7 Real People Who Are Winning Their Fight With Debt

Spain, France debt costs rise on new euro crisis fears

She’s been debt-free since May 21, 2013. 5. Harvard Business School grad Joe Mihalic graduated with $101,000 worth of student loan debt and decided to pay it off in under get out of debt a year. Joe MihalicWho he is: Joe , 30, of Austin Texas works as a pricing analyst for a tech firm. His debt wake-up call: “I graduated from Harvard Business School with my MBA and $95,000 worth of student loans ($101,00 including accumulated interest) in 2009 at the age of 26. Since graduation, Ive made 21 monthly loan payments at $1,057 each. After paying $22k towards my $101k of loans, the balance stood at $90,717. It [was] absurd.” How he did it: Joe took a two-pronged approach, decreasing his spending and increasing his revenue. He got a weekend gig as a pedicab driver, started a landscaping business with his friend, bought a flask to skimp on booze spending, got a roommate for his Austin home, temporarily stopped his 401(k) contributions, and did the usual lunch-eating, restaurant-skipping money-saving tricks. It worked. In under a year, he shaved off his entire debt-load. 6. Jordann Brown, 23, faced $53,000 in student loan and auto debt after graduating college. A year later, she only has $7,000 left to pay off. Jordann BrownWho she is: Jordann , 23, is a marketing professional living in Atlantic, Canada. Her debt wake-up call: “I grew up with the misconceived idea that I would go to university, get a killer job right out of school, and spend the rest of my life traveling, buying whatever I want, and generally living ‘the dream.’ Unfortunately, due to something called reality, that lifestyle is not an option. Even though Ive made the ‘right’ decisions, Ive still ended up in a pile of debt, which has put my ideal lifestyle out of reach.” How she paid it off: Brown lucked out when she found out the Canadian government offered debt relief for students who graduated on time. That erased $16,000 of her debt right off the bat. A cushy tax refund helped chip another $5,000 off the balance. The rest was a lot of hard work. She took a side gig as a freelance writer and made some money off her own blog, while also extremely cutting her expenses. She still managed to contribute to her emergency savings and plan her wedding in the meantime. Not too shabby. 7. Bridget Casey, 27, is on her way to turning $20,500 worth of student loans into smoke in less than two years. Bridget CaseyWho she is: Bridget , 27, is a young professional from Edmonton, Alberta, Canada. Her debt wake-up call: There was no ‘ah-ha’ moment for Casey.
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Credit: Reuters/Michael Dalder By Paul Day MADRID | Thu Jul 4, 2013 4:25pm BST MADRID (Reuters) – Spanish and French borrowing costs rose on Thursday as political turmoil in Portugal fanned fears the euro zone crisis will reignite, although the higher returns offered drew good demand for both bond sales. A rift within Portugal’s governing coalition following the resignations of two ministers this week has pushed up yields on bonds of more indebted euro zone countries and favoured safe-haven paper. Portugal’s own 10-year yields shot above 8 percent for a time on Wednesday but have since fallen back a bit. Analysts said cheaper prices after a month in which markets have contemplated both a revival of Europe’s crisis and an eventual end to central bank stimulus had helped underpin demand at Spain’s 4 billion euro ($5.2 billion) auction and the 7.99 billion euro ($10.36 billion) French sale. “While yesterday’s dramatic sell-off in Portugal shows peripheral bond markets retain their capacity for brutal price action, the market reaction in Spain and, in particular, Italy has been relatively muted,” said Nicholas Spiro, managing director at Spiro Sovereign Strategy. “The rally in peripheral debt went into reverse some time ago. This is a much more volatile, and a much less forgiving, market environment for Spanish bond sales.” Spain sold 3 billion euros of a new five-year bond and 1 billion euros of an existing three-year bond, while France sold 10- and 15-year bonds. Both auctions raised all or nearly all their maximum targeted amounts. Spain paid between 17 and 20 basis points more than it had to sell similarly-dated debt last month, and the 3.792 percent yield on the five-year bond was the highest since February. France saw its debt costs rise by 26-28 basis points from auctions last month, to 2.32 percent for the 10-year OAT, although its secondary market yields have fallen this week as investors sought out highly rated debt. Demand was robust at both sales, with demand for the four bonds outstripping supply by between 1.7 and 3.5 times. CREEPING CAUTION Spain, which was among countries at the forefront of the euro zone’s debt crisis last year, has now raised almost 67 percent of its 2013 bond issuance target. It took advantage early in the year of demand for higher-yielding debt from investors flush with cash pumped in by global central banks. Signals from the U.S. Federal Reserve that it will soon start scaling back its massive money-printing programme have roiled markets in the last month, however, with fresh political tensions in Portugal and Greece also hitting confidence. Spain’s benchmark 10-year bond yield rose to around 4.8 percent on Thursday from a May low of 4 percent but is still a long way from its peak of over 7.6 percent, hit last July before the ECB pledged to do whatever was needed to defend the euro. Portugal’s prime minister, Pedro Passos Coelho, and junior coalition party CDS-PP were seeking on Thursday to heal a rift that risks derailing Lisbon’s exit from its European Union/International Monetary Fund bailout. Aid payments Greece needs to keep afloat could meanwhile be frozen after Athens said on Wednesday it would not meet targets on reforming its public sector by an end-of-the-week deadline set by its international lenders. The European Central Bank left interest rates unchanged at its monthly meeting on Thursday, and ECB President Mario Draghi sought to reassure investors rattled by the resurgent political worries and the prospect the Fed will stop printing money. Draghi said the ECB will keep interest rates at record lows for an extended period and could yet cut them further, the first time he has offered such forward guidance. (Additional reporting by Catherine Bremer in Paris; Editing by Catherine Evans)
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Student debt: A hard lesson in higher education

Older folks can talk all they want about how tough it was back in the day but when you weigh the facts, its clear the odds are stacked against young people with moderate means, who are looking to move up the social ladder. The reward It may be a little tougher in the current economy but hitting the books after high school has its rewards. According to Statistics Canada the unemployment rate for Canadians aged 18 to 25 is roughly double the overall jobless rate of just over 7 per cent. A closer look at the numbers over the past decade reveals fewer and fewer of the few jobs out there are full-time with the generous benefit packages enjoyed by previous generations. However, the alternative to a post-secondary education are far worse . In the 2011 census Stats Can reported 82 per cent of university graduates were employed, compared with 56 per cent who had no certificate, diploma or degree from college. The cost Statistics Canada estimates tuition for the average undergraduate college or university student in Canada is approaching $5,500. That doesnt include books, rent, transportation, food or other costs. A recent study by Knowledge First Financial estimates a 4-year program starting this September would cost a total of $81,800 including residence. If a residence is provided the total cost would be $48,900. The risk According to a recent Bank of Montreal poll 58 per cent of students surveyed said they expect to graduate with more than $20,000 in debt and 21 per cent expect to owe more than $40,000 when they enter the workforce. Most lenders require loan repayments to begin within 12 months of graduation. A survey by the Canada Student loan program finds most students take about 10 years to pay their debt off. The fixed interest rate is bank prime plus 5 per cent, which currently totals 8 per cent. The floating rate is bank prime plus 2.5 per cent, currently 5.5 per cent. To put that in perspective, at 5.5 per cent monthly payments of $434 on a 10-year loan of $40,000 generates total interest of $12,100. But interest rates are at record lows and have nowhere to go but up. If you compare todays 3 per cent prime rate to the 15 per cent prime rate in 1990, the floating rate for a student loan would be 18 per cent. In comparison, at 18 per cent a $40,000 loan would require monthly payments of $720 and generate $46,500 in interest over a ten-year period. The plan There is no easy solution to pay for an education other than saving as much as possible and finding a job between classes. Parents can get a jump-start by contributing to a registered education savings plan (RESP) when a child is young. Ottawa will match 20 per cent of an annual RESP contribution up to $500 to a lifetime maximum of $7,200. Investment gains are taxed in the hands of the student which is usually zero. A tax free savings account (TFSA) has the same tax-free growth advantages without the government contribution. Young adults who find themselves still burdened with student debt should consider postponing registered retirement savings plan (RRSP) contributions until their higher-income years when bigger tax savings can be realized. In the meantime, they should look for ways to pay off the balance with lower interest loans such as a secured line of credit on a home. In many cases, homeowners can wrap their student loans into their mortgage if the rate is good. Pagination
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