Browsing Category: "debt"
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I’m sure you all know by now that the gov’ment decided to ship out everyone’s “economic stimulus checks” a little early. In fact, some of you who got your taxes by direct deposit may already be seeing that six hungie in your bank accounts. So here’s my question: what do you plan to do with the money? Pay off credit card debt, go buy a new laptop, horde away some gas or sacks of rice, invest it (maybe by launching a new blog or your own Internet company), or just save up? Are you thinking of spending it at one of the many retailers around the country who are promising incentives if you prove you’re spending your stimulus check with them?
Let’s get some discussion going in the comments section!
Popularity: 21% [?]
It’s been a long time coming, but — in a sure sign of the times — Sallie Mae has just officially announced that they are no longer offering student loan consolidation services. The company claims they are no longer profitable.
photo credit: Keren_According to SmartMoney, if you have variable rate loans (recent grads might, although all current and future federal loans will be given with fixed rates) you need/want to consolidate, you should check out the government’s consolidation offering. They claim,
“You’re likely to pay the same consolidation rates you’d pay if you did so with Sallie Mae.”
As for the 1.5% loan origination fee, students will no longer enjoy having that waived by Sallie Mae. Instead, you should now start shopping around for lenders who are still willing to pay them (J.P. Morgan Chase being one, but I’m sure there are more).
“Sallie Mae Halts Student-Loan Consolidation” [SmartMoney.com]
Technorati Tags: Sallie Mae, student loans, college, graduation, debt
Popularity: 23% [?]
As has been mentioned here in the past, there are a growing number of Colleges and Universities trying to find ways to help ease the financial burdens on their students after graduation. Several have decided to do away entirely with student loans, replacing them instead with grants and scholarships.
Tufts University is now joining in this growing trend, as they recently announced a new Loan Repayment Program. While this program isn’t designed to take the place of loans in financial aid packages (something the University is beginning to do with the class of 2011), it is aimed to help alleviate student’s debt and promote the Tufts mission of “active citizenship.”
According to Tufts President Lawrence Bacow:
“Every student who graduates with a loan worries about how to pay it off. We would like alumni to be able to pursue their passions—to do what they really want to do—without being unduly focused on the need to retire a student loan. It is especially appropriate for Tufts to make this commitment, since as an institution we seek to encourage a spirit of public service in our students.”
Therefore, the new Tufts Loan Repayment Assistance Program aims to give financial awards to graduates who are working in non-profit or public service areas, or those areas that “promote the public good.”
This is great news for both current Tufts students and alumni, but also is a huge boost for the growing trend of institutions taking steps to help reduce the cost of education and the burden of debt. Kudos to Tufts for this great new program, I only wish it had been in effect a year earlier for my own sake.
To read more on this program, please read the Tufts Journal article entitled: In The Public Interest. You may or may not find a quote from yours truly in there as well.
Popularity: 20% [?]
Welcome to the 134th edition of the Carnival of Debt Reduction started by Mighty Bargain Hunter. This is my first time hosting a blog carnival, so I thought I’d do something fun with it. I tried to read at least part of the 92 total submissions and picked out some of the ones I liked best. Then I decided to write a little haiku about my top choices. Enjoy!
“How to survive the coming Recession” by Jonathan:
hope for the best but
plan for the worst is how John
expects to survive
“Earning More Doesn’t Help If You Don’t Spend Less” by paidtwice:
debt is avoided
not by earning more money
but by spending less
“10 Businesses You Can Start With Almost No Money — Money Under 30” by David Weliver:
supplement income
by starting a side project
and kiss debt goodbye
“How To Get Your Free FICO Credit Score” by Raymond:
free credit report
from the feds, not the scammers
everyone: here’s how
“How I Made $2,667 In Passive Income In March ‘08” by LIVING OFF DIVIDENDS:
make money online
with these great money makers
here’s to no more debt
“Re-Evaluating Your Bank May Save You Money” by Matthew Paulson:
all those little fees
your bank is holding you back
is it time to switch?
“Sitting in a Financial Mess? Here’s How to Get Out” by Debt Freedom Fighter:
if you are in debt
than it’s time to be honest
see what you can change
“An Illustration of Why Saving Money Is Harder Than Spending Money” by Broke Grad Student:
a picture is worth
a thousand words, so you see
here is the “debt cliff”
“Review: PearBudget Beta” by squawkfox:
“‘fun” and “delicious”
used to describe “PearBudget”
make me want to try
“The Dope on Credit Card Debt” by Lisa Spinelli:
the reality
is there are things you can do
don’t be average
##
Well folks - there you have it. For anyone whose submission wasn’t written about - I’m sorry! The ones featured here weren’t necessarily the best of the best, there were just too many submissions for one round up and lets face it, no one can write 92 Haiku!
If you’d like to get involved in the Carnival of Debt Reduction, visit carnivalofdebtreduction.com to find out more.
Popularity: 33% [?]
Popular financial blog The Simple Dollar featured a post today targeted towards recent grads entering the working world for the first time. The post recommends something called the 50% Solution - essentially putting 50% of every paycheck in your checking account to cover day-to-day expenses and 50% into a high yield savings account, and not touching it. Then, once you’ve settled into a routine, every three months invest 80% of your savings account balance in an index fund. The author, Trent, goes on to explain:
Putting half of your paycheck away buys you a little more than a year of complete freedom for every year that you work. If you work for ten years, then you’ve probably built up eleven or twelve years of living expenses. Even if you work a single year, you’ll be able to just follow your muse for another year on that savings.
But is it really that simple? Or even that plausible? Quite simply, I know I couldn’t do it. Believe me, I would love to be able to put half of each of my paychecks away in a savings account (and someday soon I’d like to be able to). But if I were to do that now, while I’d be investing in my future, sure, I would be hurting my present by not focusing on paying down my debt — from credit cards, student loans, the car I needed to buy after graduation because my job required it, etc. — first. 50% of each paycheck on an entry-level salary is nearly impossible, in my opinion.
I think the best advice to come out of Trent’s post is that putting money into a savings account (especially one with a high interest return) with every paycheck is a huge advantage. I personally put $25 (much less than 50% of my paycheck, yes, but as much as I can handle) directly into a savings account each time I get paid. I look at it like I’m paying another bill, so there can be no exceptions, and I don’t touch that money for any reason. And as I pay down my high interest debts mentioned above, I will up that deposit amount.
The biggest thing to keep in mind is to pay down the debt first but still put away (or invest) as much as you can. If 50% is too much to handle, start where you can and work your way up, even if it’s just $25/month. Set your sights too high too quickly and you’ll doom yourself to failure and falling further behind in debt.
source: “About To Enter The Workplace For The First Time? Try The 50% Solution” [The Simple Dollar]
Technorati Tags: debt, budgeting, personal finance, college, real world, graduation
Popularity: 25% [?]
Graduation is a liberating feeling; there’s nothing else quite like it. However, graduating from college can also be a frightening time in someone’s life. You’re finally on your own without the protective college bubble and it’s time to use your education to get a job, a car, an apartment… a Real Life. But that’s easier said than done, of course. Finding a job right out of college can be a daunting experience, especially if your degree is in a very competitive field. Needless to say, there will be times that you run low on funds and the temptation to use increasingly popular Payday Loans to make up the difference can be great.
While using payday loans to get a cash advance can seem like a helpful thing, it can be dangerous as well. A cash advance is a short term loan set at an incredibly high interest rate. As long as you can repay a cash advance in the time specified, you can generally use these to your advantage. The peril of payday loans lies in extending the loan beyond its original period. Doing this will put a serious strain on your finances.
Using payday loans to your advantage can be done if you are diligent about your repayment terms. While a cash advance will definitely give you the funds that you need this minute, do not forget that your next paycheck will go towards the loan repayment.
What this means for you is that you’ll be just as low on cash when your next check comes through. Payday loans can be beneficial when used for emergency needs, though you will need to plan carefully about the loan repayment. Those interest payments can quickly double or even triple the amount you pay for the loan.
There are certainly great options out there for Payday Loans and, if used wisely, they can be a very good alternative — in an emergency — to ruining your already fragile credit score. Just remember, like everything else financial, to do your homework to see if such an option is the right one for you, and to sort the reputable lenders from the scam artists.
Technorati Tags: Payday Loans, loans, payday advances, personal finance, debt, college, graduation
Popularity: 17% [?]
Sure they have great catchy, sing-a-long commercials, but are all of those “free” credit report services we see ads for on TV every day for real? Well, yes and no. According to Young Money Magazine, these credit reporting sites,
“require you to sign up for a monitoring service, using your credit card in order to obtain the ‘free’ report. You will be required to cancel the monitoring service within 30 days or your credit card will be charged as much as $99 for an annual membership fee. These companies count on people forgetting to cancel the trial membership and not asking for a refund.”
So, while they do provide you with one free report, if you don’t back out in time, you’ll still end up paying a pretty hefty price
tag. And regardless, such a service really isn’t worth it. Because, what a lot of recent grads don’t know (or don’t remember), is that under U.S. law, every citizen is entitled to one free copy of their credit report from each of the three national credit bureaus each year.
To order your free report, visit www.annualcreditreport.com (note: this is not a scam or service site like the others, it was created by the three nationwide consumer credit reporting companies), call toll-free at 877-322-8228 or complete the Annual Credit Report Request Form on the Federal Trade Commission website.
(image by creditreportsbyweb.com)
“Ask YOUNG MONEY: Can I trust free credit report offers?” [Young Money]
Technorati Tags: credit, credit report, debt, college, graduation
Popularity: 28% [?]
I have written before about the potential (if treated correctly) benefits of transferring your credit card debt to a card with 0% APR to help you get out of debt faster. Well, today the Mint.com blog took that topic and ran with it. If you have a decent sum of debt built up on your credit card but still aren’t convinced that a transfer balance is right for you, their post is definitely worth the read. Some stand-out points include their list of what to watch out for:
Hidden Fees: Most charge a transfer fee, usually 3% of the transfer amount. Aim for one that caps the amount at $50 to $75, or else a large balance transfer could cost a few hundred dollars. Avoid cards that charge a membership or annual fee.
Transfer rates versus purchase rates: Some offer 0% APR on balance transfers but not new purchases. Right now, a number of banks are offering 0% APR on new purchases as well, so make sure you’re getting the best deal possible.
Tricky payments: Payments are often applied to the transferred balance first because it has lower rates. The balance transfer must be paid before payments are applied to new purchases. For example, if you transfer $5,000 and then charge $50, all payments will go towards the $5,000 until it’s paid. Meanwhile, the $50 accumulates interest because most balance transfer cards don’t offer grace periods for new purchases.
And their list of ways to come out ahead during the balance transfer process:
Shop around: Compare the fees, APRs and payment policies of several cards. And be realistic about how quickly you’ll be paying down your debt. If you won’t have the balance paid before intro rates expire, find a card with the best overall rates and fees.
Pay more than minimum: Pay the principal balance before intro rates expire so you won’t have to pay interest. If you can’t pay down the full balance, at least pay more than the minimum. Once the standard rates kicks in, just making minimum payments extends the debt’s life for years.
Maintain low rates: Always make (at least) the minimum payment and pay on time. If you miss payments, you’ll end up with unreasonably high rates and late fees. Set up automatic bill pay if you’re forgetful.
Maintain clean credit: Some credit card companies routinely check your credit reports and raise interest rates if your profile changes for the worse. Make sure you keep a clean credit history.
Think long term: Don’t think that serial balance transfers are a way to avoid paying off your debt. Sooner or later you’ll have to pay it off. Consider them a potentially smart, near-term way to reduce the cost of carrying the debt you have and help you get back into the black sooner.
“Credit Card Balance Transfers: Pros, Cons and Caveats” [Mint.com]
Technorati Tags: balance transfer, credit cards, debt, Mint.com, college, graduation
Popularity: 28% [?]
According to the 2007 survey released by The Hartford Financial Services Group, Inc - Students and parents agree that college students are not well prepared to deal with the financial challenges that lie ahead. Less than one-quarter of students and only 20% of parents say students are very well prepared to deal with the financial challenges that await them after graduation.
Anecdotal evidence seems to support this. The familiar story of students getting way over their head in credit card debt the minute they arrive on campus. Students are bombarded with credit card offers, despite having student loans and no documented income. You can hardly walk onto a college campus these days without getting harassed by some promoter peddling free t-shirts and gift certificates for signing up for a credit card. Students are definitely taking the bait. 50% graduate with $5,000 or more of high interest credit card debt (according to the Jump$tart Coalition For Personal Financial Literacy). Often the teaser rate on these cards is 0%, but skyrockets to 20% to 30% after a few months. It isn’t hard for students to get in over their heads at those rates.
Why are students falling for this predatory lending? The reason is both simple and sad. They don’t know any better. No one ever sat them down and explained how these cards work and why they are so dangerous. Same goes for credit scores and budgeting. College-aged students just simply aren’t getting exposed to this stuff at school. Many parents try to talk to their kids about this mpm, but any parent knows how that works…
One company in San Francisco, called DollarCamp, is trying to do something about this financial crisis, though, through its crash course for college kids on financial literacy. Their program focuses on teaching college students basic budgeting skills and tips and tricks for staying out of financial trouble.
“DollarCamp is about preventing kids from making easily avoidable mistakes”,
says founder Stephen Epstein. But are grads responsive to the message?
“We have had tremendous results by teaching the basics through story-telling and case studies that [students] can relate to… After all, when you hear it from your peers, it’s not like it’s your parents talking”.
Stephen is referring to the fact that all DollarCamp instructors are in their 20’s — recent graduates themselves — who often relate their own personal experience. Stephen notes,
“[College] kids are smart, they don’t want to be talked down to, but a sincere message from someone… their age really gets through”.
I wish I had had something like this before my financial hardships. But DollarCamp definitely seems like a good idea to me…
(image by weddingssc1)
Technorati Tags: personal finance, budget, debt, credit cards, college, graduation, financial literacy
Popularity: 33% [?]
Debt reduction is on the mind of (nearly) every college graduate – from credit card debt, to repaying student loans; even monthly bills. Heck, it’s one of the main topics on this blog. And what’s one of the best ways to pay off debt a little more quickly? Increase your cash flow; especially if you’re in the pitfall of currently having to spend as much or more than you make.
I know that sounds pretty obvious, but I’ve read before that 90% of people don’t generate any income from anywhere other than their day jobs – at all. While taking on a second part-time job is always an option, it’s one that sucks up what little down time is left after a full-time job pretty quickly. But there are some things you can do during that down time to earn a little extra each month to help pay the bills, and all you need is an Internet connection. Think about how helpful just an extra $100 would be every month when it came time to pay the bills!
Some things to try:
- Sell your left over text books on amazon.com. Have text books left over from last semester? List them all in the Amazon.com Seller’s Marketplace and watch the money come pouring in. I know that sounds a little trite and you’re probably thinking that the books won’t make you any money because when you went to the campus bookstore to sell them back, you were only offered $7 a book.
But the truth is you can turn your text books – especially the really big, expensive ones – into quite a bit of cold, hard cash. I know; I did it every semester of my college career (and even profited – earning more at the end of the semester than I spent at the beginning – once or twice).
- Sell stuff on eBay. Again, it sounds trite and I’m not suggesting turning into your day job – although it can be done; but that’s another post for another day. I’m merely suggesting rummaging through your closet and selling the clothes and shoes you no longer want. Sell things in your old bedroom that you’re not taking to your apartment with you.
If you find success there, offer to go through your parent’s basement or attic and clean for them, in exchange for getting to sell what you find (or offer to split the profits with them).
It may sound crazy but I made more from eBay a few summers ago than I did from my part-time retail job, doing exactly what I just described. Don’t have an eBay account? Click here to sign up.
- Take surveys online. I’ve tried this out and never really had much luck with it. I did make a few dollars here and there but I just didn’t have the patience to sit in one place and fill out surveys for 20 minutes a piece. If you do, however, this is a great and (relatively) easy way to make a little extra money.
My biggest piece of advice here — if paid surveys are the way you want to go — is to set up a separate free email account on yahoo or gmail or something just for your surveys and use it for every survey site you sign up with – that way your day-to-day email address isn’t flooded with survey offers.
Also remember that each site will only offer you a few surveys a week (and you’ll qualify for even less than that), so the more you can sign up with, the better your chances of actually making some money (some examples of where to start can be found here and here).
- Start a blog. Last but certainly not least – starting a blog is a great way to make a little cash on the side. While chances are you’re never going to reach the income levels of Darren Rowse, John Chow, or Perez Hilton – all of whom make six or seven figures a year from their full-time blogging – with a little work and perseverance, blogging is a great and fun way to make a few dollars a day. If you have a hobby you’re knowledgeable and passionate about… anything at all, really… you can blog about it.
While some niches will be more widely read (and thus will make you more money) than others, it is theoretically possible to set up a free blog through sites such as www.blogger.com and www.wordpress.com (or to pay a monthly fee for your own dot com through someone like bluehost.com), install Google AdSense and some affiliate banners, and be making money tomorrow.
For more on how to become a good blogger, click here.
There are certainly many more ways to make a little money on the side – try something old fashioned like walking the neighbor’s dog or shoveling their front steps if Internet riches isn’t for you – so do what works best for you. But supplementing your income is by far the best and easiest method for reducing your debt and boosting your net worth.
(image by rmwhittaker1012000)
Technorati Tags: debt, supplemental income, making money, making money online, blog, ebay, college, graduation
Popularity: 32% [?]
