Saturday, December 31, 2005

2005 Financial Review

I still haven't reached the half year mark in age, but I get to do my first yearly financial review. That ranks right up there with beginning to make sounds.

Thanks to a couple of gifts from my uncle and nana and some sales on ebay, December turned into a good month for my finances and I'm closing on the $3,000 mark and was able to increase my net worth by approximately 20% this month.

Upromise did better than the last couple of months and brought in $6.44. Advertising did better, too, bringing in a little more than $14 with much of this thanks to the sponsor I have. I earned less than $1 in interest from ING, but their site is currently not online as they upgrade so I'll add that little amount in later. There is no interest counted toward the $1,000 I-Bond I have since it still hasn't been 3 months since I purchased it.

If we do a little forward thinking and if I can add $2850 to my savings each 6 months, that will leave me with over $100,000 for college which makes me smile. That isn't counting the interest that the money would also earn. 2005 has been good and I think I'll continue to keep smiling into 2006.

A Happy New Year To All!!!!

Wednesday, December 28, 2005

Consolidate Student Loans Now To Save Money

While this doesn't effect me since I'm still 18 years away from college, for everyone who has gone through school and picked up loans along the way (something that I'm trying to avoid doing by saving early), congress has change the law on Safford and PLUS Loans. If you are carrying student loans and are considering consolidating them, you now have a time-limit: July 1. As part of its $40 billion budget cutting effort, congress has raised the interest rate of Safford loans to 6.8% (one of the more popular student loans because borrowers don't have to show a financial need to get one) and has made this rated fixed, not adjustable as it currently is.

This change can have a significant affect on the amount you pay. If you currently have a Stafford loan, you can consolidate and lock in a rate of 5.375% for its life. If you happen to still be in your grace period, you can lock in a 4.75% rate.

Parents of students will also have to pay higher rates under the new law. The rate for PLUS loans (Parent Loans for Undergraduate Students) will become a fixed rate of 8.5%. PLUS loans currently sit at 6.1% and are variable.

The new rates will increase the cost of college by quite a bit. If you currently have a Stafford loan balance of $20,000 and paid the new 6.8% rate compared with the current low rate, it would cost more than $2,000 more in interest over a standard 10-year life of the loan. With PLUS, parents would have to pay nearly $3,000 more.

With interest rats not likely to fall between now and July and with a chance that they will rise, now is the time to get low rates locked in. If you have student loans and you haven't consolidated them, be sure to make that one of the first New Year's resolutions that you complete.

Sunday, December 25, 2005

Happy Holidays

Happy holidays to one and all. I woke up this morning to lots of gifts and also $100 from my uncle and $200 from nana (grandma)to add to my college fund. I haven't heard from grandpa yet, but I'll probably be able to add a bit more when I do (I'd cross my fingers if I was that coordinated, but since I can't, I'll just stick them in my mouth). That brings my net worth up to $2,823.15 so it's a Merry Christmas for me!

Sunday, December 18, 2005

Should I Be Paying For My Own College?

This is the question that came up in a recent article I found. Should it be my responsibility to pay for my own college education? There seem to be quite a few people out there that think that a student going to college should pay for their own education according to this piece from a Utah newspaper:

"When a student is responsible for the costs of education they seem to take it more serious, because it is their money. They are less likely to skip class or waste their investment. What is wrong with a child working hard through the summer to earn money for fall/winter semesters — or saving money while working during the summer of the high school years?"

This is a difficult question as I can see the point of view from both sides (even at my young age). I think that helping out students going to college is important if they also realize the value of money. As another person wrote:

"I am from California and had to pay for my education because my parents were poor," he wrote. "I knew how vital it was to get a good education. I did not want my kids to go through the same work/study plan I had to go through. So, I paid for their first year of education.

"During that first year, they each showed little interest in learning. I stopped paying after the first year for each of them. All of a sudden some of them became very interested in studying, when they were paying for it. . . . I guess I learned my lesson after six kids. I will advise my children to not pay for my grandchildren's education."

If a student doesn't realize the worth of the money given to help them through college, then they are not likely to appreciate the help which in the long run will be detrimental to their own personal finances.

I once read an article (okay, I didn't actually read it since I'm still working on rolling over with ease, but I did hear about it) about a woman that was considering going to graduate school. Her father had said he would pay for her education which was going to run about $100,000, but instead of saying he would pay for her education, he phrased it in a different way. He said, "I have $100,000 for you. Please use it as you want."

What this did was make the woman view the money as her own, not as free money from someone else. She ultimately decided to go to graduate school, but to a program that was much less expensive and used the rest of the money for a down payment on a house. I think when you give children the opportunity view the money as theirs, they must consider much more how they want to use it. Of course, this all presupposes that the child has been brought up and taught about personal finances and the way that money works.

Wednesday, December 14, 2005

More Investment Sales

I had four more of my antique investments sell for $79.80. Taking into account all the expenses for selling them, I am left with a profit of $68.38. That in turn brings my net worth up to $2,523.15 and means that I have managed to break through the $2,500 barrier for my net worth! I'm enjoying the antique investments very much.

That means, however, that I only have one more antique investment. My uncle has promised to put that one on auction tomorrow and then he will look for some more items for me to invest in.

Overall it's been a good week and has kept me smiling the whole time. (^_^)

Choosing A College

Even though college is still 18 years off for me, there are a lot of students that are beginning to think about college. I came across a good article in the Christian Science Monitor about choosing the right college. The article says that the most important point in choosing is that the college has "the right fit" which could be anything from college being the right price to the campus feeling comfortable. To figure this "right fit" out, they suggest four actions to take:

Build your own college ranking system: What's important to you and what's important to another student is probably not the same. Make a list of what you want from a college to help rank the colleges of interest.

Focus on the first year: Look at how the college treats it's freshman students for classes ans other activities and see if this appeals to you.

Gauge the engagement: "Research shows that if students engage in certain activities, they're likely to learn more than if they don't," says Trudy Banta, vice chancellor for planning and institutional improvement at Indiana University-Purdue University in Indianapolis. The long list includes: "things like participating in faculty research; study abroad;... service learning; contact with faculty outside the classroom - [especially] talking about intellectual matters; group work with peers; and how much they study."

Probe preferred majors: Take a look at how the majors you may be interested in are regarded at the colleges you're considering.

I think that these are a good way to begin if you have no idea where you want to go or if you're trying to narrow from a few colleges to one or two. I think the last line in the article sums it up pretty well:

Do as much research as you can, Stuart says, but when it's time to make a choice, "it comes down to a feeling."

Monday, December 12, 2005

Antique Investments

I had 5 of the ten antique items my uncle bought for me sell over the weekend, so I have been smiling and gurgling even more than usual! The five sold for $99.75 in total and after all fees were deducted, I came away with a $84.97 profit! That raises my total net worth to $2,454.77.

My uncle has promised to place the other 5 items up for auction this week and hopefully they will sell well so that I can break through the $2,500.00 mark. While this may not seem too exciting for most, it's fantastic for me. I may not even be fussy for an entire week just to celebrate.

I still need to talk to nana and grandpa about what they will be getting me for X-mas. Hopefully they will be generous and add a bit more to my net worth on top of these investments.

I've also hinted to my uncle that he needs to find a few more investment for me since I'm enjoying the returns they are bringing in quite a lot. I'm sure that I'll be able to charm him into doing so (that's an advantage we babies have when we are in a good mood)

Tuesday, December 06, 2005

Free American Greeting 1 Year Subscription

My gift to all the readers of this blog. Thank you for visiting!

Free American Greeting 1 Year Electronic Greeting Card Subscription

1. Go to
2. Enter Code: AGift4U
3. Fill out basic information

4. When it asks for your credit card info, don't fill anything in and hit "submit" until you see the confirmation page. It appears that they have changed their form :( - you now must enter a credit card number to get this free year and be sure to cancel if you don't want to be charged once the year term is over.

You'll receive a confirmation email and your free 1 year subscription. They also have a great reminder service so you don't forget those important days. Enjoy! (^_^)

Monday, December 05, 2005

Net Worth Ranking - November

Personal Finance Advice has listed the net worth for personal finance writers in November and for the third straight month - you guessed it - I came out in last place. this has made me a bit cranky, but I think I will have to get used to this position for awhile.

There is a bit of hope, however. He started a new ranking of the % change in net worth which I did poorly in this month (15th out of 17), but an area where I can do really well since my current net worth is much lower than everybody else.

I would like to be at the top of the list next month, but that could be hard. Some of the writers had double digit gains in their net worth over a one month period!

Sunday, December 04, 2005

The Strange World Of College Financing

I came across a good article that I think every parent should read and especially those that have older kids that will be entering college in a couple of years (if you have a junior in high school, start reading NOW!)The article is titled The weird world of college financing and here are some of the highlights:

To qualify for financial aid based on family finances, parents need to understand a quirky formula that is as complex as the tax code.

Using the formula, colleges calculate what they believe a family can afford to pay for college. That calculation is called "the expected family contribution," and essentially tells parents and students what percentage of their income and assets should be devoted to college.

After a college has calculated what students and parents must pay, the financial aid office helps cover what families can't afford, frequently by providing low-interest loans, work-study jobs and grants.

This formula, while not easy to understand, can end up saving you thousands of dollars out of your own pocket so it's worthwhile to study up a bit on it. I have 18 years, but most of you probably have a shorter amount of time to do it, so start asap.

One common mistake is that tax accountants often encourage grandparents and parents to shift money to children by opening Uniform Gift to Minors Act accounts. Those accounts sabotage financial aid because they are in the child's name.

"If you are going to qualify for financial aid, you should never, ever put money in the child's name," Chany said. "It's like throwing money away."

For example, if a family has saved $40,000 for college, and the money is kept under the parents' name, the family will be required under the formula to use as much as $2,260 of that savings to pay for the first year of college, Chany said. If the family instead has kept identical savings in their child's name, they will have to spend $14,000 immediately.

This is often difficult for parents to understand because they assume college money will be treated the same regardless of the account it is in. But the quirky financial aid formula doesn't act with that logic. It looks at student income and assets differently from parents' income and assets.

I'm going to have to look into this closely and it may change my strategy on how I same. My hope is that I won't have to take out any loans, but I don't want to exclude myself from loans and financial aid if I can get it. Being the financially savvy nearly 5 month old that I am, if I can get low interest rate college loans that are have a lower rate than what can earn elsewhere with the money, it would make sense for me to take them out. I7m always trying to think ahead...

Parents also can make college affordable by discouraging a student from earning too much.

"It's a bizarre situation," Chany said. "The best way a student receiving financial aid can help his parents pay for college is by not working very much."

Under the formula used to compute a family's expected contribution, students must devote half of their income and 35 percent of their assets to college over a certain threshold.

A student who earned $2,761 would be required to spend $1,150 of it for college. But for every dollar over $2,761, the student would have to provide 85 cents for college.

Because parents typically are paying for most of the tuition and living costs, the child's job simply is decreasing financial aid and requiring parents to pay more.

Now that makes absolutely no sense to me, but since it is the system we are all working with, I guess it's important to take it into consideration. Since I hope to be making more than that before entering college, I will have to sit down and really work the numbers on the best way to approach this.

Parents also are surprised at what happens if they sell stocks, bonds or mutual funds during college to pay tuition bills. Selling the investments gives families income under the formula. So they may sell all their investments one year and use every cent to pay for tuition that year. But the college aid formula will indicate they have that money as income for tuition in the coming year, even though it already has been spent.

I've read this numerous times. The best course of action is to sell these investments before December 31 of the student's junior year in high school so that the money doesn't appear to be income. The article also list these strategies for those will kids in their junior year in high school:

Saving the maximum possible in 401(k) and tax-deductible individual retirement accounts before Dec. 31. When a student is in college, it won't hurt a family to save for retirement, but making contributions to 401(k)s and IRAs won't help cut your income. Under the financial aid formula, those contributions are deemed income - available to pay for college.

Don't take early distributions from IRAs or convert an IRA into a Roth IRA. If you do, your income will go up, and you will lose some financial aid.

Do not take out a second mortgage on your home to pay for college. If you do and stash the money in a savings account, your assets could be inflated substantially and reduce aid.

Instead of making charitable contributions during the college years, make a large contribution before Dec. 31 of your child's junior year. If you keep providing contributions during the college years, financial aid staff will consider that income you can use for college.

Medical expenses can help increase financial aid. So if you have a choice, you could push an expensive medical procedure into your child's senior year of high school.

Before doing any of this, make sure you will qualify for financial aid. If your income is too high to qualify, you could be interfering unnecessarily with your investments and taxes by using these strategies.

I think that last one is going to be important for me. It would be nice if they could develop a formula that made sense and was easy to understand, but maybe financial aid is the first test a student (and parents) receive when a child goes to college. Stick around and I hope we can all pass it with flying colors together!

Saturday, December 03, 2005

My Antique Investment

As part of my investments , I have my uncle buying some Japanese antiques for me. This is one that he bought. This is "Benzaiten" who is one of the 7 Gods of fortune, and the only woman God (or should I say - if I could speak - Goddess). The cup dates from the Taisho period in Japan (1912-1926). It's made by Kutani which is a well respected pottery maker both in Japan and in the world.

Since I7ve been threatening to be fussy if auctions don't go up this month, my uncle spent a few hours getting my antiques ready to place on auction. I'm looking forward to seeing how they do and hopefully increasing my net worth a bit more!

Thursday, December 01, 2005

No I-Bond Interest

I received a nice email asking if I forgot to include the I-bond interest in my November net worth calculations. I purchased a $1000 I-Bond, but haven't added any interest on it yet.

The reason for this is that I-bonds have a three month interest penalty if the bonds are redeemed before 5 years are up. Due to this, they will not count interest on it until 3 months have passed and thus I don't have any interest added for this past month. it will begin adding interest in January.

While this may not look good now, if I keep the bond for 5 years, when I hit that mark I get a nice 3 month addition to my interest. If I sell, I don't have to decrease my account worth because the penalty has already been built into the system.

This is even a bit confusing for my uncle (so you can imagine how I feel), but he assured me that it makes sense and I have nothing to worry about. The interest will show up and is being calculated, it's just delayed three months until the I-bond reaches 5 years.

December Goals

For the second month in a row I fell short on a couple of my monthly goals. Unlike last month, I would have liked to have done a bit better.

My goal for my net worth was to increase it to $2434.51, but I only managed $2369.80 falling $64.71 short of the goal. At this time I still feel that a 5% increase in my net worth per month is realistic since I'm still too young to even think about spending it. That would put my goal to increase my net worth by $118.49.

Since it is the holiday season and I'm a bit young to really appreciate the gifts that are given to me, I'm also going to see if I can convince nana (grandma) and grandpa to give me at lease one cash gift each that will go toward my savings. I7ll shoot for another $100 in that area for a goal of $2588.29.

I did open a BabyMint account, but only I'm still not sure how I'm going to approach this. I need to do a bit more research to see which of the programs will be best for me to concentrate on. That will be another goal this month.

I failed on getting articles in all the carnivals of Personal Finance only getting in 2 of the 4. Those are good for this journal because they bring in extra traffic and new people can see what I'm doing, but with the holiday season, I don't think I can do one each week. I'll shoot for 2 this month.

I fell one short on the getting link trades and ended the month with 9 instead of the ten I wanted. I will try and get another 5 this month for a goal of 15. In addition, now that I have one sponsored link, I would like to try and get another one this month.

I completely failed on getting auction listed with the antiques I have in my investments, but have been assured that this month they will go up (my uncle doesn't like it when I get fussy around him). Since I wanted to list 5 last month, but didn't get any up, I'm going to shoot for 10 this month.

I hope you all cheer my on in my goals and hope that you that have found my have been enjoying my journey thus far!