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.

No comments:

Post a Comment

I'm starting to get too many spam messages in the comments so I'm turning on moderation. Please be patient and wait for your comment to be approved. Note it may take up to a few days for approval, thanks.

Blog Widget by LinkWithin