Every day, we’re confronted by messages from advertisements and society telling us that we need a new car, new clothes, a new phone — new everything. Without even realizing it, it’s easy to fall into a thought process that goes a little something like this: If I consume more, I’ll be happier. But that’s just not true.
This week’s guest, Vicki Robin, co-author of the seminal book “Your Money Or Your Life,” challenged a whole generation of people to think critically about what they were really working toward financially, and how they could live authentically in a consumer-driven world.
Vicki and her late partner and co-author Joe Dominguez are largely credited with sowing the seeds of the FIRE movement (Financial Independence, Retire Early) as it is known today. Vicki says the reason the FIRE movement has been such an awakening for so many people is because it’s given them a steering wheel with which to take control of their financial lives — which they can use to steer themselves away from debt and other money struggles. For so many people, it feels like an awakening, she says, “like someone just sent me a life ring in a vast sea, and I’m being reeled in.”
Vicki speaks some hard and necessary truths about the concept of “enough,” and how we can fully embrace what’s “enough” for us. She reminds us that you have to want something else more than you want stuff, and tells us that for every purchase, you need to ask yourself: Is this making me happy? Is this thing really worth the number of working hours I’m going to invest in it?
Unfortunately, nothing in society today is inspiring us to think critically about how much we’re spending — every day, we are encouraged to consume. Oftentimes, the only way out of the spending cycle is introspection, and making a conscious effort to think about the future in the present. For example, asking yourself: In five years’ time, what would I like to be doing with my life? or, What are ten things I’d like to do before I die?
While on the topic of consumerism, Vicki also talks about environmental impact — people who reduce their overall consumption also reduce their carbon footprint. In this way, she says, living authentically means living without excess.
Then, in Mailbag, Jean and Kathryn talk about how to build credit scores and credit history for young people, how to save for retirement if your employer doesn’t offer a 401(k), and what to do with a balance remaining in a 529 college savings account. Lastly, in Thrive, Jean talks about balance transfers on credit cards, and whether one might be right for you.
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Has a new entry from BP/SYNCB lowered your credit score?
When BP/SYNCB winds up on your credit report, it’s most likely as a hard inquiry, which occurs when you apply for new credit cards or loans.
In this case, the inquiry is for a BP credit card offered through Synchrony Bank.
If you’re worried about the long-term effects of a hard inquiry, want to learn how the BP Synchrony card works, or you don’t know why the inquiry is on your report, read on.
We’ll unpack hard inquires and show you how you may be able to get one removed from your credit report.
BP/SYNCB On My Credit Report
BP/SYNCB stands for BP Synchrony Bank.
Synchrony is a large bank that is known for its long lineup of store cards, with brands like:
Toys R Us
BP Synchrony Bank offers two cards: the BP Visa Credit Card and the BP Credit Card.
The BP credit card is a card that rewards you at the pump and in the store, with savings on gas and cashback on your purchases at BP and Amaco stations.
BP’s Visa card is even more rewarding, offering cashback at all other stores that accept Visa cards.
Any time you apply for a card like the BP credit card or Visa card, it requires a hard credit check.
We’ll talk about all that the process entails below.
How Does a Hard Inquiry Work?
In most cases, an occasional hard inquiry is nothing to worry about.
As long as you don’t have too many, hard inquiries do minimal damage to your score and are an essential part of getting approved for new credit.
A hard inquiry allows lenders to look at your credit report to get an idea of how you manage credit. This information aids them in their decision-making process.
There are three major credit bureaus: Equifax, Experian, and TransUnion. Some lenders only use one credit report to assess your creditability, while others may request two or all three of your reports.
That means all three of your credit scores could be impacted when you apply for a credit card or loan.
Hard inquiries might also occur when you apply for a new apartment or undergo a background check for a job.
Hard inquiries typically drop your score a few points and stay on your report for two years.
This is different from soft inquiries, which happen when you compare quotes for a loan or check your credit score online.
Soft inquiries do not impact your score, meaning you can get credit score updates from a credit monitoring service or get pre-approved for offers without hurting your score.
While one hard inquiry isn’t going to lower your score much, having several of these entries on your report will.
To reduce the damage done by hard inquiries, try to only apply for credit or loans that you have a good shot at getting approved for.
Read up on them before applying to get an idea of the approval odds. You may save yourself from an unnecessary credit check by sidestepping offers with strict requirements.
Another piece of advice to help you limit the effects of hard credit pulls is to submit all your applications for a particular type of financing, like a mortgage, to a 14-day time period.
You usually have two weeks to apply for certain loans, cards, and mortgages without lowering your score repeatedly.
Get a Free Copy of Your Credit Report
How to Remove BP Synchrony from Your Credit Report
If you applied for a BP card, your best bet is to wait for the hard inquiry to fall off your report in two years.
However, if you didn’t apply for a BP credit card, you should get the hard inquiry removed from your report.
Here are a couple of resources to help.
Dispute the Inquiry with Synchrony and the Bureaus
Never ignore a credit inquiry you didn’t submit.
Though the inquiry itself might only lower your score a couple of points, you need to address the situation as it could be a sign of identity theft.
Or it could merely be the result of a reporting error.
Either way, you should dispute the debt with both SYNCB and the credit bureaus that reported the inquiry.
Request information from Synchrony about the inquiry and ensure that any credit card account opened fraudulently in your name gets closed promptly.
Then file a dispute with the credit bureaus that feature a hard inquiry from BP/SYNCB.
This can all be done online, over the phone, or by mail. Just note that you have 30 days to dispute an entry on your report, so you should act quickly.
To stay informed about changes to your score, you should consider using a free credit monitoring service.
They’ll track your reports, giving you regular updates on your score and new entries on your report, along with tools for boosting your score.
You can also get one free copy of your credit reports each year at annualcreditreport.com for a more thorough look into your credit.
Get a Credit Repair Company to Deal with BP/SYNCB
If you’re drowning in hard inquiries and other credit issues, a credit repair service could be a worthwhile investment.
Credit repair companies can take the hassle out of dealing with the credit bureaus and disputing fraudulent entries.
They can help with all your credit problems, getting to the bottom of what’s bringing down your score.
They’ll then enact a plan to improve your score, whether that means disputing faulty reporting, negotiating with collections agencies, or getting validation for questionable entries.
A few of the problems credit repair companies can help out with include:
Get started with one of the best credit repair companies today.
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Getting BP/SYNCB off Your Credit Report
If you applied for a BP credit card or Visa, you can relax knowing that the hard inquiry on your report is a standard part of the application process.
And fortunately, it won’t affect your credit nearly as much as some other types of entries.
However, if you didn’t apply for a card, it’s important to contact Synchrony and the bureaus ASAP, whether you do it yourself or hire a credit repair company.
If you applied for a BP card from Synchrony and want to erase the damage it did to your credit score, the best thing you can do is use the card responsibly.
Keeping your balance low and making timely payments can go a long way in improving your score.
While most people purchase homes that are already built, some people want to get a bit more creative. Therefore, they purchase land to get things going, so that they can build their own dream homes.
While you get creative control when you decide to build, you still can’t avoid the fact that there is a large amount of capital required to get through the process.
Not only does the land need to be prepared to accommodate your new home, but you also need to buy all the materials needed, plus you need to pay the contractors who are working to make your home a reality.
Moreover, you never know what kind of random expenses can come up in the middle of the building process that you may need to attend to. When you add it all up, you likely just don’t have the kind of capital that is required. However, it is possible to acquire this capital.
Acquiring a land loan is one of the steps you can take to get started on your dream home. While these loans don’t cover the total cost of building the home, they cover the amount that you need to buy the land that you start building on.
Now, you may think that such a loan is useless, since it just results in you ending up with a plot of land. When you acquire that land, you still need to build stuff on it, right? Well, you also need to remember that the cost of the land is miniscule compared to the figure that is needed to start building.
This means that you can always secure the land in the meantime, while you work on assembling the funds you need to start building. It is also very possible to complete payment of the land loan before you start the construction process, so you can always free yourself up to start another loan payment.
How Lenders Feel About Providing Land Loans
Most lenders view the provision of land loans as riskier than the provision of home loans. There isn’t a home to use as collateral, and the repossession of the land may not yield the required value if the person should default on payment.
Additionally, it is proven that people are more likely to walk away from land in the event of hardship than they are to walk away from a house. That is understandable when you think about it.
Even if the bank were to try to sell the land to reclaim the value of the loan, this might prove to be a difficult process. If you were to look at the market share for land, you would see that it’s not very impressive. The truth is that the demand for land is not even close to the demand for homes. This is because not everyone has the drive or even the desire to purchase land to build something on.
All these factors are considered by lenders when they are required to provide land loans, so the terms that usually come with them can be a bit crazy.
The down payment is an example of this. As you know, when you buy a home, you must make a down payment and the loan covers the rest. The payment percentage is way more with a land loan than it is with a home loan. Additionally, there are usually higher interest rates coupled with shorter repayment terms for these kinds of loans. You may not even be able to get a ten year repayment term when you opt for a land loan.
How to Go About Getting a Land Loan
There are several different types of land loans, and these are all covered below. It is important to note that each type has its own inner workings and required qualifications. However, there are some general rules that apply where the acquisition of one of these land loans is concerned.
You first need to prove that you earn an income. Bank statements, pay stubs, job letters, etc. are great ways for you to display this. The point is that the income needs to allow for coverage of the loan repayment figure without being a strain on you. A lender needs to see this, or the belief is that you cannot adequately handle the repayment.
Your debt-to-income ratio also factors into the equation above, and you need to show that you have a good one. If debt is already eating away at most of your income, then it simply means that you cannot handle another source of credit.
Finally, excellent credit is required to access these types of loans. After all, this is the indicator that shows what your behavior is when you get to access credit facilities. A credit score check is typically done in this regard, and it forms a part of the processing fee for your loan.
The Types of Land Loans That You Can Access
There are five major types of land loans that you can get from lending institutions. Each one has different requirements and a different purpose that it serves.
This loan doesn’t come from a financial institution, and it is not always available, depending on the land that you are looking to buy. This is because it is offered by the party selling the property to you. Note that this financing is usually offered with a short-term repayment condition.
While you may be able to access such an option, you should note that the terms here can be a bit extreme. Apart from the term for repayment, the down payment can be very high and so can the interest rates.
After all, this is just a random individual or company that is selling the land to you, so there are no resources or portfolios like that of a bank.
Home Equity Loan
This is an option that you’d need to have an existing home to cover. That home needs to have a significant amount of equity. If it does, you can use it to your advantage to get a home equity loan.
Unlike the situation you encounter with other loans, there is no down payment required, since you already own the asset. Additionally, the interest rate that you are given is typically not too high. Since your home is being used as security, there is no concern for what you plan to do with your land.
Should you decide to opt for this option, you should note that the interest you pay does not fall under the realm of being tax-deductible. This is because the loan’s purpose is not for the benefit of the house it was taken out against. Additionally, if you default on your payment, the possibility exists that you may end up losing your home.
Lender Land Loans
It is heavily recommended that you weigh your options before you make a loan application here. This is something you should do, regardless of the loan type, but especially for lender land loans.
The first point to note is that the interest rates can be very high when you opt for such land loans. If you are not looking to develop the land that the loan is for, this interest rate could skyrocket even higher.
Additionally, the down payment required could be heftier than you’re ready to accommodate. There are some cases where it’s required that you have 50% of the value of the land upfront before your loan can even be processed.
Of course, much of this depends on your plans for the land. So if the idea is for you to start development in the short term, then the conditions are likely to become more favorable.
Larger banks are not famous for offering lender land loans, so you may need to go to a credit union or a community bank.
SBA 504 Loans
This loan only applies to you if you’re a business owner. Additionally, you must be using the land for the benefit of your business. If you meet these two conditions, then you may qualify for an SBA 504 loan.
These loans are typically accessible via the United States Small Business Association, which is affectionately called the SBA. When you opt for this kind of loan, there are three contributors to the loan.
The first is the SBA, which provides a loan that covers 40% of the purchase price. The second is lender, which covers 50% of the purchase price with a loan. You are required to cover the additional 10% that is required by making your down payment.
The interest rate tends to be based on market rates when you get the loan, and the repayment period is either 10 or 20 years.
Rural Housing Site Loans
These land loans apply to you if the plan is to construct your home on land purchased in a rural area. Note that this must be a place of primary residence. If these conditions are met, then the United States Department of Agriculture can assist you with one of two loan types.
The first is the Section 523 loan. These are exclusively offered to those who plan to complete the labor process themselves. The interest rate on these loans is usually no more than 3% per annum.
The second loan type is the Section 524 loan. These loans are offered to those who plan to hire a contractor to complete the building of the home. The interest rate provided here depends on the current market rate.
Regardless of which one applies to your situation, they are designed for families that have a low or moderate amount of income. The repayment term is two years, and you may even be able to access the loan with no down payment depending on your situation.
It isn’t easy to be an entrepreneur, but if you’re also female, you are likely to face even more challenges to operate and own a business. Until H.R. 5050 passed in 1988, most states did not allow women to receive a business loan unless they had a male cosigner. With this legislation passing, resources are more readily available to female business owners. Still, it can be tough to get small business loans for women and the right financing.
If you want to start a business or are a female business owner, there is hope. You can find many resources available, and one of them is the Small Business Administration (SBA).
The SBA offers many resources to female entrepreneurs, which includes affordable loan programs. It’s important to know as much as you can so that you can get the funding you need to start or run your business.
What Is the Small Business Administration?
In 1953, the SBA was founded to offer assistance to small company owners. It provides many resources to help these entrepreneurs become more successful. Services can include counseling online or in-person, advocacy, and low-cost training. Of course, one of its most noted resources is the low-interest loan programs that are available.
Many times, business owners find it tough to secure a conventional loan from a credit union or bank, even if they have an account there. Such financial institutions often view a small business as a risk, even if there is a proven track record. Since traditional lenders want to avoid risky borrowers, it can be more challenging for a small business owner to get one.
While you can consider an alternative lender with fewer requirements, less favorable terms, and higher rates, this isn’t the best choice. You can turn to the SBA to receive a loan with competitive terms and rates, even if you have already been turned down for loans through other means.
How the SBA Can Help Women-Owned Businesses
Through the SBA, there is an Office of Women Business Ownership, which was created to empower and enable female entrepreneurs. You can find counseling and training available in many states. This section collaborates with other organizations to give women more resources. We’ll talk about some of them later.
Women can also find federal contracting opportunities through the SBA and Women-Owned Small Business Federal Contracting organization. Through the program, certified businesses that are women-owned can then compete for federal contracts.
There is no discrimination from the SBA, so women-owned companies can take advantage of what it has to offer. Therefore, small business loans for women are provided, as long as the woman meets all of the requirements set forth by the SBA. Such a loan can open up other funding opportunities so that women can grow or launch their companies.
You should be aware that the SBA isn’t a lender. The organization has, instead, created guidelines to keep repayment terms flexible and interest rates low. The money is loaned through an intermediate. This can be a credit union or nonprofit lender, as well as others. These lenders are more willing to help you now because the SBA takes the risk away. It guarantees a large percentage of the loan. Therefore, lenders can loan to a small business without as much worry.
Qualifying for an SBA Loan
Small business loans for women can be easier to find through the SBA. If you’re female and don’t qualify for a conventional loan, you can still utilize the programs from the Small Business Administration.
Many times, a lot of capital is needed to expand or start a small business. You need to buy equipment, lease or purchase the commercial property, and have money for daily expenses. Most entrepreneurs can’t handle such a financial burden alone, and the SBA can be highly beneficial.
As long as you meet all of the requirements, you can apply for any of the SBA loan products offered. Of course, you need to be considered a small business through the SBA. It limits your annual revenues, number of employees, and even the business’s net worth.
You must also have a company based in the US. Many of the loan programs are available only to for-profit businesses, but some options are open for nonprofit childcare centers. Some industries are not eligible to utilize SBA loans, and these include:
Any illegal business/industry
Keep in mind that your personal credit score is going to be an approval factor when applying for a loan through the SBA. While credit requirements can vary between lenders, most intermediaries of the SBA require credit scores in the mid-600s. Some may want a score of 700 or better. Also, the credit report cannot contain any:
Government loan defaults
If you have negative items on your report, you may need to explain them to the lender. Depending on how negative these things are, you might be disqualified from getting a loan.
It is also important that you show you make enough revenue to pay the loan payment each month. The lender is going to evaluate your current debts and revenue during the approval process to make sure you can afford this loan.
Sometimes, the lender is going to require that you pay a down payment or put up some collateral to secure your loan. Fees may also be part of the deal and can include:
Loan service fees
It is important that you have invested your own money and time into the company to qualify for small business loans for women through the SBA. This means you’ve exhausted other financing options first.
What If You Have Bad Credit?
One of the drawbacks here is that you need a solid and good credit score to get an SBA loan (and almost every other type of loan). The SBA doesn’t set the score requirements, but it is still an important factor for the intermediary lenders.
Most lenders look for scores of at least 620, but 700 is preferred. If you do fall below the 620 mark or have negative items on your report (foreclosures, collections, bankruptcies, etc.), you have a lower chance of getting an SBA loan.
Even if that happens, you do have some options. The first thing you should do is request your credit report and make sure there are no inaccuracies. Then, you should work toward paying off your debts and building your score higher. Once you meet the SBA loan requirements, you can reapply.
While this is a lengthy process, it is important now and in the future. Having an excellent credit score is going to open up other affordable financing options for you, which includes SBA loans. If you have a pressing need for financing, it is possible to go to bad-credit borrowers, but you should be wary. These options have higher interest rates, less favorable terms, and are much more expensive.
Types of Small Business Loans Available to Women
Now that you understand SBA loans a bit better, it’s time to find out which ones work best for businesses owned by women. While any SBA loan product is available to a female entrepreneur, there are three that stand apart from the crowd. These include: Microloans, CDC/504 Loans, and SBA 7(a) Loans.
SBA 7(a) Loans
This type of loan is one of the most popular for small business owners. Through the program, you could receive up to $5 million, which can be used for almost anything relating to the business. That includes expanding an existing business, purchasing a building, paying startup costs, and refinancing your current debt.
The repayment terms can be up to 10 years for working capital and are based on your ability to repay the loan. You can also get terms up to 25 years for a loan used to buy commercial real estate. The maximum interest rate for this loan is prime rates plus markups of anywhere between 2.2-4.75%.
Depending on the amount you need, collateral may be required. Of course, if you are a woman and own the business, you could also qualify for the Community Advantage loan through the SBA. With it, you could get up to $250,000, which can be used for almost anything business-related. Repayment terms are the same with interest rates at prime plus 6%.
If your capital needs are smaller, a microloan may be suitable. You can get up to $50,000 with this program, though the average is about $13,000. They’re provided through a nonprofit lender and can be used to buy fixtures and equipment, as working collateral, or to pay for improvements.
The repayment terms are six years, with interest rates varying based on the cost of funds for the lender. Lenders can add up to 8.5% when distributing the loan.
If you’re updating your facility or buying commercial real estate, you may want to apply for the CDC/504 loan. This option works differently than other programs through the SBA because there are two lenders involved.
The money you borrow can be used to buy long-term equipment, land, buildings, new construction costs, updating the facility, and refinancing debts that are connected to buying/updating facilities and equipment.
You work with a certified development company (CDC) licensed through the Small Business Administration, and it provides 40% of the project costs for up to $5 million. Then, a private lender provides 50% of the project costs. You pay that remaining 10%. Repayment terms on this type of loan can be 10 or 20 years. The interest rates vary depending on the lender and the US Treasury.
Small business loans for women can be hard to come by, but it isn’t impossible. Options are available through the SBA and other means. It might be a good idea to go through the Small Business Administration so that you have many choices available and can pick the one that best fits your needs. There are plenty of resources if you know where to go. By taking advantage of what’s available to you, it’s possible to start, grow, or build your company.
Student loans are beyond stressful. It is one of the most important loans you are ever going to take out, and it’s during one of life’s most pivotal and challenging times to boot. If you go in blind and don’t manage your finances, you are going to end up buried beneath a mountain of debt before you’ve even given yourself a chance.
Going to university can cost thousands of dollars, sometimes even tens of thousands, and unless you’ve been blessed with an ungodly amount of money, you’re going to need to find a way to fund that from an outside source.
There are grant schemes, scholarships, and programs offered by various colleges for a variety of circumstances, but the people who get chosen for these are few and far between. Chances are, you aren’t going to be so lucky, so you’re going to have to do it the hard way.
That’s where student loans come in. You’re going to need one of these on account of education costing the same as a house, and because it’s this much money we’re dealing with, it is going to be a very long-term loan.
When we’re talking about this much time and money, you need to be sure that you know what you’re getting yourself in for. There are a few things to keep in mind, but one of the biggest is the difference between the two types of loans, subsidized and unsubsidized.
The Difference Between Subsidized and Unsubsidized Student Loans
An unsubsidized loan is a standard federal student loan that anyone can get. You have to qualify for a subsidized loan. That’s because, given that subsidized means for something to be partially financially funded, it is going to cost you less in interest in the long run.
So the big differences are, firstly, with a subsidized loan, you need to be able to demonstrate a financial need for the money. You need to show the institute you’re borrowing from proof of income, potentially your household’s earnings, as well as other financial documentation related to your ability to fund yourself through college.
Due to the fact that the government is essentially paying off a part of your student tuition for free, you need to be able to show them you actually need them to.
This is not the case for unsubsidized, where there is no need to demonstrate a financial need for the loan.
The amount of money you can actually borrow differs drastically between the two as well.
Again, considering the government is paying for a percentage of a subsidized loan, the upper limit on these is going to be set lower than an unsubsidized loan, which has a very high limit on how much you can borrow. It shouldn’t be so low as to be too little to actually pay for your tuition, but if you’re planning on applying for a subsidized loan, make sure that you can actually borrow the amount that you need.
Now, the big selling point of subsidized loans is that the Department of Education pays the interest on the loan while you’re in college. The typical rate is between 4-5%, and while that does not seem like much, it can save you a ton over the course of your tuition.
This is just over the course of your tuition, though, as the financial support endssix months after you graduate, unfortunately. Although, hopefully by then, you’ve secured yourself a decent job using your newly earned degree and can pay back the whole thing by yourself.
Of course, with unsubsidized loans, you don’t have this helping hand. Your interest accrues regardless of whether or not you’re in college, and every cent of it needs to be coming out of your pocket.
There is one more key difference between the two, and that’s who can actually apply for each loan.
Subsidized loans are designed to help new students just entering university-level education. That means that only undergraduates (people without a college or university level qualification) can apply for it.
For unsubsidized loans, undergraduates, graduates, or professional degree students can all apply no problem.
It is worth noting, though, that your school determines how much you can borrow with a subsidized loan, and that amount is proportional to your financial needs at the time.
Whether you are an independent student or a dependent one, also factors into how much you are allowed to borrow.
For example, if you’re a dependent student whose parents are eligible for a plus loan, your first-year loan limit is $5,500 dollars, with no more than $3,500 of that being in subsidized loans. That amount increases by $1,000 dollars for each year you are in school, up to your third and final year.
If you are an independent or a dependent student whose parents cannot get a plus loan, that amount starts at a $9,500 dollar limit, with the same $3,500 limit on the subsidized amount, which again increases by $1,000 dollars for each of the three years you’re studying.
For graduates and professionals, this amount it wildly higher: $20,500 dollars in unsubsidized funds only. At this point, you are considered an independent student regardless of circumstance.
There is one exception to these limits, and that’s if you are a medical student. In that case, you are eligible for higher limits on your loans, on account of the education costing more. So if you are, then speak to the financial aid office in your school about the limits you are eligible for.
Are There Any Other Options?
You may not want to take on so much debt so early into your professional life, and understandably so. In that case, there are a few unique grants that you may take advantage of depending on circumstance. Keep in mind that you don’t have to pay these back, so if you’re eligible for one, then go for it.
First is the Pell Grant. This is a grant for undergraduate students with a financial need or for a student studying a post-baccalaureate teacher certificate and is up to $5,920 dollars.
Learner’s parents who were killed in action in Afghanistan or Iraq post 9/11 are also eligible for this grant.
The Iraq and Afghanistan Service Grant is for those ineligible for the Pell Grant, whose parents died while performing military service in the above countries after the 9/11 terrorist attacks.
There is also the Federal Supplemental Educational Opportunity Grant. This is a grant of up to $4,000 dollars, depending on the availability of it at any particular school. The only prerequisite for this grant is that you are a student with exceptional financial need.
The Teacher Education Assistance for College and Higher Education Grant, or TEACH, is a supplemental grant with a limit of $4,000 dollars. However, for any grant that is disbursed after October 2019 and before October 2020, that amount is reduced by 6% down to $3,764 dollars.
The maximum amount awarded by the grant is $6,195 dollars, but like the TEACH Grant, that amount is decreased by six percent between the Octobers down to $5,830 dollars.
As well as the two circumstances mentioned above, there are additional requirements to qualify for this grant. First, you cannot receive the grant for more than 12 semesters. Secondly, you must have been younger than 24 or enrolled part-time at college when a parent or guardian died in service.
Direct Plus Loan
The last finance option available to you comes in the form of a loan, not a grant, available to your parents.
The Direct Plus Loan is a funding option parents can take out to make up the difference between the cost of their child’s education, and the amount that their child could borrow themselves.
The limit it the cost of attendance to the college minus any additional financial supplementation that the student has received.
Aside from being in college, the only requirement for this loan is to not have an adverse credit history.
Private Student Loan
On the topic of federal loans versus private loans, you are better off going with federal first nearly all of the time.
Private loans have a reputation for being brutal and unforgiving, and that stigma is well earned.
Private student loans carry much higher rates of interest than federal ones, and if the student has no credit history, which chances are they don’t, then it also requires a co-signer. Federal loans are far more forgiving and offer plenty of borrower repayment plans to help you get by the best you can financially.
The only time you should be considering a private loan is when you need to make up the difference in terms of your student loan limit and the college’s cost of admission. Even then, you should still try to get a Direct Plus Loan first.
If you can’t, and you have to go private, just make sure that you compare all of the institutes you find. Check what people are saying about them, and don’t forget to check the interest rates. As well as that, you need to know the repayment and forbearance options each institute offers before you borrow as well.
The landscape of the student financing world is constantly changing, and the options available to you in two years’ time may be drastically different than the ones available to you now.
There may be more grants, higher or lower loan limits, different repayment plans, and so on. So get some advice before you commit to anything. Speak to your school’s financial aid office or a career guidance counselor. They have been through it all, and their wisdom and advice can make the difference between a happy and thriving career and a lifetime of misery and debt.
With October in full swing, those of us on the East Coast at least are finally starting to feel the fall weather creeping through the humidity. But even if those lower temperatures haven’t captured your interest, here’s something we should all be paying attention to — Cybersecurity Awareness Month. Take this opportunity to check in with your accounts, to change your passwords if need be (or start using a password manager if you haven’t already) and to make sure you’re taking every step you can to keep those hackers out of your Instagram account. (Here’s mine, BTW, and here’s HerMoney’s.) No one wants to start their feed over.
We’re Waiving (Fees) But Not Enough
How do you feel when that annual fee your credit card slips onto your bill once a year? How about the late payment fee — or balance transfer fee? You’d like to ditch ‘em, right? New research from WalletHub shows it’s possible. Of the 46% who asked to have a late payment fee waived, 41% were successful. Of the 26% who asked to have an annual fee waived, 17% were successful. And of the 10% who asked to have a balance transfer fee waived, 7% were successful.
The keys to succeeding? First and foremost, asking. The reluctance to speak up is likely one big reason men were twice as likely to get annual fee waivers as women. And second, don’t be persnickety, presumptuous or downright rude — be polite. More than 60% of survey respondents said that was the key to getting what you want. “Minding your manners goes a long way when dealing with people who are getting yelled at all day,” says Odysseas Papadimitriou, CEO of WalletHub. The survey found that one in five people have yelled at customer service reps and one in 10 have cursed them out. Only 2% of survey respondents said screaming and yelling was key to their success.
A Matter of Balance
And while we’re on the topic of your credit cards, let’s dispel an oft-held myth. You do not have to carry a small balance on the cards in your wallet in order to maintain a high credit score, explains Michelle Singletary in The Washington Post. Singletary (who explained the magic behind her 850 credit score on the HerMoney podcast recently) explains that a big part of your FICO (or other credit) score is determined by two factors — your payment history and your credit utilization, or how much you owe compared with your credit limits. The latter flies right in the face of the argument that you should carry a balance — owing money means higher credit utilization, and higher utilization means a lower score. (Singletary chalks her perfect score up to the fact that she kept her utilization below 10% in the time right before she checked it.) That perfect score, by the way, shouldn’t be at the top of your to-achieve list. You can still be considered an “excellent” card-user if your score is in the high 700s or above. You’re not typically going to get a better deal on interest by getting by getting the equivalent of an A++. Bragging rights, maybe. Mo’ money? No.
The Meaning of The Middle
What does it mean to be middle class? That’s the question posed by New York Times reporters Tara Siegel Bernard and Karl Russell over the weekend. The answer is, the middle exists in a very wide range from struggling to make it from one paycheck to the next, to being able to live comfortably and save consistently. About half of US adults are considered middle class, according to a 2018 Pew Research Center report, which defines middle class as “having an annual household income from about two-thirds to double the national median, which translates to roughly $48,000 to $145,000 for a family of three (in 2018 dollars).” As I said, a wide range, with those on the lower end of the salary spectrum suffering from the rising prices of housing, health care, and education during a time of lower job security and minimal salary growth. The Times looked at four families — from Wisconsin, Utah, California and Iowa to shine a light on how being middle class manifests for families across America. Personally, I couldn’t put it down.
FAFSA: Heads Up
Finally, just a heads up for those of you with kids headed to (or back to) college. The FAFSA — Free Application for Federal Student Aid — went live last Tuesday for the upcoming school year.
You may not have heard much about child ID fraud, but it’s becoming a real problem. Parents should be aware of the risk.
According to a new study from Javelin Strategy & Research, more than 1 million kids were victims of ID theft in 2017. The losses due to child identity fraud totaled a whopping $2.6 billion last year, with two-thirds of the victims under the age of 8.
Javelin, a research-based advisory firm, gathered this information from an online survey of 5,000 people who were living with a dependent minor or had lived with a dependent minor within the previous six years.
Perhaps most alarming is that more than half of the minors (60%) knew the perpetrator. In contrast, only 7% of adult victims of identity fraud know the person who is stealing from them.
While the study found that the most-common culprits were “family friends,” parents and stepparents were also found to have committed the fraud. Close relatives, such as siblings, cousins or uncles, were also offenders.
What does this mean for you?
If you have a child whose identity may have been compromised, it could mean a big headache — for you now and potentially for your child later on down the line. Child ID theft can take years to detect, and it can be a nightmare to fix if not caught early.
“Out of sight, out of mind” does not apply here. If you suspect your child is the victim of ID theft, it’s important to act quickly to uncover and resolve the fraud. Not only can it potentially damage their financial future, but it can cost you money now.
Of the $2.6 billion in losses revealed in the Javelin study, families paid $540 million out of their own pockets as a result of child ID theft.
Why should you care?
ID theft is often thought of as an “adult” problem, but kids need protection, too.
This is especially true in today’s hyperconnected world, in which kids have more opportunities to share information they may not know is sensitive. As the Javelin study notes, kids, particularly those vulnerable to bullying, may be especially susceptible to fraud by oversharing personal information online.
Whether it’s a close family friend or an online fraudster who steals the information, the consequences can be devastating.
Even though a child might be a decade or so away from applying for their first credit card or loan, ID fraud could cripple their ability to buy a car or a home once they come of age.
What can you do?
ID theft can be scary when you’re the victim, and maybe even more so when it’s your child who becomes the target.
Fortunately, you can take action to reduce risk for you and your child when it comes to ID theft. Here are some recommendations for getting ahead of potential identity thieves.
Monitor your child’s bank account and credit reports. Consider freezing their reports until they’re old enough to apply for credit and take some of the other steps recommended when it comes to reducing your own risk of identity theft.
Report any suspicious activity immediately. It can be tricky emotional terrain if the perpetrator is a close relative or new romantic partner, but it’s generally best to report any inaccuracies in your child’s credit reports right away (and file a police report if necessary).
Protect your child’s personally identifiable information. This can mean physically locking away sensitive documents like a birth certificate or Social Security card.
Have a conversation. Teach your child from a very early age about the importance of protecting their identity in the digital world. Establishing these habits early may help them later in life.
About the author:Greg Hernandez is a writer-editor for the Los Angeles LGBT Center and an editor of his own pop culture blog, Greg in Hollywood. He was previously a staff writer for the business sections… Read more.
The Millennial generation is moving back home in record numbers, and their parents are getting some sympathy from, of all people, the IRS.
The much-despised agency has a soft spot in its tax code for parents whose nests are no longer empty.
More than one-third of Millennials (ages 18 to 33) have come home to roost, rather than striking out on their own in the adult world. A Pew Center Research survey put the number at 21.6 million for 2012, and it’s trending up.
That is 3.1 million more adult children living at home since 2007. The struggling economy, as is the case for so many of America’s problems, is to blame. College graduates can’t find a job when they leave school, and paying back student loans is an issue for 70 percent of them. There also is a significant pool of young workers who either get laid off or fired and don’t have anywhere to turn.
So they knock on mom and dad’s door and ask if they can get their old room back, meals and use of the electric and water. And maybe some gas for their car and a few bucks for clothes and, well, pretty much everything they used to get when they were kids.
IRS Cuts Parents Some Slack
The IRS has compassion for that unenviable situation. They dole it out in the form of deductions and credits that can reduce a parent’s tax bill, sometimes considerably. Unfortunately, there is also a healthy dose of qualifications that your child must meet in order for you to receive the deductions and credits. After all, if this were simple, the IRS wouldn’t get involved.
For example, if your adult child was under 24, attended college in 2013, and came home because you would provide more than 50 percent of support for their expenses, then you can deduct $3,900 off your taxable income.
That’s a lot of ifs to overcome, but it’s probably an accurate description of what’s going on in many homes. Junior’s got a degree, but not a job, and you’re footing the bill while he worries about his next job interview.
Depending on what tax bracket the parents fall in, that could mean a savings anywhere from $585 to $1,287 less on your 2013 tax bill.
Passing the Qualifying Tests
That’s the good news. The bad news is that there are approximately 50 hypothetical situations for almost every break the IRS allows with your income tax.
They all start with making sure your child is either a qualifying dependent or qualifying relative, as defined in the IRS tax code.
A qualifying dependent must meet the IRS rules for age, relationship, support, residency and not be filing a joint return with a spouse. That means it’s possible you could deduct your child, even if he or she has married.
A qualifying relative must meet similar tests for relationship and support, but also not make more than $3,900 for the year. It is important to note that your child can’t qualify in both categories. In other words, you can’t deduct them as a qualifying dependent and a qualifying relative. It’s one or the other.
Credits, Deductions Have Definite Impact
If your child does pass the test for either qualifying dependent or qualifying relative, there are some nice credits and deductions available. Here are a few worth checking out:
American Opportunity Credit: This reduces your taxes by as much as $2,500 for tuition, books, supplies and necessary equipment the first four years your child attends college, as long as they are pursuing a degree.
Lifetime Learning Credit. You don’t have to be pursuing a degree for this credit, which can be as much as $2,000. Anyone who takes a course at a higher education institution can claim it as long as they make less than $63,000 on an individual return and $127,000 on a joint return.
If you make too much for the Lifetime Learning Credit, you can deduct up to $4,000 off your taxable income for paying their tuition and fees.
Child and Dependent Care Tax Credit.
There are plenty of nuances with each category, so it’s wise to read through the IRS explanation or consult an expert before making deductions. J. Alden Baker, a CPA who specializes in tax returns, offers this advice:
“There is a lot of ‘If this, then that’ in tax law. There are strings attached to almost everything, so you have to be careful before claiming your adult child as a dependent.”
Be careful. The IRS doesn’t give many people breaks, so if this works, take advantage of it.