Managing your Money
The UNCW Office of Scholarships & Financial Aid is dedicated to helping our students be successful academically, as well as personally and socially. Therefore, we have created this web page to help students better manage their money.
We understand the financial challenges facing college students. The rising cost of tuition, combined with an increasingly broad range of available financing options, requires that today’s college student know the ins-and-outs of balancing spending and saving, as well as understanding how to use--and not abuse--available credit. We’re committed to providing you with the information you need to successfully manage your finances--and improve the quality of your life, both now and in the future.
We hope that by using this site, students will learn to create and use a budget allowing them to be smart planners. Also, it is our intent to educate students to understand their student loans and credit cards and become informed borrowers and spenders.
Build Your Budget
What is a Budget?
A budget is an itemized summary of probable expenses and income for a given period. Or, you may prefer to think of it as a way to keep from running out of money before you run out of time! No matter how you refer to it, it’s a tool to help you prioritize your spending and manage your money--no matter how much or how little you have.
How to Begin
If you’re like most people, you don’t know exactly where all your money goes. You have more than likely discovered, at a most inconvenient time, that yours is gone!
So, for the next few weeks, jot down every amount you spend. include snacks, meals, gas, bills, laundry, clothes, toiletries, postage and entertainment. Beside each item, write down whether you paid for it by cash, check or credit card. You’ll be surprised to see how much you spend on some items--and how much impulse spending you do. It’s likely you’ll spot some areas where you can cut down without big sacrifices.
Step 1: Determine Your Monthly Income
Add up any money you take home from jobs, student loans and scholarships, or any regular support you may receive from your family. Remember, a credit card is not a source of income.
STEP 2: Figure Out How Much You Spend Each Month
Fixed expenses are expenses that you have to pay every month, like rent or car payments. These are the expenses that you can’t really change.
Variable expenses are expenses that change from month to month, such as books, eating out or buying clothes. These expenses are the ones you can vary by changing the way you spend.
Once you’ve determined all the amounts you’ve spent in a month, add them up to get your total. Don’t worry if at first you use rough estimates. It may take a few months to know exactly what you’re spending. But once you figure it out you’ll have a good idea of what you’re spending and where you’re spending it.
Step 3: Figure Out What You Spend Each Month
Determine whether what you spend each month matches your effective monthly income. Add your total fixed expenses to your total variable expenses. This will give you your total monthly expenses. Subtract your total monthly expenses from your effective monthly income. The result is the bottom line.
STEP 4: Determine If You’re Spending Too Much
A budget doesn’t really change the way you spend. But it will show you where changes need to be made. If your expenses are greater than your income, you’ll need to cut back. Make sure that you’re paying monthly expenses out of your income - not your credit. Don’t rely on a credit card to cover shortfalls in cash - or your balance will soon snowball into a huge debt. If you do have a shortfall, you should review your budget to see where you can cut expenses. Look at your variable expenses. Which ones can you cut back on?
More Ways to Keep Better Track of Expenses
Start keeping a monthly expense record. Carry a small notebook. Each time you buy something, write it in the notebook. Be sure to record ATM withdrawals and what they’re for. Track every penny you spend. Do it for one month.
Buy some ledger sheets or graph paper. Enter the major expense categories from your budget worksheet across the top. Record all purchases and paid bills underneath. Add each column up at the end of the month. Then compare it to your initial worksheet. Make adjustments to your estimates as you go along.
The goal is to get a picture of where you’re spending your money. Your budget should be based on what you really spend, not what you think you spend.
Now that you have worked out your budget you should be able to set your own limits of how much to borrow each year. Talk with your financial aid counselor, it could be possible that you are borrowing more than you need and are accumulating unnecessary debt.
Graduating from college with student loan debt is common today. Your student loans are serious commitments, and you need to be sure you pay them off on schedule. But if your loan has an attractive interest rate, don’t be in a hurry to pay it off early; you might be better off making the regular payments and using the additional money to build your personal savings.
Understand the terms and conditions of your student loans. It is important to know when your deferment is over and repayment begins. Realize interest rates are not cut and dried. Interest rates are generally variable and will change. Also, when interest begins to accrue depends on the type of loan (subsidized/unsubsidized) borrowed.
If you are experiencing unusual circumstance and find it difficult to make your monthly student loan payment you may want to contact your lender and research various options.
If you have loans from various lending sources you may want to consider Consolidation. Consolidating your loans will allow you to have just one student loan payment per month. However, consolidation often costs the student more in total loan repayments.
To find out more about your loan, interest rates, repayment, and/or consolidation contact your lender. Should you need assistance determining who your lender is, contact the financial aid office.
Common lenders used by UNCW Students over the past years:
William D. Ford Federal Direct Loan Center
College Foundation of North Carolina
You already know how to use your credit card for purchases. And you may think that’s all you need to know. Actually, you’ll find it interesting and helpful to understand some basics behind credit cards. By using your credit card wisely and always paying your bills on time, you’re building a good credit history. This can help lay the foundation for your future success.
Your credit card account is actually a type of contract; in this case, it’s a contract with your credit card issuer. In exchange for the right to use your credit card, you agree to repay the amount you charge or borrow with the card. In many cases, you may also be required to pay interest on the amount you charge, particularly if you revolve, or carry over a balance on your account from month to month.
To avoid charging more than you afford to pay back, think about how you’ll use your credit card.
- Track your credit use. Set up a register, similar to your checkbook, and record your credit purchases.
- Limit the number of credit cards you have. Creditors may consider the credit you have been granted, but haven’t yet used, as an existing loan.
- Set a personal credit limit for yourself. For example, just because your credit card issuer has given you a $1,000 limit doesn’t mean you need to charge $1,000 in purchases.
- Subtract your credit purchases from your budget so you don’t over spend: once it’s charged, the money is owed!
- Be as serious about credit card debt as you would be about getting a bank loan for the same amount.
- Plan your credit use ahead. What expenses are you going to have? Determine if your income will meet them. If not, decide which type of credit is most appropriate for you.
Paying Your Credit Card Balance and Interest
Paying on time is a reflection of your conscientiousness about your obligations. You can avoid paying interest charges on purchases by paying your bill in full each month. Credit card issuers could charge extra fees and increase your APR if your payments are late. Please be sure to read and understand the statement of terms and conditions that arrived with your card.
- The minimum monthly payment: Your monthly statement shows a minimum payment due amount. This is not a recommended payment amount, but rather, the absolute minimum amount you must pay and the date by which you must pay it to keep your account current. If you do carry a balance, it’s a good idea to minimize interest charges by paying off your balance as soon as possible.
- Pay more than the minimum balance for long-term savings: If you can, you should think about doubling or tripling the minimum due to pay off your balance faster and pay less in interest. Paying more than the minimum due can save you a lot in interest charges.
- Annual Percentage Rate (APR): APR is the interest rate, on an annualized basis, that you pay on balances. If you carry a balance, the APR is the best indicator of what credit costs. The higher your APR, the more you will pay. Some credit card companies offer lower introductory rates for a limited period of time. Afterwards, these rates usually go up to a higher APR.
- An Example If you just paid the minimum due on a $1,000 balance, you’d wind up paying more than $800 in interest charges and it would take you more than 7 years to pay it off. That’s assuming an APR of 18% and a minimum payment of 2.0% of the balance, or $20. To calculate the rate each month, divide the APR by 12. For example, if the APR is 18%, the monthly finance rate is 1.5%.
When You Are Having Credit Problems
Be careful not to get into trouble with credit. You can tell if you’re getting in over your head with credit if:
- You’re regularly using your credit cards for daily expenses.
- You’re using cash advances from credit cards to pay other creditors.
- You’re paying the minimum amount or less due on your bills each month.
- You’re always late with bill payments.
- You don’t know how much you owe.
For more details on your credit rights:
United States Federal Trade Commission (FTC)
National Consumer League
If you find you have debts you can’t pay back within 12-24 months, not including your student loans or mortgage, then you may have a credit problem. If you think you have this kind of problem, get help from a non-profit consumer credit counseling service.
|Consumer Credit Counseling Of Wilmington
4016A Shipyard Blvd.
Wilmington, NC 28403
|Consumer Credit Counseling
(for the location nearest you, call)
|National Foundation For Consumer Credit
These companies compile your credit history to create credit reports. It’s very important to make sure there are no errors on your credit report. You can request a copy by calling the three main national credit bureaus:
Information Service Center
P.O. Box 740241
Atlanta, GA 30374
|Trans Union Corporation
National Disclosure Center
P.O. Box 390
Springfield, PA 19064-0390
National Consumer Assistance Ctr.
P.O. Box 949
Allen, TX 75013-0949