What College Students Are Really Learning In School

Graduation, student loans, debt, debt free

Even though the number of students attending college is dropping these days, the ones that go are determined. Whether they receive a scholarship, have money to pay for it, or no money at all, it doesn’t make much of a difference. Most people still go because just about anyone can get a student loan. The question is, what is really being taught with all of this college lending?


Think about this for a moment. At a young age, students learn that they don’t need to save up money for a purchase because they can take out a loan. They figure out that they are able live however they want. Once the loan runs out they can take out another one to cover future expenses. When they finish college, not only do they have a mountain of student loans to pay off, they will have grown accustomed to depending on the loans and living off more than they make. They will have a need to replace those student loans by other means, which will probably be credit cards. Along comes one card, and then another, and another. Before they know it they will be joining the club of over 51 million Americans that own 5 or more credit cards! Do you see how bad this is?


College students need to sit back and realize that while they are going to school they are not going to be able to live the life that their parents live. Driving a nice car, vacationing, and eating out often are not always possibilities when you are going through school. Their parents can live the way they do because they have been working for the past 20-30 years.


It’s Normal

Taking out student loans is the normal thing to do. The average college graduate finishes college with student loans of $25,000 - $30,000 dollars. They instantly have that pressure to land that great high paying job, to get rid of the loans. Someone who graduates with no student loans, on the other hand, has more flexibility to consider a wider range of entry-level jobs, even ones with low starting salaries. Without the extra $300 dollar a month payment, you have less pressure to get a higher paying job to cover the extra bills. You would be able to choose the job that you’re really passionate about, and are really going to enjoy.


Get Out Of Jail Free!

There is another scary thought that goes around with the student loan theme. It’s thinking that the government is just going to bail them out of their loans. If you want that you should join the military or other similar indentured servant type options. They are out there and can be very good options. They’re also guaranteed so you can be sure it’s all taken care of. There is no guarantee with the government. We need to remember John F. Kennedy’s famous words, "Ask not what your country can do for you, ask what you can do for your country."


The financial life lesson that is learned by not going into debt, and handling money well in college will be more beneficial in life than your degree itself. No matter how much money you earn because of your degree, you will end up losing it all if you don’t know how to handle it well.



Try your hardest to not go into debt for school. With some good thought and preparation college can be taken care of without going into debt. It starts in high school by getting good grades. Spending as much time as possible applying for scholarships. There are thousands of scholarships out there. Sure they take some time to apply for, but the hours spent applying for scholarships will be well worth it in the end.



Consider working while you go through college as well. A college kid that works while going to school paying for it as he goes, even though it may take an extra year or two or three will be much better off than the college kid that goes through in 4 years, and ends up with $30,000 in loans to pay off over the next ten to fifteen years.


I think education is very important for everyone. I realize that not everyone is going to get a full ride scholarship, but I also know that with some determination and a lot of hard work you can go through school without ending up with $30,000 of loans. Let’s change the norm, and quit adding to the one trillion dollars of student loan debt in America.


“Neither a borrower nor a lender be”

-Benjamin Franklin-

I’d love to hear your thoughts. What do you think about all of this?


Photo credit: Flickr, License, no changes made.

You Should Invest, 10 Years Ago!

Parrot, Colorful, birds eye, blue, green, feathers

The early bird gets the worm. Right? This rings so true when it comes to finances. I want to show you how the early bird not only gets a worm, but how the early bird ends up with the entire feast! I’m not talking about waking up at the crack of dawn. If you knew me, you’d know that I’m not a big fan of that. I’m talking about investing today instead of waiting until tomorrow.

In the “What Can A Roth Do For You” post I showed you how much a Roth IRA can accumulate before you retire. Whether you’re retiring in 10 years or 40 years, and anywhere in between. I mentioned the importance of getting started early, but here I want to dig a little deeper, and show you how powerful investing now, instead of later, can be.

The examples I used in the “What Can A Roth Do For You” post,  were all examples of  investing the Roth IRA max of $5,500 every year. Here I want to show you two different investing possibilities over a 30 year period. The first situation is someone investing $5,500 every year for the first 10 years of the 30 year period, and then letting it sit for the next 20 years in the account accumulating growth and dividends. The second situation is the exact opposite of that, which would be not investing for the first 10 years of the 30 year period, and then starting to invest every year for the last 20 years. Check out the results here below.

Investing Chart, 10 years vs 30

Look how amazing this is! By investing only in the first 10 years of the 30 year period, your Roth can accumulate more than double what you would earn if you held off 10 years and just invested the last 20. Keep in mind, you are only investing half as much money in the first situation, and no matter what percent return you get on it you will always make more money in the first situation, than in the second where you invested the last 20 years.

Now just to make sure this is clear I want to show you another table. We are going to compare the chart above on the left hand side which is investing for 10 years and then letting it sit for the last 20, to a third situation where you invest every year for all 30 years. Take a look at this.

Investing Table, 20 years

In this case we have invested 3 times as much over the 30 year period, and come out with an extra 30-50% in our final retirement pot. This means that in the first 10 years of investing over a 30 year period, you are going to make 50-70% of your total retirement! Those last 20 years of investing are, at most, going to earn you 50 percent of your retirement. Don’t forget that in those last 20 years of investing you put in 2 times the amount of money that you put in the first 10 years! Isn’t that amazing?


I know I’ve thrown a lot of numbers in here, so I’m going to repeat myself in a different way to make sure it’s clear. When you invest, the first 10 years that you’re investing, will make up half of your retirement. The last 20 years make up the other half. This means that if you postpone your retirement just 10 years you are cutting your total retirement savings in half! That is huge!


I hope this is clear enough to help you realize why investing now is so important. If not, study the tables a little longer and message me in the comments below with any questions. I’ll be glad to clear up any confusion.



You don’t have to max out anything right away if you can’t afford it, but you need to invest something! Get the ball rolling by investing whatever you can, and I promise you won’t regret it when you retire.


“You may never know what results come of your actions, but if you do nothing. There will be no results.”
-Mahatma Gandhi-


Photo credit: Pexels, license, no changes made. Chart/design credit: Lindeestonedesigns.com

15 Years Or 30?

blue sky, sea, ocean, houses,

Now that we know what we need to do before we buy a house, let’s talk about one decision that is going to save you $80,000!

The most optimal way to buy a house, in my opinion, would be to pay for the whole thing in cash, which might not be as far fetched as you think, but that’s a topic for another week. By paying cash you will avoid all the interest that comes with a mortgage, and you will see here below that the amount of interest can nearly double the price of your home.

Since most of us won’t be able to pay for our homes in cash, we’re going to talk about the next best option, which is a 15 year fixed rate mortgage.

We don’t want just any mortgage. It’s very important that you are specific about this.  A 15 year fixed rate mortgage is the way to go. The 15 year fixed and the 30 year fixed are both very popular mortgages. Though you can get a mortgage for just about any time period, these are the two I want to focus on today. I want to show you why you should choose the 15 instead of the  30.


First reason is that you get a better interest rate on a 15 year fixed than you would on a 30 year fixed. Shorter time period, smaller interest rate equals much less interest paid and more money in your pocket.

Second reason is that if you can’t afford to put a 20% down payment on it then you are going to pay PMI, which is private mortgage insurance. This is insurance that you are required to pay for the bank, so that if you aren’t able pay the mortgage at some time the insurance will cover the bank. This insurance doesn’t help you out in any way. It’s simply to cover the bank.

Third reason is that if you have a 15 year mortgage, then you’re going to pay it off in 15 years. You want to get rid of your mortgage as soon as possible. That way you will pay as little interest as possible.


Let’s take for example a $200,000 dollar home. If you were to get a 15 year mortgage on that right now at a good interest rate of 3%, and you put a solid 10% down payment of $20,000, then you would be looking at a monthly payment of about $1,250 dollars. You will pay $1,800 in PMI over the life of the loan. You would be paying a total of $43,800 dollars in interest and PMI. This may sound like a lot, and it is, but let’s look at this same loan on a 30 year fixed.

If you get a 30 year fixed rate mortgage for the same amount you would be looking at an interest rate around 3.8% because you can’t get quite as good of rates on a 30 year. Again, assuming you put a 10% down payment on it. You would have a monthly payment of $840. You will now pay $5,000 dollars in PMI, so you’ll end up paying $122,000 in interest and PMI! That’s basically another house! I don’t know about you, but that kind of makes me sick to my stomach.

Chart, Down payment, Loan amount, interest, monthly payment, private mortgage insurance, graph

Think about this for a second. By taking out a 30 year mortgage you are going to pay $322,000 dollars for a home that is only worth $200,000.  With a 15 year fixed rate mortgage your monthly payment is going to be $400 a month higher, but in 15 years you will have a completely paid for house, and an extra $78,200 dollars in your savings account!

By waiting to buy a house until you can afford the higher monthly payment, you automatically give yourself an $80,000 dollar bonus. Not bad right? That’s money that can help pay for your kids college, or add to your retirement. If you don’t need it for any of that, then it’s an extra $80,000 that you can use to bless other people with. Any way you look at this it’s worth downsizing or waiting to buy once you can afford the 15 year monthly payment.


“If you spend your life over analysing every encounter you will always see the tree, but never the forest.”

Shannon L. Alder

Photo credit: Pexels, license, no changes made.

Are You Ready To Buy A House?

Are you ready to buy a house?

Owning your own home is part of the American dream for most people. It really doesn’t matter what country you live in, owning a home is something that people all over the world dream to accomplish. There are many reasons for this.

Owning your own home gives you and your family a sense of stability. You have the freedom to upgrade it and remodel it however you please.

Owning a home can be a good way to get yourself to save money. With a fixed mortgage you know that you’re putting money away every month that you probably wouldn’t do if you weren’t forced to pay the mortgage.

Having a set mortgage payment can also be beneficial over rent because your landlord can’t kick you out or decide to raise the rent in future years, which saves you from having to move inconveniently.  


With all of this being said, there is a time and a place for everything. If you buy a home before you are financially ready then all of these benefits will be greatly outweighed by possible financial sorrows.


3 steps to take before buying a house


1-    More than anything else you should be completely debt free. If you have debts holding you back, and on top of that you want to take out another huge debt of 1, 2, or $300,000 dollars for a house then you’re asking for trouble. When owning a house all costs for repairs come out of your pocket. If the water heater goes out or there’s a plumbing problem you will have to cover the cost. If you are already in debt when these other unexpected costs pop up they will surely put you into more debt.


2-    The next thing you should do after you’re out of debt is have a solid emergency fund. Having an emergency fund of 3-6 months will allow you to cover “emergency” costs such as the water heater or roof leak or whatever else comes up.


3-    Once you have an emergency fund saved up you should save up a good down payment. This is all about seeing the big picture. If you don’t have a downpayment of at least 20% you can be charged more fees as well. You will get a lower interest rate from the bank the bigger the down payment you have. One percentage point in interest may not seem like that much but it could save you more than $50,000 over the life of your mortgage. If you take out a loan of $250,000 at 5% you will pay $56,000 dollars less than if you took out that same loan at a 6% rate. The interest rate makes a big difference!


Once you have your down payment saved up you will be in a much better financial position to buy a house. You will be able to enjoy your home so much more by waiting until you get to this point to buy it. It may take some time to get to there, but that can actually be a blessing for you.


This will give you time to make sure that the place that you’re going to buy a house is a good fit for you and your family. If you are just moving into a new city, it’s a good idea to rent for a little while until you get to know the city and find the best place to live. More than just knowing if you like that part of the city you should figure out if you like your job there as well. It also gives you time to figure out if you’re okay living that close to, or far from your family?


If after reading all of this you realize that maybe you’re not in a good position to buy a house, then sit down and make a plan. Make it a goal to be house ready by such and such date and get to work. The American/entire world’s dream of owning a home is within reach, and if done at the right time it really will be a dream to have instead of an expensive burden.

Photo credit: Lindyconsulting, license, no changes made.

Order In All Things

Batman vs Superman

With just about everything in life there is a correct order to do things. If you try to bake the cake before mixing all the ingredients together, the cake isn’t going to come out like you hoped. You don’t put the car in drive before you turn it on, and you don’t put your pants on before your underwear unless you're a superhero. If you do things in the right order everything goes much smoother, and works out much better. The cake will be delicious, you won’t be stuck in the driveway wondering why the car won’t start. You'll also avoid many weird stares.

Your finances are no different. If you do things in the right order then you can expect good results. You can expect to have a secure financial life. When your life is in order it brings peace. This is especially true when it comes to your money. It’s something you might worry about constantly. With good reason too. You have a family to feed, a mortgage that must be paid, and a car that gets you to work which enables you to provide for the ones you love.

One Step at a time

Follow these simple steps, for increased financial success. If you’re familiar with the teachings of Dave Ramsey these will follow just the same.

Get Out Of Debt

1- The most important thing you can do for your financial life is to get rid of your debt. You will never be able to create wealth if you are constantly paying payments on your car, and your credit cards, and that couch that you decided to finance. You should buckle down and pay off all your debts as soon as possible. With the exception of your house, unless you owe very little on it, hold off until we get further along.

This can be a very scary step for people. We’re talking about throwing all your money out of savings to take care of this debt. Mr. Ramsey suggests all but $1,000 dollars should go to your debt. That isn’t much, and that’s the point. It’s enough to keep your head out of water, but it’s definitely not enough to make you feel comfortable. If you are in debt you shouldn’t feel comfortable. You are at risk because those debts own you and your family. You should be doing all you can to work extra and live frugally to get yourself away from the danger of debt. You need to make a budget! Find out where all your money is going, and cut back so you can save up the $1,000 dollars quickly and pay off all your debts.


Save For An Emergency

2- The debts no longer own you! Once you have paid off all of your debts except your house you are now in position to save up more money to create a barrier between you and debt. It’s time to save up an emergency fund. You should save between 3 to 6 months of expenses in an emergency fund. This will help keep you from going into debt again. You no longer need that $10,000 line of credit on your credit card because your emergency fund is now your “smart line of credit”.


Retirement Savings

3- Now that you have an emergency fund in place it’s time to plan for your retirement. You should hold off retirement investing until you get to this point. There is no reason to be investing while you have a mountain of debt to pay off. Even if the interest rates outweigh each other. Get out of debt, build up your emergency fund, and then start investing for your retirement. Most financial advisors suggest investing between 10 and 20 percent of your income for retirement. The best place to start investing is with your work’s 401k. IF, and only IF they offer some sort of match. If they don’t offer a match then start with a Roth IRA. You will have more freedom to choose what you are investing in than you would with the 401k, but if your company is offering a free match on the 401k, don’t pass that up. invest the matching percentage first. Then max out the Roth IRA, and if you still have money left over to invest go back to your 401k.


Kid's College Savings

4- By investing into your retirement on your own, you have put yourself in a much better position to retire on your own terms. You won’t have to rely on the government or your kids to retire. You’re also in position to help your kids out with college if you wish. You can set up a college fund for them. A 529 plan or an ESA will do the trick. You can click the link to see which one fits your situation best. They are both tax favored plans that allow the money that is accumulated to be used tax free if used for educational purposes. Both are good options, it just depends on how much money you make and the state you live in.


Pay Off Your Home

5- You now have a retirement plan and college savings accounts in place accumulating interest. It’s time to get rid of the house payment. Use whatever money you have to get the house paid off as soon as possible. Set up your budget very carefully, and any money left over at the end of the month should be thrown at the house. Just imagine the feeling of not having a payment come in the mail. How great will that feel to really be a home owner, and not a slave to the bank?


Help Out Others And Enjoy!

6- Once you get to step 6 you no longer have any payments holding you back. Now you have to opportunity to help out others like never before. This isn’t to say that you never help out others until you get to this point. I think you should always budget some money every month to give, but at this point, after you have followed all the steps in order, you are completely debt free. You have an emergency fund to keep you from falling back into debt. You are funding your retirement accounts, kids college is taken care of, and you actually own 100% of your home. Now all that’s left is to help out others as much as possible, and enjoy anything leftover. How neat is that? (Check out the link for a good laugh)



If you're not a super hero, you will see more success by doing things in the right order. By following the steps, you will be able to knock out each thing much quicker. If you are putting money into a child’s college fund while you still have a car payment to pay off, then your college kid might end up bailing you out of a repo because you don’t have the money to pay for it. Take care of the steps in order, and as you pass each one you will surely gain more and more financial security.


“Each move is dictated by the previous one--that is the meaning of order”
― Tom Stoppard

Photo credit: JD Hancock, License, no changes made.

What Can A Roth Do For You?

The short answer is that it will make you a millionaire. That’s right. Without investing in anything else, a Roth IRA will be worth a million or even a couple million dollars when you retire. Pretty awesome right?

You don't have to live miserably your whole life to be able to retire well, but it will take some sacrifice. To be able to live off of your savings for the last 20, 30 or even 40 years of your life, will take some discipline, and time.

This is why so many people struggle with saving for retirement. We all want to live in the “now”, and let the future take care of itself. People think that retirement savings is something they will start doing next pay check when they have more money, or after Christmas when they have more time.

It’s time to turn retirement savings into a “now thing” and not a “later thing”.

Think of all the good you could do in the world if you had a million dollars. 

First of all don’t feel overwhelmed. It’s really not as complicated as it all seems. A Roth IRA is one thing that you can do today to get your retirement savings rolling. This may not take care of all your retirement needs, but it’s such a good option that it should not be overlooked.

A Roth IRA is one of the many “covers” that you can put on a mutual fund, like I talked about in the “529 or ESA” post. With this specific cover on the mutual fund there are many benefits if used for retirement.

4 Benefits and Rules of a Roth IRA

1- The first and greatest benefit is that you put money into this account with after tax dollars, so as long as you don’t pull money out before you’re 59 ½ years old then you don’t have to pay any taxes on it. That includes all the interest that you will earn. You can see in the table below that, that will be a huge amount of savings!


2- You are allowed to put in $5,500 dollars a year. That comes to $458.33 a month. Invest that much a month, and you can retire a millionaire. That doesn’t seem that out of reach does it? There’s no secret here. You don’t need to win the lottery or be a professional athlete. Just invest $458 dollars a month and you’ll be well on your way. When you’re 50 or older you're allowed to invest $6,500 a year to catch up a bit.


3- You’re not allowed to withdraw from the Roth until you’ve had it open for at least 5 years. Then, unlike a traditional IRA once you turn 70 ½ you will not have to start withdrawing money from it. The government doesn't get any tax money from it, so they don't care how long you leave it in there to grow.


4- The fourth thing is that you and your spouse must make less than $183,000 a year. If you’re over that limit then you’ll have to invest in something else. That’s not a bad problem to have.


In this table I have laid out how much a Roth IRA can accumulate over time. Decide what age you want to retire, look at the table that fits you.

40-45 Years to Retire
30-35 Years of Investments
20-25 Years of Investments
10-15 Years of Investments

What situation best fits you? Do you have 30 years before you want to retire? Maybe just 15 years? What if you stretched your working years for another 5 or 10 years. How much more could that interest be making for you?

There are a few other factors that can change these numbers, but the point I want to get across is that you need to act now. There is no time to waste! Everyday you wait there’s free money being flushed down the toilet.

Keep in mind that these numbers here represent just one Roth IRA. If you and your spouse can max out one for each of you then you automatically double the numbers for your retirement. It’s not out of reach.

Maybe you’re not in position to invest $458 dollars a month. Keep in mind you don’t have to max it out. If you can only afford $50 a month then do that much. That’s what I started with. You can slowly work your way up.

Now, If you’re in debt, and don’t have an “emergency fund” saved up I would suggest you hold off on your Roth until both of those things are taken care of. Get out of debt as soon as possible!


Time is your best friend! As you can see in the table above, the more time you have the easier it will be to save up for retirement. Compound growth will be your favorite employee, and he works for free!


"The best time to plant a tree was 20 years ago. The second best time is now."
-Chinese Proverb-


Do you want a million dollars? There’s just one thing you need to do. Set up an appointment with your financial advisor today!

What is something you have always wanted to do, but didn’t have the money for?

chart/design credit: lindeestonedesigns.com

5 Reasons to Change Your Mind About Debt!

                Have You Put Your Family In Credit Danger?

                Have You Put Your Family In Credit Danger?

As I mentioned in the post on how to create a budget, the thought of credit cards years back was non existent. You bought things when you had the cash on hand to buy them. There was no such thing as a plastic card to buy things even if you didn’t have the money for them. Well, now days in the US it’s less common to use cash to pay for things then to use a plastic card.

Our culture is so consumed with this idea of credit that everywhere you look there are advertisements promoting how much it will “help” you or how much money you can “save” by getting a certain credit card, that gives you one percent back on all purchases! (more on this further down the page)


I want to share with you my top 5 reasons for why it’s so important for us to change our mindset about credit and debt!

#1 It’s Dangerous!

Parents inherently have a deep desire to protect their family. They would never intentionally put their family in a dangerous situation. Much like you wouldn’t leave your 3 year old alone in the kitchen with a hot stove top on, or take your family on a hike in the wilderness without keeping a close eye on the little ones. We all want to put our family in as safe of a position as possible.

We want to build a strong foundation. Going into debt weakens your foundation and puts your family in danger. You must be very careful with this. The more debt you are in, the more at risk you and your family will be. On the contrary, the less amount of debt you have the more secure and happy you will be! Try to imagine yourself with absolutely no debt, not even a house payment! How free-ing would that be?


#2  Loads of Lies

We have been fooled. There are many lies in the world of credit that have made our culture believe that credit and debt are necessary things. THEY’RE NOT! They throw things out there such as; if you ever want to book a hotel or a rental car you will need a credit card. NOT TRUE! A debit card will work just as well. Then people say my credit card is safer because if I lose it then I can cancel it, and be refunded any fraudulent expenses. The truth is that a debit card works the exact same way. The same rules and laws hold to your debit card as your credit card.

Another, probably the most popular lie, is that if you ever want to get a mortgage for a house you will need a good credit score. Again this is just what our culture has grown to believe, but it’s not true. There are mortgage companies that will give you a mortgage with a zero credit score. They base it on other things, such as proving to them, that you have paid rent on time or early for the past 12 months. You will also need a few other “credit tradelines” such as proof of paying utilities, cell phone bill, or even proof of paying your insurance on time. Churchill Mortgage is one company that will do it. It doesn’t make sense to go into debt to be able to get a good credit score in order to get into more debt. That's a dangerous cycle to get into.


#3  Be The Living Example

Do you want your kids to be financially sound, or lost in a world of credit lies under a mountain of debt when they're adults? It’s your decision. You can allow your kids to be taught the ways of money by society, or you can teach them yourself, by living it. You can lead by example in your home to combat the teachings from the outside. As the bible reads, “Train up a child in the way he should go: and when he is old, he will not depart from it.” Proverbs 22:6.


#4  Why Not Be Old Fashioned?

There’s nothing wrong with sticking to the old ways that work. Paying cash for things will bring peace to your life. Knowing that you were patient enough to save and pay for your car in full instead of dreading that monthly bill because you borrowed the money will be so worth it. As RichUncle EL says, "Never trade freedom for debt, but sacrifice things for freedom any day."

Keep in mind the power of cash. If you are are the bargaining type you already know that showing the cash in hand gives you a lot better chance of getting a better deal on the item then if you were to use your credit card.


#5 What is 1%?

And last of all… Do you realize what 1 percent is? These amazing credit card offers that give you a whopping 1% back on all purchases aren’t as great as advertised. Think about this. If you spend $10,000 dollars you will get $100 dollars back. Don’t get me wrong, if someone wants to offer free cash I’ll take it too, but the problem with these cards is that it makes you feel like you need to spend more. You have to spend a certain amount of money in the first few months in order to get the rebate then you have to use the points before they expire which forces you to keep spending more. The credit card companies and stores that offer these cards realize this, and that is why they offer these “amazing” benefits for using their card. Be careful!

Now, all this being said. I don’t want to come off like a financial know-it-all. I don’t. I’m 26 years old and still trying to get a handle on things myself. I’m living the grind like all of you. I’m constantly trying to learn more every day to figure out how to put my family in a better situation financially. These are just some things I've learned, and I feel like they can help all of you.


“I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”

-Thomas Jefferson-

Are there other credit/debt lies that you have heard? What do you dream of doing when you’re debt free?

Design/Photo credit: lindeestonedesigns.com

529 or an ESA?

529 or ESA

Dear Parents of a Newborn College Kid,

Are you one of the many Americans that got your college degree accompanied with a mountain of debt? Sadly, but truly that seems to be the trend these days. With a little planning ahead your newborn baby won’t have to experience the same thing you went through.

“That’s the value of a college education... I don’t know anywhere in the world where you can make an investment and make that kind of return.”
-Gaston Caperton-

College Is No Small Purchase

As with all types of large purchases, saving a little bit at a time over a long period can make the purchase much easier. In this case with college savings it becomes even more true. Since college is such a huge purchase, probably your biggest purchase apart from your house, it’s a good idea to start putting some money away in a college fund, as soon as your kid is born.

There are a few options out there. I want to point out two that make the most sense. That’s a Coverdell Educational Savings Account (ESA) and a 529 plan.



Let’s start with the pros of an ESA. An ESA allows you to save $2,000 dollars a year once the child is born. If you do that until they graduate you can have $36,000 saved up just with what you have put into it. If you get a return of 10-12% you could have between $100,000 - $130,000 saved up there. Now if you don’t believe that sort of return is possible cut that number in half and you still have $50,000 to $65,000 dollars. It wouldn’t be hard to find an instate school for that price. Money in an ESA can be used for schooling at any age from Kindergarten and up, but remember that by putting this money in an ESA that means the money must be used for school. You can’t pull it out and buy a car with it unless you want to take big tax hits. Because you fund the ESA with after-tax dollars (money that you have already paid taxes on),all the interest you made on it will be tax free as long as you use it for what it’s meant for. Schooling.


But what if…

Say your kid decides not to go to college? Well, that’s just great, you’ve spent 18 years saving up all this cash for your kid to go to college, and now he decides he doesn’t want to go. The good news is, you are allowed to transfer the ESA account, and use it for another one of your children. It would probably be a good idea though, to make sure they know that they have this account growing up, so it’s built in their mind that they are going to go to college. Now if they end up getting scholarships to pay for college the money can be pulled out without a penalty. The downside of an ESA is that the contributions are never tax deductible, and in some states the ESA becomes property of the beneficiary. This means that if your kid goes astray, and decides that he wants to take the money and buy drugs it’s in his name, so he can. Check your state laws to make sure. There’s also an income limit of $220,000 for a married couple, so if you make more than that than go straight to the 529 plan.


529 Plan

The 529 plan has a much higher limit of how much you can put into it per year, so this would be the better choice if you’re a little behind, and need to catch up on college savings. Again, depending on the state, the amount that you can invest differs. The good news is that in some states 529 plan contributions are tax deductible. Money from a 529 can only be used for post secondary schooling though, so anything after high school. As mentioned above there is no income limit for a 529 plan so if you’re making above the limit of an ESA this is the plan for you. Another good thing about the 529 is that the account is in the name of the contributor. It’s not in the name of the beneficiary. The main drawback of the plan can be that as the kid grows older the account automatically changes your investments, and can freeze up your options of what you’re investing in, so look into this before you jump right in. You need to be in control of your money. Don’t let the plan administrator be. They don’t care about your hard earned money nearly as much as you do!


Let’s Keep In Mind

You need to take care of yourself first. The temptation for lots of people I know would be to forget about themselves, and make sure their kids future is set up perfect. Make sure you’re investing into your retirement, and then any money on top of that can go to your kids college. If you don’t take care of yourself first then you could become a burden to your children later on. There is no shame in a college kid having to pay his own way through college.


“The only thing more expensive than a college education is ignorance.”

-Benjamin Franklin-


Which one is a better fit for you?

Photo credit: Kami Stone

15 Minute Financial Life Changer

15 Minute Financial Life Changer

Hello Friend,

Okay okay, I get it. There’s a monster in the closet. Nobody wants to look at their finances, because they are scared of what they might see. They don’t want to sit down and figure out a budget because they are afraid that they might have to cut their lifestyle. The truth is, is that the unknown is much scarier than the known. If you actually do sit down and check out your finances I think you’ll be surprised that it’s not quite as bad as you expected. If it is as bad as you expected, at least you will know all the details, and you can make a plan to get out of it. Start by making a simple budget. If you need help starting a budget check out these four simple steps here.


Just Fifteen!

Fifteen minutes isn’t a scary amount of time is it? That’s really all you need to get on top of your finances. Fifteen minutes a month can transform your financial situation greatly. If you have never done a budget before, the first few months are going to take a little bit longer. By the time month three and four come around fifteen minutes max, will be all you will need to stay on top of your finances. Fifteen minutes will change your financial life. Those few minutes can be the difference of having peace of mind that all your finances are in order, or always stressing about them until you’re finally forced to figure them out because of the financial hole you're in.


Don't Delay! Save Your Finances Today!

Don’t wait until the collections guy is calling on the phone everyday. If you wait until then you’ll have a much bigger hole to dig yourself out of. Start a budget today! Before you turn the TV on after dinner sit down with your spouse, and get this figured out. This is such an easy thing to do, and you will reap great benefits from it. Along with everything else in life, the sooner you start, the sooner you will see results. That should be pretty obvious to you, if so what’s stopping you from doing it now? The longer you wait the less money you will have saved for your future, and the more your debt you are going to pile up. Do yourself and your family a favor and start today. It’s never too late!


“No matter what your history has been, your destiny is what you create today. What are you going to create?”

Steve Maraboli


What has kept you from starting a budget? What is the hardest thing about doing a budget? I'd love to hear your comments below!

Photo/Design credit: lindeestonedesigns.com


Funded For Emergencies

Road, barrier, cliff, blue sky, mountain

To the Security Searching Folk,

If you needed $5,000 dollars to cover an emergency today would you be able to pay for it without using a credit card? If you answered no, you’re not alone. The truth is that the majority of Americans wouldn’t be able to cover such an expense with no time to save. A lot of people think, like I used to, that if I’m ever in an emergency, I could just put it on my credit card. I have a $6,000 dollar credit limit, so I will be just fine. When you sit down and think about that, I think you’ll realize how bad of an idea that is. This means that when you’re nearly out of cash you’re going to borrow $5,000 dollars to cover an emergency. That has trouble written all over it. It’s never a great idea to go into debt, but to go into debt when you’re broke can lead you and your family into a disaster!

As much as we don’t like to think about it there are a number of expensive disasters that can occur at anytime. Your roof could start leaking, the transmission in the car could go out, or your refrigerator could die. You may end up in the emergency room, and have surgery that maxes out your insurance. Sadly the list goes on and on. You need to put yourself in a position so that when these emergencies come about you don’t end up having to borrow the money to cover the expenses.

There’s A Better Way

Save up an emergency fund. This fund will act as a financial barrier for you and your family. There are barriers along the sides of roads in dangerous areas. The barrier keeps your car from driving off the road if you happen to fall asleep or get distracted in some other way. It protects you from going down the mountain or into the ocean. Even though you can’t avoid all emergencies, there is a way to protect yourself and your family from the terrible financial effects that they can have. You need an emergency fund of 3 to 6 months. I’m sure you’ve heard this before. This doesn’t need to be 3 to 6 months of income just your expenses that you would need to survive off of if you were, for example, laid off of work. You would need money for food, gas, rent, and clothes. Depending on how long you foresee the emergency lasting you would probably stop contributing to retirement and you would definitely be cutting out the expenses of entertainment and eating out. You decide for yourself exactly how much money you need in your emergency fund to feel secure if an emergency did strike. Take a good look at your budget and figure out what is appropriate for your family.

Your Emergency Fund Isn’t An Investment

If you’re a math person like myself you might think, “Well I’ve got this $10,000 dollar emergency fund sitting here I might as well invest it to make something off of it.” That is a bad idea. Your emergency fund needs to be very liquid. This means it’s easy to get a hold of. It should be put in a money market account or checking account, so that when the emergency occurs you can write a check or go straight to the bank and pick up the cash. If it’s invested it will usually take days to get it liquid to be able to use it. Not to mention, if you invest it you risk losing it.That would be like not having the traffic barrier on the road. The chances of you driving off the cliff are much higher. You want that barrier between you and all the emergencies that could possibly come your way.

Let’s Not Forget…

This is an EMERGENCY fund. This isn’t an, “Oh, I forgot the kids needed new clothes this month.” or “I forgot to save for our trip to Disneyland.” These are not emergencies! If you use up the money in your emergency fund to pay for expenses because you forgot to save up for them, then a real emergency will come up and you will end up going into debt when you’re broke. This is why it’s important to never pull money out of your emergency fund unless it’s an emergency. If you pull money out once because Tommy needs some new shoes then it makes it easier to pull money out the next time you have a non-emergency. You should keep your emergency fund separate from your everyday checking account. You don’t want to be looking at it everyday thinking that you have all that extra money sitting around that you could be spending or investing. On this same note. If you are in debt other than your house. I would recommend you buckling down and paying off all your debt before you save a large emergency fund. There is no sense in having a $10,000 dollar emergency fund sitting in the bank when you have $14,000 dollars of debt piled up. Pay all your debts off first then save up your emergency fund.

Now You Know

You just need to do it. Figure out how much you will need in your emergency fund and set a goal to save it up. If you decide that you need a $10,000 dollar emergency fund then figure out a reasonable amount of money that you can save every month to reach your goal. Put it in your budget and make it automatic! You should be out of debt before you do this, so you will be able to put a lot towards it and save it up quickly. Buckle down and do this ASAP! You never know when an emergency will strike your family.


“It wasn’t raining when Noah built the ark.”

- Howard Ruff -


Have you ever had an emergency expense come up and been grateful that you had an emergency fund? Or the opposite and wished you would have had an emergency fund?


Photo credit: Pexels, license, no changes made.

4 Simple, But Essential Steps To Creating A Budget That Works!

steps, red shoes, metal

For the budgetless family,

Budgeting is simply planning ahead. You are planning to pay for things so that you don’t pay for things that you don’t have money for. If someone would have said that 50 years ago people would have thought they were crazy. “Pay for something you don’t have money for? How ya supposed to do that?” In today’s world with credit cards and loans available for pretty much any possible purchase, you don’t have to think twice about buying something that you don’t have the money for. A budget will keep expenses from sneaking up on you.

When the car unexpectedly dies you won’t have to finance it this time. If you know that you’re going to need a new car in the next year you can start budgeting to save $500 dollars a month, so in a year you have $6,000 to buy another car. After a year goes by, you will have $6,000 dollars set aside. You won’t be stuck wondering how you’re going to come up with $6,000 in this month's budget to buy your car. Budgeting allows you to know before the month has started what you will be able to buy.

Follow these 4 steps for success.

1- First, make a list of everything you spend money on in a month. Groceries, gas, electricity, rent/mortgage, car payments etc. Think about this long and hard because you don't want to miss anything. Don't forget magazine subscriptions, Amazon prime, credit card bills, and retirement savings.

2- The next step is to organize your list from most important (#1) to least important (#...). Think about it this way. If you only made $100 dollars this month what would you spend it on? Make that your number one. (The answer should be food!) Then if you only had money leftover to pay for one more thing what would you spend it on? Probably your electricity and water bill so you could cook your food. Next in line would probably clothes and then transportation. After that you can decide the rest on your own.

3- Now that we have our priorities straightened out you take your monthly salary and start dividing it up. This means that you if make $3,000 dollars a month, and the top 9 things on your list equal $3,020 then you’ll have to cut that 9th thing off until you are at $3,000 dollars. That is what you would call living within a budget. Spending less than what you make. If “thing” number 9 on the list is Netfix, then you're going to have to go without for that month.

4- Last step is to stick to the budget! If you have planned to spend $400 dollars on food for the month then only spend $400 dollars. If you need to pull the $400 dollars cash out of the bank at the beginning of the month and only pay with that cash, so that you can’t go over; then do it! Do whatever you need to do to stay within the budget.


A Few Things To Remember…

When I first started doing a budget the thing I had most problems with was budgeting for things that don't happen every month. Like birthdays, or vacations. This is why it's so important to make a new budget every month. It doesn't have to be a completely new budget, but it will need to be adjusted.

After doing if for a couple months you will get a better hang of it. You will probably leave a few things out the first few times but after 3-4 months you’ll have no problem making the perfect budget.

To help you get started, go check out this excellent online budget tool, at everydollar.com. I use it because it's free and very user friendly. 

Lastly and probably more important than anything else I’ve mentioned is learning contentment. If you can't learn to be content than no matter how big your budget is, you will alway feel like you need more. If you are content, living within your budget will be no problem. In the words of Socrates, 

“He who is not contented with what he has, would not be contented with what he would like to have.”


Good luck! Let me know in the comments section if you have any other questions or suggestions that I should write about.


Photo credit: Pixabay, license, no changes made.

Where There's a Will, the Way is Made Easy!

cemetery, headstones, grass, gravestone

To the Willful Parent,

When you hear of someone mentioning a will, what usually comes to mind? It could be a movie where the rich uncle dies and the dysfunctional family meets together with the lawyer to read the will to find out who Uncle Ben is leaving his mansion and money to. Then, inevitably after the will is read the arguments and fights start. Does this sound like the way you would want to leave your family? Of course not. By understanding just a few important things you can be a blessing to your family instead of leaving them with the trouble of having to fight it out.

What is a will?

A will, or a last will and testament, is simply a paper that gives instructions to those you leave behind as to what should be done with your estate. It states who is to receive inheritances, and who is in charge of executing it all. Along with a last will and testament, which is for after you die, there is something called a living will. A living will gives instructions while you’re alive, but can no longer make decisions for yourself. In a living will you can state who will be your agent, or who will be in charge of decision making if you become incapable before you die. You can state in the living will if you would like to be put on life support, and any other final wishes you may have. A living will is just as important as a last will and testament. You don’t want to leave the incredibly difficult decision of prolonging your life left up to your family. Nobody wants to have to decide that for someone else.

Only the Super Rich Need a Will...

You might think that a will is just for the super wealthy that have millions of dollars and rubies to divide between the trust fund kids and the ex-wife. The reality is that everyone needs a will. If no will is in place when a person dies then the state laws will govern who receives your estate. This includes your kids! Do you want the state to decide which one of your crazy family member gets to take care of your kids? You should be the one deciding this, and all you need to do is sit down and fill out a few papers. Then you’ll sign them in front of a few witnesses who will also sign them, and your will is made. It’s really not all that difficult. Save your family the trouble of waiting on the state to decide how to divide your things and make a will. I did mine at uslegalforms.com, and it was a pretty easy step by step process, and it cost about $45 dollars.

Don’t Forget!

One very important thing to remember is that if you want to leave your family in peace, your will should be shared before you die. This way nothing is left as a surprise. Everyone will know how your assets are going to be divided out. This is very important because it can settle any disputes with the family while you are still alive. Yes, it would be easier to just pass away and let them figure it out on their own, but you want to be a blessing to your family and leave them in peace, not in an arguing mess. Another great reason for this is incentive for the family members that may have strayed away. You are not going to want to leave an inheritance to your nephew that is addicted to drugs, and enable him to continue on his same path. If the will is read aloud and Timmy hears that he won’t receive anything as long as he’s still doing drugs then he may have the incentive to change his life.

Take The Time!

Though it may seem like a hassle to take the time to do a will and write down all the info of your estate, this can be a great blessing. As I did mine, and got organized finding the life insurance policy numbers, the IRA account info, and all of the contact information of insurance agents and so forth. It helped me see exactly where my wife and I are at financially. We could see the progress that we had made in the past. I feel much better now, knowing that if something were to happen to Lindee and I, a family member would have no problem figuring things out. You don’t want to leave a mess behind when you leave this life. With a little organizing and prep time you will be prepared to go out in style!

If you have any questions or suggestions about future blogs please comment below!


Photo credit: Daniel Richardson, license, no changes made.

Life Insurance Because You're of Great Value!

life preserver, ocean, sand

For The TERM Newlyweds,

You have taken a step in life where you and another person who were once living independent, now have combined your lives to depend on one another. You now have real responsibility, someone to care for, who relies on you. I'm not just talking to the man in the marriage. This goes both ways. As much as the homemaker needs the provider to bring home the bacon. The Provider needs someone that can cook the bacon and care for all the needs of the home and children while he is away. This new responsibility means that you need to make sure that your family is taken care of financially no matter what happens. You need to insure your life.Whether one of you leaves the workforce to focus your talents on homecare and raising a family, or if you both plan to continue working it doesn't make a difference. You both, in most circumstances, need life insurance.

What is it exactly?

Life insurance is essentially putting a price on someone's life. It sounds a little heartless, but we will see here just how heartfelt this act of getting life insurance can be for your family. For example, take a father who makes $50k a year. With that money they are able to pay the bills, such as the mortgage, electricity, and groceries while the mom stays home caring for the kids and chores that need care. Well, what happens if dad, heaven forbid, gets in a fatal accident? As sad as the situation would be emotionally for the family; financially it would be a disaster. How is mom supposed to continue to take care of the kids and house and on top of that start up a career to provide for herself and her children. If the father had life insurance it would take care of the financial part, and the family would be able to continue living without adding financial pain to the already emotionally painful situation.

How much is enough?

A good amount of life insurance is 10-12 times your yearly salary. The reason being is that the stock market over its history has averaged 10-12 percent. This means that the survivor can now take that lump sum of money, which in our example above would have been 10 times 50,000 which is 500,000. Now they can invest it into good mutual funds and continue to earn 10-12 percent on the $500,000, which ends up being $50k, to replace the father’s income. It works the same for the mom/homemaker. It's just a little different computing a value of life since the homemaker doesn't have a salary to base off of. You just have to figure out the economic value of the homemaker. What it would cost to replace the work that is normally accomplished. Figure out how much childcare, or a nanny, or whatever else will need to be done would cost for one year, and do the same thing. Multiply that by 10-12 and you have the amount of life insurance that you will need for that spouse.

worm, germ, TERM!

Now that we have the basic idea down there are a few more details that you need to know. TERM life Insurance is what you want. Nothing else! A Term policy means that you will have it for a certain term such as 10, 20, or 30 years. Term is the cheapest and overall just makes the most sense. There will be people that will want to offer you cash value policies like whole life, universal life, or variable life. These types of policies are tied with investing and you do not want to combine your insurance with your investments. In a sense these policies have a term policy included in them with a savings plan. Doesn't sound too bad right? You put the savings/investment money into it on top of what the insurance costs. However, this savings that you’re getting is very minimal. Much less than what you could get if you took that money and invested it on your own in good mutual funds. On top of the terrible returns you get from one of these policies; when you die then all the money you saved up goes back to whomever sold you the policy. All that your beneficiary receives is the face value of the life insurance policy, and all that money that you had in your “savings/investment plan” is lost. It's not a good investment. The difference in price is incredible as well. We’re talking 1/20th of the price for term insurance versus a cash value policy. Someone looking for a $100,000 cash value policy would probably pay around $100 a month whereas that same person looking to get a Term policy could get it for around $5 a month. Your financial advisor makes more money off the cash value policies, so they are going to try hard to get you to buy one. Stick to term life insurance, and keep your investments outside of it.


Do I need it forever?

How long of a term should you get it for? The idea is that you eventually want to be able to insure yourself instead of paying a monthly premium for an insurance policy. If you have kids you want to make sure that they are grown and out of the house before your policy would run out. Once you have the policy dollar amount in savings and retirement, technically you would be self insured, and you wouldn’t need the insurance anymore. If you passed away at that time your beneficiaries would be taken care of in the same way.

One last thing to remember. Many people have life insurance policies provided by their workplace. If this is your case you need an additional policy outside of your work as well. In the case of you losing your job you don't want to suddenly be left without any life insurance.

Remember how much you love your family and how much they love you. When you leave this life, whenever that may be, it will be tough emotionally for your family. You have the chance now to make sure it's not tough on them financially as well.

Photo credit: Karen Arnold, license, no changes made.