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How 4 Students Took a Gap Year Without Breaking the Bank

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

 

Planning the Perfect Gap Year Doesn’t Have to Break the Bank

The gap year — taking a year off from formal education to travel, participate in social projects, or gain work experience — is growing in popularity among American students. Just ask Malia Obama. The first daughter announced back in May that she would be taking a gap year before attending Harvard University.

She’s among those contributing to a 22% increase in American students taking part in the practice already common among students in Europe and Australia, according to the American Gap Association. Some families spend hundreds of dollars on gap-year consultants.

Like Harvard, many higher education institutions encourage students to take gap years. The reason: a push toward experiential learning. Schools increasingly see value in the life experience, maturity, and other skills that gappers return with.

“We have more information in the palm of our hands than ever. So why are we teaching [students] information? They don’t need information,” said American Gap Association Executive Director Ethan Knight. “They need experience to know what to do with that information.”

Jamie Hand, 23, a senior at Middlebury College in Vermont, echoes the sentiment. She said her gap-year trip to São Luís, Brazil with Rotary Youth Exchange allowed her to “take a break from this rat race that I felt like I was in.” At the time, she was 18 years old and wanted to take time off before beginning her freshman year. Though she already had a high school diploma under her belt, the program involved taking classes at a local high school in São Luís.

“It felt like I was taking this big breath and I was free to excel but I didn’t have to excel,” said Hand. “It was one of the times when I learned the most in my life [because] I didn’t have to.”

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The Cost of a Gap Year

Gap years may seem like a privilege only available to families wealthy enough to finance them. It’s true that some gap-year programs can easily cost more than a year’s worth of college tuition. Families pay over $35,000 — close to the average cost of a four-year degree these days — to participate in the “Global Gap Year,” a program offered by Thinking Beyond Borders, which offers gap-year and study-abroad programs. During their global year abroad, students split their time between homestays on three different continents. But the gap-year experience isn’t just for the super-rich. MagnifyMoney caught up with some current and previous gappers to find out how they made it work.

Go the DIY Route

Brandon Stubbs, 18, motivated by his interest in Southeast Asian archaeology, decided to defer his acceptance to Brown University for a year to travel to Malaysia for two months this fall.

Rather than paying for a trip through a travel agency, which could easily have cost several thousand dollars, he did some research on his own. Stubbs found a hostel in Johor Bahru, where he will be able to work in exchange for room and board.

To save on airfare, he booked a round-trip ticket to Malaysia for just $500 with StudentUniverse, a site that offers cheaper fares to students. When he’s not working, Stubbs plans to spend his free time sightseeing and exploring the city.

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“I’m most excited to explore an entire different area of the world,” said Stubbs, who said he grew up enthralled by the exotic locales in movies like Indiana Jones.

When he returns to the U.S. from Malaysia in November, Stubbs’ gap year will continue with a stop in New Orleans. He plans to take time off for the holidays and then move to the Big Easy, where he’ll work at a hostel in exchange for room and board.

“I feel like taking a gap year will sort of increase my momentum. High school wasn’t an easy experience mentally,” said Stubbs. “I feel like in a year I’ll be rejuvenated and ready to jump back into my studies.”

Get College Credit for the Program

A great way to save money and kill two birds with one stone during a gap year is to earn college course credits along the way. Some schools offer course credit to students who take gap years. Students may even be able to use financial aid dollars toward their gap-year experience.

Some schools have specialized programs or fellowships for gappers like UNC Chapel Hill’s fellowship, or Princeton University with its Bridge Year. Others, like Elon University, offer their own version of an experiential learning program for first-year students.

There are even some gap-year programs that will not only give you a stipend, but contribute to the cost of your college education like those offered through AmeriCorps or City Year.

Work Now, Play Later

Breaking up a gap year into smaller trips or working for part of the year can help to reduce overall costs. If you budget well, the money you earn could fund your travels.

Jericho, Vt., student Asher Small, 19, who will begin his first semester at Brown University this fall, also worked at a ski resort in Utah for part of his gap year.

“It was kind of like a dream job because I love to ski,” said Small. In addition to his $8/hour wages, the resort subsidized his room and board, leaving him with just $300 to cover each month.

Small worked at the ski resort for four months. Before making his way back home, he took a road trip through Southern Utah and California and participated in a 10-day meditation course retreat. To save on lodging, he used couchsurfing.com, a service that connects benevolent hosts with houseguests. He estimates he ended up saving about $2,000 from his work at the resort after the trip.

Working or interning during a gap year can also be a great way to build skills or experience for the subject you’re interested in majoring in once you get to school. Some programs will pay you for work abroad or offer perks like free room and board as an incentive. For example, if you have a green thumb, you could volunteer to work at an organic farm or winery through a program like World Wide Opportunities on Organic Farms during your gap year in exchange for food and accommodation.

Before he went to Utah, Small spent the first half of his gap year in Desab, Haiti, with Volunteers For Peace, a nonprofit volunteer organization. There, Small taught an English class to local residents. The trip cost him about $1,500 in total, which he paid with funds he saved from past summer jobs.

Work Now, Play Later

Stay Close to Home

Keeping your gap-year experience stateside can be an easy way to minimize travel expenses, reducing the overall costs of a gap year. Staying in the U.S. doesn’t mean you’ll have any less of a cross-cultural experience.

Start Saving Early

Knight recommends planning your gap year at least six months from the date you want to travel, so you’ll have ample time to save up.

Stubbs worked all four years of high school as a junior college tutor and as a camp counselor at a music camp. Doing so helped him to save about $3,000 to spend on his trip to Malaysia and Louisiana.

Small worked over the summers prior to his gap year as well. Those funds helped him with his trip to Haiti.

Tap into Your Savings

If your parents have been saving up for college, you may be able to use some of that money to finance a gap-year program, although it may mean sacrificing going to a more expensive college.

Gabe Katzman, 24, was considering the University of Maryland, where he would pay in-state tuition, and other, more expensive out-of-state institutions at the time he was planning his gap year in Israel.

His parents presented him with the option to use some of his college savings to fund the trip, which cost about $16,000 to $17,000. Because the cost was close to a year’s worth of tuition at the pricey out-of-state school, his parents told him they could only help him finance his gap year if he decided to stay in state.

Ask for Free Money: Grants, Scholarships, Trusts, and Charities

Find an organization, trust, or charity that’s aligned with the focus of your trip and ask if they have any grants or scholarships that you can apply for and that would be applicable toward your gap year.

Local associations, businesses, schools, and charities such as the Rotary Club or Lions Clubs International award grants, or scholarships may even be able to sponsor students who meet certain criteria and goals.

When Katzman decided he wanted to spend 9 months in Israel with Habonim Dror’s Workshop, a gap-year program run through his childhood camp, Habonim Dror Camp Moshava, the first thing he did was look for scholarships and grants to help him cover the $16,000 the trip would cost.

Ask for Free Money: Grants, Scholarships, Trusts, and Charities

“I talked to my synagogue,” said Katzman. “I knew that if I connected with the synagogue they [would support me].” In the end, they gave him about $3,000.

Katzman then asked other organizations including one called Masa, an Israeli organization that advocates interning and volunteering in Israel, adding another $1,000 to his fundraising goal. Next, he went to the Jewish Community Center of Greater Washington.

After he got some funding through community organizations, Katzman turned to his family and friends to help out.

“I talked to all of my family. Instead of a Hanukkah or birthday present, I asked them to give me money for the trip,” said Katzman.

The rest of the funds came from his own savings from working as a lifeguard and camp counselor while in high school.

Get Creative

Katzman and the group he went to Israel with saved money by pooling their resources.

“We were living a socialist lifestyle with a group of 23. We had a shared bank account that we all put money into. Some of us put $2,000 and some put just what they could,” said Katzman.

The shared account allowed them to prioritize the group’s experience as opposed to the individual and kept them out of “a situation where someone felt excluded because they couldn’t afford it,” said Katzman.

Two of the members in Katzman’s group were co-treasurers of the shared account and managed the group’s budget. If some or all of the group’s members went out to eat or someone in the group needed to replace a pair of shoes, the money to pay for it came from the shared account. At the end of the trip, they had a little left over to donate back to the camp.

Stubbs, who already has his room and board covered with the hostel, also plays the trumpet. He plans to finance some of his living expenses while in Malaysia this fall and New Orleans in the spring with money earned from street performing or “busking.”

Some Final Advice: You have to want it.

“Sometimes coming up with the money for something like this can be really discouraging because it’s really expensive,” said Katzman.

But setting aside time for a gap year was well worth the added cost and effort. After he graduated from college, Katzman decided to move to Haifa, Israel, full-time, where he is working part-time to lead this year’s Habonim Dror gappers and taking Hebrew classes.

“I grew more in one year than I think the average college student would have grown,” he added. “It affected what I did in college, it affected my choices during college and afterward [when I decided to] live here.”

Katzman

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Top 5 Checking Accounts for College Graduates

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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When you open your first bank account as a kid, you’re not thinking about fees. You’re just excited to swap your piggy bank for a debit card. That first bank account may even stick with you up until college. That doesn’t mean it’s the account you should keep for the long haul.

Some checking accounts give you a break on fees while you’re a student, but after you get a diploma or turn a certain age these bank accounts get expensive. For example, Bank of America waives the $12 monthly fee on its checking account for students under 23 years old. After graduation, that’s an extra $12 per month you’ll want to keep your hands on.

If you have a checking account that will phase you out of a discount, it’s time to shop around for accounts with the lowest possible fees. Here are six checking account alternatives college graduates should consider:

1.Charles Schwab Online Checking

No Monthly Fee, ATM Fee Reimbursement Worldwide

Charles Schwab
Charles Schwab has no fees or account minimums. This account comes with free checks and bill pay. You can connect your Charles Schwab online checking account to Apply Pay for purchases if you have an iPhone 6 or iPhone 6 Plus. Deposits can be handled remotely through Schwab check deposit.

Where this checking account stands out from other accounts below is it has an unlimited fee rebate for cash withdrawals at ATMs worldwide. Charles Schwab will reimburse you every time you use an ATM that charges a fee. This makes it ideal for those planning to travel frequently.

2. Ally Bank Interest Checking

No Monthly Fee, ATM Fee Reimbursement Up to $10 Per Month

Ally Financial
Ally Bank offers an online checking account without monthly maintenance fees. There’s also no minimum balance required. You’ll get charged certain fees in unique situations. For instance, an overdraft will cost you $25. To avoid an overdraft, you can set up free automatic transfers from another account. This means free overdraft protection, which isn’t the case at many banks that will charge you $10 to move your money from savings to checking.

If you’re used to walking into a bank to manage your money, you won’t get the same experience with this online account or any of the other online checking accounts on this list. But, managing your money is still easy. Ally Bank allows you to deposit money remotely using Ally eCheck. You can also transfer money between Ally bank accounts or sign up for direct deposit to put money into your account.

For withdrawals, you can use Allpoint ATMs in the U.S. for free. If you use an ATM that’s not Allpoint, Ally Bank will reimburse you ATM fees up to $10 per billing cycle.

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3. Bank of Internet USA Essential Checking

No Monthly Fee, Unlimited ATM Fee Reimbursement in the U.S.

Bank of Internet USA
The Essential Checking account offered by Bank of Internet USA has no monthly fees as well. There are no fees for overdraft or insufficient funds. If you try to make purchases without enough funds in your account, your card will simply be declined.

Withdrawing money from this checking account is convenient and cheap. You can use any ATM in the U.S. and Bank of Internet USA will reimburse the ATM fees. No need to hunt for a specific ATM to get free cash.

4. BankMobile Totally Free Checking

No Monthly Fee, ATM Fee Reimbursement With Conditions

Bankmobile
BankMobile has a checking account with no fees or a minimum balance requirement. When it says no fees, it seriously means no fees. You can use the BankMobile app to deposit checks via remote deposit and you can set up direct deposit. For withdrawals, BankMobile has a map where you can locate STAR surcharge free ATMs.

If you have at least $500 deposited into your account each statement period, you can join the BankMobile VIP program. With VIP membership, every ATM in the U.S. becomes free.

5. Capital One 360 Checking

No Monthly Fee, ability to deposit cash, Doesn’t reimburse ATM fees

Capital One
The 360 Checking account from Capital One has no fees. There’s no minimum balance required either. You have two options for overdraft protection. Connect your checking account to a savings account and have funds transferred automatically when your cash runs low. Or you can apply for an overdraft line of credit. Of course, with a line of credit interest will apply to your balance.

Deposits can be easily made through the mobile app, direct deposit or by sending a check. You get access to free cash withdrawals from 38,000 Allpoint ATMs and Capital One ATMs. If you use an ATM out of the network you may get charged by the bank you withdraw money from and these charges are not reimbursed.

A unique feature of the Capital One 360 Checking account is the ability to deposit cash at many ATMs. Not many Internet-only banks offer the ability to deposit cash. Before signing up for this account purely for this reason, you should guarantee an ATM near you allows you to deposit cash.

Which is the right checking account for you?

All of these accounts are insured by the FDIC up to $250,000. But, if banking online only still makes you a little nervous, the 360 Checking account is a good pick. With this account you can visit a Capital One branch for some account services like disputing transactions and changing your account information. Otherwise, Charles Schwab and Bank of Internet USA have the potential to save you the most money if you routinely frequent ATMs.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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Review: The Upromise MasterCard by Sallie Mae

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

MagnifyMoney Review

The Upromise MasterCard by Sallie Mae gives you a creative way to earn cash back for college with every purchase. With this card you earn 5% back on eligible online purchases – including travel – when you shop through Upromise.com, and on eligible Upromise restaurants. The card will also earn 2% cash back on eligible in-store department store purchases, movie theaters, and 1% back on all other purchases.

Shop through Upromise.com with this card and you could earn 10% in cash back rewards: 5% for shopping through Upromise and up to 5% for using the Upromise MasterCard. It has no annual fee, offers the ability to earn a $50 cash back bonus, and places no limits on the amount of cash back you can earn.

How To Apply

You can apply for the Upromise card online. You should be prepared with the following information:

  • Personal Information: Name, address, phone number, email address, birth date, Social Security number, mother’s maiden name
  • Employment & Finances: Occupation and income

The application will only take a few minutes, and depending on your credit, you could receive instant approval. If you don’t receive instant approval, you will be contact in a few days with your approval decision.

How The Upromise Card Can Help You Save For College

This card offers a creative way to save for college, whether you currently are in college, paying off student loans, or saving for your children’s college. The earnings can be used to pay down eligible student loans, pay for college courses, or help friends and family save for their college education.

When you join Upromise.com, you open a Upromise account and your cash back earnings will be automatically deposited into your this account. Your Upromise.com account will not earn interest, but you can transfer your earnings to an interest-bearing savings account or an existing student loan to help meet your goals. You can also request periodic checks to invest the earnings on your own.

While Upromise was created to help parents, grandparents, and even current students save for college and pay down student loans, you don’t have to use your earned cash back for college. It is your money, and you can request a check to use your earnings however you would like.

Opening the Upromise MasterCard and using it in conjunction with your Upromise.com account boosts your cash back rewards.

Perks

When you open the Upromise MasterCard, you will have the ability to earn a $50 bonus as long as you use your card to make one purchase within the first 90 days of account opening.

You’ll have $0 fraud liability on unauthorized purchases, your complimentary FICO score, no rotating reward categories, and no annual fee.

Determining the exact percentage of cash back rewards you’ll earn when using this card can be a little tricky, but the ability to earn up to 10% back towards college makes it worthwhile.

10% – When you shop through Upromise.com and use the Upromise MasterCard to shop online (including travel) you will earn 5% back for shopping through Upromise, and 5% back for using your Upromise MasterCard, for a total of 10%

2% – Eligible in-store department store purchase and eligible movie theater purchase using your Upromise MasterCard

1% – All other purchases

The Fine Print

Besides the rewards being complicated to understand, there are few other fees and gotchas you should know about.

In order to earn the $50 cash back bonus, you have to use the card to make a purchase or complete cash advance or a balance transfer within 90 days of account opening. We don’t advise using a cash advance as a means to earn $50, because the interest on a cash advance is 25.49% at time of writing. You will also be charged a fee of $10 or 5% (whichever is greater) for a cash advance. Just make a purchase and pay it off on time so you won’t be charged interest.

There is no 0% APR introductory period on purchases. Your APR will be 14.24%, 20.24%, or 23.24% based on creditworthiness.

There is a 0% introductory APR on balance transfers for the first 15 billing cycles after account opening. After that, and for balance transfers that do not post within 45 days of account opening, the APR will be 14.24%, 20.24%, or 23.24% based on creditworthiness. If you choose to complete a balance transfer you will be charged a fee of $5 or 3%, whichever is greater.

The card charges a foreign transaction fee of 3%, a late payment fee of up to $37, and a returned payment fee of up to $37.

Pros

  • Up to 10% cash back for college
  • Earn a $50 cash back bonus
  • No annual fee
  • No limit to the rewards you can earn
  • Free FICO score
  • $0 fraud liability for unauthorized purchases
  • No rotating rewards categories
  • 0% APR on balance transfers for 15 billing cycles

Cons

  • Rewards are complicated to earn
  • Purchase APR is high: 14.24%, 20.24%, or 23.24% based on creditworthiness
  • 25.49% APR for cash advances
  • 3% balance transfer fee
  • 5% foreign transaction fee
  • $37 late payment and returned payment fee

How It Stacks Up

No other cards come close to 10% in cash back rewards, but there are others that have simpler terms.

Citi Double Cash

One of those cards is the Citi Double Cash Card. With no annual fee and 2% cash back (1% when you make a purchase and then 1% when you pay your bill), the Citi Double Cash Card is an easy to use cash back rewards card. There are no rotating categories, but the APR is high, so make sure you can pay your bill on time.

Citi® Double Cash Card – 18 month BT offer

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Not Simple, But Offers Good Rewards

The Upromise MasterCard by Sallie Mae is not a simple card to understand. But where the terms are complicated, the card makes up for it with the ability to earn up to 10% cash back on online purchases when you shop through Upromise.com.

If you don’t shop online a whole lot, you would be better off choosing a simpler, 2% cash back card. But if you do a lot of online shopping, then the 10% in rewards makes the Upromise MasterCard worth looking into.

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Gretchen Lindow
Gretchen Lindow |

Gretchen Lindow is a writer at MagnifyMoney. You can email Gretchen at gretchen@magnifymoney.com

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Best of, College Students and Recent Grads, Eliminating Fees

Best Bank Accounts for College Students

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Best Bank Accounts for College Students

For most students, the college experience is like dipping one’s toes into the “real world”. Yes, a student may be living away from home but their parents are probably still helping financially. Before anyone blushes, it’s okay. According to a University of Michigan study, more than 60% of adults between the ages of 19 to 22 still receive financial support from their parents. They receive, on average, $7,500 per year. This includes costs like college tuition, rent, and transportation. This makes it important that parents find an economical, fee-free way to send money to their children.

But remember, college is typically a transition period in which child should begin having more control over their financial lives, which means finding the best checking and savings accounts. Our round up of bank accounts for college students below offer options for parents to send children money without fees, stellar overdraft protection and even foreign ATM reimbursements.

For Parents Sending Money to Students

Bluebird by American Express

You may have seen these blue cards at Walmart checkouts. They’re quite popular. The Bluebird card serves as a prepaid debit card of sorts. It’s free to set it up online. It costs $5 for an in-store Set Up Kit to begin using right away.

It doesn’t cost anything to send or receive money. Parents can load the card in a number of ways. The fastest way is to send money to the card via an electronic bank transfer (yes, there is an app). Simply connect a checking or savings account to the card and begin transferring funds. It’s just like transferring funds from one bank account to another. Funds can also be added at a Walmart checkout register via cash or debit. Finally, parents can also load the card even by sending in a paper check.

A cardholder can request money for free. They can simply send a request for ‘new shoes’ and a parent can simply transfer ‘x’ amount of dollars to cover the cost. It’s pretty simple.

Another unique aspect of this card is you can add Walmart Buck$. These are funds that can only be used at Walmart. The funds cannot be redeemed as cash, cannot be withdrawn at ATMs and cannot be transferred to a bank account. This may stop the hold holder from using the money irresponsibly.

Fees and Fine Print

  • No activation fee
  • No monthly fee
  • No annual fee
  • No overdraft fee
  • No ATM fees when in-network. Out of network ATM transactions are $2.50 each plus any surcharges from the bank that owns the ATM. $2.50 is a pretty high fee.

The information related to Bluebird by American Express has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this offer.

Best Bank for Overdraft Protection 

Ally Bank

This is our pick because Ally Bank offers a unique overdraft protection plan. Simply link an Ally savings account to an Ally Checking account and it’s protected from overdrafts. However, if the savings account balance isn’t sufficient, an overdraft fee of $25 will be charged. The overdraft fee $25 and is charged a maximum of once per day. But that is still low compared with most banks, with the Big 4 Banks all charging over $30 per incident and often four or five incidents per day.

Ally also provides $10 worth of ATM fee reimbursements per monthly statement cycle, which enables you to take out money at out of network ATMs and still get refunded. But what about other fees?

Fees and Fine Print

  • No monthly maintenance fees
  • Free standard checks
  • Free cashier’s checks
  • No fee for having a zero balance
  • No incoming wire fees (domestic or international)
  • Free Allpoint® ATM usage (43,000+ in the US) plus $10 worth of ATM fee reimbursements each month.
Ally Financial

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Best Bank Account for Free ATM Reimbursements

Charles Schwab High Yield Investor Checking Account

Thinking about studying abroad? The Charles Schwab High Yield Investor Checking account reimburses all ATM fees, even internationally. This account is ideal for traveling students. Even for those not studying abroad, this may be a good option for any travel overseas.

Charles Schwab High Yield Investor Checking Fees

  • No ATM fees
  • No monthly service fee
  • No overdraft protection fee. Although owners must also have a Charles Schwab brokerage account or savings account to link for overdraft protection. Should funds in the overdraft account be insufficient, a $25 fee will be charged for up to 4 incidents daily. This overdraft protection is pretty abysmal when compared with Ally.

Brick-and-Mortar Options

If the parent is more comfortable with having physical locations, there are still brick-and-mortar banks, which offer good benefits and low fees. Before committing to a big bank, check the local credit unions. They often offer a better value. Compare the credit unions with the other banks listed in this post. Ask about overdraft protection, overdraft fees, minimum account balance, and monthly maintenance fees. The good thing about a local credit union is the customer service. Don’t be too shy to ask about fees.

The downside to local brick-and-mortar options is the parent may be in one location and the child in another, making it difficult for one party to withdraw or deposit money. However, most credit unions today have good online banking systems. They may not have mobile deposits or an intuitive app but they have what counts. If ease of use is still a concern, look for a big bank with many locations. Fees will likely be higher and interest lower, but convenience is very important for a college student. After all, they need to spend their time studying.

Don’t Be Afraid to Break Your Routine

Technology has really changed the way banking works today and it’s provided an option for fewer fees and easier transactions. Just because you’ve always banked at a certain establishment, doesn’t mean you should stay there – especially if you’re trying to make it cost-efficient and simple to send money to your college-aged children.

Will Lipovsky
Will Lipovsky |

Will Lipovsky is a writer at MagnifyMoney. You can email Will at will@magnifymoney.com

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