With student credit cards you will be able to afford extra college expenses that are not directly related to the studies but have incidence on college life, like purchasing groceries, paying for college material (books, electronic equipment, etc.) and many other expenses that can not be faced with regular student loans due to the fact that they do not fall on the college expenses category.
Student Credit Cards Explained
Student credit cards are specially designed for students. There are secured credit cards which can provide some control over the expenses and prevent debt accumulation because the credit card holder needs to make a deposit into an associated account and only then he can use the credit card up to the deposit's limit. The deposit works just like a guarantee of repayment.
Unsecured credit cards are also available however and provide different benefits for students. Credit limits may be lower than regular credit cards, but they provide promotional interest rates and other advantages like agreements with certain stores where most students purchase goods and services.
Financing And Flexibility
These credit cards are specially made to meet student needs that due to the type of expenses that college implies need financing and flexibility. There are certain months where book and studying material purchases will raise expenses, others where entertainment and vacations raise expenses and other months where expenses are reduced and remain on a normal level. Without financing there would be a lot of discipline and saving capacity needed to cope with this situation.
Instead, student credit cards will provide you with the ability to purchase anything you need and distribute payments along the year in an even way so as to avoid compromising your income too much. These cards also allow parents to exercise some control and review over their children financial and credit behavior.
Security And Control
Both for students and their parents, credit cards provide a fantastic tool to control the expenses so as to analyze credit and financial problems that college life may imply. Also they provide security in case of accidents or unexpected expenses as they provide financing when cash is not available. Thus, student credit cards are a must for college life and if used correctly they will not imply costs to the student or his parents.
Nevertheless, when applying for a student credit card, you should not go for the first offer you receive as there are many financial institutions competing in the credit card market and offering different credit card products with varied benefits. Just do a quick search on the net for different credit cards and compare what the credit card issuers have to offer you. Only apply once you have decided which offer best suits your needs because by doing so you will make sure to get the most out of your student credit card.
Devora Witts is a certified loan consultant with several years of experience in the credit area who instructs people regarding credit recovery and approval for personal loans, home loans, consolidation loans, car loans, student loans, unsecured loans and many other types of loans. If you want to understand Bad Credit Personal Loans and Student Debt Consolidation thoroughly you can visit her site http://www.badcreditloanservices.com. If the link doesn't work, just copy and paste www.badcreditloanservices.com in your browser's address bar.
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Are we doing well financially? How do we compare?
35 year old couple, 2 children. Earn almost 100K after taxes.
Approx. 100K Home Equity, Owe 225K Mortgage Balance.
< 1K credit card debt, paid off every month. Both cars paid off. No student loan or any other debt. Emergency Fund: 26K. Diversified Retirement Assets (90% stocks): 75K (401K, 403B, ROTH, & Trad. IRA Total). 529 College Plan: 18K.
Wife has company pension, but still contributes 20% of salary
I contribute 10% to 401K and 4K to ROTH. We both have Term Life Insurance policies.
Answer
You're way ahead of the average, of course, because your finances are headed in the positive direction. The average person is in debt. No debt other than your mortgage is perfect. You're socking away 15% or so of your income -- great.
I see nothing to quibble about here. You don't say how old your kids are, but if you're planning to put them through college, you should plan on working that long. After that, it's just a question of whether or not you *want* to work -- my guess is that you'll be financially set.
Here's an easy rule of thumb to track your progress -- I call it the FTI (for "Forget This Index" -- when it reaches 1000, you can walk into your manager's office and say "Forget This!"):
Age * Net Worth / Yearly Expenses
Age is your average age
Net Worth includes everything, including home equity and pension balances
Yearly Expenses doesn't include payroll taxes or investments
You're at 35 * 219k / 55k or so -- I'm guessing on your expenses, based on your description. That's already at 139, which is great for age 35. It'll continue to go up as you age and as your portfolio grows faster than inflation.
When your expenses drop (kids finish college), you might be all set! Pay off the home to lower expenses further, cut your income down as well, remove your itemized deductions and take advantage of the standard deduction, pay next to nothing in taxes, and enjoy the rest of your lives!
Good luck,
Doug
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