We Are Spending Down Our Savings Trying to Make Ends Meet. – Patch
Patch wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, My husband and I have alot of debt due to my student loans that are almost 100,000, and then of course we have a mortgage , car payments and the household bills. I feel like we are drowning and our savings is dwindling down fast. How can we get this under control before we are totally broke? Patch” Dear Patch, If your savings are dwindling that tells me that there has been some change in the household income or expenses. At one time you were able to save, and now you can’t. Having money in savings is great and critical but it is clearly a warning sign of bad things over the horizon if you are spending down your savings without a solution that will stop that need. Otherwise what will happen is you will spend yourself down to broke. If you are unable to raise income you will have to lower expenses. That might mean moving, downsizing, bankruptcy or some other radical adjustment. Typically among the most expensive bills each month are the mortgage and car payments. If you have government backed student loans , investigate the new Income Based Repayment (IBR) program that will modify student loan payment. What is Income Based Repayment? Income Based Repayment (IBR) is a new repayment plan for the major types of federal loans made to students. Under IBR, your required monthly payment is capped at an amount that is intended to be affordable based on your income and family size. Top What federal student loans are eligible to be repaid under an IBR plan? Any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training). Top Who is eligible for IBR? You may enter IBR if your federal student loan debt is high relative to your income and family size. While your lender will perform the calculation to determine your eligibility, you can use the Departments IBR calculator to estimate if you would likely benefit from the IBR plan. It 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. See below for a more detailed description of how IBR eligibility is determined. The following chart shows the maximum IBR monthly payment amounts for 2009 for a sample range of incomes and family sizes. IBR Monthly Payment Amount Annual Income Family Size 1 2 3 4 5 6 7 $10,000 $0 $0 $0 $0 $0 $0 $0 $15,000 $0 $0 $0 $0 $0 $0 $0 $20,000 $47 $0 $0 $0 $0 $0 $0 $25,000 $109 $39 $0 $0 $0 $0 $0 $30,000 $172 $102 $32 $0 $0 $0 $0 $35,000 $234 $164 $94 $24 $0 $0 $0 $40,000 $297 $227 $157 $87 $16 $0 $0 $45,000 $359 $289 $219 $149 $79 $9 $0 $50,000 $422 $352 $282 $212 $141 $71 $1 $55,000 $484 $414 $344 $274 $204 $134 $64 $60,000 $547 $477 $407 $337 $266 $196 $126 $65,000 $609 $539 $469 $399 $329 $259 $189 $70,000 $672 $602 $532 $462 $391 $321 $251 After the initial determination of your eligibility for IBR, your payment may be adjusted each year based on your income and family size, but your required payment will never be more than the standard 10-year payment amount (unless you choose to exit the IBR program). Top What are the benefits of IBR? PAY AS YOU EARN – Under IBR, your monthly payment amount will be less than the amount you would be required to pay under a 10-year standard repayment plan, and may be less than under other repayment plans. Although lower monthly payments may be of great benefit to a borrower, these lower payments may result in a longer repayment period and additional interest. INTEREST PAYMENT BENEFIT – If your monthly IBR payment does not cover the monthly interest that accrues on the loans, the government will pay your unpaid interest on Subsidized Stafford Loans (either Direct Loan or FFEL) for up to three consecutive years from when you first enter IBR repayment. After three years, and for all the other types of loans, interest that accrues will be capitalized (added to the loan principal on which future interest is calculated) when the borrower no longer is eligible for an IBR repayment amount.) 25-YEAR CANCELLATION – If you repay under the IBR plan for 25 years and meet certain other requirements, any remaining balance will be cancelled. 10-YEAR PUBLIC SERVICE LOAN FORGIVENESS If you work in public service and have reduced loan payments through IBR, your remaining balance after ten years in a public service job could be cancelled if you made loan payments for each month of those ten years. The Public Service Loan Forgiveness Program is available only if you have Direct Loans and you make 120 monthly payments under the Direct Loan Program. If you have FFEL loans, you may be eligible to consolidate them into the Direct Loan Program to take advantage of the Public Service Loan Forgiveness Program. However, only the payments made while in the Direct Loan Program will count toward the required 120 monthly payments. For more information about this program, review the Departments Public Service Loan Forgiveness Program Fact Sheet . Top What are the disadvantages of IBR? YOU MAY PAY MORE INTEREST The faster you repay your loans, the less interest you pay. Because a reduced payment in IBR generally extends your repayment period, you may pay more total interest over the life of the loan. YOU MUST SUBMIT ANNUAL DOCUMENTATION To set your payment amount each year, your lender needs updated information about your income and family size. If you do not provide the documentation, your payment reverts to the standard 10-year repayment amount. Top How is the IBR amount determined? Under IBR, the amount an eligible borrower would repay each month is based on the borrowers Adjusted Gross Income (AGI) and family size. The annual IBR repayment amount is 15 percent of the difference between the borrowers AGI (or an alternate income amount) and 150 percent of the Department of Health and Human Services Poverty Guidelines, adjusted for family size. That amount is then divided by 12 to get the monthly IBR repayment amount. If that amount is higher than the 10-year standard repayment amount on the borrowers loans, then the borrowers required payment is the standard amount. The repayment amount under a 10-year standard plan is calculated based upon the total amount borrowed and the applicable interest rate applied over 10 years. (Unlike the IBR plan, the repayment amount under a 10-year standard plan is not based on your annual income.) Top Are there examples of borrowers who are eligible for IBR and for borrowers who are not? Example 1 – Based upon the IBR repayment formula a borrower with a family size of one and an AGI of $30,000 would have an IBR calculated payment amount of $172 per month. If this borrower had total student loan debt of $25,000, the calculated monthly repayment amount under a 10-year standard plan with an interest rate of 6.8 percent would be $288. Since the $172 IBR calculated amount is less than the 10-year plan amount of $288, the borrower would be eligible to repay under IBR at a monthly amount of $172. However, if this borrowers total educational loan debt was only $10,000 the 10-year calculated amount would be $115 per month, which is less than the IBR amount of $172. Thus, the borrower would not be eligible for IBR. Example 2 – A borrower with a family size of four and income of $50,000 would have an IBR calculated monthly payment amount of $212. If this borrower had total student loan debt of $20,000 the calculated monthly repayment amount under a 10-year standard plan with an interest rate of 6.8 percent would be $230. Since the $212 IBR calculated amount is less than the 10-year plan amount of $230, the borrower would be eligible to repay under IBR at a monthly amount of $212. But, if this borrowers total educational debt was $15,000, the 10-year calculated amount would be $173 per month which is less than the IBR amount of $212. This borrower would not be eligible for IBR. For more information on other repayment plans and calculators, click here . Top How Do Borrowers Apply for IBR? For more information and to apply for IBR, you should contact the lender or lenders who hold your student loans. Big hug. Steve @GetOutOfDebtGuy Source: We Are Spending Down Our Savings Trying to Make Ends Meet. – Patch Other Related Articles to Read I’m in Debt to the IRS and Student Loans Only. What Can I Do? – Veronica Website Offers Helpful Advice for Those Looking for Student Loan Forgiveness Tweet This! Email this to a friend? Stumble upon something good? 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Why Does Credit Counseling Drop Us When We Can’t Make The Payment. – Tracy
Tracy wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, My husband and I are self employes and dont make a lot of money.he use to have a steady job before being laid off two yrs ago..we tried consolidating our debt and were kicked out of the program because we couldnt afford the monthly payments..now creditors are calling all day and I dont know what to say..we arent in a position to pay anyone right now..what is going to happen to us? What do we do now and what actions can the credit card companies do to us? Tracy” Dear Tracy, A credit counseling program will drop you when you can’t make the payment because you become a liability to them. When your monthly minimum payment is not enough to satisfy the creditor wishes then the credit counseling program has no further use for you. When they say it’s not about the money, guess what, it’s about the money. It is time for you to find a local bankruptcy attorney , pick up the phone and call to make an appointment for a free bankruptcy consultation . This is not going to get better without intervention or a sudden increase in income. Bankruptcy will stop the calls and end collection attempts. It will close the door on this unmanageable debt for ever. Sometimes the hardest thing to do is the right thing. Big hug. Steve @GetOutOfDebtGuy Source: Why Does Credit Counseling Drop Us When We Can’t Make The Payment. – Tracy Other Related Articles to Read How Do I Handle the One Creditor Not in My Debt Consolidation Plan That is Suing Me? – Tony Bad Credit Debt Consolidation – Brutally Honest Advice How You Can Get Out of Debt Fast Without Filing Bankruptcy I’m Enrolled in a Credit Counseling Program And Thinking About Dropping Out and Paying Creditors Myself. – Wilder I Want to Repay My Debts But I Can’t Stop Using the Credit Cards. – Bonnie Tweet This! Email this to a friend? Stumble upon something good? Share it on StumbleUpon Share this on Facebook Share this on Linkedin Seed this on Newsvine Share this on Technorati Share this on Tipd
I Want a Divorce From My Cheating Husband But We Have This Mortgage. – Stuck
Stuck wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I am seeking to divorce my husband who I have found out is cheating. We live in a no fault state so that is not an issue. However, though the title to the house is in both our names, the main mortgage is in my husbands. I say main because we qualified for the house from a local program that has given us no interest loans (in addition to the main mortgage ) for as long as we live in the house. I need him to leave for my peace of mind. I would like to remain in the house with our child as on my salary alone, I can just afford the bills. However, we now are upside down on our mortgage and I am stuck. What can I do, trying to be fair, to get him to leave. I dont want to move because the house is in my daughters school district. Stuck” Dear Stuck, When you say you can “just afford the bills” that does not leave me with a warm fuzzy feeling. Just getting by is a plotted path towards financial disaster, especially owning a home. What’s the plan when something breaks? I doubt you’ll be able to build an emergency fund as you are “just” getting by. Hum, why not just ask him to leave and if he won’t then evaluate what your priorities are. If your priorities are to get you and your daughter out of that environment then talk to your divorce lawyer about your soon to be ex-husband taking over the house and you move out to rent in the district. This might be a better time to consider breaking your financial ties together, consider bankruptcy , hand the house back to the bank since it has no equity and get alimony and child support from your husband along with a fresh start. That is not an unreasonable plan based on where you might want to move forward with your life from this point. Consider this, if the main mortgage is in your husband’s name and you guys split and he falls behind on the mortgage or stops paying it, the house gets foreclosed on and you get evicted. Big hug. Steve @GetOutOfDebtGuy Source: I Want a Divorce From My Cheating Husband But We Have This Mortgage. – Stuck Other Related Articles to Read My Wife Gave Away Our House With a Quitclaim Deed. – Patrick My Children Landed Me in Debt. – Jane Karen Writes In “Ex-Husband Isn’t Paying The Bills and He’s Trashed My Credit. What Can I Do to Repair It?” We Got 100% Financing On Our Home But Once the Loan Adjusts We Won’t Be Able to Afford it. – KC I Can’t Make the Mortgage and Feed the Kids. – Lill Tweet This! Email this to a friend? Stumble upon something good? Share it on StumbleUpon Share this on Facebook Share this on Linkedin Seed this on Newsvine Share this on Technorati Share this on Tipd
