So you’re a few weeks into the new semester. Classes have started, you’ve made copies of the 75 pages your professor has assigned you out of her new book (never pay for the whole book), and you’re awaiting the most glorious part of the semester: refund check week. Before you buy those Yeezys, book spring break, or otherwise blow it on something reckless, back away from the ‘confirm’ buttons, and continue reading!
Let’s address your first question: Why should you listen to me? Well for one, I’m not that far removed from college life that I don’t remember the excitement of seeing that refund hit my student account. Freshman year, that thing would be gone almost as quickly as it would get deposited. TBH, my husband is on the law school grind, and it still takes discipline to turn down financial aid refunds.
Further, hindsight is 20-20. Two degrees later and all the student loan debt to show for it, I’d go back and tell my 17 year old self to avoid making the whole any bigger. In the end, it’s just not worth it. I’ll spare you the lecture on personal responsibility and move on to the list of things I want you to do with your refund instead.
Only Borrow What You Need
I know you hear this all the time. But It’s tempting. They just put all those thousands of dollars right out there for you. How can you not take just a little extra to use for spring break in London? After all, that is part of your learning experience, right? Nah. If your school has been a little too generous with amounts they’ve designated for you, (and be honest, you know when it’s too much), go talk to your financial aid office and make some adjustments. Don’t let them tell you it’s impossible. If they for some asinine reason won’t allow you to adjust your aid, create an account with your loan servicer, and make a payment toward the earliest loan that you have taken out. I encourage you to gain an understanding of how student loans and the repayment process works BEFORE graduation. I’ll have a future post on this, but for now start here.
This is an obvious one. At it’s core, refund checks arise from housing or other costs that were factored into your total cost of attendance. So it follows that the primary use of these funds should be for your books and reasonable living expenses while attending school. If you live off campus, use your refund check to pay 4-6 months of your rent, utilities, and even your cell phone bill for the semester. If you’re really disciplined, you’ve already established a monthly budget. Therefore, you should know exactly how much you need for groceries and incidentals. Calculate your groceries and incidentals for the term and move it into a separate account, that way you’re not tempted to overspend, leaving you left with nothing come April. Each month, move your monthly allotment into your regular checking account for your monthly purchases.
Play Catch Up
I’m not a fan of taking on debt to cover debt. I think it’s generally a terrible decision because you’re just kicking the can down the road and incurring more interest. As a student, however, your options are limited. It makes more sense to eliminate high interest debt, and high risk items as soon as possible. That means, don’t be that guy who’s 35 years old with outstanding warrants from his college parking or speeding tickets. Don’t be that girl who’s racked up thousands in credit card debt, at astronomical interest rates, from overspending. Use this refund check to pay those items off in full and do better going forward.
Will your car need new tires? Is your laptop on it’s last leg? Are you interested in a summer internship or volunteer opportunity, that won’t pay much (or at all)? Use your refund check to tuck funds away towards these expenses now so you’re not scrambling later.
Do you have questions that you need answered? Feel free to contact me with your QOTD. What financial advise would you give your younger self?