Student Loan Debt on the Rise
…who needs college anyway?
In a New York Times, Economix article Catherine Rampell explains how Americans have been getting better at paying off their debt in the last year, with a glaring exception: student loans. 
The article continues to show that consumer debt fell again in the third quarter and seems that this figure has been falling for four years now. But in its “Quarterly Report on Household Debt and Credit,” the New York Fed found that education debt totaled $914 billion as of June 30—up $10 billion from March 31.
The actual delinquency rate for student loan borrowers may be about twice as high as stated, according to the New York Fed, “because almost half of these loans are currently in deferment, in grace period, or in forbearance and therefore temporarily not in the repayment cycle.”
So what’s with the rise in student loan debt and the decline in repaying it? Almost everyone is more likely to have student loan debt than a few years ago. A four year college graduate’s pay advantage over high school grads has doubled over the last 30 years. With this in mind, more and more people believe that the key to success lies in obtaining a college degree. Many prospective college attendees are under the beliefs that if money for college is tight, borrow what you need. But can we all afford to bear this burden? 
It would seem that one of the major reasons for running up so much debt for school is that the cost to attend college is ever increasing. The cost of a college degree in the United States has increased “12 fold” over the past 30 years, far outpacing the price inflation of consumer goods, medical expenses and food. According to Bloomberg, college tuition and fees have increased 1,120 percent since records began in 1978.
With the soaring cost of college and the inability of new college graduates to find a job, the only thing that could possibly happen is that these student loans will not be able to be serviced and end up in default.
While I personally have obtained the all-important college degree, and the debt to go along with it, I’m not sure I would encourage my 2 boys to go to college if they were of the age. Immediately after college, I was unable to obtain a decent paying job in my field, and that was what seems like 100 years ago.
My plan for our boys was for them to join the family business when they were old enough. With the financial / real estate catastrophe, we were forced to close our mortgage company, so much for the boy’s future employment. Still, I would encourage my sons to take a look at a trade school as opposed to a conventional 4 year college. The cost of a trade school is far less than a traditional college and there are usually employers who enjoy picking up new employees at these schools.
Even though these schools are not conventional, there is still financial aid available. The other great thing is that it is usually possible to find a trade school close to home, eliminating the added cost of moving away to attend college. Also, another perk is that they mooch off of their parents for a few more years by living at home.
Yes, I would certainly advise anyone considering heading off to a 4 year college to consider something closer to home and targeted to preparing them for employment after graduation.
It is possible to start a trade school the same time the other guy starts his 4 year school, and have graduated and landed a good job and earn some dough, all before college boy makes it to his junior year.
Well, thanks to the recent financial crisis, I can say that I have finally started working in my field. See, that only took a measly 13 years!
Sure, go ahead. Go to college, everything will be fine.
As the Fiscal Cliff Looms, So Does the Marriage Penalty
If We Jump Off the Cliff There Will be Some Penalties
With automatic budget cuts and tax increases set to begin in January, many economists say if we slide over this fiscal cliff, it could send us back into a recession. I’m not so sure we have come out of the last one. Anyway, don’t fear! Congress is expected to come back on Thursday and Obama is cutting his 20 day, $4 million tax payer’s dollar, Hawaiian vacation, in order to get together and prevent the economy from going over the so-called fiscal cliff.
OK, I’m sure there is nothing to worry about, and our genius representatives and President will save us from the fiscal cliff. But let’s just say they don’t. I know, I know, that is very unlikely. After all, this is the same Congress that has failed to produce a budget in over four years. I’m sure they will have no problem fixing this economic mess in just four days. If we go over the fiscal cliff, without any of the automatic cuts and tax increases being addressed, there is one part that will affect millions of Americans and every married middle-class couple in America, the exact group of people the administration supposedly wants to “protect”. And that is the return of the so-called Marriage Penalty.
As a result of the Bush tax cuts, married couples get a standard deduction that is exactly twice of that of their single counterparts. And the income ranges for the 10% and 15% tax brackets are also doubled. Prior to 2001, married couples had paid a “penalty” because their standard deduction and income tax brackets were less than twice those of singles.
Next year the disparity could return. While the standard deduction for single filers should rise to $6,100, married couples would receive a deduction of only $10,150 if something isn’t done to extend the provision. To remove the marriage penalty, the married couple deduction would have to be $12,200.
That’s just the affect this fiscal cliff thing will have on income taxes, but what if the President and Congress really don’t work things out before the deadline? Well, it’s unusual for me to agree with CNBC on many things but they sum it up pretty well:
Partly by fate, partly by design, some scary fiscal forces come together at the start of 2013 unless Congress and Obama act to stop them. They include:
Some $536 billion in tax increases, touching nearly all Americans, because various federal tax cuts and breaks expire at year’s end.
About $110 billion in spending cuts divided equally between the military and most other federal departments. That’s about 8 percent of their annual budgets, 9 percent for the Pentagon.
Hitting the national economy with that double whammy of tax increases and spending cuts is what’s called going over the “fiscal cliff.” If allowed to unfold over 2013, it would lead to recession, a big jump in unemployment and financial market turmoil, economists predict.
What if they never agree?
If negotiations between Obama and Congress collapse completely, 2013 looks like a rocky year.
Taxes would jump $2,400 on average for families with incomes of $50,000 to $75,000, according to a study by the non-partisan Tax Policy Center. Because consumers would get less of their paychecks to spend, businesses and jobs would suffer.
At the same time, Americans would feel cuts in government services; some federal workers would be furloughed or laid off, and companies would lose government business. The nation would lose up to 3.4 million jobs, the Congressional Budget Office predicts.
Well, everyone should be at work on Thursday. Obama comes back, congress returns to the capitol; everyone will roll up their sleeves and get to work. I’m sure of it. After all, the current Congress is in session only through noon Eastern Time on Jan. 3. …After that, a newly elected Congress with 13 new senators and 82 new House members would inherit the problem.
I can’t wait to see what happens and how all of this plays out. It’s like Christmas all over again!
HTTN No. What? Oh. Ok. Fine
2013CLEbytheSeacover Here’s her DRAFT – click through to see the final work 🙂
My thirteen year old budding artistic daughter has a friend who is the Marketing and CLE Coordinator at the Arizona State Bar. Where she meets these riffraff, I’ll never know… #?!*
The Bar was to hold a CLE Event at the Hotel Coronado in California at the same time as Comic-con; so the Marketer had the idea to make a comic book style cover to cross market the two events. That meant he needed art, and as a fan of my daughter’s work, he asked her to draw a picture of the Hotel Coronado for him.
She promptly and clearly said “No”.
She doesn’t like drawing buildings and that was final; which is odd because she loves Athena’s daughter Annabeth from the Percy Jackson Series and Annabeth is all into architecture. Whatev.
So the idea was presented a little more differently to her.
My daughter wants to enroll in the Dreyfoos School of the Arts next year. Hmmm…Opportunity.
“Dear”, “Um”, “Sweetie”, (fill-in the blank how you would talk to a 13-yr old disagreeable girl) “You could possibly add this piece to your portfolio for your school application…” …waiting…
“Oh”, she says. “Fine.” “What’s a bar anyway?”
“It’s a bunch of lawyer and lawyer types.” I tell her and I wait for the reply. I get nothing. Typical. She gets a deadline. She has about five days and two pictures of the hotel to work with.
She gets fast to work, right? HTTN. She is 13. She does what every kid does. She finishes it in the last hour the night before and leaves the final scanning and turning in part to me. Thanks kid 😉 In her defense, I suppose I volunteered.
A little bit later after some magic potion from the Marketing and Graphic Designer was added to it, the cover of the brochure for the July 17, 2013 CLE Course by the Sea, presented by the Arizona State Bar, has my kid’s artwork on it with inside credits for her as the artist. I think it’s not too shabby.
Incidentally, I told my daughter the publication went out to 50,000 attorneys in the States of California and Arizona and I thought I heard her say “So what.” Turns out I was wrong, she said “That’s a lot.”
Shannon publishes her art online at http://www.deviantart.com under the screen name:
Obamacare’s Employer Mandate
Will Your Hours Get Cut? Will Your Job?
With the reelection of President Barack Hussein Obama, the Affordable Care Act (Obamacare) is ensured to be around for a while. But there are b
usiness owners that are recoiling at the extra cost it will bring. Beginning in 2014, Obamacare requires businesses or franchises with more than 50 workers to offer healthcare coverage to their employees or pay a penalty of up to $3,000 for each full-time worker over 30 workers. This is what is called the Employer Mandate and it is all over the news. One method businesses are considering in order to avoid this crippling mandate is to cut the size of their staff and switch full-time employees to part-time, which means less than 30 hours a week said CNNMoney.
One of the big names in the list of businesses that are already preparing for the mandate to kick in is Darden Restaurants Inc., operator of chains such as Olive Garden, Red Lobster and LongHorn Steakhouse. They are experimenting with limiting their employees to 28 hours a week, thus exempting them from the mandate and the associated fines. Papa John’s, Applebee’s and Denny’s publically stated that they were considering taking a similar approach to dealing with the devastating effects of the impending mandate, But then rolled back on their position due to a flurry of negative media coverage.
These proposed cuts to employee’s hours are not inclusive to just the food service industry; this mandate will affect every business that employs 50 people or more. Cedar Falls, IA city government, in a KWWL report, states: “It means 59 permanent part-time employees who now work 32 hours a week will be scheduled for 29 hours per week starting Dec. 1.” “Those workers have jobs in the public works and parks departments as well as at the public library.” “Most of those workers are seasonal workers.” City officials say they were advised by their health care provider to make the changes now because there will be a look-back period once the law goes into effect. In an Inside Higher Ed article by Colleen Flaherty, the Community College of Allegheny County will cut course loads and hours for some 200 adjunct faculty members and 200 additional employees to avoid paying $6 million in Affordable Care Act-related fees in January 2014.
You can be assured that you will continue to hear about business making cuts in hours and restructuring employee schedules in an attempt to avoid these business killing mandates. How will you be affected if you are all of a sudden told by your employer that your hours have been reduced to 29 hours a week? Will you have to go find another part-time job to make up the loss income?
If you work for a company that has more than 50 employees, you would be well served to talk to your manager, or someone in the know, and try to find out what if any changes have been discussed concerning the looming Obamacare Employee Mandates. Companies will have to make decisions on what course of action to take, there is no choice, they have to comply.
Black Friday, Every Friday?
Holiday Shoppers Started Earlier This Year.
It used to be that Black Friday started the day after Thanksgiving. Just in case you didn’t know, Black Friday got its name from retailers. Investopedia states that it was the day that retailers had enough sales to put them “in the black”, an accounting expression referring to the recording of profits in black ink and losses in red.
Some retailers started launching their holiday sales campaigns as early as October. It would seem that not only are retailers happy to get the holiday shopping season started, but happy about the early start also is the consumer. According to a Consumer Expenditure Survey, conducted by the U.S. Bureau of Labor Statistics, released in October, people are spending less. With less money to spend, consumers are looking for the big deals, and looking earlier.
As the economy remains in a slump and slow to recover, more and more people are cautious of their spending having worked hard to reduce their debt. Most consumers are shopping on a budget and sticking to it.
Retailers are starting the holiday shopping deals sooner in hope of catching more of these frugal shoppers. By giving consumers more time to pick up holiday savings, retailers hope to get people shopping longer, spending more money.
It is impossible to go into a major retail outlet without seeing evidence of this “earlier start” to holiday’s deals. Our local Lowe’s, of all places, had Christmas decorations and “pre-holiday” sales going on before Halloween!
Although receiving a decent turnout this year, Black Friday I feel is turning into just another holiday shopping day. Due to great savings, on most items targeted for the holidays, being had as early as October, there becomes less of a need for the camp-out ritual traditionally associated with Black Friday.
The smart shopper, especially the one set on sticking to their budget, would be better served to avoid Black Friday all together. Without the temptation to get caught up in the Black Friday buying frenzy, the smart can sit back and wait; searching for the great deals both at retail outlets and on-line.
It’s during the holiday season that most of us overspend, destroying all of the hard work we put into making and adhering to a realistic household budget. There are many things that you can do to stick to your budget this holiday shopping season. Let’s take a look at a few things that we can all do to be financially responsible and make it through this year’s shopping season with our budget intact.
Price Matching
At Target, they will match the price if you buy a qualifying item at a Target store between Nov. 1 and Dec. 24 and find the identical item for less in a competitor’s local printed ad or at selected online competitors such as Amazon.com, Walmart.com, BestBuy.com, ToysRUs.com or BabiesRUs.com.
Find the Best Deal
Use that smart phone! Use your mobile device, especially right there in the middle of the store, to compare prices to see if you are getting the best deal. Sites such as RetailMeNot.com and PriceGrabber.com can lend you a hand. You could also load up an app on your device to assist in your holiday shopping. Check out RedLaser, Decide.com or Armadealo.
Don’t Just Wander!
Make a list and a budget. If you head out on your shopping spree without a list will be at a greater risk of falling victim to the ever dreaded “Impulse Buy” which always leads to a bad, often incurable case of buyer’s remorse.
No New Credit!
Do not fall victim to the ploy to open a store credit card in order to receive an immediate discount on purchases you make today. …with your new store card. At likely more than 20%
All it takes is a little foresight and preparation to reduce the expense of your holiday shopping this year. Stick to your budget, be financially responsible and avoid the Holiday Blues.
The Lucky Powerball Jackpot Winners
How Would Winning the Lotto Affect You?
$587.5 million. Let that sink in for a minute. $587.5 million dollars! That is just shy of half of the total spending for the entire state of Wyoming , that’s more than the National debt in 1862. With $587.5 million dollars you could buy 34 F-16 Fighters, half of the Space Shuttle Endeavor or if you fancy, you could get the Rolling Stones to play at your house for 80 hours! OK, last one, for $587.5 million you could fly to the International Space Station aboard a Russian Soyuz spacecraft 29 times!
$587.5 million, how awesome would that be? Well, actually if you took the lump sum you would only get a measly $293, 750,000. That’s half gone right off the top. Of course if there was another winner, which in this last Powerball there was, you would only get half of that. Oh damn, only about $146 million. I’m glad I didn’t win, that’s not even worth the effort now.
So seriously, can you imagine how winning the lotto could change your life, at least financially? I’m sure you can. If you are like everyone else, we sit and think about that “what if” of winning the lottery. Personally, I’ve been over this scenario so many times in my head that I feel like I am totally prepared for the inevitable. I’d like to think that I would be conservative in spending my new found fortune. First thing on the list would be that Stones concert at my house, Rock –n-Roll!! OK, not really… First thing, after tithing, would be to pay off all of my debt. All of it, I don’t even want to owe my buddy for lunch last week, pay it all off. College funds and annuities for the kids, a bunch of gold (the dollar is going down the crapper, but we’ll talk about that another time), some land and a home in Wyoming, almost off the “grid” and a new set of wide whites for my ’50 Chevy, ooh, the extravagance!
I’m sure most people are the same, in that they want to take care of their debt, provide for their family and get a couple of those things that you would never feel comfortable buying unless you were a millionaire (like a couple of F-16s for you and your buddies). But some people have a mental melt down and end up nuttier than squirrel poop. Here are a few examples to help keep you “grounded” for when your time comes.
Billie Bob Harrell, Jr. won $31 million in the Texas Lottery in 1997. 20 months of spending, giving and just plain squandering of his winnings left Harrell dead broke, literally. Shortly before taking his own life, Billie Bob told a financial advisor “Winning the lottery is the worst thing that ever happened to me.” According to askmen.com
And then there was Ralph Stebbins. Ralph and his wife won $208 million in the Mega Millions Lottery in 2005. According to the same askmen article, less than 20 months of winning, Stebbins was charged with attempted murder for stabbing his daughter’s boyfriend. Two months after that Ralph dropped dead from heart failure.
And our last example is just tragic. Jack Whittaker of West Virginia hit the Powerball Lottery on Christmas day 2002. Not long after picking up his $114 million lump sum he was arrested for drunk driving. A couple of months later, thieves broke into Whittaker’s car and relieved him of a briefcase he like to carry around. Oh yeah, he kept $545,000 in that briefcase. After one year of being a millionaire, Jack was arrested for threatening the life of a bar manager. A few months after that 17 year old Brandi Bragg, Whittaker’s granddaughter, was found dead from an apparent overdose and three years ago Jack’s daughter was found dead in her home.
All tragic stories really. What happens to us when we have a huge financial windfall? You hear about it all of the time. Professional sports figures who have virtually hit the lottery with multimillion dollar contracts, some who were living in the ghetto yesterday and today pulling in millions. Overnight success in the acting or music fields seems too often to produce the same results. Something happens and they end up doing stupid stuff. Does too much money make the “normal” person lose their mind? …Let’s hope not.
It happens to many people, but here’s to wishing you luck and the numbers you play hit every time. …except when I’m playing.
The Fiscal Cliff
Are You Facing Your Own Fiscal Cliff?
You can’t turn on the News without seeing the talking heads discussing “Fiscal Cliff” this or “Fiscal Cliff” that. What is the Fiscal Cliff anyway? Will it really affect you and me? Well, let’s see. I’ll try to put all of this in a nut shell to make it easier to figure out and then we’ll go from there.
OK, “The Fiscal Cliff”, where did this name come from? I don’t remember ever hearing this term used before so I did a little research. Well, no wonder we never heard it before, this is a new term, most likely made up by an Ivy League political speech writer, used by Ben Bernanke (The Federal Reserve Chairman) in his testimony to Congress earlier this year. Not everyone thinks the term “cliff” is accurate in describing what we, the Nation, are facing. The Center on Budget and Political Priorities likens it to more of a “slope” and The Economic Policy Institute says no, it’s a mere obstacle course. Whatever verbal imagery you want to use, one thing is for sure, the impending consequences are not good.
Well, January 1 or around there, $500 billion in tax increases and $200 billion in spending cuts are scheduled to take effect. According to the Congressional Budget Office (that might be an oxymoron!) if allowed to take place that will likely throw us into a recession. None of the bean counters in Washington can agree on how fast the recession will hit us. If Wall Street freaks out it will happen quickly, but who knows, it could take a while. No matter what, everyone is in agreement that this stuff should not be allowed to kick-in. What they are not in agreement on is how to fix it. …we’ll address that in a little bit.
Tax Increases and Spending Cuts. But what’s that really mean?
Tax Cuts:
There are 5 or so tax related provisions that are set to expire at the end of the year, here are a couple that could affect you and me:
- Bush Tax Cuts – If you remember, these cut individual tax rates, lowered capital gains and dividends rates, and expanded the child tax credit and others. If these cuts are extended it could cost $203 billion next year.
- Payroll Tax Holiday – This little gem decreased the payroll tax rate on employees from 6.2% to 4.2%. If this is kept it is estimated that it will cost $115 billion in 2013.
- 2009 Stimulus – There’s that little ditty in the 2009 stimulus that has in it the expansion of the child credit, American Opportunity tax credit (helps families pay for college) and the expansion of the earned income tax credit. For this one if they kept everything it would cost$10 billion next year.
Spending Cuts:
Here are a couple of the what some feel are ridiculous spending cuts, that no one really wanted, that will go into effect next year:
- Caps on discretionary spending – This will set a limit that policymakers will have to stick to. This could reduce spending by $78 billion next year.
- Budget Caps – Cuts to defense and non-defense spending, some predicting a crippling effect on all affected departments and agencies. You’re looking at around $110 billion next year for this one.
- Doc Fix – This is another one of those quirky things that if it was to hang around would cost around $14 billion next year.
Debt Ceiling:
Of course it all depends on how much the government spends and taxes, but the groups that study stuff like this figure the debt limit will have to be raised between $730 billion and $1.25 trillion to avoid the debt ceiling for 2013, that’s whether anything is done about the “fiscal cliff” or not.
So What If We Just Thelma and Louise This Thing?
It seems that law makers on both sides of the isle can’t make a decision on how to handle this problem. Democrats want higher taxes on the rich and the Republicans won’t stand for any tax increases. What’s screwed up is that if we take the plunge over the cliff, taxes will go up higher than either sides wants.
Hold on to your wallet because it’s you and me that will feel the effect of a cliff dive. Taxes will go up for nearly every taxpayer and most businesses. You know what an increase in taxes means, yep, less of your paycheck in your pocket. And when businesses get hit by tax increases they don’t just say “oh, that’s OK. We’ll just make less profit”, no they pass the joy on to us, the consumers. You can expect the cost of everything to increase, with the exception of Twinkies, but that’s something we’ll discuss in a future article. It would seem to me that there are only three options available. 1 – Make a Deal. This would be the best bet, to make a deal between the two. The problem is that Congress moves at the speed of molasses in the winter and I don’t see how there is any time left to work out a deal. It’s been over 4 years and they haven’t been able to produce a budget for our country. 2 – Just Extend It! There’s always the “put off for tomorrow what you can do today” mentality and just extend everything. No loss, no gain. 3 – Ladies and gentlemen, the Captain has turned on the We’re Screwed Sign. If you haven’t already done so, please stow any cash you might have underneath the mattress in your bedroom or in a can buried in the back yard. Please take your seat and fasten your seat belt. And also make sure your seat back and folding trays are in their full upright position. There are no emergency exits on this flight so don’t bother looking for them. Please assume the bracing position, lean forward with your hands on top of your head, and kiss your butt good bye! …end transmission.
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