Friday, August 31, 2012

Wasting loan money to waste time (by big spender)

So you took out loans to pay for school. Maybe you got a huge sum of money from a relative to pay for school. Either way you may at some point in your education have found yourself receiving more money than you needed to pay tuition and housing. For some the resulting refund check or extra cash is used entirely for necessities like food or basic clothes. There are plenty of people at UWW that do not need the extra cash for living means and spend it on frivolous wants and desires. What I am here to say is that if you are going to take out the extra cash spend it right.

Obviously the smart thing to do is to not take out more loans than you need or spend your money to pay for school on wasteful items. This is not to say that you cannot have fun or spend money on things you will enjoy.  Let me start with a simple story.

You go to UWW and start as a freshman. First semester you take out no more money than you needed to pay for you schooling. You do not spend more than $50 over the course of the semester so you hardly dipped into the savings you collected before starting the school year. Second semester comes around and you get a $1000 loan refund check. There would appear to be no need for this freshman to take the loan refund. So when this freshman does “just-in-case” deposit the check rather than choosing to return it the freshman ends up starting sophomore year with that same money. Kid was responsible in not just wasting it. The truth now becomes apparent that the kid can be safe to spend or return that money if the kid chooses. Let us say he spends it. Here is where a valuable learning experience or trouble can start.

The kid can invest the money or throw it away. The kid can choose to invest the money in something like stocks, bonds, or any other area where the kid thinks the return will be better than the interest the kid is paying on the money. Though this cliché idea of invest is obvious there are many other forms of investing that may not be thought of as investments. A car or car insurance payment can be an investment if that car is used as a way to get the kid to a part time job while the kid is in school.  A snowboard or longboard can be an investment if it is used as a healthy stress reliever and device to hone skills. The throw it away options are those choices that hurt the kid in the kid’s studies.
Using the loan refund in ways that hurt your school studies is worse than throwing away the money. By participating in buying things that hurt your studies you will waste not just the $1000 refund but the entire amount you spent on school. Those people who choose to drink alcohol or use drugs with the money may be just fine and model students. If that is the case I wish them the best. Likely though if you participate in buying items that disable the body you will find yourself giving less than optimal output in school. That is not to say that alcohol and drugs are the only poor choices. That car or board you buy can cause you to perform less than optimally if they only add increased continued costs on you financially and cut into the time you should spend studying.

The old adage “do in moderation” is really a summary of what I am saying. I just want kids to see that extra cash they get can be used in a way to teach them something or ruin their education. Of course some say the only smart and safe route is to never take more then you need from loans. While this may be safe the opportunity to practice spending sums of money can benefit some.  For those without restraints just tear that loan refund check up and get it canceled by the financial aid office.

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