The College Investor – Young Adult Personal Finance and Investing

Last Minute Frugal Valentine’s Day Tips

by Robert on February 13, 2012

Valentine’s Day is tomorrow, and that means that if you have a significant other, some effort will be required! If you’re on a budget, you may be worried that you have to break the bank to make this day special – but you don’t! There are a lot of frugal ways to make Valentine’s Day special on any budget!

Here are some things you may consider to do for your special someone. Remember, I’m a guy, so these may or may not work out for you.

Make Your Own Card

Have you been to Hallmark or your other local card shop lately? Every card available is usually around $5! That is crazy, especially for a piece of paper you’re expected to write in anyway (if you didn’t know that – now you do: you MUST write your own sincere thought regardless of how well any greeting card expresses how you feel).

Making a card is very easy – just get some thicker paper, fold it in half, and you’re set. A good idea is to get a photo of the two of you, and cut it out and glue it to the front. Then, on the inside, write why it is a favorite photo of yours, and how she/he makes you feel!

Cook Your Own Gourmet Meal

Valentine’s Day is another justification for restaurants to raise prices to crazy levels. Many fancy places also only allow you to order from “special” menus on holidays like Valentine’s Day. If you aren’t looking to spend $100+ on a meal, consider making it yourself.

No matter how bad of a cook you are, there are easy meals you can prepare – think a main course, like steak or fish (stay away from cooking chicken if you can’t cook), a salad, a side dish (maybe potatoes because they are easy), and a dessert – maybe a cake or pie.

If you keep it simple, you can have a simple, cheap, and romantic Valentine’s Day meal (just don’t forget to put some candles on the table).

Make Something For Your Significant Other

If you don’t have the money to buy something, you can always make something. Have you ever thought of making a CD or Playlist of songs for your significant other? Maybe you are handy and can build something? Or, maybe you can just plan out a day to do your significant others favorite activity.

Whatever it happens to be, there are a lot of thing you can do that can make the day special, and they don’t have to cost a fortune.

Readers, do you have any other frugal Valentine’s Day ideas for readers on a budget?

9 comments

Can Debt Hurt a Relationship?

by Robert on February 10, 2012

Photo Credit: Paul Glazzard

I feel like everywhere you turn, debt is abundant. That is sad…

However, with that debt comes a person, and that person will eventually form a relationship. That relationship will using be built around everything but money – love, friendship, shared interests, etc. And when the money piece comes out, will the relationship be jeopardized?

Love and Money When You’re Young

If you’re young, and having fun, money and debt most likely never play a part in a relationship. As long as “date night” can be afforded, everybody is happy. It’s good to be young, and buy expensive things, and get an expensive education.

However, as things become more serious, and you start thinking about settling down, getting married, kids, and buying a house, that debt from your “wild and free” days can quickly come back to haunt you.

So, while there is no guilt now, “young” may only last a few years, and then you will be guilty as you try to make things work with a loved one.

Next Next Phase

As things get more serious, this is where debt can really harm a relationship. As couples try to get the finances arranged for this new “couple”, it can be a challenge to deal with debt. Some couples didn’t even know how in debt their partners were until this phase, and that can cause real trust issues.

The best thing you can do is be open and honest about debt, and what your plan is to pay it off. You also need to consider what caused the debt, and is that behavior likely to continue? Was it for education, which is now over, or was the debt credit card debt, and it was accrued by poor spending and budgeting habits.

If the costs incurred are over, this phase is a great time to support each other in paying it off. However, if the debt is a behavioral issue that hasn’t changed, it could be a big red flag for the relationship.

What Couples Can Do

If you are in this situation, and are concerned about your other half’s debt, the biggest thing you should do is communicate about it. When communication, discuss how it makes you feel (it could be a trust issue, or a fear of being saddled with the debt in the future).

As your relationship progresses, maybe you can do things to alleviate the fear. Insurance could be a good thing to look at – should something happen to you, your significant other won’t be saddled with any of your debts. If you’re thinking about getting married, maybe you consider a prenuptial agreement that clearly spells out each party’s responsibility for their debts.

Whatever the case, you need to be open, honest, and up front about any debts you have, especially as a relationship progresses.

Readers, what are your thoughts? Can debt hurt a relationship?

6 comments

Free TurboTax 2012 Premier Giveaway and Review

by Robert on February 8, 2012

Turbo Tax 2012

It’s a little bit over 2 months until the tax deadline, have you started doing your taxes yet?

If you haven’t, you may want to consider giving TurboTax a try. I have used TurboTax for years, and I love how easy it always is to input all of my information. Furthermore, each year, TurboTax makes it easier to automatically gather your information.

Do you use Quicken or Mint? If you do, TurboTax can easily import all of your information automatically.

Just like last year, I’m going to give away a FREE copy of Turbo Tax Premier – which is designed for individuals who own investments and rental property. This is a $50.00 value!

The great feature about TurboTax is that there are options for you to file your taxes for free! Not only that, but you can start your taxes on any level of TurboTax for free, and you only pay when you file. That is awesome if you want to see how your tax liability is panning out prior to filing in April.

Check out the link, and learn how you can get free federal e-file!

Here is some basic information about the different levels of TurboTax.

TurboTax Federal Free Edition

The TurboTax Federal Free Edition is designed for individuals who don’t need much tax guidance. It handles wages and income, as well as deductions such as mortgage interest, childcare, or medical expenses.

This edition is designed for individuals who file a Form 1040, Schedule A (Itemized Deductions), Form 1040A, Schedule B (Interest and Dividend Income), and 1040EZ. If you have investments or own a business, you need a different version.

TurboTax Deluxe

If you need a little more help, or want the system to walk you through your return, this is the edition you should consider. It has everything the Federal Free Edition has, but it has additional guidance to help you find and maximize your deductions.

This version is best if you own your own home, donated to charity, have significant education or medical expenses, have childcare expenses, or lots of other deductions.

TurboTax Premier

TurboTax Premier is the version we are giving away for the 2012 Free TurboTax Premier Giveaway!

This version is designed for individuals who sold stocks, bonds, mutual funds, or options for an employee stock plan. It also is designed for individuals who own rental property or are the beneficiary of a trust or estate (and received a K-1 form).

This is the version I have used for years, and it is extremely helpful at managing investment gains and losses, and making sure that you track everything correctly.

TurboTax Home and Business

Finally, TurboTax Home and Business is designed for individuals who own their own business. It includes everything the Premier version has for investments and rental property, plus the tools you need for your business.

This version is the right choice for you if you are a sole-proprietor, consultant, 1099 contractor, or single-member LLC. It is also a good version if you must prepare W-2 or 1099-MISC forms for your employees or contractors.

The TurboTax 2012 Giveaway

This year, I’m giving away a free copy of TurboTax Premier Edition. This usually retails for $49.95!

The contest runs from today until Saturday, February 25, 2012 at 11:59PM PST.

How do you enter? I’m using Rafflecopter to keep this contest organized, so follow the details below. You MUST comment to be included!
[click to continue…]

8 comments

Supercharging Your Returns with Options Trading

by Robert on February 7, 2012

If you are looking for a way to boost your current investment returns, option trading could be something you may want to look into. There are a lot of ways that you can use options to leverage your current portfolio, or for a new investment all together. It is important to remember that, although options can be complex, they are able to be used in almost any risk environment, which can make them a great play to any portfolio.

Using Options in Your Current Portfolio

The most common way to use options in your current portfolio is to write what is known as a covered call. This is when you are currently long a position, and you write a call option on that asset in an attempt to generate income from the asset. The income you receive from this strategy is the option premium. Many people employ this strategy when they have a short-term view of the asset that is neutral. They will write a call just above the price they think it will reach, and collect the premium. The only downside to this is if there is a major price movement and you are forced to sell your position.

You can also do what is known as an insurance put. This is designed to protect paper profits on a stock, without actually selling the stock. The idea is that this is preferable to selling shares because you could lose on future gains if the stock goes up. You employ this strategy by purchasing a put below the price of the current asset (out of the money). You do this because an out of the money put is usually pretty cheap, but if the stock does move below the strike price, your put’s value will increase.

Adding in Options to Your Portfolio

If you want to add in options, you can do this in a variety of ways. Many accounts will let you trade stocks and options together in a single account. One such place is OptionsXpress by Charles Schwab. This brokerage allows you to trade stocks, options, and futures all together. They even offer incentives such as an account bonus or free transfer if you use the OptionsXpress Promo Code.

It is important that you do your homework before you get started trading real options. The great thing about OptionsXpress is that it has a virtual trade account, which allows you to use virtual money to place trades. The benefits of this are that it allows you to test out your options strategies before investing real money. That way, you can get used to how options work, without risking your actual portfolio.

A second great feature is the “All-in-One Trade Ticket”. As you get into more complex trades – such as spreads – you will want to place multiple trades at once. A common example is buying a call and put together, or two calls with different strike prices. Since there are actually two trades, it could get complex, but OptionsXpress makes it easy.

So, if you are looking for a way to supercharge your portfolio, look into adding options.

Readers, what are your thoughts on adding in options to your portfolio?

4 comments

Student Loans: Banks Win, You Lose

by Robert on February 6, 2012

When you go to your financial aid office to think about getting a student loan, do you think that financial aid officer is working in your best interest? What if you just have to click the mouse three times on a webpage, and suddenly you are approved for $20,000 in student loans? Who do you think is winning? How is that possible?

When you get a student loan, most of the time you are getting a federal student loan, which means the federal government is insuring your loan. Yes, the school or university you are attending facilitates the loan, but it is still usually a private lender that loans the money, which is insured by the government.

As such, nobody is advocating for you, and you need to make sure you understand what you are getting into when getting a student loan. Think of the financial aid officer like a used car salesman. They work for the university, and are trying to help you finance your education any way possible so that the school gets paid, not so you can go there. They will work any payment plan, loan plan, work study possible so that they make money, not for you. Keep that in mind at all times!

Student Loans – Banks Always Win

If you look at my diagram on the right, you can almost see why the banks always win. With federal student loans, their loan to you is 95% insured by the federal government. The bank doesn’t care who you are, or your ability to repay the loan. Want $200,000 to go be a social worker, who may make $46,000 after 5-10 years of work, and whose entry salary is probably going to be around $30,000? Sure! It’s not my money!

That is the mentality that banks have since they have no risk – only reward (sound similar to the housing crisis?).

Government Won’t Lose Either

The government, since it is essentially on the hook for your debt, has made it hard to not pay. One of the biggest strings attached to all student loans is that it is nearly impossible to get discharged in bankruptcy. So, you basically owe your loan for life, unless you qualify for some type of government program to get it forgiven (which is still decided at the hand of the government).

Here is a statistic recently reported by the White House Office of Management and Budget. The federal government actually nets $111 for every $100 in student loans that has been defaulted on. If you have never defaulted, the lender usually gets $122 for every $100 borrowed.

Ummm…nobody seems to lose? Not the bank? Not the government who insures the loan? Even if you refuse to pay or can’t pay, the government will ensure it gets its money back – and it does this through wage garnishment and other means.

Bottom Line – YOU Lose

At the end of the day, the only person on the hook for these loans is you, and you will pay for them one way or another. The government, even though it insures your loan, isn’t going to let itself lose money. And the bank…the bank doesn’t care either, because it either gets $122 for every $100 lent if you pay, or the government gives it $95 for every $100 lent if you default.

At the end of the day, you are the only one that can lose with student loans.

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