Credit Card Debt vs College Loans

I was recently asked my opinion on what to do with credit card debt vs college debt.

I believe that the 2 types of debt should be looked at completely different.

Credit Cards
With credit cards, you should try and pay them down as much as possible while in school. If your monthly payment is $45, try and send at least $75, get your balance down to where the monthly payment is only about $15, do NOT completely pay off of your card, that can actually hurt your credit. Try to keep something charged on your card but always pay it on time if not early. The average credit card rate is 14% or more!

College debt is a double edged sword, some is good and some is an evil necessity.

Subsidized Loans
Government backed loans are the best ones, do not even try to pay them off while still in school, but try to budget for the payment by saving some money every month and putting it into some kind of SAFE investment, then when you do graduate and it is time to start paying off these loans. Start putting what you were saving (while in college) as your monthly payment and also try to put 1/2 of the interest from what money you were able to save toward your loan. It may only be $1 or $2 per month. But since you are only using 1/2 of your accrued interest you are still getting some compound interest that will eventually let you pay more per month toward your loan. In reality this technique will help boost your credit score and pay off your loan sooner, rather than later.

Private Loans
The other type of college loans is private loans. These can be some of the worst loans you can get. They will have higher interest rates. Try to start putting SOMETHING toward these loans everytime you can, even while in college.

I personally think that a college student should try to save as much as possible during college so that they do not have it so hard when they graduate.

My Loans
I personally have government loans and credit card debt (3 cards)
2 of my credit cards have under $200 on them combined just to keep the credit line open and to establish credit. My other card I use for gas every month because I get 5% off gas. My monthly payment for that card is about $95, but I pay at least $200 every month, just to get it down and help boost my credit rating.
My government loans are subsidized, which means as long as I am in college, Uncle Sam pays the interest on these loans for me. I am paying the rest of my tuition with cash that I make from doing little things here and there. I still have a social life, I still take friends out to dinner, go play pool with them, go on vacations at least every 2 months, and go to the bar every now and then to socialize. I am a typical college student in some aspects, but I am also looking toward the future.

ps. I just received my dividends from my savings account, that amount will be reflected in April's Results. Which aren't looking to good due to low stock prices and a deliquent personal loan through Prosper.


New Money

March is now over and I was paid for my Credit Card Applications that I received for my employer. I deposited $35 into my money market account for the purposes of this blog. I am looking for ideas on what to do with it?

Oh yeah, Thanks to the reporters at "The Brand" because they did a story about this blog in this last issue!

"The Brand" is the monthly newspaper for Hardin Simmons University.


Credit Applications update

If you remember on March 7th I told everyone that I was in a contest where my employer was going to give me $2-$4 for each person I got to sign up for a credit card. I had to get at least 5 to get paid, of Right now I have 9 or 10, so next friday I will post on how much money was made, I also said that I was going to put it all into one of these accounts. Those totals will show up in the April Update, or I might just start a new account with something else. Also I will be depositing my change too. so we will see how that did!


March 2008 Results

Well, It has now been a month since we started this experiment. It is now time to see if we lived up to our plan and made on average $1 per day for the month of March.

The Starting Totals for March:

My Savings Account: $256.24
My savings account is though a credit union that you must be a relative of to get in, I got in through my Great-Grandfather a few years before he died.

My Investing Account: $672.40
I hold positions in General Electric, Coca-Cola, Microsoft, AT&T, Napster, & Sirius Radio. All of my dividends are automatically re-invested into these companies.

My Money Market Account: $25.79
This is handled by the same company that handles my investment account and at any time I can move this amount into my investment account to purchase stock.

My Personal Loan Account: $238.82
Currently Loaned: $206.02
Waiting to be Loaned: $32.80 * does not make any of interest while waiting.
Thanks to I am able to make loans to individuals and make a lending fee off of each loan. If you want to join Prosper let me know and I will send you a link and we will both get an extra $25.

The ending Totals for March 2008 are:

My Savings Account: $256.24 <0>
A net change of <0> becuase interest/dividends are paid out quarterly and even though March is the end of the quarter, I have yet to receive a statement telling me how much interest was incurred. I will receive it in a few weeks and they will be reflected in April's results.

My Investing Account: $704.82 <+32.42>
Most of my stock positions did well for the month, only 2 were lower: Napster and Sirius. I am surprised Sirius is lower because the DOJ gave them the greenlight for a merger. They just need one more approval. My other stocks: GE, Microsoft, Coca-Cola, AT&T, and McDonald's all were up. We also added in the dividend from GE stock.

My Money Market Account: $25.83 <+0.04>
That doesn't seem like much now, but that is the beauty of a money market account. You get monthly compound interest and relatively safe place to harbor your hard earned money!

My Personal Lending Account: $240.95 <+2.13>
Currently Loaned: $199.29
Waiting to be Loaned: $41.66
Some time during mid-April, enough payments will have been made to offer another $50 Loan to some individual. When this happens I will post about the process.

The Grand Total Earnings for March are.........+$34.59 or $1.1158 per day! Our first month out of the gate and we did what we wanted to do.

I will think of and try some new ideas this month.

For the last 2 months I have been going through the interview process to try and get an intership for the summer. I was successful! (yay me!) I will try to keep my current job at the retailer so that when the internship is finished, I will still have a job. But, I will have less days off and will be needing to think of some real creative ideas that won't take up much time. I have a few ideas in my head right now (drop off recycling, lemonaide stand, selling water, and a few more) but am looking for more! I am also looking for imput on how to reuse magazines so that we can make some money, I have 5 subscriptions netting me 9 magazines per month.