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					The Student’s Guide to Understanding   The Hartford
                                       is an Official
and Planning Your Financial Future     Corporate
                                       Partner of           the NCAA®
Graduate to a Brighter Financial Future

Have you ever thought, “If I only         Whether you’re graduating from            That’s why The Hartford, in collab-      of all ages have told us, “This is the
knew then what I know now?”               college, starting a new job, or renting   oration with the NCAA, created the       guide I wish I had had when I was
I know I have.                            your first apartment, you’re facing       Playbook for Life -- a practical guide   starting out!”
                                          a number of financial decisions --        based on real-life experiences to help
Throughout our lives, we learn from       ones that can affect your future for      you be successful in managing your       We invite you to take a few minutes
experience. There are things we did       years to come. From evaluating            finances. The Hartford is a leading      to explore this Playbook and check
right, and things we wish we had          salaries and benefits, to budgeting       investment and insurance company         out the additional resources at
done differently. If you’ve had           for housing and living expenses, to       with a strong 200-year history, and
people in your life whose insights        understanding credit, insurance,          we believe that a great life plan is     Let us know what you think.
and experiences have helped you           saving, investing and retirement,         based on a solid financial strategy.
make a better decision or avoid a         there’s a lot to know.                                                             We at The Hartford wish you all
pitfall, you know firsthand how                                                     Since we launched the Playbook           the best as you plan for your future
valuable that guidance can be.            You may have more                          for Life in early 2005, we have         and realize your dreams. We look
                                          questions than answers                       shared this guide with more than      forward to accompanying you on
This Playbook for Life was created to     at this point, and like                       200,000 students and young           your journey.
help provide the information you          three-quarters of                             adults. We have also visited
need to plan for your financial future.   college students, you                         numerous college campuses,           Best wishes,
                                          may wish you had                              and the feedback we’ve received
We understand it may be difficult         more information about                         along the way has helped make
to plan beyond today, particularly        personal finance.                                      the content useful and
if you’re dealing with student loan                                                                     relevant to a        Tom Marra
payments, tight credit and rising                                                                         broad audience.    President and Chief Operating Officer,
living costs. But there are steps                                                                          In fact, people   The Hartford Financial Services Group, Inc.
you can take right now, even if
you don’t have much money.
Table of Contents
                                   at illie pelit.

 2   Getting Started Early
     It’s all about having a plan for you and your money.                  19   Real World Story: Housing
                                                                                “If I could go back, I would have put that rent money
                                                                                toward buying a home sooner rather than later.”

 4   Budgets Give You Choices
     A spending plan is like a road map to get you where
     you want to go.                                                       20   Buying a Car
                                                                                Everyone needs wheels, right? Wrong. Your first choice
                                                                                is deciding whether you actually need a car right away.

 7   Real World Story: Budgets
     “I soon discovered that little things add up quickly.”
                                                                           22   The Basics of Saving
                                                                                The most important personal finance lesson

 8   Credit Counts
     Understanding credit is crucial to starting off on
                                                                                is learning the value of compounding.

     a solid financial footing.
                                                                           24   Investments: Put Your Money to Work
                                                                                Choosing among the best options now and for the future.

10   The Basics of Credit Cards
     Not all credit cards are created equal; it pays to shop around.
                                                                           28   Retirement: One Goal, Several Options
                                                                                Saving for retirement is always smart. Now is the

11   Real World Story: Credit
     “It wasn’t easy wiping the balance sheet clean.”
                                                                                time to start.

12   Interest: The Cost of Money
     It’s all in the percentages; different rates will
                                                                           30   The ABCs of Insurance
                                                                                You’ll likely need at least some types of insurance
                                                                                as soon as you graduate from college.
     dramatically affect your bottom line.

13   Finding the Right Job for You
     Cover all your bases, consider all your options.
                                                                           32   Taking a Bite Out of Taxes
                                                                                If you know the rules, you’ll be sure to pay just
                                                                                your fair share.

14   Evaluating the Job Offer
     Benefits can be as important as the salary.                           33   Top 10 Quick Tips
                                                                                An easy access game plan at your fingertips to help you make
                                                                                good choices
     Housing You Can Live With
16   Putting a roof over your head shouldn’t put a big hole
     in your wallet – if you think it through.                             34   Additional Web Resources
                                                                                A place to get started for additional information.

Getting Started Early
                                             It’s all about having a plan for you and your money.

                                                                                                some far-off, distant future. And they                  It’s a great idea to review your
                                             common, think again. Personal finance
                                                                                                                                                        goals every year. Pick the same
                                             is about setting goals, making choices,            understand that it is not impossibly                    day each year, perhaps New Year’s
                                             and following through. In the next few             complicated, and does not require a                     Day or your birthday. Remember
                                             years, you’ll find that managing your              lot of money to start. You can start                    to set goals that are reasonable
                                                                                                                                                        and measurable, for example,
                                             money will become an increasingly                  planning your finances now, too.                        saving $50 or $100 a month
                                             important part of your life. Even if you                                                                   toward retirement.
                                             don’t have much cash to work with now,
                                                                                                Goals Worksheet
                                             it’s well worth it to start learning all you
                                             can about how to handle your money.                 Short-Term Goals
                                             As your income grows, you’ll know what
                                                                                                                                           Monthly            Amount          Date
Life is a lot like sports – it’s all about   your options are, what mistakes to                  Goal                                    Contribution         Needed      Accomplished
setting goals, making choices, and           avoid, and what steps to take to achieve
following through to achieve the best        the best possible outcome.
outcome possible. If you play on a
team or for your own pleasure, when     The Future Is Now
you train, you set goals. You might     Many people spend their 20s not giving
want to build muscle. Or gain speed.    a thought to managing their money.
Whatever your goal, you can make        Whatever they have, they spend. Before
choices to help you accomplish it.      they know it, they’re in their 30s – or 40s              Long-Term Goals
                                        – and wonder where to start. If you look                                                          Monthly             Amount          Date
The same approach can be applied        around, though, you’ll notice that those                 Goal                                    Contribution         Needed      Accomplished
to many aspects of your                                who do start planning
life – and one of the most Many people spend           early are the ones who
important is personal                                  are poised for financial
finance. If it seems like  their 20s not giving a success. They know that
sports and personal        thought to managing financial planning is not
finance have little in                                 just about retirement in
                                their money. Whatever
                                they have, they spend.

                                                                                                                                                                                              PDF versions of the Goals
                                                                                                                                                                                              and Net Worth Worksheets
                                                                                                                                                                                              can be downloaded for free at

Write It Down. Build a Chart.                        helpful to record it in order to track your         Net Worth Worksheet
Make a Plan.                                         improvement in the future.
Never underestimate the value of putting                                                                   Assets (what you own)                                                                                Value
your goals on paper. Once they’re written            It’s also a good idea to record your goals,           Cash                                                                                                 $
down, it’s easier to see where you are,              keeping them simple, measurable, and                  Checking Account                                                                                     $

revise your goals if necessary, and move             realistic. You might want to increase your            Savings                                                                                              $

forward. It really works.                            salary by a certain amount, save a fixed              Certificates of Deposit (CDs)                                                                        $
                                                     amount each month, buy a car, or reduce               Retirement Accounts                                                                                  $
The first thing to write down is your                your debt. At the end of the year, you                Mutual Funds                                                                                         $
personal financial net worth statement.                                                                    Stocks                                                                                               $
                                                     can feel good about the goals you have
                                                                                                           Bonds                                                                                                $
This is a list of what you own, what it is           achieved, consider why you might not
                                                                                                           Real Estate (Own)                                                                                    $
worth, and what you owe. When you                    have reached some, and establish new
                                                                                                           Automobile                                                                                           $
start out, there might not be much to                ones for the coming year.                             Personal Property (Electronics, Jewelry, Furniture, etc.)                                            $
write, but it is still a useful exercise; it’s a                                                           Cash Value Life Insurance                                                                            $
baseline measurement. Think of it this                            Review your net worth each                                                                              Subtotal                              $
way: If you’ve never run five miles and                           year. It will help you monitor
                                                                  your progress and might even             Liabilities (what you owe)                                                                           Value
your first time is pretty slow, it’s still                        serve as motivation to take              Student Loans                                                                                       $
                                                                  better care of your finances.            Credit Card Balances                                                                                $
                                                                                                           Auto Loans                                                                                          $
                                                                                                           Other Loans                                                                                         $
                                 Break Big Goals Into Bite-Sized Pieces                                    Mortgage Balance                                                                                    $
                                 Breaking long-term goals into shorter ones will make them seem            Other                                                                                               $
                                 much more attainable. For example, instead of writing down                                                                               Subtotal                             $
                                 that you will save to buy a car, plan to save $50 per month – or                                                                         Total Assets                         $
                                                                                                                    To find your total net worth,
                                 whatever you can realistically afford – toward a down payment.
                                                                                                                    just subtract your liabilities                        Total Liabilities                  – $
                                 Or, instead of saying you will pay off your credit cards, specify                  from your assets.                                     Total Net Worth                      $
                                 that you will pay an extra $10 per week or month – or whatever
                                 you can comfortably afford. Set your goals, make practical              Note: If you own a home or real estate and have a mortgage, count the value of the property if you were to sell it as an asset,
                                                                                                         and the balance you owe as a liability. So if you own a condo that would sell for $150,000 and you paid a down payment of
                                 choices to carry them out, and follow through all year.                 $30,000, and have a $120,000 mortgage, you have a $150,000 asset and a $120,000 liability. This ultimately translates to
                                                                                                         $30,000 in equity.

Budgets Give You Choices
                                          A spending plan is like a road map to get you where you want to go.

                                          credit card debt, you might actually             expenses and those that do not occur          The Low Down on High Tech
                                          save $165, because you’d be eliminating          every month, such as the occasional car       New technology can throw your budget
                                          some of your next month’s interest               repair, gifts, or clothing. The best way      out of whack. Example: Just about
                                          charges. Or, if you took that $150 and           to do this is to estimate how much you        everybody needs a cell phone these days,
                                          saved it in an account, it could earn            would need in a year to cover your            but buying ring tones, ring back tones,
                                          interest. Maybe $150 per month would             unexpected or one-time expenses, and          backgrounds and games, or paying
                                          be a big chunk of a monthly car loan             then allocate 1/12 of that estimate to        extra for text alerts can get expensive.
                                          payment.                                         your monthly budget, whether you              Games and text messaging can transform
                                                                                           spend it that month or not.                   an affordable monthly bill into a
                                          Seemingly small expenses, like MP3                                                             budget-wrecking nightmare. Ditto for
Say the word “budget,” and images of      downloads and ATM fees, can also add             If this all sounds too serious, it’s          downloading music and videos for
“doing without” often come to mind.       up quickly; a budget will keep you on            important to note that budgeting does         your MP3 player.
But what budgets really do is reveal      track. When you get all your spending            not mean doing without fun. By all
information that enables you to take      patterns down on paper, you have a road          means, when you create your budget,
control and make choices. They help       map of your financial plan. It helps you         factor in eating out, entertainment,            Start an Emergency Fund
you plan how to pay for necessary         see where you are, where you want to             and social activities.                          Many financial planning experts suggest
                                                                                                                                           keeping an emergency fund of three to
expenses with the funds you have, and     go, and how to make the right choices                                                            six months’ worth of living expenses in
they show you how you are actually        to get you there. Then take a good look          And don’t forget to include savings as a        the bank or in another easily accessible
spending your money – something that      and decide if this road map is taking            budgeting goal. Try to avoid falling into       investment in case you have unexpected
                                                                                                                                           needs or lose your job. When you are
is not always obvious.                    you where it should.                             the trap of saving only what is left over.
                                                                                                                                           just starting out, this can take a while
                                                                                           Whenever possible, give that $50 a              to accumulate, but once you have your
Where Does Your Money Really Go?          Sounds Like a Plan                               month you earmarked for savings the             emergency fund, you can go on to
You might be spending too much on         The other part of your budget is a plan:         same priority as the electric bill; it must     invest in other ways,
                                                                                                                                           and rest easy knowing
items you don’t really need. Spending     What items do you know you must pay              be paid each month. Many personal               you have a financial
$5 every day on coffee and lattes might   for each month? These are basics like            finance experts say “paying yourself            cushion should
seem like a small expense, but it adds    rent and utilities, food, transportation –       first” is critical to financial success.        a problem arise.
up to $150 per month. If you used         anything that’s absolutely necessary.
that $150 per month to pay down your      Remember to allow for unexpected

                                                                                                                                                          A blank Budget
                                                                                                                                                          Worksheet can
                                                                                                                                                          be found on the
                                                                                                                                                          next page.

Here’s how a budget works.                Sample Budget
We’ve created a sample budget to show
                                              Expense                          Monthly          Yearly       Expense                            Monthly        Yearly
how each dollar of a salary might be
spent and why it is so important to           Housing                                                     Insurance

track. We’ve also pointed out a few       1      Rent/Mortgage             $       409      $   4,908    3   Health Insurance               $        45    $      540
                                                 Electric                  $        32      $     384        Auto Insurance                 $        91    $    1,092
important areas of your budget.                  Telephone/Cell Phone      $        48      $     576        Home/Rent Insurance            $        12    $      144
Salary:                                          Water                     $         3      $      36        Life Insurance                 $              $
$35,000                                          Heat (Oil/Gas)            $        32      $     384     Recreation/Entertainment
Location:                                        TV (Cable/Satellite)      $        50      $     600        Movies/Concerts/Shows          $        23    $      276
New Haven, Connecticut                           Internet Access           $        26      $     312        Magazines/Books/Music/DVDs     $        20    $      240
                                                 Furniture/Electronics     $        23      $     276        Nightlife/Other Activities     $        20    $      240
Apartment with three roommates                   Condo Fees/Maintenance    $                $                Pets/Pet Care                  $              $
                                              Transportation                                                 Hobbies                        $        20    $      240
                                                 Auto (Loan/Lease)         $       152      $    1824        Vacations                      $        35    $      420
Used car, commute 10 miles to work
                                                 Gas                       $       160      $    1920     Savings
                                                 Repairs & Maintenance     $        35      $     420    4 Savings                          $        50    $      600
      When starting out, sharing an              License/Registration      $         9      $     108        Retirement Contributions   5   $       150    $    1,800
 1    apartment reduces housing and
                                                 Parking & Tolls           $        20      $     240     Other
      utility costs
                                                 Public Transportation     $        11      $     132        Education/Tuition              $              $
      A great way to save money is            Food                                                       6 Student Loans                    $        50    $      600
 2    to bring your lunch instead of             Groceries/Household       $       307      $   3,684        Other Loans                    $              $
      eating out
                                                 Dining Out                $        20      $     240        Gifts                          $        38    $      456
      Even if your employer provides      2      Lunch                     $        40      $     480        Charity/Donations              $         5    $       60
 3    health insurance, you still might       Healthcare                                                     Childcare                      $              $
      have to pay a a small portion
                                                 Medical (Co-Payments)     $            8   $       96    Taxes
      each month
                                                 Dental                    $           20   $      240       Social Security                $       223    $    2,676
 4    Don’t forget to pay yourself               Medications               $            3   $       36       Property/Auto                  $        20    $      240
      Start saving for retirement now –       Personal                                                       Real Estate                    $              $
 5    it will pay off in the long run                                                                        State                          $        92    $    1,104
                                                 Clothing/Jewelry          $           17   $      204
                                                 Laundry/Dry Cleaning      $           21   $      252
                                                                                                         7 Federal                          $       283    $    3,396
      Pay your student loans on time to
 6    establish a good credit history            Haircuts/Makeup           $           35   $      420
                                                                                                                         Total Expenses     $     2,703    $ 32,436
                                                 Health Club/Memberships   $           45   $      540
 7    Remember to budget for taxes


Put it in writing – everything   Budget Worksheet
you pay over the course of a
month – and try to account for    Expense                          Monthly       Yearly   Expense                              Monthly       Yearly
every penny that you spend.
This will give you a good idea    Housing                                                 Insurance
of where your money goes.            Rent/Mortgage             $             $               Health Insurance              $             $
                                     Electric                  $             $               Auto Insurance                $             $
                                     Telephone/Cell Phone      $             $               Home/Rent Insurance           $             $
A PDF version of the                 Water                     $             $               Life Insurance                $             $
Budget Worksheet can be              Heat (Oil/Gas)            $             $            Recreation/Entertainment
downloaded for free at               TV (Cable/Satellite)      $             $               Movies/Concerts/Shows         $             $         Internet Access           $             $               Magazines/Books/Music/DVDs    $             $
                                     Furniture/Electronics     $             $               Nightlife/Other Activities    $             $
                                     Condo Fees/Maintenance    $             $               Pets/Pet Care                 $             $
                                  Transportation                                             Hobbies                       $             $
                                     Auto (Loan/Lease)         $             $               Vacations                     $             $
                                     Gas                       $             $            Savings
                                     Repairs & Maintenance     $             $               Savings                       $             $
                                     License/Registration      $             $               Retirement Contributions      $             $
                                     Parking & Tolls           $             $            Other
                                     Public Transportation     $             $               Education/Tuition             $             $
                                  Food                                                       Student Loans                 $             $
                                     Groceries/Household       $             $               Other Loans                   $             $
                                     Dining Out                $             $               Gifts                         $             $
                                     Lunch                     $             $               Charity/Donations             $             $
                                  Healthcare                                                 Childcare                     $             $
                                     Medical (Co-Payments)     $             $            Taxes
                                     Dental                    $             $               Social Security               $             $
                                     Medications               $             $               Property/Auto                 $             $
                                  Personal                                                   Real Estate                   $             $
                                     Clothing/Jewelry          $             $               State                         $             $
                                     Laundry/Dry Cleaning      $             $               Federal                       $             $
                                     Haircuts/Makeup           $             $
                                                                                                         Total Expenses    $             $
                                     Health Club/Memberships   $             $

Real World Story: Budgets
                 “I soon discovered that little things add up quickly . . .”

                 When you’re part of a sports team,            I worked full-time at ESPN and           It wasn’t until I began preparing
                 you’ve got to have a strategy on              earned lots of overtime. For the first   for graduation – with about $20 in
                 how to win. Personal experience is            time, I was on my own for rent and       my savings account – that I started
                 showing me that the same holds true           expenses, with no sense of how to        getting concerned about my
                 for success in managing money.                budget or keep track of what I           financial future.
                 In order to win at personal finance,          spent.
                 you’ve go to have a plan – a plan                                                      When I accepted my first job after
                 for spending, saving and, eventually,         I soon discovered that little things     graduation as a basketball coach
                 investing wisely.                             add up quickly – things like gas,        for Got Game, a start-up company
                                                               going out to dinner, my cell phone       that trains kids for AAU basketball
                 As a basketball player at Boston              bill, buying toilet paper and shampoo.   tournaments, I made budgeting a
                 College, I didn’t think much                  It was a real eye-opener: “I just got    top priority. I also mapped out a
                 about money. My tuition, room,                paid, so why am I broke?” I would        game plan for saving money while
                 and board were covered by an                  repeatedly find myself asking.           playing basketball overseas, based on
                 athletic scholarship and, like many                                                    my income and living expenses.
                 students, I depended on my parents            Even after my internship, I did not
                 back home in Texas for additional             adopt a more responsible approach        I still have plenty to learn about
                 spending money. It took just one              toward my finances. Back at school       money matters, but at least I now
By Aja Parham
                 small taste of life in the “real world”       my senior year, I continued to spend     have an idea of how to discipline
Boston College
                 – a paid summer internship at                 without saving. The only thing I         myself.
Class of ’06
                 ESPN – to realize the importance              had going for me was that, unlike
                 of having a plan for my finances.             many other college students, I had
                                                               no debt. I had steadfastly refused to
                                                               get a credit card, so I could not
                                                               spend what I did not have.

Credit Counts
                                              Understanding credit is crucial to starting off
                                              on a solid financial footing.

                                              transaction – and how well you’ve done           mortgage companies, credit                   It’s a good idea to establish your credit
                                              repaying money borrowed in the past.             card companies) offer credit based           early and demonstrate your ability to
                                                                                               on your earning power and your               repay. Begin by borrowing sensibly.
                                              Before deciding to use credit, consider          repayment history.                           Obtain a credit card and make
                                              whether you are really willing to pay                                                         occasional purchases, but pay off the
                                              “rent” on the item you’re buying.                FICO Who?                                    bills in full. Also, repay your student
                                              Typically, it’s not a good idea to “rent”        In recent years, lenders’ decisions to       loans on time. By the time you really
                                              pizzas, movies, gadgets, or other things         award credit have become automated           need credit, your good credit rating
                                              that are easily consumed, because soon           through a computer model called              will be well established.
                                              you’ll only be left with the payments.           credit scoring. Information compiled by
                                              School loans and mortgages are usually           credit-reporting agencies is analyzed and              You are entitled to one free
Credit is your ability to buy goods and                                                                                                               credit report per year from each
services now and pay for them over            worth borrowing for because they                 converted into a numeric score or letter               of the three major credit-reporting
time. In short, it’s a form of borrowing      require large initial outlays that can be        grade. The most commonly used is a                     companies. You can purchase a
                                              paid off over time, and you are left             score called a FICO score, which stands                copy of your FICO score at
money, which you can also think of as
paying “rent.” Just as you would pay          with a valuable asset (your education            for Fair Isaac Company, the company
rent for using someone else’s house,          or home).                                        that created the original scoring model.
credit allows you to “rent” other people’s                                                                                                   Boosting Your Score
money to buy things you can’t pay for       Your ability to get credit is also valuable.       There’s no single definition of a good        • Establish a line of credit, if you
yourself. In return, you pay fees and/or    When it comes time to pay for big-ticket           score, as lenders use different standards.      haven’t already
interest as well as the                                  items like cars, homes,               But a higher score improves your              • Ask a parent to co-sign for a
                                                         college, or grad school, if           chances of obtaining credit and                 loan or credit card if you have
money you’ve borrowed. Think of credit                                                                                                         trouble initially
How much interest you                                    you’re like most people,              qualifying for lower interest rates.
                             as rent. Before                                                                                                 • Pay all bills on time or even
pay can vary with the                                    you’ll need credit, in the                                                            ahead of time
type of credit and the       deciding to use it,         form of a loan. Qualifying,                     Review your credit report           • Pay more than the minimum
moment in time that                                      however, is not automatic.                      several months before you plan        balance due – as much as
                             consider whether you                                                        to apply for a loan. This gives
you make your credit                                     Lenders (such as banks,                                                               you can afford
                                                                                                         you time to fix any errors that
                           are really willing to                                                         could impact your credit score.     • Keep account balances low, pay
                                                                                                                                               the balance in full when possible
                           pay “rent” on the
                           item you’re buying.


                                                                                                  this is probably the worst use of credit
  Repaying Student Loans: Climbing Out of the Hole                                                possible. Contact everyone to whom
  Repaying a student loan can be a big chunk of the monthly budget. It’s also                     you owe money, explain your situation,
  a key factor in establishing and maintaining good credit. If your student loan                  and ask for a payment plan. Most
  is subsidized by the U.S. government, there are                                                 creditors will react more favorably if
  various repayment plans, offering a variety of                                                  you act first and in good faith before
  monthly payment levels and repayment periods.                                                   they mark you as a bad credit risk.
  There’s also a menu of programs to help if you
  run into trouble. Visit for                                            Non-profit credit assistance groups can
  additional information. A non-government loan is subject
                                                                                                  help you get organized and overcome
  to whatever terms you agreed to when you applied for it.
                                                                                                  credit problems. These organizations
                                                                                                  typically charge fees based on your              fee or those that claim they can “fix”
                                                                                                  ability to pay and the level of service          your credit or remove negative items
Using Credit Responsibly                       such as having a high credit card balance
                                                                                                  you need. Beware of private companies            from your credit report. Negative items
To benefit from credit, it’s important to      or too many credit cards, can also have
                                                                                                  that promise to “restore” or “repair” your       remain on your personal credit report
be disciplined and prudent; consider it a      a negative impact on your credit rating.
                                                                                                  credit; many are scams. In particular,           for seven to ten years unless you can
convenience, not a necessity. Using too
                                                                                                  avoid companies that ask for an up-front         prove they’re false.
much credit can leave you with monthly         Also beware of minimum payments;
charges you cannot repay. If you pay           they often give a false sense of achieve-
your bills late – or worse, if your bills go   ment. Yes, you are making the smallest
                                                                                                                                               How Much Is Too Much?
unpaid – you might find that collection        payment as determined by the credit
                                                                                                                                               An old rule of thumb is that your rent
agencies or the government will fill your      company, but you will not achieve
                                                                                                                                               (or mortgage) plus car payments plus
life with frequent requests for payment;       your goal of eliminating your debt.                                                             loan repayments plus credit card
they can even go to court and force your                                                                                                       payments should not equal more than
employer to divert part of your salary to      If you find you are unable to pay off                                                           33% to 40% of what you earn before
cover your unpaid bills. Moreover, your        your debts, take immediate steps to fix                                                         taxes. If it does, take a closer look at
credit rating might suffer, making             the problem. Stop using your credit                                                             your spending and income and make
lenders reluctant to loan to you when          cards. Don’t fall into the trap of borrowing                                                    some adjustments.
you really need to borrow. Other factors,      on one credit card to pay off another;

The Basics of Credit Cards
                                              Not all credit cards are created equal; it pays to shop around.

                                              What’s the rate?                                  It Never Hurts to Ask                    Tips to Prevent Identity Theft
                                              What’s the interest rate that will be             It’s worth exploring whether a           When identity thieves gain access
                                              charged if you do not pay your bill in            better deal is available. Often,         to your personal information, they
                                              full each month? Rates vary, as do                your bank will waive a credit card       can open credit cards and make
                                              methods of calculating interest, and              fee if you make the request.             purchases, incur phone charges,
                                                                                                                                         take loans, and run up big bills.
                                              these differences can affect how much             The same is often true in dealing
                                                                                                                                         Follow these prevention tips:
                                              you pay. Read and compare the fine                with telephone and cable TV
                                                                                                companies. Ask if there are              • Never give out your Social
                                              print of several card offers to see                                                          Security number, date of birth,
                                              which is best for you.                            any promotions or special
                                                                                                                                           mother’s maiden name, credit
                                                                                                deals that could reduce                    card or bank account numbers
Choosing a credit card is no different
                                                                                                your bill. You’ll                          to anyone who contacts you.
from shopping around for a car or             In evaluating credit card opportunities,
                                                                                                be surprised
MP3 player. A little research can save        you should gauge your own spending                                                         • Don’t share information with
                                                                                                how often you
                                              and payment ability. If you always pay                                                       anyone who claims you have
you money. There are several factors                                                            get a positive                             won a prize or special promotion,
to consider.                                  your charges in full, a low annual fee or         response!                                  or is taking a poll.
                                              no fee at all might be more appealing.
                                                                                                                                         • Don’t discuss personal
What’s the fee?                               If you carry a balance, lower interest                                                       information or place credit card
Does the card have an annual fee? In          rates might be more important.                                                               orders via cell phones.
some cases, if you have an account at         In most cases, it’s best to pay your                                                       • Don’t leave charge slips and
the bank offering the card, they might        credit cards in full. If you do accumulate                 In general, the interest you      bank receipts for others to see.
waive the fee, so it’s always worth asking.   credit card debt, pay it off as soon as                    would earn in a bank or
                                                                                                         other safe investment will be   • Shred paperwork before putting
Some cards have no-fee promotions             you can – even if it’s at the expense of                                                     it in the trash.
                                                                                                         less than the credit card
for a given period of time or even            your savings.                                              interest rate that you would    • Don’t post your resume on
permanently. If you take a short-term                                                                    pay, so paying the card           employment Web sites.
                                                                                                         off first is usually a sound
deal, remember to re-evaluate it when                                                                                                    • Don’t post personal information
the promotion period expires.                                                                                                              on social Web sites.
                                                                                                                                         • Install anti-virus and firewall
                                                                                                                                           protection for your computer.
                                                                                                                                         • Shop online via secure sites,
                                                                                                                                           denoted by “https” only.

Real World Story: Credit
                              “It wasn’t easy wiping the balance sheet clean.”

                              Spiraling into debt is like a massive         After signing on with an agent         from my parents– just to pay off
                              weight sitting on your chest. You             who set me up with an expensive        my debt. They helped me set up a
                              struggle to push it away, but without         apartment and a generous line of       payment plan, but I was on my own
                              the proper plan, it just gets heavier         credit, I used credit cards to buy     to come up with the cash. I also
                              as you sink deeper into financial             things like clothes, dinners at nice   turned to a credit repair lawyer to
                              quicksand.                                    restaurants -- things I thought I      show me how to get paid items off
                                                                            could afford once I scored an NFL      of my credit report.
                              I know this feeling all too well. I           contract. But then circumstances
                              went into debt during college and,            changed, my agent dropped me,          As part of the plan to improve my
                              after several years, I’m still wiping         and my dreams of going “pro”           credit rating, I took on additional
                              the balance sheet clean. It’s easy            disappeared.                           debt that I could afford to pay off
                              for college students to fall into the                                                right away. My dad co-signed for
                              credit card trap – but based on               With a $2,000 monthly apartment        loans on a house and a car, and I
                              personal experience, it’s not so              lease that I couldn’t afford, I had    made all the scheduled payments
                              easy to get out.                              to move home with my parents.          on time, eventually establishing
                                                                            My credit card debt was $5,000,        good credit.
                              It all started when I was playing             and quickly doubled as a result
                              football for the University of Florida        of the high interest rates. Within     This experience proved to be a costly
By Dave Jorgensen
                              Gators. As an honorable mention               90 days, my credit rating had taken    lesson: There are ways to fix bad
University of Florida
                              All-Southeastern Conference Player            a major hit.                           credit, but it’s not easy. Better to
Class of ’02
                              in both the Sugar Bowl and Orange                                                    learn how to use credit wisely from
Honorable Mention             Bowl, I was being recruited by                It took a full-time job and two        the onset and set yourself up for
All Southeastern Conference   agents for the NFL.                           part-time jobs – along with advice     financial success in the future.
Football Center

Interest: The Cost of Money
                                           It’s all in the percentages; different rates will dramatically
                                           affect your bottom line.

                                           at the chart below shows that a lower                           Many credit card
                                                                                                           companies offer low
                                           rate of interest will yield savings in your                                                     The Bargain That’s Not:
                                                                                                           interest rates – or even
                                           monthly payments and the total amount                           no-interest – for fixed         Beware the Minimum Payment
                                           of interest you pay for the life of the                         periods of time. Once the       That super-discounted $1,000
                                           loan.                                                           promotion ends, a higher        spring break trip isn’t so cheap if
                                                                                                           interest rate kicks in.         you book it with your credit card
                                                                                                           If you have a balance,
                                            $10,000 Loan for 3 Years at Various                                                            and pay only the minimum monthly
                                                                                                           you’re paying a significant
                                            Interest Rates                                                                                 payment. If your card
                                                                                                           monthly finance charge.
                                           Interest Rate           4%      6%         8%                                                   carries a 12 percent
                                                                                                                                           interest rate and you
                                           Monthly Payment       $295.24 $304.22    $313.36                When evaluating debt, list it
                                                                                                                                           pay $15 a month,
When you borrow money or take on           Total Interest Paid   $628.63 $951.90 $1,281.09                 in order of highest interest
                                                                                                           rate to lowest. This way,       the actual cost of the
credit, whether through a credit card or                                                                   you'll know which debt to       trip will be $2,100.
a bank loan, it’s important to under-      The lesson is simple: Shop around for                           work on paying down first–
stand interest because it can vary from    interest rates and add the cost of interest                     the 18 percent credit card
                                           to the cost of whatever you buy before                          debt as opposed to the 6
company to company, and can be
                                                                                                           percent student loan.
quite costly.                              deciding how much you can afford.                                                               What’s a Parent Worth?
                                                                                                                                           If you buy a used car for $10,000
Here’s an example: Let’s say you’re                                                                                                        and take out a three-year loan at
buying a car and you need a $10,000                                                                                                        8 percent interest, your monthly
loan with a three-year term. A glance                                                                                                      payments would be $313. If your
                                                                                   Interest Rates: When Low Is Good, High Is               parents offered to lend you the
                                                                                   Bad, and Vice Versa                                     $10,000 with no interest, your
                                                                                   We talk about interest rates in several contexts.       monthly payments would only be
                                                                                   When borrowing money through loans or credit            $278, saving you $35 a month.
                                                                                   cards, a low rate means you pay less for the use        Over the three years, your parents
                                                                                   of that money. On the other hand, when you’re           will have saved you $1,260.
                                                                                   saving or investing, higher interest rates mean         Don’t forget to say thanks to
                                                                                   your money is earning more for you.                     Mom and Dad.

Finding the Right Job for You
                                          Cover all your bases, consider all your options.

                                          The Job-Hunting Process                           Job Search Tips                             Send your resume and cover letter to
                                          Most colleges have career services offices        ■  Internet job postings are an obvious     potential employers; follow up with
                                          to help you get started, but it’s usually            place to start, whether you consult      phone calls to make sure it got to the
                                          up to you to do the legwork. The first               the major Web sites or sites specific    right place and to offer additional
                                          step is to prepare a resume of your                  to your field.                           information. Keep notes on your
                                          experience. Make it more than a list of           ■   Don’t forget the newspaper’s            contacts and the responses you get.
                                          jobs: highlight skills, accomplishments               classified ads – and not just your
                                          and personal qualities. Proofread                     local paper. With most newspapers       When you are invited for an interview,
                                          carefully so you can present yourself                 available online, you can check out     learn all you can about the company,
                                          in the best possible light. As your                   the job market just about anywhere.     role-play possible questions you’ll be
Today’s work environment is an            job search progresses, tailor different           ■   Recruiters offer another option.        asked, and think of a few to ask your
ever-changing place; you can expect       versions of your resume to specific                   Talk to those who come to your          interviewer. Dress conservatively – a
to hold multiple jobs over a lifetime.    employers you’d like to work for. At the              campus and research others in           business suit is suggested unless you’re
It’s an environment that requires you     same time, prepare a cover letter that                your field.                             sure the company has a more relaxed
to take an entrepreneurial approach to    can be tailored to specific opportunities.        ■
                                                                                                                                        dress code – and bring extra copies of
                                                                                                Check out career fairs both on
employment. Think of                                                                            campus and in the community.            your resume. At the interview, be
your first job as a way                                Next, start a list of                                                            gracious and polite, but also try to relax
                                                                                            ■   Networking can be key. Let people
to learn about the             Just like choosing      employers you’d like to                                                          and let the interviewer see your personal
                                                       work for. Use a variety                  know you’re looking; you never          best. Always send a thank-you note
workplace and the kind
                               the right school,                                                know who can offer a boost to a
                                                                                                                                        after the interview. E-mail is acceptable
of culture in which                                    of sources, including
                                                                                                young person starting out. Your
you’ll thrive.                 choosing the right      the career services office,                                                      these days, but a typed note via the U.S.
                                                                                                college alumni network is a good
                            employment                 to create it.                            place to begin.                         mail may help set you apart from other
                                                                                                                                        applicants. If possible, send both.
                            opportunity is                                                  ■   Don’t hesitate to contact companies
                                                                                                you’d like to work for directly. Most
                            essential.                                                                                                             Most colleges have career
                                                                                                company Web sites have a page                      services offices and advisors
                                                                                                about employment opportunities.                    who can offer a wealth of
                                                                                                                                                   information and help in finding
                                                                                                                                                   a job or internship. Many also
                                                                                                                                                   host job fairs and schedule
                                                                                                                                                   interviews with corporate

Evaluating the Job Offer
                                           Benefits can be as important as the salary.

Just like choosing the right school,       Besides evaluating the responsibilities
choosing the right employment oppor-       of the job itself, consider the strength                           Which Job Is the Better Deal?
tunity is essential. While salary is an    and values of the company, the
important consideration, it should not     training offered, and the advancement                              Job 1 offers a salary of $50,000 with NO benefits.
be the only one. There are other factors   opportunities. Consider where the
to keep in mind when selecting a job,      job is situated and the cost of living                             Job 2 offers a salary of $47,000 but pays 75 percent of
should you have multiple options.          in that region. And consider benefits                              the $350 monthly premium for your health insurance
                                           provided by your employer, such as                                 and contributes 3 percent of your salary to a 401(k).
                                           health insurance, disability insurance,
                                           retirement plans, flexible spending                                Job 2’s $47,000 base salary may actually be
                                           accounts, tuition reimbursement,                                   worth more than $51,500.
                                           bonuses, and paid time off.

                                           Health Insurance: In evaluating your        health coverage for an employee contri-    Don’t go without health insurance!
                                           health benefits, find out if the company    bution of $100 per month ($1,200 per       When you are young and in good
                                           offers medical and dental insurance, and    year), the two opportunities might be      health, it might be tempting to save
                                           whether it covers just you or your entire   more evenly matched than you thought.      money and neglect it. However, in
                                           family, if you have one. Also find out if                                              doing so, you run the risk of financial
                                           your employer will pay a portion of the     Rising medical costs have resulted         catastrophe should a medical emergency
                                           coverage. You might have one job offer      in many changes in employee health         arise. Remember, if you’ve been covered
                                           for $1,200 more per                                        plans in recent years.      by your parents’ health plan, you will
                                           year, in which you are                                     It’s important to           likely not be eligible for that coverage
                                           responsible for $200 a
                                                                        Don’t go without health understand the specifics          after graduation. Even if you’re not
                                           month (that’s $2,400 a       insurance. Even if it         of your employer’s          employed, or your job doesn’t offer
                                           year) in health insurance costs a few dollars, it’s        benefits plan, so you can   this benefit, health insurance can be
                                           premiums. If the other                                     make the most of your       purchased independently.
                                           job offers comparable        typically wise to take        healthcare dollars.
                                                                       the health coverage an
                                                                       employer offers.


Flexible Spending Accounts                    also generally require that you “use it or
Flexible spending accounts (FSAs)             lose it,” meaning that you forfeit any
allow you to set aside a portion of your      unused funds at the end of the year. It’s
income to pay for certain expenses            important to plan for your FSA carefully.
with pre-tax dollars. For instance,
contributions to healthcare spending          Retirement Savings Plans
accounts can be used to cover out-of-         Many companies offer voluntary savings
pocket medical or dental expenses,            and retirement plans such as 401(k),
and contributions to dependent-care           403(b), or 457 plans. These plans allow
spending accounts can be used to              you to invest money over the long term
cover childcare expenses while you’re         without paying taxes on it until you
working.                                      retire, at which time you may be in
                                              a lower tax bracket. They can also help
What’s the big deal about pre-tax             put you in a lower tax bracket right
dollars? When part of your paycheck           now, by reducing your taxable income.
is set aside for an FSA, your income at       In many such plans, the employer
the end of the year is lower, so you pay      matches a portion of the funds you
less in taxes, but you still get to use the   contribute, so it’s like getting additional        and matching funds you may receive             increasingly innovative, so it’s worth
money during the year. Be aware,              “free” money. If your employer offers a            by enrolling in your employer’s plan           exploring both traditional and
however, that these plans                                   voluntary retirement plan,           make this a smart move. Put away as            unconventional benefits that come
typically require you to          When an employer join it immediately.                          much as you can afford, but if cash is         with a job offer to see which make
determine in advance the                                    Retirement might seem                tight, try to invest at least 4 to 6 percent   the most sense for you.
amount you will set aside
                                  matches a portion         far away, but the tax                of your income in your retirement plan.
for the coming year. They         of the funds you          advantages, routine savings,         Employee benefits are becoming
                               contribute, it’s like
                               getting additional
                               “free” money.

Housing You Can Live With
                                           Putting a roof over your head shouldn’t put a big hole in your
                                           wallet – if you think it through.

                                           with having you back? Are they                     lucky enough to have a friend, or several                 Make a list of your criteria for a room-
                                           willing to let you live rent-free?                 friends, who would like to live in the                    mate. Are you a non-smoker who can’t
                                           Or for a nominal rent?                             same area. If not, there are roommate-                    tolerate the smell of smoke? A light
                                                                                              matching services that advertise online                   sleeper who has to rise early? Or will
                                           Looking purely at finances, moving                 or in the telephone directory. Find out                   you work nights? Weekends? Being clear
                                           back home is a great deal, even if your            exactly what they cost and what you’re                    about your preferences will help you to
                                           parents charge a nominal rent. Out in              signing up for.                                           select a compatible roommate.
                                           the open market, an apartment renting
                                           for $700 a month would cost $8,400
                                           per year. In addition, you will likely                Housing Costs
Home sweet home. After graduation,         need a one-month security deposit, and                The average cost to rent an apartment can exceed $1,900 a month in some
will you rent an apartment, with or        sometimes two months’ rent in advance.                of the nation’s most expensive real estate markets – excluding utilities,
without roommates, or move back            Utility companies might also require                  cable TV, or phone bills!
home? It’s not an easy choice, as it       deposits. Remember, too, that you’ll                  Moving back home for a year could save you as much as $22,000!
balances finances with personal freedom    have monthly expenses such as utilities,
– a difficult calculation.                 phone, cable TV, and Internet bills.                  Average Monthly Rental Prices
                                           You’ll also be responsible for furnishings,           New York, NY                   $ 2,636
There’s No Place Like Home?                rental insurance, and food. Even laundry              San Francisco, CA              $ 2,009
First, ask yourself whether living at      expenses will add up if you don’t have                Los Angeles, CA                $ 1,770
home is an option. After the freedom       a washer and dryer.                                   Long Island, NY                $ 1,643
of living at school, many students don’t
                                                                                                 Boston, MA                     $ 1,551
want to live under their parents’ rules.   Rooming with a Roomie
Do you? Is there still room for you at     Another option is to share expenses with              Source: Property & Portfolio Research (PPR), 2008 Q3

home? And are your parents comfortable     one or more roommates. You might be

It’s a Business Arrangement
Even if you room with a good friend,
                                                       A Good Rent Rule
you won’t know what it’s really like to
                                                       A rule of thumb on rent is that you should not spend more than 25 to 30
live with a person until you do so.                    percent of your gross income (your income before taxes are deducted from
It’s wise, therefore, to think about a                 your paycheck). For example, if you earn $36,000 a year and apportion
roommate relationship as what it                       25 percent for rent, you could spend $9,000 per year ($750 per month) on
actually is: a financial arrangement. As               rent. If you wanted to go as high as 30 percent, you could spend $10,800
with any contract, you’ll want to spell                per year ($900 per month).
out all the rights and responsibilities of
each party. Make up a household budget                     Earnings          Percentage           Maximum           Maximum
                                                           Per Year           For Rent            Per Year          Per Month
just as you made your personal budget.
How much rent will each roommate                           $36,000               25%              $9,000               $750
pay? (Will you split it evenly or will                     $36,000               30%              $10,800              $900
the bigger bedroom, if there is one,
cost more?) How will you split utilities?
How will you handle food? If one                    found immediately? And don’t forget           and one of them moves out, how will
roommate has to move out, how much                  the non-monetary issues such as               that slot be filled? Will the landlord have
notice must he or she give? How long                housekeeping, entertaining and other          a vote? In cases where all roommates’
will the departing roommate have to                 basics of daily life.                         names are on the lease, is the old lease
pay rent if another roommate isn’t                                                                invalidated when one leaves and a new
                                                    When the Landlord Comes to Call               one comes in?
           In case of damage, your                  Then there’s the roommates’ relationship
           landlord’s insurance will likely
           cover only the building and any
                                                    with the landlord to consider. Will the       A roommate relationship can be a lot
           fixtures it contains, but not            lease be in one roommate’s name or all?       more complex than it might seem at
           your stuff. Renters insurance            If there’s one official tenant, it’s doubly   first glance. But if all parties understand
           will cover your personal property
                                                    important to have a written agreement         what’s expected and pay their fair share
           – your electronics, furniture,
           clothes, and household items.            between roommates. Or, if more than           on time, it can be an excellent way to
           It’s generally inexpensive.              one roommate’s name is on the lease,          start out.


                                            At the end of 30 years, Jack owns
                                            nothing and continues paying rent.                Renting vs. Buying
                                            Jill has finished paying her mortgage
                                                                                              Renting Advantages      Buying Advantages
                                            and lives rent-free; plus, she also owns
                                                                                              • Don’t need large      • Build equity in
                                            real property that can be sold. Real                down payment            property that could
                                            estate typically increases in value,                                        be sold for a profit
                                                                                              • Not responsible
                                            which means Jill will probably be                   for repairs           • Mortgage interest and
                                            able to sell her home for more than                                         property taxes can be
                                                                                              • Some utilities may
                                            she paid for it.                                    be included
                                                                                                                        deducted on tax return
                                                                                                                      • Can borrow against
                                                                                              • Don’t need to find
                                            Another advantage to having a mortgage:             buyer before moving
                                                                                                                        the home’s equity
                                            taxes. You can deduct the portion of
A Mortgage Instead of a Rent                your mortgage payment that goes for
Buying a home – whether a house or          interest. Usually, in the early years of a
condo – is one of life’s milestones. One    mortgage, most of your payment goes                                       Mortgage Basics
major advantage is that when you pay a      toward interest. Therefore, you may get                                   When you buy a house, you typically pay a down
mortgage, you are not just paying for       a significant tax deduction.                                              payment that can range between 5 and 20 percent
lodging; you are acquiring an asset.                                                                                  of the full price of the house. The rest of the purchase
Let’s compare two students, Jack and        Buying a home is probably a few years                                     price is financed by a bank loan called a mortgage,
Jill. Both get good jobs after college.     away. For some people, the ease of                                        which you pay back, with interest, each month.
Jack rents for 30 years, while Jill saves   renting outweighs the benefits of home                                    Reduced-price mortgages for first-time homebuyers
for a down payment and then buys a          ownership; for others, owning a home                                      are often available from federal and state agencies.
home and pays a mortgage for 30 years.      is the ultimate goal.                                                     Check for links to
                                                                                                                      information on these programs.