4 Things Your Teen Should Know About Debt

student bankingWithin five years of leaving home, most teens are faced with the decision of taking out student loans, buying a car, signing up for credit cards or even taking out a mortgage. And it’s up to you as a parent to instill some wisdom in your son or daughter, to prevent them from making some serious financial mishaps.

Your teen shouldn’t be burdened with your financial stress, and he or she definitely doesn’t need to know the nitty gritty about any financial mistakes you may have made along the way. But they should know the basics of the common financial situations they’re bound to encounter. Whether you’ve done right with your money, made some financial mistakes, or a little bit of both, here are some worthwhile discussions to have with your teen:

Student Loans. While student loans are often times a necessary debt, they’re still money owed to someone else. And unlike many other forms of debt, this one cannot be discharged in bankruptcy. If you had student loans yourself, you can help your teen by telling them how long it took you to pay them down, as well as what you had to sacrifice along the way.

Need a Student Loan resource, or does your child already have Student Loans that could be consolidated?  Look no further than First Financial.  Get started by applying for a private Student Loan or consolidating Student Loan debt today.*

Car Ownership. If you don’t have a car loan, you should let your teenager know why you paid in cash or how you paid off your car. If you do have an auto loan, it might be helpful to explain that it’s more than just a monthly payment. Sit down and run the numbers with them, demonstrating the money lost to interest.

First Financial has a first-time car buyers program, First Auto.  If it’s your teen’s first time buying a car and they meet the criteria, they’ll receive a .25% rate reduction on their approved APR.  If they don’t meet the criteria, but still qualify for a First Financial auto loan, they’ll get a $100 gas card.** If it’s not their first time buying a car but they are a recent college grad, we have a special auto loan offer with their first payment deferred for 45 days, up to 100% financing, and an additional rate discount of .25% APR when a graduate checking account is opened at loan closing.***+

We’ve also got a free, handy auto loan payment calculator tool called AutoCalcubot.  Calculate your potential car payments instantaneously, save them for later, email a friend, or set-up alerts to let you know when our auto loan rates change.

Credit Cards: If your 18-year-old has a pulse and a mailing address, credit card companies will find them. Your teen should know the responsible ways to build credit and the dangers lurking behind every unnecessary swipe. You can try to convince them that credit cards should be paid off in full each month. If you’ve ever had credit card debt or you do now, your teen should know all the work that goes into paying it off.

If you have a soon to be college graduate, then First Financial has a great starter credit card – guaranteed to have a $500 limit.  Higher limits may also be available, based on income, additional credit, and other criteria.+

Mortgage: While a mortgage usually isn’t seen as a mistake, the timing in getting one can be – especially if one isn’t ready or doesn’t have enough saved. Make sure your teen knows the various considerations that go into buying a home, such as the details of the housing market, private mortgage insurance, and interest rates.

First Financial also has a First Mortgage Special Offer for recent college grads, which includes the waiving your first mortgage processing fees with a first mortgage from us!+

What might be second nature to you is a whole new world for your soon-to-be independent teen. The more he or she knows about finances, the better. And sharing your personal financial experiences — the good, the bad and the ugly — will help. Let them learn from your mistakes — and, in the process, keep them from making a few of their own.

Article Source: http://www.dailyfinance.com/on/4-things-your-teen-needs-to-know-about-debt/

*Private student loans should be used as supplemental funding after exhausting all other sources of financial aid, including grants, scholarships, and federal student loans. Federal loans offer more attractive terms when compared to most other borrowing options, including private student loans. For more information on federal loans, visit http://www.fafsa.ed.gov.

**See branch for details on credit qualifications. APR = Annual Percentage Rate. Rates shown are lowest possible and may not apply to every borrower, and higher rates may be charged depending on credit qualifications. Rates as low as 3.99% for up to 60 months. For example, a $15,000 loan at 3.99% APR with a term of 60 months would have a monthly payment amount of $276.18. Subject to credit approval. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.

***Must not have had other vehicles previously financed. Requires automatic payment for monthly loan payments from a Graduate Checking Account.

+All graduate accounts or products and services must be from within 30 days prior to or 12 months after graduation; have a diploma or other proof from a registrar’s office from an accredited two or four-year college or university. For Graduate Loans and Credit cards, verified employment or verification of employment offer from an organization; no derogatory items on credit history. Graduate products and services are not eligible for Rewards First Program.

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Jackson Memorial Students Get Taste of Financial Reality

Tri-Town News article by Andrew Martins:

DSCN0228Financial independence can be a scary thing for young adults who are beginning to make their own way in life after graduating from high school or college. Unexpected costs arise, debt can become bloated, and temptations to spend frivolously crop up every day.

For a group of freshmen at Jackson Memorial High School, the sobering reality of money and adulthood was put on display during an event dubbed the Financial Reality Fair.

“The goal of the fair is to teach the kids the value of money and how to manage their money when they leave high school,” said Issa Stephan, First Financial Federal Credit Union president and CEO. “It is very crucial these days to be financially savvy, and there is a lot of temptation out there.”

Financial responsibility is a subject that Stephan believes should have a bigger focus in public schools. He cited the economic downturn that began in 2008 as a prime example for why such responsibility is imperative for the future.

“I think that since 2008, people are more conscious about money,” he said.

On Jan. 8, students tackled financial issues in a hands-on manner without potentially destroying their credit rating.

“These days, it is easy to get in trouble,” Stephan said. “Twenty years ago, you had to drive to the mall and take your cash to spend it. Now you can be sitting in your bed, clicking yourself away into financial trouble” on a computer.

The idea for the fair, according to First Financial Marketing Manager Jessica Revoir, was based on similar events held throughout the state by the New Jersey Credit Union League Foundation, which sponsored the Jackson Memorial High School event.

DSCN0230Students were initially instructed to choose a career. After each student selected a job, that career’s starting salary after taxes was used as the baseline for a monthly budget. The young adults were informed that some expenses were required, including food, clothes and rent; and some expenses were not required, including gym memberships and vacations.

Stephan said the point was to illustrate the importance of determining what is needed and what is not needed.

“If you move out [of your parents’ home], you have to pay rent and insurance, but people usually get in trouble with what I call ‘variable expenses,’ ” he said. “A lot of people see a smartphone as a fixed cost … but it is not. There are ways to make even a necessity much more affordable in the long run. If you shield the students from reality, they fall.”

Stephan said students were led astray on purpose as a means of letting them see the difference between what they want and what they need.

At the transportation booth, for example, a binder was purposely left open at a page featuring luxury cars and sports cars for purchase, rather than being left open at a page with less expensive vehicles or public transportation.

“We are trying to teach these kids that if they let themselves be manipulated financially when they get older, they can get into some serious trouble,” First Financial Investment and Retirement Center Coordinator Samantha Schertz said.

To Lisa Scott, who teaches honors economics and financial literacy, the fair provided an opportunity for her students to take a more tactile approach to learning the importance of finances.

“This really is experiential learning for our kids because, to them, the class is just the textbook and something they need to graduate, but then they come here and realize they need this to live and get through adulthood,” Scott said.

The fair was a sobering realization that made freshman Claudia Besse take a moment to consider her future.

“I learned that I am very grateful for my parents, for one,” Claudia said. “I never realized that your gross pay is not your takehome pay and that there are so many expenses. Cars are so expensive.”

Scott said those realizations are fueled not only because of the way that financial education is traditionally handled in school, but also because some parents provide everything for their children.

DSCN0223“What I am hearing as the kids go through the fair is they ask, ‘Does that cost that?’ A lot of kids don’t have to pay for the things they enjoy right now … so for some kids, this is a revelation,” Scott said.

Stephan said he and his staff hope the students will take what they learned at the event and apply it to their lives.

“I saw some kids calculating and trying to make smart decisions, and I saw others just not caring as much. And that, in a way, reflects society,” he said. “We need to try to catch people before they get into financial trouble.”

Click here to view the original article from Tri-Town News.

*First Financial is not responsible for any content listed on external websites.

We Asked, You Answered! Financial Advice from Our Staff & Members

DSCN0229The Jackson Memorial High School Reality Fair on January 8th was a huge success! With over 200 students in attendance, we were able to help better educate them on the financial decisions that even adults continue to struggle with on a daily basis. Prior to the Reality Fair, we asked First Financial employees as well as our members – to answer the following question:

“What is the most useful piece of financial advice you’ve received over the years or learned from experience, that you would like to provide to today’s young adults, and why?”

And since we received so many wonderful financial tips across the board – we’d love to share the advice with our readers!

  1. “Save a percentage of what you earn – 10% is wise. If you start young, it will give you enough for your post-retirement years. If you do not get into this habit from a young age, you will not have enough. This is very important!” Laura Stone (*$50 Visa Gift Card Member Contest Winner)
  2. “Math is one of the most important things you will use in the business world when it comes to balancing a checkbook, your savings and checking accounts, and eventually when buying a home. When you get credit cards always pay attention to the APR. As long as you understand these few items – you’ll be okay!” - Tanya Copeland
  3. “Learn and be comfortable with math for business. Know your numbers!” - Sarah J. Moore
  4. “The most useful piece of financial advice I’ve learned over the years is to use credit cards sparingly, and when you do – try to pay the entire bill at once instead of letting it spread out over months. This will keep you out of debt and living within your means.” - Odelind Lewis
  5. “Avoid opening multiple credit cards simply because you are old enough to obtain them. Debt adds up very quickly!” - Lisa Weltner 
  6. “Learn early how to separate needs from wants. Keep this in mind when planning for the future. In the end it’s not about what you make, it’s about what you spend!” - Shannan McMillan
  7. “Don’t let the desire to have the newest and fanciest stuff get the better of you and cause you to make poor choices.” - Jeff Van Zilen
  8. “Spend your money on what you need, not what you want!” - Jay Arya
  9. “Remember what you have learned from the Reality Fair. Several years from now, your fellow students who did not get to participate will look back and wish they had more fully understood the impact of the decisions they’ve made; you will not. You have been given invaluable insight into your future, remember it as you make your way.” - Rich Stubbs, Jr. 
  10. “Make a budget and stick to it every month! It helps a lot!” - Laura Wagner
  11. “Set the age at which you want to retire and start planning for retirement the day you start your first job. Why? So you can actually retire at that age and live comfortably.” - Janice Anderson

Thank you to everyone who submitted their financial advice, which will continue to help educate the young adults of our surrounding Monmouth and Ocean County communities!

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To view additional photos from the Jackson Memorial High School Reality Fair, visit our Facebook page.

Jackson Memorial High School Students Get Schooled in Money Management

Asbury Park Press Article by Amanda Ogelsby:

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How do you teach teens how much it really costs to live?

JACKSON, NJ — Fourteen-year-old Aylin Torenli of Jackson spent a recent Wednesday morning calculating whether the salary of a dental hygienist would be enough to afford her the finer things of life: a smart phone, upscale furniture, television.

“I didn’t realize how expensive it was,” Torenli said of life’s luxuries that quickly add up. The freshman joined more than 200 Jackson Memorial High School students at a Financial Reality Fair Wednesday that was designed to give teenagers the foundations for a lifetime of successful money management.

After picking a “career” and its related income, students visited various stations where they chose cellphone plans and car payments, looked at housing costs, and calculated quality-of-life expenses like dining out and spa treatments.

“You understand how hard it is to be in the financial world,” Torenli said after meeting with a financial adviser to review her budget. “I give a lot of credit to my parents now.”

Under New Jersey law, public school students must learn about money management, insurance, saving and investing, as well as credit and debt management, beginning by fourth grade.

Public high school students are required by state law to take 2.5 credits of financial literacy and economics to graduate, according to the state Department of Education. That law went into effect in the 2010-11 school year, beginning with then ninth-graders.

The 2008 recession — when financial markets around the world fell following a collapse of the U.S. housing market — triggered the need for such educational programs, said Issa E. Stephan, president of First Financial in Wall, which helped to organize the event along with the New Jersey Credit League Foundation.

“Our mission for the fair is to help the students understand the value of money and how to manage their money, so as they grow as an adult, they’ll be more financially responsible,” Stephan said.

In a country loaded with easy temptations to spend, financial literacy is crucial, he said.

At the spinning “Reality Wheel,” students took a risk at budget breakers like car repairs and accidents.

“We just want to give them a little wake-up call,” said Janice Anderson of First Financial, who talked to students about managing monthly food budgets.

Freshman Tom Del Monte, 15, said the Financial Fair helped him better understand the importance of securing a good job after high school. The Jackson freshman said he was shocked by the high prices of cellphones and food.

“I finally understand the reality of what we’re learning in class,” he said. “I didn’t realize what my parents pay.”

“We hope this (fair) leads to better consumers,” said Lisa Scott, a business, finance and economics teacher at Jackson Memorial High School.

She added: “They’re coming face-to-face with the reality of whether or not that (job) will buy them all the things that they think they’re going to have when they are young adults out on their own for the first time. It is a rude awakening for some of them.”

Click here to view the original article/video source from APP.com.

*First Financial is not responsible for any content listed on external websites.

3 Effective Uses of an Allowance

allowanceFor many families, using an allowance to encourage children to do chores is an effective means of both teaching responsibility and money management. For other families, linking chores to an allowance means that the children only learn to help out around the house in exchange for payment. It is important for parents to sit down and talk about what they hope their children learn from the experience of getting an allowance. Here are three common methods you may wish to consider implementing:

The “You’re Part of the Family” Strategy

This strategy hinges on a few things: adult family members must always set a good example when it comes to their own chores, and the chores given to a child must bring them closer to the whole family. Family work days are effective ways of making this strategy work. The downfall of this strategy is that it can often be harder to track what, when and how well a child completes their given tasks.

The “Must Work for Your Pay” Technique

This technique links each separate job with an amount of pay. The benefit of this style is that it can make keeping track of completed tasks much easier. To make this work, very clear expectations must be set both with a timetable and in regards to how to correctly carry out each task. The downside is that since the children link a task to a certain amount of money, they may decide the amount is not worth the work required to complete the task. This can cause friction and frustration with parents and children.

The “Request as Needed” Method

This method involves you allowing your child to make requests to you for the things they want, which can allow you to help your child verbalize why what he or she wants, is important to them. It also builds their ability to negotiate and be persuasive. The downside of this method, however, is that you will constantly be having your child ask for and negotiate for what he or she wants.

Whatever method you use, there are some universal tips for every allowance strategy:

  • Help your child learn to give and save by encouraging them to put 1/3 in a savings jar, 1/3 in a giving jar where they choose where that money will go every so often, and 1/3 in a spending jar that they can use whenever they want.
  • Begin early. Most experts suggest beginning to help children work with their own money around the time they enter Kindergarten.
  • You will need to clearly define that allowance money goes to what your child wants and not what they need.
  • Raises should be given at birthdays and can also be linked to an increase in responsibilities.
  • Keep good track of responsibilities completed so that confusion and arguments do not occur over the job being completed.
  • As a child grows, it is OK to give extra money for larger jobs completed, like bigger seasonal work around the house.

Learning to work with money is an important childhood milestone. Giving an allowance can be a positive event that brings the family together instead of creating arguments.

ATTENTION PARENTS: Please bring your children in to take full advantage of our First Step Kid’s Savings Account* – a unique product that was specifically designed for young people, with a focus on education and fun and it’s a great way to encourage your kids to save every penny! We also offer our Dollar’s for A’s Program** and our annual Summer Reading Contest which additional ways your children can earn money while having fun doing it – for more information, visit our website.

This article written by our friend, Marcia Hall of GoNannies.com.

*As of 12/12/2012, the First Step Kids Account has an annual percentage yield of 0.05% on balances of $100.00 and more.  The dividend rate may change after the account is opened. **Offer applies only to report cards for most recent school terms. Letter grade “A” or 90%+. No back rewards available for prior semesters or marking periods. Available for First Financial members between 1st and 12th grades. Qualifying report cards must be submitted within 45 days from the date of issue. Child must be present and a $5.00 deposit to a First Step Kids Account is required to receive the Dollars for A’s incentive. Parent or guardian must bring both the child’s birth certificate and social security card when opening a First Step Kids Account at any branch location. Parent or guardian will be a joint owner and must also bring their identification. A First Financial Membership is open to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.

My Kid’s Drowning in Credit Card Debt! What Do I Do?

consumerismIf you trusted your son or daughter to keep track of their finances, and they slipped up, what in the world are you supposed to do?

Let’s say they’ve racked up a big, nasty credit card debt — to the tune of thousands of dollars. Should you pay off their debts to help keep their credit score above water? Or is it better to let them learn from their mistakes and suffer the consequences? Though each individual situation is different, here are your options, what’s at stake, and a few pointers to help you plot your course of action.

A Personal Loan, With a Contract

If you have the means, think about whether or not you want to loan your child the money. Sometimes the debt is manageable enough that you can pay it off in the form of a personal loan to your child. You can even decide to charge them interest as well, so they learn just how much a high APR can cost them.

But you have to examine the situation from a lender’s perspective, rather than simply write a check and expect your child will make payments. What is the child’s employment situation? Will he or she be able to make payments to you without the security blanket of your relationship making them complacent? Has your child typically been a responsible spender in the past, or does he or she impulsively purchase on a grand scale regularly? If you do decide to help protect their credit history, it’s a smart idea to sign a contract with your child to make your agreement more official and binding.

If You Co-Signed, You’re on the Hook

If you co-signed on your child’s account, you’re responsible for their debt. Because of regulations passed in the CARD Act of 2009, it’s more difficult for young adults to qualify for credit cards, so more and more parents are co-signing on accounts and acting as guarantors for their children. If you’ve already taken that step, you should hopefully have realized that your child’s purchases will affect your credit, regardless of your involvement.

In this case, it may be more prudent to pay off the debt if you can, cancel the account, and work together to come up with a payment plan to rectify the situation and make sure it never happens again. If you haven’t co-signed yet, sit down for a serious conversation with your child on your values and financial responsibility.

Lessons to Be Learned?

Bad credit now will impact their financial future later, but so will bad habits. If your child doesn’t learn from his or her mistakes now, there could be bigger and more damaging mistakes ahead. Will bailing your child out of their financial mess with creditors make them realize the gravity of their mistake? Or will you just end up fostering their sense of dependence on you? You won’t always be there, wallet in hand to save them, so if they can manage to take the credit hit, perhaps it’s best to let them learn the lesson this time, and give them some tough love.

Communication Is Key

Loaning money to someone you love is always, always messy. While your child should intellectually know that your love is unconditional (which is why your help comes so willingly), it’s emotionally very difficult to face your parents when you owe them money. Plenty of relationships have been ruined by debts of personal loans, both from neglected payments and feelings of shame. Be sure that if you choose to help your child, you commit to maintaining an open dialogue and doing your best to keep business and family separate.

Ultimately, each family and financial situation is different. But before you make a plan to tackle your son or daughter’s debt, you need to examine the situation from all angles. There are many factors in play, but above all, your relationship and your child’s sense of responsibility from this learning experience should be at the forefront of your mind.

Click here to view the article source, from DailyFinance.com.