How To Talk To Your Kids About Student Loans

Student loans are much more of a reality for kids today than they were for their parents and other previous generations of college students. The cost of education has risen so quickly that in 2014 almost seven out of 10 students graduating college had loan debt—nearly $29,000 each, on average.

This means discussing student loans needs to be a key part of family discussions on college. The earlier these talks happen, the better. I know this first-hand, as my eldest daughter is a college freshman this year.

Affordability is key

The conversation about how student loans work can include talks about what your family can afford in terms of college. At one end, a family may decide that they will find a way to pay for the best colleges to which their college-bound student is admitted—no holds barred. Even if both parents have to get second jobs, they will pay for their child to attend the most prestigious college to which he or she is accepted.

In our family, the chat was quite different: We told our daughter what we could afford and invited her to apply to colleges that were reasonably within our budget range. There was no sense in having her look for her “College Charming” and then tell her we couldn’t afford it.

We also talked early—during her sophomore and junior years in high school— about student loans and the importance of limiting them as much as possible. Why? Heavy student loan debt can be a tremendous burden on new college graduates. It can limit their choices of jobs because they often must earn enough to pay off their debt, especially if they can’t count on financial help from parents or other family members. In the long run, significant student loan debt, like any other debt, might also delay or limit the borrower’s ability to buy a home, start a business, or even begin a family.

How much is too much?

Syndicated author and radio talk show host Clark Howard suggests students not take out more in student loans (in total over four years of college) than the entry-level salary they can expect to earn their first year after college. If the student expects to earn $30,000 in their first job, that number should be the ideal student loan limit in total. (College students can estimate entry-level wages in their field with online tools such as Of course, seeking advice from financial aid consultants might be helpful (if pricey), and many colleges offer financial aid resources.

Learning about loans

The U.S. Department of Education requires students to enroll in online counseling when they first take out federal student loans. Sitting through it with your student may provide opportunities to help explain the concepts covered, such as accruing interest and repayment rules.

The repayment calculator was a huge eye-opener for my daughter, as she was able to see what her student loans could cost her in actual monthly payments. Making the loans real is a great way to discourage overborrowing.

More things for students to consider

Emphasizing a few key factors may be helpful to your student in understanding the essentials of college loans. For instance:

  • Personal expenses. Loans aren’t intended to cover personal expenses. Your child could cover pocket money by working during college, even if that’s just five to 10 hours per week.
  • Quitting college. If your student leaves school or drops down to less than part-time status, there is only a six-month grace period before your son or daughter must begin paying back federal student loans.
  • Credit score. Paying loans on time and as agreed to helps your student keep his or her credit score healthy, which is important when attempting to rent an apartment, get a car loan and much more. Credit reports are available for free one time each year at
  • Declaring bankruptcy. It’s very tough to walk away from unpaid student loans. Even if other debts are discharged during a bankruptcy, you will usually remain responsible for any federal student loans. Again, this underscores the importance of not overborrowing.
  • Charging college expenses. Using credit cards is not a good choice for paying for college. A close relative of mine charged his entire senior year of college on credit cards. As you might imagine, the interest rates make paying back the loan amount incredibly challenging.
  • Private student loans. These loans should be considered carefully, and perhaps only as a last resort. According to Howard, private student loan interest rates may be much higher than federal loans, and a student often has little flexibility on repayment plans. Like other school loans, private loans are not usually discharged during a bankruptcy. Students short on money might be better off attending a less expensive community college for their first two years to satisfy many general education requirements. Others might consider working more hours and attending school part-time if necessary. Borrowing from family members such as grandparents might be another option.


Post-college plans and opportunities

We emphasized to our daughter that paying off student loans should be her first priority after college. Our family places a high importance on living free of debt, and she’s getting the message that student loans are no exception to this rule. We are encouraging her to plan on “living like a student” for several years after she graduates so that she can put every dollar possible toward paying off her student loans.

Depending on your graduate’s line of work, he or she may also want to look into student loan forgiveness programs. Many teaching and public service jobs offer this as a benefit to encourage college graduates to work in underserved communities.

As Mary Hunt, author of the book Raising Financially Confident Kids, wrote: “It’s not as if student loans and big credit card balances are mandatory graduation requirements. … It is possible to graduate debt-free, but it does take a lot of work. And you’ll have to buck a financial system that encourages students to take the easy way out by diving into a lifetime of debt.”


6 Free (or Cheap) Tools We Used to Make More Money & Get Out of Debt


Employment gives us a lot — a sense of security, a regular paycheck, health and life insurance and other perks, but what about our dreams? How much do we give up to be employed by someone else and work on their dreams? How do we change so that we’re both financially free and personally happy?

We paid off $51,000 in credit card debt and became financially free. When we started our dream business three years ago, our goal was to build a business so that — from anywhere in the world — we could help others become financially free. We decided we wanted geographic freedom along with financial freedom. We’ve achieved this through our writing, speaking, videos and podcast.

The same tools that keep us digitally connected to grade school friends and celebrities are also a source for information and a platform to grow a business.

The barriers of entry to start a business today are lower than ever. With a tablet, a website and a few social media accounts, a few hundred dollars spent on moderately sophisticated recording equipment and basic editing knowledge gleaned online, you may be able to turn your hobby into a successful blog, podcast or video show.

The trick is learning how to monetize these mediums. This can be done with affiliate marketing, sponsorships and branding that provide multiple (horizontal) income streams, eliminating the risk of the single (vertical) income stream. But the first step comes in learning about your given industry and what the leaders of a platform or marketplace are doing.

Below are the six tools we still use today to help grow our business.

1. YouTube

YouTube isn’t just for music videos and beauty video bloggers. YouTube is for ME: motivation and education.

Whether we’re paying full or partial attention, motivational videos keep us positive. Starting your own business isn’t easy and there are times we get negative. Negativity must be remedied. As Willie Nelson once said, “Once you replace negative thoughts with positive ones, you’ll start having positive results.” And we’re always looking for positive results.

We’ve used YouTube as a teacher. It’s taught us about creating tags and categories for our website, how to manage lists in Twitter and video editing. We’ve spent hours studying public speakers on their style, tempo and delivery.

If you want videos that both motivate and teach you the art of public speaking, you can’t lose by YouTubing anything with Lisa Nichols.

2. Podcasts

Podcasts supplement YouTube and offer access to today’s leading minds for free and on your own time. Listening while we work, drive or exercise allows us to challenge ourselves to new ways of thinking, which helps us in our personal and professional lives.

Want to know what Mark Zuckerberg is planning next for Facebook? Want to learn what Tim Gunn thinks of today’s fashion? Want to hear what world leaders think of today’s current affairs? Podcasts can be your answer. Two of our favorites are Sean Croxton’s “The Sessions” and Stephen Christopher’s “Business Revolution.”

3. Apps

Can’t afford a personal coach? Neither could we, so we turned to apps. Apps are a great alternative and can be the tools that help get you to where you want your career to go. With just your phone or tablet and the right level of engagement, some business and life coaching apps can be as helpful as some business and life coaching humans.

4. Books

Nothing beats books. Though certainly not new, the accessibility of books is new. On Amazon alone, an average of 1.064 million digital books were downloaded each day, as of January 2016. There are many free books available on Amazon or at your local library. Here’s another secret: Don’t only source your books from the bestseller’s lists. There are great books being published independently. Give someone lesser known a try. Two such books are “True to Your Core” and “Discover. Act. Engage.” These are both powerful books that haven’t been picked up by a major publisher yet.

5. Facebook Groups

Facebook is more than cat videos and memes about the drudgery of the 9-to-5 grind. Facebook groups offer valuable information and support. Whatever your specialty or niche, you can likely find a Facebook group for it. Within these groups, people share their successes and failures, ask questions and throw out ideas. These are motivating and inspiring discussions that can have a much wider reach than they did before the days of social media.

6. LinkedIn Groups

You can do more with LinkedIn than create a digital resume. Like Facebook, but on a more professional level, are LinkedIn groups. LinkedIn groups are especially good for career guidance and networking.

To be fair, you may already be aware of some or all the tools we mentioned. What we hope we’ve demonstrated here are our ways to help you embrace what’s available to you and get you closer to financial freedom.

[Editor’s Note: Saving money and paying off debt can be an important part of any financial plan and can even benefit your credit. You can see how your spending behaviors are affecting your credit by viewing two of your free credit scores, updated every 14 days, on]

Image: Jacob Ammentorp Lund

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10 Money Mistakes You Might Not Know You’re Making


If you take a look at your spending, are you really being as smart as possible? It may seem like it at first glance, but if you really sit down and think about it, you may be actually making mistakes with your finances and not even realize it. This can mean you’re overspending or missing opportunities to save. Here’s a list of mistakes you might be making, and the changes you can make.

1. Not Having a Budget

A written budget can be the key to managing your money. A budget puts financial control back in your life. Otherwise, your money just goes and you can lose control over your finances.

I know it can seem scary to actually sit down and make a budget, but it really is not that bad. In fact, once you do it and start to follow one, you will realize how much better you feel about your money.

If you need help getting started, you can read about how to create a budget here. 

2. Not Being Involved in Your Finances

If you are in a relationship (married or otherwise) where you both contribute financially, are you both involved in paying the bills? In most cases, it seems that just one person takes care of this. There are instances where it is the person who is better at handling money (and/or maybe enjoys it). But really, to have a full understanding of your money, you both should be involved.

Consider sitting down together and talking about your budget (see point 1). Fill it out together so you both see how you plan to spend your money. You can both contribute to how you will save, what you will budget for dining out or other items you want to spend your money on. You both have an equal voice. You both are in control of your money.

Once you have the budget, look at your investments, credit cards, life insurance — anything with any sort of financial tie. Make sure you both understand where these items are held, be it a bank or insurance company, and that you both know how to access the account (login and passwords).

3. Not Saving for Retirement

Too many parents focus more on college than retirement. Sure, we’d love to help our children financially with college, but it’s important to consider your future as well. It is up to you to take the steps now to ensure that you are looking ahead to take care of yourself for the future.

Consider looking at the options your employer offers. Do they have a 401K plan? Do they have a matching program? Start saving now and look ahead toward covering yourself for those golden years.

4. Using Credit the Wrong Way

Many people are wise when it comes to using credit cards. They use them and pay the card off completely every single month. If you are one of these people, that’s what we should all aspire to. The problem is when you’re not careful to understand the fine print. The low introductory rate or the in-store discount can very tempting, but will only be worth it if you can afford what you charge.

Take a look at this example: You open a store card to save 20% off of your purchase that day and end up spending $400. The bill comes and you open it. You see that the interest rate is 18.9% and that the minimum payment is only $16. Rather than pay the entire $400 out of your account, you decide to send in the minimum balance because you need the $384 for something else.

If you continue to do this, it could take you nearly 3 years (34 months) to pay off this balance. Not only that, but you could accumulate more than $120 in interest on this charge alone, making your $400 purchase ultimately cost more than $520. Keep in mind — while only paying the minimum isn’t ideal, it is better to make that payment on time than to not pay at all.

You can see how your financial habits are affecting your credit scores by taking a look at your free credit report summary, updated every 14 days, on

5. Listening to the Bank Instead of Your Budget

If you want a new home or car (or anything that requires a loan), you will go to the bank. Consider this scenario — You fill out an application for pre-approval and find out that they tell you that you can afford a $300,000 home with an interest rate of 3.76%. Your monthly payment will be $1,391.05.

While that looks like it will work, according to the numbers, you know that will really stretch things thin. However, the bigger house with that huge master tub and large backyard is so wonderful. The neighborhood is upscale and it is everything you want. But is it what you can really afford? (Consider using this tool to get a better understanding of how much house you can afford.)

You take a look at your budget and decide you really should spend only $900 a month instead. That would mean you should not spend more than around $200,000 for a home ($100,000 less than what the bank says you can afford).

By spending less, you have freed up money to allow you to do things other than pay for your home. If you find yourself in this situation, it might be wise to consider downsizing or maybe trying to refinance at a lower rate to reduce the amount you are paying each month on your mortgage.

6. Not Doing Research Before Shopping

It is easy for us to overspend on things such as home repairs, clothing and gifts, as emotion is driving us on many of these purchases. If the refrigerator goes out, we worry and know we have to get it fixed as quickly as possible. That may result in paying more than necessary.

Instead, it’s a good idea to shop around and do your research. You may even want to do so before the unexpected happens. In the instance of an appliance repair, make some calls to find out the rates of various companies that repair the items you have in your home. Find out who does good work at an affordable price. Then, write down that name and number so that when you need someone, you will know who to call.

You can also look around for deals and the best prices on other items such as clothes and gifts. By taking a few extra minutes to do some research online, you might find a better price at another store.

7. Not Teaching Your Children About Money

Kids take in everything they witness and hear around them. This can lead to them learning great things, but also not so great things. You want your kids to be smart in all areas of their lives as they get older. This includes their finances.

It’s good to start educating them at a young age. When my kids go to the store, they know that we can’t just buy anything. We talk about our budget with them and tell them we have only a certain amount of money to spend on food, so we have to first cover the items we need and then we may be able to pick up that splurge item.

We also teach them financial responsibility. It is important that you start young with your children so that they understand the concept of how to manage their own money. Teach them about giving, saving and spending. By starting young, you set them on the path to financial independence as they get older.

8. Not Planning for an Unexpected Loss

None of us ever plan on losing a spouse or something happening to them that can prompt financial hardships. But, the reality is that it can happen. It is important to plan now so that you are ready just in case. To do this, consider sitting down with your spouse or partner and having a candid discussion. Ask yourselves these questions:

  • Who will raise our children if we are both gone?
  • How much money will my spouse need should I pass away?
  • How will we cover a funeral and/or medical expenses?
  • What happens if I become disabled and can no longer work?

Use this to figure out what your emergency fund should entail. Look at your budget and determine what could be cut back if you were out of work (things such as entertainment and dining out may have to be put on the back burner). It’s also wise to add in the additional cost of health insurance premiums (if you get this through your employer). Then, work hard to try to build up your emergency fund so you can support yourself and your family, should you find yourself (or your spouse) out of work.

From there, you may want to make other considerations, like life insurance or disability insurance. Check with your employer as they may offer some supplemental benefits as well as some sort of disability insurance at a reduced premium rate. You can read more tips to help you plan for the unexpected here.

9. Not Having a Debt Payoff Plan

If you currently find yourself in debt, it’s a good idea to have a plan to pay it off.  These are some simple things to keep in mind with any debt plan:

  1. Figure out your monthly payments to get the debts paid down.
  2. Set a deadline to getting out of debt.
  3. Put it all in writing and do your best to stick to it.

(If you are currently working to pay off your credit card debt, consider using this credit card payoff calculator tool to see how long it may take you.)

10. Ignoring Your Finances Completely

The truth is, ignoring your problems does not make them go away. The same holds true with your finances. If you are ignoring them, things will not improve.

If you find you are in over your head, check with your bank. Some of them offer free assistance to anyone who wants to get out of debt. They might even have financial planners available to assist you. You never know what services are out there unless you ask.

It is not how much you make that matters, it is what you do with it. Making wise financial decisions can keep you from throwing money away and help you gain more control.

Image: gpointstudio

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4 Smart Things to Do With Your Tax Refund


There’s a good chance you’re probably getting a refund from the federal government sometime soon, if you haven’t already (and if you aren’t among the thousands of people who experience delays because of taxpayer identity theft).

There are a few ways to look at that deposit. For one, you might be a little bitter when you realize how much you let the government borrow from you in the last year, interest-free. You might also be excited: No matter what the amount is, you can really improve your financial situation if you think carefully about how to use that money and execute your plan accordingly.

If you’re wondering what to do with your tax refund, here are some things to consider.

1. Boost Your Savings

Having an emergency fund is crucial to your long-term financial well-being. When an unexpected expense pops up, like a medical bill or urgent car repair, having an emergency fund can help you avoid going into credit card debt or ending up with a collection account on your credit report. Both those things can really drag down your credit scores. (You can see two of your credit scores for free every 30 days on

Many financial experts recommend you keep 3 to 6 months’ worth of income in an emergency fund, but no matter where you’re at with that, it’s really important to have some money stashed away. A tax refund is a great way to get started.

2. Adjust Your Withholding

One of the smartest things you could do with your refund is use it as a piece of information to improve your financial strategy going forward. If you have a massive refund, you might want to adjust your withholding for next year so you have more income at your disposal on a regular basis. Conversely, if you just barely got a refund or think your tax liability might go up next year, you might want to think about how you could maximize your refund in the future. Once tax season has died down, you could consult a tax professional about what you might want to change for next year, based on this year’s refund.

3. Get What You Need

Everyone puts off important purchases because they’re expensive, and it never feels like a good time to spend a lot of money. If your savings are in good shape and you don’t have a lot of debt, your tax refund might be the opportunity you need to get some of those need- or nice-to-haves on your list. You could also put it toward buying a home or a car, if that’s something you’re working toward.

4. Pay Off Debt

The longer you have debt, the more it costs you. Your tax refund could help you save money by reducing the balances on your credit cards or tackling that student loan debt you want so badly to get rid of. You can either target your largest debts, the ones with the highest interest rates or an account you can entirely pay off with your refund — whatever motivates you most to continue working on paying down what you owe. (You can go here to calculate the lifetime cost of your debt.)

There’s no one “right” thing to do with your tax refund, but no matter what you decide, try not to rush into spending that money. This opportunity only comes around once a year — though you don’t have to spend it all at once — and you can make significant progress toward your financial goals when you use your tax refund.

More Money-Saving Reads:

Image: Wavebreakmedia Ltd

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3 Smart Ways to Use Your Raise

The only thing better than a payday is a payday that comes with a bigger paycheck. They might not happen often, so when a raise comes your way, it’s hard to not get a little excited.

With that excitement often comes an urge to spend more, even if you don’t need to. This is sometimes called lifestyle inflation — people spend more as they earn more, while failing to re-evaluate their savings and other financial goals. So when you get that occasional bump in income, take some time to decide what you should do with it. Here are some ideas for making the most out of a raise.

1. Pretend You Didn’t Get It

Do you want to save more? One of the easiest ways to do that is to make more money. At least, it tends to be easier than the alternative: spending less. If your expenses stay about the same but your income goes up, keep the same budget you had before, and push the leftover money into a savings account.

Getting a raise is often a good time to revisit your budget so you can identify any regular costs you may want to cut, like a subscription you’re not using or insurance premium you could reduce by modifying your coverage or changing insurers. Reducing your expenses and increasing your income can significantly improve your financial stability if you put your surplus toward an emergency fund or retirement plan.

2. Do Something You’ve Been Putting Off

Think about ways you’ve wanted to improve your well-being but couldn’t previously afford. This could be anything from an overdue home improvement to a long-desired treat, and a bit of extra monthly income could help you get it. Sure, replacing your car’s tires may not be as exciting as getting a new TV, but try to think of purchases that could help you save money in the long run before splurging on something you might not need for a while. Ideally, you could do a little bit of both as your higher paychecks continue to roll in.

3. Pay Off More Debt

Most people in debt have something in common: They want to get out of it. A pay raise can help you accelerate that process. Say you have $2,000 of credit card debt with a 15% APR (about the average credit card interest rate), and you’re currently paying $100 a month to get rid of it. If you use your raise to add another $100 and bump your monthly payment to $200, you’ll be out of debt roughly a year sooner and save about $166 in interest. You can use our credit card payoff calculator to see how higher payments can shorten your debt-free timeline and save you money on your debt.

It’s your raise — do with it what you want — and remember you don’t have to do just one thing with it. You can save a little, spend a little and throw a little at your debt, because these can all be positive moves. If you’re trying to improve your credit, remember that paying down debt (credit card debt in particular) can help your credit scores. You can see how credit card spending affects your scores with the two free credit scores you get once a month on

More Money-Saving Reads:


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This Just In: America’s Debt Diet Appears to be Over

DebtDietOverConsumers in each of the nation’s 25 largest cities added debt throughout the months of July, August, and September. This is compared to the previous year, ending a multi-year trend in which several cities continued to show declines in overall consumer debt, according to the latest Equifax National Consumer Credit Trends Report. “Consumers appear more confident in the economy and are moving forward with their lives and borrowing money again,” said Assad Lazarus, Senior Vice President, Product and Customer Experience at Equifax Personal Information Solutions.

Earlier in 2015, when Equifax last reported a similar report, 19 of the nation’s largest 25 cities showed declines in consumer debt compared with a year ago. The new report shows a reversal of this trend; all major metro posted gains, with the largest experienced by Houston (+7.4%), Denver (+5.4%), Dallas (+4.8%) and Orlando (+3.8%).

“Overall, the data paints an encouraging picture of the American consumer and the U.S. economy,” said Lazarus.

What else does the report tells us about consumer financial behavior across the United States?

  • Mortgage markets are improving, in part because mortgages are the largest single component of consumer debt. In fact, just three major metropolitan areas – New York, Cleveland, and Miami – saw a decrease in those balances. This is a marked difference from past reports where many cities showed a similar decline.
  • Non-mortgage debt, meanwhile, continues to show significant year over year growth in every major U.S. cities. Nine cities experienced double-digit increases in non-mortgage debt compared to a year ago, with Orlando leading the way with an increase of 13.9% and Miami close behind at 13.2%. Again, this suggests that consumers remain confident and are poised for growth.
  • Detroit had the smallest amount of non-mortgage growth at 4.9%. In fact, only Detroit and Minneapolis experienced a lower rate of year-over-year growth in non-mortgage debt through the third quarter of 2015 compared to the same time period in 2014.

Dennis Carlson, Deputy Chief Economist with Equifax, contributed to this article.