By Wesley Kerrick–
Rachel Cruze is the daughter of financial guru Dave Ramsey and is on staff with his Nashville-based organization, Lampo Group LLC. She speaks at schools, community events and churches throughout the country. Through email, the Cardinal got her advice on how U of L students can better manage their money.
Q: What are some sources of funding that university students tend to overlook?
A: Most students just accept that student loans are a way of life, but it is possible to avoid them! There are plenty of jobs that college students can do to make money in order to pay cash for school. You can deliver pizzas, work on campus or work at a retail store. In fact, a recent study showed that students who worked while in college actually had better grades than those who didn’t. You might have to make sacrifices in order to pay cash for school, but trust me, it will be worth it when you’re debt free at 30 and all of your friends are still paying for college. And don’t forget to check out all of the scholarships that are available. It may only be 1,000 dollars here and 2,000 dollars there, but that’s 3,000 dollars less that you have to come up with!
If the cost of tuition is still too much after working and scholarships, consider going to a community college for a year or two, then switching over to a state school for the remaining years. This could help you save thousands of dollars.
Q: Where do you think university students waste the most money?
A: Most college students wander through school without a plan or a clue where there money is going. They go out to eat, go shopping or go on vacation without even thinking about where their money is going. They live their lives in the moment and don’t think about how the four years they are in college can affect the next 40 years of their life (sic).
Every student should have a budget so they can make sure they have enough money to live off of. Write your income at the top of the page and then write down all your expenses – rent, groceries, utilities, books, eating out – and total them at the bottom. If your income is greater than your expenses, and you live within your budget, you will be on the right track. If your expenses are greater than your income, then you need to look at cutting some of your expense or increasing your income.
Q: Loans and credit cards are common in today’s university environment, but you advise students to avoid them. Why?
A: Debt is a dangerous tool. Many people think they can use it to “leverage” their purchases and rack up points. But too many college graduates are struggling to make ends meet because they’ve racked up student loans and credit card debt. I’ve talked to hundreds of students who can’t take their dream job because it costs too much to move, or they need to be able to live at home.
Avoiding student loans and credit cards isn’t easy, but it’s a lot easier than working for years upon years to pay them off. If you work hard and only spend money that you actually have, you’ll be far ahead of peers financially and actually be able to have a life after graduation!
Q: What are some things you tell university students, that other financial advisors don’t?
A: Many people will tell you that it’s okay to go into debt as long as you do it wisely. But I tell you the opposite – to stay away from debt completely. There is no good side to debt. Your income is your number one wealth building tool, and if it is tied up with monthly payments because you’re in debt, it’s going to be a lot more difficult to become wealthy.
Cash is a powerful tool. Whether you’re using it to pay for school, buy a car or just a TV, using cash is empowering. It helps you make smart, informed decisions and usually helps you get a better deal, too!
Photo courtesy of Meg Grunke