Fun fact! The first speeding law in the U.S. was passed in 1652 in the Colony of New Amsterdam which is New York today. Thou shalt not gallop thine horse or wagon. The fine back then would be equivalent to $150.00 in 2016 dollars. Yikes! Not much has changed.

The average speeding ticket still runs around $150 nationwide, but based on the infraction, fines can range wildly from $50.00 to $2,500.00 and from state to state. Americans shell out about $6 billion annually on our “need to speed.”

For the 8 out of 10 families living paycheck to paycheck an unexpected bill like this is a big deal. The startling reality is that 28% of us cannot handle a financial emergency of even $10.00. We are strapped as a nation and are not prepared for even the most mundane of surprises. And traffic tickets are really sort of a mundane surprise. Most people (ok, not YOU) receive a ticket or two in their lifetime. Between 2010 and 2015 about 1 in 5 drivers did.

Putting it together, most of us can’t afford a ticket, any ticket. And many Americans will reach for the credit card or borrow the money from friends, family, or a lender. Even a payday lender. Because, the consequences of ignoring a citation can be devastating. Let’s face it, fines can continue to grow and in the worst case, you lose your license or car and then how do you get to work? But borrowing the money can mean interest on top of fines. And if you already struggle to make your minimum payments? Danger, Will Robinson, danger.

So, what to do? My recommendation is to get a “baby” emergency fund, set aside in a bank account, as quickly as possible. Aim for $500 to $1,000.00. Another option is to utilize the “grace period” that time between the ticket and the court date, which is approximately 4-6 weeks or a few paydays, to pick up an extra shift, make some side money, or take another part-time job to earn all or part of the cost. If you do use part of your baby emergency fund, make sure you replenish it as soon as possible after you pay your fine.

For higher traffic and criminal justice fees and fines, this can be very difficult and create a huge hardship. So, you need a meticulous plan which requires a written budget, and cutting back on expenses, which may include cancelling unnecessary services such as cable or fancy ring tones, or a monthly subscription service for the short term. But you CAN do it.

Time to think about those dings to the budget that are unexpected, but really very likely to happen at some point. Take the smart step to put some money away “just in case” and get your monthly cash flow under control by knowing where your money is going with a written budget. Be the boss of your money.

 

 

The federal government stopped mailing annual Social Security statements to everyone back in 2011. They are still available, but you have to use the internet.  I don’t mention this earnings statement because I believe the Social Security program is solvent, or have a prediction whether it will be fixed, or even necessarily believe any “projected benefits” will ever be received by the time I am ready to retire. What the statement will tell you is how much you have earned each year, as reported to the Social Security Administration, since you started working and reporting income to the SSA.

We can go back (waaaay back) to 1990 and look at the average net income earned by average Americans over the last 26 years. The SSA reports $20,172.11 in 1990 and $46,640.94 in 2016. Meaning that for average Americans, we take home more than double each year now than we did in 1990. On the bottom of the SSA statement there is a number- your total earnings to date. In other words what you have earned over your working life.

If you worked and earned an average income from 1990-1999 you would have brought home about $209,056.00. From 2000-2009 about $351,192.00. And from 2010-2016 about $304,037.00.  So, if we added the average net income earned and taken home by average Americans from 1990-2016, we get a mind blowing $864,289.00.  Well over three quarters of a million dollars. And many people earn well above that annual average.

So, what do we KEEP? According to the latest statistics? Not much. Some of us have a 401k with auto withdrawal and a match at work. But, around 20% of those with a 401k have loans against the accounts taken to cover financial emergencies!  Savings accounts are in bad shape as well, in 2017 about 57% of Americans have less than $1,000.00 in savings.

Where is it all going? To service debt. At various interest rates, for various reasons. Average Americans are paying their dollars to cars, homes, student loans, credit cards and personal loans. Excluding a mortgage payment, we send creditors a whopping $1181.00 per MONTH or $14,172.00 a year. Many Americans send much more than that to others.

It’s eye-opening, or at least it was for us. Debt is taking our income, payments that we can do other things with. Like save. Or pay cash for cool things. Or support organizations we feel strongly about. If you are ready to take back your income, you can start anytime. Even if you are still paying oodles of interest and have $1.87 in an IRA right now, its never too late to start. Its never too late to grab a hold of your hard-earned income with a plan to take back your earnings from the current situation.

If your income is flying away the moment after payday, it’s time to make it behave. Make a monthly budget and write down where each dollar goes. Give it a job. Be the smart boss over your hard-working money. Your money likes to have a job. “This month you little dollar, yes YOU, will pay the water bill! YAY!”. If you want an easy to use, free online budgeting tool, I recommend Every Dollar.  Money stress really begins when you run out of dollars before you run out of jobs for them to do. Run out of jobs and reassign your money where you want it to work!

graphic from www.indianapublicmedia.org

 

 

Ahhh, student loans. The loans for higher education that about 44 million borrowers owe at an outstanding balance totaling a staggering $1.48 trillion. That is higher than our total US Credit card debt! But national statistics aside, where student loan debt looms over the average family its personal and distressing. The average student loan debt in 2017: $37,172.00! I know, I know, loans have enabled many people to go to school who couldn’t afford it, but nobody foresaw this mess! College costs exceed the cost of inflation! Lots of people don’t finish…

Many students take the loans without really counting the future price of carrying this type of debt. And for those who do not graduate? Well, your loan for the entire semester was disbursed to the school- and you owe it. Student Loan debt is a huge stressor for new college grads, with the monthly payments making it hard to get a car or save for a home .

And there are pretty scary steps that servicers can take when you owe and don’t pay, including garnishing wages and social security checks without a lawsuit. And getting rid of these obligations is not as easy as some others because these loans are typically not dischargeable in an average bankruptcy (for now). Finally, while there are currently NINE different payment plans for federal student loans, some stretch out the terms of the debt for 25-30 years. That is a mortgage!

The only way to get rid of these loans is to have a plan and pay more than the monthly payments. These guys need to be attacked with a vengeance. I mean, who wants to have an education debt for 10-25 years? Or have a high debt to income ratio on their credit report? Yeah, credit reporting includes the total amount of the loans and any balance increases accruing monthly. There are real dangers in these high balances on reports for people who have security clearances or must have a background check for employment. But where to start?

These steps are for federal student loans. For private loans, contact your lender.

First, get your loan balance, monthly payment, status (for each if you have more than one), and type of loan from the National Student Loan Data System (NSLDS). https://www.nsldsfap.ed.gov/nslds_FAP/ Note that there are several types of loans. Federal Family Education Loan (FFEL) and Direct Loans are two common types taken by students, and Parent PLUS loans by parent borrowers. The type of loan is important because not every loan type is available for all payment plans. It’s complicated.

Second, if you have multiple loans over several years, listed as “Loan 1,” Loan 2,” etc. they will be listed by amounts and dates of disbursement. You may benefit from consolidation of the outstanding loans into one or two. Often Unsubsidized and Subsidized are consolidated separately. Subsidized means Congress pays the interest while you are in deferment or forbearance, so they accrue interest differently and have a different character than unsubsidized, where interest accrues immediately upon disbursement. There is a limit to the number of consolidations you can do, and the credit agencies will report it as a “new loan.” This will likely affect your credit score, if you are worried about your FICO.

Third, check out the federal loan “repayment estimator” to look at the payments that may be available. https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action.  CAUTION some plans are based on your loan balances, some are based on your current income and go up in payment every few years, and some require entrance into a program that you must requalify for each year or your loan converts to the “10 year standard plan” with the highest monthly payment. Also, for some programs, the interest will automatically “collateralize” or transform into “principal” added to the loan… and interest then grows on the new principal. READ THE FINE PRINT.

Again, the best way to get out of the student loan mess is to get serious about kicking student loan debt out of your life. Payments above and beyond the minimum are going to make a dent faster than just treading water with monthly payments. I firmly believe no one should be in debt for 25 years to earn a college degree. Seriously, read that again. In debt for 25 years to earn a college degree. But before you can start to make plan, you need to know your “enemy.

https://studentloanhero.com/student-loan-debt-statistics/

ii  https://www.debt.org/students

iii] https://www.cnbc.com/2017/10/17/student-loans-take-a-mental-toll-on-young-people.html

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from The Law Office of Dawn K. Kennedy or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.