Protect Yourself

This weekend started off like any other weekend – running errands including a trip to the gas station. Everything seemed like a regular weekend. But here we are the next day and I go into my wallet and my ATM / debit card isn’t there.

First thing I do is to check my wallet, maybe I put in in another spot or maybe it’s loose in my purse. No such luck. Next, I go online to my bank account to see what transactions have posted, nothing that I didn’t recognize – that’s good. I immediately call my bank to ask them to freeze my card. This will give me a chance to look for it without any liability.

ATM / debit cards are different than credit cards when it comes to your liability. The most important thing to do is to contact your bank to stop your liability. If you contact your bank immediately before any unauthorized transactions occur, you have zero liability. The longer you wait, the more liability you have. Form more information, check out the Federal Trade Commission information page.

If I don’t find it today, I will call and cancel it and get a replacement card. Wish me luck in the search for my card.

Should you pay off your credit card debt with a mortgage refinance?

In our last Quick Tips, we talked about refinancing your mortgage. I hope you did your homework. If you decided that refinancing is right for you, you may be tempted to pay off your other debts by financing them into your mortgage.

Should you do it? Follow these steps to find out.

List all your debts

If debt is a problem for you, take a closer look. Make 5 columns:

Column 1: Write down the name of each creditor (credit card companies, auto dealership, bank, hospital, etc.)

Column 2: Write down why you took a loan or used a credit card. This will help you see how you came to be in debt. Were these essential expenses like a car or a hospital emergency? Or, were these items you could have saved for, like a vacation, clothes, or furniture.

Column 3. Write down the interest rate.

Column 4. Write down the current payment amount.

Column 5. Write down when it will be paid off at the current payment rate.

I know that this can be scary, but you need to know. Congratulate yourself for doing this. This is a huge step forward.

Why is it important to really look at your debt? If your debts just disappear into your mortgage, you could forget where they came from. Most people who consolidate their debt this way will have credit card debt again in just a few years.

Refinancing may not be the answer, but knowing how and why you spend will help you stay out of debt in the long run.

Consider the downside of consolidating your credit card debt into your mortgage. Credit card debt is unsecured, so you would be taking unsecured debt and betting your house on it. When you have credit card debt and can’t make payments, that’s a problem – but, your creditors cannot take your home. On the other hand, if you can’t make your mortgage payments, then you could lose your home in foreclosure. If you increased your mortgage loan in order to cover credit card debt, you could end up with a larger house payment – one that you can’t afford! That’s why I don’t recommend refinancing your unsecured debt into a mortgage.

Consider the long term outcome when refinancing secured debts into your mortgage.

Secured debt is a physical object that can be repossessed / foreclosed if you don’t pay: it could be a car, or even a home equity loan or line of credit. Here are three questions you should ask before making your decision:

1. If you combine your mortgage with your home equity will this mean you need to pay mortgage insurance? Mortgage insurance is added when the total amount of your mortgage is equal to, or over, 80% of your home’s appraised value. That will increase your monthly mortgage payment.

2. Will you need the home equity line in the future? It will be difficult to get a new line in these economic times.

3. Is it better to pay off your debts yourself, and have a tight budget for the short term? Or combine them with your refinance and have a bigger mortgage in the long term?

Think long and hard about what you put into your new mortgage. Consult with your tax preparer for an objective opinion.

Credit Card To The Rescue

For several years, we were planning this big vacation for this year. We would be visiting several European countries over the course of three weeks. Lots of time and efforts was put into the planning and coordinating with friends we would be seeing along the way. Enter 2020 and the pandemic, and we cancelled everything.

That left us with many refunds / credits to pursue. The airlines tickets were amazingly easy, we cancelled, and miles were returned to our account within days. We have a credit for future travel – easy. Hotels were all booked without a deposit – so that made cancellations easy. Excursions were fairly easy to cancel, although we have credits for one to use in the near future (I hope).

Now on to the hard part. We chose to cancel our cruise before the cruise line cancelled the cruise. We did it before final payment, as we did not want to have our money tied up. Now, we needed to get back our deposit plus some extra charges. We cancelled our cruise more than 90 days in advance, so all was refundable. We understood that refunds were taking quite a while and were patient. The credits started to come in and various amounts. No amount refunded was equal to the charges. So, we totaled up what was owed and started to subtract the refunds, but not all the money was returned. (Thanks to meticulous record keeping, we knew what was owed to us and how it was paid for).

Why is this important? Because when all was done, we were not made whole. We were shorted some of our money paid. We ended up filing a dispute with our credit card company. When you use a credit card for payment you have the added benefit for protection. We were able to provide all the details, original charge information and all the calls / emails to rectify the situation. This is important for your dispute case. Then just this past week, the dispute was resolved by our credit card company and we are all set, and we were made whole.

When you find yourself at your wits end and frustrated, know that your credit card company can help you resolve the situation. Remember this only works if you use a credit card for payment.

Your Financial Health

Do you ever wonder how your financial pictures stacks up? Are you on track to meet your goals? What do you need to still do? These and other questions are always on the many people’s minds.

I have discussed the importance of having an emergency savings, a budget to know where your money is going, great credit /score to have the best interest rates when you need to borrow and minimal high interest debt. Check out some of my past emails for more information on these topics.

This is a great article Six Numbers Reveal the State of Your Financial Health. How well do your finances compare to these six areas? All are important areas that should be goals for you to accomplish with your finances.

Third Credit Report Reminder From Jill Russo Foster

It’s September – Get ready for the holidays! For this month use TransUnion for your credit report.

Hello, it’s Jill again, reminding you to get your finances in order before you start spending for the holidays.

Order your credit report from www.AnnualCreditReport.com. This is the ONLY authorized source for the no cost annual credit report that’s yours by law. You have the right to know. Exercise your rights! Learn more.

When ordering online:

Select your state, then click Request Report.
Fill out your information, then click Continue.
When it asks you to select a service, select TransUnion.

Not comfortable ordering online? There are three ways you can order your report:

Order online at www.AnnualCreditReport.com. By ordering online you can have your report back in minutes!
Mail your postal order by downloading the form at www.AnnualCreditReport.com
Call in your order at 1-877-322-8228

It doesn’t matter how you get your report, the most important thing is that you do! Then…

Review it for accuracy!
Follow the instructions with the report to correct any errors.
And, always remember to keep copies for your records.

Were you hoping to get your credit score instead? Try CreditKarma.com. CreditKarma does not supply a FICO score, but it does provide scores from TransUnion and VantageScore. And, there’s no charge for you. CreditKarma funds their service through website advertising.

Wishing you the best for the school year and the coming holiday season!

Do You Need To Establish / Reestablish Your Credit?

I always get asked how someone should establish credit when I speak. Let me give you the answer. First whether you are establishing credit for the first time or reestablishing credit, this information is for you.

There are two main ways to establish credit:

The first option is to be a joint user with someone else. You would have to open a joint credit card with another person. That means that what you do (and what they do) will appear on both of your credit reports. If you both handle your credit wisely, that will reflect on both your credit reports positively. On the other hand, if one of you abuse your credit, that will reflect on both your credit reports as well. This can be a great way to establish your credit. Take a great thought when determining who the joint user will be. You want to be sure you are a joint user and not an authorized user – trust me there is a big difference.

The second option is to open a secured credit card. A secured credit card is where you give the credit card company a sum of money for them to give you the credit card (without risk or harm to them). Think of this as similar to a renter giving a security deposit to a Landlord. This is what you are doing. You get a credit card that looks and works just like a traditional credit card, but the creditor has minimal risk if you default. Remember, you are doing this to establish or reestablish credit.

When you need to establish or reestablish credit, you are a risky person (from a credit stand point) and you need to minimize the risk to the creditor for them to give you a chance. Once you have proven yourself, you can open a traditional credit card (with more favorable terms) and close the joint or secured credit card. Notice the order, I said in the previous sentence – do it in that order, please.

Keep your credit as best as possible and this will help you in the long run and give you the best possible finance down the road, but first you need to take this step to establish or reestablish your credit.

Credit FAQ’s

Whenever I do a workshop I am always asked about credit. I have taken some of the most frequently asked questions and compiled them into this issue of my newsletter.

Why did the creditor close my credit card? I didn’t own them anything. Creditor will sometimes close your credit card account if you don’t use it. If you want to have this credit card available to you, then make a purchase a few times a year to keep the account active.

My pay date and my credit card payment don’t coincide, what can I do? You can call your credit card company and ask them to move your credit card due date to another date that works with your finances.

How to I get a copy of my credit report? You have three credit reporting agencies – Experian, EquiFax and Trans Union. You are entitled to one credit report from each of the three reporting agencies once every 365 days. My suggestion is to order one credit report every four months to see your credit report three times in a year. If you sign up for this newsletter, you will receive a credit report reminder to order your credit report three times during the year.

How do I see my credit score? Your credit score if not a part of your credit report. You can get a close approximation of your FICO score at Credit Sesame, Credit Karma or Quizzle (the scoring part of the three credit reporting agencies). If you have a major credit card, most of them offer you your free credit score.

How do I know which credit card is right for me? That’s a hard thing to answer without knowing your circumstances, but I will give you some ideas for you to select which one is right for you. First thing to think about is how you will use this credit card. Will you use it and pay the balance in full each and every month. If so, then you want a credit card without any fees, because you won’t be paying any interest. If you are planning on financing purchases with multiple payments, then you want to lowest interest rate credit card possible, to pay less in interest.

My friend was declined for credit and wants me to co-sign for him / her. Should I? You need to think about this carefully. When you co-sign for someone, you are saying that you will be responsible for the payment, if the borrower doesn’t make the payment. In addition, how they pay their credit back will reflect on your credit report. So if they make a late payment, it will appear on your credit too. Make your choice wisely.

What’s the difference between a joint credit card and an authorized user credit card? Joint credit is exactly what it says, all parties apply for the credit card with their individual information are liable for what is charged (regardless of who made the charge). An authorized user is a person that you give a credit card to for them to use, but they are not responsible for the charges on the account.

What credit questions can I answer for you?

Understanding How Credit Works In Your Life

Let’s talk about credit.

First, loans / credit cards are when you use someone’s else’s money (borrowing). You are receiving goods or services now that you have agreed to pay for later (either in full or with a series of payments). This will help you to establish or re-establish your credit. This is different from a debit card, which is using your own money and not building your credit.

Now that we have that straight, credit is an extremely important part of your finances. It gives you that ability to purchase goods or services when you need it and pay for it later. Sometimes life requires you to make a purchase now (even when you don’t have the funds of your own to do it now). Last month, I came home from work to find our smoke and carbon monoxide detectors beeping – not a good thing. It wasn’t the batteries, which meant it had been 10 years since we replaced them. Ugh! There was an immediate need to have the electrician come and replace all 11 smokes and carbon monoxide detectors now. It wasn’t something we planned on in our July budget, but it needed to be done now. That’s where credit comes in. They were replaced and we will pay the bill in August.

Credit is something you will find you need in your life, whether it be for emergencies or planned purchases. Having good credit will be an asset to you in your time of need. Having good credit will give you more favorable terms (lower interest rate) for your repayment terms. The higher your credit, score the better chances of getting credit at the best terms. Putting it a different way, your credit score is as important to your finances as your GPA is to getting into college – both numbers are an important in your life.

To have the best credit, you need to use it but not abuse it. It’s easier said than done. You need to use your credit and make purchases as needed, but only purchase what you can afford. You need to make your payments on time and not max out your debt.

In my next newsletter, I’ll talk about credit and some frequently asked questions.

Credit Report Reminder From Jill Russo Foster

Time To Order Your Second Credit Report Of The Year

For your 2nd report of the year, 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 for free!

To Learn More, Visit www.AnnualCreditReport.com:

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 FREE

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? One option is to take a look at CreditKarma.com, Quizzle.com or CreditSesame.com. They won’t give you a FICO score, but they come close by providing a close approximation of your score. And, there’s no charge for you.

May you have a relaxing and successful summer!

Financial Literacy Month – Tip #13

Monitor Your Accounts

Here’s the tip from July 28-Credit month:

Something that I personally do weekly is to monitor my accounts. I go online (from my home computer) and check my accounts, both bank and credit cards. I actually look at the individual transactions to see what is posted. Is there anything that I don’t recognize? Get in the habit of this and check even if you haven’t used the account. You never know who has.

To purchase a copy of either of my books Thrive In Five: Take Charge of Your Finances in 5 Minutes a Day or 111 Ways To Save

#JillRussoFoster #30WaysToSave