There are times in our lives that we are not able to pay all our bills. Maybe we have lost a job, had a medical illness or other life circumstance. Not being able to pay your bills is one more stresser added to the mix.
I will give you my advice, but please know that you should check with your professionals for what is best for you and your situation before taking any action.
There are several types of bills categories we have:
Utility Bills – You may have noticed that these typically don’t appear on your credit. Yes, you are correct. When your utilities are paid on time, they don’t appear on your credit report. When you are late, most utility company will report the delinquent payment information to the credit reporting agencies. Or even worse, they may send the account for collection and that will appear on your report.
Credit Cards – This is a double-sided question. You want to be able to have credit in case you need it but you can’t afford to pay the credit card. The best possible option when you can’t afford to pay your bills, is to be able to pay the minimum amount due on all your credit cards each and every month. If not, then you want to contact your credit card companies to work out an agreement. You don’t want your credit card companies to send your account to collections and/or small claims court. Both these options will negatively affect your credit.
Non-Credit Bills – These are debts you owe that don’t appear on your credit usually (i.e. your auto mechanic, cell phones, tax bills, medical etc.). You might be thinking that you can ignore these bills, but that’s not the case. Not paying these can lead to judgments and judgments have serious consequences on your credit report. Try to work out payment arrangements to keep this from happening.
In difficult times when money is tight, you may need to access your credit to get by. You will need to keep these tips in mind so that you have that option available to you. Even when you are unable to pay your bills as you have when you making more money, these tips will come in handy.
This newsletter, we are going to talk about spending too much! Personally, we upgraded the master bedroom and bath. In addition to the insurance deductible, we added on the additional expense of better bathroom fixtures – granite counter, higher end faucet, natural stone ceramic tile and more. Yes, we did spend more (maybe too much). With a new year beginning, we need to reign in our expenses and rebuild our savings.
If your 2017 goal is to track your expenses and come up with your actual budget, there is an exercise I like my clients to do when they have their budget created. Take out two different color highlighters. Use one color for your fixed expenses (amounts that can’t easily change) and then use the second color for expenses that you can adjust or eliminate. Typically, I see three areas for the adjust or eliminate category:
- Penalty fees (late fees, overdraft, over limit, etc.)
- Do it yourself fees – these are things that you pay others to do that you could do yourself and save money (lawn maintenance, snow removal, housecleaning, coffee, manicure / pedicure, laundry, trash pick-up, etc.)
- Life extras – these are the things that you do that you could reduce or live without (entertainment, movies, concerts, dinning out / take-out food, personal care, etc.)
Now make a list of five ways to reduce or eliminate specific items. For example, I could find a teen to shovel my snow versus paying a snow plowing service.I could download a movie for free (Hoopla) or borrow from the library versus renting and not returning on time and incurring a late fee. I could balance my checkbook regularly to know how much money I have available and not incur an overdraft fee. These are just a couple of ideas. Now make your list and track your savings. How much did you save this month? How much would that be in one year?
Are you getting the hang of it? Are there more ways to reduce or save on your expenses? Share what expenses you have reduced or eliminated by 5pm EST on March 10, 2017 as a comment below and you could win a copy of my new book 111 Ways To Save. Three winners will be selected randomly at the end of March.
Welcome to 2017. My goal for you is to keep you informed and assist you with your personal finances. Remember, that no one cares (or should care) about your finances as much as you should. This may be shocking to some, but it shouldn’t be. You have your best interests at heart.
From time to time I meet people who say that someone else handles the finances and they are uninformed. That’s not good enough. Every single person should know and understand their own finances individually and as a couple. So make this year the year that you make your personal finances your goal.
To get from where you are today to being in the know, step one is to make your finances a priority in your life. With that said, I don’t what to overwhelm you. Let’s start with a few easy questions, although the answers may be tough:
$ What do I earn? Sounds simple, but do you know the answer?
$ What do I own? These are your assets – your home, car, etc.
$ What do I owe? That’s a hard question for some to actually face.
I am going to give you a hint about the answers.
The first two questions should be upward moving numbers. What you earn now should be more than 10 years ago. The same with what you own. The last question should be downward moving number, unless you recently took on a mortgage.
These three simple but complex questions, are the start to being informed about your own finances.
Take some time to answer these questions and you will be more informed about your finances.
Stay tuned for more articles to get you aware of your finances.
While I was at Columbia College during my Financial Literacy training, I had the opportunity to meet and speak with Harold Pollack, the author of the book, The Index Card. I have always liked simplification and ways to do things easier and more efficiently, and this is a great example of this.
Finances don’t have to be rocket science, you can make your finances simple and create your own rules. He is someone, like me, who learned to make better choices with his finances. It’s never too late to start and take that first step towards your goals. He has 10 steps that he wrote on an index card that he uses to manage his finances.
So after reading his book, we made our own list for where we are right now with our finances at this stage in life. We thought about these key areas:
$ Savings – emergency, retirement, goal savings, etc. – set a goal.
$ Debt – face your debt and make a plan to payoff.
$ Insurance – make sure you have the coverage you need.
$ Investments – contributions and money management – really understand what you are doing. Don’t do this blindly.
$ Tax Advantage Savings – understand what is available and take advantage of it.
Now create your index card and post it somewhere you can see it all the time. Finances don’t have to be complicated. Start your journey today.
We’ve all heard the word “refinance”, but what typically comes to mind is mortgages. Yes, you are correct. It also can apply to other areas of your finances such as car loans, student loans and credit cards.
As with any borrowing, you want to pay off the debt as quickly as possible. But sometime you cannot afford to purchase a car with cash, so you take a car loan. You may want to look into refinancing your car loan if you can get better terms – lower interest rate.
For student loans lower interest rate is probably not the answer. You may have several loans and several payments. It might be easier for you to keep track of and have only one payment per month, if you consolidate. Check out your options to determine if this is right for you.
Credit cards are a good example. You may be payoff debt and it may seem like it takes forever. It could if you have high interest rates. Refinancing a credit card balance to a lower or zero percent interest rate will help you pay back what you owe quicker and pay less in finance charges.
As with any financial transaction, do your research and compare all terms and conditions to see if this is the right move for you and your finances at this point in your life.
You know that I go to great lengths to protect myself from identity theft. I do what I can from my end even though I have no control over corporate breaches. Ugh!
But, there are others in my family who may be at risk.
Have you ever had a close family member pass away? You probably said ‘yes’ to that question. If so, you know that the family writes an obituary for the newspaper that includes a number personal details. When I was the Executor for my father’s estate, I did that. I even looked at the newspaper to see what information other families included to make sure I didn’t leave anything of importance out.
Well, that was mistake number #1.
I (like many others) handed a potential identity thief the information on a silver platter. I included his date of birth, where he grew up, the names of my mother and siblings, his past places of employment, and the organizations he was a part of. I included everything everything but his social security number.
According to AARP, 2.5 million deceased people have their identity stolen postmortem each year. This is wide spread and the victims can’t speak up, so it’s a win for the thief.
So what can you do about it?
- Send death certificates to the three credit reporting agencies and request that a death alert be posted to the deceased credit report – I did this.
- Contact the banks and investment companies with death certificates. See if you can get the accounts out of the deceased’s name. In some states you can do this if the account was joint – I took care of this, too.
- Notify the Social Security Administration, the IRS and Motor Vehicles – this is where I could have done more (partial mistake #2 – I did social security and the IRS but not motor vehicle).
Then, preventatively, check the deceased’s credit reports to monitor for any suspicious activity so you can catch it early on. For more options, please go to my previous newsletter on reports available to consumers.
Hopefully, I won’t lose anyone close to me anytime soon, but from now on I will do ALL the steps – not just most. I was somewhat lucky, as my father was collecting social security and had a government pension, so I notified both. It didn’t even occur to me to notify the DMV. Learn from what I have done (and not done) to protect your loved ones.
Are you familiar with these types of loans? These are the ones, I would strongly encourage you to stay away from:
1. Payday loans aka payday advances rely on your employment / payroll history. You borrow short term money to be paid back at your next pay date. These are unsecured in the sense that there is no collateral. Depending on how the interest is calculated by individual state regulations (in the states that allow them), your interest rate can be upwards in the hundred percentage range. Not a very cost effective way to borrow money.
2. Balloon loans / mortgages: These types of loans are NOT fully amortized. With most “good” loans you make an agreed upon payment, and at the end of the term the loan is paid in full. But that is not the case with a balloon loan. Your payments are not high enough to pay off the loan at the end of the term. Once you think you are finished, you end up with a very large final payment which may be 50%, 60% or even 100% of your principal (hence the name ‘balloon’).
3. Rent-to-own loans: You make rental / lease payments towards the ownership of an item (furniture, TV, computer, etc.). You can terminate the rental / lease at any point and return the item, though there may be a penalty. Once the agreed upon payments are made, the item is yours. This looks like an affordable way to get what you want right away, but it isn’t. Typically, you pay substantially more for the item than if you just used a credit card.
In each of these cases, borrower beware. Read and understand any legal agreements prior to signing. You need to understand what you are getting into and for how long, so that you can make an informed choice that is right for you and your situation. If you don’t understand the contract or feel pressured, that would be your signal to walk away.
This month use Equifax
Hello, it’s Jill again, reminding you to get your finances in order so you can relax this summer.
How to Order Your Credit Report
The only authorized source for your report is AnnualCreditReport.com. You won’t be charged and they won’t force you to sign up for “credit monitoring”. It’s yours to review by law. Learn more.
- Select your state, then click Request Report.
- Fill out your information, then click Continue.
- When it asks you to select a service, select Equifax.
Not comfortable ordering online? There are other ways to order your report:
- Mail your postal order by downloading the form at AnnualCreditReport.com
- Call in your order at 1-877-322-8228
What should you do with your report?
- Review it for accuracy!
- Follow the instructions to correct any errors.
- And, always remember to keep copies for your records.
Were you hoping for your credit score instead? Try CreditKarma.com. It doesn’t give you a FICO score, but it comes close by providing scores from TransUnion and VantageScore. And, there’s no charge for you. CreditKarma funds their service through website advertising.
May you have a relaxing and successful summer!
P.S. I’ll send you another reminder in September to help you stay up-to-date on your credit before the holidays.