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Avoiding student loans and being able to graduate debt free from college or university has become a luxury for most people these days. The worsening levels of consumer debt and pitiful savings rates are compounded by young people leaving school burdened by mountains of student loans that can take years to climb out from underneath.
If you read the newspaper or follow social media, it’s not uncommon to see details of how much tuition rates have risen and past years and forecasts for future escalating costs. As a parent, it’s almost enough to make me join the 47% of people who are losing sleep due to financial stress.
Don’t Worry. Be Happy. Graduate Debt Free
But I’m actually not that worried about how my kids will pay for university. Of course, we’ll help them out with the costs. We’ve already set a plan in place where we put money aside each month to support them as they fund their education. But they will most definitely have skin in the game. A lot of skin.
One of the reasons I’m not worried is because I was able to be debt free from university less than a year after I graduated. And I took a year off from formal studies to attend a Bible school in Austria, travel extensively throughout Europe and work.
Now I know that was a few years ago (I’m older than I look), but the principles that allowed me to start off my career on a solid financial foundation are every bit as applicable today as they were almost 20 years ago.
They involve the timeless characteristics that allow anyone to get ahead financially. Specifically applied to graduating debt free and starting your career unhindered by your finances, they provide an amazing foundation for your money.
So How’d I Graduate Debt Free?
1) I lived at home
What? You lived where? At home? Like with your family? And your parents? And your siblings?
Yes, yes, and yes.
I made the conscious decision to forgo the living with roommates experience, and the party-hearty, alcohol-centric, I’m hungover and it’s Wednesday…I think, culture that came with it.
This decision isn’t for everyone. I’m not a big partier or a boozehound, in part due to my personal convictions, and because I’m Scottish. I have a hard time paying $8 for a beer when I have a 6 pack at home I paid $12 for. It’s just in my genes (thanks Grandpa).
I also am fortunate enough to have awesome parents who I respect and get along with. I know that’s not the case for everyone and some people are just itching to move out when they turn 18, or in some cases, before.
But I wasn’t, and the decision to stay at home saved me thousands of dollars.
The average total cost for a year of college or university in state is around $25,000. In Canada, it’s about $5000 less, not taking the current exchange rate into consideration. (Out of state or province costs more as we’ll talk about in a bit). Of this, around 40% is tuition. A whopping 40% went to room and board, 8% to groceries, and 4% to traveling home.
Annual Savings: $10,800
2) My parents paid for my books
My parents were incredibly generous to me in letting me live at home, but their support didn’t end there. They also paid for my books each semester I was in school. The cost of books is estimated to be around $1250 (it’s significantly less in Canada at about $800/year).
Thanks mom and dad!
3) I didn’t party
As I said above, my upbringing and heritage both nudged me towards only enjoying the most occasional of beers on campus or while out with friends during my university days. I’m not as frugal these days, but it still pains me to cough up the cash and pay the premium for a beer at a restaurant and it doesn’t happen often. It was even more rare when I was surviving on a pittance of a monthly income in school.
It’s estimated that 3% of the total cost of university is spent on alcohol. Maybe I’m “tighter than bark to a tree” as my mom would say, or maybe I just like to invest my money in things that actually pay dividends in the future, and not the kind that come with a hangover and regret.
Annual Savings: $750
4) I worked crappy jobs, with high pay
When I say I worked crappy jobs, I mean that literally. While in high school I was an excretory technologist.
That’s industry jargon for a porta-potty repairman.
It was my job to suck out the human waste from the porta-potty tanks, fix any damage that had been done by our most courteous patrons (beer league softball players and concert goers), and clean the honey holes so they could go out for the next event.
After several months proving my worth, I was promoted to sanitary engineer (read garbage man). I’ve never hated the rain as much as I did then, slinging bags and bins of trash for hours on end. Going through multiple pairs of socks in a day gives you a real appreciation for the merits of continuing your education.
Take the Longview
I had a few other jobs that weren’t as bad, but I generally looked for jobs that paid well. This often meant these were positions that involved unpleasant and/or monotonous work.
Taking the long view and knowing WHY I was enduring these awful jobs, to save money to pay for my schooling, helped me get through many long days riding on the back of the garbage truck.
I averaged about $15/hour during my summer employment days. The average minimum wage from 1999-2005 where I lived was $7.50, which is what I probably would’ve made if I’d chosen something easier like retail. This means I made an extra $7.50/hour. If we assume I worked 40 hours a week for 16 weeks or 4 months (the length of summer for a university student) this works out to:
Annual Earnings Difference of $4,800
Adjusted for Inflation today = $6,500
5) I traveled cheap
My first car was a 1989 Toyota Tercel Hatchback. I paid $1,900 for that beauty.
Wow, was that car a dream…on gas.
And that’s about it.
It burned more oil than gas which made it a necessity to carry a 4L jug of Quaker State in the trunk.
My second car was an ‘85 Jetta Diesel that cost me around $5,000. Sunroof (with manual crank), also great on fuel, and it didn’t have the same oil habit as the Tercel. It was awesome… above 5 F/-15 C. Any colder than that and it wouldn’t start.
Now living in Canada, dipping below those temperatures is not uncommon. We even have a term for it when it gets that cold.
I can remember on one particularly cold day the door latch mechanisms freezing and my doors refusing to stay closed. My girlfriend had to ride in the back seat and hold the door shut while we sought the refuge of a heated garage or car wash.
When not rolling in style in my own wheels, I took the 414, otherwise affectionately known as the bus. It wasn’t fancy, but it got me from A to B. And it didn’t require periodic motor oil therapy or an extra set of hands to operate it.
Point is, my rides during that period of my life were cheap. They were not fancy or even at a minimum even nice. I made the sacrifice to travel cheap in order to save my money.
One estimate is that around 2% of annual college costs are transportation and 4% are using a car to travel home. With traveling so cheaply, and buying less expensive used vehicles up front, I’d guess I saved $500-$800 annually.
6) I packed my lunch
This was an easy cost savings, and continues to be to this day. These costs add up:
$10 for lunch/day. That’s $50/week and $200/month. Going to school for 8 months leaves you with a total lunch bill of $1600 per year.
Me bringing lunch = instant savings, especially since I lived at home. But even if you lived on your own and have to buy your own groceries, the savings from bringing your lunch can add up very quickly.
7) I went to a public, local university, not an out of state/province private one
Private universities are way more expensive than public ones.
And, local schools are often cheaper than ones out of state/province. For the average American, the difference works out to be an extra $15,000/year. If you want to go to a private college, it’ll cost you $25,000 more.
It’s similar, though not as bad, in Canada. In my town, the large local public university tuition and fees come in at $8,133/year. At a popular, private school out of province, the tuition is around $22,000. Yikes.
The bottom line? Staying local and going public can save you HUGE money.
8) I lived below my means and saved
At this point you may be thinking that I’m a pretty lame guy. I haven’t exactly painted you a compelling picture of what my life was like during these years: I worked with crap and garbage, never partied, went to a local, public school, drove terrible cars and lived with my parents.
Not exactly livin’ la vida loca.
But my life was actually awesome. I had great friends who were a lot like me.
Not many of my friends were really spenders. We were mostly from solid, middle-class homes, with parents who had taught us the value of money and hard work.
And so we did middle-class things. Instead of going out and blowing our money on nights out at the bar and expensive spring break trips to exotic locations, we’d play hockey and then go grab food after, or play tennis and drink big gulps on warm summer nights, or go to the lake and hang out around the bonfire. It was good. Very good.
And generally, it was pretty inexpensive.
An Important Principle
In his amazing book, The Millionaire Next Door, Thomas Stanley describes occupations that tend to have high net worths. You’d think they’d be doctors, lawyers, dentists.
Not only do these jobs require advanced degrees that cost a TON of money, but there is a cultural expectation placed on these professions: drive a nice car, have a big house, have a vacation home with a boat, take nice trips regularly, etc. It can cost a lot to keep up the profile of a successful professional.
And since our social networks are often built of people with a similar socioeconomic status, these professionals often feel a lot of pressure to keep up with the Joneses. This leads them to spend more than they have and they often have low net worths, contrary to what they look like from the outside.
On the other hand, what occupation tends to have a large proportion of high net worth individuals?
Yep, that’s right. Teachers.
Not because they make a lot, but because they DON’T make a lot.
There’s not the pressure to wear beautiful designer clothes, drive sweet wheels, and have a massive home and kids in private school. And they hang out with people in similar income brackets as themselves. As a group, they are frugal and do not overextend themselves.
As a trained teacher now, I think some of those characteristics were just innate to me. Living below my means, hanging out with similar people, and not overextending myself financially allowed me to save a lot of money during high school and university to pay for school.
9) I lived at home AFTER I graduated
Yes, that’s right.
And you thought I was lame before.
But hear me out.
After having done 5 years of university education (I did 2 degrees concurrently), going to school in Europe for a semester and traveling, I graduated with about $15,000 in student loans.
My parents graciously agreed to let me live at home and pay a pittance in rent. It was basically free.
During this time, I worked as a teacher and paid off my debt like a madman. I was so single-minded that I was able to have it wiped out in less than a year.
Again, this may not be for everyone. But for me and my situation, it worked. And I’m thankful to my parents for helping me out in this way.
10) I chose a degree with a solid return on investment (ROI)
When I was deciding what I wanted to be when I grew up, money was never a factor. Fireman, doctor, hockey player. It was all about the excitement.
When I actually grew up, money became a consideration in my decision.
Now I’m not saying it was the only factor or even the primary one. It wasn’t. I mean, it’s not like teachers get rich from their extravagant paychecks and multiple income streams (Millennial Money Man excluded). I could’ve opted for a career where the trappings of wealth were more prominently displayed and admired. But I didn’t.
I knew that in becoming a teacher, I would be guaranteed a solid wage for the rest of my life at a job that was relatively secure. I also knew that I would be paying into a pension that would be there for me when I retired.
In choosing teaching I understood that not only would I be making an impact directly on kids and doing work that really mattered, but I’d also be setting myself up for a comfortable middle-class life.
Too often today students are given the advice, “find something you love to do and find someone to pay you for it.”
This is great advice.
But not always.
There are lots of students I taught who loved playing video games, singing, drawing, or playing sports. Sadly, many of them will never do that and get paid for it. It doesn’t mean that they can’t enjoy these passions as hobbies. But at some point, reality needs to kick in. If it doesn’t, a person can find themselves graduating with a degree in something they love but which has very little marketable value.
It reminds me of a friend who is an Art Major. He once explained to me, “When I got my Art Degree, I didn’t need to deliver to people anymore. They started to come to me, explaining what they wanted me to create. Then I’d ask them to pull up to the next window.” (Bad joke from a Science Major)
11) I used networking to get working
Getting a degree with a solid ROI is one thing, but actually being able to land a job in your desired field is quite another.
I was fortunate enough to have developed a network in high school and university of people who were smart, wise, hard-working, and cared enough about me to mentor me in how to actually GET a job. They coached me up, helped me build a professional resume and gave me the opportunities I needed in order to get a job in teaching and to be successful.
Without them, I would not have landed my first teaching job. I probably wouldn’t have gotten my masters and would not be an Assistant Principal today. And I would not have been able to pay off my student loan debt nearly as fast if I’d been forced to move away from my hometown to find work.
I’m forever grateful to all of them.
Bringing it All Together
So that’s how I did it.
I think this is the part where I’m supposed to say it wasn’t easy, that in spite of all the obstacles I faced, I managed to find a way.
But really, it wasn’t all that hard.
And I’m not some extraordinary person with superhuman capabilities to stretch money. I’m not a frugal fanatic who mends the holes in their socks or reuses the leftover milk in the bottom of cereal bowls.
I’m just a guy who decided he didn’t want to start off his career weighed down with debt. And I had a lot of help along the way, from my parents, my friends, and the people who have mentored me in my career.
It’s not impossible to do what I did today. And I hope that my kids will be able to start off their careers the same way I did. With hard work and a hand-up.
What about you? How did you pay for college or university? What ways did you use to save money and stretch your dollars? Share in the comments below or on Twitter @method_money or my Facebook page Method To Your Money. You can also find me on Pinterest. To get more great ideas on how to save money, sign up to receive my weekly emails detailing how to keep more of your hard earned cash!