Life in Transition

Navigating Personal Finances During Life Transitions

Archive for the tag “saving”

Saving Money In College as a Resident Assistant

The tuition of a four-year university is already daunting, and the cost-of-attendence just keeps climbing.  Adding a bigger blow to the wallet is that many universities are requiring students to live in expensive campus housing and buy a meal plan.  One way to get around paying for the extra costs is getting a resident assistant (RA) position in one of the dormitories.

What is an RA?

An RA is a peer mentor who supervises students living in residence halls and dorms.  Responsibilities include conflict mediation between roommates, planning events for students, helping students transition to university life, helping with check-in and check-outs, submitting maintanance requests, and enforcing university rules.  RAs usually go through a rigorous training process.  Usually students cannot apply for an RA position until they are finish with their freshman year.

What are the benefits?

Compensation varies from institution to institution.  Usually, RAs will get free room and board.  Another perk is that RAs are not required to have a roommate, which is usually madatory in university housing.  Some universities will also pay an hourly wage on top of the room and board stipend.

What are the drawbacks?

The main drawback is having less freedom than the average student.  When my husband was an RA, he was required to be in the building by midnight during the week, and by 2 a.m. on weekends.  During holidays and breaks, he could not just go where ever he wanted whenever he wanted.  He had to divide holidays between the other RAs in his building.  For example, each year he had a two week Christmas break, but he had to either go home a week later or go back to school a week early.  He also spent one weekend a month on-call, which meant he could not leave the building the entire weekend, expect to take two hour-long breaks to get lunch and dinner. 

The second major draw back depends on what kind of students live on your assigned hall.  If the students are conciencious of others and well-behaved, then the RA will spend a lot of time having fun hanging out with their residents.  If the students are wild and immature, the RA will spend a lot time disciplining students and mediating conflicts.  One year, my husband was assigned to a floor of rowdy freshman boys.  He spent a lot of time busting residents for alcohol and drug violations and trying to clean inappropriate graffiti (use your imagination) off the walls. 

The Numbers

My husband spent two years of his undergraduate career as an RA, and just began a new RA position recently.  As an undergrad, he received a generous scholarship from the university that included full tuition and a $6700 annual stipend and an annual $2500 scholarship sponsored by the state (read about scholarships in Kentucky here and here).  So technically he did not need any extra money to pay for his living expenses while in school.  Since his RA position provided him free room and board, he pocketed stipend and stuck it in a bank account.  In two years, he saved $18400 from his stipends alone.  On top of that, he was paid an hourly wage of $6.90 for 13.25 hours a week for 37 weeks a year for a total of $3383 annually.  Assuming that he spent between $250-$300 a month on gas, entertainment, and eating out (this is a high estimate), he would not have needed to touch his stipend at all.  His biweekly paycheck was more than enough to cover his miscellaneous expenses.  Overall, my husband was able to pay a semester of dental school with his own savings.

Money saved in two years as an RA: $18400

Right my husband is starting his second gig as an RA in the graduate student housing complex.  Instead of trying to build his net worth (only to wipe it away paying for grad school), the goal of taking the position is to cut costs.  Right now, we get a free one-bedroom apartment that includes all utilities, internet, and cable.  The university charges $779 for the same room so in a year we will save $9348.  However, if he did not have the RA position, we would not live in campus housing and find someplace cheaper.  I estimate that an apartment, Internet, and utilites (we wouldn’t get cable) would be average $625/month or $7500 annually.  On top of that, he will get paid $7.50/hour for 15 hours/week for 52 weeks, which is a nice bonus since he would not be able to get a “regular” part time job.  So, his annual salary is $5850 which we will put directly into his tuition savings account.  With these savings combined with the money we had already saved, we may be able to delay taking out loans for another year.

Total Costs Cut: $13350/yr

Overall, a college student has the potential to either build a large savings account or greatly reduce the amount of loans needed.

Cheap (or free) Summer Entertainment

I always have a lot more time to spare during the summer.  Over the years, I’ve learned to take advantage of the cheap/free entertainment offered in the city.  Here are my top 5 (not in any particular order)

  1. Movies under the stars: In my city, some of the parks will have a public amphitheater or outdoor stage.  On different days of the week, they will have a free movie nights opened to the public.  Most movies shown tend to be older and “family-friendly” in order to reach a wide audience, but who doesn’t love old Pixar films?  A lot of people will picnic at the park beforehand.
  2. Shakespeare Festival: Many cities have their own Shakespeare Festival at a park, and Louisville is no different.  Every year, a two or three plays are put on and they each run about a month long.  The best part is that it’s free (although they always ask for donations during the intermission)!
  3. Neighborhood Festivals and Block Parties: The fun factor and costs  depends on the event and/or neighborhood.  A lot of these have free concerts, food tastings, and games.
  4. July 4th Events: Free music and fireworks, what more can I ask for?
  5. Gallery Hops: A lot of cities have art districts.  Once a month we have free trolleys that take us up and down the art district.  Galleries and shops are opened late.  I always enjoy seeing contemporary art and discovering new, quirky shops (I usually leave my money at home to prevent any impulse purchases)

What kind of free entertainment do you take advantage of in your city/town?

Financial Milestones for Twenty-Somethings

Several bloggers have been posting a list of financial milestones for those in their twenties.  I’ve decided to jump on the bandwagon to see how many I can cross off the checklist.

  1. Finance a dream vacation in cash–I’ve paid for a vacation in cash but it was with a bunch of college friends right before graduation.  I don’t think sharing a three bedroom condo in Panama City, FL with nine other people qualifies as a dream vacation so I’m not going to count it.  Currently my husband and I are half-heartedly saving money for a delayed honeymoon
  2. Pay off your student loans–I didn’t have to take out any student loans thanks to the generosity of the Kentucky state government and the alumni at my school.  Check!
  3. Automate paying your credit cards in full–I always pay my credit cards in full.  Check!
  4. Get rid of all bad debt–I’ve never taken on any bad debt.  Check!
  5. Build an adequate emergency fund–I worked pretty hard to build up a $5000 emergency fund, but as soon as I accomplished my goal, circumstances changed and now the new goal is $7000.  I’m still going to count this, since $5000 was adequate at one point. Check!
  6. Max out a Roth and contribute to your 401(k)–I contribute to my Roth IRA but I’m no where close to maxing it out.  My employer does not offer any retirement accounts since the company is relatively new and very small.
  7. Get a degree that increases your earning power–I got a bachelors degree in biology last year, which is pretty useless where I live unless you have an advance degree.  I plan on going to graduate school soon for a counseling degree, but I doubt that will increase my earning power much.
  8. Make your first and last investment mistake–I made a pretty big investment mistake and I definitely suffered the consequence. When my sister decided to go to the same college as me, my parents thought it would be a great idea to get a condo for us.  They had just moved and bought a new house so they didn’t have enough cash on hand for the down payment.  They pitched the idea that my sister, parents, and I split the down payment with promise that we would split the profits when we sell it.  We ended up buying a condo (I didn’t see it before they made an offer) in a building that was falling apart with a third of the owners delinquent on their HOA fees.  My parents didn’t see the need to do an inspection, since the exterior parts of the building was the condo association’s responsibility to fix.  Unfortunately, they forgot that as owners, we would be part of the condo association and with a building needing extensive repairs, our HOA fee will increase.  So there’s a ton of extra expenses that my sister and I have to pay for since my parents consider us “shareholders” on the property even though neither one of our names are on the property.  I did not expect that I would be responsible for these costs, since it was not discussed before hand.  Also, my parents have been using the $12,000 I contributed to the down payment as leverage to try to control me (see #11).  At this point I don’t know if I will see any of that money again.  I definitely learned that I shouldn’t be too trusting of anyone trying to push me into partnering with them on an investment, and that family and investing don’t necessarily mix well.  I should have done my research and not passively agree with my parents investment “advise.”  Hopefully this would be the last investment mistake I make. Check!
  9. Develop a statement of cash flowCheck!
  10. Take a career risk–I was part of a program at my university that saves you a seat at its medical school (in effort to keep good students from going out of state for college) provided that you maintain halfway decent grades, get a respectable MCAT score, and don’t get arrested.  Students apply to the program during their last year of high school, and this program pretty much eliminates 99% of the stress that comes with being a pre-med student (I avoided hanging out with my pre-med classmates since they would hate me if they found out that I was in the program).  During my last year as an undergraduate student, I realized that I wanted become a doctor because my family expected me to.  I learned that no matter how much money and prestige a career in medicine would bring, I would never find happiness living a script that someone else has written for me.  It was not a decision I took lightly since my choice heavily strained my relationship with my parents.  By walking away, I now have a chance pursue a career that will fulfill me (I know that doctors can have a fulfilling career, but being a doctor won’t fulfill ME).  Check!
  11. Negotiate something–My wedding photographer charges an extra $200 for out-of-town weddings.   I got her to shave off $100.  I still went $100 over my photography budget, but the pictures she took was worth going over budget. Check!
  12. Earn your first side grand–I babysit about twice a month, but I don’t think I’ve made even close to a grand after three years.
  13. Start a sub-savings account for an upcoming goal–I don’t have a specific savings account at a bank for my targeted goals, but I keep track of everything on a spreadsheet.  Check!
  14. Set a target retirement date–Definitely have not done this yet.
  15. Monitor your credit–I always get the free annual credit reports.  Check!
  16. Say no to a financial salesman–I don’t think I’ve been approached by one yet nor have I sought one out.
  17. Give just enough to make it hurt–I’m not 100% sure if this counts since I’m not sure if giving up a honeymoon actually “hurts.”  Before the wedding, my husband and I were saving money for a honeymoon when a really bad tornado hit in March.  A family at my church was hit pretty hard.  The  tornado ripped the house off its foundation and carried it hundreds of yards.  The father broke 19 ribs and jaw. The mother shattered her pelvis, broke her shoulder, and had a collapsed lung.  One of the children broke his back, and another had a bruise liver and a seizure from a concussion. Between the medical bills, loss of their house and possessions, and lost work time, they definitely needed help and support.  The only extra money we had at the time was our honeymoon savings, and we felt the family needed that money a lot more than we did, so we gave it away.   I don’t normally donate that much for natural disasters, but I knew who was directly benefiting from the money.  The only “inconvenience” for me is that I will spend another year saving for my honeymoon, and I don’t regret it.  Check!
  18. Save a dollar for every dollar you spend–I still have a long way to go. Depending on the month, I save between $0.10-$0.20 for every dollar I spend.
  19. Start a 529 college savings plan–I don’t see a point in starting one if you don’t have kids, and I don’t plan on having kids until my husband graduates from dental school.
  20. Buy a house–I won’t be doing this for awhile.

I’ve complete 11/20 milestones, which I guess is okay for a 23 year old.

Check out the progress of other twenty-something PF bloggers:

Random Thoughts and Acronyms

From Shopping to Saving

Making Sense of Cents

My Alternate Life

The Tax Withholding Debate

My co-workers and I have been talking about the checks (or lack of in my case) that we will expect during tax season.  Most of them like to have as much taxes withheld as possible.   One guy who started working here as a bachelor had not changed his withholding once, even though since then he has gotten married and now has an two-year-old daughter.  So, between him and his wife, he’s expecting a $6000 refund.  I asked him why he never changed his withholding.  He gave me the following reasons:

  1. It’s a nice psychological boost getting a big fat check from the IRS
  2. It forces him to save money.  To him, it’s equivalent to automating saving, except the government holds on to the money instead of the bank
  3. It forces him to live below his means, since he gets a smaller than normal paycheck each month
  4. A large check gives him and his wife an opportunity to discuss the progress of their annual financial goals and priorities

I, on the other hand, prefer to pay the right amount of taxes throughout the year instead of overpaying, and get a small refund  instead.  Here are my reasons:

  1. I hate seeing so much of my hard-earned cash being taken out of each paycheck
  2. I tend to be OCD about my money, so getting a slightly bigger paycheck  throughout the year makes me feel like I’m have more control over my finances.
  3. I like to make my money work for itself, so to me, giving the government an interest free loan is a bad deal when I can earn 4% interest if I park the money in my rewards checking account
  4. I think I’m disciplined enough to save money on my own throughout the year

In the end, I don’t think one way is better than another.  I think each person should make their decision based on their needs, priorities, and money management style.

Do you prefer a large refund check once a year, or do you prefer getting a little bit more money on your paycheck throughout the year?

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