Monday, February 23, 2015

For Better or For Worse, For Richer or For Poorer...

With all the fuss of Valentine's Day behind us, I thought I'd take a look at love from a financial perspective.

What do you look for in a mate, financially, that is?
There are things you want to find out sooner rather than later. How do you determine your "financial compatibility" early in the relationship.?

Honesty - disclosing all debt: student loans, car loans, credit cards, bankruptcy, etc. Mortgages and student loans are okay; they have positive potential. But credit card debt can be damaging and linger for years.

- spender vs saver? Live for today or save for tomorrow?
Does he spend everything he earns? Does she borrow from her parents? Is shopping her favorite pass time? Must he have a new car every year? Is the latest iPhone a necessity?

Generosity - sharing both the good and the not so good.
Does she expect you to pay for all dates? Does he ask you for gas money when his car is used for trips? Is he/she a big tipper, skimpy tipper or fair tipper? Does he insist on using your car all the time? Does she offer to pay for half or her share?

$ Savvy - shows responsibility about money. Are his bills paid on time or overdue? Does she always request an extension for paying income taxes? Does he have an investment account? Does she know a CD is not just a compact disc? Has she contributed to an IRA or 401K?

Co-mingling assets could prove problematic if you are not willing to learn the financial side of your prospective mate.

Be $ Smart - Protect your heart and your wallet by watching for telltale traits.

And for the ladies, please remember: "A man is not a financial plan!"

Friday, February 13, 2015

Fafsa Tips to Help Pay for College

These are a few notes I took from a recent article Gateway to College Aid by Jerilyn Klein Bier. Please pass this information along to friends and family facing college tuition payments.

The author quotes Mark Kantrowitz, co-author the of book Filing the Fafsa and publisher of, a website focused on planning and paying for college. The book may be downloaded for free in PDF format at

"It is very difficult to predict how much aid a student might get from year to year."
- one big factor is the number of siblings enrolled in college,
- another factor is the price of a particular school.

Make sure assets and income are positioned before the year your student is a Junior in the spring and a senior in the fall. Fafsa works on the calendar year Jan. - Dec. not the academic year.

He urges families to file as soon as possible after January 1 as many states and schools have deadlines in early 2015 and award aid on a first-come, first-served basis.

He encourages families to file the form online because of faster processing, built-in edit checks and the skip-logic functionality. This means respondents are not asked questions that don't apply to them.

One big change for 2015 is there is little differentiation for parent relationships. Parents who live together, married or divorced, or never married are now treated as married and both must report income and assets on the Fafsa.

Grandparent owned 529 plan distributions reported as untaxed income to the beneficiary (the student) can reduce need-based aid eligibility. A parent owned 529 is treated as a parent asset and is assessed, at most, by 5.64%.

If grandparents do hold 529 plans, it's best to hold off on withdrawing assets until the student will no longer be applying for financial aid - like their senior year.

For example, a $10,000 distribution from a grandparent owned plan could reduce aid eligibility by as much as $5000, while $10,000 in a parent-owned plan could reduce eligibility by a maximum of $564.

Parents of younger children should tune in. Understanding what goes into the expected family contribution and how schools consider this can help them position their assets and steer their kids toward institutions that may offer more attractive aid. It can also help families to better balance the triple threat of saving for education, a home and retirement.

No one will give you a loan or scholarship for retirement!

Be $ smart
- plan well in advance to qualify for financial aid.

Tuesday, February 10, 2015

Use Tax Season to Put Your Financial House in Order

My least favorite time of year has arrived - TAX season!
It takes days to gather all the 1099's, W-2's, etc. I take over the dining room table with papers spread over every inch. Fortunately, I also have a kitchen table where I eat my meals.

With everything out in the open, this presents a perfect opportunity to organize your finances.

Try to implement one of these suggestions:
1. Use a 3-ring binder to organize statements. Even if you receive statements online, it may be helpful to print the summary page for each financial institution. Use dividers to separate each. This helps you to compare monthly or quarterly values. Are you making money?

2. Create an annual Net Worth statement. List all the assets you own - house, condo, car, 401k, IRA, etc. and their current value. Add them up. List what you owe (liabilities) - car loan, student loan, mortgage, credit card balances, etc. Add them up. Subtract what you owe from what you own. That number is your Net Worth. Each year compare the bottom line. Are you growing your wealth?

3. Increase your savings amount. Pay yourself first.
Are you on track to buy that car or condo? Set up direct deposit from your checking account to your savings account.
For retirement, increase your contribution to your 401k/403b by 1%.

Be $ Smart - Use tax season to build your financial independence.