Maudie Ashley

Avoiding the credit cards is a good plan, said Maudie Ashley, a credit counselor for Consumer Credit Counseling Services of Brevard.She sees too many clients fall back into bad habits.

"They come back in two years, and they're maxed out again," she said.

When people tell her they're using their home equity to wipe out credit card debt, Ashley advises them to cancel all but a couple of cards, which should be left open to maintain good credit standing.

But if they know they don't have the discipline to avoid excessive spending, they should cancel all of them and use cash, she said.

"What people are doing with their credit cards, bottom line, is they are increasing their income," she said.

Getting out of credit card debt is a good goal, but people should understand the risks.

"You've now taken this unsecured loan, and you've secured it with your house," Ashley said.

That means your investment in the home now is at risk if you default on the loan.

To avoid running into trouble again, she advises coming up with a budget -- or spending plan, if that sounds less depressing -- before refinancing the mortgage.

Maudie Ashley, Credit Counselor, CCCS of Brevard was quoted as saying "It's never too early to teach children the financial facts of life" and NFCC was mentioned in the October 15th edition of Woodmen.The story focused on tips for educating teenagers about credit. (Circulation 500,000)

Maudie Ashley, a credit counselor with the Consumer Credit Counseling Service of Brevard County in Melbourne, Fla., says it's never too early to teach children the financial facts of life.Parents should teach children about finances while they are still living at home and have some control over how their children spend money."We (the CCCS) think that around the age of 12 is a good time to provide your child with money, whether it's through an allowance for chores or money they earn," she says.

Ways to help children learn about finances include helping them set up a budget and having them pay for some of their own needs or wants.If they are old enough to drive, require them to pay for some aspect of car care, says Ashley.Even if your children do not work, "it still would be wise and appropriate to give them an allowance and insist that they live within that amount," says Ashley.Once they run out of money, they have to wait until the next "pay day."This reinforces the concept that money is finite and that budgeting is important.

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Parents also need to look at the example they set with their own credit cards, says Ashley.Are bills paid on time?Despite appearances to the contrary, children watch their parents closely, and how you are handling your credit cards and bills does make an impression on children."Many times, parents may not even realize that what they're doing is completely irresponsible in terms of having a nice credit history," says Ashley.And if parents are modeling bad behavior, it may rub off on your children.But, it's never too late to mend your ways.

You and your children can learn together, says Ashley.You will be doing your child a huge favor by teaching them how to be financially responsible.By helping them learn from your mistakes, they may avoid a bad credit rating that can haunt them for years to come.

Why Is Credit Important?

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"When you go to make that car loan, you will pay premium rates if you have a bad payment history," says Ashley.This also applies to other types of loans."If you don't pay on time, you're going to pay a higher interest rate than someone who always pays on time and who always pays in full.You pay a really dear price for having bad credit."

"When you have something derogatory put on your credit report," says Ashley, "it stays on for seven years."And seven years is a long time.Many young adults finish school, get a job and want to buy a home in a seven-year period.Getting a mortgage will be more difficult and it will have a higher interest rate than those given to people with good credit ratings."Not paying a bill or becoming delinquent in paying a bill all contribute to a bad credit rating," says Ashley.

It might also be more difficult for young people to find a landlord who will rent to them if they have poor credit or no credit history.
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For young adults (and nervous parents) who want a less risky way to test their abilities to handle a credit card, there is such a thing as a "secured" credit card, says Ashley.Secured credit cards are available to individuals 18 years and older through most financial institutions, such as banks and credit unions.They require the cardholder to secure the credit card with money up front.For example, says Ashley, if the credit card has a $200 spending limit, the teen may have to deposit $240 into an account at the bank as collateral.Then, the card works exactly like a regular credit card.The teen receives a bill and is expected to make monthly payments.The $240 that the individual deposited stays in the account as collateral in case the individual defaults on payments."It's learning at a very safe level," says Ashley.

Another option for parents who want their children to have a credit card and start building a positive credit history, but who still want to be informed about the card's use, is a new credit card offered by College Parents of America and MasterCard.