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Is It Worth Refinancing my Student Loans?

You may have asked yourself this question before, wondering if it is truly worth the time and effort associated with a refinance to save what may amount to a few hundred dollars or more. There is really only one way to find out whether and how much a refinance can save you, and that is to input your information and get a rate quote based upon your credit. I’m not sure about you, but the thought of saving several thousand dollars over the next 5-10 years excites me.

For many individuals student loans can be in excess of $50,000, with some going into the hundreds of thousands of dollars. If you have loans in this range, or even the tens of thousands of dollars, then you truly should review your current interest rate and financial situation and find a way to attack and get rid of those loans. A refinance to a lower interest rate and possibly even a shorter repayment period can save you thousands potentially. If you can afford it, or will commit to getting rid of those loans fast (suck it up short term and enjoy the benefits long term).

Click the Picture Above to Get an Exact Quote and See What Your Savings Will be.

As an example, let’s say one has $50,000 in student loans and is presently locked into an interest rate of 7% with 15 years left to repay. Your current monthly payment is about $449 per month for the remaining 15 years. With a refinance through Social Finance (SOFI), you could be looking at a shorter loan term of 10 years at an interest rate as low as 4.5% with a slightly higher payment of $550 or so, but would save up to $18,711 for the life of the loan. This is a car you could save for, or $18,000 you could use to invest, put a down payment on a home, etc. This is no joke, now we are talking about serious money. This is not something that you should simply overlook.

Picture what the savings would be if you have student loans of $100k (a 20 year loan, 7% interest rate). With SOFI you could possibly refinance at a rate as low as 4.5% to 6.5% (usually the shorter the repayment period the better the interest rate, which means you would need to pay more principal each month and thus have a higher payment, but it can be worth it). This could equate to almost $300 more each month for your monthly payment (going from $775/month to over $1k/month), but you would save almost $62,000 over the life of the loan. Are you kidding me? That’s incredible! Imagine saving $62,000 just by making one little change and sucking it up (forgoing a few extras for a number of years) so that your financial future can benefit as much as possible.

As you can see, it’s worth taking the time and effort to consider whether a refinance would help you save thousands over the course of your loan repayment, and whether you can speed up your loan repayment for that matter for a limited additional amount each month. In some cases you may simply refinance with the same term, get a better rate, and lower your payment. I would recommend giving up something wasteful you spend $100 or so on each month and going for the shorter repayment period to help jumpstart your financial future, it will be worth it long term.

Click on the links on this page to get a special $100 cash back reward as my referral (this comes directly from SOFI as my referral). The $100 will be rewarded if you decide to refinance your loan through them and are approved and the loan funded*. The larger reward of course is the long term savings you will get through the refinance. Prioritize payment of those student loans, forgo some extras, and make it happen. Imagine your life 5-10 years from now with no student loan payment, and having saved thousands in interest. You could go from paying $1000 each month in student loans, to saving $1,000 each month or investing that money. You had to borrow to get the degree, now get your financial future back on track by getting rid of those loans. Don’t keep paying the government 7% interest for the next 15-20 years. Get rid of those loans, pay them down, its the equivalent of investing and making a 7% return if you are paying down a 7% loan, and as you can see, it ends with guaranteed long term savings and your increasing your net worth, by reducing your liabilities.

 

*The party and or parties behind this site may have relationships with the listed companies/advertisers above and may receive compensation related to any offers.

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How to Improve Your Credit Score

Boosting a Credit Score Takes Time, but can be done through some very simple steps and financial habits you can build with a bit of knowledge and discipline.

Below are some important financial habits and steps you can take to get started.

 

  • Pay Bills Timely (This is the most important thing)
  • Utilize the Appropriate Amount of Credit (it is better to use 30% or less of your credit card limits)
  • Don’t Carry Balances (Pay your cards in full each month)
  • Monitor Your Credit Report and look for tips on your unique situation from free services

Paying Bills Timely

Timely payment of bills is one of the largest factors impacting your credit score and credit. Lenders want to see a history of reliability in making payments and good financial habits. This is shown through using credit responsibly and making timely payments on loans and bills (auto insurance, loans, credit cards, rent, cable, telephone, etc.). Make certain you are responsible and timely pay all bills, avoid having late payments reported on your credit and you will position yourself well to continue building your credit and score.

Utilize the Appropriate Amount of Credit

major factor in your credit score is how much revolving credit you have versus how much you’re actually using. The smaller that percentage is, the better it is for your credit rating.

The optimum: 30 percent or lower.

To boost your score, pay down your balances, and keep those balances low.

If you have multiple credit card balances, consolidating them with a personal loan could help your score.

What you might not know: Even if you pay balances in full every month, you still could have a higher utilization ratio than you’d expect. That’s because some issuers use the balance on your statement as the one reported to the bureau. Even if you’re paying balances in full every month, your credit score will still weigh your monthly balances.

One strategy: See if the credit card issuer will accept multiple payments throughout the month.

Don’t Carry Credit Card Balances

Paying off credit card balances or paying them in full each month is a great way to boost your credit score. You do need to utilize credit to build your score to show you can use credit responsibly, but pay it in full.

The reason this strategy can boost your score: Having multiple cards with balances can hurt your score and your financial ratios like debt to income, and thus a lenders consideration as to your ability to pay a certain debt load out of your income (with a higher debt to income, higher balances, you are a more risky loan).

It is therefore recommended to carry a balance on one card or not at all and to consolidate loans and pay them down if possible.

Monitor Your Credit Report

One of the ways to improve your credit score is to monitor your credit report and score and by leaving old loans or your past credit history showing a positive repayment history on your report. They are positives and show your history of repayments. By focusing on and paying attention to your credit report and score you may learn new ways to improve your credit from free services such as Credit Karma.com.

Use the above to improve your credit score.

 

 

 

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How to Build Your Credit

Follow the Below Tips to Build Credit

Building your credit and obtaining a good credit score can be important for a variety of reasons. Most importantly, it can provide you with favorable loan terms for big ticket items including a mortgage for a home, investment property, or even a vehicle loan, or student loan refinance. This can save you thousands of dollars over the years and therefore should be a priority. Lenders use your credit score to evaluate your ability to and prior behavior as to paying bills and loans timely.

The good news is that building credit is not hard and can be done with focus on a number of key factors outlined below.

How to Build Credit Starting From Zero

Banks and financial institutions/lenders like to see that you can manage your money and pay your bills timely. To begin building credit, consider some of the following strategies.

Get a Cosigner for a Loan or Credit Card.
Having a co-signer with a positive credit history can allow you access to a loan (guaranteed by your co-signer in addition to yourself) that you might otherwise be unable to get. It can give you the start you need to building a credit history and showing you can make timely payments and manage money well.

Make your rental history count.
Ask your property management company if it reports your payments to Experian RentBureau. If it doesn’t, you can sign up for a rent payment service that works in partnership with RentBureau and have your rental payment history reported. This is a great way to add to your ability to show that you manage money well and make timely payments. This can really build your score.

Open a Secured Credit Card Through a Bank or Other Lender.
Secured credit cards are secured with a deposit you make in an amount anywhere from $500 to $10,000 or more. You basically deposit the money in advance to secure the card (ensure payment; if you fail to pay the creditor will retain your deposit in an amount to cover the deficiency and fees). This is one way for those with zero credit history to obtain a first credit card if they do not have a co-signer and have no other way to build a credit history. The downside is the tied up funds securing the card, but these are a great offering for those with no credit history and no other way to build credit. Think about whether this can benefit you long term and if so, this may be a good fit.

Tips for Building a Positive Credit History

In order to build a positive credit history and thus increase your credit score, it is very important to do the below:

  • Pay your bills on time (this is a large component of your overall credit score and your way to show lenders that you will pay on time).
  • Utilize any existing credit cards up to 30% and pay them off each month in full (do not carry a large balance on your cards and pay them in full each month if possible to show lenders you are responsible with credit and a good risk).
  • Monitor your credit report and score (each year you can get 3 credit reports for free, one from each reporting agency at myfreecreditreport.com)
  • Take out a car loan and pay it timely
  • Take out a mortgage loan and pay it down faster

Do the above to build your credit score either from scratch or expand upon your existing score. Doing so can benefit you financially going forward.

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How Much Do We Need to Retire?

How Much Do I Need to Retire?

When it comes to retirement planning, one of the most common questions for couples is: How Much Do We Need to Retire?

While this answer will vary for everyone based upon their individual circumstances and how much they need to spend on an annual basis in retirement. The typical retired worker will spend $828,000. Adults 65 and over spend roughly $46,000 annually, according to the Bureau of Labor Statistics, and the average length of retirement in the U.S. is 18 years. Multiply $46,000 by 18, and you’re looking at a $828,000.

 

 

Generally, the rule is that you should set aside 15% of your paycheck for retirement savings, and the sooner the better. If you do so at an early age, you can hit the $1million dollar mark or more. For those who are extremely committed to living well in retirement or retiring early, they can even beat that by focusing on pumping as much as possible into tax favored retirement accounts at an early age and investing for passive income. Sadly however, statistics show that many do not take such an active interest or place a priority on retirement savings and the majority fall far short of what would be required to meet the $828,000 retirement of the average retiree.

 

Don’t be a statistic, start planning for retirement early and don’t underestimate the importance of pumping money into tax favored retirement accounts, getting an employer match (where offered), and placing an emphasis on your retirement investments from a young age. Smart Couples plan together for a successful financial life and a successful retirement.

Feel free to use the retirement calculators on our site to get an idea of what you will need to retire so that you can start planning.

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Best Mutual Fund 2017 T. Rowe Price – Domestic

What is Compound Interest?

T. Rowe price is a name that has become synonymous with mutual funds and investing. T. Rowe Price is one of my favorite mutual fund companies as it offers a wide array of no-load funds, both domestic and international allowing for plenty of options for the enthusiastic mutual fund investor. One of the top performing funds for 2017 is listed below along with a brief overview of the fund.

T. Rowe Price Blue Chip Growth Fund (TRBCX)

  • Current NAV as of 03/16/2018 $107.81
  • NAV Change -$0.12
  • Daily YTD Return as of 03/16/2018 11.94%
  • NAV 12 Month Low-High $78.82 – $108.71
  • Net Assets as of 02/28/2018 $51,200.29 Million

The Fees and Expenses are detailed below:

  • Gross Expense Ratio^
    0.72%
  • Net Expense Ratio^
    0.72%
  • Waiver Type
    N/A
  • Limitation Expires
    N/A
  • Transaction Fee No
  • Redemption Fee 0%
  • 12b-1 Fee 0%

In order to open an account and purchase this mutual fund one may do so with $1,000 through an IRA retirement account, or in a taxable account with a minimum of $2,500. Additionally, if one wants to set up automatic investments or systematic purchases of this fund, one may do so with a minimum recurring purchase of at least $100 (monthly/quarterly, etc.).

This is a moderately risky fund. The fund offers long-term capital appreciation by investing in leading companies in industries T. Rowe Price believes are poised for long-term growth. It gives investors a low-cost way to invest in “blue chip” companies that enjoy strong market positions, seasoned management teams, solid financial conditions, and above-average earnings growth and profitability.

Because growth stocks have higher valuations and lower dividend yields than slower-growth or cyclical companies, the share price volatility may be higher. As such, fund prices could decline further in market downturns than non-growth-oriented funds.

The 10 year historical performance for this fund was 12.92% for the month ending 2/28/18. In my opinion, this is a good fund to own long term, and a great company. The fund’s overall performance for an extended period (10 years) has been excellent, and the fund offers no front load fees and no back load fees with an ongoing management fee as listed above. I personally like T. Rowe Price and the funds they offer.

Mutual funds, in my opinion are a great investment for the long term to build wealth over time. My preference would be to always own them in tax preferred retirement accounts such as 401k’s, SEP IRA’s, IRA’s, Roth IRA’s, etc. If you have been savvy enough and are fortunate enough to have maxed out those accounts, then I would also argue these are a great long term investment for taxable brokerage accounts. I again must emphasize not to overlook the value of growing your wealth inside of tax preferred retirement accounts and the large difference this can have on your net worth over time. I am working on growing my wealth at this time as well and have most investments inside of tax preferred accounts for this exact reason, the compound growth is tax free until withdrawal and thus there is more money invested on an ongoing basis and every year which can accumulate more interest and grow. This is a humongous benefit, compound interest growth is no joke!

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