Breaking the Small Business Code

New Stimulus Bill 's Housing Related Benefits & College

     We don't know all the details yet but the recently passed Stimulus Package looks to have three potential benefits for families thinking about buying or refinancing a home. I wanted to share how these items can have possible benefits for college planning:

• In 2008, the conforming loan limits were increased to $729,750.  The American Recovery and Reinvestment Act of 2009 (ARRA 09) reinstates the $729,750 conforming loan limits until December 31, 2009.  This means lower interest rates for loans up to this amount. Higher rates come with "jumbo loans" that exceed this amount.  If your home still has equity, this could be a good thing to take advantage of lower interest rates for college planning!

• The 2009 bill will offer first-time home buyers a tax credit in the amount of $8,000 providing you purchase a home between January 1, 2009 to December 31, 2009.  The credit does NOT have to be paid back to the government unless the buyers sell their home within 3 years after the date of close of escrow on the home.  If you have the means, this could be a great time to help your student(s) buy their first home in lieu of a dorm. 

• The American Recovery and Reinvestment Act of 2009 offers incentives to existing home owners for going Green.  A tax credit of up to $1500 is given to home owners who make some “Green” home improvements.  These Green home improvements include, but not limited to, energy efficient windows, doors, and furnaces.  So doing something to save energy costs could help reduce taxes both of which can improve tax flow for college.

     As I learn more about ARRA 09, my team and I will look for ways to help college-bound families use the benefits to help pay for college!

Paying for College When Your 401K becomes a 1K

     Good morning.  You just woke up to yet another bank being bought out, news of the bailout plan being used as a political football, your house value (and your home equity) has fallen another 10%, and your 401k has been reduced to a 1k.   And tonight's dinner table conversation will be about which $20,000 to $50,000 a year college your high school senior should be applying to. 

     Welcome to the new American nightmare -  paying for college while the financial world you were planning to use seems to be falling apart before your eyes.

     So what is a college-bound family supposed to do in today's chaos?

     First, slow down, take a deep breath and focus on what you can control and create a plan.  The reason firefighters seem so in control during an emergency is they have plans for what to do in various situations.  Families who have a plan will not react in panic when something outside their control happens -- they move onto plan B and then plan C.

     I am counseling my families to think of college planning in these turbulent times as a road trip.  You know you want to get from New York to California for a particular budget.  You decide to drive and begin the trip.  You get 30 miles away from home when traffic stops and the radio tells you about a crash on the main highway ahead.  You can choose to wait it out OR take an alternative route.  You probably wouldn't turn around to go home and decide to fly would you?  If you don't know an alternate route you may pull out a map or pull off the highway and ask someone.  College planning in these strange financial times is the same way!

     Have a TRIP (College) PLAN!  Know where you want to go, how much you can afford to spend to get there, and alternatives in case of an emergency.  If you don't know the alternative routes, find someone who does!  And like driving across the desert, I wouldn't recommend listening to advisors who aren't experienced in that dangerous part of the journey.  I often end up fixing college plans that were based on heresay from friends, family and "professional" advisors who are well-meaning but have never successfully created college plans.

     So where should you turn for professional help on your "road trip"?  You can hire college financial planners like me to be your personal chauffer and take over the trip.  But that's an expensive option and not for everyone.  Instead, I would suggest you consider joining a  "AAA" for college planning.  That's why  I am suggesting that all families learn more about the not-for-profit College Leadership Foundation's College eCoaching program. 

     I am proud to be one of the Technical Advisors to the CLF's eCoaching Club.  I feel they are the most cost-effective way I have ever seen for getting help for the college journey for virtually every college-cound family.  They are unbiased and independent so there is no risk that they will send you down a "road" that only benefits a lender or a mailing list company!

     If you can't find or afford a local "Linda" to be the chauffer, I suggest looking into the CLF eCoaching program to help you on your journey.  For a modest monthly fee, you get the information you need sent direct to your family's inbox several times per month. Compared to the ultimate cost of the trip you and your student(s) are about to take, having a college planning "AAA" will be a small but valuable investment.

     In the meantime, if you have questions or concerns about your college future in today's economy, respond to this blog or contact me through my webpage at www.LindaPTaylor.com.