As summer gives way to fall, a new crop of college freshmen are stocking their dorm rooms and awaiting orientation. Retailers try to convince students and their parents to buy an endless array of gadgets and other goodies for their college dorm, but the truth is you don’t need a pimped out dorm room to have a great college experience. In fact, you probably need a lot less than you think.
Before I left for college, I bought bookshelves, shoe racks and all kinds of stylish décor pieces with a friend before flying across the country for freshman orientation. My parents paid to ship those items 3,000 miles — only to realize once we arrived that there was no space for them!
Fortunately, my mother saved the receipts and returned my beloved shoe rock, but we still lost shipping costs. I’m likely not the first person to make this mistake, as many national retailers now allow you to select dorm items in your local store and pick them up at a store closer to campus for free.
Here are my tips on what to buy—and what not to buy for your dorm.
What to buy:
Extra set of extra-long twin sheets: Most dorm room beds are extra-long twins, and it’s easy to find extra-long sheets during back-to-school season. While you’re shopping, grab an extra set. That way you’ll have clean sheets even if you spill on them or if you’re too busy for laundry during mid-terms and finals.
Bed risers: Most dorm rooms are short on storage space, so bed risers are a cheap and easy way to add more space for clothes, sporting equipment, or whatever else you need to stash. Now there are even bed risers with built-in power strips, or you could create DIY bed risers.
Noise-canceling headphones: If you’re sensitive to noise, you’ll want a good pair of noise-cancelling headphones to block out the sound of your drunk roommate or your neighbor’s music while you’re trying to study or watch a movie.
Power strips: Electricity is included in the cost of most dorms, but you may have limited outlets for charging your phone, computer and other electronics. Bring at least one power strip so you and your roommates won’t have to fight over outlets.
What not to buy:
A car: Kiplinger lists cars on its 13 things college students don’t need, and I completely agree. It’s not just the expense of gassing up the car and keeping it running, but also parking and the fact that when you have a car, you’ll inevitably get roped into chauffeuring around your carless friends and get constant requests to borrow your keys. Nissan and Enterprise recently announced a college car rental partnership so that college students can get cars on demand rather than bringing their own. Unless you’re commuting to a job or internship on a regular basis, car-sharing could make a lot more sense than bringing your own. Inexperienced drivers are also expensive to insure so that’s another cost to consider.
An iron and ironing board: Aside from students who intern at a bank or law firm, very few undergrads wear clothing that requires ironing. If you need to iron a shirt for a job interview or a date, chances are someone in your dorm will lend you their iron and ironing board.
A TV: With tons of apps that allow you to watch TV shows and movies on your smartphone, tablet or computer, why waste money and space on a TV for your dorm room? If you have a TV in your room, it’s all too easy to get sucked into mindless reality shows instead of studying or leaving your room to meet new people. For those times when you do want to unwind with a movie or show, your dorm probably has a lounge with a TV anyway. I remember (and this might date me) watching “Will & Grace” on Thursday evenings in my dorm’s common room and socializing during commercial breaks.
When it came to saving for our two kids to go to college, my family found itself in a pickle jar good and tight.
My eldest plans to begin his college career this fall. My husband and I first thought about contributing about $10,000 a year to college, and the kids were expected to cough up the rest. (One study found that when parents give kids a blank check, grades are lower.) The goal was to avoid saddling the boys with student loans. (more…)
Victims of elder financial abuse, including scams, lose about $3 billion a year collectively, according to a study by MetLife. It’s a big problem, and elder advocates have responded aggressively.
There are hotlines and email blasts that keep the elderly up to date on the latest scams targeting their age group, such as the AARP’s Fraud Watch Network and its fraud-fighting hotline, (800) 646-2283. Also, the government issues alerts, such as the Federal Trade Commission’s advisory on the “grandparent scam,” sometimes called the family emergency scam.
There is understandable concern about the fraud our elderly face, but I have to wonder whether we’re ignoring teens and young adults.
Every time I get an alarmist piece of mail warning me that my car’s warranty is about to expire, or I get an automated call announcing my “final notice” that I’m paying too much interest on my mortgage, I wonder if my two teenage sons would know how to handle these situations.
In the past couple of months, I’ve come up with an action plan that I hope will prepare my boys for the scammers that are out there. Here are my five tips:
Make them answer the home phone. This gives them a chance to hear the different angles of fraudsters, and they can ask me or my husband how to handle the call in real time.
Educate them about personal information. They know not to give their personal information to the Nigerian prince email scams, but do they know not to give out Social Security numbers, driver license numbers or bank account information over the phone? Probably not.
What if the call is legitimate? That said, there will be times when a service provider calls, or heaven forbid, a debt collector. When this happens, I will teach them that the callers should be the ones providing the information. For example, if the caller wants personal details, I will tell my boys to get the caller’s name, employee ID number and then call the company’s listed number to confirm the caller is legitimate. (My financial advice company periodically calls me and asks for personal identifiers before we can proceed. I always get the representative’s name and call the company’s listed number to confirm that it is a legitimate call.)
Have them sign up for the Do Not Call Registry. Explain that they can register their cell phone number now, and home phone once they move out (if they have one), and that they will then be placed on a list banning telemarketers from contacting them 31 days after registration. I will give them a short script to say when a company calls. “This line is on the Do Not Call Registry. Please take me off your list or I will file a complaint.” After 31 days, the legitimate companies will stop calling, and you are left with the fraudsters. (Also, if a caller claims to be with the registry, he isn’t.)
Teach them the fine art of hanging up. If someone calls and clearly wants information or money, teach your kids that it’s OK not to engage them. In fact, there are times when it’s OK to simply hang up. I got a call recently from someone who said she was with “the Claims Department.” I asked what that meant, the caller stuttered and couldn’t say which “company” she was with, so I hung up. My kids were there, and I explained to them what happened.
By giving your kids practical experience in how to handle con artists, you arm them with an important life skill. Don’t let them move out without knowing how to negotiate through the minefield of fraudsters out there.
My 15-year-old, Byron, loved the idea, particularly the fact that he would have $150 in allowance to put in his account the beginning of each month. My 17-year-old, George, on the other hand, was stricken with fear.
You see, I told them they would be responsible for their school supplies, clothes, books and any incidentals that might come up. I wanted them to learn how to budget and how to anticipate expenses. Byron saw a parade of Domino’s pizzas in his future. George worried that he would not have enough money set aside in the fall for clothes and school supplies.
What followed was even more interesting.
In the beginning, Byron used all of his money on takeout, pizza delivery and the Apple iTunes Store. In April, he ordered pizza three times and ate at restaurants five times. He was out of money by April 20.
I didn’t bail him out the rest of the month, even though he didn’t have money for our Saturday morning tradition of breakfast tacos at a local restaurant. There was some gnashing of teeth, but the point was made. In May, he started the month with $50 set aside for necessities, and he only ordered Domino’s twice. However, he was down to $3 by May 17, spending his money on tacos and iTunes.
June was better, with $28 in his account by June 29. Today, he has $152 in savings for necessities.
Meanwhile, George immediately set $50 aside for necessities (he set up a subaccount with that name), and ended April with $48. When he realized that he could actually save more than $50 a month, he set a goal of buying parts for his old laptop so he could rebuild it.
George decided to spend no more than $50 a month on “fun” items, and in June, he spent $130 on computer parts. Today, he has $213 in savings for school expenses.
As you can see, my boys have very different ways of approaching money. I’d rather that Byron didn’t spend so much of his money on restaurants, but he is living within his means, which is the ultimate goal. Investopedia advises that you let your teen budget his way, rather than the way you think it should be. Budgeting can be done with paper, online software such as Mint or commercial software such as Quicken, Investopedia says.
FamilyEducation.com has a teen budget worksheet that includes such items as hobbies, transportation and the all-important cell phone.
MoneyAndStuff.info recommends that you give your teen a monthly allowance, rather than a weekly sum. The site has a sample budget for the teen. Money and Stuff likes the idea of a prepaid debit card, although personal finance expert Dave Ramsey points out that they are riddled with fees. That’s something I like about my kids’ credit union accounts: There are no fees, and we opted out of overdraft protection. That means that when their checking account runs out of money, charges are simply rejected. The savings accounts aren’t dipped into.
Rejected charges have a bonus. My kids get to experience the “walk of shame” from the store counter after being told they have insufficient funds for a purchase. It just took George one time for him to make sure he has enough money in his checking account before he goes to the store.
Now that we have a record of their monthly expenses for the past few months, I think it’s time for the boys to develop a formal budget.
I think George will embrace it. He seems to enjoy the concept of having his finances under control.
Byron will be the challenge. He keeps a running tally of his expenses in his head, which I don’t love. So far, his way has worked for him, but I’d like both of them to at least know their options when it comes to budgeting. When the fall school year kicks in, I plan to teach them the basics of Excel and show them Mint, to see if there’s a system that appeals to them.
Or maybe they’ll discover their own system. That would be even better.
Did you graduate from college in May? If you’re like a lot of new grads, this summer has been a tough one of job searches and inconsistent (or non-existent) work. According to a July 6 article in the Miami Herald, recent grads are learning the hardest lesson that personal finance courses can’t convey: How much life really costs.
The Miami Herald article is full of good advice about not only how to stay afloat, but how to make strides toward a healthy financial future — asking for a free consultation with your parents’ financial adviser, for example, and putting a few bucks at a time into an emergency savings or retirement account.
That future-oriented advice is important, and young people should follow it if they can — but, if this year’s grads are anything like I was, they’re too freaked out about the present to even consider the fact that there’s life beyond the next month. At this point in my summer after graduation in 2006, I was lucky enough to be temping part-time and getting a small but weekly paycheck. Saving wasn’t on my radar — but staying afloat was. That mindset is reflected in the three “frugal living” rules I made for myself that summer — rules that I wrote down and hung up near my door.
1. After the 15th of the month, rent has to be in the bank: The words “in the bank” were underlined multiple times. The rule was simple. After the 15th of each month, my bank account balance had to be equal to or greater than my rent. It was not allowed to dip a penny under that.
Because I was sharing a one-bedroom apartment, my rent (which included utilities) was $300. That seems blissfully low. Yet, the second month after moving in, I found myself with rent due and $270 in the bank. My roommate covered me, and, luckily, my bank account didn’t have any minimum balance requirements. I was determined not to let this happen again. After I made the rule, if it was after the 15th of the month, and my bank account had $300 or less in it, I said “no” to dinner invitations and spent nights at home. The biggest perk of doing this was that I often found I had a little extra in the bank account by the end of the month.
2. Pay bills right away: This was seven years ago, so I was still getting paper bills in the mail. It was so easy to put the cellphone bill or the Internet bill in a drawer, go out with friends the next couple weekends and then find my account uncomfortably low when the bills were actually due. Sometimes I forgot to pay them entirely and had to pay late fees.
So I started tucking the envelopes with my bills into the top row of my computer’s keyboard, where they annoyed me until I paid them, nearly always within a few days of them arriving. Paying the bills immediately lowered my account balance — and that lower balance reminded me that I really couldn’t afford regular nights on the town.
3. Take a walk: My roommate was in the same boat I was. When we found ourselves bored and restless and tempted to spend money, we took walks. When our neighborhood got boring, we’d drive 10 minutes and walk around a different one. Just being on busy streets, taking in the scenery and being around the bustle of our city was enough to re-set our brains into frugal mode.
By the time summer ended, I’d gotten a full-time job offer. Yet I still followed these rules strictly for a few years. In fact, I still haven’t turned off the email reminder that shows up on the 15th of every month, prompting me to make sure rent is in the bank.
If you’re looking for more tips on the post-grad life, the personal finance blogosphere is full of them:
Frugal Toad advises against making any long-term financial obligations too soon after graduating, even if you have an income. Don’t get a new car and don’t consider home ownership just yet. Instead, if you have any extra money, put it into a 401(k) or an emergency savings fund.
In a guest post on iHeartBudgets, Jason from personal finance blog Work Save Live, emphasizes how important it is for recent grads to build their credit. Even if the only credit card you qualify for requires a deposit and provides no rewards, take it and use it wisely.
John from Frugal Rules recommends paying whatever you can toward your student loans, even if deferment is an option. John writes in his blog that he deferred his loans, and the interest that piled up when he deferred put him in a worse situation.
In a post for Forbes, personal finance writer Kerry Hannon proposes something many recent grads may balk at: moving back in with Mom and Dad. It may seem like a retreat, but if it’s an option, the money you save by not paying rent can help you pay down student loans and bulk up your emergency savings. When you do move out, you’ll be miles ahead financially than your struggling peers.
Once you do get that first post-grad job, sign up for your employer’s 401(k) even if you think you can’t spare a cent out of your paycheck. Shannon, blogger at The Heavy Purse, has been a financial adviser for 21 years, and she writes that no client has ever regretted investing in a 401(k).
Grads, what are you doing to stay afloat? Tell us in the comments. As for those of you who left behind the post-grad life long ago, what helped you survive that first summer?
With our moderator and CreditCardGuide expert-at-large Erica Sandberg, our panel tackled some touchy questions (Should you co-sign a credit card for a friend?), gave some solid advice (How do you know you’re really ready for a credit card?) and shared some wisdom for parents (What do your kids need to know about credit before they fly the nest?).
If you missed our live hangout, you can watch the video below, or on our Google+ page.
A new world of financial responsibilities awaits young adults leaving home for college. For many students, that includes navigating the financial products marketed at them — such as credit cards. Unfortunately, mistakes made with that first credit card can set students up for years of financial problems.
That’s why we’re gathering some experts for a Google Hangout to talk about credit tips for college students. Have a question for our panel? Or just want to watch? Here’s everything you need to know.
What we’ll be talking about: Some of the topics we’ll be tackling include:
How students can know if they’re really ready for a credit card
What parents should tell their kids about credit before sending them off to college
What college students find most confusing about credit
The risks of co-signing credit cards
Want to ask a question? You can send it to us in advance at email@example.com. During the chat, you can tweet at us using the hashtag #studentcredit or leave us a comment on our Google+ page.
Paying off tens of thousands in student loans isn’t going to be easy for any recent grad, unless they win the lottery or land a high-paying job (which may seem as likely as winning the lottery these days). But some, namely those with federal loans, have it a bit easier than those with private loans.
Federal loan repayment generally has some flexibility. You can defer payment, ask for forbearance or even adjust your payments based on how much (or how little) you earn. When it comes to private loans, however, that kind of flexibility is rarer and varies widely, putting students at the mercy of their particular lender.
The Consumer Financial Protection Bureau (CFPB) is therefore trying to even the field when it comes to private loans. The consumer watchdog agency announced Feb. 21 that it’s taking suggestions for developing a framework for the regulation of private student loans. While the CFPB doesn’t actually have the power to create and enforce rules for private lenders, the plan is simply to gather suggestions from the public, colleges and financial institutions to make recommendations to policy makers. Anyone with skin in the student loan game can submit their ideas here.
So why would lenders be interested in helping those who borrowed too much for degrees and are now having a hard time repaying those loans? The CFPB’s news release points out that it aims to help those “willing to make good on their debts but seeking a more affordable payment, especially when navigating tough times.” In other words, the idea is to give borrowers more negotiating power so they can pay repay their lenders in a way that works for them, rather than simply defaulting.
And, these days, student debt and defaulting aren’t always a choice. Low-level jobs (such as file clerks and receptionists) that used to require a high school education are increasingly open only to those with bachelor’s degrees, according to this New York Times article. This means that skipping the college degree (and the debt that comes with it) before entering the workforce is less of an option.
Even after racking up debt for the requisite B.A., grads still may not be able to earn an income. The Washingtonian recently covered the phenomenon of the “permatern” (or, permanent intern). Recent grads, ready to work, are hitting big cities only to find unpaid (or barely paying) internships waiting for them. As a result, they find themselves working full-time hours for no income for years on end.
Another reason to help? The CFPB argues that, by helping struggling grads, we are helping ourselves. Young consumers floundering in private student loan debt can’t start businesses, buy homes, get car loans and start families — and help give the economy a much-needed jump start.
If you’re struggling with student debt — or any debt — check out our roundup of this week’s best personal finance blogs for inspiration.
The CARD Act of 2009 limited banks’ ability to woo college students with freebies to get them to sign up for credit cards. Yet other financial products offered to students, such as student IDs that double as debit cards and on-campus bank accounts, can be just as dangerous to those with limited financial experience.
That’s why the Consumer Financial Protection Bureau (CFPB) is taking a closer look at the relationships between colleges and universities and financial institutions. The government watchdog agency is asking students, families and anyone from the higher education community to send in comments about their experience with financial products aimed at students. Follow the instructions for submissions here.
CFPB Richard Cordray says the agency’s efforts are simply an attempt to make sure students are “getting a good deal.” And that brought back memories for me — because I didn’t exactly get a good deal when I signed up a checking account at college.
A major bank has a branch on my alma mater’s campus, and, at my freshman orientation more than 10 years ago, it had a table covered in freebies — T-shirts and key chains with bottle openers (got to give them credit for knowing their audience).
I wandered over to the table and started talking to a rep from the bank, who immediately asked me if I had a checking account. I did — at a bank that had branches in that very city. But that bank, the rep pointed out, was a bus ride from campus. Plus, if I wanted to use the ATMs on campus, I’d be charged a fee. So why not open an account at a bank that had a branch right above the student dining hall and an ATM right next to my dorm?
That sounded logical to me, so I filled out some paperwork and got my photo taken for an ATM card. When it came time to pick which type of account I wanted, the rep asked me if my parents would be depositing money in my account for emergencies, or if I’d be getting a job and want to have my checks direct-deposited.
My reply was something to the effect of, “Yeah, I guess. Sure.”
“Well, then you’ll want this account,” the rep said, and I circled it on the form. No, I didn’t ask any questions. Yes, I’m embarrassed to admit that.
I moved a few hundred dollars from my old bank to my new one and used my free ATM access to get cash for pizza.
A couple months later, I opened up my statement to see a few ATM withdrawals, a few deposited birthday checks and … a monthly fee?
Turns out, I’d chosen an account that required a money wire or direct deposit of a certain amount every calendar month. Because that didn’t happen, about $10 was getting sucked from my account every month — because I kept only a few hundred dollars in the account, that made a significant dent.
I went into the bank’s branch on campus that day and asked all the questions I should have asked in the first place. I got a new account that required me to maintain a higher minimum balance — but that didn’t require regular deposits. I monitored my balance carefully and was able to avoid fees.
I’m not blaming the bank. I was an adult, fully capable of asking questions. Yet perhaps campus financial institutions’ marketing techniques and their fee disclosures warrant a look. Although college students are on the cusp of adulthood, they often don’t have the know-how (or the motivation) to make good, thought-out choices about financial products.