This Week In Your Wallet: Defeating Defaulting
Alexa, Open HerMoney Radio. Yes, if you were one of the 12 million or so who received an Amazon Echo around the holidays — or if you got one before, or since — let that short phrase trip off your tongue. And — if you like what you hear — please take a moment to rate our skill and write us a short review. Evidently, reviews really matter when it comes to the success of Alexa Skills and getting featured in the Skills Store. Even our pal Dave Ramsey only has 33 reviews, and we’re not above a little friendly competition. Let’s beat that number this week! If you rate and review, send me an email at Jean@JeanChatzky.com and Kelly (HerMoney’s producer) will add you to the invite list for HerMoney’s Private Facebook Group!
So, if you start listening to HerMoney on Alexa — or subscribe on your mobile device — what will you hear? The sort of important, actionable information that affects your wallet, much like what you get in TWIYW. This week, our eyes are, once again, on student loans because a) the student debt crisis is a mess and b) Congresswoman Virginia Foxx (R-NC) has teed up a bill that would wipe out $40 billion in relief by rolling back improvements in income-based repayment programs. (Yes, the same income-based repayment programs we are always suggesting you look into if you — or your kids — are having trouble making payments.)
As if that’s not bad enough, a study from Daniel Herbst, a doctoral student at Princeton University, traces the steps that borrowers who are having trouble making payments often take. They typically pick up the phone and call their lender — or maybe they fall behind, as the New York Times reported, and their lender calls them. What happens next is largely — and shockingly — at the whims of the agent who handles the call. If the agent suggests an income-based repayment program, then credit scores, loan repayment, and homeownership are likely to increase. In fact, delinquency rates for income-based plan borrowers fell by 21 percentage points within seven months of being on the plan, when compared to borrowers on a standard repayment plan. This process shouldn’t be reminiscent of calling an airline when your flight is cancelled: You either end up in the hands of a compassionate creature who knows her way around and rebooks you in a flash, or you end up in the hands of someone not so skilled and wind up siting in the airport for two days. Except in this case, days are years, and the money at stake is tens of thousands.
Income-based repayment plans have their drawbacks. You may end up paying more in overall interest because you’re stretching out the term of your loan. But at the end of 20-25 years, as long as you’ve followed the guidelines of the program (which are complicated) your remaining balance should be forgiven. If you think you’re a fit for income-based repayment, go here.
Equal Pay Day
Today also marks Equal Pay Day — the day in the 2018 calendar year to which the average woman would have to work to make as much as the average man earned in 2017. That’s the average of all women, our friends at The Broadsheet remind us — women of color have to work months longer, black women until mid-August and Latinas until the beginning of November. There are those who deny the existence of the gender wage gap, pointing to the fact that college-aged women in their 20s come out of school earning almost as much as their male peers. In fact, the gap widens as we age and by the time we hit 60, it’s become a million dollar gulch as Refinery29 shows us in this cool infographic. The writers note: “While women are regularly taken to task for wasting our money on shoes or fancy coffee or skincare products, it’s insulting to suggest that our lack of financial security is a result of frivolity. In fact, you’d have to buy 16 coffees a day, every day for more than 30 years in order to blow a $1 million on coffee.” That’s no latte factor. It’s an endemic societal problem.
Keep The Change
Finally, we know people hate change, even when it’s good for us. According to a new study by CreditCards.com, 40 percent of Americans have never changed their primary credit card, or have gone at least 10 years without switching. If I could put emojis in the newsletter, this would be where I insert the surprised/shocked face. Today’s introductory bonus offers of miles or cash are almost three times what they were a decade ago, according to research from MagnifyMoney.com. And today’s still low interest rates have also inspired a slew of valuable balance transfer offers that enable you to pay off debt at a 0 percent teaser rate that can last more than a year.
Cue Samuel L. Jackson (or Jennifer Garner). It’s time to take another look at what’s in your wallet. Here’s my Today Show segment.
Have a great week!
Jean
