TeachMeFinance

Starting July 1, 2009, the US government’s new Income Based Repayment Plan will help some college graduates get lower student loan payments. The program uses your income and your family size to calculate your monthly payments.

If you have a Graduate PLUS, Stafford or consolidated loan that was made under either the Federal Family Education Loan or the Direct Loan programs you may qualify. However if you have a Parent PLUS loan you likely won’t qualify. Also your debt must be over one and a half times your gross income.
Your monthly payments will be determined by how much you can pay each month, assuming you qualify for Income Based Repayment Plan

Generally, the payments you have to make will be less than 10% of your monthly gross income. If your income is 150% or less than the federal poverty line, it’s possible you won’t have to pay anything until your salary increases.

This program might be particularly useful to you if you are a graduate with a lot of student loans that can’t find a job or a college student that has a high debt to income ratio. People going into public service might also find the program useful. If they are in this plan they may be eligible for the Public Service Loan Forgiveness Program. That program eliminates the debt of some people who have worked in the public sector full-time for 10 years. Student loan debts that remain after 25 years of payments may be forgiven under the Income Based Repayment plan.

Now the bad news. You may end up paying more interest over the life of your loan because a smaller payment usually increases the length of time you have to repay your loan.

If you think you qualify for any of these loans contact your lender. You may be asked for a copy of last year’s tax return or you may have to fill out IRS Form 4506-T so the IRS can send them a transcript of the federal tax return you filed with the IRS. Be sure to let your lender know if you have lost your job or had some sort of financial hardships.

The US Government apparently wants to help US citizens purchase a new car. The US House of Representatives recently passed the so-called “Cash for Clunkers” bill which provides money for US citizens to replace their gas guzzling cars with more fuel-efficient automobiles. The plan is to offer vouchers to give consumers up to $4500 in savings on our new car purchase, as well as various credits for trucks. The U.S. Senate is expected to debate the bill soon.

The House version of the bill has the following requirements:

The car that you want to trade in must get no more than 18 miles per gallon in the city and highway combined. The new car has to get a minimum of 22 miles per gallon in the city and highway combined. Your trade-in vehicle must be insured and registered under your name. It must have been in use for these one-year. The car you purchase must cost no more than $45,000.

Unfortunately there are some limitations. Cars that haven’t been insured for the past year or are not eligible to be traded in for vouchers. Cars that are over 25 years old are not eligible to be traded in for vouchers. Eligibility requirements vary for work trucks and light duty trucks.

Criticism of the bill includes the idea that it is not environmentally friendly enough.

Up to one million new car purchases could be generated by the program which would last about a year. Some are predicting that the program could start in October 2009.

The Credit Cardholders’ Bill of Rights Act of 2009 (H.R.627) passed both the House and Senate and has been sent to President Obama for his signature to make it law.

When this bill takes effect early next year, among other things, this new law will:

Require advance notice of any interest rate increases;

Prohibit interest rate increases on an existing credit card balance because the cardholder misses a payment on an unrelated debt;

Prohibit interest rate increases on any existing balance unless payments for on that card are at least 60 days overdue;

Protect consumers from arbitrary fee and finance charge increases;

Prohibit interest charges on balances that have already been paid off;

Require payments to be applied first to the account with the highest interest rate;

Protect students and other young people from aggressive credit card solicitations;

Require greater disclosure of rates, terms and billing details by credit card companies; and

Establish tougher penalties for companies that violate the law.

27 million people are expected to travel by car this holiday season which is a 2.5% increase over last year.  Although gasoline prices have increased by $.30 over the last month they are still far below the four dollar a gallon price level that we saw last summer in the United States.

Troy Green, the national spokesman for AAA said that he doesn’t expect gasoline prices to return to the four dollar per gallon level.   In fact he said he’d be surprised if prices hit three dollars a gallon this summer.

Prices often go up over the holidays and during the summer.

Here are few tips to help you save money while traveling on the road this summer.

If you haven’t already switched to synthetic motor oil consider doing so.  Although it does cost a little bit more your engine will probably run more efficiently and you may use less gas.

Take a good look at your gas cap. 17% of cars on the road are said to have gas caps that are loose, damaged or missing. It’s estimated that 147 million gallons of gasoline are lost by evaporation each year.