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THE BATTALION
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Tips and tricks for avoiding debt during the college years ■
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4726) is published daily, Monday
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By Stuart Hutson
The Battalion
When Alex Ly received his new credit
card his freshman year, he never imagined
that he would be $4,500 in debt by the time
he was a senior.
“It is really easy to spend more money
than what you have when you don’t actually
see the money changing hands,” said Ly, a
Texas A&M senior aerospace engineering
major. “This is especially true when you are
buying things online where you only have to
enter the card number and expiration date.”
The fall semester is quickly approaching,
and as students prepare themselves for trials
of college courses, one examination is com
monly failed by freshmen who are new to the
concept of independence — the test of fi
nancial responsibilities.
Activities that seem to take care of them
selves when students are home with their par
ents can quickly add up to unexpected debts
for those who never realized how much gro
cery shopping or even doing laundry
costs. In compensation, many stu
dents misuse financial tools of
fered by lending and credit institutions to
cover the spending gap.
The result can be a debt that adds to the
money pit students dig with student and emer
gency loans; however, there are some simple
ways to avoid the road to financial ruin.
Choose your accounts wisely
In any college town, banks are as ubiqui
tous as gas stations, and choosing the right
bank can be an ordeal matched only by a vis
it to the local DPS.
“Everyone needs to look at the require
ments imposed and services offered by nu
merous lending institutions before deciding
on the one that they use,” said Jeremy Roark,
a customer service representative with Wells
Fargo Bank. “All financial institutions are
different in some way. While one checking
account may be perfect for one person, an
other person may not be able to keep up with
some requirements that may come along with
the checking account. Don’t just assume that
every place is the same.”
Roark said students should
balance requirements and service charges
(such as ATM fees and overdraft charges) of
numerous banks before choosing one.
“For some people, a minimum balance is
a good thing because it can come along with
benefits, and it may provide some level of in
surance,” he said. “For others, it just may not
be possible to keep that amount in the bank.”
Practice safe banking
At some point in time, everyone has lost
a dollar bill or some spare change in the cush
ions of a friend’s couch or through a hole in
the pocket of their favorite broken-in jeans.
However, losing a check or credit card may
be a much more costly experience.
“Never leave your checks or cards laying
around where someone else — even your
roommate — can find them,” Roark said.
“I’m not saying that everyone can’t be trust
ed, but it just provides too easy of a chance
for someone to misuse your credit account or
pass a check in your name.”
Roark also said that every
one should be cautious when
using an ATM.
“Never use an ATM in a dark or
suspicious area, and when you are
using a machine guard your PIN
number from others’ view,” he
said. “Also, if you do any trans
action online, be sure you initi
ated that transaction — in other
words don’t respond to a solicita
tion like you would get via email —
and make sure that you log off
properly so that someone
can’t follow you and use
your credit account or
see your bank files.”
One word: Budget
If there is one word
that freshmen tire of
(besides “class” or
“test”), it is “budget.”
Parents, professors and
counselors all seem to
say nothing else other
than, “You should
learn to budget your
time better,” or “You
should learn to budget
your money better.”
In the case of mon
ey, the advice should
be well received.
“Establishing a
proper budget and
sticking to it is crucial
to financial survival,”
said Deborah Rabi-
nowitz, a counselor for
A&M’s Student Coun
seling Service. “Most
college students have
this finite amount of
money they can
spend, and you
have to be able to
know where to
spend it on the nec
essary things before
you can spend it on
the enjoyable
things.”
Rabinowitz said making a
budget too strict is often one of the largest
mistakes made.
“When you sit down to make up a budget,
you should consider your income, and then
where you have to necessarily spend that in
come,” she said. “But, if you don’t allow
some extra for a little free-spending or
entertainment, the budget will usually
end up a failure.”
“It is a lot like being on a diet that only lets
you eat five things. Eventually you are going
to break down and eat something else, and
when you do, you are most likely going to go
on an eating binge and develop a real problem ”
Rabinowitz also suggests that students
keep close tabs on where and when they
spend their money so that they can determine
whether the budget is working.
Remember to phone home
For many freshmen, income from parents
is essential to financial survival, but freshmen
usually have enough problems communicat
ing with their folks without bringing money
into the mix.
“College is a time when students are gain
ing independence while parents are learning
to let go. This can bring in a lot of control is
sues, and unfortunately, these usually involve
parents controlling the student through use of
money,” Rabinowitz said. “It may be a form
of bribery such as, ‘I’ll pay you a little more
if you are a specific major,’ or it may be
something as severe as ‘You don’t get any
thing if you aren’t in the Corps of Cadets.’ ”
She said the best way for parents and stu
dents to resolve the issue is to plan the stu-
r "Freshmen don't really need credit cards, especially if you
live on-campus, because most haven't learned to balance
money and what they want. There is plenty of time later to
get one."
- Frankie Kalbow, senior elementary education major
—rise Checking
"Make up a shopping list and stick to it when you go to
the store so that you only buy what you need. You will
probably buy a few extra things, but at least it won't be as
bad."
-Carl Eggenberger, senior animal science major
"Always budget the amount that you want to spend for fun
for the weekend. A lot of times, people will spend most of
their cash while they are just having fun and not thinking
about what they are spending."
-Ben Burt, senior theatre major
"Credit cards are evil tools if you don't watch how you use
them. They are great in an emergency, but can be
addictive if you constantly use them for online buys and
traveling."
-Alex Ly, senior aerospace
engineering major
WISE
I FULLY LEARNED)
GHTS FROM
JPPERCLASSMEN
dent’s income on the basis of an estimated
budget that is revised as the student learns
more about how much college costs.
“After the budgeting, the student should
keep track of exactly what they spend mon
ey on and then share that information with
their parents,” Rabinowitz said. “That way,
the parents have a better understanding of
what is going on with the student.”
Credit cards: necessary evils?
“Credit cards are evil tools that will suck
your money away,” Ly said.
But, if used properly, credit cards can of
fer vital assistance in times of emer
gency or when traveling and can help
establish a credit history.
“The trick is knowing when you can use
them and when you shouldn’t,” Rabinowitz
said. “I see a lot of students who have gone
into debt because, for some reason or other,
they just didn’t control their use.”
To keep a lid on the charges students rack
up on the monthly bills, Rabinowitz suggests
that students use only one credit card and ig
nore incentives offered by companies and de
partment stores.
“[Credit card companies and stores] dan
gle these incentives like ‘20 percent off elec
tronics’ in front of the faces of students and
end up convincing students that the cards will
offer some big benefit that they never deliv
er,” she said.
Rabinowitz also suggests that students
should not get cards until they know they can
financially handle them.
“They are great in the emergency, but, in
the meanwhile, they are just extra stress,” she
said. “As for developing good credit, there
are other ways — like paying bills on time.”
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