Credit, College, and Beyond

In the last lunch workshop we learned about credit. Going into it, I wasn’t very knowledgeable on the topic so I was interested in learning more about it. I come to find out that credit is VERY important and everyone needs to be familiar with it. The first question I had was well what IS credit?

By definition it is: a contractual agreement between a lender and a borrower in which the borrower assumes something of value, and agrees to repay the lender on a future date. However that can be confusing, so basically in a different way of saying it, credit is: borrowed money that you can use to purchase things you need when you need them and then repay the funds back at an agreed on time.

I stress the importance of credit to people my age because; we are all going to college soon , therefore living on our own, perhaps getting student loans, and applying for credit cards. All of those things coincide with your credit score in one way or another.

So how does credit even work?

Great question! When you apply for a credit (example: card or credit loan), it’s the lenders discretion to decide if you meet the expectations or are a good candidate for receiving the loan. Their decision is based greatly on your credit history. If you have poor credit history and display late payments, then you are less likely to be approved for the loan or line of credit.

It’s not just credit card companies that are looking at your credit history though, its employers, insurance companies, landlords, etc. It is necessary for them to know your past payment history and spending tendencies to determine if you are responsible in that aspect. Chances are that if you were always late on payments in the past that you may indeed still carry that bad habit in the future.

One of the most important things on your credit report is your credit score which is a reflection of your credit report as a whole. This is a big factor in determining whether you are granted credit or not. The number includes several factors which are

- Payment History - 35%
- Outstanding Debt - 30%
- Credit History Length - 15%
- New Credit Applications - 10%
- Your Credit Mix - 10%

How can I build up my score?

This is a common question people often ask to get on track of if they have bad credit how to get BACK on track.

-- Make payments on TIME! --- You can open to accounts to help with this.

-- Make payments that are higher than the minimum required---people have then tendency to just pay what they have to but if it is possible pay a little bit more than the minimum, it helps you pay it off faster and looks good on your report!

-- Make sure you understand the basics of credit and its scoring

-- Apply for a SECURED credit card

There are many sites, and people that can help you better understand credit or get you started on the right track. You would be surprised at even little things that you don’t think are that big of a deal, but are actually a big impact!

GOOD LUCK!
--Solana :)

Financial Aid Saturdays

Did you know that completing the FAFSA (Free Application for Federal Student Aid) can increase a student’s chance at going to college by 350%?

I had no idea until I got involved with the Greater Austin Chamber of Commerce’s Financial Aid Saturdays events. Starting in February, in schools all across the greater Austin area, the Chamber will be holding Financial Aid Saturdays. Trained volunteers from all over will be on hand to help families and students complete the FAFSA. The service is completely free and only takes about an hour to an hour and a half to complete.

I remember my first time filling out the FAFSA. The form was long, many of the questions were confusing, and my parents and I had many arguments over what we were supposed to be doing. It usually took an afternoon to get everything together and finally fill out the form. And after I clicked “Submit”, I still wasn’t sure if I had done everything right. I would like to say there was a huge learning curve the following years, but there wasn’t. Every year was the same struggle. The only difference was I had a slightly better idea what I was doing (and my parents and I had a few less arguments).

So it only figures that after I graduate, the Department of Education would make some awesome changes to the FAFSA form.

This year, the online FAFSA is super easy to navigate and complete. At our training session for the Financial Aid Saturdays, we went through a demo FAFSA, and I just have to say that it is a great improvement. Now, if a question doesn’t relate to you, it doesn’t show up. You don’t even have to worry about it.

Filling out a FAFSA this year? Here are some tips. Also, be sure to check out the College Ready Austin website to learn more about the Financial Aid Saturdays. The volunteers will be there to walk you through the FAFSA and answer questions you may have. At the end of the session, you will have completed and (hopefully) submitted your FAFSA.

Basically, there are seven steps to filling out the FAFSA:

1. Student Demographics.

2. School Selection. You can choose up to ten schools you would like to receive your financial aid information. These schools can then look at your form and send you a financial aid package.

3. Dependency Status. This status determines whether or not the student needs to provide parental financial information. *Note, this is different than the IRS definition of independent and dependent.

4. Parent Demographics.

5. Financial Information. This information will be found on financial statements and tax forms.

6. Sign and Submit. To sign and submit electronically, both the student and the parent will need a PIN. This will be used every time you complete a FAFSA, so be sure to keep it safe. If you lose it or forget it, you can always request a duplicate PIN.

7. Confirmation.

To make the process go even faster, be sure to have to following items with you:

- Social Security number or alien registration card
- Driver’s license or equivalent
- 2009 federal tax returns (student and parents)
- 2009 untaxed income records (student and parents)
- 2009 financial institution statements (student and parents)
- 2009 business and investment records (student and parents)
- Federal Student Aid PIN (pin.ed.gov)

Links:

College Ready Austin
fafsa.gov

Setting Limits

Hey everyone,

Sorry it’s been so long since my last post, life has been CRAZY. Between finals, my soccer team going to district playoffs in San Antonio and then state playoffs in Beaumont (near the Louisiana border), family, etc., time has been hard to come by. This has made keeping my register up to date nearly impossible too. Today I plan on going online and comparing what I have written down to make sure it is accurate.

Money-wise, this time of year is always difficult for me. I am a very giving person, often to the point that I am willing to sacrifice my own comforts and needs to make others happy. I tried something new this year though to help with this; I attempted to set limits on each individual I was shopping for, however this did not always work out as planned. For example, a store was out of the thirty dollar angle-grinders. All that was left was the fifty dollar ones.

I have no idea how much I spent on Christmas collectively, and honestly I am a little scared to find out. Also, my boyfriend’s birthday is January 3, another expense to add to the seasonal list.

However, on a more positive note, I have been getting a lot of letters from colleges that I have already been accepted to and am considering offering even more money. YAY!! This definitely helps. It makes the thirteen years of busting my butt on my grades and education seem so worth it. So far all those slacking, it is really worth it in the long run. I really encourage everyone to do all you can to keep your grades up, it is definitely worth it. I will keep everyone updated on how the college stuff plays out.

I am super excited about 2010. Not only do I graduate (WOOHOO!!), it’s full of new opportunities and challenges. One of the biggest of these obstacles for me is going to be living on my own (hopefully in Waco). Being able to determine what are good prices and what are expenses that are needs versus wants is going to be vital in this change. Having to discover how to be financially independent, more so than I already am, is going to be a struggle, but I think I’m ready to take it on. I really think I can handle the pressures that it comes along with. Yeah, it may be difficult at times, but who doesn’t have it hare every once in a while?

I will let everyone know the damage Christmas has done after I am able to total it all up. I hope and pray that everyone had a safe and amazing Christmas and New Year’s.

-Katelyn

Learning to Set Goals

When I went to the luncheon meeting last week, I was able to learn a bit more about saving money and setting different goals. Most of my goals are set for long term, but there are always a few short term goals. For example, one of my long term goals is to save money for a car some time in 2012. My short term goals involve saving money for birthday and other holiday gifts for my friends and family.

I learned about how to save properly, for instance, to bring only the amount of money that I want to spend, and if I am using a credit or debit card to set a goal to not spend over a certain amount.

I also learned ways to prevent myself from getting the urge to spend money on things that I want more than need. I need to ask myself whether I need the things, or if it is only something that I want. For example do I really need that Robin Hood DVD from BBC (YES), or is it something that I can live without (OK I guess this would be the right answer so we’ll go with this one). It would be nice to have and I can survive without it, so I have to put it on my birthday or Christmas wish list.

I also learned that I should also try to find cheaper gifts that are just as good to give as well as receive. Cards are a good example of this. How many times does a person receive a card to only throw it away a few weeks later as to not clutter their space? If it’s a really special occasion such as a wedding, or a birth, then it is fine to buy a more expensive card to give out. Otherwise, I found that it is ok to give the fifty cent cards because it means just as much that you gave one in the first place.

Now that everyone must think that I am very cheap, I would rather be thought of as thrifty. This thriftiness will help me in the long run, and comes in handy when I am a little low on cash.

- Lynda