Today is a day for me to celebrate. No, not because it is Friday (and why does everyone get so excited for the weekend? I mean, I love every second of my job and I have a hard time not working all weekend too. Are there that many people out there that really despise his or her job?) or because the weather is going to be nice this weekend, nor because I am all moved into my new apartment. But rather for the fact that based on my calculations (which are pretty accurate) I am an official graduate of Purdue University. I just finished up four straight semesters of math courses that were all required for my set of three degrees. But, I will never open another notebook (or at least until I start graduate school) again.
There are a lot of college students out there. And not every college student will graduate. There are the students that go to college to drink and party and get into as much trouble as they can. There are students out there that study their butts off in the wrong major and end up switching time and time again only to find themselves five years in with nothing more than the day they started. And there are students out there that busted his or her butt in high school, made the grades to get into that ivy league school, and will succeed in every possible way. I fall somewhere in the middle of that mess. I did transfer colleges after two years. I did start at the bottom when I began at Purdue. And I did take the scenic route through school. But at the same time, I had a blast while doing it. I would not be the person that I am today if I had not gone the route I did.
But I was lucky in my college career. Through the help of scholarships, grants, and a very generous father, I was able to escape college without an ounce of debt. (I am not so sure my father can say that, though.) But how many of you can say that? I am not trying to brag by any means, I am jut lucky and have been able to put myself in a perfect position to begin my career. (And how cool is it that I have been working for almost eight months and learning everything I can not even having the degree? It is very cool, that’s how cool!) But not everyone can say that. There are people that go hundreds of thousands of dollars in debt to hold that piece of paper in his or her hands. But, they can say when they reach that stage (I am not walking by the way) that, “I did it.”
But where does that college loan sit? Are you with your local bank paying an insane interest rate? Or did you follow the more typical route and go through Sallie Mae? (I just learned yesterday that they also do mortgages.) If you chose that path you are probably going to be paying on those student loans forever. They offer such low rates, and such a long time to begin paying them off after graduation, let alone to pay them off at all, that you can just push them to the side and it never matter. As long as you are giving them something they could care less.
Some students are starting to run away from his or her loans. They are pushing them so far to the side that they just stop paying them all together. I mean, of course when you are first out of high school you are eager to get moved into a dorm and not have to have your mom wake you up every morning. The loan companies are going to give you enough to feed yourself, to live for a few years, to cover books, and to even cover a computer if you need one. So you sign on the dotted line with the idea in the back of your mind that you do not have to pay these loans off for four or five years. Why worry now, right?
Well when you finally make it through college and are stuck with that bill how do you handle it? How much do you owe your loan company? And how long are you going to keep putting it off before you just pay it off? (I would much rather get out of debt now, when I am young (or avoid going into it at all) than get to the point where I am thirty plus and owing fifty of sixty thousand on my education.)
It is getting to the point where some companies are offering the option to refinance your loan for a lower interest rate. They are doing this just in hopes that you begin making some payment to begin with. (I wonder if you file bankruptcy while you still have student loans how that is handled. Does anyone know?)
I look at this like buying a new car. If you have a budget, which I assume everyone in the work force does, you know how much you make, how much you need to live, and what your spending habits are. I know that I spend $X,XXX a month and that I save $XXX a month. I place this in a series of four bank accounts that are all set up for various reasons. This allows me to be flexible with my money. (How do you think my trips to L.A., Las Vegas, San Juan del Sur, and Dubai are getting paid for this year?) So if you go out and buy this new car you know what kind of a payment you can afford. So do you pay the bare minimum? I would think not.
I am in the process of buying a new car myself, and I have given myself a budget of $149 a month. Now, is that what I want to spend on a car all together? No. I want to spend that only if I am buying (and I have been considering a lease in the most recent weeks) due to the fact that I would pay $299 a month. Why? Think about it. I will pay off a, say $15,000 car, in half the time. Why would I pay the bare minimum and drag out the inevitable?
But this is where they make their money. For instance, my last credit card statement read well over a thousand dollars (I put all my bills on there, so calm down.) My minimum payment was $20. Are you kidding me? If I would do that, next month I would have a 13.9% interest rate tacked on the end of that, as well as only knocking the total down by $20. So in theory, that $20 would actually not do anything. I would loose money. I would be paying money to pay more money.
So what are you doing with your student loans? Where is your paycheck going? Who did you borrow money from? And what are your plans for your student loan in the next five years? What about the next ten?
Also, can I borrow $20 form someone? I have to make a credit card payment.