Tips on how to evaluate a 529 college savings plan

• Avoid large fee plans by doing your own research and selecting your own 529 plan
• Look for a direct-sold (nonbroker) 529 plan.  Broker sold funds do not guarantee better earnings, you may in fact end up getting less after paying investment fees.
• Review the eligibility requirements and read the fine print!
• Make sure you are able to pay the minimum contribution.
• Evaluate the investment options and make sure the program offers options that meet your investment objectives.
• Compare management and account maintenance fees.
• Check for limitations. Read the fine print!
• If you are dissatisfied with your 529 plan, you can always swtich to another plan by changing the beneficiaries ont he account!  This can be done once every 12 months.
  

Technorati Tags: savings, money management, investment, 529, college, finances

Shopping for a 529 college savings program

What exactly is the right balance of risk and profit when you're saving for your child's college education? It all depends on how much time you have and how much you have to invest, but for everybody, the clock starts ticking once your child is born. Unlike retirement where you have decades to save, you have a mere 18 years until they graduate high school and start college to scrape together whatever you can. Start shopping early to save yourself the worry and heartache of uncertainty.

How to Allocate Assets for College Savings at Morningstar




Technorati Tags: savings, money management, investment, 529, college, finances

The more you save, the more you earn... in Chicago

It seems that Monetta, an investment comapny in the Chicago area has set up a new program for its Monetta fund shareholders to save for their children's college education. The initial and monthly investments are very low, but the plan gives earnings of 2.5 percent of the shareholder's account value.

Read more about it at businesswire...

businesswire

Technorati Tags: college savings, investment, monetta, chicago

College Savings Account - 529 College Savings Plans

Besides investing in a Coverdell ESA account, there is another popular alternative to saving funds for college.  A 529 Savings plan is offered by either your state or an institution of higher education.  Withdrawals and earnings from 529 savings plans are generally tax free as long as the withdrawn funds are being used for "qualified educational expenses" like books, tuition, room and board, and supplies.  Contributions may also be partially tax deductable depending on your state.  One of the greatest strengths that a 529 plan has over a Coverdell ESA is that there are no income based restrictions on contributions.  Another strength of 529 plans is that many plans are managed for you.  So if you don't have to worry about the risk of wisely investing your funds if you're not a savy investor, all of this will be taken care of for you.  However, as with all investments, there are risks associated with 529 plans.  Your best bet is to request information directly from you plan's administrators.


Technorati Tags: 529 college savings, investments, saving for college

Saving for College - Is a Coverdell ESA the best option?

Like an IRA, a Coverdell Educational Savings Account allows annual non deductible contributions. The funds in the account grow tax free and qualified distributions are also tax free. This may sound like a great way to save for college, but there are some catches.

• Contributions cannot be made to an ESA once the beneficiary turns 18.
• All funds in an ESA will have to be disbursed to the designated beneficiary by the time she turns 30 or the withdrawals will be subject to income tax and the 10%. Another technique is to rollover the account to another beneficiary who will have to be a family member.
• The maximum contribution limit is $2000 annually. Excess contributions are also penalized if they are not withdrawn before the end of the tax year.
• Distributions are only tax free if they're used for qualified educational expenses, otherwise a 10% penalty and income tax will apply to any gains that were withdrawn from the account. Double dipping and also claiming deductions such Hope and Lifetime Learning credits for the same educational expenses is not allowed.
• An ESA is considered to be an asset of the account custodian so this will not have a large negative impact on financial aid.
• For now, it is possible to make tax free withdrawals from an ESA and claim Hope or Lifetime Learning credits in the same year. This may change by 2010 though.

Paying rent for a new apartment with skylights and a jacuzzi is not a qualified educational expense! See the IRS publication on qualified educational expenses and distributions. Click here

Technorati: college, taxes, finance, saving, investment

Credit Cards - Friend or Foe

Previously: rent, food, utilities, clothes, books and supplies, entertainment

Some people like to make credit cards out to be the greatest enemy to college students learning how to manage their finances. However, I think that credit cards can be a good thing if used responsibly and in moderation. If you can exercise self restraint, then credit cards can very effectively be used to build up your credit history. Having a good credit history is crucial to getting lower rates on your mortgage, student loans, and car loans. College is an excellent time to begin building your credit. Most lenders won't even consider giving you a loan unless you either have at the very least 2 years of established credit or a credit worthy co-signer. What happens if yo can't find anybody to co-sign for you? Well, then you're screwed, especially if you need a loan to pay of your tuition for the semester. That's why you should begin building your credit as soon as possible.

• Think of your credit card as a debit card. Never charge more than you have saved in the bank. At no time should you have a balance greater than what you have in your bank account. Better yet, never spend more than you have budgeted for expenses.
• You don't have to use your credit card every period. Just having the card will help build your credit. Even if you don't use your card, the credit card companies will indicate on your credit report that payments were made on time.
• Check your credit report. You can get one free credit report annually from each of the credit agencies. Don't fall for scam sites, the only site approved by the government is annualcreditreport.com. Go to the ftc website to see how to get your free credit report. You can also request a credit report from the companies if you were denied credit for any reason.
• Never carry charges from one statement period to another. You'll end up struggling just to pay off the interest. A twenty dollar charge for dinner could end up costing hundreds if you don't pay off the debt.
• Don't get a card because of reward gimmicks or because the card has pretty designs. Some people really do get credit cards for this reason...
• Look for a long zero interest intro period, zero annual membership fees, and low apr.
• Never pay just the minimum. This is the amount that credit card companies come up with to keep you in a cycle of barely paying off the interest.
• Pay off your balance before your intro period ends. Depending on your agreement, you may end up paying interest on the original charges, not just the remaining unpaid balance!
• Use balance transfers wisely. You should transfer debt from a high interest card to a lower interest one. Just be sure to read the fine print and try calling in to get the company to waive the transfer fees.
• Never transfer your balances just to avoid paying off the debt! Switching cards all the time will ruin your credit.

• If unfortunately you already have credit card debt...
• Cut up all of your cards. Yes all of them! Don't leave a single one 'just for emergencies'. The temptation is the last thing you need right now.
• Cut your spending so that you have money available to pay more than just the minimum due on your credit cards.
• Concentrate first on paying off your largest balance first, then the next largest and so on.
• Call the companies to negotiate a lower interest rate. Convince them that you're sincere in paying off your debt. They may even stop accruing interest on what balance you do have. The companies would rather you pay off what you currently owe them then to risk collecting nothing if you declare bankruptcy.

Technorati: credit, debt, credit cards, saving, money management

Having Fun on a Budget

Previous tips for a frugal lifestyle: rent, food, utilities, clothes, books and supplies.

College campuses are great places to find frugal entertainment. There are always cheap/free art gallery showings, concerts, shows, and cultural events. Also campus museum exhibitions are usually free, although a donation is usually suggested.

The most obvious answer to cheap movies on a budget are to use your student ID or going to matinees instead of evening showings. For further savings, look to see if there are small independent movie theaters nearby. There will often be free/discounted showings sponsored by local organizations. Look for dollar movie theaters in your area, most often the movies shown are only one or two months old. Libraries also have a wide video/dvd selection available for free, just check one out like you check out books. Have a movie night with a bunch of friends and share the cost of renting a movie. Better yet, have a movie night at your cinephile friend's place. How about just watching movies that are shown on tv!

It's even easier to find cheap books than cheap movies. It's completely free to check books out from your library. See if there are used book shops or book traders near campus, these shops sometimes have sidewalk sales to get of older books that aren't worth very much. Look for books for sale at libraries and charity book collections. If you have access to a large bookstore, then just grab a good book and relax in one of the many comfy chairs they have there. Make sure not to crease the pages or damage the spine and put everything back when you're finished.

Look through your departments' seminar and presentation postings for events that are free and open to the public, they may even offer free food. You can learn something, have some fun, and get fed at the same time.

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