Your Family & Insurance
Resolution to get Finances in Order for College Students
Once the ball has dropped and the celebrations have come to a close, the New Year's Resolutions start rolling in. These resolutions include losing weight, giving up smoking and studying more. Getting finances in order is a resolution many college students should also have at the top of their New Year's resolution list as well! If you're a college student you're probably thinking, "I barely have a dollar to my name, why would I make getting my finances in order a New Year's Resolution?"; and that is exactly the problem. Many college students are limited in funds, but have bountiful available credit - causing students to lose control of their finances and create more college debt than they can afford.
To help you gain back control of your finances before it snow balls into a financial nightmare, here is a list of 10 steps to help college students get their finances back on track. And while this probably means that you will have to stop charging pizza and beer on your credit card, think of it this way - do you really want to be paying interest on pizza and beer after college, or even worse, for the rest of your life?
- Make a budget and stick to it. The first step to getting your finances in order is to create a budget detailing your monthly income and expenses. This will help you see where you might be able to cut corners and eliminate expenses from your budget.
- Write down your monthly payment, interest, and total amount due on each student or credit card loan. A scary exercise, but a valuable one! By doing this exercise, you will be able to see exactly what you are paying on each student or credit card loan, how much you owe each lender and which card or loan has the lowest interest rate.
- Cancel all credit cards with annual fees. Annual fees only add fuel to the fire when you have a considerable amount of debt to pay off. That is why it is a good idea to transfer your balances to a card with a no annual fee and cancel your annual fee card(s) immediately. Depending on the amount of your annual fee, you could potentially save yourself anywhere from $50 to $250.
- Ask lenders for a rate reduction. Many times credit card companies will consider lowering your interest rate if you are a customer in good standing (meaning you pay your bills on time and do not max out your credit card). And if they are not willing to lower your rate, notify them that you are going to transfer your balance to a lower rate card - they just might reconsider their decision.
- Consolidate and pay off your credit card balances. First ask yourself what kind of person you are. If you are someone who likes to see results instantly, then you will want to pay off your lowest interest rate credit card first and then move on to your higher rate credit cards. However, if you are someone who enjoys working towards a long term goal, then you will want to pay off your highest interest rate first and then move down the line until everything is paid off. But no matter what kind of bill payer you are, the one thing you always need to do is pay your bills on time. This will help keep your credit score in good standing and help prevent you from accumulating debt for unnecessary late fees.
- Pay your bills on time! Paying your bills on time is a very important part of your adult financial life, but one that many students often lose sight of during their college years. The best rule of thumb is to pay your bills right when you receive them. This will ensure that your bills will reach the payee on time and reduce the chance of you losing the bill. If this method does not work well for you, consider paying your bills through an online bill payment system. Typically offered through banks and credit unions, this will help keep your bills and payments organized, while ensuring that your payments are delivered on time.
- Spend less than you earn. If you do not have the money to buy that new pair of shoes now, you surely will not have the money once the bill comes. So play it safe, if there is something you really must have, then save up for it - it will make buying the item more special than if you just charged it.
- Ditch the car while at college. Between gas, maintenance, auto insurance and paying for a parking pass, having a car at college can be costly. So why not start the New Year off right by leaving your car at home and taking advantage of your school's public bus system. The campus bus can be a great way to travel and may help you catch up on some studying along the way. And if there is somewhere you need to go that the bus system just cannot take you too, consider car pooling with friends - you'll not only save money on gas, but you will also have a great time in the process.
- Invest. Your initial reaction might be that you are too young to invest - but that simply is not the case. It is never too early to start saving for the future and investing can be the jumpstart you need to do just that. Companies, such as ShareBuilder, allow you to purchase stocks for $4 or less when you use their Automatic Investment Plan.
- Know your credit score. Your credit score impacts more than just what rate you get on a loan, it can also impact your car insurance rate. Why would an auto insurance company care about your credit score? Well, many auto insurance companies believe that if you have a poor credit score you will also be a poor driver - which means you are a bigger liability to the insurance company and ultimately will pay a bigger premium for your car insurance.
With that being said, it is a good idea to check your credit report annually by pulling up a free copy at AnnualCreditReport.com. This will help you see what your current credit score is and see if there are any discrepancies on your report, such as identity theft or fraudulent activity.
If your credit score is low and your car insurance rate is high, consider shopping around for cheaper auto insurance through ComparisonMarket's comparison application. Here you will be able to compare the rates of best-in-class insurance providers - helping you find the best auto insurance rate available for your limited college budget.