7 Don’ts for Fiscal Freshmen

(This is a guest article by Jack Busch*)

As a student, your financial picture is a bit unique. You have few assets and few hours to devote to a job, thus little income. You have little credit history (good or bad) but some limited access to revolving credit and other loans. Because of this, the years between matriculation and graduation are somewhat of a testing ground for your creditworthiness. Lenders give students just enough rope to hang themselves – and during those crucial four or so years, you can either establish a firm foothold on your way up to excellent lifelong credit or scar your credit rating for life with poor decisions. But by being an early adopter of responsible spending habits, you can save yourself from a lifetime of debt and sorrow. Your continued fiscal auspiciousness should be dictated by a series of don’ts. For example:

Don’t carry a balance.

If you have to use that emergency credit card, make sure you get it paid off ASAP. If that means no pizza or beer for a week, then so be it. If it means borrowing $50 from your pop, then do it. Believe me – it’s worth it to miss out on that one wild night in order to avoid the never-ending downward spiral of credit card debt. As long as you don’t flunk out, there’ll be plenty more wild nights to come. But that credit card debt will last far longer than a hangover if you let it get out of hand.

Don’t open multiple accounts.

If you’ve gone ahead and ignored the first don’t and maxed out your credit card, then don’t make things worse by getting another credit card. Instead, focus on paying down your current debt or, as a last resort, transfer your balance to a 0% interest card, such as the Discover More Card (but watch out for those fees!). I’m actually a bit hesitant to recommend the latter route, since two cards are always tougher to pay off than one, and you likely won’t qualify for a favorable credit with high debt to credit ratio. Opening another credit card count when cash is tight is akin to drilling a hole in a sinking boat to let the water out. It just doesn’t make sense.

If things are truly dire, you may want to consider credit counseling or a debt consolidation loan. But both of these open routes open an entirely different can of worms – do so with caution.

Don’t spend your salary before you’ve got it.

Yes, I know, you think you’re going to be a wheelin’ dealin’ lawyer or a snazzy corporate consultant when you graduate. But don’t bank on that bestselling novel or big banker’s bonus to pay for your credit card debt in college. First of all, your lucrative career is going to be four years down the road (or more, if the job market stinks) which gives all that debt plenty of time to accumulate interest. Plus, you’ll have an entirely new set of expenses once you’re living the urban professional lifestyle. Going into the post-grad world with a bunch of undergrad debt is like going straight from being a student to being a parent. Except that lousy ungrateful kid you’re paying for is yourself.

Don’t use your credit card to its full extent.

Ever notice how your car’s speedometer goes up to something like 140 miles per hour? Ever notice how driving that fast will get you killed or arrested? Your credit card is the same way. There are lots of neat features that come with your credit card, such as cash advance, convenience checks and deferred interest. But don’t use them and don’t use up all of your credit line. Cash advance (i.e. getting cash from an ATM using your credit card) comes with an astronomically higher interest rate and can’t be paid off until the rest of your balance is paid off. That means that $60 you pulled out can actually end up costing you twice that much in the long run. Use your credit card only for emergencies or only to rack up points, cashback and rewards and then pay it off in full each month.

Don’t forget to check your statement.

You’re already checking Facebook every 24 minutes, why not bookmark your bank’s website while you’re at it? Knowing what you’re spending and how much you’ve got to spend will save you from overdraft charges, over-the-limit fees, late fees and other unpleasant surprises. If that’s too boring for you, there are plenty of flashy tools that you can use to track your finances, such as Mint, Thrive and Wesabe.

Don’t let your parents write the check.

To get the full gravity of how much everything is costing you, arrange your finances so that the money for tuition, room and board, etc. comes out of your account. This can be necessary for tax purposes but it also instills a sense of how much everything is costing and how money should be budgeted.

When I was in college, my grandparents paid for much of my expenses. But instead of cutting the school a check whenever money was due, they just plunked all the money I was going to get from them into my checking account on day one. It was a daunting sum of cash to see on my bank statement, but I knew that if I blew it all, it’d be the end of my education. I was in charge of writing my rent check each month and arranging payments with the school’s registrar to make sure I was still signed up each semester and it taught me a lot about handling vital finances.

Of course, you don’t have to go it alone completely. It’s not a bad idea to become an authorized user on one of their credit cards strictly for emergencies. Especially since the credit cards for college students offered (for a limited time) on campus can often be riddled with pitfalls and traps designed to extract money from the uninitiated.

Don’t let your spending outstrip your income.

This is a pretty simple one. If you have no job, then you have no income. This should make budgeting easy. If all you have is some money you received as a gift for your high school graduation and a check for your birthday and Christmas, then it should be pretty easy to calculate how much you can spend before you’re broke. If this kind of lifestyle feels restricting, then get a part time job. Donate plasma. Wash dishes in the cafeteria or get a work-study position through the school. You can party all you want as long as you subsidize the expenses.

This last don’t is important , and if you can’t remember anything else from this article, remember this: don’t live beyond your means. Follow that one rule and you’ll be fine.

Let college be the time in your life when you forge a healthy relationship with credit. Because once you get out and payments on your student and federal loans become due and it comes time to finance a house, a car and a family, the rules will stay the same but stakes get much higher. Master these guidelines today and thank yourself for sidestepping crippling debt tomorrow.

*About the author: Jack blogs about personal finance, credit cards and debt management at Master Your Card and DebtLoans.com.au.

*Image Credit: Photograph by RBerteig [via Flickr Creative Commons]

5 Ways Parents Can Help Reduce Student Debt

(This is a guest article by Gary Foss*)

Often when a child leaves to enter further education, they will not have had to budget or manage their own money before. This can be quite a shock to the system and some young adults will deal with this more responsibly then others. Unfortunately, some will leave with considerably more debt than others. In many cases, this will be because the temptations of having money are all too much.

Many parents may not be able to help their children by providing money and helping to pay for their education and, for this reason, there is a lot that parents can do to help build their child’s financial independence before they leave.

1) Teach Them to Become Financially Independent

One of the best things that you can do is to encourage your child to save their money from an early age and to see and enjoy the benefits of saving. Often this will also result in the child feeling less inclined to spend their money in one go or on items that they do not really need.

It can be a good idea to encourage your child to have a small job when they are old enough, as again, this teaches them responsibility for their own money. It will also further reinforce the idea of saving and hopefully they will take pride in being able to manage their finances independently.

2) Point them in the right direction to fund their education

There are a number of ways to find money for education these days. Help your son or daughter identify these avenues:

a) Student Loans – Government student loans are the standard way to acquire money for your education. If you or your child have enough to pay for their schooling then you might not even need to go this route.

b) Scholorships & Bursaries – Most colleges and universities in North America offer a vast array of scholorships and bursaries that you can apply for. There are a number of resources on the internet and your school will be able to point you in the right direction for these as well.

c) Family Assistance – Often a relative will be willing to put up a portion of a student’s education to help them cover the costs. This is not always possible but it certainly helps your child get a head start on the financial planning that goes along with eduction.

d) Commerical debt – Tell your children to avoid this type of education funding as it can be the most expensive and dangerous. If you are very diligent you can take advantage of commercial debt for education but it is a risk that may not be worth pursuing.

3) Help them stay on top of their finance

You may also find that suggesting they keep track of all their income and expenses will teach them how to budget their money, which is an essential skill for the future. Once your child has begun full-time education it is advisable to sit with them and establish some form of budget.

This could be simply working out how much money they have per week and then taking out only this amount from the cash machine to avoid overspending. Something like this can really make a difference to how much debt they will have when they eventually leave. You should also advise against obtaining store and credit cards as these can provide too much temptation and cause them to accumulate debt.

4) Encourage them to get a part-time job

Some students don’t have the time or the energy to pick up a part time job on top of their studies but many can and should. If it’s possible, encourage your children to get a part-time job or even a full-time job during the summer vacation from school.

A job will give them a chance to earn a bit of money to go towards their education but it will also give them a sense of how much things actually cost. A student that never works doesn’t understand the costs of their education and the things that come along with it (Ie. housing, food, clothing etc.)

5) Help them if they’re having trouble

Lastly, you should always encourage your child to talk to either yourself or someone in a relevant department at their University or college if they do find they are struggling with their finances. Often, students will struggle on and get themselves into even more debt because they did not want to admit that they could not cope.

You might also need to bail them out by lending them money to cover their education debts – you obviously want your child to be able to stand on their own two feet but sometimes they might need your help to save them from financial disaster.

*About the author: This is a guest article by Gary Foss from SIPPS.org.uk - personal pension and finance specialists.

*Image Credit: Photograph by upsuportsmouth [via Flickr Creative Commons]

Credit Card Debt Among College Students

(This is a guest article by Clark Chambers*)

College students are increasingly relying on student credit cards to make ends meet. According to student lending giant Sallie Mae (SLM), average credit card debts carried by graduating college seniors jumped $1,200 between 2004 and 2008. The same study also shows that only a shocking 15% of college students do not carry any credit cards.

The number of credit card-toting college students should change however now that the “Credit Card Holders’ Bill of Rights” act was signed into law. The bill requires credit card companies to lay off the high-pressure pitches to college students unless the students have proof of independent income or complete a financial literacy course. Otherwise, the credit card companies need Mom and Dad's consent to market credit cards to college-age students until they reach the age of 21. So, what does the passing of this new bill mean for students? No more stacks of credit card offers piled up in their mailboxes right after their eighteenth birthday, shucks!

The provisions in the "Credit Card Holders' Bill of Rights” act also outline new protections for college students in the form of credit line limits and requirements that card issuers may ask for. Card companies must receive proof of income and credit history, or a co-signer before issuing a card to borrowers still in college.

Reasons for the card increase amongst college students

According to some research analysts, college students make easy targets because they have little independent income and a significant need for ready cash, and Mom or Dad will often step in if a college student gets into trouble with a credit card. But, the main issues right now are the lack of college financial aid and personal savings, combined with skyrocketing college costs create the perfect storm for college students to go looking for additional funds.

Another cause for student’s increasing their needs of credit cards is the lack of private student loan funding available for school. Do to the current credit crisis and the changes the Government made to the student loan industry, students are finding it more and more difficult to find private student loans. So, the next best thing students are turning to is student credit cards to pay for living expenses, books, fees, supplies, and in some cases, college tuition itself. Often, with the constant hounding of the credit card companies on and off campus, students eventually find themselves holding on to four credit cards, complete with balances, by the time they graduate school.

Ways to avoid a credit card disaster

• Only buy what you can afford. May sound like common sense, but this is where a lot of people get into trouble. That new Macbook Pro or HDTV you’d never have the cash to pay for may seem like a good idea when you’ve got plastic. If you are unable to afford to pay with cash or a check, don’t charge it.


• Do not replace student loans for credit cards. Federal college loans have low, fixed interest rates, as well as borrower benefits that will allow you to postpone making your payments if you’re ever experiencing a financial hardship. This is something credit card companies will not keep in mind. Take advantage of your federal aid, scholarships and private student loan options first to cover all your school expenses before turning to credit cards.


• Get digital. Most major card companies offer automatic e-mail or text alerts that can notify you about your current balance and payment due dates. If you’re prone to forgetting payment dates, use these alerts. It will make remembering those bills so much easier and save you money.


• Pay off that balance. Don’t settle into the habit of paying only the minimum due, pay off the entire card balance each month to prevent years of payments.


• Put it on ice. If all else fails, stick those credit cards in a large bowl, fill it with water, and stick it in the freezer. The next time you’re tempted with an impulse buy you’ll be giving yourself time to think. Thawing or breaking apart that block of ice will give you the needed time to collect your thoughts and really think about that purchase you are about to make.

*About the author: This guest post was provided by Clark Chambers, a freelance writer who covers topics on college finances including; financial aid, private student loans, student credit cards, and debt consolidation.

*Image Credit: Photograph by Andrman [via Flickr Creative Commons]

The Value of Education: Is the Investment a Good One?

(This is a guest article by Lewis Bennett*)

Entering into further education can be extremely beneficial to your future. It is also a necessity for a wide range of jobs and careers, such as becoming a doctor, nurse, dentist or engineer. Although continuing on to University or College can be costly, it also provides you with a lot of life experiences that you would otherwise miss out on. It can enable you to build additional skills and confidence, and provide a number of new opportunities.

Nearly 90% of young people in America graduate from high school, and about 60% of those graduates start college the next year. There are a number of reasons why students choose to attend college.

How Your Education Affects Your Career

For those considering further education, there is still evidence to indicate that you are more likely to be in demand than those who do not have any extra qualifications. Furthermore, there is also a great deal of evidence to suggest that those with degrees will also fill higher level occupations as they are deemed to be more qualified.

Earning Potential

By obtaining a higher education qualification, you will invariably increase the amount that you are capable of earning and be provided with a much more extensive range of opportunities in the long-term.

The US Census Bureau is quoted with saying the following:
“Adults with advanced degrees earn four times more than those with less than a high school diploma. Workers 18 and older with a master’s, professional or doctoral degree earned an average of $82,320 in 2006, while those with less than a high school diploma earned $20,873.”

Americans with a bachelor’s degree earned $56,788 on average according to the Census while those with a high school diploma only earned $31, 071. This is a significant amount of money but when you calculate that amount over 10 or 15 years that number rises to $150,000 and $225,000 respectively.

A Rewarding Career

Having an extensive education behind you also makes you more likely to have a long lasting and rewarding career rather then just some job. Anyone can find a job but a fullfilling career can be more elusive.

It has also been noted that those who graduate from further education are more likely to work for the majority of their life and are unlikely to be unemployed.

Education doesn’t guarantee success

A college degree doesn’t necessarily guarantee success but it does increase your chances of obtaining wealth. There are lots of highly educated individuals working at gas stations and there are grade school dropouts running multinational corporations but statistics show that an education will increase your chances.

In a recent survey of some of the America’s wealthiest businesspeople, 30% felt that a good work ethic was the most helpful asset in achieving success. Work ethic was chosen just slightly more than the 28% that said a post secondary education was more important.

“Donative Commercial Non-Profits”

There are a number of economists that study higher education, like Gordon Wilson, who suggest that universities and colleges are “donative commercial non-profits” – that is, they are institutions that charge a fee, but where that fee doesn’t cover the cost of the product.

A business and a “donative commercial non-profit” are different in many ways – to start with, motivation and customer choice are very different. Prospective students and their parents base their decisions on hunches and reputation. In that sense, you often only have one chance at choosing a college: therefore there is no opportunity for repeat customers.

Another important element is how your fellow students will influence the value and quality of your education – both in the present and throughout the rest of your career and life. The networks of fellow alumni and the prestige of your educational institution will follow with you for years to come.

Additional Benefits to Further Education

Many students believe that their going to University was incredibly worthwhile and that they learnt a lot about themselves, as well as obtaining qualifications to obtain a good job once they graduated. There is also the added benefit of experiencing a wide social scene and mixing with people from different cultures. You are also far more likely to develop good communication skills and this is something that is just as attractive to future employers as your degree.

Even if you feel that your time has passed, you can still opt to continue your education at any age and mature students are becoming more and more common.

*About the author: This article was written by Lewis Bennett - He writes about education and finance, including the mortgage and remortgage market.

*Image Credit: Photograph by CarbonNYC [via Flickr Creative Commons]

10 Ways to Dramatically Improve Your Credit Score

(This is a guest article by Karen Schweitzer*)

Everyone knows that paying bills on time will have a positive impact on credit scores. What many people don’t realize is that there are lots of other ways to improve your score--no matter how low it is. Here are 10 tips to keep in mind:

Check your report for errors. A low credit score can sometimes be a byproduct of errors on your credit report. Since an estimated four out of five reports have errors on them, there is a very good chance that yours does as well. If you do find an error, you can dispute it with creditors and the three credit bureaus before any more harm is done to your score.

Add as much info as you can. Depending on what is already included, adding information to your credit report can sometimes increase your credit score. Things to add include: birth date, address, telephone numbers, bank account numbers, and employer.

Get a credit card. Getting a credit card is a good way to establish credit history. The longer your credit history is, the better it is for your score. And when you use credit and pay it back responsibly, it impacts your score in other positive ways.

Piggyback on someone else's card. When you add your name to someone else's credit card account, you can piggyback on their good credit. Every time they make a charge and pay it off, it helps your credit score. One warning--only do this if you are absolutely sure that the person with the account is responsible and able to make the required payments. Late payments or slow payments on the card can have a negative impact on your score.

Request higher limits. When coupled with low balances, high credit card limits can boost your credit score. Most credit card companies will up your credit limit if you make the request. If you're a good customer, you can request and get higher limits several times throughout the year.

Negotiate better terms. Having better terms (lower interest rates) on your credit cards can make them easier to pay on time. And as everyone knows, paying on time is the best way to steadily improve your credit score.

Re-open closed accounts - Closing an account is never a good idea. Even if you don’t want to use a particular card anymore, you should still keep the account open. Long credit histories are always better than short credit histories. If you recently closed an account, call the creditor and request to re-open the SAME account. Within a few weeks, you'll probably see a double-digit increase in your score.

Get a loan. Getting and paying regularly on car loans, personal loans, student loans, home equity loans, and other types of credit typically issued by banks can lead to double-digit improvements in your credit score in just a few months time. Be careful not to make any late payments through. Just one late payment on a loan can undo months of dedication and hard work.

Lower your debt. This is usually easier said than done, but it is a good way to improve your credit score. Having a low debt-to-income ratio makes it easier to get a loan. It also makes it easier to pump your score up in a few months time.

Pay off old debts. Old debts and past due accounts can be a huge drain on your score. Even small bills of less than $100 will drag your score down. Paying off these old debts will not create an immediate boost in your score, but it will prevent the debts from working against you as you try to employ other score-hoisting tactics.

*About the author: This is a guest post by education writer Karen Schweitzer. Karen is the About.com Guide to Business School. She also writes about online courses for OnlineCourses.org.

*Image Credit: Photograph by khalid almasoud [via Flickr Creative Commons]

How to Spot Financial Abuse

(This is a guest article by Lewis Bennett*)

Financial abuse is the act of stealing or defrauding someone of their money, possessions, or property. It is a very common form of abuse in the United States. If you are being financially abused, or know someone who is, then there are a number of ways that you can beat this problem but first you must learn how to identify it.

The following is a list of some of the indicators of financial abuse:

• Forging a signature

If you notice that someone else is signing cheques for a friend or relative you will want to help them notify their bank immediately. Also pay close attention to any additional names being added onto a bank account, or large amounts of money being withdrawn by another person on behalf of your relative or friend. Elderly people often fall victim to this scam.


• Inability to afford things

Another sign of financial abuse is when you notice that you or someone you know is suddenly unable to pay their bills or purchase items that they need and should be able to afford. This could happen when they are attempting to take out money at an ATM or if they are trying to pay for groceries with their debit card. Review financial statements and make sure that the reason they have insufficient funds is legitimate.


• Things going missing

The most common form of financial abuse is when possessions of value start going missing. People with abusive partners and the elderly often find that valuable items around their home will start disappearing. In most cases the abuser will sell these items.


• Unexplained changes to a will

This is another symptom of financial abuse that is especially prevalent among the elderly. Sometimes people will try to befriend elderly people hoping that they can make their way onto their will. If you are suffering from poor mental or physical health it can affect your decision-making processes. Predators will take advantage of these people to get on a will. You don’t want to be suspicious of everyone that might befriend an elderly relative but it’s also naïve to think that there aren’t people out there doing this.

How can this occur?

Often the person in question will be exploited by someone that they thought they could trust. This could be a carer, family friend, or even a member of the family. This can make spotting financial abuse difficult at times as it can be hard to distinguish. However, it is important to remember that no matter who is responsible for the abuse, it can all be dealt with by professional means.

Financial abuse can occur in the person’s own home, in a retirement home, or in a day care centre. The key is to be vigilant and recognise the signs above.

People that are most susceptible to financial abuse

Although people that suffer financial abuse come from a range of backgrounds, the following factors will make a person much more vulnerable:

• Spending a lot of time alone
• Mental or physical disabilities
• Loneliness
• Poor understanding of financial matters
• Having unemployed family members or family with drug problems
• Having family members that have recently died

Reasons for the financial abuse within the family

Oftentimes a family member such as son, daughter, grandchild, or spouse perpetrates these acts. They do this for a number of reasons:

• They have drug, gambling, or financial problems
• They stand to inherit a significant amount of money, which they feel is rightfully theirs
• They have grudges with other family members and they want to prevent them from inheriting money
• They have had a bad relationship with the family member and feel that they are owed this money

Who Should I Contact if I feel this is Happening?

If you are concerned for yourself or for someone that you know, then you should contact Health & Human Services in order to explain the situation to them. They should then be able to investigate the circumstances of this further.

Should you feel that a crime has been committed and you have proof of such, then you can contact the police. The important thing to remember is that you must contact someone for help immediately and do not let the situation continue. The police will likely suggest that you contact the bank to freeze bank accounts that might be jeopardized by the financial abuse.

If you feel that you require any legal advice then you should contact a professional body, such as a solicitor, for further help and guidance.

*About the author: This information was put together by IVA Advice, a provider of free debt advice and resources

*Image Credit: Photograph by seretuaccidente [via Flickr Creative Commons]

Learning to Save - Tips on Starting Your Investment Portfolio

(This is a guest article by Jeff Roberts*)

So you’ve done it... you landed that new job, and are well on your way to becoming the financially responsible adult your parents always dreamed of. And now for the first order of business - how to spend that newly fattened paycheck. Sure, you could buy gold and jewelry, a phone that does everything short of making coffee, or a new wardrobe to make sure you’re the snazziest accessory in your corner office. And while buying like there’s no tomorrow certainly holds an immense appeal, spending all of your extra earnings every month is a surefire way to end up in debt fast. After treating yourself to a few luxuries, it may be time give some serious thought to using your money more wisely. Now is the perfect opportunity to develop and begin to grow an investment portfolio. Think of it as a way to ensure that your money is making more money.

A portfolio is a collection of mixed investments. The assets within your investment portfolio can include everything from stocks and bonds to gold certificates and real estate (Or anything else that is expected to retain value long term). In essence, developing and building your portfolio is the most important part of diversification; the key to limiting your risk and maximizing your return. But if you’ve never invested (or, as is the case for many young Americans, even saved) before, the idea of building a portfolio can seem like a daunting task. The key, then, is to take it slowly; learning as you go which options are the best for you. There are, however, some basic guidelines that can help just about any budding investor:

Start with a goal
Knowing where you want to be is an essential first step in deciding how to begin. Of course, your investment goals will vary wildly based upon what stage of life you’re in, so you should be prepared to evaluate accordingly. A single person who is out of college and embarking on their first major career choice can afford to be more aggressive and take larger risks than, say, someone who has a family depending on them or is still struggling to pay huge student loan bills.

Money management is an abstract concept that can seem baffling, but everyone has dreams that they want to see realized. Come up with a concrete goal that you’d like to achieve, and suddenly setting aside money for your investments won’t seem like as much of a hardship. Motivation is a key ingredient to a successful investment strategy.

Do your research
This is probably the most important part of building a portfolio. Educate yourself on the basics of investing in general. You have to have a solid foundation on which to base your investment decisions. A great place to start is with the company that employs you, as it’s always a good idea to work with something you know a little something about. Read your company’s quarterly and annual reports, and compare them with the competition. (As an added bonus, you will develop a keener understanding of what makes your field of business tick) Use the internet, the newspaper, and the library as your tools for understanding as much as you can about the investment world. Once you have a general idea of how investing works, it’s time to talk to an investment advisor. Ask pertinent questions, and make note of any advice they offer you. You work hard for your money—don’t risk it until you’re sure that you know what you’re doing.

It’s also a good idea to find a mentor; someone who isn’t interested in selling you a product or service. A friend, family member, or coworker who does well in the market may have valuable insight for you.

Know what you can afford
Before you can even begin to assemble your portfolio, you need to determine your risk tolerance. Decide from the very beginning just how much you can comfortably afford every month. Some people like to carve out a certain amount (such as 10% of their paycheck) while others prefer to divert something along the lines of their weekly designer coffee habit.

It’s important to look for investment products that are within your level of acceptable risk. Start with something safe (mutual funds and bonds are usually very forgiving) to help you build confidence. If your employer offers a 401(k), use this as a jumping off point.

Keep in mind that if you keep all of your financial work with one bank, they will usually repay your loyalty with lower fees and better rates.

You’re ready to get started. Remember, this is supposed to be fun—you’re taking an active role in building your wealth. Build a trial portfolio of the stocks you’ve chosen based on your research. Look into respectable online brokerages with affordable fees. (Stick to the ones that don’t require a minimum investment amount to get started) If you’re dedicated… you’ll be surprised at just how quickly you can see your portfolio taking off.

*About the author: This is a guest post by Jeff Roberts, an industry expert on the Gold Market. Jeff also consults for Goldline International.

*Image Credit: Photograph by thinkpanama [via Flickr Creative Commons]