Should Student Loan debt be wiped out during bankruptcy?

Article below from Chicago Tribune:
Massive student loan debt weighs heavily on young couple

Danielle Jokela, who graduated in 2007 with a bachelor's degree in interior design from Harrington College of Design in Chicago, still hasn't found a job in her field. She and her husband fear losing their condo, she said, because she owes more than $98,000 on 16 government and private student loans.

The 32-year-old Rogers Park resident was among those testifying at a Senate hearing in support of legislation that would allow students who borrowed from private lenders for their education to wipe out that debt in bankruptcy proceedings, just as credit card borrowers and many other unsecured debtors may now do.

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Basically the situation is that, this lady is in an unfortunate scenario where she took on a huge loan in order to attend school, and the school arranged government and private institution student loans for her.  The private educational loans have variable interest rate, and upon the time of borrowing, the school did not discuss interest rates, total loan amounts, and expected payment with her.  Now she is in a bad spot that the payment is high, along with her mortgage, car loan and credit card loan, and being underemployed, it is too hard to keep making payments. 

It sounds easy to simply change the rule out of sympathy, but it would be a seriously reckless decision in a logical standpoint.  Here's why:

1 - It encourages the irresponsible borrowing behavior - students will borrow without looking at the amount, calculating the true cost of borrowing and expected payments

2 - It's unethical for people who bear the burden. Who's paying for this? Debt holders, Shareholders, Insiders and many others when these students stop paying. It's a losing battle for the private lenders. 

3 - It's unfair - why should someone else pay hefty prices for others' lack of common sense?

4 - It promotes 'walking away from debt/liability', If you owe $100K and you have to pay $170K with interest, why not just declare bankruptcy and come back 7 years later clean?

5 - It lacks common sense - if someone is intelligent enough to pursue higher education, he/she should read the terms and conditions on the loan contract before signing it. 

Easy Dinner 1

My work days are pretty busy; after a long day and getting home at 9-10pm, I really don't feel like cooking a big meal or eating out. So my simple solution is to make a small and quick dinner.  Fresh pasta is a great choice because it only takes a few minutes to cook and more importantly, tastes much fresher than regular pasta.  Buitoni Ravioli are one of my favorites because they fits all I wanted in a late dinner - fresh, simple, quick. I usually bring water to boil, drop half of the Buitoni ravioli package in water, and add some olive oil and salt. My favorite flavors are Spicy Beef & Sausage Ravioli and Wild Mushroom Agnolotti:

For Spicy Beef & Sausage, I like to put a little bit of Parmesan cheese on top or if I had pre-made some marinara sauce over the weekend, will heat and pour some sauce over it. 
For Wild Mushroom Agnolotti, my favorite of the two, I like to pour a little bit of black truffle oil on the plate and sprinkle Parmesan/Asiago cheese over the Angolotti. If I had the time I would make a creamy sauce instead.  It's a great vegetarian option for me to balance out the big lunch that I had during the day :)

During my weekend shopping, I always pick up one or two of these fresh pasta from Target, and get some freshly shredded cheese from Whole Foods Market. I've tried a few brands of shredded cheese and still haven't found any one that beats the Whole Foods 365 ones. It's simply the freshest and tastes the best!

Happy Eating!

Should I pursue an MBA?

That is probably one of the question you've came across when you're early on in/few years into your career. Some people want to have increased responsibilities in the company, or are ready for a career change, or need to stay competitive in the job market,  and most of all, more $.  For whatever the reason is, do some research and figure out if this is worth it, because after all, getting an MBA requires investing a lot of time and money.  Here are some of the key points to consider:

1. What motivates me to go back to school? - If your answer is to merely stay competitive in the job market, I will strongly suggest you to reconsider it. Although a lot of job openings out there indicating preferences for MBA/CFA/CPA etc. it is 'a plus', not a requirement.  I remember my boss from my summer internship told me that he'd rather hire someone with bachelor degree with 5 years of experience than someone with an MBA but no experience, I find it true after I started hiring for my team and my boss's team. With all the candidates I've interviewed, some MBA graduates are truly bright, but I also met individuals who are extremely intelligent and without an MBA.  Same holds true if your motivation to go back to school is for increased responsibilities in the company or a promotion, there are many different ways to advance your career even if you stay in the company: ask to be involved in projects, optimize efficiency in your current tasks, or mentor new hires are few great ways to demonstrate your leadership   potential.  You can also ask your manager what you can work on in order to develop your leadership skill, and have him or her guide you through it. I don't think any manager will turn you down on that request. (If he or she does, then it's about finding another job instead)
2. Who is paying for it? - According to Forbes, the cost to obtain an MBA can easily go above $100,000.  If you are going for part time, will your company pay for it? If so, what is the reimbursement plan? Since the cost is high, most companies will reasonably choose to offer limited support. Some companies provide few thousands per year,  some only sponsor for related course work, some reimburse only if you get a B grade or better in the course, some reimburse % based on your grade. Many companies do not pay for books and fees at all. If you are going for full time, how will you pay for it? Take out a loan or pay out-of-pocket, or both?
3. What is my real cost for an MBA? - That is your out-of-pocket cost, opportunity cost and long-term cost.  You could be paying some of the tuition today, and make monthly payment for the student loan after your graduation. Opportunity cost could be expensive as well. For full time MBA, you will be paying for two years of tuition and earning no income for two years. (exclude summer internships). For part time, your company could make you stay for a fixed period while you're getting reimbursed, and during this time you could have found another job with higher salary.
4. What is my expected salary increase after getting an MBA? - This is the most important question, right? The statistics out there are screaming $100K and above in average.  But the real average is often inflated, since the average includes any individual who has an MBA, meaning company executives or C-level officers who have the degree are included in the numbers. Real average varies greatly and considers these factors - the quality and reputation of the school, years of experience, industry, geographic locations.  It's true that some MBA grads with 1-2 years of experience land on jobs that pay $100K+, but it's not common.

I hope this sums up the majority of what you need to consider before pursuing the MBA, it's definitely a big decision and planning out your timeline and expectations correctly will make your MBA experience worthwhile. 

The Truth About Student Loan Interest Deduction

It's Tax season! Considering deducting Student Loan Interest from your income? Please read this!
In recent years, about 80% of the college students graduated with a student loan (http://www.asa.org/policy/resources/stats/default.aspx), with the average loan amount at about $25K.  With the average amount owe by students trending upward and the average income for college graduates staying relatively flat, young individuals are carrying bigger baggage than ever.

When you consolidate your loans, the lenders give you all the benefits of deducting the interests you'll pay when you do your taxes, so that your "real interest" is much lower than 4.93% (assumptions) and you should pay interest as long as possible. Sounds about right?  Here are some facts that you might find interesting from a conversation I had with a friend who went through this, the truth is probably surprising to some people.

Let's call my friend John Doe.

John is similar to every regular college graduates, spent 4-yr in college, got some scholarships and took out some loans (about $35K).  After college, he was fortunate enough to land his feet on a decent job and company. He consolidated his student loan at 4.25% for 20 years, which made the payment only a little over $200 per month.  With a "fact" given by the loan associate that "you can deduct loan interest when you file your tax" and "after 3 years of on time payments we will award 1% deduction from the interest rates", and also with a "tip" from his friend - "20 yrs? With inflation $200 is NOTHING after few years! You should save those money and invest in the stock market", he thought it was great and took the deal.  With a stable job and decent pay, the monthly payment was rather affordable. John is also a responsible debtor - he had never missed a payment, in fact he set up automatic deduction from his checking account each month.  At the end of each year, he received a 1098-E form from the creditor for deductible interest.  It was not too bad for John - even though he was mostly paying interests in the first few years, he was getting some money back.

That might sound just about normal,  as John continues to work and made more money, $200 is more affordable than before. Until recently, when he was checking his tax returns prepared by the accountant, he noticed that the line for Student Loan Interest Deduction didn't look right - it was ZERO.  He then called his accountant to see if the guy forgot to fill it in.  "Nope," the accountant replied, "Your income is over $75K and you're not eligible to deduct your student loan interest. In fact when you were above $60K the interest deduction had started to phase out."

That was news. John was a little upset about this, but after some research he found what qualifies him to be eligible for Student Loan Interest Deduction (IRS Topic 456):

• You paid interest on a qualified student loan in tax year 2011
• You are legally obligated to pay interest on a qualified student loan
• Your filing status is not married filing separately
• Your modified adjusted gross income is less than a specified amount which is set annually, and
• You and your spouse, if filing jointly, cannot be claimed as dependents on someone else's return

John qualifies for everything except bullet point #4, for the modified adjusted gross income  (MAGI), the limit for full deduction is $60,000, with $2,500 maximum deduction allowance.

For MAGI of $60,000 - $75,000, the deduction is phasing out or modified, the formula is as follows for single:

Reduced Student Loan Interest Deduction = Interest - Interest * (MAGI - 60,000)/15,000

and MAGI $120,000 - $150,000 for married couple filing jointly:

Reduced Student Loan Interest Deduction = Interest - Interest * (Combined MAGI - 120,000)/30,000

John looked at his remaining balance, he had probably paid 20% of the principal after all, and still has years of payments to make.  In contrast, the stock market hasn't gone up too much since his initial investment, and the bank account interest rate is significantly lower today vs the loan interest rate.  John decided to cut this loan short and has paid it off altogether.  He says that he is now debt free and worry free - not having a financial burden is a great feeling.  While I feel great for him, I also hope that you'll think twice before taking interest as an advantage, it's never an advantage but a way to prolong your life in debt and to give you endless worries.

There's a bible verse that has great intelligence about borrowing, whether you are religious or not:
The rich rules over the poor, and the borrower is the slave of the lender. ~ Proverbs 22:7

Disclaimer: I am not providing any tax advice here, please consult with your Accountant for the best advice concerning your financial situation.

My New Facial Cleanser pt. 2

After introducing my new facial soap yesterday from Cle' de Peau,  I would like to share with you my favorite exfoliating system - the OLAY Professional PROX series.  

I have been struggling with blackhead since I was a teenager and tried different brands (probably more than 20 pharmacy/luxury brands) to get rid of blackhead with not so much success.  I've also tried the nose strip, nose peeling mask, nose masks that claimed to 'melt' blackheads, small electrical scrubber, nose exfoliating pad, you name it etc.  I've had enough of trying for the first few times and say, "I think I finally found something that works!" and then didn't work so much afterwards.  The nose strips are probably works best for sticking blackheads and peeling off, but too much peeling make your pores look bigger.  After hearing about the hypes on professional scrubbing tool - I wanted to give it a try, but even the reviews were great, I hesitated to invest in this. Until maybe last year, I saw OLAY PROX professional cleaning system in a pharmacy and it's only $30 retail, I thought it's worth trying.  

As you might have read from a reputable publisher - effects of OLAY's anti-aging cream is comparable to those that sell for $200+. Although I had not tried the ant-aging cream, but this little scrubber does look simple to use and works gentle on your face.  All you'll need is two AA batteries (included) and an exfoliating scrub (sample size included). The scrub has two speeds, I like to use the fast one on my nose, cheek and chin area; but for forehead and outer areas of eyes, I use the slower movement and scrub gently.  I love the result - and the good thing about this product is that you can bring it to your oversea travels as well since it uses batteries.

After using it, I recommend using a hydrating mask as a follow up - after scrubbing off some skin cell, it's good idea to replenish the skin with some moist as the layer gets thinner, and when you skin is clean it absorbs the benefits of skincare the best. 

Now I use it in conjunction with my new facial soap, my skin stays smooth all the time.  

Happy Scrubbing!

Source: http://www.amazon.com/gp/product/B0043OYFKU/ref=oh_o00_s00_i00_details 

My New Facial Cleanser

After trying numerous of facial cleanser brands, I finally found one that I am really satisfied with - Cle' de Peau Synactif face soap. It successfully remove a lot of dirt, oil and dead skin cell on my face, is extremely mild and makes my skin feels smooth after rinsing. In the other brands I've used in the past, some were good and some were average - most of the time I liked it in the beginning and felt like it didn't work as much as I expected after few weeks.  I've been using the sample of the soap for a few weeks from my best friend, and I love it! It is a little pricey after all but I thought it is worth trying. 

If you're not familiar with this brand, it is the luxury brand product of the Shiseido brands, which you might have heard of. It is a reputable company and the products work on sensitive skin like mine.

For someone with visible pores like me, having clogged pores or blackheads is a big concern, this face soap is great for cleaning some of those nicely. For deep exfoliation, I will  share some tricks in my upcoming post.  Stay tuned :)

I love Häagen-Dazs Ice Creams!

If you're an ice cream fan like me, you had probably tried many flavors of the Häagen-Dazs ice cream.  For some reason I had always prefer non-fruity flavors, like chocolate, vanilla, coffee to mango, banana, raspberry etc.  

Recently I have been absolutely crazy for their limited edition new flavors (pictures below), they are really good with hitting the market in correspondence with the food trend - such as salted caramel, I can't say how much I've seen this twist on dessert menus;  I particularly like that and Vanilla bean espresso, try it out and let me know which is your favorite!