Translate Your Salary When You Move

When you relocate from one place to another, most likely, your salary will change and so will your cost of living. If you are moving, you need to be prepared and know how much to ask for when you are hired. By using the Cost of Living Wizard Calculator, you can see what your salary should be in the new city based on the cost of living.

For example,  if you are currently earning $35K in Miami and want to move to New York, you will need to earn over $54K to have the same standard of living. However, employers in NY pay on average of 22% more than employers in Miami, therefore, you should expect an offer of close to $43K for the same position. Before you move, you should realize that, likely, there will be a gap in income and your standard of living will be lowered in this case.

Mint Goals

As a grad, you probably have student loan debt. Mint.com just released a new goal "Pay Off Your Loans." Go to Mint.com, choose the loan you would like to pay and adjust the slider bar to see how much you have to pay each month to pay off your student loan in a certain amount of years. This is great as it tells you how much interest you will be saving as well, which should serve as a motivator.

Pay off private student loans off first especially if they have been co-signed. However, if the interest on your federal loans is 7.9% and your private loans are at 3%, you might have to think about the value of money you will be losing when paying off the low interest loan. My interest rates are the same for private and federal and, therefore, I'm setting up to pay off the private loans in 5 years instead of 13.5 by doubling my payments.

Purchase Price to Rent Ratio

I earlier wrote a post about Renting vs. Buying with a link to a calculator. There is also a simple way to see weather you should buy a place or rent using the Purchase Price to Rent Ratio. What you do is figure out the cost of the house/apartment you are renting and divide that by the total yearly rent. If you get a number above 15, it is better to rent and if you get a number below 15, it is better to buy. For example: your rented dwelling is worth $250K, but you are paying only $12K per year in rent. Your number is 20.83, which is higher than 15, so, according to this formula, you should keep renting.


I could buy my apartment for 150K (at the low end) while my current yearly rent is $12,600. The Purchase Price to Rent Ratio is low, 11.91. It seems that I should buy the apartment, however, you must consider other factors. The association fees for my building are $500 per month and regularly increase. Therefore, buying would be more expensive.

The NY times calculator in the previous post accounts for the association fees, however, the Purchase Price to Rent Ratio is easy to use on the go.

Checking Accounts - PerkStreet

I'm in the market for a new checking account. Looking at what's available locally is discouraging even when i live in a place with the largest concentration of banks. Citi and Chase still seem like the top choices due to ATM availability. However, their free checking accounts do not earn any significant interest and their debit cards are not even 1 point to a dollar. In addition to the low rewards, they have restrictions for free accounts such as direct deposit or a minimum balance.

A better checking account is one that can be found online. The one that came out on top for me is PerkStreet.

The Good:

• 1% cash back on all purchases
• 2% cash back on all purchases if your account balance is over $5,000
• free ATMs in places such as Walgreens, CVS, and Rite Aid
• refund of up to $10 per month for non-network ATMs
• easily transfer funds from any bank account online 
• monthly specials where you can receive up to 5% cash back - info should be on Facebook and Twitter
• online account that gives you checks

The Bad:

• limit of $1,500 transfer for a bank account per 30 days (if you want to deposit more you can through an ATM or by mail)
• if you want a refund for non-network ATMs you must email, fax, or mail the receipts from the ATMs that charged you
• apparently PerkStreet does not separate the rewards you earn per transaction, making rewards hard to track

As you can see, 'the good' outweighs 'the bad.'

A New(ly Discovered) Search Engine

Nowadays information is readily available, however, sometimes you just want a snapshot of what you are looking at or a clear 'yes' or 'no' answer. Here is a great search engine WolframAlpha. The search engine will tell you almost about anything with a quick snapshot. This is great for checking out a company if you want to buy the stock (type: Google), finding out the population, weather, and median home price of a city (type: Washington DC), by finding out how much you will pay in interest over a life of the loan (type: loan 10% interest 10 years $10,000), etc.

 

Try it out and look at the Examples page to see what else this search engine can do.

Student Loans - Is It Really Good Debt?

Student loans are the major burden for a recent graduate. It is usually talked about as 'good debt.' Good debt is usually a mortgage, student loans, or a business loan. All of these loans will help you increase your net worth in the future, theoretically. 'Bad debt' is consumer debt that is acquired by buying things.

So, technically student debt is good debt as your education will help you earn more money in the future. However, as a lot of students are doing, if you have taken out private student loans and paid much of the college bill through loans, you've probably borrowed too much. I borrowed a private student loan only in my first year for $9,000 due to a change in circumstances. I could have borrowed less, as I used left overs from the loan (which was around $1,500 per semester) to live a better life, travel a bit more, etc. I thought that the value of $1,500 was much more to me in college, than it would be while I was working. I did not consider interest. However, if I were to to do this again, I would have done exactly the same thing as I still believe that the private education I received is better than what I would have received going to a much cheaper college. I also believe that being able to travel every break (as I also received about $1,500 refund from the government loans in the last 3 years) has taught me more about the world.

However, the only reason I would do this again is because I ended up graduating with around $26K in student loans in total from a private liberal arts college with tuition of $45K per year. Half of it was federal subsidized loans and the other half was the private student loan that grew to $13K due to interest. Supposedly, if you take out about the same as your first year's salary after college, then you will be able to pay it back at the terms set by the lender. Of course there are programs such as IBR, however, you should aim to pay the least amount in interest. So far, I have not had trouble paying back my loans and I am aiming to have them paid off in 5 years or so.

Imagine you have $100K in private student loans, your monthly payment would be $1,150 with 10 year terms at 6.8% interest as calculated with the FINAID Student Loan Calculator. If you were making $27,600 a year, you would be spending 1/2 of your gross salary on your loans. That is unsustainable. Therefore, these kind of student loans are toxic or bad debt. If you had to pay $25K per year at the school you chose, you chose the wrong school.

Private loans usually means that you have borrowed all you could from the government, therefore, you are taking out loans that the government does not think you can afford. Consider that. Also, consider that student loans can pretty much never be dismissed in bankruptcy. There is only a small chance of dismissal if it is your second bankruptcy and you have included your student loans in the first bankruptcy. Also, private student loans do not usually have a fixed interest rate, therefore, if your credit goes down and the LIBOR goes up, your interest rate could sky rocket. Mine was at over 12% at one point when I had no credit history. You usually have to get a co-signer and you have no control over their credit score. Also, if you are unable to pay the loan, they are liable. This could ruin relationships and two sets of credit scores.

There are so many things wrong with private student loans and, therefore, I do not consider them to be good debt. I'm trying to get rid of the $11K I have left as quickly as possible.

File Your Taxes for Free

It's tax time. Did you know that it's easier to eFile as all you have to do is answer questions and all your forms will be automatically filled out for you. By eFiling, you do not need to fill out the tax forms yourself, the company through which you are eFiling will usually ask all the right questions so that they do not miss any deductions or credits for you, you get your refund faster, and there is a 70% chance it's free for you.

IRS eFile

Click on the link above to take you directly to the IRS eFiling site. If you have AGI of $58,000 or less, you may eFile with the IRS for free. Personally, I like Turbo Tax as they are user friendly and I have used them for years. However, Turbo tax will only allow you to eFile for free if you use their Basic Edition. I receive a 1099s as well as a W-2 and, apparently, the tax return is no longer basic. If you like filling out the forms yourself, you could also use the Free File Fillable Forms, link available at the above IRS site. This way, you also do not need to enter all your information and be told in the end that you do not qualify because you have too many forms.

Personally, I like to use Turbo Tax first to see what they can come up with and then, I don't mind filling the forms out myself.