There are five steps you must perform that will help you pay off your debt and get you back on track to financial stability. The steps consist of: evaluating your current financial situation, defining what you want out
of a budget or your financial goals, developing a plan of action, implementing your plan, and reviewing, reevaluating, and revising your plan. I know this all sounds like it requires a lot of effort but financial stability is worth it. You are not alone in this, everyone experiences debt some point during their lives.
The first step is to evaluate your current financial situation. I recommend keeping track of where your money is being spent for a month. If you have a bank account through one of the larger banks, they have already done this for you. If not, you will need to categorize your expenses. Utilities, entertainment, auto/gas, education, groceries, and veterinary expenses are only a few categories that you can use. The type of categories will depend on your personal expenses. Microsoft Money and Quicken are two forms of software that help you keep track of your finances.
The second step is to define what exactly it is you want out of a budget. Goals can be placed into three categories: short term, medium term and long term. Short term goals are goals that you do not require longer than a year to pay off. Medium term goals are goals that require longer than a year but less than five years to pay off. Long term goals are goals that take longer than five years. Some short term goals include purchasing a new stereo system, an entertainment system, a small computer, etc. Purchasing a new refrigerator, stove, and vehicle are a few examples of medium term goals. Some long term goals include purchasing a home, boat, or tractor, investing in a 401K plan, and paying off an education loan.
The third, fourth and fifth steps will require tweaking throughout the rest of your life. The third step is to develop a plan of action. This plan will help you meet your goals if you stick to it. In order to prevent
yourself from straying, it is important to make the plan realistic to your income. The plan should also be flexible. Opening a money account will ensure that you have "extra" money hidden in savings for unexpected incidences that could appear at any given moment. The fourth step is to implement your plan. I would start one week before the end of the month. This will allow you to make your payments one week in advance so that you are guaranteed to never make a late payment. This also allows you plenty of time to correct payment problems before the bill's due date. The fifth step requires you to review, reevaluate, and revise your plan. This step is very important if you wish to remain financially stable. As your career advances, so will your income. If you get married or have children, your living arrangements will also grow which means your utility bills will increase. It is important to stay on top of your financial obligations.
One last note of advice, if you don't have the cash to buy something then don't buy it. Keep your credit card at home in a safe where you can't access it. If you really want to make sure you don't use your credit card then ask a friend or family member to choose the code on the safe and not tell you what it is until that card is paid off. If that is not motivation, I don't know what is! Happy financial planning!
Showing posts with label Family Finances. Show all posts
Showing posts with label Family Finances. Show all posts
Wednesday, 22 December 2010
Defining Your Financial Goals
Have you had trouble getting your money to work for you? All the financial advisors tell you that money has to work for you to grow, but no matter what you do, you just can’t get it to work.
The following are some simple suggestions to help you gain an understanding of your money, what it needs to do and how to take the first steps to make it work for you. This article is not a step-by-step guide for saving or investing, it is a simple guideline to get you in the right mind-set with your money.
What Money Can and Can’t Do.
Money can pay for an education, pay for nice cars, homes, fund vacations, and sporting events. Money cannot buy love, friendship, peace, happiness or knowledge. It can fund the education but cannot buy the knowledge and plant it into your mind. Money cannot buy your values or self-esteem. But money is directly related to your values and your self-esteem. It has been said that, “the love of money is the root of all evil.” This is simply not true. It’s the greed that leads to evil-doing of men. You can love and respect money without being greedy. You can have the mind-set of drawing money to you without being greedy. You have to understand money to make it work. Money is a living entity that needs attention just as much as a child does.
You need to be clear about what you want out of your money and be as specific as possible.
Things to consider are:
What’s important to you? Giving your children a good education? Having a nice home and car? Paying the bills on time and having money left over?
What makes you happy? Giving your family nice things? Taking a nice vacation every year? Security?
How much money do you want to have? Do you want to retire with an abundance of money? Do you want a lot of investments?
How do you want to spend that money? Cars, boats, summer beach house? Dining in fine restaurants? Home electronics?
What do you want to contribute with your money? Do you want to give to charity?
When you answer these questions you will be revealing your values and ambitions. These need to be clear and precise. Obstacles may slow you down but, once you have direction and purpose, you will be able to overcome
those obstacles and move forward.
You need focused direction to give it power. If your direction is not focused it will not have the power it needs to make your money work for you.
Define your priorities for your financial goals.
Financial success comes from making your money work. This is the basic foundation of all wealthy people. They have learned how to make their money work for them thus resulting in a strong financial foundation.
If you do not set financial priorities you will not increase your net worth. Setting aside money is always the best bet. Saving money should be treated like any other bill. Sometimes this is difficult when the only person holding you accountable for this “payment” is yourself. No collector will call, there will be no late charges deducted from your savings if you don’t pay it on time. But the end result will be not having enough money for retirement. In a sense, not planning for retirement will be like tons of late fees being heaped on you at once, because there won't be any money set aside when you retire.
Know what you want to attain with your money.
Never allow circumstances to direct your spending habits. You have to be in charge of your money to make it work for you. Money is like anything else, if it doesn’t have an objective it will be used on whatever comes along. You need financial goals in place to avoid watching your money go out the window. If you walk into a store without a plan of which items to buy and the amount of money you want to spend, you will end up with a lot of frivolous purchases that waste your money.
At first you may need to keep track of every penny until you realize just where your money goes. One trip to a convenience store can cost you well over $5. If you stop at the convenience store several times a week, you could be looking at the amount of money needed each week for your retirement plans.
Time and consistency are very important for financial wealth. Time will help compensate for not having much extra money to put back. A little put back over a larger time frame works to your advantage.
You increase your options, your confidence and your security by saving and investing more when you are young. The sooner you start getting your financial goals in order and working towards them, the more time you will
have working on your side. Putting time to work is just as important as putting your money to work.
Be specific when lining out your goals. Vague goals are hard to stick with. Clear and concise goals lead you to committed action. Writing out your goals in a specific manner also helps you see them more objectively.
You should refine your goals at least three times in the beginning. This allows you to be more specific each time you write them. Your first goal may be “I want to be wealthy.” While this is a good goal it needs to be more specific. Ask yourself what wealth means to you. Does it mean a large bank account or a lot of investments? Does it mean owning your own company or going on extravagant vacations? The more specific you are, the more you are able to work for your goals.
Think about the goals you've just written down and define them further. Don’t simply say “I want to be wealthy.” Give your goals a purpose and be as specific as you can, “I want to retire early or I want to own my own company.”
For the third phase, write your goals as they will be when accomplished. Get it down to the nitty gritty. An example is: “I own a three bedroom home with a swimming pool. It is in a wealthy neighborhood. My savings are worth $100,000. I accomplished this by saving X amount of dollars each week over a period of X years.”
Take the time to clearly define your goals. Write them as if you have already reached them. Being specific and writing goals as if they have already happened will set them into motion and make them more concrete.
Your next step will be to think ahead about the conflicts and obstacles you will face in reaching your goals. Decide what your highest priorities will be and focus on those. It’s also a safe measure to put a little back for unseen emergencies as well. There will be times when your second or third priorities have to take a back seat for a little while. Expect this and plan for it so you won’t be devastated when it happens. Making your money work for you is an assurance that those priorities are only put on hold for a little while.
Devising a plan of action.
Give each specific goal a plan of action. This needs to be worked out step by step so that you’ll know what it will take to reach each goal. Some financial advisors suggest it’s easier to determine how to attain your goals than it is to define them. You should decide how much money needs to be put back each week or month to reach the amount you want at retirement. Decide where and how you will invest some of your money taking the risks, rewards and earnings of each investment into consideration. This is an important step in coming up with your plan of action.
You should reassess your goals often so you’ll know whether you are on track or not. It will also help in case some of your goals change at a later date. If something doesn’t work out, use that as a way to learn what went wrong.
Always concentrate more on your accomplishments than your failures. Failures are merely tests of determination. If you are making progress you will face adversity. Something will always come up. Adversity contains the seeds of hope that we need to carry out our plans.
The following are some simple suggestions to help you gain an understanding of your money, what it needs to do and how to take the first steps to make it work for you. This article is not a step-by-step guide for saving or investing, it is a simple guideline to get you in the right mind-set with your money.
What Money Can and Can’t Do.
Money can pay for an education, pay for nice cars, homes, fund vacations, and sporting events. Money cannot buy love, friendship, peace, happiness or knowledge. It can fund the education but cannot buy the knowledge and plant it into your mind. Money cannot buy your values or self-esteem. But money is directly related to your values and your self-esteem. It has been said that, “the love of money is the root of all evil.” This is simply not true. It’s the greed that leads to evil-doing of men. You can love and respect money without being greedy. You can have the mind-set of drawing money to you without being greedy. You have to understand money to make it work. Money is a living entity that needs attention just as much as a child does.
You need to be clear about what you want out of your money and be as specific as possible.
Things to consider are:
What’s important to you? Giving your children a good education? Having a nice home and car? Paying the bills on time and having money left over?
What makes you happy? Giving your family nice things? Taking a nice vacation every year? Security?
How much money do you want to have? Do you want to retire with an abundance of money? Do you want a lot of investments?
How do you want to spend that money? Cars, boats, summer beach house? Dining in fine restaurants? Home electronics?
What do you want to contribute with your money? Do you want to give to charity?
When you answer these questions you will be revealing your values and ambitions. These need to be clear and precise. Obstacles may slow you down but, once you have direction and purpose, you will be able to overcome
those obstacles and move forward.
You need focused direction to give it power. If your direction is not focused it will not have the power it needs to make your money work for you.
Define your priorities for your financial goals.
Financial success comes from making your money work. This is the basic foundation of all wealthy people. They have learned how to make their money work for them thus resulting in a strong financial foundation.
If you do not set financial priorities you will not increase your net worth. Setting aside money is always the best bet. Saving money should be treated like any other bill. Sometimes this is difficult when the only person holding you accountable for this “payment” is yourself. No collector will call, there will be no late charges deducted from your savings if you don’t pay it on time. But the end result will be not having enough money for retirement. In a sense, not planning for retirement will be like tons of late fees being heaped on you at once, because there won't be any money set aside when you retire.
Know what you want to attain with your money.
Never allow circumstances to direct your spending habits. You have to be in charge of your money to make it work for you. Money is like anything else, if it doesn’t have an objective it will be used on whatever comes along. You need financial goals in place to avoid watching your money go out the window. If you walk into a store without a plan of which items to buy and the amount of money you want to spend, you will end up with a lot of frivolous purchases that waste your money.
At first you may need to keep track of every penny until you realize just where your money goes. One trip to a convenience store can cost you well over $5. If you stop at the convenience store several times a week, you could be looking at the amount of money needed each week for your retirement plans.
Time and consistency are very important for financial wealth. Time will help compensate for not having much extra money to put back. A little put back over a larger time frame works to your advantage.
You increase your options, your confidence and your security by saving and investing more when you are young. The sooner you start getting your financial goals in order and working towards them, the more time you will
have working on your side. Putting time to work is just as important as putting your money to work.
Be specific when lining out your goals. Vague goals are hard to stick with. Clear and concise goals lead you to committed action. Writing out your goals in a specific manner also helps you see them more objectively.
You should refine your goals at least three times in the beginning. This allows you to be more specific each time you write them. Your first goal may be “I want to be wealthy.” While this is a good goal it needs to be more specific. Ask yourself what wealth means to you. Does it mean a large bank account or a lot of investments? Does it mean owning your own company or going on extravagant vacations? The more specific you are, the more you are able to work for your goals.
Think about the goals you've just written down and define them further. Don’t simply say “I want to be wealthy.” Give your goals a purpose and be as specific as you can, “I want to retire early or I want to own my own company.”
For the third phase, write your goals as they will be when accomplished. Get it down to the nitty gritty. An example is: “I own a three bedroom home with a swimming pool. It is in a wealthy neighborhood. My savings are worth $100,000. I accomplished this by saving X amount of dollars each week over a period of X years.”
Take the time to clearly define your goals. Write them as if you have already reached them. Being specific and writing goals as if they have already happened will set them into motion and make them more concrete.
Your next step will be to think ahead about the conflicts and obstacles you will face in reaching your goals. Decide what your highest priorities will be and focus on those. It’s also a safe measure to put a little back for unseen emergencies as well. There will be times when your second or third priorities have to take a back seat for a little while. Expect this and plan for it so you won’t be devastated when it happens. Making your money work for you is an assurance that those priorities are only put on hold for a little while.
Devising a plan of action.
Give each specific goal a plan of action. This needs to be worked out step by step so that you’ll know what it will take to reach each goal. Some financial advisors suggest it’s easier to determine how to attain your goals than it is to define them. You should decide how much money needs to be put back each week or month to reach the amount you want at retirement. Decide where and how you will invest some of your money taking the risks, rewards and earnings of each investment into consideration. This is an important step in coming up with your plan of action.
You should reassess your goals often so you’ll know whether you are on track or not. It will also help in case some of your goals change at a later date. If something doesn’t work out, use that as a way to learn what went wrong.
Always concentrate more on your accomplishments than your failures. Failures are merely tests of determination. If you are making progress you will face adversity. Something will always come up. Adversity contains the seeds of hope that we need to carry out our plans.
Increase Your Savings with Short Term Financial Goals
In difficult financial times, it is more important than ever to save your money. A small savings will help you pay for unexpected emergencies like car trouble and health problems, but the general recommendation is to
save 3-6 months of expenses. With a sagging economy, you never know when you might lose your job or see a cut in your hours.
You may have a financial goal to save up three months of expenses in the next 12 months. Just for an example, let's say you have $2,000 in expenses a month. Your goal, then, is to save $6,000.
A recent study by Rice University and Old Dominion University discovered that people are more likely to meet their long-term financial goals if they set short-term financial goals to get there. In our example, if you wanted to save three months of expenses in 12 months, you are more likely to reach your goals if you break your savings goals into shorter time periods.
You can set your goal of saving $6,000 into 12 monthly goals of $500 each. That might work well for you. Breaking your goal into bi-weekly goals of $250, or a weekly goal of saving $125, might also be easy. By breaking your goal into short-term goals, you might also see that this goal is too difficult to reach. Perhaps you are living on a tighter budget and can only manage to save $65 a week. By breaking your goal into monthly or weekly goals, you will realize that without earning extra income, it will take you almost two years to save enough money to reach your goal. You can also choose to start with a smaller savings goal, such as setting aside $1,000 to pay for unexpected expenses like car repairs.
If you set a savings goal, you should consider putting your savings into a separate account. If you mix your long-term savings with your regular spending money, you might see that extra money in your account and be tempted to spend it. Many banks will allow you to easily transfer money between accounts online, even if you are using different banks. Free financial software is available at places like Mint.com that can help you track the money in all of your accounts in one place.
Whether you are saving a small emergency fund, a larger expense in case of a layoff, or even for that trip to Europe that you've always wanted to take, setting short-term goals will make it more likely that you will
get there. Saving money often takes sacrifice, but consistently taking steps to reach your goal is often better than intermittently working to get there.
Sources:
Maxwell, Kristin. "Save More Money: A Simple Trick". Shape. February 2009, p. 27.
Serra, Dan. "Short-term Financial Goals May Be More Reachable." Catholic Online. http://www.catholic.org/finance/finance_story.php?id=29345
save 3-6 months of expenses. With a sagging economy, you never know when you might lose your job or see a cut in your hours.
You may have a financial goal to save up three months of expenses in the next 12 months. Just for an example, let's say you have $2,000 in expenses a month. Your goal, then, is to save $6,000.
A recent study by Rice University and Old Dominion University discovered that people are more likely to meet their long-term financial goals if they set short-term financial goals to get there. In our example, if you wanted to save three months of expenses in 12 months, you are more likely to reach your goals if you break your savings goals into shorter time periods.
You can set your goal of saving $6,000 into 12 monthly goals of $500 each. That might work well for you. Breaking your goal into bi-weekly goals of $250, or a weekly goal of saving $125, might also be easy. By breaking your goal into short-term goals, you might also see that this goal is too difficult to reach. Perhaps you are living on a tighter budget and can only manage to save $65 a week. By breaking your goal into monthly or weekly goals, you will realize that without earning extra income, it will take you almost two years to save enough money to reach your goal. You can also choose to start with a smaller savings goal, such as setting aside $1,000 to pay for unexpected expenses like car repairs.
If you set a savings goal, you should consider putting your savings into a separate account. If you mix your long-term savings with your regular spending money, you might see that extra money in your account and be tempted to spend it. Many banks will allow you to easily transfer money between accounts online, even if you are using different banks. Free financial software is available at places like Mint.com that can help you track the money in all of your accounts in one place.
Whether you are saving a small emergency fund, a larger expense in case of a layoff, or even for that trip to Europe that you've always wanted to take, setting short-term goals will make it more likely that you will
get there. Saving money often takes sacrifice, but consistently taking steps to reach your goal is often better than intermittently working to get there.
Sources:
Maxwell, Kristin. "Save More Money: A Simple Trick". Shape. February 2009, p. 27.
Serra, Dan. "Short-term Financial Goals May Be More Reachable." Catholic Online. http://www.catholic.org/finance/finance_story.php?id=29345
Establishing Financial Goals May Be More Important Than the Financial Plan
For individuals seeking to invest in the stock market, financial advisors always recommend to first become prepared to plan and establish specific needs and goals. In most financial plans, having a financial goal is
almost more important than the financial plan itself. It is the financial goal that puts the drive and motivation into the investment portfolio. So, how does one go about setting a financial goal?
Goal setting is rather simple when broken into a few easy steps. First, the financial investment which leads to the financial goal must be measurable. In other words, it must be an investment that can be tracked and monitored to ensure progress is underway. While investing in the stock market is certainly measurable, there are some financial investments which may not be measurable, resulting in loss of focus or direction in meeting your financial goal. Often, individual investors will place some of their financial wealth into start up businesses for which they are not privy to the information regarding financial progress and failures. This would be an example of a non-measurable financial goal. Investing in a company for which regular financial feedback is not provided on your investment return and success of the operation, would not be a measurable investment.
Beyond measurements of success when setting a financial goal it is important to be specific with regard to the outcome realistically expected. The operative word here is, realistically. Expecting to make $30 million off of a $50 investment is not realistic. In other words, sit down and establish what the financial goal is and be specific as to how you might achieve that financial goal. Who will be your partners? Will the goal be achieved in a particular location or among a specific organization or will this goal be something you work, alone, in the privacy of your home?
As part of the financial goal, once the location and players are identified, it is important to set out a realistic timeline for financial goal achievement. When considering a timeline for completion, also be sure to
incorporate factors which may cause delay or set back attaining a financial goal. By incorporating the most foreseeable constraints, you can better establish a realistic financial goal completion date.
And finally, be sure your financial goal is tangible. A financial goal that can be seen or touched is always a great motivation and driver behind your financial plan. For example, if your goal is to purchase the yacht you always wanted, you will want to expose yourself to yachts on a regular basis so as to keep your motivation and drive in full force. As part of your overall financial goal statement, be sure to state why achieving this goal is important to you and your family. What are the benefits for achieving the financial outcome?
Placing these simple techniques into place will ensure not only a financial goal is established but also a realistic and profitable financial plan accompanies it. When in doubt as to what your financial goal, or financial plan, should be consider engaging a financial mentor; those with whom you can identify a similar pattern in financial goal achievement.
almost more important than the financial plan itself. It is the financial goal that puts the drive and motivation into the investment portfolio. So, how does one go about setting a financial goal?
Goal setting is rather simple when broken into a few easy steps. First, the financial investment which leads to the financial goal must be measurable. In other words, it must be an investment that can be tracked and monitored to ensure progress is underway. While investing in the stock market is certainly measurable, there are some financial investments which may not be measurable, resulting in loss of focus or direction in meeting your financial goal. Often, individual investors will place some of their financial wealth into start up businesses for which they are not privy to the information regarding financial progress and failures. This would be an example of a non-measurable financial goal. Investing in a company for which regular financial feedback is not provided on your investment return and success of the operation, would not be a measurable investment.
Beyond measurements of success when setting a financial goal it is important to be specific with regard to the outcome realistically expected. The operative word here is, realistically. Expecting to make $30 million off of a $50 investment is not realistic. In other words, sit down and establish what the financial goal is and be specific as to how you might achieve that financial goal. Who will be your partners? Will the goal be achieved in a particular location or among a specific organization or will this goal be something you work, alone, in the privacy of your home?
As part of the financial goal, once the location and players are identified, it is important to set out a realistic timeline for financial goal achievement. When considering a timeline for completion, also be sure to
incorporate factors which may cause delay or set back attaining a financial goal. By incorporating the most foreseeable constraints, you can better establish a realistic financial goal completion date.
And finally, be sure your financial goal is tangible. A financial goal that can be seen or touched is always a great motivation and driver behind your financial plan. For example, if your goal is to purchase the yacht you always wanted, you will want to expose yourself to yachts on a regular basis so as to keep your motivation and drive in full force. As part of your overall financial goal statement, be sure to state why achieving this goal is important to you and your family. What are the benefits for achieving the financial outcome?
Placing these simple techniques into place will ensure not only a financial goal is established but also a realistic and profitable financial plan accompanies it. When in doubt as to what your financial goal, or financial plan, should be consider engaging a financial mentor; those with whom you can identify a similar pattern in financial goal achievement.
Financial Aid: Getting Your Grip on Scholarships, Grants, and Student Loans
Remember all those times in the last few years when you wanted to kick your parents out of the house and just live your own life? Well guess what? You're on your own now, so now what? Here's a piece of motherly
advice. Don't screw up! The thing you are now messing with is your life. So let's talk about one of the most important decisions, one of the first decisions you are going to make: your college or technical school education and how to finance it.
The first item of business is deciding if right now is the right time for you to go to college. If you don't have any idea what you want to do with your life, and just want to party, this might not be the best time for you to go to school. First-time college students are notorious for dropping out in the middle of the first or second semester. You don't want to do that. Why not? Because those who drop out in few weeks or months generally end up owing for all or part of the loan funds they received, and may even owe grant funds back to the government—and with nothing to show for it, not even a few credits.
But let's assume that you are a levelheaded individual who knows what you want to study, and maybe even what you want to do in life. If that is the case, read on, as there are some serious matters you need to consider about your financial future.
The federal government - via the U.S. Department of Education—is currently the largest sources of funding for college students. The best way to learn about the Department's programs is to call the Federal Student Aid Information Center (1-800-4-FED-AID or 1-800-433-3243) and order Funding Education Beyond High School: The Guide to Federal Student Aid, a free booklet. If you're someplace where you can't call a toll-free number, then call 1-319-337-5665, but this will cost you (though no more than any other long distance call. You can also write to
The Federal Student Aid Information Center
P.O. Box 84
Washington, DC 20044-0084
Or you can check out federal aid information at www.studentaid.ed.gov.
If you plan to go to school in the near future, you may as well request the Free Application for Federal Student Aid (FAFSA) when you write or call. Like the title says, it's free: you should never pay anyone to
help you fill out or submit a FAFSA. You can also fill out the FAFSA online at www.fafsa.ed.gov.
Online is the way to go if you're in a hurry; you'll get a response back in a few days rather than in a few weeks. Applying online is becoming the norm.
However you do it, fill out the FAFSA as soon as possible. Schools and state aid agencies have deadlines you must meet to be eligible for state aid or for certain kinds of aid the school controls. (State agencies receive information when you list your state of residence on the FAFSA.)
For example, if you want to start school in September 2006, you should fill out the 2006-07 FAFSA as soon after January 1, 2006 as you can. (You can't fill out that year's application before then.) As you may have guessed, the FAFSA asks for information about your and your parents' incomes. If your parents (or you) don't have your taxes done, estimate your income numbers and send the FAFSA in. You'll be glad you did and you can correct your numbers later.
What happens after you submit your FAFSA? The Department calculates your eligibility for aid and sends this information to the financial aid office of each school you listed on the FAFSA. (Each school that participates in the Department's programs has a financial aid administrator - at least one - who determines what kind of aid you'll get.)
Just filling out a FAFSA generally isn't enough to get aid. Naturally, you need to be admitted to that school, but you may also have to fill out an aid form your school provides. If you have questions, contact your school.
After you've submitted the FAFSA and done whatever else the school wants, that's when they'll finally show you -or at least tell you about—the money. Generally, the school will send you an award
letter, telling you what kinds and how much aid you'll get.) Knowing how much college costs, the financial aid administrator will try first to award you as many grants as you can get. Just in case there's any question, grants are FREE MONEY YOU DON'T HAVE TO PAY BACK. If your FAFSA results say you have enough financial need (and you take enough hours, etc.), you'll get a Federal Pell Grant. The maximum award during the 2006-07 award year is $4,050. If you apply early enough and your school has enough funds, you may also get a Federal Supplementary Education Opportunity Grant (FSEOG). The maximum amount is $4000. But since the school determines your eligibility for this award, there's no guaranty you'll get that.
Not a grant, but also helpful, is Federal-Work Study (FWS). As the name implies, you work for these funds. The school grants you a job and you get an hourly wage, rather than a lump sum award. The amount you get depends on your award—and how many hours you work.
There are two new federal grants available for the first time during the 2006-07 school year. They are available to first-year students (freshmen) who graduated from high school in January 2006 or for second year students (sophomores) who graduated in January 2005.
An Academic Competitiveness Grant will give up to $750 for first year students, or up to $1,300 to second year students who are eligible for Federal Pell Grants and who successfully finished a "rigorous high school program." The student's state or local education agency determines just how rigorous this program was. Second year students must also have had a Grade Point Average (GPA) of at least 3.0.
The second new award, the National SMART Grant, will provide up to $4,000 for each of your third and fourth years of study as an undergraduate student—if you are majoring in certain areas. Note that SMART here stands for "Science and Mathematics Access to Retain Talent": So naturally, students who major in physical, life, or computer sciences, math, technology or engineering will be eligible. A student can also qualify if he or she majors in a foreign language considered critical to national security. The student must also have a 3.0 GPA in the courses he or she takes to complete his or her major.
Note that these last two are new, and some details are probably still being worked out. So, again, ask your school's financial aid administrator if you have questions.
Regarding scholarships: scholarships were never a big part of the U.S. Department of Education's picture but that doesn't mean there isn't value here. In fact for most students who wont qualify for grants, this is the main source of money for school that will not have to be paid back.
Most of us are familiar with scholarships for academic achievement, athletic performance, or outstanding skill in the performance arts. However there are hundreds if not thousands of scholarships out there for many
different kinds of talents, and also for people of certain ethnicity, geographic location, or for students studying a specific major. For instance you might find a loan for sons of Irish firefighters, or For Latvian students living in Appalachia who will be studying bioengineering.
Go to your guidance counselor, but don't stop there! Remember you are on a quest for FREE MONEY;. Search the Internet, inquire at church groups, ethnic associations, rotary clubs, and trade unions; leave no stone unturned. Think about what makes you unique, and follow that lead.
Here are some links to get started on a general search.
www.collegeview.com
www.edamerica.net/money/scholarships/default.aspx
www.ecampustours.com/payingcollege/scholarships/freescholarshipsearch.aspx
But of course grants and scholarships are probably not going to cover the entire cost of your education, which brings us to the dreaded student loan, which must be paid back. Sounds basic, but you'd be surprised at the number of people who've signed a promissory note - the legal contract that gets you a loan - who thought it was a grant.
First of all you need to understand that a student loan, like any loan, is a calculated risk. You're taking a risk that you're going to be able to pay it back. It's a risk that pays off well for most people, because those who go to college usually earn more, much more, than those who don't. But it's still a risk. So don't borrow any more than you need.
You also need to know how interest works. A typical freshman receives a Stafford Loan for $2,625. Now interest rates have been low in recent years. For example, it was 5.3 percent during the 2005-06 fiscal year (from the end of June through July 1.) But generally rates are higher, and are slowly climbing back up to their more usual 7 and 8 percent rates.
So let's say you took out a $2,625 Stafford and must repay it at 7 percent. Because interest accrues at a simple annual rate, this loan will accrue about $174 in interest per year. (Multiply this by the 7, 8, or 9
more loans an undergrad typically borrowers.) If no payments are made that year, your loan will grow from $2,625 to almost $2,800.
If you have to get loans, Federal Perkins Loans are the best. These have historically had the lowest interest rates (5 percent for many years). They can also be canceled for more reasons than Stafford Loans can. But the most you can get per year is $4,000 as an undergrad. Whether you get them at all depends on your financial need and the school's funds for this program. Because this program depends much on the school's policies, be sure to file your FAFSA early if you want this loan.
But most students have to take out Staffords. If your school participates in the William D. Ford Direct Loan program, you'll borrow Direct Stafford Loans directly from the U.S. Department of Education. If your school doesn't participate, you'll borrow a Federal Family Education Loan (FFEL) Stafford Loan from a commercial lender. (As far as the borrower is concerned, the loan terms are similar.)
Your financial aid administrator will start by giving you a subsidized Stafford Loan. These are best, because the government pays the interest on subsidized federal student loans while you are in school and during authorized deferments. For unsubsidized Staffords, you must pay all interest from the day the loan is disbursed (paid out), though you won't have to start making payments until after you finish your education.
As mentioned previously, a freshman can typically get a $2,625 subsidized loan. If needed, he or she may be able to borrow $4,000 in unsubsidized loans. (The amount you can borrow goes up every year.) If that isn't enough to cover your expenses, your parent may be able to borrow a PLUS Loan on top of that. The amount your parents can borrow is your cost of attendance (as determined by your school) minus the other loans, grants and scholarships you've already received.
Every year, millions of Americans have to take out a loan of some kind to complete their higher educations. But be wise. Understand interest, and get the best package you can.
And while you are on your way don't forget to hit up the relatives, as they may be willing to give private loans with much lower interest, or no interest at all. And if all your relatives are deadbeats be the first to kick butt and take names. Get a job, work your fingers to the bones, and show them all what you are made of. The best revenge is success.
So lets sum all this up:
· Grants are need based and do not have to be paid back
· Scholarships are based on achievement or other qualifying factors and also do not need to be paid back.
· Do not expect that Grants and Scholarships to cover everything, most people do need to take out some form of student loan to complete their education.
· You will have to pay your student loan back even if you do not get the job you want. You will have to pay your student loan back even if you do not make the amount of money you expected. You will have to pay your student loan back even if you do not complete your education.
The ball is in your court now. The next step is to do some research. You are going to have to do some legwork. Remember it's YOUR future that you are creating. These choices are going to create a big part of the foundation for what house you are able to buy, what car you can afford, and what clothes you will be able to wear. But you don't need to be afraid, just motivated and well informed. If you know what you are facing, you will be up to the challenge.
Whatever your course, whatever your lot in life. You WILL get out of it what you put into it. And that's a good thing- so good luck and go to it!
advice. Don't screw up! The thing you are now messing with is your life. So let's talk about one of the most important decisions, one of the first decisions you are going to make: your college or technical school education and how to finance it.
The first item of business is deciding if right now is the right time for you to go to college. If you don't have any idea what you want to do with your life, and just want to party, this might not be the best time for you to go to school. First-time college students are notorious for dropping out in the middle of the first or second semester. You don't want to do that. Why not? Because those who drop out in few weeks or months generally end up owing for all or part of the loan funds they received, and may even owe grant funds back to the government—and with nothing to show for it, not even a few credits.
But let's assume that you are a levelheaded individual who knows what you want to study, and maybe even what you want to do in life. If that is the case, read on, as there are some serious matters you need to consider about your financial future.
The federal government - via the U.S. Department of Education—is currently the largest sources of funding for college students. The best way to learn about the Department's programs is to call the Federal Student Aid Information Center (1-800-4-FED-AID or 1-800-433-3243) and order Funding Education Beyond High School: The Guide to Federal Student Aid, a free booklet. If you're someplace where you can't call a toll-free number, then call 1-319-337-5665, but this will cost you (though no more than any other long distance call. You can also write to
The Federal Student Aid Information Center
P.O. Box 84
Washington, DC 20044-0084
Or you can check out federal aid information at www.studentaid.ed.gov.
If you plan to go to school in the near future, you may as well request the Free Application for Federal Student Aid (FAFSA) when you write or call. Like the title says, it's free: you should never pay anyone to
help you fill out or submit a FAFSA. You can also fill out the FAFSA online at www.fafsa.ed.gov.
Online is the way to go if you're in a hurry; you'll get a response back in a few days rather than in a few weeks. Applying online is becoming the norm.
However you do it, fill out the FAFSA as soon as possible. Schools and state aid agencies have deadlines you must meet to be eligible for state aid or for certain kinds of aid the school controls. (State agencies receive information when you list your state of residence on the FAFSA.)
For example, if you want to start school in September 2006, you should fill out the 2006-07 FAFSA as soon after January 1, 2006 as you can. (You can't fill out that year's application before then.) As you may have guessed, the FAFSA asks for information about your and your parents' incomes. If your parents (or you) don't have your taxes done, estimate your income numbers and send the FAFSA in. You'll be glad you did and you can correct your numbers later.
What happens after you submit your FAFSA? The Department calculates your eligibility for aid and sends this information to the financial aid office of each school you listed on the FAFSA. (Each school that participates in the Department's programs has a financial aid administrator - at least one - who determines what kind of aid you'll get.)
Just filling out a FAFSA generally isn't enough to get aid. Naturally, you need to be admitted to that school, but you may also have to fill out an aid form your school provides. If you have questions, contact your school.
After you've submitted the FAFSA and done whatever else the school wants, that's when they'll finally show you -or at least tell you about—the money. Generally, the school will send you an award
letter, telling you what kinds and how much aid you'll get.) Knowing how much college costs, the financial aid administrator will try first to award you as many grants as you can get. Just in case there's any question, grants are FREE MONEY YOU DON'T HAVE TO PAY BACK. If your FAFSA results say you have enough financial need (and you take enough hours, etc.), you'll get a Federal Pell Grant. The maximum award during the 2006-07 award year is $4,050. If you apply early enough and your school has enough funds, you may also get a Federal Supplementary Education Opportunity Grant (FSEOG). The maximum amount is $4000. But since the school determines your eligibility for this award, there's no guaranty you'll get that.
Not a grant, but also helpful, is Federal-Work Study (FWS). As the name implies, you work for these funds. The school grants you a job and you get an hourly wage, rather than a lump sum award. The amount you get depends on your award—and how many hours you work.
There are two new federal grants available for the first time during the 2006-07 school year. They are available to first-year students (freshmen) who graduated from high school in January 2006 or for second year students (sophomores) who graduated in January 2005.
An Academic Competitiveness Grant will give up to $750 for first year students, or up to $1,300 to second year students who are eligible for Federal Pell Grants and who successfully finished a "rigorous high school program." The student's state or local education agency determines just how rigorous this program was. Second year students must also have had a Grade Point Average (GPA) of at least 3.0.
The second new award, the National SMART Grant, will provide up to $4,000 for each of your third and fourth years of study as an undergraduate student—if you are majoring in certain areas. Note that SMART here stands for "Science and Mathematics Access to Retain Talent": So naturally, students who major in physical, life, or computer sciences, math, technology or engineering will be eligible. A student can also qualify if he or she majors in a foreign language considered critical to national security. The student must also have a 3.0 GPA in the courses he or she takes to complete his or her major.
Note that these last two are new, and some details are probably still being worked out. So, again, ask your school's financial aid administrator if you have questions.
Regarding scholarships: scholarships were never a big part of the U.S. Department of Education's picture but that doesn't mean there isn't value here. In fact for most students who wont qualify for grants, this is the main source of money for school that will not have to be paid back.
Most of us are familiar with scholarships for academic achievement, athletic performance, or outstanding skill in the performance arts. However there are hundreds if not thousands of scholarships out there for many
different kinds of talents, and also for people of certain ethnicity, geographic location, or for students studying a specific major. For instance you might find a loan for sons of Irish firefighters, or For Latvian students living in Appalachia who will be studying bioengineering.
Go to your guidance counselor, but don't stop there! Remember you are on a quest for FREE MONEY;. Search the Internet, inquire at church groups, ethnic associations, rotary clubs, and trade unions; leave no stone unturned. Think about what makes you unique, and follow that lead.
Here are some links to get started on a general search.
www.collegeview.com
www.edamerica.net/money/scholarships/default.aspx
www.ecampustours.com/payingcollege/scholarships/freescholarshipsearch.aspx
But of course grants and scholarships are probably not going to cover the entire cost of your education, which brings us to the dreaded student loan, which must be paid back. Sounds basic, but you'd be surprised at the number of people who've signed a promissory note - the legal contract that gets you a loan - who thought it was a grant.
First of all you need to understand that a student loan, like any loan, is a calculated risk. You're taking a risk that you're going to be able to pay it back. It's a risk that pays off well for most people, because those who go to college usually earn more, much more, than those who don't. But it's still a risk. So don't borrow any more than you need.
You also need to know how interest works. A typical freshman receives a Stafford Loan for $2,625. Now interest rates have been low in recent years. For example, it was 5.3 percent during the 2005-06 fiscal year (from the end of June through July 1.) But generally rates are higher, and are slowly climbing back up to their more usual 7 and 8 percent rates.
So let's say you took out a $2,625 Stafford and must repay it at 7 percent. Because interest accrues at a simple annual rate, this loan will accrue about $174 in interest per year. (Multiply this by the 7, 8, or 9
more loans an undergrad typically borrowers.) If no payments are made that year, your loan will grow from $2,625 to almost $2,800.
If you have to get loans, Federal Perkins Loans are the best. These have historically had the lowest interest rates (5 percent for many years). They can also be canceled for more reasons than Stafford Loans can. But the most you can get per year is $4,000 as an undergrad. Whether you get them at all depends on your financial need and the school's funds for this program. Because this program depends much on the school's policies, be sure to file your FAFSA early if you want this loan.
But most students have to take out Staffords. If your school participates in the William D. Ford Direct Loan program, you'll borrow Direct Stafford Loans directly from the U.S. Department of Education. If your school doesn't participate, you'll borrow a Federal Family Education Loan (FFEL) Stafford Loan from a commercial lender. (As far as the borrower is concerned, the loan terms are similar.)
Your financial aid administrator will start by giving you a subsidized Stafford Loan. These are best, because the government pays the interest on subsidized federal student loans while you are in school and during authorized deferments. For unsubsidized Staffords, you must pay all interest from the day the loan is disbursed (paid out), though you won't have to start making payments until after you finish your education.
As mentioned previously, a freshman can typically get a $2,625 subsidized loan. If needed, he or she may be able to borrow $4,000 in unsubsidized loans. (The amount you can borrow goes up every year.) If that isn't enough to cover your expenses, your parent may be able to borrow a PLUS Loan on top of that. The amount your parents can borrow is your cost of attendance (as determined by your school) minus the other loans, grants and scholarships you've already received.
Every year, millions of Americans have to take out a loan of some kind to complete their higher educations. But be wise. Understand interest, and get the best package you can.
And while you are on your way don't forget to hit up the relatives, as they may be willing to give private loans with much lower interest, or no interest at all. And if all your relatives are deadbeats be the first to kick butt and take names. Get a job, work your fingers to the bones, and show them all what you are made of. The best revenge is success.
So lets sum all this up:
· Grants are need based and do not have to be paid back
· Scholarships are based on achievement or other qualifying factors and also do not need to be paid back.
· Do not expect that Grants and Scholarships to cover everything, most people do need to take out some form of student loan to complete their education.
· You will have to pay your student loan back even if you do not get the job you want. You will have to pay your student loan back even if you do not make the amount of money you expected. You will have to pay your student loan back even if you do not complete your education.
The ball is in your court now. The next step is to do some research. You are going to have to do some legwork. Remember it's YOUR future that you are creating. These choices are going to create a big part of the foundation for what house you are able to buy, what car you can afford, and what clothes you will be able to wear. But you don't need to be afraid, just motivated and well informed. If you know what you are facing, you will be up to the challenge.
Whatever your course, whatever your lot in life. You WILL get out of it what you put into it. And that's a good thing- so good luck and go to it!
Making the Most of Student Financial Aid
As parents begin the process of completing financial aid applications for their children, it is important that they have some basic information about the process. The amount of financial aid received often influences
the decision as to where a child goes to college. The information contained in this article should help parents to maximize their child’s chances for receiving financial aid.
What is financial aid?
There are many types of financial assistance. Most types fall under the categories of scholarships and grants, educational loans and employment opportunities. Scholarships and grants are “gifts”. They are generally given to students on the basis of academic potential or financial need to help them meet educational costs. These kinds of awards do not have to be repaid by the student.
Educational loans include a number of different borrowing programs from various lending agencies. The student or parent must agree to repay the loan. Interest rates on educational loans are usually lower than those of regular consumer loans and the repayment periods are longer. With some loans, repayment begins while one is still attending school. Other loans defer repayment until after a student has completed their program.
Employment opportunities are another source of financial aid. The College work Study Program is a form of aid that allows a student to work on campus and earn a designated dollar amount per semester to be applied to his/her expenses. Educational loans and work-study are often referred to as “self help”.
Where does the money come from?
The federal government provides money for various grant, loan and work programs. These funds are allocated to students by their school on the basis of financial need. In addition, states like Pennsylvania provide eligible resident students with grant money.
The college/university you attend is also a source of financial aid. Funds can be awarded on the basis of academics, athletics, or financial need. Academic scholarships are normally offered to entering freshman through
the college’s office of admissions, often upon recommendation from their high school principal or counselor. Performance awards such as are given in music and art programs are based on an audition or presentation of a portfolio of the student’s artwork. Other major sources of funding are private organizations, professional associations, civic and community groups, churches and synagogues. Finding out about these programs involves research. Libraries are a good source of reference material. Another excellent source is your high school counselor. You can also go to one of the many College Access Centers around the city. These centers are affiliated with the School District of Philadelphia and offer an on-line scholarship service at no cost to the student. Also, don’t be afraid to make use of the financial aid professionals at the school you plan to attend. They are a storehouse for information and they are there to help.
How do I qualify for financial aid?
In most cases financial aid is awarded on the basis of financial need. Need is not simply determined by family income. It is dependent upon a number of factors such as the value of your assets and the number of children in college. Financial need is calculated using the information you supply on a Financial Aid Form or the Pennsylvania higher Education Assistance Agency’s combined state/federal application. The need-analysis process requires that each family supply information about its income, assets, expenses and liabilities, along with other data. The data is then reviewed in order to determine an accurate picture of the family’s financial situation. From the assessment of the parents’ ability to contribute to their child’s educational expenses, an expected parental contribution is derived. In addition, the student’s income and assets are also reviewed. From this information a student contribution is assessed. Generally, a higher percentage of the student’s income, and assets are calculated as available to be used for his/her educational expenses.
What can I do to improve my chances of getting financial aid?
Here are a few pointers to keep in mind when you begin the process for applying for assistance:
1. Apply on time! Make sure that your application is received before the school’s deadline. Late students receive consideration only if there are funds available after the “on time” applications are processed.
2. Check the school’s requirements. Make sure that you submit ALL the proper documents. An incomplete file will not be processed, thus delaying your ability to make a decision at a school.
3. Ask for an explanation of your financial aid “package”. Schools award dollars in varying fashions based on their individual “packaging philosophy”. This may mean that one school awards a
greater percentage of “self help” than scholarships or grants. Also, some schools factor a loan into your aid package whether or not you intend to actually borrow the money. Scholarships or grants awarded in your first year are not necessarily guaranteed to be given in the next. Find out how your aid was determined.
4. Check the financial aid data you submit before and after processing. Input errors are not uncommon and can result in an inaccurate assessment of need.
5. Document any additional costs you have incurred. Financial aid is distributed based on the information you provide. Higher than usual medical expenses or a loss of employment after an application has been filed may result in a recalculation of a student’s need.
6. Be assertive! After you receive your notification of aid, if it is not enough, file an appeal to the financial aid director/dean. Make an appointment to meet in person to discuss your situation. Don’t be afraid to ask questions. The financial aid office is there to serve you – make use of this service!
Benjamin Franklin once wrote, “an investment in knowledge pays the best interest.” Higher education has been shown to enhance an individual’s lifetime earnings greatly. Financial aid can help you to reach your goal, make sure that you go for every dollar that you can get to make the path to success a smoother one.
the decision as to where a child goes to college. The information contained in this article should help parents to maximize their child’s chances for receiving financial aid.
What is financial aid?
There are many types of financial assistance. Most types fall under the categories of scholarships and grants, educational loans and employment opportunities. Scholarships and grants are “gifts”. They are generally given to students on the basis of academic potential or financial need to help them meet educational costs. These kinds of awards do not have to be repaid by the student.
Educational loans include a number of different borrowing programs from various lending agencies. The student or parent must agree to repay the loan. Interest rates on educational loans are usually lower than those of regular consumer loans and the repayment periods are longer. With some loans, repayment begins while one is still attending school. Other loans defer repayment until after a student has completed their program.
Employment opportunities are another source of financial aid. The College work Study Program is a form of aid that allows a student to work on campus and earn a designated dollar amount per semester to be applied to his/her expenses. Educational loans and work-study are often referred to as “self help”.
Where does the money come from?
The federal government provides money for various grant, loan and work programs. These funds are allocated to students by their school on the basis of financial need. In addition, states like Pennsylvania provide eligible resident students with grant money.
The college/university you attend is also a source of financial aid. Funds can be awarded on the basis of academics, athletics, or financial need. Academic scholarships are normally offered to entering freshman through
the college’s office of admissions, often upon recommendation from their high school principal or counselor. Performance awards such as are given in music and art programs are based on an audition or presentation of a portfolio of the student’s artwork. Other major sources of funding are private organizations, professional associations, civic and community groups, churches and synagogues. Finding out about these programs involves research. Libraries are a good source of reference material. Another excellent source is your high school counselor. You can also go to one of the many College Access Centers around the city. These centers are affiliated with the School District of Philadelphia and offer an on-line scholarship service at no cost to the student. Also, don’t be afraid to make use of the financial aid professionals at the school you plan to attend. They are a storehouse for information and they are there to help.
How do I qualify for financial aid?
In most cases financial aid is awarded on the basis of financial need. Need is not simply determined by family income. It is dependent upon a number of factors such as the value of your assets and the number of children in college. Financial need is calculated using the information you supply on a Financial Aid Form or the Pennsylvania higher Education Assistance Agency’s combined state/federal application. The need-analysis process requires that each family supply information about its income, assets, expenses and liabilities, along with other data. The data is then reviewed in order to determine an accurate picture of the family’s financial situation. From the assessment of the parents’ ability to contribute to their child’s educational expenses, an expected parental contribution is derived. In addition, the student’s income and assets are also reviewed. From this information a student contribution is assessed. Generally, a higher percentage of the student’s income, and assets are calculated as available to be used for his/her educational expenses.
What can I do to improve my chances of getting financial aid?
Here are a few pointers to keep in mind when you begin the process for applying for assistance:
1. Apply on time! Make sure that your application is received before the school’s deadline. Late students receive consideration only if there are funds available after the “on time” applications are processed.
2. Check the school’s requirements. Make sure that you submit ALL the proper documents. An incomplete file will not be processed, thus delaying your ability to make a decision at a school.
3. Ask for an explanation of your financial aid “package”. Schools award dollars in varying fashions based on their individual “packaging philosophy”. This may mean that one school awards a
greater percentage of “self help” than scholarships or grants. Also, some schools factor a loan into your aid package whether or not you intend to actually borrow the money. Scholarships or grants awarded in your first year are not necessarily guaranteed to be given in the next. Find out how your aid was determined.
4. Check the financial aid data you submit before and after processing. Input errors are not uncommon and can result in an inaccurate assessment of need.
5. Document any additional costs you have incurred. Financial aid is distributed based on the information you provide. Higher than usual medical expenses or a loss of employment after an application has been filed may result in a recalculation of a student’s need.
6. Be assertive! After you receive your notification of aid, if it is not enough, file an appeal to the financial aid director/dean. Make an appointment to meet in person to discuss your situation. Don’t be afraid to ask questions. The financial aid office is there to serve you – make use of this service!
Benjamin Franklin once wrote, “an investment in knowledge pays the best interest.” Higher education has been shown to enhance an individual’s lifetime earnings greatly. Financial aid can help you to reach your goal, make sure that you go for every dollar that you can get to make the path to success a smoother one.
Financial Aid for College
Most people who are planning to enroll in college need some form of financial aid in order to handle the rising costs of tuition, textbooks, supplies, and other fees. Fortunately for these perspective students, there
are a number of financial aid options available through colleges, local or state government, and federal programs. These include scholarships, grants, student loans, and the work-study program. While many students are able to get some form of aid, it is exceedingly frustrating for students once they realize how limited their options are, particularly when applying for federal financial aid.
Students often get their first shock when they begin to read the details outlined in the Free Application for Federal Student Aid, better known as the FAFSA. The vast majority of colleges and organizations require that aid seeking students complete one of these forms in order to come up with a financial aid package for those students. Financial aid officers analyze your financial need through examining your income and current tax information. It doesn’t sound so outlandish, right? However, once the applicant gets to the second page of the application, it is startlingly apparent that if he or she does not fit some very specific requirements, the amount of the financial aid package is severely limited.
Once applicants answer some general questions about themselves, they are confronted with a series of seven questions that can “make or break” them in terms of their financial aid award. Students are asked if they are: at least 24 years old, a veteran, enrolling in graduate school, married, have children or other dependents in which they are supporting, and have deceased parents or are/were a ward of the court.
If students answer “no” to all of these questions, they are forced to apply using their parents’ tax information rather than their own. At that point, the financial aid award is largely based on the
EFC, Expected Family Contribution. In other words, the amount of aid students get is directly connected to the amount of money the government estimates their parents will provide them for their education. Obviously, this can cause a number of problems. The applicant first has to figure out who is considered a parent for the purpose of this application. Shockingly, even legal guardians cannot be considered a parent. It does not matter if the student’s parents offer no support at all, or even if the student is living in the parents’ home. Wealthy parents are under no obligation to help their child pay for college, yet their high income is exactly what will keep that child from getting much aid. Another potential problem is that some students do not have relationships with their parents or perhaps the parents do not wish to give the child their tax information. You may be thinking there is a way around this…wrong again. The only way to get out of documenting parents’ tax and income information is if a) the parents are dead or b) the student has documented proof that the parents were abusive.
The limits the FAFSA forces on to college students has become more of an issue recently, and for good reason. Just a few short years ago, the aid application process was not quite as strict. It seems that, like everything else, people who were taking advantage of the system forced the government to enact harsher requirements for financial aid-seeking students. Perhaps changes did need to be made to the aid system, but the current state of the process is not working well for many students. Potential college students, who are young, single, and trying to make it on your own, beware: your independent efforts may not mean much, if anything at all.
are a number of financial aid options available through colleges, local or state government, and federal programs. These include scholarships, grants, student loans, and the work-study program. While many students are able to get some form of aid, it is exceedingly frustrating for students once they realize how limited their options are, particularly when applying for federal financial aid.
Students often get their first shock when they begin to read the details outlined in the Free Application for Federal Student Aid, better known as the FAFSA. The vast majority of colleges and organizations require that aid seeking students complete one of these forms in order to come up with a financial aid package for those students. Financial aid officers analyze your financial need through examining your income and current tax information. It doesn’t sound so outlandish, right? However, once the applicant gets to the second page of the application, it is startlingly apparent that if he or she does not fit some very specific requirements, the amount of the financial aid package is severely limited.
Once applicants answer some general questions about themselves, they are confronted with a series of seven questions that can “make or break” them in terms of their financial aid award. Students are asked if they are: at least 24 years old, a veteran, enrolling in graduate school, married, have children or other dependents in which they are supporting, and have deceased parents or are/were a ward of the court.
If students answer “no” to all of these questions, they are forced to apply using their parents’ tax information rather than their own. At that point, the financial aid award is largely based on the
EFC, Expected Family Contribution. In other words, the amount of aid students get is directly connected to the amount of money the government estimates their parents will provide them for their education. Obviously, this can cause a number of problems. The applicant first has to figure out who is considered a parent for the purpose of this application. Shockingly, even legal guardians cannot be considered a parent. It does not matter if the student’s parents offer no support at all, or even if the student is living in the parents’ home. Wealthy parents are under no obligation to help their child pay for college, yet their high income is exactly what will keep that child from getting much aid. Another potential problem is that some students do not have relationships with their parents or perhaps the parents do not wish to give the child their tax information. You may be thinking there is a way around this…wrong again. The only way to get out of documenting parents’ tax and income information is if a) the parents are dead or b) the student has documented proof that the parents were abusive.
The limits the FAFSA forces on to college students has become more of an issue recently, and for good reason. Just a few short years ago, the aid application process was not quite as strict. It seems that, like everything else, people who were taking advantage of the system forced the government to enact harsher requirements for financial aid-seeking students. Perhaps changes did need to be made to the aid system, but the current state of the process is not working well for many students. Potential college students, who are young, single, and trying to make it on your own, beware: your independent efforts may not mean much, if anything at all.
Financial Aid Resources for College Students
College financial aid has become a necessity for most college students and graduates. Colleges and universities are becoming more expensive, thus putting a financial strain on students and parents. Students who are not
financially able to pay for their tuition can apply for college financial aid from the federal government. There are guidelines that must be met in order to qualify for government assistance, but several thousands of students qualify for the aid and get checks quarterly to pay for their education. When applying for financial aid there are many factors that come into play.
To be eligible to receive federal student aid, students must meet certain requirements. They must be:
· A U.S. citizen or eligible non-citizen
· Registered with Selective Service (see www.sss.gov for more information)
· Attending a participating college
· Working toward a degree or certificate
· Making satisfactory academic progress
Also
· The applicant cannot owe a refund on a federal grant or be in default on a federal education loan
· They must have financial need
· They cannot have any drug convictions
Other requirements may apply. Contact the school's financial aid office for more information.
Formula for Determining Financial Need
Using a “needs analysis” formula the government is able to determine the financial needs of the student. This analysis includes “price of attending,” which consists of tuition, fees, books and living expenses. Then they add expected family contributions, which is figured by assessing the family’s financial situation including income, assets and number of children. After the assessments then financial need is determined and the student is notified of what kinds of assistance is available to them.
The amount of the financial aid award depends on whether or not:
The student goes full-time or part-time
· The student attends school for a full academic year or less
· They believe that they have special circumstances such as unusual medical or dental expenses
If the student believes that they have special circumstances that should be taken into account, such as unusual medical or dental expenses or a significant change in income from one year to the next then the student contact the financial aid administrator at the schools to which they are applying.
Any financial aid a student is eligible to receive will be paid through the school. Typically, the school will first use the aid to pay tuition, fees, and room and board (if provided by the school). Any remaining need is paid to the student for other expenses.
There are different kinds of college financial aid available to college students. The requirements for each program may differ. Some of the aid available is:
Federal Pell Grants
These grants do not have to be repaid and they are available to undergraduate students only. Applications for the Pell Grant can be found at the school’s financial aid office or on the Internet at “www.fafsa.com” . In order to be eligible for these grants students and their parents must meet financial guidelines. They are designed to help families whose children would otherwise not be able to further their education because of financial restraints.
Federal Stafford Loans
These loans must be repaid and are available to undergraduate and graduate students. They have a cap amount that you can borrow. The interest and payments are usually deferred until the student graduates. There are strict rules in order to qualify so each student that is approved must meet the requirements.
Stafford college loans are guaranteed by the government to have a low interest rates and deferred payment options. There are two types of Stafford loans one is the subsidized Stafford loan and the other is the unsubsidized Stafford loan. The government pays the interest on your subsidized Stafford loan until you complete your education, but with the unsubsidized Stafford loan students must pay the interest from the date of origination. In order to qualify for a subsidized loan the student must meet financial requirements and show need for the government’s aid.
PLUS Loans
PLUS college loans are Parent Loans for Undergraduate Students. This loan is designed for parents to be able to cover their child’s education expenses. The credit history of the parent is evaluated and if approved
the payment start 60 days from the approval date. If a parent is looking for a way to cover their child’s college education but they don’t have the funds upfront this is a great option.
Work Study Program
This program may vary by school, but it is essentially designed to help students earn money while attending a college or university. The school provides them with a job so they can earn money to live on and pay tuition.
Perkins Loans
These are low-interest loans that must be repaid after graduation and is typically around $4000 to $6000 for undergraduate and graduate students. Banks and other financial institutions fund these loans.
Campus-Based Programs
Campus-Based Programs are available at participating schools. Different schools will have different resources and programs available to college students. Each school determines their own participation requirements.
Federal Supplemental Educational Opportunity Grants
Federal Supplemental Educational Opportunity Grants are grants available for undergraduates only; awards range from $100-$4,000.
Scholarships
There are all kinds of scholarships for eligible students. Many businesses and foundations offer scholarships through schools and universities. Information about this type of financial assistance is readily accessible in the library or on the Internet.
College financial aid is widely available and there are so many options that it can get confusing. People interested in applying for financial aid should consult with the schools financial aid office in order to explore all options and programs. A financial aid administrator can tell them about student aid available from your state, the school itself, and other sources. The school is required to inform the of its aid procedures and deadlines, and how and when they will receive their aid award. The applicant should keep copies of all financial aid documents and your enrollment agreement.
Free information about federal, state, institutional, and private student aid can be found in the local library's reference section (usually listed under "student aid" or "financial aid").
financially able to pay for their tuition can apply for college financial aid from the federal government. There are guidelines that must be met in order to qualify for government assistance, but several thousands of students qualify for the aid and get checks quarterly to pay for their education. When applying for financial aid there are many factors that come into play.
To be eligible to receive federal student aid, students must meet certain requirements. They must be:
· A U.S. citizen or eligible non-citizen
· Registered with Selective Service (see www.sss.gov for more information)
· Attending a participating college
· Working toward a degree or certificate
· Making satisfactory academic progress
Also
· The applicant cannot owe a refund on a federal grant or be in default on a federal education loan
· They must have financial need
· They cannot have any drug convictions
Other requirements may apply. Contact the school's financial aid office for more information.
Formula for Determining Financial Need
Using a “needs analysis” formula the government is able to determine the financial needs of the student. This analysis includes “price of attending,” which consists of tuition, fees, books and living expenses. Then they add expected family contributions, which is figured by assessing the family’s financial situation including income, assets and number of children. After the assessments then financial need is determined and the student is notified of what kinds of assistance is available to them.
The amount of the financial aid award depends on whether or not:
The student goes full-time or part-time
· The student attends school for a full academic year or less
· They believe that they have special circumstances such as unusual medical or dental expenses
If the student believes that they have special circumstances that should be taken into account, such as unusual medical or dental expenses or a significant change in income from one year to the next then the student contact the financial aid administrator at the schools to which they are applying.
Any financial aid a student is eligible to receive will be paid through the school. Typically, the school will first use the aid to pay tuition, fees, and room and board (if provided by the school). Any remaining need is paid to the student for other expenses.
There are different kinds of college financial aid available to college students. The requirements for each program may differ. Some of the aid available is:
Federal Pell Grants
These grants do not have to be repaid and they are available to undergraduate students only. Applications for the Pell Grant can be found at the school’s financial aid office or on the Internet at “www.fafsa.com” . In order to be eligible for these grants students and their parents must meet financial guidelines. They are designed to help families whose children would otherwise not be able to further their education because of financial restraints.
Federal Stafford Loans
These loans must be repaid and are available to undergraduate and graduate students. They have a cap amount that you can borrow. The interest and payments are usually deferred until the student graduates. There are strict rules in order to qualify so each student that is approved must meet the requirements.
Stafford college loans are guaranteed by the government to have a low interest rates and deferred payment options. There are two types of Stafford loans one is the subsidized Stafford loan and the other is the unsubsidized Stafford loan. The government pays the interest on your subsidized Stafford loan until you complete your education, but with the unsubsidized Stafford loan students must pay the interest from the date of origination. In order to qualify for a subsidized loan the student must meet financial requirements and show need for the government’s aid.
PLUS Loans
PLUS college loans are Parent Loans for Undergraduate Students. This loan is designed for parents to be able to cover their child’s education expenses. The credit history of the parent is evaluated and if approved
the payment start 60 days from the approval date. If a parent is looking for a way to cover their child’s college education but they don’t have the funds upfront this is a great option.
Work Study Program
This program may vary by school, but it is essentially designed to help students earn money while attending a college or university. The school provides them with a job so they can earn money to live on and pay tuition.
Perkins Loans
These are low-interest loans that must be repaid after graduation and is typically around $4000 to $6000 for undergraduate and graduate students. Banks and other financial institutions fund these loans.
Campus-Based Programs
Campus-Based Programs are available at participating schools. Different schools will have different resources and programs available to college students. Each school determines their own participation requirements.
Federal Supplemental Educational Opportunity Grants
Federal Supplemental Educational Opportunity Grants are grants available for undergraduates only; awards range from $100-$4,000.
Scholarships
There are all kinds of scholarships for eligible students. Many businesses and foundations offer scholarships through schools and universities. Information about this type of financial assistance is readily accessible in the library or on the Internet.
College financial aid is widely available and there are so many options that it can get confusing. People interested in applying for financial aid should consult with the schools financial aid office in order to explore all options and programs. A financial aid administrator can tell them about student aid available from your state, the school itself, and other sources. The school is required to inform the of its aid procedures and deadlines, and how and when they will receive their aid award. The applicant should keep copies of all financial aid documents and your enrollment agreement.
Free information about federal, state, institutional, and private student aid can be found in the local library's reference section (usually listed under "student aid" or "financial aid").
Financial Aid Help for College Students
My senior year in college and I get in a car accident. I had to take off a semester and incorporated tons of bills both medical and car. The next semester was coming up quick and though I wish I was still injured I was
not. I now had to face the bills from the accident and school bills.
In desperation I looked online to find scholarships or loans. I found a site that had both and so much more. www.finaid.org is my savior. It is a site that helps you find exactly what a college student needs. It helped me find scholarships based on me and get a loan with low interest rates.
Finaid.com has a scholarship website which leads to you to about 30 other websites based on what you want. It is written out clearly and easy to understand.
It also has a loan, other financial aid area, and financial aid applications. Each area explains everything clearly. It helps every individual, including me, find what they need.
For example:
Free Scholarship Lotteries
Federal and State Government Aid
College-Controlled Aid
Student Profile-Based Aid
Aid for Graduate and Professional School
Aid for Elementary and Secondary School
Aid for Specific Activities
Innovative Programs
There is also a section for Military Aid and Savings. The military aid section has:
US Armed Forces Recruiting Programs
Financial Aid for Veterans and their Dependents
Veterans and the FAFSA
HEROES Act of 2003
Books about Military Scholarships and Financial Aid for Veterans
My favorite area is the calculator. FinAid's custom calculators can help you figure out how much school will cost, how much you need to save and how much aid you'll need.
Overall this website made it a lot easier for me. It relieved a lot of stress and help with me financially incredibly.
not. I now had to face the bills from the accident and school bills.
In desperation I looked online to find scholarships or loans. I found a site that had both and so much more. www.finaid.org is my savior. It is a site that helps you find exactly what a college student needs. It helped me find scholarships based on me and get a loan with low interest rates.
Finaid.com has a scholarship website which leads to you to about 30 other websites based on what you want. It is written out clearly and easy to understand.
It also has a loan, other financial aid area, and financial aid applications. Each area explains everything clearly. It helps every individual, including me, find what they need.
For example:
Free Scholarship Lotteries
Federal and State Government Aid
College-Controlled Aid
Student Profile-Based Aid
Aid for Graduate and Professional School
Aid for Elementary and Secondary School
Aid for Specific Activities
Innovative Programs
There is also a section for Military Aid and Savings. The military aid section has:
US Armed Forces Recruiting Programs
Financial Aid for Veterans and their Dependents
Veterans and the FAFSA
HEROES Act of 2003
Books about Military Scholarships and Financial Aid for Veterans
My favorite area is the calculator. FinAid's custom calculators can help you figure out how much school will cost, how much you need to save and how much aid you'll need.
Overall this website made it a lot easier for me. It relieved a lot of stress and help with me financially incredibly.
Creating a Business and Marketing Plan for a Home Based Business
Creating a business and marketing plan gives you the opportunity to clearly outline your business objectives and how you plan to achieve them. It serves as a personal roadmap for launching and operating your home-based
business. It is also a necessary component when you need to obtain financial assistance from banks or investors.
As you create your business plan, you will want to place emphasis on the needs of your business. For instance, a business plan for a start-up company will highlight different points than a business plan being used to attract investors. This article focuses on developing a business and marketing plan for a start-up company.
In most cases, your plan will be a 20- to 30-page document written in simple business language. You will want to highlight main points with bullets, tables and charts. A standard business plan includes seven sections:
1. Executive Summary
2. Company
3. What You Sell
4. Your Market
5. Strategy and Implementation
6. Management Team
7. Financial Projections
As you begin to organize and develop your business plan, realize that you may not need every item listed above. It's okay to ignore anything that doesn't fit your needs. It's also okay to add sections that aren't listed here. Unless you will be using the plan to obtain financing or attract investors, there will be areas that simply aren't important.
Last, but not least, your business plan should include a table of contents to provide readers with a quick and easy way to find each section of the plan. All pages should be numbered and the table of contents should include these page numbers.
Step-by-Step Guide for Writing Your Business and Marketing Plan
The presentation and information contained within your business plan will determine what kind of first impression you make. Everything about your business plan needs to scream "I am a professional and I know what I
am doing." It needs to be printed on high quality paper and bound as a professional presentation. It needs to include a cover page, table of contents, executive summary and the seven sections mentioned above. All of the elements must be top-notch both in presentation and substance. Let's take a look at each specific element:
Cover Page: The purpose of a cover page is to inform the reader about what they are going to find inside. The cover page should also include your contact information. Use high-quality paper stock for the cover page and use an easy-to-read font such as Times New Roman. The cover page should include the words "Business Plan" in large, bold font and should be centered at the top of the page. The cover page should also include the following information:
* Your full name and the name of your business
* Your company logo
* Address (street address, city, state and zip code)
* Telephone number (including area code)
* Fax number (including area code)
* E-mail address
* Web site address (if you have one)
* Current date
You would be surprised at the number of business owners who leave crucial information off the cover page. If a lender or potential investor cannot find your contact information, chances are your plan will be tossed. Don't make this mistake. Make certain your cover page contains all of the information mentioned above.
Executive Summary: The executive summary is what most readers will go to first. If it doesn't grab their attention and make them sit up and take interest, it will probably be the last thing they read about your company.
Lenders are particularly interested in executive summaries because they use them to determine whether or not they want to learn more about a business. The executive summary provides an overview of your business. It will help others determine your level of professionalism along with the viability of your business.
The executive summary should be written last. Although it is the first part of your plan, it's difficult to write a summary unless you have all of the other components in place. As you create the others sections of your plan, highlight sentences or sections that you want to include in your executive summary.
The executive summary should be between one and three pages. It should include your business concept, financial features and requirements, current state of your business, when it was formed, and biographies of each owner and key personnel.
After you complete your executive summary, have several people read it to check for clarity and presentation. Keep your summary short, but make it interesting. This is your chance to entice readers to read your entire
plan. Just as you would dress your best for an important job interview, you want your executive summary to make a good first impression as well.
Company: An important aspect of defining your company involves creating a mission statement. A mission statement is generally one or two sentences that describe the purpose of your business, what you stand for, and your target market. You want to be very clear when creating your mission statement. Tips for writing a mission statement can be found at bPlans.com and About.com.
Once you have your mission statement, you'll want to highlight various aspects of your company. Although there are specific areas you will need to cover, you want this area to be particularly lively and interesting. Show your enthusiasm and let others pick up on your excitement through the words you use to describe your company. After all, who wants to join forces with a boring, dull company? This is the section where you will want to "go for the gusto" and get people excited about your vision.
Specific areas that should be included in this section are:
* What type of business is it? (wholesale, retail, manufacturing, service)
* Date the company was founded. In the case of a start-up, include the date you intend to open for business.
* The story behind the founding of the company. Talk about what drove you to create this type of business and why you are so passionate about providing your product or service. Also include the benefits your customers receive because of your business. Discuss how your business impacts the community.
* Include the legal structure of the business (sole proprietorship, partnership or corporation).
* Include information about the owners (including you). Discuss their past work experience and talents. Talk about the special qualities they bring to the business.
* Share information about your work environment. Since this is a home-based business, talk about the accommodations you have arranged for your home office. If you will have employees, discuss the work environment you have set up for them.
* Be certain to include information regarding support systems you will utilize. Discuss how customer service will be addressed. Include marketing information, such as where you will be advertising and various types of promotions.
What You Sell. In this section you will want to discuss your product or service in detail. If you manufacture the product, discuss where you obtain your supplies, the manufacturing process, why you make the product and the story behind it. For instance, if you are selling organic salsa and grow the ingredients yourself; talk about why you are passionate about organic gardening and how you developed the recipe. You would want to include things like why your salsa is better than any other salsa, what sets it apart, the benefits it offers, and why you are driven to get it into everybody's hands.
If you are offering a service, discuss the same factors as above and explain why you are better at providing this service than anyone else. What sets you apart? What extra benefits do you offer that your competitor does not?
Market Analysis. Provide a brief overview of the industry you will be competing in. The goal is to demonstrate that you are in a "hot" industry that has an excellent long-term outlook. A good market analysis discusses both the present situation in the market and future possibilities. Describe how your company fits into the marketplace. Include information about new products or developments within the industry that will benefit your business. Use graphs and charts to emphasize specific trends in the marketplace.
Strategy and Implementation. Discuss the various strategies you will implement to create a successful and profitable business. Talk about the prices you will charge for your product or service and explain your pricing structure.
Next, discuss your plans for implementing your product or service into the marketplace. Explain your goals and the steps required to reach them. Describe your customers in detail and discuss how you will market to them. Will you be advertising on a billboard or in a niche publication? Will you use direct marketing or online advertising methods?
Include information about your primary competitors such as their annual sales and market share. Discuss why these companies do or do not meet their customers' needs. Explain why you think you can capture a share of
their business and how you intend to do so.
Management Team. It's not necessary to include a detailed resume of every person on the management team, but it is important to highlight their previous experience and discuss the qualities they bring to the organization. If you are going solo, this is the place where you will want to toot your own horn. Don't be afraid to include information about awards or recognition you have received.
Financial Projections. This might be the most challenging area of the business plan. However, once you have compiled all of the information required for the previous six sections, you will have a better understanding of where you stand in the marketplace. Using the gathered information, forecast your estimated sales for the next three years. Visit Entrepreneur.com for a detailed guide on forecasting sales.
While creating a business plan may appear to be an overwhelming task, there are ways you can simplify the process. There are many books on this topic available at your local library or bookstore and numerous resources available on-line.
The Small Business Administration provides counseling and assistance for all phases of your business. There are several software programs on the market that walk you through every step of the business plan process. You can also find business plan templates in word processing programs and on-line.
Don't let the magnitude of the task steer you away from creating a plan. Break it down into smaller tasks and take the time to do it properly and perfectly. And, last, but not least, even if you have no plans to obtain financing or attract investors, it's wise to create a business plan. It will provide you with many insights and shed light on areas that need improvement. If you take the time to do it right, it can be your one-way ticket to success!
business. It is also a necessary component when you need to obtain financial assistance from banks or investors.
As you create your business plan, you will want to place emphasis on the needs of your business. For instance, a business plan for a start-up company will highlight different points than a business plan being used to attract investors. This article focuses on developing a business and marketing plan for a start-up company.
In most cases, your plan will be a 20- to 30-page document written in simple business language. You will want to highlight main points with bullets, tables and charts. A standard business plan includes seven sections:
1. Executive Summary
2. Company
3. What You Sell
4. Your Market
5. Strategy and Implementation
6. Management Team
7. Financial Projections
As you begin to organize and develop your business plan, realize that you may not need every item listed above. It's okay to ignore anything that doesn't fit your needs. It's also okay to add sections that aren't listed here. Unless you will be using the plan to obtain financing or attract investors, there will be areas that simply aren't important.
Last, but not least, your business plan should include a table of contents to provide readers with a quick and easy way to find each section of the plan. All pages should be numbered and the table of contents should include these page numbers.
Step-by-Step Guide for Writing Your Business and Marketing Plan
The presentation and information contained within your business plan will determine what kind of first impression you make. Everything about your business plan needs to scream "I am a professional and I know what I
am doing." It needs to be printed on high quality paper and bound as a professional presentation. It needs to include a cover page, table of contents, executive summary and the seven sections mentioned above. All of the elements must be top-notch both in presentation and substance. Let's take a look at each specific element:
Cover Page: The purpose of a cover page is to inform the reader about what they are going to find inside. The cover page should also include your contact information. Use high-quality paper stock for the cover page and use an easy-to-read font such as Times New Roman. The cover page should include the words "Business Plan" in large, bold font and should be centered at the top of the page. The cover page should also include the following information:
* Your full name and the name of your business
* Your company logo
* Address (street address, city, state and zip code)
* Telephone number (including area code)
* Fax number (including area code)
* E-mail address
* Web site address (if you have one)
* Current date
You would be surprised at the number of business owners who leave crucial information off the cover page. If a lender or potential investor cannot find your contact information, chances are your plan will be tossed. Don't make this mistake. Make certain your cover page contains all of the information mentioned above.
Executive Summary: The executive summary is what most readers will go to first. If it doesn't grab their attention and make them sit up and take interest, it will probably be the last thing they read about your company.
Lenders are particularly interested in executive summaries because they use them to determine whether or not they want to learn more about a business. The executive summary provides an overview of your business. It will help others determine your level of professionalism along with the viability of your business.
The executive summary should be written last. Although it is the first part of your plan, it's difficult to write a summary unless you have all of the other components in place. As you create the others sections of your plan, highlight sentences or sections that you want to include in your executive summary.
The executive summary should be between one and three pages. It should include your business concept, financial features and requirements, current state of your business, when it was formed, and biographies of each owner and key personnel.
After you complete your executive summary, have several people read it to check for clarity and presentation. Keep your summary short, but make it interesting. This is your chance to entice readers to read your entire
plan. Just as you would dress your best for an important job interview, you want your executive summary to make a good first impression as well.
Company: An important aspect of defining your company involves creating a mission statement. A mission statement is generally one or two sentences that describe the purpose of your business, what you stand for, and your target market. You want to be very clear when creating your mission statement. Tips for writing a mission statement can be found at bPlans.com and About.com.
Once you have your mission statement, you'll want to highlight various aspects of your company. Although there are specific areas you will need to cover, you want this area to be particularly lively and interesting. Show your enthusiasm and let others pick up on your excitement through the words you use to describe your company. After all, who wants to join forces with a boring, dull company? This is the section where you will want to "go for the gusto" and get people excited about your vision.
Specific areas that should be included in this section are:
* What type of business is it? (wholesale, retail, manufacturing, service)
* Date the company was founded. In the case of a start-up, include the date you intend to open for business.
* The story behind the founding of the company. Talk about what drove you to create this type of business and why you are so passionate about providing your product or service. Also include the benefits your customers receive because of your business. Discuss how your business impacts the community.
* Include the legal structure of the business (sole proprietorship, partnership or corporation).
* Include information about the owners (including you). Discuss their past work experience and talents. Talk about the special qualities they bring to the business.
* Share information about your work environment. Since this is a home-based business, talk about the accommodations you have arranged for your home office. If you will have employees, discuss the work environment you have set up for them.
* Be certain to include information regarding support systems you will utilize. Discuss how customer service will be addressed. Include marketing information, such as where you will be advertising and various types of promotions.
What You Sell. In this section you will want to discuss your product or service in detail. If you manufacture the product, discuss where you obtain your supplies, the manufacturing process, why you make the product and the story behind it. For instance, if you are selling organic salsa and grow the ingredients yourself; talk about why you are passionate about organic gardening and how you developed the recipe. You would want to include things like why your salsa is better than any other salsa, what sets it apart, the benefits it offers, and why you are driven to get it into everybody's hands.
If you are offering a service, discuss the same factors as above and explain why you are better at providing this service than anyone else. What sets you apart? What extra benefits do you offer that your competitor does not?
Market Analysis. Provide a brief overview of the industry you will be competing in. The goal is to demonstrate that you are in a "hot" industry that has an excellent long-term outlook. A good market analysis discusses both the present situation in the market and future possibilities. Describe how your company fits into the marketplace. Include information about new products or developments within the industry that will benefit your business. Use graphs and charts to emphasize specific trends in the marketplace.
Strategy and Implementation. Discuss the various strategies you will implement to create a successful and profitable business. Talk about the prices you will charge for your product or service and explain your pricing structure.
Next, discuss your plans for implementing your product or service into the marketplace. Explain your goals and the steps required to reach them. Describe your customers in detail and discuss how you will market to them. Will you be advertising on a billboard or in a niche publication? Will you use direct marketing or online advertising methods?
Include information about your primary competitors such as their annual sales and market share. Discuss why these companies do or do not meet their customers' needs. Explain why you think you can capture a share of
their business and how you intend to do so.
Management Team. It's not necessary to include a detailed resume of every person on the management team, but it is important to highlight their previous experience and discuss the qualities they bring to the organization. If you are going solo, this is the place where you will want to toot your own horn. Don't be afraid to include information about awards or recognition you have received.
Financial Projections. This might be the most challenging area of the business plan. However, once you have compiled all of the information required for the previous six sections, you will have a better understanding of where you stand in the marketplace. Using the gathered information, forecast your estimated sales for the next three years. Visit Entrepreneur.com for a detailed guide on forecasting sales.
While creating a business plan may appear to be an overwhelming task, there are ways you can simplify the process. There are many books on this topic available at your local library or bookstore and numerous resources available on-line.
The Small Business Administration provides counseling and assistance for all phases of your business. There are several software programs on the market that walk you through every step of the business plan process. You can also find business plan templates in word processing programs and on-line.
Don't let the magnitude of the task steer you away from creating a plan. Break it down into smaller tasks and take the time to do it properly and perfectly. And, last, but not least, even if you have no plans to obtain financing or attract investors, it's wise to create a business plan. It will provide you with many insights and shed light on areas that need improvement. If you take the time to do it right, it can be your one-way ticket to success!
Saturday, 18 December 2010
How the FDIC Affects Your Wallet
You might be surprised to learn that the FDIC is not funded by tax payer revenue, so it receives no Congressional appropriations. Rather, it’s funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities. With an insurance fund totaling more than $45 billion, the FDIC insures more than $5 trillion of deposits in U.S. banks and thrifts – deposits in virtually every bank and thrift in the country.
Banks and thrift institutions have to comply with a host of regulations and safe operating guidelines designed to protect depositors and their money. In many ways, the FDIC could be considered a consumer protection agency as it supervises and regularly examines insured banks to make certain they are operating in safe and sound ways, thus protecting customers and their deposits.
On October 3, 2008, FDIC deposit insurance temporarily increased to $250,000 per depositor through December 31, 2009, but there is legislation currently proposed in Washington to keep the $250,000 coverage permanent. Many experts believe this will pass with little resistance, but only time will tell.
Your money in savings, checking and other deposit accounts, when combined, is generally insured to $250,000 per depositor in each bank or thrift the FDIC insures. Deposits held in different categories of ownership – such as single or joint accounts – may be separately insured. Also, the FDIC generally provides separate coverage for retirement accounts, such as individual retirement accounts (IRAs) and Keoghs, insured up to $250,000. The FDIC’s Electronic Deposit Insurance Estimator can help you determine if you have adequate deposit insurance for your accounts. We’ll cover ownership categories in more detail in our next installment.
The FDIC, Your Bank, and You
We’re launching our blog with a short series of posts dedicated to how we work with the Federal Deposit Insurance Corporation, or FDIC, to protect your hard-earned cash. (With bank failures and economic doom-and-gloom all over the news we thought it a good place to start.) But before we get into specifics, we need to provide a brief history of the FDIC and its role as a consumer protector.
The FDIC was created as an independent agency of the federal government in 1933 in response to the bank failures of the 1920’s and early 1930’s. The FDIC is headquartered in Washington, D.C., but conducts its business in Utah from a field office in Salt Lake City. This field office works closely with the Utah State Department of Financial Institutions to oversee the safety and soundness of many of the state’s banks, including Western Community Bank. Since the start of the insurance program on January 1, 1934, no depositor has lost a single cent of FDIC-insured funds from a bank failure.
The FDIC insures deposits only. It does not insure securities, mutual funds or similar types of investments that banks and thrift institutions may offer. (See Insured and Uninsured Investments on the FDIC website to determine what is and is not protected by FDIC insurance.)
Upcoming installments will cover “How the FDIC Affects Your Wallet,” “How to Make the Most of FDIC Insurance Coverage” and “How the FDIC Affect’s Your Bank’s Service.” We hope these posts will help you gain a better understanding of how you can better protect your hard-earned cash, and how your bank is working to protect you.
Make the Most of FDIC Insurance
Our last post made reference to the FDIC’s Electronic Deposit Insurance Estimator, or EDIE, to help you determine if you have adequate deposit insurance for your accounts. Today we’ll delve further into ways you can make the most of available FDIC deposit insurance coverage.
Perhaps one of the best features of FDIC deposit insurance is that’s free. You qualify for it simply by opening a qualified deposit account at an FDIC insured bank. How much insurance you can receive is a different matter. The amount of coverage is based on factors such as the amount of money you have in an insured bank, the type of account, and the kind of ownership category the account falls into.
You can never receive more money than you have in your deposit account. Traditionally, the FDIC has insured deposits up to $100,000 per depositor, but on October 3, 2008, FDIC deposit insurance temporarily increased to $250,000 per depositor through December 31, 2009. So this means if you and your family have $250,000 or less in all of your deposit accounts at the same insured bank or savings association, you do not need to worry about your insurance coverage – your deposits are fully insured. A depositor can have more than $250,000 at one insured bank or savings association and still be fully insured provided the accounts meet certain requirements
You may qualify for more coverage if you own deposit accounts in different ownership categories. The best source of information regarding ownership categories is the FDIC. So to help you determine how you can establish your accounts in the proper ownership categories and to help you maximize your coverage, we suggest you take some time to review the information on the FDIC’s insurance coverage info page.
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The Princess and the Penny
Do you remember the story of the Princess and the Pea where a pea is placed below a ridiculous stack of mattresses to help a desperate prince determine if a traveler claiming to be a princess really is a princess? The prince thought if the woman could feel a pea through all those mattresses that she had to be a princess, because “only a princess could have skin so delicate” as to feel that small irritating pea under all of those mattresses. Sure enough, the woman proved to be a princess. She did not sleep all night because she could feel the tiny irritant under all the mattresses. Imagine what she would think today sleeping on one mattress with a penny-or a stash of money-stuffed under it.
Admittedly, this story is recalled in order to make a point: As bad as the economy is, or may get, the mattress is not the smartest way to save. If you don’t want to loose sleep over the safety of your money, or sleep with an annoying lump in your bed, do some homework and find a safe and secure bank where you can open a simple savings account. You will have greater peace of mind knowing your money is FDIC insured and that your bank is working hard to deserve your trust.
Remember that the bank failures you’re hearing about in the news are typically large banks, and that there are thousands of smaller institutions, like community banks, that continue to operate in safe and sound ways. What’s more, your local community bank is most likely owned, managed, and operated by people in your community who understand your needs, the local economy, and the issues that affect your neighborhood.
Resist the temptation to open a “restless-nights-sleep account” and open a simple savings account at a trusted local community bank instead. You’ll sleep better.
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Benefits of “Going Local”
“The past few years have seen increased emphasis on “going local,” or supporting local communities by consuming products that are produced and sold by independent organizations rather than big-box, franchised retailers,” according to American Fork City Councilman, Dale Gunther in an article published in the February 2009 Utah County Business Journal. “The trend has really taken off…because it helps local communities thrive by reinvesting local dollars at home.”
“While it’s natural to think of products such as produce and art as part of the “going local” movement,” Gunther continues, “one product that is often overlooked is the community bank. Yes, the community bank is indeed a local product that supports local communities.”
So what are some benefits to banking with a local community bank? Here are a few cited by Mr. Gunther:
- “Community banks are locally owned and geographically centralized. This means the money deposited by citizens in your town is generally loaned back to citizens in your town” – not citizens or businesses in other states or even counties.
- “Local management also means faster decision making and less red tape.”
- “At community banks, there are fewer layers to get to the top, which means you have easier access to executives.”
- The employees of community banks are almost always from the community. They “know the community and have been working at the bank long enough to know how to best meet the needs of the community. They know the market and have a vested interest in seeing the local economy succeed.”
- Smaller banks are better to work with you when you have problems with your account. “[They] work with you to avoid fees in the first place and, when incurred, they don’t sting as much as those of their bigger brethren.”
When you consider “going local,” do as Mr. Gunther suggests and “realize that as much as spending locally lifts communities, saving and borrowing locally does, too,”
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“How much should I have in savings?”
It’s not often that I read the magazines in the break room–partly because I could care less what’s going on with Brangelina or because I have no interest in making cupcakes look like butterflies. But I confess to opening the April 1, 2009 issue of Family Circle Magazine a few days ago and stumbling upon an article by Kate Ashford titled “Financial Planner.” The article was shorter (much shorter) than I expected, but there were some good bits of advice.
“Confused by the economy?” Ms. Ashford begins, then answers four (only four, mind you) finance-related questions. I’m not going to repeat them all–you can click the link to the article above if you want to read the entire piece. The third question and response is worth sharing here because I hear this question with some regularity when I’m in the bank, and when people I meet find out I work at a bank:
“Q. How much should I have in savings?
A} At least six months of living expenses. The general rule of thumb has always been that dual-income families should have three to six months of living expenses accessible in a savings account…But fewer than 40% of adults have enough in savings to tide them over for even three months, according to Bankrate.com. And now that the economy is so uncertain, experts are leaning toward six months. “If someone loses his job, it’s anybody’s guess how long it will take to become employed again,” says Donald E. Whalen, a certified financial planner in Alpharetta, Georgia. But don’t get overwhelmed by the thought of having to save so much money-”living expenses” doesn’t mean cash for leisure activities. It’s the money needed to cover bare essentials, like mortgage, food, and health insurance.”
To beef up your emergency fund:
A) Set up a weekly automatic debit from your checking account into a high-interest savings account, and increase the amount when you can.
B) Raise the deductibles on your home and auto insurance, or shop around for a better deal, and then stow the difference in a savings account.
C) When you finish paying off a credit card, keep making payments-to your emergency fund.
D) Try bundling expenses (like getting phone, Internet and cable from one company) then stash the savings.”
These are great ideas, and the emphasis is clear: Look for places to cut expenses and then save the money rather than spend it. For more ideas on how to save money, check out some of our past posts.
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Half-empty or Half-full?
The US Department of Labor released a report today stating that the national unemployment rate rose to 8.5% in March 2009 — the highest level since 1983. At the risk of sounding a little heartless: So what? What does this often quoted statistic mean to me and you? It’s 8.5% of what? How does Utah, or Utah County, or Orem, Lindon, Pleasant Grove, or American Fork fit into this statistic? These are all good questions that deserve some attention. So here goes…
The unemployment rate is a measure of the percentage of the work force that is unemployed at any given date–which means that 91.5% of the work force is still employed according to the March 2009 numbers.
How does this affect us locally? For simplicity’s sake, let’s take a look at February’s statistics, because we have them for the nation and state. In February 2009, the US unemployment rate (or sometimes called jobless rate) was 8.1%, which means that the 91.9% of the workforce who wanted to be employed had a job. The rate for the same period in Utah was 5.1% (or 94.9% employed). This puts Utah at number six on the list behind Wyoming (3.9%), Nebraska, North Dakota, South Dakota, and Iowa (4.9%) out of the 50 states and Washington D.C. In the Provo-Orem and Salt Lake City Metropolitan Statistical Areas, the rate was 5.2%. This places our local rate at 27 on a list of 372 other Metropolitan Statistical Areas.
We all know we’re in turbulent economic times, but in our neck of the woods we’re not being impacted as heavily as other areas of the country, and we’re not getting through it unscathed, either. Have we seen the worst of it? Probably not. Is the glass half-empty? No. There is still plenty to be thankful for, because it surely could be a lot worse for many more people.
Chances are high that you know someone who has been laid-off or needs a job. Do them a favor by keeping your ears and eyes open for opportunities, and let them know about what you see or hear. History tells us that communities that work together are usually better insulated against downturns as each member helps his or her fellow citizens. The situation will get better. At a recent event I attended, Steve Forbes, the Chairman and CEO of Forbes, Inc., and Editor-in-Chief of Forbes Magazine, said, “The world can only end once–and this is not it.”
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Tax Fun Facts
Is it really fair to place the words “tax” and “fun” next to each other? We’ll let you decide, but with April 15th bearing down on us, here are some interesting–if not fun–tax facts to divert your thoughts for a few minutes and hopefully lift your spirits.
- The first property tax in the United States was in 1798.
- The first US income tax started during in the Civil War to help raise money back in 1862.
- The first federal tax office in the US was the Office of the Commissioner of Internal Revenue in 1862.
- The 16th Amendment, ratified in 1913, established the first permanent US income tax. Four states rejected the amendment: Connecticut, Florida, Rhode Island, and Utah, and two never considered/discussed it: Pennsylvania, Virginia.
- The Gettysburg address, one of the greatest speeches in U.S. history, has 269 words. The Declaration of Independence contains 1,337 words. The Holy Bible consists of 773,000 words. Yet there are over 7,000,000 (not a typo that is 7 million) words in the U.S. Tax Code (laws and regulations).
- There were 402 tax forms in 1990, by 2002 that number jumped to a staggering 526.
- The number of pages in the tax code and regulations went from 26,300 in 1984 to an astonishing 54,846 in 2003. There are 500 pages in a ream (standard package) of paper–that’s nearly 110 reams of paper! A ream is about two inces thick, so if you stacked all 54,846 pages on top of each other, you would have a stack of paper 220 inches high, or about 18 feet tall!!
- The IRS sends out over 8 billion pages in forms and instructions every single year, that’s nearly 300,000 trees. (Thankfully, they now use recycled paper).
- The easiest form, the 1040EZ, has 33 pages of instructions–ridiculous.
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Minimizing the Stress of a Layoff – Part 1 of 3
Layoffs are commonplace in a sagging economy, and chances are good that you know someone who has recently been laid-off from his or her job. And it often doesn’t matter how good you are at your job or how hard you work. But a layoff doesn’t have to be the end of the world, nor should it be. The key to minimizing the stress and negative fallout is to know how to react if you are laid-off and to prepare now for the possibility of a layoff in the future.
If you’ve been following this blog, you know we recently posted information about Utah County’s unemployment rate. Fortunately, the Provo/Orem Metro Area ranks 27th out of 372 other Metropolitan Areas in the U.S. according to February 2009 numbers–so it could be lots worse. Nevertheless, while 91.5% of the workers in the Provo and Orem areas are still employed, there are an increasing number of good, honest, hard-working people who want to work, but who do not have a job.
If you’ve been laid-off, have hope. You will survive to work another day if you’re determined to work. You may even find a way to embrace the layoff for what it may be–the opportunity to make a career change that you’ve been considering for a while.
We don’t know about you, but we’re tired of hearing about hope and seeing nothing done. It’s time for solutions. We’ll be posting information we think may be useful for anyone currently employed, anticipating a layoff, or who may have already been a casualty of downsizing.
Please leave us comments with ideas or helpful information you have that may help someone facing the stress of a layoff.
Minimizing the Stress of a Layoff – Part 3 of 3
Here are some additional ideas that may be useful to help reduce the stress of a layoff, or to prepare for the possibility of one in the future:
Be Wise with Your Emergency Fund – This assumes you have an emergency fund. If you don’t have one, start one. Cut back on discretionary purchases and put as much of your paycheck into your emergency savings fund as you can. If a layoff has already affected you, cut back or eliminate unnecessary expenditures and be wise with your use of the fund. Our “How much should I have in savings?” post can help you determine the right amount to put away. And the information in our “Automate Your Savings” post can help you save effortlessly. Hopefully, if you do get laid off, you’ll also have a severance package that will help you pay the bills. However, the more you can sock away, the more peace of mind you’ll have if the axe falls.
Communicate with Creditors and Billers – One of the major stresses after a layoff is making ends meet. The more willing you are to communicate openly and honestly with creditors and billers, the greater your chances are that they will work with you to help you meet your obligations. It’s not a guarantee, but you may be surprised by what they are willing to do to help you.
Remember to Look on the Bright Side — At worst, getting laid off is a temporary trial (and you will get through it, I promise). At best, your layoff may be the kick in the pants you need to find a more fulfilling job. It’s surprising how often I hear people speak of being thankful for their layoffs (some of them volunteered or even begged to be let go). Their severance packages gave them the time and opportunity to pursue the careers of their dreams. If you’ve been unhappy in your current career path, this layoff may be your chance to explore your options.
Know What Resources are Available — There are many resources available to help if you have already been let go. The Utah Department of Workforce Services has offices in American Fork, Provo, and Spanish Fork with professionals who can help. The Church of Jesus Christ of Latter-day Saints has Employment Resource Centers available to anyone, regardless of religious affiliation.
Tell Everyone You Know That You’re Looking for a Job – Now is not the time to be the strong, silent type. Ask for leads from family, friends, and neighbors. Sometimes it really is who you know, not what you know that leads to a meaningful job opportunity.
If you have ideas or helpful information that may help someone facing the stress of a layoff please leave us a comment.
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