Personal Finance Archives - Page 5 of 8 - NorthStar Capital Advisors

Six College Loan Mistakes

Managing college loan debt smartly has never been more important than it is now. Total college debt in the U.S. is five times higher than 20 years ago. As with many things financial, good results come by simply avoiding the common mistakes. The best golfers aren’t the ones that make the most killer shots – they’re the ones that make the fewest bad shots. With that in mind, here are six common college loan mistakes to avoid:

MISTAKE NO. 1: Failing to consider income-driven repayment plans
Federal student loans have many payments options (check out the infographic below). Don’t just assume the default payment plan is best for you.

MISTAKE NO. 2: Failing to understand the loans
There are two basic types of student loans: federal and private. They come with different interest rates and different repayment options. It pays to know the differences and options to make the best choice for your needs.

MISTAKE NO. 3: Failing to research student-loan forgiveness programs
Borrowers with federal loans are eligible for debt relief under the Public Service program for a range of careers including teachers, law enforcement, doctors, lawyers and others. Some employers even help pay employee student loans including the U.S. military, PWC, and Fidelity.

MISTAKE NO. 4: Prioritizing student loans at the expense of retirement savings
Prioritizing debt payment ahead of retirement savings is a mistake. For example, if your employer provides a matching contribution to your 401(k), that’s free money that you need to capture.

MISTAKE NO. 5: Automatically refinancing or consolidating
Consolidate carefully! You can capture a lower overall interest rate. However, you may be giving up flexible payment options and other opportunities.

MISTAKE NO. 6: Failing to automate payments
Make it easy and automatic. You don’t want to accidentally miss a payment and blow up your credit score or compromise your eligibility for loan forgiveness.

Source: WSJ

NorthStar Client Family Featured in AARP The Magazine

Debra and Gary Wilhoit, a NorthStar client family, are featured in the June/July 2016 issue of AARP The Magazine. Dr. Chris Mullis, CEO and senior planner at NorthStar, is quoted in the article alongside senior advisors from Charles Schwab and T. Rowe Price.

Kudos to the Wilhoits for candidly sharing their early-retirement anxieties and the actions they have taken to ultimately reach greater peace of mind and long-term success. Millions of Americans who are transitioning toward and into retirement can immediately relate to the Wilhoits’ experience. And millions of Americans can benefit by adopting the Wilhoits’ long-term perspective and positive investor behavior.

AARP The Magazine addresses the evolving life stages of 50+ Americans and is the largest circulation magazine in the United States (35.9 million readers).

Class of 2016: Financial Advice That will CHANGE YOUR LIFE

The following is a brief excerpt from the commencement address by Dr. Chris Mullis to the graduating class of Providence Day School on May 31, 2013. The full text of Dr. Mullis’ speech, that includes career advice, financial guidance, and a few pearls of wisdom, can be found here.

At my investment advisory firm, we developed complex computer algorithms and use them to manage our clients’ investment portfolios. But the basic steps you need to take to manage your own money well are deceptively simple. First, live within your means and avoid being caught up in rapid lifestyle inflation. You will not live like your parents when you first start out. Second, save and invest your money wisely. Let me elaborate on this point.

Wealth accumulation depends on three factors: how much you save, the rate at which your money grows, and how long you save. That last factor, time, is very, very important. There’s an urban legend that Albert Einstein once said that compounding interest is the most powerful force in the Universe. That quote is likely misattributed but the message is spot on. If you save $5,000 a year for 40 years and earn 8% annually, you will eventually have $1.3M. But if you delay starting for merely 5 years, your results after 35 years will be only $860k. That 5-year delay preserved $25k of short-term capital but ultimately cost you >$400k in the long run. Time is the most powerful lever in the machinery of investing. Nothing else comes close to it.

So what do you need to do? Start saving and investing right out of high school regardless of how hard you think it hurts or how unpleasant the tradeoffs. Even if you set aside only 5% of your paycheck starting out, do it to get into the habit of saving. Delaying getting serious about investing until my 30s was a significant financial mistake on my part. No one ever sat me down and explained how important it is to start investing early. Now that we’ve had this little talk, you’ll never be able to say that no one told you.

“for me, for you, for later” — First Steps to Spending, Sharing, and Saving

Seasame Street is helping parents teach kids about value with a new program to help kids develop good financial habits:

Each time your young child sees you spend money or use the ATM, she is building an understanding of what money is. You can guide that understanding with simple activities about making good choices; what has value; and spending, sharing, and saving. Over time you’ll see that, through everyday conversations and fun, you can help your child grow up to make good financial decisions.

View the multimedia program at SeasameStreet.org

How Much You Need to Earn to Buy a Home in 27 U.S. Cities

How much salary do you need to earn in order to afford the principal, interest, taxes and insurance payments on a median-priced home in your metro area?

Cities	30-Year Fixed Mortgage Rate	Median Home Price	Monthly Payment (PITI)	Salary Needed*
National	4.02%	$222,700	$1,192.67	$51,114.62
Pittsburgh	3.90%	$128,000	$726.47	$31,134.50
Cleveland	4.00%	$121,800	$758.88	$32,523.47
Cincinnati	4.02%	$136,600	$792.56	$33,967.01
St Louis	4.00%	$143,700	$811.48	$34,777.53
Detroit	4.07%	$148,667	$861.34	$36,914.56
Atlanta	4.03%	$169,200	$876.19	$37,551.08
Tampa	4.16%	$175,100	$978.19	$41,922.58
Phoenix	4.03%	$221,000	$1,025.21	$43,937.76
San Antonio	4.01%	$192,100	$1,096.08	$46,974.78
Orlando	4.08%	$205,000	$1,115.59	$47,810.81
Minneapolis	4.00%	$223,700	$1,172.52	$50,250.68
Philadelphia	4.00%	$213,700	$1,204.52	$51,622.40
Dallas	4.05%	$206,200	$1,208.81	$51,806.01
Houston	4.04%	$209,200	$1,217.16	$52,163.93
Baltimore	3.98%	$233,500	$1,233.51	$52,864.57
Chicago	4.04%	$209,800	$1,352.93	$57,982.85
Sacramento	4.05%	$294,100	$1,450.01	$62,143.45
Miami	4.07%	$286,000	$1,471.12	$63,048.07
Portland	4.05%	$318,800	$1,538.07	$65,917.47
Denver	4.05%	$353,500	$1,596.85	$68,436.22
Seattle	4.09%	$385,300	$1,829.91	$78,424.93
Washington	4.01%	$371,600	$1,834.60	$78,625.71
Boston	3.96%	$393,600	$1,940.20	$83,151.43
New York City	4.00%	$384,600	$2,024.64	$86,770.19
Los Angeles	4.02%	$481,900	$2,217.60	$95,040.20
San Diego	3.90%	$546,800	$2,407.18	$103,164.96
San Francisco	3.94%	$781,600	$3,453.24	$147,996.19

* Income required to cover the mortgage’s principal, interest, tax and insurance payment assuming the standard 28% “front-end” debt ratios and a 20 percent down payment subtracted from the median-home-price

Source: Visual Capitalist

The Financial Four – Bracket Challenge

Now that your March Madness bracket is already collapsing, how about a matchup where you’re always a winner? The National Endowment for Financial Education (NEFE) and the Financial Planning Association have put together an online interactive bracket of 32 financial actions that people can take to help make winning money moves.

Click here to take the Financial Four Challenge

Download PDF

Source: Washington Post

Mapping Student Debt

More than 42 million Americans owe a total of $1.1 trillion in student debt, making it the second-largest liability on the national balance sheet. A generation ago, student debt was a relative rarity, but for today’s students and recent graduates, it’s a central fact of economic life that we don’t know much about. Mapping Student Debt is changing that. The maps below show how borrowing for college affects the nation, your city, and even your neighborhood, giving a new perspective on the way in which student debt relates to economic inequality.

Click for the full, interactive map

Source: Mapping Student Debt

Home Price Growth Cools Off

The pace of year-over-year home price growth is beginning to cool off according to this week’s 20-city Case-Shiller Housing Price Index which updates through the end of July. At a national level, home prices have seen an annual price increase of 5% year over year as of July 2015. However, that is way off the peak year-over-year growth of nearly 15% seen in previous years. The following charts from Nick at Floating Path do a great job summarizing the trend. Click here to download Nick’s full report with high-resolution charts and great detailed information.

Here’s the whole index followed by a city breakdown showing the rate of growth.

and year-over-year growth by city:

Source:

Looking for a Lucrative Major?

The chart below illustrates how gender, major and earnings are related based on an analysis of college majors and median earnings after graduation for those under 28. Median yearly earnings are shown on the vertical axis: Majors that appear toward the top of the chart tend to earn more, and those toward the bottom earn less. The gender makeup of the major is on the horizontal axis, with majors that are male dominated on the left and female-dominated majors on the right.

The chart clearly shows that those who study male-dominated majors generally earn more after college than those who study majors that are dominated by women. Each of the squares below represents a college major; the bigger the square, the greater the number of recent graduates. The color of the square indicates the category of study — science, humanities, etc.

Source: WonkBlog

Our appearance in U.S. News & World Report

U.S. News and World Report quoted us in an article they ran on Monday (9/14) entitled“10 Reasons New Investors Should Enter the Market”. Lou Carlozo, one of the nation’s leading personal finance writers, reached out to NothStar Capital Advisors for ourinsights and wisdom for new investors contemplating an entry into a choppy or down market. Scroll down to read our full guidance.

Here are our leading thoughts to guide new investors:

New investors should embrace the opportunity to start their investing experience in a down market. These conditions are ideal for helping you get your investing psyche or your investing brain straightened out from the get go. Bear markets showcase the negative inputs and fears that all investors ultimate face. Take up the challenge early on to understand the fears, to recognize your intuitive human response, and take counter-intuitive actions. You’ll cultivate long-term wealth with that counter-intuitive mindset that features taking the long-view, developing a thick skin to combat the short-term “noise”, and sticking to your investment strategy with steely discipline.
If you’re new to investing you should be happy there’s a bear market because that means more buying opportunity. You’re buying on discount and getting more bang for the buck. So embrace the bear market. Get in the game and get the benefits.
Another reason one shouldn’t hesitate to get into a down market is because bear markets are absolutely normal events. Historically a bear market occurs about every 6 years on average. So a smart young person who starts investing in her mid 20’s will experience about 7 bear markets before retiring in her mid 60’s, plus 5 more during 30+ years of retirement. Even though bear markets are regular events, the exact timing of the bear’s appearance and disappearance is not. Hence, the evergreen but difficult-to-follow-advice, “don’t try to time the market”.
When you’re trying to understand what’s the best course of action, it’s often beneficial to consider what’s the worst thing to do. When it comes to bear markets, the worst thing to do is to panic, sell, and become a non-participant. Today in 2015, our office gets a regular flow of folks seeking our help. They cashed out at the bottom of the market in ’08 and ’09 and never got back in. They are trying to find the courage and commitment to come back in and re-start the wealth accumulation process. They have squandered the last 6+ years of stock market growth by sitting on the sidelines. They’ve thrown away money and damaged their retirement lifestyle by taking negative action around a bear market. So back to your quandary of plunging into a bear market…get in and stay in. You’ll be happier and wealthier in the end.
In summary, investors grow their wealth by getting in and staying in. If you have any troubles understanding the why’s or maintaining your discipline to stay the course regardless of the moment, reach out to a professional advisor. That will probably be the most profitable call you ever make in your life.

If you know someone who is new to investing and struggling to decide the best thing to do for her family, please share this information with her.

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