9 Smart Money New Year’s Resolutions for 2019

money new year's resolutions

Everyone looks forward to the New Year as a fresh start. This year, use your New Year’s Resolutions to benefit your wallet! From big goals to small changes, these 9 tips can get your finances on track in 2019:

 

  1. Eliminate/Reduce Credit Card Debt

If your credit card debt has gotten out of control in 2018, plan to make paying down your credit card balances a priority in 2019. With the Federal Reserve likely to increase interest rates this year, credit card debt is only going to become more expensive. Set a specific goal for yourself, (for example:  pay down 25% of your current debt). Focus on paying down the debt under the highest interest first to avoid income-draining interest rates. If you are struggling to make credit card payments, do not hesitate to reach out for help from Veitengruber Law.

 

  1. Pay Down Student Loans

For a lot of people, student loan debt is a heavy financial burden. It’s a great idea to take 2019 as an opportunity to make a huge dent in your student loans. Start by reviewing your loans and determining which ones have the highest interest rates. Making extra payments on those loans will save you money on interest in the long run. Paying more than the minimum due each month is also a great way to make sure you are not spending more than you should on interest. If your interest rates are high or you have a lot of different loans, consolidating your loans may allow you to get a lower interest rate and create more manageable monthly payments.

 

  1. Emergency Fund

In 2018, 39% of Americans paid for an unexpected $1,000 expense with their savings.* Many Americans end up in debt trying to cover unexpected costs. Most experts recommend having at least six months’ worth of expenses in savings, but if you are starting an emergency fund from scratch, make your goal something you think is reasonable to achieve. Even having a few hundred dollars in savings is better than nothing. You may want to consider setting up automatic transfers from your paycheck into a savings account so you are not tempted to spend this money.

 

  1. Improve Your Credit Score

The first step to improving your credit score is to know what it is in the first place. Signing up for free and reliable credit score monitoring through services like Experian or Mint will help you see how healthy your credit score is now. Good credit scores range from 700-749 and scores of 750 and higher are considered excellent. If your credit is not where you want it to be, make raising it your priority in 2019. Small things like paying your bills on time, keeping credit card balances low, and setting up automatic payments right after you’ve gotten paid can help reduce your debt and improve your score.

 

  1. Do Taxes Early

Filing for your federal income tax returns as soon as you can is a great way to start the New Year. Not only will you get your refund faster, it can give you extra time to pay taxes you may owe or help you avoid needing a tax extension. If you are expecting a big life change in 2019—like returning to college or buying a home—filing early will help you get a head start on this paperwork. For instance, students can use the information on their 1040 form to apply for financial aid. Plus, the sooner you apply for your refund, the less likely it is that you will be the victim of tax return identity theft.

 

  1. Cook More

Americans spend thousands of dollars a year eating out. A big way to save money in 2019 is to spend less time eating out and more time making your own food. Use 2019 as a chance to get more comfortable in the kitchen. Bring lunch from home, meal prep on the weekends, and spend some time researching quick-to-make meals. The more frequently you eat food bought from the grocery store, the less money you will spend—and the healthier you will be, too!

 

  1. Retirement Savings Plan

It is important to start saving for retirement as soon as possible. There are many options for creating a savings plan for retirement and you can determine which one is best for your specific circumstances. Maybe your employer provides a 401(k) plan, but if not – you can open an IRA or, if you are self-employed, a Simplified Employee Pension IRA. If you already have a retirement plan in action, reassess the plan in 2019. Could you be saving more? Are you on track for retirement?

 

  1. Home Improvements

While some home improvement projects will cost big and add value to your home, sometimes it’s the small projects that can have a big impact on your finances. Investing in energy-saving appliances in 2019 could allow you to save money every month on energy costs.  Energystar.gov has recommendations for energy efficient products and other home improvement ideas to get you thinking about ways you can save money on energy this New Year.

 

  1. Focus on Your Health

The average American spends over $4,000 a year on health care. Make your health a priority in 2019! Join the gym, focus on eating well, and take the time you need to relax. Go to the doctor at the first sign of illness instead of waiting until your health has been severely diminished. Preventative healthcare measures can save you big in the long run.

 

 

 

*From Bankrate

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Student Loan Relief for NJ Retirees

NJ retirees

A growing number of people entering retirement are struggling to afford their student loan payments. Some older borrowers may have taken out loans for themselves to go back to school later in life, while others co-signed loans for their children or grandchildren. As of 2015, the average student loan debt owed by borrowers 65+ was $23,500 and nearly 40% of those loans were in default.* Carrying student loan debt into your 60’s can make it extremely difficult to sustain your standard of living through retirement.

 

Even worse news is that an increasing number of borrowers in retirement have had portions of their Social Security retirement and disability benefits garnished for nonpayment of federal student loans. If a loan is in default, lenders can take up to 15% of a retiree’s monthly Social Security benefits. This can affect retirees’ ability to buy food, pay for housing or afford needed medication. If you are struggling to make student loan payments under a retirement budget, consider the following options.

 

Many lenders offer loan modification options for borrowers struggling to keep up with their payments. Some offer ways to temporarily reduce student loan payments through deferment or forbearance. Deferment will allow you to put off your loans for a designated time period, usually no longer than three years. Borrowers approved for deferment will not have to make payments during that time. Under some loan agreements, you may even be able to defer interest accrued during the deferment period.

 

Forbearance is similar to deferment, with some slight differences. Under forbearance, your loans will be paused or reduced for up to a year. Your interest, however, will still continue to accrue under forbearance. Many times, lenders will allow borrowers to apply for an elective forbearance with the understanding that this kind of loan modification can only be utilized a limited number of times. It is important to note that these types of interventions are effective for momentary financial struggles, but are not long-term solutions. These options will allow you to postpone repayment, but they do not take away the debt.

 

Under some circumstances, you may be able to file a special request to get your student loan debt forgiven. This request must include a written Complaint indicating the student loan debt is causing undue hardship on the borrower. The official legal Complaint will be served in court together with a Summons on the applicable lender(s). A judge will then decide whether or not to forgive all or some of the student loan debt. This decision will be based on the borrower’s income, their financial hardships, any medical hardships and whether or not the individual has previously tried in good faith to make the loan payments.

 

While you can file this Complaint yourself, the document must be in a special format and include very specific information about the borrower’s financial situation. Up to 40% of these cases result in at least a partial loan forgiveness for the borrower. While law firms do charge a fee to assist in these filings, it’s easy to see that you’d likely get a huge return on your investment of the expert help of an experienced attorney. At Veitengruber Law, we know what judges are looking for in these filings and can help you present a detailed case that is likely to be decided in your favor.

 

Student loan debt can be hard to manage at any age, and especially so for those living on a fixed income. Don’t let student loan debt drain your financial resources in retirement. Call us today to get individualized advice on your specific case.

 

*Statistics from AARP

No Debt vs College Degree: Which Wins?

student loans

If you’re strategizing to keep your debt burden low throughout the first phases of your adult life, you’re probably considering whether or not it’s worth it to assume a large amount of student debt. After all, 70% of college graduates leave their alma mater with a burdensome level of student debt. Today, more than 44 million US residents are struggling to repay a collective $1.5 trillion in college loans alone.

For many people, a college degree is a necessary step toward creating the adult life they’ve dreamed of, and assuming some level of student debt is likely unavoidable. However, it’s absolutely imperative that students fully comprehend the long-term impact of the loans they’re agreeing to.

If a college graduate is unable to repay their loans in a timely manner, or doesn’t prioritize repaying them, financial disaster looms ahead. Graduates face severe financial penalties for not repaying their loans, including additional fees, mounting interest fees, potential wage garnishment, and negatively impacted credit ratings. Keep in mind that New Jersey is not an inexpensive place to live, so if you play to return to your home state after school, you’ll need a savvy financial plan to do so.

The following quick guide will help you determine whether the cost of student loans will make sense for you in the long term. The answer to this question varies from individual to individual, so it’s a decision you’ll need to make for yourself. Carefully weigh the pros and cons, advantages and disadvantages, and do your best to make the most beneficial decision for your situation.

Remember, too, that if you do end up (or have already ended up) with a significant amount of college loans, it’s going to be okay. You’re not alone by any means; as we’ve discussed, 1 in 4 adults in our country are still repaying their loans.

The Pros and Cons of Student Loans

Pros:

  1. Student loans can make college possible, or make it possible for you to attend a school that would otherwise be unattainable. If a student loan makes the difference between you attending your dream school or a local state school, it may well be worth it to bridge the gap with a loan.
  2. In certain fields, if pursuing a higher quality (or more widely respected) education positions you to earn significantly more over the life of your career, then your student loans may represent only a small fraction of your potential earnings. In such situations, assuming responsibility for a larger loan is almost certainly worth it. Study hard, network with grace and skill, and set yourself up to bring home the kind of money you’ll need.
  3. Student loans can be spent on more than just tuition. Choosing a student loan may make the difference between you having to work full-time during your education and instead having the luxury of focusing solely on your studies. You can use student loans to pay your rent or car payment, purchase a laptop and textbooks, or even just buy groceries. Postponing your financial troubles until after you graduate can have a positive impact on your mental health and resources during the few years you’ll have to pursue your education goals.

Remember, too, that even though student loans are pretty terrible, they’re still more affordable than credit card debt or other high-interest personal loans!


  1. Paying off student loans on time will help you build credit. You’ll need a positive credit rating to get a good interest rate on significant purchases like a car or home, so having this opportunity to build credit right out of college can be very positive. Please be aware that you will need to make prompt payments every month in order to benefit from an improved credit score.

 

Cons:

  1. Interest is a pain in the neck. When you repay your student loans, you’ll be repaying the amount you initially borrowed plus the interest that’s accrued over the years you’ve been in college. As of 2018, interest rates on student loans range from 4.5% to 7% for federal to 11% – 15% for privately-held loans.

If you choose high-interest student loans, the interest rates can be almost as disastrous as those on credit cards! If you can afford college without assuming any student loans, clearly it is in your best interest to do so.

  1. Choosing student loans will mean that you’ll begin your adult life with debt. Your financial freedom will be significantly impacted by this burden; you’ll probably need to delay other life goals like home ownership or international travel until you’re able to pay off a significant portion of your student debt.

Home prices in New Jersey don’t show any signs of halting their steady climb, so delaying your entry into the housing market could mean paying as much as tens of thousands more for your first home.

  1. It is nearly impossible to discharge student loans without paying them directly. Unlike many other kinds of personal debt, student loans cannot be eliminated by declaring bankruptcy. If you assume responsibility for a student loan, you will have to repay it.
  2. Missing payments on your student loans can destroy your credit score, which will negatively impact your financial opportunities for many, many years to come. You’ll have difficulty renting or purchasing a home on your own, applying for a loan on a car, and could even lose your job along with your financial credibility.

 

The truth is that student loans can be a net positive in your life and can be relied upon to help you create a better future for yourself and others. In real-life application, though, slow job growth, high interest rates combined with punitive laws preventing struggling graduates from discharging their debts through bankruptcy, and skyrocketing tuition prices are factors that work against even the most well-intentioned students.

That’s why if you do decide to assume student loans, it’s important that you try to live frugally and limit the amount of debt you need to take on. If you can work part-time and still maintain your grades, consider doing so. Purchase clothing second-hand when possible, for example, and keep your wardrobe streamlined until you have more financial freedom.

You’ll find that the fiscally wise habits you can cultivate during these lean years will serve you well in the future, even after you’ve paid off your debts. Remember that being conscious and intentional about your spending is always a healthy decision. Frugality is never something you should be ashamed of!

Getting Out of Student Loan Debt: Public Service Employees in NJ

Are you working as a New Jersey firefighter, police officer, teacher, nurse, principal, or hospice care worker? Employees working these jobs, along with many others, have one major thing in common: a motivation to serve others. When people have access to services and education, even if they cannot afford them, society benefits. You’re playing a role in the well-being of society. Though it may seem like you could earn more money in another field, there are unmatched benefits to working as a public service employee.

Unbelievably, 40 million Americans have student loans to pay off; there’s a high chance that you’re one of those 40 million. The good news for you is that if you’re a public service employee, you could be eligible for student loan forgiveness. That sounds awesome, right?

In 2007, Congress formed the Public Service Loan Forgiveness Program (PSLF) to embolden individuals to enter the public service work force and to continue working as public service employees. Again, although these jobs may not be the highest paying, they are absolutely necessary, which is what Congress wanted to reinforce. To qualify for this program, your job must be in a nonprofit organization, the government, or a specific not-for profit program.

How can you qualify for student loan debt relief – is it enough to simply be a public service employee?

It’s necessary to be employed full-time by a public service program, and under certain repayment plans, it’s required that you have made at least 120 payments on the eligible federal student loans. Every payment must meet or exceed the required amount and must be paid on time, meaning no later than 15 days after the due date. October 2017 was the first month that any remaining loan balances were eligible to be eliminated. This program is not unique to New Jersey, but all New Jersey public service employees can apply to the program, as long as all stipulations are met.

In addition to the public service jobs already listed, employees in the following sectors can also benefit from the PSLF Program:

  • Government organizations
  • Non-profit, tax-exempt organizations (listed under 501(c)(3) of the Internal Revenue Code
  • Private, non-profit organization that provides any of the following services:
  • Law Enforcement
  • Military Service
  • Public Safety
  • Public interest law services
  • Early childhood education
  • Public services for the elderly and disabled individuals
  • Public library services
  • Public education
  • Public health (nurse practitioners, nurses, full-time health professionals in healthcare practitioner occupations)
  • Emergency management

How do you know what loans fall under the PSLF Program?

All non-defaulted loans under the William D. Ford Federal Direct Loan Program meet the requirements. Basically all Direct Subsidized and Unsubsidized Loans as well as Direct Consolidation Loans are eligible. In addition, Direct PLUS Loans for parents and graduate or professional students fall under the PSLF Program.

To enroll in the PSLF Program, you need to print and complete the Public Service Loan Forgiveness Employment Certification Form, and Section 4 must be filled out by your employer. Once the form is completed, send it in to the U.S. Department of Education FedLoan Servicing. Each year, the form needs to be resubmitted.

If you have student loans and you meet the requirements for eligibility under the PSLF Program, don’t hesitate to enroll. You could potentially save a substantial amount of money each month – freeing up that capital to pay for your monthly expenses.

Image: “Teachers Union” by Kevin Dooley – licensed under CC 2.0

How Your SSDI Benefits May be Affected by Past Due Student Loans

In the past several years, there seems to be a growing trend, and one that is less than ideal. More and more recipients of Social Security are also carrying significant federal student loan debt. This obviously presents a problem since both sources of money flow from the federal government. With more student loan debt, the federal government will continue to fall deeper into debt. How exactly will your Social Security Disability Income (SSDI) benefits be influenced by past student loans?

According to a report released by the Government Accountability Office, the number of people whose Social Security benefits have been offset rose from 31,000 in 2002 to 155,000 in 2013. That’s almost a five-fold increase! The report also tells us that only about 36,000 of the 155,000 individuals are age 65 and older. We can conclude that there are many individuals whose SSDI is being affected by their student loan debt. Did you know it’s possible that your student loan debt could be forgiven? Before making any rash decisions, it’s necessary to check out how your taxes will be influenced if you were to receive a TPD discharge.

In order for an individual to have any of their loans forgiven by the Social Security Administration (SSA), the individual needs to qualify for Total and Permanent Disability (TPD) discharge. Monitored by Federal Student Aid, which is a facet of the U.S. Department of Education, TPD discharge equates to an individual not having to pay back the funds that they owe for their education.

Which loans fall under TPD discharge?

·        William D. Ford Federal Direct Loan Program loans

·        Federal Family Education Loan (FFEL) Program loans

·        Federal Perkins loans

·        Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligations

Who qualifies for TPD discharge?

Unfortunately, TPD requirements are more difficult to meet than the eligibility requisites for Social Security. Just because you have been approved for SSDI benefits does not mean that you will be eligible for TPD discharge. Here are the rules, which were updated in 2010.

·        You must not be able to complete any “substantial gainful activity” that could provide an income. This activity is includes physical and intellectual activities. The inability must be due to a medically determinable physical or mental health impairment that has lasted for at least 60 months, is anticipated to last for 60 months, is expected to lead to death, or is correlated with 100% military service disability.

·        Social Security does not guarantee disability benefits for military service disability.

If an individual receives the Social Security disability award within the five to seven year review date, they will be part of a group known as “Medical Improvement Not Expected (MINE),” which should qualify them for a federal loan discharge.

To complete a TPD Discharge Application, you must have your medical doctor verify that you are disabled. Once your physician has filled out sections regarding your diagnosis, the severity of the problem, and any limitations experienced as a result, you can submit the application to your loan servicer. It’s required that you submit an application for each individual loan holder.

Please don’t hesitate to ask us if you need help with your TPD application or if you aren’t sure if you’ll qualify.

The Best Tips for Paying off Student Loans Quickly

At the time you applied for and were granted a federal student loan, there’s very little chance that you were thinking about how long it would take you to pay it back. We’re all a bit naive and wet behind the ears when just starting our college studies. Buoyed by the prospect of a “well paying job” after your time at university, you, like many others, most likely figured that paying back your student loan debt would be a piece of cake.

As we all know, student loans are a whole lot less fun after college ends. No one likes the harsh reality of knowing that a large portion of your (newly acquired) paychecks will go toward paying back your student loans. Real life take home pay is usually a lot less than you thought it would be, and subtracting even more money from your net income can feel almost physically painful.

On top of how depressing it can be to fully realize just how much you owe, it can feel like you’ll be paying for your student loans forever. However, there are things you can do to make sure that feeling doesn’t become your reality.

Stop deferment as soon as possible

As a general rule, most student loans, both federal and private, will continue to accrue interest while in deferment. This means the longer you put them off, the more you’re going to owe.

Avoid income-based repayment plans

Also known as ‘pay as you earn’ or ‘income contingent’ plans, these repayment methods are geared toward college graduates who can demonstrate at least a partial financial hardship. In theory, limiting how much borrowers have to repay each month based on how much money they’re earning might sound like a good idea. The problem with dramatically lowering your monthly loan payments again lies in the staggering amount of interest that will be tacked onto the total amount due.

Be aware of income taxes if considering loan forgiveness programs

There are currently a number of federal and New Jersey loan forgiveness programs available for borrowers who have made a set number of payments over a given time period (usually 10, 20 or 25 years). While just knowing that the remainder of your loan will eventually be forgiven can be a light at the end of a tunnel, you may have to pay income tax on the amount that is forgiven.

If you’ve deferred your loan several times and then paid the lowest payments possible via income-based repayment, the interest will have been compounding for a long time. That interest will be added to the remaining balance, which may be a significant sum by the time you qualify for forgiveness. While you will be able to celebrate the debt forgiveness, you’ll still need to foot the hefty NJ income tax bill.

Refinance and consolidate your student loans

One of the best steps to take when trying to get a handle on your student loan debt is to lower your interest rate. You should first consolidate (combine) any loans that are eligible for refinancing. If your original student loan interest rates were high, you’ll save a lot of money over the course of your repayment plan by refinancing to get a lower rate. This can also shorten the length of time required for you to pay back your loans and, in turn, lower the amount of income taxes you’ll owe on any remaining balance if you qualify for forgiveness.

Earmark your yearly tax refund for student loan repayment

Each time you receive extra money, whether from your tax refund, a lawsuit settlement, an inheritance, etc., resist the urge to spend it frivolously and instead apply as much of the total windfall to your student loan balance. You can do the same every time you receive a raise at work, too. Set aside the extra income and pay that much above and beyond your monthly minimum loan payment.

Look for employment opportunities that offer loan forgiveness

The Public Service Loan Forgiveness Program forgives student loan debt in teaching and certain public and nonprofit jobs. You’ll have to meet a whole host of requirements in order to have your loans forgiven through your job, but it is something extremely well worth looking into.

In addition to the above strategies to get out of student loan debt quickly, you should consistently re-work your budget so that you can trim as much excess spending as possible. This will allow you to put more of your income toward repaying your debts faster. Your budget will only be stilted temporarily – so remind yourself that the end justifies the means.

 

Image: “Calculator and Money” by Reyner Media – licensed under CC by 2.0