Sunday Gazette-Mail, February 12, 2017 11J

By Kate WhiteStaff writer

Need cash now? Search on-line and dozens of websites turnup promising exactly that.

Each year, 12 million Ameri-can adults take advantage ofpayday lenders, according to aPew Research report.

The loans, however conve-nient, warn the Federal TradeCommission, often are difficultto repay and “come at a veryhigh price.”

The FTC advises consumersthinking of taking out a payday

loan to first consider some alter-native options.

Lending companies hold aborrower’s check until the loanis due and charge borrowersadditional fees every time a loanis extended. Borrowers write acheck to the lender for theamount they want to borrowplus a fee.

“A payday loan — that is, acash advance secured by a per-sonal check or paid by electron-ic transfer is very expensivecredit,” the FTC’s website states.

“How expensive? Say youneed to borrow $100 for two

weeks. You write a personalcheck for $115, with the $15 feeto borrow the money. The checkcasher or payday lender agreesto hold your check until yournext payday. When that daycomes around, either the lenderdeposits the check and you re-deem it by paying the $115 incash, or you roll-over the loanand are charged $15 more toextend the financing for 14 moredays,” the website explains.

“The cost of the initial $100loan is a $15 finance charge andan annual percentage rate of 391percent. If you roll-over the loan

three times, the finance chargewould climb to $60 to borrowthe $100,” states informationfrom the nation’s consumer pro-tection agency.

Such loans are prohibited inWest Virginia.

Instead of a payday loan, theFTC suggests considering asmall loan from a credit cardunion or small loan company.Do your research and shop tofind the credit offer with thelowest cost.

Make a budget and save mon-ey, the agency advises.

“A savings plan — however

modest — can help you avoidborrowing for emergencies,” thewebsite states.

The Pew report, which waspublished in 2012, found thatpayday loan borrowers arespending about $520 in intereston a $375 loan.

Most borrowers use paydayloans for ordinary living expens-es over the course of months,not unexpected emergenciesover the course of weeks, thereport states.

An average borrower is in-debted about five months of theyear, according to information

from Pew, which states mostpayday loan borrowers arewhite, female and between 25 to44 years old.

“The bottom line on paydayloans: Try to find an alternative,”the FTC’s website warns. “If youmust use one, try to limit theamount. Borrow only as muchas you can afford to pay withyour next paycheck — and stillhave enough to make it to nextpayday.”

Reach Kate White atkate.white@wvgazetttemail.com,

304-348-1723 or follow@KateLWhite on Twitter.

Payday loans offer relief at ‘a very high price’

By Jacob BogageThe Washington Post

It’s time to stuff your suitcases fullof all your earthly belongings and goshopping for a hoodie bearing somefearsome mascot.

You’re headed off to college, per-haps the first time you will be left toyour own financial devices. It’s a lib-erating feeling, but also a period thatpetrifies financial advisers and par-ents, too.

Faced with student loans — alongwith fend-for-yourself expenses likepaying for food and rent — manycollege students are often unpreparedfor the financial world they’re entering.

“High schools and middle schoolsdon’t do a good job preparing studentsfor budgeting,” said Ronya Corey,senior vice president of wealth man-agement at Merrill Lynch. “Unfortu-nately for most students, going tocollege is a practical exercise in fi-nance.”

And increasingly, students are leav-ing college with a big mound of stu-dent loan debt. Seven in 10 collegestudents owe an average of $28,000in student loans, according to an In-stitute for College Access & Successstudy in 2013, the last year for whichsuch data is available.

So how do you get through collegewith enough fiscal savvy to avoidliving with your parents after gradua-tion? Here are some financial tips forcollege students to help you navigatethose four (or five) years and exit withless monetary heartache then yourpeers:

Start thinking about money now,Develop your financial strategy

before you set foot on campus, saidKatherine Dean, managing director ofwealth planning at Wells Fargo.

Hash out your expenses: tuition,books, rent, food, airfare home forThanksgiving, entertainment, ticketsto football games. Be transparentwith yourself and your parents abouthow much college is really going tocost.

Talk with your parents to get astronger grasp on what real-worldexpenses look like. Go food shoppingwith a parent to learn how muchgroceries cost. Going on a family va-cation? Book travel plans with yourmom so you know how much yourfamily spends on airfare.

“The earlier the better,” Dean said,“because it better equips and preparesthem for what they’re getting into.”

It’s never too late to approach yourparents or a financial mentor, like agrandparent or family friend, to learnsome of the same basics, Dean said.

Make a budget, stick to itRemember all those expenses you

laid out? The tuition, books, rent,food, entertainment and whatnot? Setgoals for yourself about how muchyou want to spend on each and holdyourself to those goals.

Categorize your spending into“buckets,” said Rick Harkins, wealthmanagement adviser at HarkinsWealth Management in Providence,Rhode Island. And if you’re on trackto overspend in one bucket, don’t pour

money from another into it.“Stick to those allocations,” Harkins

said. “If you spend down one bucket,don’t take from another.”

Use online tools to track yourspending habits and help you set ac-curate goals. Most banks offer freespending-tracking software. OtherWeb sites like Mint.com or eMoneydo, as well.

Monitor, protect your creditCollege is the first time a lot of

young people get credit or debit cards.It’s also the first time young peoplemight take on substantial amounts ofdebt in the form of student loans.

Opening a credit card may helpstudents establish a financial footholdand create a credit history. But thereare potential pitfalls, Harkins said.

Missing a single credit card pay-ment can ding your credit score andincrease the fees and interest rateassociated with the card. And somecredit cards target students with freegiveaways, but carry high fees andinterest rates.

Compare credit cards to find outthe interest rates they charge. Re-search their fee structures. One cardmight have a low interest rate, butcharge an exorbitant fee every timeyou withdraw money or make a pay-ment, said Michelle Cortes-Harkins,an adviser at Harkins Wealth Manage-ment (and Harkins’ wife).

If you have a job in college thatgives you a steady and relatively sub-stantial income, start paying downyour student loans then and there,Cortes-Harkins said.

Save, save, save. Then save moreHave you saved yet? You should,

financial advisers agree. In fact, takea break from reading this piece to gosock away a few dollars.

College is a time rife with uncer-tainty, which means students need tohave some money on hand for anunexpected expense. What if your carbreaks down or you have to fly homesuddenly?

Harkins recommends regardingsaving as a subscription. If you’rewilling to pay $7.99 a month for Net-flix, couldn’t you put aside $10 amonth — or $20 or however muchyou can afford — to “pay yourself?”

“As soon as you do have discretion-ary income and start living on a bud-get, you can probably find that mon-ey,” Harkins said.

View your saving as a sliding scale,he said. It’s best to stash away 10 to15 percent of your income, but if youhave a job, maybe you can afford tosave 20 percent. If you’re living off anallowance from your parents, maybesave 7 or 8 percent.

That’s a good way to start savingfor retirement or some larger futureexpenses, such as buying a home orgoing to graduate school — becauseno one wants to leave college.

Set up a Roth IRA — an individualretirement account — the advisers say.You can invest up to $5,500 a year ina tax-free Roth IRA. You can take$10,000 out of that account after fiveyears without penalty to buy your firsthome or for more education.

Otherwise, that money you’ve in-vested stays locked up accruing inter-

est until you’re 591/2 years old, when— presto! — you have retirementsavings!

“Students are pretty reluctant toopen a Roth IRA because they think,‘I can’t access that money for another40 years,’” Corey said. “To have espe-cially millennials think about long-term planning, I find very difficult. Ishow people the power of compound-ing to show them how far ahead itgets them.”

Live below, not within, your meansThink about it this way: If you live

below your means during college, youhave a bunch of money left over aftercollege when you’re thrust into thedark and scary “real world.”

Take advantage of student dis-counts, Cortes-Harkins said. They’reeverywhere, from riding public trans-portation, to buying movie tickets.

High school and college studentscan save 10 percent on Amtrak fareswith a “student advantage” card. Col-lege students get free two-day ship-ping from Amazon. Use travel Websites such as Kayak and Travelocityto hunt for travel deals.

Think twice about whether youreally need that sweater from thebook store or that extra cup of coffee.Talk with your roommates about shar-ing expenses for things like groceriesor dorm or apartment decor. Talk withyour significant other about who paysfor every date.

“Talk about money,” said Harkins.“I think, in years past, we didn’t eventalk about money when we were kids.It was a taboo subject.”

A few money rules every college student should live by

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