3 Ways Millennials Can Learn About Personal Finance for Free

Adulting, Author: #NAMB Guest Author

When it comes to money, millennials know that they owe a lot of it — especially when it comes to student loans. More so than any other generation, millennials are feeling the squeeze of student loan debt, with the average borrower in 2016 having nearly $28,000 in loans. In fact, the national student loan debt now stands at $1.4 trillion (up from $260 billion in 2004), and is predicted to continue growing.

Student loan debt can largely be attributed to the ballooning cost of college tuition and fees, which has far outpaced the rate of inflation.  But it can also be chalked up to the number of American college students who willingly sign up for substantial debt, seemingly without any real idea of what the loan documents mean or how difficult it will be to repay these loans.

Money makes the world go round, and yet so many Americans know so little about it. Financial literacy appears to be largely unimportant in the United States, with only 17 states requiring students to take a course in personal finance in order to graduate.

This leaves many millennials in the difficult position of learning about how money works after they’re already out in the real world — with a job, bills and student loan payments.  If they haven’t been fortunate enough to learn about personal finance from their families or in high school or college, how can they learn about it now?

Luckily, there are some great free options available for millennials who want to learn about personal finance, and they don’t even require you to leave your home. With a laptop and a strong internet connection, you can take advantage of these courses and learning modules to take control of your finances and be on your way to financial security.

Family Finance Course
This course is offered through Utah State University. Over the span of 14 units, students are taught the basics of personal finance, including budgeting, taxes, debt, major purchases, mortgages and even creating a financial file. Each unit takes approximately 100 minutes to complete, and includes an action step at the end to help you work towards the ultimate goal: coming up with a financial plan of your own.

Free Personal Finance Course
The University of Arizona offers a free 15-unit course for all to take. It covers variety of topics through a series of posts, organized in a way that helps you go from more basic concepts of financial literacy to more complex issues. At the end of each lesson is a quiz to test you on what you have learned. With this course, you don’t have to enroll and can move at your own pace, making it ideal for anyone who wants to learn more about personal finance without being tied down to more specific course requirements.

Fundamentals of Personal Finance
The University of California-Irvine offers this course, which is aimed at individuals who want to get their finances in shape but cannot afford a personal financial planner. It has eight general topics: goals, figuring out where you are financially, taxation, keeping bad things from interrupting your goals, investing, funding retirement, college planning and estate planning basics. Each of these eight objectives or goals has between one and six lessons, and you can choose among the different topics. The lessons are all available online, and the entire course will take approximately 25 to 30 hours to complete.

 

Each of these courses each are geared towards general personal finance issues. There are other specific free online courses on topics such as credit, retirement, buying a home and more.  They are typically offered through universities, and are offered free of charge for all learners — including millennials.

Financial literacy is a skill that is valuable at all stages of life, from high school to college and beyond. It can assist you in choosing a college that helps you avoid going into significant student loan debt, in living within your means while in school, and in paying back your loans quickly after you have graduated. Financial literacy is also the key to reaching your other goals after you are out of undergraduate or graduate school, such as saving for retirement, buying a house, or even getting married or having kids. With a wealth of free online courses and other options available, there is no excuse for not learning as much as possible about the world of personal finance — and taking charge of your finances.

 

About the Author: 


Drew Cloud is a journalist who typically writes about student loans, personal finance and education. He always had a knack for reporting throughout high school and college where he picked up his topics of choice. Since his graduation from college, Drew wanted to funnel his creative energy into an independent, authoritative news outlet covering an exclusive and developing industry. Thus, the Student Loan Report was born. You can reach out to him at drew@studentloans.net.

Student Debt Secrets: A Chat With a Student Loan Expert

Adulting, Author: Mary Grace Donaldson

It’s no secret to anyone who doesn’t live under a rock: millennials have racked up a lot of student debt. According to the Huffington Post, student debt rose 84% between 2008 and 2014, and seven out of ten members of the collegiate class of 2014 graduated with debt (and not the same type of debt we’ve already chatted about).

While we don’t have the solution to the problem of the price of a college education — and we can’t eliminate your student debt, we brought in an expert to help you manage it. Drew Cloud, founder of The Student Loan Report, answered some of our questions about student loan debt.

Why have millennials earned so much student loan debt? Is it really all our fault?
In the past decade or so, society has placed an increasing importance on getting a college degree. This has caused many students who would be better off entering a trade or some other job that doesn’t require a four-year degree to shell out big bucks or take on large amounts of debt (usually both) to go to college. Also, students are increasingly majoring in overcrowded and non-rewarding majors that lead to poor job prospects and, therefore, lower salaries — making it much harder to be successful in student loan repayment.

Finally, possibly the greatest reason for the explosion in student debt in the United States is the federal government’s system of giving it out. The government has almost no eligibility requirements, and any student going to an eligible school (most of them) can receive student loans. The government does not look at creditworthiness, high school GPA, intended major, or anything else when giving out student loans. If you go to an eligible school, you can receive a federal student loan with the same interest rate as everyone else.

How did you get started in this field? Why do you want to help millennials in particular?
When struggling with my own student loan debt, I constantly searched for a site that not only gave non-biased advice on how to manage student loan debt but also one that provided coverage of the latest student loan news.

The student loan industry is always changing. Laws are passed, new private companies spring up, etc. When I couldn’t find the site that I thought would help myself, I ventured out to start it to help students and their families everywhere make better decisions when it comes to paying for higher education and managing student loan debt.

What are the best techniques you can offer to help eliminate student loan debt?
The best way to eliminate student loan debt really depends on each individual’s situation.

If you have a well-paying job and a solid credit score, refinancing your student loans is one of the best things you can do. If you are eligible to refinance, you will typically receive a lower interest rate, saving you thousands over the life of your loan(s). You can choose to shorten your repayment term to expedite repayment or extend your term to lower your monthly payments. You can also consolidate multiple student loans (both private and federal) into one loan when refinancing.

It should be noted, however, that when you refinance your federal student loans with a private lender (the only option there is) you will lose certain benefits such as access to income-driven repayment plans, forbearance and deferment protections, and student loan forgiveness. Those who are eligible for refinancing, though, will likely never use any of these benefits.

Speaking of income-driven repayment plans, this is one of the best options for those struggling with repayment. These plans limit your monthly payments to 10% to 20% of your discretionary income – making them much more affordable. If you do not have a job, or have a very low-paying job, you may be able to pay $0 per month. These plans also offer student loan forgiveness after 20 to 25 years.

Like refinancing, there is a downside. When you make smaller monthly payments, you will pay down less of your principal balance and more interest will accrue each month. This means you will end up paying much more over the life of the loan unless you receive forgiveness at some point, which I wouldn’t recommend depending on. You should see income-driven repayment plans as a way to lower your payments until you can get back on your feet and start paying down yo

Aside from refinancing and enrolling in income-driven repayment plans, my other suggestion is to try to reorganize your budget to free up some money to put towards your debt. Also, if you happen to find yourself with some extra cash (whether you get a bonus at work, sell some stuff, or win the lottery ((!!!!!)), you should consider putting it towards your debt. This will lower your principal and less interest will accrue.

How have you helped millennials tackle their student loan debt (i.e. success stories)?
Though I haven’t been able to work directly with millennials as much as I’d like, I do like to think that my website has helped lots of students and families make better decisions regarding their student loans.

I have consulted many of my friends and have helped them get back on track with their repayment if they were struggling, and helped those doing well financially figure out the best way to attack their debt while still doing other important things like investing.

Do paying off student loans after college help or hinder your credit score?
Honestly, it is really hard to tell. It all depends on the individual’s situation. If you make every payment on time and pay off your debt, there is a chance you will see your credit score drop. The reason for this is that one of your accounts will close, thereby lowering your credit mix which determines 10% of your credit score.

If you are successful in repayment, though, that will always be reflected in your credit history, and lenders will see that positive repayment history. If you consistently miss payments or default on your student loans, you can definitely expect to see your credit score drop.

Should you start paying off loans while still in college? Or are you better off waiting until you’re finished?
If you can afford to put money towards your student loans in college, this is one of the best things you can do to save money in the long run. As mentioned previously, as you make extra payments towards your student loans, your principal decreases and each subsequent interest charge will be less. Making payments in college is especially important for those with unsubsidized federal student loans as these accumulate interest while you are still in school.

If you don’t finish paying while you’re in college… will we have to keep paying these off into our ‘30s?
This also is highly dependent on the individual. Those who are able to secure well-paying jobs could realistically pay off their loans in just a few years. Those with less income, on the other hand, may be paying of their student loans well into their ’40s (scary stuff!).

Can you recommend any online resources for millennials paying off student loans – blogs, Twitter accounts, or apps?
Here are some of my favorite resources for student loans:

Are there any government assistance programs to help millennials pay off student loans?
As mentioned previously, there are options for borrowers struggling to make payments such as income-driven repayment plans and student loan forgiveness. You can learn more about these here.

What about Uncle Sam? What are the tax implications of paying off student loans?
There are a few things to consider with taxes when paying off student loans. First there are two tax credits for higher education expenses — the American Opportunity Credit and the Lifetime Learning Credit. These allow you to write off expenses for tuition, books, supplies, etc. You can also deduct student loan interest payments from your taxes. To learn more about all of these tax write-offs, check out this page.

 


Drew Cloud is a journalist who typically writes about student loans, personal finance and education. He always had a knack for reporting throughout high school and college where he picked up his topics of choice. Since his graduation from college, Drew wanted to funnel his creative energy into an independent, authoritative news outlet covering an exclusive and developing industry. Thus, the Student Loan Report was born. You can reach out to him at drew@studentloans.net.

‘Tis the Season for Bills: A Chat About Holiday Debt With a Finance Industry Expert

Adulting, Author: Mary Grace Donaldson

Our Monthly Chat series continues — and our industry expert of choice this month brings us some highly topical information!

One in four Americans planned on racking up holiday debt in 2016. These stats aren’t specific to millennials, but that’s not to say we aren’t included in that one in four. While our Finance Cheat Sheet is helpful in this arena, we’ve also chatted with Albert Ramos, CEO and Founder of Educate Your Pockets, LLC, a new website that specializes in financial management. Here’s what he had to say about holiday debt, how you can stay out of it, or, how you can find your way out of it:

What is your best advice for millennials looking to stay out of holiday debt?

Make sure every dollar has a purpose and pay with cash. When you write (or type) down a budget for your holidays, you’re more likely to stick to it. And if you’re going to pay for something, pay with cash that you have –- if you don’t have it, then it doesn’t fit within your budget. Don’t let the worries of finding the “best” gifts, or holiday shopping ruin your progress towards achieving your financial goals.

Also, I always meet with my clients before the holidays to go over their New Year’s goals or “resolutions” – – this puts them in the mindset of what they cannot do during the holidays if they want to start the year off right with their money. They remember: no holiday hangovers this year or regretting the “travel-on-a-credit-card” (check out my blog post on this topic).

How do most millennials even get into holiday debt?

From my experience, the top reason why millennials get into holiday debt is that they use credit cards and spend money they don’t have. Holidays are so amazing, fun, festive and tasty, and the season is always a great time of year. However, every year the pressures of holiday shopping (Cyber Monday, Black Friday, the “Christmas Deal” that lasts two weeks or more) continue to increase, and millennials get really stressed out about finding the best gift or deal…..and unfortunately, pull out their plastic (credit) to fund and satisfy those worries, stresses and pressures. Without a plan, it’s easy to stray and not stay disciplined.

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Do credit cards help or hinder millennials in their spending and finance management?

Such a great question – and there are two differing philosophies here. Some may say that credit cards are fine because they help you build credit. True – my counter, however, is that your credit score is your relationship with debt.

Credit card companies are not aggressive in ad spend and direct mail to “help you” pay for all the things you want now. Credit card companies and banks are in the business of making money – they make millions and millions of dollars from millennials spending money they don’t have, including the interest that they initially thought they’d never have to pay (“I always payoff my credit card each month”….). And if you’re like most people, unfortunately, your constant spending with “free money” catches up to you when that spending you couldn’t afford starts to build up and gets out of control due to interest payments compounding.

I truly believe that sticking to a solid cash plan, building your savings and investments, eliminating debt and working hard to increase your income (salary) is the way to go. If you have trouble doing that, use your debit card rather than credit card, go old school…do the cash envelope diet. Sounds archaic, but it totally works.

What do you see millennials doing “wrong” in the arena of budgeting – for the holidays, and all year round?

Couple of things: not creating a specific and realistic plan (every dollar must have a purpose and you need to know where it goes; and the plan must be realistic depending on your situation – – if you keep the budget unrealistically tight, you’ll end up going over budget which influences many to rationalize more overspend). Second thing, focus and follow-up. Focus and follow-up are two very important variables to building wealth and sticking to your budget. Millennials should have their budgets visible when making holiday purchases. It will reinforce behaviors that will allow them to stick to it. Staying within budget and finding those great deals on gifts you really wanted to get is great!

Oh no! You’ve found yourself in debt. Now, how do we get out of it?”

It happens. It’s nothing to be ashamed about. It’s the unfortunate reality for our generation – we have too much debt. But it’s okay – if you create a plan to get out of debt it’s totally achievable – but you must make it a priority. Debt not only sneaks up on you if you’re not paying attention, but it loves to grow. Create a short-term and long-term plan to payoff your debts (credit cards, student loans, etc.), starting with the smallest one first. You want some quick wins, similar to those pounds you want to lose right away when working out hard – it feels good, and stimulates those endorphins.

First take out the small loans, and once you don’t have any payments left for those, use what you would have normally paid for those on the bigger loans and get rid of it fast. Now, you may have to also make some sacrifices on current things you spend on. 6-12 months of sacrifice so you can live debt free, travel the world and start your large savings/investment account feels so much better. Trust me – check out my blog on #TheDebtDiet. I highly recommend if you’re in any type of debt, get started on my Debt-Free Program – – I know a ton of millennials that have started and are feeling more confident about their money than ever before.

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Are there any apps out there that can help millennials budget while making sure they pay their post-holiday bills?

There are some great apps out there, tons that are free on your mobile device. I personally provide your very own personal financial website that does this all for you when you get started with an Educate Your Pockets Program – in which I personally look at it every morning for you to make sure you’re following your plan. Very similar to a virtual personal trainer, I’m your virtual financial assistant in your pocket.

Are there any other resources out there, such as Twitter accounts to follow or podcasts to listen to, that you would recommend?

Definitely check out my Instagram @EducateYourPockets–I do a morning daily Instagram Live show called #DailyPockets where I answer financial questions that people email me about on my website. I also do a Facebook Live chat @EducateYourPockets where I do a similar Q&A on Friday nights for those that need an extra reminder before having fun on the weekends.

The Educate Your Pockets Podcast will be coming out in a few weeks, so look out for that, I’ll also be launching it with my new eBook #RetireAndChill ……this will be a fun and simple guide for millennials to start investing in a retirement plan like a Roth IRA, Traditional IRA, and/or 401(k). I can’t wait! Millennials are going to love it! I love tweeting financial tips on my Twitter @EYPFinance and make sure to Snap me at “pocketseyp” where you’ll be able to see more of my personal life and watch me interact with other millennials that hire me to help them achieve financial success.

Albert Ramos, Founder and CEO of Educate Your Pockets, LLC, received his Bachelor of Arts in Economics from Occidental College and his MBA in Finance from the University of Redlands. With over ten years of experience in Management, including being responsible for annual budgets exceeding $50M, Ramos offers clients diverse experience and education within the financial sector. For more information on how you can work with Educate Your Pockets, LLC, please e-mail albertramos@educateyourpockets.com or call (909) 580-7232.