Entry bubble The Pitfalls of Payday Lending

By: Nicole | August 22, 2008 | Category: Money

CashThe Gov Gab comment box has recently been flooded with spam promoting payday loans. Fortunately, we don’t post spam, but these messages gave me an idea for today’s topic.

If you gather more than five consumer advocates in any one location for more than five minutes they will commiserate about the pitfalls of payday lending. For cash-strapped consumers, a payday loan is one of the most treacherous ways to borrow money.

Here’s an example. A person borrows $100 until payday. The lender charges $15. The borrower cannot repay the loan on time, so the loan is "rolled over" for another two weeks with an additional fee of $30. Already, this person has spent $45 to borrow $100, and the borrower is not out of debt yet.

Most payday lending models actually intend to keep the borrower in debt indefinitely. More than 90 percent of these loans are given to borrowers who use more than five payday loans per year.

Payday lending is illegal in some states. Use this map to determine if your state has laws that protect you from payday lenders.

If you find yourself short on cash, look for alternatives to payday loans.

For more information about managing debt, read our publication on Financial Fitness.

Have you ever been solicited by a payday lender?

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Entry bubble Financing College

By: Sam | January 23, 2008 | Category: Home and Family

My sister is in her last semester of high school, and of course, everyone’s favorite question is “Where do you want to go to college?”  Right now, it’s between five schools-2 public and 3 private. Even though the jury is still out on what colors she’ll be wearing next fall, one thing is for certain-college costs are painfully high.  graduation cap with diploma and money

It’s been 10 years since I went to college, and during that time, the average cost of tuition and fees has risen by 57% at private four-year colleges and 69% at four-year public colleges  These figures from the College Board may have you feeling a little light-headed, but the costs can be managed thanks to the power of compounding interest.

Since every family’s situation is different, you’ll need to find a savings method that works for you.  In doing so, you’ll want to consider factors like your tax bracket, child’s age, how much financial aid you expect to receive, etc.  Then, you can use these helpful college financing calculators to figure out how much you’ll need to save. 

Once you’ve determined this figure, you need to decide on a savings vehicle.  In addition to mutual funds, brokerage accounts, and bank savings accounts, there are also some tax-advantaged alternatives available to help.  Here are some options:

And remember you don’t necessarily have to save for the entire four years.  Grants, loans, and scholarships can help make affording college a little easier.  Here are some resources to get you started:

 Students

Parents

 

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