Monday, August 28, 2017

My Five Biggest Money Mistakes in College & How I Fixed Them

Hello, beautiful! Today, it's time to get real about everyone's (least) favorite topic: money.

I'm a total perfectionist, so I hate admitting this, but I struggle a lot with managing my money. Hey, I'm only human - and messing up is part of the learning process! But, I still struggle with a lot of the problems you guys struggle with, like paying off credit card debt and curbing impulse shopping. And, as a blogger, the problem gets even more complicated, because I'm constantly earning extra cash and re-investing in features to improve Haley Marie Blog.

So, since I'm only human, it goes without saying that I've made a lot of mistakes when it comes to my money! Which is why I'm sitting here writing this blog post for you guys: I don't want any of you to make the same silly mistakes that I have.

This post is all about the five biggest money mistakes of my life. However, I'm also getting super honest with you guys and sharing what I did to fix them, so should you (hopefully not, but still) find yourself in the same situation, you'll know exactly what steps you need to take action :)

Money Mistake #1: Maxing Out My Credit Card

Okay, so this is probably rule number one in the "How to Be Good With Money" handbook - and when I got my first student credit card, I never thought I would find myself in this situation. However, having a credit card when you're not used to it makes it easier and easier to treat the card like plastic cash (which it's not!). 

I knew all the guidelines. I knew what I was "supposed" to do, and I knew that you should never spend more money than you actually had to back it up. But despite my best judgment when it came to credit cards, I still wound up with $500.00 of debt and a declined transaction when trying to buy shoes (I'm not proud of it, but it's a true story). 

What I did about it...

Thank goodness for my introductory APR of 0%, because I have been able to spread my payments out over a few months with few repercussions. Any extra money I have, I'm now putting toward my credit card - and a savings account, so that if this ever happens again (God forbid) I'll be prepared. With this aggressive debt payment strategy, I'm now down to less than $180 in debt and plan to have it paid off by September 1st! 

In the future, I'm trying to stick to the limit that most experts recommend: according to FICO, you should try to stay under 20% of your maximum credit limit (so, for me, that's $100 or less on my card every month). I watched my credit score literally plummet from the 800s to the 700s - that's pretty much from great to fair - after I maxed out my card, and have had trouble building it back up ever since. So, do yourself a favor and STICK TO THIS GUIDELINE! It will help you in the long run, I promise :) 

Money Mistake #2: Prioritizing Activities Over Grades

This might seem like a weird thing to mention in a post about money - after all, at first glance, the problem seems to be academic more than anything - but when you think about it, college is an investment! And when my grades started to slip due to too much time at the school newspaper (I was an associate editor, which meant I spent half my week editing and half my days in the office), I was essentially wasting the hefty investment paid for my academic courses.

Tuition at my college is upwards of $60,000 per year. Thank goodness I have a scholarship that covers a significant portion of that - but the scholarship also requires me to maintain a B-average. Meaning, when I got my first failing grade on a test, I got seriously worried about whether my commitment to the paper was worth the academic sacrifice.

What I did about it...

In my mind, I had no choice: I had to cut back. I started saying no more often, and stopped taking assignments just to compete with other editors and writers. When I later applied for a more senior position, I honestly think this hurt me, and was one of the reasons I ended up not getting the position. But, to me it was more important to maximize the return on my investment in a college education than it was to continue working at the paper. 

For the upcoming fall semester, me cutting back eventually led to me quitting so I could focus on just one activity I love - blogging, of course! - and now, my schedule is more stress-free than ever, minimizing anxiety and leaving me with more room to try new things, spend time with my friends, study and focus on my education.

Money Mistake #3: Online Shopping

Don't get me wrong: sites like Poshmark are great for selling your old clothes on. But they also made it way too easy for me to blow $100 on three new-to-me things I didn't really need - not only because the app was always right at my fingertips, but also because I could rationalize it: Oh, but it's just such a good deal! 

And then there's the age-old problem of Amazon Prime. As much as I adore my Prime student membership, it also makes it way too easy for me to toss extras in my cart that I don't really need. For awhile, a big challenge for me was determining what items I really needed, and what items I was using as an excuse to impulse shop online.

What I did about it...

I deleted apps like Poshmark off my phone, only allowing myself to log into my online account when I received a notification about a sale. And I stopped watching/subscribing to YouTubers' haul videos, which helped me stop feeling like what I already had wasn't enough.

I also got into the KonMari method after reading The Life-Changing Magic of Tidying Up (you can read my blog post on it by clicking here), which helped me adopt a more minimalist attitude toward shopping. Not only did it help me love my possessions I already have, but it challenged me to live without the things I thought I "needed" to see if I really did need them after all. (And you know what? Most of the time, I didn't!)

Money Mistake #4: Relying On Online Banking

Online banking is a tricky animal. It seems super convenient and enticing, but then the bank slams you with fees for exceeding a certain number of transactions! I never wanted to carry large amounts of money in my checking account (so I wouldn't overspend), but I was constantly being punished for exceeding the maximum number of online transfers from my savings account.

Eventually, this battle ended with one of my two savings accounts being converted into a checking account by my bank. I found out through a letter in the mail, and didn't have the option of protesting - but I will admit that it helped shine a light on some of my unhealthy money habits.

What I did about it...

This one was at least fairly simple to solve: I limited my online transactions to six per month, which is the maximum amount allowed on a savings account by federal law. However, one thing that helped me stick to this was using the money envelope system - this way, I could make one big transfer to my checking account at the beginning of the month and withdraw all the cash I needed at once. Then, when the cash was gone, it was gone - no overspending allowed! 

Whenever possible, I would advise using an ATM or bank teller for your transactions. I know this probably sounds pretty old school, but trust me when I tell you it will save you a lot of trouble down the road! (Especially if you use a big bank that might just change your account at a moment's notice...not naming names, though ;) )

Money Mistake #5: Getting in a Car Accident

Okay, I know this money mistake wasn't particularly avoidable, but it was definitely the one that caused me the most stress! Back in May, I was in the middle of a four-way intersection when an (empty, thankfully) school bus blew through a stop sign and slammed into the (empty, thank God) passenger side of my car. My car was totaled beyond repair, and I didn't have the means to buy a new car of my own - so, my dad generously bought me a used car. 

However, the car didn't come with no strings attached: I still have to pay it off over time, especially if I want to keep it after I graduate from college. So, in the blink of an eye, I suddenly became financially responsible for a $4,000 debt that was not only not my fault, but that was completely unavoidable! 

What I did about it...

Car payments have since become a (loose) part of my monthly budget. According to the agreement I have with my dad, I'm able to pay off my car when I have the money to spare - I don't have to meet monthly payments the way one would with a car loan from a bank. In that sense, I guess I'm lucky that the only person I'm financially responsible to is my dad and not some shady banker!

I'll also definitely think twice before I go speeding through any stop sign. Even though the accident wasn't my fault, the insurance company decided otherwise after seeing the police reports (the police said there were no witnesses; a witness from the school bus company is listed on the report as saying I blew the stop sign...shady stuff!). Now, the points on my insurance will take six years to clear, costing me a lot of extra cash in the future. So, my advice? Definitely take safe driver discounts seriously - wherever you have to be can wait for the thousands of dollars you'll lose after just one accident! 

Finally, it's important to be prepared for emergencies you don't expect - like car accidents! So, I'll definitely be working to build up an emergency fund before I graduate from college to prepare for anything like this that might happen during my young adulthood. The best piece of advice I've heard on the subject actually comes from my mom: she recommends saving as much as half of every paycheck until you've built up an emergency fund that meets your needs! (Now I kind of wish I'd listened to her when she made me save half of my allowance every week...)

What's your biggest money mistake, and how did you fix it (or how are you fixing it currently)? LMK @haleymarieblog or in the comments below! 

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