The Holidays are Right Around the Corner

With the holiday’s right around the corner, it is a good idea to get a jump-start on your holiday budget. Powercat Financial Counseling is here to assist if you are a first time budgeter, or if you need assistance with your current one. You can make an appointment any time by following this link: Also be sure to keep up with our events and tips by following us on twitter @KStatePFC.

To kick off the holiday season PFC hosted an event recently – Thrifty Gifting, to find out information regarding the shopping guide, holiday budget worksheet and the slide presentation follow

The holidays seem to creep up and before we know it we are trying to buy gifts all within one week (we have all been there); which is not a good idea if you are on a tight budget. With no plan, or budget, gift giving can quickly get out of control and cause a lot of stress. Some people slip up on their budget during the holiday seasons because they believe they deserve a free pass during the holidays. Don’t fall into this pattern and create bad habits. To stay within the holiday bliss we would like to share some tips for the holiday season.

First things, first, create a budget

First you will need to sit down and make a list of all the people you may want to buy a gift for. How much you will spend on each person. You can either budget out per person, or take a percentage of your income for your total gift-giving budget. The difficult part will be sticking to it! Remember if you stick to the budget you will be less stressed and not feel guilty for over spending, equaling a joyful Holiday time!

Crafty and meaningful gifts

Giving gifts does not have to be all about how much money you spend on them. You can bring joy to others by being crafty with your gifts, bake, and draw or make a craft for a gift. Sometimes the best gifts are the ones that have a lot of meaning behind them. Suggestions might be framing a wonderful picture for the person that brings back memories of a day you shared.

Shop the sales

Shop the sales! This may not necessarily mean black Friday, shop online (try to find companies that offer free shipping and free returns). There are a lot of options for shopping online now, it may take more time than going to a store, but may save a lot more money in the long run.

Remember what the holidays are about

The holidays do not have to be all about gifts, the holidays are a time for building memories with your loved ones. If gift giving is not an option have a gathering, such as a potluck. With a potluck everyone can make a dish relieving pressure on one person, but allowing everyone to gather together.

Camila Haselwood
Peer Counselor II
Powercat Financial Counseling

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Understanding Interest Rates

As college students leaving home for the first time and becoming more financially independent from our parents, it is important that we familiarize ourselves with basic concepts when learning to deal with money.  One of the most important concepts to understand is interest rates, and how they can affect our financial lives in good and bad ways.  An interest rate is a percentage at which interest is paid by borrowers for the use of money that they borrow from lenders; in other words the cost to borrow money.  Interest rates are commonly seen in credit cards, student loans, and mortgages.  However, interest rates can also benefit you as a saver when banking institutions pay you for the use of your money, especially when you start saving at a young age.

A Simple Interest Rate is a percentage of an amount, called the Principal, which can be on an annual basis.  Here’s a quick example of how simple interest works.  If you were to put $1,000 into a bank account, and were given a simple interest rate of 5%, the amount of interest you would earn at the end of the year is:

Principal amount * Simple Interest Rate = Amount earned

1000* .05 = $50

You would earn a nice return of $50 dollars for allowing the bank to borrow your money for that year.  As we can see, simple interest is very easy to calculate which is why it is called a simple interest rate.  You would continue to earn $50 dollars each year if you decided to keep the $1,000 in the account.  Over 30 years you would earn $1,500, and over 50 years you would earn $2,500.

The same would apply if you were borrowing $1,000 and paying a simple interest rate annually.  It would cost you $50 per year to borrow that $1,000.

Compound Interest works a little a bit differently. You don’t see a lot of results in the short-term, but in the long term compounding can make a big difference.  Compound interest is calculated on the initial principal amount and the amount of interest built up. Because of this interest build up, compound interest will grow at a faster rate than simple interest. In other words, you are earning interest on both the principal and the interest earned, rather than just the principal as in simple interest.

For example, if you put $1,000 into an account when you are 20 years old and the rate that is paid is 5% per year compounding and you just leave it alone, never adding or taking anything out, after 30 years you will have $4,321.94; after 50 years you would have $11,467.40.  As you can see, with compounding you earn more than with simple interest – an increase of $2,821.94 for 30 years and $8,967.40 for 50 years.

Calculating compound interest is a bit more complicated. You can calculate compound interest on a financial calculator, but there are several calculators available on the internet.  Just search “compound interest calculator”.  One of my favorites is

Compounding can be a great tool to save money easily.  You can really see the benefits of compounding if you start saving early as possible, make regular contributions to the account, and leave the money alone to grow over time.  Even though interest rates paid on savings are very low right now, at some point in the future the rates should rise and understanding the concept of compounding can help you become a more disciplined saver.

Unfortunately, compounding can also work against you especially when you are borrowing money.  Most students run into this through the use of credit cards.   An interest rate you may have heard about before in regards to credit cards is the Annual Percentage Rate (APR).  This rate is the annual rate that is charged for borrowing, stated as a percentage that represents the actual yearly cost of not paying off your credit balance on or before the due date.  Students can use credit cards to establish credit history, it is more convenient than writing checks everywhere and you have a record of all purchases.  However, credit cards are among the most expensive types of debt, with some of the highest interest rates and fees.

The APR on credit cards can be hard to track.  There are different rates charged for various transactions or time frames.  For example, most cards try to give you a low, introductory rate, then after a few months, it goes up.  Also, students without a long credit history will likely be charged a higher rate.  Cash transactions usually are charged a higher APR than regular purchases.  If you miss a payment, you could be charged a penalty APR.

Most credit card companies use a Daily Periodic Rate (DPR) and Average Daily Balance to calculate interest charges.  The DPR is calculated by taking the APR and dividing it by 365 (number of days in the year).  The Average Daily Balance is figured by adding up each month’s daily balance and dividing it by the number of days in the month.  The amount of interest you will pay is calculated using this formula:

Card Balance X DPR X days in statement billing cycle

Because of all the variables involved in differing rates and fees, it is very important to check your credit card’s particular rates and fees schedule on the statement to see how they are calculating transactions and what other fees they charge.  The best advice is to pay off your credit card balance every month before or by the due date!

Understanding interest rates and how you can make them work for you is a great first step in building a strong financial future.   If you have any questions on how interest rates work or any other financial questions, schedule an appointment with Powercat Financial Counseling by going to our website!

Brett Zapletal
Peer Counselor I
Powercat Financial Counseling

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Save Hundreds While Buying Textbooks

As the Spring semester is quickly approaching, students will begin to start thinking about the supplies needed for their classes. According to the College Board, the average student will spend more than $1,200 on textbooks and supplies, per year. This number is outrageous for students who are already paying a large amount on other school expenses. The bad thing is, the costs of new textbooks and supplies aren’t going to be going down in the near future. So what can we do to keep some of the money spent in our pockets? I encourage you to consider the following to improve your awareness of the other options that are out there.

  1. Buy Used

You will want to begin looking for used books as soon as possible, because they usually sell fast. Start by going to your local bookstores, to see if there are any used options available. If not, first check online before you immediately buy a brand new book. One great thing about new books is the fact that they’ll most always be available.

  1. Buy Only What You Need

One thing that I have begun to realize, is that not all required books are really required. One way to find this out is to ask around, maybe a friend has taken the class before and says it’s not worth the money. Another option you have is to give it a few class periods to see if the instructor will be making the textbook a priority.

  1. Buy and Sell

If you are forced into buying a textbook at full-price, always remember to put it back on the market after you are finished using it. You might not get all of the money you spent, but maybe it’s enough to cover a book or two the following semester.

  1. Consider Renting

Another great buying option that you could take advantage of is renting instead of buying. First, check your local bookstores to see if they offer this. If they don’t, search online because there are a lot of places that let you rent a book for a semester instead of buying it. This could definitely be a very cheap option for you.

School is expensive. Everyone should try their hardest to save as much money as possible. Taking into consideration these buying options, are just a few of the ways you can cut back on your school expenses. This time, when the new semester rolls around, I hope you have the knowledge think twice about buying a brand new textbook.

Be sure to visit Powercat Financial Counseling for a free and confidential peer-to-peer consultation to make sure your finances are on track for the upcoming semester.  Visit our website at to schedule an appointment.

Nolan Keim
Peer Counselor I
Powercat Financial Counseling


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