Poor Student No More

Upon deciding to officially pay off all of my student loans and be free of the financial restrictions of debt, I made a budget.  This wasn’t the first time I’ve made a budget by any means, but this was the first time I included my income.  Crazy, I know.  Turns out, my monthly cashflow was in the negatives after I paid all my expenses.  So I knew I had to cut back on what I was spending in college.  I could no longer pretend to live a life full of expensive drinks (or cheap for that matter), sororities, and brand names (or any new clothes).  I quit my sorority months ago, as it was not providing enough value for its cost.  But where was that extra $1,500 per semester going?  I lived paycheck to paycheck and still never seemed to have enough.

So, I got smart.  I rearranged my budget and cashflow so that instead of the extra money that I got from my scholarships paying for extra, frivolous things, I paid my rent first.  The scholarship money is passive income, meaning that it is an independent source of income that is guaranteed each semester without having to “work.”  With that passive income, I needed to pay my expenses for my needs first (rent, utilitiy bills, books for school, etc).

With the money I earned from my job, I am able to pay my interest on my student loans and food, but that’s really it.  So while all of my friends go spend their money on alcohol and sorority dues, I am getting smart about how to budget my money so that I know I can always pay what I need to pay.  But this isn’t enough to get me out of debt.

The goal learned from Rich Dad Poor Dad: Create a passive income greater than your monthly expenses.

As of now, I have not reached that goal.  My monthly expenses are about $800, but my passive income (if broken down equally into twelve months) is only at $400.  This is why I started this blog - to create passive income for myself eventually.  If I can get my passive income greater than my expenses, I can use extra money that I earn to start paying off my loans.

Pay more than just the minimum balance due (AKA the Interest Rate)?!?! CRAZY, I know.  But it’s how you build great credit and get out of debt.  Spending money on frivolous things that you can’t actually pay for out of passive income will only create more debt.  Paying off your student loans will be much more difficult in the future if you spend now.