$ave the Planet & Your Wallet

Amanda Locker, Majoring in Environmental Science at Purdue University
www.purdue.edu/mymoney

GIF by: Magellan

College is expensive enough so the thought of spending more money on “environmentally friendly products” is a huge turn off to any college student!  However, buying environmentally friendly products is not the only way you can help reduce your carbon footprint.  Here are some things you can do to save money and help save the planet:

Bottled Water

Just stop buying it now!  Bottles of water are expensive and the costs add up.  Vending machines on campus sell bottles of water on average for $1.25.  If you are buying even 5 bottles of water a month for the full academic year you are spending $56.25 on water… ON WATER! Not worth it, in my opinion.  Just get a refillable water bottle and you’re good to go.  Plus, if you really don’t want to spend any money on water, fill up your bottle at any of the drinking-fountains on campus.

Transportation

Purdue has a variety of options on how to get around campus! The bus system (CityBus) is a great way to get around and has many different route options for students who live off campus.  Or, if you are still unsure about taking the bus you can always start biking to class and using all those fantastic bike paths.  Either transportation option will save you time, cash, and will help cut down your carbon emissions!

Farmers’ Markets

As a student myself I know the feeling of wanting to eat healthy fresh foods but not being able to afford the costs of fresh food at the grocery stores.  However, there is good news! A study done at Bard College reports how in most cases the prices at Farmers’ Markets can be cheaper than at the grocery store.  In even better news Purdue has a Farmers Market and Lafayette does too! Buying local food helps reduce carbon emissions and helps boost your local economy. Even if you cannot do all three of these things just start out by trying one method above and see where it takes you!  Living a sustainable lifestyle really can be easier than you think.  Check this website out if you are interested in finding out what your Carbon Footprint is and more ways to reduce your impact on the environment. 

If you would like more information about sustainable living or if you have any comments you would like to share feel free to comment below.

Invest in Your Financial Future

Photo by: Poppy Thomas-hill

Raysha Duncan Purdue University Student and Peer Counselor
www.purdue.edu/mymoney

All of us are in college to invest in a better future. And we’re already taking a big step towards the future by investing in a big expense such as a college education. But, there are other activities we can participate in to help us save and plan ahead. I’m not here to tell you that you should get a Roth IRA or start your 401K now or start setting aside large chunks of money for your future dream home. This article discusses some helpful tips you can do now that will help you invest in your future.

1)     Get a reusable water bottle.

Sure, they are really good for the environment because you’re not wasting plastic bottles, but they’re also really good for your wallet. If you are getting your recommend 8 glasses (or more) of water a day and you buy each one of those water bottles, that’s a lot of money! A bottle of water from a vending machine costs about $1.50 and assuming each of those gets you about 2 glasses of water, then you’re spending about $6.00 a day. However, if you buy a reusable water bottle (I have a Brita), you’re going to be saving a lot of money! Also, a lot of companies hand out reusable water bottles as promotional items, and the cost to you is nothing! And like I always say, the freer the better!

2)     Know the weather in your area and be prepared for it.

GIF by: Magellan

By this I mean, know that it’s going to rain, snow, and be windy in Indiana and make sure you have the proper apparel. Buy water-proof shoes for rainy days so you don’t ruin your favorite pair. Get a reliable umbrella (maybe something not from the Dollar Store just to make sure it lasts). Get a hat, gloves, winter coat, and full ski gear. Just kidding on the last one, but know that it gets cold. And of course, watch the weather or get an app for that! Know what to expect and dress accordingly. By doing this, you’re not only saving yourself comfort-wise, but you’re also making sure that you don’t ruin non-weather proof items and you could even ward off a costly cold.

3)     Invest in your credit score.

This doesn’t mean that you should get a thousand credit cards and rack up insane amounts of debt. What I mean by this is be smart with your credit. Get one credit card and use it wisely (or not at all, just have it). Pay your bills on time. Take out as little in student loans as possible. If you can’t avoid them, look into different payment options so you are aware of your repayment options. Lastly, if you did take out student loans calculate your monthly repayment. Be prepared!

4)     Buy what you need.

This may sound simple, but think about it. Everyone has a friend who bought a bike to ride to class every day but doesn’t use it, ever! Does that sound like a good investment? The $150 spent for the bike could have paid for your groceries…for a month or two. Be smart about where you spend your money and avoid buyer’s remorse. One tip is to think about how much use you’ll get out of a particular item. If it’s clothing, are you buying it because it’s a fad now or are you investing money in your wardrobe? If it’s something larger, how many times will you use it in the course of a year? If you’re not going to use it nearly every day, maybe you should reconsider it. Check out Should I Buy those Shoes? for advise on how to avoid buyer’s remorse.

These are all fairly simple suggestions, but they really can help make a difference when it comes to saving money and investing in your future. What types of things do you do to invest in your financial future?

Renter’s Insurance: Pros and Cons

Chris Bibey is the founder of Finance.info, a website providing personal finance advice from the pros.

No matter if you are renting an apartment as a college student or a single family home as a young professional, you are going to have many financial decisions staring you in the face.

One of the most important questions you have to answer is this: should I purchase renter’s insurance or opt against this coverage for the time being?

Like any sort of insurance policy, you need to compare the pros and cons to ensure that you are making the right choice. Upon doing so, you will have a better idea of how to move forward.

Pros

Most people soon find that the advantages of buying renter’s insurance greatly outweigh any perceived downfalls. Here are several benefits you don’t want to overlook:

• It is affordable. While home insurance can often times be expensive, this is not the case with a renter’s policy. For approximately $10-$15 per month, you can receive up to $50,000 of personal property coverage. These numbers are rough estimates, but give you a good idea of just how affordable a policy can be.
• The ability to add liability coverage. In addition to coverage for your personal property, liability protection is a big deal. For instance, if somebody is hurt on your property or your dog decides to bite a neighbor, you will be protected.
• Plenty of companies offering high quality renter’s insurance. Regardless of where you live, you won’t have a difficult time finding an agent who can provide you with the policy you are looking for. Investigate your current auto or life insurer, they too can have renter’s insurance policies and bundling insurance policies could save you more money.

Cons

Generally speaking, there are not many disdvantages of renter’s insurance. However, here are a couple of things to keep in mind:

• Deductible. Like any insurance policy, there will be a deductible attached to this coverage. This is the amount you will pay out of your own pocket before your policy kicks in.
• Another monthly expense. Although renter’s insurance doesn’t cost a lot, this is an expense you have to add to your budget. Can you afford it?

Now that you understand the pros and cons of renter’s insurance, it is time to decide if it is right for you.

If you rent an apartment or home, this is a relatively cheap type of policy that can provide you with personal property and liability protection. Most agree that carrying some sort of coverage would be in their best interest. How do you feel about this?

Which Private Alternative Loan is Right for You?

Leo Hertling, Associate Direct Financial Aid Services and Operations – Purdue University
www.purdue.edu/mymoney

As we progress through the semester, some students are getting a bill asking for the next payment on tuition or for a payment in full.  This financial headache on top of living expenses, cell phone bills, etc.  When there isn’t enough in your checking or savings account to pay off everyone that you owe, how will you make it through the semester without working a full-time job and going to school full-time?  Oh and you have to maintain at least a 2.0 cumulative grade point all at the same time.

Before you begin looking at private loans, you should consider exhausting all of your federal eligibility for grants and loans. If you have not exhausted your federal eligibility or do not know what your federal eligibility is, you may want to contact your institution’s Department of Financial Aid. If you have fully maximized your ability for aid with the Federal and state assistance programs, and still have a sizeable balance due, then you may need to consider the use of a private alternative loan.  But which one is right for you?

If you search the internet for Private Alternative Loan, you will get about 4.5 million hits on Google in a little under ½ second.  I don’t know about you, but I don’t have the time to look at all those pages to see what is out there.  Not to mention that I have no idea who is reputable and who is not.  So how can you tell what lender to choose to satisfy your needs?

Let’s go back to basics:  Who does your family bank with?  What lenders do you know and trust?  Are there lenders that you don’t trust?

If none of the banks your family works with have a private student loan program, you may want to take a look at some of the online resources for lists of student loan lenders.  Purdue offers a list of lenders that our students have used in the past.  You can also receive a list of national private student loan lenders from finaid.org.

Why choose a private loan?

Private loans may be a financial alternative after all other sources of aid have been explored and found to be lacking.  If you find yourself in a situation where you are unable to cover the rest of tuition, living expenses, are unable purchase educational supplies, and borrowing is not possible through a Parent or Graduate PLUS loan, then a private student loan may be right for you. There are times when a private loan may have a lower interest rate than the current Parent or Graduate PLUS loan options.  Usually these loans have variable interest rates.  Be sure to review the borrowing conditions of the loan to determine the amount of variability in interest rates over time.  With variable interest a loan can start low and affordable, but the interest rate could increase significantly making payments unaffordable in the future.  A loan of this sort could adversely affect your future and wreak havoc on your finances.

A private loan may be the proper route for you to follow if you have been denied federal assistance due to a lack of progress toward your degree.  Many private lenders will funds to you regardless of how well you are currently doing in school.

Things to look at before choosing:

A private loan is in your name (and your co-signers name) solely and does not have a guarantor backing the loan; this is different from your Federal student loans.   In most cases, lenders tend to be conservative business men and women who like the idea of being paid back the money they loaned you.  If you default on the note, the lender will be left holding the note, with no recourse but to try to collect the money from you or your estate. Unlike other loans, educational loans cannot be dismissed in bankruptcy litigation. As a result, most lenders require a student with limited credit history to obtain a co-signer before they are considered for a private loan.  Your co-signer should be someone with a good credit history; this way, if something happens to you, they have someone to go to when trying to collect on the promissory note.   Even if you have very good or well established credit, you may want to consider using a co-signer for you loan.  Often lenders will give a lower interest rate or better terms simply because you applied with a co-signer.  Be sure to discuss lending options with your cosigner, they should have an equal say as to whom the loan is borrowed through since, in essence, they are borrowing the loan too.

Processing time from the start of the loan application to the disbursement of the loan also needs to be considered when investigating private loans.  The borrower needs to stay on top of communication between themselves, the lender, the co-borrower, and the institution they are attending.  It may take as long as 5 weeks to get the private loan in place at your institution.  By immediately responding to any queries sent to you by your lender, you may be able to cut this down to 2 weeks, but it will still not be faster than borrowing through the federal loan program. If you know you will need a private loan, the best practice is to apply early, finish all required steps by your lender, and keep the institution you are attending informed of where you are in the private loan process.

When choosing a lender, you will want to look at the terms and conditions of the loan.  The terms and conditions spell out the basics of a loan such as:  interest rates, origination fees, and repayment terms. Find multiple trusted lenders that offer private loans and compare the terms and conditions of each lender. Many lenders have multiple private student loans; find the one that best fits your need. 

Most loans will have a variable interest rate but there are a few with a fixed rate.  If you choose to take a loan with a fixed rate, you may have a rate that is much higher than if you had selected a loan with a variable rate.  On the other hand, if you select a variable rate loan, your interest rate may be lower than the fixed rate, either at first or for the entire repayment period depending on the economy.  The interest of a variable rate loan will be based upon a set variable like the current Prime (WSJ Prime 3.25%) or LIBOR (.78%) rate plus a margin.  The margin will vary from +0% to as high as the lender feels is necessary to adequately cover its risk exposure.   The better the credit of you and your co-signer, the lower the margin will tend to be.   The margin will remain in place for the life of the loan while base variable will go up and down as interest rates go up and down in the economy.  Review the terms and conditions of the loan you are considering to review the variables you may be facing.  Also look to see how often the interest rate will be recalculated and if there is an interest rate cap of any sort.

Origination fees:

Origination fees are fees that are assessed; you pay them, but never see the money.  A front end origination fee is where the lender takes a portion of the loan, a set percentage as defined in your terms and conditions, off the top.  A lender with a 2% origination would take $2 for every $100 borrowed.   The problem is that if you need $100 you need to borrow $103.  Some lenders will offer you a lower interest rate in return for paying an origination fee.

Term of the loan: 

The term of the loan is the period over which you will pay the loan back.  When does it begin?  Are you expected to make payments while you are in school?  Some lenders expect you to repay the interest on the loan even while you are in school or at least make a monthly token payment to assist in covering the interest that is accruing.   Other lenders would not require you to make any payment until you enter repayment.  Federal government student loans will normally be amortized over 10 years.  This will not be the case for your private loans.  Many of them have a repayment period of 15 to as much as 25 years.  While this sounds great remember the longer the period the greater the amount of interest.  It may make it easier on your monthly pocketbook to take a longer repayment but you may wind up paying 2 -3 times as much over the life of the loan.  You will also want to review the terms of the loan to see if there is an early repayment clause.  You can forecast the cost of your debt by using PayBackSmarter’s online calculator.

Borrower benefits: 

Does the lender give you an interest rate discount because you have an account with them?   Do they offer a benefit if you sign up for auto-debit where the loan will be automatically drafted from your bank account on the same day every month?   Some lenders will offer a discount if you let them do this.

Ultimately, it comes down to choosing the loan that makes the most sense to you and your co-signer given your projected income and possible income growth.

Have additional questions about whether borrowing a private / alternative loan or whether it is the right option for you?  Please feel free to contact the MyMoney at Purdue team at mymoney@purdue.edu or (765)494-5050 for more help. 

Should I file my own taxes?

Kimberli Youngblood, Report Writer, Data Support Specialist and Purdue Alumni
www.purdue.edu/mymoney

cartoon man with briefcase flowing of money

This is a question all taxpayers have faced at one time or another.  The dreary thought of the men in black suits showing up at your door to collect taxes drives people to complete their taxes.  I imagine most have heard their elders say that there were two sure things in life: taxes and death.  Regardless though, we still are left each year with the question of whether we should file our own taxes or use a professional tax preparation service.

Over twenty years ago, an option to purchase your own software that would be updated on the new federal tax laws did not exist.  When you completed your taxes, you paid a hefty price to a tax preparer.  This was unless you knew how to decipher the tax laws, prepare your own 1040 by pencil on paper forms, and then write it all again in ink for the final form.  Times sure have changed.

Individuals are no longer limited to a professional tax preparer or reading the fine print on all the new tax laws while filling out the paper form(s).  Today, the majority of people who want to file their taxes look for the ability to electronically file at the most reasonable cost.

One place I have found helpful in retrieving information on how to file your taxes is the IRS website.  The IRS website contains vital information on the file format your e-file should be in whether you file it yourself or have a professional tax preparer complete your taxes for you.  This information is available free of charge, at your fingertips, and at the click of a button.  If you do not have internet available at home, you can access this information at your local library.

There are many choices on federal tax preparation.  The sites listed below offer information and links to the IRS website to assist in choosing a method to electronically file your taxes in the right file format.  If you stand in a store having difficulties determining which e-file provider or software to use, visit the IRS website to see what information is available.

For free federal tax filing, if you are at or below an adjusted gross income of $57,000 per year, you can use most of the software links listed at their websites for free.

The IRS has a website that allows all taxpayers to use the e-file option for free.

• FreeFile
• IRS Information Site on Free File
• Authorized IRS e-file Provider for Individuals – You will need to put in your zip code to display the correct e-file options for your area.

For Indiana residents, you can free e-file  for state taxes as well, information links for those residents who qualify to file their state taxes.  Check with your state website to see what may be available for filing your state taxes to at a reduced cost or for free.

paper tax form

It is important to determine which option best fits your situation; filing your own taxes or using a professional tax preparer.  It is important to decide how much you wish to spend for completing your yearly federal and state tax preparation out of those same wages to justify the cost.

Estimate College Loan Amounts & Escape the Burden of Debt

Andrew is a writer who contributes his articles to various financial communities, websites, and blogs

 

Such high levels of student loan debt are an impediment to economic growth. It is becoming increasingly difficult for individuals to start their own business, make investments, or purchase homes due to the repayment burden of the loans. Relief from student loan debt will allow these individuals to better manage personal finances. They will be able to direct the funds towards the production of goods and services that are so often asked of them. Rising tuition costs and the necessity of higher education for a better future, forces students to borrow mountainous amounts of debt. This leaves you with one question – What is the correct amount that I should borrow?

The following are important tips you should consider to get help for college.

Talk to someone – A student borrower may not have enough experience to make accurate financial decisions on his or her own. A parent, grandparent, or an experienced representative at your school’s Financial Aid Office could enlighten you on the matter.

It is important that you consider only the necessary expenses while deciding on your loan amounts. You have to keep other unnecessary expenses out of the picture to avoid high debt loads. Think about your wants versus your needs!

Focus on your future needs – Just like borrowing extra money is not a good decision, borrowing less money than needed could also create financial troubles. Keep in mind that you have to take care of your expenses once you’re out of college. The extra money borrowed could help you meet your expense needs during college and to some extent, until you find a better source of income.

Don’t ruin your future – You must have certain goals in mind. Carrying a burden of huge student debt could prevent you from achieving those goals. Hence, it is important that you borrow reasonable limits so that your future dreams and plans don’t get stalled right away.

Estimate your monthly debt payments – You have to make monthly payments towards your student loan debt. Try to estimate the monthly debt amount. This way you’ll know whether the monthly debt payments are going to pull your budget and personal finances apart. You should be comfortable paying the monthly debt amount.  You can estimate your monthly student loan payments from online calculators like PayBackSmarter.com.

Keep your debt payments lower than your projected income – Don’t borrow more than what you expect to earn. Use salary estimators if you have to, but don’t ever overlook the fact that borrowing more than your future income could mean trouble.  You can find a handy salary estimator at salary.com

Knowing the right loan amount is the key to making the best use of student loans.

Should I file my own taxes?

Kimberli Youngblood, Report Writer, Date Support Specialist and Purdue Alumni
www.purdue.edu/mymoney

cartoon man with briefcase flowing of money

This is a question all taxpayers have faced at one time or another.  The dreary thought of the men in black suits showing up at your door to collect taxes drives people to complete their taxes.  I imagine most have heard their elders say that there were two sure things in life: taxes and death.  Regardless though, we still are left each year with the question of whether we should file our own taxes or use a professional tax preparation service.

Over twenty years ago, an option to purchase your own software that would be updated on the new federal tax laws did not exist.  When you completed your taxes, you paid a hefty price to a tax preparer.  This was unless you knew how to decipher the tax laws, prepare your own 1040 by pencil on paper forms, and then write it all again in ink for the final form.  Times sure have changed.

Individuals are no longer limited to a professional tax preparer or reading the fine print on all the new tax laws while filling out the paper form(s).  Today, the majority of people who want to file their taxes look for the ability to electronically file at the most reasonable cost.

One place I have found helpful in retrieving information on how to file your taxes is the IRS website.  The IRS website contains vital information on the file format your e-file should be in whether you file it yourself or have a professional tax preparer complete your taxes for you.  This information is available free of charge, at your fingertips, and at the click of a button.  If you do not have internet available at home, you can access this information at your local library.

There are many choices on federal tax preparation.  The sites listed below offer information and links to the IRS website to assist in choosing a method to electronically file your taxes in the right file format.  If you stand in a store having difficulties determining which e-file provider or software to use, visit the IRS website to see what information is available.

For free federal tax filing, if you are at or below an adjusted gross income of $57,000 per year, you can use most of the software links listed at their websites for free.

The IRS has a website that allows all taxpayers to use the e-file option for free.

• FreeFile
• IRS Information Site on Free File
• Authorized IRS e-file Provider for Individuals – You will need to put in your zip code to display the correct e-file options for your area.

For Indiana residents, you can free e-file  for state taxes as well, information links for those residents who qualify to file their state taxes.  Check with your state website to see what may be available for filing your state taxes to at a reduced cost or for free.

paper tax forms

It is important to determine which option best fits your situation; filing your own taxes or using a professional tax preparer.  It is important to decide how much you wish to spend for completing your yearly federal and state tax preparation out of those same wages to justify the cost.

Downside of Student Loan Default

Brandon Endsley, Financial Aid Administrator and Purdue Alumni
www.purdue.edu/mymoney

thinking about debt

Before I discuss the downsides of student loan default, you probably need to know what the term student loan default means.  A student loan default occurs when a student accepts a loan to cover their higher education costs and fails to fulfill the payment obligations they agreed upon once the loan has entered repayment. If your loans enter default status do not feel embarrassed.  Many other student loan borrowers can relate to your situation.  According to the Federal Reserve Bank of New York in 2011, 27% of the 37 million student loan borrowers could not meet the repayment obligations and have defaulted on their student loans.  That means approximately 10 million Americans could not make their student loan payments.

Problems for the 10 million Americans in student loan default go above and beyond the ability to make payments.  There are 6 common consequences that can occur from a student loan being placed in default status.

1.)   A loan default in any category (mortgage, car, or credit card), would result in a negative effect on your credit score.

When entering into student loan default, all three credit reporting agencies are notified, causing your credit score to drop up to 150 points.    The maximum credit score is 850.  What is considered poor credit starts below 700 points.  If your credit score started at 850 points, a credit reduction of 150 points will have a negative effect on your ability to receive additional loans in the future.  A poor credit score can result in a denial of a future mortgage, car loan, or even the opportunity to obtain a credit card.  A loan default can also affect your ability to attend higher education institutions.

 2.) While your student loans are in default status, you cannot receive additional financial aid.

If you want to return to college and receive your associates, bachelors, masters, or even Ph.D., and your loans are in default, you will have to fund the complete cost of your education without federal aid.  This means, you will also not be eligible for federal, state, or institutional grants, scholarships, or loans, regardless of where you previously attended.

3.) The federal government can garnish your wages.

One avenue the government can use to receive payment on your defaulted loans is through wage garnishment.  Wage garnishment is where the federal government takes a percentage of your paycheck until the student loan debt has been paid off.  The federal government may take up to 15% of your wages, but the amount they take cannot exceed 30 times the federal minimum wage.

4.)  You will not receive a refund from your tax return until you are out of student loan default.

Along the same avenue, the federal government can also withhold tax refunds from the federal or state tax returns, and apply the funds to the overall student loan debt.  In addition to the garnishments listed above, the government can garnish federal benefits you receive to pay towards your debt.  An example of this would be, garnishing your Social Security Disability benefits (SSD).

5.)  You can be sued for debt owed.

Another way the government can receive funds owed is through the court system.  The federal government can sue for defaulted student loan debt.  Also, provisions for a statute of limitations do not exist. This means the federal government does not have a time frame limitation to sue and can bring a case against you to at any time.

The last two consequences include bankruptcy and additional fees.

6.) You cannot discharge your student loans in bankruptcy and you will be charged additional fees.

Bankruptcy is a reallocation of your assets to resolve your debt issues.  In previous years, student borrowers could include student loan debt in bankruptcy.  Now that policies have changed, student loan debt can only be included if approved by the court. 

Additional fees, charges, and collection cost involved in the defaulted student loan process mark the last consequences to consider.  Each debt retrieval avenue listed above costs either the federal government or collection agencies money.  The costs are then passed down to you, as the owner of the loan.  These fees will only increase the amount owed on the loan, and increase the repayment period.

Life happens, and situations can arise that make the repayment of a student loan difficult or even impossible.  Loss of a job, the inability to find employment after graduation, or just not earning enough money can all be reasons a loan may go into default.  The government understands these situations and has alternative repayment options for borrowers who fall into hard times.  Before your loans go into student loan default, be proactive. Call your lender and find out about the different options that may be available to you.  There are other options to help you through these tough times before causing further financial headaches.