What to do about debt.
If you’re in debt, you’re not alone. Americans owe a staggering $1.2 trillion on their credit cards. How do you get the upper hand with credit card debt? Here are some tips for squeezing out an extra payment each month.
—Use your savings.
With savings accounts yielding only from 2.5 to 3 percent, and credit cards charging 18 percent, you’re actually losing money by not applying savings toward debt retirement.
—Track your expenses.
Chip Krueger, president of Fortress Financial in Wheaton, Illinois, suggests keeping a daily log of everything you spend, no matter how insignificant, for at least a month. “You can save $1 a day just by ordering water instead of a Coke at lunch. That’s $30 a month.”
—Make nickel-and-dime savings.
Set a timer when making long-distance calls, find a bank that offers free checking, join a food co-op, refinance your mortgage to a lower interest rate, drop cable for a year.
—Pay off smaller amounts first.
If you can’t consolidate your debt, pay off your smallest debt first. Then, when that’s paid off, apply what you were paying to your smallest debt to your next smallest one, and so on.
—Seek counsel.
Consumer Credit Counseling Service (800-388-CCCS) and other groups offer advice.
What to do about college tuition.
“It’s unrealistic to expect to pay for your children’s education,” says Gene Frost, ceo of Hosts (Helping One Student To Succeed) Corporation, an educational firm. “It can’t be done-nor should it.” If you want to help pay for your child’s education, set a goal for the amount you plan to contribute. T. Rowe Price (800-638-5660) and Fidelity (800-544-8888) offer free worksheets to help calculate the price of future education. Online, you can use Money magazine’s college calculator (http://www.moneymag.com). Here are a few alternatives to your footing the bill. Your student can:
—Attend a junior/community college.
Most four-year institutions accept course credit from these schools for required classes, and tuition is usually half the price.
—Get a scholarship.
An estimated $1.25 billion in scholarships are awarded each year. You can research them through the FinAid Website (www.finaid.org), which offers links to 42 scholarship databases.
—Take out loans.
Student loans offer low interest rates and can be consolidated or deferred until after college. Contact the U.S. Dept. of Education (800-433-3243) for information about Stafford or plus, two low-cost loans.
—Postpone schooling.
A student can work full-time saving money, then attend school in a year or two. Many schools offer lower tuition rates for non-traditional students (ages 25 and over).
What to do about retirement.
If you have to choose between saving for your child’s college education and your retirement, Penelope Wang, Money magazine writer, advocates that you choose your retirement: “You’re solely responsible for financing your retirement, while your child will have other options to pay for college, including scholarships, loans, and jobs.” What’s more, she says, because most colleges don’t include retirement plan assets in calculating how much you can afford to pay, “your [403(b)] or IRA stash usually won’t hurt your chances of receiving need-based financial aid.” So, how to get started?
—Start small.
Many tax-deferred retirement accounts can be opened for as little as $1. Once the plan is set up, the church can pay directly into the account.
—Set up a mutual fund.
Some will accept as low as $25 a month. Many will waive their minimum initial investment requirements if you agree to contribute monthly.
—Put away $100 a month.
Consumer counseling expert Teresa Rosado suggests, “If you can save $100 a month, at the end of the year you’ll have more than $1,000 to invest in a 403(b) or a CD.”
—Meet with a financial planner.
Those who seek help are likely to reap greater financial benefits than those who invest for themselves.
Ginger E. McFarland editorial coordinator, Leadership
1997 by Christianity Today/Leadership Journal.
