Red or Black? - Page 2

Skunks · 01-04-2005, 12:19 PM

Being still in school I'm somewhat oblivious to just how dire my finances are, but y'all've got me thinking. Are there any big college-years fiscal shoulda-woulda-coulda's, beyond the obvious "get all your food, booze, and pot from friends & shack up with a business/econ/compsci major from a rich family"?

(I like the "use plastic, not cash" bit, particularly with online banking and such.)

garnet · 01-04-2005, 12:51 PM

Quote:

Originally Posted by Skunks

Are there any big college-years fiscal shoulda-woulda-coulda's...

Don't charge up the credit cards, no matter how tempting it may seem. It's scary how easy it is for college kids to get credit these days, and I definitely fell into that trap. At one point I received an offer for a pre-approved credit card with a $5,000 limit, and I didn't even have a job at the time (yup, I got it, and shortly after had it maxed out). I had a good time in college, but it took me almost 10 years to pay off that stuff. I've certainly learned my lesson...don't do it!

Beestie · 01-04-2005, 01:01 PM

Quote:

Originally Posted by Skunks

Are there any big college-years fiscal shoulda-woulda-coulda's, beyond the obvious "get all your food, booze, and pot from friends & shack up with a business/econ/compsci major from a rich family"?

I think you pretty much have it figured out.

Beyond that, I'd try to keep a low limit on the cards and resist the temptation to increase to the level that credit card companies would like you to raise it to. The Capital Ones of the world would love nothing more than to own your ass once you get out of school.

I always tried to get a job on campus that I could use to offset some expense like being a dorm advisor in exchange for free rent or work in the cafeteria for free food. Jobs that pay with real money are fine but I tended to piss away the money.

Kitsune · 01-04-2005, 01:09 PM

Are there any big college-years fiscal shoulda-woulda-coulda's, beyond the obvious "get all your food, booze, and pot from friends & shack up with a business/econ/compsci major from a rich family"?

Avoid those damn student ID debit cards that don't permit you to use the money anywhere else but on campus. We ended up burning the money away in the school store on stupid crap because we weren't permitted to widthdraw the money until we had graduated (ha ha). Meal plans are sometimes a massive waste, too -- go to the grocery store and sustain on the joys of college, like Coco Puffs, coffee, and Ramen.

melidasaur · 01-04-2005, 01:24 PM

I really hate how credit card companys prey on college students. I fell victim to their free tshirts and candy bars as a college student and it pains me to see other college students fall victim to them. Whats sad is with all of the credit card debt that I did rack up in college, I have nothing to show for it. I didn't buy anything cool, just crap!

I work on a college campus now and really try to tell all of my students that credit cards are evil and not the way to build up your credit. Pay your cell phone bill on time, pay your tuition... that will help you build up your credit without going into debt.

My other thing is - if you don't have the money to pay for it now, do you really need it? Emergencies are one thing... but if you don't have $500 to pay for a pair of jeans, do you really need them? I don't think so.

Happy Monkey · 01-04-2005, 01:33 PM

Pay your credit card bill in full every month. Pretend that the balance is the minimum payment.

garnet · 01-04-2005, 01:34 PM

Quote:

Originally Posted by Kitsune

[i]Meal plans are sometimes a massive waste, too -- go to the grocery store and sustain on the joys of college, like Coco Puffs, coffee, and Ramen.

I agree. I never got my money's worth out of the meal plans. Most of the food was gross anyway, and I never got up early enough to eat breakfast, so that was a waste of 1/3 of the cost. I did a lot better with a mini-fridge and microwave in my dorm room.

russotto · 01-04-2005, 01:53 PM

Black. I use credit cards but pay them off each month. I spent a lot of money last year (mostly that New Zealand vacation mentioned elsewhere), so was red for the year but I had the savings to cover it.

Of course, making the property not count is cheating... I've got six figures of debt in the house.

Beestie · 01-04-2005, 02:15 PM

Quote:

Originally Posted by russotto

Of course, making the property not count is cheating...

Not really. You own a house worth 100,000 and you owe $98,000 on it you are technically in the black for $2,000 (transaction costs notwithstanding).

When there is no corresponding asset to the debt, that is a problem even if only a temporary one.

lookout123 · 01-04-2005, 02:19 PM

also, having a free and clear home is not the wisest choice. Real Estate with either appreciate or depreciate in value irrespective of the amount owed on it. if you can pay 4-6% interest annually on a mortgage balance and have a greater portion of your net worth invested wisely you will have more for your retirement nest egg in the long run.

lookout123 · 01-04-2005, 02:21 PM

BTW, i have to change my previous answer as i will now finish january seriously in the red. i just purchased another piece of land last night and will have to wait 6-8 weeks to pull my money back out and return it to my investments.

Cyber Wolf · 01-07-2005, 10:38 PM

I'm about $12K in debt due to student loans. Minus that, I have about $400 that I owe on, made up of medical bills and credit card debt. I only got my first credit card two years ago. It came with a $500 limit and I've left it there because I know I'll spiral out of control if I get a limit much higher than that. Also, by using my debit card instead of cash for most of my purchases, I can easily see what my money's going into. And if there's something I really really want, I'm patient enough to wait until Christmas time or near my birthday and start dropping hints

Beestie · 01-07-2005, 11:33 PM

Quote:

Originally Posted by lookout123

BTW, i have to change my previous answer as i will now finish january seriously in the red. i just purchased another piece of land last night and will have to wait 6-8 weeks to pull my money back out and return it to my investments.

Please explain how buying property puts one in the red. Unless, of course, you paid considerably more than the property was worth.

Griff · 01-08-2005, 11:25 AM

Debt is a lifestyle choice. Its great for the mobile fully employed middle class suburbanite who can afford to play the government tax and education games that were written for him. Buying land on speculation may not be a great idea for working class country folks, with rural population wanning and the buying pressure from city folks inflating land prices (temporarily?). Agriculture is dead, we live in a difficult job market but won't have a banker on our butts if we lose our jobs. We live very different lives, let's not pretend that our economies are the same. My house is free and clear. I built (am building) it spending no more per month than I would have spent on a morgage so there was no initial lump sum that could have been invested differently. I did take a hit on salary but that was balanced by being the primary care-giver for my kids before they became school age and providing that crucial stability. You have to tune your debt to your personal situation. You can use debt but debt can just as easily use you. Griff

lookout123 · 01-08-2005, 11:42 AM

Beestie, i meant that i'll be in the red for the short term, as i chose to drain savings to pay for it. i will mortgage it next month and return the money to my investments (keep in mind i pay no sales charges). just playing numbers games for best possible terms, really.

Griff, i definitely wasn't encouraging excessive debt. i wouldn't take out a larger than necessary mortgage unless i had that same amount invested in relatively conservative vehicles. that way, if the need arises, one can always pay the mortgage down without fear. example, if your home is free and clear and you were to take a loan for 50% of the value and invest that into a nice blend of conservative investments returning an average of 8-10% annually and you were only paying out 5% on the mortgage balance(which is tax deductible, so in a 15% tax bracket you are really only losing 4.25%), your money would be working more effectively for you. if you run into hard times you can A) pull monthly expenses out of investments, B) liquidate investments to pay off debt completely eliminating payment altogether. that scenario is equally valid in any job and housing environment.

That doesn't mean you should do it, though. All financial plans have to fit your comfort level. If you have a fantastic financial plan in place with wonderful investment vehicles working for you, but you can't sleep at night because of concern over the mortgage, it wouldn't be the right plan for you. Like i tell my clients "I have many great investments available, that doesn't mean they are all great for you. the goal is to fit the investment to the person."

i should also add that i don't really invest in property for investment sake. i am going to build a new home over the next 24 months then sell the one i'm in now. i believe the big housing bubble is going to deflate over the next couple of years as people who got in over their heads start to drown, creating opportunity for others who were a little more restrained about the housing markets. IMO

View Poll Results: How much debt do you hold?
$20k+	2	6.45%
$10k-20k	1	3.23%
$6k-10k	5	16.13%
$2k-5k	3	9.68%
$0-1k	3	9.68%
I break even each month	4	12.90%
I'm in the black each month	13	41.94%
Voters: 31. You may not vote on this poll

01-04-2005, 01:24 PM	#20
melidasaur Traded your soul for pogs. Join Date: May 2004 Location: Champaign, IL Posts: 646	I really hate how credit card companys prey on college students. I fell victim to their free tshirts and candy bars as a college student and it pains me to see other college students fall victim to them. Whats sad is with all of the credit card debt that I did rack up in college, I have nothing to show for it. I didn't buy anything cool, just crap! I work on a college campus now and really try to tell all of my students that credit cards are evil and not the way to build up your credit. Pay your cell phone bill on time, pay your tuition... that will help you build up your credit without going into debt. My other thing is - if you don't have the money to pay for it now, do you really need it? Emergencies are one thing... but if you don't have $500 to pay for a pair of jeans, do you really need them? I don't think so. __________________ I love England, what can I say?

01-04-2005, 01:33 PM	#21
Happy Monkey I think this line's mostly filler. Join Date: Jan 2003 Location: DC Posts: 13,575	Pay your credit card bill in full every month. Pretend that the balance is the minimum payment. __________________ _________________ \|...............\| We live in the nick of times. \| Len 17, Wid 3 \| \|_______________\| [pics]

01-04-2005, 02:19 PM	#25
lookout123 changed his status to single Join Date: Apr 2004 Location: Right behind you. No, the other side. Posts: 10,308	also, having a free and clear home is not the wisest choice. Real Estate with either appreciate or depreciate in value irrespective of the amount owed on it. if you can pay 4-6% interest annually on a mortgage balance and have a greater portion of your net worth invested wisely you will have more for your retirement nest egg in the long run. __________________ Getting knocked down is no sin, it's not getting back up that's the sin

01-04-2005, 02:21 PM	#26
lookout123 changed his status to single Join Date: Apr 2004 Location: Right behind you. No, the other side. Posts: 10,308	BTW, i have to change my previous answer as i will now finish january seriously in the red. i just purchased another piece of land last night and will have to wait 6-8 weeks to pull my money back out and return it to my investments. __________________ Getting knocked down is no sin, it's not getting back up that's the sin

01-04-2005, 12:19 PM	#16
Skunks I thought I changed this. Join Date: Nov 2002 Location: western nowhere, ny Posts: 412	Being still in school I'm somewhat oblivious to just how dire my finances are, but y'all've got me thinking. Are there any big college-years fiscal shoulda-woulda-coulda's, beyond the obvious "get all your food, booze, and pot from friends & shack up with a business/econ/compsci major from a rich family"? (I like the "use plastic, not cash" bit, particularly with online banking and such.)

01-04-2005, 01:09 PM	#19
Kitsune still eats dirt Join Date: Sep 2003 Location: Tampa, FL Posts: 3,031	Are there any big college-years fiscal shoulda-woulda-coulda's, beyond the obvious "get all your food, booze, and pot from friends & shack up with a business/econ/compsci major from a rich family"? Avoid those damn student ID debit cards that don't permit you to use the money anywhere else but on campus. We ended up burning the money away in the school store on stupid crap because we weren't permitted to widthdraw the money until we had graduated (ha ha). Meal plans are sometimes a massive waste, too -- go to the grocery store and sustain on the joys of college, like Coco Puffs, coffee, and Ramen.

01-04-2005, 01:53 PM	#23
russotto Professor Join Date: Jan 2001 Posts: 1,788	Black. I use credit cards but pay them off each month. I spent a lot of money last year (mostly that New Zealand vacation mentioned elsewhere), so was red for the year but I had the savings to cover it. Of course, making the property not count is cheating... I've got six figures of debt in the house.

01-07-2005, 10:38 PM	#27
Cyber Wolf As stable as a ring of PU-239 Join Date: Jun 2004 Location: On a huge rock covered in water, highly advanced moss and 7 billion parasites Posts: 1,264	I'm about $12K in debt due to student loans. Minus that, I have about $400 that I owe on, made up of medical bills and credit card debt. I only got my first credit card two years ago. It came with a $500 limit and I've left it there because I know I'll spiral out of control if I get a limit much higher than that. Also, by using my debit card instead of cash for most of my purchases, I can easily see what my money's going into. And if there's something I really really want, I'm patient enough to wait until Christmas time or near my birthday and start dropping hints __________________ "I don't see what's so triffic about creating people as people and then getting' upset 'cos they act like people." ~Adam Young, Good Omens "I don't see why it matters what is written. Not when it's about people. It can always be crossed out." ~Adam Young, Good Omens

01-08-2005, 11:25 AM	#29
Griff still says videotape Join Date: Feb 2001 Posts: 26,813	property counts when the sheriff nails the tax sale notice up Debt is a lifestyle choice. Its great for the mobile fully employed middle class suburbanite who can afford to play the government tax and education games that were written for him. Buying land on speculation may not be a great idea for working class country folks, with rural population wanning and the buying pressure from city folks inflating land prices (temporarily?). Agriculture is dead, we live in a difficult job market but won't have a banker on our butts if we lose our jobs. We live very different lives, let's not pretend that our economies are the same. My house is free and clear. I built (am building) it spending no more per month than I would have spent on a morgage so there was no initial lump sum that could have been invested differently. I did take a hit on salary but that was balanced by being the primary care-giver for my kids before they became school age and providing that crucial stability. You have to tune your debt to your personal situation. You can use debt but debt can just as easily use you. Griff __________________ If you would only recognize that life is hard, things would be so much easier for you. - Louis D. Brandeis

01-08-2005, 11:42 AM	#30
lookout123 changed his status to single Join Date: Apr 2004 Location: Right behind you. No, the other side. Posts: 10,308	Beestie, i meant that i'll be in the red for the short term, as i chose to drain savings to pay for it. i will mortgage it next month and return the money to my investments (keep in mind i pay no sales charges). just playing numbers games for best possible terms, really. Griff, i definitely wasn't encouraging excessive debt. i wouldn't take out a larger than necessary mortgage unless i had that same amount invested in relatively conservative vehicles. that way, if the need arises, one can always pay the mortgage down without fear. example, if your home is free and clear and you were to take a loan for 50% of the value and invest that into a nice blend of conservative investments returning an average of 8-10% annually and you were only paying out 5% on the mortgage balance(which is tax deductible, so in a 15% tax bracket you are really only losing 4.25%), your money would be working more effectively for you. if you run into hard times you can A) pull monthly expenses out of investments, B) liquidate investments to pay off debt completely eliminating payment altogether. that scenario is equally valid in any job and housing environment. That doesn't mean you should do it, though. All financial plans have to fit your comfort level. If you have a fantastic financial plan in place with wonderful investment vehicles working for you, but you can't sleep at night because of concern over the mortgage, it wouldn't be the right plan for you. Like i tell my clients "I have many great investments available, that doesn't mean they are all great for you. the goal is to fit the investment to the person." i should also add that i don't really invest in property for investment sake. i am going to build a new home over the next 24 months then sell the one i'm in now. i believe the big housing bubble is going to deflate over the next couple of years as people who got in over their heads start to drown, creating opportunity for others who were a little more restrained about the housing markets. IMO __________________ Getting knocked down is no sin, it's not getting back up that's the sin Last edited by lookout123; 01-08-2005 at 11:46 AM.

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