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The Importance of an Individual Retirement Account

An Individual Retirement Account (IRA) is a type of investment account that is built for retirement savings. As fewer Americans have money saved away for retirement, I think that it is important to inform those who are looking to start saving, at some of their options. There are two main IRA’s; a traditional IRA and a Roth IRA. A traditional IRA is an account that you can put up to $6,000 annually ($7,000 if you are over 50) and that money can be deducted on your taxes for the current year. A Roth IRA is similar in the sense that you can contribute $6,000/$7,000 annually, however the money is not tax deductible at the time you put it in, but your qualified distributions on the back end are tax-free.

Why are these tools so important? The answer is time! The power of compound interest is incredible. These retirement accounts are easy to set up and easy to contribute to every month. You can also take any amount of the principal that you put into these accounts at anytime. The only amounts that have to stay in until you are 59.5 (without paying a 10% penalty fee) is the growth. This allows you to even use an IRA as an emergency fund if needed. If you suddenly were to need some money, and you had it invested in an IRA, go ahead and take out as much principal as you need (with the plan to replace the full amount). Take advantage of retirement accounts as soon as you can, and you will reap the benefits in the future.

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Starting Repayment of Student Loans

Congratulations to our recent UWW college graduates!  Your time and talents have resulted in a well-deserved diploma, but along the way, many have acquired student loans and are now wondering about the repayment process. Let’s break down the steps for our new graduates, and in addition, you are encouraged to utilize the Federal Student Aid’s repayment checklist:

  • Direct Federal Loans offer a 6 month grace period before entering repayment, which means repayment will not start until later this year.
  • During this grace period, you will need to select your repayment plan.  The standard repayment plan is 10 years; however, there are other plan choices.
  • Once a repayment plan is chosen, your lender(s) will provide you with a loan repayment schedule, the first payment due date, and the amount of payment.
  • You can choose to set up electronic payments or make payments by postal mail.
  • Payments can be made before they are due and can be more than the amount due each month.  Be sure to communicate the extra amount paid each month should be applied to the principal to ensure the loan is paid off faster.
  • If you are having trouble making your loan payment, contact your lender, and you may be able to change your repayment plan to allow for a longer repayment period or one that is income based.
  • If you do not make your loan payment, your loan becomes delinquent and will eventually go into default.  This will damage your credit, negatively affect your borrowing ability, and may lead to legal action resulting in garnishment of wages and withholding of tax refunds.

For more information on student loans, you are encouraged to schedule a coaching session with the UWW Financial Literacy Center.

 

 

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Student Debt: How Much Do I Owe?

Although not every student has to borrow money for college, most leave school with some level of student debt. It’s important to keep a running total in order to make future debt decisions and to develop a repayment strategy.

Finding the Balance on Federal Student Loans.  The National Student Loan Data System (NSLDS) is managed by the Department of Education, and gives information on how much you owe in federal student loans.  You can use the NSLDS to obtain your original loan amount, current balance, interest owed, and name of loan servicer. When accessing information, you will need your Federal Student Aid (FSA) ID, which is the same ID used when completing the FASFA.

Finding the Balance on Private Student Loans.  There is not a national database for private student loans, and finding balances on these types of loans can be more challenging.

  1. Ask the original financial institution.  If the loan has been sold to a different entity, the lender should have contact information on which company currently owns your loan.
  2. Ask the financial aid office:  If your original lender is unable to track down your loans, call the Financial Aid Office, and they can assist with identifying who is currently managing your debt.
  3. Check your credit report.  A credit report will list all of your current and past credit obligations, and this should include your student loans. The credit report lists the amount borrowed and loan servicer, and any further information can be obtained by contacting the loan servicer.  You can obtain a free credit report from the three main credit reporting agencies using annualcreditreport.com.

For more information, you are encouraged to schedule a coaching session with the UWW Financial Literacy Center.

 

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Become Money Smart!

Money Smart Week® is coming to Whitewater! The campus community, both in Whitewater and Janesville, are invited to attend several events during the 2019 Money Smart Week, April 1-5.

Money Smart:  Adulting 101.  Monday & Tuesday, April 1-2, 10:00 am – 2:00 pm, UC Concourse Tables. Test your knowledge of personal finance topics! Stop by our table in the UC to see if you can correctly answer a money question, win a prize, and more importantly, learn about free financial resources available to you on campus.

Cooking on a Dime. Monday, April 1, 4:00 pm, UC275B. Are you looking for ways to save money when preparing meals and purchasing groceries? Amanda Kostman, the Family Living Educator from Extension Walworth County, will be on campus to present and demonstrate ways to ‘Cook on a Dime’. Food samples and door prizes will be available to those in attendance.

GeoCache for College Cash.  Tuesday, April 2, 4-6:00 pm, UC Concourse Tables. GeoCache for College Cash is a contest that operates similar to a scavenger hunt. Using a smart phone or tablet, players read and respond to quiz questions for a chance to win prizes. This fun campus event features personal finance info every student should know. Prizes include a chance to win a $500 national prize, along with local prizes including a Beats Pill, wireless earbuds, gift cards. and swag.

Understanding Credit & Credit Scores.  Wednesday, April 3, 12:00 pm, UWW at Rock County, HS120.  Understanding credit can be challenging.  Summit Credit Union will be presenting a seminar at the UWW at Rock County campus during Money Smart Week to help students understand credit and breakdown a credit score.

Financial Crimes: Awareness & Prevention.  Wednesday, April 3, 2:00 pm, UC264. A loss prevention specialist from UW Credit Union will share relevant information on current financial crimes and how to prevent them from happening to you.

Help, It’s Almost Tax Time!  Wednesday, April 3, 3:30 pm, Hyland 1302. Do I need to file taxes?  If I am a dependent for my parents, should I still file? What is an education credit? Where can I get help to file my taxes?  Get all your tax questions answered by the IRS Volunteer Income Tax Assistance Program (VITA) providers at UW-Whitewater. 

Homebuying 101. Thursday, April 4, 3:00 pm, UC262. Are you interested or considering the purchase of a home?  Attend our Homebuying 101 seminar to obtain information and resources from both a local real estate agent and a mortgage lending institution.  They will give guidance and clarity (no sales pitches!) to the many steps of the home purchasing process. 

Paint-A-Bank. Thursday, April 4, 3-5:00 pm, Andersen Library. Get creative and come to Andersen Library to paint a money bank.  This is a make and take event, and banks will be available until supplies run out.

All events are free and open to all.  For more information about these and other nearby events, visit www.moneysmartweek.org.  Money Smart Week® events on campus are hosted by Andersen Library and the Financial Literacy Center.

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4 Reasons You Should Check Your Credit Report

When is the last time you checked your credit report?  Sadly, far too few people are taking the time to request their reports.  At a minimum, you should be requesting your free credit report every 12 months.   Here are a few reasons why this is a good idea:

  • Free.  When using annualcreditreport.com, you have access to your credit report for free, once each year, from each of the three credit bureaus – Transunion, Equifax, and Experian.
  • Identity Theft Indicator.  When looking over your credit report, if you find names you don’t recognize, social security numbers that do not belong, or accounts that are not yours, you might be a victim of identity fraud.
  • Monitor Credit.  Just like you monitor credit card bills and bank statements, it’s a good idea to keep track of credit accounts.
  • Correct Inaccurate Information.  If any information on your credit report is incorrect, both personal or account related, instructions are included on how to correct those inaccuracies.

For more information on the process to check your credit report or if you have questions or concerns related to credit, contact the Financial Literacy Center to schedule a coaching session.

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It’s Tax Time!

Do you need help filing your taxes? UW-Whitewater provides free tax preparation through the IRS Volunteer Income Tax Assistance (VITA) program to low to moderate levels of income.  Supervised by accounting faculty, certified student preparers assist members of the campus and area community with their tax preparation and filing.

On Wednesday, February 20 and April 3, representatives from VITA will be available in Hyland Hall, room 1302, starting at 3:30 pm, and all undergraduate and graduates students are encouraged to attend to have their tax questions answered.  In addition, UWW VITA tax clinics are held on Wednesdays and Saturdays through April 10.  Click on the link for specific details.

For other personal finance questions or to set up an appointment to speak with a staff member, call (472-4947), email, or visit the UWW Financial Literacy Center today!

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New Year, New You

The start of a new year is often celebrated by resolutions.  Why not make changes to your financial situation in order to reach your goals?  Here are a few money resolutions you might consider to improve your financial well-being.

  • Limit entertainment expenses.  College is suppose to be fun, but the more you spend on entertainment, the less you have towards tuition.  You don’t have to completely eliminate your entertainment, just become more frugal.  Seek out free or low-cost options on campus, and take advantage of student discounts by showing your student ID at restaurants, movie theaters, and more.
  • Utilize your savings account. After each pay period, place some funds (any amount is good) into savings.  If you don’t want to think about making the transfer, set up an automatic transfer or utilize apps provided by your financial institution.  Creating the habit and having funds for emergencies is a good idea.
  • Use credit cards wisely.  Avoid impulse purchases and only charge what you can afford to pay off each month.  Paying down credit card debit over months and years incurs expensive interest charges.
  • Create a budget.  Estimating income and expenses is not difficult, but keeping track of expenses and comparing budgeted to actual amounts take time, and is often the hardest part of the budget cycle.  The advantages to completing the budget process includes personal knowledge of where your money goes and the ability to plan for changes.
  • Check your credit.  Use annualcreditreport.com to check on your credit history once a year.  Although this free site will not give you a credit score, it will allow you to look for errors and discrepancies in regards to your credit.  Often times, the credit report will alert you to any signs of  identity theft.

Pick one, two, or all of the above resolutions and implement a plan to work towards your goals and improve your overall financial wellness.  Take charge of your finances now to set yourself up for future success and freedom.  For more information or to set up a financial coaching session, contact the UWW Financial Literacy Center.

 

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Holiday Gift Giving on a Student Budget

The tradition of holiday shopping and gift giving on a student budget is challenging, and the added financial stress and burden can make the holiday season more stressful and less enjoyable.  It is possible to give your friends and family meaningful gifts, even on a student budget.

Tip #1:  Save money in advance.  The holiday season should not come as a surprise each year, yet how many times has it ‘snuck up’ on you, and you find yourself wishing for more funds in your bank account.  A year-long savings or holiday fund plan is a solution.  Determine an estimated total cost and start saving early to achieve your goal.  This would make a good New Year’s Resolution for 2019.

Tip #2: Hunt for bargains.  Use sites like RetailMeNot and Groupon that offer business discounts.  Utilize coupons and sales, which are in abundance around the holidays.  When online shopping, watch for and utilize discounts and free shipping.

Tip #3:  Budget and monitor expenses.  List the people you wish to purchase presents for and set spending limits on each person.  Save your receipts and maintain a listing of spending totals, being careful not to overspend.  Remember to include greeting cards and holiday gift wrapping supplies within your budget.  Consider downloading one of the many money management apps, or keep a notebook log to track expenses.

Tip #4:  Utilize thrift stores and DIY projects.  Browsing local thrift and consignment stores may yield unique gifts for loved ones at a price cheaper than retail.  Handmade gifts are often the most cherished gifts.  It can be more cost effective to purchase materials and create gifts rather than to purchase items.  Around the holidays, watch craft store sales for percentage off items or entire purchases.

The holiday season can wreak havoc on a student’s budget, but affording the holidays can be done with careful planning.  Relieving yourself of financial worry and stress will allow you to enjoy and celebrate this special time of year.  Contact the UWW Financial Literacy Center for additional personal finance information and resources on a wide array of topics.

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Financial Literacy Services Expanding to UW-Rock County

Exciting news!  On Monday, December 3, the Financial Literacy Center will be hosting a financial seminar at the UW-Whitewater at Rock County campus.  Smart Strategies to Manage Money will focus on budgeting strategies, monitoring expenses, managing credit and establishing positive credit history.  Starting at 12:00 noon, the seminar will take place in the Commons Meeting Room, HS120, and attendance is encouraged and open to all students.  For more information on financial topics, visit or contact the UWW Financial Literacy Center.

 

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Comparing On and Off Campus Housing

When deciding to live on or off campus, compare the pros and cons before making this big decision.

  • Cost.  Expenses such as security deposits, monthly rent, utilities, and parking should all be considered.
  • Location.  Is the location within walking distance of campus or will transportation be needed?  Consider parking needs, vehicle costs, and if public transportation is available.
  • Privacy.  Dorm rooms generally have shared living space by 2 or more students. Rentals may have more privacy options, but this is determined by number of roommates, bedrooms, and bathrooms.
  • Amenities. Air conditioning, heat control, laundry facilities, internet connection, and dishwasher may be available at rentals; however, living on campus provides daily cleaning of facilities and readily available meals.
  • Security.  Consider door locks, peep holes, and security systems when living off campus.
  • Other.  If contemplating off campus housing, some additional considerations include renter’s insurance, allowable pets, subleasing options, yard work requirements, furnished or unfurnished, and landlord availability.

Once the pros and cons of each category are compared, you can make a decision based on which is most beneficial to your personal situation. For more information and resources on comparing on and off campus housing, visit the Financial Literacy Center and schedule a coaching session today!