BSU Blog Fest: Day Three - Lessons Learned

I'm excited to participate in Bridgewater State University's second year of Blog Fest, a one-week adventure exploring the thoughts and ideas of several students, faculty members, and staff members in daily, themed blogs.  It's a highlighted feature of our Social Media Week, hosted by the Office of Student Involvement and Leadership, as the campus community engages in the promotion and education of all that is social media.  For this week, I'll use my personal blog, "Goodharted Thoughts," to share my personal experiences, as well as my professional experience as a Resident Director, in the context of BSU's Blog Fest.  

Wednesday's BlogFest Theme: Lessons Learned

The topic for today's blogs is about lessons that you've learned at some point in your life.  The possibilities for discussion are fairly limitless.   I'm going to go with a very hard financial lesson that I've finally learned after the last fifteen years.

It used to be extremely easy as a college student to obtain one or more credit cards.  Credit card companies and banks would flock to college campuses around the country during orientation, residence hall move-in days, and during the first few weeks of classes.  These companies would market their credit cards to students in locations of high foot traffic.  And on their tables in front of them, one could find free t-shirts and other giveaways if you signed up with them for a credit card.  Thankfully in 2009, federal laws changed things so that it would be much more difficult for marketers to push credit cards on young adults, including banning credit card companies from being within 1000 feet of any institution of higher education. 

I entered college in August 1997, however - well before these changes went into effect.  Unfortunately, I was among many who made poor financial choices as a college student.  During my college career, I believe I accumulated four or five credit cards with spending limits well beyond my means of living.  In 1999, I really began to rack up debt on my cards after visiting friends in England for three weeks (my best friend who went with me saved up for the trip). 

During graduate school, I had a graduate assistantship that paid my tuition and fees and included a stipend.  You'd think that I would have budgeted wisely and lived within those means.  Instead, I stupidly went to the Financial Aid Office and asked about available student loans.  I got a subsidized Stafford loan which gave me a significant amount of money to spend on my education.  As a subsidized loan, interest would not accumulate until several months after I graduated with my master's degree.  I did use some of the funds for books.  But - again, stupidly - I used a lot of those funds for personal use.  I'm not sure whether that was illegal (I sure hope not, as I'm posting this in a very public blog), but it was a dumb decision.

Credit cards and loans (including student loans) are very tempting.  It will feel like "free money" when you use them, but if you don't pay them off quickly, they can end up hurting you in the long run.  It's fine to have a credit card as long as you pay it off every month - or at most, within two or three months perhaps.  After that, there are major financial risks especially if that debt accumulates.

Probably sometime around the time I moved to Bridgewater to work here in 2006, my debt finally stopped getting worse.  It flattened out, but it didn't really get better, because I still used the credit cards albeit on a more limited basis.  Sure, I always paid at least the minimum monthly payments, and I never missed any payments either.  But I didn't have a plan to truly reduce my debt.

It wasn't until I had significant, costly mechnical issues with my car in the second half of 2011 that I realized how much financial trouble I was in.  I couldn't afford a new car or even a new-to-me used car.  You know you have a problem if that happens.  Transportation is so important!  So in August 2011, I finally smartened up and set up a plan with a debt management company.  They cancelled most of my credit cards with the exception of one so that I could still have some credit history, however I can't actually use that card until all of my credit card debt is completely gone.  They set up a viable monthly payment plan for the next four and a half years.  In turn, they were able to significantly lower all of my credit card interest rates. 

It's been tough not using credit cards anymore.  I only use a debit card and cash.  But it's been a good feeling, too.  It forces me to make intelligent financial decisions.  I'm even planning on taking an accounting class soon and get some additional knowledge on all of this.

The lesson here for me - and one for anyone else reading this blog, especially if you're a college student - is spend the money that you have.  Student loans are certainly acceptable if you must take them.  I think the great thing about so many BSU students is they work hard - often in part-time jobs to try to make ends meet.  I wish I was more like our students here when I was a college student.  It's easy to focus on finances solely in the short term and forget about the long-term consequences.  But one should always have a long-term plan.