I’ve decided to start a series that I will call Learning from Money Mistakes. The inspiration for this series is simple: I’ve certainly made my share of money mistakes and I suspect others have as well. Mistakes become valuable lessons when we learn from them, right? So let the learning begin!
Probably one of my biggest past money mistakes was living too high on student loans back when I was in school. The crazy part of this is that I actually made it all the way through my undergraduate years without student loans; it was not until graduate school that the loans began. During undergrad I lived off scholarships and income from not 1, not 2, not 3, but 4 part time jobs at one point. Also I got a little bit of help from my mother and stepfather. I graduated with zero student loans.
Cue graduate school. It was expensive. There were far fewer scholarships available and the course load was unbelievable. Most of my fellow students took out loans since most of us were not working due to the crazy course load. I thought that I was just living “how everyone was living,” and maybe I was. But looking back I can see that I could have cut back more. I lived in a midwestern college town in a two bedroom apartment by myself for a couple years- I totally could have found a roommate, but I made excuses like I needed it quiet to study, roommates are too much hassle, etc.
Here’s the worst of it- I am ashamed to admit that I took a trip to Mexico and paid for it with my student loans. One whole week in Mexico, and my hotel, airfare and every single margarita was paid for courtesy of my student loans. At the time I justified it with all the usual reasons: I’ve been working so hard- I really need a vacation! I deserve this! What’s a few more dollars added to my student loan debt?
I recall very clearly having a classmate, “Laura,” who lived much more frugally than the rest of us seemed to be living. She talked openly about how she was trying to graduate with as few student loans as possible. While the rest of us just seemed to randomly find places to live, Laura managed to figure out that in our state students who are not earning income are eligible to live in low income housing. She took her time finding a place to live until she found a landlord who would accept her low income housing allowance, which allowed her to save a lot of money and cut down on her housing expense considerably.
Fast forward a few years. I am sure Laura is doing quite well; she is probably still living frugally and almost certainly making smaller student loan payments than I am. I took a few more years to learn the frugality lesson (starting to make the payments on the student loans was a big wake up call for sure 🙂 ), and hopefully I am now making up for it. However, because of the mistakes of my past I will be saddled with increased student loan payments for quite a few more years (unless we pay it off early, but it is actually locked at a super-low rate so we are focused on other financial goals at this point).
So what is the lesson here? Well, I have certainly learned my lesson about the responsible use of student loans, although since I am most definitely not ever going to be attending school again it is sort of moot. For me it is a lesson in the importance of living well below your means (and for goodness sake if you are living on borrowed money you need to be living a very no-frills existence in order to minimize the amount you have to pay back!) It is a very valuable lesson- it just cost me a little too much to learn it. 🙂
I also think that this experience will have a big impact on how we raise our future children. We are in the process of trying to adopt at this time. Had I myself had better financial education or knowledge I wonder if I might have made better choices when I was in school. I really think that it is so important that children receive a financial education as well as an academic education, and I hope that we can provide our children with that.
Are there any expensive lessons that you have learned the hard way in your past? If so, do you think there is anything that anyone could have said or done to change your behavior before you made the mistake?
Photo credit: Omar Reyes, http://www.flickr.com/photos/bitesizeinspiration/
It’s hard to be responsible and have the foresight to take out fewer loans when the norm is to spend on all those extras.
I agree. I’m glad that lenders are starting to educate students a little bit more these days, hopefully that will help others from making the same mistakes I did.
You’re very candid in mentioning that you took a trip to Mexico using your student loans (not many people are brave enough to mention their mistakes in public) but it’s not entirely your fault. I say that because I recently blogged about student loans and know that for many students, getting a loan when entering college is their first encounter with debt. Credit companies give away loans so easily and it’s difficult to control your spending when you suddenly have so much money in your pocket. The main thing is that you’re working your way towards a financially-prudent life!
I would agree that I had little experience with debt prior to that. You know, I often feel thankful for the fact that I graduated at a time when student loan interest rates were at an all-time low. That’s the only thing that is helping me out now- I was able to consolidate at a great rate when I graduated. But I feel terrible for those who are as ignorant as I was and who are in school now at a time when interest rates are much higher. It’s a more expensive mistake if you make it today, and I fear lots of students are making it! Thanks for your comment.
You’re right. A lot of students are suffering today. I recently read around $1 trillion in student loans was outstanding in mid 2013. That’s a lot of people struggling to pay their debts…
Oh my gosh, that’s staggering. All the more reason why we need much more emphasis on financial education for our children.
You’re definitely not the only one who has lived the high life on their student loans! Unfortunately, you just don’t realize what a bad idea it is at the time…..especially when you’re in Mexico having drinks with friends! But, the bill always comes due eventually =/
No kidding! Good to know I’m not the only one I guess 🙂
Shannyn @frugalbeautiful.com says
I paid my undergrad with scholarships and a part time job…but when it came to graduate school, despite my diligence, there were no scholarships or financial assistance to be had for my program and the school was particularly unhelpful.
Tuition was sky high so I made it work by having two roomies, getting rid of my car and living in a low cost area. I made $800 a month and sometimes it didn’t cover what I needed it to… it was rough. I still think of living on the 4th floor walk up with no air conditioning and no elevator and how buying a $10 scarf made me feel so guilty. I still graduated with a hefty student loan and I just used it for tuition..school is stupid expensive.
Thanks for posting this- though our experiences were different, I know your story is similar to a lot of folks out there. Many of my sorority sisters from undergrad reach out to me (since I blog about debt free living) and ask me how I managed, but I remember seeing them take trips and living in much nicer digs than I did so I know it’s pretty common! Good on you for tackling your debt and working on it!
Thanks, we are really wishing now that we had lived much more frugally in school. Hopefully through this blog I can reach out to others and help prevent some people from making similar mistakes!