1 Million Dollars

Wednesday, April 2, 2014

Updated Millionaire Plan April 2014

We are doing steadily well, we added $625 this month but our account is now worth $18,532, a $698 increase.  We plan to keep depositing $625 per month for the foreseeable future which means as long as we don't lose money we will make our first mini-goal of $21,000 (6 months expenses including COBRA) in about four months and our second mini-goal of $25,000 (my entire annual income) in about 10-11 months.  Obviously the market can either help us and we may get our goals sooner or it may hurt us and it may take much longer than four or  eleven months to beat these mini-goals.  But I am optimistic that we will make it to $25,000 within the 2014 tax year!

We have considered trying to increase our deposit amount but have decided that paying off our student loans, saving a emergency fund and moving fund at a higher priority right now.  As young people we have a lot of expenses vying for our money and very little money to spend so choices have to be made.  I am doing the bare minimum right now and hope to increase my savings over time as my income increases.

I am also looking at seeing if there is anything more I can cut without hurting my lifestyle too much.  I do want to have fun, and have some spending money but as I continue in my frugal life new ideas pop up.  Never stop looking and you will find ideas where you least expect them.    

How are your investments going?

Wednesday, March 26, 2014

Financial Aid and the FASFA

We are lucky to be considered independent student but for most students under 24, they are dependent students and the government expects their parents to contribute towards the cost of college.  This means that your parents income and assets are counted as well as your own.  It also means that most of your assets are expected to go towards college spending, not just your income for that year.
Before I go into what a dependent student should do to shelter money, determine if you are a dependent or independent student.

The Following Questions Determine If You Are An Independent Student

  1. Are you 24 year of age or older?
  2. Are you married?
  3. Are you enrolled in a master or doctorate program?
  4. Do you have children who receive more than half of their support form you?
  5. Do you have dependents other than your children or spouse who live with you?
  6. Are you an orphan or ward of the state?
  7. Are you a veteran of the U.S. armed forces?
If none of these apply, then according to the federal government, you are a dependent student.  However, many medical programs still require you to include your parent's income and assets, which may be something to consider, if you are picking a medical school.
As a dependent student there are different rules than an independent student because the dependent student is expected to use most of his or her assets to pay for college but the independent student is not.

If you have been determined to be a dependent student, first be aware that the law has changed.  It used to be that if your parents refused to fill out the FAFSA, you were not eligible for any aid.  The federal government has figured out that perhaps that may not be right, since every student is eligible for unsubsidized loans regardless of income or assets.  Now you can fill out the FAFSA without your parent's income and assets and still get unsubsidized student loans.

But often that is not enough.  What to do?  If you are eligible for work-study, TAKE IT! Work study is the only work you can do that won't be counted against you for future aid.  Often you must accept work study NOW to get the good jobs on campus because for many universities, the good jobs go quick.  The other option is to ask your department if they have any jobs that can be paid via work study.  I was able to work in the statistics lab which improved my CV as an undergraduate because I had work study, normally the coordinator only took Master's students.

While you are there, ask about scholarships.  Our department had three $500 scholarships only for declared majors.  The biology department had more.  My community college had all the scholarships within the financial aid office, but neither of my universities (undergraduate or graduate) run scholarships through there.  But, don't assume, check with the financial aid office too. 

This is the time to apply for aid both loans and scholarships and prepare for next year, which includes applying for summer internships and jobs.  Don't wait to the school year is over, you will be behind.  So, everyone let's be about it.*  Post if you have other ideas for preparing for next year.

*A prize for the first person to who recognizes the series that quote was from and post it.

Sunday, March 16, 2014

It's that time of year! Scholarship Time!

Sorry folks, I know you wanted me to say it was Spring Break Time, which it is but for your college career, scholarships are more important than spring break.  When I was in undergrad it was hard for me to apply for scholarships.  I felt that time could be used making money at my part-time job or studying.  Why work so hard to find these scholarships when chances were, I would not get them.  I did get pushed into apply for a few and I did not get them.  But, I am still applying now.  You may be asking why?  And why would I be tell you folks to do so?

There are a ton of scholarships out there and yes the chances are not great but the more you do, and the better you do, the better chance of landing AT LEAST one.  And, winning $500 is worth a lot of time, about 50 hours for a student.  So, tell me, have you spent 50 hours working on scholarships?  I know I have not.  I have two that I will be working on, one due in April and one due in December.  I have spent about seven hours on the one due in April and it is almost done.  Once it is done, I plan to find one more.

It is hard to get excited about scholarship because the reward does not often come through.  But it can.  I know of many people, my husband included who received them.  People are not tricking students, and they want students to apply.  So, I give you this challenge during Spring Break give yourself a 3-5 hours and find and work on a scholarship application.  Five hours will mean my scholarship application will done and I will have found a second.  Let me know in the comment if you plan to try for this challenge.

Monday, March 3, 2014

Updated Millionaire plan March 2014



This is my first update after starting my $625 per month retirement savings.  We did very well this month, with a bit of help from the market.  We now are at $17834.  Our next goal is $21,000 which includes all of our expenses for six months plus COBRA.  We are still $3,166 short but are getting close very quickly.  If the market cooperates with us we will be there in about five to six months, well within our goal of having six months by the end of 2014.  

Our goal after $21,000 is $25,000, the amount of my gross income, as well as the amount we need to stop using target date funds, and diversify on our own.  That will lower our investment costs, increasing the money we keep to invest.  If the market does not crash, it looks like we may be able to get up to that goal in eleven to twelve month (March 2015).  But who knows, maybe the market will help us more, and we will beat both of these goals in 2014.

But, right now we are not looking for extra money to up our retirement savings.  I am happy with 15% while I focus on other money goals, like building up an emergency fund.  Within this year my husband graduates with his PhD.  That means our very secure income, won’t be as secure.  Once you graduate, be ready for turbulence.  That is why I am saving a bare minimum for retirement and focusing on here and now.  We are building an emergency fund and paying off debt.  Once those are done, we will start pushing up our retirement savings again.

Monday, February 24, 2014

I found a new blogger group to join!

Many, many moons ago I joined J.Money's millionaire goal blogger's group.  Friday I updated my plan, and let him know.  When I did that I checked out a bunch of new and newish bloggers to the group.  Through that I found a new group.  It is a group that has a goal I want to reach.  A goal I doubt I can reach this year but I know I can reach it at some point, so why not join up now.   So you are sitting there going,  So what is the group?!
The group's goal is to save half of their income, after taxes are taken out.  This does not mean that you don't count pre-taxed savings, just that we are looking at the lower number.
Go check the two leaders out at YoungFinances and FrugalPortland.

With our daughter's expenses of over $12,000 for daycare alone which accounts for about half of my income, we can't afford to save half our total income.  My husband and I make about the same, plus we have our joint rental income.
Now this group is not strict, paying off debt counts as savings.
Right now I only have two debts we are paying off:
My mortgage which is 4.75%, minumum payment of $252.48, total balance of $45,040.31
Private loan through NYSERDA to replace my water heaters and furnace which is 3.49%, minimum payment of  $36.79 but this has been on autopay for so long, I don't know the total balance.  It started as $5150 and was a 15 year loan.  I am trying to get the information.

Keep in mind that paying interest does not benefit you, so this group only allows for principle payments.  That means I can only count $73 of the $252 payment as "savings".  Still better than nothing.  I believe I paying about $24 per month on principal towards the private loan though.
So, just with debt repayments I am "saving" $97 per month.
So averaging my rental income and our salaries, that would give us a savings rate of 2.33%.  Obviously that is way too low.  But wait!  We have not accounted for real savings:
We have a retirement savings of 16.4%, which right now is $625/month plus my pay in to my pension.  That brings up to 18.60%.  Not bad, not bad at all, but still short.

Well, here is where the rental comes in.  The income is variable so I don't account for it in the budget and it ALL goes to savings or debt repayment.
This is because we have debts we are not paying on as most graduate student do:
$17,000 in graduate student loans 0% for now, 6.8% six months after my husband graduates (Nov 2014 is the expected start of repayment)
$5,500 in undergraduate student loans 0% for now, 6% six months after my husband graduates (again Nov 2014 is the expected start of repayment)
$5402 in undergraduate student loans 0% for now, 6% when I graduate in three years (May 2017 is the expected date of repayment)

We already have set aside $17000 to pay off the graduate loans, so we just need to pay off the undergraduate loans and start an EF.   Prior to this, the money set aside for debt repayment and our EF were one and the same.
So assume we can either save or pay down debt by $4000 per year?  How much, as a percent, will we be "saving"?
So, that is up to 26% of our net income.   Not bad, but we still have a ways to go.   So my goal within this group is to increase income and decrease expenses until I can truly say "I am saving half my salary".
So who is with me?

Friday, February 21, 2014

Updated Millionaire plan February 2014

Now that I have a job, we have revised our millionaire plan and we actually have a goal in mind as well as a goal to beat!

In order for me, The Frugal Student, to become a millionaire, I (and my husband) pledge to do the following (each year):

  1. Now that both my husband and I are students, we are not eligible for the saver's credits...
  2. Therefore we are contributing $625 per month to our Roth IRAs (this is 15% of our salaries).
  3. I am also contributing 3% to my pension (the max I can).
  4. We also now have access to a daycare FSA allowing us to deposit $5000/year tax free and FICA free for the little frugal baby's daycare.
  5. We have not done well on selling stuff so we shall be changing this around to try to find something to earn $10 extra a month towards our EF.  This will increase surveys, being part of experiments and possibly selling things.
  6. Living frugally.  
Our previous plan was:

1. Contribute to the traditional IRA if it will make us able to use the saver's credit at the max of .5
2. Contribute $200 per month to our Roth IRAs depending on the saver's credit to determine where the money will be deposited
3. Sell stuff on eBay, craigslist and Amazon - $10/semester ($20/year)
4. Live Frugally - $1000/year (put into my EF




    Using CNN-Money’s millionaire calculator with a conservative interest of 6%, I will see a cool $1 Million in approx. 35 years and 7 months!  So now you see why we have a goal to beat.  I am not waiting till I am 65 to become a millionaire. 
    So what is the next step?  We will follow this plan until life changes and we will update as we go along.  If anyone has any ideas, feel free to throw them at me.




    Wednesday, February 12, 2014

    Always Check! My shock with my credit union

    So, this morning I restarted my deposits to my IRA.  I want to try to get as much in for 2013 as I can, so I have three months to go!  Remember you can deposit under last year's limit until April 15th.  After I set up my automatic transfer, I was checking out my credit union's website to see if there was anything new.  I saw that they had student loans now.  Wow, credit unions normally have better rates than anyone else and variable private loans can be found as low as 2.75%, whereas fixed rates can be found as low as 6%.  So, I try to check it out and I can't find a rate ANYWHERE.  I can find the rate for every other loan but not this one.  But, I have gotten in the groove and want to know!  I pick up my phone and call.  Go through the automated system and finally get a person and do you know what the lowest rate they had was? 9%

    They say they have private student loans but charge the personal loan rate?  Why would you do that?  I asked the woman for a reason that they were so much more expensive than their competition.  And was just told that they don't do many loans so they keep the interest high.  Don't you think it might, just might, be the other way around?  Your rates are way over the norm so no one uses you.
    Do they not legally classify these loans as private loans and therefore the loan is not insured by the federal government?  Oh no, they do.  So.... what is going on?  Why is a credit union price price gouging? 

    I don't know if I am cranky enough to write a letter to our board about this or not.  If I do, I will report back.  However, it does make me happy I checked and not trust in their past behavior.
    Never assume when it comes to money, always confirm.