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PAIBOC Analysis

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PAIBOC Analysis
Note: Use complete sentences and proper punctuation / grammar. Do not exceed one page.

P What is your purpose or your purposes? What do you want your audience to know, think, or do? The purpose of the message is to both educate students on the responsible use of credit and credit cards and to give them tools and examples of how to use debt responsibly.

A Who is your target audience? Describe the typical person in the group. What personal characteristics of your target audience are relevant to this message? The target audience would be Seniors in High School-Graduate Students in College, primarily ages 18-24. Subtarget would be those who have little or no direct experience managing finances or even knowledge of such things as APR, late-fees, over-limit fees, etc. Gender and ethnicity are irrelevant except as defined within economic needs.

I What information must you include in the message? Information that must be included consists of: relevancy of debt/credit; consequences of irresponsible use of credit; ways to manage credit/debt; and reasonable expectations of the use of credit.

B How can you build support for your position? What reasons or benefits will your target audience find convincing? Support is built through real-world examples, showing how much credit actually "costs," consequences to job, insurance, or ability to be employed in certain industries; ability to remain in school rather than drop out to pay for debt, etc.

O What objections can you expect? How can you address the objections? Most students live in the here and now, thinking little of future consequences; objections will be numerous - but I need to get that x, y or z; it was on sale; it's a great deal; I needed to pay for dinner, etc. --objections may be addressed by helping students categorize expenses.

C What aspects of the context or situation might affect audience response? Invitation to seminar or professional setting may have greater effect than, say, extemporaneous speaking at a café or bar. Standing outside a Mall and trying to persuade students not to spend will likely have little effect.

Here's the scenario: it's your first week away from home and on campus. You are registering for class, caught up in the excitement of new friends, experiences, new places to visit, and dozens of vendors handing out T-shirts, Frisbees, even Ipods - so what's the catch? Each of these vendors is "offering you a free credit card," just sign up today - no, you don't need a job, we trust college students.
If you signed on the dotted line, you'll not be alone - over 75% of college students have at least two credit cards, and 60% have more than two. And, did you by chance take the time to read the fine print? Did you know that the first bill you receive, even if you don't spend a dime, will include a $50 activation fee? That your interest rate is almost %30; and that if you are even one day late on your payment you're charged a $50 late fee and your interest rate rises? Well, that's the reality of the situation, and yes, the government is trying to regulate the industry and put guidelines on credit - but ultimately, it is your responsibility to manage credit.
Credit is a relatively new concept in consumer economics; your grandparents had to save and purchase most things in cash - exceptions were larger purchases like a home or car. Credit also has a cost to it - which will vary depending on the situation and creditor. Credit is almost essential though, you cannot shop online without a credit or debit card; you may need to purchase textbooks or an apartment deposit before your Student Aid money arrives, or you may have a medical emergency or automobile repair that is essential for your life. However, consider the following real-world example.
Seth, like you, received numerous credit card offers - which he accepted. Pretty soon, he was feeling quite wonderful, knowing he had $5,000 in money that he "could" spend. Now Seth wasn't a brain, but he did well in school, and made a lot of new friends; who invited him out regularly for pizza and beer. Of course, not wanting to seem "cheap," Seth almost always bought a few pitchers; and then there was that new DVD; oh, and those fantastic tennis shoes; and did we mention Seth met a special person and wanted to impress- the bill for that night out was only $400 - easy, right? Within a few months, even though Seth had made his payments on time, his cards were maxed out - he owed $5,000 to three credit card companies - his monthly payments were right around $300, and, here's the focal point - it will take Seth 11 years to pay off that slice of pizza he had last week, and instead of just owing $5,000, he will pay the credit card companies almost $10,000. What a great way to start a career, right, not to mention a family?
Seth's story isn't over. He cut his cards and tried to act responsibly; and then it came time for his auto insurance renewal - his rates increased 23% - he called and found out it was because of his credit score. Doing a little research, Seth found out that not only does his bank and insurance company check his credit score; but also potential employers, especially higher-end or technological companies, have minimum standards before they will even interview.
So, what's the smart way to manage credit - it's easy, and can be accomplished in just four simple steps:
1. Use a debit card whenever possible; especially for purchases like food, gas, and entertainment. Spend only what you can and resist the urge for that "immediate gratification."
2. Save your credit cards for emergencies; not emergencies like a trip to Matzatlan, but real emergencies like healthcare, auto repair, textbooks, seminars, etc. Even then, manage your credit so that you can completely pay of X purchase in 6 payments maximum.
3. Never be late on your credit card payment and always pay more than the minimum - if an emergency happens, call the company, most will take a payment over the phone, although some with a small fee.
4. Avoid impulse - don't carry your credit card to the bar, restaurant, etc. "just in case." Budget for the present and you will be budgeting for the future.

Credit is a privilege, not a right - responsible use will enhance your ability for long-term financial success; abuse might cost you a job, or worse - require you to leave school and work simply to pay off your credit card debt.
References:
FTC Consumer Protection Site: http://www.ftc.gov/creditcardcalculator

College Board "Credit Card Smarts." http://www.collegeboard.com/student/plan/college-success/9139.html

Silver-Greenberg, J. (September 5, 2007). "Majoring in Credit Card Debt." MSNBC. Cited in:
http://www.msnbc.msn.com/id/20607411/ns/business-businessweekcom/

Clarke, C. (May 23, 2009). "Let College Students Get Into Debt." The Atlantic Cited in:
http://business.theatlantic.com/2009/05/let_college_students_get_into_debt.php

Holub, T. "Credit Card Usage and Debt among College and University Students." EricDigest. Cited in:
http://www.ericdigests.org/2003-2/credit.html

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Solution Summary

The expert provides a PAIBOC analysis. The purpose and purposes are determined.

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