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Featured Advisor



Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management

City:Northbrook

State: IL



BIOGRAPHY:
At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

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Saving, Spending and Debt: Part 3 – Sources of Debt

College costs are the primary source of personal debt, according to a new Millionaire Corner survey. What other factors contribute Americans’ debt burdens?

| BY Adriana Reyneri

College costs are the primary source of personal debt, according to a new Millionaire Corner survey that finds Americans are also likely to incur debt due to unexpected medical expenses and job loss or pay cuts.

College costs ranked as the top individual factor contributing to the personal debt of investors from a range of wealth levels surveyed by Millionaire Corner in April. More than 27 percent of these investors identified college costs as a source of debt, while 22 percent cited unexpected medical expenses and 20 percent said a job loss or reduction in pay contributed to their personal debt levels. Excessive spending was the fourth most common factor, contributing to the debt levels of 19 percent of investors, while 15 percent said an underwater mortgage was a factor leading to personal debt.

College costs were more likely to create debt for investors age 40 and younger, but educational expenses remain a significant source of debt for investors in their 40s and 50s, as well. Forty-four   percent of the younger investors said college costs were a source of debt, as did 28 percent of investors ages 41 through 59.

College costs have been rising at an average rate of 5.6 percent beyond the rate of general inflation over the decade from 2001-02 to 2011-12, according to the most recent data from The College Board, which administers the national standardized test known as the SAT, as well as the AP exams.  For the 2011-12 academic year, in-state tuition, fees, room and board at a public four-year college averaged $17,131 a year. Out-of-state tuition at the same institutions averaged $29,657, while costs a private nonprofit four-year college averaged $38,589 a year. According to The College Board, two-thirds of students attending these institutions receive grants that lower these costs.

Rising educational expenses have pushed the nation’s student loan debt past the $1 trillion mark, according to the Federal Reserve, which notes that student debt now exceeds credit card debt.

While student loans are the primary source of debt for Americans, Millionaire Corner data shows that households are also likely to be burdened by debt related to unexpected medical expenses. Medical costs are also rising faster than the general rate of inflation and, according to the U.S. Bureau of Labor Statistics, Americans have the highest out-of-pocket medical costs – more than 7 cents of every dollar - when compared with citizens of Canada, Japan and the United Kingdom. 

Investors ages 60 and older rank medical costs as their primary source of personal debt, while job loss or pay cuts trail at a distant second. One-fourth of these senior citizens identify unexpected medical expenses as a factor contributing to debt, and 17 percent say they’ve taken on debt as a result of reduced pay or job loss.