Planning on giving my latest ebook -The Top 7 Tax Saving Tips
away FREE to my loyal newsletter subscribers before year end. 
Sign up here http:// www.wholeheartedway.com/ to get your copy plus more goodies
to put cash in your pocket in the New Year!
Just 17 more days left to save money on taxes-
do some of these easy tax saving tips for cash in your pocket in new year
(Note: I personally have done 3 of these and expect an extra $1,000 in my tax refund in April -WOO-HOO!)
http://www.amazon.com/dp/B006KJI1B0
-Fern Alix LaRocca CFP EA
My beef with Suze Orman started years ago when a young couple came to me for help in getting their financial life together and building wealth. They had been following my blog for years and saving money. They were two married professionals ready to buy a home and start a family. Both were very intelligent and motivated. They had actually saved quite a bit of money and wanted to go over what they thought they could afford and what type of loan would be appropriate. Well we never really got that far. In fact, the meeting was very short and I felt sad for them after our call.
You see they had been watching Suze Orman on television and were convinced by her that the best place to put their money to grow for their down payment was in tax deferred retirement plans.
Now I am a big fan of these plans (401k, 403b, SEP, etc.). The combination of tax deferral on the contributions in addition to tax deferral on the accrued earnings is a powerful punch to building wealth. But I have always made it a point to say that these are for long term funds. Note the wording- “retirement plans”. That is a keyword that means long term, and by long term I mean 10 years or longer.
Anyway, the 20% down payment that they had saved was mostly in tax deferred retirement plans which couldn’t be touched without severe penalties. But, the couple said, Suze said we could take money out for our down payment anytime. Well, Suze Orman is kind of right. You can take money out of a 401K for a down payment for qualified first time home buyers.
She didn’t say that there is a $10,000 limit on how much you can withdraw. You will also need to pay tax on that withdrawal. So if each spouse withdraws $10,000 each that is $20,000. For a 20% down payment, that means they could qualify for a $100,000 home. I don’t know where Suze lives, but I live and this couple lives in California where the average home price is $500,000. That is far short of their goals.
The couple was stunned that this detail had not been disclosed. It would take them a lot more years to save up for the $100,000 that they would need in liquid savings to put down on a home now. The family planning was put on hold and there was a chill in the air as we discussed savings strategies.
Financial journalists and television financial advisors aren’t the best source of financial advice. If you need to know quickly how a Roth IRA works, or how much you can contribute to a 4013b, then this is a great source of information. But when you need advice on your particular situation, you need to work with a licensed, practicing fee-only Financial Advisor (shameless self promotion here). Your financial future depends on making the right decisions. Don’t trust this to media people and bloggers. You wouldn’t go to a doctor who didn’t review your medical history first before prescribing pills. So why would you listen to a television program and take advice from someone who doesn’t know and understand your personal situation? It’s just plain crazy.
I know it’s tempting since we all want a quick fix to all of our problems. But the financial decisions that you make now will affect whether you can retire or not in the future or work part-time when your child is born or provide financial help to a son that is going to a private college. Like a patient who refuses to take all of their antibiotics and then has to suffer from infection once again, you can make the decision not to add financial stress to your life by making the right decisions now to build wealth. Life is short and you can’t go back and do it again.
Black Friday is the best and worst of times. The discounts are big and so is the frenzy. Here are some tips on how to survive with money left over and still get what you want:
1. Know specifically what you want and what you want to spend. This is an important point because you will be swayed to make a much bigger and more expensive purchase if you aren't really clear about what it is that you want and what you are willing to pay for it.
2. Bring only enough cash to cover what you are going to buy. Leave the rest of your money at home because if you have excess cash with you, you are going to spend it.
3. Don't use your credit card. Psychologically you will spend more if you just whip out that credit card. Don't do it. Use only cash for your purchases and that will keep you from overspending.
4. Have a mental pricing range so you can walk away if it isn't what you want. Make a mental note of the lowest and highest price you are willing to pay for an item. If it isn't in your price range, don't buy it. Don't be a fool. If it was on sale for a certain price, it will be on sale again for that price.
5. Don't be swayed by going fast, out of stock, or must buy now promotions. Stock will get replenished and merchandise will go on sale again. Stick with what you want and what you are willing to pay for it. Don't waiver.
Got any more tips on how to hold on to your money this season and still get what you want? Please comment or share.
How a Financial Pro Lost his House - great article on how even the experts make a lot of mistakes.
I admire this guy for his honestly in saying he made the same mistakes that he told clients not to do. Yikes!
I aspire for all people to feel the abundance that exists in their lives right now.
Would you turn down free money? Many employers match an employee's 401(k) contributions up to a certain percent of salary. If you contribute less than your employer is willing to match, you may be passing up free money. According to a recent report,1 29.4 percent of 401(k) participants do not contribute enough to their 401(k) to receive their full employer match—with higher rates of foregone matches seen among younger workers age 20 to 29 (43 percent) and those automatically enrolled into an employer-sponsored defined contribution plan (41 percent). An earlier report showed that 40 percent of employees making less than $40,000 fall short of contributing the full extent of their employer's match.2 Millions of workers are leaving money—free money—on the table.
Get my new e-book the 401K First Aid Kit:Stop your Portfolio Losses and get Back to Financial Health for tips and tricks on how to maximize your 401K balance
This study show that roughly 30% of American workers who are not contributing enough to their 401(k) plans to receive a full employer match to step up their contributions in order to meet their eventual retirement needs.
Read the article and march down to your HR department and tell them that you want to contribute the maximum amount to get your employer's matching amount in your 401K.
This is how it works in a nutshell- You put a $1 in and your employer puts in $1- that's 100% return on your money and it is risk free.
Now do it! You can thank me later.
In case you haven't heard, October is Breast Cancer Awareness Month. That means pink ribbons, bows, t-shirts, boas, pins, etc. are in supply. Now most of this trinkets are around for you to buy and support breast cancer research. Sounds wonderful, right? Well, let's dig a little deeper.
I would bet (please prove me wrong) that very little money from the purchase of these items actually ends up in research for a cure for breast cancer. But you know women, we love to shop and so every brand will feed your appetite to feel good about giving and so we buy all the pink hats, pins, scarfs, etc.
Note- you don't see Prostate Cancer awareness month (which is September by the way) with this massive display of consumerism aimed at finding a cure for prostate cancer, and this cancer strikes 1 in 6 men versus 1 in 8 women will get breast cancer.
So think twice before you reach for that pink eyelash curler at Sephora that costs extra $ for breast cancer research, or any other pink do-dad, and just give directly to the charity or research foundation of your choice.
Now that is a using your money wisely and giving to a great cause.
A new spate of higher banking fees will hit young people with modest balances especially hard. Here's what they need to know:
The younger generation doesn't know a paper check from a floppy disk, and its members shy away from using cash. Between school ID cards and debit cards, they have swiped their way to adulthood. Now they are about to get swiped themselves. Bank of America, the nation's largest by assets, recently announced it will charge most customers who use their debit cards for purchases a flat $5 monthly fee starting next year. It also is testing a new array of checking accounts with higher fees. SunTrust Banks has added a $5 monthly debit-card fee for purchases to some accounts and is raising some checking-account fees. Citigroup is raising fees and adding a $1,500 minimum balance on basic checking accounts, though there are ways around it. Wells Fargo will soon be testing debit-card fees. An August Bankrate.com survey of the largest banks and thrifts in 25 major markets found that just 45% still offered free noninterest-bearing checking accounts, down from 76% in 2009. It also found higher average monthly maintenance fees, automated-teller-machine surcharges, overdraft fees and minimum required balances across the board. The higher costs will hit young people with modest balances especially hard: A customer with a basic Bank of America checking account who uses a debit card to make purchases would pay $6 or $9 a month for the account, based on current test markets, plus $5 for debit-card use—or up to $168 a year. The new and higher fees come as a regulation that took effect this month cut the average fees that merchants pay for debit transactions to about 24 cents from 44 cents. In addition, federal rules that have reined in overdraft fees have cost banks billions of dollars, which they are trying to make up in more-direct consumer charges. The average checking account costs $250 to $300 a year to maintain, after including infrastructure, regulatory requirements, security protections and other costs, says Nessa Feddis, senior counsel at the American Bankers Association. Interest income on small accounts offsets only a little of that. "At the end of the day, revenue has to be higher than expenses," she says. Putting your money on prepaid cards is an alternative. But many such cards come with monthly fees or individual charges for deposits or withdrawals high enough to make checking-account fees seem reasonable. Even so, young people—and even their parents—don't have to stay in financially unhealthy relationships. The changing landscape calls for new rules for your consumer affairs. • Know your partner. The kind of financial institution you choose can make a big difference. Credit unions are nonprofits. Online banks eschew bricks and mortar, keeping costs down. Others focus on a particular population, like USAA, which is limited to current or former members of the military and their families.
• Protect yourself. Your mom always carried a quarter when she was young, so she could use a pay phone in an emergency. You should carry cash as well—ideally enough to cover the purchases you would make with a debit card. (The new debit-card fees don't apply to ATM withdrawals.) The green stuff is still accepted just about everywhere (except for travel). It works even when the power is out, and when you run out, you run out; by contrast, if you spend more than you have using a debit card, you will pay overdraft fees. You can also write more checks, but, really, who wants to do that? • Make a commitment. One way to save money on bank fees is to play by the company's rules and use more of its services. Just as you can save money by bundling phone and Internet services, you may be able to save on fees if you have some mix of a credit card, car loan, mortgage, brokerage account or checking account with the same bank. Banks and financial-services firms want more of your business and may reward you for it. • Compromise. Get a travel- or cash-rewards credit card and use it smartly. Put most of your monthly purchases on the card and set aside money each week to pay for them when the bill is due. You can even pay the bill more often than once a month, if it makes you feel better. Just be sure the full amount is paid by the due date each month. If you do it right, you might earn enough from credit-card rewards to offset bank fees—and that's the best kind of equitable relationship. Karen Blumenthal at karen.blumenthal@wsj.com
By Robert Powell, MarketWatch
BOSTON (MarketWatch) — It might not be the bank of first or last resort, but it’s a bank nonetheless. About one in four investors borrow money from their 401(k), but, while such loans have some benefits compared to other sources of credit, they also can hit your retirement savings in unexpected ways.
About 22% of plan participants who are allowed to borrow from their 401(k) have such a loan at any given time and half had used a plan loan over a seven-year horizon, according to the authors of a just-published paper, “The Availability and Utilization of 401(k) Loans.”
The probability of having a loan follows a hump-shaped pattern with respect to age, job tenure, account balance, and salary, according to John Beshears, a professor at the Stanford Graduate School of Business, James J. Choi, a professor at the Yale School of Management, David Laibson, professor at Harvard University, and Brigitte C. Madrian, a professor at the John F. Kennedy School of Government at Harvard University, who co-authored the paper.
Those likeliest to have a 401(k) loan are plan participants in their 40s, with 10 to 20 years of tenure, earning $40,000 to $60,000, with $20,000 to $30,000 in their 401(k) plan. In 2008, the median amount of these loans was $4,000.
According to David Wray, the president of the Profit Sharing/401(k) Council of America and author of “Take Control with Your 401(k),” more recent studies suggest that one in four employees eligible for a loan have taken advantage of the option, with an average outstanding balance of $8,800.
Some borrow from their 401(k) to buy a home or for home improvements. Others to consolidate bills or pay off loans (sometimes the interest rate on a 401(k) loan is lower than other, more traditional sources of credit). And still others borrow to pay for education, medical bills, weddings, divorces and cars. But no matter the reason, experts say there are several things to consider before borrowing from your plan.
According to Wray, there are two big advantages to a 401(k) loan. One, if your plan has a loan program, you have the security of knowing that your money is available “just in case,” Wray said.
“This means you can comfortably make the maximum contribution commitment to your plan without worrying if you might need those funds later,” he said.
And two, loans help prevent you from depleting your retirement savings when a financial crisis occurs. “If your plan offers loans, you will be required to take a loan first before you can take a distribution because once money is taken as a distribution, it cannot be replaced.”
If you’ve already made up your mind to spend a certain amount and the only question is how you're going to finance that spending, a 401(k) loan may be a reasonable source of financing, said Choi, a co-author of the report.
“A 401(k) loan will almost always be a better option than credit-card debt because the former's interest rate is so much lower,” he said. The interest rate on 401(k) loans is usually the prime rate plus 1%, though rates vary from plan to plan.
Others agreed. According to Steve Utkus, a principal with the Vanguard Center for Retirement Research, 401(k) loans are a relatively cheap source of credit, compared, for example, to unsecured lines of credit or credit cards. Plus, there are no credit underwriting standards. “You are borrowing from yourself — and therein lies the rub,” Utkus said.
By law, the total outstanding principal of 401(k) loans can be no larger than 50% of a participant's vested account balance or $50,000. The authors of the 401(k) study also note that participants are less likely to use loans in plans that charge a higher interest rate, and loans are smaller when plans allow fewer simultaneously outstanding loans, impose a shorter maximum possible loan duration, or charge a lower interest rate.
Besides being a source of cheap credit, Wray said there are other advantages to a 401(k) loan. There’s less paperwork to fill out as compared to other types of loans. There usually are no restrictions on how the proceeds are used. Most plans let you borrow for any reason. It’s fast. You can receive a loan in mere days, depending on how often your plan processes transactions. And the rate of repayment for your loan may be greater than the rate of return you were receiving on your fixed investment.
But cheap doesn’t mean free just because you're borrowing from yourself, Choi said. “Your 401(k) loan interest payments face double taxation, since they are made with after-tax dollars and then get taxed again when you withdraw them in retirement,” said Choi. “And of course, whatever balances you spend now aren’t earning an investment return for you.”
Other experts share Choi’s point of view. “401(k) loans can be an important resource for participants facing financial hardship,” said Lori Lucas, a CFA charterholder, an executive vice president at Callan Associates, and chair of the Defined Contribution Institutional Investment Association’s research committee.
“The danger is when they are overused for non-essential purposes,” she said. “Participants pay back 401(k) loans with after-tax money. And, they become withdrawals if they go unpaid.”
Also, before taking a loan from your 401(k), consider how safe your job is. That’s because one of the dangers of a 401(k) loan is that if you leave your job or are laid off, you have to pay the loan off in full within a short period of time, usually 60 to 90 days, said Choi.
The greatest risk with loans is if they don't get paid off, said Stacy Schaus, a senior vice president at PIMCO.
“Any balance you haven't paid off at the end of that time is considered an early withdrawal, and if you're younger than 59 ½, you'll have to pay income tax on that amount plus an extra 10% tax penalty,” Schaus said. “Unless your job is very secure and you plan on staying with your employer for the duration of the loan, borrowing large amounts from your 401(k) is risky.”
Lucas agreed, and warned about a feature of some 401(k) plans. “While some plan sponsors allow repayment of plan loans after termination, most do not,” said Lucas. “Taxes and penalties can take a huge bite out of participants' assets if the loan becomes a withdrawal. Further, withdrawn money is then forever lost to the retirement system.”
To be fair, the odds are high that you’ll repay the loan, according to Vanguard’s Utkus. According to his and other research, 90% of loans are repaid.
Still, one in 10 won’t repay their 401(k) loan, more often than not due to a job change. Since you don’t know whether you’ll be among the one in 10 who don’t pay back their loan or the nine in 10 who do, Utkus offered this advice: “If you anticipate changing jobs in the near term, I'd steer away from taking a loan, unless you have money outside the plan to pay off the loan when it becomes due.”
Dave Tolve, retirement business leader for Mercer's U.S. outsourcing business, said borrowing from a 401(k) can have major consequences — even when repaid on time.
And plan participants should consider the advantages of not taking a loan. For instance, your money can keep growing. Plus, if you take money out of your account, even temporarily, you will miss out on valuable compounding and may end up with a significantly smaller nest egg by the time you retire. And, it is much easier to continue saving without the burden of a loan.
“Many people find it hard to continue making regular 401(k) contributions while repaying their loan — making it even harder to get back on the path to preparing for their retirement,” Tolve said.
Wray identified another disadvantage: 401(k) loans are not without fees. Some eight in 10 plans charge a one-time loan fee — of about $72 on average. Another 28% of plans charge an annual service fee of $35 on average. Plus, you may need to get your spouse’s permission for a loan.
Bottom line? “The long-term benefits of not touching your retirement savings may far outweigh the short-term benefits of taking the loan,” Tolve said. “Although it may seem easy to take a loan from your plan now, there may be other alternatives with lower interest rates that are available to you. Be sure to consider the impact a loan may have on your financial future and explore other options before you borrow from your plan.”
When I was in my late teens, I got sucked into a game called Magic [The Gathering]. I’ll just presume you already have some familiarity with the game. At first I resisted because it seemed to require a lot of money in order to play but soon everybody was playing and so I started too.
Eventually I found myself disenchanted with the game. I was playing a combination of black and blue and I always seemed to be losing to people who had better and rarer cards than I had. I didn’t really see myself as improving my relative position unless I began to spend a lot of money either buying booster packs and hoping for the best or buying them outright at $5 or $10 a piece from the local card pusher. Back then nobody I played with really seemed to have any kind of deck design strategy other than picking a few colors and including the biggest and most powerful cards they had. Most games would be very long. Not much would happen during the first 4 rounds as people were putting down lands in order to summon their first mega monster. After that it was a half hour accumulation of a giant army. Does this sound familiar? Keeping up with the Joneses? Bigger and better? One evening after I was just about to give up on the game, I decided to divide my blue-black deck. It happened to be about 110 cards total, so I had to add some land to make it 60 cards. And then I started winning! The game was fun again. Having more land allowed me to summon forces faster. I was no longer stuck waiting for resources much like a middle-class consumer is stuck waiting for money because everything he owns is too large or too costly. Since I was using almost all my black cards, I also had to include lighter footprint creatures which turned out to be a blessing. I was dealing out 5-10 points of damage (20 points and you win the game) before my friends even got a creature in play. This was a light bulb moment and I began to pay a lot more attention to the deck design strategy: what worked together with what? what was the ideal land/spell/creature mix? could I put something together that had more than one theme in case my main theme failed. I spent hours dry-running designs (that’s the MTG equivalent of studying chess openings). At one point the deck got so good that my regular playing partners didn’t think I was fun to play with anymore. The deck which was worth about $50 if you had to buy the cards from a pusher was even offering fighting resistance to tournament decks. I then started making decks out of common cards. These are typically less powerful and abundantly available. I was still doing okay with that. There’s a lesson to be learned here. Strategy beats “technology” every time. Having ready resources like land (money) is much better than having large creatures (house, car) which are unwieldy. Having a huge deck (lots of stuff) is very detrimental because it reduces control. Having too much stuff takes away attention from the enemy (living your life) because the entire focus is on maintaining and trying to summon your forces (paying the bills). Using a systems thinking approach to ensure resilience is a successful strategy—if one thing doesn’t work, another will. by Jacob Fisker- at Early Retirement Extreme
I know exactly what he means – and it’s not just the debts either. The same thing can be true if you’re saving for a down payment for a house or simply waiting until you can make the next leap in your career. Personal finance success often means waiting. Patience is pretty much a required virtue. It’s an interesting contrast to many aspects of day-to-day life, where speed is valued and instant gratification is the rule. It’s no wonder, given how other elements of life work, that many people struggle with the patience needed to make personal finance work for them. How can you play and win the waiting game when it comes to your money? Here are some things that I do in my own life. Automate everything I make most elements of my finances completely automatic through automatic transfers and other mechanisms. I never have to talk myself into moving money into savings each and every month. It just happens without me taking any action on it. Money gets transferred to my retirement savings. It gets transferred to 529 accounts for each of my kids. Several of my regular bills are paid. And I don’t have to lift a finger. It just happens. Don’t look at your balances Come up with a plan for achieving your goal before you start, then don’t even look at your account balances until you’re close to that goal. Seriously. Looking at your balances forces you to reflect on how long it is until you reach your goals, adding to the sense of waiting. I just don’t look at these balances at all. Whenever I examine a statement, I’m mostly verifying that things are being deducted and contributed correctly. The balance itself just causes me to reflect on the distance I’ve yet to travel. Set a mix of goals Most people think about personal finance in terms of big goals, such as paying off big debts or saving for big things. In truth, you can feel success with personal finance and get the sense of achieving goals if you choose some shorter term goals, too. I’m usually saving for some specific goal or specific item that I expect to come to fruition within the next several months. Right now, for example, I’m saving for a walking desk for my office. I’ll be able to achieve that goal in the next few months, giving me a strong sense of success in my endeavors. Share your experiences It’s a lot easier to manage a big, long term goal if you know you’re in it with others. Don’t be afraid to talk about the challenges of being patient with your friends. You’ll probably be surprised to find that they’re dealing with much the same thing that you are. Over time, I’ve found it a comfort to talk to my friends about personal finances when I focus on the struggles we all have in common. Simply knowing that they’re in it for a long haul as well makes it easier to deal with. We’re all in this together. Patience is a vital virtue when it comes to personal finance, but it doesn’t have to be a weight dragging you down. By simply taking a few basic actions to combat impatience, you can make the whole process easier as you head down the road to success.The Waiting Game
Recently, a friend of mine offered up an interesting thought on personal finance issues: “You know what the worst part about getting your money straight is? The waiting. It doesn’t happen overnight. It can take years. All of that waiting on your debts to go away is just excruciating.”
Buying your home is one of the biggest financial decisions you will make in your life. Don’t hurry through this process or it will cost you dearly. These are 7 of the most common mistakes I see:
1.Getting a house in a neighborhood that does not support your lifestyle. For example, if you are a young professional couple with kids, why buy into a senior neighborhood?
2. Getting too big or too small a house without considering your health (stairs? no stairs? family size, etc.) Think about relatives and guests coming. How long will they stay? Will they be comfortable? Are there enough bathrooms to accommodate the family?
3. Not putting 20% down. You need this to get a little equity in case you know what happens.
4. Getting the wrong kind of loan. Determine how long you are going to stay in the home and do not purchase the loan with the lowest payment loan but the loan with the lowest interest and fees. That is how you save money on a mortgage loan (despite what a loan broker will tell you).
5. Not repairing your credit rating. The time to repair your credit is before you consider buying a home not after. Clean it up and you will save loads of money since you will get better loan rates. Better loan rates means you pay less interest over the life of the loan.
6. Not considering taxes, insurance, water, utilities, garbage, and assessment fees. Home ownership means you pay all of the extras too. Don’t underestimate these charges. They add up.
7. Not making sure all appliances, electrical outlets, plumbing, lighting, window and roof leaks. Many people rely too heavily on home inspectors who really don’t thoroughly inspect the things that you are going to be using every day. Take the time to turn on and off all of the appliances, check water temperature and flows, look for good sealed windows and insulation, etc. It will pay off in fewer home maintenance fees –especially in the first couple of years.
Once you are in, don’t have buyer’s remorse. Look at the mistakes as a learning experience and look at your home as something you will enjoy for years to come.
1. Make Electronic Payments
Setting up electronic payments means that people don’t have to do anything. Their payments will be taken from their bank accounts when they are due and they can never be late. This frees up the time they would have had to take writing checks and mailing these bills every month; it also saves money on stamps.
2. Take Advantage of Electronic Statements
Receiving statements in the mail means that people have to keep track of a lot of paperwork. A better plan would be to have electronic statements. The company would be happier with this arrangement because they save on administrative costs, and the customer can keep everything in a convenient place online.
3. Use Online Bill Pay
Online bill pay with the bank makes it possible to pay the bills online. This makes managing finances simple like in the previous example.
4. The Old Tried and True Spending Budget
Creating a budget helps people tremendously who don’t know where their money is going every month. A budget is a plan, and people who make a list of all the necessary bills they have to pay know they will be able to pay those bills when they give them the highest priority.
5. Reduce the Amount of Money Spent Each Month
When creating a budget, people might notice that they have too many different types of bills to pay each month. This can mean that they will have an unmanageable number of spending categories in their monthly budget. If the budget is too complicated, it’s not going to benefit people who want to make their finances simpler. They need to keep all of their spending categories to a minimum in order to make the budget strategy work.
6. Consolidate Accounts
A big help is to consolidate accounts which will keep them all in one place. For example, some people have more than one savings account. If all of these savings accounts are under one bank then these accountholders can log into that one bank and see all of their accounts in one place making managing money much easier.
7. Set Up a Level Pay System for Utilities
When people set up level pay for their utilities, they know that they will be billed around the same amount of money each month. Utilities can be unpredictable and in some months, people can use more than of one type of utility than another. For example, in the summer people tend to use their air conditioning more often. Level bill pay will help keep them from overspending during these months.
8. Give Things Away
By giving things away, the house is much less cluttered and there are fewer things to manage.
9. Purchase a House that Fits the Family’s Needs
When purchasing a new home, be sure that the house is exactly what will be needed and nothing more or less. This will ensure that the mortgage payments will be easily manageable and that the maintenance on the house isn’t overwhelming.
10. Make a List of Things to Accomplish
Making a change from a disorganized state to a more organized one can take a little time. Before getting started on this project, people can make a list of their most important goals down to the least and finish each goal before moving on to the next. Setting a time when they would like to have the goal accomplished will ensure that the item gets done and can be crossed off of the list.
1. Make Electronic Payments
Setting up electronic payments means that people don’t have to do anything. Their payments will be taken from their bank accounts when they are due and they can never be late. This frees up the time they would have had to take writing checks and mailing these bills every month; it also saves money on stamps.
2. Take Advantage of Electronic Statements
Receiving statements in the mail means that people have to keep track of a lot of paperwork. A better plan would be to have electronic statements. The company would be happier with this arrangement because they save on administrative costs, and the customer can keep everything in a convenient place online.
3. Use Online Bill Pay
Online bill pay with the bank makes it possible to pay the bills online. This makes managing finances simple like in the previous example.
4. The Old Tried and True Spending Budget
Creating a budget helps people tremendously who don’t know where their money is going every month. A budget is a plan, and people who make a list of all the necessary bills they have to pay know they will be able to pay those bills when they give them the highest priority.
5. Reduce the Amount of Money Spent Each Month
When creating a budget, people might notice that they have too many different types of bills to pay each month. This can mean that they will have an unmanageable number of spending categories in their monthly budget. If the budget is too complicated, it’s not going to benefit people who want to make their finances simpler. They need to keep all of their spending categories to a minimum in order to make the budget strategy work.
6. Consolidate Accounts
A big help is to consolidate accounts which will keep them all in one place. For example, some people have more than one savings account. If all of these savings accounts are under one bank then these accountholders can log into that one bank and see all of their accounts in one place making managing money much easier.
7. Set Up a Level Pay System for Utilities
When people set up level pay for their utilities, they know that they will be billed around the same amount of money each month. Utilities can be unpredictable and in some months, people can use more than of one type of utility than another. For example, in the summer people tend to use their air conditioning more often. Level bill pay will help keep them from overspending during these months.
8. Give Things Away
By giving things away, the house is much less cluttered and there are fewer things to manage.
9. Purchase a House that Fits the Family’s Needs
When purchasing a new home, be sure that the house is exactly what will be needed and nothing more or less. This will ensure that the mortgage payments will be easily manageable and that the maintenance on the house isn’t overwhelming.
10. Make a List of Things to Accomplish
Making a change from a disorganized state to a more organized one can take a little time. Before getting started on this project, people can make a list of their most important goals down to the least and finish each goal before moving on to the next. Setting a time when they would like to have the goal accomplished will ensure that the item gets done and can be crossed off of the list.
With the volume of student loans on the rise, fears of a bubble in educational spending are not without merit, warns Moodys Analytics in a recent report. Moodys sober assessment: Unless students limit their debt burdens, choose fields of study that are in demand and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place.
Amen. In my previous column, I gave graduates advice on how to ease their debt burden. But the best strategy is to limit how much you borrow in the first place.
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SEE ALSO: Tax Credits for College Expenses
Choose a school that fits into the family budget. Families seem to be learning that picking a school is an economic decision as well as an academic one. In a survey by Fastweb.com, 45% of students ranked quality of major as their top reason for choosing a school. But scholarship or financial assistance (43%) and total costs (41%) came in a close second and third -- even higher than academic reputation (38%).
Among students who leave school with no debt, 85% graduated from public colleges, according to a report by Mark Kantrowitz, publisher of Fastweb.com and FinAid.org. Selecting an affordable school doesnt have to mean sacrificing quality. To find public and private schools that deliver both, see our Best College Values special report.
Bypass the four-year route. Starting at a community college and transferring to a four-year school can save a lot. You can also slice a year off your expenses if your child takes Advanced Placement courses in high school or qualifies for college credits through the College Level Examination Program.
In Kantrowitzs study, half the students who graduated with no debt graduated from a community college (one-third graduated from a public four-year college). Other hallmarks of students who graduate debt-free: They tend to spend less on textbooks -- $1,000 or less per year (see How to Cut College Textbook Costs in Half -- or More) -- and are more likely to live at home with their parents.
Use money you dont have to pay back. Its never too late to save, especially if you live in a state that gives you an income tax break for contributions to state-sponsored 529 plans (find the best 529 plan for you). Visit FastWeb.com to look for scholarship and grant money from schools and other sources where your students grade point average or other achievements would make him a standout (for inspiration, read about a student who put himself through school with zero debt).
If you must borrow, borrow smart. Start with government-sponsored loans, which offer flexible repayment options -- such as lower payments and deferral -- and fixed interest rates. These include Perkins loans, for eligible students, and Stafford loans, which may be subsidized if your student qualifies. Also look into PLUS loans for parents or a home-equity line of credit. (For more information on student loans, go to StudentLoans.gov.) With that combination you shouldnt need private loans, which carry a variable interest rate and generally require a co-signer (see Be Wary of Private Student Loans).
Apparently, many students dont realize that federal loans are the most attractive. A majority of undergraduates who take out risky private loans could have borrowed more in safer federal loans instead, reports the Project on Student Debt.
One of our young staff members here at Kiplinger told me that the financial-aid office at his college steered him to private loans before he had exhausted his federal borrowing. He spotted the mistake, but not every student is so savvy. The Project on Student Debt found that counseling and information at critical decision points can really help borrowers make smarter choices.
Its also smart to pay all or part of any loan interest as it accrues so that it isnt added to the balance that has to be repaid. And remember that even the best student loan can be a dual-edged sword, encouraging a student to borrow more than he should.
Know what youre getting into. Use the Student Loan Advisor calculator at FinAid.org. It provides an estimate, based on starting salaries of various professions, of the maximum in student loans your child should take out and how much it will cost to pay it back.
One rule of thumb is that students should try to limit their total borrowing to no more than their expected starting salary when they graduate. FinAid warns that if you borrow more than twice your expected starting salary, you will be at high risk of default.
Choose a marketable major. Moodys is right on the money in suggesting that students pick fields of study that are in demand. That doesnt mean your child has to major in engineering or computer science. But if shes majoring in economics, it couldnt hurt to take accounting. If shes studying history or government, she could learn a foreign language. And if she insists on studying something as precarious as journalism, she should minor or concentrate in another subject -- such as business, health or computer skills.
Follow Janet's updates at Twitter.com/JanetBodnar.
Great ideas on how to lower student loan debt
These are great. I love charts and they have you visualize the decision making when you are trying to figure out the right choice to make. After all - a lot of wealth building is made from making the right decisions at the right time....
Wealthy engineers even outshine their fellow millionaires; for example, they keep their cars longer and pay less for them than other millionaires. Find out all their secrets to financial success.
This 401k report from Fidelity shows 401K investors are being rewarded for staying the course despite market turbulence. I hope this is a trend towards people starting to feel comfortable with the 200-300 point daily swings in the market that can cause havoc on a portfolio (for the short term at least).
Let's hear it for - Stay the Course!
I counsel soooo many couples that are disagreeing over $$$. So I am writing a report on a step by step guide to help you and your spouse get on the same page towards financial independence.
Sounds good?
Oh, and I giving it away for free.
Just share with me your tip on what works for you and I will send you my free report.
Thanks!
Fern
