THE Cambridge Connection - Episode 22

So they can’t just forever eat the cost. So what happens? They raise their prices. When we look at people’s budgets, you go out to a restaurant and you order food, you don’t necessarily itemize it. You look at it.

What’s the cost? Obviously, we do, because we have that brain. It’s been cemented into us to do those things. But a lot of people will just go out, and when the total comes, it is what it is. And if that’s raising two or three times and costs are going up, it’s going to start to impact people tremendously.

Very noticeable, I’m sure, too, to the wallet. So our guest today, Bruce McClary, he’s the Senior VP of Membership and Communications for the NFCC. We’re going to have a great conversation with some really insightful information that will tell consumers where they can go when they need help, if they’re starting to have trouble with their credit cards and their unsecured debts. And I’m really excited to have him. He’s going to be a really amazing guest.

I believe so. This is going to be a great show. All right. He’s going to join us after the break. This is Gordon Oliver with The Cambridge Connection.

Show promo and station break

We’ll be right back. Hi, I’m Christopher Viale, President of Cambridge Credit Counseling. As 2022 begins, The Cambridge Connection is ready to continue to tackle the financial issues and challenges that matter most to you and your family. This month, they’re going to feature critical conversations around student loans, paying off holiday spending, budgeting for the new year, and other financial wellness tips to help you meet any financial challenge. And as always, they’ll include experts in those fields and a few real life scenarios and success stories to show you how following reasonable steps can help you regain control of your family’s finances and get you back on track toward your goals.

5 FM or 1400 AM. Or find all The Cambridge Connection episodes anywhere you listen to your favorite podcasts. And in the meantime, if you’d like to speak to one of the counselors at Cambridge Credit Counseling, there’s no obligation to call. 1-800-CAMBRIDGE. Welcome back, everyone, to The Cambridge Connection.

Introducing Bruce McClary and the NFCC

And it is my privilege, Tina Marie, we have our special guest, Bruce McClary from the National Foundation for Credit Counseling, also known as the NFCC. Bruce, welcome to the program. Thanks, Gordon. It’s a pleasure to be here. Welcome, Bruce.

Yeah. Really, really glad to have you. Obviously, inflation is going up. We’re going to get into some topics here. But before we do that, can you tell our listeners a little about your career and what you do and where you are today?

Yeah, sure. I’ll start with a little bit about the National Foundation for Credit Counseling. It’s the first and largest association of nonprofit credit counseling agencies in the nation. And the focus is primarily on financial well-being for all Americans. The NFCC has been around since 1951.

And all of our 51-member agencies throughout the country are nonprofit providers of credit and financial counseling. And some, like Cambridge Credit Counseling, which listeners may be familiar with, offer services beyond the scope of credit counseling. For example, they help first-time homebuyers with HUD-approved housing counseling. They also help seniors make informed decisions when considering reverse mortgages. And for people who are at risk of foreclosure, trade counselors, NFCC-approved counselors offer HUD-approved counseling solutions for people who are trying to preserve home ownership.

And then, of course, there’s also student loan counseling, budget counseling, and a variety of other services that are available at NFCC member agencies. And the NFCC supports those member agencies by providing counselor certification programs to make sure that they have consistency in the quality of counseling. And the NFCC also requires all of the nonprofit organizations that are a part of the NFCC to adhere to a pretty comprehensive and rigorous set of member quality standards. And finally, the NFCC advocates on behalf of its members and provides passive funding opportunities for these nonprofits, grow their programs to serve more consumers and to help more people. So we’re really proud of the way that we support our members, and we’re proud of the work that our members are doing, and we continue to support that just because they’re putting consumers first.

As far as myself, I started a long time ago. I’m not going to say how long because it’s going to show my age. A long time ago as a credit counselor working with consumers directly out of a counseling location in Virginia, I started at that position after many years in lending and debt collection. So I was an experienced lender and an experienced debt collector, and I brought that background to help the people who were in need of a little bit of guidance and advice if they were falling behind with their credit card debt and facing other issues. And then I moved into the communication role years later with that same agency, and then I came to the NFCC at the national level about seven years ago.

So you’re saying you have a little experience? Just a wee bit. Yeah. And I hope listeners don’t hold it against me, but I used to be a debt collector. But you know, I’m using that experience for good and not evil right now.

It all comes back to having wisdom, right? You’ve gotten a lot of wisdom on all the positions and helping so many people over the years, I’m sure. So I try to put it to good use. And Tina Marie, actually, how long has it been that you’ve been working as a credit counselor? 24 years with Cambridge Credit Counseling.

Survey on inflation and consumer worry

That’s awesome. So we got a lot of great experience on this call, and again, real important, troubling things showing on the horizon. So let’s kind of get into inflation. That’s a growing concern for everyone. So can you talk about, I understand that there was an NFCC Harris Poll survey, and what you learned about the way consumers would be impacted by the rising cost of living?

Yes. The survey was just released just a few weeks ago, and the poll was conducted in November of last year, so toward the end of the year. And it’s a snapshot of the state of financial well-being for American consumers, and it looks at different segments of the population. It looks at, in general, just the broad state of financial well-being for American consumers. But it also takes a deeper dive and looks at military families and also takes a look at veterans.

So active duty military families, veterans, and just civilian American households. And you know, the timing of the survey really gave us a pretty clear picture of just how well prepared or not American consumers are for the continuing trend with inflation. And now, as we’ve heard in recent news, the approaching interest rate increases with the Fed rate hikes, which is just going to compound some of the issues that households are experiencing because of the inflationary trends. And one of the things that we found that really came to the top of all of the data is that most Americans, at least as identified in the survey, have financial worries. And a little over a quarter of the general population are more worried about meeting basic household expenses compared to a year ago.

And that’s just the general situation with the civilian population. But then when you look at the military component of the survey, military families even more so, they’re expressing more financial worries and they’re feeling more concerned about meeting basic household expenses. And I guess to put the exclamation point on all of this, the survey also identified that about a third of Americans described their situation as just getting by. And a similar portion say that they’re spending more than they were a year ago. So what does this mean in terms of how inflation is going to be impacting American households?

I think it’s pretty obvious that there are a good number of American households that are not very well positioned right now to sustain the ongoing impact of increasing inflation. And then, you know, to throw more gasoline on the fire, the interest rate increases that we know are coming in the year ahead. Yeah, this information is important because we talk on this show. And if you’re just joining us, this is Gordon Oliver with The Cambridge Connection. Here with Bruce McCleary from the NFCC.

And, you know, while you want to have positive messaging, this show is not about doom and gloom. It’s about information. It’s about connecting people with understanding how to deal with these feelings and what they’re starting to feel. So this survey is incredibly important. And that information is exactly what it feels like.

You see headlines. There was one on Fox Business that said soaring inflation is likely costing Americans an extra $276 a month. So this narrative, and I hate to say that word, but this information is starting to show up now. And, you know, people are feeling the pinch. Yeah.

Interest rates and credit card debt

You know, in addition to inflation, Bruce, which is up about 7 percent, the largest increase since 1982, we now have higher interest rates to look forward to this year. So how how is it likely to impact people’s wallets and what what can we do to prepare for those changes? What are what’s your advice on that? Yeah, well, consumer debt activity is a key indicator of financial well-being and especially at times when the cost of living is increasing and increasing at a rate that outpaces income growth. , that just piles it on when it comes to the cost of living.

A lot of people rely on credit cards for spending and even to take care of the most basic necessities. And so you start adding to the cost of using credit cards when you when you increase where the interest rates go up, when the Fed increases interest rates, there’s that trickle down effect that impacts credit cards. So that’s a that’s a factor. And then, of course, the actual purchase price of the things that people are buying with those credit cards continues to go up, you know, meat products at the grocery store, dairy at the grocery store, gasoline for your vehicle. I mean, those are some of the areas where there have been significant increases in cost of consumer goods.

So that’s a really nasty stew that has been created there. And if we look right now at credit cards, most of the general population, 64 percent report that they are currently using credit cards on a regular basis based on the study. And more than a third report carrying balances from month to month, about 38 percent. And you and I both know, we all know what happens when you carry your balance from month to month. You’re just adding expense to to what you’ve already to what you’ve already spent on the purchase price of the item.

And that can really add up if you’re struggling to pay down that debt. So I think with the interest rate increases, that’s that that could be a trouble spot for people already struggling to pay down their debt. Right. And we’re talking an increase, like you said, in everyday living expenses. We’re not talking luxury items like a flat screen TV.

We’re talking about necessities here that people are simply just using their credit cards. I see it on a day to day basis. Yeah, absolutely. Oh, yeah. So I guess what we have to do is we have to ask ourselves what people can do now to prepare for these changes that are coming with the interest rates increasing and the inflation continuing.

Shopping for better credit rates

There are some things that people can do to at least relieve some of the pressure on their budget. And if you have good credit right now and if your credit score is fairly decent, you have the luxury of being able to shop around for better interest rate on your credit card. And I advise anybody who’s in a situation where they, you know, where they have a lot of credit cards and they’re worried about the interest rate increases that may be coming. Maybe they are carrying a little bit of debt, but otherwise their credit scores are pretty decent. And an interesting fact, according to FICO, most credit scores increased last year for consumers.

So your credit score may actually be better than you think it is. So you might want to check to see where it is and then see if you can shop around. But you may be able to land a better rate on a competing credit card or negotiate a better rate with your current credit card company and ease up some of the pressure on what you’re on the balance that you’re carrying. But it’s also a good time just to take a look at your budget, see if you can free up some room in your budget to help you power pay any balance that you’re carrying. And again, if you’re if you’re in a financially stable situation, if you’re fortunate enough not to be carrying a lot of debt, but if you’re just making some of the minimum payments each month, try to see if there’s a way to add a little bit to the minimum payments or at least get your balance paid off in as few months as possible so you can save money on interest going forward and then make a plan not to carry a balance so you’re not being charged that interest rate.

So there’s a couple of things people could do right now to kind of get ahead of the changes that are coming. So, Bruce, for our listeners that might take advantage of that advice, what what would be considered a good credit score? A decent credit score is something in the in the mid to upper 700s and above. The FICO credit score range is 300 to 850. So anything around 760 or higher, I would say, would be very good to excellent credit.

And it would get you in that top tier where you’re qualifying for the best rates and you’re getting the best deals and you’re very unlikely to get turned down when applying for a line of credit. And, Bruce, do you have any suggestions on where to shop for these lower interest rates for the consumers? com, et cetera, and you can go into some of these marketplaces. I would say don’t limit your shopping to a single marketplace. I would say compare across the different credit marketplaces so you can really get a better sense of what the landscape looks like, especially if you’re in a position where you’ve checked your credit score and you see that it is very high and you know that you qualify for the best deals.

You don’t want to sell yourself short by limiting your search just to one particular online marketplace. And that’s not to say to apply for every one of them. It’s to do your research, find the one that you think fits you best and then apply for that one, right? Yeah, you don’t want your appetite for credit to get away from you. You certainly don’t want to apply for a whole bunch of different credit cards at the same time.

And, you know, applying for too much credit over a prolonged period of time actually can ding your credit score in a negative way because it shows too many inquiries on your credit report. You have to be very strategic about it before you drop an application. Make sure you’re comfortable with your selection. Look at what the impact will be on your budget. Make sure it’s a credit card you’re going to use.

Make sure the benefits align with your preferences, and then go for it. And the odds of acceptance, I would think, need to be pretty high as well, because when being denied for credit, that also can negatively affect your rating. Yeah, exactly. And that’s why it’s so important to look at your credit score to understand what it means before you go and apply for credit. A number is just a number unless you know what’s driving that number and what the consequences are.

So look at your credit report. If you have a score that’s below that 760 level, especially if you’re down in the very lower tier of credit scores, if you’re down below 500, for example, or if you’re anywhere in the 500s, your choices are definitely going to be more limited, and your interest rates are going to be higher. There may be higher fees associated. There may be more restrictions on some of the cards that you may qualify for. So you really want to make sure that when you drop the application, you’re applying with a creditor that is more likely to accept you and to extend the line of credit.

So you’ve got to do a little bit of research, a little bit of homework. Bruce, this is incredible information for consumers, especially with the time that we’re in. Can you stay with us? We’re going to take a short break. Can you join us back for just a few more questions?

Absolutely. Happy to. Awesome. This is Gordon Oliver with The Cambridge Connection. We’ll be right back.

Sponsor break

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Avoiding debt relief scams

Welcome back, everyone. This is Gordon Oliver with The Cambridge Connection. We’re here with Bruce McClary from the NFCC, the National Foundation for Credit Counseling. And Bruce, this has been amazing so far with this information we’re giving consumers. And I really want to get into some pitfalls and with desperation and lack of knowledge, some mistakes that consumers can make and where they look to get help.

So like a dentist recommends brushing and flossing regularly, doctors recommend regular exercise and a healthy diet. What is the one thing that you feel people should do more often when it comes to managing their financial well-being? Yeah, that’s a great question, Gordon. And one of the things that I always talk about, and it just seems the more I talk, the things continue to be bad on this front. And I think it all comes down to keeping an eye on what you are spending and saving.

Only about a third of Americans keep an eye on their spending according to our survey. And not keeping an eye on your spending and especially not having a plan, that’s unacceptable. At best, the survey revealed that just below half of all Americans have a somewhat good idea of how much they spend on things like food and discretionary items. So again, going back to the inflation and rising interest rate topic that we talked about earlier, with all that going on, you’d better have a pretty good handle on what you earn, spend and save. And with that last item, savings had better be a priority.

So that’s the one thing I would say, you gotta keep an eye on what you’re spending, gotta keep an eye on savings and make it a priority. And if your debt is out of control, you need to take action pretty quickly to get that under control. You can’t just sit there and wait and think things are just gonna magically get better. And the problem is if you wait, it’s gonna get worse. And as it gets worse, your situation becomes more desperate.

And I think that’s where people make some snap decisions about where to reach out and get help that may not do them as much good as they do harm. And there are a lot of bad actors out there that are waiting to rip you off for your last penny in your pocket. Indeed. And the lint next to it as well. So you wanna make sure that you make the right choices.

Some people who are reaching out in a debt crisis, they’re worried about their credit. So they go to some of these credit repair companies, thinking these credit repair companies can magically erase some of the accounts that they legitimately owe. And in some of the messaging and advertising of some of the less above board actors in that field, they lead people to believe that they can do that, that they can work magic, that they can make accounts disappear that should actually legitimately be there. And so people pay money upfront. Not only do they lose that money, their situation is no better after going to these repair scams and schemes.

So that’s another area where people get ripped off out of desperation. And another is where people may be done more harm than good is if they reach out to some of the for-profit debt settlement companies that are offering to settle debt for pennies on the dollar. Some of the tactics the companies are using, and the Consumer Financial Protection Bureau, by the way, has a great page warning consumers about some of the dangerous tactics of some of the for-profit debt settlement companies. But some of the tactics they use put people in a far worse situation than they were when they reached out for help. They’re advising people not to make payments to their creditors, not to send them even a little bit.

They’re advising people to hide from their creditors when they’re getting mail or phone calls and not have conversations to let them know what their intent is or what they want to do to try to resolve the issue. That only makes matters worse. They say it’s a tactic to improve the chances of negotiation, but in many cases, it leads to a far worse situation and sometimes even lawsuits against the person who owes the money. I know, Tina, advice you give is you never avoid your creditor. Oh, absolutely.

And they’re taking the creditor, they’re preventing them from talking to their client to try to work something out. I always tell the consumer, someone telling you just don’t pay your debt is not good advice. Just don’t pay it. Just don’t pay. That’s not good advice.

I would never recommend not paying your bills. Obviously, people reach the point that it seems impossible, but there are truly dedicated ways to address that rather than avoiding the situation and at that point, risking property liens. Legal troubles. Anything like that, right. Go ahead and garnishments, things like that are always, can happen.

And these consumers are just somewhat looking at, oh, this is great. This is fantastic. This has got to be too good to be true. Well, it is. It is too good to be true.

Student loan repayment changes

They’re not going to just leave you alone. But Bruce, on a different note. Now, student loan borrowers have been through a lot of ups and downs during the past few years. What big changes are in store for them this year? And what should borrowers do if they’re facing financial difficulties?

Yeah, this is a good topic. And there’s a lot of speculation about student loans right now, specifically federally guaranteed student loans. Everything from loan forgiveness to possible further extension of administrative forbearance, which allows programs to skip payments without interest or penalty. And my fear is that people are acting based on what they think will happen down the road and not what we know is most likely to happen based on what’s already been announced. So in terms of this year, the months ahead, we know that the federal government extended the administrative forbearance on federal student loans to May.

So on May 1st, people who’ve been taking advantage of the opportunity to skip payments without interest or penalty on their federal student loans for more than a year are now going to have to start making those payments again. So those borrowers need to be in contact with their student loan servicers right now. I would not wait another minute or another day. Get in touch with your servicer. Check the status of your loan.

Make sure you know what to expect when the payments come due. What are those payments going to be? All of that information. And then sit down with your budget and see if you’re going to be able to afford those payments when they do resume. If you don’t think you’re going to be able to afford it, then you need to reach out and talk to somebody about the affordable repayment programs that are available through the Department of Education.

And NFCC member agencies offer student loan counseling for borrowers of federal student loans. And it’s a great opportunity to sit down and talk with a student loan counselor to determine which affordable repayment option is right for you if, in fact, you don’t think you’re going to be able to afford it. And the work you do at the NFCC, you know, this is so confusing. The last moratorium was supposed to be February 1st, and the week before they actually extended it, the government had said, there’s no way we’re extending this, and then a week later they extended it. So what my concern for consumers is that, to your point, they’re just going to think, ah, you know what, they’ll probably just extend it again, so I don’t really have to take any action.

So this advice is just paramount for people to take action now to really find out what those options are before they’re faced with another problem, especially with all the costs of everything going on. So it’s just so important that people are proactive to deal with these loans and get ready for repayment. Preparation. Be prepared. Absolutely.

Finding credit counseling assistance

All right. So we’re almost out of time, Bruce. And before I let you go, two things. Given what you mentioned from the survey results, what advice do you have for people who are struggling to keep their loans and credit cards up to date? And where can they find the NFCC and you to reach out to get that assistance to be guided to the right companies that actually offer this amazing help?

Yeah. I’ll go back to what I said earlier. Don’t wait to get help. Don’t dig your head in the sand. Don’t think things are going to magically get better.

The longer you wait, the less chance it’s going to get better. In fact, your debt situation could get exponentially worse. So a nonprofit credit counselor who is certified by the NFCC can work with you to identify all of your options and help you begin taking some of those steps, those critical steps, toward a better financial future on your terms. That’s the important part about this. The certified credit counselor is your financial advocate.

So this is somebody that can offer you advice in a situation where the counseling is confidential and is specifically tailored to you. They’re not working for the creditor. They’re not working for the debt collector. They’re working for you. And they’re going to present you with all the options that are available to resolve your debt crisis and move forward.

So I would say look for an NFCC certified counselor who can be your financial advocate and don’t wait to get help if you’re already falling behind. So a couple of ways you can get help. org. org. To get help from an agency, you can contact the NFCC at 800-388-2227.

org. Obviously we’re out of time. This has been an incredible conversation. And obviously we all are predicting, and your survey even says that troubling times are in front of us. So please, in the near future, come back as a guest as we continue to work on helping people with these solutions so that they know that they exist.

Absolutely, Gordon. I really appreciate the opportunity to be here now, and I certainly would be happy to join you again in the future. We really appreciate it, Bruce. Thank you so much. You have yourself a great day.

Closing thanks and show credits

Thank you, Bruce. I want to give a very special thanks to Bruce McCleary. Huge thank you to Leah and Lisa, our producers, because they’re always coaching us and helping us to make sure we can get the best information out to you. And as you can see from this show, we have great experts that come on, and we’re going to have some more great experts on a lot of different topics that help you get control of finances or help family members and friends that may need that help as well. com, click on podcasts, and you can listen to any of the shows in the past.

You can also find us where you listen to your favorite podcasts. And once again, we want you to be part of the conversation. org, or if you’re struggling with credit card and unsecured debts, feel free to call 1-800-CAMBRIDGE. Hey all, it’s Tina Marie, and you might know me as Gordon Oliver’s co-pilot for The Cambridge Connection every Saturday morning. What you might not know is that I’ve known Gordie for a really long time, and as a certified credit counselor at Cambridge Credit Counseling for over 20 years, I am thrilled to join Gordie every week to share and chat about real people with real financial problems, along with many success stories both myself and all of the counselors at Cambridge Credit have been a part of.

We know it takes a village of support and inspiration if someone is struggling financially, so it’s nice to know if that person is you, that you’re not alone out there. 30am right here on WHMP for The Cambridge Connection, because Gordie and I, we are here to help you have a better relationship with your money and hopefully make you smile, right Gordie? Couldn’t have said it better myself, Tina Marie.