Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, August 28, 1995 TAG: 9508280131
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
"So many of them are away from home for the first time," Connie Kratzer, a specialist in family resource management for the Virginia Tech Extension Division at Blacksburg, said of the new students.
Virginia Garretson, president of Consumer Credit Counseling in Roanoke, said how you handle that responsibility will have as much impact on your future as the grades you make.
People who prove in college that they lack the maturity to handle money can destroy their credit rating and even be prevented from getting the job they want, Garretson said.
Many of the students arrive with a lump sum that is supposed to last the entire semester, Kratzer said, whether the money came from parents or a summer job. The temptation, she said, is to run through the money now, perhaps in furnishing a dorm room and buying college sweatshirts and T-shirts. Instead, put off some of those discretionary purchases.
Count the weeks in the semester and divide the money into weekly bites, she advised. Spend by the week, not by the semester. Kratzer said some students run out of a semester's money by the end of September.
The same care must be taken with a checking account, perhaps the student's first account. Kratzer said students should remember to record all checks and automated teller machine withdrawals and to reconcile the balance with the bank.
Many students fail to take these simple precautions, she said, and they learn about the high cost of bounced checks.
Never get more cash than you really need from the ATM, Kratzer said. If you have cash in your pocket, you will spend it all.
She knows of students who will, for instance, write the check for the pizza when it is delivered, then collect cash from those sharing in the pie. This cash will disappear as fast as the pizza.
A real budget is burdensome for students just starting out, but Kratzer recommended tracking expenses in just one area.
She suggested starting with food. Kratzer said students will have coffee at Stone's, eat a hamburger at Burger King, buy a pizza for supper and then go out and eat later in the evening, which they would never do at home. She said students should record what they spend to put on the pounds and try to get the amount under control.
Students vary in their handling of money, Kratzer said. Some run through all their money in a month while others are more careful than she is.
Garretson recommended setting up a spending plan of some kind even if it's not a detailed budget. Learn to control your income and expenses.
You will be solicited for credit cards, but Garretson urged students to stay on a cash basis. Never use the card for ordinary living expenses such as going out to eat.
Many students believe their parents will bail them out if they get into debt, but this is a burden on most parents.
If you want a card, Garretson said, use it only as a convenience to buy items for which you can pay at the end of the month.
She knows of a woman college student who received offers for 17 credit cards, accepted all of them, and then charged the maximum to each.
The woman will not be able to avoid bankruptcy before graduation, Garretson said. "She worked herself out of a good job" in business, Garretson said, besides the record of a bankruptcy that will ruin her credit for the coming 10 years or longer.
Just earning a record of bounced checks from failure to record withdrawals and to reconcile statements can call into question your ability to get a job, especially in the financial industry, Garretson said.
She reminded those who are attending college with student loans that, the more they spend, the greater the financial burden after graduation. Don't make an impulse purchase that must be paid off years later with interest.
Mike English, manager of the downtown Roanoke branch of First Union National Bank of Virginia, said it's "a must" for students to handle their checking accounts and credit correctly. How you handle your finances in college will become your record after graduation.
English said First Union and most other banks are careful about issuing credit cards to college students. Those who get credit cards in their own name are generally those with a job or their own income.
In most cases, he said, parents will co-sign for a card with a low credit limit such as $500. They do this because they believe the cards are usually essential for traveling.
Students and their families will be helped this year because of a liberalization of the rules on interstate banking. Starting this fall, he said, banks can accept deposits across state lines.
That means that parents can make deposits in an account belonging to a student in another state, English said, provided that the bank has branches in both states.
by CNB