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5 Tips for Getting a College Degree Without Accumulating Lots of Debt

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student debt

To make more money over your lifetime, it usually helps to have a degree from an accredited university. This can not only make it easier to land your first job, but also to move up the ranks and earn more as the years go by.

However, while spending money on education is a worthwhile investment, you do need to avoid coming out of university with serious amounts of debt that you’ll never be able to pay off, or that will take you a large amount of your career to get on top of. To help you on your way, read on for five key tips you can follow today to get a college degree without lots of debt.

Study Online

For starters, it pays to think about choosing a degree offered via online study. There are lots of courses available this way nowadays, from online MBAs with no GMAT required, to degrees in marketing, arts, education, engineering, and most other areas of interest.

When you opt for an online course rather than one that requires you to go to a campus each week, you can save money, and reduce your debt, in multiple ways. For example, rather than having to move away from home to attend university, you can study from anywhere, which means you can stay at home for longer and save money on costs such as accommodation, food, laundry, and utilities.

Another benefit of online programs is that their flexibility means you can still work in a job while you study. You don’t have to be on campus on specific days or for set times, and can instead work your studies around your own, personal schedule. This, in turn, means you can earn an income as you learn, and avoid having to rack up so much debt.

Choose the Best Course and University for Your Needs

Next, keep in mind that different universities can charge very different levels of fees for attending their institutions. As such, it can be worthwhile choosing a more affordable college. Most will be accredited in just the same ways, and will all provide you with the same kinds of opportunities (although you do need to do your research on this front to make sure your choice is adequate).

While you might like the idea of attending a prestigious university that’s well-known around the world, it’s quite possible your job prospects won’t actually be any better from choosing a more costly one. This is something to weigh up when making your decision.

Furthermore, be as sure as you can about the particular type of course you’re choosing too. If you want to avoid racking up huge debt, try to pick the best course for your needs the first time around. Instead of enrolling in a program just because your family pressure you to do so, or because you think it’s a “safe” option, find something you’re actually interested in. This will help you complete the whole degree, rather than wasting time and money on classes in the wrong program, and then having to start all over again with a new one.

Try to Reduce the Total Amount of Time You Spend Studying

studentdebt

It’s also helpful if you look for ways to reduce your overall time spent studying. Each month you’re paying for courses, accommodation, books and other expenses, and not out in the workforce, adds up. Think about opting for a combined degree, rather than finishing one and then starting on a second one (this can often save at least a year); or choose an accelerated program. You can also apply to receive college credit for prior knowledge, or gain extra credits for taking additional classes outside of normal term hours.

Find Financial Support Options

To reduce the amount of debt you walk out of university with, you should investigate financial support options too. There are numerous national, state, and local government scholarships, grants and other funding which can be applied for, as well as programs run by private organizations and colleges to support local students. Most of these types of funds never have to be repaid, and they can cover various expenses like tuition, books, and board.

Be Frugal

Lastly, while you’re at college, look for ways to be frugal with your spending too. Try to find the most affordable accommodation possible (this might mean boarding with numerous roommates), and avoid spending hundreds of dollars on partying, new clothing, and other unnecessary expenses. Consider cooking for yourself rather than eating out all the time; and save money by purchasing second-hand textbooks, instead of new ones.

Filed Under: Make Money

Why you should get started with investing

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investing

 

Investing has never been easier. You don’t need to be wealthy and you don’t need to have any prior experience. There are more options and more choices than at any other point in time. So just how should you start investing?

Build Up that Starting Capital

You need to begin with some starting capital. These days you get started with just a few hundreds. Try to save up as much as you can through building up a savings plan. Start a savings account and wait until you have at least a little extra money on top of an emergency fund. You don’t want to invest it all, get a market low, and exit at a loss.

Find a Brokerage Account

A brokerage account is your main source for buying everything from shares to bonds to funds. Many brokers require you to have thousands of dollars to get started with. But these days, there are brokers specially geared towards those with low starting capital.

They’re different because they don’t offer expensive financial managers or high management fees. Be aware that you’ll have minimal help along the way, however.

Go here to compare the best online brokerage accounts and find the one that best suits your needs.

Know What You Want to Invest In

One of the biggest mistakes people make is to pick a random company or fund and invest in it. This is a sure-fire way of losing your money. You need to educate yourself as to what a company does and what’s likely to influence the value of their shares.

You can do this through the company’s financial information. You don’t need to be an expert in how they do things, just what their financial health looks like. All this information can be found online for free. Don’t fall for the people who demand lots of money for detailed reports.

When you first get started with investing, you should opt for low-risk investments such as index funds through a robo-advisor. Here is a review of Motif Investing where you can get a $150 bonus to sign up.

Use Dividends to Up Your Returns

Remember that investing is a long-term endeavor. When you make your investments, you should think about the impact of dividends. If you have 50 shares in a company and they deliver a dividend of $1 every year that means you can expect to get $50 for doing absolutely nothing. And this is on top of the increasing value of your shares.

The best way to handle dividends is to instruct your broker to automatically reinvest that money. Your returns will increase every single year if you do that.

Don’t Invest Money You Can’t Lose

It’s always nice to be positive about investing, but the reality is you can lose money from it. That’s why first-time investors should stick to low-risk investments. For example, you should invest in an established company and not in that hot new startup . Yes, the returns are lower, but you’re likely to get back at least what you put in.

Have a look at long-term performance when determining whether an investment is a worthy one.

Go Now!

The true value of investing is in compounding. For compounding to work effectively you need to get started early. The longer you procrastinate, the more time it’s going to take to reach your target figure. Those who start investing in their 20s can make millions through low-risk investments, but someone starting with the same strategy in their 50s will barely earn enough to cover a few years worth of expenses.

It’s Easier Than You Think

The message to take away from this guide is that investing is easier than you think. You don’t need a lot of money, a lot of time, or a lot of expertise. Some basic research is all that’s needed to start making your initial investments and securing you and your family’s future.

Are you ready to make the investment in your financial future?

Filed Under: Make Money Tagged With: investing

Stop Predicting The Future, You’re Terrible At It!

By Frugaling 7 Comments

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Coffee and Journaling

We humans are really good at convincing ourselves of our “upper hand” — that we can see the “truth” when others cannot. We repeat stories of winning hands, the right stocks, and big paydays with our closest friends. Examples and supposed successes of prediction are trumpeted in our skewed media landscape, too.

For instance, CNBC and other financial news networks feature stock chartists who create lavish drawings of candlesticks, moving averages, and support levels. Lines are drawn and circles made on fancy touchscreens. When a stock fails to perform as predicted, it’s written off as a statistical anomaly. And nobody returns to the err. The reality is that any stock-picking strategy is fallible because the herd knows about it (or soon will). These technical mavens’ moves are already priced into stocks.

Scientists can also be poor predictors of future technology and advancement. As an astrophysicist, Neil deGrasse Tyson, explains, “…what happens is, if you try to go too far into the future, there is no way you are going to predict the cross-pollination of ideas and fields that produce things that are not extrapolations of anything going on at that time.” He exemplifies this technological development with the iPhone, as it wouldn’t have been created without GPS satellites, cell towers, and the commercialization of space. Variables needed to coalesce and come together to make the idea possible. Predicting each of these individual components is nearly impossible.

Predictive ability chart
Variability shifts from 0 to ∞ across time. From short to long-term periods, our ability to predict what’ll happen next suffers. Also, what do you think of my chart-drawing skills? 😉

Psychologists are another fallible group that’s highlighted for near-telepathic powers. Popular culture seems to hold high esteem for their predictive abilities. They are depicted as readers and savants of the mind. Watch what you’re thinking, they might just read your body language, thoughts, and emotions! The reality is that psychologists aren’t fantastic at predicting behavior; slightly better than the lay public, but that’s not saying much. At their best, psychologists center on past behaviors as predictors of future behavior. Much like the stock chartist or scientist, psychological/behavioral prediction is sort of like analyzing an historical stock market chart and looking for patterns.

In failing to see our losses and failures of prediction, we risk creating confirmation biases. These psychological tricks of the mind make us think we are right — that our hypotheses have time and time again come true. We repress our failures in favor of successes, but in doing so, jeopardize our ability to accurately plan for the future. That’s when we stand to lose boatloads of money.

The fact is, we are fallible creatures. Seemingly, we are basically limited by the amount of knowledge available on the world. At a long enough timeline, nearly everyone fails.

By accounting for predictive limits, we can protect and preserve our wallets. Now, it’s all about what we do with this realization. These are five fast rules for managing your money without genius predictions:

1. Budget based on present day information

The present day includes your current income and expenditures. If you’re budgeting for a car, Christmas presents, or anything else, your budget should account for today’s income — not chances for the future. This will always keep you within limits. Unfortunately, many people use pay raises and predicted promotions to account for future purchases. This mentality can lead to excess debt and complicated repayment plans. Avoid the drama by budgeting based on today’s information — not what tomorrow might be like.

2. Be careful with retirement predictions

Companies like Betterment and Wealthfront have some sexy chartists! They beautifully illustrate the capability of compounding interest and continued investments in average performing stock markets. However, this tends to smooth over the swings of market swings and does not account for the unexpected. In fact, Betterment has a tool that attempts to predict with 50/50 accuracy how your money will perform over a set period, but it’s better to make consistent investments and look at the principal — not the predicted total.

3. Build up emergency funds

From a car accident to strange toenail fungus, you never know when you’ll need to pay for some extra costs. We cannot predict when an accident or the end of a job could occur. To account for our predictive inability, let’s build emergency funds. Most financial experts suggest people maintain about 3 months of solid income, which would cover expenses while you search for a new job or deal with an accident.

4. Avoid following interest rates

Tens of “online banks” are propping up with teaser interest rates. Instead of chasing the next biggest thing, stick with the consistent. For example, Ally Bank has earned my trust and respect after years of solid performance and service. This online bank doesn’t have wacky fees, gives me free checks, and pays a solid interest rate in both checking and savings. When you find a solid, long-term rate, stick with the bank. It pays to find a good company and then worry about making more income elsewhere — not following the next greatest interest rate.

5. Invest regularly – don’t chase bottoms

This tip comes from one of my hardest investing lessons. When it comes to putting money in the stock market, don’t call bottoms. Humans inability to predict is never worse than right here. If you think the market has crashed, you’ll likely be proven wrong. The stock market has tons of false bottoms and tops. Prediction isn’t generally your friend. Instead, I use average investment amounts and make regular investments. When the market suffers, I tend to invest more. But avoid the chase and focus on making consistent investments.

Filed Under: Make Money, Save Money Tagged With: bank accounts, Checking, cnbc, future, Investments, management, money, Neil deGrasse Tyson, Prediction, Psychology, savings, science

How Much Money Can You Make Driving For Uber?

By Frugaling 5 Comments

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How Much Money Can You Make Driving For Uber? Now that Uber is here, I can't help but think: Between taxes, fees, depreciation, and other driving costs, can you actually make any money driving for Uber?
A couple weeks ago, Iowa City entered the 21st century. The City Council, after much hemming and hawing, decided to approve Uber within city limits. In this booming college town known for some of the hardest partiers in the country, ridesharing services have been sorely missed. College students have needed to pay for expensive cabs, take circuitous buses, or stumble home. We’ve really missed the Uber option.

I’ve been waiting for this moment for years. I’ve been fantasizing about it. I would roll up in my Bentley, glide the window down, and chuck a half-smoked cigarette onto the curb. I’d peer over my Secret Service-style aviators and say, “Someone order an Uber?” Then, the fantasy would evanesce — including the Bentley, the smoking, and the aviators.

Now that Uber is here, I can’t help but think: Between taxes, fees, depreciation, and other driving costs, can you actually make any money driving for Uber?

In many ways, Uber is the perfect side income. It subsidizes the ownership and use of a car, pays for hours otherwise uncovered by other opportunities to make money, and is a fun, social method to make money.

Despite the many positives, Uber isn’t some sort of utopia. Passengers smoke cigarettes, vape, leave trash, and can be altogether rude — and that was just my first four rides. People can miss your phone calls, texts, and app notifications of your arrival, too — or cancel the request after a couple minutes of driving towards them.

This morning I had an extra 40 minutes and decided to “go online.” Within the Uber Partner app, I waited about 45 seconds and was called to pick up someone. That was quick, I thought. About 25 minutes later, after the Uber mafia had taken their cut (25% of every fare), I walked away with $9.17.

The couple I picked up were out-of-towners whose car had broken down in the city. They needed a lift to a dealership for auto repair. Being there to help them seemed important — a win-win for us both.

Searching for the real Uber income statistics

Plenty of news articles have noted Uber drivers’ incomes and attempted to get a net income, but it’s challenging to see how they do their math. I figured I’d do some math right here, and see what I found for both of our sakes.

Let’s estimate $1,000 for 2016 earnings. I haven’t made that much — yet — but intend to keep driving when fares surge due to increased demand. Maybe I’ll get there?

IRS Logo
Ah! The IRS!!!

At Uber, you’re considered an independent contractor. You are your own business in many ways. Many of the company’s risks and costs are displaced onto their drivers. You have to pay for medical and car insurance, and if you get in an accident, it’s on you.

Thus, the $1000 earned is called self-employment income. The IRS considers self-employment income for a couple special taxes: Social Security and Medicare. When Uber pays you — or other drivers — it doesn’t take out any money for income taxes. Thus, you have to give some of the money back to the government. Importantly, these taxes are only owed on earnings over $400.

Calculate your self-employment taxes

Currently, the self-employment tax rate is 15.3%. But like anything the IRS publishes, it’s complicated. Only 92.35% of income is considered taxable. Why? Again, call up the IRS — I’ve got no clue. Here’s what the math looks so far with the taxable income consideration and self-employment tax:

$1,000 total Uber earnings
x.9235 taxable income conversion
_____
$923.5 total taxable income
x.1530 self-employment tax
_____
$141.30 total taxes owed

In review, by calculating this initial taxation, I’m left with $1,000 minus $141.30. After all these calculations I’d be left with $858.70. Here’s where people tend to stop and say, “Hey, I think driving for Uber is worth it!”

Calculate your tax deductions

But wait a moment, okay? These initial calculation fail to account for business expenses and tax deductions. Tax deductions are usually expenses incurred in the process of making additional income. Over the last few weeks, I’ve calculated a few deductions because of the business.

Here are some quick examples of things I’ll be watching out for:

  • Tax deductible portion of self-employment taxes (50% of taxed self-employment income)
  • Mileage deduction ($0.54 per mile driven for business)
  • Parking (e.g., $5 thus far)

Meticulous drivers out there should try to keep track of all mileage driven for Uber. Pay close attention to every mile, as the IRS provides a $0.54 standard tax deduction per mile. What I’ve noticed is about a 40% per dollar to mile calculation on average. In Iowa City, which might differ compared to your local city, I’m out in the boonies for a long drive and then back into the city area for short trips. For the sake of this estimate, I’ll say $1,000 in income equates to 400 miles driven.

Here are my tax deductions:

400 miles driven
x.54 per mile deduction
_____
$216 tax deduction for standard mileage driven
+$70.65 deduction for self-employment tax (50% of taxes)
_____
$286.65 total tax deductions

Importantly, tax deductions are not money put directly in your pocket. They essentially are a method of reducing your tax burden on annual income. For instance, if I made $25,000 in combined income in 2016 — some of it receiving income taxes and others from self-employment — that would put me in the 15% tax bracket. With $286.65 in deductions, the IRS says I made only made $24,713.35 in adjusted gross income.

Now, here’s why I hate calculating taxes by hand…

Without deductions:
$25,000 combined annual income
x.15 tax bracket
_____
$3,750 in taxes

With deductions:
$25,000 combined annual income
-$286.65 total tax deductions
x.15 tax bracket
_____
$3,707 in taxes

Hold on, let me take a breather — this is a lot of math. Phew! Subtract $3,707 from $3,750, and you get $43 from the tax deductions. $43 that the federal government is essentially giving back to you because you drove for Uber.

Calculate your driving costs

You might’ve thought we were done. You might’ve thought, “Okay, now we can add and subtract — bada bing bada boom!”

You’d be wrong.

Before we can calculate a realistic number earned, we need to account for depreciation, registration, maintenance, and other fees associated with operating and owning a car. Driving all those miles, while accounted for in the IRS mileage deduction, still hits your wallet. Simply put, you still incur costs to driving that vehicle all around town.

AAA to the rescue!The best driving statistics come from AAA. Every year they publish their driving cost statistics, while accounting for gasoline, insurance, and other variable rates from year to year.

Based on a small sedan (that’s what I drive), driven about 15,000 miles per year, equates to 43.9 cents per mile in costs. Driving for school, work, or even Uber on the side costs the same amount: 43.9 cents per mile.

Here’s an estimate of driving costs:

$1000 income
x.40 rough estimate of dollars to miles
_____
400 miles driven
x.439 cents per mile
_____
$175.60 total driving cost based on AAA statistics

The final, Uber calculation and results

Starting from $1,000 in earnings, I lost some to self-employment taxes (-$141.30). I was fortunately able to reclaim some money through tax deductions ($43). But before I could make the final judgment, I calculated the driving costs (-$175.60).

In total, after all is said and done, $1,000 becomes $683.10 in take-home pay. And by “take-home,” I mean no one can touch it at this point. That’s after everything is paid off.

Throughout this article, I’ve made a number of calculations. With more time and statistics, I’d be able to report more accurate estimates. For now, the statistic equals 70% of what you see is what you get.

Every fare, surge, and ride time. Every cool conversation. and every drunk college student — you’ll make about 70 cents on every dollar earned.

I forgot one remaining variable: time. When you’re staring at 70 cents per dollar, you might wonder if Uber driving is worth your time. While an important question, this is what I fall back on: the money and market for ridesharing didn’t exist prior to Uber’s arrival. There were fewer ways to monetize free/down time. Now, every few moment or time off can be an opportunity to earn.

If you’re interested in becoming an Uber Partner, use my referral to gain an extra $100 to start. And if you’re an Uber passenger or want to be one, use this referral link to gain a fe ride!

There are many caveats and exceptions, it’s hard to clarify them all in this article. If you’ve driven for Uber, or have experience as a passenger, or are thinking about driving, let me know in the comments below! I’d love to include any additional insight you have into this article, as well.

Filed Under: Make Money Tagged With: AAA, car, college students, drive, driving, income taxes, Lyft, Miles, ridesharing, Self-Employment, tax deduction, taxes, Uber

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