How to Graduate Debt-Free: The Best Strategies to Pay for College #NotGoingBroke
224
How to Graduate Debt-Free: The Best Strategies to Pay for College #NotGoingBroke
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Overview
-Establish a winning money mindset -Save up and cut costs before you get to campus -Figure out the dollars and sense of financial aid -Secure your share of free cash for college -Earn money to pay as you go -Choose a school and a major that's worth it -Stretch your funds when every penny counts
With determination, the right information, and a well-planned strategy, you can earn that career-advancing degree and graduate from college debt-free. #NotGoingBroke
Product Details
| ISBN-13: | 9781617957437 |
|---|---|
| Publisher: | Worthy |
| Publication date: | 08/09/2016 |
| Pages: | 224 |
| Product dimensions: | 5.30(w) x 7.90(h) x 0.70(d) |
About the Author
Read an Excerpt
How to Graduate Debt Free
The Best Strategies to Pay for College
By Kristina Ellis
Worthy Publishing Group
Copyright © 2016 Kristina EllisAll rights reserved.
ISBN: 978-1-61795-743-7
CHAPTER 1
A WINNING MONEY MINDSET
Setting the Foundation
The best investment you can make is in yourself.
Warren Buffett
I took one look and I knew I was in love. I dreamed of all the memories we would make and the fun we would have together ...
The first time I saw that trampoline commercial, there was no doubt: it had to be mine. My big brother felt the same way — we just had to have one. The problem was, at three and five years old, we didn't have any money.
When Mark and I approached our parents, Mom and Dad quickly informed us they had no plans to purchase a trampoline. Instead we were told: "When you can think of how to make the $200 to buy one, you can get it."
Upon hearing this, my brother, who is now a biomedical and cloud-computing engineer, immediately pulled me into his room and said, "Kristina, we have to make a plan."
As he and I brainstormed, we put together our strategy: we would sell homemade cookies and lemonade during the upcoming Rendezvous, our town's biggest event, held annually over Memorial Day weekend. We told our parents, and they got on board. Our mom agreed to help us make our "product," and we rehearsed the best sales pitches we could come up with.
During that weekend, we sat in the front yard behind our makeshift sales counter for more than 20 hours over two days. Even though it was hot outside and our friends were off enjoying the festivities, we refused to leave our post as long as there were potential customers nearby. On Sunday evening, when the sun went down and Dad pulled out the moneybox, we sat at the kitchen table, gripping the wooden edges and nervously awaiting our total. We hadn't reached our $200 goal by day's end on Saturday, so we felt especially anxious for the final results.
When he finished counting, Dad took a deep breath and said, "So that's it."
I thought, So that's what?
"You made $327!" he announced.
"We did it!" Mark and I screamed.
Amid our high fives and happy dances, something else suddenly occurred to us: not only could we get a trampoline, but we could buy something else major with our extra $127! We ended up purchasing both our trampoline and a basketball goal — well beyond what we had imagined — for one weekend of combined work!
In that moment, far more than the dream of a trampoline was realized. Deep within me, a money mindset — and a lifelong conviction — was formed: with hard work and a winning strategy, any financial obstacle can be overcome.
10 Can't-Miss Financial Principles
Over the years I've learned many additional lessons in financial strategy — some of them through research and study, and a lot of them in the laboratory of real life. Underlying them all is the need for a bedrock of financial understanding. Before I can help you determine how to pay for college, it's important that we lay a strong foundation that will stand the test of time. These principles will help you enact a great strategy to both graduate debt-free and achieve financial success throughout your lifetime.
PRINCIPLE #1: START EARLY
Procrastination seems to be a part of human nature. Most people fight it at least some of the time, including me. As tempting as it can be to put off things until they're absolutely necessary, the sooner you begin working toward any goal, the greater your chances of success. Especially with finances.
Starting early can help you get ahead in many ways. Not only does it allow for money principles like compound interest to work hugely in your favor (see Principle #5 below), but it gives you more time to implement effective strategies, which will reduce stress. It also helps with things like applying for college and scholarships. Many students wait until senior year to think about applications, but most admission and scholarship award decisions are based on your entire high school experience, beginning with ninth grade. Students who begin planning early, even as early as junior high, have the advantage of extra time to go after big goals and develop a winning résumé.
If you didn't get moving as early as you wish you had, don't be down on yourself, but also understand: waiting won't make it any better. I encourage you to fight any urge to keep putting things off and instead work on tackling your financial goals immediately. It's never too late to strategize and launch from where you are. With each new day you have the opportunity to positively impact your savings and earning potential, so start now.
PRINCIPLE #2: MAKE A PLAN
Pioneer aviator Antoine de Saint-Exupéry once said, "A goal without a plan is just a wish." It's safe to say most people want to be financially secure throughout their lives. In fact, almost everyone dreams of having enough money to never have to worry about bills again. But as many prosperous people will tell you, wealth doesn't come easily. Yes, there are the few lottery winners and occasional celebrities who reach overnight fame, but they're the exceptions. Most often, the journey to financial success requires deliberate choices and long- term thought. So take an honest look at your finances and make a game plan.
You may be thinking, I'm only a sophomore in high school ... What do I have to worry about? The reality is, you're in charge of your financial future, and your future starts now. While your parents may be helping you, the level of financial success you'll achieve is ultimately up to you. Plenty of college graduates have tumbled headfirst into a canyon of overwhelming student loan debt, never expecting that they would still be trying to climb out of it 10 or 20 years later.
At this moment, you have the opportunity to avoid such a pit. Think through which financial goals you need to reach in each of the next five years to achieve your college dreams (this book will help you figure those out) — and then which financial goals you want to accomplish even 10 years from now. Then sit down and write out what it will take to make them happen. Include things you can do on a month-to-month and year-to-year basis to keep you on track. And don't forget to implement daily habits to support your efforts. Perhaps this month you can apply for three scholarships, and today you can skip that $4 coffee at Starbucks so that next year you'll have not only some scholarship money reserved in your name but a certain amount of savings set aside.
Be sure to celebrate milestones along with small wins throughout the process to mark your progress and help you stay motivated. Creating your financial plan may take a little time upfront, but it can quite literally pay off in the long run.
PRINCIPLE #3: CREATE AND MAINTAIN A BUDGET
Keep an eye on the money you have coming in and going out. Best-selling author John Maxwell says, "A budget is telling your money where to go instead of wondering where it went." As simple as this sounds, a recent Gallup poll revealed that only 30 percent of Americans track their income and expenditures. Not monitoring your spending habits can cause you to pay out significantly more than you anticipated, further distancing you from your goals. Especially since college often turns out to be far more costly than families expect.
A multitude of extra expenses can creep up before you know it. From test and application fees to deposits, campus visits, and dorm room supplies, there will be no shortage of opportunities to spend ... and spend ... and spend. So know what you can afford by creating and living on a budget. By facing your financial situation head-on, you'll be better able to anticipate and prepare for future expenses, as well as avoid impulse purchases.
See chapter 9 for more information on how to set up and maintain a budget.
PRINCIPLE #4: AVOID DEBT
As you make contact with colleges and universities, you will be pitched some crazy tuition rates — the kinds of numbers that most families can't even begin to imagine coming up with on their own. These schools know, however, that the "debt industry" stands ready to provide the funds for parents and students to borrow their way through. However, beware the real price tag — this money is never cheap!
Debt is borrowed funds that have to be paid back, most often with interest. "With interest" means a percentage is added to your balance each month to compensate the lender for delaying repayment. Ultimately, you will end up paying back more — sometimes much more — than you initially borrowed. Financial guru and best-selling author Dave Ramsey describes it in these terms: "The decision to go into debt alters the course and condition of your life. You no longer own it. You are owned."
Sadly, the business of debt has left too many people trapped in a desperate cycle that is hard to escape. For example, if you borrow $100,000 in student loan debt at a 6.8 percent interest rate with a 10-year term, then you will not only be paying back the principal — the original money you borrowed — but also an extra $38,097 in interest over the duration of the loan!
Paying back $1,150 per month, on top of other living expenses, isn't realistic or even remotely possible for most new graduates. Keep this in mind too: after graduation, you'll have even more opportunities to sink further into debt as you're offered store credit cards, car loans, introductory cash bonuses "just for signing up," and so on. Therefore, be very wary. While there are some rare times to take on what is deemed "good debt" (such as a mortgage to buy a home), debt most often causes far more harm than good and should be strongly avoided.
For more information on how to navigate debt, especially student loans, see chapter 7.
PRINCIPLE #5: USE THE POWER OF COMPOUND INTEREST
You've probably heard people mention how "the rich keep getting richer." Well, compound interest is a powerful financial tool that has a lot to do with that notion. Depending on whether it's working for you (through savings or investments) or against you (in a loan), it can tremendously multiply wealth over time — or cause you to lose it faster than you thought possible.
When your money is already earning interest, and then that interest earns additional interest, you're seeing the positive side of compounding at work: it's money making money. In the case of a loan, this works against you when the interest on your debt keeps increasing your debt.
Albert Einstein has been credited with saying, "The power of compound interest is the most powerful force in the universe. He who understands it ... earns it. He who doesn't ... pays it." If you want to see the huge difference compound interest can make, search for an online "savings calculator" and see what $5,000 or $10,000 today will look like 40 years from now at a 6.5 percent interest rate. Now take that same figure and imagine you borrowed it at that interest rate. The several thousand dollars gained by saving could just as quickly be lost through borrowing.
Evaluate each dollar for what it can benefit or cost you in the long run. The earlier you grasp this concept and start using it to your advantage, the more time your money has to make money for you.
PRINCIPLE #6: PAY YOURSELF FIRST
Renowned finance expert Robert Kiyosaki — often called "The Millionaire Schoolteacher" — advises, "You must have the self-discipline to pay yourself first." He goes on to explain the importance of setting aside income for savings and investments before your paycheck disappears to bills and extras you don't really need. This way, you have money to invest in assets that can earn more money for you!
Make a habit of immediately putting aside a certain amount of everything you make. For example, if you know you're going to get paid $100 for mowing lawns this weekend, you could determine in advance that you'll put $20 of it into an interest-earning account. This will help you avoid the temptation to spend it all when your friends start buying the latest video games or tech gadgets. Following this principle makes growing your savings a top priority and increases your potential for reaching financial freedom.
PRINCIPLE #7: VALUE YOUR TIME
Time wasted comes at a cost. In fact, financially speaking, it's often described in terms of opportunity cost — which Investopedia.com defines as "the cost of an alternative that must be forgone in order to pursue a certain action." In other words, for every hour you spend on a particular activity, you're giving up the opportunity to spend that hour doing something else. You can gain or lose a lot simply by valuing or not valuing your time.
For example, if you could graduate from college in four years, but you take six years instead, you lose not only whatever it costs you to attend school for those two additional years (which could easily be well over $50,000 in tuition and fees), but you forfeit the income you could have made during that time. According to the National Association of Colleges and Employers, the average starting salary for a college graduate was $48,127 in 2014. Therefore, that additional two years in school could equate to about $100,000 in lost earnings — and another $50,000 or so that the extra schooling cost you!
Time is money, so be intentional with how you spend it. You'll not only increase your financial fitness, but you'll build your life around things that energize you and bring you happiness.
PRINCIPLE #8: DON'T OVERPAY
Why pay more when you can pay less? As simple and cliché as that may sound, it's a valid question. If you can find the same item or service for much cheaper, with only a little extra research and patience, why not spend less and save your cash?
For most college students, money is tight. Any chance to keep some of it in your pocket and make your dollars stretch is a win. With a multitude of websites and apps designed to help you locate the best price on just about anything, getting a deal is easier now than ever. Keep an eye out for discount codes, coupons, and sales. While 15 percent off or "buy one, get one" may seem inconsequential in the moment, it all adds up. Just remember to use deals on things you actually need; don't buy something simply because it's "on sale."
Over the years, practicing this principle has allowed me to enjoy a lifestyle far beyond my income. I've spent a month traveling through Europe at nearly 70 percent off standard retail price. I've furnished my home with new, high-end furniture I found at a 90 percent discount. And just last week I saved $100 repairing the brakes on my car simply by remembering to print off a coupon before I left the house. With just a little extra effort, I've saved thousands!
Also, always be willing to negotiate or bargain. In an interview with Inc. magazine, serial entrepreneur and venture capitalist Howard Tullman stated, "My rule of thumb is that someone is going to have the best seat in the house. It may not be me. But shame on me if I don't ask for it."
His words really changed my approach to negotiating. In many situations, it's completely acceptable to ask for a better price. Most people simply accept the number put in front of them to avoid feeling uncomfortable. I encourage you, though, to develop negotiation skills and be unafraid to give bargaining a shot. You may not end up with anything better ... or you just might get the deal of a lifetime. But you'll never know unless you ask!
Though it's not at all the norm, there have even been situations where students have gone so far as to negotiate with their college for a better financial aid package — and succeeded! I know of a high school senior who had been accepted to multiple schools and was offered $18,000 in grants and scholarships by his second choice but only $5,000 in free money by the one he really wanted to attend. The student spoke with a financial aid officer at his top pick, explaining his situation and requesting an offer that more closely matched the other one's package. As a result of that conversation, the dream school upped its offer by an additional $10,000 in gift aid! While this doesn't always happen, and shouldn't be expected, that student took a risk that really paid off!
(Continues...)
Excerpted from How to Graduate Debt Free by Kristina Ellis. Copyright © 2016 Kristina Ellis. Excerpted by permission of Worthy Publishing Group.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
A Note to Readers ix
Introduction #NotGoingBroke 1
1 A Winning Money MindSet Setting the Foundation 5
2 Saving for College Preparing the Way 23
3 Pre-College Actions Cutting Costs Before You Enroll 41
4 Financial Aid Dollars & Sense 67
5 Scholarships Free Money for College 91
6 Pay as You Go Working Your Way Through 115
7 Navigating Debt A Dangerous Road 139
8 Make College Worth It Schools & Majors That Pay Off 157
9 Budget and Save Making Your Money Stretch 183
Conclusion Freedom! 201
Resources 203
Acknowledgments 205
Index 209
