financial

Apache is functioning normally

The Federal Reserve (Fed) raised the federal funds rate 25 basis points to the 5.25 to 5.5% range on Wednesday, its highest level in 22 years.

While the markets have already “priced in” this rate hike, which was widely expected, most investors are already wondering what it would take for the central bank to lift rates again later this year. For the housing market, that likely means a few more months with mortgage rates above 6%.

The Federal Open Markets Committee (FOMC) elected to resume its rate hikes in July in spite of recent positive inflation and labor market readings. Prices increased more slowly in June and hiring reverted back to a more gradual pace.

However, both inflation and unemployment are still running hotter than expected in an economy at full employment with stable price growth, prompting the Fed to tighten further.

“The Committee will continue to assess additional information and its implications for monetary policy,” the FOMC said in a statement. “In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

The FOMC also said it would continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities.

During a press conference with reporters on Wednesday, Fed Chair Jerome Powell said another rate hike in September is “certainly possible,” but so is a pause. He noted that the financial policymakers have two inflation reports, two job reports and other economic data before a decision has to be made.They want to remain data dependent. 

“As I have stated for a long time, the Fed wants to attack the labor market and thinks job openings are too high and jobless claims too low,” said HousingWire’s Lead Analyst Logan Mohtashami. “Certain Fed members don’t believe we have made progress on inflation. I wonder what’s in their coffee each morning. And some Fed members are saying progress is being made. Also, the Fed doesn’t know why people won’t list their homes. I am assuming that the Fed believed when mortgage rates stabilized that inventory channels would look normal, but they forgot that educated working people don’t sell their homes to the homeless. The majority sell to buy another one, so this concept I am hoping is finally hitting home with them.” 

Inflation fell to 3% in June, down significantly from where it was a year ago but still higher than the 2% threshold. Core inflation—which excludes food and energy costs—rose 4.8% in June. Raising interest rates is designed to tackle those still-high prices outside of the volatile food and energy sectors.

The problem is that housing costs, which account for a large share of the inflation picture, are not coming down meaningfully in the CPI. In June, the index for shelter accounted for 70% of the increase in the CPI. Rents were up 8.3% in June, while owner costs rose 7.8%.

Unfortunately, the Fed does not have the right tools to tackle high housing costs in the U.S., Bright MLS Chief Economist Lisa Sturtevant noted two weeks ago. Initially, higher rates did cool housing demand. But because rates had been pushed so low by the Fed during the pandemic and then increased so quickly, the Federal Reserve’s rate increases not only reduced housing demand—as intended—but also severely limited supply by locking homeowners into homes they would have otherwise listed for sale. Few Americans can or want to move when there’s such limited inventory, home prices remain near record highs, and mortgage rates are touching 7%. 

The recent slowdown in inflation makes it hard for central bank officials to firm up plans for any additional rate increase. Officials didn’t release quarterly interest-rate and economic projections after their two-day meeting this week.

What’s next?

Most Fed officials in June had penciled in two more rate rises this year – in July and once more in the fall. As a result, investors were listening carefully to Powell’s press conference on Wednesday to decipher whether a rate increase will be likely at the September 19-20 meeting. 

But Powell wasn’t showing his cards much. While he noted that a soft June inflation report was “welcome,” it was only one month of data and the Fed needs to see more from the “whole collection of data” before making a determination in September. He wouldn’t entertain a timeline for cutting rates, either, but said it was very unlikely to happen this year.

“We’ll be comfortable cutting rates when we’re comfortable cutting rates,” he told reporters.

Powell also sidestepped questions from reporters about what would prompt them to raise rates again in September or hold them steady.

“We’ve seen so far the beginnings of desinflation without any real cost in the labor market, that’s a really good thing. Historical records suggest that it’s very likely to see some softening in the labor market conditions, which is consistent with a soft landing,” said Powell. However, he refused to use the term “optimism.” Instead he said “there’s a pathway” to talk about the future of the American economy.

“We’re going to be going meeting by meeting, and as we go into each meeting, we’ll be asking ourselves the same question. We haven’t made any decision about any future meeting, including the pace at which we’d consider hiking. We’re going to be assessing the need for further tightening that may be appropriate,” said Powell.

After one reporter asked about a timeline for the housing market to balance itself out, Powell responded by saying that we are still living in the aftermath of the pandemic, which has left us with an asymmetrical market. 

“I think we have ways to go to get back to balance. With existing homes, many people who have low rate mortgages don’t want to sell their home because they have so much value in their mortgage. It means that supply of existing homes is really really tight, which is keeping prices up. On the other hand, there is a lot of supply coming on right now. A lot of the buyers are first time buyers who have accepted the relatively elevated mortgage rates. Overall, it will take some time before it balances out.”

Powell warned last month that he wouldn’t shy away from raising rates at consecutive policy meetings. He also said moving rates up at a slower, quarterly pace could be expected to continue if the economy evolves in line with current expectations.

The CME FedWatch Tool showed a 98.9% chance the Fed would raise rates to the 5.25 to 5.5% range on Wednesday morning, according to interest rate traders. However, 79.2% of these investors bet officials will freeze the rate hike at the September 20 meeting. 

Ahead of the Fed meeting, mortgage applications fell last week, recording the lowest index of purchase applications in over a month.  

On Tuesday afternoon, mortgage rates for 30-year fixed-rate mortgages were at 6.87%, according to HousingWire‘s Mortgage Rates Center. However, at Mortgage News Daily, mortgage rates were higher, at 7.04%.

The mortgage market, which will likely see another uptick in interest rates, may continue to be slow, predicts Michele Raneri, vice president and head of U.S. research and consulting at TransUnion.

“Many consumers could still hold off on making a home purchase in hopes that interest rates stabilize and eventually come down,” said Raneri.

One concern that lives among economists is that the Federal Reserve won’t be able to bring down home prices and rents by raising rates further, at least not without doing significant damage to the economy. More supply seems to be the only solution, several housing economists said.  

“The Fed is now stuck in a place where they are committed to 2% inflation and where the only tool they have will not be able to move the needle because it cannot address the housing supply-demand imbalance without seriously hurting consumers,” said Bright MLS’s Sturtevant.

“But they can’t back down because they have consistently and loudly said they will not stop until they reach 2% and backing down would make it harder for investors, businesses, and consumers to believe it when they lay down the law next time.”  

Some economists talk about a “pause mindset,” which should help shrink the spread between the 10-year treasury and 30-Year fixed-rate mortgage, providing relief after a spring of skyrocketing rates. 

“However, we will still see tension in the short term,” said Dan Burnett, Head of Investor Strategy at Hometap Equity Partners.

Meanwhile, borrowing costs will likely remain elevated through the remainder of 2023. 

“Buyers can expect to continue seeing mortgage rates above 6%, although, with 11 months of rates in that range, many home shoppers have adjusted their budgets to the new reality. The silver lining for many buyers wondering about the trajectory of housing markets is that seasonality is returning, pointing to expectations of better values during the fall and winter months,” said  George Ratiu, chief economist at Keeping Current Matters.

Editor’s note: This story was updated at 3:56 p.m. EST to include comments from Powell.

Source: housingwire.com

Apache is functioning normally

Inside: Want to know what is a rack of money? You are in the right place. Learn the slang to rack, stacks, and bands. Plus tips to have your rolling in the money.

Have you ever wondered how much money is in a “rack” or what a “band” or “stack” of cash actually is?

If so, you’re not alone.

These terms are often used in movies and TV shows to describe large sums of money, but they can be confusing if you’re not familiar with them.

In this post, we’ll demystify some of the most common slang terms for money so that you can sound like a pro next time someone asks you how much a “rack” is worth.

Also, we will give you tips to make sure you are making 1000 a day.

What is a Rack of Money?

Simply put, a rack typically refers to $1,000.

Picture this: you’ve got ten $100 bills neatly stacked and bound together. That’s a rack.

Now, if a friend tells you, “I need three racks for a down payment on a car,” they’re saying they need $3,000. Easy to grasp, isn’t it?

Just remember, song lyrics might’ve switched things up a bit, but in real-world slang, a rack is a cool grand.

So next time you hear “rack,” you know it’s all about that thousand-dollar action.

How Much Is a Rack of Money?

“A rack” is a popular slang term for $1,000, usually in the form of ten $100 bills bundled together.

Don’t be overwhelmed, it’s just street language for stacks of hundred-dollar bills.

So, whether you’re saving for a dream vacation or splurging on a new gadget, just remember to play it cool and count those racks!

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

What is a band of money?

Ever heard of the term “band” and wondered what it means in the context of money?

Well, a band is simply slang for $1000 in cash, usually bundled together with a rubber band. Here’s a breakdown:

  • It originates from the band used to hold a stack of cash together.
  • The term is also widely used in pop culture, specifically in rap songs to signify wealth.
  • If the band contains more than $1,000, it’s prefixed with the amount. For instance, a “10G band” means $10,000.

So if you stumble upon a phrase like “He’s flaunting a lot of bands”, it just means he’s flashing quite a stash of cash, probably in the club or jamming along to a hit rap song.

how much is a stack?

Ever heard someone saying they’ve got a ‘stack’? Let me break it down for you.

In the world of ‘money slang’, a ‘stack’ literally refers to a bundle of cash. Specifically, it’s a colloquial term for $1,000.

Here’s a quick bullet-point breakdown for clarity:

  • A ‘stack’ is slang for $1,000, typically in cash.
  • The term has its roots in the practice of actually stacking cash, but today, it’s used mostly in an abstract sense.

To give you an example: if you made a quick $5000 from a side gig, you’d casually say, “I made five stacks on my gig last week.” Now there you have it, you’re one step closer to mastering ‘money slang’!

Now, time to make 5000 dollars fast yourself.

Picture a real stack of money in hand

Now, let’s go on a visual imagination and bring those money affirmations to real life.

Let’s start…

  • You desire a real-life “rack” of money. Or maybe even 10 racks in your life.
  • Your eyes are drawn to a thick bunch of crisp $100 bills, bound together by a clean, white currency strap.
  • Meeting your gaze, shining under the light, are the majestic portraits of Benjamin Franklin galore, symbolizing the high-value of the stack.
  • Held firmly in hand, the image invokes feelings of prosperity, power, and accomplishment.
  • Each detailed texture and precise print on the bills reiterate authenticity, and the sequential serial numbers on the top bill tell a story of fresh prints.
  • This tidy, impeccably stacked rack, with ten $100 bills, effortlessly communicates, “Hello, I’m $1000!”

The first step to achieving financial independence is believing you can.

Make sure you put your stack of money as one of your vision board pictures.

How much does a rack cost versus a band?

Hey there, let’s talk about racks and bands. You probably heard these razzle-dazzle slang terms in music or pop culture, right?

Well, when it comes to costs, they’re actually identical.

A rack equates to $1,000. In equivalent terms, a band is also $1,000, often bundled up in crisp bills.

Let’s take a peek at a comparison chart to make things clearer:

Term Cost Equivalent
Stack of Money $1,000
Rack $1,000
Band $1,000

See how they match up? Next time you hear these terms, you’ll know exactly what’s up!

Learn how much cash should I have on hand.

How to Make a Rack Quickly

While this post focuses on various slang terms for money, Money Bliss is known for providing solid ideas to make money based on my expertise and experience in finance and the economy.

Most people enjoy learning how to make money online as a beginner.

Here are a few methods you could employ:

  • Sell Unwanted Items: If you have unused goods at home, consider selling them on online platforms like eBay or Facebook Marketplace. This could be anything from clothes and accessories to furniture and electronics. Check out Flea Market Flipper.
  • Freelance Work: Websites such as Upwork or Fiverr provide a marketplace for freelancers with varied skills. If you have proficiency in fields such as writing, graphic design, programming, or marketing, you could find plenty of work here.
  • Trading Stocks: Making money in the market is something people have done for many years! When buying stocks, the basic objective is to buy when the price is low and sell when the price is high. The value of stocks is typically influenced by a variety of factors including financial performance, economic indicators, and market sentiment. Check out this investing course.
  • Trading Options: Trading options can be risky but potentially profitable if done correctly, as investors can leverage a small amount of money to control a larger amount of stock. Potential investors should elaborate on their comprehension of the trading world before venturing into it which includes understanding the different types of investment products, their individual risks, and potential rewards. Learn how fast you can make money with stocks.

Are you passionate about words and reading? 

If so, proofreading could be a perfect fit for you, just like it’s been for countless of readers! Learn how you can create a freelance business as a proofreader.

Check out this free workshop!

Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.

Find out TODAY if this is THE business you’ve been looking for.

  • Selling printables is a profitable venture that entrepreneurs can tap into. These digital products, including anything from calendars to artwork, offer a low-overhead business model since they require minimal materials and can be created once and sold repeatedly. It’s an efficient way to harness one’s design skills to provide value to customers while generating a promising income stream. Learn more about selling printables.
  • Gig Economy: Apps platforms like Uber, Lyft or DoorDash offer an opportunity to make money fast based on the time you are willing to invest.
  • Tutoring and Teaching: If you’re well-versed in a subject, offer tutoring services or consider teaching an online course. Websites like Chegg Tutors make it easy to start.
  • Be a Virtual Assistant: As a virtual assistant with no experience, you can anticipate managing various administrative tasks from a remote location, such as data entry, scheduling appointments, and even aiding with digital marketing efforts. This career path offers flexibility, the possibility to work from home, and the chance to work with entrepreneurs from different sectors. Use this virtual assistant checklist to get started.
  • Rent out Your Space: If you have an extra room or a property, consider listing it on Airbnb or a similar property rental site. This can become a significant source of income with small investments in the upkeep of the property.

Remember, it’s vital to choose an option that aligns with your skills and interests to ensure it’s not only a source of quick cash but also a sustainable and enjoyable endeavor.

You need to consider the legality and ethicality of the ways you choose to make money fast.

This is the perfect side hustle if you don’t have much time, experience, or money.

Many earn over $10,000 in a year selling printables on Etsy. Learn how to get started by watching this free workshop.

If you’ve ever wanted to make a full-time income while working from home, you’re in the right place!

This intensive training combines thousands of hours of research, years of experience in growing a virtual assistant business, and the power of a coach who has helped thousands of students launch and grow their own business from scratch. 

Time to Bring in Your Stacks of Money

Now that you know the lingo for money, you can impress your friends with your knowledge. Plus, you can use this new information for future reference.

In summary, the terms band, stack, and rack are used to represent these same amounts of money, particularly in slang context.

Usually, they signify $1,000 in cash, and the presence of more numbers indicates a multiple interest in this monetary sum.

Now, how many racks do you have? What are you doing to make money?

These are important aspects if you want to become financially independent.

Remember, keeping your money organized isn’t just tidy, it’s smart!

Next, up learn how much is 10 figures!

Know someone else that needs this, too? Then, please share!!

Source: moneybliss.org

Apache is functioning normally

Northwestern Mutual Leads Industry on Latest Forbes’ “Top Financial Security Professionals” and Best-in-State Lists MILWAUKEE, July 26, 2023 /PRNewswire/ — Northwestern Mutual announced today that an industry-leading 489 of its advisors earned a spot on Forbes‘ annual lists of top financial security professionals – the company’s strongest showing on this prestigious ranking since it debuted … [Read more…]

Apache is functioning normally

Have you ever wondered whether you had sufficient insurance coverage to cover the wide possibilities of loss?

An umbrella insurance policy acts to provide extra coverage on top of your existing policies.

An umbrella insurance policy acts sort of like a safety net that picks up loss not covered by existing insurance policies.

While in previous times, it was mostly the very rich who took out umbrella policies, these days many more people see the need for such protection.

One of the reasons that umbrella coverage is more important in modern times is the litigious nature of our society. In comparison to earlier days, people are much more likely to sue someone of average means for a wide variety of reasons.

For example, if someone should suffer an injury while walking up to your front door, you could be liable for damages if you have been negligent in some way.

Because people are so much more likely to sue homeowners, car owners and boat owners, umbrella insurance is no longer simply for the wealthy anymore.

How Does Umbrella Coverage Work?

In order to qualify for umbrella insurance, you must already have traditional types of insurance coverage. For example, a regular homeowner’s policy covers your home while an auto insurance policy protects you and your car.

The umbrella coverage sits “on top” of these other policies in case they do not provide sufficient protection to cover all costs for liability related damages. Umbrella coverage protects the policyholder directly from liability claims. In other words, they cover damages when you are at fault due to some neglect or wrongdoing on your part.

Umbrella insurance will pay for the medical bills, lost pay and other damages suffered by the injured person due to the negligence of the covered person. However, the insurance does not pay for any personal expenses of the policyholder. For example, the policy will not pay to repair the policyholder’s car in case of an accident nor will it pay for any medical bills incurred by the policyholder due to the accident.

The coverage always pays the “other” party that has suffered due to the policyholder’s negligence.

Do I Really Need Umbrella Insurance?

While in the past, the average person would have no need for such coverage, the situation is much different now. Even if you have only modest income and assets, there is still a chance someone might sue you to recover whatever they can in instances where you are negligent.

Some experts recommend that anyone with a total of $200,000 in assets should have umbrella insurance, while others would set the asset level even lower. Some umbrella policies provide coverage in the hundreds of thousands of dollars while the top traditional policies will cover damages of $5 million or more.

Generally speaking, the more assets an individual has, the more they need umbrella liability coverage. Additionally, those who feel more vulnerable to litigation should also consider these types of policies. For example, if you use your home for business purposes and have many visitors, you many want extra liability protection.

Note that umbrella coverage only kicks in after your traditional insurance policies have paid out all their benefits. Once you reach your regular coverage limits, the umbrella policy pays any additional costs up to its own limits.

Here are some things to consider when deciding on whether you need umbrella insurance:

  • Do you live in a neighborhood in which lawsuits against neighbors are common?
  • Do you operate a home business?
  • Do you often have guests over to your home or other properties?
  • Do you own a boat?
  • Do you own, charter or lease aircraft?
  • Do you take long commutes to work?
  • Do you often take long vacations with other people watching your home?
  • Does your home have tall trees that could fall over in a storm and damage neighboring property?
  • Do you have significant liquid assets?
  • Does anyone in your household have conditions that might impair their driving ability?
  • Do you use your own vehicles, equipment or other possessions for your business or work?

Some real life examples. It’s easier to illustrate how an umbrella policy would work using real life situations. An article by CBS MarketWatch gives several instances that are very common. Here are some of the examples that could easily happen to anybody.

  • You throw a party at your home where alcohol was involved and minors were present. The minor has a few drinks without you knowing and drives home and gets in a wreck. You could be on the hook even if you didn’t provide the alcohol.
  • You act as chaperone of young kids on a field trip to a park where one of the kids gets injured. The parent of the child claims that your kid doesn’t like their kid and that’s why you let him get hurt.
  • You’re driving home from work and collide with a company truck hauling very expensive equipment.
  • Your child borrows a friend’s car to run to McDonald’s to grab something to eat. While hurrying to get back they run a stop sign and hit a mini-van with a family of four.

The right umbrella policy could protect you from the incidents listed above.

What’s the cost? For $1 million in coverage, the cost should be around $150-$200 (mine was $180) a year. For each additional $1 million in coverage, you should expect to pay an additional $100.

How to Find Umbrella Insurance

Umbrella policies can differ quite markedly in what they cover and in the amount of coverage. Shopping around and comparing policies is a good idea and can often lead to significant deals.

Internet comparison websites allow consumers to compare policies offered by different providers side-by-side. Most of these sites provide tools that allow users to search according to specific criteria. Among the items to check when comparing policies are coverage amounts, exceptions, exclusions and qualifications.

For example, some policies may not provide coverage in certain circumstances, i.e., if the policyholder was under the influence of alcohol when an accident occurred. Since one of the reasons for liability insurance is to protect against policyholder negligence, it pays to check for such exceptions. Umbrella insurance is an important piece of both personal and small business insurance strategies. Considering the low cost, going without it doesn’t make sense.

Source: goodfinancialcents.com

Apache is functioning normally

[Note from editor: The “Mastermind Showcase” highlights companies and news from members of the GEM. Today’s showcase: Second Century Ventures.]

Second Century Ventures is the strategic investment arm of the National Association of Realtors, the largest trade organization in the US, and invests in technology companies across real estate, financial services, banking, home services, and insurance. Dedicated to seeing the entrepreneurial spirit of real estate thrive, keeping the agent at the center of the transaction.

Docusign was one of its very first investments back in 2009 and has since grown to a market cap of more than 40 billion.

Second Century Ventures launched the REach accelerator in 2013, a nine month, highly selective program that provides companies with capital, meaningful partnerships, and and resources to fuel growth. They recently announced its 2020 class which represents a market capitalization of more than $400 million.

What we like: With ties to NAR’s 1.4 million members, deeply experienced executives, and a strong pool of mentors, there is no VC firm that can match its depth of industry relationships across real estate and adjacent industries.

Learn More

Source: geekestateblog.com

Apache is functioning normally

Parents and grad students have options when it comes to paying for college. Federal aid, institutional scholarships and grants…prepaid tuition plans. But sometimes there’s a leftover cost.

Federal PLUS Loans are an accessible option for graduate students and parents of college students.

Parent PLUS Loans are federal loans for parents of full time students. They offer flexible repayment options, fixed interest rates, and higher borrowing limits.

Direct PLUS Loans are available to graduate or professional degree students. They are also known as “grad PLUS Loans.” Both Parent and Grad loans fall under the Direct Loan Program operated by the federal government.

What Is a Parent PLUS Loan?

As mentioned, Parent PLUS Loans can be borrowed by parents of undergraduate students, in order to help their child pay for college. These loans are funded by the U.S. Department of Education and are part of the Direct Loan Program.

Unlike other types of federal student loans, Parent PLUS Loans do require a credit check. If an applicant has an adverse credit history, they may not be approved to borrow a Parent PLUS Loan.

Recommended: What Is a Parent PLUS Loan?

How Do Parent PLUS Loans Work?

As noted previously, Parent PLUS loans are available to all qualifying parents of undergraduate students. Borrowers with poor credit history can ask an “endorser” to cosign the loan or borrowers can send a report clarifying their credit history to be considered.

The loan amount is limited to your child’s Cost of Attendance (COA), less any other aid awarded to the student. The interest rate is fixed for both loan types and interest accrues the moment it’s released, even during deferment. Also, PLUS loans have an origination fee of 4.228% for the 2023-2024 academic year.

Like other loans in the Direct Loan program, a third party company called a “loan servicer” manages customer service around general billing requests such as repayment and deferment.

Parent PLUS Loan Application Process

The first step in borrowing a Parent PLUS Loan is to have your child fill out the FAFSA® or Free Application for Federal Student Aid. This is required before a parent can request a PLUS Loan. After the FAFSA is taken care of, parents can submit an online application for a PLUS Loan.

Note that while most schools offer an online application, some schools may have a different process. If you have any questions, check in with the financial aid office at the school your child attends.

Before applying, remove any security freezes on your credit bureau files. Any active credit freezes will prevent an application from being processed.

It may take upwards of 20 minutes to complete the application. And you’ll generally need the following information:

•   Verified FSA ID

•   School Name

•   Student Information

•   Personal Information

•   Employer’s Information (such as the employer’s name, address, and phone)

A verified FSA ID is a unique ID that acts as a legal electronic signature. It should only be used by that applicant.

After being approved for the PLUS Loan, borrowers will be required to fill out the Master Promissory Note (MPN). This indicates that you agree to the terms of the loan.

Recommended: Do You Have to Apply for a Parent Plus Loan Every Year?

Filling Out FAFSA

The FAFSA is required for all forms of federal student aid, including grants, work-studies, and federal loans. Some state and school-specific aid may also be awarded based on information included on a student’s FAFSA form.

Applicants who submit a FAFSA get a Student Aid Report (SAR) that summarizes the form’s information. It will include your Student Aid Index (SAI; formerly, the Expected Family Contribution) and your eligibility for federal grants and loans among other details. Schools listed on your FAFSA get a copy of this report to determine aid.

Recommended: FAFSA Guide

Determining Your Eligibility

Borrowers must fulfill the following basic requirements:

•   Be the legal guardian of an undergraduate enrolled in a higher ed program part-time or full-time

•   Fulfill general Federal Student Aid requirements, such as citizenship

•   Not have an adverse credit history

How Much Can You Borrow?

Parent PLUS Loan borrowers can take out the total cost of attendance of the program their child is enrolled in, less the amount of scholarships or other forms of aid.

How Much Do You Want to Borrow?

It can be tempting to borrow to make paying for college easier, but be cautious of overborrowing. Parent PLUS loans have costlier fees and rates, with the latest interest rate at 8.05% combined with a 4.228% origination fee.

For income-earning parents, it may be easier to measure the amount of student debt you should take on. As a general rule of thumb, all debt, including student loans, should not exceed more than 20% of your annual or projected annual take home pay.

Filling Out Your Parent PLUS Loan Application

Prospective students and parents of prospective undergraduates fill out a parent plus loan application online. Grad PLUS loan applications are separate online forms.

Enrollees will have the option to sign up for deferment and get a credit check on the spot — so be prepared to know which decision works best for you to apply for student loan. Finally, borrowers can view a demo to tailor the prep-work.

Recommended: Grad PLUS Loans, Explained

Signing a Promissory Note

Once you complete the plus loan application, you’ll be directed to complete a Master Promissory Note (MPN). An MPN spells out a borrower’s rights and responsibilities in the loan agreement.

Loans will not be awarded until an MPN is completed.

You’ll be asked to fill out personal information and provide two references as future contacts in case you’re unreachable.

What to Expect After Applying

Approved loans will be disbursed to the school you’re enrolled in and they’ll apply the loan to outstanding fees, tuition, and/or room and board. If there are funds leftover, you can cancel the remainder or choose to keep it for discretionary expenses related to higher ed day-to-day living.

What If You Are Denied?

If you are denied a loan, you may be able to add an endorser to your application. An endorser is someone who agrees to pay your loan if you are unable. If you were denied for having an adverse credit history, you will likely need to complete an online PLUS Credit Counseling course.

How Long Until the Loan Is Disbursed?

Each school pays out loans on a different schedule. Once the federal government has processed your paperwork and released funds, schools handle the process afterwards. If you have questions about when your loan will be disbursed, contact the financial aid office at your child’s school.

When Do You Need to Begin Repayment?

Repayment for Parent PLUS Loans may begin immediately upon disbursement or after deferment, depending on the repayment plan you select.

If you request a deferment, you are able to pause payments until six-months after your child graduates from college. If you are interested in this option, you can make this selection on the PLUS Loan application or request it directly with the loan servicer. Interest will accrue even while the loan is in deferment.

Applicants who do not choose deferment must begin repayment as soon as the loan is disbursed.

Income-Driven Repayment Options for Parent PLUS Loans

Parent PLUS Loan borrowers are able to enroll in an income-driven repayment plan if they first consolidate the loan through the Direct Consolidation Loan Program. Income-driven repayment plans tie the monthly payments to your income and repayment takes place over a period of 20 to 25 years.

On these plans, your loan payment may fluctuate each year, depending on your income and family size. At the end of your repayment period, any outstanding balance is forgiven, but under certain circumstances, this forgen amount may be considered taxable income by the IRS.

The Takeaway

Parent PLUS loans are federally funded loans available to parents of undergraduate students. PLUS loans and private student loans meet different needs. Parents might like the idea of their children learning independence, and getting a loan in their name — even as a cosigner — might be a more attractive option.

Also, a key difference between PLUS loans and private student loans is credit score impact on borrowing limit and interest rates. Parents who have lower, but not adverse credit scores, might get higher interest rates and lower borrowing limits for a private loan versus a PLUS loan.

SoFi offers the same benefits as most federal loans, including deferment and flexible repayment plans. Our interest rates for private student loans are competitively low — and we have a no-fee policy.

Check out our private loans for undergrads today and find out your rate in minutes.

FAQ

How long does it take for approval for a parent PLUS loan for college?

Loan applications are approved or denied on submission and schools are notified within 24 hours. Applicants must pass eligibility requirements after completing the application. An MPN and FAFSA also must be completed prior to loan awards. Disbursement processing times differ with each school.

Can you be denied a parent PLUS student loan?

Yes, if you have an adverse credit history. You can get a PLUS loan with an endorser or documentation proving extenuating circumstances around your history. Examples include foreclosure or bankruptcy.

What is the maximum borrowable amount for a parent PLUS loan?

The maximum amount allowed is your child or your Cost of Attendance (COA). COAs are determined by schools.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Photo credit: iStock/solidcolours
SOPS0222009

Source: sofi.com

Apache is functioning normally

Chances are you’ve heard the term financial plan in a news story or in conversation with coworkers or family. Having a financial plan sounds smart, but not everyone knows what goes into a proper document and why they need one.

Thankfully, these plans aren’t difficult to put together. If you want, you can create a simple financial plan yourself. Those that prefer a more in-depth document can hire a financial planner to put one together for them.

So what exactly is a financial plan and how do you create one? Here’s what you need to know.

What’s Ahead:

What does a financial plan include?

A financial plan is a document you or a professional put together that guides your personal finances. The plan can be as detailed or minimal as you’d like. It should inspire you to make progress both over the short-term and long-term. 

While many people end up with a written financial plan, your plan isn’t set in stone. You can adjust it as your life and goals change over time. That’s why it is essential to revisit and revise your financial plan regularly.

If you’re financially savvy, you may be able to create a financial plan yourself. After all, it’s just a document that outlines your current financial situation, where you want it to be, and how to get there. You could easily use Google Docs, Google Sheets, and free investment calculators to put together a document you could call your financial plan.

That said, a well thought out financial plan should include the following sections.

Current situation

In order to figure out where to go, you must first know where you’re starting. A financial plan can gather valuable information about your current finances including your income, expenses, cash flow, debt, savings, and investments. 

If you track your finances, coming up with this data is much easier than starting from scratch. Either way, it’s important to know what tools you have to work with.

Look at your bank, debt, and investment statements to find relevant information about each financial item. Once you have a list of your current financial positions, you can find out how much money you can put toward your goals. You can also use this starting point to come up with realistic near-term and long-term goals.

Future financial goals and how you’ll achieve them

A financial plan is a road map for your finances’ future. You should set short-term, mid-term, and long-term goals for your money within your plan. Goals can include getting out of consumer debt, building an emergency fund, reaching a specific dollar amount of investments before retirement, and more.

A financial advisor can help you think of goals you might miss. Since they create financial plans for a wide variety of clients, they can fill in the spots you may not be thinking of that are still extremely important.

Retirement planning

One of the biggest goals is being able to retire. Your plan should address how you plan to fund your retirement and how you will build the financial means to do so.

Retirement planning is more than picking a retirement number. You have to decide how much to invest each year, what types of accounts to invest in, and which investments to choose. Once you reach retirement age, you have to have a drawdown strategy that preserves your funds so you have money until you pass away.

Tax planning

Tax planning is another important concept you should include in your financial plan. It allows you to keep more of your money to put toward your goals. It does this by making smart decisions about your money to reduce the total amount of taxes you’ll owe over your lifetime.

Some tax planning strategies are as simple as putting the right types of investments in the correct tax-advantaged accounts. Other strategies are more complex. For example, one requires keeping track of the basis of your investments so you can perform tax-loss harvesting. Financial advisors can help expose you to strategies you may not know of. By learning more strategies, you may be able to keep more of your hard-earned money.

How you’re protecting your finances

It’s also crucial to manage how you’re protecting your family and finances. Insurance is often a vital tool people use to do this. You’ll want to consider your needs for car insurance, homeowners insurance, renters insurance, life insurance, disability insurance, long-term care insurance, and umbrella insurance, among many other types. 

In addition to insurance, you’ll want to make sure you’re taking care of any estate planning that needs to be done. You may want to set up a will, trust, advance medical directive, or other estate planning documents to make sure your wishes are respected when you pass away. Your plan can use specific strategies to make sure there are as few tax impacts as possible when you die. 

What’s the purpose of a financial plan?

The purpose of a financial plan is to develop a thoughtful representation of how to reach your financial goals while protecting your family and finances. It should give you a roadmap about how to reach your goals and secure a bright financial future.

Creating a financial plan makes you think critically about what you want your future life to look like. This can be a great way to set bigger goals or make adjustments if you’re not happy with your current life or lifestyle.

Who needs a financial plan?

You may think only people with large amounts of money need a financial plan. That couldn’t be more wrong. Honestly, anyone can benefit from having one. 

Financial plans can help you figure out what you need to do to have a successful financial future. It gives you a snapshot of where you’re starting and what you need to do to get where you want to go. A lot of what a financial planner helps you with when developing your document isn’t common knowledge to someone that doesn’t know a lot about finances. 

Once you know what goals you need to accomplish and when you need to achieve them, you can be more motivated to move forward faster. Often, having a financial plan that you review and update regularly can be a great motivating factor. It can assist with getting your finances in good shape for your future and retirement.

How do you make a financial plan?

If you’re financially savvy, you may be able to create a financial plan yourself. After all, it’s just a document that outlines your current financial situation, where you want it to be, and how to get there.

You could easily use Google Docs, Google Sheets, and free investment calculators to put together a document you could call your financial plan.

Take inventory of your current situation

The first thing you should do is see where you’re starting. First, work on tracking your spending and income. You can do this manually or by using free software like Empower. Next, calculate your net worth. This involves gathering information about your assets (such as cash and investments) and debt (such as car loans and mortgages). It can be done with a simple spreadsheet or using a service like Empower.

Once you have this information, make sure you keep it up to date. Continue tracking your spending on a monthly basis. Consider updating your net worth once per month, quarter, or year based on your goals.

(Personal Capital is now Empower)

Set goals you want to reach on a timeline

After you know where you’re starting, you get to figure out where you want to go. There are several financial goals you can set depending on your current situation and where you want to end up. One key is setting a timeline for reaching your goals. This helps you calculate whether it is realistic to meet your goals on the timeline you want.

For instance, if you want to save $20,000 in three years, you’d have to save $556 per month. If that isn’t realistic, you either need to find a way to make more money, cut spending, or find a more suitable goal.

Goals could include:

Make sure to include realistic timelines so you don’t get discouraged and throw out your financial plan.

Determine what actions are needed to reach your goals and take action

After you have your goals and your timelines, it’s time to start strategizing. Goals are only useful if you’re trying to actively reach them.

Based on your timeline and available financial resources, figure out how to allocate your money toward your goals. For some goals, such as preparing for retirement, you’ll need to figure out what investments to invest in. For other goals, such as paying off debt aggressively, you may need to find ways to increase your income to achieve them faster.

Based on these results, take action and set up systems to make reaching these goals a reality.

Monitor your progress

A financial plan works best when you monitor your progress. If you create one and never look at it again, it doesn’t do much good. Set up monthly, quarterly or yearly check-ins to look back at your financial plan so you can see how you’re making progress.

No one is perfect. You may not reach your goals on the timeline you had hoped or a favorable market may help you reach your goals ahead of schedule. The key is knowing where you are compared to your plan.

Make changes and update your plan as needed

If things aren’t going as planned, it’s time to take action again. If you’re falling behind on your goals, find a way to catch up and change your plan to reflect that. Catching up may not always be possible, though. In these cases, you may need to change your goal timelines.

Keeping your financial plan and goals up to date doesn’t mean you failed. It means you’re taking control of your finances. People that have information and measure their progress often make much more progress than those that financially float along in life without these tools.

It may be a good idea to hire a professional

However, you may not be aware of blind spots or better strategies financial experts could help you implement. That’s why most people prefer to hire a financial planner or financial advisor to draft the document for you. They do this for a living. Good financial advisors know the ins and outs of what you need in your plan. But, more on this below!

Do you need a financial planner or advisor?

There are several types of financial advisors you can hire to create a financial plan. Some financial advisors try to get you in their ecosystem to earn commissions on trades or by selling you insurance products. Ideally, you want to avoid these types of advisors. There are exceptions, such as when you’re confident they have your best interests in mind.

Instead, you’ll want to hire a fee-only fiduciary financial advisor who is legally required to make decisions in your best interests. These advisors don’t receive a commission for selling products. Instead, you have to pay them.

Their advisors aren’t incentivized to sell. You’re only charged a flat annual fee based on the services you need. You don’t have to pay an assets under management (AUM) fee, either. They offer several types of planning including retirement, education, life, income tax, insurance, estate, legacy, retirement income, and asset management planning.

If you’d rather work with a financial advisor in person, you can find one using the Paladin Registry. The Paladin Registry is a free service that matches you with a financial fiduciary that can address your concerns and financial planning needs. 

The service has you fill out some basic information about your situation. Then, Paladin Registry searches its database to connect you with one to three suitable financial fiduciary matches for you to compare. They even vet and document the suggested advisors’ qualifications for you.

Once you get your list of potential advisors, you get to interview the candidates and select the best one. Paladin Registry even offers a complimentary guide to help you figure out the best way to interview your financial advisor candidates. Once you choose an advisor, they can create a financial plan for you.

Summary

Putting together a financial plan can be a great exercise. It allows you to understand where your finances are today. It also makes you think about where you want your finances to be in the future and how to get there. You can put together a financial plan yourself. That said, you could miss things you aren’t aware you need to include or strategies that could help you achieve your goals faster.

Many people choose to hire a financial advisor to put together a financial plan. You can hire a service or find an advisor to meet in person using a service such as Paladin Registry. No matter how you decide to create your financial plan, make sure you have one. That way, you know what goals you’re working toward to have a successful financial future.

Read more:

Empower Personal Wealth, LLC (“EPW”) compensates Webpals Systems S. C LTD for new leads. Webpals Systems S. C LTD is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.

Source: moneyunder30.com