Author Archives: Susan Bogart

About Susan Bogart

Susan Bogart is the Director of Financial Aid for Penn State University's Dickinson School of Law. After twenty years of working in financial aid, the passion to keep a financial literacy blog could no longer be restrained. Susan has been at Penn State Law since 2003. Previously she ran the financial aid office at The John Marshall Law School (1995-2003) and worked as a financial aid counselor at Alfred University (1993-1995). She holds a B.A. in Music and English from Mansfield University and an M.A. in College Student Personnel from Bowling Green State University.

Keeping Things Interesting

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As we close in on Valentine’s Day, I’d like to talk with you about interest.  But not your interest in that attractive person you have on your radar.  Interest on debt.  And interest on investments.

Did you know that there are two different kinds of interest?  Many people don’t realize this.  Simple interest and compound interest are two very different things.  And they are both good in the right situation.  And they are both bad in the wrong situation.

Simple interest is what most people think of when they borrow money.  When you borrow a car loan or a student loan or a home mortgage, simple interest is what you will typically encounter.  Simple interest is calculated based on the amount of the principal of the loan.  And only on the principal.  So if you borrow $100,000 at 8% interest, your payments will be amortized out over a designated number of years (10 or 25 years for a student loan, usually 30 years for a mortgage, and typically 4 to 7 years for a car loan).  Your payment will consist of a portion of interest and a portion of principal.  Let’s say that $100,000 at 8% is amortized over 10 years.  Your first payment would include $6,085 in principal and $7,754 in interest. But the next month’s payment would be based on $93,915 in principal, so the interest would be only $7,189.  And as you progress through the ten years of the amortization, your payment consists of less interest and more principal every month.  Eventually, somewhere in the middle, you reach a point where you are paying more in principal than in interest each month.  But you have never had to pay interest on more than the $100,000 you initially borrowed.

In a savings or investment situation simple interest is NOT what you want.  In that situation you would earn interest only on the principal.  If you invest $100,000 at 8% you would earn only $8000 in interest for the year.  But if that interest were compounded each month, you would earn $8,300 because in addition to earning interest on the $100,000, you would also be earning interest on the accruing interest.

So you can probably see where I am going here.  Compounding interest is calculated based on the principal plus any interest that has accrued.  And in a savings or investment environment, that is exactly what you want, because it makes your money grow faster.

In a debt situation, compounding interest is the enemy.  And that is exactly how credit cards work if you don’t pay them off in full every month.  Let’s assume that you put $2,000 on a credit card at 18% interest, and you pay only the minimum monthly payment of $100.  You would think that at that pace it would take 20 months to pay off the $2,000.  But because the interest compounds (quite often daily) it would take at least 24 months to clear that $2,000 debt.  Credit card companies quite often compound your interest daily.  That 18% interest rate on $2,000 calculates out to about almost one dollar a day.  So every single day the credit card company is adding a dollar to your balance due.  Compounding interest is exactly what you do not want in a debt situation.  Does this make you want to go read the small print on your credit card statement to find out how often they compound the interest?  It probably should.

Interest can be scary.  But it can also be your friend.  In debt you want to keep things simple.  In investments you want things to compound.  But either way, I hope you found this INTERESTing.

Snow Day!!!

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I had a good old-fashioned snow day on Sunday.  It was glorious.  I didn’t leave my house.  No errands to the grocery store.  No shoveling (as the snow fell throughout the daylight hours).  Just me and my husband and my cats, all snuggled on the couch together watching movies on TV.

Adulthood can sometimes hit extra hard.  You get in the rut of working five days a week and running around to complete all the chores required of an adult on the other two days.  And it can wear a person down.  Laundry and groceries and filling the car with gas and cleaning the house and paying the bills….it gets to be a lot on top of a 40 hour a week job.  And the older you get, the harder it becomes to balance things.  At least that has been my experience.  I remember in my 30’s and early 40’s having a lot more energy to do “adulthood” tasks after a day of work.  But I just don’t have that energy anymore.  When I get home from work, I’m pretty much done for the day.  There’s nothing left in my tank.

When I saw that Sunday was going to be a bad day for driving, I got all my “out of the house” chores done on Saturday.  Sunday morning I made French toast for breakfast.  When a snow storm is on its way everyone seems to flock to the grocery stores to buy bread, eggs, and milk.  Since those are the ingredients in French toast, I like to celebrate snow days by making this unofficial breakfast of snowstorms.  And after breakfast I settled in to enjoy the coziness of my living room.  It was pure joy.  It had been many months since my last day of full relaxation.  And it reminded me how important it is to take care of yourself.

Self-care doesn’t have to come with a price tag.  It doesn’t have to involve a spa or a salon or a vacation or a shopping spree.  Self-care can be as simple as a day that you don’t leave home and you just watch movies and pet your cat.  My Sunday snow day filled me with happiness and recharged my batteries.  And it didn’t cost a dime (outside the groceries and streaming subscriptions I was already paying for).

Life can be overwhelming.  We live in a complicated and divisive time.  A lot of people are carrying the burdens of anger and fear.  Please remember to practice kindness.  And that includes being kind to yourself.

I hope you are able to experience the pure joy of a good old-fashioned snow day like I just did.

New Year, New You

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There’s something refreshing about the start of a new calendar year and a new semester.  A lot of people make New Year’s resolutions.  But I think most people go about their resolutions in the wrong way.  And doing that makes it easier to fall off the wagon.

Possibly the most popular of all resolutions is the vow to lose weight.  I’ve made and broken this resolution multiple times.  Because it’s easy to break a promise to yourself to do something.  So this year I resolved to live like a healthy person.  Healthy people make better food choices.  Healthy people exercise.  Healthy people take the stairs instead of the elevator.  I’m not going to DO something.  I’m going to BE something.  I’m going to be a healthy person.  As a result of that behavior, I will likely lose some weight (I hope, I hope, I hope).  And if I have a bad day of living a healthy lifestyle, I won’t feel like I have failed the whole project.  I can wake up the next morning and still live like a healthy person.

Many folks also resolve to spend less money.  Or to build a budget.  Or to save more.  This is always on the top of my mind as well.  This year I’m choosing to be someone who makes smart money decisions.  I’m not going to DO.  I’m going to BE.  People who are smart with money pay themselves first.  This means I’ve got an automated savings deposit scheduled for every month….and what is left after that is the amount I have to live on.  Financially savvy people know where their money goes.  This means I am tracking my spending.  I can easily look up how much I spend each month on various budget items.  And if an area of expenditure seems to be getting out of control (as so often happens in the month of December), I know that I need to make adjustments going forward.  And most importantly, people who are smart with money don’t spend on things that are not important to them.  Live music is important to me.  My home is important to me.  My camper van (or home away from home) is important to me.  I don’t feel bad about spending money on indulging these three things.  Clothing is not important to me, so I always buy secondhand.  Cars are not important to me, so I drive a 13 year old Subaru.  Fancy coffee is not important to me, so I brew at home and carry it to work in my travel mug.  There are a lot of places in my budget that I could easily spend more money on things that are not of importance to me.  But that’s not who I want to BE.

Have you made any resolutions for the new year?  Who are you planning to be?

Are You an Ostrich?

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Ignoring a problem doesn’t make it go away.  Let me repeat that.  IGNORING A PROBLEM DOESN’T MAKE IT GO AWAY.

When something is troublesome to you, it’s easy to procrastinate.  If you stick your head in the sand like an ostrich, you don’t see the thing that needs to be addressed.  And you feel like it goes away.  But it doesn’t.

That room that needs to be cleaned will still need to be cleaned even if you have shut the door.  That empty pantry won’t magically fill itself if you Door Dash for a few days.  That exam you are dreading will still happen, whether you prepare or not.  And unpaid bills will remain unpaid and possibly turn into a much uglier situation if you don’t make payment.

Unpaid bills are likely the worst thing to procrastinate on. There are all sorts of consequences.  And none of them are easy to bounce back from.  Late on your credit card payment? Not only will you be charged a late fee, you will likely be looking at a higher interest rate on the next month’s bill.  Late on an insurance payment?  You may find yourself uninsured when you need insurance the most (such as an accident or major illness).  Late on a utility bill?  The utility could be turned off.  Late on a car payment?  You could end up dealing with the repo man.  Late on rent?  That could eventually get you evicted.  And any of these things will also have a negative impact on your credit report, which will make your life more difficult going forward.  Good credit is necessary for things like signing a lease, getting a loan (yes…even a Grad PLUS or private educational loan), getting a credit card, or getting insurance.  And really bad credit history can cause struggles with the character and fitness check for the bar exam.

If you are facing a troublesome situation, it’s best to tackle it head on. Admit to yourself that you’ve gotten yourself into a sticky spot, and do what you can to fix it.  Messy room?  Clean it a little bit each day.  Empty pantry? Place an online order for pick up and get some groceries.  Dreaded exam?  Get to outlining! No money to pay a bill?  Reach out to the creditor to see if they can work with you.  Almost every problem has a solution.  If you can’t find it yourself, ask for help.

Ignoring a problem doesn’t make it go away. Don’t be an ostrich.

PA Mini-Market Loyalty

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Every once in a while I have to remind myself how lucky I am to live in Pennsylvania.  Sure…we’ve got beautiful scenery and competitive sports teams.  But more importantly, we have the battle of Sheetz versus Wawa.  The south has Buc-ees.  Wisconsin has Kwik Trip.  And I love both of those.  But when it comes down to it, I swear by the Pennsylvania-based mini-markets. The Philadelphians and other eastern Pennsylvanians (and New Jersey folks) are committed to Wawa.  But despite the fact that my mother grew up in suburban Philly and I went to Wawa many times before I even knew Sheetz existed, I am a Sheetz girl through and through.  Maybe it’s the fact that the company is based just down the highway in Altoona.  Maybe it’s nostalgia for the giant fountain beverage that used to come in a cup labeled “The Big Pig.”  Maybe it’s the convenience of the many locations down the east coast and into the Midwest. Maybe it’s because it’s the first place that I used a store-branded refillable coffee mug to get my caffeine when I entered adulthood.  It could be any or all of these things.

There are three different Sheetz stores within walking distance of my house.  And I frequent all of them with some regularity.  The obvious reason is that it’s a convenient place to get gas for my car. And with the stacked benefits of the My Sheetz loyalty card and my Sheetz branded credit card, I get instant savings of eight cents per gallon on gas.  And as I buy food and other things inside the mini-market, that earns me reward points that I can use to further reduce the price of gasoline.

When I take a road trip, I tend to move from Sheetz to Sheetz along my journey.  There are only a few layouts of the stores, so I’m always in familiar surroundings no matter where I am.  There is always a convenient rest room, a cold drink or hot coffee, and a quick meal or snack available.  And they are open 24/7, so I can always count on them to be there when I need something. A newspaper and an adult beverage to close out Thanksgiving day?  Sheetz had my back.  When I get too far from the familiar red canopy, it always makes me a bit nervous and uncomfortable…like I’m missing a friend.  I always feel better on a return trip when I know I am back in Sheetz country.

I also do a lot of my banking at Sheetz.  My credit union does not have any local branches.  So when I need actual cash, I need an ATM.  Sheetz has exactly the ATM I need.  Every Sheetz has an ATM that does not charge fees.  And my credit union also does not charge fees.  So Sheetz is my bank whenever I need a little cold, hard cash.

I know there are a lot of Wawa lovers among my readers.  But Sheetz saves me money on a regular basis.  Regardless of your loyalty, one thing is certain.  We are very fortunate to be blessed with great mini-market chains in Pennsylvania!

Late Bills Prompt Money Dates

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I haven’t been prioritizing my to do list in the way I should.  When life becomes overwhelming (as happens more often than any of us would like), it’s easy to lose track of what should be happening when, and things fall by the wayside.  My “weekly” Moneywise Tip has been one of the things that has fallen to the wayside.  And I need to do better.  Fall semester has been a whirlwind for me.  Long weekends planned long in advance, care of my elderly mother, home repairs, law school reunification activities, purchase and repair of a 20-year-old camper van (sure to factor into many future adventures!), and a presidential election that sucked all the oxygen out of the news cycle for way too many months have all pulled my attention away from writing.  And that needs to be fixed.  Starting now.

It’s not just the Moneywise Tip.  I’m behind on absolutely everything.  My house needs to be cleaned.  I need to do some repairs in my bathroom.  My cats need vaccinations.  I need to submit claims to my mom’s health insurance company.  And I haven’t even taken the time to manage my own finances.  I knew it had gotten bad when I e-paid my electric bill from a camping trip because it was coming due in a couple of days and I remembered I hadn’t paid it yet.  I didn’t have the bill with me, but I just submitted the request to pay an amount that I knew was more than the amount I owed.  But I hit an all-time low for myself last week when I looked at my natural gas bill and discovered it was due that day.  I immediately e-paid it, but the payment definitely was arriving late.  This likely won’t take a toll on my credit rating because the payment will be received only a couple of days late and this is abnormal for me with a decades long history of paying things on time.  But it’s a wake-up call.  I need to start paying more attention to my priorities.

I’m very overdue for a “money date” with myself.  Every so often it is important to take a couple of hours and sit down to look at your finances.  How much have you been spending on what?  Are you within your budget, or is it time to evaluate your budget categories? Are you meeting your savings goals?  Have you been paying down your debt in a way that makes sense? Do you have a plan for bill paying that makes sure everything is paid on time?  Ideally a money date should happen with regular frequency.  Once a month. Or at least once every few months.

I know that the end of the semester is a very busy time for law students.  Outlines and briefs and papers and studying tend to take priority over things like self-care and personal finance.  But it is still important to make sure not to forget completely about the other priorities.  Learn from my mistakes.  Pay your bills on time.  And when the semester ends, it’s a great time to have a money date with yourself.

Hop on the Bus

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I was listening to a podcast this weekend and heard an analogy that I thought was great.  The host said that politics is like a bus.  It’s likely that one candidate will not align with every single stance you take on every single issue.  The perfect candidate (which could likely only be yourself) would be an Uber.  It drops you right where you want to be.  But without the option of an Uber, you hop onto the bus that gets you closest to your desired destination.

I’m not going to talk about politics.  But I do think that most things in this world are more like a bus than an Uber.  Especially shopping.  Shopping for absolutely anything.  Big ticket items are kind of obvious.  When you are buying a house, you may have to sacrifice on some of your wish list (perhaps location or price) in order to gain something else on your wish list (perhaps a fireplace and a garage).  The likelihood of getting everything you want at the price you can manage is not great.  The same thing probably happened when you were choosing your law school.  Maybe the greatest professor you wanted to learn from was at a school where you didn’t love the rest of the curriculum, so you got on the bus that got you closest to where you wanted to be.  It’s less obvious in smaller purchases.  Perhaps the tomatoes you like best at your local grocery store are too expensive or come in too small a package.  You may have to pay more, sacrifice quality, or buy multiple packages to get closest to where you want to be.

Life is a never-ending series of bus rides (sometimes figuratively, sometimes literally).  You almost never find that unicorn Uber that takes you to the exact place you want to be. You’ll make sacrifices in one area to make gains in another.  But that bus ride will teach you so many things along the way, and make you truly appreciate how close you are getting to your goal destination.

Life is like a bus.  Enjoy the ride!

Making Bets

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Gambling seems to be everywhere these days.  The commercials for betting apps inundate my TV.  With the Super Bowl in Las Vegas (the casino capitol of the country) this year, the number of things you could bet on seemed to be never-ending….right down to the color of Taylor Swift’s shirt.  Casinos are popping up in shopping malls.  Sports betting is an app on your phone.  Lottery tickets are available from a vending machine at the convenience store.  It’s pervasive.

Betting on things is generally not the best idea.  It’s definitely not a solid plan for a stable income.  You should never bet money that you can’t afford to lose.  The lottery is a tax on people who are bad at math.  The odds are always stacked against you.  Yet that doesn’t stop me from occasionally buying a Power Ball ticket and dreaming of what I would do if I won several million dollars.  It’s not an investment strategy.  It’s a source of entertainment. I don’t do it often, and I go into it knowing I’m probably going to lose.

There are ways to make bets that are not necessarily detrimental.  One year I used my income tax refund to buy some stocks.  I picked a few companies whose products I used and bought 10 shares of each.  One of those companies was a DVD rental by mail company called Netflix.  Those 10 shares cost me $170, and I sold them several years later for a few thousand dollars.  That was a good bet, which funded the installation of central air conditioning in my house.  I don’t remember what the other stocks I bought at that time were….because they were not good bets.

There are more educated, less risky ways to bet on things.  My retirement fund is largely in stocks, but it is managed by people who do that for a living—people that do research and keep things balanced appropriately for where my risk level should be at this point in my career.  It’s definitely beyond my skillset.  But there is still some risk involved in anything that involves the stock market.  There’s still some level of betting involved.

One of the smartest bets you can make is to bet on yourself.  Every time you pursue something new, you are betting on yourself.  Maybe you are taking a new job.  Maybe pursuing a new degree or certification. Maybe starting a business. Maybe something as simple as cooking a new recipe for the first time. Every time you attempt something, you are betting on yourself.  You won’t always succeed.  But you are taking the risk and putting yourself out there. And the person who bets on themself is miles ahead of the person who is afraid to try.

Regardless of what color shirt Taylor Swift wore to the Super Bowl, there are good bets and bad bets.  But betting on yourself is ALWAYS a good bet.

What is Your Goal?

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I almost never mention my first husband.  It was a short marriage that ended decades ago, so it somehow seems like part of a different lifetime.

He and I differed on one very important issue, and I think that is what ultimately drove us apart.  We had different financial goals.  Or at least a different order in which we wanted to pursue them.  All of my life I had two primary goals: earn enough money that I don’t have to be dependent on anyone else, and own my home.  When we married, I had finished my Master’s degree and was started on my career as a financial aid professional.  I had achieved goal number one.  But I was living in a rental apartment.  A year after we got married, we moved to Chicago.  I continued working as a financial aid advisor (this time at a law school—I found my niche!).  He started attending law school.  Within a year of our move to Chicago I was looking at condominiums.  I still wanted to own a home.  He didn’t agree.  He claimed he didn’t want to make that kind of commitment to Chicago.  And that was the beginning of the end.

Ultimately, we divorced.  And a year later I bought a condo in Chicago. A studio was all I could afford, but who needs a bedroom when you have a 27th floor lake view?  It was all mine. And I loved it.  My home, my mortgage, and my rules. After only three years, I sold that condo at a 25% profit.  I moved back to Pennsylvania and started working for Penn State.  And as soon as I was able, I bought a townhouse.  I’ve bought and sold my home two more times since then, and now I know that I’m in the home where I plan to stay for a very long time.  I’ll probably even manage to pay off the mortgage in full.

What I learned over the years is that when the real estate market is strong enough, you don’t have to commit to a home forever unless you want to.  It is possible to sell a home after only a few years without taking a loss on it.  Real estate is more than just a place to live…it’s an appreciating investment.

My first husband still lives in the suburbs of Chicago with his wife and kids.  Ultimately, he did make that kind of commitment to Chicago. We just didn’t have the same goal at the time when it really mattered.  Everyone has their own financial goals. And before you too far into a relationship, it’s important to be clear with your partner what your goals are, and hopefully they will match up with each other’s.

Owning a home and being self-supporting were my goals.  My current goal is retirement at age 60.  Some people have a goal of saving a certain amount of money.  Some have a goal of being debt-free.  Others have a goal of starting their own business.  Your goal is the thing that is important to you.  And everyone’s goal will be a bit different. What is important is that you have a goal and you set your sights on working toward it.

What are your financial goals?

We Don’t Talk About Money

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We don’t talk about money.  And that kind of makes sense.  Money is one of those things that you don’t want to boast about if you have it, and you don’t want others to suspect if you don’t have it.  There’s a cultural stigma attached to talking about money. It can bring up negative emotions.  Those who have more money seem to come out on top in power dynamics.  Those who have less money can be looked down upon.  And rather than inflict that into our everyday lives, we just don’t talk about it.

Unfortunately, money isn’t a topic that can just be avoided in life.  Having money is a necessity to survive.  You have to learn about how to manage it.  How to earn it.  How to save it. How to spend it wisely. How to insure against losing it.  Perhaps things have changed since I was a kid, but this is not information I was taught in school.

My parents were always very secretive about how much money they made.  I guess they thought that would give me some sort of protection against societal stratification at school.  It really didn’t….but the thought was nice.

Luckily my parents did actually teach me some things about money.  They taught me about how loans work when I borrowed some of the money I needed to add a tiny black and white television to my bedroom.  They taught me about budgeting by giving me an allowance.  They taught me about saving by setting up a savings account for me and encouraging me to add to it regularly.  When I started my first minimum wage job at the local grocery store, they taught me how to use a checking account (and how to write a check, which is quickly becoming a lost art).  When I started my first full time job, my father taught me the importance of contributing to the retirement account (at least enough to get the employer match) right away.  And I’m sure there were many more examples over the years.

I count myself as lucky that my parents were able to teach me a bit about money.  I count myself as very lucky that I was intrigued enough by the topic to become a lifelong student and teacher of personal finance.  There is always more to learn.  But we don’t talk about money. I honestly believe that if talking about money were less taboo, more people would have a better understanding of personal finance and would become better managers of their own money.  Unfortunately, that isn’t the world we live in.

We don’t talk about money.