April 2009 Archives

Kathy

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Increasingly, more and more of us are moving a part of our social lives online. Take me for example: I'm a social media  junkie! I love reconnecting with old friends with whom I had lost touch, sharing pictures from recent trips or parties, hearing about my friends' opinions on current events, etc., etc., etc...

Is there a support group for folks like me?

Which leads me to a few important questions: Does your virtual reputation reflect your professional reputation (or the one you want to establish)? Are the photos and comments you're posting online things you would want your parents to know about? What about your boss or any future employer?

If the answer is no, you might want to take some steps to make sure that your reputation is protected (or at least consistent) online! Here's what I do:

1. I deactivated accounts that I no longer use. Like I said, I jumped on the social media bandwagon in a big way. At my worst, I had joined no fewer than eight different social media-type sites. Yikes! About a year ago, I went back and removed my information from all but the two or three sites that I actively use so that I don't have such a long trail of websites to keep tabs on.
2. I actively manage the privacy settings  provided on the sites I still do use. I make sure that I am only sharing personal information with my friends and I restrict access to photos even more stringently. If someone tags a picture of me that I would prefer didn't go up, I immediately remove that tag and occasionally even ask that person to take pictures down. People have gotten fired for photos that were put up on these web sites! Is that something I want to deal with? Um, no!

There are companies out there  that will help you protect your rep, but in the spirit of DIY, this is something that you should take a very personal interest in yourself! If you're not quite sure about general guidelines for internet privacy, there are plenty of resources to help you get educated, such as:

1. www.ConnectSafely.org 
2. www.NetSmartz.org 
3. www.OnguardOnline.gov 
4. www.TRUSTe.org 
5. www.WebWiseKids.org 
6. www.WiredSafety.org 

What steps have you taken to protect your virtual rep?

Caroline

High school seniors, you may think the hard part about your college decision-making is over. You've probably already applied to, been accepted and decided on a school. And you've probably completed your FAFSA  and know what your financial aid award entails.

Whew. That's a lot of work, and it probably took up most of your senior year.

However, there might still be one hurdle left to cross (aside from finals!). If your financial aid award doesn't cover all your expenses, you'll need to find more money.

We've said it before and we'll say it again: When it comes to paying for college, be sure you look to your lowest-cost options first. That means get all the funding you can through grants and scholarships, which don't have to be paid back.

Your next-best option is federal student loans. These loans offer a low, fixed interest rate, and offer some entitlements that help can protect you from default during repayment.

Then, if you have tapped out your options for federal loans and still need additional funds, consider a private student loan.

Private student loans are offered by banks and other private lenders, who set all the terms and conditions (the rules, basically) of the loan — like how much interest they'll charge, and how long you have to pay it back.

In general, private student loans have higher interest rates than federal student loans. Many private student loans will offer a range of interest rates, based on the credit of the borrower (that's you) and/or your cosigner. (A cosigner promises to be responsible for the loan if you're not able to pay it back.) Better credit = a lower interest rate. It's likely that in order to be approved for a private student loan, you'll need a cosigner.

Private student loans all vary by lender, and there are often different loans available based on your situation (whether you're an undergrad or grad student, etc.).

If you're considering a private student loan, talk with your financial aid advisor about your options, and compare the different loans carefully. Here are some things you should find out about any private student loan you're considering:

• What is the interest rate (also called Annual Percentage Rate or APR for short)?
• Do you need a cosigner?
• How much time do you have to pay off the loan?
• When do you have to start making payments?
• Are there any borrower rewards offered?

Remember: When it comes to student loans, federal or private, you should only borrow what you really need because you're going to have to pay it back — with interest.

What questions do you have about private student loans? Ask us!

Staci

I'm always looking for ways to make my life a little more convenient and a little less messy. In fact, if anyone has some simple advice for: [1] stopping my Corgi  from shedding uncontrollably, and [2] keeping dog hair from accumulating on my new bamboo floors , I'm listening.

But today I'm offering a suggestion to make your lives a little more convenient and a little less messy while also doing something great for the environment: switching to online-only statements.

With Earth Day  happening this week, it's a great time to consider going paperless. Plus, until May 31 Wells Fargo is offering a really cool sweepstakes as an incentive. By switching your eligible personal and/or business accounts to online-only statements (student loans included), you'll automatically be entered for a chance to win one of three $10,000 prizes. Each account you switch qualifies you for an entry. Plus, Wells Fargo will donate $10,000 in your name to your choice of one of the following three environmental nonprofits: The Nature Conservancy, Earthwatch® Institute, or The Trust for Public Land.

There's no purchase necessary. Check out the official Sweepstakes Rules for all the legalese.

Since I'm a Wells Fargo team member who already receives all of her statements online, the only "spring sweep" I'm eligible for pertains to the dog hair on my bamboo floors. But if you're eligible, enroll today and help save the greater Green!

Cheryl

Admittedly, my thoughts today were inspired by a gorgeous, teenage vampire who once said, "The wasting of finite resources is everyone's business."

Like Edward Cullen , I've come to realize that environmental conservation is not just for unbathed hippies who have hunger strike tendencies. Nor is it just a cause that I donate money towards or volunteer for each spring in support of Earth Day , which happens to be today. It's not about the grand gesture.

In fact, something as massive as saving our planet is clearly going to take a little bit of thought (and perhaps sacrifice) each and every day from me and everyone else.

Going green is truly a lifestyle change. But it doesn't have to be difficult! Here are just a few tiny ways I've changed to be more efficient, which I hope are minimizing my footprint:

• Carpool.  Soccer moms were on to something decades ago. Now, I'll find ways to bum rides with my friends (or drive them) to school, work, out for dinner, a big game or a concert. It saves gas, emits less, and we can split parking costs.
• Subscribe to less printed media. I read my fashion magazines and celebrity gossip news at the gym. I set up news feeds  and sign up for other electronic newsletters and clipping services on subjects that interest me (from college hoops to business news to sample sales).
• Set a timer while showering. Not entirely sure why, but I used to take super long showers. Now, I set a timer in the bathroom so I don't slip into an inadvertent daydream or sneak a little more shuteye.
• Print on both sides. Whenever I'm printing papers or presentations, this printer option can cut my paper usage in half. I tend not to double-space, if given the option. If I ever have old hand-outs that do have blank sides, I'll save it for note-taking, list-making, or printing drafts of my next masterpiece.
• Pack containers. Instead of Ziploc  bags, plastic wrap or foil to pack away leftovers, I opt for plastic, metal and glass ware and jars that can be washed and reused several times, if not forever.
• Reuse my goody bags. Over years of attending job fairs, professional conferences, and sample sales, I have enough canvas bags to carry all my groceries home. I even won a raffle at my local grocer for bringing my own bag. Who knew that the most valuable free S.W.A.G. (stuff we all get) was the bag itself!
• Pay paperless-ly. I used to think I needed a physical reminder to pay my bills. But now, with email statements, text message alerts, calendar reminders and all the other ways to stay organized, I got over it. And I can't remember the last time I wrote a check to pay a bill. The beauty of the internet is that I can pay my bills wherever I am — as long as I have a computer — whether I'm at home, at a coffee shop, or in an internet café on a remote Greek island. I personally could care less that postage costs are rising! 

So sure, these are small sacrifices I've made and they can be a tad more inconvenient or time-consuming at times. But the gratification and sense of worth one feels by doing good by far outweigh any negatives. How else could we ever explain the growing list of image-conscious Hollywood A-listers trading in their Roadsters and suped up trucks for teeny, egg-shaped hybrids?

But the best part about being eco-friendly is it also helps me conserve my own dough and not be wasteful with that precious resource. It's seriously a no-brainer.

So, what sort of ways are you going green? Any tips? Please share!

Barbara

Earlier this week, the abundant sunshine in my kitchen reminded me to check on my seedling trays (I decided to save costs by growing my own food...well, some of it). So, I moseyed over and squealed with delight. My little seedlings have sprouted! Woot!

Growing your own produce is a great way to go green  (and save a little green, too). Getting some of your food from your backyard — or a pot on your balcony for that matter — means less food needs to be trucked from an outside location to your grocery store.

Just the other day I got some great tips on green gardening from the Sioux Falls Green Project , a project geared at educating the community on how to build a greener future. Here are a couple of the basics I learned:

• Grow native plants. By growing plants that are already accustomed to the area, they'll need less fertilizer and water. Check with your local Cooperative Extension office  for resources on what plants are native to the region.
• Use compost  instead of buying fertilizers full of chemicals and pesticides. There are tons of spendy contraptions to help you compost, but it doesn't have to cost anything. Even just a pile of grass clippings, dead leaves and kitchen scraps will turn into compost. Or if you can't make your own compost, see if your city offers free compost (Sioux Falls does).
• Water your plants with rainwater run-off. I am super intrigued by the idea of using a rain barrel. This is a great way to save on your water bill. Some of my favorite bloggers  recently made their own rain barrel.  (Come to think of it, they've also been composting! )
• If you don't have a backyard or a balcony for a garden, see if there is any space available in a community garden.

As I dive into greener gardening, I'll be sure to keep you updated. Once my green garden is flourishing, perhaps I'll have to add a statue of the Marble Faun (props to those of you who got that Grey Gardens  reference!).

Barbara

We all strive to be above average in some of the things we do. Scholars are hoping to surpass the average grades, athletes are striving for higher than average statistics, you get the picture.

Yet we tend to settle on being average in other arenas. And, yes, sometimes it's just fine to run with the pack as just your average Joe or Jane.  But there is one area that you should never find comfort in being average — your finances.

Why not? I can tell you from personal experience that finding comfort in being average can come back to bite you!

When I graduated from college, a little over $2,000 on a college credit card followed me into the real world. Now for someone who had a scholarship to cover college expenses that seems a bit high, right?

Well, here's the deal. Looking into some credit card facts  I kept hearing over and over that the average college student graduates with over $2,000 in credit card debt. So I thought, "What the heck?" If my counterparts are dealing with the same situation, I can charge a few things, too.

However, when we get stuck thinking that the debt is inevitable, we become less conscious of how much we are spending on things we don't really need. Part of that $2,000 on my credit card was for an iPod, and be sure that I whipped out the plastic for a pair of shoes or two (or three...).

So in the end, thinking average college debt was OK helped me develop some pretty bad spending habits. And unfortunately, those habits stuck with me until I started working for a bank and talking about financial education!

I challenge you to be better than average when it comes to your finances — both during college and after. Think twice about charging that sweatshirt at the campus bookstore. Resist ordering a pizza for dinner when you could use your pre-paid meal plan at the campus cafeteria.

Don't fall into the average trap with your student loans, either (the average for student loan debt is almost $20,000 ). Consider a part-time job to supplement your living expenses rather than taking out more student loans. Pay your interest during school to avoid capitalization.

Each tiny step will put you leaps and bounds in front of the students who settle for "average."

Rachel

A few years ago when I was a banker, a high school student came in looking for help. He was freaking out because he had overdrawn  his account again and his dad was going to take away his car. "You have to help me!" he pleaded.

Oh, to be in high school again and have the threat of your car being taken away. People, listen: Of all things to have your car taken away for, banking trouble should not be one of them. You got this. Here's what you can do.

1. Make sure you have overdraft protection set up. When you spend more than you have in your account and you have overdraft protection set up, money can be automatically transferred from your savings account or credit card to your checking account to cover whatever you bought. This transfer costs money but it's less than a full overdraft charge. But don't let it come to this. You still have to replenish your savings or pay off that charge to your credit card after the fact. Do what you can to prevent this from happening altogether.


2. Play a little money mind game with yourself. For most of us, if there is money in the account, we're going to spend it, right? And if you only have $5 left in your account until Friday and you really want that Red Bull , you are going to justify the purchase. Here's what I used to do: When I opened my checking account with $100, I considered my account at zero. I pretended that $100 = $0. That way I always had an emergency cushion. When I say pretended, I mean it. That $100 in my checking account was invisible to me. Very rarely did I let myself go below the $100 and when I did, it was usually for something "really important: the day before payday.


3. Set up a text message alert to send when you enter the danger zone. You can get a text you when your account gets down to a certain amount, whatever you designate.


4. When in doubt, send a text to check your balance. This way there is no guessing or assuming and you know exactly where you stand.


5. And of course, be sure you are logging in to online banking as often as you do Facebook.  Knowing what's up will help you stay out of trouble, at least with your bank account.

Staci

Here at the Student LoanDown, we like to think that every month is financial literacy month. But this April, it actually is National Financial Literacy Month!  Time to brush up on your financial fundamentals!

One of the personal finance bloggers we follow regularly, J.D. from Get Rich Slowly, asked his readers what they want to learn during Financial Literacy Month.  They've been more than forthcoming with interesting suggestions — some even want to know more about student loans.

You've been asking some interesting questions lately, too. In case you've missed them, I thought I'd highlight some of our recent exchanges:

• Do you have questions about student loan default or federal student loan rehabilitation? Check out the comment string on my post about student loan repayment.
• Are you thinking about cosigning a private student loan for a student and wondering how long you'll be on the hook?
• Want to know more about how Wells Fargo's private student loan interest rates are calculated? Barbara answers Tyler's questions here.
• If you're curious about student loan consolidation, our most popular post probably addresses the topic somewhere in the comments section!

What haven't we discussed that you'd like to know? You don't have to wait for Financial Literacy Month to roll around — you can ask us anytime.

Caroline

I hate to contradict Shakespeare, who said "Neither a borrower nor a lender be."  But I'm going to make the case for borrowing (and lending) stuff.

When times are tough and everyone's trying to save money, borrowing and lending things among friends is a great way to save money, if you're smart about it.

So how can you be smart about it? Glad you asked!

First, know what you will not, on policy, ever lend: more money than you're willing to lose (that should be about $5-$10 if you're a college student!), your car, or other high-ticket items, like your laptop, iPod, etc. Once you've made it your policy, it's easy to say, "Sorry, I don't lend out my (insert item here)."

Now, what items are good to lend/borrow? From friends, borrow things that you can easily trade back and forth, that neither of you wants to spend money on: movies , books, CDs, clothes — that kind of thing. When I was in college, I quadrupled my wardrobe of miniskirts, "MC Hammer  pants" and boyfriend jackets simply by sharing with a few close friends.

Note I said "close friends." When you decide to start borrowing and lending stuff, keep your circle pretty tight. Don't lend your fave sweater to just anyone in the dorm, or you might not see it again. Or it might be a size too small when you do.

And don't be afraid to put your name on your movies and books to ensure that you get them back — even from well-intentioned friends. I borrow the latest bestsellers  from my sisters all the time, and I'm glad they stick return address labels inside, so I always know where to return them.

So, while it makes sense to borrow small things, what about bigger things? I would stick to family for this kind of stuff — but it's definitely a good idea to try out an expensive item before you invest in it for yourself. Maybe before you buy a bike, try out the one with flat tires in your brother's garage, to see if you'll really use it. Not sure if you need a food processor? Borrow the one your mom hasn't touched in ages. Personally, I wanted to start sewing  and considered buying a cheap machine. My sister piped up that she never uses hers, so I am currently borrowing it — saving myself the $75 I'd have spent on a basic model.

Once you get started, be a good borrower (Staci will laugh at this, as I once held a book of hers hostage for over a year). Return things promptly, in the condition you found them. And be willing to lend stuff back.

Do you think it's a good idea to borrow things to save money? Or did Shakespeare have it right?

Barbara

We all make mistakes, right? And whether your financial mistakes are minor (going $3.00 over budget for that fancy coffee) or major (defaulting on your student loans ), you must learn from your mistakes and you must take steps to correct those mistakes and lessen their impact.

So, let's talk about the sticky situations some of you may be in and how you can take action to fix your credit. I'll also throw in a couple that would be good for readers who have decent credit but would like to improve their situation.

Just like with building your credit, the first thing to do when fixing negative credit is looking at your credit report and credit score. Once you have a good picture of where you stand, you'll know what issues you need to address first.

• Get your accounts current. If there is any credit you've let slip past due, you need to get back on schedule. This goes for your utilities in addition to loans and lines of credit.
• Correct any credit report discrepancies. Check out what you should focus on fixing in #6 and #7 of this MSN Money article. 
• Work with your lender. Sometimes lenders are willing to work with you to establish a payment plan to bring your debts out of delinquency. It's in your best interest to develop a plan with your lender rather than have them send your debts to a collection agency.
• Pay down your credit card debt. Because part of your credit score is based on how much of your credit limit you're using, it's best to keep the percentage of debt relatively low to the available credit. And remember the caveat I mentioned in my last post: the amount reported is based on your statement, so try to pay what you can off before the statement is generated.
• Don't lower your limits or close accounts. By lowering credit limits or closing accounts, you could hurt your credit because you'll have less available credit and therefore a higher debt-to-credit limit ratio. Plus, it may jeopardize your length of credit. Usually, you should keep the first credit account you established open to show a longer credit history.
• Try to avoid frequent moves and job jumping. By staying in the same home or job, you're showing stability. Of course, you shouldn't stay in a job or location that isn't working for you, but some lenders like to see constancy in those two arenas.
• Pay on time. Even just one late payment can be devastating to your credit score. You can set up automatic payments or use online bill pay to help keep you on track.

Well, folks, that wraps up our two-week credit series. What other credit questions can we help you with?

Barbara

Now that we've talked about the ways your credit is reported and scored, it's time to delve into what you can do about your credit situation.

First thing's first. If you haven't already done so, you need to assess your situation through your credit report and credit score. You may already be building credit and not realize it. If you're starting without much of a credit history, there are a couple things to focus on right away that can help to build your credit.

• Put money in the bank. Start with the basics by opening up checking and savings accounts. If you've already got them, fantastic. Just by having those two simple accounts you're seen as more financially stable.
• Pay on time, always, for everything. Whether it's paying the bill right when you get it, setting up automatic payments through a lender, or using online bill pay, find a system that works for you so you never make a late payment. This goes for your credit accounts, utility bills, rent, and whatever else requires a regular payment.
• Apply for credit. If you're going to school and took out a student loan, you're already on your way! If you didn't have to take out student loans or want to diversify your credit (something that plays into your score), you can also apply for a student credit card. Make sure that the credit you do establish will be reported to the credit bureaus (remember those are Equifax, Experian and TransUnion). Your account has to be reported in order for it to help you build your credit history.
• Choose a different type of credit. For some people, it may be difficult to secure traditional types of credit without an established credit history. Those folks can consider opening a retail credit card, which are generally easier to get. Just remember not to go crazy. Every new account you apply for will appear as an inquiry on your credit report and affect your credit score. Another option is a secured credit card, where you deposit money into a bank account to guarantee repayment for your credit card's limit.
• Use your credit. Yes, you should be using your credit card  to build your credit, but don't charge more than you can afford to pay off each month. That way, you still have the benefit of building credit, but don't have to worry about using too much of your credit limit (remember that's also a consideration in calculating your score).  There is one caveat you want to remember, though. The balance that's reported to the credit bureaus is the closing balance on your statement. So even if you pay your balance in full each month, you still may appear to have a high debt-to-credit limit ratio. If you're using your card to get rewards and racking up high balances, it's best to pay that down a bit before your statement is generated and the balance reported.

Have any of you been working to establish your credit? If so, share what steps you've taken.

If you're dealing with some negative credit issues, stay tuned. My next post will wrap up our series on credit with some thoughts on how to start repairing your credit.