INDIANA UNIVERSITY PURDUE UNIVERSITY INDIANAPOLIS A CRASH COURSE ON THE COST OF COLLEGE : Finances and the College Student Multicultural Success Center (317)

What You Need To Know…. Managing Budgeting Credit Cards & College Students Student Loans IUPUI Multicultural Success Center (317)

Budgeting

How To Prepare A Budget A budget involves two key components:  List of income and expenses  Where your money comes from and where it goes  A plan for meeting responsibilities and goals  It helps you determine where you are financially, and will help you figure out which road to take to gain financial stability. IUPUI Multicultural Success Center (317)

Expenses There are two types of expenses: Non-essentials Essentials IUPUI Multicultural Success Center (317)

Essential Expenses Essential expenses are necessities:  Housing  Utilities  Transportation  Groceries. You can reduce essential expenses by changing spending habits! IUPUI Multicultural Success Center (317)

Non-essential Expenses Non-essential expenses are expenses that make life more “comfortable,” such as:  Cable T.V.  The latest cell phone  Credit card bills. You can reduce non-essential expenses or eliminate them altogether! IUPUI Multicultural Success Center (317)

Budget Components* CategoryAllocation Housing25-35% Utilities5-10% Food5-15% Transportation10-15% Medical5-10% Clothing2-7% Savings5-10% Debt Payments5-10% Misc Personal5-10% Charitable Giving10-15% *Recommendations from popular debt expert Dave Ramsey Percentages in your budget will be based on your personal needs or goals. Categorizing your spending allows you to recognize where changes can or need to be made. IUPUI Multicultural Success Center (317)

Tips For Managing Your Money Create a budget and stick to it! Save and project for future expenses Do “FREE” things Keep records of expenses Don’t overuse ATM cards Cut out coupons Pay credit cards off monthly IUPUI Multicultural Success Center (317)

SMART Goals S pecific- layout exactly what you hope to accomplish M easurable- determine your target dollar amount of savings needed to reach you goal A ttainable- you can only sacrifice so much out of your budget to dedicate to your goal R ealistic- must represent what you are willing and able to accomplish T ime-Bound- set short term deadlines to reach percentage of desired savings to gauge your progress IUPUI Multicultural Success Center (317)

Remember It is easier to make wise spending decisions when you know where your money comes from, how much you have to spend, and where you spend it. IUPUI Multicultural Success Center

Credit Cards & College Students

A credit card is a loan! Purchases are made on the promise that you will pay in cash for them later, with INTEREST! A recent study published by Sallie Mae reported that the average undergraduate carried $3,173 in credit card debt and that the average student graduates owing $4,130. IUPUI Multicultural Success Center (317)

Avoid Credit Card Pitfalls  Keep only one major credit card.  Don't charge anything you cannot pay for right away except for real emergencies.  Always be sure to pay more than the minimum requirement.  Always ask yourself “Would I ask for a loan for this?"  Do not use a cash advance from a credit card unless you have a serious emergency. IUPUI Multicultural Success Center (317)

Student Loans

 to determine gift aid eligibility  Only borrow what you absolutely need.  Remember this is a loan and it does have to be repaid! IUPUI Multicultural Success Center (317)

Smart Borrowing Tips:  Figure your total college expenses.  Subtract any “free money” (grant, scholarships or merit awards).  Subtract all possible sources of cash.  Make budget cuts where possible.  Borrow Federal student loans FIRST! IUPUI Multicultural Success Center (317)

Repayment IUPUI Multicultural Success Center (317)  Six months after graduation “grace period”  After you leave school  Drop below half-time The student loan repayment options available are designed to be flexible and adaptable to individual needs. For more details regarding repayment plans, visit the government web site:

Post-Grad Repayment Budget IUPUI Multicultural Success Center (317) Monthly Gross pay ($35K/yr salary) $ Federal Tax-$ Social Security Tax-$ Medicare Tax-$41.14 Indiana Tax-$96.46 Vanderburgh County Tax-$28.37 USI Health Insurance-$79.68 Net Pay $2,234.24

Post-Grad Repayment Budget IUPUI Multicultural Success Center (317) Rent (2 bedroom apartment) -$720 Gas/Electric-$ Cable/Internet-$59.99 Verizon iPhone Plan-$ Toyota Camry Car Payment (3 year $10,000 10%) -$ Progressive Car Insurance-$53.01 Gas (15 gallon*6 fill ups*$3.85) -$ Minus Living Expenses $457.81

Post-Grad Repayment Budget IUPUI Multicultural Success Center (317) Credit Card Payment 17.99%)* -$ Student Loan Repayment 6.8% for 10 years) -$ Minus Debt $4.91 *Making only minimum payment, assuming no more charges, estimated payoff will be 10 years and 6 months. Notice this budget does not include groceries.

Consequences Of Default! Denied employment Wage garnishment Tax refund withheld Ineligible for further student aid Derogatory credit Legal action IUPUI Multicultural Success Center (317)

Managing

Managing Debt  Requires careful planning  Manageable debt depends upon:  Your level of income  Living expenses IUPUI Multicultural Success Center (317)

Prioritize Your Debt IUPUI Multicultural Success Center (317)  Pay off higher interest rate debt first  Pay off smaller balances first  Make more than one payment a month  Set up a payment schedule, so you are never late on your payments  Don’t take on new debt until your budget allows it Failing to plan is planning to fail!

Light at the End of the Tunnel IUPUI Multicultural Success Center (317)

Helpful Resources IUPUI Multicultural Success Center (317)   Loan Repayment calculator includes needed salary based on level of indebtedness  Student budget calculator is a good starting off point in developing your budget   Debt wizard recommends maximum borrowing based on expected salary  