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Ramen Risks: 3 Reasons A Student Food Budget Should Be Part of Your 529 Plan

Posted on Oct 12, 2017 with No comments
A 529 plan is one of the best ways to help save for college. It helps you to put money away for your child’s higher education, giving them a leg up when it comes to the expensive world of college. Unfortunately, too many family members fund their 529 plans with only tuition in mind. Below are three reasons why you should make sure that a food budget is part of the plan.

Students Need to Eat

It should come as no surprise that eating is one of the major priorities for students. It might seem a bit facetious to bring that up, but it’s easy to forget that your student is going to need to eat as well as pay tuition when he or she gets to college.

If he or she doesn’t have the money to eat, there will be options—but they definitely aren’t great. If you don’t want your student to spend his college years subsisting on ramen and cheap coffee, it may be a good idea to work food into your college savings plan.

Food is Expensive

As an adult, it’s a bit difficult to remember how hard it can sometimes be to get a solid meal. If you’ve got a steady job, you are aware that you spend money on food—but it’s just another part of your budget.

As a student who has just gone to school, though, the cost of food can seem astronomical. If a student doesn’t have help paying for his or her meals initially, you can expect him or her to struggle financially. If you don’t want to bail a student out later, make sure to fund his or her food budget early on.

Removing Stress

Adding a food budget to your 529 plan is also a good way to help remove some stress from the student in your life. While he or she will always be busy studying and adapting to a much more adult lifestyle, he or she doesn’t necessarily need the added stress of worrying about where his or her next meal will come from.

This kind of stress can contribute to issues like substance abuse or even to eating disorders, and treatment for these problems can cause more financial issues in the future. It’s also worth mentioning that severe problems require inpatient services at facilities like Center For Change and can take valuable time away from classes.

Make a food budget part of your 529 plan. Failure to do so simply puts too much of a burden on a student who is already trying to adapt to a new environment. While the budget doesn’t have to be excessive, it should be enough to help him or her survive. This small change can make a big difference in a college career.


College Car: 3 Ways You Can Save Money By Driving Yourself to School

Posted on Oct 4, 2017 with No comments
College Car

Going to college is an expensive prospect. It’s harder than ever to find ways to afford tuition these days and most students are looking for ways to stay out of debt when possible. What few realize, though, is that driving a car to college can actually make a huge difference in their finances. Below are three ways you can save money by driving yourself to school.

More School Options

If you’ve got a car, you’ve got better options when it comes to finding a school nearby. If you think about it, one of the worst limitations you can place on yourself is transportation. If you are counting on working while at school, you’d have to find a school that’s close enough to your job to attend if you want to make money.

With a car, though, you can greatly expand your radius. This means giving yourself more work options, more school options, and a better chance to shop for a tuition that you can afford.

More Housing Options

If you’ve ever looked at housing near a school, you know it’s expensive. Why? Because many would-be landlords know that their potential renters have to stay near school due to a lack of transportation. If you have a car, though, you don’t have to stay within walking distance of the campus.

You might find that rent drops quite a bit as soon as you get out of walking distance, which might end up saving you thousands of dollars every year. Even better, you’ll get a chance to live outside of the craziness of the university world—definitely a worthwhile goal itself!

Getting Out of the School Zone

A car also gives you the chance to shop outside of the school area. The businesses that are near universities operate on the same principles as movie theater concession stands and airport shops—they know the customer doesn’t have a choice, so they raise prices as much as they can.

If you’ve got a car, though, you can go shop where the locals shop and save a great deal of money during the school year. Don’t fall into the trap of university stores—drive to where you can find the deals.

Take your time to shop around at dealerships like Young Automotive Group for a great deal on a car. Once you’ve got a vehicle, you can start saving money. While you might spend a bit on your car payment and your gas, those payments should still be far less than what you would be spending without a car of your own.


Saving for College You May Be Doing It Wrong

Posted on Oct 2, 2017 with No comments

There's an explanation the typical class of 2016 graduate turned up with $36,162 in student debt. Granted the outrageous expense of college nowadays, countless students and their loved ones simply cannot pay for those substantial tuition costs, so they're compelled to get loans to fund their schooling.

Staying clear of huge levels of debt typically comes down to having ample savings-- an obligation that has the tendency to fall on parents more so than college students themselves. And in that respect, Americans appear to be doing a rather decent job. As of 2015, actually, 73% of U.S. households were actively saving for college, which illustrates a 15% rise from 2008, baseding upon a report by Vanguard.

However there's some unpleasant news to toss into the mix too: Although more people are setting funds aside for college, just 42% are saving through a 529 plan. And those who aren't could be making a massive blunder.

Turbo charge your savings

Even though 529 plans aren't the only choice for saving for college, there are many benefits to going this path. First, the cash you commit to a 529 gets to grow tax-free provided you apply it for college uses. With a standard brokerage account, any money you make from financial investments is subject to capital gains taxes, which implies you'll lose a part of your gains to the Internal Revenue Service and have less money accessible to pay for those tuition costs. You'll additionally be accountable for those taxes every year, which will leave you with less funds to reinvest during the course of your college savings window.

Along with tax-free financial investment growth, several states provide tax deductions for taking part in a 529. A couple of states even give tax credits, which are more beneficial than deductions on a dollar-for-dollar basis.

Naturally, the one significant disadvantage with a 529 is that if you do not make use of the cash in your account for qualified college purposes, you'll be susceptible to a 10% penalty. That penalty, nevertheless, is just pertinent to your gains, and not your principal contribution. Say you fund a 529 with $40,000 of your own cash, which over time, your balance grows to $50,000. If your kid chooses not to go to college, you'll just be penalized on the $10,000 you made but didn't contribute directly.

Regardless of this one drawback, it pays to check out saving with a 529, particularly if your other option is to stick that cash in a traditional savings account. Imagine you're saving $500 a month for school over a 10-year time frame, however you put that money into a savings account paying 1% interest. After a decade, you'll have about $62,800, which isn't much more than the amount of your principal contributions.

Now see what occurs when we stick that very same cash into a 529. If your investments yield a reasonably conservative 6% average annual return, after 10 years, you'll has more than $79,000. That's a huge difference. Moreover, that $79,000 will be yours to withdraw tax-free given you're really utilizing it for college.

Save efficiently

Naturally, 529 plans aren't for everybody, however it still pays to save for college in the most tax-advantaged way possible. In this regard, Roth IRAs are even a fantastic bet for satisfying your objectives. Like 529 plans, Roth IRAs get to grow tax-free, and although they're designed for retirement, since you do not get a tax break for contributing, you're permitted to withdraw your money at any time to pay for other costs, like college.

Even though you're not eligible for a Roth IRA (namely, due to the fact that you make way too much cash), you can rather fund a traditional IRA for college savings purposes. Traditional IRAs provide the instant advantage of tax-free contributions, and while you'll generally deal with a 10% charge for withdrawing funds prior to age 59 1/2, an exception is made when the cash is used for qualified college costs.

Regardless of how you decide to save for college, the secret is to not just begin doing so early but also effectively. If a 529 plan does not interest you, consider saving in a traditional or Roth IRA instead. In this way, if you do not wind up requiring that cash for college, you'll have the ability to set it aside for retirement. Simply do not make the error of saving in a regular savings account, or maybe a traditional brokerage account, which could resemble the returns of a 529 or IRA yet provide no tax benefits to mention.

An estimated 49% of households state that regardless of their efforts, they're not on course to reach their latest college savings goals. The more strategic you are about saving, the higher your odds of covering your expenses, or at least coming fairly close.


Finding Finance: 4 Tips to Help You Pay for Unexpected Car Repairs

Posted on Sep 27, 2017 with No comments
car repair
Car accidents can be expensive, especially when you’re in college and you’re already on a limited income. You may need to pay a deductible, and if you only have liability insurance, you could be on the hook for all your repair costs. If you’re short on cash, here’s four tips that can help you pay those repairs.

Work a Few Odd Jobs

You may need to give up your weekends and even some free time during the week to do this, but if you’re willing to work, there are often plenty of odd jobs that pay cash. Ask around to see if anyone knows of any work opportunities. One good place to check is the Gigs section on Craigslist, specifically the Crew, Event and Labor categories.

Sell Items You Don’t Need

Look through your current possessions to see if there’s anything of value that you don’t need anymore. Start with anything you don’t use, such as textbooks from the previous semester and old cell phone. 

If you don’t find much, then it may be time to consider parting with items you’d still like to have but don’t really need, such as video game systems and designer clothes. None of these are as important as having transportation.

Consult with an Auto Accident Attorney

If you were in an accident and the other driver was at fault, then you’re entitled to compensation for your damages. That’s easier said than done, though, as insurance companies will often fight tooth and nail to minimize what they need to pay. If that’s what you’re dealing with, you should consult with an attorney like the Alexander Law Group or someone similar and ask if you can file an auto accident claim. This will put more pressure on the insurance company to provide you with the compensation you deserve to avoid a lawsuit.

Use a Credit Card

It’s best to have an emergency fund so that you can avoid using credit cards in these situations. But if you’re confident you can pay off the balance quickly, a credit card can be an effective short-term solution. There are also 0-percent annual percentage rate (APR) credit cards where you’ll pay no interest if you pay off the balance during the introductory period. You may have trouble qualifying for one on your own, but that can change if a parent is willing to co-sign for you.

When you have consistent income, you should save some of it every month to build up your emergency fund for situations like these. Until that happens, all these methods can work well if you need to pay for car repairs immediately.


Scholarships and 529 Plans

Posted on Sep 22, 2017 with No comments

For 18 years, you have diligently saved for your kid's education employing a 529 plan, building up a substantial amount, and yet your kid has gotten a scholarship, so now what? First, congratulations, both you and your kid have much to celebrate! Now what should you use the excess 529 funds for to lessen penalties and tax?

529 Plans Pay for More Than Just Tuition

To start with, note that section 529 funds may be employed for more than only tuition and charges-- other expenses qualify as well. This incorporates schoolbooks, online cost, a laptop and any computer software utilized mainly for schooling. Then there is the big one, room and board for your college student if enrolling in a minimum of half time.

Not residing on campus? Not a problem! Schools yearly release a "cost of attendance" estimate for each academic year, which features the approximate cost of room and board. You can make tax-free distributions from a 529 plan as high as this cost for a college student not residing on campus. For college students actually living on campus, if this cost goes beyond the quote in the expense of attendance, the true cost invested can be dispersed.

529 Plan Money Still Left Over? 

Still going to have money left? There are a couple of other possibilities. Initially, if there is another kid you want to select as the recipient, the accounts can be moved between brother or sisters, and even to a significant other or first cousin, however make certain that the recipient has changed prior to making distributions for the newly selected student, or this can trigger you tax headaches in the future.

Click Here : Free College? Great Scholarships On the Web

If there is no other prospective recipient, any excess amounts as much as the amount of scholarships earned can be withdrawn without cost; nevertheless, any earnings on the withdrawal would be vulnerable to tax. See the following example:

Tom has a scholarship that takes care of all tuition yearly, which is presumed to be $10,000. Sam's parents have saved carefully and, even after making withdrawals for room and board, they are anticipating to have $40,000 left over in the account, as it was the amount anticipated for university tuition ($10,000 x 4 Years = $40,000).

In year 1, $10,000 above the amount for room board and other costs is withdrawn. The 10% penalty does not apply, as Tom has scholarships of $10,000, which is what created the overfunding in the 529 plan. At the moment of withdrawal, 60% of the account is contributions, 40% is profits. As the beneficiary of the account, Sam will pay income tax on the $4,000 in gains that are withdrawn.

In year 2, $11,000 (55% contributions, 45% gains) above the amount for room and board and other costs is withdrawn. Tom has $10,000 in tuition and fees, all which is paid for by a scholarship. For this case, the gains portion of $1,000 ($1,000 x 45%=$450) of the $11,000 is subject to a 10% penalty for being a distribution surplus of the amount of scholarship covered expenses, which in this case would be $45 ($450 x 10%). $4,950 ($11,000 x 45%), the amount of gains from the distribution, is likewise subject to income tax.

Get Expert Help

Thankfully, college students are typically in a lower tax bracket, which minimizes the tax sting a bit. If you will make 529 plan distributions, talk to your tax expert to set the most effective course to lessen the tax ramifications of distributions, together with taking full advantage of any academic credits for which you may qualify.


3 Ways You Are Making 529 Plan Mistakes

Posted on Aug 27, 2017 with No comments
Throughout America, some 20 million university students are going back to school. Some get ready for their future; others mean to alter it. And a fascinating pattern is emerging: Tuition expenses are growing at a slower rate. In accordance with the College Board, tuition grew approximately about 6 percent yearly from 1990 through in 2015. That's double the rate of inflation. Nevertheless, this year the Labor Department approximates tuition expenses have actually increased merely just under 2 percent.

The reasons, supply (more colleges), need (less trainees returning to school because of a poor job market) and decreasing birth rates. And more independent schools are discounting their price tag-- NACUBO reports that freshmen are getting greater cost breaks on tuition through scholarships and grants.

529 Plan Mistakes

However, paying for education expenses is the problem. The typical expense for a four-year personal college is $27,500. You're either cutting huge checks-- $66,000 each year 18 years from now if you have a newborn and 5 percent inflation-- or have large student loans that mess up future monetary objectives like purchasing a house and saving for retirement. Or the smarter ones begin saving early for that newborn, presuming a 5 percent return.

You have choices on ways to save and invest that money. Each has its problems. One popular method is by means of 529 plans. This short article will attend to a few of the errors to watch out for with 529 plans.

Exactly what are 529 plans? They save money for college and other postsecondary training on a tax-advantaged basis. There are 2 primary types-- pre-paid tuition plans and savings plans-- and my focus will be on savings plans. The special benefit is that withdrawals of money (that is, you invested a particular quantity, and the account has actually grown in worth) might be tax-free if funds are utilized for certified education costs, or QEEs.

Just using pre-paid plans

Pre-paid plans are losing appeal. Initially, tuition might be just a 3rd of the overall college cost. Exactly what are you doing to save money for other expenses like room and board, car and other expenditures? Second, they have their constraints. What if you purchase prepaid for University A, however your kid chooses University B? What if B's tuition goes beyond A's? Will you support his/her registration in B, and how will you comprise the expense distinction?

Withdrawing more than you need

You can not utilize 529 plans like an ATM. Withdrawals should be for QEEs. Disqualified withdrawals undergo tax repercussions; profits might be taxable and sustain an extra 10 percent charge. QEEs are typically for the school's approximated expenses like tuition and costs, room and board, books, products and devices. Problems emerge when students live off-campus (and expenses go beyond school rent and meal plans), or they forget to adjust for scholarships and tax credits and cannot report school refunds. Students are told to keep records of their costs and purchases-- simply put, keep the lunchmeat and PBR on different lists!


What if there's left over cash because you are thy under budget (for instance, the student was saving for 4 years of school and only need money for 2)? The owner of the 529 plan typically does not lose the cash; nevertheless, she or he might lose the tax benefits. You might reassign the recipient (you call a grandchild after your kid graduates), or you utilize the funds for your own secondary education costs. And if you don't have anyone, you can make a withdrawal and pay the taxes and penalties.

You have many choices with college financing, and each might have special rules. Know the rules , and consult your advisors and specifically your CPA. Tax problems can be made complex, and like you, I don't want to recieve a letter from the IRS. Best of luck!


Top 10 Gift ideas for Graduates

Posted on Aug 21, 2017 with No comments
Finding the right gift for your university graduate can be hard. The challenge lies in finding something that’s special enough to mark the occasion that’s also something that you can get real use out of. Whether your recent graduate is going on to further their studies or enter the world of work, here are ten useful graduation gift ideas that truly keep on giving.

1. A tablet

From on-the-go assignments to job searches a portable tablet is a crucial tool in any post-grads itinerary. They are lightweight and often weigh about 1/3 the weight of a standard laptop, so they’re very easy to carry around when they’re out and about. 

2. Cash

If your post grads are work-bound then they will need some cold hard cash for rent, train/bus fares or petrol costs. They’ll also want to look their best so some money will be needed for a dapper suit of some sort. If your offspring are staying on for further study after recently graduating, then they’re likely to need to splash the cash on fees or study materials.

3. Jewellery

Nothing says congratulations or matches a special occasion such as a graduation more than a stunning piece of jewellery. For her, a show-stopping necklace will wow and impress all her friends, whilst for him some cufflinks will look extra smart and help him stand out from the crowd. 

4. Teddy

Who doesn’t like a graduation teddy bear? They’re cude, cuddly and a classic choice. Oh, and they’re probably cheaper than most gifts!

5. Cake

Graduation cakes come in all shapes and sizes, from traditional sheet cakes to colossal multi-tier cakes. When it comes to cake creations - the sky’s the limit! And of course their friends will love them even more if they have lots of cake to share around. Great work mum and dad!

6. Portable charger

If your recent grad is off on a year-long around the world sabbatical, then they will want to stay connected to call home or to check out what everyone’s doing on social media. Graduates who are moving on to further study will also find this useful when moving from library to coffee shop.

7. Subscription to NetFlix

Your pride and joy has worked their socks off so what better way to reward all that hard work than with a subscription to NetFlix. It’s just the thing they need to switch off and unwind. Just don’t let them enjoy it too much though!

8. Luggage

Another essential for when your recent grad decides to up sticks and see the world. For many post grad travellers who are off around the world for some amount of time, their suit case will be their new home on wheels!

9. Watch

Why should your precious one have to wait until marriage or retirement for a good timepiece? A good watch will ooze style, sophistication, add an extra layer of class to any smart dress or suit and even help toward them landing that dream job. 

10. Photo frame

Another option is to capture that special graduation day with a gorgeous frame. Often coming in a variety of finishes to suit your own individual tastes, you can treasure that special day for many years to come with this professional looking gift they’re sure to love.

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