student loans http://www.wisebread.com/taxonomy/term/5885/all en-US What Really Happens When You Don't Pay Your Student Loans http://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-really-happens-when-you-dont-pay-your-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/graduation_hat_and_figurine_on_coins.jpg" alt="Graduation hat and figurine on coins" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loan figures are staggering, and as the amount borrowed rises, so too do defaults. Failing to pay your student loan can cause serious fallout. Unlike other types of debt, student loans cannot be discharged during bankruptcy. Defaulting is nothing to be taken lightly.</p> <p>According to Student Loan Hero, college students across the country are graduating with an average $37,172 in student loan debt. And overall, Americans owe around $1.48 trillion in student loans. Unfortunately, 11 percent of the 44 million student loan borrowers have a loan in default.</p> <h2>Student loan default defined</h2> <p>How long can you miss payments before you're classified as in default? The answer depends on who's done the lending.</p> <ul> <li> <p>The Federal Student Aid Office defines a default on a Direct Loan or Federal Family Funded Educational Loan as failure to pay in more than 270 days (nine months).</p> </li> <li> <p>For private student loans, the definition of a default is stricter. You're usually considered in default if you've missed payments for three months, but some lenders brand you in default after just one missed payment.</p> </li> </ul> <p>Your loan could also be automatically categorized as in default if you or your co-signer dies or files for bankruptcy, no matter whether you're making timely payments or not. (See also: <a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans?ref=seealso" target="_blank">6 Questions to Ask Before Taking Out Student Loans</a>)</p> <h2>What can happen if your student loan defaults?</h2> <p>Student loans are among the most dangerous debt available in our society today. I say dangerous because there are few options to extricate yourself from a student loan if you fall on hard times. Mind you, federally subsidized loans offer multiple options for forbearance or deferment, which is a plus. But some private loans only permit a 12-month reprieve over the life of the loan. (See also: <a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans?ref=seealso" target="_blank">4 Things You Need to Know About Deferring Student Loans</a>)</p> <p>If you can't get a forbearance or still find yourself unable to pay after a deferment, and you end up in default, brace for some significant financial consequences.</p> <h3>Wage garnishment</h3> <p>Student loan collection agencies can legally garnish your wages without a lawsuit. And they can take not only the amount that was initially due, but also penalties that can dramatically balloon your outstanding debt. Now you've also got to worry about overdrawing your bank account, exacerbating the financial stresses that caused you to stop paying your student loan in the first place.</p> <h3>Ineligibility for repayment assistance</h3> <p>Once you're in default, your options for help begin to narrow. You'll be ineligible for repayment assistance programs, meaning you can no longer apply for a deferment or forbearance. Gradual payment plans will be off limits.</p> <h3>Suspended license</h3> <p>In 22 states, including my home state of Illinois, professional licenses or your driver's license can be suspended if you fail to make student loan payments and the loan defaults. It will be much more difficult to earn an income without your professional certification or driver's license.</p> <h3>Credit issues</h3> <p>Obviously, not paying your student loans will implode your credit. Some basic financial transactions, from getting a cellphone plan to qualifying for a mortgage, will be more expensive and difficult. It could take months or years to rebuild your credit record.</p> <h3>Tax refunds seized</h3> <p>Your tax refund can be withheld to satisfy the outstanding balance on defaulted student loans. Federal benefits like Social Security can also be garnished.</p> <h2>You can't outrun your debt</h2> <p>Student loans don't just go away if you ignore them. They are difficult to discharge and federal government collection agencies have tremendous legal authority to take your funds if you neglect to keep your payments current.</p> <p>Some Americans dodge their student loan obligations by relocating overseas. This is not a solution. Late fees, penalties, and interest continue to accrue, and if life changes and you ever decide to repatriate, the problems will only be worse.</p> <h2>Avoiding student loan default status</h2> <p>The best defense against student loan default is to be proactive. Contact your student loan servicer as soon as your payment troubles begin. Inquire about payment assistance options available to borrowers experiencing difficulty repaying. (See also: <a href="http://www.wisebread.com/8-surprising-ways-to-pay-off-your-student-loans?ref=seealso" target="_blank">8 Surprising Ways to Pay Off Your Student Loans</a>)</p> <p>Avoiding the problem with your student loan is the absolute worst plan of action. In general, student loan borrowers who are struggling with their payments should consider:</p> <ul> <li> <p>Requesting a forbearance or deferment.</p> </li> <li> <p>Modifying the loan through <a href="https://studentaid.ed.gov/sa/repay-loans/consolidation" target="_blank">The Direct Loan Consolidation</a> program.</p> </li> <li> <p>Refinancing to a nonprofit student loan program to lower the interest rate.</p> </li> <li> <p>Revising the terms of the loan repayment.</p> </li> <li> <p>Applying to discharge the student loan.</p> </li> </ul> <p>You do have options, but you've got to recognize the problem <em>before </em>you default. Take action early and you can head off a lot of the issues that can turn your inability to pay into a disaster with long-running consequences.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/toni-husbands">Toni Husbands</a> of <a href="http://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-student-loan-forbearance-anyway">What Is Student Loan Forbearance, Anyway?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans">4 Things You Need to Know About Deferring Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-get-trapped-by-these-higher-education-scams">Don&#039;t Get Trapped by These Higher Education Scams</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster">5 Ways to Pay Off Your Student Debt Faster</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training debt default deferment forbearance garnished wages licenses loan dodgers student loans suspensions Thu, 18 Jan 2018 09:30:10 +0000 Toni Husbands 2086606 at http://www.wisebread.com The Encouraging Truth About How Americans Are Covering the Cost of College http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/stick_with_word_saving_for_college_and_money.jpg" alt="Stick with word Saving for College and money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The average annual costs for tuition plus room and board have reached an average $45,000 for private colleges and $35,000 for out-of-state-students at public colleges. When students and parents learn about these staggering figures, panic and resignation can set in.</p> <p>But it's important to keep in mind that most people don't pay the full sticker price for college &mdash; and what they <em>do</em> pay tends to come from a variety of sources, not just from savings or loans. Sallie Mae's 2017 <em>How America Pays for College</em> survey casts light on how families afford higher education costs, and may offer some reassurance that one way or another, you, too, can afford college.</p> <p>Here are some of the most interesting findings.</p> <h2>1. Few families pay the highest prices you hear about</h2> <p>Despite those high average costs, Sallie Mae found that the average family paid only $23,757 for college in the 2016&ndash;2017 academic year.</p> <p>Why is this so much lower than the scary averages reported in the news? For one thing, the private schools that charge the highest prices account for a small minority of all college students in America. Sure, Harvard is expensive, but most of us aren't going there. Many students go to community colleges, where the nationwide average for tuition and fees is just $3,347, according to AffordableColleges.com. Some community colleges are even tuition-free. Other students may attend in-state public universities, where College Board reports the average tuition and fees are below $10,000 a year. (See also: <a href="http://www.wisebread.com/what-does-free-college-tuition-really-pay-for?ref=seealso" target="_blank">What Does &quot;Free&quot; College Tuition Really Pay For?</a>)</p> <p>These examples don't include room and board, nor do they include other expenses that students often fail to account for, such as travel to and from school. But even if you factor in those expenses, these costs are a lot lower than the scary headlines would lead you to believe. (See also: <a href="http://www.wisebread.com/9-college-expenses-you-arent-saving-for?ref=seealso" target="_blank">9 College Expenses You Aren't Saving For</a>)</p> <h2>2. Half of students don't pay room and board</h2> <p>According to Sallie Mae's survey, a full 50 percent of college students now live at home with their parents, saving a ton of money on rent and cafeteria food. Even if they contribute to household expenses, the cost is likely to be less than it would be if they lived on their own.</p> <h2>3. Scholarships and grants cover more than you think</h2> <p>Funds that students don't have to pay back, such as federal grants, grants provided by the schools, and scholarships, cover more than a third of the cost of college for the average student. That's the largest funding source, greater than what either parents or students contribute, and it's been on the rise in recent years. In 2016&ndash;17, scholarships and grants covered 35 percent of the average student's costs, while back in 2012&ndash;13, they covered just 30 percent.</p> <p>That 35 percent translates to $8,390 that the average student receives toward college expenses and does not have to pay back. At more expensive schools, especially those with large endowments, the grants from the institution may be much larger.</p> <p>Where do those scholarships come from? Most families &mdash; 87 percent, the survey says &mdash; get one or more scholarships from the college itself. Three out of four students also earn scholarships from companies or community organizations, and 65 percent of students get a scholarship from state or local governments.(See also: <a href="http://www.wisebread.com/how-to-increase-your-childs-odds-of-winning-a-scholarship?ref=seealso" target="_blank">How to Increase Your Child's Odds of Winning a Scholarship</a>)</p> <h2>4. Grandma may chip in</h2> <p>Four percent of the average student's college costs are covered by relatives and friends. That may not seem like much, but it works out to $900 for the average student, which isn't nothing.</p> <h2>5. Parents and students share the load</h2> <p>Parents, don't feel like you've failed if you don't cover 100 percent of your kids' college expenses. Students, don't feel like a leech if you can't handle 100 percent of your college costs on your own.</p> <p>The fact is, in the average family, students and parents each contribute about the same amount to college expenses; 30 percent comes from the student and 31 percent comes from the parent. On each side, that contribution is a combination of savings, earnings, and loans.</p> <h2>6. If you don't feel prepared, you're not alone</h2> <p>Only around four in 10 families say they have a plan to cover all four or more years of undergraduate studies before a student enrolls. Most certainly don't have the entire sum saved up in advance. In fact, between student and parent contributions, only about 34 percent, or $8,000, comes from savings and income. The rest comes from those loans, grants, scholarships, and family gifts mentioned above. (See also: <a href="http://www.wisebread.com/12-surprising-ways-to-get-more-college-financial-aid?Ref=seealso" target="_blank">12 Surprising Ways to Get More College Financial Aid</a>)</p> <h2>7. Most families don't have 529 college savings plans</h2> <p>For better or for worse, use of this tax-advantaged savings vehicle is waning, with only 13 percent of parents of freshmen paying college costs out of a 529 account. Use of these accounts appears to have peaked at 17 percent in the 2012&ndash;13 school year.</p> <p>The lapse in popularity of the 529 program could be chalked up to the lack of planning noted above, or maybe more families are worrying that money they put into 529 plans could count against their kids when they apply for financial aid. However, if you have established a 529 account for your kids, pat yourself on the back, because you're in the virtuous minority. (See also: <a href="http://www.wisebread.com/the-9-best-state-529-college-savings-plans?ref=seealso" target="_blank">The 9 Best State 529 College Savings Plans</a>)</p> <h2>8. Smart students find ways to save</h2> <p>Budget-savvy students know that the cost of college doesn't have to be so high if you work at saving money. Half of students are living with their parents; others are renting textbooks or buying them secondhand, living off campus, and bicycling to class.</p> <p>Budget shopping also comes into play when selecting a college. According to the survey, 69 percent of students eliminated a school due to cost, up from 58 percent in the 2008 survey. This is probably a wise decision. (See also: <a href="http://www.wisebread.com/10-ways-for-college-students-to-save-loads-of-money?ref=seealso" target="_blank">10 Ways for College Students to Save Loads of Money</a>)</p> <p>While past studies indicated that more expensive schools offered a greater return on investment, a more recent study, <em>A Regression Analysis of College Tuition and Mean Income</em>, concluded that's no longer true. Nowadays, once differences in family earnings, race, and test scores are eliminated, there is little difference in earnings between graduates of expensive schools and graduates of more affordable schools. The study suggested that the only variable in colleges that might lead to increased earnings is the expenditure per student, which isn't always highest at the most expensive schools.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-encouraging-truth-about-how-americans-are-covering-the-cost-of-college&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520Encouraging%2520Truth%2520About%2520How%2520Americans%2520Are%2520Covering%2520the%2520Cost%2520of%2520College.jpg&amp;description=The%20Encouraging%20Truth%20About%20How%20Americans%20Are%20Covering%20the%20Cost%20of%20College"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%20Encouraging%20Truth%20About%20How%20Americans%20Are%20Covering%20the%20Cost%20of%20College.jpg" alt="The Encouraging Truth About How Americans Are Covering the Cost of College" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-save-for-college-using-a-529-prepaid-tuition-plan">Should You Save for College Using a 529 Prepaid Tuition Plan?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea">Why Saving Too Much Money for a College Fund Is a Bad Idea</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-when-you-cant-afford-your-childs-college-education">What to Do When You Can&#039;t Afford Your Child&#039;s College Education</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-ways-for-college-students-to-save-loads-of-money">10 Ways for College Students to Save Loads of Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training 529 plans college costs fees private schools public school room and board sallie mae saving money scholarships student loans tuition Wed, 10 Jan 2018 09:30:06 +0000 Carrie Kirby 2085304 at http://www.wisebread.com 4 Retirement Planning Moves Every 20-Something Must Make http://www.wisebread.com/4-retirement-planning-moves-every-20-something-must-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-retirement-planning-moves-every-20-something-must-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/group_of_mixed_race_people_holding_piggy_bank.jpg" alt="Group of mixed race people holding Piggy Bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you're in your 20s, retirement seems pretty far in the future. But you might be surprised: The end of your working days isn't as far away as you think. Even though you're just starting out in your career, you should be taking important steps now to improve your odds of a financially stable retirement later. (See also: <a href="http://www.wisebread.com/retirement-planning-if-you-re-under-30?ref=seealso" target="_blank">Retirement Planning If You're Under 30</a>)</p> <h2>Start saving early</h2> <p>Again, you might think as a 20-something that you're too far away from retirement to worry about it. But saving as early as you can &mdash; like, right after you enter the workforce &mdash; can pay off big when it's time to retire.</p> <p>The easiest way to start saving early for retirement is to take advantage of your employer's 401(k) plan. This plan allows you to set aside a percentage of each paycheck in a mutual fund. You contribute every week, and thanks to the magic of compounding, your retirement savings will grow more quickly the more you've contributed. Your employer may also match up to a certain percentage of your contributions. That's free money you never want to leave on the table.</p> <p>The goal, of course, is to have enough money saved that, with the help of other outside income such as Social Security payments, you'll be able to live a happy and healthy lifestyle after retiring &mdash; one in which you won't have to worry about money.</p> <p>The faster you start putting money away, the easier it is to reach this goal. Financial analysts say you should put away at least 10 percent of every paycheck for retirement starting in your 20s. If you can put away more, that's even better. (See also: <a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make?ref=seealso" target="_blank">5 Dumb 401(k) Mistakes Smart People Make</a>)</p> <h2>Ask for more money</h2> <p>It's an older study, but 2010 research from Temple and George Mason Universities discovered an interesting trend: If you get a raise early in your career, it can have a compounding effect on your salary for the rest of your working life.</p> <p>The study used an example of a 25-year-old employee starting out with a $50,000 salary versus a $55,000 salary. Assuming a 5 percent annual pay raise, the employee who started out with an additional $5,000 would earn over $600,000 more during a 40-year career. Just think how far those extra funds could go toward saving for retirement.</p> <p>The lesson here? Don't be shy about asking your employer for a raise. You might not get $5,000, but even a small raise of $2,000 or $3,000 can pay off over time as you boost your earning power. It's easier to save more money for retirement when you are earning a higher salary. That 10 to 15 percent you save from each paycheck will naturally be higher if those paychecks are larger. (See also: <a href="http://www.wisebread.com/you-should-always-negotiate-a-raise-here-are-10-reasons-why?ref=seealso" target="_blank">You Should Always Negotiate a Raise: Here Are 10 Reasons Why</a>)</p> <h2>Build an emergency fund</h2> <p>While it's important to set aside money for retirement, it's equally necessary to <a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0?ref=seealso" target="_blank">save money for an emergency fund</a>. As the name suggests, an emergency fund is a pool of money, usually in a risk-free savings account, that you draw from when you need a quick infusion of cash to pay for unexpected events such as a new car transmission or medical bill.</p> <p>Why does this account matter for retirement savings? If you don't have an emergency fund, you're more likely to cover financial emergencies with your credit card. This leads to a large increase in high-interest debt. If you're then devoting too much money to paying down this debt, you won't have as many dollars to put toward retirement.</p> <p>Early in your 20s is a great time to start building that emergency fund. Financial experts recommend that you have at least six months' to a year's worth of daily living expenses saved in your emergency account at all times. Start building toward that goal now.</p> <h2>Tackle student loan debt</h2> <p>If you're like many 20-somethings, you're dealing with tens of thousands of dollars in student loan debt. The faster you pay this off, the better.</p> <p>If you have any extra money, put it toward your student loan debt. Just make sure that your loan servicer is using this extra money to pay off the principal balance and not the interest.</p> <p>The faster you pay off your student loans, the more money you'll have for saving for retirement. Paying off your college debt might seem like a struggle now, especially when your income is lower, but in a few years, you'll be thankful you did it. (See also: <a href="http://www.wisebread.com/8-surprising-ways-to-pay-off-your-student-loans?ref=seealso" target="_blank">8 Surprising Ways to Pay Off Your Student Loans</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-retirement-planning-moves-every-20-something-must-make&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Retirement%2520Planning%2520Moves%2520Every%252020-Something%2520Must%2520Make_0.jpg&amp;description=4%20Retirement%20Planning%20Moves%20Every%2020-Something%20Must%20Make"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Retirement%20Planning%20Moves%20Every%2020-Something%20Must%20Make_0.jpg" alt="4 Retirement Planning Moves Every 20-Something Must Make" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-retirement-planning-moves-every-20-something-must-make">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-moves-to-make-the-moment-you-graduate">5 Money Moves to Make the Moment You Graduate</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-signs-youre-making-all-the-right-money-moves">6 Signs You&#039;re Making All the Right Money Moves</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-americans-are-getting-better-at-managing-their-money">3 Ways Americans Are Getting Better at Managing Their Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 20 somethings 401(k) asking for a raise compound interest emergency funds employer match money moves student loans young adults Tue, 31 Oct 2017 08:00:06 +0000 Dan Rafter 2039973 at http://www.wisebread.com Is Student Loan Debt as Bad as It Seems? http://www.wisebread.com/is-student-loan-debt-as-bad-as-it-seems <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-student-loan-debt-as-bad-as-it-seems" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/student_loan_debt_184604055.jpg" alt="Learning if student loan debt is as bad as it seems" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>College students are back on campuses across the country. For many, it's the first time they&rsquo;ll be on their own.</p> <p>Every year the first class begins with the professor asking something like, &quot;Is everyone here for Business Essentials?&quot;</p> <p>After a brief, awkward silence, one student inevitably raises his or her hand and says, &quot;Um, no, I gotta go. Where, exactly, is Crime and Justice in America located?&quot;</p> <p>This year the hand was attached to my grandson&rsquo;s arm. Ironically, he'd visited each classroom the day before just to be sure he knew where he was going. For a young man who grew up in the country hunting and fishing, it&rsquo;s remarkable he could be so directionally challenged.</p> <p>But there&rsquo;s a lot on a college freshman's mind. What line do I stand in first? Where do I sign next? Who cares about reading the document I'm signing? How do I meet that cute girl or handsome boy in the next line?</p> <p>For many, like my grandson, the biggest concern is just getting to their first class on time. How they&rsquo;re going to pay for that class, and the rest of their education, usually isn't at the top of their list of things to think about &mdash; or even on it. That's what parents and grandparents worry about.</p> <h2>Student loan debt has topped $1.4 trillion</h2> <p>And we worry a lot for good reason. Student loan debt has reached $1.4 trillion. According to the <a href="https://bigfuture.collegeboard.org/pay-for-college/college-costs/college-costs-faqs" target="_blank">College Board</a>, the average published cost of a four-year degree is $129,640 for a private college.</p> <p>But have hope. It may not be as bad as it sounds. There are students and parents with overwhelming student loan debt facing tremendous financial crises. But when you look at the big picture across the population, it isn't necessarily as bleak.</p> <p>An <a href="https://www.experianplc.com/media/news/2017/student-loan-state-of-credit/" target="_blank">Experian study</a> found that the average total student loan balance is currently $34,144. That&rsquo;s pretty close to the College Board survey results that found the average cost for an in-state education for a four-year university is about $37,600.</p> <h2>Student loans versus car loans</h2> <p>Compare the student loan numbers with those for car loans. Auto loan debt reached $1.1 trillion in 2017, according to Experian&rsquo;s Q2 2017 <em>State of the Automotive Finance Market</em> report. The average loan amount for a new car is $30,234. The length of auto loan terms also is creeping up, with a third of new vehicles being repaid in six to eight years. The repayment period for student loans is typically 10 years.</p> <p>Another important statistic is that there&rsquo;s been a 10.1 percent decrease in late student loan payments since 2009. Late payments for car loans, on the other hand, have been creeping up.</p> <p>One last number. The average monthly payment for a new car is $504, according to Experian. Using a payment calculator from StudentLoanHero.com, the payment for that $34,144 average student loan debt would be only $373. So the average education is cheaper each month than the average car.</p> <p>When you look at the big picture, student loan debt doesn't seem so bad compared with what we spend in this country for new cars.</p> <h2>Student loans are the best investment</h2> <p>However, there's one metric I don't think should be used to compare student loans with car loans, and that's in the context of return on investment (ROI). I've talked with people for whom I have great respect who believe a student loan should have an ROI of five or six years and be treated like a car loan in terms of repayment time frames. I disagree.</p> <p>The reason? A car is a depreciating asset. It starts to lose value as soon as you drive it off the lot and at some point becomes worthless. An education, on the other hand, is a lifetime investment. Its ROI should be measured over the course of a career or a lifetime &mdash; 20 to 30 years or more.</p> <p>While a car loses value, research continues to show that a person with a college degree will earn as much as $1 million or more on average over the course of his or her career. When you consider that, you can&rsquo;t afford not to get an education, even if it takes student loans.</p> <p>There are ways to save significantly on the cost of college:</p> <ul> <li>Go to an in-state public school.</li> <li>Complete the first two years at a local community college.</li> <li>Attend a local school and live at home.</li> <li>Apply for scholarships and grants.</li> </ul> <p>If you're struggling to repay debts, there are options &mdash; especially for government-guaranteed student loans &mdash; including forbearance, deferment, and consolidation. I know each of them well because I used all three when I was repaying my student loans, which were about today&rsquo;s average &mdash; but that was almost 30 years ago. My education will always be the best investment I ever made.</p> <p>My grandson, I'm very proud to say, earned a full tuition scholarship at a small but very good college in Kansas. So he shouldn't face the student loan challenges I did &mdash; if he can just find his way to class.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fis-student-loan-debt-as-bad-as-it-seems&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FIs%2520Student%2520Loan%2520Debt%2520as%2520Bad%2520as%2520It%2520Seems-.jpg&amp;description=Is%20Student%20Loan%20Debt%20as%20Bad%20as%20It%20Seems%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Is%20Student%20Loan%20Debt%20as%20Bad%20as%20It%20Seems-.jpg" alt="Is Student Loan Debt as Bad as It Seems?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/rod-griffin">Rod Griffin</a> of <a href="http://www.wisebread.com/is-student-loan-debt-as-bad-as-it-seems">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-easy-ways-to-avoid-student-loan-debt">12 Easy Ways to Avoid Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">How One Couple Paid Off $147k of Debt (Even While Unemployed)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-college-graduate-paid-off-28000-in-three-years-on-a-30k-salary">How One College Graduate Paid Off $28,000 in Three Years on a $30K Salary</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness">8 Ways to Get Student Loan Debt Forgiveness</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management college fund managing debt school loans student debt student loan debt student loans Mon, 23 Oct 2017 09:00:06 +0000 Rod Griffin 2040127 at http://www.wisebread.com How a Single Mother In Debt Over $200K Is Fixing Her Finances http://www.wisebread.com/how-a-single-mother-in-debt-over-200k-is-fixing-her-finances <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-a-single-mother-in-debt-over-200k-is-fixing-her-finances" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mother_daughter_finances_108359432.jpg" alt="Single mother managing her debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For those of us actively trying to improve our financial situation, it's inspiring to read about others who have succeeded. Dilenia Frias is one such example, embarking upon Wise Bread's Total Financial Transformation Plan, and successfully improving her credit score, better managing her debt, and on the road to higher earnings in just a few, short months.</p> <p>When we first met Dilenia in August, she shared her financial concerns with us: Over $200,000 in student loan debt, tens of thousands owed on credit cards, personal loans, and a timeshare, a damaged credit score, and relatively low earnings despite graduating law school. To top it off, Dilenia was recently unemployed for two years, and is a single mother residing in New York City, an area with arguably the highest of cost of living in the country. (See also: <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Eliminate Credit Card Debt</a>)</p> <p>We decided to help Dilenia tackle these challenges one-by-one, by providing methodical advice for stabilizing her debt, raising her credit score, and improving her earnings. Read on to hear Dilenia's story in her own words &mdash; and even better, her remarkable progress in the two months since we first talked.</p> <h2>Credit Cards</h2> <p><em>I have $8,500 in credit card debt, spread over three cards &mdash; American Express, Children's Place, and Discover cards. My cards' interest rates are anywhere from 10.99-24%, and most are maxed out or over their credit limit. </em></p> <h3>Our advice:</h3> <ul> <li>Contact your creditors, explain your situation, and request lower interest rates, if possible. Always pay on time &mdash; even if it's only your minimum payments.<br /> &nbsp;</li> <li>Try to bring your balances under the credit card's limit &mdash; this will have an immediate impact on your credit score. Long-term, your goal should be to keep your balances under 30% of your total available credit. This will significantly boost your credit.<br /> &nbsp;</li> <li>One useful trick for repaying cards is to make two payments per month, instead of just one. For example, if you normally make one monthly payment of $100, try making two payments of $50 each. Since interest is calculated over the entire month, this will reduce your interest owed. Plus, depending on what time of the month your card reports to the credit bureaus, it may also show a lower debt level and boost your score.<br /> &nbsp;</li> <li>Don't close your credit cards &mdash; even once you pay them off! This reduces the amount of credit you have available, which lowers your credit score.</li> </ul> <h3>Dilenia's credit card situation now</h3> <p><em>My Equifax credit score went up 48 points to 677!</em></p> <p><em>I hadn't used my Children's Place credit card in about a year, and the suggestion was to use the card for at least a small amount, so that my account wouldn't get closed for lack of use, so I spent $125 on gift cards in August. I received my bill later in August and paid it on time. I received an email approximately a week ago that my credit limit was increased from $500 to $750. </em></p> <p><em>I also paid my American Express enough so that my statement only showed a $99 balance when the statement printed (so I was using a little under 20% of my credit limit). My Discover card was also a bit over the limit last month, but I brought the balance back down in time for the September statement closing date. I am still using almost 100% of my credit limit, but at least I am no longer above my credit limit.</em></p> <h2>Personal loan and timeshare</h2> <p><em>My $7,000 personal loan was unfortunately charged off in 2015, when, after leaving my job in February 2015, was only able to make payments until May 2015. I am currently paying $150 per month to the collection agency handling the account. Based on the amount owed, I would need to make payments until April 2021.</em></p> <p><em>A $9,000 loan for a timeshare is also in collections. I am currently trying to negotiate a limited-use timeshare based on the payments I have already made, but was told that I needed to make a final payment to the collection agency before they would release my account to the timeshare company. If I am able to regain the timeshare, I might be able to sublease it.</em></p> <h3>Our advice:</h3> <ul> <li>Aggressively try to regain use of the timeshare on a more limited-use basis. Request that the collections agency annotate your credit report to show that your are making payments on time.<br /> &nbsp;</li> <li>Once you regain limited <a href="http://www.wisebread.com/save-thousands-by-buying-a-timeshare-on-the-secondary-market?ref=internal" target="_blank">use of the timeshare, sublease it</a> using services such as rentmytimesharenow.com. Apply any extra money toward repaying credit cards more quickly, starting with the highest-interest card first.<br /> &nbsp;</li> <li>Attempt to negotiate lower payments or interest rates directly with the personal loan collections agency. Ensure they've annotated your credit report to reflect that your account is being paid on time per your agreement.</li> </ul> <h3>Dilenia's personal loan and timeshare situation now</h3> <p><em>I recently made a payment to the timeshare company, and I am awaiting documents transferring ownership in my previous timeshare to a new timeshare. When the paperwork is finalized, the collection account currently being reported to my credit reports will be removed. That should also increase my score, and also allow me to sublease the unit.</em></p> <h2>Student loans</h2> <p><em>I have over $200,000 in federal student loans, most of which are being repaid via the Income Based Repayment program (IBR). However, I have over $16,000 in Perkins loans which are currently on deferment; I'll need to start making payments on these, too, by March 2018. Due to my limited income and two dependents, my current monthly payment is $0. </em></p> <h3>Our advice:</h3> <ul> <li>Consolidate <em>all</em> your student loans &mdash; including the Perkins loans, so that they can all be placed on IBR and result in a low payment.<br /> &nbsp;</li> <li>Place your IBR account on autopay &mdash; even if your payment is $0, it may result in a slightly lower interest rate.<br /> &nbsp;</li> <li>Contact your law school's employment services office and inquire whether your school offers any debt forgiveness for students in public service or other modestly-paid legal jobs.</li> </ul> <h2>Income, employment, and other credit boosts</h2> <p>In order to be admitted to the Bar, lawyers must pass a Character &amp; Fitness (C&amp;F) evaluation, including a credit check. Unfortunately, given Dilenia's credit issues, being denied entry to the Bar (and a higher income as an attorney) was a real possibility.</p> <p>Thankfully, by bringing all of Dilenia's accounts current and boosting her credit score, C&amp;F should be less of an issue, thus ensuring that Dilenia should be employable as an attorney by late this year. This will likely result in higher income and allow Dilenia to repay debt more aggressively. More importantly, it'll enable her to save &mdash; even a modest amount saved every month toward an emergency fund of three-to-six months' expenses will help ensure she doesn't get into this sort of trouble again. (See also: <a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0?ref=seealso" target="_blank">7 Easy Ways to Build an Emergency Fund From $0</a>)</p> <p>Dilenia's 19-year-old son is also considering seeking employment to help contribute to household expenses, and once Dilenia's timeshare is subleased, the extra income can be applied to debt and emergency fund savings.</p> <p>Dilenia has made great progress, and she can do more still. Dilenia should request higher credit limits on her cards once she's made twelve on-time monthly payments and dropped her balances. Then, once her cards are paid off, she should open new lines of credit &mdash; such as gas cards &mdash; and not use them. This will all result in lower credit utilization ratios &mdash; and higher credit scores.</p> <p>Recently Dilenia joined eMoneyPool, since it reports user accounts to credit bureaus like Experian. eMoneyPool is an online version of a savings club in which members make regular contributions and receive &quot;payouts&quot; of their savings on targeted dates. She joined two $500 money-sharing pools in August, and by early September the account was added to her Experian credit report.</p> <p>Dilenia can also have her rental payments reported to the credit bureaus using services such as RentTrack or RentReporters. Depending on the lender and the type of credit score they use to determine credit worthiness, this could help her with loans or other credit applications down the line.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-a-single-mother-in-debt-over-200k-is-fixing-her-finances&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520a%2520Single%2520Mother%2520In%2520Debt%2520Over%2520200K%2520Is%2520Fixing%2520Her%2520Finances.jpg&amp;description=How%20a%20Single%20Mother%20In%20Debt%20Over%20200K%20Dollars%20Is%20Fixing%20Her%20Finances"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20a%20Single%20Mother%20In%20Debt%20Over%20200K%20Is%20Fixing%20Her%20Finances.jpg" alt="How a Single Mother In Debt Over $200K Is Fixing Her Finances" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/janet-alvarez">Janet Alvarez</a> of <a href="http://www.wisebread.com/how-a-single-mother-in-debt-over-200k-is-fixing-her-finances">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/recession-journal-part-i-fast-money-in-the-09">Recession Journal Part I: &#039;Fast&#039; Money in the &#039;09</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/peak-debt">Peak Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-the-big-deal-about-banks-refusing-to-lend">What&#039;s the big deal about banks refusing to lend?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/uk-banks-are-blocking-customers-credit-cards-will-the-usa-be-next">UK banks are blocking customers&#039; credit cards. Will the USA be next?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-the-best-way-to-get-out-of-debt">What&#039;s the Best Way to Get out of Debt?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management credit debt extra income rent student loans timeshare total financial transformation Mon, 16 Oct 2017 16:02:05 +0000 Janet Alvarez 2037681 at http://www.wisebread.com 5 Job Hunting Roadblocks Millennials Must Overcome http://www.wisebread.com/5-job-hunting-roadblocks-millennials-must-overcome <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-job-hunting-roadblocks-millennials-must-overcome" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_couple_signing_contract.jpg" alt="Young couple signing contract" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Millennials are the demographic born between the early 1980s and the early 2000s. If you fall into that category, you are going to come across some disadvantages when it comes to getting a job. While these roadblocks are not applicable to every candidate, and are certainly not impossible to overcome, they are going to make your job search more difficult than the Gen Xers you'll be competing with. Here are some of the struggles you can expect to face.</p> <h2>1. Older generations may have a bad impression of you</h2> <p>Most millennials are like every other age group of job seekers: hardworking, driven, and ready to knuckle down and have a positive impact on the company that hires them. Sadly, millennials have gotten a pretty bad rap over the years, tainted by the actions of a few. Words like &quot;entitlement&quot; and &quot;opinionated&quot; are bandied about, and it is having a negative impact on those looking for work. In particular, older generations, most of whom are doing the hiring, have bought into those stereotypes.</p> <p>For example, in a Daily Mail article published earlier this year, some bosses and hiring managers <a href="http://www.dailymail.co.uk/femail/article-4232696/Millenials-generation-huge-sense-entitlement.html" target="_blank">complained about a workforce</a> made up of young people that are &quot;spoiled, full of themselves, averse to hard work, and expect 'success on a plate.'&quot; Sadly, articles like these are a dime a dozen.</p> <p>These blanket statements, of course, are simply not true. There are selfish, entitled people of every age and background &mdash; but in the case of millennials, it can be a hard perception to shake off. Millennials will have to overcome these preconceived notions and prove they're every bit as determined as their peers. (See also: <a href="http://www.wisebread.com/5-ways-millennials-can-become-bosses-sooner?ref=seealso" target="_blank">5 Ways Millennials Can Become Bosses Sooner</a>)</p> <h2>2. Student loans can leave you desperate</h2> <p>Let's talk about student loans and crippling debt. The average student in the class of 2016 graduated with $37,172 in student loan debt. According to the New York Federal Reserve, in the U.S. alone, there are over 44 million borrowers that have amassed over $1.3 trillion in student loans &mdash; and this number continues to grow as the cost of higher education skyrockets.</p> <p>This is a massive liability, especially when you consider that in 1990 the average student loan debt was just $12,110. What's more, in that time median wages have basically flatlined &mdash; rising from $42,342 in 1990 to just $43,000 in 2016, according to the New York Federal Reserve. That's a 1.6 percent pay raise and a whopping 163.8 percent debt raise.</p> <p>As a millennial, you are facing the very likely possibility that you'll be stuck with this debt for decades. For this reason, finding work becomes nothing short of desperation. College graduates are taking jobs well below their education and skill level simply because it's better to have a low paying job than none at all. And this can lead to a vicious cycle of low level gigs, standing at the foot of a ladder that looks impossible to climb. No other generation has had to start their careers with this kind of burden. (See also: <a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt?ref=seealso" target="_blank">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a>)</p> <h2>3. Technology has its disadvantages</h2> <p>Millennials were born into a world of rapidly advancing technology, and for the most part, they are very comfortable interacting with it. That can be positive in many ways, and it can certainly help in their job search. But this reliance on technology can also lead to some social issues that may hamper a job interview process. Namely, millennials aren't as accustomed to talking on the phone or sitting down face to face as older generations.</p> <p>Many millennials would much rather communicate through text, instant messenger apps, emails, and social media posts than through traditional voice and in-person methods. These preferences can impact a candidate's chances during phone or face to face interviews. To be sure, many millennials are comfortable with and perfectly capable of acing a phone or in-person interview. But for others, this can be an obvious struggle. (See also: <a href="http://www.wisebread.com/flashback-friday-59-tips-to-help-you-nail-that-job-interview?ref=seealso" target="_blank">59 Tips to Help You Nail That Job Interview</a>)</p> <h2>4. There hasn't been enough time to establish great credit</h2> <p>In some countries, no news is good news when it comes to a credit history. As long as you have a good salary, a stable family life, and are current on loans and other debts, you're good to go. But in the U.S. it takes time to build great credit and get a credit score above the magic 700 number. Unfortunately for millennials, they haven't had that kind of time. Millennials are also less likely to want credit cards and large financial obligations, which further hampers their ability to build credit.</p> <p>Indeed, the 2008 crash, coupled with the increase of student loan debt, has made many millennials wary of getting into any kind of debt at all. But employers these days are getting thorough on background checks, and a low or nonexistent credit score can be a black mark against a candidate. (See also: <a href="http://www.wisebread.com/best-credit-cards-for-millennials?ref=seealso" target="_blank">Best Credit Cards for Millennials</a>)</p> <h2>5. Education is no match for experience</h2> <p>There's a scene in <em>The Secret of My Success</em> that sums up this problem to a tee. Michael J. Fox's character applies for a job and says, &quot;I was trained in college to handle a job like this, so in a sense I already have experience.&quot; The interviewer replies, &quot;What you've got is college experience, not the practical hard-nosed business experience we're looking for.&quot;</p> <p>This is a problem that millennials run into often. They have an education and a few years in the field, but not enough to match the candidates that have a solid 10+ years of business experience under their belts. Plus, more and more employers are placing way more emphasis on work experience than a college degree. (See also: <a href="http://www.wisebread.com/7-things-successful-millennials-do?ref=seealso" target="_blank">7 Things Successful Millennials Do</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-job-hunting-roadblocks-millennials-must-overcome&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Job%2520Hunting%2520Roadblocks%2520Millennials%2520Must%2520Overcome.jpg&amp;description=5%20Job%20Hunting%20Roadblocks%20Millennials%20Must%20Overcome"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Job%20Hunting%20Roadblocks%20Millennials%20Must%20Overcome.jpg" alt="5 Job Hunting Roadblocks Millennials Must Overcome" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/5-job-hunting-roadblocks-millennials-must-overcome">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-17-companies-will-help-you-repay-your-student-loan">These 17 Companies Will Help You Repay Your Student Loan</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements">5 Biggest Ways Millennials Risk Their Retirements</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness">8 Ways to Get Student Loan Debt Forgiveness</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-questions-you-should-always-ask-at-the-end-of-a-job-interview">15 Questions You Should Always Ask at the End of a Job Interview</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-body-language-mistakes-that-sabotage-most-interviews">10 Body Language Mistakes That Sabotage Most Interviews</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Job Hunting challenges discrimination education job interviews millennials roadblocks student loans technology young adults Wed, 11 Oct 2017 08:30:11 +0000 Paul Michael 2034468 at http://www.wisebread.com How Your Bad Credit Can Impact Your Kids http://www.wisebread.com/how-your-bad-credit-can-impact-your-kids <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-your-bad-credit-can-impact-your-kids" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/working_at_home.jpg" alt="Working at home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>This is not about laying the guilt on you as a parent (there's already plenty of that to go around). However, you need to know that bad credit not only impacts your financial situation, but can also have long-term effects on your kids. Here's what you need to know.</p> <h2>It could keep them from getting a student loan</h2> <p>Co-signing a student loan should not be the default decision in helping your child afford college. Co-signing can cause serious financial problems for you down the line if your child cannot afford to make the loan payments. However, if you do decide you want to help your child apply for a student loan by co-signing, a poor credit score could prevent you from doing so. Your negative credit history will come up in the loan application and can cause it to be denied.</p> <p>Being unable to get a student loan means that your child may have to choose from limited educational options. Is that the end of the world? No, of course not. But certain career tracks depend on specific educational programs, and limited college options can make that difficult.</p> <p>Federal student loans, however, are still an option for your child even if you have poor credit. The Perkins loan and the Stafford loan, for example, have fixed interest rates and don't depend on credit history to determine eligibility.</p> <h2>It could make it more difficult for them to establish a credit history</h2> <p>College is often the time when young adults start establishing their own, independent credit history. That seems like no problem, until you realize that &quot;independent credit history&quot; isn't so independent at first.</p> <p>In fact, many credit card companies require a co-signer on a card if the primary applicant is under 21 years of age. That means that if you want to co-sign on a card to help your child start building credit, your own bad credit can cause your child's application to be denied. Keeping your kid out of credit card debt is great, but well-managed use of a credit card is often a great way to start establishing credit history. It's tough to get credit for a bigger purchase when there's no credit history to check.</p> <p>A <a href="http://www.wisebread.com/5-best-secured-cards-with-no-annual-fee?ref=internal" target="_blank">secured credit card</a> may be a good alternative, but keep a careful eye on hidden fees and increasing interest rates. The key to using a secured credit card successfully is to pay it off in full each month; otherwise, the high interest rates will cost you and your child much more than it's worth to build that credit history.</p> <h2>It could teach them poor financial habits</h2> <p>If your bad credit is a result of poor financial habits, you may have passed those &mdash; and a bad attitude toward money in general &mdash; on to your kids. (See also: <a href="http://www.wisebread.com/4-bad-money-habits-youre-teaching-your-kids?ref=seealso" target="_blank">4 Bad Money Habits You're Teaching Your Kids</a>)</p> <p>If they haven't learned from you how to budget, how to save, and how to plan for the future, they probably don't know how to do it. And if you're not showing them how to handle financial stress in a healthy way, or communicate with each other about financial issues, chances are they won't learn how.</p> <p>The great news is that you can all learn together, starting now. A poor financial past does not have to mean a poor financial future. You can change your habits and your attitudes, and there's help available to do so. Start with financial counseling to figure out how you (and your kids) can build better financial habits for today and for the future.</p> <h2>It could prevent them from accessing opportunities</h2> <p>There are often special extracurricular activities, such as field trips, tutoring, music lessons, and more, which come with a hefty price tag. Many parents can't afford these expenses outright, but can use a credit card or other loan option to pay for the expense and then pay that debt off within a few months.</p> <p>Poor credit can keep you from being able to access this payment option for these extra expenses, which means your child may have to pass on them. If your child is focused on a future that involves art, music, or sports, those missed opportunities may really matter.</p> <p>However, it's worth noting that, in general, there are inexpensive options to build a stellar academic resume. Look into free extracurricular activities such as volunteering in local communities, trading lessons for service or help, or applying for scholarships for workshops and camps. (See also: <a href="http://www.wisebread.com/save-on-school-expenses-without-ruining-your-kids-childhood?ref=seealso" target="_blank">Save on School Expenses Without Ruining Your Kid's Childhood</a>)</p> <h2>It can negatively impact their home life</h2> <p>Poor credit can have a major impact on your ability to access housing, transportation, and work. It isn't fair to be judged solely by your credit score; unfortunately, it happens.</p> <p>Poor credit might prevent you from getting a lease, which can make your living conditions unstable and bring a lot of stress into your life. You might encounter the same issues being unable to get a car loan, which means you have to rely on public transportation, rides from friends, or an old, unreliable car for getting around.</p> <p>Of course, living and transportation issues can make getting to work difficult. If your job is unstable, your income is unstable. This instability leads to more financial issues and stress, all of which can directly impact your child's life at home. It's a vicious cycle.</p> <h2>What can you do?</h2> <p>Despite the negative consequences of bad credit, there are steps you can take right now to start improving things. It's not just for you; it's also for your kids. Here's a short list to get you started.</p> <h3>Get financial counseling</h3> <p>There are resources available, such as confidential, low-fee credit counseling from nonprofit organizations. A good place to find help is through the <a href="https://www.nfcc.org/" target="_blank">National Foundation for Credit Counseling</a> and the <a href="http://fcaa.org/" target="_blank">Financial Counseling Association of America</a>. You can also ask at your local credit union and religious or nonprofit organizations. Many of these places offer free or low-cost access to financial advisers, credit counseling, and debt management. (See also: <a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt?ref=seealso" target="_blank">8 Organizations That REALLY Can Help You With Your Debt</a>)</p> <h3>Start taking steps now to deal with your bad credit</h3> <p>Don't put this off another moment longer. <a href="http://www.wisebread.com/credit-counseling-when-you-need-it-and-when-you-dont" target="_blank">Credit counseling</a>, <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money" target="_blank">debt consolidation</a>, <a href="http://www.wisebread.com/7-unnecessary-household-expenses-you-can-cut-today" target="_blank">lowering expenses</a>, and even <a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option" target="_blank">declaring bankruptcy</a> may be good options.</p> <p>Dealing with poor credit is not easy. However, you're not alone. Many people have <a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world" target="_blank">dealt with bad credit</a> and come through it stronger than ever, and you can, too. No matter how tough your financial past has been, you can build positivity for your kids by communicating, being proactive, and looking for ways forward, together.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-your-bad-credit-can-impact-your-kids&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520Your%2520Bad%2520Credit%2520Can%2520Impact%2520Your%2520Kids.jpg&amp;description=How%20Your%20Bad%20Credit%20Can%20Impact%20Your%20Kids"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20Your%20Bad%20Credit%20Can%20Impact%20Your%20Kids.jpg" alt="How Your Bad Credit Can Impact Your Kids" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/how-your-bad-credit-can-impact-your-kids">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-questions-to-answer-before-giving-your-kid-a-credit-card">4 Questions to Answer Before Giving Your Kid a Credit Card</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-financial-gifts-to-give-your-kids-this-year">6 Smart Financial Gifts to Give Your Kids This Year</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/teach-your-kids-about-money-with-their-holiday-gift-lists">Teach Your Kids About Money With Their Holiday Gift Lists</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids">Are You Ruining Your Retirement by Spoiling Your Kids?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-family-money-matters-your-kids-dont-need-to-know">9 Family Money Matters Your Kids Don&#039;t Need to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Family bad credit children co-signing credit history financial habits impact kids negative stress student loans Thu, 21 Sep 2017 08:00:06 +0000 Annie Mueller 2022638 at http://www.wisebread.com What to Do If You're Retiring With Debt http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-youre-retiring-with-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/old_couple_having_problems_with_their_home_finances.jpg" alt="Old couple having problems with their home finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For a growing number of older Americans, the golden years have been tarnished by debt. If you're retired or will be soon, and too much debt is weighing you down, here are three common sources of senior debt, along with some suggestions for breaking free.</p> <h2>1. Mortgage debt</h2> <p>One of the tenets of wise money management is to be mortgage-free by the time you retire, ridding yourself of what is likely your biggest expense as you enter what may be a lower- and fixed-income season of life. However, for a growing number of older people, that is not the case.</p> <p>According to the Federal Reserve, about 42 percent of households where the head of household is 65 to 74 years old had mortgage debt (a mortgage or home equity loan) in 2013 &mdash; up from 32 percent in 2004 and just 19 percent in 1992. Many such borrowers refinanced their mortgages in order to take advantage of low interest rates, but in doing so, reset the 15- or 30-year mortgage clock.</p> <p>What to do? If your overall housing costs, including taxes and insurance, take up more than 25 percent of your monthly gross income, consider downsizing. Reducing or eliminating your mortgage and lowering what you pay for property taxes, homeowners insurance, utilities, and maintenance could do wonders for your financial peace of mind. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>2. Student loan debt</h2> <p>Much has been made of how indebted today's college graduates are. What's less well known is that the fastest-growing segment of the population with education debt is the 60-plus crowd. Most such borrowers took out loans for their kids or grandkids via Parent PLUS loans, or they co-signed on a student loan and now find themselves responsible for the payments.</p> <p>According to the Consumer Financial Protection Bureau, the number of people age 60 or older with student loans quadrupled between 2005 and 2015 to 2.8 million.</p> <p>What to do? Look into loan consolidation or rehabilitation (if you're behind on the payments). Both are preferable to default, in which case the government could reduce your Social Security benefits in order to collect.</p> <h2>3. Credit card debt</h2> <p>The overuse of plastic isn't just something that plagues the young. According to the National Council on Aging, in 2012, nearly one-third of households headed by someone age 60 or older carried a credit card balance. Are these older households simply living beyond their means? Some probably are, but an AARP survey found that over half the older households with credit card debt put their medical care on plastic.</p> <p>What to do? If your credit card debt is unmanageable, consider contacting a local affiliate of the <a href="https://www.nfcc.org/" target="_blank">National Foundation for Credit Counseling</a>. They may be able to negotiate lower interest rates. In addition, if you haven't done so already, don't put medical bills on your credit card. Instead, see if you can work out a payment plan directly with the medical provider, which may offer more favorable terms. (See also: <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=seealso" target="_blank">The Fastest Method to Eliminate Credit Card Debt</a>)</p> <h2>Other ways to ditch your debt</h2> <p>No matter how old you are, an important key to getting out of debt is margin &mdash; creating a gap between your income and expenses so you've got the money to make extra payments on your debts. There are only two sides to the margin equation: income and expenses.</p> <h3>Increase income by picking up a part-time job</h3> <p>By definition, retirement means not working anymore, so the idea of going back to work may not fill your heart with joy. However, even a temporary part-time job can make a big difference in how quickly you get out of debt. (See also: <a href="http://www.wisebread.com/6-great-retirement-jobs?ref=seealso" target="_blank">6 Great Retirement Jobs</a>)</p> <p>Start thinking of where you could work. How about consulting with your former employer, hanging out a shingle as a sole proprietor, or simply picking up some hours at a local retailer?</p> <p>Keep in mind that if you started claiming Social Security benefits before your normal retirement age, earning too much from a part-time job may reduce those benefits. Learn more on the <a href="https://www.ssa.gov/oact/cola/rtea.html" target="_blank">Social Security Administration's website</a>.</p> <h3>Decrease expenses by taking your kids off the payroll</h3> <p>It's common for parents to help their adult children with everything from health insurance premiums to cellphone bills. According to a Merrill Lynch study, nearly 70 percent of people age 55 or older with adult children are doing so.</p> <p>Wouldn't it be easier for you to cut them off if you realized that doing so would not only benefit you, but it would benefit them as well? That's one of the key messages in the classic book, <em>The Millionaire Next Door</em>. Authors Thomas Stanley and William Danko found that adults who receive &quot;financial outpatient care&quot; from their parents tend to become dependent on such help and end up saving and investing less than those who do not receive money from their parents. (See also: <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids?ref=seealso" target="_blank">Are You Ruining Your Retirement by Spoiling Your Kids?</a>)</p> <h2>There's plenty of time to retire debt</h2> <p>It may be discouraging to find yourself buried in bills at a time of life when you had hoped to slow down and enjoy the fruit of all your years of labor. However, increases in longevity mean you probably still have plenty of time to reap those rewards. What'll make all the difference is how quickly you implement the ideas mentioned above.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhat-to-do-if-youre-retiring-with-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520to%2520Do%2520If%2520You%2527re%2520Retiring%2520With%2520Debt.jpg&amp;description=What%20to%20Do%20If%20You're%20Retiring%20With%20Debt"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/What%20to%20Do%20If%20You%27re%20Retiring%20With%20Debt.jpg" alt="What To Do If You're Retiring With Debt" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-of-the-fastest-ways-to-go-broke-in-retirement">4 of the Fastest Ways to Go Broke in Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-red-flags-that-your-retirement-plan-may-be-off-track">4 Red Flags That Your Retirement Plan May Be Off Track</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">How One Couple Paid Off $147k of Debt (Even While Unemployed)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/depressed-it-could-be-your-debt">Depressed? It Could Be Your Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Retirement adult children co-signed credit card debt expenses giving money increasing income kids mortgages student loans Tue, 19 Sep 2017 08:00:07 +0000 Matt Bell 2021474 at http://www.wisebread.com 4 Red Flags That Your Retirement Plan May Be Off Track http://www.wisebread.com/4-red-flags-that-your-retirement-plan-may-be-off-track <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-red-flags-that-your-retirement-plan-may-be-off-track" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_and_house_model_for_finance_and_banking_concept.jpg" alt="Piggy bank and house model for finance and banking concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're 55 or 60 years old, the end of your working days may be in sight. After all, most people retire somewhere around age 65, so you may assume you will also. But how prepared are you?</p> <p>Take a look at the following potential <em>unpreparedness </em>indicators. After reviewing them, if you don't see any concerns, you may, indeed, be headed down the right path toward retirement. However, if you <em>do</em>, it'll be far better to address them now while you're still gainfully employed. (See also: <a href="http://www.wisebread.com/5-financial-moves-you-should-make-five-years-before-retirement?ref=seealso" target="_blank">5 Financial Moves You Should Make Five Years Before Retirement</a>)</p> <h2>1. You haven't run the numbers</h2> <p>Ignorance may be bliss when it comes to the latest neighborhood gossip, but not when it comes to preparing for retirement. Now is the time to estimate your post-career income and expenses.</p> <p>Start with your anticipated monthly expenses. Some of your outgo categories may disappear in retirement, such as contributions to your retirement plan, commuting, and other job expenses. Others may at least decline, such as how much you spend on clothing. (See also: <a href="http://www.wisebread.com/how-much-can-you-afford-to-spend-in-retirement?ref=seealso" target="_blank">How Much Can You Afford to Spend in Retirement?</a>)</p> <p>However, some expenses might actually go up, at least temporarily. Many retirees find that they spend more on travel and entertainment initially, but less as they get older.</p> <p>Next, add up the monthly income you expect to receive. How much is your Social Security benefit likely to be? Find out through the <a href="https://www.ssa.gov/oact/quickcalc/" target="_blank">Social Security Administration's estimator</a>. How much are you likely to have in your retirement account by the time you retire? The <a href="https://www.fidelity.com/calculators-tools/fidelity-retirement-score-tool" target="_blank">Fidelity Retirement Score</a> calculator will give you a ballpark idea.</p> <p>What's a conservative estimate for how much you could withdraw from your retirement nest egg each month? One popular rule of thumb is that you should be able to safely take 4 percent of the balance each year without having to worry about running out of money.</p> <p>What other sources of income will you have?</p> <p>Planning future income and expenses isn't a perfect science, but running some estimates may help you avoid unpleasant surprises. (See also: <a href="http://www.wisebread.com/9-unexpected-expenses-for-retirees-and-how-to-manage-them?ref=seealso" target="_blank">9 Unexpected Expenses for Retirees &mdash; And How to Manage Them</a>)</p> <h2>2. You haven't saved enough</h2> <p>One of the most unpleasant facts you may discover by taking the step above is that you <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement?ref=internal" target="_blank">haven't saved enough</a>. According to the Employee Benefit Research Institute, almost half of workers ages 55 or older have less than $100,000 set aside for retirement. That won't go very far.</p> <p>Let's say you're in better financial shape and are on target to have a $250,000 nest egg by the time you retire. Using the 4 percent rule mentioned above, even that amount will allow you to withdraw just $833 per month. (See also: <a href="http://www.wisebread.com/4-retirement-rules-of-thumb-that-actually-work?ref=seealso" target="_blank">4 Retirement &quot;Rules of Thumb&quot; That Actually Work</a>)</p> <p>What to do? Plan to stay on the job longer. Doing so will increase your Social Security benefits (when I checked my benefits, I found that waiting until age 70 would boost my monthly benefit amount by 28 percent vs. taking benefits beginning at age 67). Plus, that will give you more time to build a larger retirement nest egg. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>3. You still have a mortgage</h2> <p>For most people, a mortgage is their biggest monthly expense. Making sure your mortgage is retired by the time <em>you</em> retire is ideal. However, a growing number of older homeowners are bringing mortgages into their retirements. Many of them refinanced into a lower interest rate in recent years, but reset their 15- or 30-year mortgage clock in the process. If that's you, here are some options to consider:</p> <p>If you're planning to move after you retire, and especially if you'll be able to downsize into a home you could buy outright with the equity in your current home, no problem. (See also: <a href="http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month?ref=seealso" target="_blank">5 Countries Where You Can Retire for $1,000 a Month</a>)</p> <p>If you're planning to stay put, you might consider paying extra on your mortgage in order to wipe it out by the time you retire. But you'll have to weigh that against the potentially better benefits of using that money for added contributions to your retirement plan.</p> <p>Keep in mind that this isn't a strictly mathematical exercise. Many people argue that it would be more profitable to invest more through your workplace retirement plan than accelerate payments on a low-interest mortgage. However, you may decide that the emotional benefit of being out from under your mortgage is more valuable. (See also: <a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement?ref=seealso" target="_blank">Is it Safe to Re-Finance Your Home Close to Retirement?</a>)</p> <h2>4. You still have student loan debt</h2> <p>A surprising number of older people have education debt, usually because they co-signed on a loan for a child or grandchild who is unable to make the payments or because they took out a Parent PLUS loan. If that's you, consider consolidating your loans to a lower interest rate (you can even &quot;consolidate&quot; a single loan). Then put your loan payoff on a faster track by paying more than the required amount each month.</p> <p>This list isn't meant to discourage you; it's meant to help you prepare to retire <em>successfully</em>. Where else do you need to shore up your retirement plan?</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-red-flags-that-your-retirement-plan-may-be-off-track&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Red%2520Flags%2520That%2520Your%2520Retirement%2520Plan%2520May%2520Be%2520Off%2520Track.png&amp;description=4%20Red%20Flags%20That%20Your%20Retirement%20Plan%20May%20Be%20Off%20Track"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Red%20Flags%20That%20Your%20Retirement%20Plan%20May%20Be%20Off%20Track.png" alt="4 Red Flags That Your Retirement Plan May Be Off Track" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/4-red-flags-that-your-retirement-plan-may-be-off-track">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt">What to Do If You&#039;re Retiring With Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings">Why Your Daily Latte Won&#039;t Sink Your Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement expenses mortgages owing money preparedness red flags saving money student loans unprepared Thu, 31 Aug 2017 08:00:07 +0000 Matt Bell 2012369 at http://www.wisebread.com 7 Money Moves Every New College Student Should Make http://www.wisebread.com/7-money-moves-every-new-college-student-should-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-money-moves-every-new-college-student-should-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cute_college_student_walking_around_campus_on_sunny_day.jpg" alt="Cute college student walking around campus on sunny day" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>College is about more than just getting a degree. For many new college students, starting this phase of education is also a time to learn any number of important life skills, from proper laundry care to time management.</p> <p>However, many college students often overlook one important life skill: money management. As a college student, you might assume that money management isn't important, since you've got so little money to manage.</p> <p>Unfortunately, neglecting your money skills in college could have lasting negative repercussions throughout your adult life. Rather than assuming you'll sort out the money stuff &quot;later,&quot; get off on the right financial foot by following these money moves when you start your college career.</p> <h2>1. Open a student checking account</h2> <p>Your brand-new university ID makes you eligible for student checking accounts. This gives you a good home for your money while you're in school, and helps you develop good banking habits.</p> <p>Student checking accounts often have low or no minimum opening deposits, and they also generally do not require you to carry a minimum balance each month. In addition, some student accounts offer perks like a limited number of free out-of-network ATM transactions per month, free checks, and some overdraft forgiveness.</p> <h2>2. Start automating your bills</h2> <p>Once you have a checking account in place, you can take advantage of your bank's online bill paying services to set up automatic payments of your regular expenses. Automatic bill payment allows you to keep your focus on your studies, where it belongs.</p> <p>Of course, the caveat is that you need to periodically make sure your account has enough money to cover your automatically paid bills. One good way to do this is to set up a weekly reminder to check your finances. This will help you establish the habit of keeping an eye on your finances even as they are taken care of automatically.</p> <h2>3. Create a spending plan for your financial aid</h2> <p>Receiving a big chunk of money from your university's financial aid office can be pretty exciting &mdash; whether you're receiving loans you'll have to pay back, or grants that you won't. It's tempting to live it up when you receive your financial aid, but that's a good way to run out of money before the semester is over.</p> <p>Instead, take the time to create a spending plan for your financial aid disbursement before the money hits your bank account. Determine how much of your financial aid will need to go toward tuition, textbooks, lab fees, and living expenses. Having such a plan in place will help you keep your spending in check when you feel the urge to splurge some of your aid money.</p> <h2>5. Keep track of your student loans</h2> <p>Many college students &mdash; including yours truly! &mdash; make the mistake of paying no attention to their student loans until they have graduated. In general, the amount of money you are borrowing can seem unreal, so it's very easy to just ignore the problem until you reach your student loan exit interview just before graduation.</p> <p>However, knowing early how much you owe and how much it will cost you to pay it off is both good for your financial health and can help you remain motivated in your studies. It's much easier to get up for that 8 a.m. chemistry lab when you understand just how much you're paying for the privilege of going to it.</p> <p>If you have federal student loans, you can keep track of how much you have borrowed and what your repayment options will be through the <a href="https://www.nslds.ed.gov/nslds/nslds_SA/" target="_blank">National Student Loan Data System</a>. Just select &quot;Financial Aid Review,&quot; log in, and you can view all of your federal student loans in one place. If you have any private student loans, you will need to contact your lender for information regarding your loans.</p> <h2>6. Build up an emergency fund</h2> <p>When I was in college, a classmate's financial aid package was re-evaluated at the end of her first year. The school's financial aid office decided that she could count on an additional $1,500 from her family for her second year, even though she knew that it would be impossible to ask for that additional money. By working some serious overtime that summer and living off tuna fish and ramen, my classmate was able to scrape together the additional money. But this situation could have potentially meant the difference between her returning to school and her dropping out.</p> <p>An emergency fund can make this kind of unanticipated financial change much less stressful than it was for my classmate, especially when you are already living on a shoestring.</p> <p><a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund" target="_blank">Building an emergency fund</a> might feel impossible when you're in college, but don't forget that small amounts can add up to something really helpful. Start with an automatic transfer of $5 &mdash;$10 per week into a savings account. Add in whatever excess money you come across &mdash; including the cash you get for selling back textbooks or some of the birthday money Nana sends every year.</p> <p>Though your fund will grow slowly, working steadily on it will ensure that a financial aid (or other emergency) does not jeopardize your education.</p> <h2>7. Learn from your financial fumbles</h2> <p>Every time you make a financial decision as a college student, you have the opportunity to learn from your choices. The trick to learning from financial mistakes rather than repeating them, is to look back on the choices you made with curiosity and compassion for yourself. You're a college student, after all, and learning is the entire job description.</p> <p>Take each moment of money regret as an opportunity to figure out where your financial weaknesses are. You'll finish college with a much better understand of yourself and your money temptations, as well as potential solutions for avoiding those temptations.</p> <h2>Learn about finances before you enter the real world</h2> <p>It may feel like adding financial responsibility on top of your educational requirements will be too much to handle, but college is actually a great time to work on your money management skills. Taking good care of your finances as you are engaging in higher learning sets you up for financial success after graduation.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-money-moves-every-new-college-student-should-make&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Money%2520Moves%2520Every%2520New%2520College%2520Student%2520Should%2520Make.jpg&amp;description=7%20Money%20Moves%20Every%20New%20College%20Student%20Should%20Make"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Money%20Moves%20Every%20New%20College%20Student%20Should%20Make.jpg" alt="7 Money Moves Every New College Student Should Make" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-moves-to-make-the-moment-you-graduate">5 Money Moves to Make the Moment You Graduate</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/css-is-one-source-of-college-financial-aid-you-cant-afford-to-overlook">CSS Is One Source of College Financial Aid You Can&#039;t Afford to Overlook</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-make-the-most-of-your-student-loan-grace-period">4 Ways to Make the Most of Your Student Loan Grace Period</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-financial-aid-might-not-cover">6 Things Financial Aid Might Not Cover</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-borrow-student-loan-money-from-amazon-prime">Should You Borrow Student Loan Money From Amazon Prime?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training automatic payments bills checking accounts college emergency funds financial aid money moves savings student loans students Tue, 29 Aug 2017 09:00:05 +0000 Emily Guy Birken 2009181 at http://www.wisebread.com 5 Monthly Bills That Vary Based on Your Credit Behavior http://www.wisebread.com/5-monthly-bills-that-vary-based-on-your-credit-behavior <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-monthly-bills-that-vary-based-on-your-credit-behavior" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_screaming_papers_599701902.jpg" alt="Man&#039;s bills varying based on credit behavior" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your credit score is one of the most important numbers in your financial life. Because it incorporates data about your past behavior with credit &mdash; how much credit and debt you have and how good you are at paying those bills off &mdash; it's deemed as a good predictor of how you'll behave with future bills.</p> <p>A <a href="http://www.wisebread.com/what-does-your-credit-score-mean-good-bad-or-excellent" target="_blank">low credit score</a> can hurt you in many ways: It makes it more difficult to qualify for mortgages, car loans, or credit cards. And when you do qualify for a loan or credit card, you'll be stuck with higher interest rates and the higher monthly payments that come with them. Poor credit behavior can also cost you money each month in the form of higher student loan and insurance payments. (See also: <a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you?ref=seealso" target="_blank">15 Surprising Ways Bad Credit Can Hurt You</a>)</p> <p>Most lenders today still consider a credit score of 740 or higher to be a strong one. Anything at 640 or lower, though, is considered weak.</p> <p>Here's a look at five monthly bills that you'll pay more for if your credit score is low.</p> <h2>1. Mortgage payment</h2> <p>Your credit score has a big impact on your mortgage payment. If your score is high, odds are good that you'll qualify for a lower interest rate, which will, in turn, lower your monthly mortgage payment. If your score is low, the opposite will happen.</p> <p>Here's an example of the difference that a high or low interest rate can have on your monthly mortgage payment: If you take out a 30-year, fixed-rate mortgage loan of $200,000 at an interest rate of 3.80 percent, you'll have a monthly payment of about $931, not counting what you might pay for homeowners insurance and property taxes.</p> <p>If you take out that same loan with a higher interest rate of 4.80 percent &mdash; which you may have gotten due to a low credit score &mdash; your monthly payment, again not counting taxes and insurance, will be about $1,049. That's $118 more a month, or about $1,416 a year. (See also: <a href="http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment?ref=seealso" target="_blank">4 Smart Ways to Lower Your Monthly Mortgage Payment</a>)</p> <h2>2. Auto loans</h2> <p>You'll face the same situation when applying for an auto loan with a lower credit score. Auto lenders, like mortgage lenders, rely heavily on your credit score. If they see a low score, they'll protect themselves financially by charging you a higher interest rate. This higher rate will result in a higher monthly payment.</p> <p>The higher rates make sense if you look at your loan from your lender's point of view. A lower credit score means you have a history of making bad financial choices, whether that means paying bills late or missing them entirely. Lenders then levy a higher interest rate to make up for the danger of lending to riskier borrowers.</p> <h2>3. Credit cards</h2> <p>Interest rates on credit cards can be high &mdash; 20 percent or higher in some cases. But if your credit score is high, you'll increase your chances of qualifying for a lower rate on your cards. This is important: If you carry a balance on your cards each month, a lower interest rate will mean a lower required minimum monthly payment. It also means your debt will grow at a slower rate.</p> <p>How you use credit cards has a big impact on your credit score. If you always pay your cards on time, and if you don't run up too much debt on them, you will steadily boost your score. (See also: <a href="http://www.wisebread.com/how-to-pay-less-interest-on-your-credit-card-debt?ref=seealso" target="_blank">How to Pay Less Interest on Your Credit Card Debt</a>)</p> <h2>4. Student loans</h2> <p>There are two types of student loans: federal and private. Your credit score won't affect your interest rate on federal loans. But lenders originating private student loans will look at your credit score. If your score is low, they'll charge you higher interest rates and fees. This will result in a higher monthly student loan payment.</p> <h2>5. Homeowners insurance</h2> <p>Insurance companies don't rely on your credit score to set your homeowners insurance rates. They do, however, use a similar metric known as an insurance score. This score includes information about your past payment history, your debts, and your number of open credit accounts, just like your credit score. It can also include information about any safety features &mdash; such as fire alarms and security systems &mdash; protecting your home and whether you've made a high number of insurance claims in the past.</p> <p>If your insurance score is high, you'll qualify for a lower insurance bill. If that score is low, you can expect to pay more for your homeowners insurance.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-monthly-bills-that-vary-based-on-your-credit-behavior&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Monthly%2520Bills%2520That%2520Vary%2520Based%2520on%2520Your%2520Credit%2520Behavior.jpg&amp;description=5%20Monthly%20Bills%20That%20Vary%20Based%20on%20Your%20Credit%20Behavior"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Monthly%20Bills%20That%20Vary%20Based%20on%20Your%20Credit%20Behavior.jpg" alt="5 Monthly Bills That Vary Based on Your Credit Behavior" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-monthly-bills-that-vary-based-on-your-credit-behavior">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-need-to-know-the-difference-between-secured-and-unsecured-debts">Why You Need to Know the Difference Between Secured and Unsecured Debts</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-youve-signed-up-for-a-terrible-loan-or-credit-card">What to Do if You&#039;ve Signed Up for a Terrible Loan or Credit Card</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-good-credit-is-better-than-a-boyfriend">6 Ways Good Credit Is Better Than a Boyfriend</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-your-credit-report-does-not-include">7 Things Your Credit Report Does NOT Include</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/pay-these-6-bills-first-when-money-is-tight">Pay These 6 Bills First When Money Is Tight</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance auto loans bills credit score fico homeowners insurance interest rates mortgages payments student loans Tue, 01 Aug 2017 07:47:46 +0000 Dan Rafter 1990977 at http://www.wisebread.com It's Now Easier to Get a Home Loan Even If You Have Student Loan Debt — Should You? http://www.wisebread.com/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_and_keys.jpg" alt="House and keys" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loan debt has snowballed to the point where many young people are delaying the purchase of a home. On one hand, it's hard to save up for a down payment when you're already $37,172 in debt &mdash; the average for class of 2016 graduates. On the other hand, student loan debt can make it hard to qualify for a mortgage at all.</p> <p>Fannie Mae, the nation's largest purchaser and guarantor of mortgages, recently addressed the second problem by changing two key rules for borrowers. Because Fannie Mae buys mortgages from about 1,800 lenders that follow its rules, these changes at Fannie Mae affect potential home loan borrowers all over the country.</p> <h2>Debt that someone else is paying off no longer counts against you</h2> <p>For example, your parents or your employer might be making your student loan payments. In the past, a lender would still count those payments as part of your <a href="http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application" target="_blank">debt-to-income ratio</a>, a key figure used to determine whether you can afford to make mortgage payments. But now, Fannie Mae will recognize that if you're not the one paying the bill, that loan won't actually affect your ability to pay your mortgage.</p> <p>This new rule will also apply to other kinds of debt that someone else is paying for you, such as car loans or credit card balances. To qualify, you'll need to provide documentation showing that someone else has made payments on the debt for the past 12 months.</p> <h2>Flexible payment plans are recognized</h2> <p>One of the benefits of carrying a federal student loan is that you may qualify for an income-based repayment program, lowering your monthly obligation to a certain percent of your available income. This is great &mdash; until you apply for a mortgage and find out that Fannie Mae uses the standard payment amount, not the lower amount you're actually paying, to determine your debt-to-income ratio.</p> <p>From now on, lenders working with Fannie Mae can instead use the lower, flexible payment amount &mdash; meaning that more applicants with student debt will qualify to buy a home.</p> <p>With these two changes, many more young people will qualify to buy homes &mdash; a change that is probably good for the economy and the housing market. But is it a good idea for<em> you</em>? Some questions for graduates who will be affected by the Fannie Mae decisions &mdash; and for other student loan borrowers &mdash; to ask.</p> <h2>What would you do if you had to take over your own student debt payments?</h2> <p>For people who have their loans paid by employers or others, investing in a nice house may seem like a no brainer. Say you're a young doctor practicing at a hospital that covers student loan payments as part of its compensation package. Great! You are able to buy a four-bedroom home with a swimming pool.</p> <p>But then the hospital files for bankruptcy and you are let go. You can get another local position with a private practice, but it won't pay for your student loans. Will you be able to pay your new mortgage and student loans at the same time?</p> <h2>What if the government changes student debt repayment rules?</h2> <p>If your income is already so limited that you qualify for a modified loan repayment plan, it's worth pondering whether buying a home is the right move at this stage in your life. Congress could decide to end that program in order to save money. Think about if and how you could make a standard debt payment and a mortgage payment if the rules change.</p> <h2>Do you have enough saved for a down payment?</h2> <p>It used to be that buyers routinely plunked down 20 percent of a home's value upfront. Nowadays, most buyers make down payments of between 5 percent and 10 percent. If you've been making large student loan payments, you may not have this money saved up. (See also: <a href="http://www.wisebread.com/4-easy-ways-to-start-saving-for-a-down-payment-on-a-home" target="_blank">4 Easy Ways to Start Saving for a House Down Payment</a>)</p> <h2>Will you be able to afford maintenance?</h2> <p>When working out your hypothetical budget as a homeowner, don't stop after accounting for your student loan payments and the mortgage. You need to set aside money for things that break and systems that wear out, from the doorbell to the roof. You never know when something is going to need replacing, but a rule of thumb is to budget 1 percent of a home's value for maintenance each year. So if you plan to buy a $200,000 home, make sure you can afford to set aside $2,000 annually for repairs.</p> <h2>How will you handle a financial emergency?</h2> <p>A financial emergency can be bad enough if you're renting and are forced to break your lease and move somewhere cheaper. But once you're committed to owning a home, a loss of income could mean losing the home as well. And homeowners with hefty student loan debt are that much more vulnerable.</p> <p>Before you sign that purchase contract, it's a good idea to have several months of mortgage payments in an emergency fund. If you <a href="http://www.wisebread.com/where-to-turn-for-help-when-you-dont-have-an-emergency-fund" target="_blank">don't have an emergency fund</a>, at least have a plan for how you would pay the mortgage if you lose your job. Could you turn to a relative for support? Could you advertise for roommates? Sell your car?</p> <p>Taken altogether, it's clear that there is no one-size-fits-all answer to whether you should buy a house before your student loans are paid off. Homeownership comes with a lot of benefits, such as the mortgage interest tax deduction, so it may not be something you want to put off for the years it could take to pay off the student loans.</p> <p>But rushing into homeownership before you have a stable income and emergency reserves would be a mistake for anyone &mdash; and that much more so for folks with heavy student debt.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fits-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FIt%2527s%2520Now%2520Easier%2520to%2520Get%2520a%2520Home%2520Loan%2520Even%2520If%2520You%2520Have%2520Student%2520Loan%2520Debt%2520%25E2%2580%2594%2520Should%2520You-.jpg&amp;description=It's%20Now%20Easier%20to%20Get%20a%20Home%20Loan%20Even%20If%20You%20Have%20Student%20Loan%20Debt%20%E2%80%94%20Should%20You%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/It%27s%20Now%20Easier%20to%20Get%20a%20Home%20Loan%20Even%20If%20You%20Have%20Student%20Loan%20Debt%20%E2%80%94%20Should%20You-.jpg" alt="It's Now Easier to Get a Home Loan Even If You Have Student Loan Debt &mdash; Should You?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application">3 Ways Student Loan Debt Can Affect Your Mortgage Application</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-you-really-need-a-20-percent-down-payment-for-a-house">Do You Really Need a 20 Percent Down Payment for a House?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/weak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards">Weak Credit? You Can Still Get a Mortgage Despite Tough Lending Standards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Real Estate and Housing debt payments debt to income ratio down payments emergency funds fannie mae flexible payment plans home loans mortgages rule changes student loans Mon, 31 Jul 2017 08:30:04 +0000 Carrie Kirby 1981838 at http://www.wisebread.com 6 Questions to Ask Before Taking Out Student Loans http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-questions-to-ask-before-taking-out-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_saving_education_coins.jpg" alt="Woman saving education coins" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Americans are more burdened by student loan debt than ever, with the average graduate in their 20s making $351 a month in student loan payments. Suggested changes to the federal student loan program could have even more college students questioning just how much student loan debt they want or can afford.</p> <p>As part of its overall budget plan, the Trump administration would like to eliminate current provisions in which the government pays the interest on student loans taken out by low-income students while the borrower is still in school and for six months after graduation.</p> <p>The Trump administration is also proposing to end the Public Service Loan Forgiveness program. This program allows borrowers who go on to work for the government or for nonprofits to have the remainder of their federal student loans forgiven after they make 10 years of payments.</p> <p>Even though these potential changes might never be signed into law, just the possibility of such changes makes it even more important for students to ask the right questions before they take out federal or private student loans.</p> <p>Here are six questions you should ask before signing up for any student loan.</p> <h2>1. Have you considered all education options?</h2> <p>Your first-choice school might be the most expensive university on your list. You might be able to reduce the amount of money you borrow each year by choosing a less costly option.</p> <p>Instead of attending a private college, you might investigate a public university. Instead of going to an out-of-state school, you might consider going to school in-state, which comes with lower tuition. You could also attend a community college for two years before transferring to a private or public university for the remainder of your college years. These choices could reduce the amount of student loan debt you'll have to take on.</p> <h2>2. Can you cut out room and board?</h2> <p>The College Board reported that the average yearly cost of room and board at a public four-year university stood at $10,440 during the 2016&ndash;2017 academic year. You can save that expense if you attend a college that allows you to live at home while taking classes.</p> <p>Yes, you will lose out on some of the traditional college experience. But taking on less student loan debt might be an acceptable trade-off.</p> <h2>3. Are you borrowing too much for your potential future income?</h2> <p>Certain careers pay more than others. You need to remember this when applying for student loans. You don't want to take on huge debts if you expect to make $40,000 a year when you graduate. But taking on larger amounts of debt might be a solid financial choice if you are working toward a higher-paying degree.</p> <h2>4. How big of a student loan payment are you willing to make once you're working?</h2> <p>Borrowing money might seem easy when you're still in school. After all, you're probably not making payments on these loans yet. But once you're out in the working world, that student loan debt won't seem so benign.</p> <p>You will have to make payments each month. And these payments will come in addition to rent, car payments and, eventually, mortgage payments. Student loan payments become a huge financial burden to many. Before borrowing today, you need to consider how comfortable you'll be making those payments in the future.</p> <h2>5. Are there other types of financial aid available?</h2> <p>Before applying for a student loan, make sure you explore all financial aid options with your high school counselor, or the university you plan to attend. Many universities offer merit scholarships to incoming students. You usually don't have to apply for these scholarships. Schools automatically provide them, usually based on your academic performance. Even if you've been offered one, you might be able to persuade your university to provide you with a larger merit scholarship, especially if you are worried that you won't be able to afford the yearly tuition without financial help.</p> <p>There are other types of scholarships, too, that you should investigate. The U.S. Department of Education says that there are several ways for college students to search for scholarships and grants. They should first speak with the financial aid office at the college they are attending. These professionals often have tips for hunting down scholarship and grant money.</p> <p>They can also use the free online <a href="http://www.careeronestop.org/toolkit/training/find-scholarships.aspx" target="_blank">scholarship finder</a> offered by the Department of Education. The department also offers an online list of <a href="https://www2.ed.gov/about/contacts/state/index.html" target="_blank">state grant agencies</a> that students can search to find scholarships and grants in their states.</p> <p>Call your school's financial aid office to discuss options such as work-study programs and possible additional financial help.</p> <h2>6. Can you get by without private loans?</h2> <p>Even if you get grants and scholarships, you may still need student loans. There are two types of student loans to consider: Federal loans offered through the federal government or private loans offered by private lenders. Federal loans are preferable because they usually come with lower interest rates and more flexible repayment programs. Federal loans also provide more options if, after graduating, you find yourself struggling to make payments, including deferment and eventual forgiveness programs.</p> <p>It's far better to rely as much as possible on federal subsidized or unsubsidized student loans. The challenge is that these federal loans have limits; you can only borrow so much each school year.</p> <p>Your school might also offer its own lower-interest loans that would be cheaper than private loans. But if these options still aren't enough, you'll have to determine whether taking out less attractive private student loans to attend college is worthwhile. It might be the only option.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-questions-to-ask-before-taking-out-student-loans&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Questions%2520to%2520Ask%2520Before%2520Taking%2520Out%2520Student%2520Loans.jpg&amp;description=6%20Questions%20to%20Ask%20Before%20Taking%20Out%20Student%20Loans"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Questions%20to%20Ask%20Before%20Taking%20Out%20Student%20Loans.jpg" alt="6 Questions to Ask Before Taking Out Student Loans" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-save-for-college-using-a-529-prepaid-tuition-plan">Should You Save for College Using a 529 Prepaid Tuition Plan?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college">The Encouraging Truth About How Americans Are Covering the Cost of College</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-make-the-most-of-your-student-loan-grace-period">4 Ways to Make the Most of Your Student Loan Grace Period</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-borrow-student-loan-money-from-amazon-prime">Should You Borrow Student Loan Money From Amazon Prime?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training college debt repayment federal loans higher education private loans scholarships student debt student loans trump tuition Tue, 18 Jul 2017 08:00:08 +0000 Dan Rafter 1983760 at http://www.wisebread.com These 17 Companies Will Help You Repay Your Student Loan http://www.wisebread.com/these-17-companies-will-help-you-repay-your-student-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/these-17-companies-will-help-you-repay-your-student-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/saving_for_education.jpg" alt="Saving for education" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loans can dampen the ability of new grads to get on their feet financially, causing stress at home and at work. According to Student Loan Hero, the graduating class of 2016 had an average student loan balance of $37,172 &mdash; up six percent from the year before.</p> <p>While it's daunting to see that number rise, the good news is that, in an effort to recruit and retain the best hires, a growing number of employers have started programs to help employees pay back those hefty student loans. Here are a few of those companies helping workers get out of debt.</p> <h2>1. Chegg</h2> <p>In April 2015, tutoring and study services company Chegg announced its college loan reduction plan for full-time employees in partnership with Tuition.IO, a company that provides a web-based platform for tracking and managing student loan payments. This benefit has an annual cap of $1,000 (less taxes), but has no cap on the total amount an employee can receive.</p> <h2>2. ChowNow</h2> <p>ChowNow has found this perk so useful in hiring talent that the company decided to double it from when it first started offering it to employees. The Los Angeles-based online food ordering company has an employer-paid student loan assistance program that matches up to $1,000 a year of employee payments.</p> <h2>3. CommonBond</h2> <p>Since December 2015, this lending marketplace platform has been granting $100 per month to its employees to pay down student loans. While CommonBond limits the perk at $1,200 per year, the company continues helping its employees until they fully pay off their student loans. Employees also have the option to refinance their student loans with CommonBond. On average, student borrowers save over $24,000 when refinancing through CommonBond, according to the company.</p> <h2>4. Credit Suisse</h2> <p>The financial services company doesn't offer a lump sum benefit to its employees, but instead provides a 0.25 percent discount on interest rates to workers that refinance their student loans with online lender SoFi.</p> <h2>5. Connelly Partners</h2> <p>Boston-based ad agency Connelly Partners works with Gradifi to offer a student loan repayment plan that improves the longer the employee stays with the company. Like a 401(k) plan, the agency matches up to $100 per month of its employees' debt payments. Employees who stick around for at least six months receive a $1,000 student loan payment bonus. Those who work for the company for five years receive another $1,000 bonus for the sixth year.</p> <h2>6. Fidelity Investments</h2> <p>The financial services firm makes an annual $2,000 direct payment to employees' student loan servicers, up to a total of $10,000. If your career with Fidelity requires you to continue your education, then Fidelity will reimburse you 90 percent of qualifying costs (up to $10,000 per year) of a work-related degree or certification program. You must have worked for the company for at least six months to qualify.</p> <h2>7. Kronos</h2> <p>Based in Chelmsford, Massachusetts, the workforce management software provider has partnered with solutions provider Student Loan Genius to pay up to $500 per year to help employees pay down student debt.</p> <h2>8. LendEDU</h2> <p>Since February 2016, the online marketplace for student loan financing has paid $2,400 per year ($200 per month) to employees with student loan debt.</p> <h2>9. Martin Health System</h2> <p>Employees working in the nursing field at Martin Health System in Florida can receive up to $2,000 per year to help pay down their student loans. In addition to this benefit from Martin Health System, Florida nurses can also work in areas with staff shortages to qualify for the state's Nursing Student Loan Forgiveness Program or the federal Perkins Loan Cancellation for Nurses and Medical Technicians.</p> <h2>10. Moonlite Bunny Ranch</h2> <p>In 2015, Dennis Hof, the owner of the legal brothel Moonlite Bunny Ranch in Nevada, promised to match 100 percent of his employees' student loan payments for two months, up to the full amount that they made during that period.</p> <h2>11. Natixis Global Asset Management</h2> <p>All Natixis employees receive an annual $1,000 student loan repayment benefit, up to $10,000 over a 10-year period. The company used to require that workers reached five years of employment in order to receive a lump sum benefit of $5,000, but did away with the requirement in July 2016.</p> <h2>12. Nvidia</h2> <p>This computing giant offers comprehensive student loan repayment options. First, employees working at least 20 hours per week who graduated within the previous three years can apply for a reimbursement of $6,000 a year for qualifying student loan payments, up to $30,000. Second, employees who successfully refinance their student loans with SoFi receive a bonus ranging from $200 to $500 and pay no loan origination fees. Third, employees who need to go back to college can receive a reimbursement of up to $5,250 each year for qualified job-related educational expenses, including tuition and books, as long as they earn at least a B average.</p> <h2>13. Powertex</h2> <p>The clothing design company was among the first businesses in Wisconsin to partner with Gradifi to offer a student loan repayment assistance program. Powertex gives eligible employees $100 per month for student loan payments for up to six years.</p> <h2>14. PricewaterhouseCoopers (PWC)</h2> <p>Associates and senior associates at the consulting firm receive $100 per month ($1,200 a year) toward student loan payments for up to six years.</p> <h2>15. SoFi</h2> <p>Many employers partner with SoFi to offer a student loan repayment assistance program. The online lender also offers its own eligible employees $200 per month to help them fully pay back student loans.</p> <h2>16. Staples</h2> <p>The office supply retailer offers top-performing full-time employees $100 a month for three years, for a total of $3,600 in student loan assistance. To maintain their eligibility, employees must meet set criteria throughout the entire three years.</p> <h2>17. Aetna</h2> <p>As of January 2017, the health care company matches employees' student loan payments of up to $2,000 per year, with a lifetime maximum of $10,000. The program is available to employees who have graduated within the previous three years from an accredited institution.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/These%2017%20Companies%20Will%20Help%20You%20Repay%20Your%20Student%20Loan_0.jpg" alt="These 17 Companies Will Help You Repay Your Student Loan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/these-17-companies-will-help-you-repay-your-student-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness">8 Ways to Get Student Loan Debt Forgiveness</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-didn-t-learn-in-college-but-you-should-have">10 Things You Didn’t Learn in College (but You Should Have)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-stop-student-loans-from-ruining-your-life">How to Stop Student Loans From Ruining Your Life</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-you-didnt-save-for-your-childs-college">What to Do If You Didn&#039;t Save for Your Child&#039;s College</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-make-money-during-a-semester-abroad">7 Ways to Make Money During a Semester Abroad</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training Job Hunting college companies contributions education employee benefits jobs loan repayment plans student loans Thu, 22 Jun 2017 09:00:10 +0000 Damian Davila 1968233 at http://www.wisebread.com 5 Biggest Ways Millennials Risk Their Retirements http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-biggest-ways-millennials-risk-their-retirements" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/sad_man_has_spent_all_his_money.jpg" alt="Sad man has spent all his money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're stressing out about whether or not you're saving enough for retirement, you're not alone. Millennials are among those struggling the most with this dilemma. According to a 2016 study, 64 percent of working millennials believe they'll never save a $1 million nest egg.</p> <p>Why are millennials so worried? Sadly, this age group is prone to making less-than-ideal money moves that could hurt them later in life. Let's review the five biggest ways in which millennials are risking their retirement. (See also: <a href="http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement?ref=seealso" target="_blank">4 Things Millennials Should Do Today to Prepare for Retirement</a>)</p> <h2>1. Delaying the start of retirement savings</h2> <p>Nearly four in 10 millennials haven't started saving for retirement. The same 2016 survey found that 61 percent of females and 50 percent of males belonging to the millennial generation have their finances stretched &quot;too thin&quot; to save for retirement. Even worse, 54 percent of women and 43 percent of men of this generation are living paycheck to paycheck.</p> <p>However, delaying retirement contributions has a serious impact. If a worker were to deposit just $50 per month into a 401(k) with an 8 percent annual rate of return for 10 years, they would end up with around $9,200 at the end of the 10-year period. The IRS sets a cap on how much you can contribute to a retirement account per year, which for 2017, is $18,000 to a 401(k) and $5,500 to an IRA. If you keep delaying your contributions to your retirement accounts, you'll never be able to fully make up that gap.</p> <h2>2. Taking out high student loans</h2> <p>Student Loan Hero estimated the average student loan balance for a member of the Class of 2016 at $37,172, up 6 percent from the year before. With so many Americans still believing in the importance of postsecondary education, it's easy to see how the average student loan continues to climb. Studies have shown that higher education still leads to better earnings potential, after all.</p> <p>Still, loans are rising too fast. Back in 1993, only 45 percent of college graduates had a student loan and their average balance was $15,000 in inflation-adjusted dollars. By having to pay down a high student loan, millennials are foregoing sizable contributions to their retirement accounts.</p> <p>Assuming a $30,000 balance on a federal direct loan with a 4 percent interest rate, you would pay about $304 per month. That's $3,648 in missed retirement contributions every year. By the time that a millennial pays back that standard loan (10 years), they would have missed out on $54,259 in retirement savings, assuming an 8 percent annual return.</p> <h2>3. Putting their kids' college fund before their own retirement fund</h2> <p>Given the tough time that they're having paying back their own student loans, 19 percent of millennial parents say education for their children is their top financial priority, according to TD Ameritrade. Those millennial parents are socking away an average $310 every month for their children's college fund.</p> <p>Every month, these millennial parents are hit with the double whammy of paying down their own student loans and then putting money away for their children's education. No wonder millennial parents ranked saving for retirement third on their list of financial priorities. (See also: <a href="http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea?ref=seealso" target="_blank">Why Saving Too Much Money for a College Fund Is a Bad Idea</a>)</p> <h2>4. Not setting a retirement savings goal</h2> <p>If you don't know where you're going, you'll never know when you get there. According to the Employment Benefit Research Institute, across all generations, workers age 25&ndash;34 are the smallest percentage of individuals who have tried to calculate how much money they'll need to live comfortably in retirement.</p> <p>By not setting a retirement savings goal, millennials may be misjudging how much to contribute from every paycheck toward their retirement accounts. This explains the low average contribution levels per paycheck from millennial men and women &mdash; 7.3 and 5.7 percent, respectively. In 2016, 75 percent of workers age 25&ndash;34 said their total savings and investments were under $25,000.</p> <h2>5. Accepting a first-job salary offer without negotiation</h2> <p>Faced with a countdown to start paying back student loans, many millennials are so eager to start generating income they skip salary negotiations. According to a survey from NerdWallet and Looksharp, of 8,000 recent grads that entered the job market between 2012 and 2015, only 38 percent negotiated their salary offer from a new employer. The same survey revealed that 74.4 percent of employers had room for a 5 to 10 percent salary bump, 8.6 percent of them had room for a 11 to 20 percent salary bump, and 1.3 percent of them were willing or able to go above 20 percent.</p> <p>Do millennials skip negotiations over fear of having their job offer retracted? Not really: Close to nine out of 10 employers in the survey had never done such a thing.</p> <p>Failing to negotiate a starting salary is one of the biggest ways in which millennials are shortchanging their retirement. Let's crunch some numbers to see why. In 2016, The Collegiate Employment Research Institute found that the average starting salary for holders of a bachelor's degree was $41,880. Negotiating a 5 to 10 percent raise on your first-job salary offer would have yielded a starting salary ranging from $43,974 to $46,068. That would have been an extra $2,094 to $4,188 per year, enough to cover six to 13 $304 monthly payments on a $30,000 federal direct loan with a 4 percent interest rate.</p> <p>Saving for retirement may seem like a big hairy monster, but it doesn't need to be that way. By understanding what's keeping you from starting or saving enough for your retirement, you'll have a better chance of meeting your retirement saving goals. (See also: <a href="http://www.wisebread.com/how-to-face-4-ugly-truths-about-retirement-planning?ref=seealso" target="_blank">How to Face 4 Ugly Truths About Retirement Planning</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-biggest-ways-millennials-risk-their-retirements&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Biggest%2520Ways%2520Millennials%2520Risk%2520Their%2520Retirements_0.jpg&amp;description=5%20Biggest%20Ways%20Millennials%20Risk%20Their%20Retirements"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Biggest%20Ways%20Millennials%20Risk%20Their%20Retirements_0.jpg" alt="5 Biggest Ways Millennials Risk Their Retirements" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">How to Face These 7 Scary Facts About Retirement Saving</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-critical-401k-questions-you-need-to-ask-your-employer">8 Critical 401(k) Questions You Need to Ask Your Employer</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-every-retirement-saver-should-know-about-required-minimum-distributions">What Every Retirement Saver Should Know About Required Minimum Distributions</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) college funds IRA millennials not saving enough paycheck to paycheck salary negotiation savings goals student loans young adults Tue, 20 Jun 2017 08:00:11 +0000 Damian Davila 1961116 at http://www.wisebread.com