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Saving

Oct 10
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5 Scary Money Myths: Things that Make You Go … BOO!

By Money Management, Saving No Comments

Talking about some money matters can be very scary. It’s even more frightening when those money matters are filled with myths. Don’t let these scary money myths keep you from discussing, addressing and improving your financial situation.

MYTH #1: I HAVE TIME TO PLAN MY FINANCIAL FUTURE!

Time flies, not only when you’re having fun, but in general too and cannot be replaced, replenished or restored. Most people, especially when they are younger, believe that they have enough time and can wait on planning for retirement. Unfortunately, the importance of future financial planning (retirement planning) is sometimes realized after several precious years of savings and earning compound interest have been lost. The scariest part about late retirement planning is that there may not be time or disposable income to save up enough money at the desired retirement age, which means working longer. Instead of retiring at age 62, you may have to entertain working until age 70 or older. SCARY!

To ensure that Time is on your side, be sure to Save Something Sooner and maximize the time you have.

MYTH #2: I’M TOO OLD TO GET STARTED

It gets easier to fall for the fear factor of “getting started” when get more mature in age. Whether it is starting a business, creating a spending plan, or going back to school to get your degree; it’s never too late to start. Yes, it is scary and may be completely out of your comfort zone, but it will be totally worth it.

So, “Do It Scared!!!” – Tarra Jackson

Just remember that doing it scared doesn’t mean you have to do it alone. Connect with entrepreneurs, mentors, or professionals to help you through the process. Just get started.

MYTH #3: MORE MONEY LESS PROBLEMS

It is easy to believe that more money will solve money problems. However, the rapper Biggie Smalls said it best, Sometimes …

“More Money More Problems.”

Adding more money to a financial fiasco may just magnify the money massacre. Often it is not about how much we make; rather it is about how much we spend.

So, before wishing upon a star for more money, make sure you monitor your spending behaviors and create or modify your budget to avoid creepy cash flow issues.


MYTH #4: I CAN’T AFFORD LIFE INSURANCE

One of the scariest myths is that life insurance is too expensive. In most cases, this scary story is a fallacy that keeps people from protecting their family from financial fright during the most difficult time of their life.

“According to a Life Happens and LIMRA study from this year, 65% of households have not purchased life insurance because they think it’s too costly.” – LifeHappens.org

For example, a $250,000 10 year term life insurance policy for a healthy 30-year-old male could cost about $160 a year or about $13 a month. But, one in four people polled in that study thought it would cost more than $1,000 a year. The cost of life insurance is mainly based on a person’s age, gender, health and possibly other factors like driving record. The younger and healthier the person is, the cheaper the cost of life insurance.

Even though one size does not fit all when it comes to the cost of life insurance, connect with a licensed life insurance agent to learn how affordable it is for you or your loved ones.

MYTH #5: BUYING NEW IS BETTER

Of course the Bling of buying New is Beautiful, but it doesn’t always mean it is Better. Especially when it relates to purchasing a car.

“On average, a new car will lose as much as 19 percent of its value in its first year of ownership. That means that your $20,000 new car will be worth about $16,200 after just one year,” reports Trustedchoice.com.

The rate of depreciation, however, does not continue at this rate after year one; it actually slows down. Therefore, a used car value may be more or at least closer to it’s cost.

Instead of buying new when car shopping, consider buying pre-owned (used) with a warranty and low mileage to avoid the possible doomed depreciation of buying new.


Apr 01
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5 Foolish Money Mistakes to Avoid

By Credit, Money Management, Saving, Shopping No Comments

It’s April Fools Day, full of pranks and jokes all for fun. However, there is nothing fun about being foolish with money.

So, here the top 5 Foolish Money Mistakes to Avoid.

Avoid impulse shopping.

Make shopping a planned activity with a list or a budgeted amount.  Unplanned or impulse shopping will sabotage your spending plan / budget.  If you really want to purchase the item, give yourself 24 to 48 hours to shop for a better deal, figure out if you really want it and can afford it. You’ll be glad you waited.

Avoid retail therapy.

When you are emotionally down or distraught, avoid shopping or making any large purchases.  We are less financially objective when our emotions cloud our judgment.  Do something that doesn’t cost anything or very little, like go for a walk, spend time with family or friends, etc.

Avoid overdraft protection.

Overdraft or “Courtesy Pay” will allow you to you overspend and charge you a fee for letting the debit card transaction go through. A fee of $27 up to $35 will be charged for every overdraft, even if the bill runs just $1 or $5 over the amount you have in your account. Some banks charge the fee if you’re a penny over. Essentially, you’re getting very short-term credit at effective interest rates that reach the high triple digits. Now was that cup of coffee really worth $40?

Avoid savings tampering.

If you have to tap into your savings to make a purchase, you may not be able to afford the purchase.  Establish a savings account that is not easily accessible with a certain amount directly deposited every pay period. Savings accounts are supposed to grow, not be chiseled away.

Avoid financial promiscuity.

Financial Promiscuity is when we use unsecured revolving credit (credit cards) for small purchases when cash should be used.  Avoid using credit to purchase that “value meal” or anything less than $50.  This will ensure that we do not slowly acquire Financial STDs (Substantially Tremendous Debt).

So, enjoy the day and play an innocent joke or prank on someone you love and keep the foolishness away from your money!

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.