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Saving for Future College Expenses
By Jon L Elder
We all want our children to go to school but do you know how much to save for college? If you're like the rest of America, the answer is probably "no." But if you were asked if you want your children to go to college and have a blossoming career, you'd probably say "yes." Unfortunately, it takes money for those aspirations to come to fruition.
We're at a time in American culture where it costs a tremendous amount to go to school. With inflation hovering around 6%, college prices are going to keep growing over time, there is no going back. Instead of looking at the figures and giving up, you'll want to have a battle plan to overcome these growing college tuition fees.
There is much debate as to how much you should save, but i hope this article will allow you to pay no attention to much of the noise out there and provide you with a clear goal for your children's college future.
So, how much does tuition cost?
College tuition costs are on the rise and will not be getting less expensive soon! According to College Board, most public 4 year school charge, on average, $8,244 in tuition and fees for in-state college students. The average tuition cost for out-of-state students is right around $12,526. For private, nonprofit 4 year college, the average price is $28,500 per year. Then for more local two year colleges, the average tuition costs are $2,963 per year. If you're sitting back in your chair right now, I don't blame you. These prices are current for today, so picture how much they will be 5, 10, fifteen years from today!
Tuition cost calculators
There are a few great resources in existence to assist you with calculating the expense of college tuition presuming a few factors. Whether it's an inflation estimate or years till college starts, calculators will help you with the number you need to start saving on a monthly basis.
Preparing in advance: 3 College Saving Scenarios
Your child is 5 years out from college
If you have waited until your kid is 5 years away from college, it's a chance to start taking things very, very seriously! Unfortunately, you will need to be extremely ruthless with how much you save for tuition costs. You will need to save approximately $467/month to achieve your goals for your children's tuition. You also need to consider adding to more money on top of these month-to-month savings to pay any extra costs.
Your kid is 10 years out from college
You're a little late to the game but still OK if this is your plight. Although there is less time now than if you had started saving at birth, you can still tackle this goal and tuck away savings for your children's future tuition. Assuming the constant variables like inflation, you will need to save roughly $233/month. Assuming you have your cars paid off, you can treat this monthly payment like a car payment anticipate these funds are going to something that will appreciate over time: your child's education.
Your youngster is Eighteen years out from college
If this is you, you are planner at heart! You have saved yourself some heartache by starting to save for college right at birth. Because you're starting off early, you should only have to put away $130/month. If you save this regularly, you will have a fortune waiting there Eighteen years later.
Are you aware of how much to save for college now?
No matter when you begin, the objective is to save as much as possible for future tuition costs. With explosive inflation rates and escalating tuition costs, it's time for you to start taking saving for college very seriously. The earlier you start saving, the less of a headache you'll have when your kids come to you asking for money. Do you know how much to save for college now?
Learning about 529 savings plans should not be hard. For those who want to learn more, head over to 529 Plans by State!
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The True Cost Of Using Other People's MoneyThe Truth in Lending Act, which has been around since 1968, introduced most Americans to the annual percentage rate, or APR, which measures the true cost of money we borrow. But APRs can help us evaluate transactions that have nothing to do with credit cards, mortgages or other loans. Many consumers fail to realize it, but there are a lot of ways in which we pay to use money, either our own or someone else's. Not all of these are legally defined as loans, and so not all of them require disclosure of APRs or other measures of the true cost of the money we're using. Insurance premiums, which are frequently paid in installments, are a good example. In his print publication The Insurance Forum, Joseph M. Belth recently examined Massachusetts Mutual Life Insurance Company's disclosure (required by a lawsuit settlement, not the truth in lending law) of the cost of such installment payments. Insurance companies often refer to these installment plans as fractional or modal premiums. Belth gave the following example: "[...] suppose a company multiplies an annual premium of $1,000 by a 'modal factor' of.087 to get a monthly premium of $87. The fractional premium charges in a year would be $44 ($87 multiplied by 12, minus $1,000)." That is, by paying $87 per month for a $1,000 policy, you end up spending a total of $1,044 over the course of a year. Many people might assume that the APR in this example is 4.4 percent, but that would be an incorrect assumption. The policyholder doesn't get the use of the full annual premium for the full year. Instead, the policyholder has use of a smaller and smaller remaining amount each month as he or she pays down the premium. In Belth's example, the APR would be 9.5 percent. (On the Insurance Forum website, Belth offers a calculator for fractional insurance premiums which demonstrates the principle.) (1) Few people think of themselves as borrowing money when they pay an insurance premium monthly instead of annually, but that is precisely what they're doing. The same principle applies in many cases where it is ultimately cheaper to pay a lump sum rather than in several installments for a product or service. Many times the added price of an installment payment plan is described as a service charge or a convenience fee, but the name does not matter. It all comes down to the cost of using someone else's money. Then there are the costs we incur just to use our own money. Think of the fees you pay when you use an ATM. Generally, the fee is a fixed amount regardless of how much money you withdraw. Suppose a certain ATM charges a $2 fee. Presuming your home bank doesn't charge you anything more, withdrawing $400 effectively results in a one-time 0.5 percent fee. If you withdraw $40, you've paid a one-time 5 percent fee instead. If you withdrew all your money in such $40 increments, you would end up paying a full 5 percent of the money in your checking account to the owner of that ATM by the time you finished. It makes sense, then, to withdraw larger sums on fewer occasions - or, better yet, to try to avoid such charges altogether, either by using only your own bank's ATMs or by banking at an institution that reimburses ATM fees charged by other banks. Otherwise, you have effectively paid a surcharge to use your own cash. There are those who might argue that taking out their money in large amounts would lead to that cash slipping through their fingers. If that assumption is true, then the ATM fee is the price of being undisciplined. If that's a fee you're willing to pay, so be it. But it's important to think about such fees realistically. We are living in a strange period. Banks and the U.S. Treasury are telling savers that their short-term deposits are worth practically nothing. Certain borrowers receive an offsetting benefit through historically low rates on mortgages and other debt, but other forms of credit and pseudo-credit remain expensive. The bigger the gap between what we pay for money and what we earn on our savings, the more important it is to keep a close eye on what we pay. Source: 1) The Insurance Forum, "APR Calculator for Fractional (Modal) Premiums" For more articles, please visit the Palisades Hudson Financial Group LLC newsletter or subscribe to the blog. Newsletter: http://palisadeshudson.com/sentinel/ Article Source: http://EzineArticles.com/?expert=Larry_M._Elkin Article Source: http://EzineArticles.com/7004546 Use eBay to Raise Your IncomeeBay is one of the most common ways to make money although not many understand just how exactly you can use eBay as a money-making option. Basically, there are 3 main ways of making money using eBay. First and foremost, there are the auction sales. Unlike in the real world, auction sales on eBay are quite easy plus they do work. On the other hand, they are relatively cheap. In fact, there are some cases where you can list an item for auction without paying a penny. By setting an item for auctioning, at lets say 0.99, you can make thousands by selling hundreds of these items. The profits are mainly generated by the shipping fees. Using the store facility is another means of making money. The good thing with the eBay store is the fact that it is not as complicated as some of the other stores. In this case, there is no need for you to keep on listing your items repeatedly. The charge for you to open your own shop on eBay is £14.99 per month. Considering the fact that you will not have to pay high listing fees once you have an eBay store, then paying the monthly subscription fee you will quickly regain your money back. You can also use the but-it-now listings to gain yourself some profit. These types of listings are quite effective. However, they have their own flip side; they are relatively expensive. You will have to pay extra for a buy-it-now listing. Plus, the pay is determined by the amount of time one requires for the auction. However, if done wisely, they can still earn you a lot of money. From a personal experience, when I visit my local shops I always visit all the charity shops, I have bought ornaments, records and various other bits from charity shops for a £1 each, I have then gone home and placed these items on eBay and made a very nice profit. Also in the summer you can visit your local car boot sale where you will also find some great bargains which you can purchase then resell on eBay to make some profit. When your item finishes on eBay and it hopefully sells you will be charged a fee, so make sure you research eBay's fees before you sell, also you will have money deducted when someone pays you via PayPal. Kevin walker is the owner of http://www.mymoneycredit.com which compares pay day loans and other various lending sources. Article Source: http://EzineArticles.com/?expert=Kevin_R_Walker Article Source: http://EzineArticles.com/6995853 |