You Have Credit! by Olivia Smith

 

“If you get a credit card, you can raise your credit.”

How many times have you heard these sometimes dangerous words echoed?  Your average college student is more worried about graduating than their credit score.  Plus, why does your credit score even matter?  It’s not like we have a huge proportion of personal assets accrued.

What many fail to realize is that your credit score can come back to haunt you, especially when trying to buy your first car, rent your first apartment, or get a decent interest rate on a loan.  In boring, textbook definition format, “a credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time.”   Three separate entities keep track and calculate credit scores, causing minor fluctuations; however, all should be within points of each other.  Credit scores are used by numerous individuals and organizations, and take into account your payment history, how much money you owe, length of credit history, any new credit you’ve recently accumulated, and the mix of credit you have.

Unfortunately, it’s much easier to deplete your credit score than to improve it.  As a rule of thumb, any score below 600 is considered high risk and a score above 700 is very good.  Simple mistakes such as late payments on bills can lower your score.  Tips for improving your score includes making timely payments, keeping your credit card balances low, don’t transfer debt between cards and only open new credit accounts when absolutely necessary (two is a good number to aim for).  Also, don’t pay your college tuition using credit cards.  Credit card rates are much higher than government loans, which are locked in at a percentage and don’t require repayment until graduation.

Did you know you can get one free credit report a year from each reporting agency?  Go to www.annualcreditreport.com, a government run site making inquires much easier.  So, if you keep an eye on your credit, pay your bills on time, and don’t excessively use your credit card, you’ll be in amazing shape when entering the “real world”.

New Business: Slurp Your Way into Summer by Yen Nguyen

Sluuurp, chew, and gulp! Are your taste buds ready to try some new drink flavors offered by a new business in Wichita? From slushes, smoothies, teas, and coffees, Boba Zone, a café like place, offers a variety of flavors to satisfy any thirst. What makes these drinks more unique are the boba and jellies that can be added to any cup.

What is boba? Bobas are small, chewy, tapioca sensations that have been a common scene in many cities especially the west coast. In Wichita, however, they are not as widespread. The owner, of Boba Zone wants to change this. When asked why she wanted to open this place, she simply answered, “I want to introduce boba to Wichita,” Diana Le.

Opening a business, however, has not been easy. Some new business owners work more than full time. Diana Le is not an exception. She is there from opening to closing. Along with training her employees, and maintaining the place, she has piles of paperwork and legal matters that are involved with opening a business. It takes a lot of effort and work into opening a place and a lot more heart to keep it alive.

Along with heart, owners need well…business. A high customer base increases one success rate. Since it is often quoted that a high percent of new businesses fail within the first five years, it is critical that owners be prepared to take on the financial along with the emotional tension of having a business.

Although the fate of Boba Zone is not for certain, it has high hopes and potential. The owner is still new to this field but she is willing to work hard. Her advice to those who are dreaming of owning a business: “Start early and plan way, way, way ahead.”

For more information visit Boba Zone at 2240 N Rock Road Suite #106.

Credit Card Advances: Fast, Convenient, Expensive – by Tobias Breer

In the world we all live in, almost everyone has a credit card. As we have discussed in earlier commentaries, there are both advantages and disadvantages of credit cards. All of those aside, I am going to talk today about a certain aspect of a credit card that I hope none of you have deal with, although I am sure some have. This is the aspect of the cash advance. Although this is a very easy way to get cash fast, one needs to be educated on the intricacies of this process as it is complex and costly.

Since most college students are, shall we say, monetarily challenged [poor], it is not uncommon for those students, including myself, to have some tough times in relation to money. As the semester is coming to a close, and all of those financial aid dollars are disappearing at a seemingly exponential rate, you may come into the situation where your bank account is getting low and you overdraft your account. This is an ugly situation, but sadly, it is faced by many students every day. When you are in a situation like this, it is important to step back and think before you take the most convenient way out. A credit card cash advance would momentarily fix the problem, but with fees and other expenses that fix would be short lived.

The first thing one must understand is the fees involved in a cash advance transaction. Fees are computed using two calculation methods. The first way that card issuers calculate fees is on a percentage basis, which typically ranges from 1% to 4%. Other issuers charge “flat fees” for advances, which means you pay the same fee no matter on the amount advance to the customer. A few companies do not charge fees but they are very rare, and one must have good credit to obtain such cards. Finally, if you absolutely have to get a cash advance, try to avoid using the ATM (unless it is operated by your cardholder) because you will be charged an additional fee from the owner of the ATM.

In addition to fees, one must understand that they do not pay the normal purchase interest rate from their card on advances. When you take out an advance, you are subject to interest charges from 20% to 25%. Also, advances do not have any grace period so that high interest percent starts accruing immediately. This means that even if you pay your balance in full, when the bill comes, you will still have paid interest on the advance.

If all that is not bad enough, there is one more thing that most people do not understand about the process. Credit card companies view your normal purchases and your cash advances as almost separate accounts even though they are on the same card. For example, let’s say that you bought $200 worth of goods on your credit card this month and that in addition to this you had to get a cash advance for $50. Now it is time to pay your bill and you send in a payment of $100. One would think that the credit card company would first apply $50 to the advances (since it is a higher interest rate) and then apply the rest to your regular purchases, however, this not how it works. When receiving payments, credit card companies will typically apply payments to the purchase side of your account before covering any cash advances. The only way around this is for the customer to request that the payment be applied to their balance of cash advances.

As we make are way through college, and try to figure out how to pay for everything [seems impossible at times], I hope that you are never put into a situation where you are thinking about a cash advance. However, if you are ever stuck in that situation, I hope you will remember this information and that it will help you to make the most informed and best decision for not only the moment but the future as well.

Keep track of your personal finances – FOR FREE! by David Mason

I had a conversation with my cousin a few months ago on Web 2.0. Not since the initial boom in internet companies back in the late 1990s has there been so much excitement regarding the online marketplace. Sites like youtube, facebook, and myspace have turned the huge, diverse world of the internet into navigatable communities through which access to a million customers is simply a mass wall post away. Oh and by the way, the creators of the previously mentioned websites have made tens of millions of dollars, simply by allowing name brand companies make a small little advertisement on the side of your facebook home page everytime you log in. The sickest part, most of these creators are not much older than me…makes me sick.

Now that I’m done venting, what does this mean? Well, a number of other online entreprenuers are looking for new ideas to create communities of their own. For example, Mint.com is one of a hundred great online services offered online for free in an attempt to gather you and 500,000 of your closest friends to visit this site on a daily basis. Mint.com is an online tool you can use to sort out all of your personal finance problems. This site can keep track of your bank account, credit card account, paychecks, investment accounts, and even any business accounts all at once. It can even catagorize your spending habits, allowing you to see exactly where your money is going. The best thing is, once you’ve added your accounts, Mint.com automatically updates your account after any transaction.

This is a great way to keep track of your money, especially if your a busy college student like me who would rather give up keeping track of a few measily bucks than to organize my check book every single day. But with Mint.com, you do it once, and forget it. So support Web 2.0, and give this site a try. If anything, check out Mint.com because of its clever name.

FREE CREDIT REPORT- DOT- COM YEEHAW! by Anne Crook

Most of us have seen the entertaining commercials for freecreditreport.com, but is their site truly a source for free credit reporting? I definitely support the message these commercials give out: keep up to date with your credit so you don’t fall victim to identity theft; however, in doing a little digging around, I found some interesting things:

- freecreditreport.com allows you to access your “free” report for only 7 days. If you do not cancel your membership in these first 7 days, they are able to bill you $12 per month after that.

- I find this 7day time period extremely entertaining since it also says that it may take 2-3 weeks to verify your account! I don’t know about you but that just doesn’t make sense to me!

- This $12 can even be billed to your credit cards, making it difficult to catch if you do not regularly check your credit bills.

- I also find it suspicious that they request much of your personal information directly online. This sends up a red flag for me since I have been raised to always question giving my personal information online

According to the Federal Trade Commission website (www.ftc.gov), every consumer is permitted to have one free credit check every 12 months. The only website that the FTC has permitted to give out these free credit reports is www.annualcreditreport.com. Some other facts I found:

- You are permitted one report from each of the three reporting agencies (Equifax, Experian, and TransUnion). That means you can get one at a time or you can receive all 3 at once.

- Many websites have tried to say that they will give out free reports but attach hidden fees, try to sell you other products, or give you only a free trial.

- Other websites have purposely created sites that misspell annualcreditreport.com so that they can get your info.

- If you think you need your report more than once during the year, you can contact each reporting agency and receive your score for only

- Also, an agency may only get your personal information by telephone or by mail. There is no suspicious email asking for your information. This website only allows you to request your score.

So the point of my blog today is this: Check your credit report – YES. Get a report from any site that says it’s free – NO.

The Sweetest Escape -Booming Businesses – by Yen Nguyen

Imagine…chocolate that is indulging, extravagant, a sweet sensation melting in your mouth. The smell is overwhelming with sweetness. Each piece is hand crafted…art. From amaretto flavored to champagne kissed bittersweet chocolate, Cocoa Dulce is filled with a variety of chocolate sensations made to please anyone’s taste buds.

Cocoa Dulce is a Kansas originated business owned by Master Chocolatier Beth Tully. With a strong passion to pursue her interests, she retired her days as a corporate executive and focused her attention to creating fresh, gourmet chocolate.

Pursuing her passion has not been a cake walk for Tully. Not only has she had to familiarize herself with the trade, finance is a major factor. Like most businesses, there are start up costs such as money for rent space, equipment, and maintenance. In addition new businesses require ample time and effort. This, Tully can vouch for.

Although Cocoa Dulce has only been opened for a few years, the business is booming. Word of mouth has served this business well along with the fact that there aren’t many places that specialized in chocolate. Cocoa Dulce is truly a special shop catering to many satisfied customers. From romantic gifts or simply to indulge in an experience, the pure chocolates from Cocoa Dulce can easily serve as a wonderful, mini, sweet escape.

To find out more about Cocoa Dulce visit http://www.cocoadolce.com/.

Productivity Slows Less Than Expected – by Tobias Breer

As I am sure everyone is aware, parts of our economy are really struggling this past year, with the crisis in the sub-prime loan market, rising inflation and the Federal Reserve battling to prevent a recession, we hear many bad things about our economy and how it is functioning. As we hear all of these negative things, it is important to remember that not all facets of our economy are plunging. One area that was far better than it was projected to be was productivity. Productivity is defined as output per unit of labor. Productivity, although decreasing in at the end of 2007, did not decrease as much as predicted. Productivity changed at a 1.8% increase for the fourth quarter of 2007, which is far above the Wall Street expectations and forecasts of 0.5%. In addition to this, unit labor costs (which are a large driver of inflationary pressures) rose 2.1% in the fourth quarter. This is below the expected increase of 3.8%. What this means for our economy is that everything is not going as poorly as we thought that it was. Labor is one of the most important factors of production costs, this is because it is one of the biggest costs of any business, and if our labor force is not productive it will result in more labor to produce the same output (i.e. not efficient!). Either this will result in higher prices that are passed through the businesses as higher prices for consumers, or they will be absorbed in the firm through a loss in their profit margin.

http://online.wsj.com/mdc/public/page/2_3024-prod.html

After reading all of that technical jargon, you may be wondering, “how does this apply to me since I am only a college student?” First of all, it is apparent that not everything in our economy is going as bad as say the sub-prime loan market or other financial markets. Although parts of our economy are not doing well at all, others are not as bad off. Ok, now we have to delve in a little farther to understand how this applies to us as a young, college generation. The overall picture here is that trend productivity growth (that is productivity growth over a length of time) plus trend labor force growth (growth in the labor force over time) equals potential GDP growth. Now you are thinking, “What does that mean?” The reason that potential GDP growth is so important is that it measures how fast our economy can grow. You could think of it as the speed limit for our long-term economy.
There is one phrase in the article that I would like to break down for you, is says, “Over the long term, strong productivity growth is a win/win situation resulting in weak unit labor costs and the stronger wage growth allowed through the increased output produced.” What this means in that strong productivity growth (like we had this last quarter) is good for us because it results in low costs for each unit produced and higher wages for everyone through more units being produced. Basically, the reason that productivity is so important to anyone is that there is a direct correlation between productivity and wage increases.

Credit Card: Convenient or dangerious?

Most college students would never pass up an opportunity to receive a free t-shirt but what comes along with that free t-shirt?  College students are a prime market for credit card vendors, spelling trouble for many students or allowing others to get a head start on increasing their credit scores.

Why are college students a prime market for many credit card vendors?  These institutions see college students as an opportunity to build life-long relationships.  The “get them while they are young” philosophy holds true for many institutions, as many students are just starting out and are establishing a path for a lucrative career.  Credit card companies hope that these young individuals will continue to utilize their services throughout their life.

What credit card companies fail to mention is the possible downsides of owning a credit card.  The initial interest rate may seem intriguing, but a closer examination is needed.  A common marketing tactic utilized by card companies is 0 percent interest for the first six months, but after that introduction time is over, card rates usually skyrocket.  The average interest rate of a student card is somewhere between 16 and 18 percent, a far cry from the average card holder’s rate of 10 to 15 percent.  Furthermore, a new study found that students who pay their tuition with their card are much more likely to carry over a balance from month to month.  With an 18 percent interest rate, the amount owed amplifies in an extremely short amount of time.

Credit cards can be a beneficial way to build credit as long as they are managed correctly.  An important piece of advice to remember is that a credit card ISN’T FREE MONEY.  Before getting a credit card, ask questions and read the fine print.  Being informed is one of the best approaches one can take to avoid debt.  If you use your credit card, make sure you have the funds to pay it off immediately.  Another tactic people fail to utilize is the seemingly simple act of calling your credit card company after six months and asking for a decrease in the interest rate, further helping your credit score.  Essentially, credit cards can be an amazing opportunity to build credit as long as the terms are understood and students are able to curb their spending habits.

Source:  http://www.msnbc.msn.com/id/14031324/

An Example of Why Take Charge Exists – by David Mason

So last night I was doing some random surfing on the web and I came across an article that, in my opinion, accurately portrays the goal of Take Charge. Catherine Clifford, a staff writer at CNNMoney.com, wrote an article entitled “Befuddled by debt? You’re not alone…” about how two recent studies suggest that Americans in general are “financially illiterate”.

Clifford talks about how in one study, 1000 participants were surveyed on basic personal financial knowledge. One of the basic concepts of finance, compound interest (the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on according to Wikipedia.com) was accurately described by less than 40% of the participants. Clifford interviews a few different financial experts about the dangers of being financially illiterate and how that correlates to being caught up in debt.

Bob Neuhuas, the executive vice president and the head of the financial services sector in the U.S. for TNS, “If financial literacy was higher, you would see more caution in the use of consumer debt. It would not eliminate the problem, but it would mitigate [it].” The most alarming notion I took away from this article is describe through the following quote provided by Annamaria Lusardi, a Professor of Economics at Dartmouth College. She stated, “even those with a college degree don’t have an understanding of the basic finance ideas.” Unfortunately, this is true.

I must admit, after reading this article and while writing this excerpt, I had to go to Wikipedia.com to look for a specific definition of compound interest. As an accounting major, I am more than familiar with this concept; put a blank piece of paper in front of me, a few numbers, your interest rate and I will be more than happy to crunch some numbers out for you. But as this article kind of points out, I think it is a lot more difficult for college students to apply these basic concepts we learn about in school to everyday circumstances.

That is where Take Charge comes in. Hopefully, this site will serve as a medium for young adults and the financial world, making that transition from school learning to real life just a bit easier. It is this site’s goal to take the financial world, dissect the most important parts, put it on a grill, cook it to your liking, and spoon feed it to you so there is no fuss, no misunderstanding, and no dislike of the taste that is finance.

There is a lot more interesting, and admittedly repetitive and boring information in this article. If you want to check it out:

“click here”ß http://money.cnn.com/2008/02/26/pf/financial_illiteracy/index.htm

WSU SIFE MPA Anti-Piracy Video

Hey everyone! construction on the site is going along smoothly. Expect lots and lots of new features to be added to the site within the next few weeks. Until then, here is a little taste of another area WSU SIFE is involved in. For Years, the Motion Pictures Association have held an Anti-Piracy video competition in which SIFE organizations across the nation compete. Here is Wichita State’s submission for this years competition. Personally, this video has changed my life and has brought to light the errors of my ways…enjoy!!!