This Week In Your Wallet: Shopping Under The Influence
Happy Passover. Happy Easter. And since it finally feels like it — at least here in the Northeast — happy spring. I hope you’re enjoying the week as much as I am.
We’ll start with the tricky business of paying for college since it’s been in the news much of the week. There are three things in particular I want to be sure you know about.
First, the Consumer Financial Protection Bureau and a couple of state attorneys general sued Navient (the relatively new name for the loan servicing business of Sallie Mae and the largest student loan servicer in the U.S.) alleging that it, as The New York Times put it, misled borrowers in numerous ways. Among them: Discouraging borrowers from entering income-based repayment (which could lower monthly payments) and predatory lending to students who it knew would have a greater chance of default. Navient has denied all the charges. Stay tuned.
The Times has also had a series of articles following up on questions about whether students who had enrolled in Public Service Loan Forgiveness (which, essentially, wipes clean your debt slate after 10 years of working for a qualifying employer, generally a not-for-profit or other public service job) could count on the program following through. (This after a legal filing from the Department of Education essentially said students shouldn’t trust the program’s administration.) In a nutshell, to qualify for PSLF, you need to check four boxes: Making 120 (i.e. 10 years) of payments on time and in full while working full time; working for the right kind of public service enterprise (not all qualify, but 501(c)3s should); repaying direct loans rather than loans of another type and being enrolled in an income-based repayment program. If it sounds complicated, it is. If you have any doubt about whether you qualify, make sure that you’re filing an employer certification form every year and whenever you change jobs. You can find one here.
Last but not least, if you’re on the other end of the college equation — i.e. still saving for it — make sure you’re putting the money to work for you. Almost four in 10 parents keep college savings in a checking account, and six in 10 use a savings account, according to Sallie Mae’s 2016 How America Saves for College report. You’re better off in a 529 college savings account where contributions grow tax-free, and withdrawals for qualifying educational expenses aren’t taxed, either. You don’t necessarily need to save in your own state’s 529 plan, but if you do, it might net you an additional income tax break. You can compare different states’ 529 plans here.
Moving On…
No one is completely sure what lies ahead in the world of healthcare (although it looks very likely that health savings accounts will become more important, not less). So what can you do in the meantime to address what is likely a growing slice of your budget pie?
Put on your smart consumer hat and apply it to the making of health-related decisions. Forbes notes, for example, that hospitals often have a higher price tag for diagnostic and treatment services than standalone facilities, so call and get price quotes from two or three providers before making a decision. Then, if you have a high deductible health plan, ask if there’s a discount for paying in cash up front — the Wall Street Journal found you can save more than 50 percent. And if outpatient surgery is in your future, call and ask your surgeon or health plan to provide you with a written estimate of the cost ahead of time. Your bills may still be high, but at least they’re less likely to be unexpected.
Shopping Under The Influence
Finally, if you’re ever sipped ‘n’ shopped, you’re not alone — a third of Americans have shopped after drinking, and among those who drink regularly, it’s almost half. That’s according to a survey by financial comparison website Finder.com. The real kicker is the average price tag of the purchases: $206. As for what’s in the shopping carts? Clothes and shoes were tied with gambling, each at 39 percent. Reuters has fixes for the habit, including heading out on the town with cash instead of credit, deleting shopping apps and saved payment information from websites and, as a last resort, blocking your own access to certain websites during certain timeframes. Two good tools for this are the “Freedom” app or “StayFocusd,” an extension for Google Chrome.
Have a great week,
Jean
