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Job Market Blues: Majority of College Graduates Move Back Home After Graduation

Thursday, October 14th, 2010

In yet another sign (as if we needed more) that the job market is still no bueno, CNN reports that a whopping 85% of college graduates end up moving back home after graduation:

Getting a degree used to be a stepping stone to limitless career opportunities. Now it’s more of a hiatus from living under your parents’ roof.

Stubbornly high unemployment — nearly 15% for those ages 20-24 — has made finding a job nearly impossible. And without a job, there’s nowhere for these young adults to go but back to their old bedrooms, curfews and chore charts. Meet the boomerangers.

The rate of graduates moving home after graduation has increased “steadily” from 67% just 4 years ago. It used to be that getting a college degree was considered almost a guaranteed ticket to a decent job and income. Ah, how times have changed. (more…)

Posted in Debt, Economy, Personal Finance, Student Loans | No Comments »

Foreclosure Documentation Irregularities and Deleveraging By Default

Friday, October 1st, 2010

GMAC Mortgage Halts Foreclosures in 23 States Due to Documentation Irregularities

It looks like more trouble is rearing it’s ugly head in the housing market. Bloomberg reports that “Ally Financial Inc.’s GMAC Mortgage unit [is] suspending foreclosure evictions in 23 states” because of irregularities in foreclosure documents. An employee of Ally’s GMAC testified in December 2009 that he “signed thousands of foreclosure documents without verifying their accuracy.” This could end up being a big problem in states with judicial foreclosures, where banks have to go before a judge to proceed with the repossession of a property in default. A halt in foreclosure evictions may seem great for homeowners in default, but this could create a huge mess for the courts to sort out and could delay the much needed correction in home prices in many markets. Stay tuned.

Consumers Reducing Consumer Debt, But Mostly Because of Default

The good news is that consumers are reducing their consumer debt. The bad news is that much of the deleveraging is occurring because consumers are defaulting on their debts, according to an article by Fortune:
“In 2009, outstanding credit card debt dropped by about $93.2 billion compared with the previous year, according to a report from CardHub.com, a credit card comparison website. This might sound like good news, but the reality is that the majority of the drop — $81.6 billion — is due to Americans defaulting on their debt.”

The New York Times reports that the default rate for student loans is rising as well.  While credit card debts can often be discharged in a bankruptcy if consumers get into serious financial distress, student loans are much harder to get rid of.  Individuals carrying student debt are often stuck with it no matter their financial situation.

The fact that so many people are defaulting on debt means that many will have seriously damaged credit for many years to come, making it difficult for them to quality for home loans.  Fewer people purchasing homes means more headwinds for the housing recovery.

-CH

Need to sell a house? We buy houses for cash, even if you owe more than it’s worth, with no commissions or fees! Give us a call at (714) 583-9004 or fill in the web form on our home page and we’ll get back to you within 24 hours!

Posted in Economy, Foreclosure, Mortgage Lending, Personal Finance | No Comments »

Consumers Increasingly Reaching for Debit Instead of Credit

Tuesday, September 21st, 2010

If there’s one thing people change their thinking about during a recession, it’s how they handle debt. WalletPop.com reports consumers are increasingly reaching for the debit card instead of the credit card when making purchases:

A research firm predicts that credit card use could fall to 45% of all transactions this year if current trends continue. According to Javelin Strategy & Research, our use of credit cards has been dropping steadily; we used credit cards for 56% of all transactions last year, which was a steep drop from the 87% of all transactions in 2007, when our obsession with plastic peaked.

A good part of this could be due to banks cutting back credit limits and eliminating credit lines altogether, but it wouldn’t surprise me if a significant number of people were just rethinking how they handle money. It’s during deep recessions and uncertain unemployment situations that people begin to realize how financially risky it can be to carry a high debt load.

It is a healthy response to a recession for consumers to tighten their belts, retire debt, and increase savings. Allowing this process to run its course unimpeded by government will help the economy get back on its feet and set itself up for the next boom.

-CH

Need to sell a house? We buy houses for cash, even if you owe more than it’s worth, with no commissions or fees! Give us a call at (714) 583-9004 or fill in the web form on our home page and we’ll get back to you within 24 hours!

Posted in Economy, Personal Finance | No Comments »

Book Review: The Total Money Makeover by Dave Ramsey

Friday, August 27th, 2010
The Total Money Makeover Book Cover

The Total Money Makeover can show you how to conquer debt and regain control of your financial future.

According to CreditCards.com, we are a heavily indebted society today. As of March 2010, total consumer debt, which includes auto, boat, and mobile home loans, as well as credit cards, totaled $2.451 trillion. Nearly a third of that amount is credit card debt, which averages out to a $15,788 balance for each of the 54 million households that have credit card debt. If you are burdened with debt and overleveraged on your house, selling your house may be  great way to eliminate debt and regain your financial footing. We buy houses with no commissions or fees even if you owe more than it’s worth. For more information, contact us at (714) 583-9004.

If you are burdened with debt and are tired of living paycheck to paycheck, Dave Ramsey’s The Total Money Makeover is definitely a book worth picking up and reading.  It is easy and fun to read and is filled with anecdotes from other readers who implemented Ramsey’s Total Money Makeover, paid off their debts (including mortgages in many cases), and completely changed their lives.  Reading these anecdotes makes it abundantly clear that achieving debt freedom may be more attainable than you think. (more…)

Posted in Good Books, Personal Finance | No Comments »