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How to Get Your 5% Intro Bonus

1. Open a Citizens Bank Cash Back Platinum Mastercard.
2. Earn 5% cash back on all gas, grocery and drugstore purchases during the first 90 days that your account is open!

Terms and Conditions

• No annual fee.
• Once you have applied for an account, you will be notified of the status within 30 days. Your 90 day promotional offer will start on the date your account is approved allowing up to an additional 20 days for you to receive and activate your card. Your card typically arrives within 10 days once your application is approved.

More on Citizens Bank

Grocery Store Gift Cards. For those of you who have already maxed out your grocery store gift cards with the American Express 6% Cash Back Credit Card, this card may provide another opportunity to continue gift card purchases.

Intro 0% APR. This card is offering a 12-month intro APR of 0% on balance transfers. Depending on your arbitrage strategy, it could be a good opportunity but know that it does have a fee of 3% on the transfer.

Cash Back. In addition to the 5% cash back on the above categories, you’ll earn 1% cash back on all other purchases and you’ll automatically receive checks for your cash back in increments of $50.

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Terms of the Cyprus Bailout

Cyprus’ economy is in bad shape, leading Cyprus to be the fifth European nation to receive a bailout (the first four were Greece, Ireland, Portugal, and Spain). Last year, its economy shrunk by 2.4% and unemployment reached 12%. Two of its largest banks sustained heavy losses on Greek debt during the restructuring of Greece’s economy and have been surviving on emergency funds from the European Central Bank ever since. In an attempt to keep Cyprus in the eurozone, ECB had threatened to cut off funds propping up Cypriot banks unless agreements were reached. This is particularly not good for a country that has a large banking sector (based on deposits, Cyprus banks are an unsustainable four times the size of its economy).

The initial bailout was for a total of €17bn with €10bn coming from the eurozone and €7bn coming from Cyprus. Within a month of this agreement, after more economic analysis, the bailout package was increased to €23bn with the extra €6bn (a total of €13bn) coming from Cyprus itself.

So how did Cyprus plan to come up with their part of the bailout? Cyprus decided to use austerity measures as well as a very controversial saver’s tax to raise the necessary funds.

The Cyprus Saver’s Tax

Aside from austerity measures, selling €400m of gold reserves, and renegotiating the terms of a loan with Russia, the Cypriot government agreed that most of their part of the bailout would come from tapping the savings accounts in its two largest banks. It should be noted that this bailout deal, or the way the Cypriot government decided to come up with its portion, did not need approval from the Cypriot parliament. This is because it was achieved by restructuring the country’s two largest banks rather than levying a new tax on all of its citizens. You read that right; without the consent of its depositors, a new, substantial tax has been levied. Not only has this new tax been levied on a portion of Cyprus citizens, but it is estimated that nearly half of the €70bn worth of deposits in Cyprus’ banks is held by foreigners (the vast majority is believed to be from Russian officials and oligarchs looking for tax havens).

The levy was initially set at 6.75% on accounts under €100,000 and 9.9% on any deposit above that sum (with the option to alter this agreement to 3% on the smaller deposits and up to 15% on deposits above €500,000). In return, savers would be given shares in the banks and/or future profits from the country’s gas reserves. This initial agreement was thrown out.

An agreement was reached on March 25, 2013. In the end, those with deposits of less than €100,000 will not be taxed to help raise the money for this bailout. Here are some of the details:

• Laiki, or Cyprus Popular Bank, is to be closed. Its €4.2bn in deposits over €100,000 will be placed in a “bad bank”. Those with smaller deposits will see their accounts transferred to the Bank of Cyprus.
• The island’s largest bank, Bank of Cyprus, will be spared. However, a huge restructuring is taking place. It is thought depositors with more than €100,000 at the bank will also be involved in the recapitalization, and are expected to face losses of around 30%.
• Bank of Cyprus will inherit a €9bn debt Laiki had with the European Central Bank (ECB).
• Temporarily, a €100 limit was imposed on ATM withdrawals in Cyprus (in the month of April the limit was raised to €300).
• Cyprus must shrink its banking industry to the EU average size by 2018.

Eurozone’s Deposit Insurance

In these bailout talks one of the initial agreements was to tax 6.75% on accounts under €100,000. This was despite having a law in place that dictates all EU banks are required to insure deposits of €100,000 or less (agreed upon in the aftermath of the 2008 banking crisis). Thankfully, it did not happen. But this was mainly because the Cypriot parliament refused to skirt the law and tax deposits of less than €100,000.

Protecting Your Own Money

FDIC Insurance. After reading all of this, you might be wondering what insures deposits in the United States. The Federal Deposit Insurance Corporation (FDIC) was created by Franklin D. Roosevelt in 1933 to insure the deposits of customers. Since 1980, the FDIC insurance limits on insurable bank accounts were $100,000. But with 25+ banks becoming insolvent around the time of the stock market crash in the fall of 2008, fears among customers and small business owners started to rise. It turns out that these fears were rational, as only 63% of deposit accounts were protected with this $100,000 limit. The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010, allayed fears by making $250,000 FDIC coverage the new permanent limit.

FDIC Limits. How this limit works is per banking institution. So each of your accounts per banking institution is added up and counted towards this $250,000. You can open separate accounts at different banks to get more than $250,000 in FDIC insurance coverage. If you’re looking for a different bank to open an account to get additional FDIC insurance coverage, see our list of FDIC insured banks.

Does the Cyprus Tax Startle You?

As a diligent saver, all of this research and information has startled me. It’s not the fact that another European nation needed a bailout, nor the fact that a bank will be closing within the island of Cyprus that is shocking. What truly scares me was the levying of a tax without the consent of the Cyprus government/people (whether or not they would have reached a necessary consensus is a discussion beyond the scope of this article), as well as the ease with which there was an initial agreement to seize part of the assets of depositors with less than €100,000 despite a law being in place.

Let’s hope that we never have to deal with this in our lifetimes.

What are your thoughts?

More on Banking

• FDIC Insured Bank Rates
• $250,000 FDIC Insurance Limits
• Banks Versus Credit Unions
• Money Market Accounts vs Savings Accounts
• Do You Need a Local Bank?

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Fast forward to today and because of the baby boomer generation retiring, we have turned the scale upside down. Now for every worker, we have 5 retirees. This is not good because only one worker has to fund five retiree’s benefits. It doesn’t take a math whiz to realize that this cannot be sustained. This is why you hear that the Social Security trust is going to run out of money.

Photo Courtesy: efleming

Decline in the U.S. Birth Rate

Recently, it has been reported that the birth rate has fallen to the lowest level since it’s been tracked. This means that soon enough each worker is going to be funding even more retiree’s monthly Social Security checks.

Tie this in with medical discoveries allowing for people to live longer means even more of a disparity between worker and retiree. In the past, you would work for 40 years and receive a monthly check for five years. Now you work for 40 years, but receive a monthly check for 20-plus years. This length of time will continue to increase as we move forward.

How to Solve the Social Security Issue

Lower Benefits. There are a few solutions to solve this problem. The first is to cut back the on the size of the monthly check retiree’s receive each month. Not many retirees are open to this option. And since the older population is more reliable when it comes to voting, no Congressman or woman is going to take the heat for suggesting cuts. For the most part, the government has slowed down the rate of increases in benefit amounts, even leaving it unchanged for a few years. The only other solution was to slowly increase the age in which one could begin receiving benefits.

Increase Taxes. The next option is to tax workers more to raise enough money to pay for the monthly benefits. I haven’t seen a study that says how much a worker would need to be taxed to make the system solvent, but my guess is that it is a lot more than anyone is willing to pay. See the Social Security Wage Base for current limits on Social Security taxes.

I don’t think that one thing should be done over another. I think there is a compromise that needs to be reached (but good luck on Washington DC agreeing to that!). I think that we need to increase the tax people pay along with decreasing the monthly benefit. We’ve already begun to see the shift where people are putting more into Social Security than they receive in benefits.

Create Private Accounts. I feel the best option is a private retirement account option. I know many people are against this because they have been burned in the stock market, but you would do much better this way as opposed to Social Security. As I mentioned before, at the current rate, you are paying in more than you are going to get out. Think about that for a minute. If you pay in $100,000 over your working life, you may only receive $70,000 in monthly benefits. (Note, I don’t know the exact number, I am just trying to make this point clear.) You are losing money! If you could instead invest that money in US Government bonds that are very safe, you would almost guarantee a positive return. Put another way, if you invested $100,000 over your working life, you might end up with $125,000 in monthly benefits.

Most people “see” their quarterly investment report and get scared when it drops and sell out of everything. They can’t “see” their Social Security gains or losses because it’s not on your Social Security statement. They just receive a check and are happy because of it. I’m sure if they saw that they were losing money, they would want to pull out of Social Security, but they can’t, even if they wanted to. So we are stuck on the out of control train, hoping a solution will be found.

How Should Social Security Be Fixed?

What are your thoughts on Social Security? Are you open to paying in more in the form of taxes? Would you be OK with your monthly benefit amount being decreased? What are your thoughts on private accounts? Do you think if more people realized they were losing money in Social Security they would be more open to private accounts?

More on Social Security

• Will Social Security Be Around in 20 Years?
• Do You Have to Pay Income Tax on Social Security?
• How to Calculate Self Employment Tax
• How to Qualify for Social Security Benefits
• New 2013 Investment Tax: What it Means For You

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© My Dollar Plan

Photo Courtesy: i am real estate photographer

Why Your Credit Score is Important

A good credit score is important if you want to get a new credit card. Not only does it determine if you are approved or not, but it can also determine your available credit limit and interest rate. Credit scores also play a vital role if you are taking out a mortgage to buy a house, taking out a loan to pay for college tuition, to buy a car, or start a business. Even things like signing up for a new phone plan may require a credit history check. When you are signing a lease to an apartment, you may be subjected to a credit check as well since landlords want to be sure you’ll be paying rent on time. If your score isn’t good, you can be turned down or asked to pay a higher security deposit or additional fees to ensure payment.

Even in some careers, future employers may, with your knowledge, want to know your credit score or credit history. This is especially true if your position requires you dealing with money. But some employers just want to know how responsible and diligent you are with paying your bills and paying them on time.

How to Improve Your Credit Score

Now that you realize just how important your credit score is, you’ll want to start taking steps to improving it, or if it’s already good, keeping it that way. Keep in mind that if you have a weak credit score or a troubled credit report, you can’t fix it overnight. It takes patience and a lot of hard work. Here’s how to improve your credit report:

• Check your report.
  Whether you think you have excellent credit or a less desirable credit report, be sure to check your credit report. This will allow you to see any errors or any suspicious activity associated with your credit. You could have paid something on time but it came up as a late payment or opened an account a while ago and forgot all about it. This is also a great way to check if you’ve had a problem with identity theft. If there are any accounts you don’t recognize, you’ll want to report them immediately to the credit bureau. You can check your report for free by visiting AnnualCreditReport.com. It’s free to see your credit report, but you’ll have to pay a small fee to see your actual score.
• Get organized with your bills.
  It’s pretty easy to get disorganized with bills. For me, I have a lot of bills. Some I pay online, others I write a check for, and others are direct withdrawal. Some are due at the end of the month, and some at the beginning. Since late payments are horrible for your credit score, you need to pay your bills on time. Late payments are flagged on your credit report and cause your score to go down. It can also cause your interest rate to go up and late payments added to your bill. On the other hand, making your payments on time, will start to improve your score. Keep track of when your bills are due. The same way you mark on your calendar doctor’s appointments and items due for work or school, mark down when your bill is due. Some company’s offer customers to enroll in reminders that will be e-mailed to you when your bill is almost due.
• Consider automatic payments.
  Since making your payments on time is crucial to improving your credit score, consider signing up for your monthly payment to be automatically withdrawn from your checking account. This is a solid action to ensure you won’t be late. Some companies, like U.S. Cellular, may even offer you a small discount for enrolling. If you’ve been trying to deal with your student loans, some lenders, like Sallie Mae, will lower your interest rate if you qualify and sign up for automatic debit. But you have to be sure you always have enough money to cover any bills since it could then result in late payments plus overdraft fees. Also, keep track of your checking account because you might forget about payments deducted and then end up overdrafting.
• Make a payment plan for your debt.
  If you’re struggling with debt and also dealing with a less desirable credit report, it can feel overwhelming. But it is possible to deal with it and come out on top. Make a plan of paying off any debt you have as well as any accounts that are past due. Your plan may have to include finding ways to save money in your monthly budget so you can put it towards bills and/or debt payments. There are ways you can save money on food, try to make more careful choices about purchasing wants over needs, and try to lower your utilities.
• Work with anything you have past due.
  If you have an account that is past due, the worst thing you can do is just ignore it. Call the company, and face it. It is possible that they will work with you to go on a payment plan. For student loans, it is possible you can defer your payments if you are unemployed, still in school, or experiencing economic hardship. You can also put your loans in forbearance, which means you pay a fee, then you do not have to make a payment for a certain amount of months without any penalties.

Do you check your credit report every year? How do you try to improve your credit score?

More on Credit

• How Much Do Credit Inquiries Really Matter?
• How to Get a Free Credit Report
• Free Credit Monitoring from Credit Karma
• Credit Sesame Free Credit Score
• Credit Scores: VantageScore vs Fico

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Reasons to Consider Mystery Shopping

I took a break from mystery shopping after completing these two assignments. That is, until something very interesting came across my inbox. While completing this glamorous one (more to come below), I took the time to think about reasons why you might want to give mystery shopping a shot.

Earn Extra Cash to Supplement Your Budget

While you will not become rich off of my level of mystery shopping (think fast food shops and oil changes), the extra income can certainly supplement parts of your budget. A good way to look at it is perhaps sign up for assignments and use the cash or experience towards a certain goal. For example, sign onto additional shops around the holidays in order to purchase gifts for others. You could save on food costs by only eating out when you get a restaurant/fast food assignment, or mystery shopping could help you to afford some wonderful dates for with your significant other.

Experience Something New

In my inbox I receive lots of emails from the mystery company I am signed up for (Intelli-Shop). Most are for fast food restaurants, car dealerships, and an occasional insurance company. Don’t get me wrong, getting a meal for free is nice and all, but you do need to write up a report afterwards and so I haven’t found all of these types of shops to be lucrative or even worth it at times (though worth it when I need an oil change!).

Even with two past scores of 8 out of possible 10 for my past efforts, I have rarely seen an interesting or glamorous assignment like those advertised. Until now, that is. Last weekend, I snagged an assignment that would ensure a great date night with my husband completely for free: an evening at a racetrack. You might remember I mentioned this mystery shopping assignment when I talked about it in Do You Have to Pay Tax on Gambling Winnings?

Not only did this shop include the general admission, valet parking, and three bets, but it also included a buffet dinner for two and two alcoholic beverages. What a deal! On top of the reimbursements, I was paid $60 for my time. Because I helped the company out in a pinch (two of the scheduled people had backed out last minute), I was given a “hero” status in my profile. This means my chances of getting really cool assignments in the future are higher than before. It was a win-win-win situation!

Help Fulfill a Shopping Addiction Void

If you have a shopping addiction or spend too much during the month, then mystery shopping could help to fill the void while offering reimbursable items. Instead of spending your own money, you can spend a company’s money (though of course you need to cover the cost upfront). You might be able to find a shop that you were wanting to go to anyway, or a type of assignment where you get to purchase and item you had needed/wanted to buy anyway (word of warning: some shops make you take the product back as part of the experience). Who knows, perhaps writing the reports out will give you enough work to do that you will go out shopping less.

Get You Out of the House

Perhaps you don’t have much money in your budget for entertainment. If you are home most of the day, or on weekends, then you might like a good excuse to leave the house. Mystery shopping can certainly provide this for you. You will be on an assignment, focused, yet able to enjoy whatever venue you were given a free ticket to, or whatever meal you purchased (though reimbursable, so you have to pay upfront). Some mystery shops you can even take a friend along, so be on the lookout for these.

Because of my great experience with mystery shopping thus far, I wanted to share with you reasons why you might want to give mystery shopping a chance. It’s not for everyone, and you might question if you are wasting your time with lower-paying shops (think $7 for a fast food restaurant). But after picking up assignments and proving to be consistent, better assignments should be on their way!

Mystery Shopping Referral

If you are interested in becoming a Mystery Shopper with Intelli-Shop and would like a referral, please contact us using the subject Mystery Shopping and include the following information: Name, email address, city, state and zip. We will submit your information under their refer-a-friend program. Intelli-Shop will then send you information about how to sign up.

Have you ever participated in mystery shopping?

More on Making Extra Money

• Are Paid Surveys a Waste of Time?
• 12 Ways to Generate Extra Income
• 5 More Ways to Earn Some Extra Cash
• 14 Ways to Make Extra Money
• Donating Bodily Fluids for Cash
• 10 Surprising Things You Can Turn Into Cash

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Even if you don’t need to save for college, you can still get in on this bonus!

How to Get Your $50

1. Open a Upromise World MasterCard.
2. Make your first purchase within 90 days.
3. Earn $50 cash back on your statement!

Terms and Conditions

• No annual fee.
• No limit to cash back earnings.
• You must sign up for Upromise rewards before you can earn cash back using this credit card.

More on Upromise

Earning Cash Back. You can earn 1% on all of your purchases, 2% back at eligible movie theatres, up to 3% at Exxon or Mobile gas stations and 4% back at participating Upromise restaurants. You can also earn an extra 5% on any eligible online shopping done through Upromise.

What is Upromise? If you’re unfamiliar with the Upromise rewards program, it’s a great way to save a little bit more towards any educational costs you might have coming up. You can contribute towards a Upromise 529 plan, make deposits in a Sallie Mae High-Yield Savings Account or make payments towards a Sallie Mae loan.

No need for college savings? If you don’t need any of those services, you can also request a check for your Upromise earnings, including the bonus and cash back from the Upromise World MasterCard. You can request checks of $10 or more once per quarter.

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© My Dollar Plan

“Honey, did you buy something from so and so for $700 last month?”
“Why no, dear, I would never spend that much without talking it over with you first.”
“Hmmm; I wonder where that charge came from, then?”
“I know! You can call the phone number listed for the merchant on the statement!”
“That’s a great idea!”

The merchant confirms that the charge was made. It was a telephone order, and the merchant confirmed the ZIP code and security code on the back of the card to verify that the purchaser actually possessed the card.

You call the bank and explain the situation. The bank refunds the $700, cancels the card immediately, and sends you a new card with a new number.

Was I a Victim of Identity Theft?

This is the ideal situation of what happens when your credit card is stolen. This is what happened to me a few years ago. Some banks are a little less helpful in situations like this, but generally speaking, I think most will do what they can to resolve the issue.

Was I a victim of identity theft? I don’t think so. To me, someone simply got hold of my card information, used it for a large purchase, and then my bank and I resolved the situation. Case closed. My social security number was not compromised, there’s no one applying for credit cards pretending to be me, and no other aspect of my financial identity has been taken.

I personally don’t think that identity theft is as common as most statistics show. I generally agree with statistics that come from reputable sources, but I just can’t see how the average person, using simple techniques, can’t prevent this. Granted, there are crackers (as a computer person, I prefer this word to “hackers” as hackers are not criminals, in the original sense of the word) out there that exploit commercial web site databases and steal tons of personal information. By law, when these incidents happen, the company must contact all of their customers and let them know. I’ve received a few of these letters over the years, but again, I’ve never had any problem with identity theft.

Likewise, I don’t know that I believe there are many “dumpster diver” identity thieves; I find it unlikely that this is an efficient use of a potential identity thief’s time.

Identity Theft Prevention

I offer the following steps to help prevent you from becoming a victim of identity theft:

• If you are concerned about the garbage identity thief, buy a shredder. Keep it next to your workspace area for going through your mail. Shred credit card offers, bank statements that you can review electronically, and anything else that you would normally throw away, that may have personal information on it.
• Keep your social security number secret. Unless you have a valid reason to carry it somewhere, keep it in your home in a secure location.
• When sending out mail with personal information in it, drop it in a “blue box” instead of your own mailbox.
• Log on to your credit card websites regularly, just to make sure there are no charges that look suspicious.
• Don’t give personal information to anyone over the phone, unless it is a call that you initiated.

This is what I do. It has worked for me for years.

Have you been a victim of identity theft? What methods do you use to prevent identity theft?

More Information on Identity Theft

• How to Protect Yourself from Identity Theft
• How To Recover From Identity Theft
• How to Get a Free Credit Report
• What Happens When Your Credit Card is Stolen
• Credit Sesame Free Credit Score

You can also sign up for identity theft services, like LifeLock or Trusted ID, which offers a 14 day free trial. However, there is a charge after the first 14 days to continue the service.

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© My Dollar Plan

Word of warning: Try to hold onto that wedded bliss and smile throughout this process, as you are bound to run into some situations, issues, or get frustrated at the amount of time and paperwork all of this can take. I know I was surprised!

Change Names on Financial Accounts

Once you have your new identification (if you chose to change your name), or once you are ready to combine finances (if you chose to combine finances), then it is time to actually add names to accounts. You might want to take this as an opportunity to open a new account together with a bank offer attached to it (replenish some of those savings or kick start that emergency fund!).

Be ready with your new identification (driver’s license) and potentially your social security cards. Check with your financial institution to find out what specific documentation they require. I found that it was just easier to do this entire process in person, and we used our lunch breaks to take care of one institution at a time. You may be able to accomplish this online, but be prepared to submit documents with potential notarizations through the mail if you choose to do so. In addition, be sure to ask about any fees to change your name.

Agree on a Budget

I would like to say that our first budget meeting was smooth sailing, and that we both agreed on all of the amounts in each category. This was simply not the case, and it’s okay that it wasn’t. There are now two people involved in finances, and each of you will be bringing a different set of priorities for saving and spending. Take this time to educate each other on your priorities, suggest ways to budget, compromise, and try out a few budgets until you both feel comfortable. There are many ways to manage money in your marriage.

Change Beneficiaries

Sadly, it took us over two years to finally change all of our beneficiaries to reflect our new circumstances. I do not recommend this, as it could cause a huge financial hassle on top of the emotional upheaval death or disability can bring.

This is not to say that it will not be a huge hassle. We had to call and/or fill out paperwork for each of our accounts. Some required a notary, others did not. A good time to take care of this would be when you are already changing names on accounts above. Might as well just make one trip to the bank, right?

Combine Insurances for Potential Savings

If you both have employer-sponsored healthcare plans, then you will want to check the cost of putting a dependent onto each. For my husband and me, it would cost $130 to put me onto his insurance, and almost $200 to put him on my insurance. My own health insurance was free to me, and his cost for himself was $160 per month. Therefore, it did not make financial sense to change either of our healthcare plans.

Also, check out your car insurance policies. You may want to go with the same company and policy. A marriage financial perk is your car insurance should lower now that you are no longer single, so be sure to ask the company that you choose to go with.

Fill Out Your First Tax Return Together

Decide on who will fill out the income tax returns (alone, or together), or if you will have a service do your taxes for you. It is easiest to have a large envelope in a central location so that when each of your tax documents comes in the mail (employer documents, interest earnings, student loan debt, charitable tax deduction sheets, etc.) you can make sure they end up in one location. Before you begin the process remember to go through all of the documents in this envelope together to ensure that everything has been accounted for on each of your sides.

Be aware that there are two different ways to file your taxes when you are married: married filing jointly or married filing separately. You will most likely want to determine which way will ensure you owe less tax for the year. You may also wish to familiarize yourself with the “marriage tax penalty”, which may impact some couples.

Remember that you are in a transition period right now, and that things will take time to run smoothly. Take this time to learn how to delegate and to work together. Here’s to your future!

More Finance Topics for Newlyweds

• Should You Have Joint Credit Cards?
• Are You Aware of Your Joint Financial Destiny?
• 6 Financial Topics to Discuss Before Marriage
• Financial Management For Newlyweds
• Newlywed Finances Part II
• 5 Ways to Save Money When Your Spouse is a Spender
• 7 Financial Consequences When You Say “I Do”

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© My Dollar Plan

Financial Topics to Discuss Before Marriage

It’s time to get serious about your life with your partner, and this includes having several financial discussions to help shape your future course together. You may be uncomfortable bringing some of these topics up, but having these conversations now can really help versus wishing you had had some of these conversations years down the road.

Decide on Whether or Not to Change Your Name

While this decision may have been cut and dry in your parents’ and grandparents’ day, now it is a discussion that you should have before getting married (if for the simple fact that you will need to do a lot of paperwork to change accounts after saying “I Do”).

In our marriage, I decided to change my last name to my husband’s but to keep my maiden name as my pen name. It felt like a good compromise to both of us.

Read More: Brokers Charge Fees to Change Your Name

Decide on Where the Two of You Will Live Together

Does one person have a home? Are both of you in apartments? Do you live together already? Sometimes it is easiest to move into a new apartment or new home together rather than one person move into another person’s place. Of course this will work as well, but there may be a bit more discussions on making room for each other rather than if you move into an empty space together from the start.

Read More: 7 Frugal Moving Tips

Decide on Whether or Not to Combine Finances

Once again, in most of history this was a given that finances would be combined. But it turns out that you are free to make your own choices for what will work best for you and your partner in your marriage. I know of couples who have combined finances, and I know of couples who have not done so. I also know of couples who have pursued a hybrid approach where they each have their own account and then have an account together from which bills are paid. The point is to make sure that it works for both of you.

My husband and I chose to combine our finances, and began doing so while we were paying for things towards the wedding. This eased the transition period; however, many financial gurus will tell you to not combine finances until after you are married.

Read More: How to Manage Money in Your Marriage

Discuss Any Debts You Each Have

If you both have not disclosed your debt loads (if any) to each other yet, now is the time to do so. How will you handle these debts together? How much are the monthly payments? What is your plan for paying off your debt?

Read More: Why You Should Tell Your Family About Your Debt

Map Out Future Financial Plans

Where do you see yourself in 2 years from now? 5 years from now? 10 years from now? You need to ask your partner these same questions. It is important to know what each other wants and what each other needs.

Read More: Are You Aware of Your Joint Financial Destiny?

How to Pay for the Wedding

Weddings can be a huge expense. I’ve discussed before about how to save money on the wedding, but did not discuss one of the most important parts of it all: how it is going to be paid, and who is going to pay for it. You can choose to go to a courthouse and get married, or you can choose to have a wedding and reception. While the choice is definitely up to you, there are huge variances in what it will cost.

As someone who pretty recently went through the process, I can say that you should never assume who will or will not pitch in, nor should you assume that everyone has the same thoughts or values as you when it comes to your wedding. You will need to have discussions between you and your fiancé, as well as with any parents that you feel may wish to contribute towards your wedding. If parents bring the topic up first, that is wonderful! If not, then you will need to talk about how to approach the topic to whomever you will want to ask.

Read More: 10 Budget Wedding Ideas From a Satisfied Bride

Our number one goal was to not go into debt for our wedding, as well as to pay down our non-mortgage debt at the same time. And I am happy to report that we only missed this goal by four months. We have been consumer debt-free since September 1, 2010 (married on April 17, 2010). You might wish to work on the same goals, as going into our marriage without massive amounts of “his” and “her” debts has only made us stronger.

Some of these conversations and decisions may not be fun, and may feel awkward. But it is important to have them in order to understand each other better. Chances are that up until now you have not sat down to have deep financial discussions. Now is the time!

More Finance Topics to Discuss

• Financial Management For Newlyweds
• Newlywed Finances Part II
• It’s Wedding Season! Tips to Keep the Costs Down
• 5 Ways to Save Money When Your Spouse is a Spender
• 7 Financial Consequences When You Say “I Do”

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Photo Courtesy: Kristen

Simple Ways to Save Money

1. Be light conscious. Use daylight as much as possible. Turn off the lights when you aren’t in the room. Use solar lights outside instead of electric for energy efficiency.
2. Cook at home. Cooking at home is cheaper than dining out.
3. Cancel or reduce your cable. You can borrow movies and television series from the library for free. Certain stations have all of their television show’s episodes available online for free. You can also watch movies on Hulu for no charge. Sign up for text and e-mail alerts for Redbox, and you’ll receive codes for free rentals every now and then.
4. Eat and drink local. Produce, beer and wine, and other products are generally cheaper when they’re produced nearby.
5. Downgrade your phone plan. Call your cell phone provider to see if what you can do to lower your bill. Maybe if you reduce your data, minutes for phone calls, or texts, you can cut down your bill. If you’re not in a contract, consider switching to save.
6. Brew your own coffee. If you bought a coffee everyday for $5, you’d end up spending $1,825 a year on coffee.
7. Buy produce in season. When a fruit or vegetable is out of season, it’s much more expensive since it’s harder to produce.
8. Stop or reduce your beauty treatments. I stopped dying my hair and limited the amount I get it cut, and I’ve saved probably $500 per year from it. Services like manicures, pedicures, and facials can be done at home.
9. Use cold water when you can. If you can, wash your clothes in cold water instead of hot water to save money. Take a little colder shower, wash your dishes in cooler water, and limit any time you’re using hot water.
10. Use coupons. Don’t leave the house before looking for a coupon. Find coupons in the newspaper or in magazines. Visit the specific product’s website, the store where you’re shopping, and coupons sites, like Coupon.com.
11. Shop generic. A lot of times the ingredients are exactly the same in generic cleaning products, beauty products, or foods. Compare the ingredients of your favorite name brand product along with the price.
12. Sign up for automatic payments. For every bill you pay, check if there is a benefit to enroll in automatic payments. For Sallie Mae, they will lower your interest rate if you sign up for your payments to be automatically deducted. Other companies and cell phone providers offer a discount for customers who sign up to have their payments debited automatically. Just make sure automatic payments aren’t secretly costing you money.
13. Unplug your electronics. When you’re not using any electronics, unplug them. They are still using up power even if they’re not in use. See 13 more ways to save money before walking out the door.
14. Reduce car use. If you don’t really need a car, sell it. You’ll save on gas, insurance, maintenance, registration, fees, and much more. Either way, use your car as little as possible to save on maintenance and gas. You’ll also save on other driving costs like tolls and parking. Instead, walk or bike whenever possible. Also take public transportation when you can. Consider the surprising benefits of the one car household.
15. Travel during the off-season. When you travel, choose to go when it’s less popular because prices will be better.
16. Sign up for e-mail alerts. Wherever you spend money, sign up for e-mail alerts and rewards programs. Grocery stores, restaurants, bars, and clothing stores all have email lists. Sign up and you’ll receive alerts of sales and promotions or coupons.
17. Find free or cheap entertainment. Search for alternatives to spending money for fun. Check out free nearby activities like local concerts, plays, festivals, or other events. Enjoy outdoor activities like hiking, biking, or walking. Get together for a game night, movie night, make dinner with friends, or have a potluck.
18. Use leftovers. Whenever you cook and there are leftovers, be sure to store them properly so they’ll remain usable. Be sure to use them. Get creative, and use them to create a whole new meal.
19. Keep track of purchases. Stick to your budget, and keep track of every dollar you spend.
20. Plan your route smartly. Whenever you’re driving, plan the most efficient route. Instead of running to the store a bunch of times during the week, plan it so you are only going once. Besides saving time, you’re also saving gas. Anytime you’re driving somewhere, opt for the most gas efficient route. You also want to choose a way that avoids traffic or tolls as well.
21. Avoid money-robbing temptations. If you’re trying to not spend money, don’t go anywhere you’d be tempted to spend like a mall or out to a bar.
22. Think before you buy. Before you make any purchase, wait a while. Sometimes you have an impulse to buy something, but if you wait a while, you may realize you don’t want it as much as you thought. Also take time to compare prices at other stores, find any coupons or deals, and read reviews to see any pros or cons to it.
23. Don’t just make minimum payments. Whenever you’re dealing with debt that is accruing interest, make more than the minimum payment. You’ll save hundreds or thousands by paying more than the minimum due since your payments are always going towards interest before paying down the principal balance.
24. Carpool when you can. Whether it’s to work, school, events, or even the store, carpool with your co-workers, friends, family, and neighbors to save on gas and also help the environment.
25. Shop used when you can. Before buying something brand new, check out Ebay, Amazon, or second-hand stores for gently used items. Also consider shopping at a thrift store or second-hand store for used clothes.
26. Use reusable items whenever you can. Reusable water bottles, containers, and coffee mugs are much cheaper than constantly buying plastic or paper disposable ones. Instead of packing food in plastic baggies, use reusable Tupperware. Instead of constantly using paper towels to clean, use rags and wash them in the washing machine when you’re done cleaning with them.

What are your favorite money saving tips?

More Money Saving Tips

• 30 Money Saving Tips
• 11 Ways to Save Money This Month
• 12 Things to Stop Doing to Save Money… Right Now!
• 5 Ways to Access Extra Cash
• 15 Budget Trimming Tips

Written by Kristen

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]]> http://www.mydollarplan.com/simple-ways-to-save-money/feed/ 2 http://www.mydollarplan.com/capital-one-business-checking-sign-up-bonus/ http://www.mydollarplan.com/capital-one-business-checking-sign-up-bonus/#comments Fri, 10 May 2013 13:29:47 +0000 Kate http://www.mydollarplan.com/?p=3005
Continue reading...]]> This week’s Capital One Free Money Friday offer is a good one! They’re offering a $300 sign-up bonus for their business checking account.

How to Get Your $300

1. Open a Capital One Business checking account by August 31, 2013.
2. Deposit at least $3,000 within 30 days of account opening and make one online payment.
3. Get a $300 credit to your account!

Terms and Conditions

• Promotion expires 8/31/2013.
• New customers only.
• You’ll receive your credit 10-12 weeks after the end of the promotion.
• Account must be open and in good standing to receive the credit.

More on Capital One

Starting a New Business? If you are thinking of starting your own Amazon selling business, this could be a great opportunity to take advantage of!

Personal Account. This bonus is in addition to the Capital One 360 $50 Sign Up Bonus for personal accounts we featured last week.



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]]> http://www.mydollarplan.com/capital-one-business-checking-sign-up-bonus/feed/ 0 http://www.mydollarplan.com/inexpensive-mothers-day-gift-ideas/ http://www.mydollarplan.com/inexpensive-mothers-day-gift-ideas/#comments Fri, 10 May 2013 13:00:48 +0000 Adrienne http://www.mydollarplan.com/?p=2181
Continue reading...]]> You should not stress over what to get mom for Mother’s Day. (Believe me mom doesn’t want you to stress out over her.) You can get a thoughtful gift for not a lot of money. The key is to THINK about who you are buying for. For instance my mom likes flowers so that would be an ok gift. If someone bought me flowers I would know they had lost their mind.

Mother’s Day is this Sunday, May 12, 2013.

Here are some of my favorite mother’s day gifts. Some I have given and some I was very excited to receive (note lack of flowers on the list….)

source:ilovebutter

10 Mother’s Day Gifts

1. Operating Instructions by Anne Lamott. My mom got me this book during my first pregnancy. I’ve read it many times since then and also given it to new moms. Lamott is a wonderful writer but what makes this book especially great is that it’s an unvarnished account of her first year of motherhood. It has the highs and the lows and is also very funny. One of the few books on motherhood that I think anyone could relate to.
2. Nail Polish Basket. This is a gift where you can either go for volume or uniqueness. I only wear polish on my toes and personally haven’t noticed a difference between $10 and $1 nail polish. You can easily find $1 / bottle at your local drug store. I like grabbing a bunch of different colors (that I think they would like). So when I bought for my niece she got some sparkly blue. My mom gets a deep red. You can also go upscale and get her favorite brand (that she rarely treats herself to). As far as luxury items go, this is a low cost one.
3. A Class. My sister and I once got my mom (an amazing cook) an Indian cooking class at a local school (completely new cuisine for her to cook but one she loved to eat). It was something she’d never done but we thought she would be interested in. She loved it and we also got to benefit by being her tasters. Yum. There are lots of one-day classes offered by local schools and adult learning centers. Look around for a unique gift to give as an inexpensive experience gift.
4. Coffee (or Tea) Basket. This is another one where you can adjust to the tastes of your mom. I’ve given coffee from a local roaster as well as a selection of teas from my town’s Chinese market.
5. Photo Mug. I love photo mugs. It’s a very personal gift both to give and to get. You don’t need to worry about having the perfect picture either. One year I wanted to give both my mother and mother-in-law photo mugs of my son. Of course he was going through a period where getting him to sit still for a photo was hard and getting him not to make a face was impossible. So instead of pulling my hair out I asked him to make a goofy face. He did and both moms laughed out loud when they got their cups.
6. Make a Meal. Chances are that your mom has cooked waaay more meals for you than the other way around. It doesn’t need to be a fancy meal – mom will appreciate the effort more than the food anyway. One of my favorite recipes for brunch is a dutch baby (baked apple pancake). It’s easy, delicious and impressive.
7. Plants. Everyone gives flowers but plants are a bit different. On my last birthday my sister gave me a bunch of little veggie plants to go in my garden. It was very appreciated now and will be again when I’m harvesting the food.
8. Baggu. I received Baggu bags as a gift when I was looking for re-usable shopping bags. I appreciate them more as time goes by. They’re washable, they don’t disintegrate like some cheaper bags, they hold a ton and can fold up into nothing. We use them all the time for just about everything. I’ve had more positive comments from grocery baggers than I can even count (and who would be a better expert on bags?).
9. Gift Card (Discounted of Course). Gift cards don’t need to be bland gifts – just keep her interests in mind. A gift card to her favorite store will be appreciated because she knew you were thinking of her (not just picking the first thing you saw). Many credit card companies offer a discount on gift cards if you get them through their rewards program or buy through Plastic Jungle.
10. Decoupage Box. Even if you’re not very crafty you can decoupage. All it takes is gluing some images to a box and then layering over with decoupage (like Mod Podge). You can make a unique one of a kind gift with images or words that are meaningful to you both. Believe me if I can do it, anyone can!

What are you planning to buy your mom for Mother’s Day?


Written by Adrienne

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]]> http://www.mydollarplan.com/inexpensive-mothers-day-gift-ideas/feed/ 2 http://www.mydollarplan.com/steps-to-successful-investing/ http://www.mydollarplan.com/steps-to-successful-investing/#comments Thu, 09 May 2013 13:29:27 +0000 Don http://www.mydollarplan.com/?p=2964
Continue reading...]]> It’s all over the news about how the stock market is now trading at all-time highs. For many investors, your portfolios should now be worth more than they were back in 2007 before the financial crisis hit. I say should for two reasons, the first being this assumes you actually stayed invested in the market. The second reason is because many of the investors that I deal with have already recouped their losses from the financial meltdown, and they did so back in 2011. You may be asking how this is possible and what sorts of tricks were used to achieve this. The truth is there are no tricks. It was done by doing what any investor should do that wants to be successful when investing in the stock market.


Photo Courtesy: worradmu

Diversify

On order to be successful when investing you need to diversify. This is where the old saying “don’t put all of your eggs in one basket” comes into play. You need an asset allocation with a healthy mix of stocks, bonds, real estate and commodities. From there, you need to break down the asset classes further into small and large cap stocks, and domestic and international stocks. As most of you know, the reason for this is because many times, when one asset class is declining, another is rising. This offsets your losses. For help with creating portfolios, I highly recommend Paul Merriam’s book, “Live it Up Without Outliving Your Money”. It’s a short read and he creates portfolios that you can use.

Rebalance

Rebalaning, by some experts gets a bad rap. If you do it too often, it can backfire against you (don’t worry, I won’t go into the heavily technical reasons why). You should look to rebalance annually. I say look because you won’t always have to rebalance. You should only do so if your investments stray by 5% or more from their targets. By rebalancing, you ensure that you are always in-line with regards to your risk tolerance and you will also ensure that you buy low and sell high. The reasons for this are clear:

On the topic of risk, if you take on more much risk than you want, you could set yourself up for losing more money than you wanted it. On the flip side, if you take on too little risk, you might not have enough assets to last you through retirement.

When it comes to buying low and selling high, rebalancing forces you to sell your positions that have risen in value (sell high) and buying those that have decreased in value (buying low).

Read more: Should You Rebalance Your Portfolio or Let it Ride?

Stay the Course

It is very important to stay invested in the market at all times. Trying to time the market by buying in and selling out does not work. Recent studies show that the average investor, one that is constantly in and out of the market, earned 2.3% over the last 20 years. Had you just invested in the S&P 500 you would have earned close to 8%.

Let me say this again: you cannot time the market! No one knows what is going to happen in the market. If someone says they do, ask to see their bank account because it better have gazillions of dollars in it. Think about it, if someone says they know that the market is going to rise or fall on certain day, wouldn’t they use every cent they could get their hands on and put it in the market to make more money? I know I would.

I realize that this step is not very easy with all of the media coverage blowing issues out of proportion. But you have to do your best to ignore it. Turn the channel or go for a walk. Do anything that will get your mind off of the movement in the markets. The less you hear the noise, the less you will worry about it or be inclined to take action. Many investors that sold out of the market in 2008 never came back in and have missed this great run up in prices. Some of those that did enter back into the market sold out at the end of 2012 because of the fiscal cliff fiasco. What happened since? The market kept rising. This isn’t to say the market is going to continue to rise, but to show you that we have no clue where the market is headed. Don’t trust anyone that tells you otherwise.

Final Thoughts

If you follow these 3 steps, you will be ahead of the majority of investors out there. You may not be able to retire tomorrow if you follow these steps, but it will put you in a much better financial situation if you do. As I pointed out, some of these are easier said than done. But do your best to stick with the plan so that you can realize your financial dreams.

More on Investing

• New 2013 Investment Tax: What it Means For You
• 11 Reasons Why Investors Fail
• How to Calculate Annual Investment Returns
• 2013 Roth 401k and Roth IRA Limits
• Unveiling The Retirement Myth Book Review
• Can You Have a 401k and an IRA at the Same Time?

Written by Don

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]]> http://www.mydollarplan.com/steps-to-successful-investing/feed/ 0 http://www.mydollarplan.com/student-loan-crisis/ http://www.mydollarplan.com/student-loan-crisis/#comments Wed, 08 May 2013 13:29:54 +0000 Don http://www.mydollarplan.com/?p=2898
Continue reading...]]> Dominating the news headlines currently is the topic of student loan debt and a possible student loan crisis. For the first time ever, the total amount of student loan debt has surpassed the $100 billion mark. This is more than consumer credit card debt and is second only to housing debt (mortgages). Many experts are saying that the next bubble to burst is the student loan bubble. Below I present a few reasons why the so-called student loan bubble isn’t really a bubble at all.

More Students Are Going To College

More people are going to college to get an education. As a result, more people are going to be taking out student loans. According to the National Center for Education Statistics, college enrollment from 1990 to 2000 increased 11%. From 2001 through 2010, enrollment jumped 37%. This includes both full-time and part-time students. It appears that everyone is buying into the message that you need to go to school to get ahead. I am not going to argue for or against this point; I am simply saying that more people are going to college. That 37% jump in the last decade correlates to 5 million students.

Let’s just say for argument sake that only 500,000 of these students needed to take out student loans and each one took out a loan of $20,000 total. That’s $10 billion right there. I’m sure many more than 500,000 took out student loans.

Average Student Loan Debt Isn’t High

You may argue about how much student loan debt college graduates have when they finish school. I’ve read the stories of the girl with $120,000 in student loan debt working at McDonald’s. You have to realize that this story is the exception, not the norm. The media is playing into your emotions. In fact, 43% of students have between $1,000 and $10,000 of student loan debt. That girl in the news I mentioned above, she and others like her account for roughly 3% of student loan debt. See the chart below.



Photo Courtesy: The Atlantic

When I graduated from college, I had about $12,000 in student loan debt. Most of my friends had the same. I don’t know anyone who had over $25,000 of student loan debt. This doesn’t mean that it doesn’t happen, but it just furthers the point that huge amounts of student loan debt is not the norm, it’s the exception. If we look at the chart above, we can see that students with student loans up to $25,000 make up over 72% of the total student loan debt. This is saying that close to three quarters of all students that have student loan debt have $25,000 or less. When I see my friends and people I know that have had this amount of student loan debt, we are all doing OK financially.

College Graduates Do Have Jobs

While the unemployment rate for the nation still hovers around 8%, for college graduates the unemployment rate is under 4% as of November 2012 according to the Bureau of Labor Statistics. The peak unemployment rate for this group was just over 4%.

Now granted, this does not take into account those that are underemployed or those that have completely given up looking for a job. If we look a little deeper into the statistics, the average weekly earnings of a college graduate are $797. A $25,000 student loan that has to be repaid in 10 years and carries an interest rate of 6.8% has a monthly payment of $287 per month. If you are making close to the average earnings mentioned above, you should have no issue making your monthly student loan payment. See 6 Mistakes of New Earners and How to Fix Them if you are struggling to meet your obligations.

For those that are underemployed, student loans are more generous in terms of payback options. If you have federal loans, you can stretch out payments to 20 years and you can defer payments or forbear payments as well. You can even take part in a new income based repayment plan called pay as you earn where your payment will increase as your earnings do. In addition, for public service workers there is a student loan forgiveness program. The point is, if you have a monthly student loan bill of $300 and you cannot afford it, you should contact the lender and work something out with them. Since student loan debt cannot be discharged in the event of a bankruptcy, lenders are more open to delaying payments because they know they are getting paid regardless.

Where The Student Loan Crisis Is

For the majority of students, there is not student loan debt crisis, as I pointed out above. Where the crisis is though, in my opinion, is hidden in the above numbers. The number of people going on to college is increasing each year. This is a good thing, as a more educated work force is a more productive work force. The problem though is that a healthy part of this group is from low income families. These families tend to not attend the typical four-year non-profit college that most go to. They instead go to the for-profit colleges who in some instances mislead potential students into thinking they will be earning a high salary once they graduate and saddle them with student loan debt that they will have a difficult time repaying.

I think the media should focus on this aspect as this is the real crisis. We need to educate these young people so that they understand what they are getting themselves into. They are blinded by the fact that they are the first one in their family to ever go to college and end up getting hurt. By helping these people out through educating them on student loans and what they can expect once they graduate will go a long way in bettering their financial future.

Final Thoughts

I don’t want this post to come off sounding as though I don’t think students are in trouble when it comes to repaying their debts. As I pointed out, I think that the majority of graduating students can handle their student loan repayment and that the media really is blowing smoke. I just want you to think about what you hear in the media and not take it for face value, but to question it and look into it. Yes, for the first time ever, total student loan debt has surpassed $100 billion. But is that really a bad thing? It shows that more people are attending college and continuing the lifelong pursuit of knowledge. And according to the chart I showed you, the majority of students don’t have a significant amount of student loan debt either. So why worry about a problem if it really isn’t the problem? By breaking the numbers down we can see what the problem actually is and hopefully we can make strides on correcting it.

What are your thoughts on the student loan bubble the media is currently hyping?

More on Student Loan Debt

• New Pay As You Earn Student Loan Program
• Student Loans: The Effect of Extra Payments
• New Student Loan Forgiveness Program
• Student Loans: Repayment Options
• Student Loans: Consolidation
• 6 Ways to Deal with Student Loan Debt

Written by Don

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]]> http://www.mydollarplan.com/student-loan-crisis/feed/ 1 http://www.mydollarplan.com/new-pay-as-you-earn-student-loan-program/ http://www.mydollarplan.com/new-pay-as-you-earn-student-loan-program/#comments Tue, 07 May 2013 13:29:20 +0000 Amanda http://www.mydollarplan.com/?p=2867
Continue reading...]]> One of the trendiest and most pressing topics in personal finances is the devastating amount of debt graduating with college students. Large debt loads saddle new graduates with large monthly payments. Couple this with sometimes unmarketable degrees that do not translate well in the workforce and a wavering economy, and we see that some students are taking a two-punch to the chin.

My Student Loan History

I remember my own exit interview with the financial aid office just before graduating in 2005. For weeks I had felt that intangible peace and excitement that comes when you know that exams and papers are all behind you, you have a job lined up with a decent salary, and life just seems completely conquerable. Then I opened up my packet to find various loans adding up to the sum of around $36,000. Yikes! That heady feeling turned into a dollop of panic. The term of loan repayment that my creditors had chosen was 11 years. I looked around the room at everyone else’s reactions, determined to never be in debt for such a long amount of time. And I wasn’t; I managed to pay everything off within 5 years of graduation by making extra payments.

Even though I suffered through two lay-offs in those five years, I was never unemployed for more than three months at a time. In the summer that I graduated, interest rates for student loans were at an all-time low. I was able to consolidate the majority of my loans to lock in a 2.65% interest rate, and after 36 consecutive payments, the interest rate decreased to an amazing 1.25%. Also, my federal student loans had been subsidized, meaning that while in college the interest accrued on the loans was paid for by the government. But some graduates have not had it so well.

Let’s take a look at a new program that may help ease federal student loan payments for college grads in the future.

New Pay As You Earn Student Loan Program

As of December 21, 2012, a new program called Pay As You Earn (PAYE) is available as an alternative to the standard repayment plans of loans from the Direct Loan Program for eligible people. This program goes even further than other federal loan income-based repayment programs by reducing the maximum monthly payments from 15% to 10% of discretionary income as well as accelerating loan forgiveness from 25 years to 20 years.

The Juicy Details

So what exactly is the federal government offering in this new plan?

• Decreased Monthly Repayment Amount: If you qualify for this plan, your monthly repayment amount will be 10% of the difference between your AGI and 150% of the Poverty Guideline for your family size.
• Debt Forgiveness: After 20 years of payments, the remainder of your loan will be forgiven.
• Credit towards the Public Service Loan Forgiveness Program: PSLF, another federal student loan repayment program, can be earned after 120 qualifying payments through the PAYE program (FYI: PSLF is not taxable as income, whereas debt forgiveness under the PAYE program is taxable income).
• Potential Interest Subsidies: It turns out that there is a way to get your loans subsidized outside of college again. If your monthly payment amount does not cover the full amount of interest that accrues on your loans each month, your unpaid accrued interest on any subsidized loans (and on the subsidized portion of your consolidation loans) will be paid for up to three consecutive years from the date you began loan repayment.
• Capped Interest Capitalization: The capitalization of interest is capped to 10% of the original principle balance.

Tax Implications

There appear to be two potential tax consequences of enrolling in this program. First of all, student loan interest is generally deductible, so if you are paying off your loans for an extended period of time, then you can benefit from a tax deduction over many years (though be careful, as you are also paying more interest than you would under the standard repayment plan). Also, if you reach 20 years and have the remainder of your loans forgiven under this program, then the forgiven loans will be taxed like income.

Eligibility Requirements and How to Apply

Each year you will need to prove your eligibility in order to take advantage of this program. This means that, along with the first year, you will need to complete the electronic Income-Based (IBR)/Pay As You Earn/Income-Contingent (ICR) Repayment Plan Request. This process includes providing your previous year’s federal income tax documents, being a “new borrower” as defined by this program (someone who both did not owe any money on any federal student loans as of October 1, 2007, and also received a disbursement of a Direct Loan on or after October 1, 2011), having loans under the Direct Loan Program, and demonstrating partial financial hardship in repaying these loans.

Student loan debt is not something to take lightly. While other debts may be written off in bankruptcy (though not recommended), your student loan debt is very difficult if not impossible to discharge in bankruptcy. The only real option you have is to confront it, and to pay it off in manageable chunks. Good luck to you!

Stay tuned! Next up we’ll discuss if there really is a student loan crisis!

More on Student Loan Debt

• Student Loans: The Effect of Extra Payments
• New Student Loan Forgiveness Program
• Student Loans: Repayment Options
• Student Loans: Consolidation
• 6 Ways to Deal with Student Loan Debt

Written by Amanda

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