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Hello, and welcome to ASK USAA.
My name is Scott Halliwell.
We have a question today from Anthony in Hawaii.
And he wants to know, do you have any financial suggestions
for a new college student?
He shared with me that he's soon going to be getting out
of the military and he's going to college using the
post 9/11 GI bill.
He also shared with me that he's been saving up money to
try to sustain himself while he's in school.
Well, thanks for the question Anthony.
But more importantly, thank you for your
service to our country.
Now on your question, boy, do I wish I had been smart enough
to ask that before I went to college.
It certainly would have made my post-graduation life an
awful lot easier from a financial perspective.
But back to your situation.
First, I have to say that I think it's great that you have
been saving money.
That's some fantastic, proactive
thinking on your part.
And frankly, my biggest piece of advice is to continue that
type of forward thinking while you're in school as well.
You know many, if not most college students pay virtually
no attention to what their day-to-day, week-to-week,
month-to-month, or even year-to-year financial
behaviors are going to mean to them by
the time they graduate.
Unfortunately, the results of not paying attention typically
aren't that good.
You need to pay attention to what you're doing financially.
And think about what that's going to mean to you later on
down the line.
Along those lines, there are a handful of basics that I'd
like to share with you here today Anthony.
Under the heading of Financial Advice 101 let's first talk
about credit cards.
For a college student this one's fairly simple.
And that is, never charge more on a card then you can afford
to pay off each month.
I think it's important to have credit cards because you want
to build a credit history.
But you have to remember that using them poorly can build
the wrong type of history.
And that's something you want to avoid.
The bottom line, if you don't have the money to pay it off
at the end of the month, don't charge it.
The next point I'd like to make is keep
money in the bank.
I know from what you said, it sounds like you're off to a
good start in that direction.
You just want to keep that up.
Whether you're in college, whether you're in the military
or civilian life, having money in the bank is one of the best
ways to avoid going into debt.
Now let's look at debt a little bit further.
Let's talk about student loans.
The idea here is you want to try to limit them.
You said, Anthony, you're going to be using the GI bill.
So student loan debt might not be as big of a deal for you.
However, many students will find themselves with the
opportunity to take out loans--
in many cases-- even when they're not needed.
Sadly, they take them often anyway simply because they can
get the money.
Here's the thing about student loans though, they're loans.
Meaning at some point in time you're going to
have to pay them off.
Now it may seem obvious, but the less you borrow now, the
less you're going to have to pay back
later on down the line.
The last point I'd like to make Anthony, is this.
If you can, work while you're in school.
I know a lot of students will find summer jobs to try to
earn a few extra bucks.
But I think it's valuable to work while you're in school as
well if it's possible.
Yes, it's going to create some extra stress in your life.
But I think that's valuable for you on three fronts.
First, it's going to look good on your resume.
Second, it develops some real-world balancing skills.
And third, it gives you money to have in the bank so that
you can avoid going into debt.
The reality is you're also going to need that money as it
relates to your post 9/11 GI bill.
Because you're going to receive a housing allowance
when you're in school.
It's an E5BAH with dependants is the
amount of the allowance.
The recent change-- as of August of 2011-- in the bill
though, says that you're not going to get paid during
breaks in class.
So if you were counting on that money to pay your rent,
you're going to need to make sure that you have some money
set aside to make up for the shortfall on that.
So let's go back and summarize the points
that I've made here.
The first thing, work if you can while you're in school.
Point number two, limit student loans.
My third point, keep money in the bank.
And finally, avoid carrying a balance on credit
cards at all costs.
So Anthony, I hope these ideas are helpful.
In my opinion, coming out of college with a solid financial
foundation may not rank up there as high as coming out
with a solid educational foundation.
But it's pretty darn close.
Thanks a lot for your question.
and best of luck to you in college.