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10 minutes | Jun 16, 2021
How To Claim The Advance Child Tax Credit Payments Monthly
The American Rescue Plan of 2021 includes dramatic one-year-only tax changes that may especially benefit parents of children under 18.With sweeping changes to the Child Tax Credit, American parents may be eligible for advance payments of the Child Tax credit. That means parents may see monthly income hitting their bank accounts starting July 15th.While most parents are “auto-enrolled” into the new advance child tax credit payments, some parents will have to take action. We explain how parents who have new children or changes in their tax situation can take advantage of these newly offered tax payments. Table of Contents What Are The Expanded Child Tax Credits?Who Automatically Receives Advance Payments?Who Won’t Automatically Receive Advance Child Tax Credit Payments?How To Claim Advance Child Tax Credit PaymentsWho Should Opt Out Of Payments In 2021? What Are The Expanded Child Tax Credits? The American Rescue Plan expanded and changed Child Tax Credits. Taxpayers should only expect these changes to be in effect in 2021 (as of now). Some of the biggest changes include: The amount of the child tax credit increased from $2,000 to $3,600 for children under age 6 and $3,000 for other children under age 18.The credits are now fully refundable. That means even low-income parents are eligible to receive the entire credit.Most taxpayers will be eligible for advance payments of this credit in monthly installments. The payments will be made on the 15th of each month, starting in July.The credit is now extended to Puerto Rico and the U.S. Territories. All parents with adjusted gross income (AGI) below $200,000 (single), or $400,000 (married filing jointly) are eligible for the “old” $2000 per child tax credit. After that, the credit starts to phase out.However, the “enhanced” tax credit (the increase of $1,000 or $1,600) has stricter income criteria. It begins to phase out at lower thresholds. The thresholds depend on filing status. For each $1,000 a parent earns above the threshold, the enhanced credit decreases by $50.$75,000 — Single$112,500 — Head of Household$150,000 — Joint Parents who are not eligible for the enhanced child tax credits will also not be eligible for the advance payments, even at reduced amounts. Who Automatically Receives Advance Payments? Parents who filed a tax return in 2020 and have no major changes to their tax situation, and are income-eligible for the tax payments, can expect to receive advance tax payments starting July 15th.The advance tax payments will be directly deposited to the checking account on record with the IRS. Parents can expect to receive $300 each month for every child under age 6 (based on Dec 31, 2021 birthday) and $250 per month for children aged 6-17 (based on Dec. 31, 2021 birthday).This means a parent with children ages 2,5, and 8 could expect to receive monthly payments of $850. Most tax filers will not need to take any action to begin receiving these advance payments on the 15th of each month.Related: Top Tax Tips For New FamiliesWho Won’t Automatically Receive Advance Child Tax Credit Payments? The IRS is working to enroll as many eligible families as possible into the system for advance child tax credit payments.However, many parents who are technically eligible for advance payments will need to take action to receive payment. These are the groups that are most likely to be affected by changes.Your child was born or adopted in 2021.You became the primary custodial parent of a child in 2021 (and you were not in 2020).You did not file a tax return in 2020.Your income was above the income threshold in 2020 but will be below the threshold in 2021.Your marital status changed and now affects your ability to receive the credit.How To Claim Advance Child Tax Credit PaymentsBelow we outline the actions each group listed above should take.You Have A New Child In 2021 Families that give birth or adopt a child in 2021 are eligible for advance child tax credit payments. However, these families must register the new child (with a Social Security Number) through a new IRS web portal.The IRS announced that the web portal will open up no later than July 1st of 2021. New parents should monitor this page for a link to the portal when it opens up.Parents who don’t register in 2021 are still eligible to receive the full child tax credit. However, parents who don’t register for the advance payments in 2021 will not receive advance payments. Instead, they will receive the money as a tax refund when they file in 2022.You Became A Primary Custodial Parent In 2021 The IRS assumes that all filing will stay the same from the year 2020. If you gained custody of a child in 2021, you will need to report that through the IRS portal. Monitor this page to see when the new portal opens up. Parents should try to make changes as early as possible to ensure they receive the check.It is recommended that custodial and non-custodial parents coordinate to ensure that the appropriate parent receives the advance payments. Most people will be required to repay advance tax credit payments if they are received in error. The only exception to this rule is very low-income earners who may not be responsible for the full amount received.You Did Not File A Tax Return For 2020 Individuals who were not required to file a tax return in 2020, will need to file a tax return to receive the advance child tax credit payments. Parents are urged to use the IRS free file system to file their taxes. This can be done through the IRS free file partners (including TurboTax and FreeTaxUSA).If you had no income in 2020, you may find it difficult to use online tax software programs to help you file taxes. That should not hinder you from filing. Seek free professional help, so you can file a paper return. The IRS now allows people with $0 in income to file. This allows filers to opt into payments including the advance child tax credit payments.Once parents file their return, the IRS will be able to send the advance payments via direct deposit. If you don’t have a bank account, there are plenty of fee-free online banks that will allow you to receive payments.Your Income Is Expected To Fall In 2021 Parents who earned above certain thresholds in 2020 should not expect to receive advance tax credit payments in 2021. The exact formula for receiving payments depends on both income and the number of dependents parents have. The total advance tax credit falls by $50 for every $1000 parents earn above the threshold. A married couple with one child (age 10) with an AGI of $170,000 in 2020 would not be eligible for advance credit payments. Based on their 2020 income, they are ineligible for the additional $1000 benefit provided by the American Rescue Plan. As a result, they are also ineligible for advance payments. However, if this family is expected to earn less than $150,000 in 2021, they would become eligible for both the increased credit and the advance child tax credit payments.At this time, the best guidance offered is that parents should be able to report material changes through the IRS portal. Monitor this page to see the link to the IRS change submission portal. The link to the portal will be live no later than July 1st of 2021.Your Marital Status Changed Whether you become married or divorced in 2021, a change in marital status is likely to affect whether you’re eligible for the advance payments. Starting no later than July, parents should be able to report changes to marital status through a specific IRS portal. Monitor this page on the IRS for information on when the portal opens and how to navigate to it.Who Should Opt Out Of Payments In 2021? Many parents who are eligible to receive advance payments will opt to do so. However, some parents may want to opt-out of the advance payments. The IRS will have a separate portal for those that wish to opt-out.Parents who will be ineligible for advance payments in 2021, but receive them anyway, will generally need to repay the IRS at tax time in 2022. There are a few safe harbor rules for individuals with very low incomes. But the safest rule is that ineligible parents should opt-out of payments.A couple reasons to consider opting out of the payments in 2021 include:An increase in income would make you ineligible for some or all of the tax credit.A decrease in the number of children you can claim on your 2021 tax return (due to changing custody or the death of a child in 2020). Parents who fall into either of these categories can monitor this page on the IRS website. By July 1st, the IRS will add a portal where parents can opt out of advance child tax credit payments. The post How To Claim The Advance Child Tax Credit Payments Monthly appeared first on The College Investor.
9 minutes | Jun 14, 2021
Top 3 Automatic Investment Apps Of 2021
Building wealth typically requires regular savings and a disciplined approach to investing. Unfortunately, these things are easier said than done.Thankfully, automatic investing apps make it easier for regular people to become excellent investors. They can be great "set it and forget it" options for buy-and-hold investors who aren't interested in short-term trading.Below, we break down our top three automatic investment apps of 2021 before sharing a few more apps that didn't quite make our list but may still be worth considering. Table of Contents M1 FinanceCharles Schwab Intelligent PortfoliosRobinhoodWebullPublicBlooom Our Picks Of The Top Automatic Investment Apps Of 2021 After reviewing more than two dozen top brokers and micro-investing apps, we’ve narrowed down the best automatic investment apps to these three.M1 Finance M1 Finance frequently tops our “best of” investment lists. The top-notch interface, low fees, and customizable investment pies make it a great choice for investors seeking a disciplined, but unique investment experience.M1 Finance allows users to opt into “Auto-Invest”. With auto-invest, M1 Finance’s algorithms will rebalance your portfolio anytime you have at least $25 in cash in the account. This “smart” rebalancing automatically keeps investors more in line with their stated goals.Since M1 Finance supports Roth, Traditional, and SEP IRAS it allows many investors to automate tax-advantaged investments. It also supports individual and joint brokerage accounts. OPEN AN ACCOUNT READ THE REVIEW Charles Schwab Intelligent PortfoliosCharles Schwab Intelligent Portfolio is a free robo-advisory service for people with at least $5,000 in their accounts. The Intelligent Portfolio app makes it easy to set up recurring transfers to the account.Users select from several different pre-designed portfolios that invest in 51 broadly diversified, low-cost ETFs. Whenever money hits the account, Schwab automatically invests the money to rebalance the portfolio. However, the app also follows tax-loss harvesting laws to help minimize taxation (only for taxable accounts with balances over $50,000). This type of efficient investing is somewhat complex to do manually, so it’s nice to see the robots taking over complex but routine tasks.The only major drawback to the Intelligent Portfolio’s app is the high cash position. Most portfolios hold between 6-30% of the portfolio in cash which can be a drag on the overall performance of the portfolio (especially when the investment horizon is several decades). OPEN AN ACCOUNT READ THE REVIEW RobinhoodRobinhood is known for its commission-free trades but it also has excellent automation features. While it doesn't support mutual funds or ETFs, it does allow users to set up recurring investments into fractional shares of stocks. This means that even smaller investors can dollar-cost average into some of their favorite positions. Robinhood is an easy-to-use app and the recurring investment option is easy to find. Investors can change or increase their recurring investments whenever they want. So you won’t be locked into bad positions for too long. However, it doesn’t have any smart rebalancing options. OPEN AN ACCOUNT READ THE REVIEW Other Automatic Investment Apps To Watch While we chose just three top automatic investment apps, there were a few that just missed the cut. These honorary mentions deserve a shout-out as they can be a good fit for certain investors.Webull Webull is a great app for automating active trading. With no commissions and a wealth of information, it’s a top choice for active traders. But it’s also a great place for investors looking to automate their buying.Automating active trading may seem like an oxymoron. But in this case we mean that it allows users to set up buy and sell prices that the app then handles. This is far easier in Webull than in most apps. However, this brokerage doesn’t support fractional shares at this time. OPEN AN ACCOUNT READ THE REVIEW Public Public offers DRIP, but it doesn’t offer an obvious way to set up recurring investments at this time. Part of this may be intentional. Public wants users to buy into the social aspect of stock market investing. And automated investing doesn’t fit with that. However, we’re watching this rising star that already promotes fractional share investing and commission-free trading. OPEN AN ACCOUNT READ THE REVIEW BlooomBlooom offers 401(k) and other account management. On Blooom's DIY plan, which costs $45 per year, its robo-advising technology will give you investing recommendations. But if you upgrade to the $120 per year Standard Plan, Blooom can place the trades on your behalf. This can be a great deal for investors who have “iffy” options in their 401(k) plans. OPEN AN ACCOUNT READ THE REVIEW Apps That Just Missed The Cut Several robo-advisors, including Wealthfront and Betterment, make it easy to automate your investing as well. But their modest fees and limited control over portfolio selection gave us pause in calling them top automatic investing apps. They could still be worth considering, though, especially if you're looking for excellent goal-setting tools. See all of our favorite robo-advisors >>>What Makes An Automatic Investing App Great? These days most investment platforms allow some form of recurring investments. However, great automation is about more than just allowing users to automatically transfer funds to their accounts. To create our list, we considered five major criteria:DRIP. The app must offer a dividend reinvestment plan (DRIP). This allows investors to keep growing their shares.Easy auto-transfer. One of the keys to long-term investing success is saving often. Great automatic investment apps make it easy to set up transfers from savings to investment accounts.Low costs. Each app listed offers commission-free trades and doesn’t charge a management fee. Fees aren’t always the killer of investment performance, but they can add up if you’re investing frequently.Fractional shares. Each investment app allows users to invest in partial shares of stocks or ETFs, so all the money in their account is working hard.Rebalancing technology. Rebalancing a portfolio is difficult to do manually, but easy for computers to do. Robo-advisors specialize in rebalancing, but some other apps offer in-app rebalancing options too. Why Don’t Micro-Investing Apps Make This List?Micro-investing apps specialize in investing tiny amounts of money. They often give users the ability to buy fractional shares using just a few dollars at a time. They may even connect to your checking account and “roll-up” transactions to the nearest dollar and skim the extra into your investment account.The idea behind micro-investing apps is that a little bit of savings goes a long way. In some ways, this is true. However, most people will need to invest more than spare change to achieve their long-term financial goals.And while the fees for these apps may seem low on the surface (usually $1-3 per month), when you compare them to relatively small investment balances, they can be shockingly high. For most people, setting up a $20-$25 per week auto-transfer into one of the apps listed above will yield better results than micro-saving.Should You Use An Automatic Investing App? If you’re serious about building wealth, we recommend employing some sort of helpful automation to keep you on track with achieving your goals. Simple steps like setting up recurring transfers to your investment accounts can ensure you’re moving in the right direction.People who enjoy playing around in their investment account, reading investment news, and researching new stocks probably don’t need to employ specific investing automation technologies (beyond regular savings). If this is you, you can likely trust yourself to buy new stocks and keep yourself invested.However, those who aren’t disciplined about tracking investments and buying new shares should consider automatic investments. Life happens, but most people want to stay invested even when they can’t stay attuned to their portfolio. For those in this category, automatic investment apps are a great fit. The post Top 3 Automatic Investment Apps Of 2021 appeared first on The College Investor.
13 minutes | Jun 11, 2021
15 Summer Money Making Ideas For College Students
Believe it or not, summer can be a really tough time for students to get jobs. Why? Because many employers look at the time frame the student can work (2-3 months), and then turndown student candidates. Why hire a student when there is someone else that would stay around for longer? Heck, it takes 1-2 months just to train someone well - by the time we finish training, they're gone.But college student's shouldn't give up - especially this summer with the job shortage taking hold nationwide. There are plenty of ways for college students to make money over the summer. Here are 15 money making ideas for college students that they can do over the summer even if they can't get a "real" job. Summer Money Making Ideas 1. Search The Internet2. Become An Online Tutor3. Sell Stuff On eBay Or Amazon4. Fill Out Online Surveys5. Do Small Online Tasks On Amazon's Mechanical Turk6. Deliver Food By Car or Even Bike7. Drive For Uber or Lyft8. Deliver Groceries and More!9. Join Agent Anything And Do Random Tasks10. Babysit Or Housesit11. Become a Dog Walker12. Start A Summer Moving Service13. Do House Painting Or Handyman Work14. Be A Part Of A Medical Survey15. Get Paid To Be Someone's Friend 1. Search The InternetDo you search the Internet for stuff? Want to get paid for it? There are two main companies that pay you for doing online tasks like searching the Internet. The more tasks you complete, the more you get paid. Even better, both of these companies offer bonuses just for signing up.Swagbucks is a site that lets you earn points called SB for doing various online tasks like taking surveys, watching videos, and using their search engine. When using their search engine, you get SB points after several searches, usually in the amount of 10-15 SB. You can start cashing out the SB points at the 500 points mark.If you sign up for Swagbucks through THIS LINK you can earn a $5 bonus!Another option is InboxDollars. Similar to Swagbucks, they offer cash bonuses for searching the web or shopping online. Just for signing up with THIS LINK you can earn a $5 bonus!2. Become An Online TutorThis has become one of my favorite new ways to make money online - especially for college students. There are several companies now that allow you to teach online. Specifically, these companies allow college students (and those with college degrees) to teach English online.If you're good at English, and would feel comfortable teaching English online, check out VIP Kid and teach English online for a good hourly rate.Another similar program is QKid - where you can teach teach English online in small groups. You just have to be currently enrolled in college.Finally, there's SayABC, which allows you to earn anywhere from $16 to $20 per hour online teaching!3. Sell Stuff On eBay Or AmazonSelling stuff on eBay was one of the first ways I ever made money online. I used to sell everything old in my house. I soon started selling on Amazon as well, simply focusing around music, movies, and books.Selling on eBay eventually turned into a very large side business for me, and was earning me about $3,000 per year - very part time.Get started selling on Amazon here.Get started selling on eBay here.Check out Etsy if you want to sell things you make.4. Fill Out Online SurveysBelieve it or not, there are companies out there that will pay you to take online surveys. The reason? They simply want your opinion. All you have to do is register, and these companies will contact you when they have a survey that fits your profile. Typically these are online market research surveys for big brands.Some of the most popular online survey sites include:Survey Junkie – Earn cash and rewards for sharing your thoughts and opinions.Swagbucks Surveys – Swagbucks now has a dedicated survey section, and you can get $5 just for signing up.Opinion Outpost – Earn cash for filling out surveys.Points Club – Earn points for filling out surveys which you can redeem for gift cards. Get 2,000 points for signing up with this link.5. Do Small Online Tasks On Amazon's Mechanical TurkAmazon's Mechanical Turk is a great potential way to earn money. The gigs on this site pay incredibly low amounts – less than a nickel typically. However, they take seconds, and you can typically earn around $6 per hour if you keep at it.I put together a full guide on how to maximize the amount of money you make by leveraging tools and forums. Check it out here: How To Make Money With Amazon's MTurk.6. Deliver Food By Car or Even BikeAnother of my favorite ways for college students to earn money over the summer is to deliver food. The great thing about this is you just pick up and drop off food, and you don't have to have people in your car! Also, if you don't have a car, you could even deliver food and make money with a bike or scooter.Two of my favorite apps for delivery are Door Dash and Instacart.Both of these apps allow you to deliver on your own terms. You accept an order, get the food, deliver it, and get paid. It's an awesome way to get paid on your own terms. Check out our full Door Dash review here.Get started with Door Dash here.Get started with Instacart here.7. Drive For Uber or LyftIf you're home for the summer and have a car, you could make money simply by driving people around. All you need is a car and some spare time. This could earn you several hundred per week if you are in an area where ride-on-demand is popular. Plus, you never know how many fun people you could meet.You can easily sign up with Uber and start driving people around as a side hustle. You’ll make what you put into it. Harry at The Ride Share Guy has a lot of great resources about getting started.We've also noticed that Lyft is running an lot of incentives to get drivers to sign up. Make sure you check out Lyft and see if they have any great offers.8. Deliver Groceries and More!Instacart is an on-demand delivery service where you get paid around deliver groceries and food. That’s not bad.With Instacart, you deliver on your own time. You might deliver groceries, restaurant orders, and more! This is a great summer gig for students because you do it on your own time - download the app, get signed up, and only take deliveries when you're able to. So, for flexibility this summer, this is a great option! Sign up and deliver with Instacart today >>9. Join Agent Anything And Do Random TasksAgent Anything is a site that outsources tasks, but is more geared to students. People post projects on the site and you can make offers on how much you’re willing to pay to help. Most gigs on the site earn anywhere from $20 to $100, but some earn more. However, they are usually pretty quick and easy jobs.Think of this as another version of Task Rabbit, but one focused towards young adults.10. Babysit Or HousesitBabysitting and housesitting are two great ways to make money while you're home on summer vacation. Both require no long term commitment, and they both can earn you good money.Start by asking friends, family, and neighbors if they need anyone to help. If they don't, you could always consider posting to a site like Care.com and looking for work there. Finding work through friends and family is typically easier, but looking online opens up more options.11. Become a Dog WalkerAnother great way to earn money, especially if you love animals, is to become a dog walker. In many cities people are looking for individuals to walk their dogs and pets. Even in more suburban areas, people are looking to hire others to spend time with their pets - especially when the owners have a busy schedule.Once again, the best way to find work is to talk to friends and neighbors, but there are services online that can also help. You can look for dog walking work on Care.com and Rover. 12. Start A Summer Moving ServiceAnother great way to make extra money during the summer is to start a moving service. This job is even better if you can get 1-2 friends to join you.The best way to look for gigs is to post on Craigslist as a moving service. People will contact you, and you can negotiate the rate. Remember, you'll likely have to rent a U-Haul truck, pay for gas, and spend a lot of time for each client. Price yourself accordingly.13. Do House Painting Or Handyman WorkYou can also look for house painting or handyman work. Many people start looking to do home improvements once summer arrives, and if you are willing to put in the manual labor, this could be a great way to earn money.There are a few ways to go about it: 1) do the work on your own from start to finish by contacting individuals and setting up deals. 2) you can join a company that you are affiliated with, you do the sales, and the painting, but they provide the infrastructure, billing, supplies, and more. 3) you go and work for a company as summer/on-demand labor.A great place to start is Handy, an app that connects people looking for work with those needing it.14. Be A Part Of A Medical SurveyThis is one of our favorite unique ways to make money, and it can earn you hundreds or even thousands of dollars for your time. Given that you have time on your side for the summer, you could be a great candidate to participate in medical studies. Check your local schools or hospitals and see if they have any information on studies you can be a part of. The higher paying studies are the ones that require overnight stays.15. Get Paid To Be Someone's FriendIf you want to go out and do a fun activity - like eat dinner or watch a movie - but don't have anyone to do it with, you could join a service like Rentafriend.com, where you can get paid to become someone’s friend for a period of time. This is strictly platonic stuff here, so don’t think about it any other way please.Final ThoughtsJust because getting a summer job at a big company or retailer is difficult, that doesn't mean that you can't work and earn money. There are lots of ways to earn money during the summer, you just have to find it. And who knows, some of these gigs might turn into side hustles that you can do during college when you go back in the fall. The post 15 Summer Money Making Ideas For College Students appeared first on The College Investor.
5 minutes | May 18, 2020
What Is The Average Student Loan Monthly Payment For US Borrowers?
The average student loan monthly payment in the US is $393. See what the average borrower can expect to pay on each type of repayment plan. The post What Is The Average Student Loan Monthly Payment For US Borrowers? appeared first on The College Investor.
7 minutes | Jun 7, 2021
How To Save Interest On Your Student Loans
As college tuition continues to climb, students who entered school in the 2020-2021 year paid the most ever for tuition, according to CollegeBoard. The average public four-year tuition cost $10,560 in '20-'21. Compared to 2011-2012 which was only $8,244, that’s a $2,316 increase. And according to its most recent debt stats, the average student loan debt for bachelor's degree recipients was $28,800. Anyone entering school in the last decade will be saddled with thousands of dollars in student loans by the time they graduate.While the hard facts paint a bleak picture, there are ways to save money on your student loans. Obviously, paying extra towards principal will help you save on interest charges. But what if you don't have room in the budget to allocate more money towards student loan payments each month?It turns out that you may still be able to save interest on your student loans even if you aren't able to make extra principal payments right now. Below, we break down two simple ways to save interest on your student loans whether they happen to be federal or private. Table of Contents How To Save Interest On Your Federal Student LoansWhich Loans Are Eligible For The Rate Reduction?How To Save Interest On Your Private Student LoansHow Much Can Refinancing Save You?Final Thoughts How To Save Interest On Your Federal Student LoansFederal student loans offer a special discount if your payment is deducted through auto debit. This means the loan servicer will draft the monthly payment directly from your bank account.How much will you save for allowing access to your bank account? Generally, 0.25% will get shaved off your interest rate. If you have a rate of 5.05%, it will go down to 4.80%.You’re probably thinking 0.25% isn’t much and is it even worth it. Before we explore that question, remember that with auto payments you don’t have to worry about missing a payment and incurring fees. Making your payment on-time every time is already saving you money in fees on top of your rate reduction.Which Loans Are Eligible For The Rate Reduction?The Department of Education says that all Direct Loans are automatically eligible for a 0.25% autopay discount. But some of the federal student loan servicers may offer discount for auto payments. To determine if your loan is eligible for the discount, check with your servicer.Now back to our question of how much does 0.25% save you. Here are some numbers for a bachelor’s degree in repayment status calculated using the federal student loan calculator: Loan Balance $29,000 Loan Interest Rate 5.05% Loan Fees 1.06% Loan Term 15 years Monthly Loan Payment $232.55 Number of Payments 180 Cumulative Payments $41,859.33 Total Interest Paid $12,548.64 With the 0.25% discount applied, the rate drops to 4.80%. Loan Balance $29,000 Loan Interest Rate 4.80% Loan Fees 1.06% Loan Term 15 years Monthly Loan Payment $228.74 Number of Payments 180 Cumulative Payments $41,174.48 Total Interest Paid $11,863.79 Over the term of this loan, the savings in interest amount to $684.85. On a monthly basis, you're only saving $3.80, which is equal to $45.66 per year.While that doesn’t seem like much, it’s money that isn’t evaporating into thin air anymore. Considering its money you wouldn’t have had without the discount, think of it as a free coffee or ice cream sundae every month.How To Save Interest On Your Private Student LoansPrivate lenders include banks and credit unions. Interest rates on private loans can be higher than those on federal loans. And rates may be variable or fixed.While private loans can have a higher interest rate than federal loans, you can still save on your private loan by refinancing. Refinancing allows you to set up new terms with a lower interest rate. Most private lenders also apply a 0.25% discount for auto payments just like federal loan servicers.Here are a few companies that can refinance a private student loan:ELFI: Get a bonus of up to $1,100. Read our ELFI review.Credible: Get a bonus of up to $1,000. Read our Credible review.LendKey: Get a bonus of up to $750. Read our LendKey review.Splash Financial: Get a bonus of up to $500. Read our Splash Financial review.First Republic: Get a bonus of up to $300. Read our First Republic review.Laurel Road: Get a bonus of up to $200. Read our Laurel Road review.How Much Can Refinancing Save You? Using student loan calculator provided by SoFi, we can get an estimate of monthly and total savings. A $29,000 loan at 5.05% with 110 months remaining refinanced at 3.69% - 5.87% will decrease the monthly payment by $10 - $41 per month and save $1,565 over the life of the loan. Of course, you’ll want to make sure the rate you're quoted is below 5.05%.Final ThoughtsWhether they're federal or private, there are simple ways to save interest on your student loans without raising your monthly payment. One of the most common is to set up auto payments. This can land you a 0.25% discount. And if you have private loans, you should see if you're able to refinance to a lower rate. Consider getting quotes from each of the companies listed above. Or if you want even more options, check out our top 10 student loan refinancing companies. The post How To Save Interest On Your Student Loans appeared first on The College Investor.
7 minutes | Jun 4, 2021
Investing On Margin | How To Use Leverage And Not Get Burned
Investing on margin can present an opportunity for you to grow your portfolio more quickly. But this path is fraught with risk for investors without a game plan. Many investors have lost all that they invested (and then some) by using margin recklessly. And the strategy has has gained a deserved reputation for being dangerous. However, it's possible to use leverage and not get burned financially. Let’s explore how to use leverage safely. Table of Contents Investing On Margin, ExplainedHow To Use Leverage Without Getting BurnedUnderstand Your Risk ToleranceLearn The Ropes Of Investing FirstCap Your LeverageUse Margin SparinglySet Stop-Loss OrdersDon’t Forget To Account For The Margin RateFinal Thoughts Investing On Margin, Explained Before we can dive into the details of smart investment strategies that take advantage of leverage, let's break down how the strategy works. Essentially, investing on margin is using money that you've borrowed from your investment broker to buy investments. Before can get started, you’ll have to apply and be approved for a margin account with your broker. Once the margin account is set up, you can use the cash and securities in your regular account as collateral to borrow more funds.The point of investing on margin is to take advantage of potentially high returns. If you anticipate that a particular stock will rise, you may choose to use borrowed funds to buy more stock than you could otherwise. In order to make a profit, the investment must earn a higher rate of return than what is being paid in interest on the loan. With the power to borrow more funds than you have on hand, investing on margin provides an opportunity to amplify your gains. However, this strategy can go south quickly as it will also amplify losses.For example, let's say you invest $5,000 in ABC stock by using $2,500 in cash and $2,500 of margin. If the stock appreciates by 20% to $6,000, you'll actually make 40% on your $2,500 investment. But if the stocks falls by 20% to $4,000, you'll suffer a 40% loss.How To Use Leverage Without Getting Burned Now that you know a little bit more about investing on margin, it's clear that its riskier than investing with cash. However, that doesn’t mean it is always a bad idea. In fact, it can provide an opportunity for you to grow your portfolio more quickly. Let’s explore some of the strategies you can implement to avoid getting burned. Understand Your Risk Tolerance Investing on margin is not a good choice for everyone. A successful investor that takes advantage of margins will likely have a high risk tolerance and willingness to track their investments closely. If you don’t have a high risk tolerance, the potential downsides of investing on margin could be too great for you to stomach. And that’s okay! Don’t dive into investing on margin if you're uncomfortable with the idea of potentially magnifying your losses. With a higher risk tolerance, you may be more comfortable taking on the risks that come with investing on margin. That comfort level can help you stick to your investment strategy through the inevitable ups and downs. Not sure where your risk tolerance stands? Take a look at these assessments to find out. Learn The Ropes Of Investing First Building an investment portfolio is an exciting prospect. As you first dive into this new world of money, take things slow. I would not recommend investing on margins until you’ve gained a solid understanding of how the market works. Without a clear understanding of the market, it's very easy to lose money with margin investing. Want some help learning how to invest in stocks? We've got you covered. Read our guide here >>>Cap Your Leverage If you're chasing higher returns, it can be tempting to go "all in." After all, you believe that a particular stock will rise and net you tremendous profits. However, you'll want to avoid overextending yourself. Rather than using as much leverage as possible, set a percentage of your portfolio that you are comfortable with and stick to that. You’ll have to decide for yourself where to cap your leverage usage. Many feel comfortable somewhere between 10% and 25%. With a cap on your leveraged opportunities, you limit the damage that can done to your portfolio when one trade goes against you.Use Margin Sparingly As I mentioned above, it's good to have a cap in mind whenever you use leverage. But you should probably take things a step further and avoid investing on margin too often. When margin trading becomes a regular habit, it can be difficult to stay engaged and alert with monitoring your positions. Instead, only use margins when you find a worthwhile opportunity. With that, you'll be more likely to disciplined throughout the course of that investment cycle. This will allow you to keep everything on track to the best of your abilities. If you aren’t able to commit the time and energy required to monitor your leveraged investments effectively, then you may want to hold off. Set Stop-Loss Orders One way to limit your risk when investing on margin is to set a stop-loss order right after you enter a position. By doing so, you can automatically exit a position whenever the stock falls to a level that you decide -- even if you aren't monitoring your account at the time.While stop-loss orders are incredibly useful tools, they can't mitigate all the risk of margin trading. Stop-loss orders only execute when the market is open. So they can't get you out of a position during after-market hours, even if your stock dives well below your desired exit point in between regular market sessions.Don’t Forget To Account For The Margin Rate Even with a lucrative stock opportunity, the interest rate attached to your margin could effectively eliminate any potential gains. Some brokers charge lower rates than others so it can pay to shop around.But, as general rule, one of the best ways to minimize your margin interest costs is to keep a short-term investment mindset. Investments that you plan to keep for the long haul should be purchased with cash.Final Thoughts Investing on margin is a riskier strategy that won't be the right path for many investors. If you prefer a more hands-off approach to investing. setting up automatic cash investments with one of our favorite robo-advisors may be a better option.However, a conservative use of margin could be worth considering for experienced and disciplined traders. By taking a cautious approach and using safeguards like stop-loss orders you may find that the risk is worth the rewards. The post Investing On Margin | How To Use Leverage And Not Get Burned appeared first on The College Investor.
8 minutes | May 31, 2021
How To Compare Mortgage Refinance Rates
As a homeowner with an outstanding mortgage balance, you might stand to gain from refinancing. With relatively low rates and uncertain times, finding a way to lower your monthly mortgage payment could be great idea. But how does mortgage refinancing work and how do you sort through all the lenders to find the right loan for you? In today's article, we'll walk you through how to compare mortgage refinance rates right now. This article is in partnership with Credit Karma Home. If you’re looking for a quick and easy way to shop rates and see if you can save on your mortgage, check out Credit Karma Home here >> Table of Contents Are Mortgage Rates Still Attractive?How Does Mortgage Refinancing Work?How To Compare Mortgage Refinance RatesFinal Thoughts Are Mortgage Rates Still Attractive?Although mortgage rates have risen a bit in 2021, that doesn’t mean they aren’t attractive. Homeowners can still take advantage low rates to reduce their monthly payments and/or reduce their payment term to pay off their mortgage faster.The Federal Reserve Economic Data (FRED) graph below shows that mortgage rates are still near all-time lows (currently at 3.00%). And while rates have come back up a bit from their January 2021 lows, they're still lower than they were at this same time in 2020. Unfortunately, rock-bottom rates might not stick around for too long. According to Freddie Mac, the recovering economy may lead to higher mortgage rates in the coming months. How Does Mortgage Refinancing Work? A mortgage refinance replaces your existing mortgage with an entirely new one. When you take out the refinanced mortgage, the funds will be used to pay off the outstanding balance on your current mortgage.When you're looking to refinance your mortgage, there are two main loan products available: rate and term refinancing and cash-out refinancing. Here's how both options work.Rate And Term RefinanceThe rate and term refinance option is likely what comes to mind when you think of refinancing. In this case, you would borrow the balance of your outstanding mortgage. The new lender will offer you different rates and terms based on the current interest rate environment, your credit score, debt-to-income ratio, and other factors.If you're able to receive an offer for a new mortgage at a lower interest rate, you stand to lower your monthly payments while also saving money on interest charges over the lifetime of your loan. Additionally, you can choose a term that creates the appropriate monthly payment for your budget. When shopping for a mortgage refinance, sites like Credit Karma Home make it easy to see different mortgage types. On one page, you can quickly see a 30-year fixed rate, a 15-year fixed rate, and even a 5/1 ARM (adjustable rate mortgage). Shop for a mortgage here >>Cash-Out RefinanceA cash-out refinance is exactly what it sounds like. You can pull cash out of the equity you’ve built in your home and use the funds however you decide. Often, homeowners choose to pull cash out during a refinance in order to consolidate debt or make home improvements.If you have credit card or personal loan debt, paying it off with the proceeds from a cash-out refinance could help you significantly reduce your interest rate. The average credit card interest rate, for example, is currently more than 10 percentage points higher than mortgage rates.You can also use home equity to re-invest in your property and increase its value. For example, you could use the cash to update your windows, renovate your kitchen, or replace your roof.If you're considering a cash-out refinance, you should compare this loan to a home equity loan or HELOC. In either case, you'll add to the balance of your current mortgage. But depending on your situation, one type of loan may be a better option than the other.How To Compare Mortgage Refinance Rates Ready to compare mortgage refinance rates. Here are the steps you should take to find the right mortgage refinancing loan for your situation. Consider Your Goals If you want to streamline your finances by saving money on interest payments, then a classic refinance is the answer you are looking for. But if you need money to cover an expense, then a cash-out refinance could provide the funds you need.Whether you choose a rate and term or cash-out refinance, keep in mind that you'll have the option to reduce your rate even further by purchasing mortgage points. Typically, you'll pay 1% of the loan amount to lower your interest rate by 0.25%.Buying points could be a good option if you plan to stay in your home for a long period of time. But if you plan to sell your home in a few years, you may not save enough in interest before you sell to break even on the upfront fees you'll pay. Learn how to calculate your break-even point.Take some time to consider why you want to refinance before shopping around. With a clear vision of what you want to achieve with your refinance, you’ll be able to narrow down your options more quickly. Compare Lenders Not all mortgage lenders are created equally. Although a mortgage may seem like a standard product with the same offerings available at every lender, that is not the case. With that, it is important to shop around. Keep in mind that when you compare mortgage refinance rates on sites like Credit Karma it won't hurt your credit score. Rate shoppers have a window of time in which multiple hard inquiries are treated as one as it relates to their credit scores. This shopping window can range from 14 days (most common) to 45 days depending on the scoring model that the lender uses.Explore Different Interest Rates And Terms You don’t want to overpay for your mortgage. With that, you should start by comparing rates and terms available through different lenders. By shopping around, you can ensure that you are getting the best deal on your new loan. Not sure where to start? We’ve compiled a list of the best places to refinance your mortgage in 2021. But if you don’t want to spend any time hunting through the offers of different lenders, then check out Credit Karma Home. This comparison shopping tool allows you to explore the offers of dozens of lenders in one quick process. One of the great features is that you can quickly see your rate, monthly payment, and any fees involved in refinancing. Examine Customer Service Ratings A mortgage is a long-term financial product that kicks off with weeks of paperwork. Whether you're purchasing your home for the first time or refinancing the mortgage, there is a lot of paperwork involved. Unfortunately, a lender with a bad track record of taking care of its customers can lead to a string of headaches for you. With that, take a minute to check out the customer service ratings of a potential lender before signing on the dotted line. On Credit Karma Home, you can read unbiased customer reviews for each of its partner lenders. Close And Enjoy Your Refinanced Terms Although the process of obtaining a refinance can take some time and energy, the end results can be worth the effort. If you took the time to shop around carefully, then you’ll be able to bask in the glow of thousands saved in interest payments or the cash on hand to tackle a big expense. Final Thoughts Mortgage refinancing can be a good idea if you can find interest rates and terms that beat your current mortgage rates and terms. Take some time to consider how your financial picture could change for the better if you pursue a refinance. If you’re not sure where to start, hop over to Credit Karma Home to compare mortgage refinance rates in your area. You might be surprised how much you can save. Get a quote here >> The post How To Compare Mortgage Refinance Rates appeared first on The College Investor.
4 minutes | Mar 6, 2018
Splash Financial Student Loan Refinancing Review
Are you a medical professional thinking about refinancing your student loans to save money? Check out this Splash Financial Student Loan Refinancing review to learn how to get started. The post Splash Financial Student Loan Refinancing Review appeared first on The College Investor.
6 minutes | May 24, 2021
How To File A Complaint Against Your Bank
When you run into a problem with your bank, it can be difficult to resolve it efficiently.But if you're having issues, you might not be the only one. By filing a complaint, you can help to ensure that others aren't unfairly treated by your financial institution.When you file a complaint against your bank, you can escalate the issue to a regulatory organization. However, the bank complaint process is often less than straightforward, with several organizations involved. Here’s the step-by-step process you’ll need to follow to file a complaint against your bank (and more importantly, get the resolution you need).Ready to switch banks? Compare your best options here >>> Table of Contents What To Do Before You Make A Bank ComplaintHow To File A Complaint Against Your BankConsumer Financial Protection Bureau (CFPB)Office Of The Comptroller Of The CurrencyThe Federal ReserveWhat To Do After You Make A Bank ComplaintFinal Thoughts What To Do Before You Make A Bank Complaint If you run into an issue with your bank, try talking to them directly. Although it's tempting to jump straight into the complaint process, the problem you're dealing with may have been an honest mistake on your bank’s behalf. With that, start by giving your bank the benefit of the doubt. Take the time to contact and work with the customer service team to resolve your issue. If you're able to make contact with someone, then take notes along the way. Record the details of the conversation, who you talked to, and the timing. If you're communicating via written documents, such as a chatbox or email, then keep a copy of the conversation for your records. In the best-case scenario, you'll be able to reach a resolution with your bank to put the issue to rest. But if you can't, it's time to file a complaint.How To File A Complaint Against Your Bank If the bank hasn't been helpful and the issue is serious enough in your eyes for a formal complaint, you'll want to write down the incident in detail. You should include the type of product you're complaining about, the issue at hand, and any people that were involved. What's considered serious enough? Well, for most people, this will involved money being frozen, money being lost, money being stolen (perhaps due to a bank employee's mistake or negligence), or other account issues that's prohibiting you from accessing your money.If possible, gather supporting documentation. This might include your notes on the interactions you’ve had with the bank or statements that point to the problem. Once you know what you want to say in your complaint, you can move on to deciding where to submit it. There are a few places that you can file a complaint against your bank.Pro Tip: When you file a complaint, banks have high-level teams that have to both resolve the issue and file the appropriate response with regulators. Complaints are taken very seriously and are usually addressed very quicky.Here are three of the most common options:Consumer Financial Protection Bureau (CFPB) The Consumer Financial Protection Bureau (CFPB) allows you to submit a complaint about a banking product through their online form. If you have your information ready, it should only take a few minutes to submit your complaint formally. After you submit the complaint, the company in question will have up to 60 days to respond to your complaint. But, in most cases, you’ll receive a response within 15 days. Once you have the response, you can choose to respond back within 60 days. The complaint will be closed after you make your final response. Office Of The Comptroller Of The Currency The Office of the Comptroller of the Currency (OCC) is another government bureau that accept banking complaints. Before you try to file a complaint against your bank here, take a minute to ensure that the bank is actually regulated by the bureau. Luckily, the OCC has a quick tool to help you determine the answer. Plus, it will point you in the right direction if your bank isn't regulated by the OCC. If you find your bank on the OCC site, you can file a complaint within 30 minutes through an online form. With the complaint in hand, the OCC will investigate the issue. The organization will send you the result of their inquiry within 60 daysThe Federal Reserve The Federal Reserve is another place in which you can make a formal complaint against your bank. Like with the other options above, you'll be able to submit your complaint through an online form. You can also use a physically-mailed questionnaire. Regardless of how the bank complaint is submitted, the Federal Reserve will investigate. You’ll receive information about the findings within 60 days of filing. What To Do After You Make A Bank Complaint The process of submitting a complaint shouldn’t take too long. But it may take days or weeks for your issue to be resolved. However, we've found in practice that many issues are resolved within a few days.While you wait to hear the results of your complaint investigation, you may want to look for a different bank. It can be a challenge to continue banking with a financial institution when you know you disagree with its business practices.By switching to a top-rated bank, you may be able to obtain lower fees, a higher interest rate on deposits, better customer service, or all of the above. Check out our list of the best online banks ready to help you today. Final Thoughts Like any other companies, banks can make accidental mistakes. And, in these cases, a simple phone call or visit to your local branch may resolve the issue. But if your bank has engaged in deceptive, misleading, or illegal practices, you need to file a complaint to protect other consumers. And then you need to move on to a bank that's better able to serve your needs. Compare your banking options here >>> The post How To File A Complaint Against Your Bank appeared first on The College Investor.
6 minutes | May 21, 2021
Beware of the College Roommate Scam
Every year, there is a scam that goes around college campuses that impacts hundreds of college students and young adults. It's the college roommate scam, and if you're not careful, it could cost you hundreds (maybe even thousands) of dollars. We've talked about scams before, but this is a little different.There are reports of the scam around major college towns across the country every year, including San Diego, San Francisco, Chicago, and New York. It also doesn't just hit college students, but also anyone who rents a room. Here is what you need to know so that you can protect yourself from this scam. Table of Contents How the College Roommate Scam WorksWhat Recourse the Victim Has?How You Can Protect Yourself When Renting a Room How the College Roommate Scam WorksThe scam works like this. The scammer posts listing on Craigslist and other websites advertising that there is a room for rent. Why this works great in college towns is because there are a lot of students who are looking for a room, not a full apartment or house.After connecting via email through the website, the scammer meets the potential tenant at the room. They show them the room, tell them about it, and act like the landlord. The potential renter believes them because they have access to the unit.When the renter likes the unit, the scammer tells the renter they would need to provide a security deposit and first month's rent, which is very common - so still no red flags. The scammer my even give the renter a receipt for the deposit and a key.The problem comes on move-in day - the renter will find out that the scammer wasn't allowed to rent the room. In many cases, the scammer was the roommate who was leaving, and was trying to make some extra money. In reality, the landlord or owner had rented the room to someone else, and now the renter is out of a place to live and the money they paid the scammer!What Recourse the Victim Has?This is tough, because the victim really doesn't have any recourse if this happens. They rented the room from someone who was not legally allowed to rent it.The best thing to do in this situation is to contact the police department or the local district attorney. They can help you file a report and maybe you have a chance to get your money back if they catch the person. However, that doesn't fix the current problem of trying to find living arrangements. Which can be challenging, especially if you need to start college classes soon.The best way to protect yourself is to be vigilant from the beginning.How You Can Protect Yourself When Renting a RoomThere are several steps that you can take to protect yourself when renting a room so you don't fall victim to the college roommate scam. Most of it just involves doing due diligence. Here are some simple steps that you can take to make sure you don't get scammed.Ensure You Know Who You're Meeting WithMake sure the person you're meeting with has the authority to rent the room. This is typically the owner of the house. If the person you are meeting with is a roommate or current tenant, ensure they have permission to rent the room by contacting the owner. Sometimes owners will allow their tenants to sub-let the unit, but many times they will not.Not sure who you can contact? Check with your local county administration to see who the actual owner is. Many places have this online and you can simply search and see the public record. Other places require landlords to have permits. Just check to make sure that you're dealing with the appropriate person.Meet the RoommatesWhenever you move into a place with roommates, you MUST meet the roommates. Just like you would never rent an apartment sight-unseen, why would you rent a place with people you've never met. While they may not be your closest friends, they are going to be people you interact with on a daily basis. There should be a basic level of connection when you go live there.Pay With CheckI've written about how so few people still use checks, but this is one of those circumstances when writing a check makes sense. To deposit the check, the person will have to endorse it, which will give away their identity. Plus, the bank account will have their identity on file. If they go to a check cashing location, they will also need to provide ID. Finally, if there is something wrong, you can always cancel the check and get your money back.Want more tips for college? Check out our 101 Tips For College Freshmen.Have you heard of the college roommate scam? Any other steps you would take to protect yourself? The post Beware of the College Roommate Scam appeared first on The College Investor.
10 minutes | May 20, 2021
How To Become A Millionaire At Any Age
Who wants to be a millionaire? Everyone! (Maybe?) May 20th is Be a Millionaire Day, and what better way to celebrate than by working towards joining the Millionaires Club.I'm a huge believer in building wealth, especially when starting young. But it's possible to become a millionaire at almost any age, so let's break it down.Here are some helpful tips to get you a little closer to becoming a millionaire: Table of Contents Quick Millionaire FactsPayoff Your DebtReview Your Investments To Identify Ways to Improve ThemReview and Refresh Your Budget to Incorporate Ways to Spend Less and Save MoreMake a Plan to Earn More MoneyReview Your Financial Goals OftenCreate Millionaire Habits Quick Millionaire FactsFirst, let's look at some quick millionaire facts before we dive in. Too many people are discouraged about becoming a millionaire, while the math of becoming one is more achievable than most think.There are 20,270,000 millionaire households in the United States (Source: Credit Suisse)There are 51,882,000 millionaire households worldwide (Source: Credit Suisse)80% of millionaires are self-made (only 20% inherited their wealth) according to the The Millionaire Next Door by Thomas J Stanley.The average age of a millionaire in the United States is 62 years old (Source: Spectrem)There are 618,000 millennial millionaires in the United States (Source: Coldwell Banker)And remember, getting to a million is just about your savings rate:Here's the amount you need to invest per year to reach $1,000,000 by age 62:Starting AgeAmount To Invest Per Year22$3,60025$4,60030$6,90035$10,700 That means if you start investing at age 25, you only need to invest $383 per month and you'll hit your goal! That's less than your annual IRA contribution!Related: 5 Things Your Millionaire Neighbor Isn't Telling YouPayoff Your DebtFirst, you simply have to pay off your debt. You've got to get from a negative net worth to a positive net worth. The wrong kind of debt can hold you back from making progress on your financial goals. If you have any type of consumer debt you should make a plan to pay it back as soon as possible.Once your debt is paid off you can then funnel that money toward your investments.Here are some great resources on paying off debt:How to Ditch Student Loan DebtSnowball vs. Avalanche Debt Pay Off MethodsIt's important to note that most millionaires have debt. Debt itself isn't a bad thing. When it's used to grow your wealth, it can be a positive. However, when it's used poorly (such as to simply buy stuff for your house), it can hurt you. Review Your Investments To Identify Ways to Improve ThemAs time goes by your investment strategy needs will change. Make it a habit to review your investments and look for ways to improve them.Here are a few things you might want to review:Start or Increase Your 401K ContributionMaxing out your retirement account each and every year is one sure-fire way to enter retirement as a millionaire.If you don’t already have a 401k open meet with the HR department at your workplace and have one set up. You should contribute as much as you can (up to the maximum contribution amounts) or at least enough to receive an employer match if applicable.If you already have a 401k make a plan to increase your contributions as much as possible each year until you’re maxing it out.What if your employer doesn’t offer a 401k?No problem! You can still open a Roth IRA, Traditional IRA, or if you’re self-employed an SEP IRA. Not having an employer sponsored 401k is no excuse to skip investing for retirement. You should continually increase your contributions to these accounts as well.Related: Best Order Of Operations To Save For RetirementRebalance Your Portfolio if NeededWhile you may have started out with the perfect asset allocation it will change overtime as your assets increase or decrease in value.Review your current portfolio to make sure that your investments are currently correctly weighted based on your strategy and risk tolerance. Make adjustments if needed. You should do this at least once a year to stay on target with your investment goals.Check out our guide on how to rebalance your portfolio across multiple accounts.Check For FeesInvestment fees can keep you from becoming a millionaire. They can seriously erode your ability to make a decent return investing.Check out the free tool FeeX, which will analyze your portfolio and make recommendations about funds and ETFs that may be costing you too much in fees. Oh, and the best part? It's free.Invest in YourselfAll millionaires invest in themselves. While it is crucial for you to develop a smart retirement plan that includes a mixture of assets such as CDs, stocks, and bonds, it’s just as important to invest in yourself.After all, YOU are your most valuable asset.Review and Refresh Your Budget to Incorporate Ways to Spend Less and Save MoreOne of the quickest ways to immediately have more money to save and invest is to lower your expenses.Review your budget and make cuts where appropriate. I would caution you to take budget cuts slowly so the habit will stick. If you try to make too many changes at once you’ll end up quitting too soon.Here are some areas of your budget to look at:Food – Saving money on food is by far one the easiest ways to cut your budget. You can do this by eliminating take-out, creating a menu plan, preparing meals ahead of time (freezer cooking,) and shopping sales.Cell Phones – Cell Phones are another one of those guilty pleasures that people normally spend way too much on. The fact of the matter is you can get a pay as you go phone with same features as your contract smartphone for about a third of the price. There is a significant amount of savings to be gained just by switching out your phone.Housing – Housing is one of the hardest budget cuts to make but it’s also one that can have the most impact. By downgrading your housing situation and saving hundreds to thousands of dollars per month you’ll be able to quickly accelerate your millionaire status.Transportation – How much money do you spend on a car payment and insurance each year? If you’re not already financially stable, selling an expensive, gas guzzling, high insurance car and swapping it out for an older model that you can pay for upfront can save thousands of dollars per year.Insurance – You can normally save money on car insurance every 2-3 years just by switching companies. Don’t be afraid to call your agent to get quotes from multiple insurance carriers.Clothing – Thrift shops and consignment shops are great places to get clothes. There are even high end consignment shops online now making it extremely convenient to get nice, name brand clothes for a fraction of the retail price.When cutting your expenses do the best you can do. We’re all in different situations so there’s no one-size-fits-all situation. Remember, we've put together a list of ways to save over $500 per month. It's possible - I've done it.Make a Plan to Earn More MoneyWhile cutting your expenses is the quickest way to free up extra money in your budget it’s also a very limited route. If you really want to fast track your way to millionaire status you need to work on both sides of the equation. That means you need a plan to increase your earnings.Here are a few ideas:Ask for a Raise – This is a simple yet effective solution. If you’ve been with your company for at least a couple of years and have proven your value a pay raise might be in your future. Meet with your boss explain the value you provide and why you feel like you deserve a raise. The worst you’ll be told is no.Switch Jobs – Another option is to switch jobs altogether. If you’re underpaid for your position and aren’t happy with your employer you can start looking at alternatives.Offer Freelance Services – Everyone is knowledgeable in a certain area. Why not take that knowledge and offer it as a freelance service?Start a Side Business – Starting a side business is personally my favorite way to increase income. Your options are limitless and you get to pick something you enjoy. Here are fifty side hustle ideas to get you started.Review Your Financial Goals OftenBehind every good goal is a strong reason. Figure out why becoming a millionaire is so important to you.Do you want to be financially free? Retire early? Or just have some peace of mind?The reason behind your goal needs to be strong so that you see everything through. Make a practice of writing down your goals every day. This will help prevent you from backsliding.Create Millionaire HabitsIf you want to become a millionaire you need to create millionaire habits. This means living below your means, increasing your earnings, ridding yourself of debt, and most of all, making smart investments.Start mapping out and working your millionaire plan while you’re young and you’ll be able to meet or exceed the millionaire mark down the line.What tips and tricks do you have to become a millionaire at any age? The post How To Become A Millionaire At Any Age appeared first on The College Investor.
7 minutes | May 19, 2021
What Is Short Selling (And Should You Do It)?
Want to cash in on a hunch that a stock is going to fall? Short selling may sound like a compelling option.Shorting is one of the few ways to make money even when a stock, or the market as a whole, is declining. For this reason, short selling is a popular strategy for hedge funds that aim to earn positive returns in all market environments.But before you jump into this active trading strategy, it’s important to understand how short selling works and why it's a high-risk way to try to make money in the stock market. Here's what you need to know. Table of Contents What Is Short Selling?Short Selling ExampleIs Shorting A Stock Risky?Who Should Participate In Short Selling?What Tools Can I Use To Practice Short Selling?How Can I Short A Stock On My Own? What Is Short Selling? Short selling is a short-term stock trading strategy that involves making money when a stock drops in price. This happens when an investor borrows shares of stock from another investor who owns the shares.The borrower (i.e. short seller) pays a fee as well as interest until the shares are returned. The borrower then immediately sells the stock to another buyer.To close the position, the short seller buys back the shares and returns them to the lender. Short sellers make money if the stock price dropped during the holding period. But they lose money if the stock price increased during the holding period.Short Selling Example In a theoretical example, Borrower Bjorn borrows 100 shares of XYZ stock from Lender Lucy. He borrows the stock at $10 per share and sells them on the open market to Buyer Bob who pays $10 per share.Three days later, the price of XYZ has fallen to $7 per share. Borrower Bjorn buys 100 shares of XYZ from Seller Scott for $7 a share. Bjorn returns the 100 shares to Lucy. In that transaction, Bjorn earned $3 per share for a profit of $300 (less whatever fees and interest he paid to Lucy).Of course, this example has been stylized to show how stock and money flow in a short sale. In reality, Bjorn, Lucy, Bob, and Scott don’t know each other’s names, and all transactions happen electronically.Is Shorting A Stock Risky?Shorting stock has an asymmetric risk profile. In other words, it offers a good chance at a small upside and a small chance at an infinite downside. Unlike most forms of investing, short selling can leave investors with negative money. If the price of a stock falls after borrowing it, the person shorting the stock can make a profit. In the best-case scenario, the stock's share price would drop to $0. In this case, the person shorting the stock can buy shares for $0 and keep all the money from the original sale of the stock. But in a worst-case scenario, the investor could end up bankrupt. For an example of how risky short selling be, consider the recent Gamestop (GME) stock drama. Back in January of 2021, several prominent hedge funds shorted Gamestop (GME). At the time, shares of the stock were trading at around $40 per share.But to “save Gamestop” and thwart investment bankers, retail investors banded together to raise the price of GME. As the price rose, some short sellers bought back their shares to limit their losses. But this only served to drive the price even higher, causing even steeper losses for short sellers who were stubbornly hanging on to their short positions. In the investing world, this phenomenon is known as a "short squeeze."At its peak, GME traded for $347.51 per share. That means that the investors that shorted the stock could have lost as much as $307.51 per share. If the price had gone higher, they would have lost more still.Who Should Participate In Short Selling? The Gamestop frenzy is one popular example of shorting gone awry. It clarifies just how risky it is to bet on something with an unlimited downside. The typical investor should not consider short selling as a way to make money because it involves significant downside risk with limited upside risk.This type of "investing" is typically reserved for hedge funds that are aiming to make money even when the stock market declines. It's rarely a good idea to compete against the most sophisticated investors in a game with an infinite downside.Since short selling involves asymmetric risk, it's difficult to evaluate using averages and standard deviations which are the tools of conventional risk metrics. For great reading on this topic, check out Skin in the Game by Nassim Taleb.What Tools Can I Use To Practice Short Selling? Several companies have free paper trading apps that allow retail investors to practice all manner of advanced trading strategies including short selling. ThinkOrSwim by TD Ameritrade may be the best option for aspiring traders. In addition to offering “Paper Money” accounts, its learning center has detailed articles on how to execute the trades.WeBull also offers free stock market simulators. Its free virtual trading platform allows users to explore different strategies and learn to profit from downside risks.Both of these tools give users clear ideas of how risky short selling can be. However, they also give users the option to upgrade to real accounts where users can put real money at risk. WeBull only requires $2,000 to access its margin accounts with a 6.99% interest rate. ThinkOrSwim requires $2,000 and has additional requirements depending on stock prices.How Can I Short A Stock On My Own?To short stocks, you must have a margin account. Most major brokerages and several investment apps allow retail investors who have reached a certain minimum balance to have margin accounts.Remember, margin involves paying interest. And if a position declines, the broker can make a margin call which means that you'll need to deposit more money to cover potential losses. Thus, short selling (and margin trading in general) is not something you want to do if you’re short on cash. Both ThinkOrSwim and WeBull allow clients to trade on margin. Likewise Robinhood and other major brokers give users the option to trade inside margin accounts. Compare all of our favorite trading and investing apps here >>> The post What Is Short Selling (And Should You Do It)? appeared first on The College Investor.
16 minutes | May 17, 2021
Parent Loans: Options For Parents To Pay For Their Child’s College
When a child’s financial aid package doesn’t fully cover the cost of college, lots of parents in the United States can’t simply pay the difference, either out of their regular income or their savings accounts.As a result, many parents look into taking out loans to cover the difference, either in the form of Direct Parent PLUS Loans from the federal government or private loans from banks and higher-ed lending companies.This approach may seem smart and straightforward. After all, if your child is borrowing money on the premise that it’s worth going into debt for this education, isn’t it acceptable for you to do the same?But there are significant differences between borrowing as a student and borrowing as a parent. These differences can make the short- and long-term costs of borrowing much greater for parents. Knowing the differences can help you make smart decisions about how you and your child should share the cost of their college education.Note: We don't recommend parents ever borrow to pay for their children's education (remember the order of operations to pay for college). But, many parents will still do it, so here's what you need to know. Table of Contents Direct Parent PLUS LoansShopping for Private Parent LoansThe Dangers of Midlife DebtWho Really Benefits from Parent Loans?A Better Option Than Parent Loans Direct Parent PLUS LoansThe first option you’ll encounter, possibly on the suggestion of a college financial aid officer or simply from an email from your child's financial aid office, is the Direct Parent PLUS Loan. These loans come from the federal government, much like the Direct Loans your child is offered as part of their financial aid package.There are some basic eligibility requirements for these loans. Only biological or adoptive parents qualify for these loans — not grandparents or other guardians — and you must be a U.S. citizen, U.S. national, or permanent resident.In general, you apply for Direct PLUS Loans in the same place your child did: StudentAid.gov, though in some cases, the application must go through the school itself. You are eligible to borrow the full cost of attendance, as determined by the school, minus any financial aid your child has already received, either in the form of scholarships or loans.While the guidelines state that an “adverse credit history” may prevent you from receiving a Direct PLUS Loan, that just means you can’t have any major issues, like bankruptcy, in the past five years. There are even ways to appeal that decision.You will need to apply for a new loan each academic year, if necessary, but given that your financial situation might change from year to year, this isn’t the worst requirement.Using Direct PLUS Loan MoneyDirect PLUS Loan money is disbursed directly to the school, usually twice in the academic year, and applied to the remaining balance owed. If there happens to be money left over when this is done, that money is sent to you to help pay for other educational expenses.You can also have it given directly to your child for the same purpose. Given the cost of college course materials, this can be helpful.The Cost of Direct PLUS Loans for ParentsThe relative ease of accessing this money comes at a cost. The fixed interest rate for federal undergraduate loans made to students during the 2020-2021 academic year is 2.75%. For Direct PLUS Loans to parents, it’s 5.30%.Both kinds of loans charge additional servicing fees for each disbursement, but where undergraduates are paying a little over 1% at the moment, parents are paying around 4.25% of the loan value in fees.Direct PLUS Loan Repayment OptionsRepayment is another area where federal parent loans differ from student loans. Your child doesn’t have to start paying back their federal loans until they’re out of school, but Direct PLUS Loans go into immediate repayment.You can request a deferment as part of the application process, though, which means you won’t have to start repaying the loans until six months after your child stops attending school at least half-time. This applies whether they graduate, drop out, or drop below the attendance requirement.Direct PLUS Loans are not subsidized, however, like some student loans. Since they’ll accrue interest while they’re deferred, you should consider this when assessing the long-term costs of taking out these loans. At a minimum, though, it’s probably a good idea to start the repayment process right away so that interest doesn’t accrue while your child is still in school.Student loans have a variety of repayment plans, but the options for Direct PLUS Loans are more limited. The Standard repayment term for Direct PLUS Loans is 10 years of equal monthly payments. You can also choose the Graduated plan, in which the repayment term is 10 years but the payments start out lower and increase over time. There is also the Extended plan which allows up to 25 years for repayment, if you qualify, but obviously adds greatly to the interest you’ll pay in the end.Moreover, Direct PLUS Loans aren’t eligible for income-based repayment plans like your child’s loans, and you can’t transfer your loans to them to take advantage of that program; you must repay the loans yourself. If you have multiple loans, you may be able to take advantage of an income-based plan if you refinance and consolidate, but your loans and your child’s loans can’t be combined.However, there is an option to consolidate your Parent PLUS Loan and make it eligible for Income-Contingent Repayment (ICR), which also makes it eligible for Public Service Loan Forgiveness if you (the parent) has qualifying employment.Read this article about the options for repaying your Direct Parent PLUS Loans.Final Reminder: A Parent PLUS Loan is the parent's loan. Not the student's. As such, the parent is the one who is legally obligated to pay the loan back. The parent is also the one who will face the repercussions if the loan isn't paid back. Borrow wisely.Shopping for Private Parent LoansThe other option is to take out private loans. These generally come from banks or other dedicated higher-education lenders.Your instinct may be that they must be more expensive than federal loans, and in the past, you may have been correct. But given the mandatory fees on top of the interest charged, federal loans are often more expensive, especially when interest rates are fairly low as they are right now.That being said, private loans are more restrictive than Direct PLUS Loans in other ways, and no two institutions offer the same terms, so you’ll have to shop around. The citizenship and relationship restrictions on eligibility are generally the same as with federal loans. But your credit history will matter more when applying for a private loan, influencing the rate you get and even whether or not you qualify for a loan at all.Most institutions offer variable- or fixed-rate terms and some offer multi-year loans. Some banks will discount your interest rate if you are already a customer or have your payments automatically debited from an account there, so if you’re interested in this route, it’s good to check the institutions you already bank with.Unlike Direct PLUS Loans, where the maximum loan amount is determined by the cost of the school, private lenders have fixed maximums.Private Loan Repayment OptionsHere is one thing virtually all private loans have in common: you must begin repayment immediately. While you can’t defer a private loan, some institutions offer shorter or longer repayment periods in addition to the standard 10-year term, though extending your payment plan will further increase the cost.Though it’s not something any parent wants to think about, PLUS loans are discharged if your child dies. But that’s not standard for private loans, though some offer it as a “benefit.”Private Parent Loan LendersThere are several lenders who will make private loans to parents. You can find our full list of the best private student loans here. Two of the major private parent loan lenders include College Ave and Citizens Bank. Both are listed on the Credible comparison platform. See how these lenders compare here >>State-Based LendersOne option to consider that falls somewhere between “federal” and “private” is taking a loan from a state-based educational lending institution. These are often private or government-affiliated nonprofits chartered by the state to provide lending for college.Though most of them focus on lending directly to students, both undergraduates and graduates, some offer parent loans that offer the benefits found in both private and federal loans. Two popular state-centered lenders are RISLA and Brazos.Rhode Island’s RISLA offers some of the opportunities for discounting that you’d find with a bank loan while offering repayment flexibility like that of a Direct PLUS Loan. See how RISLA compares to other options here >>Brazos offers Texas residents great rates on Parent Loans. Get a quote from Brazos here >>Check out your state’s options before you make a decision. You can find a full list of student loan programs by state here >>The Dangers of Midlife DebtUltimately, though, the question isn’t, “Should I take out Direct PLUS Loans or private loans?” It’s really, “Should I take out loans to pay for my child’s college education at all?” For most financial advisers (including us), the answer is a resounding, “No!”The most obvious reason to avoid taking out loans for your child’s education is the cost, but just looking at the dollar amounts alone isn’t enough. When you take out a car loan or a mortgage, you try to make an educated prediction about your personal finances over the life of the loan to determine whether it’s a reasonable risk. Parent loans may seem like a reasonable risk, especially if you’ve paid off other debt.But the repayment term for these loans will often overlap with your last decade of retirement contributions. If these loan payments cut into those savings — or worse, come out of your retirement benefits — they can significantly impact your own financial stability.While your child may be eligible for loan forgiveness if they go into public service or teaching, that forgiveness does not extend to loans you took out on their behalf.Moreover, these options are most often appealing — and seemingly most necessary — for low- and middle-income borrowers, but the Direct PLUS Loan comes with very little debt counseling and does not take into account how much money it’s reasonable for someone to take on with your debt and credit rating. With no caps on borrowing beyond the school’s stated cost, this means that parents can end up taking on far more debt than they can handle at a time in their lives when many should be avoiding debt.This problem is exacerbated by the fact that most parents take these loans out one year at a time, making it harder to grasp at the beginning what an expensive approach this is. Taking out a $10,000 loan when your child starts college might seem reasonable. But if you have to do that for four years, that’s $40,000 in principal. Take into account that tuition is likely to rise over those four years, and the cost of deferring repayments for four years, and this can be a staggering amount of debt.And if you run out of money during your retirement, there are no easy loan options to help you.Who Really Benefits from Parent Loans?Some argue that parent loans serve a valuable purpose, making higher education available to lower-income families. But others make the argument that these parent loans can be seen as a kind of predatory lending.For parents who cannot draw on savings or tap into other resources for credit, the government freely loans money — at a cost. But it’s far less forgiving with parents than students when it comes to repayment, and if you cannot make your payments, the government will not hesitate to take them out of your wages, Social Security checks, or tax refund.Moreover, though the Department of Education penalizes colleges and universities when a certain percentage of their students default on loans, there are no such penalties for parent defaults. When your child’s school urges you to consider parent loans, they’re suggesting the option that brings them the greatest benefit while asking you to bear all of the risk.A Better Option Than Parent LoansThe other options for parents interested in making up the gap in funding often aren’t any better, though, especially for low- and middle-income families.One suggestion is to take out a home equity line of credit. Others say dip into your Roth IRA. For many, these are not possible, let alone advisable. And the suggestion that you should have opened up a 529 college savings account isn’t really helpful at this point in the process.It’s easy to see why parent loans seem like the only option. But there’s one more option, and it’s the smartest one in most, though maybe not all, situations.Your child can focus on work, scholarships, or even take a gap year to build up some savings to pay for school. Check out our full order of operations to pay for college.Even in today’s job market, your child will hopefully have many more years to pay back their loans. They will be able to get loans with lower interest rates, lower fees, and more time and flexibility for repayment, including loan forgiveness programs.You can assist them in other ways, by helping them minimize their own college debt, make their loan payments if you are in a position to do so without impacting your own stability, and by having an open conversation with them about the risks and rewards of borrowing money in general. The post Parent Loans: Options For Parents To Pay For Their Child’s College appeared first on The College Investor.
15 minutes | May 12, 2021
IBR vs. PAYE | Understanding Income-Driven Repayment Plans
Do you have big student loans, a lower income, or both? If so, you've probably seen the acronyms IBR and PAYE tossed around as you look for ways to make your budget work without defaulting on your debt.Both IBR and PAYE are income-driven repayment plans. This means they can offer lower monthly payments and, eventually, loan forgiveness to people that meet their standards. We’ve mentioned them on multiple occasions. But what are the similarities and key differences between these income-driven repayment plans? In this post, we provide a head-to-head comparison of IBR vs. PAYE to explain exactly what these programs are, where they come from, and how they can help you manage your student debt. IBR vs. PAYE: Understanding Income-Driven Repayment Plans What Is “Discretionary Income”?IBR: Everything You Need To KnowPAYE: Everything You Need To KnowWhat About REPAYE?Are There Downsides To Income-Driven Repayment Plans?IBR vs. PAYE: Final Thoughts What Is “Discretionary Income”? Both IBR and PAYE rely on “discretionary income” to calculate your payment. So it’s worth understanding what this is before we get into how the programs work. “Discretionary income” has a technical definition under federal education law. The government will calculate it for you when you apply for any income-driven repayment plans. But you can estimate it now:1Calculate your adjusted gross income (AGI). That’s the money you pay federal taxes on, as distinct from your total gross income.2Find the federal poverty guidelines for your location and family size and multiply that number by 1.5.3Subtract #2 from #1 to find your annual discretionary income, then divide by 12 for your monthly discretionary income. Basically, the government thinks some level of income should not be available for student loan repayment. Whereas anything you make above that line is fair game. Check out our discretionary income calculator >>>IBR: Everything You Need To Know “IBR” stands for “Income-Based Repayment." Sometimes people talk about “IBR” casually to mean all types of income-driven repayment plans. But it’s actually a specific federal program for certain types of borrowers. IBR has been around since 2007 when President George W. Bush signed a big overhaul of federal financial aid practices. It was one of the first of a group of programs that recognized the reality that some people take out a lot of debt in anticipation of an income they just can’t get.There’s almost no way to discharge student debt in bankruptcy. But these repayment plans at least offer some kind of way forward for borrowers who have federal (but not private) student loans.IBR: Who And What Loans Are Eligible? The federal government maintains a big guide to all the various income-driven repayment plans. As always, make sure to check the source to see if anything’s changed! But as of right now, you can apply for IBR if:You borrowed through the Direct Loan or Federal Family Education Loan (FFEL) programs.Your loans are Direct Loans (subsidized or unsubsidized), Federal Stafford Loans (subsidized or unsubsidized), Direct or FFEL PLUS Loans made to students, or Direct or FFEL Consolidation Loans that do not include Parent PLUS Loans.Your payment amount under IBR’s calculations would be less than your payment under the standard 10-year repayment plan. Note that Parent PLUS loan borrowers are kind of screwed by this program (as well as by PAYE below.) It’s generally a lot easier for a former student to get loan relief. So be really careful about taking out loans if you’re a parent, especially if you don’t feel like your income is secure.IBR: How Payments Are CalculatedIBR payments are calculated based on 10 or 15% of your discretionary income. And payments recalculate every year based on updated information you provide about your income and family size.Whether your payment is 10% or 15% of your discretionary income depends on when you took the loan out. If you took it out after July 1, 2014, you’re in luck. If you have an older loan and qualify for PAYE you’ll be in better shape there (see below).If your 10% to 15% payment doesn’t cover the interest on your loans, they will keep growing. Let’s say you can only afford $100 a month (10% of your discretionary income) and your loan accumulates $200 of interest a month. That leaves you with $100/month of what’s called “excess interest.”For subsidized loans, IBR will forgive all of that unpaid interest for the first three years. After that, there is no interest subsidy. If your income grows to the point where you leave the program, excess interest will be capitalized.IBR: How To Apply You can apply for IBR through the Department of Education at this link. (Note: you have to submit a separate application for each loan servicer, if you have more than one!) This application actually is good for all the income-driven repayment plans, including IBR. You can ask for a specific program or allow your student loan servicer to determine what you’re eligible for.You’ll need to submit information about your family size, location, and adjusted gross income so that the government can calculate your payment. If your AGI is pretty close to what’s been on your recent federal tax returns, this will be an easy process. But if you’re applying because of a recent job loss or income drop, you’ll need to provide some alternative documentation, like pay stubs. IBR: Payoff And Loan Forgiveness Getting the most out of IBR loan forgiveness depends heavily on keeping up to date on your paperwork. You have to recertify your income and family size every year, reporting any changes. If you miss the deadline, accrued interest will be capitalized (VERY BAD). Your monthly payment will revert to what it would be under the standard 10-year plan. So seriously, don’t miss the deadline.However, if you start IBR today, and keep making your payments for 20 or 25 years (for loans made before July 1, 2014), any remaining balance will be forgiven. The only caveat is that you may have to pay income taxes on any forgiven debt.PAYE: Everything You Need To Know “PAYE” stands for “Pay As You Earn.” It’s been around since 2012 and was signed into law as part of another big student loan reform under President Obama.While you’re in the program, your monthly payments will be a maximum of 10% of your discretionary income. Below, we look at each of the same factors as above to make it easier to directly compare IBR vs. PAYE.PAYE: Who And What Loans Are Eligible? When you compare the eligibility standards of IBR vs. PAYE, you'll find that PAYE is more strict. As of writing, here are the requirements:You must be a new borrower on or after October 1, 2007 (being a new borrower means that at that time you didn’t have an outstanding balance on an earlier Direct Loan or FFEL loan).You must have received a Direct Loan disbursement on or after October 1, 2011.You must have a Direct subsidized or unsubsidized loan, a Direct PLUS loan made to you as a student, or a Direct Consolidation loan that does not include a PLUS loan made to a parent.Your payment amount as calculated by PAYE must be less than you would be paying on the standard 10-year plan. Once again, careful before you take out a Parent PLUS loan for your kids. You won't be able to join PAYE or IBR either. The only income-driven repayment that you can qualify for as a Parent Plus borrower is the (much less attractive) Income-Contingent Repayment (ICR) plan. And you won't even qualify to join ICR until after you've consolidated your loans into a Direct Consolidation Loan.PAYE: How Payments Are Calculated Your monthly payment will be 10% of your discretionary income. As with IBR, if this payment doesn’t cover the interest on your loans, unpaid interest will accumulate. And, like IBR, PAYE will cover all of the excess interest on subsidized loans for the first three years. PAYE is unique, though, in how it handles unpaid interest if your income grows to the point where you no longer qualify to make income-based payments. In this case, the maximum that can be capitalized is 10% of your original balance. It's important to note, however, that this benefit only applies if you stay on the PAYE plan. If you leave the plan (for any reason), there is no limit to the amount of unpaid interest that can be capitalized.PAYE: How To Apply You can apply for PAYE at this link. (Note: you have to submit a separate application for each loan servicer, if you have more than one!) This application actually is good for all the student loan income driven programs, including IBR; you can ask for a specific program or allow your student loan servicer to determine what you’re eligible for.You’ll need to submit information about your family size, location, and adjusted gross income so that the government can calculate your payment. If your AGI is pretty close to what’s been on your recent federal tax returns, this will be an easy process. If you’re applying because of recent job loss or income drop, however, you’ll need to provide some alternative documentation, like pay stubsPAYE: Payoff And Loan Forgiveness As with IBR, you have to recertify your income and family size every year. Do not miss the deadline. If you do, accrued interest capitalize. Plus, your payment will be reset to what it would be under the standard 10-year repayment plan. Very not good! Keeping up with these plans’ paperwork is key.The good news is that if you still have debt left after 20 years of PAYE payments, it will be forgiven. This is another one of the big pluses of PAYE in the IBR vs. PAYE comparison. While borrowers with older loans may have to wait for 25 years to earn forgiveness on IBR, all PAYE participants receive 20-year terms.What About REPAYE?In this article, we've focused our comparisons on IBR vs. PAYE. But these aren't the only income-driven repayment plans available today. In addition to ICR (which should really only be used by Parent PLUS borrowers), there's the Revised Pay As You Earn (REPAYE) plan.REPAYE was instituted in 2015. It expanded the PAYE program to borrowers that didn’t meet some qualifications for original-flavor PAYE. First, PAYE required you to be a fairly recent borrower. But anyone can qualify for REPAYE, even if you took out your loans in the 1990s or 2000s (or even earlier).Also, REPAYE could be a good choice if your income is a little higher. You can only get into IBR or PAYE if your payments would be lower than they'd be on the standard 10-year plan.With REPAYE, you can be eligible even if you’re not at that point. This might be beneficial if you anticipate your family size increasing or your income dropping. You can start the 20-year clock on making REPAYE payments now instead of waiting. And your payment will always still be capped at 10% of discretionary income.REPAYE differs in a few other ways from IBR and PAYE:Your spouse’s income will always figure into determining your discretionary income, even if you file taxes separatelyYou may end up paying less interest with REPAYE because it's the only plan that offers an interest subsidy on unsubsidized loans. And this subsidy never goes away.Graduate borrowers on REPAYE must make payments for 25 years before you they can earn forgiveness. With PAYE, both undergraduate and graduate borrowers become eligible for forgiveness after 20 years. For most people, PAYE is probably a better deal if you qualify. But, if you don’t, REPAYE might be a better option than IBR.Are There Downsides To Income-Driven Repayment Plans? Unfortunately, yes. Income-driven repayment plans can be great options if you have a lot of debt relative to your income. But you should know that there are downsides.First, you'll end up paying more over time than you would if you just paid off your loans in ten years (or less). This is because you’ll be paying for 20 or 25 years. So even with a lower payment per month, it’s going to add up.Second, as of right now, you may have to pay income taxes on any debt that’s forgiven. That could be a HUGE problem if your debt keeps growing over time and what ends up getting forgiven is tens to hundreds of thousands of dollars. This is a long way in the future for most borrowers. But it’s good to be aware of it and keep up to date with the latest student loan legislation.Third, relative to standard payment plans, income-driven repayment plans are just more of a pain. They require a lot more paperwork to get started. And you have to keep recertifying and providing new information every year. None of these downsides should stop you from pursuing IBR or PAYE if you qualify. These programs can be lifesavers if you simply can’t afford the standard payments. But if you can make standard payments, those are probably a better option to avoid these downsides.IBR vs. PAYE: Final Thoughts If you're struggling with huge loans and a low income, the PAYE or IBR income-driven repayment plans could massively reduce the amount you have to come up with each month.They won’t solve all your problems. And even 10% of your discretionary income might end up feeling like a lot. But they can prevent you from ruining your credit. And they do provide a path forward to forgiveness even though it's pretty far in the future. The post IBR vs. PAYE | Understanding Income-Driven Repayment Plans appeared first on The College Investor.
6 minutes | Jul 28, 2020
What Is A Grad PLUS Loan? | Everything You Need To Know
A Grad PLUS loan is a Department of Education loan that can cover up to the full cost of attendance for graduate or professional students. The post What Is A Grad PLUS Loan? | Everything You Need To Know appeared first on The College Investor.
6 minutes | May 7, 2021
The Beginner’s Guide To Selling Put Options
Many traders are familiar with buying options. Buy a call if you believe the market will go up and buy a put if you think the market will go down. In general, if the market goes above your call strike or below your put price, you make a profit. A few other variables come into play in determining if the trade will be profitable or not—especially theta or time decay of the option.Both of the above strategies take a directional view of the market. One view needs the market to go up while the other needs it to go down. For call buyers, if the market remains where it is or only goes up a little, their call will expire worthless, creating a loss unless they can buy it back, which will generate a smaller loss.The game of buying options is one with little margin of error. But what if you could build in some margin of error so that the market doesn’t have to move so much for your option to generate a profit? Selling put options is one such strategy. In this article, we'll explore what put selling is and break down its main benefits and risks. Table of Contents Selling Put OptionsWhat Is Premium?Does Selling Put Options Have Unlimited Risk?Final Thoughts Selling Put Options Selling put options is a strategy that isn’t as familiar as option buying. Some traders know about put selling but view it as extremely risky. Some even go so far as to say there is unlimited risk involved when you sell puts.The specific kind of "dangerous" put selling that these traders are referring to is naked puts. Naked put selling is when the put is sold outright without owning the stock (i.e., covering the option). The opening transaction on a put sell is to sell rather than buy a put option. When selling to open a position, you're shorting. In this case, the trader is shorting the put. For those who are familiar with shorting stock, there are some similarities. A trader who shorts a stock is hoping that the stock price goes down. This trader has a short bias view of the stock. The stock going down is the only way he can make money on the trade. For put sellers, it isn’t as simple as that.Put selling takes a neutral to bullish view of a stock. That may sound contrary to shorting. If we short the option, aren’t we hoping that the stock will go down? No. We are hoping that its option premium goes down. All the way to zero means the trade has successfully and completely played out. An additional benefit of allowing the premium to fall so low is that many brokers don’t charge an option contract fee when the premium is at or below 0.10.What Is Premium? Every options trader deals with premium. When you buy a stock, the trade will become profitable when the stock price moves above your entry price. An option is a derivative of the stock. Instead of profiting directly from the stock price movement, the options trade profits on moves in the option’s price, which is called premium. Because we are shorting the put, we are hoping for the option's price to decrease (i.e., we are hoping for the premium to decrease).Let's look at an example of a put selling trade. Today is 4/19/21, and Microsoft is trading at 250. A put seller wants to sell puts on the May 07, 230 strike. The May 07, 230 put option is trading for 0.64 x 0.72. The trader puts in a limit order for 0.68 on five contracts. The order executes at that price.Over the next few weeks, the price of MSFT goes to 260 and then down to 240. The option premium has dwindled to 0.35 x 0.40, creating an unrealized gain of ~0.30 or 5 x 0.30 x 100 = $150. If MSFT can stay above 230 by May 07, the trader will capture full premium, resulting in a profit of 0.68 x 5 x 100 = $340. Of course, the trader can buy the option back at 0.38, closing out the trade and making a little less profit.Related: Analyzing And Trading Options 101Does Selling Put Options Have Unlimited Risk?Does put selling carry unlimited risk? No. The confusion in that statement comes from equating selling put options to selling stocks short.Yes — selling stocks short has unlimited risk. However, selling a put option on MSFT at the 230 strike is committing to buy MSFT stock at a share price of $230. In the worst-case scenario, MSFT drops to $0 before the seller executes the contract. This would lead to a loss of about $23,000 (230 x 100 = $23,000) minus the premium that you received.That's obviously still a massive loss. But the odds of MSFT dropping to $0 are incredibly low. Plus, you'd always have the option to close out your position before the stock price dropped that far to limit your losses. It's also highly likely that the seller would choose to execute the contract to lock in profits well before the stock reached $0.In any case, the maximum that a seller can lose on a put sale will always be a defined number. On the other hand, selling naked calls does have unlimited risk.Selling puts far out of the money (far away from the current stock price) provides for a lot of padding. It allows the stock price to move around quite a bit. But selling puts far out of the money is very difficult. The difficulty comes from finding good enough premiums to make the trade worth it.Final Thoughts Put selling is an income-collection strategy. The upside on the trade is capped at the entry price of the option. Unlike being long a stock, a put seller can’t participate in any upside movement of the stock. But for those who can find far out of the money options and have the patience to let the premiums dwindle, it can be a rewarding trading strategy. Check out our list of the best places to trade options >>> The post The Beginner’s Guide To Selling Put Options appeared first on The College Investor.
5 minutes | May 5, 2021
What Is A Clearinghouse?
Most investing brokers, including investment apps, use clearinghouses to ensure that financial transactions settle correctly.While most stock and ETF sales settle in a matter of seconds, these behind-the-scenes players play an important role in keeping the financial markets safe and secure.If you use investment apps like Robinhood, Stash, or others, the app enlists the help of a clearinghouse to ensure all transactions take place. Here’s what you need to know about these independent companies that are involved in all your securities sales. Table of Contents What Is A Clearinghouse?Self-Clearing vs. Independent ClearingHow Do Clearing Firms Work For Investment Apps?Should You Choose An Investment App Based On Its Clearinghouse? What Is A Clearinghouse? A clearinghouse (also called a clearing firm) is an independent company that matches buyers to sellers in a securities transaction. By law, all clearing firms must be members of SIPC (Securities Investor Protection Corporation) so that they can offer financial protection to brokers.These clearing firms protect buying and selling brokerages if one party is illegally trading or if the brokerage goes bankrupt. They also take care of the administrative tasks associated with most financial transactions. Clearinghouses are essential to keep securities markets running smoothly.Whenever someone wants to buy or sell a financial product, a clearinghouse is responsible for everything related to ensuring that a securities transaction happens. Without clearinghouses, brokers would need to call one another on the phone and email stock certificates to one another (after checks settled at the banks). But thanks to clearing firms, buying and selling stocks takes mere seconds.Clearinghouses take on the risk of stock transactions while they are in the transaction. Often, they'll only be responsible for a matter of seconds. However, in difficult or complex transactions, the firm may take on more responsibility.Self-Clearing vs. Independent ClearingThere are two basic types of clearinghouses. The first type are independent clearinghouse which with many broker firms. Apex Financial is an example of an independent clearinghouse. This company is the clearinghouse for apps like:M1 FinanceBettermentWealth SimpleAnd many other small companiesBecause Apex Financial is an independent clearing company, it charges clients to settle transactions on their behalf (it also requires firms that they work with to maintain enough capital/money to handle the transaction they process). The companies that use Apex Financial typically pass on costs to their clients through management fees, transaction fees, or other types of fees. However, as an investor, you’ll never see a fee directly charged from Apex financial.The other type of clearinghouse is a self-clearing firm. Many major discount brokers have their own private clearinghouses. These companies have enough trading volume to justify owning an independent clearing firm to settle their transactions. Examples include:TD AmeritradeFidelityVanguardRobinhoodAnd many other large brokersSelf-clearing can mean lower trading costs or lower management fees for clients, but that isn’t always the case. The exact price you pay for your investments depends on the fee structure at a firm.How Do Clearing Firms Work For Investment Apps? For an investment app to function properly, it needs to partner with a clearinghouse. You can find out the exact company that services your app by searching “Your Firm, clearing corporation”. These are some of our favorite investment apps and their associated clearing firm.Investment AppClearinghouseM1 FinanceApex ClearingFidelityNational Financial Services, LLCTD Ameritrade TD Ameritrade Clearing, Inc.* (Disclosures still indicate that TD Ameritrade uses its own clearinghouse even after being acquired by Charles Schwab)RobinhoodClearing by RobinhoodVanguardVanguard Brokerage ServicesWebull Apex ClearingCharles Schwab Charles Schwab & Co., Inc.Public Apex ClearingE*TRADE E*TRADE Securities, LLCShould You Choose An Investment App Based On Its Clearinghouse? Typical investors, even those buying individual stocks, are unlikely to care much about which clearinghouse a company uses. Most trades are executed within a matter of seconds regardless of which clearing firm is doing the work behind the scenes.However, high-frequency traders, especially those that use margin accounts need to consider clearing firms as well as brokers. A clearinghouse’s rules influence rules related to margin including the assets required to be a margin client.Clearinghouses are also important if you tend to buy stocks with very low trade volume. Since shares of these stocks can be harder to buy and sell, the clearinghouse becomes more important in the matching process. The post What Is A Clearinghouse? appeared first on The College Investor.
8 minutes | May 3, 2021
Where To Find Medical Residency And Relocation Loans
As you explore your options to help you pay for your stint in a medical residency, you may quickly realize that traditional education loans won't be much help to you. While completing a residency is required to become a medical doctor, it's not technically considered an education expense. So fourth-year medical students may need to look for medical residency and relocation loans that are designed to help fund this chapter of their training. The good news is that you’ll find many options for medical residency and relocation loans. But where should you start your search to ensure you get a good deal? In the article below, we take a closer look. Table of Contents What Is A Medical Residency And Relocation Loan?Where To Find Medical Residency And Relocation LoansSallie Mae Medical Residency And Relocation LoansDiscover Residency LoansCitizens Medical Residency LoansLaurel Road Personal Loans For Residents And FellowsShould You Apply?Final Thoughts What Is A Medical Residency And Relocation Loan? First, let’s define what medical residency and relocation loans are. This is a unique type of private student loan that helps you cover the costs of becoming a doctor beyond your classroom expenses. You can use the funds you obtain through a medical residency and relocation loan to cover the following costs:Residency application feesInterview travel expensesMoving and shipping costsInternship expensesTextbooks and study guidesBoard exam review courses and fees Most student loan providers will not allow you to borrow money beyond the cost of your traditional schooling. However, it is easy to see how the costs beyond the classroom can add up quickly on your path to becoming a doctor. Suppose you are looking at the upcoming expenses you face as you pursue a residency and wonder how on earth you will pay for it all. In that case, a medical residency and relocation loan could be the answer. After all, most medical students don’t have thousands of dollars to cover travel and moving expenses as they start the next chapter. Instead of letting your minimal resources hold you back at this critical juncture in your career, a medical residency and relocation loan can help you move forward confidently.Where To Find Medical Residency And Relocation Loans Convinced that medical residency and relocation loans are worth looking into? Here are the top options to help you find a competitive loan that meets your needs.Sallie Mae Medical Residency And Relocation Loans Sallie Mae is a recognizable name in the private student loan space. So it's not surprising that they would offer medical residency and relocation loans. Through Sallie Mae, you can borrow up to $30,000. The funds can be used to cover many expenses related to your medical residency, including moving costs, travel costs, and board examination fees. These loans can be used for three different types of residencies - medical, podiatry, and veterinary. With that, many students can find the resources they need through this loan.Sallie Mae offers competitive rates. If you go with this loan, you’ll enjoy a deferred repayment. You won’t have to make any payments while you are in school if you are enrolled at least half time. Plus, there is a grace period of three years after you graduate or nine months if you leave school or drop into a less than half-time status.Read our full Sallie Mae review here.Discover Residency Loans Discover residency loans offer students an option with zero fees, which means no application, origination, or late fees will come your way. You can borrow up to $18,000 through this option for several residency types including allopathy, dentistry, optometry, osteopathy pharmacy, podiatry, and veterinary medicine. Other students in their residency periods in the field of nursing, occupational therapy, physical therapy, or physician assistants can borrow up to $5,000. In order to apply, you must be currently enrolled in your senior year of a graduate health professionals program or have graduated from medical school in the past 12 months. Once you take out the loan, you can use it to cover your residency, internship, relocation expenses, and board exam fees. You won’t have to make payments until nine months after you graduate. And the standard repayment term is 20 years. Check our out full Discover student loans review here.Citizens Medical Residency Loans Citizens Bank allows students enrolled half-time in their second or later year of medical school to take out medical residency loans. You will also qualify if you graduated within the last 12 months. However, you must plan to participate in a residency after graduation. The residencies allowed include medical, dentistry, podiatry, veterinary, osteopathy, or optometry. You’ll be able to borrow up to $20,000 to cover your residency-related expenses. If you take out this loan, you can defer repayment while you're in school. Additionally, you can request an extension on the deferment period for up to 48 months while completing your residency program. Check out our full Citizens Bank review here.Laurel Road Personal Loans For Residents And Fellows Laurel Road offers a unique spin to residency loans. If you are a physician or dentist within 12 months of completing your training with a signed contract to practice upon completion, then you can borrow up to $80,000. If you don’t have a signed contract while you are still in training, then you can only borrow between $30,000 and $45,000 based on the training year you are completing. For example, if you're a fellow, you can borrow up to $45,000. If you are in your first year of training, then you can only borrow up to $30,000. When you take out this personal loan as a resident or fellow, you can use the funds for almost anything. As a personal loan, you won’t have to use the funds exclusively for your residency expenses. Instead, the funds can also be used for making home improvements or funding a major expense. The repayment terms for these loans range from 5 to 7 years. And the payments can be as low as $25 per month. The low monthly payment is a nod to the investment you're making in your financial future.Check out our full Laurel Road student loans review here.Should You Apply? As you approach the final stretch of your medical education, you may see expenses looming on the horizon. If you can't cover those expenses out-of-pocket, you may have to consider medical residency and relocation loans as an option. Of course, you should do everything in your power to avoid taking on more debt. But it might be unavoidable in some cases. If you do decide to apply for a residency and relocation loan, don’t ask for more than you really need. Take some time to tally up the projected costs of your residency and relocation before deciding on a loan amount. You won’t want to be stuck taking out a larger loan than you need to. Final Thoughts Medical residency and relocation loans can help medical school grads cover the costs of an important point in their educational journeys. If you decide that taking out one of these loans is right for you, take the time to shop around for the best rates and terms before signing on the dotted line. The post Where To Find Medical Residency And Relocation Loans appeared first on The College Investor.
5 minutes | Apr 28, 2021
How Much Do Federal Student Loan Servicers Make Per Loan?
Borrowers often believe that student loan servicers get to keep the interest on the loan. But it doesn’t work like that.Servicing companies collect payments of principal and interest on behalf of the loan holder (the Department of Education in the case of federal loans). In exchange, they're paid a monthly fee for each loan serviced.So how much do federal student loan servicers make per loan? Below, we explain how their fees are determined and how that can impact the customer service and advice they offer. How Much Do Federal Student Loan Servicers Make? How Loan Servicing Fees Are DeterminedUnit Cost BasisConsequences Of The Fee ScheduleFinal Thoughts How Loan Servicing Fees Are Determined There are two approaches to specifying how much federal student loan servicers make per loan. These are:Percentage basis — A small percentage of the outstanding loan balanceUnit cost basis — A fixed dollar amount Originally, federal loan servicers like Fedloan and Nelnet were paid a fixed percentage of the outstanding loan balance per year. 90 bp (0.90%) was typical. Since this fee is based on the loan balance, it would decrease as the loan was repaid.Today, servicers are paid a fixed dollar amount per loan each month, regardless of the loan balance. The amount of the flat fee varies, depending on whether the loan is current or delinquent.Unit Cost Basis Table #1, below, shows how much federal student loan servicers make each month. (The third column shows the annualized amount.) This table is based on the 2014 contracts for: Navient, Great Lakes, Nelnet, and PHEAA (Fedloan Servicing).Typically, a contract is good for five years, but may be extended by the U.S. Department of Education. Loan StatusMonthly AmountAnnualized AmountIn School$1.05$12.60Grace Period$1.68$20.16In Repayment$2.85$34.20Deferment$1.68$20.16Forbearance$1.05$12.60Delinquent (6-30 Days)$2.11$25.32Delinquent (31-90 Days)$1.46$17.52Delinquent (91-150 Days)$1.35$16.20Delinquent (151-270 Days)$1.23$14.76Delinquent (270+ Days)$0.45$5.40 The loan servicers are also paid $27.35 per consolidation. When a loan is consolidated, the loan servicing usually is assigned to a different loan servicer. These servicing fees are somewhat different than in the 2009 contract, which as shown below in Table #2.Loan StatusMonthly AmountAnnualized AmountIn School$1.05$12.60Grace Period$2.11$25.32In Repayment$2.11$25.32Deferment$2.07$24.84Forbearance$2.07$24.84Delinquent (31-90 Days)$1.62$19.44Delinquent (91-150 Days)$1.50$18.00Delinquent (151-270 Days)$1.37$16.44Delinquent (270+ Days)$0.50$6.00 The fees for borrowers in repayment were capped at 3 million borrowers. Beyond that limit, the fees were $1.90 per borrower per month. Similarly, the fees for borrowers in forbearance were capped at 1.6 million borrowers. Beyond that limit, the fees were $1.73 per borrower per month.The 2011 contract for the not-for-profit loan servicers, which was last updated in 2019, have slightly higher fees, as shown in Table #3 below.Loan StatusMonthly AmountAnnualized AmountIn School$1.15$13.80Grace Period$2.32$27.84In Repayment$2.32$27.84Deferment$2.28 $27.36 Forbearance$2.28$27.36Delinquent (31-90 Days)$1.78$21.36Delinquent (91-150 Days)$1.65$19.80Delinquent (151-270 Days)$1.51$18.12Delinquent (270+ Days)$0.55$6.60Consequences Of The Fee Schedule If a borrower is current for the entire duration of a 10-year repayment plan, the loan servicer will receive $342.00 over the repayment term, plus $47.25 for the in-school period and $10.08 for the grace period. That’s a total of $399.33 per borrower.If the borrower is current for the entire duration of a 25-year repayment plan, the loan servicer will receive $855.00 over the repayment term, plus $47.25 for the in-school period and $10.08 for the grace period. That’s a total of $912.33 per borrower.Customer Service But how much do federal student loan servicers make if the borrower is late with a payment or in a deferment or forbearance? In that case, they get paid a lot less, potentially as little as $54.00 over a 10-year repayment term.If a borrower is 271 or more days delinquent, the $0.45 servicing fee is not enough to cover the cost of a 5-minute call to the borrower or the postage for a letter to the borrower.This is why loan servicers use a lot of automation. It also means that the servicing fees for borrowers who are current subsidize the cost of servicing the borrowers who are delinquent.Repayment Recommendations Some borrower advocates have argued that there is an incentive for loan servicers to push forbearances over Income-Driven Repayment (IDR) since it takes less time to explain a forbearance. That idea may have certainly had merit in the past. In the 2011 contract, for example, you'll notice that servicers only received four cents more for loans "in repayment" than those in forbearance.But under the most recent fee structure (shown in Table #1 above), a for-profit loan servicer earns more than 2.5 times as much per month from a borrower in an IDR plan. In fact, the current fee schedule pays more for almost every loan status than for a loan in forbearance (with the only exception being a borrower who is 270+ days delinquent). The fee structure also provides loan servicers with a financial incentive to help borrowers who are delinquent back into good standing, since they get paid more for a borrower who is current than for a borrower who is delinquent.Final Thoughts Loan servicers have a financial incentive to keep as many borrowers current as possible and to keep telephone calls as short as possible. Loan servicers also have a financial incentive to keep borrowers in repayment for as long as possible. They'll earn more from a borrower who is in an extended repayment plan than from a borrower who is in a standard repayment plan. They earn the same monthly fee, but they earn it over a longer period of time. Learn how to pick the best student loan repayment plan >>> The post How Much Do Federal Student Loan Servicers Make Per Loan? appeared first on The College Investor.
8 minutes | Apr 27, 2021
10 Best Personal Finance Books of 2021 (That Will Change Your Life)
There is a common thread amongst those who have taken radical steps to change their financial situation for the better: they read a book that changed their lives.And so perhaps you have landed here because you are ready to shift your financial life onto the positive end of things. You are in the right place.In this post, I share 10 of the best personal finance books that will change your life in 2021 and beyond. While some of these are new releases, most of these books were written years ago, but they contain timeless lessons.Either way, you cannot lose by reading any of the books on this list. Best Personal Finance Books Of 2021 1. I Will Teach You To Be Rich2. The Wealthy Gardener3. The Total Money Makeover4. The Millionaire Next Door5. Broke Millennial Takes On Investing6. Why Didn’t They Teach Me This in School?7. The Simple Path To Wealth8. Financial Freedom9. Rich Dad Poor Dad10. The Personal MBA 1. I Will Teach You To Be RichI Will Teach You To Be Rich was released a decade ago by Ramit Sethi, but has just been re-released and updated for 2019 - with new conversations about robo-investing, FIRE, and more!This game-changing personal finance book. It is based around systems and tools that can help you conquer your financial goals - in ways that many wouldn't expect.Ramit presents ideas in a different way than many financial experts - and focuses on big wins that will actually make a difference in your total financial life, versus trying to starve your way to financial freedom. I also really appreciate how Ramit calls out companies that are terrible, and shares exactly what he uses to run his finances.Read our full I Will Teach You To Be Rich Book Review here.Check out I Will Teach You To Be Rich here >>2. The Wealthy GardenerThe Wealthy Gardener was released in 2018 and was written by John Soforic — a business owner. He achieved financial freedom at age 50 and wrote this book to his college-aged son on what it means to become prosperous.The book is written in more of a “parable” style because of the intent of the author — to give advice to his son on what it takes to succeed financially.If you like to read books in this format, this will be a good one for you. Plus, any chance we see to help millennials and other adults warms our heart.Check out The Wealthy Gardener here >>3. The Total Money MakeoverThe Total Money Makeover is a classic personal finance book written by Dave Ramsey.If you need a practical step-by-step guide to paying off debt and building wealth, this book is a must-read.Over the years, Dave has received some criticisms for his ideas beyond tackling debt (including investing and insurance), but when it comes to getting out of debt, there is really no better mindset and resource than The Total Money Makeover.Beyond the book, Dave has a huge number of followers that motivate and inspire each other online - including instagram and Facebook.Check out The Total Money Makeover here >>4. The Millionaire Next DoorThe Millionaire Next Door is one of the older books on this list but the lessons in that book are timeless.In The Millionaire Next Door, doctors Thomas Stanley and William Danko interviewed real millionaires to get their insights on what it took for them to get to that status.A lot of the lessons in that book are groundbreaking and ridiculously simple when you read it for the first time. And to be honest, most of the world’s best-kept secrets are very simple.We love this book and it even inspired us to write about the secrets your millionaire neighbor isn't telling you.Check out The Millionaire Next Door here >>5. Broke Millennial Takes On InvestingBroke Millennial Takes On Investing is a book that just came out that focuses almost exclusively on investing. We love this because too many millennials are avoiding investing for a variety of reasons.She tackles the problems facing young investors head on - with a focus on making the potentially complex world of investing easy. As a follow up to her first book, Broke Millennial, her focus is on young adults that know they "should" be doing something, but arean't.If you're looking for a book that makes investing topics easy (and easily readable), check out this book.Check out Broke Millennial Takes On Investing here >>6. Why Didn’t They Teach Me This in School?This book has been recommended by eBay, Forbes, and Lifehacker as one of the top graduation gifts for college graduates. And for good reason. Most of us never learned about how to manage our money while we were in school.Why Didn’t They Teach Me This in School by Cary Siegel attempts to reverse that with 99 useful money lessons that will set you up for life.As someone who helps people with money consistently, I can't understand why we teach the subjects we do in high school but mostly ignore the basics of money management. This book seeks to change this. While you may not agree with all 99 ideas and lessons, a large portion of this book is solid advice that should be a read for anyone looking to improve their finances.Check out Why Didn't They Teach Me This In School here >>7. The Simple Path To WealthThe Simple Path To Wealth by JL Collins was written as a guide to teach you how to easily start investing for your future.Collins basically breaks down exactly how you need to think about building wealth, from cutting expenses to investing in low cost index funds.What's great about this book is that it's a pretty short and easy read, and it's a great gift idea for recent graduates!Check out The Simple Path To Wealth here >>8. Financial FreedomGrant Sabatier, the author of this book, has an incredible story.At the age of 24, Grant was broke and he tells the story of how he had $2.26 in his bank account.By age 30, Grant had become financially independent and now writes the blog, Millennial Money.Grant’s book is an inspiring story of what you can do once you make up your mind to take the steps that are necessary to get you out of a difficult financial hole.This book is essential reading for anyone on the path to FIRE - Financial Independence and Retiring Early. While the math of FIRE is straightforward, the psychological components of it are not. This book tries to help you understand both the money and the mind of financial freedom.Check out Financial Freedom here >>9. Rich Dad Poor DadRich Dad Poor Dad is another older yet classic book on the list.In this book, Robert Kiyosaki shares lessons he learned from a wealthy man he encountered while growing up.He compares and contrasts that with the money lessons he learned from his biological father (Poor Dad).This book mainly deals with the mindset it takes to have control over your financial life and become wealthy.Robert Kiyosaki is another controversial financial figure - with some of his current project garnering controversy, and even some questions about how true this book is. But, readers should really just focus on the financial tenets of this book - there's solid advice here, and readers can get huge value from it.Check out Rich Dad, Poor Dad here >>10. The Personal MBALast, but not least on this list, is The Personal MBA.Apart from paying off your debts and making smart investments, one of the best ways to build wealth is to start your own business.Starting your own business comes with the potential to make unlimited income. And with that income you reach financial freedom.In the past, starting a business meant you needed to have gone to business school. The requirement is not entirely necessary anymore.The Personal MBA will teach you business principles and lessons that don’t require that you pay for an expensive business degree.Check out The Personal MBA here >>Wrapping UpEven though there are schools around the U.S. that now teach personal finance lessons, the education is not enough. Educating yourself is your best bet if you want to achieve financial freedom.In this post, we shared the 10 best personal finance books that could change your life this year. Which ones have you read? Let us know in the comments below. The post 10 Best Personal Finance Books of 2021 (That Will Change Your Life) appeared first on The College Investor.
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