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Thread: Advice please

  1. #1
    Kaylinn
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    Default Advice please

    I am recieving a very large sum of money for school. I will get enough to pay tuition, books and any other supplies for about the whole year.

    My question is I need advice on what to do with this money. What s the best way to keep it safe?

    I want an account that I can't touch, but not completly unavailable, because I will need to withdraw every semester, but I don't want easy access, like a saving account. I also want the money to have a good interest rate.

    I was thinkign abotu a CD, but then you can't touch it for 6 months to a year at a time, correct? So that wouldn't be any good for me since I need access to it every semester...

    Any advice on what to do with this money?

    An online savings account? Thoes can get 5% interest...or is there a high interest rate somewhere else?

  2. #2
    God/dess Lena's Avatar
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    Default Re: Advice please

    www.emigrantdirect.com

    What are you going to school for? (sorry if you've said someplace else and I missed it)



  3. #3
    BrunetteGoddess
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    Default Re: Advice please

    I believe she said she was going for Nursing.

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    God/dess Roulette's Avatar
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    Default Re: Advice please

    Lena, do you use that american dream savings account? Is it trustworthy?
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  5. #5
    Featured Member Katherine's Avatar
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    Default Re: Advice please

    You could leave just enough for next semester out while putting the rest in CD's. Stagger the release dates. Put the semester after that one's money in a six month and the rest in a one year. In a year keep what you need for that semester out while putting enough for the one after in a six month and the remaining in a year. So on and so forth.

    Viola. Can't touch the money while it 'pays' you how much you need when you need it.

    I modified the above idea from Melonie's advice on what to do with your 'emergency 3-6 months' cash fund. Which I use and love... Thank Mel!

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  6. #6
    Banned Melonie's Avatar
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    Default Re: Advice please

    Katherine probably has the right idea if the object is to 'sequester' one large lump sum so that portions only become available as they are needed to pay future semesters' tuition. You can 'layer out' this money by putting X dollars in a checking account to be available next August ... another X dollars in a 6 month CD to be available next January ... another X dollars in a 12 month CD to be available in August 2008 ... another X dollars in an 18 month CD to be available in January 09 ... another X dollars in a 24 month CD to be available in August 09 ... another X dollars in a 30 month CD to be available in December 09 ... another X dollars in a 36 month CD to be available in August '10 etc.

    There are a couple of questions that need to be asked though in regard to this approach. #1 is an assumption that you will NOT have any significant amount of taxable income from other sources while you are going to school. The reason is that the interest on standard CD's counts as taxable income, meaning that if you were still going to dance and earn a significant amount of money while going to school the CD interest could bump up your tax bracket.

    #2 is the assumption that you are not 'set in stone' in regard to which college you plan to attend, or whether or not you will actually attend college for eight consecutive semesters. If you ARE 'set in stone', and you are a Nevada resident, and you've chosen a Nevada college, then the state has a Pre-Paid tuition contract program. This program would allow you to pay for eight consecutive semesters of tuition up front at a discounted price, would allow you to avoid any future year tuition hikes by the college, and would allow you to avoid income tax liability on savings account / CD interest earnings. You'll have to check though to make sure that this program is still open ...

  7. #7
    Kaylinn
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    Default Re: Advice please

    Wow, Melonie, I had no idea about the prepaid tuition program. I realyl like that idea, and I am set in stone on where I am attending.
    However, I am attending a private college,and it isn't covered under this program. I can, however, pay this years tuition all upfront with this program, and then put the rest into a 12 month cd.

    I will be attending a community college for a few semesters to get a couple more credits, then going into the Nursing school next august.(0

    My boyfriend has brough up a god point tho, and that is if I put all the money into a locked cd, I can't add to it. I woudl liek to be able to keep adding money into it, because I need much more than I have for the nursing part.

    OK..honestly...maybe the whole story will help.

    I have 20grand. I am attendign a community college for just a fe wsemesters right now cause I need a few more credits. I will need approx. 5grand for the community college.
    Then I will go to a private nursing school aug. of 08. The total tuition for the whole program is going to be $55,000.

    So If I can pay the whole community college up front(5g) then I have 15g to put into a cd, btu 15grand is far from the 55g I will need in a year. Obviously, I need to continue to save my own money, and it would be nice t be able to just contribute money into the cd I will have with 15grand in it.

    Is that an option?

    If not..then I will need to open a seperate savings account to put money into.

    So...now that you have the whole story, maybe yuo can figure the best thing for me to do. I thank yo so much for the info on the prepayment program, and I will be using that.

    Now what is the best thign to do with the rest of the money?

  8. #8
    Banned Melonie's Avatar
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    Default Re: Advice please

    no there is no such thing as an 'open ended' CD, since the interest rate you receive is proportional to the length of time you're willing to 'lock up' the money for. There's nothing that says you can't continue to save money in an interest bearing money market account though, and withdraw the money you gradually build up to buy a new CD with a different maturity date to cover the next semester or year.

    I just want to throw out one thing on the table. These days ALL US college bursar's offices automatically report tuition payments to the IRS, which the IRS computers will then compare to student loans taken out for the person with the same social security number and previously filed tax returns for the person with the same social security number.

    As such, if you received a large 'gift', a discrepancy is going to appear between the amount of money that you yourself have reported earning and the amount the college will report that you are spending on tuition. This will probably lead to an inquiry and/or an audit, where the person who 'gave' you the large gift will have to report this to the IRS and probably have to pony up even more money to pay a gift tax. If this can't / won't happen for whatever reason, there's a pretty good chance that the IRS will consider this money to be unreported income on your part, on which YOU will be expected to pay income tax.

  9. #9
    Kaylinn
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    Default Re: Advice please

    It's a student loan.

    I just got the a huge ass loan that is disbursed directly to me, instead of a loan that gets sent to the school each semester.

  10. #10
    Veteran Member Robertjordan's Avatar
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    Default Re: Advice please

    Your best bet is a money market fund. You mentioned 5% which is a very good rate. I have a money market fund with Capital One which is getting 4.75%. I'm pretty sure you'll find that CD rates aren't all that much better AND with CDs your money is tied up for a certain period of time. Plus with that rolling CD thing you have to time everything right and there are penalties for early withdrawls. Money market accounts allow you to take the money whenever you want. With my Capital One account I log onto it online and make a transfer to my regular checking account when I need the money (it takes 3 days and there are no fees).

    Here is the Capital One website:

    http://www.capitalone.com/

  11. #11
    God/dess Emily's Avatar
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    Default Re: Advice please

    Quote Originally Posted by Roulette View Post
    Lena, do you use that american dream savings account? Is it trustworthy?
    I've used them and they are fine, but I changed because I got a better rate and $50 signup bonus with Capital One since I'm a Costco member.

  12. #12
    God/dess Roulette's Avatar
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    Default Re: Advice please

    I love Costco... anyway thanks for the answer Emily!
    Quote Originally Posted by Alaska View Post
    I just got hollered at by a CUTE guy, at dusk, in my car, in gym attire and hair. Word?
    Picaresque is the shit, I loooooves her!!!

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  13. #13
    God/dess Lena's Avatar
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    Default Re: Advice please

    Melonie, do you think it's better to do rolling CD's in small amounts, or to save it all for a few months and do a bigger CD with a higher interest rate? What was the site for the CD's that you recommended a while ago?



  14. #14
    Banned Melonie's Avatar
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    Default Re: Advice please

    ^^^ it depends on the 'scale' involved ... usually you need to put down $10k to get the higher interest rate. Right now CountryWide Bank is offering comparatively high interest rates, but this probably changes on a daily basis. Also, given the likely fate of the US dollar, EverBank's CD's denominated in other currencies are worth a look as well.

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