Should I Graduate College Early: Pros And Cons

Graduate College Early Pros And Cons

Most college students don’t complete their courses within the standard four years. According to National Center for Education Statistics (NCES) data, in 2020, 64% of undergraduates took six years to graduate.

Notwithstanding the statistics, it is possible to graduate college early and complete your degree in under four years. Graduating early can seem enticing, especially for overachievers who want to get out the door quickly. But it is a major life decision that has a ripple effect on your career and life.

Before you make a choice, check out the following pros and cons.

Pros Of Graduating From College Early

Here are the major advantages of graduating from college early:

1. Lowers The Cost Of Your Degree

One of the key reasons that many college students want to graduate ahead of schedule is to cut down on the cost of a college education.

According to the College Board, in 2021-22, a four-year college degree costs an average of $27,330 for students attending state schools and $44,150 for students attending private universities.

Graduating early reduces the time you spend in school, resulting in a lower overall cost. You can slash your college education budget significantly and save more on tuition, textbooks, room, and board.

2. Reduces The Need For Student Loans

By graduating early and slashing the cost of your college education, you can obviate the need for student loans. You will graduate with less student loan debt, making your loan repayments more manageable.

3. Allows You To Join The Workforce Sooner

If you graduate at the same time as most college students, you’ll face a highly competitive entry-level job market.

Other graduates will be vying for the same open positions, making getting a job quickly challenging. If you choose to graduate early, you’ll face less competition, which can help you get a job more easily.

Also, when you enter the workforce sooner, you can start earning sooner. This will help you repay any earlier debt, and you can start enjoying your life and building your savings or retirement fund.

Moreover, graduating early and getting a job quickly helps you qualify for student loan refinancing, as you’ll have a regular source of income. You can refinance your student loans for a lower interest rate or opt for a different repayment term.

Cons Of Graduating From College Early

While graduating early has many benefits for students, it also has some critical drawbacks, such as the following:

1. Tougher Course Load

If you choose to graduate from college in less than four years, you will have to take a tougher workload in college than other students. While your peers may take just three or four classes, you may have to take five or six to complete your degree faster.

Such a hectic schedule can make it demanding and stressful to juggle your coursework and other commitments.

2. Missing Out On Activities

Senior year of college is an exciting and crucial period for most students. Final-year students often get access to a greater variety of extracurricular activities in college. They also get more time to spend with their friends than those who graduate early.

They can also discover their interests in different fields by taking fun electives, which can guide them in their career.

If you opt for early graduation, you will miss out on that time with friends and extracurricular activities. You’ll also miss out on valuable insights into your interests and hobbies, which may reduce your opportunities to learn and grow.

3. Not Emotionally Ready For Post-College Life

Life after college is vastly different from college life. Once you graduate, you will have to start living your “adult” life, which involves many duties and responsibilities.

You may have to find an apartment, handle utilities, and cook for yourself. On top of that, you have to start looking for a full-time job and manage your schedule, which can be overwhelming.

If you graduate early at a young age, you may not be emotionally ready for all the challenges in life that adults go through. Before venturing out and taking on adult responsibilities, some students may benefit from spending more time studying, learning, and gaining experience.

Conclusion

Graduating early has its pros and cons. Make sure you weigh them carefully before you make a decision.

5 Must-Have Smartphone Apps That Will Save You A Ton of Money

5 Apps That Will Save You Money

Ever heard the phrase, “Money saved is money earned”? Well, it’s true; and if you want to save money, you are not alone.

Whether you are an entrepreneur, an intrapreneur, a homemaker, or a student, saving money is always attractive. However, keeping track of your expenses can be difficult in today’s fast-paced life. There is so much to take care of on the professional and personal front, and at times, finance can quickly get out of hand.

If you are keen on getting things fixed and saving money, here are 5 apps you must have.

1. Ibotta

Buying groceries and other household purchases is an expense that no one can avoid. However, with this app, you can get cash back for many of your purchases, both in-store and online. Ibotta has partnered with around 2,000 retailers and covers groceries, entertainment, eating out, pet supplies, clothing, and more.

You can earn cash in three ways:

For Online Purchases:

  • Shop through the app or with the Ibotta browser extension.

For Retail Shopping:

  • After you have shopped at your retail store, add offers and submit your receipt.
  • Through the Ibotta app, purchase a retailer gift card or link your retailer loyalty accounts to the app.

Also, every time you complete a task (like watching a video, taking a poll, or sharing on Facebook), cash is added to your account, which you can access when you make a purchase.

When you make a verified purchase, the money will be directly transferred to your bank account, sent to your PayPal account, or turned into gift cards.

2. You Need A Budget

You Need A Budget (YNAB) is an app designed specifically to help you gain control over your money. The app gathers all the information from different portals into one central view. So, all data from your bank accounts, loan balances, and credit cards are in one place, so you can start budgeting without getting overwhelmed.

Also, budgeting is not restrictive. It is custom-made according to your preferences, so you can design your budget without feeling guilty. The app also helps you align your money with your goals. So, whether you want a car or a house, simply set the target and watch the balance fill up.

You can start with the app’s free trial and budget using their proven method (a 4-step method—give every dollar a job). If you find the app useful, you can continue using it.

3. Acorns

Acorns is an investment app that helps you save money and invest spare change. It rounds up purchases made on the debit and credit cards linked to the app. It transfers the difference to the Acorns account for saving and investment. This way, your money can work toward your financial goals.

The app offers diversified portfolios, so you can decide whether you want to invest in a conservative or aggressive fund, round-ups, recurring investments, and more. The app started as a micro-investing platform, but with its high growth and significant expansion, it now offers five products.

Also, the app is ideal for people who want to learn about financing, budgeting, and more. It runs a literacy program that helps its users learn about the various aspects of money management.

4. Mint

With 30 million users, Mint is the most downloaded personal finance app. The app links all your accounts so you can keep track of all your financial activity. It also tracks your expenses, recognizes your spending patterns, and curates a budget for you.

This helps you fulfill all your obligations and save for emergencies, retirements, and more. With reminders for upcoming bills and due dates, the app also enables you to stay on top of your bills, so you don’t have to spend extra on penalties and late fees.

5. Chime

Chime is a mobile banking app that offers a spending account and a Visa debit card. With these, you can safely deposit funds, learn about your transactions, and track where you are spending the most.

It also has another feature—an optional high-yield savings account. It controls the savings at two points—save when you get paid and save when you spend.

In the case of “save when you get paid”, the app automatically sets aside a part (10%) of the credited amount in Chime.  It transfers this to your Chime’s savings account, which offers 1.50% APY.

With “save when you spend,” Chime rounds up the purchases you made with the Chime Credit card, and it transfers the difference to your savings account.

Apart from the above features, Chime has a host of other features that make banking very convenient.

Conclusion

Saving money is a difficult task—one that people don’t master easily. However, with the help of financing, budgeting, and cashback apps, you can get closer to your goal.

We hope the top 5 must-have smartphone apps we have listed will help you save a ton of money.

Tips to Increase Your Credit Score

Tips to Increase Your Credit Score

If you’ve ever had trouble getting a loan or been denied credit, chances are your credit score was an issue.

Credit scores are calculated based on your past behavior with financial institutions. The higher your score, the better your chances of being approved for new loans and credit cards.

If you have good credit, it’s important to take care of it! You can do this by adopting simple habits like always paying off your bills on time, keeping debt low (ideally below 30%), and avoiding late payments.

But what if you don’t have good credit? Are there any ways to raise your score? Let’s find out.

What is a Credit Score?

A credit score predicts the likelihood of timely loan repayment. Your credit score is gauged based on a few factors, most of which include your past payments like your:

  • Payment history
  • Debt
  • Types of accounts opened
  • Credit applications
  • Foreclosure
  • Bankruptcy

Tips for a Better Credit Score

If your credit score is lower than you’d want it to be, there are a few ways to boost it. Depending on what’s holding down your credit score, you can add a few points to your credit score by following these tips.

Pay Credit Strategically

Credit builds up fast. If you ignore your credit card balances, they will continue to add up. It’s a good idea to develop a strategy to monitor your credit balances. Of course, paying with a strategy comes with rewards.

There are a few things you can do to pay off your credit quickly to positively impact your credit score in the long run:

  • Pay more than what you owe each month
  • Try to make more than one payment every month
  • Focus on paying off your most expensive debt
  • Try to renegotiate your loan term to make it shorter

Aim for a Reasonable Credit Utilization

Most people aren’t aware that banks don’t commend you for spending your entire credit limit even if you pay it off on time. If you really want to build your credit score more quickly, you should only utilize 30% of your credit limit.

A good rule of thumb to remember is that you should aim to spend less than your total credit limit each month. This will make it easier for you to make timely payments while also building up a record of paying off your debt on time.

Ask for a Credit Limit Increase

If you’re unable to reduce your spending, consider asking for a credit limit increase. Keep in mind that this may only work if you don’t have any outstanding balances with the bank.

This way, it will look like you’re spending less, without really doing anything to change your spending habits.

Pay Bills on Time

Every bill or transaction should be paid on or before the due date. Late payments will only drag down your credit score further. Here are some things you can do to stay on top of your due dates and ensure that you don’t miss a payment:

  • Set account reminders
  • Automate your payments
  • Mark it on your physical calendar

Correct Credit Report Errors

The smallest mistake could pull your credit score down considerably. So, when you’re conducting a review of your credit reports, make sure you take note of any incorrect information. Mistakes happen, and it’s never a bad idea to contest them especially if they affect your credit score.

This is also a good opportunity to spot charge-offs, which you’ll want to work towards removing.

Why A Good Credit Score Is Crucial

Credit scores are the three-digit numbers lenders use to determine whether or not you’re a reasonable credit risk. Additionally, they look at your past payment habits and other factors, such as the type of accounts you have opened and how long they’ve been open.

A low credit score can make it harder to get approved for loans, mortgages, lines of credit, and more. A high credit score, on the other hand, may help you get approved for these products at a lower interest rate.

The higher your credit score, the better your chances of getting approved for a loan or credit card.

Increase Your Credit Score Today!

The tips we’ve outlined here will help you to improve your credit score and, in turn, make it easier for you to manage your finances and get the loans you need. If you are looking for a loan, consider using these tips to increase your credit score so that you can qualify for better interest rates and repayment terms.

How To Sell Your Old College Textbooks And Make Some Extra Money

sell Old College Textbooks

Apart from tuition, one of the major expenses college students face is their textbooks as well as course materials. In 2021, full-time, undergraduate students spent approximately $1240 on textbooks on average.

While this is an unavoidable expense, there are still ways to get your money back once you’re done using these textbooks. After the end of the semester, the piles of books in your cupboard are of no use to you plus it only occupies space. There is always a demand for used college textbooks and this can be a golden opportunity for anyone looking to sell their used copies.

Here’s what you need to know about selling your old college textbooks so you can make some extra money.

Maintaining the Condition of Your Old College Textbooks

Whether you had pre-planned or have just decided to sell your books, the condition of your books will play a major role in determining how much you’re able to sell them for. A buyer or a bookseller may refuse to entertain textbooks with doodlings or drawings.

Loose-bound books or books with missing pages and water and food stains will also not be accepted by most buyers. If your textbooks include supplementary materials like a CD, make sure you have those intact.

While the easiest way to avoid this is by using the books with care or trying to restore the books as much as possible. And since you may decide to sell your next batch of textbooks as well, make sure to keep them in good condition.

When To Sell Your Books

Typically, there is a higher demand for textbooks at the start of the semester, whereas there will be little to no demand at the end of the semester.

Generally, there is a major drop in the book value during summer and the demand shoots up once school reopens. So, aim to sell the old textbooks before school begins.

Keep in mind that the book value decreases over the years and can reduce significantly if new editions are released by the publishers.

Best Ways to Sell Your College Textbooks

Once you have ensured that your books are in good condition and have decided when you will be putting them up for sale, you have multiple options for selling your books.

1. Sell Directly To Students

The easiest way to sell your old college textbooks is to sell them in person to students. When you decide to sell them directly to a new student, your potential customers are mostly your juniors. You can advertise your textbooks through word of mouth or by putting up a notice in your dorm or on social media accounts like Facebook.

As for pricing your books, you can find out the average price at which your nearby stores are selling used copies and lower your price by a few dollars. This will ensure that you get more money as you will be cutting out the middleman and selling directly to your customers. You will also be charging less than bookstores.

2. Selling To A Bookstore

Many bookstores tend to buy back used college textbooks. In this case, however, there is a middleman involved so you will get a lower price for your books.

It is a very convenient way to sell your books that will also get you hard cash in hand. However, selling your books at a bookstore most often gets you the lowest price compared to any other method.

3. Selling Online

A lot of students prefer buying second-hand textbooks online, so this is an effective way for you to sell your books. Here are some of the most popular sites where you can sell your old college textbooks:

  • Amazon
  • eBay
  • Decluttr
  • BookByte
  • BookDeal
  • GoTextbooks
  • Cash4books

How It Works

Selling your books online is typically a fairly simple process.

You will have to look up your textbook’s ISBN (International Standard Book Number). Once you have that, enter the ISBN on the site and you will receive a quote for the books. You can then decide whether or not you want to sell the books to that site.

If you decide to sell your books, you receive a prepaid shipping label that you can get printed and ship your book to them. Some sites may require you to pay the shipping fee.

Make sure you provide correct information about the condition of your book. If your books do not match the description you have given, there is a very high likelihood that the books will be returned to you.

Selling online will get you the best price for your book as you can compare quotes from different sites and select a site that’s giving you the best deal. However, it is also the option that requires the most effort on your part.

Conclusion

College textbooks have a decent resale value. And though there are a number of ways to sell your old college textbooks, ideally, the best option is the one that gets you the highest price for your books with the least hassle.

Make sure you maintain the condition of your books and sell them at the right time to increase your likelihood of turning a profit.

How To Be More Disciplined – 5 Simple Habits To Learn

How To Be More Disciplined

Self-discipline is a trait that allows people to achieve their goals. This, in turn, improves their lifestyle and contributes to their overall well-being and happiness.

Despite popular belief, discipline is a learned quality. This means you can improve it with practice and consistent effort.

Being disciplined allows you to stay in control of your actions, feelings, and emotions. It helps you remain motivated and focused on the task at hand, which will boost your chances of success.

Don’t know how to go about developing this trait? Here are 5 simple habits that will help you build discipline.

1. Know Your Strengths And Weaknesses

Recognizing your strengths will empower you and create the positivity you need to achieve your goal.

Your strengths could be determination, dedication, creativity, or versatility. They could also be your ability to be patient, calm, respectful, and honest.

You can use your strengths to proactively combat your weaknesses. Your weaknesses could include procrastinating, drinking, smoking, too much screen time, or irregular eating and sleeping routines.

Weaknesses pull you away from your goals. Mastering self-discipline becomes easy when you recognize and overcome your weaknesses.

2. Remove Temptations

The best way to overcome temptations is to remove them in the first place. You cannot go on a diet with your pantry full of your favorite junk food, nor can you go through your budget plan while browsing through online stores.

If you’re addicted to social media, uninstall the applications on your phone or turn off notifications.

It’s better to reserve self-control for unforeseen and unavoidable circumstances rather than exhaust your willpower on avoidable situations.

You are only human, and there are only so many temptations you can resist. By removing temptations, you can easily stay disciplined.

The fewer distractions, the clearer your goal. This increased focus will help you accomplish your goal.

These small sacrifices will help you lead a more successful and fulfilling life.

3. Set Small Goals

Setting a goal helps you develop a clear vision, but it is easy to get discouraged if you set very difficult and challenging goals on your new route to self-discipline.

The key to accomplishing goals is to first define them.

Break your main goal into smaller goals and celebrate whenever you achieve one of your subgoals. Plan and execute your mini-goals with time-bound guidelines.

Write down your goals and make to-do lists so you know you are working on them every day. Consistency is key to discipline and achieving goals. If you are trying to lose weight, work out for 15 to 20 minutes a day instead of 2 hours once a week to stay consistent and ease yourself into it.

Every little achievement will make you more disciplined and your life more productive. It will also give you the confidence to achieve bigger goals and the motivation that you need to keep going.

Start with one small goal and move to the next only when you have accomplished the former. The same applies to new habits whether it’s going to the gym, going to bed early, or spending less time on social media. Start with one new habit at a time, instead of being overwhelmed by several in an effort to be disciplined.

If you have a couple of things to do, prioritize and tackle them in the order of priority.

4. Nurture Yourself

One cannot overstate the importance of self-care in achieving discipline. It’s fine to put in a little additional time now and then, but if you’re working overtime for months on end to achieve discipline, you’ve lost sight of the objective. Your sleep-deprived mind will struggle to make decisions, and your body will suffer as a result.

Any objective, let alone discipline, will be impossible to achieve with a weary mind and body. When you are exhausted, you cannot work at your highest potential. It makes you lose focus on the task, which also makes you grumpy and pessimistic, breaking your resolve.

Eat well-balanced meals at regular intervals, with healthy snacking in between, to keep your body nourished. Combine healthy food with regular exercise. This will boost your mood and provide you with the energy you need to achieve your goals.

5. Treat And Forgive Yourself

Self-discipline does not mean you have to be too hard on yourself. It is important to treat yourself with breaks and rewards after little achievements. This will make you feel energized and restored, so you can move toward achieving your goal with increased enthusiasm.

If you’ve failed at achieving a goal, evaluate and figure out where you went wrong. Try again, without losing heart.

If you have made a mistake, forgive yourself quickly and move on instead of dwelling on the mistake. This will help you save valuable time that you can use to work on your goal.

Wrapping Up

Your path to self-discipline will have its fair share of bumps and failures. So when you face one, use it as a learning experience and move on. Instead of wrapping yourself up in guilt and frustration, forgive yourself and get back in the game with more fervor. Once you have learned to conquer yourself, everything else comes easy.

9 Career Fair Tips For College Students

Career Fair Tips For College Students

One of the things college students worry about is getting a job – and not just any kind of job – a job that makes them feel fulfilled. A career fair allows students to find a potential employer or sponsor. It’s like a job interview but for college students and the greatest mistake one could make is to go unprepared. You need to prepare your mind to nail your pitch, but it’s more than that. It comes down to your dressing, your smile, posture, and a whole lot of other things. This article will help you find some of those things you might miss when preparing for a college fair.

Important Career Tips for College Students

  1. Prepare the outfit: Don’t go on a closet destruction spree for the perfect outfit. What you need isn’t a nice outfit; you need smart and professional dressing. Stick with minimal colors, but at the same time, don’t be boring. You need the employers to remember you for something. Keep neat, clean, put-together, and of course, like you have something valuable to offer.
  2. Update your Resume: Everyone learns every day and you might have learned new skills you want to add. Check through your resume to make sure that you have properly and professionally sold yourself the best way possible with all your skills, qualifications, and experience levels. Add some of your accomplishments if you have and make sure that you have enough printed for 10 to 20 employers. If you have ever worked a seasonal job during your gap year, be sure to put it in the resume.
  3. Research on the employers that would be at the fair: If you can, ask about the employers that would be around – what they do, their companies, what they are looking for, the kind of skills they need, and so on. This will make for a great conversation when they begin to engage you in a discussion. However, be careful not to sound like you stalked them online.
  4. Prepare the pitch: Your pitch is like a short elevator speech that is about a minute or two minutes long but captivates a potential employer. See it as an audio resume where you highlight your value to their company. Though this can be slightly hard to figure out, practice as many times as you can and ask your teachers, family, and friends for advice.
  5. Be on time: You might think ‘but the fair doesn’t start till 8’. If you want to land the front seat, you need to be on time. Campus job fairs are always crowded with smart pants and you wouldn’t want the employers meeting with you when they are exhausted.
  6. Be attentive during interviews: Most times, students have already prepared a list of possible questions they’ll be asked during interviews – and though this can be great for practice, it makes some of them give correct answers for a different question. During interviews, listen carefully to the questions, understand them, and ask them to repeat if it’s not clear. Avoid jumping to answers, understand the question first, and give a coordinated and correct response.
  7. Ask questions after: This is what sets you apart from other students at the fair. Asking questions makes the employer feel that you understand his or her company and you are interested in adding value and not just getting a working space. Most times, they remember these questions and put you in mind for a hire.
  8. Ask for ways to stay in touch: Part of asking questions is asking for a business card, an email, or a phone number that you can reach them on. Ask also, for the best times and medium to reach out. Some employers prefer phone calls while others might prefer emails.
  9. Keep in touch: Finally, it’s not enough to ask for the medium, you should also follow up with those you feel were particularly interested in you. Why? You may ask. Most times, (especially if you arrived early), potential employers would have interviewed so many people that you will be almost forgotten. Following up with prospective clients will help you remind in sight.

Conclusion

A career fair can be the most competitive, overwhelming, and stressful part of being a grown-up in college. The worst is that sometimes, you might not even get a potential employer to look your way for a long time while you wait in your stand. However, keep a positive vibe and follow all the tips that have been mentioned above. Just remember to highlight the best things about yourself while you keep a great smile.

What is Dual Enrollment? How does it work?

What is Dual Enrollment

Dual enrollment allows a student in high school to enroll for classes in college at the same time. It helps students save money on college since you’ll be taking lesser courses in the college than the students that waited until after high school. It also helps the student get into the workforce market much sooner. Sometimes, the fee is covered by the state and other times, the student has to pay the fees in full by him or herself. However, there’s more to dual enrollment than what meets the eye. This article entails what dual enrollment is, how it works, and a bonus at the end with information regarding the requirements.

What is Dual Enrollment?

Dual Enrollment is simply what it is – a student enrolling for two classes at the same time. With dual enrollment, a high school student can take college classes and run high school programs at the same time. This allows the student to earn college credit while still in high school. These students end up having to work two schedules which can prove difficult for a few students. Some other students might find it hard to participate fully in both programs which allows them to miss out on the ‘fun’ of schooling.

However, there are some benefits to it. A student that is running a dual enrollment program will earn college credits on time, get a head start on degrees, and graduate much quicker. It also helps to ease the tension and anxiety of the ‘new-world experience’ of college. But how does it work?

How does dual enrollment work?

Since the student is allowed to run two programs at once (high school and college), when a student passes a dual enrollment (or dual credit) class, it counts as a credit for both programs. The kind of classes or what sort of classes are involved depends entirely on the school district. Some schools offer general subjects and courses like Science, Social Studies, Math, English, and likely Humanities.

However, these course works are usually introductory subjects so they are not overly tough for the incoming high schoolers. The courses usually last for a single semester which doesn’t allow the student to be too choked-up with double schooling.

The exams and tests are usually held at the high school either as an online assessment or a physical test. They can also sometimes be held in a local community college and as long as the state requirements are met, there would be no problem.

Dual credit classes are for those that require or are chasing after certain degrees and certifications like Carrer or Technical Education Certificates, Associate’s degree, or a Bachelor’s degree. The grade that ensures a pass during a dual credit program is a C and above (B or A). Also, the credit doesn’t only count during assessments, tests, or exams, They also count during admission processes or whenever the college administrators count credits.

However, you might need to note that though dual credit/enrollment might seem like a good idea, not all states accept these credit types. Out-of-state colleges, for example, or even private colleges are less likely to accept dual enrollment credits so you might need to search in-depth to know what schools and states accept dual credit. That’s why you might need the next section on the requirements for dual enrollment.

Dual Enrollment Requirements

  1. Dual credits are usually awarded or offered to only high school seniors and juniors. The students need to be at least a sophomore or a junior. Only a few schools will allow younger students to participate in their current grades are over-the-top excellent.
  2. If the student is a resident or is schooling in North Carolina, Mississippi, Maine, Alabama, Missouri, or Florida, the student has to have at least a 3.0 GPA to participate in dual credit programs. A student with a lower GPA will be considered unable to balance the two schedules properly.
  3. Students might require a written recommendation and permission letter from the class teacher, subject teacher, principal, coach, or parent as the case may be.
  4. Minimum ACT or SAT scores might also be required.

Conclusion

Dual enrollment is a great way for an outstanding student to get a feel of what college life will look like plus he or she can add up some college credits while at it. It is also great for saving costs. As long as the requirements are met, nothing might be able to stand in the way of getting those degrees and preparing for the workforce market early on.

How Are Private Student Loan Interest Rates Determined?

Student Loan Interest Rates

Only a few students go through the entire school year without collecting a loan of some sort. But that is not the hard part. The challenging part is paying back the loan. However, some students prefer to know how the interest rate will be determined so that calculations and projections can be made. If this sounds like you, then you are in the right place. This article will explain what interest rates are, how they are determined for student loans, and how they affect your loan at the end of the day.

What Are Interest Rates?

Interest is a percentage (fixed or not) of a certain amount, positive or negative – as in the case of debts. When you borrow an amount, or you are loaned money, an interest usually follows and the rate increases with every day that the debt is owed until the loan is paid back in full. For example, if the interest rate of a loan of $1000 is 0.2%, that means that a sum of $2 will be added daily to the total amount you’ll pay back (for example). So that at the end of every month, you have an additional $60 to pay when you pay off your loan.

In reality, the interest rate isn’t that thick but at the same time, you must know that some federal student loans place a fixed rate and it affects the total cost of your monthly payment or loan. However, not all interest rates are fixed. Some are varied – well it is called variable interest rates. Let’s take a look at that for a minute.

Fixed vs Variable Interest Rates

Fixed rates are certain fixed amounts you should pay at the end of the day regardless of how much you loaned or how long it took you to pay back. While this might sound great for those that like to stall on payment – there might be some disadvantages. There are different methods for determining fixed interest rates and it depends on the type of loan, the lender, and maybe the state you are in. However, this type of interest rate still seems to b a better option for those that are running a long-term loan plan.

The variable interest rate is flexible and fluctuating. It can also be tagged ad fluid because it changes with regard to the market index. Therefore your monthly payment might change (increase or decrease) during the time of repayment depending on what the market index says. Over time, the interest rate might become overwhelming or not but it’s not too safe for long-term loaners.

When the federal government grants student loans, the interest rate is usually fixed but when it comes to private lenders, it depends. Some prefer fixed rates while others go for variable interest rates. The type of interest rate you pick is dependent on a lot of things but mostly the term of the loan.

How Are The Rates Determined: Private and Federal Student Loan Interest Rates

Federal student loans are gotten by applying using the Free Application for Federal Student Aid (FAFSA). The fixed interest rate is usually based on a 10 year Treasury note rate and it is determined during May. The amount of the interest consists of a percentage attached to the loan type and the status of your education (undergraduate or graduate).

For Private loans, the deal is much different. First, the application varies from company to company and they can be funded by online lenders, credit unions, banks, and so on. The type of interest rate (fixed or variable) is also subject to the company that’s lending out the money. However, they usually work with credit history before giving out loans so that they can ensure that they’ll get their money back. They also look at your income frequency and status and employment history. Some companies check your credit and do a critical evaluation before awarding a loan. All of these they do only to be sure that you will pay back their money – and on time too.

Conclusion

Many things affect a student loan, the lender, the type of interest rate, market factors, rate choice, creditworthiness, and so on. However, the ways to determine the rates sit with what kind of loan it is – a federal student loan or a private one. Federal student loan interest rates are determined more easily and are straightforward while the other needs more documents, checks, and proof that you will pay back on time.

All in all, if you can pay off your student loans early, take the chance and do it!

Benefits of Paying Off Student Loans Early

Benefits of Paying Off Student Loans Early

There are different reasons students collect loans and that’s not a bad idea. The challenge only arises when it is time to pay back. There is a major conflict between whether to pay back now (all at once), little by little, or to pay the entire thing later. However, the choice is not that straightforward. For example, some financial advisors will opine that students should hold back on payment if they don’t have enough saved up or if there are other debts involved. However, this article will show you some important benefits you’ll gather if you close your eyes and pay off your student loan early.

Why You Should Pay Off Student Loan Early

  1. The earlier you pay, the cheaper it is:

Yes, it might look like that $$$ is a little thick at the moment but the sad truth is that it increases over time. For those that might seem confused, this is how it works. A student loan – almost all loan types come with a percentage increase referred to as interest. This interest accrues with a balance (positive or negative). When you owe, it increases with a negative balance and vices versa for when you don’t owe. So the earlier you pay, the easier it would be to pay off the interest too.

  1. It will quickly be out of the list of things to do:

This is a little more straightforward. When you pay off a debt, you’ll have lesser things to worry about. You will also be able to place your money on other more profitable investments like college (or if you are already in college), a university of your choice, a master’s, or even something out of the academic line like a vacation.

  1. Your debt-to-income ratio will improve positively:

A debt-to-income ratio can also be seen as a credit score or ‘improving/worsening your credit’. When you have a good credit score, it means that you have a good history of paying off your debts quickly. This means that lenders (or whatever institution loan money) trust you and would be happy to give you better interest rates next time you need to loan. Having a bad credit score (or increased debt-to-income ratio) means that you usually allow the interest to accumulate too long before paying and so lenders find it hard to trust you with honoring your loan agreement. In the long term, a good credit score will serve you.

  1. You would save more money:

Similar to the first point, when you get rid of student loans on time, you end up saving more money. This is a common mistake students make – they wait till the end of the repayment term before they start making repayments. By this time, not only would you have accumulated too many interest charges, but you’ll also lose a lot of money. But by paying off early (or increasing how much to pay off monthly), you can save hundreds or even thousands in interest charges that you can (again) use for other things.

  1. Financial stress will be eradicated or lessened:

What is financial stress? It’s when the source of your anxiety is lack or insufficiency of money/finances. Waiting till the last moment to pay off your student loan will put financial stress on you no matter how financially stable you are/were before then. It is usually a debt that starts small and ‘payable’ until the interests pile up over time to become this huge debt that’s a pain in the neck. Paying it off while it’s still young will save you financial stress in the future.

Conclusion

Though at first, it might be difficult to pay off loans due to the thoughts that ‘the money isn’t enough or that there are other investments. But one of the worst mistakes to make with debt is thinking that the debt can wait. Yes, it will wait but at the same time, interest charges are accruing waiting for when it will shower you with big-time financial stress. Save yourself the hassle and pay it off while it’s still cheap. You can start slowly as soon as possible and before you know it, it’s all paid off. Good luck!

Traditional VS Roth 401(k): Which Is Better?

Traditional VS Roth 401(k)

We all know how important it is to invest in a retirement savings account with tax advantages. But all the nitty-gritty involved in building your retirement nest egg can make your head spin.

So, if you’ve been struggling to figure out whether a traditional 401(k) is better for you or a Roth 401(k), you’ve come to the right place!

Here’s a concise and clear guide on 401(k), traditional 401(k) and Roth 401(k), and the best option for you between the two.

What Is a 401(k)?

A 401(k) is a tax-advantaged retirement savings plan offered by employers all across America.

When you sign up for a 401(k), you agree to put away a percentage of your paycheck into an investment account. The employer may also agree to match up with this percentage in part or full.

Today, employees have access to two 401(k) plans: traditional and Roth 401(k). The traditional 401(k) was introduced in 1978, whereas the Roth 401(k) was introduced in 2006.

Let’s take a look at the similarities and differences between the two 401(k) investment plans and how they can impact your savings.

Traditional VS Roth 401(k): Similarities

  • Both are retirement savings options.
  • Both have the same contribution limit.
  • Both provide tax-advantaged growth on investment.
  • Both have a maximum annual contribution limit.
  • Contributions to both plans are matched by the employer.
  • Both 401(k) plans have required minimum distributions (RMDs) starting at 72.
  • Both plans offer tax breaks (in the present or future).
  • Both attract early-withdrawal penalties of 10%.
  • Both provide distributions to you and your beneficiaries due to disability or death.

Traditional VS Roth 401(k): Differences

Traditional 401(k)

  • Contributions are made from pre-tax income.
  • You get tax breaks in the present.
  • It reduces your taxable income/current adjusted gross income.
  • Deferred taxes on investment gains.
  • All withdrawals are taxed at the income tax rate in the future.
  • All the money is only taxed when it comes out of your account.
  • State income taxes may be applied.
  • You can start receiving distributions at age 59 ½ regardless of when you started.

Roth 401(k)

  • Contributions are made from after-tax income.
  • No tax breaks in the present.
  • Withdrawals aren’t taxed.
  • Contributions aren’t taxed.
  • Paycheck goes down with consecutive contributions.
  • Growth on contributions is tax-free.
  • You can start receiving distributions at age 59 ½ only if you have held the account for at least 5 years.
  • Employer-matched contributions go into a pre-tax account and are taxed during distribution.

Traditional VS Roth 401(k): Which Is Better?

Select Traditional 401(k) If…

  • You need a little extra cash in the present.
  • You want to save money.
  • You’re in a higher tax bracket at present.
  • You are expecting to earn less in the future.
  • If your employer is matching your traditional 401(k) contributions only.
  • If you plan to move to a state that doesn’t collect income tax in your retirement.
  • If you started after the age of 54 ½ and need to access money at the age of 59 ½.

Bottom Line: If you’re starting to invest in a 401k quite late, then the traditional 401(k) would be the better option for you.

Select the Roth 401(k) If…

  • You are young.
  • You want tax-free growth on investment.
  • You want tax-free withdrawals during your retirement.
  • You are fine with a little less in your paycheck today.
  • You have already signed up for a traditional 401(k).
  • If you are in a lower tax bracket at present and expect to be in a higher tax bracket later on.
  • If you are expecting higher tax rates in the future.

Bottom Line: If watching a chunk of your retirement savings getting taxed is a heavy blow to your heart, then choose the Roth 401(k).

Can You Opt For Both Traditional and Roth 401(k)?

Yes.

You can choose to make contributions to both traditional and Roth 401(k) accounts on a year-by-year basis. This means you can decide how you want to split your contribution in either of the 401(k)s for that year.

Here’s an example:

For the year 2021, your 401(k) contribution is $19,500. Then you can choose to split it into equal halves and contribute $9,750 to both traditional and Roth 401(k) accounts. This limit only applies to the employee’s contribution to the account. Employer contributions aren’t included in the limit.

For those of age 50 or older, there’s the option of making a catch-up contribution to the 401(k) of $6,500.

Contribution Limits

The 401(k) contribution limit for 2021 is $19,500 and the same for 2022 is $20,500.

Final Thoughts

When determining the best retirement savings plan, there will always be some assumptions and predictions involved. There are factors outside of your control that may affect your income, tax brackets, and tax percentages in the future.

If you need a professional opinion, you could always ask a financial or investment expert for advice.

The best option is to carefully assess your current options and go with either of the plans. You’ll end up saving something for your retirement anyway.