Why Millennials Are Not Leaving Home

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Mortgage rates are down slightly again, but first time home buying has slowed down and even dipped. In 2015 the percentage of first time home buyers was at 32%. Contrary to the expectation, the reality is that recent grads and others in the younger portion of the Millennial group have more expenses than other generations.

  • Gas
  • Food
  • Going out
  • Rent
  • Student Loans
  • Car Loans
  • Insurance
  • Retirement

I could rattle off a few more but for now these will do. So lets pick out and explain a few:

Going out: This may seem like an easy one to cut out if your an older generation, but the truth is we like to have fun. Going out makes us forget the rest of the bullshit on this list so no we wont get rid of this one. Now, we might limit how much we go out in a week or month, but not going out at all is not an option when clipping expenses.

Student Loans: This one will keep us from buying homes and living at home the most drastically. The range for some loan balance a month is between $200 and $1,000. That additional expense should be a mortgage payment, and now it is not. The amount on average borrowed for a 4 year education is $30,000, or a good-sized down payment.

SONY DSC
 Source: Unspalsh.com

Insurance: The rising costs of insurance (Medical, Car, etc) is not cheap anymore. In 2015 the average cost for Millennials insurance was $486 a month. Insurance is not wanted but needed, and many of us see it as unnecessary, especially because we can stick to our parents plan until we’re 26.

Retirement: For older generations this might be the saddest reality for the younger generations knowing the fact that 80% of Millennials do not invest. Investing can be anything, but in this case it’s stocks, which are a basic form of investing when you do not know how bonds, annuities, 401k, ROTH or Traditional IRA’s work.

Photo Courtesy: Reuters/Lucy Nicholson

In turn, all these things add up. And if you look at this list of common Millennial expense, the fact that workplace wage increases have been happening do not really help. You can increase the amount of money you pay someone, but it does not matter when their list of expenses grows higher than your increase. One thing that some bigger companies how incorporated into their pay packages (Like having an automatic 401k option) is paying off their workers student loan debt.

Still, living at home seems like a good option and the housing market will continue to slow down if some of these things are not looked at. No one cares or looks at “Net Worth”, or considers the impact of owning a house with tax benefits and and tying it to retirement.

 

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Cover photo: Startup Stock Photos

 

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Why Student Loan Debt Is Out Of Hand

 

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Let me start by saying myself, my sister, most of my friends, and even some of my other family members are in the same boat on this subject. Right now the average 4 year public college/university debt in Massachusetts (Where I live) is $29,391, and the school that I go to has 81% of graduates graduate with debt*. Right when you get out of school you already have almost $30k in debt, over 10 years and a 5% interest rate means $3,150 in repayments, or $263 a month for the next 10 years.untitled-infographic

If those numbers already gave you a headache, then good because you’re reading this and now start to realize how crippling this debt is becoming and it will only get worse. I myself am a Finance major so I will be seeing a lot more of those numbers over the course of my lifetime because everyone will be analyzing and waiting for the student debt bubble to burst.

It is called a bubble because certain people are affected and if it bursts, everyone including those outside of it are affected. The problem is in large part the Government. Since most public Universities are funded through taxes and fees, a schools tuition rises when taxes go up. This will cause a two fold outcome:

  1. More people my age and younger either will not pursue college at all, or choose to not add more to their personal debt by going for a Masters or Ph. D.
  2. People will default left and right because of this now additional expense has gotten so high.

As a society and Americans we pride ourselves on being THE best. That will fall off if more people around the world are either obtaining higher degrees elsewhere, or if Americans altogether cannot afford to get some type of degree. The Government can do something by not adding interest to Govt loans, and overall decrease the cost of going to a public 4 year University/College. It makes sense how private colleges and Universities increase costs because you chose to go there and most likely have the money to do so. But when a PUBLIC school raises costs, it affects the kids and adults who go there a lot more.

college-debt
Photo: cbsnews.com

Now it is not impossible to say that obtaining and  repaying your student loans is not impossible, as it is in most cases where you have 10 years to pay back. But the interest accruing should not be necessary for the U.S. Government. Think about it, the Government charges you to go to school while you pay taxes at your part-time (Or full-time) job to help pay off those interest charges. Double whammy on you.

For a great online calculator to show what your annual income needs to be in order to pay off the amount of loans you have: https://mappingyourfuture.org/paying/debtwizard/index.cfm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Numbers based on 2014 stats from http://ticas.org/posd/map-state-data-2015#overlay=posd/state_data/2015/ma

Other sources: http://www.cnbc.com/2015/06/15/the-high-economic-and-social-costs-of-student-loan-debt.html

Infographic By: Thinc Social

Why You Should Bank Locally

Lifestyle/Money:

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Money is always a sensitive subject. Where you put it and what you do with it should not be.

I for one, hate big banks. My first checking account was with Citizens Bank back in 2010 when I got my first job. I was with them for about 3 years, until I left the University I was at and came back home. The school I attended did not have any Citizens Banks around, and my mother was not a member. It was hard for her to transfer me money, and I did not have a job so me being away from home I could not make deposits or have others do it on my behalf. On top of that because I was not using my account very much and kept a low minimum balance of almost zero dollars, I was charged $10.00 a month in fees when I did not use my account and carried a zero balance. The second I got home I could not believe such a big bank did that kind of thing and I was pissed so I withdrew the little money I had left in it and closed the account.

Now the same thing can be said for the next big bank I chose, Bank of America. They have it setup so you have to have a minimum every month of $25.00, or where we rounded to $7.00 a week transferred between your checking and into your savings, in order to avoid fees. Now the real pain of it all that is you better not need that money because you’ll be slapped with a fee if that balance is not transferred every month. And then you can get around it by once a month, at the end of the month, transferring that money back into your checking. It is a useless cycle and a game I quit as well. When I went to close my account with BofA after almost 2 years of having it open, the guy behind the counter asked why and I told him I was going to a smaller bank, a local community one. He tried swaying me and even told me my account had been in such good shape, that I never carried a zero balance or overdrafted, that I could easily apply and be accepted for their credit card. I smiled and said “I’m all set, but thanks”.

The reason I say all of this is pointless is because now I bank with a very local community green_moneybank. One that donates money to a different charity every month based on a certain pledged dollar amount from however many checking accounts they open that month. There are only two locations of this bank, and yet they charge me absolutely zero fees a month for having an account and not using it if I do not want to. No minimum balances, and no monthly fees. All I had to do was start it with $10.00, that’s it. There are many deals like this if you look around you.

Some sources to bank at, other than a big bank:

  1. Credit Unions.
  2. Online banks (Simple, CapitalOne 360, Barclays.)
  3. Local banks (Such as the one I go to, they usually have no more than 2 or 3 locations.)
  4. Regional banks (Banks only found in your state.)

Many local banks will give you better options at getting a car loan, or a loan for a home with a good mortgage rate %. It is important to pay attention to how the banks go about their business, and what that means for you in return. There is no reason to pay ridiculous fees today to put your money someplace, and it is the ones who care the most (Like a local bank), that will show you. There is nothing wrong with banking at a big bank, just look at the fees and make sure you know how to get around being hit with them every month. And if that does not suit you, switch locally.

 

 

 

 

This was an unpaid post.

Why Free College Is A Dumb Idea

 

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Photo: http://urbantastebuds.wpengine.netdna-cdn.com

                There are few things hotter in the mind of Millennial’s and the generation under us than free college. It is being talked about on the campaign trail and is being spoken of nationally as a debate raging on with the youth on one side and the older generations representatives on the other. It all stems from good reason: The student loan debt bubble that has formed. The younger generations either going to be, currently in, or have gone to college within the last lets say 10 years are in the bubble with an enormous amount of debt, so much that the cost of living rising and wages not growing enough across the board to keep up with both has brought us to the issue of free college.

college-debt
Photo: cbsnews.com

Although I am part of this issue very much as anyone else in my generation of Millennial’s, I see the issue from both sides. Some of the arguments for free college are not feasible, which is what many of my peers fail to see. Another part is it is easy to say if you want to go to college you acknowledge the debt you will accumulate, or don’t go at all which is what older generations are saying really is not a great argument either.

Why it is a great idea; The argument for free college:

  1. Minimizing debt and shrinking it (You cannot eliminate it) would definitely help down the line. Older generations will not understand because they have made money through ups and downs of job and market volatility yet have started careers after attending colleges and university’s for pennies compared to todays costs.
  2. More people will go if the costs are lowered and that will lead to more leaders and innovation that come from post secondary education.
  3. The least the government could do is give interest free loans. The same consequences for default, just no profiting off kids who are in school.

Why free college is a dumb idea:

  1. Just because college is tuition free does not mean that the school cannot increase your fees. It is endless cycle if that happens because then if tuition is free and the protest get what they want, the school can raise the fees very easily and then there will be protests about that.
  2. Most students going to school today do not understand how economics and socioeconomics works. If you are in a Bachelor’s Degree program for art history or criminal justice you are not taught for the most part how certain things affect other when you give and take, just because the fact that’s not what your program involves. So to someone going to school free college sounds great, but they fail to realize the outcome is not feasible. Someone has to pay for the free college because states get “X” amount of money from the tuition paid, where would that money come from afterward?

These are the factors of the debate that is pressing this issue so much. As much as I am for free college, it just doesn’t work like that. I am a finance student and I can tell you from what I have learned in the classroom, to read from the experts this is not a possible long term solution.

My suggestion is to start with the loans by having them carry zero percent interest rates. After that a more sizable solution would be either no fees for out of state tuition at state schools, or tuition free community colleges.

Why Facebook Should Buy Square

Investing/business:

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The floor of the New York Stock Exchange.
The floor of the New York Stock Exchange.
Facebook is coming off its highest stock price since… Well, ever. After hitting the $100.00 per share mark last week Facebook’s value was around $230 billion earlier this year (Pre $100.00 per share). Facebook bought WhatsApp for $19 billion in 2014 and saw WhatsApp’s potential with its 450 million users. Now WhatsApp has grown to 900 million users, so whatever Mark Zuckerberg saw was very clear.

Facebook is becoming a behemoth. In a few ways Tim Cook and Mark Zuckerberg are very similar people when it comes to how they view competition and the importance of mergers and acquisitions. Cook and Apple bought Beats from Dr Dre in 2014 for $3 billion. Zuckerberg and Facebook bought Instagram in 2012 for $1 billion absolute bargain. Facebook has also bought WhatsApp and Oculus in 2014. Oculus was bought for $2 billion.1431862470600

What do a photo sharing app, an international instant messenger app, and a virtual reality video game company have in common with Facebook? Well if you break it down like that each one compliments a part of Facebook. Instagram with the photo’s uploaded, WhatsApp is like Facebook’s Messenger, and Oculus provides the option of virtual reality with not where Facebook’s position is today in social media’s intensive media sharing, but for where Facebook could explore going in the future.

Now how does Square come into play? if you think about how careful Facebook has bought the companies it has acquired, one could definitely see why Square and Facebook would be a perfect match. The prices Zuckerberg paid for Instagram and Oculus for the “bargain” billion and two billion dollar respectively make Facebook a visionary company to go shopping at the dollar store for billion dollar private companies in the lower range but could provide value down the road. WhatsApp could be considered a bargain for the $19 billion paid based on how many users it had at the time and how many Facebook not only projected but also guessed right to how many it has grown too.jack-dorsey-techcrunch-disrupt-sf-2012_pop_20294

Square is founded and run by Jack Dorsey, who also founded and is back as the current CEO of Twitter. Square filed for its IPO on 11/06/2015, and it came in lower than most expected… $2 billion under to be exact. This could be a play for Facebook, or any other large company with a lot of dollars to spend because of the low valuation. A mobile payments platform is what Facebook should turn to for its next acquisition. Square would be a perfect fit for Facebook for not where it is right now, but again where it could go. Having payments processed through Facebook should be something seen as a way to get users to have one-stop platform to do everything.

This could be seen as a conflict because Facebook is a competitor of Twitter, of which Dorsey also runs. But that could be taken out of his hands once Square goes public. Dorsey will probably stay with Twitter as CEO for the long term, because the task of trying to lift two separate companies from slow revenue growth problems will be too hard to handle all at once and he could probably do better with Twitter anyway.

Photo creds:

http://www.dynamicwebusa.com/blog/new-york-stock-exchange-and-united-down-dont-let-this-happen-to-your-website/

http://static1.squarespace.com/static/54d21c6be4b0535ab80a101e/t/55587cc1e4b02e4679137e67/1431862470600/

techcrunch.com

Why Technology Might Be The Saving Grace For Millennials When It Comes To Debt

Lifestyle/Personal Finance:

Photo Courtesy: www.apptentive.com

          Technology is changing so quickly today. Which could be an advantage for Millennials. After all, this is the generation that brought Baby Boomers and Generation X’ers Facebook. Now its up to the Millennials to figure out how to use their technological advances to their advantage. And that means making money.

When it comes to debt Millennials have to worry about their education undertaking more than anything. Going to school has never cost so much as it does today. As I mentioned in a previous post of Why College Today Is Like a Country Club, the cost to attend college and gain new perspectives and basic knowledge of the newest tech being released is considered astronomical today than it was even 10 years ago.

Technology today including developing of apps, new websites, interactive products like Amazons Fire Tablet or iPads, social media content is all in the hands of Millennials and the development is a dog fight for getting these things finished and out the quickest.

Now when it comes to making money Millennials need to steer these new products and advances toward figuring out their debt. Paying off debt is on just about every Millennials mind who is in college currently or already graduated. A Forbes article relayed how much Millennials think about their debt when they showcased how about 30% of Millennials surveyed said they would sell an organ to pay off debt.

That is extreme, which is why I am saying we need to harness this power of technology and use it to our advantage. The bubble of student loan debt could burst sooner rather than later and debt needs to be reconfigured to seem more

Photo Courtesy: truthdig.com

manageable. Something’s got to give which is when a tipping point could be seen. How will Millennials use tech to their advantage when it comes to making money? Maybe something like the San Francisco Chronicle’s article about companies agreeing to pay off their employees debt (In one instance mentioned in the article) for about 6 years that they are with the company.

The SFC article is on to something. Tech companies and tech start ups should start offering such programs. This will almost all but guarantee top talent if you agree to sign on to something like that. Company-wise it makes sense too. In the instance of paying off employee debt for 6 years will this will create longer term employees. It is a win-win. If Millennials ask for it they receive it.

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Photos: http://www.truthdig.com/images/cartoonuploads/cbe0603cd-college-debt-500.jpg

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How Rewards Programs Are Good For Business

lifestyle/business:


If you haven’t already noticed many businesses are popping up with rewards programs and incentives to not only get new customers but to really keep existing customers from going anywhere else.

As an example you could say Cumberland Farms has the best gas rewards program in the country. I am a “Smart Pay” member and I have to say nothing else compares. I can count on one hand how many times I have gotten gas at a gas station other than Cumberland Farms in the last 2.5 years.

The way their program works: Either download their app or go into a store and grab a physical card. Then you go online and set up an account by adding your personal checking account to it. After that you are able to use the rewards card/app at any Cumberland station and automatically receive 10 cents off every gallon you purchase. On top of that you get in-store free rewards for no reason at all and also depending on how often you get gas (it keeps track). By giving incentives to customers to keep them coming back many companies are joining the trend of offering a rewards program.

They are a great example because they kept up with the curve of consumer trends. Now you see big companies have rewards cards and offer incentives to customers to keep them coming back and not go anywhere else. Subway, Dunkin Donuts, are among some that offer a rewards program. Businesses are now fighting to keep customers because if it means something to you they want that to carry over to what they offer. Giving you a reason to stick with their products or services is seen as a way to create a long term customer, even when a program ends.

This was an unpaid post