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Credit Crunch

From buying a home to finding a dream job, there is one looming shadow which controls everyone like a puppeteer controlling a puppet.   Credit pulls the strings which grant access to homeownership, employment, and lower interest rates.    The importance of credit is undermined by the confusion many Americans have about their three little numbers.  Below is not an exhaustive explanation of credit, it merely scratches the surface and breaks down the basics of what you need to know about your credit.

What is Credit?

According to JP Morgan Chase & Co., credit is your financial trustworthiness.  Credit measures how likely a borrower is to pay back the loan.

What does Credit Control?

Among other things:

·         Helps secure lower interest rates

·         Improves opportunities to secure a credit card and other loans

·         More options when shopping for loans and a mortgage

·         Increased spending limits

·         Quicker approval for renting

·         Better rates on car insurance

·         Can help avoid paying a security deposit for utilities

What is on your Credit Report?

There are four sections on your credit report.  These sections give reporting bureaus important information which is then used to calculate your credit score. By law, you are guaranteed a free credit report once every twelve months.  To order your credit report visit annualcreditreport.com.  your credit score is NOT included on your credit report.

1.    Identifying Information

This includes your name, birthdate, permanent residence,…

2.    Open Lines of Credit

Any account you have open being a loan, credit card, mortgage … is considered an “open line of credit.”  This section outlines when the account was opened, the credit limit/ amount of the loan, account balance, and payment history. 

3.    Credit Inquiries

Every time someone checks your credit within the last two years, it is notated on your credit report.  This section includes both voluntary inquiries (inquiries done by your request) and involuntary inquiries (pre-approvals for loans and credit you have not requested). 

4.    Public Record and Collection Items

Information made public through court proceedings, collection agencies, bankruptcies, foreclosures, liens, wage attachments…are included in this section. 

What is your Credit Score?

Your credit score is calculated by three different credit reporting bureaus: Experian, Equafax, and TransUnion.  Each company calculates your credit score based on their own formulas developed to determine trustworthiness.  Since there are three different reporting bureaus and they employ three different formulas, you have three different numbers which compose your credit score.   Even though there are three different formulas, there are several common elements used in each equation. 

1.    Types of Credit in Use

·         Loans

·         Credit Cards

2.    Payment History

·         Do you usually pay before the bill is due?

·         How often do you let your balance roll over?

3.    Amounts Owed

4.    Length of Credit History

·         How long have you had a particular line of credit?

5.    New Credit

-NWP

Tax Day Debacle

It was a brisk spring day when I was overcome with panic and anxiety. The sweat continued to build on my forehead as I began to think about what was fast approaching. I had been dreading this all year, but it was converging on me faster than a hungry cheetah. Time was expiring; I could no longer run or ignore its importance. No, it is not my wedding day . . . Its April 15th, tax day. Do I get Earned Income Credit? I don’t even know what Earned Income Credit is. This form says “EZ”but it should say it’s a “liar” instead.

For most students, if not most Americans, the word “tax”strikes fear in their hearts easier than screaming “boo” behind a group taking a tour of the morgue. Unfortunately, closing your eyes will not make the IRS and taxes go away. There are tips which can vanquish your fears like an Ecto Containment Unit to a ghost, a wooden stake to a vampire, and a silver bullet to a werewolf.

There are several common mistakes which the IRS cautions the public to guard against, the first of which happens to be calculation error. A calculation error epidemic is raging across America faster than the bird flu and whatever disease was in Contagion. The IRS reports calculation error is the most widespread mistake, but not to worry, it is the easiest to fix. Adding and subtracting lines can be like a demented math story problem, however, online filing services can take your mathematical skills (or lack thereof) out of the equation. Using online services or computer-based programs not only help to eliminate mathematical errors, but also help to keep information organized and on the correct line.

Second, according to the IRS “Amrk Smith” is not the same person as “Mark Smith,” and the IRS isn’t too amused with spelling and grammatical errors. Proof reading your return can eliminate the headache attached to a missing return or even worse…an audit. As the saying goes, practice makes perfect and you can practice FOR FREE with extra copies of tax forms in local libraries and post offices.

Lastly, don’t procrastinate – file early! April 15^th should not be treated like a due date for your English 101 final paper. The IRS is more of an uber-nerd English teacher that wishes all students would turn in their papers the day they were assigned. Theoretically, you can file your taxes on or about January 1^st because your last pay check for the year will have all the information needed to file. This tip is kind of like an IRS cheat code because the earlier you file, the earlier you get your refund. The sooner you file, the sooner you can blow your return on those super-cute Coach boots and help stimulate this nation’s slumping economy.

With these tips you can come out of hiding and file more confidently than ever before. Fewer headaches and more returns sounds like a recipe for success and a sure fire way to finally ordering that Highlander replica sword from eBay. So, double check your calculations and spelling while practicing filling in the lines because there can only be one…perfect return filed.

- NWP

Extreme Couponing- is it really worth it?

Has anyone ever seen the show on TLC "Extreme Couponing"? If not, it's a show where everyday people save hundreds of dollars on groceries all thanks to discount coupons. These people put in many hours of hard work and time to munster up all the coupons needed to efficiently save on their groceries. There was once an episode where a lady bought around $900 worth of groceries and only spent $40! The only thing that I think of when I hear this is, What in the world are typically families doing with $900 worth of groceries? What can you possibly do with 50 boxes of cereal 12 gallons of mills and 60 cartons of eggs? Do they give it away, do they resell it, or do they keep a stock pile room in case of an emergency?

The idea of saving a lot of money on groceries is nice but at the end of the day, what are you possibly, realistically, doing with all that food? Before someone starts extreme couponing, I suggest that they sit and think about what they are actually doing. Are they doing it to "say" they saved a lot of money and have piles and piles of food stocked everywhere at home, or are they doing it in efforts to help other needy people.

-LaToya_I

Summer & College Students

By: Daniel Avila

As we all know, summer is just around the corner, and for some students summer means vacations and fun, but for others it is time to find a part-time job and/or apply for internships. Teens may be the recession's hardest hit demographic. According to the Department of Labor, the unemployment rate for teens ages 16 through 19 is north of 20%, higher than workers in any other age group. While teens typically have some financial support from their parents, high school and college students in need of summer cash could find themselves without jobs. Consider these three ways to make money if the summer jobs aren't there.

Internships and apprenticeships
Two of the fastest ways to land a post-graduate job, internships and apprenticeship, are solid investments in your future. A lot of organizations that offer these programs don't advertise them. Students need to take a lot of initiative, make inquiries, and approach prospective employers whether there's a listing or not.

Research grants
Get paid to build your resume. Available through colleges themselves as well as through private companies and governmental bodies, research grants can help students pay for college, and room and board while they study. Students need to apply for grants early. Normally students start looking for jobs in April, but for these programs you have to start in February or March. For fall semester, they need to start looking the spring semester before the upcoming fall semester. The best place to start the hunt is within your school. Once students have exhausted options available through their academic department and financial aid office, they can find additional opportunities through scholarship sites, the federal government at students.gov and professional associations in their field.

Work-study jobs
If you're smart about picking a work-study job, it can actually give you more real-world experience than a summer retail job. Jobs ranging from research assistant to recycling manager, work-study positions won't make you rich, the pay is usually just above minimum wage, but they are flexible and won't subtract from your financial aid eligibility as much as other jobs. The federal government currently allows students to earn up to $3,000 in income without it affecting their financial aid package. For every dollar earned over the $3,000 benchmark, students will lose 50 cents in federal scholarships and grants, reports the Department of Education. Work-study jobs along with earnings from the Peace Corp, AmeriCorps and Teach for America are exempt from this clause, so students are free to earn away without any repercussions. Students seeking work-study jobs for the academic year may have more say in where they're placed if they can start during the summer. At campuses that empty out during the summer, work-study students will have significantly lower competition for the best jobs.

Keep an eye on our Debt and Deficits

By: Mike Sutarik

It is no secret that both our state and federal governments have run up enormous debts, and they continue to have large budget deficits year after year.  As students of a state university, we are all affected by the habits of our governments’ spending.  We actually reap the benefits of these big spending politicians.  Not only do our politicians give direct funding to NIU, but they also decide how much money will be spent on our financial aid.  Even without being able to pay their bills, the state of Illinois continues to promise financial aid and funding for NIU and its students.  However, in order for our state to get back on track, we will have to balance the budget and begin to pay off our debt.  This is especially important to University students like us.  Cuts in the state budget will need to be made.  Even though we cannot know when or where these cuts will be made, we must be ready for the idea that higher education could end up on the chopping block.  I raise this idea not to worry individuals, but rather to prepare people for this possibility.  Personally, it is hard to me to believe that our politicians would make cuts to higher education, because of the votes that they would lose.  However, something will have to be done to fix Illinois budget woes, and we should all wonder what the answer is going to be.  Please visit http://www.usdebtclock.org/state-debt-clocks/state-of-illinois-debt-clock.html.

5 Weeks with Nothing To Do?

After enduring the ever-dreaded week of finals, NIU students will be grateful to be given 5 weeks off (plus a day for Martin Luther King Jr. Day) without the worries of homework, tests, screeching professors or even having to wake up at a reasonable hour to attend classes! With this freedom, comes great responsibility. Especially after finals, many students, including myself, will be completely exhausted from a long semester capped off with a week of late night study sessions and high stress. I would encourage every student to take a day or 5 to unwind and indulge in some “me” time. This may involve sleeping in late, catching up on your favorite tv shows, spending time with friends, and basically doing as little as possible. However, take it from my experience, wasting away the entire 5 weeks is not the best idea. Overuse of this “do nothing” time can leave you feeling sluggish, unprepared, and unmotivated for the spring semester. Instead, take this extended break to accomplish something you have always wanted to, or to accomplish something you weren’t able to during the semester. Read a book, learn to ski or snowboard, go ice skating, start a business, visit with friends and family, start the job/internship hunt. Your possibilities are endless. At the end of your break, it would be a great idea to create a budget for your upcoming semester. Creating a budget just for the spring semester wouldn’t be too difficult, but it will allow you to visualize your entire financial picture and accomplish your financial goals. For me, after a couple days of some much needed downtime, I plan on continuing work on campus, finishing a book, polishing up my personal website, picking up some temporary work, and working on landing an internship for the summer. My plans aren’t all that soul quenching nor are they overly ambitious, but they are enough to keep me busy and give me some direction for these upcoming 5 weeks of freedom. Since this is a financial blog, I’ve decided to break down some ideas for winter break based on your financial situation:

Winter Break ideas if you HAVE money:

-Take a trip: go somewhere you have always wanted, you literally have enough time to go anywhere your heart desires and experience it to the fullest. You could also go on a road trip with some friends, sometimes just taking off for a weekend can really be refreshing.

-See as many movies as you can: the weeks leading up to Christmas is usually filled with some blockbusters hitting the theaters.

-Buy your loved ones gifts for the holiday season: Even if you have the money, it is still wise to do some bargain shopping when buying gifts for others, sometimes the cheapest gifts can be the best.

Winter Break ideas if you DON’T HAVE money:

-Take a trip: you may not be able to go see the Castles of Portugal, but maybe you can go see your Grandparents, they will probably still treat you like royalty.

-See as many movies as you can: You can use this time to watch some of your favorite DVD’s you already own. As long as you can relax and enjoy it, your mind will be appreciative

-Make your loved ones gifts for the holiday season: As long as they are made with love, these gifts will be as good, if not better, than a store bought gift.

Winter Break ideas if you NEED money:

-Find a temporary job: Utilize a temp service, or look in your local paper to see who is hiring during these winter months

-Ask for some hours at your old job: Remember that job you had over summer break? That may be a good place to start looking for some extra income, they may need some extra help during the winter months.

-Keep working at your current job: Just because there is Winter Break for school, doesn’t mean you have to rush home and abandon your work hours in Dekalb. Stick around and earn some extra money!

-Start a business: 5 weeks is a lot of time, you could literally start an entire business in this time. You may not create a global empire in 5 weeks, but if you are creative enough and willing to put in some hard work, you may be able to set up and automated business allowing you to reap the rewards for semesters to come.