Managing your Student Loans Podcast

 Podcasts from the U.S. Consumer Financial Protection Bureau

The goal of the podcast is to educate, inform, and engage students, parents, and practitioners with tools and resources created to help them make more informed financial decisions. This podcast will help listeners with tips and strategies to find their inner financial intuition, one money topic at a time.

“Managing your Student Loans Series” focuses on Managing Student Loans & Money while in College, Discussing the Veterans Benefits Administration’s (VBA) GI Bill® Comparison Tool and CFPB’s Your Financial Path to Graduation Tool and Postgraduate Degree Repayment Options.

Future episodes will cover managing and repaying student loans, interviews from practitioners, real student loan borrowers and their family members, and more.

https://www.consumerfinance.gov/consumer-tools/educator-tools/students/financial-intuition/?utm_source=newsletter&utm_medium=email&utm_campaign=OS_IFSATF

Check out all the resources from the CFPB: https://www.consumerfinance.gov 

Making New Year's resolutions? Keep them small and achievable

 

Here are strategies to consider:

Don’t rely on motivation

"New Year’s is when many people feel motivated to make changes, including making saving for retirement a priority. But motivation can dissipate quickly, as anyone who has joined a gym in January and stopped going in February knows."

Instead find ways to "shrink your goals to make them easier to accomplish."

Keep the bar low

Setting ambitious goals sets you up for failure. Set specific actions, not that you will save more but that you will save $X per month and set up an automatic transfer to that account. 

Stress the positive

Focus on how small steps will add up to something substantial over time. See blog posts on compound interest. 

The easier the task, the better the odds of sticking to it when motivation flags.

Calculate small changes

"Seemingly small reductions in investment fees can also produce big savings over time. According to Vanguard Group, $100,000 invested at 6% a year would grow to $429,000 after 25 years with no fees. With a 1% annual fee, the balance would grow to $339,000."

Experimental approach

Don't cut back on things you enjoy. Instead get rid of subscriptions you don’t use, negotiating discounts with cellphone and cable companies, and save a portion of a tax refund or raise.

Try negotiating a rent reduction, especially if you live in a city where people who can work from home are fleeing the city, leaving empty apartments. 

Don’t get upset by setbacks. “Think of your behavior change (goal, resolution) as an experiment. Figure out why your strategy didn’t work, change your approach, and try again. 

Just take one step

"In contrast to eating healthier or exercising more, retirement savings can be put on autopilot, via payroll deductions to a 401(k) or automated transfers from a savings account to an individual retirement account."  Set up the account today and then set a date in the future to start funding the account.

 Source: Advice from an interview of Dr. BJ Fogg, a behavior scientist at Stanford University, author of “Tiny Habits: The Small Changes that Change Everything,” Ramit Sethi, author of “I Will Teach You to Be Rich” and other behavior experts by Anne Tergesen, writing for The Wall Street Journal, Dec. 29. 2020.

Robinhood investing anyone?

Robinhood is an investing platform geared to millennials to make investing look so easy, fun, and sexy... The New York Times reports: "the company has also faced intense scrutiny for its practices." 

"The app has become a favorite of young and inexperienced investors, enticed by no-fee trading, offers of free stocks and an engaging user interface that uses what a New York Times report in July described as the 'Silicon Valley playbook of behavioral nudges and push notifications.'" i.e., you are being manipulated.

 "Last week, the Securities and Exchange Commission charged the company with “misleading customers about revenue sources,” citing “repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them.” Robinhood agreed to pay a $65 million fine. And on Wednesday, Bloomberg News reported that a complaint filed in San Francisco against Robinhood Financial could become a class-action lawsuit."

Source: Robinhood Recaps From a Volatile Year... And you thought your Spotify Wrapped was a bummer.

by Ezra Marcus

Why I'm not a fan of gift cards

 OK. It's too late to reverse the flood of gift cards given in lieu of more sensible gifts for this Christmas.  On Wednesday, December 23 Suzanne Kapner, writing for The Wall Street Journal, reported on the huge increase in gift card purchases this season. 

"Gift-card purchases in the first week of December were twice the rate in the same period last year, according to InMarket, a data-analytics company. Gift card sales jumped 48% last weekend, compared with earlier in the week, as deadlines for free shipping with guaranteed Christmas delivery expired, according to Rise.ai, which manages electronic gift card programs for more than 5,000 brands, including Allbirds and Milk Bar."

Shoppers wanted to avoid crowded stores during the pandemic and the massive overload shouldered by the USPS, Fed-Ex and UPS that delayed deliveries.Ok, I get it but... somethings to think about the next time you are tempted to buy a gift card (clearly marked with a dollar amount): 

"The gift-card boom might not help holiday sales. Retailers can’t record the revenue until the cards are redeemed, according to Nathan Ehrlich, chairman of the Retail Gift Card Association."

Kapner explains: "There are two types of gift cards. So-called closed-loop cards are issued by banks and branded merchants including Macy’s or Amazon. They typically have no fees and don’t expire but can only be used at the retailer with its brand on the card..."

So "closed-loop" cards limit where the recipient can redeem the gift. 

"Open-loop cards operate on card networks such as those run by Mastercard Inc. and Visa Inc. These cards can be used anywhere those brands are accepted but typically hit recipients with fees." “If you don’t use the money, the fees will eat away at the balance.”

"A sizable portion of gift cards go unused, allowing merchants and card issuers to later book some of those funds as revenue under accounting rules. Mercator estimates merchants keep roughly $3.5 billion of unredeemed balances annually." That's BILLION with a B! So your money spent on gifts cards may just line the pocket of the retailer. 

Here's a better idea: Give old fashioned, never-go-out-of-style CASH! I doubt any of that gift will go unused. Consider that during this pandemic many people have lost income, jobs, and may be at risk of becoming homeless. Well... that's not MY relatives and friends. Don't be too sure! 

Especially for children, giving cash can help teach them to save some, donate to charity, and spend the rest on what they really want/need for themselves. 

Recently when I thought the $600 payments to all Americans (and their children) were assured (before Trump's threatened veto), I asked a teenage friend what she planned to do with her $600. She didn't miss a beat: "Give half to Planned Parenthood and put the other half in my college fund," was the prompt response!

Have you ever heard of "debt parking"?

It’s ‘Debt Parking’: When Fake Debts End Up on Your Credit Report

"The F.T.C. recently took its first legal action to stop the fraud. Consumers may not know the debts are on their reports until they apply for a loan."

Thanks to The New York Times writer Ann Carrns for exposing this despicable practice by the debt collection industry. 

"Consider this unnerving situation: You apply for a loan only to learn that your credit report is marred by a delinquent debt — one that you have already paid or maybe don’t recognize."

'You could be a victim of unscrupulous debt collectors who have placed invalid or fake debts on your consumer credit reports to coerce you to pay them. The tactic is called illegal “debt parking,” or sometimes “passive debt collection.”'

So, what can a person do? Get on the internet and check your credit report for free at: https://www.annualcreditreport.com/index.action

Follow the NYT's Your Money column for more important financial information. 

Get your free credit reports today

Due to the unemployment and financial stresses resulting from COVID-19 Equifax, Experian, and TransUnion  provide free weekly online reports through April 2021.

Go to https://www.annualcreditreport.com

You will be asked for your name, address, birth date, and social security number. 

If you've lived at your current address for less than 2 years you will be asked additional questions to verify your identity. 

Once you get to each of the 3 credit bureau sites you will be asked additional verification questions about employment, vehicle loans/leases, mortgages, and other financial transactions and maybe even your Zodiac sign!! (really!)

The Annual Credit Report website provides an abundance of credit related information and education.

 

 

Lawmakers with stock holdings vote in ways that juice their portfolios

"Amid calls for stricter regulation of congressional stock ownership, researchers find that financial self-interest outweighs party, ideology and other factors in policy decisions" according to Washington Post reporter Christopher Ingraham
December 20, 2020. 

"A series of well-timed stock trades early in the pandemic brought Justice Department scrutiny on at least five U.S. senators this year over potential insider trading, including Georgia Republicans Kelly Loeffler and David Perdue. Though the inquiries were dropped, both lawmakers have taken heat on the issue as their respective campaigns head into a January runoff election that will determine partisan control of the Senate."

"New research from political scientists Jordan Carr Peterson and Christian Grose underscores why tighter regulations might be necessary. They found that members of Congress who own stock tend to vote in ways that benefit their portfolios and that these decisions can’t be explained away by other factors, such as ideology or constituent interests."

"This behavior, it’s worth noting, is perfectly legal. While the 2012 Stock Act prohibits members of Congress from insider trading, there is nothing to prevent them from casting votes that increase the value of their assets based on public information."

So if you think your representative is voting to represent your interests as a constituent, time to reassess.