Category Archives: Finances

Is A College Degree Worth The Debt?

The title becomes an interesting conversation. Throughout history, getting a college degree meant big things in life; at least that was the general thought. Even at a price that, at the time, was considered expensive, it was nothing like it is now.

These days, the rates for private universities can be extreme, and state universities, although still fairly affordable for state residents, can be pretty high for out of state visitors. In my area, if you only take 12 credit hours a semester, the price comes to around $41,000+. The state university closest to our area comes in around $9,600 a year for residents, and $19,200 for out of state students.

Even with the possibility of telecommuting (online classes) and not having to follow all the former rules about freshmen having to live on campus, costs can feel prohibitive, especially if you have to work and pay bills while trying to get a degree. All of this begs this question; is a college degree worth the debt?

It depends; don’t you just hate that answer?

Like everything else in this world, there’s no cut and dry answer for everything. For instance, if you want to be a lawyer or physician, first off you don’t have a choice, and second, if you’re even just passable as a lawyer or physician you could be earning $100,000 a year pretty easily within a few years of graduating. The long term benefits for each can outweigh the costs… depending on specialty.

If you’re a lawyer or physician, a debt of around $500,000 might not only be overcome with less difficulty (not saying it’s easy because, regardless of income, both vocations need to carry liability insurance, which can be pretty steep, but in some cases the employers will help pay off some of the debt), if you’re in it for the long haul you have the chance to be pretty well off.

What about for everyone else? Once again, it depends on what you’re shooting for. The average pay for engineers out of college is around $63,000 a year, and the rate of pay might be determined on where you got your education from. The overall average is around $45,000, which still isn’t bad, but it’s financially better if you went to a less expensive college. Even for what’s considered “desk jobs”, many of them require either a bachelor’s degree or many years of experience in a particular field, sometimes for pay less than $40,000 a year… and still wants certification along with it.

Even in today’s world, there are a lot of spouses who go to college and, instead of opting for a career, decide to be stay at home parents or taking a shot at self employment, folks who still have to pay off college loans. It might not have been financially smart to spend all that money for a degree that, no matter what it is, becomes meaningless, but to be fair those folks didn’t go to college knowing they weren’t going to aim for employment at some point.

That’s the problem with trying to answer this type of question. There are people who don’t go to college, end up working at a place where they show proficiency, but because of a lack of a degree, or the right degree, will never be considered for advancement. There are also people who got a college degree in one field but end up working in a different field, and sometimes just having a degree allows them to be eligible for promotion, even if it’s in a totally different area.

We also can’t deny the fact that there are some high school graduates who find vocational schools to go to that can not only make pretty good money but, with proper business processes, could end up becoming millionaires. In the book The Millionaire Next Door by Thomas J. Stanley, he highlights two professions where college degrees haven’t been needed for many of the people involved have become millionaires, those being plumbers and, oddly enough, auctioneers.

We also can’t deny the fact that there are so many more people who don’t go to college, that barely got out of high school and would have never considered it, that earn less than $10 an hour (although some states are passing laws trying to raise minimum wage), as well as those who are lucky enough to work in a town where manufacturing jobs are still plentiful and, because of unions, pays a pretty nice wage without the education. The work might not be stimulating but not everyone looks for that in a job.

Families need to start thinking about college prospects when students are in their sophomore year of high school. Those thoughts should include the area of study, parent’s finances (which many parents are reluctant to discuss but it needs to be a crucial part of the discussion), and the distance and costs of the universities being considered. Not all software programmers need to go to a top college to be proficient in what they do (Steve Jobs, Bill Gates), and not all millionaire businessmen have gone to college (Richard Branson), so it’s possible that one can do well without college. A lot of technical knowledge can be learned online these days, along with taking online courses.

If you’re on a specific type of career track, getting a degree should probably be in your future. But, for the most part, the most expensive universities won’t give you more juice towards a great career than a state university or community college. Your debt will be lower and your experience will be just as good.

It’s something to consider; you can always change your mind along the way.

© December
TL Wall Accounting

Legal Fees Could Kill Your Business

In the summer of 2009, the Valley Swim Club of Philadelphia created a major controversy when it suddenly kicked out a group of black children from its facility, returning money that had been paid to them, and sent them packing. The dispute was blamed on a miscommunication on who was coming and when they’d be coming.

Of course, no one bought that excuse, and the swim club faced all sorts of bad publicity and protests. Finally it had to face a major lawsuit brought by the Pennsylvania Human Rights Commission, stating that “it had found probable cause to conclude that the campers were asked not to return because of the ‘racial animus’ expressed by one member and ‘racially coded comments’ by other members.”

The Valley Swim Club ended up deciding to file for bankruptcy, with the intention of closing the club and selling off all its properties to pay its bills, including any settlements or court decisions as a result of these lawsuits. An email sent out by the club president, John Duesler, stated that though the lawsuits hurt, the club had been barely staying out of the red for the past decade and already owed more than $100,000 in other expenses. That was back in 2012; can you imagine how much that would cost these days?

Lawsuits cost a lot of money, no matter which side you’re on. Filing a lawsuit costs money; how much depends on the type of lawsuit being filed and where it’s being filed, as every state has different filing rates. Defending yourself against a lawsuit might cost you more money, whether you win or lose; lawyer, legal fees, fines against you or your business, loss of work time… and more things to worry about.

If you have to hire a lawyer, that’s definitely going to be expensive, as most lawyers start at least around $600 an hour, except for maybe the initial conversation. If you’re a small business, you not only have to deal with finding a way to pay for a lawyer and everything involved with that, but you’re going to miss time from work, which means you’re not making any new money to replace the money you’re spending unless you have a few employees to help you out.

There’s also the bad publicity you might have to deal with if the lawsuit hits the local news, and you’re hoping to stay in business once things have been settled. Even if you win, your reputation could take a major hit depending on what the problem was.

Something that major companies are starting to realize more often is just how bad it looks when they have multiple lawyers sitting at the table when someone who’s suing them only has one lawyer, who has yet to be paid because his pay is dependent upon the outcome of the lawsuit. Juries are like everyone else; they hate the impression of someone being bullied.

It’s for reasons like this that we advocate that all businesses think more about financial planning for the future, both for personal and business reasons. In this case, thinking about legal representation for things you might have to deal with is definitely a large financial consideration. You may not always be able to talk your way out of a situation, and for some businesses, liability insurance isn’t easy to find.

Legal fees takes away money from everything and everybody; at the very least one would hope your company is incorporated or protected in some way, which removes personal liability from any decision. This is something someone like us can talk to you about when we work with you through our accounting services; we’ve made recommendations to many of our clients throughout the years.

If you’re looking to keep your business out of expensive lawsuits, cleaning up your business practices and training your personnel on good customer service practices might be a good place to start. If you don’t take care of that, you might be the next business that’s closing its doors and filing bankruptcy. We don’t wish that on anyone.

Just something to think about, business or otherwise.

Have You Thought About Creating A Trust?

You’ve probably heard or seen the word “trust” and know the conversation isn’t about trust in people. When it comes to finances and protection, a trust is a legal process that allows you to add something specific to an estate plan. In general terms, you can add things to your trust via a will like money, jewelry, and even a house. The idea is to protect your assets when you’re incapacitated or pass away so that outside entities can’t touch it without a person called a trustee that you name to manage your assets when you’re no longer capable.

by Joshua Hoehne on Unsplash

There’s two kinds of trusts; revocable or irrevocable, and within those two types of trusts are other types of trusts, which we don’t get into here. The main difference is that anything you put into a trust that you might want to remove later on is a revocable trust, whereas anything put into an irrevocable trust means nothing can be taken out until you can’t control it any longer, even by you, but also by pretty much no one else can either, which means it’s perfect for protecting your assets and for potential long term care issues.

For instance, if you put jewelry, money and things like that in an irrevocable trust and later on you go into the hospital or a nursing home, “most” of those assets can’t be touched by anyone, depending on the state. Nursing homes will bill your estate for the costs of you staying there until your insurance coverage runs out, and as long as there’s enough money in a bank account, all is good.

But at a certain point, Medicaid will come into the picture, and even within the irrevocable trust, depending on the state, a certain amount of assets might need to be used to reach the amount that the states require for you to be allowed to be covered by Medicaid. Nothing else can be touched in the trust after that point until you’re deceased, in which case the trustee you’ve selected will be able to follow the rules of the will and dispose of items as requested. In this instance, “dispose” doesn’t mean throwing anything away; it means following the requests of a will as to who gets what, and how much.

Just to clarify, the owner takes care of everything within a revocable trust, but the trustee takes over when the owner can’t do it any longer, whereas the trustee is the only one who can remove anything from an irrevocable trust once it’s created. This means you’ll want to make sure you pick someone you trust implicitly.

Many times, if you engage the services of a lawyer when you want to create a will, they’ll add language creating a trust at the same time, sometimes at no cost. After that, you can talk to your lawyer about how you might want to use your trust, but it also helps to speak to a financial consultant or a tax consultant to determine what’s more important to you based on your current financial state and what you might want to protect for others.

For instance, putting assets into an irrevocable trust allows you to protect a large dollar of assets that can’t be touched, but should only be used if you still have enough left to keep paying for everything else while you’re alive. A revocable trust allows you to keep changing which assets and how much you want to keep in there, along with making it easier for your trustee to handle your affairs when needed.

To learn more about trusts, here’s a link to information about revocable trusts and another for irrevocable trusts.

Don’t Fear Potential Credit Score Problems

Less than a year ago, we talked about the importance of having a good credit score. We still hold the belief that it’s important to do what you can to keep it as clean as you can; however, there are times when you have to take action that benefits you in the here and now.

Here’s the thing about credit score; they’re not absolute. This means five things: it can change depending on your finances; higher income, paying down debt, increasing debt (this one’s scary); what you’re trying to use credit for.

It’s time someone addressed this thing about credit scores and why so many people are scared about them falling. In some ways, we believe that credit scores are worthless. What is it about credit scores that seems to scare so many people, and why do we give them a lot of importance?

1. People worry that a bad credit score will keep them from getting new credit. That may or may not be true. It really depends on what you want credit for.

The truth of the matter is that if you can afford to buy things, you really should be looking for new credit anyway. If you are looking to buy a house, you should be trying to put away as much money as you can so you can afford a nice down payment. A bad credit score means almost nothing if you have a nice down payment of at least 25% or more.

If you have a bad credit score and you know it (if you’re getting your annual free credit report you should know it), then you should know better than to be trying to get a new credit card in the first place. Even so, you can probably still get a credit card; the interest rates might be higher, but interest rates are going up anyway and they’re going to pick on people whether you have good credit or not… unless you’re trying to get another card from the same creditor.

2. People worry that a bad credit score will keep them from getting a new job. There are certain jobs for that might be true, but the overwhelming majority of positions that are out there in the world are looking at credit scores at all. If you have great qualifications, even those jobs that check credit scores are probably going to hire you anyway.

What those employers are looking for when they look for credit scores are any indication that an employee’s recent debt of gotten so far out of hand that you might possibly be thinking about doing something illegal. Most employers won’t ask to look at your credit score if the position you’ve applied for doesn’t involve handling cash. By the way, you can always deny employers the option of looking at your credit score; even if you don’t get the job because of it, at least you’ll have kept your privacy.

3. People worry that a bad credit score will keep them from getting a new apartment; unfortunately, that sometimes happens in some nice complexes. If you have enough money for a down payment, most apartment complexes aren’t even going to check your credit report. But if they do, it’s a different animal than having them check your credit score. However, if your credit report looks bad, they might want to see more information before accepting you.

4. People worry that a bad credit score is an indictment against the type of person they are. Very few people care what your credit scores are like. A bank might care about your credit score if you trying to get a loan from them, and you might have some difficulties with car dealerships trying to get a brand new car if your credit score is pretty bad and you can’t afford a good down payment.

The truth is that most of the time you’ll still get a car, even if the interest rate is higher, but the more money you can put toward your car the last interest rate is going to be. Car dealerships work differently; if you don’t keep up with payments, they’ll just repossess your car. That’s embarrassing, but it’s not seen as criminal.

Banks are a different story, especially after the ups and downs of the economy over the last few years. Banks are being a little more cautious with how they’re loaning out their money. Here’s a couple of things you may not know.

One, you have more than one credit score. There are three credit reporting agencies, and each one has different credit scores. Experian and Equifax provide 16 different FICO scores to lenders, while TransUnion has 21. That’s because they all have different criteria for what they report, and sometimes, if you get all three credit reports, you’ll see something on one that’s not on other, and that will affect your credit score.

Two, many credit reports are wrong in some way. They might have names misspelled, addresses totally wrong, cards that show as open when they were paid off and closed years ago, wrong employers, and wrong addresses for those employers. When you know what people are looking at, and you do this when you’re getting credit reports on your own, you know beforehand what’s going on in your credit report and you should get any errors fixed that might affect your financial standing.

The way people obtain credit these days has already changed, and it’s probably never going back to the days when we were used to receive 14 to 20 credit card offers a day in the mail. We’re exaggerating a bit, but it certainly felt that way. People who supposedly have good credit scores these days are finding it hard to get some banks to give them loans for homes. If someone with a credit score of 750, which is considered really good, can’t get a loan, why is anyone else worried about their credit score? You know what supersedes a credit score?

Cash! If you don’t want to worry about credit scores or credit reports, learn how to budget your money and start putting money away for purchases of things that you want. If you can build your bank account, you’ll find that you can pay for most things you need, and for those things that you end up not having enough money for, you’ll find that if you probably be given options so you can get what you need to get things taken care of; just do some research so you don’t get scammed!

Don’t allow yourself to feel like a victim to credit scores. Take back your financial power, be in control of your own finances, and have some peace of mind.

Do You Need To Borrow Money? Try Your Life Insurance Policy

At some point most of us find ourselves needing a quick cash boost. Something many people don’t know is that if they have a life insurance policy, there’s a possibility that you can borrow against the cash value you’ve accumulated over time.

First, let’s talk about the difference between what you’re life insurance policy amount is for and what cash value means. If you purchase a life insurance policy for $20,000, if something happens to you after a certain amount of time, your beneficiary will be paid the amount you took the policy out for, as long as you continue paying your monthly insurance payment.
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