Managing your Student Loan

Managing your student loan starts the moment you apply for it. Aside from doing all the research on the types of loans available, the law also requires you to attend an entrance and exit counseling before and after you get your loan. You should pay attention to what your responsibilities and rights are regarding the money you borrowed and the terms of payment. You can contact your loan servicer any time as well if you have clarifications or questions about your loan terms.

If you are still pursuing graduate studies or are serving the military, you can also defer loan payments. Do keep in touch with your loan servicer so you can arrange payment when you’re done with school or are already out of duty. What if you become unemployed or got sick and cannot work? You can arrange to defer payment, too, under these circumstances. What’s important is that you talk to your loan provider right away if you find yourself in these situations.

But what if you are working but are not earning enough to sufficiently pay your student loan burden? Certain programs, like the “pay as you earn” plan allows you to pay only 10 percent your discretionary income based on how much you earn and your family size. If your repayment plan is “income based” meanwhile, your payment is 15 percent of your discretionary income. The “income contingent” repayment scheme is based on 20 percent of your discretionary income and is best suited for those with very low incomes. In this arrangement, any balance that remains unpaid after the loan term is forgiven.

Your loan may also be forgiven if you work in certain public service fields. Policemen and other law enforcers, teachers, doctors, nurses, healthcare personnel, and government employees can apply for the Public Service Loan Forgiveness Program or the Teacher Loan Forgiveness Program. In a nutshell, your balance is forgiven after you have made 120 payments on your loan. So make sure to check this out if you are working in education, public health, emergency management, the military, or the government.

You can also opt to extend your loan to take advantage of the lower monthly payments. So if your loan is scheduled to be fully paid in 10 years, you can change the payment schedule to 20 or 25 years so that you are not burdened with higher monthly dues. However, always remember that the longer you keep a loan, the more you will pay in interest. Most of the time, the interest paid on the student loan debt is even higher than the principal!

Don’t forget to deduct federal loan interest payments from your taxable income. Just make sure that you follow the IRS rules for doing so. Also, don’t forget that there are no penalties for paying your student loans early. Unlike home mortgages, prepayment penalties do not apply to student loans.

Student loans can help you get your college degree which will put you on track towards a higher paying job in the future. However, it can immediately turn into a burden if you don’t manage it wisely and pay it off on time. Don’t make the mistake of letting your student loan haunt you until you retire. Learn all you can about it, repay it as soon as possible, and don’t forget to talk with your loan provider right away as soon as you realize that you are going to have a hard time making the monthly payments. The sooner you talk to your provider, the earlier a solution can be found.

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Understanding Student Loans

Student loans, as the Federal Student Aid Office would put it, “are an investment in your future.” The statement that follows explains the correct attitude that students ought to have about it: “You should not be afraid to take out federal student loans, but you should be smart about it.” Unfortunately, many students only hear the first part of the explanation and neglect the second part. They are fearless when it comes to taking out student loans but pay dearly for the ways they manage it.

Many college students depend on loans to get their way through college, conveniently forgetting that there are other ways to spend for higher education. They also have the habit of loaning for more than what they really need. After all, it’s easy to forget about student loans when the due date is still very far away.

This report will give you the lowdown on student loans and steer you towards making wise decisions about this form of credit. We will also give you tips on how you can handle an existing loan now that you are already out of the university and climbing the corporate ladder (hopefully).

Ways to Fund College

Student loans are not the only way to get through college. There are actually many ways to prepare yourself and/or your child to financially spend for a bachelor’s degree. As much as possible, college loans should only be considered as the last resort since these need to be paid back. If you can find ways to meet your educational expenses without having to repay with interest then wouldn’t that be better?

First of all, there are college savings. Coverdell Education Savings Accounts (ESAs) and 529 Savings encourage parents and other well-meaning relatives to save for their child’s or other beneficiary’s college education because of the numerous tax breaks given. These college savings accounts allow money to grow tax-free for as long as the money is used to pay for qualified education expenses. For Coverdell ESAs, the distributions can even be given tax-free for as long as they are used for approved education expenses.  Try asking your parents if they had set up a college savings account for you so you can include this in your college war chest. If you’re a parent yourself, now would be a good time to start putting away money for your little one’s college education through these tax-advantaged accounts.

Second, look for scholarship opportunities. Most, if not all, institutions of higher learning have merit-based and need based scholarships for students. You will have to comply with all the requirements and impress the committee with your qualifications. But if you do get awarded scholarships, it’s virtually a free pass to college. Some even give a modest monthly stipend in addition to the tuition, board and lodging, and books so it’s a way to have extra money, too. The catch is, there are conditions that have to be maintained for the scholarship to be awarded so you have to meet these. Otherwise, your scholarship could get revoked.

Third, find work. You will have a lot of free time when you’re in college and you can make these productive by getting a job. Work will not only help you make ends meet, it also enhances your resume that will make you more valuable to your employers. As much as possible, try to find a part-time job that is related in some way to your course so your work experience will give you an edge over other applicants vying for the same position when you’re job hunting after college.

Before you Apply for a Student Loan

If the above-mentioned ways to fund for college are not available or just not enough, student loans are available. However, make sure that you know the answers to these questions before you accomplish that application form:

• What kind of student loan are you getting? In the world of credit, there are many different kinds. The same holds true for student loans. You have Stafford, Perkins, PLUS—what have you. It’s important that you get to know the features of each one so you can choose the one that’s best for your needs and circumstances. Researching on these is easier now with the Internet and it should be the first step towards getting a loan. If you know what kind of loan to apply for, it’s also easier to apply.

• How much do you need and can pay for based on your probably earning potential? See to it that you only borrow what you need and can actually afford to pay for based on your projected earnings when you start working. When we say projected earnings, we’re talking about how much your expected salary is in your first job, provided that you work in the profession you studied for. There are some majors that don’t pay as much and there are others that allow you to earn handsomely. So let’s say the entry-level salary in your field is $40,000 determine how much you can afford to pay for your student loan given your other obligations (e.g. credit card bills, food, utilities, etc.).

• What are the terms for your loan? Be sure to ask how much you will be paying for a particular loan, what the interest rate is, and how long the term is. Remember, a student loan is debt and debt can make you lose opportunities for saving and investing. The lesson? Strive to pay off your loan as early as possible.

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The Lowdown on Credit Cards

Credit cards are seen as wallet staples these days. It’s hard to find someone who does not own at least one card. But we also know that plastic money has its own pitfalls. As we have stated in the first part of this report, debt is not a tool. It can do more harm than good, and can be disastrous if you let it go out of hand.

That being said, most of us need credit cards in today’s economy. So in addition to preventing your balance from accumulating by not paying your dues on time, a crucial step that all potential card owners need to take is to try to get the right card for you. When we say “right card” we’re talking about the plastic that reduces your costs.

To do that, you need to examine your spending habits. If you are the type who sees to it that all debts are paid on time, the annual percentage rate would be the least of your considerations. After all, you won’t carry a balance anyway. What you are after would be a card that is willing to waive the annual fee and has lengthy grace periods. A “rewards card” will also allow you to reap the benefits of your prompt payments. This can be in the form of frequent flyer miles or other freebies.

However, if you are the type who would prefer the minimum payments—not really a good idea, though—then the interest rate matters big time. The lower it is the better. For those who have the tendency to go on a shopping spree when they have plastic in their hands, a secured card is better. With this card, the deposit you put in serves as your credit limit. So if you only have $500 there, then that’s all you have to spend. You also need to pay it off like a regular credit card and interest accrues if you don’t. This is also the recommended card for those who are trying to rebuild their credit.

Don’t fall for every credit card offers that come your way. At the most, you should only have two cards with you. The others only serve to tempt you to buy things which in reality you cannot really afford.

Habits to Nurture to Get Low Interest Rate Credit Cards

When looking for credit cards that charge low interest rates, you want to make sure that you nurture certain habits. Before, it used to be so easy for banks to offer low rate plastic in a highly-competitive market. But the bankruptcy filings which have increased over the years have also made them cautious and picky with those they give these cards to. So if you want to get the low rate cards, be sure to:

1. Show a history of punctual payment. Usually, they look at your bill paying habits in the last three to five years. If you have ever been late for one or two months (or more) in your bills, you’re lowering your chances of getting a lower interest rate.

2. Be employed for at least a year with your current employer. Aside from job stability, banks also want to see that you’ve been living in the same house for the same span of time (or longer) as well.

3. Show that you are not heavily in debt. They will look at your usage ratio or the ratio of your outstanding debt to your credit limits. The higher it is, the more difficult it will be to qualify.

Instead of you having to put the merchants on your account and arranging for the deductions, you can instead have the merchant automatically deduct their charges direct from your account on a certain date each month. For example, you can arrange with your cellphone company to directly deduct your bill from your checking account each month and they will do that for you. Just make sure that you are dealing with a reputable merchant. You should also still do the necessary checks that the merchant has only deducted the exact amount from your account. Reports of some merchants directly levying additional charges have made a lot of individuals wary of this mode of payment.

• Trusted Envelope System

If you would rather pay for things in cash, then the time-trusted envelope system works best. Put all the expenses and amounts in appropriately-labeled envelopes. When the “dinners out” envelope starts getting low, you know it’s time to do more home-cooking.

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Ways to Win Over Debt

Debt is not a tool, despite what you have been told to believe. If you’re reading this, you’re probably under a ton of consumer debt and want to get out. And it’s only right that you should. The more you are in debt, the more opportunities you lose to invest your money and save for the rainy days. It is not unusual to hear of seniors still paying off their student loans. So beware of that $4,000 credit card debt you have from your college years—that can easily balloon into a huge and debilitating financial obligation if you don’t pay it off fast!

Debt should not be given the same care as plants, watering it each day until it grows and blossoms. If you only pay the minimums month after month, it will grow and grow as the years pass by. However, unlike a flower that goes into full bloom when taken care of, debt will only balloon into a monster that will destroy your life. Instead, you should look at debt as a weed that sucks the lifeblood of your plants and hack at it until even the roots are uprooted. Don’t be content to pay the minimums. Rather, treat it like a plague and finish paying all your obligations until you have nothing left. Then and only then can you put your money to better use.

Debt does not give you freedom. In fact, it can imprison you unless you have a very healthy view of it. No, it cannot imprison you literally since we do not have debtor’s prisons here in the United States. However, it can limit your freedoms in a lot of ways. For starters, your financial history is recorded in what you probably know of as your credit report. Your creditors report your transactions to the three credit bureaus—Equifax, Experian, and TransUnion—and form the basis of your credit score.

If you have a bad credit history (and consequently a low credit history) marred by late payments, bankruptcies, and foreclosures, the detrimental effects can spillover to other parts of your life. You could lose your chance of getting a job, won’t be able to get competitive interest rates for loans or won’t even be approved for them, and probably won’t even be able to rent a house. Your credit report is already used as a basis to determine just how financially responsible of a person you are and if it shows otherwise, that can reflect on the rest of your character too. Unfair that maybe, that’s how things work nowadays. So unless you can responsibly manage debt, it’s better to steer clear of it.

But I Already Have Debt!

Unfortunately, majority of Americans are already swimming in debt and for those who are already drowning in it, the lessons above are learned a little too late. But even if you are already in debt, it is still possible to manage it so that it doesn’t push you further into the abyss. To help you do that, here are some guidelines:

1. Pay off your high-interest debt instead of putting your money in savings or investing at a lower interest.

Savings is good. However, if you have a credit card loan that earns a high rate of annual interest, you would be better off paying the debt first with your savings money. Here’s the deal: If your credit card debt earns 15 percent interest annually and your savings only gives you a 5 percent return each year, it is logically more practical to pay the debt than stick with meager returns on your savings. You’re essentially losing money if you continue to hold on to your savings instead of using your money to pay off your high-interest debt.

2. Refinance to a lower interest rate.

If you have a credit card debt that charges you 15 percent interest rate annually and you can qualify for a low or zero-interest credit card that allows you to transfer your remaining balance to it, then it is wiser to do so. Before you make the transfer, however, be sure to read the fine print as there are bound to be conditions that go with the transfers. For example, the low interest rate is only good for a certain number of months and will revert back to the prevailing interest rates once the time has passed. There are also some cards that strictly specify that the low rates only apply to the balance transferred. When you use the card for new purchases, they are also charged the prevailing market rates.

3. Pay promptly.

This is one of the proven ways to build a great credit history. Punctual payments will not only make you avoid additional charges and higher interest, it will also free your mind from the constant worry of not being able to pay your obligations. Now, even if you already have a marred credit history which can’t be undone, it is still possible to rebuild. And the best way to do that is to start making on-time payments. Now if you’re planning to apply for a mortgage sometime in the future, your prompt payments now can mean a huge difference in the interest that you will be given. The more punctual you are, the better your score is going to be, the more competitive the interest rate you will get for your mortgage.

4. Negotiate for a lower rate.

You don’t have to contend with a very high interest rate if you can get a lower rate. To be able to get what you want, you’re going to have to ask. Don’t be afraid to pick up the phone and call someone from the bank or the credit card company who has the power to lower your rates or even just eliminate the additional charges from a past due account. Be sure to get the name of the person you talked to and if your request is granted, make it a point to follow up your request with a letter that encapsulates the conversation and what was agreed upon. This way, you have a paper trail to support your claim. If the first person you talk to cannot or will not agree to your proposal just keep on looking for someone higher up in the chain who will finally be willing to help you out.

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Credit Card Savings

Having a credit card is very convenient since carrying a lot of cash becomes unnecessary and you might even have a hard time leaving your credit card at home. But with its advantages comes also its disadvantages. Since you can always buy things without carrying cash around, you are always tempted to buy something that you come across. If you have excellent control on your finances then good for you. If you have a hard time managing your credit card, then these pointers can help you.

Get organized

First thing's first, obtain your credit card records to have a better idea of your spendings. Be sure to double check the records for errors and ensure its accuracy. A good example would be to find out if you have outstanding debts that should not be there as well as the accuracy of the listing of your former and present address.

Evaluate your credit card

Go over your recent credit card records and look at the interest rates. Some credit card companies have promos wherein they offer lower interest rates for a period of time and this promo may already be over yet you have no idea and are already paying at a higher interest rate. Also take note of the membership fee which they charge annually since some have very high membership fees. Consider cancelling this if you are not using it frequently.  

Pay on time

It is important to pay your bills on time since it can have a negative effect on your credit record or rating. You will also be able to avoid getting charged because of not paying on time. Try asking the credit card company to remove the overdue charge if you have forgotten to pay it on time for the first time.

Manage your debts

If you see that you have more debt than what is comfortable, think ahead and plan out how you will repay it or at least reduce your debt. Devise a way to pay more than what is required of you so that you will have a reduced payment schedule. Prioritize the card that has the highest interest rate. Do not bring your credit card always when you go around since temptations abound.

Don't bite more than you can chew

As the saying 'don't bite more than you can chew" goes, do not spend more than you can afford. True, a beautiful gold bracelet may be enjoyable to wear but its price tag may mean paying a lot for the next months. If you are bent to save money when using your credit card, unnecessary items like jewelry and the like should be at the bottom of your considerations.

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High-low Numbers: Tips On Saving Money On Clothes

Are you craving for the newest designer clothes, a pretty tank top, and that pretty dress? All this fashion comes at a price — you choose.

Buying clothes these days is always a choice between the designer-made outfit or those cheap but quality items that you could pull together and express your personality in many different ways.

Most experts contend that clothes can definitely make or break a person. They say that your personality is usually reflected on how you dress up. But it does not necessarily mean that good fashion would absolutely mean expensive clothes.

Hence, you can still make a remarkable fashion statement without having to spend hundreds or even thousands of dollars just for your clothes.

Here is a list of some money-saving tips when buying clothes that would turn other people's heads to you but would not definitely break your wallet.

1. Do the math

Choosing fashionable clothes can be really tricky, not unless you know how to do the math! So before you buy three sets of clothes that would cost you hundreds of dollars, try to go for the budget-friendly dozen of items that you can even match alternatively.

The number of expensive items that your money can buy is definitely doubled or even tripled when you buy cheaper ones but can still make a good fashion statement.

2. Know what you want

Saving money is definitely based on knowing what you want whenever you spend your money on something. If you know what you want, this means that you have researched the item, have compared them with the other items, you will be able to come up with the lowest price of the product.

3. Drive your way to a 'thrift store"

Usually, these 'thrift stores" are non-profit organizations. This means that they are usually operating for charity. They give their proceeds to some charitable institutions.

Hence, the prices of the clothes being sold in the thrift store are absolutely cheaper than the ones being sold in the department store. So that would mean many savings for you.

Best of all, you do not only get to save more money, you get to do some charity work as well.

The bottom line here is that when shopping for clothes, do not shop for the brand name, shop for the quality.

Nowadays, you just have to be practical. Better spend your money on more important things than those designer clothes.

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