ClearPoint Blog

Tips for Managing Money on Unemployment

By Scott Scredon While the national unemployment rate has improved to 7.7 percent, an estimated 12 million persons are still unemployed. Counselors with CredAbility work with consumers who have lost their jobs and help them manage and preserve their credit during these challenging times.

"Managing your finances during unemployment is critical," said Deatra Riley, a financial education manager for CredAbility who teaches money management classes to people who are newly unemployed. "The search for a new job can take months, and even when you find a new job, it may pay less than your previous one." Riley also recommends that consumers who are unemployed take special care to protect their credit because good credit is a requirement for several jobs. "Failing to manage your finances during unemployment could affect your credit report and hurt your chances of landing a new job."

Riley says that even if you are unemployed, try to make the minimum monthly payments on your credit cards. If that is not possible, contact your creditor, in writing, explain the loss of income and advise them when you will be able to resume making payments. You may also be able to lower the interest rates on all of your credit cards, and your monthly payments, if you qualify for a Debt Management Plan (DMP).

Short-Term Money Management Tips
Once you have lost a job, consider the following tactics:

  • Make looking for a new job your full-time job and have an action plan that involves selling yourself to potential employers. Set a goal for the number of people you will contact, network with or jobs that you apply for in a day or during a week. Striving to reach that goal is a way to motivate you that will lead to a job offer.
  • Consider enlisting a family member or friend who will check your weekly progress. This person can also help keep you motivated if your job search does not proceed as you originally planned.
  • Manage your stress level while you are unemployed. Look for methods to control your stress and implement healthy stress relief techniques including exercising regularly, eating nutritiously and monitor your thoughts and avoid negative self-talk.

Assistance is available to help you manage your finances. For example:

  • Call United Way to find out about other low-cost services, such as day care, or rent and utility assistance.
  • If you are paying off a student loan, contact the student loan servicer company to defer or reduce your payments.
  • Ask your financial company servicing your automobile loan if they have a plan that allows you to skip one or two payments now and add them at the end of the loan. This is called extending the loan.
  • Make at least the minimum monthly payments on your credit card accounts. If that is impossible, contact your creditor in writing, explain your loss of income and advise them when you will be able to resume making payments. Keep copies for your records.
  • If you cannot make your mortgage payment, contact a HUD-certified housing counselor at 800.251.2227.
  • Consider downsizing your lifestyle by reducing expenses such as club and gym memberships, cable television, bottled water, magazines and movies. Find ways to reduce "everyday" expenses, such as telephone usage and dining out. For example, families with cell phones for each person may not need a land line and cooking all meals at home could easily save a family hundreds of dollars each month.

Show You Care, but Spend Wisely During the Holidays

By Scott Scredon
For many people, enjoying the holidays means taking care of loved ones by purchasing gifts that will bring them joy and happiness. Whether you are buying for young children, a spouse or other family members, it can sometimes be difficult to accomplish this goal and also stay within your spending plans. It has become even more difficult to achieve this with the popularity of online shopping; you do not have to leave your house in order to spend hundreds, even thousands of dollars, within just a few minutes.

As we enter December, when holiday shopping is in full swing, remember that you will need money in January for your mortgage or rent payment, food, gas, utilities and other important bills. And if the furnace goes out or your car needs major repairs, suddenly you may need to borrow several hundred dollars from a credit card to cover these or other unexpected expenses. We have seen clients who repeat this behavior year after year, pile up debt and eventually need to speak with one of our counselors about a Debt Management Plan (DMP).

To keep your spending in check during the next three weeks, here are a few helpful hints:

Make sure your holiday spending budget is realistic. As you consider the amount for each family member and friends, do not underestimate the amount you want to spend. You will only end up feeling guilty and end up spending more money as Christmas gets closer. And this often means putting some of these last-minute purchases on credit cards.

Cut back on everyday spending items in December. Skip the lattes, pack a lunch and do not eat out at restaurants between now and Christmas Day. If your employer allows it, consider working from home one day each week, which will save money on gasoline and other expenses. By combining all of these ideas, you may be able to save a couple of hundred dollars in expenses that can be applied to any last-minute gift needs.

Look for any last-minute deals on the weekend before Christmas. With Christmas falling on a Tuesday, there should be plenty of good deals at major retailers from Dec. 21-23. If you feel the need to make any final purchases, you may find reduced prices for a number of items.

Start off the New Year on solid financial footing. No one wants those first two or three paychecks of 2013 to be spent paying down credit card bills and paying off other holiday expenses. Think about how you will feel if that is the case and resist the need to spend more now for short-lived satisfaction.

Think before you open multiple new retail accounts

As you shop this holiday season, you will probably have manyopportunities to open new retail credit card accounts.

Be careful about succumbing to this temptation.

Often the cards are offered with the sweetener that you willget a discount on your first purchase, or for purchases you make the rest ofthe day at that store.

But opening new accounts can hurt your credit rating and domore damage in the long run than you are able to save at the cash register.

CredAbility’s Florida President, Broc Rosser, recentlyappeared on an Orlando TV newscast to explain.

Georgia Man PaysOff $50,000 in Credit Card Debt 

By Scott Scredon

When Jim Braden’s roommate moved out a few years ago, he needed help paying off more than $50,000 in credit card bills. Debt had piled up from medical costs and other routine expenses, so he turned to CredAbility for assistance. Now, after working with CredAbility to make payments of approximately $1,200 a month for four and a half years,that credit card debt has been paid off.

Like many people, the Clarkston, Ga., resident’s debt gradually built over time. A chronic health problem has meant regular medical bills, along with high medical insurance premiums and prescription drug costs that often exceed $1,000 each month. Still, Braden managed to make his regular credit card payments until he missed one when traveling out of the country several years ago. 

“By accident, I missed one payment, and the interest rates on all of my credit cards jumped to 25-30 percent,” he said. Braden made payments at those rates for six months, but his rent and utilities ballooned when his roommate moved out, so he sought help.

After speaking with a CredAbility counselor, Braden enrolled in a Debt Management Plan (DMP). Depending on a person’s income and debt levels, CredAbility can work with a person’s creditors to negotiate lower interest rates and lower monthly payments.  In Braden’s case, CredAbility helped lower the interest rates on all of his credit cards dropped to between six and eight percent. He also sent one payment into CredAbility, which handled his payments to each creditor.

“It was an enormous relief when I went on the plan,” Braden said. “Trying to keep up with multiple accounts, multiple due dates,  the paperwork and the changes in credit card agreements can be overwhelming. It was a huge amount of stress.”

Still, the $1,200 monthly payment was a large part of Braden’s take-home pay as a contract librarian, so he needed to make other adjustments to his lifestyle. He moved to a smaller home with a lower rent payment and utilities, cut out cable television, reduced cell phones and other telecommunications costs. He ate out only once a month, brought lunch to work from home, stopped parking in pay lots and used public transportation when possible.

He also needed to continually adjust his health insurance policies, which were needed to pay for two more surgeries. And when his car died on a trip to visit family inTexas, he needed to buy a used car.

Despite all of these financial challenges, Braden never missed a payment on his Debt Management Plan. He’s looking forward to this Saturday, Nov. 17, which will be the first month in almost five years when he will not need to make his $1,200 payment to CredAbility.

“This will be the first month in many years where I haven’t had to make that payment,” Braden said. “My debt is paid off and it’s a huge, huge relief.  I’m really grateful.” 

Plan to give yourself a debt-freeholiday

Do you have a spending plan in place for the holidays?

Even people who are careful to create monthly budgets most of the year find themselves tempted to go all out for friends and loved ones during the holidays. When that happens they can wind up with excessive credit card debt.

The best strategy to avoid headaches when your January credit card bills arrive is to create a carefully considered budget that sets aside money each month for your holiday spending. You should include gifts, of course, but also projected travel costs, meals and once-a-year purchases, (like that seven-foot Douglas- fir).

Holiday shoppers will spend an average of $749.51 on gifts and seasonal merchandise, according to the National Retail Federation. That’s fine for people who planned for the expense. But for people who don’t create a spending plan and stick to it, this is a season filled with opportunity to wind up in credit card debt.

If you don’t have a monthly spending plan that fits into a yearly household budget, you are courting financial trouble. If you are conscientious about creating a spending plan and sticking to it, then congratulations. You already know the peace of mind that comes from keeping your spending within your means.

For those of you who can use some help with budgeting, we offer an online class that guides you through a step-by-step process to build a prioritized spending plan. It is eight minutes well spent.

If you need help with budgeting or you need help paying credit card debt, CredAbility is always here to help online or by phone – 800-251-2227.