Wednesday’s need-to-know money news

Today’s top story: 7 tax tips for new college grads. Also in the news: Why many people don’t know the cost of bad credit, how to travel on the cheap, and the death of payday loans.

7 Tax Tips for New College Grads
It’s a whole new tax world.

How Costly Is Bad Credit? Many Don’t Know, Survey Shows
A look at just how expensive bad credit can be.

To Travel Cheap, Steer Clear of These Booking Flubs
Don’t make these mistakes.

Payday loans are dying. Problem solved? Not quite
The slow death of payday lending.

Monday’s need-to-know money news

imagesToday’s top story: The money mistakes you make in your 40’s. Also in the news: What financial documents you should keep, what every college grad needs to know about money, and the important things you need to know about Social Security.

Money mistakes you make in your 40s
A crucial time for your financial future.

What financial documents to keep
What to keep and what to shred.

10 Things Every College Grad Needs To Know About Money
It’s a whole new world.

4 Important Things You Need to Know About Social Security
Finding your way through the maze.

Q&A: Budgeting for new college grads

Dear Liz: My son will be graduating from college this June. He is fortunate to have already landed a good job, starting in August, and will be managing his own finances for the first time. His company provides a full benefits package, retirement fund, profit-sharing, a hiring bonus and all that good stuff.

I’d like to give him some guidance on how to organize and allocate his income between living expenses, liquid savings, student loan payments, charities, etc. What do you suggest? With graduations coming up, this might be a good time to help us parents get our kids off on the right foot.

Answer:One of the best things new college graduates can do is to continue living like college students for a little while longer.

In other words, they shouldn’t rush out to buy a new car or sign up for an expensive apartment when they get their first paychecks.

Pretending they’re still broke can help them avoid overcommitting themselves before they see how much of that paycheck is actually left after taxes and other nondiscretionary expenses.

A few other rules of thumb can help them get a good financial start. One is to immediately sign up for the 401(k) or other workplace retirement plan.

Ideally, they would contribute at least 10% of their salaries to these plans, but they should put in at least enough to get the full company match. If they aren’t eligible for the plan right away, they can set up automatic monthly transfers from their checking accounts to an IRA or Roth IRA.

Graduates don’t need to be in a rush to pay off their federal student loans, since this debt has fixed rates, numerous repayment options and various other consumer protections. Private student loans have none of these advantages, and so should be paid off first.

If your son has both types, he should consider consolidating the federal loans and opting for the longest possible repayment period to lower his payments. That would free up more money to tackle the private loans. Once those are paid off, he can start making larger payments toward the federal loans to get those retired faster.

One budgeting plan to consider is the 50/30/20 plan popularized by bankruptcy expert and U.S. Sen. Elizabeth Warren.

In her book “All Your Worth,” she suggested people devote no more than half their after-tax incomes to “must have” expenses such as shelter (rent or mortgage), utilities, food, transportation, insurance, minimum loan payments and child care. Thirty percent can be allocated to “wants,” including clothing, vacations and eating out, while 20% is reserved for paying down debt and saving.

Monday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Money tips for new college grads. Also in the news: Lying to yourself about finances, the pros and cons of auto financing, and ranking the 50 states for retirement.

Money tips college graduates can use
Welcome to the real world!

3 Financial Fibs You Tell Yourself
Paying off debt and building your savings aren’t mutually exclusive.

Auto Financing vs. Paying in Cash: What Are the Costs and Benefits?
Evaluating present vs future costs.

Report ranks best, worst states for retirement
Where does your state rank?

What You Should (and Shouldn’t) Overlook During an Open House
You can always change the paint.