A Point In Time

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.



Presentation Script:

Introducing a new website called “ourfreedomproject.com”.

This website will be a resource for college students and college graduates that have gone into debt to pay for their education.

Did you know that just last year, American college students borrowed $18.5 billion just from private lenders alone? Never mind the loans backed by the Federal Government.

On top of this, the National Center for Education Statistics reports that two thirds of all College students have student loan debt after graduation.

In other words, 65.6% of all post-secondary students will start making loan payments after they graduate.

That’s a lot of people. And this percentage will continue to grow as the cost of higher education increases. In fact, on average tuition increases by 6.5% each year—almost double the rate of inflation. No wonder why there are so many students and graduates in debt.

And that’s why a resource is needed—a website that will provide help for the debt laden college student and graduate.

So, what will ourfreedomproject.com offer?

It will offer three main areas of content:

-News and advice
-Tools
-Social Networking

Ourfreedomproject.com will provide news and advice…

Now more than ever, in-debt students and graduates need first-rate advice to answer those common questions …

-Should I focus on paying down my debt or contribute to retirement?

-What are some alternative ways to pay for school?

-Should I go into debt to get a graduate degree?

“Ourfreedomproject.com” will have trained financial professionals writing articles about these topics and more.

And because every person’s financial situation is different, students and graduates can sign up for individual chat sessions with our financial counselors for a small fee. Before talking one on one with a trained professional, the user will fill out a short survey that the counselor will use to facilitate the meeting. The bridge that “ourfreedomproject.com” will create between debtor and counselor will make a positive financial impact on the lives of students and graduates worldwide.

Ourfreedomproject.com will also serve as a news aggregator, pulling in relevant news stories regarding student loans and debt. Rules and regulations that revolve around loan repayment options change constantly and “ourfreedomproject.com” will have everything you need to know on how to repay your loans in the best manner.

In addition to professional advice and news, “ourfreedomproject.com” will offer student-specific financial tools—tools that are practical, like…

-A student loan payment calculator, which will calculate out how much the student loan payments will be after graduation

-A tool to help keep track of student debt accumulation—because we believe staying financially organized and knowing what you owe helps with planning and budgeting.

-A tool to calculate the real cost of a student loan—because understanding the cost of the loan by adding in interest helps the student make educated decisions when financing higher education.

But the most unique part of the website will be the social networking element. Users will have the opportunity to sign up for an account. They will be able to:

-Connect with others that are in a similar situation

-Share techniques for dealing with college debt

-Help each other with budgeting and spending

The social networking part of the site will also offer a blog that will collect posts from various individuals who are in the process of untangling themselves from student loans. And all users will have the opportunity to share their personal stories on the blog.

It is through the social networking part of the site, and the blog, that Ourfreedomproject.com will provide an environment that connects college debtors together. No longer will the student or graduate strapped down by college debt have to go it alone. And the overall goal of the website is to be a network of support. We believe supporting the student and graduate through the debt repayment process will help them gain financial freedom at an accelerated rate.

We are confident that this website will be one of the best public service sites out there because it will act as a beacon of light for the growing population of students and graduates struggling with educational debt.

There is hope and “ourfreedomproject.com” will provide relief through community and education.

Let’s get this project underway. With two-thirds of all college students in debt, this website is way overdue.

“Ourfreedomproject.com” – a new interactive solution for students and graduates who are in debt from higher education.

Getting out of debt is not rocket science, but it does take determination. And there are small things you can do to help ease the process. One of them is to position your income across multiple bank accounts in a way that will help you stay on track with your budget.

Sara and I found this article on the topic and it was pretty helpful. Of course, the way we position our money is slightly different than how the author does it, but the overall strategy has helped us a great deal.

We organize our money across four different bank accounts:

• Checking Account 1: used to pay utilities, our mortgage and give to our church
• Checking Account 2: used to pay our students loans
• Savings Account: where we continually save for specific things
• Money Market Account: where we keep money on hand in case of an emergency

Every time one of us gets paid we deposit the entire sum of money into Checking Account 1. This account is like New York’s Grand Central Station–a transfer point. And out of this one account, Sara and I make payments. We pay for our utilities, mortgage,  and insurance among other things. But, just like making a payment to Connecticut Light and Power, we pay ourselves from this account too. These self-payments go straight into the three other bank accounts and each payment is made four times per month corresponding to each of our paychecks.

The largest of the self-payments is made to Checking Account 2–our student loan bank account. By the end of the month, the amount of cash in this account equals the amount of money we’ve budgeted for student loans. Essentially, it’s an escrow account used to pay Sallie Mae.

Another self-payment is made to our savings account, but only if we happen to be saving for something in particular. For example, this month we plan to go out to dinner for our three-year-anniversary. We’ve been transferring money into our Savings Account so that at the end of the month there’s enough money to enjoy a nice dinner at one of our favorite restaurants.

The last self-payment goes into our money market earmarked for emergencies. We try to keep $1,200 on hand as liquid cash for unexpected expenses.

Positioning our income forces us into financial accountability. It separates out sums of money for large budgetary items like college debt and helps us limit our spending. But, it also allows us to gauge how we’re doing financially throughout the month.

Introducing the College Debt Awareness Foundation–CDAF–an organization that will educate and prepare students for educational lending and the costs that come with it.

The truth is, most students–and parents too–don’t understand what they’re getting into with students loans, but CDAF will lead the effort to change that. It will offer various seminars that will go over financial planning for college and the risks associated with college debt. CDAF advisors will be trained in debt management and provide guidance on paying student loans and how to minimize costs.

But, the main mission of CDAF is to educate–to help the student understand how loans actually work and the kind of monthly payment he or she will encounter after graduation. Knowledge is power–and CDAF believes that through education, students will be able to get out of debt faster after graduation.

One of the seminars offered to high school seniors and college freshmen will focus on the alternatives to students loans, such as becoming a resident assistant, work study programs, and scholarships and grants.

As tuition continues to increase faster than the rate of inflation, CDAF is slated to become one of the most important organizations students will come in contact with when pursuing higher education.

The College Debt Awareness Foundation will educate students and parents about college loan financing so the student can get out of debt faster after graduation.

Promotional Release

The College Debt Awareness Foundation

Educating students and parents so they can get out of debt faster after graduation.

CDAF helps students and parents understand how loans work and the kind of monthly payment he or she will encounter after graduation.

CDAF advisors travel to highs schools and colleges offering seminars on paying for higher education.

As tuition continues to increase faster than the rate of inflation, CDAF will distill the facts and prepare students and parents for the future.

Introducing OurFreedomProject.com–a resource for students and graduates that have gone into debt to fund their education.

Now more than ever young people need a community–a website–for advice, news, and a place to vent their frustrations about college debt. After all, almost 60% of all American college students graduate with debt. OurFreedomProject.com will provide a voice for these people.

The website will be run by Steve and Sara Saunders–two individuals who understand what it feels like to be in debt. And incorporated in the site will be a blog showcasing various individuals who are in the process of untangling themselves from student loans. The goal of OurFreedomProject.com is to become a resource of information and encouragement, so the debt laden student or graduate no longer has to go it alone.

OurFreedomProject.com will offer a number of dynamic tools to help debtors understand their true financial situation. One tool–called the “The Truth Calculator”–will compute the  true cost of a student loan and determine how much a borrower can save by making larger payments over the life of the loan. Another tool–called “The Debt Buster”–will help users keep track of their outstanding loan balance and provide weekly debt-reducing tips through email.

This website will also serve as an aggregate site publishing links to news stories and resources about college debt.

Informing the debtor is key, and OurFreedomProject.com will take this seriously. Anyone with student loans will benefit from the social community this website will create.

OurFreedomProject.com–providing a voice for those who bear the burden of college debt.

Promotional Release

OurFreedomProject.com

Finally. Relief is here.

A new interactive solution for students and graduates who are in debt from higher education.

OurFreedomProject.com offers helpful tools, information and tips on how to pay down college debt. But it’s also an online community connecting college debtors together for support and encouragement.

OurFreedomProject.com – providing a voice for those who bear the burden of college debt.

For the past month, I’ve been writing about college debt and how it’s becoming a major burden for students these days. Once out of school, many students face mortgage-sized monthly payments because they are borrowing more to pay for tuition costs that are rising faster than the rate of inflation. And with our minimum loan payments adding up to $900 a month, my wife and I fully understand the pain that comes with student loans. It is suffocating.

But there is hope. And I want to be a voice that provides encouragement and wisdom to the debt laden college graduate. Why? Because I am one.

A few weeks back, I posted an article called An Expensive Frame of Mind touching on common yet flawed thinking.

After talking to my friend about Sara and my goal to be free from college debt by 2014, he replied, “just make sure you don’t burn yourself out.” Sadly, his mentality is similar to the mindset of many others—that it’s okay to prolong the payment of student loans. That’s one expensive frame of mind.

My goal is to be an informer—a propagator of facts—who spells out the truth about debt and how to deal with it.

Just two weeks ago, I published a step–by-step guide on how to create a budget—something only 64% of Americans have. And last week, I wrote about the financial epidemic called Debt Ignorance and the difference between short-term and long-term financial thinking.

In addition to the significant amount of debt that Americans carry, they have an even larger amount of Debt Ignorance. It’s the failure to understand that borrowing to pay for things equates to a much larger financial burden later. All too often, the consumer determines whether something is affordable by the short-term size of the monthly payment rather than the actual long-term cost.

My writings are practical and important to heed. And moving forward, I will continue to provide advice and encouragement to the college debtor.

Over the coming weeks, I plan to write about the hows:

• How to position your money for debt reduction.
• How to stay on track with your budget.
• How to think about long-term costs rather than short-term affordability.

The goal is to have a collection of articles that serve as a remedy for Debt Ignorance and offer oxygen to the financially suffocating.

College debt is oppressive, but my voice can help lift the burden.

I’m starting to think that life is one long episode of Sponge Bob Square Pants. Today’s episode? The adventure of Paul and Colton–an octopus and a barefoot bandit.

Today’s show starts off with a retirement.

After making eight successful World Cup predictions–including the latest win by Spain–Paul the Oracle Octopus has decided to take retirement.

But have no fear. Today’s episode is not over!

After running from authorities for two years, Colton the Barefoot Bandit has been captured in the Bahamas and forced to take a haitus from criminal activity.

The end.

If only Paul the Oracle Octopus and Colton the Barefoot Bandit had joined forces. Paul could have predicted the location of the authorities.