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Scare tactics educate teens on credit crunch

Local judges, attorneys and CPAs participate in grassroots programs that address financial literacy

TUALATIN - During the first lesson on financial literacy, Jim McCaffrey promises his students that he will do everything he can 'to scare the heck out of them.'

National statistics are showing that the amount of money people are saving is at the lowest point since the Great Depression. Eighteen-year-olds are the No. 1 target market for credit cards - most will get seven to eight credit card offers within the first six months of turning 18.

And the horror stories are countless. A college student already loaded down with college tuition loans used a credit card to fund a European summer trip. By the age of 22, the student filed for bankruptcy.

The realization of being faced with bad credit at a young age is almost commonplace now. It's also scary. And two organized grassroots efforts are pushing the belief that the 'credit crunch' could be avoided with just a little education.

Financial planning and financial literacy have been a pillar in the Tigard-Tualatin School District's Senior Seminar series from day one, said McCaffrey, a teacher at Tualatin High School. The class includes an eight-month checkbook simulation, a presentation by a financial planner and budgeting scenarios.

But when it comes to the hard truth about how credit cards can 'screw up' your life, McCaffrey brings in the big guns - federal bankruptcy attorneys and judges. The Credit Abuse Resistance Education program is a grassroots effort founded by the U.S. Bankruptcy Court, the U.S. District Court Western District of New York and the Bankruptcy Committee of the Monroe County Bar Association. CARE, which now has a presence in all 50 states, relies on judges and attorneys to volunteer time giving presentations on the importance of managing one's credit.

The advice and the stories don't always work. But they do give students a chance to understand how credit if not handled correctly can ruin lives, McCaffrey said.

And the danger for financial futures isn't just affected by credit card use. A lack of emergency savings in the United States is alarming, said Carmel Wright with the Oregon Society of Certified Public Accountants.

Alicia Young with Oregon Society of CPAs will give a presentation entitled 'Credit Cards: What You Don't Know CAN Hurt You' on Tuesday, March 25, from 7 to 8 p.m. at the Tualatin Heritage Center. Much of the presentation will cover the basics of destructive credit card debt, but a main focus will also be put on saving money.

'With destructive debt, if you keep charging up, you lose your ability to save money,' said Wright. 'You're paying interest rates and fees. It really does affect the rest of your life if you're not careful.'

The Oregon Society of CPA's financial literacy program which targets mainly freshman in college was established in 2004. Since then, the society's members have volunteered time giving presentations to groups throughout the state.

The society, which is also part of the American Institute of Certified Public Accounts, is also pushing another campaign called Feed the Pig which targets people ages 25 to 34. The campaign, which includes a Web site at www.feedthepig.org, pushes for more savings plans.

The hardest part is changing the mindset of Americans when it comes to savings, Wright said. Asking teens and adults to skip the lattes and purchases of bottled water is a simple request.

'They realize that their really not missing much if they learn that tap water is just as good,' Wright said.