To Co-sign or Not to Co-sign

The fall semester's tuition payment is due this month. Many students must take out student loans to make that payment. Most take advantage of having a co-signer on their loan as it allows them to be approved for the loan or to qualify for a lower interest rate.

You may feel obligated to co-sign or just magnanimous but there are a few risks involved for you as the co-signer:

1. It may limit your access to other forms of credit as this loan increases your debt ratio.

2. You may incur higher interest rates on future borrowing as the student loan is considered part of your debt obligation.

3. It is very difficult to remove a co-signer from the loan.

4. It may change your relationship with this person as now they will feel obligated to you or you may find yourself nagging him/her about payments.

5. Upon graduation, if the student does not find gainful employment or decides to ignore paying, you could be totally responsible for this debt.

These reasons hold true for car loans, boat loans and credit cards.

Be $ Smart - protect your credit worthiness, know the risks before co-signing a loan.

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.

Attitude - 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!"

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.