Hi everyone -
I'm a big supporter of this cause. I'm working on an assigment for my undergrad degree (I'm already in debt) and wanted to see if anyone had other ideas on how best to get your finances under control to help control your total debt... here is what I've come up with so far:
Get All Finances under Control
Broadly speaking there are four ways to reduce your monthly debt burden. Understanding them and their application can improve your liquidity and reduce your debt at the same time.
1. Reduction in Spending
As a preliminary step in maintaining liquidity, people should control their monthly expenditures. Spending on expensive brands – food, accessories and other miscellaneous goods should be replaced by discounted items. Shop at discount stores like Wal-Mart and K-Mart. The central purpose is to cut down on the cost incurred across all levels. This can help you pay your debt installments on time without defaulting.
2. Increasing Disposable Income
There are various ways to increase your net disposable income. One such way is to work overtime and benefit from extended shifts. Another possible option would be to work as a freelancer for select set of clients. There is no dearth of online resources where you can browse for such freelance work. Analyze your strengths – writing, presentation, programming, research or any other skills you may have that you can use to find quality work online to support your financial commitments.
3. Analyzing Your Liabilities
Generally, people are not bothered about their liabilities in the form of debt and other unsecured loans. A serious thought should be given on lowering your interest rates while debt repayment is underway. Interest can be lowered if loans are secured. Debt consolidation is also a viable option to reduce your liabilities.
4. Analyzing Your Assets
Assets are physical items that you own. Some of the ways to channel funds through assets include:
• Selling your house and moving to less expensive housing
• Phasing out non used assets – abandoned cars or smart cell phones
• Savings can be used to pay of a portion of debt
Prospective debtors can benefit from the discussed strategies to bring down their debt concerns. Proactive steps should be taken as soon as possible, otherwise, debt can pile up and become unmanageable.
Vaciam,
You make some great points especially when you say we need a movement for social justice. I would take that statement a step further and say that we need to revisit our entire way of life - we need a paradigm shift.
Our country has become about consumerism - such that we need people to spend, spend, spend to keep things humming along and maintain the status quo. This leads into such a rapidly paced lifestyle that must of us are too busy to take note of the costs of that way of life.
Fortunately, many sectors of our society are starting to have spotlights shined on them - the silver lining in the cloud called the economic slowdown has given us some down time to take notice of more things gone wrong.
It is my belief that beyond this recession, our survival as a people may just depend on the realization that social justice must become a way of life.
This planet has limited resources - we can't really believe that everything is going to be o.k. at the current rate of consumption of our natural resources. We can't really believe that enslaving our brightest to massive student loan debt is the best way to find solutions to our current and future problems. And yet we eat through resources and financially burden our best and brightest to the point of paralysis.
My point is that all these ideas must be part of a way of living - and of seeing the world. They are not problems in isolation but intricately woven together. One weakness in our way living leads to another.
We need a paradigm shift away from movements about this or that, or wars on this or that and really start focusing on what it is we want as a people. Do we want a sustainable way of life that lifts our sights to something greater or one that focuses on possessions and keeping up with Joneses?
One road seems filled with endless possibilities and the other - a dead end.
Thank you for reading this.
Good post, jman; I very strongly agree with you. We do need to make social justice a way of life, and end this miserable system of people being isolated in their pursuit of junk and full of stifling self-blame for not "becoming rich" when we could all enjoy a good quality of life through building strong public, communal institutions.
I like what you're saying, and you're right to a certain extent. For many financial issues, just reevaluating your finances, and looking at where you spend can help free up some money to pay off some debt.
However a few points of contention:
1. You make the assumption that I have enough money in my budget, or can work enough hours to make enough money to square my debt away.
This doesn't take into account that many people's student loan payment is, upwards of 50% of their income, or greater. When it comes down to it, My options are eat or pay debt, and pray that no unseen expenses come up.
2. You also believe that the individual has some leverage with a student loan company. When it comes to federal loans, possibly, but in the case of private loans: you don't. Credit cards have programs to assist you in repayment. Private loans, have one line "you signed a contract, and we'll hold you to it." You have limited to no options for deferment or forebearance, and your loans still accrue interest.
This is a situation where you have no rights or options beyond starve, kill yourself, and ruin your financial future in order to pay back a debt that is borderline illegal.
Matt -
Thanks for the feedback. I appreciate the dialogue and would like to understand a little more.
What did you go to school for that caused you to be in such debt, and how expensive was the school? While I realize that different options are available to everyone, I've been trying to go to a local State school that is relatively affordable and keep my debt costs low by working while I'm in school. Granted, I have had to take on some debt, but by doing this and then sharing expenses with some friends, my debt burden is fairly low thus far. Again, I realize that I've been lucky with some of this, but I'd love to understand more about the how and why your debt burden became so significant.
Also, I do realize that the leverage with student loan companies is significantly less than other types of loans. I appreciate your point on that.
Long answer:
I felt called to study youth ministry, and state schools don't offer to many ministry degrees. I will admit that some schools youth ministry programs are nothing more than a joke, but Mount Vernon's was excellent with good leadership, management, and education components. But because it's a ministry degree I can't get my foot in the door at most businesses. And the recession has hit churches and other youth based non-profits. And I hate to say this, but sometimes it feels like I'm not hired because I'm a white male. It's tough to not believe that when a job application says "persons of color encouraged to apply."
For whatever reason, I didn't qualify for more than a pittance of Federal financial aid. Even when I applied as an unemployed adult. The amount I received would have covered my books and not much else. Because of that, I had to apply for private student loans through a despicable company suggested by my financial aid advisor (Plug here, don't get a loan serviced by AES).
TO finish school I had to take out close to $50,000 in student loans. It's not a great amount, but because the majority is a private student loan with variable interest rates, I don't have the economic hardship assistance that federal loans do. That means that during the off season at work, I can't defer my payments easily, and if I do when I start paying them again my payments are higher.
I work 80 to 90 hours split between two jobs just to make ends meet. There are days where I work 12 to 15 or even 20 hours straight. If something happens like I have to replace two tires on my car, or an injury or I get sick, I don't have a safety net. Even with benefits, I still don't have the time or money to use them.
So tell me, when my student loan accounts for half of my monthly budget, the rest is eaten up with credit card payments, cell phone payment, auto insurance, gasoline, and food, how do I manage that debt? Find the nonessential in that list friend, and show me where the extra dollars are hidden right now.
Or help me get my foot in a door somewhere at a company, land me an interview, find me a better paying job, or do you want to give me a decent paying job?
And due to lobbyists, I can't declare bankruptcy and have my student loan forgiven either. And my parents had to cosign on my loans because "I didn't have enough of a credit history." I had graduated high school two years before I applied for these student loans, of course I don't have credit history. So because my parents are on the loans, I can't just go off the grid because they'll lose their house.
It's a damned if I do, damned if I don't situation.
I've read the financial books, the help books, the debt consolidation plans, and none of them work for me. Unless you can answer the questions above, then my debt will continue to prohibit me from doing much of anything. How is this just and right?
Matt -
Thanks for the feedback. It really looks like you are working hard to keep your head above water. I realize that my comments above were broad and definitely not applicable for everyone out there who is already working hard and has already cut back on costs.
I'm not that familiar with youth ministry as a major. What kind of jobs do folks normally wind up with who follow this major?
I would think that through a program like that, and any outreach that you've done, I would hope that one of your contacts can come through for you and help you find a better paying job.
Couple more questions if you don't mind? How bad are your credit card payments? Was that also money spent while in school, or was that emergencies, or just every day expenses? I noticed you didn't reference housing costs - are you back home or how much are you spending there? Oh, and how bad is your cell phone bill? I've seen people lately with these crazy tricked out iphones who are struggling to pay the bills.
I hope you don't find this invasive. If you do, please just ignore me. I'm really just trying to understand how this happens to people so that I can avoid it.
The credit cards were a combination of school, everyday, and emergency bills. They're roughly $80 a month, my cellphone is about $72. Work provides housing, and during the off season my parents let me stay with them. If I had to pay rent I would have starved to death by now.
Youth ministry degrees tend to put you in a church, non-profit, or similar setting. Which is all well and good, except they've all been hit hard by the economy.
Honestly, and this is my bitter and cynical side coming out, the easiest way to avoid it is to not go to school. The stress of loans far, far outweighs any of the benefits of a college education. Especially in the current climate where young graduates aren't being hired.
It's not repaying the loans that I mind. I get that I signed a contract, and all that jazz. But elsewhere in business you can renegotiate terms, both parties have rights. When dealing with a student loan company, I have no rights. In fact I was told just as much today on the phone by a representative. If I starve to death paying their loans, they don't care.
I was thinking about just dropping out of school but that seems like a short sighted decision. It feels like something that I'd regret down the line. My sense is that I just need to avoid getting too far into debt, by going to a reasonably priced school and working a part time job while I'm in school. I just filled out an application for Dominos to be a delivery guy. I figured that if I was going to have a car anyways, I might as well put it to use.
Look for a position that offers tuition assistance, that way the costs can be offset even more.
And about working while in school, I have mixed feelings on it. For one, my grades went down after I started working; and two, until you start working full time you don't make enough money to pay for college.
My parents said it best: They looked at my tuition and couldn't comprehend it. In the 70s they were able to work a full-time summer job in menial positions, and pay for a year of education at the Ohio State University. To top it off, they even had money left over!
I have been paying little against my loan, I'm safe for the time being. I want to comment on all these people offering financial advise.
And your audience here are the ones that just don't have the money
2. many of them lost their jobs and are close to becoming homeless
3/ m,any are in financial difficulty because of medical problems. They do not help or let the loans go must be comatose and/ or dead. not funny but true.
4. they can take from your Social secirty checks after you retire to get the money back
5 can go after your family for their life for repayment
6 My loan was for $9,000.00 original owed, I paid in $11,000.00 and I have Ms and neck surgery that was bad and 5 months no work so penalties, compounded daily interest rates to the tune of additional loan amount drum roll $16,333.00 and I'm handicapped, They do not give a flying damn about you they get commissions on landing a payment plan. And they dog eat dog to take away from each other to land that commission!!
7. So where is the justice, you point me the way, you point me to solve hundreds and thousand of hard working people, single mothers, under employed and unemployed you tell what you have to offer , I see nothing , no justice just predatory lending practices that are lobbied to every congress person, senator and any one they can touch, we are getting stronger and we have the dirt read all the profiles. read mine I'm I a looser, no I'm not the bailed out , banks, insurance com etc and they are still abusing the system and getting huge bonuses read the morning paper>> "A Slave To Sallie Mae"
Thanks for you feedback. For the avoidance of doubt, I definitely am not any sort of financial counselor. Just a college student who has been following this cause and is in process of researching general financial trends and habits in the country today.
While I can appreciate your post, I think some of what you are saying is somewhat unique to your situation. I think we'd be hard pressed to find someone on this forum or any other, who wouldn't want to see you get helped given your handicap and health struggles.
That being said, I feel that today in America, we have too many people looking for help when they could really make a difference themselves or do something themselves. I've seen people go unemployed who are capable of working, because they were too proud to accept a job at Best Buy or something in retail. I've seen people continue to take on debt, even though they knew they could not pay it back, just to keep up with the neighbors. There is a lot of belly aching in this country, when what we need is for people to get out there and try to make a difference with whatever means they have possible.
Best of luck with your health and your debt situation. I'll be rooting for you.
Hi guys,
Just read your exchange and I don't think that Matt's story is all that uncommon, at least in a general sense. The problem is that so many people feel alone with this problem. Let's face it - people don't offer up about how they screwed up their finances unless they are really pressed.
Also, on another inroad - bankruptcy protection is meant not only as a way out for excessively burdened debtors but also as a check on lenders to make wise agreements.
In the case of student loans there is no such check without the bankruptcy option and given the Draconian rules set in full favor of the lender - it is little wonder that the loans are being made so easily. So students hungry for a way to their dreams eagerly accept the loans with full expectation to repay - not knowing the true nature of the price they may pay.
Yes we as student loan borrowers bear some responsibility for our agreements too but the more I research this dilemma the more apparent it becomes that this situation of inflated student debt was contrived by special interests and some political traitors in government.
Dwight I urge you to checkout the information more. It sounds like you are one of the lucky ones to have avoided debt so far. And that's great because that is what these sites are supposed to do in part.
For more reading (and hopefully more understanding) check out my blog and its links at http://misplacededucation.blogspot.com/. Its entitled Education, Student Loans and (F)utility.
I hope my post has helped.
Warmest regards,
J. Densmore
Thanks jman. That was a helpful link. I really like the message board forums on this site, so I'm hoping we can get more useful people like yourself contributing.
Hi Dwight,
It's immensely rewarding that you find my posts helpful. Student loan borrowers seem to be the only ones that care about one another so we might as well try and be as helpful as we can.
I actually wish more people posted here and that we had other sites to draw on to try and create a snowball effect here.
So if you or anyone else knows of other forums and blog sites please post them because I know that I would be very interested indeed.
Regards,
J. Densmore
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The current economy we live in was intentionally designed (over the last forty years), as dictated by stagnant and falling wages, outsourcing, deregulation, gross inflation of the costs of housing and education, oppressive limiting of bankruptcy laws, to make sure that people would have to rely on debt to make ends meet. It is also designed so that most people will not make it. That needs to be changed--trying to make a few people privileged by "good advice" doesn't cut it. Everyone should be able to have a good living wage job with benefits so that they could hopefully have a shorter work week--not a longer one. Expecting people who built up a professional career over decades and then were laid off due to the financial crisis (caused by the same casino-capitalist finance firms and banks that prey on poor people) to take an extreme pay cut (certainly not enough to pay their bills, raise their family) to accept a job at best buy is ridiculous--the manager probably will flee when looking at their resume anyway.
I agree that a lot of people here really are in dire circumstances--not casual ones. We need a movement for social justice.