August 2007 Archives

Caroline

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As you head back to school this fall, know that you're probably going to be faced with some unexpected expenses.  Even if you've spent the summer diligently stocking up on necessities, know that stuff comes up.

If you're moving into your first dorm or apartment , you may not realize that every move comes with two or three unanticipated and somewhat spendy Target® runs for things you forgot, or didn't even know you needed. Light bulbs, another electrical outlet strip, dish soap, tools to hang pictures … the list goes on. Plan to drop another $100 just for this stuff.

Once you get moved in, other expenses come up as well. Books may be a little pricier than you anticipated. And when you get to the bookstore, freshmen, you'll inevitably buy at least one new college T-shirt or sweatshirt. If you live off-campus, you'll likely need a bus or parking pass, and don't forget club/sorority/fraternity dues. If you're a sports fan, be sure to factor in your season ticket costs—and be glad you get the special student rate!

Individually, none of these expenses is a huge deal, but when you add them up, it can take a chunk out of your fall semester budget. If you haven't planned for expenses like these this year, keep track of all the little “extras” you get hit with this semester. You can use that list to make a better budget next fall.

Staci

Some of the comments we've been receiving as of late—and I haven't been able to publish them all because they don't meet our Comment Guidelines—indicate that the Student LoanDown blog hasn't been spending enough time discussing student loans.

I'm not going to argue with that—we have diversified our content a bit this summer, adding new bloggers and broadening our topics. But here's what I would argue: that we're here to talk with you about financing college and managing debt, and that includes much more than just student loans.

These days, what I hear from so many young people is that their student loans feel like Monopoly®  money—abstract, unreal amounts with no consequences attached. That they're not even sure how much they owe. That they have no idea how they'll pay it back. Wait, you mean I have to pay it back?

Earlier this week I read an article quoting a 22-year-old college grad who said something along the lines of "we're too young to understand that we're going to owe this much" and that "it doesn't feel real until later."

I don't want to be judgmental here, but it's this kind of attitude that frustrates me. You're not too young to grasp the concepts of borrowing—you're just not doing it.

That's why we discuss the broader topics of debt and credit and wants and needs and budgeting and saving on a "student loan blog." We share our personal experiences for the same reason. If we can get any of these financial concepts to resonate with you in any way, we will have built a better educated, more responsible community of past, present and future student loan borrowers.

Because, my friends, it's not Monopoly money—it's as real as it's ever going to be. So do not pass Go, do not collect an unnecessary $200 at 6.80% interest, and, above all, do not claim ignorance. You're old enough to know.

Dinna

Recently I got a call from my credit card company asking me about some unusual charges. Since it was on a card that I have for emergencies and knew hadn't been used in quite some time, I knew that someone was committing fraud with my account.

I was infuriated. How could this happen? I checked my wallet right away and my card was still inside. The customer service rep on the other line explained that there are many ways that people find to commit fraud.

Fortunately, I was told I would not be responsible for any of the charges. My account was closed, and I was given a new account number and sent a new plastic card. I also had to fill out an affidavit stating for the record that none of the charges made were authorized by me. The affidavit had to be returned to my credit card company within a specified timeframe in order to keep the status of the charges as fraud.

Although I am hopeful my situation will be resolved quickly (and without impacting my credit history ), it still highlights the importance of being vigilant with your card to help avoid fraud. Here are a few "Credit Card Safety Tips" pulled from Hands on Banking®, Wells Fargo's free money management education program:

1. Keep your card in a safe place. Never leave your credit card lying around—particularly in communal living situations like dorms—and protect your credit card number as much as possible.
   
   
2. Don't let anyone else use your card. No matter how much you trust someone (including boy/girlfriends and roommates) you are ultimately responsible for any activity on your card. Avoid conflicts over misuse by never sharing your credit cards.
   
   
3. Report your lost or stolen card immediately. If you misplace your card or suspect that you have been the victim of theft, contact your credit card issuer right away. They may be able to freeze your account and begin the process of correcting any charges that may have occurred without your consent.
   
   
4. Save receipts and compare them with your statements. Be sure to monitor your account often to ensure that all activity on your card was actually authorized by you! Most issuers provide online access to your account, so sign up and make a habit of logging on frequently. If you notice any suspicious transactions, contact your card issuers immediately to begin the process of resolving the suspected fraud.

Finally, you might want to contact your credit card issuer to see what tools are available to help you combat fraud on your account. At Wells Fargo you can set up email alerts that will notify you of unusually high activity on your card—this simple "heads-up" could be a potential fraud-prevention tool!

Credit card fraud is a serious issue, but following a few proactive steps can help you avoid its damaging consequences. If you have any tips on how to avoid or recognize credit card fraud, or if credit card fraud has happened to you, share your thoughts.

Barbara

Oh, the Joneses. You know the saying about keeping up with them . It's something we've probably all dealt with at some point. Wanting the same things your peers have is likely a constant struggle—at least it is for me.

My most recent battle is with my next-door neighbor. Since I first moved in, the neighbor to my right has kept an immaculate lawn—green and lush. I've been super jealous.

My lawn was on its last legs when I moved in. Add a couple more days before I got a hose and, well, it was pretty much brown. But eventually I started watering for about an hour on my designated night (following the necessary guidelines  in the city), and the grass started to perk up.

It wasn't long before I came to my senses and realized that watering could get expensive, so I decided to cut back—Joneses or not.

It's really easy to get caught up in keeping up with others. You tell me: What's the worst when it comes to your Joneses?

And BTW: Thankfully, we've been getting lots of rain lately, so I haven't needed to water and still have grass jam-packed with chlorophyll . I wish the rain could help my other Joneses problems, though—I'll keep hoping that a size 10 designer shoe tree will sprout up in the backyard.

Staci

In my last post, I addressed some of the different money options available for international travelers. And whether you're "on holiday" or studying abroad, a little common sense goes a long way to keep your money safe when you're in a foreign country. Below are some suggestions that might help.

Before you depart, make a list of your credit and debt card account numbers, the numbers of your traveler's checks, and the international phone numbers for reporting lost or stolen cards and checks. Keep the list with you, and give copies to a traveling companion and to someone at home to call in case of trouble.

Sometimes peace of mind is more valuable than any Let's Go®  or Lonely Planet™  travel guide. Keep copies of your key documents—including your passport and plane tickets—separately. Photocopies might not always be accepted, but they can speed up the process of getting replacements and/or be better than nothing. I stashed copies in the bottom inside pocket of my luggage (fortunately, I never had to use them).

Most travel experts recommend that you carry only the funds you'll need for each day's outing. But when I backpacked around Europe, I was staying mostly in hostels , and safes weren't always available. So I actually kept all of my money, cards and documents on my person at all times in an under-my-clothes, around-my-waist money belt . It started off as ivory but was a sickly khaki color by the time I got home. Kind of gross, but safe!

Other tips to consider:

• Divide your money and traveler's checks with a traveling companion, if possible. That way, if yours are lost or stolen, your companion has access to cash.
  
  
• For credit and debit cards, keep them in a safe place where they won't bend, scratch or become demagnetized. Minimize the risk of theft or loss by taking only the cards you need.
  
  
• When using ATMs, use the same caution you would when you're at home: Don't flash your cash after leaving the machine, and use ATMs in safe locations.

All this talk about money and travel has reminded me that sadly, I've let my passport expire. While I work on a renewal , tell us about your international money adventures here.

Staci

A few weeks back, Kathy wrote a great post about alternatives to taking a European vacation. Well, if in these last few weeks of summer you're taking an actual European vacation—or perhaps preparing for a semester abroad—one thing you'll need to think about before handing over your passport at customs is money.

I was born in Germany (my dad was in the Army), made a trip to the United Kingdom in college, and spent two months backpacking around Europe after my first job. So other than my time as an infant, I've had some experience spending money overseas. Here are a few tips that might help.

Buy some foreign currency before you leave so you don't have to pay high fees and lousy exchange rates  at an airport currency window. Most banks can sell foreign currency with a few days' notice. Ask for some in small denominations—when you arrive at your destination desperate for a snack and a taxi, you'll be glad you did!

In addition to foreign currency, consider taking traveler's checks . You can buy them either in the currency of your destination or in U.S. dollars. If you need to cash U.S. dollar traveler's checks abroad, you are more likely to receive the best exchange rate at a bank. Fees usually apply per check cashed, so it may be in your interest to cash the higher denominations.

Use your credit card or debit card for the most favorable exchange rate. Just be sure to notify your bank of your travel plans before you leave—otherwise, your accounts could be frozen as a precaution against fraud (certainly not what you want when you've been standing in line for an hour to buy tickets at the Louvre ). And if you plan to use an ATM, remember that cash at foreign ATMs is dispensed in the local currency and debited from your account in U.S. dollars.

Basically, it all comes down to diversifying your travel money portfolio. A combination of foreign currency, traveler's checks, and plastic will give you the most flexibility. In my next post, I'll focus on how to keep your money safe when you're abroad.

P.S.: Want to know how much the U.S. dollar is worth in other countries? Check out our handy currency calculator.

Kathy

Try as I might, I just can't seem to shake my travel bug. Over the weekend I watched "Long Way Round" —a documentary film that chronicles Ewan McGregor  and his friend Charley Boorman as they ride motorcycles from London to New York City by driving east—the long way round.

Admittedly, I added the movie to my Netflix® queue  because of my love of the "Moulin Rouge"  actor, but I was captivated by the film as soon as I turned it on. This movie has some really good stuff in it, especially as the pair tries to navigate some of the "roads" in Mongolia and Siberia!

Many of you also share my love of travel, and you've been quick to offer advice on the subject! I recently was made aware of another a great hostel booking and reviewing site . Don't tell my manager, but I spent a good hour perusing it this morning, and I was impressed by both the quantity and the quality of the listings offered. It might be useful to check out if you're planning a trip to, well, anywhere!

Finally, as you may well be aware, the days are beginning to get shorter once again—summer is coming to an end and so too is my summer internship. I'll soon be back on campus  as a full-time student, so I must bid you farewell. It has been my pleasure to chat with you all, however briefly, and I wish you the best of luck in your endeavors (financial and otherwise)!

Parting, as they say, is such sweet sorrow.

Barbara

I'm not a fan of long-distance relationships . So it's hard to believe I spent an entire year in a long-distance banking relationship. About 130 miles separated me from my hometown bank during my freshman year of college.

While I was living at home, my old bank served all my needs just fine. But once I got to college, I started to see the signs that as a long-distance relationship, it just wasn't going to work …

There was a lack of communication. Without being able to stop into the branch, I didn't talk to my bank that much. Really, the only time I heard from them was when they sent my monthly statement. I didn't even have the chance to communicate with them securely online.

I wanted different things. I wanted to have easy access to my money. But five years ago, my bank didn't offer me a debit card. I also wanted online access, which wasn't an option (apparently, I was ready to start my obsessive account-balance checking early on in college).

Everything was too complicated. Because my bank didn't have online banking, I had to call to check up on things or to make a transfer between my accounts. Plus, with no branch to stop into, I found myself mailing deposits back to my hometown—wasting a stamp and putting my money at risk of being lost or stolen.

I started liking someone else. Sometimes I didn't have time to deal with my hometown bank. So, I'd go to the Wells Fargo store in Vermillion . Even though I wasn't a customer at the time, if the check was issued from a Wells Fargo account or if I took a Wells Fargo customer with me and signed the check over to them, I could still get my money. I liked the interaction with the staff there and how they handled my needs.

All the signs started to add up, and I knew what I had to do: break up with my hometown bank. When I headed back to school for my sophomore year, I went to my local Wells Fargo store with my tuition refund check—all 800-some dollars of it—and opened a College Combo®.

A lot has changed since 2002, but it's still something to think about for those of you headed to college soon. If you're facing a long-distance banking relationship, make sure you weigh the pros and cons of staying or switching.

Considering a bank swap? Done one already? Let us know how you feel.

Kathy

It's August, which means that it's tuition time for the many of us heading back to school.

*GULP*

Over the next few weeks, the loans I am borrowing will be disbursed to my university to pay off the tuition and fees I owe as I continue my education. Once I have settled my bill with the school, the remaining funds will be deposited into my bank account in a ceremony I affectionately refer to as "Student Loan Payday."

Let's face it, getting a degree is expensive, and many of us need to borrow money just to cover our cost of living. Here in the San Francisco Bay Area , that burden is especially high. I am eagerly awaiting the additional money in the bank so I know I'll be able cover all of my expenses for the next few months!

The kicker about "Student Loan Payday" is that it only comes about once a semester, which means you have to figure out how to make those funds last. Creating a budget—and sticking to it—is crucial to making that happen!

What tips do you have to help stretch your student loan dollars?

Caroline

If you're off to college this fall, you've probably loaded up on the necessities  like sheets, towels and cool décor for your dorm. But put one more thing on your list, if you haven't already: a bike.

A bike probably wasn't the mode of transportation you chose in high school—and maybe you haven't ridden one since the fifth grade—but bikes are the best way to get around on a college campus.

Biking is much cheaper than driving, when you consider gas prices and parking tickets. (Ask any experienced college student—you WILL get a parking ticket!) And it's faster than walking—good news when you oversleep the day of your bio quiz.

OK, I admit, I'm a little biased. I really like to bike. My most recent vacation was spent biking—I rode a couple days on RAGBRAI®  (Register's Annual Great Bicycle Ride Across Iowa™) in July. It's a touring ride across the state. And it's ginormous—about 10,000 people participate every year. It's actually a really relaxing vacation, because when you hop on a bike you completely change the pace of your life.

That's another benefit of biking that's great for college life. When you're busy and stressed, biking to class or a study session may be just the exercise and change of pace that you need to feel refreshed. Biking around campus can also help you ward off the "freshman 15"  without dragging yourself to the gym.

So dust off that two-wheeler and pack it up! Are you bringing a bike to college?

Dinna

At the risk of sounding like a total nerd, I've never had an issue with debt and have always had good credit. Somehow, Mom and Dad got the message through to live within my means and pay off debts quickly.

Maybe it was because I saw my parents living simply, budgeting their money, balancing their checkbook, and not buying many of the big-ticket luxuries that their friends were indulging in. I can remember hearing my father say to my mother, "When you see me driving around a Mercedes , I won't be worrying about making payments." I guess I took that to heart and didn't want to worry about making payments, either.

I was the older of two kids from immigrant parents and grew up in a middle-class neighborhood. My dad was in the Navy , and my mom worked in the banking industry. My parents bought their first home when I was about 10 years old, and my mom managed the household finances.

When I was old enough, Mom gave me money management “training wheels” by putting me on her credit card account. But she didn't just hand the card to me without instructions—she taught me the basics like credit limits, balances, minimum payments, and payment due dates. And, while I didn't completely understand its value at the time, she emphasized how proud she was of her good credit rating . She said that I should try to build my own good credit by paying back my debts and always paying on time.

Now that I work in the credit card industry, I recognize the value of these lessons. And, from talking to friends, I've learned how uncommon it is for parents to give their kids the basic financial guidance I was lucky enough to get. By the time I got a credit card in my own name, I understood that each purchase I made was actually a little loan that needed to be paid back—so I really thought long and hard before using it.

Thanks to my folks, when I ventured out on my own I did so with a good credit history. This signaled to lenders that I was a good risk to buy a car or to rent an apartment. I was surprised to learn that even employers were interested in my credit rating. And, when it came time to buy a house of my own, I was able to qualify for a mortgage with a lower interest rate, which saved me a considerable amount of money.

What money management lessons—good or bad—have you learned? And who have been your teachers?

Editor's note: Please welcome Dinna as the newest member of the Student LoanDown blog team!

Staci

Even though I'm not in school anymore, and I don't have kids of my own, I love to shop for school supplies. In both the big-box stores  and the independent drug stores across America, aisles are filled with wide-ruled notebooks, two-pocket folders, No. 2 pencils, and crayons.

There's something about a new box of crayons: perfectly sharp, perfectly intact, and perfectly aligned according to color. I'm especially partial to Crayola® cornflower , a soothing shade of blue. And the smell! Wax and dye and the promise of a brand-new school year. There's nothing better.

Not all families share my enthusiasm for buying school supplies—after all, they can be expensive. Many kids go back to school with last year's supplies, or worse, no supplies at all. That's a tough way to start off the year.

Fortunately, in my community there's help for those who need these essentials but can't afford them. It's Project S.O.S., which stands for "Supply Our Students." Sponsored by a local volunteer organization  that relies mainly on donations, Project S.O.S. provides basic school supplies to area students from low-income families. This year, they expect to assist more than 4,000 students!

I have to admit that selfishly, I benefit from Project S.O.S. just as much as the students do. I get to indulge my school-supply addiction by purchasing backpacks  and three-ring binders and scissors and glue. What's more, I get to share a sense of optimism with kids who might not otherwise have it.

Sadly, crayons are no longer on the supply list—they've been replaced by markers and colored pencils. But I'm pretty sure that the promise of a brand-new school year is still every box.

Kathy

I had a pretty amusing—but all too common—experience at the mall last weekend.

While shopping at a nationwide retailer (whose identity I will not disclose, but it could really be any of them), I found a shirt that had that elusive combination: 1) It looked really cute on me, 2) It would be appropriate to wear for both school  and work, and 3) It was on sale! This shirt that normally retails for $58 was marked down to $29.99. I was still grinning about my good fortune as I brought it up to the register.

As the saleswoman behind the counter scanned my treasure, she asked me, "Would you like to save 10% today by opening up a [Store Name] credit card?" I stifled a laugh and politely declined .

On top of the fact that this special discount would only save me $2.99, I thought about the possible damage it could do to my credit score. A credit score is a number used by a variety of people and institutions (banks, landlords, utility companies, etc.) to determine the likelihood that you will make payments as promised. It's a complicated equation that is constantly being updated and that your actions directly influence. To learn more, check out www.whatsmyscore.org .

So what does my situation at the mall have to do with my credit score? Every time you apply for or open up a new credit card account, an inquiry is made into your credit history. Too many inquiries or too many credit card accounts could lower your credit score—which could mean getting charged higher interest rates or even being turned down for credit in the future. I hardly thought the $3 I could save today would be worth the damage to my credit score and possible extra interest I could be charged in the future.

It's tough to resist this temptation, especially when your purchases are bigger and that discount begins to seem more appealing. Just be sure to factor in all the costs before you decide to fill out that application.

Do you have experience opening up (or resisting) retail credit cards? If so, share your story here!

Kathy

I love the Internet.

No matter what your interest, chances are there's a website out there that covers it !

For example, I have two cats, Rocky and Boo, and I'm always amused by the funny things they do. It's especially cute when Boo climbs into my bathroom sink and just hangs out there, sometimes for hours. Certainly this behavior is unique just to her and no one else would find this particularly noteworthy, right?

WRONG! Turns out there is a website out there completely devoted to pictures of cats in sinks ! It's the funniest site and a good way to spend five minutes if you think adorable pictures of kitties in sinks are entertaining (like I do).

Another reason I love the internet? Online banking!

Online banking has completely revolutionized the way I manage my money and stay on top of my bills. (What can I say? I'm a busy girl in graduate school , so I get excited by things that make me more efficient!)

Oh yes, not so long ago, I had to go to a branch or call a customer service representative just to check a balance, and snail mail was the typical method of paying most bills. Nowadays many of these crucial services can be done electronically. Depending on where you bank, services may vary, but in general you can:

1. Monitor your account online—you can check your account activity, view online statements and more, depending on what products you have signed up for.
2. Pay bills online—this one's self-explanatory but unbelievably important so that you are sure to make payments on time!
3. Receive email alerts—if you're feeling forgetful of your payment due dates or your balance is getting low, you might be able to sign for email alerts to let you know.

Ask your bank what services they provide online—or if Wells Fargo is your bank, check out online banking here.

How does the Internet impact your world?

Barbara

It’s August! Soon some of you will be heading back to campus (or going for the first time). Those of you going probably have your upcoming schedule on your mind—are you excited?

While those of us not on campus this fall aren’t focused on our schedule, we know what it’s like to be in your shoes. Specifically, I remember how enthusiastic I was about some classes and how others *cough* college algebra *cough* left me a little less eager. Generally, those I felt less enthusiastically about were general requirements.

Most of you have taken or will take the general required classes: a social science class, a humanities class, etc. If you ask me, there should be an additional requirement: Personal Finance 101.

The decisions you make during your college years can have a huge effect on your financial future. And just like you wouldn’t go into a Bio 101 test without studying, you shouldn’t make financial decisions without first knowing the facts.

Some schools offer opportunities to learn about managing money and debt through First Year Experience programs like this one at Ohio State University.  Personal finance is one of the programs students can attend as part of their Success Series. 

I’m wondering: are/were any of you required to take a class or seminar on personal finance?

Even if you don’t have programs like this offered, you can have a little personal finance study session of your own. Check out Wells Fargo’s Hands on Banking program—there’s a section specifically for young adults to learn about managing finances.