THE CASE OF . . . CREATIVE FINANCING

Lynn Abrams grew up in a house where a little money had to go a long way. As a child, the answer to most of her requests was We cant afford that. When she started college, she was deluged with credit card offers. Tired of scrimping, she accepted every offer. With five new cards and $10,000 worth of credit, Lynn felt like shed won the lottery. Lynn had applied for financial aid and received almost enough to cover her tuition for the semester. She put the rest of her tuition and all of her fees on one credit card. She rented an apartment, paying the security deposit and rent for the first month with a cash advance from another card. A cash advance on a third card got her the (used) wheels she needed to get to campus. No more buses for her! She assigned the fourth card to cover food and entertainment which, as the semester progressed, included some very pricey meals out and an even more expensive weekend away. Card number five bought her the kind of wardrobe shed always dreamed of. Four weeks into the semester, Lynn received her first credit card bills. Shock did not begin to describe her reaction as she stared at the five statements. In one month, shed not only used her entire $10,000 creditshed overspent her limit by several hundred dollars on three of the cards. Their angry notices informed her she must pay the over-limit amounts at once. But Lynn had no money, and her rent was due.

1.	What should Lynn do now to start addressing her problem? What steps should she take immediately?
2.	Can you suggest some approaches Lynn can take to deal with the problem of the rent she needs to pay for next month?
3.	How do you think Lynn exceeded her credit card limits by so much? What advice would you give her to avoid a similar mistake in the future?
4.	From the evidence in this story, do you think Lynn understands the difference between want and need? How would you suggest she evaluate her spending priorities to avoid repeating this financial disaster?
5.	What steps might Lynn take to decrease her expenses? What might she do to increase her income?