Average 401(k) balance hits record $91,300

401(k) balances reached a record high last year, thanks to a soaring stock market and larger contributions from workers participating in the savings plans.

At Fidelity, the average 401(k) balance hit $91,300 by the end of 2014. While that’s up just 2% from 2013, it’s a jump of more than 30% from 2011’s average balance of $69,100, Fidelity reported.
Ultimate Guide to Retirement

 

The increase was due in part to the stock market, which saw the S&P 500 climb by more than 10%– its third year of double-digit gains. But a spike in worker contributions also played a significant role.

Workers and their employers contributed an average of $9,670 in 2014, up 4% from the year before.

“The 401(k) is the sole source [of retirement savings] for many,” said Fidelity vice president Jeanne Thompson. “I think there is heightened awareness of the importance of putting money into the 401(k).”

On average, employees socked away 8.1% of their salary, the highest savings rate recorded by Fidelity since 2011. Including an employer match, workers saved around 12% of their salary, which falls within the 10% to 15% recommended by financial planners.

Save a million before you retire

Thompson credited the increasing savings rate to a growing number of employers who are automatically enrolling workers into their 401(k) plans at a contribution rate of 5% or more.

Consistent savers are doing especially well. Savers in their 401(k) plan for 10 years or more had an average balance of $248,000 — an increase of 11% from what similar savers had a year ago.

Related: My biggest retirement mistake

The bad news: most people will need far more than that for a comfortable retirement. The common 4% rule for example, dictates that $250,000 would provide only $10,000 a year in retirement income.

Of course, 401(k) balances are just a snapshot of the retirement savings landscape since savers often have multiple investments and accounts like Individual Retirement Accounts (IRAs) and annuities. Fidelity, for example, found IRA holders had an average balance of $92,200 in 2014.

With the stock market starting out on rocky footing this year, Fidelity urged savers to ignore the market turmoil and instead to focus on long-term savings goals.

“The typical American worker will see markets go up and down many times during their career,” Jim MacDonald, president of workplace investing at Fidelity, said in a statement. “Commitment to a long-term savings and investing strategy will put individuals in the best. Read more…

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Payday loan middlemen face crackdown

Thousands of payday loan middlemen face tough new rules after the City watchdog highlighted “blatantly unfair” treatment of customers.

Borrowers have complained about credit brokers taking fees without permission for “half-hearted promises” of payday loans.

 

Some have complained that they thought the brokers were, in fact, lenders.

The Financial Conduct Authority (FCA) said clear contracts must be made explaining fees that could be levied.

New rules, that come into force on 2 January, mean that credit brokers must give clear information to customers about who they are, what fee is payable, and how payment can be made.

In addition, seven brokers have been stopped from taking on new business while investigations into their actions take place. Another three have already been told they could face a fine or lose their licence to operate.

 

Owing to the swift rise of payday credit brokers, primarily online, and the number of complaints, the FCA said that it was bringing in the new rules without consultation with the industry.

“The fact that we have had to take these measures does not paint this market in a particularly good light,” said Martin Wheatley, chief executive of the FCA.

“I hope that other firms will take note that where we see evidence of customers being treated in a blatantly unfair way, we will move quickly to protect consumers from further harm.”

But the FCA said that the new rules would not come into force for a month, as tens of thousands of brokers needed to prepare for the new requirements. Read more….

Western Sky Loans Consumer Complaints & Reviews

western sky

Western Sky Loans is a Native America company dedicated to provide a wide array of loans. You can get unsecured loans from this firm and manage your life in a better way in times of need and crisis. By means of lending quick money, fast cash loans online, short term loans and emergency cash loans, Western Sky Loans enables you to come out of any financial problem in an easy way. It offers loans of up to $2,600 any time you want.

 

Personal loans are received without any security. You do not get this type of loans against any collateral such as a property or car. There are several businesses within the US that offer personal loans. What makes Western Sky Loans a better choice than other companies is the easy and quick process of getting these loans. Also, the flexible terms and conditions of this company make it a better choice when compared to other businesses that extend the same financial aid. You can get the loan proceeds into your account within a day which allows you to have quick cash without any hassle.  In order to have loan from Western Sky Loans, one has to be at least 21. You also have to have a checking account to apply for these loans. Western Sky Loans accepts loan applications from all residents of the United States. However, if you live in California, Maryland, South Dakota and West Virginia, you cannot apply for a loan from this company.

 

Western Sky Loans offers interest at the rate of 135% with an APR of approximately 139%. The borrower can return the sum at his convenience. There is no upfront fee involved in payday loans by this company. If you loan is approved, you will have to pay $75 loan origination fee from the proceeds of your loan.

 

The process of getting a loan from Western Sky Loans is simple. You need to fill an application form. The company will get your credit report and will let you know about its decision shortly. When the application is conditionally approved, the borrower has to fax in a copy of his driver’s license, bank statement and a voided check. You need to fill in an on-line loan agreement to get the loan. Thus you can get loan and manage your life in a better way by availing easy personal loans from Western Sky Loans.

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10 Steps to Minimize Student Loan Debt

Most students take out loans to fund their college education. This type of debt can be a wise investment, experts say, but students need to carefully consider how much is too much to borrow. These 10 tips can help students keep their student loan debt at a manageable level.

 

Tuition is only the tip of the iceberg for college expenses. Students should also factor in books, housing, meals and transportation. “People look at tuition and think, ‘Oh, that’s what I need,’” Suzanna de Baca of Ameriprise Financial told U.S. News last year. “They don’t really make a good list of all the different expenses that are involved.

 

Once students calculate their total costs, they can figure out how to cover their expenses. Grants, scholarships and college savings plans should be used before loans come into play, experts say. Students should also deduct potential earnings from any part-time jobs, like waiting tables, from their total costs to determine what they need

Reed more ……

What Is a Loan?

A loan is money that is provided to you now that you must repay later.

Typically, lenders will give you a single immediate payment. In return you will be expected to send them smaller payments each month.

Because prices usually rise over time, a dollar you pay back several years from now does not buy as much as a dollar today. That’s one main reason most lenders lenders typically charge interest. Interest also covers lenders’ other costs such as insurance, telephone help lines, etc.

Interest is a fee added (typically added yearly or monthly) to the debt. For example, a standard federal Stafford “unsubsidized” student loans charged an annual interest rate of 6.8 percent in 2010. So for every $1,000 you borrow, under the standard repayment plan, you’d have to repay about $11.50 a month, for a total of about $1,380, to pay it off in 10 years. (Federal student loans offer many different repayment options, however.)

Many students are afraid of borrowing for college because they’ve heard of friends who have had lives ruined by borrowing too much. Generally, it is wise to avoid or greatly restrict borrowing. But if borrowing is the only way you can obtain your degree, it is probably a worthwhile risk. While a college diploma is no guarantee of a good job, and you may be one of the unlucky graduates who ends up driving a cab, many employers require college degrees for the best jobs. On average, college graduates earn about $20,000 more a year than those whose education ended at high school.  Reed more……

New Student Loan Deal – Is it Good or Bad for Borrowers?

President Barack Obama is expected to sign new student loan legislation this week, making market-based interest rates the law of the land for federal student loans and immediately lowering rates for borrowers.

The bipartisan bill ties interest rates on Stafford loans, as well as graduate and Parent Direct PLUS loans, to that of the 10-year Treasury note, which reflects the federal government’s cost to borrow. The student loan rates are determined as of June 1 each year and locked in for the life of the loan. That means students borrowing this fall will pay 3.86 percent on all undergraduate Stafford loans, 5.41 percent on unsubsidized Stafford loans for graduate students and 6.41 percent on all PLUS loans.

[Find out what the new interest rates mean for grad students.]

While the compromise reversed the interest rate hike on subsidized loans, which jumped from 3.4 to 6.8 percent on July 1, experts say the deal is a mixed bag for students. Here is a rundown of the benefits and drawbacks of the new student loan legislation.

 The Good

• Stability: Prior tweaks to student loan interest rates were temporary and agreements to extend or reauthorize the adjustments often led to political showdowns.

“The past couple of years we’ve been in these situations where students haven’t known up until the last minute what their interest rate was going to be, because we were waiting for Congress to act,” says Megan McClean, director of policy and federal relations at the National Association of Student Financial Aid Administrators.

[Learn what to ask during student loan counseling.]

This bill has no expiration date, so students can breathe a sigh of relief, Peter McPherson, president of the Association of Public Land-grant Universities, said in a statement last week.

“Interest rates on subsidized federal loans for college won’t double from last year and a long-term fix will be in place to avoid these annual political chess matches over the loan program,” he said.

• Universal: Last year Congress extended an interest rate reduction, but only for subsidized Stafford loans, which are issued to students with financial need. The new market-based plan lowers rates for all federal loans, which stood at 6.8 percent for unsubsidized Stafford loans and 7.9 percent for PLUS loans. Any student enrolled at least half-time in a degree-granting program is eligible for unsubsidized loans, and PLUS loans are available to parents, graduate students and those pursuing a professional degree.

“This is a deal that benefits all borrowers,” says McClean, who points out that 80 percent of students who take out subsidized loans also borrow unsubsidized funds.

The Bad

• Fluctuation: Market-based interest rates are not static. As the economy improves, they will rise, and experts predict that will happen quickly.

The deal passed last week does cap how high those rates can go – 8.25 percent and 9.5 percent for subsidized and unsubsidized Stafford loans, respectively, and 10.5 percent for all PLUS loans. Those caps are all higher than where the rates stood just a month ago, and could be a reality for students in just a few years’ time.

“I’m glad that students today won’t be borrowing at 6.8 percent, but I think in two or three years we’re going to be wondering ‘Why are we giving kids these expensive loans?'” says Robert Weinerman, senior director of college finance at College Coach, an educational advising firm. Reed more …..

4 Payday Loan Myths

If you thought credit card interest and bank fees were bad, you probably haven’t looked at the payday loan industry. A recent report from The Pew Charitable Trusts sheds light on the payday loan industry and why people turn to them to borrow cash. According to the report, nearly 12 million Americans take out a payday loan every year. On average, borrowers take out a two-week loan for $375. Borrowers usually end up taking 5 months to pay back the loan, which has an effective annual interest rate of roughly 400 percent.

While those surveyed thought payday loans were necessary, given dire financial circumstances, a majority walked away feeling as though they’d been taken advantage of. In truth, payday loans are such poor financial instruments that many traditionally poor financial decisions are better alternatives. If this is the case, why do people still use them?

Pew’s survey examined the misconceptions fostered by those who borrowed using this type of lending. Here are four myths surrounding payday loans:

“Not another bill.” The average term of a payday loan is only two weeks. Payday lenders use this shortened, repayment term as part of the loan’s marketing. What makes this abbreviated term so enticing?

The survey shows most payday borrowers struggle with monthly expenses on a regular basis. A two-week loan is attractive, because it creates the illusion the loan is a quick-and-easy transaction that isn’t going to come back and reach into your wallet every month. For most payday borrowers, this is only a misperception.

In truth, only 14 percent of borrowers could afford to repay the average payday loan out of their monthly budgets. As a result, new payday loans are usually taken out to pay previous payday loans. Instead of a single monthly bill, payday users end up with a bill due twice a month. In fact, the average time to repay a loan is approximately five months.

“Avoid extreme measures.” Pew’s study found 81 percent of borrowers had other means of covering the needed cash. With other resources available, why do many borrowers choose payday loans over the alternatives?

The answer has to do with avoiding the unpleasantries of alternatives. Those who borrowed from payday loans indicated a number of alternatives, like borrowing from family, pawning items, and cutting expenses. Payday loans were taken out to avoid these options.

Do payday loans help prevent extreme measures? They proved so burdensome that more than one in four payday borrowers ultimately turned to one of the extreme options in order to end the payday loan.

As such, when it comes to payday loans, your best option is probably your alternative.

“Prevent overdrafting.” Most payday customers have bounced a check in the last year, in turn leading lenders to market loans as a last-ditch effort to avoid overdraft fees from banks.

However, it turns out many payday loan direct lender directly result in overdrafting customers’ accounts when loan payments are made. More one in four storefront borrowers and nearly half of online borrowers reported bouncing a payment to a lender.

Since many customers report bouncing checks to payday lenders, it hardly seems likely that they reduce the instance of overdraft fees.

“All payday loans are created equal.” By now you’ve likely realized payday loans are poor financial products. In fact, credit card debt would be a far better option. Still, are all payday lenders the same?

For the most part, the borrower is going to run into the same financial conclusion regarding the lender. All lenders charge high annual interest rates, and most short-term loans turn into long-term obligations.

However, Pew’s survey shows there are some interesting differences in the type of lender. For example, online payday lenders received poor ratings for satisfaction compared to in-store lenders. Banks tended to have lower annual rates of interest—although they were still extremely high.

The bottom line: Payday loans are a poor financial instrument. They often lead borrowers into a seemingly endless cycle of debt, which causes customers far more money to borrow than is reasonable. Advertising can be tempting, but don’t be fooled by the myths being sold. Reed more…