Eliminate Credit Card Debt
BBB advises: as you pack your teen for college, throw in some financial advice
Published Sunday, July 23, 2006
If you are the parent of a college freshman, the "To Do" list is probably growing by the hour. There are dorm room furnishings to consider, computer equipment decisions to make, immunization/medical records to gather and other items to "check off" your list. The Better Business Bureau advises parents to include financial counseling.
"Parents typically take the time to discuss the risks of illegal drug use and other personal safety issues. We hope they will also remember to advise their college-bound son or daughter how to manage finances responsibly. That way, when they graduate in a few years, they'll have a head start on the road to financial stability," said Steve Cole, president and CEO of the Council of Better Business Bureaus.
The BBB is joining with national non-profit consumer credit counseling agency ClearPoint Financial Solutions to encourage parents to review with their teens the "ABCDs" of good finances, before they head off to campus:
A is for Account Awareness
(1) The typical teen needs some direction when selecting a bank, opening a checking account and learning how to maintain it. What may seem common sense to you (record every withdrawal, balance the account each month, don't draw on funds until they are available), might be a mystery to your child. Don't forget to offer instructions on how to use debit and ATM cards responsibly.
(2) Tell your teen to keep his account information (paper statements, passwords, ATM cards) in a safe, secure location. BBB surveys show that identity theft victims are more likely to be robbed by people they know (family members, friends, roommates), than a stranger. Do not leave account statements or computer passwords strewn about the dorm.
(3) Emphasize the importance of regularly monitoring his/her financial accounts (checking, saving, credit). That is a quick way to determine if someone has stolen their password, Social Security number or account number is accessing their funds, and it is the best way to keep a handle on their financial status.
B is for Budgeting Basics
(1) Following an organized budget will help your teen stay on track with spending and financial goals. Help your college freshman to set up a semester budget. Begin with income. Your son or daughter to calculate how much money will be available from you, a part-time job, financial aid, grants or loans or other revenue sources.
(2) Help your student project what he will need during the semester for books, rent, food, entertainment and other expenses. It might be a good idea for your teen to track expenses that first month and then determine if their income for the semester is likely to prove sufficient. If expenses need to be cut, what is expendable?
(3) Discuss what happens if there is a gap between their expenses for the month and available income. Will your teen live off their credit card (not a wise idea!)? Call home for more money? Take an advance off of next month's income? Obtain a part-time job?
C is for Credit Cards
(1) It is not uncommon for college students to be inundated with offers for credit cards. Those students who succumb to the easy lure of "charging it" can wind up carrying hefty card balances. Help your teen understand that credit is not the same as cash and that interest rates, late fees and other charges will impact the amount they owe.
(2) Even small purchases can add up over time, particularly if students are lax about making timely payments. If it makes sense for your child to have a credit card for emergencies or important school-related expenses, show them how to research the best card for their purposes. Ignore "free t-shirt" or tempting credit lines. Look at the annual fee, the interest rate, grace period, late fees and other charges.
(3) Stress that a credit card is one small part of an overall financial plan. Possessing a credit card should not free your teen of the responsibility to set spending priorities, exercise fiscal restraint, and establish a good credit record.
D is for the Dangers of Debt
(1) Your teen needs to understand how important it is to pay off their debt in a timely and responsible fashion. Discuss the basics of debt management: pay on time; pay more than the minimum payment due; and, avoid missed or late payments that result in costly late fees, higher interest rates and negative marks on their credit report.
(2) Assure your college student that it is okay to ask for help, from you, from a professional credit counselor or from sources of financial assistance the college may offer. One easy way to locate reputable credit counselors is to contact the National Foundation for Credit Counseling (www.nfcc.org/) or the Association of Independent Consumer Credit Counseling Agencies (www.aiccca.org/) for a list of members.
(3) Do not succumb to a "too good to be true" solution. It is a sad fact of life that scam artists are always willing to prey on those who feel caught in a financial bind. College students are not immune from tempting "make hundreds of dollars, no experience necessary" employment schemes; enticing "guaranteed" loan offers; or unsolicited e-mails promising to reduce or eliminate burdensome debt.
Copyright Boca Raton News
posted by News at 3:45 AM
Published Sunday, July 23, 2006
If you are the parent of a college freshman, the "To Do" list is probably growing by the hour. There are dorm room furnishings to consider, computer equipment decisions to make, immunization/medical records to gather and other items to "check off" your list. The Better Business Bureau advises parents to include financial counseling.
"Parents typically take the time to discuss the risks of illegal drug use and other personal safety issues. We hope they will also remember to advise their college-bound son or daughter how to manage finances responsibly. That way, when they graduate in a few years, they'll have a head start on the road to financial stability," said Steve Cole, president and CEO of the Council of Better Business Bureaus.
The BBB is joining with national non-profit consumer credit counseling agency ClearPoint Financial Solutions to encourage parents to review with their teens the "ABCDs" of good finances, before they head off to campus:
A is for Account Awareness
(1) The typical teen needs some direction when selecting a bank, opening a checking account and learning how to maintain it. What may seem common sense to you (record every withdrawal, balance the account each month, don't draw on funds until they are available), might be a mystery to your child. Don't forget to offer instructions on how to use debit and ATM cards responsibly.
(2) Tell your teen to keep his account information (paper statements, passwords, ATM cards) in a safe, secure location. BBB surveys show that identity theft victims are more likely to be robbed by people they know (family members, friends, roommates), than a stranger. Do not leave account statements or computer passwords strewn about the dorm.
(3) Emphasize the importance of regularly monitoring his/her financial accounts (checking, saving, credit). That is a quick way to determine if someone has stolen their password, Social Security number or account number is accessing their funds, and it is the best way to keep a handle on their financial status.
B is for Budgeting Basics
(1) Following an organized budget will help your teen stay on track with spending and financial goals. Help your college freshman to set up a semester budget. Begin with income. Your son or daughter to calculate how much money will be available from you, a part-time job, financial aid, grants or loans or other revenue sources.
(2) Help your student project what he will need during the semester for books, rent, food, entertainment and other expenses. It might be a good idea for your teen to track expenses that first month and then determine if their income for the semester is likely to prove sufficient. If expenses need to be cut, what is expendable?
(3) Discuss what happens if there is a gap between their expenses for the month and available income. Will your teen live off their credit card (not a wise idea!)? Call home for more money? Take an advance off of next month's income? Obtain a part-time job?
C is for Credit Cards
(1) It is not uncommon for college students to be inundated with offers for credit cards. Those students who succumb to the easy lure of "charging it" can wind up carrying hefty card balances. Help your teen understand that credit is not the same as cash and that interest rates, late fees and other charges will impact the amount they owe.
(2) Even small purchases can add up over time, particularly if students are lax about making timely payments. If it makes sense for your child to have a credit card for emergencies or important school-related expenses, show them how to research the best card for their purposes. Ignore "free t-shirt" or tempting credit lines. Look at the annual fee, the interest rate, grace period, late fees and other charges.
(3) Stress that a credit card is one small part of an overall financial plan. Possessing a credit card should not free your teen of the responsibility to set spending priorities, exercise fiscal restraint, and establish a good credit record.
D is for the Dangers of Debt
(1) Your teen needs to understand how important it is to pay off their debt in a timely and responsible fashion. Discuss the basics of debt management: pay on time; pay more than the minimum payment due; and, avoid missed or late payments that result in costly late fees, higher interest rates and negative marks on their credit report.
(2) Assure your college student that it is okay to ask for help, from you, from a professional credit counselor or from sources of financial assistance the college may offer. One easy way to locate reputable credit counselors is to contact the National Foundation for Credit Counseling (www.nfcc.org/) or the Association of Independent Consumer Credit Counseling Agencies (www.aiccca.org/) for a list of members.
(3) Do not succumb to a "too good to be true" solution. It is a sad fact of life that scam artists are always willing to prey on those who feel caught in a financial bind. College students are not immune from tempting "make hundreds of dollars, no experience necessary" employment schemes; enticing "guaranteed" loan offers; or unsolicited e-mails promising to reduce or eliminate burdensome debt.
Copyright Boca Raton News
posted by News at 3:45 AM
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