CWR Building Wealth – Watch The Traps!
By Gil Michel, MBA, CPA
I can remember it just like it was yesterday. I was a young, promising freshman, just getting acclimated to my new campus at Hofstra University. I had just attended all of my classes the first time and was now looking to purchase my books from the campus bookstore. As I exited the store, there was a woman standing at the exit to introduce me to the wonderful world of credit. She was a representative from Citibank, and she told me that I would be pre-approved for my very own credit card. Now, you have to understand that the only time I saw a credit card in my family was when my father was making a purchase at a department store. So, the thought of my having a credit card of my very own felt powerful.
At first I used my credit card for repairs on my car. Being a college student I wasn’t exactly driving the newest vehicle, so I used my credit card quite often. The good thing is I would usually pay off the balance within three months. The very thought of paying someone that much interest didn’t make me feel-good. But then family members found out that I had a credit card and would ask for favors here and there. That, my friends, was where the problems started. When I reached the limit on that card, I felt like I needed to get another credit card. Because after all, if they did it once I’m sure I could get another one.
The second trap was impulse shopping. While going to college and seeing all of my peers rocking the party in the dopest new gear (forgive my 80’s hip hop vernacular), it made this poor kid from Brooklyn feel as if I needed to keep up. Besides, I deserved it, right? So I made sure this student look his best at all times. Conversely, I developed a plan to make sure I paid off that credit card within six months to a year. However, the problem with planning for the future is that it rarely works out just the way you planned. You may eventually get to your destination but it may take a little longer to get there you originally planned. And that’s what happened with my plan to pay off my debt. New “emergencies” came up, more car repairs were needed, and I suddenly gained new “necessities” when my credit card was in my wallet.
The reason I share a story with you is because I do not want to see college students entangle themselves with consumer debt while they are still students. The world of credit is more complex than when I was in college. Potential employers will be looking at credit scores and credit reports when determining whether or not they will hire you for the job that you just attended school for. And it would be a travesty to find out that your future could be hindered because of a few bad decisions in college.
So here’s my advice to you. Obtain one credit card to use during your time in college for emergencies. As a matter of fact don’t even keep it in your wallet or purse. Keep it in your room so that you will avoid the temptation of using it on a daily basis. Adopt a strategy that if you do not have the cash for it then you cannot buy it. College should be a time of building and going forward. Don’t fall into the trap, but rather use your college years to empower yourself financially and set a course for financial freedom in your years ahead.
About Gil Michel: Gil Michel is a CPA and financial planning expert, and is the CEO and President of The Caleb Group, Inc., a small business solutions firm. Gil’s experience has evolved from working in top ten CPA firms to working one-on-one with small business owners in developing realistic budgets to create wealth for their families. Gil’s Caleb Group is the parent company of BlackMoneyMatters.com, an interactive website that seeks to educate, inform, and enlighten the Black community in areas of financial health. Currently Gil is featured on Sheridan Gospel Network’s The Light, which is syndicated in 56 radio stations/48 cities across the United States. In addition, Gil is also featured on The Good Life Radio broadcast financial segment every week in a feature called “Stacking Paper.” Gil’s passion to see urban cities turned around in the next 10 years inspired him to form TACTT, Inc. (www.tactt.org) in 2003 (Teens Achieving Community Through Training). TACTT is a financial literacy program that empowers teens in the five areas of entrepreneurship, real estate, banking/personal finance, investing, and positive life skills.