What To Do About
Excessive Debt

Frank Money here – your very effective money detective….

If you have excessive debt, you should take a deep breath and realize you do have options.

Millennials in general have the lowest credit score and most problems managing their debt, compared to prior generations. But the good news is you have the lowest number of credit cards and lowest debt total compared to other generations.

However, the bad news is that you use credit cards a lot, and make a lot of late payments. Late payments mean lower credit scores.

Additionally, millennials tend to use costly alternative financial services, such as auto title loans, payday loans, pawnshops, rent-to-own loans and tax-refund advances.

Here are some steps you can do to help you get control of excessive debt:


1 – For credit cards, get a lower credit card interest rate as soon as you can – Call up your credit card company and ask for a lower rate.

2 – If you can’t make the minimum payments on time, call your credit card company and work out a payment plan.

3 – Allocate a larger portion of your income to reduce debt. This will be painful, but over time it will work.

4 – Limit your spending. If you don;t have a budget plan in place, now is the time. Limit your spending to only the essentials, and make paying off your debt the number one priority.

5 – Motivate yourself. Reach out to friends or relatives who have been through similar problems. This is a process, and it helps to have support during those low times.

Need more help? Then why not reach out to the NFCC (National  Foundation for Credit Counseling – the nations largest and longest-serving non-profit financial counseling organization.

http://www.nfcc.org/

So don’t fret the debt – instead take some steps to help yourself and sleep easier.

April is National Financial Literacy Month, Detective Frank Money’s favorite month! To celebrate the importance of being financially literate, Detective Money is going to post financial literacy tips every day.

Student Loan Debt = Game of Loans

Student loan debt is a big issue for Millennials. It is the most common way of funding your college and graduate school education – but doing so has become a ‘Game of Loans’.2016_0424-GameOfLoans

But before you start to think that getting a student loan is like an alliance with the House of Lannister, understanding what you are getting into is an important first step.

In the U.S., the total outstanding student loan debt is around $1.2 trillion dollars with the average student debt for a grad being around $33.000 (2014 figures).

Come off of graduation day with $33,000 in debt that begins to require monthly payments shortly thereafter can definitely take the wind out of your sails – and prevent you from being able to purchase other things you might want, like a car or home.

Perhaps the biggest question you need to ask yourself is what is the return on my investment for the education you are financing. Will the degree you earned, ‘pay off’ in giving you enough income over your working life to afford paying off the loan  it required -and- prove you with enough remaining $$$ to actually live the life you want.

As a general rule – try to avoid student loans as much as possible. Look for other monies, some of which is available for little cost to you in scholarships.

It’s sometimes daunting to understand all the facets of the ‘Game of Loans’ – but taking steps to understand the rules of the game will prevent you from ending up with the dragons.

Dealing With Excessive Debt

2016_0423-ExcessiveDebtIf you have excessive debt, you should take a deep breath and realize you do have options.

Millennials in general have the lowest credit score and most problems managing their debt, compared to prior generations. But the good news is you have the lowest number of credit cards and lowest debt total compared to other generations.

However, the bad news is that you use credit cards a lot, and make a lot of late payments. Late payments mean lower credit scores.

Additionally, millennials tend to use costly alternative financial services, such as auto title loans, payday loans, pawnshops, rent-to-own loans and tax-refund advances.

Here are some steps you can do to help you get control of excessive debt:
1 – For credit cards, get a lower credit card interest rate as soon as you can – Call up your credit card company and ask for a lower rate.

2 – If you can’t make the minimum payments on time, call your credit card company and work out a payment plan.

3 – Allocate a larger portion of your income to reduce debt. This will be painful, but over time it will work.

4 – Limit your spending. If you don;t have a budget plan in place, now is the time. Limit your spending to only the essentials, and make paying off your debt the number one priority.

5 – Motivate yourself. Reach out to friends or relatives who have been through similar problems. This is a process, and it helps to have support during those low times.

Need more help? Then why not reach out to the NFCC (National  Foundation for Credit Counseling – the nations largest and longest-serving non-profit financial counseling organization.

http://www.nfcc.org/

So don’t fret the debt – take some steps to help yourself and sleep easier.

April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

5 Numbers That Spell Fresh Financial Trouble For Millennials

From Forbes – Ask 5,500 Millennials about the state of their finances and you’ll get 5,500 reasons to feel a little depressed about the financial security of the largest generation in the U.S.

This is what global tax and consulting outfit PricewaterhouseCooper recently discovered when it surveyed 5,500 people between the ages of 23 and 35 about their personal finance knowledge, the state of their savings, the status of their debt, and their overall satisfaction with their financial lives. The results were not pretty.

Given the relatively derelict state of America’s personal finances, this isn’t altogether surprising. But the study makes the argument that Millennials’ small savings and high debt is compounded by their low personal finance IQ — and that this, in turn, could have a domino effect on other generations.

“Millennials owe a lot. They know too little,” says Annamaria Lusardi, the academic director at George Washington University’s Global Financial Literacy Excellence Center, which partnered with PwC to put out the research. What’s more, she says, Gen Y’s ”struggle with debt may eventually become our problem, too.”

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How I’m Paying Off $155K of Student Loans From Pharmacy School

From Yahoo – Medical professionals often leave school with jaw-dropping amounts of student loan debt. Among 2014 graduates from medical school, for example, most (84%) reported having education debt, with a median amount just over $176,000, according to the Association of American Medical Colleges. Even if they earn high incomes when they graduate (physicians, for example, are among the highest earners in America), by the time that debt — with interest — is repaid, the tab can be significantly higher.

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7 do’s and don’ts of student loans for millennials

From Fidelity.com, some great advise on student loans.

2013_12-TMTest05When Philly resident Chenell Tull’s grace period ended 6 months after graduation, her $45,000 in private loans turned into $52,000. That’s because post-grace period, the student loan companies took the interest that had accrued while Tull was in school and added it to the principal.

Follow this link for the ret of the article: https://www.fidelity.com/insights/personal-finance/student-loans-for-millennials

 

Here’s what happens when you stop paying your student loans.

From Yahoo – Two years after leaving school, students default on their federal loans at a rate of 9.1%, according to a 2013 report by the New York Federal ReserveThat figure jumps to 13.4% at the three-year mark.

Pulitzer Prize-nominated author Lee Siegel wrote an op-ed article in The New York Times on Saturday in which he advised people to default on their student loans rather than remain stuck with crippling debt.

But what actually happens when you default?

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student debt

How Bad is Student Debt?

From the NYTimes – Once again, the headlines are filled with claims that student loans are bad. Several articles have highlighted results from a Gallup poll that shows that college graduates who borrow for college are less happy, healthy and wealthy than debt-free graduates. The Gallup report (which is cautious in its interpretation of the data) has been drawn into a rising chorus of news media reports on the negative consequences of borrowing: Student loans not only make you sick but also hamper homeownership and delay marriage.

Student loans need reform. But recent reports obscure the key benefit of borrowing for college: a college education.

The highlight of the Gallup report is a comparison of the well-being of college graduates who did not borrow and those who borrowed more than $50,000. As I discussed in this New York Times article in June, 43 percent of undergraduates borrow nothing, and 98 percent borrow less than $50,000. The report is therefore comparing the 43 percent of undergraduates who borrow nothing with those with the highest debt loads.

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