Consider Long Term Savings When Back To School Shopping

As busy families everywhere start to think about the back to school rush, chances are good that there aren’t many parents thinking as far ahead as sending their young children off to college right now!  Especially if you’re just trying to get through the back to school shopping for your elementary students before embarking on another activity-filled school year.  The fact is though, the sooner we make time to consider college savings options for our children, the better their position will be if they should decide to get a higher education once their high school years have ended.

So what’s a busy family to do?  Most of us are cash-strapped as it is, working hard to get the necessary school supplies for this year, add to the ever-growing child’s wardrobe (so their legs aren’t poking out three inches further than the bottom of their jeans!), and keep up with the activity and sports fees as well as the family’s living expenses.

The IRS has created a college savings option called the “529 Plan”, aptly named after Section 529 of the Internal Revenue Code.  The plans are operated at the state level, but you can use funds saved in a 529 in your state toward the costs of any college around the country – meaning you don’t have to have any idea where your child will end up spending their college years when you start saving.  In fact, you don’t even have to stress too much over whether or not junior will attend college, because the plan has some really nice features built-in that give you options for the money you’ve saved if your child ends up doing something other than going to college.  For example, if you save money in a 529 plan for your child and he or she doesn’t go to college, you can either withdraw the money for non-educational expenses (and pay a penalty fee), or you can transfer the money to any other family member.  If one of your children goes to college, he or she could benefit from the siblings 529 plan funds; or the money could be transferred to cousins, aunts, uncles, or even saved for your grandchildren!

All states have at least one 529 plan available, but each state has slightly different rules and regulations for the plan.  Most states provide tax incentives to the person investing in a 529 plan, and there are federal tax laws that offer tax benefits for investing in these plans, as well.  The tax benefits combined with the ability to transfer the money fee-free to other family members are two of the best advantages of this type of college savings plan, and the reason why many families opt for a 529 plan instead of simply saving the money in a money market account or certificate of deposit.

You can enroll in a 529 plan by applying directly with the 529 plan manager in your state, or through your financial advisor.  There are two types of 529 plans – they are categorized as either a prepaid plan or a savings plan.  The savings 529 plan is similar to a 401(k) or IRA.  You can select how to invest in mutual funds and similar investments, and the 529 account will increase or decrease based on the performance of the investments you’ve selected.  The prepaid 529 plan allows you to basically “prepay” for the cost of public colleges.  If your child decides to attend college out of state or go to a private college instead of a public college, you can convert the savings to another plan that can be used for private institutions and out-of-state schools.

So, while you’re working through the back to school shopping lists for your children, it’s a good time to also consider opening a 529 plan.  The younger your child is, the more years you have to maximize those savings and earn more before they’re ready for college.  You can set up automatic deductions from your bank account to make deposits to the accounts; or you can use one of the many services that will allow you to receive contributions to your child’s 529 plan from family and friends, like FreshmanFund.com.  Additionally, if you are a member of Upromise.com, you can move your earnings through Upromise into your child’s 529 plan and get more value out of those earnings!

Trisha Wagner is a freelance writer for DepositAccounts.com, where you can compare rates of checking accounts from dozens of banks in one place. Trisha writes regularly on the topics of personal finance and savings accounts.

Help for Your Family Finances

During these difficult economic times, getting a handle on family finances has never been more important.  We have added a couple of new products to help you do just that along with a new family organizer. 

Finance Organizer - This all in one finance organizer helps familie keep track of spending and plan your financial goals too.  With expense tracking worksheets, expandable file folders, and self assessment worksheets the Financially Fit Organizer will help you finally get control of your personal finances.

Receipts FilePlus Organizer - This latest addition to our receipt organizer can be used to save receipts for major purchases, gifts, and household and tax-deductable items. Complete with both pre-printed and blank labels, this receipt organizer lets you customize it to fit your needs. line helps you keep track of all those receipts and keep clutter under control. 

Home and Family Organizer - This all new family organizer helps keep track of all those endless details that can be overwhelming to many parents.  With sections for School, Health, Home, and Be Prepared, the Home and Family Organizer puts your kids’ school contact numbers, family medical info., home repair log, emergency plan, and more at your fingertips.

Debt Reduction Strategies

For many families battling debt is a problem. From braces, to daycare, to family vacations, families every day are struggling to keep up financially and are relying more and more on credit cards to help pay the bills. According to money-zine.com, the average family carried a balance of $8,500 in credit card debt in 2007. With a current average variable rate of 12.89% (source bankrate.com) and an average payment of $212.50 (2.5%), it will take a family approximately 53 months or about 4 ½ years to pay off this debt.

So what’s a family who is faced with a lot of debt to do? Here are some common debt reduction strategies to help you get started.

Pay the Highest Rate First - List all of your family debt (credit cards, auto loans, personal loans) on a piece of paper with each debt’s balance, minimum payment, and interest rate. Sort the debt from highest interest rate to lowest interest rate and start tackling the debt with the highest rate first. Throw as much money as you can at the debt with the highest interest rate while making only the minimum payments on all the other debt. Once the highest interest rate is paid off, move onto the next highest rate paying as much as you can while continuing to pay the minimums on all the other debt.

The Debt Snowball approach is a debt reduction strategy advocated by Dave Ramsey in Total Money Makeover. In this strategy, you begin by listing all of your family debt just like in the first strategy, but rather than starting with the debt with the highest rate you start with the debt with the lowest balance. You throw everything you have at the debt with the lowest balance while continuing to make payments on all of the other debts. Once the first debt is paid off you take the payment you were making on it, roll or snowball it into the minimum payment on the next debt until the next debt is paid off. You continue this snowball approach, each time making your payment bigger and bigger, as you roll your payments together until all the debt is paid off. The philosophy behind this debt reduction strategy is more psychological in that people need the psychological win of actually paying off a debt to continue. By paying off the debt with the smallest balance, families realize a quick win and thus have motivation to continue tackling the remaining debt.

Dead on Last Payment (DOLP) - In the book Start Late, Finish Rich, author David Bach advocates the DOLP debt reduction strategy for families. In this method he advocates using a DOLP factor to determine how to pay off your debt. Begin by listing all of your debt along with each debt’s balance and minimum payment. Divide the balance on each debt by the minimum payment to calculate a DOLP score - or Dead on Last Payment. Rank the debt from lowest to highest DOLP score and begin tackling the debt with the lowest DOLP score first. Throw any extra money you have at this debt while continuing to make the minimum payments on all the other debt. When the first debt is paid off, move onto the debt with the next highest DOLP score.

11 Quick and Easy Things You Can Do Right Now to Organize Your Personal Finances

A family with purpose is a family who controls their lives and who work diligently to prevent their lives from being controlled by outside factors. A family with purpose sets priorities and lives their lives accordingly.

Request your free annual credit report. By law, credit bureaus are required to give everyone a free copy of their credit report every year.

Consider protecting yourself from identity theft by placing a freeze on your credit at all three credit bureaus. Credit freezes prevent anyone from opening an account or taking out a loan without your knowledge by blocking access to your credit report. Don’t do this if you plan on applying for credit or a loan in the near future. There are fees (around $10) every time you place a freeze, request a temporary lift, or cancel. You will need to place the credit freeze with all three credit reporting agencies, Equifax, Experian, and Trans Union, for this to be effective

Get real about how much you owe. Take some time to list all your debts with the amount you owe and the interest rate you are paying on one piece of paper. Make one list sorted from smallest balance to largest balance and another list with highest interest to lowest interest. Next month we will talk about debt reduction strategies to help get rid of some of the debt.

Shred all the bills, credit card bills, and pay stubs from last year keeping the ones that are tax related.

Set up automatic bill payment for your utilities and mortgage. Most utility and mortgage companies allow for people to have their payments automatically deducted from their bank accounts for no fee.

Organize everything you need to keep on top of your home finances in either one central drawer or a basket. Include your checkbook, stamps, envelopes, stapler, monthly budget, etc. Make sure you have everything you need to make paying the bills and updating your budget easier and quicker. Having to constantly get up and down to get something you need wastes time.

If your employer offers it, set up your paycheck to be directly deposited every week into your bank account. If possible, establish an automatic savings plan by having some of your paycheck directly deposited into a savings account.

Consider refinancing your mortgage. The Federal Reserve recently lowered interest rates and it may be to your advantage to shop around for a better rate. The better your credit score the better the rate and more likely the banks will be willing to work with you.

Never miss another bill. Make a list of all your monthly bills and the date each month they are due. Place this in your basket or drawer for quick reference.

Make folders to keep track of your personal finances. Make a folder for each of these categories, Utilities, Bank Statements, Credit Card Bills, Mortgage, Taxes, Paychecks, Retirement Plans, Budget.

Schedule on your family calendar which days you will review your personal finances and pay bills.

More than 30 Days of Night - Top Tips for Avoiding the Debt Vampires this Christmas

By: Andrew Leatherland

For some Christmas can be more of a horror story than a celebration of light. It can bring a nightmare where every day seems darker than the next. This is because the only way to pay for seems to involve going to the banks cap in hand to find the extravagant amounts of cash.

The problem is that the nightmare can be never ending. Like a nightmare that has more than 30
days of night, debt can be like a vampire, drinking every last drop of money you have, especially when you don’t have much to begin with. Loans or credit cards have to be paid and so often the payment for one Christmas extends well beyond the next one.

With a little thought and some work the debt could be avoided or at least brought to a more acceptable level. Try some of these tips to help you avoid the darkness that is the Christmas debt nightmare.

1) Know what you’re getting into - too many people walk blindly into Christmas debt. They assume they’ll just go out and get a loan. Strange though it sounds, it’s almost like they forget it has to be paid back. Don’t make this mistake this year. Go into Christmas with your eyes wide open. It’s best to avoid them but if you’re insistent that you’ll get a loan, find a comparison website and shop hard for the best deal. Shop harder for the best deal than you would for any other gift this Christmas. Believe me your happiness depends on it. Better still…..

2) Don’t Get a Loan - Get a Business Opportunity. There are many internet / home based business opportunities out there. They can be the nearest thing to an interest free loan. It’s just a way of turning the debt on its head. By working to bring in extra money, you’re not trying to fund Christmas from you existing resources, plus you’re avoid a loan and therefore avoid interest. Internet based opportunities can be great because once they’re set up and promoted, they can be working for you even when you’re not focusing on them.

3) Agree Your Budget - Have a plan this Christmas to save your spending. Too many people head out to the shops with no clear idea in mind. They drift from shop to shop and buy randomly. This lack of focus takes so many people into higher levels of spending than they can afford. You need to decide your budget for Christmas before you go shopping.

4) Talk to your friends and family - Christmas is so stale it’s untrue. People buy presents without real thought. Pretty much everyone does it. Worse still, so many people buy gifts for others, only because the other person buys a present for them. Trouble is the other person only does it because you bought for them. My advice is to bring Christmas up and talk about presents in your conversation. Done right, you’ll often find you can come to an agreement not to have buy presents for each other this year. Think about how much money you’ll save! Do the same for family and younger children. You’ll be amazed how many people are just waiting for the other person to say something. These conversations can also be used to agree a limit for children. Don’t just barge in though by saying your cutting back. See how the conversation goes so you can avoid arguments.

5) Have a plan. Plan your food, plan your gifts, and plan your card list. Once you have it stick to it as tightly as you can. The stores, toymakers and banks have planned to squeeze as much cash out of you as possible. You need to plan just as hard as them to hang onto as much as possible.

6) Cut Your Christmas Card List. Think about it? You send yours to a huge list of people including co-workers and they send you a load back. Shortly after Christmas, they’re all in the trash. Ever thought about being the first at work to send an e-mail suggesting that rather than sending each other cards you agree to put the money into a charity instead. Set a limit below what you would normally spend on cards and put it to a not for profit organisation instead. Now that’s real giving!

7) Shop Hard! - No I don’t mean to spend vast amounts. Shopping hard involves looking for the best bargains. Use the internet. Price comparison websites are everywhere. Use them to drive the hardest bargain you can for a gift.

8 Start Early - The earlier you start gathering what you need for Christmas, the more paychecks you can spread the burden over, therefore reducing your need for credit.

9) Plan your menu. Virtually everyone buys more food than they need for Christmas. So much of it goes to waste. Imagine what it would look like if it were pure cash in the waste - because that’s what it is really. Plan a careful menu and remember it’s not the amount of food, it’s the time you have at the table that’s the real joy of Christmas dinner.

10) Remember why it’s Christmas. You don’t have to spend vast amounts of money to show how much you love your friends and family. You can save so much cash by tuning in to the meaning of Christmas. One thing my grandmother always tells me is that if you do the good things for people all year round, you don’t need to splash vast amounts of cash on them. That’s about showing people and telling them - not splashing your (or the banks cash).

Andrew Leatherland is passionate about people having the best life possible and wants this Christmas to be their first step to a whole new debt free life. If you’re looking to have a Christmas free of money worries visit his blog at http://worryfreechristmas.blogspot.com

Article Source: EzineArticles.com