The Importance of Managing your Finances in Marriage

Relationships are a pivotal part of society. From a young age we go looking for a soul mate to spend our hearts, our dreams and our futures. We think about sharing our homes and our day-to-day lives; we think about having children and pets together, but many people forget to think about sharing their wallets.

We often think that love conquers all, but money is the leading cause of relationship divorce and breakdown. While love is powerful, the hip pocket is mightier than the heart.

Love and Money, Where to Start?

While dating is a whirlwind and falling in love can be intoxicating, it is important to consider money early on in your relationship. While entering a relationship with equal finance is not necessary, entering a relationship with shared ideals is important.

In a relationship money can quickly become a taboo conversation if it’s not handled from the beginning. Once you have been living together for a while patterns become established whether you had agreed on them or not. It is important to set up structure around who is paying for what before the bills hit your doorstep, otherwise you may find an inequality in who pays for what.

What’s Mine Is Yours

Different countries and states have different laws about when couples are merely dating and when they are in a relationship for finances sake. After moving in together, you can start claiming the benefits of marriage such a shared tax returns and shared health insurance.

While there are many benefits, that are also risks. Once you are in a relationship, sharing a home, bills and supporting one another then your things become shared. Challenges are shared, furniture is shared, victories are shared and assets are shared. Both in your eyes, and possibly in the eyes of the law. Even if you aren’t married, if your relationship falls apart you may have to split your assets with your ex-partner, even without a wedding ring.

Developing Goals as a Couple

The strongest way to keep your finances on track and to protect your relationship is to make shared goals. Sharing money goals and discussing them regularly can be the quickest way to ensure that you and your partner are open about your spending habits.

Without shared targets it can be easy to start spending ‘your’ money without considering how it affects the relationship. At first this can be okay – after all no relationship ever broke down because of one extra beer at happy hour, or a new pair of shoes. However, when couples don’t have shared goals and one is saving heavily while the other is bulking out their wardrobe.

While relationship breakdown isn’t likely from a slight mismatch in spending habits, hiding those habits can become an issue. Especially when one partner is in debt, or brings debt to a relationship.

Without shared finance goals, and open communication money can tear apart even the most loving relationship.

What Are the Benefits of Student Loan Refinancing?

After years of studying you’ve finally made it, you’ve graduated. Now you have a massive debt hanging over your head with just a few short months to find a job and get your finances in order before you have to start paying back your loans. Maybe you’ve just started paying back your loans, maybe you’ve been paying them forever. Whatever your situation, student loans are a burden everyone would like to be rid of sooner rather than later.

Typical repayments

Depending on the size of your loan and the length of it, your payments may vary wildly. Many people have multiple loans with different organizations. Different types of loans with different organizations will have different rates and repayment terms, but there are a few things you should now.

If your required monthly repayments are more than you can handle, you can apply for an income-based repayment plan to ease your budget. In the case of federal loans you may be able to suspend payments for a short-time, say if you are between jobs or on medical leave. In both cases your loans will keep accruing interest, so delaying payments may mean you end up owing more.

Refinancing your student loans

You can refinance your student loans with a new lender to improve your situation. While you might lose access to income-driven repayment plans and various federal loan forgiveness programs, you can dramatically lower the interest rates on your loans.

As a student many people sign up for a loan without reading the fine print. Even if you did you may have noticed that the rates on a student loan are often quite high. Rates on student loans reflect the market at the time the loan was taken out, so if you took out a loan in 2007 you would be paying 6.8% interest. SoFi is currently quoting their highest rate for student loans as 6.54%, with a low of 2.615%.

Switching a 10 year loan to a private lender like SoFi could save you almost $3,500 on a $25,000, while also lowering your monthly repayments $30. Refinancing to a shorter term (e.g. 5 years) would increase your monthly payments, but save you over $7,000 on the life of the loan.

Think before you switch

While refinancing can lower your overall payments, as well as month to month payments there are risks involved. You will no longer have access to any income based repayment plans, meaning if you take a pay cut or are without income for a period of time, you will still have to pay your loans.

There are also programs in place such as the Public Service Loan Forgiveness Program, which will allow you to wipe the slate clean of any remaining debt after working for a qualifying public service for 10 years. Switching to a private lender removes this option.

However, if you want to pay off your loans quickly, and have no concerns about future income, switching to a private lender could be your savior. The shorter term you set, the lower the rate you can expect to be offered. Once you are free of your student loans you’ll have plenty of breathing room, and spare cash, to consider your next adventure.

Navigating the Confusing World of Student Loans

In today’s post-secondary education climate, student loans are becoming a necessity for a large number of students. While scholarships and money from jobs are enough for some, the cost of four or more years of college education continues to rise. Luckily, student loans are available through both government-subsidized programs and from private lenders. Of the two, government loans are much more attractive than private loans. Because they are funded by the government, these loans accrue interest at much lower rates than private (for-profit) loans. It is generally advised that an individual only use government loans to pay for school and that private loans only be taken after all other avenues have been exhausted. Government-backed loans are taken much more often than private loans due to the better terms, and this post will be focusing on the types of government loans.

Subsidized Stafford Loans

Stafford loans are loans that are funded directly by the Federal Direct Student Loan Program, but can vary significantly depending on whether they are subsidized or unsubsidized. Subsidized loans are preferable because they do not begin accruing interest (that you are responsible for) until after you graduate. However, the subsidy is not available to everyone. Generally, it is reserved for those that demonstrate financial need (reported via the required FAFSA form) and not available to those coming from incomes in excess of the $50,000-60,000 range. While your school is ultimately responsible for determining the amount you are awarded, the program caps freshmen at $3,500 for the year, sophomores at $4,500, and each year of undergraduate studies after that at $5,500. The total amount that a borrower can take in Subsidized Stafford Loans is capped at $23,000. Interest rates on Stafford Loans are subject to change, but those loans issued between July 1, 2016 and July 1, 2017 typically carry a rate of 3.76%.

Unsubsidized Stafford Loans

Unsubsidized Stafford Loans are much like their subsidized counterparts, except that the borrower is responsible for paying interest that accrues while they are still in school. However, the payments are usually deferred until the student graduates. Additionally, all students are eligible for the unsubsidized Stafford, regardless of income. The loan availability amount ranges between $5,500 and $20,500 depending on income status, dependent status, student grade classification, and whether or not the student is a graduate student. Graduate students and financially independent students are eligible for larger dollar amounts per year, usually increasing slightly as their grade classification progresses. While these usually loans carry the same stated rate of 3.76% for undergraduate students, the actual amount owed will often be higher than subsidized due to the accrual of interest during the student’s tenure in school.

Stafford Loans – Grace Period

One of the most important features of federal (public) loans is the grace period. For Stafford loans, this period is six months after graduation, dropping out, or after going below half-time enrollment. Institutions may vary widely on what they consider half-time, so it is best to check at your individual institution to see what restrictions may apply. During this six-month grace period, a borrower is not required to make payments on their student loans. This allows students to find a source of income before becoming swamped with debt.

Perkins Loans

Although the Perkins Loan program will come to its end on October 1, 2017, it is still possible for a student to be awarded a Perkins loan before that date, though unlikely. Perkins Loans offered fixed interest at 5% and, like Subsidized Stafford Loans, deferred interest until leaving school. Another major feature of Perkins loans is the 9 month grace period usually attached to them.

Parent PLUS Loans

PLUS loans are loans to graduate students or to parents helping their children pay for college. The most noteworthy feature of PLUS loans is that there is no hard cap to the amount a borrower can take. Instead the cap is effectively the cost of attendance at the student’s school, if no others factors are present. PLUS loans are less preferable than Stafford loans because they have a higher interest rate. For 2017, the rate is 6.31%.

In summary, public loans are far less predatory and costly than private loans. Along these lines, the more subsidized, the better. Subsidized Stafford loans offer the lowest interest rates and deferred interest, but have income restrictions on eligibility. Unsubsidized Stafford loans have the same low rate, but do not defer interest and have no income restrictions. Perkins loans, though on the brink of extinction, offer the next lowest interest rate and a grace period of nine months (three months longer than Stafford). PLUS loans are only available to assisting parents and graduate students and are effectively capped at the cost of attendance for a given school, however they carry the highest interest rate of public loans.

How to Make Your Case and Win Scholarships

With the ever-rising costs of college tuition, many students are reliant on scholarships to be able to go to college. This has led to increased competition for the limited number of scholarships and other financial aid. However, there are a few tricks that you can use when writing scholarship essays or responses that can substantially improve your odds for success when writing scholarship essays or responses.

Unfortunately, the prompts for scholarships can vary widely, but some of the most common are a variation of the following:

  • Where do you see yourself in 5 (10) years?
  • Explain why you are a good candidate for this scholarship.
  • How will your collegiate studies contribute to your life goals?
  • How have you demonstrated leadership (or another ability) in your life?

You may have noticed that the common theme is a probing question asking you, in one way or another, how you stand out from other candidates. The prompt is usually quite straightforward, but it is important to avoid sounding bland and falling into the same traps as other candidates. An ideal essay will highlight a candidates academic achievements, extracurricular activities, financial need (if applicable), and personal drive.

Know Your Audience

Before diving into your essay, it is critical to know to whom you are writing. If you are writing to an individual or a family, it may be beneficial to Google them and find out what they do in an attempt to relate to their experiences and it is likely that hard work or financial need are some of the most important factors to them. If they are alumni of your school, be sure to mention the school.

If you are writing to someone unnamed, it is probable that it will be a committee in the scholarship office or someone from the department that houses your major. In that case, it is usually more beneficial to talk about the school and the department, invoking the school’s motto or creed if possible (without seeming forced).

The most important rule for knowing your audience is knowing how formal or informal to be. Generally stay as formal as you can, but if the addressee is an individual that you can relate to personally, it is usually worth the risk of going informal. Remember, you have to stand out.

Avoid Typos and Unimaginative Descriptors

One of the most common mistakes that disqualify a candidate for a scholarship is poor grammar or sloppiness.

This makes sense.

Why would a committee award a scholarship to someone who didn’t take the time to proofread an essay?

It doesn’t exactly scream academic excellence. Additionally, it is generally a good rule to avoid any contractions (hence, you should replace “don’t” with “do not” and can’t with “cannot”), as they are seen as a more informal form of writing. The same holds true for weak adjectives and adverbs. Avoid using bland words like “great” and “very”, opting instead for “tremendous” or “incredibly”. Readers will feel more sincerity and stay more interested in essays that avoid weak descriptors.

At the very least, it is a good idea to write your essay in Microsoft Word or a similar program. This allows you to catch more typographical and grammatical mistakes. Additionally, if you find you have used a weak descriptor, you can right-click and select synonyms for an idea on some potentially stronger alternatives. Finally, you should have someone you know read your essay for suggestions. It can never hurt to have a fresh set of eyes look at your work.

Explain What Winning the Scholarship Would Mean to You

At the end of the day, those in charge of giving scholarships want their decisions to have positive impacts. It is usually a good idea to mention the impact that scholarship money will have on you. If a scholarship means less you have to take in student loans or relieving hardship on your parents, who are helping you pay for school, be sure to emphasize that.

Your essay should clearly demonstrate your need and gratitude to the reader. Sincere flattery can go a long way, but insincere flattery could backfire, so be sure to mean what you say and clearly articulate when telling your audience what the scholarship would mean to you.

While these steps might not apply to all prompts, they can be broadly used in almost all cases. Showing awareness, drive, and sincerity can be as important as anything else you might say in a scholarship essay and will certainly help your chances of being selected for the award.

Having Trouble Qualifying for Credit Cards? Try Applying for a Secured Credit Card

Credit cards have become the backbone of many people’s lives.

They allow you to spend up to a certain limit and give you a ‘free’ period before you need to pay that balance back and before your balance starts accruing interest.

They also allow you to do things like hold a deposit against a rental car which can be trickier (or impossible) with debit cards, depending on your banking institution.

To be eligible for a credit card you need a good credit history. You can build one up by paying all your bills on time, having long term credit cards and meeting all your payments for a loan. If you miss a payment on any of these items, you get a negative mark on your credit history that can take years to disappear.

For anyone with a poor credit history, or simply no credit history at all, it can be difficult to qualify for a credit card. In this case, you can opt for a secured credit card which will allow you all the benefits of a credit card, and build up your credit score at the same time.

Secured vs. Unsecured

Most credit cards are unsecured, meaning there is no asset listed against the card and you can draw down any amount the bank deems appropriate during your initial application.

Secured credit cards, on the other hand, require you to put down a cash deposit, and in most (but not all) cases the amount you put as a deposit will be set as your credit limit. Some institutions will offer a higher limit, and some will offer interest on your deposit, so check the fine print to see what suits you.

Credit Reporting

The number one draw of a secured credit card is to rebuild your credit score so you can get better financial products. There are three major credit bureaus in the United States. A card that reports to all three credit bureaus will increase your score quicker, while a card that doesn’t report to anyone won’t increase your score at all.

The Downsides

As mentioned, all secured credit cards require you to pay a deposit. When you’re in a financially tricky situation, it can be hard to find the funds for this. Search for a card with a lower starting deposit, and keep in mind that many institutions will let you add to this amount moving forward.

As with all banking products, there are fees to watch out for. If you aren’t careful in choosing your company you can end up paying fees that wipe out you deposit within a few short months. Steer clear of application fees wherever possible, and if you do choose to pay them make sure the benefits of the card outweigh the initial buy in costs.

Lastly, most secured cards will charge higher interest rates and offer minimal rewards. This means that secured cards aren’t a long-time financial product, but something that can be highly useful in the right circumstances.

While there are many downsides and your credit line is limited by the amount you can deposit, secured credit cards are an excellent tool for getting back on your feet, or taking your first steps into building a credit score.