You’ve no doubt heard about the student loan debacle. Student loan debt here in America passed the $1 trillion mark not long ago and isn’t going to let up anytime soon. In fact, over 70% of college graduates this year borrowed money to get their bachelor’s degree, and their average debt, $33,000, makes the class of 2014 the most indebted in history.

If you’re considering borrowing money to pay off your student loans, do yourself a favor and take a look at the scenarios, and their consequences, below. Once you know what you’re looking at, you’ll be able to make a more educated decision. Enjoy.

If you’re considering taking out a home equity loan to refinance your student loans, you might think it’s a good idea because of the low interest rates available today. The fact is however that this could cause significant long-term risk, i.e. the risk of losing your home if you can’t pay that money back. Let’s face it, the reason lenders are more than willing to offer such incredibly low interest rates is because they know that, if you can’t pay them back, they get your house.

Many people borrow from their 401(k) in order to pay off their student loans but, even though this might seem like a good option, it has a high amount of risk as well. Yes, it’s easier than getting a loan somewhere else because, well, it’s your money. You’ll need to call your 401(k) provider and fill out a short application, and interest rates might not even be all that bad. The risk is that you never replace the money that was in your 401(k) and thus lose all the benefit that compound interest can give you. Plus, when you go to retire you’ll have much less in your nest egg.

Taking out a personal loan to pay off your student debt would be a great idea if you were able to get a loan at a much lower rate than your student loan rate. The problem is that most personal loans are dependent on your credit score,  your credit utilization ratio and how much debt you already have. In other words, they can be quite high and might not offer a real advantage over simply paying off your student loans as they are.

Finally there’s borrowing money from your family to pay off your student loans which, if your family is filthy rich, might not be a bad idea at all. On the other hand, if you’ve already had someone in your family (most likely your mom and dad) cosign for your student loan and you’re having trouble paying it off, you probably don’t want to borrow even more money in order to do so.

By the way, if you’re having trouble paying off a loan that was cosigned by a family member, you definitely should discuss it with them as, if you default on your loan, it could harm their credit rating greatly.

Now that you know some of the advantages, and all of the risks, you can make it much more educated decision on whether or not to borrow more money to pay off your student loans. Best of luck.

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If you’re new to investing in the stock market then it’s possible that you don’t know just how many different ways there are to invest, and make money, in the market. Below is a brief look at popular strategies that many investors are using right now and that you can use yourself to take advantage of one of the best long-term investing tools ever invented. Enjoy.

If you want to focus on companies that you believe have very strong prospects for the foreseeable future, you may wish to become a growth investor. Most growth investors shy away from paying too much but, if they find a really promising business, they definitely don’t have a problem ponying up the money to get its stock. One of the best examples of this is Google (NASDAQ: GOOG). Over the last five years they’ve surpassed 75% in annual earnings, which is simply phenomenal.

Investors who are fond of purchasing stocks that pay dividends like Duke Energy (NYSE: DUK), are known as dividend investors. The reason they like these types of stocks is simply that they pay them back with income streams that are quite generous. Although the aforementioned Duke Energy only has a 4.8% yield and typically won’t have big price jumps, dividend investors count on the fact that these types of stocks will outpace their counterparts over time.

Then there are those who purchase stocks in companies that are well-established with highly proven track records. These large-cap investors buy stock from Microsoft (NASDAQ: MSFT) and Walmart (NYSE: WMT) for the simple reason that these companies are extremely stable and the likelihood that they will go out of business is extremely small. The reason is that they are well beyond their growth phase and into their maturity phase.

If you’re an investor that looks for stocks that have fallen out of favor and have been abandoned by other investors, but still seem to have some life and hope for a rebound, then you’re a value investor. Value investors seek out stocks with the best prices and, while some of these actually don’t ever recover, some do and provide fantastic returns. One of these is Fairfax Financial (NYSE: FFH), a bargain at one time and now a superstar for those who picked it up.

Investors that don’t mind a little bit more risk will put their money into undiscovered companies rather than those that are well known. The reason that these small-cap investors to do this is that they are betting that the profits they will gain when that company becomes the household name of tomorrow will outweigh the losses that they face from any companies that eventually fail.

Lastly there are international investors who realize that not all of the best companies in the world exists in the United States. The fact is however that a company that is relatively obscure might still be an excellent investment, and bring greater rewards due to that obscurity, than a company that’s more well-known.

Now that you’ve seen the different types of investors, and investments, that there are in stock market, you might be a little surprised at the diversity. The fact is that this diversity is one of the best reasons to learn how to invest in stocks because, just like a diversified portfolio, they offer protection, less risk and higher long-term rates of return.

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Why you Shouldn’t Cancel your Credit Cards

by Justin Weinger on August 6, 2014

Did you know that the average consumer in the United States carries 8 credit cards in their wallet or purse at any one time? It’s true but, if you want to get rid of some of those cards in order to lighten the load, and the risk of temptation, you might just want to simply cut up those cards and cancel them.

And that might not be such a good idea.

First let’s take a look at a few facts. The first is that once you open a credit card it’s on your credit report for at least the next 7 years, even if you cancel it the day after  you receive it. If that card happens to have any negative history like overspending, late payments and charge-offs, those are going to be on your credit report for the next 7 years as well.

Seven years from now all of those negative entries will fall away but, rather than closing that account and tossing that card in the trash, you might want to keep it instead.

The first reason is that, since it’s been paid off and those negative items are history, you now have a clean credit card with a long-term credit history. Since 15% of your credit score is based on the length of time that you’ve been borrowing, closing that credit card for good really isn’t going to help you. In fact it could hurt your FICO score.

The reason is because lenders are always looking at a number of things, including your total available credit, the balances on your revolving accounts and the ratio between the two. Since closing any open accounts will mean that they aren’t factored into your ratio any longer, the amount of debt you have as a percentage of available credit will actually increase. Not good.

In fact, unless you really have no willpower at all, there’s no need to cancel those credit cards at all. Over time holding on to them will have a positive effect and could even increase your credit score but closing them won’t do anything for your credit score and might even hurt it in the short run.

Still, if you want to get rid of some of those little pieces of plastic, your best advice is to keep the ones that you’ve had for the longest time as they will show lenders that you are a responsible person who can handle credit in the long-term. Also, if you have cards that reward you with things like points, cash back, miles and so forth, and you actually take advantage of them, those cards are worth keeping if you make sure to pay them off in full every time you use them.

Cards that have a high annual fee that, even after you call the lender, can’t be waived, are probably worth putting through the heavy-duty shredder. Buh bye.

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The answer to the question in the headline above is this; time. The best weapon that any investor, new or experienced, big or small, has, is time.

One of the reasons that time is so powerful is that, if you have plenty of it, you can sit on your investments when times are tough and the market is even tougher. Even better, you might even be able to take advantage of some stock prices that are bargain-basement while you’re waiting for the market’s upward trend to return.

Unfortunately, the vast majority of consumers in the United States don’t take advantage of time as well as they should, if at all. Less than 45% of people 29 years of age or younger don’t take advantage of a 401(k) or IRA for example.

Let’s take a look at some of the excuses that people have not putting time to work for them. Once you see them you’ll realize that all of them are fundamentally flawed.

Many people believe that the small amount of money that they have left over for investing won’t garner them enough money to make it worth their while. The fact is however that even small amounts of money invested over the course of 40 years can multiply from 20 to 50 times, which can turn even a small amount of money into a substantial amount of money. For example, putting $25 a month into an IRA and leaving it there for 40 years will net you $133,000. You could also stash a small amount within well researched binary options trading strategies.

Some people believe that it’s not a good time to invest right now but the fact is that there’s almost always a reason to not invest and, if you never do, you’ll never be able to take advantage of the time factor that we’re talking about right now. You’ll also certainly miss out on a whole bunch of profitable opportunities that might have become available if you would just stop making excuses. (No offense.)

Lastly there are those people who don’t want to think about investing, or retirement, because they’re “too young”. While we realize that it’s tough to think about retirement when you’re in your 20s, or even 30s, and there are other things to do like pay down student loan debt, start families and buy homes, starting as early as possible allows you to take full advantage of time’s excellent effects. We’ve talked about it many times here before and it bears repeating; compound interest is one of the best financial discoveries ever made.

Also, starting early sets you up for excellent  financial habits that will definitely serve you well for all of your years. The fact is, putting aside a little bit of money now in order to get back a lot of money in the future is the most sound financial advice that you’ll ever receive, or could ever follow.

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