Milwaukee Accountant Reports On: “A September 12 World”

We all remember where we were that morning. The world shifted beneath our feet.

And, in the cool light of the next morning’s dawn, it was clear things had to change, somehow. And we’ve been fighting the last ten years over exactly what that change should be.

Outreach programs, wars of necessity or aggression (depending on your perspective), security "upgrades", bureaucratic consolidation — and expansion, and many other changes. Some subtle, some quite intrusive.

But the reality still faces us: we are in a different world than we were 11 years ago. Or maybe we’re not, and we simply have different eyes.

Either way, I’m glad we took Sunday to remember, once again, the dangers of complacency.

Now I don’t think there’s any good way to segue out of such a solemn topic, but I’ll give it a shot: because complacency isn’t just for nations to guard against; it’s for families too.

And, for better or worse, often our children haven’t been "burned" enough by the real world for them to understand how financial complacency can lead to ruin. So this week’s Note is a public service for you families with children starting college — or those with children already there. I put it together because I’ve seen too many kids get underwater, and too many parents complacently enable them.

I hope it helps!

Jon Neal’s
"Real World" Personal Strategy
For The College Student In Your Life
Financial independence training is a short-term pain, for a long term gain. Because "untrained" college students are sitting ducks for unscrupulous financial service companies and their own lack of financial sense.

So, with that in mind, here are some off-the-cuff guardrails to consider for your son or daughter entering, or continuing on through college…

1. Make a definite plan to leave college with no consumer debt. And I’m talking a real PLAN. Credit cards, car loans — college kids are ripe for the plucking. Consumer debt is a real killer, simply because it depreciates so much. In a short matter of time, these items lose their value, but the payments and interest continue to inexorably pile up. So set up a clear budget for travel, late-night snacks, and other miscellaneous lifestyle expenses (heck, going through the process might even prompt some lifestyle evaluation!). Tell your child: "You should have an exact answer if I ask about your weekly spending limit." And have them try to earn enough over the summer that they can afford to skip the part-time job during the spring and fall semester.

2. ATM bank fees are killer. Moving to a new city often means the local debit card will likely be charged from $1.50 to $3.00 for every withdrawal from a foreign ATM. Consider an online bank account like Charles Schwab Bank that reimburses all ATM fees or a local bank with easy ATM access.

3. Overdraft fees are as common as hangovers for the college kid — avoid both. A recent Pew Foundation study found that the median overdraft penalty fee is $35; an additional $25 accrues if this overdraft is not repaid in seven business days. The average bank allows up to four of these overdrafts to occur in one day for a total fee of $140 or more per day. However, if you open a savings account in addition to your checking account, you can apply for overdraft transfer protection. You might even set up a situation where the college student controls the checking account — but you control the savings.

4. One cell phone bill gone awry can swamp you. New routines in college will likely mean that calling and texting habits will change. Or just one call to that high school sweetie who is spending the semester abroad might necessitate a different plan. If your child doesn’t have an unlimited plan, have them make it a habit to review the account online in the middle of each billing cycle. By the way, this is a very good expense to NOT pay for as a parent.

5. Avoid gimmicky credit card offers. Often the first credit card is awarded at a football game where so-called "free" T-shirts are being handed out. Again, college kids are ripe targets. Shop online for the best rates and terms and purchase a dozen dress shirts with the money saved by finding a card with less onerous terms for interest rates and late fees. Focusing on the so-called "rewards" which credit card companies give you is a distraction in your financial life. Like a casino, credit card companies win most of the time — which is why they stay in business.