Back to School Without Breaking the Bank

You’ve probably already heard them; the worst three words of summer: “back-to-school.” The end of July is the Sunday of summer. You still have a whole month left, but you’ve already got that first email from an overeager professor. Stores have started putting up their back-to-school displays, and shorts and tank tops are put on clearance to make room for sweaters and coats. And of course, seeing all those back-to-school commercials signals not just the end of summer – it also means it’s time to pull out the wallet for new school supplies.

The upside to this back-to-school rush is almost unlimited options for cheap pens, notebooks, and other supplies from a number of stores. The downside is that you and millions of other students are all hitting the stores at the same time. So the longer you wait, the greater the odds that you’ll only have poor quality and/or higher priced items from which to choose. To save you from this sad fate, I offer up some advice and observations from my own back-to-school experiences.

  1. Make a list. Before you even think about going to the store, figure out what supplies will be needed for each class you’re taking and write it down… Sticking to this list will help you avoid the temptation of walking into a superstore and buying everything on display. Don’t fall into the trap! Make a list, get what you need, and get out.
  2. Dumpster dive in your old backpack. Before you even go to the store, empty your old backpack and see what you can reuse. Pens, pencils, and folders are items you can typically reuse year after year. Personally, I even keep partially used notebooks as “scratch notebooks” for homework assignments and study pages. Other items like staplers, scissors, and your backpack itself are all reusable as well.
  3. Don’t worry about the color. “So last year I was into blue and white polka dots, but I just saw this awesome chevron print phone cover, which matches this new iPad cover I just saw…” wait, let me stop you right there. Do you really need to spend more money to switch up your style every year? Nope. I think it’s safe to assume that no one cares if your phone matches your iPad, or if your dorm room style is perfectly coordinated like a Target ad… Avoiding yearly upgrades for the newest trends is not only practical for your wallet, it’s also being earth friendly (reduce, reuse, recycle!)
  4. Start early. Waiting until the last minute to buy your supplies may leave you sifting through near-empty bins of picked-over items. School supplies often start going on sale around the end of July, so have your list ready and go shop right away. If you wait until the Sunday night before classes, you’re setting yourself up for disaster. Supplies will be out of stock and you’ll have to pay full price for the expensive stuff. You don’t want procrastination to carry over to the school year, so start your year on the right foot and buy your supplies early.
  5. Buy quality. Okay, let’s be real. Sometimes the more expensive supplies really are better. Things like laptops and other high-end electronics may be worth forking out the extra dough if they will better meet your specific technology needs. And because you will use your computer all throughout college, you want to invest your money in a product that will last – not just whatever is necessarily the cheapest option. Electronic stores often have deals for students around July and August, so shop around for the best discounts on higher quality products.
  6. Buy used. Textbooks, that is. Your required materials list probably includes a textbook for each class. Talk to students who have taken the class before you and see if they’ll sell you their textbook at a discount. If not, search websites like Chegg and Amazon for used textbooks.
    • Even better, rent a used book. One mistake first-year students tend to make is buying all of their books thinking that they’ll use them in the future. This is a common mistake that will cost you an arm and a leg. Most students don’t even look at the book after finishing a class. Many campus bookstores offer rental options, but be aware: the earlier you look for books, the better chance you’ll have at getting one at its lowest price before they sell out.
    • Other alternatives to saving money on books include buying previous editions of the required text (which are often very similar to the current edition) or purchasing just the online access code to a particular text. To be on the safe side, you may want to check with your professors first to ensure you’re not missing out on anything by taking these frugal routes.
  7. Buy groceries. Not what you were expecting, huh? Okay, this is something that can wait until the Sunday before class starts. Your first week of classes will probably be a little bit overwhelming, even if you are an expert student. A new routine takes some time to master, so having your meals under control will allow for a smoother week. You’ve probably already thought about how early you have to be up for your first class, but take a look at when you’ll have time for lunch and supper, too. Packing your lunch will save you a lot of money, but can also be more nutritious than a greasy burger from the student union. Planning what you will have for supper each night will save you from last minute runs to the nearest fast food joint. And yeah, brain food is a real thing. Preparing your food will not only be healthier, but it will save you time during your day, and save you a good amount of money.

You don’t have to break the bank to get ready for another semester. “Back-to-school” might be the last thing you want to think about in the summer, but preparing early will save you money and start your new year off on the right foot.

Beware! You Don’t Have to Pay for Help With Your Student Loans

I bet many of you have seen ads on Facebook that sound something like this:

“Want Student Loan Forgiveness in Two Weeks? CALL NOW!”

“Apply for Obama Loan Forgiveness in 5 minutes!”

Usually, if something sounds too good to be true, then it probably is.  There are countless ads online from companies offering to help you manage your student loan debt…for a fee, of course. While the U.S. Department of Education (ED) does offer some legitimatestudent loan forgiveness programs and ways to lower your student loan payments, they are all free to apply for. Don’t pay for help when you can get help for free!

If you’re a federal student loan borrower, ED provides free assistance to help:

  • lower your monthly payment;
  • consolidate your loans;
  • see if you qualify for loan forgiveness; and
  • get out of default.

Lower Your Monthly Payment

Are you out of a job or not earning very much? The federal government makes it easy for you to switch to a more affordable repayment plan at any time at no cost.

Your loan servicer — the company that works on behalf of ED to collect your payments, respond to your customer service inquiries, and manage other tasks related to your federal student loans — can help you decide which repayment plan best suits you and help you switch at no cost! Not sure how to contact your loan servicer? Find out here.

Before you contact your servicer, check out the Repayment Estimator to get an idea of plans available and see estimated monthly payments.

Consolidate Your Loans

If you have multiple loans that you want to combine, you can apply for loan consolidation through The application is free, and unlike many student loan debt relief companies, there are no extra processing fees.

Some people find it simpler to group all their student loans into a single loan with one interest rate and one monthly payment. Also, if you received your student loan(s) before 2011, you could qualify for better repayment options by consolidating.

See If You Qualify For Loan Forgiveness

Loan forgiveness is the cancellation of all or some portion of your remaining federal student loan balance. This is sometimes called a discharge.

Many student loan debt relief companies advertise that they can help you get your loans forgiven. But, what most people don’t know is that  they are simply using the ED’s freeresources to help you, but are charging you to do so.

You can find out whether you qualify for loan forgiveness due to your job, disability, the closure of your school, or other circumstances.

Your loan servicer also can help you determine if you qualify for loan forgiveness… at no cost!

Get Out of Default

If your loan is already in default, debt relief companies will target you with online ads, phone calls, and maybe even letters to your home address. By being in default, you’ve already incurred added interest, and you’re subject to collection fees. There’s no reason to add additional fees by signing up with a debt relief company.

(Note: Debt relief companies are different from collection agencies. Here are the collection agencies ED contracts with.)

If you’re in default, contact us immediately and we can help you get your loans back on track.

There are 3 FREE ways to get out of default if you go through the federal government.

How to Protect Your Log-In and Account Information

When student loan debt relief companies offer to manage your loan account, to do so, they will ask you to provide them with your federal student aid log-in information (your FSA ID) or to sign a Power of Attorney. Think about it:  your log-in information is the equivalent of your signature on your student loan documents. If you share this information or sign a Power of Attorney, you’re giving a debt relief company the power, literally, to take any action they choose, make decisions for you, and act on your behalf.

And if the debt relief company collects fees from you, but never actually makes any payments on your behalf, you still will be responsible for those outstanding payments and late fees.

You should protect your FSA ID and account information as securely as you guard your ATM PIN.

What to Do If You Think You’ve Been Scammed

If you think you’ve been scammed by a student loan debt relief company:

  1. Contact your bank or credit card company, and request that payments be stopped.
  2. Change your FSA ID password and contact your servicer and the company you contracted with to revoke Power of Attorney.
  3. Submit a complaint with:
    • The Federal Trade Commission at
    • The Consumer Financial Protection Bureau (CFPB) by calling 1-855-411-2372. Or, to submit a complaint online, under “Products and Services,” select Debt Collection. Then, choose Get Started. From there, you will be prompted to answer a series of questions to file and submit your complaint.
    • Your state’s Office of Consumer Affairs or Consumer Protection, which usually is within or affiliated with the office of the state’s Attorney General.

Remember, there are no student loan companies affiliated with the U.S. Department of Education that charge fees to help you manage your loan repayment. We have many resources available to help you successfully manage your loans for free. Remember, if you have to pay, then stay away!

Alexis Anderson is an intern at Federal Student Aid’s office of communications. She is a graduate student at The George Washington University studying Strategic Public Relations.

This article originally appeared on

What to Do If You Lose Your Financial Aid

When you first started college, you might have assumed that your financial aid package would be solid for the next four years. But now spring has rolled around and you’ve been blindsided: You’ve learned you’ll be getting less money next year.

There are five major reasons you could lose financial aid:

  • Your parents are making more money. If they’ve been pushed into another tax bracket, it’s especially likely to affect your financial aid.
  • Your grades didn’t requalify you for scholarships or grants.
  • You didn’t take enough credits to requalify for federal aid.
  • Your school’s tuition and fees increased.
  • Your school’s financial aid offers more scholarships during freshman year and more loans during later years.

Don’t panic: You might be able to negotiate your financial aid offer, and if you can’t, there are steps you can take to fill the gaps.

Talk to your financial aid office

Your first step should be starting a dialogue with your financial aid office. The staff there can help you find out what happened and how to respond. If your grades slipped, ask what you can do to get back on track.

“I like when they call in and say, ‘I understand that my grades didn’t meet the requirements. Is there anything I can do?’ That shows some initiative,” says Brad Yeckley, assistant manager of financial literacy at the Penn State Financial Literacy Center.

Apply for private scholarships

It’s a good idea to apply for scholarships throughout your college years, even if you aren’t worried about losing financial aid. Maximize your chances by playing up your accomplishments — such as a high grade point average, awards, leadership roles and volunteer activities — showing that you align with the organization’s mission in your application, and focusing on lower-competition scholarships, such as local scholarships or scholarships for non-freshmen.

Take advantage of tutoring programs and office hours

It’s not uncommon for students to lose scholarships because their have grades slipped. And your financial aid award letter might not have even mentioned the minimum GPA required to keep those funds, says Marguerite Dennis, who spent 40 years working in college admissions and financial aid and is the author of “The New College Guide: How to Get In, Get Out, and Get a Job.”

If that’s your situation, prove that you’re actively trying to raise your grades to regain your aid by signing up for tutoring programs and visiting your professors during their office hours.

Appeal your award

Appealing your award works best if you’ve had a recent change in your financial circumstances — such as a birth or death in the family or a parental job loss — that wasn’t reflected on your most recent Free Application for Federal Student Aid (FAFSA).

If you’ve lost eligibility for federal aid because you’re not making satisfactory academic progress, tell your school’s financial aid office about any extenuating circumstances that affected your grades.

Max out your federal aid

If you must take out loans to make up the difference, start with federal loans. They’ll most likely offer the lowest interest rates, they come with flexible repayment plans and, in some circumstances, they can be forgiven. Plus, they don’t depend on your credit.

These are the current federal loan options for undergrads:

  • Direct subsidized and unsubsidized loans: 4.29% annual percentage rate; you can borrow between $5,500 and $12,500 per year.
  • Perkins loans: 5% APR; you can borrow up to $5,500 per year.
  • Parent PLUS loans: 6.84% APR; you can borrow up to the cost of attendance, minus any other aid.

Consider taking out a private loan

Private loans should be a last resort, but they can be a useful tool for some — particularly borrowers who have good credit or who have a co-signer with a great credit score. Look for a private loan that offers incentives, such as cash back for good grades, and make interest-only payments while in school, if possible. That way, your accrued interest won’t be added to your principal balance after you graduate.

But be cautious: Private loans don’t come with the same borrower protections as federal loans.

Transfer to a cheaper school

If you can’t afford to take out more loans, consider continuing your education elsewhere. You might be able to take general education courses at your local community college, says Deborah Fox, CEO and founder of Fox College Funding. Weigh your budget and potential postgrad earnings against your potential loan payments to see if transferring is a good option.

If you decide to change schools, make sure that enough of your credits will transfer to make the switch worth it. Taking more than four years to graduate is another added expense.


Devon Delfino is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @devondelfino.

This article was written by NerdWallet and was originally published by USA Today College.

8 Things High School Grads Need to Do Before Leaving for College

Your last high school prom is over and for most of you, graduation has come and gone. Yes, freedom and plans for a fun-filled summer are just around the corner. Before you know it, you’ll be loading up your belongings in the family minivan and heading off to college. You’re so ready, right? Well, maybe not. Here are some tips for things to do this summer before you head off to college.

 1. Make sure your school has your financial aid ready for you

By now, you should’ve already applied for financial aid. If not, you need to complete the 2016-17 Free Application for Federal Student Aid (FAFSA) ASAP!

Early summer is a great time to check with the financial aid office at the school you plan to attend to make sure your financial aid is and all paperwork is complete. This will help you avoid any unnecessary surprises or financial aid delays when you arrive on campus.

You’ll also want to make sure you have enough money to cover any gaps between the cost of your school and the financial aid you’ve been offered. Here are 7 Options to Consider if You Didn’t Receive Enough Financial Aid.

If you’re using student loans to help you pay for college, make sure you’re borrowing only what you need and keeping track of what you’re borrowing.

2. Find a part-time job

If you’re interested in working part-time while in school, it’s best to start checking out those opportunities early, even before you get to campus or start classes. Working during school can teach you great money management skills and also help limit borrowing if you’re able to put that money toward your tuition.

If you were awarded federal work-study, here are eight things you need to know. For starters, being awarded work-study does not guarantee you a job. Some schools match students to jobs, but most schools require students to find, apply and interview for positions on their own, just like any other job. Contact your school’s financial aid office to find out what positions are available and how to apply. The most sought after work-study jobs are often filled quickly, so get started now!

Which reminds me…

3. Craft a good resume and learn how to network

Work experience can be just as important as good grades when looking for jobs after college graduation. Don’t wait until you’re approaching college graduation to write a cover letter and resume, you need one now.  Having a compelling and professional resume and cover letter is vital to applying for part-time jobs, internships, . Internships not only provide you with knowledgeable experiences in your field, but they also provide great networking opportunities. Don’t settle in and nest; put yourself out there and go to as many networking events as possible.

TIP: Make sure you have an appropriate email address. Employers probably won’t be impressed with an email address like

4. Create a budget and learn how to manage your money

Now that you’re heading off to college, you’ll need to learn how to manage your money.

Will you get a financial aid refund? How much can you expect to make weekly at your part-time job? What expenses are already covered (i.e. meal plan)? What do you still need to pay for (i.e. books)?

It’s important to know how much you have coming in and what you can afford to spend. Sit down and make a budget for the semester or year. It will help you avoid unnecessary splurges. Here are some tips.

TIP: Consider opening a bank account that has locations near your campus. You’ll save yourself money in ATM and other fees.

5. Register for classes and prepare for a whole new world of time management

Make sure you are registered for classes and understand your class schedule. One of the biggest challenges for a lot of you will be time management. When you head off to college, you won’t have somebody there to wake you up, make you breakfast and send you out the door in clean clothes with completed homework in hand. Set yourself up early with a class schedule (make a course syllabus your new best friend) and a system that works for you. You need to know deadlines for registration, papers, financial aid, coursework and everything in between. Your chance of succeeding academically will rapidly evaporate if you don’t manage your time well. You’re worth the investment–manage it well.

 6. Embrace coupons and master the art of a good deal

Yes, I know it’s all about YOLO but you need to embrace BOGO. Coupons aren’t just for stay at home moms anymore. Scoring deals whether in newspapers, magazines or with online sites like Groupon and Living Social is easier than ever. But don’t get so caught up in the deals that you buy vouchers for things you end up not using. That can cost rather than save you money.

Always ask about student discounts and if available, consider getting a student discount card.

Another great way to save money is by buying used textbooks or renting them. Search sites like, Amazon, Chegg, and TextbookRush to name a few. If you sell textbooks back to the college bookstore at the end of the semester, check online sites first for what they’re worth. College bookstore buy back rates are sometimes as low as 10% of what you paid for it new, so you may be better off selling them online.

 7. Learn how to keep you and your things safe

Yes, you need to remember to lock your dorm room and place that lock on your laptop. Losing your laptop can wreak havoc on your studies and a theft due to an unlocked door can also ruin your relationship with your roommate. Start practicing being more aware of your surroundings and keeping yourself safe.

Program your school’s campus security number into your phone. You never know when you might need it.

Safety also applies to protecting your Social Security number, usernames and passwords. Your Social Security number is one of the main identifiers when checking on things like financial aid, grades, and registering for classes. Make sure all your passwords and important numbers are not on a post-it-note on your desk. Store them in a secure place. Not protecting your identity and important information can have lasting long-term effects on your ability to get a job and apply for credit.

8. Get ready to fill out the FAFSA again in October

Yes, you heard that right. Beginning this year, the FAFSA will be available three months earlier, October 1, 2016 instead of January 1, 2017. If you want to maximize the amount of financial aid you receive next year, you’ll want to fill out the FAFSA as soon as possible after October 1, 2016.

Congratulations on a job well done and making the decision to advance your education!

Susan Thares is the Digital Engagement Lead for the U.S. Department of Education’s office of Federal Student Aid. 

This article was originally published on

How to Qualify for Public Student Loan Forgiveness

Everyone wants their student loans forgiven. The perception is that very few qualify. But did you know that there is one broad, employment-based forgiveness program for federal student loans? Let me break down some key points of Public Service Loan Forgiveness (PSLF) to help you figure out if you could qualify.

[ 1 ] Work for a government or non-profit organization

Qualifying for Public Service Loan Forgiveness is not about your job, it’s about who your employer is. In order to qualify for Public Service Loan Forgiveness, you must work for a “public service” employer. What does that mean? Everyone has a different definition.

Employers who qualify based on our definition:

  • Government organizations: This includes federal, state, local, and tribal government agencies and organizations.
  • Not-for profit organizations: This includes all 501(c)(3) organizations and some other not-for-profit organizations that provide specific public services, such as public education or public health.

Teachers: You may qualify for PSLF even if you don’t qualify for teacher loan forgiveness.

Employers that don’t qualify:

  • Labor unions
  • Partisan political organizations
  • For-profit organizations

[ 2 ] Work full-time

You must also be a full-time employee in order to qualify for Public Service Loan Forgiveness.  For us, that means you either meet your employer’s definition of “full-time” or work at least 30 hours per week, whichever is greater.

[ 3 ] Have Direct Loans (or consolidate other federal student loans to qualify)

Not having a Direct Loan is a big reason why borrowers aren’t on track for PSLF. Many borrowers don’t even realize there are different types of federal student loans, so do your homework.

A qualifying loan is a Direct Loan. If you took out our student loans before 2011, there’s a good chance that some or all of your loans aren’t Direct Loans. If that’s the case, don’t despair! You can consolidate your federal student loans into a Direct Consolidation Loan and qualify for PSLF.

If you don’t know what loan types you have, read this to find out.

[ 4 ] Repay your loans on an income-driven repayment plan

For Public Service Loan Forgiveness, you’ll want to repay your loans on one of our income-driven repayment plans:

  • Revised Pay As You Earn Repayment Plan (REPAYE Plan)
  • Pay As You Earn Repayment Plan (PAYE Plan)
  • Income-Based Repayment Plan (IBR Plan)
  • Income-Contingent Repayment Plan (ICR Plan)

Read this to decide which income-driven repayment plan to choose.

You can apply for an income-driven repayment plan on

If you’ve been making payments under the 10-year Standard Repayment Plan, those qualify, but you still need to get on an income-driven repayment plan or your loan will be paid off before you can get forgiveness. That’s because Public Service Loan Forgiveness forgives the remaining balance on your loans after 120 payments (10 years), while the 10-year Standard Repayment Plan sets your payment at an amount that will ensure that your loan is paid off within 10 years.

[ 5 ] Make 120 qualifying payments (10 years of payments)

Lastly, you need to make qualifying payments—120 of them. 120 payments is 10 years of payments. A qualifying payment is exactly what you think it is. You get a bill. It has an “amount due” and a “due date”. Make your full payment by the due date (or up to 15 days later if you slipped up and forgot to make your payment), and the payment qualifies. If you make a payment when you’re not required to—say, because, you’re in a deferment—then it doesn’t count. The best way to set yourself up for success is to sign up for automatic payments with your servicer.

Your payments do not need to be consecutive. So, if you make qualifying payments, stop, and then start again, you don’t start over.

Lastly, a payment only qualifies if it was made after October 1, 2007, so nobody can qualify until 2017 at the earliest.

[ 6 ] Submit the Employment Certification Form early and often

Given the specific requirements of the program, it can be tricky to figure out if you’re on the right track. Good news is, there’s an easy way to find out:

  1. Download this form and fill it out.
  2. Have your employer certify it.
  3. Send it to FedLoan Servicing (one of our federal student loan servicers).

FedLoan Servicing will then process your form and let you know whether your employment qualifies, and how many qualifying payments you’ve made.

Submit the form early and often. We recommend once per year or when you change jobs. Why? Because it means that you won’t have to submit 10 years’ worth of forms when you ultimately want to apply for forgiveness. It also means that you can apply for forgiveness with confidence.

Okay, so do I qualify?

Now, let’s put it all together. For any payment to count toward PSLF, you need to meet all of the criteria when you make each payment. That means you need to be working full-time for a qualifying employer when you make a qualifying payment on a Direct Loan under a qualifying repayment plan. If you think you meet those requirements submit this form to confirm you’re on track.

One more piece of good news: unlike some other forms of student loan forgiveness, PSLF is tax-free.

Ian Foss has worked as a program specialist for the Department of Education since 2010. He’s scheduled to be eligible for Public Service Loan Forgiveness in 2021, if all goes according to plan.

This article originally appeared on

Teen Jobs: Think Beyond Fast Food Counters

•Your parents have finally given you the green light to get a job and earn your own money. Awesome! But wait – where do you start? Do you head down to the local fast food joint where all your friends are working, or dig a little deeper to find more interesting opportunities?

Exploring Your Options

There are tons of employment opportunities for teenagers, which is great news for you. However, the volume of positions may be limited, depending on your area of residence. Here are some possibilities to consider:

  • Cinemas (i.e. concessions, ticket window)
  • Event Planning
  • Auto Detailing
  • Tutoring
  • Hospitality Management (i.e. hotel customer service representatives)
  • Food and Beverage (i.e. food service)
  • Newspaper Delivery
  • Clerical Work (i.e. bookkeeping, filing)
  • Retail (i.e. cashier, sales representative)
  • Summer Camp (i.e. lifeguard, camp counselor)

And if you’re skilled in a particular area, such as childcare, writing, or landscaping, don’t be afraid to put your creative talents to use to rake in the dough.

The Benefits of Working

Beyond the almighty dollar bill, there are several benefits of getting your elbows greasy.

For starters, you’ll learn how to effectively manage your time to ensure that your performance in the classroom remains up-to-par, despite the new addition to your schedule.

(If you find that your schedule is too grueling with a part-time gig during the school year, a summer job may be a more viable option.)

Another valuable benefit of working as a teenager is getting experience. It can serve as a great resume-builder – both for future employment and for college – while helping you sharpen your communication skills.

Plus, you may even meet a mentor or two who can assist you down the road with your academics or entrepreneurial pursuits.

If you’re fortunate enough to get your foot in the door with the right employer, you may discover a passion that you didn’t know you had.

What to Do With Your Hard-Earned Cash?

Before you land a steady job and receive your first paycheck, you need to start thinking about what you’re going to do with your newfound wealth. (Chances are you’ll be far from wealthy after one check, but you never know what the future holds).

That’s where financial goal-setting comes in.

A budget will tell you where to spend or how to allocate your money, but financial goals will explain why.

Perhaps you want to save for a car, build a nice cushion, fund next year’s spring break trip, or buy a new iPhone. Regardless of the objective, you’ll need to acknowledge it as a financial goal and come up with an action plan to actually reach the finish line.

Dealing with Taxes

Like it or not, you’ll have to pay Uncle Sam – also known as the Internal Revenue Service (IRS) – what he’s owed to cover your tax bill. The good news is you’ll only have to file a return if you meet any of the following criteria:

  • Your earned income is greater than $6,300.
  • Your unearned income is greater than $1,050.
  • Your gross income is greater than either $1,050 or your earned income of up to $5,950, plus $350 (whichever number ends up being higher).

You can read IRS Publication 929: Tax Rules for Children and Dependents for additional information.

Beyond standard payroll taxes at both the federal and the state level, the following will also be deducted from your paycheck:

  • Federal and State (if applicable) Income Taxes
  • Social Security Taxes (FICA)
  • Medicare Taxes (MED)

Now that you’ve figured out how to land a job, set financial goals, and dealt with taxes, it’s time to devise a spending plan to make your hard-earned dollars work for you.


The article Teen Jobs: Think Beyond Fast Food Counters originally appeared on CentSai Adulting.

Sean Talks Credit: What I Learned From the Credit Card Mistakes of My 20s

My 20s have featured some big financial hits — and some painful misses.

Among the successes: I finished school, got a great job and saved for retirement while paying student loan debt. After turning 29 a few weeks ago, I can honestly say that I feel pretty good about how I’ve managed my personal finances so far. If I lived anywhere outside of Silicon Valley, I’d even be saving up for a house.

But a few financial mistakes from the past decade still gnaw at me, even though I’ve resolved them.

A few years ago, my wife and I gave up on budgeting because we found it tedious, and later found that we somehow had accrued $10,000 in credit card debt by overspending. Once, I paid interest on a credit card balance because I completely forgot about it. Another time, while studying abroad, I paid foreign transaction fees on all my credit card transactions, just because I didn’t know there were cards that didn’t charge those fees.

As I get closer to turning 30, I’ve found that my mistakes have less to do with age, and more to do with experience. I didn’t make these financial blunders, and others, simply because I was a millennial, as some might think. Ultimately, I slipped up because I didn’t know better at the time, or I didn’t have the information I needed to make a better choice. Anyone, at any age, can mess up. But we can learn from our mistakes, too. Here’s what I learned from mine.

Make budgeting work for you

To this day, I still find it unbelievable that my wife and I managed to dig ourselves into that $10,000 hole in a single year just by overspending on credit cards. At the time, we were carrying balances on our cards, but didn’t realize how quickly our debt was growing. We thought, as so many people do, that we would instinctively know when we were spending too much, and trim spending when necessary. We honestly thought we were scrimping and saving.

Boy, were we wrong.

At the end of the year, when we discovered  how much debt we had accrued, I realized we needed a better way to manage our expenses. As I’ve written before, earmarking money for every single household expense was too complicated for us. Many seem to feel the same way: About 60% of Americans say they don’t budget, according to a 2015 National Foundation for Credit Counseling survey.

But it wasn’t until we gave up on budgeting that we realized the value behind its basic principle: Tracking expenses makes it easier to spend less. So we borrowed that framework and simplified the rules. Instead of setting money aside for a laundry list of expenses, we set weekly spending limits. We stuck to those limits week after week, and paid down our credit card bill in just a couple of years.

Avoid ‘setting it and forgetting it’ for credit cards

Almost every credit card comes with an auto-pay option, but that doesn’t mean you should set up automatic payments and ignore your accounts indefinitely.

I learned this the hard way. A while back, I mistakenly set up one of my credit card account’s auto-pay preferences to “pay the minimum,” instead of paying in full every billing cycle. I then neglected to check the account for a year, thinking that it had been paid off. As a result, I carried a balance on the card for about a year, accruing about $100 in interest charges.

But my real mistake wasn’t setting up auto-pay the wrong way — it was opening a new credit card account that I didn’t have time to manage. By letting my account sit untouched for 12 months, I took a huge risk that could have easily cost much more than $100. Consider what could have happened instead:

  • A fraudster could have stolen my credit card information and used it to make purchases without me noticing.
  • I might have missed a single payment by more than 30 days, and ended up with a negative mark on my credit reports for seven years.
  • I could have neglected to set up auto-pay altogether, and ended up with an account in collections and several negative entries on my credit reports.

I still use auto-pay and credit card account email alerts as a convenience. But these days, I check on all my accounts regularly — even the ones I don’t use — and take stock of all my recent transactions. I also avoid opening a new account unless I’m confident that I have the time to keep track of it.

» MORE: Pros and cons of automatic bill payments

Understand your credit card’s interest rates and fees

When I was new to credit cards, I didn’t realize that each type of credit card transaction — including purchases, cash advances or balance transfers — was billed at a different interest rate. I also didn’t know that certain credit card fees, such as foreign transaction fees, could be avoided.

As a result, I broke two cardinal rules of credit cards while I was studying abroad in Europe in college: I used my credit card for cash withdrawals at foreign ATMs and I paid foreign transaction fees on every overseas transaction.

Because those cash withdrawals counted as cash advances, they started accruing interest right away, with no grace period. I also had to pay a cash advance fee for withdrawing the money, in addition to the foreign transaction fees I was already paying. In total, all those overseas credit card transactions cost me hundreds of dollars in fees and interest payments — but I didn’t fully realize the damage until I saw my credit card statements.

Looking back, I think the most painful part about that mistake was knowing how completely avoidable those interest rates and fees were. Had I read my card’s terms ahead of time, I would have used a credit card that didn’t charge foreign transaction fees for purchases while I was abroad. And rather than using a credit card to withdraw cash, I would have used my no-foreign-transaction-fee debit card at an in-network ATM.

Since that trip, I’ve paid a lot more attention to my credit cards’ Schumer boxes, those charts that detail each card’s interest rates and fees. I’ve been especially careful about reading these terms when I’m thinking about doing something out of the ordinary, such as carrying a balance, making a balance transfer or purchasing something in a different country. Avoiding interest and fees on credit cards is easy enough, but you need to know how your cards bill certain transactions in the first place.

‘Run from it, or learn from it’

Realizing my past errors is painful but necessary. It reminds me of a line from one of my favorite childhood movies, “The Lion King,” when Rafiki, the monkey and royal advisor, smacks Simba, the lion, over the head with a stick when Simba complains that he has to confront his past.

“Oh, yes, the past can hurt,” Rafiki says to a bewildered Simba. “But the way I see it, you can either run from it, or learn from it.”

And I’m learning. I’m getting better at making smarter financial decisions, asking for help when I need it and changing strategies when necessary. I’ve gotten better at knowing the terms of my cards, asking the right questions, and recognizing bad deals. My financial life is a work in progress, and I’m improving it one day at a time.

Sean McQuay is a credit cards expert at NerdWallet. A former strategist with Visa, McQuay now helps consumers use their credit cards more effectively. If you have a question about credit, shoot him an email at The answer might show up in a future column.


The article Sean Talks Credit: What I Learned From the Credit Card Mistakes of My 20s originally appeared on NerdWallet.

3 Questions to Evaluate the Investment in Your College Education

College costs are going through the roof. The average four-year private college now runs nearly $44,000 a year, including tuition, fees, and room and board. For many people this will be the biggest investment they make and, for some, the one with the highest return — if planned for carefully.

Before making any investment, you should always evaluate the costs and risks it involves. Answering the following three questions will help you evaluate your education investment and determine the potential return.

What is the initial cost?

Like any investment, the price you pay will impact your future return. In terms of your education investment, this is where college selection comes in to play and why it’s one of the most important pieces of your college planning strategy.

To figure out what you can expect to pay, first begin researching schools to determine where you will be a good fit and how your academic profile compares with those of current students. The College Navigator site is a great resource to use in assessing this. The more desirable you are to the school, the more likely it is that you will be accepted and receive financial aid in the form of grants and scholarships. Don’t exclude community colleges in your search, as they can offer a good education at a fraction of the cost of private schools.

Once you receive your award letters from the schools, you will be able to determine your net price. This is the difference between the school’s sticker price minus any grants or scholarships. Student loans should not be subtracted since they will ultimately increase your total college costs. But before committing to any loans, calculate the interest over the entire term and add it to your sticker price. At this point you will be able to determine your initial investment cost.

Beyond financial aid, there are other ways to reduce the initial cost. For instance, taking advantage of the American Opportunity Tax Credit can reduce your tax burden, effectively helping with college funding. Provided they qualify, students or their parents may claim this education tax credit, which can provide up to $10,000 in tax credits over a four-year education. And if your parents use tax-favored savings vehicles such as 529 plans, this can provide years of tax-free growth for your college expenses.

What are the risks?

Every investment has risk, and a college education is no different. One of the greatest risks is that you extend your stay beyond four years (increases your initial cost) or don’t graduate at all (diminishes your return). This is another reason the college selection process is so important.

To address these risks, you may benefit from working with a college admissions professional who can help you determine where you might fit in best, select a major you will stick with and increase your odds of graduating on time. In addition, resources such as College Scorecard can show you the graduation rates at each school, which can be an indication of the amount of guidance and support students receive and the likelihood that you will complete your degree. You can also research the tutoring, academic advising, counseling and career development services provided by the schools you are interested in.

However, there’s also the risk that the school reduces your grant or scholarship aid, which would increase your out-of-pocket costs. If you have an aid package, be sure to talk to the school’s financial aid administrator about what award amounts you can expect each year and any factors that might alter that amount.

Of course, there are other risks you can’t plan for. For instance, your future employment potential could be affected by changes in the economy or technology, family obligations or other unexpected events. You cannot control such risks, but you should consider them as you evaluate your options.

What is the potential return?

Not all gains can be measured in dollars, but for now let’s focus on the financial aspect of the return on your investment in your education. Research shows that people who go to college earn substantially more over their lifetimes than nongraduates. Decades of higher earning power can make a college degree an excellent investment that pays you back exponentially.

When selecting your potential school and area of study, estimate what you can expect to earn after graduation. PayScale offers salary projections for specific majors and offers a return-on-investment calculation based on future income and college costs. Of course, such calculations won’t be exact, but thinking realistically about what you can expect to earn later in life can help you make decisions about how much you can afford to invest in your education today.

Be proactive

The last thing on my mind when selecting a college was the return on my investment. I remember opening the Barron’s college ranking book and choosing a few recognized schools in the area that offered business degrees. Then I subsidized what I couldn’t pay with student loans. But knowing what I know now, it’s clear that this lack of planning cost me thousands of dollars in missed financial aid opportunities and excessive student loan debt.

Don’t make the same mistake — be proactive! Start by choosing your college wisely and exploring financial aid opportunities. Learn how to take advantage of tax aid and figure out ahead of time how your degree will impact your future earning potential. With a sound planning strategy, your college education can be the best investment you ever make.


Brett Tushingham is a financial advisor and the founder of Tushingham Wealth Strategies in Wilmington, North Carolina.

The article 3 Questions to Evaluate the Investment in Your College Education originally appeared on NerdWallet.