Rebuilding Your Financial Future After Divorce

By: Michelle Buonincontri, CFP®, CDFA

If you are like most, your divorce ends with debt, and the last thing we are thinking about is retirement. I know, I've been there; nothing kills a retirement plan like a divorce. There are no student loans or government bailouts to help us.

According to a report released by the National Institute on Retirement Security on March 1, 2016, 80% of women over 64 are already more likely to live an impoverished life than men.

So what’s a gal to do?

Cut Discretionary Spending

This might sound obvious, but life is not the same. The income that once supported one household may now be supporting two, and you may be entering the workforce again or for the first time. Things will need to change, and you are the catalyst for that change!

For example, renting instead of owning a home may make more sense, even if just in the interim to keep expenses down. We need to remove the emotion from our financial decisions and take a longer range view.

Take Advantage of Any Employer Retirement Match

Many employers offer workplace savings plans that match employee contributions—often up to 6% of your salary. Execute the strategy above so you may contribute enough to your tax-deferred employer plan to earn 100% of the employer match in a 401(k), 401(b) or 457 plan. Earning the match is like receiving a 100% return on your investment. Where can you find a 100% return? This will help your nest egg grow and boost your retirement security. Not contributing enough to utilize the employer match is like leaving free money on the table.

View Your Divorce Debt Like An Investment

Like a what? I know that intuitively does not make sense. But there are competing resources for paying off debt and saving. Start by comparing the interest rate on the debt to that of an expected investment return and the power of compounding of retirement savings.

If, for example, your student loan or mortgage has a before-tax interest rate of 3–5 % (which may be even less after a tax deduction) and you can reasonably earn 5% with compounding over a longer time horizon in retirement, it may make more sense to put money in your retirement account than pay off that debt early—always considering cash flow and remembering that market returns are not certain. 

But if your credit card is charging 10%, put more money there. Once you stop paying that 10% it’s like earning 10%, because it is no longer being spent and is available in your budget for other items. Look at the interest rates you are paying like market returns that are leaving your pocket, and try to consolidate debt into a lower interest rate whenever possible.

Get in Touch With Where You Are in Your Story

What is going on for you right now, in this moment? Are you living in the past with regret, bringing the past into the present, or maybe even living in the future with fear?  What messages have you taken in and believe about yourself? This can be scary. For me, being grateful for what I have, acknowledging a point of view or a set of expectations I have of a situation, or others that are coloring my perspective, is freeing. Once done, I can choose to see things differently and I can choose to take actions so that I may be the architect of my life.

When we are not blaming and we are choosing, it can be very empowering!

Yes, these are the basics. We need to lay the foundation before we can move onto planning strategies. Consult a certified financial planner for comprehensive advice on strategies that address your retirement planning needs.

This article originally appeared on Investopedia.


Michelle Buonincontri Circle Headshot.png

Michelle Buonincontri is the Founder of Being Mindful in Divorce. She’s a divorced single mom, passionate about using her professional experience as a CFP® & CDFA™ and personal journey to support women in transition; creating confidence through education so they can make financial choices with peace of mind. Bringing together a background in investment management, tax prep and retirement planning, to provide Divorce planning (with singles or couples) and Financial Coaching services, financial literacy workshops and writings.

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

Should I be zeroing out my credit card every month?

by Rebecca Eve Selkowe, J.D

The best way to use your credit card is to pay the balance in full every month – that way, you don’t have credit card debt and you don’t pay interest. However, if you are using your credit card all the time, the balance will never be $0.

(It’s very confusing.)

Credit cards work on a “statement cycle” and a “grace period.” The easiest way to understand what this means is to use an example. Let’s say your Visa bill is due on the 20th of every month, and your statement cycle ends on the 23rd. Let’s say it’s February. How do you know what to pay this month?

Everything you charged from December 24 to January 23 (and anything you hadn’t completely paid off up to that point) makes up your January statement balance. That January statement balance will be due on or before February 20. If you pay the entire January statement balance sometime between January 23 and February 20, you won’t pay any interest. WOO HOO!

BUT! If you used the card in February, you’re still going to see a balance on the card when you pay it on the 20th. Not to fear… on February 23 that statement cycle will close and everything you charged from January 24 to February 23 will be due on or before March 20!

March is Women's History month

Do we have something to celebrate? This year marked a milestone in the movement for gender equality and the advancement of women. The world has recognized that gender equality is critical to the development and peace of every nation. Women are not only more aware of their rights; they are more able to exercise them. This includes being empowered to make strong decisions about financial issues. Unfortunately, there is not one country where women are truly equal with men. Where are the best – and worst – places for women to live? The answer is not as obvious as it may seem. The worst countries for women to live in – by our standards at least - are likely to be poor and war-torn, or unsympathetic to women’s rights. However, it is surprising to find that the gap between the haves and have-nots makes the US “shocking” for many women, says a University of Adelaide academic, Barbara Pocock. Many women are being left behind because of the low minimum wages, a welfare system aimed at pushing people back into work, and expensive health care.

As women, there is a natural fear of money. We learn so much about healing and restoring other aspects of our lives – such as relationships, body image, parenting - and yet we are sometimes afraid to tackle anything to do with the business of financial reality. We are afraid of not having enough, of losing what we have, and of having more than enough.

So how can we find serenity in all that financial angst? We can start by being honest with ourselves. Compare notes with your friends; untangle some of your economic package; figure out the specific symbolic nature of your relationship to money versus the reality of what you need for you and your family to get by; and isolate the lies you’ve bought into about money.

It’ll be scary and painful at first, but it’ll get easier as you continue to learn and embrace the topic of money. If we are to change the past that put women at a disadvantage in most societies, we must implement what we have learned on a larger scale. It is fundamental to create more economic opportunities for women. Promoting gender equality and facing financial reality, is not only women’s responsibility -- it is the responsibility of all of us. Let us rededicate ourselves to making that a reality.


Take Steps to Protect Yourself from Credit Fraud

by Stacy Francis, CFP®, CDFA

The FTC says that the average victim of identity theft is unaware of the problem for 12 months. You don't want to let 12 months go by before finding that you're a victim. Follow these top tips to protect yourself from credit fraud.

  • Reduce the number of cards you carry in your wallet; just one or two are sufficient for everyday use. Keep your others at home. This practice minimizes the amount of information a thief can steal.
  • Make sure you keep as little personal information in your wallet as possible. Don't carry your Social Security card, birth certificate or passport with you on a routine basis.
  • Install a lockable mailbox at your residence to reduce mail theft.
  • Make photocopies of all of your credit cards, including account numbers, expiration dates, and issuer phone numbers, so that you can notify creditors quickly in case of theft or loss.
  • Sign any new cards as soon as you receive them. Don’t give a thief the possibility of putting their John Hancock on your card.
  • If a credit card bill is late, call the card issuer's customer service number immediately. This is one of the first signs that your credit card number has been stolen.
  • Review your statements carefully each month to make sure all charges are accurate.
  • Never leave your purse or wallet unattended at work or in church, restaurants, health fitness clubs, parties, or shopping carts. Never leave your purse or wallet in open view in your car, even when your car is locked.
  • Never give anyone a card number or other personal information over the telephone even if you made the call, unless you can positively verify that the call is legitimate.
  • Memorize your passwords and personal identification numbers (PINs) so you do not have to write them down. Be aware of your surroundings to make sure no one is watching you input your PIN.
  • Buy a shredder. For only $30 you can have the piece of mind that your credit card information will not get in the wrong hands. Shred pre-approved credit card offers, credit card receipts, copies of airline tickets, travel itineraries, and anything else that displays your credit card information before putting them in the trash.
  • Check your credit report at least once a year. 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: Equifax, Experian, or TransUnion.
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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.

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 Avoid The Pressure Cooker

by Jillian Beirne Davi

It’s not how you act when the pressure is on that determines your success. It’s how you act when the pressure is off.
— Jill :)

Today we're going to talk about a common habit that keeps people stuck financially for years or even decades and it's something you absolutely want to avoid if you want to achieve financial stability in your life once and for all.

It's called the "pressure-cooker" dynamic and it's a concept Tony Robbins teaches around diet and exercise but I see the exact same pattern happening with people and their finances.

So first, let me set up the scenario for you. Let's say your finances are a mess. Let's say you've been ignoring the problem, ignoring the problem, ignoring the problem.

Then something happens in your life and you are forced to deal with it. You can't ignore it any longer. Your bills come due, the creditors call, you get stranded somewhere with your credit cards maxed out. You finally total up how much you owe. You've reached zero in savings. Whatever the situation is, you wake up and decide that you have to make a change.

(By the way, I find that Life will ask you nicely several times to make a change before finally grabbing you by the collar and demanding that you change. So it's up to you to make an empowered decision to change before things get so bad that you're backed into a corner. But that's a topic for another day.)

So now, you're frustrated and you feel a sudden burst of energy to start taking action and change. And this lasts for a little bit. Now you're not AS frustrated as you once were. Maybe you've paid off HALF of your credit card debt. Maybe you've saved up a little bit of money. Maybe you've stuck to a budget for a few weeks. Or a few months.

What happens next is fascinating. Once the pain starts to subside, we slowly start feeling "okay" again. And we start to give ourselves permission to fall back into our old ways.

We justify with all sorts of reasons, too! (Trust me, I've been there -- that's why I'm aware of this.) We say: "Well my debt's not AS high anymore." Or, "well I've got SOME money in savings, it's not as bad as it used to be." Or, this one: "I've been working so hard on this, I deserve to take a break."

And then we take our eyes off the prize, we backslide, we go unconscious and the next thing we know we're right back to where we started. We go back into debt, we've spent our savings, we're back to our old spending habits. And this goes on until we get upset again, we get motivated to make a change, and the cycle begins again. Out of debt, right back into debt. Save $5K, spend $5K.

The reason this happens is because we're usually only motivated to take action when pain is really high. Once the pain goes away, we fall back into our old ways. Because without accountability, we tend to quit. We stop taking action.

So how do you end this cycle? Well, I teach this to my private clients and it's something that a great coach can call you out on when they start to see this happening in your life in real time. Not months or years later when the damage is already done.

One way to end this cycle is to make sure that when you make a decision to get rid of the pain, that you back it up with a plan that you can stick to long term. Not one or two things that you do in the short term to ease the pressure. But instead you use that motivation to create a plan that includes small daily rituals that become automatic over time and keep you moving forward once the initial motivation wears off.

Trust me. The initial motivation WILL wear off. So when you accept this up front, you can make a smarter plan.

Another way is to keep your focus in front of you on a daily basis as a reminder of why you're making this change in the first place. I call this knowing your "Big Why" and connecting with it often.

By understanding this dynamic, you can use your frustration and convert it into a long term plan that includes daily actions that you use consistently with your vision in front of you. When you get support you increase your chances exponentially of breaking the pressure cooker cycle and make lasting change.

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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!

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!

Radical Financial Care

by Suparna Bhasin, Founder of She Creates Change

One of my favorite sayings is “Money isn't funny, people are funny with money!” What this means really is that we as a collective have made this thing called money mean so much about who we are, our level of success, a way to happiness and so much more. In reality, money is actually a neutral tool to buy and exchange goods and services.

What continues to surprise me is the amount of people that buy lottery tickets. I say this with a bit of tough love and smile on my face to anyone who buys lottery tickets – you are participating in the biggest scam in the world and p.s. money does not in fact buy happiness.

Money, however, is a ticket to freedom, which is what most people are truly seeking in their lives. So instead of a lottery ticket (let’s face it, it’s a long shot!) a more important investment is towards your time and imagination in considering what you would do with your life if you won the lottery. Money is simply a means to the end, NOT THE END!

I first taught my practices of Radical Financial Care in the summer of 2009, almost a year after we were on the brink of the total collapse of our financial markets. My belief is that this has happened because as a nation we held a very distorted view of money and its use in our society and culture: a mindset of over-consumption and greed.

The other observation I have made about money is the amount of fear our society has around making it, having it, and losing it. Many people make the most important decisions in their lives because of money and cause themselves an incredible amount of stress along the way. The biggest heartbreak I have observed is the abandonment of one’s dreams over money.

Debt is also an important and significant part of our monetary system. Many people believe that debt is bad just as many people believe money is the root of all evil as well as the source of happiness. Debt can be the result of money invested in opportunities, whether it be financial or towards your future dreams – this could be in a program such as She Creates Change, an advanced degree, a start-up business, property, etc. – anything you believe could give you a worthwhile return on your accruing the debt to begin with.

Debt when misused, can become problematic as can anything else. Often times people are unwilling to take risk in the form of investing their money as they fear that there will be no pay-off in the long run. Remember, money is an energy and tool – just consider how to use what you have or borrow in a healthy way that allows for advancement of your life and your dreams.

Now I would be misleading and misguiding you if I told you that money WASN'T important and that it did not have an important role to play in our lives and in your life specifically. We live in a material world wherein I believe it is critical to live responsibly with money and to create a healthy relationship with it and live comfortably without the stress it causes by not having enough to make ends meet. Personal development work is about actualization – according to Maslow’s Hierarchy of Needs (see graphic), it is impossible to thrive without first meeting one’s survival needs.

Together we can lay the foundation and blueprint for how you’ll make your dreams a reality. The first step is to concretely evaluate where you are today financially and work wise. Is your work sustainable? What will it take to move out of your current reality into your new one? Looking at your financial resources is an important part of this change.

It is important to “right size” money in your life. People in first world countries, such as the United States, typically have met their survival needs but often times at the cost to their health, relationships, and happiness. I ask you to take a very close look at your complete financial picture, income, balance sheet and finally the choices you are making to ensure they are the best choices possible for making your dreams a reality. 

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Suparna Bhasin

Suparna Bhasin: Founder and CEO of  She Creates Change, Suparna is a successful entrepreneur devoted to creating personal and global transformation through empowering women. She is a true visionary and teacher, inspiring a movement of change and infinite possibilities.  Suparna is the President of the Board for Women’s Education Project, a non-profit organization dedicated to helping women of limited means discover their potential for college and career success. She served as a lead coach for Future Possibilities and sat on the board of SAAIDS (South Asia Against AIDS) from 2001 - 2004.  She is a certified coach from both Coach for Life and The Life Purpose Institute.

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.