Ask Our Experts
Practical life advice from the faculty of HES
Debt: The Good and the Bad
All debt is not created equal. It’s important to remember that whether debt is good or bad is a matter of your personal situation and may not be the same for everyone. The University of Alabama’s Dr. Melissa Wilmarth explains the difference between the two:
Good debt can help you increase your wealth in the long-term. Good debt is secured (meaning it has an asset backing it as collateral), is used to purchase assets that will increase in value, may generate tax benefits and, generally, has a low interest rate. Good debt may include student loans, mortgages and business loans.
Bad debt is debt used to purchase something that immediately goes down in value. It can be debt that is unsecured, is not expected to generate income in the long run, in general carries high interest rates, and/or does not produce tax benefits. Bad debt often includes credit cards, payday loans, pawn shop loans, and loans from your retirement accounts and life insurance.
Your debt-to-income ratio (amount of monthly debt owed divided by monthly income) should be no more than 36 percent. Also, the timing of debt is important. Be sure to manage so that you are not in debt during fixed-income times, like retirement.
Warning Signs of an Abusive Relationship
Once thought of as a private issue in some marriages, domestic violence is now a widely discussed public concern.
The University of Alabama’s Dr. Tricia Witte offers some helpful information and some warning signs if you suspect that you or someone you know is in an abusive relationship.
Domestic violence refers to abuse toward a current or former intimate partner. Examples include physical violence; denigrating, controlling, intimidating or threatening behaviors; and abusive electronic communications (text messaging, social media). A U.S. Department of Justice survey found that 22.1 percent of surveyed women and 7.4 percent of surveyed men reported being physically assaulted by a current or former intimate partner.
In a study of seventh grade students, 37 percent of the surveyed students said they had been victims of psychological abuse (denigration, intimidating and threatening behaviors, etc.); 15 percent said they were victims of physical dating violence; and 31 percent said they were victims of electronic dating aggression, such as threatening text messages or derogatory comments on social media.
Warning signs of an abusive relationship include jealousy or controlling behavior, discouraging you from talking to or seeing friends and family; demonstrating threatening behavior or acting in ways that scare you; calling you names or making you feel worthless; destroying your property; and using physical force, such as grabbing, shoving or hitting.
The National Domestic Violence Hotline is 1-800-799-7233.
Brides on a Budget
Today, the average American wedding costs about $30,000 — even more in major cities. What’s a family to do if their budget isn’t anywhere near the average?
The good news is that brides can cut back in so many areas and still have the wedding of their dreams. The University of Alabama’s Kimberly Boyle offers some tips on cutting costs on the big day.
The first step is to create a written budget and keep to it with a good tracking system. Then, trim the guest list, select a scenic location to save on décor and the florist bill, and select an earlier time in the day to save a bundle on catering. Serve beer and wine rather than a full bar and reuse as many flowers throughout the weekend as possible. You can print your own invitations, and a DJ or an iPod playlist is a great way to save on music. Consider having a small traditional wedding cake and supplement servings with a ready-to-go sheet cake.
Finally, Sunday is the new Saturday. A non-Saturday wedding reduces costs and increases the availability of top vendors.
Avoiding Hot-Car Deaths
Each year, too many parents must face the tragic, accidental deaths of their children who have been left alone in a hot car.
A child is put at risk when left in a car unattended in any situation, even for a few seconds. Circumstances may cause parents to inadvertently forget that a child is strapped in the back seat.
Tammy Morrow, a parent resource specialist with the Parenting Assistance Line at Child Development Resources, offers some precautions caregivers can take to avoid hot-car deaths:
• Place personal articles such as purses, cellphones and briefcases on the back seat to ensure that you look in that area before leaving the car.
• Seat your younger children behind the front passenger seat where they are more likely to be in your eyesight.
• Keep a stuffed animal in your child’s seat when your child is not in the seat. Place the object, as a reminder, on the front seat when the baby is on board.
• Start a routine of opening your back door to check the back
seat before leaving your car.
• Make sure that the doors to all parked vehicles are locked at all times.
• Hang keys out of reach of young children.
• If you see a child alone in a vehicle, do not hesitate to get involved. Call 911 or your local emergency number immediately.
Smart Steps for Getting Out of Debt
Part of smartly managing debt includes reducing your debt level and maybe even getting out of debt completely. The University of Alabama’s Dr. Melissa Wilmarth offers some steps that will help you reduce your debt level:
• Step 1: Gather records and track spending. Pull together your financial records all in one place and record all of your spending for a month (or longer) to see where your money is going.
• Step 2: Prioritize your budget. What are “must pay” items and items that you place a high value on? You may be able to take the lowest priority items off your budget completely and find areas where you can spend less.
• Step 3: Prioritize your debt repayment. Write down all of your debt balances and interest rates. Make a goal to pay off one of your debts first. Start with the debt with the highest interest rate or the debt with the lowest balance. Choose what is most achievable for you. Focus on one debt at a time (while paying the requirements on all others) to build confidence and feel success along the way.
• Step 4: Keep change in mind. If you get a tax refund or a raise or a bonus at work, evaluate how much of it you should save and how much of it you should put toward debt repayment.