Debt-Talk is a comprehensive debt education program consisting of audio visual presentations and written content. This section allows easy reference to each module.
Module Sections
Be Debt Free - Making an Informed Choice
Overview of the debt settlement process
Understanding the debt collection process
Managing your financial health
Correcting credit mistakes
Saving for long term goals
Investments
Be Debt Free: Making an Informed Choice
Why Debt Settlement Can be a Good option
Did you know that you can become debt-free without actually paying back all of the debts ? This is possible through something called Debt Settlement. Basically, all those numbers in your credit history are open for negotiation during the debt settlement process. That’s right – those numbers are not set in stone. Our staff will negotiate with your creditors so that you will only pay back a portion of what you owe, probably 50% or less. The creditors then forgive the rest of the money through something called a settlement. Debt settlement isn’t for everyone. Really, the best option is to pay all your debts in full. But if you don’t have enough money to pay in full, debt settlement could help you be debt-free in three years or less. Let’s see how this how this works.
Overview of Debt Settlement and Benefits
Debt settlement works by reducing the amount of money you owe through creditor negotiation. This means that your balance owed, which is also called the “principle,” will actually go down over time before you even pay anything toward it. Here’s how this happens. Your creditors don’t want you to declare bankruptcy, because that means that they will lose all the money you owe them. If they know that bankruptcy is just around the corner for you, then suddenly humans become more powerful than numbers. Negotiation begins. Our staff will “haggle” with the creditor to reduce the balance on your account. We can usually talk your debt down to 50% or less of the original balance.
Advantages of Debt Settlement
Why should you choose debt settlement? Let’s look together at six reasons.
1. It will keep you from declaring bankruptcy.
2. You will be able to keep your financial matters private. A bankruptcy declaration, on the other hand, goes into public record.
3. You control your own money.
4. In about 2-3 years you will be done and debt-free.
5. You will pay less than with other programs.
6. You will have more flexibility in planning monthly payments.
Being in control of your own money, short time frame, and good flexibility for monthly payments are definitely on the plus side. Now, we understand that you probably feel wary of monthly payments. The last thing you want is to set up another payment that you might not be able to pay at some point. That’s why the flexibility of debt settlement might be right for you. If you miss a payment with our program, nobody will show up at your door threatening to take away your house or your car. The program will just take longer to finish. You could even make it up later, getting you back on track to finish within the original time frame.
We know that you don’t want to make any more financial mistakes. So let’s slow down for a while to answer some basic questions about debt settlement, so that you can make an informed choice.
What Qualifies for Debt Settlement?
You can’t use debt settlement for all of your debts. Debt settlement will help you to pay unsecured debts, like credit cards. Secured debts like student loans, vehicle loans, and home mortgages don’t qualify. You also can’t use debt settlement if you’ve been keeping up with your payments. This is because our staff needs to have the leverage of bankruptcy in order to make the whole thing work. If you have been making regular payments then your creditors simply won’t believe that you need to settle. We want them to believe that you cannot pay more than a reduced percentage of the whole balance.
How Do We Pay the Creditors?
One of the best things about debt settlement is that you control what happens to your money, just with a little guidance from our staff.
During the negotiation process, we will set up a “debt settlement account” in your name at a federally insured bank.
We will then work with you to set up a monthly payment plan that you can afford. This monthly payment will go into the special debt settlement account. When you have accumulated enough money in this account to pay a reasonable amount toward the balance of a debt, we then make an offer to the creditor.
After we reach a settlement with a creditor, you will pay the reduced balance out of the debt settlement account.
We will do this for each creditor, one at a time, until the debt is gone.
What Happens With Your Creditors While You Build the Settlement Account?
Once you decide to sign up with us, you will begin making monthly payments into your own debt settlement account instead of to your creditors. That’s right, you won’t even pay them the minimum monthly payments. All of the money you have available for paying your debts will go into the settlement account.
In the meantime, your creditors will want their money! They may send letters or call you in order to collect this money. You need to tell them that you have signed up with us. We will be contacting them in the future to negotiate a settlement. Later on in our time together we will look more closely at dealing with creditors throughout the settlement process.
How Will It Affect Your Credit?
Debt settlement isn’t for everyone because it attacks the problem more aggressively than other programs.
We need you to know that debt settlement can lower your credit score. But your current high debt also lowers your credit score. When you want to get a loan, for example, a potential lender looks at your credit score. If that score reflects really high debt, that lender might not want to lend you any money. After all, how can you pay for the new loan when you already have other payments coming out your ears? Reducing your overall debt will benefit you in the long run.
While debt settlement can slightly lower your credit score, it will get you back in order financially so that you can build that score up again. Why wouldn’t you want to improve your current situation? With debt settlement you may lower the credit score a little, but this will prevent your credit score from crashing a lot in the future.
Because the debt settlement program only a few years, you will begin building good credit more quickly than with other programs, and certainly more quickly than with bankruptcy.
You will be happy to know that once the program is finished, you have the right to ask the credit reporting bureaus to remove anything that reflects negatively on you. We will talk about how to do this later.
How Will It Affect Your Taxes?
You will need to pay taxes on the settlement. This means that if you owe $5000, and our staff talks the creditor down to a balance of $2000, then you will be responsible for taxes on the remaining $3000.
This may seem alarming to you. But think about it in terms of taxes versus interest. If you had eventually paid off all debts in full over a longer time frame, you would have paid a significant portion in interest to the creditor. Usually, the amount you will need to pay in taxes after debt settlement is much less than the amount you would have paid in interest.
We encourage you to consult a tax advisor if you have more questions.
Why Can’t You Negotiate by Yourself?
You may indeed be able to settle your own debts. But haggling with creditors can be difficult for people in debt. Creditors have highly skilled negotiators working on their side, waiting to take advantage of any irrational misstep you might have. They don’t want to lose any of their money.
Our professional debt settlement staff knows how to sidestep their strategies. We have established relationships with many credit card companies, and we can get you a better deal than if you go it alone.
Overview of Alternatives
You probably want to consider everything right now. We understand. While we believe that debt settlement can get you out of your debts faster and with the least amount of damage than other programs, we also know that it isn’t for everyone.
Let’s look at some alternatives to debt settlement, including bankruptcy, credit counseling, debt consolidation, and doing it yourself.
Bankruptcy
When people formally declare bankruptcy, the creditor collection process stops. Depending on which type of bankruptcy they declare, they will no longer owe their creditors at all (Chapter 7 bankruptcy) or they will owe a percentage of the debt (Chapter 13 bankruptcy).
Sometimes people see this as their only way out. In fact, bankruptcy filings have been on the rise lately.
Why wouldn’t you want to apply for bankruptcy? For one thing, it will be a big bad spot on your credit report for the next 10 years. This will certainly result in negative consequences like denied credit, or very high interest rates when credit is granted.
For another reason, bankruptcy is a last resort. It is intended to keep people from financial ruin when they cannot pay their debts. Sometimes people will accrue hundreds of thousands of dollars in medical bills, which they cannot possibly pay. Bankruptcy would be a viable option for them.
But you have other options. You have the ability to get out of debt without help from the government. Do you really need that big spot on your credit report?
Credit Counseling
Some people decide to use a form of debt management called credit counseling. For this type of program, clients make a single monthly payment directly to the counseling agency. Then the agency uses this money to pay the creditors at lower interest rates.
With this option you will need to pay each credit balance in full, but at lower interest rates than with your original contract.
Credit counseling is the most popular debt management option in America. However, it does have some drawbacks. Because clients pay this money directly to the agency, and the agency then pays the creditors, the clients themselves don’t have much control over their own money. Many of these programs market themselves as “non-profit” agencies that are purely interested in representing the person in debt. But there will be fees, because the agency itself needs to earn money.
Another drawback to this type of program is the high failure rate. Did you know that 3 out of 4 people who start a credit-counseling program do not complete it? These programs take a lot of time, depending on the amount of debt. Clients need to pay the agency for anywhere from 5 to 9 years for the program to be successful. Who wants to give up control of their money for that long?
Debt Consolidation
Another popular form of debt management is called debt consolidation. With debt consolidation, you would lump together several of your small, high-interest debts into one large debt, with a monthly payment at a lower interest rate. The idea is that you will pay less over time, since the interest rate is lower. You will also go from dealing with multiple debt accounts, to handling one debt account.
Here’s the problem: you must find a lender willing to agree with that low interest rate. This can be difficult, so most people end up borrowing money against secured debt like their home mortgage. This is not a good idea! What happens if you can’t pay for some reason? Your house could be at risk.
Borrowing money to pay off debt is dangerous, especially for people who have trouble in this area. If you had a good history with paying your debts, you wouldn’t be reading this right now. You may say that you’ve changed. You won’t make the same mistakes again. But old habits die hard, and would you really want to risk your house?
Doing it Yourself
Finally, you always have the option of doing it all yourself. Put your nose to the grindstone and pay off those debts in full, according to their current percentage rate.
This method takes time, persistence, and mental strength. If you are working all the time, when will you be able to negotiate with creditors or create a detailed payment plan?
You may think that if you just work hard and pay your debts over time, then things will get better. This is probably true for many people. But if you are having trouble meeting your minimum payments right now, or if you have recently over-drafted your checking account, then this method isn’t for you.
Something needs to change – you can’t just keep on going and expect your financial situation to improve. If you want to do it yourself, you will need to make a structured plan for achieving your financial goals, and stick to that plan mercilessly. But the problem is that many people in your shoes have trouble sticking to a financial plan. You wouldn’t be in this mess otherwise!
Your debt may also be too overwhelming to handle right now, either actually or psychologically. If you simply cannot afford to pay the debts, or you simply cannot bring yourself to cope with them, then going it alone would not be the best idea. You could bring more harm to yourself and your family.
With debt settlement, our professional staff will handle these loaded issues for you.
Calculating Your Debt
Let’s say that you owe $10,000 in credit card debt. You have an interest rate of 18%. If you continue making minimum payments, it will take you 382 months to pay off that debt. That’s more than 31 years! During all those years of making minimum payments, you will pay about $14,000 dollars in interest. You will be paying more in interest than the amount of the debt itself.
With debt settlement, our staff can reduce the balance on your debt from $10,000 to about $6,700. If you make monthly payments of $150 into your debt settlement account, you will be able to pay off the reduced balance within 45 months. You will not pay any extra money in interest. Best of all, you will be free of that debt in less than four years.
Please keep in mind that these numbers are for example only. The actual numbers will depend on your particular situation. But you can clearly see the difference that debt settlement makes.
You will pay less over a shorter time frame.
You can calculate your own numbers by using our online debt calculator Just plug in your amount of debt, your percentage rate, and your minimum payments. Their debt calculator will then tell you how many months it will take to pay off the debt, and how much interest you will end up paying over that time period. Really, it can be quite shocking.
Fortunately, debt settlement will prevent you from paying too much interest over a significant portion of your lifetime. While other people continue paying for their credit cards, you will be able to move on to other things, like financial freedom.
Wouldn’t that feel great?Try our debt calculator to understand the full impact of what you owe.
Click for calculator
Overview of the Debt Settlement Process
How the debt settlement process works
In this section we will discuss how the debt settlement process works. You already have a surface understanding from your own research and our previous discussions. We will dive deeper into specifics from this point forward, beginning with this overview and then expanding on some topics during later sections.
As someone seeking debt settlement, you have certain characteristics that brought you to our company. These same characteristics will help make the debt settlement process successful:
You need some serious help. Let’s put it this way –you need to be in legitimate financial distress to be considering debt settlement. You aren’t able to pay your bills or make ends meet. You simply cannot afford your current debt.
You don’t want to declare bankruptcy. You must be committed to avoiding bankruptcy for debt settlement to work.
You owe thousands of dollars in unsecured debt. Debt settlement is too aggressive for small debts. Most small debts will go away when you apply discipline and self-control over time. But sometimes people accumulate more debt than they could ever pay even under the best of circumstances. If this describes you, then debt settlement may work for you.
Most of your debt is from credit cards. While our staff can negotiate all kinds of unsecured debt, including medical bills, the best negotiations usually happen with credit card debt. This means that you will get a better discount on your overall debt settlement if you have a high percentage of credit card debt.
Your budget can handle a monthly payment. You can’t be completely broke for debt settlement to work. Take a look at your budget – how much money currently goes toward your debts? What other extra money do you have? During the settlement process you will take this money and set it aside every month in your account. We will work with you to develop a monthly payment you can afford, but you must be able to afford something.
You have other resources. Any income you can access during the debt settlement process will help you become debt free more quickly. This is just plain common sense. Have a garage sale, sell items on E-bay, or use a small inheritance. You plan to do what it takes to pay off the debt.
If you have some or all of the above characteristics, the debt settlement process will happen fairly easily. We talked earlier about how debt settlement works. Let’s take a minute to briefly review the process.
When you sign up with us, we will set up a special debt settlement account in your name at a federally insured bank. You will stop making minimum payments to your creditors.
Then we will work out a monthly payment plan for you, based on what you can afford. You will put this money into the special account on a monthly basis. When this account has accumulated enough money for a settlement, our staff will negotiate with one of your creditors to reduce the overall amount of that debt. We then pay off the reduced debt amount, called the settlement, from your account.
We do this for each creditor until all the debt is gone. The whole process takes about 2-3 years. When all is said and done, you will pay less over a shorter time frame than with other programs.
At some point you may hear about term settlement. Some debt settlement companies offer this type of settlement, which means paying a settlement to the creditors in installments, adding up to the reduced debt amount settled upon. However, term settlements usually take longer, since you won’t be moving on to the next debt until you’re done with the installments for each one. We use the regular settlement system of paying creditors in one lump sum at the end of negotiations.
Review this timeline to understand the overall process flow
Module 3
Understanding the Debt Collection Process
Steps to Collection
Debtor misses a payment à creditor sends friendly reminder
Still no payment à another friendly reminder
Still no payment à stronger letter threatening credit report action or similar threat
Still no payment à in-house collection department contacts debtor.
Still no payment à creditor hires third-party collection agency to collect the debt.
Collection Letters
It’s better to receive collection letters than phone calls, because you will not be vulnerable to manipulative tactics meant to prey on your emotions. In fact, you should communicate with all debt collection agencies in writing only. Written communication prevents manipulation and also provides a record of all contacts with the agency. You will want to keep copies of everything.
The law gives everyone the right to dispute a debt. But here’s the catch – you must dispute a debt within 30 days of receiving a letter from the collection agency. If you don’t send a written letter disputing the debt within that time frame, the collection agency will record that debt as valid and will likely note this on your credit report. They will also keep pursuing you.
Cease and Desist
At any point in time, you have the right to send a cease-and-desist letter to the collection agency. This is a formal letter, demanding that the collection agency stop all attempts to contact you or collect the debt. After receiving this letter, by law collectors must respect your wishes.
You should know that the letter does not make the debt go away – it just keeps the collector from contacting you. The collector can still go about his business of collecting your debt by making notes in your credit report or filing a lawsuit.
You will find that cease-and-desist can be a useful tool during the debt settlement process. After all, you are keenly aware of your debt and taking aggressive steps to pay off that debt. Just because you aren’t paying the debt by the usual means does not mean that you’re a deadbeat. So receiving collection letters during the settlement process is a hassle that you can do without.
Let us handle all the negotiations
Now that we’ve established how you should respond toward debt collection, let’s take a moment to learn about it from the collector’s side.
Let’s remember that a third-party collector, above all, wants to be paid. When talking with you, collectors most likely will not be looking out for your best interest. Instead, they will say things that could result in more money for them. Let’s take a look at the possible results of a debt collector could receive if you did what they requested.
The primary goal of a collector is to obtain a payment-in-full of the entire outstanding amount you owe. If you refuse to pay-in-full, collectors will then try to arrange an immediate settlement for as much of the outstanding debt as possible. This type of settlement is different from the settlement our staff negotiates.
If you cannot obtain enough money for a settlement with collectors, or you choose not to negotiate, collectors will then strive for a payment plan.
Do not negotiate with these debt collectors! You will lose money and further damage your credit report. Let us do the negotiating directly with your creditors when you have enough money for a good settlement in your account .
Violations of Fair Debt Collection PracticesSometimes debt collectors will stop at nothing to get their money. The may ignore a cease-and-desist letter, or may continue contacting you by phone when you have requested that communications in writing only. They might even harass, threaten, or lie to you.
You should not endure this kind of behavior. True – your payments are late and delinquent. But this does not mean that debt collectors have the right to mistreat you. In fact, our government made a law about this called the Fair Debt Collection Practices Act. We will discuss the FDCPA in detail during the next section.
Collectors who violate this law should be held accountable. You can report unfair collection practices to the Attorney General and the Federal Trade Commission. If you have solid documentation of wrongdoing you may be able to file a lawsuit against the collection agency. Who knows, you might even turn the tables around and get to collect money from the collector who acted illegally.
Laws Governing Debt Collection Practices.
Debt Collectors CAN:
• Contact debtors in person, by mail, telephone, telegram, or fax
• Contact debtors at work IF the employer approves
• Contact a debtor’s attorney
• Contact family members for residence and phone information only
Debt Collectors CANNOT:
• Contact debtors before 8am or after 9pm (in the debtor’s time zone)
• Contact debtors at work if the employer disapproves
• Tell anyone else (besides an attorney) about a debtor’s debt
• Call excessively
• Use profane language or use threats of violence
• Misrepresent the amount, character, or legal status of a debt
• Use false or misleading statements with the debtor or other contacts (ex. Imply that debtor has committed a crime, or act as though collector is a lawyer or credit bureau employee)
• Threaten to have debtor arrested
• Threaten to seize or harm debtor’s property or wages (unless they have a court order)
• Collect more than the debtor owes
• Cash a post-dated check early (if post-dated for more than 5 days)
• Trick debtors into paying extra fees, collect call charges, or other non-debt items
• Ignore a cease-communication request
Debtors have the RIGHT to:
• Send a Cease and Desist Letter to your collectors demanding them to refrain from contacting you via telephone
• Receive written notice of the debt amount, name of creditor, and what to do if debt isn’t valid
• Choose which debt to pay at any given time (collector may not apply payment toward a different debt)
• Sue a Collector in state or federal court
• Report illegal actions
Module 4
Managing Your Financial Health
| Home Budget Analysis |
Analyze your budget, see where your money goes and find out where you can improve! |
How to Manage your Budget
You may have bad feelings about budgeting. Isn’t it strange that we usually only hear about budgeting when money is tight? “I can’t go out to eat tonight, because I’m on a budget,” or “I would like a new suit but my budget won’t allow it right now.”
While budgets will keep you within healthy spending limits, their real, full purpose is to manage your money. Budgets are tools. And the more money you get, the more important budgeting becomes. Everyone needs to have a budget. Corporations that bring in millions of dollars in profits have a budget, and so do all the wealthy individuals out there. If you want to learn healthy money habits, you need to set up and manage a budget.
Now that you know why you need a budget, let’s learn how how to make one.
Monthly Income and Expense Worksheet
The first step in creating a budget is to record your income. Every month you earn a certain amount of money through employment. Do you also have other types of income, like Social Security checks or investment royalties? Now calculate your net monthly income, which is the amount you actually bring home after taxes.
The next step is to record your expenses. We all have two different types of expenses: fixed and variable.
Fixed expenses are always there – you must pay them every month. Examples of fixed expenses are your car payment, housing payment, utilities, and groceries. While some of these expenses can vary from month to month, you should be able to estimate an average amount based on past grocery or utility bills, for example.
Variable expenses come and go. Examples of variable expenses include clothing, vacations, gifts, and personal spending. You may have trouble putting values on these expenses at first. It will be easier if you have kept receipts, so you can look back and see how much you have spent on variable expenses in the past. If you don’t have any receipts, just start keeping track today.
When estimating your expenses for a budget, it’s better to estimate too high rather than too low.
Take a look at monthly expense worksheet posted here . This will give you an idea of how monthly budgeting works. Seeing this worksheet may cause you to feel overwhelmed. But all you need to do is take one step at a time. Calculate your income, and insert that number in the sheet. Then record your fixed expenses. Finally, make an educated estimate of your variable expenses, and you’re done.
Where Does Your Money Go?
DEBT TO INCOME Ratio
Debt-to-Income Ratios
Once you have established a monthly budget, you will need to know how much of your monthly income is already committed to other debts. In fact, when you apply for credit, a potential lender will want to know how much debt you have, compared to your income. This number, called the debt-to-income ratio, lets potential lenders know how much ability you have to pay off the new loan. Credit cards, loans and leases are all considered debt, whereas utilities, insurance, food, clothing, and other necessities of daily living usually don’t factor into the debt calculation.
As we just learned, lenders consider the debt-to-income ratio when evaluating your cash management skills and ability to pay back a loan. This is usually a very important factor, perhaps because lenders can condense two potentially complicated items – income and debt – into one easily interpreted number.
Your total debt should amount to no more than 40 percent of your income. Mortgage lenders usually require that a house payment should amount to 30 percent or less of the monthly income, leaving only 10 percent for other debts. This fact becomes increasingly important when applying for a mortgage loan – if you want a house that demands a large monthly payment, you must have your other debt items under control within these parameters, or you will not qualify for the loan.
Let’s do some quick calculations to illustrate how this works. For example, we’ll examine a home loan (mortgage) applicant who has $3000 gross monthly income (before taxes). Their maximum mortgage payment is 30% of their gross monthly income, or $900. But this applicant has already acquired some other monthly debts -- $300 for a car, and $100 for several credit cards.
Total Allowed Debt including mortgage = 0.40 x $3000 = $1200
Total Existing Debt($300 car + $100 credit cards) - $ 400
Amount available for maximum monthly mortgage: = $ 800
In calculating the debt-to-income ratios, we’ve determined that this applicant would only qualify for $800 monthly mortgage payment, rather than the full 30% of their gross monthly income.
In most cases, lenders will also calculate downward for applicants with high existing debt. This means that an applicant often cannot use the maximum mortgage payment calculation, but should seek loans that fall somewhere below the maximum. For example, the above applicant might need to consider a housing payment of $750 or even $700, before approval becomes a reality.
So the point here is that if you have large amounts of credit card debt, you will not only pay more than what you borrowed in interest, but this debt might also prevent you from fulfilling your bigger goals like buying a house or a car.
Create a Monthly Spending Plan
Link a monthly spending plan – PDF DOCMUENT TO COME
A good way to control your spending is to create a monthly spending plan. When the month begins, this plan needs to be in place. For example, you would create a spending plan for April during the last week of March. When April 1st rolls around, you’ll know exactly what to do.
When making a monthly spending plan it’s important to forecast your expenses. How much money will go toward fixed expenses? This tells you how much is left over for everything else. Then look at your calendar and think about any activities or events you have scheduled that might cost money. Give each activity a dollar amount and then stick to it.
Don’t forget to leave some slack for emergencies. If you have all your money accounted for and then you have car trouble, you will need to be able to pay the mechanic.
A monthly spending plan can keep you on track financially. It will help you avoid spending too much. Take a look at the following monthly spending plan.
| Home Budget Analysis |
Analyze your budget, see where your money goes and find out where you can improve! |
Module 5
Steps to correcting mistakes on your Credit Report
Obtaining Credit Reports
First you should get your credit reports from all three credit bureaus. Please refer to our online manual for contact information. Secondly, you should review every detail of all three reports, looking for anything that isn’t accurate. Then you send a letter to the bureau requesting correction of each item. You should only dispute one item at a time, and once that item has been resolved you move on to the next inaccurate item.
It’s worth noting that you cannot remove all negative information from your credit report. Your natural tendency will be to challenge only the negative or derogatory listings on each credit report. Your goal is to remove all incorrect information from the report, whether it’s positive or negative.
To request your free yearly credit report, go to www.annualcreditreport.com . This website provides immediate access to your free credit reports.
To request credit reports more frequently than once a year, mail each bureau for a credit report request or go online to the bureau’s website.
It is critical to keep copies of all information to be successful in correcting credit mistakes. You should keep copies of any letters you send or receive. It could also be beneficial to note the names of the people you contact by phone and record the dates of every letter and phone call.
Equifax ( www.equifax.com )
P.O. Box 740256
Atlanta, Georgia 30374
Experian ( www.experian.com )
P.O. Box 9532
Allen, Texas 75013
TransUnion ( www.transunion.com )
P.O. Box 6790
Fullerton, CA 92834
Working with Credit Bureaus
Nine Strategies for Approaching Credit Bureaus
1. Never Lie in a Dispute. False or misleading statements in an official credit report dispute is illegal in most states. But it’s also completely unnecessary to lie when disputing a credit listing – you have the right to challenge the listing if you think the information is incorrect or obsolete.
2. Clearly Indicate the Nature of the Challenge. Are you challenging the listing itself (“not mine”), or just the information in it (“not late”)? The credit bureau needs to know how to investigate your dispute. As a general rule, it’s best to avoid challenging the existence of a listing unless you have solid proof that it shouldn’t appear on the credit report.
3. Clearly Indicate the Desired Outcome. For example, do you want to delete the entire listing, or erase the late pay notation within the listing? If the listing is negative by nature, such as a court record or repossession, don’t waste time with details within the listing. Assuming that such a listing is questionable, request complete deletion.
4. Always Give a Reason for the Dispute. Provide an explanation for the wrong listing.
5. Include Proof of Authenticity. Always include sentences and phrases within your letters that make a dispute sound authentic. For example, mention that you have the receipt from the disputed purchase, and that you signed off on a different amount than appears on your report.
6. Be More Insistent with Each Dispute. When conducting business for the first two disputes, you should be upbeat and polite, which will establish a rapport with the credit bureau. But as you continue to send disputes, the credit checker may resist initiating the investigations. If this happens, and you find that the allowed 30 days for response turns into 45 or longer, you may threaten legal action against the bureau.
7. Don’t send multiple disputes at the same time. One dispute every 36 days is sufficient – sending too many disputes at once could result in a “frivolous” or “irrelevant” cause for dismissal.
8. Use Inaccuracies and Inconsistencies to Prove your Case. This may mean that you use credit reports from two bureaus to establish inconsistencies in the one you are disputing (assuming the other reports don’t confirm negative credit listings you are disputing).
9. Establish that You Are A Truly Wronged Consumer. The checker wants to correct only those reports that are truly incorrect due to credit bureau errors, so as to avoid a lawsuit. Remember, they don’t get paid for correcting errors, but they can be sued for not correcting the reports.
Writing a Dispute Letter
Before sending the letter, verify that you have the correct address for disputes by calling the credit bureau. At this time, also verify all related fax numbers and other contact information. Also, if you’re computer savvy, you can always dispute your issues online as well. Log on to the bureau’s website’s for more information and check out our online manual for a sample dispute letter.
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Sample Dispute Letter
Date
Your Name
Your Address
Your City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
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Module 6
Save for Long Term Goals
Create a Crisis Savings Account
A crisis savings account acts like a vehicle seat belt. Hopefully you will never need it. But when you do, it can save your life. Get money in this account as soon as possible, even if that means only making minimum payments on other debts. If you get laid off, or physically injured in a way that keeps you from working, you will still be able to pay bills and debts. You will not go under.
About $1000 is a good amount to invest at first in your crisis account. In fact, it would be smart to focus on saving $1000 for this purpose before moving on to paying other debts in full.
But how are you supposed to save $1000 right now? Well… you need to make a plan. Some people call this plan by another word: budget! We talked about how to make a budget earlier in an earlier section, so apply this knowledge today.
Eventually, you should save about three to six months of your gross salary in the crisis savings account. This means that if you were out of work for 6 months, you would not feel it financially.
Save $1000 first. Then once you have paid off the other debts (not including your mortgage), begin sending money regularly into the crisis account.
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Module 7
Investments
What is an Investment?
An investment is when you commit money to something and expect to make a profit over time.
Many people invest their money in the stock market. When you purchase stock from a company, for example, you commit a certain dollar amount to that company per share. A share is one unit of stock. Hopefully the company will become more successful, and the value of that one share will grow. If this happens, you make a profit. The more shares you purchase, the more profit you will make.
As you probably know, stock market values fluctuate widely. This makes it a high-risk investment. Let’s look at the different types of investments we can make.
Types of Investments
Mutual Funds – Purchasing shares of a mutual fund company, which then uses your money to purchase a diverse array of stocks. This is the best option for beginners, as it has a lower risk.
Stocks – Buying shares of ownership in a public company.
Bonds – Lending your money to the government or a company for a specified length of time, and receiving the interest as profit.
Real Estate – Purchasing land and/or property to make profit as the real estate grows in value. Real estate appreciates steadily – if you buy a house now, in 10 years you can sell it for more than you bought it. You can also buy homes and rent them out – the renter’s money will go toward the cost of the home, and eventually into your pocket. Real estate even has its own trading market, the REIT.
Predicting the Future
Investment Chart
If you decide to invest money in the stock market you will need to be aware of how a stock does over time. The general rule is that you want to buy low, sell high. While we cannot know exactly what a company’s stock will do in the future, we can make reasonable predictions.
Investors use a stock chart to make educated guesses about when to buy and sell. The stock chart above records the activity of stock over one year for the telecommunications giant AT&T.
Take a look at the stock trend for the year. Where does the stock increase in value, and where does it decrease? Because the chart shows that stock prices have increased steadily in value since June 2006, an investor could purchase AT&T stock in January 2007 with the reasonable expectation that stock values would continue to increase for a few months or more. This would result in a profit if the investor sells when the stock price increases. Of course, something could happen that would cause the stock to crash, and investors would then lose money. That’s why the stock market carries risk.
You may be thinking that it would be fun to invest some money in a high risk stock right now. Please don’t do this. The time will come when you have enough money for such risks. But playing the stock market is like going to Vegas – you can lose everything.
Experts therefore recommend that beginners like you should pursue other investments like mutual funds rather than play the market themselves.
Having Money to Invest
You may think you need to have an extra thousand dollars lying around if you want to invest. But you don’t need to have large sums of money. You just need to change your mindset.
Learn how to think like an investor, not like a consumer.
What’s the difference? Investors look for the best way to use each dollar. Consumers think, “It’s just a dollar.” Investors sacrifice some unneeded luxuries to gain future wealth. Consumers want to enjoy their little bits of money now . Investors have a vision. Consumers have debt.
Every day you can decide whether you will invest or consume. Deciding not to buy a premium latte tomorrow morning may be the beginning of your financial freedom. You could take that latte money and invest it.
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Benefit of Spending Less |
Reducing your spending can be worth more than you might think. Use this calculator to see just how much your budget reductions may be worth. |
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Savings Calculator |
Find out how consistent investments over a number of years can be an effective strategy to accumulate wealth. |