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College Students are Overestimating How Much They’ll Make After Graduation

Written by adminJune 20, 2019

Many companies are finding that students right out of college are overestimating how much money they’ll be making. They assume that because they have a degree, they’ll be ushered to the front of the line for better work. That’s not often how life works. Starting from the bottom, one has to work their way up to higher wages.

But college students often come in with some unrealistic expectations. This information comes from an online polling software called Pollfish that surveyed 1,000 undergraduates about what they expected to be making once they graduate. The results of the poll were interesting, as it showed how much expectations don’t meet with reality.

“In particular, we labeled business students as the most ‘delusional majors’ because they overestimate how much they’ll be making out of college by $14,585 and how much they’ll make 10 years into their career by $47,070,” Tommy O’Shaughnessy, head of research at Clever Real Estate Analyst and the author of the report.

“It seems the next generation of college graduates might be in for a rude awakening … the average college student has seriously unrealistic expectations for both their early and mid-career salaries.”

By the Numbers

The average student believes their bachelor’s degree right out of college is worth $57,964 in their first year. Sadly, that doesn’t line up with what really happens. The average median salary of someone with a bachelor’s degree hovers around $11,000 lower per year. That’s a massive overestimation! One can expect to make around $47,000 per year throughout their first five years.

O’Shaughnessy continued to state that there’s a true ‘lack of information’ that has led graduates to overinflate their starting salaries. Some of it has to do with a feeling of superiority as well. College grads put 4 years of work into their degree and expect a rolling out of the red carpet and a hefty salary to pull them in.

“While college graduates [who] get further along in their education… learn more about different job opportunities and can start to estimate how much they’ll earn, … there’s a phenomenon known as ‘illusory superiority,’ which is the tendency for people to overestimate their qualities and abilities,” O’Shaughnessy added. “I think we’re seeing that tendency come through in this study.”

Student Loan Debt Part of It

While a lot of the problem stems from a lack of information and illusory superiority, there’s still a massive chunk of this to blame on student loan debt. Most college students leave school tens of thousands of dollars in debt. They only have a six-month grace period before their payments start to kick in, whether they’re ready for it or not.

As college tuition rises, so does student loan debt. When one graduates with so much debt, they expect to find a job that will make racking up all that debt worth it. The problem is, a college degree is a long-term investment. You might see greater opportunities because you have a degree, but it takes time to find the right career.

You also have to put a bit more experience behind you. The more experienced you are, the better opportunity you have to ask for higher sums of money. You’ll get raises over the course of your time working at a company. So, while a college degree might not seem as if it’s worth it at first, stick with it. Its value will grow over time.

Written by adminJune 20, 2019

Credit & Debt

Your credit score can impact a lot more than you realize it does. We’re talking about its ability to keep you from making major life decisions, taking care of yourself during an emergency, or even the ability to save money. Low credit scores can also be blamed for causing issues in relationships and putting a person in turnoff territory.

Low credit scores can cause higher interest rates, expensive insurance, and so much more. Sometimes, a bad score isn’t the person’s fault. Perhaps they had a medical emergency and are now trying to pay back a lot of debt. A divorce and big spending by a spouse can lead to it as well. Either way, low credit scores make life difficult.

The new middle class is essentially a person who is making a decent amount, but are unable to save. A lot of them don’t have health insurance, which costs them big time in the end. There’s new information coming by Elevate, a company that looks at data from non prime Americans. To be considered non prime, you must have a credit score below 700.

Those with a low credit score are finding out they have a harder time financially than those with a good credit score. This might seem obvious, but it happens in ways you might not expect. Their incomes are less steady. They’re paying a lot more for things that someone with good credit is paying less for.

Credit Scores and Dating

42% of people who were surveyed said the person’s credit score played some role in their interest in another person. This is an interesting statistic found by Bankrate and Princeton Survey Research Associates International. A good credit score says someone is responsible with their finances and money issues cause problems in relationships.

Women are rightfully more judgmental about credit scores than men. The survey looked at 1,000 adults and found about half of the women said they wouldn’t date someone with a bad credit score. Men care less about it, with only 35% saying the same. Older millennials are the group that seems to care the most about the subject.

There are very good reasons for this. Low credit scores can make it nearly impossible to buy a house, get an auto loan, get any type of loan if one is needed, and so much more. Even if they’re able to find that one company out there willing to give them, let’s say, a mortgage, they’d pay nearly $50,000 more than people with good credit.

This is ultimately what makes life more difficult for people with a lower credit score. They’re shelling out a lot more money and it’s catching up to them. They make higher monthly payments and can’t seem to get ahead in their finances. This is why it’s essential to focus on improving your credit score and saving money any way you can.

Written by adminJune 20, 2019

Student Loan Consolidation

Student loans lead the way as Americans continue to fret about their finances.

A survey by Bank of America talked to 1,000 Americans throughout the U.S. and discovered that for 51% of participants student debt is very stressful and is a major concern for at least the early part of their career.

Participants were also worried about not having sufficient savings, the prospect of a looming recession, as well as their capability to pay off their debts.

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Acccording to Aron Levine, Head of Consumer Banking at Bank of America, “Student debt is probably leading the way as the absolute No. 1 major concern. Whether it’s the actual student who took on the debt, parents, grandparents who have co-signed for the debt, that’s a huge one.”

The survey results show that aside from their mortgages, 73% of participants had some form of debt: 43% credit card debt, 36% auto loan debt, 20% student debt, and 15% in personal loans. Almost half of respondents with student loan debt owe more than $20k in overall debt.

It’s no secret that over the past few years, student loan debt has risen to the bloated level of $1.49 trillion. A much lesser known fact is that increasing numbers of borrowers are unable to meet repayment deadlines. In the first quarter of this year, delinquency rates rose from 9.08% to 9.54%.

In the South, student loan burdens are especially crushing. In a study looking at American cities where residents were most indebted relative to their salaries, thirteen of the bottom 20 cities were in the South.

Some of the graduates in those cities are seeing 70% or more of their annual income owed in student debt. On the other end of the spectrum, 10 of the top 20 cities with the best debt-to-earnings ratio were in the state of California.

More Falling Into the Trap

Levine mentions that not only graduates are feeling the burden of student loans. Parents and grandparents are also feeling the hurt in their pockets.

Last year, 69% of college students on average took out loans of $29,800, of those 14% were parents taking out loans on behalf of their children. Those Parent-Plus loans amounted to around $35,600 on average.

It is this same group the 40-50 age group that has the highest terms of debt that transitions into delinquency. This group is finding it harder and harder to pay back their children’s student loans.

Hope On the Horizon

The student debt deficit is in crisis now, but Democratic presidential candidate and Massachusetts Senator Elizabeth Warren brings some hope to the beleaguered. As part of her election campaign, she has promised to eliminate student loan debt of up to $50,000 for 42 million Americans.

Warren said in a press release, “The student loan debt crisis is real and it’s crushing millions of people. It’s time to decide: Are we going to be a country that only helps the rich and powerful get richer and more powerful, or are we going to be a country that invests in it’s future?”

That definitely sounds hopeful for everybody with student loan debt out there. For any other financial advice you may need, feel free to reach out to the Financial Helpers.

Call Now 844-332-2079

Written by adminJune 18, 2019

Credit & Debt , Saving

You may be among the 25 million HSA account owners, here are some things you might not know about them.

Health savings accounts (HSAs) are becoming an increasingly common feature in benefit packages. Usually offered together with a high-deduction health plan (HDHP), they are tax-exempt and set up to pay for certain medical expenses that owners may incur.

Contributions used to pay for medical expenses that meet requirements are not taxed, and the funds that grow in the HSA remain tax-free.

Some owners may not realize that contributions made via payroll do circumvent the Federal Insurance Contributions Act (FICA) tax, which makes HSAs as tax-perfect as they can get.

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HSAs are Underutilized

HSAs are rising in popularity but are not optimally utilized. According to a survey conducted by Mercer, more than 53% of large employers offer HSA-eligible health plans but only 24% of covered employees have opted into one.

The HSA enrollment process is actually quite easy. Here are the requirements according to the IRS:

You must be covered under a high-deductible health plan.
You cannot have any other health insurance coverage, including Medicare.
You must not be claimed as a dependent on someone else’s tax return

For 2019, if you only have personal HDHP coverage, you can contribute up to $3,500 towards your HSA. If you have HDHP coverage for your whole family, the contribution amount increases to $7,000.

Avoid Spending on Current Medical Expenses

The HSA is designed to cover health care expenses in retirement. But many HSA account holders use their accounts to pay for current medical expenses which defeats the purpose of having a HSA in the first place.

Rob Foregger, co-founder of NextCapital says that in certain situations, HSA account holders have no other funds to pay for their current medical expenses. If they plan to use their HSA in retirement, Foregger suggests investing in mutual funds, and that most HSA providers now offer these long-term investment options.

No Need for Required Minimum Distribution

After signing up for a HSA, you are under no contractual obligation to spend it on current and/or future medical expenses. You can also use it as a savings account, or to pay for personal costs at a 10% penalty.

There is no required minimum distribution (RMD)with a HSA as compared to a standard IRA. After age 70, most IRAs are required to take an annual minimum amount from their accounts. However, HSA owners can leave their money in their accounts for longer and let it grow tax-free.

Shop Smart

It is idealistic to think that people with high-deductible plans will allocate their money wisely for their medical expenses. But if people spent more time comparing prices they can avoid paying for overpriced plans.

There are procedures like MRIs that can be overpriced, draining HSA accounts. HSA owners should get quotes from different vendors for such services to avoid long-term impact to their HSA’s future value.

If you would like to discuss the merits of enrolling in a HSA, or if you require any other financial advice, feel free to reach out to the Financial Helpers. We are only a phone call away.

Call Now 844-332-2079

Written by adminJune 17, 2019

Politics , Student Loan Consolidation

You may be wondering where does former Vice President Joe Biden stand on student loan debt? Most polls show that he’s a clear front-runner – but he has not said much about the student loan debt crisis. Here’s what we know:

Free College?

Biden indicated that he supported the concept of free college, saying, “We need to commit to 16 years of free public education for all our children… We all know that 12 years of public education is not enough. As a nation, let’s make the same commitment to a college education today that we made to a high school education 100 years ago.” However, he did not offer a plan or any specifics to implement it.

Biden’s History on the Topic

We have to look to Biden’s’ past to get a sense of where he has stood historically on the issue.

In 1998, Joe Biden supported a change that created an “undue hardship” standard for federal student loans, making it significantly more difficult for borrowers to discharge their federal student loans in bankruptcy. Biden continued to oppose efforts to loosen bankruptcy restrictions on student loans through 2001.
MOST RECENTLY: In 2005, Biden supported a change in the “bankruptcy code” by applying the “undue hardship” standard. Before this, student loan debt was not treated much differently than other forms of consumer debt in bankruptcy. After this change, private student loans started rapidly expanding across college campuses

As Vice President, Biden was part of an administration that created new programs and protections for student loan borrowers including Borrower Defense to Repayment and Pay As You Earn, as well as greater oversight of the for-profit college industry.

Until he releases more detailed policy proposals to tackle student loan debt, all we have to go on are his prior positions as a lawmaker. We’ll just have to wait and see what else he comes up with.

Written by adminJune 16, 2019

Saving

Most people enjoy the summer. It’s a great time where we spend a lot of time outdoors and enjoying the pleasant weather. But sometimes, especially if you live in warmer climates, summer can mean oppressive heat. Throw in a bit of humidity and you can be drenched with sweat just from stepping outside.

Most people’s solutions to this problem is to crank up the air conditioning. The home itself can be as hot as the air outside. So, turning on the AC can really put a strain on the budget. Having the AC running during the summer months can triple your electricity bill. In order to combat that problem, let’s look at 5 ways to stay cool this summer without blasting the AC.

1) Keep Track of Your Windows

In the summer months, if you’re not running the AC, you might keep all your windows open. The air in the morning and evening are usually cooler than during the heat of the day. But the trick here is to block the sun’s solar heat from entering your home. That means that in the morning, close your east and south-facing windows and draw the blinds.

In the evening, close your west and north-facing windows and blinds. This trick will help block out the sun’s heat during the times it will most likely enter your home. Also, don’t forget that your home can hold onto a bit of that solar heat and release it when the air temperature starts to drop.

2) How is Your Attic Insulation?

Attic insulation isn’t just to keep the warm air in the house during the cold months. It also will help keep the cool air in place. So, in that way, having good insulation keeps the lower floors comfortable throughout the year. If your insulation is poor or isn’t think enough, the cooler air can escape, or even push the hot air from the attic down into the home.

3) Install a Ceiling Fan

If you don’t have a ceiling fan, they are great at keeping rooms a good 5-10 degrees cooler with one-tenth the power usage of an AC. If your fan doesn’t seem to be doing the trick, check to make sure it’s not on a ‘winter’ setting. A winter setting will blow air the opposite direction to blow the air up rather than down.

4) A Whole Home Fan

Consider the places in your home that are the warmest. They are where the warm air settles in and it can make parts of your home really hot and humid. A great way to cool off those areas is to install a standard ‘whole-house’ fan that works like central air. The fan will pull the warm air out and push it outside the home.

5) Keep the Oven Off

During the unbearably hot summer months, using the oven can make the problem worse. Nothing heats up the kitchen like having the oven roaring. During these days, use alternative cooking methods, like grilling outside, using a crock pot, or a microwave. This will even help save on the electricity bill.

It’s understandable that there will be some days so hot, you’ll have no choice but to turn on the AC. But if you do most of the things on this list, it should cover you on most of your warm days while saving a bit of money on your electricity bill.

Written by adminJune 16, 2019

Student Loan Consolidation

Student loan debt is a massive crisis hitting the United States. Currently, 44 million Americans owe over $1.53 trillion and climbing. These numbers are expected to rise later this year when the new numbers are released. That much debt is forcing people to put off major life decisions, simply because they cannot afford their debt payments and other types of spending.

For example, many people in their 20s and 30s are waiting to get married and have kids. They’re not buying homes or vehicles. It’s easy to make fun of the millennial who still lives at home, but they have a good economic reason. They simply can’t afford to pay their monthly student loan debt bill and rent and all the other expenses that come with living on your own.

Putting off these ‘rites of passage’ are coming at a major cost to the economy as well. We have a growing generation of people who leave college and cannot find a decent job. As college enrollment drops, many are starting to wonder if going to college is worth it at all. It is a great long-term investment, but in the short-term, you’re probably going to feel the heat.

Sadly, many Americans feel the sting too strongly. They leave college and have six months to find a job and get on their feet. They call this the ‘grace period’ that gives students a little bit of time. But, whether you’re ready or not, after that six months, that first bill will come in. You might be able to get a deferment, but deferments only make your principal total grow as interest continues to be added.

Leaving the Country

CNBC recently reported about some Americans being in such a tight spot that they decide to leave the U.S. to escape the wrath of their student loan debt. One guy in particular moved to India. Living in Colorado was expensive and the jobs weren’t available. Imagine spending many years and racking up tens of thousands of dollars in debt for a degree that doesn’t do anything for you. That’s the desperation this man felt. He left for India to escape it all.

While there’s no official data on how many former students have left the United States due to student loan debt, there’s many people out there. In particular there are Reddit channels and groups all over social media that tell the story of people running as far from the U.S. as possible to escape their debt.

A lot of that has to do with the backlash of not being able to pay your debt. As stated earlier, they will come after you whether you’re ready or not. If you can’t pay, they will garnish your wages, steal your tax refund, and even harass you. Many students were often lied to and became victims of their debtors who purposefully gave them wrong information to keep them from seeking any type of student loan help or assistance.

One person told her story of how she left for Japan. She was working multiple jobs to pay off your debt, but it was weighing her down in every way. As long as she had a lot of debt, she was unable to pay for health insurance, which is another part of this problem. “I wish I could come back to America and not be scared,” she said.

A Lot of Debt

Out of all the other types of household debt, student loans seem to be the hardest to pay off. The 90-day delinquency rate is much higher than all other forms of debt. It’s even predicted that 40% of all student loans will be defaulted on in the next 5 or so years. That’s a lot of people not paying their bills! Because of that, the amount of student loan debt is expected to skyrocket.

While the White House currently has no plans to help out students, many Democratic presidential candidates have made this crisis a top priority in their campaigns. Candidates like Bernie Sanders and Elizabeth Warren have promised to tackle the issue. Most of the candidates appear to be in favor of free college education and wiping out the $1.53 trillion already owed.

Written by adminJune 13, 2019

Entertainment

Once again, the photo-sharing app is suffering a major outage this afternoon. People all over the world are saying they can’t log into their accounts. This includes both the mobile app and desktop. Some people have limited access, but cannot make any posts at all, while others say it’s completely down for them.

Downdetector.com has recorded at least 50,000 outage reports for Instagram in a matter of minutes. While Instagram is struggling as of late, it doesn’t seem to be impact Facebook much at all. It was first reported to be down at around 2:30 PM Pacific Time, so it’s been about an hour of non-service.

So far, there’s been no response from Facebook about the outage or when we can expect the site to be back up.

Written by adminJune 12, 2019

Saving

Parents who pay for their adult children’s expenses, like rent and student loans post graduation is no longer a new concept.

According to a survey conducted by Bankrate, half of Americans with children 18 or over have spent or are spending their retirement security to help support their adult children. The survey also found that parents are paying for a wide variety of bills, ranging from credit cards to rent and even student loans.

As college tuition costs continue to rise, parents are digging into their retirement funds to foot the bill for their children’s college tuition. A new survey done by Country Financial shows that 56% of parents are willing to take on $31,000 in debt, and 10% of parents have already gone into debt to pay for college for their children.

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A Stark Reality

“It’s an emotionally charged subject.” Doyle Williams, executive VP at Country Financial concedes. “If it’s going to help your children of course you’re going to do anything. But parents today need to be objective and ask if that’s the right thing to do for them.”

Williams adds, “The reality is that retirement is a necessity, and paying for your child’s education is a luxury.”

There is a crisis of retirement in our country, roughly 40% of retirees are spending more than they anticipated, and the so-called sandwich generation of Gen Xers are facing the prospect of taking care of aging parents and adult children at the same time.

This ends up putting even more financial pressure on them which is impacting their ability to pay off their debt and set aside money for their retirement.

Bank of Mom and Dad

With a plentiful jobs market and rising wages, why are the younger generations still relying on the ‘Bank of Mom and Dad?’ Bankrate analyst Kelly Smith proposes that delayed entry into the workforce is partly to blame.

“Young adults are staying in school longer, because higher education is getting more popular,” Smith says. “Education costs are going up, they aren’t getting the immediate push to enter the workforce, and on top of that they need help paying the bills.”

Wages have bounced back since the recession, but not all of the younger generation can handle it on their own. Ironically, achieving advanced degrees to get higher paying jobs does mean that some adults have to rely on their parents longer.

And the proof is in the pudding, where we see the impact of the $1.5 trillion student debt crisis on not just the 45 million borrowers but their parents and grandparents as well.

The Elephant in the Room

While parents might think they are doing right by their children, but Smith says that supporting your children financially for too long does them no favors in the long run.

The boomerang generation – when children come back to live with their parents – used to be looked down upon. It would be best to avoid becoming a boomerang senior coming back to live with their children after their retirement savings have been depleted.

When their retirement accounts are at stake, it is imperative that parents have that uncomfortable conversation with their children earlier to come up with a game plan. It’s all about coming to a compromise, and moving towards a more comfortable future for all parties.

If you need any help setting up a plan for your financial future, the Financial Helpers are ready to assist you.

Call Now 844-332-2079

Written by adminJune 10, 2019

Saving

Many find themselves swamped in debt, and question being able to retire comfortably.

An online survey of 1,000 American adults conducted by CreditCards.com has shown that 78% of people are living paycheck to paycheck. 41% of those surveyed said that they don’t know when they will pay off their credit card debt, and 65% don’t know when they will get out of it.

Financial expert Chris Hogan describes the responses as “a depressing statistic and one that we can hopefully avoid. But we need a wake-up call all around, and people need to engage in this and get more serious.”

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Hogan adds that “people need to understand how important it is to make sure we’re putting money away and saving because if we don’t save, we won’t have any to spend or to build a foundation for retirement.

Avoid the Debt Trap

According to another survey conducted by Freedom Debt Relief, 41% of Americans have set aside little or no money at all for retirement. The overwhelming reason for this is the cost of everyday expenses.

79% of those surveyed said that they have debt: credit card debt 53%, mortgage debt 54%, auto loan 47%, student loans 21%, medical debt 13%, and personal loans 11%.

The overall debt held by households stands at $13.67 trillion in the first quarter this year and is steadily climbing. That figure is $993 billion higher than the peak of $12.68 trillion in the third quarter of 2008 before the Great Recession.

Credit delinquencies are also on the rise, driven at the forefront by credit card and student loan debt. Financial analyst Ted Rossman is optimistic that most people are responsible with their finances. “Most people who have credit card debt didn’t get there because of a vacation or a shopping spree,” Rossman explains, “they got there because something happened with their health, their car, their home, or they’re just having trouble making ends meet.”

This highlights the importance of personal finance and doing what you can to budget and live within your means. Any kind of debt can be a threat to your future. Whenever we borrow someone else’s money, we are charged a penalty called interest. Helping young people understand how money works will educate them to avoid this debt trap down the road.

If you’re not budgeting, then you will end up losing control over your money. You can either tell money where to go or wonder where it went. For any other financial advice, you can reach out to the Financial Helpers.

Call Now 844-332-2079

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