Financial aid and college

I could write forever about different ways to try to maximize student financial aid and get the most bang for your buck when paying for college, but I am going to do so briefly today.
First off, make sure to file your FAFSA as early as possible even if you don’t not have correct numbers yet. Just make sure to edit them later.
Secondly, minimize the amount of money you have readily available for college expenses. No, this does not mean spend every last dollar and your parents $250,000 a year salaries will be forgotten. No, it’s the fact that if you made or have money in accessible accounts as the student you will be required to use more of it to pay for your own education. While parental income could make a huge difference, they are not expected to carry as much of the burden as you the student are.
Lastly, choose a cheap college when favoring in all costs, this includes transportation home from college and to college, housing, food, partying, tuition, fees, books and technology. Find a college that offers what you want in a college and compare it to a similar state college in your home state. Paying in state tuition or public tuition as opposed to private tuition could make a huge difference. Also be sure to factor in scholarships and other aid, as some privates offer more scholarships which can make prices much closer than anticipated.
Overall, learn to assess all the costs. Minimizing overall cost of college will reduce the amount of debt from your college years thus leaving you with a better net worth and closer to securing your financial future.


Interesting thoughts on Retirement

While I thoroughly enjoy reading and dreaming about early retirement and how all of these other bloggers have realized that dream, I have grown weary of reading all these tips and plans to retire early that generally won’t apply to my situation.
As of right now, I am a twenty two year old graduate student seeking his master’s in history education and to become a certified 7-12th grade Social Studies teacher in New York State. I will graduate will roughly $30,000 of student loan debt for my undergraduate and graduate combined (thanks to a great 5 year combined program at Plattsburgh State and graduating a semester early). I am looking at a $42,000-45,000 a year starting salary once I find a full-time position in my field. I don’t have a cushy $80 or $90,000 a year tech job where I can devote 50-70% of my income each year to my investments. I don’t have a spouse who also will earn $60k plus a year. My girlfriend and I will be lucky to haul in $90k a year combined. The point is that everyone’s situation is different. Everybody has different goals and different priorities.
There are plenty of people on the internet blogging about ultra frugal lifestyles that have allowed them to accumulate 25 to 30 times their annual expenses into an investment account decades before most people retire. These people are ones who preach giving up everything but the necessities and living with even fewer expenses during retirement. But, is this a readily available retirement plan for the majority of the middle class? What about working class families like my parents? Will they ever be able to retire and living comfortably without the financial support of their children?
So, what do I think is a better way to help these people realize the simple goal of retiring when max benefits kick in?
Well, I personally feel there are about five major points to follow in order to set yourself up to retire “on-time.”

1. Build a good credit history.
It goes without saying that mist people will need to use credit at some point in their life, whether it be for a car, a house or an emergency expense. So, by building a great credit score and shopping around for the best available credit for you, you can save thousands upon thousands of dollars in interest charges over your lifetime. This is all money that can be used to pay off loans early or sock away as an emergency fund or into your retirement accounts.
2. Set up an emergency fund and carry insurance.
Life happens unexpectedly and we need to be prepared. This means that we need to keep money readily accessible in case of an emergency. This fund should amount to about 6 month worth of expenses. If you lose your job, get laid off, get injured or become disabled, this money can help you stay afloat until you can figure away out of the situation. Also, be sure to invest, yes invest, in health insurance, life insurance, disability insurance, car insurance, and homeowners or renters insurance. In the event of an accident or unforeseen problem, being properly insured could mean the difference between going broke and staying afloat financially.
3. Savings rate.
The important thing about saving is not the return you are getting but instead how much and how often you save. Focus on maximizing how much you can save by budgeting to cut out unnecessary and wasteful spending. Once the amount you are saving each month is as high as you can get it, begin thinking about your goals. If you don’t own your own house do you want to? Do you have credit card debt? Do you have student loans? Once you have began divying up your savings make sure to set a certain amount aside for retirement. The more you can devote to retirement and the longer you have until you want to retire, the more compound interest you will earn on your savings. Hopefully, compound interest will make up the majority of your retirement t savings.
4. Cut out debts and build equity.
If you plan to own your own home, consider the amount of savings now (down payment and Immediate monthly payments) and long term (sum of payments and total interest) that will be tied up into your house. It doesn’t make sense to spend tons of money on an unnecessarily expensive home and then spend tons more on interest payments on your house. Putting money into buying a home is already has major opportunity costs associated with it instead of investing that money in the stock market. So, to maximize the benefits of owning your own home plan to pay extra to pay off your mortgage early and save on interest paid. Sure, this will reduce your mortgage interest tax deduction but in the long run which is more important? Saving on some taxes or reducing total interest and building equity in your home? Also, do not carry credit card balances as these are really expensive loans. Cut your spending if you are relying on plastic to get by.
5. Simply be smart about your cash flow.
USE A BUDGET! Be sure that your expenses do not exceed income and begin looking at what areas you might be able to cut back on. A simple reduction of annual living expenses to 5% under your annual income means that you will have effectively increased your annual savings rate AND reduced the amount of money per year you will need to live on in retirement.

DOW JONES AT 18,000!

Woke up today to a flurry of buzzes and beeps being emitted from my cellphone on my nightstand. Figured it was probably my girlfriend who is staying at her grandparents until I can get there on Christmas day. Boy was I shocked when I saw the 7 different CNBC notifications and the 2 yahoo finance ones as well. First thing that caught my eye was that U.S GDP growth outstripped expectations in the 3rd Quarter of 2014 and actually increased at a 5% rate! It definitely was a shock to me and a great thing to see. Finally, it appears as if our economy maybe getting back on track. Of course, if you look at the stock market you would ask hasn’t the economy been fine for months? Well, the economy is a lot more than just the Dow Jones Industrial Average, but it is always nice to see the Dow posting new all-time highs every other day.

Today was no exception as the Dow reached new heights of 18,000! Quite the turn around from the recession years where the Dow was sub 10,000. This is great news, showing that investors are more confident in our economy and the direction it is taking. For those who are savvy investors, hopefully their investments have been growing steadily and they will consider the direction the market may take from here.

While I love to be an optimist and say that I feel everything is only going to improve, I also realize that with new heights comes new worries. Every bit of new news that hits Wall Street is going to be carefully screened and over analyzed as pessimists await a market correction that they assume will bring the Dow back down out of the stratosphere. So, no matter whether our markets improve or decline in the coming months, fear of another crash is going to keep the market volatile. But, don’t view this as a negative!

Volatility in the market may not be good for anyone looking to retire soon, but for those of us who are in our late teens to early 30s, this is great news for us! While I don’t believe anyone can time the market perfectly, volatility in the market makes it easier to accidentally time the market! As I recommend in my article Automating your Financial Future and Security (Pay Yourself First!)make your contributions to your investments on schedule automatically and perhaps you will catch it on a down and wait for it to grow! Of course, I don’t recommend getting in and out of the market often, so avoid short term trading, but be aware of where your investments stand on average and hope you catch them just below that level.

Anyway, whether or not you are able to benefit from this spike in the market, it is still amazing to see the Dow so high and it will be interesting to see where it will go from here. What are your predictions for the market? Do you see it continuing to set all-time highs or settling down at a lower range such as 15-16,000? Let me know below in the comments! 

How to Build Credit

check out the full post at (My main blog site)

Luckily, it can be pretty easy to build a good credit score (granted the more secure your financial situation, the easier it becomes). According to MyFICO, your credit score is derived from the following categories:

Payment History- 35%

Amounts owed- 30%

Length of credit history- 15%

New credit- 10%

Types of credit- 10%

First off, always pay your bills on time! Your payment history is a big part of who you are as a borrower and consumer, as it accounts for 35% of your score! For some bills, such as your phone or other utilities, try to automate your payments so that every month they are automatically withdrawn from your checking account. Just make sure to keep your checkbook balanced and that there is enough money to cover the bills, otherwise you will get hit by your bank with overdraft fees! As for other monthly obligations, such as your credit card, mortgage or auto loan, make sure to keep track of when each bill is due and be prepared to at least pay the minimum every month by the due date.

Secondly, the amount of debt that you have is important to monitor. Carrying more than 30% of your credit limit is often seen as a liability. As for a home loan, a good rule of thumb is to not exceed purchasing a home valued at over 2.5 times your annual salary.

When it comes to length of credit history, this is normally a category that many young adults will struggle in. No matter what this deck will be stacked against you. While you might have a perfect payment history and keep a low balance, your credit score will still suffer since your credit and payment histories are short and thus you are seen as risky. While I have perfect scores in all other categories, my length of credit history drags me down. However, a good way to get going on this is to get a credit card at a young age and be smart with its use. If you use a credit card to your advantage, you can not only reap rewards but also bolster your financial future. By using your credit card ritually each month for only one small purchase and then immediately paying it off in full, you are avoiding interest, perhaps getting credit card rewards, starting your credit history and maintaining a responsible credit account. As you age and begin getting other cards and credit accounts, make sure not to close that first account, even if it has the worst interest rate. This is because as your longest running account, it has the most history in it and by keeping it open you are able to show how long you have been a loyal and responsible client.

Ten percent of your FICO score is derived from how often new credit lines are sought out. If you have applied for many credit cards, auto loans or mortgages in a short period of time, this will pop up as a red flag showing that you may be desperate or underwater on your expenses and bills. By spreading out your requests for new credit lines, you will appear as being more stable and responsible, then if you tried to open up many lines at once.

Last but not least is the different types of credit that have open. This mainly pertains to open and closed accounts. Open accounts involve  the ability to continually borrow more up to your credit limit. This types of accounts are mainly credit cards, which can be paid off and then borrowed against again. Closed accounts are things such as auto loans or mortgages, that have a specific start and end of the payment schedule, with a set monetary amount, and a fairly standard monthly payment. These can also be referred to as installment loans. By having different types of credit open, it shows the ability to responsibly manage all major types of credit.

Automating your Financial Future and Security (Pay Yourself First!)

If you Google something like how to become wealthy, or how to build wealth through passive income, you are going to find articles and blogs that list off steps to becoming rich. I have read and scoured through many of these blogs and articles in search of a way to get rich without really trying. Sure, some of them tout up different ways that you can get extremely rich and others talk about how live an ultra frugal lifestyle is the best way to become wealthy. I disagree!….. VISIT THE ORIGINAL SITE FOR THE REST!

Return to Blogging

Well, I finally decided to log back into my WordPress blog, and immediately I realized that I needed to clean house. My older blog posts were erratic and simple-minded to say the least. From posts about Jorge Posadas’ retirement, to remembering the Red Sox’s 2004 World Series victory, to college life, to the current state of the economy (in 2012). Needless to say, I deleted each and every one of them. Sure, they were a great learning experience but they lacked intellect or direction.

So, with my return to WordPress, I hope to have a more generalized focus on matters pertaining to personal finance. I am creating this blog as I journey from out of my final year as a graduate student through all my investment and savings decisions. While I did not study anything related to finance in college, I took 9 credits of economics in my undergraduate years and have spent countless hours of my life (well spent) reading and learning about personal finance and investing. So, while my advice may be used by anyone, I am not a professional, I do not have a fancy title or a certification, therefore consider what I have to say but do not take what I have to say as law. Do you own research, consult a certified financial planner, or just go with your own gut!

I just want to say that as I write this post I am turning 22 years old! While you may say that’s so young, believe me, my body after my adult league basketball games tells me otherwise! Anyway, enjoy my blog, comment, ask questions and follow for more!