Free At Last… (2015 Edition)

You’ve graduated from high school and are getting ready to head to college. Finally you have freedom to do whatever you want.
Without a doubt when you go off to college you will have a lot more freedom than in high school, even if you attend a local school and/or live at home. At the same time, your parents hope all the important things they tried to teach you to prepare you for this new stage of life will have taken root in your mind.

So… do you know what’s necessary to be financially safe and successful in this new stage of life?
For some of you, college will be your first experience with financial independence and financial responsibilities and also with having a checking account, a debit card or a credit card. Whether new to personal financial responsibility or not, the following items should help you, and your parents, keep things in order financially and help make your new freedom a good experience.

Make a budget – Create a budget by tracking all spending for a full semester. Lots of new spending will be done, and some of that spending will occur every semester, e.g. books, food, rent, etc. Use a spreadsheet or an app to track your spending by categories that are meaningful to you. As your spending picture develops you will be able to make adjustments to keep yourself on good financial footing. Your budget will enable you to know where your money is going and to meet each semester’s obligations.

Manage your checkbook – Only what goes into a checking account can come out as spending. So balance the checkbook every month in order to identify mistakes or forgotten transactions. The monthly bank statement may not show items or transactions that have not cleared the bank yet. That money has been spent, so don’t look at it as available for use just because the statement is not up to date. Equally as important, protect your bank card and your on-line bank access information from theft or misuse.

Build an emergency fund – If you are on a “fixed income” from parents, scholarships or stipends, get in the habit of setting aside some money each month as savings for true emergencies. Any amount will do. If possible, open a separate account so you won’t be easily tempted to use the money for non-emergencies.

Don’t be impulsive – Now that you will have readily available cash under your control, be in the habit of thinking before you spend. Part of personal financial responsibility is to make good decisions and good choices. What you spend now is money you will not have available to spend later on something else. (Maybe you learned about “opportunity cost” at school already.)
As a friend of mine put it: You’re a college student. Live like a college student. Later, when you are gainfully employed in a full-time job after college you can be more of a free spender (while paying off your school loans – but that’s a topic for another article).

Treat plastic properly – A credit card can be a good thing for emergency situations. Having and properly using a credit card can also start you on the road to building a good credit history.
However, there can be negatives as well. Credit card debt is one of the most prevalent problems for college students. This is due primarily to carrying a balance rather than paying off credit card balances each month. Credit card debt can grow very quickly, and this can be a problem for both student and parent if the parent is the actual account holder or a joint account holder.
Some simple safeguards: Use cash or a debit card for all your spending so only funds that are actually available are spent. Use a credit card for emergencies only, and try to use a credit card with a low credit limit to further guard against over-spending.

Don’t be a lender – Have a personal policy of not lending money to other students. If you do lend someone money, do so expecting that you won’t get it back. That mindset may help in making good decisions about lending. If a “friend” keeps asking to borrow money, clearly there is a problem, but you are not the solution to their problem (other than trying to give them good advice).

Renter’s insurance – Protecting your personal possessions is very important. If you will be living in a dorm, your parents’ homeowner’s insurance will most likely provide some level of coverage for your personal possessions. (Parents, talk to your insurance agent about the coverage provided by your policy.) The better alternative, especially if you will be living in non-dormitory housing, is a renter’s insurance policy. Renter’s insurance is fairly inexpensive. It will provide insurance coverage for loss of personal possessions as well as some amount of liability coverage. Liability coverage helps provide legal protection in case something happens to someone visiting you at your residence.

Don’t be a victim – Be sensible and careful with your stuff and about what goes on around you. Don’t get taken advantage of. Protect yourself against identity theft. Be careful with your personal information. Have good on-line security practices and habits.

I trust you find this helpful and that your new freedom will be a good experience.

Posted in Budgeting, Education, Halcyon Living, Halcyon Thoughts, Halcyon Times, Insurance | Comments Off on Free At Last… (2015 Edition)

Preparation Is Key

Due to serious health issues dealt with recently by a relative, I feel compelled to give a reminder about making some other preparations while in good health.  Facing serious illness brings challenges, but you can eliminate a couple issues from the list of potential challenges.

First, have a will in place.  This is important if you have dependents and/or significant assets in your estate.  If you have minor children, remember to also state your desires regarding guardianship of your children.

Second, have healthcare AND financial powers of attorney in place naming a trusted family member or friend to speak on your behalf if you are incapacitated. This provides the ability to have healthcare and financial issues managed according to your wishes.

The key is to take care of things while you are able and not in the middle of a crisis.  Handling these things from a hospital bed is not ideal, to say the least.  In most cases you cannot accomplish necessary legal paperwork while incapacitated, and you may not be able to deal with or discuss issues related to care or finances.

In any given family there will likely be people who are on top of these types of issues.
But even more likely, there are people who give no thought to “what will happen if…” or believe they can put things off.  To you I say “There is no time like the present!”  None of us know when we might suffer a disabling event, a life-threatening illness or become incapacitated.

Therefore you have to plan ahead.  As an adult child, find out if your parents have addressed these issues.  As a parent you may recognize the need to talk to your adult children about their own planning.  Maybe you need to have a discussion with your spouse about your collective situation.

Don’t put it off. These things may be uncomfortable to deal with, but if dealt with ahead of time, you will be thankful later in the midst of crisis.

Posted in Halcyon Living, Halcyon Thoughts, Halcyon Times, Retirement | Comments Off on Preparation Is Key

Baseball As Life? Home Plate

So you’ve rounded third base and are headed for home.

What does that mean? Retire and travel? Health issues? No more mortgage? Long term care needs? End of life issues (morbid but true)? People inheriting your estate?
It can mean any or all of these things at some point in your “golden years”.  Several things should be part of your plan for this stage of life.

Plan to have more cash available but treat it as if it is not replenishable.  In retirement your income will most likely be fixed to some degree if you are not working at all.  Good investment returns may replenish some or, in a best case scenario, all of what you use, but you should have the mindset that what you use up will not be replaced completely.  That means have a plan in place that keeps you living within your means.  Hopefully that will also allow you to accomplish some “retirement dreams” but also live a comfortable day to day life for a long time.
Keep in mind that one of the biggest retirement expenses is health care.  Even with insurance and other medical benefits there can be substantial out-of-pocket costs.  A lot of cash can be spent in a short amount of time.  Have a budget that includes regularly setting aside funds for future medical expenses.

Equally important, have discussions with children or other relatives who may have to assume responsibility for your physical or financial well-being to make known your wishes in case of incapacity. This will make things easier on you and on your loved ones. Have healthcare and financial powers of attorney in place in case you become incapacitated. 
If you have dependents and/or substantial assets, proper asset protection is essential.  Have a written will to make financial provision for surviving dependents and to define what happens with your belongings when you are gone. 

Finally, be prepared to touch home plate. All of us will get there. We just don’t know when.

Posted in Budgeting, Halcyon Living, Halcyon Thoughts, Halcyon Times, Insurance, Retirement | Comments Off on Baseball As Life? Home Plate