"I've always thought anyone can make money.
Making a life worth living, that's the real test."
Money Management Resources: General
360 Financial Literacy http://www.360financialliteracy.org
University of North Texas Money Management - http://moneymanagement.unt.edu/resources/index.html - is designed for students, but helpful for most anyone.
Modest Needs - www.Modestneeds.org - is an award-winning charity that helps low-income households with short-term emergency expenses and lets those who want to support those needs have a way to do so in a secure way.
Kids/Teens and Money
Go to http://www.kidsmoney.org for information on allowances, kids and work, current books, etc., in English,
Spanish, French, German, Portuguese, Hindi and about 30 more.
The Federal Citizen Information Site has lots of fun information about money.
The Mint Web site has good information about the parents' role in helping their children be financially literate. They also have teacher information and information for the kids themselves.
Planning for Post-High School Education
The Indiana Youth Institute's Trip to College Web site is a step-by-step guide to the college planning process
at any age, so visit early and often. The Federal Student Aid -site is also worth a visit.
Each financial situation is different, so it is important to look at various options and to start planning long before your student is a senior in high school. For information on Indiana's 529 college savings plan (called CollegeChoice 529 in Indiana), go to http://www.collegechoiceplan.com . While some think 529 plans are the way to go, in consideration of your unique situation, you may want to compare to Coverdell Education Savings Accounts, Uniform Gift or Transfers to Minors Account, U.S. Savings Bonds, Lifetime Learning Credits, Hope Scholarship Credits, universal life insurance policies, IRAs, etc. Consider whether federal and state tax implications (tax-deferred earnings, tax-free withdrawals, restrictions), which expenses qualify, how much personal control of funds/earnings/how earnings are invested you want, what the contribution limits are, who can contribute, estate ramifications, etc.
If you or someone you know is considering a career college or technical school to earn a certificate, degree or diploma for a specific career, trade, or profession (dental/medical assistant, mechanic, business, hairstylist, computer technician, etc.), it is important to ask the right questions and compare several options, to make sure your choice is a good one (i.e., accredited by a recognized authority, licensed/certified, fair TOTAL cost compared to others, credit transferable, low crime rate, etc.). Visit http://www.ed.gov/students/prep/college/consumerinfo/questions.html .
For information on the SAT test and how to fund college (including a cost calculator), go to http://www.collegeboard.com/student/pay/add-it-up/401.html. For ACT information, go to www.act.org.
IUPUI sponsors Upward Bound to assist low-income 9th and 10th grade students from Arlington , Arsenal Technical, Broad Ripple, Emmerich Manual, Northwest and Warren Central high schools. A book that can be borrowed from the IUPUI HRA Work/Life office is Conquer the Cost of College: The Family Guide to Paying for College by Elizabeth Cote' (2001).
The EFC and Its Effect on Where to Save for College
Cost of college minus expected family contribution (EFC) = financial need for federal college aid programs and at most higher education institutions, so it is important to know what the costs for the colleges that your child might consider are and HOW THAT PARTICULAR COLLEGE/UNIVERSITY FIGURES THE EXPECTED FAMILY CONTRIBUTION (what types of income and assets are assessable and at what percentage, etc.). I also suggest going to http://ifap.ed.gov/efcinformation/attachments/Tables_EFC_0301.pdf reviewingand reviewing "EFC Formula Worksheets and Tables" as this is where you can see what sources of income and assets are assessed and at what percentage for federal aid (some colleges/universities may be different).
IUPUI scholarship information . Ask about the $250 David L. Robbins Memorial Scholarship is for IUPUI juniors or seniors who are dependents of IUPUI staff members, with GPA's of 3.0 or greater with at least 12 credit hours at IUPUI. Click here for details.
Free Checking? Questions to Ask
Are the ads for free checking all they're cracked up to be? According to an article by Chris O'Malley, a while back in the Indianapolis Star, the answer is, "It depends on what you expect." Click here for some of his (and my) suggestions.
New to Checking or Had Checking Problems?
Not having a checking account can be costly due to check cashing fees and money order purchases. "Get Checking" workshops are for those who have never had
a checking account or who have had problems with an account in the past (and may be in ChexSystems) that are making it difficult to open an account now.
FMI about "Get Checking" classes in Indiana, visit
here or call the Marion County Purdue Extension Office at 275-9305, ext.
Getting Started With a Budget
Make a simple budget:
- 1) Add up all the "keep-my-credit-record-clean" payments (rent/mortgage, utilities, car payment, phone, credit card payments, public transportation, child care, taxes, etc.).
- 2) Subtract from your monthly income.
- 3) Review your past spending history and tally up other necessities/near-necessities (groceries, food, savings for emergencies/future, oil changes/basic maintenance for car, insurance - car, health, renter's/homeowner's, etc.) To get monthly amount of some of these, you will have to figure out the yearly cost and divide by 12.
- 4) Subtract your total from #3 from the income remaining after you subtracted the first group of bills and what's left is what you have for entertainment, cable, clothing, eating out, gifts and other discretionary items.
- 5) Discipline yourself enough to STAY on the budget.
General Shopping Tips for One-Time Purchases
- Talk to someone you consider to be a savvy shopper to get his/her suggestions.
- Research what a good price range for the item might be well ahead of time (the Web can be helpful here) so that you have time to wait for the item to hit your "target." Then put the item and its target price range on your "wants" list and watch for sales, etc. so that you can buy when the "target" price is offered.
- If you don't have time to research and wait, comparison shop at least three different places (by phone is a time-saver).
Food/Grocery Cost-Cutting Tips
- Make a list of all the things you typically need to buy at the grocery and then window-shop at three different stores in your area and list their base price (not sale price) on each of your items. Compare stores and go to the least costly, but carry your price list with you so you can always be sure the current price is still good.
- Make a two-week meal plan of quick, easy meals, check your cupboards, then make a list of needed items and stick to your list at the grocery (unless you see a really good buy on something you normally use and can afford to go ahead and buy it now).
- Buy ground coffee and your favorite breakfast food at the grocery and fix your own breakfast rather than going to the coffee shop.
- To your list, add the items you normally get out of the vending machines, purchase them at the grocery store and take along to work in your backpack/purse/briefcase rather than buying from expensive vending machines.
- Eat in, not out. Pack your lunch, and eat breakfast/dinner at home.
- Use coupons (but ONLY if it is what you need and the price is fair).
- Watch for sales, but make sure the price is really a sale price by referring to the list you made earlier.
- Cut down on cleaning costs by using vinegar and water or baking soda and water instead of all the expensive specialty products. Just type in "vinegar and baking soda cleaning" on the internet and you'll get plenty of ideas.
- Buy in bulk when you find a good sale, if you can afford to, it's an item you use a lot and you have a place to store it.
- Be wary of convenience foods (mixes, etc.). Does it really take that much more time to mix up flour, sugar and baking powder on your own?
- Avoid impulse buys like magazines, paperbacks, candy, donuts, etc.
- Watch for price discrepancies at the cash register.
It's recommended you have a financial emergency fund that consists of 3-6 months worth of living expenses in an account that you can easily get to without fees, etc.
Rule # 1 is, if at all possible, don't accumulate credit card debt, but if you do, pay off as much as possible each month. If you have $6,000 in credit
card debt and only pay the 3% minimum payment (assuming an 18% nominal annual interest rate), you would pay a total of $11,538 (almost double what you
originally spent), including $5,538 in interest charges and take 17 years to pay off the entire amount. By paying 4%, instead of 3%, you'd save $2,144 in
interest and if you paid double the 3% minimum, you'd save $3,619 in interest and pay the entire amount off in seven years. Of course, this requires that
you don't add to your credit card debt.
By starting to save at an early age, you enjoy the magic of compounding. For example, assuming an 8% average annual rate, if you saved $5 per week starting at age 26, you would have $6,046 less than if you had started just one year earlier. Now think of what missing out on compounding is costing you if you wait until you're 30? 35? 40? 45?
If you spent $1 less per day (on coffee, pop, cigarettes, impulse buys, snacks, lunch/dinner out, magazines, books, etc.) and saved it, in five years you'd have $1,826 and in 10 years, $3,652 and in 20 years, $7,305 (and that's with NO interest). If you spent $5 less each day and saved it, you'd have $36,525 in 20 years (not counting interest). If you put that money into a retirement account that grew in value, you'd have a chance to end up with a lot more than that. For example, if you are 40 years old and saved just $10 every two weeks, you would end up with $20,606 at age 65; if you saved $50 every two weeks, you'd end up with $206,056; and if you saved $200, you'd end up with $824,223 (all of these examples assume an 8% average annual return; this is not a guarantee).
If you plan to save through the IU Tax Deferred Annuity (403b) or the IU Retirement Saving Plan (457b), to which both biweekly-paid and monthly-paid employees who have at least a 50% FTE appointment can contribute, you can start slow because the university allows you to start with a minimum of 1% of your gross pay (for example, if your gross biweekly pay was $800.00, you could have as little as $8.00 put into your 403b account). Once you see if you can live without that amount, raise it (which you can do at any time by completing the salary deferral agreement or by calling one of our Benefits Specialists at 274-4596) and keep raising it until you've maxed out what you can safely put aside. . Note that the salary deferral agreement contains information about allowable contribution limits.
Other Ways to Save
The Right Mindset
Be conservative (borrow ONLY WHAT YOU REALLY NEED even if you qualify for more, use cash instead of a credit card if you can't have enough control to pay the card off each month, brown bag, get a roommate to split the rent, buy used books/clothing/household items, borrow books/magazines from the library, use free parking, go to afternoon movies or use university discounts). Remember that some employers now look at credit records when hiring, especially if the position will involve any fiscal responsibilities (and many jobs do). Be patient. You really CAN wait to have the "perfect" apartment/house. Be creative in being a wise consumer and in having what you want.
Credit bureaus compile credit reports and scores for individuals. The score usually ranges from 300 to 850. The higher your score the better, and getting an "A" loan (market rate, rather than a subprime rate) may require a score in the mid-600s or higher, though it varies from lender to lender.
You can improve your credit score by: (1) paying your bills on time (2) using all your financial tools (checking account, debit/credit cards, etc.) in a
responsible manner (3) closing accounts you do not use (but only close one at a time and give it a few months before you cancel another one because any
large amount of activity, even for a good reason, can be a red flag to the credit reporting agency) and (4) limiting the number of credit inquiries from
potential lenders and applications to open new accounts (for example, when the stores are offering 20% off on purchase if you sign up for their credit
card, don't go from store to store signing up for these as that creates too much activity and can be a red flag).
Check Your Credit Report for Free
As of March 1, 2005, U.S. residents are allowed to get a FREE copy of their credit report (not score) once each year from each of the three major companies (Equifax, Experian and TransUnion) by going to https://www.annualcreditreport.com . This was made possible by an amendment to the Fair Credit Reporting Act (aimed at the problem of identity theft).
It is suggested that you stagger the requests for a report from the three agencies rather than requesting reports from all the companies at once so that you can keep tabs on what's happening on your credit report throughout the year. You might order a report from one company now and put a reminder in your Outlook calendar to remind yourself to request the next one (from the second company) in a few months and the third one (from the third company) a few months after that.
By the way, checking/requesting your OWN credit report does not lower your credit score. The credit report is most helpful in seeing if there are any signs of fraudulent use of your account or any mistakes in your report. This new amendment allows you to get a free credit report. To get a copy of your credit score will likely have a cost.
Don't ever respond to pop-ups or messages offering a free credit report/score even if they say they are from annualcreditreport.com. They could be scams. Go to the site listed above on your own; don't be tempted by shortcuts, especially when they require valuable information like social security numbers, etc., and be careful that you type in the exact e-mail address or dial the exact phone number; there are scammers who have set up "look-alike" sites.
Once you get your credit report, check that all the information, including accounts, etc. is correct. If it isn't, go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm and scroll down to the "What if I find errors" section to learn how to correct. If you find that you have a lot of old credit cards listed that you had forgotten about or no longer use, experts advise that you NOT cancel all the cards at once if you will soon be buying a house, etc. for which your credit score will be checked. I know this sounds crazy, but credit card companies consider anything drastic (like cancelling a lot of cards at once, signing up for a bunch of credit cards, etc.) to be a red flag. So write to the company and cancel one card, then wait six months and cancel the next and so on.
If you know that you will not be making a purchase, applying for a job, etc. that might require checking your credit score for a long time, then you could cancel them all at once. If you think you've been the victim of identity theft, go to http://www.ftc.gov/bcp/edu/microsites/idtheft.
Mortgage Loans & Home Buying How Tos
As you read this section, remember that these are just general hints and that since each person's situation is different, you need to talk to a reputable source like Indianapolis Neighborhood Housing Partnership (925-1400) for complete details as you make decisions. Another good place to start is at the Federal Reserve Web site
Free Online Tax Filing at
IRS Web Site - (For those making under $57,000 for 2011 – check this year’s limit)
Earned Income Tax Credit for Low-Income Workers
Financial Fraud and Preventing Identity Theft
Click here to learn preventing identity theft