That's one of the lessons participants of the annual GECU Savings Challenge have learned in a yearlong battle to get their finances under control.
The contestants -- six students at the University of Texas at El Paso -- have also been encouraged to steer away from student loans if possible and try to finance their education with scholarships and grants that don't have to be paid back.
"The greatest thing I learned is knowing you can save even if it's a little bit. You don't have to live paycheck to paycheck, and there's money in the bank for emergencies," said Claudia Valero, 23. She's a UTEP sophomore pursuing a degree in English literature, with plans to become a high-school English teacher.
"We're still saving $200 to $300 per month" even though Valero's husband lost his job during the summer and the couple, and their 4-year-old son, are living on his unemployment check, she said.
They have saved $3,600 since the Savings Challenge began in January, and they have kept their $1,200 income tax refund in reserve in their checking account. They've also paid off $3,000 worth of credit-card debt, she said.
"We had no savings before the Challenge. We were just living paycheck to paycheck," Valero said. "Our budget was spend until the credit card was declined. Now we have a budget," and paid off all but one credit card, she said.
Valero is one of the contestants in the college edition of the Government Employees Credit Union's third Savings Challenge. The winner of the contest, who will be announced Dec. 13 at halftime of the UTEP-NMSU basketball game, will receive a $10,000 prize. The other participants will each receive prizes of $2,500 each.An accounting firm determines the winner by reviewing the participants' financial records to see who has saved the most money, paid off the most debt and created an effective budget. Also figuring into the winning equation is how students have been able to find sources, other than student loans, to pay for their education.
Harriet May, GECU chief operating officer, said college students were targeted for the credit union's third Savings Challenge because "they come out of college loaded with debt."
Many college students don't know how to handle their finances, May said. Students need to learn "how to save and borrow wisely, and how to pay for college," she said.
Roger Portillo, 29, a UTEP junior studying accounting, said he's stopped trying to borrow the maximum amount he could get from federal student loans, and now is only getting the amount he needs to cover tuition not covered by federal grants and for books. He's also won a $600 scholarship for the next semester.
"I've separated needs from wants. Before, I was maxing out more than what I needed for tuition," said Portillo, who has a student loan debt of about $13,000.
Valero said she also has stopped getting student loans to pay for extraneous expenses, and is relying solely on grants and other financial aid to pay her tuition.
The Savings Challenge coaches "encouraged me to stop doing that (student loans) if you don't have to," said Valero, who has accumulated $11,000 in student loans. "You have to stop incurring debt and start paying it off."
At UTEP, 9,406 students now have student loans, which average $14,215, according to UTEP data.
Krystal Hoganson, 24, a UTEP sophomore studying electrical engineering, said she received $5,000 in scholarships this semester for expenses, and also is now getting her tuition paid through UTEP's Promise Plan, for entering freshmen, and transfer students with annual family incomes of less than $30,000. Hoganson transferred from El Paso Community College to UTEP this year. She never applied for scholarships before the Savings Challenge.
Getting money for her tuition and other school expenses has allowed Hoganson to reduce her hours at work to part time so that she can spend more time on her school work, she said.
Alex Rascon, one of the Savings Challenge coaches, said being able to work part time can help a student get through college faster. "If you delay graduating, you delay your (higher) earnings potential," he said.
Rascon said that if a student can't get grants or scholarships to pay for tuition, then a federal student loan is the "next-best option." If a student can eliminate other debts before graduation, he said, then it will be easier for the student to pay off the federal loans. Students start paying back the federal loans after graduation.
Robert Armstrong, 30, who received a degree in communication at UTEP last summer and now is working on a master's degree in leadership studies, said his student loans total about $40,000. But, he said, the budgeting skills he learned in the Savings Challenge have made him more prepared to pay off the loan when he gets out of school.
"We got rid of $5,000 in debt," which will make it easier to pay off the student loans in the future, Armstrong said. He and his wife also have saved $5,000 since the Challenge began in January, even though Armstrong was unemployed for two months and had to take a lower-paying, part-time job he said. His wife is a bank supervisor.
Armstrong, who has four children, said paying for school and raising a family at the same time has been a financial challenge.
The Savings Challenge taught him and his wife "how to survive on a reasonable budget instead of worrying about each bill as it comes in," Armstrong said. "Without a budget ... you're navigating in the dark."
It also taught him how to communicate with his wife and children about financial issues, he said.
Lucia Calixtro, 23, a UTEP senior pursuing a degree in bilingual education, said the Challenge has made her understand "how to tackle my debt" of $20,000 in student loans after she graduates next year.
Calixtro said she decided to go from a part-time to full-time job at an El Paso bank to pay off her credit-card debt faster. She's reduced her credit-card debt from $3,200 to about $1,200 since January and has saved $3,000.
Before the Challenge, if Calixtro had money, she spent it, and "if I didn't have it, I would spend it using credit cards," she said. "I won't use a credit card anymore."
Portillo, the accounting student, said he and his wife always had a budget, but they lived paycheck to paycheck because they never saved money.
The couple have saved $6,500 since January, which has allowed them to stop paying for emergencies with a credit card.
"I paid $580 (from savings) to fix my wife's car. Last year, that would have gone on a credit card," Portillo said. "The bottom line is I've learned the value of a dollar."
Christopher Bobino, 22, a UTEP junior studying electrical engineering, said learning how to save during the Challenge has been a lifesaver since he lost his job at the UTEP dormitory where he lives.
"I'm not saving now; I'm just living off what I have." His savings have decreased from $1,400 to about $900, he said.
Hoganson, the other electrical engineering student in the Challenge, said she was "financially irresponsible" and a "walking financial mess" before entering the contest.
"I had 37 (bank account) overdraft fees last year," which cost more than $1,000, she said. She had racked up a $10,000 debt from credit cards and fees for broken rental leases. The debts grew because they were turned over to collection agencies.
"My main goal for participating in the challenge was to get the opportunity to attack my debt like a bear," Hoganson said, adding a "growl" to punctuate her desire. She's whittled her debt down to about $3,000, and has about $4,000 in savings, she said.
