11 Sources of Funding Your Small Business

 

When you’ve got a big new idea that you want to get off the ground or an existing operation that requires an influx of capital to keep charging ahead, you want money fast. And that puts you at risk of paying unnecessarily high interest rates for the first lending option you encounter or wasting time with unnecessarily slow approval processes that may even end in rejection. Thankfully, there are myriad financing options for small businesses if you know where to look.

We’ve put together a list of sources of capital for small businesses, ranging from conventional bank loans to newer options such as online lenders and crowdfunding portals. Your funding needs will depend on whether you’re launching a new venture or expanding an existing one. Each funding option has its particular pros and cons, which you should weigh carefully to get the best choice for your needs.

 

Friends and Family

Interest rate: Set by lender and borrower

Repayment schedule: Set by lender and borrower

Pros: Easy access to money at potentially lenient terms

Cons: Requires friends and/or family as funding source

It isn’t easy getting a bank loan when you are just starting out. For example, many banks require strong credit scores and a personal guarantee.

Many early-stage businesses tap friends and family for easy funding. Companies such as LendingKarma and LoanBack help entrepreneurs to formalize and manage the process of soliciting loans from your social network. For a small fee, starting around $30, your business and your sources of seed money can securely exchange money through an online platform, utilizing features like payment tracking and e-mail reminders to ensure that lenders get paid back on time.

 

Credit Cards

Interest rate: 0%-30%

Repayment schedule: 30 days

Pros: Readily available

Cons: Expensive, relatively low borrowing limits

Using personal credit cards is another option for people starting businesses, particularly if they have good credit.

If you’re thinking of going this route, make the most of credit cards with different features for different expenses. For example, a credit card with a low interest rate, preferably a 0% introductory offer, could be used for business purchases. For large cash expenditures, use your card with no fees for cash advances, then transfer the balance to the card with the 0% interest rate.

Crowdfunding

Interest rate: N/A (payback in form of equity or rewards)

Repayment schedule: 5+ years for equity, 1+ years for rewards

Pros: Access to diverse pool of backers, good way to establish engaged customer base

Cons: Relatively slow process to accumulate funds

Popularized by platforms such as Indiegogo and Kickstarter, crowdfunding has evolved in the last couple of years into a viable funding alternative for those looking to start a business. Crowdfunding is a great option for entrepreneurs who may not have an established track record, but who can successfully demonstrate the viability of their venture or product to potential backers.

There are two main types of crowdfunding: reward- and equity-based. Reward crowdfunding allows entrepreneurs to receive financing by offering, say, a future product in return for capital. Equity crowdfunding allows entrepreneurs to reach investors interested in owning a piece of their start-ups.

Platforms such as SeedInvest and Crowdfunder allow you to offer equity to a pool of investors. Indiegogo and Kickstarter allow you to raise money from a pool of backers in exchange for a reward.

“Crowdfunding is an option that doesn’t look at your personal financial information at all and could provide cash for your business, particularly if it looks attractive but hasn’t hit the point where it is generating a lot of revenue,” says Gerri Detweiler, head of market education at Nav, a California-based company that helps entrepreneurs manage their business credit.

 

Term Loans

Interest rate: 6%-30%

Repayment schedule: 1-5 years

Pros: Short waiting time, no collateral

Cons: Higher interest rates

Online lenders, who offer loans without requiring you to make a trip to your local bank, have taken off in recent years. Online term loans beat traditional bank loans in efficiency and speed. You can typically fill out an online application within 15 minutes. Once all documentation is verified, you get the money deposited in your bank account in a day or two.

Companies such as Lending Club and Prosper rely on credit-scoring algorithms and third-party data to expedite the lending process and reduce the cost of originating loans for less-established firms.

Low-Interest Small Business Loans

Interest rate: 8%-15%

Repayment schedule: 1-5 years

Pros: More welcoming to less-established businesses; many include access to financial education

Cons: Low borrowing limits, long application process

Small businesses that have difficulty obtaining a bank loan can generally get financing from a small-business development center (SBDC), which provides assistance to local small firms.

A number of community development financing institutions (CDFIs) — which are banks, credit unions and venture capital funds that receive funding from the Treasury Department — offer low-interest loans to small businesses. The mission of these companies is to provide capital and other resources to entrepreneurs who don’t meet the criteria banks typically require for credit score, revenue or operating history.

 

Microloans

Interest rate: 7%-20%

Repayment schedule: 6 months-5 years

Pros: Friendly terms, low rates

Cons: Long review times

Microlenders are another source of loans for entrepreneurs. Typically offering small loans to businesses, they are a great option if you can afford to wait a while to receive funding. Generally, you’ll get solid loan terms from these lenders, such as long repayment schedules or no fees.

Microlenders such as Kiva and Accion offer small loans to businesses with relatively low interest rates (0% in the case of Kiva). These companies focus on working with small firms that are typically underserved by traditional banks.

Bank Loans

Interest rate: 10%

Repayment schedule: 5-10 years

Pros: Great terms and rates

Cons: Long application process involving much documentation

Interest rates charged by banks are typically much lower than rates charged by other lenders. As profit margins tend to be slim on small-business loans, banks try to reduce their risk as much as possible. This means that you will need to present a complete loan package, including a personal financial statement, copies of personal tax returns and sometimes even a business plan.

Banks also tend to give loans only to small businesses with collateral and a personal guarantee from the owner. Local banks may be better options because they know the local credit conditions. They often provide more access to a loan officer and put more emphasis on a borrower’s character rather than just the credit score.

 

SBA Loans

Interest rate: Prime + APR (typically 3%-5%)

Repayment schedule: 10 years

Pros: Fantastic terms and rates

Cons: Long application process and a lot of paperwork

One financial product that banks are a little more eager to provide are loans backed by the Small Business Administration (SBA). The SBA doesn’t issue these loans directly. Instead, an authorized lender makes the loan, with the SBA guaranteeing a portion of it, reducing much of the risk for the lender.

The SBA offers different types of loans, of which the 7(a) loan program is the most popular. These loans can be used for a variety of purposes — working capital, buying a franchise or refinancing debt. Different lenders may interpret the SBA guidelines differently, so if you have a solid application that gets turned down by one bank, you should try another bank.

Receivable Financing

Interest rate: 15%-35%

Repayment schedule: 1-3 months

Pros: Quick access to funds

Cons: Collateral required

Don’t want to take out a loan? Receivable financing is a common source of cash for businesses that get paid long after they deliver their goods or services. There are three types: invoice factoring, invoice financing and receivable-based lines of credit.

The interest rate for receivable financing is high compared with traditional bank loans, but getting the funding is relatively quick. So if you need a quick influx of cash, invoice financing can be a good short-term solution when you want to avoid lengthier loan applications.

Online firms such as BlueVine and Fundbox offer financing backed by unpaid invoices, while firms such as Dealstruck and P2Binvestor give you a line of credit secured by your account receivables.

 

Cash-Flow Loans

Interest rate: 25%-90%

Repayment schedule: 6-12 months

Pros: Quick (if not instant)

Cons: Personal guarantee required (in most cases)

Borrow from cash you expect to receive in the future by promising the lender a predetermined amount of these receivables. Lenders provide you with operating funds in the interim, using your future expected cash flow as collateral for the loan.

The application process is much shorter than for a traditional bank loan. The lender will review your business’s cash flow and make a quick decision on whether or not to offer you financing. Online commerce platforms such as Amazon and PayPal offer such loans on an invitation-only basis. Online firms Kabbage and OnDeck also offer cash flow loans and require minimal paperwork.

“You can get funding in as little as 24 hours once you’ve submitted all of your documents,” says Lydia Roth, content manager at Nav and co-author of 11 Ways to Finance Your Business in 2016.

A cash flow loan can be pretty expensive. Consider it only as necessary for unexpected expenses or a rare opportunity to purchase inventory at a steep discount that will allow you to earn a high return on your investment.

Revenue Loans

Interest rate: 20%-40%

Repayment schedule: 3-5 years

Pros: No collateral required

Cons: Not many providers of revenue loans

A relatively new source of financing, revenue loans are for small businesses that have a strong potential for future earnings but can’t quality for other loans because they lack collateral, or their sales are lumpy or seasonal. Borrowers don’t give up any ownership of their businesses. Instead, they agree to pay a percentage of future revenue to investors until reaching a predetermined total return on their investments.

 

Should You Use Retirement Savings to Fund Your Child’s College Education?

 

Here’s a look at the high costs of using a retirement account to pay for college.

Raiding a retirement account for college costs could result in taxes, penalties and less financial aid.

When faced with looming college expenses, many parents quickly find out that they haven’t saved adequately. If you’re in this situation, it may be tempting to tap into your retirement savings to pay for your child’s college education, but this is seldom the best option. As a parent, you are probably accustomed to putting your child first. But by protecting your retirement savings, you actually are putting your child first. After all, if you haven’t saved adequately to pay for your expenses during retirement, you might need your children to help foot that bill, which could be even bigger than college costs. Here’s what happens if you use retirement accounts to pay for college.

 

Look at the tax consequences. It’s important to understand the tax implications of using retirement funds to pay for your child’s college education. Tapping your 401(k) to fund education expenses will nearly always result in penalties. There is an early withdrawal penalty on distributions from your traditional 401(k) before age 59 1/2, and income tax is also due on the amount withdrawn. Alternatively, you could take out a 401(k) loan, which requires you to pay yourself back. But 401(k) loans charge fees, and if you fail to pay back the loan, you could face income tax and an early withdrawal penalty.

Another option is to tap into an IRA, which allows you to pay for qualifying education expenses for yourself, your spouse, your children or your grandchildren without incurring the early withdrawal penalty. However, you will still owe income tax on traditional IRA withdrawals.

Check the implications for financial aid. The money in a parent’s retirement account is not factored into financial aid calculations. This means that you could have hundreds of thousands of dollars stashed in a 401(k) or IRA, and that savings won’t hurt your child’s chances of obtaining need-based financial aid. However, if you take a withdrawal from your retirement account, that amount is considered income and will count against your child’s financial aid eligibility. So tapping your IRA for your child’s freshman year expenses could result in much lower aid eligibility. Before you decide to withdraw money from your retirement accounts to pay for college expenses, talk with a financial aid expert about how this will affect your child’s future aid package.

Factor in compounding interest. Depending on your investment selections, your 401(k) rate of return might be higher than the interest rate you’re likely to be charged on student loans. If you’re getting an 8 percent return on your 401(k) portfolio, but your child’s student loans will only cost 6 percent interest, your family will come out ahead by keeping the money in the 401(k). And if your child qualifies for subsidized loans the government pays the interest while the student is in school at least half-time. In this case, leaving money in your retirement accounts is the better option, even if it means you commit to helping your child pay off student loans after college. Compounding interest is a powerful force, and you are likely to be better off over the long term if you leave the money to grow in your retirement accounts. You can always help your child pay off student loans later.

 

Consider other ways to pay for college. Your child can get help paying for college, but you can’t get help paying for retirement. Outside of Social Security and Medicare, you’re on your own when it comes to funding your retirement. But you can help your child take out student loans and find grants and scholarships to pay for school. Plus, you might be able to solicit help from grandparents and family friends to pay for college in lieu of giving your child gifts for holidays and birthdays. You probably won’t be able to crowdfund your retirement expenses.

Look at how much money you stand to lose if you pull money from a retirement account. This isn’t just how much you withdraw immediately, but also the returns you will lose over time. Also, consider other sources of income you are eligible to tap for your child’s educational ventures before you decide whether or not you should use your retirement savings to pay for education costs.

From US News and World Report OnLine, written by Abby Hayes

6 Things That Cost Women More

 

The gender pay gap often takes the spotlight when it comes to women’s financial issues. But on the spending side of the equation is an equally worrisome problem: Women must pay more for many things, including some big-budget items, throughout their lives. In fact, a recent study by the New York City Department of Consumer Affairs compared the city’s local prices on nearly 800 products from toys and children’s clothing to personal care products and senior health care products. It found that women’s products, on average, cost 7% more than similar products for men.

The higher costs are not necessarily due to discriminatory practices. (And the difference in price doesn’t always favor men. For example, a Y chromosome typically bumps up prices for life and car insurance.) Still, that doesn’t make bigger bills for women any easier to manage. What will help is knowing to expect them. When establishing short-term budgets and long-term financial plans, recognize that gender is a factor, and plan accordingly. You need to be prepared to pay more for the following six items if you’ve got double Xs.

Retirement

Good news: Women are expected to live longer than ever before. Bad news: A longer life requires a bigger nest egg.

According to the Centers for Disease Control and Prevention, for babies born in 2014, females will outlive males by nearly five years—a life expectancy of 81.1 years for women and 76.5 years for men. Those extra years at the end of life can be particularly costly and will greatly affect retirement savings plans. “When you live longer, you’ll likely run into medical issues that need to be taken into account as part of your living expenses,” says Nicole Mayer, financial adviser with RPG Life Transition Specialists, in Riverwoods, Ill. “So certainly saving more for retirement for a female is important.”

How to spend less

There’s no getting around the need for a bigger nest egg to cover your longer life span, but you can take steps to avoid shortchanging yourself in retirement. If you’re married, boost your survivor payouts from your spouse’s pension and Social Security benefits. And married or not, maximize your own retirement savings throughout your career—by putting extra emphasis on retirement benefits when evaluating new jobs, making catch-up contributions once you turn 50, and more.

Cars

More good news: Ladies are closing the car-cost gap, at least on the younger end of the age spectrum. But women over age 65 continue to pay significantly more for cars than buyers of any other demographic.

In a 1995 study in which actors negotiated new-car purchases with unwitting dealers, economists Ian Ayres and Peter Siegelman showed that white males were routinely quoted lower prices than black or female test buyers. Nearly two decades later, a new study analyzing more than 10 million new-car sales in the U.S. and Canada between 2002 and 2009 indicates that men and women between the ages of 25 and 30 pay nearly equal prices for the same car type. Unfortunately, after age 30, a gap develops between genders, with women paying increasingly more than men for cars. Women age 70 and older tend to pay the highest prices, $236 more on average than men between age 30 and 35, who pay the lowest prices.

What causes this price drift with age? “One popular theory is that older people don’t research as much,” says economist Ambarish Chandra, co-author of this study along with Sumeet Gulati and James Sallee.

How to spend less

Before you visit the dealership, use sites such as Edmunds.com, KBB.com or Truecar.com to compare actual prices paid by other buyers so you can negotiate for the best new-car deal. Or consider a car-buying service, which is ideal for people who simply hate to haggle. You can also buy a used car online to skip the negotiating process.

Health Care

Women spend, on average, $1,136 out of pocket on health care per year, or 35.5% more than men ($838 per person), according to 2010 data from the Centers for Medicare & Medicaid Services. Younger women tend to face the biggest bills. Women between ages 19 and 44 spend 54.2% more out of pocket on health care than men of the same age, mainly due to the high cost of bearing kids. But even child-free women are typically burdened with greater health care demands and costs—for example, for annual gynecological exams, birth control and over-the-counter products such as tampons (plus the tampon tax). Longer lifespans for women will mean more years paying more for health care.

How to spend less

You can move to a slowly growing list of places that does not tax tampons as a “luxury good” (which includes Minnesota, Pennsylvania, New Jersey, New York, Massachusetts and Maryland). Otherwise, take advantage of flexible spending accounts and health savings accounts when possible, to save on taxes. You can also trim spending with strategies as simple as staying in your insurer’s network or switching to generic drugs.

 

Personal Care

The costs of daily care add up—and more so for women. For example, a 2011 study, “The Cost of Doing Femininity,” found that men’s deodorant costs just $1.15 per ounce while women’s deodorant costs $1.44 per ounce. Razors for men are $2.67 each; for women, $3.00 each. Even President Obama has publicly lamented the inequity of dry cleaning: It costs an average $2.06 to clean a man’s shirt and $3.95 for a woman’s shirt.

Such price differences are not always due to discrimination. Products for men and women are produced and marketed differently. But those differences point to a bigger issue. “It simply costs women more to perform the culturally expected functions of femininity than for men to match up with cultural expectations of masculinity,” says sociologist Nicholas Guittar, co-author of the study.

How to spend less

To affect the bigger picture, talk to your dry cleaner or other service provider who practices gendered pricing. “It may not impact that one interaction, but an increased cultural dialogue holds a lot of value,” says Guittar.

In the meantime, stock up for less at drugstores and mass retailers such as Target and Walmart. Keep in mind that store brand items can be much cheaper while offering similar quality. Also, you may be able to find better deals on a retailer’s site than in its stores, so be sure to check online, too. Or simply buy gender-neutral products or the cheaper men’s products.

But before you opt to skimp too much on personal care, remember that it is an investment of sorts—especially for women. A recent study by sociologist Jaclyn Wong and Andrew Penner showed that good grooming (as well as attractiveness) is correlated to higher incomes. In other words, paying attention to your clothing, hair and makeup can actually pay off. For example, the study showed that a well-groomed woman would earn about $6,000 more annually than an averagely groomed woman (of equal attractiveness).

Annuities

Women’s longevity, once again, wears down their wallets when it comes to certain types of annuities.

Monthly payouts for immediate single-life annuities are based in part on life expectancy. Because women tend to live longer, they must invest much more to get the same monthly annuity payout that a man would. For example, according to estimates from immediateannuities.com, a 65-year-old man from Virginia can purchase an annuity that will pay him $2,000 a month for the rest of his life for about $360,000. A Virginia woman of the same age would need to pay more than $400,000 for the same annuity.

How to spend less

For equal payouts, you can opt to set a defined schedule. For example, a 65-year-old Virginia resident can buy an annuity that will pay $2,000 a month for ten years for about $222,000, regardless of gender. If you outlive those payments, you can purchase another annuity later. (If you don’t, the money goes to a beneficiary as scheduled.) Unfortunately, in the long run (should you be so lucky), this strategy of building an annuity ladder may wind up costing you more. But an upside to laddering: annuities purchased later may come with bigger payouts if interest rates rise.

Long-Term-Care Insurance

Most long-term-care insurers charge single women about 40% to 60% more than single men for new policies, according to the American Association for Long-Term Care Insurance. The reason for such a drastic price disparity is that women tend to live longer and make more claims than men. For example, Genworth—the first big insurer to introduce gendered pricing for long-term-care insurance—estimates that a 55-year-old single man from Colorado would pay an annual premium of about $1,725 for a policy with a $150 daily benefit for three years. A single woman of the same age would face an annual premium of nearly $2,113 for the same policy in Colorado.

How to spend less

You can generally avoid the extra charge if you buy a policy as a couple. If the Colorado man and woman cited above bought the same plan together, they’d each pay about $1,300 a year. Married or single, you should check whether your employer offers long-term-care coverage; insurers still charge men and women the same amount for plans purchased through an employer. See Options for Covering Long-Term-Care Costs.

From Kiplinger.com, August 2016

A Hail Mary Retirement Plan for Those With Nothing Saved

You’re rounding the corner toward retirement age with not nearly enough set aside.

We tell young people to start saving for retirement from their first job and not to quit, because even small sums can grow staggeringly large with enough decades of compound returns. But maybe you bumped along from paycheck to paycheck, never saving much. Or maybe you tried to save but got slammed with unexpected setbacks like a late-in-life job loss.

Let’s be clear: You can’t make up for lost time.

But don’t give up — you do have options. Any money you can set aside can help you make retirement more comfortable. Here’s what you need to do:

REDEFINE RETIREMENT

This means working longer, working part time in retirement or both. You’ll have more time to save, your savings will have more time to grow, and you’ll shorten the full-retirement period you’ll need to cover. That’s a nice way to say you’ll have fewer work-free years before you die.

If working longer in your current job feels like a death sentence, start looking around for paying gigs you might enjoy in retirement. Working longer may have an upside: People who voluntarily work in retirement often say their jobs keep them active and engaged.

If you start taking Social Security benefits before your full retirement age–which is currently 66 and rising to 67 for people born in 1960 and later– the “earnings test” will reduce your benefit by $1 for every $2 you earn over a certain limit ($15,720 in 2016). That reduction will end when you hit full retirement age.

DELAY SOCIAL SECURITY

The benefits of waiting are so great that it may be worth tapping whatever retirement funds you have so you can hold out until your full retirement age. If you sign up at age 62, you’ll lock in a permanently reduced check.

Most people are better off delaying their application at least until their full retirement age, currently 66 but rising to 67 for people born in 1960 or later. That would inflate a $1,500 monthly benefit to at least $2,000. If you waited until age 70, when benefits max out, the same check would grow to about $2,640 each month.

If you’re married, it’s particularly important for the higher earner to put off applying for as long as possible. When one of you dies, the survivor will get the larger of the two benefits you received as a couple. Maximizing that benefit can help keep the survivor’s final years from being a financial nightmare.

Rule of thumb: Every year you wait past age 62 adds about 7 percent to 8 percent to your eventual benefit.

TAP THE HOUSE

If you have substantial home equity, you have a powerful asset to deploy for your retirement. You can:

—Downsize now so you can invest the money freed up from the sale and from lower housing costs. The big advantages to doing it now: Your money will have more time to grow, and you may be better able to handle the disruption of a move than when you’re older.

— Downsize in retirement, when you can relocate someplace with a lower cost of living. Your job may require you to live in an expensive area, but once you retire you can choose to live somewhere cheaper within the States or, as about 1 million U.S. retirees do, abroad.

—Consider a reverse mortgage . Reverse mortgages can give you a lump sum, a stream of monthly checks or a line of credit you can tap as needed. You don’t make payments, but the debt grows over time and is paid off when you move, sell or die. The earliest you can apply is 62, but the longer you wait, the more money you can get.

New Jersey resident Walt Lukasik, 60, is investigating this option to salvage retirement plans that were upended by his wife’s cancer diagnosis 15 years ago. She hasn’t been able to work for the past eight years, and medical bills have sucked away any money they’d hoped to save, Lukasik says.

The combination of caregiving and worrying about retirement is taking its toll. “It’s killing me,” he says.

If he applies for a reverse mortgage in two years, it could pay off the $75,000 balance on their current mortgage and give them a monthly payment of about $390, according to the National Reverse Lenders Mortgage Association. If he waits until the mortgage is paid off in five years, the monthly payment would be closer to $800. Other payout options include a lump sum of $93,000 or a line of credit of more than $160,000.

Reverse mortgages are complex and can be costly, so they’re not a good fit for every situation. Counseling is mandatory and typically provided by nonprofit credit counseling agencies.

TURN TO YOUR KIDS

Most U.S. parents are horrified by the notion of asking their children for money. Their kids often don’t feel the same way. A recent survey by Fidelity Investments found nine out of 10 parents think it would be unacceptable to become financially dependent on their offspring, but only three out of 10 adult children agreed with them. If there’s any chance you may need your children to help you make ends meet, consider having the conversation sooner rather than later. Bringing up the issue may be painful and embarrassing. But at least you’ll know whether you can rely on their help, and they will have time to rearrange their finances to better offer it — while, of course, saving for their own retirement.

EXPLORE PUBLIC BENEFITS

If worse comes to worst, Social Security alone can keep you above the poverty line — that’s why it was invented. You also may qualify for public benefits, such as subsidized housing, food benefits and lower-cost utilities. Start your search at Benefits.gov.

RE-EXAMINE YOUR DEBT

If consumer debt such as credit cards, medical bills and unsecured personal loans totals half or more of your gross income, explore your debt-relief options, including talking with an experienced bankruptcy attorney. You may be better off saving that money than using it to chip away at debt you can’t ultimately repay.

SAVE, SAVE, SAVE

You don’t need a fortune. You do need a way to deal with an emergency or the flexibility to time your benefits better. Anything you can save will give you more choices in retirement. Having $10,000 in a savings account could pay for a new furnace or an unexpected medical bill. Boosting your savings more could allow you to delay Social Security or the start of a pension to get bigger checks.

POWER SAVE

This option is a long shot, but it may work for those with sufficient income to make a last, aggressive push to save for retirement.

You may be able to save a big chunk of your income if you’re entering the empty nest years and can funnel into retirement accounts money that you used to spend on raising and educating kids. Or maybe you’re just determined to slash expenses and buckle down to serious saving.

Let’s say you earn around $45,000. According to Social Security, your benefit at full retirement age will replace roughly 40 percent of what you make, or about $18,000 a year. Saving 20 percent to 30 percent of your income during your last 15 years of work could give you a nest egg big enough to prevent your lifestyle from falling off a cliff in retirement. (This assumes that you can manage a 6 percent average annual return, inflation averages 3 percent and that you’ll live on about 60 percent to 70 percent of your preretirement income for 20 years.)

If you’re able to pull this off — and that’s a big if — you can go a long way toward closing the retirement gap.

From Associated Press, written by Liz Weston

38 Smart Financial Moves You Can Make in 30 Minutes or Less

 

Hey, can you spare a few minutes? We know you’re busy, but chances are you can set aside 30 minutes to tackle some of these quickie tasks. Our collection of financial fixes—designed to save you money, get you on track to reach a goal or simplify your life—run the gamut from trimming your cable or phone bill (15 minutes or less) to applying for a more rewarding rewards card (30 minutes).

Make a Date With a Financial Planner

Visit Let’s Make A Plan or NAPFA to locate planners in your area. (For a planner who will do a onetime checkup, you can also search at the Garrett Planning Network.) Research a few to see whose skills and resources mesh with your situation and set up a free,

Set Up a Budget

With budgeting tool Mint.com, you can get a big-picture view of your finances. Link to your financial accounts by entering your online user names and passwords; you can also put in information about your home and car to get estimates of their value and track your overall net worth. Set limits for how much you want to spend monthly in various categories and receive alerts when you go over budget.

Protect Important Documents

If your critical documents are residing in a drawer or a folder, shop for a home document safe to help protect them from a fire, flood or theft. Look for a document safe that has been tested by Underwriters Laboratories (UL) or Intertek (ELT) and is built to withstand at least 30 minutes of fire up to 1,550 degrees Fahrenheit. A safe with about 1 cubic foot of space typically costs between $100 and $300. (Before stashing the documents away in your new safe, take photographs or scan the papers, and make extra copies of electronic files to store in the cloud.)

Cash In Loose Change

At Coinstar.com, search for a nearby Coinstar kiosk (often found at grocery stores). The machine will sort and count coins for you, and cashing them in is free if you redeem the money as a gift card from companies such as Amazon.com, Applebee’s, Best Buy, Home Depot, iTunes, Lowe’s and Starbucks.

Find the Best Savings Account for You

Go to DepositAccounts.com and enter your state, how much cash you have to save, and how long you plan to hold money in savings. The tool will list high-interest account options in several categories, such as “Keep It Simple” (using a single savings account) and “Mix and Match” (dividing between certificates of deposit and a savings account). Visit the bank’s website to open an account and transfer money.

Run a Credit Checkup

Start by visiting CreditKarma.com, where you can sign up to see free credit-report infor­mation from credit agencies Equifax and TransUnion, as well as your VantageScore credit scores from each bureau. (You can also sign up to receive notifications of changes in your TransUnion report.) Then go to CreditScore.com which provides a free FICO credit score and credit report information from credit agency Experian. Finally, go to AnnualCreditReport.com to see free copies of your credit report from each of the three major bureaus.

Get a More Rewarding Rewards Card

In our Best Rewards Credit Cards for Your Wallet slide show, review our roundup of the best rewards cards and choose one that best suits your spending patterns. If you have good credit, you could be earning 2% on every purchase you make with a credit card—and up to 6% in certain categories. Visit the card issuer’s website to fill out an application.

Secure Your Smartphone

If your phone isn’t password-protected, set a lock-screen pattern, PIN or password. Consider adding an extra layer of security to apps with sensitive information. Android users will need an app such as AppLock to password-protect individual apps, but iPhone users can do it by selecting “Settings,” “General” and then “Restrictions” to set a password and apply it to certain apps. Protect against a misplaced, lost or stolen phone by enabling location-access services. Apple users need to sign in on the Find iPhone app using their Apple ID. Android users can access the feature by signing into their account. Windows users should go to Microsoft.com. You’ll be able to track your phone’s location and remotely erase your data from any web browser.

Set Up a Password Manager

A password manager such as Lastpass will tie all of your passwords together and store them in a file that’s secured by a single, ultra-secure master password. Download the program and type in a master password. The service gathers and encrypts passwords and other private information. It’s free for one device, but you’ll need the premium version ($12 per year) for multiple devices.

Protect Your Wi-Fi Network

See the instruction manual that came with your router or the manufacturer’s website for instructions to turn on encryption and the firewall and keep your internet connection secure. Then change your wireless network’s default name and password. Also consider turning off “network name broadcasting” so that your network won’t appear to others in your area, or set up a MAC address filter, which limits access to the network to devices that you approve.

Switch to a Better Online Broker

See Kiplinger’s ranking of the best online brokers to find the best fit for you. Fill out an application online, then stay on the new broker’s site to initiate a transfer of assets from your old brokerage firm or bank. Switching over an entire account is easiest, but you can select individual securities or cash. Some mutual funds may not be eligible to transfer—call your new broker beforehand to find out.

Trim Your Fund Bills

Log in to your account and click on a mutual fund or exchange-traded fund in your portfolio. Find the expense ratio, which is the annual fee charged by the fund. Use your broker’s screening tool to find similar funds with lower expense ratios. For example, you could swap a large-capitalization stock fund for Schwab U.S. Large Cap ETF (SCHX). Closely tracking Standard & Poor’s 500-stock index, the ETF has razor-thin expenses of 0.03%.

Harvest Tax Losses

Sell your losers and you can deduct the losses against capital gains, as well as use up to $3,000 in losses to offset taxable income. Still like the investment? Swap it for a similar one. But don’t violate the “wash sale” rule, which requires a 30-day wait to buy a “substantially identical” security.

Cut Your Investment Fees

Link your investment accounts to FeeX, a free online tool, to see a breakdown of all the charges you’re paying, including underlying mutual fund and ETF expenses, trading commissions, and custodial and advisory fees. The tool suggests similar, lower-fee investments, and it shows potential savings if you switch funds. Personal Capital, an online budgeting and investing tool, can also run a fee checkup.

Open an HSA

If you have a high-deductible health insurance policy and your employer has a preferred provider, get the enrollment form for a health savings account from your HR department. That may be the best option if it’s the only way to qualify for a company match. If your employer doesn’t match contributions, you can open an HSA at any financial institution that offers them. Compare fees and investments at HSAsearch.com.

Pay Less for Life Insurance

Provide information about your health, age, contact information, length of term (from 10 to 30 years) and amount of coverage at AccuQuote. You’ll get term insurance price quotes from several companies. If prices are lower than for your current policy (or if you can lock in a low rate for a longer period), then choose an insurer and apply online. (The final price depends on the results of a medical exam.) Or call AccuQuote at 800-442-9899 to get a quote, especially if you have medical issues or coverage questions.

Share Financial Info With Your Family

Create a master list that lets your spouse know how to get into your accounts and where to find important documents if you become incapacitated or die first (you may want to share the list with adult children, too). Store the list online, using a document-storage account such as Dropbox.com and give your spouse the user name and password to the account. Also keep a paper copy of your information.

Size Up Your Retirement Stash

Go to Kiplinger’s Retirement Savings Calculator and fill in information about your salary, accumulated savings and future sources of retirement income (including Social Security benefits and any pension income). Our calculator estimates how much you need to save each month to reach your goal.

Tweak the Choices in Your 401(k)

Log in to your account and go to the page that lets you manage your money. Look for the appropriate button or category—say, “Change My Investments” or “Change My Paycheck Deduction.” For 2016, you can contribute up to $18,000 to your 401(k) or similar employer-based plan, or up to $24,000 if you are 50 or older.

Get a Fatter Paycheck

If you’ve been lending money to Uncle Sam—that is, getting a big tax refund each year—use Kiplinger’s withholding calculator to reduce your withholding. Consult your 2015 tax return and latest pay stub to fill in the blanks; you’ll have to make some educated guesses about other income and expenses. The calculator tells you how many allowances to claim. Then go to your human resources department and ask to fill out a revised W-4 form (or download the form at http://www.irs.gov).

Reassess Your Risk Tolerance

To create an investment plan that suits your goals and fits your personality, use Vanguard’s Investor Questionnaire as a starting point. Gather estimates of your annual Social Security or pension benefits and the balances of your 401(k), IRA and other investment accounts, then answer 11 questions about your time horizon and your tolerance for risk.

Get a Better Deal On Cable

Is your cable or internet service bill creeping upward? Call the customer-service number for your service provider and ask whether you qualify for any promotional deals. If you don’t succeed with a phone call, check whether the company has a presence on Twitter. You may get what you want by requesting a discount via tweets directed to the company’s account.

Reshop Your Cell-Phone Plan

At this Wall Street Journal interactive tool, select the number of phone lines, voice minutes, messages and gigabytes of data you need per month. You’ll see options from AT&T, Sprint, T-Mobile and Verizon.

Put Your Savings On Autopilot

To squirrel away money before you have a chance to miss it, create automatic, recurring transfers from checking to savings and investment accounts. Log in to your checking account and look for an option to transfer funds. Enter routing and account numbers for your savings account and choose the frequency and amount for each transfer. Then set up a transfer to your investment account, too. Watch out for any fees that your bank may charge for transferring to external accounts; you may be able to avoid fees by initiating the transfer through the savings or investment account instead.

Save Extra Money With an App

Wells Fargo’s Qapital gives your savings a boost by automatically collecting small chunks of your money for you. Link your checking account to the app and create rules that will prompt transfers to Qapital’s savings account (held by Wells Fargo).

Never Bounce a Check Again

Check your bank’s website for an option to link your checking account to a savings account. If you draw too much from the checking account, the bank will transfer money from the backup account (you may pay a fee of $10 to $15).

Search for Lost Money

Go to MissingMoney.com and enter your name and state of residence in the search fields. If you have unclaimed property in state or local government records—such as cash in a forgotten bank account, a utility deposit or investments—your name will appear along with details on the property and directions on how to file a claim.

Copy Everything in Your Wallet

If your purse or wallet is lost or stolen, having copies or scans of the front and back of your driver’s license, credit cards, and membership and loyalty cards will make the process of suspending accounts and replacing cards go more smoothly. Keep paper copies in a safe place, and store scanned PDFs on your computer and back it up.

Consolidate Loyalty Cards

Slim down your wallet or key ring without missing out on rewards or discounts with a mobile wallet, such as Android Pay, Samsung Pay or Apple Pay’s Wallet, or download the free Key Ring app (Apple and Android). Use the camera on your phone to scan loyalty cards into the mobile wallet or app. The next time you’re in the store, show the digital version of your card’s barcode.

Sell Old Gift Cards

At GiftCardGranny, you can sell the card to a partner site at the offered rate or list it for sale at a price you choose (you’ll pay a fee of about 10% to 15% to the listing site). You’ll receive a check in the mail or a credit to your PayPal or bank account.

Redeem Credit Card Rewards

Log in to your account and look for an option to redeem cash back, points or miles. You may choose to get a check in the mail, a credit toward your bill, or a deposit into your bank account, or to exchange points or miles for travel bookings, gift cards or merchandise.

Monitor Your Subscriptions

Truebill.com links with your bank, credit card or PayPal account to scan your monthly statements and track paid subscriptions, from your Netflix account to your gym membership. If you see a forgotten subscription or one you no longer want, use the site’s one-click cancel­lation feature. Truebill also sends a monthly report to alert you to any rate hikes or extra fees.

Digitize Your Receipts

You’ll reduce clutter from paper receipts if you organize and store them with the free Receipts by Wave app. You can photograph and categorize receipts, plus save them in the cloud so they’re accessible from the app or at Waveapps.com.

Get the Best Deal Online

To make sure you are getting the lowest price on your purchases, install two web browser add-ons. Ziftr Alerts compares prices as you shop and lets you know when it spots the item for less. Honey Honey scours the web for coupon and discount codes—before you buy, just click the icon the extension installs on your toolbar.

Test the Refinancing Waters

After the turmoil of Brexit in late June, the 30-year fixed rate fell to 3.5%, according to Freddie Mac. To see whether a refi makes sense for you, visit the Zillow Mortgage Marketplace. Fill out an anonymous loan request with personal information and the type of mortgage you want. You’ll get instant quotes on rates, fees and payments. Before you connect with lenders, use the Zillow refi calculator to see whether you can save enough to recoup the cost of a refi before you sell the home.

Lower Your Student Loan Payments

Go to StudentLoans.gov and click on “Repayment Estimator” under “Managing Repayment.” Enter the balance and interest rates of each of your federal loans and your income information to see what your payments would be for each repayment plan.

Set a College Savings Goal

Visit SavingforCollege.com to use the World’s Simplest College Cost Calculator. You can generate estimates based on the average cost of a private or in-state public college education or the cost of a specific school. Enter how much you have saved so far and what kind of investment return you expect for your college fund (or use the calculator’s default settings). The calculator delivers an instant verdict on how much you should save each month.

Sign Up for My Social Security

Want to see what you’ll get when you claim benefits? Go to SSA.gov and click on “My Social Security.” Enter your personal information and answer several security questions, then create a user name and password. You’ll see a preview of your benefits

From Kiplinger.com, August 2016

Check Rental Car Coverage Before the Hard Sell

 

 

Before visiting a rental car counter this summer, it’s wise to make two telephone calls: one to the insurer that covers your personal car and one to your credit card company.

Many people feel pressured to buy the rental company’s insurance coverage on the rationale of better safe than sorry, even though it can cost up to $30 a day, said Norma Garcia, a lawyer with Consumers Union, the advocacy and policy arm of Consumer Reports. But if you verify coverage you may already have before setting out on vacation, she said, “You can be safe and not sorry.”

Many, but not all, credit cards offer rental coverage at no extra cost, as a perk for customers when they pay for the rental with the card and decline the rental company’s offering. Coverage varies, however, and depends not only on the card’s payment network — like Visa or MasterCard — but also on the issuing bank, according to a recent analysis from CardHub.com, a card comparison website.

To avoid surprises, contact your card company before renting to confirm that your card indeed offers insurance protection, and ask about any limits or exclusions: “A simple call ought to do it,” Ms. Garcia said. Ask for the terms in writing, said Loretta Worters, a spokeswoman for the Insurance Information Institute, an industry group.

Most card policies cover rentals of up to 30 days, but others limit coverage to rentals of no more than two weeks. Some exclude some sport utility vehicles, trucks and expensive cars. Many card policies don’t cover damage to tires and rims.

Many cards also exclude coverage in certain countries (Ireland, Israel and Jamaica are often left out, as are Australia, Italy and New Zealand.) Citibank and Discover credit cards may come in handy when traveling internationally, according to the analysis, as they cover cars globally.

The analysis evaluated 10 large card issuers on 11 criteria, including the duration of coverage, exclusions and the card’s claims process. Citi cards generally offered the most favorable insurance coverage over all, the analysis found, although Citi’s claims process may require a bit more paperwork than other cards. USAA American Express cards also got high marks. (Some cards evaluated were CardHub sponsors. Jill Gonzalez, an analyst with CardHub, said CardHub “does not make recommendations based off of advertising partnerships.”)

Of the four card networks, MasterCard and Visa scored the highest over all for their insurance offering, the report found.

Keep in mind that credit card rental car insurance is usually secondary, or backup, coverage that pays for expenses, like your deductible, that your personal auto policy may not cover. And the card policies generally don’t provide liability coverage, for damage to other cars or injuries to other people. So before renting, check the coverage on your personal auto policy.

If you own a car, the auto insurance you carry on your personal vehicle often covers a rental car at similar terms, Ms. Worters said. (You usually must be using the car for personal reasons, not for business).

If you have dropped optional coverage on your car, like collision coverage, to save on premium costs, however, your rental car may not be covered if it’s damaged. In that case, she said, you should consider buying the rental company’s “loss damage waiver,” also called a collision damage waiver, so you won’t be responsible for damage to the rental car.

Rules vary by state, however, and in some states, your rental may still be covered if you drop optional coverage on your personal policy. So confirm the details with your insurer.

In most states, personal auto policies don’t cover something called “diminished value,” or a drop in the car’s value because of damages and repairs. Some insurers may add this option with a special “endorsement” on your policy, Ms. Worters said.

Rental car companies are required by law to provide liability coverage with the rental at the state-mandated minimum, which is low, Ms. Worters said. (Liability coverage protects you if you injure someone or damage their car in an accident.) Rental companies may sell “supplemental” coverage with higher limits, but if your personal auto policy is adequate, you probably don’t need to buy extra, the National Association of Insurance Commissioners says.

Here are some questions and answers about rental car coverage:

Do any credit card rental car policies provide primary coverage?

A few do, including the Chase Sapphire Preferred card, Ms. Worters said. Others do, for a fee, like “premium” car rental protection from American Express. You register your card for the service, and are automatically charged a flat fee (typically $25) per rental when you pay with the American Express card.

What if I disagree about minor damage to a rental car?

The best way to protect yourself from being charged for dings and scratches is to take photos of any damage — even small scratches — before you drive off the rental lot, and make sure the rental agent notes them on the agreement, said J. Robert Hunter, director of insurance at the Consumer Federation of America.

What if my personal auto policy doesn’t cover rentals?

You may be able to add a rental “rider” for an additional fee, rather than buying the rental company’s coverage, the National Association of Insurance Commissioners suggests.

If you don’t own a car but you rent frequently, it may be worth buying a “nonowner” auto policy. The cost is $300 to $500 annually, Ms. Worters said.

From YourMoneyAdviser.com, written by Ann Carrns

11 Ways to Cut the Cost of College Tuition

Here’s some interesting thoughts on ways to cut the cost of college tuition –

There are lots of smart ways to save for college — including tax-advantaged 529 plans and Coverdell accounts. But the best way to pay less for college is also the most obvious solution: Find ways to cut your tuition bills.

Depending on where you’re willing to take classes and how hard you’re willing to work to earn the breaks, you can trim your annual tuition costs by as little as $500 (by winning a small scholarship) or in full (by attending a tuition-free school). Take a look.

Attend a Tuition-Free College

Several colleges offer free tuition — yes, free tuition — although you’ll still need to budget for room and board and miscellaneous fees, such as textbooks and transportation.

At Berea College in Kentucky, students work 10 hours a week and receive a tuition scholarship worth $97,200 over four years. Room and board, fees, and books and incidentals bring the actual student expense to around $10,000 per year, but students can apply for financial aid to cover those costs. Other tuition-free schools include Alice Lloyd College, in Kentucky; the College of the Ozarks, in Missouri; the Curtis Institute of Music, in Pennsylvania; and the Webb Institute, in New York State.

Also consider the U.S. military service academies — the U.S. Military Academy (West Point, pictured at left), the Naval Academy, the Air Force Academy, the Coast Guard Academy and the Merchant Marine Academy — all of which offer free tuition and room and board. However, graduates must serve in the military for a minimum of five years after graduation. Unless you truly want to join the military, there are other ways to cut college costs.

Enroll at a Community College

For some students, attending community college for two years before transferring to a four-year institution is the ideal way to cut costs. According to the College Board, the average annual tuition and fees at a community college amount to $3,440, versus $9,410 at a public school for in-state students. You can also save on room and board if you live at home and commute to your local school.

Understand your state’s requirements for community-college students to gain admission to four-year institutions. For example, graduates of any of Virginia’s 23 community colleges are guaranteed entry into top schools, such as the University of Virginia and the College of William and Mary, as long as they earn a minimum grade point average.

Stick to In-State Public Universities

Attending a public college in your state remains an effective way to keep college costs in check — especially if you may not qualify for significant financial aid at private institutions. In 2015-16, the average annual sticker price for in-state students at a four-year public school was $19,548 (including tuition, fees, and room and board), according to the College Board. Compare that with the total average sticker price of $43,921 at private colleges for 2015-16.

There are other financial advantages to attending an in-state school. In-state schools tend to be closer to your hometown, which means lower transportation costs throughout the year. If you live close enough to your college, you could even opt to live at home to eliminate room and board fees.

Look to “No-Loan” Colleges

About six dozen schools offer “no-loan” financial aid packages that consist of grants, scholarships and work-study programs to limit what you’ll pay out of pocket. The list includes Ivy League schools, as well as top values such as Davidson College, Stanford University and Swarthmore College. In some cases, you need to be a low-income student (typically, this means an average household income of below $40,000 to $60,000) to qualify for a loan-free financial aid package. At other schools, all admitted students are eligible for such awards.

The programs don’t necessarily eliminate loans altogether. The financial aid package is based on a school’s estimate of what the family can afford to pay. Some families can’t or choose not to pay the full amount, which means the student must borrow to make up the difference. And some students borrow to cover costs that aren’t included in the budget covered by their financial aid packages, such as health insurance and laptop computers.

Maximize Financial Aid

Now that you’ve picked colleges that are great values, maximizing financial aid is your next step to reduce college costs. Fill out the Free Application for Federal Student Aid and, if necessary, the CSS Profile and school-specific applications. For the 2016-17 school year, a student can submit his or her FAFSA as early as October 1. Applying for financial aid as early as possible remains important. Most schools dole out financial aid on a first-come, first-served basis, and a college’s free money runs out fast.

Income, not assets, is by far the biggest factor in awarding financial aid. “Generally, every $10,000 increase in parent income will cause about a $3,000 decrease in need-based financial aid,” says Mark Kantrowitz, publisher and vice president of strategy at Cappex.com, a college planning website. If possible, parents should hold off on taking distributions from retirement plans or realizing capital gains because the money will count as income on the FAFSA.

The financial aid formula excludes assets held in retirement accounts, the cash value of life insurance policies, and the value of a home and other personal property (including cars, clothing and furniture). So parents should consider directing a larger portion of their paychecks to their retirement accounts during FAFSA-filing years.

A fat savings account can also lower financial aid because the federal financial aid formula considers up to 5.6% of parents’ assets to be available to pay for college. 20% of a student’s assets are also counted in the EFC calculation. If your parents are planning to use cash to buy a new car, do a home-renovation project or make some other large purchase — even to pay down debt — they should do so before you file the FAFSA.

Apply for Scholarships

Chip away at your remaining tuition bill after financial aid with private scholarships. Students don’t need to be incoming college freshmen to qualify for scholarships, says Kantrowitz. Some scholarships are only open to students already in college, and others, like Jif’s Most Creative Sandwich Contest, are for younger students.

Potential scholarship sources include the college you’re attending (for example, the University of Virginia offers a full ride to its Jefferson Scholars), various companies and philanthropic foundations, and your community. Kantrowitz suggests applying for as many scholarships as possible, from full-tuition offers to smaller awards. There’s less competition for $500 awards, he says, and “small scholarships do add up.”

Become a College Employee

Campus workers and their children can save big on tuition bills, with nearly every private and public college offering some form of tuition benefits to full-time employees. The perk could be a difference-maker for job hunters comparing competing job offers.

At Boston University, employees are eligible for as many as eight free credits per semester. At Northwestern University, employees can qualify for as much as $12,000 in tuition discounts each year. And at the University of Missouri, 75% of tuition fees are waived for as many as six credit hours per semester.

Students of university employees also often qualify for tuition discounts. At the University of Pennsylvania, dependents get 75% off tuition and technology fees. At Ohio State University, dependents receive as much as 50% off the cost of instructional and general fees. If both of your parents work at OSU, the discount increases to 75%.

Take Advantage of Military Benefits

Attending a military academy or enrolling in the Reserve Officers’ Training Corps (ROTC) could cut your college costs to almost nothing. Students at the five U.S. military academies — West Point, the Naval Academy, the Air Force Academy, the Coast Guard Academy and the Merchant Marine Academy — receive free tuition and room and board in exchange for a minimum of five years of military service. If you sign up to serve a tour of duty without attending a military academy, you’ll be eligible for substantial tuition assistance through the Montgomery GI Bill and branch-specific funds.

If you would rather enroll in ROTC, which allows you to complete military science and army training courses at the same time as your other coursework, you can apply for two-, three- and four-year scholarships that cover all tuition and fees. Scholarship recipients must serve eight years (split between the army and Individual Ready Reserve or part-time with the Reserve or National Guard while pursuing a civilian career), while those who do not receive scholarships may serve three years on active duty and five years in the Individual Ready Reserve (sometimes called the Inactive Ready Reserve).

Dependents of military veterans also qualify for generous aid. The Survivors’ and Dependents’ Educational Assistance Program provides up to 45 months of education benefits, including apprenticeships and funds for university costs, to the children or spouses of veterans who have died or been disabled in service. There are also smaller awards for military families, including the Military Commanders’ Scholarship Fund and the AMVETS Scholarships.

Take Advanced Placement Courses

Many high school students take AP or International Baccalaureate (IB) courses, which offer the chance to skip (but receive credit for) introductory college courses if you receive a high score on year-end exams. It’s typically free to take AP and IB courses, but you may need to pay for the exams.

According to the College Board, a student with qualifying scores on two AP exams can save $2,000 a year, on average, at a public college and $6,000 at a private school. You won’t have to buy textbooks and supplies for the classes you would’ve taken without AP or IB credits. More significantly, Kantrowitz points out, the advance credits will give you a head start toward graduating on time, avoiding a costly additional year or two of school.

Note: Some colleges, such as Brown University and Dartmouth College, do not accept AP test scores for credit. Check your school’s policy here.

Tap Employer Tuition Assistance

If you’re a younger student with a part-time job or an older worker looking to go back to school, ask your employer about tuition assistance. Employers can provide their workers with as much as $5,250 tax-free per year to cover tuition and miscellaneous fees. In return, employers may ask you to continue working for them for a set period of time or meet a minimum grade requirement.

You can also check if your parents’ employers offer assistance or scholarships to dependents. For example, the state of Tennessee gives a 25% discount on all courses taken by dependents of executive, judicial and legislative branch employees.

Solicit Funds From the Crowd

Consider creating fund-raising pages on popular websites, such as GoFundMe, to ask friends and family to help cover your college costs. In 2014, 140,000 GoFundMe education campaigns raised $17.5 million.

To create a successful campaign, follow a few key steps: Set a realistic goal, such as $5,000 to pay for costs your federal loans don’t cover. Write a detailed explanation of why you’re appealing for help, and be clear about how the money will help you. If friends and family choose to donate, keep them updated on your progress and be sure to thank them.

Several crowdfunding sites are geared specifically to students. At GiveCollege, friends and family can contribute to a 529 college-savings plan on your behalf, and PigIt lets students exchange their skills, such as graphic design, for donations from an online community.

From Kiplinger.com

How to Make Your Car Run for 200,000 Miles or More

The average age of cars on the road today is higher than ever — over 11 years old, according to IHS Automotive. And with the average car adding more than 10,000 miles to the odometer each year, it’s practically a given that you’ll hit the once-notable milestone of 100,000 miles. With care (and some luck) you might even triple that without needing a big-dollar repair, such as a new engine or transmission.

But reaching those loftier targets requires some input from you, the owner. Squeezing maximum life out of your ride at minimum cost means being attentive to your car in a variety of ways.We’ve outlined nine here. Take a look.

Regular Maintenance Is Crucial

There’s no getting around this one: A car that’s not regularly serviced won’t last as long as one that is. It might not even make it to 100,000 miles.

Regular maintenance is “the key to the automotive fountain of youth,” says Tom Torbjornsen, author of How to Make Your Car Last Forever.

What is regular maintenance? It’s what it says right there in the maintenance schedule of your owner’s manual, says Torbjornsen. Follow the “severe duty” schedule of more frequent servicing if your manufacturer specifies one.

But at a certain point, the manufacturer’s schedule may fail a high-mileage driver — as it sometimes lacks specifics beyond, say, 150,000 miles, other than to start over as if the car were at mile zero. “Can [manufacturers] truly believe that an engine with more than 50,000 moving parts — with 150,000 miles — is going to replicate an engine straight off the assembly line?” wonders Pam Oakes, a certified technician and author of Car Care for the Clueless. “What about a 180,000-mile engine? Would that have the same wear as an engine with 30,000 miles? I don’t think so.”

Like other experts we spoke with, Oakes recommends building your own maintenance schedule with a trusted, certified mechanic who knows you’re interested in going the distance.

 

Use Your Senses: Sight

 

If your routine is to plop into the driver’s seat in a darkened garage at one end of your trip and hustle out of the car when you reach the lot at work, it’s time to shake things up a little.

“Do a ‘preflight’ at least once a week,” says Tony Molla, vice-president of communications for the National Institute of Automotive Service Excellence (and a certified technician with years of experience). “Walk around your car. Have your kid step on the brake and see if the lights come on. By spotting a problem now, when it’s small, you might save yourself more than just a ticket.”

Lauren Fix, an automotive analyst and author ofLauren Fix’s Guide to Loving Your Car, suggests looking back at where you’ve parked every time you pull away. “Just take a second to look back and see if there are any fluids left behind. If there are, next time park on some cardboard, and you’ll know where it was coming from,” says Fix.

 

Use Your Senses: Sound (and Touch)

Though your sight is the most important sense when driving your car, hearing may actually be the most important one to keeping it running. A car that sounds like it’s falling apart probably will soon.

What you’re listening for is anything out of the ordinary. “Any bump, squeak, knocking, ticking? Don’t turn up the radio — turn it off! At what speed does it happen? That’s a really important piece of information you can give to your mechanic,” explains Fix. “If you can guide a technician [with that information], you will save them hours of trying to track something down.”

 

Use Your Senses: Smell

No, really, your nose can help you head off problems that could endanger your run for 200,000+ miles. When you’re checking the oil, counsels Fix, give it a sniff. If it smells burnt, that could be a sign that your engine is running too lean (not using enough fuel). Fixing this condition could save you from a costly engine rebuild.

Smell can also come into play if your car has a dipstick to check the level of the automatic transmission fluid (not as common as it used to be). If that fluid smells burnt and nasty, it’s also a bad sign. (We’ll discuss stinky transmission fluid more later.)

 

Say No To Short Trips

If there’s one single thing you can do as a driver to get your car to last longer on its original parts, it’s to drive it less — specifically, on trips where the engine doesn’t have a chance to reach operating temperature.

Here’s what happens: Water is a byproduct of engine combustion, and some of it gets into your car’s oil and exhaust system every time the engine runs. Also, when your car is first started, more fuel is mixed in to get it running.

On a longer trip, your car’s engine gets hot, boiling the unburned fuel out of the oil, your engine and your exhaust — that’s a good thing. But a short trip won’t do that, allowing the slurry of oil, water and fuel in your crankcase to eventually turn into a noxious sludge. So, how short is too short? It varies by temperature and how you drive, but AAA defines it as “trips of less than five miles in normal temperatures, or less than ten miles in freezing temperatures.”

Tony Molla, of the ASE, faces only a three-mile commute to work but often drives longer. “I go out of my way,” he says. “I take the long way in the winter, to make sure the engine gets up to operating temperature. That way it burns off the nasty stuff that can build up in your crankcase.”

Try to combine your short trips into a single run. And for Pete’s sake, don’t park in front of the garage and then pull the car in when you’re going to bed. That’s a short trip to the junkyard.

From Kiplinger.com

The Two Biases That Keep People From Saving Money

An interesting article about why people have a hard time saving money – hope you find it interesting –

 

 

Thinking about the future is hard.

That Americans don’t save enough money is a truism. But why don’t they? The answer is a complex mix of macroeconomics (incomes have stagnated for many workers over the last few decades), culture (Americans are notoriously conspicuous spenders), and policies (two-thirds of workers are at companies without retirement plans).

But another variable is the challenge of giving up the gratification of immediate spending for the security of future savings.

A new paper finds that two biases prop up many people’s disinclination to save: “present bias” and “exponential-growth bias.”

Present bias is a straightforward idea. People claim they’re willing to embrace all manners of self-control—saving money, working out, cleaning their room—provided that they don’t have to do so immediately. It is like the regularly scheduled conversation I have with my dentist.

•“Do you want to floss more in the coming months?” Yes.

•“Do you want to floss next week?” Yes.

•“So I assume you flossed yesterday.” Um.

The commonplace name for this behavior is procrastinating. But academics, ostensibly paid by the syllable, favor the terms “hyperbolic discounting” or “time-inconsistency.” The only distinction between flossing next week and flossing right now is the passage of time, and yet it makes all the difference in my attitude. Researchers in this study found the same attitudinal difference among their participants. When they asked people if they preferred $100 today, $120 in 12 months, or $144 in 24 months, they found that about half of respondents took less money if they could have it immediately.

But is holding out for more money always the right decision? For many low-income people, taking the money immediately might be the rational choice. For example, perhaps buying that week’s food and groceries with $100 and not suffering for a few days is worth more than the $44 they’re leaving on the table. I have no doubt that many Americans suffer from time-inconsistent modes of thinking about money, but the bias deserves context. For some people, spending money on new clothes is a choice between shopping and saving for the long term. For others, spending money immediately on food and shelter is the only option.

The second bias that the researchers consider, exponential growth bias, isn’t a cognitive bias, perhaps, so much as a failure of math. They found that 75 percent of participants in their study didn’t understand compound interest, the principle that even small annual growth over a long period of time yields surprisingly great returns.

It’s intuitive to most young people that saving $100 now is better than saving $100 the year before they retire. But most people underrate the benefits of compounding interest. Saving $1 at the age of 20 is twice as valuable in retirement as saving $1 at the age of 40.

The rule that has stuck with me (although I can’t remember where I heard it) is the 2-20-50 rule. Two percent annual growth might sound shockingly meager. But a sum of money that grows by 2 percent each year for 20 years will have increased by about 50 percent.

It’s important to consider these biases in the context of history. There are massively different savings rates all over the world, and the decline in saving in the U.S. has happened within the last few decades. Americans in 2016 cannot blame their inability to save entirely on cognitive biases, because the human brain hasn’t changed all that much since the 1970s. The responsible way to think about these effects is that they are ingredients in the socioeconomic phenomenon of low savings rates. But they are not the sole ingredient.

Finally, what should policymakers do about low savings in the United States? The U.S. credit and banking system makes it far too easy for unsophisticated consumers to screw up their finances. Many companies don’t have 401(k)s, or they make them opt-in and don’t adequately explain the benefits of putting away more money, or they make it easy to draw down funds whenever their workers desire. Many credit-card companies offer contracts with absurdly low minimum payments, which often induces less sophisticated signers to incur large penalties for not paying off the full amount. These policies “nudge” people to be bad savers. Rather than nudge back, consumer protection agencies should just change the rules, for instance raising minimum payments for most customers. The U.S. could also step in to force Americans to save more through expanded Social Security. It’s an idea worth considering. Let’s talk about it next year.

From Atlantic Monthly, written by Derek Thomspon

Don’t Let Election Drama Sway Your Investment Decisions

Make a plan to protect yourself mentally and financially, regardless of who becomes our next president.

Think back to four years ago, when media outlets and economic pundits were doing their best Henny Penny impersonations.

The economic sky was falling. Whether Barack Obama or Mitt Romney was to be elected president, the United States would be unable to pay its bills. The stock market would drop to perilous levels, perhaps as much as 30%.

That level of drama went on for months.

Now here we are four years later, and the drama is on par with where it was then, but this time, we started hearing it even earlier.

My advice: Don’t buy into it. In fact, I want to focus on taking the drama down a notch.

Back in 2012, if we all had a dollar for every time we heard the term “fiscal cliff,” we’d each have an additional $10,000 in our savings accounts. It was brought up every day on every channel. Before then, the term had never been used.

For those who don’t remember, at the time, President Obama and Congress needed to reach a deal on $500 billion in tax increases and across-the-board spending cuts. Federal Reserve Chairman Ben Bernanke coined the term “fiscal cliff” to warn of the dangerous drop-off the nation faced if no action was taken.

We worried about whether, as a country, we would be able to pay our bills. On a scale of one to 10, our drama level reached a 12.

No one in the media ever discussed, to any great degree, a scenario that would pave the way for the positive year the market actually experienced in 2013.

Remember that as we continue through this election cycle. No matter how dire the situation may seem, no one has a crystal ball to truly predict how the market may or may not perform. You’re better off disregarding all the gloom and doom and focusing on your own financial situation.

In any year, regardless of whether there is an election, the key thing is to develop a financial strategy that allows for the ebbs and flows that occur in the market at any given time.

Whether you use a professional or do it yourself, create a financial plan that allows for some clarity on how much money you are really willing to lose and how much money you are potentially willing to lose, even if it’s just paper losses. The last thing you want to do is create an investment plan with too much risk, causing you to hit your “uncle point” and potentially make decisions that could have a severe impact on your long-term plan.

If you do work with a financial professional, be sure that person communicates with you effectively during stressful and uncertain times so you’re not making rash and drama-filled decisions.

From Kiplinger.com, written by Isaac Wright