I got a lovely email the other day from Life As A Purse, a new personal finance blogger who just wanted to thank me for my blog. It was VERY sweet. =) (she claims she read like every post over the course of two days, boy do I feel sorry for her if this is true! j/k!)
She is applying for graduate school and wants to get her financial life in order before she goes, which is SO GREAT!
It got me thinking about graduate school and the things that I didn’t know/didn’t WANT to think about while I was there. For me, graduate school is where I got in trouble. I left undergrad with $0 in student loans, $0 in car debt and only about $1,500 in credit card debt. All my debt I acquired in graduate school.
Here are some of the things that I wish I had realized while I was in graduate school:
1) Don’t inflate your lifestyle
This was a big thing for me. I went straight from making about $300/month tutoring in undergrad to making $1,800/month as a Teaching Assistant in graduate school. For me, this was like making $3,000/month! Or at least, that’s how I SPENT money.
I initially stayed in the same apartment that I had as an undergrad (I didn’t move cities, just changed schools). However, instead of waiting for the less nice, cheaper apartments to move into after my first year or two – I moved into the more expensive nicer apartments. Rather than paying $800/month to share a 2-bedroom apartment I chose to pay $1300/month to share a 2-bedroom apartment in a nicer complex a few months sooner.
2) Learn How To Cook
I was exceptionally blessed in undergrad that I didn’t have to pay for room, board, tuition, books, fees, ect – my entire 4 years of undergrad. So I ate 99% of my meals in the cafeteria because it was free. I didn’t learn to cook, because I didn’t need to. All my meals were prepared for me.
So when I went to graduate school, I ate every meal out because that is what I was used to in undergrad. Sometimes I would cook meals at home, but VERY, VERY rarely. So rarely that I would always have to buy the basics of butter and milk and olive oil, ect. Making it just as expensive as eating out. Which would discourage me all the more.
If I had made my lunch every day or ate dinner at home every night, I would have saved SO much money. Instead I ate breakfast, lunch and dinner out every meal for 5 years – I was outspending my food budget by between $2-300 each month.
3) You can’t afford to not be honest when you date
I had a boyfriend while I was in graduate school for 4.5 years. We started dating when I was in my senior year of college and he was just starting in his job. We were both 20/21 and dirt poor. However, I went to graduate school and started making some cash (not a lot) while he continued to get raises at work.
When we started dating we split meals and things of this nature 50%. However, after 3 years when he was making 3-times my salary and I was starting to feel the pinch of the debt I was creating each month, I couldn’t afford to pay for everything 50% anymore. Mainly because as he got more money he wanted to spend more money, and I couldn’t keep up.
We would have some conversations about this, but we were never on the same page. So instead of ending the relationship or putting my foot down – I put down the credit card. I should have been more assertive, but instead I got around $5,000 more debt because I wanted to keep up with his lifestyle inflation.
4) Student loan debt is better than credit card debt
I don’t want to advertise that you SHOULD get debt. You shouldn’t if at all possible (see #5). However, as a student, especially if you’re not in the sciences, you may have to take on debt load to get your education. If you have done your budget and can’t figure out how you’ll be able to pay for it, please remember that a SUBSIDIZED student loan is better than an unsubsidized student loan which is FAR FAR FAR better than credit card debt. I would much rather be on this blog telling you that I have $35,000 worth of student loan debt than $16,000 in credit card debt. In the long run it would have saved me money.
5) Do whatever you can to avoid debt
All that I said in #4 considered, if I had known how much my debt was REALLY going to cost me, I would have tried harder to stay within my budget, eaten out less often, not gone so crazy with gifts for other people, lived in a cheaper apartment, taken on more tutoring jobs, not bought such an expensive car, whatever I could have done to stay out of debt. However, I DIDN’T realize the cost. So I spent freely.
My dear friend TMcImmy was able to get paid just as much as I was in graduate school, yet he managed to not get any debt AND to save for an Emergency fund. I should have used him as a model rather than make fun of him for being a monetary stick in the mud. 😉
6) Don’t spend like you’ll have more money tomorrow
One of the most common things you’ll hear in graduate school is: “Well, someday I’ll make more money”
We all fell prey to this. This idea that “someday” we’d have more money to pay for the things that we wanted today.
And sure, I “technically” get paid more now than I did in graduate school. But I’m here to tell you this: Because of the DEBT I accumulated in graduate school – and subsequently the FEES that I’m paying now to pay off that debt – I now bring home LESS money each month now than I did in graduate school.
DON’T count on tomorrow to pay for today, all you’re doing to PROLONGING the period of time that you’ll be poor.
Do yourself a favor and just accept another 5 years of Ramen if that is what it takes. Because then you WILL make more money someday – and you’ll be able to enjoy that money rather than watch it go towards paying for years on the debt you accumulated because you didn’t want to accept that you were poor.
These are the things I can think of now. For those of you who went to graduate school or are in graduate school, what advice do you have for Life As A Purse? What recommendations do you have for her to stay afloat financially in graduate school?
This article was featured in the Carnival of Personal Finance!