What the experts say
Pausing student loans
“Beware of student loan consultants offering ‘forbearances,’” said Ann Carrns in The New York Times. That is a fancy word for an option that lets former students temporarily stop making loan payments, yet still be considered current on their loans. Some colleges are promoting forbearances, according to the Government Accountability Office, even though they may not be in borrowers’ best interests. Colleges prefer borrowers to be considered up-to-date on loans, the report said, because if too many people default within a certain time period, the college may lose its eligibility to offer federal financial aid. Forbearances can help colleges avoid that penalty, but for borrowers who use the option, the loan interest continues to pile up, so they “can end up owing much more than they did in the first place.”
Affordable flood insurance
“You don’t have to live in a high-risk flood zone to be hit with expensive flood damage,” said Kimberly Lankford in Kiplinger.com. A quarter of the National Flood Insurance Program’s claims come from areas with low-to-moderate flood risk. So even if you aren’t required by your mortgage company to carry a flood insurance policy, “it can be worthwhile to protect against the risk.” A policy with the National Flood Insurance Program, which provides up to $250,000 in dwelling coverage and up to $100,000 in property coverage, can cost as little as $456 a year in a low-risk area. And check with private insurers, which offer competitive rates in some states. You may also get a discount on flood insurance in high-risk areas by making certain home improvements, such as elevating your home or adding flood vents.
Low-balling retirement spending
Underestimating how much you are likely to spend in your golden years “can be the difference between a comfortable retirement and one that is a struggle,” said Neal Templin in The Wall Street Journal. Soon-to-be retirees often carefully estimate what they are likely to spend on day-to-day needs and activities but “forget to factor in more periodic, and mostly predictable, expenses like a new car or a new roof” that can “blow holes in their budgets.” Many people also underestimate how much they’ll need for health care, as well as for entertainment to occupy their newfound free time. “Instead of working five or six days a week and playing one,” it’s typically the opposite, though entertainment spending typically falls as people get older.