When you think of college, what types of things come to mind? The cost of tuition? Books? Financial aid? No doubt, college can be a stressful time, but you don’t have to add the burden of a strained financial life to the picture. You can be healthy – financially – and still graduate on time with good grades. It’s all about planning. As it says in the Bible: Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? – Luke 14:28 Going to college debt free is a lot like building a tower. You’re going to have to strategize and make sure you’ll have enough money to fund it while you’re in school. Sit down and estimate the cost before you start! The Two Sources of Income While you’re in college, there are primarily two sources of income you can use to fund your tuition and other expenses. Sure, there are a lot of ways to make money , but they all stem from these two sources: 1. College Reserves This is money that you’ve made and saved up before you went to college. This is the very best way to save up money for college, as you know that the money is already there to support you when you have that massive tuition bill dropped on your lap. I recommend saving up as much money as possible before going to college. 2. Income During College This is money that you’re making as you’re going to school. By landing a part time (or if you’re brave, full time) job, you can pay your way through college. I do not recommend starting college without a significant amount of reserves built up first, but finding income while you’re in school can help you complete your education debt free. As you’re going through college, you might want to consider obtaining a cash back debit card from PerkStreet Financial. We pay for our college education with our debit card, and save a lot of money! Remember Income Loss Another calculation to throw into the mix is your loss of income. Don’t assume that you’ll be able to work your full time job while attending college. You might get burnt out and quit your job or you might find your homework too time-consuming to continue full time at your job. When you are trying to determine how much money to save up in your college reserves fund, make sure to consider your income loss during that time. Save up more money before you attend college if you anticipate your income dropping. The more money you have in your college reserves fund the less risk you have of not being able to “build the tower.” Determining Your College Reserves Here’s a formula you can use to determine how much money you should have saved up before you attend college. It goes like this: (Cost of Tuition + Books + Room and Board) – (Extra Money Made During College * .8) = College Reserves Fund (at start of college) For example, let’s pretend it will cost you $70,000 to go to college. During that amount of time you’ll make $20,000 that you can throw toward your college education. Here’s the calculation: ($70,000) – ($20,000 * .8) = $54,000 So, you might want to save up $54,000 before you even step foot on the campus. Some of you have observed that I throw in a 20% reduction in the extra money made during college estimation. That’s to ensure that you take into account any emergencies or unexpected drops in income. It helps lower your risk. Now, you might have a different formula than I have outlined above (I understand my formula is rather simplistic, but it’s a starting point). That’s okay! The point is, you should sit down and count the cost. Don’t get caught without a plan, or you might just end up with a lot of student loan debt. Graduate debt free. You’ll love it. It’s a fresh start to your new life! Are you thinking about attending college debt free? Tell us about your situation in the comments, we’d love to hear it! Image by Matthew Benoit / Shutterstock Related Articles: How To Avoid Taking Out Student Loans 3 Goals to Accomplish Before Attending College From Fruition to Tuition | FPU Review #10 College Debt & The Student Loan Trap 4 Ways to Maximize College Scholarships and Grants Where Should You Throw Extra Income? Should You Use Retirement Savings For Your Kid’s College? John Frainee is a personal ﬁnance writer at TheChristianDollar.com . His goal is to provide biblical ﬁnancial principles that encourage people to live healthier lives. Beyond personal ﬁnance, John enjoys spending time with his wife and two crazy cats, playing a competitive game of Monopoly, and reading just about anything he can get his hands on. You can also ﬁnd him on Twitter and Facebook . As a thank you for subscribing to our newsletter you can download our quick eBook ” 25 Ways To Save Money in 2011 ” for FREE! The articles on this site are for entertainment purposes and should not be taken as financial advice. Please contact a financial professional for specific advice regarding your situation. Also, many of the CPF articles help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others. Find out more here .
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How to Attend College Debt Free!