Introducing Mr Beerver
A few weeks ago, I talked about various iterations of the unsavory practice of mooching off of friends to get free beer. Blech.
And now for a video! Poor dad just doesn’t seem to be able to catch a break… first his kids mooch off his beer, and now HIM!
OK, then… today, allow me to introduce the star of this blog: Mr. Beerver.
Mr. Beerver is 20 years-old, the same as the average-aged college student. He’s a first-year student and is an all-around common guy. He works part-time at the local supermarket and makes 12,000$/year which is a shade less than the average of 14,400$/year for American students (according to the National Center for Educational Statistics). His other assets are a college fund his parents built up to 12,000$… a bit under the 14,000$ average.
While he is an average worker, he wants to be an exceptional saver and diligently tries to save 10% of his income, which is to say: 1,200$/year. In 2013, he put the totality of these savings into ISCO at 0.15 cents/share. A bit risky there, Mr. Beerver! As you can see on the sidebar, ISCO still trades at 0.15 cents today which means he’s not even keeping up to his benchmark. Uh oh…
That cowboy-streak aside, he’s pretty common. He goes to an in-state college and doesn’t have extravagant tastes. No fancy import beer for him!
So his finances break down like this:
12,000$ from work
3,000$ from college fund
Total Income: 15,000$
Total Expenses: 22,826
Wait… WHAT! Oops. These numbers don’t work out at all! Without a bit of sleight of hand, Mr. Beerver is setting himself up for a bad hangover and will not in fact be saving anything. Rather, he’ll be drowning in debt alongside most of his peers before he knows it.
A good friend of mine had numbers very much like this and wound up with 20,000$ in debt after 5 years of university studies. Ouch.
So, how do we turn this nasty situation around? Scholarships? Not going to happen for Mr. Beerver. He won’t even be getting a Pell Grant and he’s not interested in looking through the tomes of grants. He’s got beer to drink tonight!.
Let’s take a look at the average expenses for students and see where Mr Beerver could cut costs.
Tuition is pretty much non-negotiable so that leaves the other big 2kg growler in the budget: room and board.
Ah, well now. There’s a very easy fix for that monster!
Mooching off of family for free beer! 9,500$ per year buys MUCHO beer!
Yes! That’s the answer! Among my friends, this is the single biggest issue that seems to determine whether they’ll finish college with debt or not. Rent is a killer. Even dorm rates’ll punch a large hole in the budget.
If you are on speaking terms with your parents, staying with them through your college years may end up being one of their biggest financial gifts to you. It may also help in keeping the partying down a bit and in encouraging you to go to those early-morning classes. Bonus!
If at all possible, I plan on encouraging my own kids to stay at home while they study for college. Mooching off of me for a bit in those years will not be an issue in our household.
Hopefully, with this one move, Mr Beerver can avoid becoming like the average student in respect to accumulated debt. Currently, that debt stands at 26,000$ according to the College Board & Advocacy Policy Center.
Now that he’s cut this nasty expense, Mr. Beerver’s budget looks like this:
He’s left with 1,672$ per year of surplus. Woo hoo! That nets him plenty to meet his savings goal and he can even drink a couple of beers every month! Mooching off of Mom&Dad is the BEST!In that regard, I’d like to thank my own parents for their generosity, forethought and planning. Before becoming a high-school student, we moved from a small town to a college-town. Part of the reason was to allow my sister and I to stay at home while we studied. That move paid off in more ways than I care to count. Thanks mom and dad!