I recently published a blog about the impending Student Loan bubble if nothing is fixed. Well, there is a proposed fix out there that I have learned about since that post. The proposal is that student loan payments undergo a major overhaul and start coming out of people's paychecks, much like taxes do.
I know, I know, calm down, keep reading.
There are a lot of really great benefits built into this. The amount that you pay would be capped at 15% of your income AFTER cost of living is taken out. This would make it so that if you have a high paying job you pay off your loan more rapidly than if you have a lower paying job, but either way you are paying, and the amount isn't arbitrary, it is based on what you make. This would also make it so that if you lose your job you quit paying and when you get a new one you start again.
Also, they would put a cap on the amount of interest you can be charged. The cap would be that you can only be charged up to 50% of what your loan's valuation is at the time of graduation. So, if you owe $20,000 you cannot be charged more than $10,000 in interest. This is also, however, where a danger point lies. If they pass this they (the government) are expected to drastically reduce the number of subsidized loans that they issue. This would make it so that you would be accruing interest the whole time you are in school, adding to the valuation of your loan at the time a graduation. The other danger here is that there is no regulation written in as to what kind of interest rates they can charge while you are in school. This is probably just an oversight and not something that they actually plan on nailing students with, but some of you will disagree, and that's ok.
I think this is a great plan. I was talking with a fellow student about this and we both agreed on this point. The biggest benefit that we saw to the graduate is that it comes out before you ever get your paycheck, so you won't really miss it. It is much harder to write a check than to just never have that money in the first place. My boyfriend has health insurance benefits through his job and he makes several payments into that each month. They come out automatically and so he never misses that money. Now, if he had to write a check to pay into those same benefits I guarantee he would almost never make that payment.
Why is this even a problem? Student loan debt has topped $1 trillion, finally beating out credit card debt. While all other consumer debt industries saw payment improvement this past year the student loan category took a major turn in the opposite direction. "Last year, 5 million borrowers were in default - meaning they had failed
to make payments for at least 270 days -- on $67 billion in loans, more
than twice the amount in 2003." (Collections and Credit Risk)
It is hard to pay for school. Getting loans is the only way that some people can get through school. Knowing that there was a better repayment program in place may help make it so that lenders are willing to grant funds to those people who currently struggle with finding funding for school.
Thoughts?
Thursday, December 6, 2012
Wanted: Handsome Male, Responsible, Clean. Loves: Kids, Kittens, and Long Walks on the Beach in the Moonlight
Ever thought about the consumer behavior around dating sites and personal ads? Having never used one myself I am drawing off of my admittedly limited knowledge based on people (who will remain anonymous) that I know who have used them as well as stories I have heard. Oh, and I have read through the personal ads to find the funny ones, so there is that "experience" also. (and we all know that sometimes it can be QUITE the experience, there are some weird ones out there!)
How would you go about marketing yourself to an unknown future mate? Are you honest? Do you fudge the facts? Current picture or the one from 10 pounds ago? What all do you say? Do you list all of your features? Do you include all of your quirks? What level of mystery do you keep? What do you say you are looking for? What if you say something wrong and potential Mr./Mrs. Right never sees your profile? Do you know check things that aren't necessarily true but broaden your scope? Which site do you choose?
I find the whole online dating phenomena quite interesting. I have heard tremendous success stories where people were actually able to find that person in life who adds to their happiness and truly loves them. I have also heard horror stories of the fakes/frauds/loonies that people get hooked up with. (and then what does that say about you? hehe)
Then you start looking through profiles. Is he/she being honest? How do I know?? They want to meet!! Should I? Do I message them? Hope they message me?
What are your thoughts on the world of online dating?
How would you go about marketing yourself to an unknown future mate? Are you honest? Do you fudge the facts? Current picture or the one from 10 pounds ago? What all do you say? Do you list all of your features? Do you include all of your quirks? What level of mystery do you keep? What do you say you are looking for? What if you say something wrong and potential Mr./Mrs. Right never sees your profile? Do you know check things that aren't necessarily true but broaden your scope? Which site do you choose?
I find the whole online dating phenomena quite interesting. I have heard tremendous success stories where people were actually able to find that person in life who adds to their happiness and truly loves them. I have also heard horror stories of the fakes/frauds/loonies that people get hooked up with. (and then what does that say about you? hehe)
Then you start looking through profiles. Is he/she being honest? How do I know?? They want to meet!! Should I? Do I message them? Hope they message me?
What are your thoughts on the world of online dating?
Am I Really Turning into My Mother/Father?
Here's an interesting thought, How much influence do parental buying habits have on their children?
I have heard studies from the PEW research group that talk about how our beliefs are almost completely formed by the time we graduate high school. Whatever beliefs aren't completely solidified by the time of graduation are formed during college (or the next 3-5 years for people who don't go to college). After that time it is very difficult to change someone's beliefs.
This means that the majority of all of our beliefs are formed for life while we are still living with our parents. Does this same principle apply at all to our purchasing habits and brand preferences? While some consumption is based out of our various belief's in life others are separate from that. Are those areas influenced by our parents as well?
The only way for me to dive into this is to look at my own personal experience. What brands or buying habits do my parents have?
What are your thoughts?
I have heard studies from the PEW research group that talk about how our beliefs are almost completely formed by the time we graduate high school. Whatever beliefs aren't completely solidified by the time of graduation are formed during college (or the next 3-5 years for people who don't go to college). After that time it is very difficult to change someone's beliefs.
This means that the majority of all of our beliefs are formed for life while we are still living with our parents. Does this same principle apply at all to our purchasing habits and brand preferences? While some consumption is based out of our various belief's in life others are separate from that. Are those areas influenced by our parents as well?
The only way for me to dive into this is to look at my own personal experience. What brands or buying habits do my parents have?
- My Mom is southern so she introduced me to certain southern dishes that I still love.
- My Dad is a potato farmer so eating potatoes is almost like a religion to me, it is one food I could never do without.
- My Parents both love Basic 4 cereal and Honey Bunches of Oats, those are my favorite cereals and I always tend to purchase those above all others.
- My Dad is a Chevy/Dodge person and NOT a Ford person, I hold to the same beliefs. I have had two cars. One was a Chevy. My current is a Dodge. I don't think I could ever buy a Ford.
- My parents always listen to oldies on the radio. While I do listen to other music that I personally like and prefer (even some that my parents do not like) oldies will always have a soft spot in my heart and a place in my musical library.
- My Mom and I have very similar tastes in fashion and whenever she falls in love with a particular brand I tend to follow along with her on most of them, there are a few I have not joined her in loving.
What are your thoughts?
Sunday, December 2, 2012
Why do I love you so?
What is it about a brand that can draw people to it? Susan Fournier is a researcher who did a study on how sometimes our relationships with a brand almost start to resemble our relationships with the people in our lives. What drives this?
Have you ever identified so strongly with a brand that you started to tell everyone about it. You became fiercely loyal to it, and would do anything for it? Think about it. What brands are you in love with? Have you ever broken up with a brand? How do you feel about it now? Does it feel like that awkward ex?
I have a few brands that I am in love with. My latest affair is with a coffee shop here in Bozeman, from which I am currently writing this post. This shop, Zocalo, is incredible. I love their coffee, the people who work here, the owner, the atmosphere, and what it stands for. My love for this coffee shop is filling a void in my life that was left by another coffee house, my ex. I had another shop in town that I loved. I loved the people and the coffee. Then it got a new owner. After being wronged by this owner I broke up with that shop. I had always told everyone I knew to go there and suddenly told everyone I knew about the break up and that they shouldn't go there either. Then I met Zocalo. It was love at first sight. They won me over so quickly and I am fiercely committed to this relationship. I encourage all of you to go meet my love!! (They are located on Main between Black and Bozeman, across from US Bank.)
What drove this love? I also think about how some people fall in love with their shoe brand (Chucks, Toms, Jimmy Choo), their purse brand (Louis Vuitton, need I list more), or any number of other brands. Their consumers sing their praises. Swear by them. Wouldn't dream of cheating on them. This is the dream of every company and marketer. To create a brand with such an identifiable personality that people fall in love with it.
Have you ever identified so strongly with a brand that you started to tell everyone about it. You became fiercely loyal to it, and would do anything for it? Think about it. What brands are you in love with? Have you ever broken up with a brand? How do you feel about it now? Does it feel like that awkward ex?
I have a few brands that I am in love with. My latest affair is with a coffee shop here in Bozeman, from which I am currently writing this post. This shop, Zocalo, is incredible. I love their coffee, the people who work here, the owner, the atmosphere, and what it stands for. My love for this coffee shop is filling a void in my life that was left by another coffee house, my ex. I had another shop in town that I loved. I loved the people and the coffee. Then it got a new owner. After being wronged by this owner I broke up with that shop. I had always told everyone I knew to go there and suddenly told everyone I knew about the break up and that they shouldn't go there either. Then I met Zocalo. It was love at first sight. They won me over so quickly and I am fiercely committed to this relationship. I encourage all of you to go meet my love!! (They are located on Main between Black and Bozeman, across from US Bank.)
What drove this love? I also think about how some people fall in love with their shoe brand (Chucks, Toms, Jimmy Choo), their purse brand (Louis Vuitton, need I list more), or any number of other brands. Their consumers sing their praises. Swear by them. Wouldn't dream of cheating on them. This is the dream of every company and marketer. To create a brand with such an identifiable personality that people fall in love with it.
Saturday, December 1, 2012
Borrowing Beyond Our Limits
Remember the housing bubble? Remember how it popped and sent our economy into a tailspin? Well we are creating another one. This bubble is in the Student Loan world. I work for a company that is in the financial industry and a part of my job is reading industry blogs. This last week I have seen an increase in the number of blogs on student loans. This caught my attention.
While I have been very fortunate to receive financial aid and then worked hard to make up the balance of my school bills so that I will graduate debt free, the vast majority of my fellow students are graduating with HUGE student loans. I hear them talking about how loans of $30,000 to $50,000 aren't that bad and I cringe. In my world that is a lot of money! I can't imagine having that burden on my shoulders.
The delinquency rate on student loans is up 80% from 2003. The total amount of student debt is up from $241 billion in 2003 to $956 billion this year. (Unibul) With the total amount and the delinquency rate rising so rapidly economists are estimating that we may soon have another financial crisis on our hands.
How do we avoid this? We all need to take responsibility for our finances and not borrow beyond our limits. Whether it is signing for a home loan or a student loan that you can't afford to pay back. We also need to look into the loans that we sign up for and make sure that the loan underwriting is solid and do our research on the different types of loans out there. This way we can know which loans to avoid.
It is time for us as consumers to be financially responsible. Even if it isn't a large loan that you are looking at it may be a credit card. Whatever it is know your limits. Don't spend beyond your means. Debt shouldn't be taken on unless you have a solid plan for repaying it. Obviously there are times when the unexpected happens and catches us off guard, but we need to be responsible players in the debt industry. Do your research. Know what you are signing up for and know if you can actually repay or not. It is easy to blame others for our situation, but we all need to take responsibility and do our part to be responsible citizens.
While I have been very fortunate to receive financial aid and then worked hard to make up the balance of my school bills so that I will graduate debt free, the vast majority of my fellow students are graduating with HUGE student loans. I hear them talking about how loans of $30,000 to $50,000 aren't that bad and I cringe. In my world that is a lot of money! I can't imagine having that burden on my shoulders.
The delinquency rate on student loans is up 80% from 2003. The total amount of student debt is up from $241 billion in 2003 to $956 billion this year. (Unibul) With the total amount and the delinquency rate rising so rapidly economists are estimating that we may soon have another financial crisis on our hands.
How do we avoid this? We all need to take responsibility for our finances and not borrow beyond our limits. Whether it is signing for a home loan or a student loan that you can't afford to pay back. We also need to look into the loans that we sign up for and make sure that the loan underwriting is solid and do our research on the different types of loans out there. This way we can know which loans to avoid.
It is time for us as consumers to be financially responsible. Even if it isn't a large loan that you are looking at it may be a credit card. Whatever it is know your limits. Don't spend beyond your means. Debt shouldn't be taken on unless you have a solid plan for repaying it. Obviously there are times when the unexpected happens and catches us off guard, but we need to be responsible players in the debt industry. Do your research. Know what you are signing up for and know if you can actually repay or not. It is easy to blame others for our situation, but we all need to take responsibility and do our part to be responsible citizens.
Impression Management
I read an interesting article recently that talked about how airlines manage people's impressions. Pilots and Flight Attendants wear uniforms that resemble military or police uniforms. Why? Imagine getting onto an airplane and the pilot is wearing shorts and a cut off tank top. Would you feel confident in his/her ability to fly the plane? Many people would not. The military like uniform commands a certain level of trust and therefor boosts our confidence in the pilot and his/her abilities.
This is a tactic that is used in many different arenas. Ever noticed all of the fresh flowers that are located right as you walk into a grocery store? These stores don't sell a lot of these products so why give them such prime real estate in the store? Studies have shown that having fresh flowers in the entrance of the grocery store gives you the subconscious impression that the items in the store are good and fresh, because the flowers are fresh.
In our class we read a book called Nudge that talked about this subject and how people put things in front of us to prompt certain behavior out of us. Most of the time this is used for good, but it is somewhat manipulative. The shelves in a grocery store that are at eye level are the most expensive to have your product featured on because the mere fact that they are at eye level encourages people to favor them.
This book talked about a scenario where a superintendent for a school district conducted an experiment in her schools during lunch times. She had the staff arrange the food in different ways to see if she could influence the options that the students made. She found that whatever was at eye level and the easiest to grab is what students tended to take the most of, whether it was french fries, carrot sticks, or dessert. If she made it harder to obtain the dessert fewer students chose it.
These "nudges" are all around us every day impacting the choices that we make. Whether it is a preselected option on a form or the placement of products on a display or in a store. We are constantly being nudged towards the desired scenarios of those who design those nudges, whether on purpose or by accident.
This is a tactic that is used in many different arenas. Ever noticed all of the fresh flowers that are located right as you walk into a grocery store? These stores don't sell a lot of these products so why give them such prime real estate in the store? Studies have shown that having fresh flowers in the entrance of the grocery store gives you the subconscious impression that the items in the store are good and fresh, because the flowers are fresh.
In our class we read a book called Nudge that talked about this subject and how people put things in front of us to prompt certain behavior out of us. Most of the time this is used for good, but it is somewhat manipulative. The shelves in a grocery store that are at eye level are the most expensive to have your product featured on because the mere fact that they are at eye level encourages people to favor them.
This book talked about a scenario where a superintendent for a school district conducted an experiment in her schools during lunch times. She had the staff arrange the food in different ways to see if she could influence the options that the students made. She found that whatever was at eye level and the easiest to grab is what students tended to take the most of, whether it was french fries, carrot sticks, or dessert. If she made it harder to obtain the dessert fewer students chose it.
These "nudges" are all around us every day impacting the choices that we make. Whether it is a preselected option on a form or the placement of products on a display or in a store. We are constantly being nudged towards the desired scenarios of those who design those nudges, whether on purpose or by accident.
I want you, I need you
A while back in one of our classes we talked about needs vs wants and how those play into our daily lives. How do we determine what is a need and what is a want? Some of these things are obvious. We NEED to eat. We NEED shelter. We NEED a way to stay warm when it is cold outside. But even within those categories there are wants that come into play.
You NEED to eat, but what do you eat? There are so many options for what you can consume to fulfill that need. Do you go for the cheapest? Is nutritional value the key?
You NEED shelter. Do you live in the cheapest place you could find? Is having a lot of space important? Did you go for an option that would impress your friends?
Do you say you NEED your car? You could walk, ride a bike, take public transportation, catch a ride with someone else. What car did you NEED to buy? Was it cheap? Expensive? Good fuel mileage? Luxury?
Where do we draw the line between a NEED and a WANT? When does something that we once WANTED in life become something that we NEED and can't live without? When I was in high school I really WANTED a cell phone. It became all that I could think about. My parents' refused to buy me one, so I got one on my own. After getting this phone it became a NEED very quickly. I got to a point where I couldn't imagine life without my phone and knew I would never go without one again. Then I started to WANT a smart phone. My dumb phone just wasn't as cool as those smart ones, so I made the jump and upgraded. As soon as I got one I realized that it was a NEED in my life. How had I ever gotten along without one? All of my communications in my pocket at all times. I could be completely connected yo my world at all times. I NEEDED to have this smart phone and could never imagine having a dumb phone again.
It is interesting to look at the things in our lives and see how our possessions can become a part of who we are and how we define our lives. When did your WANTS become your NEEDS?
You NEED to eat, but what do you eat? There are so many options for what you can consume to fulfill that need. Do you go for the cheapest? Is nutritional value the key?
You NEED shelter. Do you live in the cheapest place you could find? Is having a lot of space important? Did you go for an option that would impress your friends?
Do you say you NEED your car? You could walk, ride a bike, take public transportation, catch a ride with someone else. What car did you NEED to buy? Was it cheap? Expensive? Good fuel mileage? Luxury?
Where do we draw the line between a NEED and a WANT? When does something that we once WANTED in life become something that we NEED and can't live without? When I was in high school I really WANTED a cell phone. It became all that I could think about. My parents' refused to buy me one, so I got one on my own. After getting this phone it became a NEED very quickly. I got to a point where I couldn't imagine life without my phone and knew I would never go without one again. Then I started to WANT a smart phone. My dumb phone just wasn't as cool as those smart ones, so I made the jump and upgraded. As soon as I got one I realized that it was a NEED in my life. How had I ever gotten along without one? All of my communications in my pocket at all times. I could be completely connected yo my world at all times. I NEEDED to have this smart phone and could never imagine having a dumb phone again.
It is interesting to look at the things in our lives and see how our possessions can become a part of who we are and how we define our lives. When did your WANTS become your NEEDS?
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