- Introduction
- Featured Article: Rates Keep Rising
- Interest Rate Updates
- Scholarship Notes
- A Word from our Sponsors
- Privacy and Subscription Information
- Back Issues
- Sponsor this newsletter!
Welcome to the May 2005 issue of FinancialAidNews.com. This month, we are proud to congratulate all students who are graduating this month and in the months ahead. You've worked exceptionally hard to get through school, and we applaud your dedication. Congratulations!
This month, we talk a little about graduation-related issues, especially with regard to dealing with your student loans.
Also, we're pleased to announce our newest service: the Student Financial Aid News Podcast! If you have a portable MP3 player, you can download our podcasts and feed your brain while commuting or just wandering around. Learn valuable financial aid information while on the go! If you're not sure how to subscribe, visit iPodder to get free podcast listening software. Visit http://www.FinancialAidNews.com/financial-aid-podcast.php for back issues.
Have you visited FinancialAidNews.com? The Student Financial Aid News web site provides you with the back issues of Student Financial Aid News, so that if you missed an issue or your email address unexpectedly changed, you'll still get to read the articles you need. Also, don't forget to check our Financial Aid Blog from time to time. As always, please share The Student Financial Aid News with your friends, family, and colleagues, by simply forwarding this message, or letting them know to subscribe by visiting www.FinancialAidNews.com today!
Enjoy this month's newsletter!
Christopher S. Penn
Editor in Chief, The Student Financial Aid News
The Student Financial Aid News
1250 Hancock Street, Suite 703N
Quincy, MA 02169
Featured Sponsor: Consolidate your student loans
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Featured Article: Financial Tips for Graduates
You've got your cap and gown, and are ready to graduate! Congratulations - and get ready, because the very real world of personal financial management is coming your way, and it's not all wine and roses.
From the moment you graduate, things change. Even if your IRS tax status stays the same, you feel like an independent, ready to begin making your mark on the world. Here are two top tips for you to ensure that your finances don't get left behind.
Tip #1: Organize!
The first and most important tip is to get an accurate picture of your financial situation, which can be broken down into three categories:
- Income
- Expenses
- Position
Get a sheet of paper and divide it into three columns, like so:
| Monthly Income | Monthly Expenses | Position |
Now start to fill in this table. Under income, put in anything that contributes money to you on a predictable basis - this is money coming into your pocket. This includes things like:
- Your job
- Gifts or contributions
- eBay / Craigslist profits
Remember, we're not aiming for IRS-level accuracy - we want to simply get an idea of how much money you regularly have coming in each month.
For expenses, you're looking for any and all activities which cause money to leave your pocket each month. Food, clothing, rent, utilities, debt... capture it all.
Finally, under position, put the amount of money you have right now. Checking, savings, cash, investments, and enforceable debts (i.e. people who owe you money). As opposed to a monthly schedule, position tells you exactly where you are. If you owe money to someone or you have an unpaid bill or two, include them here.
You now have a vastly simplified picture of your current financial position. Let's say this is your current example:
| Monthly Income | Monthly Expenses | Position |
Total: $2,650 |
Total: $2,350 |
Total: $600 |
Based on this simple statement, assuming that everything is accurate, you should have about $300 extra at the end of each month.
Tip #2: Prioritize!
Now that we know what our position is, essentially where we are, we need to prioritize, decide where it is we want to be, financially. There are a few goals which should be paramount for anyone, but especially a new graduate, when it comes to personal finances:
- Free yourself from consumer (non-equity) debt.
- Build an emergency reserve.
- Begin investing.
Let's examine these in a little more depth. On point #1, consumer debt is basically any debt which has no equity or collateral. For example, credit card debt is the primary form of consumer debt - debt that has been accumulated through consumption but has no worth tied to it. Equity debt is any debt that has something of worth tied to it - like a mortgage, a car loan, etc. So the first step of priorities is to free yourself of non-equity debt - and the order to do it in is from highest interest rate to lowest interest rate.
Incidentally, student loans are a gray area because while they have no equity tied to them, they also tend to be relatively low on the interest rate scale while still having large balances. For the purposes of priorities, classify student loans as equity debt, to be paid off over the years. And of course, you can start with a lower monthly payment by consolidating your student loans.
Second, build an emergency reserve. You know what your "burn rate" is on a monthly basis. These are your expenses. Once you have managed to find a stable source of income and you've got your consumer debt well on its way out the door, start to save three month's worth of expenses to have on hand. The best idea is to place it in some kind of low risk mutual fund; not only will your money grow a little, but it will be inaccessible for a couple of days, giving you a little more insurance against impulse spending.
Once you've got your finances well in hand and you've escaped your debts, it's time to start thinking about the future. Specifically, your long term financial future. There is simply no better way to plan for the future than investing, but you have to invest smartly. This is a good time to start thinking about long term financial goals - what do you want to do with your life? Do you have financial goals you'd like to meet by a certain age?
Consider contacting a certified financial planner or certified financial advisor to work up a long range income and investment strategy. Many credit unions and a few banks offer free consultations with an on-staff CFP/CFA for free or reduced cost - avail yourself of those services as a starting point. Also consult your library. Remember, the #1 way to achieve your goals is to find someone successful who started in a similar situation as you are in and figure out what they did, how they did it, and how you can do the same.
We wish you the very best of luck in your post-college career, and for all the financial success you would like to achieve.
Currently, the 91-day Treasury Bill Rate (the rate on which federal student loan interest rates are computed) is %. What does this mean? If federal student loan rates were set for the most recent T-bill auction (), your rates would change as follows:
| Loan Type | Current Rate |
New Rate |
Current Pmt* |
New Pmt* |
| Stafford (in school) | 2.77% |
% |
||
| Stafford (in grace) | 2.77% |
% |
||
| Stafford (in repayment) | 3.37% |
% |
||
| PLUS | 4.17% |
% |
If you have graduated and want to lock in the current rates before they change, visit www.StudentLoanConsolidator.com and apply now.
With interest rates rising across the board, it's more important than ever to have the best tools available for your search for interest-free money, and that means scholarships. That includes free solutions like Google and premium solutions like Financial Aid Officer's Scholarship Search. For a nominal fee, you get access to an ever-increasing database of scholarship awards, more than 2.3 million worth $14 billion.
If you can't find the financial aid you're looking for online, try the FinancialAidOfficer.com Scholarship Search Service at http://www.financialaidofficer.com/scholarship_search/ today.
And now a word from our sponsors...
Health insurance for Grad Students! (finally)
We have been waiting for more than a year for a great student health insurance provider for students who need health insurance in their own country of residence/origin. There's a lot of great international student health insurance out there, but until this month, we didn't know of anything for, say, US grad students in the US. Now there is. Visit www.GradInsurance.com today for the Global Citizen health insurance plan!
Study Abroad Loans!
Are you a US student who needs a loan for studying abroad? Look no further than Study Abroad Loans. We provide up to $30,000 per year for all study-abroad education expenses. Visit www.StudyAbroadLoans.com today!
List your school, club, or organization for free!
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Visit http://www.Edvisors.com for more!
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