If you have student loans you may be able to lower your payments with the government’s Income Based Repayment (IBR) plan.  IBR is a new repayment plan for the major types of student federal loans, which include any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program.  However, if you are in default you are out of luck.   Additionally, parent PLUS Loans or consolidation loans that repaid a parent PLUS Loan are not allowed as well.

IBR caps your required monthly payment at an amount that should be affordable based on your income and family size.  New and old loans for any type of education (undergraduate, graduate, professional, job training) may qualify for the IBR plan.

You may apply for IBR if your federal student loan debt is high relative to your income and family size. Your lender will determine your eligibility, however, you can use the Departments IBR calculator to estimate if you would likely benefit from the IBR plan. The calculator looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment under a 10-year standard repayment plan, then you are eligible to repay your loans under IBR.

For more information visit studentaid.ed.gov.

The interesting thing about life is that we don’t know what’s around the corner.  The recent death of Michael Jackson is a good example. Many people live as if tomorrow is guaranteed; as if their job, health, possessions, friends, family, etc., will be around tomorrow.  

When I was 16 years old I got hit by a car while crossing the road.  I recall one second being healthy and living and within less than a couple of seconds I was laying on the hot road in shock, feeling the bones in my left leg rub against each other, not being able to move because my collar bone was broken and with blood everywhere.  I thought I was dead, dying or would be crippled for the rest of my life.  That experience thought me that at the drop of a time things can quickly turn for the worst.

I’ve also learned that the word “permanent” doesn’t really exist for humans.  Nothing is permanent.  How can anything be permanent for a human, when his/her life is temporary?  In the past, whenever I got a job offer letter stating it was a “permanent” job I’d chuckle to myself.  How can they offer me a permanent job when no one knows what the future will hold?  Sure enough with today’s economy many people are experiencing this reality.

Because of this I’ve learned to plan for the rainy days which include having more than one source of income, saving money when you have it, and ensuring you have good insurance (health, auto, life, home, etc).   When things are going well, plan for when things will not go well, because they will one day!

Related Articles:

• Should You Have a One Year Emergency Fund?
• Keep Expenses Low for When the Hard Times Come

It amazes me that most Americans aren’t angry about our existing healthcare system.  I consider healthcare the biggest threat to most people financial well-being.  Most Americans don’t realize that a catastrophic illness or accident can easily bankrupt them even if they have health insurance.  

Consider this; treatment of the average breast-cancer patient costs $66,489 according to a MSN Money Central report.  If your insurance covers 80% of the bill, you are left to pay 20% which is $13,297.80.  If you are fortunate to have health insurance paying 90% of the bill, then you are left to pay $6,648.90. These costs depend on your financial wellbeing.  If you are a high income earner or have $100,000 saved in the bank, it’s not that bad.  But if you are the average American living from paycheck-to-paycheck, these costs are extremely high.  Plus with the current economy where many people are out of work, these costs can easily bankrupt you!

I praise President Obama for trying to restructure our healthcare system; however, it seems that most people don’t realize the seriousness of the problem until they run into problems.

If you are healthy, have a job and money saved in the bank, and then you may not pay attention to the problem.  However, the minute something happens to you (major illness or serious accident) and the bills start to roll in; you’ll then become aware of the problem.  But the problem is, by then its too late for you to do anything.
 
If more Americans were upset or concerned about the serious flaws in our healthcare system, we’d vote people into office who were serious about fixing the problems and vote-out the ones that aren’t.  We’d protest, have marches and demonstrations until it was fixed!

I’m so happy John McCain didn’t win the election because it was clear that he had no desire to fix the problem.  He didn’t see healthcare as a major threat to the long term stability of the American economy.  When asked if he thought healthcare was a privilege, a right or a responsibility?   He stated it was the responsibility of the individual.  President Obama stated it was a “right” for every American.  He stated for the richest country to have people go bankrupt because of an illness is wrong.  He spoke of how his mother who died at age 53 had to argue with her insurance company in the last months of her life from her hospital room over whether or not she had a pre-existing condition is fundamentally wrong.  President Obama clearly understands the system is broken and needs to be fixed!

Last night President Obama gave a prime-time interview moderated by Charles Gibson and Diane Sawyer of ABC News on healthcare and I was very impressed with the interview.  I’ve always believed the best way to get your ideas to implementation is to first sell it to the people involved.  If you try to ram your ideas down people’s throats you will fail.  President Obama’s strategy of selling his ideas in “town-hall meetings” is an excellent strategy.  When he’s able to convince the majority of Americans that his ideas will work, then it will become easier to implement.  President Obama has my full support!  I sincerely hope he succeeds.

According to a study published last week by the Employee Benefits Research Institute, people retiring today will need a ton load of money to cover healthcare expenses over the course of their retirement.

No one knows what will happen with President Obama’s plan to cut $131 billion in Medicare / Medicaid spending and reform the U.S. healthcare system.  However, for now men retiring at 65 this year (2009) will need $68K to $173K in savings to cover health insurance premiums and out-of-pocket expenses if they want a 50% chance of having enough money and $134K to $378K if they want a 90% chance.

For women, who have a longer lifespan, who retire at 65 will need $98K to $242K in savings to cover health insurance premiums and out-of-pocket expenses if they want a 50% chance of having enough money and $164K to $450K if they want a 90% chance.

Additionally, according to the report retires may need more money because the costs doesn’t cover long-term care expenses.

Those are some really big numbers, considering in some countries citizens pay nothing!  Let’s all hope that by the end of the year, the Obama administration will be successful in reforming the U.S. Healthcare system!

Source: MarketWatch.com

Related Article: It’s Time to Fix the American Healthcare Crisis

Now maybe a great time to buy a car, especially if your current vehicle is a gas guzzler.  President Obama is about to sign into law a program called the Car Allowance Rebate System (CARS) to help consumers purchase a new, more fuel efficient vehicle when they trade in their less fuel efficient vehicle.  The government incentive could save you up to $4,500 to purchase a new car.

To qualify, your vehicle must be less than 25 years old on the date of trade-in and you can only purchase a new or leased vehicle costing less than $45,000. Your trade-in vehicle must have 18 MPG or less, however, some very large pick-up trucks and cargo vans may have different requirements. To find out your vehicle’s official MPG, visit www.fueleconomy.gov.  Additionally, your trade-in vehicle must be registered and insured continuously for the full year preceding the trade-in.  You will not need a voucher because dealers will automatically apply the credit at the time of purchase.  To find the trade-in value of your vehicle visit Autos.MSN.com.

How Will CARS Work?  According the website Cars.gov:

• Step 1: Visit CARS.gov for current information about the program.
• Step 2: Determine if you qualify, then shop for a new car.
• Step 3: Bring the title, registration and insurance papers showing continuous registration and insurance coverage for the past full year.
• Step 4: When you buy or lease a new vehicle, the dealer handles the submission of all required information to NHTSA (National Highway Traffic Safety Administration).
• Step 5: NHTSA ensures that your purchase meets the requirements.
• Step 6: About 10 days later, NHTSA will issue a financial credit to the dealer.

Sources:

• Visit Cars.gov for further details.
• Visit FuelEconomy.gov to determine your car’s MPG.
• Visit Autos.MSN.com to determine your trade in value.

This is interesting!  Do you realize that nearly 1/3 of multi-million lottery winners become bankrupt in just a few short years after their big win.  I’ve always believed that if you give a fool any amount of money, they will blow it.  Some people are prone to lose money!

The top ten lottery losers are listed below:

10. Vivian Nicholson – won £152,300, lost five husbands
9. Willie Hurt – won $3,100,000, lost everything
8. Evelyn Adams – won $5,400,000, lost all but her caravan
7. Shefik Tallmadge – won $6,700,00, lost his Ferrari
6. Michael Carroll – won £9,700,000, lost everything but his reputation
5. Rhoda Toth – won $13,000,000, lost her disability claim
4. William Post – won $16,200,000, lost his family
3. Janite Lee – won $18,000,000, lost her money but bought a seat in heaven
2. Billie Bob Harrell – won $31,000,000, lost his life
1. Jake Whittacker – won $315,000,000, lost his car insurance

Visit TimesOnline for the complete story.

Want to make a lot of money? One good way is to convince people that you have a fail-safe secret plan on how to make money.  Tell them that for a few hundred or thousand dollars you can teach them how to “easily” make money in real estate, network marketing, affiliate marketing, the stock market, the Internet, etc. with just a few hours per day of work.  In your advertisement show pictures of yourself sitting in an expensive car, on a yacht, before a mansion, with beautiful people around a pool and with you holding up a check with a huge amount of money!  You’ll persuade a lot of people to buy your services.   On the other hand, the savvy consumer will not buy into the hype and will first do some research.  They may then be surprised to find out that the get-rich-marketer doesn’t own the car, yacht or mansion.  The check maybe legitimate, but it’s deceiving because the get-rich-marketer doesn’t reveal how he really made the money.  

Training Seminar Hype
The reality is most training seminars are fraudulent, deceiving, or just not worth the money.  Many get-rich-marketers don’t tell you the full story about what they are selling.  For every 1 person that maybe successful, 1,000 will fail.  However, the 1 successful person will be shown as proof that their system works.  The reality also it that most of the information get-rich-marketers try to sell you can be found on the Internet for free or in books at the library and/or book store.  Get-rich-marketers know that when it comes to money, people get emotional, so they can be easily convinced to sign-up and spend their money.

There are stories about get-rich-marketers advertising their classes by showing a big check from an affiliate company.  When people see the image of a $96,000 check they immediately think to themselves, “This guy must know what he’s doing.  I’m buying whatever he’s selling.”  Who wouldn’t want a $96,000 check?  Well, in reality the $96,000 check was gained by spending $120,000.  Here is how it works. The get-rich-marketer advertises an item on Google where he will receive a commission for each sale made at an affiliate website.  This is called affiliate marketing (read more here).  However, for ever $1 spent on advertising he makes $0.80 in commission.  So he loses $0.20 per $1 advertised.  That’s okay because he plans on making his money back later.  So when he spends $120,000 he makes $96,000 in commissions with a loss of $24,000.  He then creates a training class with books and videos (that he may outsource) and sells the training class for $99.99.  As proof he the show’s off the big check.  People seeing the $96,000 check are impressed and quickly sign-up with their credit cards.  Within a few days the get-rich-marketer sells a million dollars worth of training classes and laughs all the way to the bank!

CEO Hype
Over the years I’ve watched the financial markets, which include watching interviews with CEOs. As a result, I’ve come to the conclusion that many CEOs are deceitful or outright liars.  Most are salesmen who focus on telling you the positives while hiding the negatives about their companies.  After all they don’t want their company stock prices affected by negative news, which will affect their bonus.  I’ve watched CEOs tell the public that the future of their company is bright and that things are going well only to then release horrible earnings results a few weeks later.  I’m certain if you researched CEO statements for many of the companies currently in trouble (Countrywide, GM, AIG, Citigroup, etc.), you will hear the CEOs giving glowing statements about their companies.  Remember WorldComm and Enron?  Their CEOs got in trouble for misleading investors with their hype. Never buy a stock based on the CEO statements!  Let the company’s financial statements and market research do the talking for you!

Revenue Hype
Have you ever read magazines articles about entrepreneurs who launch companies that have revenues in the millions?  You may have thought to yourself, “Wow, that’s great.  This guy must be rich.”  Well, not so fast.  Revenues mean very little in giving you a complete picture of a company’s financial health.   Most magazines will not even state if the company is profitable or not.  To get a good feel of how a company is doing, you need to know at least their cash flow, net income and debt.  

There are many companies with revenues in the millions or billions (GM and Chrysler are examples) who go bankrupt.  The next time you read an article about some young guy who started a company with revenues of $10 million dollars, don’t be envious, jealous or impressed because it maybe just hype.  You really don’t know the full story.  You may look closer and realize that the company spent $12 million to make $10 million in sales and the company only has enough cash to last 6 additional months.  At night the owner is up sleepless, worrying about his company going bankrupt.  Most of these new companies you read about will not exist 5 years from now!

Lifestyle Hype
Never envy a man who drives a big car, lives in a big house or have a big job.  You may look closer and realize that you would never do what he did to attain these items or do what he’s doing to maintain them. You may realize that he’s working 80 hours per week in a very stressful job.  He may travel a lot and as a result is never home to spend time with his family.  His wife may be unhappy and is threatening divorce.  I know of people who make a lot of money, but when I ask them about their jobs, I realize that I’d rather make less and have more free time and less stress.  For me the hours worked isn’t worth the money!  The reality is that more money and “stuff” will not make you happy!  After a while the “stuff” looses its appeal.  Have you ever purchased a new car and it felt great, and in a few months the car looses its appeal and it’s just a car?  

Career Hype
I’ve seen many people get better paying jobs or promotions only to have it backfire on them.  I’ve had friends and co-workers who took new jobs, which sometimes required relocating, only to regret it and end up quitting.  The job ended up not being what they expected.  Sure they were making more money, but now they were working more hours, had conflicts with the new boss, hated the new city they relocated to or the job was very boring and not challenging.  

I’ve learned to not always believe the hype.  There are advantages and disadvantages to pretty much every situation.  Before getting emotional about making more money, take a step back and think about it rationally.  Do your research and then proceed with caution.   Many times we as people will deeply desire something, but when we finally get it, we quickly realize it wasn’t worth the effort and that it didn’t make us happy.  So don’t always believe the hype!