With college expenses on the rise, along with the interest rates on student loans, many individuals are looking for ways to reduce college debt. From personal experience, I have come up with three easy ways to reduce college debt:

1. Pay Quarterly Interest

The availability of scholarships is declining; so many people are depending on student loans to get them through college. The student loans are a lifesaver, but eventually comes payback time. In anticipation of that dreaded day repayment begins, reduce your college debt by paying the quarterly interest on unsubsidized student loans.

Unlike subsidized student loans, the minute you cash the check, your loan starts accruing interest. While it may seem like no big deal at the time, it can really add up, especially if you are going to college for 4 or more years. If you pay the quarterly interest, you will only have to pay the interest on the original amount of the loan, saving you a substantial chunk or change.

2. Purchase and Sell Used Textbooks

You can also save a bunch of money if you purchase and sell used textbooks. Once you have to pay $200 for one book, this money saving idea is a no-brainer. For example, I have an English degree. However, I had to study a lot more than English to graduate. Even though I saved all of my English textbooks for future reference, what do I want with my math, science, and health books?

So, I am quite pleased to find used textbooks at the college book store or online. Many familiar online bookstores have a used textbook site. Still other sites are totally dedicated to selling used textbooks. Since you do not plan on keeping the book anyway, this practice can save you hundreds of precious educational dollars. Likewise, you can sell you books to the next student who wants to save wherever possible. Go used and save.

3. Attend College Locally

Finally, attend a local, or state, college or university and save thousands. If you are like my daughter, you already have an idea of where you want to get your post-secondary education. You have a specific goal in mind, and the local college does not have the resources you need. So you are looking at a college or university farther from home.

My advice, wait a couple of years. What! Yes, wait a couple of years to go to the college of your choice. All education programs require essentially the same core classes. You can save a lot by paying in-state tuition for the first couple of years. Also, local colleges often offer scholarships to entice students to keep their educational dollars within the community. Then, when it comes time to take your career related courses, you can follow the best opportunities.

Reducing college debt is as simple as one, two, and three:

1. Pay quarterly interest on student loans
2. Buy and sell used textbooks
3. Take your core classes at the state or local level. In-state tuition is much cheaper.

Do you have a great idea on how to reduce college debt? I would appreciate your input!

Tina

A reader sent in the following question about managing taxes on personal donations.  I’ve never been on the receiving end of donations so I don’t know the tax implications or the best strategy to reduce taxes on the money. 

It sounds like an awfully sad situation; I can definitely see why they would want to reduce the tax bite. The more they can keep, the more they have to spend on the well-being of their kid. Can anyone offer some tax tips for this unfortunate situation?

A friend of mine has a dying child. They have been receiving donations, funds raised for them. What will be the best way to set up an account or fund that will be tax-free? Is this money even taxable?

Being a self-employed single mom of two, I have no guarantee of a certain monthly income, especially during the holidays. After all, my clients are also feeling the budget crunch of Christmas, so they are less likely to require my services.

Unfortunately for my children, it also means that Mama’s Christmas list has to be more economical, and there probably won’t be as many presents under the tree this year. Nevertheless, this could prove to be the best Christmas ever!

Why? Maybe my kids and I will take the time to remember why we celebrate Christmas in the first place. Is it only because of all the presents under the tree? I sure hope not! Is it the opportunity to get together with family and friends? Is it a celebration of the foundation of our religious beliefs? Is it a day set aside for letting people know how much they are loved and appreciated?

Why do you celebrate Christmas? If you do not blow your finances to smithereens and charge your soul, will your family grumble, complain, and really think you love them any less? What are you teaching your children this Christmas?

Obviously, you are concerned about your financial well-being. You want to understand how to improve your finances. You want to get out of debt, learn how to save, learn how to spend wisely, learn how to budget, or a plethora of other issues related to money, or you wouldn’t be participating in this blog-right?

Since you believe in being wise with your money, there is no time like the present to begin instilling good financial sense in your children. Teach them that the depth of your love is not measure by the size of your wallet. Show them ways you can enjoy the holidays and give, without spending a cent.

For example, giving of your time to help the needy at the local soup kitchen is an excellent way to foster a giving heart, and help your children realize their blessings, even if Santa is not wealthy this year. Volunteer to ring the bell for charity this season. Make a Christmas basket for the elderly lady next door, and take the time to sit down and share the contents.

No, you may not be able to buy your children the gifts you had hoped to afford this Christmas; nor, should you go into financial debt. Instead, you can give them the priceless gift of giving.

Can you think of other economical ways to enjoy Christmas or give of yourself to those less fortunate or lonely?

Tina

Do not shoot the messenger! Although I intellectually understand the necessity of paying my share of income tax, I too would rather not have the expense. As soon as the holidays are over, income tax information is deposited in my mailbox. Even though taxes are not due until April 15th, I know in advance if I am going to be required to pay.

If I have any idea that I might owe Uncle Sam, I need to plan for it now. If I wait until the deadline, it could mean financial disaster! For example, I know a man who spends his wages as fast as he makes the money. Saving for the unexpected, or even the expected, is not any part of his financial plan.

Thus, if he does not have the money, he simply chooses to ignore the fact that he owes income tax. If he does not file, maybe the Federal government will not notice. BIG MISTAKE! The IRS might not catch on today, but when they come across flagrant neglect or naiveté, it still costs big bucks in the end.

The penalties and interest of neglecting your civic responsibilities, whether you agree with them or not, can far exceed anything you can imagine. The process is similar to mating rabbits: you start with two little rabbits, and by the end of the year, you are overrun with the little creatures. Your tax bill will grow faster than multiplying bunnies, if you neglect the bill.

To avoid financial devastation that bankruptcy cannot even cure, budget for your income taxes, especially if you are self-employed. In the event you do find yourself owing Uncle Sam, do not shove the problem under the proverbial rug. Make arrangements to take care of your tax debt as soon as possible.

So, why am I being a Scrooge and bringing up taxes and the IRS now, instead of after the holidays?

Plan now or pay later. Before you spend every spare cent you have on Christmas, consider the financial responsibilities in the coming months. If you are going to need the money you are spending today, tomorrow, you need to adjust your Christmas budget.

You will have a much merrier holiday, if you do not have the financial pressures of next year weighing on your mind. Remember is does not mean you will become a Scrooge to live within your budget. After all, as the story goes, the Cratchits are far happier being poor than Scrooge ever was with all of his money.

Do you have any tax tips, or ways you celebrate Christmas that are inexpensive (free) and fun?

Tina

Is your credit card your friend or foe? Is your mailbox inundated with tempting offers, from competing financial institutions, for additional credit? Are you tempted to check out the offer, or do you drop the envelop straight into the shredder?

Have you noticed that the more credit card debt you experience, more offers flood the mail? What is up with that!? Obviously, banks are more concerned about making money than the consumer’s financial stability. So, it is up to you, and me, to make the right choices.

So, how can your credit card become your friend?

1. Travel Safety

Honestly, credit cards can be a blessing, but only if they are used to your advantage. For example, I do not like to travel with a wad of cash in my pocket. I would prefer to put the trip on the card and carry a minimal amount of paper money in my purse. If I lose the money, I am in big trouble! If my card is misplaced or stolen, I can call the company, have the card cancelled, and protect my credit from theft.

2. Reap the Rewards

My father-in-law travels frequently. To save money, he has a card with frequent flier miles added with every purchase. So, he buys groceries and pays all of his bills via his credit card. Thus, the miles add up quickly, and he saves a bundle at the travel agency and definitely reaps the rewards.

3. Establish Good Credit

For individuals trying to establish good credit, having a card is a good start. The better you can handle the credit you have, the better credit score you will achieve, and lenders will be more likely to loan money for an automobile, house, or other large expenditure.

How your credit card becomes your enemy:

A purchase here, a purchase there, and pretty soon the card is maxed out. Then, here come the bills. While the card seems like free money at the time, your purchases, plus the interest, can really bust a budget.

To get a clearer picture, exercise your Internet search engine and find a credit calculator. Put in the amount of your debt, the interest percentage rate, and the scheduled minimum payment. If you never charge another dime, I promise you will still have quite a shocker. The calculator will tell you how many months it will take to bring the balance to zero. The number of months, times the minimum payment, will result in a much larger debt than the original amount charged.

So, how can keep your card a friend, and keep from turning into a foe? The answer is simple:

Do not spend more than you can afford to pay at the end of the month!

Rack up those frequent flier miles, feel safer on vacation, and begin building your credit for the day you want to buy a home or a car. But, do not carry the credit over to the next bill. Use credit unwisely, and the card will be your foe in no time at all. Avoiding spending money you do not have and a credit card will remain your friend.

Is your credit card your friend or foe?
Tina

Christmas is a wonderful time of year! You look forward to the lights, the Christmas carols, the food, and the chance to be with family as you celebrate the reason for the season. However, along with all the festivities, the bills usually stack up during the holidays. For many, gift giving results in dread and frustration, as the list of recipients grows longer every year.

Sadly, many people spend so much money over the holidays, paying the bills takes until next Christmas to get caught up. Then, it is time to start spending all over again! Do not fall into the money trap of Christmas. Learn how to enjoy the season without suffering from the play now, pay later syndrome.

Of course, I created a catchy syndrome to get your attention, but there is nothing funny about buying your way into debt every December. So, here are some ways you can enjoy the holidays without selling your firstborn to pay the bills:

• Reevaluate your priorities- is Christmas about family, or getting the best presents. If it is usually the latter, have a family discussion, and set new priorities. The true joy of the holidays should not come in a big, expensive box.

• Be creative- and make decorations for the tree. A great family activity, making homemade decorations like stringing popcorn is lots of fun, unbreakable, and does not take up storage space after the first of the year.

• Homemade Christmas gifts- are a wonderful way to say, “I love you.” For example, if you crochet, make snowflake ornaments for all of the relatives. Children, draw pictures. Parents will treasure your artistry more than anything you could have bought at the store.

• Give IOU’s- No. It is not bad etiquette to give an IOU. Last year a family of seven decided Christmas was simply getting to costly, so they exchanged notes. For example, a child’s note may read: “I owe Mommy any chore of her choice without complaint.” Dad’s note to Mom could say: “I owe you a date, without kids, to go shopping, eat out, go to the movies, or take a walk on the beach.” With a little help, even the smallest toddler in the family can give IOU’s to parents and siblings.

• DO NOT overcharge this Christmas- have a budget and stick to it, even during the holidays. If you must pull out the plastic, make sure you do not charge more than you can pay off within the next month. You will enjoy the holidays a lot more, if you do not have to dread January.

As a self-employed single parent, I tend to dread the holidays, which makes me sad. I do not have the money to get them the gifts they want. Also, I still have to worry about buying for extended family. I have had to consider my own values this Christmas.

With the rising cost of heating fuel, gasoline, housing, and everything else-including groceries, I know many of you are also feeling the budget crunch of the holidays.

If you have any suggestions on how to have a Merry, and affordable Christmas, please share your ideas.

Tina

Holiday shopping is ZERO fun.  Although I wasn’t around for Black Friday, I did spend half an hour waiting in line this evening to make my first gift purchase of the season.  The longer I stood the more irritated I became with the situation and any holiday cheer I was feeling quickly evaporated.  I decided while waiting in line that this year I’m going to do the remainder of my Christmas shopping online.  If I start now I should have it all delivered on time, we’ll see how it goes.

I wasn’t the only one with shopping on the brain this week. The Digerati Life gives us some Black Friday Inspired Shopping Strategies, Generation X Finance offers a List of Some 2007 Cyber Monday Sales, Free Money Finance listed 10 Things Better than Shopping Today, Mighty Bargain Hunter asks Can you do without these holiday expenses?, and My Money Blog suggests some Investment Gift Idea For Children.

Here were some other posts I enjoyed this week:

-The Sandwiched Generation @ Money, Matter, & More

-Book I Read: An American Hedge Fund @ Suns Financial Diary

-Changing Credit Card Rewards Strategy @ Five Cent Nickel

-History of the Indices: Dow, Nasdaq, S&P & More @ Blueprint for Financial Prosperity

-Exactly HOW I Pay Off Debt, Mortgages And Credit Cards Early @ No Credit Needed

What’s the most difficult time of the year to stick to your budget? How about the holiday season? Of course, it’s not just the holidays, it can be difficult to live within your means throughout the year. Below are some tips I’ve used to help me stay on track with my budget. Although they may read simply, putting the steps into practice can be difficult and require some sacrifice on your/my part.

1. Pay the Rent/Mortgage First

Regardless of your financial circumstances, you need a roof overhead, a place to call home, a sanctuary from the world at the end of the day. So, your housing comes off the top of your check.

If your check is not big enough, you may have to relocate or find a roommate. When applying for a loan, I was told the house payment or rent should not be more than 25% of the monthly income. Any amount above and beyond that percentage and you will surely be financially challenged.

2. Pay the Utilities Next

The roof over your head will be very uncomfortable, if you are freezing to death in the winter, or roasting to death in the summer. You need to keep up with your utilities. If you are ever required to pay late fees or reconnection charges, it will be extremely costly and put your finances further in the toilet.

If your utilities are too high, you must conserve. In the winter, turn the heat down a couple of degrees and wear a sweater, if necessary. In the summer, turn the air conditioning down to a bearable temperature. When you are not at home, keep the house about 10 degrees lower than when you are home. The same goes for nighttime. Crawl deeper under the covers and save.

3. Pay the Remaining Bills

Before you do anything else with your money, pay your creditors. You bought it, your pay a monthly fee for service, or you already used it, and you need to pay. If you do not pay your bills, the cost rises for the people that do, your credit will be ruined, and debt collectors will start to call.

4. Buying Groceries

You have met all your financial obligations, and you need to buy groceries. Now what? You already know you do not have enough to shop for your favorite food items.

You need to shop sales, used coupons-even if they may be a pain to collect, buy generic, and cut back on your list. For example, I love a good steak. However, I am on a hamburger budget. So, I buy hamburger. Sometimes, even when hamburger seems too expensive, I purchase a lot of eggs and peanut butter. Both are excellent sources of economical protein.

What you buy at the store may not be your favorite items, or even your preferred brands, but you are doing the right thing to stay within your budget.

5. Say “No”.

If staying within the budget is still impossible, you need to learn to say “no”, even to yourself. Personally, I like to watch television, when I have the time. However, if the privilege of cable keeps me from observing the first four budget constraints, it is bye-bye cable. I would much rather feed my kids than watch the news.

If you have more expenses than you have money, obviously something has to go. You may have to say “no” for many things you or your family want, but it is more important to budget for housing, utilities, absolutely necessary bills, and food.

Do you have other advice on how to live within your budget?

Tina

As you go through the checkout line this holiday season try the following experiment. Take all your full shopping bags directly to the Salvation Army. Keep one and give the remainder away. Repeat this every shopping trip. How long would it be before you dramatically decreased the amount you bought or just stopped shopping all together?

Disposable Gifts

Seem a little drastic? Did you realize that many of the things you buy for gifts will eventually end up being thrown away or donated? Of course there are some items that will be used and cherished for years but then there’s the other group of gifts that will just lay around the house for a year or two, then get bagged up and disposed of.

Out With the Old, In With the New

Right now we have three big bags full of stuff sitting in our entry way waiting to be donated. It struck me how ridiculous it was that only a day before Black Friday, we were cleaning out stuff, to make room for more stuff we’ll get over the holidays. We’re actually not participating in the mad shopping dash the day after Thanksgiving since we’re out of town this year. However, had we been at home, I think those three big bags would have kept me at home with my wallet closed.

Fashion Cycle

It seems one of the worst offending items is clothing. We buy more shirts, shoes, pants, belts, and purses even though the ones we have are still comfortable, functional, and probably even still fashionable. We haul bags of old clothes to Salvation Army then empty our wallets to fill their spots with brand new items. It doesn’t make a whole lot of sense to me but it’s in the clothing industry’s best interest to make it seem very sensible to you. Just keep in mind that many of those retail purchases you make in the next month are destined for the donation pile.

Personal finance can be very stressful. Here are five major areas that we feel fortunate about.

Limited Debt

The bad news is that we have a mortgage to pay. The good news is that we have no student loan, car loan, or credit card debt to worry about. The less you owe, the better you feel and the less you worry.

Emergency Fund

A financial pessimist could spend their whole life worrying about what bad things might happen to their bottom line. Luckily, we’ve built up a sufficient emergency fund so that we don’t have to spend time stressing out over what might happen.

Health Insurance

Our whole family is very thankful that my grandmother has recovered amazingly well from a very scary recent health crisis. This incident reminds me of how precious our health is and how important it is to have good health insurance to help protect it. If you’re sick or injured the last thing you want to think about is whether you can afford treatment.

Home/Auto Insurance

As I mentioned above, our mortgage is our biggest financial burden. We’re lucky to have a wonderful insurance company that helps us protect not only our home but also our automobile assets/liabilities. I’m thankful I don’t have to stay up late thinking about major damage to our home or fender benders; I trust our insurance company enough to let them do the worrying for us.

Retirement Savings

Thanks to my parents, I learned the value of a dollar early in life and the importance of saving, saving, saving. We started putting away money for retirement as soon as we could and contributed enough early on that we don’t worry about whether Social Security will be around for us later in life.

Giving Thanks

As I mentioned above, my wife and I have our parents to thank for our financial upbringing. The things we learned early in life have helped us provide for and protect the most important think, our family.

It would be a major oversight if I didn’t mention the Money Writers, Money Blog Network, the M-Network, and rest of the personal finance blogosphere for providing timely, relevant, and personal information on finances for everyone.

Happy Thanksgiving!