Out of Hock & Out of Debt

Out of Hock & Out of Debt Harry Dahlstrom 1

The New American Dream Not too long ago, the great American Dream was to own a home, buy a new car, and send the kids to college. Today, for lots of people, the great American Dream is to get out of debt. 2

Rising Debt, Shrinking Savings 3

What Causes Most People to Go Into Debt? Most families with debt problems didn’t get there because they bought a home or a new car that they couldn’t afford. They got there because they have credit card problems. 4

Are You an Impulse Shopper? • Do you buy things you didn’t plan to buy? • Do you spend more money than you planned? • Do you buy items you don’t end up using? • Do you not bother to comparison shop? 5

Do You Abuse Your Credit Cards? • Suppose you couldn’t use credit cards? • Do you run out of cash between paychecks? • Do you put off paying your bills? • Do you get cash advances to pay your credit cards? • Do you spend 20% of your paycheck on credit? • Do you pay only the minimum? 6

How Far in the Hole Are You? Let’s figure out your debt rate. Your debt rate is the percent of your take-home pay that goes toward paying your debts. It will show us how good or bad things really are. 7

List Your Loans • Auto Loans • Personal Loans • Time Payment Loans • Bank Loans • Credit Card Loans 8

What is Your Monthly Take-Home Pay? • If you are paid weekly, multiply your paycheck by 4. • If you are paid every-other-week, multiply your paycheck by 2. 9

Find Your Debt Rate • Divide your take-home pay into your monthly loan total Enter your total monthly debt .…… 3 2 6 Divided by…………………………. ÷ Enter your monthly take-home pay.. 2 3 7 5 Equals……………………………… = Answer is a percentage…………….. 0.13 10

How Do You Compare? • 10 percent • 15 percent • 20 percent • 25 percent 11

Nine Ways to Get a Handle On Your Bills Whether you owe a lot of money or a little, here are nine ways to get a handle on your bills. Some are easy. Some are difficult. Some can be life changing. 12

1 Reduce Your Spending to Make Ends Meet Method • Look where your money goes. • Watch out for snowball spending. • Make drastic cuts. 13

A Few Money Saving Ideas • House Supplies • Gasoline • Public Transportation • Food away from home • Entertainment 14

2 Send in More Than the Minimum Payment Method 8 7 With a $25 minimum monthly payment, it will take you 8 years to pay off $1,000 at 18% interest. Add $50 to your minimum monthly payment you could retire your $1,000 debt in only 16.6 months. 6 5 4 3 2 1 1 15

3 Use Easy Money to Pay Down Easy Debts Method • Get some overtime or a part-time job. • Collect old debts. • Have a yard sale. • Unload the family jewels. • Do you have any savings? 16

4 Cash in on Yourself Method • Do you have a talent or skill? • Do you have any free time? 17

5 Ask Creditors to Reduce Your Payments Method • Who should you call? • Look on your monthly bill statement for the phone number. • Figure out how much you can pay. • Make the call. 18

6 Consider a Debt-Consolidation Loan Method • Consolidation loans are cheaper than credit cards. • A debt-consolidation loan is the most popular way to get out of debt. • Lots of banks and credit unions offer loans. 19

7 Ask You-Know-Who For a Loan Method • Ask friends and relatives. • Let’s role play! • Always put your agreement in writing. 20

8 Talk to a Certified Credit Counselor Method • Credit counselors have been known to perform miracles. • Credit counselors are affordable. • How can you find a credit counselor? • Beware of scammers. 21

9 What About Bankruptcy? Method • What does bankruptcy do? • There are two types of bankruptcy. • Declaring bankruptcy isn’t quick, easy, or cheap. • For some people, bankruptcy is the right choice. 22

Clean Up Your Credit Report Banks, merchants, landlords, and credit card companies send reports on their customers to credit bureaus. These bureaus hold detailed credit histories on millions of people. If you have credit, you have a credit report. 23

What is a Credit Report? • Your credit report is like a report card from school. • Your credit report shows how well you pay your bills. 24

You Should See What’s in Your Credit Report • Check your credit report for accuracy. • Call 1-877-322-8228 to obtain credit reports. • If you fell behind on your payments, be sure to insert a statement explaining why. 25

Build Up Your Net Worth Believe it or not, one day your debts will be gone. After celebrating, shift your goal from reducing your debt to building your wealth. 26

Easy Steps to Build Your Net Worth • Use the 75-15-10 formula. • Build an emergency fund. • Open an IRA • Buy insurance policies. • Buy a home. 27

Good Luck. You can do this! 28

Out of Hock & Out of Debt