Friday’s need-to-know money news

RelationshipDetermining credit worthiness, how money problems distract workers, how to develop good financial habits, and what to do when you have student loans from multiple lenders.

The Non-Credit Score Numbers Your Lender Wants to Know
Looking beyond your credit score to determine your credit worthiness.

Personal Finance Problems Distract Workers
Stress over finances can cause a loss of productivity.

Finance Tips for 20-Somethings
How to get and stay on a secure financial track.

13 Happy Events That Need a Financial Plan
Graduation, marriage and parenthood are just some of life’s celebrations that need financial planning.

Get Schooled on Student Loan Consolidation Rights
Find out what options you have when it comes to multiple loans.

How to deal with your debt

Zemanta Related Posts ThumbnailDebt may be a four-letter word, but it’s not necessarily the enemy. Some debts are much, much worse than others, and knowing which to tackle first can leave you richer.

That’s the central idea of my book “Deal with Your Debt,” and I go into more detail in this interview with Experian’s Mike Delgado. (Also, you’ll get a great view of one of our bedrooms…I couldn’t get my laptop to cooperate with Google Hangout, so I had to resort to the desktop.)

We covered a bunch of topics, including:

  • What you need to know about getting, and paying off, student loans
  • Why retirement has to be your top financial goal (yes, even ahead of paying off debt)
  • What debts to tackle first and
  • When to consider filing for bankruptcy

…and much more.

Wednesday’s need-to-know money news

HomeInheriting Grandma’s frequent-flier miles, how to pay less for homeowner’s insurance, and what you need to know about rising interest rates.

How Student Loans Can Hurt Your Mortgage Application
Those pesky student loans can reduce your ability to borrow money.

Can You Inherit or Transfer Your Frequent-Flier Miles?
What happens to Grandma’s miles after she takes her final flight?

How to Reduce Your Home Insurance Costs
Home insurance doesn’t have to break the bank.

The Best Children’s Books for Money Lessons
It’s never too early to start teaching kids how to manage their money.

5 Things to Know About Rising Interest Rates
How to navigate the new lending environment.

In case you missed it: the youth edition

Cut up cardsSpurning credit cards means younger people have less toxic debt but they may be doing inadvertent damage to their credit scores and costing themselves money. Learn more in “Why young people hate credit cards.

Read some smart answers to the awkward questions your kids may ask about family finances in “One way money is a lot like sex.

You’ve probably read that student loan rates doubled on Monday, but that’s not quite true. Read “Student loan rates: Facts amid the fictions” for the straight scoop.

Have a great weekend!

Tuesday’s need-to-know money news

Champagne glassesFinancial survival tips for before the wedding and after the marriage ends, freedom from credit card debt, and beating the retirement clock.

Engaged? You Might Need Money Therapy
Things you should know before you walk down the aisle.

How Does Divorce Affect Bankruptcy and Mortgage
Things you should know for when the walk down the aisle fails.

Declare Your Independence From Credit Card Debt
Life, liberty and the pursuit of zero debt.

How to Get Help From a Student Loan Mediator
Student loan battles don’t have to be fought alone.
What to Do When You Haven’t Saved Enough for Retirement
How to get by when time isn’t on your side.

Student loan rates: facts amid the fictions

Paid education. Graduate cap on bank notesStudent loan rates aren’t about to double, despite the headlines.

Only rates for newly-issued, subsidized federal student loans are set to rise July 1 from 3.4% to 6.8% because Congress couldn’t get its act together to prevent the increase.

Loans that have already been made won’t be affected. Neither will there be an impact on unsubsidized federal student loans, since those already carried a 6.8% rate, or on PLUS loans for graduate students and parents, which have a 7.9% rate.

Subsidized loans traditionally got lower rates because the borrowers have demonstrated financial need. But subsidized loans also charge no interest:

  • while the student is still in school at least half time
  • for the first six months after the student leaves school and
  • during an approved postponement of loan payments.

Those are powerful advantages not available on unsubsidized loans, which is what you get when you can’t demonstrate financial need.

College expert Lynn O’Shaughnessy points out in her MoneyWatch column that the doubling of subsidized loan rates actually won’t have an outsized impact:

The hike will mean that a borrower will spend less than $7 a month repaying that extra interest, according to Mark Kantrowitz, the publisher of Edvisors Network and a national financial-aid expert. Keeping the subsidized rate at 3.4 percent would cost the government $41 billion over 10 years, which is a high price to pay to save borrowers a few dollars a month.

Kantrowitz has said it’s unlikely that higher interest rates would dissuade many from attending college, and he would rather see the money go toward increasing Pell grants for the neediest students, which would do a lot more to encourage them to get a degree. Here’s what he had to say in a New York Times op-ed piece co-authored with O’Shaughnessy:

But the partisan posturing is a distraction from far more pressing issues that face students and parents who must borrow to cover their college costs. What’s lost is how Congress, in numerous ways, has been hurting the most vulnerable college students and dithering on the crisis of college affordability….Congress has starved the Pell grant program, an educational lifeline for low-income families.

He goes on to question why most student loan rates are so much higher than the government’s cost, something that’s turned education debt into a profit center for Uncle Sam. Congress also hasn’t done anything about the suffocating student loan debt many graduates have already taken on or the continuing (if somewhat moderated) increase in education costs. Private student loans remain especially problematic, since they lack the consumer protections of federal student loans and many lenders have been unwilling to work with borrowers to create affordable repayment plans. I’ve argued that we should give bankruptcy judges the power to modify private student loan terms as a way of forcing lenders to play ball.

Nobody wants to pay more interest, but there are bigger problems with the way we pay for higher education than a hike in the subsidized student loan rate.

Our #CreditChat is about to begin!

liz-westonIn a few minutes I’ll be answering your questions about how to deal with your debt on Experian’s #CreditChat, which starts at 3 p.m. Eastern/noon Pacific today. Topics include how to balance savings and paying off debt, which debts to tackle first, how to handle student loans and what to do if you’re drowning in debt. Easy ways to follow the conversation include Twubs or tchat.

Please join us!

Career change in midlife requires caution

Dear Liz: I went through divorce three years ago (after 20 years being together). I’m now 41 and broken financially and emotionally. I’m wondering if I should sell my small place and move in with my mother or stay broke and tough it out so I can keep my own place. I work part time, which was fine when I was married. Should I return to college and start a new “second half of life career”? I love my job and I’m torn.

What do you recommend? I can’t survive on my income alone and pay my bills. It’s never ending and I’m stressed beyond measure!

Answer: Recovering from a big setback such as a divorce is tough. But continuing to struggle in a situation that doesn’t work makes little sense. You need enough income to cover your bills and save for the future.

If you sell your place and move in with your mother temporarily, you could continue working part time in the job you love while getting a degree that would qualify you for a better, full-time job. You’ll need to make this investment carefully, since you’ll have only a couple of decades for the money you spend (or borrow) to pay off. A two-year degree might make more sense than a four-year course of study, for example.

You’ll want to pick a well-paying job in an industry that’s growing, and you should limit the amount of student loan you take on to no more than you expect to make your first year out of school. The Bureau of Labor Statistics has a list of the fastest-growing jobs, and their median salaries, at http://www.bls.gov/ooh/fastest-growing.htm. Your local community college probably also has a career services center where you could talk to counselors about your options.

Monday’s need-to-know money news

collegeWhat to watch out for with credit cards, when you need to pay U.S. taxes and a possible light at the end of the student loan tunnel.

How to Stop a Neverending Student Loan Nightmare

Could there be a real solution to the student loan crisis?

The Case Against Credit Cards: Overspending, Obesity, Inequality

Credit can be a helpful tool, but it also may make us “dumber, fatter, poorer.”

Living Abroad? Your ‘Tax Home’ Could Still Be U.S.

How to pay U.S. tax rates while living in your newly purchased English manor.

How to Get the Most Value From Your Home Inspection

The home inspection could be the most important part of your potential sale.

Wednesday’s need-to-know money news

FinancesFather knows best, careers that simply aren’t worth the money and the double-edged sword of frugality.

Listen to Your Father! Old-School Money Tips for Today

Financial advice that stands the test of time.

The Best and Worst Careers to Go Into Debt For

If you want to see your work in print, become an advertiser, not a reporter.

Credit Expert Answers 7 Burning Personal Finance Questions

Including tips on how to improve your credit score.

When Frugality Goes Too Far

Growing your own vegetables is a great idea. Spending $3500 on a vegetable garden is not.

Overdraft Fees Cost Bank Customers Hundreds of Dollars a Year

The Consumer Financial Protection Bureau found overdrawing their accounts cost customers an average of $225 per year.