Deal with Your Debt: The Right Way to Manage Your Bills and Pay Off What You Owe (Liz Pulliam Weston)

Why do colleges cost so much? Large capital spending provide the best facilities, faculty, and sport centers and teams to keep wealth alumni donors happy. Universities hope to boost their national ranking by spending on high-speed internet access, new gyms, concert halls, and better student housing. Faculty salaries are expensive. The median salary for a tenure professor is $76,200. Many colleges are trying to shrink class sizes and reduce class loads so professors can do more research and bring glory to the University. What type of loans are available? A Perkins loan offers a 5% fixed interest rate and a maximum borrowed amount of $20,000. Stanford loan is a variable rate loan capped at 8.25% and a 4% upfront fee. How much should you borrow? None is the correct answer. If you don't have money then don't go to college. Save your money then go to college. If you yield to temptation and accept a loan then your loan payments once you graduate shouldn't exceed 10% of your expected monthly gross. You will have 10 years to repay the student loan. If you earn $40,000 then your payback will be 4,000 a year (10%) or about 340 dollars a month for a $26,000 dollar loan. The average undergraduate loan is about 26k. 50 percent of the student enrolled in college do not graduate and leave the college with heavy student debt. If you graduate making less than 40k the loan repayment amount will be overextended in ratio to earnings. Instead of 10 percent of your wages the loan will represent 15 to 20 percent. The heavier debt loan increases the risk of default.

Introduction

If you're picking up this book, you're probably concerned about your debts.

If so, you're in good company. Half of Americans in a December 2004 Associated Press poll said they worried about what they owed, with 42% saying their debts caused them "a great deal" of stress. One in five said they obsessed about what they owed most or all of the time.

Some people have good reason to worry. They've maxed out their credit cards, or struggle with an unaffordable mortgage, or face repossession of their car. One in 10 Americans in the AP poll said they had missed a minimum payment in the past six monthsmda sure sign of major credit trouble.

If you're one of those folks, you'll find plenty of information in this book to get you back on your feet.

But you don't need to have overdosed on plastic to be concerned about your debt situation. Most people get little if any education about the right ways to acquire and manage borrowed money. They rely on lenders, family, friends to tell them which loans are "good" or "bad" and to advise them how much they can afford. Many veer between extremes, thinking debt is evil one minute and the next applying for yet another new department store card to get that 10% discount.

The typical book on debt, meanwhile, focuses almost entirely on how to pay it off and ignores when debt might actually be beneficial to your overall financial life.

In reality, debt can be an enormously helpful financial tool, allowing us to buy homes, get educations, and build businesses. Instead of sucking us dry, it can help give us the cash flow we need to grow ourlong-term wealth. But we need to know how to get it, when to get it, how much to get, and when it's time to pay it off.

This book is designed to help you identify which debts are toxic to your financial health and which actually help you get ahead. You'll learn the smart ways to deal with your debt, including which loans you should pay off and which you should keep. You'll discover how to manage your finances and your credit so that you'll be able to borrow all the money you need at the best rates and terms. In short, you'll be able to craft a sensible, workable plan to achieve your goals and truly deal with your debt.

So let's get started!

© Copyright Pearson Education. All rights reserved.

Library Journal

Weston (Your Credit Score), a columnist and certified financial planner, asserts that for most of us, debt is a fact of life. Her aim is to help readers understand the different kinds of debt and how they may be managed for a healthy financial picture. She advocates a management plan in which individuals learn the specifics of their debts, take a big-picture look at their financial situation, and create a repayment strategy. She follows that with a review of mortgages, credit cards, student loans, home equity, auto loans, and loans against 401(k) and retirement plans. Weston explains each type of debt and outlines what borrowers must consider, including how much of a loan to take, choosing the lender, calculating payments, getting good rates, paying off loans, and refinancing. Weston also offers counsel on how to recognize a debt crisis and how to deal with creditors and collection agencies. Basic and clear, this is similar in scope to Jon Hanson's Good Debt, Bad Debt. Recommended for public libraries.-Joan Pedzich, Harris Beach PLLC, Rochester, NY Copyright 2005 Reed Business Information.

This is the eBook version of the printed book. If the print book includes a CD-ROM, this content is not included within the eBook version.Most people carry debt for most of their adult lives. Yet, most books on debt focus mainly on how to pay it all off, and live forever without it. Too often, following that advice leads only to failure. People either give up, or pay off the wrong kinds of debt. They strand themselves with too little flexibility to survive a financial crisis -- and land in bankruptcy court. They neglect saving for retirement, homes, or college, and end up poorer than they might have been. For most people, it's more realistic -- and smarter -- to control and manage debt effectively, rather than eliminating it completely. Debt Smart shows how. Award-winning personal finance columnist Liz Weston explains the rules and explodes the myths surrounding debt. Discover the crucial role debt can play in a portfolio, identifying debts that actually contribute to wealth and flexibility, while avoiding or eliminating “toxic” debts. Weston presents effective strategies for evaluating, monitoring, and paying every form of debt, from credit cards and mortgages to student and auto loans. She offers practical guidelines for how much debt one should take on. Find realistic (and often surprising) guidance on everything from home equity loans and 401K borrowing to small business loans. Most€people€carry debt for most of their adult lives. Yet, most books on debt focus mainly on how to pay it all off, and live forever without it. Too often, following that advice leads only to failure. People either give up, or pay off the wrong kinds of debt. They strand themselves with too little flexibility to survive a financial crisis -- and land in bankruptcy court. They neglect saving for retirement, homes, or college, and end up poorer than they might have been. For most people, it & rsquo;s more realistic -- and smarter -- to control and manage debt effectively, rather than eliminating it completely. Debt Smart shows how. Award-winning personal finance columnist Liz Weston explains the rules and explodes the myths surrounding debt. Discover the crucial role debt can play in€a portfolio, identifying debts that actually contribute to€ wealth and flexibility, €while avoiding or eliminating & ldquo;toxic & rdquo; debts. Weston presents effective strategies for evaluating, monitoring, and paying every form of debt, from credit cards and mortgages to student and auto loans. She offers practical guidelines for how much debt€one should take on.€ Find realistic (and often surprising) guidance on everything from home equity loans and 401K borrowing to small business loans Annotation Most people carry debt for most of their adult lives. Yet, most books on debt focus mainly on how to pay it all off, and live forever without it. Too often, following that advice leads only to failure. People either give up, or pay off the wrong kinds of debt. They strand themselves with too little flexibility to survive a financial crisis -- and land in bankruptcy court. They neglect saving for retirement, homes, or college, and end up poorer than they might have been. For most people, it's more realistic -- and smarter -- to control and manage debt effectively, rather than eliminating it completely. Debt Smart shows how. Award-winning personal finance columnist Liz Weston explains the rules and explodes the myths surrounding debt. Discover the crucial role debt can play in a portfolio, identifying debts that actually contribute to wealth and flexibility, while avoiding or eliminating "toxic" debts. Weston presents effective strategies for evaluating, monitoring, and paying every form of debt, from credit cards and mortgages to student and auto loans. She offers practical guidelines for how much debt one should take on. Find realistic (and often surprising) guidance on everything from home equity loans and 401K borrowing to small business loans "Live without debt? On what planet? For most people, it's just not practical. Here's the good news: you can manage your debt so it actually improves your financial well-being. You can pay off debts that are truly toxic and cut the costs of the debts you keep. You can keep debt from getting out of hand, and get smarter about every debt you incur from now on."--Back cover Isn't debt-free the way to be? Your debt management plan Credit cards Mortgages Home equity borrowing Student loans Auto loans 401(k) and other retirement plan loans Loans you don't want to get or give Dealing with a debt crisis Putting your debt management plan into action.