A Point In Time

It’s been a long time since the Brass Bonanza has percolated through the chilled air of the XL Center–formerly the Hartford Civic Center–just a split second after the puck slips into the net. But last night and tonight, it did.

Click here to listen to the excitement that paralleled the Brass Bonanza as The Connecticut Whale scored its first goal against the Adirondack Phantoms this evening.

In total, the Brass Bonanza–originally titled “Evening Beat”–cast over the fans seven times during the Sunday night game.

And right before third period, Sara and I had the pleasure of meeting Pucky, the new face of Hartford’s AHL hockey team.

Over the last few weeks I’ve been in contact with the editor of Tolland Patch and we’ve been discussing how I might contribute to the new website that covers the news beat for the town I grew up in. If you’re not familiar with Patch.com, it’s a new-media initiative that hones in on the concept of hyperlocal journalism. And prior to the advent of the world wide web, journalism was confined to the big dogs–newspapers, radio and television. But because of websites like Patch, this is no longer the case.

Today is my debut on Tolland Patch with an article on budgeting. It’s pretty timely when you think about it–some of us probably spent a fortune on Christmas gifts this weekend, continuing the tradition of America’s Consumer Holiday: Black Friday.

If you’ve tapped into the educational loan system here in the US to get money for college, there’s a high probability that you’ve established a relationship with Sallie Mae. Originally created by the government in 1972, Sallie Mae is now a publicly traded corporation separate from the public sector.

All of the student loans my wife Sara and I have are serviced by Sallie Mae. And lately Sallie and I have become pretty good friends. Well, you would think we’re good friends if you saw my cell phone’s call history–Sallie and I talk at least three times a month.

But believe me, our 20-minute-plus phone calls are not by choice. I call to fix Sallie Mae’s mistakes!

Sallie’s a big woman, with over 8,000 employees, and apparently she’s going through some growing pains. You might be thinking: why is Steve ragging on Ms. Mae? It’s because over the last two months she’s has been tripping over herself–making mistakes. And her mistakes could have been costly if I hadn’t been paying attention.

You see, Sallie Mae misapplied a couple of the loan payments I made back in July and August. In both cases, the payments were applied to the wrong loans. And if I hadn’t been vigilant, I could have suffered late fees and even marks on my credit. And it turns out I’m not alone.

So, my charge to you–double, triple and quadruple check all transactions with your student loan service provider.

Silly Sallie–errors are for no one.

Welcome!

I’ve been blogging for a long time–Xanga to Movable Type to WordPress–but only this summer have I decided to hone in on a topic that I’m passionate about: college debt awareness.

Feel free to comment anytime.

Just a little bit about myself–I’m a second year masters student on track to graduate this August. I have a certificate in web design from Sessions College for Professional Design and a Bachelor of Science degree in Finance from the University of Connecticut. I work for a software company in central Connecticut and I’m a free-lance web designer.

This semester was much more intense than I anticipated and that’s not because I had some preconceived notion about online courses. I think it was a combination of things–the quantity of writings in conjunction with the amount of autonomy we were given for our assignments. But honestly, I wouldn’t change a thing. Why? Because I learned a ton.

What I’ve learned in this course is not confined to the classroom, but is useful in the real world. It’s like being “street smart” but with words. Now, I am more confident in my writing style, probably because of all the pruning. This course trimmed away the fluff from my writing–like a sheep just out of the shearing house.

The street smarts came in handy when tackling my niche: college debt. And it’s amazing how much ground I covered over the last three months. I was able to talk about the silent cost of debt interest here and here, the benefits of using cash here, how to create an effective budget here, how to stick to a budget here, and how to stomp out impulsive buying here. On top of this, I put together two pitches for potential projects within my niche here and here, and formulated one of the pitches into a presentation here. It was a productive summer.

But I do have regrets. All semester I focused mostly on blog posts and not on Twitter. While I religiously tweeted links back to my blog, I wish I had created short packets of content just for Twitter. Maybe a crafty combination of words that would have spawn conversation about college debt or something. Oh well. I shouldn’t live in the past, right? The cool thing is–I don’t have to. Just because the semester’s over doesn’t mean my niche-related writings have to stop.

Sara and I intend to keep on blogging and tweeting about college debt. In a way, writing about it keeps us accountable to our convictions–to get out of debt as quickly as possible. And if we continue down this path, we may be able to help a person or two along the way. In fact, just this morning, Sara started talking about “ourfreedomproject.com” and how she’s excited about building content for the site. Wow. My pitch actually worked!

I’m grateful for everything I learned this semester. It was tough, but well worth it. I took some risks, but in the end, I was rewarded. And I now understand what it means to have a voice. Although I have a lot of work to do, I’m finally on the right path.

I don’t often struggle with the temptation to impulsively buy things, but I know people who do. And in a society like ours where the credit card is all but french kissed, more and more people are falling into the deadly trap of impulsivity when shopping. And if you’re already in debt from school, whimsically buying things with a credit card will destroy your budget and keep you from paying off your loans.

If this is you, know that you’re not alone. Even though I don’t consider myself impulsive, I’ve certainly had my share of incidents. Like the iPhone for example. Sara and I had a respectable cell phone plan with Verizon Wireless–the self-proclaimed Network. But while driving by AT&T on the Berlin Turnpike last summer, I remember saying to Sara, “oh what the heck–let’s do it.” And today we have iPhones. While it’s probably the coolest handheld device I’ve ever owned–do I really need it? Probably not. But if you’re like me who occasionally buys things on impulse, or if you deal with full-out buying impulsivity, it’s important to understand this: knowing that you have a weakness is more than half the battle.

To help with the rest of the battle, Sara and I came across this list of 10 ways to beat impulsive buying. The entire list is helpful, but take a close look at #6. It talks about computing your true hourly wage…

True yearly income / True number of hours worked in one year = True hourly wage

This number represents the actual amount of money we earn every working hour. And if we divide the cost of our impulse purchase by our true hourly wage, we essentially come up with a sobering number. It’s the total number of hours we’ll need to spend working just to pay for our purchase.

Say your true hourly wage is $10 and you buy something that’s $200. You’ll have to spend 20 hours of your life–a chunk of time that could be spent doing other things–at work so you can afford the item. Hopefully the purchase is worth the 20 grueling hours.

If this doesn’t shatter impulsivity, I don’t know what will.

If your goal is to hang on to your benjamins and stick to your budget, it’s all about having a system. For Sara and me, we’ve found the envelope system to be helpful. It’s simple in nature, but quite foreign to a generation that has grown up using plastic–debit and credit cards.

The crux of the system is cash–Sara and I use physical cash to make our day to day purchases. And if you remember our discussion about the benefits of paying with cash, the same concept applies here. But the envelope system takes that cash and organizes it into groups. And these groups–represented by envelopes filled with money–create spending limits for budgetary items such as groceries, dining out, car maintenance, etc. Ultimately, they force you to stay on track with your budget because when there’s no money left in the dining out envelope, you know it’s time to stay home and boil some pasta.

On the first of every month, Sara and I withdraw a set amount of cash and divide it up over these categories:

• Steve’s allowance – cash I will use for my day to day purchases
• Sara’s allowance – cash Sara will use for her day to day purchases
• Groceries – for food purchased at local supermarkets
• Personal Care – for things like shampoo, toothpaste, paper towels, etc.
• Car maintenance – for oil changes and car up-keep
• Dining out – for that random night when Sara and I too tired to cook
• Medical co-pays – when we have to go to the doctor’s
• Miscellaneous – a set amount of cash used as a buffer for random expenses we haven’t anticipated in our budget

Each of these categories represents an envelope that we store in a box in our home office. From the first day of the month to the last, we make purchases using cash from these envelopes.

But it’s important to note that how Sara and I break up our money caters to our budget and our specific circumstances. So, our advice? Do what works for you, otherwise the envelope system won’t work.

You might be thinking, “But Steve, where are the envelopes for your mortgage, utilities, gas for the car?

That’s a great question.

Sara and I exclude any expense that is out of our control. Why? Because the goal of the envelope system is to limit discretionary spending–paying our mortgage, for example, is not discretionary. Our mortgage lender expects to be paid at the end of the month–we don’t have an option. And the same applies to utilities like electricity. While conserving our energy consumption throughout the month will reduce our bill, when our usage statement comes in, it needs to be paid. The same goes for gasoline. There’s no getting around it, we need to fill our cars with gas. For this, we use our debit cards because the cost of gas is out of our control and because it’s just plain easier to pay at the pump.

So, it would be a waste of time and effort to put cash in envelopes to pay for these things–not to mention unsafe. Did you know that most insurance policies for homes, condos and apartments only cover a small amount of cash when stolen or destroyed by a fire? Therefore, it wouldn’t be wise to keep a wad of cash in an envelope to pay for, say, your mortgage. It’s just too risky.

But for everyday, discretionary spending, the envelope system is a great way to stay on track with your budget. And if you stay on track with your budget, you’ll be rollin’ in those benjamins before you know it.

The Project on Student Debt is an initiative of the Institute for College Access & Success and is dedicated to increasing the public’s awareness of cost-effective solutions to pay for higher education. The initiative’s website is located here and utilizes two social media networks to broaden its reach: Twitter and Facebook.

PSD’s use of Twitter is typical of other non-profit organizations on the web. However, it’s interesting to point out that they have only been on Twitter for about 10 days and already have 85 followers. So far, the posts have been informative, but also interactive—more of a question and answer form with the questions coming from the audience. The tweditor—what I call a twitter editor—shows a lot of enthusiasm over the organization’s Twitter presence and gets the ball rolling by answering questions and providing advice to other Twitter users. And no doubt, Twitter is a great way for PSD to interact with its followers, especially since its main website offers little user interactivity—it does not offer a component to leave comments within the site. I think the way PSD is using Twitter will ultimately make a positive impact on its mission: to increase public awareness about the cost of higher education. And there’s no better way to do this than to have a conversation in public. This is what PSD is accomplishing with Twitter.

Facebook is the other tool PSD utilizes to connect with its audience. They have a Facebook Group, a discussion board, and a large quarry of resourceful links. Right now, PSD has 8,671 Facebook members connected to its account and 130 discussion groups on a range of topics. Just like how PSD utilizes its Twitter account, its Facebook admins actively interact with members answering questions, making suggestions, and posting content. Facebook adds an invaluable element to the PSD cause: community. Across its Facebook page, users are not only interacting with the organization, but each other as well. And out of the two social networks PSD utilizes, Facebook is more powerful because of the camaraderie it builds.

As a suggestion, in both cases—for Twitter and Facebook—it would be beneficial for PSD to pose more questions to its followers in order to keep the conversation going. Currently, on the main website, PSD has a series of polls surveying user opinion. Moving this feature to Facebook, for example, could generate more user response and conversation.

Modeling PSD’s use of social media, I would like to expand my online presence to include accounts on Twitter and Facebook. In fact, my pitch for the website OurFreedomProject.com revolves around community and conversation, and linking this website, and the site’s blog, to Twitter and Facebook would be beneficial on a number of levels:

• I would be able to connect with individuals faster and share my posts, links and multi-media over an established social network that already has members.
• Facebook and Twitter will push my content to my followers in real time. I would not have to rely on users visiting my website and blog to hear what I have to say about college debt.
• I will have the ability to communicate in real with my followers and orchestrate good discourse.

Facebook and Twitter are positive and helpful tools that will enhance my online presence and place a megaphone in front of my already established voice.