Frugaling

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The Secret To Less Student Loan Debt

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Choose A Major

If you’re thinking about college, recently enrolled, or attending, you’ve probably thought a lot about majors. University small talk frequently begins with, “What are you studying?” Your parents probably pressure you to find and/or settle on a major; graduate in four years, they stress. From advisers to counselors to friends to acquaintances, the onslaught for selecting a major can be daunting. Unfortunately, it’s not the most important question to prevent and tackle student loan debt.

The Secret To Less Debt

How do you prevent or lessen student loan debt if you’re footing the bill?

The secret is simple: Project your future income.

More and more students are entering into college – oblivious of the financial ramifications. As Congress finds “solutions” to our $1.2 trillion student loan debt crisis, students are floundering. Now more than ever, it’s important to know how to stem the tide and beat the debt. But the key is knowing what your major is worth.

Frankly, it sucks to think about majors from a financial, future-income perspective. It’s not sexy. Universities often depict a wealth of opportunities and encouragement for any field of study. They’re selling studies irrespective of salary. This can be dangerous.

The reality is that universities are selling a degree – charging thousands – without telling you the whole picture. Do your homework before settling on your dream degree.

Example Degrees

Thinking about a degree in philosophy? Starting median salary is $39,900.

How about psychology? Prepare for an abysmal $35,900.

What about financially-oriented degrees like economics? An impressive $50,100.

And the major that takes the top spot: Chemical Engineering. Right out of college, you can expect to make about $63,200.

Next time someone says, “Follow your dreams!” Ask yourself, “How much will this cost me and what will be my future salary?” If you graduate with $80,000 in student loan debt, it’s best to have a good job lined up. My recommendation: You could find part-time and full-time jobs on job search sites. Otherwise, the crushing, choking student loan debt will ruin those idyllic dreams.

Source: http://online.wsj.com/public/resources/documents/info-Degrees_that_Pay_you_Back-sort.html

Should You Buy Renter’s Insurance?

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Home insurance may never be applicable to me, but what about renter's insurance?

Walk into my apartment, and you’ll notice something: There’s hardly anything in it. It’s sparse, austere, and minimalistic; most of all, purposeful. A table, chairs, my bed – not many extras.

I’ve rented for years now, and I’m not sure I ever want to purchase a house. In a previously written article for PTMoney.com, I cataloged the many reasons why I hesitate to buy. Home insurance may never be applicable to me, but what about renter’s insurance?

Multi-Line Discounts

Every time I call Geico to ask for discounts or check my car insurance premiums, a representative suggests a particular “discount” for also having renter’s insurance. Invariably, I ask what that costs. Would having a multi-line discount make my overall bill cheaper? No.

Unfortunately, this multi-line “discount” is simply a marketing ploy to attract non-critical consumers. Do yourself a favor and ignore these enticements.

Fear Factor

…what if your apartment gets burglarized? Or, worse yet, suffers smoke damage in a fire? Some renters may think that everything they have inside their apartments is insured under the landlord’s policy, but that only covers the building itself. (Source)

Renter’s insurance is often motivated by fear of the unknown. A fire, flood, burglar, or any other risk may enter your apartment and destroy what’s rightfully yours. This destruction is not covered by landlords.

If you have a wealth of materials in your house, renter’s insurance may be for you. It’s a hedge against negative events. The insurance company lets you pay a small fraction of the total worth on the actuarial assumption that you won’t need the money.

Minimalism

There’s a way to avoid renter’s insurance, feel safe, and live a comfortable life. The secret is minimalism. This term represents a movement towards the essential; basically, eschewing all that’s superfluous for what really matters.

Minimalism can be a powerful tool to feeling free from worry. If there’s nothing to burn or steal, why do you need renter’s insurance? When I go on vacation or leave my home, I’m comforted by my bare apartment. What could anybody want? What’s the worst that could happen?

Yes, my table, chairs, pictures, and electronics could morph into charcoal and dust if a fire occurred. But I place no value in these inexpensive things that are easily replaceable. They’re not worth a monthly hedge that drains my budget even further.

And if you choose to plaster the walls with pictures of loved ones and heirlooms, there’s a priceless nature to these things. Geico doesn’t care about priceless – nor could they actually replace them.

What Should You Do?

When it comes time to consider renter’s insurance, take a critical eye to this apparent money saver. Potentially, it may drain your budget, while making you feel safe.

The decision is yours.

Just know that safety doesn’t always need to be purchased. Sometimes, it takes a philosophical change, instead. That’s where minimalism can help.

Is Buying A Smartphone Case Frugal?

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Is Buying A Smartphone Case Frugal?

Scared By Another’s Cracked Phone

My friend pulled out his black iPhone 5 and began typing into his screen. Something appeared askew, different then I remembered it. I glanced over the phone and blanched at a nasty crack along the glass face. Immediately, I thought, “I need a smartphone case.”

As a budding frugal man, self-identified minimalist, and spendthrift, buying a new iPhone 5 was probably financially irresponsible. With nearly $40,000 in debt, the latest gadgets are hardly necessities. My one excuse: I purchased the device before I started this journey to tackle my debt and improve my financial future.

Frugal Without A Case?

I developed a strong focus toward spending cuts (my own austerity) and smart financial moves. My iPhone 5, an homage to a bygone spending era, stuck with me. The phone was purchased, and the reasoning was that I would make this one count – this would last me more than a two-year contract cycle. I wasn’t going to fall prey to the lock-in tactics of major wireless carriers.

Despite this vestige to out of control spending, I left it naked, without a case. Somehow, as I entered the frugal world, it didn’t seem financially smart to buy more. Part of me was right. The other part was scared by what had happened to my friend.

Motivated by fear, I quickly purchased an iPhone case with a special discount (a Lifeproof case, in case you’re interested). Despite the sizable bargain, it was still nearly $40. Admittedly, the swift purchase was motivated by fear. I worried I would soon share a similar fate. But was it fiscally responsible?

Why Buy?

A cracked phone can cost hundreds of dollars to replace screens professionally. Even if you do it yourself, you’re looking a supplies and materials that can cost a small fortune. Suddenly, a $40 case seemed far more frugal. Even though I never dropped the iPhone or suffered such consequences, the threat of lost resale value is an important consideration.

Cases are a form of insurance. You’re lessening risk of loses with a smaller investment. With an expensive cost for accidents with these glass-heavy devices, it’s important to protect them. That is, if you’re going to own them at all. Because the reality is that it’s far more frugal to get a cheap, prepaid flip-phone.

Write The Perfect Credit Card Cancellation Letter

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After traveling to Costa Rica, some fraudulent amounts were charged to my credit card. Unfortunately, after much coaxing, questioning, and negotiating, my card company refused to refund the charges. I decided to write a cancellation letter.

After traveling to Costa Rica, some fraudulent amounts were charged to my credit card. Unfortunately, after much coaxing, questioning, and negotiating, my card company refused to refund the charges. I decided to write a cancellation letter.

At times, I find my words to more potent than my voice. It connotes an ability to publish, share elsewhere and on grander scales. A cancellation letter makes your message clear: You’re unhappy with the status quo and willing to leave.

Below is my cancellation letter that I sent to a credit card company. After mailing it and having multiple, lengthy phone calls with billing dispute representatives, customer service agents, and managers, a solution was found. I’ve decided to leave the company name removed for privacy reasons and because they responded fairly to my complaints.

Before reading on, here are five quick writing tips:

1. Be Polite

2. Be Direct

3. Be Honest

4. Be Concise

5. Be Hard To Get

This letter made all the difference.

Dear Company A,

In my second year of college (2008), I researched and scoured the web for a credit card. Eventually, I settled on Company A credit card with some sort of cash bonus. I slowly worked up my credit line and built a healthy credit score from there.

I never churned Company A credit cards or participated in strange cash back behaviors (read: buying coins through the U.S. Mint). The company benefited from some of my poor financial decisions when I transferred a few balance transfers to the Company A card.

Over the years I’ve had minor issues and billing concerns, but never any problem with Company A‘s customer service or basic functions. The card always worked, had no fraudulent behavior, and if there were ever issues, Company A‘s staff was professional and courteous.

Because of my sizable history with Company A, I decided to apply for another: the Company A credit card. The attractive bonus miles and a statement credit were a powerful value. I was flying a fair amount last spring, and Company A’s airline partner was the best airline to fly from the Midwest to West Coast. Receiving the extra miles and features seemed like a perfect fit.

Then, I did my first serious travel with the card. At the beginning of summer and the rainy season, I traveled with my girlfriend to Costa Rica. Prior to flying down, we booked a rental car. The prices were staggeringly inexpensive and we knew the card offered rental insurance. We entered in the Company A-branded card’s digits and were assured that a rental would be available for our four days of travel. The price was a little less than $60.

We arrived to a beautiful day in the Central American country. The rental service picked us up and took us to their off-airport office. We received a map, talked about insurance, advice about travel, and were about to embark on a wonderful five-day adventure when the employee gave us an ultimatum: provide documentation of rental insurance or receive an added charge.

All of a sudden, the price shot up to $187.52. There was nothing we could do, but I trusted Company A would stand by their customers – by me. I was a loyal customer and believed they would credit me and investigate this strange business practice.

When I landed back in the States, I called Company A for help. I was issued a conditional credit and a dispute case was initiated. The customer service agents assured me that they would figure this out, but that I needed to send documentation.

While I still had the Orbitz receipt and sent that in, the Economy Rent A Car receipt was impossible to find – a consequence of international travel. Nonetheless, the incorrect (possibly fraudulent) charge was on my credit card and the merchant was listed.

A few days went by and then I received a letter riddled with computer-generated errors asking for more information. I sent in everything and said that this extra charge should be considered fraudulent. The case continued.

In future letters, I was asked if I was still interested in calling this a fraud claim. This confused me, as I started the case under this assumption. Orbitz, Economy, and the employees in Costa Rica had misappropriated pricing and I was the sucker suffering from it. I believed this to be dishonest and fraudulent business practices.

Company A’s dispute representatives continued to guide me in the case, and believed that I would receive the refund permanently. Then I received a disturbing letter on July 18, 2013. The important points:

This merchant is involved in the following type of business: AUTOMOBILE RENTAL AGENCY and their telephone number is unavailable.

We previously issued a conditional credit to your account for the amount in question pending the outcome of our investigation. Now that the investigation is complete, we have rebilled your account for this charge along with any related fees and interest charges.

Time and time again, I’d heard from others and in searches online that if a credit company couldn’t reach the company for comment, they’d give the purchaser the benefit of the doubt. If a company is unreachable that seems strange to me. How could a company not be reached, but the bill still be considered valid? Woudn’t this be like the defendant not showing up to a court case?

The crazy part is that other companies stand by the customers concerns and problems. For instance, here’s Discover’s dispute agreement:

How does the dispute process work?

After gathering information and any documentation you may have, we issue a credit to your account while we investigate the transaction. We notify the merchant of your dispute. If the merchant responds, we evaluate the information they provide and then either a credit is issued from the merchant’s account or the credit we issued during investigation is reversed. If the merchant doesn’t respond, a credit is issued from their account. (Discover FAQs)

Unfortunately, Company A, you’ve decided to reverse the charge and bill me for the full amount. The merchant’s failure to respond to communication hasn’t been enough to credit me. After much arguing, frustration, and mixed messages by your staff, you decided to credit me $50 for my troubles. That still leaves an $80 gap, and I don’t believe that charge is legal, right, or fair.

The next step is easy:

A card that successfully advocates for you deserves your business and recommendation. (NBC)

Today, I’m saying goodbye. After 5 years and 1 month of time, I’m canceling both my credit cards with Company A. I have a feeling Company B, Company C, and Company D will stand behind their customers and work with them to offer a reasonable due process. In fact, I know they will from previous experiences.

Thank you for reading,

Sam

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