The Bottom Lion

Student Financial Aid and Literacy Issues from a Biblical Perspective

30 Apr 2012

Take the Umm Out of Summer

Some of you barely began the Spring semester before dreaming and planning for summer. Others keep thinking of summer as off in the future until all of a sudden it sneaks up on you and smacks you in the face. It’s like that scene in Monty Python and the Holy Grail where the two castle guards see Sir Lancelot running toward them in the distance. His approach raises no alarm because they know he’s coming but he seems so far away. But the next thing you know one soldier is fatally wounded and the other is hopelessly confused.

 

So to those of you who are “dead” or dazed, this is your wake up call. Sir Lancelot…I mean, summer is here and it’s time to take the guess work out. The choices you make concerning the break can have significant implications. Here are just a few worthy endeavors that done on their own or in combination can make summer, in one way or another, quite profitable.

 

Take time to recharge

 

I mention this one first because when we typically talk about getting the most out of something we assume that involves a lot of activity. I don’t think that is necessarily the case. You have theoretically worked hard for two semesters and a little planned down time can be critical to your future success. Planned implies purposeful and thought out, quite the opposite of “umm…”

 

Recharging may be getting rest or relaxation, connecting with friends and family, pleasure reading, personal hobbies or sports and exercise. These are all valuable activities and may prepare you mentally, emotionally and physically for the next academic year.

 

Enroll in summer courses

 

Did you know that summer is a great time to get caught up or get ahead on completing your degree at a fraction of the cost? You can take online classes with Bryan for approximately 70% less per credit than the regular fall/spring charge. If you go back home there is potential for you to enroll in even less expensive summer courses at a community college that may transfer back into your program at Bryan. Just remember to chat with your advisor before taking any courses to ensure they fit into your major.

 

Taking summer courses may hasten your graduation, saving you money on extra semesters, and it would enable you to enter the job market sooner. Plus, Bryan has some great summer courses available including Environmental Science, Christian Theology and Human Trafficking. Depending on your circumstances, you may also qualify for financial aid so be sure to see the aid office.

 

Go on an adventure

 

There is no time like summer to plan an exciting vacation or service trip. Although there is usually cost involved, the benefits may be well worth it if you plan it correctly and ensure it will not negatively impact your ability to pay for school in the Fall. There are so many places to go and things to see, as well as opportunities for service, that may not be as feasible at other times in your life. It can be as simple as a road trip or project in the States or as elaborate as an international excursion.

 

Look at your trip as an opportunity to learn and grow. Experience the basics of trip planning and budgeting, discover first-hand new places and things, make a difference in the lives of others or explore informative and insightful events, museums, art galleries and exhibits.

 

Earn extra cash/resume build

 

There is very little that sets a job seeker apart like real-world experience. Employers know that theoretical knowledge does not always translate into practical skills in the work place. A summer job can not only help build up savings for college but it can provide you with invaluable tools that will make you a hot commodity in the marketplace. Being wise about summer job selection as it relates to your future career and treating the position very seriously can be an excellent resume builder.

 

And, as already mentioned, the earnings from seasonal employment can help pay the tuition bill or give you spending cash during the semester if you are careful not to let it “burn a hole” in your proverbial pocket.

 

No more lion around

 

Summer holds a lot of opportunity and potential. The options are numerous and failing to make a plan can be costly in more ways than one. Like Sir Lancelot, summer is here whether you like it or not. This can be the summer of unbelievably good things or simply the summer of umm…believable regret. Make the most of summer. That’s the bottom lion.

Posted in Uncategorized | Leave a Comment
10 Apr 2012
17 Comments

Is Bryan Really Worth the Cost??

With the rising cost of receiving a college degree, skyrocketing student loan debt and a weak job market it is no wonder that there are articles written every day asking about the value of higher education. Even President Obama has called for colleges to find ways to rein in exorbitant tuition increases. It is certainly true that college is not cheap. Harvard stickered at just under $40,000 this year! Undoubtedly, even at half the cost, more than a few students have to weigh the value of starting or continuing their education at Bryan, attending a public university or dropping/delaying school attendance altogether. It can be a complex and difficult decision.

 

The Positives of a Bryan Education

 

Sometimes the hype surrounding the latest media topic can obscure the facts and lead to an uninformed or misinformed decision. There are a lot of aspects that can go into making choices about college. Ultimately you have to consider the options and make up your own mind, but I would like to share just a few areas that may give you some additional confidence about being or becoming a student at Bryan.

 

Increased Earning & Less Debt

·         A college graduate earns $412 more per week ($21,424 per year) than students who did not attend or finish college

·         A Bryan graduate, on average, who works from ages 25 to 67 can earn an extra $899,808 that amounts to a 7.6% annual return on an average $61,000 tuition investment

·         The average student at Bryan is burdened with $11,950 ($15,700 vs. $27,650) less student loan debt after school than the average student at other private non-profit colleges nationwide

Preparation for Life after College

·         A college graduate has significantly more marketability in a world where the average working American will switch jobs 11 times over the course of their career 

·         A liberal arts education from Bryan is designed to give graduates a broad knowledge base and the critical thinking skills necessary to succeed in an ever-changing marketplace

Statistically Higher Job Opportunities

·         The unemployment rate of those with a college degree is half that of those without a college education

·         Employers and ministries who have experienced the skill and adaptability of a Bryan graduate are significantly more likely to seek out Bryan grads to fill other open positions

Competitive Graduation Rates

·         Students who enter college for the first time as freshmen at Bryan are 3 times more likely to graduate from Bryan within 4 years than freshmen entering the University of Tennessee at Chattanooga (UTC ) are to graduate from UTC within the same timeframe

·         Bryan graduates a higher percentage of students than any other college or university in the area, including UTC, Tennessee Wesleyan and Lee University

Low Cost & Generous Institutional Aid

·         The cost of one year of a private, Christian higher education at Bryan is within $3,700 of the net price of attending UTC

·         Bryan tuition rose from 2010-11 to 2011-12 at less than half the rate of UTC and a year at Bryan costs 16% less than the average Christian college

·         96% of Bryan students receive gift aid from the college versus only 26% of their UTC counterparts

Ability to Live Out a Vibrant Christian Faith

·         Bryan’s efforts in and out of the classroom, from teaching a biblical worldview to an emphasis on spiritual formation, focus on making servants of Christ who will be able to make a difference in the world

·         Many secular schools are downright hostile to the Christian faith, including some who ban Christian student groups that attempt to hold to their values

·         Bryan provides an environment during the pivotal college years where faith can be analyzed and strengthened and students are equipped to face and shape the broader culture with confidence

 

The Eye of the Beholder

 

As you can see, there is a ton of value packed into an intimate, Christ-centered, academically rigorous private college education at Bryan. However, worth is often found in the eye of the beholder. You might be drawn or called to some other school or some other endeavor. If so, don’t ignore it. But if you are comparing apples to apples Bryan makes a lot of sense and cents. That’s the bottom lion.  

Posted in Uncategorized
21 Mar 2012

Secret Stafford Loan Decoder Ring

For both students and caring financial aid counselors the use of student loans to help fund a college education can sometimes be described as a vaguely understood, yet necessary evil.  Counselors don’t prefer to offer them and students most certainly don’t like to take them.  It’s not the borrowing that’s so bad but the pesky repayments with interest that are so painful. 

 

Relatively Speaking

 

In reality, there is no such thing as a “good deal” in the loan business no matter what someone tells you…borrowing is borrowing.  So please, don’t take this as an endorsement of student loans.  But at least historically federally guaranteed loans from the Stafford loan program have been relatively better than any other unsecured loan on the market when it comes to rates, terms and benefits.  A Stafford loan has been about as good as it gets in the unfortunate world of educational debt.

 

The Secret Decoder

 

Now, some of you are scratching your head as you try to decode what I just said.  In explaining why the Stafford Loan has been better than other types of loans I will seek to decipher the “insider” lingo with my secret decoder ring.

 

CODE WORD: Guaranteed.  This means the loan is available to you without passing any type of income or credit test.  This is important because most traditional age students would fail to obtain virtually any kind of loan because they have no income and (at best) no credit history to speak of.  The federal government guarantees that if you are an enrolled student who meets some basic educationally based criteria that you will have access to at least some amounts of student loans for school.

 

CODE WORD: Unsecured. Translation, these loan funds are given without any form of collateral.  They are unsecured.  Still confused? Collateral is something pledged by the borrower to ensure that the lender is compensated in some way should you fail to pay the loan back.  Examples of collateral would be an automobile for a car loan or a house for a mortgage.  If someone fails to pay back one of these types of loans the lender can rightfully take the property as their own. Most loans require collateral.  Collateral also usually indicates that the interest rate will be more favorable for the borrower.  The benefit of a Stafford Loan is that a student can obtain a school loan with no collateral and still receive a relatively low interest rate.

 

CODE WORD: Rates.  This includes what a lender is charging you up front to make a loan to you (fees) and the continuing cost of the loan (interest charges added to the payments).  The interest rates and fees associated with most loans take into account your income and credit history.  Not only do lenders determine whether to extend a typical loan to you based on credit/income, the loan rates and fees will also be different based on what your approved credit/income is and are usually variable (change monthly or quarterly). The better your score, the better the rate and fees will be. Federal student loans have historically had advantageous rates. These loans have a fixed rate and fees that do not change for the duration of the loan and they are same for every borrower.

 

CODE WORD: Terms.  Loan terms specifically refer to the timeframe you are given to repay and the monthly payment amount. On a typical loan, the terms are strict and firm. They are set or locked at the beginning of the loan and may not be altered.  On the other hand, Stafford loans have more flexible repayment terms that take borrower circumstances into consideration.  You can extend payment timeframes out longer and/or reduce payment amounts by qualifying for a different repayment schedule based on income or total student loan debt.

 

CODE WORD: Benefits. Benefits are special perks built into a loan to make it easier or less expensive to repay. Federal student loan benefits have historically included fee reductions, payment deferment (suspend payments while in school), interest subsidies (government pays the interest on certain Stafford Loans), grace periods after graduation, forbearance (suspend payments during financial hardship) and interest rate reductions for specific actions of the borrower. Because the benefits are numerous, understanding and taking advantage of the right ones can be confusing. A typical loan, however, comes with little to no benefits.

 

Expert Decoding Advice

 

The bottom lion?  Avoid loans if you can.  Even the best rates, terms and benefits can’t beat debt free.  But for the majority of students who need to use them, be sure to borrow wisely and take the opportunity to review these concepts and repayment options with a financial aid counselor who has your best interest in mind. Graduating students are especially encouraged to participate in face-to-face or online loan “exit” counseling or “decoding” sessions to make sure you are prepared to face your financial future after school. 

 

To learn more about the Stafford Loan and its rates, terms and benefits the Bryan website has a wealth of information.

Posted in Uncategorized | Leave a Comment
22 Dec 2011
1 Comment

Give Without Regret

Welcome to the last few frantic shopping days of the Christmas season.  There is little time allowed for reading financial blogs when you’re blowing wads of cash on gifts for uncle Bob, your third cousin Suzy, the mailman, your hair stylist and your best friend’s feline, Spot.  The shopping list seems to get longer and longer each year and the budget got blown about fifteen people ago.  But it is Christmas after all and there’s supposed to be great excitement and a sense of fulfillment in giving, right? But somehow the more we give the less good we feel about the whole enterprise.  Our wallets are thinner and our smile is no fatter.

How could this be?

Perhaps the simple joy of giving from the heart got thwarted somewhere along the way by the pressure to give out of obligation.  We have put too much emphasis on the material gift and we have tainted the act with a need to reciprocate and impress.  The personal impact of giving died when our motives changed. Giving at Christmas is supposed to provide a small glimpse into the selfless love demonstrated by God in sending his only Son to rescue a fallen world.  Giving soon-to-be-forgotten stuff is not the point and clearly pales in comparison.

No one speaks to the ill-placed emphasis on presents at Christmas better than the Grinch.  All that junk we spent so much time and money to get for other people often goes unused, unappreciated and ultimately discarded.

There is certainly nothing wrong with truly expressing love and appreciation for someone around Christmas with a special gift.  But it’s important to remember that it is not necessary to break the bank to do it. There are unique and appropriate ways to give to others that take into consideration your financial circumstances.  If you’re a broke college student or a family living on a tight budget people will understand.  We often forget that people can be very gracious.  You would never think of  looking down on someone who does not have the means to reciprocate a gift. Trust that others wouldn’t do it either.

The joy of the season came wrapped in a manger, not at the bottom of a tree.  Give lavishly this Christmas, and if necessary, use money.  That’s the bottom lion.

Posted in Budgeting, Stewardship
13 Dec 2011

Tools to Control the Flow

Budgeting is critical and powerful way to take control of your money and plan for a successful financial future. In its most basic form, a budget is a plan on how you will spend the money you make. Some of the planning is easy because you may have certain payments that you are obligated to make, like for a loan. Other parts of the plan are more challenging, like how much to allocate for food, entertainment, and savings, or consistently monitoring and living within it. 

 

There is no doubt it takes some forethought as well as discipline to see the process through. But as I mentioned last week, it is more than worth it. To aid in the process I have collected a list of FREE resources and links that can give you the help and tools you need to get your budget off the ground and money’s current working in your favor.

 

BUDGET/SAVING WEBSITES

 

www.feedthepig.org

 

www.mappingyourfuture.org/money

 

BUDGET TOOLS

 

Mint

Description:  Mint brings all your financial accounts together online or on your mobile device,
automatically categorizes your transactions, lets you set budgets and helps you achieve your savings goals.

Website: www.mint.com

dsbudget

Description:  A simple, open source downloadable budgeting software program. It allows you to allocate income into categories and track expenditures as you make them.

Website: http://sites.google.com/site/dsbudgethome/

moneytrackin’

Description:  An online webapp that allows you to track all your expenses and income easily and without effort, thus allowing you to have a clear view of your financial situation. It intends to be a simple yet powerful online budget management tool.

Website: www.moneytrackin.com

BUDGET WORKSHEETS

These worksheet tools allow you to build a budget online or print one to do by hand.

www.daveramsey.com/tools/budget-forms/ (monthly budget)

www.budgetworksheets.org (monthly budget)

www.squawkfox.com/2010/08/18/student-budget-planner (academic year budget planner)

BUDGET SAVING TIPS

                http://www.thesimpledollar.com/2008/02/06/little-steps-100-great-tips-for-saving-money-for-those-just-getting-started/

                http://www.getrichslowly.org/blog/2006/08/30/27-money-tips-for-college-students/

                http://www.collegescholarships.org/student-living/save-money.htm

BUDGET WEBINARS/COURSES

                http://www.moneymanagement.org/Budgeting-Tools/Credit-Webinars.aspx

                http://www.youneedabudget.com/support/ynab-coaching/

                http://www.youneedabudget.com/course/

This is just a small list! There are countless other options available besides these that may or may not cost money. Evaluate all of your resources and pick the ones that will be most beneficial to you.

The bottom lion: Use whatever budgeting websites and tools that work best for you to put yourself in control of your money.

Posted in Budgeting | Leave a Comment
05 Dec 2011

Controlling the Current

I am almost certain that the word I am about to mention has to be among the most dreaded in the english language. Just thinking about it gives some a claustrophobic feeling.  Throats get tight and palms get sweaty. Other words like “limit”, “restrict” or even “bondage” flash across many a cerebral cortex when the concept is discussed. There is a deep resistance to any loss of perceived freedom and pleasure that the word “budget” represents.

The fact is I understand.  No one likes to live on a budget.  Not so much because we deny the value of it, but rather because it forces us to face the awful reality that our money is not of endless supply. For others it is an entirely foreign concept. Living within a budget may be new for some, especially for those in the college years.  It is the first time where a level of independence is experienced in severals ways, including finances.

Now is the perfect time, at the infancy of financial decision making, to master the art of the budget. I don’t use the word master lightly either. The truth is that when people construct and observe a budget they actually find a greater, not weakened, sense of control and joy.  Each of us has an unavoidable relationship with money. And,  it has the ability to be the dominant partner, if we let it. That’s because money is powerful stuff.  It is always moving and acting.  That’s why it’s called currency.  Those who find success with their finances are the ones who learn to weld money’s power to their advantage.

A budget is an amazing tool to enable you to control the current of the money that passes through your hands. Our money is limited.  There is no way around it. But when you purposefully direct your every dollar you will find several things will happen:

  • you get to identify and fund your priorities (the things that really matter to you)
  • you get an awareness of where you stand financially which fosters a sense of peace and security
  • you are able to make wiser, more informed decisions about expenditures
  • you experience deeper satisfaction from your money and find that it goes farther than you ever imagined

The most effective and valuable budget will contain certain elements that will amplify these benefits.  First,  it will recognize the source of  provision. All of our resources come from a good and gracious God.  It belongs to him and a portion should be given back to worthy causes.  Second, good stewardship and wise financial planning always includes allocating a portion of our funds toward the future.  Deferring gratification now by investing for later will pay huge dividends. Lastly, it operates on the philosophy of cash purchasing. Your budget should not contain a plethora of loan and credit card payments. The power of a budget gets diminished when you have stolen tomorrow’s earnings to supply today’s wants.

There are several resources available to help us build and track our budget.  We will explore these opportunities in the next post. In the mean time I hope that the word budget is not quite the dirty word it use to be.  A budget can change the dynamic of your relationship with money and put you in charge for good. That’s the bottom lion.

David

Posted in Budgeting | Leave a Comment
21 Nov 2011

Don’t Be a Turkey!

Contentment is being satisfied in what we have.  It is finding joy in what already is and patience and faith in what will be.  When we bring ourselves to that place of true contentment and discover that God and his provision are more than we need it can have an amazing impact on the way we live and how we use our resources. I believe there is a profound progression from our head, to our heart, to our hands in the way that we naturally respond.  When our mind has found contentment in God’s supply it leads our heart to an overflow of gratitude.  When our heart is overflowing with gratitude there are messages of praise and inevitable demonstrations of kindness and service.

Holy Cow

An unknown author in the New Testament provides some noteworthy guidance on our response to God’s provision. He explains the Old Testament practice of animal sacrifice for sin.  The animal’s blood is presented in the holy of holies and the body is taken outside the camp and burned. In comparison, he says,

Jesus also suffered outside the city gate to make the people holy with his own blood. So now, let’s go to him outside the camp, bearing his shame. We don’t have a permanent city here, but rather we are looking for the city that is still to come. So let’s continually offer up a sacrifice of praise through him, which is the fruit from our lips that confess his name. Don’t forget to do good and to share what you have because God is pleased with these kinds of sacrifices (Hebrews 13: 12-16)

This passage shows us four things:

1)      We are blessed beyond measure

Jesus’ sacrifice was an all-sufficient, once and for all action to show his love and to provide payment for our sin.  It is the greatest and only gift we need.  It brought us abundant life today and eternal life forever.

2)      Our treasure is not found here

We will not necessary be bombarded with life’s pleasures and ease.  As Jesus suffered, we too who identify with him may not experience worldly appreciation or collect earthly wealth.  Instead we have the opportunity to faithfully walk with him, store up treasure in heaven and become a living sacrifice.

3)      His gifts result in constant gratitude

There is a natural response to the love that God has poured out on us through his Son.  A heart that has really grasped what Jesus did for him will be unable to resist the temptation to offer thanksgiving and praise.

4)      Real gratefulness leads to action

A changed heart that recognizes the depth of grace will be compelled to action.  God calls and enables us to sacrifice our own comfort to be a blessing to others through generosity and loving deeds.

Bird Brains

You may have heard that turkeys are not the smartest creatures on earth.  This Thanksgiving when you have the chance to see or partake of the tasty bird try to avoid acting like one.  Let this holiday be a reminder to once again reorient your life and your resources on Christ. When we stop looking around at the counterfeit treasures of the world and focus our attention back on Jesus, where it belongs, we quickly remember that we are richly blessed.  We really can find contentment in what God has provided.  A real encounter with the words of Hebrews 13 and that realization of deep satisfaction in him will have some pretty powerful results on the things we say and the things we do, especially with our money. That’s the bottom lion.

David

Posted in Bible, Stewardship | Leave a Comment
14 Nov 2011
3 Comments

The Leaky Bucket

There has always been a serious struggle within my heart and mind over being truly satisfied.  When I was a kid I was looking for the next best game or toy. As I grew, my desires shifted to having the best clothes, music and electronics. Later in high school and college those passions grew to include the most amazing cars, technology and experiences that life had to offer.  Once I attained something, it was never enough.  I was constantly moving on to the next big thing or event.  There was always a certain temporary high or happiness that came from getting what I wanted but the feeling soon faded.

Losing the Fight

It was those ever changing wants that lured me into spending greater and greater portions of my resources. Even though the pursuit had a clear monetary price tag, I realize now that the deeper issue was actually a spiritual one.  Until I was willing to address the reason I was seeking those things and acknowledge the value and meaning I was giving to them I would never find myself on more solid financial footing.  I would be stuck in the endless cycle of debt and discontentment.

For me, the things and activities I spent my time and money on were important because I was expecting them to provide me with fulfillment and curry favor with others.  I placed significant meaning on what others thought of me based on the things I did and the things I had and I let those things define me. The problem was that someone always has more money than me, or owned something that was newer or more amazing.  The competition was fierce and I was in a losing battle.

A Horrible Exchange Rate

God had a different path for me (and you). He wants me to get my full and complete satisfaction in life from him and him alone. This is certainly not a new revelation, but the reality of this concept struck me in a fresh way when I read these words: 

Be appalled, O heavens, at this; be shocked, be utterly desolate, declares the LORD, for my people have committed two evils: they have forsaken the fountain of living waters, and hewed out cisterns for themselves, broken cisterns that can hold no water ( Jer.2:12-13).

I was not finding the contentment that I so longed for because the things and activities I was pursuing were all flawed, broken and empty.  Money and the things that money can buy will never satisfy the deepest desires in my heart. I was trying to put something else in the supreme place that only God could occupy.

Jeremiah was speaking to Israel, but the words are no less true of me sometimes. He says they “exchanged their glory for what does not profit.”  They performed the equivalent of putting dirty water in a leaky bucket. How often have I done the same thing?  How many times have I traded God in for something utterly worthless? Every time I get my priorities out of place and allow money and the things it can afford to rule in my heart and mind I sold his glory. 

Pursuing anything above and apart from God will always lead to “waste” and “ruin” as they did for Israel. But when God is my source of life and joy, then the resources I have become a means to love and honor him. The choices I make about how I will spend those resources change drastically in light of who he is and what he desires for me. I am thankful to God for his grace and mercy because I no longer have to use money to seek satisfaction and fulfillment.  He is all that I need. 

May I encourage you this week to read all of Jeremiah chapter 2 and ask God to open your heart and mind to anything that you may be exchanging with his glory.  Are they worth it? Perhaps you would consider making him your priority.  That’s the bottom lion.

David

Posted in Bible
08 Nov 2011
1 Comment

Confessions of a College Idiot – Part 2

My credit card transgressions (see Part 1) were painful.  They impacted my money and life for many years. As bad as they were, I am embarrassed to suggest that my previous confession was not the most heinous financial offense I have ever committed.  As unfortunate as my credit card decisions were in college, they were nothing compared to the choices I had made regarding one particular shiny, big toy…

 My Costly Love Affair with Heavy Metal

Cars were a great passion of mine (still are), surpassed only by my love for Jesus and a beautiful girl I would later marry.  I like to look at cars, touch them, and most of all to drive them. Maybe it’s a guy thing or maybe there is something in the water in metro Detroit where I grew up.  Who knows. I have owned several of them in my 33 years and have had trouble holding on to one for very long in the past.  It was like an addiction.

I had a two-door sports car when I first entered college.  It was fully paid for with cash.  No monthly payments, it ran well and it got decent gas mileage.  It is too bad that this car could not hold my interest or all my friends.  I soon decided that a bigger, nicer car was critically important.  I convinced myself that the larger car was a necessity brought on by the expanding pile of junk that I was transporting to and from college in Philly every year.

Clearly I needed nothing less than an suv to hold all the clothes, supplies and computer equipment purchased in part with…you guessed it…my handy Red Wings credit card.  And no basic, sport-utility would do.  The 500 mile trek would demand something reliable and most certainly more comfortable. My current car would not earn me enough for more than a down payment.  I traded ”up” from my paid-for car into an suv with 48 wonderful payments.

I also convinced myself that even though I was only making the minimum monthly payment on my credit card, my newly secured student job at the college would not only continue to help me pay my current bills but would also enable me to easily pay for my new toy.  To my surprise things were a lot tighter than I figured in my head.  Instead of stressing solely about my studies, I now had to be sure to work enough hours to cover all of my obligations, including higher gas and auto insurance rates that I conveniently forgot to factor into the whole transaction.

The Seven Year Stain

I quickly found myself in big trouble.  My expenses were overwhelming and I couldn’t seem to get the hours I needed at work. Eventually the month came when I owed more than I earned. Something would have to give.  I am not sure much thought went into my decision to delay payment on “Jimmy”, my suv.  It was my largest bill, seemed the easiest to postpone and would provide the most relief for my aching wallet. 

Thirty days came and went without a payment.  The funny thing about monthly installments is that they keep coming.  Although a bit late, I had caught up enough to resume my next payment. But in reality I had not made my next payment but instead the payment I had delayed from the previous month. For the second month “Jimmy” would show more than 30 days past due. By the time summer, and a summer job came, I was able to make two payments at the same time  but I had three months in a row of over 30 days past due.

What some of you may not know is that each of those three months found their way onto my credit report and became negative marks that were visible for SEVEN long years.  My failure was not something I endured for only three months.  The credit I was trying to build was ruined for a long time.  Any time I wanted to buy something on credit, or rent an apartment or put utilities/cell phone in my name my credit report was reviewed. In some cases I was given a higher interest rate because I was a greater risk.  In some cases I needed a co-signer or additional deposit.  In other cases my request was flat-out denied.

Don’t Be an Idiot

I am sure the point my folly makes in one sense is very clear; don’t overextend yourself.  The consequences of taking on bills that you cannot pay can be severe, embarrassing and long-term.  But there is deeper value to be had from my mistakes. I could have avoided the entire mess if I had only kept the perfectly good car I already owned and waited to buy another car until I could afford to pay cash.  It’s a novel idea, but spending only what we have is something we all need to desperately hear in our gotta-have-it-now, consumeristic culture.

Be smart and live within your means.  That’s the bottom lion.

David

Posted in Loans, Stewardship
31 Oct 2011
3 Comments

Confessions of a College Idiot – Part 1

There are probably not many of us out there that don’t have some desire to be a positive example or role model for others to follow.  We want to point to our successes as a path for others to emulate.  This is no less true when it comes to our money and the way we handle it. I am no exception.  I wish I could say that my example in the past has been a good one; that I made really great choices during my college days and into my early 20’s. I would like to be able to stand up as a representative in the financial field and declare how making right choices with your finances really does pay off and my life can prove it.

Unfortunately, I cannot make any such declaration. I made too many of the wrong choices. However, even though I would much rather be a positive example, I am learning that if I am willing to open up and be honest, my negative experiences can sometimes provide even greater guidance for students.  So… brace yourself!  Learn from my mistakes. Over the next couple posts I will share a few things you can take away from the dirty, dark world of David’s monetary failures.

Don’t Buy a $5000 Gym Bag

My first encounter with a credit card came during my “gap” year between high school and college. Hockey is king in Michigan and I was (and still am) a huge fan of the Detroit Red Wings.  In attending a game one fall I was lured to a credit card offer table by the glorious prospect of not only receiving a coveted card with the Red Wing logo and colors, but a FREE wings gym tote bag to boot!  What could be better than free? 

Of course I signed right up.  I had no hopes of being approved but at least I would get the free bag, right? What a shock when my special edition credit card arrived in the mail.  It was a beautiful thing…for a while.  I was using it for purchases I would have made anyways, like gas, and then paying it off each month.  As my gap year ended and the paychecks stopped, I headed off to be a full-time student.  Unfortunately, being at college without a source of steady income is tough.  There were books to buy, pizza to pay for and exciting places to drive my new friends.

The temptation of “easy” money was too strong.  I began to pay with plastic with no ability to pay off my purchases each month.  My balance was mounting.  Eventually I hit my credit limit and I was only making the minimum monthly payments.  It seemed that as soon as I got a little paid down I would make another unnecessary purchase.  This went on all through college.  The funny thing was that I had this nagging monthly payment, a large balance and nothing to show for it.  Even the gym tote bag was torn and discarded.  As far as I can figure in my head, that “free” bag cost me nearly $5000 dollars in debt and interest!

Do You Hear that Giant Sucking Sound?

I learned the hard way that credit cards are anything but “easy” money. They are a money pit that makes someone else very rich.  A credit card can seem like a good idea to build your credit history, specifically if you pay it off each month. But in my experience, the best intentions to maintain a zero balance can quickly go south under the right (or wrong) circumstances.  Once you have a rolling balance the interest starts kicking in and that “emergency” purchase or the item that seemed like a good deal at the time could cost you much, much more in the long run.

Accumulating debt through a credit card is one of the best ways to divert your “treasures” (money and abilities) away from more valuable and important things.  A credit card is like a giant plastic funnel, syphoning away your hard earned resources.  It is amazingly efficient at doing what it was designed to do; make a profit for its owner.  And by owner, I don’t mean you! The lender who issued you that card is “banking” on the high, variable interest accumulation, fees and late charges you rack up to increase their earnings.

Your best defense is to always pay cash.  If you can’t pay cash for something don’t buy it. Exercising self-control now will save you stress and afford you more financial freedom in the future.  Don’t waste tomorrow’s earnings on “cool” or “tasty” stuff today that will soon be eaten, forgotten or destroyed. In fact, using a credit card sounds a lot like the opposite of what Jesus said in Matthew 6:20; “But store up for yourselves treasures in heaven, where moths and vermin do not destroy and where thieves do not break in and steal.”

Final Plea

I sincerely beg you to take me as a really good BAD example for the reality of all of this. Steer clear of the plastic.  That’s my prayer for you. That’s the bottom lion.

David Haggard

Posted in Credit Cards

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