How to Budget for the big things, use what I call Big Thing Budgeting.
USE BIG THING BUDGETING TO GET OUT OF A MOUNTAIN DEBT: CREDIT CARDS, MEDICAL BILLS, PREDATORY LENDING
For Individuals, Couples and Small Businesses, you can get out of a mountain of debt if you focus like a laser beam on getting debt-free. It is not easy, but it is possible.
It will first require that you stop buying anything you don’t need. Get rid of the “I Got to Have it Syndrome”.
Start by keeping a log and inventory of your buying habits. Then slowly start to purge spending you don’t need to do. When you take an inventory of your buying habits, you will be surprised at the amount of unnecessary buying you do.
Second, you must start paying off one thing at a time in a big way but pay on other bills at the same time. Start with the smaller bills, pay extra to those bills with the most you can afford, then pay a small amount extra to principle to your other bills — at the same time.
Big Thing Budgeting Shaves Thousands Off Your Budget -Lois
You will see bills drop off one by one. Now, for the larger bills, you may have to start selling things you don’t need. From cars to yard sells, is where you can sell things you don’t need.
BUDGET TO BUY A CAR
Save money for your next car while your current car is in good shape. Then, research the cost of the car you are interested in. Set a budget, then go through the internet and your local newspaper to see prices and figure out monthly payments, if you plan to finance. If you don’t plan to finance, you will see how much you need to save and for how long, to pay cash.
Consider buying a certified used car at a new car dealer or a one-year-old car from a new car rental agency. Make sure you know the new car prices and options on a new car so you can compare it to a new-used car with options.
Use Kelly blue book or kbb.com, to check for cars that are good for buying as used cars. You can also check for general pricing of new and used cars.
BUDGET TO BUY A HOME
Home buying requires doing a lot of research to discover 1. how much you can afford to pay for a home, 2. how to find a good mortgage company, bank, or credit union. The best place to start is your local credit union or bank due to the savings in fees, cost and time. 3. How to buy a quality home, and 4. How to get it properly inspected – some inspectors work for the realtors, so many won’t tell you when you the home you are interested in has major problems.
Therefore, it is best to contact tradesmen directly, like electricians, plumbers, roofers, and carpenters to get a fair assessment of possible home repairs. Most of them will do an inspection in their specific area for a small fee.
Use at least 2 of each kind, so you can get a consensus as to what is wrong. You can then budget for the down payment and escrow cost to purchase your next home.
Therefore, it is best to contact tradesmen directly, like electricians, plumbers, roofers, and carpenters to get a fair assessment of possible home repairs.
There is a Right Way and a Wrong Way to Buy Cars, Homes, and Education -Lois
Most of them will do an inspection in their specific area for a small fee. Use at least 2 of each kind, so you can get a consensus as to what is wrong. You can then budget for the down payment and escrow cost to purchase your next home.
Make sure you know exactly what your payment will be in regards to your loan. What will your payment be with Principle+Interest+Insurance+Taxes? You can also do mockups of an imaginary home to calculate what you should pay.
Ask friends or family what they pay for insurance and taxes for a home you are interested in. Taxes vary from state to state, you can also search your state websites. In some states, taxes go up as home values increase, but in others, the taxes stay the same.
BUDGET FOR VACATION
Don’t put your vacation on a credit card when you can save a little all year and pay cash for your vacation. It is as simple as that. Budget in transportation, food, lodging, tours, and shopping.
If you want to go on the cheap, vacation where you have family members or friends who live in or nearby vacation spot. Pay your family member to stay with them, or cover their restaurant costs and meals. Do the math, and see what works out.
BUDGET FOR COLLEGE
Some people are obsessed with the “best college syndrome” due to the college propaganda machine.
If you have unlimited money, you can go where you want. But, if you must depend on financial aid, which usually includes substantial student loans, that is not an option. If there is one thing you want to keep as low as possible, is student loans.
Since there is 1. never a guarantee you will get a job in your field or keep it, 2. There is not a guarantee you will get a job that pays in accordance with your student loan 3. you can’t file bankruptcy on student loans.
Because of these items 1-3, you should keep student loans as low as humanly possible. That means avoiding high priced schools and high-priced areas to live in for college. The least expensive schools are community colleges, and state colleges and universities.
There are some colleges that are priced like state colleges and universities, but you must do your homework and compare all cost. Private colleges and universities are unreasonably high cost and they have a lot of hidden costs, which makes the total difficult to calculate.
The for-profit schools offer quick learning and high prices. Today, some of them are now calling themselves non-profit due to the unpopularity of the for-profit model.
Private colleges and universities are unreasonably high cost and they have a lot of hidden costs, which makes the total difficult to calculate. The for-profit schools offer quick learning and high prices. Today, some of them are now calling themselves non-profit due to the unpopularity of the for-profit model.
The for-profit schools do massive advertising on television and the internet, this is your main clue. All colleges and universities have their cost listed on their websites. Make sure you find these costs and know exactly what you are getting into before you consider any college.
Your total student loan balance should not surpass your first years’ salary. Example: If you plan to be a teacher and your first year’s income is $25,000, your student loan should be capped at $20,000. Understand the details of student loans with the eBook on student loans.
BUDGET TO PAY OFF STUDENT LOANS
There ae people all over Pinterest bragging that they paid off $60,000 of student loans in 5 years. This is possible due to re-amortization. When a loan is amortized to 20 years by your loan servicer, you can amortize it to 10 years by paying extra to principle every month.
If you have a 10-year loan, you can knock it down to 5 years. You can live tight, give up the finer things in life, and knock down those years with extra payment to principle.
You have to check your statements to make sure the extra payment is added to principle and you have to state that on your check, they will always try to put the extra to interest, even though it makes no sense. Big Thing Budgeting is essential when it comes to student loans, if not done correctly, these loans can follow you to your grave.
You have to check your statements to make sure the extra payment is added to principle and you have to state that on your check, they will always try to put the extra to interest, even though it makes no sense. Big Thing Budgeting is essential when it comes to student loans, if not done correctly, these loans can follow you to your grave. Learn more on my instagram.
Understand the way predatory lending works such as car title loans and payday loans. Why are many cars confiscated with a car title loan? Why do payday loan balances go from $500 To $3500?
I would have to write another article for an explanation, but a car title loan can easily double or triple if the money isn’t paid on the date due repeatedly, and a payday loan gets a rollover when the employee does not have the money to repay the loan on time.
Both problems push the balance way up over the top. The most effective way to pay off these loans is to stay away from predatory loans. Using predatory lending is probably the direct opposite of using Big Thing Budgeting, don’t get caught in the predatory lending trap. Predatory lending also includes car title loans, unsubsidized student loans and high interest car loans.
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Lois Center-Shabazz | Course Delta Agency
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Why are banks getting rich and richer off college financial aid and student loan profits? Unfortunately, students are not having the same experience. I keep reading articles stating that student – loan debt average is $26,000.
This appears very low, because whenever I hear a forum on television or radio they suggest most graduates have much higher school loan debt. According to most media projections, the national school loan debt is edging toward a trillion dollars, and may crash soon.
Also, when I speak, I always have several attendees tell me they have a much larger debt than $26,000. The real average seems to be more like $50,000.
If you use a realistic breakdown, including private versus public school, and public schools in the south versus public schools in New York and California; you can reach better averages.
There are 12 major factors I have come up with that will determine how much you will owe after college. If you understand each of these factors before you choose a college, you can keep your school loans to a minimum.
THE 12 FACTORS TO STUDENT LOAN PROFITS:
- The total college costs for the following college items — tuition (in-state & out-of-state), fees, room, board, books, transportation & incidentals.
- The total available for a Pell grant is only $5730. for 2014-2015 school term.
- The total available for a work study grant is limited, but determined by many factors, including
part-time work hours and total financial package.
- For an expensive school, most of your financial aid award will be in loans.
- If you are of low income or moderate income, you may get federal subsidized loans.
- If you are of middle income or high middle income, you may get expensive unsubsidized loans.
- If you go to college in the South versus the North, West or East, prices differ.
- If you go to a public in-state college versus a private college, prices differ.
- If you live at home or on campus.
- Whether you plan to stop at a 4 – year degree or go on to graduate degree.
- Financial aid is limited, no matter what your income — It works best for low or moderate incomes.
- This can leave you with a financial gap in your ability to pay total college costs each year.
You may not be hired for a college level job
Because school loan costs can skyrocket with the misunderstanding or lack of knowledge of the 12 factors above, it is important to understand college costs and the severe limitations of financial aid.
You should research and ask questions about these 12 factors before you decide on a college or university. The research can be found on the colleges websites and by calling the school financial aid office and registrar’s office.
UNDERSTANDING ALL 12 FACTORS ABOVE WILL ASSURE TWO THINGS:
- That you finish college,
- That you finish with a minimum of student loan debt.
- That you will contribute minimally to student loan profits for banks
Below I listed the actual cost of several colleges; this will give you an idea of the differences of cost, and your ability to NOT pay, even if you have financial aid – all of these values are in the ballpark of cost, but only a rough estimate:
A PUBLIC UNIVERSITY IN THE WEST~ $125,000 (IN STATE RESIDENT):
Example; The University of California in 2014:
In State Student — Tuition, fees, room & board, miscellaneous: – 4 years $125,000
Out of State Resident — Tuition, fees, room and board, miscellaneous – 4 years $160,000
Because Pell grants max out at $5730., and work – study grants are limited; a realistic loan balance after graduation could easily be $80,000, bear in mind, this is for in the in-state student.
A PRIVATE UNIVERSITY IN THE WEST~$280,000:
Example; Stanford University:
Tuition, Room & Board, Books, Fees, miscellaneous: ~70,000 per year; 4 years $280,000 total
School loans here could easily total $150,000. – 250,000
A PUBLIC UNIVERSITY IN THE SOUTH~ $94,000 (IN-STATE RESIDENT):
Example; The University of Virginia (In-state student):
In State Tuition, fees, room & board, and miscellaneous –4 years ~ $94,000
Out of State Tuition, fees, room & board, and miscellaneous –4 years ~$200,000
For the in-state student school loans could total $50,000.
A PRIVATE UNIVERSITY IN THE EAST~ $270,000 – $300,000
Example; Harvard University:
Tuition, fees, room & board, and miscellaneous –$68,000–4 years ~ $270,000-$300,000
Harvard claims that if your parents make under $65,000 parents are not required to meet costs or what I call the “gap”. All costs can be satisfied with some form of financial aid. The problem is, if you don’t have a full scholarship — what will your total school loan balance be after graduation? Perhaps $150,000 – not good.
If was hard for me to find the total estimated cost for Stanford and Harvard, it is not something on the front of their websites, the administration does not seem to want to give this information freely, since you may not go further into the sites.
The question is, how far can you get on an average of $26,000 in school loans with these schools? Not far, you would not have nearly enough money to finish. Unfortunately, there are many students who start college and find this out after a year or two; that they can’t get enough financial aid, and are forced to drop out with no degree but they have school loans to pay.
They are told if they can’t come up with the “gap”, or the difference between total financial aid awarded and total cost for the past year, they cannot register for the next year.
THERE IS A WAY TO KEEP YOUR student LOAN profits for banks LOW, AND ATTEND A MAJOR UNIVERSITY:
If you choose to live at home and attend the University of California as an in-state resident, you could keep your school loans within reason, maybe $25,000 if you also qualify for a Pell Grant and Work study. Your parents’ income would have to be very low to qualify.
The other state college in that same area is San Diego State University; it is a bit more affordable, especially if you consider living at home. The academic requirements for incoming freshman for both colleges are very high.
If you made the mistake of choosing a college or university that will leave you strapped with unbearable debt, it is not too late to change to an affordable college after your first or second year.
FINANCIAL AID IS LIMITED
Because financial aid is limited, choosing a school according to cost may not matter how poor you are. Some schools have total cost financial aid packages, but many only give you about 80% of cost in financial aid. This is where you will experience a “gap” in your school account balance after you start.
Because financial aid is limited, if you are poor and dependent on a loan based financial aid package, you are better off going to your local state college or university, and staying at home. Another option is attending your first two years at a junior college, where costs tend to be much more reasonable.
In other words, you are better off going to a public school and leaving with a loan debt of $15,000, then going to a private school and leaving with a loan debt of $80,000. Targeting a low final loan balance is one reason that
cost consideration is crucial.
Poor and middle-income students have the best chance of affordable financial aid, since financial aid is need based. But, they must understand that there is a gap, which is between the maximum award given and the total cost.
Sometimes that gap is as much as $5000 per year in a private school or more and $2500 in a public school. That is a rough estimate, it could be much lower or much higher.
Do a thorough analysis of your college cost, and figure out your gap before you go. Upper middle-income students have a better chance of getting low quality financial aid, such as unsubsidized loans and parent loans — interest is charged to your loan while you are in school.
If you choose the option of not paying interest while in school, it will accumulate and could double your actual loan balance after you graduate.
Student LOANS ARE A BILL AND MAY BE DIFFICULT TO REPAY AFTER GRADUATION, KEEP THESE FACTS IN MIND:
- It is important to plan your studies carefully, get out of college in an optimal amount of time and keep school loan debt as low as possible. There are no guarantees as to income or when you will get a job. The grace period for not paying back your school loans after graduation is very small, like 6 months in most cases.
- It may take a while to find a job, and you want to finish paying your loans off in optimal time so you can buy a good car, buy a home, save for retirement and help your own kids go to college. Protect your credit rating by paying off your school loans in a timely manner.
- There are people who planned poorly, they went to an extremely expensive school or did not finish in due time or went part-time for too many semesters. As a result, they will have school loan balances at the time their kids are going to college.
- Some states also provide financial aid to supplement federal financial aid, others may not, or may only supplement with a small amount.
- Many schools do not cover financial needs 100%, even for the poorest students.
- If you have a high quality guaranteed academic scholarship, (these are rare), it may cover 100% of your costs.
- Students max out of financial aid and are asked to leave school, either after a few years or even after one year.
- There are many student loan forgiveness programs with the federal government, be sure you contact legitimate government sources only.
The current student loan profits have not been revealed for 2017 by the current Washington D.C. administration. But, hints are that the burden of financial aid and student loans will be shifted heavier to the student.
Students are defaulting on student loans on an outrageously large rate. Currently in excess of 1 million students are defaulting on their loans. The reason they give is they are underemployed and not making nearly enough money to make loan payments, or have no job.
Lois Center-Shabazz | Course Delta Agency
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