Boo! Frightening college costs

Here's something scary: The 10 most expensive colleges in the United States are all above $50,000 per year. For a four year education, you're looking at probably close to $250,000 by the time you've paid books and fees at these universities.

As we've said time and again here, there is no good reason to spend that amount on an education. There are lots (and lots!) of good, solid state colleges and universities. It's what you do with your education that matters. If you are wealthy and you can afford to send a child to one of these universities, hey, have at it. But do not mortgage your home or do anything scary to pay for college for your kids.

Have a look at the list here:

http://bit.ly/1AcvcF

And here's something REALLY scary. If you have a baby this year, and you want to send that child to one of the universities highlighted that's $50,000 a year now, you'll pay $518,641 for their education by the time they're ready for college. If college costs rise at 5 percent a year, your annual cost will be $120,331 (up from $50,000 over 18 years). The total cost for 4 year(s) will then be $518,641.

Here's the calculator we used to get those figures. Use it to look at the cost of your education or your child's education.


http://apps.collegeboard.com/fincalc/college_cost.jsp

New homebuyer credit: could it be renewed?

The tax credit for first-time homebuyers hasn't quite done what government officials had hoped. It's not quite boosted the real estate market as much as they'd like. So there's talk now of extending it and even perhaps making it larger.

Curious as to where things stand? Read on for more information:

From CNN: http://tinyurl.com/ykgxp7v

Don McNay: Just Say "No" to Adult Children Wanting Money

Don McNay writes a regular column for The Huffington Post. His latest shares a key message: don't give large sums of money to adult children. It keeps them from growing up and really doesn't do them, or you, any favors.

Here's his insightful column on the topic.

Don McNay: Just Say "No" to Adult Children Wanting Money

Posted using ShareThis

Roth IRAs may be an option

On Mondays, we answer a question from a reader in this space. If you have a question, please post it in the comments section or e-mail it to robynsekula@sbcglobal.net

QUESTION: I’d like to make a ROTH IRA contribution for me and for my husband - $5,000 each in 2009. However, my husband’s income is about $60,000 and mine will probably be at least $100,000. I’m self-employed. I understand from what I’ve read about Roth IRAs that if your Modified Adjusted Gross Income is $166,000 you can’t make the contribution. If our income comes in at or right above $166,000, does that mean that we won’t qualify? What’s modified adjusted gross income anyway?


ANSWER FROM DAN DANFORD: This may sound like a simple question, but really, it's not. The Modified Adjusted Gross Income is a complex number that depends on many factors, and I don't know enough about your personal situation to tell if you'll be disqualified or not, especially since your income is near the borderline. Here's a link to solid information to read more about it: http://www.fairmark.com/rothira/modagi.htm

Despite the income limitations, Roth IRAs are worth taking the time to do the calculations to ensure that you qualify. Roth IRA accounts differ from traditional IRAs because there's no tax deduction for the annual contributions. In other words, it's money that has already been taxed. The desirable Roth benefit is that you won't pay taxes on the annual portfolio growth or withdrawals in retirement. There are a number of constraints - including family income and early withdrawal privileges - which alter the ability and attractiveness for using Roths.

I'm not going to address the exact Roth tax rules here. You'll need to talk that over with your tax advisor who knows your exact situation including income and adjustments. But some general guidelines might be helpful. First, the younger you are, the more attractive a Roth. Income and tax rates aren't high, so the tax you pay isn't prohibitive. A traditional IRA deduction isn't as meaningful for you. Second, the period for tax-deferred compounding is longer, so that's appealing, too. Third, the older you are, the more likely you are to have existing traditional IRA accounts. Why complicate life with another tier of monthly paperwork?

I'm a fan of Roth IRA accounts in the right circumstances, and your family could be a perfect fit. You've got high income and 401(k) or traditional IRA tax deductions could be more appealing. Also, I'd usually suggest a compounding table to view the actual difference between Roth compounding and traditional compounding, given your age and years until retirement. It's true that you'll pay taxes on withdrawals with the traditional, but most of our clients defer those withdrawals for a very long time anyway. Not sure how much difference the Roth makes for many people.

Overall, I'd suggest you discuss with your tax advisor and keep one eye towards convenience and simplicity. I see too many people with a dozen scattered accounts which include Roth, traditional, old 401(k)s, and an occasional orphaned Tax Sheltered Annuity. Stick to a good long-term plan, and weigh both current and future tax breaks.

Your best plan for 2009 may be to wait until as late as you can in 2009 when you'll know, as a self-employed person, what your gross income will be. Ask your tax advisor to help you figure out your MAGI and see if you'll qualify. Hold on to the Roth IRA money until then, and make the contribution in December if you qualify. If you aren't working with an advisor, you need to be. With your income, you can make some significant progress towards long-term goals if you have professional help. This is an opportunity you don't want to squander.

Collaboration: Vicious group-think with a point

By Dan Danford, MBA, CRSP

The great manipulation technique of this decade is “collaboration.” This horrendously popular business term has been deployed in all areas of American life.

We hear it constantly at work, and now it is now worming its way across the nation like some dreaded crop blight or tree disease. A recent Google search yielded some 83,000,000 hits in under a quarter-second. That’s five times more than “synergy” and four more than “paradigm.” We’re talking the World Series of inane business terminology, here.

According to Webster, to collaborate means 1) to work jointly with others or together especially in an intellectual endeavor, 2) to cooperate with or willingly assist an enemy of one's country and especially an occupying force, or 3) to cooperate with an agency or instrumentality with which one is not immediately connected.

Of those three, happy “collaborators” likely prefer the first, which sounds noble, but the bell which rings true today is the second; that is, to cooperate with or willingly assist an enemy (emphasis mine). That’s because collaboration is usually suggested by the strong as an effort to manipulate the weak.

Think about it. Do cries for collaboration ever rise up from the peasant classes? Not so much. They nearly always reign down from above. “Go, therefore, and collaborate on the issue of diminishing widget sales in the direct distribution channels of our Northsouthern region,” declares Mr. Puffy, the CEO. “Help them see why I think we should close that plant.”

In the community, it’s “let’s gather a group of social agencies to collaborate about neighborhood floral disintegration. Perhaps we could jointly commission a study to determine possible solutions,” intones Pansy Marigold, owner of the International Floral Studies Group. Blah, blah, blah, blah.

I loathe manipulation. Manipulators think they are smarter and sneakier than all the rest of us. They devise grand schemes to feather their own nest, and then coerce others to pay. They are bullies with velvet gloves. Collaboration is their tool of choice. “Everyone gets a say,” they’ll explain, but results are known far in advance to anyone with a brain. Ask around the office; manipulators think they are smarter, but they’re not.

There’s a sign on my desk declaring “none of us is as dumb as all of us.” The simple fact is that collaboration is often a management technique designed to exploit group dumbness. Most times, the lead collaborator has an agenda and a desired result. Others in the process are unwitting co-conspirators. They show up, hoping they can add data, or resources, or wisdom (or, with any luck at all, humor). Wrong. They are, in fact, adding dubious credibility to both the agenda and result.

Collaboration as intellectual endeavor? Maybe it could happen. When two university scholars gather at Starbucks to discuss research. Or when Bobby Flay and Rachel Ray conspire to create some new dessert for the Food Network. On ESPN commentators engage lofty discussions over the merits of a Wildcat offense in the NFL. (Though a friend just emailed that last weekend he heard a broadcaster suggest that two bruising linebackers "collaborated" on a tackle. I kid you not.)

Intellectual? Not today. Collaboration is a transparent and weak management tool. The suits want us to think we have input, so they put us in a group and guide us to their goal. But we have a secret weapon. Any of us are smarter than that group of us. As a tool, collaboration is dull, clumsy, and ineffective. Manipulators beware: we’re on to your hollow game.

Defining a good job

Dan Danford regularly provides podcasts for Dad's Divorce.com, an excellent resource for men going through the divorce process. In this week's installment, Dan addresses what makes a job a good job.

You can watch it right here.

Elaine Coder earns well-deserved promotion

By Dan Danford

At the Family Investment Center, like a lot of small businesses, we keep an eye out for great employees. We're lucky to have Elaine Coder on our staff, and delighted to announce that she's moving up into a higher position here and will be serving clients even more in the future.

For a small business, there's nothing better than finding out your next great partner is already working for you - and that they're willing to do what it takes to get there. She knows us. She knows our clients. She knows how we do business. It's a wonderful find for us.

Elaine brings an excellent skill set to Family Investment Center. Her genuine concern for clients melds perfectly with relevant experience in finance and banking. She's been helping us serve clients for almost five years and she worked very hard to learn material and pass the required securities exam. I was more excited when she passed the exam than I was when I did. She's sincere, hardworking, and dedicated to each client's success. She's the perfect compliment to our other professionals, and we welcome her as a trusted colleague and professional.