Tools
for Living
MANAGING FINANCES
CREDIT
A credit card is essential—especially if it has no fees, low interest rates, and if you pay it off completely every month. Just remember that a credit card is essentially a debt, and your bills eventually must be paid.
- Fees: some companies charge an annual fee for the card.
- Interest rates: annual percentage rate (APR) of interest plus late fees.
- Grace period: the amount of time you have after your purchase to pay back the charge. The standard period is usually four weeks.
- Credit limit: the maximum amount you can charge on one card. Look for something high enough to cover emergencies, but low enough that you won't be tempted to spend beyond your means.
BANKING
Decide where you're going to keep your money. Some questions to consider:
- Location. Is it convenient? Do you have easy access to your funds?
- Is there a monthly or yearly account fee?
- Are you charged for writing checks?
- What are the interest rates?
- Do you have a minimum required balance?
- Can you get overdraft protection?
- Are credit cards or debit cards attached to the account?
- Which ATMs can you use?
- Do you have access to online banking?
- Can you do direct deposit?
Checking: A checking account will provide easy access to your cash and give you a checkbook and ATM card. You won't be paid interest on your money. Be careful: many checking accounts have monthly fees and high penalties for overdrawing. Balance your checkbook!
Savings: A savings account will provide easy access to your cash and give you an ATM card. You'll be paid interest on your money, but not much. Be careful: you might have a minimum balance.
Other options: CDs, money market funds, and stocks and mutual funds.
STUDENT LOANS
Your debt: Know who and what you owe. Common lenders are Amherst College, Sallie Mae, the Department of Education, and private banks.
Your options: Figure out how much you can pay. Work with your lender to determine a payment schedule. Look for advantageous interest rates. Find out if you have a grace period or deferment option. See if you can consolidate multiple loans into fewer payments. Are you going back to school? See if you can avoid accruing interest as a grad student.
Amherst College Office of Financial Aid: Do you have specific concerns about your package and debt? Contact the aid office for more information:
BUDGETING
A balanced budget is a good thing.
- Necessities: rent, utilities, insurance payments, car or transportation payments, food, clothing
- Debts: student loan payments, credit card bills
- Incidentals: laundry, dry cleaning, hair cuts, stamps
- Not exactly necessary, but…: cable, newspaper and magazine subscriptions, internet, gym membership.
- Fun: movies, eating out, coffee, cab fare, entertainment, travel
TAXES
Your Paycheck: Your employer will deduct state and federal taxes, Social Security, and Medicare at a rate determined by your W-2 form.
Taxes: Don't forget April 15. You must file federal taxes (using the 1040, 1040a, or 1040EZ form) and you may need to file state taxes. Don't forget:
- Sign your forms.
- Are you paying? Enclose your check with the tax forms.
- Attach your W-2s, 1099s, and schedules.
- Make copies for your own files.
- Check your return address label.
Need help? Think about using an accountant. Computer software is also available. You can also read informational booklets published by the IRS.
INSURANCE
MEDICAL
If your employer provides you with a plan,
signing up is easy. Otherwise you'll need
to find health care coverage on your own.
Terms to know:
- Deductible:
the
dollar
amount
you
need
to
pay
for
your
medical
expenses
before
your
insurance
company
begins
paying.
Usually
based
on
an
annual
figure.
- Co-payments:
the
fee
you
pay
each
time
you
visit
your
health
care
provider.
- Premium:
your
monthly
payment
for
insurance,
perhaps
supplemented
by
your
employer.
- Out-of-pocket
Maximum:
the
cap
set
on
expenses
you
will
be
expected
to
pay
in
one
year.
Your
insurance
company
should
cover
costs
over
this
amount.
- Types:
HMO
(Health
Maintenance
Organization),
PPO
(Preferred
Provider
Organization),
POS
(Standard
Point
of
Service
Plan)
- Short-term
Insurance:
you
can
get
coverage
for
shorter
periods
of
time.
If
you
are
not
offered
insurance
immediately
after
leaving
your
parents'
plan,
consider
COBRA.
You
can
usually
obtain
coverage
from
a
pre-existing
plan
for
up
to
18
months
after
expiration.
VISION AND DENTAL
If these are provided by your employer
or included in your medical insurance,
great. If not, you'll have to decide whether
to add coverage yourself or to pay out
of pocket as needed.
AUTOMOBILE
If you have a car, you need it. Terms
to know:
- Bodily
injury:
covers
what
you
do
to
someone
else.
- Property
damage:
covers
what
you
do
to
someone
else's
stuff.
- Personal
injury:
covers
injuries
to
the
driver
and
passengers
of
your
car.
- Collision:
covers
your
car
if
you're
in
an
accident.
- Comprehensive:
covers
damage
to
your
car
from
a
variety
of
causes
(natural
disasters,
thefts,
etc).
- Uninsured
motorist:
covers
your
damages
if
you're
in
an
accident
with
someone
who
has
no
insurance.
- No
Fault:
depending
on
the
state
you
reside
in,
your
insurance
company
may
be
required
to
pay
for
bodily
injury
and
property
damage
regardless
of
who
caused
the
accident.
Other insurance to think about: life,
homeowner, rental.
REAL ESTATE
APARTMENTS
Rent payments are generally cheaper than mortgages and renting an apartment means less maintenance work. Things to look for while apartment hunting:
- Electricity and electrical outlets
- Air conditioning and heat (electric, central, or radiator?)
- Water: hot water, leaking water
- Working appliances
- Locks and deadbolts: do they work? Are they where they should be?
- Windows: do they open, close, and lock?
- Fire escape, smoke detectors, fire extinguishers
- Noise levels
- Parking and/or public transportation
- Previous damages
Brokers: If you have extra cash, you might want to let a broker do the work for you. Be prepared to negotiate—consider starting out at a price range several hundred dollars less than what you can actually afford to pay.
On your own: sources for apartments include word of mouth, classified ads in print and online, FOR RENT signs, and public posting spaces.
Translating ads: walk-up, duplex, alcove, studio; h/w, DW, EIK, WIC, w/d.
Expect to provide: Money order or cashier's check, driver's license, references, credit report, rental history, employment history. If you've never signed a lease before, you might be required to have a co-signer.
Read your lease! Some questions to ask: How long? Who is responsible for repairs? What appliances and/or furniture are provided? Will the space be cleaned and assessed for damages before you arrive? What happens to your security deposit? Is there rent control? Do you have privacy rights? Is storage available? Can you sublet?
Roommates: Do you want a roommate to share the rent? Do you want to live with friends, or are you willing to live with a stranger? Are your prospective roommates' living habits and sleeping patterns compatible with your schedule?
Check out:
The Daily Jolt's Housing Forum
Craig's List
Smith College Housing Board
HOUSES
Most college students choose to find apartments or rentals, but buying a home is an option. Notes on private homes:
- No landlord: you're paying to own the house.
- Investments: home ownership can build equity.
- Tax benefits: interest on mortgage payments can be tax-deductible.
- Concerns: personal credit history, mortgage applications, interest rates, home loans.
MOVING
It's a bigger job than you think. Decide whether to hire someone or do it yourself. Some things to think about:
- Renting a moving truck or van
- Transportation costs: rentals, gas money, parking tickets
- Cost of new furniture, home décor, moving supplies
Make sure you know when your service provider's disconnect/connect deadlines are.
- Basic
utilities:
gas,
electricity,
water
- Telephone,
television
(cable),
and
internet
service
- Others:
garbage
and
recycling
service
- Post
Office:
don't
forget
to
forward
your
mail
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