TL;DR: It was terrifying, but necessary.
I’m not proud that I’ve been in college three years and have just started learning about my student loans. In fact, I’m ashamed. Recently, I’ve been trying to take charge of my money matters since I live off-campus and have bills to pay. (More like: my parents have bills to pay but I let them know when the bills are due and how much. I do have some responsibility.) I track my spending and make a budget for each month: groceries, eating out, extracurricular expenses, etc. In short: the short-term stuff.
But over this past winter break, I started spending time on the Reddit subreddit r/personalfinance, as per my boyfriend’s advice. (In less than six months he’s built an online business handling almost $1000 per month, so I consider is financial advice to be A+.) r/personalfinance is a gold mine for practical information from people who both struggle and thrive with money. I learned about not leaving a balance on your credit card, how to calculate an appropriately-sized emergency fund, how much is reasonable to spend on groceries as a college student? I also faced the looming monster threatening to swallow my (read: my parents’) wallets up: student loans.
I asked my dad how much debt I’ve racked up. He looked from me back to the TV screen, clearly agitated and, instead, told me how much he collectively pays for my and my sister’s loans monthly. I suppose it was an effort to keep our finance status obscure enough that I don’t worry about being excessively frugal at the expense of my middle-class lifestyle.
But throughout break, I kept asking about when should I get a credit card? Could I be a joint account holder until then? How are we paying for my sister’s law school tuition? I suppose my dad realized I wasn’t going to let up on my determination to be able to plan my long-term financial situation. He revealed something disheartening: he wasn’t paying off student loans for two daughters. He was paying off student loans for me, my sister, and himself. I had forgotten he went back to school to further his degree. He said I’d be helping to pay off my loans at almost $1000 per month by the time I graduate. I felt lost.
But now everything has been put into perspective. I am so behind. Looking at my bare minimum monthly living costs now at my off-campus house ($350 rent, $20 electric, $20 internet/TV, $140 groceries), I’d need an emergency savings fund of at least $3000 for six months (according to r/personalfinance). That doesn’t include loans or gas or medical expenses. And this is all my parents’ money because I don’t work.
I know they won’t pay for my life forever. I also understand that life won’t just “fall into place” when I graduate. There’s no getting the dream job (I don’t even know if I have one.) and making bank without having a plan for it. So I made a plan, and probably an unrealistic one. I looked up the area where I’d be interested in living later in life. I researched apartment rates, average utility bills, grocery costs, projected student loans, and other living costs. I calculated how much I’d need to make annually in order to live the comfortable middle-class life, hopefully with a partner. And I worked backwards from there. That is the life I want, these are the jobs that can afford me that lifestyle, these are the requirements for that job, this is how I complete those requirements, this is what I can do to get there now.
I know it won’t amount to much. None of those numbers will stay the same for the next ten years. Life circumstances will get in the way. But it was a step to motivate me to become more active in shaping my future. Student loans are a terrifying thing to face, but it does all come down to working hard. Take a step. You don’t have to go looking for apartments like I did. But look consider what you want your future to look like, and work backwards from there to plan the steps.