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Controlling Student Loan Payments

Student loan debt has become an epidemic of sorts. These loans can be hefty and ultimately stressful. Many young people in America are scared to even make a monthly payment on their student loans. It could seem impossible to deal with due to the enormous balance that doesn’t seem to go anywhere.

When you are young you are impressionable. Today’s millennials are no exception. Accruing student loan debt is seen as a necessary burden essential to achieving their careers. Many find themselves employed following college. However, according to CareerBuilder.com about half of college graduates in 2014 were employed in jobs that do not require a college degree.

To make things worse the student loan lenders begin hounding their “clients” immediately after graduating. If you are one of these clients you probably know by now that nothing in this world comes easier than debt. The chances of you having money to pay your student loan debts so soon is quite slim.

Before leaving high school these young, impressionable people are lead to believe a college education will lead to a guaranteed career. Turns out, it is not that simple. The Washington Post reported in 2013, according to data from Jaison Abel and Richard Dietz of the Federal Reserve Bank of New York, only 27% of college graduates had jobs related to their major. If this comes as a rude awakening to you I apologize. There is no one simple way to make your dream job come true and your student loan debts disappear. However, it takes action, commitment and it is possible.

Student loans. If reading those two words infuriates you don’t worry. It should. Paying off student loans may seem impossible but there are ways you can help yourself out. The first thing you need to do is understand what type of loan you have. Some loans are eligible for certain benefits which may assist your situation.

Check out the National Student Loan Data System (NSLD). This website is home to the U.S Department of Education’s database for student aid. Only federal student loans are eligible for this aid. In my experience I’ve talked to more individuals with federal loans than those with private ones.

A good idea for those who are unemployed or “between jobs” is deferment or forbearance. A deferment or forbearance allows you to temporarily stop making your federal student loan payments or to temporarily reduce the amount you pay. This could be helpful if you are in danger of defaulting on your loan. A default occurs when you have not made your monthly payments for an extended period of time. In the case of a default, the lender make execute legal action in order to get their money back.

If you are eligible for deferment, the federal government may pay the interest on your loans during the deferment period. The opposite goes for a forbearance. In a forbearance you may be able to lower your payments or stop payments completely for up to 12 months.

These options can give you room to breathe and pursue the career you studied so long to achieve.

There are other options available to help get your monthly payments decreased to a manageable level. There are income-based repayment plans for people with direct loans or Federal Family Education Loan (FFEL) Program loans. In an income-based repayment program your monthly payments can be reduced to 10% of your monthly income. In most cases the loan is forgiven after 25 years in these programs.

Depending on your situation, there may be a repayment plan out there that best suits you. Head over to the Federal Student Aid website and browse their listings of payment plans.

Student loan consolidation is a viable option for people with more than one student loan. If your student loans have varying interest rates and minimum monthly payments you should look into a Direct Consolidation Loan. Just like traditional consolidation, a direct consolidation loan combines multiple federal student loans into one loan with one payment and interest rate. These loans can stretch the amount of time you have to pay the loan, thus lowering your monthly payment. You will also get a fixed rate on your interest instead of dealing with variable rates.

Consolidation does have its down sides. You may be more comfortable with the monthly payments but, you will end up paying more in the long run due to the interest rate. If your individual loans had attached benefits you will lose those as well.

You may not have planned on dealing with student debt when you were leaving high school. With most people it seems to sneak up on them as soon as the leave college. No matter what your student debt situation is there are programs available to help you manage it. You deserve to focus on the future and work towards your career goals instead of worrying about monthly payments.

Choosing the Best Money Transfer Provider

If you need to send money online, then you will discover that there are so many ways in which you can be able to do all this. There are so many exchange services that can be applied to make the transfers. However, it is usually very hard to choose the correct provider for the services. You need a reliable and well-priced provider. This can be hard but in the end, you can enjoy great savings if you do take your time to make the choice. Some of the factors worth consideration include:

The fees and rates

Before choosing one, it is important that you compare the different rates of exchange. You need to know that they do fluctuate from time to time and so the quotes only work for only some minutes. This gives you a good idea about the companies that are overcharging and the ones that are very competitive. Yet others have rates that are guaranteed for a period. There are also available resources that can be used to make price comparisons.

The costs of transactions

Sometimes the exchange rate could be favorable but then, the costs per transaction may be high. This is not an ideal scenario for many. You need to consider just how much you will be charged as the commission or the transfer fees before a transfer can be effected. One way to make it less hectic is to consolidate the smaller payments into only one. This lowers costs. There are providers that have better rates and yet others waive the fees altogether when a large payment is made.

Convenience

Some of the companies offer a very easy way to signup, others take so much time. There are online providers that offer their services 24 hours a day, and seven days a week. You, however, need to see the delivery and payment methods that are offered so as to ensure that all your needs are satisfied. Check for features like mobile wallet options.

Currencies needed

Not all the companies will operate in all countries and even offer all currencies. When you have to send money to areas that are remote where currencies are not popular, you may have to deal with delays. It is important you check that the currencies that you need are actually offered before you settle for a specific provider.

How reliable and safe is the foreign exchange provider?

You need to assess the reliability of the company. Consider how long they have been in business. Consider the amount that has already been transferred and what others think about the services that they have provided so far. Security of the platform also has to be considered. This allows you to think more clearly and make the most informed decision.

Tracking the transactions

There are providers that allow you to track your transactions and create some alerts through emails. In this way, you can easily get the status of any order that has been placed. You can have some email updates sent and this helps in businesses. You lower risk of fraud this way.

Education Funding Options

As the cost of higher education continues to rise, many parents and young people struggle with how to cover the cost of college education. Costs of in state and private schools. What are your options when planning for education funding?

529 Plan- These types of plans allow you to contribute after tax dollars that grow tax free. Qualified withdrawals from the plan are not taxed when used for qualified education expenses. You can choose a savings plan that works similar to an IRA, which allows the student to attend a school of his/her choice. Or, you can choose a pre-paid plan that allows you to pre-pay part or all of the costs of an instate public college education.

Life Insurance – Some types of life insurance build cash value and also provide a death benefit. If funded properly, you can access the cash value at the time the child attends college. Keep in mind that accessing the cash value, could also affect the death benefit provided under the policy.

Student Loans- Student loans can be helpful but it is important to remember that students may have to divert funds in the future to repay loans. These are funds that could be used to be used to accomplish other financial goals. If borrowing becomes a necessity, parents could also take a home equity loan and deduct the loan interest at tax time.

Transferring Funds to Children- As of the 2017 tax year, parents and grandparents can gift up to $14,000 to each child without gift tax consequences.

Tax Credits- The American Opportunity Tax Credit and Lifetime Learning Credit are tax credits available to full time students. Household income guidelines do apply, so be sure to check the IRS website to see which option might work better for your family.

Education Savings Account- Parents, guardians, or other qualified individuals can contribute up to $2000 per year on behalf of eligible students under age 18. Withdrawals from the account are not taxable if used for qualified education expenses. All funds must be distributed within 30 days of the participant’s 30th birthday.

The cost of funding higher education can be daunting! It is important to consider many options when thinking about how to fund the cost. All of the above options are various mechanisms available to do so. It is also important to consider what types of grants might be available when selecting educational funding options.

Test Your Credit Score Knowledge

All credit active people have a profile. This is a summary of your history with every credit provider you’ve ever dealt with, and serves as a record of how well you’ve managed your accounts like loan repayments, overdue debts, how often you’ve asked for credit and the kinds of loans or credit you’ve applied for, and the frequency of your applications.

How it works?

Credit reporting providers summarise your profile into something called a credit score. The score is between 0 and 1200, where the higher the number, the more likely you are to be able to repay a loan. Lenders look at your credit profile and score to find out about your credit history and behavior, and assess if you are able to take on a new loan. This information reassures lenders that you’re good at paying money back to those you’ve borrowed from – i.e. you are a ‘low risk’ client.

A good score not only makes you more likely to get approval on your home loan application – but it also means you’ll qualify for a better interest rate. Of course, the other side of the coin is that if you have a poor score, you will be less likely to qualify for any new loans. This protects the lender and those with low scores from taking out additional loans and overextending themselves and getting into more debt. In short, you’ll need to have a good credit score rating for your home loan application to be approved.

It’s therefore a good idea to first find out what your credit score is before applying for a loan, and to give yourself time to improve it before approaching a lender.

How to check your score?

A great place to start your research is ASICs MoneySmart site. You can get a free credit score assessment from a number of online providers, which are listed on the MoneySmart site.

How to improve your score?

Improving your credit score starts with looking at your current financial situation and ways to improve it. Getting into a good credit position before you apply for a loan can help increase the likelihood of you getting approved.

You can improve your score by:

  • lowering your credit card limits
  • consolidating multiple personal loans and/or credit cards
  • limiting your credit enquiries
  • paying your rent and bills on time
  • paying your mortgage and other loans on time
  • paying your credit card off in full each month

To avoid any surprises, be prepared and know your credit score.

Exit Strategy Your Retirement Plan

According to a survey conducted by the Freelancer’s Union, 57.3 million Americans, 36% of the working population, were self-employed in 2017. The self-employed receive no employer-sponsored benefits, unless they themselves become employers and hire full-time workers, making employers and employees eligible for sponsored benefits.

Otherwise, the self-employed receive no paid sick, holiday, or vacation time and no employer co-sponsored health insurance or retirement benefits. Along with the self-employed are millions who work part-time in traditional employment and likewise receive no employer-sponsored benefits.

Let’s consider retirement, one of two benefits that workers may self-fund (along with health insurance). If finances allow you to set aside money to live on when you’re too old to work, you’d be wise to do so.

Examine your spending patterns. What are you spending on items that you want, but don’t need? I don’t recommend that you deny yourself all gratification—we deserve little luxuries every now and again—but some spending might perhaps be trimmed and those funds redirected to savings.

Budgeting a limited income is difficult. Even full-time workers under-fund their retirement accounts, despite the matching contributions. Wages have stagnated for 30 years and living expenses only increase. Many are unable to accumulate savings. Some apply what they’re able to save toward buying a home, rather than retirement. They take a different view of long-range financial planning.

According to the Economic Policy Institute, the mean retirement savings for Americans age 55 – 61 was $163,577 in 2017. Social Security payments help, but on average cover only 40% of monthly expenses. As of December 31, 2017, the average monthly payout for retirees age 62 is $1,112; retirees age 66 receive $1,383; and at age 66, retirees receive $1,578.

The retirement picture in the U.S. is a looming national emergency and a national embarrassment. Corporate governance laws enacted during the administrations of Reagan, Clinton and Bush (son) brought us globalization and the transfer of well-paying jobs to other countries and by so doing created the crisis. The ability of many citizens to earn a comfortable living through employment in benefits paying jobs has been destroyed.

The computer age has done no favors, either. So now you can play with Snapchat on your Android while on break at your $12/hour job. There is technology that’s advanced many fields. But are those advances worth the livelihood of millions? That’s a question for the ethicists.

If possible, please start a retirement account. Here are two options for Solopreneurs and part-time employees:

myRA is a starter retirement account created by the Treasury Department. There’s no charge to open an account and you decide how much to contribute each month. Automatic withdrawal contributions can be done through your bank account or paycheck.

If you change jobs, your myRA account isn’t affected. If you withdraw money from the account, there is no financial penalty. myRA is funded with after-tax income. The maximum annual myRA contribution is $5500 and $6500 for those age 50 or older. The maximum amount that can be held in a myRA is $15,000. Once the $15,000 limit has been reached (or before, for that matter), the balance can be rolled over into a traditional retirement account. https://myra.gov

Self-employed 401(k) profit sharing-plan (Solo 401[k]) is funded with pre-tax dollars. You can make contributions as both an employer (because you employ yourself) and as an employee (because you are employed by your sole proprietorship or single person LLC entity). Wearing your employer hat, one contribution can be up to 25% of annual net profit, or $33,000 ($39,000 if 50 years or older) per year. A second contribution of maximum $18,000 annually ($24,000 annually for those 50 years and older) can be made while wearing your employee hat.

Better still, it’s possible to hire your spouse as an employee under this plan and s/he can contribute in the same way as you do, meaning that your spouse can also contribute up to $53,000 ($59,000 if age 50 years or older) per year. Open your Solo 401(k) account before December 31 and make a tax-deductible contribution this year.

Students Loans Are Killing Americans

The United States government is about $20 trillion dollars in debt currently. The number is consistently climbing. With the collapse of Fannie Mae and Freddie Mac, financial institutions are more volatile than ever.

For many college graduates, student loans can feel like a financial death sentence. Child support, Taxes, Alimony, and Student loans are generally unforgivable in bankruptcy cases. So, what is a graduate to do if they cannot find a great paying job with their degree?

The good news is that there are well known options like “deferment” of payments and income based payment plans. However, many fail to realize that there are numerous grants and applications that can be used to lower your payments even further or have part of your balance forgiven.

Those who work in public service are the best candidates to have part of their loans removed. Teachers, lawyers, public defenders, and those who make less than 10K a year have a plethora of options for relief. You can also challenge the accrediting merits of a school in order to have your loan forgiven. These following program are available for those struggling to pay off these insidious loans!

Public Service Loan Forgiveness
Forgiveness from an income-driven plan
Federal Perkins Loan cancellation
Loan forgiveness for teachers
Loan forgiveness for nurses
Loan repayment assistance for doctors and other health care professionals
Loan repayment assistance for lawyers
Additional student loan repayment assistance programs (LRAPs)
Military student loan forgiveness and assistance
Student loan discharge for special circumstances

If you aware of the right procedure or the right form, it isn’t too difficult to solve or mitigate a legal issue. It may take a lot of time and sacrifice, but the pain and suffering of waiting can also lead to fruitful rewards. Joining the military or applying for other scholarships are also great ways to mitigate the costs of going to school. If you are blessed enough to come from a wealthy family, you must be resourceful enough to explore these options. Even if you choose not to exercise these options, it is still encouraging to know that they are there!

Many states have recently began to discuss the possibility of suspending drivers licenses for unpaid student loans, treating them as if they were alimony or child support payments. The seriousness of the situation regarding our education system is reaching its capacity. Knowing these useful tricks and tips are more important than ever in these politically charged times that we are living in.

The Fair Consumer Reporting in Bankruptcy Act of 2015

Did you know that banks and other creditors may continue to list a debt on your credit report even after that debt has been paid? When your credit report reflects a debt that hasn’t been paid, your credit rating can drop drastically. In some cases, that poor credit rating can even mean that you will have to pay extra interest in some cases or that you may not be able to obtain credit at all from other lenders.

A new bill proposed by Senator Sherrod Brown called the ‘Fair Consumer Reporting in Bankruptcy Act of 2015’ would prevent banks and creditors from listing a debt on a consumer’s credit report once that debt has been wiped clean with a bankruptcy discharge.

Bill Details

The new bill (if passed) would require creditors to contact the consumer reporting agency once a debt has been cleared. If that debt has been discharged in bankruptcy and is at zero, creditors would have to report the debt as such.

How big of an issue is this? Right now, it’s estimated that one in five consumers has an error on their individual credit report. Personally, we think this number is way too low and is actually upward of 50%. This means that there are major mistakes on many credit reports, and even if you think that your debt has been paid and wiped clean, it might not be.

Aside from the fact that you may have a hard time getting approved for a loan, neglecting to report a debt as “zero” may also mean that a consumer will be charged more interest on additional obligations because of their debt to income ratios. Sadly, many consumers do not bother to check their reports after paying off a debt. The new bill would protect consumers that have declared bankruptcy and, therefore, have a right to have that debt wiped from credit records.

In the Meantime

The bill mentioned above has not yet been approved, but there are some things that you can do to make sure any debts you have paid off are reflected on your credit report. First, always check your credit report to make sure that debts that have been paid are accurately reflected on that report.

If you see any discrepancies on your credit report, it is incumbent on you to dispute the debt. Second, keep on top of your credit report by checking it once per year. You never know if the information that is reported is accurate, and it will only benefit you to keep on top of it.

Making Money Work

As I begin the journey of finishing my working career I look back at messages I have received throughout my lifetime about money and the idea of saving money. Of course, as a young man I never gave much thought to saving. After all I was young and I had a lot of time to save.

It was a plan built on wishes and fantasies. A plan which gave me all sorts of money to party and put me on a path of self-destruction. While I had some amazing times, albeit a bit crazy, the memories have lasted me a lifetime. But those memories did nothing for me when I had an emergency.

It got to a point where I could justify not saving money. After all, with all the debts I had how could I possibly save a penny? The question should have been how could I not save a penny?

One of the easiest ways to save money and to also get a raise in pay is through your pension plan at work (401K). People don’t do it because… well it goes back to my early beliefs that I was young and I’ll worry about it tomorrow.

Let’s look at a simple example of how this can help. This is just an example using simple financial amounts. During the month you make $1000. Let’s say that 20% is taken for taxes. Your take home pay is $800. That is everything you make for the month, so saving money is impossible, right? I. Say. Wrong.

I’m still learning the UK pension plans, so I’ll use the 401K models that I am used too. Let’s say your employer will match your contributions up to 5%. So if you put in 2%, they will contribute 2%. If you put in 3%, they do 3% and so on up to 5%. So if you contribute to a 401K and only contribute 2% (in this example) you are losing money. You are losing 3% of the money your employer would contribute.

In the above example, based on a 100 hour work month, your hourly wage was $10. By contributing 2% to a 401K, which your employer matches your monthly wage grew by $20. An hourly increase of 20 cents. So the hourly wage grew to $10.20. But without taking advantage of the employers 5% maximum the employee is losing $30 a month and 30 cents an hour.

Yes, to get this increase you will have to give money from your check that you say you don’t have. 401K contributions are taken into account before taxes. So if you take 5% from your monthly check of $1000, your taxable income is $950. Then the 20% taken from that amount leaves you with a take home check of $760. A loss of $40. But you are adding $50 to your account and your employer is adding another $50. So for the month you added $100 to your account, which only cost you $40.

These are simple figures but it is crazy not to use pension plans to your advantage. I have heard from people in the UK that plans are garbage. The only horrible plan is no plan. To take advantage of any plan, contribute at least the maximum that your employer will match and also look at your plan. Many plans offer different investments to grow your money. From simple safe plans like bonds and CD’s to more risky investments from international funds.

4 Things to Consider When Refinancing Your Student Loans

Are you thinking of applying for a student loan? If so, a promissory note will need to be signed. Basically, this is a contract. On the due date, you will have to pay the loan along with the amount of interest based on the terms and conditions. Often, students don’t think much before accepting the terms and conditions of the promissory note. If you have got a loan but you are finding it hard to pay it back, you can refinance your student loan. However, make sure you consider 4 important things before you go ahead and refinance it.

No financing from the federal government

Remember: it’s the congress that decides on the rate of interest for the federal student loans. Moreover, the rates of interest are set based on the law irrespective of how good your credit rating is. If you have lower credit score, the interest rate will be higher and vice versa.

It’s possible to use a private loan to refinance a student loan. However, keep in mind that the same can’t be true about refinancing a federal loan into another federal loan.

Know the difference between refinancing and consolidation

Some borrowers believe that the consolidation of their loans is a good way of reducing the rate of interest just like refinancing. This is a common confusion as the options are quite similar. You get a new loan accepting new terms to replace a loan you took earlier. However, it’s important to keep in mind that you can’t reduce your interest rate by consolidating a federal loan.

However, you can enjoy some benefits with consolidation. For instance, you are free to opt for a service you like. Moreover, you can qualify for other forgiveness and repayment options.

Refinancing and your loan terms

Remember: refinancing will made changes to the terms of your loan. For instance, your interest rate may come down based on your cosigner or credit rating. The reduction in the rate of interest is the main thing that entices students.

As said earlier, the new loan will feature new terms and conditions. What this means is that the rate of interest may go up.

If you are finding it hard to repay your loan, the protection that come with federal students loans can help you. For instance, you can try repayment plans that reduce the payments.

Other methods

You can use other ways to cut down on the interest. Moreover, if you want to get federal student loans, you can use other options to reduce your interest rate. Therefore, it’s a good idea to give them a go. Some servicers may choose to reduce the interest rate provided you register in automatic payments.

You may also choose to pay an additional amount each month. As far as prepayment goes, federal student loans have no penalty. If you pay back faster, your overall interest will come down.

So, if you are going to refinance your federal student loan, we suggest that you consider these 4 things. They will help you get through the process more easily. Hope this will help.