10 Ways to Save Money on School Uniforms for Kids

According to the National Center for Education Statistics, 1 in 5 public schools required students to wear uniforms as of the 2017-18 school year. These can be anything from identical outfits marked with the school’s name or logo to a basic color scheme, such as plain white shirts and tan pants.

According to 2011 research from the University of Nevada, Reno College of Education, a school uniform policy can have many benefits for students. It can make it easier to get ready for school, boost self-esteem, reduce bullying, and improve classroom discipline. But it has one big downside for parents: the cost. According to CostHelper, a school wardrobe of four or five uniforms can cost anywhere from $100 to $2,000.

One reason uniforms often cost more than regular clothes is that parents have less choice about where to buy them. If you can only get your kids’ school wardrobes from the official school store, you must pay whatever that store charges. However, you can get around this problem with the right shopping strategies. The first tip to try: shopping secondhand.

Ways to Save With Secondhand School Uniforms

Clothes are one thing it nearly always pays to buy secondhand if you can. With school uniforms, that’s doubly true.

Since young children grow so fast, their outgrown uniforms can still have lots of life left in them. Naturally, these previously worn uniforms don’t look brand-new, but neither do most school clothes after a few weeks of wear. Secondhand school uniforms cost much less than new ones, and in some cases, they’re free.

1. Try Uniform Swaps

If you have two children attending the same school, the younger kid can wear the older one’s hand-me-downs. But if you have only one child or your kids go to different schools, you can end up with clothes in good condition and no one to hand them down to.

A uniform swap is a way to expand your hand-me-down family. By pooling resources with other parents, you can pass on your child’s outgrown uniforms to younger students at your school and receive uniforms from older students in turn.

Some schools hold official uniform exchanges. For example, at St. Catharine School in Ohio, you can trade in gently used school uniforms for larger sizes or pick up other people’s trade-ins at significantly reduced prices. Other schools, like St. Stephen’s Academy in Oregon, give parents points for their trade-ins, which they can use for purchases or donate.

If your child’s school doesn’t have an official uniform exchange, hold a clothing swap party of your own. Invite other parents over, lay out all your outgrown uniform items, and see who can use them.

If you don’t have the space to meet and exchange clothes in person, start a social media group where parents can post photos and descriptions of their kids’ outgrown clothes. When you find someone who has the size your child needs or needs the size you have to give, you can contact each other to arrange a pickup.

2. Shop at Thrift Stores

If you live in or near a large city with a large student population, there’s a good chance you can find outgrown school uniforms at local thrift stores. Check the stores closest to your child’s school to maximize your chances of finding them.

Even in smaller cities and towns, thrift stores are an excellent place to look for basic pieces that are often part of a school uniform. Dress shirts, solid-color polo shirts, and chino pants are likely to show up on their racks. You can’t count on finding the pieces you need in your child’s size, but if you do, they’ll be significantly cheaper than new clothes.

To find thrift stores in your area, do an Internet search on “thrift stores” or “thrift shops” with your town’s name or zip code. Also, check the websites of the largest store chains — such as Goodwill, Salvation Army, and Value Village — to find their nearest locations.

3. Find Sellers Online

If you can’t find suitable secondhand clothes for your child’s uniform at local stores, try looking online. Start consulting your local Craigslist and Facebook Marketplace groups in early July, and look for new listings every other day or so. That gives you roughly two months to find all the pieces you need to build a complete school wardrobe for your child. Just be sure to contact sellers quickly when you find something you need so someone doesn’t beat you to it.

Another reliable source for secondhand uniforms online is eBay. You can create saved searches for each specific garment your child needs, such as “navy shorts size 8,” and receive daily emails of all new listings for your saved search. You can pick up pieces one at a time or — if you’re lucky — find a lot of uniform clothing all in the same size.


Ways to Save on New School Uniforms

The biggest downside of secondhand shopping is that you can’t be sure of finding what you need. If the start of the school year is approaching and you still don’t have a complete school wardrobe for your child, don’t panic. There are ways to buy new uniform-appropriate clothes and still keep costs down.

4. Buy the Minimum

For starters, don’t buy more of any component than you really need. Your child may need a clean shirt for school every day, but kids can usually get away with wearing the same skirt, pants, or sweater several days in a row. Jackets and ties can go even longer between cleanings.

How many pieces your child needs depends on how often you intend to do laundry. Mothers discussing their kids’ school wardrobes on Mumsnet generally say they include:

  • Five to 10 shirts
  • Two to five sweaters
  • Two to five skirts or pairs of pants or shorts

On top of that, you can add one or two school blazers and one or two dresses or jumpers if your uniform includes these pieces. And your child also needs at least one pair of school shoes and enough socks and underwear to last the week.

If you shop smart, you can put together this minimalist kids’ wardrobe for less than the $240 average parents reported spending on back-to-school clothes in a 2019 National Retail Federation survey. CostHelper says it’s possible to find pants and skirts for as little as $5 each, tops for as little as $3, and shoes starting at $15. That’s less than $100 for the whole wardrobe.

5. Visit Cheaper Stores

If your school’s uniform consists of basics like solid-color tops and pants, there’s no need to buy them at the official school store. Many major retail chains sell uniform-appropriate clothes for kids at quite reasonable prices. In fact, several retailers offer lines of kids’ clothes designed explicitly for this purpose, such as:

6. Shop Online

If stores in your area don’t carry the school uniform pieces you need at prices you like, try shopping online. Some online retailers specialize in school uniforms, and others have sections devoted to them. Good places to shop online include:

  • Amazon. The e-tail giant has an entire section called The School Uniform Shop. It provides links to uniform-appropriate garments from many popular brands, including Nautica, Izod, and Dockers. Alternatively, you can search for “school uniforms” to find apparel for girls and boys. Check out these Amazon savings tips for more ways to save.
  • French Toast. Online retailer French Toast deals in school uniforms for all ages, which you can search by school or gender. The site also offers two- and three-packs of identical shirts or pants for a discounted price per piece.
  • Lands’ End. The school uniform shop at Lands’ End offers sturdy clothing in all sizes, from toddler to adult. Clothes are covered by the brand’s unconditional lifetime guarantee. There’s even a selection of adaptive garments for kids with disabilities. This apparel combines easy-to-use magnetic closures with decorative buttons for a uniform look.
  • Lee Uniforms. For teens and young adults, the Lee Uniforms store on Amazon offers school- and work-friendly pieces. The selection is limited, but the prices are excellent.
  • SchoolUniforms.com. As its name implies, SchoolUniforms.com specializes in uniform basics, from blazers to plaid pleated skirts. Garments come in a range of sizes to fit children ages 3 and up, including plus sizes.

When shopping for uniforms online, you can save still more by using a mobile coupon app like Rakuten or Ibotta. If you prefer to shop from a computer, install a money-saving browser extension like Capital One Shopping to help you find great prices and available coupon codes.

Capital One Shopping compensates us when you get the browser extension using the links provided.

7. Wait for Sales

If your school has an official uniform store, call that store and see when it plans to offer discounts or promotions. In many cases, uniforms go on sale in October, after most parents have already bought their kids’ clothes for the year. You can save money on school uniforms by buying just enough pieces to get through September and waiting until October to stock up.

If the school uniform is a generic outfit available from many stores, keep an eye out for sales at all the stores in your area. Consider signing up for emails from your favorite local stores to let you know when uniform clothing goes on sale. Sometimes, these emails also provide coupons, which can boost your savings still more.

Timing your purchases can help at department stores too. Clothes often go on sale at the end of the season — for example, summer clothes in September or winter coats in March. If you plan ahead, you can save by buying school uniforms for next year during these end-of-season sales.

If you’re unsure when and where school uniforms are most likely to go on sale in your area, create a Google Alert for the term “school uniform sale” with your location or zip code. Whenever a new sale pops up, you’ll receive an email about it. You can also use the term “school uniform clearance” to learn about end-of-season clearance sales.

8. Check Out Clearance

Even when a department store isn’t having a sale, there’s usually a clearance rack you can check for marked-down clothing. Since school uniforms tend to be plain clothes without a lot of eye appeal, there are often at least a few pieces that don’t sell and end up on the clearance rack.

For example, the frugal-living bloggers at Life Your Way and Joyfully Thriving both report finding uniform pieces for less than $5 on the clearance racks at stores like Gap and Macy’s.

9. Buy Bigger Sizes

If your child is still growing, there’s a good chance the uniforms you buy now won’t fit by the end of the year. However, you can make them last as long as possible by sizing up.

Choosing clothes with an extra inch to spare in the legs and sleeves gives your kid room to grow into them. Some uniform pants and skirts come with adjustable waistbands, so they’ll accommodate your child’s growth in width as well as height.

And if you find a great price on a particular piece your child needs, you can buy next year’s sizes now. Assuming they plan to attend the same school for the foreseeable future, you know they’ll need the same uniform next year, so buying multiple sizes at once lets you get them all at the best possible price.

10. Buy to Last

If your child has stopped growing but still has a few more years of school to go, you can save money by choosing quality clothing that will last. These well-made pieces may cost more upfront than cheaper brands, but they pay off in the long run. A $50 blazer that wears out after one year costs $50 per year, but a $100 blazer that lasts for four years costs only $25 per year.

For example, clothes from Lands’ End come with a lifetime guarantee. If they don’t last your child until graduation (or they outgrow them), you can return them for a full refund. Clothing from Dickies, available at Walmart, is also guaranteed for its “expected life,” though they don’t define the term. Clothes from Target’s Cat & Jack line come with a one-year guarantee.

Another way to make school uniforms last as long as possible is to choose the darkest colors allowed. On light-colored clothes, minor spots or stains show up more vividly, making them unfit for school wear. Darker-colored clothing, such as maroon, navy, or forest green, hides these minor flaws.


Final Word

Saving on school uniforms doesn’t end when you’ve made your purchases for the year. If your kid’s uniforms become unwearable due to rips, stains, or lost buttons, you’ll have to replace them in a hurry — possibly at full price. To avoid this problem, handle school uniforms with care to make them last as long as possible.

Always follow the washing instructions and line dry or dry flat when possible to avoid wear and tear from the dryer. Treat stains promptly, repair rips, and replace buttons.

If your sewing skills are up to it, you can even get another year or two of life out of garments by letting down the cuffs or adjusting the waistband to fit your child’s larger size. Following all these steps reduces waste, so you can also pat yourself on the back for being green.

One final tip: Label all your kids’ school clothing with their names. When all the students in a school wear the same outfit, it’s easy for them to grab someone else’s sweater or jacket by mistake. Sewing in a name tag or writing on the care tag with a permanent marker increases the chances misplaced clothes will find their way home again.

Source: moneycrashers.com

The 6 Best Ways to Save Money for Kids

If you think higher education is in your child’s future, consider a 529 college savings plan.
Ready to stop worrying about money?
If you plan on covering some, but not all college expenses, you can tweak this formula to suit your situation. For instance, Fidelity recommends targeting a savings goal of ,000 multiplied by your kid’s current age if you plan on covering 50% of college costs and assume your child will attend a four-year public school. The financial institution provides a couple of examples of parents covering different percentages of fees and what that would look like at different ages of their children.
First, assess your total financial picture. Take inventory of your outstanding debt, and create a budget if you haven’t already.
If you want to save money, there are many ways you can go about it. Whether you’re thinking ahead to your child’s college education or just want to set aside a little something for when your child reaches a certain age, you have more than a few options to reach your savings goals.
(Have you picked your jaw up off the floor yet? Good. Keep reading.)
As with all investments, there are fees and risks associated with 529 plans.
There are also plenty of child-friendly bank accounts you can choose from to encourage your children to start saving early and often. A savings account is a good start.

Planning for Your Kids’ College Savings and Future Expenses

Source: thepennyhoarder.com
Now on to the good news: You have many options to start saving for your child’s future today, no matter your budget.
Again, that’s just the estimated cost. And there are grants and college scholarships available to help families chip away at the fees.
With this plan, a saver opens an investment account for the beneficiary’s qualified college education expenses, including room and board. This money can be applied toward universities (and some outside the U.S.), and withdrawals can also be used to pay up to K at elementary and high schools.

5 Ways to Save Money For Your Kids’ College Education

What’s the best type of savings account for a child? We’re glad you asked!

1. 529 College Savings Plans

How much money you “should” save depends on a few factors. For one, there are a lot of variables to consider: How much will a university degree cost in X number of years? How long do you think your child will go to school for? (Two years, four years or more years for advanced degrees.) What amount can you afford to regularly sock away for expenses?
These plans are sponsored by state governments as well, but there are fewer residency requirements. Investments in mutual funds and ETFs are not guaranteed by the federal government, but some bank products are protected.
A Roth IRA is an individual retirement account. You fund it with money you’ve already paid taxes on. So, when the time comes (typically at age 59 ½), you can withdraw your Roth IRA contributions and earnings tax free. However, you can withdraw this money earlier, penalty-free, to pay for higher education costs for your child.

Prepaid Tuition Plan

A 529 plan, or qualified tuition plan, is a tax-advantaged investment account. This means the money grows tax free and you can also take it out tax free. Each state (plus the District of Columbia) offers at least one plan. You can view minimum and maximum contribution limits and other considerations by state here.
With this plan, a saver or account holder can purchase units or credits at a participating university and lock in current prices for future tuition costs for the beneficiary. Typically, this money can’t be used for elementary and high school costs, nor be put toward room and board at college.

Education Savings Plan

While interest rates are low and whatever interest you earn is taxed as income, an FDIC-insured bank savings account is a tried and true (and safe) place to store money — whether yours or your kid’s.
With a Roth IRA, they’ll get tax-free money when they retire. They can also use these funds to help pay for their own qualified college expenses. While your child will have to pay taxes on the earnings, they won’t face an early withdrawal penalty.
You generally have more flexibility with brokerage accounts: You can choose from a variety of investments and make withdrawals at any time. Note: If your child does plan on going to college, the value of this account will be included in financial aid calculations.
There are other online calculators that can help you determine what you should save, depending on what your child’s future education plans might entail (like grad school). Again, a financial advisor or certified financial planner (CFP) can help you plan for college costs in way that accommodates your needs.

2. Roth IRA

Anyone can use a 529 college savings plan (no annual income restrictions!) and you can change the 529 beneficiary to another family member without incurring a tax penalty.
Here are three questions we see pop up time and again when it comes to investing in your child’s future. Oh. And this figure doesn’t even factor into university costs.
Of course, you can invest your money in a few different ways — some combination of a 529 plan; Roth IRA; or, UGMA, UTMA, brokerage or savings accounts — so you have options.

3. UGMA and UTMA Accounts

Sticking with college, here are additional ways to save that you and your child can work toward. Whether you’re a new parent or a year out from sending your kid off to college, consider these opportunities to save money.

Uniform Gift to Minors Act (UGMA)

A brokerage account allows you to invest money in stocks, bonds and mutual funds. Once you deposit your money, you can work with a financial advisor or robo-advisor, or both, to invest and grow your money.

Uniform Transfers to Minors Act (UTMA)

File this under “Things You Already Know” — kids are expensive. What you might not know is the best ways to save money for kids, and we’ve got your back on that.
This account establishes a way for someone under 18 years old to own securities without requiring a trustee or prepared trust documents.

4. Brokerage Account

Here are several ways you can invest and save money for your children, whether you want to open a college savings plan or start a rainy-day fund.
A parent or guardian will need to serve as the custodian, since minors generally can’t open brokerage accounts. Children need to have an earned income (part-time jobs, like babysitting, count) to contribute to it. Like adults up to and under age 50, they can only contribute up to K to the Roth IRA annually. Once the child turns 18 or 21 years old (depending on the state in which they live), control of the account must be transferred to them.
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5. Savings Account

College is an investment, and it can be a pricey one. By saving early (and with the magic of compound interest on your side), you can earn a bigger return on your money down the line.
And, mom and dad, when the time comes, make sure you fill out the Free Application for Student Aid (FAFSA).
There are two types of 529 plans: prepaid tuition plans and education savings plans.
Consider meeting with a financial expert to help you craft a plan that’s best for you.
The cost of raising a child from birth through age 18 is roughly 3,610, according to the United States Department of Agriculture (USDA). To break that down further, that’s around K per year, per kid.

graduation cap filled with money on sidewalk
Aileen Perilla/The Penny Hoarder

Additional Ways to Save Money for College

Save early and save regularly, and you’ll be off to a good start.Contributor Kathleen Garvin (@itskgarvin) is a personal finance writer based in St. Petersburg, Florida, and former editor and marketer at The Penny Hoarder. She owns a content-writing business and her work has appeared in U.S. News, Clark.com and Well Kept Wallet.

  • Ask for gifts toward their education expenses. If friends and family would like to give a gift to your child, ask them to consider putting any money toward their college fund. You can do this for any birthday or holiday, though the earlier you start investing in their education, the better. (Bonus: Your 1 year old doesn’t have the capacity to ask for the latest toy and won’t object to this gift.)
  • Encourage your kid to work and save. Once your child is of legal working age, they can get a job and start saving money for their school expenses. Even saving a small amount per paycheck can help them make a dent in later costs; you might also consider “matching” their savings to incentivize them (for example, give them $1 for every $20 they put away for college).
  • Look to companies and professional organizations. Your workplace may offer opportunities to children of employees looking to earn money for college. Some large companies, like UPS, offer such scholarships. Review your company handbook or ask your HR department about any available opportunities. Professional organizations, like the Rotary Club, are also known to offer scholarships and grants for continuing education. If you belong to any organizations or other clubs, look out for these benefits.
  • Apply for scholarships and grants. Additionally, encourage your high school student to look for scholarships and grants to help mitigate their college costs. Universities typically offer money for students who fit certain criteria — such as transfer students or people in certain majors — and meet other requirements. There are all sorts of weird scholarships, contests and even apps that can help them earn money for school, too. Just make sure they weigh the pros and cons of any entry fees and stay on top of contest deadlines.

If we use the earlier figures from CollegeCalc that forecast what a four-year education will cost in 2039 (5,167.67 / 4 = ,792 a year), it’s recommended you put 1 a month into a college savings plan. This calculation assumes an after-tax return of 7%, an annual tuition increase of 7% and four years of school.

Frequently Asked Questions (FAQs) 

It’s great if you’re able and want to contribute to your children’s future expenses and education fund — student loan debt has surpassed a whopping .7 trillion in the U.S. — but you need to be smart about it. If you put yourself in a precarious financial situation, it can be more difficult for you to course-correct later.

When Is the Best Time to Invest Money for College?

With that said, don’t let getting started “later” deter you from saving at all. It’s kind of like the Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.” You want to save what you can as early and regularly as possible. But if life circumstances prevented you from doing so before, right now is the next best time to start saving.
On average, tuition and fees ran ,411 at private colleges and ,171 for in-state residents at public colleges for the 2020-2021 school year. The estimated cost of a four-year degree, 18 years out?

What’s the Best Way to Invest Money for a Child?

Most prepaid tuition plans have residency requirements for the saver and/or beneficiary, and are sponsored by the state government (and not guaranteed by the federal government). However, not all state governments guarantee the money paid into them, so it is possible to lose money. Additionally, your mileage may vary with this plan if the beneficiary doesn’t attend a participating college, resulting in a smaller return on investment.
First things first: If you have nothing saved for retirement, focus on your own needs before you start saving for someone else. You’re on a more fixed timeline. Plus, you can’t borrow for retirement savings like your child can for their education.
5,167.67.

How Much Money Should I Save for My Child?

Looking for more options that aren’t exclusive to education? You can invest in a taxable brokerage account.
The good thing about putting away money for your children is that there is no one “right” way to do it. You can open a 529 plan for your child early on or later as they get closer to college aid. Or, you can fund a brokerage account so you’re not held to stricter rules about how the money’s spent.
If you want to invest in your kid’s future without choosing an account that’s for education expenses only, look into a Uniform Gift to Minors Act or UTMA Uniform Transfers to Minors Act.
Don’t forget the old standby: a traditional savings account.

The Best Way to Save Money for Kids

This account is similar to a UGMA. However, minors can also own property such as real estate and fine art.
A custodian will also need to be set up for this type of account. Parents can set up a custodial account and then make withdrawals to cover child-related expenses. Once the child is of legal age, the assets are transferred to their name. Since the funds for both UGMA and UTMA accounts are in the child’s name, they cannot be transferred to another beneficiary. <!–

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Where to Find Cheap or Free Tutoring for Your Kids

Whether your kid is struggling to read or to understand advanced calculus, some additional one-on-one instruction can make a world of difference. That’s why parents hire tutors — to boost their kids’ academic progress beyond the constraints of the school day.

But finding the funds to pay a tutor can be tough for a family on a budget. Costs vary, but it’s not unheard of to spend between $40 and $80 … per hour. And if your child is really struggling, chances are you’re going to need way more than one hour.

Here are some alternative ways to get educational assistance, even free tutoring, without breaking the bank.

6 Low-Cost or Free Tutoring Options

1. Get Extra Help With an Online Tutor

Online tutors don’t need a brick-and-mortar building, and they eliminate the need for anyone to commute. Everything is accessible with the click of a mouse. Your screen is your virtual whiteboard.

Some free or low-cost online tutoring websites include:

  • Khan Academy — a nonprofit organization that provides a wide range of free lessons to students all over the world.
  • Learn to Be — a Los Angeles-based nonprofit organization that provides free one-on-one tutoring to K-12 students in underserved communities.
  • Chegg Study — a 24/7 tutoring service for high school and college students where you pay $14.95 a month for expert homework help from a variety of subjects including math, science, engineering and business.
  • Free Tutoring Center — a student-run service that provides free one-on-one tutoring to elementary and middle schoolers from economically disadvantaged backgrounds.
  • UPchieve — a free online tutoring app where volunteer tutors provide academic help in various math and science subjects. This service also offers free college counseling.
  • Varsity Tutors — an education platform that offers free large group classes and free learning tools for self-study. For more individualized help, Varsity Tutors charges for one-on-one tutoring and small group classes.
  • Outschool — an online learning platform that has a variety of classes for kids ages 3 to 18. Filter your class search by price to find offerings for $9 or less.

2. Browse Your Library’s Offerings

If you’re only using your library card to check out books, you’re likely missing out on all the neat opportunities your library has to offer. Some tutoring companies like Tutor.com and Brainfuse partner directly with public libraries to provide free online tutoring to students.

Ask your librarian about what your local branch offers. Outside of partnering with an online service, your library might host free or low-cost test prep or homework help. Your librarian might also know of students or teachers who offer affordable tutoring. At the very least, you can get pointed in the direction of helpful reference books and research materials related to your child’s topic of study.

3. Go Back to School

Sometimes the best place to get help is directly from your child’s teacher. He or she already knows your child’s unique challenges and learning style and is invested in seeing your kid improve.

Schedule a parent/teacher meeting to ask about opportunities for extra instruction. The teacher may be free to help your child during a study hall period, and you can bypass paying for a Saturday afternoon tutoring session.

Also, ask if there’s a peer tutoring program at school where older students or students excelling in a particular subject volunteer to aid those who need extra help.

Consider that the help may come from outside your kid’s individual school. National Honor Society members at the local high school might have an outreach program that would benefit your struggling middle schooler. Community colleges sometimes have academic resources available for high school students at low or no cost.

4. Be Selective About After-School Programs

Until kids are old enough to go home to an empty house, working parents often turn to after-school programs and extracurriculars. While karate practice and dance lessons sound fun, your kid won’t be working on math equations or language arts.

You can save money by choosing an after-school program that includes tutoring services. The Boys and Girls Club and the YMCA are two national youth nonprofits that often provide help with homework or studying for tests.

5. Call on Your Community for One-on-One Tutoring

Don’t underestimate the power of your social circle. Your friends or coworkers may know of organizations in your city that provide free or low-cost tutoring.

Ask the parents of your kids’ friends for recommendations on affordable tutors. An older sibling of your child’s best friend might be a math whiz. You may be able to barter with a classmate’s mom, exchanging tutoring sessions for free babysitting.

6. Give Into Screen Time on YouTube

Now this last one isn’t quite tutoring in the traditional sense, but you can turn to YouTube for almost anything these days — including K-12 subject matter. In most cases, you’ll be able to access instructional videos at no cost.

Has physics or chemistry got your kid down? Check out these YouTube science channels. This list of YouTube history channels may help students master the details of major world events.

The video-sharing platform just might get your kids to see their worst subject in a new light and find learning — dare I say it? — fun.

Nicole Dow is a senior writer at The Penny Hoarder.

Source: thepennyhoarder.com

5 Strategies for Paying Off Car Loan Early

Is your monthly car payment a burden to your budget? Paying off your car loan early can earn you much-needed financial freedom and save you potentially hundreds (or thousands) of dollars in would-be interest. 

You can pay off your car loan early using several effective strategies, but before you do, consider any potential penalties and effects to your credit score.

The True Cost of a Car Loan

It’s no secret that cars are our worst big-ticket investment. Unlike houses, which typically increase in value over time, and education, which theoretically opens the door to higher earning potential, cars lose their value over time. In fact, a new car depreciates in value as soon as you drive it off the lot and will lose 20% to 30% of its value in the first year.

That’s a big deal, especially given the average cost Americans are spending on new cars in 2021. According to KBB, that hard-to-swallow number is over $40,000, up more than 4% over 2020.

That means Americans are shelling out $40,000 for a car that, in a year, will be worth anywhere from $28,000 to $32,000, representing an $8,000 to $12,000 loss.

But there’s more than just the sticker price to consider. In addition to sales tax (average of 10.12% in 2020, though it varies by state), be prepared to pay interest on your car loan. Right now, the average car loan interest rate (also referred to as APR, the annual percentage rate, though there’s a difference) is over 4%.

APR includes the interest rate, in addition to other fees, like loan origination fees or mortgage insurance. You should use the APR, not the flat interest rate, when calculating what you’re paying.

Your APR will depend on the current market and your credit score. The better your credit score, the lower your APR. If you have a weak credit score and can put off buying a car, it is advisable to build up your credit score before applying for a loan.

For 2021, rates are expected to hover between 4% and 5% for 48-month (four-year) and 60-month (five-year) loans. 

Car Loan Calculator: An Example

Interest on a car loan adds up. Let’s take the $40,000 new car as an example, with a $995 dealer fee. Assume you put $2,000 down and have a tax rate of a clean 10% and an APR of 5%. You’ve agreed to pay off the loan over 60 months, or five years. (The typical car loan is anywhere from three to seven years; the shorter the loan period, the higher the monthly payment.)

In this scenario, the total cost of the vehicle after tax and dealer fees is $44,995, minus your $2,000 down payment. That leaves $42,995 to be financed. Given the 5% interest rate over 60 months, your monthly payment would be $811.37.

Over 60 months, you will end up having paid $50,682.20 (including down payment) for a car that, with taxes and dealer fees, cost just $44,995. That means, over five years, you’ve paid $5,687.20 in interest. 

And let’s just ignore the fact that, due to depreciation, that car that you’ve just paid $50,000+ on is now worth just $18,752.41 (average value of 37% of original cost after five years).

Use The Penny Hoarder’s car loan calculator to figure out how much you’ll pay with real-life numbers that match your scenario.

How Car Loan Interest Rates Work

Paying off your car loan early, if you can afford it, seems like a no-brainer then. However, before you start strategizing about how to pay off your car loan ahead of schedule, do some digging to determine what kind of car loan you have.

In an ideal world, your loan will be a simple interest loan. If you have not yet purchased your car, only consider lenders that will offer you a simple interest loan. This means the interest is calculated entirely on the principal balance of the loan.

But if your lender charges precomputed interest, that means they will calculate how much you will pay in interest over the life of the loan and include that in your total balance. That means, even if you pay off your car early, the payoff quote will include all the interest you would have paid had you kept the loan open. In this case, there are absolutely no financial savings in paying your car loan off early.

One other element of your loan to research is payoff penalties. Payoff penalties are legal in 36 states and allow lenders to charge you a penalty (usually a fixed percentage of the remaining balance) for paying off your car loan early. In this case, it may be more expensive than what you would have paid in interest over the life of the car loan.

Will Paying Off Your Car Loan Early Hurt Your Credit Score

It is not likely that paying off a car loan early will hurt your credit score, but it could be keeping you from growing your credit score. Regular, on-time payments account for roughly 35% of your FICO credit score, making it the most important factor. Making monthly payments on a car loan is a great way to show lenders you are responsible with repaying your debts.

In addition, lenders like to see a nice mix of credit (mortgage, car loan and credit cards are the big three). Keeping your car loan open also helps extend the length of your credit history. If you have no other open credit (like a credit card), keeping your car loan open may be advantageous in building up your score if you eventually intend to buy a house.

5 Strategies for Paying Off Your Car Loan Early

If you have a simple interest car loan, your credit is in good standing and your loan doesn’t have any payoff penalties, it may be wise to pay off your car loan ahead of schedule. Not only will you avoid spending heaps of money on interest, but it will also give you the financial freedom of hundreds of dollars back in your monthly budget.

The best advice for paying off a car loan early: treat it like a mortgage. If you are a homeowner, you have likely heard that making an extra (13th) payment toward your mortgage principal every year can shave years off your loan. If you pay even more toward the principal each year, you can easily get your 30-year mortgage down to 15 years—and you’ll be able to drop PMI (private mortgage insurance) costs much earlier.

Of course, home loans tend to be much bigger than vehicle loans, so the potential to save is much larger, but the logic works the same with your car loan.

These strategies for early payoff are all effective, if done right:

1. Make One Large Extra Payment Every Year

If you can count on your grandma slipping a fat check into your Christmas card every year without fail, don’t use that money to splurge on alcoholic eggnog (OK, maybe one bottle). Instead, apply it directly to your car loan as a lump sum.

If you have autopay scheduled online, you can log into your account and simply arrange to make a one-time payment. If you’re old-fashioned and pay by phone or mail, simply call your lender and let them know you’d like to make an extra, one-time payment toward the principal.

Apply this logic to any unbudgeted (aka, not-planned-for) funds, like a bonus at work or a tax refund.

2. Make a Half Payment Every Two Weeks

Talk with your lender to see if you can switch to biweekly payments, instead of monthly. If your lender allows you to pay half of your monthly loan amount every two weeks, you will wind up making 26 half payments. Divide 26 by 2, and you get 13 full months of payments, paid over 12 months. That means, by the end of the year, you will have essentially made an extra car payment.

Just check your budget first to ensure that kind of payment plan is feasible.

3. Round Up

Rounding up to the nearest $50 or even $100, if you can swing it, is a great way to add extra money every month to the principal. For example, if your monthly payment is $337, you could round up to $350 or even $400 to essentially pay an extra $13 or $63 a month. This will wind up knocking a few months off the life of your loan.

If you have autopay scheduled, log onto your loan platform and see if you can add the additional funds toward the principal each month so you don’t even have to think about it.

4. Resist the Urge to Skip a Payment

Some lenders may let you skip one or two payments a year. So kind of them, right? Wrong. They do this knowing it will extend the life of your loan, meaning they will rake in even more of your hard-earned cash in interest fees.

Unless you fall on very hard times, fight the urge to skip a payment. You will wind up paying more in the end if you do.

5. Refinance, but Exercise Caution

If you had a poor credit score when you bought your car and opted for a seven-year loan to keep payments low, it might make sense to refinance. Perhaps you’re two years into the loan, you’ve got a higher-paying job, and your credit score is in great shape. You could potentially refinance at a lower APR and build the loan out over 36 months, saving you two years and lots of money in interest.

But borrower beware: Don’t refinance to get a lower monthly payment by extending a loan, as you will end up just paying more in interest. 

When You Shouldn’t Pay Off Your Car Loan Early

As we’ve seen, it doesn’t always make sense to pay off your car loan early. But there are more reasons to hold your horses than just payoff penalties and precomputed interest.

Here are some other reasons not to pay off your car loan early:

  • Lack of emergency savings. Bankrate reported early in 2021 that most Americans could not afford a $1,000 emergency. Just 39% have enough to cover such an unexpected expense. If you are a part of that 61% without a well-padded emergency fund, prioritize adding funds to a high-yield savings account to protect yourself and your family should the unthinkable happen. And it’s not just your family’s medical emergencies; you may need to cover a deductible on your renter’s insurance in the case of a break-in, the cost of an unexpected car repair or even a terrifying trip to the vet when your dog eats something he shouldn’t.
  • Higher-interest loans. If you have a reasonable interest rate on your car loan but are drowning in credit card debt, focus on the debt that has the highest interest rate. Credit cards historically have interest rates in the high teens, so they make the most sense to pay off first. If you are free of credit card debt but have a mortgage or student loans, compare those interest rates to that of your car loan to figure out which makes the most sense to pay down with extra funds.
  • Lack of credit history. If you refuse to get a credit card and don’t yet have a house, a car loan is your best bet for building your credit score. Keeping your car loan open could positively affect your credit score.
  • Investments. For most drivers, car loan APRs are not terrible. If you have some extra funds and are thinking about paying off your low-interest car loan, consider instead investing in your retirement fund or even buying a few stocks on your own. The average stock market return is about 10%. Obviously, you could wind up losing money, but in general, if you invest and hold, over time, you should expect your money to grow.

Timothy Moore is a managing editor for WDW Magazine, and a freelance writer and editor covering topics on personal finance, travel, careers, education, pet care and automotive. He has worked in the field since 2012 with publications like The Penny Hoarder, Debt.com, Ladders, Glassdoor, Aol and The News Wheel. 

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Source: thepennyhoarder.com

How Does Non-Farm Payroll (NFP) Affect the Markets?

What Is Nonfarm Payroll?

A nonfarm payroll is an economic report used to describe the number of Americans employed in the United States, excluding farm workers and select other U.S. workers, including some government employees, private household employees, and non-profit organization workers.

Known as “the jobs report” the nonfarm payroll looks at the jobs gained and lost during the previous month.

The US Nonfarm Payroll Report Explained

The NFP report studies US employment via two main surveys by the US government of private employers and government entities.

•  The U.S. Household Survey. This report breaks down the employment numbers on a demographic basis, studying the jobs rate by race, gender, education, and age.

•  The Establishment Survey. The result of this survey tracks the amount of jobs by industry as well as the number of hours worked and average hourly earnings.

The US Bureau of Labor Statistics then combines the data from those reports and issues the updated figures via the nonfarm payroll report on the first Friday of every month, and some call the week leading up to the report “NFP week.” Economists view the report as a key economic indicator of the US economy.

How Does NFP Affect the Markets?

Many investors watch the nonfarm payroll numbers very closely as a measure of market risk. Surprise numbers can create potentially large market movements in key sectors like stocks, bonds, gold, and the US dollar, depending on the monthly release numbers.

Investors create a strategy based on how they think markets will behave in the future, so they attempt to factor their projections for jobs report numbers into the price of different types of investments. Changing or unexpected numbers, however, could prompt them to change their strategy.

If the nonfarm payroll number reflects a robust employment sector, for example, that could lead to a rise in US stock market values along with a hike in the US dollar relative to other global currencies. If the nonfarm payroll points to a downward-spiraling job sector, however, with declining wages and low employment growth, that could portend a stock market downturn and the US dollar could also decline in value, as investors lose confidence in the US economy and adjust their investment portfolios accordingly.

4 Figures From the NFP Report to Pay Attention To

Investors look specifically at several figures within the jobs report:

The Unemployment Rate

The unemployment rate is central to US economic health, and it’s a factor in the Federal Reserve’s assessment of the nation’s financial health and the potential for a future recession. A rising unemployment rate could result in economic policy adjustments (like higher or lower interest rates), which could impact the financial markets, domestically and globally.

Higher-than-expected unemployment could push investors away from stocks and toward assets that they consider more safe, such as gold, potentially triggering a stock market correction.

Employment Sector Activity

The nonfarm payroll report also examines employment activity in specific business sectors, like manufacturing or the healthcare industry. Any significant rise or fall in sector employment can impact financial market investment decisions on a sector-by-sector basis.

Average Hourly Wages

Investors may look at average hourly pay as a good barometer of overall US economic health. Rising wages point to stronger consumer confidence, and to a stronger economy overall. That scenario could lead to a stronger stock market, but it may also indicate future inflation.

A weaker hourly wage figure may be taken as a negative sign by investors, leading them to reduce their stock market positions and seek shelter in the bond market, or buy gold as a hedge against a declining US economy.

Revisions in the Nonfarm Payroll Report

Nonfarm payroll figures, like any specific economic benchmarks, are dynamic in nature and change all the time. Thus, investors watch any revisions to previous nonfarm payroll assessments to potentially re-evaluate their own portfolios based on changing employment numbers.

How to Trade the Nonfarm Payroll Report

While long-term investors typically do not need to pay attention to any single jobs report, those who take a more active, trading approach may want to adjust their strategy based on new data about the economy. If you fall into the latter camp, you’ll typically want to make sure that the report is a factor that you consider, though not the only one.

You’ll want to look at other economic statistics as well as the technical and fundamental profiles of individual securities that you’re planning to buy or sell. Then, you’ll want to devise a strategy that you’ll execute based on your research, your expectations about the jobs report, and whether you believe it indicates a bull or a bear market ahead.

For example, if you expect the nonfarm payroll report to be a positive one, with robust jobs growth, you might consider adding stocks to your portfolio, as they tend to appreciate faster than other investment classes after good economic news. If you believe the nonfarm payroll report will be negative, you may consider more conservative investments like bonds or bond funds, which tend to perform better when the economy is slowing down.

Or, you might opt to take a more long-term approach, taking the opportunity to potentially get stocks at a discount and invest while the market is down.

The Takeaway

Markets do move after nonfarm payroll reports, but long-term investors don’t have to make changes to their portfolio after every new government data dump. That said, active investors may use the jobs report as one factor in creating their investment strategy.

Whatever your strategy, a great way to start executing it is via the SoFi Invest® brokerage platform. It allows you to build your own portfolio, consisting of stocks, exchange-traded funds, and other investments such as IPOs and crypto currency. You can get started with an initial investment of as little as $5.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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Source: sofi.com

19 Black-Owned Banks and How to Support Them | The Simple Dollar

Banking Black isn’t a new concept, but it’s gaining momentum amid the rise of the Black Lives Matter movement. But what does it mean to bank Black? According to the Urban Institute, a Black financial institution provides services to minority communities and is 51% or more Black-owned.

Black financial institutions have been around for centuries, with initial meetings among African Americans interested in establishing their own banks held as far back as 1851 — before the Civil War. However, the first Black-owned bank in the U.S. didn’t materialize until after the war, in 1888. 

The first Black-owned banks enabled African Americans to accumulate enough capital to start other service-oriented businesses like nursing homes, catering businesses and insurance companies. And they provided an opportunity for African Americans to learn accounting skills and other techniques required for handling large volumes of cash. 

Today, there are roughly 19 Black-owned banks in the U.S. offering the same services as other financial institutions, such as certificates of deposits, loans, online and mobile banking assistance and more. This number used to be much higher — in 2001, there were 48 Black-owned banks — but, as with other community banks, the numbers have dwindled over the years partially due to regulatory restrictions that often favor larger financial institutions. 

As we celebrate Black History Month, we celebrate the Black-owned financial institutions that have served as pillars in the community for years now.

In this article

Why you should consider banking Black

It’s no secret there’s a wealth gap between minority and non-minority households. As of 2016, the median wealth for a White family was $171,000 compared to $17,600 for a Black family. 

This is partly attributed to a lack of financial services in minority communities. Without financial inclusion, minorities can’t affordably save, invest and insure themselves, which is required to grow and sustain wealth. This lack of experience also places them at a disadvantage. 

“I believe it is vital that African Americans make financial literacy a priority in 2020 and beyond, especially because of the effects of the coronavirus. Over 67% of Americans cannot pass a basic financial literacy test. African Americans, on average, can only answer less than 40% of financial literacy questions correctly. According to research, African Americans have the lowest levels of financial literacy,” states Dr. JeFreda R. Brown, personal finance consultant, educator and CEO of Provision Financial Education.

Because of financial exclusion, minorities often resort to expensive financial services, such as check cashing stores and pay-day lenders, because there are fewer banks in their neighborhoods. There are roughly 41 financial institutions per 100,000 people in a White community compared to only 27 in non-White majority communities. And the financial institutions present in minority neighborhoods often make it difficult to open and maintain an account. For example, a bank may require higher account balances to eliminate service charges or a larger minimum account balance. According to one study, the average minimum account balance at banks in Black neighborhoods is $871, compared to $626 in White communities. 

Because of this, nearly half of Black households are either underbanked or lacking access to such institutions. 

“Earning money is not a problem for African Americans,” says Dr. JeFreda R. Brown. “However, there is a large gap for African Americans when it comes to personal finance education, understanding how money works, understanding economics and economic indicators, understanding time value of money and understanding wealth building.”

Many Black-owned banks aim to combat the wealth disparity gap through:

  • community development lending
  • supporting minority businesses and nonprofits
  • offering financial literacy workshops for community members
  • providing financial aid to underserved Black communities

“I think banking with Black-owned banks is good because many of them give people a second chance who can’t get bank accounts with other banks,” says Dr. JeFreda R. Brown. “Also, Black-owned banks offer the same services as other banks and credit unions.”

In 2016, there was a rise in support for Black-owned businesses following the Black Lives Matter movement. One initiative was the Black Money Matters movement, headed by rapper Michael “Killer Mike” Render. He made a call for action in July 2016 during a town hall meeting televised by BET, asking Blacks to “bank Black.” It was an effective yet short-lived effort that led to 8,000 new accounts at Atlanta’s Black-owned Citizens Trust Bank. In addition, One United Bank reported receiving $3 million in deposits at branches across the country, and Carver Bank witnessed $2.4 million in deposits thanks to the movement.

There is also the Bank Black Challenge, which was launched by One United Bank, that is challenging one million people to open a $100 savings account at a Black-owned bank to generate $100 million of economic power. This challenge started in 2016 and is still ongoing today. 

Initiatives like these are significant, but it requires ongoing support to make their effects long-lasting. In 2020, the current Black Lives Matter (BLM) movement is motivating people to support the Black community in new ways. And by banking with Black financial institutions, you can now play your part in reinvesting in the Black community in the U.S. 

“Black-owned banks should be given a chance to grow and be a strong financial staple in the communities they serve. Also, Black-owned banks are a great option for anyone because they promote economic revitalization. Banking with Black-owned banks helps increase community development and economic development. This is why they need support from everyone,” states Dr. JeFreda R Brown. 

Black-owned banks and credit unions

If you’re considering banking with a Black financial institution, check out this list of Black-owned banks and credit unions in the U.S. If you don’t see a bank listed in your area, keep in mind you may still be able to use the bank’s digital banking services.

  1. Alamerica Bank – located in Birmingham, Ala.
  2. Citizens Trust Bank – located in 15 cities across the U.S.
  3. Columbia Savings and Loan – located in Milwaukee, Wyo.
  4. Commonwealth National Bank – has two locations in Mobile, Ala.
  5. Broadway Federal Bank FSB – two locations in Los Angeles, Calif. and one in Inglewood, Calif. 
  6. Carver State Bank – two locations in Savannah, Ga.
  7. Carver Federal Savings Bank – located in three cities in N.Y.
  8. Columbia Savings & Loan ASSN – located in Milwaukee, Wyo.
  9. GN Bank – located in Chicago, Ill.
  10. First Independence Bank – located in two cities in Mich.
  11. Harbor Bank of Maryland – located in three cities in Md.
  12. Liberty Bank & Trust CO – located in 10 cities across the U.S. 
  13. Industrial Bank NA – has multiple locations in N.Y., Md. and N.J.
  14. OneUnited Bank – located in three cities across the U.S.
  15. Optus Bank – located in Columbia, S.C.
  16. Mechanics & Farmers Bank – located in five cities in the Carolinas
  17. Tri-State Bank of Memphis – located in Memphis, Tenn.
  18. Unity National Bank – located in three cities in Texas and Ga.
  19. United Bank of Philadelphia – located in Philadelphia, Pa. 

Considering making the switch?

Black-owned financial institutions are struggling. In 2013, 60% of Black banks lost money, and they were especially hit hard by the 2008 recession. As we enter yet another economic downturn, now is a great time to invest in Black banks. In doing so, you can help keep these entities afloat so that minority communities can continue working to close the disparity gap. 

Together, Black banks control $5 billion in assets, which is a fraction of what the banking giants have (for example, Wells Fargo has $1.7 trillion in assets alone). It’s up to the people to help grow Black financial institutions in the U.S. If you’d like to make a difference, then follow these simple steps to switch to a Black-owned bank. 

Step 1: Identify your banking needs

Are you currently banking with another bank? What do you like and dislike about it? Keep this in mind as you’re shopping for a new, Black-owned bank.

Maybe you like the mobile banking options your current bank offers but hate the high monthly fees. Or perhaps you want to do your banking with an institution that has more involvement in minority communities. 

Make a list of your must-haves to help you decide on the best Black banking solution for your needs. 

Step 2: Choose a new banking institution

After you’ve identified your list of banking needs, it’s time to search for a Black-owned financial institution that meets those requirements. Use the list of Black-owned banks and credit unions above to start your search. Create a list of options and mark off the ones that don’t make the cut. 

Step 3: Take note of your automatic payments and deposits

Do you use automatic withdrawals for your billing? How about direct deposits from your employers (or clients)? If so, you’ll need to make a list of these automatic transactions so you can set them up with your new bank.

Step 4: Open up your new account

Once you’ve found a bank that meets your needs, it’s time to create your new account. Go through the application process and schedule to make a deposit (if required). Also, check with your new bank to determine what process they have to make  transferring funds from your old bank easier. Once your account is up and running, don’t forget to schedule your automatic payments and deposits.

Looking ahead

Deciding to bank Black isn’t just about choosing where you keep your money. It’s a way to take a stand against inequality in minority communities that lack financial inclusion. And it helps push the Black Lives Matter movement forward. 

In 2012, Wells Fargo was sued for pushing Blacks toward more expensive mortgages with higher fees and rates (compared to white borrowers with similar credit). Then in March 2018, Bank of America was fined for racial discrimination in its hiring and lending practices. 

Unfortunately, this is an ongoing issue for people of color who receive less than 1% of mortgages from white-owned banks.

Banking Black isn’t a choice only available to African Americans, either. It’s a viable option for anyone who wants to make a difference in their financial prosperity, as well as the prosperity of those in underserved communities.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Cost of Living in Thailand – How Much for Rent, Food & Entertainment

How would you like to live in a tropical paradise where a restaurant meal costs $2, a taxi ride costs $3, and a furnished apartment rents for as little as $200 per month?

For decades, the low cost of living in Thailand has made it one of the most popular destinations for anyone looking to live in a tropical climate on a budget. And while prices in this sunny “Land of Smiles” have inched up over the years, you can still live on a fraction of what you’d spend for a similar lifestyle in your home country.

But just how cheap is Thailand in 2021?

How Much Does It Cost to Live in Thailand?

Each of Thailand’s regions offers something unique to travelers and expats. From beach towns to bustling cities and cultural centers to sleepy hideaways, Thailand accommodates every lifestyle — at least as long as you like sunshine.

The overall cost of living in Thailand varies by region. But some expenses, such as cellphone bills, taxes, and visa fees, remain constant, no matter where you choose to live.

Your standard of living has the most significant impact on your cost to live in Thailand. You can choose a life of luxury for a sliver of what it costs in the United States or Europe. But if you’re willing to live like a local with a simple lifestyle, you can stretch money even further.

When comparing prices in a foreign currency, your purchasing power fluctuates with the exchange rate. Since 2018, the exchange rate has held steady in Thailand, ranging from 30 to 33 Thai baht (THB) per $1 U.S.

With the exchange rate in mind, you can compare the cost of living between your current location and Thailand. To make the comparison easier, the prices herein are converted to U.S. dollars.

Average cost-of-living figures come from Numbeo, a crowd-sourced cost-of-living database. After living in Thailand for five months, I found these averages are a good starting point, but they don’t always accurately depict how affordable each destination can be.

Since the crowd-sourced data comes primarily from expats, costs are higher than what you’d spend living like a local.

In addition to Numbeo averages, all other pricing data comes from real properties for rent on Facebook Marketplace and Airbnb.

Rent

Your expenses partially depend on how you find your rental. While accommodation-hunting on Airbnb and other booking websites is convenient, that convenience comes at a price. To find the cheapest rates, search on Facebook Marketplace or (better yet) on the ground — but don’t expect everyone to speak English.

The cost of rent in Thailand also varies dramatically from city to city — even neighborhood to neighborhood.

Bangkok and the Suburbs

As the capital and center of economic activity, Bangkok is naturally the most expensive part of the country.

Luxury apartments on Airbnb can cost more than $3,500 per month in the most desirable parts of Phrom Phong, Silom, Lumpini, and Sukhumvit, all of which make up Thailand’s financial and retail center. Penthouse apartments complete with housekeeping, a private swimming pool, and panoramic views of the big city can run $6,000 per month or more.

But there are plenty of more affordable options.

Tourists and backpackers generally rent rooms on Khaosan Road, where a decent hotel room costs $10 to $25 per night. If you’re on a shoestring budget, shared dormitories in hostels go for as little as $2 per night. Discounts for monthly rentals are also available.

In Bangkok, the average one-bedroom apartment in the city center goes for $580 per month but only costs $290 outside the city center.

One factor that influences price is the proximity to the nearest subway station. The closer it is to the subway (MRT) or Skytrain (BTS), the higher the price.

Public transport is now starting to expand into the suburbs, which can offer the best of both worlds: low rental prices with easy access to the city.

For example, the furnished studio we rented in a luxurious condominium right next to a BTS station in the suburbs costs $460 per month on Airbnb. We could have negotiated an even lower price by paying an owner directly, taking an unfurnished unit, or signing a longer contract.

It had everything we needed built into the complex, including a restaurant, mini-store, gym, infinity pool, and workspace. Since we had everything on-site, we rarely had to leave, which saved us transportation costs.

If you prefer to rent a house, you have to venture outside the city center. Neighboring Nonthaburi and Samut Prakan are technically independent cities but are really more like exurbs of Bangkok. Detached single-family houses in these regions cost as little as $200 per month.

Beach Towns Near Bangkok (Pattaya and Rayong)

A couple of hours southeast of Bangkok, the beach towns of Pattaya and Jomtien have seen aggressive growth in recent years as real estate investors continue to build high-rise condominiums in these once-sleepy fishing towns.

In fact, the 2019 Global Destination Cities Index ranked Pattaya the 15th most overnight tourist-visited city in the world. Many of those tourists have fallen in love with the sunny, relaxed lifestyle and now call Pattaya home.

Despite their popularity, the cost of living in these regions remains surprisingly low.

Pattaya is the most expensive. Its nightlife is a big draw for expats. But even there, you can find one-bedroom apartments just off the beach for less than $500 per month. And the farther you go inland, the lower the prices get.

Rayong is even cheaper, with plenty of furnished studios going for less than $200.

Chiang Mai and Chiang Rai

Chiang Mai is a small town in Northern Thailand near the border of Burma and Laos. Considered by many to be the “digital nomad capital of the world,” Chiang Mai is a hotspot for young backpackers with a thriving expat community. Its popularity is primarily due to a low cost of living, beautiful temples, and foreigner-friendly cafes, nightclubs, and hangouts.

The average rent in Chiang Mai is $430 inside the city center and $300 outside the center. That said, when I went apartment-hunting in Chiang Mai, I found prices to be even cheaper.

In the Nimmanhemin (or “Nimman”) neighborhood, prices have exploded over the past decade due to the influx of digital nomads. We walked around door-to-door asking for rates and couldn’t find any decent studio apartments under $400. But outside touristy areas, it’s not unheard of to score a furnished studio for under $125.

A less popular option is the neighboring town of Chiang Rai, home to three of the most awe-inspiring temples in Thailand. Since it’s a bit more under the radar, it can be even cheaper than Chiang Mai.

The average rent for a midrange one-bedroom apartment in the Chiang Rai city center is $240, with comparable apartments outside the city going for half that. Northeast Chiang Rai is also close to the Burmese border, which is convenient for border runs when you have to renew your visa.

In Chiang Mai, Chiang Rai, or any other touristy town in Northern Thailand, prices fluctuate with the season. During “burning season” — when farmers burn their crops and pollution levels rise — rental costs plummet as foreigners flee in search of cleaner air.

Southern Beaches and Islands (Phuket, Krabi, Songkhla)

The stunning beaches surrounding Phuket and Krabi have surged in cost over the past 20 years as luxurious resorts slowly replace cheap backpacker bungalows.

The average one-bedroom apartment goes for $470 in Krabi, with similar prices in Phuket. There are also still deals on popular islands like Koh Lanta, where you can find simple one-bedroom Airbnbs for as little as $230.

That said, rents vary radically depending on the unit’s proximity to the beach, with luxurious beachfront villas fetching upward of $2,000 per month.

In Songkhla, a less popular resort town near the southern Malaysian border, you can still find bare-bones apartments on Facebook Marketplace for as little as $100 per month. You won’t be living in luxury, but you can’t go wrong for $100, especially if you spend all your time at the beach anyway.

Gulf of Thailand (Koh Samui, Koh Pha Ngan, Koh Tao)

The Gulf of Thailand is home to three of the country’s most popular islands — Koh Samui, Koh Pha Ngan, and Koh Tao. Each island has a unique vibe. And while prices have risen over the past decade, you can still find some steals.

Koh Samui is the largest and most developed of the three islands, with the average one-bedroom apartment rent ranging from $270 to $390 per month. It’s full of resorts and known as a family vacation destination, but plenty of expats also call the island home.

Koh Pha Ngan is home to the infamous Full Moon Party, an enormous beach festival held on the southwest corner of the island every month. But Koh Pha Ngan is more than just parties.

The island’s west side offers laid-back beach towns with expat communities dedicated to yoga, mindfulness, and spirituality.

It’s hard to find anything under $200 per month in Koh Pha Ngan, which would get you a rustic bungalow. For a modern furnished apartment with air conditioning and a beach view, expect to pay upward of $1,000 monthly.

Koh Tao is the smallest and least developed of the three islands, a favorite for backpackers wanting to scuba dive on a budget. Since it’s so small, most rental prices you find online are expensive Airbnbs. If you search on the ground and negotiate directly with locals, you can find rustic bungalows for under $150 per month.

Off-the-Beaten-Path Destinations

Generally, the further you go from tourist destinations, the cheaper your cost of living. Rent for a basic one-bedroom place in a rural Thailand region like Isan can be as little as $50 per month.

Remember, the 2021 daily minimum wage in Thailand ranges from $10.03 to $10.77. You won’t get a Western standard of living on less than $11 per day, but if you learn to live like a local, you’d be shocked at how far your money stretches.

Utilities

When renting an unfurnished apartment on a long-term contract, you’re usually responsible for paying your own utility bills.

But even many furnished accommodations exclude electricity in the price. That’s because electricity is expensive compared to rental costs, especially if you’re blasting the air conditioning all day. Some rentals even include electricity for everything except air conditioning, which they meter separately.

To make matters more complex, when property owners charge for electricity in furnished apartments, they set their own rates per kilowatt-hour. The official power tariff in 2021 is $0.11 per kilowatt-hour, but depending on how much the property owner wants to profit, you could pay anywhere from $0.12 to $0.25 per kilowatt-hour.

When comparing rental options, factor in:

  • Whether they include electricity
  • How much they charge for it
  • How much you plan to use

It can get confusing, and we ended up creating a full-blown spreadsheet to keep everything straight. Just know that if you pay the property owner for electricity (versus paying the electric company directly), the monthly cost of your electricity bill could double depending on the rate they set.

Numbeo reports that the average utility bill (electricity, heating, cooling, water, and garbage) in Thailand is $68.

And choosing a cooler climate doesn’t necessarily lead to a lower air-conditioning bill. You also have to factor in pollution. Bangkok is known for its pollution, and on bad days, you won’t want dirty air circulating through your house. That means keeping the windows closed and the air on and investing in an air purifier for your home.

Similarly, during the burning season in Chiang Mai and the northern regions, the air quality reaches harmful levels, and you should keep the windows closed.

Food

Thai food is delicious and cheap. Eating out is so affordable that most Thais build their houses without a full kitchen. That means, unless you pay for a property built specifically for Westerners or tourists, you won’t cook many meals at home.

Food costs vary by location. Touristy areas like the islands and expat hangouts generally have the highest prices. But no matter where you go, there’s usually always a food cart or small family restaurant serving tasty rice and noodle dishes for $2 or less.

Rural areas can cost much less. I once visited an orphanage on the outskirts of the small town of Chiang Rai. The founder invited us to a delicious feast at a local restaurant, and our bill came out to a shocking $0.80 per person, including drinks.

When hunting for the cheapest restaurants in town, look out for general cleanliness to avoid getting sick. If it’s packed with locals, that’s a good sign the food is safe.

Thailand is also full of vendors selling fresh fruit and fruit shakes on the streets. While in Bangkok, we bought $1 coconut shakes and a bag of $0.50 mangoes every day.

Coffee lovers in Bangkok spend an average of $2.20 per cappuccino. The average chicken breast runs $1.10 per pound if you want to cook yourself. But with such cheap and delicious restaurants, it’s often hard to justify the time spent cooking.

That said, not all food in Thailand is cheap. After living in Thailand for a while, many expats start to miss Western food. And Western food in Thailand is pricey — and underwhelming.

Many Western ingredients, like cheese, are hard to come by in Thailand. That means foods like burritos, hamburgers, and pizza are both expensive and taste funny with substituted ingredients.

Transportation

Public transportation in Thailand is so cheap and convenient that owning a car is rarely necessary. Instead, most expats use motorbikes or public transit.

The average cost of a basic scooter rental varies by region, but you can usually pick one up for as little as $60 per month. You can also rent bigger motorcycles, but they cost two to five times as much, depending on the model you choose. In addition to rental fees, you have to factor in gas costs, which average $3.36 per gallon in Thailand.

When renting a motorbike, choose a model with parts made in Thailand. That way, if you crash or scratch the bike, you won’t have to pay outrageous fees to import parts from a different country. Also, record a video showing the condition of the motorbike before you rent it. Otherwise, the rental agency may try to charge you for damages you weren’t responsible for. I learned that the hard way.

You technically need an international driver’s license to ride a scooter or motorbike in Thailand. If you plan to live in the country long-term, it’s worth getting. If you’re just visiting, many tourists rent scooters without it. If the police pull you over, they give you a ticket or try to extort a bribe from you. So sticking to public transit may be best.

If scooters aren’t your forte, there are plenty of other affordable transportation options available. For example, there’s the metro system in Bangkok, moto taxis, and the famous shared red truck taxis (called “songthaews”) in other regions like Chiang Mai.

For example, when we lived in Chiang Mai, a songthaew within the city limits of Chiang Mai cost us roughly $1 per person.

Fares for Bangkok’s BTS and MRT depend on the distance you travel, ranging from $0.50 to $1.70.

If you live in a walkable neighborhood or beach town and take subways or songthaews once per day, you’re looking at $2 per day round trip, or $60 per month in transportation expenses.

On the other extreme, if you live in Bangkok and constantly take taxis across the city — which cost an average of $0.66 per mile, according to Numbeo — your transportation bill could shoot up to a couple hundred dollars.

Entertainment

There’s more to life than food, rent, and transportation. Thailand is famous for its nightlife, and that’s where a lot of people run into trouble.

Based on our experience, beers in most bars and nightclubs only cost $2 to $4. That said, expats and vacationers can quickly find themselves partying a bit too hard and spending even more than they do back home.

Some nightclubs have free entry, but we’ve paid up to a $15 cover. If you’re going out multiple nights per week — which can be tempting in a city that never sleeps — your monthly budget can quickly go off the rails.

If you prefer to entertain yourself with travel and exploration, you’re in luck. Thailand has 1,430 stunning islands, many of which you can access fairly cheaply.

For example, an 11-hour bus ride from Bangkok to Krabi costs less than $20. And if you buy in advance, direct local flights can be just as cheap.

Phone and Internet

In the past, one trade-off of living in Thailand was slow and unreliable Internet speeds. That’s no longer the case. In fact, fast Wi-Fi is one of the reasons expats and digital nomads choose to live in Thailand over other similarly affordable countries.

In Thailand, the average price for a 60-megabits-per-second or faster Internet plan is less than $20 per month.

Prices for cellphone plans vary based on:

  • Provider
  • Length of contract
  • Amount of data
  • Data speeds

Prices also depend on whether you need a data-only plan, a calling plan, or a combination of the two.

For example, with TrueMove H, you can get an unlimited data plan with a couple hundred calling minutes for less than $20 per month.

Note that many “unlimited” data plans only include a certain amount of data at maximum speed. After that, it’s throttled.

Gyms, Spas, and Self-Care

Gyms in Thailand can be surprisingly expensive.

The gym we joined in Chiang Mai cost $30 per month, three times as expensive as Planet Fitness in the U.S. Of course, our gym catered to expats, with air conditioning and well-maintained equipment. You can also find more rustic gyms for as little as $5 per month.

That said, many condos have free gyms on-site. So if it’s important to you, finding one could save you money even if it’s more expensive than another rental.

Thailand’s massage culture is world-renowned and a big part of many expats’ lives. Steeped in Buddhist traditions, Thai massage techniques have been passed down from generation to generation for centuries.

You can find massage parlors on almost every corner. While living and traveling around Thailand, most parlors we saw cost between $5 and $15 for an hour-long massage.

Cost of Health Care in Thailand

Health care in Thailand is incredibly cheap, especially coming from countries with outrageous health care costs like the U.S.

I once needed a procedure that would have cost over $25,000 in America. In Bangkok, I had it done for $1,500, including a one-night stay in a surprisingly luxurious private hospital room.

You can find hospitals with English-speaking staff in all the main tourist hubs. But if you have a complicated situation, Bangkok is the place to go.

Also, just because a hospital is more expensive or internationally recognized doesn’t necessarily mean it has the best doctor for your condition. To find a specialist, I searched for the top surgeons in Bangkok for that discipline. It turns out the best specialist in all of Asia worked out of a small private hospital — a hospital nowhere to be found on the online lists of best Bangkok hospitals for expats.

Many expats living in Thailand on a tourist visa rely on travel insurance or international health insurance for their coverage. These plans range from basic $40-per-month SafetyWing travel insurance to more comprehensive plans that cost hundreds of dollars per month. Whichever plan you choose, your premiums depend on factors like your age, the coverage you need, the country you’re from, and the insurance company you choose.

Expats with a resident visa can also buy local private insurance like Luma Health for coverage in Thailand. These plans are comparable in price to international health insurance plans, and most hospitals can bill them directly. It’s more convenient than a travel insurance policy that requires you to pay out of pocket and submit claims for reimbursement.

Lastly, if you work legally in Thailand and pay Social Security taxes, you receive free government medical insurance. If you’re used to Western standards, set your expectations appropriately. Odds are you won’t be impressed with the treatment you receive under free government insurance in a developing nation.

Thailand Visa Expenses

American tourists on short-term vacations don’t need an entry visa.

But if you plan to stay in Thailand full-time as a retiree, recurring tourist, Thai spouse, student, or business owner, you need a visa.

To keep these visas current, you must pay to renew them regularly.

For example, a single-entry education (ED) visa — which you could use to take Thai language lessons — costs $80, and you must renew it every 90 days.

The fee for a five-year retirement visa is $400. It also requires proof of an income source greater than 65,000 baht (roughly US$2,000) per month. Immigration waves the monthly income requirement if you maintain a balance of at least 800,000 baht (US$24,585) in a Thai bank account.

That said, many countries have introduced digital nomad and remote work visas in the wake of the pandemic. Thailand is in the process of creating its own remote work visa, which would eliminate much of the hassle and expense remote-working expats face.

Income Tax in Thailand

Just because you live abroad doesn’t make you exempt from income taxes. If you live in Thailand for more than 180 days (roughly six months) per year, you’re considered a resident. Residents in Thailand must pay taxes on income earned worldwide. If you are not considered a resident, you must still pay taxes on income earned in Thailand.

Thailand has progressive income tax brackets similar to those in the U.S., ranging from 0% to 35%.

Americans must also file taxes in the U.S., but you can avoid double taxation thanks to the U.S.- Thailand tax treaty, foreign earned income exclusion, and foreign tax credit.


Final Word

In addition to everyday living expenses, you also have to factor in the cost of an intercontinental move and building a healthy emergency fund.

Not only do you have to buy a plane ticket across the globe, but unless you stick to renting expensive furnished spaces, you also need to buy a bed, fridge, furniture, cookware, and decorations.

That said, even though Thailand isn’t quite as cheap as it once was, it’s still one of the best places you can live on $2,000 per month or less.

Source: moneycrashers.com

How to Gift a Stock

Stocks are a unique gift that have the potential to keep on giving over time. They can be given to family members, friends, charities, and others. Gifting stock is easy to do and can have benefits for both the giver and the receiver—though it’s worth noting there can be tax implications for the receiver.

The Benefits of Gifting Stocks

There are several upsides to giving (and receiving) stocks:

•  If you’re giving the gift of stocks to kids, it can begin their investing education and provide them with an asset that will grow over time.

•  For anyone receiving stock, there’s potential that the value of the gift will grow over time. (Though it must be said, the value could also diminish over time.)

•  If the giver already owns stock in the company, they may benefit on their taxes by transferring some or all of that stock to someone else. If a stock has appreciated in value, the owner would normally owe capital gains if they sell it. However, if they gift it, they don’t have to pay the taxes. Those gains do get transferred to the receiver—but depending on their tax bracket, they won’t owe any taxes when they sell. In that case, both the giver and receiver would avoid paying the capital gains.

8 Ways to Gift Stocks

There are several ways that stocks can be gifted.

Set Up a Custodial Account for Kids

Parents can set up a custodial brokerage account for their kids and transfer stocks, mutual funds, and other assets into it. They can also buy assets directly for the account. When the child reaches a certain age they take ownership of it.

This can be a great way to get kids interested in their finances and educate them about investing or particular industries. Teaching kids about short and long term investments by giving them a stock that will grow over time is a great learning opportunity. However, keep in mind that there is a so-called “kiddie tax” imposed by the IRS if a child’s interest and dividend income is more than $2,200.

Set up a DRiP

Dividend Reinvestment Plans, or DRiPs, are another option for gifting stocks. These are plans that automatically reinvest dividends from stocks, which allows the stock to grow with compound interest.

Gifting to a Spouse

When gifting stocks to a spouse, there are generally no tax implications as long as both people are U.S. citizens. A spouse can either gift a present interest or a future interest in shares, meaning the recipient spouse gets the shares immediately or at a specified date in the future.

According to the IRS , If the recipient spouse is not a U.S. citizen, there is an annual gift tax exclusion of $159,000. Any amount above that would be taxed.

Virtual Transfers and Stock Certificates

Anyone can transfer shares of stock to someone else if the receiver has a brokerage account. This type of gifting can be done with basic personal and account information. One can either transfer shares they already own, or buy them in their account and then transfer them. Some brokers also have the option to gift stocks periodically.

Individuals can also buy a stock certificate and gift that to the recipient, but this is expensive and requires more effort for both the giver and receiver. To transfer a physical stock certificate, the owner needs to sign it in the presence of a guarantor, such as their bank or a stock broker.

Gifting Stock to Charity

Another option is to give the gift of stocks to a charity, as long as the charity is set up to receive them. This can benefit both the giver and the charity, because the giver doesn’t have to pay capital gains taxes, and as a tax-exempt entity, the charity doesn’t either. The giver may also be able to deduct the amount the stock was worth from their taxes.

For givers who don’t know which charity to give to, one option is a donor-advised fund . While the giver can take a tax deduction on their gift in the calendar year in which they give it, the fund will distribute the gift to the charities over multiple years.

Passing Down Wealth

Gifting stocks to family members can be a better way to transfer wealth than selling them and paying taxes. For 2021, up to $15,000 per year, per person, can be transferred through gifting of cash, stocks, or a combination. This means a couple can gift $30,000 to one individual, free of the gift tax.

If a person wants to transfer stocks upon their death, they have a few options, including:

•  Make it part of their will.
    Recommended: How to Create An Estate Plan

•  Create an inherited IRA.
    Recommended: 8 IRA Rollover Rules to Know

•  Arrange a transfer on death designation in a brokerage account.

It’s important to look into each option and one’s individual circumstances to figure out the taxes and cost basis for this option.

Gifting Through an App

Another option is to find an investing app that has stock gifting features.

Gift Cards

It may be surprising to hear, but stocks can be given via gift cards. These may be physical or digital gift cards.

Thing to Consider When Giving a Stock Gift

Gifting stocks is relatively straightforward, but there are some things to keep in mind. In addition to the $15,000 per year gifting limit and the capital gains tax implications of gifting, timing of gifts is important, and gifting may not always be the best choice.

For instance, when gifting to heirs, it may be better to wait and allow them to inherit stocks rather than gifting them during life. This may reduce or eliminate the capital gains they owe.

Also, there is a lifetime gift exclusion for federal estate taxes, which was $11.58 million in 2020, which can be used to shelter giving that goes over $15,000. However, this is not a great tax option, due to the ways gifts and inherited stocks are taxed.

Generally a better way to give a substantial amount of money to someone is to establish a trust fund.

Tax Implications of Gifting Stocks

There are some tax ramifications of giving stock as a gift.

Capital Gains Tax

There are a few things to be aware of with the capital gains taxes. If the stock is gifted at a lower value than it was originally purchased at, and sold at a loss, the cost basis for the recipient is based on the fair market value of the stock on the date they received it.

However, if the price of the stock increases above the price that the giver originally paid, the capital gains are based on the value of the stock when the giver bought it. In a third scenario, if the stock is sold on the date of the gift at a higher than fair market value, but at a lower value than the giver’s cost basis, no gain or loss needs to be recorded by the recipient.

•  Tax implications for giving: When gifting stocks, the giver can avoid paying capital gains tax. can sometimes be a way for the giver and the receiver to avoid paying capital gains taxes.

•  Tax implications for receiving: The recipient won’t pay taxes upon receiving the stock. When they sell it, they may be exempt from capital gains taxes if they’re in a lower tax bracket (consider, for example, a minor or retired individual). Otherwise, if they sell at a profit, they should expect to pay capital gains tax. If the annual gifting limit is exceeded, there may be taxes associated with that and the giver will need to file an estate and gift tax return.

Recommended: What Are Capital Gains Taxes?

The Takeaway

Gifting stocks is a unique idea that may have benefits for both the giver and the receiver. As you plan for your future, you may decide to build up a portfolio of stocks that you intend to give to your children, parents, or others as you grow older.

You can easily start investing online with SoFi Invest®. The app lets you quickly buy and sell stocks right from your phone. You can also research and track specific stocks, and see all of your investing information in one simple dashboard.

Find out how to get started with SoFi Invest.

Photo credit: iStock/akinbostanci


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Dear Penny: Can We Retire in 6 Months With $190K of Student Loans?

Dear Penny,
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Unfortunately, there aren’t any great relief options if you have private loans. Selling your home and downsizing so that you can pay off your balance, or at least a large chunk of it to make your payments more affordable, may be your best option.
Related Posts
If you could make a serious dent in your balance by working another year or two, that’s something to seriously consider. But the reality is that 0,000 is a lot of money. Delaying retirement by a couple years may not be enough to make significant headway.

Ready to stop worrying about money?
If you have federal loans, including Parent PLUS loans, Mayotte suggests looking into a program called income-contingent repayment. You’ll need to consolidate your loans to enroll. The advantage is that your payment will be 20% of your disposable income, which will presumably be lower once you retire.
If you incurred any of this debt for your children, it may also be time to look beyond relief programs and ask your kids if they can help you with the payments. “That’s a difficult conversation but sometimes that’s a conversation that needs to be had,” Moyette said.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
I reached out to Betsy Mayotte, president and founder of the nonprofit The Institute of Student Loan Advisors, to discuss strategies for people approaching retirement with serious student loan balances. She’s advised thousands of student loan borrowers about the best way to deal with their debt. She emphasized just how common your dilemma is.
But if you have federal loans, you have several options. Instead of paying off your loans, a better alternative may be to get your monthly payment as low as possible, even if that means you’ll never be completely out of debt.


My husband wants to sell our home and pay off the debt. If we do that, we won’t have much for a down payment for another house, so we won’t have a low mortgage payment. If we don’t sell, we can afford the student loan payments. But we will be very limited with no extra money left to save for emergencies. 
Help. I have many sleepless nights trying to find the best solution to this.
Only in rare occasions are student loans dischargeable in bankruptcy. You probably wouldn’t be a good bankruptcy candidate since it sounds like you have decent home equity.
-H.
“They reapply every year and if their income goes down, the payment goes down,” Mayotte said. “If their income goes up, the payment goes up. If they still have a balance at the end of 25 years, the balance is forgiven.”
Dear H.,
Traditionally, the balance forgiven on all the federal student loan programs I mentioned has been treated as taxable income for the year the debt is forgiven. But thanks to COVID-19 relief measures, any balance that’s forgiven between now and 2025 isn’t treated as taxable income. Moyette wouldn’t be surprised if Congress eventually extends that tax break. But if you choose to enroll in a program that offers forgiveness, she suggests preparing for the worst but hoping for the best, since 20 to 25 years is a long way off.
You have even more options if you have federal loans that you took out for yourselves, including income-based repayment, Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE). These programs make your loan payments as low as 10% to 15% of your discretionary income, and they also offer forgiveness at the end of the repayment period, which is between 20 and 25 years.
About 20% of federal student loan debt is held by people 50 and older. Telling millions of people like you and your husband that they have to work forever simply isn’t a viable solution.
I am in big trouble. My husband and I have a combined student loan debt of 0,000 and we were planning to retire in six months. 
Assuming you have options to lower your monthly payments, it’s really about your personal preference. If you think you’d sleep better knowing that you don’t have this balance hanging over you, it may be better to downsize and pay it off, even if that means having a mortgage payment.

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The options you have available depend on a couple of factors. First of all, are these federal loans, private loans or a combination of the two? Second, if you have federal loans, is the debt from your own education, or did you take out Parent PLUS loans for your kids? While a lot of Baby Boomers are in debt because they paid for their children’s education, many have loans because they went back to school during the Great Recession, according to Mayotte.

Keep Momma Away from This Financial Adviser

“Mr. Beaver, my 79-year-old mother has trouble saying no to relatives and is being soft-pressured by her grandson, “Mario,” to let him become her financial adviser.

“He is 29 and was just hired by an investment house after bouncing from job to job for many years. He lacks any of the professional certificates that show some degree of training beyond obtaining his license to sell investments.

“Realistically, I do not think she needs or should be in the stock market, given her age, and as she is very well off financially (with a net worth of $8 million in liquid assets, plus rental income of $100,000 a year and no debt!). She has a simple lifestyle that does not require a great deal of money to support. However, Mario has been telling her that inflation will eat up much of her savings and that he can deliver a 25% rate of return annually on investments that seem to be gobbledygook to me!

“When I ask him to explain, he gives incomprehensible answers and implies that I could never understand these concepts. Mom just sits there and is afraid to say a word so as to not look stupid. But more than that, he is obviously a close relative and I sense a conflict of interest.

“Mom loves your column, and I am sure your advice will have a positive influence on her decision. Thanks, ‘Danny.’”

I ran Danny’s question by two friends of this column, retired university business and finance professors Lyle Sussman, Ph.D., and David Dubofsky, Ph.D., whose new book, Your Total Wealth: The Heart and Soul of Financial Literacy, I reviewed recently.

Mom Could Wind Up Getting Badly Burned

Each of these experts has strong feelings about how dangerous a situation this appears for Danny’s mother, or anyone else with significant financial resources and relatives who want their investment business. They outlined the road to getting badly burned by saying “yes” to family hungry for your portfolio.

Sussman: Using nepotism – favoring relatives – as a reason to select a financial adviser, especially where the client is elderly and the adviser stands to inherit from them, is an obvious conflict of interest. It could potentially be seen as financial elder abuse if things were to go south in a big way.

Surgeons do not operate on family members for the same reason that a family member should not be your financial adviser: Emotional attachment distorts objectivity and judgment.

Regardless of training and credentials – noble intent aside – nepotism places both the adviser and the “client” in a difficult and unnecessary situation.

Nepotism is an even greater problem if the adviser is a potential heir. Here’s the test: “Do you honestly believe that a financial adviser who is a potential heir, directly or indirectly through marriage, can be totally objective in managing your hard earned money?”

Reluctance to Ask Questions Spells Trouble

Aside from the obvious nepotism problem, this situation has another huge red flag: the fact that Mario discourages questions and answers them in an incomprehensible way.

Dubofsky: Being afraid of looking stupid can cost you dearly. And whenever an adviser promises a high rate of return when investing in stocks or makes promises of a specific profit, RUN!

A corollary warning: If an adviser actually produces a consistently high rate of return year after year, with little variation, regardless of how the overall market has been doing, it may be a Ponzi scheme. If you are told this, RUN! Bernie Madoff did this.

No one can guarantee that you will make a consistent rate of return, with the exception of the yield offered by United States Treasuries and/or insured bank CDs.

The easiest way of being stupid is the fear of looking stupid. The key is in asking questions of the adviser. If, after your meeting, you can’t explain to a 10th-grader what that person is doing to make you money, then shame on you! You are putting your financial dreams at risk without even understanding the risk.

Never forget that you are paying not only for advice, but also for the logic underlying that advice, explained in terms you understand.

So, ask questions, seek clarification and reduce uncertainty. The financial world is a world of jargon. Being stupid is not asking questions. If your adviser can’t or won’t answer your questions without making you feel embarrassed or intellectually inferior, fire that adviser.

Sussman concluded our interview with a direct question to Mom: “Ask yourself, with my net worth, no debt and a substantial income stream, how much should I risk in the stock market?”

“Not everyone needs to be in the stock market. Inflation is a risk we all face, and if inflation is high, it will have an impact on daily life. But losing a substantial amount of money in risky stocks will also impact her daily life. Recognizing risk and appropriately investing require careful consideration of risks and rewards.

“So go out, buy a new pair of running shoes, and run like crazy away from your grandson!”

Attorney at Law, Author of “You and the Law”

After attending Loyola University School of Law, H. Dennis Beaver joined California’s Kern County District Attorney’s Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, “You and the Law.” Through his column he offers readers in need of down-to-earth advice his help free of charge. “I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift.” 

Source: kiplinger.com