Back-to-School Expenses Recovery Plan for Parents
“What does Christmas and September have in common for most parents?” If you guessed that, they both are high expense periods, then you are “right on the money”. If you feel like you need a back-to-school financial recovery plan; this article can be your guide to getting started.
1. If you “borrowed” from other bills, and/or loved ones to meet back-to-school expenses you will need to repay these debts in the future.
Solution: Firstly, calculate exactly how much you owe in total; then prepare your annual budget so you have a holistic picture of your income and expenses. You will notice that you have fixed and variable expenses, the later is based on your consumption. Your next step is to determine how much you can save by reducing your variable expenses and how long would you need to maintain a conservative approach in order to “catch up” with the bills you delayed. For example, you may reduce your electricity bill for 3 months by J$2000 each month, and J$1,000 from the supermarket bill, etc. You have to do what it takes!
2. If you opted for a payment plan from your child’s school, this is great, since most school payment plans do not attract any interest; making this an “inexpensive loan” option. However, if you pay these installations late you will often face a penalty.
Solution: In order to ensure you are able to honour your obligations and have sufficient money for future payments; separate your “education expense account” from your other account/s by creating a separate account. Then, put a standing order in place to automatically transfer funds to your “education expense account” each month.
3. If you used your credit card; though this offers you more convenience, this attracts a high interest rate, normally more than 40%. So, if the price of books and tuition was J$300,000 you would end up paying J$420,000 or more by next year.
Solution: Pay off that expensive credit card loan with a less expensive loan, such as a secured loan backed by: cash, investment, motor vehicle, home (if it is a large principal balance). However if you have no security, consider a JMMB Graduate unsecured loan.
Ensure you are fully recovered from your back-to-school expenses by reducing your variable expenses over time, creating a separate “education account” to meet your obligations and pay off expensive loans.
Would you like to plan towards next year? If so, get started with the JMMB Graduate, which in addition to the loan component offers J$ and US$ investments. From July 31, 2018 to July 31, 2019, dependent your risk tolerance, parents like you, enjoyed rates of return of between 7.5% to 15.9% on their JMMB Graduate plan. You can use this investment to jumpstart the back-to-school expenses for next year.
Do you need a back-to-school recovery plan, JMMB is here to get you started, text “GUIDE” to (876) 822-5662 (JMMB).