THE Cambridge Connection - Episode 32

We’re going to take a quick break. We’ll be right back. This is Gordon Oliver with The Cambridge Connection. Spring is here, and it’s a great time to clean up your debts with a debt management plan from Cambridge Credit Counseling. Reduce your credit card interest rates and lower your monthly payments.

Call Cambridge Credit Counseling today. 1-800-CAMBRIDGE. Welcome back, everyone. This is The Cambridge Connection. I’m your host, Gordon Oliver.

Explaining the debt management plan process

What a pleasure. Tremendous show we have to talk about credit counseling, how it works, and hear some real stories with real people that have had success as well. So Tina, Marie, I know you and Stephanie want to have a dialogue to kind of talk through the counseling process. So what do you have for us? Well, first of all, Gordon, so what we are is a national nonprofit credit counseling agency.

We’re actually located in Agawam, Massachusetts. And what we do is just help consumers get to a better place financially. There’s a lot of process involved. A consumer will call in, might be looking for help with credit card debt. It could be unsecured loans, even disconnected utilities, just someone that might feel they’re in financial stress and don’t know where to go.

So they’ll give us a call, and at that point, what we do is identify the areas that they’re concerned with. So we go through a budget. We go through all their income and expenses, all their assets and debts. We get a better understanding of exactly what’s going on, and then look into some options to help. You know, if we determine that the credit counseling is the—the debt management plan, I should say, is the best option, it’s very simple.

What happens is we take the unsecured debt, close all the credit cards out, consolidate them into one payment. So if such a plan were appropriate for the consumer, once a month they would make one payment to our company. And in turn, what we do is send out individual payments to each creditor on their behalf. There are tremendous, tremendous benefits involved. Credit card companies reduce interest rates typically on average to around 8 percent.

So there’s a lot of consumers out there paying way more than 8 percent on their credit cards. Typically, those are 25 percent. We can get that down to an average of around 8 percent. If a consumer is past due or running late on their payments, they do discontinue future late and over limit fees on the debt management program. So it’s designed to get a consumer back on track and save them a tremendous amount of money while doing so.

OK. So I have a couple questions. One distinction, I want to make sure you said nationals. That means that you’re able to provide this service in all 50 states. So if it’s Hawaii, North Dakota, any of the states out there, you can provide these services.

You got it. You got it. We are licensed in all required states and we conduct business in all 50 states as well. That’s good for our listeners now and when they listen to the podcast so they know that Cambridge is available to help. So question number two is that process that you go through.

Are there times where either it’s not the right fit for the consumer to go with a debt management plan? Is there other steps that you take if that is the case? Absolutely. And that’s exactly why we go through the process to determine what the best option is for the consumer. So when we go through a budget and, you know, we obviously look at areas that we may be able to suggest a consumer cutback, sometimes they’re strapped.

There just isn’t any more cutting back that can be done. Unfortunately, at that point, there’s other options out there. We may tell a consumer to seek the advice of an attorney. Sometimes working with the creditors directly may also be an option. We definitely go through the budget to determine what those best options are.

And either way, you’re getting out of the phone call, you’re getting advice. Whether you’re enrolling in the plan or not, 99% of our consumers that hang up the phone have such a better grasp of their own finances and just feel so much better after speaking to a certified credit counselor. So Tina Marie, you talked about potentially referring to a bankruptcy attorney and a lot of people, first of all, are apprehensive to even go through credit counseling, even though they’re struggling and they’re stressed out with debt problems. But at some point, you’re helping consumers narrow down the options. So bankruptcy is an alternative.

Bankruptcy alternatives and budgeting help

People think negative of it, but it truly is a solution to help people get a fresh start when there’s no other answers. Would you agree with that? Oh, absolutely. It’s not the end of the world. I mean, bankruptcy laws were written with the knowledge that people reach a point that it is impossible to pay their debt.

I don’t know. Stephanie, I mean, how often do you feel you end up having to refer a consumer over to a bankruptcy attorney? Well, Tina, I would say, unfortunately, that does happen often. OK. If that happens often, when you were talking through the beginning of the conversation with a consumer and you’re talking through budgeting, we talk, I hear about this all the time where consumers, people feel that when they’re doing a budget, like all of a sudden they’re trapping themselves into, you know, having to force handle their money and because of it, they don’t feel like they want to do it because it is a process that takes work.

When you go through the budget and you’ve gotten to this point where it seems like no other alternative exists, other than talking to a bankruptcy attorney, what things in the budget will you go through to make consumers aware of some adjustments that they can make or areas where they might be spending too much in a certain category, what does that process look like? Well, a lot of clients don’t even realize that they’re spending so much on restaurants and takeout or their grocery bill or entertainment expenses, if that. So I would suggest making some cutbacks there. There’s also utilities for electric bills. They could go on a budget plan that will help them better manage that.

Or their cable or the cell phone bills, those might even be high and they don’t even realize that they can lower the payment. Yeah, I find going through the budgeting is actually a reality check, wouldn’t you say, Stephanie? Yeah, I would say so. So in the process, you’ve got the consumer that will get counseling, may not take advantage of the debt management program, or may not even need it at that point. When you leave the conversation or the counseling sessions are over, is there information that you’re providing to the consumers for them to have as like a takeaway of what they can do to improve on their own?

Yes, Gordon. We do have education and resources that we could send the client. We have a variety of them. And we also follow up with the consumer within a few months just to see how they’re doing. So just because they go through the session, and if they’re not enrolled in the debt management plan, there’s definitely follow-up.

There’s follow-up. We make sure that these consumers did reach out. And we send them an action plan in hopes that they do follow through with the recommended actions. So Tina Marie, I know we’re going to talk about some real people, real problems and success stories today. And before we do that, could you let consumers know where they can find Cambridge Credit Counseling to talk to a counselor like you or Stephanie?

Absolutely. They can call 1-800-CAMBRIDGE. They can also find us online. org. All right, Tina Marie.

Real people real problems success stories

So you brought some real people, real problems and success stories. So let’s get into them. Let’s dig in. All right. Well, I’ll go first.

I know Stephanie brought a few herself. As far as a success story I’d like to share, first would be Jared from Illinois. Jared’s hours were reduced at work. His income reduced about $140 per pay period, which was around $303 per month. Jared was really concerned about the reduction in pay as well as the rising cost of living, of course.

He had no idea how he was going to make the payments. So he considered bankruptcy but found that he only owed about $5,800 in unsecured credit cards. So he didn’t think that was enough to file bankruptcy on. He just needed an affordable repayment term. So Jared and I went through his budget and we were able to cut things back.

Stephanie touched on this earlier. We were able to cut back a little bit on his streaming services, things that he didn’t even realize he was still paying on after reviewing his bank account. And unfortunately, he had to cut back a little bit on his golf game, but whatever, he had to save some money. So we were able to reduce the payment down from $498 to $376. So it was about $122 monthly savings.

And one of the best things I can say about this story is that one of his creditors eliminated his interest entirely. So this repayment term at $376 allowed him to pay off $5,800 in approximately 19 months. So cutting back on the golf game for only about, say, two to three seasons, it made it worth it for him because now he’s debt free. Well, that’s awesome. And again, in times like we’re in now where things have a bigger cost to them, like fuel and groceries, obviously this is the perfect time to be able to look at some of these things in your budget where you have to make some adjustments to kind of adjust for things costing more.

So that’s incredible. That’s awesome. Exactly. Stephanie, do you have anything else to share today? So I had a client named Bill from Oklahoma, and he had a reduction of hours at work due to COVID-19.

His wife had unexpected medical bills, and he had to use his credit cards to get by. 9%. So we lowered the payment down $50 a month, and he was debt free in four and a half years. That’s amazing. So you heard that, a story like this, and the story that you just gave, Tina, what’s the alternative?

If they don’t move forward with a debt management plan, they actually say, yes, I’m going to do this. What is the path that they are on if they leave the counseling and don’t do the debt management plan and don’t make adjustments? What does that look like? Well, they find themselves using their credit cards even more, spinning the wheels, making the payments each month. Debts aren’t going anywhere.

It’s a never-ending process, especially the way these credit cards have these payments set up. If you notice, when you make a monthly payment, next month your payment might be $1 or $2 lower. They set it up where you are in debt with them for 20 to 25 years. There’s no way out. It’s relentless.

At least with the debt management program, there’s light at the end of the tunnel. Even with proper budgeting, I think we’re able to help the client, or the consumer, I should say, develop a savings. Have you found a lot of your consumers have been able to develop savings, Stephanie, after counseling? Well, a lot of clients don’t even realize that they’re spending a certain amount of money on certain areas in their budget. If they cut back that, they can always apply that to their savings.

I’m going to take that a step further, too, when it comes to savings. You said one of the benefits is reducing monthly payments. For consumers that are listening right now, if you just take your statement out from your credit card company and just look at the payment that you made and how much of that payment was interest, and then just put that bill to the side and look at next month’s bill when it comes in, see what your expected monthly minimum payment is, because it certainly will be different, and then look again at the amount of money that it’s costing you in interest with all the rising costs that we’re talking about, and then you add that money that’s being charged to you to carry these balances. It’s an extraordinary amount of money that’s being wasted. If you have a credit card with a balance, say, of approximately $5,000, and you’re being charged 24%, 25% interest, you’re making a payment of $150, but $100 is literally going towards interest.

How long can a consumer do that, especially those that are in financial trouble? That’s just literally money going out the window, and if you’re not paying attention to your statements, you might not even be aware that this is actually happening. more stories to cover. We’re going to take a quick break. This is the Cambridge Connection.

Promotional segment about the show

We’ll be right back. Hey, y’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. So join us every Saturday at 930am. 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. Welcome back, everyone. This is the Cambridge Connection.

Real people real problems single mother letter

I’m your host Gordon Oliver here with my co-pilot, Tina Marie, and our friend, Stephanie, who’s a counselor at Cambridge Credit Counseling. And occasionally we do what’s called a real people real problems conversation. And for people that are listening, we do we use these stories to have people maybe see that there are other people in their own shoes. I’d like to share an email that Cambridge received real people, real problems, and definitely go over the solutions or some proposed solutions with Stephanie. So the first one starts Dear Cambridge, I’m at my wits end emotionally and financially.

I’m a single mother of two, my children are eight and 10 years old. I was working from home when COVID initially hit my kids went to school remotely as well. Recently, we were called back into the office and my kids are actually going back to school again. Gas, the cost is killing me. You would think this would be an easy transition, but it really isn’t.

I now have to pay for after school care for my little ones. I have to commute what might only be a few miles each day to work, but the price of gas is killing me. My paycheck remains the same. And the cost of living has increased tremendously. For two years, I was able to wear jeans, sweats and sneakers all day long.

And now it’s back to business casual. I found myself shopping for new clothes using my credit cards to pay for them. I guess I just don’t know where to prioritize. I have no idea where to start when it comes to preparing for a budget. I’m losing sleep and I’m experiencing a lot of anxiety on just day to day living.

Can you give me some advice? I find this actually hitting home to me. I don’t know about you, Stephanie, but that whole part about wearing jeans and sweats all day. Yeah, I agree with and then having to go back after the COVID-19 weight comes on a little bit. Unbelievable.

So what would you say Stephanie to someone like this? Well, I would suggest to a client to make some cutbacks with the shopping for clothing. You can even look and see if they have any items on sale. They have seasonal sales, you know, or you could even dig in your closet and see if you can find anything that you can stretch along. It’s funny you should say that because I recently went through my closet.

And what might appear to be old clothing, I dressed up with accessories. So as far as you know, women in business having to dress business casual, grab a bracelet or another pair of earrings, you know, make it and dress it up, dress it up, you don’t have to have brand new clothes just because you’re going back to work, even though it’s been two years. Also, I would say having two children, I mean, I don’t she doesn’t specify if they’re both boys or girls, but obviously hand-me-downs are certainly something that I think all families should consider. But in a situation like this, I mean, even just to start a budget, that’s the main thing. Sit down, write down where you’re spending your money.

Jot it all down. Journalize. Track your spending. At the end of the month, take a look at it. Take a look where you spent your money.

I guarantee you will see areas that you are going to be able to cut back on. It’s not a bad idea, number one, to sit down with the family and really talk about things, even young children, right? We talk about financial literacy. And sometimes parents want to protect their kids from when they’re struggling with certain things. But in reality, I think back to my childhood, my parents worked very hard and we didn’t have a lot.

And, you know, I knew that they were doing a lot and there were times to be conservative. And one of the areas that I remember my parents really tightening up was planning meals that could last for days, right? Cooking a nice, inexpensive meal and have it last for days. The grocery stores are very expensive. All the products are very expensive now.

And that’s an area where people may still be living like it was yesterday when things weren’t like this. But this is the time where you can actually pull the family together, have these conversations, and then look at areas like meal planning to try to come up with an economical meal that can last for a couple of days. It’s interesting, Gordon, that you do bring that up. I found myself on a personal note shopping at the outlets, the meat outlets, things like that, buying in bulk, and freezing. Freezing what I don’t use, just divvying everything up and making it last.

Because at this point, that’s a very good option, and definitely a way to cut back. I’d like to add, you know, I’ve even noticed myself with my own budget at home, you know, we spend all this money on groceries, and then we get home and we’re like, oh, let’s just order a pizza tonight, you know, instead of... Makes it a lot easier. Yeah, it makes it a lot easier. And then I’m like, wow, we’ve spent a lot on restaurants this month, we really need to cut back.

Real people real problems disability letter

We do have the groceries in the freezer. Alright, so we do have one more real people, real problems question. I’m going to have Stephanie read that if you don’t mind, Gordon. Dear Cambridge, I was heard at work and released from my job. I now collect about $400 less a month on disability.

I find myself with debt up to my eyeballs. I have had to use my credit cards to buy a new washer and dryer when mine broke. I thought it was 0% interest and found out that the promo rate expired. My balance is now 900 more than it was last month. I recently got a letter from my landlord that my rent is going to increase by $50 a month.

I have no idea where I’m going to come up with this money. I want to work but my disability won’t allow it. I feel stuck. Help. Wow, that’s a tough one.

That’s a tough one. Especially, first of all, I would like to point out or address the 0% interest. A lot of consumers get stuck on that. The promo rates. Do you find that, Stephanie, when they call in and say, oh, I was at 0% but now my balance increased?

Yes, and a lot of clients don’t even know that their balance is going to increase. They think 0% is 0%. What they don’t understand is behind the scenes, even though it’s 0%, they’re calculating all of that interest. So if that balance is not paid in full within that promotional period, bam, they tack that interest on and the balance, what did he say, $900, his balance went up? Yep.

And then again, that involves increase in monthly payment. So consumers, I strongly suggest that you’re fully aware of what 0% promotional plans mean. Let me just jump in here for a second. So Tina, on this show, we’ve talked about Buy Now Pay Later, how even the CFPB, the Consumer Financial Protection Bureau, is taking a hard look at those programs because it’s really setting people up in a pseudo trap, and they’re getting caught up not being able to pay the balance. For many years that I’ve been in the financial counseling industry, we’ve seen the furniture options always be the ones that people want the furniture so bad that they sign up for these deals for 12 or 18 months at 0% interest.

And what are we talking about? We talk about budgets. So without budgeting that payment in and knowing that you have to make 18 payments that meet the balance, or if $1 is left on that loan, they retro all of that interest for those 18 months back into what the consumer owes, and people get caught in it time and time again. And that couch is only so comfortable for a month or two until you realize you’re going to pay a lot more for it if you don’t pay it off in that promo time. Just as this gentleman did that wrote in $900 more, so he thought he was probably paying let’s say $2,000, $3,000 for the furniture set, and when he didn’t pay the balance off in full, now the $2,000 comes to $2,900.

And now if you’re not paying off the $900 in full, you’re getting charged interest on that. So it’s a vicious cycle. It’s a vicious cycle, and consumers, please beware. Please beware. All right, Stephanie, I understand you had another success story for us to listen to.

I’d be more than happy to hear what you got to say. I do. I have a client, Emily, from Michigan. She recently purchased a home and had to use her credit cards for unexpected repairs in her home. For her credit cards, she was paying about 20% interest.

9%, and even 0%. She was paying about $1,129 in just her minimum payments, and through the program, we were able to get her payment down to $793 a month. Wow, that’s amazing. Over $1,000 a month in credit card payments, that’s a mortgage for some people. Yeah, and for our listeners, when you get into a new home, in the budget should be a section where you’re putting some money into a fund that deals with repairs when they come due.

Also, I’d like to point out homeowners insurance and property taxes. If it’s not escrowed in, that is something that the consumer definitely has to keep in mind and budget that in. You need to factor in. If it’s not already escrowed in, factor in your taxes and insurance with your monthly mortgage. Just because your mortgage is low doesn’t mean that that’s it.

Closing quote and credits

There’s taxes and insurance, and you know Uncle Sam’s going to get his taxes, and we don’t want to get caught out there without insurance. Well, having both of you on the show, Stephanie, joining us and going over these real people, real problems and success stories, the main message is if people see that there’s a problem and they’re struggling, they need to reach out and get help. The purpose of this show, again, is to try to get people so that they are financially wise and financially empowered. We’ll do this again, and thank you both so much for going over these stories because I think a lot of people out there, with the way things are in the economy, will connect with some of these situations. So every week, as you know, I give a quote, and this week’s quote is, you are the roots of your financial success or failure.

If you work on the roots, the fruits will take care of themselves. I want to give a special thanks to our producers, Leah and Lisa. They work with us every week to bring the best show that we can for our listeners. We always have great experts on the horizon to help with all kinds of topics, financial. com and click on the podcasts, or you can find our show where you listen to your favorite podcasts on any of your devices.

Once again, be part of the conversation. org or feel free to call 1-800-CAMBRIDGE.