Every Day Finances

Facts about College Kids that Scare Me

Where do kids learn about banks and credit? I have gone into many schools and spoken with many teens about money. There are always a handful who say things that startle me. I have heard things like…

Do I really need to pay credit cards back?
If paying bills bothers people, why don’t they just throw the bills away?
I know I have money left in my checking account because I still have checks.
Why do people need to work when they can get money anytime they want with an ATM card?

Sound unbelievable? Not only are these ideas commonly believed by kids, but there’s a logical thought process behind each one. If you don’t explain what you’re doing, your kids will make assumptions about money based on what they hear you say and what they see you do.

Take the idea that money from the ATM is free for you anytime you need it. The boy who believed that probably heard his parents complain about not having any money, then watched as they took money from the ATM. What other conclusion could he have drawn?

The idea that you don’t have to pay your bills back comes from a general assumption about the world based on ideas of fair play. You don’t have to run laps in gym if you have a sprained ankle. You can take a make-up test if you have a sick day. Why can’t you just put off the bills if you don’t have money because you got sick? If you can’t pay, they shouldn’t expect you to. That’s fair, right?

But kids grow out of these crazy ideas, don’t they. It’s not like they hold them onto them into adulthood. Trust me, they may not believe the exact same things, but their misconceptions and ignorance can still hurt them.

Here are some scary facts about college kids and credit cards from credit.com:

91% of undergrads have at least 1 credit card
Undergrads have an average of 4-6 credit cards (that means more than half have more)
$3,173 is the average amount of undergrad credit card debt (that’s not including student loans)
25% of undergrads have paid late fees
15% of undergrads have paid over limit fees

Does this scare you? It scares me! Don’t let your kids make assumptions. Teach your child about money and credit by speaking with them. You don’t have to be perfect (no one is), but showing your child the process behind your decisions can be eye-opening.

Start Small to Have It All

This is Part 2 of my “Having it All” series. The first part is “Step One to Having it All”

Everyone has a different definition of Having it All. In the first article, I asked you to list a few goals based on what you want out of life. Now, I want you to pick one for this exercise.

Living Debt Free with Enough Money for Expenses

That’s part of the “Having It All” dream for many people, so I’ll use it to illustrate how to start small and take action steps towards your goals.

As an example, I am going to use “Save $20 per week to build $1,000 in emergency savings in 1 year.” See how specific this goal is? That lets you check your progress and feel good about your success.

It’s also a good example of starting small. It may not seem like much, but $1,000 can cover a leaky roof or a brake repair. The less often you use your credit cards, the more your savings accounts will grow. One thousand in emergency savings is a good base for building the “debt-free” dream.

Now let’s break down the goal into action steps by first asking a simple question…

Do you have $20 a week to save?

If the answer is Yes…

Step 1. Set up a separate savings account in a different bank or credit union than the one you normally use. This way you won’t have easy access and it won’t be linked to your ATM/debit card.

Step 2. Visit your HR department to set up an automatic transfer from your paycheck, or, visit your bank to have $20 per week transferred from your checking account to your new savings account, or if you do online banking you can set this up yourself.

If the answer is No…

Step 1. Reduce expenses until you can save $20 per week.* (I’ll write more on this below.) Can you bring your lunch to work? Can you cut out the impulsive shopping? Think of how you can reduce your spending to come up with the $20.

Step 2. Return to the top and take Steps 1 and 2 above.

Step 3. Tracking and celebrating your success

I want you to check in on your progress throughout the year. Are you on track to meet your goal or did something happen to throw you off? We all want to be perfect, but that’s not real life. Things happen that get in our way. You have to understand this and get back on track as soon as possible to achieve your goal.

Keeping track also allows you to celebrate and feel good about what you’re doing. This is your baby that you’re nurturing – your future, your wealth, and the beginning of your dream life.

*Just a note about personal austerity measures. “What…” you might ask, “…does giving up eating out and impulse shopping have to do with having it all!? That’s my dream lifestyle!”

First, I’ll have you know that a lot of millionaires are pretty tight fisted. They spend their money selectively instead of blowing it on any old thing that comes along. So, I challenge you to think like a millionaire.

Second, many successful entrepreneurs like Bill Gates, Mark Zuckerberg, Julia Childs, Martha Stewart and Oprah Winfrey started with small budgets. They built their fortunes by working hard and investing their money back into their businesses, making a little bit go a long, long way. They had the discipline to put off luxury living until after they had money.

Third, cutting back doesn’t mean living unhappily. Take joy in building your dream life from the ground up.

I used saving money as an example. I challenge you to break down one of your goals into simple action steps. Let me know what you’re working on and join the discussion.

College Expenses: Books, Printing, and Meals

You’ve figured out how to cover the cost of tuition and room and board, and you think to yourself, “Now I can coast through the school year on a small budget.” Think again. College costs can continue to add up. Here are some things you may not have considered.

Text Books

Don’t underestimate the cost of books. This is not high school. They don’t come free with the course.

It’s not unheard of for a text book to cost $300 new. Some courses require multiple books. Multiply that by 5 classes and you’ve got a big dent in your budget. If you want to save time, you can buy your books at the college book store. If you want to save money, do your shopping ahead of time and try these options:

Buy Used. You can find used text books on Amazon, Barnes & Noble, and eBay. Not to mention, online stores like ecampus.com, and bookbyte.com.

Rent. If you know you’ll never open the book again once class is over, you can rent from websites such as bookrent, bookrenter.com or chegg.com.

If you do rent or buy used, double-check your course requirements and the ISBN number to make sure you get the right edition of the book.

Do you need a printer?

Even though a few courses will be (mostly) paperless, you should plan on having to print some of your course work. But, you don’t have to buy a printer, because most colleges have printers for campus use. (Check with your college).

However, you may want a printer if you’re the type who does homework at the last minute, or if you’re taking courses that require a lot of writing. Let’s compare your options:

Using the campus printers: There may be a charge per page, but it’s usually pennies. Compare that to the cost of buying your own printer, paper and toner.

Using your own printer: If this is the option that works best for you, you’ll want to find good deals on paper and toner. Consider buying paper by the box and using recycled toner cartridges.

Meals and Snacks

Cafeteria meal plans. Colleges usually offer multiple meal plans. You can have 3 meals a day 7-days a week, or you can have a plan that covers lunch and dinner but not breakfast, or weekdays but not weekends. You need to choose a plan that fits your course schedule and weekend plans.

Snacks and food in the dorm room. Many college students feel that a small fridge, popcorn air-popper, and coffee-maker are essential. Check with the college to see what types of appliances are allowed in the dorms. If keeping simple foods in your room is part of your budget strategy, you’ll need to have cash and access to a grocery store to keep your fridge stocked.

Consider your class schedule. This is especially important if the cafeteria isn’t open all day. Will you miss an important meal each day if the cafeteria is only open from 7am-9am, 11am-2pm, and 4-7pm? That could make the small fridge in your dorm an essential instead of a luxury.

The cost of books, paper, toner and food can really add up. Thinking ahead will save you money.

Prepare Your College Freshman for Reality

Did you know that 1 in 4 college freshman fail to return their sophomore year? Some say the number is even higher.

A lot of reasons have been given for the high dropout rate. It may be that college itself isn’t a good fit. But the fact is that many first year college students have difficulty living in a new and stressful environment.

There’s a big difference between what 18 year olds expect from college and what they get. They look forward to the freedom and luxury of being away from home for the first time. Instead, they find that…

The dorms are crowded, noisy, and smell a like a gym locker room.
Homework and studies take most of their time and living in a dorm is distracting.
Every little comfort has to be paid for. Little things that helped them deal with stress are suddenly expensive or inaccessible. Little pleasures like a soda, snack food, fresh laundry, and a movie require cash and transportation.

Here are some thoughts and tips to make their lives and budgets easier.

Make a checklist of the items your child will need. The college and retail stores will help.

The college itself will have a checklist. Read it over carefully. It should tell you what size sheets are needed, and make recommendations based on the amount and type of storage in the dorm room and whether your child will have a private bath.
There are independent websites online that have good lists as well. But, each college living situation is different so check it against the list the college provides.
Stores such as Bed, Bath and Beyond and Target have online lists with sale prices.

Buy the supplies at stores near the college.

You won’t have to lug the items yourself (no need to rent a truck). If you buy at the store, you can avoid shipping costs (more money saved).

Prepare your child for medical emergencies.

All it takes is the flu, a slip on an icy sidewalk, or a broken filling, and suddenly your child will have to see a medical professional in an unfamiliar town.

A little research now can save you money later. Your child should know where the nearest doctors, dentists, and hospitals are so that they know where to go if they need the services. Knowing which doctors are in network for your insurance will save you money in the long run.

Set up an account at a local bank.

Which bank has ATMs on campus? If your bank doesn’t have an ATM location convenient to campus, consider opening a bank account with one that does. Even if that bank is not convenient for you at home, you can always transfer money electronically between banks.

Life coaching for college freshman

You can be your child’s life coach by making sure your child knows what to really expect from college. In movies and on TV, dorm rooms are spacious and nice looking. The people you meet are exciting, and there’s plenty of time for socializing. All the studying is done in a 5 minute montage with a catchy song track.

In reality, a shared dorm room is about the size of a walk-in closet, most of the people living there are stressed and annoyed, and studying non-stop. The small amount of socializing offers a nice but needed break at the end of a long day or week.

Colleges do offer counseling. Make sure your child knows that. If you think your child is especially unrealistic about school, or is either shy, or too social for his or her own good, you might consider life coaching. If it makes the difference between dropping out and graduating, it could be worth the cost.

Sending your child to college is expensive. Preparing your child realistically will benefit your budget and your investment.

Beware of Summer “Deals”

Now that summer is here do you find yourself shopping more? It’s the long days and great weather. You feel more energized, more optimistic, and more willing to go somewhere and spend money.

Retailers are counting on your great mood to maximize their bottom lines. They’re using sales to get you into the store and tricks of the trade to get you to buy more products than you had planned.

Let’s look at the grocery store.

You walk in to buy milk and bread, and you walk out with two full bags, having spent way more than you planned.

How did that happen? Let’s look at a common marketing scheme. Most grocery stores have products they call loss leaders. These are often common staples, like milk or bread. They know these bring you into the store, so they’re willing to take a loss knowing that you’ll buy something else that will make up the difference. How can they be so sure? Product placement is a science and could be an article in itself. Just know that you’ll be tempted to open your wallet.

Here’s another common marketing scheme. Most flyers and sales offer a better price for multiple quantities – you were only going to buy one, but then you saw the sticker offering 50% off the second item, so you bought two. Some grocery stores offer mix and match sales, like 10 for $10 deals in the snacks, frozen food, or canned aisles. The store is obviously trying to get you to buy more than you intended, and because these deals are almost always on foods that will keep, you may feel that it doesn’t hurt to stock up. Does it work for the store? Yes, most people can’t pass up this type of deal.

What can you do about it? You can go to that grocery store, just buy the specific products you need, and leave.

Let’s look at other stores.

“Store Credit” is another trick to get you to spend money. At checkout, you may be offered an additional discount if you use store credit or even free financing for a specific period. They aren’t dong you any favors. They are counting on you having to make multiple payments with interest.

Furniture is a great example of free financing (no payment until 2015). You may be thinking you need a new bed, but with this offer you end up buying the bed with matching night stands and dressers because you have years to pay it off. Of course, the store is betting against you. They don’t believe you’ll actually pay it off on time, then they’ll collect interest going back to the date of purchase.

Let’s go back and take closer look at product placement. It’s not just for grocery stores. It’s no surprise that impulse items are always next to the register. These are small items that are usually reasonable in cost. While you are waiting in line, you find yourself putting one (or more) into your cart. Maybe it’s the magazine you started to read while you waited, or maybe they have your favorite flavor of gum. These little items add up, leading you to spend more than you intended.

Bottom line: Shop with a plan or list and stick to it. Don’t be tempted by multiple-item deals and bright displays. One way to stick to your list is to shop with cash. You can’t spend what you don’t bring with you.

Make Your Dream Vacation Affordable

Last issue we talked about vacationing locally and all the things you can do close to home. But, what if you really want to get away? How will you save money, then?

We travel often and are able to save in a variety of ways. Here are some of them:

Travel during shoulder season (that’s somewhere between peak and off-season). We’re going to Aruba in the Fall. The Caribbean is off season at that time because of the hurricane season, but Aruba is usually too far south to be affected by hurricanes.

Comparison shop to get the best deals – there are so many websites that will do this for you. I like Kayak for airfares.

Reward Programs – if you find yourself using a particular airline or hotel, join their program. I know you’ve heard that you may not be able to use your miles for flights. I can tell you that I haven’t found that to be an issue. You do need to plan ahead to get the reward you want. We have used airline miles for many trips, including a flight to Alaska in August.

For rental cars, we make our reservation early, but don’t prepay. Then we check back regularly to see if the price has dropped. You will be amazed at how much the price can drop closer to your trip!

Discounts and coupons – don’t forget about those. We recently went to an aquarium because our water company sent a buy-one-get-one-free coupon with your bill. Coupons and offers can come from a variety of sources. If you have a membership with a service like AAA or a store like Costco, check their mailings or website. Once you reach your travel destination, the visitors guides typically have clip-out coupons (make sure you pick them up when you arrive).

Stay at a place with a kitchen (or at least a fridge) to help your budget. You can shop when you get there for meals and snacks.

Bring your own food on the airplane. Take carry-on food versus buying in the airport or on the plane. You can’t bring drinks, but you can buy a beverage in the waiting area, or get a free drink after boarding. Your own food will undoubtedly be healthier and more satisfying than anything they have to offer.

We’ve had trips in the past where we’ve traveled for next to nothing. Our airfare was paid for with miles and our lodging with hotel points. We only had to pay for food, local transportation, and entertainment.

What do you do to save money on vacation? Join the discussion.

Save Money – Stay Local this Summer

Share Your Vacation Story!

Planning a great money-saving vacation? Share your tips! You can post your story in the comments below or on Facebook, LinkedIn or Twitter. Or, you can email me at book @ jillrussofoster.com. I can’t wait to be inspired by your summer plans!

Here are my suggestions!

Now that it’s Spring, you’re probably thinking about summer travel plans. I know I am. But, with the price of gas going up, you might be thinking, “Can I afford to do something this summer?” You can if you stay local. Here are some free or low-cost suggestions:

Local museums – Museums can be pricey, especially if you’re bringing the whole family. But most museums have free days or discount days. Check the website or call the museum to see when their next discount day is, then plan a vacation day around that.

City parks for movies, concerts, or theater – Many Parks and Recreation Departments host events. These might be free, or low cost, and all you need to do is pack a picnic. In our area, we have movies in the park, many music concerts and Shakespeare on the Sound. Check out your town’s website to see what they offer.

Libraries – Check your library’s event listings (we use our library all year long). Many libraries host interesting talks, movies, and even musical events.

Holiday Celebrations including parades and fireworks – What is your town doing? Check out nearby towns, too.

State Parks – You’ll get a change of scenery and a day outside.

Tourist activities – Be a tourist or visitor in your town (or nearby) and check out the sites. Try to see your town with new eyes and check out the funny little restaurants, art stores, outdoor art, and important town landmarks.

Get together with family and friends – Plan a get together to reconnect. We have one planned for July already.

Go to the Beach – This is one of my favorite places to relax.

Street Fairs and Festivals – Many areas have multiple festivals throughout the summer. There are arts and crafts fairs, ethnic celebration festivals, and antique car shows. You can buy pottery one weekend, and dance the polka the next. Use the internet to see what’s happening in your area.

What do you have planned? Join the discussion.

What Don’t You Do with Your Money?

I’ve shared two ways we save money in our household – careful food shopping and credit monitoring. Now I’ll tell you what we don’t do that saves us money.

We don’t have a data plan with our cell service

We have cell phones, but that’s it – just cell phones. We don’t have text messaging or a data plan. We lowered our minutes to the lowest plan available and we regularly come in way below our limit.

We don’t have HBO.

Only in the last month have we upgraded to an HDTV and that’s because one of our two TV’s needed to be replaced. We still have one older TV and we don’t plan on replacing it unless it stops working. We have a basic cable package and get our movies free – either from the library or the free on-demand selection our cable company provides. We gave up our paid movie channels a while back. We don’t have a DVR either – still using the VCR.

We don’t hire home contractors (often).

We do a lot of home maintenance and repairs ourselves. Last year, we painted the garage. This year we painted the bathrooms ourselves. We don’t have a landscaping service to take care of our yard. (It helps that we don’t have a big yard to take care of.) I really enjoy gardening. There is nothing better than picking fresh vegetables and eating them within minutes while they’re still super fresh.

We don’t buy new cars.

We drive older cars. Mine is a 1995 with 167,000 miles and it runs fine. I just had a tune up and the mechanic says the car is in great shape. Having older cars works perfectly for us, because we don’t like making payments. I’m not into fancy cars – all I need is reliable transportation.

You might be thinking that we lead lives of deprivation, but I can assure you that we are not missing out on anything. We only spend money on things that are important to us. If we spent money on things that we didn’t enjoy (but made us look good to other people), that would mean having less money for things we do enjoy – like nice vacations.

What don’t you do with your money? Join the discussion.

If you’re in a relationship, how do you handle finances as a couple?

Are you in a relationship? If you are, you know what it’s like to share your life with someone you love: your joys, your sorrows… and your money.

One of the biggest reasons for divorce (or breakups) is finances. I know you don’t want that to happen, so what can you do about it? Talk. Communication is the key to handling joint finances.

People have different ways of handling their finances. One person might be a saver who really values the money saved for future dreams and needs, while the other might be a spender who lives in the moment. If these two individuals become a couple, there can be disagreements about money that can escalate to divorce.

Take a minute to talk with each other about your money habits. It can be a really eye opening conversation. Really listen and try to understand the other person’s point of view. What did they learn about money growing up? What do they want right now? Where do they want to be in 1, 5, 10 years and beyond? With this understanding, you can choose a path that will work for the both of you. Meaning, the spender will save a portion and the saver will spend some money. Come up with mutual goals and agree on how you will achieve them together.

The goal is to handle your household finances and your goals in a blended way so that both people are comfortable. To do this, communication and action is key so that all feelings are heard and considered.

If you’re in a relationship, tell me how you handle your finances as a couple. Who handles the money? Who makes the budget? Who sets the goals?

How do you save money at the pump?

With the price of gasoline going up every time you drive by the station, what are you to do? There are a couple of things you can do to save money at the pump.

1. Clean out your car. The more weight you carry in your car, the more gas you use. Take out the stuff you don’t need and make a habit of doing this regularly.

2. Combine your shopping. Run errands in one trip versus going out today for something, then again tomorrow for something else. Map out your stops to get your errands done in an efficient manner.

3. Drive at a steady pace. Quick starts and hard braking can use more gas than driving at a steady pace. While you’re at it slow down. Driving above the speed limit is a waste of gas.

4. Pay with cash. Many gas stations charge a premium to use your credit card at the pump. Save money by using cash for your fill ups.

5. Plan ahead. Use your computer to help you save money when you need to purchase gas. Websites like Gas Buddy can find you a lower price and apps like Cheap Gas can do the same from your smart phone. (Gas Buddy also has an app for Android)

So, how do you save money at the pump? Let me know in the comments.