Part of the Solution to The College Debt Crisis

College debt in the United States is over $1.2 trillion dollars according to USA Today. There are over 7 million debtors in default. We need to change how we handle higher education. This paper outlines how YOU can make a difference in the amount of debt accumulated by students in the United States, and how you can avoid being part of the statistics.

According to collegedata.com the average cost to attend college is $24,061 a year. This is a lot of money. The price includes tuition, fees, room & board, books, transportation, and personal expenses. If a student starts saving their final summer to pay for college, they will incur a lot of debt. This is the problem faced by our nation. Some students are looking for help from the government to pay for their schooling. Something that students could do instead is start saving at a younger age. In no way will this harm them. If they decide not to go to college they will have money in the bank to pursue whatever their dream is.

Over four years, on average, a student will incur almost $100,000 to get their degree. That is a crushing debt to have when you’re just starting out in life. A way to lower that would be to start working, and saving for college early on. The following is an outline on what a 14 year old would have to do to make about half of the money they need at the age of 18.

The student would have 8 years to pay for college. On average they would have to earn $12,500 a year. Obviously a 14 year old kid can’t make that in one year. However, they could make about $4,000 in a year. To do this a 14 year old would have to work on average 10 hours a week at $7.25 an hour. At the age of 15, the student could work to make about $6,250. This would mean that the student works an average of 15 hours a week at $8 an hour. At the age of 16 the student could work to make about $10,400. This would mean that the student works an average of 25 hours a week, at the same $8 an hour. At the age of 17 the student repeats what they did at 16. This is to account for any shortcomings in the previous years. At 18 the student will work an average of 40 hours a week. Let’s say that after four years of working the student now makes $8.25 an hour. This means the student will make about $17,000.

From the ages of 14-18 the student will make approximately $48,050. This is just under half of what they will need to pay for college. It could be over half if they stay home at a local college for the first year. Having this money saved would also wipe out lots of interest that would have accumulated on the loan taken out to pay for those first two years of college.

College debt is over $1.2 trillion dollars, with over 7 million debtors in default. There are many things that need to be changed about our higher education system, but I think the solutions begin with hard work, not the government. To earn the $48,050 would of course take lots of work, and sacrifices would need to be made.  The question is are the sacrifices worth it to earn your degree, and not add to the statistics?

Sources

http://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064

http://college.usatoday.com/2015/04/08/national-student-loan-debt-reaches-a-bonkers-1-2-trillion/

Getting out of Debt

Someone is struggling with money. They keep digging themselves into a deeper and deeper hole. They want to pay of their debts, but the payments are to high. Not to mention there are too many of them. What is this person supposed to do? Turn to Dave Ramsey's seven baby step plan.

Dave Ramsey is a financial author, radio host, and motivational speaker. Dave Ramsey has helped thousands upon thousands of people get and stay out of debt. And not just that, but build wealth and a legacy. The debt snowball method that he teaches has been proven by the Kellogg School of Management to be the most effective way to go about getting out of debt.

Here are the seven baby steps

1. $1000 in an emergency fund
2. pay off all debt with the debt snowball
3. 3 to 6 months of expenses in savings
4. Invest 15% of income into roth IRA's and pre-tax retirement plans
5. College funding
6. Pay off your home
7. Build your wealth and GIVE

Step 1

Step one is simple, set aside $1000 to pay for any type of emergency that might arise. Examples of this would be a car problem, emergency doctors visit, house repairs, etc.. When you have the $1000 you don't have to worry as much about something happening during the month, and then not having enough to make your payments. It gives you peace of mind.

Step 2

Step 2 is paying off all of your debts. You're supposed to do this using the debt snowball approach. This is where you pay the smallest debts off first. Ending finally with the largest debt. This approach is used for two reasons. First, by paying off a debt you feel like you've accomplished something so it gives you motivation to continue. Second, in the end you'll end up paying less money in interest. The proof of this second reason is shown in the Kellogg School of Management's study. They took a look at 6,000 unique cases and found that using the debt snowball approach you don't spend as much money as if you would do the opposite.

Step 3

Step 3 is setting aside 3 to 6 months of expenses. This is to give you extra peace of mind, and a way to deal with most life crisis that might arise. Such as losing your job, a family member, or suffering an injury that stops your flow of income. By this point in the program you should have a monthly budget worked out. So figuring out what 3 to 6 months worth of expenses should be easy.

Step 4

Step 4 is investing 15% of your income into roth IRA's and pre-tax retirement plans. This is basically just your beginning to setting aside money for your future.

Step 5

Step 5 is starting a college fund. Depending on your age this could be for you, or for you child(ren). The amount you can put in the college fund will depend on your situation.

Step 6

Step 6 is paying off your home. This should be the last debt that you pay off. After you complete step 6 you should be completely debt free for the rest of your life (or until you buy a different home). This is the big tipping point. Once you pay off your house you can really start building your personal wealth and giving to charities that you believe in.

Step 7

Step 7 is building wealth and giving. Once you reach step 7 you can start really building your wealth. By building wealth you can give your children a better future, and depending on how well you could even give their children a better future. This is the step that you can also give away more money to charities that you believe in and make a difference.


This is in no way an in depth look into Dave Ramsey's Seven Baby Step plan. It is just an overview, so you can decide if it is something that you might be interested in. I know that it has helped me to know where to put my money. It definitely helped my parents, as they are now debt free. In this day and age it is important to be debt free, and know what and how to handle your money. This is a good way to accomplish those goals. Best of wishes to you in your financial endeavors. Leave a comment if you know of a different, or better program!

The Best Teen Job.. Ever

I have tried and tested this job, along with many others. This is by far the best money maker you can have as a teen. What is that job? That job is lawn mowing. Yep, lawn mowing! If you have a mower this can be the quickest way to make some pretty easy cash. 

I make between $20 and $40 an hour from mowing lawns. It's hard to get the ball rolling in the beginning, but once you have your customers it's all downhill. Here are some tips for starting a successful summer lawn mowing business. Don't make the same mistakes I made! 

Okay, so the first thing you have to do is get your customers. You'll want to cut cheaper than the professional mowers around you. For me $20-$25 dollars for a normal residential lawn is a good price to ask. For that price I mow, trim, edge, and blow. 

The next thing you have to do, after getting your customer, is satisfying them through the entire summer. This can be hard sometimes, depending on the customer. Make sure that you do a good job every time. Not just when you think they're watching, because they see the lawn everyday. Make sure you talk to your customer. Ask them if you're doing everything they want.

This is the painful topic. Paying for gas and equipment. The price for maintaining equipment includes buying new stuff, repairing the old stuff. I worked out a deal with my parents to do this. I mowed their lawn for free and they pay for equipment maintenance. This is a sweet way to go about it. Another way to do it would be to split it half and half with your parents.

After the season has ended make sure that you let your customers know to keep you in mind for next year, if you plan on mowing next year. 

Don't be a copycat. Don't make the same mistakes that I did. 

Spending too Much

Am I spending too much? Could I get away with spending more? Am I just wasting my money on
stupid things that I don't need?

I ask myself these questions regularly. The answers are normally yes, no, and definitely. I spend a lot of time working. So I have a decent amount of money. I've found that despite having a good amount of money saved, I have wasted a lot. I sat down one afternoon to try and figure out how much money I'd spent on junk. Let's just say that that number is higher than I would like to admit. I spent a lot of money on stupid things, and didn't realize it, because I was staying focused on the amount in my bank account. BIG MISTAKE!

When you're making money keep an eye on how much you're making. Give yourself a budget. It's okay to spend some money on junk. But don't let your hard earned money go to waste. Make sure that you're saving money, on top of paying all of your bills. Duh!

Ask yourself these questions when thinking about buying something, that might not be worth it. Do I need it? Will it matter that I bought this in 1 week? Will it matter that I bought this in 1 month? Will it matter that I bought this in 1 year? From the answers you come up with, decide if you will make the purchase.

Pay attention to the money that you're making. The money that is coming in. Don't focus on the amount in the bank, after you've already wasted part of it.

Dont be a copycat. Don't make the mistakes I do!