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How Much Could A Lifestyle Downgrade Save You?

By Frugaling 9 Comments

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Flip Phone Old Lifestyle Downgrade
Photo: RobotSkirts/Flickr

Before I flipped out and got all frugal on everyone, I was taking out as many student loans as the good ol’ US of A would lend me. At times, I was engaging in some questionable personal finance practices – balance transfers (aka, robbing Peter to pay Paul). I felt pretty helpless, but people around me kept saying encouraging remarks, as the bulk of my loans were for school.

Unfortunately, the investment and loan damage that’s incurred to graduate from university programs varies tremendously. Some programs are a wonderful investment of time and money – they’ll most certainly add up to a great job, benefits, and an easy retirement. Others are a bit more vague. Something just doesn’t sit right when people say one kind of debt is better than others.

In an effort to reduce as many extra costs as I can, I’ve frequently thought about a lifestyle downgrade. What is it, you may ask? Essentially, it’s about getting rid of as many of necessarily technological advances as you can and pocketing the difference in money to pay off debt. With around $30,000 in debt left to pay off, I recognize that every little bit can help. Moreover, the bulk of this $30,000 currently gets taxed at an abysmal, life-suffocating 6.8 percent, courtesy of the federal government. It’s easy to imagine selling some unnecessary creature comforts and design elements to close this gap.

There Are Assets At Your Fingertips

Man Typing On Keyboard Assets Lifestyle Downgrade
Photo: Kacper Pempel/Reuters

Many articles about personal finance stress removing your daily coffee at Starbucks or packing a lunch. These tips will certainly lead to better budgeting when you’re seriously starved for cash, but there’s more that can be done. Usually, it takes no more than a simple glance at the device you’re using to read this article. Are you using the latest technology? Is that an iPhone 5 in your pocket, or are you just happy to see me?

Personally, I have a number of assets that are slowly depreciating – losing their resale value every day I own them. About a year ago I bought a white iPhone 5 and a couple years before that, I purchased a Macbook Air. The iPhone 5 was purchased on contract and cost the traditional $199 upfront, but these devices are worth WAY more than that on eBay. The Macbook Air was purchased for over $1,000. Unfortunately, the computer has depreciated quite a bit over time. But how much could I sell these items to restructure my life, spending habits, and pay off the burgeoning amount of student loan debt I have?

Choose Your Medium Wisely

When it comes to selling used goods there are three major options: eBay, Craigslist, or your local pawn store. Pawning your old accessories can be the worst option. Because there is a middleman to the transaction between buyer and seller, you’ll likely lose a lot of value. To their credit, a pawn store needs to make a profit, too – there are margins to any business. For the purposes of making the most you can off of your tech and accessories, let’s rule this out.

Next, we should consider Craigslist. In case you’ve been living under a rock for about a decade (and you will be soon by selling off all these newer technologies), Craigslist is the ultimate local classifieds and it’s completely free to buy and sell online. This method will net you the largest profit as there won’t be any commissions skimmed in the process (unlike with pawn stores and eBay). The one risk is that you’re dealing face-to-face with other people, and they may not necessarily be interested in dealing fairly once you meet in person. Similarly, you’ll likely have to spend more time responding to personal emails and arranging meetings to finally sell the item.

The last (but not least) option is eBay. The auction site has become a behemoth in the tech world. It’s by far the easiest and most populated area for buying and selling goods. As a buyer, it can be a wonderful way to find used goods at deep discounts, but as a seller, eBay is a little less friendly. For starters, eBay takes a cut every time you make a sale. Then, like the mafia, they have created one payment process that they own: PayPal. You’ll suffer another payment cut there, too. eBay ranks somewhere in between a pawn store and Craigslist for the money you’ll make, but it’s a safe platform and guarantees a sale within a certain, set period of time.

Reap Your Rewards And Pay Off Debt

Chromebook Lifestyle Downgrade
Acer C720 Chromebook

In the end, the goal is to sell off the unnecessarily advanced, profit off the difference of a lifestyle downgrade, and pay off some debt. If I were to sell my Macbook Air and iPhone 5, I’d probably net about $1,000 off the entire transaction. By selling these goods, I could buy a cheap, affordable computer and buy an older, used smartphone.

Using the same methods outlined before, I would recommend looking on Craigslist and eBay for used laptops and smartphones. The Galaxy Nexus – once the hottest phone on the market – now is a bargain at $60 used, off contract. That would take my net profit down to around $960. As a graduate student and heavy researcher, I would absolutely still need a computer for day-to-day work. The most affordable computers on the market are Chromebooks. I could easily buy a used Chromebook for around $125. After buying both downgraded accessories, I would net about $835 for loan debt.

With all lifestyle downgrades there will be sacrifices. Google Chromebooks are not fully-featured laptops and there are a number of restrictions you’ll bump up against. Older model smartphones may have worsening battery life and poor reception at times.

The question then becomes, is the sacrifice and debt payment worth your inconvenience and potential discomfort?

Filed Under: Minimalism, Save Money Tagged With: chromebooks, Craigslist, credit, debt, Downgrade, eBay, Galaxy Nexus, Google, laptops, Minimalism, school, smartphones, Student Loans

A Terrific, Terrifying Article About Poverty

By Frugaling 5 Comments

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Poverty House
Photo: Rennett Stowe

Today, I happened upon a wonderful article about what poverty is like. After reading it, I knew I needed to share it with you all. Poverty, debt, and working till you drop are all terribly interlinked. The following are a few highlights:

Rest is a luxury for the rich. I get up at 6AM, go to school (I have a full courseload, but I only have to go to two in-person classes) then work, then I get the kids, then I pick up my husband, then I have half an hour to change and go to Job 2. I get home from that at around 1230AM, then I have the rest of my classes and work to tend to. I’m in bed by 3.

Nobody gives enough thought to depression. You have to understand that we know that we will never not feel tired. We will never feel hopeful. We will never get a vacation. Ever. We know that the very act of being poor guarantees that we will never not be poor.

I make a lot of poor financial decisions. None of them matter, in the long term. I will never not be poor, so what does it matter if I don’t pay a thing and a half this week instead of just one thing?

Poverty is bleak and cuts off your long-term brain.

Read the article in its entirety here (it’s worth a read): Why I make terrible decisions, or, poverty choices.

Filed Under: Social Justice Tagged With: Budget, debt, jobs, low-income, management, money, poor, poverty, school

Apply For $50,500 Worth Of Scholarships In 70 Minutes

By Frugaling 2 Comments

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The budget doesn’t add up. In the simple equation of money minus time, there’s not enough of either. Personally, it’s the single greatest reason why graduate school is hard. As a graduate student in a traditionally debt-laden field, those around me seem to treat debt as the norm. But this de facto acceptance of debt – the status quo – is no longer tolerable. Maybe, despite all my efforts, I won’t be able to balance the budget. Maybe, despite all my efforts, the loans will grow – building on the principal and metastasizing into financial prison.

Time to excise this. I’m done with debt.

As the semester wraps up, this is an inherently challenging time to look for funding opportunities – especially scholarships. But I’m desperate, and thought a look would be worth it. Most of what I found appeared to be junk or spam-related entities looking to get your email address and have you register to signup for a “No Essay” scholarship. Nonetheless, I decided to apply to everything I could in one day. Here’s what happened.

My search started and ended at FastWeb.com (Link). While this may be a great resource for a scholarship search, it’s congested with spammy advertisements for companies and colleges that will bleed you dry. In between the advertisements, there are decent scholarships. The end of spring semester is hardly a great time to start applying for scholarships, but that is all part of the experiment (look back in the fall to see what new numbers I put up!). There are very few scholarships for those in graduate studies. This, with the bad timing of the application cycle, made for a rough start.

After a little while I narrowed it down to a few scholarships that were relevant and I could actually apply to. Then, I began. In the course of 70 minutes, I applied to 7 different scholarships, which totaled $50,500. Most of the applications were short, no essay, monthly giveaways that felt like I was entering a hopeless sweepstakes. But a few of them seemed to have potential, and even made me think about what I truly believed via the essay. Over the next few months I will be scanning the web for new scholarship opportunities, and I’ll keep you posted if I receive some good news.

Scholarship Applications:

Gotchosen.com (Link)

  • $40,000 Gotchosen No Essay Scholarship
    • Time: 2.5 minutes (registration)
    • Difficulty: Easy
  • $1,000 Gotchosen Monthy No Essay Scholarship
    • Time: 2.5 minutes
    • Difficulty: Easy

College Prowler Scholarships (Link)

  • $2,000 “No Essay” Scholarship (Monthly)
    • Time: 5 minutes (mostly to register for site)
    • Difficulty: Easy
  • $1,000 College Survey Scholarship
    • Time: 15 minutes
    • Difficulty: Easy

Cappex High School and College Scholarships (Link)

  • $1,000 A GPA Isn’t Everything Scholarship
    • Time: 5 minutes (mostly for site registration)
    • Difficulty: Easy

Do Something: Don’t Be a Sucker Campaign (Link)

  • $4,000 Don’t Be a Sucker Scholarship
    • Time: 20 minutes (registration and taking pictures of unplugged appliances)
    • Difficulty: Easy to Moderate

Delete Cyberbullying (Link)

  • $1,500 Delete Cyberbullying Scholarship Award
    • Time 20 minutes (essay = 500 words or less)
    • Difficulty: Moderate

Total time: ~70 minutes

Total Scholarship Potential: $50,500

Filed Under: Loans, Make Money Tagged With: college, debt, loans, scholarships, school

I have $37,718.68 in debt. Would you marry me?

By Frugaling 10 Comments

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Wedding Photo Would you Marry me
Photo: flickr/codyryanreigle

Today, I logged into my Mint.com account. The number updates after a few seconds, as all my accounts come online. The transactions keep coming and the debt keeps accruing. There’s a big, bold number staring at me: $37,718.68 in debt.

Nowadays, when I look at the cup of Vanilla Chobani Greek Yogurt or tall coffee at Starbucks, I know it will end up costing me 6.8% more. Everything in my life will cost at least 6.8% more. Nothing is face value. Hello, student loan debt.

I am one of the privileged, fortunate souls where my undergraduate education was paid for by family. My parents and grandparents saved and saved – they compromised and cut-out from their own budgets to help me go to college. We never went on lavish vacations or purchased expensive things. We were a humble, middle-class family.

But now I’m in graduate school. Nobody expected I’d actually make it this far in my schooling – not even me. This is my second year in a doctoral program. The debt and interest is accruing, adding up, and spiraling out of control. People tell me it’s okay – that this is an investment – “you’re getting a Ph.D.!” In two years, I’ve amassed nearly $40,000 in debt.

I’m writing this to say it isn’t okay. Just because I’m spending the time to better myself doesn’t mean I should leave with six figures in loans. My partner recently asked how much I owe, what I might have by the time I graduate, and what my plan is to repay it.

I didn’t have an answer.

It prompted some sad questions: Would the amount of debt I have prevent somebody or scare them away from a serious relationship or marriage? Could debt be so burdensome, if shared, that people just avoid it at all costs?

The original question and the ensuing self-doubt prompted this post. This will be the first of many – a diary of sorts as I change this descending trajectory towards the pits of student loan hell.

Filed Under: Loans, Social Justice Tagged With: bank account, debt, loans, marriage, school, Student Loans

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