| Guest column: Home equity loans should be used sparingly
The versatility of the home equity line of credit has many consumers tapping into their home's equity to pay for home improvement projects, college tuition, weddings, new vehicles and credit card consolidation. While there are no restrictions on how the proceeds can be used, using your home's equity as a temporary solution to a long-term problem could jeopardize your home and credit. For example, using a home equity line of credit to consolidate credit card debt can put you into further debt if you continue to use your plastic and carry a balance from month to month. Your home is usually your largest asset. If you choose to use your home for additional credit, be sure you have a plan and purpose for that credit, such as financing a home renovation to improve your asset and increase your home's value.
Debt burden gets heavier for students
It's no small thing to make it to the top of one of U.S. News and World Reports' college lists. But the folks at Seton Hall University aren't exactly celebrating their No. 1 national ranking for student loan debt. Sixty-one percent of students graduating from the South Orange, N.J., campus have to pay back student loans -- the average totaling $37,724, according to America's Best Colleges 2008. The numbers are high but they are not an aberration. Nationally, nearly two-thirds of graduates of four-year schools have debt, according to the Project on Student Debt. That debt load averages $20,000. New federal measures are expected to ease some of the burden going forward. But, for now, student debt -- which is estimated to have more than doubled in the last decade -- has a stranglehold on many students and families.
Post-age paid
Kraft Foods Inc. is selling its Post cereal unit, with its Raisin Bran, Grape Nuts and Fruity Pebbles, to private-label producer Ralcorp Holdings Inc. for about $1.6 billion and debt. The all-stock, tax-free deal is worth about $2.6 billion to Kraft and its shareholders, the Northfield-based food company said Thursday. Kraft will first split off or spin off Post and related assets to its shareholders, then the Post business would be combined with Ralcorp. Kraft shareholders would own about 54 percent of the combined company. The deal was expected, sponsored by super-investor Nelson Peltz. If approved, it would give Kraft an out of the slow-growth cereal business and provide Ralcorp a group of brands on which to build. "They are better suited to dedicate resources to this business than would have been possible under Kraft," said Chris Baldwin, vice president of Kraft's snacks and cereals group.
Bank of Montreal taking $320M in debt-market writedowns; MasterCard gain $110M
TORONTO - The Bank of Montreal (TSX:BMO) said Friday it is booking $320 million in writedowns arising from disorder in world credit markets. BMO said the charges, to be booked in the fourth quarter ended Oct. 31, are expected to amount to $210 million after tax. The "valuation adjustments" at BMO Capital Markets include $170 million on trading and structured credit-related positions and preferred shares, $135 million on Canadian asset-backed commercial paper, and $15 million on Links Finance Corp. and Parkland Finance Corp. structured investment vehicles. BMO also expects to record a charge of $185 million pre-tax, or $120 million after tax, "to increase the liability for future customer redemptions related to its loyalty rewards program in P&C Canada's MasterCard business." In addition, BMO said that "its strategy to reduce its commodities portfolio continued through the fourth quarter," with losses of $25 million pre-tax.
NextStudent Encourages Recent Graduates Who May Be Having Trouble Making Their Student Loan Payments to Take Advantage ...
Students who graduated in May with Federal Stafford Loans may be having to adjust their budget to accommodate monthly student loan payments as six-month grace periods end sometime this month. Recent graduates who are still looking for work or who received a lower-than-expected entry-level salary may be having trouble finding the room in their budget to meet a new monthly expense from student loans going into repayment. NextStudent, a leading Phoenix-based education funding company, urges graduates who may have trouble making their student loan payments to contact their lenders about their deferment and forbearance options, which allow borrowers to temporarily reduce or postpone their student loan payments without compromising their credit score or defaulting on their student loans. .
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