Student questions, answered!

Every student who participates in our “Take Control of Your Money” workshop completes a Classroom Survey. Among other things the survey asks “What other money topics would you like more information about?”  Weekly we compile the requests and list them on this page.  If one student asks, we know there are other students out there wanting the same information!  (And if you have a money question or want more info on a particular topic send us an email money@austincc.edu)

 

 

#1 “How can I get more information about managing money?” – Jose, Kevin, Amayiah, Travis, Madeline & Blanca

We think of managing money as the process you use for budgeting, expense tracking, and saving towards goals. That makes this a BIG question!  But a great one.  

Our favorite free budgeting app is Mint.com. You can create your budget and track your expenses from this app. 


#2 “How do you invest money?” – Ernest, Medrick, Blanca, Gregory,  Sarah, Cannon, Alexandria, Justin, Michael, Harley, Collin, Elliott, & Samantha

Learn more about investing by reading “Investing for Dummies” an ebook available through the ACC library. There are also hard copies at some ACC library locations (you can request the book be sent to your campus library!) 

We recommend getting your investing feet wet by using a site like Stockpile. It doesn’t cost to use this site, but you are investing your money, which means you do risk losing money. Start small! 

We also love Ramit Sethi who wrote “I Will Teach You to Be Rich.”  He has a lot of good nuggets of financial wisdom. Here’s a great video interview with him. At 15:00 he recommends Vanguard for establishing an investment account. You can get his most recent book at the Austin Public Library.


#3 “What kind of hustle jobs can I get (and drop quickly if I need to focus on school)?” – Leo, Elaina, Gregory & Cannon

We love app-based jobs for things you can pick up and drop as needed. One of the Student Money Management Office staff members has been a dog-walker on Rover (and she used it to get her daily exercise too — no gym membership required!). During her study breaks she would make money being a user tester. Amazon Mechanical Turk is a similar gig. 

You can also look for one-time gigs through staffing agencies like the A List Staffing (right now they’re hiring for SXSW), or A+Staffing which hires people to work conventions and catering. You can also find flexibility in babysitting or caregiving


#4 “How do I establish credit?” – Breonna, Travis, Elaina, Michael, Wayne, Iliana, Jose, Emily, Mariela, Laura, Madeline, Alexis & Blanca

Our recommendation for someone who wants to establish credit is to get a secured credit card from where you bank. Nerd Wallet (weird name, but we love them!) has a great article to help you understand a secured credit card.

Once you get your secured credit card, we recommend using it only for small purchases that you have anyway, like gas for your car, or your Netflix subscription.  And pay it off in full, every single month! Do not carry a balance.


#5 “How do I build/fix credit and manage it?” – Travis, Jeric, Zuri, Michael, Kaitlyn, Devin, Cade, Caleb, Kacie, Wayne, Ryan, Jose, Michael & Madison

To build or fix credit, we recommend starting with a secured credit card (see #4). Once you have established credit, then the very best thing you can do is pay all of your bills on time, every time. Never, ever be late!  35% of your credit score — the biggest chunk — of your score is based on your payment history. Here is an article that explains what factors influence your credit score


#6 “I’d like more information about scholarships and grants.” – Samantha, Alexander, Alec, Rana, Diana, & Justin

As an ACC student, the best place to look for scholarships is through the ACC Foundation. Applications are due April 1 for scholarships awarded in the fall semester. 

You are awarded grants (that’s money that you don’t have to pay) by filling out the FAFSA. Make sure you fill out the FAFSA each year, and as early as you can! Some grants are distributed on a first-come, first-served basis, so you want to ‘get in line.” The 2020-2021 FAFSA (that covers fall 2020, spring 2021, and summer 2021) became available to be completed in October 2019. 


#7 ” I’d like more information on savings.” –  Amayiah, Samuel, Dejah, Lauren & Samantha

First, as a student we recommend setting aside at least $500 in an emergency fund.  To get there, determine how much you can save each month (for example $20). Then using automated savings, send that amount to a savings account that is set up just for emergency expenses. Once you have that set aside, then you may start working on saving for other financial goals you want to accomplish while you’re a college student. Some common goals college students have: 

  • Pay college tuition, fees, & books in cash (foregoing student loans) 
  • Purchase a used car in cash 
  • Save for first-month’s rent on an apartment 
  • Save for a new computer 

 As for saving toward goals, we love SmartyPig.com. Say you’re saving to buy a $4,000 car for cash. With SmartyPig you earn a bit of interest and you receive a goal planner and helpful reminders so you can stay on track. 

A lot of people get stuck on “How much should I save each month?” — and that’s a great question (so we provided a detailed article!) But what’s more important in our opinion, is to save something consistently every month. Establishing the savings habit is so important!  As a college student, you may only be able to save $10-$25 a month. And that’s okay! Once you have a bigger paycheck, you can increase that amount.


#8 ” I need help to go over everything and set a budget.” – Amayiah, Elizabeth & Natalie

As an ACC student you have free access to financial coaches. These coaches meet with you virtually via webcam/phone and can help you make a budget, prioritize expenses and make financial goals. You can schedule your appointment online here aie.org/coaching

You may also work in-person with a financial coach through one of Foundation Communities’ Prosper Centers. That is also a free service (as long as your household income is under $55,000).


#9 “Making a successful IRA and savings account + need info for credit union.” – Kaitlyn

Roth IRA — is a perfect tool for students to start saving for retirement. If you have a part-time or work study job, that’s all you’ll need to get started. In this article, you will learn about the advantages of Roth IRAs. Our suggestion is to determine how much you can contribute after creating your budget. The amount can be as little as $50 per month.  Be sure to do your research and select a broker that’s a good fit for your situation. Here is an article that gives information on some of the top brokers for IRAs. 

Credit unions — we love them. Learn the difference between banks and credit unions here. As an ACC student you qualify for membership at University Federal Credit Union and A Plus Federal Credit Union. We love them both!


#10 “I’d like more information on the Rainy Day Savings Program.” – Johana

Our Rainy Day Savings Program currently has a waiting list. Add your name here. We’ll reopen the program in fall 2020.  

In the Rainy Day Savings Program we open an account for you at University Federal Credit Union. You can earn up to $100 in cash deposits for doing things like meeting with a financial coach and setting up direct deposit. We hope you’ll join the program in the fall!


#11 “Recommended types of credit cards.” – Elaina, Alexis, Nathaniel, Jorge, Collin & Sarah

A credit card with no annual fee. If it has rewards, only choose cash back reward cards that literally give you cash (not just points for gift cards). And always, always, always pay the balance in full every month (and then the interest rate doesn’t matter!). 

Let me tell a story! My friend Jackie has family in Mexico City. Jackie and her husband have a three-year old son who they take to Mexico once per year to visit family. Southwest Airlines had flights from Austin to Mexico City. They decided to get a Southwest Airlines credit card (annual fee $99) so they could earn points to use for airline tickets for the once per year trip to Mexico City. They used the card to pay for groceries, gas, holiday presents — any expense they could use a credit card for, they did.  

Then in early 2019, Southwest Airlines announced it was stopping service from Austin to Mexico City. They couldn’t use their points on their annual trip to Mexico. So, they had to pay for round-trip tickets on another airline to go to Mexico over spring break ($1,520) AND “had to” take another trip to use their Southwest Airline points ($1,000 for lodging & vacation expenses).  That’s $2,520 they weren’t planning on spending that year. 

Credit cards that provide rewards points for specific things (like flights), lock you into purchasing with just one company, which ultimately limits your choice as a consumer. 

And be careful with any kind of rewards credit card: Are you spending money because you’ll get a reward?  Or because the expense fits within your budget?


#12 “Sporadic income management.” – Sarah

This is tough!!  There are a couple of ways to handle this. 

(1) Budget according to the month with the least amount of income (if it’s possible to do so and meet all of your basic expenses). Months when you have more income, set that money aside to meet your periodic expenses like car insurance, car registration, or tuition payments. 

(2) Budget for more than one month! People with sporadic incomes, like those who are self employed, have to look at 3-6 months of income and expenses to ensure they have a plan for what is coming in, and when/where it is going out. 

A financial coach can help you develop a plan for sporadic income.  As an ACC student you have free access to financial coaches. These coaches meet with you virtually via webcam/phone and can help you make a budget, prioritize expenses and make financial goals. You can schedule your appointment online here aie.org/coaching.


#13 “I’d like more information on student debt/loans.” – Kaythan

Only take out how much you need in loans. To determine that figure, you must complete a detailed semester budget. Here’s our semester-based budget. It can be overwhelming figuring this all out, so consider meeting with a financial coach!

When you need to take out loans, we recommend only taking out federal student loans, which are available by completing the FAFSA. Here’s more on how to apply for federal student loans

You have to repay loans. If you don’t repay them, you can severely damage your credit. You can get a list of all your federal student loans on the National Student Loan Data System

Use the repayment estimator to determine your payment amount and experiment with different repayment plans.


#14 “How to be a good saver.” – Alan

To be a good saver, first you should review your income and expenses to determine how much money you’re able to save without causing yourself any hardship. When you get the amount that you can handle even if it’s just $25 per paycheck, set it to automatically go into a seperate savings account that’s not connected to a card. When you set your savings on auto-pilot and forget about it, before long, you’ll see your savings grow. If you make less than $20,000 per year, your savings goal should be at least $500. A really good book that comes highly recommended is the Automatic Millionaire by David Bach. Check with ACC’s library to see if they have a copy. And remember, you don’t have to make a lot of money or have a complicated plan to be a good saver. You just need to start as soon as you can.


#15 “Tuition and financial aid.” – Clementine

If you have questions about financial aid, I’d encourage you to first complete your FAFSA. Then stop by the Financial Aid office at the campus nearest to you. They’ll be happy to fill you in on all the details of the financial aid process.


#16 “Creating college savings accounts for my kids.” – Emilee

This is a great question. You want to start as early as possible to save for your children’s education. There are two types of plans you should research. Prepaid Tuition Plans, which allows parents to prepay their child’s tuition at current rates for enrollment in the future. Participating in a school’s prepayment program presupposes that the child will ultimately attend that school. A 529 College Savings Plan allows the owner of the account to contribute money so that the contributions can grow tax-deferred and, hopefully realize a higher return on the investment than could be achieved outside of the plan. 


#17 “How to pay or file my taxes.” – Angel

The Prosper Centers have certified tax preparers available January to April and June to October to help you file your tax return and claim the maximum refund for free. Please note, some locations take appointments while others take walk-ins.


#18 “Paying off debt.” – Rodrigo, Lauren & Iliana

There are two schools of thought to paying off debt. The first, which we like and is a favorite of Dave Ramsey is the snowball approach. The idea is that you pay off your smallest debt first despite the interest rate, then roll the amount you used to pay those first debts into paying off your bigger ones — like rolling a snowball down a hill.Here are Dave Ramsey’s steps to the snowball approach

Step 1: List your debts from smallest to largest regardless of interest rate.

Step 2: Make minimum payments on all your debts except the smallest.

Step 3: Pay as much as possible on your smallest debt.

Step 4: Repeat until each debt is paid in full.

The other school of thought is the avalanche method, which involves paying off debt with the highest interest rate first. This method will help you save the most money, and when you apply extra payments, you’ll pay off the debt sooner.


#19 “How do you save money for travel?” – Maleya

You don’t need to be rich to travel. However, you want to give yourself time to save for your amazing trip. Here are a few suggestions to get you started: 

  1. Set an attainable financial goal 
  2. Make a realistic plan to achieve your goal 
  3. Create a budget to determine how much you can save
  4. Create a seperate travel fund for your trip. You can even name that account “Hawaii” as a reminder of your goal
  5. Implement your plan
  6. Reassess your plan

#20 “How do you start a retirement savings?” – Amanda

Before saving for retirement, first fund your emergency savings account with either $500 (if you make less than $20,000 a year) or $1000 (If you make more than $20,000 a year). 

Once you have your emergency fund established you’re ready to start saving for retirement. If you are employed, inquire with your employer if they have any retirement savings options for employees like a 401(k) or 403(b).  

If your employer doesn’t have an option for you, then it’s time to look at establishing an Individual Retirement Account.  See this article: How and Where to Open an IRA.


#21 “I had taken a previous money management course not @ ACC where they stressed not to use a credit card, but @ acc, they encourage “credit scores”, why the contrast?” – Sydney

What a great observation! Dave Ramsey – who we LOVE – recommends not ever, ever using a credit card.  We understand his point. A credit card is temptation in your pocket, and if you carry a balance month-to-month, you pay way more for your purchases (considering interest & other fees).  For someone struggling to get their spending and trying to get out of debt, we agree with his advice.  

Here’s the flip side. It is hard to live in our country with no credit score and no credit history. Most likely you’ll need a mortgage when you purchase a house. To get a mortgage you have to have a credit score.  Now, Dave Ramsey says you don’t — he believes there are ample ways to get a mortgage with no credit score. We haven’t seen them.

We also believe credit gives you options when you’re faced with a temporary financial hardship. In Texas, we have Payday lending. Payday loans carry interest rates that exceed 300% and trap people in a cycle of debt. Sometimes people turn to payday loans when they have an immediate need for cash and no access to credit.  We would much prefer that when you have no other options (savings, help from friends/family) that you use a low-interest loan from a bank or credit union to help you through your financial hardship. To get that low-interest loan, you have to have excellent credit. 

We do not however, recommend that students go into debt for the sole purpose of establishing excellent credit. Here’s a good article on how to establish excellent credit, without going into debt.


#22 “I’d like to know how to go about getting a secured credit card.” – Georgia

A secured credit card is a useful tool that can help people with little to no credit establish good credit. With a secured credit card, you put down a cash deposit which will act as your credit limit and serves as collateral if you fail to make a payment on time. NerdWallet has more information about the inner workings of a secured card as well as the comparison to an unsecured card. 

You can sign up for a secured credit card at most banks and credit unions. We suggest starting at the bank or credit union where you have your checking account. Compare three bank/credit union secured cards, and choose the one that works the best for you.  Make sure you compare cards and understand how the card works — read the fine print!


#23 “What site I can get a score credit off of?” – Brandon

Think of credit scores like tissues for a moment.  FICO and VantageScores are a brand of credit score, just like Kleenex is a brand of tissue.  We recommend getting your free credit score from CreditKarma.com https://www.creditkarma.com/. The score you get from CreditKarma is your VantageScore – a brand of credit score. 

Many banks and credit unions are offering account holders easy free access to their FICO score (another brand of credit score). You’ll generally find this when you log into online banking.  

Here’s more on the differences and similarities between FICO and VantageScores: https://www.debt.org/credit/report/scoring-models/


#24 “The car insurance discount.” – Mayra

We’re not sure which car insurance discount you are referring to, but you are correct, many insurance companies offer discounts for things like safe driving habits, being a college student, or bundling your insurance (that’s when you use the same insurance company for your renters/homeowner insurance and car insurance for example). 

This is just marketing to make their insurance product stand out to you. And that’s neither good nor bad!  Here is what we recommend: Get insurance quotes from THREE insurance companies. Choose the best one for your budget. 

Here’s more shopping for car insurance: https://www.businessinsider.com/personal-finance/how-to-shop-for-car-insurance-quotes


#25 “Types of expenses and how to handle it.” – Ermiyas

There are three types of expenses: periodic, flexible, and fixed expenses

Periodic expenses include things that occur once or twice a year (not-monthly). Think about car maintenance (oil change, license/registration, battery) and money you spend on special occasions like birthdays and holidays. Plan and save for these types of expenses into your budget, so that you are prepared for them. Here’s a worksheet to help you incorporate your periodic expenses into your budget.

Flexible expenses are where we tell students to go find the money! This includes eating out, entertainment, groceries, etc. We can reduce the amount you spend on eating out or how much you pay for groceries by sticking to a set amount for each expense. Make it realistic. If you spend $100 on eating out every month, reducing it to spending $0 is not something you’re going to stick to. Try $50 a month and see how it goes. If you’re worried about eating, did you know that every 4th Friday of the month, you can get free, healthy food, through the Central Texas Food Bank. All you need is your ACC student ID!  

Fixed expenses include things like your phone bill, auto loans, and student loans. These are monthly expenses that are set amounts. However, we encourage students to reduce these as much as possible. We recommend that you pay no more than $50 a month on a single cell phone plan. That means no leasing or financing your phones and go look for a cheaper provider to lower your monthly costs.

We also recommend the budgeting app mint to help you keep track of your expenses.

Bottom line is to understand all your expenses, reduce or eliminate ones that are less important, and plan for the expenses that do matter by adding them to your budget.


#26 “How to close an account without getting so much points off your credit score?” – Aleksa

You are correct, closing a credit card may negatively affect your credit score. One reason for this decrease is because part of your credit score is based on your credit history. If you close a credit card you’ve had for a long time, it could reduce the length of your credit history. The impact is different for each of us.  I have had one of my credit cards for 13 years and I have a lengthy credit history. If I close this particular credit card, my credit score is predicted to decrease only 3 points. Someone with a shorter credit history may experience a greater decrease. 

The best tool we recommend to see how closing a credit card would affect YOUR credit score is the credit score simulator available on CreditKarma.  


#27 “What is a 401(k) and a Roth IRA?” – Lea, Jose, & Andrea

401(k)is an employer sponsored retirement plan that allows employees to contribute pre-tax dollars into an account and in some instances the employer will match you dollar for dollar up to a certain percent. Our office encourages you to start at your place of employment to determine if a 401(k) plan is offered and if you’re eligible to participate. It’s a great deal and one of your most valuable retirement opportunities. 

Roth IRA – is a perfect tool for college students to save for retirement. If you are earning an income, that’s all you’ll need to get started. Roth IRA accounts consist solely of tax-free income. When you retire, you will receive tax-free distributions on your contributions, earnings, and gains. If you’re under the age of 50, your annual contribution cannot exceed $6000.  In this article, you will learn about the advantages of Roth IRAs. Our suggestion is to determine how much you can contribute after creating your budget. The amount can be as little as $50 per month.  Be sure to do your research and select a broker that’s a good fit for your situation. Here is an article that gives information on some of the top brokers for IRAs.


#28 “Is there a way I can invest by making a one time payment and money in?” – Adriel

This is a great question. If you have an employer sponsored retirement plan such as a 401(k) they typically do not allow you to make contributions outside of payroll deductions. However, you can make one-time contributions to an IRA. The deadline for making contributions to an IRA for the 2019 tax season is April 15, 2020.  If you’re under the age of 50, the maximum that you can contribute to an IRA is $6000. Here’s an article from Dave Ramsey explaining the benefits and the difference between a Traditional IRA and a Roth IRA.


#29 “To increase income to have more funds to live comfortably should I work more than one job?” – Andrew

If you’re enrolled in school full time, working more than 15- 20 hours per week may hurt more than it helps. However, if you’re looking to earn extra income, we do suggest that you look into picking up extra hours at your current place of employment or side gigs during down time from school like spring break. One side-gig that seems to be popular with our Peer Money Mentors is User Testing. They will pay you $10 via Paypal for every 20 minute video you complete.  Also, look into applying for scholarships. Last year, ACC awarded 700 scholarships with an average award of $2000. ACC’s scholarship deadline is April 1st. 


#30 “Investing in your life insurance?” – Yareli

No one likes to think about premature death and its impact on family. However, investment in a life insurance policy is economically crucial when you have earned income and others are dependent on those earnings. Life insurance provides financial protection to surviving dependents. Our suggestion is that you have a policy at work as well as an outside policy. Here’s an article that can provide you with additional information.


#31 “Credit building, specifically paying off a car. ” – Clark

Paying off a vehicle that you are financing is an amazing financial goal.  We love it when our students aren’t burdened financially with car payments. However, if you’re looking to build credit, you want to be careful about paying off your car too fast. Based on an article from Experian, paying off your car too soon can have a negative effect on your credit score. Having positive open accounts has a greater impact than closed accounts. Open accounts show lenders how well you’re currently managing credit. So if you’re trying to establish or improve your credit, keeping your car loan may be more beneficial.


#32 “How to apply for a loan and a job as an international student?” – Yanan

A student’s citizenship status is the determining factor in his/her eligibility to get a loan in the United States. If you’re an eligible noncitizen, you can apply for federal students loans by submitting the Free Application for Federal Student Aid, also known as FAFSA. If you’re not eligible for federal student loans, here is a detailed article from NerdWallet on the process of securing private loans.

International students are allowed to work on-campus if you have a valid F-1 visa and maintain a good academic standing. To work off campus, you must receive approval from the International Student Office and the U.S Citizenship and Immigration Services. For additional information, read this post on ACC’s website.


#33 “How do I make my credit grow if I’m from another city?” – Katya

Credit is a hot topic for ACC students. However, improving or establishing  credit has nothing to do with the city that you live in. There are a few strategies that you can implement to improve your credit. The one strategy that we highly recommend during our classroom sessions to build and improve credit is to open a secured credit card at your bank or credit union. To open a secured card here are a few suggestions to get you started:

  • Requires a cash deposit of $300 – $500
  • Your credit limit will equal your cash deposit
  • Pay small recurring bills like Netflix, Hulu, Spotify, etc.. with your card
  • Pay off your balance in full by the due date
  • Your positive payment history will help improve your credit over time

#34 “The risks about moving and planning to move to another country.” – Savannah

There are several factors that should be considered when planning to move to another country. Here are a few that you want to keep in mind:

Language – Communication is something that we take for granted and it could be a barrier. You’ll want to study the language as much as you can before you make the decision to go.  

Where to go? – With this, you want to consider the climate, political stability, crime, and proximity to the U.S. 

Taxes and Insurance – When you live in another country, the IRS expects you to pay taxes as long as you’re a citizen and earning an income. You’ll probably want to stay current on your health insurance. 

Banking – You can bank and pay your bills online 

Making money – Many expats find that life isn’t quite as cheap and burned through their savings fairly quick. So, you’ll have some decisions to make about how you’re going to earn money.


#35 “I would like more information about how to take money out of IRA’s if needed for emergency situations.” – Hector

Although it is not advised, you can withdraw money from a Roth IRA, but there are rules. Distributions that occur before the age of 59 ½, if it’s not a qualified distribution, will be treated as ordinary income and are subject to income tax and a 10% early withdrawal penalty. Here’s some information from the IRS on qualified distributions.  If you decide to move forward with taking a distribution and it’s not a qualified distribution, to prevent taxes and penalties from being assessed, your total distribution should not exceed your total contribution.


#36 “What is a 401(k) and a Roth IRA?” – Andrea

401(k)is an employer sponsored retirement plan that allows employees to contribute pre-tax dollars into an account and in some instances the employer will match you dollar for dollar up to a certain percent. Our office encourages you to start at your place of employment to determine if a 401(k) plan is offered and if you’re eligible to participate. It’s a great deal and one of your most valuable retirement opportunities. 

Roth IRA— is a perfect tool for college students to save for retirement. If you are earning an income, that’s all you’ll need to get started. Roth IRA accounts consist solely of tax-free income. When you retire, you will receive tax-free distributions on your contributions, earnings, and gains. If you’re under the age of 50, your annual contribution cannot exceed $6000.  In this article, you will learn about the advantages of Roth IRAs. Our suggestion is to determine how much you can contribute after creating your budget. The amount can be as little as $50 per month.  Be sure to do your research and select a broker that’s a good fit for your situation. Here is an article that gives information on some of the top brokers for IRAs.


 

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