Students advised to keep lid on spending

By Pete Bach
Fox Valley Inc.

APPLETON - Going to college shouldn't mean going broke.

By taking some vital steps now, high school graduates can start to head off the kind of crippling debt faced by many college graduates, say a pair of Fox Cities financial advisers,

"I would say talk with your parents about a budget," said Alan Prahl, education manager for the Financial Information & Service Center (FISC), Menasha. "How much should they (students) be spending on entertainment and what's the overall support they can expect from their parents?"

If college-bound students have a credit card, the freshman year of college is a good time to discuss when it's appropriate to use, Prahl said. The question of necessities and emergencies for spending should be discussed and defined.

Steve Hooyman, a financial planner and investment adviser with Schenck Investment Solutions of Appleton, said debt can quickly build up. His general advice?

"Be very conscious of debt, that it can catch up to you and that you've got to pay it back."

Hooyman said college students have a major advantage going in: their youth. Retirement is the farthest thing from their minds.

"Sometimes because maybe they weren't as conscious of debt, they're busy paying off debt after they graduate when they should be focusing on starting a retirement plan for themselves," Hooyman said.

"The biggest asset you have as a young person is time. The time value of money is huge."

College students are flooded with credit card offers and credit's never been easier to get.

Still, one tactic to control debt might be replacing the credit card with a debit card, which looks like a credit card but is the electronic equivalent of a check. Paying with a debit card automatically deducts that expense from a checking account.

"A debit card is limited to the cash you have on hand," Hooyman said. "That increases your consciousness (of spending limits)."

Prahl's organization has long advocated a pay-as-you-go - with cash - method of bill payment. That advice applies when college students throw a party on the town for their friends.

"If they normally carry plastic, they can get very generous buying food and so on," Prahl said.

Pete Bach can be reached at 920-993-1000, ext. 430, or by e-mail at pbach@postcrescent. com.