April 15, 2002 – Heads bent in concentration, the 40 students at St. John's Coral Bay School calculated how much it would cost them to live and how much they would have left over to pay back a loan if the need arose.
"Pay the loan first before you get your hair done or go shopping," advised Thelma Lewis, JPMorgan Chase Bank senior customer service representative.
Lewis and Britta Kindervater from the bank's mortgage department on St. Thomas were at the school on Monday to give the students a lesson in their financial ABCs. It was part of the national Teach Children to Save Day observances taking place across the nation this week. Similar teams also will be visiting Charlotte Amalie High School on St. Thomas and Central High School on St. Croix.
The Coral Bay students got the message.
"I learned how to manage money," John Depree said after the Chase officials had finished their presentation.
Jessica LaChance said she now plans to invest her disposable income to make it grow.
As the students went through the costs-of-living exercise, various issues arose. For starters, Lewis and Kindervater pointed out the perils of a bad credit rating.
If people don't pay back their student loans, Lewis said, then 10 years down the road when they want a mortgage, they won't get one, because their credit report will show their delinquency. "They complain and complain, but it's nobody's fault but theirs," Lewis said.
Other types of unpaid bills stay on a person's record for eight years, which also makes it hard to get a loan, she said.
Some of the students asked about television ads they have seen about resolving bad credit problems and wanted to know how they function. Kindervater explained that such companies work out plans for consolidating payments and setting priorities for who gets paid in what order.
On the subject of home mortgages, Lewis said that people who under-report their earnings on their income-tax returns may well find themselves declared ineligible for home loans as a result. As a hypothetical example, she said, a person who claimed yearly income of $6,000 on his tax return but in fact made $40,000 would be turned down for a mortgage because there is no evidence that he would be able to make the mortgage payments.
"In the long run, it catches up with you," Kindervater added.
She said banks will typically grant home mortgages for an amount up to three times a person's or a couple's documented yearly income if they have a good credit rating.
Kindervater and Lewis also advised the students to protect their identities. They said the theft of Social Security numbers is rampant, for example, and that with a stolen Social Security number a thief can run up big bills for the unsuspecting owner of the number.
Kindervater pointed out that bulk-mailed catalogues left at a post office for others to read often carry account numbers which can provide easy billing access for dishonest people.
She also advised the students not to keep their savings under the mattress — because inflation will diminish its value. To say nothing of the fact that a fire could incinerate it, one student added.
There were lots of jokes and creative answers to questions about what the students would do if unexpected expenses came up — if their car's transmission broke down, for example — the message of the day was serious.
"There are real challenges you're going to face," Lewis said.
The American Bankers Association is observing Thursday as national Teach Children to Save Day by having banking professionals visit schools across the country this week. For more information on the topic geared to young people, parents, teachers and bankers, see the aba.com Consumer Connection web site.
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