College bound? Don't fall into these money traps
Diane C. Lade, Sun-Sentinel
Issue date: 9/2/09 Section: News
3. Not making a budget. Not knowing how much you need every month to cover your costs is a sure way to get in trouble, said Terry Seaton, a St. Augustine accountant who heads the financial literacy committee for the Florida Institute of Certified Public Accountants.
Make out a budget and stick to it. Go back to the allowance system you may have had as a kid, asking your parents to send you a certain amount monthly. When it's gone, it's gone.
4. Not asking mom and dad for a free loan. Students often turn to their credit cards or high-interest loans if they have a necessary but big-ticket expense. That means you'll be paying off that debt plus your student loans when you graduate. Instead, Emery suggests getting a loan from your parents, but one that includes interest and a written payback agreement.
5. Keeping a car on campus. It may seem like that $8,000 used car fits into your budget. But Emery said teens may forget to factor in insurance, maintenance, gas and parking fees- easily running up to $250, $300 a month. Plus then everyone else wants you to drive- to the party, the library, the supermarket. Ditch the car, take the bus, save the money.
6. Not monitoring your credit report and score. Late payments and closed accounts can stay on your credit report for up to seven years and affect your score. Which might not seem like a big deal- except that your credit score may affect your ability to get a good loan, rent an apartment or even get a job, as more employers are checking reports.
Nina Banister, spokeswoman for the Florida Department of Financial Services, suggests checking your score regularly with all three major credit reporting agencies and immediately correcting any deficiencies. You can get one free report a year, courtesy of the federal government, at www.AnnualCreditReport.com.
7. Not having insurance. You know you need to insure your car. But what about your stuff? Check to see if you are covered under your parent's homeowner's policy if you live in a dorm.
But if you are crashing off campus, you probably should get a renter's policy. See if your family's insurance carrier will sell you one. Seaton even has seen coverage just for laptops; one policy he noticed would insure a $1,000 laptop for three years for $75.
8. Not developing good fiscal habits. Properly handling money is like getting enough exercise or eating right, Emery says: It takes discipline but once you get into the habit, it becomes routine. Start your fiscal workout this semester.
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(c) 2009, Sun Sentinel
Make out a budget and stick to it. Go back to the allowance system you may have had as a kid, asking your parents to send you a certain amount monthly. When it's gone, it's gone.
4. Not asking mom and dad for a free loan. Students often turn to their credit cards or high-interest loans if they have a necessary but big-ticket expense. That means you'll be paying off that debt plus your student loans when you graduate. Instead, Emery suggests getting a loan from your parents, but one that includes interest and a written payback agreement.
5. Keeping a car on campus. It may seem like that $8,000 used car fits into your budget. But Emery said teens may forget to factor in insurance, maintenance, gas and parking fees- easily running up to $250, $300 a month. Plus then everyone else wants you to drive- to the party, the library, the supermarket. Ditch the car, take the bus, save the money.
6. Not monitoring your credit report and score. Late payments and closed accounts can stay on your credit report for up to seven years and affect your score. Which might not seem like a big deal- except that your credit score may affect your ability to get a good loan, rent an apartment or even get a job, as more employers are checking reports.
Nina Banister, spokeswoman for the Florida Department of Financial Services, suggests checking your score regularly with all three major credit reporting agencies and immediately correcting any deficiencies. You can get one free report a year, courtesy of the federal government, at www.AnnualCreditReport.com.
7. Not having insurance. You know you need to insure your car. But what about your stuff? Check to see if you are covered under your parent's homeowner's policy if you live in a dorm.
But if you are crashing off campus, you probably should get a renter's policy. See if your family's insurance carrier will sell you one. Seaton even has seen coverage just for laptops; one policy he noticed would insure a $1,000 laptop for three years for $75.
8. Not developing good fiscal habits. Properly handling money is like getting enough exercise or eating right, Emery says: It takes discipline but once you get into the habit, it becomes routine. Start your fiscal workout this semester.
___
(c) 2009, Sun Sentinel
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