You Need a Game Plan to Get Out of Debt

• Procrastination only makes situation worse
• Even small steps make a difference

Paying off debt can seem insurmountable. But that debt can prevent saving for retirement, prevent homeownership, and negatively affect overall financial security in addition to lots of stress.

The more you procrastinate the larger the debt grows with compound interest. Start today to set a firm plan to reduce debt.

1. Get Organized
Understand how much you owe to whom and what the relative interest rates are. Start with a spreadsheet listing all your debts from highest to lowest interest.
Focus on eliminating the highest interest rate debts first.

2. Commit and Take Action
Get family members to support and participate in the effort.
Unless you are single you need to recruit other family members to join the effort.
Change your perspective from negative to positive: you can accomplish this goal. You are not a bad person because you have debt; you have lots of company but that's no excuse for ignoring what is best for you.
Set up automatic payments to pay down the debts.
If you have medical debt, try to negotiate with the provider BEFORE the debt goes to collection.

3. Set SMART Goals and Reminders
Make the connection between your long term financial goals and why you want to pay off your debts.
Set SMART goals: specific, measurable, attainable, realistic & time-specific. 
What picture visually represents your goals? Pick a picture and place it on your mirror where you will see it each morning. Pick another visual to keep in your wallet where you will see it before you spend. 

Mounting car debt traps more drivers

Look at all those huge shiny new pick up trucks and SUVs on the roads these days! Are Americans really that affluent? Not really.

How could it make sense to buy a $27,000 vehicle with a $45,000 loan? No I did not mix up the numbers as reported by AnnaMaria Andriotis & Ben Eisen on the front page of the November 11 Wall Street Journal. "Consumers, salespeople and lenders are treating cars a lot like houses during the latest financial crisis: by piling on debt to such a degree that it often exceeds a car's value"

Forget about envying your neighbors driving expensive new vehicles; it may be all debt and more! One-third of new vehicle buyers who traded in a car during first 9 months of 2019 had negative equity. On average these borrowers owed about $5,000 on their trade-in before taking on new debt.

"Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can lst seven years or longer." Don't get sucked in! 

Did no one learn any lessons from the Great Recession? 

Debt Collection help from the Consumer Financial Protection Bureau (CFPB)

"In the United States today, debt collection is a $13.7 billion dollar industry with more than 6,000 debt collection firms operating in the United States. The CFPB estimates that about one in three consumers, more than 70 million people, were contacted by a creditor or collector seeking to collect a debt within the past year. Dealing with debt collection issues can be difficult and stressful for consumers, and consumers may face debt collectors who use unfair or otherwise illegal practices. The CFPB handles more complaints about debt collection than any other financial product or service. The CFPB has tools and resources to assist you in helping consumers with debt collection issues." If you or someone you know is being contacted about debts they may (or may NOT) owe, check out this resource: https://www.consumerfinance.gov/consumer-tools/debt-collection/

Just because a debt collector is contacting you does NOT mean that you owe the debt. You may owe nothing or far less than they are trying to collect. Know your rights!
The CFPB is under attack and threat of elimination under the new administration. 

6 Unusual Ways to Get Out of Debt

"Driving for Uber, pet sitting through Dog Vacay and doing odd jobs through Task Rabbit are all options to pick up extra money" according to Andy Smith, a certified financial planner. Maryalene La Ponsie describes the pros and cons of other creative way to find money to pay off debt. Her article includes links to related resources. Renegotiating the balance owed can reduce the amount by 40%. Learn more at: http://money.usnews.com/money/personal-finance/articles/2016-09-08/6-unusual-ways-to-get-out-of-debt

Do Debt Management Plans Work?

"Nonprofit credit counselors are the good guys in the debt relief industry, which is otherwise full to bursting with lies, scams and sketchy players," according to Liz Weston, NerdWallet Columnist.

"That said, credit counselors need to acknowledge that their signature offering — the debt management plan — doesn't work for everyone."

"Debt management plans are touted as an alternative to bankruptcy and an affordable way to pay back credit card debt. Borrowers make payments to the counseling agency, which then pays the creditors. Thanks to standing agreements that counselors have with credit card companies, the plans typically reduce the interest rates, fees and payments that borrowers are expected to make. Full repayment of the debt often takes four to five years."

"The lack of disclosure about bankruptcy's potential benefits isn't the only problem with debt management plans. Other issues include:

—They aren't designed to tackle many other types of debt, such as mortgages, car loans, student loans and most medical bills.

—Borrowers should expect to live without much access to credit during the repayment period. Their credit card accounts are typically closed and they agree to not apply for new credit, whether it's for another card, a new car or a mortgage refinance. A new account appearing on their credit reports may lead creditors to cancel the debt management agreement.

—There's little leeway for missed payments, which can lead to the plan's cancellation.

Some people find that they simply can't afford the payments on debt management plans, while others drop out because of setbacks such as job loss or unexpected expenses." Read more at:

http://www.usnews.com/news/business/articles/2016-08-01/do-debt-management-plans-work

Unlearn what you have learned’ for financial success

Thanks to Michelle Singletary, Washington Post columnist, for three pieces of financial advice:
1. "Unlearn that there is good debt and bad debt. When it comes to a mortgage or education loans, you’ve probably heard that this debt can be a “good investment.” “Bad debt” is characterized as carrying credit card balances or taking out payday loans.
But debt is debt. The problem with “good debt” is that people take on too much by rationalizing that in the end, they’ll be better off financially"
 2. "Unlearn that it’s okay to hold on to your mortgage even into retirement. People are told that they should keep or get a mortgage for the tax break. Or if they have extra money, they should invest the funds rather than pay down their mortgage." "If you itemize deductions on your tax return, you can usually deduct the interest you pay on a mortgage or for a line of credit tied to your home. But the tax break isn’t enough to offset all the interest you’ll pay over the life of the loan. Many people — most of them middle- and lower-income families — don’t even take the tax break because they don’t owe federal income taxes or they claim the standard deduction rather than itemize deductions." Homeowners: Do your homework & figure out IF you are getting a tax deduction on your mortgage interest and, if so, how much. Prospective buyers: Don't just take the assurance of the real estate & mortgage industry that you'll save lots in taxes with a mortgage. The standard deduction for married, filing jointly is $12,600 in 2016. You only get a benefit of itemizing for amounts above that AND THEN ONLY at your marginal tax rate which for most taxpayers is 10 or 15%. So if your itemized deductions, including mortgage interest total $13,600; you only get to reduce your taxes by $100 if you are in 10% marginal tax bracket!
3. "Unlearn that renting is throwing away money. Take into 2016 this message: You are not a financial failure if you rent."
Read the full column at:  http://wapo.st/1mPtMr7

Dealing with Debt Collectors

No one should have to put up with harassing or offensive phone calls from debt collectors. Consumers also have rights when it comes to getting correct information about the debt and disputing it when it’s wrong. Here are 4 things that you or your loved ones can do when experiencing debt collection problems:
consumerfinance.gov/blog/four-things-older-americans-can-do-about-debt-collection-problems

iPhone Debt Elimination Mobile App

"Discover how quickly you can become debt free and how much you can save in interest costs. The free PowerPay app will help you develop a personalized, self-directed debt-elimination plan.
Enter the balance, payment amount, and interest rate of each debt, and PowerPay will calculate the best repayment schedule to save you time and money. It can also help you build an emergency fund while paying off your debt. Go to the App Store to download PowerPay.
For a more comprehensive version of PowerPay and additional debt elimination tools go to www.powerpay.org."

7 Steps to Pay off Debt

1.      Create a debt payoff strategy.

2.      Pay off the most expensive debt first.

3.      Lower your interest rate.

4.      Use annual budget data to plan against pitfalls.

5.      Stop creating new debt.

6.      Allocate your holiday bonus. 

7.      Pay more than the minimum. 

Read the details from Hitha Prabhakar: http://money.usnews.com/money/blogs/my-money/2014/01/16/7-easy-steps-to-pay-off-debt

Survival Strategies for Tough $ Times

What do the experts "suggest if you're in the middle of a torrential downpour, just at the point your funds have virtually run out and the roof is leaking?" Read: "5 Things to Remember When Your Finances Are Falling Apart: How to put up a financial umbrella if that rainy day is today" by Geoff Williams. The author provides advice from he experts on how to cope with financial crisis and overwhelming debt. Some of the advice may be contrary to what you've learned about financial problems. http://money.usnews.com/money/personal-finance/articles/2013/02/01/5-things-to-remember-when-your-finances-are-falling-apart

Debt = Depression

At least short term debt (credit cards, past due bills, and payday loans) contributes to depression. Long term debt (for mortgages and education) does not have the same effect according to University of Wisconsin professor Lawrence Berger.  The associate professor of social work determined that a 10% increase in the  amount of an individual’s debt increases his or her depressive symptoms by 14%. "To be clear, having debt does not lead to full-blown clinical depression.  But it does trigger the garden variety blues that most people experience.  Symptoms vary from losing one’s appetite or being unable to shake the blues to feeling lonely" http://fsp.bc.edu/%E2%80%9Cdamn-right-ive-got-the-blues%E2%80%9D/. watch the YouTube video: Household Debt and Adult Depressive Symptoms http://www.youtube.com/watch?v=nwROZNBt5aY
Get help in reducing your debt from the Housing and Financial Counseling program at the USU Family Life Center: 435-797-1569; http://www.usu.edu/fchd/housing/

5 Smart Strategies for Managing your Debt

"Consumers have been good about paying down their debt. But they stink at managing what debt remains. Here are five ways to keep control."
1. Match assets and liabilities.
2. Maintain liquid savings.
3. Watch interest rate risk. 
4. Don’t forget to save.  
5. Minimize regular debt expense. 
Find out the details at the Time/Moneyland site: 
http://moneyland.time.com/2012/06/20/5-smart-strategies-for-managing-your-debt/?iid=pf-main-lede
Join us on Wed. July 11 for the Financial Planning for Women program: Get out of Debt fast with PowerPay debt reduction software. Details at: www.usu.edu/fpw