Financial Mistakes to Avoid in College

When you add up the costs of tuition, housing, food, textbooks, Greek fees, frozen yogurt, tailgating, live shows, bar covers, and whatever else you spend money on in college, you probably want to weep. I know how you feel, and I’ve been there. If you’re worried about finances, there are several things you can do to keep your spending and debt under control, and I’ve highlighted three of the major ones below. Don’t stock up on Ramen just yet!

Going Loan Crazy

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Sure, study abroad, graduate school, and clown college all sound awesome until you look at the costs. You might think about taking out a loan, but don’t act hastily. Consider your priorities.  Will what you’re paying for be worth the debt when it’s over? For example, would getting an MBA actually benefit your eventual career path? 

I know how expensive college can be, especially if you go somewhere out of state. If you’ve already had to take out loans for tuition, there’s nothing you can do about that, but you can definitely try to minimize any other borrowing you do. If you continue to borrow, you’ll have massive debt when you’re out of college, and you’ll start off your career by owing a ton of money that you’ll always be stressed about paying off.

So if you want to take extra classes over the summer or finance some other major expense, don’t pull an iPhone ad and say, “Hey, there’s a loan for that!” Instead, consider looking up scholarship and grant opportunities and apply to everything you qualify for. Many of my friends did this in college and were able to finance all kinds of extra activities, and scholarship money can also help you finance tuition and school expenses.

Not Paying Off Credit Cards

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Credit card debt is to your future like pass interference is to your football team — both are missteps that totally wreck your progress. If you miss a payment, you’ll be in all kinds of trouble with additional interest and fees, which will further hinder your ability to pay in full each month. Start the right way and build up your credit. If you’re already burdened by the weight of credit card charges, don’t panic, but start paying every month in full (and even a little extra).

Maintaining good credit card habits is important now because if you end up with a really low credit score, you could be trying to buy a house or car in the future and getting straight-up laughed at. Treat your credit card bills very seriously, and don’t open more than one. You don’t need multiple cards, and they’ll only tempt you to spend more and max out.

Sometimes, though, you might find yourself in an emergency situation and need money immediately. No, I’m not talking about needing the funds to start your own social media website — I’m talking about serious emergencies. These circumstances call for something like payday loans, which are short-term and easily manageable as opposed to opening new credit cards or long-term loans that can lead to debt.

Splurging/Poor Spending

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If you’re reading this, rolling your eyes, and saying, “Come on, I don’t do any of this stuff,” then this is your section. Even if you manage to keep debt to a very minimum level and always pay off your credit card bills, that doesn’t mean you’re in the clear. This might be the first time in your life that you’re responsible for all of your expenses, and it can get pretty overwhelming.

Because of this, it’s important to — I hate using this word, but — budget. Don’t run scared: it doesn’t have to be that difficult. Just figure out how much you generally spend in each major category, like food, entertainment, etc. Think before you purchase! Doing that alone will save you a lot of money. Before you get ready to call and order that extra-large pepperoni pizza at 3 a.m., consider whether you’re actually hungry or if you have food in your dorm or apartment.

While it’s important not to throw money away on needless things, it’s also important to spend wisely on necessary things. For example, you’ll need a bunch of textbooks for your classes, and upon stumbling into the college bookstore, you might faint from the $100 price tags. Buying used books or buying online are great wasy to save money.  Of course, your professor could have written the book this year and have made you purchase it at full price, which is, you know, awesome. 

Conclusion

College is supposed to be fun. You’re supposed to go to sporting events and pull all-nighters and participate in random protests. But don’t let rash monetary decisions begin to ruin your financial health. It’s a delicate balance, because trust me, you don’t want to be super cheap and let your college years slip by without having fun. Just be responsible and enjoy yourself.

Filed Under: Financial tips Tagged With: , , ,

How to Understand Loan Lingo

When you decide to take out a loan, you might already be a little anxious about the situation. You hope you’re doing the right thing and taking out the right kind of loan. On top of that stress, you see the loan agreement and suddenly feel like you’re reading hieroglyphics. Don’t let crazy loan terminology freak you out into signing something you never meant to sign.

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Understanding the commitment you’re about to make is extremely important. Without fully comprehending what you’re signing up for, you’ll be less likely to pay it all back on time and avoid debt. This glossary defines many common loan agreement terms so you can know what you’re getting yourself into.

ARM: This stands for “adjustable-rate mortgage” and refers to a loan with a changing interest rate based on a specified index. It usually involves a cap, but the interest rate will start low with the risk of changing in the future.

Additional Principal Payment: This is money given to the lender on top of the payment amount in order to make the loan span a shorter period of time. So if you have more money than you need to pay, you can hand it over and try to shorten the borrowing time period.

Annual Percentage Rate: Usually referred to as APR, this rate represents the cost of your loan yearly, including interest and other fees. It is always listed as a percentage.

Balloon Payment: The final sum payment made at the end of a balloon loan, which involves payments with low interest rates that don’t fully pay off what’s borrowed. You basically have to cover the rest of the money you never paid back via the previous payments.

Collateral: Something you pledge to guarantee you’ll pay back the loan. If you don’t, you risk losing this asset (whether it be money, property, etc.).

Finance Charge: This is the cost of actually borrowing the money throughout the entire life of the loan. For example, you know how much you’re borrowing, but because of interest rates and fees, you always end up paying more. This lets you know what that additional amount is, and then you can plan accordingly.

Interest: You’ve probably heard about the dreaded I-word, but just in case, interest is the charge for borrowing the money. It’s an amount you’ll have to pay back on top of the money originally borrowed.

Lock-in Period: This is the time period the lender guarantees a certain interest rate that won’t change. 

Margin: Read “ARM” to make this definition easier. When an ARM loan is up for an interest rate adjustment, the margin is the number of percentage points the lender adds to the index rate in order to calculate the changes.

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Point: A point equals 1% of the loan amount, usually in the case of mortgage loans. The lender uses points to cover loan costs like the expense of making the loan. Sometimes borrowers pay points to reduce the interest rate.

Prepayment Penalty: A charge you get if you pay off your loan before you’re scheduled to pay it off. Most standard lenders don’t implement this penalty, but make sure it’s not included in your agreement so you’re not caught off guard later. 

Principal: This number strictly represents the amount of money you’ve borrowed (or the amount of money you owe) without including interest. So here’s the equation: Original loan – amount repaid – interest fees = principal. 

Qualifying ratios: Lenders create this ratio in order to figure out what you can afford to borrow. It usually involves a comparison between your expenses and your income.

Settlement: The closing of a loan, usually a mortgage loan. 

Total of Payments: This number is the amount you’ll have paid once you’ve made every payment scheduled. This terminology has been found on payday loan agreements.

Underwriter: The person who analyzes the risk involved in giving a borrower a loan. He or she usually considers your credit history, assets, and employment, and this process is generally related to mortgage loans.

Conclusion

When you read a bunch of text about balloons and principals and ratios, you may think it’s a description of an algebra classroom party, but this breakdown will help you identify what exactly it is you’re looking at and what it means for you.

Filed Under: Loans Tagged With: , , ,

Green Loans Help Lead Housing Developments To Energy Efficiency

CLEVELAND, Ohio – This beautiful brick building has a dirty secret. It’s an energy waster with heat slipping out through drafty windows and doors. “It’s an old school is what it was to begin with. We renovated it about ten years ago and the energy has been an ongoing problem for us,” said Steve Bodkin of National Church Residences, the organization that owns this low cost housing development. Federal and private money is helping this building “go green.”

Grants and loans totaling about one million dollars are helping with the upgrades. A $250,000 loan from Enterprise Community Partners is funding part of the transformation. Organizers hope this project helps highlight the need for this type of low interest loans in large scale housing. “There are 525 windows that are getting replaced all in desperate need. The roof is being completely redone,” explained Bodkin.

The upgrades don’t stop there. Insulation is being added to the walls and roof. All the exterior doors will also be replaced. Enterprise Community Partners and the Ohio Housing Finance Agency (OHFA) created a partnership to provide a free energy audit to show where energy can be saved. “They need to be able to believe those energy savings are going to come about. If they do the work they will see the extra money,” added Mark McDermott of Enterprise Community Partners. The upgrades are projected to save Harvard Village in Cleveland’s Slavic Village $25,000 per year.

The project will help with the electric bill while also rehabbing and beautifying a community cornerstone for all residents. “To be able to see this kind of investment come back into this neighborhood at a time when we’ve been hard hit is very special,” said Cleveland City Councilman Anthony Brancatelli.

Source: ONNtv.com

Filed Under: Loans

Save Money Without Changing Your Lifestyle

Many U.S. families have seen their incomes drop or remain stagnant in the past few years, and a great number have lost net worth thanks to declining real estate prices and gyrations in the financial markets. This has led many to focus on reducing expenditures.

The good news is that you can often cut costs without reducing your living standards. Here are some ways to do it.

Choose credit cards over debit cards

People are using debit cards more frequently than ever. I never use one for two reasons: First, credit cards provide you more protection when you are dissatisfied with a product or service. But, more important, many credit cards are available that provide you with a cash return of up to 5 percent for purchases and with no annual fee. I use several “rewards” credit cards. None has an annual fee, but all provide a cash return of at least 1 percent for purchases. Most types of purchases return 2 percent, and some return 5 percent. Lately, credit card issuers have complicated things by changing their incentives quarterly. For example, a card issuer might offer 5 percent cash back for grocery purchases in one three-month period, and then offer 5 percent for restaurants in the next three-month period. By carrying several cards and using them strategically, I earn approximately $1,000 cash back every year. If you pay your balance in full each month, you have no good reason to use a debit card instead of a credit card. But if you routinely carry a balance on your credit cards, you will incur high interest charges and likely negate any rewards you would otherwise earn. You can compare rewards credit cards at creditcardtuneup.com.

Switch your investments to no-load mutual funds

Some mutual fund investors pay a sales commission when they buy or sell their funds. If you want to avoid that expense, you can consider many excellent no-load funds, many of which have extremely low expense ratios (especially index funds). With minimal background reading and research, you can identify a handful of well-performing funds that will suit your objectives.

Refinance your mortgage

Mortgage rates have dropped to historically low levels. Even if you bought or refinanced a home a year or two ago, you may find that refinancing will save you a tidy sum each month. I recommend first that you consult the booklet “Looking for the Best Mortgage,” published by the Department of Housing and Urban Development. It’s available at hud.gov/buying/booklet.pdf. It explains all the factors you should consider and contains a very useful “mortgage shopping worksheet” that identifies all the associated closing costs. With this information, you can approach lenders to determine whether refinancing makes sense. Approach big national lenders, local banks, credit unions and mortgage brokers to see who will give you the best deal. In general, if you can recover the closing costs in a few years by refinancing, you should consider refinancing. Avoid refinancing into a new loan with a term that is much longer than what’s left on your current mortgage, as this will cost you a great deal more in interest payments over the life of the loan.

Find better deals on services and subscriptions

Many families use a combination of telephone, cable and Internet services, but they purchase them separately, which is generally more expensive. Ask the phone company/cable provider what the cost would be if you purchased all these services as one package. When periodical subscriptions come up for renewal, don’t use the notice the publisher sends. Often you’ll find a better deal on the publication’s website.

Repair your credit

You might have noticed that some of the strategies are available only to those with good credit. If your credit history is blemished, your first priority should be to repair it. In time, you will have more opportunities to save.

Source: Chicago Tribune

Filed Under: Savings

Will Government Lending Save Chevy?

While financial losses nearly forced General Motors to disappear a few years ago, one of its building blocks, Chevrolet, celebrated its 100th birthday on Nov. 3. But expect to sip coffee rather than champagne. The one-time giant is still recovering from surgery that removed several assembly plants, thousands of workers, numerous vehicles, and three entire divisions — Oldsmobile, Pontiac and Saturn — to regain its health.

“GM benefited by walking away from debt by filing for bankruptcy, so the healing has begun,” said Joe Phillippi, principal of automotive consulting firm AutoTrends, “but Chevy needs to succeed in global markets where it hasn’t been before as well as in the U.S., where sales are up but still aren’t strong.”

Since its inception, Chevrolet has been known for offering technology and features typically found only in more expensive cars, such as the electric starter and electric headlamps. Its role was to get people into the GM family where they’d then move them up to other makes as age and income rose.

Without Pontiac, Olds or Saturn, it’s role has changed — to move buyers into low-priced Chevrolet products and then into higher-priced Chevrolet products, said Art Spinella, general manager of CNW Marketing, a company that specializes in why consumers buy the vehicles they do.

People behind the innovations

While known for its vehicles, Chevy boasts noteworthy people, too. Ed Cole, chief engineer from 1952-1956, not only created the small-block V-8 in 1955 that gave the division its performance DNA, he became Chevy general manager in 1956 and president of GM in 1967.

While Cole may be Chevrolet’s most famous alum, former general manager John Z. DeLorean may be its most infamous. Once fast-tracked to the top executive suite, DeLorean refused to adopt GM’s straight-laced, conservative style and was ousted. So, he set out to market his own gull wing sports car. Though acquitted after a nasty sting episode in which he was charged with allegedly attempting to finance car production through a drug deal, DeLorean faded from sight. The car lived on and might be best known as the flying star in the 1985 “Back to the Future” movie.

Sales leader

Historically, Chevrolet has been a sales leader. For decades the auto industry was dominated by domestics and Chevrolet car sales were tops, outselling closest rival Ford, though Ford held the distinction of outselling Chevrolet in trucks. In the ’70s, the full-size Impala/Caprice lead the industry in sales before fuel economy concerns sent consumers rushing for smaller models where imports dominated. In 1984 and again in 1985, the new subcompact Chevy Cavalier retook the industry sales lead. As gas prices eased, imports started adding midsize sedans and won back the sales lead as the Toyota Camry and Honda Accord alternated in the top spot throughout the ’90s.

Clever advertising themes over the years helped attract buyers, dating back to the “See the USA in a Chevrolet” tune introduced in 1948. It was followed by arguably the most memorable slogan in automotive history — “baseball, hotdogs, apple pie and Chevrolet” in the ’70s, then “Heartbeat of America” in the ’80s, and “Like a Rock” in the ’90s.
By comparison, the current “Chevy runs deep” slogan is like an anesthetic “and does little to give Chevy a new image they’ve been struggling for,” said Aaron Bragman, senior analyst with IHS Automotive in Northfield, Mich.

Chevy icons

Chevrolet, which sells about 3.5 million vehicles in 130 countries each year, has created many icons over the years, such as the fiberglass-body Corvette sports car and its noted ZR-1 King of the Hill version; the ’57 Bel Air with its eye-catching tail fins; the ’67 Camaro sport coupe, the fire-breathing 1962 Impala 409 named after its V-8′s cubic-inch displacement and immortalized in song by the Beach Boys “she’s real fine, my 409.” Can’t forget the ’59 El Camino car/pickup or the truck-based Suburban, forerunner of the SUV, which first appeared in 1936 to substitute for the station wagon and has quietly become the longest-lived, continuous production automotive nameplate in the U.S.

Of course, not every offering has been a success, like the rear- engine Corvair that skyrocketed Ralph Nader to national consumer advocate prominence when he insisted it was unsafe at any speed. And the subcompact Vega in the early ’70s was supposed to make motorists forget the Toyota Corolla even existed. But engine overheating and body cancer led to its demise, and prompted critics to chide Vega’s R.I.P. meant rust in peace.

The road ahead

“Not too long ago Chevy’s quality missed, design missed, fit and finish were terrible, and there weren’t enough right new models,” said Joe Phillippi, principal of AutoTrends, an automotive consulting firm. “Then along came (former GM vice chairman) Bob Lutz, who made the needed changes and refinements and the brand won over converts with terrific cars like Malibu, Volt and Sonic.”

Source: Chicago Tribune

Filed Under: Financial News
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