Monthly Archives: December 2011

Merry Christmas — A Little Early

It’s been a crazy few days for our family. My father in law wound up in the hospital with multiple blood clots in his lungs and will be in the hospital through Christmas Day. So needless to say, we will be spending part of our Christmas stuck in a hospital room.

He’s in great spirits however, not in a lot of pain, and very thankful to still be with us.

So for us this Christmas, we are very thankful to have him still with us. Regardless of whatever gifts come our way this year, that will be the most precious.

With that said, that is the reason I have been a little vacant from the blog the past few days, and why I wont be back to the blog until January. The rest of the Christmas Holiday is going to be spent with family and friends, and enjoying the precious gift of life that we all have.

I hope you all have a great Christmas, and I look forward to coming back in a week or so!

Is a College Degree Worth Taking Out a Student Loan? Student Story

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I have dedicated the Money for College Project to helping you find more money for college, and finding better ways to manage that money while in college, and after graduation. I have railed against student loans, and the many negative consequences that can come along with them.

Rather than another tirade against “The Man” I wanted to share with you a recent story that I heard while speaking with a student on my college campus. It might surprise you to see how some students view student loans, and I hope it is a wake up call. It was for me anyway.

Student Story: Jake – The 19 yr old Engineering Student With No Plan
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When Jake wakes up every morning, he is even further in debt, even though he spends no money during the day. How is this possible? He has unsubsidized Stafford Student Loans that are accruing interest while he is enrolled in school. Because he does not have part-time job, and has elected to focus his energy 100% on school, he chose not to pay the accruing interest on his student loan, and therefore it has continued to increase daily for the past two years.

Jake is a typical student. He likes to sleep late, he grumbles about going to class, he pulls all nighters in the library before big exams, and he loves college life. His big secret however, is that he already has over $28,000 in student loans as he nears completion of his second year of college. He’s not even half-way done.

How is this possible? He maxed out his Stafford Loans ($5500 for Freshman Year, $6500 for Sophomore Year), he received a Federal Perkins Loan ($4,000), and he took out a private student loan with this parents ($12,000). All told, he already owes back the price of a brand new SUV, and he has not even finished his Sophomore year of college.

I wanted to dig a little deeper and see what led Jake to the decision to take out so much in student loans.

I asked Jake about when he first made the decision to attend college. He said that he had applied to multiple schools, but he finally made the decision to attend our college because of the excellent Engineering program. The average starting salary for a Civil Engineer (his program of choice) is $44,000 for graduates of our program, and there is an 83% job placement rate. (I was actually very impressed that he knew these figures, and it gave me some hope!)

I asked further about his financial aid package, and he noted that when he received it, he was initially elated. His financial aid package was enough to cover virtually all of his tuition and fees. Then he looked a little deeper. $7500 of his awards were from student loans; money he would have to pay back. He had also not factored in the cost of a meal plan ($1450 per semester), required on-campus housing ($2900 per semester), and a required laptop for his Engineering program ($1200). With all of these extra fees added in, he began to realize that he still needed more funds to cover his costs.

He said that he approached the Financial Aid Office to see what help they could offer him. His FAFSA had already been evaluated for federal aid, and all of the Academic scholarships had already been awarded, so Jake was left with only one option: More Student Loans.

The process was virtually the same for his Sophomore year. He was able to score a small scholarship through the engineering department, but with the rising cost of tuition, and extra lab fees for some of his courses, that was quickly eaten up.

This brings us to the present, with Jake stuck $28,000 in debt, and only half-way through his degree program.

The more we talked, the more I could tell that Jake was resigned to his fate. All of his friends had student loans, so he saw no harm in it. He wanted to be a Civil Engineer, he wanted to graduate, and this was the only way he knew how.

I finally worked up the nerve to ask Jake the big question: “Is your college degree really worth the student debt that you will have when you graduate?”

Jake said an emphatic yes, and I knew he would. I knew that almost every college student would say that when asked. What else would they say? “Well not really, but I figure I have no other choice and I have to have a degree to get a job!” Oh wait, I’ve heard that one too!

What would I recommend to Jake and any other student in this situation?

I would ask them to take a step back, and take a serious look at their situation. Start by looking at real numbers. Let’s assume that Jake gets a job paying $44,000 (it is a big assumption). After taxes his take home pay will be roughly $2750 per month. Let’s assume that Jake’s student loan consumption continues at his current rate and he graduates with $56,000 in loan debt. The average loan payment is $50 per $5000 borrowed. Jake is looking at a $560 per month student loan payment. That leaves him with only $2,190 per month to pay all of his other bills, save for retirement, pay for his health care premiums, put gas in his car to get to work, and enjoy life a little bit.

Not exactly a rosy financial picture for our friend Jake.

Then comes decision time. You might ask “Is the juice really worth the squeeze?” Should Jake and other students like him remain in school, continue to borrow loans, and struggle financially once they graduate while they perpetuate the cycle of college graduates who are in over their heads in debt?

I honestly don’t know the right answer, but I can see that something needs to change.

I think we need to have a serious conversation with our next generation of college students BEFORE they enter into college and walk them through this scenario. Help them to see how much student loans can sidetrack them financially for years. Help them to find a major that will allow them to get a job. Help them choose a school that has a good track record of placing their graduates in jobs that actually pay a decent salary. Help them understand how to find FREE financial aid and avoid taking out student loans.

These conversations are not easy, but I believe they are essential to help our future generations avoid bankruptcy and our country avoid utter financial ruin.

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Money for College Project Weekly Roundup: New Car Edition

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My wife and I have finally made the decision to buy me a new vehicle. I took a new job back in April 2011, that increased my daily commute significantly. I now drive 94 miles per day, round trip. As you can imagine, this meant that our fuel bill skyrocketed. I currently drive a 1997 Ford Explorer Sport which has been paid for for over 5 years. I love the vehicle, and would not even consider getting rid of it if it were not for it’s terrible gas mileage – 19 mpg highway.

So, after taking a close look at our budget and expenses, we have decided to purchase a new Chevy Cruze. The new vehicle gets 42 miles per gallon. We are able to get 0% financing on the loan, and pay a down payment also. With the savings in gas every month, I will be able to come within $50 of evening out the savings in gas expenses, and the increase in having a car payment!

I did not factor in the higher taxes and insurance yet, so I know that will put me behind again. At this point in my life it if worth it to me to have this job, and our family is alright paying a little extra for this opportunity. Can’t say that will be the case in 5 years though…

Anyway, as I prepare to buy a new car this weekend, here are some good reads for your edification!

Money for College Project

[button link=”http://www.moneyforcollegeproject.com/2011/12/12/turn-your-hobby-into-a-business-worth-1-million/” color=”red”] Turn Your Hobby into $1Million Business[/button] An insider’s look at how some personal finance bloggers turned their hobbies into multi-million dollar businesses. Also, some baby steps to get you headed down that same road.

[button link=”http://www.moneyforcollegeproject.com/2011/12/13/sneak-peak-at-the-2012-2013-fafsa-application/” color=”red”] 2012-2013 FAFSA – Sneak Peak[/button] An advanced look at the 2012 – 2013 FAFSA. You can’t fill it out yet, but this will give you an idea of what to expect.

[button link=”http://www.moneyforcollegeproject.com/2011/12/14/3-ways-to-cope-with-unwanted-christmas-presents/” color=”red”] Unwanted Christmas Presents[/button] We have all gotten them – Christmas presents you don’t want, and will never use! Here are 3 ways to get rid of them, and turn the unpleasant gift into something worthwhile!

Awesome Articles You Need to Read

[button link=”http://manvsdebt.com/raising-entrepreneurial-kids/”] Raising Entrepreneurial Kids[/button] Man V. Debt wrote an excellent article about teaching our kids to be entrepreneurs at a very young age. I think this is an excellent suggestion, and something I fully plan to do, when we have kids.

[button link=”http://www.thepennyhoarder.com/2011/12/holy-moly-serveamex-is-now-giving-away-20-for-free”] $20 Free from Amex[/button] Penny Hoarders has long been one of my favorite personal finance sites to visit. Every time I visit I seem to learn something new, and for some reason the style of posts and random nature of the money saving ideas always sparks my creativity.

[button link=”http://mylifescoop.com/featured-stories/2011/12/5-gadgets-to-create-the-ultimate-holiday-lights-display.html”] Ultimate Holiday Lights Display[/button] I don’t know how many of you feel the need to imitate Clark Griswold in Christmas Vacation, but if you do, or if you secretly wanto, here is an awesome article on how to dominate your neighborhood light competition.

Yakezie Friends

[button link=”http://sustainablelifeblog.com/2011/12/14/goal-o-matic/” color=”green”] Sustainable Life – Goal -O- Matic[/button]

[button link=”http://blog.themillionairenurse.com/2011/12/15/shoplifting-top-ten-holiday-favorites/” color=”green”] The Millionaire Nurse – Shoplifting[/button]

[button link=”http://dailymoneyshot.net/the-amazing-race-to-30k/” color=”green”] Daily Money Shot – 30K Amazing Race[/button]

[button link=”http://www.moneybeagle.com/2011/12/manage-your-mortgage-payment-responsibly.html” color=”green”]Money Beagle – Manage Your Mortgage[/button]

[button link=”http://knsfinancial.com/pay-for-spray-firefighters-let-another-house-burn-down-over-75/” color=”green”] KNS FInancial – Pay for Spray[/button]

[button link=”http://www.bucksomeboomer.com/tax-moves-to-make-before-the-end-of-the-year/” color=”green”] Bucksome Boomer – End of Year Tax Moves[/button]

[button link=”http://www.investinthemarkets.com/learn-to-invest/how-risk-management-should-guide-every-stock-trade/” color=”green”] Invest in the Markets – Risk Management[/button]

[button link=”http://erinshanendoah.com/dogatemywallet/?p=257″ color=”green”] Dog Ate my Wallet – Volunteer from Home[/button]

[button link=”http://www.mypersonalfinancejourney.com/2011/12/opening-and-managing-self-employed.html” color=”green”] My Personal Financial Journey – Solo 401K[/button]

3 Ways to Cope with Unwanted Christmas Presents

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I’d like to say that I have never had this problem, but I would be lying through my teeth. Most of you can relate. You have all received a Christmas present that just didn’t quite live up to your expectations. Instead of an Xbox, you received a kitten calendar.

Instead of a skateboard you got a pack of socks.

Snuggies anyone?!?

Unfortunately, the mystery is not whether or not you will receive unwanted Christmas presents, but rather what do you do with them once you get them?

Donate

What better way to make use of a Christmas gift that you do not want than donating it to someone less fortunate. Millions of kids go without Christmas presents during the holiday, and your small donation could brighten up their life. At Christmas time there are hundreds of organizations that accept donations for unwanted presents. Visit your local grocery store or Wal-Mart to find an organization willing to take your unwanted presents.

This might be a bit miserly, but you can even use your donated Christmas presents as a taxable deduction (You can debate on the ethical standing of that one).

Refund or Exchange

The one thing that can make an unwanted Christmas gift a real treat is a gift receipt. A gift receipt is your ticket to returning or exchanging your gift back to the store it was purchased from. Depending on the sotr, you may receive a cash refund, or store credit.

Many stores will even take back your brand new merchandise without a receipt, and give you store credit. All you have to do is find out where it came from. If you can’t figure it out, it’s up to you to play sneaky detective and try to pry it out of your unsuspecting relative.

Sell on Ebay or Craigslist

The after Christmas sales market is huge. Sites like Ebay and Craigslist are booming after Christmas with unwanted Christmas presents. If you have never sold items on Ebay or Cragslist, it is simple to create an account and list your items.

While you are at it, you could dig even deeper into your closets and find your other unwanted items and sell those online also. Who knows, you might wind up finding a hidden stash of stuff you did not know you had, and make a tidy profit off of it. Craigslist and Ebay have become an answered prayer for people who receive unwanted Christmas presents every year. It takes a little extra work, but turning those unwanted gifts into cash is a gift all in itself!

Your Ideas

How about you? Do you have any unique ways to dispose of your unwanted Christmas gifts?

Sneak Peak at the 2012 – 2013 FAFSA Application

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It’s hard to believe that it is almost that time of year again. Beginning January 1st, 2012 you will be able to complete the Free Application for Federal Student Aid (FAFSA).

This financial aid application will be used to qualify you for financial aid for the upcoming Fall semester in August 2012. Yes, it is 8 months in advance, and yes you should do it as soon as possible!

The Department of Education has recently released a sneak peak version of the 2012-2013 FAFSA Application. You cannot actually submit this worksheet, but you can begin working on the draft version today, so you will be fully prepared to submit the real document when it becomes available on January 1st.

Procrastinating on completing your FAFSA could mean the difference in thousands of dollars in college financial aid. For example, the FAFSA deadline for many colleges is February 15th. If you wait until January 1st to begin gathering the documents needed, you will likely miss out on this deadline. If you miss this deadline you will miss the priority date for your college’s scholarships and grants program and lose any potential financial aid you qualified for through your school.

Even though this worksheet is available, you do not want to submit a paper copy of the 2012-2013 FAFSA Worksheet. The electronic application at http://fafsa.gov will be available beginning January 1st, and that is where you should submit your application. Submitting a paper FASFA could take 5-6 weeks to even get to your school, whereas a FAFSA submitted on the web will take a maximum of 48 hours.

There is also a really neat tool that is new this year for the FAFSA called IRS data retrieval. If you have successfully submitted your IRS tax forms, then you can “retrieve” that data through the FAFSA form. When this data is retrieved it will automatically populate the FAFSA form so you do not have to compare line by line figures. This one change alone could save you hours in completing your FAFSA.

The Department of Education may not be perfect, but they are trying very hard to make the FAFSA completion process less of a barrier to applying for Financial Aid. The best way to be prepared is to know what to expect. Print out a copy of this 2012-2013 FAFSA worksheet, and look it over to know exactly what to expect when you sit down to complete your FAFSA in a few short weeks.

Turn Your Hobby Into a Business Worth $1 Million

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Let’s suppose that you have a hobby which you love. This hobby could be anything from fixing bicycles, creating model train villages, playing paintball, sewing, writing/blogging, creating websites, or even driving. You are passionate about this hobby, and you would be perfectly content spending 8 hours a day working on your hobby.

What if I told you that you could make over $1,000,000 by turning that hobby into a business?

It’s entirely possible, and here is a real life example.

Personal Finance Blogs Equal Serious Cash

I read an article this morning that rocked me to the core. First, because I did not realize that this had happened, second, because I had no clue that this was even possible. The article was a list of personal finance blogs that have sold for 1 million or more.

First, I had no idea that Get Rich Slowly, Bargaineering, and Consumerism Commentary had even been sold. That should be read as a compliment to their former owners and current publishers. Second, they were sold for staggering sums of money!

All of these blogs had been created out of a hobby, a passion for writing, and a need to get their financial lives on track. The end result was a business that made them a fortune.

I have interacted with all three of these bloggers, and I know that they have worked very hard to reach this goal. They have also all been blogging for several years, so their success was not overnight. They have positioned themselves as experts in their fields, and have been financially rewarded for their efforts.

How to Turn Your Hobby into a $1,000,000 Business

$1 Million seems like a fairly tale. It seems like such an insurmountable goal that it is not even worth setting. However, I bet you that all three of the above personal finance bloggers would have told you the exact same thing if you had asked them several years ago.

What changed?

The path to a $1 million business begins with a realization that your hobby can indeed be turned into a business. Like any good business, you must have a plan. Your plan does not specifically have to state it eventually being sold for $1 million, but it does have to include a plan to make a profit, and to expand.

For example, if you are passionate about playing paintball; how can you turn your passion for paintball into a profitable business?

[box type=”info”] I would suggest learning how to repair paintball guns. When you go to play paintball with your friends, you can charge a small fee to fix the guns that malfunction. Your friends will be willing to pay you because they can have them fixed on the spot. You have a captive audience.

Then you could branch out to buying and reselling paint. Out in the woods, or on the field, players will always run out of paint and need more. If you have the supply they need, you can turn a quick profit. Buy low, sell high!

With the profit you make from these sales, you could then rent a piece of property and create your own paintball field. You can furnish it with scrap junk, and players will likely flock to your location. Then you can charge entrance fees, sell paint, sell paintball guns, and even sell concessions. Before you know it, your passion for paintball has turned into a real business.

Then an investor may swoop in, see the progress you have made, and offer you $1 million to buy your business outright. They will likely even hire you back on to run the show.[/box]

Any hobby can be turned into a business.

I would recommend taking the following steps once you make the decision to take your hobby to the next level:

List the needs of people you know who also participate in your hobby
Place a star beside the needs that you believe your business can fill
Detail your plan to fulfill the top 3 needs on your list
Spread the word to your friends about your new services
Create an expansion plan to scale your business as it grows

Don’t Lose Your Passion In Your Business

One of the most common problems with starting a business out of a hobby is that many people quickly lose their passion for that hobby. There is a fine line to be walked, and many people quickly become complacent in their business because the joy in their hobby has been overtaken by the stress of a business.

Finding the right balance, and keeping your passion are what will take your business to $1 million.

In my experience, the key to keeping the passion for your hobby is to still participate in that hobby outside of your business.

If you write for a profit, you should carve out some time every day to write for fun.

If you create websites as a business, have a coding party with your friends.

If you sell model trains, invite some kids over to check out your model train village.

If you start a limo driving service, take a joy ride in the mountains.

Don’t ever forget what initially attracted you to the hobby in the first place. Focus on that, never lose your passion for your work, and someone might write a post about your $1 million business in a few years!

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Money for College Project: Exam Week

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I work on a college campus, so naturally my work ebbs and flows with the college schedule. This week has been particularly slow because it is the dreaded Exam Week!

Exam week is much different as an employee than as a student. As an employee I welcome exam week because it always gives us a much needed lull before Spring registration starts up again. I’ve been able to catch back up on my work after being out for a week on our cruise.

Exam week also means that Christmas is still rapidly approaching. Students will leave to go home, and faculty and staff will have the campus to ourselves until Christmas. A college campus is always a little weird without students….but I will welcome the slower traffic! With that, here is the best of the best from this past week!