college expenses http://www.wisebread.com/taxonomy/term/8853/all en-US 12 Surprising Ways to Get More College Financial Aid http://www.wisebread.com/12-surprising-ways-to-get-more-college-financial-aid <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/12-surprising-ways-to-get-more-college-financial-aid" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/beautiful_thoughtful_graduate_student_girl_young_woman_in_cap.jpg" alt="Beautiful thoughtful graduate student girl young woman in cap" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The cost of college has risen so high that even middle and higher-income parents may qualify for some financial aid. Beyond how much money you earn, how a family structures college savings and general finances in the years leading up to and during college can have an impact on how much aid you're offered.</p> <p>It wasn't always like this. Once upon a time, students could pay their tuition at a public university with the money they earned working during summer. Now, students would have to work full-time all year to pay the average public school tuition, which has skyrocketed to $10,000 for in-state students and $25,000 for out-of-state students for the 2016-2017 school year, according to the College Board. Private colleges and universities are charging an average of more than $33,000 per year. And don't forget, you still need to set aside money for room, board, books, and Albert Einstein posters.</p> <p>All this means that most American families have a gap between what they can pay toward college and what college costs. Fortunately, a university's published &quot;sticker price&quot; is not what most families pay, especially for private colleges. According to the National Center for Education Statistics, even students with household incomes of $110,000 or more received an average of $15,240 in the 2013-14 school year to defray the cost of private nonprofit colleges, and $1,860 for public schools.</p> <p>And that's just the federal grants, loans, and work study jobs. Many schools also offer institutional aid consisting of grants, scholarships, and loans. Some well-endowed schools even promise to cover the entire difference between the family's resources and the price (usually incorporating a combination of loans and other aid types). These financial aid packages can be so large that some families pay less for the most expensive colleges than they would have paid for their local state school.</p> <p>How much aid a student is offered depends on a lot of things. Much of it has to do with how a family's finances are organized and how they fill out the Free Application for Federal Student Aid (FAFSA) from the year before their kid starts college. Let's look at strategies for students to maximize available college funds.</p> <h2>1. Be strategic with college savings accounts</h2> <p>First of all, parents should make <em>retirement </em>their top savings priority, not education, because you can get loans for education, but there are no loans to fund retirement.</p> <p>&quot;It's just like being on an airplane: Help yourself first before assisting others,&quot; says Carol Stack, author of <a href="http://amzn.to/2vQaOq7" target="_blank">The Financial Aid Handbook: Getting the Education You Want for the Price You Can Afford</a><em>.</em></p> <p>Second, parents should keep any money they do save in their own names, not in a joint account or a Uniform Transfers to Minors Act (UTMA) account in the student's name. Your assets count against you even more than your parents' assets do. (See also: <a href="http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea?ref=seealso" target="_blank">Why Saving Too Much Money for a College Fund Is a Bad Idea</a>)</p> <p>For the same reason, grandparents or other well-wishers outside the immediate household should avoid directly giving students money for college. If your grandma wants to help with college, great! She should hold onto that money in her own account, not gift it to you. As long as it's in grandma's name, those assets don't get reported on the FAFSA.</p> <p>Some college-savvy financial planners even advise against taking out 529 accounts, those state plans that allow money to grow tax-free but can only be spent on qualified educational expenses, because 529s opened by parents will count on the FAFSA as parental assets and increase the expected family contribution (EFC). Gary Sipos, founder of College Cash Solutions, a for-profit company that offers advice on choosing a college and getting financial aid, always warns clients against them.</p> <p>&quot;In no case in the decade or so I've been doing this, have I ever seen a case where a 529 plan was a good idea,&quot; Sipos says.</p> <p>In Sipos' experience, even though these plans offer tax benefits, the harm to students' chances of getting financial aid can cost the family as much or more than they saved in taxes.</p> <p>However, most college savings experts stand by 529 plans.</p> <p>&quot;The 529 is probably going to be one of your best options,&quot; says Joseph Orsolini, a certified financial planner with Illinois' College Aid Planners.</p> <p>If a grandparent wants to save for college in a 529 plan, they should open their own account, not contribute to one set up by the parents. This way, it's not counted as a parental or child asset. Even then, Orsolini warns, caution is needed to avoid having the account hurt the student's aid chances. If your grandma owns the plan and pays the first year tuition out of it, that payment is counted as your income, and could decrease the amount of aid you qualify for the next year.</p> <p>&quot;You want to withdraw starting the second half of sophomore year,&quot; Orsolini advised. Because the FAFSA looks backward to past years' tax returns, at this point, you'll be in the clear and the student income from Grandma's 529 plan won't affect financial aid.</p> <p>If you're a student who already has money in your own name, you might consider spending that on things you'll need for college &mdash; like test prep classes, or a new computer &mdash; before the period reported on the FAFSA. Once you start paying tuition, spend your own money before your parents spend any of theirs. If your parents want to pay your tuition, they can instead make up for it with a gift later or by helping you pay off any loans you take out.</p> <h2>2. Fill out the FAFSA, even if you think your family makes too much money</h2> <p>The FAFSA is the first step in getting need-based aid, and it's a pain in the butt to fill out. Among other things, it asks for tax returns, your household income, and assets. High income, say over $200,000 a year, lowers your odds of receiving grants and loans, so if your household falls in that category, you may think there's no point in going through the agony. <em>Fill it out anyway.</em></p> <p>There are so many factors affecting whether you will get aid &mdash; like how many people are in your family and whether any of them will be in college at the same time as you &mdash; that you might qualify for at least subsidized loans, despite high income. (See also: <a href="http://www.wisebread.com/the-10-most-common-financial-aid-mistakes-and-how-to-avoid-them?ref=seealso" target="_blank">The 10 Most Common Financial Aid Mistakes &mdash; And How To Avoid Them</a>)</p> <h2>3. File early, and accurately</h2> <p>The opening date for turning in the FAFSA has been moved up, and it's important to get that thing in within about a month of opening day. If you plan to start college in the fall of 2018, that means turning in the FAFSA starting Oct. 1, 2017.</p> <p>Financial aid is first come, first served, Sipos explains. If you wait until spring, financial aid officers may be running low on funds to distribute. &quot;They might give you half the award they would have given you if you had applied a few months earlier,&quot; he says.</p> <p>In addition, if your FAFSA has errors, it can get kicked back to you for corrections and then you have to go to the back of the line.</p> <h2>4. Spend more time with your poorer parent</h2> <p>If your parents are divorced and live separately, you only have to put the income and assets from <em>one </em>of those households on your FAFSA. So do you put down your mother's income or your father's income? The rules simply say that you submit the information about the <a href="https://studentaid.ed.gov/sa/fafsa/filling-out/parent-info#who-is-parent" target="_blank">household you spent the most time in</a> during the preceding year &mdash; even if it was only one day more.</p> <p>For example, say your parents are divorced and you split your time evenly between their houses. Your mother and her new husband make $300,000 a year and have a million bucks in the bank. Your father is on disability, and has no assets beyond his house and car. If you are presented as his child, your chances of getting financial aid are greater. While you're in high school, make sure you spend more than half the year living with your dad.</p> <h2>5. If you work, watch your earnings</h2> <p>If you, the high school or college student, earn more than $6,400 in a year, colleges will consider that as money you could be paying in tuition, and reduce need-based awards accordingly. Of course, most student jobs don't pay much, but even at minimum wage, working 20 hours a week all year would put you over the threshold. There are many reasons you may want to work, including wanting to be self-sufficient or gaining valuable job experience. Just remember that once you pass the $6,400 per year threshold, increased tuition costs may eat up 50 cents of every dollar you earn.</p> <p>Instead of working more than 15 hours a week for pay during the last year of high school, when your income must be reported on the FAFSA for your first year of college, consider spending your time doing something that will boost your college application, from studying for the SAT or ACT to doing volunteer work.</p> <p>This is also a warning to parents: Paying your kids a good salary to work for you might help you taxwise, but the penalty in the financial aid application could eclipse any tax savings.</p> <h2>6. Don't dismiss more expensive colleges</h2> <p>School aid offers can vary, based both on how much the school wants you and also how much the institution is. Once you have the financial aid promises in hand, you may be surprised at how much you're expected to pay differs from the sticker price.</p> <p>&quot;[D]epending on a family's income and a college's available aid funds, the cost paid by the family for attending even the most expensive Ivy League schools may be less than the cost of attending an in-state public university,&quot; reads <a href="http://amzn.to/2vLp9Wj" target="_blank">Paying for College Without Going Broke</a> by Kalman Chany, a popular primer on navigating the financial aid process.</p> <p>Don't make a final decision until you have all the aid letters in hand, because the sticker price is not an apples-to-apples comparison.</p> <h2>7. Don't automatically choose the best college you got into</h2> <p>Many schools reserve their best merit aid offers for the top 25 percent of applicants, based on test scores, Sipos explains. That means if you barely squeak into a great school, but would be one of the top students at a good school, you'll probably get a better aid offer from the good school. Sipos counsels families on this strategy when applying for colleges, using information schools publish about their students' median college entrance test scores.</p> <h2>8. Look into whether you have to report your family's small business income</h2> <p>Sipos used to be a general financial planner, but he was inspired to specialize in college financial planning when he met a couple who was drowning in debt despite having run a successful business for years. They'd sent three daughters to Ivy League schools, and because they earned a good income, and their business was worth a lot, they'd never bothered to fill out a FAFSA.</p> <p>What the family didn't know was their business met the legal description of a <a href="http://www.finaid.org/fafsa/smallbusiness.phtml" target="_blank">small business that does not count</a> against students for financial aid purposes. Family farms fall into this category, as well. The family would have qualified for financial aid if they'd applied, Sipos says, leaving them ready to retire after their kids graduated, instead of running double time to dig out of debt.</p> <p>&quot;They could have saved $30,000 a year if they had exempted their business. The financial aid officer didn't mention anything,&quot; he says.</p> <h2>9. Put money into non-reportable assets</h2> <p>If your parents have car loans, credit card debt, or a mortgage, it makes good sense to pay them off as much as possible, not only to reduce their debt but also to increase the amount of aid you might be eligible for. You have to report how much money and other liquid investments your family has on the FAFSA. That means your parents' bank accounts are considered money they could be putting toward your education. But the <a href="https://www.cappex.com/hq/articles-and-advice/financial-aid/fafsa/How-to-Shelter-Assets-on-the-FAFSA" target="_blank">value of your family's primary home</a> and personal possessions such as cars don't count against you in assessing your need. (See also: <a href="http://www.wisebread.com/5-smart-places-to-stash-your-kids-college-savings?ref=seealso" target="_blank">5 Smart Places to Stash Your Kid's College Savings</a>)</p> <h2>10. Make sure the school knows about all special circumstances</h2> <p>Besides the volumes of information the FAFSA asks for, you can also include a letter explaining the family's circumstances &mdash; and in many cases, you should. For instance, if you have a disabled sibling who needs expensive care, or another challenging circumstance, let the school know so it can take that into account when calculating your family's ability to pay.</p> <h2>11. Negotiate with the financial aid office</h2> <p>When you get your aid letter, it's not necessarily a &quot;take it or leave it&quot; proposition. You can let the school know if other schools offered you a better deal, and urge them to take another look.</p> <p>If you haven't already written a letter about special circumstances, now is the time to do that. Finally, if the year reported on the FAFSA was an unusually good year financially for your family &mdash; your mother got a huge bonus, for example, or your parents sold an investment property &mdash; you can provide previous and subsequent tax returns to support your case, Sipos advises.</p> <h2>12. Join the military or a public service program</h2> <p>Two members of my family became the first in their respective lines to go to college, thanks to the GI Bill, a program that helps service members and veterans cover education costs. That's just one of the college benefits available to veterans and service members. It's worth looking into.</p> <p>Outside of the military, AmeriCorps, Teach for America, the Peace Corps, and the Public Service Loan Forgiveness program are all avenues for paying off student loans or financing college.</p> <p>Some people might look at the above tactics as gaming the system. It's certainly possible to pass beyond optimizing into the shady territory of trying to hide income and assets.</p> <p>&quot;I lose my patience with people who are affluent &mdash; and they want to hide that affluence? Come on,&quot; Stack says.</p> <p>While it's up to the individual to decide which legal financial aid optimization tactics are appropriate, reputable college financial planners see no problem in making a financial plan that maximizes the chance of getting aid.</p> <p>&quot;You're just following the rules,&quot; Orsolini says<strong> &quot;</strong>It's no different from putting money in a 401(k) to minimize your tax burden.&quot;</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F12-surprising-ways-to-get-more-college-financial-aid&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F12%2520Surprising%2520Ways%2520to%2520Get%2520More%2520College%2520Financial%2520Aid.jpg&amp;description=12%20Surprising%20Ways%20to%20Get%20More%20College%20Financial%20Aid"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/12%20Surprising%20Ways%20to%20Get%20More%20College%20Financial%20Aid.jpg" alt="12 Surprising Ways to Get More College Financial Aid" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/12-surprising-ways-to-get-more-college-financial-aid">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-apply-to-lots-of-colleges-without-going-broke">How to Apply to Lots of Colleges Without Going Broke</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-late-starters-can-save-for-their-kids-education">Here&#039;s How Late Starters Can Save for Their Kids&#039; Education</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-tips-for-going-back-to-school-as-an-adult">8 Tips for Going Back to School as an Adult</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-9-best-state-529-college-savings-plans">The 9 Best State 529 College Savings Plans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-saving-hacks-every-college-student-should-try">8 Money-Saving Hacks Every College Student Should Try</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Education & Training affording college college college expenses college savings continuing education saving money saving money for college Tue, 22 Aug 2017 08:30:10 +0000 Carrie Kirby 2007138 at http://www.wisebread.com 6 Ways to Save on College Tuition http://www.wisebread.com/6-ways-to-save-on-college-tuition <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-save-on-college-tuition" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/college-5062908-small.jpg" alt="college" title="college" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>It&rsquo;s the time of year when many people are figuring out how to fund a college education. Whether you&rsquo;re starting college, returning to school, or looking forward to the next term, paying for college can be intimidating. However, there are some things you can do along the way that will save you money and improve your overall financial outlook through college and beyond. (See also: <a target="_blank" href="http://www.wisebread.com/degrees-of-frugality-7-tips-for-the-college-bound">Degrees of Frugality: 7 Tips for the College Bound</a>)</p> <h2>1. Take College Courses While in High School</h2> <p>Many community colleges will let you take college courses during your last two years of high school. As long as you can pass some basic tests and keep up with your high school work at the same time, this is often a great way to get your basic, prerequisite courses out of the way before you&rsquo;re even ready to go to college.</p> <p>Some high schools and community colleges have even worked out ways for you to do this at minimal cost to yourself. If you can take college courses for free (or nearly so), why wouldn&rsquo;t you?</p> <h2>2. Test Out of Basic Courses</h2> <p>If it&rsquo;s too late for you to enroll in high school and college concurrently, you can still test out of some of your basic courses. If an AP or IB test is an option for you, you can get your credit that way. Otherwise, you can <a target="_blank" href="http://clep.collegeboard.org/exam">take a CLEP test</a> in any number of different subjects.</p> <p>While there are <a target="_blank" href="http://www.wisebread.com/know-something-save-time-and-tuition">other ways to get out of taking certain courses</a>, taking these tests can actually allow you to get credits toward graduation without taking the courses. For instance, passing the CLEP in biology can earn you six semester units toward graduation at a fraction of the price you&rsquo;ll pay anywhere.</p> <h2>3. Take More Courses Each Term</h2> <p>When you take more courses each term, you will pay more each semester. However, if you have a plan, and you know what courses you need to take when and how it will all work out, you can actually graduate a semester or two early. That will save you all of the fees and costs that you would have run up in later semesters.</p> <p>Do make sure you do this with a plan, though. You&rsquo;ll want to plot out your courses carefully and make sure that the classes you need are offered during the semesters you want to take them. Otherwise, you might end up spending more overall.</p> <h2>4. Plan Ahead and Analyze Your Options</h2> <p>There&rsquo;s some new evidence that some of the &quot;tried and true&quot; methods for saving money on college (like starting at a community college and then transferring) <a target="_blank" href="http://business.time.com/2013/02/14/three-strategies-for-saving-money-on-college-that-may-not-work-as-promised/">don&rsquo;t actually save you money</a>. At the very least, it seems like you need to run the numbers to see if you will save money using these methods.</p> <p>It&rsquo;s a good idea to try to calculate your total college costs ahead of time and evaluate how different options will affect your overall financial outcome. This will let you choose your college plan based on what will work best for you and your financial situation.</p> <h2>5. Know Your Loans</h2> <p>Despite your very best planning, you may find yourself taking out student loans. In fact, that can be a smart way to get through school quicker, depending on how much you have to borrow and what your earning potential is upon graduation. However, not all <a target="_blank" href="http://www.wisebread.com/college/financial-aid">student loans are created equal</a>.</p> <p>Make sure you understand whether your loans will be subsidized or unsubsidized, and how that might affect repayment in the future. In addition, determine whether your lender puts any special rules on their loans. For instance, some loans are not candidates for consolidation later on, and others only incorporate certain repayment plans.</p> <h2>6. Find a Repayment Plan That Works for You</h2> <p>Speaking of repayment plans, make sure you <a target="_blank" href="http://www.wisebread.com/student-loans-how-to-make-post-college-decisions">find the one that is best for you</a>. Some people find that they need to send their loans into forbearance upon graduation, especially if they can&rsquo;t get hired right away. Even if this isn&rsquo;t an issue for you, make sure you know your options. For instance, <a target="_blank" href="http://studentaid.ed.gov/repay-loans/understand/plans/income-based">income-based repayment</a> can help many borrowers, but few know that it is an option.</p> <p>Make sure you have your repayment plan in place well before your loan comes due. Making late payments or missing payments on student loans is a big deal and can hurt your financial outlook for many years into the future.</p> <p>The most important thing to do to save money on college tuition is to have a plan. Even if you change your plan later on, you&rsquo;ll be better off for having had it in the first place. And if you&rsquo;re able to follow through, you&rsquo;ll not only save money, but you&rsquo;ll know exactly how much you saved.</p> <p><em>How are you keeping college affordable?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/6-ways-to-save-on-college-tuition">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-obamas-free-community-college-deal-will-help-you">3 Ways Obama&#039;s Free Community College Deal Will Help You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-late-starters-can-save-for-their-kids-education">Here&#039;s How Late Starters Can Save for Their Kids&#039; Education</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-surprising-ways-to-get-more-college-financial-aid">12 Surprising Ways to Get More College Financial Aid</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-keep-student-loans-from-wrecking-your-retirement">How to Keep Student Loans From Wrecking Your Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-tips-for-going-back-to-school-as-an-adult">8 Tips for Going Back to School as an Adult</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training college expenses community college save on education tuition Thu, 02 May 2013 09:48:34 +0000 Sarah Winfrey 973724 at http://www.wisebread.com What to Do If Your Adult Child Is Moving Home http://www.wisebread.com/what-to-do-if-your-adult-child-is-moving-home <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-your-adult-child-is-moving-home" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2715035547_1f1d12bbec_b.jpg" alt="woman and mother" title="woman and mother" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to a recent Reuters article on <u><a href="http://www.reuters.com/article/2012/06/20/us-usa-economy-households-idUSBRE85J17V20120620">adults moving back in with their parents</a></u>, the U.S. Census Bureau reported the number of adult children (those over 18 years of age) living with their parents increased to 15.8 million total between the years of 2007 and 2010. Perhaps more alarmingly, the majority age group that accounted for these numbers was the 25- to 34-year-olds.</p> <p>Given the rough economy since the bank industry&rsquo;s meltdown in 2008, these numbers shouldn&rsquo;t bee too surprising, but they pose an interesting dilemma &mdash; how much support are these parents obligated to give their children? While many parents fund their children&rsquo;s college expenses and health insurance until they age out of the policy &mdash; even when the kids are no longer at home &mdash; this article examines what other financial aspects that parents of adult children living at home must take into consideration when presented with these unique living circumstances. (See also: <a href="http://www.wisebread.com/re-nesting-tips-for-moving-back-in-with-your-parents">Re-Nesting: Tips for Moving Back in&nbsp;With Your Parents</a>)</p> <h2>Set Basic Guidelines</h2> <p>First things first &mdash; draw up a contract and set some basic guidelines for what is expected of your child if they are moving back or currently living at home. Detail exactly what chores you&rsquo;d like them to do, what their curfew is (if any), what expenses are covered by you and what expenses are to be covered by the child. Let them ask questions so both parties are perfectly clear on what&rsquo;s expected of each, minimizing the hassle of living together beyond the usual birth through 18 years.</p> <h2>The Issue of Rent</h2> <p>Should the child pay monthly rent and utilities or not? This decision is ultimately a personal one on the parents&rsquo; part; some people will want to wean their child off their wallets as quickly as possible, and others would rather the child save up money so they can move out sooner. Some families agree to let the adult child live rent free if they&rsquo;re in college or saving for a down payment on a house. If they have a job and <i>could</i> be comfortably living in an apartment, however, it may be wise to charge rent (otherwise, they&rsquo;re likely just there to mooch). For most parents, an adult child going through rough financial times shouldn&rsquo;t be penalized as long as they&rsquo;re earnestly looking for work, but again, it comes down to a matter of personal decision. You as the parent probably don't want an occupied nest going into your retirement years, so while it's good to help your kids lower their cost of living, you may need to apply a little tough love if they overstay their welcome.</p> <h2>Food Matters</h2> <p>Will it be a fridge free-for-all, or should adult children cover their own meal expenses? Sometimes it&rsquo;s a mixture of the two, where they&rsquo;re allowed to eat dinner with the family but required to pay for their own food and meals away from the dinner table. Perhaps they can offer to cook in exchange for access to the pantry and refrigerator. The downside to open access is that they may be tempted to raid the family <a href="http://www.wisebread.com/how-to-organize-your-pantry-and-save-cash">food storage</a> to cut back on their own food-related expenses, so asking for a monthly contribution for grocery expenses might be in order.</p> <h2>Other Expenses</h2> <p>What about phones, insurance, transportation costs, etc.? There ought to be a balance &mdash; adult children shouldn&rsquo;t be completely dependent on their parents, but if they&rsquo;re struggling to find a job, they might not be able to afford all of the expenses that come from living on your own in the real world. As the parent who has already raised them for 18 years, you are not obligated to cover any expenses. However, you may decide to pick and choose which expenses to cover and which ones to let your kids handle. Generally speaking, entertainment expenses such as movies, alcohol, clubs, etc. ought to be covered by the child (just make sure they&rsquo;re not spending all their money on entertainment while they could be paying you rent or saving up to move out sooner).&nbsp;</p> <p>If paying for extra expenses on a regular basis isn't a good fit for your family's situation, consider giving <a href="http://www.wisebread.com/25-awesome-useful-gifts">practical birthday or holiday gifts</a>, such as gas cards or offering to pay for cell phone bills for a year. This way, your child can retain most of their independence yet still cover some costs they might otherwise not be able to afford on their current paycheck.</p> <h2>Parental Loans</h2> <p>There are, of course, other ways to support your adult children other than merely letting them crash at home rent-free. For starters, <a href="http://www.wisebread.com/should-you-lend-to-friends-and-family">loans</a> can be a great way to help your kids get back on their feet without the risk of ruining their credit or depleting their financial resources with exorbitant interest rates. Going this route would definitely demand a contractual agreement to protect yourself in the case where they may not feel obligated to pay off the loan within a reasonable timeframe because you're likely not as strict or demanding as a credit card or lending company. Be sure to include: the date of loan, the amount loaned out, interest rate (if any), payment schedule, expected date of full payment, and of course, signatures from both parties.&nbsp;</p> <p><em>What about you? If you are an adult living with your parents or have you adult children living with you, how does your family approach this situation? Let us know in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kelly-kehoe">Kelly Kehoe</a> of <a href="http://www.wisebread.com/what-to-do-if-your-adult-child-is-moving-home">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-new-homeowners-can-furnish-their-place-on-a-budget">How New Homeowners Can Furnish Their Place on a Budget</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-prep-your-finances-for-an-emergency-vet-visit">How to Prep Your Finances for an Emergency Vet Visit</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/21-things-you-should-make-your-kids-pay-for">21 Things You Should Make Your Kids Pay For</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-help-your-adult-kids-and-still-save-for-retirement">4 Ways to Help Your Adult Kids and Still Save for Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-budget-design-ideas-for-a-kids-playroom">10 Budget Design Ideas for a Kids&#039; Playroom</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Family Home adult children child expenses college expenses living with parents paying rent Fri, 31 Aug 2012 09:48:42 +0000 Kelly Kehoe 952403 at http://www.wisebread.com Dorm Room Essentials http://www.wisebread.com/dorm-room-essentials <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dorm-room-essentials" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/dorm_room.jpg" alt="Girls in a dorm room" title="Girls in a dorm room" class="imagecache imagecache-250w" width="250" height="176" /></a> </div> </div> </div> <p>Well, the time has finally arrived &mdash; you&rsquo;re packing for college. Freedom, adventure, shenanigans, and (hopefully) a crap-ton of learning and growing await you during these next four years.</p> <p>So, what are you taking with you? Don't say &quot;my blanky.&quot;</p> <p>What you pack for college depends a great deal on where you are going for college. Big university in the middle of a city or tiny college in the middle of nowhere? Does your dorm permit you to have a mini-fridge and microwave in your room? These are questions that need to be answered before you start shopping to outfit your new home. Your college or university should provide you with living information ahead of time, but you're still left deciding what you can't live without and what you can afford to leave behind in your old bedroom. And heaven forbid you should get stuck without something you really need while attending some idyllic liberal arts college in the middle of Western Massachusetts, because you'll either shell out big bucks at the student store or have to go without.</p> <p>There are many things that make for a killer dorm room, like plants, well-designed politician posters, and a rug that really ties the room together. This is not an article about those things, because this is meant to outline the bare minimum that you can take with you while living comfortably in a college dorm.</p> <h2>Where to Shop</h2> <p>What's the best place to get good prices on your college essentials? Probably the same places to get best prices on anything else &mdash; Costco, Sam's Club, Walmart, Target, and K-Mart. Avoid buying stuff from the catalogs that colleges send out in the summer, and don't fall for the idea that your dorm room has to include a theme or any particular element that you don't think is necessary. Also, if you can manage to keep it spare and spartan during your freshman year, you can score tons of free stuff at the end of the term when seniors move out and dump all of their stuff for you to pick through (freegans rejoice!). (See also: <a href="http://www.wisebread.com/college-move-out-days-the-best-time-to-dumpster-dive">College Move Out Days: The Best Time to Dumpster Dive?</a>)</p> <h2>Sleepy Time Stuff</h2> <p class="MsoNormal">Sleep is so incredibly important during your college years. However, getting a good night's sleep when suddenly faced with a room-sharing situation can be tough. To help you catch all the necessary Zs, make sure to pack the following:</p> <h4>Ear Plugs (cost varies; $20 for 200)</h4> <p>Your roommate is guaranteed to either snore or receive very loud phone calls at 2 a.m. from his mother in Croatia (or both). Soft, foam ear plugs are going to allow you to largely ignore middle-of-the-night convos while still being able to hear your alarm ring in the morning.</p> <h4>Sleep Mask ($5-10)</h4> <p>There are going to be times in college where you are going to need to catch some shut-eye even when the sun is out or your roommate is cramming for an exam with the light on until 3 a.m. This is where a sleep mask will save you from a life of sleep deprivation.</p> <h4>Alarm Clock (varies)</h4> <p>If you have a mobile phone, you can its alarm clock to wake up in time for 8:00 a.m. Spanish (why, why did you sign up for 8:00 a.m. Spanish?), or you can buy a full-fledged alarm clock that will wake you up with soothing sounds or your favorite music.</p> <h4>Foamy Mattress Cover ($44-100)</h4> <p>Unless you are attending a college of chiropractic medicine, chances are that your dorm bed is going to suck. Find out ahead of time what size mattress you will have (twin, probably) and purchase a memory-foam mattress pad. It&rsquo;ll be nice and cozy and will separate your tender spine from those metal springs by a few inches of soft, wonderful foam.</p> <h4>Sheets ($20 and up)</h4> <p>Some dorms provide sheets, others don't. But even if they do, you want to bring your own, don't you? Don't go for anything fancy, just two sets of simple sheets that will fit whatever size bed your college is forcing you to use.</p> <h2>Personal Care</h2> <p>Grooming is especially important during your college years. It might not be consistent, but it&rsquo;s important. You should shower at least once a week, is my point.</p> <h4>Shower Caddy/Tote ($10-20)</h4> <p>Common showers? Unless your dorm provides lockers (they might), you&rsquo;re probably going to want a shower caddy to tote your toiletries to and fro. Plastic is easy to clean and doesn&rsquo;t rust, but metal is less likely to get moldy. There are even fabric or plastic mesh versions now, should you care to simply toss your tote through the wash after every few uses.</p> <h4>Bathrobe ($10 and up)</h4> <p>Bathrobes are indispensable in college. You can&rsquo;t be expected to get totally dressed on your way to the bathroom in the middle of the night.</p> <h4>Flip-Flops/Shower Shoes ($1 and up)</h4> <p>Unless you are lucky enough to have a dorm room with a private shower, you&rsquo;re probably going to have to deal with communal showering situations, which are often rife with bacteria. Avoid athlete&rsquo;s foot and general grossness with a good pair (or two) of shower-ready flip-flops. You can bring as many pairs with you as you like, but reserve one pair specifically for shower use.</p> <h4>Slippers ($10 and up)</h4> <p>Although your flip-flops can double as slippers for schlepping around the dorm, you might want a pair of warm slippers if your school happens to be in a cooler clime.</p> <h4>Towels ($5 and up)</h4> <p>Most colleges don&rsquo;t provide towels. You will need a minimum of two body towels and two hand towels. Washcloths are a personal preference (I never liked them).</p> <h4>Body Wash ($2 and up)</h4> <p>Under normal circumstances, soap is a more frugal buy than body wash. But when you have to tote your shower essentials back and forth and store shower stuff in plastic buckets, body wash is a scum-free alternative to bar soap.</p> <h4>Extra Razors (godawful amount of money)</h4> <p>If you shave, buy your razors in bulk ahead of time. Costco, your local dollar store, or Walgreens are good places to find deals on razor refills.</p> <h4>Feminine Products (varies)</h4> <p>Obviously for the ladies only; stockpile everything you will need for approximately nine months of menstruation, and then pack some more because you will make instant friends with other women who come to you in the middle of the night in desperate need of a tampon.</p> <h2>Laundry</h2> <p>Laundry facilities will vary from place to place, but chances are that you will find yourself doing laundry more often than you like in college.</p> <h4>Laundry Basket or Bag (from $10)</h4> <p>Traditional laundry baskets take up a lot of horizontal space, so seek out baskets that are tall and have a small footprint. Sturdy laundry bags that hang on a light aluminum frame are also a good option.</p> <h4>Detergent ($13 and up)</h4> <p>Detergent is expensive if purchased anywhere outside of Costco or Sam&rsquo;s Club. If you possibly can, buy one or two massive drums of the stuff at the beginning of the year, and ration it carefully. Powder detergent is a more frugal option than liquid detergent, but it&rsquo;s also less useful in rickety old dorm washing machines.</p> <h4>Dryer Sheets ($4 and up)</h4> <p>Easier to store than fabric softener, dryer sheets can be reused at least once each.</p> <h4>Rolls of Quarters</h4> <p>I imagine that many colleges now have advanced laundry systems that allow you to use credit cards, student IDs, or other means to pay for your laundry, but many millions of years ago when I was in school (1999), quarters were where it was at. And I happened to go to a school that shall remain nameless (Mount Holyoke College) where obtaining enough quarters to do a month&rsquo;s worth of laundry was pretty much like pulling teeth, only less pleasant and occasionally with more bloodshed. My mother, bless her heart, used to send me rolls of quarters in her occasional care packages. Get a couple hundred dollars worth before setting out and hoard any that you come across when getting change, and you&rsquo;ll be fine.</p> <h2>Miscellaneous</h2> <p>It's always the little things that make life less stressful &mdash; realizing that you have what you need to run minor errands, like a bus pass and a decent pair of socks. Here are some minor items that make dorm life more tolerable.</p> <h4>Waste Basket ($5 and up)</h4> <p>Most college dorms provide at least one waste basket, but you can never have too many baskets to stash things in.</p> <h4>Desk Fan ($12 and up)</h4> <p>Fans are a godsend for muggy climes with no air conditioning and for drowning out the sounds of a snoring roommate.</p> <h4>Stamps (varies)</h4> <p>You will occasionally have to mail something in college. A pack of Forever stamps will take you far. The same goes for envelopes. Buy them now, as they will cost a million times more at the student bookstore. You might want to consider printing out your own return address labels.</p> <h4>Surge Protector/Power Strip ($5 and up)</h4> <p>It&rsquo;s amazing how few outlets you will find in a 15 ft. x 15 ft. bedroom. A surge protector will offer extra places to plug in your lamp/laptop/cell phone charger.</p> <h4>Medicine</h4> <p>It sort of goes without saying that you will need to bring any and all prescription medicines with you while away from home.</p> <h4>Documents and Filing System</h4> <p>Bring any and all documentation that you might need for filing financial aid paperwork, to get a job, or to pay your bills. It's unlikely that you will need a full file cabinet &mdash; an accordion file should suit you just fine.</p> <h4>Condoms</h4> <p>Hey, better safe than sorry, right? Even if you don&rsquo;t personally get the opportunity to get (safely) busy, you can bet that a roommate or friend will probably be grateful for your prophylactic stash.</p> <h2>Learnin&rsquo; and Technical Stuff</h2> <p>Books and computers are expensive, but the advent of the technical age means that many books are now in electronic format, making a computer a worthwhile investment. How many other peripherals you need depends largely on your ability to plan ahead.</p> <h4>Computer ($300 and up)</h4> <p>Some colleges have well-apportioned computer labs at your beck and call 24/7; others are a little stingier. It&rsquo;s obviously more convenient to have your own computer in college, because you can use it for note-taking, loading e-books, writing papers, and keeping in touch with everyone you left behind when you went to college. How MUCH of a computer you settle on depends on budget and major &mdash; if you plan to work with graphic design, a netbook is not going to cut it. But if you&rsquo;re a Lit major or taking Asian Studies, you can probably get by with a lightweight, inexpensive netbook or even an iPad.</p> <h4>Printer and Paper ($50 and up)</h4> <p>Computer labs usually offer printing services, but the price can vary. Printers are so cheap these days that it almost makes sense to buy your own and keep it on hand for days when you need to print a term paper but don&rsquo;t have time to wait in line behind 20 other students. If you do have your own printer, be sure to bring enough paper.</p> <h2>Food and Snacks</h2> <p>Keeping yourself armed with edibles that can stand the test of time is a good way to avoid splurging on late-night Denny's runs (not that you shouldn't EVER hit Denny's at 2 a.m.). If preparedness leads to savings, then having a well-stocked snack pantry is practically the key to your vault of gold.</p> <h4>Dried Fruit and Nuts (varies)</h4> <p>It helps to hit up <a href="http://www.wisebread.com/5-things-other-grocery-stores-should-steal-from-trader-joes">Trader Joe's</a> on your way to college and stock up on dried fruit and flavored nuts, which will get you through many a late-night cram session. Go easy on the dried fruit, though. Peanut butter is also a fantastic source of energy that is easy to store.</p> <h4>Ramen ($0.50/pack)</h4> <p>Ramen is the answer to all of life's woes. If you can find a nice, cheap electric kettle for your room, all the better. Another option here is a rice cooker, if you are a big fan of rice or the <a href="http://www.nytimes.com/2008/10/01/dining/01rice.html">one-pot meal</a>. If you're not a carb-lover, investing in a big stash of beef jerky can be a wise choice, even if it is on the pricey side.</p> <h4>Coffee and Tea (varies)</h4> <p>Having your own stash of coffee and tea will not only help keep you awake when you suddenly remember that you have a paper on the early Islamic caliphates due in the morning, but also makes for some good socializing time with new roommates and friends. Buy a decent selection of tea (black, green, chamomile), offer a warm cup to any homesick co-ed, and you've got a friend for life.</p> <p><em>Are you heading for college? What are you bringing with you? What do you think you can live without?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-karim">Andrea Karim</a> of <a href="http://www.wisebread.com/dorm-room-essentials">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-luxury-pens">The 5 Best Luxury Pens</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-resistance-bands">The 5 Best Resistance Bands</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-live-like-a-celebrity-on-a-budget">5 Ways to Live Like a Celebrity on a Budget</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-exercise-mats">The 5 Best Exercise Mats</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-dreams-you-wont-achieve-unless-you-live-below-your-means">5 Dreams You Won&#039;t Achieve Unless You Live Below Your Means</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Lifestyle Shopping college expenses college frugality dorms Fri, 26 Aug 2011 09:48:17 +0000 Andrea Karim 669953 at http://www.wisebread.com Degrees of Frugality: 7 Tips for the College-Bound http://www.wisebread.com/degrees-of-frugality-7-tips-for-the-college-bound <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/degrees-of-frugality-7-tips-for-the-college-bound" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/graduation_cake.jpg" alt="Graduation cake" title="Graduation cake" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>It's no secret that affording college tuition and all the related expenses can be a daunting prospect for students and families. According to the College Board in New York, tuition costs in 2010 have increased 6.5% for public universities and 4.4% for private &mdash; that's about twice the national inflation rate. Students who are responsible for all or part of these costs are in for a rude awakening regarding debt levels and should prepare themselves for a crash-course in frugal living.</p> <p>Since graduating from college 18 years ago, I've had the opportunity to work with younger people struggling to pay undergraduate loans, graduate students embarking on a whole new debt load, and my own peers finally making those last loan payments. Though each circumstance is unique, there appears to be a few common strategies that can help contain the financial impact of college. They may not appeal to everyone or always fit in with the idyllic notion of ivy-draped walls or lingering existential exploration, but they can help keep students focused and insulated from some of the worst financial blows. Here are my seven tips for minimizing the costs of college.</p> <h3>1. Get in and get out</h3> <p>The average yearly tuition at a public university is $7,020 and more than $26,000 for private. This is no time to dawdle. Enjoy your college experience, make friends, learn, and broaden your horizons, but do so with intent. More time in college now means more time paying for college (with interest) later. Realize that it's not just tuition that's putting you in the red. Textbooks, housing, lost earnings and lost time invested in actively building your career all impact the bottom line. Beyond getting what you came for (a 4-year degree), get in and get out.</p> <h3>2. Make your adviser your best friend</h3> <p>A college degree is formulaic: By following a predetermined combination of coursework (minding prerequisites and GPA), you're rewarded with a particular number of credits which equal a degree. Done. Your college adviser keeps you on-track for graduation by monitoring your adherence to the formula and informing you of acceptable variables within it. As you meet with him, make certain you have all the information necessary to help him do the job. Take notes, ask questions, follow-up, and double-check the facts. Being an active advisee helps ensure that you don't take courses you don't need or face unnecessary delays on your degree path because of an unforeseen prerequisite. No one's infallible; keep your own spreadsheet of coursework completed and coursework remaining and compare it your official transcripts periodically to ensure accuracy.</p> <h3>3. Don't change majors</h3> <p>College should be a time when you have room to explore interests and some liberty to revise your goals. Use the first two years of your general education coursework to actively explore different fields of study so that you are more certain when the time comes to declare a major. Once declared, realize that any significant change means more coursework, more time and more money.</p> <h3>4. Be a four-season learner</h3> <p>Minimizing the number of calendar years that you devote to college can't be overstated. A well-paced, credit-focused college life that makes room for friends, study and part-time work should be a year-round, uninterrupted endeavor. Summers off-campus disrupt routine and can allow the temptations of life to derail college plans altogether. Summer coursework, though condensed, can give you a head start on credit requirements for the following term with reduced distractions and a quieter campus.</p> <h3>5. Don't discount community colleges</h3> <p>Community colleges may not inspire us to wax nostalgic about our alma mater later in life, but if tuition costs are a real concern, start here. Tuition at community colleges can be significantly lower than even public universities. Explore your options, pay attention to how your credits will transfer, and see if this option might work for you.</p> <h3>6. Avoid the bookstore blues</h3> <p>Getting your textbooks at the campus bookstore may be easier and quicker, but you'll pay for that convenience. Check out Amazon.com or Half.com for deeply discounted prices. With a little planning and legwork, the price of those textbooks each term can be a little less stratospheric.</p> <h3>7. Rethink housing</h3> <p>One of the smartest housing strategies I remember from my own college years came from the sister of dear friend of mine. Before her freshman year, her parents made a trip to the town where she was to attend college and purchased a modest two-bedroom mobile home in a quiet mobile home park. The place cost about $15,000, if I remember correctly. She moved in a few weeks before classes started and rented the spare bedroom to a friend. The rent she charged took care of the utilities and lot fee. This situation, with the expected roommate turnover, lasted the entire four years. Upon graduation, the parents sold the mobile home for a couple thousand more than they paid for it. I've always remembered this approach as keenly efficient and pragmatic &mdash; essentially zero housing costs for their daughter and some real-life landlord responsibilities and experience to boot. Lovely.</p> <p>College shouldn't be all science and no art; there are larger life lessons to learn than money management. But at times, the combination of youth, the first tastes of freedom and the array of choices can all conspire to make college more expensive than necessary. These are just a few ideas that can help reign in those costs and keep students on-track. Grants, work-studies, and careers paths that allow for eventual loan forgiveness are all important avenues to investigate too. Prepared or not, Frugality 101-301 become part of the required coursework for both students and parents during these years.</p> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p>This is a guest post by Kentin Waits. Kentin has written five guest posts for Wise Bread and been published in Backwoods Home magazine. His writings have been featured in other top blogs such as Consumerist and Lifehacker. He&rsquo;s currently working on launching his own blog; look for it soon.</p> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kentin-waits">Kentin Waits</a> of <a href="http://www.wisebread.com/degrees-of-frugality-7-tips-for-the-college-bound">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-surprising-ways-to-get-more-college-financial-aid">12 Surprising Ways to Get More College Financial Aid</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-save-on-college-tuition">6 Ways to Save on College Tuition</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/getting-the-most-out-of-free-college-planning-resources">Getting the Most Out of Free College-Planning Resources</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/rethinking-the-529-college-savings-plan-strategy">Rethinking the 529 College Savings Plan Strategy</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-certifications-that-add-big-to-your-salary">7 Certifications That Add Big $$ to Your Salary</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training college expenses college planning Wed, 26 May 2010 13:00:03 +0000 Kentin Waits 98832 at http://www.wisebread.com Making Do With Help From Mom And Dad http://www.wisebread.com/making-do-with-help-from-mom-and-dad <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/making-do-with-help-from-mom-and-dad" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/parenting flower to child.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="181" /></a> </div> </div> </div> <p>Ever wonder how the person with about the same salary as you lives in a fully furnished apartment, enjoys Caribbean vacations, and is setting aside money for retirement while you share space with an ever-changing roster of roommates, are hoping for a weekend stay at the beach, and are still paying off student loans?</p> <p>It may be that your coworker, friend, or acquaintance is deeply in debt but it may be <em>just as likely</em> that help from Mom and Dad has moved this person from just making it to living well with few money worries. By my calculations, contributions for college expenses, transportation, childcare, vacation rentals, and weekly dinners could add up to over $400,000 to an adult child’s net worth by the time he or she is 35 years old. </p> <p>I have long considered the advantages of wealthy families but after reading Linsey’s post on <a href="/should-you-be-ashamed-to-be-on-public-assistance" title="http://www.wisebread.com/should-you-be-ashamed-to-be-on-public-assistance">growing up poor and receiving public assistance</a>, I started thinking about the financial benefits of having middle-class parents.</p> <p><strong>College Expenses</strong></p> <p>In today’s numbers, my parents&#39; funding of my public university education put me ahead of my indebted peers. For example, if I invested $7,732 per year rather than pay off $60,000 in student loans at 4.9% over 10 years and earned 10% per year, I could have a $218,000 nest egg by 35.</p> <p><strong>Cars</strong></p> <p>Many of my friends had cars before graduation day, wholly or partially funded by their parents. I borrowed my parent’s car to go to job interviews and rode my bike nearly everywhere else. </p> <p>When I did receive an offer for a real job, it was dependent on my having reliable transportation to and from work in a small town with no public transportation (I checked “yes” for transportation on the application with plans to purchase a car). Getting a loan wasn’t quite the snap I expected. My employer, a regional bank who signed me on as a financial analyst, wouldn’t lend me the money to buy the car (the credit department operated separately from human resources).</p> <p>I thought that my parents could help me with the down payment. But after paying for 3 college educations and funding 2 weddings within 10 years, my parents didn’t have extra cash by the time I, the youngest, finished college. I had saved $500, which helped.  </p> <p>My parents did have a relationship with a bank, where I encountered a loan officer who empathized with my predicament. She made the loan with my dad as a co-signer. His credit and my savings gave me the start that I needed. </p> <p>If my parents had given me a $20,000 car on or just before graduation (again in today’s dollars), I could have invested my car payment (annual cost of $4,735 based on 5.9% interest rate over 5 years with 10% investment return) and increased my net worth by over $82,000 at age 35. </p> <p><strong>Housing</strong></p> <p>With my new car, I was ready to start my new job. I didn’t have enough money for a security deposit on an apartment or rental house but that didn’t matter. My relocation package allowed 30 days in a hotel, so I saved my first couple of paychecks to fund my launch into the real world. Housing costs in this area were relatively low and I found a roommate at work so my upfront cash needs were minimal. </p> <p>Contrast my situation with that of a co-worker’s. Her parents didn’t want her to waste dollars on rent so they gave her money for a down payment on a house. Though I can’t recall the details, she may have been able to rent space to a roommate, further elevating her financial status. </p> <p>Still, her parent’s decision, though sensible, didn’t strike me as particularly wise. We lived in a small town with inexpensive, though limited, apartments and houses for rent. Real estate prices weren’t rising very fast – in fact, they were stagnating due to high interest rates.</p> <p>I wish I could say that the gift had thwarted my co-worker’s self-reliance but I don’t think it did. Still, her homeownership made her separate from the rest of us. Did it rob her of the sense of satisfaction of succeeding on her own? Maybe, it did. But, more importantly, she may not have learned how to live with less comfort and more creativity. </p> <p>Here are some things I remember from my close-to-the-financial-cliff days: </p> <p><strong><em>Fun</em></strong></p> <ul> <li>Near-weekly hiking trips in the Blue Ridge Mountains</li> <li>Impromptu parties</li> <li>15 people in a beach house rented from a friend of a friend because we were too young (under 25) to rent from a property management company </li> </ul> <p><strong><em>Finance</em></strong></p> <ul> <li>Light bulbs going off in my and my friends&#39; collective 20something brains that paying the minimum payment on credit cards would keep us indebted for years</li> <li>Thrill of cable television at <em>someone else’s house</em></li> <li>Realization that savings was better than furniture<br /> </li> </ul> <p>Wisdom and social interaction aside, my colleague&#39;s net worth may not have been boosted much by her parent’s generosity. Though $80,000 could have gotten her in a 3 bedroom-2 bath home in our town in the early 80s, interest rates were double-digit (10-13%) so that her monthly payments were likely over $500 and even with a roommate paying $100-200 per month, she could have paid less to live in an apartment (during this time, I paid $112.50-$150.00 for my share of an apartment in the boonies and then a rental house in town; note: small-town living is not exciting but can be very inexpensive). If my co-worker had pocketed and then invested the proceeds from the sale of her home in an amount equal to the down payment (after our employer had been sold to an out-of-town company), she’d be about $45,000 richer at age 35. </p> <p><strong>Gifts of Cash, Stock, and Furniture</strong> <br />Since then, my husband and I have received some gifts from our parents: a loan from his parents to help us through a cash flow crunch right before we bought our first house; college funds for my sons and some furniture from my parents after my mom received an inheritance; and two gifts of cash and stock from his parents. Combined, the gifts total about $18,000 over 20 years. And, if I needed more, I had quick access to support. </p> <p><strong>Financially Self-Made?</strong><br />You may be thinking that, having paid your way through college, establishing your own credit (something I should have done in college), saving for your first house, and never taking a dollar from your parents that you are financially self-made. But there are other ways that Mom and Dad may have helped or are still helping. </p> <p>Consider the value of services that they may provide (estimates): </p> <p><strong>Services</strong></p> <ul> <li>Childcare: $150/week for 52 weeks=$7,800 per year starting at age 28; by age 35, your net worth boost is over $47,000 per child. </li> <li>Sunday dinner: $25/week (considering family members and friends that you may bring along) for 52 weeks=$1,300 per year starting at age 21; by 35, you’re ahead by $45,000. </li> <li>Room and board: $900/month for 12 months each year should cover housing, utility, and some food costs; live at home for 5 years beginning at age 21 and you are $171,000 richer by 35. </li> <li>Vacation home rental: $2,000/year for 9 years beginning at age 24 lets you grow your nest egg by $39,000. </li> </ul> <p>They may also offer you used, big-ticket items such as cars and furniture, or they might make payments on your behalf for your children’s preschool tuition, private school tuition, and college fund. Ranging from a few hundred dollars to several thousands of dollars, these gifts may allow you to reduce your spending and save for the future. </p> <p>What should you do with this information? Here are some ideas:</p> <ul> <li>Thank your parents.</li> <li>Refuse gifts if you think that your parents may not be able to afford them without sacrificing their futures (you’ll have longer to earn and watch your investments grow).</li> <li>Realize that the financial playing field isn’t level. </li> <li>Help someone else who is just getting started. For example, I served as a credit reference to the utility company for the first cousin of a friend who had since relocated, letting the cousin (who I talked to once on the phone) get wired with no cash outlay. </li> </ul> <p>Some of you may have been completely on your own at 18 years or less but many of us have had help of <em>some kind</em> until 21 years or more. I don&#39;t have a trust fund but I see now that I started real life with an advantage. </p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/making-do-with-help-from-mom-and-dad">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/learn-good-financial-habits-from-your-parents-or-not">Learn good financial habits from your parents. Or not.</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-characteristics-of-the-worlds-youngest-billionaires">5 Characteristics of the World&#039;s Youngest Billionaires</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-money-rules-every-working-adult-should-know">10 Money Rules Every Working Adult Should Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-easy-ways-to-protect-your-debit-card-from-skimmers">6 Easy Ways to Protect Your Debit Card From Skimmers</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-minute-finance-create-financial-goals">5-Minute Finance: Create Financial Goals</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance childcare college expenses middle-class parents Fri, 29 Feb 2008 01:54:19 +0000 Julie Rains 1861 at http://www.wisebread.com