The Orlando Sentinel reports another lottery winner filed for bankruptcy after winning a $1 million lottery jackpot. A Seminole County jury ordered the former school teacher Lynn Anne Poirier to pay her boyfriend $291,000. Poirier took a one-time lump sum $750,000 payment and claimed that there wasn’t an agreement to split the jackpot but a six-member jury concluded that “the two had a valid but unwritten contract to split any major lottery jackpot.” Past studies have shown that lottery winners often become estranged from family and friends. According to a 2015 Camelot Group study, 44% of lottery winners were broke within five years. The Certified Financial Planner Board of Standards also found that nearly a third declared bankruptcy and were worse off than before they won the lottery. (orlandosentinel.com)
Debt Management
The Unexpected Upside of Student Loan Debt
Hadley Malcolm writes on USA Today that the unexpected upside of student loan debt is the financial responsibility as she learns to set goals and to track budget. “The unexpected upside of graduating with $25,000 in student loan debt is the financial responsibility it forces on your life. I have to take control of every dollar I spend and know exactly where it’s going. I have to say no to dinners out with friends, Friday night drinks and other general fun a lot more often than I can say yes. I stare perplexed at the photos from exotic vacations and Euro trips so many of my Facebook friends seem to take every year — or as is so much more common once you pass age 25, the flood of shiny, diamond-clad fingers waving through my newsfeed — wondering how exactly these people have that kind of extra cash.” Taking control over your money is a crucial part of getting out of debts. Gaining an awareness of your personal finance while paying off the student loans will benefit the rest of your life. (usatoday.com)
Some Medical Students Avoiding Huge School Debts by Studying in Cuba
Medical students in U.S. faced an average of $180,000 in debt after graduation. By 2025, the Association of American Medical Colleges projects that the U.S. will have a shortage of 130,600 physicians. More than half of the shortgage will be in primary care as more medical students choosing subspecialites for higher pays. Due to higher economic barrier, some students are ditching America for medical school in Cuba. The Latin American Medical School is free for students with no tuition, room, or board. Over 100 American students have joined this medical school route and and Sarpoma Sefa-Boakye is one of them. “I called the office asking how much the program cost, how much the application fee was. They were just like ‘free, free,’” says Sefa-Boakye. “It boggles my mind they make it so expensive and so hard to be a doctor” in U.S. says Darnna Banks, who recently graduated in Cuba and matched to a pediatrics residency program in Chicago. (wired.com)
Law Graduate Sues School After Huge Debt and Failing to Get a Job
After borrowing $100,000 to get her law degree at Thomas Jefferson School of Law, Anna Alaburda still couldn’t find a job as an attorney three years after graduating. So she sued the school for fraud. The law school reported that 80% of its recent graduates found jobs within nine months. But Alaburda claims the school inflated the number of its students who found jobs after graduating since not all reported jobs are law-related. Judge Joel Pressman allowed the case to go to trial and agreed that the employment figure is “meaningless in the context of a legal education.” (cnn.com)
Why Don’t People Manage Debt Better?
Emory Nelms and Dan Ariely at Scientific American noted that even financially savvy people have a hard time juggling debt. The most cost-effective way to pay off multiple debts is to focus on loans with the highest interest rates first. But evidence shows that consumers consistently pay off smaller debts first, in a bid to reduce their total number of outstanding balances, even if it means racking up greater long-term costs. In a suboptimal method, Dave Ramsey often urges his listeners to ignore the interest rates and to attack the smallest debt first. This strategy of paying off the smaller debts first is a planned strategy rooted in psychology. “Consumers with multiple debts are motivated to reduce the total number of debts rather than reducing the total of their associated costs.” To counteract our natural tendency to approach debt irrationally, you can set up automatic payments to the debt with the highest interest.
Even Presidential Candidate Has Problem with Personal Finance
No matter what income level, you will have a spending problem if you don’t live below your means. That is what happens to U.S. senator and presidential candidate Marco Rubio. Rubio has a spending problem, even though he earns over $200,000 last year. In a newly disclosed personal finance details, Rubio revealed that he sold $68,241 worth of retirement funds. Withdrawal from retirement funds for immediate cash is a bad move since it comes with a huge tax penalty. “It means that he is probably on some level living above his means, because he is borrowing against his future,” said Boston University economist Laurence Kotlikoff. In an interview on “Fox News Sunday,” Rubio said that he needed “access to cash” for personal expenses and in anticipation of running for president. According to the 2013 data, Rubio has a net worth of negative $140,000. (washingtonpost.com)
How To Get A Perfect 850 Credit Score
According to WalletHub data, the average credit score in the U.S. is just 668. By improving your credit standing to “good” you can save around $4,400 per year with a mortgage, auto loan and credit card. Once you reach the 90th percentile or at least 810 credit score, you are likely to get the lowest interest rate and cheapest insurance premiums. For the overachievers, Odysseas Papadimitriou shows some tips to achieve a perfect credit score and join the 850 credit-score club of 0.1 percent of the adult population – about 245,000 people.
- Inundate your credit reports with as much positive information as possible, from various sources
- Maximize available credit and minimize balances
- Keep your report derogatory-free
- Don’t close accounts prematurely
The trick to get a perfect credit score is to pay all your bills on time and don’t borrow too much money too often. Keep in mind that a credit score of 850 will take years of good history, not just your present records, to achieve the perfect status.
If You Want To Get Out Of Debt, Ask Yourself This Question
According to Pew Charitable Trusts report, eight out of 10 Americans are in debt with the median amount owned at $67,900. Over the past 30 years, American families have taken on increasing amounts of debt. If you want to get out of debt, you have to ask yourself this question: “Why you got into debt in the first place,” says certified financial planner John Gajkowski. “Was it a one-off type of thing? Was it a medical expense you weren’t ready for? Or was it your lifestyle? If you have a $60,000 lifestyle and a job that only produces $50,000 in income, you’re always going to be in debt, so you either have to modify your lifestyle or change careers to earn the money for the lifestyle you want to create. A lot of people never come to that realization.” Debt management is a lifelong process just like weight management. You need to keep this question in mind to successfully control your personal finance.
How to Pay Down Your Student Loans
With over $1.3 trillion outstanding loans, the class of 2015 was the most indebted ever with the average of over $35,000 for 70% of graduates. In fact, more than 40 million Americans have at least one student loan. Part of Forbes’ 30 Day Money Challenge, Maggie McGrath compiled excellent guides on how to pay down your student loans. No matter your background, the guides have tip and information for high school senior, undergraduate, college senior, graduates and high earners. Whether you’re in school or out, it’s smart to consider paying off your student loans as early as you can. (forbes.com)
True Costs of A Bad Credit
Personal finance blogger Allan Liwanag writes: “Wouldn’t it be nice to have a good, excellent, or even a perfect credit score? Of course, it would be. When you have a good credit, you are able to apply and get approved for loans with little to no problem at all. You are able to avail low-interest rates on credit cards, car loans, and other debts because lenders see you as a low-risk borrower. In truth, there are many benefits of having a good credit. But what if you have a bad credit? One thing I can say is that life won’t be so easy. I had my share of living a life with a bad credit. The repercussions of that bad credit score were far worse that I could have ever imagined.” With a bad credit, not only you will have difficulty in getting loans but you will also face a hard time getting a job. So beware of the true costs of a bad credit and take steps to improve your credit scores. (thepracticalsaver.com)
Huge Personal Debt Raises Worries in Wealthy Qatar
Spending lavishly on credit cards and struggling to repay loan are the universal personal finance problem that happened around the world. In Qatar, where government subsidized citizens with free healthcare and generous salaries funded by rich gas reserves, three quarter of Qatari families are in debt with most owe more than $68,700 USD. These huge personal debt raises worries in Qatar as the welfare state is becoming less generous especially with the downturn in the energy industry. Qataris are borrowing enormous sums to finance lifestyles they cannot afford. “You cannot have a bad watch on your wrist, a second-hand car, or an old telephone. You need to have the latest models so as not to appear ‘poor’,” said Mohammed al-Mari, a former traffic policeman who works in the charity sector. “People end up pretending they have money just to keep up. There is this social pressure.” Keeping up with the Joneses can spread to any part of the world where people lack the understanding about personal finance. (reuters.com)
How Much Debt Is Too Much?
Take on certain debts, like student loans or mortgage, for something that have the potential to increase in value over time is considered good. But how do you know how much debt is too much? Liz Weston, on personal finance website NerdWallet, provides some answers:
- House: “Capping housing costs at 25% of your income can give you the financial flexibility to juggle all the other important financial goals in your life.”
- Student loan: “Your payments should eat up no more than 10% of your gross income.”
- Auto debt: “Car payments in the range of 5% to 10% of gross monthly income. Car loans should be for four years or less and ideally accompanied by a 20% down payment so you don’t spend years owing more than the car is worth.”
- Credit card debt: “Pay your balances in full every month.”
- Toxic debt: “Avoid at all costs, includes payday loans, no-credit-check loans, title loans and rent-to-own schemes.”
Improve Your Credit Score by 100 points
Having a perfect credit score of 850 is a dream for many people but, of course, not a lot of people will ever get it. According to Fool.com, only 1% of the population has that perfect credit score. Don’t fret if you are not one of them or will never be one of them. If you have an excellent but less than perfect credit, you can still pat yourself on the back. There are tips or ways that you can apply to improve your credit score, whether yours is bad, good, or excellent. Is a 100-point improvement realistic? Rod Griffin, director of public education for credit bureau Experian, says yes. “The lower a person’s score, the more likely they are to achieve a 100-point increase,” he says. “That’s simply because there is much more upside, and small changes can result in greater score increases. It’s harder to improve scores when you already have a strong credit history.” Here are three ways to improve your credit score by 100 points from NerdWallet:
- Knock the errors off your credit reports
- Pay your bills on time, all the time
- Don’t go anywhere near your credit limit
11 Things to Consider Before Co-Signing a Loan
The Practical Saver writes: “Co-signing a loan for someone can be a generous thing to do but can be dangerous at the same time. I’ve heard so many horrible stories about people helping out others through co-signing with horrible results. It is true that doing this can be daunting especially when you hear these kinds of stories. There are many situations that co-signing a loan for somebody is necessary especially when that person is just starting to build up credit. If you are a parent, you may find the need to do it for your child. Of course, family may be exceptions to the unwritten rule of don’t co-sign for others.” (thepracticalsaver.com)
US Marshals Arresting People for Not Paying Their Federal Student Loans
Believe it or not, US Marshals Service in Houston is arresting people for not paying their outstanding federal student loans. Paul Aker says he was arrested at his home for not paying his $1500 federal student loan. Seven deputy US Marshals showed up at his home with guns and took him to federal court. Overall the US Marshal in Houston serves up to 1500 warrants to people who have failed to pay their federal student loans. With over $1.3 trillion outstanding loans, student loan debt is the second highest form of debt after home mortgages. No doubt there will be many more defaults on federal student loans in upcoming years. (fox26houston.com)
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