If I Could Do It All Over Again: Advising Myself At Age Eighteen

Ten years ago, I was in the midst of my freshman year in college. I had very little concept of money or what to do with it, but at that point I still had an overall positive net worth. If only I knew then what I know now, I sometimes think to myself, particularly when I look at the financial disaster of the last ten years.

So what would I tell myself if I had that chance? Here are the ten pieces of advice I’d love to tell that college freshman:

The less stuff you buy when you’re in college, the better off you are. Why do I say this? In general, my decision making in terms of what items to buy when I was in college was at best poor and at worst disastrous. I would buy things like furry hats and tee shirts with pictures of gophers on them. Why? I didn’t actually know then, and I certainly don’t know now. In general, I would have just encouraged myself to think more about each thing you buy and simply ask myself if I really needed it. If I didn’t, just put that money in a savings account somewhere rather than buying a giant poster of Hulk Hogan.

Live in the dorms for as long as possible, especially if you’re on scholarship. If your tuition, room, and board are free, as they were for me for a few years because of ample scholarships, you are a fool if you move off campus. Not only are the costs of food and housing going to greatly increase, but you’ve suddenly added transportation costs to the mix, along with the extra travel time you’ve added to each and every day.

Get a credit card, but only use it to buy textbooks. The reason for this is to build credit in a healthy fashion but avoid the temptation of using a credit card, as in the plan described here. I got a few credit cards during my college years and I made very stupid purchasing decisions with them; even though I kept the bills paid, I swallowed a lot of finance charges. I’d love even now just to have the cash I dumped into finance charges if it had been left in a good savings account for five or ten years.

If you get student loans, minimize the amount of the loan. I had to get loans for my final two years in college. At that point, the loans allowed me to borrow about six thousand beyond the cost of room and board, so I took that to essentially mean a low interest credit card, and I borrowed the maximum possible. It was a big mistake that I’m still paying for. Get what you need for room, board, and enough for textbooks and keep living in the dormitory. That way, there’s no temptation to spend that loan money on stupid things.

Assuming your dorm life is covered, put at least half of any pay you receive into a high-yield savings or money market account. Living is cheap now, but when you graduate you’re soon going to have a ton of expenses rain down on your head. You’ll need a good car, you’ll have a wedding and honeymoon to pay for, a child to care for, and a house to buy. Help that future self out a little now. If you’re adventurous and actually have some financial grounding, you can invest it, but don’t invest too much in it.

Never, ever buy an article of clothing that costs more than half of the last paycheck you received. If you’re buying such expensive clothes, it is a red siren that you’re heading down a road laden with debt that you’ll be digging yourself out of for many, many years. You’re in college; you’re probably going to buy some unnecessary stuff. But do you really need a $300 pair of jeans or a $500 sport jacket when you can get virtually the same item for much less money? Is it worth mortgaging your future for?

Find cheaper ways to maintain your hobbies. In college, my biggest hobbies were reading, writing, listening to music, going to movies, and playing Hearts. In almost every case, I spent wildly on these hobbies, but just a few changes would have saved me a lot of money that I could have put away for the future or perhaps not borrowed as much on my student loans. Instead of buying two new books every week, I could have gone to the local library. Instead of buying exquisite leather-bound journals, I could have just bought a cheap notebook. Instead of buying three CDs a week, I could have listened to student radio (it was playing almost exactly the same stuff I was buying – and it was free). Instead of going out to a movie every weekend, I could have watched some of my DVDs or borrowed some or went to one of the free movies on campus. Instead of playing nickel-a-point Hearts, I … well, there’s not a good replacement for that one, but by the end of my final year, I was actually making good pocket money at it. In short, my hobbies ate up a lot of my money in school – a giant mistake.

If I had followed these eight guidelines in college, I would be debt free right now and have a house down payment; instead, I have only a bit saved towards a down payment, I have tens of thousands in student loan debt, and I just now paid off all of my credit cards.  Was that furry hat really worth all of this?