Why You Need a Will and How to Get One

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

For much of my adult life, I didn’t have a will.  Even after I had children, my spouse and I neglected to make a will.  Only after dealing with my Mom’s estate did we decide to get one.  We were lucky that we didn’t die without a will.

Here is why:

If we died at the same time, our children would have gone to child services until a guardian could be appointed by the courts. The government in our state would not let anyone watch the kids unless they had a legal right to do so, even just for awhile after (for instance) the car wreck that killed us.  Not only would our two sons have been dealing with the trauma of their parents deaths, but they would also have possibly been subjected to care by strangers or care in an institution.

Repeat that about 20 times.  To me, the main purpose in having a will is to influence who will care for your children on your death.

Of course, there are other reasons to draw up a will.  For instance,  to distribute your assets (if you have any that would pass through probate and if you want them distributed differently than your state would) or to shorten up probate time.

But, you can distribute assets the way you want without a will.  You can avoid probate altogether.  You just have to know how.

To distribute your assets without a will you can (choose one or more):

• Put them in a joint account,
• Put them in a trust,
• Title them as ‘transfer on death’ or ‘pay on death’ or
• Designate a beneficiary.

To avoid you can having a will and going through probate if you have a really small estate (in some states) or if you have all assets titled so they flow directly to someone else.

But there is no other way to legally state your wishes as to who will raise your children if both parents are dead.

When I say ‘state your wishes’, in many of the US states, I mean just that.  State law governs  guardianship rules.  Many states do not automatically grant the wish you state in your will.  Some states retain the right to appoint whoever they feel is best for the minor, others vary in degrees of automatically abiding by your wishes – but still retain the right to appoint someone else if there are issues with the person you chose.

Still, your wishes have weight and will at least be considered by most courts in most states.  Typically the judge will allow for providing letters of guardianship to those you designated.

If someone does try to raise your child without letters of guardianship,  she will struggle – even with something as simple as getting medical care.

How to draft a will

Writing and recording a will doesn’t have to be expensive or time consuming.  In many states, you can simply write out what you wish done, sign it in front of a notary and you are done.  BUT, since you won’t be around to make sure things go as you wish, you should spend some time and at least a bit of money to make sure your will is legal in your state.

Step 1 – Figure out what you want done.

Coming up with a name for a guardian for your children is never easy.  You and your spouse may differ on which person should do so, making things even harder.

You may want one person to be the one who raises them, lives with them and etc and another to be the custodian of the finances you may be leaving to help your guardian with the costs of raising your kids.

Include some kind of language to let the guardian know how you want your kids raised (religion, education, and etc).

You will revisit this as you go through life, needs change as might your idea of the best guardian may.

Writing down what you want done with your assets is somewhat easier.

Step 2 – Make sure what you want is within the laws of your state.

We consulted a lawyer for this step, but you could use one of the software packages available now on sites such as Nolo.com.  A compromise would be to draft up the will using software but have a lawyer give it a look before you make it final.  That way, you use fewer lawyer hours but still have some additional assurance that you are within the bounds of law.

Step 3 – Draft the language.

A lawyer will do this for you, or as stated above you could use one of the many software packages available for this purpose.  Legal Zoom for instance, has one for around $70 which includes a review of the document (not a legal review, more like an editor review).

If both of those are out of your reach, visit your local library and checkout books like Kiplinger’s estate planning : the complete guide to wills, trusts, and maximizing your legacy or Estate planning basics.

Some of these have forms you can fill in – one for each state.

Step 4 – Sign it so it is legal.

Most all states require that a witness also sign the document.  A notary public signature is best and can be obtained for a small fee at most banks.

Step 5 – Let your guardian and heirs know you have a will.

After you have gone through all four steps above, it would be a shame if you died and no one even knew you had a will, let alone what was in it or where it was.

Asking someone to care for and raise your kids is a very big deal.  They deserve the right to decline the honor.  Let them know in Step 1 – right after you settle on that person.

Don’t squirrel your will away in some unknown or unreachable (in the event of your death) spot.

We have ours in a drawer at home, with copies to both of our sons.  Some folks leave theirs with their lawyer.

Step 6 – Explain what you want done.

Let your heirs know (if they are old enough to understand) what you have set out.  If you are dividing your assets unequally, get it out in the open, along with your rationale.  Otherwise, there are likely to be fights on your death – including lengthy and costly court battles.

Step 7 – Review periodically.

Change is constant.  What you had and wanted when you first drafted your will could change.  Laws can also change.  Review your will periodically to make sure it still satisfies your wishes and is still legal.

Our solution

My spouse and I have combined multiple estate planning techniques.  We do each have a will (but since our children are grown, they do not have words about guardians).  We also each have a living, revocable trust.  In addition, certain of our assets, such as our IRA’s will pass directly to one or more beneficiaries.

Our wills both have “pour over” language in them.  At our death, any assets titled solely in the deceased’s name will pour over into the trust.  The trust becomes irrevocable at death and dictates  how our assets will be distributed.  Any assets titled in the name of the trust will be distributed by our successor trustee.  My spouse and are are currently each trustees of our own and of each others trust, so that we can operate just as we would if the assets were held in a joint account.  When the first of us dies, the other continues as trustee.  If both of us die, the successor trustee (one of our son’s) becomes trustee.  In addition, should one or both of us become unable to manage our affairs, the trustee or successor trustee can step in to do so.

As long as we keep assets titled to the trust, our heirs should be able to avoid having to use probate court to distribute our estate.

We also meet as an extended family at least once a year to provide an opportunity to share information with our adult heirs about our plans and our assets.

How about you all? Have you started your estate plan? What is your estate planning strategy?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/ken_mayer/5599532152

Is Your Addiction to Being Busy Costing You Money?

The following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

My name is Melissa, and I’m addicted to being busy.  There.  I said it out loud.  I have an addiction to being busy, which has only gotten worse in the last three years that I’ve been homeschooling my kids.

There are so many great activities, co-ops, etc., for the kids that saying “no” is hard.  Inevitably, I overbook our schedule one semester, and we limp through, exhausted.  The next semester, I’m wiser, and then I cut our responsibilities down to the bare minimum so we can spend more time at home.  But the semester after that, recharged, I overcommit again.

It’s a bad cycle, but, unfortunately, I’m not alone.

If you’re like most Americans, you’re probably overly busy, too.  According to Dr. Gina Manguno-Mire, PhD, associate professor of psychiatry and behavioral sciences at Tulane University Health Sciences Center, “America is an achievement-oriented culture.  Success is defined by accomplishment, and that mindset starts at a very early age.  Today, we see both kids and adults who are so structured that they just don’t seem to know what to do with free time, so they fill it with activities” (Health Fitness Magazine).

Sound familiar?

But it gets worse.  Our addiction to busyness is costing us money in a myriad of ways, both short and long-term.

Short Term

In the short term, busyness costs us money on a daily basis.  We have to pay for the activities we’re involved in, and we spend additional money as we look to save time and we lose track of the items that we already have.

Activity Expense

Being in many different activities costs a lot of money.  Right now, my kids are in archery, photography, and citizenship 4-H groups.  They’re also in two homeschool co-ops.  The expense of all of these activities easily cost us $500 extra this semester.

It’s a bit ironic that to overbook yourself with activities costs money, and then once you’re too busy you spend too much money on the following items:

Convenience foods

When we’re busy, we don’t have as much time to cook, so we rely on restaurants, fast foods, and quick convenience foods.  All of those food sources typically cost much more than if we made a nice, basic meal at home.

Even though my family is very busy right now, I’m still cooking at home, which is good.  However, I am spending more on food because I find myself buying things like already chopped cauliflower for cauliflower “rice” instead of processing it myself or buying more lunch meat for quick lunches instead of eating the from-scratch lunches we usually make.

Gas

Running around town for activity after activity causes you to use more gas.  While gas prices are reasonable now, this expense can really hit your wallet when gas prices are $3 or more per gallon.  Still, I’m easily spending $20 to $30 more per month on gas than I do during quieter semesters.

In addition, because I’m using the car more, I have to have oil changes and tune ups more frequently than I would if we had a quieter, simpler schedule.

Buying more items than you need

Let’s face it.  When you’re too busy, you don’t have as much time to clean.  Clutter may build up, and it’s hard to find the items you need.  You may unknowingly buy one or two of an item that you already have but have forgotten that you own or simply can’t find.

My son has been too busy to really clean his room the last few months.  However, last weekend, he had a little free time, and he found two items he thought he had lost that we were planning to purchase again—his arm guard for archery, and his calligraphy pen for calligraphy.  True, if we had to buy these items again, we would have only spent approximately $20, but that’s $20 we shouldn’t have had to spend because we already owned the items.

When losing items and buying them again because you can’t find them becomes a habit, you could be wasting hundreds of dollars every year.

Long Term

While the short-term expenses can add up, the long-term expenses of being addicted to busyness are really budget busters.

Medical expenses

Your body may be affected by your schedule because you may not be sleeping as well, and you may not be eating as well as you should as evidenced by the many convenience foods you may rely on.  Both lack of sleep and reliance on convenience or fast food can lead to weight gain, which leads to medical conditions like high triglycerides, high blood pressure, high cholesterol, etc.

Busyness causes stress, and stress can lead to a host of health problems if you aren’t already suffering from health problems because of lack of sleep and weight gain.  Being addicted to busyness may result in the need for prescription medication for high blood pressure, high cholesterol, etc.  If the stress is unmitigated, it may eventually lead to heart attacks and strokes years down the road.

Wear and tear on your vehicle

I mentioned the expense of more frequent oil changes and tune ups in the short term effects, but the long term effect is that your vehicle wears out more quickly.  If you weren’t driving to as many locations, your car might last you 15 years, if you choose.  However, an accelerated life styles means you add on the miles more quickly, cutting several years off the time you can keep your car in good working condition.

A perpetual cycle of busyness

Over the last two weeks, my family and I have carved some downtime into our busy schedule.  I noticed that my kids really didn’t know what to do with themselves or their free time.  When kids and adults are always busy, we don’t know how to entertain ourselves or how to lose ourselves in a project or an interest we’d like to pursue.

Children who are being raised this way will naturally crave busyness, and all of the related stress, pressure, and financial burden that goes with it, as they grow older.  This simply perpetuates the cycle of busyness.

According to journalist Tim Kreider, in his 2012 article for The New York Times, The Busy Trap, “‘Busyness serves as a kind of existential reassurance, a hedge against emptiness.’  Some people actively create their hectic lifestyle because they dread ‘what they might have to face in its absence’” (Health Fitness Magazine).

What Should You Do If You Want to Break the Busy Cycle?

My family and I have been in this super busy cycle for just two months, and we have two months to go before it’s over.  We’ve already decided to cut our responsibilities in half for upcoming semesters so we can enjoy our activities and our lives.

However, if you’ve been in a busy cycle for much longer, slowing down isn’t always easy.  Dr. Manguno-Mire says, “It is important to remember that busier does not necessarily mean happier.”  She advises “taking a ‘gut check,’ especially when feeling overwhelmed.  ‘Be present and mindful in your own life.  Ask yourself, what am I doing?  What meaning do I derive from this?  Create support systems, and carve out unstructured time every day, even if it is just half an hour.  Set boundaries with technology.  All these things help counteract the effects of stress.  And ask yourself this—who really needs to be busy and available 24/7?” (Health Fitness Magazine).

How about you all? Are you addicted to busyness?  If so, are you still in the busyness trap?  If not, how did you learn to slow down?

Share your experiences by commenting below!

***Photo courtesy https://pixabay.com/en/tired-axhausted-woman-female-377438/

New Personal Finance Apps To Try In 2016

The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.

Smartphones have made it easier than ever for people to manage their finances anywhere at any time. A number of companies have come up with new apps that make money management even simpler. Many of these app connect to your bank and credit accounts to help you make smarter spending and saving decisions.

Here are some great new personal finance apps to try in 2016.

Nudge

Released in late January, this new personal finance app from HSBC is designed to encourage customers to make small, regular financial decisions that will result in a change to their long-term spending habits. Nudge identifies trends in customers’ spending habits and sends regular, targeted push notifications to make people aware of their expenditure. There are currently 38 different types of nudges, including notifications about the amount spent on groceries in a week and how much customers are spending or saving versus others in the same income bracket. The app is currently in a pilot phase and will be rolled out to a wider audience once all of the kinks have been worked out.

Savings Coach

This stand-alone app, launched by USAA in July of last year, tries a new method to get its customers on track to increase their savings. Built with voice recognition and text-to-speech technology provider Nuance Communications, the app analyzes your financial transaction data to recommend daily amounts of money to put into savings. Savings Coach also deploys a number of gaming techniques to encourage saving, including rewarding points and badges to members and allowing them to reach new levels within the app. The app is available to all USAA members that have checking and savings accounts.

Hip Money

This new financial app links to consumers’ checking and savings accounts to help users make smart financial decisions throughout the day. The first lo-fi prototype of the app was released in September of last year, and the full app will be available some time later this year. The company behind Hip Money, Hip Pocket, plans to launch a Kickstarter campaign in March to fund the development and roll-out of the app. Donors to the Kickstarter campaign will be the first people to get the app, as well as be the recipients of cool merchandise from the company, according to Mark Zmarzly of Hip Pocket.

Qapital

This app applies theorems from behavioral science to the world of financial management. Users of the app can assign financial rewards to daily goals, including reducing spending in specific categories or reaching specific savings goals. This is supposed to keep users interested in money management and on track to reach their financial goals. Initially available only for iOS when it launched last year, the service is now available for Android customers.

Fam-ess

This app is geared towards helping kids learn money-management skills. Fam-ess is an acronym for Family First, Earn Always, Save Often and Spend Wisely. The app helps determine whether if a wanted item is really worth the effort it will take to earn it. Users spend about 4 minutes per session with the app and typically use the app every day to every few days. A free public Beta has been launched for iPhone in the App Store and GooglePlay for Android.

Even

The app from Even aims to solve the problem of income volatility by providing hourly workers with the steady cash flow of a simulated salary. On the weeks when users outearn their Even salary, the company banks the surplus into a separate, Even-managed savings account. On the weeks when the users earn less, they will still receive the full salary amount, with the difference made up from past surpluses or interest-free credit from Even. The app was released to all customers in January and the company is reportedly seeking partnerships with large employers who might offer Even to their part-time employees as “a subsidized benefit, akin to health insurance or financial wellness programs.”

Penny

This new personal finance app gives users personalized financial advice using a simple chat interface. Nearly everything done with the app is done through chatting with Penny through pre-written prompts. Users can see graphs showing income vs spending, see how much they spent in certain categories like groceries, or see their account activity. Penny can be downloaded from the iOS App Store and Google Play Store.

Trim

This app scans your monthly credit card transaction history to find recurring payments that could be eliminated for more savings. When subscriptions are located by Trim, the app sends you a notification and with a simple text to Trim, you can have the subscription canceled. This is great for those who tend to sign up for free trials, but forget to cancel before the company begins to charge you fees.

Wealthee

Wealthee is an all new personal finance management app for Android users. The Wealthee app allows you to manage all of your personal finances, including expenses, income, investments and bill payments with a click of a button. It also provides advance alerts and notifications of low balance situations. No transaction and banking information is collected by the company as everything is saved on your phone.

iBudgetix

iBudgetix was designed to help users create a monthly budget, optimize their cash flow, and increase savings. The app calculates and shows how much money is still available, how much has been saved or overspent, and displays largest spending categories. The iBudgetix beta is now available in the Google Play store for free. The beta test will run for approximately four weeks to gather feedback from real users before the official launch. After Android, the company is planning to add iPhone, iPad and Blackberry support.

How about you all? Do you have a favorite personal finance app? What do you use your personal finance apps to track?

Share your experiences by commenting below!

***Photo courtesy https://c1.staticflickr.com/5/4017/4328628491_dffe3856c2_b.jpg

Are You Sure You Want to Be Your Own Boss?

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

There are outstanding reasons why people are hesitant to start their own businesses. There are obstacles and activities involved in self-employment that you simply don’t have when you have a traditional job.

And yet every year many thousands of people strike out on their own and start their own businesses. It is possible – and you know it is just by the number of people who do it.

The secret is to know exactly what you’re getting into, and more importantly, to have strategies to overcome the obstacles.

Here are the biggest challenges to being your own boss, along with strategies to overcome them.

Creating a Reliable Income

This is probably the single biggest reason why more people don’t attempt self-employment. The regular paycheck that you can take for granted on the job just isn’t there when you start a business. That can not only make life difficult, but it can also lead to a lot of worry, and that won’t help your business either.

If you decide to start your own business, make sure that you have enough money saved up not only to start the business, but also to pay your living expenses for the first few months. You’ll need that at least until you get a regular cash flow going.

It will also help if you have income sources – like clients and customers – lined up before you start your business. One of the best ways to do this is by starting your business as a part-time venture while you still have your full time job.

You can then stair-step your way from full-time employment to full-time self-employment. As the income from your business grows, you can convert your full-time job to a part-time job, and keep that arrangement going until the business justifies being in it on a full-time basis.

A lack of reliable income is probably the single biggest reason why businesses fail. But if you prepare for it, with savings and employment income, you should be able to get over that hurdle.

Being responsible for everything

When you first start a business, there isn’t much income, and you will find yourself in a position of having to do every job that needs to be done. There’s no getting around this, and no easy way to overcome it.

But what you can do is focus your primary energy and time working on the jobs that are most important to the growth of your business. For example, the primary job is almost certainly to generate income. That means you should spend most of your time concentrating on marketing, sales, and filling orders.

That brings up the next challenge…

Unlimited Hours

If it seems that your new business venture requires something that looks like unlimited hours, you’re on the right track. Upstart businesses can easily require 60, 80, even 100 hours per week on your part.

It will be that way until your business has enough income that you can begin hiring others to handle some of the responsibilities. But until that day arrives, you’re going to have to be prepared to put in the time necessary to make your business successful.

Mental preparedness is probably the only strategy, other than having family members help you along the way.

A Lack of Benefits – Especially Health Insurance

This is a serious issue, and not one that is easily overcome. When you work for someone else, important benefits are often provided by the employer. But when you are self-employed you are the employer, and the only benefits you will have will be the ones that you pay for yourself.

One way to handle that is to be on your spouse’s benefits, if he or she has a job that provides them. Another is to hold on to your current job until you are in a position to pay for benefits on your own.

Failing either of those efforts, you will have to choose which benefits are most important to you. For example, you may focus your attention on getting health insurance, and temporarily letting go of setting up a retirement plan.

Paying Your Own Income Taxes

When you work for someone else, they withhold payroll taxes for you. That not only spares you the job of having to do it for yourself, but it often sets you up to receive a tax refund when you file your return.

When you’re self-employed, there is no payroll withholding, and you must pay your own income taxes. You can do this by being prepared to file IRS Form 1040-ES, Estimated Tax for Individuals. This is a form that you file and pay your taxes with on a quarterly basis. It only pays your taxes at the federal level, so you will have to investigate the process if your own state also has an income tax.

Paying income tax estimates requires discipline. Most likely, you will have to allocate a certain percentage of your income to the pay for your estimates. The good news is that you can deduct business expenses from the income before determining your tax liability. This is a fairly complicated process, and one well worth the investment of time and some money consulting with a CPA.

There are all sorts of challenges involved in being your own boss, but if you know what you’re up against and you have a strategy for dealing with each, you can dramatically increase the likelihood of your business being a success.

How about you all? Are you your own boss? What sorts of difficulties have you encountered and how have you handled them?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/9731367@N02/6988137520/sizes/q/

Options for Out of Control Student Loans

The following is a guest post by Paul Smith.  He is an attorney with an interest in personal finance.  He blogs at insideconsumerfinance.blogspot.com.

Are your student loans out of control? If so, you have a number of options to assist you in getting your student loans back under control. Some involve taking advantage of some repayment options that many people are not aware of, while others involve temporarily suspending your obligation to make payments to allow you to get your personal financial circumstances under control. Finally, simply communicating your situation, particularly if you are having financial difficulties, to your loan servicer will also often go further than you think.

Are You Taking Advantage of all Available Repayment Options?

The first and most important question to ask if your student loans are out of control is whether you are taking advantage of all of your potential repayment options. All federal student loans offer a variety of repayment plan offers, including what are called income based or income contingent repayment. Income based repayment (IBR) is a program in which your required payments are pegged to your income; payments cannot constitute more than 15% of your discretionary income based upon the amount you owe, your monthly income and your family size. (The rate is 10% for those who first borrowed after July 1, 2014). The one drawback to IBR is that your payment is readjusted every year based upon your income as reported on your previous year’s taxes. Income contingent repayment plans are also based upon your total student loan debt, family size and income. With income contingent repayment plans, the maximum payment is 20% of your discretionary income or the amount you would pay over a 12 year loan term, whichever is lower.

Contact your loan servicer for further information and they will provide you with the necessary forms to apply for these three repayment programs.

Forbearance or Deferment May Be Appropriate for You

Most federal student loans also offer options for either forbearance or deferment. Forbearance means that your obligation to make payments is suspended for a certain period of time. One caveat to forbearance, however: interest does accumulate during any period during which you are on forbearance and most loans, including federal student loans, provide that all accumulated interest will be capitalized (i.e. added into principal) at the time that you are taken out of forbearance and put back on a payment plan. Forbearance is not automatic, but lenders are often happy to work with you in order to keep your loans current. Deferment is similar to forbearance but is available for specific enumerated circumstances, such as if you are experiencing financial hardship or are unemployed/unable to find employment, whereas forbearance is at the discretion of the lender and can be for any reason.   Interest is also capitalized at the end of a deferment period. Deferment can extend no more than 3 years, while forbearance cannot extend more than 12 months at any time.

If your student loans are private, your options are more limited. Very few private student loans offer the type of flexible repayment options such as IBR or ICR that are available to those with federal student loans. In addition, not all private student loans offer forbearance or deferment for borrowers either. To the extent that forbearance is available under your private student loan, there may be fees or penalties associated with having your loans placed in forbearance status.

Private Loan Borrowers Have Much Fewer Options, Unfortunately

If you do have private loans, your best bet is to contact your servicer to explain your situation. Servicers are often extremely willing to work with you because, even if you cannot make your required payment, something is better than nothing from their perspective. It costs them money to place you into collections and they will generally do everything they can to avoid having to do that. And if they decide to sell your debt completely to a debt collector, it will be for less than the face value of the debt, so it is in their interest to keep you from defaulting on your student loans.

To the extent your payments are completely unaffordable, you may also consider whether refinancing might make sense. Both federal student loans and private student loans can be consolidated, although private student loans cannot be consolidated into any federal consolidation loan.

Finally, failing all the above, it is always worth a telephone call to your servicer to explain your situation and see if they will work with you.

Need Further Information?

If you need more information, there are some wonderful organizations out there which assist borrowers who are having difficulty with loans or whose loans are in default. Student Loan Borrower Assistance at www.studentloanborrowerassistance.org, which is a resource offered by public interest law firm the National Consumer Law Center, and American Student Assistance www.asa.org, a non-profit organization which provides information on managing your student loans, including all of your available options in the event you run into trouble with your loans.

How about you all? Are your student loans out of control? How have you been able to get a handle on them?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/jakerust/16608691510/

Affordable Ways to Take Care of your Health While being a Workaholic

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

I’ve always been known to be a workaholic like most other Americans who dream of seeing better days for their finances. Getting into debt during college prompted me to start hustling on the side of my full-time job more and luckily, work has picked up tremendously. I work an average of 60 hours per week spread across each day.

Not having any official off days can take its’ toll on anyone, but I know I’m not the only one embracing the hustle. According to Fortune.com, American employers offer the least amount of paid time off compared to European companies. Yet and still, U.S. employees typically leave about 429 million paid vacation days on the table every year.

Last year I had an unexpected minor surgery that woke me up by telling me I need to put more time and energy into my health as opposed to all the hours I was putting into work. Taking time off for yourself and focusing on your health is so important because without your health, you can’t work and bring in an income anyway.

Here are 5 affordable ways to take care of your health when you’re a goal-drive workaholic.

Go for a 10-Minute Walk or Run

Sitting at a desk all day can be extremely damaging to your health. According to Diabetes.org, 67 percent of Americans hate sitting, yet 86% of Americans sit all day at work. Sitting for long periods of time can reduce your metabolism while excessive sitting has been identified as a key factor in heart disease, stroke, diabetes, cancer and obesity.

To get on your feet more during the day, you need to squeeze in time to stand, do something active, or simply go for a walk or jog around the block. Getting a routine established will help improve your health over time and possibly even help you obtain that extra energy boost you need throughout the day.

Meditate When You Wake Up

Meditation is great for calming the mind and body along with being a great stress reliever. Stress and anxiety can cause health problems long-term. Whether you tend to stress out about work, money, or your kids, start your day off on the right foot by meditating for a few minutes and thinking about positive aspects of your life.

You can even keep a gratitude journal and spend a few minutes each day writing in it.

Take a Random Vacation Day or Plan a Rest Day

Don’t be one of those people who don’t take their vacation days. Employers understand that workers need rest which is why they make those days available to you. If you don’t have any relaxing trips planned, take a staycation and just stay at home, relax, catch up on your rest and recharge.

If you don’t have any vacation days available, schedule down time on one of your off days and commit to doing something relaxing.

Eat Whole Foods

What you eat can affect your body, health, and even your attitude so it’s important to make sure you’re putting the right things in your body. Eating a diet filled with whole foods, fruits and vegetables doesn’t have to be expensive. In fact, it can cost significantly less than expensive processed foods.

Start your day off with a nutritious breakfast and meal plan during the weekend so you won’t be tempted to buy quick and unhealthy foods due to the convenience and being short on time. You can also try smoothies by blending your favorite fruit with a bland vegetable like spinach or kale to work more whole and healthy foods into your diet to give your body the fuel it needs.

Make Time for Annual Health Exams

It’s Important to schedule time for regular physical exams with a healthcare professional each year. Preventative screenings and check-ups can help identify any problems that could occur later down the road and keep your body at its’ absolute healthiest state.

Plus, as long as you have insurance, most annual checkups should be covered so you won’t have to spend much.

Getting a check-up last year was one of the best things I could have done to maintain my health because it let me know that I needed to have a preventative surgery to eliminate developing cancer when I got older. It’s a scary thought for a young person in their twenties, but it’s better to be aware of what’s going on in your body and be committed to keeping it healthy.

No matter what your work or financial goals are (as I know they can seem overwhelming at times), it’s always best to prioritize your health and make time to improve it.

How about you all? Do you consider yourself a workaholic? How do you make time and put forth the effort to maintain your health without spending lots of money?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/tashmahal/2731681028/

The One Money Management Tip That Changed Our Lives

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

When we decided at the end of 2012 that it was time to get our financial life together, we really had no idea of where to start.

On a whim, we started searching the Net with terms like “How to get out of debt” and discovered the immensely helpful world of personal finance blogs. One piece of advice we saw over and over was, “You need to start tracking your spending.”

Up until that point, we’d always been afraid of budgeting and spend tracking. Due to perspectives we learned about money in our childhoods, my husband and I realized we were subconsciously afraid of not having enough. Therefore, when we would start a budget or spend tracking system, guilt would set in immediately when we’d spend on something that wasn’t a necessity and we’d stop budgeting altogether.

As we began to assess our very unhealthy financial situation at the end of 2012, we realized that we had to overcome this fear of budgeting if we really wanted to dump our debt. And the one key that helped us most when it came to taking control of our money was this:

Track all Spending

It sounds simple enough, but what we learned about spend tracking truly has changed our financial lives exponentially. Spend tracking has helped us to:

• Be sure we are staying in line with our planned budget
• Have a clear, one-minute view of where our money is going
• Keep us accountable for whether or not we’re spending in line with our values and goals

Why Budgeting Without Spend Tracking Didn’t Work for Us

When we tried to set a budget without tracking our spending, we continually fell into money management failure. As we looked over our non-tracking expenditures, we found that we spent:

• 50% more on groceries than we had budgeted for
• 100%+ more on entertainment expenses that we thought we were spending
• Much more money than we had coming in

Hence the tens of thousands in credit card debt that we are now digging out of. Spend tracking and looking at your total monthly expenditures as a whole – both during and at the end of each month – helps ensure you are truly spending your money on what you want to spend it on.

For instance, when I look at our entertainment expenses on the 15^th of the month and see that we’ve already reached our spending limit, I can say “Ok, guys, no more entertainment costs this month. We’ll be doing free fun stuff only for the next two weeks.”

And the family is okay with that because we’ve established our goals together and we know that keeping within our entertainment and other budgets means we stay on track to reach our financial goals.

How to Overcome Fears About Spend Tracking

If, like we did, you have some reservations about tracking all of your spending, never fear. Here are some quick tips that will help you overcome your fears and reap the benefits of a solid spend tracking system:

1. Choose to spend-track for just one month. That way there’s no pressure to do it forever and you’ll be able to assess the benefits without the pressure of having to stick with the program.
2. Make your spend tracking system user-friendly. We use a simple Excel spreadsheet. There are also great programs through companies like Mint and Personal Capital that can help you track your spending.
3. Write down your expenditures at the end of each day. Recording your expenditures daily will keep the task simple and help you avoid missing anything.
4. Remember that you’re doing this for the greater good. It’s easy to get caught up into guilt over spending habits when you start spend tracking. Remind yourself that spend tracking is not a punishment, but a way of helping you to achieve your financial goals faster.

Learning to live off of a real-life budget and to track your daily spending can drastically accelerate achievement of your financial goals. Make a commitment to try it for just 30 days, and see if it helps you to save more money toward your financial dreams.

How about you all? Do you track your spending? If so, how has it changed your financial picture?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/59937401@N07/5474825330

Asset Allocation in Retirement

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

What should your asset allocation strategy be once you are actually retired?

You know what it is.

As readers of My Personal Finance Journey, you know what asset allocation is. Jacob has written about it many times.

But, just to repeat: Asset allocation is the process of keeping your investment portfolio diversified across multiple different types of assets (asset classes like bonds and various types of stocks -domestic, international, and etc) in an effort to get the highest returns, avoid catastrophic loss across the portfolio in a downturn and still let you sleep at night. At least, that is my definition.

The goal of using an asset allocation strategy should also hopefully allow you to take some of the emotion out of investing, allowing for more logical and consistent decisions about what to keep and when to sell or buy.

Why asset allocation is important

In my terms, as a past project manager, asset allocation is a plan for investing. Without a plan you might end up where you want to be, but more likely, you won’t get there.

Forbes lists 10 of the reasons asset allocation is important in 10 Reasons Why Asset Allocation Is Everything For Retirement Saving:

To me, the one that makes most sense is the first they list, as explained in this quote from the article:

“Most returns are “explained” by asset allocation, in investment parlance. That means it matters more how you divide up the pot into bonds, U.S. stocks, international stocks, etc., than it does whether you pick the best (or worst) funds in each of those asset classes. “

The author cites multiple studies that claim that 100% of your returns are due to your asset allocation.

What is the typical recommendation for your target allocation (and why)?

Investing pundits try to help the masses of people investing by simplifying what we should stake out as our ‘target’ allocation. Here is what CNN Money quotes as the rule of thumb for your target:

“The old rule of thumb used to be that you should subtract your age from 100 – and that’s the percentage of your portfolio that you should keep in stocks. For example, if you’re 30, you should keep 70% of your portfolio in stocks. If you’re 70, you should keep 30% of your portfolio in stocks.

However, with Americans living longer and longer, many financial planners are now recommending that the rule should be closer to 110 or 120 minus your age. That’s because if you need to make your money last longer, you’ll need the extra growth that stocks can provide”.

The reason being that as you age, your income from non portfolio sources will most likely drop. Your portfolio becomes very important to your continued ability to buy groceries and pay your taxes. So, you must be ultra conservative as you approach retirement, so as not to lose your nest egg.

I’m 67 and retired since 2010 and I don’t buy it for my situation. You’ll see why later.

What should be included in your asset allocation?

You would think that figuring out what things you should include when allocating assets would be pretty simple, but sometimes this isn’t the case.

Jacob has raised this question before in several posts, like Should You Include Emergency Fund and Specifically-Earmarked Savings in Your Overall Asset Allocation? or Should You Incorporate Gold / Precious Metals in to Your Asset Allocation?

The American Association of Individual Investors has the following suggestion:

“An investment portfolio should consist of financial assets that you would be willing to sell for spending money or that generate some form of spending money, either now or some time in the future.”

The article suggests that you can make the decision by asking yourself (and your spouse) questions such as: can you put a dollar value on the asset; how much is it worth (if not much then maybe not include it); is it really an asset or is it instead a purchase that you consume – in other words, would you mind selling it for cash?

In New Take on Asset Allocation: Include Your House and Social Security, Anne Tergesen, the author, suggests that for some, it might be appropriate to include these things in your list of assets to allocate saying:

“So, for a 65-year-old woman who receives $25,000 in annual benefits, the value of those payments as an asset is about $500,000. Next, she would add that $500,000 to the bond portion of her investment portfolio.”

Whoa! Not for me. I like my house and won’t be selling it for spending money except as a total last resort. Plus, I don’t count my chickens before they hatch, do you?

So what should your asset allocation be once you retire?

Well, as Bonnie Baker, database technician, consultant and award winning speaker of the “Things I Wish They’d Told Me 8 Years Ago” DB2 database series always says in her presentations (yes I am an ex-mainframe programmer who used IBMs DB2 product!):

“IT DEPENDS!”

I believe it depends not just upon your age but also on a whole lot of other things. Here are a few of the things I think matter.

• How big is your portfolio?

In general, I think (and I am NOT an investment professional, by the way) that if you are post-retirement and living solely off your portfolio income and principal, you do need to consider being ultra conservative. Of course, even this depends – how big is your portfolio? If you have tens of millions, you probably can be a bit more exuberant in your investment selections.

• What are you including in your asset list to allocate?

If you are targeting a fairly aggressive allocation, are you leaving assets out that can mitigate the risk?

• What is your lifestyle?

If you are satisfied with less, you won’t need as much income. If you like to shop impulsively, travel, spend on hobby’s grandkids or give considerable amounts to your favorite causes, you will need more backing and higher levels of income.

• How much debt do you have?

With debt, especially debt on things you need to live (ahem… your home), you need to make sure your portfolio will continue to kick off enough to cover the debt.

• What other sources of income do you have and how reliable are they?

If all your current needs and wants are covered by income that doesn’t include that from your portfolio, then you can be more aggressive in seeking higher returns with more risk.

What we do

My spouse and I are ordinary folks who worked and saved hard for a really long time. We aren’t finance gurus but we do believe we have done well enough.

In our situation, those ‘it depends’ items are as follow.

He gets a pension equal to 3/4 of his working salary. I collect social security but also have $600K + in a traditional IRA, from which I will start having to take required minimum distributions in a few years. We paid off our mortgage in 1993 and have a fully paid vacation condo as well, only travel when I force the issue, live a fairly inexpensive lifestyle that is well covered by his pension alone and we have a significant net worth (putting us solidly in the upper middle class). We have no debt and pay off credit cards in full each month. Our kids and grandkids don’t require supplemental support and except for my mother-in-law we have no family financial obligations.

While I was still working, I bought into the idea of reducing exposure to risk by moving our target asset allocation more to the ‘safe’ side. But now I am rethinking that after 5 years of no salary income and no money problems.

Our current target allocation is:

• 35% Large Cap stocks and mutual funds
• 20% Small-midcap stocks and mutual funds
• 15% International stocks and mutual funds
• 25% bonds
• 5% cash (or near cash)

So… 70/25/5

The rule of thumb quoted above, tells me I should be targeting 54% in stock instead of 70%. That just doesn’t make sense to me in our situation.

What I include in my asset list:

I exclude many of our assets from our allocation strategy. I only include liquid assets like bank accounts, investment accounts, and etc. I exclude our home, our condo, his cash value in the life insurance, and I definitely never include money we don’t have yet (like future pension or social security payments).

Because I exclude all of those things, I feel we have a pretty big security net. We can continue to sleep in our beds, keep food on the table, and stay retired even if our portfolio falls to zero.

How to get to and maintain allocation targets

Setting an allocation target and actually meeting it are two very different things – and both have benefits.

Just setting a target forces you to list what you own and owe, think about and discuss risk, review your lifestyle desires and more.

Meeting and maintaining your targets maximizes your hoped for returns, and can take some of the emotion out of buying and selling.

I must confess that I have historically had trouble maintaining our target allocation. However, I’m sort of a control freak and also kind of thrifty. I don’t want anyone else managing our money and I certainly don’t want to pay them a percent of my managed asset base to do it.

Therefore, it is up to me to track where we are with our asset mix and decide what to do about meeting the allocation targets.

I’m also a buy and hold type investor and really hate to sell. Unless there is good reason (like the investment really sucks AND I need a capital loss for tax purposes), I tend to try to balance with dividends and new purchases. This negates one of the benefits of an asset allocation strategy – selling when a class of assets has risen in price, putting you over your allocation in that class.

How I check my progress towards target allocations

Once a quarter, I produce Quicken a report of all of our liquid investments, classified by asset type (bonds, the various types of stocks and cash). Since I manually classify these assets by type in Quicken, I really should also be checking that classification each time. This is hard to do with mutual funds and is a constantly moving target as to how much of each fund is actually invested in what type of asset. Sometimes even the actual stock I own can change from large cap to mid or vice versa.

After printing out the Quicken report, I then start fiddling with it. Currently, we are in a very low interest rate environment so I have put some of our cash into short term bonds to get more interest. I’ve also allocated our cash positions to various projects my spouse and I believe will be needed – things such as buying a new car, putting on a new roof and siding, investing more when prices come down, taking the family on vacation (OK, that one is really mainly mine) and etc.

When I figure out how much cash is in our portfolio, I subtract out the things on which we will be consuming (siding, roof, car, etc) as well as our emergency living money (in case those pensions and payments stop coming for whatever reason this would give us time to find jobs).

I also move the ‘cash’ that we have put into short term bonds out of the bond category.

Then I re-figure the percentages and figure out how much over or under we are in each category. This reduces our overall asset base and removes part of our bond portion (the part that is currently actually in bonds, but which, in our minds is actually cash).

Following that exercise (which takes me several hours), I ponder what to do about it. I write down action items to do during the coming quarter. These are things like, “keep looking for opportunities to buy bonds” or “buy Chevron (large cap that we already own shares of) while the price is down”.

Since we no longer are actively investing salary or pension income, any buys have to come from dividends or sales in another asset class.

While I am diligent about reviewing our allocation and deciding what to do, I must confess that I often don’t take action on the items I list. Sometimes this is because I get sidetracked. Other times it is a conscious decision that now is not the time.

It’s kind of a pain, so how could this be done differently? Here are a couple of ways to let someone or something else share the burden.

Should you use a portfolio manager?

There are firms, if you have enough money, that will manage your entire portfolio for you. They typically charge a percent of the portfolio value each period, and those percents can be pretty high.

I guess if you are a mega millionaire or a billionaire, these managers might be worth their cost, but for we average Janes, they are either not available or too pricey.

Should you use target date funds?

As this CNN Money article explains:

“Based on the year you expect to retire, target-date funds are supposed to invest in a mix of stocks, bonds and cash that reflect an age appropriate level of risk that changes as you get older.”

You are supposed to pick the date at which you want to retire, then let the fund control your money. You could, I presume, pick a date based on your risk tolerance as well, however. If you are very risk adverse, then you could pick a date closer to now, for instance, which would cause your money to be invested in things in which people closer to retirement are theoretically supposed to invest.

I never have liked target date funds (remember I’m kind of a control freak), and the above article notes also that you may be incurring more fees than you would want. In addition, these funds are typically one size fits all and don’t consider the particulars of your individual situation

Would robo advisors make this all easier?

In this 21st century, software companies, combined code writing talent with modern portfolio theory allow you to use robo advisors to manage your asset allocation/portfolio.

Main St article Top 10 Robo Advisors Ranked: Find the Best Automated Online Investing Services describes these as:

“Robo advisors– automated computer algorithms that allocate, deploy and rebalance our investments.”

All of these appear to be somewhat different variations on a theme. Many will, in addition to a fee of a percentage of your portfolio, also incur other fees, such as fund management fees, commissions, etc.

Some of them have absolutely no human component, while others allow you to decide how much control you or an advisor has over the assets.   Some will automatically buy and sell to re-balance while others allow intervention or just provide suggestions.

The jury is still out on how viable these will be for other than absolute investing beginners (although reports are that the Millennials are loving them). As these robo advisors grow in flexibility and complexity, perhaps they will be able to take into account some of the things I consider today in defining and executing my own asset allocation strategy, things such as my individual lifestyle, portfolio levels, risk tolerance, and tax situation.

Wouldn’t it be nice just to not bother with all the work and have it all automated? But, as with liberty, eternal vigilance is the price of financial freedom.

How about you all? What’s your asset allocation strategy?

Share your experiences by commenting below!

***Photo courtesy https://pixabay.com/en/stock-exchange-bull-bear-securities-642896/

How to Control a Job Interview

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

A job interview can be an intimidating process, there’s no question about it. But you can take the sting out of it – and make it a more comfortable event – by taking control of the interview.

Here’s how…

Make Sure You Know the Job You’re Interviewing For

It’s mission-critical that you have a solid grasp of the position that you are interviewing for. Though this point should be self-evident, job candidates sometimes apply for jobs that they are either totally or substantially unqualified for, in the hope of a miraculous outcome. But it’s one thing to embellish your resume to make it look like you’re qualified, and quite another thing to prove it in an interview. Interviewers, managers in particular, can usually spot an unqualified candidate just minutes into an interview.

Carefully study the job and requirements presented, and make sure you understand the position you are applying for. That means not only having the skills and qualifications necessary, but also being able to comfortably explain how you’re the person for the job.

Make Sure You Know the Company You’re Interviewing At

This is easier to do with large publicly traded companies, but much harder with smaller ones. No matter, you still need to get as much information on the potential employer as possible. The more you know about the company, the more credible you will look in the interview.

Get information on the company from any public sources that are available. Also do a web search on the company name, and see what recent news stories come up. Be prepared to discuss the more interesting ones. Your interviewer can’t help but be impressed with your knowledge of the company.

Make Sure You Know the Industry You’re Interviewing to Enter

This is at least as important as knowing the company you’re interviewing with. In fact, it can be even more important if the company is small. It demonstrates that you have open understanding and an interest in the big picture environment that the employer operates in.

You might even want to be prepared to discuss challenges that the industry is facing. At a minimum, that will position you as a candidate who perceives problems, making you better prepared to solve them.

Rehearse Answers to Questions that are Likely to be Asked

If you have already been on a few interviews, you’re probably aware that there are certain questions that are common in just about any interview. Make a list of those, as well as your best answers to address them.

You should also consider questions that you are likely to face based on certain jobs. These aren’t as easy to know in advance, but if you spent time studying job requirements, that’s a good start. Be prepared to answer any questions that are likely to come up in regard to those qualifications.

Make Sure You Can Support Everything Your Resume Says You Can Do

Do a detailed review of your resume, and make sure that you can support everything you claimed. Understand that an employer may be interested in you based primarily on a single skill. If it turns out that you don’t really have that skill, or that you’re really not strong in it, the interview and your candidacy will be over.

Be sure that you can not only support what you claim, but that you can explain it easily. The interviewer may be looking for inconsistencies or a lack of comfort in your answers. Make sure that isn’t the case.

Prepare a List of Relevant Questions

This step is an absolute must on any job interview. Having your own questions will provide the following benefits:

1. It will demonstrate clear interest in the position on your part
2. It will show deeper understanding of the employer’s needs
3. It will help you to determine if you really want the job (you may not!)
4. It will take the pressure off of the interviewer having to ask all the questions
5. Having a list of questions will eliminate periods of “awkward silence”
6. It may give you the ability to get around answering a question you aren’t comfortable with

Make sure that your list of questions are relevant to the job, the employer, and the industry. That means that they need to be substantial – the kind that demonstrate your knowledge of the position and confirm your value to the interviewer.

In that regard, you must avoid standard questions, such as asking about salary, vacation time, or the 401(k) plan. Those are filler questions in a serious interview, and need to be addressed when an offer is made.

Make Sure YOU’RE the One Conducting the Interview!

The bigger picture purpose of going through all of these steps – knowing the job, the company, and industry, being prepared for questions that are likely to be asked, being prepared to support your resume claims, and having a list of relevant questions – is to put you in a position of being able to conduct the interview.

In truth, anyone can be the interviewer in a job interview – the employer or the candidate. But by assuming the role of interviewer, you put yourself in a position of strength. You’ll be able to control the flow of the interview, often to the point of being able to avoid uncomfortable situations and inquiries.

The interviewer will not only respect you, but the strategy will probably make you strongest candidate that they interviewed for the position. That should make an offer more likely to come your way.

How about you all? Do you have any other tried and true tips for maintaining control over an interview?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/21218849@N03/5015628145/sizes/q/

Alternative Ways to Fund your Child’s College Education without a 529 Plan

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

Paying for college for a child is a long-term expense and goal a lot of parents strive to achieve to reduce the amount of student loans their son or daughter has to take out. Student loan debt is a big issue in today’s society and it’s no secret that without it, young adults can get further ahead financially during their mid and late twenties.

When I was ready to attend college, my parents didn’t have any money set aside to help me pay for my education, but as a first generation college student of a low-income household, I took advantage of many scholarships and financial aid options to lower my out-of-pocket costs and loan amounts. Even though I accumulated some student loans during college, it’s nowhere near what I could have taken out.

Now that I’m a parent, I know my son will not have the same government benefits that I had when it’s time for him to attend college and with inflation, tuition will most likely increase over the next 10-15 years.

While a state 529 savings plan is always a superb option when it comes to saving up to fund your child’s college education, not everyone can take advantage of this option for various different reasons. Here are a few alternative ways to save for college.

Coverdell Education Savings Account

While 529 plans are a great way to build your investment portfolio and provide some nice tax benefits while allowing you to set aside money for your child’s college education, they have limited investment options and promote high-cost mutual funds.

On the other hand, Coverdell Education Saving Accounts have very little restrictions on what type of investments you can make and they allow the same tax-free educational benefits that 529 plans provide. Even though Coverdell accounts have a lower limit on contributions, it could be ideal for parents who don’t have a lot of extra money to contribute but still want to set aside something for their child.

Roth IRA

Roth IRAs are popular tax-advantaged retirement savings vehicles that can also be used as a college savings account. The money you contribute to a Roth-IRA gets taxed so that you can withdraw it tax-free. While there are income and contribution limits, you don’t have to wait until you are 59 ½ to withdraw funds. You can withdraw funds for educational expenses in as early as five years after you begin contributing. With a Roth IRA, it’s best to start setting aside money early and maxing out contributions each year.

Real Estate

Can’t set aside much now but still want to help your child cover expenses? If you are interested in real estate, you can attempt to rent out a property to help cover your child’s educational expenses in rapid amounts.

I’ve heard of some parents who deliberately purchase an investment property with the intent of paying off the mortgage in time for their child to attend college so they can rent out the property and receive passive income to contribute each month. If you have extra space in your home, you can also rent out a spare room as well for extra money.

Prepaid College Tuition Plans

If you are sure without a shadow of a doubt that your child will attend college, you may want to look into prepaid tuition plans. Prepaid tuition plans is a type of 529 plan that allows you to lock in tuition rates from state colleges now to avoid having to pay increased tuition rates in the future.

Prepaid college tuition plans are only available in a select number of states and vary from state to state with their own pros and cons depending on where you live, but if you are willing to save money on your child’s education now by locking in a payment and tuition rate, you just need to have your child attend a specific state school that participates in the program to reap the benefits.

Gerber Life College Plan

The Gerber Life College Plan is like a high-yield savings account for your child with a guaranteed positive growth rate. Parents can choose to contribute anywhere from $10,000 to $150,000 and contribute monthly until their child is ready to attend college. When you open an account, Gerber Life discloses how much money it will have at the maturity date.

The one downside of this option is that once the balance in your account grows, the income it generates can become taxable. On the flip side, what’s nice about this option is that your child doesn’t have to use the money for educational expenses if they choose not to go to college and start their own business or choose another path. Nothing is worse than sacrificing to set money aside for your child to attend college only to find out that they have a different opinion on what they’d like to do.

Start Small and Contribute What You Can

Saving for college takes a lot of time and persistence. It may be difficult at first to squeeze extra money out of your budget to contribute to investing in your child’s future but getting them off to a good start upon adulthood should always be the end goal.

Consider which option will allow your money to grow safely and generate a nice return. Then, start making small contributions and gradually increase them overtime. If your child receives monetary gifts or allowance from time-to-time, take a portion of their earnings and contribute it to college savings. Every little bit counts and what you save now will allow your entire family to carry less of a financial burden in the future.

How about you all? Have you started saving for college for your child(ren) yet? What are some of the ways you are saving?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/68751915@N05/6629054127/