Monday, Sep. 08, 2008

Tri-City collegians get lesson in caution

Ingrid Stegemoeller, Herald staff writer

Learning how to manage money responsibly is one lesson that doesn't come from a textbook.

But as a new class of freshmen begin their post-secondary educations and 2008 graduates job search in a tough economy, it's one that could prove just as important as those taught in a classroom.

"College years are the time when many young adults establish habits they will carry with them for the rest of their lives," said Jan Quintrall, president of the Better Business Bureau of Eastern Washington, North Idaho & Montana.

A 2007 survey by Charles Schwab discovered that fewer than half of teens considered themselves knowledgeable on how to budget money, how to pay bills or how credit card interest and fees work.

And there are a few major mistakes college students make than can bite them once the bills start showing up.

"Use as little loans as you can get away with. Don't take extra," said Laurie Tufford, chief executive director of Consumer Credit Counseling Service in Kennewick.

Recent Washington State University Pullman graduate Stephanie Kelley, 23, watched some of her peers use extra loan money for new clothes or spring break trips. That means more money to be paid back later.

Kelley, who started working as Tufford's administrative assistant about six weeks after graduating, also advised young people to use credit cards sparingly.

"We would get (pre-approved offers) in the mail every day," she said of her roommates.

Kelley got a credit card her freshman year for emergencies, but her parents didn't allow her to accept the many offers she received.

Tom Chu, a 20-year-old sophomore at Columbia Basin College, maintains a strict policy against having credit cards.

"You can't buy more than the money you have" when you pay cash, he said, adding that he's watched friends a few years older go several thousand dollars into debt by swiping their plastic.

Chu, who works as a mentor at CBC and at a weekend construction job, hasn't needed to take out loans yet to pay for school.

He recommends students look high and low for scholarships and grants, which don't need to be paid back.

"It's not that hard, you just have to do it," he said. "You have to look in the right places."

Like the school's financial aid office, Kelley advised.

And even though it might seem impossible, Kelley and Tufford said saving money is crucial.

Kelley put away a little bit each month during her four years in school, even if it was just a dollar, she said.

Those savings gave her the cushion she needed between graduation and finding her job, for expenses such as first and last month's rent.

"You don't think of the small things," Kelley said. "I was surprised at the expenses. We don't realize that six months after graduation you have to start paying back loans. They don't just give (money) to you."

Tufford added, "You don't make enough not to save."

Plus, graduates don't always find high-paying jobs using their new degrees right away, said Tufford, who's daughter is a sophomore at WSU Tri-Cities.

Parents play a big role in helping their kids learn how to manage money well.

"Aside from leading by example, parents have an active role to play in ensuring their children are equipped to handle their own finances away from home," Quintrall said.

Other than credit card responsibility, the BBB recommends parents talk to their children about saving money, paying bills on time and protecting personal information from identity thieves.

Now that Kelley's out on her own, she continues to track her expenses -- she was shocked by how much she was spending at Starbucks -- and make loan payments on time. And she's saving a little bit each month to make sure she can pay for any emergencies.

"I'm catching up right now," she said. "It's a lot harder to get out of (debt) than it is to get in."

For more financial tips visit www.spokane.bbb.org or call CCCS at 737-1973.