Making Sense of Cents: My Crash Course in Personal Finance

I didn't really become obsessed with personal finance until after I'd graduated from university (specifically, when my student loans came due), but post-secondary education didn't come without its own financial lessons. I went into university knowing about as much about money management as I did about advanced statistics, but I came out knowing more than I'd like to about both.

There Just Wasn't Enough Money

My crash course in personal finance happened in my first year. As a student going to school without (I hoped) any parental financial assistance, I was relying on student loans to get me through. I stayed in residence and had a meal plan that was prepaid, so my first year financial management was limited to figuring out how I was going to be able to buy beer or go to a movie on the weekend.

A Baby Budget

I was just recovering from the trauma of my first exam period when I realized I was running out of money. I'd never budgeted before so I was just spending as I needed to. Which, as a first year student, was a recipe for disaster. So I took a crack at budgeting. My very first budget was hilarious. Basically I knew I had X dollars of student loan money that wasn't taken by my tuition, books, or residence fees, and four months left of school. So I divided that number by four, and tried not to run out of money before I ran out of month. I'm really lucky I had a residence meal plan to rely on, I hear it's hard to survive by eating air.

As I made my way through University, I eased into the world of personal finance, mostly out of necessity. I had student loans, and I was going to a very expensive school in an expensive city. There just wasn't enough money available to ignore my finances. After I moved out of residence and into my own apartment, I got more sophisticated with my budgeting tactics.

My budget began to flesh itself out, more line items were added for rent, utilities, and special events. It was still a rudimentary system but I was coming up short at the end of the month less and less.

Then Came Credit

I got my first credit card in January of my second year and I still remember the feeling of excitement that my brand new, $500 limit card provided me. Oh, the possibilities! I still remember the very first thing I charged to my card: A brand new pair of rubber boots to keep my feet dry while I sloshed back and forth to my co-op job down town. I think I had it maxed out in a month.

This credit card, with it's incredibly high interest rate, gave me first hand experience in how much it sucks to pay interest on purchases. After spending a few months treading water on the payments and then still more months of hard earned, low-wage income paying that sucker off, I banished my credit card to the realm of 'for emergencies only'.

What I Didn't Learn in Business School

The thing that's the most ironic about my financial education in university, was that absolutely none of it came from my business degree. I basically developed all of my knowledge through trial and error, and necessity spurred the evolution of my skills. While I was sweating it out trying to memorize the formulas to calculate compound interest and learning how to predict stock share prices, I was also muddling my way through my first budgets and hating my high interest credit card. I never made the connection between what I was learning in school and what I was struggling with day to day. We'll call that a failure by the curriculum to connect abstract concepts to real world applications and leave it at that.

What I Learned from University

I came out of university with $26,000 in student debt. That number seems high, but I'm really thankful that it wasn't higher. When it came to money in university, for me, scarcity was the mother of invention. I didn't have access to much credit, and I tried as much as possible to avoid asking my parents for help. I just didn't have it, so I had to be careful with my pennies.

So I budgeted, and I'm so glad I did. While $26,000 in debt sure seems like a lot, if I hadn't been forced to learn about personal finance, or had been given easy access to credit, it could have been much, much worse.

I've already paid off $10,000 of that debt since I started paying on my loans ten months ago. I owe a lot of my ability to be frugal and disciplined with my income to what I learned about personal finance in university - whether I wanted to or not.

Jordann is a part time runner, yogi, local foodie and personal finance aficionado, and a full time marketing professional living and working in Atlantic Canada. She writes about her life at her blog, My Alternate Life.

Michelle's comment: I don't think I can say thank you enough Jordann for guest posting for me. Her blog is one of my favorites, just so everyone knows. Congrats on paying off $10K already. I owe around $30K, and plan on having it paid off by early of next year. It'll require a lot of frugality, but I know I can do it. Can't wait until it's gone!

Source: http://www.makingsenseofcents.com/2012/09/my-crash-course-in-personal-finance.html

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