Tuesday, July 5, 2011

The widening gap between the rich and the poor

The June statistics are out and the gap between the rich and poor is the U.S. has reached levels not seen since 1928 just before the great depression.  I recently wrote an article about the gap itself for Helium and linked it through Redgage. I will leave both references below if you are interested.  If you go though Helium, you only click once. If you go through Redgage, you click through twice (and I get paid for both views).   

A writing friend commented to me that she didn't know what the answer was. Her comment started me thinking about long term solutions and short term solutions. I don't know what the answer is either and I know that there are plenty of Washington economists much well equipped to answer than I. But we have to find ways to survive.

In the article, I point out that part of the problem this increasing disparity creates is the inability for the middle class to remain the consumer class that has always driven out economy.  And I think that remains true.  The top 1% doesn't consume enough to drive the economy. After all, there are only so many houses and yachts that one needs.

So, short term survival for the rest of us 99% depends in some measure upon opting out of "consummerism."  It may not be life off the grid, but it is a matter of mindset really.  Creating wealth may be a far cry for some of us, but a realistic plan for getting out of debt is a neccessity if we are carrying debt.  Find a plan that works for you and stick to it.  (More on various tools and methods to come!)

And about this article, if you are not angry yet, please think about getting angry. At least one of the source that I looked at discussed looser lending practices as a means to quell the anger that the middle class and poor feel periodically about this huge gap.




Tuesday, March 15, 2011

Student Loans

So, many of you out there have student loans. How many of you struggle to pay your loans. In this economy, it can be very difficult to meet our financial obligations: rent/mortgage, food, medical costs, clothing, bills.  For many of us, and I include myself in that number, bills come after the essentials of living and before luxuries such as entertainment.

If you have lost your job, or are making less money than you anticipated, you can look at the possiility of an Income Based Repaymet Plan.  In essence, the amount of your monthly income is capped depending upon the amount of your income.

Income Based Repayment Plans (“IBR”) are part of a legislative enactment called the College Cost Reduction and Access Act of 2007.  IBRs became available for use in July 1, 2009. This plan may be a helpful tool for borrowers who have incurred substantial student loans but who work in lower paying jobs such as the arts or the public interest sector.

One of the big disadvantages of the income based repayment plans is that you must supply sensitive financial information, such as your tax return, annually to your lender. Your lender then calculates your monthly payment under the plan according to federal guidelines. At the end of 25 years, any amount remaining on the loan is "forgiven" by the lender. However, under current legislation, any amount forgiven at the end of the 25 year period remains taxable as income in the year it is forgiven.

Of course, it is always better to pay off your student loans as quickly as possible. However, if it is not possible, take a look at Income Based Repayment. It may help you balance your life and end telephone calls from your lender.

For further information:



Tuesday, February 15, 2011

Paying off Credit Cards

I am on a painful quest. Besides my mountain of student loan debt, I (read this as we) have a mountain of credit card debt.  This year, as my husband started talking about retiring, I took a long look at our assets and liabilities, including the amount of credit card debt we have.  I joined a site called www.sparksavings.com. It is free and provides a fair number of tools for budgeting and tracking expenditures. One of the things that I like about it are tools for savings dreams.  That trip to Europe is now a concrete plan with a savings plan attached to it.  On the site as well are calculators that will help determine how long it will take to pay off specific debts. You inut the amount of the debt and the percentage interest as well as the amount you are paying monthly on the debt and it will tell you how long it will take to pay that debt off.  By playing around with the calculators you can determine how much extra to add monthly toward that debt to pay it off within the time frame that you desire.

So, we are on track. I signed up during December which is the worst month to start tracking expenditures, but so far, so good. We are on track with the plan. 

Check it out.