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Defeat Massive Student Loan Debt With Public Service Loan Forgiveness (PSLF)

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Diploma
©Alex Kalmbach/PhotoXpress

You can’t imagine how terrible student loan debt is until you are faced with the bill — for the next 20 years of your life. This was my predicament 5 years ago, after I graduated from pharmacy school with about $220,000 of student loan debt.

I know what you are thinking, “But Christa, that number is outrageous!” Trust me, I know! About $30,000 of my student loans was from undergrad and the rest from pharmacy school. I would love to tell you that I only took out the minimum amount of loans to get by, ate ramen for every meal, and delivered pizzas 8 days a week, but I didn’t. I lived like most college students do without much of a budget. I wasn’t really thinking about my future self having to pay it all back with interest.

The 18-year-old student loan decisions have serious consequences

There is a lack of education concerning student loan debt among colleges. As a student, you are not usually educated about the repercussions of getting yourself into massive student loan debt. You make shortsighted financial decisions that can adversely affect your life for years and years.

Some of the student loan debt is because you are giving “free money” to a bunch of stupid teenagers (I can say this because I was one!). Some of the debt is also because tuition costs have skyrocketed. For instance, the pharmacy school I attended now costs $33,990 a year. This equals $135,960 in tuition for pharmacy school! That doesn’t even include undergraduate costs or costs of living.

Many post-graduate/professional degrees require this significant student loan burden

Many graduate degrees cost hundreds of thousands of dollars. How can anyone possibly afford this? Many need significant student loans and financial aid. I took student loans out because they were necessary for my dream job as a pharmacist. After pharmacy school, I was told that I’d pay for the next 20 years. My student loans cost more than the mortgage on my house!

I’m not the only person in this situation. Some have gotten into debt from graduate school and others have gotten into major student loan debt from undergrad alone. Fortunately, in 2007, the government started the Public Service Loan Forgiveness (PSLF) program.

The PSLF program is for those working for the government or in the public service sector. If you find a job in one of these areas and make on-time, scheduled monthly payments for 10 years, your remaining loans will be forgiven. But there are some important caveats and rules to look out for.

Confusing, right? Trust me, it does seem complicated when you are first starting out. Some people will start to look into it, get stuck, and forget about it. Lucky for you, I’m here to help!

Fundamentals of the PSLF program

What type of job do I need?

Qualifying employment includes:

  • Those who work for the government (ex- military, public libraries, police officers)
  • Those who work for public service non-profit company with a tax exemption code of 501(c)(3)

Tip: You can call human resources or even check your companies website for their tax exemption code.

Which type of student loans qualify?

Federal loans that were received under the Federal Direct Loan Program.

If you have student loans under the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins Loan) Program, you can consolidate them into the Direct Loan program in order for those loans to be eligible.

Note: Private student loans are not eligible.

What repayment programs do I need to be on?

  • Income Based Repayment (IBR)
  • Income-Contingent Repayment (ICR)
  • Pay As You Earn Repayment Plan
  • 10-year repayment plan (this is kind of silly since you would have nothing to forgive after 10 years)

What qualifies as an on-time, scheduled monthly payment?

In order to be on-time, the payment must be made no later than 15 days after the due date.

For the payments to count, scheduled monthly payments should be in active repayment status. You can’t be in a grace period, forbearance, and/or deferment.

Object Wealth Christa
Christa from Object Wealth

Where can I find out more?

You can go to the Federal Student Aid website. They have a bunch of information regarding student loans.

You can also come visit me on my site where I talk about all things personal finance, including my step-by-step guide to the Public Service Loan Forgiveness program.

This is a guest post from Christa, the founder of ObjectWealth.com, a blog on personal finance and her journey to go from massive debt to building financial independence. She is also a hospital pharmacist and loves watching Game of Thrones (even though it gives her nightmares).

Filed Under: Loans Tagged With: college, debt, Graduate, loans, Programs, PSLF, Public Service Loan Forgiveness, school, Student Loans

How To Fundraise $25000 In 12 Months

By Frugaling 4 Comments

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Sam Lustgarten Always Remember Speech

In search of hope amidst great pain

To save money on housing and food, I decided to become a resident assistant as an undergraduate student. That decision put me on a collision course with residents dealing with serious mental health concerns. The transition to college was always different — some people eased right into it and others struggled.

I loved my residents, and thought we had an incredible academic year. It was April when everything changed. A resident died by suicide. As one of the first responders to the scene, the visuals caused an aching, grinding weight over my chest. Over the course of the next six months, two more people in my life would die by suicide.

It shattered me. There were many days in which getting up was a trial. I’d leave classes early to go into a bathroom and cry. I remember feeling lonely and isolated in my pain. It took that heartache and tragedy to find hope for something better.

Always Remember Fundraise Plan
Part of my proposal to administrators.

Finding, honing an inspiration

I was desperate for action. Then, a flash of energy hit me in one sleepless night nearly a year after the first suicide. I wanted to start a scholarship to fund undergraduate students who wanted to pursue suicide prevention and/or work with those suffering from severe mental health concerns.

Over the course of the next month, I created a proposal for the university and told them how I would fund an endowment (a self-supporting — through interest — scholarship). I explained that I had been talking to friends and family. Altogether, we could scrounge up about $2,000 to start.

They told me I could try, but I’d need to fundraise $25,000 within 5 years.

I said, “Deal.”

Make the first donation

When I started the scholarship I had about $500 in my bank account. I had few assets. Still, I sold everything I could and donated a couple hundred dollars to start the scholarship. It was less than 1% of what I’d need to raise, and it hurt to give that much (especially since I’d need to take out student loans soon after that). No financial advisor would say it was wise.

I had to give everything I could. My head and heart were sucked into this powerful idea — hope through tragedy. I don’t regret giving as much as I did then or over the years. It fueled my passion to seek donors and encourage others to join me.

Realize your connection to community

With almost every cause, there’s a community of support behind it. I realized I wasn’t alone in my distress and desire to make an impact. In fact, the community around my alma mater was incredibly supportive. They were eager to make a difference, as well. They had been affected by this issue.

I heard stories about lost loved ones — brothers, sisters, fathers, mothers, children. It hurt to hear the stories, but I only grew more connected to those around me. Eventually, students at a local high school started fundraising for the scholarship. It brings tears to just think about how meaningful that felt. A cynical part of me died when others began to donate. I didn’t know if anyone would support the cause.

Inspire yourself and others

Suicide Prevention Fundraiser
Group of supporters spent a day in the plaza providing information about the scholarship and suicide prevention.

The $2,000 wasn’t enough, and I felt a pressure to make this happen. I told everyone about the scholarship. Donations began to trickle into the scholarship account.

I shared on Facebook and Twitter — all over social media. Each time led to others sharing. The positive feedback was unmatched in my life. It felt amazing to be channeling such a dark period in my life.

Others were inspiring, pushing me to continue. Likewise, I seemed to inspire others. This shared, symbiotic relationship appeared to benefit everyone. My energy, which had long been depressed and negative, shifted.

That first summer, a massive, $5,000 donation was made. The idea of a scholarship to prevent suicide and provide awareness to this issue struck a chord with many who were affected in the community.

Throw away modesty, seek media attention

This is the trickiest part for some people. Seeking attention is something that society generally says is inappropriate. Unfortunately, far too many people think media will just come to you when they’re ready. I threw that lesson away as fast as I could.

Seek out media outlets! Talk to local papers, zines, and websites about your story and propose times for interviews. This has a tremendous snowball effect to getting donations and finding supporters. Media can be your best friend. You never know, you might just get the biggest paper in your state covering the scholarship and linking to it.

Endowed status!

After about 12 months — the fastest a scholarship has ever been fully endowed in the college — over $25,000 was raised. Whatever you’re looking to fundraise for, know that you can. Follow your passion, link others, connect with a community, give until it hurts, and seek some old fashioned media attention. You can do this.

If you would like to donate to the Always Remember Never Surrender suicide prevention scholarship I founded, head on over to: https://advancing.colostate.edu/arns

Filed Under: Make Money Tagged With: college, endowment, graduate school, scholarship, school, Student Loans, university

Entrepreneurial Secrets That Turn Side Jobs Into Main Incomes

By Frugaling 7 Comments

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Entrepreneurial Google Founders Wikipedia Photo
The Google Founders. Photo: Wikipedia

My first year of writing is nearly complete. In starting my own online site and business, I realized a few entrepreneurial secrets that aided in the success and development of Frugaling.org. Hopefully, some of these ideas inspire you to make more and take advantage of any downtime you have to achieve your own entrepreneurial dreams!

A fun alternative to a temp job

Finding time for extra income opportunities was daunting last year. I wanted to make and save more money to pay off an overwhelming amount of student loans. I was rapidly approaching $40,000 in total debt last May. I thought about getting a menial job that paid me about $8 an hour after taxes. I scoured Craigslist for random temp jobs, but grew hopeless as the opportunities didn’t often fit within the parameters of my challenging semesters. The debt was unmanageable.

Sometime in mid-July, Frugaling.org became a real second income for me. My advertising revenue and traffic skyrocketed. I felt a rush when I published articles that would get read by 10, 100, 1000, and eventually by up to 10,000+ people at a time. But the excitement was heightened because I knew this would perfectly sync with my busy graduate student schedule.

You make your own schedule

Here and there, I began to work on the site. I’d type a story between classes or when I finished work for the night. In a fleet of passion through my fingers, I’d hammer out intricate articles that were entirely my own desire. As much as I wanted to share my voice with others, I was writing for my own growth, too.

Unlike the Craigslist opportunities or strange side jobs around my college campus, writing online and becoming entrepreneurial allowed me even greater freedom in money-making endeavors. It was far easier to squeeze an hour of work where I could fit it, then worry about someone else’s overlapping or differing schedule. Frankly, it was empowering.

Entrepreneurial success is often predicated on fall back options

Graduate school, work, and my other job account for about 60 to 70 hours of work per week. At times, it was hard to digest how many hours were dedicated to my education. Until this academic year, I considered myself to be lazy. I didn’t want to work all that hard and found any opportunity to waste time.

By creating an outlet for my thoughts and conveniently forming it around my schedule, I kept my prior obligations while starting a new project. My grades and school experience hardly changed; actually, I was more diversified and felt grounded in life because of my entrepreneurial spirit.

Starting a business takes a certain gusto and risk, but having options helped insure against failure. If Frugaling didn’t work out, that would be okay. This wasn’t the only business venture going for me, and I wasn’t putting all my eggs in one basket. The failure of this would simply be a drop in the larger bucket.

Follow these examples to find your own achievement

I’m not alone in starting a business while staying busy. There are a tremendous number of tech titans that took to something on the side, and it turned into their main income. Here are two examples:

Drew Houston, CEO of Dropbox

Houston was searching for a method to avoid the constant need for a flash drive. As a graduate student at MIT, he coded a rough basis for Dropbox.com. Basically, it would allow users to place a file online, and have access anywhere in the world to that same file, as long as there was Internet. Houston met his business partner at MIT and launched the company with the safety net of getting a masters degree from a top-tier institution with massive social connections. If Dropbox had failed, he would still be hirable at some terrific institutions. If it succeeded, he would get the best of both worlds.

Mark Zuckerburg, CEO of Facebook

Zuckerburg’s story is legendary now. Through a series of startups and ideas, Mark created a site that was exclusively for Harvard students. It was originally entitled, “The Facebook.” This elite establishment became the perfect territory to foment incredible demand. From there, Zuckerburg and his partners slowly spread the idea from university to university. The elite model appealed to a variety of people, but if it had failed, he would still be getting a Harvard degree.

Filed Under: Make Money Tagged With: balance, Business, Dropbox, Entrepreneur, Entrepreneurial, Facebook, Google, Graduate, Income, Life, Options, Salary, Schedule, school, Work, Writing

Why Are College Textbooks So Expensive In The Google Age?

By Frugaling 13 Comments

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College Textbooks price problem
Photo: xshamethestrongx/flickr

We live in the greatest information age ever. Bandwidth, storage, data, smartphones, and computers are cheap! With a carrier contract, you can have your first Android or iOS phone for free. For as little as $200, you can buy your first computer – brand new. These devices used to be expensive and less powerful – a luxury for the wealthy, subject of study in academia, or business tool.

The decline in prices is largely attributable to Moore’s Law, which asserts that the number of transistors on circuits doubles approximately every 2 years. These advances have contributed to the accessible age for information – spanning vast income demographics and socioeconomic factors. Unfortunately, college textbooks haven’t seen these progressive declines that could attract larger audiences.

Information Is Stuck Inside A College Textbook

Major publishers of textbooks (i.e., Pearson, McGraw-Hill, and Reed Elsevier) have long held dominant control of the industry. Despite vast sums of encyclopedic information moving to free sites like Wikipedia, these publishers have courted the strongest academics to publish on their platforms. With this control and profit model come crushing prices for students.

Academics, largely coming from older generations – before the popularization of the Internet – are content with this publication model (or, they must be if they keep hawking them at the beginning of every semester). When they are recruited to write for these publishers, their knowledge is condensed, controlled, and synthesized. Unlike the Internet’s anarchic flow, an elite few choose what is shared.

Most businesses follow free market principles of supply and demand, but the textbook industry doesn’t follow those same rules. Their supply is infinite and their demand is solely based on their marketing tactics to professors, and the network that professors have with authors. In turn, this stifles competition for pricing – making every book unique and “worth” a premium price.

New College Textbooks Are A Small Fortune To Buy, Make

Publishers use rich text, color, paper, and often publish in hardcover. All of these materials are beyond necessary and contradictory to the principles of progress that are present in this information/Google age. The quality materials give even more reason for publishers to charge more for the college textbooks, but oftentimes you won’t ever reference the book again.

If you are unlucky enough to buy a textbook during an edition update cycle, your $200+ purchase price may lead to an abysmal resale value. New editions are constantly released, usually with minor changes that are imperceptible to the casual reader. This forces students to buy newer and newer texts, and professors are encouraged to hawk these latest editions because they are given free instructor copies. Effectively, this artificially manipulates the supply for certain level textbooks.

When new textbooks come to market, they can easily fetch nearly $200 or more. That’s 1000% more than most popular hardcover novels at Amazon.com. While the Internet has made for more free stuff than ever, textbooks seem to be stuck in the three-decimal price range. Technological advances seem to be overlooked when it comes to price considerations.

Google Search Economics Answers
Google, What’s Economics? (Click to enlarge)

Online, Electronic Platforms Were Supposed To Bring Price Declines

Despite the significant, onerous budgetary demands that these expensive college textbooks place on students, professors seem happy to assign them as “required” for the course. Every class I’m taking this semester emphasizes the need for certain textbooks. It seems like professors willingly participate in this complicated price fixing.

While technologies have improved, the prices of textbooks haven’t fallen. Moreover, even though ebooks and online books are becoming more popular, they are usually the same price or a smidgen cheaper than their concrete brethren. Unfortunately, this small price decline (sometimes) does not account for the fact that the digital textbooks cannot be resold. By purchasing an online book, you are limited to that world and restricted from recouping some of your losses.

A Plan Of Action Going Forward

This semester I refuse to buy a single college textbook. It’s not that I believe we should abolish them, but make them more accessible. Even though I won’t purchase one this semester, I use every campus resource I have to get access to them. Thankfully, as part of the Big 10 system, I can request books from every library within the network.

Next time a professor says a college textbook is required for ask, it’s worth asking them:

  1. Did you get a free instructor copy of the text?
  2. Why are you promoting this particular text and edition?
  3. Are there any free methods (i.e., Wikipedia, online editions) to getting access to this information?
  4. Would you buy this textbook if you were taking this class?
  5. Will we actually reference from this throughout the semester?

Filed Under: Save Money Tagged With: Amazon, Books, college, expensive, Google, Information, knowledge, McGraw-Hill, Pearson, price, Reed Elsevier, school, textbook, university, wikipedia

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