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Sacrificing for Student Loan Payments

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Research of the Week: What are You Sacrificing to Make Your Student Loan Payments?

81% of Americans make a personal sacrifice to afford student debt obligations each month.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

News today is full of stories of how people are forced to push back major life goals in order to pay off student debt. Now the American Institute of CPAs has a new survey that attempts to qualify just how much Americans are sacrificing in order to foot the bill for higher education.

The big result

According to the survey results…

81% of Americans who have student loans to repay have made some kind of financial sacrifice in order to meet those obligations.

The fascinating details

College education costs stress your life and budget

College student sitting outside a classroom with a hand on his hair, feeling stressed and upset about his grades. So what exactly are Americans sacrificing to repay those loans?

  • 50% aren’t contributing to a retirement account until their student debt is repaid
  • 46% delayed buying or upgrading their current set of wheels
  • 40% delayed buying a home
  • 20% postponed marriage
  • 19% postponed having kids

In addition to these life delays, other survey respondents had to make other hard choices in their lives that they wouldn’t have made otherwise:

  • 46% got a second job to make their payments
  • 40% reduced housing costs by having roommates instead of living alone
  • 37% moved in with family members

With all of these sacrifices in mind, it’s not surprising that 71% of the survey takers said they would change their educational experience if given the chance. In fact, 36% would have just opted for a 2-year community college rather than a more expensive 4-year education at university.

What you can do

If you’re already facing student loan debt then the best option you have for lowering the payments now is to use federal student loan consolidation. There are five options available for consolidation that cover a range of goals – from paying off your loans fast with higher payments to getting the lowest payments possible if you’re facing financial hardship. Which option you choose depends on your situation.

Of course, there’s a tradeoff for those lower payments now and it comes down to the fact that you’ll be in debt longer. So, for instance, if you choose an Income-Based Repayment Plan, the term on your loans goes from 10 years to 25 years. The monthly payment amount is set at 15% of your Adjusted Gross Income (AGI) level compared with the federal poverty line in your state for a family of your size. The payments end up being significantly lower and more affordable even on a low-income budget. However, you stay in debt longer.

Still, lower payments now could make those life delays disappear. If your student loan payments are reduced, you can afford to start saving for retirement or saving up to buy a first home now. Additionally, there is no penalty on any of the consolidation programs for early repayment, so if your income increases as you advance in your career then you can accelerate your loan payoff without worrying about penalties. In the meantime you’ll have a more balanced budget in the here and now so you’re not waiting to start your life because you still have student loans to repay.

If you’re a parent or a student who is concerned about taking on student loan debt, then you need to put in some work to ensure you minimize the out-of-pocket costs of school.  This means saving up in advance through investment tools like a 529 college savings fund, as well as taking time to apply for scholarships and grants so you’re not relying wholly on loans to fund your education. You can learn more in Consolidated Credit’s Affording College section of our website.


Greatest Generation?

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Research of the Week: Greatest Generation?

You might be surprised which one is showing the most financial responsibility.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

A company called Financial Finesse spent two years asking 35,000 employees around the country to fill out “financial wellness assessments.” It recently issued its report, called Generational Research 2016, and what they learned isn’t what you might’ve guessed.

The big result

Millennials make smart credit choices

After crunching the numbers, Millennials scored much higher than common wisdom might suggest. Most surprising: In 2015, 61 percent of Millennials said, “I check my credit report annually.” That eclipsed Generation X (60 percent) and Baby Boomers (56 percent).

Knowing your credit score is often a sign of overall financial knowledge. In other words, if you’re doing that, you’re probably paying attention to other financial issues.

The fascinating details

Millennials are also the generation most concerned with debt – 61 percent said “getting out of debt” was their top priority. For Gen X, it was 55 percent, and for Baby Boomers, it was only 31 percent.

As the nation approaches $1 trillion in credit card debt and still struggles with a savings rate in single digits, Consolidated Credit president Gary Herman finds this statistic particularly encouraging.

“While the Millennial generation is the one mostly struggling to pay back more than $1.2 trillion student loan debt, the credit card crisis is shared among all three generations,” Herman says. “In more than two decades at Consolidated Credit, I’ve tried to educate people about the hidden costs of debt. Many listen, and they get their lives in order. Sadly, many don’t. Maybe Millennials will turn that tide.”

What you can do

Take a lesson from the 61 percent of Millennials who check their credit reports every year. In fact, do it every four months – for free. While many adults in all three generations know you can get a free credit report at AnnualCreditReport.com, they don’t realize they have three different reports.

The “Big 3” credit bureaus – Equifax, Experian, and TransUnion – are each required by law to give you a free credit report per year, if you request one. So the best way to ensure your report has no incorrect information is to ask for one every four months. Spreading out the reports means you’ll see more up-to-date information. If you want to know what’s actually in your report, check out Consolidated Credit’s special section called Understanding Your Credit Report.

More Money or Less Debt?

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Research of the Week: More Money or Less Debt?

Guess which one most Americans would have.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The title is unexciting: Northwest Mutual’s 2016 Planning & Progress Study. But the results are as important as they are depressing – with just a few bright spots that might shine a path out of debt for millions of Americans. Those glimmers come from interviews with nearly 3,000 adults of all ages.

The big result

Here’s a stat you need to read twice to really grasp: 14 percent of Americans are 100 percent certain that they’ll outlive their savings, while 34 percent are 51 percent sure that’ll happen.

Even worse, less than a third of these worried future retirees think Social Security will even be solvent when they retire.

When you add it all up, the conclusion is: Nearly half of all U.S. adults believe they’re likely to die broke.

The fascinating details

Finding the right balance for debt in your budget

Buried near the end of the report is one intriguing detail that might be a rare positive: Researchers asked “what would make the most significant impact on your financial situation?” The top answer was, “Eliminating all my debt” at 27 percent. Nipping at its heels was “earning significantly more income” at 26 percent.

Down the list were other options like “having my older children gain financial independence” (8 percent) and “getting additional income from another job” (6 percent).

So why do these percentages encourage Gary Herman, the president of Consolidated Credit? Because the top answer is something he can help deliver.

“When you ask people how they can help their finances, you want to see responses they can actually control,” Herman says. “You can’t make other people, even your children, be financially responsible. You can’t always find a second job that’s lucrative and fits into your schedule. But you can reduce your debt, and you can even get expert help to do it.”

What you can do

Even further down in the study, respondents were asked about their “main sources of debt.” As expected, mortgages topped the list at 29 percent. But credit card debt was close behind at 23 percent. That exceeded the totals for everything else, from student loans (8 percent) to car loans (6 percent) to home equity loans (3 percent).

And again, Herman finds a silver lining – because Consolidated Credit has certified counselors who can help. Or to put it in terms of this study…

That 23 percent with massive credit card debt can get their total payments reduced by 30 to 50 percent.

Even better, 100 percent of the people who call [PHONE_NUMBER] get a 100-percent-free debt analysis.

Hoping Doesn’t Help

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Research of the Week: Hoping Doesn’t Help

Millennials have ambitious financial goals, but they aren’t doing enough to meet them

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Millennials are proactive with retirement planning

There’s no shortage of research about the millennial generation’s conflicted outlook on money. One study shows most have no idea how much they need to save for retirement – while another shows they’re pretty good about paying off their credit cards.

The latest contribution is a detailed poll by the investment firm MDRT, which asked 2,000 millennials about the “milestones” they hope to achieve in life. Of course, milestones often require money.

The big result

Millennials just might be delusional…

Despite the fact that the average age millennials say they expect to retire at is age 62 — which is younger than the expectations of older generations (ages 45-54 at 66 years old; ages 55-64 at 65 years old; and ages 65-plus at 73 years old) — a mere 22 percent of millennials say they are currently saving for retirement.

That’s right. Most millennials want to retire earlier than any previous generation, but they’re saving at levels lower than any previous generation.

The fascinating details

It gets worse: 91 percent say they don’t even have a plan for retirement. Yet almost half are planning to buy a house in the next five years. Even then, MDRT says, “Only 33 percent are currently saving for this.”

What explains this apparently cavalier attitude? It might be a defense mechanism. Researcher found they’re avoiding financial planning because 38 percent “don’t have enough money to cover minimum expenses.”

Then again, 27 percent “were unsure where to start” when it comes to financial planning. The Internet is so chock full of options, it’s hard to know which are reliable, and which ones really work.

What you can do

“If you’re going to seek financial advice, it’s best to follow three proven rules,” says Consolidated Credit president Gary Herman. “First, look for a nonprofit credit counseling agency – it will put your interests first. Second, make sure they’ve been around for years or even decades – the longer the better, because no company survives that long unless they’re helping people. Third, make sure they’re highly rated – check the Better Business Bureau for an A-plus rating, as well as customer reviews.”

Herman also says the agency you call should offer you a free debt analysis with a certified credit counselor – which is what Consolidated Credit does. You can call [PHONE_NUMBER] today or check out its in-depth Financial Advice section for tips ranging from budgeting to student loan consolidation.

Battle of Wills

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Research of the Week: Battle of Wills

Most people don’t have Wills. Here’s why they need them.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

When your business model is letting people write their Wills online, it’s either good news or bad news when your research shows most Americans don’t have one.

USLegalWills.com can look at this as either a death knell or fertile ground to recruit new customers. The results of its poll of more than 2,000 adults has enough twists and turns to support any conclusion you want.

The big result

A written will protects your loved ones

Only 28  percent of Americans have an up-to-date Will, while 63 percent have no Will at all. If you’re wondering if Wills have an expiration date like meat and milk do, they don’t. But USLegalWills says these important documents definitely can grow stale…

“One of the surprising pieces of data to come out of this survey is the number of Americans with out-of-date Wills. Many people write a Will hoping that it will last a lifetime, but changes in family situations like marriage, divorce, births and deaths can all render a Will obsolete at best, and actually quite troublesome if not updated.”

The fascinating details

Ominously, even old people are lacking Wills.

“Only half of Americans over the age of 65 have up-to-date Wills in place,” researchers said. “One in six Americans over the age of 65 have a Will that is out of date.”

Of course, if you have nothing to your name but debt, you might think, Why do I need a Will anyway? To officially pass along my spare change to my relatives?

But it turns out that even rich people are foregoing Wills.

“In fact, in the income bracket of $100k-$150k only 10 percent of respondents had an up-to-date Last Will and Testament” – a stat researchers called “astonishingly low.”

What you can do

For obvious business reasons, USLegalWills.com really wants you to draw up a Will, even if you’re broke. The company’s logic is accurate is a tad morbid: “You have absolutely no way of predicting the size of your estate when you die, and in fact, you can be worth much more after you have died than you ever were alive.”

Then there’s this hopeful scenario…

“Supposing your death was an accident, and somebody was held responsible. There is a good chance that there would be some level of accidental death compensation and that compensation would go to your estate. Suddenly, the amount being distributed according to the directions in your Will is several millions of dollars.”

Setting aside the gruesome possibilities, Consolidated Credit president Gary Herman says a Will is important for sentimental as well as financial reasons.

“Even if you’ve lived a frugal life, you probably have possessions that your children cherish – even if their dollar value is modest,” Herman says. “It might be an inexpensive watch or costume jewelry your children grew up noticing on you. When you’re gone, they’ll want that to remember you by. You don’t want your children fighting over these possessions, especially when they’re still grieving your loss.”

Wills can cost around $300 if you sit with an attorney face to face, or less than $100 from one of the many online services out there. However you do it, Herman suggests you get one.

“If you want to leave more for your children, I have another suggestion,” Herman says. “Use the time you have left to wipe out your credit card debt, then save the money you were spending on interest and late fees.”

Herman’s nonprofit firm offers a free debt analysis with a certified credit counselor. You can call [PHONE_NUMBER] today or check out its in-depth Financial Advice section for tips ranging from budgeting to student loan consolidation.

Paper for Plastic

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Research of the Week: Paper for Plastic

How do you like your credit card statements?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Traditional payment methods with paper bills are preferred

No one enjoys paying their credit card bill each month, but most Americans have a definite preference when it comes to how they pay those bills.

A recent poll by the website CreditCards.com asked a weird series of questions that essentially boil down to: “Do you prefer paper to pay for your plastic? Or do you embrace the latest technology to do it?”

Turns out Americans are very traditional about their bills.

The big result

Online statements and payments are more convenient and even cheaper than opening an envelope and writing a check, but 54 percent of us still prefer the old-fashioned way – and nearly half will fight to keep it that way.

“For those who prefer paper, loyalty is fierce,” CreditCards.com says. “46 percent say they would not switch even if they were charged extra for mailed statements. A $5 account credit and a 10 percent discount coupon wouldn’t be enough inducement for most, either.”

Even if they were offered a $50 credit to their account, 48 percent wouldn’t switch to online-only. So weirdly, this is an emotional decision, because even a few dollars won’t budge them.

The fascinating details

No one will be surprised by this stat: Just 6 percent of those 18 to 25 get their credit card statements by mail. The older the person, the more likely they cling to those paper envelopes. Yet…

For many, it’s not an either-or choice: 44 percent of those who receive credit card statements electronically also get paper statements.

And why not? It costs nothing extra to get both, and there good reasons to double up.  Consolidated Credit president Gary Herman explains why below.

What you can do

“When it comes to paying your credit cards, the most important principle is: Never be late,” Herman admonishes. “Late fees are killers. They wipe out all the rewards points you accrued and can do the same to your monthly budget. If paper or online statements help you pay on time, that’s what really matters.”

Herman’s words echo what the National Consumer Law Center said earlier this year, when it concluded, “Even computer-savvy consumers may prefer paper as electronic statements are easy to overlook due to email overload. Consumers may value a physical mail piece as a record-keeping tool and reminder to pay.

While banks and credit card companies are pushing their customers to go “online only,” Herman recommends ignoring the marketing and doing whatever keeps you current. And if you’re having trouble making your payments regardless of the statement method, Herman recommends another technology: the telephone. You can call [PHONE_NUMBER] to speak with a certified credit counselor and receive a free debt analysis that may lower your monthly payments by 30 to 50 percent.

Back to School shopping in July

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Research of the Week: Back to School shopping – in July

Parents are getting a jump on the school year. But are they really saving money?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The first day of school is months away, but many parents have already ventured online and into stores to scour for back-to-school deals.

“More than a third of all parents (34 percent) and nearly half of college freshman parents in particular (49 percent) have already started back-to-school shopping,” says the second annual Back-to-School Consumer Pulse Survey. 

The big result

Don't let back to school shopping bust your budget

Maybe those parents are buying now because they have so much money to spend…

Sixty-one percent of all parents plan to spend more than they did last year, spending approximately $917 per child on average. Freshmen parents plan to spend more than $1,300 per child, twice what the average K-12 parent plans to spend.

What will they buy? While clothes are a perennial purchase, tech products will dominate, with an average of $343 per k-12 child. Compare that to only $233 for clothing.

More than half of K-8 parents who say they need technology for their children will buy tablets. While Apple is the hot brand for students, parents are unimpressed: 72 percent says they’ll by PCs instead of Mac for their children, while 52 percent will buy Android phones instead of iPhones.

The fascinating details

Parents are often maligned for not grasping the latest technology themselves, but the Pulse Survey reveals…

This year, adoption of online and mobile shopping has reached a high water mark, with 60 percent of all parents surveyed planning to use mobile devices for some back to school shopping – 30 percent plan to do at least a quarter of their total shopping on mobile devices.

What you can do

Interestingly, shopping early might not be the best way to save. That’s because many states, particularly in the south, have “tax free holidays” that allow back-to-school shoppers to avoid all state sales taxes for a very brief time – often a couple of days.

To find out about your state, check out Consolidated Credit’s Back to School Budgeting Strategy, which features an interactive map showing which states offer these tax-free days. Also check out Consolidated Credit’s video, Avoiding Back to School Credit Card Debt.

Credit Score Obstacle to Homebuying

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Research of the Week: Credit Score Obstacle to Homebuying

Homebuyers recognize the importance of good credit, but lack the knowledge of how to achieve it.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Achieve the credit score you want

It’s no secret that a good credit score makes it easier to get approved for a mortgage so you can buy a home, but do you really understand how much a bad score can hurt you? And if so, what can you do about it.

This is the topic explored by Experian’s latest Consumer Homebuying Survey. The results find that while people are typically aware of how important a good score is in homebuying, what they don’t know is how to get there without delay.

The big result

Overwhelmingly, 94% of survey respondents understand that credit scores are important in the homebuying process and 74% view credit scores as a “valuable tool” rather than a necessary evil. However, only 48% working towards improving their credit so they can qualify for a better home loan.

The fascinating details

Of those survey respondents who have applied for a loan in the past 12 months and were denied, the largest number of reasons have to do with a homebuyer’s credit score.

  • 16% sited poor credit history
  • 12% said it was due to too much debt, which threw off their debt-to-income ratio
  • 10% sited limited credit history
  • 8% blamed their spouses’ credit – either because they had poor credit or a lack of credit history

Income issues from lack of income to lack of verification of income only accounted for 15% of the denials, while lack of assets or inability to verify assets only accounted for 10% of the total loan rejections reported.

What’s more, homebuyers from all generations are delaying home purchases due to credit concerns.

  • 39% of Millennials (18-34)
  • 41% of Gen Xers (35-54)
  • 24% of Boomers (55+)

In fact, 19% of all prospective homebuyers reported that they may end up choosing NOT to own in the next 5 to 10 years because of the debt and credit challenges it may present.

What you can do

“Credit score is certainly important when it comes to qualifying for a mortgage at the right interest rate,” says Maria Gaitan, Housing Director of Consolidated Credit. “However, people often make the mistake of assuming that fixing their credit is an impossible task that will take years to do right. The truth is that you can start working to improve your credit in as little as six months to one year, even if you have negative items caused by hard financial choices like bankruptcy or foreclosure.”

The key is that credit history is judged on a scale, where what’s happened most recently supersedes negative actions that may have occurred a few years prior. Basically, by keeping your debts under control now and making all payments on time on credit cards and loans that you have in good standing now will reduce the negative impact of penalties incurred during a period of financial distress.

“There are also programs available in many states that can help a first-time homebuyer with a weak or limited credit history to overcome credit challenges so they can find mortgage approval without relying on a risky subprime loan,” Gaitan explains. “If you’re in a situation where you believe you’re on the cusp of achieving homeownership, but you feel held back by your credit score, call a HUD-certified housing counselor. They can tell you what score you really need to achieve and help you make a plan to get there.”

For more information on buying a home with less than perfect credit, call Consolidated Credit today at 1-800-435-2261 to speak for free with a HUD-certified housing counselor. Together, you can find a path to homeownership that can get you there in less time than you think.


Stress for Less

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Research of the Week: Stress for Less

Is America getting less financially fretful? Yes for many, no for some.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The FINRA Foundation – short for the Financial Industry Regulatory Authority, which protects investors – constantly studies how Americans are faring with their money. These aren’t breezy phone surveys, either.  For this summer’s latest report, Foundation researchers studied more than 27,000 adults, making it  “one of the largest and most comprehensive financial capability studies in the country.”

The big result

Find better budgeting practices in 2016

First, the good news. The FINRA Foundation is happy to report, “The percentage of respondents reporting no difficulty in covering monthly expenses and bills has increased from just over a third in 2009 (36 percent) to nearly half in 2015 (48 percent).”

The emphasis is ours. After a brutal recession and creeping economic recovery, this is an encouraging development. Of course, the bad news is that half the country is still spending more than it can comfortably afford to pay for. And it gets worse…

The depressing details

While things are looking up overall, specific groups of Americans are still struggling mightily with specific bills. For instance…

Medical debt: 21 percent of adults carrying an unpaid medical bill, and women “are more likely than men to put off medical services due to cost such as seeing a doctor, buying needed prescriptions or undergoing a medical procedure,” the Foundation says.

Mortgages: 29 percent of Millennials (ages 18-34) who have a mortgage have been late with a payment. That’s more than four times those 55 and over (at only 7 percent).

Emergency fund: Got a college degree? Then only 18 percent of you would fail to “come up with $2,000 in 30 days in the event of an emergency.” But if you have only a high school diploma, that soars to 45 percent.

What you can do

One statistic in the study really concerns Consolidated Credit president Gary Herman. It’s this one…

Only 37 percent of respondents are considered to have high financial literacy, meaning they could answer four or more questions on a five-question financial literacy quiz — down from 39 percent in 2012 and 42 percent in 2009.

In other words, while more Americans can pay their bills since 2009, fewer Americans are smart about money. (If you want to take that quiz, the FINRA Foundation offers it here.)

“This is very much like the expression, ‘Give a man a fish and he eats for a day, teach a man to fish and he eats for the rest of his life,’” Herman says. “While more Americans may be paying their bills than before, it could be their financial outlook is brighter. But like the sun rising and setting, there are sure to be darker times ahead in our lives. If we don’t know the basics of how money works, fewer of us will emerge from those though times unscathed.”

If you want to learn quickly and profitably, Herman suggests using Consolidated Credit’s easy-to-read guides such as Budgeting Effectively for Healthy Finances, Saving Money & Long-Term Saving Strategies, and Financial Planning for Life Events.

If you’re mired in the half of the country who can’t pay their bills, Herman suggests you call Consolidated Credit at [PHONE_NUMBER] for a free debt analysis from a certified credit counselor. You can get a road map out of debt that will let you enjoy how the other half lives.

Getting Real with Student Loan Debt

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Research of the Week: Getting Real about Student Loan Debt

Are borrowers all really as bad off as reports make it seem?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

If you’re a student loan borrower who is NOT struggling, news today may make you wonder if you’re an exception to the norm, because reports often make it seem like everyone’s debt is out of control and practically unpayable.

With that in mind, The White House Council of Economic Advisors conducted an investigation to see if investment in higher education is worth the cost in today’s economy. The aim is to see if the cost of a college education is still worth the potential lifetime earnings, given today’s borrowing crisis.

The big result

Is there any relief in sight for student loan debt?

A college education, be it a 2-year associate’s degree or 4-year bachelor’s degree, is still shown to be worth the cost incurred upfront which is increasingly funded through student borrowing. In fact:

While outstanding student loan debt has grown to $1.3 trillion, that’s due in large part to a rise in enrollments and larger number of borrowers. Although average loan has also increase, the average undergraduate borrower only owes around $17,900 and 59% of all borrowers owe less than $20,000.

The fascinating details

Basically, the report finds that the highest concentration of high-volume borrowers really happen when you throw in graduate programs like degrees for lawyers and doctors that tend to come with really high price tags. In addition, bad repayment outcomes tend to be more common about borrowers who attend for-profit or community colleges, those who do not attend full-time and especially people who don’t finish their degree.

So, if you’re a 4-year undergrad who has graduated with a bachelor’s degree in the career field you chose, then it’s much more likely that you’re able to afford to repay what you owe than not. Given that the report also reconfirms that a 4-year bachelor degree holder can earn up to $1 million more during their career lifetime, while a 2-year associate degree holder earns about $360,000, it is fairly evident that college is still worth it even if the price tag seems hefty.

What’s more, the news about student loans in default tends to be overinflated too according to this White House report.

  • Loans of less than $10,000 account for nearly 2/3 of all defaults
  • Loans for less than $5,000 represent 35% of all defaults

Loans of this size are typically used by borrowers attending for-profit technical colleges, rather than traditional universities. The report concludes that debt levels and default rates have increased during the past few years. Many workers went back to school using seemingly cheaper and faster for-profit degree programs which often did not pan out as anticipated.

Finally, the report investigates the effectiveness of income-based repayment plans for federal loans, such as the President’s PayE plan. Of those who have taken advantage of this plan, 40% started out facing financial distress as shown by loans in default, deferment or forbearance. Average household income for this kind of program is $45,000, versus the $57,000 annual income of borrowers who use non-hardship repayment plans.

What you can do

If you’re already a student loan borrower… your first step should be to explore federal loan repayment plans. You have two basic options:

  1. Standard and graduated repayment plans aim to help you pay off your debt quickly and efficiently so you can get rid of your debt as soon as possible
  2. Income-based repayment plans aim to reduce your monthly payments so your debt is more affordable within your budget. This includes income-based (IBR), income-contingent (ICR), income-sensitive (ISR) and pay as you earn (PayE)

Whether you’re struggling to stay ahead of your payments or you’re not and you simply want your debt paid off as soon as possible, there’s a repayment plan that can help you accomplish that goal. Even better, if you work in a public service sector, enrolling in a hardship-based program makes you eligible for public service loan forgiveness (PSLF), which can erase your remaining balances without penalties after 10 years on the repayment plan.

If you’re thinking about going back to school… make sure to consider carefully the type of degree you want and research any institution carefully before you enroll.

Since for-profit schools are often the ones causing borrowers the most problems, you have to be careful signing up for “fast track” programs you see advertised on TV and radio. Just because you can graduate in less than 12 to 18 months, it doesn’t mean the certification you receive will be as good as a 4-year bachelor’s or master’s degree. If you’re not careful, you can get scammed by a company just trying to make a quick buck off your desire to advance your career.

When finding a school to attend, make sure to check:

  1. Total cost of degree program
  2. Graduation AND dropout rates
  3. Starting salary range of graduates in your chosen field
  4. Available career placement services
  5. Reputation of school, including reports of lawsuits over financial aid

Financial Education Doesn’t Go Beyond the Piggy Bank

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Research of the Week: Mom, Dad, Kids, Money

What parents teach their children doesn’t go “beyond the piggy bank”

Do your financial lessons go beyond the piggy bank?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

What parents are teaching their children about dollars might not make a lot of sense. A new study from U.S. bank says children learn some valuable money lessons at home, but not the biggest ones. They’re just not “comfortable teaching them about important topics such as credit and saving for the future.”

The big result

While 77 percent of parents told U.S. Bank pollsters they’re comfortable teaching about saving in general” and 66 percent also taught their children about budgeting their money, that’s as far as the financial education goes.

“Everything kids know about money, they learn from their parents,” says Robyn Gilson, U.S. Bank’s coach for student financial education. “The problem is, many parents are not confident teaching beyond piggy bank saving and basic budgeting – missing important topics like credit and saving for the future.”

The depressing details

Gilson surmises one reason parents don’t teach about the pros and cons of credit is that they simply don’t understand the topic – even though it will affect their children deeply as adults, from student loans to mortgages. The poll reported…

Many of the parents surveyed who are talking about credit may be misinformed themselves. More than half of the parents incorrectly believe their bank balance affects their credit score (51 percent) and that using checks/debit cards can help build credit (52 percent).

What parents can do

Thankfully, learning about credit and debt doesn’t’ require a college course. Consolidated Credit offers a simple No-Hassle Credit Card Debt Elimination Guide, as well as a special report called Do You Need Credit Help? and another for Saving Money & Long-Term Saving Strategies. However, knowledge isn’t enough, says Consolidated Credit president Gary Herman.

“If your family is struggling with credit card debt, the best lesson you can impart is to get rid of it and live debt-free,” Herman says. “You’ll not only teach your children a valuable lesson by showing instead of telling, you’ll also have extra money to spend on their well-being, because you won’t be paying high interest rates and fees.”

If your children are growing up in a family with crushing debt, achieve financial freedom before they leave the house. Herman suggests you call Consolidated Credit at [PHONE_NUMBER] for a free debt analysis from a certified credit counselor. You can get a financial plan that will help you now – and your children for the rest of their lives.

Losing Sleep Over Retirement

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Research of the Week: Losing Sleep Over Retirement

Guess what’s keeping Americans awake at night? Weak retirement savings.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Everyone knows there’s a retirement saving crisis – and not just in the United States and not just among older workers. However, a new study was just released that shows the health effects of this crisis, both physical and emotional.

The big result

The retirement savings clock is ticking down

“Results show 56 percent of Americans are losing sleep over retirement,” says researchers at Ramsey Solutions, part of Dave Ramsey’s personal finance empire. “Eight in 10 Americans who feel ashamed, guilty or embarrassed about retirement lose sleep, while less than half of Americans who feel excited or confident about their future lose sleep.”

The fascinating details

Unfortunately, even if you start saving for retirement, your sleep doesn’t improve along with your retirement account. Even savers still fret if they’ll have enough money to last through their golden years. Of those losing sleep over retirement, 61% are active savers who don’t feel like they’re doing enough.

“Most people assume saving more will eliminate money stress,” says Chris Hogan, a best-selling author and retirement expert. “But it’s not just about saving money. It’s about having a plan, understanding how much they need to save, and feeling in control of their future.”

That may explain why Gen X savers still feel under-prepared even though they report bigger nest eggs than their Baby Boomer counterparts – 51% of Gen X report they have $25,000 or more saved, compared to just 46% of Boomers. Yet 1 out of every 2 Gen Xer is afraid of outliving their money and they’re more likely to lose sleep and feel significant anxiety.

What you can do

So to sleep like a baby while becoming a senior citizen, don’t just scrape together some cash. Come up with a plan. It’s as easy as 1, 2, 3…

  1. First, look at your current debts before worrying about your future. Check out Consolidated Credit’s report, Debt Elimination vs. Retirement Savings.
  2. Next review two Consolidated Credit infographics:  Retirement Checkpoints and Secrets to Successful Retirement.
  3. Finally, read up on Avoiding Debt Problems during Retirement.

If you’re losing sleep over your credit card debt and don’t’ even have time to worry about retirement, Consolidated Credit can help. Call [PHONE_NUMBER] for a free debt analysis from a certified credit counselor. You’ll sleep better knowing you have a plan for getting out of debt now, so you can create plan later for retirement.

College Savings in Crisis

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Research of the Week: College Savings in Crisis

Lack of household saving plan leads to increased risk for student debt problems.

Are you saving enough for school?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Is America’s student debt crisis really rooted in saving? Common wisdom would seem to suggest the crisis is a problem with borrowing, i.e. that there’s a problem with current student lending practices. This is why the government has taken so many actions to restructure interest rates and update lending practice regulations.

However, studies like the 10th Annual State of College Savings survey seem to point in the opposite direction. They indicate that no matter how fair lending practices are made, the problem is really rooted in the fact that parents and households are struggling to save.

The big result

The survey found that 88% of parents are planning to help fund their children’s college education. Almost nine out of ten parents are planning to cover all or part of the final bill their children would have to foot.

The issueis that half of that number (44% of parents) plans to borrow in order to provide that help.

The fascinating details

On the upside, 32% of parents say savings is the number one way that they plan to pay for college, which coincides with the fact that 32% of parents surveyed also report that they have a 529 college savings plan.

  • 67% of parents are already saving for college
  • 3/4 of that number already have more than $5,000 saved per child

For many of us in the past, the contributions parents made for college covered the lion’s share of the total education costs. That’s still true, however the amount students are expected to cover is increasing overall:

  • 80% of parents expect children to help pay for college
  • 57% expect children to contribute up to 1/3 of cost
  • 27% want the student’s contributions to make up 1/3-2/3
  • 16% expect the child to cover over 2/3
  • 65% of parents expect child to get financial aid
  • 74% of that amount is expected to come from scholarships and grants

This puts increased pressure on students to apply for scholarships and grants to cover their portion. While literally millions of such opportunities exist online, going through all that apply to you can be time-consuming and exhausting.

What you can do

“Following the financial crisis, many parents went from a relatively stable financial outlook with room for savings to living paycheck-to-paycheck with no money left for savings,” explains Gary Herman, President of Consolidated Credit. “As a result, they haven’t saved effectively for their children’s education costs. Now those children have an increased borrowing burden that comes to a head following graduation. It’s all rooted in the same issue.”

Herman encourages parents and students to sit down now to come up with practical solutions that fit each family’s financial situation today.

“Planning practical steps to take now even if you face a grim situation with little time to save will lead to significantly less headaches and financial upheaval down the road once a student graduates,” Herman continues. “It’s about assessing how much time you have to save, what you can accomplish in that time, and what you can do to adjust the situation so student debt isn’t such an insurmountable burden after graduation.”

In other words, if your children are still 5 years out from graduation, then you still have time to set up a 529 college savings plan and start contributing so the money has time to grow effectively. If your child is a junior or a senior that solution may not be as effective, in which case you need to plan ahead for extra time spent on online scholarship and grant applications.

You may also discuss adjusting further education plans, such as going through a two-year associate’s degree program to minimize cost and get out into the working world faster. Then look for jobs with benefits packages that include covering further education costs. It may delay your education, but allows you to find a path where the burden for education doesn’t rest solely on the shoulders of students and their parents.

The Joneses Get Social

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Research of the Week: The Joneses Get Social

More pressure to keep up with the Joneses now thanks to social media.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The material need to keep up with the Joneses is nothing new, but the American Institute of CPAs recently conducted a survey to see how much worse social media has made the drive to outdo your neighbors.

The big result

The Joneses get social

One in four adults (25% of survey respondents) has been left feeling envious after seeing someone else’s post about a vacation or a new purchase. What’s more, 11% acted upon that envy to take a similar vacation or buy a similar item.

The fascinating details

One of the more interesting details revealed in the survey is people’s connectivity to social media, or rather lack thereof. Of the more than 1,000 adults polled…

  • Only two thirds (67%) have social media accounts
  • And less than half (48%) check their most frequently used account more than once a day

So this belief that everyone is connected all the time now may not be as far-reaching as people who are connected 24/7 believe.

Still, it’s the drive of those who do connect that’s most concerning:

  • 21% admit they’re more likely to make a purchase or choose an activity based on how friends and family will view it once it’s posted
  • 14% of people have posted something specifically because it looked fancy or expensive

And it’s not all that surprising that social Jonesing is more prevalent when it comes to younger generations that older:

  • Millennials are twice as likely as Boomers to report that social media influenced a purchasing decision (26% vs 12%)
  • They’re also twice as likely to feel envy over other people’s posts (31% of Millennials vs. 15% of Boomers)

What you can do

Triggers for keeping up with the Joneses are nothing new, but social media definitely makes it harder to keep up. Whereas you used to only have to worry about the new boat your neighbor bought sitting in the driveway or the vacation pictures your brother brought to Sunday dinner, now there’s a much bigger pool of Joneses to compete against and you’re inundated almost constantly if you log on to your accounts daily.

“No matter where they hit you up, the Joneses are usually bad for your budget,” says April Lewis-Parks, Financial Education Director of Consolidated Credit, “and you never want to base your purchasing decisions on someone else’s potentially bad choices. After all, there’s every chance the Joneses took on unmanageable amounts of credit card debt to pay for that vacation they posted. So you’re following them into debt if you follow up their trip with one of your own.”

Consolidated Credit encourages people to ask the following three questions when it comes to deciding on a luxury purchase:

  1. Can you pay for that expense with cash or money you have saved?
  2. If not, if you plan to put the purchase on credit do you have a plan to pay off the debt within the first few billing cycles?
  3. If there’s not a more affordable version and you really want to opt for the luxury brand or vacation plan, can you wait to generate savings to pay for it?

“Your goal should be to avoid taking on credit card debt that you don’t have a definitive plan on how to pay it back,” Lewis-Parks explains. “Ideally, paying off a luxury purchase in one billing cycle minimizes finance charges. If it will take 2-3 billing cycles for a major item or series of vacation reservations, then the transaction should go on your credit card with the lowest interest rate and you should be able to craft a repayment plan that eliminates the debt in-full within a few months.”

For more information on how to manage credit card debt strategically, visit Consolidated Credit’s No-Hassle Credit Card Debt Elimination Guide. If you’re already in debt and need help to craft a strategy to get out of debt quickly, call Consolidated Credit today at [PHONE_NUMBER] or complete an online application to request a confidential debt and budget evaluation from a certified credit counselor at no charge.

HELOC Domino Effect

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Research of the Week: HELOC Domino Effect

Study finds missed home equity payments are a sign of trouble to come.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Unlocking the equity built up in your home

Home Equity Lines of Credit (HELOCs) are a financial tool available to homeowners, where they are able to borrow against the equity built up in a home. In a typical HELOC, payments start low and only cover interest charges. However after a set period of time (usually 10 years) payments increase to cover interest plus principal.

The Wall Street Journal recently released an investigation into missed HELOC payments and what it means for a borrower’s overall financial outlook.

The big result

The study looked at HELOCs that ballooned between December 2014 and March 2015. Ballooning refers to when an interest-only payment changes to being covering interest plus principal.  Looking at borrowers whose payments jumped by at least 20%…

Almost 2 out of every 100 borrowers (1.9%) were more than 90 days behind on HELOC payments by the end of the year.

The fascinating details

What’s more concerning is that those who fell behind with HELOC payments also started to fall behind on other payments as well:

  • 40% of delinquent HELOC borrowers also feel behind by at least 3 months on their primary mortgage
  • 5% fell behind on credit card payments

All of those numbers are up from previous years. Previously, only 0.1% of HELOC borrowers fell behind in their balloon year. And of those, only 12.5% also fell behind on a mortgage and 18.5% fell behind on credit cards.

What this means

“HELOCs that are ballooning now were for debts taken out prior to the Great Recession,” explains Maria Gaitan, Housing Director of Consolidated Credit. “The loans evaluated in the study would generally be from December 2004 to March 2005. With that in mind, this increase in HELOC delinquencies may be the lingering effects of over-borrowing prior to the collapse. However, such a sharp increase in the number of delinquencies happening now is a cause for concern.”

Prior to the recession, homeowners were possibly a little too comfortable borrowing against the value of their homes. Basically, equity in many key metropolitan areas skyrocketed just prior to the collapse and so homeowners effectively borrowed against bubble equity. When property values plummeted, many households were left in a financial lurch.

What you can do

If you already have a HELOC that hasn’t ballooned yet…

“If you’re still paying interest only on a HELOC taken out before the Great Recession, start planning now so you can get your budget ready for the balloon,” Gaitan encourages. “As the study shows, payments often increase by 20% or more, which can spell big problems for your budget if you’re not ready.”

Gaitan says the best thing you can do to offset that increase is to pay off credit card debt prior to the reset date. The more credit card debt you pay off, the lower those bills will be, giving you more cash flow to cover HELOC payments when they start to include principal.

“Cutting out one or two credit card obligations may give your budget the boost it needs to handle higher HELOC payments. Otherwise, you’re at high risk to end up juggling bills and facing financial distress where you can start to miss payments.”

If you’re considering a HELOC…

“Borrowing against the equity in your home can be tricky and risky,” Gaitan continues. “It’s difficult, because real estate bubbles and market fluctuations have significant effects on equity. It’s also a financial risk because HELOCs are secured debt. In other words, if you default you could be facing foreclosure.”

Gaitan recommends that other lending and financing options should be explored thoroughly before you consider borrowing against your home. If a HELOC seems like the best option, make sure to borrow responsibly and don’t just take out a bigger line of credit because it’s available during a real estate bubble.

If you have questions about your home equity and how HELOCs work, call 1-800-435-2261 to speak with a HUD-certified housing counselor free of charge.


Banking on the Unbanked

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Research of the Week: Banking on the Unbanked

The unbanked may be an untapped market, but most banks aren’t interested.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

How to unbanked manage finances out of pocket

The term “unbanked” is not new. In fact, we’ve reported on the potential for banks to target unbanked customers since 2010. This year, the big news is about how many Hispanic consumers are unbanked, mostly due to lack of trust and language barriers.

So with this in mind, the FDIC conducted a survey to see how many banks had initiatives or at least plans to target the millions of consumers who are unbanked or underbanked in the U.S.

The big result

According to survey results, most banks are aware of the amount of unbanked customers in their area – 73% reported they know these populations exist. However, less than 18% of banks have plans to extend services to this large segment of the U.S. population.

The fascinating details

Banks have two very good reasons why they don’t do more to reach the unbanked:

  1. Profitability
  2. Regulations

Basically, regulations on providing checking accounts to high-risk account holders make it tough to reach this group. And even if they can reach this group, they don’t really believe it’s profitable enough to warrant attention.

There are a few encouraging statistics that show how someone can overcome their unbanked status:

  • 53% of banks offer financial education sessions targeted to the unbanked
  • 37% participate in outreach efforts with other organizations like nonprofits to reach these unbanked consumers
  • 38% of banks work with corporate and business customers to provide services for unbanked employees

Of course, making the transition from unbanked to banked means a person may often have to adjust their financial management methods. That’s because most banks don’t offer the services the unbanked have grown accustomed to using:

  • Only 49% of banks offer check cashing services
  • Only 41% provide money orders

What you can do

In case you’re wondering, the term “unbanked” simply means you don’t have the basic accounts that most people consider standard, such as a basic checking and savings account. You do all of your banking without a bank – so you cash paychecks at check cashing stores and use money orders to make payments for things like bills.

Given the results listed above, if you’re an unbanked consumer it’s really up to you to establish a relationship with a bank – because chances are fairly high that they won’t reach out to you. So the question really becomes, why are you unbanked?

If you’ve had problems with banks in the past…

One reason people are unbanked is because they’ve faced challenges with banking in the past. If you had a checking account that was closed because you had too many overdrafts or misused the account, your account may have been closed and you may be having trouble opening a new account.

  1. Any negative action taken with a bank account will be listed in your ChexSystems report.
  2. You can download your report for free once per year through consumerdebit.com
  3. Check to see what it says, how old the information is and what you may have to overcome to open a new account
  4. Also check your credit report, since too many missed payments or collection accounts may also prevent you from opening a new account
  5. You can download your credit report for free once per year through com.
  6. Once you know what negative information you have, call the bank where you want to open an account and ask the rep what you need to do.
  7. In some cases, you may have to take a financial education course and prove you completed the course material
  8. Follow the steps they indicate and you should be able to open a new account within the next 6 months.

If you just don’t trust banks…

Some people – particularly Millennials – aren’t unbanked because they can’t open accounts. They simply don’t want them because they don’t trust banks. However, not having a bank account ends up being costly.

  • Check cashing fees typically range from $3 to 3% of the amount cashed
  • Money order fees can be up to $5 per money order

By avoiding traditional banking services, it’s actually costing you more to manage your money. With that in mind, the solution is not to swear off all banks, but to find a bank you can trust. If big banks can’t be trusted, consider:

  1. Local banks that are specific to your city or state
  2. Credit unions which act in the best interest of their members rather than their shareholders

And remember, if debt and bad credit are barriers to you achieving a stable financial life, we can help. Call Consolidated Credit today at [PHONE_NUMBER] or complete an online application to request a free debt and budget analysis from a certified credit counselor.

Credit Card APR at 5-Year High

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Research of the Week: Credit Card APR at 5-Year High

Higher rates won’t help families working to eliminate debt.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

CreditCard.com’s latest Credit Card Rate Report has some troubling news for any consumer who is currently working to pay off credit card debt.

The big result

The national average credit card rate hit a five-year high at the end of last week. The average rate hit 15.22%, after holding steady at 15.10% for most of this year.

The fascinating details

How high will interest rates rise?

If rates continue to trend as they have been, the yearly average is set to be the highest it’s been since 2007 at 15.17%. Higher rates typically have the largest effect new credit card accounts:

  • 10 million consumers who have never had a credit card have opened an account this year
  • 52% of that number is Millennials age 20-29

A big concern however, is that with rising credit card balances that are set to hit $1 trillion by the end of this year many households may find themselves stuck with high balances that may be tough to pay down. Credit card debt shows no sign of slowing so far, with Americans adding $662 billion this year – a 6% increase from what we added in the same time last year.

“Many Americans rely on balance transfers to consolidate debt,” says Gary Herman, President of Consolidated Credit. “With rates on the rise, consumers may only be able to transfer to cards that have limited introductory periods before higher rates begin to apply.”

What you can do

Experts are concerned that consumers are reaching unsustainable debt levels. This happens when minimum payment requirements on credit cards reach a level where they don’t effectively help a consumer reduce their debt. High interest charges eat up roughly 2/3 of every payment you make if you’re only making minimum payments. As balances rise, this leads to a situation where you pay month after month, but your balances never seem to go down.

“This is a situation where other forms of consolidation become invaluable,” says Herman. “If you can’t qualify for a good rate on a balance transfer credit card, then you should explore options such as a debt management program so you can still qualify for the low rates you need to eliminate debt effectively.”

Herman also says for those new credit users who are just getting cards this year, it’s critical to make sure balances are paid off in-full at the end of every month. Otherwise, higher interest rates have the potential to affect your bottom line.

“If you pay off your balances in-full at the end of each billing cycle, you minimize interest charges to save money even though you’re using credit,” Herman explains. “Then once average credit card interest rates decrease again, you can call your creditors to negotiate for lower interest rates on the cards you opened during this high rate period.”

Good News in Personal Finance

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Research of the Week: Good News in Personal Finance for a Change

Most polls about personal finance have been bleak this year. Not this one. Well, not totally.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Good news in personal finance

Experian, one of the Big Three credit bureaus, is known for researching all sorts of esoteric topics. This year alone, the company revealed that rural retirees are among the fastest-growing ID theft victims and Jeeps are made with 97 percent U.S. parts. Now Experian has done something completely different: asked personal finance experts what questions they would pose to the general public if they had Experian’s massive polling operation behind them.

The big result

Called the Experian Financial Blogger Survey, the most surprising results were surprisingly positive…

  • “64 percent of survey respondents feel ‘very’ or ‘somewhat’ confident in their ability to reach their financial goals.”
  • “53 percent are confident they will pay off their student loans on time.”
  • “76 percent reported they have not paid any credit card late fees in the past year.”

“The survey points to a few very encouraging trends in personal finance,” said Toni Husbands of Debt Free Divas, one of the bloggers Experian recruited for help. “For instance more than half of the respondents create a monthly budget, and 69 percent say they use the budget to control spending.”

The fascinating details

Of course, no poll of Americans about their money can be all positive – otherwise, we wouldn’t be drowning in nearly $1 trillion in credit card debt and more than $1 trillion in student loan debt.

Experian calls these “unsettling findings.” They include…

  • “49 percent have credit card debt.”
  • “46 percent have less savings today than they expected they would five years ago.”
  • “54 percent believe they will never pay off their debt fully.”

The best way to turn that frown upside down?

“Become more educated about managing money and debt,” says Rod Griffin, Experian’s director of public education. “That is why resources like personal finance blogs are so beneficial. You can read timely information and real-life stories from experts and peers on everything from understanding credit to learning how to invest.”

What else you can do

How can you know which personal finance blogs to trust with your financial decisions? You can check out the winners of the Plutus Awards, which is the Oscars of personal finance blogging. Better still, you can consult the educational sections here at Consolidated Credit, which are reported and written by full-time staff that has passed exams to become certified credit counselors. Check out our detailed but plain-English reports at Financial Advice to Help You Achieve Your Goals. And if you prefer your advice on the phone, call one of our certified credit counselors for a free debt analysis at [PHONE_NUMBER].

Creeping Holiday Shopping Seasons

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Research of the Week: Creeping Holiday Shopping Seasons

Holiday shopping seasons are almost as long these days as the presidential election season.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Holiday shopping seasons creep up to make you spend more

Each year the National Retail Federation puts out a Halloween Spending Expectations Survey to see how much Americans plan to spend, how they plan to shop and how shopping trends may have changed since last year. This year’s survey hits an all-time high of $8.4 billion in total spending.

The big result

While the headline focuses on record total consumer spending, for this article we’re instead focusing on when people plan to start shopping for Halloween. According to the survey results, only about one in five readers of this article haven’t started shopping yet. Most people started much earlier:

  • 4% started shopping in the past two weeks, after the start of October
  • 29% started in September
  • 5% started during the summer or earlier than that!

The fascinating details

It’s not just Halloween shoppers who are getting the jump early this year. Each year, holiday shopping seasons from Halloween to Valentine’s seem to start earlier and earlier every year.

  • In fact, Time Money reports half of American parents have already started shopping for the winter holidays
  • com even finds that 1 million winter holiday shoppers are already done

Of course that same story from CreditCards.com also finds that 74% of survey takers say, “It’s annoying that the holiday shopping season has gotten earlier.”

What you can do

“The goal of starting to shop early for any holiday is to save money,” says April Lewis-Parks, Education Director for Consolidated Credit, “but retailers are not putting out promotions earlier and earlier every year to help you save. They want longer shopping seasons because in many cases it prompts people to spend more which helps them increase revenue. Early-season shoppers need to be careful that they’re shopping early for the right reasons and don’t fall into retail traps that lead to overspending.”

Consolidated Credit actually encourages people to shop as early as possible. In fact, shopping year-round for the winter holidays can be an effective way of avoiding end-of-year debt. You buy one big ticket item each month, so you’re not overburdening your budget in the last few months of the year.

“The trouble with retailers moving up holiday shopping seasons is that it almost defeats the purpose of being an early shopper,” Lewis-Parks explains. “Early shopping is effective because you’re buying things in the off-season. The earlier the season starts, the harder that is to do.”

Lewis-Parks and the budgeting experts at Consolidated Credit offer the following advice:

  • Shop around sale prices, not shopping seasons.
    • Decorations always have the best markdowns right after a holiday happens
    • Winter items are best bought in spring, and summer items in fall
    • For big items like electronics and appliances, watch for sales throughout the year and get in when the getting is good
    • Fad items tend to be marked up, instead of down during holiday shopping seasons – even during sales like Black Friday
    • Unless there’s a specific sale that looks like a good deal, things like Halloween candy are almost always going to have the best prices right before Halloween since stores are aiming to clear their shelves
  • Focus on your list and how you need to spread out the total cost.
    • Your goal should always be to have a cash-only shopping season
    • Mapping out costs early lets you evaluate upcoming spending, even if you don’t start to shop early
    • The longer you give yourself before a holiday, the more likely you are to find the best discounts and sales
    • Spreading out the cost of larger items allows you to cover them in cash, instead of piling them on credit

For more information on how to save money when you shop, use Consolidated Credit’s Smart Spending Tips.

The Retirement Confidence Trap

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Research of the Week: The Retirement Confidence Trap

Think you have enough saved for retirement? You’re probably wrong.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

TIAA is an investment firm, so it wants to know how much Americans are saving for retirement – and where they’re investing. Alas, TIAA’s latest study – called the 2016 Lifetime Income Survey – shows Americans don’t have enough income for their lifetimes. But they think they do.

The big result

Retirement confidence is high

Despite a constant flow of bad news about retirement savings, TIAA discovered, “58 percent of American adults feel confident that they can successfully turn their retirement savings into income after they stop working.”

Where does that confidence come from? Nowhere.

“Fewer than half (46 percent) even know how much they have saved in their retirement savings accounts,” the study says, “and just 35 percent know how much monthly income they’ll have in retirement.”

Even given that ignorance, “Only 35 percent are concerned about running out of money in retirement.”

The fascinating details

TIAA calls these “disconnects.” Here are some others…

  • “41 percent are saving 10 percent or less of their income for retirement, while experts recommend people save at least 10 to 15 percent.”
  • “63 percent of those who are not retired estimate that they will need less than 75 percent of their current income to live comfortably in retirement, but most experts recommend that individuals aim to replace 70 to 100 percent of their pre-retirement income.”
  • “49 percent say that their retirement plan’s No. 1 goal should be to provide guaranteed monthly income in retirement, but 41 percent are unsure if their current plan provides an option for lifetime income.”

Even worse, those who are saving for retirement have no idea how to invest it safely.

“Many people focus on how much they have saved, without considering how their savings will translate into income,” TIAA president Roger W. Ferguson says.

What you can do

Consolidated Credit has made saving for retirement easier to understand with two helpful infographics: Retirement Checkpoints and The Secrets to Successful Retirement. Consolidated Credit president Gary Herman suggests every adult start there – but then look at your current debts as a way to save for your golden years.

“In every state in the Union, Americans are carrying an average credit card debt of more than $3,000,” Herman says. “When you consider the average credit card interest rate is over 15 percent, it’s stunning to think how much money you could save if you eliminated those bills.”

Getting rid of credit card balances seems a steeper climb than saving for retirement, but over two-plus decades, Consolidated Credit has helped millions of Americans slash their total credit card payments by up to 30 to 50 percent. Most of those Americans got started with a simple phone call to [PHONE_NUMBER] for a free debt analysis from a certified credit counselor.

“Imagine if you eliminated those crushing balances and invested that money each month in a retirement fund,” Herman says. “You’d be transferring money from the credit card companies to yourself!”

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