ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, August 19, 1996 TAG: 9608190125
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
IF you're just starting college, you will be earning a grade in finance no matter what your major.
During your academic years, you will have an opportunity either to build a good credit history or to create a reputation for financial irresponsibility. The latter could blight your career before it even starts.
Virginia Garretson, president of Consumer Credit Counseling in Roanoke, said one of her clients was a recent college graduate who had stretched 17 credit cards to their limits. She had no money to pay off her debts, Garretson said, and her terrible credit reputation prevented her from getting a good job.
From her years with the nonprofit counseling agency, Garretson has some advice for college students: "Don't accept all the credit cards offered," she said. Take one card - and save it for emergencies.
When you get that single card, she advised, pay in full when the bill is due. Stay on a cash basis.
Garretson said too many students try to impress their friends by entertaining them on nightly trips to restaurants and night spots, using a credit card repeatedly to pay the bills.
Garretson said students need to know how much money they have for discretionary spending. You should have a plan or (that dreaded word) a budget.
She also recommended opening a checking account at a local bank rather than trying to maintain an account back home. It is very difficult, Garretson said, to cash a check on out-of-town banks.
Then you must reconcile your bank statement monthly and keep good financial records.
A good investment, she suggested, is a small refrigerator if you live in a dorm. Then you can eat in most evenings instead of being forced into the high cost of eating out. Garretson said a group of friends should try to buy, prepare and eat food in a cooperative group, thus saving even more money.
Know in advance how much money you have to spend on meals. Connie Kratzer, a family financial specialist with the Virginia Tech Cooperative Extension said students living in apartments may eat out too often instead of buying groceries and cooking. Even those living in a dorm with access to the university's meal plan sometimes go out too often.
There are many ways to get into trouble by eating out. Kratzer knows of one student who put nightly deliveries of pizza for himself and friends on his credit card. Some friends never reimbursed him, but payments he received went into his pocket and the money was spent. After a year of pizzas and other expenses, he couldn't pay his credit-card bill.
You have to pay first for your books, classroom supplies and lab fees, she pointed out. Don't forget that your laundry will consume a lot of quarters. But then you have to budget for discretionary items like movies and CDs.
Kratzer said students first should try to determine what expenses they face.
Many students will be paying rent for the first time, but this is only the beginning because they have to pay for gas, electricity and other household bills as well. Even students living in a dorm must pay for a telephone.
Telephones can be a prime source of financial trouble, Kratzer pointed out, if there are too many calls to your family, friends back home and at other colleges.
Some students may get money monthly or weekly from their parents, but others may have a fund, perhaps from a summer job or long-term savings, that must last for an entire semester. Stretching out such a fund over time, at so much a week or month, is a great challenge for any person, Kratzer said.
If you have a car, remember that a vehicle is expensive, and wheel-less friends will want you to take them everywhere, Kratzer said. You must ask them to chip in to cover the cost of gas if you give them rides.
She, too, advised taking a single credit card and using it only for required large purchases. Don't use it to eat out or buy groceries, she said, because the food will be long gone when you face paying the debt.
Kratzer has seen students at Virginia Tech get into trouble over their failure to keep track of their checkbook, such as not recording ATM withdrawals. That quickly means bounced checks and each of them can cost more than $20 just in bank charges, she pointed out, rapidly depleting any balance.
Don't make a series of small ATM withdrawals, she said, and use your own bank's machine if you can. It makes no sense, she said, to pay fees as high as $4 in order to withdraw $10.
Garretson said that any young person who gets into financial trouble should notify his or her parents immediately.
Her agency, Consumer Credit Counseling, offers free classes in the Roanoke and New River valleys for any person who wants to learn how to budget, including college students.
Classes are held in Roanoke at 10 a.m. the first Wednesday and at 7 p.m. the first Thursday of each month. They are given at the headquarters building on Peters Creek Road.
The New River Valley class is scheduled at 7 p.m. on the last Tuesday of each month.
You can get more information or reserve a seat by calling (800) 926-0042.
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