PFCollege: Always Keep Your Resume Updated

Personal Finance for College Students Series SealIf you’re like me, you probably will have a handful of jobs during your college undergraduate career ranging in length from a real summer internship all the way to a simply work-study at the college bookstore during the semester. No matter what it is, it’s important that you keep your resume up to date every semester because you never know when 1) you’ll need a copy of your resume 2) how much of your work experience you’ll actually remember.

Recently, I was trying to recall all the jobs I held during my college career and while I remembered most of my “real” jobs, I completely forgot about the semester I was a teaching assistant and the one where I was a work-study in some department’s IT group. Honestly, those two jobs aren’t truly resume worthy, I had meaty enough internships to take up the space, but had I needed them I didn’t remember enough to even try to make them resume worthy. That’s why you need to write your work as you do it (or soon thereafter) so that you accurately capture what you did.

This was a suggestion I mentioned in a prior post (update your resume every 3 months) but I felt it was an important enough tip to bring up again.

This article is part of a new series I’ve started called Personal Finance for College Students (hence, PF College).


PFCollege: Start Thinking About Roth IRAs

Personal Finance for College Students Series SealA Roth IRA is one of the most intruiging and most often discussed (argued) means of saving for your retirement. You contribute post-tax dollars into a retirement account that will appreciate tax free. You can also withdraw your contributions (but not the appreciate of those contributions) tax free at any time. While the awesomeness of the Roth IRA can and probably will debated until the end of time, let’s move past that for now.

The only significant requirement that a college student needs to know is that you can’t contribute more than what you earn in a year. So if you had an income of $2,000, as reported on your tax return, then you can’t contribute the maximum of $4,000 – you can only put in $2,000 (because that’s your income). What’s nice is that there is no requirement that the money you contribute has to be the money you actually earned, so you can earn $2k, spend it on books, tuition, beer (just kidding Mom!), etc.; and then get $2k from your parents to put into your Roth IRA and it’s entirely legitimate.

Why should you (and your parents) do this? That $2,000 can do so much more for you, growing tax free, than it can for your parents from a retirement funding perspective, if you consider that you are four decades away from retirement. While you are young and can afford it, saving as much as you can in retirement is crucial because time is on your side.

Don’t really want to ask for a few thousand dollars from your parents for “retirement” (especially since they will probably be helping as much as they can for school)? Structure it as a loan and pay that loan back after you graduate and start working, they’ll appreciate how responsible you are in thinking of your retirement.

This article is part of a new series I’ve started called Personal Finance for College Students (hence, PF College).

 Personal Finance 

PFCollege: How To Make Saving A Habit

Personal Finance for College Students Series SealWhy is the savings rate of most Americans negative? It’s because our culture of instant gratification and easy access to credit has changed the paradigm of buying from “save up money to buy” to a “borrow money to buy” mentality. You cannot leverage the future to pay for today and expect to come out ahead! So, the very first step in improving your finances is to make saving money a habit. Making saving money a habit is most important, and easiest, when you’re still in college because it establishes a new, arguably better, method of thinking about spending – saving up before you spend instead of charging it. It’s also easier during college because the things you’re saving for are likely lower in value (a car instead of a house) so you can reach your goals a little faster.

1. Write down your goals – Are you saving up $500 to make a down payment on a car? According to someone more distinguished than I (though I can’t remember his or her name), people who put their goals into words are more likely to achieve them. Seeing the goal is a reminder that you’re in a “save” mode and that you’re saving for something. Instead of “I’m not getting a soda with my lunch because I want to save a few bucks” it becomes “I’m not getting a soda with my lunch because I want to save a few bucks so I can put down a $500 down payment to buy a new Honda Civic that I can drive around!

2. Track your savings – Do what fundraisers do when they put up a poster with a thermometer or a bar on it showing progress, make your own “car down payment” bar and be sure to update it when you save the money up. Constantly remind yourself of your progress, how you’re a couple steps closer to getting that set of car keys for your car.

3. Tell other people – Tell your friends you’re trying to save money to buy a car and they can act as a support group (because you’ll be giving them rides!). Perhaps they’ve been looking to save a few dollars for something else and you could find inexpensive things to do besides go to the bar or clubs (consider going to the riviting game of Dungeons and Dragons going on right now somewhere in some dorm – guaranteed!).

Those are only three tips out of a gazillion, if anyone has any tips on how they try to get themselves to save please do share!

This article is part of a new series I’ve started called Personal Finance for College Students (hence, PF College).

 Frugal Living 

PFCollege: Don’t Buy Nice New Stuff

Personal Finance for College Students Series SealWhatever you do, don’t buy nice new stuff. People spill beer and liqour on nice new stuff. People fall and break nice new stuff. People, who aren’t very nice, often steal nice new stuff. Plus, nice new stuff is expensive… especially if you consider someone, probably you, will spill beer on it, break it, or have it be stolen from you. The only exception to this rule are bed sheets, always get yourself some nice bedsheets (and definitely make sure you’re the one ripping the shrinkwrap off them) 🙂

I’m half kidding (about not getting nice new stuff) about all the bad things that can happen to nice new stuff but the half that’s not kidding is trying to convince you that the premium you pay for nice new stuff isn’t really worth it while you’re in college. Wait until you have a job, don’t have to move as often, and can truly learn to appreciate it before you buy nice stuff – that’s Tenet #2…

Tenet #2: Wait until after graduation to buy nice new stuff.

Reason #1: It’s cheaper. Bottom line, if you need a couch you should consider scouring Craigslist or your school’s bboard before you go to someplace like Ikea (and they’re still on the cheaper end of the spectrum). As school semesters end, people will be looking to move and that’s when you can swoop in and snag a couch for much less than what a store will charge you.

Reason #2: You’ll move, probably several times. I (and like nine other people) helped one of our friends move from one apartment to another one day (it was one of those 3 moves in one day so that we could share the truck fees) and he had some ridiculously nice solid wood furniture. I could not tell you how nervous each one of us was when we were moving his furniture because it was so nice and each bump could potentially cause an ugly gash in the soft wood. Now, imagine you had to move that nice stuff each year from place to place… think of how beat up your furniture would get and how angry you’d get every time someone dropped it (even though they were helping you move).

Reason #2a: Nice furniture is heavy. My friend’s nice couch, in the story above, was so heavy it required about 8 people to move it. Plus we had to stand it up to get it through the stairwell and then unscrew the feet in order to fit it through the door. Forget dinging it a little (which we did a couple times), nice furniture can be expensive. You don’t really want that grief when you’re moving from one dingy apartment to another.

Reason #3: You really don’t want to be a prick and obsess over your nice things. Something nice can go to something not so nice really quickly. Something that isn’t nice almost never gets worse. Imagine you invite some friends over for some pizza and beer and the next thing you know you’ve become that guy sliding coasters underneath your friend’s beers and asking them to be careful with the pizza drippings. C’mon… seriously, you don’t want to police your friends and you don’t want to have to obsess over a really nice couch. Just get an old Ikea couch from that senior moving out across the street for $50 (what will he care, he has a job now and you’re basically paying him so he doesn’t have to take the couch with him) and enjoy life.

Reason #4: Nice things go missing. I’m not saying someone will steal your iPod but people have been mugged because bad people recognize that those telltale white earbuds are usually attached to three hundred dollar objects the side of a fat credit card. And if you’re the type to lose your keys from time to time, you run the risk of losing your expensive possessions.

Please don’t read this to mean that you shouldn’t get nice things ever, just consider holding it off for four years until you get that degree and land that job, after that you can start treating yourself without having to turn to plastic.

Moral of the story? Don’t buy nice new things. It’s a waste.

This article is part of a new series I’ve started called Personal Finance for College Students (hence, PF College).


PFCollege: Establishing Credit

Personal Finance for College Students Series SealEvery fall, outside of Doherty Hall on the campus of Carnegie Mellon, sat a guy with a table, a photocopier, hundreds (if not thousands) of credit card applications, and hundreds (if not thousands) of stupid college t-shirts. Invariably he’d be surrounded by freshly minted freshmen who want a cool free t-shirt and didn’t care about giving out very personal information and copies of their driver’s license. I was one of them.

Looking back, I was lucky in that it wasn’t a identity theft fishing scam (gee, all my personal information on a credit card application, what was I thinking!?) because not only did I get a free t-shirt but I also was able to start one of the most valuable things in one’s personal finance arsenal: a credit history. This leads me to Tenet #1 of the Personal Finance for College Student series… Establish a strong credit history as early as you possibly can.

Tenet #1: Establish a credit history as early as you can, keep it blemish free at all (legal) costs.

Why a strong credit history, which will drive a high credit score, is important is fairly simple to understand. If you have a good history of paying off your debt, you aren’t late, you haven’t defaulted, a creditor will be more likely to loan you money. A perfect scenario for a creditor is someone who both pays on time and pays lots of interest – you will want to just fit the bill on the first count, paying on time (wait until you buy a house to be perfect in this case).

Real Life Example: If you want to buy a new Scion tC for $17,740 (base), it will cost you $358 per month for 60 months if you have good credit (FICO score of 650-649). If you have excellent credit, that price drops down to $348. If you have no credit, it will cost you $432 per month. If you have no credit, the same Scion tC will cost you $25,920 instead of $20,880 (excellent), or nearly 25% more – just because of your credit! Five thousand dollars is a very very nice vacation.

Let’s break down Tenet #1…
Establish a credit history as early as you can…

But it’s hard to get a credit card with no credit history, I keep getting rejected! – That’s correct, especially if you’re a college student with no income. So, when you apply for a new credit card (I recommend the mtvU credit card, it’s geared towards students), put that you’re a student and put your tuition payments as your income (I’ve did this but I don’t know what the legal ramifications, if any, there are on doing this) and you may be approved. If not, ask your parents to put you as a cosigner on a credit card (but never use that credit card!). Eventually, after a few months of being a cosigner, try applying for another card again.

…keep it blemish free at all (legal) costs.

What does blemish free mean? – It means you should pay off your debt every payment cycle and always pay on time. If you don’t think you should do this, take your credit card and send it home. Don’t use it. If you can’t pay off your statement balance every single month, don’t use the card. You do not want to leave college with any credit card debt whatsoever. Period. You will have plenty of time to enjoy the fruits of your labor after you start working (when you’ll have more money anyway and way bigger fruit!), so now is the time to set yourself up for success later.

It helps me to think of your credit as a glass ball (this is an analogy commonly used for a lot of things, like a reputation). If you take great care of your credit, it will look beautiful and it can help you out. If you drop it, it’ll break or crack and the glass ball will be very very difficult to repair and will almost never look as good as it once did.

This article is part of a new series I’ve started called Personal Finance for College Students (hence, PF College).

 Personal Finance 

Personal Finance for College Students Series

Personal Finance for College Students Series SealAfter a fruitful five years of college, I was fortunate to be one of the few who escaped with a reasonable amount of student loan debt (~$25,000), zero credit card debt, and degrees that made it easier for me to find gainful employment in an otherwise difficult job hunting season (Spring of 2003). I didn’t become interested in personal finance until a few years later, coinciding with the creation of this blog, but I had luckily and inadvertently built a solid foundation onto which to apply that learning and new found interest. That being said, looking back with 20-20 vision, I think that there are many things a college student can do that will make their lives much easier in the decades after graduation.

If you’ve made your way here and will be attending or are currently enrolled in college, you are much farther along in your financial maturity that I ever was. Hopefully I can impart some of the wisdom I’ve gained with the benefit of years (only a few) and hindsight.

The topics I’ll tackle will try to be most relevant to the college-aged crowd (establishing credit, handling credit cards, basic budgeting, furnishing an apartment, and much much more!) and some may seem pretty basic for those of you who are connoisseurs of blogs (I see readers of blogs as trying to squeeze knowledge like water out of a stone – blogs are probably the final frontiers in terms of valuable knowledge so I commend you!) but often we forget that when we’re learning something new, it’s not the difficulty of the topic that trips us up but that we didn’t even know the topic existed.

So, I welcome you to join us, both as a passive reader and an active contributor, as I try to dispense small golden nuggets of wisdom about personal finance for college students.

This article is the introductory post (and the index) of a new series I’ve started called Personal Finance for College Students (PF College).

    Getting A Job After Graduation

  1. Always Keep Your Resume Updated
  2. Use Student Loans for School Only!
  3. Credit

  4. Establish Credit Early!
  5. Get A Credit Card
  6. Investing & Retirement

  7. Start Thinking About Roth IRAs
  8. Frugality

  9. Don’t Buy Nice New Stuff
  10. How To Make Saving A Habit
  11. Use Your College Facilities

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