Monthly Archives: January 2016

Advice For Educators’ Finances

Everyone wants a good standard of living. For that each of us have to be responsible adults and take care of our family and ourselves. With the economic climate changing we need to realize the value of money and try to save for a rainy day. We need to understand that a credit card is commodity that needs to be used only in emergencies. A bad credit score can change our lifestyle. You are even under a lot of scrutiny when you apply for a loan. There would be a lot more formalities and also paper work to ensure you get the desired interest rate that you require.

Not only that even when you’re applying for a job you will be able to get the job a lot faster since your credit rating will show that you are trustworthy and dependable. Applying for a home mortgage or an auto mobile loan will also be easy since they know you will pay you EMI regularly and you will continue working for a very long time. It you are an independent entrepreneur you can even expand your business with a good credit score rating since money lenders are very particular about who they deal with as well as check that individuals credibility.

Your credit line may be extended and you can get the proper financing that you need for your business. The credit report will basically determine your lifestyle. It’s always advisable that you remember that while taking any commodity on credit you will also have to re-pay that amount at some point of time in your life. If you are not able to do so, your credit rating drops and you will have to pay a higher interest rate that will only lead you to debt. There are several ways of checking your credit report, you can find numerous vendors who can give you the credit report in a nut-shell so that you know exactly what to expect while applying for a loan.

If you are in school, college or even in a university, you could be a student or even a teacher, the government has made arrangements for the society to form School Credit Unions. These unions help you to get loans on group discounts. It’s not a profit making organization. They are for the people, by the people. There are quite a few benefits of being under this union. Since you do get facilities like free online banking, classroom supply loans, educator computer loans. The school itself can apply for a loan to re-furbish the library. Or even get new equipment for the school to ensure that the students are getting the best of technology that is available in the market at a subsidized rate.

School Credit Unions understand how hard you work for your money. They realize that it needs to be invested right so that you get maximum benefits that you are entitled too. These unions can even have meetings with any board of advisory that can take a call on the action that is required, they can be your voice and pass on the message or any idea that you have in mind that can benefit the school. To sum it up investing you money with the School Credit Union is worth a thought since you as an educator or student can benefit from this decision.

Options Education: Financing the Calendar!

As a trader, one of the key things that I try to consciously do is to cultivate my instincts by talking with other traders and investors as often as possible. It still amazes me how large the divergence of opinion that exists regarding what people believe will unfold as we enter the new millennium. Many very respected names are literally predicting an economic earthquake that will measure a 10 on the Richter scale while others having looked at the exact same research claim that the consequences will be very mild. As a trader I have to evaluate the data and develop a strategy that I feel not only gives me an edge but allows for a great deal of error while still being low risk!

In his book, “Business Without Economists” author William J. Hudson submits a theory worthy of every traders consideration. (Particularly now with Y2K just around the corner) He states:

1) The demand for answers will always be greater than the supply.

2) Therefore, the price for answers will be high.

3) Therefore, a very large supply of answers will emerge.

4) Therefore, most answers will be false, especially when tested against reality.

I have this STATEMENT posted on my computer as a reminder to myself that markets are very humbling mechanisms. The key question that we as traders must continuously ask ourselves with regards to whatever trading strategy we enter into is, “What if I am right? And What if I am Wrong?”

As I assess the economic landscape and scan the marketplace for trading opportunities there is one fact that I must pay attention to: The NAME of the GAME is Managing RISK!

With this in mind, let’s evaluate some of the important facts:

Many of the Commodity Markets have bounced sharply from their twenty to thirty year lows.

When I cross reference this FACT with the REALITY that INFLATION is back in the economy, it creates some very interesting trading opportunities for the OPTION savvy trader. The key to any trading strategy in my opinion is that it HAS to be low risk because there are so many possible outcomes that may occur.

The purpose of this strategy is to eliminate the need for timing the market by developing a method minimizing my exposure to loss. Before I provide you with the mechanics of this tactic let me illustrate an outlandish possibility so that we can get clear on a traders definition of RISK. Let’s say that you are convinced that on March 1, 2005 that you think that Gold is going to be trading at $3,000 dollars an ounce. (I did say outlandish!) Based upon this scenario even if you wholeheartedly disagree, how could you trade this viewpoint and still take very little risk? Most people think that RISK is defined as BEING RIGHT or WRONG on the outcome of a trade. However, a risk sensitive trader is only concerned with their exposure to chance of LOSS.

If you thought that Gold was going to be trading $3,000 an ounce you could enter into the marketplace and
very inexpensively purchase a couple of Call Options that would give you the right to purchase Gold at $500 an ounce. In this instance, the most that you could lose is the money that you put up to purchase the options and you would have the RIGHT but not the obligation to purchase Gold at $500 between now and March. However, just because you have LIMITED RISK you STILL have a great deal of EXPOSURE to LOSS. Reason being, that if GOLD does not get up to $500 you would lose all of the money that you put up to purchase the options.

The way that a professional would trade this scenario is that he would finance the trade through OPTION SELLING. When you SELL an OPTION you are in effect creating an OBLIGATION that you are forced to abide by contractually. For example if you SELL a $500 December Gold Call and receive money you have in effect agreed to deliver Gold to the option purchaser at a price of $500 between now and December 2004.

As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are obligated to make delivery of Gold to the Option purchaser at the originally agreed upon price of $500 an ounce. Should this occur you would in effect have a loss of $300 per ounce on each contract that you sold. Not very attractive, especially since each Gold contract is 100 ounces in size. The loss becomes $30,000 per contract. That is a lot of risk!

The way to minimize RISK is to SPREAD it off against other OPPOSITE Options positions.

In the above example, let’s say that a trader purchased 1 March $500 Gold call Option for a premium payment of $6.00 an ounce ($600). Each Gold contract is 100 ounces so this trader would be paying $600 per option . The RISK here is very clearly defined as $600. However, if this same trader now SOLD (1) GOLD December $500 Gold Call Option (NOTE THAT THE DECEMBER OPTION WILL EXPIRE BEFORE the March Option) and collected a premium payment of $300 they have in effect reduced their initial risk to the difference between the $600 that they paid out and the $300 that they collected, or $300.

Let me outline what this trader has done. They have obligated themselves to make delivery of 100 ounces of Gold at a price of $500 an ounce between now and December and simultaneously they have the right but not the obligation to own 100 ounces of Gold at $500 an ounce between now and March. They have established a BULLISH CALENDAR position by SELLING a Call option in a nearby month and using the money that they collected in the sale of that option to finance their purchases of the Call Option in the deferred option expiration month.

What this strategy is in effect saying is that it is the traders opinion that Gold will make its move after December but before March. Although it does not appear very exciting now, should this anticipated disruption occur in that time frame a trader that positioned themselves in this style would be sitting in the drivers seat. Essentially they would be looking at a maximum risk exposure of $300 with the possibility of unlimited upside potential. (YES, I realize that with Gold at $430 at present time that possibility appears extremely remote.) However, it is this kind of trading tactic that makes a great deal of sense in markets that are trading at historical lows.

The key to successful trading is to minimize your risk as you acquire more information. The closer you get to option expiration the more

How Mighty Is the Pen? The Dire Problem of Education Finance

School funding in the U.S. is essentially unfair and inequitable. In a society in which it is nearly impossible to advance without a good education, in which education has become a civil right of man, it would be wrong to deny any child quality education.

We cannot logically expect our children to advance in society that will not give them the money they need to get a decent education. And even after primary and secondary education, it makes no sense to put the poor in college debt when they were already given less opportunities to get into that college than the rich. Making college so expensive continues to burden the poor and when the time comes, their children are put in this cycle. This violates the original intentions of American life, giving equal opportunity for all.

Why are there so many struggles placed on those who work hard? Currently systems are based on a revenue limit, meaning districts provide money for schools depending on property wealth of the school. School finance should be given based on the current wealth for one family and society, more finance on the less fortunate and vice versa. If this cycle of giving less to the less fortunate continues, it will create a socioeconomic gap that hurts quality of education, teacher fold, and school ranking.

School funding works at three different levels: local, state, and federal. Federal funding is minimal for lack of educational clauses in the constitution, while state governments are the sole voice in taking control of financing. Yet instead, local funding has shown to be the most domineering and main source for school funding. This has become a problem because local funding depends on property wealth, and property wealth widely varies within city and district. Cities that suffer from a predisposition of “poorness” get poorer the funding. Those schools are stuck in the ditch of debt and are unable to escape due this revenue-limit system.

As well as the federal and state funding level needing repair, the local and district division is also issue. Districts may be considered the smallest unit of funding, but funding inequality is prevalent within districts too. This disparity is exemplified in the rising differences among schools in material and teacher quality. Teachers get paid more in low poverty districts and as a result compete for those jobs. Consequently, high-poverty districts suffer from a shortage of teachers, lower quality teachers, and a high turnover rate. And in our current system, schools finance judgments are per-teacher-based, so high-poverty schools are unable to receive the aid they need because of surface teacher salaries. Schools instead should be given enough money in a per-student system rather than per-teacher system in effort to increase output per student.

Renowned economist and critic Eric Hanushek addresses the finances of education issue in his novel Courting Failure. In his novel, he explores and discovers the correlation that low student performance indicated inadequate funding. It is precisely this situation that shows children’s right to adequate and equal education cannot be pursued if do not fix the underlying problems, such as that of public funding state levels need to provide a safety net for the schools of their region. States can do so by providing more to the less-wealthy and less the more-wealthy. Yet while doing this, they must make sure the funding level is high enough that all these schools can function properly, instead of the “minimum” levels they currently adopt.

Hanushek also questions the term “adequacy”, the current national requirement for school education. Strikingly, 28 states have been ruled unconstitutional in this area. States assert minimal education standards that no reasonable people would consider acceptable. Adequacy’s violations can be visualized if we imagine fully efficient public school and an actual public school or what society believes students should learn and what they actually learn. The space between these two ideas is incredible and throw off all vouches for adequacy. This gap comes from how finance calculations are made, typically through teacher-salary, lack of inclusion for more expensive students (e.g. English language learners), and different standards of adequate funding. We need to stop resorting to traditional terms of what is “sufficient” and instead adopt concrete definitions needed to give real standards to schools so they can be efficiently and thoroughly funded.

Another widely claimed label is “equity”, the idea to distribute resources equally throughout schools in a state. If we are to allow all students equal opportunity in school quality and ranking, this distribution should be done in a way that lessens the differences ranging across school districts’ abilities to raise funds. Lawsuits claim that such is a violation of the “equity” principle, that poor districts should not get more money than rich districts, but if we do not help or nurture those in need, we are raising them for unequal chances and opportunities for their future lives. Indeed, it is necessary to limit the poorness of these districts.

Studies suggest this inequality can be reduced by transferring more of responsibility of funding from local to state. Well respected Californian finance reform advocate, Arun Ramanathan, proposes a plan to better state-wide academic funding.

1) Instead of a revenue-limit formula, adopt a student weighted formula.
2) Ensure that school funding gets allocated directly towards students.
3) Require districts to clearly show district and school level spending
4) Monitor correlation of financial inputs and academic results. Ensure that those who need special help get the help they need.

A plan similar to the one Ramanathan proposed was implemented in Colorado recently. The plan itself calculates the difference that state funding has to make up for local funding to be equal throughout the state. The idea is that if the districts can raise more from local taxes, the state does not have to make up the difference if the locals make less. The new finance act makes sure to have expenditures visible and comparable for the public, allowing for direct regulation of financial reform. The plan also accounts for those who qualify for reduced-lunch and ESL learners. By diving 20-40% more money toward those students, the financial system balances giving all students equal opportunity. Using these plans, Coloradans have begun showing improving trends in educational finance.

College Education Financing – Finding Scholarships, Grants and Loans

There are several sources of financial aid available for college students. Grants and scholarships are best because the money is generally tax-free and never has to be repaid. Although this sounds promising, obtaining scholarships for college can be challenging. Prospective college students seeking scholarships should conduct research on scholarships available from local businesses, non-profit organizations and foundations, as well as options available from the U.S. government.

Local Businesses

First and foremost, exploring your direct location and surrounding areas would be a good place to start as finding funding and aid in and around your local area is more likely than applying further away or even abroad. Local contacts, businesses, individuals and institutions will typically be your first point of call. It is easier to gain access to and the competition pool is that much smaller. So, in a sense, you are stacking the odds in your favor, making the most of what your local hometown and area has to offer.

Non-profit Organizations and Foundations

Most non-profit organizations and foundations have scholarships for prospective college students. Following are some examples of where scholarship sourcing might come from:

labor unions
chamber of commerce
volunteer organizations
local chapters of professional societies
charity organizations
school-based endowments
university grants
private scholarship programs
U.S. government (federal, state and local)

You may also find other sources of information on scholarships at a library, in newspapers, or even the yellow pages.

U.S. Government

The U.S. government offers various ‘need-based’ financial aid packages and options. These funding options and awards occur mostly in the form of Federal Pell grants, Federal SEOG grants, SSIG grants, Federal Work-Study initiatives, Federal Stafford loans (in a subsidized and unsubsidized form), Federal Perkins Loans, and Federal Parent (PLUS) loans. The U.S. Department of Education, as well as the formal body known as the Federal Family Education Loan Program (FFELP) funds most of these programs and initiatives. To quality for any of these options, a student must file the Free Application for Federal Student Aid, also known as FAFSA.

Other options for college education financing and funding include:

state-funded grants
work-study programs
tuition waivers and scholarships
individual colleges and universities offering grants
need-based or merit-based scholarships
private alternative educational loan (which is available from most large lending institutions)
foundations and professional associations
endowed scholarships
student financial assistance subsidies

There are several sources of financial aid available for college students in the form of scholarships, grants and loans.

NextStudent Education Finance Advisors Deliver Premier Service in Student Loan Industry

Recently, student loan companies and their representatives have come under fire for questionable business practices ranging from collection methods to marketing efforts. For student loan borrowers, financing their college education and choosing the best lender for their funds often is one of the most important decisions they will face in their college career. Investing considerable time in researching the character, track record and reputation of a lender pays major dividends that immediately may not be evident, according to NextStudent, the Phoenix-based premier education funding company.

One of the prime criteria that borrowers may want to consider in their selection process is the lender’s commitment to customer service, often exemplified in the training required of the company’s phone representatives. At NextStudent, students or their parents are assigned their own personal Education Finance Advisor, or EFA, an individual to guide them from start to finish through the often-confusing landscape of student loans.

NextStudent’s dedication to making student loan funding a simple, easy process through outstanding service, a priority reflected in excellent customer feedback, is no accident. In order to meet these demanding standards, EFAs are required to complete NextStudent’s own rigorous six-month, on-the-job certification process, where they demonstrate mastery in each of four subject areas, including NextStudent’s Student Loan Consolidation, Federal PLUS Loans, Stafford Loans and Private Student Loans.
The Graduate PLUS Loan may be available to you no matter your income and completely pays for all your graduate school needs, including tuition, books and even your computer.
Paying for your graduate school education now is within reach. NextStudent’s Graduate PLUS Loan makes it easy to attain your goals with a convenient and manageable program with rates starting as low as 8.5 percent! Aggressive rebates are also offered.