Archive for April, 2008
Cold Weather, You’re Out
April 30, 2008 9:02 pmDear Chicago:
I don’t know what I did to piss you off, but I’m writing to let you know that I’ve absolutely had it with your attitude. I WILL NOT, no matter how cold, snowy or downright nasty you get, WILL NOT wear my down parka another minute until at least October. I refuse! You may have gotten the best of me this winter by jacking up my heating bills to over $200 each month, leaving permanent salt stains on all my clothes and shoes and halting my driving lessons with your “ice storms,” but mark my words, frienemy, your frosty days are numbered.
Watch out Chicago. Because as soon as your cold snap ends, I will be out on your town with a vengance.
Regards,
Nicole
Saving game
April 29, 2008 9:41 pmI generally don’t do blog “tagging” games. Mostly because I could never actually figure out what they actually are. But Twiggers over at In Debt Because I Like to Have Nice Things kindly explained how it worked, and now that I’ve read a couple posts, it’s actually pretty fun to read everyone’s lessons learned.
Here’s my deep and meaningful contribution:
SAVING TOTALLY BORES ME. OH WELL.
Most other memoirs were super serious so I thought I’d change it up.
Seriously, for those of you who are rock stars and love going out, saving will be a challenge. But there are some things you can do to spice it up. Like getting a cheap hobby; I’ve tried about 500. Knitting? Super cheap but kind of hot for the summer. Step aerobics? Dangerous… I fell off it and hurt myself. Getting a pet to keep you company? So not cheap. Eh… oh well. In the end, I’ve emerged a stronger, healthier, more content, less chaotic person with a lot to live for and a simple, chill life to enjoy. So call me boring. I do not mind. I’m having fun.
I’m not going to tag because I know it can be laborious sometimes to participate in these things. That said, take a quick read at these memoirs for a nice snapshot of different people in various stages of their financial journeys, and feel free to post your own so-called memoir here. It’s actually pretty cool to think about.
IDBILTBNT: “You can’t take it with you“
Young Broke and Fabulous: “At least you have the experience“
Beachgirl’s Budget Blog: “Do what is best for you“
The Debt Hole: “Falling down. Getting up. Trying again.“
Frugalista Files: “Peace, values and a decent wine.“
Who else should I add up here???
What Does a Credit Score Mean to You?
April 28, 2008 10:21 pmSimply College Answers Our Student Loan Q’s
April 27, 2008 11:01 pmWhile I typically spend my weekends dining, drinking and catching up with friends at social functions, I spent much of this weekend at the Kellogg School of Management’s
Women’s Leadership Workshop in Evanston, Ill. Kellogg is one of the world’s top business schools, and I was honored to be a participant. The session featured valuable classroom workshops on negotiations, interviewing techniques, values-based leadership and relationship dynamics for leaders.
I’m going to reflect on those themes and share learnings from the workshop in coming days, so look for more on that. In the meantime, I noticed that many of the women attending the session were grappling with the issue of funding and student loans. Serendipitously, I had already been working on a story about college loans with the good folks at Simply College, a company that specializes in simplifying financial aid for those applying to college and graduate school.
Since the job market’s looking pretty glum these days, and the news about student loans has been drab as well, I posed some questions about loans to Rene Bolti, Vice President of Simply College, and an educator with 17 years’ experience creating and administering programs and services for elementary, secondary and higher education. I hope you find her answers helpful.
Here’s the Q&A…
1. In layman’s terms, what’s changed in student loans over the past six to twelve months?
Probably the most significant change is a new trend toward eliminating loans from financial aid packages of students below certain income levels. As a result, students at many top-name colleges may find themselves being awarded grants (which don’t need to be repaid) instead of loans.
But, the vast majority of students attend colleges that still include loans in the financial aid equation, so unless you are accepted at one of the top-tier, no-loan colleges, you’re likely to have to grapple with the question of student loan debt.
Although some lenders are exiting the student loan market, there are still many education loans available through a variety of lenders, including federal loans. In fact, the maximum annual limit on federal loans and grants for undergraduate and graduate students has recently increased, making the loans go further toward paying for a year of school.
2. What are three things I should know about college loans today?
1) There are many different types of college loans.
- Federal Stafford loans are available to students who complete a Free Application for Federal Student Aid (FAFSA).
- A family’s financial situation determines whether a student qualifies for subsidized or unsubsidized Stafford loans. (In subsidized loans, the government pays the interest while you’re in school; in unsubsidized loans, you’re responsible for the interest that accrues while you’re in school.)
- Federal PLUS loans are a low-cost option available for parents of students.
- Private loans, made directly by banks or specialized lenders, which tend to be the most expensive option, are available to students and parents to fill any gaps that remain once financial aid has been awarded.
2) Not all education loans are taken in the name of the student; some are student loans, some are parent loans, some need to be co-signed by the student and a credit-worthy adult.
3) Private education loans need to be researched for terms of repayment, length of repayment, total cost over the life of the loan, special qualifying characteristics (like minimum grade point average), and whether all terms and special offers (like interest reduction based on a certain number of on-time payments) are guaranteed for the life of the loan.
3. Can’t parents help their kids navigate the process?
The financial aid process is complex and overwhelming, even for parents who are college-educated and highly motivated. It is a multi-step process requiring attention to timing and detail, with many significant decisions compressed into a very short period of time. To minimize the anxiety and stress inherent in the process, it is beneficial for parents and students to work together, using trusted resources, to be sure they pay attention to each critical component.
Our program, Simply CollegeTM offers a step-by-step workbook/organizer, “Financial Aid Simplified”, to guide students and parents through the entire financial aid process beginning as early as January of junior year in high school, including researching scholarships and loans, completing required forms, comparing financial aid award offers, building a “college life” budget, and more. Go to www.simply-college.com to view video segments that accompany each tab of the workbook.
4. Is the financial aid process different for grad students?
The financial aid process for graduate students typically includes the FAFSA (to make federal loans accessible), but also may include looking for fellowships, assistantships and private loans. FinAid.org has a page dedicated to information for graduate students, including information on specialized loans.
5. Are working professionals at a disadvantage when it comes to loans?
While it is true that income will determine eligibility for certain loans and grants,
working professionals might consider financing their graduate degree through a combination of: employer tuition reimbursement, fellowships, grants, loans.
If you research the possibilities, you’re likely to be able to put together a package that meets your needs. In addition to discussing all possible funding sources with your selected university’s financial aid office, be sure to discuss assistantship and fellowship opportunities with your selected department.
If you are currently employed, talk to your human resources department about tuition reimbursement options (even if you’re unsure whether your employer has a tuition reimbursement program). As mentioned above, finaid.org is a good source of information and fastweb.com has loads of scholarship opportunities, including some for graduate students.
6. If I’d like to quit working and go to school full-time, using student loans, what special considerations might I have to take?
Giving up a salary and returning to the classroom full time will mean making some adjustments to your current lifestyle as student loans are unlikely to equal your salary. Each person needs to weigh personal responsibilities, career aspirations and financial goals when considering full time graduate study and how best to finance it. Here are some specific questions you should ask.
- Is there an alternate source of support available while you’re in school, like a spouse or parent? Even if it’s a loan from a family member, the terms of repayment and amount of the loan would likely be more favorable than any formal education loan.
- Is it possible to work part-time to cover basic living expenses while in school?
- Will a post graduate-degree job in your field draw a salary sufficient to afford and justify educational loan payments?
- Do you already have employment prospects that will be enhanced by a graduate degree?
- If you need to take an educational loan, how soon will you be expected to begin repayment?
# # #
To read some of my personal thoughts and other research on college loans and education, click here and here and here.
Good luck with your applications!
The Importance of Building a Good Credit History
April 26, 2008 11:41 pmThere are many reasons as to why people should strive to build a good credit history. First and foremost, a good credit history is an important financial asset to possess in order to obtain the big loans (i.e. a mortgage, a car loan, and/or a college loan, to name a few) in life. Additionally, beyond qualifying for these kinds of loans, the interest that you will have to pay for any such loan is an important factor to consider when getting the loan. If your credit is good, your interest rate will be lower and thus, make the loan a more attractive option for you.
Of course, these loans will not be a concern to some people. Some people rent (however, renting a place by yourself does require a credit check, therefore, if your credit report is bad, you may be denied the lease. If you do rent and do not want to have your credit history checked, you are going to have to have roommates, or have the apartment rented in the name of another person who is willing to be the primary tenant on the lease and who trusts you enough to make the monthly payments on time.). Some people buy cars for cash, get scholarships to college, or never go to college, and some people will never take out a loan. There are not many of these people. However, if you are one, or are striving to become such a person, there is another reason as to why you should have a good credit history.
What started in a minority of companies is now basically common practice. Many companies will check the credit history of all new employee applicants. These companies believe that the credit history of a person can determine, among other things, the responsibility level of a person and the true intention as to a person’s reason for applying for a job. A bad credit history will not be the end-all factor that prevents you from getting a job, however, many companies take your credit history into consideration when determining who to hire. Do not start with a disadvantage because you have a bad credit history.
Even though some of you may think that debt is evil and that there is no possibility of you ever taking out a loan or otherwise using credit and therefore do not care about your credit history, remember that there are many companies out there that check your credit. If you do not strive for a good credit history because of the financial benefits, at the very least, a good credit history could get you the job that you want. Therefore, a good credit history is in your best interest. 
In order to answer this question effectively, one would have had to actually participate in a credit counseling service. Fortunately for you, I have participated in such a service. There was a time in my life (mostly during college) when I would irresponsibly use my credit cards. I was deeply in debt and was having trouble making monthly payments. I decided that I needed to solve the problem by hiring the services of a credit counseling company.
Basically, these companies contact your creditors and get your interest rate and monthly payment lowered. Your credit accounts are closed (therefore, you can no longer use them and your credit score is negatively impacted, although not by much) and all of your debt is pseudo consolidated. These companies claim that your debt is consolidated into one, low monthly payment. Although it is true that you do only make one monthly payment, your debt is not consolidated. Each one of your credit card companies is still owed its respective debt amount. You only make one payment because you pay your credit counseling service, which in turn pays each one of your individual credit card companies its individual share. Additionally, the credit counseling company takes a fee for this service.
For the most part, these companies help you get organized and do help you pay down your debt. In my experience, they do not completely cover all of the ramifications of participating in such a service, however, if you do your homework and ask all the questions you may have, you will discover the whole story. If you do not like the answer you are given, ask the question again or ask for clarification.
The only problem I had with my credit counseling company is that they sometimes were not timely with my payments to my creditors. You have to make sure that your payments are being made to the appropriate creditors for the appropriate amounts. Additionally, you have to make sure that the credit card companies are recording the payments and are not adjusting your interest rate. It can be a tedious process, but if you put in the effort and weigh the benefits against the disadvantages, you should conclude that a credit counseling service is one viable solution if you are struggling with credit card debt.
Should you Pay off your Debt or Invest?
April 25, 2008 1:01 amMany financial gurus advise that you should always pay off your debt first. In my opinion, whether or not you should pay off your debt first comes down to the interest rate you are paying on your debt versus the interest rate you could collect (or the return you could get) by investing.
Debt comes in many different forms. Many people have credit card debt, student loans, a mortgage, and some kind of auto loan. Many financial gurus state that you should pay half of your monthly mortgage payment every two weeks. By the end of the year, you will have made an additional monthly mortgage payment. This extra monthly payment will help you pay off our mortgage faster. Unless you plan on living in your home for the next 30+ years I do not like this plan. A mortgage is a fixed payment. Additionally, if your monthly payment is too high you can refinance your loan (if your credit is good). Also, many people do not live in a home long enough for the mortgage interest rate to take a toll on their finances. Also, most homes appreciate in value at a rate higher than the interest rate on the mortgage. Last, mortgage interest is tax deductible. Therefore, paying off a mortgage is not something I would take into account when deciding whether to pay off debt versus investing.
The main inquiry should be whether you should pay off your credit card debt before investing. Credit card debt usually carries an interest rate of anywhere between 8-30+%. If you have a credit card with an interest rate of 8%, you are in the minority. 8% is a very low credit card interest rate, therefore, it is more likely that you possess a credit card that has 10% or higher interest rate. Meanwhile, I am unaware of any risk-free investment that yields a 10% return. Therefore, in this case, you should pay off your credit card debt first.
If, however, you find an investment that yields a return higher than your credit card interest rate, than the investment looks like a good choice. However, you must take into account the risk involved in the investment. The stock market goes through many changes. You definitely do not want to pay your full credit card interest rate and at the same time lose a percentage of your investment.
Always carefully analyze the investment situation before you choose to invest in lieu of paying off your credit card debt. In most cases, it will be better and more profitable to pay off your debt before you invest. However, do your homework and there may be an exception that you discover.
US News Loves Budgeting Babes
April 24, 2008 1:42 am
So exciting! Click here to partake in the awesomeness and sweet knowledge building.
And congrats to Kim for doing an absolutely amazing job on her ABC News Now interview, which you can watch here. It’s everything I wish I would have said in my recent TV interview. She’s so smart and together. If only my financial brain was as big as hers!
Kim, when you become uber-famous and spin off your own cool magazine and TV show properties, keep me in mind as a contributor! Or at least invite me to the kick-off party so we can be sassy together. I know you will.
Six-Word Memoir Game
April 23, 2008 2:20 amI generally don’t do blog “tagging” games. Mostly because I could never actually figure out what they actually are. But Twiggers over at In Debt Because I Like to Have Nice Things kindly explained how it worked, and now that I’ve read a couple posts, it’s actually pretty fun to read everyone’s lessons learned. Here’s my deep and meaningful contribution:
SAVING TOTALLY BORES ME. OH WELL.
LOL! Most other memoirs were super serious so I thought I’d change it up. Seriously, for those of you who are rock stars and love going out, saving will be a challenge. But there are some things you can do to spice it up. Like getting a cheap hobby; I’ve tried about 500. Knitting? Super cheap but kind of hot for the summer. Step aerobics? Dangerous… I fell off it and hurt myself. Getting a pet to keep you company? So not cheap. Eh… oh well. In the end, I’ve emerged a stronger, healthier, more content, less chaotic person with a lot to live for and a simple, chill life to enjoy. So call me boring. I do not mind. I’m having fun.
I’m not going to tag because I know it can be laborious sometimes to participate in these things. That said, take a quick read at these memoirs for a nice snapshot of different people in various stages of their financial journeys, and feel free to post your own so-called memoir here. It’s actually pretty cool to think about.
IDBILTBNT: “You can’t take it with you“
Young Broke and Fabulous: “At least you have the experience“
Beachgirl’s Budget Blog: “Do what is best for you“
The Debt Hole: “Falling down. Getting up. Trying again.“
Frugalista Files: “Peace, values and a decent wine.“
Who else should I add up here???
Avoiding the Vending Machine
April 22, 2008 2:59 amLadies and gents, I’m happy to say that I’ve received my first reader question to which I can actually provide an answer without having to look a bunch of stuff up or call on a smarty-pants friend/expert resource. Neat-o. (It’s the small things that keep me happy, really.)
Anyhoo…this question comes from Sarah over at My Dainty Dollar, who seems like could use our collective support. She’s having a hard time living within her means in New York while trying to pursue her passion for performing. She writes:
” I am a slave to the vending machines at work. Every day I get at least one thing. These snacks are never healthy and are 80 cents each. I’m sure over time that’s going to add up. I think part of the reason I snack at work is because I’m so bored and my job is unfulfilling. Do you have any tips for staying away from this money taking calorie machine?
OK, I’m going to answer the question about vending machines for now and leave the career management bloggers to advise you about the job. But before I begin dispensing my snacking wisdom, I will say that life in general can seem pretty crappy if you hate your job and don’t know what else to do. A lot of people find themselves totally bored out of their mind at work, feel stuck in jobs that are unfulfilling and develop bad habits to compensate. But remember that life is all about decisions, and that you are never a passenger in your own life. You are the driver. You get to choose where you want to go. That is the beauty of life. So, you know, drive. Make a turn or stop and ask for directions or something.
Ugh. This driving analogy’s making my head hurt. Onto snacks.
Snacks, indeed… I love them. Every day at like 3:00 p.m., I start thinking about cookies. Big, lovely, sugary, chocolate-chipped yumminess. Or Doritos - a bag of cheesy, crunchy heaven. Or just about anything I ran past on my way to work in the morning or got a whiff of on the bus. Suddenly at 3:00, it’s all I can think about.
Luckily, I have the good fortune to work with dietitians, personal trainers and other nutrition specialists at my job. And I have pumped them for information, well, like it’s my job. So without further ado, here are my tips for staying away from the vending machine at your office.
1. Plan ahead. My best days are those when I manage to pack sandwich bags or Tupperware with enough snacks to get me through the day. The sandwich bags are key, because in my opinion, they give me the illusion I’m eating something sinful. So into my sandwich bags I pack dried berries, wheat crackers, baby carrots, cut-up red peppers, trail mix, pistachios and other fruits, vegetables and grains to get me through the day. When I feel like I need a bag of Doritos, I go for the crunchy carrots. When I need a cookie, I eat my dried berries.
2. Keep healthy food at your office. For days when you can’t plan ahead, keep a few supplies at your office. I usually have an apple or orange, a packet of oatmeal and a can of soup at my desk in case of emergency. Trust me, they come in handy.
3. Buy in bulk. If you can buy granola or dried fruit in bulk, and then bag it, you’ll save some cash. I don’t really know where to buy healthy versions (without preservatives, sulfates or additives) of this stuff in bulk for cheap, unfortunately, since I don’t really have cabinet space. Whole Foods bulk always seems really expensive. So let me know if you find a better alternative. People with cabinet space will thank you.
4. Fill up with fiber. To stay full, keep your energy levels high and help with your daily calorie count, eat foods that are high in fiber. You can find a great list of high-fiber foods here. I also have been known to use a fiber supplement (I like Metamucil Pink Lemonade) to tide me over for days when I’m really hungry.
5. Keep a box of low-sugar, high-fiber cereal at your desk. This is a no-brainer. See the above note. (I like Kashi Good Friends.)
6. Drink decaf green tea. I read the book “Skinny Bitch” and one of the best tips I got was to drink decaf green tea to conquer cravings and provide a non-caffeinated energy boost. I drink Celestial Seasonings because it’s typically the only decaf green I can find. It’s also yumtastic.
7. Drink enough water. I also read that most of the time when people feel a craving for snacks, they’re really dehydrated. So for a while, I required myself to drink a full 12-oz. glass of water before I had any snacks or soda. It was a punishment back then, when I used to drink cans of soda every day. But now, practically the only thing I drink is water.
As a sidenote, have you ever actually tried to drink 64 oz. of water in one day? I have. My stomach was so full that I couldn’t fit any snacks in.
8. Go easy on yourself. All food costs money, especially the healthy variety. So don’t beat yourself up over spending 80 cents per day on snacks. It’s not like you’re buying two $5.00 lattes every day. If you’re trying to cut costs, take Suze Orman’s advice and look for the bigger expenses first (expensive cable, two phone lines, etc.).
And in general, don’t be so hard on yourself. You’re doing an amazing job by just recognizing where you are in life and trying to do better! Congrats on taking your first steps towards financial fabulousness! Good luck and remember the little people when you get big and famous.
