Money Crashers » College

Dave Ramsey Supports My Thoughts About College Planning

Erik Folgate — Fri, 28 Aug 2009 05:15:31 +0000

I recently wrote about an article discussing college planning and paying for your kid’s college education. This can become a heated debate. I completely agree with Ramsey’s stance on this subject. If your kids are young, you have a lot of time to plan for college. Why not start today?

Kids And Money: Should Your Kid Apply For A Credit Card While In College?

Erik Folgate — Wed, 19 Aug 2009 02:45:36 +0000

Many parents will be sending their kids off to college in the coming weeks, and the issue of credit cards always comes up. Parents don’t want their kids to be high and dry if they need an emergency car repair or have a medical issue. For many college freshman, it is a rite of passage to apply for their first credit card and swipe the card for the first time. It makes them feel like a responsible adult, because they are using credit. This is a load of garbage, and it’s exactly what credit card companies want young people to think. Credit card companies have done a superb job at making credit cards feel like a status symbol. That’s why they use words like “gold” and “platinum”.

Blake Thompson, the sound engineer for the Dave Ramsey radio show, posted this on Twitter and Facebook today:

64% of college students have credit cards, half do not know the annual percentage (APR) of the credit card they use most, and 42% of freshmen are credit card dependent. – Center of Economics in Washington

64% of college students have credit cards, and 100% of them can’t afford to pay them off! Don’t we see the problem with that? Credit card companies are extending credit to students who generally have no income. They might have jobs, but it’s only enough money to live on, not pay off credit card balances every month.

What About Emergencies?

There is too much temptation for a broke college student to have a credit card sitting in their pocket. No matter how responsible they are, they’ll end up using it once for something that’s not an emergency, and then it’s downhill from there. If you are worried about emergencies and you want to give your kid a real graduation gift, open up a high-yield, online savings account for them with $500 to $1,000 in it. Don’t tell them the username and password. If they have an emergency, you’ll have the money sitting there to help pay for the emergency.

What about building credit?

For what? Buying a new car after college that they can’t afford? Teach your kids to save money instead of relying on credit. What about buying a house? You don’t need to screw around with a credit card to get accepted for a mortgage. If your kid lands a great job out of school, has no debt, and he or she can prove that they paid their rent on time for four years, they’ll have no problem getting a mortgage loan from a company that does manual underwriting. Lenders that mindlessly look at credit scores to approve loans are the ones that go out of business.

What If I Co-Sign For The Credit Card?

Sure, if you feel like paying for another credit card balance and/or ruining your credit. I know your kid is really responsible, but this is a whole different ball game. It’s college. Kids do a bunch of stupid stuff, their mind isn’t focused on paying minimum payments for a credit card, and there are so many opportunities to spend money in college. One night out could easily be a $100 down the drain. Don’t ever co-sign for your kid’s credit card. You’ll end up ruining your own credit.

You may disagree with my stance on this issue, but please think before you encourage your kids to get credit cards while in college. They don’t have the resources to manage a credit card responsibly, and they end up coming out of college with $10,000 in credit card debt. It happened to me, and I will do and say everything I can to stop other college freshman from getting wrapped up with credit cards. Related Posts:

Kids And Money: Should Your Kid Apply For A Credit Card While In College? is a post from: Money Crashers

How To Save Money On Dorm Furniture For A College Freshman

Erik Folgate — Mon, 17 Aug 2009 19:04:44 +0000

Universities across the country will be filling up their dorms and surrounding apartment complexes from now until the next three weeks. I remember my first experience going away to school. I didn’t have much, because my dorm was about the size of a medium sized bedroom, and I shared it with one other guy. I brought a computer, bedding, clothes, and a chair. We already had a bed and desk provided to us. However, many large universities don’t have enough dorms to house all of their college freshman, so some freshman need to look for alternative off-campus housing. For these freshman, the cost to go away to school rises even further, because now you need to furnish an entire apartment. If your buying furniture for your kid, make sure you don’t go overboard buying furniture that is too nice for the space it will be in. When you’re looking for dorm/apartment furniture, look for utility. Here are a few places to start looking to find quality furniture at cheap prices.

Craigslist. Scour your local Craigslist and better yet, the Craigslist of the city where the college is located near. Bedroom sets, dining tables, couches, chairs, and desks are all easy to find on Craigslist. Make sure you put on your negotiating hat when contacting sellers on Craigslist. Many sellers on Craigslist price their stuff high, because they anticipate buyers to negotiate the price down.
Garage Sales. Don’t look for junk. You can find some quality furniture at garage sales that might have no place in your house, but it works great for a dorm or college apartment. This is how you need to think when shopping for college furniture for your kids. Don’t think, “Ewww I would never buy that”, think, “We could make that work in his/her apartment”.
IKEA. IKEA is a great place to find affordable dorm and college apartment furniture. Their lower end furniture is not the best quality, but it’s durable enough to last a couple of years, and it works very well in small spaces. If there is an IKEA store near you, make the trip, because you can find a lot of cheap furniture like bookcases, night stands, living room tables, lamps, mirrors, and storage bins for under $50!
Furniture Outlets. We recently purchased an entertainment center for half its retail price at the Rooms-To-Go outlet, and it’s good enough to stay in our home for years to come. If your child needs a couch, bed frame, dining table, or any other large piece, you can find great deals at furniture outlets. If the piece has a few scratches or imperfections on it, don’t be afraid to ask for an additional discount or free shipping.

As a former college student, I can tell you that furniture gets used and abused while in school. Plus, college kids typically move around a lot during their four years, which means that furniture you buy them could be getting banged around in a truck someday or even sold to make some extra money for course books. Get your college freshman furniture that’s functional and looks decent, but don’t go overboard. It’s not worth it!

How To Save Money Buying A Laptop For A College Freshman

Erik Folgate — Mon, 17 Aug 2009 15:35:04 +0000

All universities and colleges have followed suit with the rapid growth in internet technology over the past ten years, and it is now essential for college students to have a good computer for school. Laptops are the computer of choice with college students, because they’re portable and pack enough features to help them with whatever needs to be done for school. This will be one of the bigger expenses you will face if your sending your child off to college in the next couple of weeks, and it’s important that you get them a laptop that meets their needs without breaking your checking account.

Don’t go shopping with your kid

Make the laptop a surprise, and what you buy them, is what they get. If you bring your kid with you, they will go straight to the Apple store and pick out the $1800 Macbook Pro, I guarantee it. Macs have branded themselves as the hip, fun notebooks that many young people want, because it has become a status symbol. If your budget isn’t above $1,000, then you need to stay away from the Apple store.

What If They Insist On A Mac?

If your kid is very brand conscious, and you think they will be devastated if they don’t get a Mac, then consider a refurbished Macbook. Remember, there’s a big price difference between the regular Macbook and Macbook Pro, but the specs that the Pro offers are not needed for the average college freshmen who will be using it to surf the internet and write papers. Right now, the Apple store website has a refurbished 13″ Macbook with great specs for only $899 with free shipping. It’s Apple certified, so you can rest assure that they will stand by all of their refurbished products.

The Most Important Feature

Many people get caught up in all of the tech features of a laptop, and they end up buying a computer that is much too powerful than the user needs. When buying any computer, you need to consider matching the user with the specifications. If your kid is really big into video editing, recording music, and shooting high-resolution photography, then you’ll need to buy them a powerful computer. But, if they are like most computer users and they’ll be using it for the internet, watching streaming video, and using MS Office, then they don’t need the most powerful computer on the market. So, what’s the most important feature on a laptop? Size and portability matter most to me. I really don’t like laptops that act like desktops. 14 to 15″ inch screen laptops that weight less than 6 pounds are what you need to look for. I am not a big fan of the netbook, only because their keyboards are so small and the size of the screen makes it hard to do more than one thing at a time. But again, pay more for portability rather than tech specs.

Here is a list of specifications that will be plenty of power for the average user:

2GB RAM
100 GB Hard drive
Any Core Duo processor above 2.0 Ghz
128 RAM on video card
Wireless card G/N

Some extras that are nice to have, but not necessary:

Built-in webcam
Bluetooth capabilities
HDMI hook-ups (allows you to hook the computer up to a television

Good Brands for Windows-Based PCs

Stay away from HP, Compaq, and Toshiba. I have never heard of someone having a good experience with these brands of laptops, and they also lag behind on my most important feature, portability. For a laptop under $1,000, look for Sony, Asus, Acer, Lenovo, Dell, and Gateway.

Where To Shop

I would stay away from the large retail electronic stores like Best Buy, HH Gregg, Comp USA, and Office Depot. They try to discount the computers they are looking to get rid of from the less desirable brands. Wal-Mart, Costco, Sam’s, Fry’s, and Tiger Direct are all great brick-and-mortar locations to find an affordable laptop. My personal preference is to shop online for the best laptop deals as long as you feel comfortable enough to know what you are buying based on reading the tech specs. If you’re not, you can always look at models at a store to know what you are looking at before you buy online. Buy.com, Tigerdirect.com, NewEgg.com, and Frys.com are all good places to start looking. You can also check out deal aggregators like BensBargains.net and product search engines like Google products to help you find the BEST deals on the internet from little-known, yet reputable internet retailers.

Figure out your child’s computer needs, don’t go overboard on tech specs, look on the internet, and you’ll get your kid a great laptop for a cheap price.

Should You Pay For Your Child To Go To College?

Erik Folgate — Wed, 29 Jul 2009 17:30:41 +0000

Answering the questions of “should I pay for my child to go to college?” is a daunting task, but it should always be dictated by your personal and financial situation. Did you set up a college savings fund for your child when they were a baby? Did you not save a dime for your child’s education? Are the grandparents going to help with paying for college? The answer to these questions will help determine where your child should be attending college and if you’ll be paying for it. The decision brings with it a lot of emotions on your part and the part of the child. Your child will have their mind made up about where they want to go, but if you’re paying for it, you have the final say. Here are a few things to consider.

Don’t feel bad about not paying for their college education

Going to college is not mandatory for every child, and if you can’t afford to pay for it, the responsibility is shifted to the “child” who is not so much a child anymore. In our society, it is so taboo to think that paying for our children’s higher education isn’t our responsibility. But seriously, you gave them a roof over their head for 18 years with a full stomach, and you gave them every opportunity to succeed in high school. Don’t go into debt to pay for your child’s higher education.

Don’t Let Your Child Make The Decision

Guide your child to making the right decision. Don’t tell them it’s not up to them, but rather, participate in the decision making process. Most seniors in high school look at prestige, where their friends are going, and location of the school as determining factors. They rarely think about whether or not they can afford the school they want to attend. If you’ve bene diligent in saving for your child’s education, don’t let them burn through all of the money in two years just because they wanted to attend a private school. If you have enough money saved to pay for the $40,000 a year, then go for it, but if not, look at other options.

Going to community college for two years isn’t the end of the world

Many seniors think of themselves as losers for going to community college the first two years, but I still wish that I had gone this route. I would have saved myself $12,000 if I had stayed at home the first two years. The college experience is great, and I have dozens of good friends from college that I still keep up with. Some of my most favorite memories were made at UF, but your child can still experience that their junior and senior year. The dirty little secret that many universities don’t tell you is that the core classes you’ll be taking your first two years are exactly the same as they are in community college. You really don’t start taking classes for your major until your junior and senior year.

Should I co-sign on a student loan for my child?

The answer is flat out, “NO”. Why would you co-sign for someone who is broke and will be broke for a few years after they get out of school? I know you want to help them, but it’s just too risky.

The bottom line is that you can’t go back and mend your mistakes of not saving for college by getting into a bunch of debt to pay for your child’s education now. If they choose to go to a school that they can’t afford against your wishes, then that is their choice.

Where I am coming from on this issue

I spent my first three semesters at Toccoa Falls College, a private, Christian college in Northeast Georgia. The tuition was about $4,500 a semester, and the room and board was another $2,500 per semester. My parents had nothing to give me, and my grandmother left me about $2,500 in a mutual fund. I could not afford this school, but I was too dumb to realize it, and no one told me not to go. They were excited that I was going to a Christian school and playing basketball, and so was I. About a year later, I saw the money flying out the door and the student loans I was accumulating. My credit card bill got bigger and bigger, because I wasn’t working enough to pay for books and other living expenses. So, I left Toccoa, went back home and started community college. Then, I moved to Gainesville, finished my A.A. at Santa Fe Community College, and I was immediately accepted into the University of Florida. On top of the florida scholarships and grants, I was getting money BACK from the school with all of my tuition and books paid for. I had already accumulated $12,000 in loans, but I had stopped the bleeding. Don’t let your child make a big mistake and end up with mounds of student loan debt. It’s not worth it for your undergraduate degree. Community colleges and state universities provide great educations. Be the voice to your child that I didn’t have when I was making my college decision. Related Posts:

Should You Pay For Your Child To Go To College? is a post from: Money Crashers

College Savings Tip: Live Without A Car

Erik Folgate — Fri, 15 Aug 2008 12:37:19 +0000

This might sound crazy to some of you, but I knew plenty of people who made it happen. The only drawback this is that it makes it tough to hold a job during college. I think all college students should working during their college career, but many jobs are either on campus or right around the corner. My senior year, I worked as a computer technician on campus, and I lived five blocks from campus. I drove my bike to work every day. Here are five reasons why living without a car can save you some significant cash.

Gas is $3.75 a gallon. Need I say more?
Insurance premiums for young people are outrageous. You’ll easily spend $75 to $100 a month on car insurance.
Car maintenance is extremely costly, and most young people drive old cars. Oil changes, new tires, new alternator, new radiator, and new batteries. I replaced all of those during school, and I cringed every time that I did it.
Parking is never fun at large universities. Parking passes ran $75 to $100 a semester for on-campus passes and some apartment complexes near campus charged for parking passes as well.
You won’t be tempted to go home as much. I know mom and dad want to see you, but going home is expensive. Not having a car won’t tempt you to make unnecessary road trips.

Seriously consider buying a good bike and get familiar with the bus system. I owned a car, but I still frequently road my bike, because finding a parking space on UF’s campus is impossible during peak hours. I also used the bus system frequently, because it was free with our student ID. You will seriusly save some cash if you can find a way to make it work for you.

College Savings Tip: Set Up An Automatic Savings Plan

Erik Folgate — Thu, 14 Aug 2008 12:27:17 +0000

I recommend the ING Direct Orange Savings account for college students. It earns 3.0% interest, and you can set up an automatic savings plan.

My biggest problem in college was that I had no cash cushion when something went wrong. When my car broke down, it went on a credit card. When I needed a security deposit for an apartment, cash advance on a credit card. My parents helped me a little bit with finances, but not with big expenses. And I suspect that many of you are in the same situation. In order to keep yourself from using your credit card as an emergency fund, set up an online savings account to automatically take out $25 dollars a week for your emergency fund. Then, when the worst happens, you’ll be prepared for it.

The ING Orange savings account has no fees, no minimums, and you can open it up today. Related Posts:

College Savings Tip: Set Up An Automatic Savings Plan is a post from: Money Crashers

College Savings Tips: Buy Used Text Books

Erik Folgate — Thu, 14 Aug 2008 02:27:17 +0000

Many college students will be going back to school soon, so I decided to put together a series of savings tips for college students. Many of the tips that I share are ones that I used myself while I was in college. One of the largest expenses for college students other than rent and tuition, are the dreaded textbooks. The amount that publishers charge for textbooks is criminal. Plus, some of them package a textbook with the workbook and practice tests, so you are forced to buy the entire package or nothing at all. It’s sick, and college students know it. Here’s what you can do.

Check your local used text book store. The prices are typically 15% to 30% cheaper than new text books.
Check Half.com, Craigslist, and Amazon.com for used text books at a fraction of the price.
Go to the first class before buying textbooks, and ask the professor specifically how much he or she will use the text book. You may find out that you don’t need it at all or you may be able to get away with checking the book out at a library periodically throughout the semester.
Share a textbook with a friend. Work out a system where you take the book for a certain amount of time to study with it, and your friend takes it for the rest of the time.
Check out a textbook swap website such as bookswap.com, swapbooks.com, and collegebookswap.com to get rid of old textbooks for ones you need.
Publishers love to make new editions just to sell new textbooks and make used ones obsolete. The dirty little secret is that some older editions have EXACTLY the same content as newer editions, and you can find older editions for DEEP discounts.

Don’t settle for paying full price for your textbooks. It’s not worth it, and many professors rely heavily on their own notes for the course cirriculum. More often than not, textbooks are only a reference, rather than the bulk of the cirriculum for a college course. Choose wisely, and do your research. You’ll literally save hundreds of dollars if you follow the tips I listed above.

Investing In A Child’s College Fund Versus Paying Off Your Mortgage

Erik Folgate — Wed, 24 Oct 2007 03:38:06 +0000

If you have young children and a house, you may have faced the dilemma of whether to pay off more money on your mortgage or start putting money towards a college tuition fund for your children. So, what’s the right answer? Well, every answer is different given someone’s situation. Here are some things to consider:

First off, evaluate how many kids your going to be putting through college and how much time you have to build up cash for college. If you’ve got teenagers, then you’ll have to start saving yesterday for college.
How much do you owe on your mortgage? Could you pay down your mortgage AND save for college at the same time? Most people don’t have enough disposable income for this, but it’s worth checking out to see if you can swing both without putting a strain on your family.
Will you be making enough money to pay cash for your children’s college expenses when they enroll? You may have a great income, and you’ll be able to write a $5,000 check for tuition, but planning for this type of expense is always the better thing to do. It’s tough to say with 100% confidence that your situation will be that favorable when your kids leave for college.

If I was faced with this decision, I would start funding a college fund before I started paying off a mortgage. Your mortgage is an appreciating asset, but college tuition, room, and board are a HUGE expense. I don’t think your a bad parent if you don’t help your children pay for college, but if you have the financial opportunity to gradually invest small amounts of money towards their college expenses, then I think you should do it as a responsible parent. You can fully fund an ESA for 10 years and have plenty of cash piled up for your child’s tuition, room, and board. Just make sure that you actually have the extra cash to invest in your child’s future. Don’t stop paying the mortgage or utility bill just to fund an ESA. Related Posts:

Investing In A Child’s College Fund Versus Paying Off Your Mortgage is a post from: Money Crashers

The 11 Principles Series: Paying For Education with Cash

Erik Folgate — Tue, 03 Jul 2007 03:01:59 +0000

Pay for your college education with cash. That sentence sounds so simple, but it is one of the toughest things to do in the 21st century. College tuition continues to rise, the cost of living continues to rise, and the demand to have that magical piece of paper called a degree continues to be more important. I will be honest from the beginning, I currently carry student loans. So this is not an article to preach to you all about paying cash for your education. I understand if you take out a loan. Most of my loans were taken in the first year and a half of my college degree, because I made the wrong decision of going to a private school that I could not afford. I realized that I was doing, quickly withdrew, and enrolled in a community college to finish my A.A. This is a challenge. I am challenging you to make a goal to pay cash for your education and your child’s education if you plan far enough ahead. I’m challenging you because I know you’ll thank me later on in life.

If you walk out of a post secondary degree with no debt, you will start the next chapter of your life financially ahead of more than half of your peers and others who went to college. How does that sound? That sounds like a good enough incentive to me. You’ll be in a better position to save up for a house quicker than people your age, and you’ll start a marriage with less stress in your life, because you carry much less of a debt load. I listen to Dave Ramsey’s radio show every now and then, and I always hear of twenty-somethings calling in with 50k, 100k, 150k of combined student loan debt. Granted, some of them are doctors, but some of them walk away with that just after undergraduate degrees. There are few things that you can do to help yourself pay cash for a college degree. Here they are:

Go to a state school. If you’re parents did not plan for your college education, then you can’t afford a private school. Going to private college whether it’s a christian school, Ivy League school, or a specialist school is a luxury. You can get a great education at a state school for usually a third of the cost. You will find out that it matters less and less where you received your undergraduate degree. If it’s a reputable, accredited school, then your undergraduate degree can be done at a good state school. I know that a business degree from Harvard might look better than the one from the University of Arkansas, but it’s not about the degree. It’s about you. The Harvard degree might get your foot in the door, but it is YOU that keeps the job and receives promotions.
Keep your cost of living as low as possible. When I was in school, I witnessed a good deal of my friends blow their money on going out to eat almost every night, drinking and clubbing every weekend, and buying clothes and other unnecessary things for their apartment. If you decide to not work while in college, then you should be the one that really tightens up on your budget. Too often I saw the students that didn’t work were the ones that went out to eat every night. One great way to save on rent is to find an older house for about $1000 to $1200 a month and split the rent four ways with three other roommates. Here’s a novel idea, pack a lunch to eat between classes! It’s those simple things that will allow you to keep your expenses very minimal while getting your degree and allow you to pay as you go.
Get a job while in school. Working while in school is very feasible. Don’t cry to me that your workload is too strenuous. My wife was a pre-med major for her undergraduate degree and she worked 30 hours a week serving at Olive Garden. I delivered food, worked on campus, and worked some other various jobs while in school. I always had at least one job during school. UPS offers a great tuition reimbursement program. You can work part-time for UPS as a delivery driver, and they will literally pay for all of your tuition while you are working for them. You can work 25 to 35 hours a week and still have plenty of time to study and have a social life. It’s all about your time management. Time management is not a course in college, but it should be!
Find creative ways to make extra income. This is a great segway to my next principle. Read my next article about creative ways to boost your income. I used a few different ways to make extra cash for going out, paying utilities, and paying for gas.
Related Posts:
The 11 Principles Series: Paying For Education with Cash is a post from: Money Crashers