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

Posted on Sep 27, 2017 with No comments

Sep 27, 2017

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.


Balancing Your Scholarships and 529 Plans

Posted on Sep 22, 2017 with No comments

Sep 22, 2017

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.

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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.


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