How to Cover Your Expenses and Stay Out of Debt in College

With rising tuition costs, college students are graduating with more and more debt than ever before. Not only are students struggling to pay back their loans post-college, but during and after college, students are racking up credit card debt and unaware of how to budget the money they do have.
dave ramsey pic
So who’s to blame? No one and everyone at the same time! Unfortunately, being in debt and living outside of our means is common in our culture and often times, people learn this from their families.

Can YOU break the cycle? Yes, you can! Through my personal experiences taking Dave Ramsey’s Financial Peace University course, learning from Tony Robbins, working with college students for the last 11 years, and once being a college student myself, I know you can.  Here are 4 SIMPLE steps to take to cover all of your expenses and start saving.

STEP 1: Write Down ALL of Your Monthly Expenses that You are Responsible for Paying

Tip: If you have no idea how much you spend, like most students, then look at your bank statements for the last month or two in order to get a good feel on where your money is going. My girlfriend even prints her monthly statements off and assigns a category to each expense, such as “food, entertainment, bill, etc” to track where she’s spending her money.

Examples of what the average student may spend in a given month:  
Apartment rent – $350 (outside of the dorm)
Apartment utilities/Internet –$50
Gas – $70
Groceries excluding a meal plan – $150
Cell phone – $80
Car insurance – $70
Dining out – $80
Entertainment/party – $100
Clothes/supplies – $50

Total: $1,000

(FYI, I’m assuming you’ve already paid for this semester of school, your parents have helped, or you’ve received a loan. I am also assuming you have a meal plan already paid for).

STEP 2: Download the Mint.com App

This app is a great tool to link all of your accounts together in one spot. It allows you to get a snapshot of your debt, expenses, and bank accounts. You’ll be reminded of upcoming bills, low balances of an account, and you can set up a budget for each category to make sure you stay on track. I believe this is one the best free tools to use for basic budgeting. A lot of students overspend because they aren’t aware of their spending or cash flow situation. Being able to open the app quickly and instantly see what you just spent that day or if you’re on track with your budget is half the battle. With this app, you will actually be aware of your spending and then, can do something about it!

STEP 3: Get Creative!
Once you start noticing your spending patterns, you may realize that you may need to find a flexible job around classes that will allow you to make money. The thing is, you probably have a busy schedule at school already and don’t want to have to bust your tail at a minimum wage job, just to make ends meat.

Think about the rut students are in. If they’re one of the lucky ones and making above minimum-wage with $8 per hour, they are only bringing home $6 dollars per hour after 25% of their paycheck is taken out for taxes. Let’s say you’re a student spending about $1,000 a month like the example above.The student who needs to cover $1,000 a month will need to work 42 hours a week just to cover their expenses (after taxes). In order to cover your expenses, you may want to get creative for work.

Ideas to make money around school:
1. Find a typical lame and boring $8 per hour job
2. Donate plasma 
3. Sell items on craigslist or eBay
4. Have friends pay you to do their laundry or type up their study notes
5. Become a CUTCO rep (Some reps on our team work 10 -15 hours a week and take home $1000+ a month.)
Don’t let the excuses “I don’t know what to do” or “I don’t have time” keep you from staying out of debt in college. Everyone is busy but will make time for what is important to them. If you don’t believe me, read this article on time management and how to make a Google calendar, and be the most productive and profitable you’ve ever been this semester.

BONUS for Cutco Reps Before the FINAL STEP BELOW

Let’s say you need $1,000 a month to cover your expenses, and you also want to save $500 a month for investing or to open up your own branch office.

If you are still reading this article, you are probably an above average person. Someone who is responsible, growth minded, and an experienced rep making 30%. At 30% commission, that means you need to sell $5,000 a month to take home $1,500. With the company average of $250 average orders and a selling ratio of 60%, that means you’ll need to set up 35 demos per month, or about 9 demos per week. This could be one to two demos, five days a week, OR you could go ham on the weekend with four demos on Saturday and five demos on Sunday around homework. Even if you don’t have a vehicle or live near your hometown, you can still demo it up! Check out this really cool link to the Cutco virtual demo.

Since it takes five phone calls (with averages) to set up one demo, that means you need to make 50 calls a week, which could be 10 each morning or it could be 20 on a team night and 30 calls during the Saturday morning Rising Star meeting. Overall time spent would be less than 20 hours a week to make $1,500 a month for current reps on the team who have hit a few promotions, not to mention priceless experience to add to your resume.

STEP 4: Stick to a Budget and Start Saving

Dave Ramsey lays it out so well with this Ben vs. Arthur example (see chart below) that shows how early investing can have a huge impact on how much money you’ll be able to accumulate over your lifetime. Even though Ben invested a mere $16k as compared to Arthur’s $76k, Ben ended up with an EXTRA $750k to retire with because he started early. With your new budget, extra income source, and savings goals, begin investing in a Roth IRA with your money. The best time to start…..is NOW!

bvs_benarthur

Advertisements

2 thoughts on “How to Cover Your Expenses and Stay Out of Debt in College

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s