download the first hour of his radio show for free on iTunes. It’s called the Dave Ramsey show. You can check out his book(s) at the library (Total Money Makeover, Financial Peace Revisited, More Than Enough, and Entreleadership I think are the titles. I’d start with the Total Money Makeover for getting out of debt). The “baby steps” which are his method for getting out of debt/building wealth are explained on his website here: http://www.daveramsey.com/new/baby-steps/
You can ABSOLUTELY start the baby steps without buying anything.
I’m so sorry about your job loss, and I hope you’re able to find work again soon and feel less overwhelmed.
Thank you both so much, I have read about his baby-steps but was looking for a more in depth reading on them. I’m ashamed to say but I had never even thought of our library. 🙁 Think I’ll make a trip there next week to see if they have any of his books. I’ll also take a look into the radio but we don’t get very many stations here. Thanks again!
Melissa,
Check out Dave Ramsey’s books from the library (free!). That’s what I did. He also has a lot of free information on his website regarding his debt snowball plan and other recommendations. You can go to the Dave Ramsey radio website and listen to him for free daily from 2-5. Older radio casts are also available there. His resources could be helpful to you. I’m sorry you feel lost–you can do it:) Good luck!
I checked out his book “total money makeover” from the library for free 🙂
You can find a TON of stuff and Q&A sessions just on his website without purchasing anything. Also, watch the community pages of your newspaper. Church’s around here offer his class for free several times a year.
But, honestly, the principles are very simple and common sense. Cut back on excessive spending and apply extra toward debt. It’s just like a lot of things–we already KNOW what we need to do, it’s just a matter of getting the dedication and motivation to actually do it. Good luck!!!
Hey! I am excited to see your plan and wanted to offer some advice. My husband and I canceled our cable/tv bill completely and only watch free tv online on hulu.com. Of course, I noticed that your husband watches sports. I’m not sure where, maybe espn’s own website, but I have a friend whose husband only pays for sports and watches live online. From what I understand, it is only 100/year and you will have full access to all sports current and already aired. Also, most tv’s these days will hook up to your computer laptop or desktop. We have ours set up like this, so watching anything on the internet is exactly like watching cable. And the best news, there is WAY less commercials!
I’ve been reading some about that recently. Sounds like the wave of the future. We watch History, Discovery, Nickelodean, and HGTV along with the local channels. Are those accessible through hulu?
No, Hulu is generally just NBC shows.
I would like to punch debt in the face as well. I like to think that I’m working on it, and making progress, it just seems slow right now, when every time I make a decent debt payment, we end up going back into debt because something breaks, or something goes wrong, or a medical bill comes in the mail. Family just says “welcome to reality” but I have to hope that things will get better.
Hang in there…. You will be debt free if you stick with it! I remember feeling the exact same way and now we’re in the clear.
If you haven’t already check out Dave Ramsey. He suggests a $1000 emergency fund so that when something breaks or goes wrong you don’t have to go into debt.
I can speak from experience that when this happened to me that $1000 went a lot further than I thought it would!
You can do it. I’m only 24 and I’m realizing debt doesn’t have to be “reality”.
This is one of my favorite posts about getting out of debt…ever! Thanks for sharing!!!
Thanks for the encouraging article, I stand in awe of the faithfulness of the Lord. As far as tithing goes I have come to understand that if I can’t live off of 90% of my income then I definitely can’t live off 100% of it. I can never outgive the One who gave it all.
Love the title! I was one of those freshmen who let herself get sucked in by the free tee shirts for opening a credit card. I will try my best not to let the same thing happen to my kids. Good for you for working together to get out of debt now! We’re so lucky we found Dave Ramsey when we did!
thankfully credit cards can no longer target college kids in this manner – especially not Freshmen. Now you have to be 21 to apply for a credit card on your own. This is a HUGE improvement because tons of people got sucked in by free t-shirts.
I didn’t know that! It’s about time:)
That is untrue. If you are under 21, you have to prove that you can make the payments. So if you have a good-paying job, you may still qualify on your own.
You are correct. Technically a 18-21 year old can apply and get approved for a credit card. However, credit card companies cannot TARGET this age group. I work at a bank and legally we are not allowed to even offer a credit card application to a person under the age of 21. Of course if a person under the age of 21 wants to look for a card on their own they could definitely get approved but at least banks and credit card companies can no longer reel in naive college kids with free t-shirts.
That’s great news. I, too, was one of those college freshman who got sucked in by the free t-shirt offers. I’m so glad to hear that has changed.
So much of your stuff sounds exactly like my family!!! We would DEFINITELY not have TV! He’s the same way, he has to have his sports.
This sounds like an excellent plan, although I would find it difficult not to travel. Have you come up with a bunch of good staycation ideas instead?
Great article. In regards to satellite TV, I wish, too, that they would offer you a package where you just got to choose 5 channels or something like that. Who needs 250 or whatever is in those packages? I have written to them (them being the DirecTV we have) repeatedly asking for cheaper packages and they have allowed us to keep our no-longer-available inexpensive one, but it can still be crazy expensive!
My husband has always said that if the cable company ever started offering a la carte packages, that would be the day we’d reconsider our family’s no-cable policy. 🙂
Yes! I think they would easily gain enough people to recoup their losses from not making people sign up for giant packages that no one needs/wants.
We watch basic TV and 4 “cable” channels on Directv. I watch Food and my husband watches 4 sports channels. The problem is that he follows every sport. We watch baseball, football, soccer, hockey, tennis, golf, basketball, etc. etc. etc. Every time I make a comment on these boards someone always says, “if my husband gets an itch to watch a game he’ll watch it online or go to a friends house.” Well, we’d have to buy extra bandwith on the internet or I could just expect him out of the house all evenings. He works and lets me stay at home to raise my daughter….I just suck it up and pay Directv their dues.
We have Dish Network, and I recently called them to see if they could offer us a better deal. Apparently they have a basic package that they don’t advertise that is only $14.95 a month.
That’s what we have…it’s great!
What’s included in that? My husband watches History and Discovery channels, the kids watch Nickelodean, and I like HGTV.
It probably won’t happen because the actual channels themselves are sold in bundles to DirecTV. This is a very, very limited example, but you wouldn’t be able to just pay for Nickelodeon because Viacom also wants you to have Teen Nick. I believe it has to do with advertising rates – the companies don’t want to lower what they can charge advertisers.
Can I just say that I love the title of this article? 🙂
In response to the tithing question, it has completely changed my life. Tithing is giving God the first 10% of your income because in reality it’s God’s blessing and He has given it to me. The bible says tithing is the one thing you can challenge God with and he will bless you more than you can imagine when your give him your first fruits.
We never started tithing 10% until I lost my job. We needed to have faith and trust God to take care of our finances. In just the two years we’ve been tithing, our lives have changed. I had a job fall in my lap that is greater than anything I could’ve ever expected. We’ve paid off more debt with only have the income we used to have. Whenever we are short on money, we tithe, pray, and have and God provides more than we asked for. We even actually got a random $2,000 check in the mail a few months ago from a house we overpaid on 3 years ago. Its only because of God and giving him our firsts that we truly show our faith in Him.
I very much enjoyed this article! Her life sounds so similar to mine, except my husband and I don’t have any kids yet! I couldn’t agree more about educating college freshman about financial management before they take out so many loans! I wish we would have had some guidance like that, because now it is so hard to have a huge monthly student loan payment for many years to come! Bachelors degrees are seeming like they don’t really matter much anymore because so many people have Masters and higher degrees. It has become so hard for my husband and I to find decent jobs in this economy even though we both have Bachelor’s degrees in Biology. We both are currently working hourly jobs that don’t even require a degree! I keep trusting God that He will get us through all this because it has become very evident that we will have to get more schooling (which means more loans) in order to be able to support a family one day and pay off our loans in a reasonable amount of time!
It depends on your career field and your skills. My husband has a bachelor’s. Most of his co-workers, including some that he manages, have PhDs.
That’s great! I wish at least one of us could find something like that! It’s definitely been really hard for us to find anything decent.
Keep looking, Jessie! You’ll find something 🙂
I was forced into learning finace when I was 11 as that is the year I landed on the streets providing for myself.
I taught my children well and I have saved and stretched every penny to make it at least .25.
I still try to teach other young folks and how time is your most valuable asset so never ever under estimate your time!
Two things .
#1. When you get most of the debt repaid start with dates for you and hubby start small with almost zero cost picnics (only the gas to get there) For now do dates like camp in your own back yard etc…
#2. Vacation on a super small budget but do vacation too it keeps the romance in your marriage. (Swap homes with someone who lives around the corner and plan an at home vacation that is somewhat different)
Go away for one night go see a great waterfall or something else that you don’t normally do.
Something easy and small.
Teach your children starting very young and teach them well.
Never teach them they can not afford things teach them to find a way to afford things (in this way they learn to dream big!)
I wouldn’t mind punching my debt in the face either! We started with $110,000 worth of debt ($85k in student loans) and have been slapping it around for a couple of years but we haven’t totally knocked it out. We’re down to $50,000…so still a long way to go!
I love your plan and you’ll get out of debt eventually. It’s all about just doing the best you can each day and knowing that you’ll get there sooner or later.
It is EXTREMELY important for parents to instill wise financial principles into their children at a young age but I’m not sure how well college kids will receive the education. I believe some of us have common sense and others are simply destined to learn the hard way (the majority). While some students would certainly take the education and run, the immature kids (again, the majority) wouldn’t pay much attention to it as they’re focused on living life and having fun while they’re in college.
It doesn’t hurt to try I guess, but I just remember when I was that age and I know there was 0% change I would have listened.
Dave Ramsey is great and just straight forward. I listen every week day to him . The day he started yelling about student loans my boss (across the room) asked if I was ok and what was I listening too. Funny but had to turn it down.
We have paid off about 5000 in 6months. .. 12 to go…hopefully debt free in a year!!! Even had canned soup today so I don’t leave work for lunch. No spending and a little OT. My favorite reminder about Dave R is “Stay focused you are broke”!!
Good for you!! Bringing lunch to work is a huge budget saver!
“If your friends are really your friends they will understand when you say you can’t go to dinner, get your nails done, or on a weekend trip because you’re trying to get out of debt.”
That may be true, but make sure you don’t cut yourself off from friends and fun in the process. You can do potluck dinners, paint each others’ nails, go camping, etc. and do all those things on the cheap.
Friends and I started a dinner club to avoid eating out. We each cook one week a month. It provides a chance to hang out without going out to eat.
Education across the board is important especially when it comes to finances and how to make the most of your school finances.
The biggest lesson I have learned is sometimes you have to stand up for yourself against your college institutions. I took a pre-req class at a four year prior to attending full time and I was considered part time. When I became a full time student and applied for scholarships, the office didn’t change my status which meant I wasn’t eligible for any scholarships. I knew there were scholarships I should have gotten. (My department has one for all students who apply. It wasn’t much but I knew I should have gotten something). I stood my ground and even ask to speak to supervisors until they lady in charge finally admitted she had made a mistake. By then, all the scholarships were given out. The issue was corrected and thankfully, I was able to get several my next year to help even it out.
I also had to stand up for myself when administration didn’t think I could handle an overload. Once you reach a certain hours load, your fee’s are the same regardless of the number of additional hours you took. I pushed to get my overloads approved each semester which allowed my to finish two bachelors degrees in four years and save at least a years worth of fee’s and the increase cost of tuition.
While it may not seem cool to be 18-23 and having to tell someone you want to bust your butt on 20 credit hours simply to save some money it may earn you their approval which in my case was required each term.
Rebecca, you can do this! We went through the baby steps of Dave Ramsey’s plan…and the most daunting debt was my student loan ($50,000!)…because it was something that we couldn’t sell (like a car)…we just had to plow through it and pay it off. It was worth the effort to get out of debt and now we have money to do the things we love (like zip lining, parasailing, surfing, dance classes for my girls, and a bunch of other ‘experiences’ that we couldn’t do when we were in so much debt!). Oh, and you are right about parents needing to teach finances to their kids (I didn’t have these lessons growing up and it was obvious:)…all three of my kids are saving for their first car (my youngest is 6 and she’s been saving for 4 years now!) and they all now know the importance of not being in debt. Good luck getting out of debt:)
YES! Way to go, Rebecca! My husband and I are in our 40s and it took us until about 3 years ago to get our acts together. A friend sent us the Dave Ramsey, Total Money Makeover book. Since the beginning of this month we are DEBT FREE!! I know you can do it! You’re well on your way. Thanks for sharing your story. I’m sure it will help someone see their way clear to kick debt to the curb. 😉
p.s. We continued to tithe as well. Not everyone has to make that choice, but I know it lifted our spirits to give in that way. Someone could volunteer their time instead, if they felt the call to give. There are so many ways!
I am always amazed by the people who are able to pay off all their debt in such short periods of time! With our salary, it’s just completely impossible, but how exciting if you are able to do that! Congrats to you because I know that even if you have the salary to be able to do it, it still takes dedication and self-discipline to reach that point 🙂 For us it’s about 10 years away, even with absolute diligence.
Thank you, Crystal! Our debt was from irresponsible credit card usage and wasn’t as huge as some other folks. We don’t use credit cards anymore. My hubby is a server and our income varies from week to week and month to month. I haven’t worked since early in 2010 due to a back injury. There are only the two of us, so we make do and keep our expenses to a bare minimum. He eats beans and rice that he takes to work, along with some of the food he gets from working there. If we want to do something we budget for it and save. We have been gifted to in so many ways: two free cars, free furniture, monetary gifts. Truly blessed!! We’re raising our grocery budget and adding in more healthful things that we’ve left out for so long.
One of the biggest helps was for us to “see” our debt reducing every month. I created a “Debt Pay Down” sheet that I filled in each month that stayed next to our computer, where I pay our bills. I totaled our debt and divided it by what we budgeted for each month. That gave me how many months it would take. I made that many lines, plus a few extra, to fill in. I started on the bottom of the sheet and started up. It took awhile for the feeling to set in that we were really doing it, but when we hit the “halfway” mark we realized we could do it. That big nul zero at the top is amazing. Now I’ve created the same thing for the next step of our 6 months “security savings.” It will take another 3 years (or less).
Wow! I hope this wasn’t too much of an over share. I just want you and everyone to know you can do it, no matter how long it takes or how little you have. The sacrifices are worth it!
Thank you for this insight. I would love to see some writing regarding finances that speak to college freshmen specifically. Geared to now, before they make this terrible place for themselves. They wont necessarily read a book, or isten to us “old folks” but may be interested in blog enteries etc.
Are you interested in just something for college freshmen or college students in general? I finished two bachelors degrees in four years from a private institution with little debt. The small (I mean microscopic) loan I have is a result of having 48 hours to find a new place to live which resulted in me getting my own apartment. I went from living rent free to paying rent and with all the new uncertainty in my life, I didn’t feel comfortable touching my true emergency fund. I also paid cash for my masters degree.
How did you do this? Did you have a full ride scholarship?
No, I didn’t have a full ride. My grades in college weren’t good enough. I took advantage of a state funded program in Missouri called A+. My high school took advantage of it and I did the work to qualify. This paid for an associate’s degree at a state run junior college. I started my education in high school with dual credit which was way cheaper then traditional classes. I then spent two years at a junior college getting every basic course I could out of the way. I choose a four year institution that a transfer agreement with the juco to ensure my hard work followed me. My sophomore year I took one pre-req class at my four year school that I had to have prior to transferring junior year.
Junior year I transferred to my four year school. I took advantage of good old fashion work study programs. These programs have come a long way since the olden do the yard work days. I was required to complete clinical hours for my program and that also served as my work study hours so I wasn’t out any extra effort other then pushing to ensure I got into the program. Many people don’t realize that you apply for work study on your FAFSA. I didn’t qualify for many grants but I made sure I filled out the FAFSA early to get my spot in my schools program.
See my comment below about how over loads helped me saved money. I saved on books by buying them used online. I wore my work clothing to class to reduce laundry cost and clothing needs cost. It wasn’t always fashionable and I wasn’t able to roll in to class in sweats but hey. I asked a department if I could use their work room that had a microwave and took my lunch almost every day. While classmates would go to subway I would go to the work room and study.
One thing I do want to point out is that due to my degree program I was unable to work during the school year so I busted my butt during the summer. I’m talking work 60+ a week. I weighed my options and choose to work for a company who placed me at a location 35 miles from my house. They paid my mileage and my duties there necessitated working overtime which paid time and a half. I then saved most of this money to cover living expense for the next school year until I could do it again. I saved my car payment, cell phone, and car insurance each year.
For my masters I shopped around. For my profession its simply a piece of paper but required for most positions due to the professions history. I choose a program that had a standard tuition rate for online programs regardless of where you live which means I didn’t have to pay out of state tuition. My maters cost about half what most programs did. I saved money each month to pay for the following semesters.
It can be done with hard work and a little determination.
That’s truly amazing! Good for you! I’m sure you are enjoying all the fruits of your hard work now by not having that debt hanging over your head!
Young people and money in general. They have not been taught well considering TV and all media is geared toward the “need” of everything they see. During the years they were growing up, the parents were spending and spending so that is what the young people see. They dont understand debt… period. They need the psychology behind all the spending not just the bare facts of debt. To easy to be in denial I guess.
Jessica you are one in a million….good for you and your stick-to-it -veness.
I really think this is overgeneralizing. I am what you would consider young, 25, have a bachelor’s degree education and absolutely no debt. I think there are people of all ages who have problems with money not just young people. My parents didn’t make a lot of money and did make some mistakes but I was always aware that I couldn’t have everything I wanted. I know a lot about debt and handle my finances quite well for somebody my age.
I agree Kristin!
Hi Kristin, when one replies to blog enteries there is always the risk of someone taking it personal. It is not aimed at any one person and not meant to be personal. Just seeking insight re how to help those that it does apply to. I am sure there are many like you who do well, but perhaps you too have seen many young people in a bad way with finances.
I honestly didn’t take the comment personally, I just think it is an over generalization.
I have seen many people struggling financially, especially right now, but they are of all different ages. Honestly, most of the people I know who are struggling with debt are older than myself. I was just pointing out that debt is something people of ALL ages have problems with. There are many people, no matter their age, who don’t understand debt… period.
There are also people who understand debt but unfortunately have made some bad decisions or gotten in bad situations and are working on fixing it.
All that stuff is great, and I’m glad you have such a wonderful understanding of finances. However, statistics show you are the exception not the rule.
I got in debt right away. I didn’t even think about whether it was good or bad, or the repercussions. I just did what I had always known and been taught by my parents. By the time I realized there was a better way, my husband and I had a larger than we’d like mortgage payment and I have nearly $20,000 in student loans for my graduate degree. Although, luckily we made the choice to nix the credit cards early on.
I think you have misunderstood. I don’t think the emphasis on younger people is to imply that only young people have the temptation. I think the emphasis is to catch people while they are young, BEFORE they make those financial mistakes…to have them thinking about it BEFORE they get to the point where it might seem hopeless to even try. It’s awesome that you have no debt, but not everyone can say that, and I agree it would be nice to see more education about it.
You can also look at your kids clepping many of their courses and getting their degree in less than 1/2 the time and a fraction of the cost. They can start when they are in high school (during the summers (we homeschool)…….but the idea is when they take their classes (gov’t, higher math, biology etc) they take their cleps THAT year…..so it’s still fresh in their heads!
When I was in college, the general rule of thumb about student loans was “do not borrow more than your entry-level yearly salary”. I borrowed significantly less than that and always kept a running tally of how much I had borrowed.
Love it! I definitely agree on the financial adviser thing. I bawled an entire night when I was about to graduate and learned how much debt in in student loans I had accumulated- much of it not being used on my education. I also think that high schoolers should be required to take a financial planning class. I took one in college that really taught me a lot. I think it is probably the class that I took that I used the most in my day-to-day life. Imagine the difference if more people graduated knowing how to manage their money!
Can anyone explain tithing and why people do it when they have a lot of debt? Not just this instance but ive seen it mentioned before and 10% of an income seems like it would make a big dent in many peoples debt. I’m just wondering why people tithe before becoming debt free (excluding a mortgage)?
Catherine, as believers we believe everything we have belongs to God, we are giving back to him the 10% that is spoken of in the Bible.
http://www.bible.com/bibleanswers_result.php?id=161e
Hi! If I was not a Christian or Jew or following some other religion that had teaching regarding charitable giving, I think your line of thinking is right on – pay debt first. I can’t speak for charitable giving in other religions, just Christianity. Jesus teaches that our heart is where our money is. Teaching prior to Jesus was that 10% of income was the starting point for giving. The idea is that as believers, we trust that God is ultimately the owner and creator of all resources. He asks us to give 10% as a way of recognizing and remembering this. This helps us keep our heart in a place of contentment and trust that ultimately God is our provider – not our jobs, the government, etc. For many of us, getting into debt in the first place was due to a lack of confidence and contentment. Keeping up with the Jones fueled the debt cycle. From my personal experience, proiritizing a tithe first has helped me to be disciplined with the management of the rest of my finances and has helped me learn the art of contentment to stay in bounds in other areas of my budget. Hope that helps! Maybe others will have great input too.
Catherine, I can see how this might seem like the logical conclusion (even most Christians I know feel that way), and I can only speak for myself.
(1) God tells us to tithe. He also promises blessings because of it: In Malachi 3:10, God says, “Try me now in this’ says the Lord of hosts, “If I will not open for you the windows of heaven and pour out for you such blessing.”
(2) For me, it is also about trusting God. I could “help myself” by putting that 10% toward my debt reduction and other expenses, or I can give Him his due, and trust that He will provide (and He always has!) If I’m having trouble making it, I can either hold on to what I have that’s not enough, or entrust it to Him and allow Him to use what little I have given and multiply it to meet our needs.
3. My pastor’s wife just did a demonstration about this. We sow our seed and reap a harvest. She did the demonstration with an apple. The apple is the harvest, and it’s sweet. But the seed is bitter. So many Christians try to eat the fruit (by holding back tithes), and it’s bitter. His harvest is so much better than the seed we hold on to!
Catherine,
I having been paying tithing as long as I can remember, and have been blessed in amazing ways because of it (and my husband and I have been going to school the whole 10 years we’ve been married, we could really “use” that 10%). But also, more than that I think giving, whether a tithe or to another worthy organization fundamentally changes our character. I think it’s an important step away from selfishness and materialism that will help when we have a lot of debt and financial mess to clean up. Dave Ramsey has great things to say about this, and I find them personally true.
“Good things that cannot be calculated or quantified are set in motion in your life and in your finances when you give… I do not totally understand what giving does to the human spirit, but I do know that I meet very few well-balanced, happy, healthy, wealthy people who don’t give money away.”-Dave Ramsey
The old testament tithing principles are the only place where God says to put him to the test. He gives back when we give.
The actual old testament tithe was more like 23.3% of GROSS not net income because the law required multiple tithes.
Tim Keller says it best in regards to “tithing” and the New Testament believer:
“There have been times when people have come to me as a pastor, and asked about “tithing,” giving away a tenth of their annual income. They notice that in the Old Testament there are many clear commands that believers should give away 10 percent. But in the New Testament, specific, quantitative requirements for giving are less prominent. They often asked me, “You don’t think that now, in the New Testament, believers are absolutely required to give away ten percent, do you?” I shake my head no, and they give a sigh of relief. But then I quickly add, “I’ll tell you why you don’t see the tithing requirement laid out clearly in the New Testament. Think. Have we received more of God’s revelation, truth, and grace than the Old Testament believers, or less?” Usually there is uncomfortable silence. “Are we more ‘debtors to grace’ than they were, or less? Did Jesus ‘tithe’ his life and blood to save us or did he give it all?”
Tithing is a minimum standard for Christian believers. We certainly wouldn’t want to be in a position of giving away less of our income than those who had so much less of an understanding of what God did to save them.
I totally get tithing and understand why people do it when they have debt etc. etc. I was just wondering what Dave Ramsey says about this topic. I thought I had read somewhere that he said not to do charitable giving until one was out of debt. Is this true or is he talking about charitable giving over and above the 10%? Or did I read that wrong (elsewhere- I can’t remember now where I think I read that)?
Dave assigns a give envelope with his system – which he says seems to classify as the tithe.
I can’t speak for others, but I tithe not only because I’m a Bible believing Christian, but also because I want to tithe. After attending a private university, graduating, and starting to work more full time, I figured up how much that 10% could do if I wasn’t tithing. However, I decided it just wasn’t worth it to not tithe. Since then I have given faithfully that 10% and had more money coming in than if I’d not given the 10%.
In fact, I paid off my first student loan today!
Way to go Melissa! So exciting to see how God works! 🙂
Catherine, I see tithe as a way of thanking God for his faithfulness, as well as showing your trust in Him. I can see how it doesn’t seem to make sense, and maybe even seems crazy, but its Biblical. What we have comes from the Lord, and nothing material truly lasts anyway. Better to trust in God than money!
I’ll be completely honest that my “tithe” isn’t the 10% that it is “suppose” to be. We budget what feels appropriate for us. You might start there, rather than making it the traditional 10% tithe. I was never admonished about not giving 10% because we really cut back in so many ways to pay off our debt that our church was cool with what we were able to give. Now we’re giving a bit more than we were, but it’s still less than 10%. Some of my “tithe” money is held to give to individuals and organizations that we feel called to give to during the year, rather than to our place of worship. That has been a wonderful way for us to share in ways we wouldn’t have been able to if we hadn’t been budgeting for giving.