5 Things You Should Know about Your Student Loans

Kanye West’s commencement speech is old news (yes, he really gave one), and our nation’s nearly 4 million college graduates are, hopefully, on the road to somewhere. Whatever path they might be on, chances are that almost 70 percent of them have student loan debt. If you are one of them, here are five important things you should know about managing your student loans:

1. Know your loans. You want to keep track of your loans like you’d keep track of a Facebook friend, your Instagram or your phone. Keep track of the lender, balance and repayment status for each of your student loans. What’s more, know your grace period. Different loans have different grace periods. You don’t want to miss your first payment!

2. Keep in touch with your lender. You’re not going to say good-bye to the friends you’ve made in college. Just like you’d let them know if you’ve moved, got a new cell phone number or a new email address, you want to extend the same courtesy to your lender. If your lender can’t reach you, it can cost you. Don’t ignore them. Lenders’ jobs are to work with borrowers.

3. Choose the right repayment plan. Remember, you have options. If the 10-year repayment plan becomes too much of a burden, you can change plans. Check out options such as Income-Based Repayment and Pay as You Earn. These income-driven plans cap your monthly payments at a reasonable percentage of your income. If you’re not certain what your best option is, see suggestion #2.

4. Keep Calm and Carry On. At some point, you may hit a bump in the road. Unemployment, health issues and other unpredictable crises can bring on financial stress. You’ve got legitimate options. You can postpone your federal loan payments through deferments and forbearance. Again, see suggestion #2.

5. Don’t Do Something Stupid. Don’t default on your loans. Ignoring them can have grave consequences that can haunt you for the rest of your financial life. For federal loans, default kicks in after nine months of non-payment. Also, keep in mind that declaring bankruptcy will not relieve you of your loan obligations.

Like any other life event, paying for college involves planning. Managing your college debt doesn’t have to be stressful. Have a budget and hold yourself accountable to it. Remember that you have options, and your lender will work with you. Congratulations to all of this year’s graduates. Here’s to a bright future.

LeBrononomics

I’m a native Clevelander, so, naturally, I’m very excited about the Cleveland Cavaliers taking on the Golden State Warriors for the 2015 NBA Championship. If the Cavs win, it will be Cleveland’s first championship team since Jim Brown led the Browns in 1964. Of course, I’m picking the Cavs to win the series, but I obviously can’t guarantee a Cavaliers’ series victory. What I can guarantee, though, is that win or lose, each of these two teams will receive a boatload of money for going to the finals.

Let’s take a look at the numbers. First, the total player prize pool for all teams participating in the playoffs is 13 million dollars. Fifty percent of that pool (roughly seven million dollars) goes to the two teams in the championship round.

Here’s where it gets interesting. Up to this point, the Warriors have accumulated 1.5 million dollars in playoff cash winnings compared to 1.3 million dollars for the Cavs. The Warriors have more winnings because they are paid extra for having the best record during the regular season. The winner of the finals will receive 2.3 million dollars compared to 1.5 million dollars for the loser. (Is there really a loser here)? So, if the Warriors win the finals, they will receive about 3.8 million dollars compared to a paltry 3.6 million dollars that the Cavs will receive if they win.

Each team has the option of deciding how to divvy up their player pool of playoff money, and it’s top secret how they do so. To keep it simple, let’s say the Cavs win the title and pay all fifteen players on their team equally. If that were the case, each player would receive a playoff check of $240,000! Although these payouts may not mean much to superstars like LeBron James or Stephen Curry, I’m sure the team’s sixth man or benchwarmers would love an extra quarter million dollars to get them through the summer. Not to mention bragging rights for a year. For Clevelanders…that’s priceless

“Man Smart (Woman Smarter)”*

Besides the obvious, there may be no greater distinction between men and women than when it comes to investing. Recent studies show:

• 70% of women say they are more comfortable saving than investing;
• Conversely, 70% of men surveyed were willing to take risks for higher returns;
• Over 40% of the men surveyed said they enjoyed the “sport” of investing (I have yet to hear that nonsense expressed by a woman);
• Both professional and amateur female investors take less risk and have more diversified portfolios compared to their male counterparts. This may translate to better investment returns!

Even women who have a basic understanding about investing do not feel they can parlay that information into better investment returns. (Women’s intuition wins again because it’s impossible for anyone to outguess the markets). Of course, men feel the opposite.

Well, gentlemen, I’ve got some bad news for you. It turns out that women, both professional and amateur investors, get better returns than their male counterparts. Why women do better, however, isn’t rocket science. First, women take less risk than men and, unlike men, are more apt to ask for advice. Women, as we all know, are more apt to ask for driving directions, too. (Do you see a pattern here, guys)? Also, women aren’t overconfident (like men) which means they are less likely to be deluded into thinking they know more than they really do. Ultimately, women realize they are not in control. This means that women are more likely than men to attribute success to factors outside themselves, like luck or fate.

Understanding that we have very little control over the markets allows women the rationale they need to avoid panic. What’s more, it allows them to admit when they have made a mistake. When it comes to investing, we can all benefit from both male and female attributes.

Men, your household’s investment portfolio will be less risky and more diversified if your wife helps manage it. Down the road, she’ll share what comes out of that portfolio. Shouldn’t she share what goes into it? Chances are, her ideas and emotions will complement yours, and you’ll both end up wealthier. And at least one of you will end up wiser.

If you have a problem with this, guys, just remember the title of the old Harry Belafonte song “Man Smart (Woman Smarter).”

*Together, we know more than we do alone. Watch this three minute video about “The Power of the Markets.” Just click the link and scroll down to the video.

http://silawealthadvisory.com/golden-gate-portfolio.html