Finance Xpress

Should you pay off debt or invest? This is a common question I receive, and it is a difficult one to answer because every situation is different.

You may have students loans, a mortgage, car loans, credit card debt, furniture debt, medical loans, or something else. Whatever your debt may be, I’m sure you are, hopefully, thinking about your debt payoff plan.

Paying off your debt is a great thing to think about. However, where does investing come in to your overall financial plan? Paying off debt may take what feels like forever, so you may not want to completely ignore saving for retirement and investing while you pay off your debt.

And, this becomes the really tough decision to figure out – should you pay off debt or invest? Should you do both at the same time? Maybe one slightly more than the other?

If you've read How I Paid Off $40,000 In Student Loans in 7 Months, then you know that I paid off my student loans quite quickly. In order to do this, though, I had to decide whether to focus on my students loans and pay off debt, or invest in my long term savings and retirement plan.

It was an incredibly tough decision to make, but I made paying off my debt my sole focus.

Deciding to pay off my debt quickly and putting exactly $0 towards my retirement and investing did not sit well with about 50% of you readers.

But, that's personal finance – it's personal!

If you are asking yourself whether to pay off debt or invest, I can’t give you a definitive answer because everyone’s situation is so different. However, I am going to go over what factors you will want to think about for your specific situation so that you can make your own best decision.

Related content:

• Credible Review – Refinance Your Student Loans And Save An Average of $18,668
• How Blogging Paid Off My Student Loans
• 30+ Ways To Save Money Each Month
• 12 Work From Home Jobs That Can Earn You $1,000+ Each Month

Quick side note: Companies, such as Credible (this is an affiliate link and I highly recommend them), allow you to refinance your student loans so that you can have a lower interest rate. With refinancing, the average person can save thousands of dollars on their loan, and that’s incredible! Plus, Credible is giving Making Sense of Cents readers a $100 bonus when they refinance with Credible.

So, should you pay off debt or invest?

 

Do you have an emergency fund?

To start off, I want to talk about emergency funds. So many people wonder if they should have an emergency fund while they are paying off their debt.

I am a big fan of emergency funds. If you have debt and are pondering today's question, for the most part, I think you should probably still have an emergency fund.

Now, I know that some of you may want to fight me over this, but my reason for still having an emergency fund is that you just never know when you will have an emergency. It’s just that simple. While you’re paying off debt, your emergency fund doesn't have to be the huge six months (or whatever number) of expenses.

I recommend having an emergency fund of at least $1,000 for while you're paying off debt. This is a good amount to have because you will have at least a small cushion to help you in case an expense comes up and surprises you.

If you had $0 in your emergency fund versus a small one of at least $1,000, that can make all the difference in really being able to focus on debt repayment as you will be less likely to add to that debt during your repayment period. What if you had a medical emergency, immediate home or car repair, and more?

If you didn't have an emergency fund but had debt, then this could make for a disastrous situation. Without an emergency fund, it’s likely that you would have to add to your debt, and it would most likely be at a higher interest rate because you would probably have to use a credit card.

Related content: Everything You Need To Know About Emergency Funds

 

How fast do you want to get rid of your debt?

For me, I put 100% of what I had towards debt and 0% towards investing. I chose this option because I just wanted my student loans to be completely gone. That huge monthly payment felt like such a big weight hanging over my head, and I just wanted to stop worrying about it.

If you hate debt as much as I hated my student loans, then this may be the option for you as well.

Some people, like myself, get stressed out by debt, or certain types of debt, which can then impact other areas of their lives. If having debt is leading to extra stress, which can lead to health issues, impact your relationships, work, etc. then focusing as much energy as possible on debt repayment might be the best option for you.

By eliminating your debt, you are then free to focus on improving other areas of your financial situation, such as investing for your future. This is almost like choosing to single task versus multitask – you put all of your energy into one thing so you can focus on doing it efficiently and well, and once you are finished with that, you can put all of your energy into your next goal.

 

What's your interest rate?

Now, there's a chance that you may not really mind debt. Debt doesn't have to be the end of the world, and many people are able to use debt to their advantage. That might sound crazy, but it can be done!

If you have a low interest rate, then this may be something that you are thinking about – investing more instead of throwing everything towards your debt.

I still remember my finance and economics professor in college talking to me about his student loans. He still had them and wasn't worried about paying them off quickly at all, because the interest rates were 2% or less. So, instead, he put as much money towards investing because he figured he could beat his interest rate by investing in the stock market and in other areas of his life.

However, if your interest rate is high, then you may want to pay it off more quickly. For example, credit card debt may have an interest rate of around 20%. There are also high interest rate student loans (such as with private student loans), crazy expensive leases (such as on furniture), and more. These are the types of debt that you will really want to focus on because as that interest adds up, you ended up paying exponentially more in the long run.

If you think your interest rate is high, then you will probably want to think about getting rid of your debt quicker, because the interest is just going to keep piling up until it just seems so unmanageable, and this can make your long term investing goals seem impossible to reach.

Personally, I think that if your interest rate is around 6-8% or higher, then you may want to think about paying off that debt a little quicker so that the interest charges don't build up too high.

 

Do you get a company match?

If your company provides a 401(k) match, then this is a benefit that you will most likely want to accept as you decide to pay off debt or invest. If your company matches your 401(k) contribution, they are giving you money, for free. Even if you add a little in, you can still take advantage of their contribution.

If you don't take it, then you are leaving a valuable benefit on the table, one that you have earned by working. It's not like you would just let the company keep a paycheck of yours, so you should most likely treat a company match similarly!

 

Don't fret.

While I realize that choosing to pay off debt or invest can be an incredibly hard decision to make, you should know that you are on a good path either way. Having the option to choose between paying off debt and/or investing will bring you closer to achieving your financial goals, and the fact that you are doing one or the other means you are making a positive decision for your future.

This is really important when deciding which to focus on – both choices are good. If you are just absolutely stuck, then you may want to put half towards your debt and half towards your investments, so that you can move on with life and spend more time improving your finances in other areas.

Also, remember that personal finance is personal. What may have been a great decision for one person may not be the greatest for another. You will want to weigh your options and see what is best for your specific situation.

What would be your choice? Should you pay off debt or invest? A healthy balance of the two?

The post To Pay Off Debt Or Invest- Which One Is Best For You? appeared first on Making Sense Of Cents.

from Making Sense Of Cents


via Finance Xpress

Posted by: Richie Bernardo

Securing a child’s academic success begins with choosing the right schools. But how can parents decide where to enroll their kids? Because children develop and learn at different rates, the ideal answer to that question varies based on each student’s needs. Unfortunately, most parents can’t afford to place their children in exclusive, private or preparatory schools that give their students greater individual attention.

For the majority of U.S. families, public education is the only option. But the quality of public school systems varies widely from state to state and is often a question of funding. Public elementary and secondary education money usually flows from three sources: the federal, state and local governments. According to the U.S. Department of Education, states contribute nearly as much as local governments, while the federal government supplies the smallest share. Some researchers have found that more resources — or taxes paid by residents — typically result in better school-system performance.

Unlike other research that focuses primarily on academic outcomes or school finance, WalletHub’s analysis takes a more comprehensive approach. It accounts for performance, funding, safety, class size and instructor credentials. To determine the top-performing school systems in America, WalletHub compared the 50 states and the District of Columbia across 25 key metrics. Read on for our findings, expert insight from a panel of researchers and a full description of our methodology.

1. Main Findings
2. Ask the Experts
3. Methodology
4. Resources

Main Findings Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/5335/geochart-school1.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2LNsrRH>

 

Public School Ranking by State

Overall Rank (1 = Best)	State	Total Score	‘Quality’ Rank	‘Safety’ Rank
1	Massachusetts	74.16	1	1
2	New Jersey	67.09	3	9
3	Connecticut	66.93	2	11
4	New Hampshire	65.11	4	7
5	Vermont	63.18	5	4
6	Virginia	63.03	7	2
7	Minnesota	60.34	6	27
8	Maryland	57.82	10	20
9	Wisconsin	57.59	9	26
10	Colorado	57.45	14	8
11	North Dakota	57.03	11	29
12	Wyoming	57.02	8	37
13	Maine	56.82	16	5
14	Nebraska	56.42	12	28
15	Kansas	55.55	21	6
16	Iowa	55.33	13	35
17	Rhode Island	54.78	19	14
18	Washington	54.58	17	10
19	Delaware	54.36	31	3
20	Kentucky	54.34	20	19
21	Illinois	54.20	15	40
22	New York	53.36	24	12
23	Montana	52.78	18	37
24	Indiana	52.69	22	23
25	South Dakota	52.27	23	24
26	Florida	52.10	25	22
27	Ohio	51.93	29	18
28	Pennsylvania	51.36	30	17
29	Missouri	51.20	26	34
30	Utah	50.99	28	32
31	Michigan	50.07	27	44
32	North Carolina	48.91	32	25
33	Oklahoma	48.79	36	16
34	Idaho	47.84	33	39
35	Tennessee	46.90	39	15
36	Texas	46.90	35	41
37	California	46.33	38	21
38	Georgia	45.67	37	42
39	Hawaii	45.09	41	13
40	South Carolina	42.24	40	46
41	Arkansas	42.18	34	50
42	West Virginia	39.91	44	31
43	Oregon	39.79	42	49
44	Alabama	38.98	43	45
45	Mississippi	38.87	45	43
46	Nevada	38.54	47	36
47	Arizona	37.53	48	30
48	Alaska	35.87	50	33
49	District of Columbia	33.62	49	48
50	Louisiana	32.50	46	51
51	New Mexico	31.53	51	47

 

 

Note: Spendings Ranking refers to “Total Current Expenditures for Public Elementary and Secondary Day Schools per Student” (Highest Amount = Rank 1)

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/5335/geochart-school2.html" width="700" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:700px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2LNsrRH>

 

Ask the Experts

Giving students a good education is crucial for the future of the country. That responsibility falls to parents, educators and leaders alike. To expand the discussion, we asked a panel of experts to share their thoughts on the following key questions:

1. How will the education policy agenda being pursued by the Trump administration affect the quality of K-12 education across states?
2. Does variation in per-pupil spending explain most of the variation in school quality?
3. What can state and local policymakers do to improve their school systems without raising taxes?
4. In setting a child up for success, how important is the quality of the school relative to other factors (family, neighborhood, etc.)?
5. In evaluating the best and worst school systems, what are the top five indicators?

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• Theodore G. Zervas Ph.D., Associate Professor, MAT Coordinator, North Park University
• Laura Hsu Assistant Professor, Merrimack College
• Sandra Stotsky Professor Emerita, University of Arkansas - Department of Education Reform
• Barbara Jeanne Erwin Clinical Associate Professor, Indiana University Bloomington
• Paul T. Hill Distinguished Visiting Fellow, Hoover Institution

Theodore G. Zervas Ph.D., Associate Professor, MAT Coordinator, North Park University

How will the education policy agenda being pursued by the Trump administration affect the quality of K-12 education across states?

There is no way to really predict what impact President Trump and Secretary DeVos’ education policy will have on the quality of education across the nation. But we do know that that Secretary DeVos has called on drastically cutting the Department of Education budget. Secretary DeVos has also proposed using $250 million to create a federally funded, nationwide school voucher program. Most of the vouchers would be used towards private school education. Fewer funds and resources going to public schools would only hurt the quality of education in these schools while more money through a voucher program would help private schools.

Does variation in per pupil spending explain most of the variation in school quality?

Yes and No. It all depends on how the money is being spent at schools. One thousand dollars difference between two students may not have a tremendous impact. It’s all about how to maximize resources and monies to help students. When we are talking about two or three thousand dollars them we may see an impact on the quality of education. But again here we have to look if the money is being spent effectively.

What can state and local policymakers do to improve their school systems without raising taxes?

We have to remember that schools are part of the community. Local business, community members, and other stakeholders need to get more involved in their local schools to help support their schools, both financially and through other support networks. For a long time college and universities have sought the help of donors. I think k-12 public schools could do the same.

In setting a child up for success, how important is the quality of the school relative to other factors (family, neighborhood, etc.)?

While teachers and school resources are important they are not the main contributing factor to a child’s success. Rather a child’s family background and child’s support network outside of school are the most important factors in a student’s success. The more people behind the child the more likely he/she will succeed.

In evaluating the best and worst school systems, what are the top 5 indicators?

Test scores are not the best indicators but we do not have many solid indicators when evaluating schools. Some things can’t be measured well, like student or parent satisfaction of their schools. Today, most high schools do not keep track of their students after high school to see if they went on to college, or decided to pursue another path. When someone is looking for schools for their child I tell them the best thing they could do is look at the school report card, but also visit the school and talk to the teachers and administrators about the school and school community.

Laura Hsu Assistant Professor, Merrimack College

In setting a child up for success, how important is the quality of the school relative to other factors (family, neighborhood, etc.)?

I will say that from literature I have read, more than any factor, teacher quality seems to be the strongest predictor of student achievement. Thus, recruiting and retaining strong teachers would ideally be the priority for every school. This is, of course, linked to budgets -- what can schools afford to offer teachers? And what kind of institutional support can they provide teachers once they are hired? Teacher retention continues to be a concern in K-12 education. Often, teachers report they feel overworked and underpaid. What undergirds this is the value placed on the teaching profession in our country (as opposed to other countries who compensate their teachers significantly more, such as Finland). A change in perception is important if any changes in compensation will occur. In my own institution, I see students changing majors because of such concerns about the future. Although I convey to students that money is not the “be all end all” of feeling fulfilled, students and their parents have practical concerns, particularly with the rising cost of college tuition.

Sandra Stotsky Professor Emerita, University of Arkansas - Department of Education Reform

Does variation in per pupil spending explain most of the variation in school quality?

The work/research of economist Eric Hanushek for years has told us that spending more money on education does not result in higher school achievement or quality. 

What can state and local policymakers do to improve their school systems without raising taxes?

1. Allow public schools to hire directly college graduates who have majored in a subject taught in a normal k-12 curriculum (for subject area teaching from grade 5 to grade 12). No requirement that they attend or complete a teacher preparation program.
2. Eliminate all professional development provided by external providers; professional development should be within and between discipline-based departments (no evidence to support externally provided professional development in any subject).
3. Eliminate all reading and math coaches – no evidence to support their effectiveness.
4. Eliminate all federal/state mandated tests for k-12; use district-based teacher-made tests by subject area in high school for high school diploma.
5. Develop transitional grade 9 for students unable to read at high school level.
6. Develop regional (independent) grades 9-12 career/technical high schools and performing arts high schools as options-for all grade 8 students to consider, with support of local industries/business for choice of workshops offered – see as model Blackstone Valley regional vocational/technical high school or Worcester Technical high school or Ellington School for Performing Arts in DC.
7. Hire for k-4 as primary grade teachers only those who can pass separately scored reading and math licensure tests as developed in ma in 2003 and 2008.
8. Eliminate all computer-based testing.
9. Eliminate all data managers and assistant administrators in all subjects. Restore high school department chairs after requiring they have at least a ma or ms degree in the discipline/subject they chair.

In setting a child up for success, how important is the quality of the school relative to other factors (family, neighborhood, etc.)? 

Family stability and support most important, as 1966 Coleman Report and 1965 Moynihan Report implied.

In evaluating the best and worst school systems, what are the top 5 indicators?

1. Daily attendance by students.
2. Daily attendance by teachers.
3. Accelerated curriculum in math and reading available from grade 5 on for fast learners regardless of race or creed or gender.
4. Active PTO (not PTA).
5. Optional high school curriculum sequences available.
6. Teacher/parent committees to choose textbooks for math, science, and history, and suggest literary texts for reading K-12. 

Barbara Jeanne Erwin Clinical Associate Professor, Indiana University Bloomington

Does variation in per pupil spending explain most of the variation in school quality?

Absolutely. Education has been losing $$ over the last decades. Educators are asked to do more (federal and state mandates) with less funding. I am still waiting for full funding of idea passed in 2004.

In setting a child up for success, how important is the quality of the school relative to other factors (family, neighborhood, etc.)?

SES is the number one factor of student success.

In evaluating the best and worst school systems, what are the top 5 indicators?

Trying to measure best and worst is not easy; the states all have different funding systems and state required tests. The first nationally normed test we usually see in a school system comes up in high school—the act or sat. We keep comparing apples to oranges. Unfortunately most parents do not understand that education in one state usually has different state funding mechanisms than the state they are living in…..good luck with that.

Paul T. Hill Distinguished Visiting Fellow, Hoover Institution

How will the education policy agenda being pursued by the Trump administration affect the quality of K-12 education across states?

Private school choice is more polarizing that effective: it will prove a dead end because good new schools will, not emerge to serve the majority of students. In the meantime trump and DeVos will divide the charter school movement on ideological grounds and increase its political liabilities.

Does variation in per pupil spending explain most of the variation in school quality?

It explains very little, in part because high spending is accompanied by oppressive union contracts and state regs. There is probably a minimum level of spending for decent schools and some states fall below it. But the best combination is moderate spending (c. $12,000/pupil) low regulation, and constant pruning of ineffective schools.

What can state and local policymakers do to improve their school systems without raising taxes?

Deregulation, encourage new school formation, accountability. Being open to new schooling models and operators via chartering is a v important factor, if not a panacea.

In setting a child up for success, how important is the quality of the school relative to other factors (family, neighborhood, etc.)?

Impossible to say in general. Schools can make a huge difference but the kid needs a supportive home environment too. It is crazy to say one or the other, because they are independent. The left and right both emphasize one side of a tight relationship.

In evaluating the best and worst school systems, what are the top 5 indicators?

Is teacher turnover low in all schools or high in some and low in others; in what % of the schools is the average kid unlikely to graduate or be eligible for college (negative); what proportion of kids leave elementary school reading at grade level and mastering fractions, percentages, etc.; what is the probability that a student leaving 8th grade will graduate HS 4 years later; what proportion of the students can alter college and need no remediation?

Methodology

In order to determine the best and worst states for public-school education, WalletHub compared the 50 states and the District of Columbia across two key dimensions, including “Quality” and “Safety.”

We evaluated those dimensions using 25 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the highest quality of public K–12 education.

Finally, we determined each state and the District’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.

Quality – Total Points: 80

• Presence of Public Schools in “Top 700 Best U.S. Schools”: Full Weight (~3.64 Points)Note: This metric measures the number of public schools in U.S. News & World Report’s “Top 700 Best U.S. Schools” ranking adjusted by the number of public schools for each state in the U.S. News & World Report sample.
• Blue Ribbon Schools per Capita: Full Weight (~3.64 Points)Note: The National Blue Ribbon Schools Program recognizes public and private elementary, middle, and high schools based on their overall academic excellence or their progress in closing achievement gaps among student subgroups.
• High School Graduation Rate Among Low-Income Students: Full Weight (~3.64 Points)
• Projected High School Graduation Rate Increase Between 2017-2018 and 2031-2032 School Years: Full Weight (~3.64 Points)
• Dropout Rate: Double Weight (~7.27 Points)
• Math Test Scores: Double Weight (~7.27 Points)Note: This metric measures the scores earned by fourth and eighth graders.
• Reading Test Scores: Double Weight (~7.27 Points)Note: This metric measures the scores earned by fourth and eighth graders.
• Share of 2017 High School Class Scoring “3” or Higher on Advanced Placement Exams: Double Weight (~7.27 Points)
• Median SAT Score: Double Weight (~7.27 Points)
• Median ACT Score: Double Weight (~7.27 Points)
• Share of High School Graduates Who Completed ACT and/or SAT: Double Weight (~7.27 Points)Note: For this metric, the percentage sum may be larger than 100 percent, considering some students completed both standardized tests. However, no data specifying the number of students who did so are available.
• Division of SAT Results by Percentile: Full Weight (~3.64 Points)
• Division of ACT Results by Percentile: Full Weight (~3.64 Points)
• Pupil-Teacher Ratio: Full Weight (~3.64 Points)
• Share of Licensed/Certified Public K–12 Teachers: Full Weight (~3.64 Points)

Safety – Total Points: 20

• Share of Threatened/Injured High School Students: Double Weight (~3.33 Points)Note: This metric measures the percentage of public school students in grades 9 to 12 who reported being threatened or injured with a weapon on school property.
• Share of High School Students Not Attending School Due to Safety Concerns: Full Weight (~1.67 Points)Note: This metric measures the percentage of public school students in grades 9 to 12 who reported not attending school because they felt unsafe at or on their way to or from school.
• Share of High School Students with Access to Illegal Drugs: Full Weight (~1.67 Points)Note: This metric measures the percentage of public school students in grades 9 to 12 who reported that illegal drugs were made available to them on school property.
• Share of High School Students Participating in Violence: Full Weight (~1.67 Points)Note: This metric measures the percentage of public school students in grades 9 to 12 who reported involvement in a physical fight at least once during the previous 12 months on school property.
• Share of Armed High School Students: Full Weight (~1.67 Points)Note: This metric measures the percentage of public school students in grades 9 to 12 who reported carrying a weapon on school property.
• Number of School Shootings (1990-present (May 30, 2018)): Full Weight (~1.67 Points)
• Presence of Adopted and Enacted Laws Regulating Mandatory School Resource Officers: Full Weight (~1.67 Points)
• Bullying Incidence Rate: Double Weight (~3.33 Points)
• Disciplinary Incidence Rate: Full Weight (~1.67 Points)Note: Rate measured per 100,000 students.
• Youth Incarceration Rate: Full Weight (~1.67 Points)Note: Rate measured per 100,000 population aged 20 and younger.

Resources:

• Summary video with V/O
• Summary video without V/O

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, U.S. Department of Education, National Conference of State Legislatures, National Center for Educational Statistics, Centers for Disease Control and Prevention, Western Interstate Commission for Higher Education, Office of Juvenile Justice and Delinquency Prevention, U.S. News & World Report, College Board, Ballotpedia and ACT.

from Wallet HubWallet Hub


via Finance Xpress

Looking for ways to save this back-to-school season? Mark your calendars! Here is the latest sales tax holiday schedule.

Each year, several states in the U.S. have a sales tax holiday weekend–or sometimes a whole week! Some states offer two or three different sales tax holidays over the year, often focused on different types of items. Sales tax holidays are an especially big hit around back-to-school season. They are a great way to save as you stock up on school supplies or outfit your kids for the coming school year.

Back-to-school offer – The Chase College Checking℠ account provides students a checking account with a wide variety of tools to manage their day to day finances. Students have access to 16,000 ATM’s and over 5,100 Chase branches along with Chase QuickDeposit, the Chase Mobile App and a VISA® debit card. For a limited time, new students can earn a $50 bonus by signing up, depositing $25, enrolling in paperless statements and making 10 qualifying transactions inside of the first 60 days.

Since we first published this article, we’ve seen some changes in sales tax holidays. Georgia and North Carolina dropped their programs, and several states added or expanded theirs.

This schedule gives you the latest information on sales tax holidays nationwide. A few of the states have not released their sales tax holiday dates as of this update (July 2018), but look for more information on specific dates in the future!

State	2018 Dates	Items Exempt	Maximum Cost* (Per Item)
Alabama (Back to School)	7/20 - 7/22	Computers	$750
		Clothing	$100
		School Supplies	$50
		Books	$30
Alabama (Hurricane Preparedness)	2/23 - 2/25	Supplies	$60
		Generators	$1,000
Arkansas	8/4 - 8/5	Clothing and Footwear	$100
		Clothing Accessories and Equipment	$50
		School Supplies, School Art Supplies and School Instructional Materials	No Limit
Connecticut	Dates Forthcoming	Clothing and Footwear	$100
Florida (Wealth Preparedness)	6/1 - 6/7	Portable generators	$750
		Bungee Cords, Anchor Systems, Radios, Tie-Down Kits, etc.	$50
		Batteries and Coolers	$30
		Gas and Diesel Fuel Containers	$25
		Portable Self-Powered Light Source	$20
		Reusable Ice	$10
Florida (Back to School)	8/3 - 8/5	Bags, Clothing, Footwear and Wallets	$60
		Other School Supplies	$15
Iowa	8/3 - 8/4	Clothing and Footwear	$100
Louisiana (Hurricane Preparedness)	5/27 - 5/28	Hurricane Preparedness Items	$1500
Louisiana (Personal Property)	Dates Forthcoming	Tangible Personal Property	$2500
Louisiana (Firearms)	Dates Forthcoming	Firearms, Ammunition and Hunting Supplies	No Limit
Note that Louisiana tax sales reduce state sales tax to three percent rather than getting rid of it altogether.
Maryland (Back to School)	8/12 - 8/18	Clothing and Footwear	$100
		Backpacks	$40
Maryland (Go Green)	2/17 - 2/19	Qualifying Energy Star Products	No Limit
Mississippi (Back to School)	7/28 - 7/29	Clothing and Footwear	$100
Mississippi (Firearms)	8/31 - 9/2	Firearms, Ammunition, and Hunting Supplies	No Limit
Missouri (Energy Star)	4/19 - 4/25	Energy Star Products	$1500
Missouri (Back to School)	8/3 - 8/5	Computers and Accessories	$1500
		Computer Software	$350
		Clothing	$100
		School Supplies	$50
		Graphing Calculators	$150
New Mexico (Back to School)	Dates Forthcoming	Computers	$1000
		Computer Hardware	$500
		Clothing and Footwear	$100
		School Supplies	$30
New Mexico (Small Business)	Thanksgiving Weekend	Select Items from Small Businesses	$500
Ohio	8/3 - 8/5	Clothing	$75
		School Supplies	$20
		School Instructional Materials	$20
Oklahoma	8/3 - 8/5	Clothing	$100
South Carolina	8/3 - 8/5	Clothing, Footwear, School Supplies, Bed and Bath Linens, and Computers	No Limit
Tennessee	7/27-7/29	Computers	$1500
		School Supplies	$100
		Clothing	$100
Texas (Energy Star)	5/26 - 5/28 (2019)	Energy Star Air Conditioners	$6000
		Other Energy Star Products	$2000
Texas (Back to School)	8/10 - 8/12	Clothing, Footwear, Backpacks and School Supplies	$100
Texas (Emergency Preparedness)	4/27 - 4/29 (2019)	Portable Generators	$3000
		Emergency Ladders and Hurricane Shutters	$300
		Select Other Emergency Supplies	$75
Virginia (Combined)	8/3 - 8/5	Portable Generators	$1000
		Gas-Powered Chainsaws	$350
		Chainsaw Accessories	$60
		Other Hurricane Preparedness Supplies	$60
		Energy Star and WaterSense Products	$2500
		Clothing and Footwear	$100
		School Supplies	$20
Wisconsin	8/1 - 8/5	Computers	$750
		School Computer Supplies	$250
		School Supplies	$75
		Clothing	$75

* The spend limit is for each item sold. This means you can buy multiple items and pay no sales tax as long as each one is below the limit set by the state.

Topics: Taxes

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Today, I want to introduce you to Sean. He is a financial analyst by day and money blogger by night. He saved over $200,000 by age 27 and plans to retire in less than 10 years. Enjoy!

No, that headline never gets any less surreal the more I read it.

And no, I wasn't a lucky lottery winner or a privileged trust fund beneficiary. (Unfortunately)

Instead, I got my money building start at the oh-so-glamorous position of digging ditches in the scorching Texas summers. When I eventually saved up a whopping $500, I opened my first savings account. From there, I took a few years working up the courage to invest in the stock market, and then I held my breath in terror, hoping I didn't lose everything during the recession.

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I then strapped in for a wild ride past all sorts of neat milestones – $25,000 by age 23 and $100,000 by age 25, when I started my blog. The extra accountability of publicly sharing my net worth every month must have provided motivation, because just two years later I've now saved over $200,000.

In true OCD-money-blogger fashion, I've kept this chart outlining my progress:

But that's just the story of the numbers. Behind all those numbers are some surprisingly simple steps anyone can implement to kick their savings into overdrive.

 

1. I realized the power of compounding.

In high school, my math teacher sat the class down and asked a simple question. Would you rather have $1,000,000 right now, or a penny that doubled every day for a month?

If you chose the million bucks, prepare yourself for the lottery winner's remorse. While I'd certainty take a million without complaining, that tiny little doubling penny would have left you with, wait for it… $5.4 million at the end of the month.

(And yes, the majority of the class chose the million dollars.)

Here's another counterintuitive example. Consider two investors who both want to become millionaires by age 60. They each invest in the stock market and earn 7% each year.

To become a millionaire, the first investor needs to invest $10,000 a year from age 24-40. Then, she's free to stop investing entirely, coasting to the million-dollar finish line at age 60.

Now imagine the second investor procrastinates a bit, and he doesn't start investing until age 40. To retire with the same amount of money, he'll have to invest over $26,000 a year. AND make those larger investments for 4 more years than the first investor!

I'll admit, this is hard to conceptualize.†There's no shame. The human brain isn't really hard-wired to understand exponential returns.

Compounding is confusing. It's hazy. It's really-freakin-hard to imagine a penny doubling 30 times in a row.

What's this all mean, anyway?

It means the best time to start investing is undoubtedly, unquestionably, RIGHT NOW.

I was lucky to have this epiphany early, and I started investing in the stock market in my late teens. Sure, I wasnít investing much back then, but I was investing something.

And when you invest even the smallest amount, your dollars get the power of time (and the power of compounding) on their side.

 

2. I got a degree that pays.

I graduated college with a degree in Economics and Finance, which happens to be one of the 11 highest paying college degrees.

Sure, Iíd love to say that I chose the degrees because they were my true passions in life, and I was just living out my destiny. (And maybe thatís party true, since I do blog about money in my free time.)

But whatís much more accurate, is that I strategically chose the degrees because I thought they represented by best chance at making bank.

I researched starting salaries. I reviewed real life job postings on glassdoor.com, monster.com, and other career sites. I sought out any mentor who would listen, and I visited career fairs like they were scouting opportunities.

And once I started interviewing and got those first job offers.

 

3. I avoided the starting salary bait and switch.

Coming out of school, I was lucky in having more than one job offer. And that soon meant a classic dilemma:

• Option 1 – the job with the higher starting salary, but uncertain upward mobility.
• Option 2 – the job with the lower starting salary, but much more certain upward mobility.

I like to refer to option one as the classic employer bait and switch.†They lure you in with a higher opening offer, then stick you into a career path thatíd have you earning much less.

So I accepted my starting offer at a lower, but still respectable $50,000. The big curveball? 5 years later, I was earning over $85,000 a year, while the “bait and switch” offer would have had me at no more than $65,000.

Lesson learned: whenever youíre evaluating job options, always calculate your salary in chunks of time. Donít consider the year one salary, consider the first five yearís salary, or however long you realistically plan on staying with the company.

At this point, youíre probably either laughing at my puny salary, or discouraged because you earn less.

But fear not! Because even if your day job doesn't pay quite like you'd hope (who's does, anyway?) there's always.

 

4. The Side Hustle.

I was also fortunate to graduate without student loans, thanks to some generous parents, scholarships, and a secret weapon.

That secret weapon? Side hustles!

Ramen noodles have a certain knack for helping you understand the value of a dollar. So in college, I side hustled my way to extra money in any way I could.

I became a mystery shopper, so I could earn a couple extra bucks and occasionally eat for free. I used my student discount to buy and sell concert tickets. And I even learned more than anyone should ever know about softball bats, then bought, sold, and traded my way to big profits.

My efforts allowed me to avoid student loans and start my working career with a clean slate. But more importantly, my side hustles taught me a take-away anyone can use.

No, the take-away is not to start wildly speculating on softball bats.

Side hustling taught me that no matter your position in life, YOU have the power to get creative and increase your income. No matter who you are, you have†a special skill you can monetize in your free time.

Even if you're a broke, ramen eating college kid, you can always make extra money. Find a good side hustle and start building up your nuclear triad of income.

 

5. I made saving easy, by minimizing my fixed expenses.

Whatís harder, saying no to a night out with friends, or living without stainless steel appliances in your first apartment?

Thatís the question I asked myself when looking for my first place.

Why?

Because of most of the legwork for saving money comes from minimizing those big, recurring monthly expenses.

And the biggest expense of all? Housing.

So, I went apartment shopping. I passed on the trendy downtown place, and instead I opted for a good deal just outside the city.

Sure, the uber rides downtown cost a little more, but that expense was more than covered by the hundreds of dollars in rent I was saving every month.

Along the same lines, I said no to a new car payment, and instead opted to keep my old 13-year-old truck.

Just these two decisions saved me over $600 per month!

That's over $7,000 per year. On my my $50,000 a year salary, those two decisions allowed me to save an extra 20% of my take home pay every paycheck, without even trying!

 

6. I tracked my spending.

To really kick my savings into higher gear, I started tracking my spending meticulously.

Every month, I set aside 30 minutes to comb through my credit card statements. I entered all of my purchases into a big spreadsheet, and I calculated my progress.

And boy, was I in for some surprises. I found out how much it actually costs to adopt a dog. I realized I eat out way too much. And I had plenty of time to regret that ridiculous $14 cow-skull magnet from the gift shop. (What was I thinking??)

But I also found the process incredibly motivating.

When youíre saving money, it can often feel like youíre spinning your wheels. By going over my details every single month, I could see exactly how much progress I was making.

And I noticed something else interesting. Tracking my spending also highlighted areas of improvement. And even stranger, simply knowing that I was keeping a log made me more aware of my spending habits.

I soon found myself looking for ways to spend less and save more. And dare I say, it actually became kind of fun!

These days, tracking your spending is even easier with all the amazing money apps available. You won't even need to set aside those 30 minutes!

 

7. I used my time more efficiently at work.

Yeah, Iím not the biggest fan of work, either. And Iím not about dedicating my life to my career, as you can probably tell from my aspirations of retiring before Iím 40.

But, I am appreciative of the paycheck, and our discussion earlier about upward mobility only counts if you capitalize on it!

Most people waste hours in the office surfing the internet, gossiping, and staying distracted with unimportant details.

How much more efficient could you be in your job? And how much could that translate to bigger bonuses, higher promotions, and ultimately, more money!?

Some strategies I used to bump up my efficiency in the office:

• I created detailed to-do lists, to hold myself accountable for actually following through on my tasks.
• I realized Iím most productive in the morning, so I blocked off my schedule to complete the dayís toughest, most important task first thing. No email or morning hellos, just 100% focus on the one thing most likely to improve my career.
• When I started needing a break, I utilized the Pomodoro Technique to stay efficient all-day long. (25 minute cycles of uninterrupted work followed by a 5-minute break)
• And when it came time to ask for a raise, I didnít back down from a strong, professional negotiation.

These strategies helped my salary grow from $50,000 to over $85,000 in 5 years.

 

8. I abandoned stock picking in favor of index fund investing.

What to do with all that extra money?

Well, picture this: a young money wizard, eager to become the next Warren Buffett. He studies day and night, confident he can outsmart the stock market.

After much deliberation, he picks some hot-shot stocks to invest his hard-earned money into.

And it works! His stock picks go up in value, and he's feeling pretty good about himself.

Then, one day, he logs into his brokerage account and notices a feature he never saw before: “Compare to Benchmark…”

“Hmm,” he thinks. “I've never compared my investment choices to the overall stock market before.”

He opens it up, and his computer screen is illuminated by the glow of charts, graphs, and spreadsheets.

And he immediately notices something shocking.

Those hot shot stocks he was so proud of? Sure, they increased in value. But the entire stock market increased even more!

Yep, that's my story.

Over my first few years of investing, I spent countless hours researching stocks and analyzing investments. But I never realized that my hand-picked portfolio lagged the market by several percentage points the entire time.

Over time, this underperformance compounds, and I'll let this little graph speak for itself:

It'd be far too painful to calculate how many thousands of dollars that under-performance actually cost me.

In my backfired attempt at outsmarting the market, I learned a valuable lesson. I shouldn't trade individual stocks, and neither should 99% of you. (That's a real stat, btw.)

And while this might sound like a disappointing revelation, itís actually great news!

By shifting your focus from stock picking to index fund investing, you limit your risk for bad investments. Instead, by choosing an indexing strategy, like vanguard or betterment, you humbly accept the returns of the entire stock market, which historically have been about 7% per year. And then, you kick back and enjoy the rest of your life.

What a relief! In order to make good money in the stock market, you donít have to spend your nights and weekends reading financial statements, crunching numbers, and running stock screens. Instead, you can choose a hands-off index fund strategy, and youíll probably end up even richer! Hooray!

When I started index fund investing, I noticed my free time increasing right along with my returns. More free time = more side hustles, and the money-making cycle repeats itself.

The Money Wizard is a financial analyst by day and money blogger by night. He saved over $200,000 by age 27 and plans to retire in less than 10 years. If you found this post interesting, you'll love his free ebook outlining the rules he uses to save money fast.

 

The post 8 Steps I Took To Save $200,000 By Age 27 appeared first on Making Sense Of Cents.

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