Graduates: Paying Educational Loans

20 Apr

Can anyone believe it is already the end of April? The year flew by, and you Boilermakers did some amazing things! For the seniors, the highlight is probably going to be graduating. No matter what your next step is, we are so excited to see how you impact the world.

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There are many changes on the horizon, and you are probably thinking much about the future. One thought that’s probably impacting you is how you will pay off the educational loans you took out to earn that wonderful degree. While it seems scary, heading into your post-college life with federal student loans will be just fine, especially if you remember these facts and tips about your loans:

1. Your first payment will be due 6 months after graduating. Direct Subsidized Loans and Direct Unsubsidized Loans have a six-month grace period before payments are due. For those of you graduating in May, this means your first payment will be due in November. Your loan servicer must provide you with a repayment schedule stating when your first payment is due, so be on the lookout for that in the mail, as well as in emails. If they have not contacted you, be sure to log into the National Student Loan Database System(NSLDS) to find out who will be handling your loans. Make sure they know how to contact you so you don’t miss any communication!

2. There are different payment plan options to suit your needs.

Traditional Plans

Standard Repayment Plan

The Standard Repayment plan consist of equal monthly payments over a 10-year period of time. This repayment plan is good for those who can handle making their monthly payments and make enough money to afford them. This payment plan is best for those who have minimal other debts and start working right out of school.

The Pros: You’ll pay off your loan faster compared to other plans, and pay less interest as a result.

The Cons: Your monthly payments will be higher than those made through other plans.

Graduated Repayment Plan

The Graduated and Extended Repayment plans could be an option for you if your income is low when you graduate but will increase quickly. Under a graduated plan, payments start out low and increase during the repayment period, usually every two years. This is a good plan if you can’t afford your current payments but know you will make more money in the years to come.

The Pros: Your loan is still paid off within 10 years.

The Cons: You’ll pay more interest over the lifetime of your loan compared to the Standard Plan.

Extended Repayment Plan

An Extended Repayment Plan is an option if your loan amount is more than $30,000 and you want to stretch your repayment to 25 years.

The Pros: Smaller monthly payments (since they’re spread out over as many as 25 years) and more time to pay off your loan.

The Cons: You’ll be saddled with payments for a longer period of time as well as pay more interest.

Income-Driven Plans

If you qualify for an Income-Driven plan, these are often the most attractive options if you’re willing to recertify your payment each year (it’s not very difficult). However, some of these are contingent on when you took out loans! If you’re interested in student loan forgiveness*, you’ll need to be enrolled in any one of these plans.

Income Based Repayment Plan

If you’re not making enough money to cover all of your monthly expenses the Income Based Repayment (IBR) Plan would be a good option. There are two separate calculations for IBR which are dependent upon when you took out your student loans.

The Pros: The IBR plan takes into account your annual income as well as your family size. Your payment will be 10% of your discretionary income** if you were a new borrower on or after July 1, 2014. Otherwise it will be 15%. Any outstanding balance on your loan will be forgiven after 20 (for undergraduate loans) or 25 (for graduate loans) years.

The Cons: You will have to pay income taxes on any forgiven debt unless you qualify for PSLF (this is true for all loan forgiveness).

Income Contingent Repayment Plan

If you have a federal Direct Loan (other than a PLUS loan), you could opt for the Income Contingent Repayment (ICR) Plan. Your payments could be as low $5 or even $0.

The Pros: Your monthly payment will be the lesser of 20% of your discretionary income or on a repayment plan with a fixed payment over 12 years. You can have your remaining loan balance forgiven after 25 years of regular payments.

The Cons: You’ll pay more over the lifetime of your loan than you would with a 10-year plan, your payment could be lower than the monthly accrued interest and your loan principal will grow. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

Income Sensitive Repayment (ISR) Plan

The Income Sensitive Repayment (ISR) Plan is only available for those with Federal Family Education Loan (FFEL) Program. Payments are based on your annual income, family size, and total loan amount. You would pay the loan off in fifteen years.

The Pros: Each lender has their own calculation, but generally it is between 4% and 25% of your monthly gross income, although your payment must be greater than or equal to the interest that accrues.

The Cons: It’s only available for up to five years. After that time, you must switch to another repayment plan. You must reapply annually, and there’s no guarantee that you’ll have continued enrollment in the plan.

Pay as You Earn Repayment Plan

The Pay as You Earn Repayment (PAYE) Plan is another option for those not able to afford their current monthly payments.

The Pros: The PAYE plan takes into account your annual income as well as your family size. Your payment will be 10% of your discretionary income. Any outstanding balance on your loan will be forgiven after 20 years.

The Cons: PAYE is only eligible to those who were new borrowers on or after October 1, 2007 and must have received a disbursement of a Direct Loan on or after October 1, 2011. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

Revised Pay as You Earn Repayment Plan

The Revised Pay as You Earn Repayment (REPAYE) Plan is very similar to PAYE. This plan was created to allow more borrowers the opportunity to have their payments lowered to 10% of discretionary income.

The Pros: Not dependent upon when you took out your student loan, the payment will be 10% of your discretionary income. Any outstanding balance on your loan will be forgiven after 20 (for undergraduate loans) or 25 (for graduate loans) years.

The Cons: If you are married, your spouse’s income will be considered whether taxes are filed jointly or separately. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

You can get a closer look at these payment plans and get your questions answered here.

 3. Make your payments on time. Yes, this is elementary and a no-brainer that you’ve also heard about credit cards, utility bills, and anything else you could possibly owe money for. However, many people do not actually know the consequences of missing student loan payments. For example, if your loan is in default, the feds can actually take your tax return and apply it to the overdue loans. Communicate with your lender, set-up your payment plan, and set reminders for the date your payments are due to avoid adverse consequences.

 To all of the graduating seniors, CONGRATULATIONS!! We wish you all the best in your bright futures, and never hesitate to come to My Money if you are in need of help with financial topics.

Boiler Up!

Breakfast on a Budget: Delicious, Healthy, & Affordable

13 Apr

“I have two exams this week, a paper I haven’t even started, a couple of shifts scheduled at work, an intramural volleyball game, and maybe a social life that will still in that mix.”

How many times have you or a friend uttered a very similar sentence during these exciting, but busy, college years? Students are constantly on the go, making it challenging for most to even think about making proper meal choices. They grab food here and there whenever time permits, and often regret those choices later since they were never really healthy or satisfying, just convenient.

Breakfast seems to be the meal that most commonly falls to the wayside as college students go about their busy days, yet it is the most important meal to think about. Yeah, yeah, everyone is told that breakfast is the most important meal of the day starting in kindergarten, but could it actually be true? Research shows that people who eat a wholesome breakfast in the morning are in better overall health, have more energy throughout the day, and are better able to successfully complete cognitively-demanding tasks.

So, what to have for breakfast when you are busy and on that tight, college kid budget? My Money at Purdue has some ideas for you:

1. Overnight Oats Keto_Overnight_Oats_square

While overnight oats require a bit of prep the night before, no actual cooking is required! All you need is the container you want to eat your oats in (mason jar, tumbler, Tupperware, etc.), and ingredients you love. Throw them in and – voila!- a delicious and nutritious breakfast. A good overnight oats recipe to start with includes:

  • ½ cup rolled oats
  • ½ to one single-serve container Greek yogurt (depends on preference)
  • ½ banana, sliced
  • fruit to top with
  • ½ cup milk of choice

All you need to do is throw in the oats, layer them with yogurt, banana, and any other fruit you want, and pour the milk in last. Put a lid on the container, shake it up, and let sit in the fridge overnight. When you wake up, you will have a breakfast that just requires a grab from the fridge! It’s easy to get creative with overnight oats, so feel free play around with your favorite ingredients. You can also find more overnight oats ideas here. The average cost of a serving of overnight oats is around $0.60, varying depending on your ingredient choices.

2. Fruit Smoothies 

Talk about healthy, tasty, and a breakfast that lends itself to multi-tasking. All you have to do is drink it! Here is a favorite classic smoothie recipe:

  • 1 frozen banana
  • ½ cup frozen strawberries
  • 1 cup milk of choice
  • ½ cup Greek yogurt
  • honey or maple syrup, to tastemilkshake-1021027_960_720

Throw it in the blender in the morning or make it the night before to save for morning! If you like sweeter breakfast, play around with peanut butter and cocoa powder in your smoothies. Check out more smoothie recipes here. In general, you should be able to make around 4 smoothies for $3, making your smoothie another breakfast under a dollar!

3. Hard Boiled Eggs (plus grab fruit)

When you are in a huge time crunch but also want to grab a satisfying and slightly savory breakfast, nothing beats grabbing a hard boiled egg from the fridge. Add a piece of fruit, and you will be satiated until lunch. Have you heard of a billion different ways to hard boil eggs? A tried and true method recommended by My Money is as follows:

Fill pot of eggs with cold water, set on stove, and bring the water to a boil. As soon as 6030618367_b3ab25ca65_bwater starts boiling, turn off the heat and cover the eggs in that pot for 12 minutes. Then, carefully drain the water out, and you should have perfect hard boiled eggs!

When breaking down the cost of grabbing a hard boiled egg and piece of fruit, this meal totals in at a whopping $0.30 or $0.40.

4. Breakfast Burritos

If you want to set aside an hour on the weekend to cook some make-ahead breakfast with your friends, breakfast burritos are the perfect item! There really are no rules to them. Just have tortillas on hand (consider whole grain if looking for added health benefits) and scramble some eggs, and then let the fun begin. You can add sausage, bacon, sautéed vegetables, even leftover potatoes that you have diced up! Be generous with your favorite cheese, and assemble all theburrito-chicken-delicious-461198 ingredients into delicious burritos. Put them in the freezer and pop in the microwave in the morning, usually for 1-1 ½ minutes. When taking ingredients in this bulk recipe into account, you are looking at about $0.50 per burrito. Make as huge of a batch you’d like and enjoy, because it is cheaper and healthier than fast food burritos!

5. Avocado Toast

Have you jumped on the avocado bandwagon yet? We hope so since they are yummy and healthy!  Avocado toast is even better:

Start with toast (again, do whole grain or wheat if you are trying to be really conscious ofdownload your choices). Then, scoop your avocado into a bowl and mash it up with a drizzle of olive oil, salt, and crushed red pepper. It needs to be mixed and softened, but leave some avocado chunks.

Some people like to even top this with an egg. There are many variations of avocado toast, and you can find some good ideas here. As long as you look for avocado deals, this meal stays around $1.00 and will probably not exceed $2.00.

 

We hope these ideas help you make some healthy choices, maintain your budget, feel full, and feel ready to accomplish the amazing feats you Boilermakers work on every single day!

Looking for a Student Job?

9 Apr

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Are you worried you won’t have enough money to have fun while you’re on campus this summer or for next fall? Think your parents will get sick of you asking them for money, you might consider getting a part-time job on campus. I know, I know, being a student is a full-time job, but how else are you supposed to keep up with the latest trends and enjoy a cup of Starbucks every few days? Especially without racking up more debt than you may already have from student loans. Earning a little extra cash during the school year not only helps you financially, but as reported by Student Employment Services at Purdue University, working 8-12 hours per week may actually help in academic performance and student retention.  Probably because working students learn better time management skills.

Now that you’ve decided (or have been influenced by your parents) to get a part-time job while attending college, START EARLY! This will give you an edge on everyone else searching for part-time jobs near campus.  If you want to work on-campus you have a variety of options, or if you’re willing to go off-campus, you will have even more options! To start your search for on-campus employment I would recommend you start here:

Start here for specific student employment options. Purdue University’s Student Employment website is a comprehensive job posting website with on and off campus opportunities.  This site is especially helpful if you need to search specifically for a work-study position.

Are you looking for other employment opportunities on campus?  Check out the different employment websites listed below.

Other options for employment near campus include the bookstores (either Follett’s or University Bookstore.) Also, there are plenty of restaurants and stores around campus that hire students. Just walking down the Chauncey Hill or the Levee opens more options for employment. There are plenty of restaurants there and a few shops that hire students. Make sure you get there early though; they often have to wait and see if their regular employees will be returning in the fall, so it’s good to get your name and face in their brains. There are enough employers hiring at any given time, that if you want a job you should be able to find one!

Can’t find anything there? If you are looking through alternative resources to search for jobs online BE CAREFUL!  Some online job postings sites may not screen their job postings and it could lead to a scam.  You can research the company’s track record and see if any complaints have been made through the Better Business Bureau. A safer option would be visiting a particular company’s website to see if they are hiring, or you could even call or stop by and ask for an application. Both West Lafayette and Lafayette have companies that hire part-time workers, and most of them are often hiring. If your job search isn’t going as well as you would like, don’t give up! Maybe you could work at Starbucks instead of that little coffee shop on Chauncey. If you have a close friend who works somewhere, ask if they can get you an “in” and have them tell their boss how great you are.

Good luck in your search!

 

Smart Money Moves for Your Internship Paycheck

23 Mar

Nathan Carmany, a Purdue Alumnus, is a Certified Financial Planner for Watermark Wealth Management

The spring semester is underway. Companies are recruiting and having conversations with your professors about ideal candidates. You attend networking events, purchase new interview clothes, and hopefully land the perfect position for the summer. To stay ahead of your finances, you need to make a conscious plan for your earnings.

  1. PAY HIGH INTEREST RATE CREDIT CARD BALANCESinternship txt crop

The average credit card balance for all student cardholders in 2015 was $906; younger students (age 18-20) carried a significantly lower average balance ($611) than students aged 21-22 ($1,013) or 23-24 ($1,109).

  1. CREATE A SPENDING PLAN

Consider creating a spending plan for the summer and school year to stretch the duration of the funds. Paul Arden stated, “Don’t look for the next opportunity. The one you have in hand is the opportunity.” Think about what opportunities you may put into your own hand with a well thought out spending plan.

  1. PAY FOR YOUR SUMMER CLASSES

Don’t overlook that your credits for the summer internship can cost money. Why not use some of the funds to possibly pay for those? Reduction of your total amount borrowed before interest is capitalized and recommended for faster loan payoff.

  1. PREFUND YOUR LIVING EXPENSES

Seniors, set aside as much as you can. When you find your first apartment or home, somewhere the move will create an unplanned expense. Inevitably it happens, an extra day rental on the moving truck, needing kitchen utensils, towels, or boxes. The money will help cushion for the unplanned expense. Do not forget about the extra cost of hooking up utilities, cable, or the internet.

  1. BUILD AN EMERGENCY FUND

Traditional financial planning calls for 3-6 months of living expenses set aside for an emergency fund.  Most people will experience at least one significant financial emergency in a three to five year period. It can be difficult for college students to save a full 6 months of living expenses, but setting aside a modest amount may prevent you from making a call to your parents when something comes up. Like my grandmother taught me, place the money in a zip lock bag and freeze it in a container of water, then see how easy it is to impulse spend!

  1. CONTRIBUTE TO A ROTHgraph spending plan final

The sooner retirement savings start; the less you have to save over the rest of your life. The compounding of gains and interest early on are difficult to make up if you delay contributing until later in life. By saving it in a Roth IRA, the earnings are tax free after age 59.5, as long as a Roth account was opened 5 years ago or longer. That 5 year clock begins with the first contribution to your Roth. If you need access to the money, contributions are removed first without any penalty.

  1. PAY DOWN STUDENT LOANS

Hopefully, you have been informed about the inability for most borrowers to ever declare this type of debt in bankruptcy and that prolonged periods of missed payments will lead to wage garnishment, a much larger loan balance, and the destruction of your credit score. The grace period on most student loans expires 6 months after graduation. Interest is capitalized (meaning that it is added to the loan balance) at that point unless you qualify under a different exemption. Paying down unsubsidized loans (make sure your loan servicer allocate it properly) with your earnings before the end of the grace period is a great way to cut the overall cost of the loan.

Think about your upcoming needs for the summer, school year, or beyond graduation. Pick one of the ideas to best suit your needs and work on an implementation plan. No matter which idea you execute, a well thought out plan will serve you well.

(Blog originally published in March, 2015.  Some sections have since been edited from the original)  MyMoney administrator

Playing Your Way to Becoming Financially Literate

20 Mar

 

Let’s face it, whenever I am speaking to college classes or high school students and their parents about financial aid or financial literacy topics, I see a lot of blank stares.  Filing a FAFSA, educational loans, budgeting and smart credit card usage are not, in today’s vernacular, “sexy” topics.  They tend to be dry and boring topics.  But there is hope.

pockets inside out

Budget?  What Budget?

The Practical Money Skills website has a variety of fun, but educational ways to learn about some of these topics while playing online games.  Whether you are a parent looking for a way to entertain and educate your children at the same time, a budding college student needing to learn what personal finance really means or an old financial aid administrator looking for new ways to engage an audience, help is available.

(From Practical Money Skills https://www.practicalmoneyskills.com/)

Much research has been done on whether online games and other interactive educational tools can teach people how to make better decisions regarding personal finances, including an exciting new study called “Improving Americans’ Financial Literacy: Educational Tools at Work,” by Lisa A. Donnini, PhD, KayAnn Miller and Kitch Walker. According to Dr. Donnini, “Children have always learned through play and today, digital media has resulted in increasingly more sophisticated games that can engage youth while at the same time encouraging learning.” In fact, many would suggest that the key components of good video games, including immediate feedback, rewards, motivation and goal-setting, may be a better fit for the high-technology, global world in which today’s kids live than the more traditional types of learning often found in the classroom.

Practical Money Skills Games
There are several educational games that teach personal finance and money management skills to students of every age on the Practical Money Skills website, including:

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Financial Soccer, the free multilingual video game developed in partnership with FIFA, which helps provide children and young adults with the knowledge and tools they’ll need to maintain sound financial habits over a lifetime. The game has been localized in 15 languages and has rolled out in over 41 countries.

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Financial Football, a fast-paced, National Football League-themed video game developed by Visa. The interactive financial literacy game is available online and as a free app for iPhones and iPads on iTunes in both English and Spanish.

Peter Pig’s Money Counter, in which kids ages 5 to 8 practice sorting and counting coins with the help of wise Peter Pig. The free game is also available for Android and iOS devices.

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Money Metropolis, which has kids ages 7 to 12 navigate a multi-dimensional world, making life decisions that will affect whether their virtual bank accounts shrink or grow.

Today, most children and young adults play video games on a regular basis. For this reason, games offer an excellent opportunity to engage and motivate students in learning, from home to the classroom.

 

AVOIDING SCHOLARSHIP SCAMS!

16 Mar

Right about now many of you are on the hunt for scholarships for the upcoming school year.  If you’re not, you should be.  Work with High School guidance counselors, family members, or friends who have been through the process before to get some helpful hints.

You can even start your own search.  There are great “FREE” resources available to help you look for private scholarships such as www.finaid.org/, www.fastweb.com and www.scholarships.com!

man hiking in woods; text overlay: How to Avoid Scholarship Scams

But some scholarship resources aren’t quite as friendly. The Federal Trade Commission has investigated numerous consumer complaints in recent years about such firms and found fraudulent activity.

What are some fraud warning signs to watch out for?

-You are required to pay a fee to apply

-A “money-back guarantee”

-The application requires credit card/bank account information

-Offers “exclusive” information, especially if you respond quickly

What are some common scholarship scams?

Phony scholarship-promises cash if you pay a registration fee

Phony scholarship matching service-pay a fee and they guarantee you will win awards

Phony educational loan-pay a fee and receive a low interest rate

Phony financial aid seminar-a high pressure, poorly concealed sales pitch

Phony grant-promises to replace loans with grant if you pay a processing fee

Where do I report a scam?

National Fraud Information Center (NFIC)

File an online complaint at www.fraud.org, call their toll-free hotline at 1-800-876-7060

Federal Trade Commission (FTC)

To report suspected fraud, visit www.ftc.gov and click on File a Consumer Complaint to use the online form, or call 1-888-FTC-HELP (1-202-382-4357).  For more information watch: https://www.ftc.gov/faq/consumer-protection/submit-consumer-complaint-ftc

State Attorney General’s Office

File your complaint with the Consumer Protection Division in your home state.

Better Business Bureau (BBB)

Report business fraud, or ask for information about a company. Visit www.bbb.org (You must have an address for the questionable organization to file a complaint).

United States Postal Inspection Service

To file a complaint involving mail fraud call the Postal Crime Hotline at 1-800-654-8896 or visit https://postalinspectors.uspis.gov/contactUs/filecomplaint.aspx to file online.

Spring Break is Here and So Am I. Now What?!

8 Mar

 

Spring Break is here and I am excited!  Even though it still feels like winter, spring is approaching quickly and it is finally time to take off from classes.  Are you staying on campus for Spring Break or sticking around West Lafayette for the summer and looking to save money on activities, spend time outdoors, or find indoor activities when the weather isn’t the greatest?

The Greater Lafayette Area is brimming with outdoor activities during the spring or summer from parks, to trails, to outdoor performances. You can visit the Lafayette-West Lafayette website here to get more information on all the upcoming outdoor activities.  I’ve gone ahead and summarized some of the activities below.

Lafayette/West Lafayette/Tippecanoe County Parks

Lafayette alone boasts 17 parks. Some of these parks have trails, some parks have pools, most of them have picnic shelters, and some of them are just soccer fields with a concession stand. Not to mention there are 12 more parks just across the river in West Lafayette! There are 3 good sized parks with hiking trails in West Lafayette (the Celery Bog Nature Area itself is 195 acres!) for hikers and casual nature lovers to enjoy. But in my opinion, the most diverse parks lie outside the city limits in Tippecanoe County. The Tippecanoe Battlefield in Battle Ground, Indiana, features a lot of history, including a monument in honor of the Battle of Tippecanoe; it’s also the start of the Wabash Heritage Trail.

West Lafaeytte Parks

Wolf Park

Located in Battle Ground, this park is a sanctuary for, you guessed it, wolves. It’s also home to coyotes, fox, and bison. They have limited hours (1PM – 5PM Tuesday through Sunday) but it only costs $8.00 for an adult, $6.00 for children 6-13, and free for children under 5 to get into the park. There’s a BUNCH of fascinating events happening over the summer also, including Howl Nights (which are awesome) where guests have the opportunity to see the wolves in the evening and hear them howl, something you can’t experience during normal business hours.

Photographer taking pictures of a wolf

Outdoor Art Trail

Are you in to art? Scattered across both Lafayette and West Lafayette are dozens of outdoor art pieces that you can walk around and see. There’s even a handy online map for routing out your own personal trail for the day. More information on the art pieces can be found online to give you some background on what you’re going to go see.

Prophetstown State Park

Not only is this one of Indiana’s newest state parks, it’s also full of fun activities to do this summer. You can hike, ride your bike down the bike trails, camp, or even swim for a small fee in the Family Aquatic Center. Close by is the Farm at Prophetstown, where you can take a tour of a horse-powered farm and learn about agriculture.

…but what if it’s raining?

Raining on Window

There’s still plenty to do around the Lafayette area indoors too!

-Visit some of the area’s art galleries or take an art class (glass working, anyone?)

-Check out the area’s nightlife. Whether you’re a pub or a coffeehouse kind of person there’s something for you. Most places offer live entertainment on Friday or Saturday nights too.

– Love all things vintage? Head to downtown Lafayette and check out all the antique stores on the “Antique Trail”. (Or pop over to the Tippecanoe Mall to completely avoid the rain and shop both vintage and major retailers – the vintage store Hot House Market!)

What are some of your favorite things to do in the Greater Lafayette Area? 

America Saves Week: Thinking About Retirement in College

2 Mar

themed-saveforretirement

If you’re in college your retirement might seem like a long way off. And it probably is, assuming you aren’t one of the very few people who become a wildly successful professional athlete and strike it rich early.

Unless you are currently swimming in cash as a college student and free of taking out educational loans, it probably isn’t realistic to be saving for retirement until you get your first post-college job. While now may not be the time to start investing into your retirement, here are three tips to remember as you’re setting up your career, and the rest of your life.

asw-retirement-txt

Minimize Debt: Saving for retirement is a lot harder if you’re paying several hundred per month against debt. So think twice (or three times) before accepting the full amount for educational loans that are offered to you and ask yourself if you really need all of it. Once you start working, make a plan to pay down your debt as soon as possible.

An increasingly popular choice for graduates today is to head back to the parents’ nest for a year or two to save money for life on your own. Keep in mind that living with your parents only helps if you use it as a springboard to save, not as an opportunity to free up more spending money.

Career and Employer Choices: When you’re looking into employers and eventually weighing (hopefully) several employment offers, consider more factors than just the dollar signs on the salary. Once you’re off your parents’ healthcare plan on, or before, your 26th birthday you’ll need your own plan, which can be costly if your employer doesn’t offer one.

Additional non-salary factors to consider are moving expenses, cost of living, vacation, and retirement options. Retirement plans where your employer matches your contribution guarantees you a 100% return on investment, not an easy feat investing your money elsewhere. Also keep in mind if you are part of the nearly 50% of Americans who think that Social Security payments will be important in your retirement that they currently average about $14,000 per year.

Start Saving Early: Within your first month of getting paid you might find yourself wondering how anyone can spend this much money, and then within a few weeks wonder where it all went.

A great strategy to start saving early on is to have money automatically deposited into a savings account. It is much easier to adjust to having less right from the start than to save what you have left.

To emphasize the importance of saving consider this scenario of two employees at the same company.

Alice is 25 and starts contributing $100 every month ($1,200 per year) toward retirement. Alice plans to retire at 65 so she has 40 years to save. Sheila also contributes $100 every month, but she waits until she is 30 because life was just too hectic to start saving earlier. What’s the difference in retirement savings at 65? Alice will have saved $310,000 compared to Sheila’s $206,000 – or a difference in over $100,000. Why does this happen? The miracle of compound interest that you once learned about in math class.

Five years is the difference between surviving and thriving in retirement. Your youth is an investing advantage you will never get back.

Remember that it is important to save up for both retirement AND a regular savings. The savings account is there for you when you need money for big purchases, to handle emergencies, etc. without having to use credit cards and lose money on the interest.

America Saves logo

It is important to avoid a mindset of “I’ll start saving when…” It will never be a better time to start. So take the America Saves Week Pledge and start today.

 

America Saves Week: Tax Time Savings for Students

1 Mar

 

themed-savingattaxtime-768x384As you’re filling out your taxes, there are a couple of tax deductions that being a college student may have made you eligible for. If you have received either a form 1098-E from a student loan lender or a form 1098-T from your school, be sure to have these on hand when you complete your taxes before April 15th (or hopefully sooner).

Taxes Afraid

1098-E: Given to you by your educational loan servicer, this Student Loan Interest Statement shows how much interest you paid on your student loans in the prior year. If you have been making student loan payments and paid over $600 in interest, you can expect to receive a 1098-E. You will receive one from each different borrower that you have educational loans through allowing you to deduct up to $2,500 in interest!

1098-T: This form is a tuition statement supplied by your university for your taxes. It will show qualified tuition and related expenses, scholarships and grants you have received, whether you have been enrolled at least half time, and if you are a graduate student or not. Entering this information into your taxes can allow you to claim the American Opportunity Credit or the Lifetime Learning Credit. You may not receive a 1098-T if all of your tuition and expenses were paid for via scholarships. To find your Purdue 1098-T, log into your myPurdue account! Full instructions are available here.

Learn more about filing your taxes at https://www.irs.gov/

 

America Saves Week: Pay Off High Interest Debt

28 Feb

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The average Class of 2016 college graduate had $37,172 in student loan debt, up 6% from the previous year.  Debt isn’t fun, but education is one of the better reasons to take on debt. While you may not enjoy paying back student educational loans there are some steps you can take to save yourself some money and make your payments hurt a little bit less.

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  1. Prioritize high-interest debt: While Federal Direct student loans are capped at 6.8%, private loans are not. Even worse interest rates? Credit cards. If you have credit card debt, prioritize paying it off before your student loans. 6.8% interest is no fun, but credit card interest rates 20% and higher can be crippling.

 

  1. Income based repayment: If you qualify for an income-based repayment (IBR) plan, do yourself a favor and consider one. Generally if your debt is higher than your income you will probably qualify. Even if you are able to make your payments without much issue, an IBR can still save you money. How? If you keep paying the same amount you did before, you can target your payments toward either your highest interest or smallest loans depending on which repayment style fits you.

 

Pick your payoff: There are two main methods for paying off debt when you have multiple balances to pay. The snowball and the avalanche method.

The snowball method entails taking the extra money you have and paying off your smallest debts first while paying the minimum on the rest. Then once that is taken care of, you roll that payment into the next smallest and knock off your obligations one-by-one. This is best for those who like the reward of seeing their different loans disappear the quickest and can help you stay on track easier.

The avalanche method is similar to the snowball where you make minimum payments on all loans but one. The difference is that you target the highest interest rates first. While you may not experience the visual rewards of seeing the small debts disappear quicker, you will save the most amount of money in the long run this way.

One way to not repay is by spreading out the extra you pay to all debts and pay a little bit additional on everything each month. This provides neither of the advantages that the avalanche and snowball methods have while still costing you the same amount. You get less savings than the avalanche, and less of the reward that the snowball offers.

 

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