Category Archives: Getting Started

How To Save Up For Retirement Without Breaking Your Head

Save Up For Retirement

The best time to start saving for retirement is now. However old you are, waiting is unnecessary. Even if you’re in-between jobs, putting a few dollars aside keeps the habit going and all adds to that 8th wonder of the world: compounding interest

However, getting started is difficult. Talk of allowances, annuities, inflation, maxing out 401Ks and diversifying your portfolio is a certified way of putting you off even beginning. The issue is that whilst these are things you want to become familiar with in order to prevent mistakes and optimize your retirement plan, they are not prerequisites to starting. That is the misconception, that only the sort of people that already know this stuff are those who can invest from a young age.

The jargon is certainly a barrier, but it can be overcome. Here are some of the most basic concepts you should know and some ways to invest as, say, a broke student. 

Easy, functional options for retirement saving

Automation is key

First thing’s first, pensions are at the core of retirement savings. Pensions offer the ability to have annual income until death, no matter how long you live, once you reach the agreed age of retirement. They can also be great ways to pay less tax and can be taken out early in a lump sum.

So, paying into a retirement plan is a clear necessity. If you’re employed, you can pay into a 401k (a pension pot, essentially) directly out of your pay. This means there’s no chance of spending the money first. Automated retirement contributions such as this are at the core of lazy retirement planning – nothing can go wrong and you can forget all about it. It removes the temptation – the choice – to spend it elsewhere.

Being self-employed or a non-working student makes this a little more difficult. However, you can still set up direct debits/standing orders into a 401k yourself and let money drip out of your account each month.

Another great tool is Robo-advisors. These are essentially companies (websites) that let you contribute monthly (or just a one-off) and they invest for you. They claim to be AI investors with an intelligent bespoke algorithm. They’re not. They’re nothing special. They invest in a mixture of bonds and index trackers that follow a few markets and they take around 0.5% as a cut. 

But reading up about Vanguard, making an account and doing the same with a few others doesn’t sound appealing. Robo-advisors are actually a great resource to get you started. You can let them take out fixed, monthly contributions from your account and you may end up getting a 6% return if the western economy does reasonably well that year. 

Annual returns can vary widely, from potentially losing money to getting over 10%, but considering they’re longer-term than one-year investments, they’re a safe bet with decent returns. Very few can beat the market, let alone when getting started so investing in the market itself (or a tracker that mirrors the market) is a great place to start.

Emergency fund

No matter how keen you are to start saving for retirement, you must keep some of your assets liquid. This means not tying up your savings in bonds that you can’t sell quickly, or savings accounts that you can’t access for 5 years.

Yes, these usually offer better returns. But always keep a month or two worth of expenses as either cash or easily accessed deposits. This is vital to giving you a safety net throughout your journey to retirement.

Learn frugality

The importance of whether your investments return 4% per year or 6% per year pales in comparison to being able to save more. Learning how to save on a small scale in everyday situations is what will lead to long-term results. For example, cycling to college instead of driving, learning to cook, not buying coffee at lunchtime.

Increasing your savings rate (% you save in relation to income) from 5% to 25% isn’t all that hard, but it could be the difference between saving $100 per month and $500. That’s around $100k more in savings over 20 years – but it would be more than that of course because you will have gained more from compounding interest too!

Frugality can become a subconscious mindset that will prepare you for retirement, where you won’t have enough money to be splashing out on eating out every day and such (compared to your working pre-children life).

Understanding tax relief

The government understands the necessity of having money at an old age, and how difficult this is when you cannot work. However, they also understand how expensive paying pensions are. To promote our efforts and focus on private pensions, there are tax advantages to saving for many of them.

The specific reliefs will depend on which country you’re in, but generally, there is tax relief on private pensions and many ISA savings accounts. This means you can reduce your taxable earnings in the now, by saving for the future.

When the future comes around and you want to receive your pension, there will likely be tax relief wherever you are. In the UK, 25% of your pension will be tax-free. It doesn’t matter whether you take it out in a lump sum or as annuity payments, the first 25% will be tax-free. Of course, if you’re properly retired and have not just taken your pension early, it’s unlikely that you will be earning enough to pay tax anyway, as there is a personal allowance of £12,500 (in the UK). This means you may end up never paying a penny tax on your pension. Compare this to the tax you would have paid if you didn’t save it throughout your life – you will have likely saved tens of thousands in tax. Saving for retirement is a marathon and reducing tax is just as important as making more returns on investments.

When Should College Students Start Looking for Their “Adult” Job?

Adult job

It’s something that every college student starts to stress out about during their educational career – when do you start to look for your first “adult” job? The job search can be incredibly time consuming and overwhelming. Many students might feel discouraged by their prospects, or maybe they’re expecting a job to fall into their lap just because they’re on their way to earning their degree. However, especially in today’s world where it’s not always what you know but who you know, job searches are much more about networking and pursuing opportunities with people you know or could potentially be introduced to. So, knowing that your job hunt might take a little longer, do you start to look for an “adult” job while you’re still in college? Or do you wait until you’ve graduated and have your degree in hand?

The Difficulties of Job Hunting

We live in a very connected world. Even if you’re able to find a job posting on a website or in the paper, it’s likely that the poster already knows several people or can be introduced to several people who are the ideal applicants. However, don’t allow yourself to be consumed by the doom and gloom rumors that all college graduates struggle to find a job. In fact, only 2.5% of college graduates are unemployed as of a January 2017 survey. That doesn’t mean the job search is easy or that there are jobs out there that are a perfect fit for everybody, but there are ways to deal with the difficulties of the job hunt.

It may be tempting to put off your job search until after you graduate. Logically, this might appear to make sense. Ideally, if you focus your time while in college on your studies, your grades will be better. Better grades mean a higher GPA, and that should mean a higher likelihood of finding an amazing job after you graduate. This logic is faulty. While GPA is a factor, most places of employment aren’t going to be scrutinizing your college transcript. Just seeing that you earned a degree is usually enough to qualify you for employment (unless, of course, you’re going into a very high tech or niche-specific field).

If we look at how job hunting works these days (78% of college graduates say that networking played the largest factor in finding a job after college), we know one thing for sure: it’s time consuming. So, the right way to go about your job search is to start as early as possible while you’re still in college. This will ultimately save you money in the long run because before any student loans or hefty post-college living expenses kick in, you’ll already be squared away with a salary-earning job. If you wait to start job searching until after college, it’s likely you’ll take a bit of time to do so. During this time, you won’t be earning money, you could potentially be going into debt to pay for your lifestyle, and you won’t be putting any money towards student debt, savings, or retirement funds.

Timing & Experience

Timing is, in this case, the most important factor in finding a job. You never know who you’ll meet at a career fair, at a panel interview, or during a networking event, and you can’t really orchestrate the meeting with your ideal employer. These chance meetings aren’t premeditated. This is the reason you should start hunting for your job early on, to increase your likelihood of being in the right place at the right time. Of course, timing these meetings or being able to bump into someone who wants to hire you in the right place at the right time isn’t easy – if only because it’s mostly outside your realm of control. Regardless of how difficult this seems, keep pressing on. Continue to apply, send emails of inquiry, and attend networking events to maximize the time you’re spending on your job hunt.

Experience is also a critical factor in your job hunt. It can be frustrating for college students when it seems like all entry-level jobs have a high experience requirement. One way to circumvent this is by attending events within the industry you’re interested in.

Get involved early – a year or more before your expected graduation date with volunteer work, internships, networking events, and more. Although you’re a full-time student, this involvement will show very clearly that you have experience in the industry, know about the employers you’re speaking with, and you’re ready to jump into the workforce after you graduate. The job search is a stressful time, but it’s also an exciting time! Take advantage of events in your area to put yourself in front of the people you want to work for and eventually you will be working for them after you graduate!

Book Review: Share or Die – Voices of the Get Lost Generation

I was recently given a copy of the anthology – Share or Die – Voice of the Get Lost Generation in the Age of Crisis. The book is a collection of stories, mostly written by young adults, about what it is like to grow up in Generation Y (Born after 1985) and try to find employment post-graduation.

I don’t normally review books here at Money for College Project, but this book is an exceptionally interesting read. Many of our readers are in Generation Y, or are just outside of it and can find very relevant lessons in this book. If you are interested, you can pick up up here: Share or Die: Voice of the Get Lost Generation in the Age of Crisis

Never a Better Time to Become and Entrepreneur

I have said this many times before: During college, or the period right after graduation, is the best time to start a business. Your expenses and responsibilities are as low as they will likely ever ben in your life, and a business started in your early twenties can set the tone for the rest of your life/career.

Gen Y is graduating into a very unique economic climate. The world is trying to upright itself after a global economic recession and traditional jobs markets are still faltering. The barriers of entry to starting a business and becoming an entrepreneur are lower than they have ever been.

The Internet has brought the world together, and therefore you are able to connect with like minded people from around the world to share ideas, brainstorm, and plan. You can reach targeted customers quickly and efficiently through online advertising and social media. You can sell digital products online or become an affiliate for someone else’s products. Start-up companies are even partnering with large corporations to head their research and development wings. Did you catch that? Large corporations are outsourcing the future of their business to the sharp minds of Gen Y!

It is our time!

Pack Up and Travel the World

Another main point in many of the stories shared in this book is the call to to pack-up your things and travel while you can. There is a lot than can be learned from travel, and from personal experience, I can attest that many important life lessons and perspectives can be gained by getting outside of your comfort zone. In particular, I learned a great deal about how the U.S. is viewed in other parts of the world.

I think it is very important to understand that there is value, beauty, and power in the world outside the shores of the U.S. It is very easy to get an superior imperialist attitude living here, and this perspective will aid you in your career moving forward. it may also open up opportunities to connect with new and exciting people and places. It might even turn into a job if you meet the right people along the way!

The Bottom Line

graduating from college and striking out on your own in 2013 is not easy, but there is hope. In fact, the future is brighter than it has been for some time and now is as good a time as any to start your future.

Start a business, travel the world, pursue your goals, just please….don’t sit around and feel sorry for yourself.

Get up and make it happen!

Lifestyle Inflation and Greedy College Students are Driving College Tuition Higher

lifestyle inflation

The news is filled with stories and data of rising tuition on college campuses. I have written about this very fact a number of times here on the blog. The talking heads on every major news channel mention it at least once per day and each person you listen to may spout out a number of various reasons why college tuition is continually on the rise.

“Experts” are so divided on this issue because there is not a clear cut answer. There literally could be a million internal factors that influence the cost of a colleges’ tuition, as well as the external factors of our national and global economy.

In researching this phenomena  and from working on a college campus, I have a hypothesis of why college tuition has risen so dramatically in the past decade: Lifestyle Inflation and Greedy College Students!

Lifestyle Inflation

I believe that “lifestyle inflation” or the 21st century version of “keeping up with the Joneses” is to blame for driving college tuition prices to unprecedented heights. College students are simply no longer satisfied with musty dorm rooms, and uncomfortable classroom chairs. College students expect to have multiple Starbucks locations on their campus. They want manicured grass and climate controlled buildings. They want spotless restrooms, and state of the art laboratory facilities.

Today’s college students expect to have sports stadiums which rival (or far surpass) professional teams. They want to have a gym facility with an indoor climbing wall, olympic size swimming pool, Zumba classes, and enough ellipticals to entertain an entire sorority.

College students also expect to have a car on campus, they expect to have access to social activities at every hour of the day, they expect their professors to bend over backwards to accomodate them within their office hours, and they expect to have private showers.

None of these conveniences and amenities are cheap.

To attract new students, colleges are forced to cater to these demands. The sad thing is that you will likely never get a student to admit that they crave the above luxuries. Even though they may not voice this opinion, their voice is heard loud and clear through their actions. They choose to go to colleges and universities which offer these amenities. The better the amenities, the higher the enrollment.

A Vicious Cycle

Many colleges are driven by their enrollment. Their budget is directly determined by the number of students they admit each year, and they do not receive funding from the state or other external entities. Colleges who live and die by the number paying students they have on campus each semester must do whatever is takes to attract their quota of students. Attracting new students means building bigger and nicer facilities, and providng all of the amenities mentioned above.

When college students (and parents!) walk onto campus for their college tour, they expect to find these things. Unfortunately, many students base their college decision on the level of the amenities offered by the college and not on their academic prowess.

Here is the vicious cycle: Colleges must provide these high priced amenities to attract new students, these amenities and facilities cost a great deal of money, thus driving up tuition costs, parents and students complain about high tuition costs and demand that colleges find ways to lower their costs.

The standard of living on a college campus has expanded to a level that colleges simply cannot keep pace with. Their attempts to keep pace have resulted in the skyrocketing of tuition rates.

As college tuition prices are driven higher by the insatiable desire of students for high priced amenities, student loan debt also continues to skyrocket. This is the predicament that we find ourselves in today.

Let’s take a step towards halting the rise of both college tuition and student loan debt, by eating more ramien noodles and accepting a moldy dorm room as your right of passage!

 

Bubba’s Hover Craft with Oakley for Golf Courses – April Fools Prank?

So this post is just for fun.

But for those of you who have not yet seen the video of pro golfer Bubba Watson driving his Oakley hover craft around a golf course, you need to see it!

bubba hover

If this is real, sign me up!

I don’t even play golf, but this would make me pay money to go to a golf course.

Being a designated driver has never been more fun!

If this is an April Fool’s prank; hat’s off to Bubba and Oakley. This is one of the more elaborate pranks I have see in awhile.

But also, kudos to them for thinking of an incredible ingenious idea that may actually work. If this is a prank  I can guarantee that someone will run away with it, and make it into a profitable business idea. Not a bad way to profit off of an April Fool’s prank (although, here is to hoping we will see it out on the back 9 next time we play!)

Florida Gulf Coast’s Server Crashed — Lesson in Website Traffic

florida gulf coast university

Admit it. You had never heard of Florida Gulf Coast University prior to their stunning upset victory in the first round of the 2013 NCAA men’s basketball tournament.

It’s ok. You were not alone. Nobody else in the world knew who they were either, which is why the servers which ran the Florida Gulf Coast Athletic Department website crashed multiple times on Sunday evening, after FGCU won it’s second game in the tournament to secure their spot in a Sweet 16 game.

The massive surge of traffic resulting from people trying to figure out who Florida Gulf Coast was, literally knocked their site offline.

Technical difficulties aside, that is incredible!

For a blogger, website mechanic, or anyone else trying to boost their traffic numbers, there are important lessons to be learned here.

From Obscurity to Priminence

Some times all it takes is one powerful event to get your name on the map. As a blogger, this might be one link from an uber popular and highly trafficked website. This might be a product endorsement from a major news outlet. This might be bad press that suddenly draws you into the spotlight. Whatever the event, be it good or bad, there are ways to harness this surge of traffic to your advantage.

Always be Prepared

You should prepare your blog or website like you are expecting a tidal wave of traffic at any minute, even if you have no idea it is coming. How can you do this?

  • Make sure your subscription and newsletter sign-up options are highly visible
  • Make sure you always have fresh content on your landing page
  • Make a landing page!
  • Keep your social media outlets up to date
  • Don’t put a “Welcome visitors from X” message on your site (It’s just tacky)

Have a Web Host With Excellent Customer Service

When your servers crash from a wave of unexpected traffic, your web host will become your best friend. The customer service number you may have never used will suddenly be on speed dial.

You also do not want to wait until your servers crash to determine whether your web host’s customer service department is up to snuff. I don’t suggest orchestrating a crash on your own site, but you should at least contact their customer service department with a routine service question to experience their response time and ease of use.

This way, when it hits the fan you will know you have an ally in your corner.

If you don’t already have a web provider, or you want one with documented excellent customer service, I highly recommend BlueHost.

Signup for BlueHost! (Affiliate Link)

I have used BlueHost for a number of years on this blog, as well as all of the other websites that I run and they have never let me down. In fact, they were able to restore one of my websites after I made a bonehead change and erased my entire site!

The Bottom Line

The bottom line is that we may never know when we can expect a massive surge of traffic. We can however, prepare to make the most of it if and when it does happen!

 

The Importance of Being Concise – Or A Writing Lesson from The Hobbit

By now you have all heard of the Apple Fanboys. If not, just Google it. Pretty funny…

Well, I don’t consider myself an Apple Fanboy, but I am most certainly a Tolkien Fanboy. Yes, I just made that up, and yes feel free to associate yourself with it if applicable…

Lord of the Rings, The Hobbit, The Silmarillion, and Tolkiens other works have been some of my favorites since I was a kid. I loved the adventure, the characters, the relentless triumph of good over evil, and the full immersion into the fantastical world of Middle Earth.

As you can imagine, I was more than excited when Peter Jackson announced that he was working on developing The Hobbit into a movie. With the success of the Lord of the Rings trilogy, it was inevitable that The Hobbit would also eventually grace the silver screen.

Then I heard that Jackson had made the decision to split the book into two movies. I was a little taken aback, but I let it slide because of Jackson’s success with Lord of the Rings. But I was still skeptical, after all this is one single kid’s book right?

Then soon after that announcement, I was shocked to hear that The Hobbit would actually be broken into a trilogy. The Hobbit would now have the same amount of screen time as the 1000+ pages of the Lord of the Rings trilogy. I heard dollar signs screaming in my ears. Can you say “money grabbing Hollywood bandwagon”? Then I went on to read that there are new characters, new plots, sub-plots not in the book, and WAY more details about the world of Middle Earth that are not in the original texts.

I could only shake my head in stunned silence.

I tell that story, just to say that there comes a point where it is critical to your success to be concise. Granted, The Hobbit has already pulled in $1 Billion, and I will pay go to see the next two movies in the theaters  but the fact remains that the essence of the story was gutted, because Peter Jackson did not know how to be concise.

Don’t Say 5 Words When 2 Will Do

When I first began writing one of the most difficult things for me to do was be concise. I still struggle with it. Every English teacher I ever had scolded me for being too wordy.

When I was working on my Master’s degree, my program adhered to the APA style which emphasized brevity, and being concise. I dearly earned my stripes trying to perfect APA.

Through my struggles to be concise, I constantly had to remind myself that my words could be powerful, but they were not as awesome as I thought they were. I did not need to write needless phrases just to hear myself talk.

Why do you think Twitter is so popular? Because people can express themselves in 140 characters or less.

Twitter = Forced brevity

Being wordy, adding fluff, and rambling are the death blows to quality writing.

Just remember that people want you to get to the point as quickly as possible. Don’t ramble, don’t add extra words into sentence to make them appear cool, and don’t add fluff content to boost your word count.

Practice being concise and your readers will thank you.

553 words later, I am done…..

Fighting the Demon of Student Loan Debt

I met with a student this morning who is trying to figure out how to pay his tuition bill for the upcoming Fall 2012 semester. He already has taken out roughly $50,000 in Stafford Loan, and does not have willing parents, or sufficient credit, to take out a PLUS loan or a private student loan. This means that he only has $7,500 left to take out in Stafford loans before he reaches his lifetime maximum. Funny thing is, he does not seem worried.

I also asked this student how his job prospects looked. His reply? “Oh well, I suppose I will go to Grad School. I still don’t know what I want to do!”

This sounds incredibly stereotypical, but it was a real conversation I had with a student today. This is the same line of thinking that leads so many people to take out payday loans without thinking about the financial ramifications down the road.

So, how do we combat the student loan debt demon and avoid a generation of college graduates who cannot repay their student loan debt?

It starts in childhood.

I firmly believe that the student loan problem is a result of mismanaged expectations on the part of college students. All of their lives they have been told to pursue their dreams. Get a college degree. Conquer the world. Well, without trying to be cynical, it’s pretty difficult to conquer the world when you can’t find a job or pay your bills.

Being realistic and brutally honest about what it takes to become wealthy is a good start to avoiding taking out student loan debt. Having a clear plan to reach this goal will ensure that the education decisions a student makes aligns with their life goals.

One more thing to consider is that being wealthy is not the goal of every student, nor should it be. In fact, most of the happiest people (ok ALL of the happiest people) I know are not wealthy by the world’s standards. They live simple lives, yet are more fulfilled, and genuinely happier than their financially rich counterparts.

Just something on my mind on a rainy friday afternoon in the southeast…

 

Adoption Fundraising: Unethical or Necessary?

As many of you know, my wife and I are in the middle of the adoption process to bring home our first child. We are so far 4 months into the process, and have recently come to a standstill.

Our homestudy has been approved, which means that we have been cleared to take custody of a baby whenever the right situation presents itself. With that said, the “right situation” has proven hard to come by.

Over a year ago when we first met with our adoption attorney he gave us an estimated budget of our expected costs. We sat down after that meeting and setup a budget plan to save that amount of money over the next year to be able to start the adoption process. We worked hard, saved A LOT, and were finally able to secure the funds we thought we needed by January 2012.

When we met again with our attorney, he informed us that we may very likely have to adopt a baby outside of our state. If this occurs, which is very likely, it could increase our cost by roughly $10,000.

We were floored.

Adoption costs are already crazy enough, and now we find out that we would likely have to spend an additional $10,000!!

Needless to say, we were devastated and began scrambling to find these extra funds.

To Fundraise or Not to Fundraise?

We then began to run into a “moral” dilemma. Well, more of a pride issue I suppose. Do we begin working on adoption fundraisers, or just buck up our bootstraps and get an extra job to save the money?

Asking for money is never easy, but we also realized that we had a whole host of friends and family who sincerely wanted to help us. They wanted to support us. They did not want us to go through this alone. This realization made the final decision for us, and we began exploring various ways to fundraise for our adoption.

We made the decision early on, that we did not want to simply ask for cash. If we were going to do a fundraiser, we wanted to give away a product or service of value, in return for money.

After a lot of research we settled on two different fundraiser ideas:

Just Love Coffee

We love coffee, so this was a no brainer for us. This awesome company provides an entire system of fundraising where we will earn a small return for every bag of coffee that we sell through our storefront (basically we earn the profit margin for the coffee).

You get an awesome fair trade, custom roasted coffee blend, and we earn a small commission.

You can visit our storefront here: Just Love Coffee

A Forever Family

This idea is the brainchild of my wife, and it is entirely her project (although I have helped in a few small ways).

She has discovered recently her passion for sewing, and has found a way to turn this into an adoption fundraiser. She has started sewing little baby Giraffes, burp cloths, car seat covers, and Taggie blankets. She uses designer fabrics (Michael Miller, etc…) and created custom, hand made gifts which we have decided to sell on ETSY.

You can visit our ETSY storefront here: A Forever Family

It has been amazing to see the outpouring of support through both of these fundraisers. I share this with you to:

1. Let you know what I have been up to the past few months,

2. To encourage you to share these fundraisers with anyone you think may be interested in supporting us, and

3. To give you some inspiration for creative fundraising and encourage you to go for it, even if you are intimidated. It is incredibly uplifting to see that people truly are willing to support you, and you will be blessed beyond belief through the process!

 

How New College Graduates Can Avoid Debt

For the majority of college students around the country Graduation just happened. At the school I work at, we just released 2600 newly minted students to the world to seek their fortunes. This is a scary time for most graduates. Entering the work force in the current economic climate is daunting, and they are faced with odds that are already stacked against them. And unfortunately, not a single one of those college classes taught them how to get out of debt.

Fortunately, there are specific steps that new college graduates can take to avoid falling into the consumer debt trap that so many of their fellow students find themselves in.

Continue your college lifestyle for as long as possible!

There is no shame in this, and the stigma of living on ramien noodles and single ply toilet paper is rapidly receding. In fact, I would say that adults who are long removed from their college years are increasingly moving back towards their “college spending” days to save money and avoid falling further into debt.

In college, you don’t need “stuff” because you have friends and real human relationships to occupy your time as opposed to china patterns and big screen tv’s. By avoiding the trap of lifestyle inflation as soon as you get a job, you will be able to establish a firm foundation, start paying off your student loans, establish an emergency fund, and even set aside money for your future (spouse, marriage, kids, house, new car, travel). Setting a plan, and understanding the downside of falling into lifestyle inflation will help you avoid these common mistakes.

Make a Savings/Spending Plan

One of the best pieces of financial advice my parents ever gave me was to set a strict budget and keep to it. Having a firm grasp of your budget and income needs will tell you very quickly the lifestyle you can expect to have.

In fact, if you have a Stafford Student Loan, you will be required to complete exit loan counseling when you graduate, and you will have the opportunity to create your first sample budget in that counseling session.

Understanding that a high income is got a right granted upon graduation will help you face reality, and plan accordingly. Sticking to your savings and spending plan, will help you keep that vision in check.