May 24, 2016
Find Best Job Market with Online Tool
This online tool for exploring urban job markets is very cool.
It could be a big help for high school and college graduates looking for work, especially those willing to migrate to a new city and trying to figure where to go. What’s unique about it is that it ranks the nation’s large, mid-sized, and small cities based on the user’s personal preferences.
To use the tool, created by the American Institute for Economic Research (AIER), the job hunter decides how high to rank the importance – from 5 (most important) to 1 (not important) – of nine different aspects of the job market and lifestyle in their ideal city: low unemployment, high average earnings, high labor force participation, public transportation, highly educated peers, low rent, high diversity, plentiful bars and restaurants, and many arts and entertainment options.
To test it, I selected a 5 for low unemployment and high labor force participation and a 1 for everything else (the bar scene, public transit, diversity etc.). Cities like Minneapolis, Denver, Salt Lake City, and Austin came up as the best cities, when these two job-market criteria were most important.
AIER also compares different cities in a report, which is available here.
Of course, other things are important when relocating. But the tool forces job hunters to balance their priorities – a strong job market or a good bar scene? To play around with AIER’s gadget, click here.Learn More
May 19, 2016
Quiz: Financial Well-being or Unease?
What does it mean to have a sense of financial well-being? Or what does it mean to have its opposite, financial uneasiness?
Based on in-depth interviews with dozens of people in focus groups, the federal Consumer Financial Protection Bureau has developed a financial well-being quiz. The quiz is the agency’s attempt to quantify a very subjective concept so that researchers can measure it and integrate this measure into their research, said Genevieve Melford, a senior research analyst for the CFPB.
“It’s about creating a tool that allows meaningful research and effective interventions that might help people,” she said.
We think regular people can also gain personal insight by taking a short version of the CFPB’s quiz on this blog. After taking the quiz, write down your score, and return to the blog to learn what it means.
May 10, 2016
5 Ways Millennials Mess Up With Money
The harsh reality is that you aren’t earning as much money as you think you are, and you don’t have as much to spend as you think you do – so it’s easy to let spending get out of control.
Andrea Woroch, only 34 years old herself, delivers some tough love to those who’ve already developed poor spending habits. A personal finance expert for the Millennial generation, Woroch said a perilous time is between the cash-strapped period right after college and the time when the steady, but modest, paychecks start flowing.
Early on, she explained, the attitude was “Okay, let me go to happy hour on this day because I can get $1 tacos and a beer. Now it’s okay to spend $20 for dinner. But that adds up, and they end up spending even more.”
Millennials polled by Gallup said they prefer saving to spending. But Woroch, in an interview, provided five harsh observations about the obstacles to saving that she’s observed among young adults – including her husband, when they started dating:
- You eat out all the time. Rightly, socializing is a big part of life. Eating out is also part of a larger trend: in March, consumer spending on dining out surpassed grocery store sales for the first time. Woroch advises that “spending money at the grocery store will help you spend less on food and leave room in your budget to put towards your savings goals.” …
April 26, 2016
Delaying Motherhood Boosts Earnings
Economists have landed on two primary reasons for why women working full-time earn less than their male co-workers. First, their research detects an element of discrimination.
The second reason stems from motherhood, which can make it extremely difficult to simultaneously complete an education or get a firm footing in a career.
But America is changing. Over the past half-century, the typical age at which women have their first baby has risen markedly, from 20 to 25.
This societal shift toward later motherhood has, in turn, dramatically improved women’s financial prospects, concluded a study featured in a book about the financial impact of changing employment, family and health trends.
University of Virginia economist Amalia Miller found that each one-year delay in when women start a family has increased their lifetime earnings by 3 percent. Since first motherhood now comes five years later, she estimates that translates to a 14 percent increase since the 1960s in the typical woman’s lifetime earnings.
Women who wait to become mothers also accumulate more wealth: each one-year delay increases their wealth at age 50 by between $12,000 and $20,000 – or potentially $100,000 more for waiting five years.
Although women who earn more money spend more, “their consumption does not increase proportionately, leaving them with greater accumulated wealth at older ages,” Miller said. “The effects of motherhood timing especially are substantial and significant for decades after the age at first birth and well into retirement years.”
Education plays a large role in the improvement in women’s ability to build up their financial resources. For example, there was a much smaller increase in women’s incomes due to delay when Miller controlled for education.
There is another way to think about her findings: it’s becoming clear to many young women that there are fairly large financial rewards from delaying their first child. …Learn More
April 21, 2016
Game of Loans: Refinancing Student Debt
Brendan Coughlin, who runs the student loan refinancing unit for a major bank, is very upfront about this: some young adults should not refinance their loans.
One example is a graduate new to the labor force who doesn’t feel stable yet in his or her job. Refinancing a federal student loan with a high interest rate can make sense and saves money. But one reason not to refinance federal loans is that they have a major advantage over loans refinanced by private lenders: flexible repayment options for those who might have difficulty meeting their monthly payments later.
Another reason not to refinance is that the government forgives the debt after five or 10 years for certain types of teachers and public service workers.
Understanding whether to refinance is so important that Coughlin, as president of Citizens Bank’s consumer lending unit, instructs the bank’s loan officers to talk prospective customers through the pros and cons three or four times – to make sure they’re clear about what’s at stake.
“We really don’t want to have a customer swap out their loans and have a surprise. We want to make sure they’re making the right decision,” he said.
If you clear the hurdles, however, it might be time to refinance into bank loans with lower interest rates than the steep 6.8 percent currently charged for some federal student loans – and the double-digit rates on some private loans. Citizens Bank estimates that more than 40 percent of the $1.3 trillion in student loan debt outstanding is both held by someone who could qualify for refinancing and has interest rates high enough to potentially make it worthwhile. …Learn More
March 15, 2016
Private Student Loans: Borrower Beware
Privately financed college loans were less than 10 percent of the $1.3 trillion in unpaid student debt last year, according to the Consumer Financial Protection Bureau. The bulk of student loans are funded by the federal government. But the minority who borrow from private financial institutions often learn painful lessons after graduation: it is much more difficult to negotiate affordable repayment plans with private lenders. Private loans are unlike federal student loans, which have standardized repayment options and procedures.
This blog is intended to help parents and future college students avoid getting into difficult situations in the first place with private loans. Squared Away interviewed two student loan experts at Clearpoint Credit Counseling, an Atlanta non-profit: Terrence Banks, a counselor who works directly with borrowers, and Thomas Bright, a blogger.
Question: Graduates trying to renegotiate their private loans conveyed some harrowing stories in Clearpoint’s 2013 blog post. Have things improved since then?
Terrence: The complaints are still valid and still rampant. But some – not all – private lenders have stepped up to the plate to make private loans a bit more financially feasible.
Q. What would you advise parents and matriculating students do when making their first borrowing decisions?
Terrence: Exhausting the federal loan option is paramount before you go to the private loans. If you find yourself in trouble where you can’t make a payment, you have more options under the federal than the private loans. Also try to find out the potential income for your future profession before going down this road and borrowing at all. And then look for grants – there’s a slew of grants that are untapped each year because people don’t take the time to access them because student loans are so readily available.
Q. How do borrowers get themselves into the situations like this one, described on your blog? “I am able to consolidate my federal loans (big help on the monthly payments) but not my private loans.” Borrowers also talk about inflexible private lenders and being harassed with phone calls from these lenders. … Learn More
March 8, 2016
Study: College Debt Hurts Retirement
College graduates learn very quickly that paying hundreds of dollars toward student loans each month makes it difficult to afford things like a nice apartment or a car.
But they might not appreciate the long-term consequences of their record levels of borrowing: college debt is an added threat to their retirement security, according to a new study by the Center for Retirement Research.
The researchers gauged the debt’s impact by looking down the road to retirement and projecting what would happen if working people of all ages had started out with the same profile as young adults: 55 percent of today’s 20-something households have student debt, and they owe $31,000, on average.
College debt has a bearing on retirement security through two avenues. First, money going into loan payments is not available for a retirement savings plan. Second, lenders place limits on how much total debt a homebuyer can have, forcing many borrowers to delay home purchases; and getting a home loan would be very hard for the 17 percent of student loan borrowers delinquent on their debt.
Based on these assumptions and using 2013 data, the Center’s National Retirement Risk Index shows that those at risk of a lower standard of living when they retire would increase sharply to about 56 percent of working U.S. households – compared with 52 percent at risk when the student loan projection isn’t figured into the NRRI calculation.
This “represents a substantial increase in the already alarming rate of households at risk,” said the Center, which supports this blog. …Learn More