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In the begining….

May 10, 2007

In the begining…
Roughly one year ago, I graduated from college and realized that money was more difficult to manage when there was more to do than just show up for financial aid dispersement and spend the money they gave me. I started taking an interest in personal finance, starting with a “Personal Finance for Dummies” book (which really, wasn’t incredibly useful, later sold on Amazon) and listening to Marketplace Money every weekend (which has been useful). From a segment on there, I discovered the blog world. After spending about a month as an avid reader, I decided to start my own blog.

The college years
Let’s review my situation. I did a few things right in college and a few things wrong. There wasn’t a penny saved for my education (nor do I think I’m entitled to it). My parents helped out some, providing me with a car and insurance, along with little bits of money, but mostly, it was funded on loans.

Here’s what I had going for me in those years:

  • I had $2000/yr in scholarships and went to a relatively inexpensive state school.
  • I worked part time throughout college
  • I lived at home for 3 semesters (for free! Thanks mom and dad!)
  • I opened a credit card to build credit history, and never carried a balance
  • In the later years (once I became smarter with my money), I used money I was eligible for from subsidized federal loans (0% interest) to pay back most of my “alternative loans” that I took out my first year or two.
  • I didn’t go on spring breaks. Though some would say I missed out, I haven’t regretted it yet.

Here’s what I could have done better, had I known:

  • I took summer school my first two summers and while I worked, I didn’t work full time. This allowed me to get some difficult classes out of the way (and they were a bit easier in the summer), but was a financial mistake. Not only did I not make much money those summers, I also had to take out extra loans to fund them.
  • I worked jobs that didn’t pay well when I could have done something better. I worked in retail when, at minimum, I could have been making much much more waitressing.
  • I didn’t apply for internships related to my major until after my junior year (these paid around $15/hr), when I might have been able to get one sooner.
  • I studied abroad. Worth every penny, but realistically probably added at least $5000 to my student loan debt, maybe more.
  • I didn’t finish in four years, but five. To be fair, I took one semester off for an internship (paid), so it was really 4.5 years. And I could have squeezed it in in 4 had I not studied abroad. Also, few people in my major get out in 4 flat, though it isn’t unheard of by any means.
  • I could have spent less money (but who couldn’t?)

The after effects of the college years
Here’s where things stand now. My base salary is about $56k, and I’m contributing 10% to my works 401k plan and getting a match on 6% of that. I have a Health Savings Account which I’m contributing $200/month to for the first half of the year, then it will be fully funded for the year. I’m contributing $350/month to a Roth IRA I opened in January (but I started out just contributing 250) with plans of maxing it.

I started working full time in June, and paid off about $6000 of student loan debt in the first six months. The interest rate was around 8% for that chunk of non-federal loans, so I was glad to get rid of them. I consolidated my federal loans through Wells Fargo, and I must say I’m really unhappy with how the process went. In fact, it is still not complete–somehow about $5500 was “forgotten” in the consolidation. I’m waiting for them to finish adding it, but Wells Fargo has left a bad taste in my mouth. Now I’m stuck with them for the life of my student loan.

I opened a savings account at INGDirect after realizing Wells Fargo was paying me .5% on any money I kept there. Later I switched to HSBC for their “new money” at 6% deal, and plan on sticking with it for now. I’m paid bi-weekly, and have $300 from each paycheck automatically deposited in that account.

Here are the numbers, neglecting credit card balance ( always paid in full) and checking account (less than 500 anyway):

  • Student Loans at Wells Fargo (currently at 0% interest): $14,800
  • Student Loans waiting to be consolidated: (7.14% interest… thanks for screwing up Wells Fargo!): $5446
  • Roth IRA: $1100
  • 401k: $9057
  • HSBC: $4130

The numbers won’t add up exactly, but this includes everything:
NET WORTH: $-6,300

Oh look, it is still red!

I have roughly $2000 coming to me in tuition reimbursement (once I finish my last project) and $300 coming in mail in rebates (what a pain!) from my laptop, so that brings the pretty red number to about $-4000.

Changing those numbers
I’m trying to set a goal for when I’ll see that number turn black. I just recently started tracking everything, and I really have no idea how much each paycheck will affect it. I imagine it’ll be very soon–within months. Today is May 9th, and I think it’ll take at least 4 paychecks to get in the black… so let’s go with June 22nd as the date to be “in the black”.

Let the learning begin!

2 Comments leave one →
  1. Brad permalink
    May 17, 2007 5:23 pm

    Welcome to the PF blogosphere, SJ! I’m a newbie too, and I know I want as many reads and comments as I can get . . . so here’s one for you.

    Best wishes and good luck with your goals.


  1. From -4k to +20k in one year! « Stacking Pennies

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