Managing Student Debt: A New Government Program

For many people, debt begins at the age of 18, when they begin their college education.  Sad to say, many student borrowers don’t recover from this debt for many years, even decades.  Debt has the habit of snowballing: it piles up and before you know it, interest rates have caused it to grow to huge proportions.

So how can students begin to cut off debt before it gets the better of them?  There are a plethora of programs out there to help manage student loan debt, but that debt still exists, it’s just a matter of when it gets repaid.  A new program is designed to decrease payments and cut off debt.

Learn more about managing student debt

Planning for a Newborn? Good Financial Advice.

July and August have the highest percentage of births for any month in America.  For the soon to be parents:  Congratulations!  Parenthood is a wonderful and life-changing experience.  As with most life changing experiences, as you may have determined after reading many of our posts, there are life changing financial aspects to deal with.  The blog www.cashmoneylife.com recently had an article spotlighting the different things to prepare for as a parent, and we would like to highlight some of these, and some of our own, for you.

Check and update your life and disability insurance

Could your family survive a disaster if you weren’t there to assist them?  What would happen to them if something happened to you?  These are the reasons for life insurance as well as disability insurance and both of these become even more important as your family begins to grow.  Make sure the beneficiaries of your insurance are your spouse and children and your policy is not outdated.  You would be surprised at how often that happens.  Make sure you have enough insurance to cover the expenses ahead so your new child has a fair shot if disaster strikes.

Discover more about budgetting for newborns

The Search for Security at Retirement

What’s more important to today’s retiree:  flexibility in investing or rock-solid dependability? It will come as no surprise that the pendulum is swinging in answer to that question, from the former to the latter.

A recent survey reported in investmentadvisor.com found that those at or nearing retirement “expressed significantly lower levels of financial comfort, greater concern about further market declines, and higher interest in guaranteed income streams for retirement” than one year ago.”

Where once “the ability to make decisions about how money is invested, diversified, and allocated” was held as the most important factor, now it is the safety and sustainability of a “guaranteed payment stream” above all else.

One such product for creating that kind of stability for retirement is the Annuity.

In the U.S. an annuity contract is created when an individual gives a life insurance company money which may grow on a tax-deferred basis and then can be distributed back to the owner in several ways. The defining characteristic of all annuity contracts is the option for a guaranteed distribution of income until the death of the person or persons named in the contract. Perhaps confusingly, the majority of modern annuity customers use annuities only to accumulate funds and to take lump-sum withdrawals without using the guaranteed-income-for-life feature.
Learn more about using annuity for retirement savings

Obama plan would ensure companies establish employee IRA accounts

Financial insurance for retirement can take many forms. Whole or Universal Life insurance policies and annuities can build actual cash value for those golden years.  It’s a  good thing, too. Most small business workers have employer-sponsored retirement options that range from slim to none.

Under the proposed federal budget plan from the new Obama administration, employers that don’t offer a retirement plan would be required to enroll their workers in a direct-deposit IRA account.

This requirement is one step in Obama’s goal of creating a system of automatic workplace pensions apart from Social Security. Employees at businesses that do offer retirement plans would be automatically enrolled in them, with the ability to opt out if they choose. The automatic enrollment feature would significantly increase the number of low- and moderate-income workers who save for retirement, according to the Obama administration.

About 75 million workers – most of them working for small businesses – lack access to an employer-based retirement plan.

Under the Obama proposal, small businesses that don’t offer retirement plans would not be required to contribute money to their workers’ IRAs, but they would have to set them up and link them to their payroll systems. Opponents claim that will cost some money and pose an additional burden for small businesses. Your future is on the line.

Celebrating “The Year of the Ox”

The Chinese New Year has begun with fireworks and celebration. This year marks “The Year of the Ox.”  People born in the “Year of the Ox” are said to be patient, speak softly, and inspire confidence in others.  Perhaps the children of this “Year of the Ox” will acquire those characteristics, qualities which are so important to turning the corner in our national economic recovery.

We hope for the strength and patience that are necessary to pull together as a people and create a renewed sense of purpose.  Indeed, without the patience to withstand economic adversity, we risk losing the resolve and commitment to see our way through the challenges we face and press forward to the dawn of a new day, and a new era,  in our nation’s economic revival.

“The Year of the Ox”  symbolizes the inner strength and power to engender progress and create confidence.   It is confidence that is needed to generate the momentum needed for recovery.

In this “Year of the Ox,” will our elected politicians be able to truly speak less and listen more? Will they plow ahead with the quiet determination of the Ox?  A new commitment in this new year is the way towards the future.  Let us “speed the plow” and harvest what we sow together.  Tell us, what does “The Year of the Ox”  symbolize to you?

Peering Into Your ‘09 Future…With Kreskin!

It might not take a Kreskin to predict financial gloom in the year ahead, but that hasn’t stopped the actual Kreskin from making just such a proclamation.

As reported in the Tonawanda News, the famed hypnotist The Amazing Kreskin, born George Kresge Jr., went out on a limb with the latest presidential election, predicting in December 2007 — when no less than 10 candidates were alive in the race — that Barack Obama would win.

In addition to his Obama prediction, Kreskin correctly said the New York Giants would win last year’s Super Bowl by three points, and that a cloud of social controversy would hang over the Summer Olympics in Beijing.

Many of Kreskin’s predictions come from studying the past, which he said can teach society a lot about itself. Among the blasts from the past he predicts to make a comeback in 2009 are trains and mom-and-pop stores
Read more Kreskin's prophecies and predictions for the future

Children as Life Insurance Beneficiaries

When completing a life insurance application people often list out all the people they love most in the world, sometimes without thought to the meaning of primary or contingent beneficiaries. When minors are involved, the primary beneficiary is most often the person who will be caring for the children and taking care of them financially. In a family situation the wife should be the beneficiary of the husband’s policy and the husband the beneficiary of the wife’s. The children should be listed as contingent beneficiaries.

What should you do if you are divorced, or your spouse has died? You want to take care of your children in the event of your death, but children cannot cash checks, and you certainly wouldn’t want them to handle large sums of money. How do you specify the beneficiary so they will be taken care of? Fortunately, a statute has been adopted in all states to take care of this situation. It is called the Uniform Transfers to Minors Act or “UTMA”.

Think of UTMA as a mini-trust with standardized language that does not need an attorney to set up. An UTMA account can be set up at a bank or brokerage company. Under UTMA an account can be set up for a minor using the minor’s social security number. The UTMA account will require a custodian be named to manage the account.
Read more about ensuring your life insurance is managed properly

Being Thankful and Thoughtful This Holiday Season

With a new federal government coming into office, a new economic team brainstorming visionary, new ideas, and new hope for the greening of American jobs, transportation, infrastructure and a sustainable energy future,  Americans can find at least one thing to be thankful for this Thanksgiving holiday — the thoughtfulness of everyone working to find solutions to the crisis.

The government unveiled two new programs Tuesday that will provide $800 billion to try to help unfreeze the market for consumer debt from home mortgages to credit cards.

To try to increase the availability of home loans to borrowers, the Federal Reserve said it will buy up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. The Fed also will buy $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.

The program on consumer debt will lend up to $200 billion to the holders of securities backed by various types of consumer loans. It will be supported by $20 billion of credit protection from the $700 billion bailout package that was enacted last month.

In a promising sign that homeowners’ mortgage rates could tumble, rates on Fannie Mae and Freddie Mac debt fell Tuesday after Treasury Secretary Paulson announced the new plan.

The holiday retail forecast, bleaker than in year’s past, may also offer some semblance of a silver lining to consumers through a number of eye-popping deals in the days after Thanksgiving.

Among many in the retail sector, Wal-Mart is paying attention to customers. The nation’s biggest retailer recently announced a new plan called Operation Main Street.  “We anticipate saving customers $200 million” through the program, which discounts some of the most popular store items, Wal-Mart spokeswoman Melissa O’Brien said. The company has been promoting its $35 complete Thanksgiving dinner for eight, including a turkey and all the necessary ingredients.

All of us at Efinancial extend our very best wishes to you and yours this holiday season. Thanks for sharing your thoughts at Efinancialblog.com!

Keynes’ Economic Theory: A Historic Solution to our Modern Crisis?

History is a great teacher.

Over 70 years ago, economist John Maynard Keynes lived through the troubles of the Great Depression and came up with a solution for such a crisis. What did Keynes’ figure out?

During the Great Depression, monetary policy became ineffective and institutional failures were triggered by falling asset prices. Keynes opposed the conventional wisdom of the time. He was not content to think that the economy would self-correct. Instead, Keynes realized that during economic downturns, people and businesses alike have a propensity to save.
Read more about Keynes economic theory

Buy/Sell Agreements for Business Owners

Have you ever wondered what would happen to your business if one of your owner partners dies?  For example, say you are 50% owner of a business and you have 2 partners with 25% interests.  If something happens to one of those owners with a 25% interest who will you in business with?  If you haven’t done any planning the answer is you will be in business with your deceased business partner’s spouse or children.  It can be a very uncomfortable situation.
Read more about protecting your company from tragedy

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