Obama Administration Raising Awareness for Federal Student Loan Options – Lori Youngston

By on Apr 30, 2013 in Finance, General Tips, Organizing

This month, the Obama Administration began sending email notices to over three million federal student loan borrowers. The Department of Education is targeting four groups: those whose six month grace period is now ending, borrowers who have fallen behind in their monthly payments, loan holders with a higher than average amount of debt and those who are already in deferment due to financial hardship or because of unemployment. Of particular interest seems to be those borrowers with total loan amounts exceeding $25,000. Everyone in these categories should receive a notice by mid-December.

This push is part of the suggested reforms proposed by President Obama and his Education Department in August of 2013. The purpose behind it is to remind the loan borrowers of the options available under the government’s Income Based Repayment(IBR) programs and to hopefully increase the number of federal student loan holders in those programs. However, it is not the first attempt to encourage student loan borrowers to take advantage of the Federal Repayment Programs.

Federal Student Loan Options - bigstock-President-Obama-40747615 Project Done Lori Youngston 2

The Income Based Repayment Program offers many benefits:

  • Affordable payments based on your discretionary income, not loan size and interest rates
  • If your payment does not cover the accumulating interest on your Direct Loan, the interest will not be capitalized for a period of three years
  • Forgiveness at the end of your term if any balance remains on the loan
  • Payments in the IBR qualify for public service loan forgiveness on a Direct Loan

Despite previous attempts over the last three years, enrollment in one of these programs remains below seven percent of all federal student loans currently in some form of repayment. In fact, overall household debt has increased to $11.28 Trillion according to the Federal Reserve Bank of New York, with student loan debt being almost ten percent of that at $1.03 Trillion. Nearly twelve percent of those student loans are behind in payments for 90 days or more.

This is particularly bad for a still recovering economy. The very people who need to take the risk of starting businesses and begin buying their first cars and homes are unable to do so because of the amount of monthly debt they have. Worse, student loans are not like mortgages and cannot be discharged under current bankruptcy laws and once graduates begin to get behind on their payments, the resulting damage to their credit rating further drags out the time that they are unable to help grow the economy.  All of this drives the President to try and keep these borrowers in the ‘black’ as it were and creating new jobs and start-up businesses. 

Most of this renewed push for Income Based Repayment and other repayment plans is trying to keep borrowers active in this economy. Some of it, unfortunately, is also to combat recent bad attention from the media given to the sometimes shady recovery practices of Sallie Mae and other loan servicing companies.

Federal Student Loan Options - bigstock-College-Students-Preparing-For-31421852 Project Done Lori Youngston 1

While the Education Department is again actively advertising Income Based Repayment, it falls to the loan servicing agencies contracted with the Department to work with the individual borrowers. The problem with this is that it is these same agencies also collect on their own defaulted student loans. It has been pointed out on many consumer advocate websites and by an increasing number of government officials that a loan in default can result in much more money going directly to the loan servicer as opposed to a student loan in good standing. Because of this obvious conflict of interest, many politicians and consumer advocates have questioned the ability of the servicing agencies to remain unbiased in their business practices and operate the different government repayment plans with any transparency.

Even so, the National Consumer Law Center believes that this new spotlight on the repayment programs will be useful in educating borrowers on the Income Based Repayment Program. The trick, in their opinion, will be getting them enrolled. One of their lawyers, Deanne Loonin, stated that “Once somebody knows about it, we need to do a better job of helping people get into the program and stay.” Agreeing with her is the President of College Access and Success, Lauren Asher felt that “This is a positive step towards making sure that people who need to know and might benefit from the income based programs are getting the information they need. We’re happy to see this is moving forward.

Even happier are the student borrowers and their families. Getting more federal student loan borrowers enrolled into Income Based Repayment or another repayment plan helps not only the graduate today, but also the future they intend to create for themselves. Fortunately, the Obama Administration has also recognized that reducing the load of debt and raising the graduate’s credit rating back where it belongs also serves to support the local, state and national economies.

Lori Youngston Headshot Project Done Lifestyle Guest Blogger
Lori Youngston is currently a writer for www.StudentDebtRelief.us whose primary objective is to educate and assist student loan borrowers on the many federal programs available to them, including student loan forgiveness.

 

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Planning Your Budget for the New Year

By on Apr 30, 2013 in Finance, General Tips, Organizing

Are you already thinking about the 2014 budget?

Don’t wait until the New Year, start planning now so that you are ready next week with a plan. Others will wait and spend the entire year thinking about getting their finances together. Not us, we start mapping out the annual spending plan now.

Try a free online template or create your own spreadsheet in Excel. First list your income. If you have many sources, list each one separately. If the income varies, take an average of your earnings from last year (the year divided by 12) to come up with a reasonable monthly total.

Then multiply the monthly total by 12 and this is your annual income. This is on a separate line to be used later in our budget.

2014 Income Annual Budget Project Done Excel Worksheet 5

Next calculate your monthly fixed expenses. This would include anything that is due on a monthly basis from regular bills to recurring expenses that are charged to your credit or debit card. Total this column to come up with your monthly number. Then on the next line, multiply this total by 12 for your annual expenses.

2014 Fixed Expenses Budget Project Done Excel Worksheet 4

Then total up the miscellaneous expenses that happen each year but not necessarily every month. Things like car repair, medical expenses, family vacations, meals & entertainment, emergency fund savings, etc. Take a look at your expenses for the last 2 years to come up with your categories and annual expenses. In this section, we have some control of what is spent. If we don’t spend the money in a category, we can keep it in savings ~ so be watchful of this section and see how much extra you can save each year.

Once the annual numbers have been calculated, divide this by 12 to come up with a general monthly number for easier tracking. Setting this money aside each month will take the stress out of emergencies and not drain your bank account in its urgency.

2014 Annual Expenses Budget Project Done Excel Worksheet 3

The next part of the budget is to calculate any debt that you want or need to pay off like credit cards, loans, etc. We will set this in motion when we have our annual totals in order.

2014 Debt Budget Project Done Excel Worksheet 2

Now we are ready to total up our year and see where we are. Start with your annual income and subtract your annual fixed expenses then subtract your miscellaneous annual expenses. This is your annual savings or loss to pay off the debts/credit cards listed. Divide this number by 12 for your monthly payment amount.

2014 Annual Budget Project Done Excel Worksheet 1

If this number is negative, it is time to take a hard look at your Miscellaneous expenses and see if you can narrow these a little to get closer to a positive number. You might even need to increase your income if reductions aren’t enough. The bottom line is that we need money to pay off any outstanding debts and to have a cushion for the just in case. Just in case car repair costs more than expected. Just in case we have a serious unplanned medical expense above our projection.

The next step is to track the money on a monthly basis. You can do it weekly or monthly but by reviewing your numbers, you are always in control of your money and your money won’t rule your life!

2014 Annual Budget Monthly Tracking Project Done Excel Worksheet 6

(Click the image to see the larger view)

Print a copy of the 2014 projections, keep it with you and go over it often. Because it is with you, fine tuning is happening all the time so less money and time are wasted.

The final step would be to snowball your debt to zero and have more money in your savings. I just read the book Pocket Your Dollars by Carrie Rocha and she and her husband used a similar budgeting plan to get out of debt and they have stayed out of debt!

To snowball your debt, arrange them in balance order listing the lowest balance first. Make your monthly payments on everything but apply extra money to the lowest debt until it is at zero. Then take this money along with any extra money and start applying it to your next debt until it is zero. Repeat until your debt payments are all zero! Now this money can be aggressively put towards your emergency fund or the purchase of a house or retirement investments. The less you owe and the more you save, the more options you have! Life gets really fun at this point.

Dream big and enjoy the future. Let me know if you need any help putting your spending plan in order and stay in touch with your progress. Let’s make 2014 a big savings year!

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5 Effective Strategies to Help You Pay Off Multiple Debts – Barbara Delinsky

By on Apr 30, 2013 in Finance, General Tips, Organizing

My post today is all about reining in multiple debts by formulating an effective strategy.

This is a time when people are undergoing a lot of financial struggle simply because of the economically tight conditions prevalent all around. The worst part is perhaps that individuals are getting deeper and deeper into debt which is definitely not a happy state of affairs. One of the main reasons why most are going deeper and deeper into debt without any clue as to how they’ll get themselves out of it, is because of the multiple debts they carry. If you’re one who’s saddled with multiple debts, then understand that this is a common situation. At the same time, having multiple debts makes things that much more difficult.

Debt payment strategy Barbara Delinsky guest post Project Done Lifestyle Finances5 Effective strategies to help you pay off multiple debts

A single debt is easier to handle and you can also get rid of it easily, but this is not the case when carrying multiple debts. This is why effective strategizing is essential to get rid of multiple debts effectively enough.

1. Formulate a list of all that you owe: Multiple debts essentially become all the more difficult to handle simply because of the fact that you tend to forget how much you owe and that too to whom. This is why one of the first tasks you should undertake is to make a list of all your outstanding debts. Try listing them in such a manner so that the debts with the highest rate of interest comes right at the top followed by the lower interest debts. This can then prove as an easy reference sheet when paying off your debts.

2. See how much extra money is there: Next it’s time for you to calculate the kind of extra money you’ve got. Understand that this extra money is best utilized in paying off your debts. When looking to calculate the extra money, you should put together all your extra bills, groceries and all other possible expenses. Subtract that from your total income and see what it comes down to. Make use of this extra income to pay off your debt.

3. Try consolidating your debts: Since you’ve got multiple debts and if you’re too unsure about tackling them together, then consolidating your debts would be a good idea. It’d be best to pay down the high interest debts first for that way you’d save on the high interest costs you’d have otherwise incurred. Consolidating your debt would help reduce interest and you’ll have a single debt to deal with instead of multiple ones.

4. Cut down on extras: It’s extremely important for you to cut down on any extra expenses. If you can cut back effectively, then you manage to save money. This can be done by taking some easy steps like cooking cheaper meals, eating out less, making your own coffee at home and so on and so forth.

5. Earn extra to make payments: Finally, managing multiple debts requires that you earn extra. Generation of extra income can provide a ready solution to your multiple debt woes. In fact, extra income would also enable you to pay off multiple debts faster.

The 5 strategies discussed above actually help you pay off multiple debts effectively. These are the right strategies focusing on the financial problem at hand and effectively deals with it. You need to focus right and not take any wrong decisions hastily.

This article has been written by Barbara Delinsky. She’s a reputed financial writer associated with quite a few websites and blogs. She writes on various financial issues like getting out of debt, budgeting strategies, etc.

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Smart Money Spending Guide for College Students – Lois Weldon

By on Apr 30, 2013 in Finance, General Tips, Organizing

The main purpose of going to college is getting a quality education (well, at least for most students), but the things students learn during that period of life extend beyond the lectures they hear in class. College is all about learning how to become responsible and manage to live on your own without asking for more money from your parents. Becoming self-sufficient is not an easy process, but it can be made easier if you follow the right guidelines.

Lois Weldon College Students Guest Post Project Done 2

This article will provide you with 5 tips on how to spend (and save) your money in a smart way.

1. Save on living expenses!

Now that you are living away from your parents, the bills will be on your back; and that’s not an easy burden to deal with. If you never had to pay an electricity bill, the monthly expenses for this purpose may come as a shock to you. You can reduce the electricity usage by using energy efficient bulbs and turning off the lights when you don’t need them. Learning how to use electricity wisely is a small step that will bring you significant savings, and it’s a lesson for life!

Another significant living expense is decorating. Here’s where things get fun, as decorating on a budget is even more pleasurable than being able to spend money on whatever you lay your eyes upon. There are many objects that can be repurposed and used as multifunctional items. Don’t be shy from getting the most of thrift stores, as they hide real gems of lovely furniture pieces that you can bring back to life. Being creative definitely pays out!

2. Be smart with your insurance choices!

Car insurance is constantly getting more expensive, but you can still achieve a better price if you play the right cards. The first thing you should do is check whether your car is worth for comprehensive insurance or not. Besides searching for the best insurance offers online, you should also ask your insurance company about your rights to discount, because the best offers are often not being marketed. You can reduce the amount you pay on insurance by combining policies, annual mileage and good grades.

3. Learn how to save on food!

Coupons are students’ best friends! It is best to do your weekly food shopping with beneficial coupons, but make sure that the coupon is really valuable (it would mean nothing to you if you were purchasing the items in an expensive store). You have to do a price comparison between different stores, because it is pointless to pay more if you can get the same things for a lower price.

Learning how to cook is inevitable in college. You cannot rely solely on fast food, as that would not only bring you health consequences, but it would also be devastating to your budget. It is very easy to cook cheap, simple and highly nutritious meals. Trust me; as soon as you start cooking and experimenting with different ingredients, you will start loving the kitchen!

Remember: if you want to save money on food, it is recommended to stick to the foods that belong to the lower levels of the food pyramid.

4. Learn all about taxation!

Qualifying for larger returns is a clever way of refreshing your budget. If you just got your first job, you should research the Internet for practical tips on tax planning in order to get the most out of the money you make. If you know nothing about taxes and all those rules confuse you, the best recommendation is to work with a tax service, as it can really help you get qualified for bigger returns.

Lois Weldon College Students Guest Post Project Done 1

5. Have fun, but stay within the limits!

Students in college would have limitless fun if they weren’t limited by their budgets. In fact, being limited with money is a good thing because it keeps you reasonable and responsible. You can still have fun without spending too much money – all you need are good friends, great music and cheerful spirit. When it comes to good music, iTunes is not your only source, you know. There are lovely coffee shops with great live music that’s free and much better.

You don’t have to go to bars and clubs each weekend in order to enjoy your free time. Sure, clubs are a great place for meeting new people, but such a night out always costs you a lot of money. Moreover, staying on campus and enjoying the company of your friends can bring all of you closer, because there is nothing natural about the contact you make in clubs.

Conclusion: It’s not difficult to live within the limits

Being short on money is never pleasant, but you can learn how to manage the situation as soon as you get into the habit of spending your money wisely. Remember to stay organized, keep track of your income and expenses and take the necessary measures if you can’t reach a positive balance in the end of the month (yes, I’m trying to tell you to get a job).

Lois Weldon Headshot Guest Post Project DoneLois Weldon is a writer at dissertation writing services Uk.bestdissertation.com.
She loves helping students by writing useful education tips and tricks.
Lois lives in London with loving family, and secretly writes a sci-fi novel.

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