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Money Management

Nine Steps to becoming Money-Wise…

Nothing will be more powerful than attaining your college education without building up a large amount of debt. The best advice we can give you is to live within your means and only borrow money when you have no other options.

The nine steps:

  1. Get Organized. Set up separate files for your bank statements, credit card bills, phone bills, gas and electric bills, insurance payments, financial aid papers, loan documents, and correspondence with your college’s financial aid administrator. Keep all your financial records in a safe place.
  2. Create a spending plan and stick to it. Start with a financial planning worksheet. Record all your income and expenses in a notebook for one month to help you understand your spending habits and know where your dollars are going. What can you do without? Can you earn more?
  3. Borrow smart. If you think you may need to borrow for college, calculate how much you can afford to repay by looking at what your monthly payments and other expenses will be and what you can expect to earn after graduating. Set borrowing limits.
  4. Start saving. No matter how little you have to save, you should set aside something every month. Even $20 will get you in the habit of saving and give you a cushion if unexpected bills arrive.
  5. Pay as you go. Deferring your student loan interest payments may be attractive in the short run, but you’ll pay a lot more in the long run.
  6. Don’t graduate with sticker shock. Keep track of how much you borrow and how much you owe, including interest costs and fees. Don’t underestimate the total payback of your loans.
  7. Take advantage of federal tax breaks. You may be able to deduct up to $2,500 in student loan interest paid each year on your federal tax return. Also, find out if you or your family qualifies for a Hope or Lifetime Learning tax credit.
  8. Be Thrifty. Eat at home, get a roommate, shop garage sales and thrifts stores, buy used textbooks when you can, take public transportation, clip coupons, take advantage of weekly food specials, rent videos instead of going to the movies, and balance your checkbook.
  9. Avoid using credit cards. It’s easier than you think to get a credit card and even easier to get in trouble. Be wary of low introductory rates that quickly jump into the high teens. If you like the convenience credit cards offer, consider a prepaid, “stored-value” card, or a card with low monthly limit. Also, pay your balance in full each month.