Personal Finance and Investing

As we all know, college isn’t cheap and if you are the parents of a high school senior, you may be excited for them, but at the same time you may be dreading the choices you will have to make when it comes to selecting a college. There are so many things to consider like the schools location, tuition, room and board costs, and purchasing books for their classes. It can all be extremely overwhelming, but I have a few tips that are just in time for you and your newly christened high school senior as you prepare to make such big choices.

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Teen chat rooms are a common form of computer addiction amongst our teenagers. There are many reasons why youngsters turn to this form of socialising, which can also be, potentially, very dangerous. Thankfully, with the massive media coverage outlining the dangers of chat rooms and meeting with strangers, many of our teenagers are now aware of the dangers involved. It is with these dangers in mind, that we as parents, must stress to our children and ensure they are aware of the possible dangers involved in meeting up with strangers.

As with other forms of computer addiction, teen chat rooms offer a degree of anonymity and the chat room addict can be who he or she wants to be. More often than not, chat room addicts start off with just a break from the routine of daily life. Studying, research, projects, assignments, etc. As time progresses and more chat room friends are added to the list, it becomes very hard to stay away from the computer. Different time zones mean staying up late or getting up early to meet with chat friends from other parts of the world.

Just one or two hours a day in the teen chat rooms is fine by any normal standards, but when the addict is spending the best part of the whole day in the chat rooms, that’s when it is time to start taking action and limiting the time spent at the computer. We, as parents, owe it to our children to take the necessary steps to reducing their time spent at the computer. From personal experience, it is not always possible to make your child understand that it is in his or her own best interest that you are doing what you are doing.

There must also be a hard and non-bending rule that personal information is not given out in teen chat rooms. It will be extremely difficult for the chat room addict, who is totally engrossed in the conversation, not to respond to an innocuous question such as “what is your last name?”, or “can I call you on the phone? What is your number?”. It is best to stick to your chat room name. Anything personal which is given away, innocently, in a chat room could result in them being identified. Again, this is knowledge gained from a personal experience. My teenager was once asked the name of his pet, he told them. It was the answer to his secret question. The account was stolen, the password changed, the address was found and his friends were sent abusive messages. Thankfully, nothing happened with the address. With regards to giving out a telephone number, you only have to go to Google, type in a telephone number and a name and address will be given, unless it is unlisted, of course.

Stay away from putting your photo as your avatar in teen chat rooms, it is best to put a photo of your pet, or better still, a picture of your favorite film star. Also, it is best not to give your exact location. For instance, the town you live in. It is much better to put the nearest large city as your location.

This article is not meant to alarm you. It is only intended to warn of the potential dangers that a chat room addict can face in teen chat rooms.

Remember, not everyone in teen chat rooms are teenagers!

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How can you save for the cost of higher education? Here are some ideas that can help regardless of how close you are to that first tuition payment.

Based on the mathematics of compound interest, we should start our college savings and retirement funds the day we start our first job. There are more than a few obstacles in the way; food, shelter, paying off your own college loans and raising children.

The best approach is to start a plan as soon as possible. Part of the plan includes having a set amount deducted from your paycheck for the purpose of college funding. If you don’t see it, you won’t spend it and a great place for your college fund is a 529 College Savings Plan.

The 529 College Savings Plan provides key advantages in savings. First, the earnings are allowed to accumulate tax-free. Second and more important, there is a 10% tax penalty on the earnings if the funds are used for purposes other qualified expenses. I like the penalty for two reasons, it is more difficult to withdraw money when you have to pay a penalty and even harder to tell the kids your new boat was once their college fund.

The 529 Plan can be funded with up to $60,000 per beneficiary per year, the beneficiary can be changed and the account is controlled by the parents. For financial aid purposes the account is considered an asset of the parents and not the child which provides a lower weighting in the financial aid process. I highly recommend that every parent and child research and understand the financial aid process.

The 529 Plan is also an excellent estate planning option for the grandparents since they can use the annual gift exclusion of $12,000 (in 2007) to fund a non-taxable gift or can elect to fund up to $60,000 with a special five-year election. A couple can fund twice these amounts. For most of us, an automatic deduction of a much lower amount is the most likely mode of funding.

Other savings options include the use of the Coverdell Education Savings Account (ESA). Annual contributions may not exceed $2,000 per beneficiary per year, the beneficiary must be under the age of eighteen and the taxpayer’s ability to fund a Coverdell ESA is phased out. Like the 529 Plan, the earnings are tax-deferred and are not taxable if they are used for qualified expenses.

U.S. savings bonds issued after December 31, 1989 may qualify for interest exclusion if they are in the name of the purchaser who is over the age of 24 and used to pay for the qualified higher educational expenses of the taxpayer, their spouse or dependents. The interest exclusion is phased out for at higher income levels.

Just to add another level of complexity, qualified expenses for all three savings options are different as are the phase limits for the Coverdell ESA and the interest exclusion on U.S. savings bonds.

My preference is the 529 Plan as it provides greater flexibility in terms of who can fund the accounts and the higher funding amount. The 529 Plans are offered by several low cost investment managers. Keep in mind that a key element in increasing your investment returns is to keep fees and expenses to a minimum.

Once the children start their higher education you may qualify for a few important tax breaks. Naturally they are limited based on income.

There is the HOPE Credit. Individual tax payers are allowed to claim a credit against their Federal income taxes up to $1,650 in 2007 for the first two years of a student’s post-secondary education or certificate program at an eligible institution. The student must also be enrolled on at least a half-time basis. The credit amount and income limitations are indexed for inflation.

The HOPE Credit is on a per-student basis. If you have more than one child in college even the IRS feels sorry for you; however, the HOPE Credit is phased out for taxpayers with a modified adjusted gross income between $40,000 and $50,000 ($80,000 and $100,000 for joint returns).

The Lifetime Learning Credit is available to students enrolled in an eligible education institute. Enrollment can be less than half-time as long as the student is taking undergraduate or graduate classes to acquire or improve job skills. The Lifetime Learning Credit can be used to reduce your Federal income taxes by up to $2,000. The credit is based on 20% of the qualified tuition and fees paid during the year. The Lifetime Learning Credit is phased out using the same limits as the HOPE Credit.

The credits cannot be combined. You cannot use the HOPE Credit and the Lifetime Learning Credit for the same child in the same year. You can use the HOPE Credit for one child and the Lifetime Learning Credit for different children in the same year.

If you have eligible work-related educational expenses and include the expenses in your itemized deductions you cannot use the Lifetime Learning Credit for those expenses.

Student loan interest is another potential tax savings. Rather than being a tax credit, up to $2,500 student loan interest is deductible from taxable income. As with other deductions, this one is also subject to phase out.

If the tax aspects seem overwhelming, your tax preparer or several of the tax software packages will determine how to get the most from the various credits and when the credits are phased out.

My final recommendation is to get a jump start on saving by understanding your options, what is available for tax benefits and to research the financial aid process. There are several excellent sources of information on the financial aid process. I particularly like the services of Octameron.Com. They have several inexpensive books that will greatly help you understand both the admissions and financial aid process.

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Whether you or your high school student knows where they want to go to college by their sophomore year, it is still an important time to start planning for a successful collegiate future- that is, if college is where they are most likely headed. College planning for high school students might seem fairly early, and quite honestly most of their peers are going to be paying way more attention to dating and other parts of their social lives, but making the point of college planning for high school students is the key that will- if not put your son or daughter way above and ahead of the competition- it will be the ticket to the acceptance letter from the school of their choice.

Your teenager might have no idea where they want to go to college, what they want to do with their career, and quite possibly may even have plans to go to college at all. But from personal experience, this all can change dramatically closer to or even after high school graduation, and it is always better to be safe and prepare for this possibility that the high schooler will in fact decide to pursue a college education and some type of career.

It is not recommended to push the teenager too hard when it comes to thinking about and preparing for college in high school and life thereafter, of too much pressure can be an irritating turn off and a catalyst for rebellion. But if you have an y influence over a child or children, be they your own biological kids or maybe even students you teach or chaperone through some means or another, it would really help the students in the long run if you incorporate a few simple pre- “preparing for college in high school” techniques into their lives and curriculum. These methods would be most beneficial if teachers, youth group leader or other such members of adult authority were the ones to try and educate and prompt the student to be interested in preparing for college in high school, but if parents can generate enough respect and leverage in that area with their teens, they can success in its effectiveness as well. And even though your student might act disgruntled, uninterested and maybe even resentful for your pressure in their preparing for college in high school this early, later on down the road (sometimes even many years later) they will be most certainly grateful for your concern and also for the opportunity that it brings to their lives.

One important and helpful way to not just prepare a high school student for college but increase the likelihood of the student getting into the college of choice and succeeding in their time there and afterwards, in the career path they choose to take is through high school volunteering.

These days many schools, particularly private schools are requiring a set amount of community service hours served to graduate high school, but from experience, the rule isn’t mandated too strongly and if you know the right people in the right position of supposed authority, it’s quite easy to get that signature of proof of high school volunteering without really having done much work. When younger, volunteer work for high school students very likely will seem boring and quite the chore that cuts into the social lives of many high school students but that doesn’t have to be the case. If the volunteer work for high school students is indeed covered, the student, instead of picking a random, boring place to work at the end of the semester, as a last resort, should really give thought into where it is they would like to do volunteer work for high school students. Though not required, it is recommended that the parents, teachers, or guidance counselors encourage and assist in the process of choosing a place to volunteer. Consider the student’s hobbies, what is most fun to maybe have the student make a list of the jobs he or she would want to work in if anything were possible and then use that list of interests as a basis to try and find something mildly similar that they are able to try out for fun with little commitment, through volunteering for high school students, see what a certain job would be like. One might be extremely surprised at the possible volunteer opportunities out there that truly mimic particular job in that industry so that often only a couple of weeks the student volunteer will get a good sense of what such a n industry would be like to work in and additionally, whether or not its still what they think might be for them. If they really like it chances are they will excel at this volunteer work for high school students and it is not uncommon for a volunteer to impress his or her employee so much with their education passion and effort that they foresee a potential great future employee and offer the person a job post graduation.

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College is a very important part of your child’s education because it gives your child more opportunities in life. College provides a wider view on subjects that interest the student and gives them more ways to grow and learn about these topics. Also, after finishing college, your child will have more choices for jobs and these will also be higher paying than jobs which only require a high school diploma.

Nowadays, high school students wonder why a college education is so important, especially since they want to earn right after graduating and because college is quite expensive. They do not know that often a college education will be worth more than the tuition later on in life. This is why you should start preparing your child for college early.

Firstly, you should prepare a college fund for your child. There are many banks that offer services for parents saving up for educational funds, so you just have to choose a bank in order to start your college fund. Look into tax breaks that may be available for education designated accounts. Start this fund as early as you can, so you can start saving early. You can deposit an amount like $50-$100 every month and by the time your child is ready for college you will have quite a bit of cash in the fund.

When your child is in elementary school, you should already start to monitor your child’s academic and extracurricular activities. Teach your child how to study well and excel in his or her studies. Also, allow them to pursue the different activities that they are interested in and expose them to other fields so they can find out what they are passionate about. This will already prepare him or her for college.

By the time your child reaches middle school, you should start talking to him or her about what they plan to do in the future, what job they would like, and what courses they want to take in the future. Talk to them about how important college is and how they can prepare for it now. Taking the right courses during their junior high years is very important. Your child should take up all of the necessary courses like math, English, science, and history every year, as well as extra subjects that your child is interested in like computer, visual arts, foreign languages, etc.

Once your child has reached high school, it is important for you and your child to look at different colleges together and weigh out the pros and cons of every college. Make sure to think about the different aspects of the college such as their tuition fee, distance from home, as well as their facilities and curriculum. In-state tuition fees are usually much lower for you than out of state.

After finding a few colleges to apply to, help your child take the proper admission tests and submit all of the documents necessary to apply for the colleges. Creating a calendar for the deadlines of these tests and submission dates is important to help your child apply for these colleges. Many of these deadlines are absolute so you need to stay on top of matters. You can also apply for financial aid through the college or through a bank to help your child get through college without any interruptions.

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