Four Ways to Scrape Up Money to Pay for Your Child’s Higher Education

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1.  Tax Breaks

The tax code is very friendly for parents paying for college and technical school.  The Hope Scholarship Tax Credit lets you get a $2,500 tax deduction for paying $4,000 for your child’s qualified educational expenses, which are basically tuition and fees, but not room, board, or books.  You get a $2,000 credit for the first $2,000 you spend on qualified expenses.  The first $1,000 is  a refundable credit, which means you can get this as a tax refund, even if you owe nothing in taxes.  The second $2,000 you spend, you get a 25% tax deduction, so it is $500.  You can change your W4 so you can decrease your tax withholding and make monthly payments to your child’s college or technical school.  This tax credit does begin to phase out at $180,000 married filing jointly or $90,000 for single filers.  Less than 10% of U.S. households have incomes of $180,000 or more. Continue reading Four Ways to Scrape Up Money to Pay for Your Child’s Higher Education

How Do Behavioral Finance Concepts Relate to Budgeting?

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The concept of behavioral finance that most relates to budgeting is mental accounting, which is separating your money into separate accounts.  Doing a budget is mental accounting, because you are separating your money into different accounts where your money is intended to go.  You could also give savings account a specific purpose. Continue reading How Do Behavioral Finance Concepts Relate to Budgeting?

Are Dave Ramsey’s Budget Percentages Wrong?

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This is a consolidation of three widely used recommended percentage budgets from Dave Ramsey, Credit Counseling Advice, and Consumer Credit Counseling Association:

Charitable Giving             0-15%

Housing and Utilities     20-45%

Food                                    5-20%

Transportation                  6-20%

Medical                                2-10%

Clothing                               2-7%

Invest/Savings                   5-13%

Debt Payments                  5-20%

Personal/Recreation        5-10%

When the three are combined for range, the range becomes too wide.  Let’s see if I can justify narrowing it a bit. Continue reading Are Dave Ramsey’s Budget Percentages Wrong?

How Do Americans Spend Their Money?

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The Bureau of Labor Statistics put out the results of their Consumer Expenditure Survey for 2014 this month.  I thought I’d look at the range of spending in the fourteen categories they use, based on household situation, and how our spending compares.  I decided to look at spending based on age, income, city size, employment, and household composition. Continue reading How Do Americans Spend Their Money?

Starting On Our Retirement Budget

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Today is the Day

Today we start our first month of living off our pension income.  Our pensions were electronically deposited today.  For the next four months, we are supplementing our budget  with $400 per month that we saved for personal money and clothing, since it isn’t worthwhile for us to work the rest of 2015 since we don’t want to pay a higher rate of taxes and don’t want to increase our parent contribution for our daughter in college, as calculated by FAFSA.  We plan to work for our personal and clothing money beginning in 2016, since we don’t want to draw on our retirement fund until it is larger.

Our Monthly Retirement Budget: Continue reading Starting On Our Retirement Budget

Meet the Retired MBA

image (1)I finished my bachelor’s degree in business administration in 1982. Unfortunately, unemployment hit a post-depression high that year, and I couldn’t find a job that I liked.  I went back to school to get teaching certification so I could coach high school debate.  I’ve taught high school for 30 years.  In 2009, I got certified to sell mutual funds, life insurance, health insurance, long term care insurance, and mortgages.  I quit after three years working part-time, without much success as a salesman.  While I was trying to sell financial products in 2010, I decided to go back and get my M.B.A.  I planned to finish in two years, but an unavailable course and heart surgery for an aortic aneurysm cost me two years.  I completed my M.B.A. in the summer of 2014.   Last year I did tax preparation part-time. Continue reading Meet the Retired MBA