This is part three in a series of posts describing my Financial Journey. Part one can be found here. Inspiration for this series came from the Road to Financial Armageddon series over at The Simple Dollar.
After high school I went directly to college at a large university. I made a lot of decisions that would influence my financial and professional future while I was there even if I didn’t realize it at the time. College is a time of transition to independence and learning as much about oneself as it is about learning classroom material. My spending habits from when I was younger carried over through my four years there and I narrowly avoided starting a dangerous habit of carrying credit card debt.
I unknowingly made a strong financial decision in choosing to attend an in-state school. I was able to get some scholarships for the first two years that I wouldn’t have gotten elsewhere. My reason for deciding on the school had little to do with money and more to do with where I felt most comfortable and thought I would find many opportunities. My mentality for the school loans my parents and I had to take out was that I would just pay them off later. I would tell myself and my friends, “I’ll work when I graduate”.
By the end of my time at the university I had accumulated roughly $17,000 in student loans to pay back. The agreement with my parents was they would take 1/3 of the cost in loans, I would take 1/3 in loans and together we would pay the remaining 1/3 balance on the account. Looking back, I wish I would have restrained my spending a bit more and earned some income to put a dent in those loans. Besides one semester where I had a paid position doing research, I didn’t have a job while class was in session. Instead, I focused on full credit semesters and I finished my two degrees in four years. Despite the heavy load I had abundant amounts of free time and in retrospect I could have easily had a part-time job.
My spending habits through college consisted of buying season tickets to basketball and football, buying new video games, purchasing a laptop computer and upgrading my desktop computer. At the time my form of budgeting, if you can call it that, was quite simple. If there was money in my wallet or checking account I could spend it. At the beginning of each school year I would have money in the bank from working the summer before and I knew that if I wasn’t going to work I would have to make it last all year. When I reached the end of the spring semester my bank balance hovered barely above zero.
Instead of realizing how much I had taken out in loans for tuition, room and board (including the most expensive meal plan) I spent money on whatever I “needed” to have at that moment. If there was a new game out that everyone was playing, I bought it. I did no financial planning or budgeting for myself. The thought never even crossed my mind while I was taking classes for my business major. For homework I was doing earnings reports and cash flow analysis for Company ABC but I never once applied it to CALEB, Inc.
In my sophomore year I had an unpaid internship off campus for a television studio developing a website. Somehow I convinced myself within a span of a week that I needed to buy a laptop for this to work. It now feels unnatural to even hear myself say that an unpaid internship warrants paying $1,200 for a laptop ($300 of which was just for a warranty!). At the time I obviously didn’t have $1,200, so I needed a credit card. A friend offered to let me put it on their credit card and I am glad I didn’t take them up on their offer. As convenient as that would have been owing debt to a close friend is not an ideal situation and can go sour quickly. Instead, I went to my bank and opened one immediately. I should have known by how easy it was to open a credit card that the bank wanted me to have one more than I did. I purchased the laptop and paid the minimum on the card for a few months until I had more money in the summer. Luckily this was the only big ticket item that I carried a balance on my card throughout college, but I solely used credit to pay for something I didn’t need.
While I didn’t focus on budgeting or tracking my net worth like I do now, I did focus on my future career. I attended resume workshops, career fairs, company visits and participated in professional student groups. To gain experience, I got involved with volunteer organizations, spent a month studying abroad in Japan and practiced at mock interviews. I majored in something I was genuinely interested in, Telecommunications, but I also pursued a second degree in Supply Chain Management because I knew that was major that was heavily recruited for at my school. Having these degrees on my resume helped open the doors for me to get two summer internships at large multinational corporations. These helped me pay off the 1/3 balance on my tuition each fall and one of the companies hired me full-time after college. Even if my spending habits had me headed in the wrong directions over my years in college, I learned some strong financial lessons for the years to come.
Check back tomorrow when I will talk about my first years after college.