Book Review: Morningstar's 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances

Christine Benz, who is the Director of Personal Finance over at Morningstar, has written a new book. Its called "Morningstar's 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances". It is a well written and practical book. The 30 minute part in the title describes how long it would to take to do the tasks she writes about in each chapter. The book is divided into 11 parts, each describing a different part of financial planning for your life. 

I find the book complete in helping a newcomer get on the road to financial organization. The chapters are laid out that you can come back to each at different times to answer question you may have at a later date. The helpful basic knowledge will help the average person to get the basic info on finances. For the average knowledgeable reader of financial books there are no new revelations. 

Even though the book states the tasks are doable in 30 minutes, I don't think they are. Only if you are already very organized. Yet if you were, you wouldn't need this book. 

There is a web site listed in the book that has worksheets and further articles. 

Here is a list of the chapters:

Part 1: Find Your Baseline

Identify where you stand, what your goals are, and how to get there.

Part 2: Get Organized

Create systems for bill paying, filing, and keeping track of it all.

Part 3: Find the Best Use of Your Money

Determine whether to pay down debt or invest, then decide where to put your money.

Part 4: Get Started in Investing

Establish emergency, short, and long-term plans, and select the right investment mix.

Part 5: Invest in Your Company Retirement Plan

Evaluate your retirement plan and choose the right type of 401(k).

Part 6: Invest in an IRA

Choose the best type of investments and conversion strategies for you.

Part 7: Invest for College

Find the right college-savings vehicle, 529 plan, or investments.

Part 8: Invest in Your Taxable Account

Identify the best investments and maximize tax efficiency.

Part 9: Invest During Retirement

Build an in-retirement portfolio and plan withdrawals.

Part 10: Monitor Your Investments

Check up on or rebalance your portfolio.

Part 11: Cover Your Bases on Estate Planning

Start your estate plan, handle beneficiary designations, and create a personal legacy.

As with all financial help books, this one is written to apply to the broad population. Its a very good start for a neophyte in financial literacy. Some readers will find that this info is enough for their money life. But, more complex situations call for professional assistance in a Financial Advisor. I believe with something as important as your money, its imperative to get a professionals advice, at least once.

College Loan Defaults Increasing

Image via WikipediaOver at Yahoo.com there's an interesting article about graduates not paying their student loans. Figures from the U. S. Department of Education shows 7 percent of borrowers of federal student loans defaulted within two years of graduation, up 6.7 percent from the previous year and 5.2 percent the year before that. 
 
Her we have the perfect storm of easy flowing money from the government. Coupled with the recession starting and the cutback in job hiring. These two factors really hurt the newly graduating students. 
 
Even before the recession was on the horizon student borrowing had doubled. Education Secretary Arne Duncan voiced his concern over excessive debt and useless degrees. The article goes on to argue not about the burden, all this debt has but, who's debt is worse public or private schools. 
 
Here we see the bureaucrat mentality. The common sense rules of excessive debt isn't even explored. Just who to point fingers at. We have 2 problems here. First a mindset of non-restrictive borrowing. No preset guidelines depending on the degree your seeking. For example, borrowing $100,000 for a job that only pays $35,000 per year. Secondly, why is the government so deep in the student loan business? I can see some intercession by the government for it being the source of last resort for people who can't borrow anywhere else. 
 
Even some private sector loans are guaranteed by the government. The government has a never ending supply of money to loan out. In this day of an ever expanding government. Do we have to address every need of the citizen. Maybe it's time for Uncle Sam to but out. 

How much should I save for college?

 Fidelity Investments released guidelines last month for how much parents should save in a 529 college savings plan. It shows both annual and monthly selections. If the plan is followed you should not have to take out any loans. 
 
The guidelines estimate what a four year in-state college would cost in 18 years from now for a parent with a newborn infant today. It used data from the College Board about the average cost of public and private colleges today and how much those costs are growing annually. It assumes a 5.4 percent annual growth rate in costs for the next 18 years. 
 
Next, using Sallie Mae data, Fidelity estimated how much in scholarships, grants and family gifts households currently earning $55,000, $75,000 and $100,000 annually could expect to receive and subtracted that amount from the expected cost. Then it estimated how much, at each of those income levels, a family would need to save to cover future college costs. Assuming they put the money in a 529 plan that gave a return in line with what the company estimates an investment in Fidelity's age based investment option should provide. 
 
The table reflects their findings and supplies their actual dollar amounts to be invested every month. 
 
 Their are no guidelines for family's making over $100,000 dollars per year. But they should examine the guidelines and interpret a plan that suits their own situation. Also the proposed savings amount don't consider the extra expenses that go with college, only tuition. Though transportation and health care are qualified 529 expenses. 
 
Fidelity Investments claims if you follow their recommendations the family making $55,000 would accumulate $48,000 for public college and $107,000 for a private college. The $75,000 family would have to save $51,000 for public college and $115,000 for a private college. The family making $100,000 would need to save $55,000 for public college and $123,000 for a private college. 
 
Now these figures are very subjective. We don't know what the final amounts would have grown to. Also we don't know if a family could sustain making these large payments for 18 years. But if they could the 529 accounts would become substantial. I am aware that it's pretty hard to estimate all this and I have to give Fidelity credit for attempting this. The amounts of monthly savings are relatively close. The family incomes are not, so the burden is on the lower wage earners. Like I said it's a place to start. w