A well-known writeup on software development stated the following:

Your “use case” should be, there’s a 22 year old college student living in the dorms. How will this software get him laid?

This frank statement hides some amazing truths inside of it, many of which relate to things far beyond software. The key principle, though, is that things that are successful are things that make it easy for people to do other things that make them happy. That’s why college students are notoriously bad at personal finance: it’s not easy and it doesn’t make them happy. Personal finance is often about the long term, and in the sheltered environment of college, the farthest goal in the future is getting a job in a few years - anything beyond that is pretty hazy for almost everyone.

So how can personal finance ever reach out to college students? The only way that personal finance management works in the life of an average college student is if it’s easy and if it brings either some happiness right now or a lot of happiness in the future.

Most lists for saving money in college that cover things like getting only the best loans and how to “optimize” your FAFSA fly right over the heads of most college students - I’m not ashamed to admit that I ignored them completely. These lists must have been written by people who have forgotten what college was actually like.

Given that, here are ten positive personal finance steps that any college student can take that meet all of these criteria: they’re realistic, easy, and they bring happiness both now and later.

Get some free money. Take your semester stipend and put it in an ING savings account. It will take about ten minutes, and if you ask me for a referral code, ING will give you $25. It will earn 4.5% APY interest, which means if you put $2,000 in there now and withdraw it in two months, you’ll get $14.71. The longer you put your stipend in there and the more you have, the more cash you get for nothing. Whenever you need cash to pay the university, you can just click your mouse a few times and get the cash out.

Make it automatic. When you’ve got that ING account, set it up so that it withdraws a few bucks every week from your checking account. The money will be automatically saved for you, a little bit at a time; you don’t have to worry about it or even think about it. Even if you can just swing a buck a day, you’ll wind up with about $400 at year’s end; check out the George Washington plan for more details.

Look for cheaper entertainment. I used to sit in the dorm and play video games all the time and I’d buy a new one about every two weeks. Why spend so much cash when I could have just found a video gaming club on my college campus? It turns out that there was one, with lots of meetups, rooms full of consoles on weekends, and lots of game swapping going on. Look at the list of all of the student organizations on your campus. At most large colleges, there’s one to meet almost every interest; if you’re at a smaller school, get one started: just print up a flyer, hang it up in a few places, and get the ball rolling. You can keep doing whatever you enjoy doing, except you’ll meet new people who like the same stuff and it’s cheaper because you might not have to invest nearly as much in it. Even better: look for interesting free stuff you might not have done otherwise.

Don’t get any credit cards. There’s no good reason to have a credit card in college; just be lazy and don’t fill out the application. If you don’t have the cash, wait a few weeks. I spent five years after graduation dealing with the credit card debt I racked up in college buying stupid stuff; don’t let the same thing happen to you.

Eat in the cafeteria. Eat as many meals as possible in the cafeteria; unless something very weird is going on at your school, it’s much cheaper in the long run than even making your own food, let alone eating out. It might not be gourmet, but it’s incredibly cheap and (reasonably) nutritious, so don’t pass it up.

Look for free stuff. When I was in college, especially in the dorms, I used to get tons of freebies from people looking for my business. If you hear about giveaways on campus, go get some. The same thing goes for on-campus clubs; the biggest thing I regret now is not going to club meetings when they had free food; not only would it have saved on the chow, but I could have met some new people, too.

Empty out your pockets at the end of each day. At the end of the day, dump out the change in your pockets and put it in a jar. Keep building that jar up, then go deposit it in a bank at the end of the semester. I used to keep change on hand for pop - in other words, I’d just waste it. I wish now I had put it in a change jar and cashed it in once in a while.

When you go buy something, ask around and see where it’s cheapest. I used to be a music addict, and for the first year I was in college, I just shopped at the local Sam Goody’s. When a friend finally informed me about a local music shop, we went there and it was about $7 cheaper per CD. I never browsed at Sam Goody’s again, and actually wound up hanging out a fair amount at the local music shop. I also eventually started buying some clothes at Goodwill, once I got over a mental block about how it was for poor people. I was in college; I was poor. This general concept is usually true for about anything; just ask people who have been around for a while where the cheapest places are to buy stuff.

Get an interesting job. Go to the general office for your major and ask if there are any jobs available for undergraduates. If you’re in the sciences, there’s almost always something available; in most other majors, there’s at least a chance of it. Get that job and find out if the things happening there excite you and also earn a little cash. You’ll probably quickly figure out if you’re in the right area with your studies, plus you’ll have some more money on the side and a job that doesn’t sound like you’re a loser when you’re talking to the opposite sex.

Keep yourself up. Take a shower every day. Wear some deodorant. Shave. The cleaner you are, the better you’ll feel about yourself, and the less likely you’ll be to spend money on stuff that you don’t need.

One last thing: if it makes you feel good, do it. This might be a shocking finisher to a list of personal finance tips, but you’re in college, and now is the time to experiment. You’re going to do stupid things you’ll regret later and you’re going to do some great things you’ll never forget. Just keep an eye on the debt you’re going to have to deal with after college; your future self will thank you even more than you can imagine for keeping that debt low.

Recently, CNNMoney.com posted an article containing 35 outrageous fees, along with tips on avoiding them. Unfortunately, due to the terrible layout of the article (you’re forced to jump from page to page in a very awkward fashion), it’s almost impossible to see all of the fees and also jump to the one you want to read.

I did the footwork for you, and here’s the list of Money Magazine’s 35 Outrageous Fees. Each one is linked to the appropriate page on the CNN/Money site so that you can jump straight to the information about that fee. After the list is a bit of general commentary.

1. Airlines: Paper tickets
2. Airlines: Talking to a person
3. Changing your flight
4. Airlines: Reserving an aisle seat
5. Overpacking
6. Car rental: insurance
7. Car rental: excise taxes
8. Hotel fees: Internet connection fee
9. Hotel fees: Resort fee
10. Hotel fees: Automatic gratuities
11. Hotel fees: Package delivery fees
12. Hotel fees: Mini-bar restocking
13. Phone surcharges: Carrier cost recovery fee
14. Phone surcharges: AT&T’s tax-related surcharge
15. Phone surcharges: Property tax surcharge
16. Phone surcharges: Activation fee
17. Phone surcharges: Cancellation penalty
18. Gift card activation fee
19. Junk closing costs
20. Title insurance
21. Biweekly payment fee
22. ATM fees
23. Monthly service fee
24. Bad deposit fee
25. Foreign currency fee
26. Credit card late fees
27. Balance transfer fee
28. Over-limit fee
29. Same day payment fee
30. Mutual fund fees: Index funds
31. Mutual fund fees: Large U.S. stock funds
32. Mutual fund fees: Target-date retirement funds
33. Variable annuity expenses
34. Brokerage transfer fees
35. 529 expenses

It’s a good list, but most of these “outrageous” fees boil down to consumer irresponsibility, unfortunately. Many of these are due to violations of clearly-stated policies by companies; just follow their policies and use some common sense and you’ll skip right over many of these fees. However, there is one fee that really irritates me that isn’t listed here: a fee to deposit loose change into your savings/checking account.

As a parent of a young boy, I’m very concerned about the best educational path for him. As we sock money away for his college fund, I’ve been considering the concept of private school for him in the back of my mind.

I recently stumbled across an article entitled Private School vs. College Savings: Which is the Better Investment For Your Kids?:

Okay, I admit it somewhat sheepishly, I send my kids to private school. It’s easy to justify since I live in an urban neighborhood where the district public schools just aren’t all that well-regarded. And man, my kids’ elementary school is nice. Large, sunny classrooms, awesome teachers, great facilities and “specials” galore like gym, art, music, foreign languages. The kids love it.

[…] I hope it will turn out, as the principal of their school asserts, that the kids are getting such a great educational foundation that spending so much money on elementary school will make sense in the long run. Ripping them out of a school they love certainly doesn’t seem like a good choice right now.

The extensive comments on this article seem to reflect the same basic idea: if the school district in your area isn’t strong or reflective of your values, then you should strongly consider private school. What do you want your child to get out of education? Core knowledge and skills? Social skills? Manners and respect for others? Some of these are well-served in public school settings, while others are not. Once you’ve determined these, you should look for metrics by which you can gauge a school’s performance. Test scores can often indicate academic performance, while attendance numbers can reflect social information.

Once you’ve determined what you’re looking for, you need to find out if your local public school district meets the needs of your child adequately enough. How do you find out? Do your research. Most states have school report cards that provide extremely detailed metrics on many different dimensions of the public school experience. For example, Iowa offers IowaSchoolProfiles.com, which gives great comparisons between specific districts and the state averages in many different metrics. You can also find out anecdotal information by asking around in the community and also attending public school events.

One also needs to consider the financial picture. Private schooling is quite expensive: the median tuition for private day schools in the United States is about $12,000 for grades 1 to 4, $13,000 for grades 5 to 8 and $15,000 for grades 9 to 12. Those numbers alone put private school out of reach for many of us, even if we’re already saving for our child’s college fund.

My current plan is to send my son to the local public school through at least eighth grade. Up to that point, I am confident in my own skill in supplementing his education in certain areas, particularly given that my wife is a teacher. Once he finishes eighth grade, we’ll see where he is at both socially (is he respectful and so forth) and academically and determine whether a private school would be better for him to grow as he readies himself for college.  Another benefit is that he will have a well-stocked 529 college savings account at this time, which will help pay for private schooling if that is the route we choose.

The Simple Dollar is running a series in which we re-evaluate Money Magazine’s “25 Rules To Grow Rich By”. One “rule” will be re-evaluated each weekday until the series concludes; you can keep tabs on the action at the 25 Rules index.

Rule #14: Aim to accumulate enough money to pay for a third of your kids’ college costs. You can borrow the rest or cover it from your income.

This rule is utter rubbish. Let’s say that you have a newborn child today. How can one reasonably estimate what the cost of higher education will be in eighteen years? The simple fact of the matter is that you can’t, and thus this rule is nonsensical. We know that the cost of education will grow over the next eighteen years. We just have no idea how much.

There’s also a massive difference between the cost of your local state school and the cost of a top-notch private institution. Which do you think your child will be attending? For my parents, they didn’t believe I would attend college at all. For me, I want my child to attend the best school that he can get into, so I’m saving assuming that he’s going to MIT.

So, I check MIT’s financial aid site and it reports that the cost of undergraduate tuition per year right now is $33,600. So, in order to pay for four years of tuition at today’s cost, I’d have to cough up $134,400.

On the other hand, what if I were to send him to the local state school? The cost is about $6,000 a year for in-state tuition. So, to pay for four years there, I’ll have to save $24,000. Right now, I’m saving with a target amount between these two boundaries.

What about room and board, living expenses, and the tuition rise between then and now? I’ll deal with those when the time comes, but for right now, I have a tangible and sensible target to work towards, rather than an arbitrary number. So, let’s rewrite that rule.

Rewritten Rule #14: Aim to accumulate enough money to pay for what four years of undergraduate tuition would cost for your child at the institute of your choice on the day he or she was born. The rest can be borrowed or covered when the time comes.

You can jump ahead to rule #15 or jump back to rule #13.

I was recently complaining loudly in the comments section of a political blog about the contradictory information one will find in different segments of the mainstream media when I began to consider what information sources that I actually trust. For example, the only news source that I generally trust is National Public Radio and even they have a slight liberal tint to their news reporting.

That evening, I was at home reading a personal finance book when I began to wonder the same thing about financial news and advice. What sources do I actually trust when it comes down to it? I decided to make a list.

I trust pieces of information that come from three or more distinct sources. If a claim is made in a personal finance book or magazine that piques my interest or might be the basis of a personal finance choice of mine, I generally don’t immediately trust it; instead, I seek out supporting sources. If I continue to find the same idea expressed from a lot of different sources, I usually trust it.

I trust Consumer Reports. They’re a nonprofit entity whose sole goal is to compare and contrast features of consumer goods. They’ve got a stellar record of doing this and their results are proven again and again to be as reasonably reliable as can be expected given their adherence to quantitative analysis. For product comparisons and ideas, I trust what I read in Consumer Reports, though I don’t consider them the bottom line in qualitative reviews.

I trust The Wall Street Journal. Some complain that their information is too slow for the modern age, but the difference between the WSJ and many internet sites is that the WSJ takes the time to properly investigate matters and write them up in a clear and concise fashion. Though I might find quicker information on the web, it doesn’t have the “trust factor” I get from the WSJ.

That’s basically it. I have sources that I’ll rely upon for strictly numerical data, but in terms of actual meaty content, those are my only truly trusted sources.

The proper question at this point is what sources do you trust for your financial information?

Ten years ago, I was in the midst of my freshman year in college. I had very little concept of money or what to do with it, but at that point I still had an overall positive net worth. If only I knew then what I know now, I sometimes think to myself, particularly when I look at the financial disaster of the last ten years.

So what would I tell myself if I had that chance? Here are the ten pieces of advice I’d love to tell that college freshman:

The less stuff you buy when you’re in college, the better off you are. Why do I say this? In general, my decision making in terms of what items to buy when I was in college was at best poor and at worst disastrous. I would buy things like furry hats and tee shirts with pictures of gophers on them. Why? I didn’t actually know then, and I certainly don’t know now. In general, I would have just encouraged myself to think more about each thing you buy and simply ask myself if I really needed it. If I didn’t, just put that money in a savings account somewhere rather than buying a giant poster of Hulk Hogan.

Live in the dorms for as long as possible, especially if you’re on scholarship. If your tuition, room, and board are free, as they were for me for a few years because of ample scholarships, you are a fool if you move off campus. Not only are the costs of food and housing going to greatly increase, but you’ve suddenly added transportation costs to the mix, along with the extra travel time you’ve added to each and every day.

Get a credit card, but only use it to buy textbooks. The reason for this is to build credit in a healthy fashion but avoid the temptation of using a credit card, as in the plan described here. I got a few credit cards during my college years and I made very stupid purchasing decisions with them; even though I kept the bills paid, I swallowed a lot of finance charges. I’d love even now just to have the cash I dumped into finance charges if it had been left in a good savings account for five or ten years.

If you get student loans, minimize the amount of the loan. I had to get loans for my final two years in college. At that point, the loans allowed me to borrow about six thousand beyond the cost of room and board, so I took that to essentially mean a low interest credit card, and I borrowed the maximum possible. It was a big mistake that I’m still paying for. Get what you need for room, board, and enough for textbooks and keep living in the dormitory. That way, there’s no temptation to spend that loan money on stupid things.

Assuming your dorm life is covered, put at least half of any pay you receive into a high-yield savings or money market account. Living is cheap now, but when you graduate you’re soon going to have a ton of expenses rain down on your head. You’ll need a good car, you’ll have a wedding and honeymoon to pay for, a child to care for, and a house to buy. Help that future self out a little now. If you’re adventurous and actually have some financial grounding, you can invest it, but don’t invest too much in it.

Never, ever buy an article of clothing that costs more than half of the last paycheck you received. If you’re buying such expensive clothes, it is a red siren that you’re heading down a road laden with debt that you’ll be digging yourself out of for many, many years. You’re in college; you’re probably going to buy some unnecessary stuff. But do you really need a $300 pair of jeans or a $500 sport jacket when you can get virtually the same item for much less money? Is it worth mortgaging your future for?

Find cheaper ways to maintain your hobbies. In college, my biggest hobbies were reading, writing, listening to music, going to movies, and playing Hearts. In almost every case, I spent wildly on these hobbies, but just a few changes would have saved me a lot of money that I could have put away for the future or perhaps not borrowed as much on my student loans. Instead of buying two new books every week, I could have gone to the local library. Instead of buying exquisite leather-bound journals, I could have just bought a cheap notebook. Instead of buying three CDs a week, I could have listened to student radio (it was playing almost exactly the same stuff I was buying - and it was free). Instead of going out to a movie every weekend, I could have watched some of my DVDs or borrowed some or went to one of the free movies on campus. Instead of playing nickel-a-point Hearts, I … well, there’s not a good replacement for that one, but by the end of my final year, I was actually making good pocket money at it. In short, my hobbies ate up a lot of my money in school - a giant mistake.

If I had followed these eight guidelines in college, I would be debt free right now and have a house down payment; instead, I have only a bit saved towards a down payment, I have tens of thousands in student loan debt, and I just now paid off all of my credit cards.  Was that furry hat really worth all of this?

Last time, we reviewed the mistakes I made during my earliest days of dealing with my own finances, and it was clear that I was already showing some grave errors in financial planning. After high school, however, I found my way into college, an environment where I would have an opportunity to learn many things, including the meaning of financial planning. Unfortunately, I made just as many mistakes there as I did in high school.

I would have never gone to college if I had not been blessed with a four year full tuition, room, and board scholarship. I had no college savings at all, so my opportunities for education boiled down to burying myself in financial aid, praying for scholarships, or preparing to directly enter the workforce.

Yet this was the source of my first mistake: I had no idea of the value of my college experience. I was the first person in my family to go to college, so I didn’t have any idea what to expect when I went to college. My belief was that you just took a few classes and goofed off a lot, because this is usually the “pop culture” attitude towards college. So (for the first few years, at least), that’s what I did. I goofed off and took classes and really didn’t think about what it all meant.

What I should have done with this huge financial gift is spend my first year really focusing on determining what I really enjoyed doing, then spend my remaining years working to excel in that major. Instead, I almost completed a major in a half-hearted fashion, realized it wasn’t for me, and finally started to get my head on straight by about the end of my fifth year.

That was my second mistake: I went for longer than I needed to, and I let the student loans finance that extra time. I spent two extra years in college after the end of my full scholarship, completing two full majors and building up a substantial amount of student loan debt. I took out the biggest loans that I could in order to be able to prop myself up in a very nice apartment with only one roommate, which is still perhaps the nicest place I’ve lived in in my life. It was all financed by loans.

My third mistake was not taking advantage of all of the opportunities the college experience gave to me. Rather than seeking out interesting meetings and organizations and extra classes that could have personally and professionally benefited me, I spent my spare time in the dorms playing GoldenEye or out on dates. Given the opportunity again, I would have loved to invest time in organizations where I learned how to speak in public and debate or attended some of the countless free talks and seminars or volunteered my time to a worthy cause instead of burning days sitting at a computer playing Warcraft II, but I didn’t know any better.

The end result is that I left college two years late, saddled with two years of student loan debt, with only my education and nothing extra to show for it. I did manage to not put myself into credit card debt during my college years; those stupid moves were yet to come. How did I start down that path? Tune in tomorrow to find out.

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

#1: The Earliest Mistakes
#2: Early Profits … Lost
#3: Cash & College
#4: The First Taste of Real Money
#5: Love & Marriage
#6: The Yuppie Years
#7: Here Comes Baby
#8: Meltdown
#9: The Road to Recovery
#10: What I Learned