15 Ways To Save Money In The Summer

15 Ways To Save Money In The Summer

“Summertime and the livin’s easy.” George Gershwin (Porgy and Bess), sung by Ella Fitzgerald

Summer is here!

It is a good time to spend more time outdoors.

Don’t miss a good opportunity to save money this season while spending time with your family. I spend a lot of time in Litchfield County and the Berkshires, essentially our local environs in the summer and year-round. However, our recommendations came be found in many parts of the country.

When it comes to saving money, get your whole family involved. It is always a good time to speak to your children about family values, particularly budgets, wants versus needs, spending, and saving.

15 Ways To Save Money In the Summer:

#1 Eat more fruit and vegetables

It is always a good time to eat healthier with better choices at your local grocery. Better yet, go to the nearest farmers’ market. Fruits and vegetables are even more plentiful in the  warmer months. Go to a farmers’ markets near you. They come to the cities, or you can order from a cooperative. Healthiest picks at lower prices.

Connecticut has over 100 farmers’ markets seven days a week. We find them in virtually every town in the Northwest corner of the state.  There, you pick among locally produced seasonal fruits and vegetables from the region. Many carry breads, cheese, honey, syrup, flowers, herbs, sausage, jams and jelly, chocolates and mushrooms.

#2 Have A Picnic

Find  parks, waterfalls, hills and mountains. Bring a blanket, some wine, cheese and other delights. Find a picnic table. Enjoy the outdoor weather, scenery, and birds chirping. Go with your family and friends. Many state parks are free, have trails for hiking, fishing and sitting by waterfalls, like Kent Falls State Park. Save some money as you go to fewer restaurants in the summer.

#3 Garage/Yard Sales

Declutter your home and organize a sale with your family. Consider combining with homes in your neighborhood. I recommend having these events, starting on Friday, rather than Saturday and Sunday, typically the more crowded days. Avoid July 4th and Labor Day when people have more BBQ’s and families visiting.

Advertise with large signs so people riding by can see the dates and location at 30 miles an hour. While you can advertise in your local paper, there are a few social media sites try like yardsalesearch.com and garagesalehunter.com.

When holding your event, label prices clearly. Consider lowering prices late in the day to sell off what you have left. Experts have said these sales can net $500 and up if thought out properly. Aaron Lapedis is respected in this area and has written “The Garage Sale Millionaire.” 

#4 Outdoor (and Indoor) Entertainment

There are many cheap and free music festivals, film festivals, country fairs, theater, and wine tastings across the country. Two sources to find summer events in your area are Cheapism and Debt.com.

Locally, we have a robust calendar with tickets starting as low as $5. In Litchfield, we have a Connecticul Wine Festival on July 20th and Podunk Bluegrass Music Festival on August 7th to name a couple. There are plenty of choices on visitnewengland.com providing far more than I can list. In Massachusetts,  Tanglewood Music Center and Shakespeare & Company have superb offerings at great value.

#5 Become An Uber or Lyft Driver

If you are off from school this summer, whether a student and teacher, you may apply to be a driver. Demand may be less in your area so strategize by waiting in a queue at the airports or busy areas. Make sure that thr air conditioning works well in your car. According to ridester.com, you can pick up $155-$210 per month. Consider doing this as a side hustle in the fall if your schedule permits.

#6 Staycation or Vacation or Both

There are more ways to go away with your family at many different price points.

The benefits of a staycation is to be a tourist in your own backyard, returning to your own bed at night, and not having to pack and unpack. It can be cheaper but requires planning so your family doesn’t just laze around.

Everyone should have input and it should be a mix of play, fun, adventure, and sightseeing. Find adventure beaches, lakes, and parks on nice days. Consider museums and theater on rainy days.

Vacations Can Be Cheaper At The Last Minute

To save money on vacations, consider booking flights last minute when tickets are often cheaper. Book early morning flights. Your kids may hate you but they can sleep on the plane. This works if you and your family are flexible and will several alternative places in mind.

Someone told me to search flights via an incognito window and a regular window. You sometimes get two different prices. Before you officially book, consider if there are available accommodations.

Airbnb may help in finding attractively priced rooms to stay. It is great way to save money when travelling with kids and one hotel room will not cut it. Booking a last minute cruise may also work well.

Driving Vacations

Driving vacations works if everyone is comfortable in a car for hours at a time. Planning stops are vital for breaks. Our kids sleep in the car so it often defeats the purpose of going on scenic routes. When I wake them they are often crabby… I think I just talked myself out of a driving vacation. It works well when everyone enjoys the ride and  its a “spur of the moment” adventure.

One way to save money on a trip is consider the costs ahead of time for the some the sights. A visit to a Disney Park is far more expensive than going to a National Park.

# 7 Disney Parks

The one day tickets for Disney per family member over 10 years old (3-9 years are not much less) range from $129-$199 for regular or peak prices, whether you are going to one park or hopping to their other parks on site. Food and beverages are super expensive in the park.

There are slight discounts if you buy multi-day packages but you will need to book your hotel stay which is expensive if you stay within the park. If you are going this summer, try to target August when it is off-peak and less crowded (but very hot!).

#8 National Parks

There are so many parks to visit with families in the US. Annual passes per vehicle are $80 per year. There are more than 2,000 Federal recreation sites. Certain parks particularly cater to children and are clustered in areas you can drive to like those in Utah. Hiking, fishing and rafting can be enjoyed by families. You can stay in hotels not far from entrances and your kids can use the pools.

# 9 Raise Your Thermostat

Setting the thermostat a few degrees higher in the summer will not likely be noticed by your family (maybe the dog, though) but it does save money. By some accounts, each degree raised over 72 degrees, saves 1-3% in energy costs. We raise the thermostat in rooms we don’t occupy as much and have ceiling fans that help with cooling. The nights are cool so we rarely use air conditioning.

Unplug less frequently used appliances. Most homes run more than 40 appliances. These account for about 10% of our energy bill. You will not only save costs but plugged appliances can be a fire hazard.

#10 No More Plastic Bottles

We have not used plastic bottles for a long time, especially in the summer. They never stayed cold enough and the suspicious bubbles worried me. I have the 32 oz. steel insulated bottle by Takeya which keeps the water cold significantly longer. I bought one for each of my family members but they prefer smaller bottles to fit with our car. I am happy with mine.

#11 Cut Out Expensive Lattes Even Iced Ones

I had to be weaned off lattes after I finished law school and studied for the bar in Starbucks. I enjoyed iced lattes in the summer but at $5 a pop, it felt like an investment. I have also stopped drinking carbonated water and soda in restaurant. If I am going to drink in a restaurant, I’d rather have wine or martini so my latte savings go there.

#12 Lawn Care

Keeping your grass healthy and green is expensive. A sprinkler system is generally can be used to save water costs. If it rains you don’t need the sprinkler on. You can reuse your rainwater by installing a collection system near your roof or gutter system. If you are planning a garden, consider planting low-water perennials which are drought-tolerant and use more wildflowers.

#13 Visit Your Library

Use your local library for books, online music, audibles, and film. We own a lot of books, always a treat for me, but they take up a lot of space. I enjoy going to our wonderful small town library in Goshen, especially in the summer, and walking out with my arms full.

I confess to being a bit of a nerd. Growing up, my mom, my brother Mark, and I went to our library the last day of school with summer ahead. It was our ritual to take 12 books each and put in my mom’s shopping cart. They were due the day after Labor Day, only time of year we were able to keep them longer than four weeks.

#14 DIY Projects

Learn how to do more things on your own without outside help. Our kids tend to be far more handy than my husband or I. They are also more willing to watch videos to learn how to repair, clean, and make things in our home. We bathe our dog more often in the summer because our dog rolls in the dirt. Less trips to the groomer helps our wallet.

#15 Delay Purchases You Want

Don’t buy everything you want immediately. Delay gratification of buying things you really don’t need. Give yourself time to research and decide if you want it. You can even put into your shopping cart online for a few days. You may even find a coupon there that provides a few dollars off your purchase.

It is often fun to save money by reducing costs, spending les,s or making some extra money from a side hustle. It is particularly rewarding when your kids participate in the endeavor. My daughter Alex has particularly shown an interest in recent months. She keeps coming up with ideas. She has share these thoughts with her teen friends on social media.

I am sure I have missed some ways to save money. It feels good to experience to have extra money for investments, a vacation, a car, or something of value. How are you saving money these days?

Please share your experiences and thoughts with us. We would like to hear from you!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10 Tips To Handle Stock Market Volatility

10 Tips To Handle Stock Market Volatility

“The intelligent investor is a realist who sells to optimists and buys from pessimists.”  Benjamin Graham

 

“The stock market is a device to transfer money from the impatient to the patient.” Warren Buffett

 

The financial markets are always in flux.

Investors tend to dislike turbulence but need to understand that it happens. Periods of calm alternate with volatility. Turbulence is a force of nature of the stock markets to be reckoned with. Often, that is the best time to buy stocks of good companies.

Markets regularly adjust to changes in economic fundamentals, business cycles and current valuation levels. Stock prices are influenced by interest rates, sensitive to economic growth and steered by company earnings.

Higher levels of noise can impact the financial news cycles, adding more angst for the average investor.

Market Volatility Should Be Expected

There have been 11 historic bear markets (declines of 20% or more from their high) since the Great Depression (October 1929-June 1932). That was among the longest and most severe, reflecting an 86% decline from the high to the low S&P 500 prices  in 34 months.

In comparison, the bear market caused by the Great Recession lasted from late 2007 to March 2009, causing a pullback of 56%.

Those were particularly painful declines, causing many investors to lose money as they sold their shares out of fear. Had they held on to their shares, or bought more at the trough, they would have seen the market rise 68% by March 2010.

Who can forget the tantrums the market threw after the Powell-led Fed raised the fed funds rate by a quarter of a point in mid December 2018. This caused the Dow to lose over 1,800 points within the following four trading sessions in a volatile year. Stocks have recovered in 2019 year-to-date.

Related post: 11 Reasons Why Investors Need To Understand The Fed

Corrections are more common, less severe and shorter than bear markets. They occur about every 15-17 months with price declines of 10% from their high. While we can’t control when markets fall into bear territory or corrections, we can better prepare for them with a financial plan.

A Good Financial Plan Helps To Navigate Volatility Better

Having a financial plan that helps you meet your financial goals for the long term is important. Investing for the long term does not mean you don’t make changes in the short term to address market movements. You may also want to speak to a financial planner about your risk tolerance and plans for the future.

1. Put Your Financial Life In Order

Before investing, make sure you have savings that can pay for your basic needs now and for any unforeseen circumstances. Create an ample emergency fund that is liquid and can take care of six months of monthly fixed costs such as rent or mortgage, food, and car payments, and along with unplanned financial costs.

Take advantage of your employer’s 401 K retirement plan, if offered, by contributing the maximum amount from your paycheck to their match. By saving for retirement, you are beginning the process of investing for your future.

2. Diversification

As you accumulate assets, you want to allocate your portfolio among different classes and different types of accounts. You want to spread risk into different but complementary baskets such as stocks, money markets bonds, and real estate.

Invest some of your money in cash-equivalent securities like money markets and Treasuries. While they will generate lower returns, they will be a comfort in times of market volatility.

Diversification of your portfolio is important whether on your own through outright stock purchases, by buying low-cost index funds, or in consultation with a financial advisor.

Related Post: 10 Tips To Diversify Your Portfolio

3. Asset Allocation

You should target different allocations based on your age and retirement plans.

Usually, the younger you are, the greater the risk tolerance you have. You will invest differently when you are in your 20s and have a longer time horizon. Compounding your investment returns can enhance your wealth substantially.

In your 60s, preservation of capital is more of a priority because retirement is approaching. Review your investing and rebalancing strategies periodically to make sure your holdings reflect your goals.

Set up different investing accounts depending on its purpose, notably for retirement, 529 savings plan, and insurance.

4. Don’t Sell Your Stocks Out Of Panic

We get very emotional when we lose money in the stock market. I know I have gotten anxious when my stocks are declining for days or weeks on end. Funny how we don’t react that way when our stocks soar in our portfolio.

It is not unusual to feel dread at prolonged declines in the market. The market can be a very humbling place to be in. Sometimes stocks decline on no new news yet the drops feel like they are on automatic pilot. The financial news headlines sound like the opposite of what you read the day before.

Remember that you haven’t lost a penny until you sell your stocks. The stocks are only declining on paper. If you sell your stocks based on fear, you may be making a premature exit. In the past, I have sold some positions in choppy markets only to find it difficult to buy them back  when the market recovered.

It helps to remember your long term investing perspective. Weakness in the market is part of the short term adjustments that occur regularly albeit unpredictably.

5. Keep Emotions In Check

Don’t act irrationally. If you have food on the table, a roof over your head, you and your loved ones are healthy, things are good.

“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” Charlie Munger

 

Biases Cause Us To Make Mistakes

Avoid “action bias.” Behavioral scientists use that term to describe why we sell our stocks when markets go down. We feel we need to do something when we get anxious. Sometimes we sell our risky assets for reduced amounts of cash.

Sometimes we sell our winning stocks that have some gains in them. This is known as “disposition effect.”  This is often a mistake because these stocks may have better long term potential and you may end with a portfolio that has more losers than previously.

Availability bias is a cognitive bias that may cause people to incorrectly assess the likelihood of events by remembering past events. For example, the correction in the market may remind us of what we experienced during the financial crisis. We recall how stocks dropped more than 50% during a once-in-a-lifetime event and sell our positions to avoid repeating those losses.

Anchoring

Another mistake commonly made is when we don’t want to sell a stock because it is below the price we paid. So we hope it will get to that price and sell it then. This called “anchoring.”

We need to look at the stock at its current price and decide if we still like it for its fundamentals, rather than what our cost is. The company may have stumbled and a new management is promising. Keeping the stock makes sense. However, if the company’s fundamentals have deteriorated or if it is restating past financial statements, we may need to sell this position even if it is below our cost.

Overconfidence

Another bias when invested in the market is overconfidence. Studies show that 75% of us see ourselves as above average, which is mathematically impossible. Therefore, overconfidence is especially a dangerous bias to have in financial markets because we can overestimate our knowledge and abilities while underestimating risks.

6. Don’t Time The Market

You always hear the adages: “As January Goes, So Goes the Year,” “Sell in May and Go Away,” “Buy Low” and “Sell High,” but no one can truly time the market. No one can predict the beginning of a recovery with precision or sell on the perfect day before the start of correction.

If you must invest according to a saying, then use one of my favorite’s of Warren Buffett’s: “Be fearful when others are greedy and greedy when others are fearful.”

Buffett’s wisdom is contrarian and means that when stock prices rise and markets get overbought, it is time to exercise caution. On the other hand, when stock prices decline and the market is oversold, it is time to look for bargains. Don’t buy as markets climb.

Jumping in and out of the market is fraught with costly mistakes for average investor, besides the commission payments. Good investors maintain their stock exposure while making adjustments to their holdings and allocation.

7. Be Patient As Investors

Most investors lack patience, especially younger investors. A Schroders global investor study found that investors tend toward short-term investing, expecting to hold their investments three years on average. However, investors ages 18-35 desire a minimum return over 10.2% but expect to hold investments for just 1.5 years. This is unrealistic.

Over the longer term, stock investors have enjoyed annual returns of around 10% based on S&P 500 prices over 80 years. However, investors rode out “boom and bust” cycles during that time .

It is no wonder the best investors like Warren Buffett practice “Buy-Hold” strategies for their investment portfolio and outperform the market.

Tolstoy said, “The two most powerful warriors are patience and time.”

 8. Use Disciplined Approaches

Pruning Your Winners

Long term investors often prune their positions that have become outsized in their portfolios. Investors should practice good discipline. Consider selling part of your position when you have reached a gain of 20-25% over your purchase price.

Knowing when to take profits is always tricky. As a subscriber to Investor Business Daily and their products, I have benefited from exercising their prescribed discipline. A wise Wall Street adage says, “Bulls make money, bears make money, pigs get slaughtered” reminds us not to get to greedy about our profits.

Dollar-Cost Averaging

When buying a new position for your portfolio, buy your targeted stock in parts. For example, if you are expecting to buy a $20,000 (or $100,000) position of a stock, start with 25% of your position, and use your cash to buy the dips over time to bring the average cost of the position down, if you still believe strongly in the merits of the holding.

There will usually be opportunities to buy at a lower price. If it doesn’t come, you probably have a high quality problem with a potentially winning stock.

9. Meeting With A Financial Professional

As individuals, our risk thresholds differ based on our lifestyle, age and future plans. Investing is a wonderful way to grow your wealth. Building your goal-oriented personal approach requires diligence, knowledge, and perseverance.  You need to understand investment risk, allocation, diversification, and how to make rational financial decisions.

It is prudent to meet with a financial professional to help you proactively plan and implement strategies to achieve your financial goals. These strategies can broaden to tax planning, estate planning and family wealth.

It is also helpful to have a sounding board when you feel concerned about market turbulence. They can talk you down from the sometimes emotional roller coast that accompanies being an investor. Depending on your financial professional, they can provide their own wealth of knowledge and experience and that of the team they may be working with.

10. Your Financial Plan Is Your Long Term Road Map

It probably goes without saying, that you need to be diligent about your assets, their returns and your comfort level with your financial professional, if you have one. Do your own research. There are a lot of resources to educate you about your investments, read company releases and financial documents, listen to or read company transcripts from investor meetings or earning calls.

Do your holdings fit with your current lifestyle. Review your plan for potential life changes like marriage, children, divorce, college, second careers, and retirement.

There are many trade-offs you and your family may need to make. A good financial plan should be reviewed throughout your life. There is an indelible scene from Alice in Wonderful by Lewis Carroll that resonates with investors and financial planners alike.

Alice is at a fork in the road. “Which road do I take?” She asked.

“Where do you want to go? responded the Cheshire Cat.

“I don’t know,” Alice answered.

“Then, it doesn’t matter” said the Cat.

With a sound investment strategy and a good financial plan, you can build your wealth for the long term.

Consider subscribing to The Cents of Money blog and our growing community!  Get our free weekly newsletter and other freebies to help you.  We have a free email course that deals with several key personal finance topics.

What do you find most challenging about investing? What works to offset that challenge? Please share your experiences with us. We would love to hear from you!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10 Benefits of Going To Community College

10 Benefits of Going To Community College

“I wanted to race cars. I didn’t like school, and all I wanted to do was work on cars. But right before I graduated, I got into a really bad car accident, and I spent that summer in the hospital thinking about where I was heading. I decided to take education more seriously and go to a community college.” George Lucas, American filmaker

 

“With the changing economy, no one has lifetime employment. But community colleges provide lifetime employability.” Barack Obama

Attending a community college is attracting dependent students with varying parent income from a broader economic background. Though a large proportion of students come from low income families, more students from middle-to upper middle income with annual earnings of $100,000 or more, are turning to community colleges

The rising national student debt serves as a burdensome overhang on individuals for years. Many postpone their plans like getting married, having children, buying a home or saving for retirement.

Many Merits

The value of community college is being realized in a post-recession student debt crisis world. Recent studies have highlighted improving earnings prospects, particularly associated with certain majors like nursing, engineering, STEM, and  job-specific or skill training programs.

There are more than 1,100 community colleges nationwide currently enrolling  more than 12 million students in classes annually. According to the National Center for Education Statistics (NCES), 34% of all undergrads in the US attended community colleges in 2016 (17% full-time and 58% part-time).

Two Year Degrees

Students can earn two-year degrees, notably Associate of Arts, Associate of Science, or Associate of Applied Science, along with certificate programs that take various times to complete. The two year degrees may sometimes be completed in that timeframe but on average are closer to 3.5-4 years.

Colleges sometimes partner with four year institutions so students to earn joint degrees such as forensic accounting.

I am a tenured professor at an urban community college and I have added my two cents where helpful on the hopes I don’t sound too biased.

Let’s review the benefits and drawbacks of community college.

 

Benefits:

 

1. More Affordable To Attend A Community College

The average annual (two semesters) tuition and fees in 2018-19 were $3,660 for instate public community college as compared to $10,230 instate public four year college, $26,290 out of state public four year college and $35,830 for private colleges and universities. This doesn’t include room and board costs.

According to The College Board, 56% of independent students and 50% of dependent students at 2 year colleges do not pay any tuition and fees because of grant aid and tax benefits provided.

Additional room and board annual  ranges from $8,660-$12,680 for community colleges and the higher priced four year private college, respectively. About 28% of community colleges offer on-campus living arrangements. However, most community college students do not incur room and board costs. They either live off campus or with their parents near school.

Related Post: How To Pay For College: A Family Guide

 2. Use Your 529 Savings Plan

Tuition costs associated with community college are qualified expenses that can be withdrawn tax-free from your 529 Savings Plan. To reduce your need for borrowing, make use of these tax-deferred plans by saving for your child’s college education as early as feasibly possible.

3. Less Student Debt For Community College Students

As a result of lower tuition and many living at or close to home, community college students carry less debt: 59% earned two year degree without borrowing to pay for school; 18% graduated with less than $10,000 in loans. Most of the loans are applied for through the Federal aid,  specifically, by filing a FAFSA (Free Application for Federal Student Aid) application.

Although they have less overall debt than students in four year colleges, the community college cohort default rates (CDR) for 2015 dropped to 16.7% from the year-earlier. However, the national default rate was 10.3%, with public four year institutions having default rate of 7.1%.

CDRs are the percentages of a school’s borrowers who start repayments on certain federal loans during a particular year. Default rates rise to the 20+% range when repayments are calculated within 10 or 12 years of entering college. The higher rates are often concentrated in minority neighborhoods.

4. A Great Place To Strengthen Your Focus and Transcript

Many students have less than stellar grades in high school and aren’t able to pursue scholarships or get into their first school choice. They may not  know what major or career they are interested in. Community college may be a great way to start, achieve A’s in the basic courses you would be taking in four year schools anyway.

It can provide extra time to buckle down, learn about different majors, and explore different options. It gives more time to explore four year colleges that meet more ripened expectations. Personal and academic growth occurs at different speeds and maturity. These colleges can be an intermediate place for strengthen your writing, communications, critical thinking, and technical skills.

Finding Our Interests At Different Times

I started college at a 4 year public college just as I turned 16 years old. I was a first generation to go to college. I often felt lost, lacked motivation, and focus in my undergraduate studies. I opted for a liberal arts major as an undergrad. It wasn’t until I enjoyed working at a bank and I transitioned to a business (MBA) program that I found my passion later in my 20s.

5. Greater Flexibility

For those students who are parents, help their families,  have work schedules or need amenable arrangements, community college can be more accommodative. There are night and weekend classes for students who have 9-5 jobs, or need to adjust class schedules as Uber drivers, for example.

Often, adult students return to school after taking a long break and find their interests in certain programs.

By going close to a college close to home, you have more opportunities to take care of your personal needs. You may have more study space, able to make your meals and do laundry more affordably.

6. More Diversity

Broad demographics at community colleges provide a comfortable atmosphere for older students, working students, parents, and greater diversity. It is well known that two year colleges serve a large proportion of minority, first generation, low income, and adult students.

About 44% of students are 25 years or older. White students account for 49% of students, with a diverse mix of African Americans, Hispanics and Asians accounting for the rest. While 31% of dependent students’ parent annual income are below $30,000, 17% are from parents making $100,000 or more.

7. Smaller Class Sizes And More Support

Classes range from 150-300 students in four year colleges and can be impersonal. Classes are far smaller at community colleges, more likely to be 25-35 students on average. Students get a lot more personalized attention either in the classroom or meeting with their professors. Community colleges offer significant resources to students such as writing and tutoring centers.

8. Quality of Professors

From my experience as a communities college professor, I generally know many of my students well, and meet with them frequently about the courses and their business career interests. (I know I am sounding biased here.)

The quality of tenured professors I work with is high. They publish in high caliber peer-reviewed journals, have worked in their respective fields, and are dedicated to their students. Many professors are faculty advisors for student-run clubs, competitions and events. This leads to more professor-student interaction.

At some of largest and sometimes most exclusive colleges, you may taught by a teaching assistant (TA) linked to your professor. You may have less interaction with your chosen professor than with the TA for certain courses.

9. Community College Graduates Earnings Potential

The average student who completes an associate’s degree will earn $5,400 more each working year than a student who drops out of community college. The average is from the range of $4,640-$7,160 per year based on a working paper by Clive Belfield and Thomas Bailey.

However, a study in Washington State examined returns of graduates with associate degrees in STEM, nursing and construction found that they do significantly better than degrees in humanities, for example.

10. Lifetime Earnings Vary By Degree

Lifetime earnings illustrate the disparity between completing degrees from high school, community college and four year college. On average, lifetime earnings are:

  • $1,304,000 for a high school degree;
  • $1,727,000 for an associate’s degree; and
  • $2,268,000 for a bachelor’s degree.

 

And By Major

The $1 million difference between the above degrees changes to $3.4 million when you calculate the difference between the lowest paying majors and the highest paying majors like architecture and engineering. Quite a gap!

Additional research has also disclosed out that those with associate degree’s in many applied and technical fields can actually outearn bachelor’s degree counterparts five years post-completion.

Mark Schneider has been among the most persistent of researchers who have highlighted the value of community colleges, and potentially greater earnings power, particularly for community college students devoting their studies to health, engineering and technical fields.

Another Example

Community college grads who earned associate in science degrees from Florida community colleges earned an average of $47,708, above an average of $36,552 for students who graduated from a Florida four year college.The reason cited for the big gap was that the community colleges may have had a greater focus on job-specific programs.

Still, an average college graduate with a four year degree will generate higher earnings on average than that of community college grads. However, your major or fields of study matter and completion of your respective degree is essential.

Drawbacks:

1. Course Offerings May Be Limited

Many of the course offerings are basic, designed to address the typical first two years of a traditional program and are credits that will rollover to the senior college. Where there is significant student interest, courses may go beyond the basics.

Increasingly, many community colleges have added more courses to provide certification for certain majors like engineering or nursing, as an example. Some programs offer specialized courses such as Walla Walla College in California, partnering with John Deere to help students understand tractor  mechanics and technical aspects

2. Less Campus Life At Community College

As community colleges are often commuter schools, it will be a less integrated experience than a traditional four year school. However, community colleges will vary. Students may participate in sports, organizations, competitions and clubs.

Students can get involved in student government or write for the school paper. Students at community colleges may be on campus less because of work or living elsewhere.

At the community college I teach and through our business faculty, students proactively join study groups, compete in The Fed (Federal Reserve) Challenge or Mock Trial teams on state or regional basis and become officers of their respective clubs.

3. Credit Transfers May Not Be 100%

Community College Research Center (CCRC) found about 80% of community college students indicate their intention to transfer to four year colleges to complete their bachelor’s degree or higher.

However, research shows that only 29% of students who started in fall 2011 actually transferred to a four year institution. Of the 29% of these students, 42% completed a bachelor’s degree within six years. That equates to about 12% of the 2011 group of entering community college students earning a BA within six years.

How Can This Rate Improve? Be Proactive

Ideally, as community college students benefit from lower tuition costs, you want all your credits to count towards your four year BA degree which usually requires 120 credits. Most community colleges have transfer agreements (sometimes called articulation agreements) which are formal agreements with four year colleges documenting the transfer policies.

These agreements provide assurance that your credits will be accepted by the senior college. There are times though you may lose credits if the content of the community college course is not in line with requirements of the senior college.

Keep Track Of Your Transferrable Credits

Losing these credits can be frustrating for community college students hoping their classes count towards their graduation at four year schools. It is the student’s responsibility as well as their community college’s to keep track of transferrable credits.

It is important to do your research about the programs at your preferred college you may be interested in going to. Meet with your advisers who may have updated information and can guide you during course registration.

Make sure to attend transfer programs on your campus. You can meet with admissions officers from your preferred college list and learn how they will treat your credits before you apply there.

Picking your college is an individual choice and you have many schools to choose from.

For many, community college can be a great choice, allowing you to save money, and mature into stronger students. If you need flexibility because of your life schedule, it may be a perfect solution for you.

You may attend community college as an accomplishment on its own or as a stepping stone to a four year degree or more.

A Favorite Success Story To Share!

Early in my career as a professor, I got to know one of my students in my business law class. A few weeks into the term, she admitted to me that she did not like business law at all. I told her to give it more time and to stop by if she needed help in picking a case for her term project.

The assignment was to pick a constitutional case with a meaningful precedent, and to research future cases and legal research about this precedent. She picked Brown vs Board of Education, a 1954 case. Her paper was amazing with terrific research and she received a well deserved an A.

She said she enjoyed the law class after all. She graduated with Honors, went on to complete four year bachelor’s degree. Before she graduated she came to visit me, asking for a recommendation.

I said, “Sure, but where?”

She said, “You know, professor. LAW SCHOOL!”

This student received acceptances and scholarships from several law schools and today is currently practicing. While this story stands out, I have many student success stories to share in the future.

Have you considered community college among your choices? What was most important to you when making your final decision? We would like to hear from you!

 

 

 

 

 

 

 

 

 

 

 

 

Estate Planning For Digital Assets In 5 Steps

Estate Planning For Digital Assets In 5 Steps

Increasingly, our lives are becoming digitized.

As a result, a bigger proportion of our net worth may be in our digital assets. Yet most of us don’t prepare wills (only 44% do) and if we do, we may not fully address these assets in our estate planning documents.

Estate planning for our digital assets follows a similar process as planning for the distribution of our physical assets but there are unique challenges. The legal landscape is still unsettled, outpaced by technological advances that produce a myriad of digital assets.

Take banking, for example. If we are doing our banking online exclusively, there is no paper trail for our loved ones to locate these accounts easily after we die. Getting access requires security questions and passwords that are readily available. Historically, we could find the latest financial statements to guide us to the assets at the bank.

Related Post: Guide to Estate Planning in 6 Steps

Creating A Plan for Digital Assets In 5 Steps

I will guide you through five steps so that your digital assets, those of value, monetary and/or sentimental, can be properly addressed for your loved ones.

The Internet of Things (IoT) is extending our connectivity in our homes, at work, and socially.

We are nearly all online using broadband, mobile and social media.

Take a look at how we use technology:

  •  70% of US has  high speed broadband connections, largely in urban and suburban areas;
  • 95% have a cellphone, with 77% owning a smartphone; and
  • 70% are engaged in social media and social networking.
  • We spend 3 hours and 28 minutes a day on our computers, tablets and smartphones but according to Nielsen, that mushrooms to more than 11 hours when we include watching, reading, listening and interacting.
  • The typical person has 25 digital accounts, ranging from email to social media. Most (86%) of people commit their online passwords to memory.

As of 2013, a majority of US adults banked online per Pew Research, with 32% using their mobile phones.

In 2017, about half of US adults with bank accounts had used a mobile phone to access an account during the year according to the Federal Reserve Board’s Survey of Household Economic and Decisionmaking (SHED). 

The average person in the US has $55,000 worth of digital assets according to a 2011 McAfee survey.

We are not fully addressing digital assets in our estate planning documents.

Digital assets refers to different forms of content stored in a digital form. A digital estate consists of digital media rights that pay be passed on to our heirs. If we fail to plan, we may thwart our family’s ability to recover important photos, videos, or to pay your bills, after we pass away.

In the past when you died, an executor of your estate, or a personal representative if there wasn’t a will, would sift through your paper records and physical mail recently received by the deceased (known as decedent for legal purposes) to find bank accounts, insurance policies, bills, and such to determine monetary value.

Family members would also go through your assets at home or wherever  to find your physical objects like photos, phone book with your contacts, videos, letters, all in the search for items of sentimental value.

However,  a lot of that information may be in a digital form now. There may be years worth of data and it may be more difficult to find.

Then and Now….Finding Our Legacy Assets

In the days before the Internet, the family and the executor of the estate would likely have been granted access to the mail and the decedent’s home. However, the amount of information we now generate online, which is stored in cyberspace indefinitely has created significant privacy concerns.

If digital monetary and securities account ownership can’t be easily identified those assets may end up in the state treasuries as “unclaimed funds.” Not only can these valuable assets remain hidden, personal debts for the estate may rise as bills go unpaid. Dormant bank accounts are particularly vulnerable to identity theft.

Ajemian v Yahoo! A Major Court Battle

Gateways were erected to stall or prevent access to all types of online accounts by loved ones and their legal representatives.  Access to online accounts have become more restrictive due to legislation, leading to a lot of lawsuits. One major court case, Ajemian v Yahoo! reveals the difficulties families face when requesting access to emails.

John Ajemian had tragically died in 2006. He left a Yahoo! email account but no will or instructions for his account. Using privacy concerns, Yahoo refused the family access to their brother’s personal email. His siblings wanted to find information to invite friends to their brother’s memorial. Later, they sought access as a means to finding their brother’s assets.

A lengthy court battle was decided by the Supreme Judicial Court of Massachusetts in 2018. It held that personal representatives may provide lawful consent on a decedent’s behalf even in the absence of an express authorization in the decedent’s will.

Several social media companies, such as Facebook, have begun providing ways for account holders to create and provide access to legacy accounts after they die. Loved ones would be able look after the  “memoralized” account or have it deleted from Facebook.

We Spend Our Lives On Social Media But We Don’t Own It

Each online service provider has its own terms of service (TOS), making it very difficult for families to easily find access these accounts which may contain personal content dear to them. The Ajemian decision may promote legal change for streamlining the process. Still, it is better for you to have a plan so your loved ones can secure your digital property after  you die.

Your Estate Plan For Digital Assets

Step 1: Create A Digital Asset Inventory

A list of all digital assets, those with monetary and sentimental values, should be categorized and referenced in a document. If you want to provide passwords associated with the accounts, you may want to store the list in a safe deposit box. This list would need to be updated periodically for new and closed accounts.

You can customize your list in the following categories:

Devices. Computer hardware, such as computers, external hard drives, flash drives, tablets, smartphones, digital music players, e-readers, home security systems, medical devices, smart television, digital cameras, and other digital devices like Nest and Alexa;

Online storage at home and work. Any information or data that is stored electronically whether stored online, in the cloud, or on a physical device. Examples would include your Dropbox accounts;

Any online accounts. Email and communication accounts (eg. iphone, Skype and Facetime), banking and other financial sites (eg. PayPal, Square), bitcoin accounts, social media accounts, shopping accounts, photo and video sharing, video streaming accounts (eg. Netflix, YouTube), video gaming,and esports;

Points, Coupons and Loyalty Rewards programs. Shopping, Travel, hotel, airline, grocery, and shopping  accounts where you are particularly a loyal customer and have monetary value on apps or cards.

Websites and blog accounts that you manage for personal and business;

Domain names that exist and are owned by you personally and by your own business;  and

Intellectual Property, including copyrighted materials, trademarks, patents, and any code you may have written.

Step 2:  Decide how you want to handle some of these accounts.

You may want to divide the list into monetary and non-monetary accounts. The latter may be more personal or sentimental. You may want to provide specific instructions as to whether you have a legacy account for your social media accounts, or if your e-reader or photos are going to someone specific.

Monetary Value

Digital assets with monetary value can pass through your will or a trust (more on that later). For example, websites, blogs and domain names may have significant value as standalone businesses or in combination and should be addressed in your estate documents.

Domain names can be sold for prices in the five digits while the most expensive names have commanded prices in the millions of dollars.

Step 3: Estate Planning Documents: Powers of Attorney, Wills and Trust

Your plans for your digital assets should be formalized in a legally binding document such as a will, codicil (an attachment to your will) or make reference to a letter of instructions in your will. Your will should not contain any passwords. You may want to consider a trust instead.

You should consult with an attorney who could help you decide what document is best and what sample language to use in your powers of attorney, wills or trust.

Step 4: Powers of Attorney (POA)

Each state has their own Statutory Short Form of Attorney where your attorney can include language to limit or supplement authority granted to the agent you have chosen.

You can ask your attorney to spell out the agent’s power to use, manage, terminate, transfer or have full access to digital accounts, name the type of accounts, including email accounts, digital music, video, photos, software licenses, e-commerce accounts and bank/financial accounts.

Does the agent have access including passwords and access controls?

The designated agent should be informed as to whether they will handle the digital property or if there is a specific digital agent with respective powers for those assets.

Step 5: Distribution of Digital Property: Wills or Trusts

Traditionally, there are assets that go through your will to your heirs while other property may be distributed by operation of law or named beneficiary (ies). A life insurance policy is such an example.

Digital assets that have value can be distributed through either wills or trusts.

While these assets can be passed on through wills, the nature of accessing online accounts requires knowing usernames, security questions and passwords. That is information that should not be in a will, especially because it will become part of the public record if the will is  admitted to probate.

Trusts May Be Better Than Wills For Digital Assets

Trusts are more desirable for digital ownership and account information because a trust does not become part of the public record like wills.

Authority is granted to a trustee (similar to executors for a wills) as to how to handle this property. If the digital property in question is of significant value, a Digital Asset Trust can be created. Alternatively, a testamentary trust pertaining only to the digital assets can be folded into a will.

If You Want Digital Assets In Your Will

When creating your will, your attorney can be guided by your digital inventory list and what digital assets can be distributed. When you die, the executor  of your estate has the responsibility of managing and distributing all of your assets to your intended recipients.

You can pass some of your digital assets through your will but many of these assets are not capable of being passed through a will. Typically, digital property that you own and have monetary value will pass on to your heirs via your will.

Examples of digital property that can be distributed are:

  • Funds that are in your bank, investment, PayPal accounts.
  • Travel reward points and frequent flyer miles.
  • Your own photos or videos,that are stored on your hard drive.
  •  Business websites, blogs, products that you sell in an online store.

If you don’t own the property or it has sentimental rather than financial value, it isn’t likely to qualify as a testamentary asset which would be passed on through your will.

Examples of what doesn’t get passed on to heirs are:

  • Email, apps, and social media accounts generally have terms of service agreements that often ask you to agree that your account is “non-transferable.”  In recent years, the tendency has been to give heirs the ability to terminate these accounts upon a showing of a death certificate.
  • Downloaded music from iTunes usually come with a limited set of rights and you don’t own digital music.
  • Licensing agreements, such as domain names that are not owned.
  • Streaming subscriptions like Netflix are not owned by subscribers.

Consider Naming A Digital Executor

Your attorney can add language to enable the executor (or digital executor) to have authority to manage, handle, access, use, distribute, control and dispose digital property, including and not limited to, all named digital assets. You can assign a separate executor to be named in the will to have authority for all digital assets.

What the digital executor does:

  • Transfers money, points, and credits from online accounts to your heirs.
  • Closes social media accounts unless you left instructions for a memorial site.
  • Archives owned electronic files that contain owned photos and videos.
  • Cancels subscriptions to online services.
  • Transfers or closes blogs, websites, or any online businesses.

Letter of Instructions

The will should never contain passwords or sensitive information because of the risk of the will becoming part of the public record once the will is admitted to probate. Instead, you should have your attorney consider referencing in your will an external list of digital properties with relevant usernames, access codes, security questions, and passwords maintained in a separate document.

A letter of instructions is the best way to contain sensitive detailed information about accessing  your digital property. It has been used in traditional wills for a long time. This letter can be referred to in the will but is a separate document.

Have A Safe Place To Keep Sensitive Information

You should store information like account and access information in a separate location from your will. Given its sensitivity, you probably want to put your document into a safe deposit box or another secure place.

Review Your Digital Inventory List Periodically

We are often opening, closing or changing our online accounts, along with its access information.

Monitor Income-Generating Accounts

Keep track of  important accounts, particularly those that are income-generating accounts such as fledging small businesses, with customer lists and their websites. That is where most of the monetary value of your digital assets that are reflected in your will or trust exist. If  you are changing your passwords frequently, you will need to record that information.

Keep Track Of Your Assets

Estate planning documents should always be reviewed periodically every few years and when there are life-changing events. If these documents have been completed but are largely silent with respect to digital assets, you should update your plans to include them.

Our digital lives are changing so rapidly with technological advances, that it is not easy to predict what we may store online in the future. Many of the laws predate the explosion of Internet. They have not kept pace with these rapid developments balanced with our need for privacy.

Therefore, we need to be proactive about staying on top of what we own digitally and want to pass on to our heirs. Digitization helps us in so many ways but it is messy for those we leave behind. Do you have an estate plan that addresses your digital property? Do you keep track of your property with an inventory list?

We hope this guide helps you in your estate planning.  We would love to hear from you of different ways you may keep track of your online accounts to save time and effort.