Unfortunately this week I didn’t get a chance to head over to the library, so I don’t have a new book today. But I have read a few articles on personal finance that I thought were interesting, and want to share them with you for your Saturday morning ready. So grab a cup of coffee, sit back, and enjoy!
Avoiding The Worst Traps in Repaying Student Loans
This NY Times article caught my eye a few weeks ago. Although I’ve never struggled with student loans (check out my college story) I know so many others do, so it’s a topic I’m interested in reading about to learn more on how to help others.
This article was apparently inspired by the CFPB suing of Navient, the biggest student loan provider in the nation, accusing it of “failing borrowers at every stage of repayment.” I’m sure this is not a news flash to anyone that has student loans with this company, as I hear nothing but complaints about the student loan providers. Whether it’s not applying payments correctly, not providing accurate information on repayment options, or not allowing cosigners to get out of the loans, the student loan companies certainly appear to have their (not your) best interests at heart.
This article goes through how you can protect yourself against some of these unethical practices and take control of your student loan debt:
- Know your loans – How much do you owe, and who do you owe it to? The National Student Loan Data System has the answer for you
- Income Driven Repayments – Look into all your student loan options, including income driven repayment plans, as they may save you money. Don’t count on your student loan provider to tell you about the programs available-do your own research. Go here for an explanation of the different kinds of programs available to you
- Stay Enrolled – Many of the programs like income-driven repayment plans require annual enrollment and certification. Don’t miss the deadlines, and don’t rely on your student loan servicer to remind you. Put it in your calendar.
- No Forbearance – Interest keeps adding up when you go into forbearance. Make sure you look into other options first, even if this is what the student loan company offers you, to try to avoid the additional interest
- Dropping a Cosigner – Watch out for tricks student loan companies might play with your payments to prevent you from dropping a cosigner, like resetting your payment counter when you prepay. Be sure to keep a close eye on how your payments are applied to make sure they follow your instructions
- Check Your Credit – Make sure to get your free credit reports every year to ensure there’s no innacurate information. Go to the Annual Credit Report site today. As an identity theft victim, I can’t stress the importance of this enough
Death Is Inevitable – Financial Turmoil Afterward Isn’t
This article reminds me of the one I wrote the other day, about how taking care of a plan for your death or disability is an act of love for the ones you leave behind. What’s especially sad about this is how it reinforces that women, who are usually the ones left behind, are usually ill-prepared to handle the finances. As more women become the financial heads of household, the tables will turn. The truth is that it should be whoever is the head of the finances, whether that’s the man or the woman, who needs to work to prepare the other partner for the times when the main financial person is out of commission.
A few important parts of this article include a checklist of things that both spouses should know how to locate:
- Social security documents
- Insurance policies
- Marriage and birth certificates
- Powers of attorney
- Living trusts
- List of all assets (real estate, stocks, bonds, savings accounts, safe deposit boxes, etc.)
- Titles to all properties (cars, homes, vacation homes)
- Military discharge papers (if applicable)
The key to a good estate plan is transparency and communication. Secrets and deception are what tear families apart. Make sure everyone knows what choices you’ve made, and why, before you’re not here anymore to explain them.
Will I Ever Be Able to Retire Like my Grandma?
I saw this article on my Facebook page the other day, and had to read through it. Unfortunately it’s one of those complaining type of articles that I despise. “Oh, woe is me, things are so much harder now! They were so much easier for other people. Whineeeeee!!!”.
OK, so your grandma had a pension and you don’t. Guess what? My grandparents also had a nice pension with medical care, and I don’t. You know what I do about that? Save money and assume I need to cover my own retirement. And guess what I don’t do? Complain about it in articles on CNN Money.
The world has changed, but the world has changed before and it will change again. My grandparents may have had a pension, but they also lived in a modest house they paid for in cash. The house was 1300 square feet and they lived in it for about 40 years, including when they had two teens at home. This was built after spending many years in an even more modest house-probably under 1000 square feet. And no, the house was not less expensive than it is today in real dollar terms. That house today is worth 250k and they had it built for 60k back in 1966. Sounds like a great return, right? No. If you adjust for inflation, $60k in 1966 would be equal to $450k today. Doesn’t sound like such a great return anymore, does it?
My grandmother was a stay at home mother and my grandfather worked for the telephone company. They lived well below their means in a style that was typical in the 1950’s through 1970’s – local vacations, small houses, one car, not much “stuff”. They were born during the Great Depression and never wasted anything. They also paid for their kids college educations and had a good retirement, but nothing fancy. I’m glad they had a pension, but I’m not at all jealous or spend time thinking about how lucky they were or how unlucky I am.
I may not get a pension or full medical care when I retire, but I’ve known that since I was young. Believe it or not, even in the heydays of pensions most people didn’t get one. For some reason there’s a myth out there that everyone received a pension. But the number of people who worked for a company offering a pension for a long enough time to get a substantial one is actually pretty small. Believe it or not, even in 1980 – before the death of the pension – only 38% of people were eligible for one. So six out of every ten people were not even eligible. Out of those 38%, how many do you think were laid off or left the workforce before they got their pension? Quite a few. And lets not forget about people promised a pension only to see it cut down-or out. How do you think it feels to not save and invest, thinking that the company will take care of you and you don’t need to provide for yourself, only to see it all ripped away?
So the lesson I took from this article was rather than complaining about something outside your control, you need to focus on taking charge of the things you can control. You’re not going to control the benefit offerings of large corporations, but you can control your own savings and investments.
What have you been reading lately? Any good article recommendations? Let me know in the comments, or drop me a note by using the “Contact” option on the site.