Thirteen Tips for a Financially Healthy Family

1. Track spending to know where your money goes. Identify expenses that can be reduced or eliminated—and take immediate action.

2. Expect and prepare for emergencies. Aim for six months worth of expenses set aside in a liquid account.

3. If housing costs are too high, consider downsizing, renting or home sharing with friends or family members.

4. Communicate about family finances regularly with your spouse or partner, and any of your children you feel are old enough to be involved.

5. Do not try to “keep up with the Joneses (or the Kardashians).”

6. Explore nanny share care, babysitting co-ops, and subsidized daycare. Childcare is the single largest expense for most working parents, so investigate all reasonable options.

7. Explore whether you would be financially better off if one parent were to be a “stay at home” or a “work from home” parent.

8. Unless you have endless funds, accept that you can’t buy everything you want for your child. This is often harder than it sounds.

9. Remember that you are the single greatest role model in your child’s financial education. He or she will remember everything, from arguments about money to how you deal with debt. Teach them good habits now.

10. Pay for unreimbursed medical expenses and dependent care with pretax dollars using a flexible savings account. Check with your employer for availability.

11. Commit yourself to spending within your means. A line of credit should never be confused with an emergency fund or extra income.

12. Remember, you are not being “cheap” for the sake of saving a few dollars. You are being “frugal” for the well being of your family over the long term, and will come out ahead by doing so.

13. Get professional assistance and support to help you prioritize your expenses and understand debt repayment options.

BALANCE
January 2016

Could a Gap Year After High School Make Financial Sense?

In some parts of the world, a gap year – a year-long break between high school and college – is the norm. It’s starting to catch on in the U.S. as well.

It’s a chance for recent high school graduates to earn money, challenge themselves, explore the world and build their resume while experimenting with different career paths.

Those who take full advantage of the opportunity often find the experience to be rewarding and beneficial. And colleges report that students who start school after a gap year tend to earn higher grades, are more involved with campus life and graduate within four years at a higher rate than their non-gap-year peers.

Lessons you could learn along the way. Many people spend at least part of the year traveling, working or volunteering away from home. During the year, they may discover that what they originally wanted to study isn’t a good fit, or may come away with a newfound passion.

Entering college with this knowledge can help them focus on a major, plan their classes and graduate early. Or, at least avoid changing majors and extending their schooling. In either case, they can save tens of thousands of dollars.

During a gap year, young adults also often take a more direct role in their day-to-day finances. They can develop a greater appreciation for earning, and spending, money. In turn, this can give them a framework when taking out student loans and an extra push to apply for scholarships.

Finding structure for your gap year. To avoid squandering the year, you can look into formal programs that can help you achieve or define your personal, academic or career goals. According to the American Gap Association (AGA), a nonprofit based in Portland, Oregon, over 80 percent of gap year students say the skills they acquired helped them be successful in their career after school.

Many choose service-oriented work. The federally backed AmeriCorps programs place volunteers throughout the U.S. to help communities in needs. Once you complete a full-time 10- to 11-month commitment, you may be eligible for a scholarship worth up to $5,815 (in fiscal year 2017). Some colleges and universities will also match a portion of the award.

Working for a local business could be another great option. You can earn money, see if you truly enjoy the work, network and may be able to line up work during school or for future summer jobs. The industry connections and mentorship you receive can also be valuable for your post-graduation job search.

Another resource for finding a program is the USA Gap Year Fairs, which provides a broad range of gap year experiences. Privately run programs may not offer compensation, but sometimes you can work in exchange for room and board. The experience can also serve as a foundation for cover letters when you apply for jobs or college admissions essays.

Funding your gap year. There are gap year options for students from all socio-economic backgrounds.

The AGA maintains a list of financial aid opportunities that can help you fund a gap year. The mix of merit- and need-based scholarships could cover the cost of a program or offset the cost of traveling or volunteering. If you have a particular program, ask the organization for recommendations.

Also, inquire with your university to see if it recommends or runs any programs. Some schools offer scholarships to admitted students who take a gap year, and a few will give you college credit for completing certain programs.

Once you start your college education, you can try to capitalize on your year off. There are many scholarships available to continuing college students and your experience could be a good jumping-off point for an essay.

Bottom line: Taking a gap year between high school and college is increasingly popular, although still not as common as it is in some other parts of the world. While jumping right into college and getting a degree is the traditional path towards employment, some parents and students see the benefit of taking a year off to better define one’s goals and gain real-world experience before going to college.

by Nathaniel Sillin

How to Save Money While Welcoming a New Pet to Your Home

Whether it’s a dog, cat or another furry (or scaly) friend, many people have pets who are more than just animals – they’re part of the family.

Pets can be friends, they can offer nonjudgmental companionship when you’re feeling down and they can put a smile on your face. To provide the best care for a pet, you’ll want to be able to afford their needs, including the basics like food and healthcare. With this in mind, think carefully and review your budget before deciding to welcome an animal into your family.

Choose a pet that you can afford. While the initial cost of adopting or buying a pet is relatively small compared to the long-term expenses, the type of pet you choose does matter.

Admittedly, you might visit the pound and fall in love with a dog or cat. What can you do? The heart wants what the heart wants. Research is a must if you want to take cost-saving measures, though. For example, larger animal breeds may be more expensive to care for, partially because they simply eat more food. And if you’re taking in a dog you’ll want to consider the cost of training, which could set you back several hundred dollars.

Lifespan is another consideration. Hamsters, gerbils and some types of fish may only live a couple of years. A pet turtle, on the other hand, could live several decades.

Keep your pet healthy and happy. Health care can be one of the most expensive aspects of pet ownership. As with humans, it’s often best to invest in preventative care rather than treat emergencies.

Follow your pet’s recommended vaccination schedule and treatments, spay or neuter cats and dogs and visit the vet at least once a year for a checkup. Finding and dealing with health problems early on isn’t only less expensive, you may be able to prevent serious problems and improve your pet’s quality of life.

Some types of preventative care don’t require a visit to the vet, although you can still ask for recommendations. For example, brushing your dog’s teeth (with special toothpaste) can help prevent teeth and gum problems.

Consider pet insurance to cover emergencies. When a pet is part of the family, you’ll do anything to help him or her. You may want to have an insurance policy to help cover emergencies that you might not be able to afford otherwise. Particularly if you have a high-risk breed, a pet that tends to escape or you live in an area with a lot of other potentially aggressive animals.

Before buying a policy, read up on how pet insurance works. There can be important differences between pet and human policies.

Save money on nutritious food. Once you bring a pet home, it’s your responsibility to provide for them. You can ask your vet for food recommendations (and free samples) based on the pet’s type and age. The American Society for the Prevention of Cruelty to Animals has general nutrition tips for dogs and cats, including age-based diet recommendations.

Once you’ve found a food that you and your pet likes, you may be able to get a discount by signing up for a subscription delivery service online. Or, if you don’t mind the workout, consider buying in bulk at a warehouse club.

Have a plan for when you’re unavailable. Another responsibility pet owners take on is making sure their pet is looked after while they’re away. The least expensive option may be to find a neighbor or friend who also has a pet and exchange free pet-sitting services.

Otherwise, you can look for a well-reviewed doggy daycare center or boarding service. You could try one of the several apps that connect you with someone who can feed, walk or play with your pet. If you’re away for several days, the apps can also help you find someone who will spend the night or take your pet to their home.

Bottom line: Taking a pet into your home and caring for them can be a rewarding and wonderful experience. It can also be life changing. Review the potential immediate and long-term costs to help ensure that you’ll be able to provide for a pet once they join your family.

by Nathaniel Sillin

Save on Your Summer Road Trip Adventure

Are you packing up your car and hitting the road this summer? You’re not alone. According to a survey conducted by AAA, road trips are the most popular type of vacation for families in the U.S. in 2017. In fact, 10 percent more families are expected to take road trips this year than last.

From driving to the tip of Cape Cod, to seeing the Great Lakes all the way to a drive through the Yosemite Valley in California, there are limitless ways to explore on the road. Whether you’re going to visit family or taking off on an epic adventure, a road trip can be a great way to make travel about the journey rather than the destination.

 

Before you hit the road, make sure your car can handle the trip. Before you pack up your car, it’s a good idea to take your car to a mechanic and ensure that it’s ready for the drive. Having your car inspected and serviced by a mechanic before a road trip can be a worthwhile investment that could both save you money and prevent an untimely breakdown. Looking into a rental car is an alternative you may want to consider if you’re hoping to avoid wear and tear that might depreciate your car’s value. Consider your options carefully and choose what makes most financial sense for you.

Pack for bumps along the way. A flat tire or dead battery can put a serious damper on your road trip, especially if you’re not prepared. Keeping a spare tire in your car and checking your tire pressure and tread should be on your pre-trip checklist. Along with your bags, bring a few items for preventive maintenance measures on the road. Having jumper cables, coolant and engine oil handy can save you time and money.

Map out your trip ahead of time. While just jumping in the car and driving without a set destination can be an enticing idea, the spontaneity will likely result in more expenses. Knowing when and where you’ll stop ahead of time, especially for hotels and outings, will help you stick to a budget. If you still crave the more adventurous aspects of a road trip, you can make a general plan for your major excursions and routes, while stopping for unexpected attractions and views as you go.

Comparison shop to keep hotel prices under control. Booking ahead of time and using comparison shopping websites will save you from driving around to find the best hotel deal when you’re already tired from a long drive. If you do have to book last-minute, consider using hotel coupon books, hotel-booking apps, group coupon sites or reward points to save a little more. Camping could be another alternative to booking a hotel, which can be particularly cheap if you already have gear like tents and sleeping bags.

Managing your mileage could add up to major savings. Though fuel prices may generally be down, the cost of filling up your tank can still add up. To make this cost more manageable, you can take advantage of apps that help you find the best gas prices in your area. In certain cases, you may also want to consider renting a more fuel-efficient car. You can save even more by mapping your trip ahead of time to avoid road tollways and construction that might slow you down.

Keep kids entertained to avoid unnecessary stops. Kids tend to get antsy in the back seat, which can lead to more frequent stops and a few impulse buys if you’re not prepared. Packing snacks and meals ahead of time can help you avoid making extra purchases at the gas station, and will often be cheaper.

Also have a plan for keeping your kids entertained. Let them choose a few activates ahead of time, like preparing a road trip playlist or making a game like road trip bingo with sights you’ll be seeing along the way. If you have a tablet or phone, downloading free games, podcasts or movies can be another great option.

Protect your home while you are away. One other way to save on your road trip is to ensure that your home is protected while you’re gone. If you can, ask a trusted neighbor, friend or family member to keep an eye on your house. If you can’t find someone to help, you can call US Postal Service to hold your mail while you’re away. Double check that you’ve locked all doors and windows, including the garage door, and that you’ve set your alarms and put your lights on a timer.

Bottom line: Road trips can be an adventurous and inexpensive way to see the country, but costs can add up if you’re underprepared. Planning your stops and packing to anticipate your needs could help you enjoy the ride rather than worry about the expenses.

by Nathaniel Sillin

Paying for College: Dealing With the Student Loan Crunch

In this current financial climate potential home-buyers are not the only ones struggling to find loans. The mortgage crisis has spilled over into other areas of lending as well, such as student loans. Media reports about possible student loan shortages have left many students wondering about how hard it will be to find financing for school.

Finding financing

Due to the high cost of college tuition many families are unable to pay for college with savings alone. Traditionally, the availability of student loans has provided an important avenue in allowing students to be able to go to college. However, many lenders have stopped offering public or private student loans. Many lenders that are still offering loans are charging higher interest rates and/or fees. Even though paying for school may seem like a daunting task there are several steps you can take to find financing:

-Talk to your school’s financial aid office. Employees at financial aid offices are trained to help people find financing for school and have dealt with many others in the same situation as you. Ask them what lenders still offer student loans and what your other options for funding are.

-Look for scholarships and grants. It is a good idea to look for scholarships and grants regardless of how easy it is for you to find student loans. Why borrow when you do not need to? High school guidance counselors and college financial aid offices usually have information on available scholarships and grants. Information is also available at www.finaid.org.

-Consider a home equity line of credit or loan. For parents with a significant amount of equity in their homes this may be a good way to help finance college. Interest rates are usually fairly low, and the interest is tax deductible as well. However, it is important for those considering this option to remember that home equity lines and loans are secured debt. You could lose your home if you do not make payments.

-Contact NASA Federal Credit Union about the CU Student Choice Loan, which can help you pay for the education expenses not covered by your financial aid package. Get competitive interest rates and generous repayment terms. Plus, with our fast online application, get the money you need to pay for college quickly.

Preparing for the future

For parents, the current student loan crunch demonstrates why it is a good idea to save for college. Even if student loans are readily available when your children go to college, saving allows them to rely less on loans, which they will need to pay back after they graduate. If you are saving for college take advantage of available tax-saving vehicles. For example 529 Plans, Coverdell Educational Savings Accounts, and Series EE Savings Bonds (issued by the Department of the Treasury) allow you to invest savings for college and not pay taxes on earnings, as long as the funds are used for qualified education expenses.

College tuition is high, and paying for college is often not an easy task. However, there are several options for funding available, and being well informed can help you prepare for and manage this cost.

BALANCE
January 2016

Do you Need to Downsize? A Quick Quiz

Perhaps you’ve heard the call of coyotes from that den you don’t go into anymore, or you’ve seen tumbleweeds congregating in that extra, extra bedroom. Or maybe you’ve just looked at your electric bill lately—and gasped. No matter your reasoning, if you are a homeowner who feels like you have more space than you really need, you’ve probably considered downsizing into a smaller dwelling at some point. Here are questions to ask yourself when you are considering the change:

What is my equity position in the current home?

Obviously, having a positive equity position in your home is a biggie, since it will make it a lot easier financially to get into a new place. If you sell the home and the amount you receive is less than what you owe on the mortgage(s), you will have to use your own money to make up the difference or face the consequences associated with a short sale. In other words, if you are in a negative equity position, downsizing might not be the best option.

How much money will you save on monthly housing payments?

If you’ve given serious thought to downsizing, you’ve probably looked at what it would cost to live in a new place. When you are comparing that number to what you currently pay for your house, don’t forget to include categories like taxes, maintenance and repairs for the future on the house side of the equation. Also, pay close attention to utilities since there can often be a dramatic difference in what you will pay in a larger home and what you would pay in a smaller home, apartment, or condo. Sometimes these expenses can tip the scales such that downsizing is the better option.

Does my current neighborhood still fit my needs?

It’s not just the house that should be weighed when making a decision on downsizing. If you moved into a neighborhood because it had great schools or lots of wide-open space, as you get older those things may not matter anymore. Downsizing could mean being able to find an area that’s better for what you want now while also saving you money.

Will I be able to maintain the property in the years to come?

Maybe at one point you were gung-ho about climbing ladders to do fix-it projects or spending all day on a yard project. But as you get older, you may not be able to maintain the property like you once did. This could mean increased expenses in the future, or if you can’t afford to hire someone to do these things for you it could result in the property quickly losing value as it falls into disrepair. Sometimes it is best to sell a home when you are still able to keep it at its most attractive.

What’s my relationship with my stuff?

Many people find getting rid of a good deal of their accumulated belongings liberating since they feel less controlled by their possessions. Others have sentimental or practical attachments to certain possessions that require a fair amount of space to store. Either way, think about what you would really need to have with you in the home and then decide how much space it will take going forward to keep it.

What are your space needs for guests?

You may enjoy having a larger space to host family members or friends who come to visit. Think about the maximum number of visitors you have at one time and if you can accommodate them in a smaller space. Many people find that even in a smaller place they are still able to have plenty of guests.

BALANCE
January 2016