Debt Snowball – that is when you continue to roll up assorted debts into one. It can be a good thing or it can be a bad thing. When a debt snowball is used to consolidate debt into one lower and manageable payment that is a good thing. Many consumers have done it in a good way using home-equity loans to pay-off other higher interest debt.
On the other hand, when you continue to roll-up more and more debt into a debt snowball just to accumulate more debt – you are creating a disaster. Unfortunately that is what Fannie-Mae appears to be doing by changing it’s underwriting guidelines with regards to student loans & payments. Yes that same Fannie-Mae that brought you the mortgage crisis of last decade seems hell-bent to do it again.
Up until now a lender had to count the fully-amortizing payment or one percent of the outstanding loan balance of a student loan in a borrower’s debt to income ratio. That is common sense – count the full-payment or more on a debt to determine a borrower’s ability to successfully repay a mortgage. Since we the people are backing these student loans and mortgages that is a reasonable and sound lending-approach.
Well folks that sound and reasonable approach just got turned upside down by Fannie-Mae. They have now changed their guidelines to allow lenders to accept the payment for the student loan that is reflected on the credit report. No longer following the common-sense guidelines aforementioned.
Here is the problem – the government allows student loan borrower’s to negotiate a lower-payment and defer the additional payment and interest to a future date. Basically they are allowing debt to be piled upon more debt. That usually doesn’t work out very well.
Thus, with Fannie-Mae’s new guidelines you are not qualifying the borrower on their real debt to income ratio – but on a deferred reduced payment that will be due at some point in the future.
This bad debt snowball may turn into another mortgage-crisis avalanche!
The Battle of San Jacinto happened on this day April, 21st a hundred and eight-one years ago. The battle was between Texas and Mexico in Texas quest for independence. It was fought in San Jacinto, Texas which is about twenty-two miles outside of what is now know as Houston, Texas.
The Mexican Army was led by General Antonio Lopez de Santa Ana. On the other side the Texas Army was led by General Sam Houston. Santa Anna had an Army with him of twelve hundred men that were fresh off a victory over the Texans at the Battle of the Alamo and the Battle of Goliad. On the other hand, General Sam Houston had amassed an army of nine hundred men ready to avenge their losses to the Mexican Army. Santa Anna was known as a brutal dictator and had laid carnage to even women and children when fighting the Texans.
He was such an evil ruler that many of those that fought against him were citizens of Mexico known as Texicans. Even though the Texan Army was out-numbered they had several advantages going into the Battle of San Jacinto. First, they knew the lay of the land, it was familiar to them. On the other hand, it was foreign to the Mexican Army, and they established their camp in a vulnerable location. Moreover, the Mexican Army had been on a long march to get to San Jacinto. They were tired and weary. Lastly, the Texan Army was rested. They were also highly motivated by revenge along with their thirst for independence from Mexico.
Combining those factors when the Mexican Army took it’s afternoon siesta from their long March the Texans attacked at 4:30 PM. They charged the sleeping Mexican army with cries of “Remember The Alamo” & “Remember Goliad. Eighteen minutes later it was over. In what can be described as not only the shortest battle, but also the most decisive one as well.
The Texas Army in that short time had killed six hindered fifty Mexican soldiers and captured another three hundred. Moreover, the Texan Army only lost leven men with another thirty wounded in battle.
And that my friends is where the saying “Don’t Mess With Texas” evolved!
Krav Maga is the best self-defense system on the planet in my opinion. There is a reason most top Special Operation Groups use it. These include Navy Seals, Delta Force, SAS, and Shayetet 13 the Israeli equivalent of the US Navy Seals. In fact, Krav Maga is taught to every member of the Israeli Defense Force. Moreover, this combat system has been adopted by many of the top law enforcement agencies nationwide. If all of these “Teams” find it to be the best I’d say that my opinion is valid. Moreover, there is no self-defense system that has been more “Battle-Tested” than Krav Maga. That makes it a proven system that works.
Like many young boys I always had an interest in martial arts. Perhaps it was all of the Bruce Lee, Chuck Norris, and later Jackie Chan movies I had watched. Finally, after college I took the plunge and contacted many martial arts schools. The one I settled on at the time was Champions Martial Arts. It was a school that taught multiple systems as one. I practiced there for years obtaining a black-belt in Shin-Nagare Karate and Wu-Shu Kung-Fu.
There were lost of positive things I learned there. The four that you should learn at any quality martial arts school: Respect, Discipline, Patience, & Determination. It also provided me a place to set goals and obtain them through hard work. The most practical martial art I was introduced to there was Brazilian Jiu-Jitsu. I had a solid foundation on ground-fighting. I also developed many friendships many of which I still enjoy today. Eventually the Head Instructor retired, and it was time to find a new martial arts school to train & practice.
About that time I heard about an Israeli Martial Art system called, Krav-Maga while watching a television program. What piqued my interest was the instructor talking about using “anything” as a weapon and the practicality of the system. It was simple, effective, and anyone could learn it. That was all I had to hear, now I had to find a place to checkout this martial art. And I’ll continue the story in my next post. Until then, “Walk In Peace”.
Texas Longhorns – they are my college team, and I’ve know that since I was five years old. Cheering for the Texas Longhorns is something I learned from my father, Russell Cox, and my uncle Jon House. Both of them are went to The University of Texas at Austin. They had season tickets to Texas Longhorns football games for as long as I can remember.
I remember the very first Texas football game I attended. It was against our rival Texas A&M on a cold November Thanksgiving Day in Austin, TX. It was cold for Texas anyway which meant you had to wear a sweater. For some reason my mom had packed a burgundy sweater for me. Unfortunately burgundy looks like maroon, the school color of our rival. I was so upset that everyone else was in Texas “Burnt-Orange” while I languished in ugly maroon.
Thus, that was the first time I had ever become upset with my mother. On the other hand, when you get that feeling over having to wear a maroon sweater you know without a doubt you are a Longhorn! The saving grace of that day was later in the evening when the game was played, my Longhorns slaughtered that Aggies.
That’s one of the great things about being a Texas fan, we dominate our two rivals – the Oklahoma Sooners and the Texas Aggies. Our all-time record against Oklahoma is 61-45-5 and against Texas A&M is 76-37-5. Unfortunately with Texas A&M moving conferences we no longer play them – for now anyway.
I was blessed that for the rest of my childhood thru my teenage years I was able to attend Texas football games. Moreover, I loved those trips to Austin with my parents and my Uncle Jon & Aunt Sue. Furthermore, with every game I attended the bigger fan I became.
Bleeding orange is something that I’ll do my entire life. Now it’s something I’ve passed onto my two sons, and they love it too!
Student Loan Crisis is now upon us and we need some reasonable solutions. Furthermore, we need them to be implemented immediately. This problem is a two headed monster – rising student loan debt and escalating college costs. Did you know that the average student loan debt is $27,000 per student according to Forbes. These issues are compounded by shortfalls in the education budgets at the state-level across the nation. Let’s first address an easy solution to the budget shortfalls before addressing the student loan crisis.
Universities are for the most part giant-educational bureaucracies. They, bureaucracies, are like a cancer, they must grow to survive. Moreover, the only way to stop the cancer is to cut out the malignancy. Thus, every university, especially every state-funded university should have to have it’s budget reviewed by outside independent auditors for the big three. Those would be waste, fraud, and redundancy.
One can only imagine how much of these can be found at any college by a consulting firm such as Accenture, Boston Consulting Group, or Bain & Company. Colleges should be required to “take a look under the hood” every two years before raising taxes or tuition.
Now back to the issue at hand solving the student loan crisis. I bet very few people know that student loan funds are deposited directly in to the students personal bank accounts. Giving eighteen year-olds access to cash and asking them to be responsible with it is akin to giving a pyromaniac unlimited access to gasoline and matches! It’s just not a good idea, but that’s what the government does – unbelievable!
A small minority of students may use the money for its’ intended purpose. On the other hand, the vast majority are going to buy beer, pizza, and spring-break road trips. Some students have been know to pay for cosmetic surgery with their student loan monies. Perhaps they should enhance their knowledge before their looks.
So what’s my solution?
Student loan funds should be directly disbursed in the name of the student for their intended purpose. The student submits a bill for college tuition the government pays the college directly. The students need housing and food? Then the government pays the university directly for the dormitory and meal-plan. Don’t want to live in a dorm with a meal-plan, fine but no student loan money for it. Textbooks, the government pays the bookstore directly.
If the student needs extra money they can get a job at the local Starbucks, wait tables, or get some other part-time job.
My plan will reduce waste, fraud, and abuse of student loan funds. In addition, it brings efficiency back to the use of the government’s funds.
One more thing we will limit the types of degrees one can obtain with student loans, but we’ll save that topic for another article.