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4 Reasons To Review Your Credit Report...Now

 

1. NON-LENDERS USE YOUR CREDIT INFORMATION TO MAKE DECISIONS ABOUT YOU.

check your credit report resized 600

The information contained in the report can affect many areas of daily living that have little or nothing to do with the extension of credit.  Car insurance companies, landlords, prospective employers and a host of other enterprises may use your credit history as a basis for setting rates, giving you a job or renting you an apartment. 

 

  2. MANY CREDIT REPORTS CONTAIN INACCURATE INFORMATION.

It is up to you to determine if there are errors on your credit reports. Any errors These make up your credit scoreshould be disputed in compliance with the credit reporting bureau. Negative errors on your report can have a huge impact on your ability to get credit. 

 

  3. A DETAILED CREDIT REPORT REVIEW MAY UNCOVER IDENTITY THEFT.Identity Thief

Unknown entries on your report may be the result of an honest mistake or it could be evidence that someone is trying, or has tried, to use your name or social security number to open credit lines or steal your identity. The FTC has a step by step process to follow to help report and repair the damage to your credit image. 

 

4. CERTAIN ENTRIES MAY ALERT YOU TO LEGAL ACTIONS.

Legal actionYou could be facing tax liens, mechanics liens or other legal actions of which you were unaware.  Public records filings (where you are named) are contained in a section of the credit report and lists those items when reported through the courts and other agencies.

 

 Don't be caught unaware!!! Know your credit score and have the knowledge you need to make your financial plans for 2013.

When you use the services of a Certified Credit Counselor to conduct a Credit Report Review, you have the advantage of someone who can explain the layout of the report, the codes relating to each entry and actions that you may take to improve your credit file and ulitmately your finances. Click here to fill out the form and receive a free copy of the FTC's "Taking Charge", which will offer steps you can take if you have been a victim of identity theft.

5 Tips to Financially Help Your Adult Children Living With You.

 

Financially helping your adult children You or someone you know probably have adult children living with them.  A combination of college graduates unable to find permanent employment, couples now separated by divorce and not being able to live on one paycheck or adult children unemployed for several months and no longer having the financial resources to fully support themselves have created a culture of long term financial support from parents. Parents in their 50’s and 60’s now place their own retirements at risk in order to financially help adult children. So how can parents “help” without losing their sanity (or their finances!)?  Here are five tips that may help:

  1. Make sure that the adult children help around the house. They are not a sixteen year old child. They need to be a major part of your family with responsibilities to help the family function (especially if you are working and they are not).  This could include doing the cooking each night, doing the laundry, and helping with the cleaning.  Parents I have interviewed say they feel they have been “invaded” by their children. The adult children need to respect the parents space by keeping their space tidy.
  2. Parents are not the on call baby sitter. Adult children have a life of their own and parents need to respect that.  The same is true for you.  Adult children do not need to expect parents to baby sit on demand.  Although unexpected things happen, it does not mean that parents must act as the main transporter of grandchildren to activities, rides home from practice or nursing them when they are sick.  This is not to say agreements cannot be made that are fair to you and helpful to them.
  3. Encourage adult children to find employment even if it is not in their “field of interest.”  They need to be contributing financially to the family in some way if possible.  This is not a time for adult children to set around trying to find themselves.  They can do that by expanding their mind as they work even in menial jobs.
  4. Define in specific terms how you will provide financial help to them. Take into consideration the free rent, utilities and food when determining how much financial help you will give.  Often times, adult children expect that kind of help and do not give it the value it should have.  You may also decide to help with car insurance, school supplies for grandchildren and maybe gas for the car if they are job hunting.  It is not advisable to give money for clothing, eating out, or recreation.  Give them a motive to find employment.  If you pay for everything, why should they work?
  5. If possible, try to set a time limit that you will provide financial assistance.  Set a time line where goals should be completed.  Whether it is job hunting or finishing school, a time line will help each party know what needs to be done.  If they are job hunting, then follow up with them on how many interviews they have had and suggest any networking tips you find.  Don’t leave them on their own to locate employment. It can be very discouraging but that is part of the learning.  Keep pushing them to do their best.

Don’t let their problems become your problem.  They need to be active in solving their own issues whether it is how to find money for gasoline or how to pay the car insurance.  You are not their “bank”.  To do so puts your financial future at risk and you do not want to become a burden on them in later years.  They may not be able to help you financially so it is up to you to put your needs first.  That sounds hard, but these are ADULT children and may not even realize the financial strain of helping them has placed on you.  

If you would like counseling assistance in this area, contact Family Life Resources, Inc. Visit our website to find our programs and educational material.  We will be glad to meet with you and develop a plan so your adult children can get the help they need and you will have action steps defined for everyone involved.

How Much Is Too Much Debt?

 

How much debt is too much?How Much Is Too Much Debt?

Realistically we can expect to have some debt as part of our financial picture. The question is how do we know if we have too much debt?  You cannot judge this just by the amount of debt alone.  What can seem a manageable amount for one person may be too much debt for another.

While credit card debt is the usual culprit, any debt can spiral out of control.  In the last few years, a once affordable home grew from a dream home to a nightmare due to mortgage payments increasing because of increased taxes, increased home insurance rates or it decreased in value due to the housing bubble that burst and left many with underwater mortgages. 

The best way to gauge your debt is to look at your debt to income level.  A debt to income ratio is determined by the combination of all of your debt compared to your income level.  By calculating these figures, you can determine if you are headed down the road to financial stress.  To calculate your debt to income level:

  • First add up your total income.  This includes income from your job, child support, benefits, pensions and any government assistance you might receive ( ex: food stamps) as well as any support money received from family and friends.
  • Next, calculate your monthly obligations.  This would include your car payment, mortgage payment ( including taxes and insurance), credit card payments, student loans payments, and any other monthly bills including utilities.
  • Then, divide your monthly debt total by you monthly income total and multiply that number by 100 to calculate your debt to income ratio.

Now, use this guideline to help you gauge your current financial standing:

Your debt to income ratio is less than 35%.  You are in great financial shape. You have money to set aside for emergencies and investments which can help you keep your debt to income level low.

Your debt to income level is between 35% and 45%.  This is an acceptable amount of debt but a major purchase such as another car would put you over the edge. The more wiggle room you have the better off you are to offset any unexpected expenses.

Your debt to income level is between 45% and 50%.  You are on the verge of financial distress. You have no wiggle room left and any financial crisis such as a major car repair can have devastating effects. Now is the time to address this issue and make sure you do not add to the debt load. Contact a Certified Credit Counselor to help you find resources to better manage your debt.

Your debt to income level is more then 50%.  You are in a financial emergency. You can not continue to carry this debt load and have a secure financial future. You will need to look at major changes in how you manage your money that might include taking on a second job, selling your assets to pay down debt or perhaps you may need to file bankruptcy if you do not have the resources to increase income.

What does the debt to income level really mean? It is a gauge to how well you will be able to handle a financial crisis, plan for retirement and adjust to increases in cost of living expenses such as gasoline and food. In essence, it determines how financially healthy you are today and for the future. If your debt to income level is too high, take action now. Contact a Certified Credit Counselor and take the necessary steps to start on the road to financial recovery.

I'm Never Going Into Debt Again! Yeah, right.

 

I'M NEVER GOING INTO DEBT AGAIN!  Yeah, right.never again in debt

Keep talking.  You claim that in this downturn you learned your lesson and that you'll never borrow another dime.  You have sworn off the credit cards, will pay cash for your next used car and are finished with home equity lines of credit.  Keep talking.

As our recovery lumbers into its fourth year (or 5th, I lose track) it seems like the environment will never again be favorable to the practice of borrowing money.   We remember the heyday of easy credit and swelling balances and wonder how we could've been so foolish.  Families are now paring down debt, especially on credit cards and home mortgages.  There is a great resolve to clean up our personal balance sheets and pay only in cash. But, as history has taught us, this phase will pass.  It may take some time and will require that the job market recovers and might take a good up tick in house prices, but one day it will come.  And you'll find yourself all atwitter at the thought of powering down the road in that shiny new ride.  You know you will.

Some of you might indeed succeed in living the Dave Ramsey life and I hope you do.  But  everybody else needs to take the time now, while the recession is still fresh, to consider how you'll behave once the crisis has passed, jobs are more secure and your home hasn't dwindled to 40% of what you paid for it.  A former chairman of the Federal Reserve described our late 90s/early 2000s debt party as a period of "irrational exuberance" where people lost their minds with the goal of borrowing too much and spending too much.  Let's consider a few ways to avoid attending the next party.

FOUR THINGS TO ASK YOURSELF TO AVOID TAKING ON TOO MUCH DEBT:

1. Is my job really that secure?  A lot of folks took out loans only to find that their income was reduced or eliminated.  Future economies will probably be in a continuing state of change where entire industries are created and eliminated. The reality is that incomes go up and down, but household debt remains constant.

2. Is the amount of debt I'm incurring for a need or a want?  You need transportation.  You want a Lamborghini.  Here's a trick that's helpful:  borrow only the amount that will satisfy the need and pay in cash for the want.  LamborghiniWhen making a transportation decision, you can borrow $13,000 for a Toyota Corolla (need) and pay the  additional $224,000 in cash if you want to step up to a Lamborghini Gallardo (MSRP $237,000). 

A little more realistic example is when shopping for a refrigerator.  Borrow the $550 to buy the basic model, but if you want the model in stainless steel, are you willing to shell out an additional $400 in cash?  Spending cash is more painful than putting it on plastic, so it will make you stop and evaluate how much this want is worth to you.  

3. Is this purchase so important that I'll gladly make payments long after I'm tired of the product?  Some people get a real "high" by making a purchase on credit, but weeks later the pleasure has worn off and they are faced with a monthly visit from the credit card statement and his sidekick named 29%.  Pleasure goes up and down, but household debt remains a constant.

4. Will this debt payment "crowd-out" other spending that could bring real joy to my life?    You've probably witnessed families whose house payments are so large that they cannot afford to furnish the place.  Or they can't go on vacation.  I knew a guy who had a truck payment so large that he couldn't afford to put gas in it.  In a later blog, I will discuss the concept of Debt-To-Income ratios and how they are designed to keep you from becoming house-poor or truck-poor.  I'll also try to make the case for why most traditional rules surrounding those ratios are sure to set you up for failure. 

All I know is that some time in the future you're going to forget about the past 5 years and get the urge to go back into debt.  When you do, remember that good times come and go, but debt remains constant.

 

  Images Credit: FreeDigitalPhotos.net             http://www.freedigitalphotos.net

The (Sad) New Retirement Strategy: Delaying The Date

 

Delay The Date

 

          RETIREMENT: DELAYING THE DATE

Many people have dreamed of leaving the workplace and living a life where they keep their own schedule and fill their days with pleasurable pursuits.  They dream of retirement.  But events of the past two decades have challenged those notions and forced the vast majority of older workers to re-evaluate plans for their golden years.  

RETIRE AT 65.  WHERE DID THAT COME FROM?

Ask anyone about "the normal retirement age" and they will almost always come up with the number 65.  That number has been enshrined in our social security laws and in the policy manuals of public and private enterprises.  Mandatory retirement at 65 was the rule in many companies through the 60s, 70s and 80s.  But where did that number come from?

It probably was derived from life expectancy statistics of the 1930s and 40s.  If you review the actuary charts from those years you'll find that life expectancy in 1930 was 64.2 years.  When social security was created it assumed that people would only be collecting their benefits for a very few years and so the numbers worked out.  Then something very wonderful happened: people began living longer.  Today the charts show that you will probably live well into your 80s.

WILL YOU HAVE ENOUGH RESOURCES TO LIVE 15 YEARS IN RETIREMENT?

The good news is that we're living longer and our quality of life is much better than in years past.  Balance that, however, with the need to meet basic living expenses for over 15 years after you've left behind a steady paycheck.  Social security will provide some of that income, but many people reach their early 60s with the realization that SSI won't be enough and that they are falling short of saving enough to fund the difference.  The downturn in the economy and decline in many household incomes mean that putting aside extra savings is difficult and a stagnant stock market over the past 10 years has prevented meaningful growth in 401(k) and IRA accounts.

THE NEW STRATEGY: DELAY RETIREMENT

The sad reality of our new economy is that workers may need to consider delaying retirement. Full retirement age (for social security purposes) is moving upward and most baby boomers cannot claim full benefits until age 66 or later.  Many will have no alternative but to continue working into their late 60s.  Staying in your current job for a few more years has three great advantages:

   1. Obviously, the longer you wait to retire, the fewer years your retirement funds need to last and the more time you have to accumulate extra retirement savings. 

   2. Having an earned monthly income could delay your required minimum distributions on IRA accounts until 70 1/2 and that allows the earnings to grow tax-deferred for a longer time.

   3. Wait four more years before claiming social security and your monthly benefit check, at    age 70, will be around 8% higher than at normal retirement age.  That could mean an income boost of several thousand dollars per year.

 EASIER SAID THAN DONE 

There are some problems with the "delay" strategy.  The first is your job situation.  If you are able to remain in your current position, then delaying can be beneficial.  But if you are now jobless or will be facing a layoff, you'll need to be mindful of the difficulties of competing in the new economy.  Keep your digital skills (computer, communications, etc.) sharp and don't lose your marketplace contacts.  Stay current on the issues affecting your profession.  Click here for tips on job searches for seniors.

The other concern is one that is more difficult to address and that is your health.  By age 65 some people are facing medical issues that may prevent them from working.  For this, there is no easy answer.  I talk with many people who claim that they have no retirement plans other than to work their entire lives.  Health issues can take away that option.

If you are some years away from retiring, it is best to try to accumulate enough resources so that you can supplement your social security and be able to pay your basic bills.  Depending on the "delay" strategy has many shortcomings that may or may not be in your control.

For other issues on this subject, see Boomers Working Past Retirement.

                                            Image Credit: Danilo Rizzuti

              http://www.freedigitalphotos.net/images/view_photog.php?photogid=851

Why Review Your Credit File (even if you're not borrowing money)?

 

C  Documents and Settings ADMIN Desktop BlogGraphics review fileMost people think they should review their credit reports only when they are in the loan application process.  While it is important to take a look at your credit before borrowing, there are at least four reasons why you should know what's in the file on a continuing basis.

You can conduct your own review or use the services of a Certified Credit Counselor, but knowing the contents of the report is important because:

1. NON-LENDERS USE YOUR CREDIT INFORMATION TO MAKE DECISIONS ABOUT YOU.

The information contained in the report can affect many areas of daily living that have little or nothing to do with the extention of credit.  Car insurance companies, landlords, prospective employers and a host of other enterprises may use your credit history as a basis for setting rates, giving you a job or renting you an apartment.  Negative items in a credit file can make life more difficult and expensive.

2. MANY CREDIT REPORTS CONTAIN INACCURATE INFORMATION.

Given the impact that a poor credit rating can have on you and your family, it is important to discover and challenge any items that are not correct.  It is your right to dispute items in the report that are inaccurate and the Federal Trade Commission has a site devoted to assisting you in the challenge process. 

Go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm for guidance.

3. A DETAILED CREDIT REPORT REVIEW MAY UNCOVER IDENTITY THEFT.

Unknown entries on your report may be the result of an honest mistake or it could be evidence that someone is trying, or has tried, to use your name or social security number to open credit lines or steal your identity.  Regular monitoring is a good defense against illegal activity or sloppy reporting.

4. CERTAIN ENTRIES MAY ALERT YOU TO LEGAL ACTIONS.

You could be facing tax liens, mechanics liens or other legal actions of which you were unaware.  Public records filings where you are named are contained in a section of the report and lists those items when reported through the courts and other agencies.

When you use the services of a Certified Credit Counselor to conduct a credit report review, you have the advantage of someone who can explain the layout of the report, the codes relating to each entry and actions that you may take to improve your credit file.

                                      Image credit: renjith krishnan

         http://www.freedigitalphotos.net/image/view_photog.php?photogid=721

Can I Lose My Job If I File Bankruptcy

 

Can I be fired if I file bankruptcy?

Filing bankruptcy is always a hard decision to make. While it may relieve you of your debt, it can come back to haunt you in other ways. Under section 525(a) and (b) of the Bankruptcy Code, there are provisions that protect you from discrimination for filing bankruptcy. No employer, government or private, can fire you because you file bankruptcy. Your current employer cannot reduce your salary, demote you or take away responsibility because you filed. However, if there are other valid reasons for the negative actions against you, you would not have a case against your employer for illegal discrimination because of your bankruptcy.

Public Agencies

Federal, state or local government can't discriminate against you by denying or revoking licenses, permits, charters or franchises based on your bankruptcy. They cannot terminate or deny public benefits, public housing, withhold college transcripts or deny you a contract such as a contract for a construction project. You can still apply for government-guaranteed student loans. You can still get a drivers license as long as any debt tied to a suspension of a license was discharged in the bankruptcy.

Private Agencies 

Private agencies are very different. In Myers v. Toojays Management Corp, the Eleventh Circut Court of Appeals affirmed a summary judgment in favor of private business. The court held the under section 525(b) of the code, a private employer may deny hiring an individual based on a past bankruptcy. Companies usually do a credit check as part of the background check done for employment. A past bankruptcy can be an issue. Other private entities are affected as well. Landlords can deny renting property to individuals with a bankruptcy. Credit can be denied from lending institutions and college transcripts can be withheld if it is a private college.

Child Custody

According to the Nolo's 3rd addition of The New Bankruptcy Will It Work For You?, "There are no reported cases from any state of a parent losing custody because he or she filed for bankruptcy." Be aware however that bankruptcy does not wipe away any child support or alimony obligations past or present.

Should you still file bankruptcy? That depends on your individual financial situation and how you see future job opportunities. Your credit will be restored with time. New job opportunities with private companies can be an issue. What would you do? Comment on my blog.

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