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How I Learned To Love Pie Without The Charts

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You attend your first ever 401k meeting….and they hand you some pie charts.

Oh, no.

First of all, I should say I love pie. Especially apple pie.

But I hate generic pie charts in retirement plan books.

Pie charts stink! The Free Financial Advisor

I can’t tell you the number of boring-ass financial meetings I’ve attended where some dude in a suit is plowing through a bunch of pie charts while his clients pretend to be awake.

Rule one of asset allocation:  Chuck the pie chart.

Most of the time, these charts are based on your age and risk tolerance. Nothing like putting a few square pegs in round holes, huh?  I’m sure yours will fit just nicely into this….oh, wait, it won’t fit?  Let’s just

Jam it home.

What about your goal? What about “How much do I really need my money to earn?”

Nope.

Asset allocation, or (to use the five dollar word) “diversification”, starts with what you want for yourself, doesn’t it? Don’t you think you should try to achieve your real goal?

So, here’s the rocket science of 401k planning:

1)      Write down what you want.  I know that may seem like a shock to you. The National Endowment for Financial Education (NEFE), The Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC) and the College for Financial Planning (FPA) all recommend starting with your goal.

You want to use a generic pie chart instead?

Good luck with that the next time the market drops.

2)      Here’s the next amazing step:  read through different types of investments to see which ones actually have historically met your goal.  I think my head just exploded.  Really?  Who thought that you could actually look back at investments and see what they’ve accomplished?

Some thoughts:

Gold and Collectibles:  Good for people who can actually predict the future.  Ms. Cleo and Nostradamus should have loaded up.  Gold is five times more volatile than the stock market. Think you know where it’s headed?  Think again.  (This doesn’t mean I don’t like gold.  It means that you can’t tell me it’s going to be through the roof in three years, moron on Twitter…..).

Stocks:  This is like saying that you should always have cake after dinner, but generally, ten years or more and you’re looking good with stocks.  If you need the money next year, you’ve done about as well at the casino.

Bonds:  Depending on the type, over five years.

….and so on.

Get the point?  Real diversification, dear readers, is going to be based on your personal end-game. Start there.  Or not.  Avoid pie charts, but load up on pie.  Yum.

5 Ways to Turn Your Budget Into a Hot, Soapy Dream

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Ah, the budget.

While I dream about hot, soapy fun, I’m not sure that “a budget” is what I had in mind. Sure, I’m into crazy stuff as much as the next guy, but this whole budget and soap thing….I thought, “I’ll pass.”

…until I was recently looking at my dishwasher.

Then I thought, “I’ll pass….out! This is awesome!”

Here’s hot, soapy, and the key to my biggest budget dreams of all time.

When I want to get stuff done….you know, real stuff, like washing dishes or clothes, I don’t do the job by hand. I throw in a few ingredients and let a machine handle it.

People tell me that they like to budget by hand. I don’t get it. I could wash my clothes by hand. They’ll probably smell a little and I’m fairly certain I won’t do a wonderful job….but I could do it.

Automatic Savings like a dishwasher - The Free Financial Advisor

Instead I just press a button.

I’ve got better things to do than sit around and worry about how I’m spending every penny. I could be playing video games, running, or working on writing an article about budgeting…..(how META!)

Instead, try these ways to create the automatic thrills of a budget lifetime:

1) Soak in your expenses without writing stuff down. Ummm….how unbelievably wild and crazy. Using a system like Mint or YNAB instead of writing out every expense? Oh la la.

2) Wash down easy purchases automatically by avoiding the store. I’ve been using Amazon’s Subscribe and Save for some time now for basic household expenses. Not only do I get great prices, but I know what a large portion of my grocery budget is going to be before the month begins. This also saves me time at the grocery store, so I can spend more time writing crazy dishwasher/budget analogies.

3) Rinse yourself in free, credit protecting services. Afraid you’ll damage your credit by missing payments on your credit card? Ask your lender about automatic minimum payments. Sure, you want to stay ahead of the game, but if you accidentally overlook a payment, you’ll keep your credit intact. …and nothing is sexier than a perfect credit score.

4) Spin your investments by reinvesting dividends. I swoon when people start talking to me about dividends. Is it getting hot in here? Until you’re ready to start spending your fortune, use the power of automatic dividends to build your savings quickly, and better yet….without paying attention.

5) Dry out any rough investments by scheduling alerts when your funds drop more than your risk tolerance can stand. Who wants to worry about the financial markets? Well, I do, if there’s something to worry about. Here’s a plan: use alerts to tell you when there’s something you should pay attention to. Until then, spend your days sprinkling rose pedals across your bed and singing horrible love songs. Or not.

Aren’t those sexy? I know what you’re thinking. “How can I get more of these tips, but on my mp3 player or phone?” Check out the Stacking Benjamins podcast every Monday or our single-interview Short Stack on Fridays for more overwraught analogies…..

My brother just sent me this hilarious SNL Amazon.com skit video….talk about hot, soapy dream! 🙂

The Market’s Coming Back! I’m Panicking Again!

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Here’s a quick lesson in human behavior:

Fed quantitative easing, problems in the Ukraine, soft volume numbers in the stock market. It seems like a recipe for more downer days in the stock market. It’s also a recipe for worriers to worry even more.

…Yet the market continues to roar back.

Did you get caught?

Did you move money to the sidelines when the market was low and then miss out on the upswing (essentially losing money and locking it in….).

A better question might be: did you do anything at all?

Down markets bring out worried investors. TheFreeFinancialAdvisor.com

….and Action!!!!!

When I was an advisor we had some clients who wanted to see some action if the markets sank. We should be doing something, dammit!

The more experienced guys in the office insisted that we talk about re-diversifying the portfolio with our clients like the guy helping ease the suicidal lady off the window ledge. It didnt matter that we already had damned good diversification in our portfolios.

When the markets moved, here’s how we’d end meetings:

We’d move a few things around to prove to clients that we were doing something about it.

That was “the show.” Let me tell you what we were really doing:

…we were watching the market very closely and hoping that it rebounded soon. That way, the phone calls from clients would stop and we could quit pretending to be market gurus (even though we’d been insisting with our clients that we weren’t market gurus….AND that there’s really no such thing……).

At first I thought this was nonsense.

The Truth About Client/Advisor Relationships

 

Why would we move a few funds around if we believed they were the right places to invest? Why would we abandon the strategy?  A friend of mine, we’ll call him Joe, told me everything I needed to know about human behavior my second year practicing.

He said, “Either they’ll get rid of the fund they don’t like or they’ll get rid of you. Which would you prefer?”

You know the answer to that one.

So, answering my own question, it was nonsense for the client, but made perfect sense for the advisor. Sadly, most clients thought that it made sense also.

Let’s set the record straight.

If you have a good fund with a track record and your long term diversification says to keep that fund, you should hold on to it. Don’t just hold on with your eyes closed and teeth clenched; hang on while knowing what you’re doing. Here is what you should know:

1)      Make sure your fund is keeping up with its benchmark. Some funds track the S&P 500, while others follow the NASDAQ or a certain sector of the market. Use Morningstar.com to find out what your fund tracks and to see if it’s keeping up with ‘the Joneses.’

2)      Is your goal still the same? If you have a fund, it’s really only a fuel for your goal, isn’t it? When your goals change, your diversification should also change. If you’re in the best fund in the wrong part of the market, you’ll never be able to use the fuel.

3)      Pay attention to taxes and turnover. If your fund is outside of tax shelters, track a metric called turnover (also found at Morningstar.com or any of the reliable search engine sites). Turnover show how much of the portfolio your manager is churning to keep his head above water. This movement can create taxes and unnecessary expenses. Turnover of 100 percent means that all of your positions are changing in a twelve month period.

So the market’s been moving around…..what do you do now? Check out your funds to make sure you’re in the right spot to meet your goals, and then do nothing.

6 Money Saving Ideas That Aren’t – 2 Guys and Your Money #66

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Crazy man Len Penzo sits in for OG on today’s show, reviewing his article from Len Penzo dot Com called Money Saving Ideas That Are Anything But.

Thanks to Len for sitting in today!

SHOW NOTES

<> Open

<> Amazon.com – Follow this Amazon.com link when you do your shopping and not only will you score those great Amazon deals, but you’ll also help out the podcast! (You can also go to StackingBenjamins.com/Amazon and you’ll reach the same spot).

<> Len Penzo – 6 Money Saving Ideas That Really Aren’t

Book Mentioned: Kitchen Confidential by Anthony Bordain….I love this book:

The 14 Leadership Traits of the Marine Corps and How They Can Make You a Better Investor

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Once upon a time, I stood on the parade deck a mere stone’s throw from the San Diego airport.  My mom, grandma and grandpa, and best friend’s sister were in the stands, but I couldn’t find them.

Eyes. Straight. Ahead.

After all the pomp and circumstance, we heard the final phrase we had been waiting to hear for nearly 14 weeks, “Marines!  Dismissed!”  To which we replied, “Aye-Aye, Sir!” took one step back, about face and done.

I had earned the title Marine.

One of the things we learned in the Marine Corps were the 14 leadership traits – they were beat into our brains (sometimes quite literally)– so they’ve stuck with me for almost two decades.  Undoubtedly, my time as a Marine shaped who I am today, and despite the fact that I’m not active any more, I still talk with Marine buddies, and quite often reflect on my time; the acronym JJ DID TIE BUCKLE ringing in my head.

Without further ado, here are the 14 leadership traits, as taught to me by Uncle Sam, complete with their definition, and how I think they can make you a better investor:

  • Judgment: The ability to weigh facts and possible courses of action in order to make sound decisions.
  • Justice: Giving reward and punishment according to the merits of the case in question. The ability to administer a system of rewards and punishments impartially and consistently
  • Dependability: The certainty of proper performance of duty.
  • Initiative: Taking action in the absence of orders.
  • Decisiveness: Ability to make decisions promptly and to announce them in a clear, forceful manner.

Marines Semper Fidelis

  • Tact: The ability to deal with others in a manner that will maintain good relations and avoid offense. More simply stated, tact is the ability to say and do the right thing at the right time.
  • Integrity: Uprightness of character and soundness of moral principles. The quality of truthfulness and honesty.
  • Enthusiasm: The display of sincere interest and exuberance in the performance of duty.
  • Bearing: Creating a favorable impression in carriage, appearance, and personal conduct at all times.
  • Unselfishness: Avoidance of providing for one’s own comfort and personal advancement at the expense of others.
  • Courage: Courage is a mental quality that recognizes fear of danger or criticism, but enables a Marine to proceed in the face of danger with calmness and firmness.
  • Knowledge: Understanding of a science or an art. The range of one’s information, including professional knowledge and understanding of your Marines.
  • Loyalty: The quality of faithfulness to country, Corps, unit, seniors, subordinates and peers.
  • Endurance: The mental and physical stamina measured by the ability to withstand pain, fatigue, stress, and hardship.

Which of these should you practice while managing your investments?

Knowledge is an easy one, but which others?

I think Judgment and Decisiveness are most important in my investing plan.  It’s important to know what to do (knowledge), exercise sound thinking on when to do it (judgment), but most importantly, you need to act (decisiveness).  I can see many other leadership traits that would help me (and others) become better investors.  This is a useful list for your investment plans and for your day-to-day interactions with others.

A lack of decisiveness holds people back too often. When you have multiple options, and they all look good, it’s important to pick one and move. In the Marines it’s a matter of life or death. Luckily for us, in investing, it’s a matter of compounding interest!

While not life or death, missing out on a few days of interest, over long periods of time, has an increasingly damaging affect on your money. Missing $100 today could be a couple thousand dollars lost during your retirement years.

Other than the ones I listed above, do you see any leadership traits that if applied would help you be a better investor?

photos: Semper Fidelis – Marine Corps Archives & Special Collections; Marine Engineers Resting After Firefight – DVIDSHUB

Taxes Suck! 7 Ways to Stick It To Uncle Sam

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Let’s admit it: everyone wants a lower tax bill.

Well, everyone wants the combo of mo’ money AND a lower tax bill.

Doesn’t that sound like a “have your cake and eat it, too” scenario?

Maybe. But then again….maybe not.

Too many people pay WAY too much money on their tax bill. Sometimes they pay more because of poor decisions, but often it’s just because they don’t understand how taxes work and where to look for awesome opportunities.

Here are seven of our favorites:

Do you work for the man? Try these:

Open a retirement plan and use it. The #1 way to grow your net worth and help your tax return is to stuff money into your retirement plan at work. If you’re eligible for a 401k, 403b or 457 plan, jump on that opportunity.

I’ve heard many “reasons” people don’t invest in their workplace plan. Here are a few:

I can’t afford it. Ask yourself this: how will I afford to retire when I have no money later. If you’re too poor to save now, what will you do if you can’t work later?

I don’t like my work, so I don’t want to put money in the 401k plan. Your work farms out the administration of the 401k plan to professionals. Use your workplace plan.

They don’t match. Matching contributions by your employer are gravy on top of an awesome tax shelter. Don’t worry about the match….get invested.

Take advantage of workplace pretax plans: Besides the retirement plan, there are other opportunities, such as HSA accounts. Some companies allow you to pay for everything from childcare to optical with a health spending account. Use as much of this as possible to score huge savings on these services. (If you’re in the 25% tax bracket and have a 5% state tax, you’ll save 30% on your childcare!)

Use bonuses and incentives wisely:

It’s a great day if you’re getting a stock award or bonus, but make sure you understand what you’re getting into tax-wise carefully:

Stock options or stock purchase plan: You’ll pay taxes on these plans when you sell. Having a tough year tax-wise? Don’t sell today. There’s also a HUGE difference between short term and long term capital gains rates. Wait until you’re paying the (significantly lower) long term rate before selling.

Bonus money: If you’re eligible for a big bonus but this isn’t a good year to sell, ask your boss if you can defer your bonus until the new year. Or, if you feel that your income will stay consistent, ask if you can break up a big bonus into two even halves to lower the tax impact. This strategy is best used if you’re getting a bonus at year-end (I hate deferring money in my pocket for several months….).

Have a budget? Try these:

Give to charities. Not only are you helping your community, but you’re putting money back in your pocket if you itemize. Cash gifts will obviously lower the amount of money you have overall, but gifts in kind, such as clothing, old automobiles, and items to 501c thrift stores can both lower your tax bill and remove clutter.

An increasing number of people are now donating larger items and receiving sizable tax deductions as a result. For example, if you have an old boat that you no longer use, making a sponsored boat donation could help you to save a significant amount on your taxes.

Donating a boat is a great thing to do on a number of levels, since the boat is then sold at auction with the proceeds going to charity. Then, for your donation, you receive a tax deduction that is equal to the value of the boat or the boat’s true value.

Claim ALL of your refinance costs. If you’re FINALLY taking advantage of low interest rates to refinance, remember that any points or closing costs you pay might be deductible also. Ask your tax preparer or read this IRS notice to see if you qualify.

Investments? Here are some:

Think about your dividends. I love dividends as much as the next guy, but a portfolio full of dividend-paying stocks in a non-qualified account can be a huge tax speed bump on your investment returns. If you aren’t spending the dividends today, purchase dividend-heavy investments inside of your IRA and use your non-IRA account to house more tax efficient investments.

Buy/sell creatively. If you’re finally selling your big winning stock, look for that stock in your closet that’s been horrible and has no prospects of coming back. You can cover up all of your capital gains with losses from losing stocks…and $3,000 more.

Photo: DonkeyHotey

 

Blog Post of the Week! …Another Great Month edition

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Where the hell has the month gone? Well…we’re wrapping up a great January here at TheFreeFinancialAdvisor.

Here’s a list of things we accomplished between FFA and our sister site, Stacking Benjamins:

– We’ve completely redesigned this site. I hope you like the look of our new home. We’ve got more coming in February that I can’t yet disclose, but you’re going to love it!

 

star anis toothpaste stacking benjamins
Maybe not so lovable. “Made with real anis!” doesn’t sell me….for some reason.

 

– I also redesigned Stacking Benjamins, my personal blog. Now you’ll see pictures on the tops of the posts and the podcast player has been moved to the top.

– We created better written content this month. Now that I have a podcast editor (thank you to Isabella Bianca, our new editor!), I can focus more on the written word. Hopefully you’ve gotten some great tips from our new posts here.

I’m especially proud of:

5 Secrets Auto Insurance Agents Won’t Share

How The Repo Guy Nearly Took My Car

and on Stacking Benjamins:

What To Do When Your Mutual Fund Manager Leaves

21% Interest Rate Credit Card or Build Your Emergency Fund? The Choice is Obvious

Joe’s Top Films of 2013

I hope to do more of these in the future, so you’ll know these two sites are well worth your time every day!

Also – In the past, I had a hell of a time discerning the roles of the two sites. What was the difference between Stacking Benjamins and The Free Financial Advisor? From the beginning, I knew what I wanted to create with SB. I wanted a place that was MY home on the internet and a home for our podcasts. So, on that site, you’ll get my personal point of view with a big dose of “Joe” attached.

But FFA was a different story. When I began SB in the spring, I gave little thought to what FFA was going to become. I realized during January what FFA should be: exactly what the name implies. You’ll get lists of the best activities you should undertake with your money. Lists of the worst mistakes we’ve seen people make. Planning tips while you’re navigating the financial waters.

So, to try and put it succinctly, Stacking Benjamins will be Joe’s quirky thoughts and Free Financial Advisor – Average Joe’s Money Blog will focus on clear tips to manage money better.

Also in January:

– We tweaked the podcast to feature a better introduction sequence, a few more voices on the roundtable, and we added an awesome new contributor, The Evil HR Lady.

– I’ve been experimenting with video, and I’ll have our first Stacking Benjamins video up in February.

– Work has continued on my book. I’m now at 32,000 words, just over halfway to my 60,000 word goal.

– I’ve joined on as a contributor at another awesome site, Daily Capital. You can now find me at American Debt Project once a month and Daily Capital from time to time.

Enough about me, because this post is about you….and the best writing I read on the web this week.

The Blog Post of the Week!

My favorite article of the week comes from Snark Finance and was actually written eight days ago. I know….that should invalidate Mitchell from the grand prize, but in fairness, I missed the post and actually read it yesterday. So, the judges conferred and decided to grant an exception.

I’m sure Mitchell was sweating.

So, why do I like How to Become Creative: Tips!? People often tell me they aren’t creative, but they don’t realize that creativity isn’t something you’re born with….it’s a muscle you can develop. I love Don Hahn’s book on creativity: Brain Storm: Unleashing Your Creative Self, and Austin Kleon’s book Steal Like an Artist: 10 Things Nobody Told You About Being Creative
(our affiliate links if you’d like to help the site!). These books say in 60k words what Mitch stresses in a few hundred: work to become creative and soon you’ll have ideas when you least expect it.

So, Mitchell, here’s the deal. Congrats on the award….which is us allowing you to print this and post it on your refrigerator for exactly one week.

You’re welcome.

Other Articles That (to use Mitch’s term, since we’re all about Snark today) Didn’t Suck

I’m so incredibly happy to see our good friend Marvin at Brick By Brick Investing posting again. He featured this week a fantastic in-depth review of why dividend investing can go bad and has a good solution to even out your results: 11 Monthly Dividend Stocks That Let You Sleep Well At Night.

My brother called me this week to ask about purchasing foreclosures. Simon Campbell offers up which states are best to search for some low-cost housing in Looking For Foreclosures? Look In These Three States.

I love this idea at Krantcents about a Countdown Clock. As a guy who spent far too long in a job he liked but didn’t love, I constantly now feel the clock ticking on my life. I agree with him: if we had a clock all the time going in our brain, I bet we’d all accomplish more (or all be on medication for the neurosis it created….).

Here’s something that doesn’t often happen: Cameron at DQYDJ.net deals with the emotional side of paying off debt. Emotions and DQYDJ? Say it ain’t so….. Read: Maintaining a Debt Paydown Strategy.

Greg at Club Thrifty watched a film called Park Avenue and goes all left wing (not really….I just thought it sounded pot-stirry) in Park Avenue and the One Percent. I love his analogies: “I squirrel that shit away like a fat kid hiding Twinkies under his bed.” If I squirrel Twinkies under my bed does that make me fat, too? …just asking…..for a friend….

I’ve been in love with the concept of renting out our bedrooms to travelers, but Cheryl won’t get onboard with this idea….yet. Maybe that’s why I really liked How I Made $1,500 Renting My House To Travelers.

Hello, my name is: 

In the “new to me” department, let’s welcome DebtFreeTejana to our little world of financial bloggers. She’s been blogging seriously since what appears to be October….but this is how long it takes me to actually pay attention. Read: The Cost of Being a Female.

Hope you have an awesome weekend! We’ll see you Monday on the Stacking Benjamins podcast and back here with more fun articles on saving.

A Huge Thanks!

Big thanks to our friend J. Money. He popped our post 21% Credit Card vs. Emergency Fund: The Choice is Obvious on the top of his Rockstar Finance page. Have you heard our interview with J. from Fincon? Check out: How Much Does a Baby Cost?

Finally, a big thanks to Tonya at Budget and the Beach for mentioning Joe’s Top Movies of 2013 on her Big Picture list of reads. Have a great half, Tonya! Remember my mantra: start off slow and then settle into a slower pace….

photo: Greg.Buri

5 Secrets Auto Insurance Agents Won’t Share

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5 Secrets Auto Insurance Agents Won't ShareCar insurance agents, for quite awhile, have been the butt of finance-related jokes. Lately though, with hard-hitting advertisements from big firms like State Farm and Allstate, agents are fighting back. People are beginning to understand that while you may pay less with an online auto insurance service, there’s a ton of value attached to having an insurer who’s there when you need them.

But that doesn’t make agents little angels, either, does it?

Insurance agents have a few tricks up their sleeves, and the more you know about those tricks, the easier it’ll be to navigate meetings and phone calls in the future.

Here are my favorite 5:

1)   Auto insurance is a loss-leader. Maybe the insurance company makes money on auto insurance, but the agent doesn’t. Auto insurance pays so little that it’s very difficult for an agent to survive. Therefore, the agent will sell you an auto policy as a way in to your heart. Most agents have a full line of far more lucrative products, ranging from life insurance to annuities, that they’d love to sell to you.

2)   If you don’t ask about the discount, I might not tell. This isn’t universal, but agents hoping to make a few extra bucks might try and steer clear from discussions about discounts. Because the agent is paid a commission based on the amount you pay, it’s in their interest for you to pay more.

Of course, agents who are after the “bigger picture” will try to give you as large a discount as they can find. That way, when you’re looking for help in other areas, you’ll come running back to them for advice.

3)   That multi-line discount, while giving you a little off the premium, might not be your cheapest option. For years, I’ve had my auto coverage through a different insurer than my homeowners. Yet, agents always ask me if I have a multi-line discount. I’ve found that by forgetting this discount and paying  a little more, I still save in the aggregate by purchasing from separate insurers.

Why doesn’t the agent share this one? That’s easy. Wouldn’t you rather have a client who thinks they’re getting a discount AND who owns two of your products instead of only one? You betcha.

…by forgetting this discount and paying  a little more, I still save in the aggregate by purchasing from separate insurers.

4)   I’m not going to monitor your policy. I remember people getting angry because their insurance agent never called them except when she wanted to sell something else. They never asked about bithdays or new discounts that might apply to the client. Simply put: agents don’t have time to waste on these small issues. With several hundred (or thousands) of clients, there simply isn’t enough time in the day for those personal calls. It’s up to you to take care of your own needs. Call your agent periodically to review your policy for discount opportunities and new rates based on any changes in your life.

5)   My assistant knows a ton more about you than I do. In most offices, the assistant handles 85% of the day-to-day “low commission” business. I always told my clients that for routine business calls, ask for the assistant, not the agent. While the agent might take two days to return your call, the assistant may be available right now to take care of address changes, premium payment changes, or small policy questions.

That doesn’t mean you should ask the assistant if you really need that permanent life policy. If you think your question is at all technical, talk to the agent for your best answer.

4 Factors to Weigh When Choosing a College

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college search 4 factors choose collegeCollege students in America are facing a financial crisis.

According to the Center for American Progress, more than 13 percent of students who started loan repayment in 2009 wound up in default by September 2012. Another 26 percent of those borrowers were delinquent.

Ouch.

Many experts argue that the causes for these epidemic rates are systemic: College is getting more expensive, forcing students to borrow more, but the rising cost of college degrees is not being met by increasing value of those educations.

Many students who began loan repayment in 2009 entered into an economy that struggled to create new jobs for the youngest generation, resulting in an employment crunch where college education was not rewarded with the employment they merited. With horror stories running rampant, today’s prospective college student is increasingly weighing the cost of college against its supposed value. If you’re facing a similar situation, here are some financial considerations to keep in mind:

Consider the Total Costs

For many students, college is expensive. But there are other costs associated with college that are worth considering when weighing the total cost. For example, if you go to a school where you need to own a car, you’ll have to pay for the up-front cost of the vehicle plus maintenance, gas and insurance while you’re in school. That could easily up the price of college by thousands of dollars per year, depending on the vehicle.

And if you plan to live off-campus, the local cost-of-living might also factor in. Consider housing prices, food budgeting, and other situational costs that might affect how you consider the overall cost of attending one college over another.

How Does Financial Aid Vary?

Federal financial aid is typically awarded according to your family’s presumed ability to pay for college. This affects the federal grants you qualify for as well as the types of student loans you are eligible to borrow. Additionally, individual schools also have financial aid packages that can feature an array of scholarships and grants. Depending on the school you plan to attend, strong students can sometimes lobby for better financial aid packages.

Because your financial aid is likely to be different at every school, you need to get hard numbers from each institution, and use this aid to reassess your college options. One report by HCM Strategists identified financial aid packages and emerging aid channels as vital tools to make college more affordable. These tools help avoid the worsening student-debt crisis, so don’t ignore how these alternatives might create much-needed economic relief.

You can even receive financial aid if you enroll in an online institution, depending on your overall financial need. Contact your school’s admissions advisor for more information on state loans, personal loans, veterans’ benefits, and tuition reimbursement through your employer. The tuition reimbursement program is a great option for employers who want to invest in their employees and keep them around long-term.

Will You Get Your Money’s Worth?

When it comes to saving money in order to get more bang for your buck, students have a number of options available to them. They may choose to first attend a community college and complete general education requirements while the costs are low. It’s also helpful to keep online college courses in mind, particularly if you’re looking to maintain flexibility while juggling school and a job. Browse a directory of online colleges and programs to educate yourself on all of the options available to you. Scourge the web for all available online college resources you can find, and start comparing and contrasting each resource.

For Some, It May Depend on Your Major

A college education can offer job prospects and income opportunities that vary widely across different majors. According to a report from Georgetown University’s Center on Education and the Workforce, unemployment rates tend to be much higher for some courses of study than for others, as Forbes highlights.

Architecture graduates have the highest current unemployment rate, largely because the stagnant economy has deflated demand for new buildings. Not far behind are Arts, Humanities and Social Sciences, all of which have unemployment rates of 8.9 percent or greater.

Given those numbers, students might find it particularly risky to invest in an expensive education that offers poor income prospects and a high risk of unemployment. Degrees in business and other stable professions, on the other hand, are more likely to deliver a strong return, making it more practical to spend for a more expensive education.

How the Repo Guy Nearly Took My Car

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Repo ManWhen people ask, “What do you really know about the average guy? You manage money for rich people?” I always smile.  I’ve had the privilege of working through my share of wonderfully challenging personal financial situations.  And when I say “challenging” I mean the worst timing and situation imaginable.

Here’s one you’ll love and can learn from:

I’ve been a member of an entrepreneurial coaching group for a long time. Early in my career I was getting ready to head out of town.  My job was to pick up two additional participants and get the heck on the road since we were getting some pretty crappy winter weather.  As I was just finishing loading my bags in the car, my phone rang:

“Hello, is this TheOtherGuy?” (clearly someone who doesn’t know me. They even pronounced TheOtherGuy incorrectly!)

I answered with the affirmative.

“Hi, this is Rick with American Recovery…”

“Hey, Rick, whatcha trying to recover?” I said, half jokingly…and kinda wondering who this guy was.

“Uh, let’s see here…an Acura.  We need to get that picked up today.”

What?  That was my car!

AT this point I’m sure what’s happening: My wife listens to a radio program in the morning where they call people and get them all riled up and then surprise them with the fact that it’s all a big joke.  I’ve listened a couple of times and have told my wife that there was NO WAY I would ever fall for that stuff.

Ever.

So, immediately, I thought it was a joke.  So I sort-of played along.

Then Rick says, “So, ’cause you filed bankruptcy, Acura wants the car back.”

Now it’s getting serious…I’m pretty sure I would remember filing bankruptcy.  I assured Rick I had not ever (and would not ever) file for bankruptcy, and that he must have the wrong number.

Then he said the magic words…

“Who’s Sally?”

Mutha f*$#er.

Sally is my mom.

And here’s why that matters.  Several years earlier, when I’d bought my nicely used car (doing the right thing…Dave Ramsey would be proud), I decided that I was smarter than the people who figure out interest rates.  I was a young, aggressive financial planner and knew a thing or two about leverage.  So, I figured out that if my MOM co-signed the loan, it would save me another 0.5% per year in interest, thus making it worthwhile for me to take the financing (instead of paying cash for the used car) and invest the difference in some investment that would beat the interest rate.

In fact, I distinctly remember thinking how smart I was.

As Julia Roberts said in Pretty Woman, “Big mistake.  Huge.”

I figured that I could clear this whole thing up by calling Acura.  You see, it was true. I’d just found out that my mom HAD filed (long story there, but a good reason) and not me!

Without boring everyone with all the details – I have never been treated worse in my whole life.  The people on the phone at Acura actually said “Well, if you weren’t such a deadbeat and wouldn’t have filed bankruptcy, this wouldn’t be going on.”

It really didn’t matter that I HADN’T filed for anything. They kept repeating what a loser I was.

White. Hot. Burning. Rage.

Finally, I ask for solutions – they offer two:

  • Pay off the balance of $10,680
  • Have car repo’d

Obviously, I’m choosing option 1, so I inquire: Can I just wire you the money?

Their answer: “No.  It must be Western Union.”

For those of you who don’t know, I found out that day that sending money via Western Union is a giant pain in the ass.  Trust me.

Oh, and did I mention the joys of going to the bank to take a withdrawal of $10,700?  The IRS likes those forms they make you fill out…they’re called Currency Transaction Reports.  And, I happen to know that 100% of CTR’s are reviewed by an IRS Criminal Agent.  Lovely.

All because I was too smart to just pay cash.

So, I went on my trip – worried the whole time that the repo dude was going to take my car while I was 800 miles from home. When I returned, I had to drive 4 hours round trip (since we bank online) to get $10,700 withdrawn from my bank account, then I filed out a CTR which basically invites the IRS over for dinner, I enjoyed standing in line at Walmart for 45 minutes…with TEN THOUSAND DOLLARS IN MY POCKET to fill out this long-ass form to Western Union a payment to Acura.

All because I didn’t pay cash.

…and because I thought I was smarter and could make a couple extra bucks on my own.  I guarantee that the time, energy and stress associated with this incident taught me a lesson – it’s not worth the time.

So, yes, I manage money for rich people…and average people. But many of the lessons I’ve learned are because I’ve also been there myself.

The lesson for today? Pay cash for your car and be done with it.

That’s my lesson: What’s a costly lesson you’ve learned?

Photo: David Berkowitz