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TagsBY DEBASUBHRA BANERJEE
NEWJERSEYNEWSROOM.COM
SPECIAL COMMENTARY
A closer look at the debt scenario in New Jersey
Earlier this year, Congress passed a bill which prohibited raising the debt ceiling until May 18, 2013. The Treasury, as it has done in the past, is making manoeuvres so that it can borrow for longer. Not a very reassuring picture. The state of New Jersey too is experiencing serious debt issues. Thanks to its failure to meet pension payments and lack of funds to cover health insurance for retirees, NJ’s debt is up by $6 billion (FY 2012). In such a situation, where does the common man in New Jersey stand in terms of personal finance? Do they have the option to pile up more debt? The answer for most New Jersey people is NO.
The debt situation in NJ –an overview
As per statistics from Debt.org, a debt help organization, New Jersey people have significantly higher amounts of debt than residents of other states. While the national average stands at $47,500, NJ residents have an average debt of $62,300 per capita. Student debt comprises the most of it though credit card debt, and mortgage has their share as well.
Student Debt – Crippling the youth
Average student debt in New Jersey is shooting up in an alarming manner. The figure was close to $28,000 in 2003, considerably higher than the previous years. A recent study revealed that New Jersey students graduating in 2011 were the 11th most indebted batch in the U.S. It’s not too hard to find students who carry a debt over $100,000. A report on student debt reveals that two-thirds of New Jersey students graduate with debt.
Consumer debt – A disturbing picture
Average credit card debt in New Jersey stands at $3,690 (Debt.org), second to Arkansas. The unemployment rate in the state is above national average, which doesn’t make things any better. The situation isn’t rosy in terms of balance on Mortgage debt either, where NJ beats most other states.
Who’s the winner?
Debt relief companies without a doubt. You approach them when you are most vulnerable, and they take advantage of the situation. Most of them are outright scams and almost all of them dodge FTC rules in one way or the other. They promise to reduce your debt by negotiating with your creditors and almost all companies take advance payments from you, which is absolutely illegal. Their intervention hardly works and pushes you further into debt. This month, Premier Consultant Group of New Jersey was accused in Federal Court of charging upfront fees and failure to provide effective services.
What’s your way out of the debt trap?
Avoiding loans is the easiest solution, but it’s not a practical choice is most cases. You might try the following ideas:
Following debt reduction techniques like Dave Ramsey’s debt snowball
Analysing your situation, making a budget, and monitoring the budget all the time
Approaching your creditors to consolidate your debt
Trying to make some extra bucks by taking up freelance projects
Most importantly, try to stay out of debt if you are already in financial trouble. Remember you can’t solve your debt with more debt. Listening to reason and common sense can be an ace up your sleeve. Good luck.
Debasubhra Banerjee is a Business Content Editor with a Big 4 professional services firm. His interests include politics, economy, and debt related issues.
With Public Sector workers earning no less in "cash pay" than their Private Sector counterparts (per the US Gov't BLS), if we consider EQUAL Public/Private Sector "Total Compensation" (cash pay plus pensions plus benefits) as a proper goal, then there is zero justification for ANY greater taxpayer-funded Public Sector pensions and benefits than those typically granted Private Sector workers by their employers.
NJ's "failure" to meet pension payments is DIRECTLY a function of those pensions being WAY too generous .... not just a bit better than those of private sector workers, but TYPICALLY multiples greater in value at retirement. It's not not only the much larger pension "formula factors" (per year of service) but the many VERY COSTLY peripheral provisions...... full retirement 10-15 years earlier than Private Sector workers, COLA increases (temporarily suspended, but with the suspension being challenged by the Unions), VERY liberal definitions of "pensionable compensation", etc.
Dear Taxpayers ..... it's WAY past time to put an end to this. Public Sector pension accruals for FUTURE service of CURRENT (yes CURRENT) workers MUST immediately be reduced to a level NO GREATER than that granted the typical PRIVATE Sector taxpayer. And forget "negotiating" with these Unions ... they won't even agree to 10% of what's needed and appropriate. The Changes must be forced upon them with the same gusto that they regularly muster to cheat the Taxpayers at every opportunity.