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Borrow Wisely

Image of family statue in front of Graduate School of Business.

College doesnít last forever, no matter how hard some of us try. At some point, youíre going to graduate and want to buy a house and a car. How you treat your finances during college will greatly influence your ability to make large, life changing purchases after college.

Try to avoid these costly mistakes:

Mistake #1: Taking Out Payday and Title Loans

No. No. No. Do not take out a payday loan. These are by and large traps to trick you into never-ending debt.

Mistake #2: Failing to Opt Out of Overdraft Coverage

Banks donít like to advertise that you can do this, but you can (and should) opt out of overdraft coverage. Overdraft coverage is not your friend.

Say you purchase a song online and overdraft. Your bank temporarily pays for the song, plus it charges you an overdraft fee of $25.00.

What this means is, you just took out a $0.99 loan, with a 2,500% interest rate, to pay for that song.

And thatís just one overdraft. Banks will usually let you overdraft a few more times before they finally put a hold on your account. Each incidence is another overdraft fee.

Mistake #3: Credit Card Debt

Credit cards are extremely easy to use. Thatís a bad thing.

Credit card companies and banks are counting on you to not understand the terms of your credit card, and to spend more than you can pay off. Banks make their profits when they can charge you a fee, or keep you paying interest on a balance youíre unable to pay off.

Donít fall into their trap. Take a Bevonomics Course. Get financially literate. Pay off your credit cards every month.

Mistake #4: Ruining your Credit Score

Credit cards arenít the only way to impact your credit score. Utility and cell phone bills that you let end up in collections. Unpaid tuition. All of this can be reported on your credit report. Those missed payments will be a drag on your credit score for seven years, severely impacting your ability to take out a loan for a car or a house.

Mistake #5: Using Financial Aid Inappropriately

Many students receive a check for the remaining balance of their financial aid at the beginning of every semester. A few use it irresponsibly.

Resist the urge to spend it all. Fancy new TVs, fun vacations and designer clothes can be a lot of fun, but theyíre a lot more fun (and attainable) when youíve graduated and you're working full time.

If you have extra money released to you, remember you have to make it stretch until the end of the semester. If you still think itís more than you need, consider using it to pay off some of your student loans. Or save it for a rainy day.

Mistake #6: Not Budgeting

Create a budget, and stick with it. This is an important life skill, and can be the difference between living comfortably and living paycheck to paycheck.

Mistake #7: Not Attending a Free Bevonomics Course

The Office of Student Financial Services offers free workshops in personal money management.

Theyíre fun, and full of information you will use for the rest of your life.

Visit Bevonomics for seminar dates, plus budgeting, savings, and credit resources.

Office of Student Financial Services · The University of Texas at Austin
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Updated 9 March 2015