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Tarra Jackson

Mar 15
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3 Ways to Save for College

By College, Money Management, Saving No Comments

By guest contributor Sallie Mae®

As you start to save for college, consider three of the most popular ways to set up a college fund: 529 College Savings Plans, UGMA/UTMAs, and Education Savings Accounts (ESAs).

Each one offers different features and benefits. Other methods include high-yield savings accounts, life insurance, and mutual funds. A financial advisor can help you choose the best one for your needs.

529 College Savings Plan

State-sponsored 529 plans are one of the most popular ways to save for college. You can invest in any state’s 529 plan regardless of your residence, but check with your own state’s plan first. Most offer special tax advantages for residents. 529 plans give you additional benefits such as:

  • The account owner has full control over the account, so you can be sure the money is used for college.
  • Your assets can be used for any qualified higher education expense, including tuition, fees, and certain room and board costs.
  • Earnings grow tax deferred and are free from federal income tax when used for qualified higher education expenses.1
  • Most plans offer gifting programs, which allow friends and family to celebrate milestones by making contributions directly into your account.

UGMA/UTMA

An UGMA/UTMA (which stands for The Uniform Gift to Minors Act/Uniform Transfers to Minors Act) is a custodial account usually set up at a bank. The assets in the account are designated for the child, but do not have to be used solely on education. Benefits include:

1 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

Originally posted on March 19, 2015.

Mar 14
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More than 3 Million Scholarship Opportunities for Students through Sallie Mae® Scholarship Search

By College, Money Management, Saving No Comments
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Scholarships and grants are used for 31% of college costs, according to How America Pays for College 2014.  Yet, in the rush of coursework and other activities, students may overlook this valuable source of free money for higher education.

SMSM_MKT10139A_ScholarshipGraphic_280x158A valuable source of money for higher education

Students may believe that scholarships are all geared toward academic excellence or athletic prowess.  While some are, there are millions of opportunities for every kind of talent, background, and experience.  Students should broaden their searches to include place of origin, ethnicity, family professions, and political persuasions.  Another myth of scholarships is that scholarships are only for high school seniors.  Students in all years of their college journey can be eligible for free money.

3 milion scholarship opportunities through Scholarship Search by Sallie Mae® 

Scholarship Search by Sallie Mae®  has a free service that automatically searches through a database of more than 3 million scholarships, worth up to $18 billion, based on a wide range of activities, interests, and affiliations entered by the student.  Email alerts are sent when new matches are posted.  Plus, by registering, students can easily enter a monthly sweepstakes for a chance to win $1,000.

Free college planning resources

While 98 percent of parents believe that college is a worthwhile investment, only 38% have a plan in place to pay for all years.  To help students and parents create planning and saving strategies, there is a suite of free tools, calculators, and resources at SallieMae.com/CollegePlanningToolbox.  Students can estimate their expected monthly loan payments after graduation, analyze award letters, and create a step-by-step financial plan using a combination of scholarships, grants, and loans.

Learn more about Scholarship Search at SallieMae.com/ScholarshipSearch.

 

Originally posted March 9, 2015.

Mar 12
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5 FAFSA Season Tips for Parents and Students

By College, Money Management, Saving No Comments

By Tameka Easter, Sallie Mae Social Media Director

Families with college-age children find themselves in a new season: FAFSA Season. Filling out the FAFSA (Free Application for Federal Student Aid) is the most important step you can take — it’s the only only way to receive federal student aid. Last year, the federal government awarded about $150 billion in grants, low-interest loans, and work-study.1 Make your FAFSA process smoother with these five tips:

Tip 1: Know your deadlines

The deadline for federal student aid is June 30 of the academic year in which the student plans to enroll in college. In other words, if you plan to enroll in college in August 2018, you must submit your FAFSA by June 30, 2018. But do try to submit your FAFSA as soon as possible after January 1. College and state financial aid deadlines can be as early as February or March of the senior year of high school. Colleges may require an additional application to be considered for institutional aid, so check your deadlines and apply as early as possible.

Tip 2: Have your information ready before you start

You’ll need your Social Security number, family financial information, most recent tax returns and/or W2s, bank statements, and a federal PIN number. If the student is a dependent, you’ll need financial information from parents and the student. This Department of Education guide can help clarify which parent’s information should be included: https://studentaid.ed.gov/sites/default/files/who-is-my-parent.png.

Tip 3: Get a PIN

If you plan to complete and submit your FAFSA online, you’ll need a Federal Student Aid PIN, available for free at https://pin.ed.gov/PINWebApp/pinindex.jsp. With it, you can apply and “sign” the FAFSA online, check the status of your submitted FAFSA, make corrections, and even e-sign loan promissory notes. Note: A Federal Student Aid ID will replace the PIN beginning spring 2018.

Tip 4: Do it online

This is the easiest way to fill out the FAFSA — and there’s no charge at https://fafsa.ed.gov/. If you have questions, the site offers online chat, and there are built-in error detectors to catch mistakes in real time. Your online submission will be processed within 3-5 days, compared to 2-4 weeks if you mail it in.

Tip 5: Review your information

At every step of the process, be sure to review the information to make sure that it’s correct. You can make corrections online at the government’s FAFSA site.

For more information on the FAFSA process, along with free tools and tips about paying for college, visit SallieMae.com/FAFSA.

 

1 fafsa.ed.gov

Originally posted on March 2, 2015.

Mar 08
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How to Financially Prepare to Launch Your Own Business

By Business, Money Management, Women's Wealth No Comments

I’m considering starting up a personal business. How should I prepare financially? —Anonymous

Being your own boss is the dream for many Americans.

But it’s not as simple as quitting your job and then pow! Instant entrepreneurial success. Instead, it takes time. And, of course, it takes money.

Here are a few ways to prepare.

Don’t quit your day job just yet

If you’re unsure about jumping into the world of self-employment, try some baby steps first. Pick up a side gig, turn your passion into a mini business or cultivate your side hustle into something bigger. And most importantly, set some money aside. You’ll need something to live on while you’re business is still getting off the ground and isn’t making money yet.

Kristin Sutton, a financial planner and founder of her own business, Debt Free Black Girl, admits that when she first embarked on a life of entrepreneurship, she was a little too excited to hit the ground running.

“I quit my job prematurely and it’s been a struggle,” she says. “Your job is your first investment into your business. Utilize that money to fund your start-up costs. It’ll keep you afloat while you’re starting to make money consistently.”

Kimmie Greene, a self-employment expert and head of communications at Intuit Quickbooks, says she frequently hears from young people who are excited to leap directly from college life to starting their own business. Her advice: slow down. Experiences working for someone else can actually make you a more successful entrepreneur.

“It’s really important to have a year to a few years working for someone else, because you establish a network and you learn your work style and you learn what it is to potentially manage someone else’s money before you manage yourself,” she says.

Know your numbers

Knowing the health of your business account means also knowing the health of your personal account.

Sutton suggests keeping your personal money and your business money completely separate — and start that habit on Day 1. When you open a new bank account for your business, it ensures you save money for supplies, investments and eventually taxes, all without dipping into your personal funds.

Her own tip: meet with an accountant.

“I suggest people do hire an accountant if they aren’t good at managing their own money,” she says. “In order to be successful with the business, you have to know your personal finances as well.”

Pick your investments carefully

The best part of starting your own business is earning your own money.

The hard part: deciding what to do with it.

At your past 9-to-5 jobs, taxes, retirement savings and other expenditures come out of your paycheck automatically. You lifted pens from the office supply closet and poured java from the office coffee maker.

But as a self-employed mogul, none of that comes free. In your initial business plan, calculate what money you will have to set aside for taxes, insurance, retirement savings, rent, material costs and other business expenses.

With the money left over, however, you have to consider what you’ll keep as income — and what you’ll invest back into the business.

Greene recommends considering what matters most to you at different stages of growing your business.

At the very beginning, for example, a new computer may be more valuable than a membership to a coworking space. But as you expand, you may find that a coworking space or conference ticket offers invaluable opportunity to promote your product, meet mentors, connect to the larger industry community and more.

 

Originally appeared on CNNMoney by @JuliaCCarpenter

Mar 06
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Getting A Tax Refund Is Bad, Actually

By Money Management, Taxes No Comments

Don’t give away free money.

The IRS rolled out the latest version of its tax calculator on Wednesday after updating it to reflect the new withholding tables. The free tool is designed to help taxpayers be sure they don’t have too much money taken out of their paychecks for taxes.

That’s because getting a big, fat refund is actually a bad thing.

While some people look forward to getting refunds for taxes they overpaid ― and some even consider it a way to save money ― overpaying your taxes is essentially giving the federal government an interest-free loan. The government gets to use your money for the better part of a year, then return it to you without a nickel of interest. So just to be clear: Getting a lump-sum check back from the IRS is actually bad, because you could have had that money in your savings account, where it would have earned interest, or used it to pay off debt ― or used it to not incur debt in the first place, because you had cash on hand.

With the IRS’ free tool, you can ensure you don’t have too much money held out of each paycheck.

This calculator is easy to use.

 

What You’ll Need

To use the calculator, you’ll need your most recent pay stubs and most recent income tax return. Your completed 2017 tax return will help you estimate your 2018 income to expedite the calculation. If you’re self-employed or likely to have income swings later in the year, you’ll probably want to revisit the calculator again later in 2018.

The goal, though, is to set up your deductions so you don’t overpay taxes or get a refund next year ― something that roughly 75 percent of Americans currently receive.

The IRS is not terribly interested in getting more people to break even on withholding if they like getting a big check every spring, said Mark Mazur, director of the independent Tax Policy Center and a former tax official with the U.S. Treasury Department.

“People seem to like to get about the same refund year after year,” Mazur said. “They seem somewhat surprised when things are different.”

And ultimately, the burden of estimating how much a taxpayer will owe in taxes falls to the taxpayer. All salaried workers must submit a W-4 form to their employer that authorizes the amount of money (in the form of allowances) that they want taken out of their paychecks to cover their tax obligation. The flip side of overestimating what you will owe is underestimating it, which could result in getting slammed with a hefty tax bill when you file your return.

Why The Calculation Matters

The fear of owing taxes is one reason many taxpayers overpay during the year, according to Motley Fool. After all, the logic goes, it’s a far more pleasant experience to get a refund than suddenly have to cough up cash to pay the IRS.

The problem, though, is that people are far better off owing money than getting refunds, and here’s why: The bulk of Americans are extremely financially insecure. An estimated 57 percent of U.S. adults have less than $1,000 in the bank, while 39 percent have no savings at all. By limiting the amount of money we bring home each pay period, we’re putting ourselves at greater risk to incur more debt ― and with more debt comes interest charges.

Although many filers do use their refunds responsibly, a good chunk don’t. They see the money as “free cash” and an opportunity to splurge. In reality, a tax refund is just your money that you failed to collect up front, and you’re just getting it back from the government with no interest accumulated.

Check out the withholding calculator, then follow its recommendations for allowances when filling out or filing a new W-4.

 

Originally appeared on HuffingtonPost.com.