CPA Rockvile Financial Planning Rockville

How to get a “loan” from the IRS

Estimated Payments - Rockville, MDEven if your overall cash-flow situation is good, but you still need to cover a short-term deficit, today’s still-strict credit environment often won’t allow you to take out a loan.  More than likely, your only option would be an untapped home equity line of credit or a generous relative.  If that’s the case, great.  If not, you may be able to turn to a surprising source for some help: the taxman.

If you’re self-employed, an investor or someone who lives off Social Security benefits, pension payments, retirement account withdrawals, and the like, you can apply for loan from the Internal Revenue Service.  Better yet: To borrow from the IRS, you don’t have to fill out any annoying applications, prove your income or fence with a balky loan officer.  While this may sound too good to be true, it is true.

What you do is simply postpone some federal income tax payments that you would otherwise make to the IRS via estimated tax installments.  You don’t need the government’s permission.  You just do it and then make up the difference later.  Of course, the IRS will charge interest on the difference between what you should have paid in for each installment and what you actually paid.  However, the current interest rate on estimated tax underpayments is only 3%.  While the rate can potentially change each quarter, it will probably remain at a reasonable level for a while.

The IRS calls the interest on estimated tax underpayments a “penalty.”  But since the current interest rate is only 3%, it’s not really a penalty.  In fact it’s actually a pretty good deal for someone with a short-term cash crisis.

Note: If you are a salaried employee, you must pay in federal income taxes via payroll withholding.  You may be able to adjust the withholding downward a bit for the rest of this year by turning in a revised Form W-4 to your employer.  However, the strategy of borrowing from the IRS is basically unavailable to you.  Sorry.

Estimated Taxes:

There is no federal income tax withholding on income from self-employment activities conducted via sole proprietorships, partnerships, or LLCs.  Nor is there generally any required federal income tax withholding on interest income, dividends, capital gains, Social Security benefits, pension payments, or taxable retirement account withdrawals.  Instead those with income from these sources are expected to make four installment payments of estimated taxes for each year. The installments for the 2012 tax year are due on Apr. 17, June 15 and Sept. 17 of this year, and Jan. 15 of 2013.  Obviously the first date has since passed, but the next three are still in the future.  So you can work with the installments due on those dates by paying in less than you owe or even nothing at all.

As mentioned, you will be charged interest based on the difference between the amount you should have paid in for each installment and the amount you actually pay for as long as the underpayment remains outstanding.  The amount that you should pay in for each installment generally equals the lesser of: (1) 22.5% of what you expect to report on your 2012 Form 1040 for total federal income and self-employment taxes or (2) 25% of what you reported on your 2011 return (27.5% if your 2011 adjusted gross income was over $150,000).

Borrowing from the IRS in this fashion is only a short-term fix.  By no later than April 15th of next year, you must catch up for any estimated tax payment shortfalls for the 2012 tax year.  If you don’t, the IRS will start charging additional interest of half a percent per month on the shortfall, which equates to a 6% annual rate.  That 6% is on top of the “regular” interest charge, which is currently only 3%.  So you could be looking at a rate of 9% or maybe more.  In any case, owing the IRS for 2012 taxes after April 15th of next year is just not a good position to be in.  So, if you are not ready, willing, and able to pay up by that date, this is not a good option for you.  You do not, however have to wait until April 15th to catch up.  You can do so as soon as you are able and that is the recommendation.


Make the most of LinkedIn

Connect with Eric L. Bach & Associates on LinkedInAre you LinkedIn? If not, try expanding your horizons outside that of Facebook.  Indeed, LinkedIn has more than 100 million members, including executives from every Fortune 500 company.  LinkedIn’s research team recently mined that information to determine the most common names for CEOs.  Verdict?  Peter, for a man, and Deborah, for a women.  But no matter what your name, LinkedIn can take your networking to the next level with just a little effort.  Here are the most common ways people aren’t making the most of their presence on the site (and how experts say you can fix that):

Having A Vague Headline
Say your current title is marketing manager.  Many people naturally leave that as their headline, which is a huge error because it says nothing about what you actually do, says career coach Kimberly Schneiderman.  Instead: “Use a headline statement that really describes your expertise and talent, like ‘Executive-level Product Strategist’ or ‘Hospitality Executive — Expertise in Franchise, Operations, & Change Management,'” suggests Schneiderman.  Then further develop it: “Create a summary about your career that fully describes your passion for your work, your impact in your company or companies, and your professional focus.  People in an open job search can map out the kinds of opportunities they are pursuing next.  Make it about 3 paragraphs and write in 1st-person using ‘I’ statements,” says Schneiderman.

Maintaining A Passive Profile
Filling out an attractive profile is just the beginning. “Most people create a LinkedIn profile, but then don’t take advantage of potential connections that might be available through their existing network,” says career consultant Shawn Graham, author of Courting Your Career.  His suggestions: regularly identify and reach out to potential contacts, use status updates to congratulate those contacts on their successes, and consistently review the “People You May Know” section to identify additional connections.


Not Trying New Tools
Branding expert Dan Schawbel says that a major mistake is not taking advantage of the many tools Linkedin has to offer.  His tips include connecting with someone you have no connection with by joining a LinkedIn Group they’re active in, using a 1st degree contact to gain access to 2nd and 3rd degree ones, and using apps like SlideShare to connect with even more people.  And don’t forget to take your toolbox on the go: “The LinkedIn mobile application allows you to transfer contact details electronically,” says Schawbel.  A new one has just been released for the Droid.

Networking Only When You Need Something
Schawbel also reminds people that networking on LinkedIn is no different than networking in real life.  You still want to give more than you receive, particularly when asking for a recommendation: “The best way to get recommendations on LinkedIn is to give one first,” says Schawbel.

Prepaid Education

Financial Planning - Rockville, MDSection 529 of the tax code established 2 types of higher education investment plans that will also provide you with preferential tax treatment.  The 529 college savings plan allows assets in the account to grow and your withdrawals for college expenses to be made tax free.    The second type, a 529 prepaid tuition plan, also known as prepaid educational arrangements (PEAs), provides tax-deferred growth on savings for tuition, based on the current cost of that tuition.

Prepaid Educational Arrangements can be purchased in units, usually credit hours or a percentage of the annual tuition fee, or in contracts for 1 to 5 years of tuition.    Payments can be made in a lump sum or in installments.  The states that administer PEAs guarantee that your investment will, at the very lease, match college tuition increases.  For that reason, these plans are typically much more conservative than other types of college savings, so they may not be appropriate for late-stage college saving.

Because PEAs can be purchased for the student by anyone, they allow aunts, uncles, grandparents, and even unrelated benefactors to help with educational costs and, depending on the state, receive a break on their taxes.  Most PEAs are transferable to other members of your family, including parents, brothers, sisters, and children if the original beneficiary decides not to attend college.  The distributions from the PEAs are not taxed by the Federal government as long as they’re used for tuition and fees. The primary drawback, however, is that states administering these plans usually require that the funds be used for a school in that state.  That may be a difficult commitment to make if your child is young and his/her “future” career is pretty much up in the air, although the ability to transfer to another family member gives you one option if plans change.

PEAs are just one of the extensive opportunities for securing your child’s future and typically contain less risk.  By meeting with a trusted financial professional and finding out your options, you will move yourself one step closer to helping your child take part in the most important investment of their lives: their education.


Fastest growing retailers

Whole Foods MarketFollowing the recession, retailers are growing once again and, increasingly, moving online. In the first quarter of 2014, retail sales were 2.4% higher than the same time the year before, largely helped by a 15% jump in e-commerce sales. Online retail is increasingly accounting for more and more of America’s shopping.

Yet not all retailers have adapted to a market where many Americans have less disposable income, and are increasingly choosing to shop online. Other companies, in turn, have become enormously successful by embracing these changes. Based on figures from the National Retail Federation’s (NRF) STORES magazine, compiled by Kantar Retail, 24/7 Wall St. identified America’s Fastest-Growing Retailers.

In 2013,’s U.S. sales rose by 27%, the most of any retailer. For some retailers, such as Tractor Supply Co., part of its continued growth comes from the fact that they sell products simply cannot, such as farm equipment and livestock.

Many other retailers have also moved online, embracing a more-targeted approach in order to set themselves apart from the competition. Bryan Gildenberg, chief knowledge officer at Kantar Retail, told 24/7 Wall St. that this kind of personalized approach, “makes buying much more enjoyable and finding what you want much quicker.”

Some retailers have benefited from the financial struggles facing many Americans. This includes Family Dollar, which targets low income shoppers and had 11% growth in sales in 2013. Others, such as Sherwin Williams, have benefited from more positive developments in the economy. An improving housing market helped the company’s sales rise by 18% last year.

And while many growing retailers are deeply impacted by changes in the economy, others are benefiting from evolving customer tastes. Both Whole Foods and Apple are among the fastest-growing retailers in America, and both have very strong brands aligned with changing consumer spending. Whole Foods’ commitment to organic food and Apple’s exceptional mobile product quality both resonate strongly with customers, who are often willing to pay more for these items.

While many of the fastest-growing retailers have different customers and products, they also have a great deal in common. Gildenberg noted that many retailers aimed “most of [their] energy at the middle of the market.” However, he added that, recently, growth has generally been stronger among companies that target a specific segment of the population.

For example, he noted that Whole Foods and Family Dollar are much more similar than they might look at first glance. “They both target segments of the population that general mass retail, for whatever reason, doesn’t serve as well.”

The addition of new stores can also play an important role in driving sales growth. Excluding Amazon, which is exclusively online, all but one of the fastest-growing retailers increased their U.S. store count in 2013. The one retailer that did not do so, AT&T, has heavily invested in new store designs and has opened or renovated a number of locations. Gildenberg noted that store growth is currently quite strong among more specialized retailers with unique store concepts.

To identify America’s 10 fastest-growing retailers, 24/7 Wall St. reviewed STORES’ Top 100 Retailers report. The report is based on Kantar Retail’s estimates for companies’ retail-only sales, and includes the 100 largest companies by this measure, as well as their estimated number of stores. The companies on our list had the largest percentage gains in U.S. retail sales between 2012 and 2013. Sales figures listed do not include third-party sales. We also excluded Albertson’s and Ascena Retail Group from our list. These companies had retail revenue gains that were largely driven by transformative mergers and acquisitions.

Social Security myths solved

Eric L Bach, CPA- Rockville, MDSocial Security is America’s largest source of retirement income.  But most of us have little or no idea how it works.  Worse yet, misinformation causes many to make poor retirement decisions.  Here are the facts you need to know.

First, some background.  Social Security is insurance, paid for by workers and employers.  Only workers and their families benefit from it.  It insures against loss of your work income due to retirement (or age), disability or death.  It has an annual cost of living adjustment (COLA) equal to the inflation rate, to protect your long-term buying power.

Mystery #1: Will Social Security be there for me? Social Security can pay 100% of all promised benefits until 2033.  After 2033 it can pay about 75% of promised benefits.  There are numerous options to extend solvency indefinitely with a mix of tax increases and/or benefit cuts.  If you’re a pessimist, subtract 25% from your SSA benefit estimate.

Mystery #2: Is Social Security a good deal? Social Security is a complete package of worker benefits, including retirement, disability and life insurance.  The average worker earning $43,000, with a non-working spouse, would need to save over $700,000 to duplicate their retirement payments, plus buy additional disability and life insurance.  The Social Security Administration’s administrative overhead is a low 0.8%.  Social Security payments are at least 15% tax-free.

Mystery #3: How does Social Security compute my payment? Your payment is based on three steps:

  • Once eligible, your payment is based on averaging your 35 highest-paid work years (or fewer years for mid-career disability or death).

Mystery #4: How can I get the most lifetime payments—by filing early, at FRA, or later? It’s an individual and financial-planning decision.  In simple dollars, it’s best to apply later, if you have average life expectancy or above.  But in ”present value” dollars, counting inflation, taxation, withdrawal options and interest rates, it may be best to apply early.  See this post for some considerations and software resources.

Mystery #5: What are good Social Security planning tools? Definitely sign up for a ”My Social Security” account at  See SSA’s suite of calculators at  And see the software products at the link in Mystery #4.

Mystery #6: Will Social Security pay my family members?
Yes, in certain circumstances.

  • Your spouse or former spouse can get up to 50% of your FRA payment if they are at least FRA; less if they file early (as early as age 62).
  • Your spouse can be paid 50% at any age if caring for your child under 16.
  • Your unmarried child can be paid 50% if under 18, under 19 and in high school, or at any age if totally disabled since youth.
  • In most cases, your family member must first file for any benefits on their own work record.  (An exception is your spouse who is over FRA.)

Mystery #7: Can family members receive Social Security after I die? Yes.  Payments to your survivors are possible whether you die before or after your own Social Security eligibility.

  • Your widow(er) or surviving former spouse can be paid up to 100% of your payment if they are at least FRA, or a reduced amount as early as age 60.
  • Your widow(er) can be paid 75% at any age, if caring for your child under 16.
  • Your unmarried child can be paid 75% if they are under 18, under 19 and in high school, or any age if totally disabled since youth.
  • Your parent over 62 can be paid if they were dependent upon you.

Mystery #8: Can I work and still get Social Security? Yes.  If you are over FRA, there is no work limit; you can earn as much as you can and still get full Social Security payments.  Before FRA, some of your Social Security is withheld if your earnings exceed the annual earnings threshold, $15,120 in 2013.  (Higher limits apply the year you turn FRA.) Only work income counts against Social Security; not counted are pensions, interest, dividends, capital gains, etc. Remember, your Social Security does not stop as soon as you reach the threshold; that’s where partial withholding begins.  If you get Social Security disability, different work rules apply.

Mystery #9: How do I file for Social Security? You can file by visiting an office, by calling (800) SSA-1213, or online at  You can file up to 3 months before you want payments to begin.

Mystery #10: When can I enroll in Medicare? Medicare age is 65.  You should file promptly by contacting SSA (see Mystery #9), preferably 2-3 months early.  Late filing causes penalty fees and delayed coverage.  If you are covered by health insurance from current work done by you or your spouse, you can postpone Medicare until that insurance or work ends.  Note that it must be insurance from current work, not a retiree plan or COBRA. Everyone should contact SSA 3 months before their 65th birthday to make sure their Medicare enrollment is on track.

You now have a good start at understanding your retirement’s cornerstone.  For more detail, see my book.  But remember, everything here has individual nuances and exceptions.  Only SSA can make official decisions, so be sure to study their website and consult with them by phone or in-office.

As always, keep on planning.

Pros and cons of refinancing

Up in the air about refinancing your mortgage?

That’s okay. Refinancing, which is essentially the process of paying off your existing mortgage with a new one, isn’t the right option for everyone. And for this reason, it’s important to weigh out the pros and cons.

By doing so, you can determine if you’ll actually benefit from refinancing.

For example, you could be lowering your interest rate by 25 percent, but if that comes with thousands of dollars in closing costs, it could take a long time to break even, says Shashank Shekhar, a loan originator with Arcus Lending in San Jose, California.

Not an easy decision is it? To help, we’ve hashed out the pluses and minuses of refinancing to see if it makes sense for you and your Financial Planning - Rockville, MDfinancial situation.


1) This is perhaps the biggest pro of refinancing your mortgage: a lower interest rate.

Of course, you’ll need to first qualify for the lower rate, but if you do – you could be saving a lot of money. In fact, even an interest rate that’s a half percent less could garner a good chunk of savings.

Just consider this example from the Federal Reserve, which compares the monthly payments on a 30-year fixed-rate loan of $200,000 at 5.5 and 6 percent interest.

2) What exactly is the benefit of refinancing to a shorter term mortgage, you ask?

For starters, shorter-term mortgages – like a 15-year mortgage versus a 30-year mortgage – generally has lower interest rates, according to the Federal Reserve.

What’s more, the shorter your mortgage term, the sooner you’ll be out of debt and the less interest you’ll have to pay in the long run.

For example, the Federal Reserve says to compare the total interest costs for a fixed-rate loan of $200,000 at 6 percent for 30 years with a fixed-rate loan at 5.5 percent for 15 years.

While the total interest savings are indeed significant, “The trade-off is that your monthly payments usually are higher because you are paying more of the principal each month,” says the Federal Reserve.

3) Cheat sheet: an interest rate on a fixed-rate mortgage (FRM) remains the same for the life of the loan, while an interest rate on an adjustable-rate mortgage (ARM) adjusts periodically based on an index.

And if you currently have an ARM, now is a great time to refinance to an FRM.

In fact, with rates at historic lows, an average of 3.39 percent on a 30-year fixed-rate mortgage as of November 1, according to federal lender, Freddie Mac, there may not be a better time to refinance.

“Given the uncertainty in the real estate market and the historical low rates on offer now, I always advise my clients to go with a FRM wherever possible,” explains Shekhar.

So, to avoid any uncertainty with your mortgage payments, you may want to refinance and lock in today’s record-low rates.

If you’re still unsure, then consider this: If you stick with an ARM and rates go up in the next few years, will you be in utter regret?


1) Have you struggled to make your last few credit card payments? Has your credit score suffered as a result?

If so, refinancing may not be in your best interest, especially since a bad credit score often means having a higher rate when you refinance, explains Shekhar.

“For every 20 point drop in credit from 740, you pay higher in closing cost, interest rate, or both,” says Shekhar. “In some cases, your closing cost can increase by 2 percent or more.”

As you can see, a bad credit score could definitely work against you during the refinancing process.

So, before you refinance, it might be a good idea to try and improve your score by paying credit card bills on time and keeping balances low on your credit cards, according to myFICO, the consumer division of the Fair Isaac Corporation, which provides a global standard for measuring credit risk.

2) Getting a lower interest rate sounds great, right? Of course it does. But like most things in life, there are costs that come with refinancing  – and these costs could really add up.

“It is not unusual to pay 3 percent to 6 percent of your outstanding principal in refinancing fees,” according to the Federal Reserve, which adds that fees could include an application fee, loan origination fee, an appraisal fee, and more. “These expenses are in addition to any prepayment penalties or other costs for paying off any mortgages you might have.”

A prepayment penalty, in case you’re wondering “is a fee that lenders might charge if you pay off your mortgage loan early, including for refinancing,” according to the Federal Reserve.

So, before you refinance, you’ll want to do some research and make sure that the refinancing savings will outweigh any and all fees.

3) Planning to move out of your home in the next few years? If so, it may not be the right time to refinance.

Why? Because if you move soon after you refinance, “The monthly savings gained from lower monthly payments may not exceed the costs of refinancing,” the Federal Reserve says.

If you will be moving – and you still want to refinance – the Federal Reserve suggests using a break-even calculation, which could help you figure out whether it’s a smart decision.

Unfortunately, sudden changes like job relocation or a divorce may be out of your hands.

But if you do sense that the future in your home is a bit unstable, you may want to hold off on refinancing.

What are your financial planning options

Options are one the most versatile trading instruments ever invented.  Since options cost less than stocks, they provide a high leverage approach to trading that can significantly limit the risk of a trade.  Simply, option buyers have rights and option sellers have obligations to the buyers.  Option buyers have the right to buy or sell the underlying stock at a specified price until the third Friday Financial Planning - Rockville, MDof their expiration month.

There are types of options: calls and puts.  Call options give you the right to buy the underlying asset, whereas put options give you the right to sell the underlying asset.  Before stepping away from  your financial manager, it is important that you get to know the inner workings of both.  Every investment strategy you will have or be given by investment advisers will require your working knowledge of both types of options.

There are no margin requirements if you want to purchase and option because your risk is limited to the price of the option.  In contrast, option sellers receive a credit in their account for selling an option and get to keep this amount if the option expires worthless.  However, option sellers also have an obligation to buy or sell the underlying instrument if their option is exercised by an assigned option holder; therefor selling an option requires a healthy margin.

The price of the option is called the premium.  An option premium is priced on a per share basis and each option on a stock corresponds to 100 shares.  Therefor, if an option premium is priced at 2, that corresponds to 200 shares in the company’s stock.  Yes, this all does sound a bit confusing at first, but if you sit down with a financial adviser and educate yourself with reference material on the subject, you will be better able to make financial decisions on your own.

Student loan HORROR stories

Student LoansWith the cost of college continuing to rise and the economy still stagnating, the student debt burden has swollen to a record $1 trillion.

Mark Kantrowitz, publisher of and, believes that one of the main culprits behind the student debt crisis is the private student loan sector.

“Students are following their dreams and don’t pay attention to their debt,” Kantrowitz says. “They sign whatever piece of paper is put in front of them, figuring they’ll pay it back when they graduate.”

Unlike federal loans, private loans usually come with variable interest rates that seem low at first glance but can skyrocket by 5 points over the loan’s lifetime. They also offer far fewer options for cash-strapped graduates struggling with payments, such as deferment, lengthy forbearance periods and income-based relief.

And since it’s next to impossible to discharge student loan debt in bankruptcy, millions of students are left drowning in private debt they have no hopes of ever paying off.

Last year, the Consumer Financial Protection Bureau (CFPB) put out a call for consumers to share their student loan stories on its message board and get the ball rolling on lending reform.

But for these nine commenters, it may already be too little, too late.

Besides being one of the millions of college graduates (from a for profit school nonetheless) that, at one point, was unemployed and had absolutely no way of paying my loans, here are a few other horror stories many of us can relate to:

Steve Macintyre: $100,000 in debt and out of a job

“I used to work in the entertainment industry but have been unemployed for a few years and I needed to desperately update my skillset if I could hope to find a job in the highly competitive field of games and animation.

Searching for various schools, I kept seeing advertisements for the Art Institute and talked with one of their recruiters and was told wonderful stories about how the school was accredited, how students went on to successful careers, etc.

I told them I wanted to get a degree in Game Art and Design but was told I could but needed to take the Graphic Design course first. I didn’t think much of it at first, but I agreed. I was dismayed at the quality of the classes…(Now) I’m stuck with over $100,000 dollars in debt, which qualifies as theft as I received nothing substantive in return.

I actually had to sign up for other courses outside the school in order to successfully complete assignments! Courses that offered REAL *VIDEO* Instruction at a fraction of the cost ($35 dollars per month as opposed to $2000+ dollars!) and by a company that trains people in the industry.

It’s now 8 months since loans have run out and I couldn’t complete my degree and I’m still looking for work.”

Michael Speck: Passing on a generation of debt

“I have three degrees, including an MA and a JD. When I graduated from law school in ’99 all of the offers – with the exception of those from the upper echelon firms that essentially own you – were for little money, leaving next to nothing for living expenses.

Now I am making a decent living and can pay my loans under the (Income-based repayment) program, but repayment is a distant dream.  As a result, I am unable to assist my son with his education expenses (thereby effectively making the debt trans-generational), or buy a home, start my own practice, etc.

As a macro-economic problem, those of us saddled with this debt are unable to fully participate in the economy.”

Dgoeck: Stuck with a clunker – indefinitely

“I’m not really sure what to do at this point. I am a victim of a for-profit school that definitely seemed in cohorts with Sallie Mae. My original loan was $80,000 but has grown to $135,000 and all I can pay is interest only, which is already $700 a month.

It’s ridiculous how sad this market has become. No one offers consolidation anymore or those that do will pin you at a ridiculous interest rate.

I am definitely in this for life… It looks like I will be stuck living in a low-rate apartment for the rest of my life and drive a 15-year-old car. I’m at least glad I found a really good job in the industry I was hoping for, but these loans are a real burden. Just thinking about them hurts my overall outcome each and every day.”

KDF11: Dogged by debt collectors

“I am a graduate (doctoral) student with a 2005 loan from Bank of America which was passed to American Education Services. AES passed my loan to their subsidiary National Collegiate Trust…

They cited that my (notice to them) was over 60 days late and the loan was in repayment and refused to negotiate. Then, when I called/wrote/emailed NCT to negotiate, they sent my loan to another subsidiary— their collection agency MRS.

These companies are working together and when students are full-time in school, they bombard them with calls and deadlines and capitalize by taking punitive measures such as outlined above, from which they no doubt profit.

…I believe that a lot of students have had loans placed at (a) collection agency while they are full-time in school. This should be amended to allow students wiggle room to complete their studies stress-free. If students graduate, find employment and refuse to pay, only then collections should be appropriate.”

Go to college for free

Financial Planning - Rockville, MDTuition-Free Schools

Recent graduate Greg Serrao saved nearly $150,000 earning his college degree by attending one of the country’s tuition-free universities.

The 23-year-old just finished his degree at Cooper Union in New York City, where tuition is technically listed as $37,500 per year.  But for the approximate 8% of applicants who get accepted each year, that cost disappears, thanks to a four-year scholarship.

“I still had to pay for room and board, which can be expensive living in New York City, but tuition was covered fully by the scholarship.  Other students…went completely for free either by working as a resident assistant in exchange for free housing, qualifying for scholarships or by living at home,” says Serrao.

On the country’s shortlist of colleges and universities offering free tuition, there’s Alice Lloyd College in Kentucky, Curtis Institute of Music in Pennsylvania, Deep Springs College in California and St. Louis Christian College in Missouri.

Search “Free”

Staying on top of the news may also help you come across free tuition opportunities. For example, a quick news search of ‘free college tuition’ leads to an announcement called ‘Michigan 2020,’ a new plan in 2012 that gives the state’s resident high school seniors a $9,500 grant each year – roughly the cost of attending a local state school or community college.

Watch For Full Scholarships at New Schools

Keep an eye out for brand new institutions offering inaugural classes where they lure in students with free tuition deals.  For example, after going out of business in 2008, Antioch College in Ohio re-launched its curriculum last year and now promises a 4-year tuition scholarship to the fall classes in 2012, 2013 and 2014, a savings of more than $100,000.

Cast a Wide Scholarship Net

If your dream school doesn’t offer a full scholarship like Antioch, remember there are millions of dollars worth of other academic scholarships awarded each year.  To win as much as possible, you need to act fast and cast a wide net.

“People should start searching for scholarships as soon as possible. Don’t wait until the spring of your senior year in high school because by then you’ll have missed half the deadlines during the senior year alone,” says Mark Kantrowitz, founder of and author of the book, Secrets to Winning a Scholarship.

One myth many have about scholarships, says Kantrowitz, is that you need to be a top student or have years of community service to qualify.  Not true.  The AXA Achievement Scholarship, for example, doesn’t require straight A’s, and winners receive up to $25,000.  Other generous scholarships include the Intel Science Talent Search, where the top award is $100,000, and the Coca-Cola Scholars Program, which gives $20,000 to the top 50 finalists.

“You also want to apply for every scholarship for which you’re eligible.  It’s a bit of a numbers game,” adds Kantrowitz.  “Even among the most talented students, winning involves a bit of luck, not just skill.”

Check out free scholarship databases online at and

Join the Army

One final strategy for those seeking free tuition is to join the army.  It’s not for everyone, but there are various armed forces colleges that charge no tuition in exchange for active service after graduation, including: The U.S. Military Academy, the U.S. Naval Academy and the U.S. Merchant Marine Academy.

Social Security is cheating widows out of money

Eric L Bach, CPA - Rockville, MDIt’s no secret that women live longer than men.  But a new study by the Wharton School’s Retirement Research Center suggests that some professional financial advisers neglect to take that fact into account when they tell clients how to time their Social Security benefits.

The mistake could cost women who outlive their husbands, and who might benefit from a significant monthly check into their 80s or 90s.  Slightly more than half of women 65 and older rely on Social Security for three-quarters of their income, according to the Employee Benefits Research Institute. Choosing when to start taking benefits—a decision that can be affected by factors like health, savings and other sources of income is complex even for pros.

While seniors can start receiving checks as early as age 62, doing so means they’ll get less each month than they would if they waited until the maximum age of 70 to start taking distributions.  Spouses that don’t work, usually women, in the baby boomer generation currently reaching retirement age—also receive benefits based on their partners’ earnings.

But women’s longevity is not being taken into account in the calculus, the study found.  “At age 62, there’s a lot you can do,” says co-author Andrew Biggs, a former Social Security Administration official.  “You may have a big 401(k), you can go still go back to work.  At 72, there are a lot fewer options.”

The study, which posed questions about a number of specific scenarios to a group of about 400 professional financial advisers, suggests that many are tailoring their advice to the needs of the husband without thinking as carefully about the impact on the wife.

For instance, presented with a 62-year-old man in average health who wants to retire right away but has, together with his wife, saved $800,000, only one in five advisers suggested he put off taking Social Security as long as possible.  The recommendations were made despite the fact that with such a large nest egg, the couple appeared to face little immediate need for cash and the decision would significantly crimp the woman’s survivor benefit should she become a widow.

Of course, while most financial advisers are men, the study doesn’t prove that these conclusions were driven purely by chauvinism.  A more charitable explanation might be that the advisers perceived the chief breadwinner in each scenario as their client.

Another, says Biggs, is that the educational materials provided by the government, while recently improved, haven’t historically done a good enough job of emphasizing the issue.



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