NextPath Parents

It’s All Happening So Fast: 6 Tips to Help You Handle Your Kids’ Freshman Year

nextpath — Sun, 27 Jul 2008 17:35:00 GMT

Dealing With the Transition to College

You wake up one morning, and it finally hits you that your kids are no longer living with you; they’re not just gone for a few days, but for the year, maybe longer. Their bedroom is still their bedroom, except it’s clean, the bed is made, some things are gone, and it feels empty.

A change like this can be a radical, sometimes unsettling shift for both you and your kids — an 18-year chunk of your lives is suddenly missing, and you’re no longer quite who you were. As you feel your way through the new and empty spaces, and adjust to the changes that come with freshman year, here are six small bits of advice for helping you cope.

The Freshman Year: A New Chapter, With Its Own Beginning

1. Don’t try and fill the empty nest.
You’re sad. Allow yourself to feel that way. It’s called the empty nest syndrome for a reason, and if you try to snuff out this feeling by filling the nest with new worries, you’re going to do yourself a disservice. Letting go is incredibly difficult, especially since you worked so hard to reach that point where your kids would be ready to handle the world on their own. But remember this: You’re still their mom or dad, and that’s never going to change. Eventually, they may even be asking you for parenting advice.

2. Make sure your sadnesses stay your own.
Be careful about burdening your kids with your lonely or down days, especially during a time in their lives that will have its own share of feeling small and lost at the same time that it’s filed with awe and wonder and the exhilaration of new starts. It’s okay to let them know you miss them, but make sure they know that you’re excited for them too. This is a good way to remind them that they’re loved without smothering them.

3. Send care packages.
One of the best pick-me-ups when you’re a freshman who’s homesick, stressed out, and a little depressed is getting a surprise care package from mom and dad. Ship a box of snacks, fruit, homemade bread, a new blanket, a couple movies, a book of Sudoku, a few issues of their favorite magazine — anything that reminds them of home — and you’ll be the coolest parents in the dorm. And you just might find the act of putting together that package of things you know will make them happy helps you feel brighter too. Hint: If you don’t have time to make one yourself, many colleges and online stores have pre-made care packages you can order and have sent on your behalf.

4. It’s your turn.
You’ve spent so much time and made so many sacrifices so you could prepare and afford to send your kids to college that you may have forgotten what makes you tick. Take this time to find yourself again, maybe even rekindle some old dreams, and concentrate on yourself now that you can: Go back to school, take up a sport, join a club, revisit an old hobby. Do whatever it is that fills your life with purpose. And don’t for one second feel guilty about it.

5. Volunteer.
If you’ve gotten so used to having your calendar filled with your kids’ extracurricular activities, and you can’t seem to get by without a day that’s bursting at the seams, get involved in the community. An activity or charity can help you stay busy when you’re not at work, and if you particularly miss your kids’ teenage exuberance, you can volunteer at a youth center or club in order to stay in touch with that young energy.

6. Leave their bedroom alone.
Keep your kids’ bedroom the same for at least freshman year. Resist the urge to redecorate, and hold off on turning it into your office, studio, or new game room. Trust us, after a long and what can be a harsh first year at college, your kids will appreciate coming home to a place that feels like home. They’ll have missed those reassuring pieces of their old life almost as much as they’ll have missed you — and know that they do miss you, even if they don’t always say so.

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5 Rules to Help Your Kids Avoid the College Credit Card Trap

nextpath — Sun, 27 Jul 2008 17:21:00 GMT

Your children will be bombarded with hundreds of credit card offers while they’re at college — current students report receiving an average of almost five credit card solicitations a month — and as sensible as you think your kids might be, odds are they won’t be able to resist.

Lured by the appeal of seemingly easy money and giveaways like coupons for pizza and free music downloads, nearly two out of every three undergraduates report having at least one credit card, with an average balance between $1,300 for first-year students and $2,600 for seniors, according to a study released in March by the U.S. Public Interest Research Group. One in four students report having paid at least one late fee, and 15 percent report having paid at least one over-the-limit fee. Over 6 percent have had at least one card cancelled for non-payment.

But the dangers of student credit cards run deeper than just debt, delinquency, and fees: Students with high credit card debt run a higher risk of having low GPAs and dropping out of school — in fact, an estimated 7 to 10 percent of college students will drop out because of credit problems, says Robert Manning, author of Credit Card Nation.

So what can you do to help make sure your kids don’t end up the victims of their own rampant and unfettered credit card use?

What You’re Up Against

Your kids see credit cards as free money, easy money, or more money — not debt.
They view having and using a credit card as a sign of independence and adulthood.
They’re drawn to the idea that they can buy what they want, when they want it, even when they don’t have the cash to cover it.
They’re sure they’ll have plenty of time and resources to pay their cards off later, and they underestimate the impact of interest and fees — they can skate by on minimum payments right now, so why worry?
They’re new to credit and may not really understand the full long-term implications of a spotty credit record — if they go over their limit or miss a payment, no big deal, they’ll just make it up next month.
Young adults tend to have less impulse control — your kids may see their chance to live large away from home and take it, overextending themselves beyond what they can afford.

How to Deal: The 5 Canons of College Credit Cards

The reality is, you may not be able to keep your kids from getting a credit card; once they’re 18, they can qualify for a credit card on their own.

What you can do, though, is try to pass on some hard-earned adult wisdom and a few reality checks. Here are five wise and basic but crucial rules for your kids to charge by that could help keep them out of credit card trouble.

Rule 1: Think debit, not credit.
Encourage your kids to think of their credit cards as for-emergency-use-only. Suggest they set up a bank account tied to a debit card instead to use for their college expenses — and turning down overdraft protection, which makes it too easy for them to spend more than what they have and comes with expensive transaction fees, to boot. With a debit card, your kids can have the same convenience of plastic, but once their money runs out, it’s out, and they’ll have no choice but to stop spending.

Rule 2: Set up a budget.
Help your kids set up a budget for each semester, so that they don’t end up spending more than they have. Urge them to track their expenses and balance their budget each month in order to establish valuable habits that’ll come in handy even after college.

Rule 3: Know what you’re getting into.
Discuss consequences. Remind your kids that a credit card is a loan, not extra spending money. Make sure they understand that even just late payments could affect their credit score to the point where they might not be able to rent an apartment when they go off-campus, qualify for any private student loans they might need while they’re in school, or even get hired once they leave college.

Rule 4: Build your credit slowly.
Acknowledge that a credit card, well-handled, can be a good way of building credit, but warn your kids that too many credit cards, even if they’re not being used, can bring a credit score down. Advise your kids to select just one low-interest credit card with a small available balance that they can begin to use — in small doses only — to build their credit.

Rule 5: Use plastic responsibly.
Stress to your kids that they should be paying off their balance in full and on time each month. Help them see that it may not matter that they find a great deal on sale if they have to charge it, since each month that they don’t pay off a full charge and rack up interest, they’re paying more for their purchase than what was rung up at the register. Emphasize that they should only charge what they have the cash to cover; and if a balance remains unpaid in any month, they need to stop charging until their debt is paid.

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Your Debt-Ridden Kids: 3 Steps to Help Them Kick Their Bad Spending Habits for Good

nextpath — Sun, 27 Jul 2008 17:12:00 GMT

Maybe you’re one of those parents who’s always bailing your grown children out of a financial hole.

You watch your just-out-of-college kids buy an iPhone, a plasma TV, spend $4.00 a day on their Caramel Frappuccino at Starbucks, even though you know they can’t afford it. Yet when they’re overdrawn on their checking account, maxed out on their credit cards, late on their rent, or can’t make their student loan payments, you’re quick to swoop in with the money they need.

It’s natural to want to help your kids. Even when they’re old enough to be taking care of themselves, you don’t want to see them make financial mistakes that could affect them for years.

But if you want there to be any chance for this cycle to stop, before you bail your 20-something son or daughter out again, keep these three tips in mind:

Be objective. Take into consideration why your kids need the money. If they got laid off, for example, or totaled their car in an accident, assuming the role of the emotionally and financially supportive parent is completely appropriate. But if this is the tenth time in six months one of your kids is hitting you up for money, this may be a sign of an unhealthy pattern that can’t be fixed by simply writing a check. Your child could be showing signs of compulsive “debting.”
Don’t enable. Consider the pattern you’re setting and the behavior you’re encouraging by not putting your foot down. If you’re always there to bail them out, your kids will never change their spend-happy ways because there’s no reason for them to.
Set boundaries. Make it clear that your help is temporary. Before you hand over any money next time, set some conditions: Require that your kids enroll in a continuing education class on financial management, watch them cut up one of their credit cards, or let them know that you expect them to sell off their nonessentials (iPod, TV, stereo) to pay you back. Be clear about how long you’ll help, and set a non-negotiable cutoff date — the day you stop handing over money, period.

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Surviving the Economy: 7 Small Ways to Save Big

nextpath — Wed, 23 Jul 2008 03:12:00 GMT

Sign up for free customer loyalty and rewards programs. Enroll in programs like Upromise or MyPoints, and earn discounts, cash back, and even money toward your child’s college fund. You can earn rewards for eligible purchases on groceries, gasoline, online shopping, and more.
Bookmark deal sites. Use websites like Spoofee, CheapStingyBargains, and Slickdeals to find daily deals, discounts, and bargains on everything from computers and electronics to furniture, appliances, and clothes. Users also post information about stores and retailers that are offering freebies and giveaways.
Rent movies from the redbox. Forget monthly fees at Blockbuster and Netflix. Rent your DVDs for just $1.00 a night from redbox, the company behind those standalone red kiosks prominently placed in front of some Walgreens, McDonald’s, and other convenience stores. You can reserve your movies online, then pick up and return your selections at any one of more than 8,000 locations — all with no late fees.
Hit garage sales and thrift stores. Wander into some of the more upscale parts of town. People who live here will tend to upgrade and redecorate more often, and their barely-used castoffs can end up in consignment stores or as donations to thrift shops. With a little luck, you can snag an almost-new designer couch or a high-end home entertainment system at a great price.
Get spa services at a beauty school. Let a hairstylist-in-training cut your hair or a nail-artist-to-be give you your manicure and pedicure. You could save as much as 75 percent over salon prices just by letting a student practice on you; some schools even offer days when their student services are absolutely free. And if your rookie messes up, a professional is usually on hand to fix the problem.
Make fewer trips to the grocery store. Start keeping a shopping list, and do all your grocery shopping just once a week. Besides saving on gas, you’re also less likely to buy things you don’t need: Over 50 percent of shoppers who make “quick trips” to a store three to four times a week will buy items on impulse, according to a study by the Marketing Science Institute.
Use online coupons and discounts. Sites like The Coupon Mom offer hundreds of dollars worth of free grocery coupons, free restaurant coupons, and free samples. At Restaurant.com, you can buy a $25 gift certificate to local restaurants for only $10. And coupons aren’t just for food and groceries anymore: At RetailMeNot.com, besides coupons for restaurants, you can quickly find printable coupons and codes for over 15,000 stores and online retailers, including car rental companies, booksellers, clothing stores, and sites like eBay and Overstock.com.

Helping Your Kids Pay for College: Co-Signing for Their Private Student Loans

nextpath — Fri, 04 Jul 2008 18:13:00 GMT

We know college can be expensive. And in the current economy, money’s tighter this year for a lot of families than it has been. Even with federal financial aid like grants and college loans, you may have education-related expenses left to cover but not enough in savings to cover them.

If you and your kids have already taken advantage of all your low-cost federal financing options like Stafford student loans and PLUS parent loans but still have college costs to meet, you may be able to get the extra money you need from private student loans.

Why do my kids need a co-signer?

Most private student loan programs require students to apply for a private loan in their own name. But unless they can meet a lender’s income and credit requirements — which, after the subprime mortgage debacle, are even more stringent this year — your kids will need a creditworthy co-signer to qualify.

Many college students simply don’t have a long enough established credit history or make enough money to qualify for a private loan in their name alone.

Even if your kids do qualify for a private loan on their own, they may still be able to benefit from having you as a co-signer. Borrowers with stronger credit profiles often qualify for lower interest rates and fees than borrowers with weaker credit. If you have more disposable income and a better and more established credit history than your college kids, when you co-sign on their private student loans, you may be able to help them qualify for a better rate and lower, or even zero, fees.

What will I need to do in order to be a co-signer?

You’ll have to undergo a credit and income check. Specific credit and income requirements vary by lender, but you can expect to have to provide certain personal and financial information when your children apply for a private loan:

Your name, date of birth, and Social Security number
Your home address(es) for the past two years
Your employer and income information
Contact information for two or three references who don’t live with you

If your loan is preapproved based on your application information, you’ll usually have to provide some final documentation verifying your address (like utility bills or a driver’s license) and your income (like pay stubs, tax returns, or pension award letters).

What am I responsible for as a co-signer?

As a co-signer, you’re assuming financial responsibility for your children’s loan. That means that if they miss a payment, the lender can come to you to collect; if you don’t cover your kids’ missed payments, those missed payments will go on your credit report too, not just on your kids’.

Once I co-sign, how can I minimize the risk to my own credit?

As a co-signer, you can’t absolve yourself of financial responsibility altogether, but there are a few things you and your kids can consider to help protect your credit.

Sign up for automatic monthly payments.
Most private loan programs will allow students to defer making payments while they’re enrolled in school at least half time. Once your kids enter repayment, talk with them about enrolling in an automatic payment plan. With monthly payments coming straight out of your kids’ bank account, as long as your kids aren’t overdrawn, you can have the peace of mind of knowing you won’t get your credit dinged for any late payments.

As an added bonus, several lenders offer an interest-rate reduction for borrowers who sign up for auto-pay plans, which means even lower, more affordable monthly payments for your kids.
Look into a co-signer release program.
Some lenders offer a co-signer release benefit with their private student loans, in which students can request to release their co-signer from all financial responsibility after making a certain number of consecutive on-time monthly payments — this string of required timely payments typically runs between three and five years.

One possibility, if you’re willing to take on some of your children’s college expenses, is to come to an agreement with your kids that you’ll cover their student loan payments for that time period, and then once you’re released as their co-signer, they’re on their own.

Before any lenders will release you as a co-signer, though, they’ll usually require that your children be able to meet the loan’s income and credit requirements on their own at that time — so up until that point, your kids will have to maintain good credit and a clean payment history on any other debts they have in their name.
Consider a repayment contract with your kids.
Talk to your kids about setting up a repayment agreement, come to an understanding about what you’re willing to do as their parent and co-signer, and then put it in writing. This contract doesn’t have to be an IOU for the total loan amount; it can be more along the lines of a written promise from your kids to make their monthly payments on time, and it can set out some guidelines for them repaying you if you ever need to cover one of their payments.

Make sure your children know this isn’t an issue of you not trusting them, but just a way of getting you both on the same page about what everyone’s financial responsibilities are — approach it as a friendly financial transaction instead of a personal one. Most levelheaded and responsible college kids will appreciate you treating them like an adult and take their commitment to you seriously.

I love my kids, but …

We know co-signing for your kids’ student loans is a big commitment, and it can be nerve-wracking when the state of your credit is in someone else’s hands. But you also know your kids: Are they reliable, dependable, smart with their money? Do you trust them to handle their student loan payments responsibly?

And even if the answer to both those questions is yes, you probably can’t help all the other questions running through your head: What if my kids have trouble finding a job out of college or lose their job while they’re still paying off their student loans? What if they can’t afford to make their payments? Am I comfortable taking on the financial burden of their student loans for them when they’re coming up short?

One way to look at it is if you can help your kids qualify for a lower interest rate by co-signing on their private student loans, you may be helping to ensure that they don’t run into problems repaying those loans. A lower interest rate means lower monthly payments, which may be easier for your kids to meet when they’re just out of college and starting a new job.

On an even more basic level than better rates and fees, you co-signing on a loan may be the difference between your children being able to get the money they need for college and not.

At the end of the day, as you sort through all your questions, it may all just boil down to asking yourself this: If my being a co-signer means my kids can afford to pay for college, is it worth it?

And the only one who can answer that question is you.

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