Friday, September 29, 2006
September Education Finances Roundup
This is my highly subjective recounting of the best posts dealing with student loans and other educational finance issues that I've read in the past month. I'll probably move this to a biweekly basis from now on.

If you think I missed yours, let me know. I may put it in the next roundup.

In no particular order:

Financial Baby Steps starts saving for college REALLY early.

Don't Mess With Taxes looks at some proposed education tax incentives. I particularly like the idea of raising the student loan interest threshold, as some of us eat $2500 for lunch.

Free Money Finance has a whole series on the Getting Into College and Paying for It guide. I actually recommended this to a coworker with a daughter in ninth grade. I'd start here and here.

Also on the series front, Jim at Blueprint for Financial Prosperity is doing Personal Finance for College Students. I liked his advice on keeping student loans for school expenses.

To toot my own horn a bit, I looked at Kiplinger's 50 Best Values in Public Colleges.

And I found a lot of posts dealing with online college courses.

See you next roundup!


Thursday, September 28, 2006
Are medical benefits worth it in auto coverage?
I just received my renewal notice from my auto insurance provider. Despite the fact that I have not filed a claim with this policy since I started it, and the fact that my car is older and presumably cheaper to insure, my rates went up. It was only $7, and that over six months, but I still think the only direction my premiums should go is down.

So I called and got an agent on the line fairly quickly. Apparently they have rerated my entire area and assured me that this would be the case with any other insurer. Again, it's not THAT much money, but who wouldn't want to pay less?

So I started looking over my policy again. I have $5,000 per person in medical benefits included as part of the policy. It would save me $30 or so to drop it. I'd never had it before I signed up with this insurer. Also, I don't drive that much, as my employer gives me public transportation benefits, and when I do, I rarely have passengers. I'm considering dropping it and just counting on my health insurance. (I don't want to switch providers until I've been with this one for another six months, since my student loan refinancing probably dinged my credit score a bit.)

So how do you feel about medical benefit coverage?

Do you include medical benefits on your auto insurance coverage?
I am mocking your binary worldview and answering in the comments.
Free polls from


Wednesday, September 27, 2006
Kiplinger's 50 Best Values in Public Colleges
New list has UNC, University of Florida, UVA, William and Mary, and SUNY-Bighamton in the Top 5

Every school in the top 10 shows an average four-year debt load of $16K or less. I'm always suspicious when I see a mean without a median, but this still looks pretty good to me.

This list focuses on academic quality first, and then the annual "sticker price", average "effective price", and the average debt load a student faces after four years.

I would like to read up a bit more on their methodology for determining quality. Average SAT scores tell you something about the class, but certainly not everything you'd want to know before attending.

At any rate, these are all well-regarded schools that give a student a head start in the race to graduate with less debt.


Tuesday, September 26, 2006
Well, it's as close to free as I could get.
A coworker recently won a "free lunch" for herself and several of us. In return, we listened to a generalized spiel from a financial services firm that is trying to get more clients. The planner (a CPA) discussed their "whole life strategy" which included covering savings, tax planning, estate planning, debt management, etc. Nothing that the rep discussed sounded unreasonable or outlandish, but nor was it any more detailed than my average day reading pfblogs.

I still said I'd be interested in meeting with them for a free consultation. I figure it can't hurt to go over my assets and liabilities with a practicing advisor. If I start getting pressured to buy anything, I can walk. (They admitted that they do earn commissions on certain instruments, but since I'd only be looking for an overview, I could keep things on a fee-based level if I decided I wanted to go that route. Again, I really don't expect to do much more than get a checkup and file the card away for later.)


Monday, September 25, 2006
Michelle Singletary drops the ball.
[cue Joan Crawford voice]

No...Student Loan Debt....EVER!

I don't disagree that many students have overborrowed. I'm a card-carrying member of the club. And I don't disagree that it's generally good to figure out ways to avoid that debt.

But she could have questioned the increases in tuition or the fact that limits on federal loans (which are more often cheaper and more likely fixed than private) have not increased since 1992 [pdf]. She could have suggested flex programs or workplace education incentives. Instead, she jumped straight into the glorified situation in which someone who already HAS a job was deciding whether or not to pay off their debt.

I was particularly confused by her reaction to the son whose father left him $30K to help pay off his loans ($39K). He wondered if he shouldn't save the money elsewhere and pay back his loans while the funds earned interest.

"Your father did know best. Pay down the debt."

This is not exactly an unreasonable final answer. It makes sure that he is (almost) debt free, and that he knows he's complied with his father's final wishes immediately. But to ignore the fact that there are almost dozens of insured savings accounts making better than 5 percent when he has his loans at below 3.5 percent seems disingenuous. Maybe he has a tenuous job situation. Maybe he has health issues that might require cash on hand in the future. I don't know.

But neither does Ms. Singletary, and yet the "debt is bad" drumbeat was the only one she played. I think this question deserved a little more nuance. And if she'd still come to the same conclusion, after raising those points, I might even have agreed with her.

As it is, I would argue that if he has cheap debt, then he has the luxury of deciding on his financial priorities, and one of those might be to cover all his bases by saving and paying down debt at the same time.


Friday, September 22, 2006
"The quest for perfection 'is making our children sick.'"
As I mentioned yesterday, one of my concerns with students who try to pile too much coursework on themselves is the impact on their health.

And Marilee Jones, the dean of Admissions at MIT, agrees with me.

"We're raising a generation of kids trained to please adults. Every day kids should have time when they're doing something where they're not being judged. That's the big difference with this generation. They're being judged and graded and analyzed and assessed at every turn. It's too much pressure for them."

Kids are reporting ulcers, anxiety disorders and just plain old "not sleeping enough," and it doesn't even necessarily translate into better students.

MIT faculty told [Jones] many students just weren't much fun to teach. The issue of perfectionism had been brought painfully to the fore at MIT by a series of student suicides. Students "want to do everything right, they want to know exactly what's on the test," faculty told her. "They're so afraid of failing or stepping out of line, that they're not really good students."

Getting a good education is important. Going to a school that challenges the students is also important. Being desperate to get into an "Ivy plus" and ending up cutting in order to deal with the stress isn't.

I didn't even apply to any of the Ivies, for undergrad or grad school. Of course, I went to high school in the Midwest, where college admissions are still not considered a blood sport. If I were to ever have kids, that would be my big concern about raising them here; I wouldn't want to impose that kind of stress on them. And that doesn't even cover the direct costs of admissions counselors, activity fees, and everything else that goes with the whole hyper package.

Thursday, September 21, 2006
Well, that's one way to avoid student loans.
18-year-old graduates from University of Virginia in one year.

David Banh went in with 72 credit hours from AP exams (including a few for which he didn't take the courses). He then took a 23-hour semester, a 37-hour semester, and a 3-hour summer semester. And he had so many scholarships that selling his books back technically netted him a profit.

On the one hand, I think this is amazing and creative and shows a lot of dedication and drive. On the other hand, how much of the college experience did he put aside in order to get through that quickly? He said he still hung out and played video games, but I find that hard to believe. 37 hours of classes is basically an entire working week at school, and there was still homework left to do.

I'm admittedly biased because I took two straight semesters of just 18 hours, and those and my extracurriculars did a real number on my health. 15-16 seems a much more reasonable framework to me.

That said, I think there are some good lessons for people who want to save money on school.

  • Take AP classes and attend schools that will accept them. Not every course will be as rigorous in high school as in college, but I suspect some frosh distribution requirements would be served with AP credit as well as a semester in class. And completing general requirements allows you to get on with the "real" major requirements more quickly.
  • Scrounge up every little scholarship that you can find.The article doesn't detail every scholarship that he received, but I'm left with the distinct impression that several smaller scholarships went towards the tuition bill along with some larger grants.
  • Consider staying in-state if you find a program that you like. Not every public school has the reputation of University of Virginia, but there are several excellent state schools that can chop your tuition bill by quite a lot.
  • Consider schools that will allow you to combine undergraduate and graduate studies. By networking with professors and other graduate students, he was able to contribute to a higher-level research project very quickly and will probably finish his master's within another year as well.

Does that make me crazy? Probably.
I have purchased a big-ticket...ticket. This Saturday, I, two friends, and tens of thousands of other people are going to check out The Virgin Festival. Hours and hours of aural delights.

When A. first suggested that we go, I had already convinced myself that I couldn't afford it. So at first I turned her down. But when I told my aunt how hard it had been to say no, she told me that since she hadn't bought me a birthday present, she'd subsidize the ticket. I told her that this would also need to be a Christmas present, to which she agreed.

It's still a fair few bucks out of pocket, but I have the funds to cover it. And I'm not planning on doing anything else this grandiose for the rest of the year.

So I may come back ears ringing and wallet flapping, but it will be with a grin that will last me into next week.


Wednesday, September 20, 2006
Sharing a room and saving your sanity.
I had five roommates in five months. How you can avoid doing the same.

As I mentioned before, I decided to live on my own when going to grad school and since returning to work, and that's a large reason why. To be fair, I had more good roommates than bad, but the bad was bad enough that I never wanted to put myself through that again. And now, a cautionary tale, and my suggestions for avoiding it at the end.

Roommate 1) I had lived with a family member for nine months when I got tired of my 1 hour 15 minute commute. (She had also decided to move to Florida.) We had had a pretty decent roommate relationship, but being in two separate states would put a damper on that. So I started hunting for a new living situation in March. I went through SO many group house interviews, single roommate interviews, and my favorite, married-couples-looking-for-a-third-person interviews. Finally, I found...

Roommate 2) I should have known from the stacks and stacks of newspapers in the family room that she didn't think much about respecting common areas, but I was getting desperate, the room was a decent size, and it was really conveniently located. To be fair, I made the first faux pas. When moving in, I slipped on the wet sidewalk and scraped the wallpaper in the hall. I immediately admitted it and offered to pay for replacement, but she looked aghast and said she'd installed it herself. (That our never-seen landlord basically allowed V. to run the place was part of the problem.) After that, everything was my fault. She couldn't be bothered to give me the total rent due for both partial May and June, and so she didn't get a check right on the first? My fault for not writing two checks. I ran the dishwasher and it stopped working? Never mind that the repairman blamed the caked-on food on the plates that had been sitting there from before I even moved in; I broke it. I didn't take the trash out right at 7 PM, even though every other neighborhood I'd ever lived in mandated that it shouldn't go out until after sunset? I was being discourteous. I got locked out because she neglected to mention that the kitchen door would lock behind me, and she had to take three seconds to come unlock the door? A vast imposition. I'd leave one box of cereal out in the midst of her collection of protein shake glasses? I was being messy.

Oh, and I was also accused of leaving lint in the laundry room (that was on top of some of the old roommate's forgotten towels) and having my car battery die just to drag her into "a drama" (clearly, yes, that was my master plan). And when I suggested that her renting the entire downstairs meant that she could take her things somewhere else than the dining room table so that I could eat, her response was "You KNOW that's my table, right?" That was the breaking point. (During this time, we technically had a third roommate, but she never really spent time there. V. claimed that this was because she really liked her boyfriend. I'm pretty sure it was to save her sanity.)

Fortunately, I never signed a lease with her, so on the first of July, I left a note on the table telling her my deposit was my thirty days' notice, and I was moving out. My parents had driven down for vacation, and helped me move my things in with...

Roommate 3) who needed someone to take over her lease. I hadn't found the place on my own; P. (Roommate-4-to-be) had done that. But P. couldn't qualify to rent the place herself, so we agreed to co-sign the lease for August, and just have me move in in July. L. and I actually got on quite well; even her cat found me friendly. I was kind of sad when she moved into her new place in August, but we still see each other regularly. She's now one of my closest friends. I cannot say the same for...

Roommate 4) who seemed very nice initially. She came off as someone willing to compromise, and because my income was basically allowing the both of us to rent the place, I figured that impression would hold. My first hint that something was wrong was right after the lease signing, when she mentioned that "her husband" would be coming to pick her up. Oh?

It turned out that she was a recent divorcee who had NEVER lived on her own. She was at least a decade older than me and had still lived her entire life with a man handling everything. She'd never paid a utility bill or balanced a checkbook. I tried to be understanding, but insisted that the fact that she wouldn't choose to run the A.C. if living on her own didn't somehow exempt her from doing so if we lived together. When she stopped showing up at home most nights, I figured she was seeing a new guy and left it at that.

Until, of course, she and her ex-husband showed up and told me to give the new sublessee a tour. P. had decided that she was going to go back to school half-time. Apparently she figured that she was such a special snowflake that her current bosses would fall all over themselves to rearrange her schedule to make that possible, and didn't bother checking with them before signing the lease. Surprisingly enough, they didn't accommodate her every whim! So she and her ex-husband (who was, incidentally, basically a slumlord of some run-down properties in the area) decided that they'd sublet the apartment for more than her share of the rent, and she'd move back in with him while they took in the profits. I pointed out that the lease wouldn't allow such an arrangement, and I was absolutely NOT agreeing to take in someone I hadn't picked for myself. I was then subjected to two weeks of telephone abuse from the ex-husband (who was also so rude to the apartment leasing staff that they had him kicked out of the office), and had to basically threaten P. with a lawsuit in order to insure that she'd pay off her part of the rent. I finally got them to agree that I would pick a roommate of my choosing, and that they'd turn over the keys, and that the two of us would sign a new lease. (Since I'd taken over L.'s lease, I was grandfathered in on the month-to-month clause.) After some more obnoxiousness, we finally settled things at the end of September.

Roommate 5) This part was actually pretty smooth. I put a post in the local alternative weekly. The rent hadn't been raised in three years, so the room was quite cheap. The building was very close to public transportation, and the apartment itself had some decent amenities (a W/D and a full-size storage closet), so it was not just cheap, but a good value. I ended up with 70-odd responses to the posting. Of those, 20 expressed willingness to meet for an interview, and 12 actually did. After eliminating some of the applicants (such as the girl with the hair phobia and the one who immediately put her bare feet up on my couch), I winnowed it down to five. And finally, I picked M. She turned out to be a great choice, and we roomed together until I left for school the following summer.

And the point of this long tale of woe? A roommate relationship will impact your psyche as well as your finances, so you should pick a good one at the outset. The better your relationships with roommates are, the more likely you are to share and save money for other things. This means that you should try to be the one in charge of picking your roommates whenever possible. This may be based on a previous frienship, a roommate-matching service, or simply being the leaseholder of the apartment already. Being the one in charge gives you power to ask a potential roommate the important questions about living together.

When I asked those questions, I did so on a questionnaire like this. (Please email me if you would like a formatted copy.)

Please fill out all responses to the best of your ability. This will help me remember you.

Date visited:
Reference First:
Reference Last:
Ref. Phone:
Ref email: (This is CRITICAL. You want someone else's opinion of what they were like as a roommate.)

1)How long have you been in the area?

2)How long do you expect to remain in the area? (These two questions illustrate stability.)

3)Are you currently employed? Where? (And this helps demonstrate their ability to make the payment every month.)

4)How regularly do you like to clean the apartment (vacuuming, bathroom duty, etc):

a) Once a week for vacuuming and kitchen duties

b) Every couple of weeks

c) Once a month

d) Other? Please describe.

(It's not so much if the person is "objectively" clean or messy as it is if they share the same tolerance/intolerance for mess that you do.)

5a)When do you wake up during the week?

5b)..on the weekends?

5c)When do you usually get to sleep during the week?

5d)...on the weekends?

(Night owls and morning doves CAN get along, but a discussion about acceptable activity early in the morning or late at night has to come before that.)

6)If you’re planning a good time, you’re most likely to (rank 3):

a) Go bar hopping/clubbing with friends

b) Catch a movie

c) See a play

d) See a concert or club show

e) Hang out with friends and watch videos

f) Other? Please describe.

(You don't necessarily want to live with someone who only does the activities that you do, but a teetotaler and a bar-hopper might have more to discuss than the two people who both go to the movies a lot.)

7)What were your biggest pet peeves with previous roommates?

(If you know that you'll invariably do the thing that bothers this person, then DON'T room with them.)

8)What are your best qualities as a roommate? What do you hope other roommates have to offer?

(It's the start of a good discussion about expectations. Almost everything can be managed, as long as almost everything is discussed first.)

9)Tell me a short joke. Use the backside.

(Not everyone might use this question, but I did because I wanted applicants who wouldn't treat the process as life-or-death, and I didn't want to live with anyone who couldn't come up with the occasional joke.)

Tuesday, September 19, 2006
The moral of the story is...
don't start a blog during the same week that a major project is due. I never even got around to my real "about me" post!

So, to rectify:

I am still slightly south of thirty. I work in what might be called the company town of all company towns (the one that is slightly south of a city with charm and slightly north of a commonwealth capital). And I make a slight contribution to a product from said company town that some of you might see on the news. (This paragraph is intended to be slightly obfuscating so as to limit search hits from people who might know me.)

What isn't slight? My student loan debt.

Punny Money has a nice five-step plan for getting paid to go to college. I would say that I followed most of it reasonably well (I hope it's not bragging to say that I had excellent grades and standardized test scores, that I tracked down some outside scholarships, and that my family filled out the federal and private aid forms promptly). When it came down to finding a school that would pay me, however, I made some different choices.

Of the six schools to which I'd applied, I had narrowed down my decision to two. Both of the schools were (and are) well ranked in the major publications that tackle that sort of thing, both had very interesting academic options, and both were small residential campuses located in similarly sized metropolitan areas. The more southern school offered me a fairly generous scholarship package that would cover over half my direct costs, and loans and work-study to make up for the rest. The more northern school offered a free ride.

The choice should have been obvious. But I felt a level of discomfort interacting with the students at the more northern school that I simply didn't feel at the other. I admitted this to my parents two weeks before final decisions needed to be made. They said both that they'd known I found the other school a better fit, and that taking out some of the loans would be worth it. And I continue to believe that it was.

I ended up graduating with a reasonable amount of debt, but was able to manage it throughout the next two years of work. After that, however, I realized that I would need a master's degree in my field to get ahead. I had taken a few night classes, which was enough to convince me that my sanity required going back full-time. I'd managed to save up about $10K for living expenses. However, I was going to have to borrow ALL my tuition because the master's was not my field's terminal degree. And furthermore, I was going to have to borrow some more to cover the remainder of my rent. (I had my reasons for living alone.) I held my nose, swallowed, and signed the paperwork. And then deferred the rest of my loans. When I finished my degree, I was able to consolidate the bulk of my loans at under 3 percent. Sadly, this was not the case for everything.

I finished my degree on time, but had to search for several months to find the job at which I currently work, which depleted the rest of my savings. (Since returning to the workforce, I've been able to reverse that somewhat.) Despite the long path to get there, I like my work, and my degree was a huge part of my getting it and getting the level of compensation that makes living in a not-so-cheap area worthwhile.

I continued to live on my own, which is a drain, but again, I have my reasons. I was managing three loans, including the variable fixed expenses one. But as interest rates kept rising, the private, variable one continued to require more payments with seemingly no dents in the principal. So when I refinanced into a non-student, but much cheaper loan the other week, it opened up new opportunities. And I plan to take advantage of them.

My goal is to eliminate $22K of debt within the next three years. Within ten years, I hope to be student-loan debt free.

I've made some good choice, some surprising but ultimately worthwhile choices, and some questionable ones that I wouldn't necessarily recommend. But, as they say, tomorrow is another day, and I feel much better about my financial tomorrow than I have in a long time.

Friday, September 15, 2006
How to be beneficent.
Windy City Blues mentioned the lack of beneficiary designations as a strike against online banks.

I actually found it much easier to set up a beneficiary for my online banks than my brick-and-mortar credit union. Being that I still have no dependents, I wanted to make any potential transfer as simple as possible, so I looked for places with an easy nomination process.

One of the things that really pleased me about EmigrantDirect's redesign was the ability to set up a beneficiary right from the main account page. I just provided the SSN, name, contact information, and relationship, and the form was stored with my account. If I ever choose to change it, I just have to select "change beneficiary" and repopulate the form.

VirtualBank isn't quite as straightforward, but still uncomplicated. VB uses a message center to keep up communication between you and your "personal" account representative. She told me that I simply had to send a message with my beneficiary's name and SSN and it would be stored with the account. So I did. (I do need to follow up to make sure it's been properly recorded.)

Of course, it doesn't do any good to nominate beneficiaries if they don't know about it. That's why I provided my aunt with a copy of my "life list," covering pretty much every asset and liability that I have, contact information for the companies involved, and the respective beneficiaries (if applicable). So in case I'm ever hit by a bus, they don't have to sort through my hideous filing system to figure out what to do next.


Thursday, September 14, 2006
A little extra cash.
One of my vaguely defined goals for this year was to "sell/donate more of my stuff." (That said, I could sell a few boxes of things and STILL want a bigger bookshelf. A girl I know once said that there are two types of people: people who are amazed at one's collection of books and people who are delighted at one's assortment of bookshelves.)

At any rate, my old PC had been sitting sadly on my file cabinet, waiting to be stripped down and readied for sale. I finally managed to order the system restore CDs from HP and install Eraser on it. I'm a bit nervous about who might have access to my data, so I did a full erase of ALL my data files before reformatting each hard drive. The money and time were well worth it, however, as I now have over $100 in my wallet, and a much less cluttered living room.

It's going to pay off the remaining 0% purchase balance on the card I got last year, which was used to buy the new PC. So I will still be able to say that I've never paid a credit card finance charge in my life.

I think my year without a credit card taught me well. I'll follow up on that next week.

Wednesday, September 13, 2006
Clearly, I spoke too soon.
I went to check on my final balance today, and I still had $0.05 listed.

Yes, because they decided not to authorize my transaction the day that it was made, I still had some remaining interest. And this is after I already had to make two payments to cover my principal balance and the accrued interest balance.

When I got CSR Joe on the phone, he was actually trying not to laugh at my plight. To their credit, they agreed to advance me the final shiny nickel and close the account. (Credit. Heh.) So all's well that ends well.

On the bright side? When my credit union reviewed my file to authorize the transfer loan, they also decided that my score and history (balances paid in full every month) were good enough to raise my credit card limit to three times its old value. Say hello to my little utilization ratio!

Tuesday, September 12, 2006
And it begins.
I transmitted the payoff balance for my private student loan today. It's one of the best feelings in the world.

(Of course, it wasn't a true "payoff." I've only refinanced it, thanks to my lovely credit union and their "summer loan sale", but six years to pay it off as opposed to fourteen and tens of thousands less in interest sounds pretty good to me.)

Should this all go well, I'll discuss a little bit about how I got here, and what I would and wouldn't do again. Should this all go very well, I'll discuss a lot about how I'm going to keep moving forward until ding-dong, the debt is gone. And should this all go superlatively well, I might even discuss something that somebody else will find useful.

Long time lurker, first time blogger. Looking forward to diving in.


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