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Scholarship Websites

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With the cost of college tuition rising, more students are looking to scholarships to help take pressure off the cost. However, when it comes to athletic scholarships, the odds of a male high school athlete playing basketball at a NCAA Division I school are 107:1, and 88:1 for a female high school athlete. If your student was fortunate enough to receive an athletic scholarship, for the 2014-2015 school year, males received athletic scholarships of $14,270 and females received $15,162 on average at a Division I school. This likely still would not cover the full cost of tuition. So where else should students look for scholarships? According to a report completed by Sallie Mae, many families don’t apply for scholarships because they think they won’t qualify due to grades, finances, or simply because they don’t know what may be available.

Scholarships can come from each school independently, private or community organizations, or state and local governments. With close to $49 billion in grants and scholarships available it is likely that there is a scholarship out there for every student, the tricky part is finding it. Below is a list of websites put together by The Scholarship System to help students get started.

  1. Big Future (College Board)
  2. Broke Scholar
  3. CareerOneStop
  4. Chegg
  5. JLV College Counseling
  6. Student Scholarships
  7. Tuition Funding Sources
  8. Unigo

By using these websites, students can narrow their search by filtering scholarships that tie to their interests and majors. This saves time so they can put more focus into applying for awards they have a better chance of receiving. It is important to track deadlines for each scholarship and be wary of scams. Also, be cautious not to avoid scholarships that seem too small or not worth the time to apply. Others may not apply under the same reasoning, therefore reducing the competition and increasing your chances of receiving the award. Every dollar received can quickly add up!

Contact Sharkey, Howes & Javer at 303.639.5100 to speak to a CERTIFIED FINANCIAL PLANNER™ about how to incorporate scholarships into your child’s education savings plan.

A Financial Checklist for New and Expecting Parents

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As a new or expecting parent, there are a number of expenses you need to prepare for. Raising a child isn’t cheap, and it only becomes more expensive as time goes on. If you want to be sure that you’re prepared for many of the major financial obligations associated with raising a child, this financial checklist will help confirm that you have everything in order.

Step One: Plan for Hospital and Delivery Costs

The average cost of birth in the United States is more than $30,000, without even factoring in the costs of prenatal care and checkups in the months leading up to it. Much of this amount will be alleviated by insurance, but you’ll need to consult with your provider to fully understand the amount you’ll owe following delivery. You will also want to make sure your doctor, hospital, and anesthesiologist are all in network with your insurance, prior to your delivery. By planning for these expenses, you can stay one-step ahead and take at least one worry off your plate when your child arrives.

Step Two: Build Up Your Emergency Fund

You may already have an emergency fund set up, but the amount you save up will change when you have a child. Ideally, you want to have 3-6 months of required expenses including rent or mortgage payments, car and insurance payments, groceries, and more in your emergency savings fund. The goal is that in the event of a job loss, you will have enough to be able to take care of your family while you search for a new job. Your emergency fund will also help cover things like emergency child care, hospitalization for illness or injury, or unexpected home repairs.

Step Three: Examine Your Will

Have you been putting off writing your will? Now is the time to write one or update an existing one. Make sure you’ve designated the individual that you and your spouse would like to raise your child or children in case something happens to you as well as how your assets should be handled. Do you want to create a trust for your children to access when they’re older? Do you prefer to hand over control of your assets to your child’s guardian? Make sure that your estate planning documents leaves your family with everything they will need.

Step Four: Update Your Insurance

Aside from adding your child to your health insurance plan, this will also be a good time to review your life and disability policies. As your family grows, it is more important than ever to make sure that your insurance plans are adequate to provide for the needs of your family in case of death or a disability.

Step Five: Revise Your Budget

Your budget is going to change significantly with the arrival of your child and some of your discretionary income may decrease. Make sure that you’re prepared for the changes to your budget, including:

  • The cost of items the baby will need (clothing, crib, diapers, etc.)
  • The cost of formula or baby food
  • Child care expenses
  • Medical expenses

Step Six: Start a College Fund

Many parents want to give their children the best possible start in life and that includes helping them pay for college. By opening a 529 or other college fund for your child, you can help make it possible without having to worry as much about budget constraints or taking out loans.

Getting your finances in line is an important part of preparing for a new addition to your family. By following these important steps, you’ll put yourself in a better place to deal with the new financial challenges that might be coming your way and set yourself up for better ultimate financial success on this new parenting journey. If you would like to speak to a CERTIFIED FINANCIAL PLANNER™ to learn more or for help setting up a financial plan for your family, please give us a call at 303-639-5100.

Happy Fourth of July from Sharkey, Howes & Javer

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The team at Sharkey, Howes & Javer would like to wish you and your family a very happy Fourth of July. We hope that you enjoy the mid-week break, take the opportunity to celebrate our independence with a great day of parades, barbecues, fireworks, and fun, and take a moment to remember the hard work and sacrifices that were made to protect all of the freedoms that we’re so lucky to have.

In observance of the holiday, our office will be closed on Wednesday, July 4th and we will reopen with our normal business hours on Thursday, July 5th.

Here are some fun facts about the Fourth of July that you can share around the barbecue this week:

  • Philadelphia held the first annual celebration of our independence on July 4th, 1777. Source
  • Fireworks have been a part of Independence Day celebrations since the very beginning. Source
  • John Adams first predicted that Independence Day would be celebrated on July 2nd, the day Congress approved the resolution of independence. Source
  • Only John Hancock and Charles Thomson signed the Declaration of Independence on July 4th, the majority did not sign until August 2nd. Source
  • If you’re out of the country for the 4th, you can still catch a fireworks show in England, Denmark, Norway, Portugal, or Sweden. Source
  • The Philippines and Rwanda also celebrate their independence on July 4th. Source
  • New York hosts the biggest fireworks display, with over 75,000 shells planned for this year’s show. Source

6 Tips to Consider Before Launching a Second Career

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Over the past several years, moving between companies and even jumping between industries has quickly become the norm and an increasing number of professionals are making major career changes 10, 20, or even 30 years into their original intended path.

Whether you’re returning to employment after a hiatus, coming out of retirement, or restarting with something fresh, switching careers can be a daunting endeavor. In our fast-paced business world, you may be worried that you will be left behind before you even get started.

The good news is that many individuals have relaunched or refreshed their work life with great success and it’s possible for anyone with some smart, solid planning. Here are six of the top considerations to keep in mind as you get ready to take the plunge:

  1. What are your reasons? Are you in search of more money, or do you just want to keep busy? Are you simply bored with doing the same thing day-in and day-out? Determining why you want new or different work will help steer you.
  2. What are your skill gaps? Some career shifts are easier than others. If you’re hoping to enter a career requiring specialized skills like the medical field, you may need to return to school. For other careers, you may be able to engage with a seminar or small-scale professional development opportunity to get your feet wet or start earning your required certifications.
  1. Have you volunteered in your target industry? Not all industries or career paths may have volunteer opportunities. However, if yours does, it gives you a great chance to feel out whether you might be happy in the new industry, as well as get your foot in the door to learn about what you might need for your new job. Using tools like LinkedIn or Meetup can help connect you with professionals you might be able to volunteer with or shadow if you don’t already have contacts in the new industry.
  2. What are your dreams and aspirations? For many people, a dream job is one that combines dreams and aspirations with work that makes enough money to create a comfortable lifestyle. Making a list of your goals, aspirations, and “must-haves” can help you determine how to find a job that infuses your work with your personal values. If you are a more visual person, fashioning a career vision board can help you visually display your goals. For others, a traditional list of goals may work better.
  3. Figure out your finances. Can you afford to take some time off of work to explore? Will you need to spend another year in your current job to save up a buffer? Make sure to take into account your current income, investments, and the trajectory of your intended path. If you are planning to start your own business, be sure to consider start-up costs and ramp up time.
  4. Who is in your support network? As you pursue a career change, you will need to surround yourself with people who cheer you on and support your new path. Friends, family, mentors, and contacts in your new industry can help you meet challenges and celebrate you when you reach milestones.

Starting a second career may feel like turning your life upside down, but with good planning and a clear vision, it doesn’t have to. If you’re thinking about starting your second career, contact Sharkey, Howes & Javer to meet with a CERTIFIED FINANCIAL PLANNER™.

How Much Salary is Needed to Live in Denver?

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As the cost of real estate in Denver continues to creep upwards, we are often asked how much is needed in salary to live here. If you search the web for this answer, you will likely find a salary that necessitates the cost of buying an “average” single family home in Denver. Typically, what is missing in this calculation is the additional savings needed to retire, savings for children’s college education, and the cost of childcare when both parents are working outside the home.

Therefore, we have created a case study for a working couple both age 35 with two children, one in elementary school and an infant. This couple has recently purchased a home that cost $500,000 with a 20% down payment. Together they have already saved $60,000 for retirement and $10,000 for their first child’s college education. Their goal is to save for the cost of four years of undergraduate tuition at CU Boulder for each child. Because each spouse works full-time, they need full-time childcare for their infant, and after-school/summer care for their elementary school aged child. Each spouse has access to benefits through their respective employers, including a 3% match on 401(k) contributions, health insurance, disability insurance, and life insurance. Because their employers offer high-deductible health insurance plans, they also contribute the maximum family contribution to a health savings account. Each spouse is paying into Social Security and anticipates collecting 75% of a projected benefit at age 70. Their goal is to be able to retire at age 65 and access Medicare benefits. In this case study, the couple needs to bring in a household income of approximately $200,000.

There are a couple of key notes:

  1. This couple would have been approved for a much higher mortgage loan based on their income. However, in order to accomplish all their other goals, they needed to keep their mortgage payment (Principle, Interest, Taxes, and Insurance) just under 15% of their gross income (banks typically approve approximately 30%).
  2. If one spouse stays home to raise the children, the cost of childcare is greatly reduced. In this case study, the working spouse would need to earn a gross income of approximately $160,000.
  3. The assumed gross income replacement need at retirement is only about 35% of their current $200,000 household income. This is because the mortgage is assumed to be paid off, saving for retirement is accomplished, the kids are financially independent, and their taxes have reduced.
  4. This case study makes several assumptions and is intended to be based on averages. The figures can be easily argued as too high or too low depending on many factors.

If you would like to speak with a CFP® professional about reaching your financial goals, please call Sharkey, Howes & Javer at 303-639-5100.

Financial Lessons for Your Kids and Grandkids

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The value of a dollar has changed over time and, with it, the financial lessons our children and grandchildren need to learn have also evolved. Many parents and grandparents want to teach children about money, but they don’t always know where, or when, to begin. These five lessons are easy for children to understand and build off each other as your child grows so that they have a wide base of knowledge for their financial future.

3-5 Years of Age:

Around three years of age, children begin to understand that they can ask for things like toys, books, and games. From their perspective, an item moves from a store shelf and into their home simply by asking. According to Carrots are Orange, this age range is perfect for teaching delayed gratification. Teaching the difference between a need and a want is an excellent lesson for this age, along with helping them begin to understand that sometimes we need to save money before something can be purchased.

6-8 Years of Age:

The Huffington Post reports that only 13 of 50 states require a personal finance course for students before they are able to graduate from high school. Because these lessons are not being taught in the majority of our schools, it is important to incorporate financial lessons at home starting at a young age. Children ages 6-8 years old are at a great stage for pretend play that utilizes money along with practical lessons from things like lemonade stands or doing additional chores for money. While playing supermarket, help your child to count out change. During the summer months, help them set up a lemonade stand and teach them how to determine what to charge based on the cost of the products they utilize.

9-11 Years of Age:

A key financial concept that is important to teach children is budgeting. While you can begin to teach the concept earlier, 9-11 year old kids will likely have a little better grasp on the idea. Consider giving your child a set spending amount to purchase snacks or toys from the store. Make a list together of things they would like, and encourage your child to determine the appropriate amount of money for each item. The important piece here, according to US News & World Report is not to bail them out if they make a mistake. Experience is a great teacher and allowing them to work through solving this type of problem is important.

12-15 Years of Age:

Investing has become a necessity for Americans who plan to retire as saving enough money for the golden years has become more difficult over time. Teaching children to invest can be fun and could make a lasting impact if it’s done well. Do some research together and discuss different types of investments and how risk and timing affect an investment. The Mint suggests setting up a fake account with your child or children and then tracking it with them over a year’s time. Not only can this provide a fun bonding experience, but it will help to plant the seed that investing is a long game.

16-18 Years of Age:

The day your child turns eighteen, they are officially eligible to open a credit card in their name. Teaching kids about credit and interest before they have access to it is crucial for their financial well-being. Discover reports that those with credit card debt carry, on average, $7,500 per credit card! With high interest rates and low minimum payments, the total cost over time for items purchased can grow out of hand rather quickly. This issue, along with the consequences of bad credit, can set someone up for a lifetime of financial trouble.

Sit down with your kids and explain how credit cards work. If you are able, consider offering your child credit through you, then allow them to make a purchase and payments with an agreed upon interest rate. Help them to track the total cost, including interest, for the item once it is paid off and compare it to what the original purchase price was of that same item. Helping teens learn this lesson early can potentially save them a lot of money and a lot of headache in the long run.

Qualifying for a Mortgage when you have Student Loans

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According to studies, on average college graduates in 2017 walked away with more than $38,000 in student loan debt. Add on graduate, medical, or law school and it’s even more. After you land your first job, the next step may be to buy your first home. How do you start paying down your student loans, qualify for a mortgage, and start saving for a house downpayment all at the same time?

If you have Federal student loans, you may have elected an income-based repayment plan (IBR), which makes it challenging for mortgage lenders to assign a payment amount when calculating your debt to income ratio. This is because your monthly student loan payment could change each year depending on your income, or your loan could be deferred or in forbearance. Your debt-to-income ratio is an important factor in qualifying for a mortgage and is a way for lenders to estimate your ability to make your monthly mortgage payments. The lower the better. When it comes to payments made under an IBR, conventional and federally insured FHA loans have different guidelines for determining the borrower’s monthly payment obligation to be used in their debt to income calculation.

For a conventional loan, the borrower must use one of the following:

  • The student loan payment amount listed on the credit report.
  • 1% of the outstanding student loan balance.
  • The actual standard plan repayment amount reported on the credit report. Your credit report will always show your standard 10-year amount for “Amount Due”, not the amount you actually pay.
  • A calculated payment that will fully amortize the loan over the repayment period (this means that you have to calculate a payment with no forgiveness after 20/25 years).

For an FHA loan, the borrower must use the greater of:

  • 1% of the outstanding balance on the loan.
  • The monthly payment reported on the borrower’s credit report.
  • The actual documented payment, provided the payment will fully amortize the loan over its term.

The ability to save for a downpayment is another factor in determining if a borrower qualifies for a conventional loan or a FHA loan. Conventional loans typically require a minimum downpayment of 5% (10% for condominiums) while FHA loans can go as low as 3.5%. With both FHA and conventional loans, there are premium costs and monthly private mortgage insurance payments to consider. However, for individuals with large student loan balances, it raises the question: should borrowers focus more on paying down student loans or saving for a downpayment? In some cases (and against conventional wisdom) it may make sense to prioritize paying down student loans to take pressure off your debt to income ratio in lieu of targeting a higher downpayment.

If you are considering purchasing your first home but didn’t think it was achievable due to student loans, contact Sharkey, Howes & Javer to meet with a CERTIFIED FINANCIAL PLANNER™ to review your options and how to qualify for a mortgage that best fits your needs.

Health and Your Financial Fitness

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When you think about financial fitness, especially as you’re moving into your retirement years, you typically focus on big financial goals: paying down your debt, building up your savings account, and making sure that you have a retirement account that will support your lifestyle throughout the later years of your life. What many people fail to think about, however, is how your physical health has the potential to impact your financial wellness.

Medical Expenses Aren’t Cheap

Health emergencies are expensive. Having the proper insurance in place is extremely important. However, even with insurance, a short hospital stay can quickly rack up thousands of dollars in bills and surgery is even more expensive than that. In addition to copays and deductibles, you may find yourself dealing with out-of-pocket expenses for supplies and medications.

The Cost of Lost Work

A job that includes benefits, such as paid time off for illness and health insurance, can be very helpful in protecting your income during your working years. However, even with that paid time off, the cost of lost work can add up quickly. Depending on the illness, you may find that you’re less productive at work, which could mean that you may be overlooked for bonuses, special assignments, and promotions. While it’s income you don’t realize that you’re missing, it’s also an amount that can add up.

Long-Term Care is Expensive

If you develop a medical condition requiring long-term care, you will quickly discover additional pressure on your finances. This means both your current income and your long-term savings could be affected, depending on the severity of the illness or condition. Furthermore, you may find that you are no longer able to care for yourself the way you once could. Many people find themselves turning to a long-term care facility in order to help maintain their overall quality of life. While this is a great method for keeping your quality of life high, it’s not such a great choice for your wallet: an assisted living facility costs an average of $43,000 per year, while life in a nursing home will run an average of $92,000 for a private room. However, it is vital to receive the necessary care to keep yourself safe, no matter the cost.

Keeping Up with Physical Health For as Long as you Possibly Can

Keeping up with your physical health can go a long way toward helping to decrease your costs, especially as you move into your retirement years. Try to keep your physical health as strong as your financial efforts.

Maintaining your physical health doesn’t have to take all of your time and attention, but making an effort to improve your wellbeing now, can help keep yourself and your bank account healthy throughout your retirement years.

Your retirement belongs to you, make sure you get the most out of it. Contact Sharkey, Howes & Javer today to speak with a CERTIFIED FINANCIAL PLANNER™ about setting yourself up for a healthy, fulfilling retirement.

A Primer on Government Debt and Deficits

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Debt vs Deficit

The federal debt is the total amount of money that the U.S. Government owes, and is a total of all of the deficits on a year-to-year basis. The deficit is simply the difference between what the government spends and receives on an annual basis. For example, if the U.S. Government spends $4 trillion in a fiscal year but only receives $3 trillion in revenue, the deficit for that year would be $1 trillion. Thus, the total government debt would be increased by $1 trillion.

Recent Context of Government Budgets and Debt

The debt balance for the U.S. Government currently stands around $21 trillion, while the 2018 fiscal year deficit is around $833 billion. From 2008 through 2016, government debt ballooned from about $10 trillion to almost $20 trillion and the 2008 Financial Crisis played a large role in this increase. With the U.S. economy in distress after 2008, the government spent the next several years stimulating the economy to get it back on track. This economic stimulus required much more spending and investment from the government than it was receiving in revenue.

According to the Peter G. Peterson Foundation, the U.S. Government has run a deficit in every year except for four (1998-2001). This is evidence that government spending is not as much of a Republican vs. Democrat issue as the media often makes it out to be.

Consumer Debt vs. Government Debt

Many people like to equate government deficit spending to using a credit card. While the government is using borrowed money similar to a credit card, this comparison does not hold up very well when you dive a little deeper. As mentioned earlier, government spending tends to spur economic growth during periods when the economy is not robust. In theory, a stronger economy means more people and businesses making more money, which in turn means more tax revenue for the government. Taking on personal credit card debt rarely produces more income for the individual spender.

Ultimately, both personal credit card debt and government debt must be re-paid to maintain healthy finances. To reduce debt, consumers and governments will generally employ some combination of increasing income/revenue and reducing expenses. When a consumer with outstanding debt passes away, their assets are liquidated to pay off their creditors. This results in fewer assets being passed down to heirs. Unlike humans, Governments exist into perpetuity. When the U.S. Government plans to spend more than what they receive in tax revenues, they issue new debt in the form of U.S. Treasury Securities. Governments, pension funds, mutual funds, and citizens rely on these securities as a substantial part of their investment portfolios. Yet, similar to credit cards, these Treasury Securities eventually need to be paid.

U.S. consumers should be conscious of their spending habits to make sure they are not over-leveraged. While the U.S. Government plays by different rules when it comes to deficit spending and debt, ultimately, the general goal remains reducing debt while stimulating the economy.

Five Financial Tips for Today’s Grads

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Graduation can be an exciting time for young adults as they embark into a whole new world. Yet, it can also be overwhelming for many to face new financial responsibilities in adulthood. Many people envision adulthood as a state of maturity, but often overlook the idea of fiscal maturity: the act of taking ownership of your financial affairs and making the best decisions possible to balance todays’ expenses with saving for future goals.

The world of personal finances can be unforgiving, so we’re offering five tips to help you achieve financial success. By following these tips, you can avoid some common financial difficulties that many new graduates encounter.

1. Budget and Spend Wisely

Graduation is an excellent time to reevaluate, or begin creating, one’s budget. You can start by opening up an Excel spreadsheet and tabulating your anticipated expenses, making it as in-depth and detailed as you’d like. The chances are that your financial status has changed since being a full-time student, whether you experience a gap in employment or must adjust for an increased income. Additionally, it’s likely that you are now responsible for more bills, which is something that comes with financial independence.

By seeing these numbers on a spreadsheet, organizing them, and figuring out exactly where you stand, you can have a better understanding of what alterations you might need to make in your lifestyle to make sure your bills are paid on time and you still achieve your goals. This might entail spending wisely rather than fluidly. There are several apps available to help with budgeting, such as Mint, You Need A Budget (YNAB), or Wally.

2. Put Your Bills on Autopay

Some companies, including many student loan providers, offer incentives for consumers who put their bills on autopay. By setting up autopay on your main bills, such as rent, utilities, credit cards, student loans, and other recurring expenses, you can take advantage of these incentives while also making sure everything is paid on time and you don’t get any late payment penalties.

3. Use Credit Sparingly

While it is true that one has to build credit in order to have credit, there are risks associated with credit cards, especially those with high interest rates. While it’s easy to make the minimum payment, it’s important to remember that you should only use credit cards if you can afford to pay the complete bill each month. You could spare yourself hundreds of dollars, or more, per year by avoiding interest charges, and you build your credit score at the same time.

4. Save for Retirement and Take Advantage of 401(k) Plans

Although it might seem too early to contribute to a 401(k) plan when you are beginning your career and just finished tossing your graduation cap into the air, the earlier you begin saving, the better you are preparing for your future. Even starting with small amounts, by investing early you will amass more money to support yourself in retirement. Furthermore, many employers encourage their employees to invest in 401(k) plans by “matching” the employee’s contributions. To see if you qualify for this win-win situation, check with your company’s HR staff as soon as possible.

5. Don’t Ignore Your Student Loans

Because of the rising cost of education, the typical college student graduates with $37,000 in debt and the biggest financial concern of many recent grads is their student loans. When you graduate, take charge of the situation and review the terms of your loan. You need to determine how much you owe and how your payments fit into your new budget.

The very first step to creating a solid financial base is to establish a cash reserve of at least 3-6 months of expenses. After this is established, and if your lender allows it, you may consider making extra payments and asking the company to put the additional amount towards the principal balance of the loan, rather than the interest. Paying more than the minimum can shave years off the length of the loan, save you money over the years, and help you qualify for a better mortgage or auto loan.

No matter your situation, reviewing your finances does not have to be an intimidating ordeal. Taking control of your finances early actually empowers you to set yourself up for a more stable and lucrative future.