Trying to avoid credit pitfalls

Area schools consider teaching personal finance class to teens
By Rachael Scarborough King The Bulletin
Published: June 27. 2007 5:00AM PST

Recent high school graduates across Central Oregon are still celebrating their newfound independence a few weeks after local graduation ceremonies. But along with their mortarboards, the teenagers may have tossed their financial security up in the air.

Students as young as 16 are seeing multiple credit card applications coming in the mailbox, and some high schoolers now have their own cards before graduation. At the same time, teachers, administrators and credit counselors say they do not think there is enough personal finance instruction at the high school level.

Some schools in the region are introducing curricula to help students with the post-high school transition from living with the parents to living on one’s own.

School officials in Crook County are planning to introduce a personal finance class as a graduation requirement for the coming school year. Crook County High School Principal Jim Golden said the class will replace the current economics requirement.

“We felt that it was a way for us to help teach our students who already are involved in using credit or will be to understand how credit works, what it means to be fiscally responsible and how to run your own personal finances in an efficient and prosperous way so that you don’t end up with massive credit card debt,” Golden said. “We felt like it was more pressing for all of our students to have a solid understanding of personal finance issues because they directly relate to their lives and affect directly the quality of their lives.”

He added that students will take the class for one trimester during either their junior or senior year.

“We’re hoping (that) when kids leave, they have information about buying a house, buying a car, running your bills in the black on a monthly basis, staying away from bad credit — which is consumer credit — and understanding the good credit,” he said.

On his own

Although he never took a personal finance class in school, Andrew McClain, who will be a senior at Mountain View High School in the fall, has already learned what it’s like to manage his own finances. Andrew, 16, said he moved out on his own about four months ago because of family problems.

“I decided to move out and start my own life,” he said. “It’s difficult — it takes a lot of perseverance.”

Andrew said he lives with roommates and works as a courtesy clerk at Albertsons to support himself. During the school year, he said, he worked about 35 hours per week, and now that school is out for the summer, he is working full time.

He has a checking account and a debit card, he said, but he isn’t old enough to get a credit card on his own. Once he is 18, he plans to get a card “just to establish credit.”

“I sort of just set aside what I make. It wasn’t very hard to figure out what I had to do — as long as I kept money coming in, I’d be fine,” Andrew said, describing how he handles his money now. “It feels good, being able to support myself in my own house — it’s kind of awesome.”

The difficulties, he added, come from not having the “safety blanket” of parents to rely on. After high school, he plans to move to California, where he has a friend who owns a construction company, and put himself through college.

Jon Wetzler, a counselor at Mountain View, said he knows of a handful of students in situations similar to Andrew’s. Mountain View has a required careers class, which Andrew took, that includes some financial information, but Wetzler said it mostly focuses on interviewing for jobs and preparing a resume.

Summit High School plans to implement a careers class next year and has an elective class called “Living on Your Own,” counselor Debbie McKeown said, but those classes are not focused solely on personal finance.

“It’s a pretty big responsibility to still be a high school student and be living on your own in an apartment or be living in a house with other people and trying to get your high school education, but with practice and the more you do it, it works out,” Wetzler said.

He added that most of the conversations he has with students about finances have to do with paying for college.

“Most of the time, they come to see us as far as financial aid (and) scholarship applications — I guess that would be the way we have conversations with them about money,” he said. “The question of paying rent and utility bills and monthly credit card minimum payments, I think that’s kind of like a secondary responsibility or additional cost of transition into young adulthood that maybe comes a little bit later. They get so fixated on getting admitted to a college, doing all the things that they need to do to get accepted and get a financial aid award, and they do all that and then some of these other things start to get onto the plate and then they get a pretty big eyeful.”

Handling credit cards

Wetzler said he knows of some students at Mountain View who have credit cards, but hasn’t heard about any of them getting into trouble with credit card debt while still in high school.

Bob Mullins, a certified money management volunteer with Consumer Credit Counseling Service of Mid-Oregon, said that some credit card companies will give cards to people even before they turn 18, but the credit lines are so low that it would be difficult for students to build up serious debt.

But Mullins added that his organization, which provides counseling and classes on money management, advises many people who have recently started life on their own.

“We see plenty of people already in their early 20s having problems,” he said. “We don’t tend to see them before then; before then, they haven’t quite gotten there, even if they’re moving down that road.”

To start out, Mullins advised that students open checking and savings accounts to start learning how to budget money. Then they could move on to credit cards, if necessary.

“If they are getting a credit card before they leave home, the ones who are in general are learning a little bit more about credit and budgeting and that sort of thing than others, just by having it and having to deal with it before they get out on their own — when they still have a backup plan called Mom and Dad,” he said.

Chad Howard, 18, who recently graduated from Crook County High School, said he took out a credit card after a representative came to speak to his economics class this year. He plans to attend Oregon State University in the fall, where he thinks he will use the card to pay for books and cover stretches between paychecks.

“I’m not worried about getting into debt because it has a maximum of $500,” Chad said.

He has a full-time summer job right now and already pays for his own cell phone. He discussed finances with his parents, he said, but mostly concerning finding scholarships and loans to pay for college.

Sharon Rexford, a math teacher at Mountain View whose youngest daughter, Becky, graduated this year, said they have talked about many different aspects of the financial responsibilities that start after high school. Rexford said that credit card applications for her daughters, who are 18 and 23, started arriving in the mail when they were 16.

“I don’t know that there’s any real information out there about taking out a loan and the consequences of paying it back or a credit card or that kind of thing,” she said. “There aren’t too many classes at any school anywhere that really emphasizes that. I think a lot of it has to come from parents and, hopefully, if the parents are responsible financially, the kids will pick up on that.”

Golden, the principal at Crook County, said Chad’s credit card came in handy during this year’s senior trip to Kah-Nee-Ta, when the students realized they had not brought a check from the school for the golf course.

“The kid calls me up and I said, ‘Do you have a credit card?’” Golden said. “He said, ‘Yeah, I’ll just put it on my credit card and you can reimburse me.’”