Skip the Allowance and Employ Your Kid

Do you own investment real estate or a business? Have you been considering buying a rental property or starting a business? Have kids going to college in a few years? If you already plan on your kids going to college, it’s never too late to start planning effective and efficient ways to increase savings, lower your taxes and improve your odds for receiving student financial aid.

Let’s say you already give your children an allowance. You’re already paying out of pocket and not getting any tax benefit. With a few changes you can turn that cash outflow into a tax deductible expense that can even help your kids save for college. Consider hiring them to work in your business or on the rental property you own.

By paying them a reasonable wage for services like landscaping, cleaning, painting, shoveling snow or doing office administrative work like filing, stuffing envelopes or printing marketing flyers, you have an additional deductible expense which lowers the net income or increases the net loss of your business or property.

And for children earning income in the family business, there is no requirement for payroll taxes. And if you keep the amount of “earned” income below certain limits, you won’t be at risk of paying any “kiddie” tax either. (“Kiddie” tax limits adjust for inflation each year). In effect, you have shifted income from a taxpayer with a higher tax rate to a low- or no-income tax paying child.

Now get your child to open a Roth IRA with the money you pay them and they have the added benefit of tax-free saving for college since Roth IRAs can be tapped for college tuition without paying a penalty as long as the Roth is open for at least five years (restrictions apply).

By reducing your income, you can also reduce your Expected Family Contribution (EFC) which is the critical number used to determine the amount and kind of student financial aid your child can get for college. The EFC is calculated using a number of things including the amount and type of parental assets as well as reported income. EFC is recalculated each time a financial aid form is submitted and is based on the assets and income from the year before.

So to improve your odds for financial aid, one strategy is to lower your reported income. By employing your child to lower your business or rental property income, you may be able to lower your EFC and improve the amount of aid your child receives.

Business Funding Has Gone Easy for Everyone

There was a time when the majority of the people didn’t get financial aid from any banks or money lenders. But currently, a financial trend has changed. You can get financial aid from small finance companies. What is the source of small finance funds? The key sources are credit unions and banks. They provide such loans to individuals and partners. Today even the housewives establish their business through cottage industry. Women are skillful in nature. For example, some women are good in stitching, whereas others can make excellent pickle at home. Some women open their own beauty parlor as their hobby. You must follow some truths while applying for small business money:

Vital facts for small business funding application

Every individual makes mistakes. It is advisable to know the mistakes on time and fix it. You should avoid some factors while smearing for small business funding. Following are few points to consider.

Not paying the increased amount –

Sometimes people have a trend of not paying the sum that has increased. For example, if you have taken a loan and the semi went higher due to increase in tax and vat. People avoid excess amount. This is an unhealthy practice. The lenders will put a negative impression.

No scope for credit advance –

There are some emergency situations at your business establishment. For example, you suddenly need to repair your office room. If you don’t have cash at that time, it will be very difficult. You need to take out the credit in advance.

You have to be very careful while applying for the loan for your small business. You need to care about many things while applying for the loans s that it will not get rejected in any case.

Negligence of own credit –

Firms dealing with funds have become fairly elastic today. But, it is always better to keep yourself flawless. If you have the credit card, make the payment before the due date on a regular basis. This will be a plus point for you when the lenders evaluate your financial statements. But, sometimes you end up will no repayment of credit card bill. You must avoid it. Otherwise, it will provide bad influence on a financial profile.

Business and personal finances mix up –

The lending institutions will be eager to know your business success. Whether you are in loss or gain is what they will find out. Now if you mix both personal and business finances, they won’t get the proper idea. Your case may be rejected. One of the common mistakes, which many individuals make, is mixing up of personal finance and business finance. But this is not the right step to get a good deal for your small business.

Student Loans – Which One Is For You?

Students and families are often confused with the variety of options available when it comes to financing a college education. There are a myriad of options, from college scholarships and grants to federal and private student loans.

As part of the Higher Education Act of 1965, President Lyndon Johnson created this law which was intended “to strengthen the education resources of our college and universities and to provide financial assistance for students in postsecondary and higher education.” This increased all sources of federal funding provided to universities and added in grants and other forms of financial aid.

The Federal Stafford Loan is available to both undergraduate and graduate students enrolled at least half-time at a college or university accepting federal aid. This is a need-based program in which undergraduates may borrow up to $5,500 per year in subsidized funds based on academic level and graduate level students may borrow up to $18,500 per year (up to $8,500 in subsidized funds and the remainder in unsubsidized funds). The funds are sent directly to the school and are applied to the student’s account. To ease the financial burden, payments are not required until six months after the student graduates. When looking to apply for a Stafford Loan, students should see what types of borrower benefits each lender is offering. As these student loans are all fixed at the same interest rate set by the U.S. Government, lenders are offering incentives to borrow by way of discounts, such as waived fees, rate reductions for early payment and cash back.

While a Federal Stafford Loan is certainly a necessary start, it doesn’t always cover the entire cost of education. A Parent PLUS Loan is a common way that parents contribute to their child’s education. This credit-based loan allows parents to borrow the total cost of undergraduate education including tuition, room and board, supplies, college fees and more, minus any other aid received. Once the loan has been put into the student’s account at the school, repayment begins shortly thereafter, at which time the student loan consolidation process can be performed. At a fixed interest rate, the Parent PLUS Loan is an easy and cost effective solution to help bridge the gap between Stafford Loan funding and the cost of education.

For many years, graduate students were only given Stafford Loans as a federal loan option for funding their often costly education. The difference was made up through home equity, savings, salaries and private loans. However, the Graduate PLUS Loan is a new product that became available to graduate students in 2006. Graduate students with good credit can apply on their own signature for a loan up to the cost of education, minus any other aid received. The Graduate PLUS Loan can be applied to tuition, room and board, education supplies, lab and travel expenses. The interest rate is fixed and payments are not required while enrolled in school. Upon graduation, borrower benefits kick in to help students save money during repayment. Or a student may save even more by consolidating this loan using the federal loan consolidation program. The Graduate PLUS Loan truly provides graduate students with a great option to making their graduate education dreams a reality.

The Perkins Loan is another federal loan available to both undergraduate and graduate students offered on the basis of financial need, other aid received and availability of funds at each school. The federal government lends schools funds for distribution to its neediest students. The school, therefore, is the lender, and undergraduates may be awarded up to $4,000/year and graduates may be awarded up to $6,000/year. These loans need to be repaid directly to the school and have a fixed 5% interest rate since the program was started. Students can take advantage of a nine-month grace period and a ten-year repayment term. However, if consolidated with any existing federal student loan, including Stafford or Graduate PLUS Loans, this can extend the repayment term. Consolidation has been mentioned a few times and it’s really in the best interest of students to take advantage of this upon graduation. Each federal loan, on its own, has a 10 year repayment term, regardless of total loan debt. Consolidation fixed the interest rate and extends the repayment term, allowing more time to repay an often hefty federal loan debt.

Named for Senator Claiborne Pell, the Pell Grant was established to provide funds that don’t need to be repaid directly to the neediest students. This is because it is a grant and not a federal student loan. However, like the Stafford and Perkins Loan, eligibility is based on need, as determined by the cost of attendance and expected family contribution. Since 2003, the maximum Pell Grant award has been $4,050 per academic year. However, due to the rising cost of education, many question why the Pell Grant award has not also increased. The Pell Grant covers, on average, one-third of the yearly cost of education at a public four-year institution. However, twenty years ago, it covered close to 60%. On February 15, 2007, in an attempt to slowly combat this issue, President Bush signed legislation into law that would increase the Pell Grant to $4,310 for the 2007-08 academic year. The following year, the grant will increase to $4,600 and up to $5,400 by the year 2012. These advances are certainly helping students and families fund the cost of education, especially as tuition costs continue to rise

Private student loans have gained popularity over recent years as federal funding hasn’t quite met the entire cost of education. There are many other costs associated with education, besides just tuition. Commuting students need to cover transportation costs somehow. City campuses don’t always guarantee housing, which forces students to find an off-campus apartment, often with high rent costs. There are costly textbooks to purchase, lab supplies and flights home that aren’t always covered by traditional financial aid. Private loans originate to students by a bank or other financial institution, unlike federal loans. Private student loans also offer similar benefits to students as a federal loan, such as deferred payment until graduation, different loan repayment terms, and borrower benefits. The interest rates on private loans vary from company to company and are, usually, on a basis of credit. Co-signers are a great way for a student who may have limited or no credit at all to get this loan. Because of the varying private loans available, most parents and families “shop around” until they find their ideal solution.

How To Get A Student Loan With Bad Credit

Tough economic conditions and rising prices have led more individuals to accumulate debt before they have even started their studies. While bad debts can place limitations on a number of financial options, it does not have to prevent you from furthering your education. A fair amount of research can aid in finding reputable service providers offering a bad credit loan.

Bad credit does not only refer to those with outstanding and unmanageable debts, but also persons with no repayment history. Although reputable companies will not advertise loans to individuals with debts, there are alternatives that are made available to cover the funds for college fees. Some of the options for those looking to borrow such finances include scholarships, financial aid, private lenders, and federal aid among others.

One has the option to apply for funding from the federal government as credit checks are not required. A number of application requirements will need to be met and receiving aid may be lengthy and difficult due to the number of individuals often seeking such aid. There are alternative choices available if such options are not applicable for your needs.

There is the option to seek loans from a private lender such as a bank. Your credit score will be used to determine whether you qualify for funding where higher scores are considered more favorable and trustworthy when it comes to repayments. Unfortunately if you possess bad debts or your financial history is non-existent, these scores will be significantly lower and you may not be approved.

An alternative is to use a cosigner who will agree to pay the loan for you if payments are not made regularly. It is important to select a parent, guardian or other trusted individual with a good FICO score to ensure that the finances are approved. This is one of the most common methods for obtaining the necessary funds to provide for your education.

If you are able to wait for a period of time before pursuing your studies consider obtaining finances from a financial lender to pay off debts and improve FICO scores. A personal loan may be obtained whether secured or unsecured depending on your financial situation. The aim is to pay off debts to prove to lenders that you are capable of responsible financial practice and fund approval.

A bad credit loan can be obtained with a fair amount of research into the options available. Consider a cosigner when applying for funds through a bank or work towards improving debts and payment history. It is important to assess the most applicable solutions before making a final decision.