Students be weary of debt

Ramen Noodles is Asia Wright’s favorite dish.

The 21-year-old brags that it is an economical meal, best served hot with a chicken or beef seasoning and cooked for one minute. “Just stir and serve,” said the Memphis native. It isn’t a dish that can be easily messed up, a plus for most college students. The only slip-up that may occur is pouring the seasoning in before cooking.

Some college students have even more difficulty with the right recipe for their finances, particularly credit. Whether students like it or not, living in today’s world demands the use of credit. The buyers of homes, cars, major appliances, and even investments need to have a good credit history.

When used wisely, credit cards can be helpful throughout college and can assist students in the development of financial management skills.

As soon as students get their first credit card or loan, they have entered the world of credit reports and scores. A credit report is compiled by credit bureaus and contains information about identity and credit relationships, among other things.

Wright, who has defaulted on four credit cards since 2004 said, “I didn’t realize how credit affected everything. I was so worried about trying to maintain an image, I became frivolous with the way I would spend.”

She mentioned that the first time she saw her credit score was when she was trying to rent an apartment in 2005. “It was below a 500 and I thought I would still be eligible, but I wasn’t,” said Wright.

“It’s vital to know that your credit score affects your ability to get loans, car loans, and home mortgages,” said Harvey Smith, a partner with the GrassRoots Investment Group. “Future jobs and insurance premiums can also be influenced by your credit score. By paying your bills in full or in a timely manner, a credit card will help you establish a good credit score,” said Smith. Smith also mentioned that late payments or no payment at all add to a poor credit score.

Justin Allen, 19, a second-year mechanical engineering student from Statesboro, Ga., said, “I know I will have a good job once I graduate so I will be able to pay back any debt that I may have while I’m in school.”

Harvey Smith sees this as a bad sign. “Many students’ expectations of their earning potential after college far exceeds what their actual income will be.”

Tianna King, 20, a second-year political science student from Richmond, Va., recommends getting one card with a low limit. “This limits the amount of credit you have access to and ultimately removes the temptation to spend more than you have or more that you can pay off immediately,” she said.

Smith offers three tips for students. The first is to have open communication with a trusted source and talk openly about financial matters. “This will save you a lot of hassle if an emergency may come up, they will be able to sympathize with you because they understand your situation better,” said Smith.

Second, students should switch from spending behaviors to activities that give a feeling of gratification or reward. “Signing up for intramural activities, exercise or joining an on-campus organizations is always a great outlet.”

Last, “It should be mandatory that students enroll in a personal finance course. You will learn a set of life skills that will not only help you right now, but also after college and for the rest of your life.”

Slowly but surely, Wright is paying off her debts and is on the way to break 600. “This is my second chance at creating a foundation for my financial future. I’d eat Ramen Noodles for the rest of my life to make sure that my credit is always up to par.”