Adventures in paying back $20,000 in student loans

A couple weeks ago I shared my opinion on cash. In short, I hate it. This past Tuesday my article was highlighted as an Editor’s Pick on MSN Smart Spending, sparking the largest discussion that I’ve ever been (partially) responsible for. Cash is apparently a pretty touchy subject for most people. It’s right up there with politics, religion, and sex.

After 70,000+ views and 260 comments on the Smart Spending site and 10,000+ views on my site, I’m still alive and so is my blog. Going through all of the comments has been pretty entertaining. Since I’m pretty sure you don’t have time to read through all of the comments yourself, I thought it’d be fun to do a little recap of some of my favorites.

Overall, it seems like most readers of MSN Smart Spending don’t have the same disdain for cash that I do (note the 1.5 star rating of the article). It’d be interesting to see the demographics of the people who left comments. I think this comment might be a good explanation for the large disparity of views on this topic.

Brett:
I think this might be more of a generation gap than anything. I can’t say for certain that the posters above are older than me, but I know most people my age (late 20s) and younger don’t see the need for cash. Most businesses that we visit do allow us to use cards (which includes debit, remember, not just credit). If you’re conscious of what you’re spending, you can have good habits with a debit card just as you would with cash. And, all of the points BGS made still apply to debit cards versus cash.

The comments in favor of cash commonly included terms and phrases like “brainwashed”, “cash is king”, “immature”, “Dave Ramsey”, and of course, plenty of elementary school name-calling. My guess is that most of these comments come from older people who have fallen into the trap of credit card debt before — something I have avoided and plan to continue avoiding.

Tom:
The system has brain washed him well. At some point he will end up carrying a “small balance” and the banks profits begin. Money, whether wrinkled, worn, dirty or partially torn is still money. Worrying about how money looks indicates a need for a level of experience or mental toughness that would serve him well in the future.

Another common theme I noticed from the older crowd was fear. I think there were a few mentions of the growing rates of identity theft, and even a few people warning about the impending police state in the United States. What are these people doing with their money that is so secretive in the first place?

Beth:
Cash also has the virtue of being private. Nobody tracking your moves, your likes, your vices, your habits and it slows down the creeping police state

While sorting through all of the differing opinions was fun, it’s always refreshing when you finally come across someone who actually read your article and understands where you’re coming from.

JJ:
Hmmm, it seems some posters have no clue of money mgmt or the rewards of using credit cards (only if balance is paid off every month). Cash is great but leave it in the bank to gain interest. Use your credit cards and get points or cash back. So your money is working for you. This only works if you are disciplined and can pay off your credit card balance every month, therefore, not incurring interest. It’s seems our grad student is being financially smart. But some posters are bashing him or her. Ignorance is bliss but dont complain when that grad student is enjoying much more on the same budget.

Well, that’s it for this small glimpse into the discussion that sprouted out of my article. While reading through the comments, there really seemed to be a generation gap among people who were for cash vs. debit/credit cards. It made me wonder, “Are we ready for a cashless society?”

While I can definitely see some pros to using cash, I’d still rather do without it. As the trend towards ubiquitous computing continues, I’m all for a cashless society, but others disagree.

dannie:
A cashless society is a controlled society.

Should we heed dannie’s warning? Is a cashless society too dangerous? Or maybe we’re all being a little too paranoid, and john’s vision is the path of the future.

john:
Older generations will never understand… every day online banking and good habits are the solutions to replace cash. Just wait and see….

What do you think? Will America ever become a cashless society?

Last week, we announced the launch of the College Money Network, a group of young personal finance bloggers who write some of the most interesting and entertaining articles about money, college, and life. I’ll be posting an interview with one of the members each week, so you can get to know them better. This week I’m excited to share an interview with Grad Girl at This Writer’s Wallet.

1. Describe yourself in 10,000 words or less, preferably less.

I’m Grad Girl (often called GG), the 25-year-old Chicagoan behind This
Writer’s Wallet. I started my blog a little more than a year ago,
right as I was finishing grad school and thinking about getting a job
and budgeting and what to do with money, yadda, yadda.

After six combined years of college, I’m thankful to say I have no
debt (my parents are fantastic), and I’m working in a field I really
enjoy. I’m a big fan of school, and of understanding finances. On that
note, I wish more students received quality PF training along with
their given subject matter. But since they don’t, I really love
personal-finance blogs, especially by people in their 20s.

Thanks to the things I’ve learned along the way this past year, I’ve
fully funded a Roth IRA two years running (2008 done! last month). My
future goals include earning enough money for a 50% downpayment on a
home and saving up $8K in an emergency fund. Other stuff: I am a
Christian, passionate about applying Biblical truth to my everyday
decisions, including the ones that impact my wallet. And I am a
writer, both by trade and by hobby. I like cooking, travel, good
books, interesting conversation and vintage real estate.

2. What made you decide to start a personal finance blog?

Mainly, I was going through that horrible try-to-find-a-job phase of
my life, and personal-finance blogging became a welcome distraction.
People wrote about career/job stuff, too, so it was immediately
applicable, but I got really interested in people’s personal stories
of money and budgeting and saving, etc. When I was hooked, I started
This Writer’s Wallet.

3. What has surprised you the most about blogging?

Definitely the connection I can have with people I don’t know in real
life. I blog anonymously, so (most of) the people reading don’t know
my real name or where I work, etc. It’s crazy how much I can have in
common with a reader or another blogger. Cool and freaky.

4. What is the most important financial lesson you have learned from college?

College is a privilege, and it’s expensive. If there’s a way to pay
for it as you go (gift/working/scholarship), do it. But if you’re
going to take out loans, make sure it’s for a career that will enable
you to pay them back.

5. If you had to pick three of your favorite posts to share with a first time visitor, which would they be?

• The Secret to Getting Your Money’s Worth in Grad School
• Why I Live with my Parents, at 25
• New Goal: I Want to Buy a House with Cash (or, I hate debt!)

Thanks for sharing your time with us, Grad Girl!

One of the first articles I wrote when I started Broke Grad Student was an explanation of why I use credit cards. Thanks to Pinyo at Moolanomy, who featured my article as an Editor’s Pick in the Carnival of Personal Finance that week, there was quite a bit of discussion in the comments. While I shared my theory that there are two groups of people: those who can handle credit cards and those who can’t, others disagreed. Among the dissenters was a self-proclaimed “Poor Student”, and here’s what he had to say:

I think I belong to a different group: I’m in debt, a lot of debt, more than $30000 in credit card debt!

But, hear me out, I’m milking the credit card companies, for a change. I max out all the cards I have while they’re offering 0% or under 3% APR balance transfer, then I wrote myself big fat checks (making sure I read the fine print of course). Then I turned around and invested the money. I am betting that my investment returns will be greater than 3% or so. I could lose money, but I think it’s a bet worth placing. Yes, I paid transaction fees, but all financial undertaking has to start with some capital, and you pay for the privilege to use that capital.

Otherwise, I have been building a good credit (over 710 points). Until I started to milk these companies for investment capital, I always paid the full balance on time without fail. I buy most things with my cards. I won’t advise most people to do what I’m doing, however (I wouldn’t even let my brother know because it could backfire).

Unless you’ve been stuck under a rock lately, you probably know that the stock market hasn’t been faring so well with the current state of the economy. The fact that “Poor Student” used the word “betting” to justify his decision immediately sets off alarms in my head. Betting is gambling, which means he gambled with over $30,000 that he never had in the first place. The only thing worse than gambling is gambling with money that isn’t yours. “Poor Student” returned a few days ago to give this update:

I’m the same “Poor Student” who wrote above a few months ago. I just want to give you guys an update. I don’t want to go into details, but take my word for it: do NOT borrow money to invest in the stock market under any circumstances. It’s a bad idea. Do it at your peril.

While it looks like “Poor Student” has learned his lesson, I can only imagine how much time it will take to repair the damage. I wish him the best of luck and hope that sharing his story will encourage others to think twice before making the same mistake. I also stand by my theory that there are only two groups: people who can handle credit cards and people who can’t.

Computers are a staple of the college life today, but we all know that computers aren’t cheap. After shelling out hundreds or thousands of dollars on a new computer, how are students supposed to afford all of the software they need? Fortunately, there are a few simple ways to save a ton of money on software.

Take advantage of educational discounts. Most colleges have special student licensing for software. This usually includes a variety of free and heavily discounted software. Last year, I purchased Windows Vista for $20 through my university’s student software store. I also snatched a copy of Office 2007 for $20. Also, don’t waste your money paying for a virus protection program, because every university I have been to offers a free virus protection program for students (usually McAfee or Norton).

Use open source software. If discounted software is still too expensive for you, then you might want to try some open source software. This software appeals to the super geeks because you can download the source code. It appeals to the rest of the world because most of it is free. Two of the most popular free, open source programs are OpenOffice (alternative for Microsoft Office) and Firefox (alternative for Internet Explorer).

Use online software. If you want access to your files anywhere (with an Internet connection), then check out Google Docs, a free web-based program that allows you to create documents, spreadsheets, and presentations online. Since everything is already online, it’s a breeze to share and collaborate with others. I really wish this had been around when I was working on group projects back in undergrad.

Find free software. If only everything in life were free, then this blog wouldn’t exist because I never would have taken out student loans. Anyway, the Internet is littered with tons of free software, so the challenge is finding the free programs that don’t suck. Softpedia is a good resource for this because users can leave ratings and reviews for all of the programs. One of the best free programs I’ve personally used is Paint.NET, a great free image and photo editing program for computers that run Windows.

This past week was an exciting one for Broke Grad Student. Earlier in the week, I announced the launch of the College Money Network, a small group of personal finance bloggers who write about topics relating to college students and recent graduates. I really look forward to collaborating with this great group of bloggers and encourage you to stay tuned as we’ve been brewing up some crazy ideas, including a big giveaway. Be sure to subscribe to make sure you don’t miss the announcement and your chance to win some great prizes.

Here’s a quick recap of my favorite posts from the rest of the College Money Network this week:

• Is Your Money Safe In The Bank? asks Broke-Ass Student
• Saving Money on Driving, One Way or Another at Poorer Than You
• Fiscal disobedience at MFA or Bust
• Money Hackers Carnival - Chicago Style at This Writer’s Wallet
• The Best Job Hunt Post: Top 40 Links From The Web at Green Panda Treehouse

I also participated in a few carnivals this week so be sure to check them out.

• Carnival of Money Stories at Funny about Money
• Carnival of Personal Finance at The Budgeting Babe
• Festival of Frugality at On Financial Success

Last, but definitely not least, I’d like to thank Donna Freedman and Karen Datko at MSN Smart Spending for featuring my article about why I hate cash. While the wave of readers they sent over has been nice, I think my favorite part is the one comment that has been left on their page at the time of writing this.

Stupid article….
– Hemming

Life Lesson #583: You can’t please everyone.