Daily Aid 99: Make your own layaway plan to save money

19 March 2009 0 views No Comment

Daily Aid 99: Make your own layaway plan to save money

Ohio Northern University is the fourth higher-education institution to announce that it is seeking to recoup money in an alleged $554-million investment fraud, university officials said today. Ohio Northern’s endowment had $10-million invested with two Wall Street veterans who face criminal charges for allegedly using investors’ money as a “personal piggy bank,” spending at least $160-million on mansions, horses, rare books, and collectible toys.

Commentary

As the tide goes out, we see who’s been swimming naked, or so the expression goes. Every college and university owes it to its students to do some due diligence for its endowment and other invested funds to make sure they’re being managed appropriately. Without due diligence, scandals like this will only make tuition increase more.

From Inside Higher Ed:

The Accelerated Study in Associate Programs (ASAP), a $19.5 million city-funded project, began in 2007 with the goal of graduating at least 50 percent of an initial test cohort of 1,000 community college students in three years. To participate in ASAP, students must be residents of the city, attend college full time and need no remedial coursework. The nearly 84 percent of students in the program who are eligible for state and federal financial aid have the remainder of their tuition waived by the system. In addition, all students receive free textbooks and Metrocards to cover transportation costs.

If system projections hold steady, the program could best its goal and graduate 60 percent of its 1,132-student cohort by September 2010 — the three-year mark. By comparison, the system’s most recent three-year graduation rate for full-time, non-remedial students (who entered in the fall of 2004) was 24.6 percent.

Commentary

Programs like this save everyone money – students graduate with less debt in student loans, colleges spend less on any given student, and the student is out in the workforce sooner. As long as academic standards have not been compromised (the whole point of going to college), this program seems like a winner, and hopefully will be a model others can replicate.

Scholarship Update

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In response to the Scholarship’s successful inaugural year in 2008, Bluewolf will grant a one-time scholarship award of $2,000 each to a New York City public high school senior boy and girl with passion and talent for technology.

Details at our free college scholarship search site.

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Eye on the Economy & News You Can Use

Kate Carruthers pointed out this article about KMart and layaways – the layaway is coming back in style. If you’ve never heard of layaways, it’s because it went out of style probably in the 1980s or so. In the decades following World War II, stores had layaway programs where you paid a portion of the price of an item and when it was fully paid, you went to the store and picked it up. The primary reason layaway went away was the sudden ubiquity of consumer credit cards – easy credit meant everyone could borrow (even if they shouldn’t, like student credit cards) and stores could move inventory quickly.

Of course, the economy’s rather sharp decline meant that consumer credit took a beating. KMart’s idea is a smart one – by reviving layaway, consumers can “buy” an item and not use credit, which is a big deal. You don’t need a good credit score or have a large credit line to use layaway, since it’s entirely on a cash basis – only once you’ve paid for the item in cash do you get to actually but it.

This, by the way, is a great idea for any store to use in the recession, as it benefits the store (cash transactions mean no credit card processing fees) and it benefits the consumer by helping them spend only what they can afford to spend.

You don’t have to wait for a store to offer a layaway program, however. You can do the exact same thing at home with any planned purchase. Do your research, find out what any big ticket item will cost you, and set up a savings account at a bank or credit union. By the way, if you’ve never tried a credit union, this is the perfect opportunity to do so.

Set up a savings account, and then start paying money into the account for your purchase until you’ve hit the planned purchase price. Make sure you do NOT get any kind of debit card or easy means of accessing the account’s money, so that you make it as hard as possible for you to spend it on anything other than your intended purchase. You should literally have to walk to the bank or credit union to get the money.

Do this over and over again for any major purchase, and you’ll find that the value of the purchase means a little more to you and you’ll carry much less debt, especially on your credit cards, helping you improve your long term financial health. (not to mention saving you money on interest)

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