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Education: With regard to college, drinking and drug use are major factors in student dropout rates . A study shows that students with high levels of marijuana use (17+ days per month) were twice as likely as those with minimal or no use to drop out. Even students who used less often than that had higher drop out rates. The cost of quitting college is quite high because, education is a leading factor determining how much income people earn . College graduates out-earn high school graduates by far. Over a lifetime, a college graduate will make almost a million dollars more and build wealth faster than a high school graduate. Also, a college drop out who leaves without earning the degree they have already partially paid for, remains liable for repayment of their student loans . Reflect on Learning: Imagine you’re an employer with a significant amount of money invested in your small business. How likely are you to hire someone who’s resume shows that they go from job-to-job with little or no career advancement and no solid job references? What would that tell you about the applicant? College is expensive. Can you understand the economic benefits of staying away from alcohol and drug abuse in college? Would you acknowledge when drinking and drug use impact your academic performance, or be in denial? II. 7 Steps to Financial Ruin It’s no surprise that there is a strong correlation between addiction and poverty . Whether it’s drugs, alcohol or both, once a user slips into addiction, they can quickly go into debt. Users of more addictive drugs, like methamphetamine or heroin, go into debt faster. Experts tell us that the spiral into financial loss or ruin often follows a pattern. Not every addict follows these steps, but there is a definite pattern to the downward spiral of financial loss from addiction. Step 1: Account Drain. Supporting a drug or alcohol habit often begins with the draining of bank accounts. What starts off as weekend partying, grows into more frequent nights out and trips to the ATM to pay for drugs or alcohol, for their personal use and for people they’re hanging with. Cash accounts are soon depleted. Serious addicts have been known to empty business accounts, savings, checking, and even retirement accounts. Step 2: Maxing out Credit Cards. The spiral of financial loss continues. After draining accounts, drug and alcohol addicts often begin to spend more of their paycheck on their habit. As a result, they begin relying more and more on credit cards to pay for things like utility bills and groceries, which they would normally pay with their debit card. Eventually credit cards are maxed out. Step 3: Pay day loans. Addicts make careless financial decisions. If they have managed to remain employed, their paychecks often don’t keep pace with their drug buys or partying. For example, if they’re partying and buying drugs on a Thursday, but don’t get a paycheck until the following Wednesday, they may turn to pay day loans to get money faster. As you’ll recall from Chapter 7, The Credit Conundrum, payday loans are short-term, very high interest rate loans . They are also known as cash advance loans. These loans are very hard to pay back. Step 4: Late bills and fees. With much of their income diverted to pay for their habit, and with credit card debt piling up, the downward spiral into financial loss and ruin continues. Many addicts are unable to pay off their monthly credit card charges which increases balances and runs up costly late fees and charges . PRODUCT PREVIEW
THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY 333
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