I’ve Paid For This Twice Already…

The Correlation Between Financial Security & Educational Outcome

When it comes to personal finance, a lot tips and budgeting maneuvers have already been highlighted. However, the most significant point (and the most neglected one) is that of financial literacy.

The notion of financial literacy and economic security for children has a positive correlation with their educational outcome. Secondly, by having a solid understanding of the finances, initiatives such as budgeting and managing student debt become easier in later years.

Impact of financial literacy on a student

The aforementioned assertion is not a vague assumption, but an inference that is backed by extensive studies. The Florida State University conducted a research project with the notion of financial literacy as the main component. One important highlight of this project was that student debt is not merely a result of the failure to properly budget, but rather a result of the lack of financial guidance.

Another valid point is that of financial literacy at students’ age translating to better financial outcomes in their professional lives.

Two important things that come to mind with this analysis are the changing economic paradigm and the enactment of an informed choice. Firstly, the recession had a trickledown effect on literally every individual.

The government was forced to bring in legislature such as the Budget Control Act of 2011, which also included cuts for education. Student grant programs were either reduced or modified. Now, a student well versed with financial jargon is in a better position to survive and prosper.

Informed choice and financial guidance

An ‘informed choice’ and how it relates to financial literacy is the second important factor. In the current era, attaining financial literacy is more convenient due to internet tools and consolidated resources.

When researching consolidated resources, the student money saving guide by Jon Fritz sheds light on financial decisions. From discussing the broader topic of tax deduction to the more targeted subject of financial aid, such guidelines can serve as an ideal resource for financial guidance.

More specifically, an informed choice is better not only as an academic attribute but also as an indicator of productivity in terms of employment. A student with better financial literacy can make intelligent choices on his/her own rather than over-dependence on peer advice.

Moreover, financial literacy in the case of a student evolves. It starts off with a combination of awareness and knowledge, which later adds skills and behavior to the financial repertoire of the student.

With the kind of technological revolution we are seeing, monetary systems are being revised. Financial products are becoming diverse, requiring appropriate knowledge for optimal usage. So, financial literacy for student means better range and accessibility of financial products and services.

For instance, student grants or research project grants help students not only to explore their academia with more diversity, but also to ensure better financial survival. Such grants can be easily obtained if the student has a decent rate of financial literacy.

A study conducted few years ago also revealed that the overall academic ability of student is strongly related to financial literacy, as are the student’s educational aspirations. So for parents, that is like killing two birds with one stone.

7 Lesser Known Methods to Pay Less in Taxes

For any individual running a small business, quarterly tax time is approaching and it’s time to look at the year and assess what you’ve earned. Collectively, Americans will claim over $1 trillion in itemized deductions over the tax year. Those who miss out on deductions are leaving money on the table. If you’re looking for methods to push your deductions past the standard, here are a few less utilized ways individuals manage to do so.

Job Hunting Expenses

If you were one of the millions without work this past year, you can claim the expenses you incurred hunting for employment. This includes printing costs for your resume or business cards, transportation costs incurred getting to interviews and any charges you take when your search takes you away overnight. You can claim up to 2% of your total income in job hunting expenses, so save those receipts!

Remember that as long as the expense qualifies as a deduction, you can claim it whether you landed the job or not. That’s more motivation for you to keep putting yourself out there.

Moving Costs

Did you move during the course of the year for employment purposes? If so, you can deduct those costs from your overall income for the year, but there are a few rules to keep in mind. You must have a job that is at least 50 miles away from your current location, but if you qualify for this deduction you can take it regardless of whether you itemize. You can also deduct the cost of using your car to move to the new destination, great for cross country moves.

Tax Prep Fees

The cost of preparing your tax forms can be deducted from your income for the year. You can also deduct any convenience fees that may come from paying with a credit or debit card. Services like H&R Block or Turbo Tax all count toward this deduction. It’s usually a small deduction, but when you’re itemizing everything counts and they all add up.

Charitable Mileage

In addition to any charitable contributions you make throughout the year, you can deduct supplies you use for charitable purposes. This includes the mileage of your car when you drive for charity (like delivering supplies or dropping workers off at a site), but you can deduct supplies you use as well. Say that you bake a cake for your school’s booster club or volunteer to make juice for your local women’s club. These non-profit contributions toward charity all count as tax deductions.

Retirement Savings

Contributions toward your retirement savings can be deducted from your income for the year. Contributions toward a Roth IRA can be withdrawn without taxes later in life. The lower your income, the higher the deduction you receive from the saver’s credit. This also works for 401k plans, which are now open to individuals. Start saving for retirement – it literally pays for you to do so.

Financial Planning Expenses

If you paid any financial advisors to review your books and help keep you in shape, you can deduct those expenses as well. It’s common for small businesses to hire a consultant early in development so that they can plan projections and sales goals properly. These deductions also include attorneys who may prepare a living will or a trust for your family.

A Word on Deductions

Keeping track of your deductions is much easier if you have a system set up to do so. You can utilize a mobile app like Expensify to track mileage and receipts, or do it the old fashioned way with receipts in a filing cabinet. Be prepared to either show proof of expenses or reconstruct them when it comes time to file. Big deductions come to those who save receipts.

4 Good Reasons Why You Should Open and Invest Actively in an IRA

An individual retirement account, or IRA, is one of many possible savings avenues that you can build toward your retirement. IRAs put the investment decisions on the account holder, you, so you’ll need to educate yourself on some investment basics before you start. If you’re under 50, you can contribute up to $5,500 of your income to an IRA tax-deferred each year. Check out Sunwest Trust, Inc., for more information on updated IRA contribution limits. If neither you nor your spouse can take advantage of a retirement plan through your workplace, then any contributions you make are deductible from your tax returns.

You can also contribute to an IRA whether you have a retirement plan through your workplace or not assuming that you have an earned source of include. In general, if you want to help build extra savings for the future, then IRAs are one of the most flexible individual savings plans that you should consider.

1. Liquidity

Most workplaces offer some form of retirement or pension saving plans to go along with other benefits of your employment. If you’ve been employed for most of your life, then your savings might be locked up in a pension account that may have additional restrictive rules limiting when you can pull out your funds for such things as a down payment on a second home or on a new car. Worse yet, you may be locked into a low rate of return and further limited as to where and when you can invest those funds.

2. Self Managed IRA Arrangements

While attempting to grow your nest egg, a self managed IRA arrangement provides you a host of additional non-standard investment options to invest in, so it’s possible to benefit in more ways than one. Since you are not restricted to public offerings, you should research private ventures to see if there are any companies that you like and could be profitable. It’s just like a venture capitalist looking to get in on the ground floor of a brand new business idea, your IRA can help a promising business grow by pumping cash into it early during its lifecycle. If your investment is successful over time and depending on your contractual arrangement and the profitability of the venture, then you may stand to gain a nice return on your investment.

3. Individual Investment Real Estate, Not REITs

Buying an investment property with an IRA may be one of the investments that you would like to do with your retirement funds. It can be a long-term investment that you can sell whenever you’re ready, and you can put money into it to increase its value. With self directed control of your retirement plan, it places you in charge of the direction of the investment activities and opens up the real estate market to you as a possible investment opportunity. You can use the funds not only to buy an investment property, but also you can draw on funds within the account to improve the property. When you’re ready if you have purchased the investment property right, you have done your homework and know the market, then you can hopefully sell your asset for a decent return.

Single-family investment property isn’t the only potential market up for grabs. Assuming you are savvy enough, investing in an apartment complex can give you long term income as you age. Although, you will need to devote IRA resources toward maintenance and repair, you can use the property for rental income to build your retirement savings account.

4. More Diverse Investment Options, Including Franchises

Your IRA can also help you get involved in other alternative investments that are outside the standard model of owning the traditional stocks, bonds, mutual funds and REITs. Investing your funds in a franchise may give you the chance to own an established business in a highly trafficked area, and it can be great for building your retirement savings, so at or after the age of retirement you can build up enough cash to replace your job income. One thing that should be pointed out before investing in a franchise, is that most franchises is that although they are proven, they also can take three to five years for you to see returns, so you must be willing to wait sometime to see a return on the investment. However, if you are patient and are willing to take a risk, then you could wind up as a big winner.

Save Now for the Future

For the forward-looking person, an IRA represents a temporary tax haven during your working years to divert a portion of your personal income into savings on a tax-deferred basis. An IRA gives you lots of options for controlling your money and building for your retirement and hopefully it inspired you to learn more. Can you think of any more reasons to open an IRA? I’d love to hear about them in the comment area.

Need to Get Out of Debt? Start a Business

If you think that you’ll be able to get out of debt by simply paying your minimums each month, you are sadly mistaken.

Debt is by far the easiest thing to acquire, but when you’re ready to pay down your balances, it always seems to be an uphill battle. Of course, you could have avoided this situation all together my managing your credit cards better. But there’s no good in crying over spilled milk. You can’t turn back the hands of time, but you can take steps to right the matter. 

I know, much easier to say than do, especially if you don’t have a lot of disposable cash. Not that you have to accept debt. Sometimes, it’s all about a creative approach and stepping outside your comfort zone. Do you have a talent or interest? Why not turn this into a business and generate extra cash to pay down your cards. 

1. Choose something that you’re interested in

Don’t select a business simply because of how much you can make. A lucrative opportunity can certainly help you reach goals faster. But if you don’t have a strong interest in the business, you’re not likely to keep with it. 

For example, do you enjoy spending time with children? Perhaps you have education or teaching experience. A part-time home day care or maybe a tutoring business might be right up your alley. 

2. Get a marketing plan

Whatever business you decide, a good marketing plan is the best way to get your name in the public. There are several ways to promote your business – some free, some costly. Determine how much you can spend on marketing and choose approaches that fit your budget. Options might include placing flyers throughout your neighborhood, running a classified ad, cold calling businesses or maybe investing in direct mail. 

3. Use social media

The Internet can not only draw attention to your business, it offers an excellent way to interact with customers. The ability to satisfy your customers is one key to success. According to Matthew Roblez, an engineer and business leader, “Your most unhappy customers are a great source of learning.” 

Social media platforms, such as company blogs, Facebook, Twitter and other websites allow interaction with customers. You can promote and announce sales, plus receive feedback, which is an invaluable tool as you work to create a reputable brand. 

4. Don’t quit your day job

It takes time and patience for new businesses to get off the ground, and when your business finally generates consistent profit, don’t quit your job just yet. Remember your purpose – debt repayment. 

If you continue to work your day job, all income from your side business can go toward your debt. This can speed your debt eliminate efforts, letting you move on with your life sooner.

There are certainly ways out of debt, and you shouldn’t let lack of disposable income keep you from reaching your end goal. Get creative, look for ways to generate cash and be disciplined. The quicker you eliminate debt, the sooner you can enjoy peace of mind, plus a better credit score 

Have you Considered Investing in an Apartment Building?

Part of being a responsible adult is planning for the future. Most of my family’s plans for the future have been based on getting out of debt now and setting up our retirement savings. If you’ve been following my blog, you know that we have been making changes to our 401K and investments since 2008. Just click on the category links for “Retirement” and “Wise Investing Made Simple” to read my older posts, such as “Choosing the Best Investment Strategies” that I wrote about a year ago.

Once we’ve started on the basics of planning for retirement, we are ready for the next step, checking out the different investment opportunities. Today’s financial marketplace has many different ways to earn a good return on investments, including:

life insurance,
mutual funds,
bonds,
trusts, and
real estate.

We have been particularly interested in commercial real estate, which can be anything from buying or building a small strip shopping center, an office building or multi-family properties.

The U.S. economy is slowly recovering and this has signaled changes in the banking and mortgage industries. Record low interest rates on loans for real estate are starting to rise, and demand for rental housing continues to grow. Even the Federal Government’s web site for FreddieMac mortgages endorses buying apartment buildings in most metropolitan areas as a good investment. Established in 1970, Freddie Mac makes mortgages possible for one in four home buyers and is one of the largest sources of financing for multifamily housing. Their website shares a wealth of information on investing in apartments, including information about qualifying for their loans, market insights and checklists.

Digging into more information on investing in apartment buildings, I’ve found advice from many sources and have learned a lot already. Successful investing in commercial real estate, and especially multi-family properties, depends upon three things:

Finding The Right Property
The Right Location
The Right Financials

Finding the right property is the most time consuming and challenging part, but some people consider it the most fun. You get to meet many different professionals, from commercial real estate brokers to property management companies, appraisers, insurance agents, attorneys and mortgage brokers.

We will start our search for the right property by conducting an overview of the existing market and property owners. Companies that are proven successful in owning and managing apartment buildings, such as Post Brothers in the Philadelphia area, can be good role models but might also be good candidates for considering a purchase offer. I found their story intriguing, starting with the fact that their company really was founded by and is run by two brothers.

Post Brothers Apartments is a good example of a company which manages properties and their web site describes how each one was selected and is maintained on certain criteria, such as:

strength of community
tenant focus
local resources/neighborhood
green initiatives and eco-friendly
accessibility to transportation options

As an investor, I would mirror the Post Brothers business model and task my commercial real estate broker with finding properties like theirs to tour as a good investment prospect. I especially like the many steps they have taken to be green, such as all Energy Star appliances in each unit, and meters so tenants can see for themselves have much energy they use.

Then it all comes down to the financials. If you like the property and believe it can make money for you without requiring a lot of additional capital investment, the next step is to prepare and submit a Letter of Intent (LOI) to gain access to the property’s financial and records. If everything checks out, making an offer to purchase puts you on the path to a multi-family property owner!