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My First Father’s Day

Posted by on Jun 18, 2013 in How to Pay College Tuition | 10 comments

father's day

This year I had the opportunity to celebrate my first Father’s Day! I just missed it last year as my daughter was born in July, so I had to wait a long time, but it was well worth it. Some of you may know, but my wife and I adopted our baby girl last year. She is a miracle to our family and I could not be more proud as a Dad.

She is not even one yet, so there was no traditional breakfast in bed or washing my car, but she did decorate a really nice coffee mug for me (Thanks to my wife!). I can now start my collection of gifts that have little to no monetary value, yet hold a very special place in your heart.

As I reflect back on Father”s Day it’s interesting to see how my priorities have already shifted. I think much more about saving for college, having good health insurance, noticing what schools we are zoned for, lamenting the fact that our driveway is as steep as a ski slope and my daughter can never safely ride her bike down it, and dreading the day when she becomes a teenager.

My reflections did however, drive me to jot down a list of a few things I need to take care of on behalf of my daughter. I suppose it is the Dad in me now, but I find myself thinking about protecting my daughter quite often. Not physical protection (Although I certainly would it is ever came to that) but financial and life protection.

Here are a few things I plan to do in the next month to protect my daughter’s future.

Open a 529 College Savings Plan

The only reason I have not done this yet was because we were waiting on my daughter’s social security number. The adoption paperwork took a bit longer than anticipated so opening a 529 college savings plan has to be put on hold.

I have been evaluating 529 plans however, and I have narrowed it down to the plans offered through my state (South Carolina) and those offered through Utah. The Utah plans are managed through Vanguard, and I can participate in the plan even though I don’t live in their state. The Utah plan also received an exceptional rating from MorningStar, which is a good enough reference for me!

I plan to invest a bulk of money up front that we had been savings from gifts and presents for my daughter over the past year. After the initial deposit, I plan to invest a small amount each month to take advantage of dollar cost averaging. Working in college finance, it is interesting to hear stories from parents about a 529 plan. One of the main questions I receive is: “How long does it take to process withdrawals?” We charge late fees to students ever year because their 529 college savings plan check arrived late. You can bet I will be asking my prospective plans how long their withdrawal process takes!

Changing my Beneficiaries

This is again something that would have been taken care of much sooner, but we were waiting on my daughter’s social security number. However, now that we have it, we can properly add her as beneficiaries to our private term life insurance policies, my life insurance policy through work, my retirement accounts, and all of our savings/checking accounts.

It is hard to keep track of every place that has you designate a beneficiary, so it is a good idea to keep a running list of those places whenever you are asked to designate one.

Create a Will

Finally, my wife and I need to create a will. It will be very simple, but to avoid a lengthy stressful court process, should it ever be needed, a simple will will save a lot of trouble.

I have looked at services such as LegalZoom.com but I chose to go with a lawyer in town who will create a simple will for my wife and I for $120. The ease of being able to ask him many questions and draft our will just as we want it, is worth much more than $120.

Also, knowing that my daughter will be well cared for should something ever happen to my wife and I lets me rest easier at night.

The Bottom Line

There is no way to protect our children from all harms that will come to them. In fact, many trials are often great teaching experience for children. However, I want my daughter to be protected and well cared for should something ever happen to me.

What ways to you plan and save to provide and protect the future of your children?

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Weekly Roundup: Crazy Weather Edition

Posted by on Jun 14, 2013 in Gifts for College Students | 12 comments

The past few weeks have made for some miserable weather here in the southeast. We have had storm after storm, and one tornado warning after another. The northeast has seen high winds, flooding, and power outages, the west coast has seen wild fires, strong storms, and flooding, and how can we forget about the deadly tornadoes cycling through Oklahoma!

Weather can be unpredictable, which is why it is a good idea to be prepared. You should have an emergency evacuation plan, a survival kit/first-aid kit, a remote location to seek shelter in, and emergency food and communication supplies. Your finances can also be unpredictable, which is why you should listen to the awesome financial advice from my friends below!

Here is what went on at Money for College Project as well as with my Yakezie friends. Enjoy!

Money for College Project

 

Dave Ramsey’s Custom College Guide

 

 

Non-Profit to Corporate

 

 

How to Build a Real Estate Empire

 

 

Yakezie Friends

 

Edward Antrobus – How Much Money for Retirement?

 

 

Funancials – How to Double Your Money

 

 

On Target Coach – Why You Need an Emergency Fund

 

 

Debt Roundup – The Credit History Check

 

 

KNS Financial – How to Negotiate with Collection Agencies

 

 

Fat Free Finance – Stop Comparing Rent to Mortgage

 

 

Mom and Dad Money – Coffee Habit = Debt Habit?

 

 

Stacking Benjamins – How to Become a Great Saver

 

 

Tie The Money Knot – Father’s Day Financial Lessons Read More

How to Build a Rental Real Estate Empire

Posted by on Jun 12, 2013 in How to Pay College Tuition | 12 comments

real estate empire

This past weekend I had the opportunity to sit down with a friend of mine to talk about real estate. Specifically, I was picking his brain about how he built his successful rental real estate business. He currently owns 22 properties, all mortgage free, and he is buying more properties at a rate of 2 – 3 per year. He has acquired all 22 of his properties in the past 12 years.

Here is how he did it…

The First Rental is the Hardest

Getting your first rental property is the hardest. My friend, let’s call him Jack, bought his first property seven years ago as a “fixer upper” foreclosure. He had saved up around $15,000 in cash from working extra jobs, and from a bonus at work to have the money needed for the down payment. He bought the house for right at $100,000. He then did most of the repair work himself, and spent $5,000 getting the house cleaned up and move-in ready. His mortgage payment, with higher rental taxes and insurance, was $600 per month. After doing a good bit of rental market research he listed his rental property at $800 per month rent. He listed on Craigslist, through social media, and by placing a sign in the front yard. He had signed his first tenants within two weeks of listing his home for rent.

Jack now had a tenant in his home, paying the mortgage for him, with an extra $200 per month. He made the wise decision of putting $50 of that surplus into a savings account to pay for any necessary repairs to the home. He then put the additional $150 towards extra mortgage principle payments. Just by adding that additional $150 to the mortgage payment, he was able to shave 12 years off of the estimated 30 year mortgage repayment schedule. But that was not fast enough for Jack. He also continued to work extra jobs, and put every extra paycheck, every bonus check, every tax refund, every gift that he received towards the principle down payment. Fast forward two years, and he was able to pay off his mortgage in full.

Jack now had one rental property, free and clear, that was giving him $800 per month income.

The Dominoes Started to Fall…

Dominoes falling is a good thing right? Well, for Jack it sure was. Once he had paid off his first rental property he was hungry for more. He began saving the $800 per month from his first tenant, and soon had enough funds for another down payment on a new rental property. He again bought a house through foreclosure, but this home was practically move-in ready and he did not have any expenses in repairs. He spent $80,000 on this new home, but because it was in a better neighborhood, with 3 bedroom and 2 baths, he was able to charge $1000 per month in rent. He had new tenants within a week. Between the two properties he was now bringing in $1800 per month in rental income that he applied entirely to the new mortgage principle. Again, with the combination of extra side job paychecks, he was able to payoff the mortgage on this new property within 2 years.

Jack’s third home purchase went a bit differently. He was trying to figure out a way to generate more cash quickly, so he could use that as seed money for additional rental properties. He decided he would buy a house and try to “flip” it. He again bought a small bungalow as a foreclosure, and spent about 2 months doing repairs himself, and getting the home move-in ready. With a very quick turnaround, he ended up netting almost $60,000 when he re-sold the home. Please remember that this was in 2005 at the height of the real estate market. I think it is still possible, although much more difficult, to “flip” houses for this sort of profit in today’s real estate market.

However, he used that $60,000 to purchase a third rental property. Paid it off in full in a few months, and now had three properties generating rental income each month.

From that point, his system went as follows: Take rental income from all properties and apply towards mortgage payoff, once mortgage on new property is paid off apply the rental income towards down payment for next home, buy next home, apply rental income towards mortgage payoff, save for downpayment, buy next home, apply rental income towards mortgage payoff, etc….you get the idea! He was also saving a little out of each rental check to pay for repairs on any of the houses that the security deposit would not cover.

Fast forward to today and Jack now has 22 properties generating net rental income of around $20,000 per month. He can now payoff a brand new $100,000 rental property within 5 months, and rent it for $1,000 per month. He has literally built a rental real estate empire.

Can We Replicate This?

Jack’s system makes a lot of sense, and I REALLY appreciate his stance on paying off very rental property before purchasing a new one. This virtually eliminates the risk from investing in real estate. If a rental property were to sit vacant for a few months due to repairs or to finding a new tenant, there is no mortgage payment to front.

Jack was also blessed with the ability to work extra jobs and generate significant extra income to put large extra payments towards the mortgage principle. I think this is entirely possible for anyone, maybe just on a more extended time frame. 6-8 years may be a more realistic mortgage payoff schedule. However, once you have one rental property free and clear, you have an instant boost to your mortgage payoff plan.

Jack is also a very handy man. He has taken on almost all of the home repairs himself, or has contracted the work out to people to knows well. This has saved him a lot of time and money in arranging and paying for repairs. Now that he has such a large number of properties however, he is contemplating hiring a part-time handy man to handle all of the repairs for him. I told Jack I thought he would be crazy not too.

One option that may be a bit more attainable for you and I, is to apply these same principles towards our primary residence. We can apply all of our extra income towards paying off the principle on our primary residence. Once we are able to pay off our primary residence we can move homes and rent out the old house. You can then apply the rental income from the old house, with your regular mortgage payment, plus any extra income, and payoff your new home mortgage very quickly. Rather than moving again so quickly, you could then buy a new house as a rental and continue applying your regular monthly mortgage payment plus all rental income towards paying off that property.

Whatever route you decide to take, please understand that there is risks involved, and everyone is not cut out to be a landlord. However, if you make smart decisions, there is serious wealth to be made!

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Review: Dave Ramsey’s Custom College Guide

Posted by on Jun 7, 2013 in How to Pay College Tuition | 4 comments

We all know who Dave Ramsey is.

What you may not know is that Dave has recently entered into the college finance arena with his new product, the Custom College Guide. The product provides a comparison breakdown of the top 6 schools you are interested in attending and gives you a cost summary based on your personal financial situation.

It claims to take the work out of the college cost comparison process for you by automatically compiling the information for you.

The product also provides free FAFSA preparation, filing and support for you.

You can get all of this for $139.99

What I Think of the Product

I respect Dave Ramsey’s stance on finances a great deal. His philosophy on credit, living debt free, and his steady investing strategy all resonate well with me. Moving into the college finance arena however, was a risky move.

The Custom College Guide requires you to call into their service to give them your personal information. This will include your top 6 target schools and your personal financial situation, including your parents finances. From this 10 – 15 minute conversation, they will then prepare your school cost comparison for you. Here is a sample of what that could look like

 

college cost breakdown

Dave Ramsey’s service actually uses the services of Student Aid Services. They essentially pull all of the estimated cost of attendance information from the net price calculator required at every college. Every figure listed under the “Estimated yearly cost of attendance” is pulled directly from these figures on a college’s website.

The next category down includes all of the grants and scholarships that you may be eligible for. If you will notice in this example, a large portion of the scholarships are provided through military assistance. This is obviously NOT money that is available to the majority of students. SOme students may be VA recipients, some students may be active military or college ROTC, but this is not a scholarship that a majority of U.S. students would qualify for. Including this military assistance in the scholarship package can be very misleading.

I do really like the section included in the “Your Contributions Summary”. I think it is important for students to work during college, so I am very glad Dave’s folks made the decision to put this in there. Also, student loans are not listed here which is encouraging!

Then the bottom of the cost comparison you see how large your gap is, between your costs and the funding you have secured.

This information can then be used to make the decision on where you would like to go to college.

A Few Problems

First, I don’t like the fact that the military assistance plays so prominently in the online example. The military is not an option for everyone, so this can be very misleading.

Second, there are no federal financial aid benefits from FAFSA listed here. Federal Pell grants, FSEOG, and other grants could add some additional aid for students.

Third, do you really want to pay $139.99 to have someone do this service for you? I have had this debate with my colleagues and here on the blog before, but would you feel comfortable paying for this service that you can easily do yourself? I would argue that for most people, this is not a good bargain. All of this information is free and available to you, with a little time and effort. However, for many people this could be an invaluable decision making tool, and one which frees you up to work on other projects.

The Bottom Line

The Custom College Guide proclaims to be personalized to each student, but it can only go so far. It will never know what your exact college costs will be, it can never tell you the exact amount of financial aid you will receive, it cannot make the decision for you.

As with most things in life, it is important to remember that making a decision as important as where to go to college should only be made after weighing all of your options and seeking wise counsel. This product could be a good guide for you, but I would encourage you to do your own research to see how Dave’s answers compare with your own!

I would never buy this product, but I also work in college finances and am much familiar with this product than the average parent or high school student. It could be a good option for you, but just remember that this is not proprietary information. It is an information gathering service in a slick package. If that is what you want, awesome! But don’t be fooled into thinking that Dave is working magic here.

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How to Manage the Career Transition from Non-Profit to Corporate

Posted by on Jun 5, 2013 in College News | 10 comments

non profit to corporate

Many people envision a life working for a non-profit as a leisurely, stress free career path down the long road to eventual retirement. No quarterly earning projections, no mergers and acquisitions, no looming deadlines, no sales quotas, no money hungry executives, no cut throat coworkers, and no travel or overtime.

Most people envision moving from corporate america to the non-profit sector as a step back from work.

Unfortunately, this is far from the truth.

Why is it that you rarely hear of anyone moving from a non-profit to a corporate career?

Please do not get me wrong, working for a non-profit can be incredibly rewarding. There are many non-profit organizations that treat their employees extremely well, offer a satisfying work environment, and make coming to work every day fun. However, that is not always the case. Many non-profits focus 100% of their efforts on fundraising and quickly lose sight of their mission and vision. There are many instances of non-profit executives pocketing upwards of 80% of the revenue for an organization. A mismanaged non-profit can be just as bad, if not worse, than a mis-managed for profit business.

I have a good friend who is considering making a move from a mismanaged non-profit agency he has worked with for many years, to the corporate world. In talking with him, we both agreed on a few important differences that will need to be considered in making this move.

Benefits

It’s no secret that higher salaries tend to follow the corporate world, as opposed to the non-profit. However, there are a number of items to evaluate when comparing salary offers between corporate and non-profit.

1. Base Salary – This is straightforward.

2. Bonuses – These generally do not happen in non-profits. They should be considered potential income, and not guaranteed.

3. Health/Dental/Vision Insurance – Many corporate plans have better group rates because they have more participants.

4. Retirement – Many corporations offer a 401(k) match, wheras the 403(b) equivalent at non-profits is utilized much less often. However, many non-profits (which would include state and federal employment) still offer defined pension plans which are a thing of the past for the corporate world.

5. Perks – Gym memberships, company cars, discounted meals, per diem, housing and relocation assistance, free lunch, free or discounted child care are almost exclusively available in the corporate world.

6. Flex Schedules – Many non-profits offer more flexible schedules than would a corporate office. You may have the option to come in early, or stay late at your convenience. Many corporations however, do offer the ability to work remote from your home.

7. Work/Life Balance – Many non-profits excel at this, but certainly not all of them. Maintaining a healthy balance between work and home is crucial to your success. Limiting the number of hours worked, requiring used vacation days, offering paid sick time, offering options for children spouse to interact during the work day are all options.

The Decision

For my friend, the most important decision criteria was the work/life balance and the fringe benefits. The offer he received from a corporate job would pay him a higher salary and he would have the option to work from home. For him, this more than made up for the slightly higher stress level he would feel to meet the corporate objectives and be within a rigid corporate governance.

The Bottom Line

In the end, the most important component to consider is your quality of life. Maybe a lower salary would be more than compensated for with an increase in your work environment. Maybe you could use fewer vacation days if you had free lunch and a free gym membership.

This decision is a very personal one, but one that can have a major impact on your life. It’s not an easy decision but hopefully for you will be a good one!

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The Case for Adjustable Student Loan Rates

Posted by on Jun 3, 2013 in Student Loans | 10 comments

student loans

Maybe that title is a little misleading…

I struggled with what to title this post because I could not figure out what would get my point across the best. What I am suggesting is a way to mediate the student loan debt crisis going forward by offering different student loan interest rates for different students.

On Federal Stafford Loan disbursed through June 30, 2013, the interest rate for subsidized loans is 3.4% and on unsubsidized loans is 6.8%. Unfortunately, if an extension bill is not passed, these low rates are set to expire at the end of this month. Both of the rates are set to effectively double.

Millions of students receive Stafford Loans every year, and every single one of them pays the exact same interest rate regardless of their situation. No other loan that I know of charges a set interest rate to every borrower. It is very un-capitalistic.

A Discriminating Student Loan Interest Rate

When you apply for a home mortgage you understand that the bank will take into account your personal situation before they come back with a loan offer. They will look at your credit score, your income, your payment history, the term of the loan, the home you intend to buy, your down payment, and the loan to value on your home. All of these factors play a role in determining how risky of a borrower you are, and therefore the interest rate and amount of money they will lend to you.

Student loans should operate on the same principle.

Student loan interest rates should take into account the student’s major, proposed course of study, career and education plans, grades, student loan repayment history (if applicable) and the outlook on job’s in that major.

The easiest way to do this would be to set a standard rate, and then give rate deductions for having qualifying criteria in each of these categories.

For example, let’s set the Subsidized Stafford Loan rate at 5% and the Unsubsidized Stafford at 8%. If you maintain at least a 3.0 GPA then you automatically receive a .25% reduction. If your major is in a critical need area, then you can receive another .25% reduction. The private job market on the lookout for employees with your skills, get a .50% reduction. Majoring in a critical research area, another .25% reduction.

This information could all be captured when submitting the FAFSA, and the interest rate would be returned through the FAFSA application. This would not increase the work on a school’s financial aid office, and would be a relatively simple process for student borrowers.

It would also give student borrowers an incentive to keep good grades, to major in a critical needs area, or to pursue a career field that was actually in demand, guaranteeing a job, and therefore the ability to repay those student loans.

Private Loans Could Also Join The Party

Private loan lenders would be even easier to incorporate into this flexible student loan interest rate model. Their loans are already based on credit and income so they have underwriting criteria in place already. They could also work on the interest rate reduction model, giving incentives when certain criteria are met.

This would likely increase the amount of quality student loan borrowers in their ranks, and increase their chances of receiving all of their money back.

The Bottom Line

There is not a quick fix for the student loan debt crisis. However, so many students receive loans to fund an education that does not benefit them. Students in courses of study that are not employable, and student who receive loans with a failing GPA are simply milking the system. They will graduate with student loan debt and no hopes of repaying those loans.

This system could at least show the importance of being selective in the major you choose, and highlight the importance of a course of study which will teach you the skills needed to get a job!

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Want to be Lebron James Summer Intern?

Posted by on Jun 1, 2013 in College News, How to Pay College Tuition | 2 comments

lebron james

Looking for an internship this summer? How about working for Lebron James?

Lebron’s official website LebronJames.com is hiring interns who are interested in online content management and digital sports marketing.

No, you won’t get to travel with Lebron James and help him lace up his sneakers. But you could have an opportunity to participate in a VERY high profile internship.

This could be the opportunity that propels your resume to the top of the stack for the jobs you apply for after graduation. This is the sort of opportunity that helps you stand out from a crowd. This could be the beginning of an exciting career in sports marketing, online marketing, or anything else you would like to do.

Here are the details from Lebron’s website:

LeBronJames.com has internship openings for students who have an interest in online content development and digital sports marketing. The program runs through the spring, summer, and fall semesters. Candidates must be available at least 10 hours a week.

Responsibilities:

- Maintaining basketball and technology industry dossiers

- Researching trends and advancements in the technology & sports space

- Assisting the content development team with updating LeBronJames.com

- Communicating and interacting with LeBron fans around the world

Basic Qualifications:

- Must currently attend college or a four year university.

- Access to a computer & phone

- Works well in a team setting and takes direction

- Strong communication skills and work ethic

- Has a strong urge to learn and improve

- Demonstrates a strong knowledge of basketball and technology trends

- Proficient with creating spreadsheets and detailed reports (Word/Excel)

- Familiarity with leading social media and blogging platforms (i.e. WordPress, Tumblr, Facebook, YouTube, and Twitter)

- Proficient with Adobe Creative Suite (including Photoshop, InDesign)

Desired Qualifications: – Residing in Ohio, South Florida, or New York

- Basic knowledge of XHTML/CSS

- Experience in journalism, marketing, or communications

- Basic knowledge of photography or videography

- Spanish fluency

How to Apply: Apply by submitting your resume, cover letter, and a writing sample (500 word minimum) explaining why you are “The perfect person for the internship” to opportunities[at]lebronjames.com. Applicants granted interviews must provide documentation showing they are currently enrolled in school. All entries should be submitted as a Word document or rich text format (.rtf). Do not call, tweet or send us messages on Facebook!

Deadline: We will not consider any applicants after Tuesday, June 4th at 10am ET.

I will admit, I am actually fairly impressed with this opportunity. Lebron James wants folks with Spanish fluency and knowledge of CSS and Adobe Creative! This is legit. He has required high level skills for the intern positions, and I imagine they will have the opportunity to work on some real projects. Not to mention rub elbows with some very influential people.

If I was still in college, I would most certainly be applying for this internship opprtunity.

If you are looking for an internship, this could be just the opportunity for you!

 

 

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