January 13, 2009

My Financial Story : Part 2 - Four Years of College and financial errors

This is the second installment of a multi-part series on my own personal financial story. The first part of the series was about my childhood experiences with money. Today I will be talking about my experiences with money during college. I made many financial mistakes in college but I learned a lot from those errors.

When I got to college I had a relatively fixed budget and mostly fixed expenses. I had scholarships, grants and some loans to cover most of my expenses. My parents helped out some but their contribution was just one portion and less than my loans overall. I also worked on campus part time. Generally I had enough money coming in to cover all my needs plus a bit of spending money.

Like many people college was the first time that I had real experience handling my money myself and budgeting expenses and bills. I was probably an average college kid in this respect. I wasn't extremely irresponsible with my spending but I wasn't the most responsible either. I made sure to pay my housing bills and always fed myself. I only recall a couple times in college where I had was late paying a bill. I generally spend my college years living paycheck to paycheck and blowing any extra money that came my way and gradually accumulating debt.

College students are a major target for credit card companies. They push credit cards on students with easy applications and qualifications. I fell for this trap myself. I don't remember the circumstances of my first credit card application or why I got it for sure. However I do remember my first major purchase that I bought with credit. I bought a stereo receiver for about $250 and paid with my credit card. At the time I figured that I could just pay it off later but I'd have the stereo NOW and it seemed like having my cake and eating it too. I assumed I'd be making good money once I graduated so I was not at all worried about having some debt since I figured I'd just pay it off once I got a good job. Terms with over 20% interest didn't really frighten me and it didn't register in my mind how much it would cost me and I didn't know how long it would take to pay off with minimum payments.

Once you've started using credit cards its easy to keep using them more and more. I had my cool stereo and all I had to do was pay $20 a month to the credit card. So why not buy some CD's too since its just a few dollars more. Gradually I started deficit spending and putting more and more expenses on my credit card. In my Sophomore, Junior and Senior years I gradually partied more and screwed off more and more. That meant spending more money on things I didn't need and couldn't afford. A lot of that spending went on credit cards. I started drinking and smoking too. By my Junior year I was smoking a pack a day at about $2 per pack ( at the time). I stopped drinking and partying heavily by my Senior year. When I graduated my credit card debt was several thousand dollars and I had an addiction to cigarettes.

In addition to partying a bit I also goofed off. The majority of my goofing off was in front of a computer screen. In the early 1990's I discovered this thing called the "Internet". At the time the World Wide Web did not exist and the net consisted of green text on a black computer terminal screen. But even without fancy pictures there were fun games to play and interesting people from around the world to talk too. I spent more and more of my free time playing on the Internet terminals on campus. At one point I had over 2000 hours logged on one university mainframe. I got heavily involved in online games my Junior year and it was a heavy addiction which distracted from my studies.

The partying and goofing off didn't' help my studies either. My grades dropped and I didn't apply myself much. In my freshman year my GPA was around 3.7. But by the time I graduated my overall GPA was around 3.4-3.5 range. This is not bad at all, but I could have done better if I'd worked harder and applied myself more.

While my grades weren't that great, I did make good progress in my classes and degree completion. I had 15 credits from A.P. exams that gave me a step ahead in college. I decided on my major by my Sophomore year and I didn't change majors. I planned out my schedule quarter to quarter and I took the right classes at the right time. I only repeated one course in the entire four years due to a bad grade and never dropped or withdrew from a course due to grades. I managed to finish school with a B.S. in four years through good planning and avoid additional costs from extra unneeded quarters or years of school.

In my Junior year I started to question my choice in major. I wasn't that thrilled with the program and the topics and work never really 'clicked' for me as what I wanted to do for the rest of my life. I thought about switching majors for a while but with some consideration I decided to stick it out and finish my major. If I'd switched majors at that point I would have been in school 1-2 extra years or I could just spend the next year and finish in four years.

Most summers I went back home and bummed around all summer. I didn't work over the summers and I didn't work hard to try and find internships related to my field. The summer between my junior and senior year I stayed at school and worked on campus as a computer lab aid. It was OK pay for that type of job for the time but I had to pay rent and expenses so I really didn't come out ahead for the summer. Over four years of college I either didn't work summers or worked but didn't save any money. I didn't have any internships related to my field so I had no useful work experience for my resume.

When I graduated I had around $5000 in student loan debt and probably about that much or more in Credit card debt. I had no work experience had wasn't very interested in my chosen major field. The economy wasn't doing well at that point either.

While I was in the end of my senior year I got a "job" at a small start up software company. The company was ran by a man and his wife along with a partner. This was their first business venture and they were new to running a business. I took the job with the agreement that I would work primarily for a % of the eventual profits. I worked the end of my senior year and then most of the summer after graduation for them. They paid me some money to help with my bills but I don't think it ever amounted to more than $1000 or $2000 total. I don't believe the software title ever made a profit so I never saw anything from my % stake in it.

I attempted to find employment after graduation. I applied to a few companies and got little response. I think in total I received one polite rejection letter. I had no experience, ok grades and the economy was not well. Worst of all however was that I never really applied myself or tried very hard to find a job. I didn't apply to many places and I don't think I even looked far out of state for work. It was a half hearted attempt.

Through my college years I made several major errors that directly or indirectly impacted my financial success thereafter.

I started spending on credit cards and piled up credit card debt. I partied and goofed off too much which both increased my spending and hurt my grades. I failed to get any internship or other work experience related to my field of study. Then I took a profit sharing based job with a start up software company.

At the end of four years I ended up with a degree, over $5k in student loans, over $5k in credit cards and no prospects for employment. I returned to live with my parents at the end of the summer after I graduated.

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