THE Y&FB BLOG

Last Chance for Great Student Loan Deal...

Hey there, just a friendly reminder:

If you haven't consolidated your student loans do it ASAP. Accent on the S: you need to do this before July 1 if you want to avoid getting slammed with a higher payment.

As you probably know, the interest rate you pay on your loans is reset each July 1. And this year the rate is going to adjust up. Way up. Probably close to 2 percentage points more because the Treasury bill rate that is used to set student loan rates has had a big spike over the past 12 months.

So someone in repayment today paying about 3.37 percent could see their rate climb to 5.25 percent. Ouch.

But if you consolidate you can lock in your CURRENT rate for the rest of your repayment period. Yes, forever. With current rates at historic lows it is absolutely a no-brainer to consolidate before July 1.

The Un American (Airlines) Way

Is it just me, or does American Airlines suck? I know business is tough these days, but AA seems to be trying to screw themselves over with just horrid customer service. Here's my story: I was flying from Fla. to NYC today when I got a call at my Fla. home telling me my 3pm flight was not going to leave until 6:30. While I was not thrilling to the delay, I was at least glad AA had its act together and gave me a ring.

That was the last time I will ever think kindly of American Airlines.

A few hours later as I am finally on the way to the airport for my delayed flight, I decide to give AA a call just to make sure we're still on sked to leave at 6:30. You can imagine how happy I was to find out the flight was now cancelled. Here I am, with a first-class ticket no less, and the knuckleheads had no sense to call me a second time to tell me of the latest change. I only found out because I called. Seems one courtesy call is all you get with AA.  I tried to remain calm and ask them what other flights I could catch. And this is where I nearly went ballistic; the customer service rep told me there was no flight tonight, or tomorrow, or any time. Seems that because they had decided to cancel the flight (mechanical problems, not the weather mind you) I was now simply on my own to figure things out.

AA had no interest in helping me. Look, I know problems happen, but what kills me is that they were so absolutely unhelpful. Deserting their customers when they have to cancel a flight seems like the perfect way to LOSE THEIR CUSTOMERS FOR GOOD.

Which is what has happened with this customer. I guess my mistake was giving AA a chance, when my gut told me to stick with Jet Blue. I love Jet Blue. Talk about great customer service! So from now on, I am no longer a flag-flying American Airlines customer. I will never fly with AA again.

College Daze

I walk out in front of a room of future MBAs, accountants and business types the other day and ask them if they know what a FICO score is, what THEIR FICO score and where the hell to get it.

I get a room of blank stares. Oh sure, they know all about GDP, the Fed Funds rate and the U.S. trade deficit, but they don't know a damn thing about their personal financial life.

If you ask me, every college and university that is not teaching basic personal finance -and making it a requirement for graduation-is doing a crappy job of preparing its students for the real world. And isn't that a big part of what college is all about?

I have news for you, an intimate understand of GDP is not going to help you out in life one iota. Trust me. Same with most all economic terms, trends and data points. Nice info if you want to bore everyone at a cocktail party, but absolutely useless when it comes to living your life.

I would love to know if any of you had any course, or seminar, in college that taught you anything about financial info that has a huge impact on your future. Did anyone teach you about your FICO score, how to deal with credit cards, and god forbid, how to handle your student loans once you are out of school? (Did anyone tell you that consolidation is damn smart, especially the past few years when interest rates have been so low?)

And while you're at it, let me know the three financial lessons you wish someone at school had taken the time to teach you. Something that you had to figure out on your own much later, or something you are still clueless about. I want to know exactly what you think you could have learned in college that would have made your YF&B years easier. I promise that I will make sure your questions get adressed here, or at my website .

This is Your Blog YF&Bers...

I am absolutely loving my first few weeks of blogging; it's no secret I've always got plenty on my mind that I want to share!

But what would be absolutely great is if you would tell me more about what would make this blog work for you. Feel free to be blunt. I want to know exactly what you are interested in-and what you could care less about-so I can make this blog fun, interesting, and useful for everyone who is Young, Fabulous and wants to get past Broke ASAP.

So come on, click on the comments link below, and let 'er rip. Tell me what you want to see in this blog.

What I told President Bush...

I had an interesting chat with a high-ranking member of President Bush's inner circle recently. The administration honcho had contacted me to see if I was interested in talking about Social Security.

You bet I was. And so we sat down for a 1:1.

I knew the administration was reaching out to me for my insight on what "real" people outside of the Washington beltway are concerned about.

He sure got an earful from me:

I give the President major points for being willing to take on the controversial issue of Social Security reform, but he's doing a lousy job of talking to you and me.

My take is that there is way too much policy wonk debate going on, and no one is telling you exactly what you need to hear: How the privitization plan will solve the system's current problems, how it will protect you tomorrow in the way that today's current Social Security system protects its retirees. And most importantly: how the new system will be easy for every American to understand and participate in. Forget about offering a bunch of investment choices; Americans are already overwhelmed with all the things they need to track and understand. Whatever revisions that are made to Social Security need to be easy to implement for you and me, easily understandable, and that they will indeed offer the same level of security.

Agree? Disagree? Let me know...for the next time the administration asks me to tell them what is going on in the real world.

Is your Company Really Looking Out for You?

So you know how much I love Roth IRAs, right? Follow a few simple rules and when you retire you won't owe a penny in tax. That's a lot better than withdrawals from your 401(k), which are gonna get taxed at your regular income tax rate. Yes, I realize the 401(k) comes with a nice tax break on the contributions you are making today, but since you are so B right now, I'm guessing that tax break isn't worth too much to you, cause you're probably in a pretty low tax bracket.

But if we jump forward 30 or 40 years when you are ready to start pulling your money out of the 401(k) there's a great chance you're going to be in a higher tax bracket, and 100 percent of the money you withdraw will be smacked with income tax.

Now here's the totally great new twist in 401(k) investing that no one is paying attention to: Starting next January your boss has the option of allowing you to invest in a traditional 401(k) or a new Roth 401(k). With the Roth 401(k) you will get no upfront tax break; all your contributions are made on an after-tax basis. But just like the traditional 401(k) your money will grow tax-deferred meaning there's no annual tax bill while the money is invested.

And the super huge payoff: when you make withdrawals from a Roth 401(k) you will owe no tax. Zip. Zero. None. I think that is a huge opportunity for the YF&B.

But here's the problem: most companies aren't rushing to offer a Roth 401(k). Hewitt, a big employee benefits consulting firm recently polled a bunch of corporate clients and found that just one-third expect to roll out a Roth 401(k) in 2006.

I think that's ridiculous. If I were YF&B I would be bugging my HR department, or employee benefits folks to find out when they intend to offer a Roth 401(k). Notice I didn't say "if." I said "when."

Look, a 401(k) is operated for the sole benefit of its participants. That's you. So you and your YF&B colleagues need to start applying some pressure to let the corporate poohbahs know that a Roth 401(k) option would definitely be to your benefit. Don't be shy. Hell, I wouldn't be surprised if they are completelty out of the loop on this; it just doesn't seem to be on too many radar screens at the moment.

It's up to you to make them aware that you want a Roth 401(k) option, and you want it sooner, not later.

Now a few basics on how this works: In 2006 you will be allowed to invest a maximum of $15,000 in your 401(k), whether it be a traditional 401(k) or a Roth 401(k). And the same matching rules apply; if your company kicks in for the traditional, it will also contribute to your Roth.

Let me know what you hear back from your benefits dept.