Category Archives: Finance

Cash vs Credit? Which One Should You Go for?

This is a million dollar question without any doubt. Financial professionals can solve the matters involving huge sums of money, develop long-term plans for corporations and make decisions strategically. However, when it comes to answering a simple question of choosing between cash or credit, they are usually unable to decide. The truth is that there is no definite answer to choosing between cash or credit scheme for you. It all depends on your personal circumstances.

Going for a cash or credit transaction also depends on your budget, credit ratings, financial standing, annual income and many other factors. Also, you should decide keeping the specific transactions in mind. Interest rate and need for urgency is one of the strongest things which will help you in determining the right choice for you. Other than this, you should also consider many different things before you choose between cash or credit cards for a transaction.

Consider the Urgency of Your Transaction

If you need to buy something on an urgent basis and you don’t have money for that, you should definitely go for a credit card purchase. As compared to a regular loan from bank, buying on a credit card can lower your total costs. Buying something on credit card can also give you sufficient time to make the repayments. If you don’t have the cash amount to buy something you need on an urgent basis, going for a credit card transaction is the best option.

Calculate Interest Rates

This is the second most important consideration. Before going for a transaction, make sure you compute interest rates properly. It is very important to make an estimate of the total cost you will incur after calculating the interest rates. It is much better to pay in cash than on elevated rates for interest which will make a heavy difference to overall amount. Depending on your circumstances, make sure you never end up paying more than you are required.

Always Go For Cash If You Want To Follow a Budget

If you want to strictly follow a budget, purchasing on credit card is the worst choice. It will become difficult for you to stay within the limits of your budget if you regularly use your credit cards. Other than this, credit involvement in your transactions will also affect your limits in a bad way. To stick to a budget, make sure you always pay in cash.

Consider the Amount of Money Involved

If you are making a huge purchase, it is essential to follow a secure method. Paying in cash is never a safe option. You should not be carrying large sums of money with you. There is always a risk of natural disaster, theft and robbery involved. Paying through credit card is the best option when it comes to larger amounts. There are fewer hazards and dangers involved. However, when dealing in credit transactions, make sure you are aware of  fraudulent scams and credit card duplicity.

Whether you should go for credit card or cash transactions depend on these factors. Apart from this, there are also many other contributing points that will help you in deciding the right option for you.

How to Help Your Grandchildren Pay for College

Grandparents can help their grandchildren succeed in their professional life by funding their educational life. They can send their grandchild to school by preparing for their future in advance or helping them with their college fees when they get older.

If you are a grandparent who wants to help their grandchild get a good education at a respectable university, here are a few ways you can help them pay for college:

1.      Provide them with a Loan

If your grandchild is about to head off to university, you can provide your grandchild with a loan to help them pay their college institution fees. You can provide them with a loan worth up to $10,000 without interest. If you want to provide them with a loan more than $10,000, the Internal Revenue Service (IRS) will charge a low interest fee.

You can establish the terms and conditions of the loan as well. For instance, you can allow the interest accumulate until they graduate, request to receive only interest payments for a specific duration, or convert the loan into a graduation gift.

2.      Repay Their Student Loans after They Graduate

Grandparents can repay their grandchild’s students loans after the graduate. By promising to pay off their debt, it will give your grandchild an incentive to stay in college and graduate. On their tax return, they will be able to subtract an interest up to $2,500.The downside of the loan is that the loan will be considered as a gift, which means that any amount more than $14,000 ($28,000 for married couples) will be taxed.

3.      Invest in the United States Savings Bonds

The process of buying the U.S. Savings Bonds is easy and people can do it by going to their local bank. By investing a savings bond, people are making a safe and risk-free investment in their grandchild’s future. People who have newly become grandparents can invest in their grandchild’s future now. People who invested in bonds at the age of 24 and after 1989 can redeem them tax-free.

4.      Establish a College Trust Fund

Another way grandparents can help secure their grandchild’s future is by setting up a college trust fund. When they become older, they can use the trust fund to pay for college. Grandparents can restrict their grandchild’s access to the trust fund. It does not matter what age the grandchild is for their grandparents to restrict their access.

If they opened a trust fund when the child was born, they can allow them access to it when time comes for them to go to college. Moreover, grandparents can indicate their wishes in the agreement and the trustee, the grandchild, will have to obey and fulfill them.

Grandparents can help start funding their education when they are young or start funding it when they get older. Grandparents do not have to help in entirety either, but as much as they can. With the rising cost of education, a little help goes a long way.