Ask Amy Smith – Disability to Credit to Student LoansOct 27th, 2013 | By Amy Smith | Category: Ask Amy Smith
ASK AMY SMITH
by Amy Smith for The Dance Journal
This column in the Dance Journal seeks to improve the financial literacy of dancers and artists in all creative disciplines, so that they may develop sustainable practices and further expand the reach of their creativity. Questions for Amy may be mailed to firstname.lastname@example.org for consideration.
I work as a dancer, dance teacher at a local studio and dance/theater teacher at a regional high school. I worry that if I get injured that I may not be able to pay my bills. This became a concern after a minor injury, but thankfully the recovery time was only a week. While I have health care insurance, not sure what I would do if I could not work for an extended period of time. How can I protect myself?
I hear you! When you work multiple part time jobs and none of them offer the stability of short-term disability insurance, you are basically out of luck if you get an injury that makes it impossible to work. A long-term disability is a different story – that would make you eligible for Social Security disability benefits, but I assume you are talking about a broken leg or something more short-term. And if you are injured on the job, you are eligible for worker’s compensation, but again I’m assuming that you are talking about an injury or illness that is not job-related. It is possible (and might be prudent) for you to purchase short-term disability insurance on the open market as an individual. I have never done so myself, so I don’t know what the premiums are like, but I assume it would be very inexpensive. Most importantly, it would put your mind at ease, which is worth a lot.
I just graduated and have only a debit card with my bank that is linked to my checking account. I want to establish credit. What would be the best way to do this? I don’t want it to be tied in any way to my parents.
The best way to establish credit is to start small. Get a credit card, perhaps through your bank, with a $500 credit limit. Pay it off every month, ON TIME. Let me say that again, the ON TIME part. EVERY MONTH! Get a lease or utility in your name, and pay on time. Eventually you will build up credit and become more credit worthy to future lenders for bigger ticket items, like cars and houses. Just remember, the credit card is not free money! Only use it if you have the money in the bank to pay it off. And I’m happy to hear that you want to cut financial ties with your parents. It’s a good idea for you, and for your parents.
I am glad this column is anonymous and thank you for doing this for our community. I am embarrassed to admit that I do not have a bank account. I usually just get paid in cash and pay for whatever my expenses are in cash. I am now making more and I guess it is time to join the establishment. So how do I find a bank? And is there anything else I need to know about opening an account?
Dear Johnny Cash,
There’s nothing to be embarrassed about. There are many advantages to living a credit-free existence, even a bank-free existence. One advantage to using cash is that you never spend more than you have, which is no small thing. My husband used to be a musician and bartender and got paid in cash, so he lived without credit or banks for years. I admired the fact that when he wanted to buy an expensive new guitar, he’d save up for it (for months!) and buy it outright. Anyway, if you decide that it is time to join the establishment, I would advise you to start your account at a credit union rather than a traditional bank, especially if there’s one in your neighborhood. Go there in person, tell them that it’s your first account, ask lots of questions, and make sure you understand what the terms are, especially if there is a minimum account balance. You don’t want to end up paying monthly fees because you fell below the minimum. When you walk out of that bank with your checkbook in hand you’ll feel like a Bad Ass.
My monthly student loan payments are just too high for me. Is there any way to reduce the amount each month? Or am I just stuck? I don’t want to be late or have to default. Getting really nervous about all this.
You can try consolidating your loans with the U.S. Dept of Education so that you only have one monthly bill, and it may significantly lower your monthly payment. Go to http://loanconsolidation.ed.gov/borrower for more information about that. You might also be eligible for an Income Based Repayment plan, which caps your payments at 15% of your income. The most important thing is that you are dealing with it! It is always, always, always better to tell a lender that you are having trouble paying, rather than ignoring it and going into default. Call the Dept. of Ed and get started. You’ll be glad you did.
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