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My Personal Finance Journey

Hey everyone, my name is Alon, and I’m a sophomore political science major.

 At the beginning of this semester I had no idea how much money I was spending. I didn't stick to any kind of a budget, but simply relied on my gut feeling to know if I was spending too much on anything. By the end of September I spent way more money than I had planned to, and realized that something had to change. It was time to budget.

For me, the hardest part of budgeting was being honest with myself. I really didn't want to go back and see where I spent my money, because I didn't want to admit how much I ended up spending at Amelia's or Starbucks. In order to actually get myself to confront my spending habits I needed motivation, and running out of money definitely did the trick.

The first step I took was to sit down and see where my money went in September. I made a big ol' excel sheet and broke down my expenses into categories like coffee, transportation, groceries, etc. Once I realized how much I spent in September, I created a budget for October that was fairly similar to my expenses in September. The main difference was that I wanted to start saving money, so I cut down each category by a little bit, and added a savings category. I also downloaded a budgeting app called Mint. I really recommend using some sort of an app because it makes your life so much easier. If you do a simple Google search on budgeting tools, you'll see that there are a lot of really great ones out there! Mint helped me out because I wasn't going to check and update my excel sheet budget every day, but having my budget on my phone is a good reminder of how much money I have left to spend.

I think the biggest misconception about budgeting is that it means you need to spend less money, or have less fun. Nope. Budgeting is just all about knowing where your hard earned money is going. My budget doesn't tell me to not have fun, it just lets me know how much fun I can afford, and still be able to pay rent next month.  

[nuthrive]

Budgeting During Co-op

Greetings Fellow Students! I’m Ben, a third year student who is about to finish up his first co-op. Let me tell you one thing, co-op is the LIFE! It’s the main reason I chose to go NEU, and I can vouch for the learning experience that I’ve gone through as a person and young adult. But it gets better. Once you get through your work day, which I happen to really enjoy, you have as many responsibilities as you give yourself. No homework, no group projects, no late classes to suffer through. BUT IT GETS BETTER. That’$ right, you get paid! Cash Money ain’t nothing funny.

But seriously, getting paid real, serious money was an entirely new concept to me. I began to think of buying thing in terms of hours of work. “Oh this meal is ½ an hour of work, no big deal.” “This baseball ticket is only 3 hours, so worth it!” Work was easy, but spending money was easier.

Before I knew it, my paychecks weren’t making as much of a splash in the bank account. I wanted to know what was going on, so I finally check my bank statements. I was spending money everywhere! $5 here, $10 there, it all adds up! So I knew I had to make a change.

I started packing lunch, and cooking more instead of going out. Boom, saved about 10 bucks a day. I stopped splurging so much on big money things and started getting involved on campus. Here’s a secret, clubs and intramurals are free! It’s tempting to spend a lot when you have so much free time, so I try to fill up my whole week with plans on Monday, and then I think of ways to make those plans cheaper yet still fun.

One thing I always tell people is that if you save money, money will save you. I live by this every time I see a paycheck come across my desk waiting to be signed. I know that some of that money should go into my savings or investments, because the earlier you start saving, the more money you have when you need it.

This lifestyle has made me feel like a more organized, contributing member of society. It’s a cool feeling! It’s important to start somewhere, even if it’s simple as managing what you spend on food and groceries. Everyone can do it, so when you’re out on coop, keep this in mind and give it a try!

[nuthrive]

A Better Bill - No, Not that Type

Hey everyone, my name is Allison and I’m a political science student who also happens to be COO of Northeastern’s Center for Financial Independence.

No, your eyes do not deceive you--I did indeed say political science and personal finance. And when I accepted the COO job, I was nearly certain that the two disciplines would remain separate. I’d teach budgeting to students by day, and nerd out to political debates by night.

Imagine my surprise, then, when our Thrive team received an unexpected email from the American Council on Education (ACE) this summer. I stared at the computer screen in disbelief for a few minutes. Could the stars have aligned so perfectly as to allow me to combine my interests in both politics and finance? What could one of the nation’s most influential education organizations possibly want from us?

I’ll cut the metaphorical language - the stars hadn’t aligned, but rather the Higher Education Act (HEA) was making its annual trip through Congress again. Originally passed in 1965, the HEA is responsible for outlining and administering all federal student aid programs. If you’re feeling punny, you could say the HEA has been receiving a lot of HEAT (get it?) lately with regards to the national student loan debt crisis.

Terry Hartle, the Senior VP of ACE and an NU alum, reached out to us at Thrive because every year ACE tries to make the HEA more relevant. But the same old solutions weren’t working, and he wanted this year’s version of the HEA to be informed by actual American students and their needs. And with nearly 70% of college students graduating with debt, updating the bill in this way seems as pressing as ever. Student loan debt is not only overwhelming and intimidating, but the process of applying for and paying back loans is also extremely complicated. The response of Congress to this widespread confusion is usually to add more information to the HEA guidelines in the hopes that this extra information will clarify things a bit for students. As Terry Hartle acutely brought to our attention, this solution might not be the best way for students to get educated on their loan options.

And that’s where we come in. Under the guidance of ACE, Thrive will be hosting focus groups and conducting surveys during the month of November to more clearly understand the needs and sources of confusion for students when it comes to financial aid.

If you told “freshman-me” that the way I’d end up getting my name on a bill in Congress was through involvement in a center for financial independence, I would’ve of laughed and rolled my eyes. Honestly, I would’ve never thought I’d get to make any difference at all, let alone make one via personal finance. Yet here I am-- and now I’m asking you to help us out.

I know how distant the federal government can seem, trust me I study it everyday. The politicians of today make lofty claims that they’ll “make America great again”-- sigh-- but now’s a chance for us to take matters into our own hands. And chances like that come up as rarely as, well, the perfect alignment of politics and personal finance.  

[nuthrive]

Taking the Plunge and Actually Starting to Budget

I’m a history major. Ever since I took Ms. Jacobs’ World History class in 9th grade, I knew that I would study history in college. I was (and still am) obsessed with the subject. How could you not be? Everyone in the world can find something that interests them about history. However, I do have a tendency to get lost in my little history bubble. I get a little too caught up in the past to really focus on the future.

Before I started working at the Center for Financial Independence (you may have heard of Thrive?), I hadn’t given too much thought to budgeting: how to start one, why I would start one, how it could help me, or anything else.

Since I’ve jumped into the world of personal finance, though, I’ve come to understand the value that comes with starting and managing a budget.

Budgets are hard to start-- I get that. Part of the hesitancy (at least for me) came from a deep fear of seeing how much money I waste on a daily basis.

Imagine your favorite neighborhood eatery that everyone loves. It’s a little dirty, but it’s got that homey feeling that can’t be replicated anywhere else. A couple of days later, you find out that the local mice population are also counted as fans of the establishment...You aren’t phenomenally surprised, per say, but you aren’t happy about this either. This was my reaction when I saw how much money was going out of my account compared to how little was coming in.

After realizing that I dropped $15 in one day on coffee (and not a single Pumpkin Spice Latte, can you believe it?), I had myself an old-fashioned wake-up call. **RING RING RING! YOU ARE WASTING MONEY!** said my inner accountant. After seeing my spending habits, and knowing that I was the one making those decisions, I understood that something needed to change.

I sat down and tracked my income. I took note of all the money I have coming in, and tracked down the money I’d spent in the previous weeks. I planned for upcoming expenses, and pushed some money aside for things that I’d like to have, but didn’t necessarily need. All of these steps took less than an hour.

I won’t bore you with the personal details. Long-story-short:  since I started budgeting, I’ve seen a steady improvement in my spending habits, a nice rise of my savings account, and a wonderful boost to my peace of mind. Like coming to college and taking on newfound independence, successfully running a personal budget is an empowering feeling that inspires confidence in unexpected facets of your life. Trust me, I’m a history major.

[nuthrive]

6 Steps to Getting Your First Credit Card

Every complicated "machine" in the world can be broken down into six simpler ones. You learned about that in elementary school, though its unlikely you remember the specifics. Instead, you pushed that knowledge aside and replaced it with other "adult" worries like finding the best deal on kiwi at the grocery store or paying off a credit card. While a kiwi might not be so hard to figure out, getting and using a credit card has a lot of parts to it! This is a stressful procedure!

Our parents and grandparents were part of the generations who didn't really know how to use credit and so they shudder in pain from the very mention of those little plastic buddies. They didn't pay attention to all the little nuances of owning a credit card and might have worked themselves into pretty deep debt holes. But that's no reason for young'uns like us to be scared of them! Credit cards can be extremely helpful, especially when it comes to building a good credit score (which you'll come to find is really important in real adult activities like buying a house or leasing a car).

The idea behind the six simple machines renaissance theory is that humans needed to find a way to make work easier for themselves so they broke it down to the bare minimum. I don't know about you but this whole getting-your-first-credit-card process feels a lot like work to me, so I decided to follow a similar six components model. I broke down all the important parts you need to know about the credit card process and we're gonna go through this together! Step by step. I'll talk you through all the hard stuff and wheel make sure you don't feel all screwed up! (See what I did there...) So grab a piece of paper and note down your answers with me.

#1 - Why do you even want a credit card?

Before you so much as THINK about googling Discover or Chase or Bank of America, you need to stop and think about why it is you want a credit card in the first place. I can promise you that there is no one-size-fits-all answer to this. Everyone will have completely different needs. Look at it from two perspectives: the big picture life side and the small picture purchase side. Big picture life? I want to build a better credit score so later on down the road buying a house isn't too hard to do. However, maybe you want it because your debit card limit isn't cutting it and you don't want to carry around $500 cash for those car parts purchases. I don't blame you.

Now let's think small picture specific purchase needs: what are you going to use your credit card for? Let's not put all our eggs in one basket and say "whatever I need it for" or "everything." Are you only buying those car parts? Or are you going to use it for anything food related? It's smart to have a game plan or expectation of when you'll be pulling that card out of your wallet. For me, I'm almost exclusively looking to use it for coffee. I spend an absurd amount on that stuff every month and while I refuse to change that aspect of my budget, I might as well at least get some good use out of the expense. Paying for my coffee with a credit card on an equally habitual basis will help that credit score goal.

#2 - What do you want out of your credit card?

Perks, reward points, frequent flier miles. We've all seen those commercials where the beautiful people are racking up hundreds of dollars of debt on their credit cards because cash back! It's fine! They get 1/10th of a cent to every dollar! Don't get me wrong, perks are a great idea. But make sure you choose the ones that are right for you. This goes back to step #1. Why do you want a credit card? What are you using it for? Try to find perks that match up with those. I love to travel, but I'm not sure I do it often enough to make frequent flier miles worth it. On the other hand, if I want to use this for coffee why not expand it to eating at restaurants and ordering food? According to my bank statement I do that a lot too so points back wouldn't be a bad idea there. Think about what you want, think about what kinds of rewards you want (points that can get you cool stuff? a percentage of cash back?), and look for cards that give them.

#3 - How high will your limit be?

A limit is exactly what it sounds like: a cap on spending. In all reality, your limit will probably be quite low if this is your first card. Keep in mind that if you're looking to build your own credit, like me, then you will definitely have lower limit options until you prove to the credit card company that you can responsibly handle something higher. A cosigner (creditworthy person who also signs their name to the account in case you can't pay) is a less independently-minded option that will get you a higher limit. Think parents. Without a cosigner, your limit will be determined by your credit score alone. With me, I know that I don't have any credit cards and I don't pay too many bills so my credit score is likely pretty low. This means I can't go for that black AMEX just yet. My sights are set on the first timer cards with companies who accept lower credit scores.

Choosing a limit need also ties in with step #1. As much as I'd love to spend $500 on coffee, that's not really why I'm getting a credit card. However, it's good to know that if I need $500 for emergency reasons then my credit card can make that available to me. Think about what you want to use the card for, think about how much that will cost every month, and then make some adjustments to look for a comfortable limit close to that.

#4 - What is an APR?

You'll hear and see APR a lot in your search process. APR stands for Annual Percentage Rate which means the interest rate you'll be charged over 1 year for borrowing money via your credit card. Remember that that is what credit cards are: they are not real cash. You do not technically have this money. You are saying to the credit card company that you'd like to use that money and they have a right to charge you some interest if you don't give it back to them in a timely (aka monthly) fashion. Credit scores will also impact this number. If your score is low, you'll get higher rates because there is more of a risk to the credit card companies that you won't pay them back. However, as you make your payments on time and increase that score, you'll find yourself faced with lower APR options.

Have we processed the idea of interest on borrowed money? Okay, now before you start hyperventilating over the rates you've seen before, also remember this: the APR is not your monthly rate, it is your annual rate. Which means that in order to figure out how much you'll be charged on each billing cycle, you need to divide that APR by 12 to get your monthly interest rate. If you have a 12% APR, you have a 1% monthly rate. Whatever you don't pay off from month to month will be charged that 1%.

I did a little Google searching to get a ballpark of APR ranges, because let's be real - a 12% APR on a first time credit card without a cosigner is pretty hopeful. From what I've gathered from numerous sites, around 10% is the lowest APR you're likely to find. That benchmark might fluctuate lower depending on if you've already got fantastic credit (which you shouldn't if this if your first credit card...) or you're finding deals at smaller companies, like a Credit Union card. On the other side of the spectrum, I also found that there is no government-limited maximum APR but on average you'll find the higher rates around the mid-20s. Again, keep in mind that these rates are annual - not monthly. If you pay your bill in full every month, you won't even have to worry about an APR because there will be nothing left over to charge interest on. If you need an extra month, you'll get 1/12th of your APR tacked on to what's left over for you to pay. I know this sounds like a piece of strawberry cheesecake but APR is one of the most important things to NOT NEGLECT and it's what gets most people into debt trouble. I'll mention why in the next step.

#5 - What is all the scary stuff you need to know about?

Okay, so now that you've figured out all this information about what you're comfortable with, it's time to think about what you're not: the risks and the scary stuff! These are some of the things you might find in the fine print, or worse - what you find after you've already gotten the card and racked up some charges. Keep these in mind as you look at different offers and figure out what you definitely want to steer clear of.

- Overdraft fees - Similar to the ones on your bank account, these are also known as penalties for going over that limit we talked about. Some might be in a percentage, some might be in a set fee.

- Transaction fees - If you get a cash advance or something, you might have a fee for doing that. If you anticipate a lot of different transaction types, look into the fees that come associated with them.

- Annual fees - Also called "service fees" sometimes. Why credit card companies even need these, I honestly do not know. You might find a deal with no annual fee for the first year, but remember that it's going to come back into play in 12 months when you're probably not expecting it.

- Variable APRs - The APR that you get when you sign up is highly unlikely to stay the same over the duration of your having the credit card. This is due to one of two reasons: because you willingly signed up for that or because you're being punished. Variable APRs weren't really a thing for a while because the interest rate set by the Federal Reserve (the one used to benchmark the rates set by banks and credit card companies) was at a minimum and wasn't going anywhere. Now that the economy is getting a little stronger, that variable rate option you signed up for is going to come into play because the credit card companies can adjust it as they please. Alternatively, if you're late on a few payments or abuse the restrictions in the fine print, your credit card company can start to vary your rate higher as a sort of punishment.

- Grace periods - Make sure you know how long you have to pay your bill. A company might give you 28 days and then after a year decrease that down to 20 days because, like the variable APRs, you haven't been the most responsible customer. And they likely won't even tell you it's changing! You'll just see the late fee show up on your bill. Also pay attention to the specific time when your bill is due. If you have until noon on the 28th day and you pay at 3pm, you can bet you're going to see that late fee pop up. Keeping track of due dates is huge, don't just set a recurring reminder on your phone. Actually look at the requirements listed on your bill every cycle.

- Late fees and penalty APRs - If you're late on paying for your first bill cycle, you'll likely see a late fee for that. However, if you're 2 to 6 months behind in paying your bill then something called a penalty APR might come into play. Basically, this is an additional amount tacked on to what you owe and these rates usually are into the 30s. Remember how we talked about how not paying your bill can quickly snowball and drag you into a debt hole? A thing like this is how.

- Default - After 180 days (6 months) of not paying your credit card, the company or provider can and likely will sell your account off to a collector who will proceed to track you down probably for the rest of your life if you never pay it off. That collector or other agency might also increase your rates so that larger amounts of money are tacked on to what you owe. Defaulting on your credit card is pretty serious and your credit score will take a huge hit so you can kiss that white picket fence goodbye.

- Closing your card - This also can impact your credit score if you're opening and closing cards left and right. That type of activity looks sketchy to a credit bureau so try to choose a credit card that you'll want to have for a little while. What exactly "a little while" constitutes varies depending on your needs, but don't go through a new card every month.

This is not a comprehensive list, so: READ THE FINE PRINT! A lot of people will avoid that, or skim through it, because these companies who write it know that if they use a lot of jargon you won't pay much attention to them. This is a huge mistake on your part and frankly, there is no excuse. There are so many resources out there on the internet now so if you don't understand a word or phrase in the fine print - Google it. Make sure you get what you're signing on for.

#6 - Now that you know what you need, who will you choose as your provider?

This is the trickiest step, in my opinion. Different people are motivated to choose a credit card provider for different reasons. You might have brand loyalties, you might want to go with the companies your parents do (which, by the way, is a great source of information for research purposes - ask around, see where your friends and family have cards and why those chose them), or you might just go off of gut feelings.

What's important here is that you do your research. You have your list of information on things that you want and are comfortable with, so try to find a company that aligns with that. Look at your wants and needs as a checklist. If you find a card that fits everything, congratulations! If you find a few that fit most but not all, pick which pieces are more important to you: those cash back points or a lower APR? If you're only finding one or two options that fit one or two checklist points then it's time to start this exercise over again and broaden it out a little more. A limitless 10% cash-back on all pet food purchases with 6% APR offer is highly unlikely for your first credit card (but hey, if you find that let me know...).

So... how do you feel? I sincerely hope this helped in simplifying the credit card process! If you still feel like it's hard to digest, reach out to us here at Thrive so we can help you through it. The best way to get people more comfortable with personal finance is by getting them to talk about it, so tell your friends, tell your loved ones... it's time to stop getting stressed about money!

[nuthrive]

Check out our upcoming programming in the center. Spring really is the time to thrive! (at Northeastern University)

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Our investing basics course is well underway! Interested in learning how to invest? Check out our website for more dates and times! #PersonalFinance #InvestInYourSuccess (at Northeastern University)

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Thank you @northeastern for believing in the student incubator approach for #PersonalFinance! Our Center kicked started the journey tonight with an extremely successful 'thrive on co-op' session! Can't wait to see where we go from here #Huskies (at Northeastern University)

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Where the hell did my paycheck go? Thank you @societyofgrownups for speaking at #NUSCC15 with @careercoachnu today! Great tips learned by everyone!! (at Curry Student Center, Northeastern University)

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At the #NUSCC15? Stop by our table and learn how to extend the lesson passed today!

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Come to our next open house, starting soon! Learn about how we can help your personal finances while enjoying free food @northeastern! (at Northeastern University)

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Interested in winning a prize?! Come stop by our open house and spin the wheel! (at Northeastern University)

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Our office is ready for the first of our open houses this week! #thrive (at Northeastern University)

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#TBT to when we were a focus group @northeastern #BigStrides #StudentIncubator