Wise Financial Decisions in College

I was randomly surfing the internet when I came across a post on wise financial decisions in college by I've paid for this twice already. The two smart decisions she says she made included not using credit cards and only getting student loans to pay for tuition. I started to think about what smart moves I've done financially while in university.

1. Avoiding leases like the plague.
I only signed a lease once during my university stint, and that was on purpose in order to learn about the tenant/landlord minefield. Apart from that one time, I never signed a lease. Leases generally carry a minimum duration of 12 months, and I was never at school for the whole year. Instead, I scoured rent ads for people who wanted lease takeovers and subletters. That way, I negotiated the duration of the lease to only be for the length of time I needed, and sometimes I would also bargain to have internet included in the monthly rent. (I think a lot of people go about this unethically, but I tried to be as fair as possible and not a bully).

2. Working full-time jobs in between classes.
Whenever I wasn't a full time student I was employed full time (except for one summer where I went to a few developing countries to do volunteer work). The money that I made from each of these jobs went first to my tuition, then to paying off student loans. After that I used my money to pay for fun stuff.

3. Setting financial goals.
I never, ever would have been able to tackle my finances if I had never started university with the goal of paying for it myself and walking away without debt. Yes, I still have debt now, but it's my choice (because I opted not to use my money to pay off my loans just yet). That's incredible freedom that I have.

Maybe in a few years I will look back and add a few other things I think were smart decisions.

Grace Period

My student loans are officially in the beginning of the grace period, but they're still accruing interest at $1.94 per day. That is kind of unnerving. I mean, that's like a coffee from Tim Horton's each day being swallowed up by my student loans. And I'm kind of forced to sit back and watch it grow while I finish my studies and try to find a job. I don't want to complain too much--I mean, without these student loans I wouldn't have been able to get to the point where I am. And I know that my job prospects are already a lot better than my parents, who never got a postsecondary education. I just mean that I've never liked to be one to sit around and not tackle debt.

The 'Dilemma'

To date I have paid off 50.2% of my student loans, or $10 608.73. I lose interest-free status tomorrow and the last thing I want is to pay loads and loads in interest. I do have the funds set aside to pay off the remainder of my student loans ($10 528.27).

The problem? It's in American dollars instead of Canadian.

I don't want to convert that to Canadian right now because the Canadian dollar is still riding too strong and we all know that the Canadian dollar is on a decline right now. Part of me is itching to pay off the rest of my student loans while the other part says to be patient and just wait--I would lose too much in the conversion.

I've always thought I ought to learn about investments, and I have friends who dabble in the stock market with their American currency. I think I should make some sort of investment, but it would have to be long term.

My gut says don't cash in the American and use it to invest. Still, I hate staring at my student loan totals.

T Minus Two Days: Losing Interest-Free Status

I scoured the internet to determine the specific moment in time when I will actually lose my interest-free status on my student loans, and the answer I've come across is that interest begins to accrue the first day of the first month following your last day of classes. So if your last day of classes was April 5th or April 21st, the National Student Loans Service Centre starts calculating interest on your loans on May 1st.

Most people who graduate think that interest doesn't start accruing until the first day of the seventh month after their last day of classes (i.e. November) but this is not the case. Your first payment is due six months after graduating, but interest is being calculated during the entire time.

Student loans are composed of a federal portion and a provincial portion. Loans are generally split as 70% federal and 30% provincial, but this can vary for each person.

The interest rate on federal student loans is prime + 2.5%. Since prime right now is 4.75%, that means the federal portion of my student loans will be accruing interest at 7.25% in two short days. Yikes.

The provincial portion of the student loans will have different interest rates depending on the province.
British Columbia - prime + 2.5%
Alberta - prime + 2.5%
Saskatchewan - prime + 2.5%
Manitoba - prime + 2.5%
Ontario - prime + 1%
Quebec - prime + 0.5%
New Brunswick - prime + 2.5%
Nova Scotia - prime - 1% (yes, that's a minus, not a plus)
Newfoundland and Labrador - prime
Prince Edward Island - prime + 2%

The Beginning of The End (of my Undergrad)

Things are really quite hectic for me right now. I have a zillion essays due and exams are coming up really, really soon. To top it all off, I can no longer claim interest-free status even though I'm still in full-time studies. The reason is that classes for the term are over in Canada (even though they aren't here in the UK) so I have to abide by Canadian class schedules rather than UK class schedules to determine my loan due dates. In the next few days I will be organizing some payment schedules with the help of my family (who continues to receive my mail and check it for me) and my close friends (who help me make general inquiries since it's long distance and there is several hours' time difference). I will post again later once I figure things out.

Still Kind of Around...

I haven't been on this blog in a long time but I've continued to save money. I just didn't document it as much. I saved enough for tuition and accomodation in the UK, and also threw more money at my student loans.

Even though I've been saving money like mad, I've also been spending more money than I'd like to. I'm working on stopping but it's all about finding some sort of balance between saving money and actually spending money on things that I care about. Like, for instance, I save money by bringing lunch to work. But when co-workers ask me to join them for lunch, I hate turning them down because I feel like I'm turning down an opportunity to get to know people outside of the office. But I know I have to turn them down so I'll have more money to spend abroad. (I just reread that last part. I said "turn down" three times in total. Apparently my education isn't teaching me to use a wider vocabulary.)

In other news, my dad gave me an airplane ticket using his points (or miles or whatever they're called) but I insisted on paying the taxes and fees. The total cost to me for the return flight? About $400. Yikes. At least it's better than the $1220 that I would have had to pay otherwise.

Oh yeah--new blog design that I got off the internet. (I would make something myself, but this one was so cute. It's a little juvenile but the style is very reflective of my character and stage in life.)

Redeeming Air Miles

I deposited money in the bank today to put towards my exchange. If you add up the total amount of money I put away for exchange and my student loans, that's more than $10 000. It's exciting to see that I've reached the five figure point!

My dad asked me to loan him $2500 so I had to take that out of my exchange savings. That's kind of a bummer to see my balance go down so drastically. Sigh.

I'm looking at how much it costs for a plane ticket for my exchange. I got a quote yesterday and it's going to cost something like $1220 for a round trip ticket, but that's only if I return within three months. It's going to cost more if I want to return later than that (and I do). I didn't ask though cause the lady at the counter was so rude, I wanted to just throw a business card in her face and walk out. (But I didn't).

My dad told me he's going to redeem his air miles for the trip, so now I have to learn how to redeem air miles points on their website. Most of the offers available on the air miles website are for travel within three months as well (i.e. if I leave in January, I have to return in March). I'm wondering if it's better to get two separate one-way tickets because there's 10% discounts if I do, or if I should just get one round trip ticket instead. I'm leaving during the low season, but I'm returning during the high season... I've never booked a flight before or redeemed air miles, so this is another financial first.

Average Debtload of Students

I just came across some statistics about student debt loads. Apparently, the average debt of a bachelor degree receipient is $19 500. For college graduates, the average debt load at graduation is $12 600.

My debt load right now is actually startlingly close to that figure. But I hope that when I graduate, that debt load will be much, much closer to $0. (You can't get much closer to 0 than 0! Just kidding.)

I also read that the average cost of tuition for a four year undergraduate program in Canada is $17 000. Now, I'm not sure I agree with this figure. None of my friends are paying that little for undergraduate programs--even the cheaper, regulated programs. Just looking at my friends, (yes, I ask them how much they pay in tuition), the figure that all of us are looking at for tuition for four years is between $24 000 to $40 000, depending on the program. This is for tuition alone, so not including textbooks, rent, transportation, and other stuff.

Just thought that was interesting to compare myself and my friends to what statistics say is the average across Canada right now. (I'm rather surprised that, unlike typical Canadian fashion, these debt statistics aren't aggregated according to geography or program. Like, for instance, we typically note that tuition is highest out east, so why calculate the average debt load for the whole country and not province by province?)