Credit card abuse is among the most persistent problems for college students who wind up mismanaging their finances.
Debt counselor Judy Lewis won't forget one college student's textbook example of financial mismanagement.
"She had five or six credit cards," said Lewis, a consultant at Credit and Debt Counseling Services in Lawrence.
The woman had been living with her boyfriend until he transferred to another school and left her with a $600 monthly rental obligation. To finish college as quickly as possible, she had enrolled in a heavy class load. But to pay the extra bills, she also began working a second job.
The part-time jobs left no time to study, which caused her to drop courses needed to graduate and necessitated that she borrow money to attend summer school.
"She was evicted from her apartment," Lewis said. "She ended up in credit counseling as well as other (personal) counseling. It created a lot of anxiety."
Not all Kansas University students managing their own financial affairs wind up in Lewis' office at 2619 W. Sixth.
Some food for thought
Here are some of her ideas for staying in the black:
- Don't sign an apartment lease with roommates unless parents of those students co-sign the document. There are many reasons why a student might move out and leave his or her peers to pick up the monthly payments.
"If parents co-sign, usually they'll advise their kids not to move until the lease is up or they'll decide to make the payments," Lewis said.
- When sharing a telephone, don't sign up for long-distance service. Each student should use a prepaid phone card for those calls.
"I'll get clients who had the phone in their name, but also had three roommates who charged up the phone bill and moved," she said. "You can't tell if a roommate is going to be that way. You don't know their values toward money."
- Don't charge tuition and fees to a credit card.
Lewis said there were options to meeting that substantial obligation without putting a huge sum on credit cards with high interest rates. Government or university loan programs with a variety of payment plans should be considered, she said.
"Credit cards, I don't believe, were designed for tuition."
- Don't charge living expenses -- groceries, for example -- to a credit card.
"If you do that you're probably in trouble ... and need to stop."
Lewis said too many students put expenditures for basic necessities on a card and worried only about making the minimum monthly payment. In the end, that strategy will wreck anyone's financial condition.
Large purchases ought not be made with a credit card either, she said. Students would be better off buying furniture or electronic equipment with cash, she said.
Apparently, Lewis said, credit card abuse is widespread among U.S. college students. A recent survey found one in five students had an average credit card balance of $1,000 or more. Half the students surveyed had more than four credit cards. Only 18 percent paid off the balance at the end of each month.
- Don't assume a free-spending attitude because parents or another relative is paying college costs.
"I've seen many parents who have got into financial trouble because of their children," Lewis said.
She said some prefer to go bankrupt rather than force their child to sacrifice.
"It's an attitude," Lewis said. "They'll tell kids: 'Just concentrate on school. We'll pay the bills.' That sets up an attitude of students getting into frivolous spending."
Lewis said most of her advice was basic common sense. For example, students can't spend more each month than the budget allows. Other students need to come to grips with compulsive-shopping habits.
"Americans love to shop," she said. "They love to have things and buy things. That is what the students see. That is what they go out and re-create."
Often times, she said, that leads to people living beyond their means.
"Just because we see everybody doing it, doesn't mean it's right."
Lewis said it was her opinion that U.S. consumers needed a new perspective on personal finance.
"We need to kind of go back to what our grandparents were doing in the Depression. We need to save our money."
-- Tim Carpenter's phone message number is 832-7155. His e-mail address is firstname.lastname@example.org.