Archive for December, 2007

Getting The Most Financial Aid

By: Green Panda | Date posted: December 31, 2007 (5:06 pm)

Since FAFSA applications will be sent out and available starting this week, I decided to re-post (and modify) a previous post on financial aid. The information is still good and very helpful.

My goal with this post is to try and get you the information you need to find  money for college. While many students finance their education with mainly student loans, there are grants and scholarships out there. The main key is start early. While there are opportunities throughout the year, focusing on applying in January and February can really pay off. How? See the tips below to find out.

Remember you’re looking for grants, which mean you don’t have to pay them back.

Apply for FAFSA early.

As soon as you can, apply for Free Application for Federal Student Aid in January. Use an estimate for your taxes when you initially fill it out. Once you get your tax return back, (or your parents’) sign in online and update the information. The earlier you do this the higher your chances of receiving more grants.

Be aware of individual states’ deadlines for getting financial aid.

Each state has a different deadline on getting grants from them. March is a deadline that many states shoot for, so try to do it early and you’ll see that you can get more grants there. We’re talking about an extra hundred a semester to thousands of dollars.

Apply for scholarships.

Just because you’re getting money from the government doesn’t mean you can’t try to get some scholarships. FastWeb is a popular site that searches applicable scholarships for you. You should also check out the institution’s scholarships, which are usually based on need, merit, and/or major.

Stay local.

By staying in-state, you get much cheaper rates than out of state students. My university doubles the rate for a class for out of state students.

Go to a community college first.

In my area, the community college is close to the local universities. Many of the university professors teach at community college. You also save 40-60% on the price per credit!

Maintain good grades.

Most federal financial aid require a 2.0 GPA or higher to keep it. Don’t use that as a guideline; strive for a 3.0 or higher. It will help when you go to a 4 year university and are looking at their scholarships.

Consider work study as an option.

This helps put cash on your pocket and the schedule is typically good for a college student. If you have dependents and going to college, this may not be an option, as the pay is usually $6-8/hour.  I would suggest looking at jobs from the career center.

There are several articles great articles from other blogs that can help college students. Here’s a list of my favorites:

If you enjoyed this post and want more, please subscribe to my RSS feed or check out my best posts!

Photo Credit: yanec

2008 Financial Goals and a Review of 2007

By: Green Panda | Date posted: December 28, 2007 (3:54 pm)

I can’t believe the year went by so quickly. It was overall a good year. We celebrated our 1 year anniversary this month and I like to thank my husband for a wonderful first year. I graduated about 2 weeks ago. I decided I should review how I did in 2007 financially and then give my goals for the upcoming year.

2007 Financial Goals

  • Income: I would like to earn $20,000 for the year. This would be from my internship job and the remaining from any side jobs. Verdict: Yeah about this…..I came really, really close (approx. 19k), but not close enough.
  • Spending: I’m trying to lower my expenses on eating out. I want to get it down to $40 a month. I would also like to cut down my magazine habit and subscribe to two magazines to save money. I can usually spend $50 a month by paying the newsstand price. I want to go from $600 a year to $30. Verdict: I actually did well with this goal. I still buy magazines on occasion, but I subscribe to one and read online from the others. I do eat less, but not as drastically as I hoped.
  • Investing in Roth IRA: I would like to contribute $500 into a Roth IRA, but only after I’ve taken care of my medical bills first. ($257) Verdict: Failed. I do have an IRA, but it’s not fully funded. My bill is for approximately $100 now since paying some of it.
  • Saving: I would like to have $1,000 in my emergency fund just to build some momentum. Verdict: Still a work in progress. :(
  • Debt: I would like to pay off all my small high interest bills by December 31. Verdict: I paid my credit card debt off and I feel good.

2008 Financial Goals

  • Income: I would like to earn $37,000 for the year. This would be from my ‘regular’ job and the remaining from any side jobs. (Since I didn’t make my goal last year I’m being conservative.)
  • Spending: I’m going to continue cutting back on eating out to twice a week, including weekends.
  • Investing: I’m going to enroll in my company’s 401(k) and meet the employer match . I’ll also continue to contribute to my Roth IRA.
  • Saving: I will have $2,000 in my emergency fund by September 1, 2008. I would also like to put our income tax return into our house fund.
  • Debt: I would like to pay off my car loan by July 31, 2008. I would like to have my car loan out before I have to start paying student loans.

Well, that’s what I came up with and please continue coming back to see if I reach these goals on time. I finished my first guest post, please look at how to maximize a minimum wage job. Paid Twice is a great site and there are wonderful guest posts this week. Have a wonderful weekend!

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5 Ways to Learn About Personal Finances

By: Green Panda | Date posted: December 27, 2007 (2:19 pm)

I learned my first lessons about money from my parents. One thing that I notice when looking back is that we grew up living paycheck to paycheck. They both had good jobs and they could be creative when it came to ways to save money, yet if something happened, it put the family into a tailspin. I thought that was just the way is was with everyone else. My mom took us school shopping twice a year for clothes and supplies. We had food and my father had the latest computer and internet service. I felt that we were fine until some screw u[ with HR or a client and then we had to scrimp and save until that got resolve and we got right back with spending.

While I now understand that it is common to handle your money in such a way, it’s not the best way. I learned through trial and error and when I was fed up I didn’t have more money in my account I decided to read up on finances. Most of he books seemed boring or didn’t feel appropriate for me as a college student. The first book that I enjoyed and read through was ‘Debt Free by 30′. It was written by 2 twenty year olds who advocated tracking all your spending and work on lowering your debt bit by bit. It had low cost recipes and lots of websites for me to look over. I also decided to talk to some friends and see what they thought.

I’m still learning and I enjoy reading up the blogs on my blogroll. I don’t try to change everything at once, but keep adding up little changes, so I’m likely to stick with them. There are different ways t learn and here’s some of them.

  1. Parents: This would be a great scenario if you learn good financial habits from them. Good examples from supportive parents can help cultivate the skills and desire to be financially independent. Unfortunately some parents don’t have the financial know-how t o pass on.
  2. Friends: You have to be careful this as you can learn bad habits from people just as inexperienced as you. Don’t just look at what your friends have. Some of the worst off financially have the latest gadgets and biggest houses.
  3. Books/Web: A common way people learn about personal finance is learning from a book or reading personal finance sites.
  4. Classroom: Some colleges have a personal finance class offered on campus. Many times this is more of an elective choice than a core class, which is a shame considering they offer that orientation class on how to study which is mandatory.
  5. Life: A common teacher for many. Basically you learn as you go along. The problem with this is that you can learn so many bad habits and keep repeating them because you don’t know any better way.

How did you learn about personal finance? I’m curious to see how many people learned good financial habits from their parents and/or friends. I also want to see if a financial crisis was the motivator to get it together. If you have any other personal finance sites I should look at, please share.

Some great posts that might interest you:

Photo Credit: Ahmed Rabea

Retirement in Your 20s

By: Green Panda | Date posted: December 26, 2007 (1:07 pm)

Retirement is usually one of the furthest things on the minds of college students and new graduates. You got bills to pay, including possibly students and car loans. You might think that you’ll pay down your debts first, buy the house, and then save for retirement.

After all, you should be making a lot more money than you’re making now so you can catch up. Right?

Don’t become your own worst enemy.

The problem is that most people use debt as a crutch and delay starting their retirement by years. There are other expenses that come up and starting to save for retirement becomes next year’s goal gain and again. There’s a better and relatively pain-free way to get ahead now and in the future.

Invest young and make retirement a breeze.

Once you have paid your high interest debt off; put a chunk of your money into a retirement fund. How much can you put into it?

Contribution Limits for 401(k)s 

MSN Money offered these facts:

  • 401(k)s allow you to save up to about $15,500 a year (the amount increases each year by an index tied to inflation) in pretax income. You won’t pay taxes until you start drawing on the money. Most employers will match a portion of your contribution. Similar plans exist for employees of small businesses and nonprofits, the self-employed and public employees.
  • You can place up to $4,000 in pretax money a year ($5,000 a year starting in 2008) into an IRA.

The first thing you noticed was the $15,500 limit on 401(k)s. Most working college students don’t make $15,000, how could they possibly put that into retirement. The answer is that they wouldn’t (unless you have another source of income that pays your expenses).

Pay off your high interest debt first, before investing for retirement.

You can’t grow your money until you’ve gotten out of the quick sand. The average credit card debt for college students is between $986 and$2700. With credit card rates in the upper 20% and higher, it is smarter to pay this off first. 

How much should you contribute into your 401(k)?

Start small and decide what will work well with your budget. Some experts suggest put 5- 10% of your paycheck into a retirement account. You can always increase the amount as you make more money. If you have a 401(k) policy that matches, then make the enough of a contribution to maximize that free money. 

If you don’t qualify for a 401(k) at work, open an IRA. Just start getting into the habit of retirement saving and planning for the future. I get benefits (finally)starting next month at my job and I will sign up for the 401(k). I’ll also continue to put something in my individual retirement account.

How many people already have retirement savings started? How do you do it? Is it by percentage or is it a fixed amount?

Photo Credit:  chefranden

What’s an Expense Ratio?

By: Green Panda | Date posted: December 21, 2007 (4:13 pm)

After reviewing which posts were popular on my site last week, I noticed that starting an IRA was number one. I think one deterrent for people investing is the terminology associated with that. I decided to help out by putting out some quick posts demystifying financial lingo. Today’s term is expense ratio.

What are expense ratios?

What is the actual definition of an expense ratio? Here’s how Google defines it:

  • The percentage of a fund’s assets that are used to pay its annual expenses.
  • The percentage of total investment that shareholders pay annually for mutual fund management fees and operating expenses.
  • A comparison of the costs of owning and operating something to its potential gross income.

    • What does that mean for me as an investor?

    This percentage is taken back by the fund as a compensation for running the fund. It covers operations and management fees. Motley Fool points out that this money comes out of your return. Another interesting point that the Fool.com site brought up:

    Because the average large-cap value fund charges 1.17% more than the index, it has to outperform by at least that much to create value for investors — and more (maybe a lot more) if sales charges are involved. That’s a high hurdle for fund managers, many of whom trip and injure their clients’ portfolios in the process.

    What’s a good expense ratio to look for?

    In generally it appears that lower is better, but you have to factor it the performance of your fund. After all what good is a lower expense ratio if your fund does poorly?

    Where can I find out more information on mutual funds and investing?

    There are a lot of sites that have financial information. Try exploring and seeing which appeals to you personally. I recommend these:

    Photo Credit:  Aaron Edwards

    10 Cars That Can Last 200k

    By: Green Panda | Date posted: December 19, 2007 (12:18 pm)

    Car Payments Vs. Savings

    Most people I know love their cars, but hate the car payments. If people drove their cars until for three more years after paying it off (assuming that bought it new) and took their monthly payments and put it in a high interest savings account, how much money would they have towards a new car? What if they saved for 5 years? Edmunds says the average car loan for a new car is $447 so I used that for the savings calculation.

    • 3 years at 4% gives you $17,067.16
    • 5 years at 4% gives you $29,635.64

    You can buy your next car with cash, just by driving your car longer!

    Consumer Reports Shares Their Ratings

    Cars don’t last forever, so how would you know which cars are more suited to being driven longer? Consumer reports did a study and they have 10 cars that could make it to 200,000 miles and 10 cars that probably wouldn’t make it. Here are 5 from each of the category, read the rest at the site.

    • Consumer Reports’ “Good bets” for making 200,000 miles: Honda Civic, Honda CR-V, Honda Element, Lexus ES, , Toyota Highlander
    • Consumer Reports’ “Bad bets” for making 200,000 miles: BMW 7-series, Infiniti QX56, Jaguar X-type, V8-powered Mercedes-Benz M-class, Mercedes-Benz SL

    My first two cars were bought with cash and while they were older cars (’85 & ’90), they did the job from getting from point A to B. I got a VW Passat, which had car payment that just reached my budget limit. It was unfortunately wrecked 4 months later.

    Instead of learning my lesson and getting a used car with the cash back I got from the insurance company I signed up for car payments on my VW Jetta. Now once, I’m done paying this car off, my goal is to set aside that car payment money into savings for the next car. If the VW Jetta lasts 3 years, that would be great, if 5 years, even better.

    What about you? Do you have car payments? What are you planning to get for your next car?

    Photo Credit:  Pascal \o/

    Green Panda is in the Carnival of Personal Finance

    By: Green Panda | Date posted: December 18, 2007 (9:35 am)

    J.D. at Get Rich Slowly is hosting Carnival of Personal Finance this week and my post on 3 Ways to Wisely Spend Your Bonus. Some other favorites of mine were:

    In other words, it’s a good carnival. I’d also like to include Gather Little By Little’s post on Why It’s so Hard to Find a Wii.  Thanks again for your support!

    Photo Credit:digitaloxygen.ca

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