A growing number of adult children are turning to the Bank of Mom and Dad and Grandparents. Many families have the impulse to be generous as they watch their young-adult children struggle with a tough job market and challenging economy, so they lend their children money to help pay for basics like rent, debts owed, transportation … or, let adult children move back home. Parent’s want their children to be successful and ultimately not struggle.
This poses a huge dilemma for a parent or grandparent. You want to help your children succeed but in doing so you can jeopardize your own retirement, and their own autonomy. It’s important to ask yourself two basic questions.
Ask yourself these two questions:
- How much if any can you really afford to give your adult child?
- What steps is your adult child taking so they won’t always need financial help?
Sometimes it is important to let our loved ones find their way into hard choices that will let them grow confident in themselves. If your adult children could benefit from creating a budget and a plan, send them to a nonprofit financial counselor. LSS Financial Counseling offers free budget and debt counseling, with 8 offices in MN. Call LSS at 888-577-2227 or visit our website at www.ConquerYourDebt.org.
Portrait of a student girl studying at libraryOne of my blog teammates recently wrote a post called “Should I Co-Sign For a Loan?” I was very impressed and wanted to piggyback on his insights by further discussing the very real and sometimes bizarre dangers of co-signing private student loans.
Private student loans are fraught with perils and pitfalls that many borrowers and co-signers alike are unaware of until it’s too late. Although many of these dangers are spelled out in the loan contract, either people don’t read the full document, don’t understand all the provisions, or may think “this will never happen to me.” I won’t go so far as to say everything is clearly spelled out because I have my doubts. But my first recommendation: always read the full contract and ask questions to clarify any confusion you may have so you understand what you’re getting into.
Real Life Examples:
I recently spoke with a parent who co-signed a private student loan for her son with a large national bank. It turns out she had also done her banking at this financial institution for many years and had always been happy with their service. Then her son stopped making the loan payments.
My client began receiving letters about the defaulted student loan that she co-signed. She wrote back informing the bank of her son’s mailing address and phone number so he could be contacted directly. But that wasn’t good enough for the bank.
Without warning, it cleared out her checking account of at least $1000 toward the loan balance. When she discovered this “offset,” she contacted the bank and was told that when she signed the paperwork for her bank accounts years earlier, it was clearly stated that balances owed to the bank could be taken from a borrower’s account without notice. You should all know this is a very common industry practice but no one seems to believe it until it happens to them!
When she asked if the bank had tried contacting her son about the loan, she was told that information was confidential and could not be disclosed. Not only was my client financially inconvenienced but was understandably frustrated with how this collection process was playing out.
She has since changed banks but still runs the risk of being sued over the debt and having her wages garnished if either she or her son do not make regular payments on this private student loan.
This instance is a bit extreme but is absolutely true. Believe me when I say I don’t have nearly enough imagination to make this up. It clearly shows just how quickly things can go wrong for the primary borrower if something happens to the student loan co-signer.
A young man called LSS one day with a question about his private student loan. I had some free time so I called him right back. It turns out he had borrowed a private student loan from a national bank but was current on his payments and had always made them on time.
The problem was his co-signer had passed away recently so according to the loan contract, the balance (which was several thousand dollars) was immediately due in full.
Huh, you might be asking? The only reason I wasn’t completely taken aback by this situation is that a few weeks earlier, our student loan team was advised about the potential for this very thing to happen. The caller acknowledged that he had seen this clause in the loan contract, but that surely didn’t change the fact that he was now facing a huge financial burden – a burden that was entirely beyond his control.
Fortunately for him, the co-signer’s estate paid off the defaulted student loan and would allow him to continue making affordable payments to the estate until paid in full. But others encountering this situation may not be so fortunate!
Food For Thought:
If you are faced with co-signing private student loans for your child, you may want to look at some other less potentially expensive alternatives. Even better, answer some basic questions to figure out if this is really a viable option.
- Student-Loan-Calculator…Ask yourself if you can afford to make the loan payments after college if your child can’t.
- Ask yourself (and your child) if he or she is ready to pursue higher education at this point. It can be a real waste of time and money when kids go to school with no real direction or idea what they hope to get out of a college degree. Or, if your child is not mature enough to take their studies seriously and would prefer to party, you may want to postpone college indefinitely until it’s a realistic goal for the student.
- Is your child better suited to learning a skilled trade with hands-on training rather than slaving over textbooks for four years? Many trades pay very good wages and may lead to the potential to start one’s own business in the future. A college degree is not for everyone!
- Has your child looked into the potential job market for his or her desired career? Knowing that good jobs are available can be a real motivator in finishing a college degree on time. It can also lead to internships and opportunities to shadow those in the business to make sure this is the right choice for one’s future.
- Is it a better idea to have your child work awhile to save some money for school rather than relying solely on student loans to fund an education?
- Has your child looked into grants and scholarships to help pay for college? These are steps that should be taken early in the process.
- What will the loan be used for? Funding tuition, books, and other school related costs is certainly appropriate for student loans. However, living on loan money is a serious mistake because it leads to over-borrowing and huge loan balances upon graduation. It’s also important for kids to work during college to be able to better structure their time, contribute to their own survival, and can be more impressive to potential employers.
Sometimes co-signing private student loans is well worth the risk. But doing so is not for every parent (or other family members). So if you plan to sign just be sure you’re prepared for the worst case scenario! Have questions? We specialize in Student Loan Counseling. Give us a call at 888.577.2227 and we can help!
Author Barbara Miller is a Certified Financial Counselor at LSS Financial Counseling specializing in Bankruptcy Education and Student Loan Counseling.
Theses days, 401K retirement plans are typically the cornerstone of every investor’s retirement plan. Gone are the days of big company pension plans, and for many of us, big company matches to an employee’s retirement funds. And relying on Social Security benefits alone will surely be a problem since those benefits are meant to supplement your other retirement savings. So, avoiding big mistakes that can cost you retirement money in the future is crucial to making the most of your 401K. (Just so you know, when I talk about 401K plans, the same principles apply to non-profit retirement plans known as 403Bs).
The best advice I can give is to find a certified financial planner (CFP) that you trust for insights and advice. Your work 401K plan should offer help from its’ own CFP so you may want to start there first.
Another resource is http://www.letsmakeaplan.org which is sponsored by the CFP Board. The Board’s’ role is to act “in the public interest by fostering professional standards in personal financial planning through its setting and enforcement of the education, examination, experience, ethics and other requirements for CFP certification.”
I have had a private CFP that I trust implicitly since 2008 and working for a non-profit, I don’t have a huge portfolio. But his help has been invaluable by putting things in perspective for me when the stock market looks a little shaky, or by devising investment strategies that I can embrace over the long term.
Mistake #1: Using investment strategies with premature target dates
We may forget that we are not only investing up to our retirement but also throughout our retirement. This means the closer that retirement gets, we often want to become more conservative across the board rather than phasing out higher risk stocks. Remember that many of us will live at least 20 more years after we retire so using your retirement date as the deadline to divest of your stock investments may harm your long term strategy.
Without additional growth to your retirement funds, there may not be enough money to see you through the long haul. This is where a certified financial planner can help you decide the best strategy that may include ongoing investment in stocks if you can stomach the risk.
Mistake #2: Leaving 401k funds with a former employer
When you leave a job, you always have the option of rolling your 401K plan into an IRA. One reason you may want to do so is 401Ks always have administrative costs and with some plans, these are overly expensive. Over time, these costs can add up reducing the overall return on your investments.
In addition, many 401K plans offer limited options in each asset category which also limits your ability to properly diversify. When your investment funds are more diversified, you can spread the risk while maximizing gains.
Mistake #3: Playing amateur stock broker
It is so important to remember that retirement investing is intended to be long term, and there are only certain factors we can control. Those who have panicked and pulled their money out of a sagging stock market often lose big time because contrary to what you may think, you cannot time the market.
Cashing out of the stock market when values plummet means you may lose potential gains when the market improves again. In addition, buying stocks when prices are high means you will pay more for less. The better approach is to buy low, sell high. This gives you the best of both worlds, and a certified financial planner can help you bridge the gap between the two.
Mistake #4: Failing to rebalance your portfolio
The closer you are to retirement, the more important it is to rebalance your portfolio every year or two. In the long run, stocks generally outperform bonds. But if you invest too heavily in stocks because the market is booming, and the market tanks just before you want to start withdrawing money, you might see your funds collapse.
Another reason to rebalance periodically is that big gains in stocks are typically re-invested right back in the same stock funds. A better approach may be to take some of those gains and move them into more conservative assets when retirement is near.
Summing it up
In conclusion, you too can avoid these common mistakes by being realistic about what you can control with your investments. Those items include asset allocation, fund diversification, and selecting funds with lower administrative costs.
If you’re closer to retirement and want to be more conservative with your money, your advisor can tell you how and whether or not this is a smart move. In the end, we all make our own decisions but sometimes we need a little help to make the best ones we can!
Learn more about LSS by visiting www.ConquerYourDebt.org. Author Barbara Miller is a Financial Counselor at LSS Financial Counseling and specializes in Bankruptcy Education and Student Loan Counseling.
A lot of people want to help out someone in their lives. They see someone they care about struggling financially and want to lend a helping hand. Compassion is an admirable quality, but when you co-sign for a loan, you’re putting your financial well being at risk. Even if it’s your son, daughter, girlfriend, boyfriend, or cousin; more often than not, it’s a bad idea to co-sign for a loan.
“But what’s the worst that could happen?”
The answer: A lot of things.
When you co sign for a loan you’re telling the lender that if this person doesn’t pay, then you’ll make sure the loan gets paid. More often than not it’s the co signer that’s left holding the bag. Two common loans that people co-sign for these days are auto loans and student loans, so let’s look at a few examples of what can go wrong when you co-sign for either of these.
Many of the clients I counsel have either co signed for an auto loan, or if the other individual’s credit is completely terrible, they take out the loan themselves so the interest is much lower. In both cases this is not a great idea and I’ll use one of my client’s stories as an example.
Client #1 comes in and is complaining about her son not paying the auto loan she took out for him. He was paying for several months, but has recently stopped paying the bill. She cannot afford to pay for all of her bills and the added auto loan that she’s now responsible for. She felt bad for him when she took out the loan and he promised that he would never miss a payment. Six months later her credit and their relationship are being slowly destroyed.
In many cases parent’s co-sign for student loans and everything work out just fine. The same risks are their when you co-sign for your children, but the parents have already considered the fact that they will probably be helping pay back the loan. One thing people should never do is co-sign for a loan anyone that is not their own child. It may seem like common sense, but a lot of people get guilted into co-signing for a loan or they trust the other person will pay the loan themselves. It doesn’t matter how much you trust the other person, the implications of taking on another person’s student loans are huge, and absolutely not worth it. Case in point; my next client example:
Client #2 had a great relationship with her son’s fiancé. The son had been dating her for years and she seemed like are very trustworthy person. She needed money for school and could not get enough in federal loans so she needed to take out a private student loan. Her parents were not in the picture, so the son and his fiancé asked client #2 to co-sign for the loan at the bank. At first client #2 was reluctant, but she was trusted the fiancé and she wanted to make her son happy so she helped them with the loan. A little while later the son’s relationship fell apart and the fiancé stopped paying on the loan. Client #2 was now stuck with $20,000 in private student loans that were verging on default. Her credit was completely destroyed and she went to the bank to see if she could be taken off of the loan. The bank would not let her be removed from the loan unless the ex-fiancé was to sign off on it, and the chance of that happening was slim to none. So now the mother is stuck with a loan you can’t even get rid of in bankruptcy. She will be stuck paying that bill for many years or risk collections, destroyed credit, and garnishment.
In the end it will be up to you whether you choose to tempt fate and co-sign for a loan, but before you do remember the stories of these two clients. So, the short answer to the question, “should I co-sign for a loan?” is no. You need to protect your financial situation first and foremost.
Are you in a situation where you co-signed for a loan and your credit might be in trouble? Give us a call at 888.577.2227 or visit our website at www.ConquerYourDebt.org to set up an appointment with a financial counselor. Appointments are free and confidential. Talking with an expert is a great start to when trying to take control of a situation.
Author Landon McKay is Financial Counselor at LSS Financial Counseling.
So you have credit card debt. Or medical debt or even student loan debt. Or a combination! It could be a lot or a little. Maybe you are successfully making payments but the balances aren’t going down. Or it’s to the point where you are afraid to answer the phone and get the mail. Wherever you are a nonprofit credit counseling agency like LSS can help. The key is that you’ve realized it’s time to make a change.
Let’s look at 5 ways you can CONQUER YOUR DEBT.
Debt Management Plan (DMP)
Find peace of mind with an affordable, consolidated monthly DMP deposit and a strategic plan for becoming debt free in five years or less. Yes, you read that write. You can be debt free in less than 5 years. And you will repay your debt in full. Interest rate reductions, re-aging of accounts, and stopping late or over limit fees may be part of your plan. LSS is a licensed credit counseling agency with a skilled and experienced team to assist you in conquering your debt.
Self-Administered Payment Plan
First, create a budget based on take-home income minus basic living expenses. Then, funds remaining are divided up for payments to creditors. Focus on getting/keeping credit card accounts current & under the credit limits then continue to send minimum payments before due date & increase payments any month affordable.
Internal Hardship Plan
When normal minimum payments are not affordable, consider contacting the creditor(s) for lower payments. This is generally a short term option. Each company has its own policy, and some may not offer this plan at all. Ask for the agreement in writing.
A new loan to pay existing debt is obtained. The lender may require some type of collateral. Make sure you understand loan terms including the monthly payment, interest rate, fees, and payoff time. It is extremely important to look into other options of debt repayment before you use any assets to secure the loan or involve co-signers.
A creditor may accept less than the full balance owed as payment in full. Settlement terms can range from 20% to 80% off the balance. Make sure all settlement offers are in writing. Settlements can negatively affect your credit report. Ask a tax advisor whether or not the unpaid portion of the settlement is considered taxable. Settlements can be arranged by the consumer for free. There is no need to pay fees to hire a debt settlement company. Be wary of debt settlement negotiation companies and their practices.
Think about what a debt free future would mean to you. Maybe it’s less worry. Maybe it’s retirement! We are here to help. Give us a call at 888.577.2227 or visit our website at www.ConquerYourDebt.org.
You’ve probably heard horror stories about folks who’ve lent money to friends or family members and got burned for their generosity. While this shouldn’t stop you from helping your loved ones, below are a few tips that may prevent anger and resentment should your arrangement fall apart. If you’re going to hand over money to someone, it’s best to be prepared for whatever the outcome may be.
Talk to yourself first
Take some time to think about whether or not you expect to be repaid. This is the number one way to avoid misunderstandings, hurt feelings, and damaged relationships!
- Can I afford this? If you don’t expect to see the money again and really can’t afford to gift the money, then the best answer is “no.” Another solution may be to gift a portion of the money requested if the borrower can find the rest elsewhere.
On the other hand, if you can afford to give the money but still don’t expect to be repaid, then make it an outright gift (and bless you for your charitable nature!)
- How much can I afford to lend? Often, people lend money regardless of whether or not it fits their own finances. A word of caution – don’t let your loved ones financial problems become yours too.
Regardless of how careful you may be with this transaction, you may never see this money again. Therefore, don’t lend out part of your kids’ college fund, or dip into your retirement accounts to make a loan you can’t afford.
- How will this affect my relationship with the borrower? Whether you say no to the borrower or go forward and lend the money, either decision is bound to have an impact. It’s not unusual for close relationships to fall apart or become strained over money when things don’t work out. Consider how you’ll handle any fallout with your loved one if you don’t get the money back.
By lending money, you may also be prone to evaluating the borrower’s financial decisions and priorities. For instance, while they may tell you the money will be used for an important financial matter, press for actual details. The last thing you want to find out is the money was used to buy a new 60 inch TV or a gambling trip to Vegas!
Now talk to the borrower
The potential borrower is a loved one, either your friend or family member. If you’re being approached for money, it’s important to be able to discuss the loan honestly (although this may not be an easy conversation to have.)
- Why do you need the money? Although you may put it more delicately, you want to make sure this is a one-time issue like a car breaking down or an unexpected medical bill. You don’t want to feed a poor money management lifestyle if it won’t solve the problem.
- Are there other options? Has the borrower looked into other options? What are they, and why don’t those work? For example, even if their car needs major repairs, maybe they can carpool to work with co-workers, borrow a car temporarily until they can save for repairs, or use mass transportation. While none of these options are ideal, the borrower should show some problem-solving initiative other than simply asking for money.
Another option is to talk with one of LSS’ certified financial counselors to review their financial situation. This may be especially important when it looks like the money crisis is bound to happen again due to poor financial skills.
- What is an affordable payment plan? While the payment amount should be workable for both of you, you should determine a figure that fits the borrower’s budget. A monthly payment may make it easier for the borrower to stay current by getting into the habit of regular installments.
For more convenience to the borrower (and greater certainty for you), consider having the payments automatically withdrawn from a borrower’s bank account.
Write up a loan agreement
These days it is fairly easy to find sample documents online to help you craft your arrangement in writing. So, take a look to see if any of these work for you and simply change them as needed.
On the other hand, the document does not have to be complicated or full of legalese. In fact, the simpler and more straight forward it is, all the better! If there’s ever a problem, you don’t want the borrower claiming they didn’t understand the agreement.
Think about the terms of the agreement such as the loan amount, payment amounts and frequency, repayment duration, the amount of interest being charged, and consequences for missed payments or loan default. If your plan is to be able to prove your loan agreement in court, you want the specifics spelled out.
Consider carefully collection activities
If the borrower starts missing payments, reach out to try to find a workable solution for you both. If unsuccessful, you may have to talk to a lawyer or take the borrower to court. But be sure to ask yourself if trying to collect is worth the time, additional money, and frustration for you. Sometimes it is instances like these that become the best life lessons for us all!
At LSS, we empower people to take control of their debt. Trust me when I say, we understand that overcoming debt is a tough challenge, but we know you can do it.
Our Debt Management Plan (DMP) serves the dual role of helping you repay your debts and helping creditors to receive the money owed to them. A DMP consolidates your monthly bills into one simple payment–often with a lower interest rate–so you can start paying off those debts and return to financial health faster. Give us a call today at 888.577.2227 or visit our website at www.ConquerYourDebt.org to get started!
Author Barb Miller is a Certified Financial Counselor at LSS Financial Counseling and specializes in Bankruptcy Education and Student Loan Counseling.
Our own blogger Barb Miller was asked to contribute to an article called “6 Ways to Help an Adult Child Without Going Broke” for The NextAvenue Blog. Author Richard Eisenberg does a great job explaining that you need to have a candid talk about what you can and can’t do.
Click to read “6 Ways to Help an Adult Child Without Going Broke.”
Many people (previously myself included) think that products are safe just because they’re sold at Target or Wal-Mart. The problem with that logic, according to the Environmental Working Group, is that in the U.S. no health studies or tests have to be done on cosmetics before they’re put on the shelves.
Also, according to the American Lung Association, some cleaning products release dangerous chemicals or are harmful themselves, like bleach and ammonia. Plus, think about the residue that’s left on surfaces after you use them. We prepare food on kitchen counters and small children have their mouths on almost everything…think about what you and your family are ingesting – it’s scary!
Over the last year and a half, I’ve been doing research and at the same time ditching the chemical-laden cosmetics and home cleaning products. Instead, I’m using and/or making healthier alternatives. And although it might be a little more work than just buying everything in a bottle, it helps me sleep better at night knowing that I’m in control of what’s going onto my skin and into my blood stream…not to mention the frugal part of me is happy that I’m saving money at the same time.
Dawn and vinegar are my new best friends. I use 1 part Dawn (just regular, old blue Dawn dish soap) and 1 part generic white vinegar in a spray bottle. Use this on your bathtub/shower, sink, and toilet. Plain white vinegar also is great for cleaning your countertops, microwave, windows, and dishwasher. I also add it to the washer instead of fabric softener to get rid of musty smelling clothes. Vinegar and baking soda work great for carpet stains, cleaning your kitchen sink and drain, and the oven/stove top.
Make your own laundry detergent. If you search online, there are a lot of different recipes and usually there are about 4-5 ingredients, tops. Just look for the borax-free ones…and don’t add in brand-name ‘crystals’ for the smell because then you’re defeating the purpose of getting rid of chemicals. I made a batch for around $25.00 and it lasted me over 6 months. Plus, my clothes got so clean!
Dryer sheets coat your clothes so that they are “softer” and prevent static. However, you’re likely absorbing the chemicals and perfumes into your body 24 hours a day from your clothes and sheets/blankets. Try wool dryer balls instead. You can even add essential oils if you miss smells. However, the first time I washed my sheets with filler/chemical-free detergent and dryer balls was the best night sleep I ever had…plus my clothes and sheets actually felt softer and had a really fresh smell to them. I challenge you to try it!
I’m just starting to use organic coconut oil as a replacement for my brand name moisturizer and lotion. Plus, it’s a little cheaper than my previous moisturizer and lasts longer. A Go Green Nowspoonful is enough for my entire body! Not to mention I don’t have that greasy feeling after applying the usual moisturizer and lotion. I haven’t tried it yet, but unrefined shea butter is also a great lotion alternative.
This is a big one because of where you’re applying the product, especially for women, if you catch my drift. Aluminum and parabens are found in a lot of deodorants (parabens are in many lotions as well). You can make your own or find natural/organic versions online. The organic deodorant I buy is more expensive; however, it smells really, really good and lasts about a month or so longer compared to my old deodorant.
I’m gaining peace of mind from using healthier products and maybe it’s psychosomatic, but I really do feel better after making these changes. Plus, I’m actually saving money. My Target trips have been reduced dramatically and the items I purchase are overall cheaper and last longer than the more expensive alternatives.
This is just the tip of the iceberg because there are many items I didn’t cover. I didn’t go into details on all of the bad ingredients in each category. So I encourage you to research the products you use. For cosmetics information, check out the EWG Skin Database.
I will be the first person to tell you that going green can be very intimidating. Start small with simple changes. You may have to spend more money in some areas but you will save in other areas. And also, food plays a major factor in our health, too, so check out how to eat healthier on a budget. Visit our website at www.ConquerYourDebt.org to learn other ways to save money in your every day life.
Author Elaina Johannessen is a Financial Counseling Supervisor at LSS Financial Counseling.
Credit monitoring services sure have gotten popular over the last few years. While I can safely refrain from saying it’s a waste of money for everyone, I will outline a few of the reasons why I believe they are incorrectly marketed and may not contain as much value as they are stated to hold.
1. False pretense by definition
Credit monitoring services often bill themselves as being “protection” from identity theft. This leads a person to assume that it would be harder or even impossible to have your identity stolen if you enroll in such service however, monitoring credit can logically only detect a previous instance of misuse rather than instantaneously catch on to successfully prevent such a breach. If you take a second to think about it, paying money to a credit monitoring service in the hopes you’d prevent identity theft is somewhat akin to being sold into believing that aspirin is as effective as a bicycle helmet.
Granted, in the case you fall off your bike, a couple pain pills might certainly be helpful but having a pocket full of them wouldn’t prevent an injury from happening in the first place.
2. There is no free lunch
Often times the biggest benefit sold with credit monitoring services is access to free credit scores that accompany memberships. Most times the credit scores are not FICO scores and therefore are just some random numbers not at all used in any actual lending process. Since the value of knowing your credit score is seeing how it relates to one’s lending or credit capacity, a score that isn’t FICO is worthless. In the case where there are legit FICO scores offered, you are going to pay for it with the increased cost of the credit monitoring service. It’s sort of the same thing as restaurants that advertise “Kids Eat Free” – while it can be a method for both parents and kids to have a meal, it’s hard to passionately argue that eating in any restaurant is the most cost effective way to feed kids.
3. Insurance is mostly pointless
The insurance that is embedded with credit monitoring programs really only considers claims for out of pocket expenses directly related to having identity stolen. Companies selling services highlight “fear” statistics like citing identity theft as a 37 billion dollar a year problem but fail to specify that corporations are overwhelmingly responsible for the bulk of these costs and not individuals. As long as the incident is reported to both the creditor and included in a police report, the actual individual damages are typically minimal if non-existent since most accounts issued by creditors and bank contain their own zero liability protection. The implied need for the insurance can further be exaggerated in the policy size, as much to $1 million dollars in coverage for some providers. The reality is, unless you’re hiring Eric Clapton to make those calls for you, you’d never use as much to really justify the cost of having a regular premium. After all, the average amount lost by a victim of identity theft is said to be only $631.
Recognize the real threat of identity theft and protect yourself. Just because paying for credit monitoring servicing doesn’t really protect you from identity theft doesn’t mean you should ignore the problem altogether.
Here are some steps to help you safeguard yourself on your own:
- Credit Freeze. Available to people who have been victimized by identity theft in the past or to everyone else for a small fee, credit freeze does actually directly stop or deflect incidents of identity theft in that it completely shuts down your credit from being accessed from outsiders. You are provided a pin so you can unlock your credit on days you wish to apply for products.
- Monitor Credit Regularly. You have the ability access free credit reports via all three major issuing bureaus at least once per year though the federal trade commission accessed via www.annualcreditreport.com. Since mostly, the bureau’s report similar findings, you can space out each inquiry to get a free report every 4 months. If you need to buy additional reports, you can do so through sites like myfico.com for a reasonable cost without having to sign up for subscription based services (though they are offered so be careful).
Want help understanding your credit report? Give us a call at 888.577.2227 or visit our website at ConquerYourDebt.org and set up a credit report review!
- Look over accounts weekly. Sign up for online accounts to get access to your accounts and set routines to briefly check them once per week. Set free alerts to notify you with any abnormal use (if account balances drop beneath a certain amount or purchases are made above a certain limit).
- Open your mail. Though it all may look like junk mail, opening all your mail helps you decipher the difference between such and possible credit statements opened with your identity. Weird phone calls that don’t make sense or any indication that your name is being used with information that doesn’t add up can be sign something is wrong.
- Keep up your guard up at home. Sadly, a large portion of identity theft crimes are committed by people that know their victim personally. Opting into e-statements for accounts and keeping irregular credit cards and secure information like social security numbers literally locked up can help you reduce the threat.
Author Tim Fischer specializes in Foreclosure Prevention Counseling at LSS. Learn more about LSS Financial Counseling by visiting our website at www.ConquerYourDebt.org.
Debt can happen to anyone at any stage in life. Debt doesn’t care about your age, marital status, income bracket, etc. And similarly, being debt free can happen to anyone as well. All it takes is commitment to change and the right tools to conquer your debt!
Here is Tiffany’s story:
I was 23 and just starting out in the professional world. I was also a single mom with a baby working full time and living paycheck to paycheck. So in my mind, credit cards gave me “freedom” to buy things like work clothes. After opening up some credit cards/store cards, I found myself with $8,000 in credit card debt. This might not seem like much, but at my age $8,000 seemed like $80,000.
I used my cards for pretty much everything…clothes, entertainment, groceries, gas, and even some bills. I was trapped in a vicious cycle and kept using the cards even though I knew I couldn’t keep up on all of the payments. Something had to give because I couldn’t take the stress of being in debt and not being able to make payments. My manager told me about LSS Financial Counseling and I figured it couldn’t hurt to check it out and meet with a counselor about my finances.
I met with a counselor who helped me set up a budget. I had never set up a budget before and it was really eye-opening to me to see my current expenses and credit card payments compared to a budget with some changes in spending and the Debt Management Plan (DMP) payment. First off, I had no idea that the DMP even existed – let alone that with the program my interest rates and payments could be reduced. I was excited and relieved to start this plan, even though I knew it wasn’t going to be easy because I had to make some sacrifices as well. I moved back in with my mother and cut back on a lot of spending.
Again for me the DMP was a no-brainer because the length of time it would take to pay off my credit cards was CUT IN HALF – from 8 years to 4 years. And my financial counselor did the math and told me that it would literally save me THOUSANDS of dollars in interest.
Although it was a little scary knowing that my cards would be closed, this turned out to be the best part of the plan…because I couldn’t use them.
During my financial counseling session I even cut up my cards and it felt AMAZING. I felt like weight had been lifted off my shoulders. Without the DMP, my finances would have gotten worse and worse.
I would have kept using the cards and likely my credit would have been ruined when I couldn’t make payments. I also really liked the fact that I could send in one payment each month to LSS and they would take care of getting the payments to my creditors. This saved me a lot of time and energy.
I learned the hard way what happens when you carry over balances month to month on credit cards. Now I pretty much stay away from credit cards unless I’m able to pay off the balance in full after using them. I completed the DMP in 4 years which was huge for me because I was debt free before I turned 30. And shortly afterward I got a mortgage and my credit has never been better. I highly recommend the DMP for anyone trying to pay off their credit cards. Without a DMP I would still be in debt!
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Our goal at LSS is to work with people like Tiffany as they take control and begin to build a life without debt.
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Give us a call at 888.577.2227 to see if a Debt Management Plan will work for you. Whether you have $8,000 dollars or $48,000 in unsecured debt a DMP can consolidate your monthly debts into one tidy payment—often with a lower interest rate—so you can start paying off those debts and return to financial health faster. Start building a life without debt today!