Student Loans – The Easy Answer to Pay for School, Right?

student loans

As a parent, you are concerned for your child’s well being and eventual success in life. For most people, this vision usually includes some type of college. The word college can be overwhelming to some parents, since in order to start saving for college you have to start early in your child’s life.  You might not think it is important to save for your child’s education. If that’s the case, are student loans what you will rely on?

The Price of College Then and Now

The cost of college is increasing.  In 1950, the University of Pennsylvania tuition cost $600.  Fees were $25 and books were $50.  In 2014 the costs are a little different.  For a state school and in-state, one year of tuition is around $5,000.  Out of state tuition is around $12,000.  These amounts only reflect tuition, not fees, books, living expenses, etc.

To receive a four year degree from a non private, non Ivy League, in-state college, it will cost the average student at least $20,000 in tuition.

The Reason Student Loans Seem to Be the Answer

There are reasons so many students depend on student loans to get them through school.

  • They don’t have enough money to cover the cost of education.
  • By obtaining a loan they don’t have to worry about working while going to school. They can focus entirely on their schooling.
  • The interest rates for student loans are lower than other types of loans.
  • Student loans are not required to be paid back until you have finished all your schooling.
  • Taking out student loans can help you build your credit score. It can be hard for young people to obtain a credit card so managing your student loans properly can help build that necessary form of credit.
  • Some student loans allow you to postpone paying them back if you come into financial hardship or unemployment.

These reasons make student loans appealing.  You think you can finish school, get the high paying job and then pay back those loans easy, right?

The Forgotten Facts about Student Loans

The problem with obtaining student loans is you are essentially living on credit. You might assume you will be in a better situation to pay back the loans a few years down the road, but you might not. According to USA Today, the average amount of student loans is $25,000. Add that amount to a mortgage payment, car payments and other living expenses and you have to be making great money to meet all those needs.

People might think they can take out loans and then if times get tough, they can file for bankruptcy and get out of their loans. The Washington Post says that is a major misconception among college students. In order to have your student loans washed away, you have to meet “harsh and high standards” set by a case in New York over 20 years ago.  In 2008 there were 72,000 federal student loans filed for bankruptcy and only 29 succeeded in obtaining full or partial discharge of their loans.

Once you take out a student loan, be prepared to pay every penny of the loan back, plus interest. Make sure your decision to obtain that loan is worth it.

Research the Costs

An education is always a good investment; just make sure you do your research before you decide to take out student loans. If money is an issue, choose a college that doesn’t cost as much, or look into scholarships. Be aware of the changes possibly coming for student loans through congress. Do the math; calculate the numbers and understand how much you will be required to pay back in interest on those loans. Student loans are not all bad, but taking one out without fully understanding the costs and the risks can be!

Take a Chance and Shop at Thrift Stores

Thrift stores

Last week I was talking to a mother of a toddler.  She told me her daughters shoes came from a local thrift store, then seemed to back track quickly and explain that she doesn’t always shop at thrift stores. She made sure I knew that her mother-in-law bought these shoes and that she doesn’t have to shop at thrift stores.

That got me thinking, why is it that we seem to be ashamed to shop at second-hand stores or thrift stores? Who decided that it was an embarrassing thing?

Save Money on Clothing with Thrift Stores

Especially for moms of little children, shopping at thrift stores makes the most sense. They grow out of clothes so quickly and most of the time the clothes aren’t used or ruined, just too small. Shopping at thrift stores is a great way to get clothes and other items without spending obscene amounts of money. A study done at North Dakota Sate University found the average American household spent 3.8% of their income on clothing. For a family making $50,000, that is around $2,000. In fact, this market of clothing is growing. Back-to-school shopping has made Fall the second-biggest consumer spending season of the year. Parents spend around $250 on clothes for their child. If you have more than one child, that number adds up quickly.

If those totals seem greater than you want them to be, shopping at thrift stores is a good option to help cut down that bill.

Rules to Remember when Shopping at Thrift Stores

Shopping at thrift stores is a great way to find discounts on well maintained clothing, furniture, kitchen utensils, books, toys, decorations and other items. Shopping at thrift stores can help you save money and allow you to find great things. When shopping at thrift stores, there are a few things to remember.

  • Choose a thrift store that is located in a good part of town.
  • Look for items you normally wouldn’t consider looking at.
  • Shop with a vision to what something can become, not what it looks like.
  • Be ready to dig and search through everything to find the great things.
  • Make sure the item you are buying actually works.
  • Don’t think you have to buy everything at the thrift store. It is OK to buy new underwear!
  • Check back often. Good deals can come through any day.

Every year, my four sisters, mother, and I have a Sisters Weekend trip. Most times we start off our trip with a stop at the local thrift store. We have such a good time laughing at the crazy things we find, and getting excited over the great deals we find. Shopping at thrift stores is an experience, not just a way to save money.

Thrift Stores Help Others

Not only does shopping at thrift stores help us save money, but it helps our community as well. Donating old or unused items to your local second hand stores is a great way to help those in your community. Plus, donating items to thrift stores keeps those items out of local landfills.

There are numerous thrift stores that help homeless shelters, wounded veterans, recovering addicts, and others who are struggling for one reason or another.

It Isn’t Embarrassing – It Is Smart

According to US News, shopping at thrift stores is becoming more and more accepted. Even Sarah Jessica Parker was seen shopping in a local thrift store. In USA Today, the executive director of the National Association of Resale and Thrift Shops explained that people can’t change the price of gas or food, but they can become savvy shoppers and save money on clothes, furniture and other items by shopping at thrift stores.

Thrift stores are a great way to save money, but get the idea out of your head that you have to be in financial ruin to shop at a second hand store. Give one a try. You will be surprised at the deals you find, the fun time you will have, and the money you save.

Choosing between Your Mortgage and a Dance? How to Save on Prom Expenses

save on prom

The dreaded four letter word for all parents of teenage kids . . . PROM!

The amount needed to fund this dance is staggering.  Nowadays, you can’t wait until the event is here and expect to have the money necessary to cover the cost. How much will you need to have saved for this one crazy night? More importantly, how can you save on the prom costs?

The Dress, Tux, Flowers, Date, Pictures – It All Adds Up

If you like to keep up with the national average and give your kids all the same opportunities, the amount needed to get that done has been around $1,200 for the past few years.  Luckily for you, the amount is decreasing slowly.

According to a survey done by Visa, the average cost of prom in 2013 was $1,139! That amount had been consistently climbing over the last few years, but now is starting to decrease. In 2014 the average household spent $978 on the event.

You might be thinking that the kids are crazy to spend that kind of money on one dance, but parents plan on paying for 59% of the costs of prom, leaving their children to only figure out 41%.

The Visa survey said that despite the drop in spending, prom still represents a major expense for American family with high school students.

Prom Shouldn’t Cost a Semester of College – Here’s How to Save on Prom

Let’s be reminded, prom is one night out of the year. Yes, it is magical; the girls should feel like a princess and the boys should feel like a prince. But is it really worth all that money for one night’s events?  If you figure that money can go to better use in a college fund or on a family vacation, there are ways to save on prom.

  • Rent the dress and the tux, or borrow it from someone who has gone to prom a previous year. Or, if you enjoy sewing, look into making the dress.
  • Visa suggests cutting the cost of the limo by sharing. To cut down more cost, have your kids drive their own car or borrow yours.
  • For the girls – learn how to do your hair and makeup yourself or ask someone to help you. Skip out on the tanning beds to save your money and your skin from cancer.
  • Avoid the expensive dinner and opt for something easy and fun.
  • Be creative with the dates. Avoid spending money on amusement parks or concerts, instead, play games as a group, go on a hike, or play at the park or beach.
  • Avoid having an expensive photographer and take your own pictures. Have a camera with you to get some candid photos as well as staged ones.
  • Ask older people for advice on fun things to do. Years ago, there weren’t all these expensive options. Ask your parents and grandparents what they did for dates and copy some of their ideas. It will be different and most likely more fun than the typical date.

No matter how you plan to pay for prom, it is necessary to set up a budget with your child before prom. Let them know the total they have to work with and help figure out ways to save on the prom event.  Stick to the budget. It will be a great way to teach children the importance of money and figuring out how to stay within those means.

Keeping Up with the Jones’ Never Pays Off – Decide to Save on Prom

One statistic Visa found hard to understand was those who are in the lower income bracket of less than $50,000 per year plan to spend more on prom than the national average. It also found that single parents planned to spend almost double compared to parents who are married. US News found that since the Visa survey, lower income families are spending less, but the amount is still staggering.

Talk to your teenagers and help them understand the importance of looking for small ways to simplify the overall cost of the evening and save on prom. A few years down the road, they will be glad they didn’t spend all that money on someone else’s spouse.