Achieving My Financial Goals: The Blog for American Financial Solutions

Today a woman in my bank came in to ask for an increase in her credit line. Why? She wanted to go on vacation and didn’t have enough money. The shocking part was the banker’s response. “How about we open a loan to pay off your credit card, and we can give you some additional money to use for vacation.”

This manner of managing debt has baffled me for a long time. I understand the arguments that:

• The loan may have a lower interest rate
• You consolidate payments into one monthly payment

However, it seems like a gamble for many more reasons. The woman in the bank needed a credit limit increase because her credit card was maxed out. Many people who call for debt consolidation help tell us that when they obtained a loan to pay off their credit cards, their intention was to close and not use the cards anymore. The reality is that they did and now they owe twice the debt and have to make twice the payments.  Neither result is good for someone’s credit or pocket book.

The only way to get out of debt is to pay it off and not charge more than you can afford to pay off, monthly, on credit cards. Having good credit is critical in our society, but that does not equate to having debt. You can have both good credit and little-to-no unsecured debt (credit cards, store cards, etc.).

Tips for Keeping Good Credit Card:

1. Use it – sparingly
2. Only charge what you can afford to pay off each month. This may mean you use it to pay your standard bills – electricity, cable, etc. – and then pay the credit card off. You are using the card and building and maintaining a perfect payment history
3. Only have two-to-three credit cards open and in use
4. Keep the balances on cards below 30% of the credit limit
5. Avoid frequent credit applications (one-or-two every 24 months)
6. Pay off debt rather than moving it around (balance transfers, debt consolidation, etc.)

So, back to the woman in the bank. She has an opportunity to start improving her credit by leaving her credit card alone and focusing on repayment of the new loan. Moving forward, it would be extremely important for her to set money aside in savings. This way, when she wants to go on vacation, purchase gifts, get new tires or any other extra expense, she will have the money and not have to rely on a bank.

Before you make a decision on consolidating debt talk to someone who can help you explore all of the options for getting out of debt. Call a certified credit counselor today: 1-888-282-5811.

1. Complete a review of your budget to determine how much money you have to put towards paying down debt (See, it always comes back to the budget).
2. Determine which creditor has the highest rate of interest or has the lowest balance.
3. Send minimum payments to all creditors except the creditor with the highest interest/lowest balance; that creditor should receive a higher than minimum payment.
4. The amount of money you send each month should never vary until all of the debts are paid off.

1. Credit counselors work with you to review your monthly bills and expenses.
2. Repayment options are discussed and compared against your budget before you make a decision.
3. A structured repayment plan is created to help get you on track to repay your debts in approximately five years or less.
   • One monthly payment
   • Creditors may reduce interest
   • Creditors may stop fees
   • Stop collection calls
4. Counselor support and financial tools are provided every step of the way.

1. Assessing whether a personal consolidation loan would be a cost effective, viable way to have one monthly payment and repay debt.
2. Checking into debt settlement and learning about all of the possible ramifications of paying back less than what you owe.

This time of year, the urge to feel happy and help others be happy by giving gifts can feel overwhelming. Yet there are many things you can do to celebrate the different holidays and they do not have to cost a lot of money.

1. The Home Tree. Many years ago when my children were growing up, money was in short supply. We could not afford to buy a Christmas tree, so we made one. I used construction paper (glued together) to make the body of the tree. Then I printed some ornament shapes I found online and the kids cut them out and colored them. We zigzagged our lights from the previous year across the tree and – VOILA! A beautiful festive site.

At the time, I felt sad because I could not afford a traditional tree, but now, 15 years later, my kids still remember that tree and beg me every year to repeat it. I think we will next year.

2. Cup of Fun. If your family celebrates Christmas and expects to see stockings filled with goodies, try decorating a tall cup or mug. A little ribbon and some colored paper and pens can go a long way towards making a simple cup seem like a festive celebration. In addition, allowing each family member to decorate their own will add to wonderful memories for years to come.

Ideas for stuffing the cup:

• Candy
• Toothbrush
• Socks
• Mittens
• Scarf
• And maybe a few dollar store items

3. Sing a song. Even if you do not have the music, gather together and sing a few holiday songs. Add some Sparkling cider and candy canes and enjoy the time with your loved ones.

4. Sightseeing. Take an evening spin around a well lit neighborhood and enjoy the beautiful decorations on display. Check your local paper or ask some friends about the best locations to see holiday presentations.

5. Decorations. There are several inexpensive ways to decorate for the holidays.

• Add a square of wrapping paper to a picture frame. Frames and paper are usually available at dollar stores.
• Gather some colorful leaves and branches and spray them with colorful paint. Once they dry arrange them on a plate, bowl or in a vase. It is an inexpensive way to add color and beauty to your home.

6. Gift of You. While we hear a lot of talk about the latest and greatest technological toys, there is another murmur we do not always pay attention to. That is the need and the want of our families to spend time with us. If you have children, try making a date with each of them individually. Do the same for your parents, siblings and anyone else important in your life. It is an inexpensive gift to give, but it has tremendous value when it is received.

Start a new, inexpensive holiday tradition this year. Think about the memories in life that have meant the most to you and why. Use those memories to build inexpensive fun into your holiday season. You only have one life, make sure you fill it with the most important things.

For Immediate Release

Longtime Champion for Workforce Readiness Recognized for Leadership and Service

Washington State, 12/2/2011. Audi Ritz was awarded the Certificate of Recognition for Leadership and Dedicated Service, by the Washington State Affiliate of the Society of Human Resource Managers (WASHRM). The Certificate of Recognition for Leadership and Dedicated Service is awarded by WASHRM to recognize a member’s great direction, commitment, and guidance in meeting the goals of the organization.

Ms. Ritz is the 2011 and 2012 Workforce Readiness Director for the SHRM Washington State Council.  She has provided meritorious service to the HR Profession in various roles including her currently held Workforce Readiness Director role, Education Director, Diversity Director, Community Liaison, Legislative Reporter and VP of Programs.

In addition, Audi Ritz has made significant contributions to the community volunteering as Board Member and Certified Mediator for the Dispute Resolution Center of Kitsap County and the City of Seattle Office of Civil Rights, member of Premera Employer Advisory Council, member of the Kitsap and King County Asset Building Coalitions, as well as volunteering as presenter and trainer for various agencies and employers.

Audi Ritz is a member and certified as Senior Professional Human Resources Manager by the Society of Human Resources Managers, holds a Master’s Degree of Science in Human Resources and is a member of Beta Gamma Sigma. She is currently the Human Resources Manager and Partner Development Director for American Financial Solutions.

About SHRM

The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India.

Contact: Becky House

Phone: 888-282-5492 ext 1114

Email: bhouse@myfinancialgoals.org

####

According to a report by [1]CNNMoney, consumer reliance on credit cards is on the rise. The statistics used by CNNMoney were provided by First Data, a credit card processing business. Since the end of 2008, when consumers began relying more heavily on debit cards to make purchases, credit card use has been down. That all changed in April of this year when retailers noticed an uptick in the number of persons applying for credit and using credit to make purchases.

I thought this would be a great time to talk about the ways to use a credit card and receive the perks without going into debt.

Only charge what you can afford to repay in full.

This rule is an oldie, but a goody. I know the premise behind using the card is that you can buy now and pay later; however we have really seen that backfire over the last few years. In the United States, having good credit is a necessity.  You can build or maintain good credit by paying your balances off in full every month. The key is that your card is active and you always pay on time.

Carrying a balance can be dangerous for several reasons:

1. 1. Sudden unemployment or drop in income. How will you pay the debt off?
2. 2. The more of your available credit limit you are using, the harder it is on your credit score. The most you want to use of your available balance is 30%. On a card with a $10,000 limit, that is $3,000. Are you prepared to pay off $3,000 tomorrow? If not, bring that balance down.
3. 3. Having a high balance to credit limit ratio can also put you in jeopardy of going over the credit limit. This can happen if interest is applied to the account and you receive an over the limit fee or if you miss a payment and receive a late fee.

Speaking of Credit Card Perks

Did you know that, on some credit cards, if you miss a payment or are late on a payment you will lose you points for the month? It is true. So, if you are using your card to earn points, that is even more incentive to make sure your balances are reasonable and you can pay them on time, every time.

In addition, some credit cards offer cash back rewards which can add up to a substantial sum. However, be sure to read the fine print. There may be limits on the amount you can earn or even expiration dates where if you haven’t earned enough points/cash/rewards by a certain date – you lose them. This is very common on cards that offer seasonal savings (back-to-school, home improvement, etc.).

Finally, there are limits to many credit card perk programs. Some offer cash back on things like gas or groceries, but if you spend too much on those items the amount you get back is actually LOWERED. In addition, many cards offering cash back have a ceiling that you must hit in order to get the best cash back rate. For instance, the offer reads, “Earn 2% cash back.” The fine print reads, “If you charge at least $4,000 annually.” Reading the fine print is very important when it comes to credit card offers.

Keep Balances Low

I know we covered this above, but it bears its own section. In order to maximize your credit score and avoid debt, keep your balances at 30% of less of the available credit limit.

Avoid Applying for Several Credit Cards

The rule of thumb here is no more than two credit card application is a 24 month period. This is even if less if you have a very short or troubled credit history. Applications for credit cards and store cards can bring down your credit score and lead lenders to believe that you may have trouble handling unsecured debt.

Make Your Payments on Time

I know this goes without saying, but it is too critical to leave out of this blog. Your payment history accounts for over 1/3 of your credit score. It is important to stay up-to-date on your bills. Late payments will hurt your pocketbook and do serious damage to a credit report and score. The only thing that can undo the damage is time.

Knowing how to manage your unsecured debt is critical in this day and age. There are so many aspects of our lives that are impacted by our credit. From certain employment eligibility, to auto insurance rates, our credit, or lack thereof, can either help us succeed or hold us back. If you or someone you know has questions about credit or how to manage their debts, give us a call today. Call 1-888-282-864-8659.

We received some great feedback from someone who is now debt free! Please read on…

“I want to personally thank you. You, along with your company have helped me turn my life around. I first called you on a dismal spring day back in 2007 on the verge of bankruptcy and beaten down.

With your help I am now on the rebound, I am now the proud owner of a house, good credit once again and still on the rise. I could not have done it without you guys. I am elated with the service and results you have helped me achieve. I have referred a few people to your company. Gave your card to a couple of people in need of assistance. I wish we lived a little closer in distance; I’d buy you a drink. Thanks.” — Josh

According to the Federal Housing Finance Agency (FHFA), starting early next month banks will begin using new criteria intended to help more borrowers eligible for relief from high mortgage payments and little-to-no equity through the Home Affordable Refinance Program (HARP). The changes include:

• Reduces fees for homeowners who want to refinance into short-term mortgages (and some others)
• Raises the ceiling on how much owners can borrow over the current value of their home (was no more than 125%)
• Relaxing rules that could force a lender to take back a defaulted loan from the government

The first round of the HARP has been able to assist, about, 900,000 home owners. The government’s goal for this round is to refinance, at least, the same number of homeowners.

HARP Qualifications

The first step in determining whether you qualify for HARP assistance is to find out what underwriter is backing your loan. Only mortgages backed by Fannie Mae or Freddie Mac qualify for HARP. Here are some additional stipulations for HARP:

• Your mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31^st, 2009.
• The loan-to-value ratio of the home and property must be at least 80%
• You have not missed any mortgage payments in the past six months
• You have not missed more than one payment in the last 12 months

Next Steps – Get Your Paperwork Together

There are a lot of forms and documents you need when applying for HARP assistance. In addition to the forms available at the Making Home Affordable Website you will also need personal documents. These include:

• Tax returns
• Pay stubs / proof of income

Act Quickly

The earlier you apply for assistance, the better your chances for help. If you need someone to guide you through the process, contact a certified housing counselor. They are familiar with the program and can help you complete the application questionnaires. Call 1-888-864-8699 now, for more information.

Yes it is true that the protections you get when using a debit card are different than those you have when using a credit card. However, you do have rights if your debit card is used fraudulently and today’s article is going to try and clear up some common misconceptions.

Debit Card with a Visa or MasterCard Logo

If you have a debit card with the Visa or MasterCard logo, then you are covered by a Zero Liability Policy. This means that if your card is used fraudulently, you are not responsible for the charges. There is a very big catch though – you MUST use the debit card as a credit card. So, rather than entering your PIN (personal identification number) to complete the purchase, you must select to run the card as credit and sign the receipt.

Federal Protections for Debit Card Fraud

The Electronic Funds Transfer Act also provides debit card users some protections under Federal law. You have 60 days from the date on your bank account statement to report that money has been taken out of your bank account without your permission. However it is critical to report the theft as soon as possible, because the amount of loss you are responsible for is directly related to how long it takes you to report the loss of card or funds.

According to the Federal Trade Commission:

• If you report the loss of theft within two business days of discovering it, your losses are limited to $50.
• If you report the loss or theft after two business days, but within 60 after the unauthorized electronic funds transfer appears on your statement, you could lose up to $500 of what a thief withdraws.
• If you wait more than 60 days, you could lose all of the money withdrawn from the account.

Time is very important here and just another reason, why it pays to keep an eye on your bank account. With thieves placing skimmers (electronic card readers that steal your debit card number and PIN) over ATM’s, gas pumps, and any place we may use a debit card, you have to be cautious and aware of all activity on your account.

Credit or Debit?

So, when evaluating whether to use a credit card or a debit card here are some quick tips that may save you time, money and headache in the future.

1. Is this a big purchase, such as a television or appliance? If so, use a credit card. Credit cards typically have some sort of buyer’s protection on purchases. If something goes wrong with the purchase, the credit card company can give you back the money and go after the merchant for reimbursement.
2. Are you handing the card over to a waiter or waitress who is going to walk away with it? If so, use a credit card. This is a perfect opportunity for skimming to occur.
3. Are you shopping online? Use a credit card – many instances of theft occur when a person uses their card to purchase something online. Make sure websites begin with https if you are entering credit card information.

Remember, take the time to fully understand the protections you have when purchasing items with credit or debit. It can be very convenient to make a purchase items with plastic, but it may also lead to loss of money, negative marks on your credit report and most important, a very stressful situation.

For more information on using credit and debit cards and on identity theft visit our Resource center or call today and speak to one of our certified credit counselors.

I had a question today about whether a creditor can demand payment of a debt in full (no payments) if you are current on your account. It’s a great question because it isn’t always clear what status your account is in – even if you think you are current.

Original creditor – account has never been past due

Let’s say you owe the original creditor (who you borrowed the money from) $6,000. You have never missed a payment, you have never been behind or over-the-limit. In this case, you are bound by the original contract and can make payments as they were stated in that contract. The creditor would have no reason to demand immediate payment in full.

Original creditor – account has been past due

If you miss a payment and become, usually, 30 days past due, a creditor may demand that you pay the entire debt as opposed to just catching up. This is because when you went past due, the terms of the contract may have been violated. This is one of the reasons why it is so important to read the fine print in contracts.

In addition, the creditor may not be satisfied if you simply catch the account up (pay the missed amount). You may certainly try making the payment and ask the creditor to accept it and reinstate the terms of the original agreement, but they do not HAVE to agree.

Not original creditor – collection agency

If a debt has been sent to a collection agency, chances are, they will demand payment in full. Collection agents are paid on commission and the more money they can collect, the more they will receive. In addition, the more recently you fell behind, the better their chances of collecting. They do not want to accept a long drawn out payment arrangement.

Different types of creditors

The two creditors most likely to demand payment in full if you fall behind are mortgage lenders and auto lenders. Again, this has to do with the stipulations in the mortgage agreement or contract. It is legal for them to make this demand.

Credit card companies are more likely to work with you on setting up an acceptable payment plan if you fall behind. But even they will eventually send a letter demanding payment in full if they are not receiving adequate payments.

If your creditor is demanding payment in full, the first thing to do is find out why. That means you will need to call them. It may be uncomfortable, but try to stay calm and ask for the reason they want full payment, the complete amount they are asking for and if there is anything you can do to bring the account into a good standing. Your chances of being successful are much greater when dealing with the original creditor rather than a collection agency.

If you need help developing a plan of action for talking to your creditor, or for repaying debts, call and talk to one of our certified credit counselors. They can help you determine what questions to ask your lender and what options you may have for repaying debt. You do not have to do it alone.