Start your financial journey right

This was originally published on Monday, June 5, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question:  I am a recent college graduate and was lucky enough to be hired just before graduation.  I will be moving out of my parents’ home next month and will be moving into a rented apartment. Although I feel my financial health is good, I want to ensure it stays that way.  Do you have any tips for a new graduate?

Answer:  Congratulations on your college graduation!  When you are moving out of your parents’ home, entering the workforce and becoming responsible for more financial obligations, you may start to question your financial priorities. It is important to start off on the right foot.  The habits you create now can have a huge influence on how you manage your finances later in life.

Keep your frugal student lifestyle: Although your new income is exciting, it is very easy to get caught up on spending. Consider ways to keep your living costs low, such as living with roommates, driving your car a couple of years longer and limiting unnecessary spending.

Take full advantage of employee benefits: As you start your new career, retirement seems far away.  Even though retirement is not in your near future, it is important to start planning.  It will take many years to build a nest egg that will make retirement comfortable.  If your employer offers matching contributions to a tax-advantaged retirement account, take full advantage of it. By not contributing enough to earn the full match, you are basically turning down free money. Besides retirement, also take advantage of other benefits offered like health insurance, short- and/or long-term disability insurance or life insurance at attractive group rates.

Create and stick to a budget: This is a habit that will benefit you for years to come. Even small unplanned purchases can hinder your financial goals.  Be sure to set money aside for savings and other big purchases like a car or even a home.  Download a user-friendly app for your smartphone to help you track your expenses.

Emergency budget:  Plan for the unexpected such as an unforeseen car repair, a medical issue, or home repair.  This account is strictly for rainy days.

Work on your credit score: The best way to improve your credit score is to pay all your bills on time, every time. Another way is keeping your credit spending in check. Do not over extend your credit limit by taking out more loans.  Keep your existing credit cards open. It proves the length of your credit history which also affects your score.  Know what your credit score is by obtaining your three free credit scores annually.

Protect your personal information: Personal identity theft continues to grow especially as we rely more and more on technology for banking, shopping and other online financial transactions.  Once your identity is stolen, it takes a long time to repair and rebuild it.  Cross-shred all documents with your personal information.  Change your passwords often and keep PIN numbers safe.

Pay off higher-interest debt first: Like most recent graduates your student loans make most of your debt. You may also have some credit card debt. Putting as much as you can toward the higher-interest debt first will save you money and allow you to pay it off quicker, giving you more money to put toward your student loans.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Financial tips for your college-bound child

This was originally published on Monday, Ju;y 4 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

Q: My son recently graduated from high school and will be attending college stateside. We will be giving him a credit card and a debit card. Do you have any financial tips I can send with him?

Congratulations on your son’s graduation! College years can define what your son’s financial future will look like. It is in these years that spending habits are formed and debt can easily start to stack up. Talk to your son about how money, debt and credit work. These tips are good for all that are heading out into the real world.

  • Create a budget. Sit down with your graduate and create a budget. Include how much you will be giving them monthly. Include expenses such as rent/dorm expenses, food, laundry, household needs, school necessities, and of course a little for entertainment.  If your child learns how to stay on a budget now, it will be much easier once he or she graduates from college.
  • Debt. If you are sending your graduate to school with a credit card, add that to their budget as well. Teach your graduate about interest charges associated with a credit card and how it is important that the credit card be paid off in full each month. If they pay off just the minimum amount required, they could be paying off a $500 expense over several years.  Instruct them that the credit card is to be used only for emergencies.
  • Savings. Now is a good time to start saving. They are still independent but still under your care. They may be frugal enough to build up a savings that they can use once they are out of college. If they are getting a job while going to school, encourage them to invest in the company’s retirement fund. Teach them how, unlike debt, compound interest in savings can make you rich.
  • Track spending. Today’s technology makes this easier than ever to track what they spend. There are free apps that can be downloaded to their phones or tablets to help them keep real-time budgets. They need to understand where their money goes and make adjustments as necessary.
  • Wants versus needs. Explain the differences between wants and needs. Wants are what they would like versus needs, which keep them alive and sheltered. It is fine to have wants if they are budgeted. Teach them to be selective on their wants. Let’s say they want a pair of shoes. It’s fine to purchase a better quality of shoes that will last longer.  Alcohol, high phone bills, and other quick-to-use services/items bring little to no return on the investment.  It is fun while it lasts, but once it’s gone you can’t resell it.
  • Money versus card. Swiping a credit or debit card is much easier than handing over cash. When they see money leaving their wallet, they can tangibly see the money leaving their possession. Unlike with a credit/debit card, the money is not seen until it is viewed in a statement. It is easier to stay on budget with cash than with a card.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Resources exist for adults to go back to school

This was originally published on Monday, February 23, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: I am a 43-year old single mom of two. I have worked hard to send my children through private school and my oldest through college. My youngest child will graduate this year and wants to start college in the fall. I have put my college dreams on hold to raise my children, but now I would like to go back and get my degree. Are there financial aid programs for adults wanting to go back to school?

Answer: I want to start off by applauding you. You certainly have worked hard to make your kids’ futures brighter. There are resources out there that are available to assist you.

Free Job Training

The Department of Labor operates the One Stop Career Center. Depending on your current job status and the industry you work, you may be able to receive free job training. The One Stop Career Center offers low-cost and some free courses in various studies. To learn more, go to the One Stop Career Center website athttp://www.careeronestop.org.

Tax Breaks

Although a tax break does not directly pay for college, it could help students that qualify by lowering the student’s taxes. There are two tax breaks that are available.

• The Lifetime Learning Credit is available for students who go to school part-time and are not necessarily enrolled in a degree-granting program.

• The American Opportunity Credit is for students enrolled full time in a program that leads to a degree or a certificate.

To verify if you qualify and the amount you can claim, go to the Internal Revenue Service’s web site at www.irs.gov.

Employer’s Assistance

Check with your human resources department if your employer offers programs that can help offset the cost of tuition. Some employers will cover the cost of tuition and require pay back in service over a specific period of time. Be sure to understand the policy. Depending on the program, you may have to consider the money as extra income.

GI Bill

If you have served on active duty for at least ninety days since September 10, 2001, you may be eligible for tuition assistance, books and supply costs, and possibly a housing stipend. In some cases, your GI Bill benefits can be transferred to your dependents.

Grants

As with recent graduates, adults, too, can qualify for federal grants. The federal government offers two grants for adults who wish to return to school:

• Federal Pell Grant is determined by financial need and can be used for part-time and full-time students.

• The Federal Supplemental Educational Opportunity Grant (FSEOG) is for adult students who are returning to school to further their education. It can be used in conjunction with the Pell Grant to help pay for the total of tuition.

Applicants must fill out and submit the Free Application for Federal Student Aid (FAFSA).

Student Loans

Adult students have some of the same resources when it comes to getting loans for their education. Loans can be secured by private or federal agencies. The Direct PLUS Loan is a federal loan that graduate students and parents of children under the age of 24 can use to assist paying for college. Go to https://studentaid.ed.gov/types/loans/plus for information about the loan program.

Financial aid for adults who are returning to school are out there, it just takes some digging. Go online.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Kids’ college dreams can be achieved

This was originally published on Monday, February 9, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

As parents we inherently want the best for our children. We can’t help but beam with joy when our kids express that college is an educational goal. Then the overwhelming stress of paying the bill is realized. Rest assured newly graduated high school students can find many strategies to aide them with college tuition.

• Apprenticeships: Large companies, state and federal governments offer high school graduates the opportunity to gain on-the-job training and related classroom instruction. Usually after a few years of training and education they are promoted within the organization.

• Training corps: In exchange for community service, some training corps will pay a majority if not all of a college student’s tuition. Some of these programs are Health Services Corps, Peace Corps, AmeriCorps and the Reserve Officers’ Training Corps (ROTC). Some organizations will even give a stipend to supplement living costs while attending college.

• Technical schools: Perhaps your child’s goal is to be a software program designer. They don’t necessarily have to go to a four-year traditional college. Instead, they can attend a school that specializes in that occupation. Specialty colleges are becoming more popular because it takes less time to earn your degree, therefore costing less to obtain a degree or certificate. Most technical schools offer tuition assistance and can even help secure a job after graduation.

• College assistance: Some colleges offer tuition assistance or scholarships to aide in paying tuition. You also may look into work/study programs on campus. My nephew is in a work/study program, which helps with his day-to-day costs while away at college. Some businesses on campus look to hire students. Students can also work for the school as teacher assistants’ or lab/research technicians. It is also common that if a student performs well and is placed on the Dean’s List or President’s List the school will offer a discount for the next semester.

• GI Bill: If you are a veteran you may be entitled to education benefits through the GI Bill. Depending which GI plan you have you may be able to transfer money to your dependents, including your spouse, to attend college. Go to www.gibill.va.gov to learn more about your GI Bill benefits.

• Military benefits: If you are military and retire in certain states, your children may be able to attend a state college or university at a discounted or free tuition.

• Employer: Some jobs offer a scholarship or grant to children of employees. Your human resources department should be able to assist you.

Sometimes going to the college of their choice may not be an option. Be upfront with your child about the costs of college. They may have to go to a community college or local university instead of leaving island. Many college graduates get their core credits at home where costs are lower, then transfer colleges to finish off the credits for their majors. Research if the credits will transfer to the new school. Many colleges and universities have residential and non-residential tuitions. Non-residential tuition can be quite a bit more expensive. Living in that state to meet the residential requirements before going to college will help lower costs as well.

Going abroad to study also may be an alternative to high college costs. Besides education, your child has the opportunity to learn about another culture and make lifelong memories.

Unless you have planned to include college tuition in your nest egg or 401K, don’t dip into your retirement fund. There are lots of opportunities for your child to go to school; do not put your retirement in jeopardy.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Help your child fulfill their dreams of off-island education

This was originally published on Monday, February 2, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: I have a son who is a junior in high school. He wants to go off island for college and I would love to send him to the college of his choice. I am worried that I am not financially prepared for this transition. Could you help me fulfill my son’s education goals?

Answer: Your situation is quite common. Many people find that with the rise in the cost of living, saving for their child’s college education is very difficult. Many don’t think about it until it is too late. The mortgage/rent, utilities, food and other necessities must be paid first. By the time all bills are paid, putting money aside for financial goals may be almost impossible. The good news is that there are many ways your son can continue his education without you taking on the full cost.

Before he graduates, your son and you should talk to his school guidance counselor. The sooner you do this the better, since many schools open registration early in the year for the fall semester. Your son’s school guidance counselor has many resources for you to explore.

• Advanced Placement (AP) classes: Many schools offer AP classes to students that carry a certain grade point average. At the end of the school year, a college-level exam program, or CLEP, is administered. If the student passes the CLEP, the high school course will counts as college credits. This could save you thousands of dollars.

• Financial aid: The Federal Student Aid program is the largest provider of college assistance in the nation. According to the Federal Student Aid website, it provides more than $150 billion in federal grants, loans and work-study funds to more than 13 million students each year. To learn more or to apply, go to the Free Application for Federal Student Aid at https://fafsa.ed.gov. The program is based on income, but do not let that deter you. Applying could result in a great opportunity.

• Grants: Another popular avenue that students can pursue to help pay for college is grants. Grants are better than financial aid or student loans because it is free money for college. The student or parent does not have to pay the grant back as long as they satisfy the terms of the grant. The Federal Pell Grant is a commonly known program. This program allows low-income students the opportunity to pursue undergraduate and some post-baccalaureate degrees. Visit the U.S. Department of Education’s website athttp://www.ed.gov.

• Student loans: Unlike grants, student loans must be repaid. There are two ways to get a student loan. One is from the federal government, and the other is from a private lender such as a bank or other financial institution. A federal loan usually has lower interest rates and does not require a credit check. Do not borrow more than what is needed. You will eventually have to repay it. The more you borrow, the more interest you will have to pay in the end. Usually a federal student loan has a more flexible repayment plan than most private financial institutions.

• Scholarships: Your child’s guidance counselor at his high school will be familiar with local scholarships. You can also do research online for other scholarships. Many organizations and religious institutions offer scholarships. Most scholarships allow you to use more than one scholarship at a time.

• Merit aid: The National Merit Scholarship Program can also assist in paying for college tuition. Go to www.nationalmerit.org for more information.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Many options exist to pay for kids’ education

This was originally published on Monday, February 24, 2014, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: I have a senior in high school. Do you have any advice on helping with the cost of college?

Answer: If you don’t have enough for college, don’t worry. There are many ways to help your child go to college. Do not withdraw from your retirement. That should be used strictly for your retirement. Be prepared because many colleges require an application fee. Sometimes, if you apply early, many of those fees are lowered.

• FAFSA: If you don’t think you will qualify, complete the Free Application for Federal Student Aid (FAFSA) form. Visit https://fafsa.ed.gov/ for more information and to register

• Grants: One of the most popular grants is the Pell Grant, a need-based grant for low-income students to access post-secondary education. Consider the Academic Competitiveness Grant and National SMART Grants. For information on either of these grants, visit the U.S. Department of Education’s website at http://www.ed.gov. Grants are better than loans because you do not have to repay them.

• Local scholarships: Look around our community. There are many local businesses, civic organizations and religious institutions that offer scholarships.

• Your employer: Your job may offer scholarships to help children of their employees attend college. Check with your human resources department.

• GI Bill: If you or your spouse have been active duty or served as a reservist, your GI Bill can be transferred to your children. Go to www.gibill.va.gov for more information on your GI Bill.

• Training corps: There are some programs that offer to pay most, if not all, of your college expenses in exchange for a service commitment. Look into the ROTC, Reserve Officers’ Training Corps, Peace Corps, AmeriCorps or Health Services Corps.

• Merit aid: The National Merit Scholarship Program is another popular aid for help pay for college. For more information, go to www.nationalmerit.org.

• Student loans: The federal government provides college loans, go to www.studentloans.gov. Some colleges and universities also offer student loans along with banks and financial institutions. These are real loans, so be sure to understand the repayment process, interest rate and any consequences if your child doesn’t finish school.

• Institutional aid: Some of the learning institutions will offer aid or scholarships. Take a look at their websites or call the admissions or financial office and see if they can work with you.

• Work/study opportunities: Many students go to college and take on a part-time or full-time job. Many businesses around the campus look to hire college students. On-campus work/study opportunities are perfect, especially if it is in the field of study of which your child will be graduating.

• High school guidance counselor: Work hand-in-hand with your child’s high school guidance counselor. He or she will know of many opportunities to help get your child’s college tuition paid, plus they are free.

These are just a few ways that you can help pay for college now. You may use a combination of these payment opportunities. Kids may have a dream school that may not be within our budget, but there is nothing wrong with attending a junior college or other university and transferring later, especially to avoid out-of-state tuition. Studying abroad or attending a local university or college is another possibility.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.