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Wednesday, October 26, 2011

Another idea for student loan debt: Make it go away//My Take (MsMoneyGuru)

Another idea for student loan debt: Make it go away

As I read this article, my heart breaks for all the people out there that took out student loans and have found themselves in a situation where they are unable to see their way out of the mountain of debt. I totally sympathize because I am one of them. I went to the University of California (UCSB) for 4 years. My parents were unable to help me with my tuition, so I (like most) resorted to taking out student loans every year. At the end of 4 years I had financed about $40k. While I was taking out these loans (being 18 years old) I was under the impression that once I graduated from college, a well paying job would be waiting for me and I would easily pay these debts off. I was blessed to find a job that has enabled me to do just that (still working on it). But for a lot of students especially those graduating during the Great Recession, that promise of success is hard fought. While I totally sympathize with their plight, I totally disagree with the idea that these loans should just be "forgiven" across the board.

I am totally in support of programs that offer graduates the opportunity to "work" or "service" these loans off, most often through community/world service, military service, or by contributing to the communities less served (for instance teaching in an under-served area), but to simply be allowed to walk away from your responsibility is not the right way to deal with it. While Mr. Applebaum (advocate in the featured story) has a right to advocate loan forgiveness, I believe its irresponsible for him to suggest that the American people as a whole should shoulder the liability of all the graduates in this country (a lot of these loans are Federally insured). We live in a free society, were we have choices, there are ways (although not popular) to work your way through school or minimize your loans. I know from experience that I could have done a better job in managing my costs when I was in school, but I chose not to. Knowing that we (those with student loans) can't turn back the hands of time, what are we to do?

1. Get on a plan...that is the B-WORD (BUDGET).
There are options (especially for Federally insured loans) to lower your monthly payment to a reasonable percentage of your discretionary income (10%) and start paying it down like you would a car loan or a credit card. Just focus and devote your energy to tackling that debt until it is gone. If you need help with that seek out a Personal Finance Coach or Counselor that can help you get organized.

2. Increase your income.
Put the Student Loans on hardship deferral and spend that time formulating a game plan to get more money coming in. Perhaps you don't care for the subject you studied in school, but figure out what you can do NOW to maximize your income given the education you do have, focus intently, and move on (to your dream job).

3. Give Back.
Educate those high school students you know that are preparing for college on your experience with student loans and try to help them understand there is a better way to get through school without or with as little debt as possible. I would rather young America take a little longer getting out of school (because they have to pay their way through), then spend the next 10 years of their lives AFTER graduation shackled to the chains of student loan debt.

How many of you are still struggling with student loans?
If you have paid your loans off, how did you do it?


Tuesday, October 25, 2011

YOUR’S, MINE, & OURS: Tips on Combining Income with Your Spouse/Partner, Part 1: The Engagement

Congratulations! You’re engaged!  This can be one of the most exciting times in your life.  You have grown to love and cherish someone special; they have reciprocated those sentiments…Now all you need is a white horse to appear and you two will ride out into the sunset and live happily ever after?  Right.

Hold up! Before you drift too far into La-La-Land…let’s take a minute to go over a sort of checklist to ensure that you and your dreamboat are living in the same fairytale.  

1.     Start thinking in terms of “US”.

I can totally relate the elation you feel when you are anticipating the day that you and your future husband/wife become one and get to the business of spending the rest of your lives together.  When I was getting married, I was in the last semester of completing my MBA program, my fiance was also starting out in his career.  Having been “on my own” for 8 years, I was used to thinking in terms of “me” and “mine”.  I also made the mistake of assuming that once we got married what was “his” would automatically become “mine” as well.  I’ve got news for you! Even if you are the one that is more financially savvy in the relationship (as I was), you must think in terms of “US”.  Everyone gets a vote and everyone’s vote counts the same.  This will help you avoid pitfalls in the future when it comes to making big decisions about money.    If you have your spouse’s complete “buy-in” you can ensure that they will be equally involved and supportive if things don’t go as planned. 

2.      Discuss your financial goals: Not just the WHAT, but the HOW.

I know this seems obvious, but you would be surprised to find how many couples “assume” their future spouse has the same goals as them when it comes to money.  It’s not only important to plan how many kids, cars, and houses you want; but it’s also important to discuss how you are going to get there! Remember, the HOW is just as important as the WHAT.  We can sit and daydream and wish upon a star all day long, but how will you know that your dreamboats’ idea of planning for retirement is playing the Lotto every week instead of contributing to their 401k, if you don’t talk about it.  The HOW matters; talk about it.

3.      Have a “Come Clean” Ceremony.

Last night I watched an episode of the sitcom “Mike and Molly” where Molly wants to start saving for their wedding, but Mike get distracted by a car he wants to buy.  The episode goes awry when Molly finds out that Mike bought the car behind her back.  The car ends up being a lemon and Mike is able to return it and get most of his money back.  At the end of the episode, Mike and Molly decide to start sharing money and calling it “OUR MONEY”.  They are sitting at the kitchen table and having a “Come Clean” ceremony.  All their financial documents are out on the table and they are sharing what they have in their accounts and how much they owe.  Mike apparently is a great saver and has a clear record of what he has and Molly is really impressed. 

Molly on the other hand has what she calls a “ballpark” amount and says that she doesn’t really have any money because she likes to travel a lot. Then she mumbles something about “carrying a little credit card debt”, Mike asks her how much, she says “Just 17 Thousand”!   Mike is shocked because from his perspective Molly should have more money than he does. She lives at home with her mother; her car is paid off, and has a good paying job. He on the other hand has been living on his own, paying rent, and has managed to save a decent nest egg. 

This was a funny episode, but many couples go through the same thing and it’s not so funny in real life.  You are engaged, about to make a commitment for life, you need to come clean and know where each of you stands in regards to finances.  You don’t want to come home from the honeymoon to a mess.  Even if you are sitting on a mess, coming clean to your fiancĂ© gives the two of you time to discuss a game plan and establish a pattern of openness.     

4.       Discuss any additional obligations.

This is just for those special situations. It’s easy to forget to tell your fiancĂ© that you routinely give $1,000 to the Humane Society every year, or that you owe your parents $1,500 for a car repair they helped you out with a few months back, or that your idea of a decent Christmas gift is $50 to everyone you know!  Remember nothing is too small or insignificant when starting out on the right foot.

How important do you think it is to discuss this topic during the engagement period?
How many tips or stories can you share when it comes to financially preparing for marriage?
What kind of conversations did you have when you were engaged regarding money?

Check back to  for Part 2: Home from the Honeymoon…

Monday, October 24, 2011

Welcome to MsMoneyGuru!

I am a 30-something American, wife, mother, and professional that is striving to achieve True Financial Freedom.  When I came of age I had a vision of how my life would be. Due to circumstances and bumps along the way (mostly self inflicted) my vision hasn’t changed BUT my tactics have.  Rather than lament on my past mistakes, I am here to share my story and my journey as it unfolds.  I will also offer articles (based on my experiences) for discussion and insight. I want this blog to be a place where people (that's you) can come to be encouraged and to encourage one another.  Details about my personal story and goals will be addressed in future posts, so make sure to check back!

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