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Tax Hacks from the Experts

Tax pros share tips to save both money and aggravation

Upon completion you will know:
• About tax planning
• About deductions
• About tax credits
• About education credits

Welcome to a webinar no one is really excited to attend. I mean, it’s about taxes, right? Well, in this case, we promise it’ll be worth your time — because we’re going to talk about practical and proven tax tips, and we’re gonna do it in plain English, and in less time than it takes to eat dinner.

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

The IRS loves all numbers and the letter W. But what’s it all mean? Once you know what the forms are for, you can get a better sense of how the entire income tax process works. So let’s start with the small numbers and work our way up.

No one likes paperwork, but this is the best IRS form. Why? Because it’s sole purpose is to show you how much you earned in the previous calendar year. It also shows how much tax was withheld, which lowers your tax bill or nabs you a refund. We’ll talk more about withholding in a moment.

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

A W9 is what you fill out when you work freelance or a side gig. It tells the IRS how much you?re making as an independent contractor. If you make more than $600 a year from one employer, you need to fill out a W9. Less than that? You don?t need to declare that income at all.

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

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

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

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

Now let’s talk about what happens when you can’t pay your taxes — or you already have fallen behind. Even if you’re current on your taxes right now, it’s helpful to know this stuff. That way, should you or anyone you know get in trouble with the IRS, you’ll know there are legal ways out of a bind. In fact, the fact that surprises most Americans is: The IRS wants to help you get out of trouble.

You might think the major way to anger the IRS would be to not pay your taxes. Actually, that’s not the case. After all, the tax code is complicated, and the IRS knows that. So they actually want to work with you to make sure everything is proper and legal. But if you ignore their letters, well, then they get upset.

Listen to Tom Vastardis, a CPA and tax preparer with three decades of experience. Tom says, “You should never ignore a letter from the IRS. An unopened IRS letter could eventually lead to bank account levies, garnishments on paychecks, loss of appeal rights in tax court, even a tax lien on property.”

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

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

Regardless of whether you call an expert or go it on your own, the crucial first step is simply taking that first step. Jacob Dayan has been a tax attorney for more than a decade, and his firm has helped more than 60,000 clients. He says nothing is more costly than waiting to reply to an IRS letter that’s sent to you. If it’s a simple matter, you might want to handle it yourself, but Jacob agrees with Tom Vastardis and says for more complicated matters, you’ll actually save money hiring a professional.

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

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

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

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

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

When you owe back taxes, you also get hit with some complex terminology. Just to define that first one, CNC status is what you get if paying anything toward your tax debt would throw you into financial crisis. In that case, there’s a whole separate process you follow.

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

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

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

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

So that’s not the end, it’s just the beginning. If you owe back taxes or fear you’re about to, all is not lost. In fact, you can get professional help and get your life back on track. The IRS might not be your best friend, but it’s not your worst enemy, either. You just need a knowing ally on your side.

Recovering from a Holiday Debt Hangover?

Personal Financial Resolutions for Every New Year

Upon completion you will know:
• How to get free expert help to overcome the debts you just racked up
• How to save for the holidays all year long – and emerge debt-free!
• The process of creating a painless, high-tech budget that will keep you out of debt forever

Hello! How are you today? If you’re like most Americans in January, you could be feeling better. More than half of us won’t pay off our holiday purchases this month. We’ll carry a balance. And that headache is what causes a holiday debt hangover. While we don’t have statistics yet for 2019, we do know the average American racked up just over $1,000 in holiday debt in 2018. That means we overspent on gifts, travel, food, and drink. We put it all on our credit cards, and now we’re struggling to pay it back. Here’s the scariest number of them all. Last year, when 28 percent of Americans started their holiday shopping, they still hadn’t paid off their holiday debts from 2018! They had so much holiday debt, they couldn’t get rid of it before the next holiday season! That’s all kinds of bad. If your holiday debt is adding to your regular debts, and if all that red ink is making you blue, it might be time to seek professional help. A little later, we’ll go over some do-it-yourself solutions, but I want to start with the most powerful debt-busting tools available to you. They might sound too good to be true, but they’re proven and they’re regulated by state and federal governments. Let’s take a look. The first step to curing your holiday debt hangover is to get a debt diagnosis. You don’t go to a doctor, though. Instead, you go to a certified credit counselor. These experts work at nonprofit credit counseling agencies. While they’re on the phone with you, a counselor will give you a free budget and debt analysis. They’ll review every dollar you spend and every dollar you earn. From there, they can give you a menu of debt-busting options. One of the most powerful weapons in a credit counselor’s arsenal is called a Debt Management Program, or DMP for short. It might be able to cut your monthly payments by up to 30 or even 50 percent. A DMP also freezes late fees. Even better, you only make one payment a month for all the credit cards that are in the program. Obviously, there’s much more I could say about DMPs, but your best bet is to read more on your own time and at your own speed. We can also answer any questions you have. Some folks are DIY. Just like they prefer to do home renovations on their own, they want to repair their credit by themselves. One proven way to do that is with a debt consolidation loan. That’s really just a personal loan from a credit union or bank. But you use it to pay off those credit card balances. With the average credit card interest rate hovering around 20 percent, and with personal loans available for less than 8 percent, you can instantly save more than two-thirds. Of course, the trick is to have a high enough credit score so you can get that low interest rate on a personal loan. You could also use a home equity line of credit, but we don’t recommend that – there’s too much risk when it comes to our home.If you have stubborn credit card balances that aren’t too high, here’s another DIY solution that really works – if you’re disciplined enough. You can transfer your high-rate balances to another credit card that offers low or even zero interest for a year or even 18 months. These specialty cards are designed to lure business from their competitors by offering you this amazing gift. Of course, these credit card issuers know that many Americans fail to pay off their debts during the introductory period, which means they’re now trapped paying high interest rates all over again. But if you’re strict enough with yourself to make sure you pay off those balances before time expires, you can save thousands of dollars.Now let’s move onto the biggest complaint about the holiday season — namely, that it keeps starting earlier and earlier. Well, we want to turn that from a spending disadvantage to a saving advantage. We want you to start thinking about the holiday season year-round. Not all the time, of course, but certainly when you’re out shopping for other things. What are we talking about? Here are our top three suggestions. Everyone knows that the best time to score deals on holiday decorations is in January, when stores are selling off their leftover inventory for cheap. Every month is off-season for something, and that’s the time to snag a discount and hide it in a closet for Holiday Season 2020. You can easily scour the Internet to learn which months are historically buyers’ markets. Believe it or not, many of these individual deals will save you more money than buying those same items during the Black Friday sales. When it comes to booking flights, there’s much debate about the optimal time to do that. Is it three months or three weeks before you fly? Well, if you’re traveling during peak times — which is right before Thanksgiving, Christmas, and New Year’s — your best bet is to book as soon as you can confirm the dates. It’s not just about saving money. It’s about even getting a seat on the plane. Airlines are flying fuller planes than ever before, so you run a serious risk of not departing when you want. If you want to avoid holiday stress, you need to budget your holiday expenses. After all, you can’t save money unless you know how much you’re spending. In fact, that goes for the entire year. So if you want to save for the holidays, you need to save year round. You need to create not just a holiday shopping list, but a monthly budget. Now, I know what you’re thinking. I sound like a real Scrooge. Budgeting is never fun while you’re doing. But once you see a hefty positive cash flow, it’s downright exciting. So the question is: How do you power through the boring parts? My advice: Let technology do it for you. Instead of spending money on high-tech gifts, you can use technology to SAVE you money. While you can certainly go old-school and create a budget by putting pen to paper, it’s so much easier if you use secure online tools that require just a few keystrokes. There are websites, apps, and programs that handle the drudgery of budgeting for you. Many are free, and the ones that charge are only a few bucks. Here’s how they work. One of the most popular is called Mint, although many banks and credit unions offer similar programs on their websites for their customers. Basically, you just type in your income and expenses, and the programs do the math for you. You can even project your savings if you brown-bag it one more day at work, or refinance your mortgage. The software does the heavy lifting for you. If that’s a little too techy for you, there’s a middle step. Websites like Tiller let you download customized spreadsheets that stay on your computer, and you easily personalize. Each program has its pros and cons, but they all work. So it’s really up to what makes you feel the most comfortable. Most are free, but even the ones that charge are only a few bucks. If you don’t want to roll into the next holiday season in debt, the best present you can give yourself is a call to a credit counseling agency and a high-tech budget. Those two simple moves can set you up for the entire year and beyond. But here’s the thing: If you make a New Year’s resolution to get in financial shape, there’s a 50-50 shot you won’t do it. Every year, polls show fully half of New Year’s resolutions fail. So let’s talk about putting you in the right 50 percent. I know this sounds weird for a financial coach like me to say, but if you take my advice and get a free debt analysis and create a budget, you need to reward yourself for your efforts. You need to spend a few bucks buying yourself a holiday present every few weeks. For instance, if you save an extra $100 a month, set aside $20 for yourself to spend however makes you happy. It’s not a lot. It’s certainly not a vacation. But it can be a nice bottle of wine, or a gourmet burger. Why am I advocating spending money, when we’re supposed to be talking about saving for next holiday season? Because saving money is like dieting. You can do it for a little while, but without some cheat days, you’ll grow weary from the struggle. In fact, dieting and saving have a lot in common. For example, they represent the top two New Year’s resolutions. And not surprisingly, they’re the two most common resolutions that get broken. If Santa checks his naughty-and-nice list twice, you need to review your credit reports at least once a year. Now, a credit report is NOT a credit score. A credit report is what the credit bureau uses to determine your credit score. Confused? Let’s break it down so you can figure it out well before next holiday season. There are three credit bureaus, with scary names like Experian, Equifax, and TransUnion. These are private companies. They vacuum up all the data about how much you spend and how much you owe, and lenders pay them to get access to this data, so they can decide if they’ll lend you money. That data is included in your credit report, and each credit bureau keeps one on you. But you can get a FREE copy of your report from each credit bureau each year. Just go to annualcreditreport.com. Then you check those reports for mistakes. A government study a few years ago showed that 5 percent of all reports had mistakes so serious, it would keep you from getting a mortgage or even a credit card. These days, everyone is talking about hacks and shortcuts for raising your credit score. Obviously, the higher your score, the lower your interest rate on everything from credit cards to auto loans. But here’s the thing: Nearly two thirds of your score is decided by just two factors: Paying your bills on time and how much debt you owe. So if you really want to raise your credit score fast, all you need to do is the stuff we’ve talked about today. Again, not to sound like a broken record, but a certified credit counselor can explain the details to you when you call for your free debt analysis. We’ve been talking a lot about trusting a nonprofit credit counseling agency, but how do you find the best one? Well, there are three factors. First, make sure the place has been around for a while. I’m talking decades, not just years. Second, check out the Better Business Bureau website. If the BBB hasn’t given it an A-plus rating, move on. And third, search for online reviews that are mostly positive. No company has a perfect track record, so also check to see how they handle complaints. Do they tackle them right away? Then that’s the credit counseling agency you can trust. If you follow the six simple steps we discussed today, you can kick off Holiday Season 2020 in style — with no stress and no debt. Best of all, each of these steps takes very little time, and they won’t cramp your lifestyle. So if you’re suffering from a holiday debt hangover, this is the simplest and best cure. It’s also preventative medicine, because once you embrace these six steps, you won’t suffer a debt hangover again!

If you have more questions or you want more free financial coaching, we’re here for you. Just go to your KOFE portal for more information or reach out to a Certified Credit Counselor and Financial coach through your dedicated toll free number. Thank you so much for your time today!

10-Money Saving Lessons about Student Loans

How to overcome a growing debt crisis

Upon completion you will know:

  • An overview of the current student debt crisis
  • Forbearance, Deferment, & Forgiveness
  • Income-based repayment plans (IBR & ICR)
  • Pay as you earn repayment options
  • Consolidating and refinancing
  • Private loans and common scams to avoid
  • Getting help fast through coaching and resources

A Masterclass: Ten Money-Saving Lessons on Student Loans – How to overcome a growing debt crisis by the time you graduate

From watching this webinar you’ll have learned some proven tactics for cutting your monthly student loan payments and possibly even getting some of your balance forgiven what are the prerequisites for taking this class just two you’re burdened by student loans and you’re willing to take a few minutes to get your financial life back on track mortgages are still the largest form of debt in the country but coming in at number two is student loan debt at more than one point two trillion for everyone in this country that’s more than all of the credit card debt we owe which is just over one trillion dollars yet for such a big problem there’s not a lot of talk about a big solution but first let’s review just how big the problem is maybe you’ve heard it called the student loan crisis now that’s not melodramatic it’s accurate according to Time magazine more than 40 million Americans are carrying big student loan balances of those nearly 6 million Oh more than $50,000 according to the Brookings Institute and a CNBC report says 1 million of them defaulted on their loans in 2016 forbearance temporarily stops your payment’s with a catch here’s a concept that’s familiar to anyone who’s called their credit card company and begged to get a late fee removed yes sometimes just asking works your servicer wants you to keep making payments so sometimes they’ll give you a forbearance which means you can temporarily stop paying your student loans basically it’s like a hold button for your loan payments the thing is you need a darn good reason for such incredible debt relief these so-called discretionary forbearances require your services permission so if you can’t make your payment’s due to a change in a job a medical expense or other financial difficulties your servicer can decide to give you a forbearance and then there’s mandatory forbearance which means your servicer can’t deny you the forbearance if you qualify what does it take to qualify if you’re on a medical internship or residency program or if you’re in the National Guard and got activated or if your payment is more than 20% of your monthly gross income then you may get a mandatory forbearance there are many other scenarios so you need to spend a few minutes conducting your research and plugging in your own particular circumstances the few minutes you spend could save you thousands of dollars whatever forbearance you qualify for you can get up to 12 months of making no payments in total you can get three rounds of 12-month forbearances before you max out that gives you plenty of time to get your financial life in order but remember you still owe the loan in fact under a forbearance your interest charges continue to accrue and because you’re not making payments that means your overall debt load increases so you get relief now but later on you’ll pay for it and of course the rules are different for private student loans still anything is better than defaulting on your student loans which is what happens when you don’t make payments for 270 days or more that means your wages can be garnished your credit score will be negatively affected and any future tax refunds and other federal benefits can be withheld deferment temporarily stop your payments and pay no interest let’s talk about deferments now as you can already see student loan jargon can be very particular and difficult in this instance a forbearance and deferment are more similar than different in fact the only major difference is that with the deferment you might not owe that actual accrual of interest we just talked about like a forbearance you must have some serious circumstances that prevent you from making those monthly payments like say a serious illness or a job layoff now this is just a rough overview of forbearance and deferment for instance the federal student aid website says you may be eligible for a deferment on your federal student loan if you are a parent who received a Direct PLUS loan or a FF II L PLUS loan while a student for whom you obtained the loan is enrolled at least half time at an eligible college or career school and for an additional six months after the student ceases to be enrolled at least half time income based repayment now let’s talk about the federal government it offers a myriad of programs that help you cope with your student loan debt the first is called income based repayment program or IBR if you have federal student loans and can demonstrate a financial hardship you qualify basically an IVR matches your monthly payments to your income it’s the government’s way of acknowledging that the salary you earn after you get a degree usually doesn’t exactly match the expense you incurred to get it for example the program adjusts the monthly payments for your Federal Direct student loan debt to your income and family size if you have lower income and a larger family it reduces your student loan payment requirement in general enrollees spend between ten to fifteen percent of their take-home pay to repay student loans under IVR this reduces the burden of student loan repayments on your budget but the government acknowledges that this can increase total cost over the life of your loans still it helps you greatly in the short term income contingent repayment just to make these programs extra confusing there’s also one called income contingent repayment plan the ICR is a little different than the IVR while both adjust your monthly payments based on your income the ICR has a few important differences first you don’t need to show any crushing financial problems to qualify on the downside unlike IBR ICR doesn’t stop your monthly payments from increasing indefinitely along with your income so how do you choose between them we’ll answer that a little later because we’re not even halfway through the complex options you have available to you like I said earlier once we’ve gone through all the options we’ll show you an easy way to navigate the process pay-as-you-earn there’s a third federal student loan relief program that matches monthly payments to your income it’s called pay-as-you-earn it’s even better than IBR reducing monthly payments it was updated and expanded a few years ago into yet another option calls are e.p.a Yee which stands for revised pay-as-you-earn but the concepts are still the same your monthly payments are reduced to 10% of your discretionary income and after 20 or 25 years whatever balance is left is forgiven and forgotten you pay nothing more what’s the difference between these two they’re subtle but real for instance to qualify for payee you must have a partial financial hardship for repay II anyone with qualifying student loans are eligible your spouse’s income doesn’t count and payee if you file separately but it does in our EPE what’s the difference between the two they’re subtle but real for instance to qualify for payee you must have partial financial hardship for repay II anyone with qualifying student loans are eligible your spouse’s income doesn’t count and payee if you file separately but it does in repay what does this all mean generally speaking payee is better option from married borrowers when both spouses have an income repay II is usually better for a single borrower and people who don’t qualify for payee in both cases just like an ice ER if you get a new high paying job or a big raise your payment’s jump up along with that extra income if you want to see payee or repay is right for you we recommend that you visit studentaid.gov there are so many variables we could do an entire presentation on just that federal district consolidation loan if you’ve ever used a consolidation loan to take care of credit card debt you might think you understand how a federal district consolidation loan works for a student loan debt but you’d be wrong you’d use a federal direct consolidation to consolidate federal student loan debt into one easy payment but the loan structure interest rate and how to qualify varies greatly from other types of consolidation loans consolidating debt is generally done to simplify debt repayment if you have multiple individual debts to repay it can get complicated to juggle all of those bills within your budget consolidation reduces that down to just one bill so debt is easier to manage however that’s not the only advantage of federal direct consolidation loans in this case taking out this type of loan provides an additional benefit that can be significant depending upon your situation namely you can make defaulted federal student loan debt current it’s an amazing benefit and one worthy of a few minutes of your research applying is easy and you do it through the federal website student loan gov if you don’t want to deal with forbearances and deferments and you’re not interested in the federal relief programs we’ve just talked about you have another option refinancing your loans on your own when you refinance you actually take out a new loan at a lower interest rate this works best if you’re not cash-strapped and want to pay off your loans faster that’s because you don’t need a high credit score to qualify basically you’re consolidating your federal student loans into one private loan for a lower interest rate you can then plow your savings back into paying off the principal here are five steps you need to take starting with a simple step of figuring out how much you want to refinance determine how much debt you need to refinance note current balance an APR in each loan you include shop around to get quotes from lenders apply for the loan and authorize the lender to run a credit check which creates a hard inquiry on your credit report then you need to record the balance and APR of those loads so you can shop for a better deal but remember when you apply for a new loan that results in a hard inquiry on your credit report that can temporarily drop your credit score it’s not a huge deal but it’s worth mentioning because if you want to apply for too many loans in too short of time your score might go down so for instance you don’t want to refinance all your student loans at the same time you apply for new credit card or secured a new auto loan all those inquiries not to mention the new credit could drop your score and raise your rates student loan forgiveness now we get to the most enticing but most complicated part of this masterclass on student loans can you really get your hefty student loan balances forgiven the answer is yes but the public service loan forgiveness program pslf for short provides a path to federal student loan forgiveness if you work in a qualified public service profession and that includes many in the medical profession the government might forgive a portion of your federal student loans however the qualification process is long complicated and worst of all it’s not guaranteed and you need to make 120 regular qualified payments first that’s 10 years of payments but if you do qualify you could get out of student loan debt for less than you originally borrowed questions to consider is it worth the hassle do you qualify for another relief program do you work in a qualified profession remember when we were talking about those federal relief programs like IVR and repay e and how they lower your monthly payments matching them to your income and family size well we also mentioned that they can cost you more in the long run because they increase the repayment term for up to 25 years two and a half decades in debt is a long so the fact that pslf forgives your balance after 10 years is a huge advantage here’s one of the catches though to qualify you must first enroll in a federal relief program like I BR ICR or repay and you must recertify your income every year to remain eligible finally you can only take advantage of this program if you work in certain professions that the federal government deems a significant contribution to our society luckily that includes nurses and doctors and it also includes firefighters police officers and teachers and there’s a separate but similar program for military veterans getting help fast as you can see this stuff can get complicated enough to fluster a PhD it’s one big reason that the Government Accountability Office told Congress that 51 percent of all federal direct loan borrowers were eligible for the IB our program we mentioned earlier yet only 13 percent are actually participating in it and the Department of Education even admits that their efforts to increase awareness about these federal relief programs is incomplete and inconsistent that’s why you might consider hiring a professional think of it like your taxes if your income tax becomes too complex you can hire a CPA or a tax preparer who not only saves you the time in aggravation but also can find ways to save you money hopefully more than enough to cover the cost of hiring them in the first place that’s been happening more and more in the student loan world now let’s talk about what to look for in a student loan expert long work history excellent online reviews and a A+ rating with the Better Business Bureau and recommendations student loans scams with this much money on the line some bad actors are bound to come after you while new scams pop up all the time let’s review the big ones which are also thankfully the easiest to spot let’s begin with the advanced fee scam this happens when one of those agencies we talked about insists you pay a small upfront fee this can be up to a thousand dollars unless that money is being held in escrow you shouldn’t pay money first to save you money later a legitimate third-party company doesn’t charge you until they start working for you and get result the thing is you can do that on your own for free at studentloans.gov if you want someone to do this for you you can certainly pay for the service but if the company doesn’t tell you upfront about the do-it-yourself option they’re not being ethical finally a lawyer or someone who claims to be a lawyer says they can settle your student loan debt for pennies on the dollar all you have to do is send in your student loan payment to them instead of your servicer the law firm will negotiate with your servicer and reduce what you owe except the law firm never makes a payment keeps your money and you go into defaults because your servicer hasn’t heard from you in the worst case the law firm actually comes back and offers to negotiate with your servicer to get you out of a default anyone want to guess if they actually do that if you take nothing else away from this webinar learn this stick to the third-party resources who have a long history excellent reviews and an A+ rating with the Better Business Bureau private student loan help so far almost everything we’ve discussed has involved federal student loans there’s a good reason for that federal loans represent around ninety four percent of all student loans private loans are only a fraction so what is a private student loan simple you go to your bank or other private lender and secure a student loan just like you would an auto loan because these go through private financial institutions that face competition their customer service is often better than some of the horror stories you read about federal student loan servicers then again you’re not eligible for those federal relief programs your options are pretty much to throw yourself on the mercy of your lenders or consolidate your loans like we talked about a few minutes ago many Americans with private student loans also have federal student loans they took out the private student loans to cover with the federal loans couldn’t some general advice when you apply for forbearances deferments or federal relief programs your credit score isn’t being affected however if you try to refinance your loans on your own your score can be affected the most common mistake is applying for multiple refi loans instead of just asking for quotes every time you apply it triggers a hard inquiry which drops your score a little don’t let all this information depress or discourage you yes you can feel like your head will explode from all of the rules and option but you have helped both free and paid the bottom line is the programs and advice we discussed today can greatly enhance your bottom line congratulations now that you’ve finished you’ve graduated from our money saving student loan master class let’s recap the most important lessons first you never want to default on your student loans because your wages could be garnished second a few minutes of research on your part can save you not only from default but also can save you thousands of dollars third your options include forbearance deferment income based repayment income contingent repayment pay-as-you-earn federal loan consolidation refinancing and in some cases even loan forgiveness if you have private student loans you have fewer options but you could still get help the bottom line is if you can’t put the time in to figure out which option is best for you maybe consult a reputable professional who can save you much more than they’ll charge you whatever you do don’t do nothing take action you.

Code Red RX

The Impact of Financial Stress on Your Health

Upon completion you will know:

  • Financial Stress Medical and Wellness Impact
  • Impact on Work & Employment
  • Tactics to Deal with Credit Card Debt
  • Strategies to Solve Student Loan Issues
  • The C.C.A.L.M. Solution to Debt

Code Red RX. How to recover from a financial panic attack and how to avoid the next one.
In many ways a financial illness is easier to solve than a physical illness. Do you sometimes feel like you’re suffering a financial heart attack? If so, you’re sadly in good company. It turns out that 85% of all Americans feel like that according to a CNBC report. Even worse, almost 1/3 of Americans feel like they’re having a currency coronary all the time. If you’re wondering why this webinar is called Code Red RX, it’s not a gimmick and it’s not melodramatic. Study after study has shown that financial problems cause physical problems. The life insurance company John Hancock has a profitable reason to know exactly what kills its customers. When the company asked if financial stress affected physical health the answer came back as a resounding yes. It lowers our immune function and ability to fight illness which can make us less effective at home and work. Taking care of your financial health is an important part of taking care of your physical health and we aren’t the only ones who know this personally tears from real people who are suffering from financial stress. It has a huge impact on their lives and even their physical well-being. Here are a few stories. Maybe they sound like yours. Maria had nearly $8,000 in credit card bills and her credit score was in the 400s. She couldn’t even move into a new apartment because her score was so low. She had maxed out her credit cards and was paying a whopping 29.99% in interest charges. Like many people, Maria said “I was embarrassed about my situation and felt unsure where to begin”, but when she finally dug herself out of debt she told us she’d never felt happier. Then there was Sonia who ran up three thousand dollars on a department store credit card at 18 years old. She told us “I was scared. I hated answering my phone at home because I knew it would be someone asking when can you send that payment? I remember having my hands against a wall. I didn’t know what to do. I was desperate. When she finally paid off that debt and the other debt she’d piled up she told us “I felt like someone had taken the shackles off my feet”. Finally, I want to tell you about Paula who’s a mental health counselor who ran up big bills caring for her ailing father. When he recovered her finances didn’t and she became sick from the financial stress. She told us as a mental health counselor “I know what it looks like when people suffer emotionally and when I became consumed with debt I was there. I was stressed all the time.”
But now that we’ve scared the living daylights out of you let’s talk about your prognosis. If you’re suffering from debt stress maybe you’re thinking thank God I’m not suffering from a financial crisis this doesn’t apply to me if so no this many money woes are caused by small spending problems that just don’t seem like a big deal then catastrophe strikes there are five major ones that we see all the time and they cause your little money problems to blow up into big ones these are accidents divorce illness a layoff and natural disasters so even if you think your finances are healthy the real question is have you built up your money immunity during the government shutdown of 2018 one of the big storylines was just how many federal workers didn’t have enough money in the bank to even miss one or two paychecks without having to take a loan to cover their bills less than 40% of all Americans have enough money saved to cover an emergency costing $1,000 according to a depressing Bank Rate report from last year that makes it hard to stay financially healthy because just like flu season money problems are sure to come your way eventually affecting you or your family this leads us to preventative medicine how can you bolster your money immune system well an emergency fund is the easiest way but it can be a bitter pill to swallow why because you need to contribute to it in small ways all the time let’s face it when you’re facing debt stress it’s because you don’t have enough money to go around so how are you supposed to save well the best place to start is with your pocket change seriously set aside small amounts all the time have one less coffee from the drive serve your favorite coffee shop Brown baguette once a week once you get into the rhythm of small contributions you can start building up your emergency fund to cover three to six months of living expenses that’s the gold standard of emergency funds how do you do that well the best way is automatically for instance if your employer pays you via direct deposit like 82% of Americans get paid then you can ask your company to split your direct deposit that’s right most employers will let you send some money to one bank account and some money to another so you can shunt some of your paycheck directly into a separate emergency savings account you won’t even miss the money because you’ll never see it in your primary bank account this works especially well when you get a raise just send the extra cash directly to your emergency fund until you build it up to cover three to six months of expenses what if you’re feeling of pain in your head or chest from all the debt you’re carrying then you need more preventive medicine you need a thorough checkup but be calm literally be calm. Calm stands for create a plan automate it build payment lower spending and make progress let’s break that down no one likes to hear the words make a budget but it’s so easy to do these days if you don’t relish the idea of putting pen to paper there are scads of online programs that will do the mundane work for you online budgeting tools are safe and they’re easy you simply type in the amount you want to spend in different categories and these powerful tools will do the math for you they also let you see how much you can save per year by shaving off just a few dollars per week for instance if you type in the cost of one less work lunch per week you can see how much you’ll save over a year here again embracing technology can help you save more in less time than ever we mentioned this technology earlier when we talked about an emergency savings account but instead of just automating your savings you can automate your Haemon almost every bank and credit card and even many municipality utilities offer automatic bill pay you set the day when you want your bill to be paid and the amount is automatically deducted from your bank account right then and not a day sooner what’s the advantage besides the worry of paying bills well you’ll never have a late fee again of course a danger of automatic bill pay is that if you blow your budget on some debit card purchases you’ve forgotten you might not notice how low your bank account is getting that’s why it’s so important to cut your spending and since we’re talking about health and debt let’s compare spending to diet it sure you can go on a crash diet and shed a lot of pounds but that’s also called yo-yo dieting because you just can’t maintain that forever the same thing happens with money if you cut spending so drastically that you suffer through the day eventually you’ll crack and go on a spending binge instead just like dieting make lifestyle changes do you clip coupons do you search out BOGO deals have you looked at all the subscription services you’ve signed up for to make sure you really use them if you take this advice you won’t notice a big change right away again this is like dieting and eating right you don’t wake up one day weighing less and feeling better it takes time and the progress is gradual but one day you’ll suddenly notice things hey my body is lighter and my wallet is heavier so the last part of calm is maybe the most important be patient and you’ll see progress we guarantee it now another component that you should keep in mind which is just as important as having a savings cushion is the plan of how are you’re going to get there planning your budget should be top of mind before you can save you need to get your financial house in order and that’s why you need a budget that sounds awful doesn’t it who enjoys budgeting their money that’s like saying you enjoy flossing your teeth in both cases you know it’s good for you but it sure doesn’t sound like fun well we can’t help you make your dental hygiene easier but we can help you make budgeting easier it only takes four simple steps so far we’ve been talking about saving money but let’s talk for a moment about making it a budget needs money coming in before you can track the money going out so add up all of your income which is more than just your paycheck it includes money from any part-time or freelance work child support you receive rent you charge and Social Security and other income from benefits once you add all of that up you have your net income even more than hidden income many of us suffer from hidden expenses to keep track think of your expenses and three buckets fixed expenses are those you can’t easily change if you pay rent or a mortgage those amounts are the very definition of fixed but so are your car payments and insurance flexible expenses are those you need but you can do something about so for instance you need to go grocery shopping but you can look for BOGO’s clip coupons and use strategies for getting more food for less money the same thing goes for gasoline and your car and utility bills now discretionary expenses are those you can live without if you really have to we’re talking about movie matinees a nice dinner out or that fancy hair salon you like the total of these categories is your net expenses if you have two thousand dollars a month in expenses and a twenty five hundred dollar income then we say you’re in the black by five hundred dollars if those numbers are reversed then you’re in the red by five hundred dollars if your income is greater than your expenses congratulations you now have the pleasant task of deciding how best to use your savings but if your expenses outstrip your income it’s time to set some priorities you need to decide what steps you can take to either reduce your monthly expenses or increase your monthly income or both now let’s break that down before we get into the nitty-gritty of saving secrets let’s review how you’ll track your progress you just learned how to start budgeting now let’s talk about maintaining it. It may also help to keep a spending diary for a month or two this means saving all your receipts and writing down the items and the amounts for everything you spend if that sounds like a chore there are free secure online tools that will help you monitor your spending one of the most popular is called mint but there are many out there sometimes offered through your bank so go check them out so what is savings anyway sure you could stuff some cash under your mattress every so often but that’s not the smartest saving tactic first you need to be clear about what you want to save for like buying a house sending your children to college or simply going on a vacation then you should establish savings goals with a plan to hit on those goals so let’s talk about that your goals can be serious and major like saving three months of living expenses for an emergency fund anyone who’s followed the recent government shutdown knows how stressful life can be if you miss just a couple of those paychecks so that emergency fund isn’t just a financial goal it’s also a mental health goal but some of those goals are actually fun saving for a vacation can make saving easier because you can think about how you’re going to head to the sun kissed beaches or powder a ski slopes and while saving for a down payment on a new home seems daunting it can be exciting to take those first steps to such a life-changing event how do you set your saving goals without consulting an encyclopedia just remember the acronym smart here’s what it stands for specific measurable achievable realistic timely specific is the easiest to do think of it like this instead of saying I want to lose weight you’d say I’m going to walk 10,000 steps during breaks at work and after dinner at night that specific goal is easier to meet than a vague one measurable means setting targets you can easily track so let’s look back at the goal of losing weight if you promise to walk 10,000 steps a day and there are apps on your phone can easily measure that there are now apps that can help you manage your money coming in and what you’re spending on you’d know every day if you’re living up to your own promises achievable means figuring out how to get where you want to go you need to develop the attitudes abilities skills and financial capacity to reach them for example even a modest goal isn’t achievable if you set too tight a deadline losing 20 pounds in a year is achievable but in one week is dangerous you can also say I will stop buying fancy coffee and pastries every morning in my way to work and save about seven dollars a day which will amount to over $1,800 at the end of the year realistic means not sending impossibly high goals if you tell yourself I plan to eat only salad every day for a year and never even look at a dessert then that’s a specific and measurable goal but it’s never going to happen using the examples of buying a morning coffee we’re not suggesting that you cut out coffee entirely it’s just the expensive one in the morning you can have a coffee at work and then make a special treat in the weekend and you’ll be saving a lot to be realistic a goal must represent an objective toward which you are both willing and able to work at timely means setting a deadline that’s as soon as you can comfortably hit it too many goals come with vague deadlines of soon even a New Year’s Eve resolution that takes an entire year isn’t as good as a smaller goal to hit each month and before you say yes answer these follow-up questions is the item worth the time I spend making the money to pay for it can I use the money in a better way right now and of course the hardest question of all do I really need this or do I just want it while waiting for sales and using coupons are effective and time-honored techniques those savings don’t matter if you don’t actually didn’t need the item to begin with of course there are more than 8 ways to save money but we found these eight to be the least time consuming and easiest to stick with they work because the small savings add up over time that’s more lucrative than trying to save big every so often it’s kind of like dieting again you want to make small lifestyle changes instead of enduring crash diets here are your financial lifestyle changes treat yourself then save yourself it’s called non-essential indulgence matching but that’s a mouthful it just means every time you treat yourself you treat your savings account too for example if you sledge on a gourmet coffee during lunch break you put that same amount of money into your savings account sounds weird think of it this way if you can’t afford to save the matching amount you can’t afford the treat either think about hours not dollars time really is money calculate a purchase by the hours you work to get it instead of the money it costs you justified the price tag by your hourly wage if it’s fifty dollars for a pair of shoes and you make $10 an hour ask yourself with those shoes really worth five long hours at work next sleep on it time is money even when you’re not doing anything it’s called the 24-hour rule it’s an antidote to the impulse buying and it’s so easy this works especially well online because shopping websites specialize in luring you in to immediate decisions that can cost you don’t think about it hands down the best way to save is without even worrying about it that means setting up automatic savings while most employers let you deduct a certain amount from your paycheck and transfer it into a retirement or savings account best of all it costs you nothing in either money or time you never even noticed the money is gone this is a great way to spend any raises you can ask your HR representative for more details about setting this up go low-tech earlier we mentioned high tech online budgeting tools like mints but some people do better going old-school they budget with cash and envelopes it’s simple label an envelope with each monthly expense and cold hard cash in each envelope draw from the envelope when you pay those expenses once the money is gone hey it’s gone that’s one dramatic way to curb your impulse decide between paper or plastic you’ve probably heard about credit cards that offer cash back and other rewards and it’s true you can save big with those rewards but you can also spend big these cards compel you to overspend to chase those points which means you run up high balances that charge high interest you might actually save more money cutting up those plastics and go all cash in fact they’re solid research showing we spend less money when we have to part with paper than swipe plastic be bad at math sounds weird right up until now we’ve been encouraging you to budget better but you can actually save by being vague here’s how some financial institutions will round up your debit card purchases for example Bank of America will round up to the next dollar amount and put that change into your savings account loosen up to bring it back to the beginning save those pennies loose change adds up keep it in a jar or piggy bank and you’ll be amazed by how much it adds up get started by checking your car and those seat cushions in your home and kitchen junk drawers you’ll be surprised about how much money you have in the house and you never even knew it if you embrace calm and started to act smart like we just talked about but still feel stressed out by your finances there’s another C to consider it’s called coaching once again let’s compare this to your health if you eat right and exercise you’ll probably be physically fit but every so often you’ll get sick and sometimes home remedies don’t work you need medical professionals well sometimes your finances get sick even when you do everything right we talked earlier about natural disasters illnesses and family problems and how they can blow up your budget sometimes a small bad habit grows into a big money ailment when that happens you need to consult a financial expert luckily you can talk to a financial expert easier then you can consult your doctor first you don’t even need an appointment you can call a certified credit counselor at a nonprofit credit counseling agency at almost any time second it’s free no copay you can receive a free debt analysis that will help you figure out how to get financially healthy of course just like doctors some financial counselors are better than others experts say look for these things the agency should be around for many years or decades it should have certified credit counselors which means they take standardized tests to ensure they know what they’re talking about and they have to retake it every two years they should have the highest rating from the Better Business Bureau and finally they should have many excellent reviews from reputable websites don’t suffer another minute when the cure is at your fingertips.

Money Never Sleeps

Big Money Tips for Small Business Owners

Upon completion you will know:

  • Business Budgeting & Financial Statements
  • 7 Ways to Solve Business Cash Flow Problems
  • Small Business Loans
  • 5 Red Flags of a Business Loan Scam
  • 6 Alternative Small Business Funding Solutions

Let’s start with a cold, hard fact: If you’re currently maxed out on your credit cards or find it hard to make payments on everything from your car to your rent to our mortgage, then you really need to get that handled first. Take some time to assess your own personal financial situation. Take care of yourself before you tend to your new business.

1         Budgeting

A business starts with a monthly budget – after you make a personal budget. If you don’t budget in your personal life, start now. There’s no way your business will survive, much less thrive, if you don’t make a budget and stick with it.

1.1       A Business Budget in 6 Easy Steps

  1. Add up your revenue: Once you’ve mastered budgeting basics in your personal life, it’s easy to do a business budget. Let’s start at the beginning. First, you add up your monthly revenue sources – and remember, we said revenue. Not profit. You want to include all the ways you make money before expenses are deducted. Ideally, you’ve been in business for at least a few months, possibly a year. Why? Because you want to do this same calculation for several months, then take an average. Few businesses earn exactly the same each month, so come up with a monthly average because it’s important.
  2. Subtract fixed costs: Now you want to do the same thing with your fixed costs, which is defined as any cost that doesn’t change with the output of your business. That includes line items like rent, taxes, and equipment. Depending on your business, you might have more or less fixed costs. Sometimes, new small business owners confuse this term to mean, “Costs that I can negotiate.” That’s not true, since you can obviously negotiate your rent. But these costs remain whether your business is doing well or poorly. So for example, if you leased a widget machine and now business is slow, you still have to make payments on the widget machine.
  3. Determine variable expenses: Obviously, variable expenses are the opposite of fixed expenses. Here we’re talking about things like wages, supplies, and utilities. Why are these variable? Let’s go back to the widget machine. You need to keep making payments on it, but if business is slow, you’re using it less, which means your electric bill is cheaper. You can also save on the wages of the widget machine operator. Conversely, if business is booming, you might pay for an extra shift and run the widget machine night and day, driving up your wages and utilities but earning you more revenue. In other words, variable costs can fluctuate with business activity. Just like you did with revenue, estimate these costs over a series of months. While most variable costs are monthly (like utilities), others can be charged quarterly or annually (like marketing costs).
  4. Set aside a contingency fund: A contingency fund for a small business is like an emergency fund for a family. Here again, if you handle your personal finances according to established principles, you’ll find that doing the same for your business will be a breeze. If you don’t have an emergency fund, and more than a quarter of Americans don’t, you need to start one pronto. A contingency fund is all about “unforeseen circumstances.” Your personal emergency fund can cover the financial costs of a sudden illness or job loss. But for a small business, a contingency fund is often used for more than just emergencies. For example, it can be used to replace that widget machine if it suddenly breaks down and is beyond repair, or it can be used to upgrade the technology of the widget machine. So while you’d use the contingency fund if, say, a natural disaster damaged your office, you’d also use it to generally repair or improve your business. The trick is to make sure you don’t dip into your contingency fund for typical business expenses. In other words, you don’t use this fund to cover your payroll. Your budget should already account for your fixed and variable expenses. We’re talking about big, one-time costs that either keep your business humming or can dramatically improve it.
  5. Make a P&L statement – this is your business budget: Now that you’ve created a monthly budget you can stick to and a contingency plan for unexpected catastrophes and opportunities, it’s time for a profit and loss statement. If you’ve done the previous steps well, a P&L is simple addition and subtraction. This is your actual budget. Once you add up all your income and subtract all your expenses, you’re hopefully left with a positive number. If not, don’t panic. Many small business take a while to become profitable, and they’re not always profitable every month. But if you have a negative number, make sure it’s not a deal breaker or a heart-stopper. Otherwise, you might need to rethink your business model.
  6. Create your projections: This is the strategic part of budgeting, and also the fun part. It requires more than just some basic math skills, because once you have all your business numbers in one place, you can make big plans. What months do you conduct the most business? Which months are slow? What can you do to deftly handle the busy times? What can you do to boost business during the lulls? Now you can devise a real business strategy supported by hard data.

2         Three Financial Statements You Need

Now that you’ve done your budget, you have the tools to create three key financial statements. That’s the P&L. Along with that are two other documents. These are the three you will need:

  1. Profit and loss statement
  2. Balance sheet (liabilities + owner’s equity = assets)
  3. Cash flow statements (cash inflow and cash outflow)

A balance sheet is simply a financial snapshot of your business. It’s an equation that looks like this: your liabilities plus your equity equals all your assets. As the U.S. Small Business Administration says, “the two sides of the equation must equal out.” Confusing? Hold that thought for a moment.

A cash flow statement is simpler. This highlights how much money coming in (called cash inflows) and going out (cash outflows, of course). Cash inflows include not only cash sales, but also accounts receivables you collected, loans and other investments. Meanwhile, cash outflows include equipment you bought, expenses you paid and your inventory.

2.1       Know the SCORE (Service Corps of Retired Executives)

If this is sounding a little confusing, here’s the easiest way to make it crystal clear. Simply go to the website for SCORE, a nonprofit that was founded in 1964. It was basically a bunch of thoughtful and smart retired business leaders giving back by mentoring new business owners.

SCORE has complete but easy to understand templates you can download for all three financial statements we just talked about, plus lots of other helpful resources. We urge you to check out SCORE for those templates and other advice. The help is free.

2.2       Overcoming Cash Flow Problems

While solidly built budgets and financial statements are required to be truly successful, they can’t prevent the inevitable cash-flow problems many small businesses face at one time or another, such as:

  • Not enough sales
  • Not enough collections
  • Too many expenses

There are several common causes for cash-flow issues. First and foremost is the obvious: You’re not selling enough of your product or service. This doesn’t mean your business is failing. Many businesses have a slow season where they’re just scraping by.

Many businesses also have a collections conundrum: Sometimes your best or newest customers are late with their payments, and you need to decide how to push hard. Sadly, that often means pushing very hard, because those payments simply never come.

Finally, there’s a situation much more within your control: Your own expenses. Are you buying items you don’t need, or can you get items you do need for a cheaper price?

Fortunately, cash-flow problems have more solutions than they have causes. Some are easier to implement than others. Let’s review your options.

2.2.1          7 Ways to Solve Cash-Flow Problems

  1. Have a “flash sale”: In the old days, you had a sale. These days, you can host a “flash sale.” These are defined as ultra-brief sales that you advertise mostly through social media. They typically last only a day. If your financial statements are otherwise sound but you need a cash injection, a flash sale might be an easy way to do that quickly.
  2. Hike your prices: This might seem to contradict the first point we just made. But if your sales are strong but you still have trouble with cash flow, it might be you’re charging too little for a valuable product or service. Experts who study pricing say you might lose your most price-conscious customers, but the majority will stick around if your business model is sound. And that will not only make up the difference, but it could also establish you as a quality product or service worthy of paying a little more for.
  3. Crack down on collections: Ask most small business owners, and they have at least one horror story about a client who owes them and pays late. Just like trying to figure out the perfect price, small business owners have to balance pushing their late payers without pushing them to their competitors. If you need cash now, you need them to pay up. But you don’t have to harass them. Consider offering your customers incentives. If they pay early, perhaps they receive a 10 percent discount. Sure, you lose 10 percent, but you gain 90 percent. Do the math to make sure the tradeoff is worth the cost.
  4. Accelerate your invoicing: Many small businesses invoice all at once, on a single day of the month. It’s easier for a harried owner to set aside that one block of time. But it’s not always the best practice if you have a cash-flow problem. Instead, invoice immediately following the delivery of your goods or service. The sooner you send that invoice, the sooner you get paid.
  5. Delay payments to vendors, or negotiate with them: While you’re trying to speed up your customer’s payments, try slowing down your own. Figure out how late you can go without incurring a late fee or the wrath of your best vendors. Coupled with a speedier invoice, this might cover your cash-flow discrepancies. If not, you can always call your vendors and explain your situation. Trust me, you won’t be the first customer who’s told them they’re suffering a temporary cash-flow situation. For reliable and long-term customers, they’ll often cut some slack.
  6. Slash expenses: If following all these steps doesn’t help, time to look inward. You need to consider cutting costs. That could mean layoffs. It could mean selling assets that aren’t making you money. It could even mean selling equipment and leasing the same equipment, to free up money in the short term, even if it costs you in the long term.
  7. Get a loan: Finally, you have the option of using other people’s money. From small business loans to small business credit cards to complex procedures with names like “invoice factoring,” there’s probably a financing solution that suits your situation and comfort level. Let’s start looking at those now.

3         The Ins and Outs of Small Business Loans

Qualifying for a small business loan requires preparation, and there are so many variables, it’s difficult to spell them all out here. Whether it’s the amount of the loan, its length, or its interest rate, you really need to do your homework to make sure you get the best terms. So let’s cover the basics. And let’s start with SBA loans, which are backed by the federal government.

3.1       SBA Loans: Good News and Bad News

The U.S. Small Business Administration’s loan program has been a savior for many small businesses in this country. Think of SBA loans like federal student loans. In both cases, the government doesn’t actually lend you money. Instead, a bank gives you a loan, which the government backs. In both cases, this allows banks to take a bigger risk on someone than it might otherwise.

This is good news for a small business owner who might not qualify for a traditional bank loan. But of course, there’s a catch. A few, actually. First, there are several kinds of loans, all with unenlightening names like 7(a) and (CDC)504. Second, deciphering how to apply can be a chore. And third, most banks won’t issue one to a brand-new business.

3.1.1          SBA Loans: Where to Start

Unlike many other government agencies, the Small Business Administration has a website where you can shop for lenders and learn the crazy details. Check out https://www.sba.gov/ Better yet, peruse the entire SBA site for helpful tips, and try to understand how the SBA works and what it can do for you.

3.2       Traditional Business Loans: 5 Steps to Success

To make your small business loan process successful, follow these five steps that will be explained further below:

  1. Build up your credit score
  2. Learn the requirements
  3. Collect your documents and data
  4. Write up a business plan
  5. List collateral

To land a traditional bank loan, you need to do many of the same things you’d do for a personal loan. For instance, focus on your credit score. For small businesses, that means checking with the three business credit bureaus. If your score is high enough to apply for a loan, shop around – because just like a personal loan, banks offer many different products at different rates.

Once you’ve found one or more banks to target, assemble all your financial data, because they will ask. This includes everything from your articles of incorporation to your financial statements. Include a resume showing your relevant business experience and your financial projections if you don’t have much of a financial history. Again, we recommend you consult SCORE or the SBA websites for more details on this.

But if you want financing, you need that business plan, so lenders can gain some insight into what you plan to do with their money.

Finally, you need to list any collateral you have. Collateral is just a fancy word for assets, and that can include your widget machine, any real estate you own, and even your inventory. If you don’t have enough collateral, you probably won’t get the loan. If that happens, you still have some options. And that’s what we are going to discuss next.

3.3       Alternative Small Business Funding Solutions

  1. Finance your business with a credit card: This sounds like a recipe for disaster, doesn’t it? Who in their right mind would fund their business with credit cards? But there’s a method to the madness. The secret is to secure the right credit cards. There are several that offer zero-percent APR for up to 15 months, because they’re intentionally designed for small business owners with irregular cash flow. Why would these cards forgo interest payments for so long? Because they want your business when you’re no longer small. The most popular cards are American Express Plum, Discover It Business, and Capital One Spark. Obviously, there’s a dangerous side to these cards. If you don’t pay off your balances within the zero-percent time period, you’ll face steep interest rates. But if you’re looking for an easy way to generate cash flow, study this.
  2. Lines of Credit from OnDeck and Kabbage: What the heck are OnDeck and Kabbage? They’re the cutting edge in short-term financing. These are online companies that provide short-term funding through automated lending platforms. They’re competitors in this space, which is good — because it means more choice for you. You can borrow between $2,000 and $500,000 in just one to three business days. To qualify for Kabbage, you need a minimum credit score of 560, at least be one year in business and have annual revenue of at least $50,000. For OnDeck, you need to have been in business for at least one year, earn a minimum of $100,000 in annual revenue, and have a personal credit score of 500 or better, and have had no personal bankruptcies within the past two years. While it’s easier to get a loan through these platforms than from banks, you’ll pay more for that privilege. Check out their websites and do your research before applying.
  3. Merchant cash advance: Now we’re getting into even more dangerous territory. A merchant cash advance isn’t a loan, although it resembles one. It’s an advance on your future earnings. A lender basically gives you a sum of money and then recoups that advance by taking a percentage of your daily sales (plus, of course, steep interest). So, the amount you repay fluctuates with your daily sales, which makes planning your payments nearly impossible. You can see already there are massive downsides to this. The upside? If you can’t qualify for more traditional financing, you can often get an MCA immediately.
  4. Invoice factoring: In this variation, you don’t repay short-term loans with a percentage of your invoicing, you actually sell your invoices. A third party, called a “factor,” buys your accounts receivable for, say, 80 percent of their value. You get immediate cash, while the factor’s profit is the other 20 percent. The downsides here are obvious, starting with the fact that you no longer control your own collections process. The factor does. Two of the more popular factors are Fundbox and BlueVine, but there are others, each with their own set of rules.
  5. Crowdfunding: Now we’re back on more familiar territory. Most folks have heard about crowdfunding sites like GoFundMe and Kickstarter, most likely for charitable causes. But those sites are even more popular for raising equity for business ventures. There are so many to explore that it might suit your particular business, including Indiegogo and Kiva. If you have a compelling story or product, this is a low-risk way to raise money.
  6. Personal loans: Finally, we end where many small business owners start. It’s common for new owners to finance their own businesses in the beginning. If their personal credit score and credit history are more established than their business’s, they can apply for a personal loan. You can often secure a better interest rate if you’ve done like we said in the beginning of this presentation: improved your personal finances so you can focus on your business. Here’s a perfect example why that’s so important. You can access additional financing for traditional risk, instead of delving into MCA and factoring.

3.4       Small Business Loan Scams: Five red flags to look out for

So far, we’ve talked about all the productive things you can do to help your business thrive. Now we’re warning you about things not to do. There are many unsavory characters out there trying to separate your small business from its capital. They’ve devised a handful of clever schemes that you need to watch out for. Luckily, knowledge is power, so here’s how to identify those schemes – and avoid them.

3.4.1          Advance fee scams: application fee, processing fee, one-time fee

This popular scam and is typically aimed at not only small businesses, but also individuals facing huge debts. It’s a simple premise: We’ll give your business access to low-cost loans – or we’ll personally help   you settle your credit debt – and all you have to do is pay us a small fee up front. It can be called an application fee or a processing fee or even a special one-time fee. But once you pay that fee, you receive nothing. It succeeds because these scammers throw around such big numbers that it seems ludicrous they’d run off with your $100 or $500 up-front fee. But they deal in volume, so the more people they rip off quickly, the more they make. Here’s what you need to know: NO REPUTABLE LENDER charges you an upfront fee.

3.4.2          Peer lending scams

When you start a small business, scammers somehow find you online. You’ve probably received unsolicited emails that sound like this: “Get a low-interest rate loans for up to $100K! Low credit score and bankruptcy not a problem. All borrowers eligible. Peer loans available, apply NOW!”

Those emails – which can also be found on Facebook Messenger and sites like Reddit and Craigslist – usually explain that they’re a “peer-to-peer lending platform.” And there are some legitimate ones out there, like Lending Club and Prosper. These websites that gather thousands of small investors who can decide to buy a portion of a loan if they earn a good rate of return.

But these sites are phony, and if they don’t charge you an upfront fee, they ask you to fill out a form with all your personal information – which they’ll then use to steal your identity and run up big bills in your name. NEVER reveal personal data until you thoroughly research who’s asking for it.

3.4.3          Funding kit scams

Here’s another kind of email you’re likely to get. It usually goes something like this:

“You have been selected to receive an INTEREST-FREE Government Grant. This Grant Kit could put thousands of dollars in your pocket. Many grants go unclaimed every year – because most people don’t know about these programs. Don’t let this happen to you!”

Basically, this scam plays upon your suspicion that securing a business loan is so complicated, there must be a shortcut. Maybe you’ve heard the federal government is somehow involved in small business loans. So yeah, this makes sense, right? But as we said earlier, the federal government backs SBA loans but doesn’t make them. Never respond to such emails.

3.4.4          Broker scams

Here’s another email to ignore: “Starting a small business? Need a Consultant or Agent to work for YOU? We can help! Best fees in the industry!”

Again, this preys upon your fear that you’ll need to hire an expert to find you the best small business loans out there. And indeed, there are reputable loan brokers. But they seldom solicit you via email, and they never charge an upfront fee like these scammers – and of course, they’ll also require all your personal info. If you want to find a loan broker, consult your local SBA office or SCORE office for advice on how to do it the right way.

3.4.5          Investor scam

One more shady email: “We have a potential investor lined up for your business. Over $1 million of funding, in your bank account within 24 hours! No need to give up ownership! Just send in your $1,000 transaction fee!”

By now, you can recognize the variations on the theme. But this one is particularly alluring because it seems to answer all your prayers. But think it through: What investor is willing to put up their money for someone they’ve never even met? Resist the temptation and ignore these emails.

3.5       Small Business Success: Be profitable, comfortable, and knowledgeable in no time!

So that’s it. We reviewed some complicated topics and things you need to be aware to avoid falling victim of a scam.

The most important thing you need to remember is that you should treat your business’ budget and finances in general separately from your personal finances. That may not be as easy as it sounds but that should be the goal.

Setting up your records properly is sometimes the hardest part, so, if you heed this simple advice, you have the tools you need to be successful.





Protect Your Consumer Rights

Your consumer rights and responsibilities

Upon completion you will know:

  • Consumer Protection Laws You Need to Know
  • Scams and Identity Theft
  • Credit, Loans and Debt
  • Filling a Consumer Complaint
  • Resolving Consumer Problems

There’s a war going on. On one side are the thieves trying to steal your identity – and your money. On the other side are government and private agencies doing their very best to protect you. But the key to staying protected is you. The only sure-fire way not be become a victim is to become your own educated advocate. We’ll show you how.


To start, you need to learn about identity theft. It’s one of the most pervasive crimes in the country. The federal government estimates that more than 17 million Americans were victims of some form of identity theft. That’s 7 percent of the country. Over the past six years, identity thieves have stolen more than $100 billion. How much is that? Enough to pay every single American $300. Why don’t more Americans know this and call for action? Probably because this is one crime where you don’t find out you’ve been a victim for a long time – or if ever. Let’s look at just what kinds of activities qualify as identity theft.


By far, the biggest headlines about identity theft involve data breaches. This happens when identity thieves break into the computers of big companies and gain access to the personal information of literally millions of Americans. In 2017, one of the biggest breaches was also the most ironic.


The hackers accessed names, SSN, birth dates, addresses and driver’s license numbers.  They also stole credit card numbers from about 209,000 people. Equifax is one of the Big Three credit bureaus that help shape your credit score. And Equifax sells an identity-theft protection service called ID Patrol for $16.95 a month! Identity thieves can hit you almost anywhere and almost anytime.


We just mentioned one of the biggest data breaches ever, but smaller ones are happening all the time. USA Today reported in 2018, data breaches affected “765 people million in the months of April, May and June alone” at businesses as diverse as Dunkin Donuts and the website Quora. Marriott might have been hacked for 500 million records, although the final tally is still not known – and might never be.


Email offers don’t grab the same big headlines, but they’re also dangerous. You’ve probably seen these before. Emails that say you’ve won money, or you’ve been left money by someone you don’t know who lives in a foreign country. They ask you to wire them money to set up the transfer, and then they will deposit a much larger sum into your account.


ID thieves also send emails posing as a representative from a foreign government. They ask you to help move money from one account to another. Sounds fishy, right? Who falls for this stuff? Well. it’s been reported that this scam nets these criminals $100 million every year. These offers account for about 12% of the scams people say they’ve received, according to a National Consumers League poll. There are many versions of this scam, so it’s important to not respond to any email if you don’t know (or cannot verify) the sender.


Phishing is a type of email and website scam. The ID thief simply creates a website using the name of a legitimate company, but adds a word like “accounts” or “secure” in the domain name. This is supposed to fool you into thinking an email is coming from a reputable company you might do business with – Amazon, Bank of America, you name it. The ID thieves then send millions of emails asking consumers to verify their account information and Social Security Number. So instead of hacking your personal information, they compel you to just hand it over.

Ransomware is much like it sounds. It’s a malicious program that can lock up your computer or block your access to your computer. Once you inadvertently download it in an email or through other means, the ID thief threatens to publish your data or maybe just keep you from ever accessing it – unless you pay a ransom. That can be a few hundred dollars for an individual or thousands of dollars for a company.


Identity thieves have gotten so skilled at their evil craft, they’ve started to specialize. Besides the email scams we just talked about – which hit up to 100 million people every year – there are many others. This reviews the many ways thieves attack your credit and debit cards, your Social Security information, driver’s license information, your tax returns, medical information, and even your unemployment benefits. Let’s drill down on these and then review how to protect yourself from them all.


This theft can happen online or in person. If you use an ATM or insert your credit card into a gas pump, you might fall victim to skimmers. Instead of hacking the Internet, they hack machines. They take over the ATM or gas pump and read your card’s data.


With a credit card, you have excellent fraud protection. Simply call the number on the back of your card if you notice charges on your statement you didn’t make. Many times, your credit card issuer might call you to ask if you made suspicious charges.


Your debit card is protected as well, but not nearly as much. You need to act fast. Your loss is limited to $50 if you notify your financial institution within two business days after learning you lost your card or had its data hacked. If it’s outside that two-day window, you’re now responsible for up to $500 in damages. So if your ID is stolen on a Monday and $200 is spent, and you discover it and report it on a Tuesday, you’ll only be responsible for $50 of that damage. But if you don’t report it until Friday and the thieves spend an additional $200 on your card, you could be responsible for all $400 worth of charges!


And if you don’t report an unauthorized transfer that appears on your statement within 60 days after the statement is mailed to you, you risk unlimited loss on transfers made after that 60-day period. That means you could lose all the money in your account, plus your maximum overdraft line of credit. So if you lose your debit card, call and cancel it immediately!


One thing to remember: If you report an ATM or debit card missing before someone uses it, you’re not responsible for any unauthorized transactions. Even if your card isn’t stolen and you think you lost it, report it the moment you realize it’s gone. You can prevent any damage simply by calling your bank.  Check your statements regularly to see if there are any mysterious charges and report them.


A Social Security Number is coveted by identity thieves because it’s a portal to discovering all other kinds of information. That means thieves will go to great lengths to get your number.


Thieves use your SSN to gain employment or to report income under your name.  They’ll use the tried-and-true tactics like phishing, but they’ll also call you unsolicited with various stories to get you to give up your Social Security Number. The most insidious scheme involves calling as hospital employees and saying a relative has been in an accident and is near death. They need your SSN to guarantee treatment.


Your number is so valuable, thieves aren’t beyond going old-school to get it. They’ll steal mail from your mailbox, lift your purse or wallet when you’re not looking, and even rifle through your trash in search of personal records. They’re relentless, which means you need to be, too. Shred your personal info before throwing it in the trash, guard your personal possessions, and never respond to email offers or threats from people you don’t know.


A tax return is a lucrative prize for an identity thief – because they literally file a tax return in your name and redirect any refunds to themselves! To get this, they’ll use your Social Security number, so you can already see how these scams fit together.


Generally, an identity thief will use your SSN to file a false return early in the year. You might not even be aware you’re a victim until you try to file your taxes a little later and learn one already has been filed using your SSN.


Another popular scam involves phone phishing. Sophisticated-sounding agents call you or leave “urgent messages” giving fake badge numbers. They mention real IRS center locations to sound as legitimate as possible. Then they insist you owe money to the IRS – and they demand an immediate wire transfer. If you hesitate, they threaten you with big fines or even arrest.


Avoiding these scams is easy if you know just one crucial fact: The IRS will NEVER contact you by phone, only through certified mail. If anyone calls you saying they are with the IRS, hang up immediately! You can also file a report with the local police and a complaint with the Federal Trade Commission. The IRS also has a page on its website that explains what you can do.


This should come as no surprise, but identity thieves are usually career criminals, which means they might have a record preventing them from getting their own driver’s license. So what do they do? Simple. Steal yours. How?


If the thief looks like you and has some skill at fake IDs, that’s easier. Or they could simply steal yours and use it outright. But what if the thief has now pretended to be you at either a traffic stop or during a criminal arrest? You now have a court date to appear for a crime you didn’t commit. When you don’t show up to the court date that you were completely unaware of, a warrant is issued for your arrest. You can see why this is one of the most serious and traumatic forms of identity theft.



If this happens to you, hopefully you’ll figure out that your license has been stolen soon enough to prevent these terrible situations. You’re first call needs to be to your local law enforcement. By filing a report, you create a paper trail. That way, if crimes are committed in your name, they know you called it in. Next, go to the DMV immediately to get a new license.


If someone can steal your driver’s license and mimic you, why stop there? Identity thieves also use your driver’s license and Social Security Number in conjunction with your health insurance information. They can either seek medical care themselves or sell the privilege to others who stick you with the bill.


This can include everything from ordinary checkups to prescription drugs to expensive surgery. It can also happen in the workplace if an employee creates fake records to submit false bills to an insurance company. Medical fraud has gone up by over 20% due to so many medical records becoming digital.


Check for these warning signs: Being billed for medical services you didn’t get, getting called by a debt collector about medical bills you had nothing to do with, and reaching the limits of your benefits when you know you didn’t have that many expenses.


How do you prevent medical fraud? Get copies of your medical records and check them for errors. It’s no different than checking your credit card statements for the same thing. If you think you’ve been a victim, contact each doctor, clinic, hospital, pharmacy, laboratory, health plan, and location where a thief may have used your information. For example, if a thief got a prescription in your name, ask for records from the health care provider who wrote the prescription and the pharmacy that filled it.


More than anything, protect your medical information like you would your Social Security Number. Be wary if someone offers you “free” health services or products but requires you to provide your health plan ID number. Medical identity thieves may pretend to work for an insurance company, doctors’ office, clinic, or pharmacy to try to trick you into revealing sensitive information. Instead, thank them and say you’ll call back your provider directly.

And of course, shred outdated health insurance forms, prescription and physician statements, and the labels from prescription bottles before you throw them out.


Unemployment fraud is becoming a huge trend, and even though it’s been growing for the past few years, everyone hasn’t caught onto it yet. Thieves are filing for unemployment benefits and being awarded government money. Over $4 billion was paid out to unemployment fraud back in 2014 – and oddly, a very large majority of victims are actually still employed. Despite its name, this isn’t a crime that typically targets Americans actually receiving unemployment.


Why? Because the thief simply files for unemployment benefits in your name and starts collecting checks from your employer. It’s clever because you might not realize it for a long time, since the money isn’t coming out of your pocket. But it’s still very dangerous, because these thieves need a lot of your personal information to pull this off – like your Social Security Number and address. If you think they won’t use that personal information for the other kinds of theft mentioned here, you don’t know how greedy these thieves are.


If you suspect this has happened to you, call the unemployment office in your state as soon as you find out. This can put a quick end to the problem. Even if your HR department tells you they’ve contacted the unemployment office, it’s important that the office receives a verbal statement from you as the victim. That greatly helps their investigation.


Before we talk about solutions, let’s discuss the warning signs that apply to almost every kind of fraud we’ve discussed today. One big tip off is getting denied for new credit if you know you have a decent credit score – because someone else has already abused it. Ditto if you’re getting calls from bill collectors for bills that aren’t yours.


Another easy red flag to spot are errors on your bank or credit card statements, which is why it’s so important to spend a few minutes reviewing them each month.

Harder to spot are mistakes on your credit reports. But there’s a free and easy way to do that, which we cover next.


Now that we’ve scared you to death, let’s talk about solutions. We’ve mentioned a few as we’ve gone along, but you have some powerful, blanket weapons at your disposal.


You might already know that your credit reports can get saddled with accidental mistakes that can drag down your credit score. But those reports can also tip you off to suspicious activity. Federal law mandates that you can check your credit reports FREE once a year – and not just one, but three. That’s because there are three major credit bureaus: Equifax, Experian, and TransUnion. You get one free report from each. Here’s a tip: request one from each bureau every four months. That way, you can spot fraud much sooner than just once a year.


These three national credit reporting companies also offer free fraud alerts. What’s that? It’s a layer of protection that comes in two levels.


An initial fraud alert can make it harder for an identity thief to open more accounts in your name. When you have this alert on your report, a business must verify your identity before it issues credit, so it may try to contact you. Be sure the credit reporting companies have your current contact information so they can get in touch with you.

An initial alert stays on your credit report for at least 90 days and can be renewed. An initial alert is appropriate if your wallet has been stolen or if you’ve been taken in by a phishing scam. When you place an initial fraud alert on your credit report, you’re entitled to one free credit report from each of the three nationwide consumer reporting companies.

An extended fraud alert stays on your credit report for seven years. When you place an extended alert on your credit report, you’re entitled to two free credit reports within twelve months from each of the three credit bureaus. Potential creditors must contact you in person or by phone or other methods you have provided before they issue credit in your name. The consumer reporting companies must remove your name from marketing lists for pre-screened credit offers for five years unless you ask them to put your name back on the list.

Unlike requesting your credit report, you don’t need to contact all three bureaus to initiate a fraud alert. Contacting just one is enough, because they’re all legally obligated to notify the others.


A credit freeze allows you to restrict access to all your credit reports. Potential creditors can’t get access to your credit information unless you lift the freeze temporarily or permanently. Your current creditors can still access your records, though.


These freezes are also free. Unlike a fraud alert, you need to contact all three credit bureaus if you want them each to freeze your credit. The biggest drawback of a credit freeze is the sheer hassle you’ll endure. When you want to “thaw” your credit, you’ll have a PIN from each bureau that will be required by phone or mail. But it might just be worth it for the protection and peace of mind.


We’ve talked a lot about protecting your Social Security information. If you think your information has been compromised, you can contact the Social Security Administration’s fraud hotline. You have several methods of reaching the SSA.


Once it’s out there, it may not be possible to retrieve or erase it. Don’t post your address, Social Security Number, or other very personal information on social networking sites. Use the privacy settings on social networks to limit who you want to be able to see the information you post and be wary of strangers who want to be your friends, since they may be fraudsters instead. Only provide your personal information when it is absolutely necessary for something – if you’re not sure why someone wants it, ask.  Shred all of your old documents.


Using passwords can be annoying, but any barriers you put in front of ID thieves make you a less attractive target. Can’t remember your passwords? It’s OK to write them down as long as you store them somewhere safe. Create passwords that aren’t easy to guess – not your birthday or your pet’s name! And not words that are in the dictionary, since crooks can use programs to run through the dictionary in minutes.


They may contain malware. If you receive something like that out of the blue and it looks like it’s from someone you know, contact that person to check whether it’s legitimate. If you don’t recognize the sender, just delete it.


Downloading “free” games or toolbars that you are not familiar with can install spyware or keyloggers on your computer. These programs can track what you do and what you type, including passwords, Social Security Numbers, and the like.


If a company unexpectedly asks you for personal information unprovoked by phone or email, odds are it is a phishing attempt. Scammers have gotten very good at disguising their emails to look like they are major corporations. If it seems suspicious, it probably is. If you are a customer of the company it is best to contact them immediately to find out if they are really trying to reach you.


Many computers and smartphones come with them built in, and you can also find this software for free or for sale on the Internet. Look for reviews from tech magazines and other independent sources.


It’s convenient, but public Wi-Fi is usually not secure. Crooks can use various high-tech means to “eavesdrop” on your email or communications on social networks and read what you’re typing. If you’re banking or shopping with your device, your account numbers could be exposed.


Before we dive deeper into governmental protections, let’s look at a nonprofit’s offerings. Consolidated Credit offers financial education tools that can help you prevent fraud. Consolidated Credit makes learning about your money painless and fun. Whether you prefer to learn from printed booklets or through interactive calculators, we can help you learn the basics that can help protect you.


While it’s up to you to protect yourself, you don’t have to go it alone. You have allies. The federal government, has two agencies that really have your back. The newer one is called the Consumer Financial Protection Bureau, or CFPB. The one that’s been around a lot longer is called the Federal Trade Commission. How are they different? Let’s take a quick look.


The CFPB was created in 2011. It’s not focused on identity thieves and that kind of crime. Instead, it focuses on protecting Americans from shady business practices of the providers of mortgages, credit cards, and student loans. Its mission is to “promote fairness and transparency” in these financial products and services. If you feel you’ve been taken advantage of in any of these areas, you can file a complaint with the CFPB. Based on those complains, the CFPB has sent warning letters to some of these providers. The agency has also filed court documents and even issued new regulations that businesses must follow.


The Federal Trade Commission’s mission is less controversial than the CFPB. First, it’s been around since 1914. Because this is the government, it can get confusing to tell the difference between the CFPB and the FTC. Why? Because the FTC has a wing called the Bureau of Consumer Protection – which sounds a lot like the Consumer Financial Protection Bureau. But they’re actually very different things. The FTC’s bureau safeguards consumers by telling businesses what they can and can’t do. For instance, it enforces the nation’s truth-in-advertising laws. The FTC can actually enforce civil contempt actions and collect financial penalties from companies who do bad things.


While many Americans of all political persuasions like to make jokes about Congress, the truth is, there have been some bipartisan bills that have passed to protect consumers over the years. They also have some confusing, similar-sounding names, but it’s worth quickly reviewing them.


Let’s look at one of those good laws. CROA regulates credit repair companies. Credit repair is a legitimate tool for fixing errors on your credit report which, left unchecked, could drag down your credit score. But like everything else in the world, a few bad actors hurt the entire industry. So CROA protects you from unscrupulous credit repair agencies that try to steal from you. Just one example: CROA prevents credit repair companies from making you pay in advance for their services, and it gives you a chance to cancel the service without any penalty within three days.


It can be tough enough to get credit at a decent interest rate – or at all. The Equal Credit Opportunity Act makes it illegal to discriminate against anyone applying for credit based on their race, their religion, their age, their marital status, and even if they receive public assistance. It also dictates that your creditors notify you about actions they take on your credit applications.

Dating all the way back to 1970, the Fair Credit Reporting Act regulates the way credit reporting agencies use the information they receive about your credit history. FCRA is mostly aimed at what are called the Big Three credit bureaus: Equifax, Experian, and TransUnion. It keeps misinformation from being used against you. FCRA has very specific guidelines for how your personal information can be gathered and released.


Not to get too confusing, but the FACT Act is actually an amendment to the Fair Credit Reporting Act we just covered. It dates back to 2003 and it allows you to pull your credit report for FREE from AnnualCreditReport.com. Given how many mistakes are on credit reports, this is something you should do every year. Take advantage of the power you now have.


The FCBA has two provisions that are pretty powerful. First, you have 60 days from the time you receive your credit card bill to dispute a charge with your card issuer. And if your card is lost or stolen, you have the right to dispute charges on the phone, instead of sending a letter.


Debt collectors aren’t beloved by many people. They have a job to do like everyone else, and let’s face it, theirs is not a pleasant career. Because of that, Congress wanted to make sure debt collectors didn’t go to extremes to collect money that’s owed to them and others. So the FDCPA sets strict limits on debt collectors. For example, they can’t call you before 8 a.m. or after 9 p.m., and they can’t call you at your workplace. If debt collectors violate these rules, you can file a complaint with the FTC.


Remember how the Equal Credit Opportunity Act outlawed discrimination in credit transactions? This does the same for housing. No one can use your race, age, gender, marital status, disability, religion or other factors against you – and not only when it comes to buying a house. This applies to renting, too.

It sounds awful, but in the past, some unscrupulous creditors would take advantage of our military personnel when they were serving our country. This act prevents that. It regulates how active duty personnel can be charged credit card interest rates, how their auto and apartment leases can be terminated, and even how evictions are proceeded. It can get a little complicated, but it’s something every military member needs to know.


Anyone with a smartphone knows how annoying it is to get sales calls you never wanted or asked for. Well, it could be worse if not for this act – which predates smartphones. It passed in 1991 and bans solicitors from calling your home before 8 am or after 9 pm, and they must maintain a Do Not Call list. Of course, these days, technology has poked holes in this act, so consumer groups are lobbying Congress to tighten the rules for this new era.


This act very specifically bans telemarketers from collecting fees for services until a debt has been settled and sets time limits on when they can call you, among other things. While it might never apply to you, it’s just another example of how the government is aware of these financial problems and tries to deal with them.


Think of the Truth in Lending Act as a comparison-shopping act. Ever try to figure out if a can of soup is a better deal than another can of soup? One is cheaper, but the other is bigger. It can be draining to figure out which is more economical. Well, the same thing happens when you apply for credit. TILA requires lenders to offer clear, uniform disclosures.  That’s one reason why when you apply for a credit card, the terms, fees, and condition are all listed roughly the same way so you can comparison-shop more intelligently.


This act, passed in 2005, changed how an individual can declare bankruptcy. For example, it requires a pre-filing and pre-discharge credit counseling  course – which is a good change, since the last thing you want is to keep the bad habits that drove you into bankruptcy in the first place. But the act also limits how often you can declare bankruptcy and uses what’s called a “means test” to determine if you’re even eligible.


The debt management and debt settlement industries need to register, and they must disclose their services and their fees so you can make sure you’re getting the right service at the right price. Again, it gets kind of technical – it’s the government, after all – but the philosophy is the same. Namely, that transparency helps you make the right choice, and it keeps businesses honest and competitive.


Besides these government actions, you can also get help from private nonprofit agencies like Consolidated Credit.


Thank you very much for listening today. I hope this helps you protect yourself, and gives you peace of mind that you have allies in this fight.


GenX Retirement Guide

What you can expect as you head towards retirement

Upon completion you will know:

  • What challenges face Gen Xers and how to overcome them
  • How to use different retirement accounts and resources to your advantage
  • Ways to start saving, even if you’re burdened by debt
  • Tips for catching up on retirement savings, specifically if you’re over age 50
  • What you can expect as you head towards retirement


Today’s webinar is specifically designed to help Generation Xers, plan and prepare to reach their retirement goals. However, much of the information you will learn today applies to all generations, whether you are Gen X, Millennial, Baby Boomer, or even Gen Z.

Now let’s get geared up to achieve your retirement goals – today you’ll learn:

  • What challenges face Gen Xers and how to overcome them
  • How to use different retirement accounts and resources to your advantage
  • Ways to start saving, even if you’re burdened by debt
  • Tips for catching up on retirement savings, specifically if you’re over age 50
  • What you can expect as you head towards retirement

While most Americans don’t think of retirement in their 20’s, it’s the best age to start planning. The earlier you start saving the more time your money has to grow.

So, who is Gen X? Gen X is anyone born between 1965 and 1980 and are now between the ages of 38 and 53.

Most people aim to retire around age 67, when their Social Security benefits start so that means Gen Xers are now somewhere between 15-30 years away from retirement. If you haven’t started saving yet, then now is the time to get retirement-ready.

Is Gen x ready for retirement? Most experts say no. According to a CNBC report from March, only 8% of Gen Xers have saved enough to be on track for retirement.

ARGI financial group says workplace retirement savings aren’t where they need to be. They reported on a study by Transamerica Center for Retirement Studies that says the average Gen X worker started participating in a workplace retirement program at age 27 and their median savings are only $69,000.

ARGI also asked Gen X how much they think they need for retirement. The median guess was $500,000, But with a 4% annual withdrawal, that comes out to $20,000 per year. That’s not nearly enough to live comfortably in most places.




A TD Ameritrade survey published this year in USA Today found:

  • 43% of Gen X workers say they know they’re behind on retirement savings
  • Almost half -49% – worry they’ll run out of money once they stop working
  • And 37% say they don’t think they’ll be able to retire at all
  • 17% aren’t saving or investing at all
  • Only one third believe they’ll be very secure during retirement

As CNBC notes, Gen X is the first generation with no employer pensions. The Social Security administration reports that Social Security benefits are on track to be depleted by 2034. So, if that comes to fruition, Gen X will be the first generation that’s largely on their own for taking care of themselves in retirement.

Gen Xers face several other challenges heading into retirement. As Americans face record high student loan debt and credit card debt, Gen X has more debt than anyone.

The average Gen X household has $231,774 of debt according to a report in USA today, with the most average non-mortgage debt of any generation at $30,334.

Many Gen Xers are still paying off student loan debt, and many lost homes in the 2008 mortgage crisis.

There’s also the challenge of being a sandwich generation, where Gen X households are taking care of children – often into adulthood – and their parents. Gen Xer’s children are taking longer to achieve financial independence, and many are moving back home. At the same time, many Gen X households have also taken in aging parents who aren’t able to live independently. As a result, Gen X can’t save for their own retirement, because they’re financially burdened taking care of everyone.

So what’s the solution? No matter which end of Generation X you’re on, you need to start saving! The AARP reports that nearly one quarter of Gen Xers believe that they can’t start saving for retirement until they pay off their credit cards.

Gen Xers need to:

  • Bring financial balance to their life by Budgeting correctly
  • Find solutions to pay off debt
  • Understand tools that can help them save effectively and to their advantage

A critical step to becoming retirement-ready is understanding the value of a 401(k).

401(k)s and other employer-based retirement programs are designed to help you save. The contributions you make are tax-free – i.e. the money is taken out of your paycheck before taxes. And, most employers offer match programs, where they match a percentage of every dollar you contribute up to a certain percentage of your annual salary. A common match is 50 cents for every dollar contributed up to 6% of your salary. That’s free money for your retirement!

Bear in mind that you aren’t taxed on contributions, but you are taxed on withdrawals. Regular withdrawals after age 59½ are taxed as regular income.

Early withdrawals come with tax penalties. Also, there’s a limit to how much you can contribute to a 401(k) each year. For 2018, that limit is $18,500.

If you don’t have a 401(k) or access to one, then an IRA is a necessity. There are two types of IRA – Traditional and Roth. With a traditional IRA you must start making withdrawals at age 70½, but a Roth IRA has no required starting age for disbursements. Both types of IRAs also have a maximum yearly contribution.

All retirement accounts use mutual funds to invest the money you contribute so it can grow. Luckily, many advisors offer an initial consultation for free, and can tell you what funds are being used to invest your money.

So, how do you choose the right financial advisor? First, make sure to choose a financial advisor that’s fiduciary. A fiduciary is someone who prudently takes care of money or assets for another person. Also, check brokerage fees and other fees charged by the advisor.

Education is key and essential even with an advisor, educate yourself about retirement accounts, mutual funds and other investments so you can ask the right questions when you speak with your advisor. It is essential for you to create a spending plan and find money for retirement. Even if you spend everything you make and live paycheck-to-paycheck, there are still ways you can find savings:  For example, your tax refund.

No0w let’s talk about solutions for paying off debt that are efficient.

  • If you carry credit card balances every month, you’re throwing money away on interest charges. So you need to reduce or eliminate those charges so you can pay off your debt.
  • If your credit score isn’t great or you have too much debt to repay with a loan, speak with a credit counseling agency to see if you qualify for a debt management program
  • If you’re at the younger end of Gen X – your late 30s – then you should have the amount equivalent to one year of your gross annual salary saved
  • By 45, you should have 3 times your annual salary saved
  • At the older end of Gen X – age 50 plus – should have five times your annual salary saved
  • By 65, the goal is to have eight times your annual salary saved

So, what do you do if you’re behind and saving? First, take a deep breath there are ways to catch up.

  • Balance your budget
  • Pay off all existing credit card debt and divert that money to saving for retirement
  • Student loans – whether they’re yours, PLUS loans for your children or a combination of both – look into student loan consolidation



If you’re under age 50 and behind:

  • Up your 401(k) contributions to get as close as possible to the max contribution
  • Start a Roth IRA and get as close as possible to that max contribution
  • Consider other investments that offer a combination of low steady growth and larger, higher risk growth

If you’re over 50, there’s more opportunity to save:

  • Maximum contribution limits on 401(k) plans and IRA accounts increase after age 50 because you’re allowed extra contributions
  • The catch-up 401(k) contribution is $6,000, meaning you can contribute up to $24,500
  • The maximum contribution for traditional and Roth IRAs is $6,500 in 2018


What can you expect and plan for as you get closer to retirement? At age 50, you can join AARP

  • At 59½ start making withdrawals from retirement accounts without penalties
  • At 62, you can get Social Security, if it is still around, but payments can be permanently reduced by starting this early!
  • Qualify for full Medicare at age 65


When you hit 67:

  • You can start getting your full Social Security benefits, again if it still exists, but you can put it off even longer.
  • At age 70½ you must start making withdrawals from 401(k) and Traditional IRAs – there is no requirement for a Roth IRA


Things to remember during retirement:

  • Keep debt as low as possible
  • Make a budget once you retire
  • Take time to research Medicare

A final Note: If high interest rate credit card debt is draining the money that you should be saving for retirement, speak one-on-one with a Consolidated Credit certified counselors to find the right solution for your unique financial situation. Thanks.


7 Tips to Conquer Your Debt

Leave debt in the past with these helpful strategies

About 60% of Americans make New Year’s Resolutions and financial resolutions are always on every Top 10 list you see each year

Upon completion you will know:

  • Coping & Managing Debt
  • Debt Snowball vs. Debt Avalanche
  • 7 Tips to Get Out of Debt
  • Your Legal Rights
  • Debt Relief

Today will teach you seven tips for conquering debt.
Consolidated Credit is a nationally recognized Non-profit Credit Counseling HUD Approved Agency. Our mission is to assist families throughout the United States in ending financial crisis, and solving money management problems through education and professional counseling. We offer Free Credit and Budget Counseling, Debt Management Services, Housing Counseling and Financial Education.
Have you decided that this year is going to be the year that you finally become debt free?
If so, you’re not alone.
Getting out of debt is consistently one of the top resolutions every year.
About 60% of Americans make Resolutions and financial resolutions are always on every Top 10 list you see each year. People resolve to:
• Get out of debt
• Save more and spend less
• Start saving for retirement or a college fund
But how many people really keep up with their resolutions?
Sadly, only about 8%
Research shows that 80% of people who make resolutions drop them before the end of January, and only 8% of people end up making their resolutions happen.
So, if you’ve made a resolution to get out of debt it’s commendable, but now you need to follow through with a plan
The good news is, you’ve come to the right place to learn how to turn your resolution into a reality.
Consolidated Credit is here to help you get there with seven tips that will help you take solid steps forward and you can start today.
Tip #1: Get organized – Figure out:
1. How much you owe
2. Who you owe
3. Where each debt stands
People who feel overwhelmed by debt often start to ignore it.
You know your balances are higher than they should be, so you gloss over your statements and just focus on the minimum payment.
You need to tally up your debt, so you can see exactly where you stand so you have all the information needed to make a practical plan to get out of debt
1. Gather up all your most recent monthly statements
2. You want to write down the type of debt, such as credit card, student loan, auto loan or mortgage because you may not always recognize a loan servicer by name
3. Find your current balance on your most recent monthly statement
4. APR refers to the interest rate that gets applied to your debt each month. You can find APR listed on your monthly statements. APR is effectively the cost you pay for using credit.
5. Also note where the debt stands – if it’s current, behind or in collections.
All this information will help you determine the best way to get out of each debt you owe and set priorities for how things will get paid back
Don’t forget other types of debt too…
For example –
• IRS or state tax debt. You may owe the government back taxes, and the penalties for not paying off tax debt quickly can be extremely steep
• Medical collections. Out of pocket medical expenses that slip into collections is another common source of debt
• Court fines or arrears. You could owe court fines or be behind on child support payments. And while you may not consider that debt, the consequences of not paying it could end in jail time, so it’s another obligation to you need to put on your list
• Collections for cellular, mobile service, or other utilities. You may also have monthly service bills that have lapsed into collections due to nonpayment
Tip #2: Make a budget to see what’s realistic
Cash flow is going to be key to becoming debt free. That’s the money you have leftover each month once all your necessary expenses are covered.
The more, cash flow you have, the faster you’ll be able to get out of debt.
So, you need to know how much money is left each month after you…
• Pay bills
• Buy necessities
Saving money can’t be left off!
You also need to make sure that savings is built into your budget. It may sound counterintuitive – if you’re focusing on paying off debt, then don’t you want to divert every penny to that effort?
The answer is no. You need savings to cover all those unexpected and usually expensive emergencies that pop up. Otherwise, those will go on credit and you’ll just have more debt to pay off.
How much should you save each month?
• Experts recommend 5-10% of your income
At a minimum, work to have at least $500 to $1,000 in reserve to cover any emergencies.
Tip #3: Slash your spending to free up more cash flow
Discretionary expenses refer to anything in your budget that’s not a necessary expense.
The more you scale back, the more cash flow you free up.
Find expenses you can cut completely and scale back on things like food– food is a necessity but having someone cook for you is a luxury and it’s more expensive than you think.
If you’re paying for services you can do yourself, cancel them for the time being. Also, don’t have multiple music streaming accounts or movie accounts. Pick Netflix or Hulu but not both.
But be careful to not yo-yo financial diet!
Extreme budgeting will work about as well as an extreme diet will. You’ll get exhausted, bored and tired of it quickly, which will snap you right back into overspending
So, try to leave at least some fun in there to make sure you can keep up with your resolution. But be reasonable, remember your goal and cut back as much as you think you possibly can.
Tip #4: Explore solutions that will make it easier to pay off your debt
Slogging along, making regular monthly payments won’t get you anywhere. But there are solutions that make it faster and easier to pay off debt.
The key to eliminating debts that are current, is usually to reduce the APR. Payment plans and debt consolidation can also help you pay off current debts, and take care of those that are behind a few payments. But if you have debts in collections, the best option may be debt settlement
Lower APR means you can eliminate the debts you owe faster because you’re not wasting so much money on interest charges
Cut interest rates in half and you’ll be out of debt twice as fast.
How do I lower APR?
• For credit cards, call your creditors to negotiate a lower interest rate
• For loans, look into refinancing
Just keep in mind that qualifying for lower rates is usually based on your credit score. If you’ve managed to keep your credit score up, that’s good news because you’ll get the lowest rates possible. Otherwise, you may need other solutions.

So what is debt consolidation?
Consolidation refers to any solution that takes multiple debts and merges them into a single monthly payment with the lowest APR possible
1. Take multiple debts
2. Roll them into a single monthly payment
3. Aim for the lowest interest rate possible
This also simplifies your bill payment schedule, so you don’t have to juggle so many obligations.
Balance transfer credit cards and debt consolidation loans both consolidate debt. But again, you’ll need a good credit score to qualify.
You can also call your individual creditors to set up a payment plan if you’re behind on your payments.
Payment plans work for:
• Credit cards
• Student loans
• Tax debt
• Collections
You can use a debt management program to set up a payment plan for all your credit card debts, and possibly debts that are in collections.
There are also payment plans for federal student loans and a payment plan called an Installment agreement for tax debt.
Why is debt settlement best for collections?
When a creditor charges off your credit card, you default on a loan, or a bill goes to collections, the best option is usually settlement.
You don’t want to settle if your accounts aren’t in collections yet because you still have options that won’t damage your credit score as badly as settlement does. But a collection account already hurts your score, so your best option is to just get rid of it as quickly as possible.
When an account is in collections:
• The debt is already hurting your credit
• Settlement is usually the cheapest and fastest option
Settlement is also better for many collection accounts because there’s no APR on collection accounts for credit cards, medical expenses, and other bills. That means other solutions that lower APR don’t provide as much benefit when you’re in collections
Tip #5: Develop your repayment strategy and set some priorities
Once you’ve explored all the solutions available for the types of debt you have, you can start taking action.
1. Start setting up solutions for your specific debts
2. Figure out what needs to be paid first and what can wait
3. Decide the best way to set up monthly payments
Call your creditors to negotiate, shop around for rates on consolidation loans or refinancing options. And if you have collection accounts, check your mail to see if the collector has made you any settlement offer.
If you don’t consolidate, then debts of the same type should be prioritized by APR and collections should be prioritized based on how long the account has been delinquent.
How do you prioritize debts of the same type?
• If the debt is current, prioritize by APR– pay off the highest interest rate first because it costs you more each month
• If the debt is in collections, prioritize based on the statute of limitations
There’s a 10-year statute of limitations on collecting almost any debt in any state. So, if you have a really old collection account, it should be at the bottom of your priority list
If you’re facing financial hardship and are struggling to make everything fit in your budget, don’t lose hope and quit. There are solutions that allow you to stop making payments or reduce your payments temporarily when you’re facing hardship

Not every debt necessarily needs to be paid now!
• Get student loan deferment or forbearance
• You can also get forbearance on loans and credit cards
• Apply for Currently Not Collectible status for IRS tax debt
Deferment stops student loans payments and can even stop interest charges from accruing on some federal student loans. Forbearance can stop or reduce your monthly payments, but interest charges still accrue.
Even the IRS will stop collection actions if you qualify for Currently Not Collectible, although penalties will continue to accrue on what you owe.
You can apply for Currently Not Collectible through the IRS website – IRS.gov – or with the help of a certified tax attorney. The IRS will review your finances to confirm that you don’t have the ability to pay.
Once you qualify for Currently Not Collectible, the IRS will stop all collection actions and any garnishments. They’ll review your financial situation periodically, so they can start collection actions again once your situation improves.
One final thing to consider as you set up your strategy to become debt free is how you want to make payments
Consider payment options carefully
• AutoPay means you won’t miss payments because you forgot the due date
• But it can also lead to added fees and penalties if you don’t manage your account
Setting up AutoPay means that you don’t need to remember to make your payments – it can also get you a rate discount on many loans. However, if you have trouble managing your money and checking account, be careful.
You could face overdraft fees, as well as NSF -non-sufficient funds – fees and penalties if the money isn’t there when it needs to be
Tip #6: Say no to new debt
One of the biggest roadblocks people face when working to get out of debt is adding new debt when they’re supposed to be focused on paying debts down. If you keep charging and borrowing, you’ll constantly be taking one step forward and two steps back. In other words, you’ll get nowhere fast.
To avoid this cycle of debt, you should:
• Avoid any new charges on credit cards
• Only take out new financing to refinance or consolidate
• Avoid new loans until you have control of your debt
Only take out new financing if it makes it easier to pay off existing debt.
Examples of financing for debt elimination:
• Balance transfer credit cards
• Debt consolidation loans
• Refinancing for student loans, auto loans or your mortgage
If you plan to use new financing to make it easier to eliminate your debt, consider things carefully before you proceed. You will be required to pay fees on any loans you originate, and if you refinance your mortgage you’ll usually face a new round of closing costs.
There’s also another danger with credit card debt consolidation. You’ll zero out the balances on your existing cards when you consolidate, and it can be really easy to run up new balances if you’re not careful.
Avoid new loans and big expenses
• If possible, put off buying any new vehicles
• If you need to pay for school, put in the effort to look for scholarships, grants, and work-study programs
• Don’t take expensive vacations – staycation until you’re out of debt
And until you get out of debt, take precautionary measures to avoid new debt.
• Don’t skip vehicle maintenance because that can lead to expensive repairs
• Find inexpensive and fun activities you can do locally, so you can take time off without the expense of traveling
• And take proper care of your big-ticket items like your electronics and appliances

Tip #7: Supercharge your repayment strategy with extra cash
• If you received gift cards for the holidays, use them to pay off debt
o Some general-purpose gift cards can be used just like debit cards to pay bills.
o Or you can cash in gift cards and transfer the money to your account and pay bills that way.
Use your tax refund to pay off your most problematic debt
Consider taking on extra work to earn some extra cash.
Part-time jobs, freelance, consulting work can all help you generate extra income
You can even sell items you don’t need any more online
The more you can earn, the faster you’ll reach your goal
If you’re not making progress, get help
Consolidated Credit’s certified credit counselors can evaluate your debts and make recommendations on the best solutions for your situation.
They can answer questions about credit cards, medical debt, and collections
We also have HUD-certified housing counselors that can help if you’re facing challenges with your mortgage or want to explore options for refinancing
If you’re facing challenges with student loans, start by calling your loan servicer. And don’t ignore communications from the IRS – it can lead to extra penalties and they’re usually willing to work with you if you can’t afford to pay… as long as you don’t try to dodge them.
We would like to thank you for attending our Webinar
*** End of presentation***

Back To School Shopping Tips

How the kids can help

Upon completion you will know:

  • How to talk to your children about money
  • How to involve your internet savvy kids so you can afford what they want
  • What to do to help children understand the value of money
  • Ten tips for saving money on back to school
  • How to explain the risks of credit cards to teenagers

Welcome to the Back to School Savings – How Kids Can Help.


It is back to school time again. If you are a parent with children, that probably means an entirely new wardrobe for them.


If you have a high schooler, that may mean you also need some kind of tablet or laptop.


The good thing about back to school time, is it is a great time for you to start talking to your children about money, how to save, and how to spend. In today’s quest for financial knowledge, we’re going to talk about Back to School, tips on shopping, and how to talk to your children about money.


These are some statistics about back to school spending.

  • Parents spend an average of $688 a year for back-to-school supplies
  • That’s approximately $29.5 Billion a year for K-12
  • And if we add college students, this jumps to $83.6 Billion a year
  • 80% of children will LOSE pricey items such as lunch boxes and clothing with in the first year!

Here are some more statistics – most of these probably won’t surprise you, but I hope they make you rethink your shopping this year!

  • Parents are projected to spend about $204. on Electronics and Computer Equipment
  • That exceeds clothing and accessories last year, but it now comes in second to clothing which is about $238 this year
  • Shoes come are $114.
  • Actual School Supplies like notebooks and backpacks are the least of our spending at $107

Percentage of Most Frequently Lost Items

This is a fun chart that shows where your money is going and how students lose what you buy for them!

  • 43% of jackets, coats and outwear will be lost.
  • 57% of hats and gloves, gone.
  • 52% of school supplies are wasted.
  • 36% of lunch boxes disappear and 14% of book bags are never brought home.



Tips on Saving for Back to School

  • Hold off on the trendier gear. Kids lose things and get bored of things quickly. The jacket or lunch box they had to have in August may end up lost or collecting dust by October or November. For those of you with teenagers, who feel they must have brand name to ‘fit in’, check out overstock stores, such as Marshall’s, Ross and TJ Maxx.
  • Start at home; you might be surprised by how many supplies are in your home already. Send the kids on a scavenger hunt and whoever finds the most items on the teachers’ list gets a prize.
  • Stick to a list. If your children are smaller and their teacher provides a supply list, don’t go off list. Odds are, any extra supplies you buy will be wasted.
  • Plan lunch. When you are in control of lunch, you are in control of the spending. You can shop for deals, as well as use coupon.
  • Lean toward bright colors. It helps things from getting lost if they stand out. Also, buy sturdy backpacks that will last longer and check to see if it has a warranty, like LL Bean backpacks do!
  • Use cash instead of credit cards to pay for your back to school supplies. Paying for supplies with cash allows you to keep an eye on your funds and to stay within your budget. You can make use of the ‘envelope budgeting system’, where you take only the amount that you budgeted for in cash in an envelope and once that’s spent, you’re shopping hopefully is complete.
  • Buy in bulk to save money on back to school shopping. When pens, crayons, and glue go on sale in late summer, buy enough for the rest of the year. You might also want to check prices at wholesale stores like Costco or BJ’s.
  • You can get some incredible bargains on school supplies at the dollar store. Really! Start shopping in the summer months. You never know how long items will stay in stock. You can buy basic supplies, like notebooks and pencils, for a great price.
  • Clothing swap parties are very popular. Getting a circle of parents together to exchange clothing and supplies is a fun way to get new stuff for free, save money and be environmentally friendly.
  • There are many ways to save on text books. If you are able to find the electronic version of a text book, it tends to be less expensive. If your children are in college, you can save on books this way too. And it is also be less expensive to rent books than to buy.  They can rent the books they need for the semester and once their finished, just ship them back and shipping is usually included in the rental price!
  • When everything goes on sale at the end of the back to school season, stock up for next year!
  • And don’t forget to take advantage of the tax free days available in your area.


The back to school season is the right time to start teaching your kids about money. By including them in your shopping and budgeting, you can start good habits early. But, how early should you start?


  • Experts say that children can start learning about money as early as 4 or 5 years old and you should use coins and small bills at first.
  • Work with Cash at first and let them see you spending actually money
  • Have them help you prepare lists and take them shopping with you
  • Coupon together – let them clip coupons and get excited to hand them to the cashier


Now Let’s Talk About Allowances


Many parents have strong views about whether allowances should be tied to chores. Some parents won’t pay an allowance unless weekly chores are done. Others view chores as something kids should do as part of a family, and not be paid, but that’s up to you!


Here are some questions to help guide you…


How much should you give? On Average, most parents pay around fifty cents to a dollar for each year of age.  Should you give chores? Many people are conflicted; they feel like you should teach your children to work for their money, but others view chores as something kids should do as part of the family.


It’s important to be reliable and pay the allowance at a set time each week.

Also make saving money part of the deal – If your kids are going to learn about money, then they should also be learning about saving money. Require them to set aside a portion of their allowance in a safe place.


Discuss needs and wants. Kids may want to spend their money on all kinds of things, but make certain they understand the difference between needs and wants.


Make sure your children have a safe place to keep their money – a piggybank or a cash box with a key. Maybe even a bank account. Make a trip to the bank an event. Help your child open a savings account, and encourage him to make regular deposits.


Try not to Interfere. Try to keep your “two cents” to yourself. Allow your kids to occasionally spend foolishly, and when they need to make a purchase and they realize they are out of money, use it as a teaching tool. It’s important to have guidelines, but on certain occasions let the kids go out on a limb.


Don’t use Big Bills If you’re paying your child $10 a week don’t give them a ten dollar bill. Break the money up into smaller denominations so they can separate their savings with the money they plan on spending – otherwise they may spend the whole thing.


For special occasions such as a back to school shopping or a friend’s birthday, have your child chip in to buy the present.


Now let’s talk about Three Jars

The purpose of teaching your kids about money is to teach them how to saving. A great way to do this with younger children is to set up the Three Jar System. Go to the store and buy three big mason jars. With a Sharpie, label one jar “Spend,” another jar “Save,” and the third jar “Give.”


The day you decide to start paying allowance, bring the jars to your family meeting and explain to your child that they are going to start getting an allowance. But then explain that there are some conditional guidelines attached to the money. Before they can spend their money, they have to set aside some for saving and some for giving too — it’s never too early to start teaching children about being charitable


Help your children set up a system. For example, if you give them $4 a week, you may want them to put a dollar in saving, a dollar in giving and two dollars in spending. When they go to spend, make sure you show them the costs of the items so they understand that they may need to wait another week before they buy something.


Back to school time is a great time to start teaching your children new concepts. For example, comparison shopping. Now that they have an allowance, and know that spending requires working and saving… start showing them the price tags. For example, if they want a twenty-five dollar backpack and there is a similar one for twenty-two  dollars explain how much more they’d have to work or time to save up for those extra dollars.


Quality vs Quantity is another thing that may come up. If spiral notebook has 250 sheets of paper vs a nicer looking notebook with only 50 sheets…, which’s the better deal?


Have your children pay for small things. Pencils, pens, little stuff. Why not? Show them that sometimes, they need to pay for things they need instead of what they want. Also, if they want something that is overpriced or too expensive… tell them they can get it if they contribute toward it. That way it feels like they get a choice, but that choice comes with a cost.


If they are a little older, use the store to help sharpen their math skills. Bring a calculator and add things up with them so they can learn the math of spending.


Discuss limits with them, tell them when you go shopping for clothes that you are not spending more than $100.  Then, using your calculator and showing them the price tags, have them add up the items they want to buy and make sure they stay within the limits!


Make a shopping list together, or review the teachers-shopping list together. Make it known what’s important and what is less important so you can focus your spending properly.


Teach Kids to Shop Around.

  • Start by teaching your children to save for larger items like video games or big toys
  • Make sure they can conceptualize how long it will take to save for the item they want
  • Plant the seeds about comparison shopping
    • Take them to multiple stores
    • See if you can find the items from good will or thrift stores
    • Show them Amazon and look to see if the products they are looking for are listed


One woman I know has a 7 year old who she gives $3.50 a week as an allowance. He knows now that whenever he wants something big, like a Lego set or a video game, he has to save for it. One day, he tells his mom about a video game he wants. They go to the store and see that it is $39.99 new. So, she tells him at the rate it will take 16 weeks to get the game. Well, he is disappointed but he understands the system and accepts it. She then tells him…that perhaps if they go to another store and look elsewhere he may be able to find it or less,

So they do. They go to a few other stores and end up finding it for $34.00. Well, now he is excited because that shaved almost 2 weeks off. After a few more weeks of saving, they go online and found it used for $28.00. At this point, her son was extremely thrilled. The next time he wanted a big-ticket item, he immediately asked if they could go online and shop around.

Doing this regularly will make it a habit and can save them money in the future.


Now let’s talk about talking to Teenagers about Credit Cards and Getting Started with Plastic.

Once your teenager has their own checking and savings account, think about giving them a debit card. Since young people are so in tune with technology, it will be easy for them to keep track of things with phone apps or bank websites. But they need to watch their account balance and not let it hit zero!


Stored Value cards, which are marketed mostly toward teens, are a twist on the regular debit card. These cards are loaded with a set amount of money that an authorized person can add to. Many of them have limits or controls that allow parents to put barriers on where kids spend money


A joint account is another great way for a parent to monitor their teenagers spending.


When under the age of 18, a teenager cannot get a card without parent’s signature, but your teenager should be responsible for paying the bill in full. You should take the time every month to review statements. Remember, they need understand that the card is for emergencies or items that you have previously discussed, like gas for their car or other ongoing essentials, but not for leveraging a lifestyle.


Another option is a secured credit card tied to the teen’s savings account. The card’s limit is usually equal to their account balance. If the teen misses a monthly payment, the bank takes it directly from the savings account. This type of card also helps build a credit history.


Finally, there’s the option of making your teen an authorized user on your credit card. It’s convenient, it’s easy, it’s commonly done — but it could result in a mega splurge, potentially putting your budget, and good credit score, at risk. Supervision is the key.

As with the joint card, parents need to review and discuss monthly credit card statements with their teen and should be monitoring expenses too. Your child should be keeping track of all they’re spending, rather than waiting to be told at the end of the month what they owe.

When a parent authorizes a teenager to use a card, the credit bureaus will report the use of that card under the parent’s name, but because the child is not technically responsible for paying the bills, being an authorized user may not have a huge impact on their credit score. But it can help those with little or no credit history beef up their credit files.


This can enable the teen to establish a credit history by piggybacking on the parent’s good credit history. And the reverse is true as well: If a parent has a poor credit history, the teen will start his or her financial life with a poor credit history too. Because children under the age of 18 can’t legally enter into a contract, the parent is the one who’s legally responsible for the debt.

This is a simple chart that shows the pros and cons of each type of card.


A PRO of a debit card is that it is easy to set up and it uses your money that is in the bank. The Cons are you have a risk of over drafting and incurring fees. It will not build your credit history.


With Prepaid or Stored Value cards the PROS are that the spending limited to the amount loaded on the card, you can check balances online, and employers can load wages onto some cards. The CONS are that you will pay fees for activation, loading money, and for monthly maintenance of the account. It will also will not build credit.


Joint Credit Card pros are that it will help build credit but the Con can be that both the parent and teen are responsible for the debt.


Secured card pros are that they do build credit and you control the amount that can be charged by setting the balance. The con is that it may have a high APR. For an Authorized User Card – the pro is that they are easy to use, but the cons are that the parent is solely responsible for the debt, it uses the parents’ credit and may put the parents’ credit at risk if the child uses the card irresponsibly.


Now let’s talk about the most important topics. Kids need to understand that it’s not your money – it’s credit and it is not free.  The longer you take to pay it back, the more it costs.

Remember, you are using the banks money. Make sure you explain to them they can either pay back everything they borrowed at once, or they can pay back over time … but if they do so, interest will kick in.

Teach them they should never rely on credit cards.

Because credit cards and debit cards are virtually identical, your child may have grown up thinking you’ve used your credit card for all your purchases. Teach your child that their checking account, which holds the money they’ve already earned, should be their primary way to pay for things, even big things. If they begin to rely on their credit card for regular things like food and gas, it can be a sign of serious trouble

There is a limit to what you can purchase

Explain the credit limit. Make sure your child knows they cannot exceed it. Try to explain further, that the closer to get to it, the worse it looks.

Creditors are NOT okay with missing payments

Parents have an immeasurable amount of patience with kids and kids often take it for granted. Kids have to learn that everyone won’t as patient with them, especially not businesses and especially when it comes to money.

Never let your friends influence your purchases, or use your card

Spending influences are everywhere so we all have to be in control of our choices, even with a credit card. Teach your child to make sound spending decisions and how not to be tricked by misleading ads. After all, they’re paying the bill, not friends or family and certainly not radio and TV advertisers.

Mistakes will follow you for years to come

This is something you need to emphasize… I still have many friends who didn’t realize how long bad credit would follow them.

And you are being graded

Credit Scores are hard to discuss, but explain it like a grading system. The better you use credit, the higher your score.

Only use your card if you can afford to pay it back

Again, should be self explanatory but…make sure they know that they should only use their card to buy things if they can pay it back.

We hope you enjoyed this information and have a great Back to School experience.

All About Credit Cards

Everything you need to know

Upon completion you will know:

  • The Pros and Cons of using credit
  • Elements to consider before applying for a credit card
  • How to build a positive credit history
  • How much credit you can afford
  • How to read your credit card statement
  • About credit card fees and other charges
  • About your credit rights

Hi, thanks for joining us today.

Today we’re going to be talking to all about credit cards. Everything you need to know. Let’s start off with some statistics nerd wallet conducted a study in 2017 regarding credit card debt. What they found was that Americans total credit card debt continued to climb reaching an estimated $931 billion now that’s a nearly 7% increase from the previous year, and the average household their carrying a balance of at least $15,000.

Let’s first take a step back and discuss what is a credit card? Well a credit card is issued by a financial company gives you the holder the option to borrow funds at some point of sale in exchange for paying cash. Now credit cards they charge an interest and are primarily used for short-term financing, it’s important to understand a credit card is different from a charge card. A charge card requires the balance be paid in full every month for example American Express offers a charge card every month you get your bill you must pay it off in its entirety. Credit cards you’re carrying the balance and paying on the debt. So, what are the advantages?

Well first of all one advantage that you can buy things that you need now it reduces your need to carry cash, it creates a record of your purchases, it’s more convenient than writing checks, and it does consolidate your bills into one payment, but the disadvantages are you pay interest which is a higher cost for the good you buy, it may require additional fees, and you could have financial difficulties if you lose track of how much you’ve spent and you can’t afford to pay the bill down the road. It also allows you to do impulse buying which is something you should always seek to control. So before you sign up for a card there’s some things you should know, first of all just like any loan shop for the best rates, bankrate.com is a great resource for finding good available deals, second read and understand the contract yeah it’s a lot of fine print but you may save yourself some trouble later don’t rush into signing anything and once you do sign make a copy of it, even if it’s online print it out, keep a copy. Also figure out the total price when paying with credit.

How much will it cost you overtime? Make the largest monthly payments possible every time. Of course, when you get credit cards you should compare them, compare them to the ones you have compare the ones you don’t have, know the penalties for missed payments, how much is the annual percentage rate? Interest rates can vary greatly between cards.

One issuer could give you a rate of 5.99% percent while another one could offer you a 21% percent rate, some will have a teaser rate to start with and it will go up higher later. Know the rates ahead of time before you apply. Second annual fees some cards have no annual fee while some have fees of $75 or more. Transaction fees, if you do a balance transfer will cost you any money? Finally grace periods, how many days after the due date do you have to pay your debt before you accessed a late fee? Most cards no longer have a grace period. It’s important to check into this though. The features that your credit card offers are also very important. For instance, what is the credit limit that the card offers you? How widely is the card accepted will it be taken at all the stores that you shop at that generally? Think about the advantages of a major credit card versus a store credit card. Sometimes it is in your best interest to have a store credit card while limited you offer great advantages for the things that you like to buy and need most often, and finally what services are available?

A lot of credit cards offer ancillary services don’t fail to check those out and see what benefits you’re getting. So, the question naturally arises how do lenders choose whom to give credit to? How do they decide one person from the next?

Well primarily they use what’s called the three C’s character, capacity, and capital. Character, will you repay the debt? Have you used credit before? Do you pay your bills on time? Do you have the good credit report? Can you provide character references, from your credit history? Does it look like you possessed honesty and reliability? How long have you lived at your present address? Those are among some of the questions that I want to answer. Second is capacity? Can you repay the debt? How long have you been at your present job? How much money do you make? What is your salary what other loan payments do you have? What are your living expenses? What other debts do you have? How many dependents you have in other words what is your ability to pay after we remove all your other expenses and after we add up all your income? Then finally capital, what if you can’t repay the debt? What do you own? What do you have in your possession that you can sell that would help you repay the debt? Even if it’s not a secured debt, do you have a savings account? Do you have investments use as collateral? Having capital is an important thing it’s an asset that underlies your ability to pay back debts. You want to build your credit history; how do you do that? First of all, establish a steady work record, pay your bills promptly, opening a checking account and not bouncing checks is quite important, opening a savings account, make regular deposits, apply for local store credit cards you make regular monthly payments, maybe apply for a small loan use your savings account as collateral. If you don’t have good credit and you need help you can also get a cosigner on a loan and pay back the loan as agreed.

At least it will show that you have a positive history. The trouble is sometimes you do need to get a credit card to start building a good history, but you can’t get one and then you should look into a secured card. Secured cards a little bit different from a regular credit card in that you’re going to be required to put a deposit at a bank or financial institution and they will hold that money in an account in case you can’t pay your bill that’s the security the collateral against your amount that you owe. Now one of the good things about a credit card that’s secured is that it’ll help you get a card that’s not secured, it’ll also give you the ability when you do have to travel you need a credit card to use that in emergencies when you can’t access your bank accounts instantly. The drawbacks well there are some drawbacks first of all you do have to pay back the money that you borrow, second the money you’re putting into the deposit into security that money is going to be held for a while so you won’t have that money available, and if you do need to take that money out for something you’re going to have to put that back otherwise you won’t have the capital to secure the credit card. Is it worth the drawback?

Sure, it is especially if you need to rebuild your credit but again as an all decisions using credit you have to do it wisely. So how much credit can you afford? Well it’s an interesting question because it depends on how much you spend on everything else generally speaking though, 15% of your net income is all that should go to be paying your personal debt because you have to leave room for food generally expected to be roughly 20% housing 25% personal debt as I said 15 and then mixed on all the other expenses you generally find, it’s going to have to be squeezed in there because personal debt can’t outweigh your other more important requirements for life food, housing, clothes, and so forth. It’s important to stress that you never borrow more than 15% of your net yearly income.

Let’s take an example then of that so if you earn 2000 a month after taxes then your yearly net income is $24,000 a year that’s 12 times 2,000, calculate 15% of your annual net income to find that you’re safe debt load 15% of 24,000 comes to 3,600 so you should never have more than 3,600 in debt outstanding again housing debt is not part of that 15 and monthly payments on your credit card debt should never exceed more than 10% of your monthly net income. So, if your net take-home pay is $2,000 a month it’s easy to understand that you should never have debt payments in a month for your personal debt of more of more than $200 per month again that would be 10% of your monthly net income.

So, what are the important credit card do’s and don’ts first of all know your payment due dates know when your bill is due, check your statements every month if you’re receiving them paperless online make sure you’re reading those emails and then going to the website and looking at them. Always try to pay more than the minimum amount, if you’re only paying the minimum amount it could take a really long time to pay those cards back. Know when you need to pay, know when you need to use the credit interest free know when to call your creditors to negotiate a lower APR. Sometimes that’s possible to do all you have to do is ask, also only get credit cards when you have a strategic need for them just don’t get cards just, so you can have them in your wallet. Keep your accounts open and a good standing always use the one with the lowest interest rate first, keep your payments as I said around 10% of your income and use your credit card reward program to your advantage don’t use it just to generate points but use it only when it pays you off better. Take advantage of extras and understand if you’re going to cosign for anybody else or someone’s going to cosign for you remember that you’re now their business partner. You want to make sure that you respect that other person that they respect you. Don’t run your balances up to the limit, that’s the worst thing you can do. It hurts your credit score and at the same time it leaves you unavailable to use the credit when you really need it. Don’t use reward credit cards when you can’t pay the balance off quickly just because you’re getting a reward doesn’t mean that you should spend money you don’t have, never use a credit as a substitute for your income if you don’t have income coming in, get income, don’t use your credit cards. If you miss a payment by more than 30 days call your creditor, if you’re going to miss the payment call your creditor, and avoid cash advances cash advantage usually carry a much higher interest rate than your regular purchases and don’t apply for too many cards in a 6-month period because that will go against your credit. Also, if you have any old accounts out there don’t just close them you may want to use them or just leave them out there but closing them you don’t want to do that and don’t let them close to inactivity try and use them occasionally just to keep them out there. They will help your credit but don’t run up credit when you don’t need it.

Finally, if you can help it never carry a balance for a month to month the best borrowers are the ones who pay their loans off every month and start anew never take on more credit that you can afford and again if you run into trouble don’t hide from your creditors they’re the first one you should call when you have trouble. Every month now you’re going to be also getting a credit card statement just like you get from other accounts that you have and in there you’re going to find a lot of important information aside from your name and address and the name of the credit card company are things like the annual percentage rate you’re paying, check to make sure that hasn’t changed Make sure you’re following your due dates make sure those don’t change they’ll tell you what your new balance is what your old balance was how much you’re paying in finance charges and again the due date that’s a really important date on the back of your statement you’ll generally find what the fees are for lost stolen cards, cash advances, other fees, make sure you’re aware of what they are it’s important to know your statement really well again I advise getting your statement online and getting a printed copy doesn’t hurt to have an extra copy for now.

The Fair Credit Reporting Act that protects your privacy any accuracy of information about you that’s held by credit bureaus under this act credit reporting agencies they’re not allowed to report any information that’s too old incomplete or wrong and positive and neutral information can be reported indefinitely negative information can only report it for a specific period of time bankruptcies are from ten years, civil suits can be on there for no longer than seven years and again seven years for unpaid liens and other things it’s important to know the law and to look into it if you have any questions but understand that negative information cannot be reported about you indefinitely there’s a time limit on them.

Equal Opportunity Act of 1974 that’s an important one it protects you from being discriminated on the basis of your sex, your race, your color, your religion, national origin, marital status age, or receipt a public assistance it applies to any business that grants credit it’s important to make sure that no one is depriving you of opportunities that you have coming to you. Fair Credit Billing Act, this one made sure that there’s a procedure for the quick correction of mistakes okay so we all make mistakes credit card companies too, this gives you the ability to refute charges you didn’t make and to make sure that everything is on your bill is there in proper.

The Fair Debt Collection Practices Act well, this prevents abuse by professional debt collectors and applies to anyone employed to collect debts owed to others they can’t call you it inconvenient times such as before 8 o’clock or after 8:00, 9:00 p.m. they can’t call you at work if they know that your employer does not want you to be called there and they can’t contact you by a postcard or use an envelope that makes it clear that a debt collector sent it, they have some other ones in there too it’s important to understand these and to make sure that no one is depriving you of your rights. So just to recap, it’s important to remember your credit responsibilities, always avoid buying on impulse, borrow only what you can repay, read and understand the credit contract that you signed, pay up debts promptly don’t wait until the end of the month don’t wait to pay next month pay what you can now, notify your creditor if you cannot meet payments.

It’s important to stay in contact with your creditors they’ll work with you only so long as you’re willing to work with them. Also report lost or stolen cards promptly, if you see any activity on your account statement that doesn’t look like it’s something you did contact your credit card company promptly, they may be fraud going on it’s important to keep track of this especially nowadays, and finally never give your credit card number over the phone unless you initiated the call, or you are absolutely certain of the callers identity. It’s important to protect yourself at all times, it’s your money make sure that you’re spending it wisely and protecting it wisely.

Finally, thank you very much for joining us today! If you have any further questions you can always reach us at 800-435-2261 or by email at fined@consolidatedcredit.org. Remember we’re Consolidated Credit when debt is the problem, we are the solution.

Affording College

Preparing for rising tuition costs

Upon completion you will know:

  • Costs of college and how to avoid them
  • The different types of Scholarships and Grants
  • How to apply, when to apply, and what to watch out for
  • Navigating FAFSA
  • Subsidized, un-subsidized, and private student loans
  • Best loan practices and what to expect
  • How student loans effect your credit

Welcome to our Affording College webinar! Let’s get the scary stuff out of the way first – the numbers. Try not to get intimidated these numbers are from the College Board for the year 2016 and 2017, so clearly these numbers can be pretty high.


But what are your options? I want to talk about the various options and how to deal with them. We have paying out-of-pocket, scholarships and grants, student loans, and a combination of them all. Paying out-of-pocket may seem incredibly overwhelming and daunting, but for some it may not be the worst choice. It depends on what you want most.


High school students aren’t taught the value of budgeting and saving, so when it comes time for college you might be on your own. You may have to go to school locally rather than far away, but hopefully you can live at home and save money. Statistics show it costs approximately ten thousand dollars for housing alone.


College classes are expensive but sometimes the tax refund you can get can be huge. To give you an example someone I know went to college and paid for two classes out of pocket to finish their degree. Paying for these two classes added over $2,000 to their tax refund the next year. Now obviously this is a specific situation, but if you’re able to get scholarships and grants to help out, sometimes you can come out on top. For some, working while you go to school is a great option and it can provide you with work experience which can be invaluable.


Now let’s talk about scholarships. So what exactly is a scholarship? A scholarship is a grant or payment made to support a student’s education. They’re usually awarded on achievement. Academic or sometimes “need scholarships” do not have to be paid back. You can apply for scholarships as early as freshman year of high school. If you win a scholarship before you know what school you’ll go to they will either write you a check if you promise to use it for school, or they’ll just hold onto the money until you get accepted and know where you want to go, but the important thing to remember is “don’t wait until your college plans are finalized to apply for scholarships”, and another big thing to remember is “you should not have to pay any fees to apply for any scholarship”. The scholarships are designed to help you. Many scholarships are renewable. That means if you win them, you win them for more than one year if you meet certain requirements. Of course, sometimes these requirements are that you’ll continue to go to the same school, you maintain a certain GPA, or you keep the same major. When you win a scholarship, typically what you need to do to maintain your award in most cases you’ll just need to keep up the status quo.


One of the biggest mistakes that many students makes they stop applying for scholarships once they’ve graduated from high school. There are literally thousands of scholarships for students in college and even for graduate students. Some of these awards are only open to students who are already in college. Your financial aid officer and your majors’ department are two of the best sources for these kinds of awards. Essays can be a great way for scholarship judges to get to know you beyond your grades, but there are some scholarships that don’t even require an essay, but these are usually for art music or other types of awards that require a portfolio or project instead.


There are basically two types of scholarships. Need-based and Merit based. As the name suggests, need-based scholarships are based on your financial needs and your parents’ income. Merit-based scholarships are based on academic or extracurricular achievements. Your parents’ income is usually not factored in for merit-based scholarships.

Grants are a special kind of scholarship. Grants are usually needs based and are typically for students who come from low-income families. Like a scholarship, grants do not need to be paid back for undergraduates. The most common grant is the Pell Grant. This will take into account your income and your parents’ income. If you meet the criteria you’ll be eligible for assistance depending upon how many classes you take. You can get up to $5700 per year from a Pell Grant. Any extra that does not need to go to tuition is yours to keep and can be used for books and related expenses. It’s important to remember that you have to reapply for this grant every year to get the grant.


You’ll have to use what is called the FAFSA. That’s the Free Application for Federal Student Aid. It’s the application used by nearly all colleges and universities to determine eligibility for Federal, State, and College sponsored financial aid. These include, grants, educational loans, and work-study programs. FAFSA should be your first step when you’re applying for financial aid. In some cases, Pell grants given by the fans may be able to completely cover your education. For example, if you’re going to a local college and you don’t have to live on campus the grants may be all you need to be eligible to submit a FAFSA. You must meet the following criteria: you need to be a US Citizen a US National, or an eligible non-citizen, have a valid social security number, have a high school diploma or GED, be registered with the US selected services if you’re a male aged 18 to 25, complete a FAFSA promising to use any federal aid for educational purposes, and you must not owe refunds on any federal student grants. I strongly encourage all students to check with their school’s financial aid office to determine their exact FAFSA deadline requirements and to file it as soon as possible after January.


Remember that when applying for scholarships it’s always free. We’ve seen many websites that offer to fill out forms for you. These sites sometimes charge as much as 80 to 100 dollars for something you can do for yourself at no charge. Here are some common scholarship scams that I want you to look out for.


Many scams encourage you to send them money upfront, but provide little or nothing in exchange. Usually victims will write-off the expense thinking that they simply did not win the scholarship. Next, there’s a scam that looks just like a real scholarship program, but requires an application fee. The typical scam receives 5-10,000 applications and charges between $5 and $35 dollars. Scholarship scams like this can afford to pay out thousands of dollars for a scholarship or even two and they’ll still pocket a hefty profit and they might not even send a scholarship out at all and your chances of winning it are likely less than winning the lottery.


The advance feast scam offers you an unusually low interest rate low and requires you to pay a fee before you receive a loan, but then the promised loan never comes through. Legitimate loan providers deduct any fees from the check. They’ll never require an upfront fee when you submit the application. If the loan is not issued by a bank or other recognized lender it’s probably a scam.


Next, I want to mention the scholarship prize scale. This is where they tell you you’ve won a college scholarship with thousands of dollars but they require you to pay a disbursement or redemption fee or even the taxes before they can release the prize. If someone says you won a prize or a scholarship and you don’t remember entering the contest or submitting any application be suspicious. Student loans are offered to students to pay education related expenses such as tuition room and board or textbooks. Many of these loans are offered to students at lower interest rates. In general, students are not required to pay back these loans until the end of a grace period which is usually six months after they graduate.


Typically, when you complete your FAFSA you are also offered student loans. Stafford Loans are the most common type of federal loan. Money for these loans comes directly from the federal government in a program called the Federal Direct Student Loan Program. There are two types of Stafford loans, subsidized and unsubsidized. If your loan is subsidized you won’t have to make any payments until you graduate. Interest rates are typically at or below 6.8% and the government will pay the interest while you’re in school. The interest won’t build up while you’re a student. Subsidized loans are reserved for students who demonstrate financial hardship. Most go to students whose family’s annual incomes are below $50,000. If you have an unsubsidized loan, you’re responsible for paying all of the interest. Interest builds up at the fixed rate of 6.8% while you’re in school, but payments are typically deferred or postponed until after you graduate. All students are eligible for this type of loan so while you’re a student you’re not responsible for the payments, but the amount you owe will continue to increase over time because the interest will keep adding up.


Perkin loans are more desirable than Stafford loans but they have more eligibility rules. Perkin loans have a fixed interest rate of 5%. They are all subsidized so the government pays the interest while you’re in school and even for a short time after you graduate. Perkins Loans are reserved for students who show exceptional financial need. These loans are funded by the government, but dispersed by each individual college or university. The federal government distributes a limited amount of funds to each school and the school determines which students to give it to.


PLUS loans are also available for both parents and graduate students. Parent PLUS loans are for parents of dependent undergraduate students and the Grad PLUS loan are for graduate students themselves.


Then we have private education loans and this can be an option if other sources of financial aids do not cover the cost of school. These loans are provided by private lenders and do not use government funding. Private education loans are more like regular personal loans. Your eligibility and interest rate depend on your credit score. Interest rates are typically higher than federal guaranteed education loans and borrowing terms vary by lender, so you must be diligent understanding the terms so you don’t end up with huge amounts of student debt after graduation.


Remember, you’re going to have to pay this money back. If you take more than you need, you’re responsible for it. If you have unsubsidized loans, try to make payments towards the loan while you’re still in school. The more you can pay now, the less interest will accumulate. Typically, you’ll be offered both subsidized and unsubsidized loans. If you can get away with taking only out subsidized loans do it. No interest builds up on these and your loans are not due until six months after you graduate.


Okay so now let’s talk about what you’re not supposed to do with student loan money. Do not spend more than you need. If you take out money and you don’t need it all you can give back the excess. So, if you take out $4,000 and you only end up needing $3,000, just send the difference back to the student loan lender. Do not take out student loans if you do not plan on finishing college and never miss payment on your student loans or really any other loan for that matter. One mistake can haunt you up to seven years with an average student loan payment of approximately $351 and pay off period of around 18 years. That means the average person will pay more than $43,000 towards their student loans.


Now you may be asking, “how does that make sense if the average loan amount is $28,000?” Well that’s because approximately $15,000 of it goes to interest. Now this list is about the risks you run when taking out student loans. This is worst-case scenario, but let’s say that one day you are strapped with debt, tons of credit cards or medical bills, and you just can’t get rid of it. Bankruptcy may allow you to wipe the slate clean with some consequences, however most Federal loans are not eligible in bankruptcy.

You have to keep in mind that credit is important. Your credit is the profile that banks and lenders use to determine how reliable you are. It’s also what landlords use to determine if they’ll rent to you and more than 50% of all employers use your credit to determine if they’ll hire you. Some jobs will also pull your credit before even promoting you.


Imagine this snowball effect. You take out student loans, you get a degree, the job market isn’t hot for your degree right now, so you start making less than you’re worth, you can’t pay back your student loans, now your credit is destroyed and you can’t get housing or a better job. You know, this can be a real life example of what can happen, but remember if you’re destined for college keep your head up, be smart about your money, and do your best.


Thank you for joining our webinar. We hope that you’ll check out some of the other topics we cover as well.

How to Achieve Your Savings Goals

Your guide to SMART savings

Upon completion you will know:

  • How to budget to save every month for contingencies
  • The importance of maintaining an emergency savings fund
  • Strategies in creating and growing savings
  • How to establish SMART savings goals
  • Proven budget and savings strategies

Welcome to achieving your savings goals, the smart way to save.
Savings is income that isn’t spent; methods of savings include putting money in a deposit, account a pension, account, and an investment fund or even under your mattress. These are some examples of a few savings goals something to work towards it’s recommended that you have at least three months of living expenses and savings. I could ask the question all the time “well how much is that?” well that really depends on you! Not everyone has the same exact dollar amount for living expenses like rent, mortgage, a car payment, food, medical costs.
Ways to save.
Okay now important it’s first to establish your budget, if you’re looking for an easy way to start on the first day of a new month get receipts for everything you buy and stack them into categories like restaurants, groceries, personal care, and such at the end of the month you’ll be able to clearly see where your money is going. Don’t just save money, save. There’s a big difference between saving money and saving money for the future, so don’t just spend less. Also put money into a savings account, a retirement account, and an emergency fund. Save automatically setting up an automatic savings is the easiest and most effective way to save and it puts money out of sight and out of mind. Each pay period have your employer deduct a certain amount from your paycheck and transfer it to your retirement account and your savings account. Ask your HR representative for more details on how to set this up. You can also save for the holidays, gifts, travel, and other expenses this way too. Open up a club bank account and put a certain amount of money in it every month and don’t touch it until you need it. Aim for short term savings goals if money seems impossible, start with a small savings goal like setting aside $20 every week or month. Rather than concentrating on a long-term savings goal, many people save more successfully when they keep short term goals in sight.
Okay now the first thing to do to start achieving your savings goal is to establish a budget. There are four steps to making a budget and we’ll go through those right now. The first step is to add up all of your income out of the money you make monthly from employment, child support, Social Security, and any other types of income you receive. Next add up your expenses; fixed expenses are things like rent or mortgage, your car payment, and insurance, any monthly bill that stays the same each month is considered a fixed expense. Flexible expenses are necessary but don’t have a fixed cost, these include variable bills like utilities as well as necessary expenses like food and gas. Discretionary expenses are the nice-to-haves in your budget, the wants everything from gym memberships and trips to the salon as well as things like magazine subscriptions and tithes go here. Next let’s do the math, it’s time to subtract your expenses from your income, you’ll either be in the positive or in the negative. Next it’s time to prioritize: are your expenses greater than your income? If it is, you need to decide what steps to take to reduce your monthly expenses or increase your income. To get a clearer picture of how you actually spend money it helps to keep a spending diary for a month or two, this means saving receipts and writing down items and amounts for everything you spend. Remember it’s important to pay yourself first. Strive to put at least 10% of your paycheck in the bank for savings. Forgo instant gratification for your long-term goals.
Now let’s talk about a few savings tips that just about anyone can implement. A good tip is to plan gift-giving well in advance, this will give you time to decide on thoughtful gifts which usually are not the most expensive. If you have children or someday hope to, start saving for college as soon as the baby is born. It’s never too soon to start a college savings account, any money received as gifts can be used as contributions to a college fund. Designate one day a week as a no spend day, cook at home, and plan free activities such as a game night, watching movies or go to the park. Bring your lunch. T he reason you hear this tip so often is that it works. If you buy lunch at work and it costs five dollars a day, but making lunch at home only costs $2.50 then in a year you could afford to create a $500 emergency fund and still have money left over. Commit to eating out one fewer time each month, save money without sacrificing your lifestyle by taking small steps to reduce your dining budget. Ask for home energy audit, it might reveal inexpensive ways to reduce heating and cooling costs. Another good tip is to weatherproof your home, seal holes and cracks that let warm air escape in the winter and cold air escape in the summer. Your local hardware store has materials and quite possibly useful advice about how to inexpensively stopping unwanted heating or cooling losses.
How about trying to use less water? Install low-flow showerheads and faucet aerators to reduce your water usage and the water costs. We’re coming to the end of our presentation and I really want you to take away the idea when shopping to take a minute to think about if you really need the item. Here are some questions to ask yourself: is it worth the time you’ve spent making the money to pay for the item? Can you use your money in a better way right now? Do you really need to buy the priciest item? Or is there a lower-cost item that will serve you just as well? Can you really afford the item right now? Will the item be on sale soon? Should you wait? Do you really need a name-brand or will store brands serve your purposes as well and both save you money?
Well I hope you’ve gotten some good tips from this presentation. Thank you so much for your time and happy savings!

It’s Time for Financial Spring Cleaning

Get your financial house in order

Upon completion you will know:

  • How long to keep paperwork
  • How to assess the mess
  • What to look for with banking
  • Why to clean up accounts
  • How to update your money plan

Thank you for joining us for financial spring cleaning. Get your financial house in order. Headquartered in Fort Lauderdale, Florida, our mission is to assist families throughout the United States and ending financial crisis, and solving money management problems through education and professional counseling. What we do is financial counseling, debt management services, financial education, and we are a HUD approved housing counseling agency with pre purchased and post purchase counseling, foreclosure prevention, and reverse mortgage counseling.
When people hear spring-cleaning they only think of the clutter in their homes, but they also need to think of the clutter in their finances as well. Why do people spring clean? To see what they own, what they use or no longer use, to get rid of unnecessary junk perhaps, and how do they feel after? Happy, at ease, they have peace of mind. This is how you can feel knowing that your finances are in order. There is a high price to pay for financial anxiety. Researchers found that people with a big part of their income tied up in credit-card bills and high debt have more heart attacks, sleeping disorders, explosive emotional outbursts, problems with smoking and being overweight, and then divorce. It is a bad idea to avoid the issues. When it comes to finances, don’t bury your head in the sand because you refuse to admit that something is true and that there may be a problem, it will not go away on its own, but with time effort and discipline you can get your financial house in order.
In order to declutter your debt or mess, the first thing to do is get organized. What are your goals, what is your net worth and what is your current financial situation? To get started you need to assess the mess. What debts do you have, who do you owe? Start off with your credit card debt. Go over your statements and ask yourself, why did you buy that, did I really need it, what am I doing? Because you need to realize that if you are not able to pay off that bill in full at the end of the month, how much is this going to cost you. Let’s try to clear out this credit card debt. You have to assess the mess before you attack it. Reflect on what it is that you are doing and how you got to your current situation. Why are you spending so much, what changes can you make? Next, list all of the other debts that you have, from mortgage loans, car loans, personal loans and any student loans. Again, the only way to clear up your financial house is to know who and how much you owe, know your net worth and to be sure that you are banking with the right institution.

Now that you have gone through your credit card statements and listed all of your loans, you have a good idea of who and how much you owe. The next thing to do would be to go over all of your assets.
In order to figure out your net worth, you need to gather some information. Net worth is what is owned minus what is owed, so the value of all assets minus the total of all liabilities. The reason you want to do this is because it helps you understand your current financial situation and gives you a reference point for measuring progress towards your goals. From the previous slide, I discussed gathering all of your statements etc., to see who and how much you owe. Now you want a list of your assets. Assets can be real estate, valuables, investments and the money you have in the bank.
For example:
• Money in your bank accounts
• Value of your investment accounts
• Your car
• Market value of your home
• Business interests
• Personal property, such as jewelry, art, and furniture
• Cash value of any insurance policies
Once you have all of that, then you do the math and subtract your liabilities from what you have. Just to reiterate liabilities are:
• Mortgage
• Car loan
• Credit card balance
• Student loans
If you need a hand with this, there are a lot of net worth calculators and worksheets available online. You will either be in the positive or the negative. If your net worth is low or in the red (negative), you’ll need to work on saving more and spending less. To watch your progress, calculate your net worth now and recalculate it once or twice a year.
Many have the question………how long should I keep this?…..in regards to financial records and important documents. Well let’s discuss that now.
Receipts – It all depends on how you paid and what you bought. You can throw receipts away right away if you happen to pay cash for the item/s. If you used a credit or debit card, then wait until your statement arrives so that you can verify that the charge is there and is correct. Now if the receipt is for home improvement or a big ticket item, like a new fridge, then you will want to hold on to it for as long as you own the item. Just in case you need it for warranty or insurance purposes, if something happens and you may also need them for tax purposes. No if you bought something impulsively and may want to return it, then you will hold on to that receipt, at least until the return period is up.
Bank & Credit Card Statements – These are also docs that can be shredded once you have verified that the information in accurate. Now, you will want to keep the ones related to y our taxes, business expenses and home improvements. Good practice is 7 years for those. Statements are also available online through your bank or credit card provider. I know that I no longer get paper statements of any kind. You can download those that you need and save to your computer or flash drive, etc..
Paycheck Stubs – A good rule of thumb would be to keep stubs for one year, until you get your W2 from your employer. This way you can make sure they match, if not you would have to use the stubs for an amended tax return.
Mortgages and Other Loan Documents – Keep documents related to mortgages and other loans, such as car loans or student loans, until you have paid off the loan. You may also keep these documents indefinitely in the event your are questioned about whether or not you paid them off.
Property Records – According to Bankrate.com, you will want to keep these records on hand for up to six years after you sell the home. These records include all documents related to the purchase of the home, as well as records of any improvements you may have made, such as remodeling or additions. It is important to keep a record of the expenses you may have incurred in buying or selling your home, such as legal fees and commissions paid to real estate agents. These type of expenses are included when calculating your capital gain, which is the profit from the sale of an asset. If you would like to know more about capital gain and how it will affect your taxes, you should seek the advice of a reputable CPA.
Tax Documents – You will want to keep tax-related records for seven years. The IRS can audit you for three years after you file your return if it suspects a good-faith error, and the IRS has six years to challenge your return if they think you underreported your gross income by 25 percent or more, according to Bankrate.com. A seven-year window should cover you in either event.
Brokerage Statements – It is good practice to hold on to your quarterly statements until you have received your annual one to make sure they match up. Also, keep records of purchase and sales of securities in case you need to prove capital gains or losses at tax time.
Bills – You can shred most bills once the payment clears. Now remember that if it is for a big ticket item (furniture, computers or jewelry), keep the bill as long as you have the item. You never know if you will have to substantiate and insurance claim in the event of loss or damage and keeping the bill is proof of value.
Retirement Plan Statements – Keep your quarterly statements for one year and then you can shred them once you match them to your annual statement. Keep the annual statements until you retire.
When it comes to keeping documents, if you can scan and save then do that. Unless for some reason you need to keep the originals. For example, some military organizations do not want copies, they want the original documents. Even in that case you should still have a soft copy of those. For originals, you will want to keep them some place safe, like a water and fire proof safe. Another good practice is to back up all of those soft copies on a flash drive or external hard drive and keep that in the safe as well.
Where are you keeping your money? In a jar buried in the backyard, under your mattress or in a financial institution? Where you keep your money is just as important as how you spend it. Is your account loaded with fees and other charges? Is it a high interest bearing account? Does it have the best value and convenience for you? These are the questions that you need to ask yourself. Are you with a traditional bank, credit union or online bank?
What is a bank? – A bank is an organization that receives deposits, honors checks drawn on those deposits, and pays interest on them. Banks also make loans and invest in securities. Banks make profits by charging a monthly fee for checking accounts containing less than a certain amount of money. Banks may also charge for bounced checks, paper banking statements, and using an ATM belonging to another bank. They offer different types of accounts: checking, savings, money market or CD’s. Banks make money by charging fees and earn income from securities and investments. They are usually FDIC insured, so in case of robbery, it’s the bank’s loss and not yours. When choosing a bank, there are some things to consider:
• The services you want. For example, are you looking for direct deposit of your paycheck, no-interest checking, or no-fee money orders? Do you want a higher interest rate on a savings account or investment options?
• ATM convenience. If you like to use an ATM to perform many of your transactions, can the bank meet your needs?
• Bank fees. Ask if there are ATM usage fees, overdraft protection fees, fees for going below the minimum balance, and bounced check fees.
• Online banking. Internet banking saves time. Simply dial into the bank’s computer using your own computer, or download information to your hard drive. This service may be free at some banks, while others may charge a fee for basic services. There sometimes is an additional fee for making online bill payments.
• Customer service. Visit banks you are considering. Are the employees helpful, courteous, and able to answer your questions?
• Insurance. Are bank deposits insured by the Federal Deposit Insurance Corporation (FDIC)?
• Location. Are there branches close to your home and work?
• We’ve touched on traditional banks, such as Wells Fargo, BofA, BB&T and TD Bank. Now I’m going to discuss Credit Unions.
• A credit union is an alternative to a bank. It is a cooperative financial institution that is owned and controlled by the people who use its services. The people who use a credit union are its members, and they have something in common such as where they work, live, or attend church.
• Because credit unions are not-for-profit, they provide more desirable rates and fees than banks. Although credit unions are for everyone, the law places some limits on the people they may serve. A credit union’s field of membership could be an employer, church, school, or community.
• Make sure any credit union you are considering is insured and offers the range of services you need. You can visit cuna.org to learn more about credit unions and to also search for them in your area.
• Because online banks don’t have the same kinds of overhead costs associated with building maintenance and staffing, they can pass the savings on to you in the form of higher rates—and usually lower fees, too. You’re likely to find that that annual percentage yields (APYs) on products like savings accounts and certificates of deposit (CDs) are consistently higher for online banks. Not all online banks are created equal. Make sure to ask if they implement security measures to provide a safe banking experience for their customers. They will include measures such as SSL encryption, firewalls, anti-virus protection, and multi-factor authentication, to name a few. But you want to be sure the online bank you choose stays on top of industry trends and goes the extra mile to protect your information.
• A good online bank will offer features like:
• Mobile banking options – think easy-to-use apps and mobile check deposit
• Account linking – to make transfers to and from your accounts as seamless as possible
• Fee free bill pay and direct deposit services
• ATM access – as applicable to your account
• Activity alerts – to help you monitor you accounts
• Having all (or most) of your bank accounts in one location can make it easier for you to keep track of your balances and stay organized. A good online bank will offer a solid range of all the bank products you use most. In addition to savings and checking accounts, online banks often offer a wide range of other bank products, like money market accounts, certificates of deposit (CDs), and individual retirement accounts (IRAs). Many online banks offer mortgage and auto loans, too. If you like the idea of consolidating your banking services, the best online bank for you will be one that has a diverse lineup of competitive products and services. You can check out sites like bankrate.com or nerdwallet.com for more information on online bank accounts.
Financial clutter can be cleaned up, and the payoffs, which include – lower banking costs, less risk of identity theft, better financial planning and an end to the chaos, are worth the time and effort. Make an inventory of accounts and a balance sheet, and then figure out which ones can be consolidated, which you don’t use or even realize you still had, and make a plan to clear those up. According to bankrate.com, people only need one or two bank accounts. More than that means more paperwork, fees and perhaps ID theft. Forgotten accounts can be declared abandoned and confiscated by the State.
To clean up your bank accounts:
• Make a list of the accounts.
• Research which offer the best services at the lowest cost.
• Stop or transfer any automatic deposits or payments on the less attractive accounts.
• Instruct the financial institutions to close those accounts.
To clean up credit card accounts:
• Make a list of your credit cards in order of the highest to lowest interest rate.
• Transfer balances from the highest rates to the lowest.
• Close the high-rate accounts.
• Make more-than-minimum payments on the low-rate accounts.
• Monitor the rates until the balances are paid off.
To get rid of 401(k) clutter, roll over old accounts to your new employer’s plan as soon as you’re eligible to do so. If your new employer doesn’t offer this benefit, roll over into an Individual Retirement Account, or IRA. Some banks will count an IRA toward a minimum balance that can earn reduced or waived fees on a checking account or other services. Rolling over an old 401(k) when you start a new job also can reduce the temptation to cash out your investments.
1. Organize yourself so that you can have a better view of your financial picture
2. Set a goal
3. Update your budget
4. Know how long to keep paperwork
5. Discard papers if you have electronic copies
6. Back up your electronic copies
7. Don’t throw away…..shred
8. Check out your bank accounts, if you are paying a lot of fees, then shop around for a new account
9. Check your credit/credit score
10. Make larger payments (if possible) towards debt
Now that you’ve assessed the mess, checked your net worth and gotten rid of unnecessary documents, you will have a better idea of what was working and what wasn’t. This is where you sit down and reevaluate your goals, budget and savings plan. If you didn’t achieve your financial goals for 2017, it is not to late to get started for 2018. What is our plan of action for paying off and getting out of debt? Are you going to tackle highest interest rate first or lowest balance? When people hear spring cleaning, they only think of the clutter in their homes, but they also need to think of the clutter in their finances as well. It was America Saves Week from Feb 26 thru March 3rd. How many of you have taken the pledge? “ I, your name, pledge to save money, reduce debt and build wealth over time. I will encourage my family and friends to do the same”. I feel as though this pledge should be something that we live by everyday of the year. How many of us have said we are going to do better, but after a few months, even after a few weeks have forgotten abut what we were supposed to be doing. Print the pledge out and leave it where you can see it, and repeat it every day if necessary. Now is the time for change, I have started my own financial spring cleaning and believe me, it’s eye opening. Always remember, that being aware of your circumstances is essential to moving forward.
Please check out our website for interactive calculators, ask the expert tips, downloadable booklets and videos.
You can also use the number you see to speak to a counselor as well. Thank you for joining us, please be sure to watch more of our educational webinars.

Student Loan Repayment Strategies

Find solutions that work for your budget

Upon completion you will know:

  • Interest rates and what they mean long-term
  • How to differentiate and prioritize your student loans
  • How “The Snowball Effect” will pay down your loans faster
  • Student loan deferment and forgiveness
  • The benefits of paying off your loans early
  • Best spending and savings practices after graduation
  • Student loans and taxes

Thank you for joining us for student loan repayment strategies. Find solutions that work for your budget.


The definition of a student loan is a loan that is used to pay off education related expenses such as tuition, room and board, and textbooks. Many loans have a low interest rate like Perkins Loans or Stafford loans. In general students are not required to pay back these loans until the end of a grace period which usually begins after they have completed their education.


There are different types of student loans and I’m going to go over them. Now the first one is a subsidized federal Stafford loan. Now the subsidized federal Stafford loan is a federal student loan available to students with demonstrated financial need. Subsidized loans are among the least expensive loan options for students because the federal government pays the interest while the student is attending college on at least a half-time basis and during other periods of authorized deferment. The unsubsidized federal Stafford loan is a federal student loan that is not based on financial need. Interest accrues on unsubsidized loans from the time the loan is dispersed by the school. The interest is not paid by the federal government.


We also have direct subsidized loans. Direct subsidized loans are available to undergraduate students with financial need. Your school determines the amount you can borrow and the amount may not exceed your financial need. The US Department of Education pays the interest on a direct subsidized loan while you’re in school at least halftime for the first six months after you leave school which is referred to as grace period and during a period of deferment that’s a postponement of loan payments.


Direct unsubsidized loans are available to undergraduate and graduate students. There is no requirement to demonstrate financial need. Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive. You are responsible for paying the interest on direct unsubsidized loan during all periods. If you choose not to pay the interest while you are in school and during the grace periods your interest will accrue and be added to the principal amount of your loan.


The next type of loan is direct consolidation loan and this allows you to consolidate or combine multiple federal education loans all into one loan the result is a single monthly payment instead of multiple payments.


There’s also the federal Perkins loan or Perkins loan. This is a need-based student loan offered by the US Department of Education to assist American college students in funding their post-secondary education. The program is named after Carl D Perkins, former member of the US House of Representatives from Kentucky.


There’s also what is known as PLUS loans and these are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school. PLUS loans can help pay for education expenses not covered by other financial aid. Under the Federal Family Education Program, private lenders made federal student loans to students and guarantee agencies ensured these funds, which were in turn were insured by the federal government.


Now I’m going to quickly discuss the two words that you hear the most when you finish school or when you’re discussing student loans. The first is forbearance. Forbearance is a period during which your monthly loan payments are temporarily suspended or reduced. Payments on your loan principal are postponed, but interest will accrue during the forbearance period. Forbearance is intended to help you out during times of temporary need. Note that the use of forbearance may cause the loss of borrower benefits such as repayment incentives that can lower your interest rate for certain loans. Cosigner release for private loans includes a one-time payment requirement and for parents may delay eligibility.


The next is deferment. Deferment is a period where you postpone making payments on your loan. Interest doesn’t accrue on subsidized federal loans. You are eligible if you are engaged in graduate fellowship program, rehabilitation training, internship or residency, or teaching in a teacher shortage area. You are also eligible if you are enrolled in an eligible school at least half time or you are a parent with a Parent PLUS loan who needs to defer repayment while your student is enrolled in school at least half time.


If you’re having temporary issues making your student loan payments due to unemployment or economic difficulties be sure to let them know as soon as possible to avoid becoming delinquent. If you are unemployed or working less than 30 hours per week and seeking full-time employment you may be eligible for an unemployment deferment for up to three years. If you’re working 30-plus hours a week, but you aren’t able to afford your monthly payment you may consider a graduated or income driven repayment plan. I’ll discuss those a little bit more later. Lastly, they have economic hardship deferment and you may be eligible for an economic hardship deferment for up to three years depending on your situation.


Now that we know what types of loans are available and we discussed a bit about forbearance and deferment let’s get into the topic of this webinar. Before you get into payment strategies and plans you have to know who you owe and you’re going to want to check out the NSLDS. The National Student Loan Data System. Basically, this is the US Department of Education’s central database for student aid. It receives data from schools’ agencies that guarantee loans, the Direct Loan Program, and other US Department of Education programs. The site displays information on loans and or grant amounts, outstanding balances, loan statuses, and disbursements. Now in order to use the NSLSDs site you need to provide your FSA ID, username, and password. If you do not have a FSA ID you can create one on the site.


Now we’re going to discuss basic student loan repayment plans. The first is standard repayment. Now this is offered at a 10-year term. Payments are a fixed amount and you’ll save the most money on this plan because you’ll pay less interest. The next is graduated repayment this is also a ten year term. Payments will start low and then gradually increase every two years. You’ll end up paying more for your loan over time than under the ten year standard plan. Lastly, there’s extended repayment. This is a twenty five-year term. Payments may be fixed or graduated and your monthly payments would be lower than the standard ten-year plan, but you will also end up paying more. I want you to know that these sets of repayment plans are for federal loans and not for private loans which we will discuss a little bit later on.


Now we’re going to get into income based programs. There are four types of income based plans. The IBR which is income based repayment. The ICR which is income contingent repayment. The pay-as-you-earn or the repay which is the revised pays now eligibility for income based repayment depends on which loans you have taken out for your education and when they were taken out. The following federal student loans from the direct loan and federal family education loan programs are the ones that qualify for application. Direct PLUS loans, direct consolidation loans without PLUS loans that were made directly to parents and not as pull signers. Direct subsidized loans and direct up subsidized loans FFPL PLUS loans which is the federal family education loan FF IL consolidation loans without PLUS loans.

If you do not have one of these types of loans you may still be eligible for them by consolidating your federal student loans into the Direct Loan Program. Second, there is the interest payment benefit if your new monthly payment isn’t large enough to pay the accruing interest on subsidized portion of your Direct Loan. The federal government will pay it for you for period of up to but no more than three consecutive years once you begin your repayment program. This is one of the many forgiveness aspects that federal student loans offer.


Now when it comes to income based repayment, monthly payments are determined by AGI (adjusted gross income), household size, and state of residency. If filed taxes jointly with spouse, combined income is used for calculation. If filed taxes separately or single, only that income is used to determine your monthly payment. The government will reevaluate income every 12 months to determine payments each year. Any remaining balance is forgiven after 25 years if over the lifetime of this loan you make 300 qualified payments and the loan is still not completely paid off. Any remaining loan amount will be forgiven and legally discharged, however this discharged amount is considered taxable and must be paid for the year it was forgiven. For example, loan discharged in 2013 must be paid with other 2013 income taxes due in 2014.


Now the payments are based on income, so that means they will be affordable for you and reevaluation can be done at any time based on a decrease in income. Any increase in income will not affect payments until the end of the original twelve months. So how does IBR payments make them more affordable? Well, IBR uses a kind of sliding scale to determine how much you can afford to pay on your federal loans. If you earn below 150% of the poverty level for your family size you are required to pay loan payment of $0. If you earn more your loan payment will be capped at 15% of whatever you earn above that amount.


Unlike with IBR and pay, which I will talk about next, your income doesn’t affect your qualification for income contingent repayment (ICR). Only borrowers with Federal Direct Loans can sign up, but if you have other types of federal loans you can become eligible by combining them into a Federal Direct consolidation loan. Your income and tax filing status and the number of people in your household determine your monthly payment. Under income contingent repayment it’s capped at 20% of your discretionary income or the amount of your fixed monthly payments on a 12 year long term, whichever is lower. ICR also extends your loan term from the standard ten years to twenty five years. At that point the federal government will forgive any remaining balance. This lowers your monthly payment, but it also increases the amount of interest you’ll pay over the life of the loan; plus, the forgiven amount will be taxed as income. That’s why switching to an ICR plan or any other income driven plan is a trade-off. If you need extra monthly cash now to cover basic living expenses consider switching to an income driven plan, but if you can afford to stay on the standard repayment plan you’ll save money on interest.


Now, you have to remember that you have to resubmit information about your income and family size each year even if your situation hasn’t changed. If you miss your annual deadline your payment will change to what you would pay in the standard ten-year plan until you resubmit the information. You will generally have lower monthly payment on IBR pay or repay, but there are cases in which ICR might be your best option. In one of those cases, that would be if you have apparent loan ICR is the only income driven plan that borrowers with Parent PLUS loans can use. Parent PLUS loan borrowers have to consolidate to a Federal Direct consolidation loan to qualify, but once they jump through that initial hoop being on an ICR plan can free up cash in their monthly budgets and – if you can’t afford a standard repayment plan, but can afford more you’d pay on another income driven plan.


Income contingent repayment plans can be a good middle ground between the standard plan, IBR pay, and repay. Those three plans cap borrowers’ monthly payments at 10% or 15% of their incomes less than the ICR’s 20% cap. If you don’t qualify for those plans or can afford to pay more making payments on ICR could end up saving you on interest in the long run.


Now we’re going to discuss the pay or pay-as-you-earn plan. This is a repayment option for federal student loans that has been available since 2012. It can help current students and recent graduates keep their loan payments affordable with payment caps based on their income and family size. Pay will also forgive any remaining debt after 20 years of qualifying payments. In some situations, your reduced payment under pay may not cover the interest on your loans. If so, the government will pay that interest on your subsidized Stafford loans for your first three years in pay. After three years and four other loan types the interest will be added to the total amount that you owe. While your debt may grow if you’re affordable payments are low enough anything you still owe after 20 years of qualifying payments will be forgiven.


So before I get into repay you have to do the research and pick a plan that is suited to you. I’m sure it seems like a lot and even a bit confusing, but with the proper research and guidance you can get into the right plan.


Now I’m going to discuss the repay or revised pay as you earn other income driven plans base your eligibility or how much you pay on the year you took out the loan. Repay removes those obstacles. There is no time requirement to participate and everyone receives the same benefit. Here’s how it’s different from the other plans. All paid participants pay a maximum of 10 percent of their incomes and receive forgiveness after 20 years of payments, but you can’t sign up if you’ve had any outstanding loan debt before October 1st, 2007.


Repay is a good option for anyone who couldn’t sign up for pay and would have only qualified for the less generous 15% cap on payments on IBR. Repay gives those borrowers the opportunity to limit their loan bills to 10 percent of their incomes. Repay also treats forgiveness differently for undergraduate and graduate student borrowers. The other plans offer the same forgiveness timeline regardless of the course of study you borrowed loans for. All borrowers on pay get forgiveness after 20 years. For instance, whether the loans are from undergrad, grad school, or mix under repaid if you took out any loans for grad school all your loans will be forgiven after 25 years. If you only have undergrad loans those will be forgiven after 20 years.


Lastly there’s Public Service Loan Forgiveness or PSLF. This is a program for federal student loan borrowers who work in certain kinds of jobs. It will forgive remaining debt after 10 years of eligible employment and qualifying loan payments. So who can get PSLF? This program is for people with federal student loans who work in a wide range of public service jobs including jobs in government and nonprofit 501©3 organizations. So what are eligible jobs? In most cases, eligibility is based on whether you work for an eligible employer and your job is eligible. If you are employed by a non-profit tax-exempt 501©3 organization, are employed by the federal government, a state government or local government, or even a tribal government, this includes the military and public schools and colleges, or if you serve in a full-time AmeriCorps or Peace Corps position. What is not eligible are labor unions, political organizations, nonprofits that are not 501©3 and do not offer qualifying services, and religious instruction.


It covers federal Stafford grad plus or consolidation loans as long as they are in the direct loan program. Borrowers with FF al loans must switch to the direct loan program to get this benefit. Only payments made after October 1st, 2007 cap towards the 10 years. 120 monthly payments are not necessarily consecutive required for public service loan forgiveness. Qualifying payments are payments made through the William Deform direct loan program in any of the following 3 repayment plans. The ICR plan, standard ten-year repayment plan, and the IBR plan. To count, these payments must be made while you are working fulltime and an eligible job full time. According to the final regulations issued by the Department of Education means an annual average of 30 hours per week or the standard for full-time used by the employer whichever is greater for people working part-time at two or more qualifying jobs full-time means an annual average of 30 hours across all jobs held in professions such as teaching. Annual contracts that include at least eight months of full-time work will be treated as the equivalent of a full year’s employment.


If you meet all the criteria the earliest year remaining debt could be forgiven is October 2017 after your one hundred and twentieth qualifying monthly payment. You will need to submit the PSLF application to receive forgiveness. The application is under development and will be available prior to October 2017, the date when the first borrower’s will be eligible. You must be working for a qualified public organization at the time you submit the application for forgiveness and at the time the remaining balance on your loan is forgiven.


To get the PSLF forgiveness checklist you need to visit the NSLDS website which is www.nslds.gov. To verify that you have a direct federal loan you need to verify that your employment qualifies at the Department of Education website, keep track of your employment by holding onto check stubs and tax returns, fill out the employment certification form also found on the Department of Education website, and continue to work over 30 hours a week. Make a total of a hundred and twenty monthly payments and then wait.


Now I’m going to discuss private loans private student loans cannot be combined with the federal student loan consolidation. They should be consolidated separately as the federal consolidation loans offer superior benefits and lower interest rates. The benefits of private loan consolidation are obtaining a single monthly payment and resetting the term of a loan, to possibly reducing the monthly man’s interest rates on. Private student loans are based on credit scores. Lower interest rate is possible if the client has significantly improved their credit score since obtaining the original loan and there may be additional fees charged for originating these loans.


So what is loan consolidation? This is simplifying repayment by centralizing all loans into one bill. You possibly lower your monthly payments by increasing the repayment period up to 25 years. You can access alternative repayment options not available to the previous loan and perhaps switch variable interest rates to fixed interest rates. Some important features when it comes to loan consolidation is a fixed interest rate for the remaining life of the loan. The interest rate is the weighted average of the interest rates on the loans being consolidated rounded up to the nearest 1/8 of a percent and that’s fixed for life.


Federal loan consolidation is entirely free and you could avoid any predatory debt consolidation or debt relief scams. Some consequences of loan consolidation are increased repayment periods mean an increase in monthly payments and total interest paid, potential loss of benefits that were connected to the original loan including interest rate discounts cancellation options refi etc., and then once consolidated consolidation cannot be undone.


Also, borrowers do not need multiple loans to consolidate. Consolidation can be used to move single eff fell loan to a Direct Loan. This can be used to qualify for PSLF or simply to choose a new servicer. Putting single direct loan into a consolidated Direct Loan, perhaps to allow a Parent PLUS loan, to income contingent repayment, and consolidation can be used to get a loan out of default if used properly since.


I said default. We’re going to discuss delinquency and default now. So, when are your student loans considered delinquent? Delinquency occurs when you don’t make your monthly federal or private loan payments on time. Your loan is considered delinquent when payment has not been made on the day it is due. Being delinquent on your federal or private loans may be a serious situation that might lead to a long lasting or permanent consequence to you as the borrower or cosigner.


Consequences of delinquency may include your information being reported to the consumer reporting agencies and that may impact your credit score. Increase in your loan balance may occur with the addition of late fees and other charges potential loss of your loan benefits or repayment incentives. Loss of your entitlement to deferment or forbearance options on federal loans and loss of your entitlement to forbearance options on private loans and once in default federal loan guarantee agencies may garnish your wages or offset your state and federal tax refunds and other payments made by the federal government to you. This means they can take your federal and state tax refunds or a portion of your disposable income.


Please remember to be careful all of the information that I have given you about repayment and consolidations. It’s very important if you want to enter into a plan or to consolidate your loans. Before you call a company that says they can do it for you contact the Department of Education and go on the NSLDS site or contact your servicer directly. These are things that you can do for yourself, but if you feel that you need help, then make sure and do your research on the companies before you make a choice.


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