Thank you to Dottie Vollmer, a Peer Financial Educator, for sharing her expertise with our educator community in this recent podcast (duration: 17 minutes). Dottie counsels college students as a member of the MoneySmarts team at Indiana University. In this podcast, she shares what she has learned in her work with college students on budgeting, student loans and credit cards and answers such questions as:
- What are the biggest misconceptions about money that college students have?
- What budget items do college students have the most difficulty cutting?
- What do you know now that you wish you knew in high school?
Show notes: Continue reading
Answer: Lots of different interest rates…
From NPR.org (if you go to the link, there is a interactive with a slider bar that allows you to see how the distribution of interest rates has changed from 2001-2013):
Ask students to provide several takeaways in analyzing this chart. which might include… Continue reading
This chart released quarterly by the Federal Reserve presents several learning opportunities:
Lesson 1: Mortgage debt far exceeds all other consumer debts with a total of $8.12 trillion as of the end of Q2 2015. The next closest, student loan debt, stood at $1.19 trillion or almost 1/8 the amount of mortgage debt. Continue reading
Answer: Based on recent research, students feel more prepared if they have a checking account prior to college: Continue reading
This BusinessInsider article might be a useful activity to try in your classroom for a few weeks or even a month. Challenge your students with debit and/or credit cards to put them away and only use cash for a period of time. Probably best for them to estimate their weekly expenses and then take out that amount at the beginning of the week. While they spend, they should also be sure to collect receipts so they can track their spending. The research is well documented that we spend less when use cash instead of plastic. Continue reading
From Federal Reserve:
Answer: 13.5% in June 2015. Note that this rate will likely be much higher for millenials who may have lower credit scores due to their short credit histories. Interesting to note the sharp decline in rejection rate in the most recent reporting period as lenders seem to be loosening their standards.
A good article highlighting the psychological differences between buying with credit vs. cash and three ways that credit cards can lead to overspending:
- The credit limit is usually a multiple of our monthly income. “With that high credit limit, it is easy to spend too much.”
- Without the pile of cash in front of you getting smaller with every purchase, it is easy to spend more than you want. Seeing those bills disappear from your wallet hurts.
- The minimum payment is usually only 2 percent of the balance. “That makes it very easy to make a small payment today to get through the month and worry about the debt tomorrow.”
Here is a great three minute video that demonstrates the third point with a pitcher of water (when I showed this in my personal finance class, students were amazed and didn’t understand how consumers could be so “dumb”):
Check out this NGPF Activity, Calculate: Paying With Interest