I always knew that my management company (or their insurance) would not cover any of my belongings if something were to happen to my apartment. For many years, I never considered my possessions to be of enough value to get any type of insurance coverage. Now that I live on my own and have acquired a lot of “stuff”, I felt the need to get some peace of mind over all of it. Just last year, I was walking home from the subway  and saw a couple buildings down the block from mine go up in flames. The street level had a laundry-mat/dry cleaners in one building and a chinese restaurant in the other, with apartments above both. It could have just as easily been my building that caught on fire that day, and I would haven’t have had any assistance in getting my life back in order.

Recently, I decided to get some peace of mind from fire, theft, plumbing issues, etc. I had read about InsureMe.com as a tool to get quotes from various insurance agencies all in one go. I went to the website and found it very easy to use for all types of insurance (home, auto, health, life, and renter’s to name a few). I proceeded to chose the drop down box for Renter’s insurance, filled out a couple of questions about me, my belongings, and my apartment and was immediately matched with agents.

To my surprise, within a couple of minutes two agents already called me to follow up! I spoke with them both on the phone to learn more about the different types of coverage and get some quotes. They both were able to e-mail me quotes the same day. I went a bit further and asked each one for the rental policy documentation to see what exactly was covered and what wasn’t, so I knew exactly what I was signing up for.

Having the conversations with the agents taught me about what to look for in coverage and industry lingo like “actual value” and “replacement value”.

The quotes varied drastically, so I was happy that shopping around was made so easy with the help of InsureMe. I will definitely use the site again in the future for all of my insurance needs.

Related posts:

1. Path to the Green Light

I have summarized below the 4 realistic repayment options discussed in the article (you’ll see why the 5th one doesn’t count).

Option 1: Repay as scheduled

This is your basic level repayment scenario. Receive a bill each month and pay it on time. The payment amounts can fluctuate quarterly or yearly if it is a variable rate loan (most private loans are).

Due to my personal experience with CitiAssist loans, I’m aware of an additional type of level payment system that Citi provides called graduated repayment. This option adjusts the payments so in early years the payments are smaller and in later years they are larger in order to still have the loan paid off in time.

Option 2: Consolidate Your Loans and Lengthen the Payment Schedule

I think this really applies to federal loans. I’m not sure if its possible to consolidate private loans because they are variable rate (if anyone knows, please post a comment). Federal loans, like my Stafford loans from undergrad were set up to have a 10 year repayment term. Consolidation provides the option to extend that time frame, lowering payments, but resulting in more interest paid over time.

When I consolidated my federal loans in June of 2006, I was able to get a better rate. I opted to keep the 10 year repayment schedule with the lower interest rate. Consolidation may be beneficial for older loans at higher rates, while current loans would maintain the same interest rate but have an extended repayment schedule.

Option 3: Income Based Repayment

This option is definitely only available for federal loans. It has been the topic of much news this past summer because of the cap on the loan payments as a percentage of gross income. Specifically 15% of the income that exceeds 150% of the federal poverty level (according to the article that comes to $16,245 for single individuals). The cap sounds good, but here’s the controversy, any debt not paid off in 25 years is forgiven. Forgiven DOES NOT equal free. The amount forgiven is still taxed as income (Uncle Sam ALWAYS has to get paid).

I think this sounds like an excellent idea for individuals with only federal loans. My concern lies in taking 25 years to pay off this student loan debt. That time span is much longer than I am comfortable with, plus there is the risk that the loan payments are increased for income increases. Graduating college at 22, I could be paying until age 47!

If this option has peaked your interest, Forbes has another article dedicated to the topic of income based repayment, along with a student loan calculator for this repayment method.

Option 4: Deferment and Forbearance

This section is where I learned the difference between two terms I always thought to be synonymous. These options focus on time spans when repaying is not a possibility (i.e. going back to school, getting laid off, starting your own business).

Deferment is when the lender allows the borrower to skip payments for a specific period of time. My CitiAssist loan allows me the flexibility to defer payments for up to 12 months. These 12 months can be used consecutively or intermittently as long as I speak with them in advance. Interest still accrues while payments are deferred and it may be capitalized at the end of each deferment period.

Forbearance is similar because payments can be skipped and interest still accrues. The big catch with forbearance is the final loan payoff date is not pushed back because payments are skipped. So in order to still be paid off by the same final date, the remaining payments are increased or a large balloon payment is added to the end of the loan.

When given the option, I would choose deferment.

Option 5: Defaulting

This one I would like to call the non-option. Defaulting on student loans, both federal or private gets you no where. Collection agencies step in, wages can be garnished, and filing bankruptcy doesn’t help. Student loans will haunt you for the rest of your life, so its best to constantly communicate with the lender and make payments when possible. They even have “rehab” programs to help with making payments.

I think the article provides a very organized breakdown of the choices. I’ve already excersized option 2 and am currently following option 1, but its good to know what other alternatives exist.

Related posts:

1. Want to Deduct Private Student Loan Interest?

I can’t speak for any other generation, but I know that Gen Y college graduates have incurred a lot of debt prior to graduation. Today I’m focusing on the private student loans that helped finance the expensive cost of education.

To be clear, private student loans are usually obtained directly through a bank and are not related to federal subsidized loans.

Examples of private student loans:

• Citibank’s CitiAssist Loans
• Chase Private Student Loans
• Bank of America Private Loans (Note: No new loans were offered this year)

Examples of federal loans:

• Stafford Loans (both subsidized and unsubsidized)
• Parent PLUS Loans
• Graduate PLUS Loans

Gen Y should know that student loan interest up to $2,500 can be deducted from federal income taxes by those who qualify. Federal loan lenders automatically send borrowers a year end statement of interest paid on federal loans for this purpose (Form 1098-E).

What many college grads don’t realize is that private student loans (which in my case amounted to much more than my federal loans) can also qualify for the interest deduction. The catch is that the borrower needs to certify to the bank that the loan was solely used for educational expenses.

How do I certify that my loan interest is qualified?

Use a W-9S IRS form to serve as the necessary certification.

To do: Go to the IRS website and download, fill out and print form W-9S . Mail this form ASAP (to your lender, not the IRS) so your lender receives it before Dec 31st. If your lender receives it before year end all of the interest on your loan paid from this year forward will now qualify for the deduction! Your lender will even send you a 1098-E statement of qualified interest at the end of each year.

This deduction is great for recent grads who are no longer dependents and have an adjusted gross income under $70,000 (borrowers are fully phased out above this level). Another great deduction for May 2008 grads is the tuition and fees deduction ($4,000!).

I hope this little extra knowledge goes a long way!

Related posts:

1. Student Loan Repayment Options

An article in the Wall Street Journal on Tuesday, October 21st  titled “The ‘Trophy Kids’ Go to Work” discusses the challenges a traditional company faces with a new generation of employees. The article focuses on individuals born between 1980 – 2001, referring to this generation as “the millennials”. Before you continue, please read the article to form your own opinion.

Being a part of the millennial generation, the article discusses the couple of years I have been in the workforce. Similar to the students in the intro, I never would have guessed that the first impression my peers and I have given upper management is that we feel entitled to anything.

According to the author, Ron Alsop, “If there is one overriding perception of the millennial generation, it’s that these young people have great — and sometimes outlandish — expectations.” He goes on to say that “they want to be CEO tomorrow“, which is a description I’m proud of. This article and many others about Gen Y in the workforce only bring to light the negative perceptions held by older workers. Here I address some of the comments in the article and present one millennial’s point of view.

“They want to be CEO tomorrow“

Yes, I do want to be CEO tomorrow. At least I know what I want and how to achieve it. I consider my generation very focused, instead of wasting our time with anything we find out what we want and how to get it. And if what we thought we wanted is no longer desired, we can move on instead of finding ourselves in a rut.

“Millennials have a stronger sense of entitlement than older workers”

The article cites a study from CareerBuilder.com stating that millennials feel entitled to higher pay than the older workers did when they joined the workforce. The study prefers to make this blanket statement without realizing that the cost of education is much higher than twenty years ago, leading many millennials join the workforce in debt. It also disregards that this generation although officially joining the workforce full time after college, has the most work experience through internships and part time work prior to graduation of any generation. So, if coming through the door with an expensive education and already knowing many of the ropes doesn’t demand higher pay, what does?

We also don’t see any harm in wearing flip flops TO the office as long as we appear well groomed IN the office, or wearing our Ipods at our desks as long as the work gets done and we dont’ miss any calls. These feelings come from a sense of not wanting to hate work. We understand how much of our lives are spent at work, so why not make it a pleasant experience. Firms that recruit us tell us they value work life balance and we believed them. In the recruiting process, no one mentioned that work life balance doesn’t apply to first years because we haven’t earned it yet.

“These outspoken young people tend to be highly opinionated and fearlessly challenge recruiters and bosses”

I come from a generation that challenged my parents in their ways of thinking. In high school we challenged our teachers, and in college our professors because we feel that our opinions matter and recognize that just because you’re older, it doesn’t mean you are right. It comes naturally to us to want to be heard at the office, we have fresh innovative ideas, and a good idea is a good idea, no matter what level of hierachy came up with it.

“Millennials were bred for achievement”

The millennial generation was raised to be well rounded. As early as elementary school, children are taught that good grades aren’t enough. Sports and extra-curricular activities are important. In high school, guidance counselors continuously articulate the importance of the well rounded student. This generation has been working hard from an early age.

With all of this hard work, comes the ability to play hard. Constantly surrounded by technology, the millennials have mastered the art of completing necessary work, while at the same time enjoying the benefits of technology. We are the ultimate multi-tasking generation, watching TV, listening to music and doing algebra homework at the same time.

“We are multi-dimensional people living and working in a multi-dimensional world.”

I think this single statement sums up the way I feel. My peers and I don’t feel that our jobs make us who we are, we learned early on to be well rounded individuals. In this economy, the comment, “Be happy you have a job” doesn’t inspire me to work harder. My life isn’t over if I left the traditional workforce. I was raised believing I could be anything I want to be. I envy my peers who have left the corporate world to be their own bosses. I know they worker harder than I do, but at least they know that every task and every action has meaning. They don’t’ need to look for positive reinforcement, because they are living it everyday.

Its also not our fault that we have constantly received positive feedback in our lives. From stickers and candy, to payment for good grades. We are just a product of our environment. When we played soccer on the field, we didn’t create the ultra competitive soccer mom. Maybe the baby boomers need to stop living vicariously through their children and see the that kids they raised are now the young adults joining them in the workforce. I commend the article for ending on this note. Sharing some of the blame so to speak.

The article sheds an interesting light on how I’m treated in the workforce. When I joined my company I was told that they only hire the best and the brightest. I’m sure each of my peers at their respective firms was told the same. So here we are, Ready to be CEO tomorrow.

No related posts.