The American Dream of Home Ownership: 10 Things You Can Do as a Student

(This is a guest article by Kyle Chezum*)

College students often take home ownership as a fact of adult life — as something inevitable that will happen when it happens. But homeownership requires real effort, commitment, and responsibility, many college students aren't sure what steps to take to meet these requirements. The following ideas will help get you started on homeownership before you graduate.

1. Put some thought into it. Are sure you want a home? Is it part of your future plans? If so, make it a goal. Work toward it. If you're not intentional about getting there someday, you won't. Simple as that.


2. Get a job. This is much easier said than done, of course, but do what you can to earn an income. You need money to buy a house, but you also need a steady employment history. Start building up your resume as soon as possible.


3. Build up your credit score. Get a credit card or two—no more than that, though—and charge small transactions now and then. Pay off the balance monthly—never let a credit card charge carry over from one month to the next. Maintain tight control over your accounts. Don't use the cards to build up debt—that's the opposite of what you want. Using of the cards over time will provide you with a healthy credit score, which is critical if you plan to purchase a home.


4. Avoid student loans if possible. Paying back student loans can help build your credit as well, but the monthly payments that will come due when you graduate will cripple your home buying ability for several years at least. Borrow the smallest amount you can in student loans. Don't use your loan money to buy a laptop or a new phone. Keep yourself financially lightweight.


5. Buy used books. You know the drill. Used books can cost hundreds of dollars less—especially online—than the shiny new ones in the bookstore. A few hundred dollars in savings every semester can reduce the amount of student debt you take on.


6. Drive a clunker. This one is controversial. Older cars come with higher repair costs than new cars, but new cars are just plain expensive. You'll have to weigh the financial pros and cons of this one yourself, but whatever you do, don't use debt to finance a car. You can get by without the Mustang or the Sebring convertible. You'll save on insurance, too.


7. Skip spring break. Sorry, but spring break vacations are often extremely expensive. A spring break adventure in Cancun will likely cost you between $1,000 and $1,500, and that's if you're on a budget. If you were able to save $1,500 each year for four years, you would have $6,000 of cash on hand—which is equivalent to the average closing cost of a mortgage.


8. Learn basic maintenance. One of the costs associated with homeownership is maintenance. If you can learn how to make minor home repairs yourself, you can save a hefty amount of money as a homeowner, which will lower your monthly ownership costs and allow you to devote more of your income to your mortgage. You can paint the entire exterior of your home for just a few hundred dollars instead of the two or three thousand it would cost to have it done professionally. Learn these skills as soon as you can.


9. Learn about real estate. Buying a home and taking out a mortgage are not simple things. There's a lot to learn. What neighborhood should you purchase in? How long should you keep the house before you sell it? Are property values increasing or decreasing in your area? Learn how to understand these things. Stay up to date on the industry. Compare home prices, compare mortgage rates, and keep your eyes open for opportunities. Read a book or two on the subject. Talk to a local broker. It will help you immensely down the road.


10. Save money. Save, save, save. Save every penny you get your hands on. Put it away. Don't think about it. Open a savings account and fill it full. You don't need to eat out three times a week, and you can skip out on movies now and then. Your friends will understand. Tell them you're buying a house—it'll make for good conversation, if nothing else.

*About the author: This guest post was provided by Kyle, a content specialist at Lender411.com. This site helps homebuyers compare mortgage rates, find local lenders, and locate the best mortgage packages available.

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

This article has been featured in the Carnival of Personal Finance #271.

How To Get Ahead Financially As A College Student

(This is a guest article by XYZ*)

College is an exciting time of learning, meeting new people, visiting new places, and of course lots of the obligatory partying. Most new students do not think about the fact that it is also the beginning of your financial life. Indeed, now is the time when you cease being a dependent of mom and dad and become the master of your financial future. In order to make that future less stressful and more successful you have to start thinking about ways to get ahead financially and how to handle the little money that you have in the most effective way possible. While you might think you have too much on your mind to worry about your financial future it simply cannot be ignored. There are a few simple ideas that can go a long way toward building a successful financial life.

Financial Guide For College Students

Start saving and investing right now - College students usually do not have a lot of extra money in their budget, but that is not an excuse not to save. In fact, if you can learn to save 10% while you are earning very little it will be easier to save money as your income goes up. Take the money you save and put it in a high yield saving account or invest it in a Roth IRA. A Roth IRA is probably the best investment for college students because they are incredibly flexible. You can withdraw your initial investment with no penalty in an emergency or withdraw some of the earnings later on to buy a home.

Come up with a budget - You might think that as a young, single person you do not need a budget. But you are wrong, everyone needs a budget. Sit down and figure out all of your monthly fixed and variable expenses. Once you do that evaluate how you can bring some of those costs down. Maybe you should have a roommate to cut costs or eat out less. It is important for you to know where all of your money is going and exactly how much you have to spend. This helps you avoid spending too much and winding up broke at the end of the month.

Avoid overspending on credit cards - College is a great time to start building your credit file. You will have the opportunity to get excellent rates on credit cards so you should take advantage of them. However, owing a credit card is a big responsibility that has the potential to ruin you financially. Be sure you only spend what you can afford to pay back each month so that you do not have to spend money on interest. If you get to the point where your bill is more then you can afford each month then cut up your card or freeze it in a block of ice until the bill is paid in full.

Think of everyone you meet as a potential employer - One of the goals of college is to meet people who can help you get jobs later in life. As you meet new people treat them with respect and do your best to make a good impression. You never know who you will meet later on and what kind of opportunities they will have for you. There is no time like the present to start building a good reputation.

In the midst of all of this financial planning be sure to have fun while you are in college. Now is one of the few times in your life when you will not be burdened with lots of responsibilities so take the time to see the world and enjoy university life. Just make sure that at the same time you are making wise financial choices.

*About the author: This article was written by personal finance writer Timothy Ng from Sydney, Australia. He is genuinely passionate about helping people compare credit cards and helping them through researching to find the best credit card.

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

Tax Savings for Twenty-Somethings

(This is a guest article by Ashley*)

Twenty-somethings have plenty of ways to save on their taxes, but the unfortunate thing about this age group is that many seem to be very nonchalant about giving money away to the tax-man. They either think that taxes are absolutely unavoidable or they are too preoccupied to figure out how to squeeze some extra out of their hard-earned paychecks.

The following tips highlight that this doesn’t have to be the case. Twenty-somethings can qualify for several tax breaks and getting them is not as hard as you would think.

Deduct Interest On Your Student Debt

Many individuals in their twenties still have student loans. You can deduct the interest you have on student loans as long as the loan is qualified, you are not filing separately if married, and your modified adjusted gross income is not greater than $70,000 ($145,000 if married). Also, you cannot be claimed as a dependent on your parents or anyone else's tax return.

Buy a Hybrid and Save on Taxes

Several hybrids are still eligible for this tax credit and it expires on December 2010. If you need to buy a car, consider getting one that is low on fuel-consumption so you can claim this credit and save some money. The list of eligible cars can be found here.

Where You Save for Your Home Matters to the IRS

A Roth IRA is an excellent account to save for your first home. You can use up to $10,000 to buy or build your first home without incurring an early withdrawal penalty as long funds in the account have not been held less than 5 years. Yes, the money in the Roth is pre-tax, but also any investment earnings you incurred you can avoid paying taxes on. Roth IRA typically yield higher interest rates than traditional savings accounts. In summary, can save at high rates of interest for your first home while avoiding some taxes and penalties.

Consider a Roth 401k

If your employer offers a traditional 401K and Roth 401k, you should consider saving in the Roth 401k because although the Roth does not grant a tax exemption while the traditional 401K does, young employees often end up in low tax brackets anyway. Also a Roth IRA does not tax withdrawals later on, which can be plus in terms of mitigating the threat of tax increases on the horizon due to bursting budget deficits and rampant government spending.

Save Your Receipts

Even if you don’t itemize your expenses you can deduct a wide range of items as long as you have your receipts to back up your claim. Teacher’s aides can deduct expenses that they purchased out of pocket and other people can claim a wide range of things from medical expenses to interest on student loans and even gas if you have moved more than 50 miles away from your current home.

Get a Health Tax Break

Some employers offer a health savings account (HSA). A salary deduction funds the account which means it is taken out pre-tax and then withdrawals made from this account can be used for paying for medical expenses. This can save you 20% to 35% on your medical expenses depending on your tax bracket because you used pre-tax money to pay.

Take Advantage of the Saver's Credit

The Retirement Savings Contribution Credit will allow you to take a credit up to 50% of what you contribute to an IRA. This credit (unlike some other IRS provisions) actually encourages you to save for your retirement. Realize though that there are income limits on taking advantage of this credit which varies by your filing status. You must also be at least 18, not a full-time student, and someone else is not claiming you as a dependent. Check the IRS website for more details. This credit really helps young workers who early on in their careers have lower than average incomes.

Twenty-somethings should really be aware of all the ways they can save on the amount of taxes they pay. Keeping more of your income is one of the basic ways to head towards greater wealth.


*About the author: This guest post was provided by Ashley, who works for TaxDebtHelp.com, a site that provides help with IRS tax debt through its tax relief service offerings and self help articles for taxpayers facing major IRS tax problems

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

Student's Guide to Travelling Overseas on a Budget

(This is a guest article by Timothy Ng*)

The allure of an overseas holiday when you are a student us often compelling. You are at that point in your life when you want to experience everything, to taste it, feel it, and smell it. Travelling out of the country may have always been a dream of yours or maybe you want to experience these adventures without mom and dad for a change. No matter what your reason for wanting to travel may be, your problem is probably the same as most other students; a tight budget.

Guide To Travelling Overseas On A Budget

Consider cheaper lodging options - Apart from transportation, lodging is usually the biggest cost of any trip. Forget about staying in hotels, when you are on a budget almost all of them are sure to be out of reach. Instead, think about camping, there are loads of campgrounds that offer cheap spots and great views. If you do not want to have to carry along camping supplies there are also hostels that offer cheap beds for student travellers. Hostels today are clean and friendly with top notch security plus you will likely meet entertaining people. One other option is a new trend called couch surfing. You simply join a couch surfing network and link up with people who are willing to let you crash in their house for free. Remember to return the favour next time a couch surfer is visiting your area.

Track your money - When you are on a budget you have to hold the reins tight so you do not run out of money before your holiday is over. Students might consider getting a prepaid credit card so they only have access to a limited amount of money at a time. You can refuel it every few days so you are not tempted to spend too much on an impulse purchase. Also, plan for all the little incidental purchases you might need to make along the way like buying a tube of toothpaste or doing laundry. Only after you consider these expenses will you know how much you have in fun money.

Find a frugal friend - If you have a travel partner, make sure they have a similar budget. There is nothing worse than travelling with someone who has an unlimited spending account when your are barely getting by. Instead, travel with someone who has to make the same sacrifices that you do for your trip. The two (or three or four) of you can even have a contest to see who can get through each day spending the least amount of money. That makes being frugal even more fun.

Choose a non-traditional destination - The world is a very big place and there are thousands of places to visit that are off the beaten path. There are many benefits to choosing a lesser known location the first being savings. Big tourist traps tend to be more expensive on all fronts from lodging to eating, even your flight will probably be more expensive. Those big tourist traps will also be crowded with people, making it more difficult to enjoy them. Pick somewhere unknown for a less costly and more exotic adventure.

Before you throw out your plans for travelling overseas during your time off from school consider that there are some low cost options available. Again, before you turn up your nose at the thought of going on holiday on a budget think about how much fun you can have and how many new adventures you can experience by taking the frugal route. You might find out that there is even more adventure to be had by spending less instead of more money on your trip.

*About the author: Timothy Ng is a personal finance writer, and has a real passion for encouraging people to compare credit cards to ensure they get the best deal. Check out his comprehensive guide to low interest credit cards where he provides an in-depth overview and analysis, to help you find a better deal.

*Image Credit: iPhoto Photograph

This article has been featured in the Carnival of Personal Finance #270.

~~~o0o~~~

This semester, rent textbooks instead of buying them and put away the savings towards your travel budget!

~~~o0o~~~

How To Tackle Back-To-School Shopping Without Breaking the Bank

(This is a guest article by Timothy Ng*)

Heading out to do some back-to-school shopping can really be a drain on the pocketbook if it is not done with a strategic plan in place. The retail shops are counting on the young ones to beg and plead with their parents for the newest and greatest school supplies.

There will be a lot of advertising and setups placed in shops, and if you don't know exactly what you are shopping for, you may be tempted to purchase everything the store says you need.

Back to school with the young ones

Find out what your children really need to go back to school. You can contact the teacher before you head out shopping so that you can get a list of items. You can bring your children with you to go shopping as long as you let them know that you are going to be sticking to the list no matter what.

If you let your children make up the list with you they will be more actively involved in the decision-making and it will be easier once you hit the stores. Don't forget to check what items you already have at home. Your child will probably want all new items, but you can let them know before you go shopping that you do not intend to purchase anything you already have in stock.

It is nice to get your child a few pieces of clothing and a new pair of shoes for back-to-school, but don't go overboard. Once school starts there will be countless sales for clothes that weren't purchased during the back-to-school rush. Do your shopping then to save some money.

Watch the fliers and make a budget

Check out which stores have the better deals before you head out shopping. There may be coupons in fliers for back-to-school items that you need to purchase. You also have to set a budget so that no matter how tempted you are to overspend, it doesn't happen.

Back to school with the older ones

The cost of most textbooks is a nightmare about to happen for college students. The costs on these books can be outrageous so it is wise to look at ways of lowering the price. Here are some helpful tips you can use to keep the price down on textbooks.

1. Look on the Internet : You can do some fast and effective cost comparison shopping on the Internet for your textbooks. You can look at classified ads and bookstores that sell used college books. It is the fastest way to find them used at a good price.



2. Find out if you can use an older edition textbook : If you don't absolutely have to have the latest textbook edition your savings can range from 50% up to 70%. You can e-mail your professor and ask whether or not you need to have the newest edition of the book. Some professors will insist that you get the newest copy while others will tell you that it is not necessary and an older edition will do.



3. Get a used copy from another student : Many students are anxious to get rid of their used textbooks to earn income that they can put towards their tuition for the next year. Try to hunt down former students of the class you are taking and see if they still have the book available for sale.



4. Look at stores that sell used books : There may be a used store that sells textbooks in your area. You can find them in your phonebook or listed on the Internet. Give them a quick call to find out if they have your book in stock and how much it is.

Both younger and older students can save a lot of money when it comes to back-to-school shopping. Setting an example of good shopping habits for these students is an important part of their education as well and will stay with them for many years to come.

*About the author: Timothy Ng lives, breathes, and sleeps personal finance. Check out his in-depth guide to 0 balance transfer 12 months credit cards where he answers everything you need to know to finding the best balance transfer credit card.

*Image Credit: istock photo

Smart Ways for College Grads to Minimize Debt

(This is a guest article by Omar Adams*)

If there’s one thing that most college students are graduating with these days, it’s a mountain of debt. And even though they know this situation is bound to arise when they take out a student loan to cover their tuition costs, they don’t realize that it is compounded several times because of the way they use their credit cards and rack up other unnecessary expenses. It’s not that hard to graduate debt-free or at least with a relatively low amount of debt; the only hitch is that collegians have to plan and execute even before they start their four years on campus. If you’re a high school student hoping to minimize your debt when you graduate from college even as you enjoy most of what college has to offer, here are a few tips that are sure to help:

1. Choose your college with care. Remember, a prestigious name is not going to help you when you’re faced with a mountain of debt on graduation. So unless you want to spend the better part of your adult life slogging away to pay your student loans, think carefully before you make the choice. While you don’t have to go to the other extreme and choose a community college, opt for a university that’s close to home or where you have friends you can stay with. This way, you cut back on accommodation costs. If that’s not possible, choose a degree at a college that’s reasonably affordable and which doesn’t demand that you pay through your nose.


2. Work while you study. College is not all about fun and games, parties and sororities. You need to adopt a more serious attitude if you want to graduate without a care in the world. When you assume responsibility for your debt right from your first year by getting a job that allows you to pay for your extraneous expenses and also settle some of your student debt, you not only prevent your debt from accumulating, you also reduce the interest on the amount that’s outstanding.


3. Use credit cards judiciously. I’m sure every college student has been given this piece of advice; even so, it falls by the wayside more often than not. While I’m not saying you must avoid credit cards altogether, it’s best to use them wisely – charge all your expenses to them if needed, but ensure that you have enough money to cover the entire payment every month on or before the due date. The best way to avoid racking up huge credit card debts is to get a secured card, one where you’ve paid a sum in advance and which is your spending limit. Also, if you have a savings account, tie it up to your credit card and set up an automatic debit facility the day your bill is due. This way, you don’t have to worry about going overboard or racking up a huge interest because you’ve forgotten to pay your bill, and even if you don’t have money to take care of your bill, the amount you paid upfront is enough to take care of it.

*About the author: This guest post is contributed by Omar Adams, he writes on the topic of online accounting degree programs. He welcomes your comments at his email id: omaradams47@gmail.com.

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

What Every First Time Car Buyer Must Know

(This is a guest article by William Eve*)

There is lots of info for first car buyers. You might think that the most important things to know before you buy a car are which ones have the best gas mileage or were voted the best in safety standards but that is only a small part of buying a car. More important then the actual vehicle is figuring out how you will pay for it. You might not have thought of it, but if this is your first new car purchase it is quite likely the largest purchase you have made to date. It might also be the first time that you put your credit file to test in hopes of getting a low interest rate and reasonable terms for your car loan.

As this is often a significant purchase in your life it is important to understand how buying a car works and what you can do to get the best deals. The first step is to get a copy of your credit file. All you need to do is contact one of the credit reporting agencies and request a copy of your file. Hopefully you will find that your file is free of blemishes and your score is good. If you have that you will be able to secure a good rate before you go car shopping. This is an important step because you can go into a car dealership pre-financed, knowing what you are able to afford and what rate your credit score entitles you. Usually you can gain this kind of approval online or by visiting your local bank.

Important Info For First Car Buyers

Settle on a price - The first step in purchasing a vehicle is to find the one you want and then settle on a price for it. Most people do not pay sticker price for a car because you can haggle with car salespeople and usually get a much lower price then the one listed on the window. Take into account when you figure out a price that you will pay a bit more because of interest and other fees, this is info for first car buyers that is often forgotten.

Negotiate on financing - Most car dealerships are able to offer financing through an affiliated bank. When you are first taken back to meet with the sales manager he will try to get you to settle for a higher interest rate then you are probably eligible. This is in the car dealerships best interest, but not in your best interest. Keep pushing to get a lower rate until he meets or is less then your pre-approval rate. Even if the car dealership offers the same rate be sure to check on the terms of the loan to make sure getting it through the dealership is the most cost effective.

Look for other ways to negotiate - Many first time car buyers do not realise that the sales price and the interest rates are not the only chances to negotiate. The sales manager will also try to get you to buy things like an extended warranty. Typically the prices for these things are also not set in stone meaning that you can also negotiate them for a lower rate. Do not be afraid to haggle with the car salesman or the sales manager, they expect it and know exactly how little they can charge for any of their products or services. Odds are the numbers are lower then you think.

By taking note of this info for first car buyers you can ensure that you get a great deal. The first step is to arm yourself with your credit rating and find out on your own what kind of interest rates you can get. Do not let the car dealership dictate your interest rates, if you do you will likely wind up spending more then you should to finance your vehicle. As always, work hard to maintain a good credit file so that the best rates and terms are available to you. If you find that your credit file contains negative marks you might even want to work on improving it before you purchase a card. Although it will put off your purchase, improving your credit score before you get a loan can save you loads of cash.

*About the author: This article was written by William Eve who is a regular personal finance writer for Home Loan Finder, a 100% free mortgage comparison and application service. Whether a first home buyer or investor, visit the Home Loan Finder website for more quality information and guides on competitive mortgage products.

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