More Money More Problems

Red to Black Assists Tech Students with Financial Woes

By Kirby Carpenter
Photos by Alejandro Garcia

Texas Tech student Nelson Gonzales looks at his finances with the Red to Black staff When you check your bank account statement and see $7.23 in your checking account and $21.50 in your savings, and you get that wave of panic, desperation, concern, worry and fear crashing into your body, that is when being a broke college student sinks in. Immediately your palms start to sweat, you start freaking out about how you are going to pay rent, and suddenly you are frantically pacing around your room.

Imagine a world where money grows on trees and everyone has an unlimited supply of funds. Going broke would never be an issue. Now, snap back to reality where money does not grow on trees, and going broke, for many college students, is a far-too-frequent occurrence.

Of all undergraduate students, 91 percent has at least one credit card, according to a 2009 Sallie Mae study. The same study showed that the average undergraduate was carrying $3,173 in credit card debt. This debt, along with rent, books, groceries, gas, clothes, and social activities, makes many college students constantly struggle with money. Job salaries often are not enough to cover all of these expenses, especially when being a student is a full-time job in itself.

Money management is challenging and causes stress, and no one understands your worry woes better than Amy Cross, the Red to Black Program coordinator.

“Let’s face it, there is nothing more stressful than money for the typical college student,” Cross said.

In an office with financial brochures and handouts, Cross coordinates and organizes the Red to Black Program at Texas Tech University. Cross is among many in the program who know that when you are broke, budgeting and responsible financial planning are not at the forefront of your mind. In fact, finding one more dollar to go out with friends may be all you are concerned with. If that is the case, the time has come to visit with the people on campus that can help you get your money issues in order.

The Red to Black Program provides students with free financial planning, counseling, and seminars. The two branches of the program are client-based and outreach-based. The client-based branch allows students to get free one-on-one consultations for financial needs, whatever they may be, with a trained peer volunteer.

A volunteer with the program, Katie Horton, is a graduate student in personal financial planning who helps to counsel students and community members alike. “Students that come to Red to Black are students that are running out of money,” Horton says.

When students meet with peer advisers, like Horton, they are asked to fill out a monthly spending plan and then the advisers can help them from there.

“Usually they have two options: spend less or make more,” Horton says.

Horton and Cross both believe the best method for budgeting is the envelope method. This method involves setting aside the amount of cash you have available for a given week, putting the money in an envelope and only using that cash. The theory is that once you run out of cash, you are unable to spend anymore. Using this method will prevent you from being broke at the end of the month. Horton says being out of money for one or two days a week is better than being out of money for weeks in a month.

Graduate assistant Katie Horton (left) and Red to Black coordinator Amy Cross give financial advice through Texas Tech's Red to Black program “Interestingly enough, research has shown that when you use plastic vs. cash, you spend about 25 percent more than you would have, had you used cash,” Cross said. “It has been said that our brain actually registers pain when we see cash disappearing, as opposed to just sliding a card and going on our way.”

If watching your cash disappear just is not your thing, other options exist. Another Red to Black volunteer, Mason Hebert, is an undergraduate in personal financial planning who also believes in the importance of budgeting. Hebert believes that because of the high usage of debit and credit cards, students do not regularly use cash. Because of the limited use of cash, Hebert recommends other methods for creating a budget.

“Categorize expenses based off your online statements, and break it down,” Hebert says. “Itemize how much you are spending for things like fast food, groceries, etc.”

He sends his clients an electronic spreadsheet that can be customized to fit their individual lifestyles, which allows them to set up a personal budget. Hebert says considering your actual needs and wants is important, and understanding that in order to keep a healthy account balance, “wants” may have to be sacrificed. But his best advice: “Live like you don’t have any money.”

Living like you do not have money seems pretty easy when that is the case, and Horton advises a similar approach. She says to live like a student and avoid frivolous spending. Living like a student entails living on a tight, strict budget and sticking to the items you really need to live life.

Both Horton and Hebert say budgeting takes more than just thinking and will require patience. Budgeting requires self-discipline to change spending habits. Think of it like a diet. If you eat right and exercise, you will get healthier and be better off in the long run. Well, if you start budgeting and making changes in spending habits, in the future, you will be better off, and most likely, going broke will not be an issue. Keep in mind that the volunteers at Red to Black will not check up on you every month to make sure you are sticking to that budget. If you are worried that you cannot stick to a budget on your own, Horton says, students are welcome to come back as often as they need to see advisers with the Red to Black Program.

Besides seeking help from advisers about budgets and money, students also can obtain advice about student loans, which also pose problems for many college students.

In 2004, a Nellie Mae study showed that the average graduate will have incurred at least $20,000 in student loan debt. According to FinAid, an informational website for students about scholarships, loans, and financial aid, 61.1 percent of students attending public four-year universities, like Texas Tech University, are borrowing student loans.

Many students obtain student loans to help offset the costs of college. Horton says that students should understand that when accepting a student loan, they do not have to take all the money offered to them. Know how much you need, and only take that. She also says that when applying for student loans, try to think about what your potential future income may be and whether you will be able to pay that money back. Many loans allow students a six-month grace period before individuals have to start payments. Horton says this gives you ample time to find a job and get organized, but you should not be afraid to start thinking about those payments long before those six months have passed. “Remember that it’s not really your money, and you have to pay it back,” Horton says.

When paying back the loans, do not be afraid to speak with one of the many volunteers about your options. In fact, Hebert, who has visited with 15 to 20 undergraduates, says that many of the students are concerned about how to pay back student loans. Counselors, like Hebert and Horton, can help you itemize potential expenses post-graduation and help you decide the method that will work best for you to pay back those loans. Horton suggests that when paying back student loans, individuals should make larger amounts of payments to help cut the interest costs.

If possible, students who find that they have extra money at the end of the month while in school can set that money aside as a student loan payment. While not an option for many students, being able to properly budget will help when due dates come for paying off loans. Volunteers can assist with understanding how to pay off the loans and create budgets.

Red to Black coordinator Amy Cross (left) and graduate assistant Katie Horton The Red to Black Program’s second branch, the outreach-based branch, can reach more than one person at a time. So if you are not quite comfortable with the idea of confessing your money troubles to another person, try attending one of the many seminars presented by volunteers with the Red to Black Program. In Fall 2010, Red to Black advisers delivered 92 presentations to Texas Tech students and community members. Cross says that the focus of the sessions typically deals with budgets, credit, identity theft, and student loans.

Next time you find yourself broke, going broke, stressing over student loans, or in a desperate need to change spending habits, go talk to people who understand what you are going through and who can help, or plan to attend an informational session. Visit the Red to Black Program website for resources and to download worksheets for monthly spending plans. For more advice, to set up an appointment with a Red to Black peer counselor, or to find the date of the next outreach presentation, visit, or call (806) 742-9781.

“I can’t say enough good about Red to Black,” Cross said. “Whether you are experiencing financial struggles or you just want general education on how to be more financially responsible, Red to Black can help.”

Next time you find yourself with $10 to your name and crying over your limited finances, cheer up. Red to Black advisers are here to help.