Americans In Debt: Stories from the Hill

Property Taxes: Are you paying the right amount?

2007-09-25T21:38:00.000-07:00

Hi,
The majority of homeowners in this country have their property taxes paid by their mortgage company. The remaining homeowners pay their taxes biannually on October 30 and April 30. If the mortgage company has been paying the property taxes over the years, there is a very good chance that when the property assessment is sent in the mail, we pay little or no attention to it other than noticing the appreciation and value of our investment. It is more likely that the people who pay their property taxes every year will notice an unusual increase in the assessment on their home or land. No matter which way you pay your property taxes, it is important to periodically make sure that you are being assessed in line with other similar properties or homes in your neighborhood. In most major cities, this information is readily available online. If it isn't available online, it can be found at the office of the tax assessor. If you uncover a situation in which you believe that you are paying too much in property taxes, you are entitled to go before a committee generally comprised of volunteers, to have your case heard. Hearings that result in a successful reduction of property taxes may be for the following reasons:
1) Severe internal damage to the home that cannot be noticed by a property tax appraiser from the outside. This generally requires written bids estimating the cost of repairs to be submitted when the case is heard.
2) Similar properties and homes in the surrounding neighborhood are assessed significantly lower than your home.
3) For insurance purposes you had an appraisal done on your home, and the appraisal is significantly lower than the property tax appraisal.
One other area we tend to overlook in regards to our mortgage is private mortgage insurance (PMI). PMI is generally required on mortgages that have little or no down payment. When the equity in the home rises above 20% of the mortgage, we are entitled to cancel our private mortgage insurance as it is no longer required. This will result in significant savings to us over the term of our mortgage.
Until later,
Alan

Pre-Holiday Financial Check-Up

2007-09-23T20:29:00.000-07:00

Hi,
The fall is always a good time to take inventory of our financial affairs. Once the holiday season is in full swing, many people find themselves short of time to address financial matters. Here are some steps to take so that you can go into the holiday season with the peace of mind that you know your financial standing.
1) First look at your credit cards and and audit the following:
a) Make sure the current interest rate being charged is the same interest rate which came with the card when you applied for it. If it has gone up, contact the credit card company to ask why.
b) Make sure the due dates on your cards are the same as when the cards were obtained. Once again, if any were changed, make sure that you get clarification as to why.
c) Check for any unusual late fees or finance charges and if anything seems out of
the ordinary, immediately contact the credit card company.
d) Check your credit limit on all your cards and make sure to write down the limits so you are aware of them going into the holiday season. Exceeding your credit limit will cost anywhere between $35.00 - $50.00 per card plus the risk of increased interest rates.
e) Find out what extras each of your cards offer in the form of frequent flyer miles, service protection, life insurance etc., All cards are different and knowing which card benefits your situation might help you decide which card you want to use.
2) Audit your bank statements:
a) Make sure service charges haven't arbitrarily risen without your knowledge and that any interest on savings and checking accounts has been paid as agreed.
b) Look out for extraordinary items such as direct withdrawals that have been cancelled continuing to be debited.
Many banks are notorious for increasing fees for services without our knowledge. In some instances, notices are sent masquerading as junk mail, so as not to alert the customer of proposed charges.
3) Personal loans and car loans: It's a good idea to request a printout of all activity on any outstanding personal loans. It is important to check to make sure that all payments have been applied in an appropriate manner and that the financial institution has not added unwarranted late fees or other finance charges. By auditing personal loans, it will ensure that the interest rates have not increased and that your credit score is not being affected by any errors committed by the financial institution.
4) Cell phones and other telephone bills: Cell phone bills should be monitored on a monthly basis but in most cases, are not examined carefully each month. This allows cell phone companies to include unauthorized charges and third party billings on the bill of the consumer. If these charges are never questioned, they will never be corrected. Therefore it is imperative to catch them as soon as possible. Some examples unauthorized billings are ring tones, games, jokes of the week etc., If your cell phone bill includes a high number of calls, it is essential to make sure you are paying for calls you made and not mistaken charges. Last but not least, if you have had any new services added to your bill, you need to make sure all charges appear on your bill as agreed.
5) If you struggled with high utility bills last winter, take steps to avoid that problem this year. These steps could include contacting your local utility company to become enrolled in a monthly averaging program. This will allow you to budget the same amount for utilities every month of the year.
6) Get a printout of your past twelve month transaction history from your mortgage company. Make sure all payments have been applied correctly and that no extraordinary finance charges or late fees have been added. Check to see that all other mortgage terms are documented as agreed. If you have any questions, contact your mortgage company as soon as possible for clarification.
Until later,
Alan

Deficiency Balance Setttlement Offer

2007-09-04T11:10:00.000-07:00

Hi,
For various reasons, many people find themselves faced with a sizable deficiency balance from a car, camper, trailer home etc., loan. In most instances, deficiency balances could be settled for far less than the amount represented by the creditors, or, in many cases, third party collection agencies. The keys to negotiating a successful settlement on a deficiency balance are:
1) The length of time the deficiency balance has been owed. If the deficiency balance has been accruing interest for many years, the creditor will take substantially less money to settle.
2) The payment history on the loan prior to the deficiency balance being created factors into the willingness of the creditor to negotiate a settlement on the balance.
If only one or two payments have been made on the loan prior to repossession, it is unlikely that the creditor will be willing to offer much of a settlement.
3) When a creditor receives a settlement offer, one of the first things the creditor does is analyze what he or she believes to be a reasonable settlement offer and the ability of the debtor to repay the deficiency balance in full. It is necessary to give all the pertinent details as to why the settlement offer is legitimate and is the best that can be done by the debtor.
4)If the deficiency balance that is owed is being handled by a third party, and the third party refuses the settlement offer, be sure to contact the original creditor and offer the same settlement to the creditor. In most cases, the creditor will accept a reasonable settlement.
5) If it is not possible to come up with a lump sum settlement, offer a payment schedule that can be kept. Once again, if the third party refuses the payment schedule, contact the original creditor and explain why that is the only available solution to handling the deficiency balance.
When negotiating any deficiency balance, keep in mind that the creditor is entitled to 100% of the balance and will only accept a settlement if it is financially justified. As soon as a deficiency balance is created, be sure to get in touch with the creditor, as communication is the key. A Performance Bond guarantees the faithful performance of the contract and payment of materials and labor by the contractor to all subcontractors and material suppliers.
Until later,
Alan

Deficiency Balances: Auto Loans

2007-08-13T22:26:00.000-07:00

Hi,
One of the most unexpected major debt problems that occur today for consumers is when a deficiency balance is created on their auto loan. A deficiency balance is usually created when a car has to be repossessed by the lender. The lender is then required to sell the car for what is defined as "fair market value", deducting the expenses of repossession and any other liquidation fees, then applying the remaining proceeds from the sale of the car to the balance of the loan. In many instances consumers are unaware of the fact that they are responsible for the full payment on the loan, and that their vehicle is only collateral on the loan. If a consumer gets into a situation in which it becomes apparent that he or she is not going to be able to continue making vehicle payments, and that the lender can no longer extend any more time without payment, there are a few actions a consumer can take prior to repossession:
1) Make an agreement with the lender that the consumer will sell the vehicle for the lender. The reason is that because of the vested interest in the sale price for the vehicle, the consumer will get a higher sales price than the lender. Typically lenders are not particularly good at selling vehicles and don't care if a vehicle is sold for top dollar.
2) If repossession is imminent, take pictures of the inside and outside of the vehicle and get the Kelly Blue Book value of your vehicle. This information will assure you that the lender is getting "fair market value" for your vehicle in order to apply the proceeds against your loan. In some instances, to save time lenders will briefly advertise vehicles and then auction the vehicles at wholesale to dealers. If you feel that you have been a victim of this practice, you need to approach your lender with the figures you got from the Kelly Blue Book and ask the lender to explain why it was not sold for fair market value. In many cases, this will allow you the upper hand in negotiating a reasonable settlement of your deficiency balance. If the lender refuses, inform the lender that you will be sending pictures of your vehicle, plus the Kelly Blue Book value of your car to the office of the Attorney General to ask them to look into the matter.
3) When negotiating your deficiency balance, your lender is going to consider the following:
a) The age of the debt.
b) The amount of the debt.
c) The type of the debt: ie, was it a new or used vehicle.
d) Your ability to repay based upon your credit history.
e) How straightforward you have been in handling your loan from the outset.
In most cases, a lender will settle a deficiency balance if the settlement offer is reasonable. As in dealing with any other creditor, success or failure of negotiating a settlement might hinge upon how well you have communicated with the creditor throughout your history.
Until later,
Alan

Credit Counseling, Debt Consultants, Debt Negotiators: Do Debtors Need Their Services?

2007-07-26T16:53:00.000-07:00

Hi,
Credit counseling services are quite good at giving people an organized look at their financial situation. After that, their usefulness is limited due to the fact that they have absolutely no legal right to enforce their suggested remedies to any of the creditors. In general, the offers credit counseling agencies make to creditors are unrealistic and many times rejected outright by the creditors. Exploratory conversation is usually an effective way to initiate the process of finding solutions to problems. However, in most instances, credit counselors will only deal with creditors in writing. Therefore any successful re-negotiations of initial proposals are highly unlikely to happen. Additionally, in many cases, debtors are not informed by credit counseling agencies that they have no binding authority to get a creditor to accept a repayment proposal. Debtors may mistakenly assume that credit counseling agencies have more leverage and standing than they actually do when contacting creditors on their behalf. The information that debtors need is available from debt consultants and debt negotiators. These professionals charge either an hourly fee or a contingency fee based upon the money saved to the debtor. From the standpoint of a creditor, a long drawn-out repayment proposal is not a sensible solution to resolving the account of a debtor. Debt professionals have the ability to analyze various situations and offer solutions acceptable to creditors. Credit counseling services and debt negotiation companies tend to strike long-term relationships with debtors that are of little or no value to the people in debt. Most people who find themselves mired in debt have achieved this situation over a long period of time. A helpful solution for the debtor is a quick one. Not one in which the debtor is required to continue down the same road, repaying the debt over a long period of time, sometimes with the added cost of several thousands of dollars. Credit counselors have their place in the credit world, but are sometimes asked to do things they lack the experience or knowledge to accomplish, which can be a detrimental situation for the debtor.
Until later,
Alan

Bad Credit! No Credit!, Bankruptcy OK! Car Loans

2007-07-19T23:20:00.000-07:00

Hi,
A relatively new gimmick seems to have taken the credit world by storm: No credit, bad credit, bankruptcies all OK. We guarantee that you will get a car loan, credit card, new furniture etc., Let's look at the scenario that unfolds when a person buys a car under these terms. All "normal" avenues of exploring the best car, the best price, the most favorable interest rates and the most suitable loan term are non-existent. When the borrower approaches the car dealer, he or she is forced to choose among a small inventory of cars, and are at the mercy of the car lots financial department. One of the common ways these car lots hide their excessive interest rates and finance charges is to offer terms 24-48 months longer than conventional car loans. The borrower might believe that the car payment quoted by the dealer isn't all that bad without stopping to realize that he or she is paying an extra $300.00 a month for an additional 36-48 months longer than if he or she had a conventional loan. Another thing missing from financial departments on car lots is the ability of banks and credit unions to work with the customer in the case of problems. In general, these types of car lots have a very short fuse when it comes to repossessing a car, and will do so immediately at the first sign of a problem. Unlike established financial institutions that handle auto loans, car lots will not be concerned at realizing maximum dollars for the sale of the borrower's vehicle, leaving an excessive deficiency balance. In many instances, especially for young people, getting involved in these types of high risk car loans will result in the borrower digging such a deep hole with his or her credit scores, that he or she may not be able to recover for many, many years to come, if at all. The reason these loans are available is that even though there will be a high delinquency rate, the excessive terms on the loans, higher interest rates, finance charges and close monitoring of the loans allows the car lot to still make a nice profit. The other factor in the dealer's profit is that the used cars being sold usually have an extremely high profit margin built into the price.
Until later,
Alan

Merchant Cards Masquerading as Credit Cards

2007-07-17T22:03:00.000-07:00

Hi,
I ran across a mailer today, addressed to a 19 yr old, that I would like to share. First, let me describe the mailer as best I can. Attached on the top right hand corner is a card designed to look like a credit card. The only difference between a credit card and the attached card is that there is no magnetic strip. The mailer insert then goes on to describe the following:

Congratulations, your card has arrived. Call immediately to activate this card. Credit purchase limit: $6,500.00. Cash on demand approved: yes. Interest rate: none. No cash deposit required for security. By calling to activate your card today we'll offset our standard member card activation fee of $200.00 by giving you $200.00 in credit.

The above is what is described on the front page of the insert. On the back of the mailer is quite a bit of interesting small print such as:

The activation fee for the card is $199.00, the annual membership fee is $198.00, and the user is encouraged to purchase the "security guard feature" for $99.00. The customer is encouraged to sign up for rush processing which prioritizes the order for $29.99. This card may only be used for merchandise contained in the card issuer's catalogs. A more detailed description is given about the "cash on demand" advertised on the front of the mailer. Without getting into too much detail, the best way to describe the program for cash on demand is that the card issuer is allied with a payday loan company.

Let's examine some of the reasons a company would issue large amounts of credit by mail forgoing normal credit qualifying procedures:

The bulk of the merchandise in the catalog is clothing and/or shoes. The mark-up in these areas is usually a minimum of 500% and may go as high as 1200%. Let's look at a sample mailing of 10,000 cards. As the target audience is young people who would be attracted by the mailing, for discussion's sake, let's take a conservative estimate that out of 10,000 cards, 1,000 cards are activated.
Immediate cash flow to the card issuer:
$199.+$198.+$99.=$496.x1,000=
$496,000.
Let's assume that 1,000 cards utilize their $6,500. credit limit.
$6,500.x1,000=
$6,500,000. (6.5mil per 1,000!)
Due to the high risk of the borrowers, let's assume 25% of the card holders go delinquent on their cards for a total of $1,625,000. Let's assume the remaining card holders pay off their balances which would total $4,875,000. Now to calculate the profit of the card holder using this scenario, we need to make a conservative assumption that the merchandise is marked up 500%. That would put the cost of goods sold at $1,300,000. To calculate the card issuer's profit, let's take the $4,875,00 of the card holders who pay off their balance, subtract the cost of goods of $1,300,000 which equals $3,575,000 plus the instant cash flow of $496,000 from the various fees, for a total of $4,710,000 plus a very conservative estimate of a minimum of $400,000. from the collection effort on the 25% of accounts that were delinquent. This leaves the profit on issuing these so called credit cards in the neighborhood of $4,470,000. The ramifications of these merchant cards being sent to young people today are as follows:

1) They will ruin their credit before they even get a chance to establish credit.
2) In order to use their cards, they will only buy from the catalogs. They will not learn the frugal habits of comparison shopping for price and quality.
3) Due to the excessive credit limit, they will buy far more than they could afford to purchase on a cash basis.
4) A large percentage of card holders will enter the world of payday loans through the "cash on demand" feature of these merchant cards. There is neither time or space on this blog to list all the reasons why that is not a good idea.

It is important for young people to be aware that these types of cards exist and to be warned to steer clear from them.

Until later,
Alan

Avoiding Maxed Out Credit Cards

2007-07-14T18:07:00.000-07:00

Hi,
This blog is not intended for any readers who pay off their credit cards without exception at the end of each month. For the rest of us, to maintain control over our credit card balances, it is a good idea to avoid the following:
1) Consistently charging groceries on a credit card. The reason is that statistics show people purchase food on credit which they otherwise wouldn't purchase if using cash.
2) Putting utility bills on a credit card. Utility bills should be part of the monthly fixed expenses and be paid on a cash basis each month.
3) Making a car payment with a credit card. There are many reasons for this, but a significant one is that it's a sign that "Peter is being robbed to pay Paul".
4) When traveling to places like Las Vegas, many people find it much safer if they leave the majority of their credit cards at home.
5) Avoid using credit cards for large purchases of stock or any other investment vehicles.
To maintain a handle on our financial health at all times, it is necessary to pay for our fixed monthly expenses on a cash basis. It is imperative to maintain the clarity of the difference between our cash position and our credit position. Using credit in lieu of cash is analogous to using chips in Las Vegas in lieu of cash.
Until later,
Alan

Questionable Bill Collection Techniques (continued)

2007-06-25T20:28:00.000-07:00

Hi,
In my last blog, I referred to a few questionable techniques employed by a small percentage of bill collectors. Some additional ones to be aware of are:
1) Bill collectors will often use the term "garnishee wages" as leverage to get a debtor to pay on an account. They often speak as though garnishment of wages will happen overnight. In reality, wages are only subject to garnishment after judgment has been rendered which takes 45-60 days minimum in most states.
2) Another form of leverage used by bill collectors is to mention highly inflated attorney fees that the debtor will be responsible for if a small balance isn't paid in full. For example, a debtor owes a bill of $400.00. The collector calls the debtor and tells him or her that the client is prepared to sue and the attorney fees will be $1,400.00-$1,500.00 to coerce the debtor into paying the bill. In reality, chances are the client will not sue for such a small balance. In addition, the attorney fees would not be as excessive as the collector claims, IE., four times the amount of the bill!
3) Another common form of leverage used is when a collector tells a debtor that a lien will quickly be placed on his or her house. Once again, in most instances, and for most debts, the only way a lien can only be placed on a house is after judgment is rendered and the judgment is registered in the county in which the property is located.
These are just a few more examples of inappropriate collection techniques that are highly illegal, and, if encountered repeatedly, should be documented and reported to the State Attorney General.
Until later,
Alan

Questionable Bill Collection Techniques

2007-06-05T19:25:00.000-07:00

Hi,
The majority of bill collectors that contact consumers and/or businesses are honest, hardworking reasonable people who want to resolve debts in a fair and equitable manner. Unfortunately, there is a small percentage of collectors that use questionable tactics to coerce people into paying their bills. Some of these tactics are as follows:
1) They throw the word "judgment" around, as though it is an action that is going to happen within a few days or weeks. In reality, from the time a bill collector calls, to the time approval is given by a client to proceed with a lawsuit, and the lawsuit is served on the debtor leading to a judgment rendered, on the average 45-60 days have elapsed. In most instances, when the collector indicates that judgment will be quickly rendered, the agency probably has no legal department at all, and likely does not have the ability to sue the debtor.
2) The statute of limitations on judgments varies from state to state ranging from as little as six years to as high as twenty one years. If a collector calls about an account on which judgment has already been rendered, make sure to get the date of the judgment and check to see if the statute of limitations in your state has expired. This information is available on the Internet.
3) If a collector calls, a reasonable offer to settle the debt in full is made by the debtor, and the offer is rejected due to a payment date that does not meet the collector's criteria, but rather the collector indicates that the file will be turned over to attorneys to proceed with a lawsuit prior to that date, simply contact the original creditor directly and tell the creditor your repayment proposal. It is not unusual for a creditor to become the mediator in a collection agency/client relationship.
If you get a call from a collection agency, the matter is serious and needs to be immediately addressed. If you feel as if the collection agency is not treating you fairly, contact the office of your State Attorney General for an appropriate referral.
Until the next time,
Alan

Judgments

2007-05-22T21:22:00.000-07:00

Hi,
The purpose of this blog entry is to take some of the mystery out of judgments. A creditor's last option in collecting a debt is very often done by obtaining a judgment. When a creditor obtains a judgment, it means that a court grants the creditor an order containing multiple remedies to collect an unpaid debt.
To obtain a judgment, a creditor must do the following:
1) Creditor files a lawsuit in the jurisdiction where the debtor lives for the amount of the debt.
2) The lawsuit must be served on the debtor. This is usually done by a process server. If the debtor is successful in avoiding the process server for a period of time, sometimes the creditor may obtain service through publication in a local paper.
3) In most states, the debtor has 21 days to respond in writing to the lawsuit.
4) If no response is given, a default judgment may be granted to the creditor by the court.
5) If, after service, the debtor disputes any part of the amount that the creditor is claiming, he or she may do so through the courts. The matter will be resolved through the courts before judgment may be entered.
Following are some of the remedies available to a creditor if a judgment is obtained against a debtor:
1) Any real property owned by the debtor in the county that the judgment is entered will automatically have a lien placed against it. The creditor also has the right to register the judgment in any county in the state in which the judgment was granted in which the debtor might own property.
2) The creditor may garnish the wages of the debtor.
3) The creditor may garnish the debtor's bank accounts.
4) The creditor may seize any assets that are free and clear of liens or encumbrances.
5) The creditor may have the debtor brought in for examination and deposed of any other assets.
6) If the debtor moves out of state, the creditor may register the judgment in the debtor's new state of residence and proceed against the debtor.
This list of actions is not all inclusive, but gives an idea of liabilities which a debtor may incur if a creditor is awarded a judgment.
Until the next time,
Alan

Caught In The Minimum Payment Trap

2007-05-18T11:27:00.000-07:00

Hi,
The last two blogs set the table for how one can get caught making minimum payments on credit cards. Today I am writing about being caught in the trap. After the cardholder receives an additional credit card he or she gets some instant gratification from being able to cover monthly expenses. Thirty days later two credit card bills arrive and once again, due to lack of cash, only the minimum payments are made. Before long, the card holder has maxed out the second credit card. In many instances this scenario will continue over a one to two year period resulting in the individual maxing out seven to ten bank cards to the tune of $40,000-$50,000. The last resort that some borrowers choose is to transfer the balances from existing maxed out cards to new cards. This is a perfect example of "robbing Peter to pay Paul". Once the borrower has exhausted all means of generating cash from credit cards, he or she might resort to tapping into his or her home equity. By the time the borrower applies for a home equity loan, the borrower's credit score has declined considerably and he or she will only be able to borrow on a non-conventional high interest mortgage. The result of the home equity loan is that the borrower has access to cash covering expenses for a few months, but without substantial income, falls behind and soon finds himself or herself in financial chaos. This scenario has unfolded around the country on numerous occasions over the past thirty years. I have written the last three blogs for the purpose of letting new credit card holders some of the pitfalls of using credit cards.
Have a good weekend!
Alan

The Minimum Payment Trap Part 2

2007-05-17T17:52:00.000-07:00

Hi,
Yesterday, I discussed the simple version of the minimum payment trap. Today I'm going to discuss a more complicated and common minimum payment trap. This is how a more complex version of the minimum payment trap unfolds:
A relatively new cardholder uses his or her card for a couple of years and pays off the balance faithfully every month. At the end of two years, the cardholder's credit limit has been quadrupled. In addition, he or she has received numerous additional solicitations to obtain other money cards from different banks. Two and a half years into activating the first card, the cardholder has an emergency that requires him or her to use most of the credit limit on the card. He or she does not have the financial resources to pay it off at the end of the month, as he or she has been doing for the previous thirty months. When the bill arrives, he or she does the right thing, and pays every available dollar on the credit card, but still leaves a substantial balance. The following month, the cardholder's car breaks down. The card holder needs to max out the credit card to get the car fixed. Once again, when the bill arrives, the cardholder does the honorable thing and sends every dollar he or she can to reduce the balance, however a substantial balance remains. The next month, the card holder gets laid off from his or her job. Due to the amount of money put on the credit cards over the last two months, his or her savings have been almost wiped out. When the next bill arrives, the card holder succumbs to the infamous box in bold letters saying "minimum payment due" because he or she needs all the cash on hand. Over the next two months, the cardholder realizes that gainful employment is not coming as soon as he or she expected. During this time, the cardholder is still receiving solicitations for more credit, and due to his or her need for immediate cash, takes advantage of the offers. I will continue "part 2"
tomorrow.
Until then,
Alan

A Word of Caution About The Minimum Payment Trap for New Cardholders

2007-05-16T12:22:00.000-07:00

Hi,
One of the biggest risks for new credit card holders is falling into the minimum payment trap. The minimum payment trap can be described as the following:
The card holder is very careful in making purchases that he or she can pay off with their monthly paychecks. The minimum payment trap begins when a cardholder purchases an item or items that that exceed his or her ability to pay off with the end of the month paycheck. The majority of the time, the purchases are prudent and made financial sense. A good example is when he or she comes across a sale of needed office attire that is significantly reduced in price. When the credit card bill arrives, the card holder is aware that there will be a large balance due. He or she usually has the best intentions of paying a significant amount of money on the bill and getting things back on track over the next few months. When the bill arrives, the number that jumps out on the statement is next to the phrase "minimum payment due." It is, of course, substantially lower than the card holder had anticipated he or she would have to pay. In many instances the minimum payment is no more than interest on the credit card with just a small principal reduction included. A portion of new card holders might succumb to only making the minimum payment each month. These card holders will find, on an annual basis, that the balance on their credit card might very well remain the same, even though they have made twelve payments over the year. For these credit card borrowers, after a year of making minimum payments, a very interesting phenomenon takes place. The credit card company increases the borrowers credit limit "for making timely" payments. Many times this scenario is repeated on a year by year basis until such time as the borrower is buried in a mountain of debt with no chance of getting out from under it. Tomorrow I will talk about "the minimum payment trap- part 2!!!".
Until then,
Alan

Young Adults: First Credit Card

2007-05-15T20:00:00.000-07:00

Hi,
When young adults apply for their first credit card, they need to be aware of hidden costs and fees, interest rate fluctuations, and the minimum payment trap. If ever it's the time to read the small fine print on the back of forms, applying for a credit card is when to do it. No one should feel embarrassed if he or she does not understand all the verbiage on the back of one of those forms. It's important to ask someone who does understand to explain all the terms and conditions to the prospective card holder. Here is a list of some of the items typically included in the small print:
1) If payment is late, by even one day, the interest rate may rise to the maximum allowed by state law in which the card is issued. For example, if the card is offered at 6% and the payment is one day late, the credit card holder reserves the right to reserve the interest rate to 19.9%+.
2) Most credit cards assess a $35.00 additional fee for any payment that is late.
3) If the credit limit is exceeded by even a penny, a $35.00 fee is assessed.
4) On many cards, when only the minimum payment is made, the principal is not reduced at all and only interest is being paid. Paying only the minimum payment is the start of falling into the minimum payment trap.
Tomorrow I will write more about the minimum payment trap.
Until then,
Alan

Using Credit

2007-05-14T10:30:00.000-07:00

Hi,
Credit only became a common financial instrument available to virtually anyone over the last thirty years. Before credit cards were made so widely available and marketed aggressively, applying for credit had a sense of seriousness to it which is lost in our current culture of debt. When my father started using credit, his intention was to consolidate purchases into one monthly bill and pay it at the end of each month. The thought of carrying a balance would have been appalling to him. Now we accept credit card balances and interest as a way of life. The barrage of credit card applications that students receive is unbelievable. It's possible that one reason many of them start early adulthood as indentured servants to the credit industry is that they were bombarded with credit card applications and applied for and received credit they were ill equipped to repay. Many of them started using credit without understanding how the credit agreements they signed even work. Over the next week, I'm going to write about how to make decisions regarding how to use credit, how to maintain and protect a good credit score, and how to get back on track if credit use is getting out of hand.
Until then,
Alan

Customer Service: Communicating about Problems With Products

2007-05-11T10:13:00.000-07:00

Hi,
At one time or another we have all face the task of calling a customer service department to complain about a defective product ranging from cell phones to washers and dryers. Before contacting customer service it is to determine what we want. Do we want the product fixed, replaced, or do we want our money back? We need to know in advance of the call whether a warranty exists, what the terms are, and if it is still valid.
When calling customer service about a problem with a product, consider the following:
1) Get the customer service representative's full name and ID number, if applicable.
2) Clearly state the problems you have had with the product.
3) Tell the customer service representative exactly what you would like done to resolve the issue.
4) Hopefully the matter will be resolved at this point. However, if a satisfactory solution has not been reached, you may talk to the customer service representative's supervisor. In many instances the customer service representative does not have the authority to resolve certain issues, but the supervisor does have such authority.
As always, keep a written record of the arrangement and reiterate it with the customer service representative at the end of the call.
Have a good weekend.
Alan

Customer Service: Communicating About Services

2007-05-10T12:50:00.000-07:00

Hi,
At one time or another we all have problems with our telephone service, cable TV, or high speed Internet. Our problems may be caused by services which are intermittent or do not function at all. This is a common scenario during the winter months. In most cases, we are entitled to a large reduction in our monthly bill due to the problems. For example, cable companies and telephone companies will give you a negotiated credit for the time your service was unavailable. But, this credit is not automatic, it needs to be negotiated with customer service. Here are some things to consider when you call customer service:
1) Prior to the call, determine what you will be requesting from the company and why. Have you facts available at the time you place the call: for example, the times and dates of interrupted service. Don't be vague in your complaint.
2) If the problem has been reoccurring, make sure the customer service representative is aware of the frustration you have experienced, and for how long it has happened.
3) If the service interruption has been over a substantial period of time, do not be afraid to request two or three months free service.
Negotiation is an art form, but with practice anyone can do it. Many times people are entitled to compensation in the form of three or four months free service, but are afraid to ask for it. If your situation warrants this type of compensation, all you can do is ask and hope that the company is invested in maintaining the good will of its customers.
Tomorrow I'm going to write about calling customer service regarding product dissatisfaction.
Until then,
Alan

Negotiating a Past Due Bill

2007-05-09T12:23:00.000-07:00

Hi,
When faced with the scenario of calling a bill collector about a past due bill that you can't afford to pay in the foreseeable future, there are several things to consider to successfully negotiate an acceptable solution. Before making the call, it is important to realize that the bill collector would love nothing more than to resolve your account in one telephone call. Some thoughts to consider:
1) Ask the bill collector for his or her name and write it down.
2) Disclose your financial situation to the bill collector in an honest and factual way. Do not sensationalize or editorialize any part of it. Chances are that the bill collector has already pulled a credit report and is aware of your payment history and outstanding debt structure.
3) If full payment is not available for the particular bill, there are two alternatives: The first is to offer a lump sum reduced amount to settle the bill.
The second is to offer payment arrangements over a long period of time. Collection agencies are not in the business of making long term commitments, so many times they would rather the lump sum settlement. If the offer is reasonable, chances are that it will be accepted.
4) If a lump sum payment is not available and you wish to propose payments, make sure that your proposed payment schedule is one you can keep.
5) If you have no financial resources available to pay your bill, explain that to the bill collector and explain that you are investigating alternatives. Tell the collector that when your situation changes you will immediately inform him or her. But, until then, there is nothing you can do.
Remember that bill collectors deal with all types of people, including professional deadbeats. They have heard every story and stalling tactic in the book. These are suggested ways to negotiate in good faith with a bill collector. Stalling or manipulating a bill collector could result in making your financial situation much worse for you, not better. Tomorrow I'm going to write about negotiating with a customer service representative.
Until then,
Alan

Collections: Customer Service- The Importance of Documenting Communication

2007-05-08T12:19:00.000-07:00

Hi:
When an individual or a business finds it necessary to contact a collection department or customer service department, here are some tips on documenting the phone call:
1) Get the full name, ID number, if applicable, of the person representing the company during the phone call.
2) If it's a payment arrangement that is being requested, communicate it to the collections person and document his or her response. Most reasonable requests will be accepted, and it is important to put down everything in writing to validate the agreement.
3) If the collector offers an alternative arrangement that is acceptable, document it the same way.
4) If the initial payment arrangement is denied, but is reasonable, ask to talk to a supervisor. Make sure to get the supervisor's name and ID number as well.
5) After a suitable payment arrangement has been hammered out, make sure to read it back to the collector, informing him or her that you've documented the call.
6) If the payment arrangement extends over a long period of time, it is a good idea to have the creditor put the arrangement in writing and send a signed copy to you.
If you are calling a creditor because the company has made a billing error on your account, the call should be carefully documented in the same manner. Since corporations have so many customer service call centers located all over the country, it is extremely important to document the name and ID number of whomever handled your call in the event that your call needs to be referenced in a future conversation. Generally speaking, documenting phone calls and creating a phone log about each problem or issue will allow you to remedy disputes in a more efficient manner. Tomorrow I'm going to start writing about collection negotiation.
Until then,
Alan

Documenting Credit Inquiries

2007-05-07T13:53:00.000-07:00

Hi,
When a small business owner or individual shops for financing, these are some important points to consider for every phone call to financial institutions:
1) Write down the full name, phone number and extension of the individual with whom you communicated.
2) Write down everything related to the particular financing that is being inquired about.
3) If applicable, inquire about the cost of insurance and service agreements.
4) If the purchase is subject to warranty, write down the specifics of the warranty. This will allow you to compare warranties among financial institutions and/or manufacturers.
5) Request that the individual email you a copy of your conversation.
By writing down all communication with financial entities, it will enable a more expeditious and prudent decision to be made. It will eliminate the unscrupulous salesperson, who does not disclose the full terms and conditions of various financial instruments until the customer is ready to close the document, to railroad you into signing for financing you don't feel comfortable about.
It is a good idea at the close of all conversations to reiterate what has been written down in order to prevent future misunderstandings.
Tomorrow I'm going to write about documenting collection calls.
Until then,
Alan

Loans For Equipment Purchase: Some Thoughts To Consider

2007-05-04T14:44:00.000-07:00

Hi,
When a business owner makes the decision to purchase a piece of equipment, he or she needs to consider the following:
1) Is it imperative that it is new? Due to depreciation, most used equipment can be purchased at a significant discount. For certain used equipment, such as for restaurants, buying used equipment can save the purchaser as much as 50%-60%.
2) Do your homework. The Internet is a very good source when looking for new/used equipment.
3) Set up the financing for equipment prior to actually purchasing the piece of equipment. Your negotiation ability is much greater if it is a cash deal rather than relying on the dealer financing your equipment. The financial institution that has your business account should be more than willing to finance a piece of equipment.
4) If buying used equipment, inquire about transferring any or all servicing agreements or warranties on the equipment at the time of purchase.
5) If the business owner is not familiar with the type of equipment that is being purchased, check the Internet to find out whether or not the equipment maintains its value. This will also give the business owner knowledge as to what is an appropriate price for the equipment.
6) Before purchasing any piece of equipment, talk to your insurance carrier to make sure it is covered. If not, make arrangements for insurance coverage. This is especially important for equipment which carries a high degree of liability.
As always, make sure that the terms and conditions of the loan agreement are satisfactory to your needs, and that the obligation can be met on a timely basis.
Have a good weekend!
Alan

Equipment Leases

2007-05-03T10:45:00.000-07:00

Hi,
Equipment leases are available in a multitude of places ranging from commercial leasing companies, private leasing companies and many equipment manufacturers. The cost of leases varies considerably from one place to the next. In determining the lease best suited for your business consider the following:
1) Determine the term of the lease before calling leasing companies.
2) Have a general idea of the amount of monthly payments the business can afford before calling leasing companies.
3) Ask if first, last and security payments are required with lease inquired about.
4) If the equipment being leased depreciates very quickly, and has a high residual value at the end of the lease, do not use it as a factor to determine whether or not that particular lease is suited for the business needs.
5) Ambitious lease salespeople often have very creative payment streams on leases to entice prospective customers to sign the lease. It is important to get full disclosure on any lease to make sure there are no hidden surprises down the road.
6) If the equipment being leased is for a highly speculative business such as a restaurant, inquiring about whether or not the lease is assumable is not a bad idea.
7) The cost of insurance is a consideration when determining the cost of leasing and needs to be factored into the decision.
8) Before signing the lease, determine who is responsible for servicing equipment.
Leasing is ideal for businesses that have to worry about cash flow. Lease rates are generally figured at a cost per thousand dollars rather than a specific interest rate.
Tomorrow I'm going to write about shopping for loans to purchase equipment.
Until then,
Alan

Rentals: How To Shop For the Right Financing-

2007-05-02T11:24:00.000-07:00

Hi,
Once a business owner has determined what method of financing he or she needs for a purchase IE., to rent, lease or buy, there are many factors to consider:
Rentals:
1) First determine if it's a short term rental or a long term rental.
2) Many equipment suppliers have both short and long term rental agreements available in house. For example, if an equipment supplier has a piece of equipment returned, and is unable to quickly sell it, many times it will be made available on a short or long term rental basis. Also, inquire about their price breaks as determined by rental periods.
3) Check with all local equipment rental companies to obtain quotes for the piece of required equipment.
4) It is worthwhile to check equipment rentals within a 100 mile radius, as sometimes the rental prices are lower in small towns and rural areas.
5) Decide whether it's the type of equipment, or brand which is important, as it may be worthwhile to check with various competitors to see what types of rental programs are offered.
6)Inquire about the insurance requirements with each obtained quote, as they can vary dramatically from company to company. In some cases, the business owner's insurance company will cover the insurance on rental equipment.
When obtaining rental quotes, be consistent in your request to each supplier, so that you are comparing apples to apples.
Tomorrow I'll write about leasing.
Until then,
Alan

Buy, Lease, Rent: Some Thoughts To Consider

2007-05-01T18:11:00.000-07:00

Hi:
In my years in the credit business I have come across numerous instances involving farms to construction companies, medical offices to restaurants in which the type of financing did not suit the particular business. In the restaurant business, where the profit margin is very slim, in many instances, the restaurateur should have been leasing the equipment instead of buying it. There are several reasons for this: the first one is how quickly restaurant equipment depreciates. Restaurant equipment has little or no value once it is removed from the restaurant and almost no resale value. By leasing the equipment, the restaurateur frees up more operating capital which is sorely needed in the business. In farming there is usually one major problem with equipment purchases. Farming equipment is incredibly expensive, and in some instances farmers get railroaded into buying more equipment than they need to run their operation. They are then saddled with servicing a debt they can ill afford. Due to the lack of depreciation on farming equipment compared to other things, buying farming equipment is generally a good idea. In the construction industry, all three types of financing are appropriate in certain situations. I have run across construction companies that have a piece of equipment worth $300,000. that generated tremendous cash flow when being operated on a job, but was sitting dormant for two years with $5,000. per month payments. In this instance, a short term rental agreement would have been a better alternative for the company. Although construction equipment maintains its value, in this situation it's an unnecessary drain most companies can ill afford. In many instances when medical professionals set up their practices, they are sold unnecessary equipment by an overly ambitious salesperson. In some situations a workable alternative is to pay more by leasing equipment than buying it. As a practice flourishes, the ability to upgrade office equipment is fairly easy. It's very important when considering a form of financing, to factor in the cash flow from a particular piece of equipment and go with financing which best fits that particular scenario.
Tomorrow I'm going to write about how to shop for financing.
Until then,
Alan

Setting Up Collection Systems For A Small Business

2007-04-30T10:15:00.000-07:00

Hi,
Every small business needs a well planned system to actively monitor accounts receivable. For a system to be successfully implemented, consider the following:
1) Do most customers get paid on a regular basis for their goods and services, or are they contractual businesses who get paid on an irregular basis? It is a good idea to split these customers into categories according to criteria.
2) For regular paying customers, a collection system needs to be in place consisting of three phone calls and three letters. The first phone call is informative notifying the customer of the past due amount and obtaining a date for payment. The second phone call is made three days after the promised due date and references the first call and promised due date and the fact that payment has not been received. The customer is told that payment is due immediately, setting the date. The third phone call is to say that if payment in full is not received within forty eight hours, all action necessary to collect on the account will be taken. This may include obtaining the services of a collection agency and/or attorney. Each of the phone calls should be formalized in letter form and mailed out immediately following the call.
3) For irregular paying customers, it is necessary to follow the same collection system, only the original payment date is established at the time of purchase. In the case of some contract labor, it might be necessary to extend payment dates, as the customer might not have received expected payment for a completed contract. If this scenario unfolds, require the customer to give constant updates, as on numerous occasions, the customer might be over extended and the amount due to the customer might not cover expenses.
To collect an NSF check:
1) Call the customer to tell him or her that payment is required immediately for the check.
2) Either call or take the check to the bank the customer drew the check on to see if the check will clear. The NSF check may be presented to the customer's bank for payment after it has been returned by your bank.
3) If no payment is received within 48 hours, contact the customer to tell him or her that whatever actions necessary to collect the account will be taken. These may include collection agencies, and in some cases, turning the check over for prosecution. NSF check laws vary state to state. It is important to be informed about the ones governing your state.
4) If a decision is made to accept repayment arrangements on an NSF check, it needs to be closely monitored and short in duration. Phone calls on NSF checks should be immediately followed up with letters.
If all collection efforts fail, it is imperative to take further action as soon as possible. Statistically, the further accounts receivable age, the chances of recovery diminish.
Tomorrow I'm going to start writing about the advantages and disadvantages of renting, leasing and buying equipment for businesses.
Until then,
Alan

Setting Credit Guidelines For A Small Business

2007-04-27T13:14:00.000-07:00

Hi,
A small business owner needs to take the time to set up both credit and collection guidelines, so that the owner has a standard policy for customers in place before the customers ask the business owner if credit could be extended to them. In the business climate of today, a credit policy is an essential component of running a successful business. When setting up credit guidelines, consider the following:
1) Is it really necessary to extend credit at all? An all cash business eliminates numerous costly and time consuming tasks.
2) If extending business to business credit, consider the type of business to which credit is being extended. Net 30 days is a good starting point, but could be changed if necessary depending upon the needs of particular business customers.
3) Set a maximum limit a particular account may charge. It is important that both parties are aware of the limit when the account is opened, in order to make future communication clear.
4) When setting up an account, get all pertinent credit information from the customer. Obtain both business and personal information on the credit application.
5) Run credit reports on both the business and business owner. Call the Better Business Bureau for a report on the business.
6)Get a list of all employees, if any, who have authority to charge on the account.
7) Add a statement to the credit application that stipulates any and all collection costs, including attorneys fees, will be the responsibility of the customer in the event of default by the customer on the account.
8) Post a clear return policy if applicable.
9) Do not be afraid to deny credit to an applicant.
Utilizing a set of credit guidelines will save a business time and money down the road. On Monday I will talk about collection guidelines.
Have a good weekend!
Alan
olympicdebtspecialists.com

Collection Agencies and Collection Attorneys: Things to Look For When Choosing One

2007-04-26T12:03:00.000-07:00

Hi,
When choosing the right collection agency to recover debts for your small business, it is important to investigate the following:
1) The majority of collection agencies work on a contingency basis, and are generally competitive with one another. Call a few agencies in your area to set up sales calls. After talking to a few salespeople, you will know what the going rates are for collection assistance in your area.
2) If your accounts are across the U.S.A., it is important to deal with a collection agency that has offices across the country.
3) It is generally a good idea to visit the office of the collection agency to get a feel for how they do business. When visiting the office, inquire about the agency's reporting procedures on the status of accounts turned over to them for collection.
4) Make a phone call to the Better Business Bureau and the office the State Attorney General to find out if any complaints have been lodged against the agency.
On larger accounts, small businesses may want to consider using a collection attorney. Collection law is fairly basic and therefore many attorneys can do the job, although few care to get involved in the field. Due to the exorbitant fees attorneys charge, it is prudent to get a collection attorney that will operate primarily on a contingency basis. To find a contingency attorney that is right for you, consider some of the following:
1)Negotiate a flat rate for legal demand letters, as often that is all it will take to settle the account.
2) Obtain the amount of all costs involved in filing lawsuits in your area, so when the time comes, you will be aware of that expense.
3) Set up a reasonable reporting schedule in order to be informed about the current status of accounts. This will eliminate unnecessary costly phone calls to the attorney.
4)When selecting a collection attorney, consider using the services of a newer law practice which might have more time to devote to your needs.
If all internal collection efforts have failed, utilizing either one of these methods may be a better decision than carrying delinquent accounts until the statue of limitations has expired.
Tomorrow I am going to start talking about how to set up a credit and collection system for a small business.
Until then,
Alan

Collection Phone Calls

2007-04-25T13:50:00.000-07:00

Hi:
Many small business owners avoid calling their past due accounts for a variety of reasons. The most common one is that they do not want to create ill will with their customers. The second reason is that they do not have the time to set aside to make the initial calls, and then to follow up on those calls. What a business owner says during his or her initial call to a customer can determine whether or not a customer will bring his account current. There is a standard set of three collection calls a business owner may consider using:
1) The first call is pleasant and firm, providing the customer with the exact amount that is past due. Whenever possible, a payment date should be set during the phone call.
2) The second call is short and to the point. The customer needs to know that the business owner will take whatever action necessary to collect the account. Once again, determining a specific payment date is very important.
3) If no payment is received by the specific date, it is important to give the customer one last phone call notifying him or her that the account will be turned over to a third party (collection agency/attorney) for collection.
If a business owner decides to accept a repayment schedule from a client, notify the client that it will be put in writing and mailed to him or her. It is important never to tell a client a collection technique will be implemented, if there is no intention of following through with it. If a business owner has past due accounts, but not the time or inclination to pursue them, hiring a part time employee to make collection calls might be an option.
Tomorrow I'm going to write about how to select a good collection agency or attorney.
Until then,
Alan

Collection Letters

2007-04-24T11:36:00.000-07:00

Hi:
Many small business owners are hesitant to send collection letters and/or call clients that have past due accounts. The primary reason is that they are afraid of alienating their customers. Familiarity with collection techniques can give small business owners the confidence to contact past due customers. Here are some suggestions for effective collection letters:
1) The initial letter sent to a customer should be informative but firm. When the customer reads the letter, he or she should realize that immediate payment is required, or payment arrangements made with the creditor. Stamping a bill past due, in itself, is not a successful means of collection.
2) The second collection letter sent to a customer should give a specific date by which payment needs to be received, or the business owner will take whatever actions deemed necessary to collect the account.
3) The final letter to the customer should inform the customer that their account has been turned over to a collection agency/attorney for collection.

Due to time restraints, many business owners don't contact their customers quickly enough when their accounts become past due. A customer who is experiencing hard times, will oil the squeaky wheel. When people hear that their account is past due, it's harder for them to ignore the call, than it is for them to set aside written communication. If a business doesn't have the time or inclination to make collection calls, it is wise to investigate hiring a part-time person to make the calls on behalf of the business. Tomorrow I'm going to write about different types of collection calls and what type of payment arrangements are the most successful.
Until then,
Alan

Small Business Credit and Collection Problems

2007-04-23T10:44:00.000-07:00

Hi,
Many small businesses have the same credit and collection problems as large corporations, only they do not have the staff to address these problems. If a small business owner is experiencing an increasing collection problem, it is important to identify the reasons why. In order to do that here are some suggestions of things to look at:
1) Is there a definitive credit policy for extending credit to individuals or other businesses?
2) When an account is opened, is the time taken to verify the information on the credit application? If there isn't a formal credit application, one might be considered.
3) If NSF checks seem to be a continual problem, investigate obtaining a machine to electronically process checks at point of sale. If that is not an option, make sure all pertinent information about the customer necessary to collect on the check in case it's returned is recorded on the check.
4) Is a maximum limit set on charge accounts? Notify the customer of the maximum limit when the account is opened, and if the limit is exceeded, immediately inform the customer.
Customers of small businesses expect to be paid when they perform services or deliver goods to people and will not be offended when a business owner wants to be paid by them. If they do take offense, they're probably not the type of customer a business ultimately wants. If contacting customers is not a strength, one might consider hiring a part time person to call past due customers on behalf of the business. The final step is to turn delinquent accounts, NSF checks etc., over to a professional for collections. This should be done promptly, because the success of collecting on a past due account diminishes with time.
Tomorrow I'm going to talk about specific types of collection calls.
Until then,
Alan

Unemployed: Some Debt Strategies

2007-04-20T09:50:00.000-07:00

Hi,
When we find ourselves unemployed, it is important not to neglect our financial responsibilities. We need to make a list of our outstanding monthly expenses starting with our basic survival needs. We need to make another list of all available funds that we have to meet expenses. Here are some suggestions:
1) We need to call the mortgage company if we are having doubts as to whether or not we can make the next mortgage payment to explain the situation in detail and see what options the mortgage company offers. Some of the options available are extending the payment until the end of the mortgage, making partial payments, or making interest only payments. Keep in mind that the mortgage company wants to work out the problem and does not want to have to foreclose on the house.
2) If we rent, we need to call the property management company as soon as possible to explain the situation and work out a livable solution. For instance, if we know unemployment is going to come in two weeks down the road, we can ask the rental company if we can make our payment then.
3) We need to call all the utility companies and work out suitable financial arrangements. Inquire about whether or not there are any programs in place for short term help.
4) We need to examine our monthly expenses in the food and entertainment areas and cut back as quickly as possible.
5) We need to call our remaining creditors and request deferrals on our monthly payments. If we are able, we should send them a good faith payment. We need to assure them that we will contact them periodically to let them know the status of our employment and our ability to resume making full payments.
As always, one of the most important things we need to do regarding our debt is communicate with our creditors. It is in our best interest and their best interest to work out all situations.
Next week I will start talking about credit/collections and small business.
Until then,
Alan

Making a Budget After The Divorce is Final

2007-04-19T11:43:00.000-07:00

Hi,
It's now time to assess whether or not our income meets our monthly expenses. It's relatively simple to determine this. We total our monthly bills and compare the total to our monthly income. In many cases, people find that their expenses are higher than their income. Here are a few suggestions to reduce expenses:
1) Look at areas in which one can reduce costs, such as paring down a cell phone plan, cancelling cable, club memberships, subscriptions etc.,
2) Consider using public transportation whenever possible.
3) Consider eliminating some credit cards.
4) Examine the amount of money spent on entertainment/eating out every month. Check the library and Internet for free or inexpensive entertainment.
5) If expenses far exceed income, call creditors to set up repayment plans that work for both parties. Do not represent a payment plan to the creditor which cannot be kept.
For the twelve months following a divorce, it is important to be financially prudent and adjust lifestyles when necessary in order to transition into a solid financial future. Revisiting one's budget every three months and making adjustments as needed is recommended.
Tomorrow I'm going to write about what to do with your debt if you find yourself suddenly unemployed.
Until then,
Alan

Taking a Financial Inventory After the Divorce Decree

2007-04-18T11:11:00.000-07:00

Hi,
After the divorce is final and the court has decided financial responsibilities, it's time to take a financial inventory. Since all situations are different, this is a list of possible suggestions which may be of use:
1) Living situation: Should downsizing be a consideration? Depending upon the circumstances, some people find it comfortable and financial rewarding to get a room mate instead of selling their home.
2) Transportation: Can we comfortably maintain our present vehicle, or do we need to get a less expensive one?
3) Outstanding credit cards: Look at all credit cards and determine balances, and monthly payments. It is a good idea to reassess whether or not all cards are needed and if it is a good idea to eliminate some of them.
4) Check all incoming bills to make sure the name of the ex-spouse is dropped from the statements.
5) Check beneficiaries listed on policies and make changes where deemed applicable.
Tomorrow I'm going to write about a budget based upon current income and expenses.
Until then,
Alan

Managing Debts During The Divorce Process

2007-04-17T10:36:00.000-07:00

Hi,
When a divorce is filed, it is easy for the parties involved to adopt the belief that their debts can wait until the divorce is finalized. Putting this belief into practice can severely damage the financial future of both parties. Any financial obligations that either party takes care of during the divorce, that could in turn be ordered the other's responsibility, will be adjusted accordingly by a judge during the final divorce decree. Showing financial responsibility during a divorce may influence numerous decisions made by the court. Now that we have gathered all financial information available to us on debts for which we are liable, we need to notify our creditors of the situation. Different states have different laws in respect to who is responsible for marital debts in the event of a divorce. When calling creditors, it is important to establish a paper trail that:
1) The name of the person paying the debt after the divorce is filed is documented.
2)Credit cards such Visa, MasterCard, Discover or American Express etc., need to be notified that we wish to have our name removed, and that we are not responsible for any charges incurred after the date of our phone call to them. In most cases they will request that we follow up the phone call with a letter. At the same time, we can inquire about getting a card issued to us in our own name.
3)If we are the homemaker in the marriage and do not have an income to pay on any debts for which we are responsible, it is important to immediately contact our creditors. When contacting creditors, we need to explain the situation and let them know that we have no means of paying the debts at this time. We will keep them advised of our future financial situation once the divorce is finalized and our financial status is clarified.
As always, it is imperative to get the first and last names of any creditor with whom we speak. If we find ourselves blindsided, and left without any means to manage the situation, we need to ask a trusted friend to help us locate any available resources in our area. Tomorrow I'll talk about financial life after a divorce.
Until then,
Alan

Divorce and Debt

2007-04-16T10:23:00.000-07:00

Hi,
In almost every divorce, the debt of the married couple turns into a problem. When the divorce is bitter, debt is totally ignored as each party believes that the other should be responsible for it. This is the equivalent of joint financial suicide. Even if the divorce is uncontested and emotions are in check, how efficiently the marital debt is handled during the divorce process can save both parties financial headaches in the future. The first step we need to take in order to efficiently manage debt during a divorce is to gather financial information in the marital estate and identify debts for which we are responsible. It is important to remember that even if we feel reasonably certain that the court will order some of these debts to be paid by our spouse, that we still need to deal with them until that time. This will assure our credit rating to remain intact once the divorce is final. If emotions are running amok in a particular divorce, it may be a good idea to solicit the help of a trusted friend or third party to gather as much information as possible on one's behalf. In situations in which all financial information isn't readily available, banks and mortgage companies will disclose pertinent needed information over the phone such as balances, monthly payment due dates etc., Another way to identify creditors of the marital estate is by running a credit report on both individuals. Tomorrow I will talk about some short term steps to take once the information has been gathered.
Until then,
Alan

Creating a New Budget After The Death Of A Spouse

2007-04-13T10:21:00.000-07:00

Hi,
Each person's situation is different. These are some general suggestions which may apply to someone who is creating a new budget following the death of a spouse. After identifying all existing assets, liabilities, and expected income sources, we should have a better idea of what needs to be done and what steps need to be taken. If one owns an house and decides to move, one has three options available:
1) sell the house through conventional means
2) sell the house and carry the contract, which will generate a substantial monthly income
3) rent the house, which will produce a monthly income (Investigate a property management firm to handle property if one is unable to manage it alone, but want to keep the house as an investment)
If one's investment portfolio contains only stocks, talk to the broker about moving investments into a monthly income producing investment vehicle.
Now that we know when funds will be received from life insurance, property sales, and investment portfolios etc., we can communicate with creditors to tell them approximately when we will be able to resume payment. In order for the surviving spouse to maintain future credit standing, it is important to communicate with creditors as soon as possible to let them know the status of the situation.
For people who don't have an estate, and the funds are not available to make the monthly payments of the deceased, creditors need to be contacted as soon as possible to be notified of the situation. Request that they freeze the interest on the bills until such time as the funds are available to resume payment. If income is reduced to the point that it seems as if funds will never become available to handle these debts, one should talk to one's banker or trusted friend familiar with finances, to formulate a plan to seek sound professional help.
It's important to take some time to identify the approximate expenses which will be incurred on a monthly basis. In some cases there will be no leeway and in other cases, significant leeway of what monies can be used for monthly expenses. In certain instances it might be necessary to spend less time eating out than is habitual. Weekly activities which cost money may need to be replaced with economical or free ones. Check the library and Internet for local activity listings. Reduced income might necessitate paying attention to the cost of goods and services as someone transitions into a new lifestyle.
Next week I'm going to write about the economic impact of divorce.
Have a good weekend!
Until then,
Alan

Long Term Financial Planning After The Death Of A Spouse

2007-04-12T10:47:00.000-07:00

Hi,
Now that we've gathered all the information about assets and liabilities, we need to create a long term financial plan. As each person's situation is different, the following are various suggestions which may apply to particular scenarios:
1)The first issue we need to look at is the feasibility of staying at our present address. There are a few reasons to move after a death: financial, practical, and emotional. If any or all three of these reasons apply to someone, that person does not need to rush to sell an home. It is wise to go about selling an house using regular real estates services. There is no need for a "fire sale".
2)If we rent our residence, it may be necessary to downsize to a smaller place. Once again, there is no need to rush. It is important to make sure that we look carefully at what's available and find something well suited to our new living situation.
3)Name Change: In some instances, surviving spouses find themselves in a situation in which their name is not included in the household credit history. It is important to rectify that situation by contacting entities and making necessary changes.
4) Cancel memberships and subscriptions belonging to the deceased.
5) If there an unneeded vehicle, solicit the help of a trusted person to sell it. Notify the insurance company immediately after the sale.
6) Sometimes financial planning involves major life changes. If someone needs job training, make an appointment with a career counselor at an educational institution. This person will help to discern aptitudes, likes and dislikes, so that future employment brings other intangible satisfactions rather than simply income.
Tomorrow, I am going to talk about creating a budget as a surviving spouse.
Until then,
Alan

Intermediate Financial Planning After The Death of a Spouse

2007-04-11T10:42:00.000-07:00

Hi,
Now that basic survival needs have been met and the household can function, trusted friends can initiate contacts with:
1) Life Insurance-
The life insurance company needs to be contacted to find out what steps need to be taken to obtain the funds from the policy and the expected date of disbursement.
2)Brokerage Firms-
When calling a brokerage firm, ask if there is a broker of record and request to speak to him or her. Ask that a copy of the most recent brokerage statement be sent to the surviving spouse. If the brokerage account is not a joint account, ask what steps need to be taken for the spouse to access the funds in the account. Most brokerage firms freeze accounts in the event of the death of the primary account holder. If the account is a joint account, do not make any immediate decisions to sell anything on the advice of the broker during the phone call. This is an information gathering call and it is wise to keep it as such.
3)Credit cards-
A trusted friend should contact all the companies which issued credit cards to the deceased. Inquire as to whether any life insurance was included in their particular contracts. Some credit card companies have policies for accidental death, but do not for life insurance. If a policy is discovered, obtain the pertinent information needed to access the funds.
4) Safety Deposit Box
Banks have different procedures for gaining access to safety deposit boxes after a death. Have a friend inquire about the procedure to allow the surviving spouse access to the safety deposit box.
Tomorrow I will discuss steps to create a financial plan for the future.
Until then,
Alan

Experiencing Short Term Financial Problems After The Death Of A Spouse

2007-04-10T11:14:00.001-07:00

Hi,
If there aren't enough funds on hand to take care of immediate needs after the death of a spouse, these are some steps one can take:
1) Notify the mortgage lender to ask for the month's mortgage payment to be deferred. Contact a property management company to ask that the month's rent be adjusted.
2) If there are insufficient funds to make full utility payments, contact the companies to ask for suitable payment arrangements.
3) If your transportation needs involve a car loan, and you need all, or a portion of the car payment extended, call the financial institution holding the loan. They are usually happy to cooperate under these circumstances.

If the deceased had any connections to the military or employee based membership societies (Police and Fire for example) contact related organizations (Veteran's groups etc.,) to see what help they have available for spouses of newly deceased former members.

It's important to have our trusted friend authenticate any unusual or questionable bills by calling the creditors to ask for the specifics involved in the goods or services provided to generate that particular bill. Unfortunately, predators abound in times of tragedy, and submitting false bills for payment is a scam used when they think they can take advantage of a person's inability to focus.

Tomorrow I'm going to talk about intermediate financial actions which need to be taken after the death of a spouse.
Until then,
Alan

Immediate Financial Planning After the Death of A Spouse

2007-04-09T10:39:00.000-07:00

Hi,
It's impossible to concentrate on mundane matters after a loss of such magnitude. Yet, daily issues won't allow themselves to be put on hold until we are in the frame of mind to be able to think about them. So, it's essential to enlist the aid of a friend to help cope with these mundane concerns in order to maintain the function of the household. First and foremost, we need to gather as much financial information as we can which includes, but is not limited, to the following assets and liabilities:

1) Assets : bank accounts, brokerage firm accounts, misc. investments including royalties and other dividends not held by brokerage firms, retirement and pension accounts, life insurance proceeds, and any other assets.
2) Liabilities: mortgage or rent payment and due date, utility statements and due dates, credit card balances and due dates, misc charge card balances and due dates, any other misc loans with monthly payments, IE car loans, tuition etc., plus any other debt.

Sometimes a spouse is unaware of all assets, investments, and outstanding debts. Assets, investments and debts generate mail. Any unaccounted for assets or debts will surface over the course of the year in the form of correspondence from the entities.

After a death, people may be flooded with statements and bills which seem to materialize out of no where. Depending upon the circumstances, they may be from medical institutions, medical supply companies, ambulance companies, bills for transporting the deceased, etc., These bills are not emergencies. We will talk about verifying these bills and others tomorrow.

Immediate financial needs of the household include covering the mortgage/rent, utilities and food. Hopefully there are funds available to meet these basic needs.

Tomorrow I will talk about what to do if funds are not available to meet living expenses the month following the death of a spouse.
Until then,
Alan

Death Of A Spouse

2007-04-06T11:10:00.000-07:00

Hi,
Nothing can prepare one for the death of one's spouse. This is the time to use the help offered by close friends and family. One immediate need is to create a folder of essential documents. If this folder is not already in place prior to the death, it is a good idea to ask a friend to help compile and organize it. Basic documents are:
-Death certificate (a few certified copies)
-Marriage certificate (May be obtained from courthouse)
-birth certificates of dependent children
-Insurance policies
-Certificate of Discharge from the military
-The deceased will and list of property
Initial contacts to be made:
-Social security
-Life insurance
-Employee, Veterans or Misc benefits
-If spouse was employed, check with Human Resources about any specific employer policies. For example, a surviving spouse might have Cobra benefits for a set period of time.
On Monday I will discuss how to deal with both immediate and long term financial concerns after the death of a spouse.
Have a good weekend!
Until then,
Alan

Instantaneous Economic Downturns

2007-04-05T10:00:00.000-07:00

Hi,
There are various events that occur in our lives which are not only huge emotional hardships, but may bring financial chaos as well. Events of this stature may include death of a spouse, catastrophic illness, sudden loss of job, divorce, and unexpected family emergencies which result in unplanned long term care for a family member's children. I will discuss each of these events in future blogs. There are a few things which are required when dealing with any emergency financial downturn:
1) Emergencies bring panic. It is crucial to have a trusted person who is objective and can offer emotional monitoring feedback through the acute stage of the event. Many times the best course of action is "no action" for the moment, and the person in crisis needs to hear an outside voice say that. If you are alone in a new city when crisis hits, take advantage of the closest crisis hot line.
2)Unfortunately predators come out of the woodwork to take advantage of people at their most vulnerable times. Predators may masquerade as "good neighbors", "church members", or even "long lost friends of the family". One typical predator approach is to act too overly helpful, too sympathetic, too understanding, too ingratiating, and too willing to be the person one can rely on during a hard time.
3) A person in an acute crisis should not make any financial decisions without the input of an objective trusted individual.
Tomorrow I will start talking in detail about how to cope with the specific financial crisis caused by the death of a spouse.
Until then,
Alan

Some Contributing Factors To Cell Phone Problems

2007-04-04T09:17:00.000-07:00

Hi,
There are many reasons why cell phone companies seem disorganized and inefficient. Over the last 15 to 20 years there have been a huge number of acquisitions and mergers in the industry. In many instances long before one merger was completed, another company would purchase the merged company. This resulted in incomplete merged billing systems which created headaches for consumers. To expedite combining customer service departments, cell phone carriers found the need to issue generic customer service guidelines in handling accounts. Due to the restrictions built into generic customer service guidelines, solutions to billing problems are difficult to find. Government regulation to the cell phone industry could solve some of these problems. The airline industry, which is heavily regulated, when through multiple mergers and acquisitions. That industry certainly suffered growing pains. However, because of regulation, it wasn't allowed to add arbitrary charges and third party billings to airline tickets. At the very least, Federal regulation of the cell phone industry could stop third party billing. Until some sort of regulation is implemented by the Federal government, there will be continual problems in the cell phone industry. Tomorrow I'm going to begin talking about what to do when "ends don't meet".
Until then,
Alan

Faulty Cell Phones and Poor Service

2007-04-03T12:18:00.000-07:00

Hi,
After eight or nine months have elapsed in our plan, we start to notice areas within our city limits in which we receive no service. In addition, three of the phones on our plan do not ring all the time. We call the company, and the customer service representative tells us that we may send our phones to the manufacturer for maintenance, but that it would take six to eight weeks. This isn't acceptable and we ask for our contracts to be cancelled. The customer service representative dispatches us to a supervisor specializing in cancellation requests. After a lengthy discussion with the supervisor outlining our problems, she asks what she can do to keep our business. We tell her that we want functioning phones and uninterrupted coverage in our call area. She is very accommodating and offers us five new phones with no activation charges, and a plan that includes roaming charges, which effectively negates interruption of service. We agree. When our next bill arrived, you guessed it, our activation fees were billed to us. Back on the phone.........
These blog entries on cell phones have been but a sampling of problems customers have with cell phone carriers across the country. Tomorrow I will talk about some of the reasons for these problems.
Until then,
Alan

Adding A New Cell Phone To The Family Plan

2007-04-02T09:44:00.000-07:00

Hi,
From time to time cell phone companies offer promotions to add new phones to your family plan which include no activation fees and a free phone. When we take advantage of one of these offers, some interesting things happen to our bill. The first item we notice on our bill is that the requested identical text messaging plan costs 50% on the new phone than the existing phones. The activation fee is included on our statement. Also, the additional phone charge of $10.00 is double billed @ 2 $10.00 charges on the statement. Finally, there are charges for text messaging on the new phone even though an unlimited text messaging plan was requested. When we explain our various billing problems to the customer service representative, the representative has no record of what was promised at the time we added the new phone. It is necessary to talk to a supervisor. The supervisor has no explanation for the double monthly charges, or the text messaging charges. She readily agrees to credit the account for not only the erroneous text messaging charges, but the double billing and the activation fee as well. After talking to the cell phone carrier, we get a sinking feeling that it is going to take time each month to reconcile the cell phone bill and rectify it. Tomorrow I'm going to talk about dealing with faulty phones and service problems.
Until then,
Alan

Round Two With The Cell Phone Carrier

2007-03-30T10:38:00.000-07:00

Hi,
Thanks to our experience in navigating the electronic maze of menu options when we called about our last bill, this time we are able to punch through them and reach a customer service representative within a few minutes. When we question the customer service representative about the mysterious $9.99 charges on our phones we are told the following:
1) These charges are third party billing charges. It is explained that a third party billing occurs when the carrier allows certain companies to add their bills to our cell phone account.
2) These particular charges are for ring tones.
3) We are given a text message address to text the company to tell them to cancel our service.
4) The customer service representative agrees to credit our account when we explain that we didn't order the ring tones and we don't know anything about them.
5) The representative offers to block this particular company from being able to add any more charges to our cell phone account.
We end our conversation impressed with the amicable and helpful demeanor of the customer service representative.
We follow the instructions given to us by the representative and text message the cancellation request to the ring tone company. The ring tone company responds by saying that we downloaded their service. We contact the ring tone company via email to tell them they are in error. Ring tones were never used on our phones. We investigate the ring tone company and discover that they offer games, music, and other add-ons for cell phones. No one on our family plan has ever heard of them. The ring tone company maintains that their service was downloaded by us, but agrees to cancel it, and block our numbers from accepting any of their services in the future.
On Monday, I'm going to talk about the impact of adding another cell phone to a family plan.
Have a good weekend!
Until then,
Alan

Resolving A Disputed Cell Phone Bill

2007-03-29T12:02:00.000-07:00

Hi,
The first thing we encounter when we call the cell phone company is that we have to navigate through an extensive electronic maze before reaching a customer service representative. After going through an excellent security screening process, we are cleared to discuss our account concerns with a representative. As soon as the itemized call detail is accessed, we realize numerous calls have been charged to our phones which were not made by us. The representative accommodates us and solves the problem by issuing us an immediate credit for the amount of the disputed charges. We then request that in the future, we are sent an itemized call detail with every bill. We are left with the impression that the billing mistakes are an isolated incident, and that we won't have to worry about our cell phone bill anymore. Thirty days later our second cell phone bill arrives. We are disappointed that no credit was given on the bill, and in fact, the amount of the credit shows up as past due. As we investigate further, we see that the any time minutes were not exceeded. However, there are mysterious $9.99 charges on three of the phones. Tomorrow, it's round two with the phone carrier.
Until then,
Alan

Experiencing Our First Cell Phone Bill

2007-03-28T10:25:00.000-07:00

Hi,
After enjoying our new cell phones for the past thirty days, the inevitable first bill arrives in the mail. When we see the amount due on the cell phone bill we are surprised that it is considerably higher than the amount we budgeted for based upon the monthly charge in our contract. The first significant charges to our bill that we are not prepared for are the taxes, surcharges and fees. For example, in Seattle, Washington, on a plan with five phones, that has a basic monthly plan costing $144.00, additional surcharges and fees include:
1) Government fees and taxes
a) Seattle City sales tax services and usage $3.15
b) Washington State sales tax, service and usage $8.91
c) Washington State wireless 911: $1.00
d) King County wireless 911: $2.50
2) Surcharges and Fees:
a) Seattle City utility users surcharge: $6.35
b) Washington State B&O tax surcharge: 0.58
c) Federal USF non-LD surcharge: $2.45
d) Federal wireless number pooling and portability: 0.75
e) Federal E911 charge: $2.00
For a grand total of $27.69
As we delve further into our bill, we notice that our any time minutes limit has been exceeded by over 300 minutes. No one using the plan thinks that he or she exceeded the limit.
Tomorrow, our first conversation with the phone carrier.
Until then,
Alan

Signing A Cell Phone Contract

2007-03-27T10:35:00.000-07:00

Hi,
Signing a cell phone contract is generally a two year commitment. This is why it is imperative that we find the right one for us. After doing our due diligence, and narrowing down the companies that we think will suit us the best, we're prepared to talk to sales representatives. It is important to remember that they may be very aggressive, and it is hard to gather information from them without making a purchase. In order for salespeople to assist us in getting what we want, we need to disclose our needs:
1) How many anytime minutes (usually calculated between 7:00 am - 7:00 pm Monday through Friday) we need
2) Number of phones with unlimited text messaging
3) Whether roaming charges are a factor in the plan
4) Whether any phones will need Internet access
5) Whether any phones need to be camera phones
After we've gathered our information, are aware of any local promotions, and have an idea of the costs of the contracts, we're in a position to select a carrier and receive our phones. When we are ready to sign a contract, we need to make sure that we read all the terms and conditions. Also, we need to make sure that any in store discounts offered at the time of sale are in writing, and cover the term of the contract. Doing our homework prior to signing a contract will help us feel confident about our plan. Tomorrow I'm going to talk about our first cell phone bill.
Until then,
Alan

Choosing A Cell Phone Plan

2007-03-26T13:26:00.000-07:00

Hi,
Cell phones are popular electronic purchases among many types of customers who acquire them for different reasons. The purpose and use of the cell phone determines what type of plan is best for the user. Reasons vary from the single adult who doesn't use the phone for communication, but only as a safety net to have in case of car trouble, to family plan users who want to be connected with their teenagers. Teens, by their nature, are always in communication with each other. If they aren't calling their friends, their friends are calling them. There are a myriad of choices in plans, phones and options. Sorting through them takes time and due diligence. It's a good idea to determine the following factors before investigating cell phone plans:
1) How many minutes are needed? The key minutes to identify are the ones needed between 7am-7pm Monday through Friday. (Some cell phone companies clock their minutes from 7am-9pm Monday through Friday).
2) Identify where the phones will be used. If phones are not used in areas which incur roaming charges, the inclusion of roaming charges isn't a necessary consideration when selecting a plan. Roaming charges can be quite expensive. If a phone will be used regularly in an area which will incur roaming charges, look at the plans which include them.
3)Camera phones. The phones themselves are available at a reasonable cost. The revenue is generated for the carriers when people send pictures to each other. Pay attention to all the costs associated with Internet connection fees etc., when looking at plans to decide exactly which options you want.
4) Text messaging costs. For many users, text messaging is infrequent enough that it makes sense to pay for each message. A mother I know didn't understand that she would be charged for all the text messages sent TO her daughter, and not only for the ones her daughter generated. After her daughter stayed home from school one day and received a tidal wave of messages saying "where are you?", "are you OK?", "why aren't you here?", the mother switched to unlimited text messaging on her daughter's phone.
Once you have a general idea of your needs, you can start looking for a suitable plan. The privacy of your own home is a good place to learn about different plans. Use the Internet to read and compare plans offered by different carriers. It pays to become familiar with the general scope of plans on the market before talking to salespeople representing individual companies. Remember that cell phones cost the cell phone companies very little and their claim of "249.99 YOURS FREE with a 2 year contract" is a selling tool and nothing more. By focusing on the plans we need, we will get the best deal without buying unwanted additional services. Tomorrow I will discuss purchasing cell phones and signing contracts.
Until then,
Alan

A Good Habit: Carefully Examining Statements Each Month

2007-03-23T12:30:00.000-07:00

Hi,
There are certain bills for which we've been conditioned to pay the amount due without scrutinizing the statement. We assume that bills like electric, heating, utility etc., couldn't possibly be wrong. This is a dangerous sentiment, as computers can make mistakes on these bills just as easily as any other statements. Faulty meters, leaking water mains, and clerical errors are just some of the causes of incorrect utility bills. People can become very frustrated when trying to contact customer service representatives to have questions about utility bills answered. First, one is generally required to navigate an electronic menu which sometimes doesn't list an option that is directly related to the customer's questions. Then a computer voice notifies the customer of a wait time of anywhere from ten to thirty minutes. This produces a common reaction in the customer of not wanting to go through the hassle of questioning the bill, which then leads to the belief that it's better to just pay the questionable overcharge than waste an half hour to save a small amount of money. Unfortunately that understandable reaction could result in a repeated billing error until the error is corrected by the utility. It isn't just one possible overcharge, but a series of billing mistakes the customer might incur if the matter isn't handled in an expeditious manner. Sometimes the billing issue is the variation in utility costs on a month to month basis which cause hardship for a customer. If you have trouble paying utility bills during high cost months, investigate to see if your utility company offers any monthly cost averaging payment plans, or other assistance for which you might qualify. For example, a monthly averaging plan sets a constant monthly rate so one doesn't get faced with an exorbitant heating bill after a severe cold snap. If one is ever faced with a one time emergency, utility companies are usually more than happy to set up payment arrangements. Due to the computerization of most credit and collection departments, it is important to address any disputes or questions one has as soon as possible after receiving his or her bill. If a bill doesn't "look right" it could be due to a billing error. It may take a few attempts at calling before a customer is able to reach a customer service person who can address the billing issues, but it is worth it. On Monday I will discuss my favorite convoluted statement: the infamous cell phone bill.
Have a good weekend.
Until then,
Alan

Car Loans and Car Repossessions

2007-03-22T09:38:00.000-07:00

Hi,
Banks and financial institutions spend millions of dollars annually monitoring their auto portfolios. When a car loan becomes delinquent, the first step is generally written notification to the customer that the payment is past due. If no payment is received, the letter is followed up with a phone call. Every institution has different rules as to how far it lets a car loan become past due before it repossess the car. A general rule of thumb is that the small independent car dealer will be more apt to repossess a car more quickly than his or her larger counterparts. For a customer to recover a repossessed car, it is generally necessary for the customer to bring the account current and pay all repossession costs. It is important to note that the account will be flagged once a repossession has occurred. Flagging an account means that the creditor will not tolerate future delinquencies. If a customer chooses not to retrieve his or her repossessed car, the following will happen:
1) The car will be sold by the financial institution/car dealership.
2) The proceeds from the vehicle sale will be applied to the loan balance.
3) The customer will be responsible for any deficiency balance.
4) Deficiency balances may be collected in a variety of different ways including litigation.
No financial institution wants to repossess a car. It's a lose/lose situation for both the institution and the customer. If a customer has difficulty making a car payment he or she needs to call the company holding the car loan and make suitable arrangements.
Tomorrow I'm going to talk about how to handle other types of past due or disputed bills.
Until then,
Alan

NSF Checks

2007-03-21T10:48:00.000-07:00

Hi,
NSF checks used to be one of the biggest collection problems for both large and small businesses. This situation has dramatically changed due to the introduction of computer verification technology at point of sale. It has reduced the number of NSF checks by 80%. From a collections standpoint, it is important that each check contains as much information as possible about the customer. There various methods that can be used to collect an NSF check.
1) Notify the customer immediately by phone and or mail that his or her check has been returned by his or her bank and that the matter needs to be immediately resolved.
2) Most banks redeposit checks twice and then return them to the depositor if they are still NSF. The depositor can still present the NSF check at the debtor's bank and get the check processed. This takes care of the people that inadvertently wrote an NSF check and for extraordinary reasons did not have expected funds at the bank. Going to the debtor's bank allows the merchant to resolve the issue without further involving the debtor.
3) Each state has different laws governing the penalty for issuing NSF checks. Merchants need to know the laws applicable in their state. If the debtor has not responded to previous communication, a letter should be sent stating that the merchant will be exercising the rights given under the applicable law to collect on the check. It should be spelled out for the debtor.
4) If no payment has been received after exercising these remedies, the check needs to be turned over to a collection agency.
Following these steps in a timely manner increases the chance of recovery on NSF checks.
Tomorrow I'm going to talk about collecting on car loans and car repossessions.
Until then,
Alan

Benefits of Collection Agencies for Small Businesses

2007-03-20T09:40:00.000-07:00

Hi,
Small businesses have two distinct disadvantages over large corporations in that they usually have no credit or collection departments. This results in accounts receivable with no one available to monitor or resolve them. The business owner is generally busy with other tasks, and his or her small staff is usually strictly clerical. Many times credit is extended due to familiarity with the customer rather than by the approval of pertinent credit information. These factors contribute to small businesses having an higher than average collection problem with their accounts receivable. The business owner fears that customers will be driven away if their delinquent accounts are pursued. It is not uncommon for business owners to have tens of thousands of dollars in very delinquent accounts. Another collection problem for small businesses may still be NSF checks, as they may not have the electronic system in place for point of sale verification. Because small businesses lack the staff to effectively collect on NSF checks, it's imperative that they utilize a third party collection system as soon as possible. In most instances, a collection agency is a perfect fit for a small business. Years ago I had a friend who was a salesman for a collection agency. He told me the story of a small business owner who had a shoe box with dust on it full of NSF checks. It took many, many visits before the salesman was able to convince the owner to give up the shoe box. When he finally did, it contained over 120 NSF checks, some over three years old. Within two weeks, the collection agency had collected over $6,000. of the checks for the business. This is one example of many in which accounts receivable or NSF checks gathering dust are not putting any dollars back into the business. In dealing with NSF checks in particular, the chances of recovery diminish with each passing month. As a small business owner, it is always important to remember that you are entitled to be paid for your goods and services provided to your customers. When you have the need of utilizing outside collection services on your accounts you are exercising your rights as a businessperson. Tomorrow, I'll talk about NSF checks.
Until then,
Alan

When A Business Should Use A Collection Agency: Part 1

2007-03-19T09:57:00.000-07:00

Hi,
There are many different reasons why all kinds of businesses hesitate to utilize collection agencies. Over the next couple of days I am going to discuss some of the fears and misgivings companies have about whether or not to turn their accounts receivables over to collection agencies. One of the most common fears businesses have is that it will hurt their public image. Businesses provide goods and services, expecting to be paid. When customers don't pay, pursuing payment is a normal course of business action. Another common fear is that collection agencies operate outside the law and without professionalism. The best way to alleviate this fear is to go to the collection agency and become comfortable with the people and surroundings. The last major objection businesses have in turning their accounts over to collection agencies is the cost which is almost always on a contingency basis, ranging from 10%-50% of the amount owed. This objection is understandable. However 50%-75% of something is better than 100% of nothing. Large corporations generally have an intermediary step in the collection process, as they have an in-house collections department. Statistically, by the time an account goes through the collection process from the credit department to the collections department, the company's chance of successfully recovering payment on that account is almost nil. As I've referred to in previous blogs, many large companies have gotten away from professional collectors and replaced them with customer service people who have only a generic menu available to resolve accounts. Three major reasons a large corporation should send an account to a collection agency:
1) The account will be serviced by a person skilled in the collection process, and who specializes in the field of difficult collections.
2) If accounts need to be litigated, they can be assigned to the collection agency and therefore sued under the collection agency's name. This helps to preserve the corporation's public image.
3) Sending accounts to collection agencies allows companies a partial recovery on accounts which would otherwise be charged off.
These are just some of the reasons companies should take advantage of utilizing collection agencies. Due to the generic approach large companies are taking in regards to collections, the personal touch used by collection agencies may make the difference in the successful resolution of past due accounts. Tomorrow I will talk about the benefit of collection agencies for small businesses.
Until then,
Alan

Collections

2007-03-16T10:33:00.000-07:00

Hi,
Yesterday I talked about the importance of the debtor to acknowledge communication from a collection agency. If a person chooses to completely ignore all written communication and repeated phone calls, in many instances the collector has no choice but to turn the account over to the attorneys for litigation. It is important to realize that even something as small as an ignored library fine may be reported to a credit bureau. This can result in significant increases in the cost of everything from insurance to mortgage costs. Remember when a collection agency makes contact, they want to resolve the matter just as quickly as the debtor. So when contacted, immediate response is in the debtor's best interest. The final collection remedy I have not yet discussed is litigation. Very seldom will a collector mention legal action if he or she has not already been authorized by the client to proceed in that manner if necessary. Once an account is transferred to attorneys, 99% of the time, the opportunity for account settlement has expired. If a debtor receives a demand letter from a law firm it is imperative that the debtor communicate immediately with the law firm. Otherwise, the debtor will start incurring high attorney fees and court costs. On many occasions, people are amazed that a relatively small bill (IE $500.00) has all of a sudden grown from $1,000.-$1,500. because it has been turned over to attorneys. The easiest way to prevent becoming involved in a long arduous collection process is to respond immediately to a collection agency and resolve the account. Next week, I will talk about when businesses should submit accounts to collection agencies.
Until then,
Alan

The Collection Process Continued

2007-03-15T10:57:00.000-07:00

Hi,
The perfect scenario in a collection agency would be to receive an account, turn it over to a collector, and, in one call, resolve the account with payment in full. Unfortunately, this scenario does not happen very often. I'd like to identify some of the reasons which keep accounts from being quickly resolved:
1) The contact information for the debtor is obsolete. This requires the account to go through the skip tracing department to try to locate the debtor. In many instances, this is a lengthy process that may involve contacting previous next door neighbors, other creditors, past employers, and any personal referrals listed on the credit application. If these avenues fail, written communication to last known addresses may be used in the hopes of getting a forwarding address.
2) Phone calls to the debtor are ignored and initial notification letters are thrown away by the debtor. In these cases, if there is no other known way to contact the debtor, and follow up letters are ignored, these accounts may be turned over to the collection agency attorneys. Many times collection agency letters are ignored, but legal demand letters from a law firm bring debtors out of the woodwork.
3) Payment arrangements are reached and are broken by the debtor after one or two payments. This requires additional communication with the debtor to usually inform the debtor that the full balance is now due.
4) In some cases a debtor may request a call back from the collector after the initial call to give the debtor time to make a settlement proposal or suitable payment arrangement. This may require the collector to make numerous phone calls before the collector makes contact with the debtor again.
5) Collection agencies receive a much higher than average number of NSF checks. As a result, collectors have to make follow up phone calls to try to collect on the checks.
6) If a debtor proposes a settlement offer to a creditor, it is necessary for the collector to get the approval from the creditor and then get back in touch with the debtor. This can be a time consuming process.
These are some of the reasons why collections can be a long difficult ordeal. Tomorrow I will finish my discussion about the collection process.
Until then,
Alan

Starting the Collection Process

2007-03-14T10:45:00.000-07:00

Hi,
Let's discuss how an account is handled once it reaches a collection agency. After the account is entered into the system, an initial letter is generated notifying the debtor of the obligation, and the necessity to resolve the matter as soon as possible. Many collection agencies have collectors that specialize in a particular type of collection. This allows the collector to become knowledgeable about documentation supporting certain types of debt which enables the collector to communicate clearly with the debtor and develop a good working relationship with the client/creditor. After an account is received by a collector, he or she reviews the financial information provided by the creditor and any previous communications with the debtor. This allows the collector to become familiar with the debtor's capabilities and to formulate an approach suitable to that account. Caller ID has made it necessary for a collector to be as effective and efficient as possible on the initial call, as in many instances, it might be the collector's last verbal contact with the debtor. Unlike many other types of negotiations that take days, weeks, and in some cases, months, a collector needs to go from start to finish in one phone call. This is the reason collectors prefer to receive a lump sum payment on an account rather than a long drawn out monthly payment arrangement. This is not to say that when the need is apparent for monthly payments on an account, a collector will not be more than happy to accept the arrangement. It is important to remember that if a payment is broken with a collection agency, that the full amount will become due with no further payment arrangements accepted. Resolving a debt with a collection agency might prevent legal action against the debtor, or at the very least, significant damage against the debtor's credit report. Tomorrow, I will continue talking about the collection process.
Until then,
Alan

Entering the World of a Collection Agency

2007-03-13T10:11:00.000-07:00

Hi,
In yesterday's blog, I discussed some of the types of people collection agencies deal with on a daily basis. Now let's look at the mission statement of a collection agency and examine some of the common misconceptions about collection agencies. The mission statement of a collection agency is to recover as much money as possible on any account given to them by their clients. Their goal is to achieve this under any means possible allowed by the Fair Debt Collection Act. Some of the common misconceptions about collection agencies are:
1) Collectors enjoy harassing people at home and at work. Fact: Every collector on the planet would like to resolve an account with one phone call. The only reason for additional phone calls on an account are due to broken payment arrangements.
2) Collectors are unreasonable when it comes to accepting settlement offers on accounts. Fact: Creditors have already lost anywhere from 15%-50% on their bill, and as a result are much more unlikely to accept low settlement offers. As collectors are paid a small salary plus commission on the amount they collect, they are highly motivated to take any reasonable settlement and offer it to the creditor.
3) Skip tracers practice unethical business behavior. When skip tracing professional deadbeats, skip tracers on occasion might represent themselves to neighbors, coworkers etc., as a friend of the debtor to obtain pertinent contact information.
4) Collectors are hard nosed and inflexible. Fact: Due to the nature of the business, collectors are constantly under a lot of stress. Certainly they have their bad and good days as do all of us. But, they are primarily paid on commission and are very interested in resolving accounts as quickly and efficiently as possible.
It's important when dealing with a collection agency to remember that the collector you are talking to is used to broken arrangements, broken promises, and in many cases, verbal abuse. If you communicate honestly, he or she will be more than happy to resolve your account as quickly as possible to your mutual satisfaction. Tomorrow, I'll write in detail about the collection process.
Until then,
Alan

The Next Step: Collection Agencies

2007-03-12T10:45:00.000-07:00

Hi,
Over the next few blogs, I will be investigating various aspects of collection agencies. First it is necessary to get a general idea about the types of accounts collection agencies receive from their clients. About 10% of the accounts received consist of debtors who have overlooked, ignored, or forgotten to pay a small bill and have the means to pay it. 25%-30% of the people who have bills sent to collection are folks that have some financial difficulty and have chosen to ignore these particular bills due to frustration, lack of being able to arrive at a suitable payment arrangement with their creditor, and naivete about the collection process. The next 35%-40% are people that have severe financial difficulties, and in most cases, no ability to service their debts. These people need long term work- outs, and or settlements. Repeated attempts by creditors to deal with these people have resulted in numerous payment arrangements which have not been kept. The remaining 15%-20% are, in most cases, "professional deadbeats." These people have intentionally run up as much credit as they could with absolutely no intention of repayment. In most instances the addresses, phone numbers etc., provided to the creditor are not valid, and, in fact, accurate information was never given in the first place. When creditors send accounts to collection agencies, usually they also send comprehensive payment histories which include all communication with the customers and any broken repayment arrangements. Tomorrow I'm going to start talking about how a collection agency operates.
Until then,
Alan

The Evolution of the Collection Department: Part 2

2007-03-09T10:24:00.000-08:00

Hi:
In the past few blogs, I have identified some of the problems which developed when computers were introduced into collections departments over the last thirty years. Some of the advantages of computerization are as follows:
1) It allows credit and collections departments to compile statistical data identifying problems and enables the departments to quickly deal with them.
2) Computers allow instantaneous communication among credit, sales and collection departments, transferring documents, pictures etc., throughout the departments.
3) Computers have virtually eliminated one huge problem of the past for retailers in dealing with NSF checks through point of sale terminals.
4) Advanced computerized phone systems have allowed companies to reduce their staff by having many questions electronically answered.
In a well run company the sales, credit and collection departments work in concert. Each department needs the help of the other and can utilize the experiences of each other. Unfortunately, many companies have done away with 75% of their experienced credit and collection people, thereby making it harder for the consumer to be dealt with in a personal manner. The only remedy for this situation is generally to talk with supervisors and sometimes even the bosses of supervisors. One needs to go up the ladder to find a professional with the authority to deal with a particular situation. Monday I will talk about collection agencies.
Have a good weekend.
Until then,
Alan

The Evolution of the Collection Department

2007-03-08T10:05:00.000-08:00

Hi,
The collection departments of most companies have gone through very similar changes to their credit departments. In the past, when a problem existed on an account it was handled by someone who had the authority to deal with it and solve the problem. Today in many instances when one calls a collection department, one is talking to a customer service representative who has limited authority and is operating under generic guidelines on how to handle each call. It is often necessary to contact collection departments and talk to three or four customer service representatives before one finds someone willing to deal with the particulars of a specific situation. This often results in in the customers becoming frustrated and just paying the bill. Another method employed by corporations in order to save money, is to make access to collection departments very difficult. This is done by setting up a myriad of electronic options, giving the customers a multiple of generic choices, many times of which none apply to their situation. The frustration customers feel when treated this way often results in the customers ignoring their bill, and in the process, damaging their credit. Often time when customers make their way through a maze of generic electronic choices and finally get to a live person in the "collection department" they end up talking to a customer service representative who does not have the authority or ability to deal with their particular problems. The goal of the callers is to make satisfactory payment arrangements for a past due bill. If customer service representatives don't have the flexibility to work with the callers to achieve that end, it is imperative that the callers ask to talk to a customer service representative/ collection supervisor and hope that the supervisor can help find a solution to the problem. On occasion, it might be necessary to request to talk to their supervisor. In the past, when one talked to a collection department, all representatives had the ability and authority to deal with problems. As a cost saving measure, companies replaced most collection people with customer service phone representatives and only kept collection people as their supervisors. This change evolved over the last 25 years as a direct result of the increase in bad credit. Tomorrow I will talk about the effective way collection, credit and sales departments can work together.
Until then,
Alan

The Evolution of the Credit Department: Part 3

2007-03-07T11:15:00.000-08:00

Hi,
In the last two blogs I have discussed how many credit departments have adopted a generic approach in how they decide to extend credit. I have also discussed the pressure sales people exert on credit departments to approve their credit requests. Now I want to examine some of the other pitfalls in eliminating the hands-on approach in extending credit:
1) Validating information on a credit application is more accurately done by people than machines.
2) Human involvement can identify when past credit problems should not interfere with current credit decisions. A common example of this situation is when a couple is divorced and the responsibility for financial obligations was put on the back burner during the divorce process, but both people became good credit risks after the divorce.
3) Another common occurrence is that when credit applications are rejected due to erroneous credit information on the individual's credit report. Human reviews can catch and rectify that situation more efficiently than machines.
4) Human involvement allows loan structures to be modified to suit individual credit needs that machines are not programmed to recognize. The best example of this is farming operations and their unusual income streams.
Credit departments have transformed from experienced credit professionals familiar with their particular credit fields, to computerized departments staffed by customer service reps. This change has resulted in an increase in sales and overall profits for companies. But the change also brought an increase in the cost of collections due to inferior credit. This cost has been passed on to the consumer in higher interest rates, finance charges and late fees. Tomorrow I will begin to talk about collection departments, and the people responsible for cleaning up some of the problems created by the generic approach to credit extension.
Until then,
Alan

The Evolution of the Credit Department: Part 2

2007-03-06T10:44:00.000-08:00

Hi,
The changes of staffing and structure in credit departments has been dramatic over the last thirty five years. In the past, it was a requirement for a lender to be familiar with the particular business to which they were granting credit. For example, if a lender was setting up a loan for a farmer to buy farm equipment, the lender understood the uneven income stream of each farmer and structured the credit to match it. The lender was also familiar enough with farming to differentiate between needs and wants in loan applications. It was also necessary for the lender to assess whether or not the income of the farm could service the additional debt. Today, in many instances, the credit people responsible for funding farms have no experience in farming and grant credit with a generic process rather than an individualized one. This sometimes results in farm loans that are doomed from the start which, in most cases, are doomed through no fault of the farmer. The other dynamic in a credit department is the relationship between the sales force and the credit staff. In many cases, sales people pressure credit departments to get approval for their customer's credit applications. As many sales people are paid primarily on commission and bonuses, their motivation is understandable. This sometimes results in loan approvals that are questionable at best. Tomorrow I'll talk about the balance needed between credit and sales departments for a successful company.
Until then,
Alan

The Evolution of the Credit Department

2007-03-05T11:26:00.000-08:00

Hi,
Credit departments have changed dramatically over the last thirty five years. In the past, credit department employees checked and assessed all aspects of credit requests and dealt with each request on an individual basis. The result of this hands on approach was that credit was only extended to people who could genuinely afford it. As a result, the number of delinquencies, charge-offs and repossessions was very low. Due to the human verification process, it was rare that information on credit applications was falsified. Computer technology redefined how credit departments work and how credit is granted. By using computers to compile statistical data, creditors have established various formulas with which to generically grant credit. These actions have caused a multitude of problems in the credit field. It has allowed unscrupulous borrowers to obtain credit that they can ill afford and in some cases, have no intention to repay. One of the other negative effects of this generic approach to credit is that many times people unknowingly obtain more credit than they can afford to repay, and which in some instances results in financial chaos. To cover the cost of these indiscretions, the credit industry has used higher interests, finance charges, late fees, etc., Tomorrow I will talk about various structures of credit departments.
Until then,
Alan

Conditional Sales Contracts

2007-03-02T10:13:00.000-08:00

Hi,
A conditional sales contract is the financial instrument that is used to facilitate the purchase of such items as household furnishings, electronics, musical instruments, etc., Before the evolution of the credit card, conditional sales contracts were very common. The contracts were generally set up with finance companies who carried the contract for the retailer. The basic set up for a conditional sales contract is that whatever is purchased is used as collateral for the loan and can be repossessed if payments are not made. The interest rates charged on these contracts are generally exorbitant and the default rate on the loans is usually very high. The finance companies will use conditional sales contacts as a selling tool to offer additional loans reducing the interest rate, while rolling the conditional sales contract into the new loans. Often times, the borrower is not even aware that he or she is dealing with a finance company as he or she is under the impression that the contract is being carried by the retailer that sold them the merchandise. It is sometimes necessary for people to utilize this method of financing due to their credit situation. As with all financing agreements, conditional sales contracts have their place in the market. If you are exploring a conditional sales contract, make sure that you inquire about the interest rates, and who will be handling your contract before you sign.
Next week I will talk about credit and collections. Have a good weekend!
Until then,
Alan

Commercial Leases

2007-03-01T10:18:00.000-08:00

Hi,
In today's business world, commercial leases are used for everything from the salt and pepper shakers at the restaurant down the street to the irrigation systems in rural farming areas. Leasing enables business owners to get the equipment they need while conserving their cash flow. In many cases, business owners would not be able to afford some of the equipment they are able to acquire through a lease. A good example of this is when farmers lease $750,000.- $1,000,000. worth of irrigation equipment: equipment they would not be able to afford even with a conventional loan.
By taking advantage of the irrigation lease, the farmer might increase the yields on his crops three to four times over, while increasing the value of his or her farm 200%-300%. Another good use of commercial leases is for restaurants. When opening a new restaurant for the first time, most people need to conserve their cash flow and can ill afford to buy $250,000.-$500,000. worth of equipment and furnishings. Leasing is a perfect option for them. Another area in which commercial leases are a suitable option is the construction business. Due to the exorbitant cost of equipment, many small to mid-size construction companies could not be in business if they had to purchase their equipment. Commercial leasing is also a perfect fit for people starting out in the medical field. Two drawbacks of commercial leases are:
1) In most cases, personal guarantees are required by the leasing company.
2) In the event of business failure, it is often difficult to find someone acceptable to the leasing company to assume the lease.
Leasing companies are similar to mortgage companies in that there are primary leasing companies and secondary leasing companies. Leasing rates vary drastically between the two markets. It is imperative for people exploring the option of commercial leases to check with different leasing companies to find the best deal available to them.
Tomorrow I'm going to talk about conditional sales contracts.
Until then,
Alan

Personal Leases (cars, household furnishings etc., )

2007-02-28T10:35:00.000-08:00

Hi,
Leasing offers the consumer another financing option when obtaining cars, household goods, musical instruments etc., A lease is really nothing more than a rental agreement which, at the term of the lease, means you own nothing. Leases have advantages and disadvantages. The most important thing is to be aware of the total cost involved in leasing and comparing it to buying the same item. For example, many people prefer leasing cars compared to purchasing them due to a lower outlay of cash, and in most instances a lower monthly payment. Most car leases have a built in maintenance program that is factored into the cost of the lease. The downside of car leases is that you have a perpetual car payment you may avoid if you purchase the vehicle. Another lease people encounter is the furniture lease. This type of lease is beneficial when a person's situation dictates a short predetermined amount of time in which they will be staying someplace. Furniture leases are not to be confused with rent to own programs. Rent to own programs are generally three to four times more expensive than leases and should only be used in certain situations. About the only benefit of the rent to own programs is that you can walk away from your obligation at the end of each month and not owe any more money. This factor makes them suitable for people that are going to be staying somewhere for a short undetermined amount of time. Financing on leases is generally disguised in what is called a money factor. In most instances a money factor is nothing more than a financial calculation that charges people so much per thousand dollars over the term of the lease. When you obtain an auto lease, the leasing company is charging you on two different fronts. The first one is the depreciation of the car over the term of the lease and the second is that they are passing their cost of the money they have in the car onto you. As with all types of financial instruments, leasing alternatives should always be investigated prior to purchasing an item.
Tomorrow I'm going to talk about commercial leases.
Until then,
Alan

Other Mortgage Structures

2007-02-27T10:58:00.000-08:00

Hi,
Some of the remaining mortgage structures are 15, 20, 40 or 50 year mortgages. In addition some financial institutions are utilizing reverse mortgages. 15 and 20 year mortgages are generally used when people do not want the burden of a 30 year mortgage and want to realize the savings of a shorter term. Either one of these mortgages saves the borrower tens of thousands of dollars over the term of the loan. In some instances, certain institutions are not allowed to give over a 20 year mortgage due to credit guidelines. The trade-off in either one of these mortgages is that for a slightly higher payment the borrower realizes substantial savings. The interest rates on these loans are usually comparable to those of the 30 year fixed mortgage. 40 and 50 year mortgages evolved to allow high credit risks the ability to purchase property and in some cases, borrowers to purchase a more expensive home than they normally would be able to afford. These mortgages generally come with a variety of payment options including interest only payments. While this sounds attractive on the surface, the borrow is not building any equity in his or her home as long as the principal remains unpaid. Interest only mortgage payments are suitable for buyers with substantial but erratic incomes. It allows these buyers to remain current on their mortgage payments while paying down the principal whenever funds are available to them. Reverse mortgages are one of the newer financial instruments available to people. A reverse mortgage is that a financial institution agrees to buy an home for a specific amount of money and pay the owner in monthly installments. One reason for the evolution of this financial instrument is that people are living longer and want to remain in their homes. They find themselves without an adequate income, but with equity in their homes. The downside to reverse mortgages is that in most cases appreciation in the properties is lost. It is important for all borrowers to be aware of unusual additions to their mortgages. These include, but are not limited to, excessive points, finance charges and balloon payments. Tomorrow I'm going to talk about leases.
Until then,
Alan

Conventional Mortgages

2007-02-26T10:45:00.000-08:00

Hi,
A 30 year fixed rate mortgage is a loan in which the principal and interest is repaid in equal monthly installments through the term of the loan. Until 35 years ago, almost all mortgages were 30 year fixed rate mortgages. The primary reason for this was the peace of mind that borrowers received knowing that their house payment would not change. Another benefit of conventional mortgages was that they didn't have points, prepayment penalties and other hidden fees. People had to meet strict credit guidelines to qualify for conventional mortgages. Beginning in the late 1970's, interest rates began to rise, peaking at over 13% in 1983. When the interest rates began to rise, the number of people who qualified for mortgages decreased. In order to support the housing industry, it became necessary for financial institutions to create a multitude of other mortgage structures people could qualify for in order to purchase homes. Very often these other mortgage structures enabled borrowers to obtain a mortgage that they wouldn't be qualified for under 30 year fixed mortgage guidelines. In most instances, the majority of people would convert these other structures into 30 year fixed rate mortgages as soon as possible. One component of 30 year mortgages, which has virtually disappeared in the marketplace today, was that almost all mortgages were assumable: people who bought homes assumed the existing mortgages. Eliminating assumable mortgages has allowed lenders to make more money and reduce risks associated with loans. When shopping for a mortgage, it is important to check with a variety of institutions, due to the fluctuation of mortgage rates among lenders. Tomorrow, I'm going to talk about the remaining mortgage structures.
Until then,
Alan

Adjustable Rate Mortgages: Risks and Attractions

2007-02-23T09:30:00.001-08:00

Hi,
Adjustable Rate Mortgages,(ARMS), are structured in such a way that your monthly mortgage payment is tied to the current prime rate. It is unlikely, but possible, for your mortgage payment to change every month with the fluctuation in the prime interest rate. These mortgages are most common in the secondary market because they are geared to take advantage of high risk borrowers. By using this type of structure, the lender effectively eliminates the risk of funding a mortgage at an interest rate under current prime rate. For example, if a lending institution funds a 30 year fixed mortgage at 6% and two years later, the prime interest rate rises to 8%, in effect, the institution is not getting the maximum yield on its' investment.
In contrast, with an adjustable rate mortgage, that risk factor is eliminated because the borrower's mortgage payment is adjusted according to the rise in interest rates. Due to volatile interest rates, borrowers are faced with payments that can increase 25%-35%. Since it is impossible to forecast interest rates, it is therefore very difficult for borrowers to cover rising monthly mortgage payments over the term of the loan. In some instances, these loans might also have a balloon payment, usually scheduled to come due 5 or 10 years into the loan. The selling point that lenders use for ARMS is that the interest rate is usually lower than a 30 year fixed (conventional) mortgage. This entices borrowers to think that they are getting a cheaper mortgage, and because they save a few dollars on their monthly payment now, buy into the program. It is much easier to successfully administer long range financial goals when the borrower has constant mortgage payment. Numerous times, out of necessity, ARMS are the only available mortgage vehicle available to a borrower. If that is your situation, make sure you explore refinancing your mortgage into a conventional mortgage as early as possible. Most mortgage companies will refinance someone with an ARM after a five year payment history has been established.
Monday I'm going to talk about conventional mortgages. Have a good weekend!
Until then,
Alan

Adjustable Rate Mortgages: Risks and Attractions

2007-02-23T09:30:00.000-08:00

Mortgage Overview

2007-02-22T11:27:00.000-08:00

Hi,
Different types of mortgages have grown enormously over the last ten years. The reasons for this vary from accommodating buyers to making more money for lenders. There has been quite a change since our grandparents' day when 90%+ of mortgages were one type: the 30 year fixed rate mortgage. In the the past, many of these were assumable mortgages, which meant that buyers generally did not have to seek financing on their own. They simply needed to qualify for the existing mortgage on the home they wanted to purchase. In today's mortgage market, the most important factor is for people to do their research and find the most economical form of financing to fit their needs. Generally, the cost of mortgages is directly related to the credit worthiness of the buyer. A mortgage is no different than any other loan in that obtaining funds from a primary lender (IE., banks, credit unions etc., ) is more economical than dealing with secondary lenders. The costs in getting a mortgage differ from lender to lender. These costs include, but are not limited to, appraisals, title insurance, and points.
1) Appraisals: Some lenders use drive by appraisals as a basis for lending money. Others require a full appraisal which costs the borrower more money. Some lenders (primarily second tier) advertise "free appraisals". Those lenders include the appraisal costs under other fees in the loan.
2) Most major title companies are fairly competitive in issuing title insurance.
3) Points: These are usually fees only charged by second tier lenders. The basic premise is that the credit risk associated with the borrower warrants a fee for obtaining a mortgage. These costs are generally rolled into the overall mortgage, so at the time of closing, the borrower doesn't analyze them. Certain circumstances justify the need to get a mortgage which includes points. Be aware that an extra $4,000.00-$5,000.00 in fees tacked onto a mortgage can end up costing many thousands of dollars in interest over the term of the loan.
I am going to discuss various mortgages and mortgage rate structures, including the adjustable rate mortgage, (ARM), 15 year mortgages, 30 year mortgages, reverse mortgages, and my personal favorite, 50 year mortgages. Tomorrow, I'll begin with ARM's.
Until then,
Alan

Secured Loans

2007-02-21T10:24:00.000-08:00

Hi,
Some of the most common secured loans we encounter at one time or another are car loans. Generally car loans are financed in one of three ways:
1) Banks or Credit Unions: the first place to investigate for a car loan. When dealing with your bank, the ideal situation is to get pre-approved for a specific amount before you go shopping for a car. This will allow you to take advantage of the most favorable credit terms and will solidify your financial history with the bank. Inquire to see if your bank carries an inventory of repossessed cars, which are usually favorably priced. Also banks sometimes have relationships with car rental companies and offer special loan rates to their customers for car rental purchases.
2)Major Dealer Financing: Dealers advertise auto loans at incredibly low interest rates that often seem lower than banks or credit unions. The reason for this is that they can inflate the cost of the vehicle. Another way they off-set the cost of their low interest rates is by giving people less for their trade-in. For higher credit risks, dealers often promise financing no matter what your credit history. Generally, they shop various finance companies until they find one that will take your loan. The interest rates on these loans are typically the highest of all car loans.
3) Independent Car Lots: These establishments will generally offer financing in any way that will seem to work to you, the consumer. They offer payment schedules by the month, by the week, and probably somewhere in the country, by the day. Their financing is generally very high risk, and they operate on the principle that with the exorbitant interest rates they charge, they can afford to have an high default rate and high repossession rate. This is not to say that independent car dealerships are not a good place to look if you are paying cash for a car.
As in dealing with all types of credit, car loans are no exception. If you are having problems paying your car loans, contact your creditors as soon as possible.
Tomorrow, I'll introduce the topic of mortgages.
Until then,
Alan

Risks Associated With Other Personal Unsecured Loans

2007-02-20T16:12:00.000-08:00

Hi,
Some other unsecured personal loans take the form of charge cards for department stores, gas stations, credit cards for home improvement stores, small businesses which have open charge accounts, etc.,. There are inherent risks associated with each one of these. Many times we find ourselves purchasing goods at a department store or home improvement store, because that is where we have a credit card, even though the same items might be available for less at another store. The same scenario applies to gas purchases and is particularly important due to the large fluctuations in gas prices from one station to another. Also, charge cards influence us to use convenience as a value when buying, rather than price. These are some examples of various unsecured loans we grant ourselves. Using these types of loans can become risky if we are experiencing financial difficulty. When experiencing financial trouble, it is imperative to contact these creditors as soon as possible.
Tomorrow I will discuss secured loans.
Until then,
Alan

Credit Principles Past and Present

2007-02-19T14:56:00.000-08:00

Hi,
If we thoroughly examine the way credit practices were carried out in the past, we will find solutions to many of today's credit problems. Many people who find themselves in current credit trouble are people who would not have been extended credit under past guidelines. In the past, people used unsecured loans to obtain needed goods or services. Therefore, it was worth their time and energy to go through the credit process to qualify for the loans. Very seldom were personal loans issued for such things as a trip to the mall, or a night out on the town. Credit cards are now easily obtainable, and people are enticed to spend money. Consumers are encouraged to utilize credit cards whenever possible in lieu of cash. The ease in which consumers can use their credit cards causes overspending which results in financial hardship. Some ways we can integrate past credit principles into our financial management techniques of today are:
1) Have the mindset that credit cards are personal unsecured loans and not cash.
2) Use credit for big ticket items and services.
3) Have a repayment plan in mind when making a credit card purchase.
4) The strongest credit principle from the past was that, in general, people didn't spend money they didn't have, and credit was extended carefully to people who could demonstrate that they had the ability to repay the loan.
Tomorrow we will talk about other types of unsecured personal loans.
Until then,
Alan

Unsecured Personal Loans

2007-02-16T10:55:00.000-08:00

Hi,
Unsecured loans have come a long way since their inception. The pinnacle has been reached in the form of bank credit cards that allow the consumer to take out many little unsecured loans. Every time you make a purchase on your credit card, you are, in effect, taking out another loan from your credit card company. At the end of each month your credit card company combines all your many little unsecured loans and bills you for the total. Compared to fifty years ago, when most unsecured loans involved going and talking to your bank, filling out applications, and going through an approval process, today receiving unsolicited pre-approved credit cards in the mail is considered a streamlined way to get consumer credit business. This practice of the lending industry results in many financial problems for the credit user. One of the major advantages of past credit practices was the full disclosure of the terms and conditions of the loans to the customers. This allowed consumers to be fully aware of the terms, conditions, and obligations of their loans before they accepted them. In today's credit market, full disclosure is given often times in a labyrinth of small light print on the back page of one of the credit application forms. Tomorrow I'm going to talk about some of the old school loan habits you can use to manage your financial affairs in today's credit market.
Until then,
Alan

A List of Various Ways We Incur Debt

2007-02-15T21:27:00.000-08:00

Hi,
We're going to investigate various types of debt in detail:
1) Personal loans both unsecured and secured
2) Credit card debt: business, personal and Internet
3) Leases
4) Mortgages
5) Conditional sales contracts
6) Finance company debt
7) Credit lines
8) Charge accounts
This is not an exhaustive list of types of debt, but one which covers the instruments by which most people incur debt. We will discuss the risks and rewards of each of these loan structures in following blogs.
Tomorrow the topic is unsecured personal loans.
Until then,
Alan

A Budget Method For People In Trouble

2007-02-14T10:32:00.000-08:00

Hi,
When your income can't possibly cover your fixed monthly expenses and other monthly expenses, drastic action has to be taken for month to month survival while you're working yourself out of your situation. First let's address a monthly budget for your fixed expenses. The following methods might help to ensure that you meet your monthly goals for food, utilities, and transportation:
1) Pay your rent or mortgage.
2) Analyze your utility bills. Investigate any payment programs offered by your companies. Some companies offer programs in which utility costs are calculated evenly over the year reducing fluctuations in monthly payments. This will prevent you from being caught with an unexpected high bill one month due to weather etc., Find out every method available given to you by your utility companies to conserve and reduce, which will then reduce your cost.
3) Revisit your monthly transportation cost. Is this an area which can be trimmed?
4) Food and drugstore expenses: Establish your food and drug store budgets for the month. Buy gift cards for the stores in which you shop, and use them to manage your budgets. It is important to save receipts for every food and drug store purchase. This allows you to analyze expenditures if you go over your budget in those areas. Your goal is to recharge the cards on a monthly basis.
5) Cash. Set aside the amount of money you will spend on "whatever" during the month and place it in an envelope. This envelope might be empty until you reap the rewards of going under budget in other areas.
Tomorrow I'm going to begin a series of blogs identifying different types of debt.
Until then,
Alan

Entering The Caution Zone

2007-02-13T10:19:00.000-08:00

Hi,
When you feel as if you are losing a grip on your expenses, it is time to act in order to reverse the trend before it does damage. Some typical red flags are as follows:
1) You find yourself sending in a little less on your credit cards each month.
2) You stop opening bills when they arrive in the mail.
3) You find yourself transferring money from savings to checking more often than usual.
4) You stop putting money into savings.
5) You start charging items you used to pay for with cash.
6) You stop the maintenance of your monthly budget.
7) You stop talking about finances with your partner.
If any of the above sound familiar to you, it is time to take immediate action to prevent financial chaos. The first thing to do is sit down and reacquaint yourself with your budget and increase the amount of maintenance you've been allotting to it.
By comparing your credit card bills for the last few months with prior months, you should get an indication in what area spending has increased. This analysis should identify whether the spending is acute or chronic, and enable you to make the adjustments to get back on track.
Tomorrow we will talk about red light budgeting for people who are in deep financial trouble.
Until then,
Alan

Why Everyone Needs a Budget

2007-02-12T10:43:00.000-08:00

Hi,
Sound financial management begins with being aware of both income and expenses. Having a good salary is meaningless if we don't know where it goes every month. Everyone has different criteria for how they use money. It's necessary to select a budget model which enhances personal criteria. There are hundreds of models one may use to create a budget. I am going to discuss three budgeting methods I tell people about, since in my experience, most financial situations can utilize one of these models:
1) Green light budget: low maintenance, low energy
2) Yellow light budget: financial situation needs to be brought back into balance.
3) Red light budget: high maintenance, high energy, drastic action needed.
Today I'll outline my concept of green light budgeting, and explain yellow and red light budgets in future blogs.
People who can use green light budgeting are people who are on sound financial footing, and want to ensure that they remain that way. If you want to use this approach, spend a few hours each month recording your expenditures either manually, or using various computer programs. This will keep you aware of any large fluctuations in expenses and allow you to deal with them in a prudent manner. After following this model for a year, you will be able to identify payments which occur quarterly, semi-annually and annually. You will find these figures on your bank statements and credit card statements. The purpose of this low maintenance budget is to essentially track spending in order to maintain financial stability.
Tomorrow I'm going to talk about yellow light budgeting for people who feel as if their financial stability is begining to erode.
Until then,
Alan

The Remaining Expense Receipts

2007-02-10T12:01:00.000-08:00

Hi,
Many people discover that drugstore receipts make up the majority of the remaining expenditures. Due to the significant increase of the number and type of items offered in drug stores, people tend to arrive at the check out counter loaded down with many more items than their prescriptions or health care products. Drug stores also offer discounted items. When buying items from another budget category, such as food, at a drug store discount, separate out that line item on your receipt so that your budget accounting is accurate. As previously mentioned in our food blog entry, be sure to check out weekly ads because drug stores also vary greatly in their weekly pricing for the same items.
Other expenditures:
1)In choosing a dry cleaner there are many things to consider. The biggest factor dry cleaners use to set their price is location. If they're in an high rent district, they have to pass their rental costs to their customers. Inquire to see if your dry cleaner offers coupon books. Sometimes dry cleaners reward their regular customers with a free dry cleaning offer after "x" number of visits.
2) There are a variety of ways to reduce your monthly transportation costs. Numerous people save significant amounts of money on a monthly basis by parking their vehicles outside the high priced downtown corridor. Many cities have a free ride zone at their urban center. Other expense reduction methods include employee ride share programs, and utilizing mass transit whenever possible. Due to volatile oil prices, gasoline may fluctuate up to .50 a gallon among stations in your locale. Take advantage of lower fuel costs.
3)Miscellaneous receipts: Use price comparison shopping the Internet and store ads.
Sometimes gently used items can be purchased at a significant savings. You'll be amazed to see the difference between the price of new textbooks at the school bookstore, compared the price of the same gently used textbooks listed by an online bookseller.
Tomorrow we will begin our discussion about different budget methods.
Until then,
Alan

Grocery Receipts vs Food Budgets

2007-02-09T11:13:00.000-08:00

Hi,
Many people are surprised when they look at their grocery receipts for a month because they tend to be significantly higher than the amount they allocated for their food budget. There are numerous reasons for this. I will identify some of the common ones:
1) One of my favorite ploys is the "buy one get one free" enticement. In most instances, it is "buy one, get a quarter free". Stores do this by inflating the price of the item to make you think you are getting a better deal than you actually are due to their presale mark-up.
2)Another common marketing ploy is "bigger is better". In many cases the actual price is no different, or in some instances even higher by buying a large quantity of something. To find out what an item really costs, look at the per ounce cost. Sometimes people buy large quantities to take advantage of the price even if the product will not be used before going bad, and will be inconvenient to store. It's not a deal if you end up throwing it out.
3) Large discount food stores create the impression that everything they carry is the best deal in town. This is not always the case.
4) Don't use coupons unless they are for a product you use, or plan to use. Getting a good price on something won't help you if you don't need the item.
One tool which can be invaluable to people in lowering their grocery bill is to scan the weekly ads which come in the mail (these are also online). The savings from one store to another on the same item can be dramatic.
Tomorrow we'll finish this discussion by covering the rest of the stacks of bills.
Until then,
Alan

The Red Zone

2007-02-08T10:34:00.000-08:00

Hi,
Over the years, I've noticed that many of my clients with severe debt problems have fallen into one or more red zones. Today I'll talk about entertainment red zones. A common topic in the entertainment red zone is going on what I call "a credit vacation". Vacationing now, and paying for it in the future, results in compounding existing debt problems while creating new ones. It is important that people be aware that credit vacations can cause unforeseen future problems.
Let's examine the every day little red zones people might slip into:
1) Airports. Everywhere you turn, you pay exorbitant prices for goods and services. Parking, eating, drinking, gift shop items etc., cost you much more inside the airport than they do off site. Hopefully you're on an expense account and the above danger is a moot point.
2)Sports events. Sometimes we associate the cost of a baseball game with the price of the tickets. We don't factor in the costs of parking and concessions which many times can equal or exceed the cost of the tickets.
3)Transportation. Downtown parking is a red zone which can be avoided by parking in a commuter's lot and taking mass transit into the urban center.
These are just a few examples of common red zones. Identifying your personal red zones is a necessary step in planning your debt management strategy.
Tomorrow we'll talk about the pile of grocery receipts.
Until then,
Alan

Tracking Your Monthly Expenses by Category: Entertainment

2007-02-07T12:59:00.000-08:00

Hi,
Many people know that they spend more money than they make each month. The next step in categorizing your expenses allows you to see in detail where you spend your money. After you get a grand total of all categories, and compare it with your monthly income, you will get a good idea of how much you need to reduce your expenditures. By analyzing each category you will be able to determine in what area you feel comfortable reducing your monthly expenses. Today let's start by looking at your entertainment expenses for the month. When you look at your entertainment dollars, it's a good idea to break out your morning coffee expense, lunch expense, and your after work drink with friends expense. For example, if you buy a coffee specialty drink in the morning at $3.50 and at lunch, you spend $6.00-$8.00, followed by a couple of $3.00 beers or wine, you are conservatively spending $250.00-$300.00 a month on these pleasures. This is generally a good area in which to painlessly reduce some of your monthly spending. Now let's address dinner. In looking back over a month's spending, some people are shocked to learn how much money was spent on fast food at dinner time. For sound debt management, money spent eating out needs to be considered entertainment and not part of the food budget.
Tomorrow: red zones.
Until then,
Alan

Chronic Monthly Bill Problems

2007-02-06T11:43:00.000-08:00

Hi,
I will be writing blogs to cover various aspects of monthly bill paying problems. Today I want to address a method to identify our miscellaneous monthly expenses. These include grocery bills, drugstore charges, dry cleaning, entertainment, etc. The only way to get an handle on our monthly expenses is to know where we spend money. Many of my clients have been successful using the following method to identify miscellaneous expenses.
For one month:
1) Save all receipts (including ATM receipts), charge slips., records of donations etc, for EVERY dollar that you spend in a month.
2)At the end of the month separate your receipts into the following categories: food, drugstore expenditures, entertainment, transportation, clothing, donations, dry cleaning, and miscellaneous.
3)List all your receipts relevant to each category, recording each receipt and date of each expenditure.
4)Total the amounts of each category.
The accumulated information will give us effective data in getting monthly obligations under control. Many people doing this exercise are amazed to find out the amount of money they actually spend in different areas of their lives.
Tomorrow I will blog about the various categories and relevant ways to reduce expenditures in each.
Until then,
Alan

How To Stretch Your Bill Paying Dollar

2007-02-05T10:30:00.000-08:00

Hi,
Our focus is to identify whether the need to stretch our bill paying dollars is a chronic or acute problem. Today we'll deal with the acute scenario. Sometimes unforeseen expenses do not allow us to meet our monthly obligations. In this case, first pay the rent or mortgage in full. Then total the rest of your bills. When you compare the amount of your remaining bills with the amount of the available funds you have left, you will be able to determine the prorated amount you can send to each creditor. Example: If you have $1000.00 and you have $2000.00 remaining in bills, you can send each creditor 50% of their payment. It is imperative to contact your creditors, and explain your situation to set-up a payment schedule that will bring your account current over the next two months. Generally all creditors are more than willing to work with their customers if their customers are forthcoming about their problems. The only time creditors react in a negative way is when their customers ignore repeated attempts at communication for the purpose of resolving their accounts. Do not under any circumstances ignore written communication, phone calls or electronic communications from your creditors. Remember that your creditors are in the business of providing goods and services to you and are not in the collection or repossession business. Last but not least, never make a payment arrangement you know you can't keep. Tomorrow we will discuss chronic financial difficulties.
Until then,
Alan

The Never Decreasing Balances

2007-02-04T14:31:00.000-08:00

Hi,
Now let's look at those bills that never seem to go down. Generally these balances are comprised of unexpected expenses which occur for all of us. Because these balances are unexpected, and not part of our monthly budget, we rationalize that it's ok not to pay them off as they occur. Or, we simply might not have the financial resources to do it. Your credit card company sets up your statement to specifically take advantage of this situation with the infamous "minimum payment due" option. When people make a minimum payment, they feel that they have made their monthly credit card payment. However, in many cases, making a minimum payment means that only the interest on the balance has been paid. Many times a person will pay the minimum payment for twelve months and be surprised that their balance has not decreased at all over the year. The only way to move this situation in a positive direction is to call the credit card company to ask them to work with you in finding a solution. Depending upon your situation, the credit card company might be able to reduce your interest rate, freeze your interest rate, and in some cases, reduce your balance. Tomorrow we will talk about stretching your bill paying dollar.
Until then,
Alan

How To Talk About The Other Pile of Bills

2007-02-03T13:11:00.000-08:00

Hi,
You've set aside your pile of living expense bills, and now let's look at your other stack of statements. These bills may carry emotional flashpoints for you, frustration that the balance never seems to goes down, and that there never seems to be enough money to go around. I will address how to deal with these bills in great detail in future blogs but today's topic is how to talk about them with your significant other, creditors, and in some cases, yourself. To effectively get your debt under control, you need to identify which of these areas are keeping you from talking about solutions to your debt problems. Generally in dealing with debt which has emotional baggage attached to it, we should consider designating a third party to handle communications with the creditor. The third party might be a spouse, relative, friend, co-worker, or professional. Tomorrow we will talk about the infamous never decreasing balance.
Until then,
Alan

Talking About Debt

2007-02-02T10:10:00.000-08:00

Hi!
Before you can talk about your debt, you need to get all the current balances on your existing debt. If you don't have your statements on hand right now, most information can be obtained from creditors electronically, i.e. the telephone or web sites. If you've lost your account numbers, usually your creditors will be able to access your accounts using your social security number. Once you get all your bills together, take out your monthly living expenses. We will address those first. In general, these bills do not have any emotional attachment to them, and as a result, are easy to talk about. However, if they are not handled properly, they will affect your entire household. Basic monthly living expenses include rent or mortgage payments, sewer, water, garbage, electricity, telephone, food, heat, internet connection service, medical co-payments, insurance, transportation costs, etc. If you're behind in any of your utilities, call the companies and make payment arrangements with them. If you are late in your mortgage or rent payments, you might consider asking your mortgage company or landlord for a different payment date. If making rent or mortgage payments is an ongoing problem, I will address that situation in a future blog. You will have a much brighter financial future by handling your monthly expenses in a timely manner, and quickly communicating with your creditors if you can't, due to the positive impact it will have on your credit scores.
Tomorrow we will talk about the other pile of bills.
Until then,
Alan
http://olympicdebtspecialists.com/

Scared to talk about debt?

2007-02-01T11:07:00.000-08:00

Did you know that most people are afraid to talk about debt? Both single people and married couples find themselves avoiding their debts in a variety of ways including not opening their mail, losing their bills, and accidentally throwing away their credit card statements. Avoiding debt causes multiple new problems for people who owe money. Over the next couple of weeks, I'm going to blog about how to take that first step in identifying your debt problems, and what you can do about them. Tomorrow I'm going to tell you how you can begin to analyze your own debt.

Until then,
Alan