Frequently Asked Questions
Spending Plan and Budgeting Questions
Student Loan Questions
Red to Black is a service that offers free financial counseling, seminars and presentations on personal finance topics such as money management, choosing a credit card, paying off debt, saving money, and comparing employer provided benefits when choosing a new job. To schedule a presentation on the Texas Tech campus or if you are a Tech student who would like to make an appointment for confidential financial counseling or planning, please call (806)742-9781.
Establishing a spending plan and limiting your credit card use are great beginning steps in getting your finances in order. Red to Black provides peer financial coaching to work with Texas Tech students at no charge. Download our Monthly Spending Plan to get started!
Taxes can be confusing, especially when the tax laws change. You might want to consider using a computer software program to help you do your taxes. There are several programs available that are inexpensive and will guide you through the tax forms and provide helpful hints and tips.
You should contact all of the companies for the cards you had in your purse or wallet when you first notice that it is missing and have them issue you new cards.
If you need more money than you make during the month to pay your bills, if you have unopened or late bills sitting around your house, and/or if you've been getting calls from collectors, or if you feel depressed about your financial situation and need someone impartial to talk to, you would benefit from financial counseling. Red to Black™ offers free financial counseling for Texas Tech Students. Contact us at (806)742-9781 to set up an appointment.
I feel alone in my struggle to obtain financial freedom and get out from under this cloud of debt. Are there other people in the same position?
Yes! In fact, rising debt among adults and college students is of huge concern across the nation. Many times we don't learn the necessary skills to handle our finances. Red to Black is about educating Texas Tech students so that they can increase their cash management skills and meet financial goals. We provide workshops and seminars year-round on topics such as understanding credit, paying off debt, creating a budget and evaluating employee benefits. To schedule a workshop or presentation, call (806)742-9781.
Personal Financial Planning offers a class called Personal and Family Finance (PFP 3301) in the fall, spring, and summer semesters. Students must be in upper-division standing. This course is an excellent introduction to personal financial planning and includes goal setting, cash management, credit, insurance, taxes, housing, investment alternatives, and retirement plans.
A sign that you are probably in trouble with your credit is if you do not have enough income to pay your basic monthly living expenses and debt payments. The 20% rule is another frequently used guideline which says that your monthly debt payments should not exceed 20% of your monthly income. Call Red to Black for free financial counseling at (806)742-9781.
Establishing a good history of on-time payments is very helpful when trying to improve a poor credit rating. You can also improve your credit score by following these tips.
- Keep balances low on credit cards and other revolving credit.
- Pay off debt rather than moving it around.
- Don't close unused credit cards as a strategy to raise your score.
- Don't open a number of new credit cards that you do not need just to increase your available credit.
- Have credits cards, but managed them responsibly.
There are three national credit reporting agencies: Equifax, Experian, and Trans Union. Each of these has their own website for consumers to use (see below).
One free copy of your credit report is available once every 12 months from all three reporting agencies. Visit www.annualcreditreport.com to request your free copy.
Websites for the three credit reporting agencies:
Trans Union: www.transunion.com
Your credit score is a number that rates how responsible you have been with credit. The number is based on your credit report and can be different with each of the three credit reporting agencies. The score is used by creditors like banks and credit card companies to decide whether to lend you money or let you have a credit card. Your score can also influence what interest rate your credit card companies charge you. To get your credit score, order it from www.myFICO.com
To obtain credit cards with the best interest rates, comparison-shop various providers' rates. For more information on choosing a credit card, download the Federal Trade Commission's article Choosing and Using Credit Cards.
When choosing a credit card, use caution to avoid companies that provide extremely low introductory rates that increases to higher rates. Determine how long the rate being promoted will apply. Also, compare annual charges among companies. The better your credit, the easier it is to obtain a credit card with no annual charge.
To maximize the use of credit cards, limit their use and always pay the balance off at the end of each month. Check out the article Choosing and Using Credit Cards by the Federal Trade Commission for more information.
There are several options in helping resist the temptation to use credit cards. The most severe but also the most successful method is to cut up and cancel your credit cards. Since many people find that extremely hard to do, a less severe option is to avoid carrying your credit cards with you. Then, if you have an impulse, you must return home to get your card before you can make the purchase. Usually by that time, the urge has passed. (If you still need more time, try the "FREEZE YOUR DEBT" method. Place your credit cards in a bowl of water and place them in the freezer. Then, you have to wait the extra time for thawing.)
Developing a spending plan will provide you with a better understanding of your income and how much you spend on various items each month. Creating a spending plan can help you have more cash for things you want by showing you where your extra money goes so you can choose what to spend it on. Try writing down every purchase you make for one month, you might be surprised. We have posted a sample Monthly Spending Plan that can be downloaded to get you started.
The best way to begin a spending plan is to track your income and expenses for one month. Then, evaluate your monthly income versus your monthly expenses. Determine if there are areas that you may be spending more than you realized and set an amount your are comfortable with. Red to Black offers free counseling to help Texas Tech students with topics like creating a spending plan. You can also download our sample Monthly Spending Plan.
Any activity that is providing you with income and every activity that you are spending money on should be included in your budget, even if you spend less than $1 per month. The best way to determine what you should include is to write down every purchase for one month and then create categories from your list. We have created a sample Monthly Spending Plan for your use.
I've always thought that creating a spending plan would restrict me and I wouldn't be able to do the things I want to do. Is this true?
No way! An established spending plan can actually help you achieve your goals. It allows you to have the money to do the things you want to do. Creating a plan can help you have more cash for things you want by showing you where your extra money goes so you can choose what to spend it on. Monthly Spending Plan
One reason people find it difficult to stick to a budget is because they compare it to dieting (being deprived). If you can focus on the results of budgeting (attaining goals: vacation, new car, home, etc.), it can help you say no to short-term wants so that those other goals can be obtained. Focus on the big things you can buy or do in the future if you stick to your budget, and not on the small things you're tempted to buy or do now.
It's so hard for me to save money for the future. What are some small ways that I can start to save?
Many people find it helpful to save by setting up automatic payroll deductions (or automatic transfers from checking) that are sent to some type of planned savings account. Usually, the harder the account is to get immediate cash, the better it helps a person resist temptation. You can also download 66 Ways to Save Money, which is distributed by the Federal Trade Commission.
I just can't seem to get ahead. I owe so much and I can't make my payments. Is there any hope for my situation?
Whatever you do, do not ignore the problem. Although the problem would resolve itself if left alone, doing so could ensure your credit is ruined and decrease opportunities such as buying a home, financing a business, etc. It will become much more difficult, if not impossible to obtain financing. When a person starts thinking about giving up, it really is a concern. Think about getting assistance. If you are a Texas Tech student, you can contact Red to Black at (806)742-9781 and use our free services. If you are a faculty or staff member at TTU, let us know you are interested in our services.
First, consider limiting your student loans as much as possible. Exhaust all scholarship and grant possibilities first! Also, use all subsidized student loans before getting an unsubsidized loan. The federal government pays the interest on a subsidized loan while you are in school. If you get an unsubsidized loan, you pay the interest either while you are in school or it accumulates and you pay it as part of your loan payments after school. Remember, student loans do have to be paid back upon graduation and a large monthly student loan payment can be a huge burden. When trying to obtain a student loan, the Texas Tech Financial Aid Office is an excellent resource for information regarding student financial aid. Use all available resources, library, Internet and university to learn about scholarships, grants and student loans.
The difference between a student loan and a grant is that the students must begin repaying a student loan 6 months after graduation and GRANTS DO NOT HAVE TO BE PAID BACK, as long as you complete your educational requirements.
Check into Scholarships and Grants. You do not have to pay these types of educational assistance back. Check with the Scholarship office at Texas Tech.