Meanwhile my alma mater is $71,830 a year up more than $12,000 from when I graduated 10 years ago.Montana State University is working to reduce student debt by educating the students about how their choices affect the amount they owe. What a novel idea!
MSU student loan debt actually drops $1,200
Finally, some good news about student loan debt.www.bozemandailychronicle.com
Individual Retirement Account. Some years ago the American government made a change to our tax code allowing for people to open this kind of account, which allows an an individual to invest money, and then not have to pay taxes on the dividends and capital gains, as long as the money is not removed until retirement age. There are a lot of other rules and details, but these are the basics. IRA’s were created for many reasons, some of which include: government benefits for retired persons are projected to be meager/inadequate for all but minimal living expenses, pensions from employers were no longer offered to new employees, and some corporations allowed their own version of an IRA called a “401(k)”, which is another tax code provision - but not everyone at a particular company was eligible to have a 401(k) to invest tax-free, and some people are self-employed, so the IRA basically opens the field to most everyone to fund their own retirement.
Ah thank you, that's called superannuation in our country, mandatory 9.5% of our wage, going up to 12% soon.
I think the primary difference is that IRA's are personally funded, with no mandatory minimums, only maximums. It's a personal account that isn't tied to an employer (typically) in any way. The 401K mentioned is typically tied to an employer, but most only contribute by matching what you personally decide to donate up to a certain percentage (usually from 1% - 5%). Again, if you don't personally contribute, many employers are contributing either.
Taking this one step further, but neither will cash value life insurance taken out of a properly structured life insurance policy affect a FAFSA.
I 100% agree with this advice - involve them. And I'd add, consider working with some sort of financial planner.
As a financial planner, I approve of this message. HAHAHA
This and that we are subsiding students with relatively cheep government provided student loans.
Easier said than done. I would show him what that money could look like if it was invested for his retirement.
@JohnCushman would likely say “hookers and blow”. I’d say invest it all in e-bikes.
Well, after he buys a RUM...
Or throw it all on a Dall sheep hunt, which is effectively what I did with some insurance proceedsWell, after he buys a RUM...
I believe feds hold back 25% as a withholding but most states don't...but both fed and state tax it at ordinary income (so watch out for the state piece!). If he's 18, he's actually in a good time to win it given presumably low marginal bracket.
His biggest asset right now is time + lifting his earning potential, so I'd bend a healthy amount that way towards education.
If he were my kid and he had reliable transportation, I'd suggest ratios like for the final "investable" amounts (ie, post tax, post tithe if that's your thing) go into:
1) 40% towards education...trade school is a decent idea.
2) 20% starting up a ROTH (if he has any earned income for the year received...lottery earnings don't count as earned income), and get the seed germinating that putting money in there every year is a good idea. "Index funds only" rule.
3) 15% towards building up an emergency 6 month fund (we all need it!)
4) 15% starting a "house fund" (agreed with @Wildabeast on the rent comment)
5) 10% fun money (he is 18 after all)
