Finance

How Much Better Can Jobless Rate Get?

September 20, 2017 By Twila Van Leer

Jobless Rates — Could the rate of joblessness in the United States actually get too low?

Could the rate of joblessness in the United States actually get too low? It’s an interesting question that economists are considering more closely as the unemployment rate reaches new lows for this post-recession era.

The crux of the matter is that a pool of unemployed people anxious for jobs is necessary to support any growth in the number of jobs created. The latest report on unemployment , calculated by the Department of Labor, shows the figure at 4.3 percent, down a tenth of a point since May, when the rate was 4.4 percent.

In June, employers offered 209,000 more jobs that contributed to the small dip in the rate. In July, the greatest surge in job availability was in the restaurant/bar sector. Some 53,100 jobs were added to the tally, probably indicative of the rising wages being offered to restaurant and bar workers. Average hourly pay increased by 4.7 percent over June of the previous year.

The United States is benefiting from steady economic growth around the world. Europe and Japan have both posted gains and China’s somewhat teeter economy has showed signs of stabilizing.

The new figures suggest that Americans who had become discouraged with the job market and quit looking are now coming back to the search. Many who went back to school or decided to just stay home and care for family are being lured back by the abundance of jobs.

The rate of hiring has stayed about steady over this year compared with last, but some 184,000 new jobs have become available each month through July. In 2016, that figure was 187,000, a sign that the post-Great Recession economy was righting itself. This July, 81.8 percent of people aged 25 through 54 had jobs or were looking for one, the highest number since December 2010. Economists focus on this age range because it includes the Baby Boomers who retiring and the younger generation that is likely still to be pursuing higher education. The current figure, however, still lags behind the 84.6 percent that was registered in 1999.

Economists expect that the 81.8 percent could jump by another 0.7 percentage points if current trends continue. That would add another 1.8 million jobs.

Have Student Loans Forgiven

September 16, 2017 By Twila Van Leer

Student Loan Forgiveness — Take care to remain cognizant of the eligibility rules if you want to stay in the running for loan forgiveness.

The U.S. government provides some opportunities for having student debt erased, but there are specific guidelines and some traps to avoid.

The Public Service Loan Forgiveness Program (PSLF) specifies that it is available only to those who have paid regularly for 10 years and who are working for a government agency or a nonprofit.

This fall marks the first time the program kicks in and there are only a few hundred used-to-be students who have signed up so far. Failure to understand the rules has led many graduates to make decisions that now make them ineligible.

Four of the most common mistakes include:

Having the wrong type of loans. The student must have borrowed from the federal Direct Loan Program to qualify. Some 19 million people – 44 percent of the borrowers got their loans in other federal programs, according to current Department of Education statistics. They can get around the provision by consolidating debt under the direct loan program. However, past payments won’t count toward PSLF until the consolidation takes place.

Misunderstanding of “qualifying payments.” Eligibility is based on making 120 payments. They must have begun after Oct. 1, 2007 through a qualifying repayment plan (generally an income-driven plan.) Payments must be in full and made within 15 days of the due date. The borrower must be a full-time employee of a qualifying federal employer. Making extra payments won’t help with eligibility as only one per payment period is eligible. At least some payments must have been made under an income-driven plan that caps payments at a certain percentage of income. Payments don’t count if the borrower was still in school, during a loan grace period or while the loan was in deferment or forbearance. (If a borrower has stayed with the standard 10-year plan, he or she will have paid off the loan before consideration of PSLF is considered.)

Working for the wrong employer. To avail oneself of PSLF, he or she must work for the government, a 501(c) (3) nonprofit or an organization providing a qualifying public service. A full-time public school janitor could qualify. Before accepting a job, an individual hoping to take advantage of PSLF should see that the prospective employer qualifies.

Falling for fraudulent promises of forgiveness. A NerdWallet investigation showed that many companies use false claims and promises to reduce or eliminate loans and they charge high fees to enroll people in the free federal program. An Obama “free loan forgiveness” program, for instance, is one such scam. The term receives more than 18,000 online searches per month, even though no such program exists. Be wary of companies that charge a high up-front fee or add monthly amounts. What they are offering is likely to be too good to be true.

The PSLF program is not set in concrete yet. The Department of Education is considering cutting funding, arguing that it is too expensive and that it tends to benefit graduate and professional school students, many of whom acquire debt in six figures before they are ready for careers. Keep posted for changes, but take care to remain cognizant of the eligibility rules if you want to stay in the running for loan forgiveness.

Financial Basics You Should Know As An Adult

September 12, 2017 By Twila Van Leer

Graduation is a milestone in the understanding of personal finances, as well as the basic underpinnings of the education that will take you through the rest of your life.

Advice from the experts on the basics of personal finances includes these gems:

There is always something new that the advertisers will tell you you can’t do without. Ignore them. You don’t need the “best” phone, computer, etc. etc. Obsolescence is the name of the game today. Find something that satisfies your needs and stick with it. You can pay less for the “not best” and find yourself well provided for.

Don’t get into the mindset that debt is the way to have what you need (or want) unless it is really necessary. Debt is not kind. Consider carefully when you are thinking of getting something new. When you overuse your credit, you are giving up the ability to create a margin for your living. Save up and pay up front for the things you merely want and keep the credit capacity for things that really matter. Watch out for lifestyle creep. It can bury you.

Be reasonable about college costs. If you haven’t saved up enough for a full-blown university, try a community college for the first couple of years. To avoid having to make the choice, begin saving early and consistently for the type of higher education you want. And four years of college is not the answer for everyone. Lesser degrees, such as associate or certificate, can lead to good jobs at less cost. At the very least, a shorter-term education plan might provide the earning capacity to finance more extended college training. Working during the first couple of years so you can stay debt-free will be helpful when you get into the final stretch and borrowing seems inevitable.

Breaking away from home post-high school may be an objective, but it also is very expensive. You may accumulate the sheets and towels, etc., for living away from home, but cash quickly becomes a problem in most cases. If you are looking at rooming with friends or living independently, be sure you have the means to make it work. Have a budget and stick with it, and include some savings in that budget. Even college students have emergencies.

High school graduation is a hallmark, but it can lead to financial stress if you haven’t addressed issues beforehand. Think about it.

A Living Trust Protects Assets

September 4, 2017 By Twila Van Leer

If you want to keep control of your assets while you are alive and set out guidelines for their distribution after your death, a living will may be what you need. Even if you need to make amendments over time, that can be easily done.

With a living trust, you can set specifics for all types of properties and have the flexibility to make changes as needed. For instance, you can name alternate beneficiaries if the individual you initially named dies. You can’t do that with joint tenancy or a pay-on-death bank account.

Compared with a will, a living trust does have some downsides. They are more time-consuming to establish and involve more ongoing maintenance. It is harder to modify them.

The usual cost of having a living trust prepared by a lawyer is about $1,000, but you can significantly reduce this cost by making your own trust. There are self-help tools to guide you through the process. Even if you create a living trust, you will need a simple will as a backup.

Age and wealth are the two most important factors in considering a living will. Greater wealth makes it more desirable to protect your inheritors from the inconvenience and cost of probate. The nature of assets also is important. If you own a small business or other assets that you don’t want tied up during probate, you are more likely to consider a living trust at a younger age. Although your expectation of dying is not immediate, you don’t want to risk having an executor obligated to report to a judge for a year or more.

The steps you should follow if you need to amend your living trust include: Locate the documents and identify the provisions you want to change.

Draft an amendment form or purchase one from a legal publishing store or office supply. Be sure all pertinent information is included, such as the name of the trust, the trust grantors, the trustees as named in the original document and the date it was created. Specify which article in the trust allows for amendments and which article you want to change.

Bring the trust grantors and trustees before a notary public and have all parties sign and date the amendment and specify who they are in the presence of the notary, who will then notarize the signatures.

Attach any changes you make to the original trust papers. Keep them is a secure place. If you filed the trust initially with your county records department, be sure you add any amendments as they are made.

Health Coverage Up In The Air

April 11, 2017 By Twila Van Leer

With President Trump hinting at dismantling President Obama’s Affordable Care Act health care plan, what’s the use of buying coverage now, even if you feel you need it?

The best reason is that health care is fickle. Today you may be able to get by and wait out the changes. But tomorrow you may be facing significant health care issues. That’s the nature of insurance of any kind. But with health care now being a huge consideration in your personal finances, it doesn’t pay to treat it lightly while waiting for the chips to fall.

If you are facing decisions regarding your own health insurance arrangements, make the potential for need the major factor, not the current haziness of what happens next in Washington D.C. It may take months or even years for the change in policis to settle out and you don’t want to risk a health disaster in the meanwhile, experts advise.

No changes are expected within the coming year, at least. The Republican-controlled Congress has indicated it will provide a transition period of a year or more, even if Trump should opt to repeal ACA soon after he is inaugurated. Congress also is toying with the idea of a replacement act that would significantly alter ACA. The future is too cloudy to base health care decisions on the “what-ifs.” Cutting funding now for the national program would leave millions of Americans without health care resources, and that’s a scenario even Trump may want to avoid.

More than 10 million Americans covered through HealthCare.gov and state markets that offer subsidized private insurance will see no changes. Also safe for the moment are those low-income persons covered by Medicaid.

The 2017 premium prices, which incorporate huge increases, were set months ago and have already been approved by the relevant agencies. Some people are looking at short-term coverage outisde the ACA exchanges. They generally cost less but also cover less. Those who choose this option are exposed to the possibility of being fined for being, to all intents and purposes, uninsured. But they are covered for major health expenses.

Those who are still uninsured when 2017 rolls along face penalties of $695 per adult or more, depending on household income. But the payment isn’t due until tax time 2018, and by then major changes in the national program may have taken effect. Trump has expressed particular opposition to this aspect of ACA.

The future is not clear, but your need for health care coverage is. Make your decisions accordingly.