A Guest Post -

After graduation, most loan companies give you a six-month grace period and then expect you to start paying back your loan. The repayment plan is usually set to a ten-year schedule. If you have the money to pay the loans back, this is generally the best way to avoid high interest rates and pay down your principal. Most struggle with this type of repayment plan. Fortunately, there are ways to alleviate your monthly student loan burden. The first thing you will want to consider is loan consolidation. Consolidation allows you to pay one amount each month instead of sending payments to several different loan companies. It also gives you the option of lengthening your repayment schedule so you can pay back less money each month. Be aware that you will inevitably pay back more interest over the life of the loan using this method. Several different loan repayment options are now available.

The government offers an income based and income sensitive repayment option for those with federal loan debt. These plans calculate the amount you owe based on your monthly income and number of dependents. It is not uncommon for some to have a monthly payment liability of zero while on these plans. In addition, loan holders who work for a government or nonprofit agency may qualify for loan forgiveness after 120 consecutive monthly payments. Finally, there are other more drastic options out there for those who qualify. Deferments allow those who are unemployed, in school, or under a financial hardship to postpone payments for up to six months at a time. Remember that defaulting on your student loans will only mean trouble down the road. Even bankruptcy won’t allow you to get out of this responsibility. Before you default, call your loan company. They are usually willing to work with you on a repayment plan.

written by JOE \\ tags: Debt, student-loan

Today, I’d like to give the soapbox to a fellow blogger who has started a new project with great potential. You see, part of the cash/credit discussion often turns to (a) the fact that many get some kind of rewards back for running charges through their account. Our card puts 2% cash into a 529 account, and I’m expecting that account to pay for a semester of college, and (b) there’s no motivation to pay cash and ignore the reward. Now JM introduces Discount With Cash, which I hope gains some traction:

Credit cards are the highest tax on goods and services you have never heard of.  Merchants pay fees every time they swipe your credit card and of course they increase the price of what you buy to cover that cost. You are paying extra for the convenience to use your credit card. Is it worth it? Sometimes it is, but most times it is not. Especially with some businesses offering a discount when you pay with cash. That idea is the basis behind a new website, Discount With Cash. Discount With Cash aims to provide customers with a list of local businesses that offer a discount for paying with cash. Since Discount With Cash is in its infancy they are currently looking for anyone out there that knows of businesses that offer the discount. So next time you are at the register, ask for a discount for using cash. If you get one, make sure to share it over at Discount With Cash.

Interesting idea, JM, thanks for introducing it on my blog.
Joe

written by JOE \\ tags: Credit, Debt, Frugal

Credit counseling is a process that offers education to consumers (that is you) about how they can avoid taking debts that can not be repaid. It involves the professional counseling that organizations provide to help you repay your debt and arrange your finances well. Thus, the process of educating consumers about how to mange their money better and live a financially sound life is called consumer credit counseling.

If you are facing any financial difficulties, then you can contact a credit counseling agency and ask for help. They will help you determine what to do next and how to come out of debt. Some of the services that consumer credit counseling agencies provide are as follows.

1. Assess your finances: The first thing that credit counseling agencies do is to assess your finances. Professionally trained and certified counselors will help you evaluate your current financial situation. They also provide you with a detailed analysis of your assets, income and expenditure so that you get to understand exactly how bad your debt situation is and work with them to eliminate debt.

2. Devises a budget for you: The credit counseling agency also devises a budget for you. This is done to determine if your expenditure is more than your income. If it is so, then where are you spending so much. When this is traced it will be easier for you to check yourself as you will know where to focus and what changes to make.

3. Educates you on effective money management: The professional who will help you, will guide you on how you can manage your finances. If you are spending too much, then the counselor will help you understand why you should restrict yourself from indulging too much into spending. They also provide personalized options that are based on your goals, these may include educational materials and resources and a Debt Management Plan if you need it.

4. Refers you to debt relief companies: If you are short of making payments on your debt and are not being able to take the pressure of your rising debt, then the credit counseling agency helps you to decide on which program to choose from to eliminate debt. Usually if your debt scenario is not good, then credit counselors will recommend the Debt Management plan. They will provide you with the full details and program of the plan.

Contributed By: CreditMagic Community

written by JOE \\ tags: Credit, credit counseling, Debt

The recent topic I find trending up (my own observation, not from any particular tracking site) is that of walking away from your mortgage, otherwise known as “giving the bank the keys.”

I’ve been reading about moral hazard and the risk of further collapse in home prices should people continue to default, but it was only when I ran into articles such as Motley Fool’s Why Are Homeowners Idiots? did I realize that there are a number of financial writers not just observing this phenomenon, but advocating it.

photo credit: bitzcelt

In a New York Times article, Walk Away From Your Mortgage! Roger Lowenstein compares a homeowner to a business which routinely chooses which ventures to keep funding and which to let fail. The reason we’re are not seeing more homeowners simply walk away is that defaults are considered antisocial and even amoral. It’s this appeal to morality that has our president urging homeowners to follow the “responsible” course.

Professor Brent White from the University of Arizona is frequently quoted as suggesting that not walking away from a house that’s underwater (i.e. worth less the mortgage) goes against one’s economic self interest and perhaps shame and guilt keep them from doing so. Even our government has made the process easier. Until recently, forgiven debt was considered taxable income. The bank sells your home and comes up $200K short, it’s as if you got that much extra income that year and a hefty tax bill follows. This is no longer the case as debt forgiven on one’s primary home is no longer taxed.

As with many issues, I don’t find this one to be so black and white. I can use some more time to ponder this issue before deciding, it’s not as though I have a default planned. I’m within about 7 years of being done with our mortgage.

Joe

written by JOE \\ tags: bankruptcy, Debt, foreclosure, Mortgage

As I often do, I was surfing through some fellow blogger posts. I came across a question posed on Debt Free Adventure

Should one pay off their 20 year remaining student loan, fixed rate below 3%, or use the money to aggressively pay a higher interest mortgage? There is no correct answer, just more questions. That’s about the cheapest fixed rate money one will even see, and with inflation likely to return in the next few years, I’d bet that one could do better than 3% on average over the next 20 years. One could buy a mix of stocks or corporate bonds with a higher dividend than 3% and take any increase in price as a profit.

The turn that caught me by surprise was one comment suggesting that the borrower should have never taken on a mortgage while the student loan was still outstanding. That God’s word says we should avoid debt and therefore not have both those debts at the same time. Specifically, the comment said “Christians have an obligation to repay debts, and to be debt free.” I am curious about the mix of religion and money. The more I blog and read others, the more I run into this. Not that I’m uncomfortable with God or religion, I’ve just never viewed God and finance as being related at all let alone as closely related as others are suggesting. I recently read a book review in which the reviewer discussed the book in a positive light, but commented that he felt the author should has injected some discussion of God or faith in the review. No, I don’t think the reviewer was at all crazy, I’m just trying to keep an open mind. When I see Star Wars (The original, 1977 release) I see good and evil, the Force and the Dark Side. A discussion of God might naturally follow. When I am talking about debt, money, mortgages, etc, I just don’t see where the injection of religion adds to the dialog.

It happens that both the book reviewer and the debt discussion were referencing Christian views of money. Are Christians more debt adverse than other religions?  Is is all Christians or just certain denominations? Do blog authors lose their non-Christian readers by tailoring their discussions to that approach to money? Am I a bad person for really liking the 2% cash back credit card I use?  Just my thought for the day.

Joe

written by JOE \\ tags: Debt, God, money, religion