Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, August 29, 1994 TAG: 9408300009
SECTION: BUSINESS PAGE: 6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
Irene Leech, family finance specialist with the Virginia Cooperative Extension at Blacksburg, sees a bad trend developing these days.
More and more college students use their credit cards to charge groceries at the supermarket, she said. Even a year or two ago, she said, students - and most other people - paid the tab in cash at the checkout line.
"It frightens me," Leech said. She said a credit card never should be used for consumables that generally have disappeared before the bill comes due.
Worse yet, she said, is the possibility of paying interest on the unpaid portion of a credit card bill for a meal eaten a month earlier. Even if the card is used for the sake of convenience, Leech said, the bill should be paid in its entirety when it is due.
It's a good idea to pay off a credit card bill, instead of revolving a balance with interest, no matter what it covers.
This is the time of year when college students must buy trash cans, bedspreads and throw rugs, Leech noted. You need a trash can now, she said, but the throw rug can be delayed until a little later in the school year if the budget gets stretched. Don't buy everything for the dorm room or off-campus apartment at once; spread out expenses.
As you head to college, Leech said, the important thing is to establish some sort of budget for the college year. Try to estimate the costs and the amount of money needed to cover them.
That not only will help parents finance school, she said, but it also will teach the student to manage money.
"Do some planning," Leech advises. Find out the cost of books and supplies.
Anyone living in a dorm will pay a flat fee, while apartment dwellers may have some payments to make beyond rent.
Choose the most suitable food plan for your needs and budget for that as well, Leech said.
Eating off-campus and going out with friends for an evening of entertainment are budget busters. "It's easy to go out and spend money" until there's nothing left for the rest of the month, Leech said. "Eating out and entertainment eat up a lot of money."
Controlling those discretionary costs is part of learning to be an adult, she pointed out, because this problem is one that everybody shares. College is a good time to develop the habit of setting aside a specific amount for entertainment - then sticking to the figure.
Banks also solicit students for opening accounts near school. Leech suggested shopping these offers carefully to determine which offer best meets your individual needs at the lowest cost.
Remember that interest rates are rising when you consider a loan or a credit card, Leech said. Learn what paying interest costs and pay off credit as quickly as possible.
Insurance is a major consideration for college students.
Undergraduates probably are covered by their parents' health insurance policies, she said, but graduate students are almost certainly too old to be included. That means older students must shop for their own policies.
Students and their parents should read their policies to determine the point at which coverage lapses, she said.
If you live in a dorm, you probably also are protected by your parents' homeowners insurance. But check this out as well.
Anyone who lives in an apartment, on the other hand, almost certainly has no coverage from parents. Leech advised apartment dwellers to buy renter's insurance to protect their possessions. The landlord's insurance protects only his premises.
Without your own policy, she noted, your television and other property in the apartment are not covered if they are lost through fire, theft or some other incident. Students, she said, "bring in lots more stuff than we used to do," so they own many valuable items such as computers to insure.
Also be certain that any auto brought to school is fully covered.
Kemper National Insurance Cos. pointed out that a family can save considerable money if a student listed as an occasional driver of a family car attends a college more than 100 miles from home.
Take the case of a family with a mid-sized car that occasionally is driven by a 19-year-old son who qualifies for a good student insurance discount and has a clean driving record.
In such a case, the annual insurance bill is $1,008.
But if the son attends a school more than 100 miles away, the family's cost of insurance drops to $884 a year - a savings of 12.3 percent.
Kemper said the cost for this same college student listed as a principal operator of the car is $1,836 a year.
The savings are even more substantial for young women.
Using the same example, the family's annual insurance bill with an female occasional operator living at home is $822. It drops to $664 if she attends college more than 100 miles from home, a savings of 19.2 percent.
As principal operator, this young woman driving her own or her parents' car would pay $1,250 annually for insurance.
Kemper and Leech both advised students and parents to contact their agent to determine if the car is properly rated for insurance coverage.
by CNB