Tuesday, May 24, 2011

Podcast #6 Tips and Tricks for Students and Parents When Paying for College


Jim and Andrew are together again for next installment of the Financial Tech Podcast!  Jim just had a child graduate from high school – for many people this means college is next.  So how do you pay for it?

We have blogged about this back in February so check that out.

Andrew quizzes Jim who is going through it right now.
What has has experience been?  How was the big bad FAFSA – done online www.fafsa.ed.edu.  Were you able to find aid for all of the cost of Government loans, Grants, Scholarships, Private loans and out of pocket fundsFAFSA: Free Application for Federal Student Aid

What was the process like for Jim? Did he encourage his kids to work through school, did he try and cover most expenses, or did he lay the whole responsibility on the student? Remember there is no wrong answer

When you graduate, what are the steps to start paying them back?  Contact your servicer!

Create a list of all the loans you have out there include: Lender, Servicer, Address, Payoff amount, and interest rate find this at www.NSLDS.ed.edu National student loan data system. 

Look into consolidating with the Federal Direct program http://loanconsolidation.ed.gov.  Do the math, what makes sense for you.

New great website: www.justthrive.com

Thursday, May 12, 2011

The Cattle to Back Up the Big Hat

We all know the type; a big house, luxury cars, a sports boat, and all of the other trappings that come along with “living the dream”. If you are anything like me, the first question I wonder to myself is, what do you do that you can afford all of this stuff? The upkeep alone must cost a fortune! There is also a good follow up question that I have starting wondering as well: How much did you have to borrow to acquire all that stuff!?

Tom Stanley, author of the book The Millionaire Next Door, has a great expression for those folks out there who have nice stuff with a bunch of debt attached to it. He says: they have a “big hat and no cattle”. In the ranching world the traditional display of success is wearing a nice big cowboy hat. But as we all know if you wear a big hat and don’t actually have the “success”, in this case a significant amount of cattle, you are simply a faker.

10 gallon hatI know it sounds harsh, but I think you guys can handle it. Let’s call it what it is. If you are creating a false reality; you are a faker. I would even go so far to say that we all do it to some extent. Whether it is with material possessions or relationships, every once in a while we fake it.

I have had the opportunity to work with many individuals in our business, and I have seen the best of the best faking it with their finances. They tend to round their total debt down and income up. These folks spend generously, borrow quickly, and live for the next paycheck so they can cover their minimum credit card payments. If you look in from the outside, it looks like they have all their ducks in a row. They are living an ideal life and wear a “Big Hat”. In reality, when you dig into their financial situation they are treading water and the waves are getting higher and higher. It doesn’t matter how much money they make, it could be $40,000 or $250,000. You can fake it at any level.

I don’t know about you, but I want to have the cattle to back up the big hat.

So how can we stop faking it? I think the first step is to try to identify the areas where we are faking. Do you pick and choose the debt you are including in your mental total? Do you leave out that mortgage debt or those student loans? Do you tend to round up when you think about your salary? What about those leased cars - are you including them in your assets?

It can be a painful exercise but when you wipe away the fog of faking it, reality can push you to action. The next step is to start changing. Try selling some stuff, pay down debt, or put together a budget that you can stick to. Be honest, don’t fake it anymore!

Monday, May 2, 2011

Podcast #5: Listener Questions and Answers!



Andrew Hunt and Jim Collison are back for another episode of the Financial Tech Podcast.  Andrew updates us on what is currently keeping him busy.  We also spend some time discussing the benefits of using Mint.com as well as answer some questions submitted by you, the listener.

To submit your questions, email podcast@theaverageguy.tv

Comments submitted by a listener.

“One of the things I see all the time is when  a new management employee signs up for the stock program, they almost always start at the maximum payroll deduction we allow of 10%.  Then a few months later, sometimes even sooner, they drop out of the program and sell out the balance in their account.  In comparison, the few that sign up for smaller amounts, say 5%, tend to stay in the program longer and actually build up a decent balance.”

“I have run into many employees who when I show them how much they need to save to reach their goal, say that is too much and therefore they will not save anything.  Of course that makes no sense at all, but the moral of the story is to start saving with the maximum you can afford and then increase it over time.”

“If your employer has any kind of matching, like we do, you should make sure you are investing enough at work to max out this matching.”

“You guys mentioned Mint.  I have never used that, but as a long time Quicken user (from the DOS days), is Mint something I should consider and why?”

Other questions that have been submitted:

What is the best/most effective way to pay off a credit card?

What are your thoughts on loan consolidation? How does it work?

What is the best way to start investing? Can you explain what a 401(k) is and how It works

Intro and Exit Music from “Motion” by Adelaide.  Hear more great tunes at  Listentoadelaide.com