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CACC Moneywise Monthly
Budgeting & Savings News You Can Bank On
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
              August 2014 
      Cycle Couple                    
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In This Issue:
5 Money Mistakes to Avoid
How to ASK for a Raise
Give Yourself Credit
Money Emotions to watch
Healthcare Reform and YOU
Changes to Credit Scoring will boost millions of Consumer Credit Scores
  

Fair Issac FICO, announced this month that the new FICO® Score 9 introduces a new way to assess consumer collection information, bypassing paid collection agency accounts and offering a sophisticated treatment differentiating medical from non-medical collection agency accounts. This will help ensure that medical collections have a lower impact on the score, commensurate with the credit risk they represent.

 

These enhancements help lenders because they result in greater precision. At the same time, the median FICO Score for consumers whose only major derogatory references are unpaid medical debts is expected to increase by 25 points.

FICO is the most widely used credit score in the U.S. and this change will likely make it easier for tens of millions of Americans to get loans.

 

Fair Isaac Corp. said that it will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. The San Jose, Calif., company also will give less weight to unpaid medical bills that are with a collection agency.

 

The moves follow months of discussions with lenders and the Consumer Financial Protection Bureau aimed at boosting lending without creating more credit risk. Since the recession, many lenders have approved only the best borrowers, usually those with few or no blemishes on their credit report.

 

The changes are expected to boost consumer lending, especially among borrowers shut out of the market or charged high interest rates because of their low scores. "It expands banks' ability to make loans for people who might not have qualified and to offer a lower price [for others]," said Nessa Feddis, senior vice president of consumer protection and payments at the American Bankers Association, a trade group.

 

As of July, about 64.3 million consumers in the U.S. had a medical collection on their credit report, according to data from credit bureau Experian. And of the 106.5 million consumers with a collection on their report, 9.4 million had no balance-and won't be penalized under the new credit-score system.

 

Under the current system, collections can impact credit scores as much as foreclosures and bankruptcies do. But the infractions are often small. Borrowers can be on time paying their debts, for example, but thrown by a medical emergency.

 

Collections stay on credit reports for as long as seven years, even if a borrower has paid off that balance and remained up-to-date on other debts.

 

Some experts said the new model for FICO scores walks a fine line: It loosens standards without overstating the creditworthiness of borrowers. Fair Isaac said it ran studies to determine how likely borrowers are to repay their debts if they had a stellar credit record with the exception of such collections.

 

Consumers often are unaware that their insurance company isn't paying a medical bill and can end up in default and in collection without knowing it, said Anthony Sprauve, senior consumer credit specialist with Fair Isaac. In contrast, lenders often send repeated notifications to consumers to let them know they have fallen behind.

 

A revamped FICO score could boost bank lending and lead to savings for people who have debts in collection. Many lenders, including credit-card issuers, use the score as a measure of creditworthiness. Reuters

Most lenders check applicants' FICO scores to help determine whether to extend credit to consumers and what interest rate to charge. Fair Isaac will begin rolling out the new scoring model, named FICO 9, to credit bureaus this fall and to lenders later this year.

 

More than half of all debt-collection activity on consumers' credit reports comes from medical bills, according to the Federal Reserve. Such activity results in lower credit scores for consumers, meaning that lenders are more likely to be cautious in extending credit.

 

The number of U.S. consumers struggling with medical debt has been surging. As of 2012, 41% of U.S. adults, or 75 million people, had trouble paying medical bills, up from 58 million in 2005, according to a report released last year by the Commonwealth Fund.

 

FICO scores were used in 90% of consumer and mortgage loan decisions, according to a study this year by the CEB TowerGroup, a financial-services research firm. VantageScore Solutions LLC, a rival credit-scoring firm in Stamford, Conn., rolled out a new scoring model in March 2013 that excludes all paid collections.

 

Even a small move in a borrowers' credit score can change the outcome of a loan application. Most lenders have a minimum credit-score requirement to lend to an applicant, and lenders can deny someone whose score is even one point below the minimum.

 

Lenders determine the interest rate a borrower will get based on the borrower's credit-score bracket.

For example, borrowers with a FICO score between 760 and 850 get an average interest rate of 3.823% on a fixed-rate, 30-year mortgage of $300,000, according to Informa Research Services, a market-research company in Calabasas, Calif.

 

Borrowers with a 759 FICO score get a 4.045% interest rate on the same loan. Over the life of the loan, the 760 borrower would pay $204,650 in interest charges-or $13,764 less than the 759 borrower.

 

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Change your money management style for free with the Money Smart program developed by the FDIC? It's the smart way to improve your fiscal fitness!

 

Thank you for choosing Consumer Advocates Credit Counselors. We welcome your comments and suggestions for future issues. Please email education@caccdebt.org with your ideas.

 

 

 

Five Money Mistakes you don't want to make

  
Patrice Washington Explains What Not to Do With Your Money
  
Whether it's positive or negative, the status of your finances directly reflects the habits you've created for yourself. Creating wealthy habits starts with your money mindset and the actions you implement on a daily basis, explains Patrice C. Washington, the Money Maven of the Steve Harvey Morning Show and CEO of Seek Wisdom Find Wealth, a personal finance training and development firm.

 

"When you're busy and caught up in the stresses of everyday life, it's easy to make mindless mistakes that directly impact your finances," says Ms. Washington. "It is essential to thoroughly think through every decision, prior to making it, so you don't let your finances take the back burner." By avoiding these five common money mistakes, you'll be well on your way to creating wealthy habits of your own.  

  1. Over sharing on social networking sites: Be cautious when posting any information on social networking sites - just remember that some things are best kept private. The less information you put out there for the world to see, the less likely you are to potentially fall prey to identity theft.
  2. Joining accounts with 'The One': Don't take lightly the commitment of joining accounts with a partner. Before making the decision, keep in mind the potential consequences your financial status, and credit score could suffer if the relationship doesn't go as planned.
  3. Focusing on credit only when you need to use it: Don't get lazy with credit, keep track of it, and make sure to closely monitor it from month to month. Keeping an eye on your statements and accounts will help you quickly catch any unauthorized transactions and identity theft.
  4. Clicking on a link in an email from the IRS: The IRS is an established governmental organization, it's almost guaranteed that they won't be sending you emails. Don't click on anything from an unauthorized source, and never send any sensitive information through email.
  5. Spilling the beans over the phone: Similar to email, never provide any sensitive financial information over the phone to an unverified source. To verify that they are who they say they are, hang up and call your bank or credit card agency and ask if there is a problem.
Known as the Wisdom & Wealth Money Maven, Patrice C. Washington is the Founder and CEO of Seek Wisdom Find Wealth, a personal finance training and development firm based in Atlanta, GA.

 

 

  ** Do you need help creating your family budget?

Talk to a CACC Credit Counselor toll-free 1-800-763-1874 or visit www.caccdebt.org

 

Why we don't ASK for a raise and How to Ask for One
   

by Author and Speaker Laura Fredricks

 

You have worked hard; extra hours; taken on other people's work; never complained; were praised by your boss's boss for your work; and you just received a great performance review. It is prime time for you to ASK for a raise. HOW you ASK for a raise makes all the difference between a "maybe," "let's wait a few months" and a "serious consideration on the spot."

 

Take the example of Kristen. She is an electrical engineer in an all male office. Over the past few years she brought in more business than her co-workers yet her raises have been moderate and not reflective of her work product or the value to the company. She asked me what she should do since she thought asking for a $35,000 raise would be too much. We did some job analysis on her field and her geographic location, and it was clear she was not being paid her worth and that $35,000 would bring her to exactly where she should be. I shared with her some specific tips and language she could use when asking for the raise as well as traps to avoid that do not amount to an ASK and here they are:

  

Always ASK for a Specific Amount

I have managed many people over the course of my career and very few came out with the amount they wanted. Most said "I have done so much extra work and I think I should be rewarded." Ok I recognize you isn't that a reward? Don't fall into the trap of leaving your raise amount a guessing game, state: "As you know I have brought in 10 new clients which has helped our company grow and attracted new business. I am here today to ASK you for a $35,000 raise effective the next pay cycle." Your boss needs the exact dollar amount to make a decision. That will put you in the position to get an answer in the very near future as opposed to a few months from now. Also put in your ASK when you want the raise. In this example it is the next pay cycle.

 

Prepare what you might hear in response

One of the best ways you can ASK way to your new raise is to be prepared for any and all possible reactions. I told Kristen to write down anything that comes to mind that her boss may say such as:

 

-This is way too much

-We have never given anyone that amount

-If I give you a raise everyone else in the department will want one

-The budget is tight this year

-We may be able to do this in the next quarter

-We hired you at a higher rate than your co-workers so a raise would make it unequitable to their pay scales

 

Then she could write down her response to each so that she would not be caught off guard. Preparation wins the day. When you are prepared you are confident and when you are confident you make your best ASK.

 

Get a date for your next meeting at the ASK meeting

Rarely will your boss say on the spot, "yes" "sure" "works for me" because depending on the size of your organization, it takes time, layers of review, and sometime human resources to consider. Kristen deserves her answer sooner rather than later but if you wait for your boss to get back to you it maybe months. So after she makes her ASK I told her to say: "Thank you I know this is an important decision can we meet next week on Thursday so we can keep things moving along and please let me know if you need anything else from me." No matter what you hear always thank your boss, get a date on the calendar so that your ASK will be considered as soon as possible and add that you stand ready to help any way you can. This way you look and sound prepared, confident, and willing to assist your boss with any back up information needed.

 

Follow these steps and ASK your way to your best raise. Kristen did. Initially her boss said no, then she began looking for another job and did get a job offer at a higher salary than her current position. She shared with her current boss that she really did not want to leave but there were other positions paying much more than her current salary and with 2 children ages 8 and 10, salary was her priority. Her boss now fearful he would lose agreed to give her a $30,000 raise.

 

Great ASK and Great Results! So, Why NOT ASK?

Asking for a raise can be very emotional because you are evaluating your contribution to the organization, assessing your worth, guessing and second-guessing whether your boss will agree or disagree with your request. And then what will you do if she says no to your ASK for the raise?

 

Quite simply, everyone deserves to get paid for the value of their work. This is very similar to asking for a new job title. The raise reflects the true value of the work you are performing and by industry standards, or company policies, you should receive the requested level of compensation. I think it would be valuable to look at the common reasons why we do not ask for a raise:

  1. It is a challenging economy and now is not the time to ASK.
  2. It I ASK, then everyone else in the department will want a raise.
  3. It may signal that, if I don't receive a raise, I will leave and then I am a less valuable employee.
  4. I was hired at a higher rate than they wanted to offer me, so maybe I should wait.
  5. The raise will put me above others in my department. That may cause bad feelings internally.

It is very hard not to hear these voices in your head or other reasons when you want to muster all the confidence you have and ask for extra money in your salary. Once you go through the exercise in turning negative thoughts about your ASK into positive, passionate statements, you will be in the position of asking from strength, not self-doubt. Remember, when you ask for a raise you are not asking for a ''favor,'' you are asking for the fair value of your work performance!

 

Still unsure "How to A$K for Money - and MORE of It"? Visit www.EXPERTonTHEASK.com or simply, follow on Twitter at Just ASK LAURA How!

 

 

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If you have the desire and the ability to make extra payments towards your DMP, contact CACC Customer Service to coordinate making the extra payment. Since your DMP is set up to pay a certain amount each month changes must be handled properly to make sure you do not get removed from the Creditors DMP.
  

CACC Customer Service: 1-800-763-1874

Do you know someone who would benefit from money management strategies and information?

 

 

Give Yourself Credit...when credit is due!
    

How long is a Credit Card account's "Grace Period"

  
The grace period is the number of days you have to pay your bill in full without triggering a finance charge. For example, the credit card company may say that you have "25 days from the statement date, provided you paid your previous balance in full by the due date." The statement date is given on the bill.

  

The grace period usually applies only to new purchases. Most credit cards do not give a grace period for cash advances and balance transfers. Instead, interest charges start right away.

  

If you carried over any part of your balance from the preceding month, you may not have a grace period for new purchases. Instead, you may be charged interest as soon as you make a purchase (in addition to being charged interest on the earlier balance you have not paid off). Look on the credit card application for information about the "method of computing the balance for purchases" to see if new purchases are included or excluded.

 

 

Give Yourself Credit

 

Federal law allows you to: 

  • Get a free copy of your credit report every 12 months from each credit reporting company.
  • Ensure that the information on all of your credit reports is correct and up to date.

To order your free credit reports, visit annualcreditreport.com or call 1-877-322-8228.

 

Five emotions to watch out for in your relationship with Money
    
Understanding Underlying Feelings Can Free Women for Financial & Personal Success, Says Business Coach

 

Everyone has a relationship with money, but for women, it's much more fraught with emotion, says Meriflor Toneatto. When we avoid and ignore those emotions, we allow them to quietly guide our decision-making - which inevitably holds us back.

 

"Understanding our emotions, fears and doubts about money and how they affect our behavior can help us heal them so we can experience financial and personal freedom," says Toneatto, an entrepreneur, certified business and life coach, and author of "Money, Manifestation & Miracles: 8 Principles for Transforming Women's Relationship with Money," (www.moneymanifestationandmiracles.com).

 

"For women, money is an emotional currency. It's tied to our sense of self-worth and self-confidence, and our feelings of safety and security. These feelings often translate into self-limiting decisions."

 

The effect can be profound. Consider female entrepreneurs: "The number of women-owned U.S. businesses is growing 1.5 times faster than the national average, but a 2013 report found that they're still contributing less than 4 percent of overall business revenues, about the same as in 2007," Toneatto says.

 

"Our businesses are smaller because we're less likely than men to borrow in order to expand. We're afraid to take financial risks," she says citing a U.S. Department of Commerce report.

 

And in the corporate world:

Women comprise half the workforce, yet hold the majority of lower-wage jobs in the United States, according to the 2014 State of the Union address.

 

What are the emotions shaping so many of our decisions? Toneatto cites five:

* Fear: The most common emotion among women is fear. With money, we fear not having enough of it; that someone will take it; that we'll lose it all and never get it back. Nearly half of all U.S. women fear becoming a "bag lady" - including those in households earning more than $200,000 a year - according to the 2013 Women, Money and Power Study.

 

And we fear an abundance of money. We may fail to negotiate a higher salary because we fear we can't live up to it. Successful women may be reluctant to reach higher because we fear failure -- and losing it all. These fears often have roots in situations we were exposed to growing up, and feelings of vulnerability and self-worth. They send a strong signal that we need to root out their source and heal it.

 

* Guilt: People who say things like, "I feel guilty when I spend instead of save" or "I never buy anything unless it's on sale" have guilt feelings associated with money. These, too, are often rooted in the fears and messages we saw and heard in childhood about not having enough money. Many of us are natural nurturers who've gotten the message that "good" women are selfless, and so we may freely, even recklessly, spend on others while withholding from ourselves.

 

* Shame: This painful emotion cuts to the core because it springs from how we feel about who we are - whether we're "good enough," worthy and deserving. We avoid talking about shame, and so it exerts control over us. With money, shame is commonly connected to amassing a lot of debt and hiding it because we fear being judged, humiliated, and disliked.

 

* Anger: This emotion repels money, opportunities and people because it can leave us closed off emotionally and physically from others. It's based in a belief in the unfairness of life and/or the unfairness of money. A person who becomes angry about money may be angry at herself for missing an opportunity or for mishandling money in the past. Anger can lead to trust issues and to over-protecting every cent - even hoarding money.

 

* Blame: Anger and blame often go hand in hand. It stems from feeling disappointed or wronged because you believe your life would have been easier and/or better if someone - maybe parents or a spouse -- had been able to provide you with more money. Blame can sabotage relationships with both people and money for years.

 

"At some point in our lives, we all have felt one or more of these emotions," Toneatto says. "The good thing is, once you begin to recognize them, they're like a flashing yellow 'caution!' light."

 

Meriflor Toneatto is the founder and CEO of Power With Soul, a company dedicated to empowering female entrepreneurs and professionals by helping them transform their relationship with money.

 

 

 
Have a money saving idea that you'd like to share?
Send it to us for possible publication in this newsletter!

 

 

 

 

 

Healthcare Reform and You
 

 

 

 

Challenges with Medicaid

 

Medicaid is a government-funded healthcare program that has been designated to provide lower income individuals and families with health insurance.

 

The Medicaid system is managed on a state by state basis and can be very hard to use. Many states have put the entire enrollment process online which can make it more difficult for low income individuals without access to a computer to enroll. Then the enrollment process can take more than an hour and require disclosure of a great deal of personal information, including financial to qualify.

 

Calling for help is usually an option but with most state offices being understaffed and the volume of calls each day being very high, hold times can exceed an hour or more.

 

Also, lines can be very long for those who enroll or seek help in person.

 

In addition, many on Medicaid and experts point out other problems with service from the Health Providers, such as:

-Not receiving proper or adequate medical care.

-Not being able to get an appointment or having to wait too long for an appointment.

-Not being able to see a specialist.

-Not obtaining an interpreter if you are unable to speak English or you are hearing impaired.

-Not getting transportation to medical appointments.

-Receiving medical care for which your HMO refuses to pay.

 

Despite the challenges in managing such a large system, Medicaid, is still a valuable coverage option for millions of people across the country. Patience and perseverance in getting correct information and using the system are keys to getting the most of Medicaid benefits.

   

 

Questions? Call HealthCare.gov at 1-800-318-2596, 24 hours a day, 7 days a week. (TTY: 1-855-889-4325)

 

 

 

Your friends and neighbors are suffering with money problems!

Upset woman

They need your Help! CACC is a non-profit, IRS approved 501(c)3 educational and counseling organization. Our expenses and operations are supported through generous contributions from corporations and individuals like you. Will you please consider providing some financial support so that we can continue our mission? The donation you make today will help fund debt relief programs, education and client services while providing help and hope to thousands. Won't you help us give the gift of Debt Relief?

 
YES, I'd like to help fund CACC's Debt Relief and Education efforts with a contribution of:           
(  ) $25     (  ) $50    (  ) Other    $___________.
  
Please Mail your Donation to:
CACC Education Development
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Free Workshops and Seminars 

As a non-profit Credit Counseling and Financial Education organization, CACC is dedicated to reaching out to the community. CACC provides financial education seminars and workshops at community centers, local organizations, and companies.    

Popular Topics Include:
  
  • Managing Money in Tough Times
  • Creating and Using a Spending Plan
  • Managing Debt
  • Fighting Identity Theft and Financial Fraud
  • Understanding Your Credit Report and Boosting Your Credit Score
  • Creative Ways to Teach Kids About Money
  • How to Get Out of Debt
  Ask about customized seminars for your group, staff, congregation, organization, or club!  
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Consumer Advocates Credit Counselors, Inc. is a 501 (c)3 non-profit credit counseling organization providing credit counseling, financial education, and debt management services.  Please visit our website at:  www.caccdebt.org 
 
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Additional consumer resources:

 

America Saves 

 

Affordable Care Act

Starting October 1, 2013 all Americans must buy Health Insurance 

 

Internal Revenue Service

www.irs.gov 

 

The Federal Trade Commission
www.ftc.gov

 

 

Free Birthday Gifts

 

Free Credit Report
www.annualcreditreport.com 

National Do Not Call Registry
www.DoNotCall.gov

 

Report ID Theft
www.ftc.gov/idtheft

Consumer Tips
www.ftc.gov/consumer
 
Consumer Resources in Spanish
www.ftc.gov/consumidor

Free Consumer Publications
www.ftc.gov/bulkorder  

Stay Safe On-Line

US General Services Administration Federal Citizen Information Center

National Drug Abuse Hotline 1-800-622-HELP

National Domestic Violence Hotline
1-800-799-SAFE

Suicide & Depression Hotline 1-800-999-9999

National Council on Problem Gambling 1-800-522-4700

Fair Debt Collection Practices Act


Homeowners Hope Hotline for Mortgage Counseling and Assistance  1-888-995-4673
  

Benefits.gov

Learn about a variety of Government Benefits, how to qualify and how to apply.

 

 Supplemental Nutrition Assistance Program

(SNAP)
SNAP is the new name for the federal Food Stamp Program.

Temporary Assistance for Needy Families (TANF)
TANF is designed to help needy families achieve self-sufficiency. States receive a block grant to design and operate their programs to accomplish the purposes of TANF. These are:
-assist needy families so that children can be cared for in their own homes
-reduce dependency of needy parents by promoting job preparation, work and marriage
-preventing out-of-wedlock pregnancies
-encouraging the formation and maintenance of two-parent families.

Medicaid   
Medicaid is health insurance that helps many people who can't afford medical care pay for some or all of their medical bills.
Good health is important to everyone. If you can't afford to pay for medical care right now, Medicaid can make it possible for you to get the care that you need so that you can get healthy and stay healthy.

Supplemental Security Income (SSI)  
is a Federal income supplement program designed to help aged, blind, and disabled people, who have little or no income.
It provides cash to meet basic needs for food, clothing, and shelter.

Low Income Home Energy Assistance Program (LIHEAP) 
If you can't afford to pay your home energy bill, your home may not be safe, and you may be at risk of serious illness or injury. The LIHEAP may be able to help keep you and your family safe and healthy.

National School Lunch Free Lunch Program (NSLP)  

Established in 1946, The National School Lunch Program (NSLP) is a federally assisted meal program operating in public and nonprofit private schools and residential child care institutions. It provides nutritionally balanced, low-cost or free lunches to children each school day.

Federal Housing Assistance/Section 8 (FPHA)
Public housing assistance was established to provide decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities. Public housing comes in all sizes and types, from scattered single family houses to high rise apartments for elderly families.

 

Home Affordable Modification Program (HAMP)

888-995-HOPE

If you are struggling with your monthly mortgage payments or have already missed a payment, now is the time to take action.

Contact Us:

phone: 1-800-763-1874
 
 
CACC Money Wise Monthly Editor in Chief:
Mike Schiano, "The DebtBuster"  


'Til Next Month,
Consumer Advocates Credit Counselors, Inc. 

   This newsletter is designed to provide accurate and authoritative information with regard to the subject matter covered. This information is given with the understanding that neither CACC nor the Editor and Writers are engaged in rendering legal, accounting, or other professional advice. Since the details of your situation are fact dependent you should always seek the services of a competent professional before making any financial decisions.      
Copyright©Consumer Advocates Credit Counselors, Inc. 2014. All Rights Reserved.   
Use of all or part of this newsletter is allowed with proper attribution and link:
Source: Consumer Advocates Credit Counselors, Inc. www.caccdebt.org  
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