The Equifax Breach and What to do

Equifax, one of the three major consumer credit reporting agencies, recently revealed that hackers had gained access to company data that potentially compromised sensitive information for 143 million American consumers, including Social Security numbers, addresses, names, driver’s license numbers, and credit card numbers (THAT’S NEARLY HALF THE US POPULATION).

The three main credit bureaus, Equifax, TransUnion, and Experian, maintain reports on when consumers attempt to obtain a credit card, car or even a mortgage loan, their payment history, and the amount of available credit. Some companies use one or all three of these companies when consumers seek a credit card, mortgage or other loans.

Since the personal information was stolen, along with 209,000 credit card numbers, the breach will increase the opportunity for identity theft to occur.

BE PROACTIVE

Review the Federal Trade Commission’s website on the breach HERE

Equifax has set up its own program to help people find out if they were one of the millions affected by the hack. It requires a multi-step process that takes place over the course of at least one week.

http://bit.ly/2xutn6S

Equifax will advise if it’s likely your information was hacked and then it’s your responsibility to register to get Trusted ID Premier, which provides the following security

  1. 3 Bureau Credit File Monitoring

  2. Equifax Credit Report

  3. 1MM Identity theft Insurance

  4. Social Security number scanning

The service is free for 1 year and you will not be required to provide a credit card number to be charged after the year is complete.

Equifax has an updates page at https://www.equifaxsecurity2017.com/

Equifax will not be contacting individuals to notify them about the data breach. Check-in with your loved ones to ensure that they are also aware and protected

Is it a Good Idea to Close Credit Cards I don't Use?

by Rebecca Eve Selkowe, J.D

3 myths about your credit score:

I never really talked much about credit scores before, but that is starting to change now as I’m realizing how much unnecessary worry, concern, and confusion swirls around them.

So first things first. Your credit score is one credit bureau’s opinion of how likely you are to be able to repay the money you borrow.

Annnd… we’re done here!

[drops mic.]

Heh.

Of course, there’s a lot more to it than that – what factors go into it, what it means, how to have a good one – and based on what I hear from my very smart, very educated clients, a lot of mystery, too!  Here are the top three myths about your credit score, debunked.

Myth #1: If I never use my credit card, I’ll have good credit. WRONG. Your credit score is based on large part on how good you are with credit.  If you don’t actually use credit, no one will know if you’re good at it.  So if you don’t use a credit card, you won’t have bad credit, but your score definitely won’t be as high as it could (and, if you’re financially responsible enough to respect credit cards enough to fear them, as high as it should) probably be.

Myth #2: I should close any credit cards I don’t use. I hear this all the time. I scream “NOOOOOOOOOOOO!!!!!!” and start lifting things up and smashing them.  Okay I don’t really do this… but I want to.  Unlike in, ahem, other areas of our lives, when it comes to your credit score, size matters! Your score is based on part on how much credit you have available to you AND on the length of your credit history (how long you’ve been using a particular account). Closing cards reduces the amount of credit you have.  Closing your oldest card shortens your credit history.  New accounts, bad.  Old accounts, good.  HULK SMASH!

Myth #3: My credit score is the same as my credit report.  NOPE.  Your score is BASED on your report.  You can get your credit report for free each year, but it will not include your credit score.  You definitely want to make sure you’re on top of that report to make sure everything in it is accurate.  You can get your score for free, too, but you may have to do some finagling.  Your score is useful, but the report is even more useful.

There you go. Three myths about your credit score. Pop quiz next week! :)

If you have your head buried in the sand about YOUR credit score, it’s time to get it out. Good, bad, ugly, you have to know that number.  You may be surprised, you may be devastated, but you know that saying “start where you are?”  That’s you and your credit score.

So go check it.

Did these surprise you? Did you know these already? Are you all, tell me something I don’t know? What other questions did this raise for you?

What You Need to Know About Credit

You sit down in your mortgage broker's office because you can’t stand the news. Your credit is so bad you will not be able to secure a loan to buy the dream home you just bid on. Can you imagine? After months of taking time off work to run from one open house to the next, you forgot to check your credit report to make sure your credit was in order. What independent credit reporting agencies say about you and your credit can and will make the difference between your ability to buy a car, a house, or even a simple pair of shoes.

Your credit report contains everything about your credit history, including the good, the bad, and the ugly. Details you would never dream of sharing with even your closest of friends are listed neatly for all creditors to see. Your last residence, your employment history, your bill payment history, how many credit cards you have, how much you owe, and how much access to credit you already have are just a few of the juicy details contained within your report.

So what hurts your credit? Paying bills late, defaults on loans, too many credit cards, canceling your credit cards, large balances, medical bills that were lost in an insurance shuffle can all end up creating black marks on your credit report.

Many major life events, such as marriage and divorce, purchasing a home, or having a child are also financial changes that involve and can affect your credit.

Even worse, many credit files contain inaccuracies that can harm your credit rating. Just as reviewing your credit card statement can reveal charges you did not make, reviewing your credit report can reveal activity on accounts you don't use or new accounts you did not open, alerting you to the possibility of identity theft.

Few Savvy Ladies know that they can fight an improper charge on their credit card. The Fair Credit Billing Act, which was passed in 1974, makes sure the law is on your side. In fact, your credit card company is required to investigate and either correct the mistake or explain why the bill is correct within 90 days. They must acknowledge your complaint within 30 days.

Make sure to put your complaint in writing and send it via certified mail to "Billing Inquiries," which is listed on the back of your card statement. According to the law, your dispute letter must include your name, address, account number and a description of the problem. Visit Bankrate.com for a sample dispute letter to help you on your way. The deadline for notifying your credit card company of a billing error is 60 days from the date the bill was mailed to you. Keep in mind that the 60-day clock starts ticking on the day your issuer mails your billing statement, not the date you receive it. So by the time you receive your bill, you actually have 50-odd days to get a dispute letter back to your card issuer.

Request your free credit report online or by calling 1-877-322-8228. You can also contact any of the following “big three” credit reporting agencies: EquifaxExperian, or TransUnion.

Top Tips for Cleaning Up Your Credit

by Stacy Francis, CFP®, CDFA

According to myFICO, it's important to note that repairing bad credit is a bit like losing weight: It takes time, and there is no quick fix. In fact, out of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast.

Here are some of the top tips to raise your score.

  1. Pay off all outstanding debts.
  2. Write letters to creditors explaining any payments that were more than 60 days late. Request that the creditor share that information with the credit companies.
  3. Pay your bills on time.
  4. Cancel any credit cards or department store cards that you don't use. Be sure to put the cancellation in writing so the account will be show you cancelled it versus the credit card company.

Be careful about tainting your good credit with debt incurred by someone else with lower credit quality than you, such as a new spouse. Help your partner clean up his or her credit before you begin co-signing on additional credit.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

How to Stand Up To Creditors

by Jillian Beirne Davi

Have you been shutting your phone off out of fear of creditors calling? If so, read on.

Nearly six years ago, I drove off my own fiscal cliff. I was drowning in credit card debt and didn’t know what to do. I had to shut my phone off because creditors called me from 7:00am to 8:59PM. I was terrified.

I remember one afternoon during this time; I got a call from a representative of a well-known credit card company. He said that if I did not pay a minimum of $2,000 on my balance, he would be referring my "case" on to their team of attorneys for review and I would be sued for the balance.

Two thousand dollars?! I didn't know anyone with that amount of money. Everyone I knew, parents included, were broke. I felt trapped in my own misery; young, naive and sinking fast.

That conversation shook me to the core. In fact, I was so distraught I began to battle depression and morbid thoughts that lasted quite a few months. (I hope you don’t mind me being vulnerable with you here.)

Reflecting on that time is painful to write, even years later. To think that I wanted to throw my life away because of some scary credit rep and $2,000.

Yet this is a common result of bullying that occurs every day in the collections industry. Yes, I was irresponsible, lived beyond my means and created a financial mess. And yes I understand that there are true con artists out on the world that run up tremendous amounts of debt and skip out on the bill. I understand the need for collections. At the same time, I felt so trapped and worthless.

Eventually after many sleepless nights, I had a revelation of sorts. I remember thinking that I had enough of the bullying. Not just from this one company but from all of them. I decided that I was stronger than this situation, and made a powerful decision to dig myself out. Now, I must preface by saying I am not an attorney, licensed financial advisor, accountant or anything like that. I’m just one regular woman who decided to take action. Here are some steps that I took to stand up to creditors and I hope they inspire you to do the same.

1. Get them to stop calling. Turns out there are many resources that provide sample letters you can send to credit card companies or collection agencies that will either stop or dramatically decrease their incessant calls. I wrote letters to every credit card company and agency. About thirty days later, the number of calls dramatically reduced.

2. Get Clear on Who You are Speaking To: Collection agencies use manipulative language to get consumers to pay. Sometimes they misrepresent themselves. When you are on the phone, ask the person’s name and employer. Refuse to have a conversation if they cannot provide this simple information. In my case, the representative that called used slippery language to make it seem like he worked for the major credit card company. Turned out he was a collector misrepresenting himself on the phone.

3. Get Everything in Writing. All communication between you and the lenders or collection agencies must always, always be in writing. This might seem obvious to some but many people make verbal agreements with intimidating collection agency reps over the phone without ever asking for the agreement to be made in writing! Keep hard copies of every letter sent and received. Additionally, request a return receipt for all your outgoing letters and send them certified mail.

4. Challenge any and all requests for debt collection. If you are dealing with a collection agency, the burden to prove that the debt belongs to you is on THEIR shoulders. They must present evidence that they are authorized to collect the alleged balance. You may owe the total amount but write a letter requesting that the agency verify that they are authorized to collect in the first place. There are many shady agencies out there trying to collect debts without proper authorization to do so.

5. Check for the statute of limitations in your state. Though this varies from state to state, find out the period of time a creditor or collection agency is legally allowed to come after you to collect, before the debt becomes null and void. For example, if the alleged debt owed was from an account that’s seven or more years old, they may not be legally permitted to collect. The account is simply too old. But of course, unscrupulous agencies out there thrive on resurrecting what I like to call “zombie accounts” and bet on your ignorance of the credit laws in your state.

6. Get Professional Help. And of course, there are attorneys, free credit counselors and other professionals that can help you assess what your options are based on your unique situation. It’s great to clarity on exactly what you can legally do to stand up to your creditors. Most local governments have free or low-cost resources to help you decide which options are right for you. One resource I found particularly helpful through all of this is the Federal Trade Commission website under Consumer Protection. It lays out a lot of these guidelines clearly. http://www.consumer.ftc.gov/topics/money-credit

By getting everything in writing and getting crystal clear on my rights, I was able to take a stand against unethical practices. Though it required a lot of courage, I eventually paid off all my accounts. I vowed to leave that dark period behind and stay away from soul-sucking debt for good.

If you are secretly struggling in this area, I hope this inspires you to do your research and take action NOW. It is possible to take your power back and stand up for your rights as a consumer.

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Jillian Beirne

Jillian Beirne Davi is a Financial Turnaround expert and the founder of Abundant Finances, a service that helps you get yourself out of debt and start amassing abundant savings in record time (without deprivation or eating cat food for dinner).   After digging herself out of $30,000 in debt and saving tens of thousands of dollars, she decided to share her strategies with others who struggle in this area.  Turns out:  They work! The Abundant Finances community continues to grow with conscious women who are committed to making RADICAL changes in their financial lives.   For more helpful money strategies to turn your finances around, visit http://www.AbundantFinances.com and sign up for the high-content, high value FREE newsletter today!

The Key to Handling Credit Card Trouble: Don't Procrastinate!

by Elliot Raphaelson

Consumers can find themselves with insurmountable debt for any number of reasons. Unwise use of credit cards ranks near the top. As a Florida certified county mediator for the last 12 years, I have seen cases involving failure to pay credit-card debt increase markedly over time.

It is not unusual for an account with a limit of $2,000 to rack up a balance of, say, $4,000 within a few years. How does this happen?

Many, if not most, consumers fail to read the initial agreement when they sign for a credit card; they assume they will always be able to make sufficient payments. When they cannot make the required minimum payments, or when they charge more than the limit on their card, bad things happen. Failure to make minimum payments results in an increase in the interest rate and a monthly charge for not making a minimum payment. Exceeding the card's credit limit brings additional charges.

When faced with hard times, many people naturally pay mortgage and car payments first, putting off paying their credit card debt. Given the high interest rates and fees this triggers, their debt can quickly spiral out of control.

Once you stop making minimum payments on your credit card bill, your card issuer will send you statements showing additional fees and higher interest rates. If you do nothing, these fees and charges will continue to accumulate.

If you do nothing and procrastinate until faced with a lawsuit, your options become limited. The credit-card issuer, or its representative, is entitled to legal expenses as well as court costs, if it can demonstrate that you owe the amount in question.

Along the way, however, you may have options you are not aware of to get a resolution more in your favor.

For example, once you have failed to make minimum payments for several months, the creditor recognizes that it is unlikely that you will be able to pay off the account in full. If it is forced to sell this account to a collection company, it will do so at substantial loss, so it may be willing to negotiate with you. If you offer to pay off some portion of the balance over a short time frame, such as two to three months, you may be able to receive a substantial discount.

If you are unable to negotiate successfully with your creditor, you can get help from a local nonprofit counseling agency. Contact the National Foundation for Credit Counseling (www.nfcc.org, or call 800-388-2227) to help you find one.

If the issuer has increased the interest rate on your account because of missed payments, try to renegotiate the rate. (When you call the creditor's customer service line, you can ask to speak with a supervisor.) Indicate you are now able to make minimum payments -- if the company is willing to reduce the interest rate. You have nothing to lose.

What can you do once you have been sued by a debt collection firm for an account on which you have not made payments for several years? If you do not believe you owe the money, or if you believe the amount is incorrect, send a certified letter (requiring acknowledgement of receipt) asking for documented proof.

When an account is purchased by a debt collection firm, especially if it has been sold many times, the firm may not have sufficient documentation. This helps your bargaining position. If the case is heard by a judge, the plaintiff will have to provide proof to the judge that the debt is owed. Once you request such proof from the debt collection firm, they know they are dealing with an educated consumer.

State and local laws and procedures vary. Your case may be heard by a mediator initially, who cannot offer you advice. If you believe your case is strong, you should insist on an appearance before a judge. If you do not want to appear before a judge, you should negotiate with the collection firm; there is no downside in asking for favorable terms for repayment and lower and/or no future interest charges. The collection firm may not want to appear before the judge either, especially if it has insufficient documentation. If you have requested documentation, and it hasn't provided it, it probably doesn't have it.

If you have credit card debt you can't handle, don't procrastinate. Find ways to pay off the debt at a discount, or have the interest rate reduced. Otherwise, the debt will increase quickly, and it will become even more difficult for you to resolve the problem.

 

Elliot Raphaelson welcomes your questions and comments at elliotraph@gmail.com

(c) 2012 ELLIOT RAPHAELSON. DISTRIBUTED BY TRIBUNE MEDIA SERVICES, INC.

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Elliot Raphaelson

A retired executive of Chase Manhattan Bank, Elliot Raphaelson joined The Savings Game after decades of experience as an advisor, teacher and author in the field of personal finance. He has taught courses in personal financial planning at The New School for Social Research and at the Military Academy at West Point, as well conducting seminars for Chase, Dow Jones & Co. and other corporations.

Past publications include Planning Your Financial Future (Wiley, 1982), and his writing has appeared in The New York Times, Town & Country, Vogue, Self, Savvy and Working Woman magazines. For ten years he has worked as a certified mediator and trainer in a Florida county court, where he helps resolve personal financial problems of every description.

On the 12 Days of Christmas

by Susan Hirshman

As I was driving the other day, the song … On the twelve days of Christmas my true love gave to me….came on the radio.  It made me think – who really is our true love and what is it really that we want.

Who really is our true love?  Well, I am not Dr. Phil but we must first start with ourselves. And what is it that we really want? From a financial perspective most people tell me it’s “ peace of mind.”

So I took a little literary license and came up with a new song for the holidays.

On the 12 days of Christmas I gave to me the best gift of all…peace of mind….

Here are twelve things you should think about and examine

Day 1 – Review your life insurance coverage.  Is it working as projected?  Is the pricing up to date? Is the coverage in line with your needs?

Day 2 – Examine (or create) your retirement goals.  Are the assumptions realistic?  Is it a priority?  Are you on track?

Day 3 – Look at your emergency savings.  Do you have any? Is it liquid? What do you want it to cover?

Day 4 – Review your disability coverage.  Do you have any?  Do you know what your policy covers, for example is it your own occupation or any occupation?

Day 5 – Go thru your estate plan (or lack thereof.) Are the guardians you named for your children still the right choice?  Is the executor the right choice?  Has your life circumstances changed and those changes are not reflected in your will?

Day 6 – Appraise your need for long-term care insurance.  What is your family’s health and longevity history?  Do you have family members that would be willing and able to take care of you in the manner that you choose?

Day 7  - Assess your diet. Studies have found that discrimination based on weight in the work place is more prevalent for women than men, especially white women in professional occupations.

Day 8:  Study your portfolio performance.  Are you an emotional investor? Do you end up buying high and selling low?  How long do you usually hold on to a mutual fund?

Day 9: Take a break from TV.  Reduce your TV watching by less than 8 hours a year and you can gain financial success. Snookie won’t be able to help you but by taking a few hours to get financially educated (read Does this Make My Assets Look Fat? A woman’s guide to finding financial empowerment and success), then take around 5 hours to get organized and develop a plan, and then take an hour 2x a year to review your plan.

Day 10 – Re-evaluate your umbrella policy.  Do you have one?  Is it sufficient? When was the last time you revisited it? Experts report that only 10%of people have the proper umbrella policy.

Day 11: Make sure you are familiar with all your finances. Do you know what would happen to you financially if you were to get divorced? 25% of couples married for twenty years get divorced.  Furthermore, the “grey divorce” (people over 65) is the fasting growing group of people to get divorced

Day 12:  Go over your credit cards.  Understand your interest rates, payment options.  Make sure you are not paying more than you have to.

Your Financial Fitness Checkup

by Stacy Francis, CFP®, CDFA

Leaving the organic produce store yesterday, a flier on the revolving glass door caught my eye. It was entitled “HEALTH CHECKUP: Do You Have the Supplement Basics Covered?” and listed five types of supplements - multivitamins, enzymes, probiotics, fatty acids, and green vegetables - as the foundations for good health. Not only is it nice to know that I take all the necessary measures to ensure my physical well-being, this also translates very well to financial health.

Do you have the personal finance basics covered?

  • Do you make more than you spend? Are you able to pay all your bills in full, on time, or do you need to make more and/or spend less?

  • Do you have an emergency fund? Do you have enough money to cover six months worth of expenses, and is this money easily accessible?

  • Are you in the black? Do you pay off your credit cards in full every month? If not, draft a plan to get rid of those balances!

  • Have you thought about retirement? Do you have a 401(k), Roth IRA or similar, and do you contribute to it regularly?

  • Have you protected yourself against disaster? Do you have the insurance coverage you need, including medical, disability and homeowner’s insurance?

Yes on all? Congratulations! Chances are you’re in great financial health.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

A Late Bill Won’t Kill Credit

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Even the most responsible borrowers slip up sometimes. Maybe a utility bill went unpaid after you moved and the missed payment went into collections. Or perhaps there are unpaid library fines or parking tickets in collections that are hanging on to your credit history and affecting your FICO credit score, which is widely used by lenders to evaluate your ability to repay debt.

With the newest version of the FICO credit scoring system, however, minor delinquencies are now overlooked in calculating credit worthiness.

Under the updated scoring model, called FICO 08, small missed payments lingering in collections with original amounts of $100 or less will no longer do damage to your credit score.

Consumers also are less likely to be penalized for any single delinquency if it occurred two or more years ago- and if their credit history is otherwise unblemished. There’s more flexibility with missing a payment. If you have a more habitual pattern of paying accounts late, you’re more likely to get penalized for that.

If a consumer’s credit usage is high, that will be more likely to hurt his or her score with FICO 08. But getting close to your credit card limits- even if you always pay on time- is penalized in some way in very FICO score, not only the recent edition.

Which credit card is the best to earn mileage points?

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There are so many credit cards to choose from to earn mileage points – a lot depends on your anticipated travel patterns and your preferred payment options.

When reviewing your options, don’t forget to look at the small print and get a handle on the interest rate (APR), annual fees and any other reward features as well as how points are earned and how you will most likely earn them based on your spending patterns. You’ll earn points quicker if you consolidate all your purchases on one card so try and choose a card that gives you the most flexibility in being able to utilize the mileage points you earn rather than seeing them being wasted because you can’t use them.

Some card issuers draw you in with some seemingly great perks, only to find that there are hidden clauses or penalties so watch out for these. There can also be blackout dates and seat restrictions and watch out for expiry terms for mileage points already earned.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

5 Quick Fixes for Your FICO Score

by Stacy Francis, CFP®, CDFA

An old friend - a real estate agent in the Midwest sent me an email this morning with a topic she suggested I post in my blog. With real estate prices at record lows, many aspiring homeowners are looking her up. Many fulfill both the down payment and income requirements for a mortgage. Unfortunately, they tend to underestimate the extent to which the credit markets have changed over the past couple of years. These days, there’s no way around it: your credit score must be sky high. Wanting nothing more than for her clients to have their dream homes, she has put together a list of quick lifts for that FICO score.

1. Pay down balances. A main ingredient in the credit score formula, the size of your balances really does matter. Pay them down – or even better, off.

2. Protest unfair information. If you have an entry on your credit report that shouldn’t be there (honestly, now), know that you can dispute it. If you submit complaints to the company that posted it as well as the credit-reporting agency, they will investigate and take it off, leaving your record a whole lot cleaner.

3. Ask for help. If you’ve been a loyal customer for years and normally make your payments on time, chances are, if you talk to customer service, they will disregard that one time you forgot to pay your bill because you were on your honeymoon. Ask politely – and thou shall receive.

4. Don’t neglect the oldies. Another important factor in the credit score formula is how long your accounts have been open. So even if the Victoria’s Secret card you applied for when you were in college doesn’t have the most useful perks, use it once in a while for a credit score boost.

5. Make your payments on time. It seems simple, yet so many people fail on this count. If you have a hard time remembering your payments, set up a reminder.

 

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

6 Smart Money Moves in Your Thirties

by Stacy Francis, CFP®, CDFA

A couple of weeks ago, I attended my friend’s thirtieth birthday party. A week later, she called my office to schedule an appointment. While I was delighted to accommodate her, I couldn’t help but scratch my head a little. She never asked me about money before. What was going on? 

It turns out that like so many people entering their thirties, she suddenly felt overwhelmed with financial responsibilities. Would she ever be able to pay off her student debt? What about buying a home? And retirement, it had dawned upon her, wasn’t as far off as it had seemed before. Nor was the whole baby thing.

It is true that your thirties bring a ton of financial responsibilities - but it is also a decade of wonderful opportunities! Below are six smart money moves and stepping stones toward a prosperous future.

  1. Learn to prioritize and keep your expenses down. While a few people pick this up in their twenties, many people never do – and they rarely enjoy a better-than-average standard of living.
  2. Pay off your credit cards. Not only will you save a bundle on financing charges, but as your FICO score improves, you can obtain better rates for mortgages and many other things.
  3. Build an emergency fund. Most experts recommend that you keep enough money to cover six months worth of living expenses in an easily accessible account. This is especially true today.
  4. If you haven’t done so already, start saving for retirement. You are best off stashing this cash in an account that scores you tax benefits, such as a 401(k) or a Roth IRA.
  5. Watch your debt. Get into the habit of spending less than you earn, making room for savings. Stay clear of high-interest and toxic debt.
  6. Review your insurance coverage. Chances are you have some sort of medical insurance already. Other types to look into include long-term disability and homeowner’s insurance (if you are planning to buy a home).

You don’t have to deal with them all at once. Just keep them in mind, and work on them whenever possible.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

How to Stay Clear of Cuts in Your Line of Credit

by Stacy Francis, CFP®, CDFA

A report from a recent Savvy Ladies meeting revealed that many of you are having your lines of credit slashed. I thought a few pieces of advice could come in handy. A couple of months ago, I touched on the topic in a blog entitled “Will a Cut in Your Line of Credit Hurt Your FICO Score?”, concluding that the extent of the damage can range from a minor nuisance to near disaster, depending on your credit history, score, and accounts. This time, I will focus on preventative measures, namely:  

  1. Use your cards. Many times, inactive accounts are the first ones to go (if you don’t use your cards, unless you pay an annual fee, you don’t make the bank any money). This doesn’t mean you should go on a shopping spree. Simply charge something once in a while, to let the lender know you are still using the account.
  2. Keep your outstanding balances low. This is always advisable, but now more than ever. Companies like American Express have been known to reduce customers’ lines of credit to below their outstanding balances, further adding to the hardship of indebted individuals.
  3. Keep working on your FICO score. It is not hard to see why troubled banks cut lines of credit for high-risk individuals; they simply cannot afford to have them default on their debt. By proving to the lending institutions that you are a safe bet, you greatly enhance the chances they’ll let you keep your lines of credit. If you have stellar credit, you can use this to your advantage, kindly informing institutions threatening to reduce your lines of credit that you could easily take your business elsewhere.
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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Will a Cut in My Line of Credit Hurt My FICO Score?

by Stacy Francis, CFP®, CDFA

This question popped up during a recent Savvy Ladies empowerment circle. The woman asking it had recently received a letter from American Express, letting her know that they had reduced her credit limit from $17,000 to $9,000. Credit score disaster or a mere annoyance? 

It depends. The three main factors determining your FICO score are 1. timeliness of payments, 2. outstanding debt compared to your total credit available, and 3. how long your accounts have been open. So an $8,000 drop in total credit available can have a negative effect on your credit score, especially if you are carrying revolving balances on one or several cards (fortunately, she does not).  

The damage caused by a cut in your line of credit will be less significant if you have a decent credit score (720 or higher), and a long history of timely payments. If you have fewer credit cards, a shorter credit history or some late payments on your record, it will sting more.

The good thing with the FICO score is that it is not stagnant – the credit reporting agencies are constantly updating it. So when you make timely payments, reduce debt, and keep your old accounts open, your score improves over time. So while it is definitely a setback, having your line of credit cut short is not a major disaster.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Credit Card Myths

by Stacy Francis, CFP®, CDFA

I went for a run in the park this morning, with my favorite workout pal. Thank goodness she is a good friend as I don’t run as fast as I used to now being pregnant. Anyways, she surprised me mid-run by asking whether it was really necessary to keep six months’ worth of income in an easily accessible emergency fund. Wouldn’t it make more sense to put her money in retirement accounts so that she could cash in on the tax benefits, and then do a cash advance from one of her credit cards if she got into trouble?

This got me thinking about credit cards, and how even though almost everyone uses them, few have a real perception of how they work. Below are three common myths about credit cards, starting with my running buddy’s.

  1. Doing a cash advance from your credit card is like taking cash out of the ATM. No. Rates and fees are sky high for this transaction. Avoid it.
  2. In times when money supply is short, you can stick to the minimum payments on your credit card balances. Again no. Not only will you waste horrendous amounts of money on interest, but paying the minimum balance only will drag down your credit score.
  3. It’s OK to take your cards to the limits. Third time no. This is OK only if you don’t care about your credit score, and don’t mind spending your money on interest instead of investing it – or enjoying it.
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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Credit Card Overwhelmed: Notes on Debt Consolidation

by Stacy Francis, CFP®, CDFA

“My credit cards are driving me insane,” a friend complained to me over mochas (bought with cash) yesterday morning. “It’s like I can’t stop thinking about how much debt I’m in, because the minute I’ve sent off one minimum payment, I get a bill from a different company.”

I asked her if she had considered debt consolidation, and she replied that she had heard about consolidation loans, but don’t you need to own your home to get them?

The truth is, there are numerous options for those looking to save time, hassle and frustration by combining all their monthly payments into one. Below are a few:

  1. Credit card transfers. This can be an excellent way to go, if – and only if – you are certain that you’ll be able to pay off your balance before the low introductory interest period is over. BEWARE: Watch out as rolling your debt from one card to another can hurt your credit scores.
  2. Home equity. This is the loan type to which my client thought I was referring. For those lucky (or unlucky, depending on how you view things) enough to own a house, this can be a great way to lower your interest and get better payback – and overall – terms for the money you owe. BEWARE: I know too many people who have innocently moved their credit card debt onto their home equity line of credit, only to rack up new credit card debt only months later.
  3. Loans against retirement funds or life insurance policies. Most employers allow this for 401(k) plans, and most insurance companies don’t even require that you pay back the loan – you can deduct the balance from the benefits paid to your beneficiaries. While the latter may not be too happy, this is an option and worthy of a mentioning. BEWARE: Taking money from a 401 K can impact your retirement security. Not to mention many loans are due in full 60-90 days after you leave or are fired from the company.
  4. Nonprofit credit counseling agencies. The employees of these agencies do debt consolidation for a living. They negotiate with credit card companies daily, and will be able to score you the smallest possible fees and most favorable interest rates. BEWARE: Not all credit counseling agencies are the same. Do your homework and make sure that you are working with a reputable company.

These are just a few examples of ways to get control over your debt situation – simple ways to commit to a plan that both eliminates your debt and takes your mind off it. Always remember that many people have had this problem before you – and many have gotten out of it.

 

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Should Your Kids Have Credit Cards?

by Stacy Francis, CFP®, CDFA

The children in front of me in line at the grocery store today were no older than eleven or twelve, yet when the time came to pay for their snacks and sodas, they pulled out their MasterCards. I started to wonder, is this normal now? Do all kids and teens have credit cards and – even more importantly – should they?

I started thinking about my son Sebastian. When should he get a credit card? He is only 21/2 but is the right age 10,15 or 20?

This, of course, depends – on everything from your financial situation to your relationship to your children, and in turn, your children’s relationship to money. But generally, I would advise against it. After all, you want your children to develop a healthy relationship to money – one where they spend no more than they earn, preferably a bit less. If money seems to appear out of nowhere (like, out of your bank account) to bail your children out when they get into trouble, chances are they will get themselves into much more trouble later on, when sums and stakes are higher.

There is, however, one major exception: secured credit cards, where you or your children (or both) deposit a certain amount into an account, and your children can learn how to manage money the way most adults do.

If your children are very mature and financially responsible, it may not be a bad idea to allow them to carry plastic as long as you can manage the account with them. But for the grand majority, stick to ATM cards, secured credit cards or good old-fashioned paper bills.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Finding and Understanding Your Credit Score

by Stacy Francis, CFP®, CDFA

“Now that real estate prices are falling,” a woman told me over the phone today, “I would like to buy a town house or a condo. But I hear you need really good credit these days, and I have a feeling mine may be pretty bad.”

I asked her what her score was, and she replied that she had no idea. She had never seen her own credit report, and she was not aware that this information is available to her. After some research, it turned out her credit wasn’t bad at all, and she decided to find herself a real estate agent. For the rest of you, here’s some basic information on the very much dreaded credit score.

There are three major credit-reporting agencies: Experian, Equifax, and TransUnion. The information on their reports tends to vary slightly. You can get your credit report for free from www.annualcreditreport.com

Once you have your reports, you should check them for accuracy. If you see anything that shouldn’t be there, make sure you contact the reporting agency/agencies to dispute it.

Looking at your reports for the first time can be something of a cold shower, as they will list every single late payment you have ever made in your life, as well as how late it was.

The actual score is a snapshot of your creditworthiness at any given time. It is calculated by a machine, and influenced by many factors such as available credit, outstanding debt, length of credit history, and late payments. As these variables vary, so does your score. So the good news is that when you clean up your report, make your payments on time, and reduce your outstanding debt, over time your credit score will be better and better.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Four Rules for Paying Off Credit Cards

by Stacy Francis, CFP®, CDFA

Numerous people have told me that Mary Hunt’s book Debt-Free Living is well worth a look. This weekend, I finally got a chance to read it. Sure enough, it had some excellent points. My favorite was her four rules for getting out of debt. I will share below.

According to Mary, shrinking your debt is not all that different from shrinking your waist, so just like your diet, your action plan needs to be simple and specific. It is also crucial that you can measure your progress, and that you have a specific completion date. All payment plans work in theory – but they will only make a difference for you if you can stick to them. So be realistic when crafting it, and your chances for success are much bigger. Then make sure you work these four rules into the formula.

  1. There can be no more debt. You are never going to be debt free if you keep borrowing. It’s a bit like binge eating while on a diet – except you can’t make yourself sick afterwards.
  2. Pay the same amount every month. Over time, as your balances and minimum payments start to look smaller, you will be tempted to slow down and make smaller payments. Don’t. The faster you pay it off, the less finance charges you have to pay, and the smaller number of dollars will stand between you and financial freedom!
  3. List your balances according to size and payback time.
  4. Whenever you’ve paid off one balance, add the size of the payment you used to make toward it to the next one, and really get the ball rolling.

Paying off debt is no more fun than being on a diet, but if you keep envisioning your goal and implementing these four steps, you will be out of your crunch before you know it.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

The Financing Trap

by Stacy Francis, CFP®, CDFA

Someone told me the other day that whenever an American scores a 5% raise, he or she immediately ups spending with 10%. Crazy, you may say, but the thing is, our society is built around exactly this sort of behavior. It doesn’t actually take money to spend money – in the short term, anyway. Sales people, banks, and other types of institutions are tossing money at us in a manner much similar to the way guests toss confetti at the bride and groom at weddings. Chances are, you’ve heard something along the lines of “0% down”, “no interest until 2010” or “cash back” within the past hour. But while these sorts of deals may sound like dreams coming true, in reality, many a people have had their finances ruined by them.

Why?

Because the sales reps aren’t just giving you that bed, car, flat screen TV or whatever it is you’re shopping for, for free. Sooner or later, the time will come for you to pay for it, and then you are stuck with your current bills (rent, groceries, gas, insurance, etc, etc) plus the bills you didn’t pay years ago. And though it is easy to think “no problem, three years from now, I’m going to make a killing anyway”, unless you are Nostradamus and can predict the future, chances are, you may not. Your company may go belly up, a family member may have an accident and end up hospitalized, or you may get divorced. The guy at my local Postal Annex has this problem. In order to keep up with his bills, he works from 9 to 6 there, and then goes straight to his second job at a warehouse, where he stays until midnight.

I’m not saying you should never finance anything, because there will be times when this is your only option. But beware of the risks – and plan ahead for the day when you will have to pay for your merchandise.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.