Pension Reform Needed Around The World [infographic]

A sustainable pension system still eludes many countries. The employer doesn't want to fund it and taxpayers do not want to pay for it through taxes. For us 50 plus people, the system will see us through but the ones who will have the most difficulties with a funded retirement are the workers 40 and younger. The broken pension system we now have, plus the poor economic environment we now are experiencing, have created a the perfect storm. 

Here is an infographic depicting current U.K. pension reform problems.

This is an infographic on pension reform is supplied by Money Infographics, a site that hosts personal finance infographics

How Much Debt Does It Take To Be Considered Drowning In It?

Many college students have graduated this past semester and are finding the prospects for jobs very limited. In a recent report, 2/3 of these students have a debt of at least $25,000. This amount reflects only students attending public colleges. Private college debt is said to be much larger.

These students should at least be congratulated for finishing their degrees. But as their reward for doing a great job they are finding a poor job market and a hefty monthly debt payment soon to begin. As a bonus, congress wants to raise the interest rate on the money owed.

If you were fresh out of college with no job and $25,000 in debt, would that be considered drowning in debt. According to FinAid.org the payment would be about $290 per month, on a 10 year repayment plan. This payment would be impossible even if the student had a job. You would need a salary of $34,000 and you would pay 10% of your income toward your student loan.

For new graduates finding an entry level job that makes that much, is tough to find. Add to that living in a medium to large city that might have such jobs is pretty expensive. Plan on spending 30-40% of your income on a resident.

With these kinds of obstacles in the college graduates way, it's no wonder the rate of student loan default is on the rise.

If these trends continue, the outcome won’t be good for this generation of college students or for the country as a whole. Especially if the cost of higher education continues to rise as predicted in this graph:

According to the Wall Street Journal, the administration has laid out a 3 part plan to help take off some of the pressure. 

1. 10% of Income — The income-based repayment program, which puts a percentage cap on the amount that individuals must pay toward their student loans, currently requires that people must pay at least 15% of their income, but Obama’s plan will drop that number to 10% starting in 2012 rather than in 2014 as previously mandated.
2. Forgiveness after 20 years — Also, starting in 2012 instead of 2014, participants in the income-based repayment program will have their debts automatically forgiven after 20 years rather than 25 years.
3. Consolidation of loans — Obama’s plan will allow people to consolidate all their federal and government-backed loans, which can translate to lower interest rates and lower monthly payments.

The proposal could cost the government as much as $1 billion. But the slow moving government has much to do to get this plan off the ground. Time will tell what the final result will be.

How Paying the Minimum Payment Makes You A Frog

 (Photo credit: Wikipedia)We don't realize how often companies use psychology on us to make money. There are many ways psychology is used but did you know it's used on your credit card statement. In a recent study the amount of your minimum payments can influence how much of your balance you decide to pay off each month.

Specifically, according to the Wall Street Journal, the study looked at how people’s behavior changed when they saw a specific number marked down as a required minimum payment on their hypothetical credit card bill:

"A random sample of 591 Americans saw a made up credit-card statement showing a balance of $1,739, and an annual percentage rate of 12%. Some people saw no further information, while others were informed that a minimum payment of 2% of the balance was due."

What they found is that people who did not see any minimum payment number desired to pay a higher amount of their balance — significantly more than 2% — whereas people who were shown the minimum payment number were inclined to pay closer to 2% (meaning they’d be in debt longer).

We can speculate that this is because the 2% amount acts as an anchor in determining what you consider a “reasonable” payment to be.

Maybe you had planned to pay off the balance in 6 months, but since the bank is only asking you for 2% on your credit card statement, you figure that’s the right course of action. After all, they’re your bank, they must know what’s appropriate for you, right?

And that’s how you become the proverbial frog in a pot of boiling water. You wouldn’t allow the bank to take $1,000 or $5,000 or $10,000 in interest payments from you in one day, but by convincing you to succumb to the minimum payments myth they quietly take that much from you over the course of several years. It happens so gradually that you might barely notice until it’s too late.

What You Can Do About It?

You need to fight this inclination to pay only minimum payments. Add up the dollar amount of the interest you will be paying over the life of the payback period. Realize that all that interest will be coming out of your pocket for no good reason. Ignore the minimum payment, double or triple it and send that amount in every month. Get the thing paid off and don't be a frog.

Why Is Your Phone Number Your Greatest Business Tool?

 (Photo credit: ronploof)

Starting a business comes from a dream of wanting to be successful in the field you have chosen. You pride yourself on doing professional work and having that work reward you. But as a small business you need to build a solid reputation. The customer needs to feel confident in your business or they won't call you for your services. One way to do that is to offer freephone numbers for them to contact you.

Even though many people use the Internet to look for goods and services your phone number is still of utmost importance. Surveys reveal that the use of the Internet is growing at a fantastic rate, but your phone number is the main way customers contact you.

A local phone number is adequate but a free phone number will help you expand your business from a small start up to a regional or national company.

Here are 5 Reasons you Need A Business Phone Number:

1. Providing good customer service is one of the most important ways a company is likely to get ahead and move from merely breaking even to becoming very successful.

2. Call centers need to increase their customer satisfaction and ensure they stay ahead of competitors in the current difficult economic market, in result making it important to employ freephone numbers for customers to contact them.

3. Marketing can play a big part in an enterprise's success and there are numerous methods of advertising and getting people's attention. However, for many smaller firms these may not be viable at present as they do not have the money or resources to spend on large campaigns spanning several different types of media. 

4. A 0800 number presents a national image, so no matter where an organisation is based it can attract clients from all over the country, thus encouraging even more business and driving up revenue.

5. Memorable phone numbers also promote brand recognition, as they help people to differentiate between different enterprises and build up relationships. In particular, 0800 numbers are well suited for this purpose, as they are free for consumers to contact from landlines.

6. If a company has a local number, it is most likely to be perceived as a smaller business offering more specialised, localised products and services to those living in certain parts of the area. While this is ideal for some firms that will no doubt be happy to create a friendly, personalised image to people who are likely to return with repeat custom and tell their friends and neighbours about their experience, this is not the case for organisations with aspirations of international trade and a nationwide reach.

7. If people see that the enterprise is willing to cover the cost of the call, they may consider it to be looking after its customers and therefore have no hesitations when it comes to returning with more business or recommending the service to a friend.

The way your customers contact you is of utmost importance to the success of your company. Your company is in competition with hundreds of other businesses. It's important to distinguish yourself from them, one way is at distinct and easy to remember phone number.