Home » KOFE Table » Webinars On Demand

Webinars on Demand

Missed a webinar? View our archived webinars that have been recorded for you to review at your convenience.

Give Yourself Some Credit – Without Adding Any Debt

You can raise your credit score, hike your credit limit, and still save money

  • • Why most people misunderstand their credit score
    • How you can painlessly and easily raise your score and secure cheaper loans
    • Where to find expert advice on eliminating debt – at no cost

Making It Big in the Gig Economy

Your side gig can be more than a job. It can be an investment

  • • How to set up a second income stream without cramping your lifestyle
  • • The best ways to discover what can make you the most money
  • • How to avoid the traps and scams of a second gig

Making It Big in the Gig Economy

Your side gig can be more than a job. It can be an investment.

There are only two ways to live a debt-free life: spend less or earn more. Debt.com usually focuses on helping people save money they already have, but this time we’re talking about bringing in a little extra through gig work.

Dipping your toe into the gig economy can help you:

  • • Bring in a little extra cash without a whole lot of extra work
  • • Hedge against inflation
  • • Build up your savings

What is the gig economy?

There’s no official definition of the gig economy. Basically, it’s every job that isn’t standard full-time employment. This includes part-timers, contractors, freelancers, and entrepreneurs.

Part-Time Work

Part-time workers are those who work less than 35 hours a week on a regular schedule for a single employer. They can work as little as a few hours a week and receive limited benefits. By law, any individual who works 35 or more hours must be hired as a full-time employee and would be entitled to full-time benefits.

Contract Work

Independent contractors and freelancers are descriptions of non-traditional workers that are often used interchangeably. Both involve temporary, project-based work, but one key difference between the two is that, as their name implies, contractors have a contract with their (temporary) employer. Whether it’s for one project for one week or longer-term work over several years, they’re guaranteed to get paid by that employer.

Freelancing

Similar to independent contractors, freelancers are also project-based. Their arrangements usually don’t involve a formal agreement like a contract, and they often work for many different clients at once.

Entrepreneurship

Technically, people who start their own businesses are also part of the gig economy. They fall outside the traditional standard employment. It doesn’t have to be formal. An entrepreneur can include a teen who offers to mow lawns in the neighborhood to a mother who starts a babysitting service.

The Massive Growth of the Gig Economy

Back in 2005, the federal government did a study and found that the gig economy accounted for roughly 2% to 4% of all workers. Today? It’s well over a third of the U.S. workforce, about 58 million people who are making money in some form of non-traditional job. Gig workers contribute $1.3 trillion to the economy every year (up $100 million from 2020).

What are the main reasons why people take on side gigs?

The Side Gig Economy

Participating in gig work doesn’t mean you need to quit your full-time job. In fact, most people who are part of the gig economy don’t. Only 3 in 10 Americans rely on the gig economy as their primary source of income. The vast majority of people partake in what’s referred to as “side gigs” and spend less than 10 hours a week earning extra cash this way.

Different types of side gigs & where to find them

Regardless of why you want to find gig work, there are several different types, each with its own strengths. Read below to find out which kind of side hustle would be best for you.

Fast Food/Retail

The service industry typically offers the easiest type of extra work to acquire. It requires little to no previous experience or specific skill sets. This can be ideal for individuals who already have full-time jobs since night and weekend shifts are one’s managers typically have the hardest time filling. However, earnings may be on the lower end of the scale and you may not make more than minimum wage so earnings may not be substantial.

Virtually/Online

The growing shift towards a digital world has made the availability of online-only, remote work relatively easy to come by. Writing, graphic design, digital marketing, and coding are some of the fastest-growing industries for freelancers and all can be performed without being in person. Some of the best places to find virtual side gigs are websites like:

They connect skilled freelancers with relevant job opportunities and act as job boards to make potential gigs easy to discover. Depending on the specific job listing and the skill required, the earnings can be significant. However, each freelancer must pitch themselves to win the bid for the gig, so things can get competitive.

Teaching/Tutoring

Education is an industry that always needs people. Did you know substitute teachers are technically gig workers? Hourly pay for substitute teachers ranges averages around $14-15 an hour and they were in high demand even before the pandemic upended how school districts operated.

Check with your state for the specific requirements but in most cases all you’ll need is a high school diploma and to pass a background check. Some states require a special license.

Another option for a side gig in the education industry is to be a private tutor. It could be for a specific subject, musical instrument, athletic sport, or prep for a specific type of testing (like the SAT or ACT). If you’re looking for a place to promote your services, try one of the three biggest websites specifically for tutors:

Creative Hobbies

You can turn your passion into an additional source of income. Love gardening? Propagate your plants and sell them. Handy with tools? Build custom dog houses. Nextdoor.com is a hyper-local platform that connects you to others in your community. It’s the digital version of posting flyers around your neighborhood.

Task-Based Gigs

There are all sorts of platforms that have opportunities for task-based side gigs like babysitting and pet sitting, and food delivery, that connect you directly with the person in need of your services. They often include the option for clients to tip, so these types of gigs are a great choice for those who have strong customer service skills.

Check out platforms like:

Getting started & making money

While it’s relatively easy to get started doing gig work, there’s more to getting started than just signing up. Legitimate gigs often have a screening process in addition to minimum requirements like having a working car or a specialty driver’s license. Some of them, like medical billing and coding, require training and testing.

Then, there’s the matter of whether you’ll earn as much as you expect. Nearly half of all gig workers make less than $500 a month pursuing these alternative streams of income. Earning money through multi-level marketing companies (MLMs) like Mary Kay, Primerica, or Herbalife requires direct selling. They may even require you to purchase your own inventory which will pose an additional hurdle to getting financially ahead.

Before committing to any service, make sure to check whether you have the necessary knowledge or equipment to carry out the task and whether your potential earnings will outweigh any other investments or costs.

Avoiding Scams

Hardworking Americans aren’t the only ones who’ve noticed the growing interest in gig work. Be wary of scams who may want you to pay for pricey certifications up front, don’t require background checks or other accreditation for something that seems like it would need it, or who urge you to sign more sellers than selling an actual product.

Online surveys, mystery shopping, or stuffing envelopes are other common side gig scams. In all those cases you’ll either have to spend money to get involved, or you’ll make so little it won’t be worth your time.

How to identify a scam

Can you tell the scams from legitimate offers? Luckily, some websites can help you determine if it’s a real company and what its reputation is like.

Don’t forget to check out the company website. If there’s no “About” page or if it doesn’t list a complete corporate history and names of its leaders, it may not be legitimate. Think of it this way: You wouldn’t spend thousands of dollars without researching the product or service you want to buy. Do the same thing with the money you want to earn.

Managing Your Side Gig Earnings

Now that you know how to earn money on the side, the next thing is learning how to manage it.

The three best ways to use your side gig money:

When you total what you’ve made from gig work, don’t forget to include what it SAVED you. When you’re working more, you have less time to spend money (e.g. shopping out of boredom or stress).

  1. Paying off credit card debt: Credit card debt is one of the most expensive types of debt. The average interest rate is around 20%. That means for every $5 spent, you’re paying $1 to your credit card company for the privilege of carrying a balance. If you have this kind of debt, that’s the first place side-gig cash should go.
  2. Start an emergency fund: If the Great Recession, the COVID pandemic, and inflation have taught us anything, it’s that our financial situation can change extremely quickly. Polls show less than half of Americans have $1,000 saved up for emergencies, which often leads them to run up on their credit cards to cover their bills. Start funneling your gig earnings into a savings account for future emergencies to prevent yourself from ending up in debt in the future.
  3. Invest in your future: Most experts consider $1 million to be the minimum amount needed for retirement. That’s why it’s important to start saving for retirement as early as possible. Upping those 401(k) and IRA balances as soon as possible means you have more time to earn interest on that money and get yourself the million-dollar mark faster. Once you’ve paid off your credit cards and set up an emergency fund, make sure to sock the rest away for retirement.

Gig Earnings and Your Taxes

Freelancers and independent contractors will need to submit a 1099 form to report any “miscellaneous” income (money earned from a non-full-time employer). For gig workers, this form is the equivalent of a W-2 which is used for full-time, part-time, and seasonal employees.

A common misconception is that side gig earnings only need to be reported if they are over $600. This is false and only applies to the business or individual that received the products or services (i.e., the payer). Any taxpayer required to file a tax return is required to report all income, regardless of the amount or source.

The exemptions for filing a tax return only apply to the following circumstances:

  • • If your income is less than your standard deduction ($12,550 as of 2021)
  • • If you only receive Social Security benefits

The Future of Gig Work

Technology has made it possible to pick up a gig from your cellphone or find a steady stream of work from around the globe. It’s easier than ever to add an additional stream of income to protect yourself against inflation, recession, or other market-rocking events.

Even if you don’t think the gig economy is for you today, you might change your mind tomorrow. And when you’re ready, the gigs will certainly be there.

Thank You!

We hope this white paper helped you realize how easy it is to get started earning money with gigs and how to best use your earnings. If you have questions about anything we’ve covered, feel free to reach out to us. Our mission is to help you achieve financial freedom.

2022 HOLIDAY $URVIVAL GUIDE

Save Big During the Holidays without Looking Like the Grinch

  • • How to find the perfect gifts at the perfect price
  • • Avoid common – and costly – holiday scams
  • • Use credit cards to save money instead of spend it

2022 Holiday $urvival guide

Save Big During the Holidays without Looking Like the Grinch

Holiday spending is one of the few things in life that hasn’t been affected by COVID-19. Last year Americans spent $886.7 billion during the holidays, up 14% from 2020. Spending continues to increase every year, despite recessions, health scares, or inflation. Another number that keeps going up every year is how many of us are stuck with holiday debt.

Roughly a third of holiday shoppers say they can’t pay off everything they bought during November and December. Only about 1 in 5 can even afford to pay off holiday purchases they put on their credit cards by the time January’s statement comes due.

Why overspending is an issue

According to CNBC, “More than 1 in 3 consumers said they spent more than they could afford, now owing $1,249, on average.” Right now, you don’t want a steep credit card balance. The average interest rate on credit cards is around 20%. That means for every $5 you spend on credit cards, you give away $1 to the credit card companies.

That’s not a good deal.

Avoiding post-holiday panic

You don’t have to run up big credit card balances to have a wonderful holiday season, but you don’t have to scrimp on gifts either. Start planning right now, and you can save hundreds of dollars without wasting a lot of time. A holiday spending plan is a perfect way to act now to feel better later.

Create a holiday spending plan

No one likes creating a budget, even for a pleasant task like showering everyone with gifts. But it’s a crucial component if you want to do holiday shopping right. So, if you don’t have a holiday spending plan then you need to buckle down.

It’s not hard.

Who do you need to shop for?

The first step is making a list and checking who you NEED to buy gifts for. Make sure you put some thought into this because you’re making a promise to yourself that this is it. Parents, cousins, aunts, uncles, spouses, friends, coworkers, and your boss should be the extent of your shopping.

How much should you spend on these people?

The next step is figuring out how much to spend. Now, we’re not talking about each person but the overall total. Over the years, studies have consistently shown something interesting: People who DON’T go deep into debt spend around 1.5% of their gross annual income on holiday spending.

So, to figure out what you should spend, simply take your annual salary and multiply it by 1.5%. For example, if you earn $40,000 a year, your holiday budget would be $600.

5 great gift-buying ideas

The national average for holiday spending is over $1,000. Here are 5 gift-buying ideas without leaving you looking like a Scrooge.

1. Shop high-tech…

Before buying online, use these websites to find the best deals:

 

  • Camel Camel Camel
  • Amazon Price Tracker
  • Price Alert for Amazon
  • BayWatch
  • PriceCute
  • Waatcher
  • The Mac Index

 

Many other websites allow you to make a list of desired items then they notify you when there’s a deal. Most of the websites listed above are tied to Amazon price drops, but BayWatch monitors deals on eBay and the Mac index does the same for Apple products. You can find these types of price monitoring programs everywhere, and you don’t need to be tech-savvy to take advantage of them.

 

2. Go low-tech…

Gifts that people make themselves often get a bad rap. People seem to think that it’s just a cheap way to get out of buying expensive gifts. While they’re not wrong, these gifts can be amazing because they’re personal. If you can knit a sweater or build a jewelry box, those will be treasured items. Remember that your gift is one of many, so why not make yours special? If you got the skills, make your own gifts.

3. Go old tech…

This idea may not work for tech-conscious kids and young adults. But for older loved ones who need a new smartphone, tablet, laptop, or TV set, don’t waste money buying the latest cutting-edge models. In fact, older Americans might appreciate a previous generation of electronics that are already proven to be reliable. It’s just as good and you get to save hundreds.

4. Assemble your gifts

If you don’t have the skills to make a gift, you can probably assemble one. It’s usually much cheaper to make gift baskets for friends and family. Since you’re close to them, you should know what they like, whether it’s a favorite coffee or chocolate or a personal treat only someone close to them would know about. Gift baskets don’t just have to be about food. You can assemble one for hair and skin care, incense and candles, and kitchen gadgets. Take the time to understand each person on your gift list. Sometimes it’s not about what you buy and more about the thought and effort you put in.

5. Don’t buy. Do.

An idea that is especially good for kids to give is “personal coupons.” These can range from cleaning the yard, shoveling snow, and washing the car to any other chore that would otherwise require a lot of nagging. Instead of them begging you for cash to buy YOU gifts, you can save your money while teaching them the value of a dollar and hard work.

Likewise, you can give them “reward coupons”, promising them a free trip for ice cream or one free pass from making their bed. Whatever will brighten their eyes doesn’t always have to lighten your wallet.

4 ways to holiday save

Everything costs money, and gift-giving isn’t the only big expense during the holidays. There are holiday parties to attend, decorations to adorn the walls, holiday meals to enjoy, and travel to see your loved ones. You can end up spending just as much, or more, on these expenses than you do on gifts. Let’s delve into four simple ways to save.

1. Let the kids help with budgeting

We talked earlier about getting kids involved on the gift side, but they can also get involved on the spending side. Any parent knows that kids are VERY interested in buying things, but they’re not typically interested in saving money. The holidays are one time of year when your children could be motivated to think about budgeting.

Kids love holiday parties and trips, so show them the budget and ask for their input. How would they spend this limited amount of money on a party or a trip? Not only can you save a few bucks, but you’ll also be teaching your children lessons that are invaluable.

2. Establish affordable holiday traditions

The holidays aren’t just about gifts. They’re about family gatherings and big parties. These can get pricey on their own. Instead of spending money on expensive meals or trips, try saving money by doing activities that can bring you closer together as a family.

Here are just a few that will let you spend time with your loved ones:

  • Looking at neighborhood Christmas lights
  • Watch holiday movies
  • Go sledding (if you’re lucky enough to have snow)
  • Visit Santa at the mall
  • Bake holiday treats
  • Read holiday stories
  • See a high-school holiday play or local choir

Everything on this list costs little to no money at all, and the memories you make will be nothing short of priceless.

3. Host potlucks instead of parties

We covered saving on family gatherings, but what about gatherings with friends and co-workers? If you’re the host of a holiday party, why spend big bucks on food and decorations for a dozen or more people? A potluck is an inexpensive solution that doesn’t feel cheap.

Promote it as a way to learn more about the people you work or hang out with. Their food choices can be fascinating, especially if they bring ethnic dishes. A potluck also makes it easier for vegans, vegetarians, and pescatarians to have something to eat because they’ll bring something that fits their dietary restrictions. It’s the same with those who can only eat kosher or halal. Finally, if you have friends and coworkers who can’t cook, they can bring the decorations and drinks.

4. Travel high-tech AND low-tech

Anyone who’s tried booking a flight online for a holiday trip knows how overwhelming it can be. There are a ton of options to choose from and costs can change depending on the airline. Your best bet is to use a fare-monitoring program. Hopper, Skyscanner, and AirfareWatchdog are a few examples of programs you can use.

These apps let you enter where you would like to go and when you would like to go there. Then, they keep checking for the lowest-priced options. Airlines tweak their fares on an almost daily basis. These programs help you keep up with those price fluctuations.

Charity done right

Believe it or not, donating to charity can make you richer. You may have heard of tax-deductible donations, and like everything with taxes, it’s not as simple as it sounds. If you donate to charities that are properly designated by the IRS, you can save on your annual tax bill. But choosing a qualified charity and not getting ripped off can be an issue.

The best place to start is CharityNavigator.org. They rate charities by their financial health, their accountability, and their transparency. A high rating means charities do a ton to help people and they do it without spending a fortune on their overhead costs. Charity Navigator is free to use. You can use it to research charities you are already aware of or discover new ones. Security experts warn you should never reply to email or phone solicitations from a charity until you check out the organization through a service like Charity Navigator. The holiday season is also the most wonderful time of year for scammers.

Make money while spending it

A dangerous but lucrative holiday saving tactic is credit card rewards points. Carefully using rewards points can be profitable, and the holiday season brings many opportunities to rack them up. The problem is people often chase the points without thinking about the consequences. After all, 10,000 points worth $100 is good, but not if you carry a $1,000 balance at 20 percent interest to get it.

Pay off your balances and the points are pure profit!

If you can pay your credit card bills in full, then your points become a profit. While that may sound easy, if you already have steep balances, the holidays will just make them worse. You may need professional help.

Thank You!

We hope this white paper helps you find effective ways to save this holiday season. We also offer a free budgeting guide and spending planner through our website so you can start your holiday budget right!

If you have questions about anything we’ve covered, feel free to reach out to us. Our mission is to help you achieve financial freedom, so let us know if there’s anything we can do to help.

 

Buy or Refi: How to Save Big Either Way

For such big financial decisions, listen to the experts.

• The benefits of buying and the best time to refinance
• The importance of these four words: “debt-to-income ratio”
• Budgeting basics, and why credit is key

BUY OR REFI: HOW TO SAVE BIG EITHER WAY

For such big financial decisions, listen to the experts.

Most people will never spend more money at one time than they will when buying a home. If you’re refinancing, that’s often the second-biggest amount of money you’ll spend. Consolidated Credit is here to help take the stress out of both processes with this white paper. It summarizes everything we covered in the webinar, so you can take this advice and put it into action.

How important is home ownership?

Homeownership is so important there’s a whole month dedicated to it. June is National Homeownership Month. In fact, 2022 is the 20th anniversary. Congress made Homeownership Month official because they know that homes are the backbone of the U.S. economy. Before the pandemic, almost a fifth of the nation’s economy was tied up in the housing market. So, you can see why the federal government cares so much about homeownership. Consolidated Credit is here to help you get into a home – and protect your investment if you already own a home!

 

The benefits of buying

There are personal reasons to buy a home like more space, more privacy, and the right to renovate to your tastes. There is also a range of good financial reasons to own, and most people don’t know them all.

1. Building equity

You may have heard the word “equity” before but what does it mean? Simply put, equity is the value you put into your home. Every time you make a mortgage payment, you build equity. That’s not the case when you pay rent. Your rent goes to a landlord, and the next month, you owe more. When you pay down your mortgage, you’re increasing the share of how much of your home you own outright. That’s equity.

2. Saving long-term

When you build equity in your home, you create wealth. The most obvious way is by selling your home years later for more than you purchased it. That means you not only effectively lived rent-free for those years, but you also walk away with some extra cash. That often offsets all the homeowner’s insurance, mortgage interest, and other costs you absorb by living in your own place. In most cases, the longer you own your home, the more you can sell it for.

3. Building a strong credit history

Nowadays, most people know what a credit score is. Many people know how to check it for free. This three-digit number determines how high or low your interest rate will be on things like a credit card or a mortgage. When you buy a home and make those mortgage payments on time, you boost your score. This helps because it decreases your payments the next time you need an auto loan or any kind of personal loan.

4. It’s healthy, too!

According to the National Association of Realtors, homeowners are happier than renters. They have higher self-esteem, too. Here’s what Consolidated Credit noticed over three decades of financial counseling: The happier you are, the more confident you are, and the wiser you are with the choices you make with your money.

What if you already own your home?

You may be wondering if it’s the right time to refinance your home. That depends. Refinancing is a powerful tool, but it can also hurt you when it’s not used properly.

How refinancing works

When you refinance your home, you’re taking equity out of it. That’s because equity is the value of your home minus that mortgage. Equity is the share of the home you own outright, not the share the bank owns. You can extract some of that equity before you sell your home.

You may have heard about home equity loans or home equity lines of credit, also known as HELOCs. They do the same thing just in a slightly different way. A home equity loan is a traditional loan. Your equity is your collateral, and you get a lump sum of money. Usually, you can borrow up to 85 percent of your equity at a fixed interest rate. Then, you pay it back monthly just like your mortgage.

 

A HELOC, on the other hand, is a little different. It’s a revolving line of credit with a variable interest rate. Think of it like a credit card. You have a certain amount of money that you can borrow and pay back. You can take what you need and pay interest only on the amount you borrow.

 

 

Home equity loans and HELOCs are good because you can usually get a low-interest rate. You can also use that money to pay off credit cards and other debts with higher interest rates. This will save you money. But it can be a bad idea because you’re messing with the most valuable asset you own. There are horror stories of people taking equity out of their homes to buy a boat, for example. Soon, they have no equity left in their home, yet they still have a hefty mortgage. This is referred to as being upside down or underwater. You owe more on the home than the property is worth if you sell it.

 

Why new homeowners should care about refinancing

It seems strange, but the moment you buy your home, you’re on the radar of every refinancing offer out there. Soon, you will receive letters and emails that promote its benefits. Be careful. These offers aren’t about helping you; they are about making a profit for the lenders offering that refi. Before you make any big decision about your home, you need to understand a few key things.

 

What is DTI? And why should I care?

A DTI is very important yet often misunderstood. It is known as a debt-to-income ratio—DTI for short. This is the most important number for buying a home – even more so than your credit score. Much like a low credit score, a high DTI can torpedo your chances of getting a mortgage or refinancing your home.

Your lender calculates your debt-to-income ratio by dividing your monthly debt obligations by your pre-tax monthly income. Basically, your DTI is everything you owe each month – like credit cards and an auto loan – divided by everything you earn each month. To make a complicated formula a little easier, they usually leave out monthly expenses like food, utilities, and health insurance, among other things.

Why DTI matters

With DTI, lower is always better. A low DTI means you don’t spend most of what you earn on debt payments. Mortgage lenders like low DTI scores because that means you have money available to make those monthly payments on your new home. For most people, the biggest loan you will ever take out is a mortgage. That’s why lenders rely on your DTI to make their final decision.

The DTI you want

The highest your DTI should be is 43 percent. Anything higher than that, and many lenders will flinch. They will want to avoid taking a risk on you. If you can get your DTI lower than 43 percent, it will help you even more.

How to get a dominant DTI

The goal here is to improve your DTI so it impresses a lender to give you a mortgage or offer a mortgage at a lower interest rate. The less of a risk you are, the less you will pay in interest. One way to strengthen your DTI is to earn more money but that’s not always possible and may not be within your control. Here’s what IS within your control: Your monthly expenses.

The income questions

These are the types of questions lenders will ask when it comes to your income:

  • Is your income steady? In other words, does it come in at regular intervals or does it fluctuate month-to-month?
  • Is your income reliable? In other words, does the nature of your work mean you only get paid sometimes?
  • Finally, have you held one job for several years in a row?

Lenders like it when the answers to these questions are “YES.”

The payment questions

Here are some more questions that lenders have:

  • Do you pay your bills on time?
  • Are you struggling with credit card balances and big loans?
  • If you are, how will you juggle those along with a six-figure mortgage?

The savings questions

While you can buy a home without a down payment, that rarely happens. You will likely owe thousands right off the bat. Besides that, you need to pay the mortgage. So, you need to make sure you can set aside that sum each month. There are also miscellaneous expenses and bills to take into consideration with homeownership. You need to add everything up from property taxes to insurance and more.

These are refinancing questions, too!

If you want to refinance your home, many of these basic questions still apply. So even if you’re in a home now, it can’t hurt to honestly answer them. This refresher will help you when it’s time to refinance.

Create a household budget

No one likes to hear the words, “make a budget” but it’s so easy to do these days. It’s also crucial if you want to buy or refi. If you don’t relish the idea of putting pen to paper, there are lots of websites, apps, and programs that handle the drudgery of budgeting. Many of them cost nothing and the ones that do cost next to nothing.

 

Here’s how they work:

 

One of the most popular budgeting tools is called Mint. Another is called Personal Capital. Lots of banks and credit unions also offer similar programs through their websites for customers. You just type in your income and expenses or sync the program with your accounts, and they do the math for you. They can even project the savings if you eat one less takeout dinner, or if you refinance your mortgage. The software does the heavy lifting!

 

If that’s a little too techy for you, there’s a middle ground. Websites like Tiller let you download customized spreadsheets that stay on your computer, and you can easily personalize them. Quicken has software that’s been around for decades and most of us are familiar with them. Each solution has its pros and cons, but they all work. So, it’s up to what makes you feel the most comfortable.

Still unsure? Consult an expert

If you’re trying to save for a home or want to figure out how or when to use your home’s equity, you need to consult a professional. The best professionals are certified credit counselors from nonprofit credit counseling agencies. Where can you find one? Well, you happen to be in luck.

 

Surviving the Unexpected: Preparation Is Peace of Mind

A job loss, accident, illness, or death doesn't have to destroy your family or finances.

• Money-saving tactics for both your financial and physical health
• How to create an emergency fund in minutes – and contribute to it without cramping your lifestyle
• Where to get free expert help through this trying time

SURVIVING THE UNEXPECTED: PREPARATION IS PEACE OF MIND

A job loss, accident, illness, or death doesn’t have to destroy your family or finances.

It can take a long time to get out of debt, especially when you get deeply into debt because of a catastrophe. This white paper will review common causes that drive most Americans into serious financial trouble, and preventative measures you can take to avoid allowing an unexpected event to derail your financial plans.

The problem

Eight out of ten Americans owe money to someone. That could be a mortgage, a car loan, student loans, credit card balances, or even personal loans. And each one of those Americans owes more than $90,000 on all their debts, and that’s just an average. So, while some owe much less, others owe much, much more. While some of that debt is considered “good debt” like a mortgage, much of the rest of that debt could be avoided. So, how does bad debt happen? The answer is simple: Bad things happen to good people.

Leading financial catastrophes

Even without a pandemic, job loss has historically been the leading cause of personal debt in this country. Last year, more than 320,000 jobs were eliminated – and along with it, all the income that supported those families. That might sound like a big number, but believe it or not, that’s much less than in past years. In fact, it was down 86 percent from the height of the pandemic where millions of people lost their jobs in a single year.
After job loss, the leading cause of debt is, sadly, death and serious accidents. And accidents and injuries aren’t just physically and emotionally devastating. They devastate a family’s finances, too.

The problem is pervasive

Job loss, accidents, and deaths aren’t rare occurrences. Yet many people pretend they are. They don’t plan for disaster to strike. You can check out our other webinar about natural disasters, which also aren’t rare and have the same devastating effect on finances. But family-related tragedies have their own unique set of problems – and solutions.

Create an emergency fund in minutes

Four in ten Americans can’t afford a $1,000 emergency without relying on credit cards. They simply don’t have that much saved up. That’s because they don’t have an emergency fund. Here’s how to start building one right away.
Ideally, your emergency fund should cover 3 to 6 months of living expenses. That’s the gold standard. The best way to do that is to automate it. For instance, if you get paid via direct deposit – and 82 percent of Americans do – then you can ask your company to split your direct deposit. That’s right, most employers will let you send some money to one bank account, and some money to another.
If you send some of your paychecks directly into a separate emergency savings account, you’ll never see it in your primary account. That means you won’t miss it, or even better, you might even forget it’s there – until you need it. This works especially well when you get a raise. Instead of spending that newfound money, send it directly to your emergency fund until you build it up to cover 3 to 6 months of expenses!

Supercharge your emergency fund

If your budget is so tight that you can’t afford an emergency fund right now, there are some proven ways to squeeze some money from your daily living expenses – often without feeling the pinch. Let’s go over three of those now…

1. Save money on your credit cards

The best place to start saving is with your credit cards since almost everyone has a few. (In fact, the average American has four.) Credit cards are a big source of debt, but they don’t have to be.
Experts predict that 42 million Americans will pay at least one late fee this year. Many will pay more than that. Avoiding late fees is an easy way to save money. And often, all you’ve got to do is ask not to pay it!
If you’ve had a credit card for many years and you’ve been a good customer, you can call the number on the back of the card and get some concessions. The biggest is waiving a late fee. If you’ve never been late before, or it’s been a while, you can often get the first late fee removed as a gesture of goodwill.
You also might be able to shave down your interest rate if you mention another card has offered you less – and in five minutes online, you can surely find one that offers you a better rate, then mention the new card and lower rate to the representative. You can also move your due date, so it corresponds better with your paychecks, so you never get caught short and need to float that balance a little longer. Credit card companies often make these concessions because it’s cheaper than losing a customer and finding a new one.

2. Automate your bills and never be late again

In addition to automating your savings, you can automate your payments. Almost every bank and credit card – and even many municipal utilities – offers automatic bill pay. You set the day when you want a bill to be paid, and that amount is automatically deducted from your bank account right then, and not a day sooner. You’ll never need to worry about late fees again.

3. Make a budget and stick to it

Surveys show that one in five Americans have never had a household budget. But if you don’t know what you’re spending, how can you save?
It can be time-consuming to put pen to paper and create a budget from scratch. But what if you didn’t have to? There are websites, apps, and programs that handle the drudgery of budgeting for you. They do the math in seconds instead of hours. Many of them cost nothing, and the ones that do have a price tag are only a few dollars.
One of the most popular free apps is called Mint, and another is called Personal Capital. But a lot of banks and credit unions offer similar programs on their websites to customers. You just type in your income and expenses, and these programs add everything up. You can even project the cost savings of eating one less takeout dinner or refinancing your mortgage. The software does the heavy lifting for you.
If that’s a little too high-tech for you, there’s a middle step. Websites like Tiller let you download customized spreadsheets that stay on your computer, and you easily personalize them. Quicken has software that’s been around for decades and most of us are familiar with. Each solution has its pros and cons, but they all work. So, it’s really up to what makes you feel the most comfortable.
So that covers ways to trim your day-to-day budget so you can start saving more. And remember, even a few dollars a week makes a big difference after a few months. But what about bigger problems and bigger solutions?
Professional help for major debts
If you’re thinking, “I can never do this because I owe too much already,” well, not so fast. You can get out of debt. You just need help doing it.
There are places known as nonprofit credit counseling agencies. Their trained and tested credit counselors will give you a free debt analysis that will probe your financial strengths and weaknesses. From there, they can advise you on proven programs that can help. Let’s talk briefly about one of the most common and powerful.

Debt management program (DMP)

A debt management program, or DMP for short, is basically an agreement between you and your credit card companies. They freeze penalty fees and lower your interest rate if you agree to make regular payments. Those payments go through the credit counseling agency, and you make one payment that covers all the credit cards you put in the DMP. So, you pay less and save time, too. But what’s the catch?
DMPs aren’t free. It costs money for staff to administer them. But – and this is a huge but – that fee is rolled into your monthly payments, and it’s minuscule next to the savings you’ll enjoy. That’s probably why DMPs have been around for decades, saving Americans millions of dollars. But you can’t just sign up for a DMP on your own. The credit card companies work exclusively with nonprofit credit counseling agencies.

It’s never too late to save

DMPs are just one of the programs available to you. There are so many ways to save money, and then sock away that money for when you need it. We realize it might sound daunting, but remember, you’re not alone. We’re here for you.

Thank You!

If you have questions about anything you’ve heard here today, feel free to reach out to us. Our mission is to help you achieve financial freedom, and this is just like the tiny spoon your get at an ice cream shop – it’s just a taste of everything we have to offer. Thank you for joining us!

5 Savings Strategies in Today's Economy

You can save big by doing very little – and sometimes by even doing nothing.

5 Saving Strategies in Today’s Economy

• How to pay off your debts so you can save more for yourself

• Proven tactics to impress creditors and ditch debt collectors

• When to negotiate a better deal, and when to hang up the phone

5 SAVINGS STRATEGIES IN TODAY’S ECONOMY

You can save big by doing very little – and sometimes by even doing nothing.
Everyone knows that saving money isn’t nearly as much fun as spending money. But many people think saving money is harder to do than spending it. But in reality, you can save money in just a few minutes, and sometimes, you can even do it automatically.

Why save?

While the pandemic has taught us many lessons about our physical health, it also taught us lessons about our financial health. Before the pandemic, emergency savings seemed like something of a luxury. Now, we know it’s a necessity. Do you have three months of living expenses saved up? More than half of American adults do not. And that’s a serious problem.

5 simple saving strategies

So, let’s dive right in and talk about saving money, even if you don’t think you have anything left at the end of the month to save. The first step is the most boring, but it’s the most important. And it’s not hard to do. Know what it is?

1. Create a household budget

No one likes to hear the words, “make a budget.” But it’s so easy to do it these days. If you don’t relish the idea of putting pen to paper, there are scads of websites, apps, and programs that handle the drudgery of budgeting. Many of them cost nothing, and the ones that do, cost only a few dollars.
One of the most popular budgeting tools is called Mint. Another is called Personal Capital. But a lot of banks and credit unions offer similar programs on their websites for their customers. Basically, you just type in your income and expenses, and these programs do the math for you. You can even project your savings if you eat one less takeout dinner, or if you refinance your mortgage. The software does the heavy lifting!
If that’s a little too techy for you, there’s a middle step. Websites like Tiller let you download customized spreadsheets that stay on your computer, and you can easily personalize them. Quicken has software that’s been around for decades and most of us are familiar with.
Each solution has its pros and cons, but they all work. So, it’s really up to you to decide what makes you feel the most comfortable.

2. Save money at work

Why not get paid while you’re saving money? More than 9 in 10 Americans are paid through Direct Deposit, and almost all of them have access to a neat feature—you can direct some of that money away from your checking account and send it directly to a savings account. Imagine if you send even $10 a week to a savings account. At the end of the year, you’ll have more than $500. And you literally spent a few minutes setting it up, then did nothing the rest of the year!
Direct Deposit also works very well when you get a raise. Just divert that extra money into a savings account. You won’t be tempted to spend it because you never got used to having it, and you don’t constantly see it in your checking account. To set up multiple direct deposit streams, simply talk to your Human Resources or payroll department. They can walk you through this easy process.
Your employer might also offer valuable services that can help you save big. One of the most popular is a 401(k), which helps you save for retirement. What’s so special about a 401(k)? Many employers match a portion of your contribution to this retirement account.
According to government research, the average is 4.3 percent. That means for every dollar you sock away for later you get 43 cents. This doesn’t sound like much, but when you consider the average savings account pays out less than one percent interest, that’s suddenly a lot. Also, the IRS gives you some money, too: By not taxing what you contribute. And since this is for your retirement, which is a long way’s off, those savings will build up over time.
Another big workplace benefit is called a Health Savings Account (HSA). It does the same thing as a 401(k), except you set aside money for healthcare instead of retirement.
We could spend an entire webinar talking about these lucrative benefits, but we suggest you chat up your HR department. Believe it or not, they want you to take their money. Why? Because companies that offer these benefits know their employees will appreciate them. Those employees are more likely to stick around and work hard. So, let your bosses help you save! Just talk to your HR department. They want to help.

3. Make a phone call

Your HR department isn’t the only agency you should be talking to. You should also talk to the people you owe money to. Why? Because they might help you save, too!
If you’ve had a credit card for many years and you’ve been a good customer, you can call the number on the back of the card and get some concessions. For example, you might be able to shave down your interest rate if you mention another card has offered you a lower rate. To find that rate, just spend five minutes online, you can surely find one, then mention the lower rate to the representative.
If you’ve never been late before, you can often get the first late fee removed as a gesture of good will. You can also move your due date, so it corresponds better with your paychecks. That way, you never get caught short.
You can also call about any debt you’ve incurred for medical procedures. We’re not talking just hospital bills and doctor’s fees. Even dental work and lab fees can be negotiated. Medical providers are well accustomed to such negotiations. Just contact the billing department and politely inform them you can’t afford to pay the full bill right now, but you’re a responsible person. Ask what breaks they can offer and remember to be polite—it can make all the difference for a successful negotiation!

When NOT to pick up the phone

Now, let’s talk about a topic no one likes—debt collectors. Who likes people calling them all the time and asking for them to pay bills they can’t afford to right now? Here’s the thing about debt collectors: They can’t just bother you any time of the day, and they’re not allowed to threaten you at any time. That’s important to know, and it’s important to let them know you know.

Federal Debt Collections Practices Act

There’s a federal law called the Fair Debt Collection Practices Act, or FDCPA. The FDCPA bans debt collectors from being abusive. For instance, it says they can’t call you before 8 in the morning and after 9 at night. They can’t call you at work if you tell them not to. They’re not even allowed to swear at you. If you’re getting harassing calls from debt collectors, just Google “FDCPA” and you’ll get a list of your rights. Then tell those debt collectors you know about your rights – and how to report them to federal authorities. That usually settles them down quickly.

4. Try these proven debt-busting programs

OK, we’ve reviewed how to budget your money, how to save your money, and how to stretch your paycheck. But what about all the debts you already have? How can you get rid of that? If you owe so much you see no way out, know this: There are proven programs that can help. The problem is they can get confusing. They even sound the same. So, let’s quickly review debt consolidation, debt management, and debt settlement.

Debt consolidation

A debt consolidation loan is simply a personal loan you use to pay off all your credit card bills with steep interest rates. You might be able to get a personal loan of between 36 and 60 months from your bank or credit union at 6 percent, then use the money to pay off your credit cards that are charging you 20 percent. Then, you simply make one monthly payment on the personal loan. Usually, you get out of debt fast and make a smaller monthly payment, which is the definition of a win-win. It’s not a perfect solution, though. If you have too much debt and bad credit, no one will give you the loan in the first place. In that case, you might to try the next option…

Debt management

A debt management program, or DMP for short, is basically an agreement between you and your credit card companies. They’ll freeze your penalty fees and lower your interest rate if you agree to make regular payments. Those payments go through a credit counseling agency you partner with, and you make one payment that covers any credit cards you put in the DMP. So, you pay less and save time, too.
But what’s the catch? DMPs aren’t free. It costs money for staff to administer them. But that fee is rolled into your monthly payments, and it’s minuscule next to the savings you’ll reap. That’s probably why DMPs have been around for decades, and they’ve saved Americans millions. Sadly, you can’t just sign up for a DMP on your own. The credit card companies work exclusively with nonprofit credit counseling agencies.

Debt settlement

Debt settlement is the next step up in both results and complexity. Debt settlement seems like the best option of them all. In a nutshell, you negotiate with your creditors and pay them only a fraction of what you owe. Why would your creditors agree to this? Because they don’t want you going broke and paying nothing.
The national average for settlements over the past few years is 48 percent – which means most folks in debt settlement don’t pay back 52 percent of their debts. Sounds like a great deal, right? Sadly, it’s not always the case. Because debt settlement is now being advertised so widely, it’s worth spending a few moments reviewing the three major downsides.
First, some creditors will outright refuse to settle with you., and they aren’t required to accept settlements. Second, while a DMP doesn’t hurt your credit score long-term and can actually help it, debt settlement will ruin your credit score. You’ll have trouble getting a decent mortgage, auto loan or even credit card. Finally, debt settlement has many ethical practitioners, but there are also many scams out there that you need to watch out for.

5. Get professional help

If you have crushing personal debt, we suggest you Google the three solutions described above. But how do you decide which is the best option for your situation? That’s where credit counseling comes in. It’s the best place to start, and it’s completely free.
When you call a certified counselor, you receive a free debt analysis. These counselors are trained to ask you the right questions and study your financial strengths and weaknesses. If a DMP is what you need, they can set you up. If another option is better, they’re required by law to recommend it to you. So, how do you find a good credit counseling agency?
It should be around for many years – decades, hopefully. It should have certified counselors, which means they take a standardized test to ensure they know what they’re talking about – and they’re required to retake it every two years. They should also have the highest rating with the Better Business Bureau, which is an A+. And finally, they should have many excellent reviews from reputable review websites like Trust Pilot and Consumer Affairs. Consolidated Credit has been around for three decades and helped millions of Americans. We have an A-plus rating with the Better Business Bureau and excellent reviews.

Thank You!

If you have questions about anything you’ve heard here today, feel free to reach out to us. Our mission is to help you achieve financial freedom, and this is just like the tiny spoon your get at an ice cream shop – it’s just a taste of everything we have to offer. Thank you for joining us!

The Weather and your Wallet

Don't let natural disasters destroy your life or your finances.

In this free webinar you’ll learn:

  • How to prepare for any natural disaster without breaking the bank
  • Which easy-to-use tech tools can give you peace of mind
  • Where to get free help recovering from a natural disaster

THE WEATHER AND YOUR WALLET

Don’t let natural disasters destroy your life or finances.

Preparing for natural disasters isn’t hard, and it’s not expensive either. Once you do it, you’ll have peace of mind. When you have a disaster plan, you worry less and enjoy life a little more – even now, as we emerge from a pandemic.

2021 natural disasters

If 2022 is anything like past years, most of the country is in the path of something bad. No matter what the year, no part of the United States is immune from natural disasters. Wherever you are right now, you’re vulnerable to a natural disaster.
According to the National Center for Environmental Information (NCEI), there were 20 weather/climate disasters last year, down 2 from 2020. They killed 688 people, compared with 262 people the year before. The total cost of those disasters was $145 billion. With that much money on the line, Americans need to be on top of their disaster planning.

NATURAL DISASTERS IN 2021

  • Wildfires: 58,985 (7.1 million acres were burned)
  • Major hurricanes: 4 (111 mph winds or higher)
  • Earthquakes: 9 (that did damage)
  • Tornados: 1,376 (101 fatalities occurred)
  • Flooding: $145 billion in damages nationwide

Disaster awareness

Thankfully, it’s not hard to convince people to care about natural disasters. When was the last time 70 percent of people in this country agreed on anything? Well, in a poll by the insurance company Allstate, 7 in 10 American were worried about natural disasters. Then again, three-quarters of those people aren’t doing anything about it. According to the same survey, only 1 in 4 Americans have a disaster plan. Which is sad because they’re not hard to make. It takes just a little time and even less money.

Plan now

Let’s start by learning about disaster preparation that costs nothing. There are three key things you can do right now:

  1. gather all your key documents
  2. organize everything you’ll need to get compensated for any destruction
  3. design evacuation routes and decide when you’ll use them

Let’s take a quick look at each…

Documentation

First, gather up all the paperwork you’ll need in case the worst happens. Most importantly, that means insurance policies. Check your policies to make sure you’re properly covered.

  • If not, it’s time to talk to your insurance agent.
  • If so, write down the name, address and claims-reporting telephone number of your insurance company – and remember, this might be different from your agent’s contact information.

Next, whip out your phone and take pictures of everything of value in your house. Don’t forget to shoot not only that nice couch but also all your jewelry and other collectibles. If you have documents attesting to their value, gather those, too. Even take photos of those documents. Store them on the cloud for free using Google Drive or similar options.

Organization

Of course, we’re not a paperless society just yet. So, you definitely need to safely store any hardcopies of important documents. And it needs to be portable, too. If you must evacuate, you want to grab everything you’ll need and not worry you’re left something behind. That’s why the worst time to gather up your documentation is right before you need to head out.
Now some people buy a portable and waterproof metal lockbox for hundreds of dollars, and you can see them advertised on Amazon and at stores like Walmart and Target. But you don’t need to buy one of these pricey options. We’ve known many people who keep these documents safely stored in cheap Tupperware. It’s waterproof and lightweight – and best of all, cheap! Whatever works for you, as long as it’s protected and at your fingertips.

Evacuation

When many people hear the word “evacuation” they think it only means, “Get out now!” They don’t often consider, “Where am I going?” So, a solid evacuation plan actually answers two important questions that can save you money and even save your life….

1. What’s the safest way out of danger?

First, what’s the safest and quickest route away from the natural disaster? If it’s a hurricane, you have more time to plan than if it’s a tornado, but either way, you want to map it out now. In the case of the former, a hurricane gives you a lot of notice, but you often have to get very far away to get out of the storm’s path. A tornado can give you only minutes, and you need to think about shelter close by.

2. What’s the cheapest place to wait it out?

You also need to know where you’re going. That could be the home of a nearby friend or faraway relative, or it could be a government or private shelter. But you want to figure that out now. Otherwise, you’ll get the first part right and get out of danger. But you won’t have a destination to wait out the worst of it. That can be costly, uncomfortable, and maybe even deadly.

Disaster tech

Technology doesn’t just make it easier to order stuff online and make our TV sets bigger and brighter. Technology has made it safer to survive natural disasters. And it’s not expensive, either. For instance, you can buy a thermal emergency blanket for around $15. A good solar charger for your smartphone is around $20. Same for a personal water filter. Best of all, these items last a long time, so you don’t have to buy them again. Even the emergency food, while not exactly gourmet, is relatively cheap and lasts for up to a decade.

Use technology to combat the forces of nature:

  • Solar battery charger
  • Personal water filters
  • Emergency meals
  • Thermal blankets

Disaster prep

Each kind of natural disaster requires different supplies, although some are universal. Here’s the problem: Most disaster supplies are purchased at exactly the wrong time. During hurricane season, for example, most bottled water is sold 48 hours before the storm is scheduled to hit – leading not only to shortages but price gouging. So, what’s the solution?
The best advice sounds weird: Shopping for disaster supplies is just like shopping for holiday gifts. Why? Because it’s best to do it off-season. You’ll save more. Look for deals year-round, not just on the eve of, say, tornado season. Shop for blizzard supplies in the summer. Shop for hurricane supplies in the winter. Not only will you save money shopping off-season, if a natural disaster is approaching or strikes, you’ll have one less thing to worry about. You won’t forget something important because you’re in a panic, and you’ll have that peace of mind we mentioned earlier.

Disaster advice

There’s no shortage of excellent advice online on exactly what to do to prep for each kind of disaster – from the best masks to breathe during a wildfire to how much bottled water you’ll need after a hurricane. If you don’t know where to go first, start with us. We’ve compiled a simple booklet on natural disasters that isn’t the end of the information you’ll need, but it’s a really good beginning.

Hurricanes

While we’re talking about beginning your research, let’s focus on one key fact about each kind of natural disaster that often gets overlooked. For instance, even if you’ve gone through a hurricane before, and even if you’ve prepared for it very well, you might not know this: Flooding kills more people and costs more in property damage than the high winds do. It’s the “storm surge” from the ocean that’s more deadly than the gale-force winds.

Wildfires

In some ways, calling wildfires a “natural disaster” isn’t accurate, since almost all of them are caused by human beings either acting clumsily or maliciously. Thus, more wildfires start in areas where camping is allowed than in remote wilderness areas. So, check to see where camping is allowed near you, because that’s something you need to keep your eye on.

Tornadoes

Although tornado season is traditionally March through May in the south, they peak in the summer up north. And they can happen in any state in the country. Only Alaska is usually spared, although it last had one documented in 2005. So, unless you live in Alaska, don’t ever say it can’t happen here.

Earthquakes

Earthquakes are the most common natural occurrence on this list, except no one feels most of them. Of the half a million that happen each year, human beings feel only 100,00 of them – and only 100 cause any damage to property or claim lives. But earthquakes are among the most damaging natural disasters. In this country, they cause more than 4 billion dollars a year, according to FEMA.

Flooding

Flooding is the one natural disaster that follows many other natural disasters. As we mentioned, hurricanes can cause flooding, but so can tornadoes and earthquakes. So-called “no-name storms” cause flooding, too. Did you know 90 percent of all U.S. natural disasters declared by the President involve some sort of flooding? It’s also the one natural disaster that can happen anywhere – even Alaska.

Disaster recovery

No matter what natural disaster hits you, the recovery process is almost always the same. Yet more injuries, costs, and even deaths result from people simply not following this basic advice.

  1. First, don’t venture outside until you get the all-clear from officials. This isn’t the time to sight-see the damage. Downed powerlines and other dangers lurk everywhere.
  2. Second, spend your time close to home, assessing your family’s needs and documenting any property damage.
  3. Third, use your disaster supplies for eating, drinking, cleaning, and washing. Don’t try venturing out to buy anything.
    That’s all the basic stuff, but what about financially recovering from a natural disaster? If you suffer any damage from a natural disaster, and you and your family are safe, the next step is to ensure your finances are safe. Now let’s double back and take advantage of all the preparation you did earlier.

Remember when you put all your valuable documents in one safe place? Well, now it’s time to consult them. Break out those insurance policies. Call the agents representing you right away. Don’t expect them to get right back to you, since they’re slammed with other claims. But the sooner you call, the sooner you’ll hear back.
Also contact your lenders and ask for grace periods and extensions. That’s everything from your mortgage to your credit cards. They have protocols for this, so it can be quite easy to do. If your home is damaged and you can’t stay there, don’t forget to tell your utility companies. They can suspend your service and save you some money.

You’re not alone

And now we come to the most important point. After a natural disaster, you might feel like your world has been turned upside down, and you’re all alone. You might not have cellphone service, only heightening your sense of loneliness. But the fact is, you’re not alone. You have help available to you, and much of it is free. Some of it actually gives you money. Let’s review that quickly…

Finding financial aid

Once you can get back online, your first step is to visit consumerfinance.gov/recover. That website offers step-by-step instructions for recovering from every kind of natural disaster.
If you’re in a presidentially-declared disaster area, go to disasterassistance.gov to learn how to claim some aid. Go to the homepage of your state’s website to see if you qualify for state aid, even if you’re not in an official disaster area.
You can also call the Red Cross at 800-RED-CROSS to see about financial aid, shelter, free meals, free clothing, and even some personal hygiene supplies.

Scammer likely

Now let’s talk briefly about who NOT to call. After a natural disaster, scammers descend upon the area. Some are shady contractors who offer to fix up your property for cheap – but only if you pay in cash, up front, and right away. NEVER pay up front. Pay as the work gets done. ALWAYS get estimates from more than one contractor, and make sure they’re licensed and bonded.

Call a credit counselor

Consolidated Credit has long provided is free priority counseling for those affected by natural disasters. For nearly three decades, we’ve offered a free debt analysis from a certified credit counselor, but after a natural disaster, we’ve offered even more help. Keep this number handy, 1-800-210-3481 and after you seek out the help on the previous slide, make sure to call us.
Thank You!

Income Tax Hacks

How to Save Time, Trouble & Money

What you’ll learn:
• Money-saving and time-saving tactics for full-timers and independent contractors
• How to get out of trouble – and stay out of trouble – with the IRS
• Where to find an accredited tax expert who can help you

2022 INCOME TAX HACKS

How to Save Time, Trouble & Money

Thank you for taking the time to attend our webinar! This guide covers key points from the webinar so you can put all that you’ve learned to use. We hope this information helps you find the answers to all your questions so you can minimize your stress as you file your taxes this year.

The IRS is not the enemy

First, let’s begin with some psychology. The IRS is not out to get you. In fact, they want to help you. But the truth is that filing taxes can be confusing.
The IRS actually has 800 different forms. It’s one of the most complex government agencies and one of the toughest government jobs. That’s why dealing with them can feel daunting, but it doesn’t have to be.

Forms you need to know

Once you understand the reason behind the numbers and letters, filing taxes becomes a lot less intimidating.

  • W2: This form shows how much you earned in the previous calendar. It also shows how tax was withheld, which helps you nab a refund or get a lower tax bill.
  • W4: This is the form you would fill out to get your W2 the following year. It also lets your employer know how much tax you want withheld from your paycheck.
  • W9: A W9 is the form you fill out if you are a freelancer or if you work a side gig where you make more than $600 a year from one employer. This form lets the IRS know how much you’re making as an independent contractor.
  • 1099: A 1099 is a form you get back from your employer who paid you as an independent contractor. Depending on your withholding you might owe taxes, or you might get a refund.
  • 1040: This form is known as the “U.S. Individual Income Tax Return.” It is a standard federal income tax form taxpayers use to report income to the IRS, claim tax deductions and credits, as well as calculate their tax refund.

What is withholding?

Whenever you get paid, your employer withholds a certain amount of money from your paycheck. This is known as a withholding and is used to cover some or all of your taxes. The reason the IRS does this is to keep you from having to pay thousands of dollars in mid-April because not many people have the means to pay taxes in one go.
And that’s why the law says employers in every state must withhold money for federal income taxes. Some states and even some cities also require a tax withholding.
The tricky part of withholding is that it’s not very user-friendly. It may seem simple enough to use numbers one through four, but it gets very confusing when you try to figure out just what you should be declaring. Hence why you may want to consider consulting with a tax pro to help you avoid a tax bill.

Why tax refunds are bad!

Everyone loves getting tax refund checks, but getting a big refund is not necessarily ideal. Why? Because many American use tax refunds as “forced savings accounts.” Basically, Americans have trouble saving so they let the IRS do it for them.
The problem with this is that the IRS doesn’t pay taxpayers any interest. That’s why tax experts say it’s best to keep your refund small and then put your money in a savings account or a retirement account to make a few extra bucks through interest.

What happens when you don’t pay your taxes?

How to get in trouble with the IRS

There is one tried and true way to get in trouble with the IRS and that’s by ignoring them. You should never ignore a letter from the IRS. Because an unopened IRS letter could lead to bank account levies, wage garnishments, loss of appeal rights in tax court, and even a lien on your property.
So, always make sure to read IRS letters carefully and follow the instructions accurately. And if you receive a letter claiming you owe back taxes you should call an accountant immediately. This is one time do-it-yourself is not the best option.
Nevertheless, here are a few other reasons you may get a letter from the IRS:

  • Balance due
  • Notifying you about a refund
  • Question about your tax return
  • Verify your identity
  • Additional information
  • Change to your return
  • Notice of delay in processing your return

How to get out of trouble with the IRS

Regardless of whether you call an expert or decide go it alone, you must respond right away! Nothing is more costly than waiting to reply to an IRS letter that’s been sent to you. If it’s a simple matter, you might want to handle it on your own. But if it’s more than you can handle solo, hire a professional who may actually save you money.
If you owe the IRS, it is most likely due to the fact that you have tax debt – meaning either you paid too little or too late. The good news is that you can’t be sent to jail or debtor’s prison, which hasn’t existed in the country since the mid-1800s.
So long as you are not engaged in tax evasion – intentionally not paying or underpaying your taxes – you don’t need to worry about criminal consequences.
That being said, if you don’t work with the IRS to pay back what you owe, you can get in trouble. The longer it takes you to settle up what you owe, the more penalties you accumulate. And if you refuse to work with the IRS, they will garnish your wages and seize money from your bank account.
The IRS cares most about compliance, which is a fancy way of saying “working out a plan to pay everything off with the IRS.” And no, the IRS will not take your word for it. They will review your records to make sure you will not owe in the future before they agree to a resolution program.
Here’s the tricky part: You usually only get 72 months to straighten everything out with the IRS. But the rumors about the IRS being heartless are not true. They will actually cut you some slack. However, the problem becomes figuring out how to communicate properly.

IRS terminology can be confusing

If you thought filing taxes was complicated, wait until you get hit with some complex terminology when you owe back taxes like:

    • Currently Not Collectible (CNC) status
    • Streamlined installment agreement
    • Offer in Compromise
    • Final Notice of Intent to Levy and Notice of Your Right to Hearing

Why you need a tax pro

A CNC status is what you get if paying anything toward your tax debt would throw you into financial crisis. And if you’re financially struggling, you want a CNC status. But here’s the downside: The IRS doesn’t tell you about CNC, tax debt reduction, penalty reduction or removal. That’s why you need a tax pro who will help guide you.
On top of this, a tax pro can help you avoid tax scams. Unfortunately, there are bad people out there who will try to rip you off and take advantage of you. And sadly, the IRS does not call your personal residence to warn you. But they will send out several notices before anything negative happens. That’s why it’s imperative you open any and all letters you receive from the IRS.

How to find a reliable tax pro

The best tax pros have a few things in common:

        • They’ve been doing this for years
        • They have great online reviews
        • They’re highly rated by the Better Business Bureau

But be aware that if someone is promising to solve your problems without having reviewed your information, your best bet is to steer clear! It would be better to seek out an attorney who works at a firm specializing in tax relief.
Also note that ethical tax pros won’t charge you their entire fee up front. In fact, run the opposite direction from anyone who demands their entire fee up front.

The best tax hack of them all

Shop around for a tax pro…

      • Don’t pay everything up front
      • Be suspicious of anyone saying you “qualify” for a tax-relief program
      • Avoid anyone who advertises “secrets the IRS doesn’t know”

Recovering from the Holidays: A New Year with No Debt

Make 2022 the year you achieve financial freedom!

In this free webinar, you’ll learn:
• How to develop smart financial goals for the new year – and achieve them
• Clever ways to pay off 2021 holiday debt, then save for the 2022 holidays
• Where to find free expert help so you’re not going it alone

RECOVERING FROM THE HOLIDAYS: A NEW YEAR WITH NO DEBT

Make 2022 the year you achieve financial freedom!

Thank you for taking the time to attend our webinar! This guide covers key points from the webinar so you can put what you’ve learned to use. We hope this information empowers you to reach your financial goals this year.

Average holiday debt per person…

28% of Americans don’t pay off their bills by next holiday season

Nearly three in ten Americans start holiday shopping each year when they have yet to pay their debts from the year before! And even though people weren’t traveling much during the holiday 2020 season, they still ran up more holiday debt than the previous year. In 2020, the average holiday debt per person was $1,381 compared to the previous year’s debt of $1,325.
It’s worth noting that the last time the average holiday debt was less than $1,000 was in 2015 when the average American racked up $986 in credit card debt. The one constant has been that regardless of what’s going on in the world, people overspend on gifts, travel, and all the trimmings for the holidays.

Smart financial goals for 2022

Now that we’ve covered those numbers, let’s get into the real reason why most Americans get into holiday debt. It’s not because they’re irresponsible or frivolous, it’s because they didn’t plan.

Budgeting is the best resolution

The first rule of personal finance is you can’t save money if you don’t know how much you’re spending. That means you need a budget. And don’t worry, creating one is not difficult and there are tools you can use that will do most of the work for you.

Cutting-edge ways to cut expenses

There are a few websites, apps, and programs that can handle the drudgery of budgeting for you. Many of them are free, and the ones that aren’t free only charge a few bucks.

  • Mint
  • YNAB
  • Mvelopes

You can try using online budgeting tools like Mint. Mint is one of the most popular tools used and it’s free. YNAB and Mvelopes charge a few bucks because they have a few more options. These software programs will do all the heavy lifting for you. All you need to do is type in your income and expenses and let the program do its thing.
If you feel like you might be in over your head with these programs, we have a middle ground. You can try websites like Tiller that let you download customized spreadsheets. But if you would rather stick to bank and credit unions, they offer similar programs on tither websites to their customers. This makes it easier for some customers because they are already familiar with their bank’s website. It’s all down to you and your preferences.

Creating an emergency budget

In addition to your normal budget, you also need to create an emergency budget. This is a stripped-down version of your budget that you can use when you’re facing financial hardships. We’re talking about cutting out every expense that isn’t needed for your basic survival.
Without an emergency budget, you’re flying blind. What happens if you are unexpectedly laid off? You’ll want to have a little cushion to fall back on. So, you’ll want to how much it will cost you just to survive during difficult times.

What are survival expenses?

When creating an emergency budget, prioritize the expenses that matter most. Start with basic needs like food, water, and shelter. Then, focus on the bills you absolutely must pay, like mortgage or rent payments, utilities, water, etc. Then there are support functions you can’t live without. For example, if your car breaks down, you’ll need to fix otherwise you’d have no way to get to work and make money to survive. Another example would be childcare.
Finally, you have medical expenses. This includes any prescriptions and any medical care you may be under. Because if you’re sick, you can’t work or enjoy your life.

Cutting back all the luxuries

Once you’ve focused your budget on the essentials, it’s time to cut back to the barest of bones. We’re talking about keeping only the bare necessities. Pause or cancel monthly subscriptions like cable or satellite TV. And yes, that means no Netflix either. And you can even scale back your phone plan and your Wi-Fi to the cheapest level available. Remember, every penny counts!

Finding free and healthy ways to occupy your time

Before we make you feel like we’ve sucked the fun out of everything. We want you to know that emergency budgets don’t mean you have to be miserable. Just because you’ve cut out some of your costliest entertainment options doesn’t mean you can’t find entertainment elsewhere.
Try your hand at a new hobby, play board games, or maybe even go for a hike or a bike ride. Check your local library for both online and socially distant in-person options.

Holiday debt doesn’t have to be a drag

If you are one of the 28 percent of Americans who don’t pay off their holiday debt before the next holiday season rolls around, you need to break that cycle. And we know that getting into debt is far easier than it is getting out of debt. That’s why we’re recommending some free professional help.

Credit counseling helps you discover your debt-busting options

First things first, you need a debt diagnosis. Much like how you’d call a doctor for a health issue, you should call a certified credit counselor for financial challenges. These experts will give you a free debt analysis because they work at a nonprofit credit counseling agency. They’ll go over every dollar you spend and every dollar you earn before they give you a menu of debt-busting options.

A debt management program might be the best solution

One of the most powerful weapons in a credit counselor’s arsenal is called a Debt Management Program, or a DMP. With this tool, they could cut your monthly payments by up to 30 or even 50 percent.
How does it work?

  1. Your credit counselor works directly with your credit companies to lower the interest rates applied to your balances.
  2. Not only will you save on interest rates, but a DMP also freezes late fees.
  3. On top of this, you only make one payment a month for all your credit cards that are enrolled in the program.
  4. Your payment is made directly to the credit counseling agency that will pay your creditors on your behalf.

So, say goodbye to forgetting to pay that credit card bill and getting hit with huge late fees.

3 other ways to ease your post-holiday debt

Of course, your options are not limited to creating budgets and calling credit counselors. There are three other methods of getting out of debt and staying out. You can use any of these three tactics to make a dent in your holiday debt.

1. Sweet-talk your credit card companies

If you’ve been loyal to your creditor for years and you’ve mostly made your payments on time, then you can ask for some slack. You call the phone number on the back of your phone and request a lower interest rate. It’s not guaranteed that you’ll get it, but because credit cards are so competitive, they won’t want to lose a good customer. Otherwise, you can also move your due date to help avoid late fees.

2. Get a balance transfer credit card

There’s a credit card out there that can help you get out of debt instead of getting deeper into it. It’s known as a balance transfer card. Balance transfer cards offer you low interest rates, and sometimes you may luck out with no interest at all. That way, more of your money goes to paying down your balances instead of lining the pockets of your credit card issuer.
Just be careful. All balance transfer cards have an expiration date—usually 18 months but they can sometimes be for as little as six months.
So, if you’re smart and pay off the balance before that time is up, you’ll come out ahead. Unfortunately, research has shown that most Americans fall behind on balance transfer cards. If you can’t pay off the balance in time, the interest rate will jump and could be even higher than your original rate.

3. Debt consolidation loan

A debt consolidation loan is a personal loan you use to pay off all your high interest rate credit cards. It works like a balance transfer card. You pay off higher interest rate cards with a lower interest loan. But in this case, the loan can last between 36 and 60 months. With a loan, you may end up with 6 percent interest, whereas your original credit cards might be upwards of 18 percent.
And you would only make one monthly payment on the personal loan. This is a great way to get out of debt fast. It also doesn’t hurt that you make a smaller monthly payment, which in our eyes is a win-win.
But there is a catch. If you get a debt consolidation loan, you’ll likely be looking at 3-5 years to pay it all off. That’s if you can get the loan at all. If you have too much debt, no bank or credit union will give you a loan. It’s a classic Catch 22.
The good news is that if these solutions fail, you still have the option of enrolling in a debt management program. So, if you’re not sure which option is right for you, just contact a credit counselor.
Thank you!

Making the Most of the Gig Economy

How to set up a second income stream without cramping your lifestyle.

In this free webinar, you’ll learn:
• The best way to discover what can make you the most money
• How to avoid the traps and scams of a second gig
• The best tips and tricks for balancing your budget and your life

Making the Most of the Gig Economy

How to set up a second income stream without cramping your lifestyle.

The Gig Economy

Thank you for taking the time to attend our webinar! This guide covers key points from the webinar so you can put what you’ve learned to use. We hope this information helps you make the best financial choices for your situation.

What is the Gig Economy?

In layman’s terms, the Gig Economy refers to every job that isn’t full-time.
Part-Timers
Part-timers can work for as little as a handful of hours a week to 34 hours by law. Part-time workers work for one place on a regular schedule while receiving limited benefits.

Independent Contractors/Freelancers

“Independent contractor” and “freelancer” are terms often used interchangeably. But one major difference is that contractors have contracts. Regardless of whether it’s for a weeklong project or sporadic work over a year, contractors are guaranteed payment from a single employer.
Freelancers also work by project. However, the agreement is much less formal, and they can work for a multitude of clients at any given time.

Entrepreneurs

This term covers everything from a mom starting a babysitting service to a tech guru launching the next Amazon or Google.

The massive growth of the gig economy

In 2005, the federal government did a study that concluded the Gig Economy “accounts for roughly 2-4% of all workers.” Today, well over one-third of all workers have side gigs. A total of 35% of all workers make money by not working traditional full-time jobs. That is 57 million people who contribute almost $1 trillion to the economy every year.

The Side Gig Economy

About 4 in 10 workers use the Gig Economy as their primary source of income, either by choice or because they were laid off. Meanwhile, 6 in 10 use the Gig Economy for “side gigs.”

Fastest Side Gigs: Retail & Fast Food Chains

Some of the easiest extra work anyone can pick up is working a few shifts at a nearby retail outlet or working at a fast-food chain. Whether you are flipping burgers, folding sweaters, or bagging groceries, you can ease into the Gig Economy. Best of all, the shifts you are likely to seek — nights and weekends — are the shifts managers usually have the most trouble filling.

Getting Side Gigs Online

If you have skills like writing, designing, or coding, you might be able to find work online. The downside is that the work listed online can often be quite competitive. Still, it may be a good idea to weigh your options. Otherwise, you can always pursue similar work locally.
Here are some of the websites we recommend:

  • Upwork.com
  • Freelance.com
  • Guru.com
  • PeoplePerHour.com

Turning Hobbies into Money

If you are wondering how or what you can do to make a few extra bucks, look no further than yourself. Do you know a second language? Are you proficient with any musical instruments? You might want to consider using your own hobbies and skills to teach and make a little extra money.
Any skill from yoga to bookkeeping and public relations can be monetized. If you possess skills others would be willing to pay for, post them to your social media, at church, or log onto Nextdoor.com. This website is perfect for listing local opportunities.

Teach Others for a Fee

While the pandemic has affected many school districts’ rules, most schools still need capable substitute teachers. According to ZipRecruiter, hourly pay for substitute teachers ranges from $10.65 to nearly $16 across the United States. Generally, you are required to have a high school diploma. However, some states will require special testing for teaching licenses. Check your state’s requirements for more information.
Otherwise, it may be a good idea to consider tutoring. You can advertise for free on social media and locally or use a website like Nextdoor.com.
Alternatively, you can make use of tutor-specific websites like:

  • Wyzant.com
  • TutormatchingService.com
  • KnowledgeRoundtable.com

Side Gigs without Special Skills

So, what if you don’t know a second language or have any unique talents? And what if teaching just isn’t for you? Well, you can still find work that doesn’t require special skills.
Think, for example, dog walking, janitorial services, or childcare help. You can advertise locally, or online.
We recommend trying websites like:

    • Care.com<./li>
    • DogWalker.com

TaskRabbit.com.

Not only can you list your services, but these websites also offer helpful advice on how to make the most of your time while making the most money.

Side Gigs to Watch Out for

Certain side gigs may seem easy, such as Uber or Lyft, but they have minimum requirements and a screening process that make them a little more complicated. So, it’s not as easy as signing up to chauffeur people. You’ll need to read up on their requirements and figure out if the wear and tear on your car are worth the hassle.
The same thing goes for medical billing or coding from home. These are legitimate jobs that require training and testing.
And when it comes to multi-level marketing, you may want to study up and do the math before signing up to be a Sally cosmetics door-to-door salesperson. Otherwise, you could be staring at a closet full of unused and unsold products.

Avoid Side Gig Scams

Since people are looking for ways to make easy money, scammers have realized this and want to take advantage of people’s given situations. So, make sure to thoroughly research that driving service before you sign up for it. And avoid multi-level marketing firms that rely on your signing up other sellers, a.k.a pyramid schemes. If you have to spend money to get involved, or if you make so little it’s not worth the time, it’s best to avoid that gig altogether.
And whatever you do, make sure you are not falling for these scams:

  • Taking online surveys
  • Mystery shopping
  • Envelope stuffing

How to Identify Side Gig Scams

It can be stressful trying to figure out which side gig is legitimate and which is a scam. Luckily, there are websites that help. For starters, try the Better Business Bureau website and see if the company is listed. Additionally, you can search for online reviews from sites like TrustPilot.com or ConsumerAffairs.com.
But more importantly, start at the source. If the company’s website does not have an “about” page, or if it doesn’t list a complete corporate history and the names of its leaders, it might be best to look elsewhere.

Side Gigs and Taxes

If you make more than $600 from one employer, then don’t forget to notify the IRS. An employer should send you a 1099 form under those circumstances. Make sure you don’t ignore it because the last thing you want to do is irk the IRS!

3 Best Ways to Spend Your Side Gig Money

Pay Off Credit Cards

The average credit card interest rate fluctuates, but recently credit card interest rates have been hovering around the 20% mark. That means for every $5 you spend you are paying $1 to your credit card company for the privilege of carrying a balance. Now, imagine how much you could save by paying off your balances. So, shift your focus to paying off debts first and foremost.

Start an Emergency Fund

If the pandemic has taught us anything, it’s to expect the unexpected. Leading up to the pandemic, polls showed that less than half of Americans had $1,000 saved up for emergencies. To cover their bills, many turned to their credit cards. For this reason, we recommend funneling your side-gig earnings into savings for future emergencies.

Invest in Yourself

According to several polls, Americans in their 30s have about $40,000 saved for retirement. How much do they actually need? Almost a million dollars by the time they are in their 60s. Hence, why saving now for retirement is imperative. Upping 401(k)s and IRA balances as soon as possible can help you by giving you more time to earn interest.

The Secret to Saving through Side Gigs

While others are spending, you’re busy earning

According to Jill Gonzalez, an analyst at WalletHub (a personal finance firm), the pandemic is created a spending problem for people. Her analysis shows that 58 million Americans are spending more than normal due to stress or simply boredom. This is concerning because of the dire state the economy is currently in.
So, to combat this we recommend totaling up what your side gig has made you and what is has SAVED you. Because when you’re working more, you’re spending less. Since your time is occupied, you are left with little time and room for retail therapy. Spend time making money instead of spending money wasting time.
Thank you!

Helping Those Who Serve: First Responders and the Military

They keep us physically safe, so let’s keep them financially safe.

In this free webinar, you’ll learn:

• Where to find special discounts on everything from phones to cars
• How to apply for student loan programs just for you
• Ways to save on a new home and a college education

2021 first responders and service members financial Guide

Helping Those Who Serve

Thank you for taking the time to attend our webinar! This guide covers key points from the webinar so you can put what you’ve learned to use. We hope this information helps you find the right programs and relief options for your situation.

Specialized Programs for First Responders

Public Safety Officers’ Benefit Program

The Public Safety Officers’ Benefit Program (PSOB) is a death benefit to survivors of fallen law enforcement officers, firefighters, and first responders. It also offers disability benefits to officers who are catastrophically injured in the line of duty. You can visit Benefits.gov or email ASKPSOB@usdoj.gov to learn more.

HUD Good Neighbor Next Door

This program from the U.S. Department of Housing and Urban Development (HUD) allows first responders to buy a home for half its appraised value. The catch is that these homes must be located in a specified area that is defined as “up-and-coming” by local government leaders. You can find out more about the program by emailing answers@hud.gov.

State Benefit Programs

Benefits vary based on which state a first responder lives in.

Many states offer extended workers’ compensation benefits to first responders. For example, in Florida, first responders are allowed to recoup lost wages through workers comp if they have been diagnosed with post-traumatic stress disorder (PTSD).

Check your state’s workers comp website to see what extra benefits you may be eligible for.

Private Enterprises Help First Responders

Not only do state and federal governments aid first responders, but so do some private businesses:

  • AT&T: 25% off wireless plan
  • Costco: $20 Costco Shop Card
  • Dickies: 10% discount on their total purchase
  • Jockey: 10% discount
  • Nike: 20% discount

Unfortunately, there is no master list of private businesses that offer discounts. So, your best bet is to ask if a company offers discounts if you’re shopping in a store. If you are shopping online remember to search for “first responder.”

Moreover, some carmakers offer incentives for first responders. General Motors, for example, has a program that offers up to $500 on most models and up to $1,000 on Cadillacs. Again, ask your local dealerships while you shop for your next car if they offer first responder discounts.

Specialized Support for Military Service Members

How does the SCRA help military personnel?

The Servicemembers Civil Relief Act (SCRA) is a federal law that temporarily suspends judicial and administrative proceedings so Service Members can focus their energy on defending the country.

·       Reduce interest rates: When you are deployed on active duty, all interest rates on your debts are capped at 6%.

·       Postpone foreclosures: This is seldom used, but can potentially be helpful. The SCRA requires a court order before your house can be sold in foreclosure. This gives you time to work out a deal with your lender directly to avoid going to court.

·       Defer income taxes: If military service “materially affects” your ability to pay income taxes, the IRS is required to defer those taxes without any penalties or fees for deferment.

·       Prevent evictions: If you are renting, regardless of what it says in your lease, your landlord cannot evict you without a court order.

 

 

·       Protect against default judgments: If you are on active duty and a civil action, civil proceeding, or even an administrative proceeding is filed against you, the SCRA protects you. The SCRA prevents plaintiffs from obtaining a default judgment against you because you cannot appear in court.

·       Delay civil court cases: Civil court cases like divorce proceedings, as well as child paternity and support cases, cannot take place while you are on active duty.

  • Court-ordered repossession: Your property can’t be repossessed for non-payment during active-duty deployment without a court order.
  • Active-duty life insurance: Life insurance companies cannot end your coverage or require any additional payments for premiums except for increases based on your age.
  • Small business owner protections: If you are a small business owner, your non-business assets, as well as your military pay, are protected from creditors while you are on active duty.

For more information about SCRA protections, speak with a VA counselor or call 877-827-3702.

To use some of these protections, you may need an SCRA certificate. This is a document used as evidence of active-duty status in the U.S. Military, Reserve, or Guard.

It is formally referred to as the “Status Report Pursuant to Servicemembers Civil Relief Act.” For more information, visit ServicemembersCivilReliefAct.com.

Military Savings Deposit Program (SDP)

The Military Savings Deposit Program (SDP) is a program designed to give Service Members an opportunity to build savings.

The savings rate through SDP is much better than what private citizens can get with standard savings accounts. The average savings rate on savings accounts from private banks and credit unions is less than 1%. SDPs can garner you a whopping 10% interest accrual.

All active-duty Service Members, Guard, and Reserve members are eligible for an SDP during deployments whenever they receive Hostile Fire Pay/Imminent Danger Pay.

Military Lending Act (MLA)

The Military Lending Act (MLA) protects active-duty Service Members, their spouses, and their dependents from certain lending practices.

The MLA will not allow interest rates higher than 36% to be charged on most consumer loans. This applies to payday loans, vehicle title loans, and tax refund anticipation loans. Home loans, auto loans, and credit cards are excluded from the MLA.

Additionally, this law does not apply to Veterans or military retirees.

Other Military Finance Programs

  • Student loan payments can be deferred while you are on active duty.
  • Military Service Members have specialized student loan forgiveness programs.
  • Tax preparation is given for free to Service Members on base.
  • You can put “active duty” fraud alerts on your credit reports so no one can scam you while you are deployed.

Private Enterprises Help Military Personnel

Just as carmakers offer special programs to first responders, carmakers extend similar offers to military Service Members and Veterans. For example, Ford’s “Ford Salutes Those Who Serve” program offers $500 bonus cash on specified car models.

Unfortunately, much like for first responders, there is no master list of private businesses offering discounts. It’s often best to simply ask for the availability of these discounts or search online for military discounts.

 

Thank you!

Marriage and Money: Till Debt Do Us Part

Learn how to say “I do” to saving as a couple

In this free webinar, you’ll learn:

• How to talk about money with your spouse
• The three reasons money is a major source of marital strife
• Why a household budget is household bliss

Learn how to say “I do” to saving as a couple

Thank you for taking to time to be a part of our webinar! This guide covers key points from the webinar so you can put what you’ve learned to use. We hope this information helps you have productive conversations about money with your spouse or fiancé.

Takeaways:

  • Marriage and money don’t always mix naturally—you need to work at it together.
  • Talk about your finances before you talk about the wedding.
  • Communicating openly about money often will make your marriage much happier.

Divorce and debt

Money fights are the second leading cause of divorce, behind infidelity, according to a 2017 report on household finances by the Federal Reserve. A separate poll of divorce attorneys showed that four in ten marriages end because of financial issues, among other things.

Try to be open with your partner about all of your spending habits and debt.

A rocky start to your relationship

That same Federal Reserve study found that nearly two-thirds of all marriages start in debt. Almost two-thirds of all new marriages begin with one or both partners carrying debt into their relationship, meaning they start off less than broke as a couple.

Couples must discuss their debt and create a plan together to achieve their goals.

Some potential indicators of a divorce

A report by Psychology Today says that there are some key questions that may predict a marriage would be headed for divorce:

  • Do you regularly argue about money?
  • Do you cringe when your partner buys new stuff?
  • Can you and your partner solve financial problems together?

If you answer “yes” to these questions, then you and your spouse need to work together to improve the financial state of your relationship.

How NOT to let money split you up

The good news is that you CAN make your money and marriage work together perfectly. But you need to recognize the areas where most couples run into issues. The three biggest relationship landmines are:

  1. Not talking about money BEFORE marriage
  2. Not budgeting DURING marriage
  3. Not talking until AFTER buying things

Talking about money BEFORE Marriage

Couples talk about a lot of things but don’t talk enough about money. You need to talk about how much you owe, how much you spend, and how you THINK about money. That’s really three separate conversations.

So don’t make the mistakes of having one quick conversation about money and thinking you’re done. Instead, follow this plan:

Conversation 1: Gather up the facts

The first conversation is primarily a fact-finding mission for you as a couple. You simply need to write everything down. Make a list with two columns. In the first column, write down both of your debts, including:

  • credit cards
  • student loans
  • car loans
  • personal debt

In the second column write down your incomes and total them up to determine your combined income. If you’re paying more than you’re earning, this is the first financial challenge that you’ll need to fix. We’ll cover how to do that further in this guide. But just getting all of this written down is enough for your first conversation.

Conversation 2: Deciding how you will handle your money

For the second conversation, answer these questions so each partner understands the other’s expectations:

  • Will you merge all your income into one joint bank account or will you each keep some separate money?
  • If one of you earns more than the other, will that partner have more of a say in how the money gets spent?
  • If one of you wants to make a major purchase and the other doesn’t, how will you resolve that?

Get as detailed as possible with this conversation. You may even consider role-playing through some possible scenarios.

Conversation 3: Talking about how you feel about money

Finally, you need to talk through how you really think about your finances.

  • When you get stressed out, do you engage in retail therapy?
  • Do you pinch pennies to such an extreme that you don’t want to make any big purchases, even when it’s a great deal?
  • Would you rather scrimp during the week so you can blow it all on the weekends?

There’s no right or wrong answer to these questions. However, not knowing the answers to these questions could cause problems later. So, this conversation can prevent you and your partner from misreading the other’s intentions and actions.

Make sure to budget DURING your marriage

The next big mistake is not watching your money AFTER you’re married. Don’t fall back on the excuse that budgeting is a hassle. There are safe, online tools that can make budgeting fast, easy, and more accurate.

First, check with your bank or credit union to see if they offer a free budgeting tool built into your bank account.

If not, apps such as Mint, Tiller and You Need a Budget (YNAB) can help you budget with a few keystrokes. They all have different looks and features, so choose one as a couple that suits your needs the best.

Don’t wait until AFTER purchases to talk

Both your money and your marriage need regular maintenance. Set some time aside to preview the upcoming week’s expenses. As a couple, you already talk about a lot of things on a daily and weekly basis. Learn to add a weekly conversation about how you plan to spend your money during the upcoming week. If you actively keep a calendar, schedule time for this.

A story of how marriage and money can go wrong

Penny and Bill did the right thing as a couple and didn’t rush into marriage. They moved into an apartment and carefully planned their wedding. The cost was high, but they decided the big day was worth blowing their budget.

They also never had those three key conversations about money. Instead, they enjoyed their wedding and had a wonderful honeymoon, but they came home to a mountain of credit card debt. As newlyweds, they didn’t have much cash, so they were only making minimum payments and interest charges were eating away at their monthly payments.

What’s more, Bill found out that Penny had a half-dozen credit cards that were all maxed out. She was only making minimum payments on those, too. He was horrified and said they were in trouble, but Penny didn’t think it was a big deal.

Bill looked at Penny’s credit card statements and found she was paying an average of 20% interest. They also had their wedding debt. With minimum payments, they’d still be in debt by the time they retired.

On top of that, they both needed new cars, wanted to buy a house, and start a family. Bill was constantly stressed but Penny kept telling him it was no big deal and things would work out.

They discovered something about themselves they should have learned a long time ago.

Bill is a planner and agonizes over every purchase, never buying anything until hes done hours of research. Penny thinks of money emotionally and jumps on a good deal before it disappears.

If they could take the best qualities of each other, they would have a strong financial life. But now they were arguing and focusing on each others financial weaknesses instead. That’s when the financial infidelity started.

The moral of the story: When couples don’t talk about money, it leads to money fights and leaves the relationship open to financial infidelity, where spouses “cheat” on each other with their finances.

Understanding financial infidelity

Financial infidelity involves lying directly or lying by omission about money to your spouse and it’s not healthy.

One report in US News found:

  • 25% of married people make secret purchases
  • 20% hide debts or accounts
  • 20% lent money without mutual consent
  • 20% drained money from savings
  • 15% lied about their income

Signs of financial infidelity

Certain suspicious activities will often point to financial infidelity by your spouse. Some signs might include:

  • Your spouse doesn’t want you checking the mailbox or rushes home to hide deliveries
  • There are a lot of new possessions that are never explained
  • You’re not allowed to see your spouse’s credit card statements
  • Your spouse deflects or even refuses to talk about finances

Some couples make financial infidelity easy—about 40% of married American’s don’t know what their spouse’s salary is. They simply never talked about it. That ignorance can lead to temptation, which can lead to financial infidelity.

The cure for financial infidelity

Talk early and talk often. Talk about your debt, your spending, and your philosophies about money. Avoiding the same fate as Penny and Bill is as easy as talking.

How to Avoid the 5 Most Common Money Mistakes

You can save big by doing very little — and sometimes nothing.

In this free webinar, you’ll learn:

• Top five money mistakes
• What happens if you bury your head in the sand
• Tips to fix the most common money mistakes
• What to be aware of when dealing with medical bills and credit cards
• How to deal with creditors with regards to late bills
• Learn to budget for contingencies
• How good it feels to be in control of your finances

HOW TO AVOID THE 5 MOST COMMON MONEY MISTAKES

You can save big by doing very little—and sometimes nothing.

This may sound unbelievable or even a little sketchy, but it’s true: You can save money every month by literally doing nothing. The tactics that we’ll discuss in this whitepaper have worked for millions of Americans. We are NOT making this up.

First let’s look one very important number – $83,000,000,000. That’s how much Americans owe on their credit cards. We owe $83 billion to credit card companies. But when a number gets that big, it’s hard to even understand it. So, how much is $83 billion exactly?

It is enough to give everyone living in the two most populous U.S. states $1,000 in cash. That’s everyone living in California and Taxes. Of course, we just keep charging, so soon we’ll be able to add the third most populous state, Florida.

Did you know more than half of all credit cardholders carry a balance each month? With credit card interest rates hovering at around 20 percent, that means many credit users are paying $1 in interest for every $5 they charge.

So, can be very hard to catch up once you get behind. That’s why credit cards can be so dangerous, and it’s why they’re going to come up a lot as we talk about money mistakes.

How to save money on your credit cards in just minutes

Before we talk about how to save money by doing nothing, first let’s talk about how spending a few minutes can help you save money on those hefty credit card interest rates and fees.

Average credit card late fee: $36

If you miss the due date on your credit card by even a day, you get popped with a late fee and it can really add up. But you can easily get rid of it?

How? By asking.

If you’ve had a credit card for many years and you have been a good customer, you can call the number on the back of the card and get some concessions. For example, if you’ve never been late with your payment before, you can often get the first late fee removed as a gesture of goodwill.

You might also be about to shave down your interest rate if you mention that another card has offered you less—and if you spend about five minutes online you can surely find one. Then mention that new card and lower rate to the representative.

You can also move your due date, so it corresponds better with your paychecks and other bills. That way, you never get caught short again.

Money Mistake #1: Not asking!

What we just covered about credit cards is the first money mistake that people make. They simply fail to ask to pay less or save more. But that’s not only with credit cards. It applies to many of the companies and institutions that you might owe money to.

When to ask for a break

  • Credit card late fees and deadlines
  • Medical bills
  • Any debt in collections

Besides calling your credit card companies, you should also call about any debt you’ve incurred for medical procedures. And this isn’t just about hospital bills and doctor’s fees. Even dental work and lab fees can be negotiated. Medical providers are well accustomed to such negotiations. Just contact the billing department and politely inform them that you can’t afford to pay the full bill right now, but you’re a responsible person and want to work something out.

Ask what breaks they offer and remember, always be polite!

Debt collectors can be mean, but you can kill your bills with kindness!

The tactic we describe above also works well with debt collectors. No one likes dealing with debt collectors, but here’s the behind-the-scenes truth that can help you save: Debt collectors often BUY debt from, say, your doctor. THEY pay pennies on the dollar for your debt.

The doctor gets something when he might fear he’d get nothing, and the debt collector then goes after you, making a big profit when you pay in full. But they can still profit even if you don’t pay the full amount. Therefore, many debt collectors will accept less than the full amount—because they’ll still profit on the transaction.

So, if you’re facing a debt collector, ALWAYS negotiate! We can show you how. We have a publication that gives you step-by-step instructions.

Negotiating isn’t just for your debt either!

  • Cable and satellite bills
  • Cell phone bills
  • Newspaper delivery

Before we leave the topic of negotiating, let’s wrap up with this: You can negotiate almost any service.

That goes for your cable or satellite bill. You can often get extra premium channels if your provider is running a special you didn’t know about. You can even negotiate for a lower bill, often saving $5 or more per month. The same tactic works for those complex mobile phone contracts. If you still get a newspaper delivered, you can either get a small price break or an extra day delivered for free.

Why do these businesses cut you these breaks? Because they want to keep your business. And these little savings really add up, especially when you don’t have to do anything.

Money Mistake #2: Ignoring the tech!

Now let’s move to the second biggest money mistake. If not asking is the first mistake, then not embracing technology is a close second.

What does this mean?

There are big advancements that make it easier for you to save money, but not everyone adopts them. Sometimes, it’s out of fear, but mostly, it is just because people don’t know about them. So, let’s allay your fears and fill you in now…

Budgeting is crucial—but boring

Let’s be honest: budgeting isn’t fun.

We all know it’s important. After all, how can you save money if you don’t know how much you’re spending? That’s why a monthly household budget is so important. But it can also be time-consuming to put pen to paper. But what if you didn’t have to?

Budgeting better with tech tools

There are websites, apps, and programs that handle the drudgery of budgeting for you. They do the math for you, and in seconds instead of hours. Many of them cost nothing and the ones that do cost only a few dollars.

Here’s how they work…

Let technology do the dirty work:

  • Mint
  • Personal Capital
  • YNAB
  • Mvelopes

One of the most popular budgeting apps is called Mint and another is called Personal Capital. But a lot of banks and credit unions offer similar programs on their websites for their customers.

Basically, you just type in your income and expenses, and these programs do the math for you. You can even project your savings if you eat one less takeout dinner, or if you refinance your mortgage. The software does the heavy lifting for you.

Tiller, Quicken, and more!

If budgeting apps are a little too techy for you, there’s a middle step. Websites like Tiller let you download customized spreadsheets that stay on your computer, and you easily personalize. Quicken has software that’s been around for decades and most of us are familiar with it.

Each solution has its pros and cons, but they all work. So, it’s really up to what makes you feel the most comfortable.

Money Mistake #3: Forgetting your workplace options!

The last place you might look for easy savings is your workplace. However, believe it or not, your employer can help you effortlessly save money, even as you work hard to make it. There are three major ways to do that.

Direct deposit can help you save indirectly

More than 9 in 10 Americans are paid through direct deposit, and almost all of them have access to a neat feature: You can direct some of that money AWAY from your checking account and send it DIRECTLY to a savings account you don’t normally see.

Imagine if you send even $10 a week to a savings account. At the end of the year, you’ll have more than $500! And you literally spent a few minutes setting it up, then did nothing the rest of the year!

TIP: Raise up your savings when you get a raise

This savings shortcut works very well when you get a raise. Just divert that extra money into a savings account. You won’t be tempted to spend it because you never got used to having it, and you don’t constantly see it in your checking account.

To set up multiple direct deposit streams, simply talk to your Human Resources or payroll department. They can walk you through this easy process.

401(k) is more than OK

Make 43 cents on every dollar!

Where you work might offer valuable services that can save you big. One of the most popular is a 401(k), which helps you save for retirement. What’s so special about a 401(k)? Many employers match a portion of your contribution to this retirement account.

According to government research, the average is 4.3 percent. That means for every dollar you sock away for later, you get 43 cents. That may not sound like much, but when you consider a savings account is paying less than one percent in interest, that suddenly seems like a lot.

Also, the IRS gives you some money, too: By not taxing what you contribute. And since this is for your retirement, which is a long way off, those savings will build up over time.

HSAs are a healthy way to save

Another big workplace benefit is called a Health Savings Account, or HSA. It does the same thing by letting you set aside money for healthcare and having it be invisible to the IRS.

We could spend an entire webinar talking about these lucrative benefits, but we suggest you chat up your HR department. Believe it or not, they WANT you to take their money. Why? Because companies that offer these benefits know their employees will appreciate them. They’re more likely to stick around and work hard. So let your bosses help you save!

Money Mistake 4: Not automating your bills!

We’ve already talked about automating your savings. Now let’s talk about automating your spending. Almost every bank and credit union—and even many municipal utilities—offer automatic bill pay.

You can go online and set the day each month when you want a bill to be paid. On that day, the proper amount is automatically deducted from your bank account right then, and not one day sooner. Or more importantly, not one day LATER. This means never paying a late fee ever again.

An autopay warning: You MUST have a budget first

Of course, a danger of automatic bill pay is that if you blow your budget on some debit card purchases you’ve forgotten, you might not notice how low your bank balance is getting. Then your bank or credit union might hit you with fees, either for not keeping a minimum balance or for overdrawing your account. That’s why it’s so important to keep a household budget.

Another autopay warning: Setting it and forgetting it

Another worry about autopay: You might set a bill to be paid and never look at it again. What if it’s for a subscription you no longer need? Or a music streaming service you no longer use? Of course, if you keep that household budget using the easy tech we talked about earlier, you won’t have any of these downsides. It’ll be all upsides.

Money Mistake 5: Falling for financial scams!

The final big money mistake is caused by our desire for easy money. While we’ve just reviewed some proven ways to save more without having to burn a lot of calories, there are also a lot of scams that prey on our urge to find shortcuts. The difference is, you don’t know these people, yet they want you to trust them.

2 types of scams: Greed and fear

Generally speaking, there are two kinds of scams. One appeals to your greed, the other to your fear. If you find yourself talking to someone you don’t know, and you feel one of these emotions welling up inside you, pause for a moment and consider whether it’s a scam. Let’s run through an example or two.

Greed scams: Getting something for nothing (or so you think)

Let’s talk about easy money. The stereotype for these scams is the Nigerian prince who wants to give you thousands of dollars to help him transport money out of his country. But these also include scammers posing as VA managers and calling military veterans to offer extra benefits. Or an IRS agent trying to give you a tax refund you didn’t know you had coming. Or even a government official saying they’ve located some funds you lost.

In all these cases, what the scammers are after is your personal information. They can either use that to break into your accounts and drain them, or they can sell your personal information to other scammers who will do the same thing.

Fear scams: Scaring you into losing money

Ironically, these scams can be from the same alleged sources. The IRS agent who wants to give you that refund? Well, now he’s calling to threaten you with prison if you don’t pay back taxes right away. Never mind that the IRS never calls you, they only send letters. And never mind that there hasn’t been a debtor’s prison in this country for two centuries.

These scams all insist you must ACT NOW or you’ll suffer severe consequences. Why? Because they know if you take a moment and really think about what they’re threatening you with, it doesn’t make a whole lot of sense. How, for example, can a bill collector order the police to arrest you if you don’t wire the balance you owe? Since when do police officers take orders from debt collectors?

How to avoid all scams – by doing nothing

So how do you avoid both kinds of scams? Simple, by doing exactly what we’ve been talking about so far: Almost nothing.

You need to resist the urge to ACT NOW. Ask for the name and title of the person calling you. Ask for a phone number to call them back. They won’t give you one, but on the off chance they do, look it up and see if it’s even from the place they say they’re calling from. Usually, they’ll just hang up on you.

In addition, NEVER reply to emails from people you don’t know. If you want, Google them and look for the legitimate company’s website and contact them that way. But again, doing nothing is your safest bet.

What to know about debt collectors

Now let’s take a moment to talk about a topic no one likes—debt collectors. Who likes people calling them all the time and asking for them to pay bills they can’t afford to right now? No one would answer yes to this question.

Here’s the thing about debt collectors: They can’t just bother you any time of the day, and they’re not allowed to threaten you at any time. That’s important to know, and it’s important to let them know you know.

Federal Debt Collections Practices Act

There’s a federal law called the Fair Debt Collection Practices Act, or FDCPA. The FDCPA bans debt collectors from being abusive.

For instance, it says they can’t call you before 8 in the morning and after 9 at night. They can’t call you at work if you tell them not to. They’re not even allowed to swear at you.

If you’re getting harassing calls from debt collectors, just Google the letters F-D-C-P-A and you’ll get a list of your rights. Then tell those debt collectors you know about your rights—and you know how to report them to the federal authorities. That usually settles them down very quickly.

The bonus mistake: Not asking for professional help!

Before we finish this off, let’s add one bonus mistake that many people make. This one costs them not only money but a lot of time. It’s not asking for professional financial help.

Now, this might sound self-serving since this guide is written by one of those places, but it also happens to be true. You can save both time and money by calling a nonprofit credit counseling agency like Consolidated Credit. Here’s what happens when you do.

Credit counseling: free, easy, short, and rewarding

When you call a certified credit counselor, you receive a free debt analysis. They’re trained to ask you the right questions and study your financial strengths and weaknesses. Front here, they can recommend ways for you to spend less and save more. They can also offer you a powerful tool that you can’t use on your own. It’s called a debt management program.

Debt management program: pay less, pay off faster, get debt-free

A debt management program, or DMP for short, is basically an agreement between you and your credit card companies. They’ll freeze your penalty fees and lower your interest rates if you agree to make regular payments. Those payments go through the credit counseling agency, and you can make one payment that covers any credit cards you put into the DMP. So, you pay less and save time, too.

So, what’s the catch?

DMP has a fee, and you can’t do it yourself

DMPs aren’t free. It costs money for staff to administer them. But—and this is a huge but—that fee is rolled into your monthly payments, and it’s minuscule next to the savings you’ll reap. That’s probably why DMPs have been around for decades, and they’ve saved Americans millions of dollars. But you can’t just sign up for a DMP on your own. The credit card companies work exclusively with nonprofit credit counseling agencies.

Thank you!

Free Yourself from Student Loans Debt

Don’t let college costs from long ago ruin your future.

In this free webinar, you’ll learn:

• How these terms can save you thousands: forbearance, deferment, and federal repayment programs
• The truth behind student loan forgiveness
• How to find experts who can truly help you lighten your student loan burdens

How to Tackle Your Student Loans

Don’t let college costs from long ago ruin your future.

In some ways, student loans are the cruelest form of personal debt. You took out these loans so you could get a great education and launch a lucrative career. You just wanted to take care of yourself and your family. Ironically, the cost of that education is now keeping you from the financial independence you were looking for.

The sad truth is, even before the pandemic, student loans were already being called a crisis. Why? Because Americans collectively owe more than one trillion dollars on all the student loans out there. It’s one of the largest forms of debt people owe.

In fact, people owe more on our student loans than they do on all the credit cards out there. Next to mortgages, this is the biggest category of personal debt. And if you think back to the Great Recession, you’ll remember that a mortgage crisis caused that.

Of course, when you talk about a trillion dollars, it’s hard to even grasp the number. So how about these numbers? 40 million American adults owe student loans, with 6 million owing more than $50,000. So basically, almost a fifth of the country is making student loan payments, and millions of them are struggling. Add a pandemic on top of that, and you can see how dire the problem is.

These are the reasons why you’ve been hearing President Biden talk about student loan forgiveness. It’s a complicated topic, but know this: What’s being proposed right now, even if it happens, won’t solve the problem. It’ll just ease some of the symptoms. That would only apply to federal student loans. That accounts for the majority of people’s student loan debt – only 8 percent are from private lenders.

THE TRUTH ABOUT STUDENT LOAN FORGIVENESS

Student loan forgiveness means different things to different people. What most people want it to mean is: No more student loan payments! But of course, nothing financial is that simple.

There are two kinds of student loan forgiveness, broadly speaking.

Small, sudden, and one time

The first is the political kind. You might’ve heard about this in the news. President Biden has been talking about this for a while now — ever since he was on the campaign trail, actually. He’s even signed a couple executive orders to forgive certain, specific kinds of student loans.

Big, slow, and permanent

The second kind of student loan forgiveness is more established. It’s been around for a decade. But it requires some work. Still, the payoff can be huge. There’s no telling what the president and Congress will actually do, and when they’ll actually do it.

Public student loan forgiveness

Can you really get your hefty student loan balances forgiven? The answer is, “Yes, but…”

The Public Service Loan Forgiveness program – PSLF, for short – offers federal student loan forgiveness if you work in a qualified profession. What are those professions? You can work in…

  • Public health
  • Military service
  • Public safety
  • Law enforcement
  • Public education
  • 501(c)(3) tax-exempt organizations

What they all have in common is they do some public good. So if you work for a for-profit business, you don’t qualify, even if you’re doing a lot of noble work in your community.

If you work in one of those professions, you’ve cleared the first hurdle. Unfortunately, there are more. The qualification process is long, complicated and (worst of all) not guaranteed. And you need to make 120 regular qualified payments first – that’s 10 years’ worth. But if you do qualify, you could get out of student loan debt for less than you originally borrowed.

Is it really worth the hassle and the long timeline? Well, depending on your specific circumstances, you can save up to $24,000. There is just one more complicating factor: To qualify for student loan forgiveness from the federal government, you need to enroll in one of their existing student loan relief programs. Many people have heard that the federal government offers help to those struggling to make their payments, but they don’t quite grasp all the details. And no wonder, because it can get a little complicated. So let’s break it down for you.

Federal student loan relief programs

One question Consolidated Credit gets asked a lot is, “What’s the catch? Why would the government help me pay off student loans it saddled me with?” Well, remember the $1 trillion in total student loan debt in this country? Well, the federal government knows that if you can’t pay it back, they’re on the hook for those losses. And besides, if you can’t pay back your student loans, you won’t be able to buy a home and pay property taxes and be a productive member of society.

Unfortunately, these relief programs are as easy to understand as your income taxes. Which means, they can get confusing. Like all government programs, these student loan efforts all have acronyms. Here are ICR, IBR, PAYE, and REPAYE explained.

Income-based repayment (IBR)

If you have federal loans and can demonstrate a financial hardship, you qualify. Like the name implies, an IBR matches monthly payments to your income. It’s the government’s way of acknowledging that the salary you earn after you get a degree usually doesn’t exactly match the expense you incurred to get it.

For example, the program adjusts your monthly payments to your income and family size. If you have a lower income and a larger family, it reduces your student loan payment requirement. In general, enrollees spend between 10 percent to 15 percent of their take-home income to repay student loans under an IBR. This reduces the burden of student loan repayment on your budget.

The federal government isn’t forgiving your loan. You still owe what you owe. You’re just paying less each month on that total loan. But here’s the catch: You pay interest on all your loans, and student loans are no different. So your interest is still accruing, because you’re paying less each month. Even the government acknowledges that this can increase total cost over the life of your loans. Still, it helps you greatly in the short term, so for many folks, it’s worth it.

Income-contingent repayment (ICR)

The same thing goes for another program with a very similar-sounding name. Income-contingent repayment is a little different than income-based. While both an IBC and an ICR adjust your monthly payments based on your income, the ICR has a few important differences.

First of all, you don’t need to show any crushing financial problems to qualify. Remember, for an IBR, you need to show some hardship. In other words, you need to prove to the government that you simply don’t make enough or save enough to meet your obligations. ICRs don’t require this, so it saves you on paperwork and hassle.

But there’s a downside to ICRs. Unlike an IBR, an ICR doesn’t stop your monthly payments from increasing indefinitely along with your income. Also, while an IBR typically reduces your payments to 15 percent of your income, ICRs only go to 20 percent.

Pay as you earn (PAYE) & revised pay as you earn (Repaye)

Pay as You Earn is even better than an IBR at reducing monthly payments. It was updated and expanded a few years ago into yet another option called REPAYE – which stands for Revised Pay as You Earn – but the concepts are still the same. Your monthly payments are reduced to 10 percent of your discretionary income, and after 20 or 25 years, whatever balance is left is forgiven – and forgotten. You pay nothing more.

So what’s the difference between the two? They’re subtle but real. For instance, to qualify for PAYE, you must have a partial financial hardship. REPAYE? Anyone with qualifying student loan is eligible. Your spouse’s income doesn’t count in PAYE if you file separately, but it does in REPAYE. So what does all this mean? Generally speaking, PAYE is a better option for married borrowers when both spouses have an income. REPAYE is usually better for single borrowers and people who don’t qualify for PAYE. But in both cases, just like an ICR, if you get a new high-paying job or a big fat raise, your payments jump up along with that extra income.

Other options

Deciding which program is right for you will take some time. You can start with this website: StudentAid.gov. That’s a federal site that’s written in pretty plain English. There are other money-saving options for student loans: forbearance and deferment. Here’s what they are.

Forbearance

What’s forbearance? You’ll be familiar with the concept if you’ve ever called your credit card company and begged to get a late fee removed. In this case, your student loan servicer wants you to keep making payments, so sometimes they’ll give you a forbearance. That means you can temporarily stop paying your student loans. Basically, it’s like a hold button for your loan payments.

The problem is, you need a good reason for such incredible debt relief. Without one of these reasons applying to you, you can’t get a forbearance. These come in two types: discretionary and mandatory.

  • Discretionary: A discretionary forbearance requires your servicer’s permission. It’s totally up to them if you get it. And all of them have specific situations that must apply to you. For instance, if you can’t make your payments due to a change in jobs, a medical expense, or other financial difficulties, your servicer can decide to give you a forbearance.
  • Mandatory: This means your servicer can’t deny you the forbearance if you qualify. What’s it take? If you’re on a medical internship or residency program, or if you’re in the National Guard and got activated by the governor, or if your payment is more than 20 percent of your monthly gross income – then you can get a mandatory forbearance. You’ll have to prove that to your servicer, but a little paperwork can save you thousands of dollars.

Whatever forbearance you qualify for, you can get up 12 months of making NO payments. In total, you can get three rounds of 12-month forbearances before you max out. That gives you plenty of time to get your financial life in order– but remember, you still owe the loan amount.

In fact, under a forbearance, your interest charges continue to accrue. And because you’re not making payments, that means your overall loan debt increases. So you get some relief now, but later on, you’ll pay for it. But there’s another option that avoids some of this: deferment.

Deferment

A forbearance and a deferment are more similar than different. In fact, the only major difference is that with a deferment, you might not owe that accrual of interest we just talked about. Like a forbearance, you must have some pretty serious circumstances that prevent you from making those monthly payments – like, say, cancer treatment or a job layoff.

Now, this is just a rough overview of forbearances and deferments. You want to know how detailed it can get? Here’s a quote from the federal Student Aid website…

You may be eligible for a deferment on your federal student loan if you are a parent who received a Direct PLUS Loan or a FFEL PLUS Loan, while the student for whom you obtained the loan is enrolled at least half-time at an eligible college or career school, and for an additional six months after the student ceases to be enrolled at least half-time.

If it sounds complicated, don’t worry – there are a few more options.

Federal direct consolidation loan

If you’ve ever used a debt consolidation loan to take care of credit card debt problems, you might think you understand how a Federal Direct Consolidation Loan works for student loan debt. But you’d be wrong. You use a Federal Direct Consolidation to consolidate federal student loan debt into one easy payment. But the loan structure, interest rate, and how you qualify varies greatly from other types of consolidation loans.

Consolidating debt is generally done to simplify debt repayment. If you have multiple individual debts to repay, it can get complicated to juggle all those bills within your budget. Consolidation reduces that down to just one bill, so debt is easier to manage. However, that’s not the only advantage of Federal Direct Consolidation Loans. In this case, taking out this type of loan provides an additional benefit that can be significant, depending on your situation. Namely, you can make defaulted federal student loan debt current. It’s an amazing benefit, and one worthy of a few minutes of your research.

It’s actually easy to apply. You do it through StudentLoans.gov.

Refinancing

Finally, there’s refinancing. If you don’t want to deal with forbearances and deferments, and you’re not interested in the federal relief programs we just talked about, you have another option: refinancing your loans on your own.

When you refinance, you actually take out a new loan at a lower interest rate. This works best if you’re not cash-strapped and want to pay off your loans faster. That’s because you need a credit score high enough to qualify. Basically, you’re consolidating your federal student loans into one private loan for a lower interest rate. You can then plow your savings back into paying off the principal.

While not nearly as complex as the other options, it’s not a walk in the park, either. There are the three first steps you need to take.

  1. Determine how much debt you need to refinance.
  2. Note the current balance and APR on each loan you include.
  3. Shop around and get quotes from lenders.

When you find the best deal, apply. But remember, when you apply for any new loan, that results in a “hard inquiry” on your credit report. That can temporarily drop your credit score. It’s not a huge deal, but it’s worth mentioning – because if you apply for too many loans in too short a time, you could end up paying more. So for instance, you don’t want to refinance your student loans at the same time you apply for a new credit card and secure a new auto loan. All those inquiries, not to mention the new credit, could drop your score and raise your rates.

Is the hassle worth it?

Pursuing any of these options will take a lot of time. Is it worth it? Most definitely yes. Anything is better than defaulting on your student loans, which is what happens when you don’t make payments for 270 days or more. That means your wages can be garnished, your credit score is trashed, and any future tax refunds and other federal benefits payments can be withheld. You don’t want to go down that road.

Here’s a depressing statistic: According to the Government Accountability Office, 51 percent of all federal borrowers were eligible for the IBR program we mentioned earlier – yet, only 13 percent are actually participating in it. And the Department of Education even admits that their efforts to increase awareness about these federal relief programs is “incomplete” and “inconsistent.” That’s why you might consider hiring a professional.

Think of it like your taxes. If your income taxes become too complex, you can hire a CPA or tax preparer who not only saves you the time and aggravation, but can also find ways to save you money – hopefully more than enough to cover the cost of hiring them in the first place. That’s been happening more and more in the student loan world.

Thank you!

Student loan debt holds thousands of Americans back from improving their credit score or even owning a home. This paper was just an overview of all your student loan debt relief options. Learn more about each option and find out which may be the best fit for you. Visit our website at ConsolidatedCredit.org to learn more, or visit StudentAid.gov.

Buy or Refi: Which Is Best for You?

This is your biggest financial decision, so listen to the experts

In this free webinar, you’ll learn:

• The benefits of buying and the best time to refinance
• The importance of these four words: debt-to-income ration
• Budgeting basics and why credit is key

BUY OR REFI: WHICH IS BEST FOR YOU?

This is your biggest financial decision, so listen to the experts.

For most people, a home is the most expensive thing they’ll ever buy. Which means it’s also the most complicated thing they’ll ever buy. And of course, that makes it the most stressful thing they’ll ever buy. While no one can make home-buying a fun and relaxing process, this guide can cut your stress in half.

Owning a home can be both fun and lucrative. Buying it is a mess of stress. A Homes.com poll from 2018 found that a third of homebuyers actually shed tears because they were so frustrated at the process. Most had at least four arguments with their families. The reason for this stress isn’t hard to figure out.

Mortgage debt by the numbers

By far, the biggest form of debt in this country comes from mortgages. We collectively owe 16 trillion dollars on our homes. That’s how much we need to pay before we own our home free and clear. Needless to say, that can easily cause anyone to stress.

It’s especially stressful because mortgage debt is almost four times more than all the other forms of debt we struggle with. That includes credit cards, student loans, auto loans, personal loans, etc. Everything else we owe is dwarfed by what we owe on our homes.

So if you’re feeling stressed, you’re not alone. Not by a long shot. There’s no way to dive deep into every aspect of home buying and refinancing in one guide. So these are the highlights that can point you in the right direction for the best expert advice — and almost all of it is free. But before you can consult the experts, you need to know how to ask the right questions.

What to consider before you buy or refi

You should be taking a deep dive into your finances before you make any decision about financing a home. Here are some of the things you should ask yourself to help you prepare:

The income questions

The very first step isn’t looking for a home. It’s looking at your paycheck. You’ll need to pay for your new home with money you earn, so you need to start there. Ask yourself…

  • Do I have a steady source of income?
  • Have I been regularly employed for the last 2-3 years?
  • Is my current income reliable?

Otherwise, you’ll have trouble getting a mortgage — and even more trouble paying it.

The payment questions

It’s hard to even get a lender to give you a mortgage unless you have a good credit score. We’ll talk more about that in a moment, but for now, you need to ask yourself:

  • Do I have a good record of paying my bills?
  • Do I owe a lot on my credit cards?
  • Do I have a car loan or other big loans?

The savings questions

While you can buy a home without a down payment, that’s rare. You’ll likely owe many thousands right off the bat. Besides that, you need to pay the mortgage, so you need to make sure you can set aside that much aside each month. Last but certainly not least are the miscellaneous expenses and bills that come with home ownership. You need to add those up, from property taxes to insurance and more. Ask yourself…

  • Do I have money saved for a down payment?
  • Can I pay a mortgage every month?
  • Can I afford the maintenance and other house-related bills?

Debt-to-income ratio

Whether you’re buying for the first time or refinancing, one number is important: it’s called debt-to-income ratio, or DTI for short. It’s the fancy way of saying, “We’re going to divide all your monthly debt payments by your gross monthly income.”

Why is DTI so important? Because lenders know it’s a reliable formula for figuring out if you’re going to make your monthly mortgage payments on time — or slip into foreclosure, which no one wants. If you divide what you owe by what you earn, you can give it a percentage.

The highest you want this number to be is 43 percent. That’s because it’s the highest number you can have and still get a qualified mortgage from most lenders. DTI as just one of the many complex numbers you’ll need to master before buying a home for the best deal possible.

Why buy or refi at all?

Some people believe, “Maybe it would just be easier to keep renting” and “Maybe it would just be easier to keep paying the mortgage I have.” Buying a home and refinancing one can certainly be daunting. But done right, both decisions will be among the best financial moves you’ll ever make. And you don’t have to go it alone. Here are tips from some experts.

Shop around

Whether you’re buying your first home or refinancing your existing home, every expert will tell you the same thing: Shop till you drop. There are so many lenders with so many different loan programs. As Wells Fargo consultant Barnaby Robles urges you: “Explore your options. Restrictions that one lender may have, other lenders may not have. The only way to find out is to shop around.” Sure, this will take some time, but remember, it’s the biggest purchase of your life.

When is the best time to buy or refi?

One of the most common questions housing experts hear is, “Is now the right time to buy my home or refinance it?” That’s actually a complicated question. It’s really not about timing, it’s about your preparation. As Realtor Bill Gassett explains, “A significant pitfall for buyers is the fact it is very easy to lose out on a home they absolutely love. Besides getting the most they can for their home, sellers are looking for financially sound buyers who have a solid down payment and a trustworthy pre-approval letter from a reputable lender.”

Basically, trying to time the housing market is like trying to time the stock market. It’s risky. Instead, worry first about your paperwork. As Bill Gassett says, you want to save enough for a down payment and meet with a lender before you go house-hunting. That way, you’ll get a pre-approval letter. What’s that? It’s a document that shows sellers you’re serious, because you already did the legwork and got a lender to say you’re a good risk.

What credit score do I need to buy a home?

People need to work on their finances ahead of buying a home, but especially their credit score. Here’s what Maria Gaitan, Consolidated Credit’s housing counselor director, has to say about that: “To get approved for a traditional mortgage, you generally need a FICO credit score of 720 and above to qualify for a good interest rate. However, as a first-time homebuyer you can find financing options that allow you to qualify, even if you have a score in the 620 to 670 range.”

When to talk to a counselor

If you’re overwhelmed, you might want to start by talking to a housing counselor. You want that to be a HUD-certified counselor, like the ones at Consolidated Credit. They’ll present you with all the options, and that includes refinancing.

“An experienced housing counselor can help a potential buyer to determine if they are mortgage-ready — and what type of loan (and amount) they may be able to qualify for,” says Barry Rothman, a Consolidated Credit certified housing counselor.

Refinancing the right way

Refinancing means you get a new home loan to replace your existing one. Why do that? Because you can profit from the exchange. If you can refinance into a loan that has a lower interest rate than the one you currently have, you can save money on both your monthly payment and overall cost of the loan.

Finding a lower interest rate

Obviously, refinancing only works when you can find a lower-interest mortgage than the one you have right now. Those rates are at historic lows right now, but there are other factors to consider. For one thing, you need to qualify for a new mortgage just like you did for your first, so everything we discussed earlier about DTI still matters. And you want enough equity in your home so you can save even more.

Closing costs

Refinancing a home comes with some of the same costs as buying one. Most fees are rolled into the new loan, so they’re sort of hidden. But they’re there. Other fees must be paid before you close on your new mortgage, like an appraisal. Either way, you’re paying thousands of dollars. It’s hard to say exactly how much, since circumstances vary not just by the cost of your home but where you live. The financial website Bankrate estimated in San Francisco County, a $200,000 refi will cost nearly $5,000 in fees.

When does it make sense to refi?

You need to look at several key factors to decide if you can refinance your home. Those include the value of your property, the loan amount, whether you want a 30-year or 15-year loan, what your credit score is, and even where you live. Thankfully, you don’t need to do this all yourself. There are many online calculators that will add it up for you. Try your bank or credit union for starters.

What to do with your savings

If the numbers work out and a refi is in your favor, the next question is: What will you do with all the money you save? While you might be tempted to spend it, you can save even more. How? By paying off your credit card balances. You could save an extra dollar for every $5 you saved on the refi. Here’s how.

Did you know more than half of all credit card holders carry a balance each month? And did you know that credit card interest rates are hovering around 20 percent? That means many people are paying $1 in interest for every $5 they charge. But they don’t have the money to pay off that stubborn debt. After you refinance, you can get rid of credit card debt and pocket even more savings. That can go into an emergency fund, college fund, car fund, vacation fund or anything else. As long as it’s going into your pocket and not your credit card company’s pocket, that’s good!

How to save for a new home or refi

Saving doesn’t sound like something that’s particularly complicated, does it? But there are ways to do it faster and easier.

Budgeting tech

Sure, you can create a household budget with pen to paper, but there are online programs that will do the mundane work for you. Online budgeting tools are safe and easy. Most are free, too.

One of the most popular programs is called Mint, although many banks and credit unions offer similar programs on their websites for their customers. Basically, you just type in your income and expenses, and these programs do the math for you.

Direct deposit

One you create a budget to save for a new home or a refi, you can start socking away cash. Here’s an easy way to do it: If your employer pays you via direct deposit – and 82 percent of Americans get paid that way – you can ask your company to split your direct deposit. Most employers will let you send some money to one bank account, and some money to another – at no charge to you.

So you can shunt some of your paycheck directly into a separate savings account. You won’t even miss the money, because you’ll never see it in your checking account. This works especially well when you get a raise. Just send the extra cash directly to your savings account.

Thank you!

The Weather and Your Wallet

Don’t let natural disasters destroy your life or your finances

In this free webinar, you’ll learn how to:

• Prepare for any natural disaster without breaking the bank
• Take advantage of technology to give you piece of mind
• Get free help recovering from a natural disaster

The Weather and Your Wallet

Don’t let natural disasters destroy your life or finances.

COVID-19 has been the biggest natural disaster in a century, but this paper will discuss the natural disasters that come like clockwork every year. We’re not trying to depress you, but actually raise your spirits. Preparing for natural disasters isn’t hard, and it’s not expensive, either. Once you do it, you have peace of mind. When you have a disaster plan, you worry less and enjoy life a little more – even now, during a pandemic.

2020 natural disasters

Of course, natural disasters aren’t polite. They don’t stand in line and wait their turn. COVID-19 won’t deter wildfires, hurricanes, tornados, earthquakes or floods this year. And if 2021 is anything like 2020, most of the country is in the path of something bad. No matter what the year, no part of the United States is immune from natural disasters. Wherever you are right now, you’re vulnerable to a natural disaster.

According to the federal government, there were 22 “major weather disasters” last year, up from 14 in 2019. They killed 262 people, compared with 44 people the year before. The total cost of those disasters was $322 billion. You might think with that much money on the line, Americans would be on top of their disaster planning. Think again.

Disaster planning

When was the last time 70 percent of people in this country agreed on anything? Well, in a July 2020 Allstate survey, they agreed that they worry about natural disasters. Yet three-quarters of them aren’t doing anything about it. We have enough to worry about these days, so here’s how to ease our fear of natural disasters. How can you do that? By taking just a little time and even less money to prepare in advance.

Plan now

Let’s start by learning about disaster preparation that costs nothing. There are three key things you can do right now: gather all your key documents, organize everything you’ll need to get compensated for any destruction, and design evacuation routes and when you’ll use them. Let’s take a quick look at each.

Documentation

First, gather up all the paperwork you’ll need in case the worst happens. Most importantly, that means insurance policies. Check your policies to make sure you’re properly covered. If not, time to talk to your insurance agent. If so, write down the name, address and claims-reporting telephone number of your insurance company – and remember, this might be different from your agent’s contact information. Also take pictures of everything of value in your house. That’s much easier these days with cameras in almost everyone’s phones. Don’t forget to shoot not only that nice couch but also all your jewelry and other collectibles. If you have documents attesting to their value, gather those, too.

Organization

Having excellent documentation won’t matter if you don’t have it safely in one place. And it needs to be portable, too. If you need to evacuate, you want to grab everything you’ll need and not worry you’ve left something behind. That’s why the worst time to gather up your documentation is right before you need to leave. While some people buy a portable and waterproof metal lockbox for hundreds of dollars, just as many people keep these documents safely stored in cheap Tupperware. Do whatever works for you, as long as it’s protected and at your fingertips.

Evacuation

When people hear the word “evacuation” they think it means, “Get out now!” They don’t often consider, “Where am I going?” An evacuation plan actually answers two questions. First, what’s the safest and quickest route away from the danger? Second, where is the safest and cheapest place to land? That could be the home of a friend or relative, or a government or private shelter. But you want to figure that out now. Otherwise, you’ll get the first part right and get out of danger. But you won’t have a destination to wait out the worst of it.

Disaster tech

Technology doesn’t just make it easier to order stuff online and make our TV sets bigger and brighter. Technology has made it safer to survive natural disasters. And it’s not expensive, either. For instance, you can buy a thermal emergency blanket for around $15. A good solar charger for your smartphone is around $20. Same for a personal water filter. Best of all, these items last a long time, so you don’t have to buy them again. Even the emergency food, while not exactly gourmet, is relatively cheap and lasts for up to a decade.

Disaster prep

Each kind of natural disaster requires different supplies, although some are universal. Here’s the problem: Most disaster supplies are purchased at exactly the wrong time. During hurricane season, for example, most bottled water is sold 48 hours before the storm is scheduled to hit – leading not only to shortages but also price gouging. Shopping for disaster supplies is just like shopping for holiday gifts. It’s best to do it off-season. You’ll save more. Look for deals year-round, not just on the eve of, say, tornado season. Shop for blizzard supplies in the summer. Shop for hurricane supplies in the winter.

Disaster advice

There’s no shortage of excellent advice on exactly what to do to prep for each kind of disaster – from the best masks for a wildfire to how much bottled water you’ll need after a hurricane. If you don’t know where to go first, start with us. We’ve compiled a simple booklet on natural disasters that isn’t the end of the information you’ll need, but it’s a really good beginning.

Hurricanes

Let’s focus on one key fact about each kind of natural disaster that often gets overlooked. For instance, even if you’ve gone through a hurricane before, and even if you prepared for it very well, you might now know this: Flooding kills more people and costs more in property damage than the high winds do. It’s the “storm surge” from the ocean that’s more deadly than the gale-force winds.

Wildfires

In some ways, calling wildfires a “natural disaster” isn’t accurate, since almost all of them are caused by human beings either acting clumsily or maliciously. Thus, more wildfires start in areas where camping is allowed than in remote wilderness areas. Check to see where camping is allowed near you.

Tornadoes

Although tornado season is traditionally March through May in the south, they peak in the summer up north. And they can happen in any state in the country. Only Alaska is spared, although it last had one documented in 2005. So, unless you live in Alaska, don’t ever say it can’t happen here.

Earthquakes

Earthquakes are the most common natural occurrence on this list, except no one feels most of them. Of the half a million that happen each year, human beings feel only 100,000 of them – and only 100 cause any damage to property or claim lives. But earthquakes are among the most damaging natural disasters. In this country, they cause more than $4 billion a year, according to FEMA.

Flooding

Flooding is the one natural disaster that follows other natural disasters. As previously mentioned, hurricanes can cause flooding, but so can tornadoes and earthquakes. So-called “no-name storms” cause flooding, too. Did you know 90 percent of all U.S. natural disasters declared by the President involve some sort of flooding? It’s also the one natural disaster that can happen anywhere – even Alaska.

Disaster recovery

No matter what natural disaster hits you, the recovery process is almost always the same. First, don’t venture outside until you get the all-clear from officials. Second, assess your family’s needs and any property damage. Third, use your disaster supplies for eating, drinking, cleaning, and washing. That’s all basic stuff, but what about financially recovering from a natural disaster?

If you suffer any damage from a natural disaster, and you and your family are safe, the next step is to ensure your finances are safe. Remember when we mentioned putting all your valuable documents in one safe place? Well, now it’s time to consult them. Break out those insurance policies. Call the agents representing you right away. Don’t expect them to get right back to you, since they’re surely slammed with other claims. But the sooner you call, the sooner you’ll hear. Also contact your lenders and ask for grace periods and extensions. That’s everything from your mortgage to your credit cards. If your home is damaged and you can’t stay there, don’t forget to tell your utility companies. They can suspend your service and save you some money.

You’re not alone.

After a natural disaster, you might feel like your world has been turned upside down, and you’re all alone. You might not have cellphone service, only heightening your sense of loneliness. But the fact is, you’re not alone. You have help available to you, and much of it is free. Some of it actually gives you money.

Finding financial aid

Once you can get back online, your first step is to visit consumerfinance.gov/recover. That website offers step-by-step instructions for recovering from every kind of natural disaster. If you’re in a presidentially-declared disaster area, go to disasterassistance.gov to learn how to claim some aid. Go to the homepage of your state’s website to see if you qualify for state aid, even if you’re not in an official disaster area. You can also call the Red Cross at 800-RED-CROSS to see about financial aid, shelter, free meals, free clothing, and even some personal hygiene supplies.

Call a credit counselor

One service Consolidated Credit has long provided is free priority counseling for those affected by natural disasters. For nearly three decades, we’ve offered a free debt analysis from a certified credit counselor. After a natural disaster, we’ve offered even more help.

Here’s who not to call. After a natural disaster, scammers descend upon the area. Some are shady contractors who offer to fix up your property for cheap – but only if you pay in cash, up front, and right away. Never pay up front. Pay as the work gets done. Always get estimates from more than one contractor, and make sure they’re licensed and bonded. You might also get phone calls from official-sounding people demanding you give them your Social Security number and other personal details. Ask for their number so you can call them back, and if they’re reluctant, hang up. In fact, if you’re not sure what to do, the best advice is to do nothing. Like we just said, there’s plenty of free help out there, so you don’t need to fall for any scams to get the assistance you need.

Thank You!

Natural disasters are only fun in the movies. In real life, they’re scary and costly. But with a little planning and just a little money, you can weather the storm. This paper was just an overview, just a starting point. But as you can see, it’s not as daunting as you might think.

Code Red Rx

How to recover from a financial panic attack – and how to avoid the next one

In this free webinar, you’ll learn:

• How poor financial health can make you physically sicker
• How to stay CALM (and what that stands for)
• Proven tactics to shed credit card and student loan debt

Code Red Rx:

How to recover from a financial panic attack – and how to avoid the next one

In many ways, a financial illness is easier to solve than a physical illness. Do you sometimes feel like you’re suffering a financial heart attack? If so, you’re sadly in good company. Turns out 3 in 4 Americans feel like that, according to a CNBC report from February 2021. They rank “financial stress” as the worst kind they face – even more than stress at work or in their own families.

This paper covers simple, proven ways to restore your financial health – no matter how long you’ve been living with your painful financial condition.

1 Financial Stress

If you’re wondering why this paper is called Code Red Rx, it’s not a gimmick – and it’s not melodramatic. Study after study has shown that financial problems cause physical problems. And Consolidated Credit’s certified counselors have repeatedly seen and heard these same reports over the past couple of decades.

The life insurance company John Hancock has a profitable reason to know exactly what kills its customers, so it researches the causes. When the company asked if financial stress affected physical health, the answer came back like as a resounding yes: “It lowers our immune function and ability to fight illness, which can make us less effective at home and work.”

Taking care of your financial health is an important part of taking care of your physical health.

1.1 Debt Stories

Consolidated Credit hears from real people who are suffering from financial stress. It has a huge impact on their lives, and even their physical wellbeing. Here are a few of their stories; maybe they sound like yours.

1.1.1 Maria

There was Maria, who had nearly $8,000 in credit card bills and a credit score in the 400s – she couldn’t even move into a new apartment because her score was so low. She had maxed out her credit cards and was paying a whopping 29.99 percent in interest charges. Like many people, Maria said, “I was embarrassed about my situation and felt unsure where to begin.” But when she finally dug herself out of debt, she told us she’d never felt happier.

1.1.2 Sonya

Then there was Sonya, who ran up $3,000 on a department store credit card at 18 years old. She told us, “I was scared. I hated answering my phone at home because I knew it would be someone asking, ‘When can you send that payment?’ I remember having my hands against the wall, I didn’t know what to do. I was desperate.” When she finally paid off that debt and the other debt she had racked up, she told us, “I felt like someone had taken the shackles off my feet.”

1.1.3 Paula

Finally, Paula, who’s a mental health counselor who ran up big bills caring for her ailing father. When he recovered, her finances didn’t – and then she became sick from the financial stress. She told us: “As a mental health counselor I know what it looks like when people suffer emotionally. And when I became consumed with debt, I was there. I was stressed all the time.”

If you want to know more about these women’s struggles – and how they eventually conquered their debts – you can read all about them on the Consolidated website under Debt Stories.

1.2 Financial Crisis

Maybe you’re thinking, “Thank God I’m not suffering from a financial crisis! This doesn’t apply to me!” If so, know this: Many money woes are caused by small spending problems that just don’t seem like a big deal. Then catastrophe strikes. There are five major ones, and they cause your little money problems to blow up into big ones: accident, divorce, illness, layoff, and natural disaster.

So even if you think your finances are healthy, the real question is: Have you built up your money immunity? During the government shutdown of 2018, one of the big storylines was just how many federal workers didn’t have enough money in the bank to miss even one or two paychecks without having to take out a loan to cover their bills.

2 The Impact of COVID-19

Maybe you’re thinking, “This doesn’t apply to me, I’m not suffering from a financial crisis, and I weathered the COVID-19 shutdown.” In that case, Consolidated Credit is thankful you weren’t affected. But our own polling shows more than half the nation was – and COVID-19 isn’t the only threat out there. Your finances are vulnerable to the Big 5 Catastrophes.

Most Americans make ends meet every month, but there’s little margin for error. One serious car accident that keeps you from going to work, a bitter divorce that splits your income while paying attorneys, a chronic illness that costs money to treat and affects your income, or a natural disaster that requires replacing so much of your belongings – all of these can wipe you out. And of course, layoffs were a huge problem during the shutdown, as were furloughs and pay cuts.

So even if you think your finances are healthy, the real question is: Have you built up your money immunity?

3 Emergency Fund

Four in 10 Americans don’t have enough money saved to cover an emergency costing $1,000, according to a depressing Bankrate report January 2020. That makes it hard to stay financially healthy, because just like flu season, money problems are sure to come your way eventually, affecting you or your family.

3.1 Preventative Medicine

This leads us preventative medicine. How can you bolster your money immune system? Well, an emergency fund is the easiest way, but it can be a bitter pill to swallow. Why? Because you need to contribute to it in small ways all the time. When you’re facing debt stress, it’s because you don’t have enough money to go around. So how are you supposed to save? Well, the best place to start is with your pocket change. Seriously, set aside small amounts all the time. Have one less coffee from the drive-through of your favorite coffee shop. Brown-bag it one more day a week.

Once you get into a rhythm of small contributions, you can start building up your emergency fund to cover 3 to 6 months of living expenses. That’s the gold standard of emergency funds. How do you do that? Well, the best way is automatically. For instance, if your employer pays you via direct deposit – like 82 percent of Americans get paid – then you can ask your company to split your direct deposit. That’s right, most employers will let you send some money to one bank account, and some money to another. So you can shunt some of your paycheck directly into a separate emergency savings account. You won’t even miss the money, because you’ll never see in your primary account. This works especially well when you get a raise. Just send the extra cash directly to your emergency fund until you build it up to cover 3 to 6 months of expenses!

3.2 Time for a checkup!

What if you’re feeling a pain in your head or chest from all the debt you’re carrying? Then you need more than preventative medicine. You need a thorough checkup. But be calm. Literally, be CALM. CALM stands for create a plan, automate bill payment, lower spending, and make progress.

3.2.1 Create a Plan

No one likes to hear the words, “make a budget.” But it’s so easy to do it these days. If you don’t relish the idea of putting pen to paper, there are scads of online programs that will do the mundane work for you. Online budgeting tools are safe and they’re easy. You simply type in the amounts you spend in different categories, and these powerful tools do the math for you. They also let you see how much you can save per year by shaving off just a few dollars per week. For instance, if you type in the cost of one less work lunch per week that you buy, you can see how much that will save you per year.

3.2.2 Automate Bill Payment

Here again, embracing technology can help you save more in less time than ever. This technology was mentioned earlier when going over an emergency savings account. But instead of just automating your savings, you can automate your payments. Almost every bank and credit card – and even many municipal utilities – offer automatic bill pay. You set the day when you want a bill to be paid, and that amount is automatically deducted from your bank account right then, and not a day sooner. What’s the advantage, besides the worry of paying bills? You’ll never pay a late fee again.

3.2.3 Lower Spending

Of course, a danger of automatic bill pay is that if you blow your budget on some debit card purchases you’ve forgotten, you might not notice how low your bank balance is getting. That’s why it’s so important to cut your spending.

Sure, you can go on a crash diet and shed a lot of pounds. But that’s also called a yo-yo diet, because you just can’t maintain that forever. Same thing happens with money. If you cut spending so drastically that you suffer through the day, eventually you’ll crack and go on a spending binge.

Instead, just like dieting, make lifestyle changes. Do you clip coupons? Do you search out BOGO deals? Have you looked at all the subscription services you’ve signed up for to make sure you really use them? There’s no shortage of ways to save, and they’re as easy to find as an Internet search.

3.2.4 Make Progress

If you take this advice, you won’t notice a big change right away. Again, this is like dieting and eating right. You don’t wake up a day later weighing less and feeling better. It takes time, and the progress is gradual. But one day, you suddenly notice things: “Hey, my body is lighter and my wallet is heavier!” So the last part of CALM is maybe the most important. Be patient and you’ll see progress.

4 Why Budgeting is so Important

Now, another component that you should keep in mind, which is just as important as having a savings cushion, is the plan of how you are going to get there. Planning your budget should be top of mind. Before you can be save, you need to get your financial house in order and that is why you need is a budget.

It only takes four simple steps.

You also need to make money, not just save it. A budget needs money coming in before it can track money going out. So add up all your income – which is more than just your paycheck. It includes money from any part-time or freelance work, child support you receive, rent you charge, and Social Security and other income from benefits. Once you add all that up, you have your net income.

Even more than hidden income, many people suffer from hidden expenses. To keep track, think of your expenses in three buckets:

Fixed expenses are those you can’t easily change. If you pay rent or a mortgage, those amounts are the very definition of “fixed.” But so are car payments and insurance.

Flexible expenses are those you need but can do something about. So for instance, you need to go grocery shopping, but you can look for BOGOs, clip coupons, and use strategies for getting more food for less money. Same thing with gasoline for your car and your utility bills.

Discretionary expenses are those you can live without if you really had to, like a movie matinee, a nice dinner out, or that fancy hair salon you like.

The total of these categories is your net expenses.

If you have $2,000 a month in expenses and $2,500 a month in income, then you’re “in the black” by $500. If those numbers are reversed, then you “in the red” by $500.

If your income is greater than your expenses, congratulations! You now have the pleasant task of deciding how to best use your savings. But if your expenses outstrip your income, time to set some priorities.

You need to decide what steps you can take to either reduce your monthly expenses or increase your monthly income – or both, if you can.

5 How to Manage Your Budget

Before getting into the nitty gritty of saving secrets, here’s how you’ll track your progress. You just learned how to start your budget, now here’s how to maintain it. It may help to keep a spending diary for a month or two. This means saving your receipts and writing down the items and amounts for everything you spend.

If that sounds like a chore, there are free, secure online tools to help you monitor your spending. One of the most popular is called Mint, but there are many others, sometimes offered through your bank. Check them out.

5.1.1 What is “saving,” anyway?

Sure, you could stuff some cash under your mattress every so often. But that’s not the smartest saving tactic. First you need to be clear about what you want to save for, like buying a house, sending your children to college or just simply going on a vacation. Then, you should establish savings goals with a plan on to hit those goals.

5.1.2 Examples of Saving Goals

Your goals can be serious and major – like saving three months of living expenses for an emergency fund. Anyone who’s followed the recent government shutdown knows how stressful life can be if you miss just a couple of paychecks. So that emergency fund isn’t just a financial goal – it’s also a mental health goal.

But some goals are actually fun. Saving for a vacation can make saving easier because you can think ahead to sun-kissed beaches or powdery ski slopes. And while saving for a down payment on a new home seems daunting, it can be exciting to take those first steps to such a life-changing event.

5.1.3 How to be SMART about Saving

So how do you set your savings goals without consulting an encyclopedia? Just remember the acronym SMART. Here’s what it stands for…

Specific

Measurable

Achievable

Realistic

Timely

Specific is the easiest to do. Think of it like this: Instead of saying, “I want to lose weight,” you’d say, “I want to walk 10,000 steps during breaks at work and after dinner at night.” That specific goal is easier to meet than a vague one.

Measurable means setting targets you can easily track. So take a look back at the goal of losing weight. If you promise to walk 10,000 steps a day, there are apps on your phone that can easily measure that. There are now apps that can help you manage the money coming in and what you are spending on. You’d know every day if you’re living up to your own promises.

Achievable means figuring out how to get where you want to go. You need to develop the attitudes, abilities, skills, and financial capacity to reach them. For example, even a modest goal isn’t achievable if you set too tight a deadline. Losing 20 pounds in a year is achievable – but in one week, it’s dangerous. You can also say, I will stop buying fancy coffee and a pastry every morning in my way to work and save about $7 a day which amounts to over $1,800 at the end of the year.

Realistic means not setting impossibly high goals. If you tell yourself, “I plan to eat only salads every day for a year and never even look at a dessert,” then that’s a specific and measurable goal – but it’s also never going to happen. Using the example of buying your morning coffee, you shouldn’t cut out coffee entirely, just the expensive one in the morning. You can have the coffee at work and then make it a special treat in the weekend… you’ll be saving a lot.

To be realistic, a goal must represent an objective toward which you are both willing and able to work.

Timely means setting a deadline that’s as soon as you can comfortably hit it. Too many goals come with the vague deadline of “soon.” Even a big New Year’s resolution that takes the entire year isn’t as good as smaller goals each month.

5.1.4 How to Save on a Tight Budget

The next time you’re tempted to buy something, ask yourself…

Do I really need this item?

And before you say YES, answer these follow-up questions:

Is this item worth all the time I spent making the money to pay for it? Can I use my money in a better way right now? And of course, the hardest question of all: Do I really need this or do I just want it?

While waiting for sales and using coupons are effective and time-honored techniques, those savings don’t matter if you actually didn’t need the item.

6 8 More Ways to Save Money

Of course, there are more than eight ways to save money. But these eight are the least time-consuming and the easiest to stick with. They work because the small savings add up over time. That’s more lucrative than trying to save big every so often. It’s kind of like dieting: You want to make small lifestyle changes instead of enduring crash diets. Here are your financial lifestyle changes:

6.1.1 Treat yourself, then save yourself.

It’s called “nonessential indulgence-matching.” But that’s a mouthful. It just means every time you treat yourself, you treat your savings account, too. For example, if you splurge on a gourmet coffee during a lunch break, you put the same amount of money into your savings account. Sound weird? Think of it this way: If you can’t afford to save the matching amount, you can’t afford that treat, either.

6.1.2 Think about hours, not dollars.

Time really is money. Calculate a purchase by the hours you worked to get it, instead of the money it cost you. Just divide the price tag by your hourly wage. If it’s a $50 pair of shoes and you make $10 an hour, ask yourself: Were those shoes really worth five long hours at work?

6.1.3 Sleep on it.

Time is money even when you’re not doing anything. It’s called the 24-hour rule. It’s the antidote to impulse buying, and it’s so easy. When you find that non-essential must-have, wait until the next day before buying it. This works especially well online, because shopping websites specialize in luring you into immediate decisions that can cost you.

6.1.4 Don’t think about it.

Hands down, the best way to save is without even worrying about it. That means setting up automatic savings. Most employers will let you deduct a certain amount from your paycheck and transfer it into a retirement or a savings account. Best of all, it costs you nothing in either money or time. You never even notice the money is gone. This is a great way to “spend” any raises you get. Ask your HR representative for more details about setting this up.

6.1.5 Go low-tech

Earlier, high-tech online budgeting tools like Mint were mentioned. But some people do better going old-school. They budget with cash and envelopes. It’s simple: Label an envelope with each monthly expense, and put cold, hard cash into each envelope. Draw from the envelope when you pay those expenses – and once the money is gone, hey, it’s gone. That’s one dramatic way to curb your impulse shopping.

6.1.6 Decide between paper or plastic

You’ve probably heard about credit cards that offer cash back and other rewards. It’s true, you can save big with these rewards. But you can also spend big. These cards compel you to overspend to chase those points, which means you run up balances that charge high interest. You might actually save more money cutting up the plastic and go all-cash. In fact, there’s solid research showing we spend less money when we have to part with paper than swipe plastic.

6.1.7 Be bad at math.

Sounds weird, right? You’re always encouraged to budget better. But you can actually save by being vague. Here’s how: Some financial institutions will round up your debit card purchases. For example, Bank of America will round up to the next dollar amount – and put the change into your savings account!

6.1.8 Loosen up

To bring this back to the beginning, save those pennies. Loose change adds up. Keep it in a jar or piggy bank, and you’ll be amazed by how much it adds up. Get started by checking your car and those seat cushions and kitchen junk drawers. You’ll be surprised how much money you have in the house – and you never knew it!

7 The Storm After the CALM – Coaching!

If you embrace CALM and started to act SMART, but still feel stressed out by your finances, there’s another C to consider. It’s called coaching. Once again, compare this to your health. If you eat right and exercise, you’ll probably be physically fit. But every so often, you’ll get sick, and sometimes, home remedies don’t work. You need to see a medical professional.

Well, sometimes your finances get sick, even when you do everything right. Sometimes, a small bad habit grows into a big money ailment. When that happens, you need to consult a financial expert.

Luckily, you can talk to a financial expert easier than you can consult a doctor. First, you don’t need an appointment. You can call a certified credit counselor at a nonprofit credit counseling agency at almost any time. Second, it’s free – no co-pay. You can receive a free debt analysis that will help you figure out how to get financially healthy.

7.1.1 Coaching Questions

Of course, just like doctors, some financial counselors are better than others. Experts say to look for these things: The agency should be around for many years – decades, hopefully. It should have certified counselors, which means they take a standardized test to ensure they know what they’re talking about – and they have to retake it every two years. They should have the highest rating for the Better Business Bureau. And finally, they should have many excellent reviews from reputable review websites.

Find experts who can help you get out of credit card debt.

Income Tax Advice from the Experts

There are legitimate – and easy – ways to spend less on your taxes

In this free webinar, you’ll learn:

• Why Americans get into so much trouble with the IRS
• How to get out of trouble – and stay out of trouble – with the IRS
• Where to find an accredited tax expert who can help you

Tax advice from the experts

How to worry less about your taxes

Tax season is upon us—which leaves thousands of Americans stressed and overwhelmed. That’s why Consolidated Credit is breaking down everything you need to know, starting with how the IRS works.

Understanding the IRS

The IRS isn’t staffed by heartless government employees. The IRS doesn’t get any joy from upsetting you. In fact, the IRS wants to help you. That may sound contradictory to everything you’ve ever heard, but the truth is, the IRS is just confusing, and that leads to misconceptions.

You’ve also probably heard of IRS forms with names like W2 and 1040. But do you know just how many forms the IRS has? There’s 800 of them. The IRS is one of the most complex government agencies, and it has one of its toughest jobs. Accurately collecting taxes from individuals and businesses isn’t easy. So when you deal with the IRS as just one person, it can be both depressing and daunting. But it doesn’t have to be.

The IRS loves all numbers. And it adores the letter W. But what’s it all mean? Once you know what the forms are for, you can get a better sense of how the entire income tax process works. It’s a lot less intimidating when you understand the reasons behind the numbers and letters.

W2

No one likes paperwork, but this is the best IRS form. Why? Because its sole purpose is to show you how much you earned in the previous calendar year. It also shows how much tax was withheld, which lowers your tax bill or nabs you a refund.

W4

What’s a W4? It’s the form you fill out so you can get a W2 the next year. Basically, a W4 is what you need when you start a full-time job. It lets your employer know how much you want withheld from your paycheck. You can also use it to adjust your withholdings throughout the year.

W9

A W9 is kind of the opposite of a W4. While a W4 is what you fill out for full-time work, a W9 is what you fill out for freelance assignments or a side gig. It tells the IRS how much you’re making as an independent contractor. If you make more than $600 a year from one employer, you need to fill out a W9. Less than that? You don’t need to declare that income at all. It’s too small an amount for the IRS to worry about.

1099

A 1099 is the form you get back from the employer who paid you as an independent contractor. It notes exactly how much you earned on that side gig. So when you file your taxes, you might be sending a W2 with your full-time income and a 1099 with your freelance income. Depending on your withholding, you might have to pay something. Or you might be getting a refund.

Withholding

Whenever you get paid, your employer removes—or withholds—a certain amount of money from your paycheck. This withholding covers some or all of your taxes. Why do that? Well, otherwise you’d owe thousands of dollars on April 15, and not many of us are organized enough to save those thousands all year long and pay them all at once. Therefore, the law says employers in every state must withhold money for federal income taxes. Some states and even cities also require tax withholding.

How withholding works

Here’s the tricky part of withholding: It’s not user-friendly. Sure, it uses simple numbers, from one through four. But it can get really confusing really fast when you try to figure out just what you should declare. Your income and some other factors might give you the opportunity to add additional allowances. You might want to consult a tax pro for this, because they can help you achieve the sweet spot: no refund, no tax bill.

Everyone loves getting tax refund checks, even though that’s not ideal. Steve Rhode, a longtime personal finance expert, laments that many Americans use tax refunds for what he calls “forced savings accounts.” In other words, since we have trouble saving money, we let the IRS do it for us. Problem is, the IRS doesn’t pay us interest. It keeps it. So all tax experts say the best thing to do is keep your refund small and then save your own money through the year, maybe earning a few bucks in interest in a savings account or even investing it in a retirement account where it can make real money. But why let the government hold onto your money for you? It doesn’t make dollars or sense.

Common mistakes

What happens when you can’t pay your taxes or you’ve already fallen behind? Even if you’re current on your taxes right now, it’s helpful to know this. That way, should you or anyone you know get in trouble with the IRS, you’ll realize there are legal ways out of that bind. In fact, here’s a news nugget that surprises most Americans: The IRS wants to help you get out of tax trouble. It’s true. The IRS doesn’t want you to stress out over your taxes. But here’s how Americans often mess that up.

Ignoring the IRS

You might think the major way to anger the IRS would be to not pay your taxes. Actually, that’s not the case. After all, the tax code is complicated, and the IRS knows that. They actually want to work with you to make sure everything is proper and legal. But if you ignore their letters, well, then they get upset. And no one likes being ignored.

Listen to Tom Vastardis, a CPA and tax preparer with three decades of experience. Tom says, “You should never ignore a letter from the IRS. An unopened IRS letter could eventually lead to bank account levies, garnishments on paychecks, loss of appeal rights in tax court, even a tax lien on property.” Always open those letters, and always read them carefully and follow the instructions. It will save you money and huge headaches later on.

Not all IRS letters are bad. In fact, the IRS will even send you a letter if you’re owed a refund, or if the IRS just needs more information about you. Of course, the scariest IRS letters are the ones that say you owe money. While you don’t want to ignore any IRS letter, these are the worst to ignore. As Tom Vastardis says, that can result in the IRS eventually seizing your assets. The sad part is that’s totally avoidable.

How to get out of trouble with the IRS

As Tom Vastardis says, the IRS isn’t trying to scare you or even intimidate you. They just want what they think they’re owed. If you get a letter saying you owe back taxes, Tom recommends, “After opening the letter, you should immediately call an accountant.” Why? Because this is one time that do-it-yourself doesn’t really work.

Respond right away

Regardless of whether you call an expert or go it on your own, the crucial first step is simply taking that first step. Jacob Dayan says, “The IRS will work with you, but not if you ignore them.” Dayan has been a tax attorney for more than a decade, and his firm has helped more than 60,000 clients. He says nothing is more costly than waiting to reply to an IRS letter that’s sent to you. If it’s a simple matter, you might want to handle it yourself. But Jacob agrees with Tom Vastardis and says for more complicated matters, you’ll actually save money hiring a professional.

Don’t be afraid of the IRS

The number-one reason people wait too long to reply to the IRS? They want to figure out all the angles first. But that’s impossible even for the pros. As Jacob Dayan says, the IRS is very secretive about its process. So, the real goal isn’t figuring out why the IRS does what it does. The goal is figuring out what you can do when they’re looking at you.

Understand tax debt

Whenever you owe the IRS, it’s because you have tax debt. You either paid too little or too late. Now the IRS wants you to settle up. First thing to know, though: The IRS can’t send you to jail. Debtor’s prisons haven’t existed in this country since the mid-1800s. As long as you’re not engaged in tax evasion, you’re OK. What’s tax evasion? It’s intentionally not paying or underpaying your taxes. That’s different than making a few honest mistakes or not having enough cash to immediately settle up.

That said, lots of bad things can happen if you don’t work with the IRS to pay back what you owe. The IRS starts a clock on your back taxes, and the longer it takes you to settle up, the more penalties you owe. If you refuse to work with the IRS, the IRS will work you over. The agency can garnish your wages and seize money from your bank account. That’s never pleasant.

Figuring out “compliance”

The IRS cares most about compliance. What’s that? It’s the fancy way of saying you’re talking to the IRS and working out a plan to pay everything off. Of course, the IRS doesn’t take your word for that, so it reviews your records. Basically, as Jacob Dayan says, “the IRS wants to be confident that you will not owe in the future before they agree to a resolution program.”

How long do you have to pay everything back?

This is really where it starts to get tricky. You usually have 72 months to straighten everything out. But the IRS isn’t the cold, heartless agency you’ve heard so much about. If you can prove financial hardship, the IRS will often cut you some slack in various ways. The problem is figuring out how to communicate all that to a large bureaucracy.

IRS terminology

When you owe back taxes, you also get hit with some complex terminology. Here are some definitions:

  • Currently Not Collectible (CNC) status: What you get if paying anything toward your tax debt would throw you into a financial crisis.
  • Streamlined installment agreement: Installment agreements that don’t require verification of your assets, expenses, debt or income.
  • Offer in Compromise (OIC): Where qualified people with tax debt negotiate a settled amount that’s less than what they owed to clear the debt.
  • Final Notice of Intent to Levy and Notice of Your Right to Hearing: The IRS may levy your bank account or garnish your wages if you don’t take action soon.

Why you need a tax pro

If you’re financially struggling, CNC status is what you want. But here’s the rub: The IRS just doesn’t tell you, “Hey, here’s something that could help you.” That’s why you need to work with a tax professional who knows all the ways the IRS will give you a break—legally. But there’s a difference between what’s legal and what’s widely known.

Avoiding tax scams

Another benefit to consulting a tax pro is avoiding tax scams. Sadly, there are bad people out there who look for people in tax problems and then try to rip them off. These poor folks don’t know that the IRS would never call your personal residence and threaten to send police to your home. These scammers are preying upon your fear so you give them money or information they can use. The truth is the IRS will send out several notices before anything negative happens.

How to find a reliable tax pro

The best tax pros have a few things in common: they’ve been doing this for years, they have great online reviews, and they’re highly rated by the Better Business Bureau. They’re also quite measured in their promises. As the FTC says, if someone is promising to solve your problems without even reviewing your information, watch out. Better yet, seek out an attorney who works at a firm specializing in tax relief.

Ethical tax pros won’t charge you their entire fee up front. Run from anyone who demands that. Also be leery of anyone who says you qualify for a program without diving into your details. That’s impossible. Also avoid any ads you see online or hear on the radio that purport to give you “secrets the IRS doesn’t want you to know.” If you’ve learned anything today, it’s that the IRS wants you to know everything. The agency might not explain it very well, but the IRS wants its money, and it won’t get that money if it keeps secrets.

Thank you!

That’s all for this paper. If you owe back taxes or fear you’re about to, all is not lost. In fact, you can get professional help and get your life back on track. The IRS might not be your best friend, but it’s not your worst enemy, either. You just need a knowing ally on your side. Speak to a certified credit counselor to see which option may be best for you. Contact us below if you have any questions.

Finding the Best Debt Solution

You have several powerful options

In this free webinar, you’ll learn:
• How a debt management program works, and why millions have done it
• Why debt settlement is both powerful and dangerous
• What bankruptcy really means, and why it’s so misunderstood

Finding the Best Debt Solution

You have several powerful options

There’s only one way to get into debt: You spent more than you could pay back. Now you’re paying interest and maybe even worse: steep penalties and painful fees. Luckily, there are several ways to get OUT of debt, and while each of them has its own pros and cons, there’s a good chance one is a perfect fit for you.

There are four proven ways to get out of debt safely and reliably. They are:

  • • Balance transfer cards
  • • Debt consolidation loans
  • • Debt management
  • • Debt settlement
  • • Bankruptcy

The first one is the hardest. Then there are the three easiest and most popular solutions. Why are they so popular? Because you have experts helping you, instead of going it alone.

Do it yourself (diy)

If you’re buried under heavy credit card balances that you can never seem to pay off, part of the problem is the steep interest rates most credit cards charge. The national average is almost 20 percent, which means for every $5 you pay to get rid of that big balance, a dollar is being siphoned off and going to your credit card issuer as their profit. That makes it tough to ever catch up. But what if you could get a credit card that would help you pay off your credit cards?

Balance transfer cards

These cards offer you a low interest rate, and in many cases, no interest rate at all. With one of these cards, more of your money goes to paying down your balances instead of lining the pockets of your credit card issuer. Sound too good to be true? They’re not, but there are some drawbacks you need to watch out for.

Specifically, there are three things to watch out for. First, most balance transfer cards charge a fee to move your balances from your other, higher-interest cards. This can total up to 5 percent of every dollar you transfer. While some charge less and a few don’t charge anything, you need to keep your eyes peeled for this annoying fee.

People often ask, “Why would any credit card company give me a card for no interest? Aren’t they giving up a lot of money?” The answer is yes, they ARE giving up a lot of money you’d otherwise pay them. But they’ll make a lot of that back. How? Well, all balance transfer cards have an expiration date, usually at the end of 18 months – but sometimes for only six months. If you use that time to pay off your balance, you come out way ahead.

Unfortunately, research has shown that most Americans who get a balance transfer card don’t pay off their entire balance. Guess what happens then? The interest rate jumps – sometimes to a higher rate than you had on your original cards! So, to really take advantage of balance transfer cards, you need to be disciplined and stick to a deadline.

Finally, balance transfer cards aren’t for everyone. Some folks can’t get them, because the credit card issuers won’t give them one. If your credit score is under 670, you’ll generally struggle to get approved. Why? Because you’ve already proven to be a credit risk, and even though credit card issuers want to make money off you, they also want to get paid. So if your credit score is suffering, this isn’t the option for you.

Debt consolidation loans

This is simply a personal loan you secure and then use to pay off all your credit card bills with steep interest rates. The concept is the same as a balance transfer card: You’re paying off the high interest rates with a lower one. In this case, you might be able to get a personal loan of between 36 and 60 months from your bank or credit union at 6 percent, then use the money to pay off your credit cards that are charging you 20 percent. Then you simply make one monthly payment on the personal loan. Usually, you get out of debt faster AND make a smaller monthly payment, which is the definition of a win-win.

If you get a debt consolidation loan, you’re looking at 3 to 5 years to pay it all off. In the meantime, you need to be careful not to run up more debt. That timeline is pretty close to a debt management program, which we’ll cover later, but in that case, you work with a credit counseling agency that can help keep you on the straight and narrow. With a debt consolidation loan, you’re on your own – if you can even get a loan. If you have too much debt, it’s a classic Catch-22. You need the loan to pay off debts, but you have so much debt, no bank or credit union will give you the loan.

Getting expert help

Not everyone renovates their own bathrooms or overhauls the transmission in their cars. Most of us rely on experts to help us do everything from our taxes to our oil changes. Well, it’s no different with debt.

Just like there are terrible CPAs and auto mechanics out there, so too are there terrible debt experts. Here’s what to look for: First, go to the website for the Better Business Bureau and search the name of the company. If it doesn’t have an A-plus rating, forget about it. Second, go to the agency’s “about” page and see how long it’s been around. The longer the better, because that means they know their stuff backward and forward. Third, check out review sites that have excellent customer reviews for the agency, like Trustpilot.com and ConsumerAffairs.com.

You should consider these options in this order: debt management, debt settlement, then bankruptcy.

Debt management programs

One of the most powerful debt-busting solutions is only available through a credit counseling agency like Consolidated Credit. It’s called a Debt Management Program (DMP). It might be able to cut your monthly payments by up to 30 or even 50 percent. A DMP also freezes late fees. Even better, you only make one payment a month for all the credit cards that are in the program. And unlike the other debt solutions we’ll talk about later, your credit score isn’t irreparably damaged. It might dip temporarily, but it actually improves over time. Unfortunately, credit card companies won’t let you sign up for a DMP yourself.

To qualify for a DMP, you have to work through a credit counseling agency, because the credit card companies trust those nonprofits to follow all the rules they establish. After all, the credit card companies are willing to forgo some of what you owe them to get back the rest. They don’t surrender profits that easily. Luckily, when you work with a reputable credit counseling agency, they take care of the paperwork for you.

DMPs aren’t for impatient people. It often takes years to graduate into financial freedom. One reason for the long timeline is that DMPs are supposed to be relatively painless. Imagine a crash diet compared to gradual lifestyle changes that help you lose weight. That’s how a DMP helps you shed debt. And your credit counselor is there for you the entire way. But if you’re looking for a quick fix, this isn’t it.

Debt settlement

Debt settlement seems like the best option of them all. In a nutshell, you negotiate with your creditors and pay them only a fraction of what you owe. Why would your creditors agree to this? Because they don’t want you going broke and paying nothing. The national average over the past few years is 48 percent – which means most folks in debt settlement don’t pay back 52 percent of their debts. Sounds like a great deal, right? Sadly, it’s not.

Debt settlement starts out with a free debt analysis to see if it’s the right solution for you. If it is, the debt settlement company will set up an escrow account for you. This is a secure account where your funds will be kept until your settlements are reached. That can take a while, and in the meantime, you’re making monthly contributions to the escrow account. The more creditors you have, the longer this process can take. And some creditors might outright refuse to settle. After all that, the debt settlement company will take its fee out of what you’ve paid into escrow.

Debt settlement also ruins your credit score. And why not? You’re telling your creditors you can’t pay them back what you owe. New lenders will be wary of giving you money, because they fear you’ll do the same thing to them. Now, if you’re buried in debt, this might seem like a small price to pay for getting rid of those steep balances. But that negative mark on your credit can stay there for seven years. That means if you want to buy a home or a car, you’ll pay a lot more in interest – if you can even get the loan at all.

The most dangerous part of debt settlement has nothing to do with actual debt settlement. It’s the scammers who try to steal your money. Some try to charge steep fees up front, which is actually illegal. By law, debt settlement companies can’t charge any fees until a settlement is successfully achieved. And those fees should be a small percentage of the original amount you owe. Whether you go for debt settlement or debt management, you’ll pay a fee to the folks who are handling the work for you, but it should be much, much less than what you’re saving. Unscrupulous debt settlement companies don’t care about that, though. Some will even take your money and then not actually help you settle your debts. You should seek out a reputable debt settlement firm using the same techniques we described earlier for credit counseling agencies.

Bankruptcy

Most people know bankruptcy is serious, but they don’t always know why. Bankruptcy can accomplish things no other debt solution can. Bankruptcy can help save your home from foreclosure and get you out of crushing credit card or medical debt. Because bankruptcy is a law, it has powerful advantages over debt settlement. For example, just filing for bankruptcy means you get an “automatic stay.” That prevents creditors from pursuing payment or taking any action against you until your bankruptcy is discharged or a repayment plan has been approved. Also, bankruptcy works for back taxes, something no other debt solution does. In a nutshell, bankruptcy is a debt solution where the power of the legal system is behind you.

Bankruptcy is even more complicated than debt settlement. You’ve probably heard of Chapter 7 and Chapter 13 bankruptcies, but do you know the difference? Chapter 7 is called “liquidation bankruptcy” because it involves selling your assets, although some are protected, like your home and car. Chapter 7 bankruptcy only takes 4-6 months. Chapter 13 is similar to a debt settlement program because it sets up a monthly plan to pay back a percentage of your debts. The biggest difference is that the terms of Chapter 13 bankruptcy are decided by the courts, not negotiated between you and your lender or creditor. Depending on this payment plan, it could take up to 5 years to complete the court-ordered repayment plan. This is commonly called “wage-earner bankruptcy,” and it can be a good option if your creditors don’t want to work with you on debt settlement.

Regardless of which option is best for you, you’re required to go through something called “pre-bankruptcy credit counseling.” It’s up to you to find an agency approved by the Department of Justice, and a typical session can take up to 90 minutes. Bottom line, it takes time and effort.

Just like debt settlement, there’s a black mark on your credit for years to come. For Chapter 7, that bankruptcy will stay on your credit report for a decade. For Chapter 13, it’s less – seven years. That’s because you’re actually paying back some of your debts. Still, that’s a long time to have a low credit score.

If you have student loans – and the national average is around $37,000 – you probably won’t be able to get rid of them in bankruptcy. Bankruptcy law puts the burden of proof on you. You must show that continuing to owe those loans “will impose an undue hardship on you and your dependents.” Proving that is tough. One study shows that only one-tenth of one percent of all bankruptcy filers have enough evidence to even try to meet this threshold – and only 40 percent of them succeed. The bottom line is, while you CAN get student loans discharged, you shouldn’t count on it.

What should you do?

There’s no downside to calling for a free debt analysis. There’s no obligation, and a certified credit counselor can walk you through all your options, which means you have more information to make your debt-busting decision. This webinar is just an overview, not a deep dive into your personal situation. But you can get that with one free phone to a nonprofit agency.

Thank you!

That’s all for this paper. Everyone’s financial situation is different, and your experience with debt settlement or DMPs may be very different from someone else you know who did the exact same thing. Speak to a certified credit counselor to see which option may be best for you. Contact us below if you have any questions.

Rebuilding Your Finances in 2021

How to have a new year with no debt

In this free webinar, you’ll learn how to:
• Get free expert help to overcome the debts you just racked up
• Save for the holidays all year long – and emerge debt-free!
• Create a painless, high-tech budget that will keep you out of debt forever
• Enjoy the rest of the year without a holiday debt hangover

Rebuilding your finances in 2021

How to have a new year with no debt

Most Americans are entering 2021 with debt. Even in the best of new years, more than half of us don’t pay off our holiday purchases when January’s credit card bills come due. We carry a balance. In fact, many Americans don’t pay off their holiday bills until the summertime. While we don’t have statistics yet for 2020, we do know the average American racked up $1,325 in holiday debt in 2019, according to Magnify Money. That means even before the pandemic, we overspent on gifts, travel, food, and drink.

Ever since the Great Recession, our holiday debt has been creeping up. Only five years ago, we were averaging $986 in holiday debt coming into the new year, according to Magnify Money. As that number grows, it becomes harder and harder to pay it all back.

Last year, according to CNBC, when 28 percent of Americans started their holiday shopping, they still hadn’t paid off their holiday debts from 2019! They had so much holiday debt, they couldn’t get rid of it before the next holiday season! During a pandemic, you can imagine how much more dangerous that would be. While we see light at the end of the tunnel, there’s no telling what will happen to our incomes between now and then. That could still mean furloughs, pay cuts, and layoffs.

How to set smart financial goals

Most Americans don’t get into holiday debt because they’re irresponsible or frivolous. It’s for a far simpler and easily fixable reason: They just didn’t make a plan. The truth is, most of us don’t want to overspend during the holidays. We feel peer pressure to do it. A poll by Lending Tree not only found that more than 6 in 10 Americans dread holiday spending, but almost the same amount report being “stressed about their holiday debt” after the fact. If that describes you, then you’re already motivated to spend less in 2021. You just need a plan.

Learn from the pandemic

While it’s still too early to know for sure, preliminary research shows we spent much less for the 2020 holidays than we did in 2019. Some of those savings are obvious. For instance, we all traveled less. But we also bought fewer, simpler, and cheaper gifts. Why? Because we weren’t gathered to open them, so we had to buy them online and ship them to loved ones. And guess what? The sky didn’t fall and disaster didn’t ensue.

Your first 2021 smart finance goal should be: Resist the peer pressure and buy reasonable gifts once again this year. If this pandemic taught us anything over the holidays, it’s that our relationships are priceless, not our gifts.

Buy sooner

Not only should we keep buying reasonable, personal gifts this year, we should do it even earlier than we just did. So many retailers pre-empted Black Friday by offering deals well before that unofficial holiday. Keep that going.

Everyone knows that the best time to score deals on holiday decorations is in January, when stores are selling off their leftover inventory for cheap. Every month is off-season for something, and that’s the time to snag a discount and hide it in a closet for Holiday Season 2020. You can easily scour the Internet to learn which months are historically buyers’ markets. Believe it or not, many of these individual deals will save you more money than buying those same items during the usual Black Friday sales.

How to pay off 2020 holiday debt

If you want a financially stronger 2021, the first thing you should focus on is getting rid of your holiday debt. Then, you can set yourself up for a debt-free holiday season at the end of this year. Your options include both do-it-yourself tactics and getting free expert advice. It really depends on your financial situation and your own personality.

Credit counseling

If you have steep and stubborn holiday bills, the first thing you need is a debt diagnosis. You don’t go to a doctor, though. Instead, you call a certified credit counselor. These experts work at nonprofit credit counseling agencies. While they’re on the phone with you, a counselor will give you a free debt analysis. They’ll review every dollar you spend and every dollar you earn. From there, they can give you a menu of debt-busting options.

Debt management program

One of the most powerful weapons in a credit counselor’s arsenal is called a Debt Management Program, or DMP for short. It might be able to cut your monthly payments by up to 30 or even 50 percent. How can it do that? Simple. Your credit counselor works directly with your credit card companies. A DMP has several wonderful advantages over trying to get out of debt yourself.

Not only do you save money on interest rates, a DMP also freezes late fees. Even better, you only make one payment a month for all the credit cards that are in the program. You make that payment directly to the credit counseling agency, who pays your creditors on time. No more forgetting to write that check for that one credit card, then getting hit with late fees.

Learn more about DMPs on your own time and at your own speed. Check out ConsolidatedCredit.org for the simplest plain-English explanation of the pros or cons. Or you can call a nonprofit credit counseling agency and not only receive that free debt analysis, but also ask any questions you have about DMPs or anything else financial.

How to budget in 2021

You might think budgets are boring. Who wants to waste time adding up your income and expenses and then figuring out how to best spend it every month? Where’s the fun in that? But budgeting in general has been proven to be the best way to save both money and stress, and an emergency budget is hands down the best way to avoid big problems when the unexpected happens.

Here’s the first rule of personal finance: You can’t save money unless you know how much you’re spending. If you’ve survived 2020 and want to thrive in 2021, you’ll create a monthly budget. And it’s not as difficult, or even as boring, as you think it is. Why? Because technology can do a lot of the work for you.

While you can certainly go old-school and create a budget by putting pen to paper, it’s so much easier if you use secure online tools that require just a few keystrokes. There are websites, apps, and programs that handle the drudgery of budgeting for you. Many are free, and the ones that charge are only a few bucks.

Budgeting tools

Here are the apps and websites we trust and recommend:

  • • Mint
  • • Tiller
  • • YNAB
  • • mvelopes

Mint is one of the most popular ones, although many banks and credit unions offer similar programs on their websites for their customers. Basically, you just type in your income and expenses, and these programs do the math for you. You can even project your savings if you eat one less takeout dinner, or if you refinance your mortgage. The software does the heavy lifting for you.

If that’s a little too techy for you, there’s a middle step. Websites like Tiller let you download customized spreadsheets that stay on your computer, and you easily personalize. Each program has its pros and cons, but they all work. It’s really up to what makes you feel the most comfortable.

Why emergency budgets are important

What’s an emergency budget? It’s a stripped-down monthly budget, cutting out every expense that isn’t needed for your basic survival. If this pandemic results in you getting laid off or losing your income for more than a little while, you need to know – in advance – how much it will cost you just to survive these difficult times. Without an emergency budget, you’re flying blind.

Survival expenses

In an emergency budget, you focus only on the expenses that matter most. First, there are your basic needs: food, water, and shelter. Second, there are bills you’ve just got to pay. Mortgage or rent, other loans, utilities, water.

Then there are support functions that you can’t live without. For example, if your car breaks down, you need to fix it – or you can’t get to work and make enough money to survive. Same thing for childcare.

Finally, there are medical expenses. This includes prescriptions and any medical care you’re under – because nothing else matters if you’re so sick you can’t work. Or enjoy your life.

Cut out all luxuries

Once you prioritize the three broad categories (basic needs, bills, and medical expenses), it’s time to cut back to the barest of bones. Since you’re keeping only the necessities, get rid of everything else. That includes pausing or even canceling monthly subscriptions like cable or satellite TV. That’s right – no Netflix. And you’ll scale back your phone plans to the cheapest level available. Ditto with your Wi-Fi. If you can get a cheaper rate for a slower connection, you’ll build that into your emergency budget. Every penny counts here.

While emergency budgets aren’t fun, they don’t have to be miserable, either. Just because you’ve cut out your costliest entertainment options doesn’t mean you can’t enjoy yourself. You and your family can enjoy board games and even go outside and hike, bike, or walk. Your local library has both online and socially distant in-person options to keep you both entertained and educated. Bottom line here: Helping your bottom line doesn’t mean living like a monk.

Defer your debts

During the worst of the pandemic, the federal government offered a slew of debt-delaying plans to ease the economic strain on us all. These included rent freezes and deferrals on paying taxes, student loans, and mortgages. Many private industries did the same, and while the federal CARES Act expired on New Year’s Eve, those private lenders are still offering some help.

If you need to commence your emergency budget, we have some weird advice for you: Don’t pay your debts. At least not before you ask permission to defer or reduce your payments. It sounds odd, but if you call your lenders, they might cut you some big breaks. Why? Because if you go bankrupt, they lose a profitable customer. So they’ll often work with you, temporarily cutting the amount of your payments, deferring them for a short time, or slicing off some of the interest you owe. But you won’t know for sure until you ask.

Emergency funds

During a normal economy, experts recommend you save 3-6 months of bills and other budgeted expenses. This allows you to weather a period of unemployment or cut hours at work without relying on credit cards.

Of course, a pandemic is exactly when you’d dip into an emergency fund. But what if you don’t have one? Well, now is the time to start. That’s right, during a pandemic might be the best time for you to start saving for the next emergency.

If you’re one of the fortunate Americans to not suffer a furlough, pay cut, or layoff, then you still have money coming in. And if you’re practicing safe health practices, you aren’t going out and about as much as you once did. With everyone else cutting back right now, this is the perfect time for you to start socking away a few bucks a week so you can build up an emergency fund.

One easy way to do that: If your employer pays you via direct deposit – and 82 percent of Americans get paid that way – then you can ask your company to split your direct deposit. That’s right, most employers will let you send some money to one bank account, and some money to another. So you can shunt some of your paycheck directly into a separate emergency savings account. You won’t even miss the money, because you’ll never see it in your primary account.

Thank you!

10 Smarter Ways to Save Without Breaking a Sweat

Saving money doesn’t have to be hard. In fact, it can be automatic.

In this free webinar, you’ll learn:
• How to save money without even knowing you’re saving money
• Which online tools can help you save money painlessly
• The latest high-tech ways to save for everything
• How to save without changing your current lifestyle

10 Smarter Ways to Save Without Breaking a Sweat

Saving money doesn’t have to be hard. In fact, it can be automatic.

Can you save money during a pandemic? Can you save money when you’re not sure if you’re going to be furloughed or even have a job? Can you save money during a recession? Not only is the answer “yes” to all these questions, but it’s actually more important to save money when times are bad. And interestingly enough, it doesn’t have to be a chore.

Before we start talking about saving, let’s talk first about overspending. The total amount of money every American owes for everything is 14.3 trillion dollars, from mortgages to credit cards to student loans to auto loans to personal loans and more. It’s a huge number, but interestingly, it’s actually been shrinking during the pandemic.

The total debt all of us owe fell by 34 billion dollars earlier this year. That sounds like a lot of money, but compared to 14.3 trillion, it represents only a drop of only .02 percent. Still, it was the largest decrease since early in 2013. What caused that drop? Experts say two things. First, we’re all nervous about the future right now, so we’ve reduced our frivolous spending just in the case the worst happens. Second, lenders are equally nervous, so they’ve tightened their standards. For example, it’s not as easy to get a new credit card these days.

Save money without even knowing you’re saving money!

We know how hard it is to save money even in the best of times. Saving now seems like it’ll be difficult. There are many techniques that require some sacrifice, but let’s start with some small ways that really add up – and they don’t hurt at all.

Automatically pay your bills

Let’s start with an easy one. Almost every bank and credit card – and even many municipal utilities – offer automatic bill pay. You set the day when you want a bill to be paid, and that amount is automatically deducted from your bank account right then, and not a day sooner. What’s the advantage, besides not worrying about paying bills? You’ll never pay a late fee again. That’s a big deal when you consider 1 in 4 Americans regularly owes late fees because they forget one of the many bills they’re juggling. That’s money they’re giving away instead of saving.

Direct – and indirect – deposit

You can also automate your savings just like you automate your bill-paying. More than 9 in 10 Americans are paid through direct deposit according to a 2019 survey from the American Payroll Association. Almost all of them have access to a neat feature: You can direct some of that money AWAY from your checking account. You can send it to a savings account you don’t normally see.

This works very well when you get a raise, because you can divert that extra money into a savings account, and you won’t be tempted to spend it because you constantly see it in your checking account. Of course, these days, more Americans are getting furloughed or laid off than getting raises, but this tactic still works, even if you set aside just a few dollars per paycheck. Soon you’ll have built up an emergency fund that will give you peace of mind as these uncertain times continue.

To set up multiple direct deposit streams, simply talk to your Human Resources or payroll department. They can walk you through this easy process.

Online tools can help you save money painlessly

During this pandemic, we’ve all spent way too much time staring at computer screens. But in this case, using a computer isn’t a waste of time but a great way to save. We’re going to start at the beginning with a topic no one enjoys talking about: budgeting.

How to budget without getting bored

You can’t really save money if you don’t know where it’s going. But let’s be brutally honest: budgeting isn’t fun. So how can you draw up a household budget and keep it without cramping your lifestyle?

While you can certainly go old-school and create a budget by putting pen to paper, it’s so much easier if you use secure online tools that require just a few keystrokes. There are websites, apps and programs that handle the drudgery of budgeting for you. Many are free, and the ones that charge are only a few bucks. Here’s how they work.

A cutting-edge way to cut expenses

One of the most popular is called Mint, although many banks and credit unions offer similar programs on their websites for their customers. Basically, you just type in your income and expenses, and these programs do the math for you. You can even project your savings if you eat one less takeout dinner, or if you refinance your mortgage. The software does the heavy lifting for you.

If that’s a little too techy for you, there’s a middle step. Websites like Tiller let you download customized spreadsheets that stay on your computer, and you easily personalize. Each program has its pros and cons, but they all work. It’s really up to what makes you feel the most comfortable.

High-tech ways to save for everything

Thankfully, computer technology can be used for more than just budgeting. You can save when you buy things. Before we share those tips, just a word of warning: Use these shopping tools to buy only what you need, not to splurge. It makes no sense saving a few bucks on every purchase just to turn around and buy something frivolous.

Don’t just shop online. Compare…

Everyone knows you can score great deals online rather than in the store. But not everyone knows about these comparison-shopping tech tools. These websites and apps – and many others just like them – let you make a list of your desired items, then tell you when the best deal is being offered. Most of them pegged to Amazon, but BayWatch monitors deals on eBay while The Mac Index does the same for the sale of Apple products.

You can find these price-monitoring programs everywhere, and you don’t need to be tech savvy to take advantage of them. Try one or more and see if you save big.

How to save without changing your current lifestyle

Now let’s talk about saving while changing the way you do things, not what you actually do. For us here at Consolidated Credit, that means credit cards. Why? Because according to CreditCards.com, more than 75 percent of all Americans adults own at least one credit card, and the average American owns three. So, if you can easily save on your credit cards, then you can make a real dent in your debt. And that means savings.

All told, those of us with credit cards are carrying balances of over one trillion dollars. And we’re paying for that privilege. While credit card interest rates fluctuate wildly depending on the card and your circumstances, right now it’s hovering around 20 percent. That means you pay $1 in interest for every $5 you charge. If you could cut or even eliminate those interest payments, you’d have a lot more money in your pocket, and you wouldn’t have to change a thing about how you live.

Balance transfer cards

Let’s start with one of the easy ways to do that. It’s a certain kind of credit card. It’s called a balance transfer card. These cards offer you a low interest rate, and in many cases, no interest rate at all. With one of these cards, more of your money goes to paying down your balances instead of lining the pockets of your credit card issuer. With credit card interest rates hovering around 20 percent right now, that’s big savings for doing nothing different during your day. Sound too good to be true? There are some drawbacks you need to watch out for.

Specifically, there are three things to watch out for. First, most balance transfer cards charge a fee to move your balances from your other, higher-interest cards. This can total up to 5 percent of every dollar you transfer. While some charge less and a few don’t charge anything, you need to keep your eyes peeled for this annoying fee.

Second, all balance transfer cards have an expiration date, usually at the end of 18 months but sometimes for only six months. If you use that time to pay off your balance, you come out way ahead. If you don’t, the interest rate jumps – sometimes to a higher rate than you had on your original cards!

Finally, if your credit score is under 670, you’ll generally struggle to get approved. That might be even more true these days as lenders tighten up.

Debt consolidation loan

Next up on the scale of difficulty is a debt consolidation loan. This is simply a personal loan you secure and then use to pay off all your credit card bills with steep interest rates. The concept is the same as a balance transfer card: You’re paying off the high interest rates with a lower one. In this case, you might be able to get a personal loan of between 36 and 60 months from your bank or credit union at 6 percent, then use the money to pay off your credit cards that are charging you 20 percent. Then you simply make one monthly payment on the personal loan. Usually, you get out of debt faster and make a smaller monthly payment, which is the definition of a win-win. You save money by literally doing nothing different, except who you write a smaller check to.

If you get a debt consolidation loan, you’re looking at 3 to 5 years to pay it all off. In the meantime, you need to be careful not to run up more debt. If you have too much debt, it’s a classic Catch 22. You need the loan to pay off debts, but you have so much debt, no bank or credit union will give you the loan.

Credit counseling

We will admit our bias here. Consolidated Credit is one of the nation’s largest and oldest credit counseling agencies, so we naturally think they’re awesome. The best of these nonprofit agencies will offer you a free debt analysis from a certified credit counselor. With one phone call, a counselor will review every dollar you spend and every dollar you earn. They’ll point you to plain-English educational resources that can help you save big bucks. Even better, they can give you a menu of debt-busting options.

But before we do that, let’s review the only drawback we know of for nonprofit credit counseling agencies. And that is this: Like everything in the world, from doctors to diners, there are good ones and not-so-good ones. How do you find the best? There are three easy ways to figure that out in just a few minutes of Internet searching.

Credit counseling: What to look for

First, go to the website for the Better Business Bureau and search the name of the credit counseling agency. If it doesn’t have an A-plus rating, forget about it. Second, read the agency’s “about” page and see how long it’s been around. The longer the better, because that means they know their stuff backward and forward. Third, check out review sites that have excellent customer reviews for the agency, like Trustpilot.com and ConsumerAffairs.com.

Debt Management Program (DMP)

One of the most powerful debt-busting solutions is only available through a credit counseling agency. It’s called a Debt Management Program, or a DMP for short. It might be able to cut your total payments by up to 30 or even 50 percent. A DMP also freezes late fees. Even better, you only make one payment a month for all the credit cards that are in the program. Unfortunately, credit card companies won’t let you sign up for a DMP yourself.

To qualify for a DMP, you have to work through a credit counseling agency, because the credit card companies trust those nonprofits to follow all the rules they establish. After all, the credit card companies are willing to forgo some of what you owe them to get back the rest. They don’t surrender profits that easily. Luckily, when you work with a reputable credit counseling agency, they take care of the paperwork for you. So, in a way, this con becomes a pro.

Two easy moves…

Let’s end with two niche tactics that require some of your time, but just once. First, did you know you can negotiate lower bills? It’s true. For example, if you’ve had a credit card for many years and you’ve been a good customer, you can often call the number on the back of the card and get some concessions just for asking. For example, you might be able to shave down your interest rate if you mention another card has offered you less. And you can also move your due date to correspond better with your paychecks, so you never get caught short and need to float that balance a little longer.

Same thing goes for your cable bill. You can often get extra premium channels if your provider is running a special you didn’t know about. You can even negotiate for a lower bill, often saving $5 or more per month. The same tactic works for those complex mobile phone contracts. These little savings really add up, especially when you don’t have to do anything.

Finally, let’s end with the last place you might look for easy savings: your work. Earlier, we mentioned direct deposit, but that’s simply diverting your own money to where you won’t easily see it. Now we’re talking about your workplace giving you valuable services that can save you big.

One of the most popular is a 401(k), which helps you save for retirement. What’s so special about a 401(k)? Many employers match a portion of your contribution to this retirement account. According to government research, the average is 4.3 percent. That means for every dollar you sock away for later, you get 43 cents. Doesn’t sound like much, but when you consider a savings account is paying less than 1 percent in interest, that’s suddenly a lot. Also, the IRS gives you some money, too, by not taxing what you contribute.

Another big workplace benefit is called a Health Savings Account, or HSA. It does the same thing by letting you set aside money for healthcare and having it be invisible to the IRS.

We could spend hours discussing these lucrative benefits, but we suggest you chat up you HR department. Believe it or not, they want you to take their money. Why? Because companies that offer these benefits know their employees will appreciate them. They’re more likely to stick around and work hard. Let your bosses help you save!

Thank You!