Archive | March, 2018

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.

money_metropolis_sq_270_270

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/

 

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