It does hurt. On average, 2011 graduates carry almost $23,000 in student loans each, the highest debt load ever, according to the Wall Street Journal. I would call this a giant debt avalanche. According to various sources, total amount of student debt is somewhere between $850 billions and $1 trillion. For the first time it has overtaken the total balance of credit card debt, and almost 40% of students are in default. And these loans are yours till death does you apart, with practically no way out. The outrageous tuition, higher interest rates and lack of employment because of ongoing recession are the three obvious reasons.
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Loans, Student Loans
As I mentioned in December 2010 in Economy is improving? I don’t think so, any economy two-thirds of which based on consumer spending has problems and big ones. And the US consumers will buy much less now as Chinese-made goods will get more expensive and gas prices are about to reach $5 per gallon. Both charts clearly show the Chinese yuan rising drastically in value against the US dollar in the last two to three weeks. The price of everything made in China will be going higher. And Walmart which caters to a huge number of US consumers and sells more of Chinese made goods than other retailers, seeing the problem.
CEO of Walmart, Mike Duke noticed something rather unsettling – Walmart shoppers, most of whom live quite literally paycheck to paycheck and shop in bulk at the beginning of the month when the paychecks come in, frequent the stores less and buying less.
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Economy
Q: Do I have to pay tax after a short sale? I am selling my house short and the neighbor told me that the IRS requires lenders issue form 1099C for all debt that was forgiven. In my case, it is almost $70,000 and paying taxes on that much will be impossible.
A: Is this short sale on your primary residence? If yes, you should be fine, because The Mortgage Debt Relief Act of 2007 does not consider forgiven debt on your principal residence as a taxable income for either short sale or foreclosure. It also applies for debt reduced through mortgage restructuring. This provision is valid for up to $2 million in debt for a married couple, forgiven from 2007 through 2012.
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Short Sale, Tax
You can find plenty of advise and instruction, some good and some not so, on how to establish credit. The other question that a lot people ask these days is what time is needed to establish credit history to be able to get loans. Interest rates have been low for a long time and seemingly everyone expects them to go higher. Home prices have been going lower every day and just as well, everyone thinks that they are bottoming and will bounce back. So every new college grad with a job or a fresh of the boat immigrant is in a hurry to establish credit history, get the credit score and score that house.
For the record, I think that interest rate will stay low for quite a while, while home prices will be going down, albeit slower.
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Credit, Establish Credit
Q: I have 716 and 732 credit scores, pulled from myFICO. I have 4 small credit card balances and one very large one with Bank of America for $23,300. I am really hoping to get some debt relief from BoA and must try to settle. If I can settle, I would be able to quickly pay off the remaining credit cards. Can I request a debt relief if I have never been late with credit card payments? I do not want to stop paying to preserve my scores. Right now, I am only able to pay the minimum monthly payments, but at this rate I will never get it paid off. At the start of 2010, my salary dropped by $18,000 and I have lived from paycheck to paycheck.
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America, Debt Relief
A mortgage prequalification is the very first step of home loan application process. Typical prequalification is issued by a loan officer and more than often based on ball park numbers which you provide, including salary and recurring expenses to estimate approximate maximum loan amount you may eventually be approved for. Your credit report is normally not pulled at this stage and no cost or obligation on behalf of either party is involved. So while a mortgage prequalification helps determine the dollar value of a potential loan, it is not by any stretch, a commitment to lend you money. A loan officer can’t make an approval in any shape or form, but give you a prequalification letter which you can use when making an offer on a property.
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