Please Send Money: A Financial Survival Guide for Young Adults on Their Own

354 Pages·2008·1.84 MB·English

by  Dara Duguay

PleaseSendMoney_CVR 1/30/08 12:07 PM Page 1
PP
Consider these facts.
The average college student graduates ll
with $20,000 of debt. Nearly 10 percent of students owe creditors ee
more than $7,000. The average credit card debt for adults 18–24 aa
rose 104 percent between 1992 and 2001. The financial world has
ss
become increasingly complex and dangerous over the last decade,
ee
and young adults are the most vulnerable targets. Learning to manage

your money wisely is now more important than ever.
SS
ee
Get on the Path to Financial Security!
nn
dd
Please Send Money
provides students and young people with the
tools they need to navigate the tumultuous world of personal finance.
M
This book is filled with dozens ofreal-life stories,chronicling eye-opening
financial mistakes that are commonly made. Dara Duguay offers advice
on how to avoid these problems,covering such topics as: O
N
• Easy credit and the proliferation of credit cards
• How to manage car payments E
•The dangers of using student loans for personal needs A Financial
Y
and wants
Survival
• Dealing with bankruptcy !
• Overcoming material temptations
Y A
O Guide
Please Send Money UN FIN
also contains various financial tools, from a G A
N
psychology-of-money test to worksheets for determining budgets, net ADU CIA for
worth, cost of credit and safe debt levels. Please Send Money is a book LT L S
S U Young Adults
that no young adult should be without. O R
N V
T IV
H A
DARA DUGUAY, the Director of Citi’s Office of Financial Education, has been involved with EIR L G on Their Own
the issue of financial literacy for over 20 years. She is the former Executive Director of the OW UID
non-profit Jump$tart Coalition for Personal Financial Literacy in Washington, D.C. N E
F
O
R
Personal Finance |$16.95 U.S. / $20.50 CAN / £9.99 UK
ISBN-13: 978-1-4022-1324-3
ISBN-10: 1-4022-1324-7
DUGUAY DARA DUGUAY
C N
P A
www.sourcebooks.com U E
Director of Citi’s Office of Financial Education
Please Send Money FM 1/29/08 4:32 PM Page i
Survival Guide
A Financial for
Young Adults
on Their Own
Second Edition
DARA DUGUAY
Director of Citi’s Office of Financial Education
Please Send Money FM 1/29/08 4:32 PM Page ii
Copyright © 2001, 2008 by Dara Duguay
Cover and internal design © 2008 by Sourcebooks, Inc.
Sourcebooks and the colophon are registered trademarks of Sourcebooks, Inc.
All rights reserved. No part of this book may be reproduced in any form or by
any electronic or mechanical means including information storage and
retrieval systems—except in the case of brief quotations embodied in critical
articles or reviews—without permission in writing from its publisher,
Sourcebooks, Inc.
This publication is designed to provide accurate and authoritative information
in regard to the subject matter covered. It is sold with the understanding that
the publisher is not engaged in rendering legal, accounting, or other profes-
sional service. If legal advice or other expert assistance is required, the services
of a competent professional person should be sought.—From a Declaration of
Principles Jointly Adopted by a Committee of the American Bar Association and a
Committee of Publishers and Associations
Published by Sourcebooks, Inc.
P.O. Box 4410, Naperville, Illinois 60567-4410
[phone]
FAX: [phone]
www.sourcebooks.com
Originally published in 2001.
Previous edition cataloged as follows:
Duguay, Dara.
Please send money: a financial survival guide for young adults on their own /
Dara Duguay
p. cm.
ISBN 978-1-4022-1971-9(alk. paper)
1. Young adults—Finance, Personal. 2. Finance, Personal. I. Title.
HG179 .D834 2001
332.024—dc21
00-066160
Printed and bound in the United States of America
VP 10 9 8 7 6 5 4 3 2 1
Please Send Money FM 1/29/08 4:32 PM Page iii
For Jean Duguay, may his
memory never be forgotten; and for
Alfonso Guida, who proves that life
can go on
Please Send Money FM 1/29/08 4:32 PM Page iv
Please Send Money FM 1/30/08 11:52 AM Page v
Contents
Preface ix
Introduction xi
Chapter 1 The Ostrich Syndrome 1
Facing money problems and the
dangers of ignoring them.
Chapter 2 Do You Run Out of Money 21
Before You Run Out of Month?
Effective money management skills,
including creating a budget, tracking
disappearing money, and setting and
meeting financial goals.
Chapter 3 Credit: It’s Not Your Money 45
The wise use of credit involves knowing
when to stop, the hidden costs of credit,
the power of the credit report, and how to
overcome credit problems.
Chapter 4 I Need Wheels 69
The complexities of buying a car
include starting with a car budget,
making the right purchase, learning
how to make insurance and financing
choices simple, and avoiding losing the
car to a repossessor.
Chapter 5 The Semester of Living 93
Dangerously
Being in college presents special
money problems, such as easy access
to credit, using student loans for non-
student expenses, dangerous sports
gambling on the Internet, and drop-
ping out due to money problems.
Please Send Money FM 1/29/08 4:32 PM Page vi
Chapter 6 What Do You Want to Be 127
When You Grow Up?
In college, you should become focused
on preparing for your career. Learn
how to make yourself more mar-
ketable, what are the “hot” careers,
how internships can add to your
resume, and salaries you can expect
in your chosen field.
Chapter 7 Returning to the Nest 145
The rite of passage to adulthood by
moving out and becoming independ-
ent can being reversed due to money
problems. Learn how it gets to that
point, what you can do to stop it, and
how to avoid becoming a financial
burden on your parents.
Chapter 8 Loaning Money? Call It a Gift 163
Should you ever lend money to or ask
for a loan from a friend or relative?
This generous act may lead to lost
friendships, credit problems for the
lender, and money never recovered.
Chapter 9 Mind over Money 181
Money is very emotional—without
an understanding of what the driving
psychological reasons are behind our
money actions, dangerous patterns
will never be broken and our rational
mind will never win the battle.
Chapter 10 ’Til Debt Do Us Part 199
Money problems are the primary rea-
son for arguments in a relationship.
Learn how to overcome disagree-
ments, work as a team, and establish
complimentary goals.
Please Send Money FM 1/30/08 11:58 AM Page vii
Chapter 11 “I’m Too Young to Start Saving,”
and Other Excuses 225
The younger one starts saving, the better.
Overcome excuses to begin saving and dis-
cover the magic of compound interest in
making money multiply.
Chapter 12 Easy Come, Easy Go 247
Wealth can be achieved overnight
through an inheritance, winning on a
game show, or having stock options in
a successful start-up company. Learn
how to hang on to this money through
wise financial decisions.
Chapter 13 Wall Street Panic 265
The stock market can be a dangerous
place if one doesn’t know what he’s
doing. Learn the ABCs of Wall Street
and the best strategies for making
your portfolio grow.
Chapter 14 Bankruptcy—Is There an 297
Easy Way Out?
The desire to escape from the stress of money
troubles can lead to choosing the easiest way
out. But does bankruptcy really put your
problems behind you? What are the other
alternatives?
Appendix 315
Index 319
About the Author 335
Please Send Money FM 1/29/08 4:32 PM Page viii
Please Send Money FM 1/29/08 4:32 PM Page ix
Preface
I
learned about money the hard way. I was happily married,
enjoying life to its fullest. We had lots of credit card debt
and virtually no savings whatsoever. It didn’t concern us
since we were young. We had our whole lives ahead of us…or
so we thought.
When my husband was diagnosed with a terminal illness,
it was the beginning of the most trying time of my life. Not
only was I distraught beyond belief over losing my husband,
but I was also stressed over losing our house and cars. I kept
picturing myself without a husband, a place to live, or trans-
portation. My income and his disability payments were not
enough to pay all our bills. Since we didn’t have any savings in
reserve, I was forced to get a second job at the worst possible
time.
Somehow, through the grace of God, I made it through
that time without having a nervous breakdown. I now believe
that denial was a good thing for me at the time. Years later, I
was eventually ready to confront the tragedy emotionally. I
think back to that time and I regret that I couldn’t spend more
time with my husband before he died. If we had only been
more financially savvy, I am certain I wouldn’t have had to
work two jobs. If we had saved some of our money and hadn’t
had so much debt, I wouldn’t have had the added stress about
our money troubles. Losing a loved one is enough stress for any
one person to handle without also having to worry about how
you will pay the bills.
I’ve always heard that everything happens for a reason. I
couldn’t fathom what reason could have been behind my hus-
band’s death at the age of thirty. I always thought it was a
waste, a loss without reason. But if I am to make something