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Conquering a mountain of student debt

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The financial realities of tertiary education are seeing increasing numbers of students having to take out loans in order to fund their education; this coupled with the fact that jobs are harder to come by and cost of living expenses continue to climb, means it is taking students far longer to conquer their mountain of student debt.

Cause of the problem

The cause of the problem is substantial increases in the cost of education in the last decade, exacerbated by poor money management skills. The increase in the price of education has resulted in many matriculants abandoning their dreams of furthering their education while others, in order to study further, can trap themselves in debt many years before they’ll ever draw their first salary cheque.

The National Student Financial Aid Scheme (NSFAS) has paid out in excess of R9-billion in bursaries and loans. Although the uptake of loans is at an all-time high, the organisation recovers a mere R400-million a year in student repayments. High unemployment rates in South Africa are thought to be the main cause of this poor recovery rate. And with delayed payments, students are having to pay increasing interest on the borrowed sum – a state of affairs that could easily spiral out of control and lock young adults into a debt cycle for many years to come.

But it isn’t all doom and gloom. It is possible to minimise the negative impact on a student’s financial future by following these 8 tips.

  1. Know the costs involved. It is important that students who take out student loans are aware of the costs involved and make sure they are informed about how to structure a repayment plan. To avoid any nasty financial surprises down the line it is imperative that you understand, fully, the real costs associated with furthering your education: not only course fees, but additional expenses like textbooks, registration fees and technology which could include laptops, tablets and other study equipment associated with your studies. Draw up a budget when you graduate and include a payment schedule that will see your loan paid off within four years.

If you would prefer to take out a smaller loan for the odd item here and there, cash loan providers like wonga.com offer small loan amounts repaid over a shorter period of time.

  1. Get a handle on your lender. Never touch a loan unless it is provided by a well-known, registered bank or institution. Always speak to your bank first for sound financial advice.
  1. Quick question: What do you owe? You should be able to answer this question immediately and without hesitation.
  1. Make a plan. Your regular payments plan should be set out by the time you graduate. If you understand the full terms and conditions of your loan, you will know that missing a payment will result in additional interest being charged on the loan, resulting in your debt growing instead of diminishing over time.
  1. No pain, no gain. It’s a fact of life. You will need to forego spending money on luxuries and trend items until you have paid off your loan. Practice good financial discipline from the start; you’ll avoid paying out extra interest on delayed payments.
  1. Consistency is the name of the game. You may not have had much luck yet trying to find a job but whatever you do, never stop paying your loan. In the real world, your grades are not the only score you need to worry about – your credit score has the power to seriously hurt your financial future. These scores are often used by insurance companies to determine your risk profile which could see you paying higher premiums, as well as prospective employers who can use your score to gauge your level of financial responsibility. So, contact the lender and arrange an affordable repayment solution. But do not stop paying altogether!
  1. Keep your lender on speed dial. You could be penalised if you change your phone number or address without telling you lender so make sure you stay in touch until that loan is paid off.
  1. If in doubt, ask. A Certified Financial Planner can help you with the entire student loan process so if you have any doubts, you do not have to go it alone.

Student loan resources:

For a list of bursaries and scholarships see here

The National Student Financial Aid Scheme (NSFAS) is the South African government student loan and bursary scheme. They provide loans and bursaries to students at all 25 public universities and 50 public TVET colleges throughout the country.

Eduloan is an education finance specialist operating in Southern Africa. Since 1996 they have awarded over 750 000 study loans to the value of more than R4 billion.

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Google ad revenue surpasses all of print media – Smarter Investing

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Google ad revenue surpasses all of print media – Smarter Investing

Three weeks ago, we reported on the rise of online advertising. Over the past few years, online ads have quickly grown past newspaper and magazine
investing.covestor.com/…/google-ad-revenue-surpasses-all-of-…

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Why Strict Investing Standards Rule (AFL, HAS, MSA, UPS)

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Why Strict Investing Standards Rule (AFL, HAS, MSA, UPS)

The Motley Fool – They help weed out companies priced for perfection and leave the field open for those set up to succeed in our imperfect reality.
www.fool.com/…/why-strict-investing-standards-rule.aspx

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Your Questions About Investing In Pattaya

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John asks…

Cost of Living in Thailand

I am looking at taking some time out of my life and spending about 6 months living in Pattaya, Thailand. Can anyone give me insight into life in Thailand, The South Pacific, or Asia. Could you also let me know about the safety of the country the cost of living so on and so forth.

Justin answers:

Well unless your Thai or over fifty and have 800,000 baht or have a job in Thailand or have 2,000,000 baht to invest, you’ll only be able to stay in Thailand for 3 months maximum. After that you’ll have to move to Cambodia or Vietnam.

If you stay in a hostel for $10 (335 Baht) buck a night you could probably live on $2500 for three months but that’s not including drinking and girls. An average hotel for 90 days will be about $3000 (1000 baht a night) a girl will run about 1500 baht or so a night with bar fines and a drink or two ($50US). If you eat on the streets for is about $1 or so per meal and bottled water is 8baht (.25). Its pretty safe just don’t get too drunk without friends around and don’t be a knucklehead and you should be fine.

Richard asks…

How can i raise a complaint against a Thai Lawyer who i believe cheated me.?

Caught up in a Property Scam in Thailand by an English guy in Pattaya Thailand. Turns out he already got away with £2,000,000 there in 2005. I lost £60K. The Lawyer who i employed to raise the Arrest Warrant on him ,did not do it.He sent me a copy of some other guys arrest warrant in Thai.I had it translated by a reputable Law firm in Bangkok. I believe now that the Pattaya Lawyer was in on the Scam .He kept saying for one year that he never seen the guy in question but in his last e mail in January he had actually spoken to the guy much earlier in the year He would not refund my £1000 pounds i and others had paid him to raise the arrest warrants..

Justin answers:

Investing in Pattaya? Better thinking next time.

I’m guessing there is very little documented proof of what happened. And there is no result even if there is a place to file a complaint. That’s why in situations like these the problem is usually handled with hired muscle, not that I’m advocating it but that’s what usually happens. Careful you don’t end up on the receiving end because that is very common.

Robert asks…

stockmarket share increase .?

which hotel will u invest? in chiang mai or pattaya?

Justin answers:

Chiang Mai

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Your Questions About Advantages And Disadvantages Of Gold Investment

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Thomas asks…

Has John Stossel begun channeling Ron Paul on the economy and disasterous bailouts?

“If an athlete injures himself and suffers great pain, we’d recognize the shortsightedness of giving him painkillers to keep him going. The pain might be masked, but at the risk of greater injury later.

That’s a good analogy for the inflationary policies now pursued by Washington. These policies may temporarily “stimulate the economy,” but they also disguise and aggravate the underlying problems. We will all pay a serious price.

Policy makers have thrown caution to the wind. Twelve-digit dollar figures are tossed about casually. The other day, after Treasury Secretary Henry Paulson changed course — yet again — and announced that the Federal Reserve would commit $800 billion more in “new loans and debt purchases,” The New York Times reported, “Fed and Treasury officials made it clear that the sky was the limit.”

The total federal commitment to date is over $7 trillion.

The Fed had given up trying to make it easier for banks to lend to each. Now, the Times reports, it “is directly subsidizing lower mortgage rates … doing so by printing unprecedented amounts of money, which would eventually create inflationary pressures if it were to continue unabated.”

No kidding.

When we hear that the U.S. Treasury is doing this or the Federal Reserve is doing that, we should remember that these agencies are run by mere mortals, and as such, they cannot know how to “fix” something as complex as an economy. But they certainly are capable of wrecking one.

That’s what their inflationary policies will do.

In a free market, prices do more than tell us what we have to pay for things. They are messages emitted by an intricate communications system that inform us of the relative scarcity of resources, labor and consumer goods, and the relative intensity of consumer demand. Thanks to prices, we can tell producers how we rank our preferences, and they in turn can arrange production according to our priorities. Without prices, economic coordination is impossible, which is why attempts at state planning produce, in Ludwig von Mises’s words, “planned chaos.”

We associate inflation with a rising price level, but equally important, relative prices change when new money is created. That garbles the messages. As Mises writes, “The additional quantity of money does not find its way at first into the pockets of all individuals; … [P]rice changes which are the result of inflation start with some commodities and services only. … [T]here is a shift of wealth and income between different social groups.”

The Fed gives money to AIG or Citicorp, but not to Lehman Brothers, or you and me. The new bank reserves also push interest rates below what the market would have set, further distorting production by encouraging investment plans to be made on the basis of artificially low rates.

How can the economy straighten itself out if it is being systematically skewed by government inference with prices?

We are in the mess we’re in precisely because of earlier government interference. Easy mortgage terms and guarantees contrived a housing boom and irresponsible lending that could not be sustained. The consequences have shaken the foundation of the financial industry. But instead of freeing the market and allowing the errors to be corrected, the government is seducing the economy into a whole new set of errors. That will lead to the next bust.

http://townhall.com/columnists/JohnStossel/2008/12/03/government_sets_us_up_for_the_next_bust?page=full

Do you think Stossel and Ron Paul are right?
Slew, oh, I agree. Ron Paul didn’t invent sliced bread, he’s just the one beating his head against the wall in Congress trying to persuade others it actually exists.

financi4 answers:

Ron Paul seems to be the only national politician that understands basic economics.

Why?
At an early age he learned how to turn a product { production of milk } into a profitable family business.
At the same time he must have seen the expense involved in his family business, and learned from his father and uncle how to budget the money they made to pay for the business expenses and at the same time take enough money out of the business to feed their large families, and save some for any emergency expense.

Apparently, the other politicians/bankers of today have never earned their keep in a production type business.

Thomas Jefferson and many of the other founders were farmers that produced products of value.
They insisted on trading their products for other valuable production type products, Silver, Gold, Copper, etc. That stayed about the same in real value, all over the world.

They demanded in the Constitution that nothing but Silver/Gold be used as money, because they very wisely knew that bankers would figure ways to debouch paper currency, to their advantage and the producers disadvantage.
America later became the most prosperious nation on earth following the monetary guidelines set in the Constitution.

We can plainly see that in society today where minimum wage production workers are the working poor.
Ask any young American kid what he wants to be when he grows up and most will respond with super athlete or super entertainer, nobody wants to produce anything because of the current inequality in wages since America went off of the Gold/Silver standard.

Dr. No, Ron Paul is RIGHT about monetary affairs but needs more like minded people in government to help and agree with him to turn the USS America into a profitable ship once again, before it sinks completely from sight.

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Your Questions About Stocks And Bonds

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Ken asks…

how can I invest my IRA money into stocks and bonds?

I have an IRA account invested in a bank, How can I use that to invest in other things such as stock trading or mutual funds. And I need to know more about what Mutual Funds are.

financi4 answers:

Easily, you can move your account to either a brokerage firm or mutual fund company. The bank can do that too (most have their own brokerage firm) but a bank broker is going to have fewer investment options.

But before you do that, do some homework. Go buy “Investing for Dummies” and learn how to choose your investments. You can’t trust your friends (and not these boards for sure) to pick your investments. You can hire a pro, and it is worth it if you have a large account, but for little investors, the cost of that help gives you noticably less to invest (advice isn’t fee), so it is good to start out on your own.

As to stocks and bonds vs funds, stick to funds until you have at least $50-100K. It is almost impossible to build a good portfolio with individual securities with less than that.

And to your last question,

a mutual fund is a professionally managed portfolio of different securities. They can hold stocks only, bonds only, a mixture of both and other types of securities.

Instead of you trying to buy all those different securities you need to design a good portfolio, the fund has done it for you with your money and the money of other investors. You buy shares in the fund instead.

This gives you the same risk/reward potential as a bigger investor.

Daniel asks…

how can I invest my IRA money into stocks and bonds?

I have an IRA account invested in a bank, How can I use that to invest in other things such as stock trading or mutual funds. And I need to know more about what Mutual Funds are.

financi4 answers:

You can invest your IRA in stocks and bonds by opening a brokerage account. Your broker will give you the specifics.

The definition for “Mutual Fund” from Wikipedia:
A mutual fund is a form of collective investment that pools money from many investors and invests the money in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager trades the fund’s underlying securities, realizing capital gains or loss, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors.

Let’s look at Investment Company of America (ICA), owned and operated by American Funds (AF). AF is an awesome fund company for a couple of reasons. There are several advantages and disadvantages:

1.AF is a private company which means they only answer to their MF holders. Fidelity is a good company also, but they are owned by stock holders. In the long run the company that only answers to you, the MF holder, is going to look out for your best interests.

2.AF also has some of the lowest annual fees to maintain an account of any MF company. All that being said, depending on your situation ICA may or may not be good for you. You need a competent advisor to help you with that.

3.I would be cautious with ICA as it is one of the largest MF in the world. They may seem like a good thing but it actually can be bad. It means it has much less flexibility to move its money around when conditions warrant it.

4.As far as EJ goes, they hire people on average who have very little experience in the industry, so at a minimum make sure your rep has a lot of experience and didn’t just start last month at this. They also have agreements with companies like American Funds where their reps get a bigger commission to them then they do with other products. The concern being your advice from EJ might be tainted by the reps desire to get more commission. You need to work with an independent rep to assist you with you decisions; one who will give you all the information and doesn’t have a hidden agenda.

Now let’s look at MF’s, in general, or the decision to use one at all.

If you invest in a MF, you have turned that responsibility over to someone else. To me, they are mostly the same, in general, in terms of results. Fewer than 10% can beat the Dow or other index it follows because of their fees. Why would you pay someone you don’t know, whom will almost certainly underperform the market, an annual fee of 2.5% to do something you can do yourself, and do it better by buying an ETF, without any input from you after the initial purchase? An ETF is a publicly traded “Exchange Traded Fund, that trades just like a stock). Just buy the Diamonds (the DJIA ETF) if you want to let it ride on the Dow, or the Spyders (SPY – the S&P 500 ETF), or the Nasdaq (QQQQ), or diversify across the entire market by buying all three. The ETF’s trade just like a stock or MF. If you want to diversify, and you want to Buy and Hold, buy an ETF.

A MF is always “in” the market, so you are at the mercy of the ups and downs of the Dow. Since you don’t manage your risk, but have turned that over to someone else, you can’t put a Protective Stop on a MF, at say a 10% loss, to lock in your profits when the market goes down. Since you spend more time watching TV, or more time deciding the color of your new car, than you do on learning how to manage money, you don’t have a clue what’s going to happen. That is not my idea of investing.

Actually, if done properly, it is more work to investigate all of the MF’s and their advisors and their traders and their fees and their methods, than it is to investigate all the similar applicable info about stocks. You shouldn’t choose to be ignorant, regardless of your investment vehicle, and just blindly turn your money over to a stranger because they are “listed,” like you do at a bank. Some MF’s are downright reckless and go out of business. Stocks are “listed,” as are commodities and ETF’s and everything else. With a mutual fund, you’ve just added a whole new set of unknowns to the equation, simply because you don’t want to know anything about it.

The market is a living thing that does what it wants, and will go where it wants, when it wants. Nobody knows these things. Your question seems to interject that somebody has “The Answer.” The best you can do in any investment is try to increase your odds of success and reduce your risk. You can do these things yourself, but not in a mutual fund.

MF’s are so 20th Century. Relics of the past. Unneccessary. Buy an ETF. Or sell an ETF short and bet on the downside. There are two sides to every market, not just the upside.

James asks…

At 27 I’m unaware of what stocks and bonds are. Can anyone shine a light?

I have been invested in my company for over 4 years, and I’m not sure if my investments are good? How do I know what to look for in putting my money into a stock or bond? Are their specific companies that I need to look for to stay away from or put more into?

financi4 answers:

When you purchase a stock you are purchsing a miniscule portion of company ownership. You make money if the stock price goes up. The stock price goes up when the company’s value increases. The company may also return some portion of the profits back to its shareholders. This is called a dividend.

When you purchase a bond you are essentially loaning a company or governement money for an agreed upon interest rate and duration.

I have a blog that discusses this type of basic information on the stock market and finance in general. I think you might find a lot of answers there. The link below is to an article that I wrote that specifically addresses what stocks, bonds and mutual funds are.

Http://familymanfinance.blogspot.com/2011/06/primer-what-is-stock-market.html

David asks…

Cds, stocks, bonds, or just save it?

I have recieved a settlement of a certain amount and I wanted to put 65000 in a structured thing, so that i will have only monthly installments and nothing else…A friend is suggesting CDs, because they have interest that I can just live off of….But I cant find anything thats enough in interest to live off of. Im still researching, and just need some opinions….

financi4 answers:

Sorry to say but living off the interest of 65000 is not possible. Don’t email that first guy either.

CD’s are safest
talk to a professional

Chris asks…

What are stocks and Bonds? How can i make oney with them?

I need to make more money so Im looking for anyway possible. I heard buy stocks andbond and investing an watever can help..but i know nothing of so does any have like a guy or can anyone just explain it to me. Tips and advice please

financi4 answers:

Well it really depends on how you need to make money.. Investing is great and you should definitely do it but everyone is different

here are things to consider.. Are you young and can make a risky investment to try to get a bigger reward.. Or are you older and need to retire so you want your money to be relatively safe or are you just looking for a little income on the side

because there are two main types of stocks, growth and income.

Growth is a stocks that is say $10 per share and in time grows higher and higher like google did from $20 a share to $515 dollars a share.. Thats a big money maker.. But growth stocks are also risky and you could have seen you $20 a share drop to $1 a share, if yahoo had beat google out.

Then income stocks are like cocacola.. They have grown so big they really can’t grow anymore so now they are just an income stock and the price of there only moves slightly.. So COKE price of stock stays roughly around the $50 dollar mark and it has a steady Dividend of $1.. So that means for every share of COKE you own you get $1 when they pay dividend’s which can be 0-4 times a year depending on the board of directors.. So if you bought 1000 shares of COKE when they pay dividends you would get $1000 dollars

then Bonds are good for a safe investment for those retiring in a few years or to save for your kids college fund.. You can buy a bond and the company has a date where they promise to pay you back.. It’s usualy like 5 – 10 years and so you pay them say $1000 dollars and in 10 years they pay you back $1300 dollars(thats a nice 30% net profit for 10 years)

so I hope that helps.. But you need to learn how to research a company to make sure they are financially stable to pay a bond or stock that way they dont go bankrupt and you lose all your money.. So you really need to read a book.. Just an investment for dummies book is good or any other basic personal investment book

HAVE A GREAT DAY!

George asks…

Why do you think the stock market lost a trillion this week and would it be wise to move stocks into bonds?

I’m 25 years old and yes I have money in the stock market and I currently transferred my money into bonds this week and have not lost a single cent, not sure for the long term if this will be effective as it was this week. Thank you for your help. ;-)

financi4 answers:

Long term investors will keep their money in the market. This is the absolute best time you want to be in the market, when prices are low.

Consumer confidence is down. Profits are down. That’s why people are selling their positions.

Thomas asks…

I want ot learn more about stocks and bonds, so I can invest properly. How do I go to college for that?

I mainly want to be way better informed because when I watch these money shows on t.v. nothing makes sense.

financi4 answers:

If you are going to college you go for a finance major or international finance major. These are the two areas that will concentrate you on the in’s and out’s of the measurements of money and the concept of time value and how it applies to returns on investments. There is no quick way to know everything it is too comprehensive. If you want to master the concepts research becoming a CFA (Chartered Financial Analyst) this is one of the most prestigous monikers in the financial world. Also don’t think watching CNBC will teach you, most of the time this is what we refer to as “noise”, start reading the Wall Street Journal and go buy a value investing book preferably one with the inclusion of Warren Buffet for starters.

Mark asks…

what’s the difference between stocks and bonds and which is better?

Im 28 years old, I just started my 401, and I when aggresive 80%

financi4 answers:

If you need to ask this question you DEFINITELY need to spend some time reading up about them both before you invest ANY money in either of them. The decision to purchase one or the other, or both, depends entirely on your age, your income, your savings balance, and your goals in life, both now and in retirement.

There are RISKs in every kind of investment. You can lose ALL of your investment with stocks, and you can tie up your money in bonds while other investment options could have earned you more money, or you could even buy bonds that are no safer than stocks; not to mention that how you buy, hold and sell both of these will influence your taxes also.

Even having a good financial advisor is no guarantee that you will earn money with your investments, so before you do anything, start reading the basics about these, so that you will have some level of understanding before you do anything. Ask friends who have invested what they think. Be SURE to read about diversification of your investments – at least that way you don’t put all your eggs, and therefore your risk, in one basket.

Good luck to you!

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Crude rises as ECB governor says euro not overvalued

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Crude rises as ECB governor says euro not overvalued

Investing.com – Bottom fishers snapped up nicely priced crude positions on Monday after a key European Central Bank official said the euro wasn't overvalued, which sparked demand for the single currency and sent the dollar falling. French industrial
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