Your Money In The News – September 2018
This month’s Your Money In The News:? Women are getting ripped off – 6 tips to help balance the scale. Car shopping? Avoid this money suck. College students can win the credit card game with these 3 steps. Save tons on interest with these refinancing tips, and more…
In our society, women?s money experiences are vastly different than men?s. ?Money is divided along gender lines in ways that might not be obvious at first
Pay Gap – Women live longer than men and make less than men. Women have to save more than men to retire.
Pink Tax – Gender specific consumable goods are more expensive for women. women pay more for pink packaged products 42% of the time.
Career breaks – Women often take time off to raise children, or take care of aging parents. ?As a result, women?s earning potential is greatly disadvantaged.
Male oriented advice – Financial Services under-serve women. When/if women marry, financial advisors often address the husband or have him as the primary contact.
Under-investing – Because financial information has been historically directed at men, fewer women invest in stocks than their male counterparts
Distressed decisions – Women are more likely to assume control over finances during the most difficult times. This is usually during or after a divorce, or death.
Social status – Society expects women to be ?generous?. ?To achieve social status, women are often pitched to serve on volunteer boards, or to chair fundraising committees. They are encouraged to donate their time and money.
Six steps women can take today to narrow the gap
Start an investment account or contribute just 1% more. – Even if you think you don?t make enough to invest, think again. You start an investment account easily with only $50.
If someone is managing your investments, take the initiative and call them to discuss it. – Find out what you?re invested in. Many advisors make a commission from suggesting (often high cost) investment products to you. Knowledge is power.
Ask for a raise if you haven?t gotten one in a couple of years – No employer is going to give away money, you have to ask for it.
Take responsibility for your financial education. – Sure, it?s a given that many of us did not learn about finances in school, but don?t let that stop you from using one of the greatest resources available. Everything you need to learn about is online. Take responsibility and dive in.
Buy generic or male-branded consumer products. – No one is going to notice if you shave your legs with a blue or pink razor.
Talk about money. – The more women open up about money, the less uncomfortable we will be discussing financial issues.
According to an annual AAA study, it costs roughly $8,849 to operate a new per year. But that’s not the biggest expense you?ll face if you buy new.
Everyone knows, or at least they should, that a new car depreciates as soon as you drive it off the lot. But what you may know is that after only one year of ownership, your car loses an average of 30% of its value. Does this mean we should stop buying new? Maybe.
Based upon the news lately, who knows if the price of new cars will increase in the future.
But let?s talk about what we do know to be true.
What are the options for not buying a new car?
Lately people are liking the the circular economy approach. In 2017:
- used car sales up 1.8%
- new car sales were down 2% ?
When considering buying a car, you shouldn?t just look at the purchase price of a car, but also the interest rate to finance the car, and weigh that against the length of time you plan to own the car.
Certified pre-owned cars often include a warranty, which can save bundles over time.
So, don?t think you have to drive a hooptie just because you don?t buy new.
And you can throw the savings into a sweet little investment account to counter the interest rate if you do finance a pre-owned.
- 25% of college students graduate with over $5,000 in credit card debt
- 10% of college students graduate with over $10,000 in credit card debt
That?s a lot of interest for the lenders. And they target this demographic specifically because they know this.
The Better Business Bureau wants college kids and their parents to be aware of this so that they can try to make better financial choices. The BBB wants you to understand that:
- Colleges get paid well by credit card companies to market their cards on campus.
- Credit card companies often offer a free gift, both at on campus events and off campus events, ?if students fill out the application.
- Credit card companies are now hitting up students in emails and on Facebook to solicit sign-ups
A credit card application should be looked at as the beginning of years of many transactions, rather than a vehicle to get a t-shirt or a discount coupon.
Students should not take the decision to get a credit card lightly. They should do their research and shop around while keeping these three key points in mind.
- Take the time to look at several different offers.
- Don?t settle for anything with more than a zero annual fee.
- Get the lowest interest rate available.
With rent, student loan payments and car payments, the last thing a recent graduate needs is the burden of high interest consumer debt.
There has been an increase in consumers paying off their credit cards with lower-cost personal loans. Why? You can save a lot of money in the long game.
The average interest rate of credit cards is 15.54%., while?the average interest rate of a personal loan is 10.31%.?That?s a difference of 5.23%, which translates into a savings of $590 for a borrower refinancing $10,000 in credit card debt paid off over two years.
What explains the growing gap between the interest rates for credit cards and personal loans?
In short, credit card rates track the Federal Reserve?s moves closely, while personal loan rates can be more sensitive to market forces.
Federal Interest Rate hikes?- Variable-rate credit cards are typically indexed to the prime rate. Whenever the Fed raises its target for the federal funds rate (which it?s done seven times since December, 2015), the prime rate usually follows.
The financial crisis – Low personal loan rates became available in the aftermath of the global financial crisis and Great Recession.
Fintech – Fintech uses technology to cut the cost of originating and funding loans and pass that savings to consumers. Fierce competition between emerging fintech companies is keeping rates down
The evolution of the personal loan industry during the last five years has been primarily driven by the rise of the fintechs. -? TransUnion
If you have credit card debt, it pays to find out what your interest rates are, and see if you can?t find a lender that can beat them in a consolidation loan. But once you pay them off, avoid the temptation to use them again.
Lisa Brown, D, an educator and former Washington state Senate majority leader, is a candidate for the 5th Congressional District of Washington.
What does it say about our nation?s priorities when we make it easier to refinance a car loan than a student loan? Student loans are seriously crippling our country’s future generations and affecting our economy.
- Two-thirds of the 44 million Americans who carry nearly $1.5 trillion in student debt are women.
- Student debt can last decades ? or even a lifetime. It?s the most difficult debt to discharge.
- Student debt is a barrier to pursuing a higher education degree and the opportunities that come with it.
- Student loan debt prevents young people from starting families and businesses, buying homes, and participating in our economy.
In short, student loan debt is bad for our economy.
What can we do?
- The Federal Student Loan Refinancing Act, currently in the house, ?would lower the interest rate on federal student loans and allow Americans with multiple loans to consolidate and refinance them.
- Along with lower costs and refinancing, we need to expand loan forgiveness programs.
The bottom line is, if our government can bail out banks, then we can find ways to help young people held back by debt. Get behind those those representatives who are trying to make it easier for our children and the future of this country.Your Money In The News