It is that time of the year again, when your children are going back to school and you are busy dreaming about their bright future. Well, when it comes to a bright future, college education plays an extremely important role. Now, that college education has become expensive, it is about time for every parent to invest in a 529 savings plan. For more information on 529 savins plan, read my previous post “Benefits of Investing in a 529 College Savings Plan”. To get the maximum returns out of your 529 savings plan, follow these tips
Choose the Direct sold plan
Well, you may be tempted to choose an advisor sold plan because you feel that you will receive an expert advice and your investments will be safe. Here is the caveat. You are paying a hefty fee for the advisor sold plan. Direct sold plan is less expensive and in exchange you need to do a little bit of research on whether your state plan is a good option or not. Websites like savingforcollege.com, nerdwallet.com, collegesavings.org offer side by side comparison of 529 plans of different state. So, you don’t have to really reinvent the wheel. Take some cues from these sites and go with the best plan.
Review your Financial Goals
It is always advisable to review your financial goals and see if you have saved enough for your child’s education. The best time to do is twice a year and that is why many direct sold plans allow you to change the allocation and the amount of savings twice a year. So, you can set a calendar and review the returns on investments in 529 Plan and again it is a good idea to compare the plans of other states as well. If by the end of the year, you feel that your state is not offering enough returns, you may opt for a different state and transfer the savings to a new state plan (you may have to lose the state tax exemption though). On the other hand, if your state plan is doing really well and you think that you have saved enough money to cover the educational cost, you can either scale down or continue to save more so that you have sufficient balance which can later be used by your children.
Involve your Children
Well, it is always good to talk to your children about their education and their plans related to higher education. You might want to send your child to MIT or Stanford Business School, but your child is somewhat interested in liberal arts and your state university offers wonderful opportunities for liberal arts. So, it is a waste to make an investment in out of state plan, when you can buy your own state’s 529 plans and may get tax exemption as well. It is always good to be realistic about your child’s education and let her choose the career she wants.
“Every child is gifted, some just open their packages sooner than others.”—Michael Carr.
Well, using credit card may sound like entering into a debt trap, but if you are smart with your money, you can actually use your credit card to your own advantage. In fact, your credit card can be an important tool to establish your credit worthiness over a period of time, which in turn may help you to get loan for your business or for your home or for that matter any time you need to borrow a large sum of money. However, it is important to manage your credit card wisely; otherwise you may find yourself in a debt trap. Here are 3 tips that can help you get the most out of your credit card.
When it comes to choosing a credit card, it is always good to shop around for the best credit card that offers lower APR (Annual Percentage Rate). Remember, interest rate and APR is not the same. In fact, they are two different terms. The application might mention the interest rate of 3%, which looks attractive but you need to read the fine print to get the APR which includes the interest rate and the annual fee. While banks may charge you anything from 12% to 20% in APR, credit unions are consumer-friendly and offer credit cards with an APR from 9.9% to 18%. Credit-unions are non-profit and are committed to help their members. However, if your credit score is not so good, you may be turned down by the credit union. So, you may need to shop around different banks and weigh in your options and choose the card with lowest APR. If you already have a credit card with a higher APR, it is never too late to negotiate with your bank for a lower APR.
Plan your Budget
Ok, you have got a credit card and you can easily swipe the card for your grocery shopping or for buying new clothes. Why do you need to budget? Well, for starters credit card debt is a debt after all and it is not free money. So, it is important that you shop responsibly. In order to do so, you need to have a plan in the form of a budget. Secondly, it is advisable not to use credit card for small purchases such as grocery, utility bills or any other recurring purchases. Use the credit card for making big ticket purchases like a MacBook or purchasing airline tickets (if you have to travel), which you cannot pay upfront . In fact, this way you can make that big purchase without hurting monthly budget and you can make a small monthly payment as well.
Pay your Balance on time
If you are a good customer who pays the credit card balance on time and in full, you get rewarded with a good credit score. This good credit score may come in handy when you are buying your first home or may be a second one. So, for big life events or for big loans, you need to maintain your credit worthiness and therefore, you need to pay your credit card balance on time. Getting a lower interest rate for your first home is like freeing up extra cash and adding another stream of income. So, a little bit of discipline now, gets you free cash in future.
Well, I was busy lately for packing back to school supplies for my children. I have always been frugal with my shopping and I love to make lists and cross-check every single item and scrutinize last year’s supplies to strike some items off the list. However, there are three important lessons I learnt this year and I want to share with everyone.
Take Advantage of Tax-Free Days
Last week, I visited JCPenney for clothes shopping (I had accumulated coupons). I was surprised when I read about tax-free days. Indeed, I saved a lot on top of the coupon discounts. So, always be aware of tax free days in your area and take advantage of tax-free shopping. You may check with your local stores about tax-free days in your state and also it is not just for one day but for the entire weekend. So, it is a great idea to spend some time to research about this great money saver.
Don’t Forget Wholesale Clubs
If you thought that only Walmart and Target has the best shopping deals, think twice. Wholesale clubs like Costco offer the best deals on stuff like Kleenex, Art and Craft kits, Composition books etc. It pays to buy even the pens, erasers and binders if you have more than 2 school age children, because you can share the bulk pack among your children. You may also want to split the items with your friends who have children same age as yours. Wholesale clubs are also great for buying printer cartridges, paper and even printers. If you or your spouse is using printer regularly, this is the best time to stock up paper and cartridges or you may want to change your printer as well.
Never Stick to One Store
There is a golden rule of investing, never put all your eggs in one basket. For shopping, there is a golden rule, never buy from the same store. You can be loyal to your brand, but try switching the stores. Of course, many stores claim that they do have price match guarantee, but it is wise to compare before rather than calling customer service and resolving issues. The best thing is to install price comparison apps like “The Find.” It is available for iPad and Android devices. So, you can look up the prices of the products not only in stores near you, but also the online prices as well. So, if you want to order Texas Instrument Graphing Calculator, which is by the way over $100 in Walmart and Amazon is available in Staples at a discounted price. So, it saves a lot of money to do a little bit of research.