Alternatives to 529 Plans – Other Ways To Save For College

Many parents want to help their children get the best start in life — and for some that includes helping them, to some degree, with college. One way to save up for your child’s post-secondary education is with the help of a 529 plan. However, a 529 isn’t always the right move for every family.

Looking for a safe place to grow your college savings? Open an account with CIT Bank

As you consider how to save up for your child’s future, don’t forget to consider alternatives to 529s, as well as the plans themselves. Here’s what you need to know about the 529 and its alternatives.

What’s Ahead:

What is a 529 plan?

An investment account for your educational expenses

A 529 plan is a special investment plan designed to help you save for qualified education costs. With a 529, you set money aside in an account and it grows tax-free — as long as it’s used for eligible expenses. 

There are limits on what the money can be used for

While some states offer tax deductions for contributions made to a 529, it’s important to note that you won’t receive a federal tax break for your contributions.

Additionally, there are limits on what the money can be used for penalty-free. If you don’t use the money in a 529 for a qualified expense, you’ll end up paying taxes on the withdrawal, along with a penalty.

For some families, a 529 makes sense because it allows you to grow money in an efficient way. Investment choices often include index funds, so if the market does well, your child could benefit from the tidy amount involved. However, it’s also important to note that if the market drops just before you need the money, you might not have as much as you’d planned on to help your child pay for school.

You’ll face penalties if the money isn’t used for education

On top of that, if your child decides not to attend an eligible program, you’ll need to either name a new beneficiary for the account or accept the taxes and penalties on withdrawals. For some, the idea of all that uncertainty is enough to look for alternatives to 529s.

If you aren’t sure a 529 plan is the right approach for you, or if you want something else in addition to a 529, there are other options.

Here are some alternatives to 529 plans:

High-yield savings accounts

Alternatives To 529s - High-yield savings accounts

Alternatives To 529s - High-yield savings accounts

With a high yield savings account, you don’t have to worry about what the money is spent on. There are no restrictions on how the money is used and it will even grow while it is waiting to be spent.

On top of that, you don’t have to worry about market gyrations. Your principal is protected, no matter what happens.

Some accounts that might work well for high yield savings include:

CIT Savings Builder

Alternatives To 529s - CIT Savings Builder

Alternatives To 529s - CIT Savings BuilderCIT Savings Builder is one of my favorite choices for building my savings. With an APY of 1.45%, there is no wondering whether or not your long-term college savings will grow. 

To get started, you will be required to set up monthly deposits of $100 or maintain a minimum balance of $25,000. The $100 minimum is the perfect kick in the pants you might need to start really saving.

Discover Online Savings

Alternatives To 529s - Discover Online Savings

Alternatives To 529s - Discover Online Savings

With the Discover Online Savings, you can earn up to 1.40% APY with no account minimums and no fees.

You won’t be able to build your college nest egg as quickly as with a 529, but you will have peace of mind and flexibility. That way, in case your child decides not to attend college, you can still use your savings to help support them.  

Roth IRAs

Alternatives To 529s - Roth IRAs

Alternatives To 529s - Roth IRAs

Normally, you wouldn’t be able to tap into a Roth IRA until you reach age 59 ½. However, if you want to take advantage of the tax advantages of a Roth IRA, you can do so for education. Education is one of the ways you can access Roth IRA money early.

Additionally, with a Roth IRA, you can withdraw your contributions at any time without being subject to a penalty. This adds additional flexibility to your account. However, you do have to be careful not to dip into your earnings. If you do, be prepared to pay a penalty for non-approved purposes. 

A Roth IRA offers a little more flexibility than a 529 while providing you with access to funds. You can open a Roth IRA with a robo-advisor like Betterment or Wealthfront.

Betterment

Alternatives to 529s - Betterment

Alternatives to 529s - Betterment

Betterment makes setting up a Roth IRA ridiculously easy. You’ll tell them what your dream retirement looks like. That’ll give Betterment a sense of what you’re really looking for. Then they’ll give you personalized IRA recommendations.

You’ll need to set up recurring auto-deposits, that way Betterment can rebalance your account when needed.

Betterment also makes retirement account rollovers easy. In fact, you could rollover everything in about 60 seconds.

Wealthfront

Alternatives to 529s - Wealthfront

Alternatives to 529s - Wealthfront

Wealthfront lets you set up a retirement account in just a few steps. You start by linking your financial accounts, which eliminates the need for all the pesky paperwork you’ll fill out for other companies.

Then Wealthfront will show you what your future could like with their recommended retirement accounts. For IRAs, you can choose to go with a Traditional or Roth IRA through Wealthfront.

Coverdell ESA

Alternatives To 529s - Coverdell ESA

Alternatives To 529s - Coverdell ESA

Some 529 plans offer limited choices when it comes to investing, mostly focusing on index funds. If you want something a little more flexible, but still with tax benefits, a Coverdell ESA can be an option.

You can invest in almost any stock, bond or fund, and the earnings grow tax-free as long as you use them for qualified education expenses. With the Coverdell ESA, you have more options and still get the tax benefit.

There are some restrictions, however. You can only contribute up to $2,000 a year to a Coverdell ESA, and the beneficiary must withdraw all the money in the account by the time they are 30. 

Taxable investment accounts

Alternatives To 529s - Taxable investment accounts

Alternatives To 529s - Taxable investment accounts

With a taxable investment account, you have total control over how you spend the money. You can grow the college fund rapidly, with the help of investing, without the restrictions that come with how you can spend the money.

If you go this route, however, it’s important to pay attention to when you sell your assets. You want to sell older assets first so that you can take advantage of the favorable long-term capital gains rate. You’ll have to pay taxes on your earnings, so it’s a good idea to plan for that.

Here are a couple of the best investment accounts on the market today:

Wealthsimple

Alternatives To 529s - Wealthsimple

Alternatives To 529s - Wealthsimple

As their name states, Wealthsimple wants to make investing…well, simple. You can have Wealthsimple create a low-fee portfolio for you, and they’ll manage it as well. All you have to do is tell them what your risk level is and what your goals as an investor are.

When needed, Wealthsimple will automatically rebalance your portfolio, so you’re always maintaining the risk level you want. To make things even easier, you can set up automatic deposits, which Wealthsimple will invest for you.

Wealthsimple really is the set it and forget it platform most young investors have been looking for.

E*TRADE

Alternatives to 529s - E*TRADE

Alternatives to 529s - E*TRADE

E*TRADE offers a brokerage account where you manage your own investments while using E*TRADE’s helpful platform. But, E*TRADE also offers managed portfolios. You will need $500 to start investing, but that’s a low minimum, especially compared to E*TRADE’s competition.

E*TRADE has a low annual advisory fee of 0.30%. Their managed option works much the same way as Wealthsimple’s. You tell E*TRADE how much risk you can take on, and they get to work building a portfolio that works for your investment needs.

Prepaid tuition plans

Alternatives To 529s - Prepaid tuition plans

Alternatives To 529s - Prepaid tuition plans

Some states and colleges are starting to offer prepaid tuition plans. If you sign up for one, you can buy tuition credits at today’s prices. By buying these credits ahead of time, you can potentially save thousands of dollars over time, especially when you consider how quickly tuition can rise.

However, it’s important to understand that you might be limited as to where you can use the funds. If you get a prepaid tuition plan through a state, you can usually only use the balance to pay for specific in-state public schools. When you buy tuition credits at a specific school, you run the risk that your child won’t actually get into the school later.

If it works out, though, a prepaid tuition plan can be a smart way to pay for your child’s schooling in increments while saving thousands of dollars.

Summary

Due to the rising cost of college, you’re probably going to need to save up some money ahead of time to help your child pay for their higher education. If you want to reduce the amount of student debt they end up with, it can make sense to find a way to save up as much as possible.

A 529 plan can be a good tool for college savings, but don’t forget about other options that might work just as well — or even better. 

Read more:

Source: moneyunder30.com

3 Things No One Ever Tells You About FHA Loan

August 19, 2018 Posted By: growth-rapidly Tag: Buying a house

Buying a home, especially as a first time home buyer, can be stressful. From coming up with a 20 percent down payment on the house to choosing the best mortgage lenders for the best rates, the home-buying process itself can be frustrating.

However, little do you know an FHA loan can make the process less frustrating and less stressful. For example, buying a home with an FHA loan does not require the traditional 20 percent down.

Related: Get Pre-Approved for a Mortgage through LendingTree.

1. The down payment is super low

The down payment using an FHA loan for buying a home is 3.5 percent. This is super low comparing to the conventional 20% down payment. While there are several advantages of putting 20 percent down on the house, it’s not always necessary.

For example, when you put more money on the house, you save more on interest payment and you will pay your mortgage earlier. However, not everyone can come up with 20% down payment on a house.

Related Resources

  • Get Pre-qualified for a Mortgage Online Now
  • Compare Mortgage Rates All in One Place
  • Check Your Credit Score For Free

2. Your credit score does not need to be perfect

Usually, you would need an excellent credit score to get qualified for a loan to finance your first home. However, with an FHA loan, your credit score needs to be at least 580. Before you apply for an FHA loan, make sure your credit score is at least 580.

We recommend using Credit Sesame . It’s completely free and it monitors your credit score and gets you updates on your credit score.

It’s important to have at least 580 credit score in order to qualify for an FHA loan. If you have less than that, work on improving your credit score.

Check Today’s Low FHA Mortgage Rates

3. Pre-approval for a loan is very easy

Getting pre-approved for buying a home with an FHA loan is quite easy. First, you will need to work with mortgage lenders who offer FHA loans.

Second, you want to make sure you have a copy of the following for the lenders: 1. your tax return. 2. Your 2 most recent pay stubs 3. A bank statement showing the funds for the 3.5% down payment.

Third, make sure your credit score is at least 580. This needs to be repeated and emphasized. If it’s less than that, you might still be qualified but you will need to come up with a larger down payment, like a 10 percent down.

Once you’re approved for the FHA loan, your pre-approval letter will show how much you’re qualified for so you can start

In conclusion, buying a home for the first time can be frustrating. But it does not have to be. With an FHA loan, you can buy your dream home.

These are some of the things you need to know about FHA loans before buying a home. 

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

Up Next: 5 Signs You’re Not Ready to Buy a House.

Related Resources

  • Get Pre-qualified for a Mortgage Online Now
  • Compare Mortgage Rates All in One Place
  • Check Your Credit Score For Free

Buy a home with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you save 100k (whether you need it to pay off debt, to invest, to buy a house, or plan for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

Source: growthrapidly.com

Idea to Steal: A Corner Office

Do you ever have problems finishing things? Taking a project over that last 10 percent to consider it complete? Yeah, me too. Hence, why instead of finishing off my master bedroom and bath design (that still continue to languish more than a year after renovations), I’m distracted by other little problem spots in the house that have been bugging me. Like wanting to redo my home office. Again. Since I’m usually chained to it ought to be pretty dang good, don’t you think??

My current inspiration – the wrap around desk.

There are three reasons I really love this look. First, it’s beautifully minimal and when done right (yes, there are plenty of really wrong examples), a well-made wrap around desk can serve as a beautiful focal point of space – rather than just a utilitarian, functional thing taking up space in the corner.

Secondly, I strongly believe that not having drawers makes you keep less stuff. Easier said, than actually put into practice of course, but that lack of storage certainly gives you the incentive.

Finally, the corner desk gives you much more surface area. I realize that kinda subverts the less stuff goal, but if you’re constantly editing images on a massive desktop, or are constantly surrounded by books, magazines and other sourcing material as I typically am, then a place to spread out can be rather helpful. I’ve also come to realize I no longer need a fancy acrylic stapler or that cute little bowl of paperclips. And if you float your corner desk you can actually give the appearance of taking up less space.

There are few other key components necessary to complete this look. A stellar desk chair (I will be prepared for the comments about the lack of ergonomics, I’m ok with that), a scatter of your favorite ceramics, a really good task light and some framed art for that must-have visual inspiration.

I’m lucky that I have the perfect little corner for this type of set up in my office. Now let’s see if I actually see this idea to the finish line.

Would you like to see that??

for the Idea to Steal archive, CLICK HERE.

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Source: apartment34.com

How To Save For A House

September 2, 2018 Posted By: growth-rapidly Tag: Buying a house

How to save for a house! For many people, saving to buy a house can be hard. This is because they don’t know how to save money or they’re not willing to limit their spending. This article will provide you with tips for saving for a house.



Determine how much money you need.

Before you decide to save for a house, you need to determine first how much money you’ll need to get started.

Typically, you need to come up with 20 percent of the property’s purchase price as a down payment and borrow the 80 percent from lenders.

In some cases, especially if you’re a first time home buyer, you can come up with way less money down as low as 3.5% thanks through FHA loans, but your interest rate might be higher. And you might be required to pay private mortgage insurance.

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

Related:

In addition to the down payment, closing costs and fees are also factors to consider in determining how much money you need to save for a house.

For example, let’s say you’re looking to buy a house for $250,000. You will need to come up with 20 percent of that price, i.e. $50,000, as the down payment. And 5 percent for closing costs, i.e., $12,500.

So in order to buy a house for $250,000, you will need to come up with $62,000.

To learn how much house you can afford, use LendingTree for the best mortgage loan rates and quotes for free. Here are some tips on how to save for a house:

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

1. Increase your income.

If your monthly paycheck is not enough to save money because of monthly bills, debts, and personal expenses, then the best way to save for $62,000 is to boost your income. There are several ways to boost your income.

One is to work more by working over time at work. Another way is to have a side hustle to make extra cash on the side. A third way to boost your income is to take a part-time job.

Tip: If you want to make extra cash, I suggest that you take surveys online. I recommend, Pinecone Research (earn minimum $3 per survey), Swagbucks ($5 sign up bonus + get paid to take surveys), InboxDollars ($5 sign up bonus + get paid to take surveys), Ebates (earn up to $40 cash back), YouGov US Males ($2 bonus + $8 – $10 per hour), MySurvey ($2 sign up bonus + 5 per survey). See this blog post for a complete list. 

2. Reduce your spending.

One of the best ways to save money fast for a house is to reduce your spending. You can substantially increase your savings by living below your means.

To do so, figure out how much you spend a month on food, clothing, grooming, transportation and entertainment. See where you can cut back a little. See if there is a much cheaper alternative. Can you eat out less? Can you take public transportation rather driving your car?

Are there things that you pay for on a monthly basis that you can cut? For example, cable TV, magazine subscriptions, a gym membership that you barely use. Indeed, there are several ways to reduce your spending.

3. Pay off your debt. 

Paying off debt, such as credit card debts, is another way to save for a house. Credit card debts are high interest debts. Once you get rid of these debts, you will have more money left to save. Also, paying down your credit card debts helps your credit score.

In conclusion, if you’re in the market to buy a house, you need to come up with the down payment including the closing fee. This can be a big chunk of money that you may not have. So it’s important to follow the above tips to save money for your dream home.

Get pre-approved for with a mortgage lender to figure out how much house you can afford.

Related:

Working With The Right Financial Advisor.

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

Source: growthrapidly.com

5 Financial Reasons You Should Never Buy A Home

September 7, 2018 Posted By: growth-rapidly Tag: Buying a house

5 Financial Reasons You Should Never Buy A Home. Thinking about buying a home for the first time?

Many people think that at a certain age or because they are married and start a family, they have to buy a house. They believe that it’s what they are expected to do or it’s the next step. But that can be a financial mistake. Even if you can afford a mortgage, there’s more to owning a home.

For example, after you buy a home, you will also need extra cash to account for repairs, property taxes, insurance. You also have to make sure you can keep a job in order to make the mortgage payments. So before you buy a home, make sure you are ready to do so. In this article, we will provide some of the common financial reasons you should never buy a home.

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

Related Articles on Buying A House

5 Financial Reasons You Should Never Buy A Home

1. Homes are very expensive.

Homes are costly to buy. The average sale price for a home in the United States in 2018 is $394,300. That means that you will have to come up with a large down payment (usually 20 percent of the home purchase price) plus closing costs and fees.

In addition, you have to make sure you can cover the monthly mortgage payments once you buy the house. There’s also property insurance, taxes, homeowner associations fees (if you own a condo), water bill, electricity bills you have to think about.

If you feel you have enough money saved for a down payment on a house and you have a stable job, then buying a home might be a good option for you than renting.

You know you can afford a mortgage? Start shopping today for a mortgage.

2. You’re not handy.

When you own a home, you also have to keep up with the place, including painting, cleaning, making repairs, mowing the lawn, etc.. If you’re not a handy person, you will have to pay for professionals to do these things. And the cost of home maintenance can eat up your savings. So if you’re not a handy person and don’t have the money for these maintenance costs, you’re better off renting a home rather than buying a home.

Shop today for the best mortgage deal.

3. You’re too busy.

Similar to reason number 2, you should not buy a home if you’re too busy in your day-to-day job and paying for someone to do the yard work for you can be costly.

4. You don’t have a stable job or a stable source of income.

If you don’t have a stable job or stable source of income, you may not be able to make on time payment. And late mortgage payments can have serious consequences. The great thing about renting rather owning a home is that you don’t have any real obligation, besides the lease. If you can’t make your monthly rental payments, the worst thing that can happen to you is eviction from the property. But with owning a home, if you make late mortgage payments, the bank can foreclose on your property.

5.  You’re planning on moving.

If you know you’re planning on moving to another state or country, or that your job might transfer you to another location, you are better off renting a home than buying a home. The rule of thumb is that you buy a home if you are going to live in it for at least 5 years.

In conclusion, although there are some great benefits in buying a home, a lot of times it just doesn’t make sense. If any of these financial reasons above apply to you, you may be better off putting off buying a home.

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

Related Articles on Buying A House

Work with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your saving goals Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

Source: growthrapidly.com