Review and renew your financial goals
May 12, 2008
It’s never too late to keep your New Year’s resolution.
Let’s face it, a lot of us probably made promises to ourselves around Jan. 1. If you did make a promise to better manage your money, have you kept it? If not, it’s time to review and renew your financial goals.
Here at Advantage CCS, we encourage consumers to look to credit counseling as the start to improve budget management and reduce debt.
A credit counseling session should give you your overall financial picture. A certified counselor will review your financial situation including the amount of income you have versus the amount of expenditures you have. The counselor will also look at your debts to determine whether they are secured or unsecured debts and what the interest rates are on those debts.
At the end of the session, the counselor will make recommendations that should help you pay down your debts and better manage your finances.
At Advantage CCS there is no charge to go through a credit counseling session.
There are many types of debt relief out there including Debt Management Plans, debt consolidation loans and debt settlement.
Which form of debt relief is the right one for you depends entirely upon your individual circumstances. If you are looking for a way to lower your debt, it is crucial that you educate yourself about the different debt relief options. Make sure you understand all of the positive and negatives of each option.
However, start with credit counseling. A reputable agency should not force you into a Debt Management Plan and should offer counseling and education regardless of whether or not you choose to enroll in their plan.
Participating in a credit counseling session will not stop you from exploring the other debt relief options. What it will do is give you a good idea of where you stand financially, which is the first step when exploring ways to reduce your debt.
Don’t become an on-line identity theft victim
May 9, 2008
Computers are wonderful things. They allow us access to our bank accounts, credit card statements, and just about any type of reading you could want.
But, those wonderful computers can also allow con artists access to your most personal information effectively making you a victim of identity theft.
Last week I wrote about scammers who are capitalizing on the economic stimulus checks that have already been electronically distributed to some Americans and will continue to be distributed by mail through mid-summer.
As a follow up, we’ll talk a bit about internet security in general.
To give credit where credit is due, I got this idea from a colleague who handed me the May 1 edition of the Wall-Street Journal. Writer Walter S. Mossberg covered this topic. Any information I pass along from the article will be so credited.
I mentioned this last week, but it bears repeating: DO NOT give out any of your personal information via the internet (or the telephone for that matter) if you are not 100 percent certain of who is on the receiving end of that information.
That is how so many of these internet scams start. An individual receives a very legitimate looking e-mail asking about a timely topic, such as the tax rebates, and that well-intentioned individual supplies all kinds of information under the false pretense of making a legitimate transaction.
Have you gotten one of the many e-mails circulating that claim to be from some guy living in a developing nation who desperately needs to get to the
Some e-mails practically scream SCAM! At least they scream to me, but not to everyone. During my years as a reporter I fielded numerous calls from good people who found themselves stunned and out of a lot of money after falling victim to scammers.
Now to borrow from Mr. Mossberg, here are some tips for navigating the web:
1) Never click on a link that is embedded in an e-mail from anything appearing to be a financial institution or any payment or auction web sites. Don’t click on the link even if it appears to be from your bank or a company with which you do business.
2) Don’t click on links to offers for free soft-ware or goods that you receive via e-mail. This is especially important if you receive an offer from a sender or company you don’t recognize.
3) Never download software from unfamiliar web sites unless you are absolutely certain it is legitimate.
4) If a web site tells you that you need a certain type of software to view videos, don’t download it from that site. Mr. Mossberg suggests you go directly to the software company’s official web site to download the product.
5) Use a web browser or security software with security features that will block or warn you of phishing sites.
6) Educate yourself about internet scams.
If you would like to read more about this or check out Walt Mossberg’s other columns about the web, you can visit his web site at http://walt.allthingsd.com.
A glossary of debt terminology
May 7, 2008
There are many terms used when it comes to debt, debt collections and debt relief. Knowing what the various terms mean can help when you’re trying to get your finances back on track.
Here is a brief glossary of terms:
Credit Counseling — A session during which a certified counselor reviews your entire financial picture, helps you to establish a budget and to create a personalized action plan to help you reduce your debt.
Credit Report — A detail of your credit history that includes all credit accounts and any late payments or charge offs.
Credit (FICO) Score — A number, ranging between 300 and 850, that most lenders use as a measure of how credit worthy a borrower is. A credit score is calculated based on information contained in your credit report including your payment history, length of credit history, amounts owed, new credit and types of credit.
Debt Consolidation Loan — A single loan taken out in order to pay off other debts.
Debt Management Plan — A plan managed by a credit counseling agency in which the agency negotiates interest rates and payment amounts on behalf of the consumer. The consumer then makes one payment to the credit counseling agency, which in turn distributes the payments to the creditors.
Debt Settlement — When a creditor settles a debt amount with a borrower, but the settled debt must often be paid in one lump payment (ex. The creditor is willing to accept a settlement of $4,000 on a credit card with a $7,500 balance). Consumers who choose debt settlement may have to pay income tax on the forgiven debt amount. There may also be negative effects to your credit report and score.
Charge-off — This is an account that has been delinquent, usually for at least 180 days. After that time frame, the creditor reports the debt was “charged off.”
Installment Debt — This is debt where the consumers pays a set amount each month until the debt is paid off. An example of this would be a car loan.
Revolving Debt — Debt that can increase or decrease depending on payment amounts, interest rates and use of open credit. An example of revolving debt would be a credit card.
Secured Debt — This is debt that you have collateral to back up. A mortgage would be considered a secured debt because the creditor could confiscate the property if you do not pay the loan.
Unsecured Debt — This is debt you have incurred but have no assets to back it up. Credit card debt, personal loans or medical debt would be examples of unsecured debt.
Are there any other debt terms you hear on commercials or see while reading about finances that you’re curious about? Just post a comment and ask!
Understand the different types of debt relief
May 5, 2008
There are several ways to pay down debt, but many consumers don’t understand the differences between the various methods, or they sign up with companies that don’t fulfill their promises of quick debt reduction.
There are some important things to look for when choosing a method to pay off or manage your debt.
The first thing to understand is that there is no quick fix to get rid of debt. There is also no way to legally remove from your credit report debt that you incurred. Be wary of any company that promises to quickly eliminate your debt or remove valid, outstanding debts from your credit report.
There are many terms associated with debt reduction that people tend to use interchangeably, but they are all very different.
A Debt Management Plan, or DMP, is a debt repayment program managed by a credit counseling agency. The credit counseling agency will negotiate lower interest rates and/or monthly payments with your creditors. In turn, you will submit one payment to the credit counseling agency, and the agency will disperse the payment to your creditors. It is important to note that you cannot use credit cards or take out personal loans while you are on a DMP.
A debt consolidation loan is a single loan you take out to pay off your creditors. With this option, you are simply moving all of your debt from several accounts to one account. This is not the same as a debt management plan.
Debt settlement is a process where you, or an attorney working on your behalf, negotiate a payoff amount with your creditors to eliminate your debt. Commonly the entire payment must be made at one time. Often regular monthly payments are not made while the client is saving up their payoff amount, which could result in negative items on your credit report and a lower credit score. This option could work for you if you have a lump sum of money to pay off the settlement amount right away.
Which debt repayment option is best for you is dependant upon your individual situation. It is important that you research and understand all of the options available to you and that you understand the benefits and pitfalls to all of the options.
Steer clear of credit counseling agencies that try to force you into a debt management plan, don’t spend the appropriate amount of time reviewing your financial situation or that pay their counselors a commission. A reputable agency should be willing to send you free information about their agency, its services and all costs and fees.
You can pay down your debt, but you have to make an educated decision about which method will work best for you.
Watch out for tax rebate scams
May 2, 2008
This week I’ve written about what you can do with your economic stimulus check.
Today, I think it is important to address another aspect of the rebates: Scammers.
Unfortunately there are people out there who look for every opportunity to play upon the unwitting public and take their money. The economic stimulus check is no different.
The IRS has put out an official warning about the various scams out there. I’m going to briefly the cover the methods scammers are using. However, if you would like to read the entire new release from the IRS, click here.
Let me start by saying that the IRS never contacts people by phone or e-mail. Do not give out any personal information via the telephone or e-mail. In general, it is a good rule of thumb to not give out your personal information to anyone unless you are absolutely certain of whom you are speaking to.
One scam involves a caller who claims to work for the IRS and tells the targeted victim they are eligible for a large rebate for filing their taxes early. The victim is then prompted to give his or her bank account information and told that is the only way to receive the early rebate.
Another telephone scam again involves a caller who claims to be an IRS employee and who tells the victim they are calling because the IRS sent a check that has not been chased. The caller then asks for the victim to “verify” his or her bank account number. The caller may have a foreign accent.
There are also several e-mail scams circulating.
One scam involves an e-mail that tells the recipient he or she is eligible for a tax refund for a specific amount and instructs the recipient to click on a link to file their refund claim. The recipient is then asked to supply personal information. The bogus e-mail may also include paragraphs that appear to give the recipient the option to direct their refund to a tax-exempt organization.
A new scam that has recently surfaced involves an e-mail informing the recipient he or she will be audited. This e-mail may address the recipient by name, and instructs the recipient to click on a link and supply personal information. This information is then used by the scammer to commit identity theft.
A third bogus e-mail is addressed to businesses, accountants and “Treasury” managers and instructs the recipients to download information about tax law changes. The IRS believes clicking on those links will download malware — a malicious code that can take over the victim’s computer hard drive and give someone remote access to the computer or its passwords.
If you receive a suspicious phone call or e-mail, do not give out any of your information or click any links. Suspicious e-mails can be forwarded to the IRS. Start by reading “How to Protect Yourself from Suspicious E-Mails or Phishing Scheme,” and you will be given directions. You can find that link through the IRS web site at www.irs.gov.
You can also notify the IRS of suspicious phone calls by e-mailing phishing@irs.gov.
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