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The Problems with Cosigning Your Child's Student Loans

Posted on Sep 18, 2019 with No comments

Sep 18, 2019

Moms and dads are, in some cases, asked to guarantee private student loans for their kids. (No cosigner is needed for Federal student loans though.) Guaranteeing can assist a child to get a private student loan or get lower rates of interest on the loan. Guaranteeing likewise brings a lot of risks that may not be understood entirely by the parent. Guaranteeing a loan can be hazardous to the cosigner's fiscal health.

Co-signing a loan can strain relationships.


No one likes to think of it; however, you have a nearly 40% chance that you'll be the one who needs to pay when you co-sign a loan. That's according to a WhatIsA529Plan.com study that discovered 30% of the 3,000 parental co-signers had to take over the payments because the student could no longer do it.

Even worse, that unexpected turn of events resulted in a degradation of relationships between co-borrowers, usually about half of the time-- 49% to be precise.

When providing money to friends and family separate from the co-signing problem remember these 2 tips.

One, treat it as a one-time-only thing. And two, deal with any loan you offer as a gift, instead of as a loan. That way if you do, in fact, earn money back, it's a bonus

Responsibilities of a Co-signer


Lots of moms and dads wrongly believe that a cosigner is a guarantor or contingent debtor, merely allowing the kid to get a student loan. The responsibilities connected with cosigning are much higher. Both, equally obligated to pay back the debt. Both the student and the moms and dad are each individually responsible for paying back the debt.

This has a considerable effect on the cosigner's credit. The cosigned loan is dealt with on credit reports as though it were borrowed by the cosigner since the cosigner really did borrow the cash. It doesn't matter if it is "truly" the student's loan since the cosigner is also a debtor. This may make it harder for the cosigner to receive new credit, such as a refinance of a mortgage since the student loans will be counted against the cosigner's debt to earnings ratios. If the party that has chosen to make the payments stops making the payments or is in default of the debt eventually the delinquency will show up on the credit report and the credit report of the cosigner.

Only one late payment will damage an otherwise excellent credit score for both the student borrower and cosigner.





As soon as the student is late with a payment, the loan provider will instantly start looking for a payment from the cosigner

There may be as much as a one in 3 possibilities that the parent may at some time be required to make payments on the cosigned loan.

Moms and Dads should never guarantee a personal student loan unless they are able and happy to pay the loan back.

Family members or friends on a low or fixed income, need to never cosign a personal student loan and should avoid it at all costs.

Moms and dads ought to also read the promissory note thoroughly, as guaranteeing a loan also may obligate you for late fees or adjudication.

Before cosigning a personal student loan, parents should ask themselves how much they trust their child to act responsibly. Has the child undergone monetary literacy training? Will the kid make all payments on time? Will the kid deal with the loan in an adult way? Does the child respect debt and obligations? Is the kid cautious or careless, orderly or chaotic, reliable or carefree? Cosigning a student loan provides the student control over the cosigner's credit and monetary future.

Consider This


If you are Co-signing a loan, you will affect your own debt-to-income ratio. This can really injure you if you're applying for a home mortgage. You shouldn't go out and get a loan for a car in the months before you prepare to purchase a home. Still, your credit score is at risk if you've co-signed an auto loan for somebody else.

It may be possible to eliminate yourself as a co-signer. With private student loans, you may be qualified for a co-signer release once the person you signed for makes a particular variety of consecutive on-time payments and has a credit check. You'll likely have to remain on the student loan servicer to make this occur. With a car, you can get off as a co-signer if the person you signed for refinances the loan in their own name.

You might have the ability to negotiate terms of co-signing in advance. The Federal Trade Commission suggests that you attempt to have the following language in the contract: 'The co-signer will be responsible only for the primary balance on this loan at the time of default. Both parties on the debt are equally responsible in paying the debt back. That means you will not be liable for late charges or court costs if you're taken legal action against the debt because the debtor is not paying as agreed.

Your unexpected passing might throw the borrower into instant default. Private student loans frequently consist of a clause that lets the lender call the loan due entirely if you as a co-signer pass away or declare insolvency. The CFPB is recommending individuals in private student loans attempt to get a release for their co-signer before something like this occurs.



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5 Books to Help College Students Make the Most of Their College Experience

Posted on Sep 1, 2019 with No comments

Sep 1, 2019

This is the time of year when parents are getting ready to send their college kids to their new homes. Along with clothes, shoes and all the comforts of home, there’s one more thing you should be packing: A good book on college life.

College is the time when kids generally get their first taste of freedom: They may be buying their own food, paying for their own needs, and getting acquainted with other college students. But do they really know what to expect in their new life?

Figuring out how to get used to college life is essential for students who don’t want to wind up being alone or maybe getting very homesick. Getting a new college students on solid footing means that they’ll get four years of somewhat real life before they launch into the “real world” of adulthood.

We asked experts in social interaction and college life — including some who specialize in the Psychology — for their top recommendations of books that will appeal to college students and offer solid principles and strategies for becoming successful in their college life and academics. Here are a few of the best college life books to give to your college students.

The Best College Student Survival Guide Ever Written: The one book all students should own before starting or finishing their college experience by MJ Wilson






In this guide MJ Wilson explains to students and parents how to:

1) choose the right major and college/university
2) deal with bad professors and impossible exams
3) keep from changing your major (again and again!)
4) learn study skills/time management techniques
5) reduce test stress and improve your G.P.A.
6) handle being homesick, depressed and lonely
7) improve your resume and make a grand exit! 
8) graduate in the least amount of time possible

MJ Wilson holds a Master's degree in Education. He is a campus speaker on "the do's and don'ts of college" - especially for freshmen. Wilson, who is an Ohio native, now resides in Tampa, Florida. For more information about his books or speaking, visit mj-wilson.com

How to Win at College: Surprising Secrets for Success from the Country's Top Students by Cal Newport



How can you graduate with honors, choose exciting activities, build a head-turning resume, gain access to the best post-college opportunities, and still have a life? Based on interviews with star students at universities nationwide, from Harvard to the University of Arizona, How to Win at College presents seventy-five simple rules that will rocket you to the top of your class. These often surprising strategies include:

• Don’t do all your reading
• Drop classes every term
• Become a club president
• Care about your grades, Ignore your GPA
• Never pull an all-nighter
• Take three days to write a paper
• Always be working on a “grand project”
• Do one thing better than anyone else you know

Proving you can be successful and still have time for fun, How to Win at College is the must-have guide for making the most of these four important years—and getting and edge on life after graduation.

“This deliberately provocative book is a good way for a smart student to see how out-of-the-box thinking can lead to success in college.”—Seattle Times



Whether it's their first year or fourth, college students (who think they already know everything) can always use powerful and proven tips on how to make the most of their experience. In 1001 Things Every College Student Needs to Know, Harry H. Harrison Jr.'s latest dose of trademark wit and wisdom provides practical advice ranging from class enrollment, living on campus, study habits and more, that every student-and parent-will benefit from...like buying their books before exams start!

The organization and presentation of the material is designed for a short attention span and that's a good thing. Some really obvious points listed in the book, but honestly, college freshman sometimes need to hear the obvious.





Most college students believe that straight A’s can be achieved only through cramming and painful all-nighters at the library. But Cal Newport knows that real straight-A students don’t study harder—they study smarter. 

A breakthrough approach to acing academic assignments, from quizzes and exams to essays and papers, How to Become a Straight-A Student reveals for the first time the proven study secrets of real straight-A students across the country and weaves them into a simple, practical system that anyone can master.

You will learn how to:

• Streamline and maximize your study time
• Conquer procrastination
• Absorb the material quickly and effectively
• Know which reading assignments are critical—and which are not
• Target the paper topics that wow, professors
• Provide A+ answers on exams
• Write stellar prose without the agony

A strategic blueprint for success that promises more free time, more fun, and top-tier results, How to Become a Straight-A Student is the only study guide written by students for students—with the insider knowledge and real-world methods to help you master the college system and rise to the top of the class

First Year Student to First Year Success: 21 Things You NEED to Know When Starting College 

by Tom Krieglstein 






This book is for incoming and first year college students who are ready to make the most of their college experience, beyond what you might hear at at orientation.This book is a combination of the super secret insider tips to college that either us authors learned themselves, or they kept hearing from their campus leadership programs. 

From classroom seating tips, to self-care techniques, to scoring the perfect campus job, this book is your insider’s guide to college success that most likely won’t be told to you at orientation.You’ll notice that the size, layout, and interactive sections of the book are all designed to make this book be your ultimate college field-guide that you can squeeze into a backpack or coat pocket. 

Read straight through, or thumb to a topic that’s most relevant to you. College can be one of the most exciting times in your life and with our field guide in hand, you’re already well on your way to going from first-year student to first year success!




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Can Grandparents Help A Grandchild With College Costs

Posted on Aug 30, 2019 with No comments

Aug 30, 2019

As the expense of a college education continues to climb up, numerous grandparents are jumping in
to assist. It is expected to accelerate as baby boomers, a lot of whom went to college, end up being grandparents and start gifting what's forecasted to be trillions of dollars over the coming years.

Contributing to a grandchild's college education can bring great personal satisfaction and is a wise method for grandparents to address their estate planning without having to pay present and future taxes. Are there easy ways to accomplish this objective?

Outright money presents


A common way for grandparents to assist grandchildren with college costs is to make an outright present of cash or securities. This method has a couple of disadvantages. A gift of more than the yearly federal gift tax exemption amount-- $14,000 for private donations and $28,000 for contributions made by a couple-- might have present tax and generation-skipping transfer (GST) tax repercussions (GST tax is an extra present tax troubled presents made to somebody that is at least one generation before you).

A problem with this is that a cash gift to a student will be thought-about as untaxed income by the federal government's help application, the FAFSA, and student income is assessed at a rate of 50 percent, which can affect financial aid eligibility.





One workaround is for the grandparents to provide the cash gift to the parents instead of the
grandchildren, since presents to parents, are not required to be reported as income on the FAFSA.
Another idea is to wait until your grandchild graduates college and then give a money present that can be utilized to pay off school loans. Another choice is to pay the college directly.

Pay tuition straight to the School


According to federal law, tuition payments made directly to a college aren't thought about as taxable
presents, no matter how big the amount. Grandparents don't have to stress about the
$ 14,000 annual federal gift tax exemption. Paying for tuition is good - room and board, books, fees, equipment, and other comparable expenditures don't certify.

Aside from the apparent tax advantage, paying tuition straight to the college guarantees that your cash goes to places you planned, plus it gets rid of the money from your estate. And you are still free to provide your grandchild a separate tax-free present each year as much as the $14,000 limit ($ 28,000 for joint gifts).

Colleges will frequently deduct a student's college tuition help by the amount of the grandparent's payment. So before sending out a check, ask the college how it will affect your grandchild's eligibility for college-based aid. If your contribution adversely affects your grandchild's student aid, especially the grant or scholarship part, consider paying off your grandchild's student loans after graduation to help him instead.

529 plans.


A 529 plan can be an excellent method for grandparents to add to a grandchild's college education, while at the same time paring down their own estate. Contributions to a 529 plan grow tax-deferred, and withdrawals used for the beneficiary's qualified education expenditures are entirely tax-free at the federal level (and usually at the state level too).

There are 2 types of 529 plans: college savings strategies and prepaid tuition plans. College savings strategies are specific investment-type accounts used by nearly all states and handled by professionals. These funds can be used at any college in the United States or abroad. Prepaid tuition strategies allow prepayment of tuition at today's prices for the colleges that participate in the plan.

Read More: Will the New Federal Tax Laws Effect College Education Loans?

Grandparents can open a 529 account and call a grandchild as the recipient (only one individual can be listed as an owner,) additionally they can add to a currently active 529 account. The grandparents can contribute money to a grandchild's 529 accounts, or they can add smaller regular deposits.

Thinking about a lump-sum gift, a significant benefit of 529 plans is that under unique guidelines special to 529 plans, people can make a single lump-sum contribution to a 529 plan of approximately $60,000 ($ 120,000 for joint gifts by couples) and avoid federal gift tax. To do so, a special election needs to be made to deal with the gift as if it were made in equivalent installations over five years, and no additional additions can be made to the beneficiary throughout the time frame. Example: Mr. and Mrs. Jones can make a lump-sum contribution of $140,000 to their grandchild's 529 plan in Year 1, choosing to treat the present as if it were made over 5 years.




The result is they are thought to have actually made yearly gifts of $30,000 ($ 15,000 each) in Years 1 through 5 ($ 120,000/ 5 years). Because the quantity gifted by each grandparent is within the annual gift tax exemption, the grandparents will not owe any present tax (presuming they do not make any other presents to this grandchild throughout the five-year duration). In Year 6, another lump-sum contribution can be made and then repeat the process. In Year 11, they can do so once again.

Considerably, this cash is considered eliminated from the grandparents' estate, even with a grandparent created 529 accounts the grandparent is still in control of the funds. There is a caveat, however. If a grandparent were to pass away during the five years, then a partial part of the gift would be "recaptured" into the estate for estate tax functions.

Example: In the previous case, if the grandparent were to die in Year two, his overall Year one and two contributions ($ 28,000) would be left out from his estate. But staying part attributed to him in Years 3, four, and 5 ($ 42,000) would be included in his estate. The contributions credited to the grandparents ($ 14,000 annually) would not be regained into the estate. If the grandparents want to open a 529 for their grandchild, there are a couple of things to bear in mind. If you want to withdraw the cash in the 529 Plan for something besides your grandchild's college expenses-- for example, for medical costs or emergency functions-- there is a double effect: the portion of the income of the withdrawal undergoes a 10 percent penalty and will be taxed at your standard earnings tax rate. Funds in a grandparent-owned 529 account might still be factored in when identifying Medicaid eligibility unless these funds are excused explicitly by state law. Relating to financial aid, grandparent-owned 529 accounts are not required to be noted as a property on the government's financial aid application, the FAFSA.

Nevertheless, withdrawals from a grandparent-owned 529 plan are reported as untaxed earnings to the recipient (grandchild), and these earnings are evaluated at 50 percent in the FAFSA. By comparison, parent-owned 529 accounts are reported as moms and dad possession on the FAFSA (and assessed at 5.6 percent), and money from parent-owned strategies aren't counted as student income. To prevent having the distribution from a grandparent-owned 529 account count as student earnings, one choice is for the grandparent to postpone taking a withdrawal from the 529 plan up until whenever after the 1st of the grandchild's junior year of college (since there will be no more FAFSAs to submit). Another idea is for the grandparent to change the owner of the 529 accounts to the parents.

Read More: What Is FASFA and Should You Fill Out an Application?

Colleges deal with 529 plans differently for purposes of dispersing their own financial assistance. Usually, parent-owned and grandparent-owned 529 accounts are treated similarly because colleges simply require a student to note all 529 plans for which he or she is the named recipient.

Keep in mind: Investors ought to think about the investment objectives, dangers, charges, and expenditures related to 529 plans before beginning. You will find information about specific 529 plans is available in each provider's official declaration, which ought to be read thoroughly before investing. Before beginning, consider whether your state offers a 529 plan that gives citizens with favorable state tax benefits. Just like other investments, there are usually fees and expenditures associated with involvement in a 529 cost savings strategy. There is likewise the risk that the investments might lose money or not perform well enough to cover college costs as expected.

A present of more than the annual federal present tax exclusion quantity-- $14,000 for specific gifts and $28,000 for presents made by a married couple-- might have current tax and generation-skipping transfer (GST) tax repercussions (GST tax is an additional gift tax enforced on presents made to somebody who is more than one generation listed below you). If your contribution negatively impacts your grandchild's tuition, particularly the scholarship or grant portion, consider gifting the cash to your grandchild after graduation to assist him, or her in paying off student loans.

Remember, this strategy is quite complicated. You should definitely do this with your financial advisor at your side. 
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College Savings Day 5/29 Shows How You Can Save For College

Posted on Jun 3, 2019 with No comments

Jun 3, 2019

May 29 is referred to as College Savings Day, a play on the date 5/29, as it pertains to the College Savings Account's formal name, the 529 savings plan.

Research has revealed that post-secondary education can bring about increased earnings and better job prospects, but the increasing expense of tuition has actually ended up being a problem for many households.

In truth, a new report finds that since 2009, most families have actually seen state school tuition fees jump 85%, the largest rise in the country. In other words, education is costly, and if you want your son or daughter to finish college debt-free (or as close to debt-free as possible), you could consider saving now.

The benefit of doing this with a 529 account is it was established exclusively for the objective of helping families prepare for the overall expense of college.

Here are a few more reasons that a 529 account is worth looking at:


College is expensive. The earlier you begin saving, the more time to allow your savings to work for you. Even saving small quantities will ultimately gain greater returns down the road.

Cover more than just university tuition. 529 savings accounts can be utilized to pay for all types of the costs related to school, including books, tools, laptops and other essential materials.





Put to use towards technical education. In addition to tuition and fees at public or private colleges, 529 savings can also be used toward trade schools, featuring culinary schools, technical colleges and other courses. These types of schools are ending up being progressively popular due to the required abilities they can teach in addition to the increasing cost of common universities.

Tax benefits. The state of Arizona provides an annual Arizona state income tax deduction for 529 plan contributions of as much as $2,000 for personal tax filers, and up to $4,000 for married couples filing jointly. (Please consult your tax consultant regarding potential tax benefits. All details provided here is meant as a practical source of information. The info is general in nature, is not complete, and may not apply to your specific circumstance.).

Lower student debt. A 529 savings account can help relieve the problem of student loans and lower the amount borrowed.

Flexibility. There are generally two various types of 529 savings accounts: the money market savings and the 1 year time savings accounts. The money market option is a liquid account that permits deposits and withdrawals any time. The one-year time cost savings option is a time account that offers low-risk financial commitment opportunities and greater interest rates by securing your deposits for a specified period of time.

529 Plans are the tools you need to save for college expenses. Open one today!


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How To Save Money While You Are In College

Posted on May 26, 2019 with No comments

May 26, 2019

In your initially year of college, you could be managing numerous things. From going to classes and keeping up with coursework to managing a part-time gig to making new friends, there's a lot to handle, and keeping tabs on your expenses might not be high up on the list.

The financial habits you develop in your initial year of college can help you long after graduation day arrives. Starting the savings habit at an early stage is certainly critical if you wish to start your career with a strong emergency fund available, or eventually buy a house.

Saving money in college is everything about having a plan of action and making the right choices. If you wish to begin establishing your money cushion, keep in mind to follow these guidelines for saving money as a college freshman.

Create a Budget


Making a budget for the first time will not be as challenging as it may seem. A spending plan is simply a plan for spending. To make a budget, add up everything you anticipate spending for the month, then match up that to the money you have coming in.

That includes any money you earn from working or financial support your parents may furnish. The objective is to make sure that you're not spending more than you have coming in. If you are, you'll want to cut back on some of your expenses so you can find money to save.

Choose the Best Bank


The first year of college is a great time to open a bank account and a savings account if you have not already. Your checking account is for paying expenses or making purchases; your savings account is for holding the money that you don't plan to spend at this time.




When choosing a bank, concentrate on 2 things: the fees they require and the interest you can make on savings. Student accounts tend to carry fewer fees, but at the same time, it pays to make certain you're getting the best rate possible on your savings so your hard earned money grows quicker.

Make Use Of Student Discounts


Your student ID can be the secret to discounts on things like sporting events, food, and entertainment. Businesses in college towns offer discounts to students as a motivation to bring in the college crowd.

The next time you head to a restaurant, movie theater, or another neighborhood business, make sure to present your student ID and inquire about a discount. Take the cash you would have spent without the discount and tuck away it away in your savings account.

Cut Costs on Textbooks


Books can easily consume a big chunk of your spending budget in your first year of college and beyond, but it's possible to get the books you require for less. Sites like Amazon.com and Chegg.com offer used textbooks for sale at a reduced rate, and, if you 'd prefer not to purchase, you could also think about renting your books. Another way to save on books as a freshman? Connect forces with another student who's taking the identical class and share books, cutting the cost in half.

Be Wise About Student Loans


Student loans can help pay for college expenses if you do not have a 529 plan or scholarships to fall back on, but they can equally lead you deep into debt. If you're getting federal loans, the number one rules is to just borrow what you need. This saves you money on interest down the road, since you're paying down a small balance.

The same rule applies to personal loans, yet the other consideration to keep in mind is getting a cosigner for those loans. Personal student loan rates are based on your credit score, so if you haven't developed a strong credit rating yet, asking a parent to cosign could help you lock in a lower rate and more savings.

Go Simple on Food Expenses


Your school meal plan can add several thousand dollars to your total expense of attendance each year. One method to avoid that expense and save money is by preparing basic meals, either in your dorm if you're living on campus, or your apartment if you're living off campus.




Steer clear of pricey convenience foods whenever possible and prepare your meals and snack foods each week before you go shopping. To keep expenses down at the supermarket and save your budget, think about shopping at a low-cost chain like Aldi's, buying store labels versus name brands, clipping discount coupons, and using a coupon app for the things you buy.


Make The Most Of School Freebies


Among the very best aspects of college is that there's always something to do on campus when you're not attending classes. That could include movie screenings, theater productions, club get-togethers, or art shows and, on a regular basis, these events are totally free for students.

If you're attempting to keep entertainment from devouring a hole in your spending plan so you can save money, check out as many of these freebees as possible. As an added bonus, they're a fantastic way to get to know new individuals if you're feeling like a complete stranger in your first year of college.

Automate Your Savings


If you have actually started a savings account, you need to make an effort to ensure that the cash you want to save makes its way into it. The simplest way to do that as a busy college freshman is by automating your savings deposits. Go over your budget and decide just how much you can dedicate to saving every month.

Then, set up an automated transfer in that amount monthly, or break it down weekly or once every two weeks, depending upon how frequently you're adding money to your checking out. Even tiny amounts can amount to a sizable savings cushion by senior year.

Saving money in your first year of college can help protect long-term financial success. As you start saving, don't forget to set clear objectives to help you stay motivated in the process.


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529 Plans Are The Best Way To Save For College Expenses And Avoid Student Debt

Posted on May 4, 2019 with No comments

May 4, 2019

Opening a 529 is hands-down the most effective way for mother and fathers, grandparents, aunties, uncles, and godparents to reduce a youngster's dependence on student loans, and the tension and anxiety that comes with paying them off.

Because of compound interest and also tax temptations, parents that put away just $10 a week in a 529, beginning on their youngster's first birthday, could have about $20,000 in the till by the time" Joe College" heads off to school. That's real money. That, in fact, makes a a major difference in a persons life.

529 Plans Are The Solution


Today, the "college costs" figures are starting to change. Since 529's were established in the mid-90s, states have aimed to make sure the strategies work well at all schools. More than 25 years later, we have finally been made known to the public the benefits and necessity of a 529 Plan. Now, mothers and fathers realize that 529 strategies are the way to go to make a large distinction in the family's educational plans.

Up until this time, a great deal of the across the country chatter on student loans has concentrated on what a person should do when they are already drenched in debt. Our message has a special take. We desire individuals to know there is a way to avoid financial debt from the beginning, in addition to this is a technique offered to every person today.



The 529 Plan remedy is not dependent upon the outcome of a political election or a candidates position on the issue. It's not hypothetical. Mother and fathers can take issues in to their own hands today to stop their youngsters from having frustrating financial debt tomorrow.

Will 529s remedy the student debt catastrophe? Heck no. They're not money magic sticks. But they are a clever beginning. As well as they're something everyone must find out about. They're something everybody needs to have.

The 529 Plan remedy


Student loan debt has reached $1.5 trillion across the country. Greater than 44 million Americans have this financial obligation gnawing at earnings, limiting opportunities as well as likewise leading them to postpone acquiring houses and also having kids. Americans of all political stripes, red or blue, must be able to see the ramifications of this dilemma. It has to end and 529 Plans are the solution.


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The Best Way To Save For College Is A 529 Plan

Posted on Apr 10, 2019 with 1 comment

Apr 10, 2019

Are you going to start a family. In the process of getting the babies nursery ready, lining up maternity leave, figuring out childcare plans, as well as making decisions relating to the birth itself, there's something else you need to be thinking of. Just how do you intend on saving for college?

According to George Ihnot, President of Family Financial Advisers, the correct time for folks to plan for college cost savings is "immediately or as early as practical-- even right after your kid is born."

"Investing for college is the hardest type of investing, given that you have a short time span and a certain draw period," Ihnot says. "It's not like retiring, where you can adjust it. If you're not prepared for retired life, you can wait. You do not have that luxury with college."

Now that you know you're require to start right away, how much do you need to set aside?




"The rising price of university in times past has actually been well in excess of normal inflation, typically 6-7%," Ihnot says.

He suggests that you take the present cost of an exclusive 4-year college and multiply it by 5. That's the amount of cash you'll wish to have on hand. Since you understand just how much you need, the question is, what's the best type of account in which to save it?

A 529 Plan Can Help You Save For College


Depending on the state in which you reside, a 529 College Savings Plan is likely going to be your best option for tax-incentive college savings. Ihnot says that you can think of these accounts like Roth IRAs. As your kid nears matriculation, you can start to move assets from more volatile assets, like equities (stocks), to more stable assets, like bonds.

Some states grant tax breaks on contributions to 529 plans and others do not. A couple of states will even allow you take a tax deduction even if you contribute to another state's 529 plan. If you happen to live in a state without income tax or someplace that does not have a 529 plan, you still have alternatives.

"It does not matter what state you reside in, you can put money in every state's 529 plan," Ihnot claims. "And it does not matter what state you save into. You can send your kid to college and university in any state. The general guideline is that if your state charges income tax and there is an advantage for a contributing to a 529 plan, then you're better off contributing to your state's 529 plan."

"the correct time for folks to plan for college cost savings is "immediately or as early as practical-- even right after your kid is born.", George Ihnot, President of Family Financial Advisers

529 plans provide parents who are saving for college and university the benefits of tax-deferred growth and tax-free spending for Qualified Higher Education Expenses (QHEE). Some K-12 tuition is also considered QHEE. A word of caution: Colleges and universities must be accredited so as for tuition to be considered QHEE.

Even More Reasons to Use a 529 Plan


The majority of 529 plans come with a balance limit that varies from one state to another. Normally, it's around $250,000, Ihnot claims.

529 plans also provide you extra property protection in situations such as bankruptcy or a lawsuits.

"In many cases, there's a greater degree of asset protection than an individual or a joint account," Ihnot claims. "There's a public interest in your children being educated."

There's also a great deal of misinformation encompassing the amount that parents can contribute the 529 plans. Many believe that the contributions comprise gifts in the eyes of the IRS and are as a result capped at $12,000. This, however is not the case. Ihnot explains that each parent can contribute as much as $15,000 per kid annually, and more with some additional paperwork.


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Funding Options for Parents Starting Late When Saving For College

Posted on Apr 7, 2019 with No comments

Apr 7, 2019

The school year is going well across the nation, which suggests millions of families in the past year are focusing on how they will pay for school next year. As costs continue to escalate, however, many are stressed they'll never manage to save enough.

In 2017, the typical price of tuition, room and board at a four-year public school was greater than $36,000, a greater than $1,000 rise from 2016-2017. For private colleges, the charge is a lot more pricey, with the price tag close to $47,000. Add that up over the course of four years-- or more-- and it's no wonder that parents are on edge.

Without question, the soundest advice when it comes to investing savings for higher education is to begin early, however there are numerous Americans that, for what ever reason, have not had the ability to do that. If that's you, not all hope is lost because there are strategies to catch up or compensate.

Consider the following:


529 plans. One of the most popular college-funding vehicle is the 529 plan, which are typically structured like a retirement savings program, except the money can be used much sooner and is exclusively meant to pay for qualified education expenses. Pre-paid plans allow you to secure tuition credits at current rates at participating colleges.

Earnings grow tax-free and withdrawals are not subject to federal income taxes, while most states allow you to deduct plan payments. Unlike 401(k)s and individual retirement accounts, additions to 529 plans are not tax deductible at the federal level.




While many people think it's too late to invest in a 529 plan when an individual is in high school, such strategies are an ideal instrument for households that are behind.

For one, it's not ever too late to begin saving. Two, there are no contribution limitations, allowing households entering their peak earning years just like their kids become teens-- which is very typical-- a way to make large lump-sum contributions that can generate returns. Three, you can continue to make the payments until the student graduates, indicating the benefits will last longer than most realize.

Choose the optimal fit. When young people begin to think about which school is the most suitable fit for them, they typically look at an assortment of factors, including where their buddies are going, which school is furthest from home or even which one has the greatest football team. However, from a planning viewpoint, figuring out "fit" indicates something else, frequently requiring a thoughtful conversation between parents and children.


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3 Non-Tuition Costs You Should Be Ready for in College

Posted on Apr 2, 2019 with No comments

Apr 2, 2019

As you prepare to take on the financial burden of a college education, your financial planning may be centered around tuition expenses. If you are like many others, you may also include room and board in your budgeting efforts.

However, numerous other expenses also impact the total cost of a college education. While these other miscellaneous expenses are not usually as significant as tuition costs, they can be sizable. More than that, the cumulative impact of numerous smaller expenses that have been overlooked with your financial planning can result in substantial and unnecessary stress. These are some of the non-tuition college expenses to prepare for.

Miscellaneous Education-Related Expenses


Simply paying your tuition bill is unfortunately not sufficient. Numerous other education-related expenses crop up each semester. For example, you will need school supplies for each class as well as a laptop, a printer and its supplies, a special calculator for math courses and more.

Some classes require you to visit various establishments in order to complete required assignments, which may result in extra expenses. You may also have costs related to enrichment opportunities and extracurricular activities. In addition to allocating funds for school supplies, consider maintaining a miscellaneous fund to cover other education-related expenses that may crop up.

Travel Expenses


If you are attending a school far from home, periodic travel may be required. In many instances, a college student will return home in between semesters and for holidays. This may be required for the time period when dorms are closed each year, so the expense must be accounted for in a budget. You may avoid this expense by living off-campus with a 12-month lease.

Emergency Costs


Young adults are still learning the ropes, and they may make a few unfortunate mistakes from time to time. Emergency costs may be related to injury accidents, severe illnesses and even legal expenses. Buying an excellent health insurance policy can offset many medical expenses.





However, you also may need ample funds in savings to pay for lawyer fees, lawsuit settlement funding and other expenses. Your savings account balance should be sufficient to cover the cost of insurance deductibles, unplanned vehicle expenses and more.

Having money available can also save a significant amount of time by letting you avoid having to search for answers about insurance, the pros and cons of pre-settlement lawsuit funding, and other time intensive things.

College is stressful enough without contending with financial woes. As challenging as it is to pay college tuition as well as room and board, additional expenses must also be taken into account. By preparing for these additional expenses in various ways, you can more easily navigate through your college years and reduce the risk of running out of cash before obtaining your degree.


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How to Reduce Future College Debt

Posted on Mar 17, 2019 with No comments

Mar 17, 2019



It is coming to be increasingly difficult for children to have much better lives than their parents. The high price of education and the shrinking middle class are just two of the reasons. Not too long ago you could make plenty of money at a part-time employment to pay for nearly all of your college schooling. And when you finished you can get a really good career without much debt.

Some youngsters still may do that. However there are 42 million Americans that owe $1.4 trillion in student loan financial debt. That's more than $33,000 per person. Just think of if you were marrying, striving to start a family and purchase a home with this debt. Life is difficult enough without starting out in a large hole.

I can not solve this situation in a brief column, but I can offer you 2 suggestions on just how you as parents can help monetarily.

The 1st is the 529 College Savings Plan. It is an excellent method for moms and dads, grandparents and family members to support a youngster's education. The 529 is an unique account you can set up where you as the account holder can assign a beneficiary. All earnings on the money you put in this account is tax free as long as you use it for qualified education expenses.

The account owner is in control of the account. The owner invests the cash and disperses the money. They even can modify the recipient. One more attribute is that the owner can encourage other individuals to add to the account. So Aunt Millie can place a $25 birthday gift in the 529 instead of purchasing a present or a savings bond.





Every state has one or more 529 plans provided and you can invest in any state's 529 and use the money anywhere so it makes good sense to have a plan that has great investment choices and low expenses. The 529 plans that financial advisers promote are all a bad deal. They are pricey with limited high cost investment choices. The direct 529 plans with the state are almost always the way to proceed.

The second method parents can really help is rarely used, although I have been suggesting it for several years as a way to save, grow wealth and teach kids about investing. And that is the ROTH IRA for youngsters. There are 2 points you need to remember. Minors can not open a ROTH IRA account. An adult have to function as custodian till the minor becomes an adult at which time the money comes to be theirs. The other point is that there are restrictions to just how much youngsters can invest in the ROTH IRA

The 2019 ROTH IRA contribution limitation is $6,000. Any youngster who has acquired earnings can add as much as the amount they earned or $6,000, whichever is less. So if a youngster earns $100 trimming lawns, babysitting, working around your company or a real job, $100 can go into a ROTH IRA. The cash that in fact goes into the youngster's ROTH IRA can originate from parents or grandparents.

It is worth doing because $100 saved in a ROTH at age 10 and earning 9 percent per year till that kid retires becomes $11,400, tax free. If you string a couple of those contributions together while your children are young you can truly help them in the future.


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Saving and Spending: Why it’s So Important to Manage Monthly Bills In College

Posted on Feb 26, 2019 with No comments

Feb 26, 2019

We all know that money doesn’t grow on trees. That’s exactly why it’s so indispensable to keep your monthly bills in check. Good spending and saving practices can go a long way in contemporary society. If you fail to take charge of your bills, you can end up with all sorts of financial concerns that can take a toll on everything.

Credit Score


Losing track of your monthly bills can do a number on your credit score. If you want to avoid wreaking havoc on your credit rating, then you need to take control of all of your monthly bills, zero exceptions. Paying your bills late can be disastrous. Failing to pay them entirely can make it harder for you to get a mortgage, purchase a vehicle, and get a credit card.

Budgeting


Not handling your monthly bills can also interfere greatly with all of your budgeting goals. It doesn’t matter if you’re saving up for a new home purchase. It doesn’t matter if you’re saving to go on a trip to the Caribbean, either. Confusion about monthly bills can make it impossible for you to budget and save like a champion. That can lead to chaos all around.




Mental Clarity


Taking charge of your monthly bills can also be beneficial for your clarity of mind. If you flounder in the financial management department, that can make your brain feel foggy and out of sorts. Mental organization can do a lot for the order of your existence in general. Rock-solid financial management abilities can help you with all different facets of your life.

Other Essential Expenses


If you handle your monthly bills well, then it can help you figure out how much you have to set aside for other costs. Home AC maintenance service is an expense that many homeowners have. Routine cooling system maintenance can keep breakdowns and problems of all kinds at bay. If you want to protect your air conditioner from airflow troubles, odd smells, and more, then you need to make sure that you can cover routine maintenance work.

People who have comfortable and pleasant lives tend to be capable financial planners. If you want to join their ranks, then you need to figure out how to control your monthly bills. You need to grasp how much you have to set aside for everything from utilities to wireless high-speed Internet access. Outstanding financial management abilities can help you soar.


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Why College Arts Students Should Protect Their Portfolios

Posted on Feb 11, 2019 with No comments

Feb 11, 2019

As a college arts student, improving your skills and creating an impressive portfolio may be at the top of your list of goals until you graduate. These are essential in order to move on to the next step after graduation and land a great job with significant growth potential in your desired field. The last thing that you may be thinking about is protecting your portfolio but there are a few critical reasons why this should be a top priority throughout your college career and beyond.

Intellectual Property Theft


When you apply for a creative arts job immediately after graduation or even many years down the road, hiring managers understandably will look at your educational background and previous work experience. More importantly, they want to see what type of creative work that you can produce.

A job applicant with a stellar resume may have trouble landing a great creative arts job without a portfolio or if it appears as though that portfolio includes another person’s artwork. Intellectual property theft is a significant problem for individuals in this field, so you must take every step possible to protect your work. Consulting with an intellectual property lawyer early in your college career about the best way to protect your work is a smart idea.

Physical Damage


While you understandably do not want anyone to steal your work and claim it as their own, this is not the only way that your portfolio of work may be unavailable when needed. If you do not actively safeguard your portfolio, the work can be damaged.

This may be related to a fire in your home, water damage or even a pet getting hold of it. Protecting your portfolio from physical damage is easy to do when you understand the importance of doing so. For example, you may simply store your portfolio in fireproof lock box or safe. This consequently also protects your portfolio from theft.




From a professional perspective, there are few things that are more important to a creative arts professional than their portfolio. You will begin compiling a portfolio of your work early in your college career, and this is the time when you should begin protecting it against theft and physical damage.

Now that you understand what the risks associated with portfolio loss are, you can take action to protect your work going forward. Keep in mind that you will need to continue to protect your expanding portfolio throughout your career.


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How to Make Utilities Affordable on a Strict Budget in College

Posted on Jan 31, 2019 with No comments

Jan 31, 2019

When you’re on a tight budget, it’s so important to stay within the lines. When you don’t, it can lead to debt and more negative financial scenarios. It’s one thing to cut down on your expenses for food. There are food banks, coupons and other ways to make food stretch. However, this same concept doesn’t apply to your utility bills. Thankfully, there are ways you can make your utilities more affordable when you’re on a tight budget. Consider the following four ideas.

Limit Energy Consumption


This doesn’t mean that you’re supposed to sleep in a cold home during the winter. However, it does mean that you need to be intentional with your usage. Keep the thermostat at a consistent temperature like 69 degrees during the seasons. Use space heaters with timers for rooms that you’ll spend a lot of time in.


Wear a layer or two as well. Try to cook meals no more than twice a week. When you cook major meals ahead of time, you won’t have to heat up the stove for longer periods of time. Turn off the lights once you leave a room. Unplug your items when you’re finished watching television or using the toaster. These small tips add up.

Find an Affordable Internet Service Provider


It might be a wise idea to let go of your cable and internet package. There are many an internet service provider to choose from, so make sure you find one that works for you and your needs. Plus, you can also watch your favorite shows through inexpensive subscription programs online.

Implement Ways to Cut down on Water Usage


Check to see if there are any leaks. If water is continuously running in one of the toilets, make sure the issue is fixed quickly. Take shorter showers. It’s also a good idea to use a low-flow showerhead. It’ll help you conserve water, get clean and keep your water bill low.

Talk to Your Utility Providers


Always remember to talk with your utility service providers. Ask about any potential programs they offer that can help you decrease your monthly bill. Sometimes, it’s just about making a phone call to inquire. In other cases, they might send someone to your home in order to give a free consultation. Many utility companies will provide free consultations so that you can learn more about ways to conserve energy and spend less.

As you implement these tips and become used to them, you might find yourself preferring this way of living. When you do get some financial margin, these tips aren’t bad to maintain. After all, you can still live comfortably. The bills will be paid and you’ll get to put more money into other areas like savings or travel.


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4 Plans to Save For Private Education Expenses

Posted on Jan 20, 2019 with No comments

Jan 20, 2019

Preparation and saving for private school tuition now is possible and more economical than financing the cost from future cash flow. While some restrictions may exist, there are tax advantaged ways of making the costs more budget-friendly and more efficient with your overall financial planning.

529 Plan


The most largely employed education savings account. Contributions are non-deductible inside a 529 plan, however they grow tax free inside the account. The contribution limitation for 2018 is $15,000 annually per contributor or $75,000 per contributor as a 5 year "pre-paid" gift. 

If applied toward qualified secondary and post-secondary education costs, distributions are tax free. There are distribution limitations for K-12 costs. The adult retains full control as the owner of the account.

Coverdell Savings Account (ESA)/ Education IRA


The non-deductible additions grow tax free inside the account. If the funds are employed for qualified education costs, distributions are tax free given they are used for qualified costs relating to private schools, but they can be utilized for both secondary and post-secondary academic expenses.



Contribution restrictions contain several factors including amount ($2,000 annually for 2018), income limits, and age limits of the minor. Contributions are deemed a gift to the child and effectively become the property of the beneficiary if they are not used for qualified educational expenses.

Regular Custodial Accounts (UTMA/UGMA)


This account is similar to the ESA in that contributions are a gift to the college student. At age 18 the student takes possession of the account. The tax benefit is different from 529s and ESAs. Distributions do not carry additional taxes as the earnings are taxed throughout the duration of the account. 

The taxation of UTMA accounts have shifted for 2018, making it very necessary to understand how this account would be taxed for you. This account usually has a dual-purpose because the goal is to pay for education with the intention that the child will receive the balance as a "graduation gift" once he/ she has completed school. The contribution limit into an UTMA is $13,000 annually per donor for 2018.


Pre-paid State Tuition Plans


Although not available in every state, some have particular plans for resident students attending an in-state university that allows for a parent to pre-pay college expenses. The adult pays for tuition at a reduced rate and can "secure" the tuition cost for that child, years in advance. This plan is seldom used, nevertheless, because of the restriction on where the child can attend. Each state program is unique and requires further study, if being considered.

As with retirement, it is important to prepare for college costs as early as possible to take advantage of long-term growth opportunities. Any one of these options will assist in saving for those costs and relieve the pressure of tuition expenses when they come due. It is recommended that one look for the advice of a Certified Financial Planner ™ expert or tax expert when deciding which plan is best for each unique circumstance.


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Side Hustle: 4 Easy Ways to Make Extra Cash in College

Posted on Jan 16, 2019 with No comments

Jan 16, 2019

Getting money can seem like one of the hardest things in the world. It doesn’t have to be that difficult for anyone, however. If you’re clever and resourceful, earning spare cash shouldn’t be too complex for you. There are all sorts of options out there for ingenuous folks who don’t want to take “no” for an answer in life.

Throw a Garage Sale


Organizing a yard sale can help you earn spare cash rapidly and easily. All you have to do is browse through your belongings. If you find things that you no longer want or use, then you should consider selling them. Putting together a neighborhood garage sale can be excellent for people who want to unload and make money simultaneously.


Sell Your Possessions on the Internet


Selling belongings on the Internet can be suitable for people who want to easily and rapidly score spare cash. There are so many websites online that are fitting for the sales of old items. There are many auction sites that are fitting for them, too.





Create comprehensive listings for any items you wish to sell. If you want to sell an old acoustic guitar, write about it in great detail. Include clear photographs of it from numerous angles as well.


Look for a Part-Time Position


Part-time work can be helpful to people who need spare money. You don’t have to get a part-time job at a boutique or a grocery store, either. If you’re unable to find the time to squeeze in a conventional part-time position, you can think about starting a pet walking or sitting business in your neighborhood. You may be able to feed cats that are alone while their owners are away on business or on vacation. You may be able to walk dogs that have busy owners as well. Be sure to explore all of your available job paths.

Recycle Scrap Metal


Scrap metal recycling can be a superb option for people who are in need of more money. Be on the lookout for scrap metal services that are accessible to your household. You can even look around your community. Scrap metal recycling can help people simply and confidently make money. It doesn’t call for a substantial time commitment in any way, either.

Earning extra cash can make you feel smart. It can help you save for all kinds of essential purchases as well. Resourceful people can explore all sorts of money-making avenues nowadays.


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Withdrawing Money From A 529 College Savings Plan

Posted on Jan 11, 2019 with No comments

Jan 11, 2019

Parents who've been saving for years know the benefits of putting dollars into a 529 college savings account. They get huge tax breaks on the cash. However what goes on when it's eventually time to take the money out? Financial experts at Money Magazine say there are smart techniques to accomplish it.

If you don't spend the money on a valid 529 expenditure, you'll pay income tax on the gains in the 529 and a 10 percent penalty on the amount you saved. Legitimate 529 expenses consist of common things, such as tuition and supplies, like books and personal computers. You can additionally use the money towards room and board if the trainee is registered in school at least half-time.

As you spend, be sure to keep all your receipts. The IRS may have questions later. Know that when you spend the money also make a difference. You need to spend it in the corresponding year that you make the withdrawal. That means the fiscal year, not the academic year.




If you're lucky enough to have left over 529 funds, you can avoid taxes and penalties by saving it for graduate school, moving the money to another child, a family member or perhaps apply it to advance your own education.

- Managing Your Strategies For 529 Plan Withdrawals -


Money Magazine says that in some cases you can even use 529 money towards education expenses for kids in kindergarten through the 12th grade, but only up to ten thousand dollars per child, per year. Simply be sure to get in touch with your plan administrator to find out what's covered.





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