OWS, Student Debt, Tuition Increases and Tuition Free Colleges

Higher tuition, more student loans, and greater access to higher education…what do we do? The Occupy Wall Streeters (OWS) say they are not going to repay student loans and are demonstrating on college and university campuses.  In today’s Inside Higher Ed daily updates, there is an article about how their energy might be misplaced.  This article argues that college and university administrator’s hands are tied because states are cutting funding to higher education and students are demanding quality student services and education.  They are feeling that their only or best choice is to raise tuition and fees, which ultimately increases the debt burden for college graduates.

According to DiplomaGuide.com there are 10 colleges and university with $0 tuition.  Yes that is right, $0.00 in tuition.  Perhaps we should look at these institutions to see if we can apply some best practices to reduce the cost of higher education.  Many require students to work on campus.  College of the Ozarks nicknamed “Hardwork U” requires 15 hours/week of work from the student to graduate tuition-free.  Berea College offers every student a full-tuition scholarship and a laptop computer while attending Berea and work-study to offset food, room and board.

Higher education is not free.  It is expensive to pay for buildings, professors, administrators, support staff, research and everything that makes college “the best years of your life.”  So the question is “how do we lower the cost of higher education without additional taxes and reduced quality of education and services?”

My answer is YOU!  Did you graduate from college?  Did you benefit from college?  If so, it is time to give back.  You can give back to a specific scholarship, start a scholarship, name a building or give to the general fund.  You can ask anyone who asks for donation, the amount is not important, but it is important that you get in the habit of giving.  We are all at different places in our financial lives, so whether you give $1 or $100 million, just give. This holiday season, think about giving your college or university a gift.  Contact your alumni association or foundation to see how you can help reduce the cost of higher education and designate your money to the area where you believe it would do the most good.

If you value higher education, and if our society values higher education, we need to put our money where our mouth is and give back.  College and university administrators, faculty and staff — You have a huge responsibility to do as your donors wish and be good stewards of the resources you are charged with managing.  That not only includes the fiscal responsibility, but the education you provide in the classroom and the support services in housing, recreational services and every service to the students. You are charged with providing the highest quality education and experience at a reasonable price.

I hope you have a happy holiday and take time to reflect on your personal values and where your money goes.  I’ve always said, “If you want to see what people really value, look at their checkbook and see where they spend their money.”  I hope your values and your checkbook are in agreement.

Frugal Fun and the Holidays

“Frugal Fun”', “Holidays”: The two topics go hand-in-hand.  So much of the joy of the holidays is the time spent with love ones and surprising them with something special. The something special does not have to cost a mint. Gifts from the heart can be the least expensive and the most treasured.


Frugal-festive examples from our homestead this year include packets of homemade monogrammed stationary:

Stockings made from a fabric stash and old costume jewelry:

And grandparents teaming up with the grandchildren to make extra special surprises for the parents. These activities make the holiday glow -- from the joy of the planning, the making and the giving.

From our household to yours, we hope your holiday prep this year is joyful, frugal and fun. :)

So Many Priorities, Never Enough Money

80-10-10: That is the budget we strive to achieve in our household. Live on 80%, save 10%, give 10% of our time, talents and treasure. We are not there yet but every year we get closer. Coming to the end of this year and heading into the next, we find that we have had, and will continue to have, more priority family fun than we originally budgeted for. How do we balance our priorities and our income?

• Want to pay for it in cash and continue to keep our credit card balance at zero each month? -Yes
• Want to take out of our savings or reduce our savings rate? -No
• Consider backing down on our giving? -No.

Ideally, we should bring our life style within the limits of that 80%. Selling off an asset, such as an extra automobile, is one option we discussed. We have three vehicles (car, truck, van) between two drivers. For the most part, the truck and the van sit in the garage as we typically car pool. Why is it hard to part with assets we seldom use even though they cost us money? Even if a vehicle is paid for, it still costs you in maintenance, license, insurance and depreciation.

It’s hard. Yes, a van is handy at times and we love ‘Chitty’, with her ‘Truly Scrumptious’ navigation voice and leather, heated seats, back-up camera and warning sounds when her bumper gets close to another object – which makes parking in tight spots such a breeze. We named her ‘Chitty-Chitty-Bang-Bang’ because with her laser speed control, we felt she practically drove herself.

To balance our budget, do we:

Take from savings? Take from giving? Carry a credit card balance? Sell Chitty? Change spending habits elsewhere?

Whether you are striving to live on 90% of your income and save 10%, or aiming for the 80-10-10 split --how do you keep an every changing lifestyle balanced and in budget?  What recommendations do you have?  Thank you for sharing.

Look Who’s Trying to Collect from Beyond the Grave

What happened to your debts when you die? As seniors increase their debt during retirement, you should know what happens to debts when you die.  According to FoxBuisness.com “Nearly 40% of all seniors say they have accumulated debt in their retirement years with no plans to pay it off in their lifetime.  Are the heirs and next of kin responsible?

There is not an easy answer and it all depends on the situation.  The first thing to do in all cases is to notify all creditors of the death. Normally, the estate and the executor who handles the estate will liquidate the assets, pay creditors and distribute the proceeds according to your last will and testament or it will be distributed according to state laws.

If there is not enough money to pay all creditors, the general order of who gets their money is:

1.  Funeral expenses, taxes and administrative fees

2.  Secured creditors such as mortgage loans, car loans, etc.  These creditors have the rights to the assets securing the loan.

3. Unsecured creditors…if there is any money left.  If there is no money left, the creditor will contact the co-signer and the co-signer is legally responsible for the debt.  If the debt was just in the deceased name, most credit card companies will write off the debt.

 

However, more and more credit card companies are outsourcing their collections and contacting the next-of-kin trying to collect based on “moral obligation.”  Saturday’sWall Street Journal has an article describing how collection firms are targeting survivors to try to collect at least some of the debt.  According to this article, “Collectors are starting to realize just how much money you can get from someone when they are at their most vulnerable.” Many survivors pay some or all of the debts just to stop the collectors from calling and bringing on recent memories of the deceased, even though they are not legally obligated to pay.

Here are some of the facts you should know:

• The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 prohibits creditors from charging late fees or annual fees during estate settlement.
• Not all monies are available to creditors.  Retirement accounts such as 401(k)s and IRAs don’t pass through the estate, but go directly to the beneficiary.
• Under the FairDebt Collection Practices Act , collectors cannot do the following:
•  Call before 8:00 a.m. or after 9:00 p.m.
•  Call at work if you ask them not to
• Harass you, use obscene or profane language or threaten the use of violence or other criminal means to harm you, your reputation, or your property
•  Conceal his or her identity on the phone
• Lie or falsely imply that you have committed a crime
• Disregard a written request from you to cease further contact
• Falsely represent the amount, character or legal status of debt
• Continue to contact you if you ask them in writing to stop

If you feel you are being harassed, contact your state’s Attorney General’s office and the Federal Trade Commission with the details of the phone call or harassing activity.  You may not be liable for the debt and you have rights to keep you from being harassed.

OWS: Repay Student Loans?

Occupy Wall Street (OWS) protesters have decided not to pay back students loans as a way to protest the high cost of higher education.  Is this a good idea?  Check out what Prof Bob has to say.

Credit, Deficit Super Committee, and You

Do you know what would have happen if we followed a federal balanced budget amendment?  We would all be speaking German.  Deficit spending allowed the federal government to finance World War II by selling “war bonds.”  Our nation’s monetary policy allows the government to borrow (by selling bonds) to finance necessities and to smooth out the ups and downs of natural business cycles.

The deficit Super Committee deadline is Monday, November 21^st, 2011. As the committee meets, I hope they are listening to some of those in the 1% who say they would not mind paying their fair share in taxes. I hope they listen to the 99% who want to see fairness in the tax system. I hope they listen to the majority of economist who say we should be borrowing and investing in infrastructure.

Let’s think about it for a minute. We borrow money to fix our roads, bridges, schools, and dare I say, Internet, so all would have access to the World Wide Web via high speed connection.  We bridge the digital divide and make a path for easier access to education for everyone. We put people to work.  It’s a simple equation; the more people who are employed, the more tax revenue the government receives and the less that is spent in social programs.  The more people unemployed, the more the government spends on social programs and the less tax revenue it has coming in.

Interest rates are at an all-time low, which makes borrowing for the government (and for you) very inexpensive.  It is okay, and maybe even a good idea to borrow money if it is for an investment that will have lasting returns.  Borrowing for a college education, a home, and even for the government to put people to work and get our economy going are good ideas.  It is important to look at the long-term vision and payback when considering taking on credit.  Does the Super Committee have the vision and the guts to make the right decisions?  For the health of our country, I hope so.

Credit, Debit or Cash - Holiday Shopping

Black Friday is less than a week away and there is no place I would rather NOT be than shopping at 4:00 a.m. when the stores open.  I will be in my bed sleeping off a good Thanksgiving meal of smoked turkey and ham with all the fixings.   But as we get into the season of spending, shopping and giving; here are some ideas to keep in mind.

When shopping for gifts make a list and check it twice.  Find out where you can get the best deal and make a budget for your gift giving. This may be a tougher holiday season financially so it is even more important than ever to keep both hands on your purse strings as you walk into stores playing holiday music and seeing displays that say “buy me!”  Using cash and the envelope system of budgeting keeps you within your budget.

Using credit cards provide some protection, however you may be tempted to spend beyond your budget. Credit cards are governed by the Fair Credit Billing Act which provides you specific rights to dispute your credit card charges when your purchases are not delivered as agreed.  You can also build rewards for using your credit card, whether airlines miles, cash back or points to use how you would like.  The major downside of using a credit card is that if you keep a balance, you could make the holidays last all year long or longer, trying to pay off what you purchased.

Cash and debit cards can keep you from having the credit card holiday hangover.  You will not receive monthly bills of unpaid balances.  This also helps you stay within your budget.  If you don’t have the cash, don’t buy it.  Debit cards do not offer the same as credit cards. Debit cards are regulated by the Electronic Funds Transfer Act (a federal law), and you only have a specified time to dispute charges.  If you wait too long, you may lose all of your money.

If you use cash, be sure you hang on to your receipts and keep track of what and where you spend money.  Sometimes my wallet is like a black hole.  I put money in and I don’t know where it went. Receipts can also help you in returning items.

You can also make holiday gifts if you have the time and talent, but that is a blog for another day. We hope you all have a great holiday season, spend your money, time and talents wisely and -- get a quiet moment to reflect on your blessings. Happy Thanksgiving!