How to Make College More Affordable in the Age of Student Debt

It is no secret that a college degree is more important today than ever.  In an ever changing economy, it is hard to make ends meet without having some sort of education that will help you obtain a better paying job.  The problem is that many students don’t have the funds they need to be able to go to college.  This creates a vicious cycle of poverty and need for many.  The good news is that college can be affordable, if you focus on ways that you can cut down your spending.  Here are a few ways that you can make college more affordable, ensuring you are able to pursue a higher education.




#1 – Get a Part Time Job While You Pursue Your Degree

Getting a part time job will not only help you to get some work history under your belt, but it will also help you to have some extra cash flowing in while you are going to school.  Many college towns have resources that help students find jobs in the area that will fit their schedule.  While you won’t want to put all of your focus into work, lacking when it comes to your academics, you can find a balance between the two.  Finding something that is in your field of interest can also be beneficial; as it will help you get some hands on experience as you work towards your degree.

#2 – Save Money By Buying Used Textbooks for Cheap

These days, buying college textbooks can seem like highway robbery.  The reality is that you will really only use those books for just a few months.  Instead of buying your books from the campus bookstore, look for used books online.  There are several sites that will help you to find good cheap used textbooks, including chegg.com and half.com, among others.  You can also look on your campus bulletin board for used textbooks for sale.  Buying used textbooks can often save you hundreds upon thousands of dollars throughout your college journey.

#3 – Avoid the Dorm Life and Live Off-Campus

Sure, living in the dorms can seem like a lot of fun, and many universities require entering Freshmen to live on campus.  The truth is, living on campus in the dorms is much, much more expensive than living off campus.  Look for a small apartment off campus, or even someone looking for a roommate.  This will help you to cut down on your room and board costs, making college more affordable in the long run.  There is also a lot more freedom that comes along with living off campus, which makes it a more attractive choice for many students.




#4 – Start Out at a Local Community College

Tuition and costs of attending a four year university can be very overwhelming.  If you want to make your college experience more affordable, it may actually be a good idea to consider starting out at the community college level.  If you go to a local community college, you will clearly save a great deal of money. Community college can mean all the difference between graduating with an average of $29k in federal and private student debt or graduating debt-free.  While some people just want to move off to a university right away and start their college journey, it makes much more financial sense to stay close and get your basic courses out of the way.  The good news is that community colleges aren’t lacking when it comes to extracurricular activities, so you won’t feel like you missed out by not diving head first into an expensive four year university.

#5 – Avoid Meal Plans with Outrageous Prices

Everyone jokes about college kids eating ramen noodles and spaghetti out of a can, but the truth is that eating cheap while you are in college can be an excellent way to spend less money.  You don’t have to eat cereal everyday to save money.  One of the easiest ways to eat cheap is to skip out on the meal plans that your school has to offer.  The school doesn’t want you to know this, because it cuts into their profits, but meal plans are outrageously priced.  If you have to have a meal plan, go with the most basic plan and make sure that you take advantage of the meals that come with it.  A lot of college kids opt for a meal plan, and then turn around and go out to eat with friends anyway- throwing that money away.




As you can see, there are definitely some great ways to make college more affordable.  The key is to ensure that you look for ways that you can save money.  We have given you a few ideas when it comes to cutting down your spending while you go through college, but we are sure that you can come up with other ways to save money.  Make a budget each month, and try to stick with it.  We know that college is a lot of fun, and you will want to go out and do things with your friends, but that doesn’t mean that you have to spend a fortune doing it.

Best Money Saving Tip For Retirement

Understanding the IRS annual tax bracket can be the best money saving tip for retirement.  You can reap benefit by keeping up with the IRS tax bracket which can change every year.  For those who do not have ROTH IRA accounts to tap into during retirement, you will most likely must pay the IRS taxes on your retirement income.  Your retirement income could come from IRAs, 401K, Social Security, rental income, brokerage accounts, savings accounts, bonds, pension and many more.  All these retirement income can be taxable, meaning you will need to file tax you may owe in April.  Keeping your taxable income at or under 15% tax bracket will help you minimize the total tax you pay during your retirement.  By knowing the IRS annual tax bracket, you can control the withdraw amount from your retirement source of income to minimize the taxes you pay to the IRS every year.




The federal income tax consists of seven rate brackets: 10%, 15%, 25%, 28%, 33%, 35%, 39.6%.  These rate bracket depends on your filing status (Single or Married Filing Jointly) and income level.

Single (2016)

Taxable Income

Tax Rate

$0—$9,275

10%

$9,276—$37,650

$927.50 plus 15% of the amount over $9,275

$37,651—$91,150

$5,183.75 plus 25% of the amount over $37,650

$91,151—$190,150

$18,558.75 plus 28% of the amount over $91,150

$190,151—$ 413,350

$46,278.75 plus 33% of the amount over $190,150

$413,351—$415,050

$119,934.75 plus 35% of the amount over $413,350

$415,051 or more

$120,529.75 plus 39.6% of the amount over $415,050

 

Married Filing Jointly (2016)

Taxable Income

Tax Rate

$0—$18,550

10%

$18,551—$75,300

$1,855 plus 15% of the amount over $18,550

$75,301—$151,900

$10,367.50 plus 25% of the amount over $75,300

$151,901—$231,450

$29,517.50 plus 28% of the amount over $151,900

$231,451—$413,350

$51,791.50 plus 33% of the amount over $231,450

$413,351—$466,950

$111,818.50 plus 35% of the amount over $413,350

$466,951 or more

$130,578.50 plus 39.6% of the amount over $466,950

Most of us probably cannot generate more than $100,000 from our retirement sources so the saving really comes into play for the 15% tax rate versus 25% tax rate.  The advantage here is obvious…  If you are married, then your combined source of retirement income for both you and your wife needs to be less than $75,300 to stay within 15% tax bracket.  Anything over will be taxed at 25% rate.  So, if your combined retirement income is $100,000, then you will pay the IRS $10,367.50 (15% rate) + $6175 (25% rate) = $16542.50.  If you can defer $24,700 to later years, then you can save $2470 in taxes by staying under the limit of 15% tax bracket.




Top 5 Ways to Minimize Income Tax in Retirement and Stay Under the 15% Tax Bracket

Retirees generally have many sources of income, and they all need to be monitored carefully so you can avoid paying high taxes. 

  • Reduce expenses can help you stay under the 15% tax rate because it causes you to withdraw less from your retirement fund. 
  • Minimize mortgages before retiring.  One of the biggest monthly expenses is the mortgage.  If you can figure out a way to get rid of your mortgage, then it will help you live with less, thus reducing your withdraw from your retirement fund.
  • Generate dividend income or long-term capital gains as they are taxed at 0%, 15%, or 20% depending on your tax bracket.  If you can stay under the 15% tax bracket, then your dividend income will not be taxed, which can be huge benefit for your retirement.
  • Donate to charity helps.
  • Take investment losses when necessary.

Did you know…

Social Security income is taxed but if the combined income is below $32,000, then you do not have to pay any tax on your Social Security benefit.  However, as your income increases, your tax on the Social Security benefit increases.

File a joint return, and you and your spouse have a combined income that is

  • between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
  • more than $44,000, up to 85 percent of your benefits may be taxable.




Top Three 401K Decisions I Made When Starting a New Job

I have stayed with same company for past 17 years but later this month I will be starting a new job with a different companyAs you can imagine, I have several concerns and one of the concerns deals with 401(k) retirement plan.  There are three primary decisions I need to make related to my 401k retirement plan. 




Continue reading

Foolproof Tips for Millennials to Gain Early Retirement

Photo Credit: pixabay.com

Photo Credit: pixabay.com

Starting early is always the key to improving your financial status. As time is on the side of millennials, investing and gain financial freedom quickly should be a key objective.

Millennials can start as early as now in terms of investing for their retirement, especially if they are planning to quit the rat race early. Continue reading

Do You Get OASDI Tax Back?




OASDI tax is the employee paid portion of Social Security tax.  OASDI stands for Old-Age, Survivors, and Disability Insurance and everyone must pay the government OASDI tax.  Social Security FED OASDI Tax will impact your paycheck and there is nothing you can do about it.  The benefit will be that you will also receive Social Security benefit when you reach the eligible retirement age.

The government uses OASDI tax to pay all the retirees who also has paid the same tax during their working years.  This means once you pay the OASDI tax, you will not see any benefit until you are also retired.  It serves as an insurance for future years similar to annuities so there is some benefit in paying OASDI tax.  However, you are looking at maximum pay of about $7300 per year for each tax payer, which is a steep amount.




To understand how to calculate the OASDI tax, refer to the previous post on Understanding OASDI Tax and Social Security Withholding Rate