By belatedly mustering a high level of personal integrity, I can admit that today’s column includes what may appear to be stolen material. You may want to check with your attorney before reading the rest of my writing to ensure you avoid ending up in criminal court as a prosecution witness.
Bart Dalton is a financial advisor with Edward Jones located in Lakewood. If you think you can benefit from connecting with a financial advisor, I recommend you visit and interview Bart.
Bart is a nice, smart, no-pressure investment guy. Let me provide you with a handy link to Bart’s global website, Bart Dalton – Financial Advisor. Tell Bart; Joe Boyle– The time of the suburbs sent you.
Bart’s monthly mail brochure for the month of August titled Edward Jones’ point of view included an essential article titled 4 money mistakes most students make.
I will focus on just one of the 4 errors listed in the referenced article titled “Getting caught in the credit card trap.” If I wrote about the 4 errors, we might have a 4,000 word column, which is too much for a busy person like you.
While at first glance it looks like I stole the material I’m about to share, if the truth is known, in fact Edward Jones got the idea from Joe Boyle.
My wife and I were working smart not to fall victim to the four mistakes from 1966. If we look at our finances between 1966 and 2019, the record shows that in over half a century we only paid 50 credit card interest cents. If it hadn’t been for a little time management error, we wouldn’t have paid any interest. Besides the 50 cents, we’ve been dodging credit card interest payments of 12% to 22% for decades, which amounts to crushing thousands and thousands of dollars. We have accomplished this easy feat even though we use credit cards every day and for amounts equivalent to thousands of dollars.
Credit card companies are beginning to drag students into financial disaster by stroking their egos. This can make a student feel adult and important to be sought out by banks offering to present their credit or debit cards. Banks make it all so easy. And it’s easy; to have life-threatening credit problems.
College students often ask for a wallet or purse full of cards. The card company tricks the student into believing that it is acceptable to add fees to the card beyond what the student can actually afford.
My wife and I established a rule of money management decades ago that we have always followed. RULE: If we can’t afford to fully refund the new balance offered based on the new item we plan to buy, we don’t buy the item. It doesn’t matter whether our balance is small or large; $5 or $50,000, we always pay our credit card balance in full and avoid all interest charges. If we have to pay interest, why pay 22% when we can get a loan at 4%?
Students continue to add to the card balance until the card reaches the maximum credit limit. Rather than paying the card down or off, the student activates another card and repeats the cycle by running the new card up to its maximum limit. The student may repeat this bad credit card behavior until they hit a financial wall.
Imagine that you are a student without a lot of money. You receive your credit card statement. The document shows that your balance is $1,000. Your minimum payment is 1% of the balance or a ridiculously low figure of $10.00. Your interest can vary between 12% and 22%, which makes the interest payment from $10.00 to $18.33 extra. Add the interest to the minimum monthly principal amount and the student is tempted to send only the minimum payment of $20.00 to $28.33. If only the student had enough knowledge to understand that he would have to pay the full $1,000. If the student took this step, he would avoid all interest charges; No interest even though they borrowed the money for about a month on their credit card.
Students find themselves buried with high balances on all their cards and monthly payments and total balances that never go away. Students may find that high credit card debt will cause credit card salespeople to stop courting them. Ultimately, lenders may refuse to issue new credit cards. At that point, the student’s house of cards collapses, meaning he can no longer sustain his overspending lifestyle by adding living and lifestyle expenses to another new credit card.
If you’re a parent of a college student, teach them these financial principles. If you are a student, please use your college-caliber brain to think about what your parents, Edward Jones, and I are trying to share with you. If we are right in what I have written and you choose to follow our suggestions, you will benefit for the rest of your life. If we are right and you decide to ignore our recommendations, you will pay for your mistake for the rest of your life.
Most university students are 18 or older, making them an adult. If your son or daughter goes off to college and ignores your advice, that of Joe Boyle and Edward Jones, don’t blame yourself for their failure. We’ve done our best to help them succeed as they move forward in their new world. Some students need to learn life lessons the hard way. We tried. That’s what matters.
The students I feel sorry for are those who never had the opportunity to learn these simple, easy-to-apply financial management axioms. I hope every child can learn these money management ideas at home, in school, in life, or through common sense. While you don’t have to be a genius to understand what I’m trying to teach, it does take smart thinking, recognition of facts, making good choices, and discipline.
Let me set the record straight on one last point to avoid any confusion as to how I feel about interest. Although I have spoken negatively about credit card interest, I am not saying that all interest programs are harmful. It may make sense to get involved in many financial arrangements where you are obligated to pay interest. Before doing so, a smart fund manager asks several questions:
- Is it beneficial for me to pay interest on a particular item or project?
- What is the interest rate?
- What kind of interest; simple, compound, annual, monthly, daily, (Hourly interest – a favorite for mafia loans).
- Is there a payment [or-more] clause?
- How is interest calculated?
- Can I improve my financial profile by seeking the best interest and financial loan agreement terms?
I started this article talking about stolen equipment. I did this in order to grab my reader’s attention while trying to write something that would be fun to read.
Realistically, I didn’t steal an idea from Edward Jones, and Edward Jones didn’t steal an idea from Joe Boyle. Ultimately, Edward Jones and Joe Boyle are simply making an effort to help students establish their new independent adult lifestyle in a way that helps them succeed in the long and short term.