May 13

Don’t let debt mar your retirement – Downsize it and avoid getting messed up

When it comes to planning your retirement finances, debt is one of the things that can hold you back from achieving your goals. Most people in the US paid off their debts before retirement but given the barely minimum wages and the rising prices of commodities over the past 35 years, Americans have pushed debt higher and are also living beyond their means. No, either people are postponing their retirement or cutting down their living standards or doing both. All kinds of debt owed by this age group have risen like never before but the biggest problem is with mortgages. Reports suggest that 39% of households with heads above 60 years of age had primary mortgages in 2010 and 30% had secondary mortgages, including HEL and HELOCs. Is debt forcing your retirement date to be pushed back?

Retirement debt statistics that might shock you

Giving a glance at the present economic condition, it has been studied that credit card debt and mortgages, apart from the financial needs of the college-goers, are taking a heavy toll on the old retirees and the baby boomers. According to a survey by Fidelity Investments, nearly half of the baby boomers expect to retire with debt. Over the past 3-4 years, there has been a 32% spike in the number of retirees who seek help from the members of AICCCA or the Association of Independent Consumer Credit Counseling Agencies. Older people or the retired people are the ones who have racked up the largest amount of debt.

People who are 55 years and older accounted for 29% of the bankruptcy filers in the year 2011-2012 and this figure was up by 23% since 2008, as per reports from the Institute for Financial Literacy. With such statistics, it is pretty well understood that the retirees are certainly going through some dire financial straits due to which they might need immediate assistance.

Deducing the reasons for the mess and exploring some solutions

Here are some most probable reasons behind the present situation of the seniors and the retirees and some solutions to opt for.

  • The burden of credit cards – Lock them at home

Whether coping with the rising health care costs or investment losses or some other kind of family obligations, seniors usually come to the same conclusion, credit cards. In a recent survey it has been found out that people above 65 have more credit card debt than any other age group. Credit card debt leads to bankruptcy and hence you should try to avoid it as much as possible. Lock in your credit cards at home so that you don’t get tempted to use them when you can’t afford something with cash. Even if you’ve already incurred debt, assure getting professional debt help to eliminate your debt burden.

  • The pitfalls of never-ending mortgage debt – Opt for alternatives

Paying off your mortgage debt before hitting the retirement age might be a worthy goal but not many are able to achieve this dream. Given the rock bottom yields on the savings accounts, people are more likely to save money by eliminating their mortgage interest rate payments. But it has been seen that homeowners are drowning in a sea of mortgage debt and for all of them, tapping into the cushion account is certainly a good option. Withdraw funds from your 401(k) or IRA so as to help repay your mortgage debt. Is debt forcing your retirement date to be pushed back? Please visit here to learn more.

Therefore, when you’re nearing your retirement age and you’re wondering about the ways in which you can avoid the pitfalls of retiring with debt, you should follow the above mentioned points. Don’t let debts mar your retirement goals as this will boomerang you in the long run and spoil your golden years. You might as well read the book Millionomics in order to enhance your knowledge on setting financial goals, saving money, being prepared for financial odds and emerging successful.

May 02

Top 10 Tips and Hints related to student loans

Student loans are inevitable to manage the cost of education in the present social and economic conditions. Scholarships are the most appreciated tool for the student financial assistance. However every student will not be able to procure the scholarships. Student loans are the better alternative solutions to meet the education expenditure. The student loans are recommended as the education aid since they are structured especially to cater the specific needs of the students such as repayment has to be started only after the completion of education and a specific grace period and so on. Moreover the interest rates of the student loans are better, in comparison to any other loans including personal loans or secured personal loans. Anyway, the thorough understanding of the application procedure is essential to procure the best student loan as most of the loans are time bound. The following 10 hints will help you to have an idea about getting a student loan.

  • Student loan is available from federal governments as well as private lenders. The federal loans are preferred because of its unique advantages. However in many cases, it will not be satisfactory to meet all the living expenditures and the private student loan is used as a bridge to meet the additional requirements.
  • Federal loans are provided on the basis of the need of the student. The federal Stanford loan is available in subsidized and unsubsidized versions. In case of subsidized loans the government will repay the debits. To resource the complete benefits you must be able to prove the essentiality of the assistance.
  • To apply for the federal loan, the student must qualify the essential qualification such as a high school diploma or a General Education Development (GED) certificate. The application must include all the supporting documents to substantiate the need of the loan.
  • The character and conduct of the student is very important in the federal assistance approval and they insist that any charge of conviction about drug abuse is intolerable.
  • The federal loans can be applied electronically through the online submission of Free Application for Federal Student Aid (FAFSA) form. The most important thing regarding the federal loans is to apply it before the last date as late filing will lead to unnecessary confusions and delay in the loan approval.
  • In case of undergraduate students, parents can apply for the particular low interest rate Federal Parent Loan for Undergraduate Students, which is often called as PLUS.
  • The private loans are provided by the private lenders and most of them obviously have higher rates than federal rates. However, they act as unsecured personal loans, which can be used specifically for education.
  • The credit will be on the basis of the private loan approval. The availability of a co-signer, who has a good credit score, will help to gain the most competitive rates for the loan.
  • Irrespective of the type of loan, the student must be aware about the attributes of the loan such as the rates and repayment formalities before signing the agreement.
  • However do not be worried about the repayment of multiple loans. If you are unable to manage all the loans, you can opt for a low rate student debt consolidation at the beginning of the of the loan repayment, after the course completion and grace period.