Grow your wealth with these tips.

Tips on How to Grow Your Wealth

Learning how to save and how to create and stick to a budget are the most important aspects of growing wealth. Keeping track of your money is vital when trying to figure out how much you can set aside to grow your wealth. Even the wealthiest of people can find themselves struggling if they don’t know how to budget, save and ways to getting out of debt.

Fundamentals to Grow Your Wealth

1. Budget – It is important to know how much money is coming in and out each month and where it is going before you can start building wealth.
2. Automatically save a portion of one’s income– Learning how to save is key when trying to build wealth. Consumers who automatically put a percentage, ideally 20 percent, of their paycheck into savings, tend to spend less because they are less likely to take money from a savings account than a checking account.
3. Cut debt– Debt is a major obstacle when it comes to growing wealth. Consumers who eliminate their debt as soon as possible are able to focus more time on saving money and growing wealth. A debt management program is one method that can help you pay off debt. 
4. Optimize spending– Consumers who are smart about what they are spending money on and work to find deals are more likely to have extra money to save.
5. Find ways to make extra money- Consumers who generate income in different ways, such as getting a side hustle, selling old clothes or renting out a home, can earn extra money to put into their savings.

If you struggle to pay off debt, ACCC can help. Schedule a free credit counseling session today! 

Learn what promissory notes are.

What is A Promissory Note?

A promissory note is a written document officially recognizing a legal relationship between two parties – a lender and a borrower. Promissory notes create a legally binding promise with a mutual understanding regarding the borrowing and repayment of money.

A comprehensive and thorough promissory note should address six simple questions:

1. Who the parties are
2. How much the loan is for
3. How you will repay the debt
4. When the debt must be repaid by
5. What happens if there is a default in payment
6. Miscellaneous provisions

Promissory notes are invaluable legal tools to bind other individuals to an agreement for goods or money; they carry the full weight of the law and are legally binding on both parties. Use promissory notes in routine and straight-forward contractual relationships between parties to avoid costly legal expertise. Next time you are entering into an agreement for goods or money, turn that handshake and bar napkin into a legally enforceable promise with a promissory note.

But, how is this different from an IOU or a Loan Agreement?

Think of IOUs as your standard “bar top promise,” scrawled on a napkin, kissed with lipstick, and barely legible. IOUs are informal and flexible. However, they carry no legal weight in a court of law. IOUs are the least protective of all notes and agreements, while loan agreements carry the most weight and are legally enforceable. Loan agreements are used for complicated repayment arrangements offering legal recourse (foreclosure) for a lender, should a borrower default.

So you’re probably wondering where a promissory note fits in? It’s right in the middle. Promissory notes are legally binding, however, they fail to provide remedies and recourse for a non-defaulting party.

When to Use Promissory Notes

1. Installment Payment

When to Use One? Installment payments are commonly used when you are looking to purchase expensive items. Such items may include a new refrigerator, stove and other appliances.

Pros: When repaying the loan, payments are divided up into equal monthly payments (the installments), along with interest. It is discharged only after the principal balance has been repaid. Borrowers usually put up a “down payment,” or a fixed sum of money upfront, to reduce the amount of interest due. Installment payments allow for flexibility through gradual repayment of the debt or loan. This allows you to customize and adjust the repayment to your income.

Cons: Installment payments are usually subject to high-interest rates, increasing the sum of money you will have to repay. Lenders often disallow prepayment of loan balances, capping the amount you are able to pay back per month.

An installment payment would be useful for making a $150 monthly payment on a family car to get the kids to school everyday in. $50 of the payment goes towards the outstanding principal, while $100 goes towards the interest. Ultimately, $150 will be due on the maturity date (when it’s time to pay the entire amount).

2. Installment Payments with a Final Balloon Payment

When to Use One? In the case of mortgage loans, use balloon payment notes. Short-term borrowers typically use balloon payment notes because they favor borrowers who are short on cash at the start, but are expecting to refinance or pay off the loan in the future.

Pros: Dissimilar to traditional installment payments, balloon payments boast lower interest rates. The trade off? For a lower interest rate, the borrower repays the principal and interest in consecutive, equal installments. And, at the end of a specified period, the borrower has two options. They could “reset” the loan (sometimes at the expense of a higher interest rate), or pay off the remaining balance (the balloon).

Cons: Keep in mind that balloon payments can carry extra risks. Oftentimes, borrowers will take out a new loan in order to pay the balloon payment. Doing so is a gamble. You gamble that interest rates will stay the same or lower over the payment of the loan. In regards to assets, you are gambling that the asset will not depreciate and become worthless.

3. Due on a Specific Date

When to Use One? Due on specific date (DOSD) promissory notes are straight-forward and true to their name; they require the repayment of a loan or debt before a certain date. A good time to use DOSD promissory notes are for small amounts of money. For example, you could likely use a DOSD when you loan a friend $150 for the purchase of a new bicycle or minor car repairs.

Pros: With a DOSD, you don’t have to worry about a borrower defaulting on monthly payments, as there is a fixed, definite date of repayment for the loan and interest. Immediate legal action can be brought against borrowers by the lender.

Cons: A fixed date of repayment can create issues for borrowers who are insolvent and unable to repay the debt when the date comes. This can result in hassle and uncertainty when negotiating additional arrangements for repayment.

4. Due on Demand or Default

When to Use One? Use due on demand or default promissory notes between friends and family or other informal relationships. A due on demand or default promissory notes would be best suited small loans, such as one for your sister’s small business, or nephew’s first car.

Pros: They are a “pay when you can” type of note, with no concrete repayment date. This allows borrowers to make good on the loan when they are financially able. Flexible lending and repayment can allow you to skip traditional, drawn-out, lending processes, and both notes usually offer no or low interest rates.

Cons: Even strong foundations of trust are susceptible to abuse. Trusted friends and family may take longer than expected to repay the debt and may take advantage of your good nature. Only use this style of promissory notes where there is a strong foundation of trust between lender and borrower. This way, there is no hurry for repayment.

Here are a few common situations where a borrower default occurs:

1. Borrower fails to make any payment or pay any obligation when due under the note
2. The borrower becomes insolvent
3. The borrower files for voluntary bankruptcy petition or has an involuntary petition filed against them
4. Borrower makes a general assignment for the benefit of creditors
5. Lender or holder discovers misrepresentation was made to the lender by the borrower or on the borrower’s behalf, and absent misrepresentation, lender would not have entered into the transaction.

Familiarizing yourself with four types of promissory notes and when to use them has many benefits. First off, promissory notes can save you from loss of friendship and familial trust. They can also save from expensive legal fees and future litigation over recovering property and debt collection. So, memorialize your next money loaning agreement with a promissory note. Hopefully, this way your Uncle Donny doesn’t end up in a wheelchair with two broken legs after failing to pay off his bookie.

If you have trouble paying off debt, call ACCC at 800-769-3571 for free credit counseling. 

Guest Author:

Rachel Ryan a legal writer for LegalTemplates.net. Rachel specializes in providing professional, diverse and creative articles, equipping individuals with the perfect tools for a variety of legal issues. When she’s not writing awe-inspiring content, she can be found trying to become the next Martha Stewart.

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Is There One Best Way to Consolidate Debt?

For some, the best way for debt elimination may be paying off smaller balances first. As the second step, you can add payments to those bigger burdens until they are fully paid off.

A second option is to consider transferring balances to one credit card or consider getting a consolidation loan. However, consolidating balances to one credit card or using a loan is a risky move. This is because, if you need to borrow additional money, it may be tempting to use one of the accounts with a zero balance. This opens a window for the debt to grow, even more, creating bigger credit problems. 

What Can I Do to Avoid Falling into Debt?

Prevention is always better than cure. Therefore, before we move on to see the best way to consolidate debt, let’s look at some preventative measures you can take to keep debts at bay. 

• Keep balances low to avoid additional interest.
• Pay your bills on time.
• Manage credit cards responsibly. This maintains a history of your credit report. Those who have no history of credit cards are considered bigger credit risks.
• Avoid moving around debt. Instead, try to pay it off.
• Don’t open several new credit cards to increase your available credit. You run the risk of accumulating more debt.

Despite anyone’s diligence in managing their money wisely, sometimes financial hardships happen because of a job loss, medical condition, divorce, or other life events. If you have problems making ends meet, contact your creditors or approved credit counseling agencies for assistance.

Best Way to Consolidate Debt:

There is no single debt solution for your financial problems. There are many approaches you can take to consolidate your debt. Let’s look at a few options.

Ask for Help from Family/Friends:

If you feel that your overall financial status can be handled with some help from a friend or a family member, then it makes sense to do so. However, relationships and money aren’t always the best combination. Therefore, if you do decide to go this route, make sure you have the repayment terms outlined clearly. This way, you can continue to maintain a healthy relationship with your friend or family member who offered to help you.

Using the money you borrow wisely is entirely up to you. The fact that you are not bound by minimum eligibility requirements or other loan terms is a plus. However, your commitment to repay the loan on agreed terms is crucial.

Taking a Personal Loan to Cover the Debt:

Although not always recommended, taking out a personal loan is a potential avenue to take when it comes to credit settlement. This way, you can make a single payment on your loan instead of making multiple credit card payments each month. However, this will only work if you have a good credit standing. If the conditions are favorable, you are likely to get a lower interest on your loan than the interest on your credit accounts. 

Take a Home Equity Loan

This is when you decide to borrow against your home’s equity. The cash you receive can then be used for credit relief or just about anything you want. the cash to pay for just about anything. However, this is a risky way to get out of debt. Although the home equity loans may offer you lower rates, any default on your payments can set alarms off. In turn, the lender legally has the right to start foreclosure on your property. Given the risk, this should be considered a last resort.  

Balance Transfer Credit Card

This is when you open up a new card with a lower interest rate and transfer the balances of high-interest older cards to the new one. Essentially, you are using one card to pay off another. This method is only practical if it helps you save money in the longer run. You have to do thorough research on things such as:

• The balance transfer fee
• The interest rate on transferred balances
• How long is your promotional period
• What are your annual fees?

This might not be your best way to consolidate debt if you lack financial discipline. Therefore, make sure you choose wisely. 

Cash Out Auto Refinance

This is when you use the equity of your vehicle to obtain a loan from your lenders. The money you cash put can be used to pay off your debt or other expenses. Similar to home equity loans, a missed payment can risk the loss of your vehicle. Therefore, although an option, it is not recommended to go this route as your first choice to consolidate debts.

Retirement Account Loans

Using your retirement funds to pay off your debts is not at all a good idea. However, desperate times may need certain desperate measures. Your retirement funds such as the 401(K) are your future security. Therefore use these funds with extreme caution. These types of loans do not usually require a credit check as long as your plan offers a loan option.

Using a Debt Management Plan with a Certified Credit Counseling Agency

The best way to consolidate debt is to consolidate in a way that avoids taking on additional debt. If you’re facing a rising mound of unsecured debt, the best strategy is to consolidate debt through a credit counseling agency. When you use this method to consolidate bills, you’re not borrowing more money. Instead, your unsecured debt payments are consolidated into one monthly payment to the agency, which in turn pays your creditors each month. Your credit counselor works with your creditors to try to reduce your interest rates and eliminate extra fees, like late charges or over-limit charges.

How Does Debt Consolidation Affect Your Credit?

Debt consolidation and credit are not always harmonious concepts. The work you out on bad debt can lead to some downfall of your credit rating and score. However, the impact it may have depends on how you choose to consolidate your debt.

Out of the many options, the best way to consolidate debt without potential harm to your credit score is debt management. However, you will have the notations on your credit report about the steps you have taken to consolidate debts. While you are on a debt management program you are not allowed to open new credit accounts. This is a means to avoid you from drowning in debt even more.

When you enter a settlement program, typically you must stop paying all your creditors for several months. This puts your accounts into arrears and makes your creditors concerned. When your past due payments are sizable, your debt settlement company will approach your creditors and offer to settle your debt for a lump sum payment that is less than what you owe. This, however, will have an impact on your credit rating due to two main reasons:

1. You stopped paying your bills for several months
2. You didn’t pay back your debt in full

The lenders will make a hard credit inquiry on your credit report when you apply for a debt consolidation loan. This usually sparks a negative connotation on your credit rating and score. However, the important thing to remember here is that you can recover your score if you commit to making on-time payments. Also, it will not leave a mark on your credit report. This is true for personal loans and home equity loans as well.

Best Way to Consolidate Debt With ACCC

ACCC is a reputable non-profit credit counseling agency known for its credible help for people in debt. ACCC’s outstanding commitment to customer service is shown with our A+ rating and accreditation through the Better Business Bureau. So, how can ACCC help you consolidate credit card debt without hurting your credit score?

As discussed earlier in this article, one of the things that can be affected is your credit score. Most of the debt relief options can shake your credit ratings from where it currently stands. This is why it is very important that you understand the debt solution that you will choose to solve your credit issues. If you choose the wrong strategy, you could end up wasting your time, money, and effort as you get out of debt.

Admittedly, even with the best debt advice, getting out of a high credit balance is hard to do. It is also not something that you can accomplish overnight. You have to accept that paying off your credit card debt completely will take at least a couple of months to finish. The higher the balance, the longer it will take for you to be completely free of debt.

Speak with a certified counselor at ACCC today to learn your options. Our counselors will take you through a guided approach to educate and explain to you, the best way to consolidate debt for your particular financial situation. Call 800-769-3571 today. 

Know The Common Job Scams

• Remote data-entry job scams

WFH data-entry jobs that don’t require much experience are appealing to many. But not all of them are legitimate. Again, the goal of a fake job posting is to gain your personal information. The posting might reel unsuspecting victims in with an unusually high pay rate, and the company might ask the victim to pay for training, send personal information, or cash a check. Which brings us to our next point.

• Fake check scam

If your “boss” asks you to cash a check for them (usually under the ruse of “buying office supplies,” or “to get money that you need to send to this other person”) hold your horses. Fake check scams commonly occur in scam mystery shopper, admin, or assistant jobs.  The bank eventually realizes the check is fake, and you’ll be on the hook for paying back the money. Since you likely wouldn’t have the large amount of money to pay back, you might end up needing a debt management program. On top of that, you could also be charged with check fraud.

• Re-Shipping Scams

This “job” (sometimes titled “warehouse associate” or “package handler”) sounds easy enough – your “boss” mails a package to your home, then you take the product out, repackage it and send it to the final location. Unbeknownst to you, you’ve just become a money mule, according to the FBI Washington Field Office. Or, you could be reshipping goods that your “boss” (the criminal) bought with stolen credit cards.

• Spoofing

This is when scammers impersonate real companies and brands. Unfortunately, scammers can easily impersonate actual employees, to further bolster the image of credibility for victims like you. With that said, if an interview is only done through text chat or phone (where you don’t actually see the person’s face), that should raise suspicion. You should also go to the company’s official website to see if the job posting is there, too – not just on a random job board.

Look Out for Job Scam Signs

• Poor grammar

Most scams are from outside of the U.S., so a scammer’s written English isn’t often professional. Typos and punctuation errors wouldn’t fly for a legit job posting from a reputable company. Noticing the first bad impression can help you avoid a job scam. That being said, an error-free job post could still be a scam. That’s why it’s important to look out for other signs, too.

• Having to pay for supplies or equipment

Your “boss” might say that you’ll be reimbursed – but once the “company” gets your money, they’ll stop communicating with you, and you’ll never get paid back. Other things a scammer might ask you to pay for include application/enrollment fees, training fees, and employment screening fees.

• Having to give personal information too early

Legitimate companies only need your banking information, social security number or credit card number after you’ve been hired, and only through a tax form. Anyone who asks for this information before that is likely a scammer who’s just trying to steal your identity or money.

• Vague job descriptions

A job description usually lists specific requirements (i.e. skills, experience, and education). Very generic requirements (i.e. being an 18 year old U.S. citizen) aren’t a good sign. Additionally, if a job post glosses over duties and heavily emphasizes the pay, research the company before getting tempted. A legit company’s site should have a history and mission statement, contact information with a physical address, case studies and client testimonials, and news stories and press releases. Look the company up on other platforms too, such as the Better Business Bureau and Glassdoor.

One final note – if you’re interviewing with someone, don’t hesitate to ask questions – a legitimate company should be happy to answer them. Getting more information handing over your personal information can help save yourself from getting scammed. Take the time to avoid a job scam with these two tips, and you’ll find the right opportunity for you. Good luck!

If you’re struggling with debt, please contact ACCC for credit counseling at 800-769-3571.

When opening a credit card, it is important that consumers are credit smart. Also, they need to understand all the responsibilities and terms that come with it. Credit cards are an excellent way to build credit if they are used responsibly. Consumer credit is a part and parcel of a person’s financials. The knowledge you have on your credit cards and other financial elements is crucial for better management.

Knowing the common credit card terms is crucial for smart credit card usage.

Common Credit Card Terms

1. Credit Score – A credit score is a three-digit number that indicates how trustworthy a consumer is for a credit card or other loans. Credit scores range from a low of 300 to a high of 850. The higher the credit score, the more trustworthy the consumer.
2. Annual Fee – Some credit card issuers charge an annual fee for use of the credit card.
3. Annual Percentage Rate (APR) – The APR is the interest rate on their credit card balance throughout the year. Although this is calculated daily, any interest charged is forgiven when the balance is paid in full each month.
4. Minimum Payment – The minimum payment is the least amount a consumer must pay on their bill each billing cycle without defaulting.
5. Credit Line – A line of credit is the amount of money the card issuer will allow the consumer to borrow.
6. Secured Credit Cards – Secured credit cards are designed for those with little to no credit. These require a secured payment to be used as collateral if the bills are not paid. Many of these cards come with high fees.
7. Unsecured Credit Cards – Unsecured credit cards are the most common and do not require collateral. Eligibility for these cards is based on a consumer’s credit history and income.
8. Credit Utilization Ratio – The credit utilization ratio compares the amount of credit used to the total amount of credit available. Therefore, lower ratios are better for consumers’ credit scores.

In Summary:

Credit is a big portion of your overall finances. Therefore understanding all nooks and crannies about it will let you have a holistic approach to managing your finances. Most credit card debt counseling requests come from consumers due to the lack of understanding of credit usage. Therefore, Knowing the terms and understanding fine print will always be an advantage.

If you are seeking credit card counseling services, sign up for a free credit counseling session with us today! 

With a global pandemic and everything readjusting, it is ever more crucial to understand the possible solutions. In a time where everything is uncertain, it is important that you are prepared to handle consumer credit in any way you can.

Student loan management gives you direction for paying off debt.

Student Loan Management Tips for Millennials

1. Understand your loans and loan agreements – It is important to understand
   • The types of student loans you have
   • The variety of student loan repayment options available
   • Different programs offered to federal and private loan borrowers.  Read your promissory note, which is a legal document.
2. Make payments on time – Making payments on time is not only the best way to avoid loan default and eventually pay off your loan, it’s an excellent way to build credit. Building good credit also helps when it comes time to make a big purchase, such as buying a house.
3. Create a budget – Create a post-college budget. Make sure it includes all expenses, from credit card payments to utilities and groceries. By creating a budget and sticking to it, you can ensure enough savings to pay your loans on time.
4. Keep good records and track your loans – Track all payment schedules and keep a paper record of every monthly payment. Utilize online tools and platforms to manage your loans and stay up to date.
5. Address any financial challenges quickly – If you are having trouble making your monthly payment, don’t wait to address the problem. Research your options and talk to your lender. A borrower is usually considered in default if he or she has failed to make a loan payment for 270 days or more. Don’t let it get to that point. Some options that are available to you may be:
   • Switch repayment plans
   • Consider an income-driven repayment plan
   • Change a payment due date
   • Secure a deferment or forbearance

In Summary:

If you are financially burdened the first step you may need to look at is your student loans. Your discipline in student loan management will certainly have an impact on your financial stability. Therefore, make sure that you take necessary action early enough and plan for your financial future.

If you are a millennial seeking credit counseling services, sign up for a free credit counseling session with one of our debt counselors today! 

A year and a half on, coronavirus (COVID-19) is still having a significant impact on how we live and work. Many people have faced a cut in pay or job loss, making it difficult to pay off student debts, mortgages, credit card bills, and other obligations.

Dealing with debt is never a pleasant experience, but the backdrop of a global pandemic may seem to tip the scales in your favor.

Don’t give up hope if you’ve found yourself in a tight place as a result of the COVID-19 crisis, like so many other Americans. In reality, after the pandemic, now is the time to take steps, even in difficult circumstances, to effectively and proactively manage debt and credit. It will give you a better long-term financial picture and a stronger position when things are improving. You can participate in a formal debt management program through a nonprofit credit counseling agency, or you can create your own debt repayment strategy!

Here are the options that may help you manage debt and credit in the post-COVID world:

Get help with unsecured debts first

In some ways, we see the situation improving. Businesses are reopening and employees are going back to the offices for in-person work. But, many people are still suffering from unemployment and reduced income. For these consumers, credit card companies, such as Capital One, Chase, Citi, U.S. Bank, and Wells Fargo have issued statements on their websites promising various types of aid. They’ve offered help such as credit line increment, collection forbearance, and skipped payments. Lenders are providing payment extensions and other opportunities to customers who can’t make their car payments.

If you’re struggling to make payments on a personal loan or a small business loan, different banks, credit unions, and other financial institutions are giving loan extensions and deferred payment options.

If you need cash, many lenders and the US Small Business Administration (SBA) are offering loans to coronavirus victims.

Avoid scams

Scammers try to take advantage of people who are in a difficult financial situation. COVID-19 is no different. But how can you identify these scams?

It’s almost certainly a scam if you find the program or service “too good to be true.”

You should understand what type of service the company is giving you:

• Credit counseling
• A consolidation loan
• Debt settlement

Stay away from any for-profit debt relief or settlement company that:

• Asks for a fee or any sort of charges before they settle your debts. Unless it’s a non-profit credit counseling program, upfront payments are a huge red flag for debt relief programs.
• Claims to provide help in taking advantage of “new government schemes.”
• Makes assurances they will settle your debt for less than what you owe
• Does not inform you of the consequences of enrolling in the program.
• Asks for your personal financial information without providing free information on their services

Also, be aware of “bait and switch” sales tactics, such as a “loan program” that needs you to first join in a credit repair or debt settlement program.

Reconnect with your lenders

Several banks and lenders developed COVID-related relief plans to help borrowers financially devastated by the pandemic. They offered deferred payments, no late penalties, and guaranteed that short-term solutions would not be reported to credit bureaus.

Most of the relief programs, however, only lasted a few months. As things are getting back to normal slowly, check in with your lenders and creditors to make sure you’re on the right track.

Do you continue your payments on the same schedule as before the pandemic? Did you pay interest on the money you are paying later?

Make sure you understand what’s going on with your debt and credit in the long run, and don’t expect everything will be “business as usual” after the pandemic.

Check your credit report

It’s recommended to check your credit report once a year. This is especially crucial post-pandemic. If you’ve had financial difficulties that have resulted in missed payments or increased debt, you want to know how your credit has been impacted. You also need to make sure that all the information is correct, and that there are no signs of identity theft on your credit report. Using annualcreditreport.com, you can request a copy of your credit report from each of the three credit bureaus. Everyone is entitled to a free copy of their credit report from each bureau once a year. So avoid any company charging a fee for access to your credit information.

Double-check that your report accurately reflects your financial situation.

For example, if you negotiated with your creditor for a lower payment or a deferred payment plan, make sure your credit report doesn’t show that you were late or behind on payments.

Similarly, if you were current on your mortgage payments before requesting forbearance during the COVID crisis, your report should state that you were not behind on your payments prior to the forbearance.

Develop a credit repair strategy

You’re not alone if you piled up a lot of debt or skipped payments during the economic crisis resulting from the pandemic. However, now that the situation is improving, the sooner you take steps to improve your credit score, the better.

Create a debt-payoff strategy, starting with any accounts that are past due. Make on-time payments on any accounts that require immediate attention to stay current and avoid fines or further damage to your credit score. When your accounts are up to date, look at your credit utilization ratio, and check how much of your available credit you’re utilizing.

People should keep their debt to less than 30% of their available credit, according to FICO. If your credit card has a 10,000 limit, for example, you should attempt to keep your debt below $3,000. This applies to both your credit card debt and your overall debt.

Paying down your debt will help you improve your credit score. The credit bureaus recommend you should not cancel unused credit cards at this time because they’ll assist you in maintaining a high level of available credit while you pay down your debt.

Finally, come up with an effective strategy for reducing your debt. Prioritize paying off debt with the highest interest rate first, or, if possible, try consolidating your debt onto a lower-interest card.

If you find that you are having trouble coming up with a debt repayment strategy on your own, you may want to contact a nonprofit credit counseling agency. A certified credit counselor will help you determine the best option moving forward, which may include enrolling in a debt management plan.

Make a budget for the post-COVID situation

After the pandemic, everyday life is getting restored slowly. You can look forward to a brighter financial future once you start going back to the office or your company is able to re-opening its business.

However, make sure you prepare a budget that accounts for any recent changes in daily household costs and monthly income post-COVID.

Analyze your monthly spending, make a budget, and cut back on your expenses to help your debt repayment strategy. Also, you can redirect the money you would have spent on entertainment or travel to debt repayment or savings.

Creating an emergency savings cushion, if possible, can also keep you from having to rely on high-interest borrowing in the future if you face another financial hardship. Most financial experts recommend saving three to six months’ worth of spending in a high-interest savings account.

Tara Falcone, Chartered Financial Analyst (CFA), CFP, and Founder of ReisUP LLC, suggested, “This pandemic has highlighted the need for all of us to be a lot more proactive when it comes to protecting our financial health. Both while we’re alive and in the event of our, or one of our family members’ unexpected passing. To protect your finances from unexpected events like lockdowns and job loss, you need to prioritize building an adequate emergency fund.”

Finally, keep an eye on your credit during the recovery process. To ensure that the information in your credit report remains accurate, you can sign up for a credit monitoring service.

Prepare strategies to control spending

There are several ways to help you keep track of your spending. Here are a few important ones to pay attention to:

• Avoid impulses – Try not to compare yourself to others, especially on social media, since this can lead to overspending due to a fear of missing out.
• Shop locally – Shopping locally and in person can help you be more aware of your spending, especially if you set a budget ahead of time.
• Think and buy – Before going shopping, consider giving yourself one or two days to think about items you truly desire.
• Invest your money – You’ll miss out on some short-term pleasure, but you’ll reap significant long-term benefits. Overspending due to impulse buying can be fatal for your finances and your monthly budget.
• Stick to your budget – In the end, sticking to your budget will enable you to determine where and when you should spend your money.

Zuzana Brochu, CFP, Certified Business Exit Consultant (CBEC) and vice president of financial planning strategy at People’s United Advisors explained, “There is a two-fold answer to this question because, generally speaking, people fall into one of two categories at this point in the pandemic: those with negative cash flows as compared to a year ago, and those with positive cash flows.”

“For many, the pandemic has meant furloughs, job losses, and associated economic hardship. For this group, the most important thing to do is take stock of where they are financially, particularly from a cash flow standpoint. If their income continues to be negatively impacted, addressing their budget needs to be a priority. I realize that is not a popular thing to say, but this is a time to eliminate as much discretionary spending as possible.”

Consult an attorney

In some cases, you may want to seek legal assistance. For instance, you may require the services of an attorney if:

• A creditor has filed a lawsuit against you.
• You have assets you want to safeguard.
• If you rely on Social Security or another form of government assistance. An attorney may protect you from debt collection.

You can find an experienced attorney in a variety of ways. It’s a good idea to check with the state bar organization before hiring an attorney to be sure he or she is in good standing.

You can check if the attorney has a disciplinary record by searching his or her name on the state bar website, where the attorney is licensed, or by contacting the state bar association.

Some attorneys provide free or discounted services. If you meet specific criteria, there may be legal aid offices or legal clinics in your area that will provide services for free.

Author Bio:

Lyle Solomon has considerable litigation experience as well as substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, and now serves as a principal attorney for the Oak View Law Group in California.

Avoid becoming house poor with these tips.

Evaluate Your Cash Flow

Budgeting is an effective tool for managing your personal finances. Even if it looks like you can afford a house on paper (like when you get approved for a mortgage), don’t automatically be convinced.

A common house-buying guideline is to not spend more than 28% of your gross monthly income on housing costs and 36% on total debts. But before calculating the percentages, take a step back to look at your annual income, expenses, and budget. Once you figure out how much you’ll have left for a down payment after your daily expenses (i.e. food, gas, retirement contributions), use this calculator to see how much house you can afford. Another tip – making a larger down payment will decrease your monthly mortgage bill, if you’re able to do so. This helps you avoid becoming house-poor, because you’ll free up more money.

Understand the Cumulative Cost of Homeownership

There’s much more to the cost of a house than the down payment and monthly mortgage payment. Here’s a comprehensive list of costs involved in homeownership:

• Property taxes
• Homeowner association dues
• Maintenance costs
• Down payment and closing costs

Once you calculate the total costs, you’ll have a much more comprehensive picture of what you can afford. Being educated on all expenses prevents any surprises down the road and helps you avoid becoming house poor. The unknown costs are what tends to trip up homebuyers the most.

Don’t Forget Other Areas of Your Budget

Now that you know what you’re able to spend on a new house, think about how it affects your other expenses or financial goals. Even if you can afford a house’s mortgage payments, will it negatively affect your ability to pay other bills? Being overly anxious about how you’ll pay your other bills after paying the mortgage is a big sign of being house-poor. That’s why it’s key to calculate how much leftover you’ll have for other monthly expenses (i.e., groceries and gas, or contributing to retirement).

Plan for unexpected expenses or emergencies as well – if they happen, and you don’t have enough money to pay for it, you might go into debt paying it off. That’s why it’s better to avoid buying a house on the high end of your budget. You might risk not having enough money left over to set aside for a rainy day. Without a sufficient savings account to cover an ER bill or broken appliance, you might have to rely on credit or take out a loan.

Buying a home is a personal choice, and we hope you this post helps you prepare for buying the right one! Whether you’re getting a mortgage or paying cash, remember the general principles of spending within your means and accounting for all costs.  This will help you avoid becoming house poor. Happy house-hunting!

If you struggle to pay off debt, ACCC may be able to help. Sign up for a free credit counseling session with one of our debt counselors today!    

Fun and cheap hobbies are a blast – without incurring debt!

Fun and Cheap Hobbies

Learning a New Language

If you have an interest in other languages, take advantage of all the free resources out there. For beginners, there are online articles on basic vocab and conjugations to get started. Also, the more you listen, the more you’ll gradually understand. For listening, you can’t beat YouTube. Easy Languages, for example, has naturally fun immersion with authentic street interviews, with both subtitles in English and in the language of subject. You can also learn basic phrases by playing a podcast in the background – repetition works! Songs are another fun way to absorb a language.

Even your favorite streaming service that you’re already paying for could be another resource! Most of Amazon Prime Video and Disney Plus’ shows have multilingual support, putting another spin on your binge shows. Depending on where you live, there may be language Meetup groups near you! You’ll get a lot out of practicing a new language with like-minded people. Joining a Meetup group is free, and the events are either free or involve some cost – for example, if the group decides to get lunch, you’d pay your own way. Just be sure to budget accordingly. Learning a new language that caught your attention doesn’t have to be a dry, boring experience.

Exploring the Outdoors

The outside world has plenty of room for fun and cheap hobbies. Walking and running are great for soaking in nice balmy weather. If you live near a pool, lake, or ocean, swimming is another fun way to be active. Or if you don’t feel like swimming, why not try fishing? You can also go hiking on a trail you’ve never been on before. If you’re looking for something particularly adventurous, try geocaching! For the especially daring, make the world your literal playground with parkour. It’s certainly one of the boldest free and cheap hobbies out there – but go about this with much caution. You could seriously injure yourself, and the medical bills certainly won’t be cheap.

For pure relaxation, scope out a spot at your local park to sit and read a book or listen to music. You might even meet cute pets on a walk, or new people if you feel like chatting with others. If you like watching the sunset, stick around at the park and watch the sky change colors. Fun doesn’t stop at the end of the day though – you can go stargazing at night. Whenever you feel bored and want to switch it up, going outside is a good place to start.

Having Fun Indoors

That being said, sometimes you just want to chill where you are. Books and shows are a great way to unwind, and you can always hit up your local library for new material (then rush home to your blankets and snacks). That’s just one example of free and cheap hobbies you can do at home.

Do you like pretty things? Learn origami! You can even use your creations as expressive, decorative flair for your living space. Or buy some inexpensive flowers (real or fake) to add color to your surroundings. Back to our earlier point about books – they’re not just for reading. You can create beautiful pieces of art from that old book sitting on your shelf. Or if you can’t part with any of your books, you can also buy cheap ones at a store to use for art. You can also try your hand at painting or calligraphy.

Being indoors is also the perfect place to master cheap eats! With the right planning, cheap is delicious! Master a dinner recipe that just might make it into your weekly rotation, or if you’ve got a sweet tooth, try a new dessert or pastry. More on that below!

Pantry staples are the foundation to great sweets. The Great Depression Water Pie made a big comeback during the pandemic, – it only requires a pie crust, water, flour, sugar, vanilla extract and butter. These pantry staples are low-cost, and you can get more than one use out of most of them before having to buy a refill. Another awesome 6-ingredient-only recipe is peanut butter bread, and it’s easy to make. Whether you’re trying to save money or money is tight, there’s no shortage of crave-worthy cheap dessert recipes out there.

Fun and cheap hobbies bring easy-breezy joy and relaxation in a fast-paced world. Have a blast!

If you have trouble paying off debt, ACCC may be able to help. Sign up for a free credit counseling session with one of our debt counselors today!  

Though major purchases are costly, it’s possible to avoid debt.

Learning to Budget for Major Purchases

Don’t let major purchases damage your budget and your finances. By getting ahead of the curve, you can avoid a big financial disaster.

Anticipating Big Expenses

The first thing you need to do is anticipate future expenses that could potentially cost hundreds or thousands of dollars. Let’s focus on home and vehicle costs which can easily cause lots of credit card debt.

If you own a car, check out your owner’s manual to see when the recommended maintenance and replacements take place. A timing belt, for example, is a major expense that you can save for. Based on the car’s mileage, you will have an idea of when it needs to be replaced instead of waiting for the belt to break and potentially destroy the engine.

Similarly, homeowners should think about home improvements, repairs and the maintenance of the property. Roofs and HVAC systems of a house need repairs and replacing every so often. Septic systems, tree removal and driveway resealing are a few other examples of costs to watch out for. New homeowners should be very cautious since you might not be as aware of all the costs coming your way courtesy of your new abode.

In general, routine maintenance of your home and vehicles can save you money in the long run by keeping things in working order.

Keep a Separate Emergency Fund

In addition to putting money aside for larger anticipated expenses, it’s also wise to keep a separate emergency fund for when life throws a curve ball your way. This way, your plans for spending on maintenance, repairs, or replacements won’t be derailed by an unexpected expense that requires immediate attention.

Most experts recommend keeping 3-6 month’s worth of monthly expenses put aside for emergencies that can range from a major medical event to getting laid off from your job. It’s not pleasant to think about, but being financially prepared can take the sting out of these types of events.

How to Start Saving

Now that you have gone through some of the bigger expense areas in your life, it’s time to start saving for those major purchases.

If you aren’t sure about how much any of these expenses will cost, do some research online to get an idea. You could also ask friends or get a professional quote. Many times getting a quote won’t cost any money and you can vet a contractor in the process.

Saving for major purchases can look differently from budget to budget. One way to save is by having a standing line item in the budget for home and auto repairs. Set aside a monthly amount and use it when needed. Look at your budget to determine the amount you can earmark for major purchases.

Getting Out of Debt from a Major Purchase

If you have already overspent on a major purchase, there are a few ways to recover. Let’s go over some options to help you create a get out of debt plan.

Create Your Own Get Out of Debt Plan

If you feel confident, create your own plan to recover from your overspending. First, you will need to find where you might have extra cash to redirect to your debt reduction efforts. Clothing, entertainment and dining out are easy options to look at.

You might also want to consider putting less in savings for the time being until the debt is taken care of. Make this your top priority in case you run into any more trouble.

A Debt Management Plan

If you find yourself under too much water, consider reaching out for help. A debt management plan or debt management program (DMP) is a service offered by credit counseling agencies. The goal of a DMP is to help you get out of debt quickly, without going through bankruptcy or debt settlement, both of which can hurt your credit score. Consumers may complete a free counseling session with a debt counselor to determine the best options for debt repayment.

Steady saving along the way can help avoid debt from major purchases. You might want to use the funds for other things, but keeping the money set aside for your home and vehicles is the best strategy.

If you’re struggling to pay off debt, ACCC can help. Sign up for a free credit counseling session with us today!