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How to get your finances ready for life’s biggest (and costliest) events

On TODAY this morning, Hoda Kotb, Jenna Bush Hager and I had a blast talking money hacks for life’s biggest milestones. Whether you’re having a baby, you’ve got college-bound kids or you’re preparing for retirement, here’s how to get your finances ready (and what order in which to prioritize things)!

 

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Paying off student loans: How to cut your monthly payments

About 1/3 of college students with student loan debt say they’d rather not have sex for 10 years than carry that amount of debt. Did you know Americans owe more than $1.3 trillion collectively in student loan debt? You can watch it grow $2,726 every second here. This morning, I talked cutting monthly payments on TODAY. Check it out.

 

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Tips For Recent Graduates To Help Avoid Identity Theft

If you’ve got a newly minted graduate in the family (or you’re one yourself), congratulations! Launching, whether you’re doing it from high school into a college or university, or from college into a new apartment and career, is exciting. Unfortunately, when it comes to your identity and personal information, it’s also a process that exposes you to more risk than usual.

According to research conducted by LifeLock, nearly two-thirds of students reported that they were not very concerned about fraud (one probable reason that fewer than one-quarter even detect fraud when it happens to them). Yet, when it does hit, 15% say the impact is moderate or severe—that’s higher than among other age groups.

More worrisome, colleges and universities—among them U.C. Berkeley—have been victimized fairly steadily by data thieves in recent years. As the head of information security for the school told reporters, it’s difficult to protect an academic institution because you can’t just shut it down in the face of a major breach.

Bottom line: The best way to keep yourself safe during times of life transition (graduation, as well as many others) is to take several steps to protect yourself ahead of time. Here’s what you need to do:

  • Lock up your personal information—and password-protect your computer and phone. Students are four times more likely than other computer users to be victims of “familiar fraud,” in other words, to have their information stolen by people they know. Living in a dorm with a person you don’t know (or don’t know well) and other students frequently popping in and out puts you at risk. Any documents with identifying details, from passports to bills, should be put (or even better locked) away. This is the same reason your mailbox should have a key.
  • Watch the sharing. It’s tempting to broadcast details and photos of this fabulous new life of yours on social media. Be careful. The more you share, the more you’re open to having your identity stolen. Why? Because by providing details like your pet’s name, birthday, mother’s maiden name, and location, you’re giving a smart thief all the information necessary to create a faux you and apply for credit in your name. Be selective about what you share and who you allow to see it.
  • Pay attention to your credit (or, parents, do this for your children). If you’re sending kids off to college or out into the world as an authorized user on your credit card, chances are you’re doing so to help them build a credit history. If you’re not doing this—and your kids haven’t applied for credit themselves—then the mere existence of a credit history is a sign of trouble. You can check your credit report (or your child’s) for free at AnnualCreditReport.com.

Finally, have the talk with your kids. Not that talk, the one about how important their identity is as they enter the adult world—and how taking steps to secure it is up to them.

Money Sense on Fortune

gradShould you refinance your student loan? The answer has changed in recent months. In this week’s Fortune column I highlight the recent deals from both bank and non-bank lenders that can save both students (who hold Stafford loans with fixed rates ranging from 3.86% to 6.8%) and their parents (who hold PLUS loans with fixed rates between 6.41% and 8.5%) some decent money.

Read on here.

Today’s Money: The Bank of Mom and Dad

We’ve seen the research in the headlines for weeks now: Over half of all college graduates are still funded by the bank of mom and dad. Well, this morning on TODAY, I offered a lesson on financial independence to two graduates who make up that statistic. If you missed it, check it out below.

Visit NBCNews.com for breaking news, world news, and news about the economy

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Wheeling Down the Wedding Aisle

iStock_babyAs parents we know there is no greater gift (and expense) than having a child. Don’t get me wrong, parenthood is worth every penny, but as we age, does it become easier financially or more difficult? I ask, because a recent Bloomberg article on how older parents are rewriting their financial plans after having children caught my eye. For example, when 37-year-old Barrow Barre (who by the way is fairly young by the standards you’ll read about in the next paragraph) quit her job to tend to her newborn twins, she asked her husband to increase his retirement contributions. Barre’s husband joked that retirement was irrelevant – he’ll be working until he’s dead. He has a point. If you’re having children in your late thirties, early forties, does retirement get pushed to the backburner? What about life insurance, estate planning, and oh yeah, saving for college?

You can attribute this to modern medicine, actively going against the grain, and probably a number of other factors, but the birth rate for women between ages 40-44 has risen 2% annually since 2000, according to the Centers for Disease Control and Prevention. If you’re among them, there are a few guidelines to follow.

“First, you need your safety net in place,” said Stuart Ritter, a senior financial planner at T. Rowe Price. “All the things that you as a parent want to make available for the rest of your family wouldn’t be able to happen if something happened to you – so you have to get life insurance.”

Chances are you probably need more than you think, but it probably costs a lot less than you feared, Ritter added. Ahem, how much are you spending on cable? This is where prioritization comes in.

Ritter is quick to suggest term insurance over more permanent options like whole life and universal, but as for how much you’ll need – that requires you to do the math…and thankfully calculators do exist. Unlike younger parents (i.e. twenties, earlier thirties), whose families would be missing out on more years of income (if the breadwinner were to die), older parents have fewer years to account for. The logic: Retirement savings should come into play for income replacement. That is, if you’ve been saving adequately for retirement.

Your second priority: retirement savings. And, yes, it trumps college. On an airplane, you’re instructed to put your oxygen mask on first, then your child’s – the same goes for retirement versus college savings. If you don’t have enough to save yourself during retirement, your kids will likely have to bail you out just as they are saving for college for their own children. Yes, it goes against every natural instinct we have as parents to tend to our children first, but as Ritter puts it: “Sacrificing your retirement may feel right in the short term, but it will have a high probability of causing problems in the long term.”

Once you’ve filled your retirement buckets, moving onto college savings makes sense. In this arena, 529 plans are the ultimate allies for both younger and older parents according to Mark Kantrowitz, senior vice president at Edvisors Network and author of “Filing the FAFSA.”

On the topic of FAFSA, don’t fail to fill out the form. CNNMoney recently reported on Kantrowitz’s analysis of government data that shows millions of students missing out on financial aid for college education. To see more from Kantrowitz, head over to the article.

Money Sense on Fortune

debitcard

This week’s column is the second part to my two-part series on credit scores. If you missed last week’s on the murky waters of credit scores (i.e. FICO vs. Vantage), you can catch up here. As for this week’s piece, I tackle the misconceptions surrounding millennials and credit, and how both parents and twentysomethings can get started on building (and maintaining) solid scores.

You can see the full column on Fortune.

Wednesday Welcome: The Benefit of Being a Big Fish in a Small Pond

Today’s guest poster is financial planner Neal Frankle, who writes about how his daughter got a great college education — and a wide network of contacts — for a fraction of the cost of an Ivy League school. If you’ve got your eyes set on a pricey school for your kids, this may help change your mind.

headshotAre you concerned about the astronomical cost of a college education? If so, I have some very good news.  My daughter just finished her degree in Finance and received a world-class education for a fraction of what it would have cost had she attended an Ivy League school.  Oh and by the way, she had a far better educational experience at the same time.

Before she started college we learned that graduates of high-priced schools don’t necessarily earn more than state school grads.  Still, we were concerned about the social scene at the state school.  We knew that it was important for her to be around other high achieving students in order to keep her motivated and working hard.

Fortunately, our daughter solved the problem herself. She got an expensive college education without the price tag.  How?  By becoming immersed in student government and an honors business fraternity (yes, the fraternity accepted both men and women).  She learned that the students involved in these groups were highly motivated, uber-achievers, super responsible and strong role models.

In order to excel in these organizations she had to be:

  1. Punctual.
  2. Responsible.
  3. Professional.
  4. Results focused.
  5. Work well in a team.

What more could any parent want?  Most of what I learned in college wasn’t taught in class.  My guess is that was your experience as well.  My daughter  flourished in college .  And she had that successful experience because she set herself up to succeed from day one.

My daughter told me that she never would have had the chutzpah to undertake student body politics and honors business organizations had she gone to an Ivy League school.  That’s  because she felt intimidated.  The state school gave her more opportunity to do well than the pricier schools.

Sometimes being a medium size fish in a small pond works out great.  My daughter had to deliver even though she had great demands placed on her.  She spent time with and learned from the best students on campus.  She also has fantastic networking opportunities that will help her for years to come.  As a result, she’s highly equipped to succeed in her professional life .  And best of all, she doesn’t have any college debt to worry about. Neither do we.

Before you decide on which school to send your children, take a look at the extra-curricular activities.  Look for academic opportunities that your kid will feel comfortable getting involved in yet pushed at the same time.  I am convinced that dollar-for-dollar, this is a far better way to go.

About Neal: Neal Frankle is a Certified Financial Planner in Los Angeles.  He helps clients make smart financial decisions so they don’t have to worry about their future.  He also is the editor for WealthPilgrim.com and MCMHA.org.  He is a regular contributor to Forbes, Huffington Post and other mainstream media publications.   

Mailbag Monday: Overwhelmed by College Costs

gradI have two children in college (and one in high school). We have exhausted their 529 accounts. I have already taken out Parent Plus loans to the extent I can afford at this point due to other financial setbacks. After financial aid, we still need to borrow to cover all the tuition/room and board costs. What are the best options, or what should we look for in obtaining loans for our children? Anything you can provide would be appreciated. I’m overwhelmed at this point.

— Nicolette

Hi Nicolette. I get where you’re coming from – it is overwhelming. And you’re smart to recognize when you’ve come to your own limit in terms of borrowing. At this point, the borrowing will fall to your children and the rule to stick to is to make sure they’ve exhausted their ability to take out federal loans before even considering private ones.

I also want you to take another look at your financial aid situation and call the financial aid offices at the schools your children are attending. Talk to a financial aid officer about the financial setbacks you’ve faced – particularly if they occurred after you originally applied for aid – and ask if there’s anything the school can do to help. Then have a very frank talk with your children about borrowing and how much they will have to repay when they graduate from school. Break it down for them so they can see what their monthly loan payments will look like. And if they’re overwhelmed by the thought, talk to them about the fact that they have options. They may want to consider transferring to schools that will offer them more in aid or working while they’re in school (and perhaps taking a lighter course load) to minimize borrowing.

Finally, the website fastweb.org has a terrific database of scholarships and grants and you’ll want to pore through it together. And when your next child goes through the process of selecting a college, make sure a good value is one of the criteria on your list.

Wednesday Welcome: The First Steps in College-Bound Cost Cutting

This week we’re happy to have Nancy Berk as our guest poster — Nancy is a pro at college planning, and author of the book College Bound and Gagged: How to Help Your Kid Get into a Great College Without Losing Your Savings, Your Relationship, or Your Mind. Here, she addresses college expenses that aren’t often considered — preparation courses, campus visits, and application fees.

 

Nancy New HeadshotWhile many parents worry about the cost of their children’s college education, it’s not unusual for college admission anxiety to override financial sensibility even before a tuition bill surfaces. I highlighted plenty of these money drains in my book, and they’re everywhere. While this is just a small piece of the fiscal puzzle, college search and prep costs and school selection mistakes don’t help the college fund. If you’re the parent of a college-bound teen, consider these cost-cutting suggestions to save a chunk of change before dorm drop-off.

Analyze Your Family Situation. When it comes to the college admissions process, it’s easy for parents and teens to become starry-eyed and make emotional choices with bad economic repercussions.

Before the wish list gets drafted, communicate and explore family concerns and limitations including tuition, transportation costs, and special needs. Applying to a school that is incompatible with the budget isn’t a wise move. However, always investigate the financial aid and scholarship data of schools before ruling one out.

Identify Great College Prep Bargains. Never dive into a test prep spending spree, until your teen’s strengths and weaknesses are identified. Is preparation required? If so, what areas should be addressed (i.e., content vs. process)? Math deficits and test anxiety don’t typically involve the same approach. Save money on test prep by asking friends with college students for those unused or gently used SAT, AP, and ACT prep books, CDs, and flashcards. Online study and tutoring options like those offered by the College Board and InstaEdu can also be more cost-effective than “live” options.

Create A College Visit Strategic Plan. Before you gas up and head off for a little collegiate bonding, do some virtual legwork and tour online. Explore college-specific websites and comprehensive sites like CollegeProwler.com and Unigo.com. Then tour local colleges and universities in order to identify your teen’s general preferences (e.g., big school vs. small school). Narrow down the list or increase exposure to options by building college visits into other, already paid for family activities like vacations, business trips, reunions, weddings, and bar mitzvahs.

About Nancy: Nancy Berk, Ph.D. is a clinical psychologist, author, comic, professor and entertainment analyst. Her book College Bound and Gagged: How to Help Your Kid Get into a Great College Without Losing Your Savings, Your Relationship, or Your Mind can be seen in the feature film Admission starring Tina Fey. Nancy co-hosts The College-Bound Chronicles podcast with broadcaster Lian Dolan and writes about higher education and entertainment for sites including Parade Magazine, USA TODAY College and The Huffington Post. The host of the showbiz podcast Whine At 9, Nancy digs a little deeper as she chats with fascinating celebrities and industry insiders. Sometimes they even talk about college.

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