Budget for Education in 5 Steps

(This is a guest article by Courtney Stewart*)

If you are thinking about going back to school but are put off by the cost of higher education, don’t let that deter you. Here is a step by step guide to reworking your budget to help you afford that degree. Education can be expensive, but it is a worthwhile investment!

1. Assess your income and spending habits

Your basic budget is your adjusted income (the amount you take home from your paycheck after taxes, insurance, 401k, or other deductions that come out of your paycheck) minus your expenses. Your expenses include both your basic living expenses such as your rent or mortgage, transportation costs, groceries, credit card payments, and utilities as well as your leisure/entertainment budget. In addition, you should ideally be putting away at least 10% of your adjusted income into personal savings or a retirement account. If you’re not, now’s the time to consider advancing your education to increase your earning potential. You’ll want to reassess your spending to make room in your budget for your education.


2. Determine the cost of your education

Tuition is the primary cost of education, but there are others. You’ll need textbooks and other supplies, and you may also need to pay for additional childcare, transportation costs, or lab fees. You may also need to purchase a new computer or software. While this does add up, it is manageable if you get a realistic figure of what your total costs will be and budget for them. You may want to consider taking courses at an online college to help counteract some of these additional costs, since you’ll be able to work from home and around your daycare schedule.


3. Find ways to cut back on expenses

While there may not be much you can change about your monthly rent, there are plenty of ways to make some changes in your budget and free up some money for your education expenses. Grocery bills can be slashed by shopping for sale items, clipping coupons, and choosing fresh foods over the more expensive processed foods. Your land line may be expendable if everyone in your family has a cell phone, or your cell phone plan may have minutes that you aren’t using. Libraries are a great resource for saving on entertainment expenses such as books, movies, games, and music for your family. And don’t forget to look at the smaller expenses - you are probably spending more on non-essential items than you think you are. All of those morning coffees, restaurant meals, and impulse buys can really add up. Try tracking all of your expenses for several months to look for areas of improvement.


4. Start saving

Once you have reworked your budget to free up some money, you’re going to want to put it somewhere where you can access it (but only for education expenses!). You can open up a savings account with your bank, or shop around for the highest interest rate available at bankrate.com. Alternatively, you could put your savings into a 529 education account. These accounts are offered through your state and allow you to save for education while earning tax incentives. Your payroll may allow you to automatically deposit a certain percentage of your paycheck into a savings account, and if it doesn’t, make sure to manually transfer the money as soon as you get paid – before you have the chance to spend it. Once you get in the habit of removing extra money from your checking account, you’ll find that you don’t even miss it. If possible, you may want to consider getting a second part time job to put extra earnings toward your degree. Just make sure that you will still have time to study!


5. Apply for scholarships/student loans

Finally, in an effort to minimize the amount you spend out of pocket, look into scholarships and financial aid. There are millions of scholarships available so it is worth finding and applying to ones that are a fit for you. Another option is student loans. Unlike scholarships, you will need to pay these back (with interest) after you graduate. The financial aid officer at the school you selected will be able to walk you through the process of borrowing the money to pay for your education.

It seems like a lot of work, but you’ll find that making room in your budget for education is the best investment you can make in terms of future earning potential, personal growth, and career success. Good luck!


*About the author: This guest post was contributed by Courtney Stewart, who writes extensively about online colleges and universities for EarnMyDegree.com.

*Image Credit: Photograph by Linda (Pane, amore e creatività) [via Flickr Creative Commons]

10 Ways to Manage Debt and Avoid Bankruptcy

(This is a guest article by Karen Schweitzer*)

Bankruptcy filings are climbing and are expected to total 1.5 million before the end of the year. If the economic crisis has you considering bankruptcy as well, there are several things you can do now to manage your debt and avoid being forced into filing bankruptcy like so many others.

Adopt a barebones budget. If you haven't done so already, you need to trim all of the fat from your budget. This includes, but is not limited to, cable TV, satellite services, cell phone or landline accounts, cigarettes, morning coffees, hobbies that cost money, and expensive nights out. If you don’t need it to survive, you don’t need it right now.

Sell assets. It can be painful to part with your prized possessions, but it is one of the quickest ways to raise money when you are in deep financial trouble. If you have a major asset, such as a house or car, that isn't secured by a loan, it has to go. Small assets can also be sold via eBay, classifieds, and other marketplaces. Take all of the money you make and apply it toward your debt.

Ask about hardship programs. Credit card companies, banks, and other creditors often have hardship programs for people who are having difficulty paying their bills. These programs offer lower interest rates, payment deferments, or reduced payments. Your creditors may or may not offer such a program, but you will never know unless you ask.

Work with your creditors. If you work closely with your creditors, you may be able to negotiate a non-bankruptcy workout agreement. This agreement will accomplish the same thing as a Chapter 13 filing, but you won't have to file bankruptcy and destroy your credit in the process.

Refinance. If you have student loans, car loans, or a mortgage loan, you may want to consider refinancing. A refinance may not cost you anything (unless it is a mortgage loan) and could significantly lower your payments if you are currently paying a high interest rate.

Request write-offs. This doesn't always work, but it is worth exploring. If you have old debts, you can contact the creditor or collection agency that holds the debt and ask if they can provide written proof that the debt exists. If they cannot, you can ask to have the debt written off entirely.

Settle your debts. Settling debt isn’t always the best financial avenue. However, it is definitely worth considering if you are on the verge of bankruptcy. If you have old debts (debts that have been sent to a collection agency or charged off), you should contact the company that holds it and ask to settle for a lesser amount. If you have a lump sum of money to give them, they may be willing to write off as much as 50 to 60 percent of your debt.

Seek help from a government agency. If you are in a really tight spot, you can contact local, federal, or state agencies for help. These agencies will be unable to assist you with certain types of debt, such as credit card debt, but they can help with the basics, such as rent, heat, electricity, or food bills.

Get credit counseling. The new bankruptcy law requires individuals to get credit counseling before filing bankruptcy. If you are thinking about filing bankruptcy, you should go ahead with the counseling. It may help you get lower payments, lower interest rates, and a better handle on your debt so that you can avoid filing altogether.

Increase your income. Although it can be difficult in a downtrodden economy, you should make every effort to increase your income so that you can pay down your debt naturally. This may mean asking for more hours at work, taking a second job, or finding ways to make extra money online.

*About the author: This is a guest post from education writer Karen Schweitzer. Karen is the About.com Guide to Business School. She also writes about online school for OnlineSchool.net.

*Image Credit: Photograph by phxpma [via Flickr Creative Commons]

The Seven Biggest Used Car Buying Pitfalls (and How to Avoid Them!)

(This is a guest article by Paige Green*)

Whether it’s your first car or you’re tenth, we are all prone to some rather basic mistakes when it comes to making the decision to buy. After all, a car is emotive and appeals to some basic primal need we seem to have for things that are shiny and go very fast. (Historically, our great great grandparents were probably suckers for a speedy horse with a well groomed coat). Unfortunately for our ancestors, they probably didn’t have the same access to information that we currently do, so there was nothing they could do if their prize pony turned out to be a training nightmare. Learn how you can avoid the pitfalls of car financing and purchase by arming yourself with information.

Seven Ways NOT to buy a Car

Falling in Love and getting blindsided

Your perfect vehicle, it looks great, drives like dream and you’ll be the envy of all your peers – if you have your heart set on the car of your dreams – STOP! This is one of the most obvious traps of car buying, especially if you’ve spotted the love of your life in a dealership parking lot. Becoming blindsided and committed to a particular vehicle without first determining the implications of the purchase can mean you’ll be drowning in heavy debt or be bound to particularly unfavourable terms.

Not doing your Research

The decision to buy a car is not a light one and before you step into a dealership or start considering internet auctions, you need to do your research and find out what sort of vehicle will suit your needs. Consider your lifestyle requirements as well as your budget and financing options. Don’t forget to account for the future, if you’re not sure what your situation will be like in five years, you might not want to commit to a vehicle that’ll lock you into a particular style of living for the long term.

Buying and Borrowing out of your Budget

If you’re looking at financing options, it’s tempting to borrow up and “get something you really want”. Remember that defaulting on your monthly payments will seriously affect your credit standing and will have a substantial impact on any future financing. Remember to also consider depreciation costs and other factors that will affect the final value of your vehicle and your assets.

Not looking into finance

When you walk into the lot, the dealer usually offers you instant dealer finance to help you with your purchase which always seems tempting since there’s no lengthy and nervous waiting time that comes with bank loans or the unsettling and embarrassing possibility of rejection. The problem is that without doing your research and considering all of your car financing options, you can end up paying exorbitant fees and higher rates in the long run.

Not test driving

As internet auctions become more prominent, it’s sometimes too easy to just purchase a vehicle based on the owner’s description and not actually doing an in person inspection, especially if the seller is out of state etc. It’s hard to get the information you really need to ensure that a car’s performance measures up to the promised description.

Not Doing a Thorough Inspection

Do your own check for oil (you want to make sure it’s clear and not dirty) and look for any signs of water damage as this could lead to expensive problems in the future even if the vehicle is running great now. When buying a used car, it’s best to consider getting the vehicle inspected by a professional mechanic. For a few extra bucks, it’s worth it to hire a mobile inspector to visit the site and do a quick on the spot check to make sure the car is in good working order. Alternatively, bring along a friend who knows about vehicles.

Not Getting a History Check

By running the Vehicle Identification Number (located on the driver’s side dash or in the door jamb) through vehicle check, you can obtain the full history of your car and find out if it’s been in any accidents or has any outstanding debt attached to it. Don’t take a seller on his or her word, but arm yourself with the necessary information to be a wary buyer.

*About the author: Paige Green hails from the Land Down Under and is an expert at driving on the left side of the road. She waits eagerly for Lemon Laws to be introduced there and also writes for Australia’s leading experts in car finance.


*Image Credit: Photograph by Jeremy Brooks [via Flickr Creative Commons]