January 2009 Archives

Barbara

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Today marks a quarter-century since I came into the world: the big 2-5. Soon, I'll be sitting on a beach celebrating my birthday — but before deserting South Dakota for warmer temperatures, I have some evaluating to do.

At 25, I've done pretty well for myself. Really, I can't complain about where I am in life. I have a lovely home, a good job, and generally I am healthy (with a few upgrades). However, over the past year I've felt a little...restless.

In the words of one of my favorite crooners , I keep wondering: "Am I living it right?" 

For some reason this antsy feeling has taken over and I find myself questioning the choices I've made. Those anxious and uncertain feelings may be part of something bigger — a quarter-life crisis , perhaps?

Some of you may be right there with me. After graduating, it takes some time to adjust to adulthood. It's pretty normal to think, "Is this it? Seriously, this is life from 9-5 until retirement?" The repetition can feel tedious.

What's a quarter-lifer to do?

For me, the past year was an opportunity to shake up the monotony with new activities and involvement. I started volunteering  and took up a new hobby. It's amazing how adding something new into the mix can give you a fresh perspective. And I hope to continue to shake it up at 25 with some goals for my personal and professional life.

So for now, I'm happy being a somewhat complacent quarter-lifer.

And one final note for you: While I will not be buying a small sports car  like someone going through a mid-life crisis , I am planning to celebrate with one extravagance on my vacation — going parasailing  (pending optimal weather conditions and minimal acrophobia)! 

Now, I'm off to bask in the sun!

Caroline

In a year when nearly everyone is looking for ways to pinch pennies, be sure you don't overlook opportunities to save at tax time.

There are several valuable tax credits and deductions available to college students and their parents. We've put together an online guide to give you a brief overview of what's out there. Be sure to check it out to see if you qualify.

If you've got questions about filing taxes, check out this article.  It's got some great tips and advice — like to coordinate with your parents on filing to ensure your family maximizes its opportunities.

Of course, remember that we are not tax advisors, so be sure to check with your personal tax advisor with specific questions about your situation.

Barbara

OK, I know Kathy just talked about BudgetWatch, but because I believe it is an amazing tool, I just have to talk about it again and share my experience.

Now, over the years, I've employed numerous budgeting methods  — everything from a strictly cash-only system, to writing down each purchase in a notebook, to the Diet Coke® Savings Plan. But nothing stuck.

So when BudgetWatch became available, I went though the motions to create my budget. Couldn't hurt, right?

Well, much to my surprise, this method is sticking! Why? Here are just a couple things that make this method easier for me:

1. Location, location, location: If you go into Wells Fargo Online® Banking regularly (to check your funds, pay bills, monitor what has been posted to your account, etc.), it's only one more click to check how well you're adhering to your budget. For me, having to go out of my routine to keep track of my budget, like through an Excel spreadsheet or other program, was a huge deterrent to sticking with a budgeting system.


2. Automatic comparisons: One of the big things that can throw a budget off is not having a good picture of your spending habits when you create it. Sure it's great to say you want to spend just $150 on groceries each month, but that may not be realistic. BudgetWatch gives you a picture of what your spending has actually been. You can even automatically fill in your budget based on your average spending each month.


3. Fluid budgeting: We're getting to the end of the month, and I'm starting to see some red categories (meaning I've spent over the allotted amount). However, some of my categories have a surplus. It's easy to swap some budgeted funds from one category to another if needed to keep you in the black. Or you can just keep track of "what's left" (your money inflow v. money outflow) to make sure you don't spend more than you have.

And the proof is in the Jello® pudding  I packed for lunch! Earlier this week, Staci sent me an invitation for a group lunch. Unfortunately, my restaurant spending category has only a whopping $0.31 left. Now, what about moving some clams from other categories? Well, most of the extras are already earmarked for some home expenses (story forthcoming) for which I hadn't budgeted. So, instead I sent my lunch regrets and brown-bagged it. A small victory, but I'll take it.

Have you found a budgeting system you can stick to? Perhaps BudgetWatch?

Kathy

What does the word "budget" mean to you?

For many people out there, the word has an extremely negative connotation, conjuring up images of self-deprivation, tedious bookkeeping, and guilt-ridden uncertainty about being able to successfully stick to it. (Not exactly the warm fuzzy feelings most of us are looking for, eh?)

Not for me.

With the recent launch of the Wells Fargo Online® free tool My Spending Report with Budget Watch, planning and tracking my budget has made me feel more empowered over my money than ever before!

We don't normally pitch Wells Fargo products or services here on the blog, but seriously, it's great! The new online tool tracks and categorizes my deposits and spending for me, and enables me to easily set up a personalized budget that fits my needs.

I may not — and don't — always like what I see. As a recent graduate whose student loan repayment has just kicked in, it's difficult to see the occasional gaps between what I'm bringing in and what I'm spending.

But here's the thing: At least I KNOW what the gaps are, so I can take the steps to bridge them — whether it's talking to a banker, my parents, or a student loan representative. I can be proactive about my finances, and I feel confident that I am taking actions to build the future that I envision for myself.

Empowered. Proactive. Confident.

Now those are feelings I like!

Give it a try, and let me know what you think!

Barbara

Staci's post about investing in education got me thinking: What other ways can folks invest in themselves?

Education is the obvious investment for this community to talk about. By gaining knowledge in a specific field you make yourself more marketable. Plus, higher education can mean higher salaries – a definite benefit to the initial investment. Here are some other ways you might consider investing in yourself during 2009 and beyond:

1. Additional education: Wait, didn't we just talk about that? Yes, but it isn't just those two- and four-year degrees that are an investment. You can also invest in yourself by taking a class here and there to boost a certain skill set, like increasing your computer efficiency or learning a foreign language. And don't forget free seminars—they're great because you're investing in yourself without paying for it!
2. Savings: Pay yourself first. This concept (to allocate money to savings before making other purchases) is a great investment. Whether you're saving for a goal or saving for emergencies , by remembering to set aside part of your income each month can really add up. You can even save automatically.
3. Health: A popular New Year's resolution  is to eat healthier or get into shape. That's a good investment choice, resolvers! Staying healthy means less chances of injury or sickness and, chances are, less medical bills. However, remember Staci's recommendation to make your resolutions realistic. Eat out one less time a week. Take the stairs instead of using an elevator. Whatever you feel you can stick with.
4. Retirement: To round out the possible investments, how about a traditional investment? We're talking IRAs and 401ks, folks. Even though retirement is a long way off for most of you readers, it's never too soon to start planning for it. The earlier you begin investing, the more you have to show for it once the time comes to retire. More time = more money. 

How else do you plan to invest in yourself this year?

Staci

Last week Alysa commented on my "Realistic resolutions" post, discussing the return on investment on college educations:

Education is the number one priority of everyone. Everyone aims to get a degree because that will definitely helps everyone to earn extra money. As more Americans try to figure out ways to save extra money, many people are asking: Is private college worth it? SmartMoney did a study that shows people who pay tuition and fees at private colleges don't see a higher return on their investment, financially speaking. In fact, looking strictly at the initial cost of getting a degree and the salaries and extra money that graduates earn, Ivy Leaguers see a lower return on investments.

Our comment guidelines prevented us from including the link about the SmartMoney study , but I was intrigued about the concept offered here: quantifying the long-term value of college education. Do you get a better "bang for your buck" by choosing a private college over a public one, or vice versa?

I work in marketing, so often I'm considering the potential rate of return  when developing a campaign. But I also have to consider the intangibles — benefits that you can't necessarily see, or touch, or spend. Things like financial education components or brand awareness, which could have an impact in the future.

The same intangibles may come into play when you're making a college choice. Sure, you want to get a solid education, pay a fair value for it, and know what your earning power will be once you graduate.  But things like geography, religious affiliation, professor/student ratio, and social group involvement all can give you value over time.

Because — and I know you might be surprised to hear a bank employee say this — money isn't everything, right?

What sort of return on investment do you expect from your college education? And does public or private make a difference?

Barbara

Caroline has already gone over some details of the FAFSA for beginners, but what about those of you who filed a FAFSA (Free Application For Federal Student Aid)  last year?

You need to complete a FAFSA every year you're in school, even if your financial situation hasn't changed. Don't worry — renewing your FAFSA takes much less time than the initial application.

The Department of Education will send you a Renewal Application or a reminder of your PIN (Personal Identification Number) to apply online, and you may also get a reminder from your school. However, you don't have to wait for either notification to apply. If you need a reminder of your PIN, just head to the PIN Website. 

And while it's best to file your taxes early to have the correct information, you don't have to wait. Use December pay stubs to estimate income for the year. You'll have the opportunity to correct your application if needed. Plus, applying earlier ensures you meet your deadlines  (some aid is first come, first served).

If your situation has changed — like a dramatic shift in your income, a divorce, or a parent's job loss — you may want to talk with your financial aid office about how it could affect your financial aid award. They'll be able to walk you through what may be different this year.

Once you've applied for federal aid, keep on applying. Seek free money like scholarships and grants.  Even though you may receive enough financial aid to cover your costs, you don't have to accept everything you are offered. Some aid, like unsubsidized Federal Stafford Loans, will need to be repaid with interest — so the more funding you find that doesn't have to be repaid, the better!

Caroline

If you're a senior in high school and hoping to get financial aid for college, start the New Year off right and make it a priority to get your FAFSA  completed in January.

The FAFSA (Free Application for Federal Student Aid) is your first step in securing money for college, including grants and loans. The FAFSA is used to apply for other forms of aid, such as those from the state, and those deadlines  vary, so it's in your best interest to get the FAFSA completed as soon as possible.

We recommend that you fill out the FAFSA even if you don't think you'll qualify for aid. Unsubsidized federal student loans are not based on financial need, so almost everyone qualifies for these loans.

It's probably easiest to complete the FAFSA online and sign it electronically using a PIN . However, if you prefer, you can get a paper FAFSA from your high school guidance counselor.

When you're getting ready to fill out the FAFSA, plan ahead so you have all the right documents  ready. Among the documents you'll need are your and your parents 2008 tax documents — an incentive to get those completed as soon as possible as well!

Be prepared to spend about two hours completing the application this first time. In future years, it won't take as long. If you start the application online, you don't have to complete it all at once. You can save your work and return to it later if need be.

Got any questions about financial aid? Ask us!

Staci

Happy 2009! Have you made any New Year's resolutions? 

I'm not a particularly successful resolution-keeper. Last year, I vowed to eat healthier, and for six weeks it was nothing but oatmeal for breakfast, salads for lunch, and Lean Cuisine®  for dinner. By the time Valentine's Day rolled around, I felt so deprived that I consumed a two-pound box of See's Candies®  in one sitting.

All bets — and subsequently, all resolutions — were off.

Looking back on it, I know my resolution was too general — not to mention highly unrealistic! I'm guessing that many resolution-makers find themselves in similar situations.

Depending on what stage you are in your student life — soon-to-be-student, current student, recent graduate — here are a couple of specific, achievable New Year's resolutions you could adopt in 2009:

1. Apply for at least one scholarship. Remember, free money for college means less money you'll have to borrow, and plenty of scholarships are out there for those willing to do a little work. Find one that's right for you by checking with your high school guidance counselor, your college financial aid office, your employer (or your parents' employer), or a scholarship search.

2. Before you apply, read the fine print. Know exactly what you're getting into before you sign a credit card application or a student loan promissory note, because your signature indicates that you agree to the terms and conditions. Pay attention to interest rates, fees, grace periods, and repayment periods. If you don't understand anything, ask — before you sign.

3. Make an extra student loan payment. Student loans don't have prepayment penalties. At least once this year, scrounge up enough cash to throw an extra $50 at one of your student loans, preferably the one with the highest interest rate. Just be sure to communicate with your lender and let them know exactly which loan you want the extra payment applied to.

My one resolution for 2009? Not to eat an entire box of See's Candies in one sitting. Sounds pretty doable, right?