Cost of Education

This is TIME SENSITIVE and IMPORTANT for all my readers who have any student loans.  Most, if not all, the folks that read my blog have some amount of student loans.  This Skoobyscents is for you. 

In the event you are not aware, they will be raising the interest rate for Federal Stafford Loans are going to go up to 4.75% on July 1^st.  I am sure if you have graduated within the last 5 years, you probably have been carpeted with mail by these student loan consolidators. With good reason, most of us throw this type of mail directly into trash.  Timber!!! There goes another forest. 

Consolidation Business

These loan consolidators buy up all your student loans if you allow them to.  They will become the single stop shop for your loans and your payments will go to them.  The reason they will be able to offer you such low interest rates on your loans is because for the Federal loans, they are guaranteed by the government.  Basically, if your broke ass defaults or can’t pay back the loan that means your favorite Uncle, good old Uncle Sam, will pay these companies back.  This means that the loan consolidators collect interest on these “risk free” loans.  Also student loans are collectable until you die.  That means you cannot bail out through bankruptcy, it is has the highest commitment with the lenders.  So these guys WILL get there money back, no matter what.  And you thought, there was no easy money?

Makes Cents to Consolidate

Lets assume you owe $10,000 for your student loans which is on the low end of amounts owed. Most people owe 20K alone for undergraduate.  If you went to or finished some higher education, you probably owe 2 to 5 times as much.  Hope you learned a lot and got a kick ass high paying job.  For the ladies that fall in the bucket., hope you marry rich. Haha.  Now assuming you don’t consolidate by July 1^st and you pay the bare minimum 4.75% interest rate.  In one year your interest on the loan will be $475.  Doesn’t seem like much money, right? 

So how much can 4.75% add up to be in 10 yrs for a loan of 10K?  It can be close to $6K.  That’s more than half the original amount of the loan.  Again another example of small cents adding up.  The average student loan is above 20K, so the numbers I outlined can DOUBLE!!! 

Consolidate Now

If you have specific questions, you can feel free to email me at skoobydrew@gmail.com  or leave your questions or comments here.   Peas.

Disclaimer:  Please be advised, I am not a financial guru or a licensed financial advisor.  Although I do work in finance and am a smart, charming handsome fellow, I am still only just skooby dropping some snacks that I pick up on my path to financial freedom.   This is not professional advice.  I simply translate some of the financial jargon and nonsense and piece together clues into simple steps to help you and me on our way to find financial success. Hopefully, it helps us.

Sorry folks but I have been tied up with the BUILD program that I haven’t been able to keep up this site as often as I like.  I hope to update at least once a month.      

It Adds Up…

I’d like to start off this entry with a true story about a pan handler lady who used to work the streets of Telegraph around my old alma mater UC Berkeley.  Now this lady used to ask for change around Durant Square, Fat Slice and other popular student dining areas.  She would beg and collect a few cents here and there from the students.  Later it was discovered that this pan handler was pulling in about 50K a year!  Sadly, that’s more than teachers make.  In fact, she made more than the average US household income a few cents at a time.  More interesting to me is that she was later arrested because she didn’t pay taxes on the money she made.  That is how the story was revealed to the public. 

Now I am not advocating that you go rush to the streets to start collecting change or turnover couch cushions to discover hidden gold mines.  The point of the story is to show you how small amounts that may seem insignificant can add up to a large amount.  Here is another example. Like many others, I personally have a coin cup on my desk that I dump the change I have in my pocket at the end of the day.  You would be surprised how much cash it adds up to in a couple of months.

This might seem a bit of a miser’s approach to life but all that you really need to understand is that a little bit will add up.  So as I show you ways to save a bit here and a bit there, remember that eventually these steps to savings will add up. 

Spend Wisely

Many people have the roads to riches confused.  The way to get there is not solely determined by the amount of money you make.  It is based more on how you save and spend your money.  Spending wisely is the key to financial success and freedom.  Spending wisely is to save the most while spending.

Let me repeat that so you understand how important this is. The road to financial success and freedom is paved by spending wisely.  Spending wisely is saving.   

Save a Bunch on Lunch

My first savings tip is on lunch.  By spending wisely on lunch you can save a large amount of money over the course year.  The best way to save money on lunch is not eating lunch.  Now we all need to and should eat, so don’t starve your way to saving money.  Remember your health is priceless, so don’t sacrifice it to obtain wealth or to fit into that nice pair of jeans.  It is not worth it.

The 2^nd best way to save money on lunch is to pack one at home.  Now unless you are eating fast food all the time, most lunches will cost you anywhere from 7 to 10 bucks a day.  For the purpose of this exercise, let’s say you spend 8 dollars a day on grub.  Here is some simple math:

8 dollars a day * 5 days a week = $40 a week on food.

$40 * 50 work weeks in a year (For the fortunate, 2 weeks of vacation a year) = $ 2080 a year on food. 

That’s a lot of lunch money.  If you were able to cut that down even by 1/4, you would be saving $500 a year!  

I personally pack a lunch a majority of the time.  I make myself a lunch at home the night before and bring it to work.  A sandwich, a hearty salad or even an Asian bento box would do the trick.  At my old job, I even used to bring groceries so that I could make lunch right there in the office. 

The question is why wouldn’t you?  Is it embarrassing to bring a lunch?  Are you concerned about looking cheap?  Are you too lazy?   Before you answer any of these questions, think about the $500 or more it is costing you not to bring a lunch.  Just something for you to snack on.  

Bon Appetit.

Financial Q&A

If you have any specific or general questions about your finances or just want to say how much you enjoy this column, drop some eprops along with your comments and questions.  If you prefer to be anonymous you can email me your questions at skoobydrew@gmail.com.  I will answer your questions in the next entry.  

Disclaimer:  Please be advised, I am not a financial guru or a licensed financial advisor.  Although I do work in finance and am a smart, charming handsome fellow, I am still only just skooby dropping some snacks that I pick up on my path to financial freedom.   This is not professional advice.  I simply translate some of the financial jargon and nonsense and piece together clues into simple steps to help you and me on our way to find financial success. Hopefully, it helps us.

Penny Saved, Penny Earned.

Everyone has heard this saying at some point in time but the message seems lost on the masses of America.  The national savings rate for the average American household is less than 0.2%  That’s right for every dollar they earn, they save 2 pennies.  This leads me to believe that most people have forgotten or never heard “save for a rainy day.”  Even in Sunny California, we get hit with the occasional rain storm.  Make sure you are prepared when your storm comes.

What is Money?

Simple formula we should all remember:

Money = Opportunity

Ghetto Rich

It amazes me that so many peers of mine live check to check.  Rather than try to build some small nest egg, I find, as many you probably do too, that people spend their money faster than they earn. Some people even spend money they don’t have. These people are not in the minority as America and the average family is up to their ears in debt. 

People need to take a few moments out of their day and look at their consumption habits and make the necessary adjustments to save a little. 

Why is Savings so Important?

If you don’t know this, you are really behind the financial game.  But have no fear, that’s why Skooby is here. This is a simple rule to getting on the financial road to success.

“It takes money to make money and that’s why the Rich get richer and the poor, well,are poor. “

Here is a simple story that illustrates my idea.  If you came across a ROCK that normally sells for $10 but someone was selling it for $3.  You could buy the ROCK for $3 and sell it for say $9 and make $6 dollars.  Simple right?  Well if you didn’t have the $3 saved up, and you came across the ROCK, you wouldn’t be able to make the $6.  Remember, it takes money to make money.

Now I know many of you might be thinking this is a ridiculous story, but is it really?  Change the word ROCK for stock, car or property and then you have some real world examples that take place everyday.  Again, this goes back to my original point.  Money is opportunity and the more you have the more opportunity you have to make more money.  It is time to start ROCKing.

Mind on my money, Money on my mind

I will show you the quick start guide on how to get started saving in the next entry.  However, it is critical to understand what money is from this entry.  If you don’t realize the importance of what money actually is, you will never be able to master how to make, use, grow or even spend it properly.

Stink as it may, it’s just my two scents. - Skooby

Side Note... Since this is my first entry, curious to hear your thoughts, questions and comments.  I'd like to customize it so that my message is clear, the entries are enjoyable to read and hopefully helps you guys out with some financial IQ.  This is really a site for you my readers, so let me know how to make this site work best for you. Thanks!