Plan For The Payoff When You Plan Your Student Loans


Planning ahead for college is not just a matter of getting good grades and accumulating a list of extracurricular activities and awards. It’s also a process of understanding how to pay for tuition and living expenses during the college years, which often extends beyond the typical four-year period and sometimes also includes graduate school. 

Parents tend to focus on a college degree as the payoff for all the time, effort, money and love they have invested in educating their child. So they invest significant time, money and effort in helping them get accepted by good schools and get situated comfortably when college begins. 

But completing high school and entering college marks the beginning of the rest of your child’s life, which generally involves repaying student loans. The payoff for anyone with student loan debt is budgeting successfully for monthly payments, and having the income to make them on time each month. 

You may have the means to keep your student loan borrowing to a minimum, which is ideal. But many parents are looking for every financial advantage available in scholarships and loans. Working together with your child, begin early by considering all the options for minimizing total student loan debt and the forthcoming monthly payments. Do the math together, calculating future monthly loan payments using a student loan calculator, such as the student loan calculator at Bankrate.com. 

When your student understands the long-term consequences of accumulating student loan debt, with monthly payments larger than her apartment rent or car payments, she’s likely to become more serious about reducing her student loan debt ahead of time. 

Here are some ideas for starting your family conversation about planning for the payoff:

  • Begin your journey by creating an account for both parent and student borrower at  StudentLoans.gov, which provides information on federal student loans, the ones with lower interest rates and more flexible repayment options.
  • Inform your search for student loans at ConsumerFinance.gov, which provides information on private (non-federal) student loans, which have higher interest rates and less flexible repayment options.  Destinations Credit Union works with Sallie Mae to help its members with student loans.
  • Consider studying for a career in public service, which offers student loan forgiveness under the Public Service Loan Forgiveness Program. An initial career in government organizations at any level (federal, state, local or tribal) or not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code can lead to many other opportunities in the future.
  • Explore the possibility of serving in the military prior to entering college. Active service-members and veterans of all branches, including the National Guard and Reserves, have several student loan programs available to them under the GI Bill. A calculator to compare the various program benefits is available at  Vets.gov.
  • Utilize a tax deduction of up to $5,250 on tuition paid by or reimbursed by an employer. It’s possible to get a job and get a college education at the same time, so giving consideration to getting a job first may be surprisingly smart. Both McDonald’s and Starbucks offer employer-paid tuition assistance in certain states.
Many parents and students forget to focus on the reality of a higher-than-average income from technical training, often requiring only two years or less of school. Information technology might be the first type of tech training that comes to mind, but it’s important to remember that plumbers and electricians are often billing more per hour than many attorneys.
Think about it … People will always need to live in structures requiring some form of plumbing. It’s not a profession that can be outsourced overseas and it already pays more than an average wage.
A recent New York Times article reports, “Plumbers and the related trades of pipe fitters and steamfitters, who often work in commercial and industrial settings, earned median pay of about $49,000 a year nationally, well above the $35,000 average for all occupations, according to 2012 data from the Bureau of Labor Statistics. The top 10 percent earn more than $84,000 a year. The average in big markets like Chicago and New York is about $70,000.”
Planning for college should start with reality, yet it often starts with some form of fantasy instead. If you ask a typical class of middle-schoolers what they’d like for a career, you are likely to hear, “to be a YouTube star,” or “to invent new computer games.”
Middle school is not too early to begin talking about a real career, and how to prepare for it, plan for it and pay for it. By high school it’s a necessity. Help your child see and understand the reality of student loans, and the big payoff they’ll achieve by keeping them in line.

SOURCES:

http://www.usnews.com/education/best-colleges/paying-for-college

Your Real Net Worth


For accountants, your personal net worth is one of the simplest calculations they might be asked to perform. Add up your assets in column A, add your debt in column B, then subtract B from A to find your net worth. It’s a number you should know, or at least be able to estimate, and it’s good to check it every year.  Since it’s March, which is the sweet spot between New Year’s resolutions, January credit check-ups and tax time, there might not be a better time to figure out your net worth than right now.  When you do, don’t forget all of the value that might not translate into worth. We’ve got a short breakdown for you, along with a way to maximize the value in your life while minimizing how much it costs you: 

Your education increases your net worth, even though it may not look like it. Very few investments offer the rate of return that continuing education does. Those who finish their college degree earn, on average, about twice as much as those with a high school diploma over the course of their lifetimes, and the gap has been widening for at least 35 years. Still, your future earning potential doesn’t show up on your net worth, even though your student debt does. If you’re trying to decide whether to go back to school, take a few extra classes or get a new certification, the cost may seem intimidating since there’s no immediate benefit. Don’t let that fool you. 

An education can also increase the value you get out of your life, helping you find a job that makes you happier or getting that promotion you’ve been wanting at your current employer.  Outside of work, going back to school can help you learn a new language or skill you’ve always wanted to learn, get you up-to-date on current technology and trends in your field, and model good life choices for your children.  Just wait until they see you doing homework on a Friday night!

It also doesn’t have to cost an arm and a leg, and you don’t have to try for federal financial aid.  We have a variety of products designed to put some money in your pocket now, whether it’s a home equity loan, a personal loan, or any of our other financial plans.  If you’re thinking to yourself, “But I’ll be 40 (or 50, or 60) by the time I finish,” remember, you’ll be 40 (or 50, or 60) anyway.  


Find out information about our loans that could make it happen.

Your kids are a drain on your net worth, but a blessing in your life.  Let’s face it, kids are expensive. The Department of Agriculture estimates that raising a child born this year to the age of 18 will cost about $250,000.  While a quarter of a million dollars is a lot of money, that only gets them to age 18, but with tuition prices skyrocketing and kids staying at home longer than they have historically, the actual figure of raising children today gets much higher much faster.  Financial analysts predict the average four-year tuition for a public university in 2030 will be $250,000, or about the same as it cost to raise that child from birth to dropping them off at the dorm.  If you have two children, you could easily spend one million dollars on them before they leave college.  In your net worth, this is only reflected as a constant drain on your savings, a net negative.

The value of children is probably pretty obvious to you, but there has to be a way to lower the cost of raising them, right?  First, let’s cut down those college costs, because that’s half the battle.  We’ve got a Coverdell IRA college savings programs that offer good returns while also being tax-deductible.  Getting to $250,000 might seem like a pipe dream, but saving even a little every month can add up quickly, thanks to compound interest.

Next, let’s find a way to save money on school while helping your child now. There are a lot of ways to encourage a gifted child, from tennis camp to musical instruments.  If your child wants to stare at the Internet all day, maybe you should talk to them about a new laptop and some software engineering classes for kids.  If they like the outdoors (or you’d like them to go outside occasionally), try a digital camera.  All of these ideas cost money now, but could result in scholarships down the road, all while giving them a head start on a career or passion they can follow their whole life.  If you’re wondering how you can pay for all of that, check out our savings accounts.  You can contribute a little money every month, and you’ll have enough for those classes or that camera before you know it.

Your home is your biggest investment.  When was the last time you checked up on it?  When you bought your house, it might have been the best available house in the neighborhood for the price. After all, if it weren’t, you would have bought some other house, right?  Is it still the best in the neighborhood for the price?  Is the neighborhood still regarded the same way by home buyers?  How do you know? This weekend, it’s time for window shopping. Take the value of your home from your last appraisal and check the Internet for houses in your area in the same price range.  How does your house stack up? Make a list so you can compare between houses.  Next, check your decor. When you moved in, did the house feel a little dated?  Did you do anything about it? How many of the houses you saw online seemed newer or more fashionable? 

After you finish your house hunting, you’ve got three options:  If you saw a house that you like as much as the one you’re in now, but it’s going for less money, you could think about moving there.  After all, mortgage rates are incredibly low for the time being, and if you could be just as happy in a less expensive house, then that’s money you could use on something else.  If your house is as good or better as the others in the neighborhood, but could use a facelift, you might want to think about remodeling.  Remodeling your home can increase its value and make it easier to find a buyer, so part of what you spend now may come back to you when you sell, with the added benefit of living in a nicer house in the meantime. Finally, if your house is still the best around, think about refinancing while rates are low.  You’re probably not going to find fixed rates this low for a long time (if ever), so locking in that lower rate now can save you tons of money going forward, while cashing out some equity can help knock down any pesky credit card debt you need to take care of, so you only need to write one check every month, while paying far less in interest.

Brought to you by Destinations Credit Union

Investing In Your Career


When you think of your investment portfolio, you probably think of stocks, savings and maybe a few other financial products you own or things you’re planning to use for buying a house, fund retirement, or to keep yourself protected.  What you might overlook is the investment you’ve made in your career. You’ve invested time in your career, and if you’re still paying off student loans, you definitely know you’ve spent money on it as well.  Just like any other investment, your career has risk and return.  If you want to get the best return on your investment in your career, then here are a few tips that can help: 

Get a degree.  If you haven’t finished college, you might have found yourself bumping up against a glass ceiling.  You can finish your degree online, often in a short amount of time and without spending a ton of money.  If you’d rather go back to school in person, talk to us about student loan options.  

Get an advanced degree.  It’s no surprise that the average income goes up with each advanced degree that individuals earn.  If you’re looking to advance your career, consider using one of our loansto finance an MBA, which is useful in virtually every field. 
Build your brand.  More and more, career changes and advancement can be built through the Internet and social media.  You can work on building your personal online brand or get training and a certification in all sorts of software and design to help others build their brand, making money in the process.
Learn another language or another culture.  There are very few job skills as portable as language and communication.  If you find yourself out of a job, knowing another language can help you get that next one lined up. Understanding different cultures makes it easy to move if the next job is across the country or even elsewhere in the world.
There are a lot of ways to invest in your future, but the one we tend to overlook is spending money to develop our jobs.  Unless you got in on the ground floor of investing in Google, you’re probably never going to find an investment that pays you more over the course of your life than the one you’ve made in your career. Don’t neglect it.

College Credit: Where will you live?


Brought to you by Destinations Credit Union

Top on the priority list for high school graduates is often, “Move out of mom and dad’s house.” And while sometimes mom and dad can’t agree more, this is not always the best financial move for teens.


What are some options for room and board while you are in college? There are plenty. Weighing the financial and personal benefits and downsides to each living situation can help you find the best possible option. Here are some possibilities for you to consider:

  • Staying at Home. This is often the most affordable option, especially if your parents will let you live in their home rent-free. If your college is within driving distance, you can live for free, eat for virtually nothing, and have the moral support of your parents nearby. The downside is being an adult and living in your parents’ home. This is not always an ideal situation for some new college students.
  • Living in the Dorms. The dorm life will help you meet people on campus and make it easier to get involved. However, the convenience comes with a price tag. The cost of living in the dorms varies by college and you often have at least one roommate in a very small room. There’s also the added cost of campus meals plan to consider.
  • Finding an Apartment. An apartment provides you the privacy of a home but at a lower cost than a house or some dorms. Finding a roommate will help defray some of the cost so you don’t have to foot the bill all on your own. The downside is that apartment living can be more expensive than a dorm room when utilities and other expenses are added in. Don’t forget to factor in the cost of food as well.
  • Live with Family. If your college is away from home, living with other family members that reside in or near the college town is a great option. You’ll get to know your extended family a bit more, plus live at a relatively low cost. Perhaps you can babysit for younger cousins to help cover expenses. The downside, again, is living in someone else’s home. If you’re looking to reconnect with family, though, this could be a great option.

Whatever housing option you choose during college, make sure you do your research and find an option that works for you-both financially and personally.

Four Ways To Repay Your Student Loans With Help From Destinations Credit Union!


Graduation day seemed like it would never come. As a freshman, you saw
seniors swaggering about like they owned the place. Then, just a few short years later, there you are. You’ve crammed for your last final, written your last paper and said tearful goodbyes to your friends. For many graduating seniors, though, leaving college isn’t “real” for quite some time.

For many college students, the reality of moving on from college doesn’t set in when they throw a mortarboard. It comes a few months later, when they get their first billing statement for their student loans. Seeing a balance of $30,000 can make the gravity of adult life hit home in a very real way.

It’s easy to put making the minimum payment on auto-pilot and to treat your student loan bill like your cellphone bill or rent payment. It gets sorted into the pile of bills to pay and never gets a second thought. However, you might be leaving money on the table by using the loan company’s bill pay service.

Destinations Credit Union can help you pay back your loan in more ways than you might realize, and save you money in the process. Here are four convenient ways you can pay for your education and get greater flexibility. You might be able to get some extra rewards out of the deal, too!

1.) A savings account for college students

You can’t start paying off your student loans while you’re in college. But that doesn’t mean you have to sit and wait to get buried under an avalanche of debt. You can take proactive steps while you’re in school to make your life easier.

Your student work or part-time job might not make a dent in astronomical tuition costs, but it can still help you get out of debt faster. Setting up automatic savings account transfers will force you to put away a little bit each month. Check out Destinations Credit Union Kasasa Cash or Cash Back (free checking with rewards) to see how you can get extra money for your savings every month.  You can use that once you’re out of school to make a big first payment. It’ll really take the sting out of the debt load.

Make sure to put this money into an account you won’t be tempted to use for other things. The $100 or $200 you put away every month could rapidly disappear through dinners out and concert tickets. Automating savings is a way to keep yourself disciplined and on target.

2.) Automatic bill pay

Your student loan provider is a business, and they’re out to make money. All aspects of their operations, from the materials they send you when you start borrowing to the bills they send you each month, are marketing materials. They’re designed to maximize profit. For lenders, that means keeping you paying the minimum amount for as long as possible.

That’s why their bills make it as easy as possible to pay the minimum and require extra work to pay more than that. They want you to pay the “amount due” every month. It’s more profitable for them that way.

You can get the advantage back by setting up automatic bill pay. When you do, you can designate an amount of your choosing to be paid to the lender every month. You can pay your bill back at your own pace and save some money on overall interest while you’re at it! As a bonus, you can often get around nuisances like “technology fees” with automatic bill payment.

3.) Pay with a Destinations Credit Union credit card

One of the benefits of a student loan is the bump you get on your credit score by paying it regularly. Lenders see your management of student loan debt as evidence of responsible borrowing, making them more likely to trust you in the future. If you want to maximize the benefit to your credit score, you can use a credit card from Destinations Credit Union to make your student loan payments.  You can earn rewards with each “purchase” but make sure you are paying down the credit card as you make these payments.  There’s not much point in trading one kind of debt for another unless there is a long-term benefit.

This advice deserves some qualification. Many lenders don’t accept credit card payments, and many others charge handling fees. A 1% transaction fee for using a credit card should be seen as a 1% increase in interest. Also, credit cards can be an easy way to get into trouble. Don’t use them if you don’t have an emergency fund to fall back on. Credit card interest rates are frequently much higher than student loan interest rates and missing a credit card payment is just as detrimental as missing a student loan payment!

Still, if you’re careful about it, you can build your credit score twice for the same loan. Both your student loan and your credit card will show as paid each month, which will make you look twice as responsible for paying one bill. You will be able to earn a few rewards points as icing on the cake.

4.) Consolidate and refinance

College is about the journey, not the destination. If your journey was a longer one than usual, you may have debt from several places. You may have used your credit card to finance your living expenses or taken out unsubsidized loans from private lenders. These variable interest rate loans can really hurt you financially.

It might be time to consider refinancing. You can take a personal loan for all your outstanding debt and consolidate it into one monthly payment. You can lower your interest rate and simplify your financial life at the same time.

This process can also include one-on-one time with a trained financial professional at Destinations Credit Union. You can gain advice on budgeting and make a roadmap to a truly debt-free future. To see if consolidation is right for you, call, click, or stop by Destinations CU today!

SOURCES:

http://www.bankrate.com/finance/college-finance/repay-college-loans-fast-4.aspx