The Need For Better Education Debt Management

It will come as no surprise that student loans are on the rise in the US.

Most people try their best to repay their loans, but they sometimes become difficult to manage. When you fall behind on your payments or really default on your loan this can have a negative effect on your financial record. This will result in unfavorable rates when you later apply for a mortgage or insurance.

The Chronicle of Higher Education reports that 20% of borrowers with government -backed student loans that entered repayment in 1995 have defaulted.

American Student Assistance (ASA) recently released a paper on the need for better education debt management.

Each year millions of students enter college to better themselves academically and secure a stronger financial future.

To achieve this goal, a majority of students must take on debt that has the potential to ruin their financial future before they even get started. While grants at one time accounted for the majority of student aid, over the last 30 years there has been a massive shift toward student loans to cover the costs of financing higher education.

American Student Assistance (ASA) is a nonprofit, federally funded organization whose mission is to help college students and their families successfully manage higher education debt. Through proactive counseling, guidance, and education, ASA provides borrowers with neutral, personalized federal student loan solutions throughout their entire loan experience.

Source: Approaching the Tipping Point

How to Create a Budget for Your Family

Creating a budget for your family can lead to great savings! This will help you to lower your spending and keep track of your spending.

It does not mean you have to give up on all your favorite things. It is mostly a matter of deciding where your priorities are. You have some basic needs and then there are all those extra things that you want. It does take some discipline to spend your hard earned money wisely.

Here are 5 steps to create a family budget:

• Set Spending Goals
• Compare Your Spending with Your Income
• Cut Expenses to Balance Your Budget
• Recalculate Your Totals
• Commit to Following Your Budget

The commitment may be the hardest part. But you will not get anywhere if all you have is a few good ideas. You need to execute them and keep yourself on track!

Read more at Suite101:  http://www.suite101.com/content/how-to-create-a-budget-for-your-family-a297630#ixzz13rXo0v8b

Debt Causes People To Defer Retirement

There is an interesting but also disturbing article in USA Today about the effect the debt crisis is having on people reaching retirement age.

As people have seen their income drop and their debt has increased they are in a difficult financial situation just when they are looking forward to an easier life, approaching their 'golden years'.

A growing number of Americans age 55 and older have put their retirement dreams on hold as they face a dismal financial reality: The recession has forced many into unemployment, stripped away years of their savings or dramatically reduced incomes during what they had hoped would be their final high-earning years.

One of the main causes of older Americans filing for bankruptcy is credit card debt!

Losing your job in a recession at a later age and increasing medical bills all add to the problems.

One major error to avoid:

Don't use your retirement saving to pay down debt. It is usually beyond reach of creditors!

Source: USA Today

How To Stop Student Loan Garnishment?

When you have stopped making payments on your student loan you are said to be defaulting on the loan.

The US Dept. of Education can then start a student loan garnishment. Your employer will have to take up to 15 percent of your wages.

You will receive notice of this about 30 days in advance. Then you can request a hearing and try to negotiate a better payment schedule.

Filing for Chapter 13 bankruptcy is another option but this also has other implications.

It is best to seek legal assistance from a lawyer before going down that route.

Why You Should Repay On Time

When you take up credit you are also taking on the obligation to repay.

It is also important to repay on time. Every time!

Being late with your repayments can make creditors nervous. It is a bad sign and they know by experience that you may not be able to follow through on your promise to be a well behaved lender.

The longer it takes or the longer you get behind, the bigger the chance you will default on your loan.

Being thirty days late is already stretching it. After 90 days you can get in real trouble.

Remember these details will also show up in your credit report.

Wage garnishment is a frightening experience.

All of a suddenly you are feeling a severe cut in your paycheck and you have all these planned expenses. Plus you realize this could go on for quite a long time.

If you thought no one can take money out of your paycheck without your permission then you are wrong. When your employer receives a notice of garnishment from the court then he has no choice but to comply.

Fortunately it cannot come as a complete surprise. You have to be given advance notice.

This gives you a chance to work out a payment schedule.

Spending Money We Don't Have

Tim Jackson gave a talk recently at a TED conference.

This is an interesting quote:

People are being persuaded to spend money we don't have on things we don't need to create impressions that won't last on people we don't care about.

This should let us think about our own spending habits and how this can get us indebted beyond our control.

You can watch the video at

The Consequences Of Bad Credit

When you end up with a bad credit score there are a few problems you may start facing.

Borrowing becomes more expensive
A bad credit score will lead to higher interest rates. This will cost you a lot of money in the long run, like on a house mortgage.

Getting a credit card is a bit harder

Losing opportunities
A potential employer may think twice before hiring you. Maybe you have a lot on your mind trying to pay back all those loans?

Expensive insurance
Some companies think that people with money worries get in trouble sooner as well. So they charge higher fees. Some states do not agree on this so you better check your local legislation too.

Additional fees for late payments
This should be a wake up call! If you are having trouble making regular payments then the fees will make it even harder. The lender is trying to push you and get your act together.
They see the risk increasing and if you are not careful your assets are at stake.
It is time for a plan to manage your debt.

Does A Passbook Loan Help Your Credit Score?

When you have a savings account with your bank you can apply for a passbook loan. This is a small loan using your account as collateral.

The loan is very easy to get. The risk to the bank is zero because they have the funds on your savings account anyway. Usually they charge an interest rate of maybe 3 percent above the rate you receive on your savings.

The money on your account keeps earning interest in the mean time. As you repay the loan you will have access to these funds again.

Some banks report this loan to the credit bureaus. In that case it will help building your credit history.

Don't just assume your bank will do this. Ask them about it!

How To Build A Credit History From Scratch

When you just come out of high school you don't have any credit history. For many stages in life this history will be important so you need to start building one as soon as possible.

You can do this by using a secured credit card.

Start with depositing some money into a secured bank account and apply for a credit up to the same amount.

The bank has zero risk because you will not borrow more than you are able to pay back (your deposit, right?).

By paying back on time you have just started showing you are a reliable borrower and this will be your first positive mark on your credit report!

What Is Your Excuse For Not Knowing Your Credit Report?

You should have on excuse for not having a recent copy of your credit report.

Because once a year you can request one for FREE from the three best know credit agencies.

You should verify that all information is correct. Mistake do happen and you should have them corrected as soon as possible!

Wait no longer and read more about how to get your free credit report online.

Credit: Spend Today What you Will Earn Tomorrow

But what will you spend tomorrow then?

"No Money Down"

This is the trap most of us fall into.

You see that nice new car. Or the latest cool gadget. Even a bigger house.

But can you afford it? Every business will encourage you to buy today and and pay later. They make credit easy so their business booms.

Many people get caught in a spiral of ever increasing debt and thoughtless spending.

So the first step will always be to cut down on your spending. Cover the basics and make sure there is some money left at the end of the month. Not some month left at the end of the money ...

 

Managing your student loan payment

Imagine you have a student loan and you are finding it hard to get a job.

After a few months you find yourself in the difficult situation where the loan company starts a law suit and gets a garnishment approval. 

Next you find a low paying job and 15% of it is garnished from the start!

If on top of that you get into even more difficult times, like a serious illness, then it really gets tough.

You can always try and talk to the customer service of the collection company.

Maybe they have an ombudsman who will investigate your situation. He may even listen to your pleas and find a solution that gives you the chance to slowly build up your life again.

A lower monthly payment plan can do wonders and if you manage to make a bit more every now and then you can do a voluntary payment as well.

Don't be afraid to find te right peolple to contact. They are not always moneysharks.

Will declaring bankruptcy stop garnishment?

Judgments for consumer debt can be included in bankruptcy.

Having the debt discharged would definitely stop the garnishments. You really need to speak to a bankruptcy attorney to see if it really is feasible or the best option to file bankruptcy. It depends on how much debt you have.

How Bad Is Defaulting Your Student Loan?

If you fail to make loan payments for an extended period your student loan may default.

This not only affects your credit score, you can easily be subject to wage garnishment.

The United States Department of Education and guarantors are authorized to garnish 15% of a defaulted borrower’s wages. The loan holder does not have to sue the borrower first.

A private lender can sue in order to collect the loan and there is no time limit for that.