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Three Steps to Negotiating a Salary

Although many employers expect candidates to negotiate their benefits package, prospective employees often do not take a proactive approach to naming their salary expectations. This process can seem especially challenging and intimidating to young people early in their careers, but a little negotiation can make a big difference. The ideal time to begin negotiating benefits is between receiving the initial job offer and formally accepting it, given that you have already impressed the employer and shown that you possess the qualifications that they are seeking. Here are some tips to help you prepare for the negotiation stage upon receiving a job offer:

  1. Review the Offer and Do Your Research

Consider the benefits package holistically. Perhaps the base salary is lower than what you were anticipating, but there may be other perks that compensate for it. Does the company offer bonuses or commissions? Recognizing that there is more to a compensation package than salary can help you determine if you are getting a fair offer. Do your research to see how your offer compares to similar ones with Payscale’s Job Offer survey.

  1. Identify Your Top Priorities

What factors of a compensation package are most important to you? Do you place more stock in salary, healthcare coverage, and retirement plans, or do you desire a good work-life balance with things like flextime and telecommuting? Figure out what you want, and how much you want of it, and ask for it. Some experts recommend asking for slightly more than you think you need in order to leave room for compromise.

  1. Re-Sell Yourself

Employers are indifferent to whether the salary they offered will cover your monthly mortgage or education loan payments. If you are going to ask for better benefits, you need to show the employer that you are worth it. Use your skills and experience as leverage. How have you created value in previous jobs and internships? Do you have any unique skills that would be beneficial to the position? Be confident in your abilities and accomplishments while simultaneously being respectful, professional, and enthusiastic.

Negotiating a salary is an often-disregarded step of accepting a job offer. However, before jumping in, remember to do your research and learn a few salary negotiation tactics. Do not be apprehensive of sounding greedy – some employers view candidates with exceptional negotiation skills as high performers on the job. Best of luck negotiating!

 

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Weighted Averages and Student Loans

One of the best reasons to refinance or consolidate student loans is to obtain a lower interest rate, thereby helping you save money over the life of your loan. During the refinancing or consolidation process, you may wonder how your interest rate might change or how the new interest rate is calculated and applied across multiple loans, especially when they include a variety of high and low rates. Both of these questions, as well as a few others associated with a student loan debt consolidation, will be answered as we explore the definition, process, loan association, and calculation of weighted averages.

 

What is a Weighted Average?

Mathematically defined:

Weighted average is a mean calculated by giving values in a data set more influence according to some attribute of the data. It is an average in which each quantity to be averaged is assigned a weight, and these weightings determine the relative importance of each quantity on the average. Weightings are the equivalent of having that many like items with the same value involved in the average.

 

While lofty in explanation, the mathematical definition does emphasize one important clue: weighted averages determine the relative importance of each quantity in the average. This kind of emphasis means that important details like previous loan amounts and interest rates will not be overlooked. However, to better explain what a weighted average is and how it pertains to student loans we want to first explain where it takes places, and with which type of student loans it is associated.

 

Weighted averages typically only apply to federal student loans that are consolidated by the Direct Consolidation Loan program (not refinanced loans offered by private lenders). When this federally-backed program consolidates multiple federal student loans into one payment, they must somehow figure out what the borrowers new interest rate will be. This is where weighted averages enter the equation. The new interest rate on the consolidated loan will be a fixed interest rate that is based solely on the weighted average of the interest rates of the loans being consolidated, rather than reflecting current rate trends based on economic conditions or considering the credit history of the individual borrower. This resulting number is rounded up to the nearest one-eighth of 1 percent, and generally reflects a midpoint between the highest and lowest interest rates from the original, individual loans.

 

How Is the Weighted Average Calculated?

Calculating the weighted average of federal student loans can be achieved through this simple, five-step process:

  1. Multiply each of your loans amounts by its own interest rate. This calculation yields individual loan weight factors.You should have as many loan weight factorsas you have loans.
  2. Add each of the resulting loan weight factors together to find the total loan weight factor.
  3. Add each of your loan amounts together to find your total loan amount.
  4. Divide your total loan weight factor by your total loan amount. To view this number as a percentage, multiply by 100.
  5. Round the resulting percentage from step five to the nearest one-eighth of a percent. This should present the final interest rate or the weighted average for the newly consolidated student loans.

 

How Are Interest Rates Calculated When Refinancing Student Loans with a Private Lender?

When a person refinances student loans (whether privately or federally-funded) with a private lender, weighted averages usually no longer apply, such as with a consolidation loan from Education Loan Finance. Instead, a new interest rate offer is calculated based on the borrowers credit history, overall financial health, and current financial market conditionsnot weighted averages. Remember, weighted averages only apply to federally consolidated loans. Furthermore, with private lenders, borrowers often have the flexibility to exclude select low-interest portions of their student loan debt from the refinance package if the original rate is more favorable than the rate being offered.

 

Do the Math

Along with calculating what your weighted average may be, should you choose to consolidate your federal student loans, be sure to find out what your options may be with a private lenders refinancing program? Refinancing student loans may offer the greatest money-saving opportunities, but it is important to understand that when federal loans are refinanced with a private lender, some benefits including income-based repayment, loan forgiveness, deferments, and forbearances may be lost. Our best advice is to compare federal student loan consolidation to refinancing with a private lender and do the math to find out what you may potentially save and what benefits and special considerations your new lender offers before you make any final decisions.

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How to Budget for a Wedding

Adulthood comes with several significant financial decisions — purchasing a home, making payments on a new car, and getting married are just a few. While marriage is often regarded as one of the most important life decisions one can make, planning for the big day can still be a large financial commitment. According to a recent survey conducted by The Knot, the average wedding carries a hefty price tag of around $32,000. There are many hidden costs associated with a wedding that newly-engaged couples are simply unaware of before and as they begin the planning process — and these costs can add up quickly! If you are a future groom or bride-to-be, the following tips can help you create the wedding of your dreams without breaking the bank.

1. Figure Out What You Want

Whether it is an intimate elopement, a casual backyard wedding, or a big celebration with all your friends and family, a wedding can be anything you want it to be. Keep in mind that larger weddings come with greater financial obligations. Decide on the type of wedding that works best for you and your partner. Create a guest list of friends and family members that you would love to attend your special day. Draft a firm budget based on these factors, and decide what is a feasible amount to spend on your wedding.

2. Start Saving

Once you have a general number of what you can afford to spend, the next step is to determine which sources will provide the money needed to match your budget. Will you be receiving financial support from your family, or will you be financing your own wedding entirely? Are you planning to wed in a few months, or do you have over a year until the big day? These factors will affect how much you need to be saving each month. Develop a savings plan with your partner — decide on an amount or percentage of your paycheck to put back each month. If necessary, you can also adjust your monthly budget to allocate more money to your wedding fund. For more creative ways to save money, check out this post.

3. Get Specific

There are so many details that go into planning a wedding, so it is essential to itemize your budget by creating specific allowances for each aspect of your wedding. Make a list of what is most important and least important to you. For instance, would you rather save on flowers and splurge on photography? Would you sacrifice an intricate cake and five-star catering for your dream venue? Determining what you are willing to splurge and save on are great ways to prioritize your costs and figure out how much to allocate to each part of your wedding. Next, create an itemized breakdown of the percentage of your budget you want to spend in each category. You can do this yourself or use a budgeting calculator like this one from The Knot. Either way, be sure to set aside a percentage for contingency, just in case you end up needing some extra cash.

4. Identify Ways to Cut Costs

Just because you have the money in your budget does not mean you have to spend it all. You can easily find ways to save money in various aspects of your wedding, allowing you to have more money to spend elsewhere (like your honeymoon), or simply put back into your bank account. Pinterest features thousands of creative ideas to cut back on wedding costs, but here are a few of our favorite ways to get the most out of your budget:

  • Flowers can be surprisingly expensive. Instead of having lush centerpieces made for every table at your wedding, consider using candles, framed pictures, and inexpensive greenery like moss.
  • Cut down your guest list. The overhead cost of your reception increases with each guest, so reevaluating who you absolutely need at your wedding can be an easy way to save a lot of money.
  • In lieu of an open bar at the reception (which can cost upwards of $2,000), try to get permission to buy beer, wine, and champagne in bulk. However, if your venue does not allow you to bring in outside beverages, consider simply limiting drinks to beer and wine.
  • You do not have to spend a fortune on your wedding dress. Check out designers like BHLDN, David’s Bridal, and Alfred Angelo for affordable but breathtaking dresses. You can also get great deals on pre-owned wedding dresses on websites like Once Wed.
  • Saturdays are the most popular days for weddings — and, thus, carry the highest costs — so opt for a Friday or Sunday wedding instead.
  • Skip the seated, multi-course meal. If your wedding is in the evening, go for a delicious buffet meal instead. You can also host a morning or early afternoon wedding and serve brunch or finger foods.

You can still host the wedding of your dreams while keeping your expenses in check. In the long run, creating and sticking to a wedding budget will do wonders for keeping your financial and emotional stress low and help you focus on the aspects that matter most. With the above budgeting and money-saving tips — along with countless others on the web — we hope you and your partner create a day you will never forget. Happy planning!

 

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Consolidation Vs. Refinancing: Which is Right For You?

Updated November 13, 2019

Anyone who has taken out a student loan has probably been required to sign a promissory note, which confirms a borrower’s responsibility to pay back the money they borrowed to pursue higher education. Many colleges and universities require exit counseling to inform their graduates of the repayment options available through federal loan programs. However, with private financing companies now offering additional options that could possibly lower monthly payments or interest costs over time (also known as student loan refinancing), many financially savvy individuals seek to minimize and simplify their financial debts.

 

Choosing the right student loan repayment program can be confusing, and borrowers need to be aware that both federal and private lenders offer plans designed to match their budgeting capabilities and financial goals. In today’s financial environment, graduates may want to take advantage of lower interest rates while paying off their debt as soon as possible, or they may prefer to free up extra cash by choosing an extended term with lower payments.  

 

When is comes to changing your student loan repayment plan, two common terms that often get confused are “consolidation” and “refinancing.” While these two terms are sometimes used interchangeably, they actually represent two different options. This blog outlines the differences between student loan consolidation and student loan refinancing of both private and federal student loans, so you can know which is right for you.

 

Federal Student Loan Consolidation

Federal or Direct Loan Consolidation allows borrowers to combine multiple federally-funded subsidized or unsubsidized student loans, regardless of income or credit history, into one payment that uses a weighted average of all interest rates rounded up to the nearest 1/8th percent. This form of student loan consolidation is only available for federal loans – student loans acquired by a private lender are not eligible. The benefits of this form of consolidation include the ability to combine loans into one simple payment, the opportunity to switch from various variable rates to one fixed interest rate, and the ability to extend the life of the loan, thereby lowering the total of monthly payments. Borrowers in the federal program are also eligible to take advantage of programs such as deferments, forbearances, or grace periods that temporarily reduce or suspend monthly payments during times of financial hardship. These federal student loan repayment options are typically known as Income-Driven Repayment Plans such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). The downside is that borrowers can be less likely to save money or see drops in interest rates with these plans. Also, borrowers who extend the life of the loan to lower their monthly payment will likely pay more in interest over the life of the loan.

 

Private Student Loan Refinancing

Similar to student loan consolidation, refinancing student loans involves combining multiple student loans into one loan with one monthly payment. However, unlike Direct Loan Consolidation, this option is only offered by private lenders and includes the consolidation of both federal and private student loans. Student loan refinancing can reward borrowers who demonstrate responsible financial habits with rates and payment options not offered through the federal consolidation program. New interest rates are calculated based on the borrower’s credit history and overall financial health, as well as current financial market conditions, rather than the weighted average of the included loans. Student loan refinancing can offer the greatest opportunity for a borrower to save money on their student loans since the new rate is applied to every loan that is refinanced. However, it is important to note that when borrowers refinance with a private lender, they may lose the benefits associated with federal student loans, such as income-based repayment, loan forgiveness, deferments, and forbearances. Although not guaranteed, reputable private lenders are interested in the success of their clients and offer support services to help keep their borrowers in good standing during unexpected financial hardship, so be sure to consider the level of customer service available when choosing to refinance your student loans.

 

Which Is Right For You?

Choosing the financial path that is right for you and your budget is paramount. Compare the terms, interest rates, and benefits of your current student loans to a new potential lender and decide if the potential savings and the stability of your financial situation make the switch worthwhile. Then, figure out what you can comfortably pay each month and how long you intend to make payments on the loan (our loan payment calculator helps borrowers choose a loan term that fits different budgets). Finally, take a look at our application process or give us a call at 1-844-601-ELFI.* Whether you choose to consolidate federal student loans or refinance the combination of private and federal student loans, our team works as your advocate, steering you in the direction that is right for you and your budget.

 


 

*Subject to credit approval. Terms and conditions apply.

 

 

How to Build Credit: A Beginner’s Guide

Building credit is a topic that isn’t always in the forefront of young adults’ minds. Up until a certain point in life, it is just something that they have never really had to worry about (or knew that it actually existed). However, with the transition from student to full-fledged adult comes an abundance of new responsibilities, and one of the most important challenges recent graduates and young professionals will face is establishing good credit. Having a good credit score is crucial for many adult decisions, including purchasing a car, becoming a homeowner, and even getting hired for a job. However, a solid credit score does not just happen. It must be built and maintained over a period of time. That is right — you will have to start from the ground up. Fortunately, there are several tools you can take advantage of as a college student, recent graduate, or young adult to begin the process.

First, we will cover some basics about credit scores. There are different types of scores, but the FICO score is the one most widely used by lenders. These scores are calculated by the three credit bureaus — Experian, Equifax, and TransUnion — and scores range from 300 to 850. This score takes a variety of factors into account, including how quickly you pay your bills, how long you have maintained accounts over time, the percentage of your monthly credit limit that you spend, and more. The higher the score, the easier it could be to obtain a credit card, take out a loan, and get lower interest rates.

You now know how credit scores work, but how do you actually begin the process of building credit from scratch? There are three major tools you can use to do so: credit cards, loans, and rent payments.

  1. Credit Cards

One of the simplest ways to establish credit is through credit cards. Before taking out a credit card be sure to:

  • Before making large purchases, develop a plan for how you will repay what you owe in a timely manner.
  • Try to keep your balance below 35 percent of your monthly credit limit.
  • You do not have to charge every purchase on your credit card in order to build credit. Using your card sparingly and for smaller purchases, such as groceries, and paying off your balance each month will raise your credit score.
  • Never miss a payment. Failing to make a payment on time could negatively impact your credit score.

In addition to traditional credit cards, there are also a few alternatives you can use to boost your credit. For example, a retail or store card is a type of credit card that can only be used at a certain store. They typically are easier to obtain than a standard credit card, but they often come with higher interest rates. You can also get a gas card (credit card used specifically at certain gas stations), which is a great way to make sure you do not overspend while still boosting credit.

  1. Loans

A slower (but still solid) way to establish credit is by taking out a loan — whether it be an educational loan, a home loan, or some other type of financed purchase. Many young adults have to borrow money at some point to help finance their education or purchase a home, to name a few, and having a moderate amount of loans in good standing can be a great way to build credit. However, because payment history is the most influential factor in calculating a credit score, it is absolutely essential that you pay your loans on time each month. A good way to ensure punctuality is to set up automatic payments (whenever possible), set reminders, or make your monthly payments as affordable as possible. Figure out what amount is feasible for you to pay based on your income, and talk to your lender about the possibility of lowering your monthly rate.

  1. Rent

A third option for establishing credit, and one that is often overlooked, is making timely rent payments. Two of the three credit bureaus, Experian and TransUnion, now give the option to factor monthly rent payments into your credit score. If you are a renter, this is a solid way to build credit history in college, after college, and as a young professional (and without a credit card).

Establishing a good credit history can seem like a daunting process, and getting started can be challenging for young people who are just beginning to achieve financial independence. Just remember, everyone must start somewhere. If you can use one or more of the above tools responsibly, you will be well on your way to building credit and setting yourself up for financial success in the future.

 

Click for Tips on How to Improve Your Partner’s Credit Score