From the News You Can Use Archives 1/2/07
'Money Matters' Highlights From EDFUND's Award-Winning Financial Advice Column
By Dennis Zanchi, EDFUND Default Prevention InitiativesEDFUND's monthly newsletter, NewSource, provides timely, operational information to our school and lender partners. It's also a great source for dates and locations of our training workshops and industry conferences.
One of the regular NewSource columns is "Money Matters" — a useful resource for financial information and advice on a variety of life's money issues. Following are some recent “Money Matters” columns.
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Ownership Rates in Perspective
Here's something to think about: The cost of lifetime car ownership could easily be over $100,000, and a home can cost $20,000 or more. It might be surprising to learn that more expensive items are within reach for more people than less expensive items, such as a college education, cell phone or computer.
- Car - 178 per 100 households
- Television - 98 per 100 people
- Home - 68 per 100 households
- Computer - 66 per 100 people
- Cell phone - 49 per 100 people
- Some college education/associate's degree - 25 per 100 people
- A bachelor's degree - 18 per 100 people
- Advanced degree - 10 per 100 people
Source: 2004 Statistical Abstract of the United States
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Long-Term Impact of Bankruptcy
Bankruptcy can have a serious impact on future purchases. Picture two neighbors: they occupy similar houses, drive the same type of car and live identical lifestyles. The only difference is that one person filed for bankruptcy and the other didn't. For the bankrupt person to enjoy his neighbor's lifestyle, the cost can be $1,085 per month (52 percent) more due to the higher interest rates he will pay on everyday things like a mortgage, car or credit card payment. Taking taxes into account, the bankrupt person needs to earn $1,619 extra each month to live his neighbor's lifestyle.Additional Monthly Expense:
Car $377 $530 $153 $228 Home $1,499 $2,381 $882 $1,316 Credit $200 $250 $50 $75 Total $2,076 $3,161 $1,085 $1,619 Additional Earnings Required:
Hourly: $9.34 Weekly: $374 Annually: $19,428
1Based on income taxes of 33 percent. Car amount of $20,000 at 5 percent interest vs. 20 percent interest. Home amount of $250,000 at 6 percent interest vs. 11 percent. Credit amount of $5,000 at 10 percent vs. 20 percent.
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Unemployment by Educational Attainment
We know that more education leads to higher lifetime earnings. Consider unemployment rates by educational attainment. People with more education earn a higher income and are employed more often. Less education means a lower salary and increases the chance of unemployment by 300 percent or more! Completing an education appears to be an effective method of reducing unemployment.Unemployment rates by year and educational attainment:
Educational Attainment 2003 2004 2005 2006 Likelihood of Unemployment* Less than high school 8.7% 8.8% 7.8% 7.1% 1 in 14 High school graduate 5.4% 5.1% 4.8% 4.3% 1 in 23 Some college/associate degree 4.8% 4.5% 4.0% 3.6% 1 in 28 Bachelor's degree and higher 3.0% 2.9% 2.4% 2.2% 1 in 45 *Based on 2006 unemployment rates
Source: Bureau of Labor Statistics: Unemployment status of the civilian non-institutional population 25 years and over by educational attainment, seasonally adjusted. Data is for the first quarter of each year.
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From NewSource, EDFUND's monthly newsletter providing timely, operational information to EDFUND customers and lender partners.
Story posted January 2, 2007.
E-mail comments to: news@EDFUND.org
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