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Online Learning: Budget for the Costs

Some parents in online parenting groups are joking that they bought pajamas in preparation for the upcoming school year because they children will participate in online learning. They laughed over saving on back-to-school clothes since their children will not be in the classroom. But the truth is that learning at home, no matter the setup, may not save money. Parents who already homeschool know that there are costs associated with purchasing certain curriculums as well as buying supplies. If you haven’t done any financial planning for distance learning, here are some expenses to consider and factor in to your budget:

School supplies: Some schools still sent out lists of school supplies. Perhaps some of these lists are shorter than usual but they are still being sent out. Other parents may find their school wants them to get certain items that would normally be supplied by the school but now need to be purchased for use at home. Parents who opt for certain online schools (not traditional public schools offering their classes online) may need to buy or upgrade a computer.

Higher utility costs: Families who have already been spending more time at home may have seen their utility bills increase and this will likely continue of the children are at home and everyone is using more electricity, water, etc.

If your family didn’t already have high-speed internet service, you may need to get it for your children’s online classes. Some school districts are offering assistance to help families in need pay for internet costs.

Tutors: Parents are making arrangements to make sure their children are getting the academic assistance they need: hiring people to teach in-home or paying older students to spend time helping their kids via Zoom.
If you were paying for extracurricular activities, some of that money that isn’t being used can go towards these kinds fo educational expenses.

Lost work time: One of the biggest considerations for parents who will have children attending school at home is how this may affect the parents’ work and productivity. Older children may be able to handle schoolwork on their own by younger children will need supervision.  But the truth is children of all ages will change the dynamics of a parent’s work environment if the parent is also working from home. Some parents who were working outside of the home mayweed to change hours or leave their jobs if they children’s school has gone online and they don’t have other childcare.

College Choice: Family and Financial Considerations

Last month we discussed how college students and their families are facing tough choices. And in a article entitled “For Financially Responsible Kids, Do NOT Do These 3 Things,” the author suggests that parents not leave this decision about which school to attend solely in the hands of their teenaged children:
“Most parents feel obliged to send their children to the best — and often the most expensive — school they can get into. We are leaving large financial decisions that will impact the whole family up to our 17-year-old children.”

The article points out that we do not usually let children make the sole decision about other major purchases like a house or a car. You could argue that a child’s education should be their decision because it affects that child’s life and future career prospects. This is true; however, it does help to consider how college education costs can affect an entire family. No matter the size or number of children in a family, the costs of a college education will alter the family budget and spending power. And since some parents consider dipping into their retirement savings to pay for a child’s college education (something the author advises against), it can change the family prospects for years to come.

Rather than letting a child get excited about their dream college and taking out loans to make that dream come true, parents can talk to their children in the years leading up to college about the costs and what they as parents can contribute. In years past, students borrowed heavily for college because they were told that college debt was “good debt” and an investment in the future.  Many of these students were in for a surprise when they learned what their monthly loan payments would be once they had graduated. Rather than dealing with this kind of aftershock, you can discuss the costs with your child and make economics a part of the considerations as you child is selecting which college to attend.

Outline an Investment Strategy Instead of Chasing Hot Investments

To respond to requests for information about what people should invest in, The Motley Fool doesn’t offer a list of specific companies but instead outlines some rules of thumb that novice investors could follow

Having an investment strategy is important. Rather than chasing what you think may be a hot investment, find a way to make the most of your resources and invest in a way that will make you feel comfortable and yield results. This is where a Fee-Only financial planner can help. If you aren’t comfortable with your investments, you can bring unnecessary on yourself. You may also get nervous and start moving money around when you need to give your investments time to grow.

The Motley Fool suggests that you:

Consider your age:

The younger you are, the more time your money has to grow so younger investors can afford to take more risks. Older investors need to err on the side of being more conservative with their investments.

Consider how much you can invest:

If you go after certain investments because you are sure they will have great results but overspend, you can put your present life at risk for uncertain gain in the future. You don’t have to risk your ability to meet expenses now. In fact, you should have an emergency fund ready before you invest to ensure that your current needs are met.

Consider your reason for investing:

We all need money and yet growing your investment portfolio isn’t usually just an exercise in getting more money to just store in bank accounts. Are you investing for retirement, education, to start a business, or to buy property? The reason you need the money and the projected time frame for when you will need it can help inform your decisions about where to invest your money.

College Students and Their Families Face Tough Choices

College students face some tough choices as they look to how they will continue their college education that was likely disrupted in some way by the pandemic during this past spring semester. Some classes are all online or partially online and some students can’t fully pursue their courses of study because of the need for people to keep their distance from each other.

Good Housekeeping offers some perspective and advice for families who are weighing their options for the fall semester and beyond. Since no one can really predict what will happen, students and their families have to consider the entire upcoming school year.

College costs will remain the same or rise.

While some colleges offered emergency funds, moving assistance (for those leaving dorms) and in some cases, partial refunds this past spring, students may not see the same for the fall. You may argue that a college that is offering online-only or hybrid course should charge you less but many schools will see budgets shrink because of lower enrollment. Colleges still have campuses that they will need to maintain with smaller amounts of tuition money.

Is it worth it?

Whether they study economics or not, students will need to quickly figure out how to do a cost-benefit analysis with regard to the viability of continuing their studies. You can ask your Fee-Only financial planner for help. If you have already started at a college or university, you will have to decide if continuing there with whatever they are offering will be worthwhile based on your course of study. Students who planned to start their first year of college in the fall also have to decide if what is being offered is good way to launch their journey into higher education.

Gap year?

The article also advises students who are considering a gap year. A student may not benefit from the year off if they do not have a plan for what they will do instead of attending classes. Whatever students do should still put them on the path toward their goals and  while that doesn’t necessarily have to be a job or an internship, the experience gained should be meaningful.

Financial Power of Attorney: Are You Responsible for Covering Debt?

A Live Chat with The Washington Post’s Color of Money columnist Michelle Singletary posed an interesting question about handling a parent’s debt. The person who wrote in to the chat has financial power of attorney and has had to move that parent into an assisted living facility. The parent had $3,000 in credit card debt that the credit card company is pressuring the adult  child to pay off using monthly payments: “While his account had been closed for fraud, I didn’t see anything too suspicious. I called the cc company to discuss options. They offered me a 5 year payment program at 6% which is $62/mo. I know I am not personally liable for his debt, and he is practically judgment proof at this point, but I’m wondering what you would recommend.”

This person is empowered enough to know that having power of attorney does not mean being automatically responsible for someone’s debts. The ins and outs of handling this kind of responsibility can sometimes come as a surprise and many people do not know what to do. If you did not educate yourself ahead of time because you were not anticipating the need to manage someone else’s finances, you can still consult with a Fee-Only financial planner. You do not have to go it alone and try to handle this responsibility without expert advice.

Singletary recommended continuing to negotiate with the credit card company to get a cash settlement (as opposed to monthly payments with interest), adding: “Yes, you have the power of attorney (POA) but you are not obligated to do more than try to manage his affairs and not take on his debts.”

(By the way, this live online chat session also includes advice on getting a password manager, something we’ve mentioned before since password access is a part of estate planning. The person who wrote in about credit card debt had to repeatedly ask the credit card company for information and it took time to get past statements.)

File Federal Income Taxes by July 15

Earlier this year, we mentioned that the federal income tax deadline was extended and that you needed to check your state deadline.

Like many other employers across the country, the IRS also scaled back operations, so they were unable to process tax returns and offer the phone assistance they had previously offered. But with the July 15 income tax deadline approaching, they are preparing to go through any backlog, as well as process new returns that come in this month. If you are hoping that rumors of further extension were true, you need to know that on June 29, the IRS announced there would not offer an additional extension.

If you were one of those people who felt you needed assistance to finish filing your taxes and could not visit a tax preparer because you were being cautious or because your tax preparer’s office was closed, contact local tax preparers to see if they are offering drop-off service. You may be able to confer with someone on the phone if needed rather than sitting across from them in an office

In “July 15 tax return deadline is right around the corner: What to knowMSN Money points out one advantage this year for those who hesitated: you may be getting a refund plus interest since the IRS will pay you interest owed between April 15 and the day your refund is issued.

The article also adds that  you may be able to get another extension: “It is still possible to file IRS Form 4868 on or before July 15 to receive an automatic extension until Oct. 15 to file your tax return. That’s an extension for filing a return, though. If you owe money, you would still need to pay what you owe by July 15 or be subject to penalties and interest. “

We recommend filing your taxes as soon as you can and working with a Fee-Only financial planner to get your finances and paperwork in order so you can be ahead of schedule for next year.

Why Are You Avoiding Estate Planning?

In “Estate Planning in the Time of Corona“, we discussed some of the ways in which estate planning may have changed during the pandemic. While some of the logistics and methods used to execute an estate plan may have changed, the excuses we use to avoid this work may have remained the same—with the added twist that we are also more fearful in general because of the Coronavirus.

Photo by Melinda Gimpel on Unsplash

Some people have been able to spend their time sheltering in place engaging in hobbies and in a more relaxed fashion while others have found an increased pressure to work around the clock. Either way, the importance of having an estate plan remains the same. We can’t break down all of your fears connected to estate planning but we can offer some tips.

In “Three Reasons People Avoid Estate Planning“, a writer for Forbes

“…narrowed it down to these three most common excuses:

Too Busy: I can barely keep up with my life as it is. 

Too Adult: It’s complicated and/or expensive.

Too Superstitious: I don’t want to jinx my life by thinking about death.”

If you are overwhelmed at the thought of doing an entire estate plan on your own, you can get some help from a Fee-Only financial planner

As a beginning step that you can take on your own, you can follow the advice of the Forbes article and either share your passwords or use a password manager to collect your password and find a way to make sure those handling your estate can get the information : “It could be as simple as writing down the location, or the master password, and keeping it with your important papers. Plus, if you ever forget the master password, which happens, you’ll know where to find it.”

As we’ve noted before: password access is a part of estate planning.

Time-Honored Investing Advice Applies During a Pandemic

In calmer, more predictable times some people find it difficult not to panic based on headlines. During a pandemic, the temptation to panic and make impulsive money moves may be even greater. offers advice to nervous investors in “How to Save Yourself from…Yourself.” 

The article says “It is only a loss if you sell it. Markets go up and they go down, but over the long run, they have always gone up.” So, before you panic and decide to sell investments that could still grow over time, consider the long-term consequences to your portfolio.

And instead of selling, you could also consider buying some of the stocks that are going to be on sale during uncertain times. Rather than worrying about what could happen to stocks you have you could boost your portfolio with additional investments. One thing the article suggests for those who want to invest more but are risk-averse is annuities since they are less volatile.

On the other hand, some people are not panicking at all because they have no investments, although now may be a good time to start investing.  The Motley Fool offers tips in “How to Start Investing During a Pandemic.” Two pieces of advice offered are overall financial planning strategies and not strictly tied to investing: have an emergency and reduce your debt as much as possible. According to The Motley Fool, these actions mean you are ready to invest.

If you haven’t invested before you can take your time to learn more about the stock market and consult with a Fee-Only financial planner. The article suggests that if you aren’t ready to just dive in, you can invest a little money at a time to test the waters.

Like, The Motley Fool suggests that you need to give investments time to grow:

“Finally, remember that pandemic or no pandemic, you should never invest in the stock market with any money you will or may need within five (if not 10) years. You don’t want to have to sell stocks after they’ve crashed, and the market’s performance in the short term is unpredictable — but over the long run, it has always gone up.”

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