Defeating Debts
Our Mission & Affiliations Our focus is on the financial health of individuals and families, helping those we serve to achieve financial wellness through our programs and services. • Member agency of the National Foundation for Credit Counseling • Licensed by the New York State Department of Financial Services and the US Department of Housing and Urban Development • A member of the Better Business Bureau with an A+ rating
Steps in Dealing With Debts
Getting Started • Clear your space – Declutter any areas of your home that can be a distraction
• Have a spot designated in your home to manage these- desk, kitchen table, office
Build a Plan 1. Goals: What do you want to achieve? Get out of debt? Increase Retirement? Build an Emergency Savings? What? 2. Budget numbers: Income vs. expenses. What’s the bottom line? 3. Non-negotiables: What is it that you will not do? It’s best to be honest from the start. 4. Action steps: Map out what needs to happen and in what order. Have a “check list”. 5. Backup plan: If things don’t work out as planned, what’s your fallback?
Getting a Budget Together • Start by evaluating current monthly expenses and income – Last months bills and receipts might help – Last months pay stubs might help
• Do an initial comparison to see what the current bottom line is
Automatic Savings • Set up a savings account for specific savings • Same account where tax returns can be deposited • Have money deposited to into this account each pay period • Do not transfer money out – Set up account at another bank – See if the account can be blocked from online tranfer
Create a Visual • First, gather information about when bills and expenses need to be paid • Secondly, transfer the information about your expenses and income onto a cash-flow tool • Use colored ink if it helps
Strategies to Pay Down Debt
Classify Your Debts: • Unsecured Interest: – Credit cards, charge cards, overdraft accounts, etc.
• Secured Interest: – Auto loans, home loans, etc.
• Non interest: – Collection accounts, judgments, past-due utilities, etc.
• Non dischargeable: – Student loans, tax liens, child support, etc.
• Find totals for each category
Self-Help Strategies: • Self-help: – First, develop a budget and find the bottom line – For credit cards, negotiate interest and concentrate payments on one at a time • Avoid settlements accounts in good standing • Use balance transfers sparingly • Avoid trading unsecured debt for secured
– For miscellaneous • Pay monthly on smaller balances • Negotiate settlements on larger balances • Take action to avoid judgments
Snowball Method • Step 1: List your debts from smallest to largest regardless of interest rate. • Step 2: Make minimum payments on all your debts except the smallest. • Step 3: Pay as much as possible on your smallest debt. • Step 4: Repeat until each debt is paid in full.
Avalanche Method • This method is a way to pay down debt by getting rid of your balance with the highest interest rate first. • Make minimum monthly payments on all your debts but pay extra toward your debt with the highest interest rate until it's gone.
Annual Credit Report • Goals regarding debt: – Get the #’s together – Your credit report will help www.annualcreditreport.com
Assistance for Credit Card Debt: • Credit counseling services: – – – – –
One monthly payment to the agency There are stipulations I.e. “No more credit” 3-5 year repayment period Plans may not cover all debts Consumer Credit Counseling Service of Rochester • 585-546-3440 • www.cccsofrochester.org
• Debt settlement services: – Will cause damage to credit history – No guarantees it will work
Maintaining Progress and Meeting Your Goal
Keeping Track • Schedule a “meeting” with yourself to review your process • Review your statements • Locate resources or programs to help hold you accountable
How Our Agency Can Help
Our services: Relevant & Effective Counseling programs: • • • • •
Budget & Credit Debt Management Programs Bankruptcy First-Time Homebuyer Reverse Mortgage
Our services: Relevant & Effective Counseling programs: •
Foreclosure Prevention - If you are currently enrolled in a deferment or forbearance, it would be a good idea to speak with a housing counselor to help you determine your next steps in the process
Contact Information Call: (585) 546-3440 www.cccsofrochester.org Call: (585) 1-888-724-2227 www.rethinkingdebt.org
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