Unfortunately, it’s also a form that has many parents pulling out their hair, year after year.  If that’s you, I’ve compiled the top five ways to simplify the process. Much like doing your taxes, it’s never going to be painless, but these tips will certainly make it easier:

• Do it online.  Please, please, do not try the pen and ink version. It’s just not worth it, particularly this year, because the Department of Education has streamlined the web application, but not the hard copy, says Patricia Nash Christel, a spokesperson for Sallie Mae.  “The improvements have made the online interface easier to use.  You can check your answers to make sure they make sense, and depending on the answers you give, you may be able to skip over questions, making the process shorter.”  Again, it’s like doing your taxes with a web program (like TurboTax) versus filling out the form by hand.  But in this case, filing the FAFSA online is completely free.
• Meet the deadline.  Sounds simple, but there are more than a few deadlines when it comes to this all-important application, and you need to keep track of them. In theory, by federal standards, you have 18 months to submit – from January 1 of the applicable school year to the end of that school year – but as a general rule of thumb, the earlier you can file once January 1 comes along, the better.  Then there are state deadlines, which can fall up to a year before the federal deadline (see a full list here), and school deadlines, which tend to be the earliest.  Call the school’s financial aid office – or check the website – for details.  Note:  You want to grab as much of the money that’s available, and filing as early as possible is the best way to do that. But if you file before January 1, your application won’t be processed.
• Don’t stress out over taxes.  I know what you’re thinking – it’s tax season, and this is just another financial chore on your list.  Not only that, but if you tend to be one of those people in line at the post office on April 15, that will delay getting your FAFSA out as well.  Fortunately, that’s not true.  While it’s easier to file the FAFSA if you’ve already filed this year’s taxes, it’s not necessary, says Christel.  “Don’t use not having your taxes done as an excuse to push off filing your FAFSA.  If you can’t get them done in time, you can estimate based on last year’s information or your own calculations.  Once you meet the deadline, you can go back and do an update after you file.”
• Gather all your paperwork.  Before you even sit down at your computer, you should have everything you need handy – things like your tax returns (again, last year’s will suffice if you haven’t filed for 2009 yet), your bank account statements, and any investment information are all necessary.  For a full list of the documents and information you’ll need, click here.  Having everything in front of you will make the process go a lot faster.
• When in doubt, say yes.  First of all, even if you don’t think you qualify for aid, you should at least file.  You may very well be surprised.  There may also be questions on the form that you’re unsure about – particularly whether your child would be interested in work study programs or student loans.  When in doubt, say yes.  You can always turn them down later, but you may as well find out the total amount of aid you’re eligible for.
• Finally, be clear on dependency.  It’s relatively easy, but it’s not the same as whether you claim your children as dependants on your tax return.  Generally, parents have to provide financial information for their child’s FAFSA if he or she is an undergraduate and under age 24.  There are a few exceptions – if the child is a veteran or married  – but that’s the standard rule of thumb.  If your child is applying for aid for graduate school, he or she is always considered independent, no matter what age.

Who: Marcy Cohen and Lori Rockoff

What: Pea Soup Accessories for Kids; a manufacturer of handcrafted children’s hair clips, bows and more. You might have seen their designs on the offspring such celebs as Gwyneth Paltrow and Jennifer Garner.

When and Where: Ten years ago in Chicago, IL

How: In 1999 Marcy Cohen was working as a teacher. Her sister, Lori Rockoff was doing social work. For fun Marcy started making hair clips for her daughter and from there, Pea Soup was born. “I found myself going in my restaurants and people would stop me and say where did you get this bow…we didn’t start with a plan. We were buying materials, going to craft stores. Our first customer was a children’s hair cutting salon. We brought our items in and they placed an order.” That first order may have only $150 but the satisfaction they got from this taste of success was enough to spur them on. “We were so excited. It’s still exciting,” said Cohen.

From there, the orders only got larger. “When we first started we were the ones making the clips. We were in LA a year and a half into it when we got our first big order. It was about $1,200.” After a weekend spent on the floor of Lori’s apartment assembling the clips, Cohen and Rockoff decided it was time to enlist some help. “That’s when we started hiring people to work with us,” said Cohen. Today Pea Soup Accessories employs a total of eight people.

After two years Pea Soup began to turn a profit. “We were really lucky. We learned as we went. When we first started we were going to the craft stores for supplies. We moved from buying retail to buying from wholesalers, and doing our own designs. We were able to really grow.” Today their accessories are available in boutiques, hair salons and online. And as for their day jobs, when the orders started to pour in, Cohen and Rockoff left them behind to focus their attention solely on Pea Soup. “When we first started we were working when the kids were napping, or when Lori got off work. It just got to the point where we couldn’t sustain the business that way. It was growing too fast.”

Their advice: “I would say first start with a business plan. We did not,” says Cohen who adds that the lack of plan prevented their business from taking off as quickly as it could have. “We didn’t budget for new samples and costs. We just bought what we liked. Which is part of what you want to do, but it helps to watch where you’re allocating your money.”

According to the sisters, uniqueness is also key. What sets Pea Soup apart from the rest? “A piece of Velcro inside each clip that helps it to stay in the child’s hair. We were definitely among the first to do that and it’s been a huge selling point,” says Cohen.

One final note: We sometimes hear that friends — and relatives — or money don’t mix. How does this duo make it work? “Make a list of all the job requirements to seek the most qualified person. Look at each partner’s strengths and allocate potential tasks to each partner to see if the two people will complement each other,” advises Rockoff. In their business, the sisters work on designs together. Rockoff handles the marketing. Cohen manages orders and keeps the books for the business in check.

Want to win a Pea Soup outfit for your little one? Click here, and write “Pea Soup” in the message box.

-Christine, New York

When teens and credit cards mix, the outcome can sometimes be disastrous. But, if handled correctly, credit cards can be a great tool for teaching your college-age kid the basics of financial management.

After your daughter turns 18 in January, she may want to hussle to get that first card. Otherwise, she will need a cosigner. When another piece of the new credit card legislation takes effect on February 22nd, any person under the age of 21 will be required to have a parent to co-sign on their credit card. “Mom needs to be sure she is comfortable with co-signing, which could affect her credit score if her daughter misses a payment,” says Karen Blumenthal, author of “The Wall Street Journal Guide to Starting Your Financial Life.” If your daughter can prove that she’s making enough money to handle having her own credit card, she may be able to side-step the need for a cosigner.

When you start shopping around for a credit card, let your daughter do the work. “It’s good practice for the student to research the options–the interest rate on charges, the interest rate on any cash advances, and the fees you’ll pay if you pay late or go over your credit limit. That way, the card holder knows exactly what the terms will be,” says Blumenthal.

As you probably know, the options for credit cards can be overwhelming. To make it easy on your daughter keep things simple. “I recommend a young person apply for a plain vanilla student card with no annual fee and the lowest interest rate you can find,” suggests Blumenthal. Check and see what your teen’s bank or credit union are offering in terms of credit cards, as many offer student-friendly options.

Before the card gets in your daughter’s hands, lay out some ground rules. Make sure she uses the card at least occasionally and that she pays the full amount due every month. “The single most important thing she can do to build a good credit record is to pay her bill on or before the due date every month. Set up online bill paying to make this easier,” advises Blumenthal

Photo by Gil Vaknin

If you lost a job, how long would your nest egg hold out? For six in 10 Americans, the frightening answer is less than 90 days. For four in 10 it’s an even more frightening less than 30 days.

And how would your family fare in the process? That’s the question posed by a prime-time special from the folks at Sesame Workshop in collaboration with David Letterman’s company Worldwide Pants and Lookalike Productions. Families Stand Together, hosted by the husband and wife team of Al Roker and Deborah Roberts – in which I was fortunate to play a role — airs Wednesday at 8 p.m. on PBS stations across the country and will be available at SesameWorkshop.org thereafter. It takes a look at the experiences of five families who have experienced job loss or other economic setbacks.

The Ballis from Canyon Lake, California, are one example. After Joe Balli lost his job at an RV dealership, he and his wife Erin, and their two boys 10, and 9, found they could no longer afford their comfortable home. They arranged with the bank to sell short (sell the home for less than they owed on the mortgage) and moved into much tighter quarters, a two-bedroom motor home. Yet, they say they’ve grown stronger as a family.

The Valentin family, from New Jersey, are another. Let go after 16 years in the auto industry, Pablo and Vanessa Valentin and their six children, are hoping to find work so that they can keep the house they worked so hard to buy. In the meantime, their young son Paul Isaiah suggested they start a business selling decorated t-shirts, and the family embraced the project. You’ll see their handiwork in the special and can purchase their shirts on the crafting website Etsy.com (search: Families Stand Together to find their store.)

And then there’s Elmo’s family. Even monsters, it turns out, aren’t immune from the economic downturn. When Elmo’s mom loses her job, Elmo at first believes it’s his fault because he has “too many toys.” But he learns that this is just something that happens in families, and that doing things that don’t cost much money – like picnicking in the park – can be as much, if not more, fun, as a trip to a pricey amusement park.

The special, which is geared to families with children two- to eight-years-old, is part of a greater initiative to help families cope, says Dr. Jeanette Betancourt, Vice President for Outreach and Educational Practices at Sesame Workshop. “It provides strategies for how to talk about these situations, and how to really work together as a family.”

I’d go one further. Families Stand Together provides the script families looking the words to explain to their children what is happening, without shame, blame, or fear, have been lacking. It also provides a long-overdue lesson in basic budgeting (in bad times and in good you need to consistently spend less than you make), deferred gratification (as you’ll see in the experience of one young girl, better things do come to those who wait), wants versus needs (you want new toys to play with, but you need healthy food to eat) and how pulling together to take care of each other is really what matters. I, for one, am proud to be part of the project. And I hope you’ll tune in.

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For the past two years, I have “promised” that this year will be different.  It hasn’t been. Instead, there will come a week when one of my kids (or both) will say, Mom, you owe me 4 (or 5 or 7) weeks allowance.  And not knowing if they are right or — perhaps — giving themselves the benefit of the doubt (that’s parental guilt working in their favor) — I pay up.  

No more.  This year is going to be different.  I just signed up for a two-week trial of a service called ThreeJars.   I had met the founder, Anton Simunovic, at a recent lunch, and heard the pitch for his website.  You, the parent, set the allowance limit for each child. Come payday (Sunday for my kids) the site adds the new money to their total.  If they want cash, they send you an email and you produce it — keeping track of how much you owe them and how much you have already paid. (By approving your cash requests electronically, the amount you have paid is deducted from your kids’ total stash).

The site also allows parents to suggest/control how much kids are allowed to spend, how much they should save for longer term goals, and how much they should give to charity. I’m inclined to let my children make those decisions for themselves, though I made some initial suggestions.  My feeling with allowance is that it’s a mechanism to show them that money is a limited resource.  If they’ve blown through their allotment for the week and they want to go into town to go out for lunch with their friends, too bad.  They’re brown bagging it.   They’ve also shown me over time that they’re more generous with their friend’s charities (or school fund raisers) than I would be myself.  So I’m inclined to leave that to their discretion as well.

I considered other alternatives before signing this route, primarily the two allowance cards on the market — Visa Buxx or MasterCard’s Allow.  These allow you to put the money on automatically (they call it topping up) on a schedule of your choice.  Then your kids can use the cards to withdraw money at ATMs or to spend it at the mall.  There are fees involved, of typically, a few dollars a month, but that’s not why I didn’t go this route — at least to start.  ThreeJars is charging $30 for a year’s subscription per family once your trial period is up.  My problem is that my kids don’t drive. There’s no way for them to get cash without asking me to take them to the ATM.  So if they want it for pizza day at school and they have to run out the door and hop on the bus, it’s easier for them to get it from me. (I hope that in the future — a hope I shared with Simunovic — that ThreeJars will add a stored value debit card so that they can have both options.  I am also looking forward to hearing his answer to this question: Can you add a mechanism so that when my child wants to download a new ringtone — that will automatically add a charge to my cellphone account — I can approve or deny that as well and subtract it from his/her allowance?)

So, how will it go?  How will they react?  I’ll keep you (pun intended) posted.

P.S. I know some of you are wondering how much allowance I give my kids.  The answer: My 15-year-old gets $20 a week, my 12-year-old gets $15.  This is their money for a movie on the weekend with their friends, junk at the mall I refuse to buy, small gifts for their friends, etc.  They both supplement with babysitting.  But I’ve found it’s enough to buy some of the things they want, not all of the things they want.  Like disability insurers, I want my children to have an incentive to work.

Michael Silverstein, co-author of the upcoming book Women Want More, asked thousands of women: What makes you happy? Those are the top answers.

Pets.
Food.
Sex.

Not loving spouses. Fabulous children. Interesting work. Or a bank account full of cash.

Pets.
Food.
Sex.

I got a sneak peek at the book and Silverstein’s thought process when we touched base earlier this week. And so I asked him: What’s the deal?

“Women are overburdened by all the responsibilities around them. They have a time challenge,” he explained. “So when they think about their day dream it doesn’t involve their children or their husbands or [anything else that might be another drain on that time.]” It’s not that women don’t love their children or their spouses, he went on to say, but rather that when almost everything in your life represents a potential time-suck (my term, not his), when you have the opportunity to fantasize you tend to focus on you and the things that give back to you without asking much in return. Thus: Pets. Food. Sex.

The intersection between money and happiness has always been fascinating to me. A Roper study I commissioned in 2002 for my book The 10 Commandments of Financial Happiness showed that once you have enough money to live comfortably (pay your rent, put food on the table, take a vacation once in a while) more money doesn’t buy more happiness. What does boost happiness and optimism? More control over the money that you have – and more control over your life in general.

Silverstein’s new work backs that up. He and his colleagues document a typical woman’s “V-Curve of Happiness.” When we’re young, single and right out of college, we may not have much in terms of money but we also don’t have much in terms of responsibility. Our time and our resources are our own. At that point, he says, we’re “peak happy.” Then we get married. And we lose 10 hours of our discretionary time – per week — to, as Silverstein puts it, our “first child” – i.e. the husband. Have a baby? There goes another 22 hours. So now you’re down 32 hours. Where does that time come from? For most of us, not from work outside the home … or in it. The groceries still need to be purchased. The counters to be cleaned. No, confirms Silverstein, it comes from taking shorter showers, not having drinks with the girls and less sleep. Is it any surprise we’re less happy?

But here’s the amazing thing: That V Curve doesn’t right itself, Silverstein notes, until those beloved offspring are actually out of the house. Yes, you read that right. Decide to marry and then to breed and you’re looking at two-plus decades of subpar glee.

Unacceptable.

So, although I continue to believe that more money doesn’t buy more happiness, perhaps you can spend your way out of these doldrums. It seems to me that the key to finding happiness with life beyond your beloved Cockapoo, a nicely charred porterhouse, and the occasional tumble in the sheets has to do with using your financial resources (despite the fact that they’re likely a bit more limited than they used to be) to add time, rather than things to your day. That $100 may be much better spent on someone to help with the cleaning, the cooking, even the homework, than on yet another pair of ballet flats. I, for one, am going to give it a try.

In the end they opted to pass.  I was disappointed.  But then I thought about how much better this would be for my bottom line.  Two dogs would mean twice the vet bills, twice the grooming, twice the food, twice the dog-sitter (when I travel for work, she often takes him overnight).  In other words, thousands of dollars a year.  And that doesn’t include start-up costs.

According to the ASPCA: Here’s what they look like:

Small Dogs: $1,314 for vet bills, spaying, neutering, food, a crate, etc.

Medium Dogs: $1,580 the first year because the bigger the dog, the higher the cost.

Large Dogs: $1,843 in year one.

Even cats, which seem to take pretty good care of themselves, aren’t cheap.  First year costs are roughly $1,035.  (Litter alone is $165.)

Why do I bring this up?  Because as the Obamas ready to introduce Bo, their new Portuguese Water Dog, to the world, parents around the world need to understand the cost of the dog their children will start begging for.  Portys, though very easy to train, are large dogs which means they cost nearly two grand a year to maintain.  Breeding sites on the web list them as $1,500 to $2,000 a pop to start (a number which is certain to rise as the breed basks in the White House Halo).

There’s a reason the number of pups dropped at shelters due to job loss and inaffordability is on the rise: Dogs are expensive.  Wonderful, yes.  Loving, yes.  Worthwhile, absolutely.  But an investment.  Just something to keep in mind before you take the leap.