THE Cambridge Connection - Episode 6

While a late payment can remain on your credit report for up to seven years, having all your accounts current can be good for your credit scores. Additionally, it stops further late payments from being added to your credit history, as well as additional late fees. For those having trouble with credit card debt, talking to a credit counselor and getting on a debt management plan could be a good option. The counselors may be able to negotiate lower payments and interest rates and get card issuers to bring your accounts current. Now here’s a potential myth that happens in the news all the time.

Cambridge Credit Counseling does not negotiate with creditors. They have guidelines, specific guidelines on benefits that can be achieved and the amount of money that needs to be paid on a monthly basis to get reduced interest rates. So you’re averaging 8%. More importantly, the links show two trade associations that you would turn to, and one is the NFCC, the National Foundation of Credit Counseling, and the FCAA, which is the Financial Consumers Association of America. And those are the two trade associations that have legitimate nonprofit credit counseling members, which Cambridge is members of both.

And the CEO, Christopher Vialli, plays a leadership role for the FCAA and advisory for the NFCC. So now I want to turn to debt settlement and credit repair and the information that’s in this blog as well. So I’m going to read this out of the article. You may also hear about credit repair companies that offer to repair or fix your credit for a price. It may seem tempting, but credit repair companies can’t do anything that you can’t do on your own for free.

Similarly, you should be very wary of so-called debt settlement companies that may encourage you to stop making payments in an attempt to try and settle the debt for less than you owe. It’s important to understand that Cambridge Credit Counseling has partnered with this show because they provide an immense portfolio of information and assistance that I know helps people. I’m here 28 minutes every Saturday to get real about financial empowerment. org or 1-800-CAMBRIDGE. Now don’t go away.

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I’ll be diving in with Arianne with the Real People, Real Problems segment, and you’ll be hearing from Tina Marie, the rock star credit counselor, and her Cambridge Credit Success Moment. This is Gordon Oliver, and you’re listening to The Cambridge Connection right here on WHNP. If you’re having trouble paying down debt or dealing with high interest rates on your credit cards, you need to call Cambridge Credit Counseling. Cambridge Credit Counseling is a nonprofit debt relief agency located right here in the Pioneer Valley. They’ve been helping consumers pay down debt safely for over 25 years and have helped over 2 million people.

com, A-plus with the Better Business Bureau, and they’ve won the Nonprofit of the Year Award. So if you’re struggling to pay down your credit card debt, call Cambridge. The call is free and confidential, 1-800-CAMBRIDGE. Welcome back. This is Gordon Oliver, host of The Cambridge Connection right here on WHNP, and now it’s time to talk to Arianne, who is from Cambridge Credit Counseling.

She is the resident digital maven and education enthusiast. Arianne’s been at Cambridge since 2016. She’s quickly cemented herself as not only the digital brand specialist, but the financial education coordinator. And if you’re wondering if she’s qualified, she’s a licensed educator with her master’s in education from Boston University. Welcome Arianne.

Rebuilding credit after family fraud

Hey. How’s it going? Great to have you again this week as always. Thank you so much. So we’re going to do two today.

Every week, I pull questions from our social media followers to answer here on the air. So we actually get questions sent in from all over the country on just about every financial topic you can think of. So the first one is Matty T. from LA, and he says, hello. I hope this finds you well.

I was wondering if you might be able to answer my questions, even if they’re not about debt, which we can. My mom and I haven’t always had the best relationship, and I’ve been on my own for a while now. I’m 19, and I got an app to check my credit score for the first time, and lo and behold, it’s terrible. I did some digging and got my copy of my credit report, and she had taken out a credit card in my name when I was 16 and maxed it out. She’s in a better place financially now.

And after I found out about the credit card, I confronted her, and she gave me the money to pay it off. So it’s water under the bridge. And we’re working to repair our relationship, so I’m not going to report her. So my credit is F’d. I’m starting from square one with a severe disadvantage.

So how do I start? Well, obviously, this is one of those situations that you’ve seen and I’ve seen where any time family members co-mingle with debt or financial issues, it causes problems with the family. And you can see that strain right in this example. com, pulling those three credit reports to be able to see any activity that’s happening on your account. Which, by the way, is the only government-backed website to get your credit report.

And this is the tricky part about advertisements. There are some good places out there that operate by advertising dollars and offer free services, and then there are other ones that charge. So you kind of got to do your homework, and annual credit report, again, is the one that is government-regulated for this purpose. But again, in this segment, the immediate problem you see is when she was 16, Maddie wouldn’t be even looking at credit because a lot of people haven’t even established credit at that point. I see it a lot because at Cambridge Credit Counseling, we actually volunteer at what’s called the Credit for Life Fairs in our community.

And these fairs are hosted by Junior Achievement. And so at these fairs, these kids run a real budget. So they just got out of college, they’re pretending that they’re in their 20s, and they’ve got the job that they went to college for, and they stop off at each of these booths. And at these booths, they input things into their budget. So there’s a housing booth, there’s a transportation booth.

So they come to us at the beginning and the end. And so what our job is, is we talk to them about their credit and how they can start building their credit. And sometimes we do see these situations where kids come to us and their parents have really taken advantage of having their Social Security number and having all this information. So one of the things we say is you can always start with a secured credit card. Absolutely.

Another one you could do is, if your parents are open to it, opening up a line of credit on their credit card so that you can share in the behavior to try to build a credit profile from scratch. Absolutely. And then once they’re able to get a credit card, we always say, pay for the things you know you’re going to pay for. So groceries, gas in your car, small stuff. But the key is to wait for the payment to actually post on your account so that the credit reporting agencies see that you’re actually using your card and then paying it off.

Because the key about having a credit card is proving to them that you’re good at borrowing money. That you’re going to make the payments on time. Absolutely. All right. If you’re just joining us, this is Gordon Oliver with The Cambridge Connection.

This is not an infomercial. org, in their education section, there is a ton of free information and articles that talk to all of these topics. So by visiting that website, you get a plethora of information that helps answer these questions. And again, you can connect with this show, or you can connect with Cambridge Credit Counseling if you have general basic questions on dealing with situations like this. Yeah, that’s what we’re here for.

Rising credit card debt statistics

So Ariane, before we get to our next Real People segment, I want to talk about an article that I saw in Reuters. And the headline was, As America’s Spend, Credit Card is Ticking Back Up. And a couple shows ago, we had talked about this, about how it seemed like because of the pandemic, people were doing quite well. But then we talked about how being released out of the pandemic and being able to get out into the community, be able to travel, to be able to spend on football and all kinds of things that people are allowed to do now, lo and behold, as we’re predicting, everything credit card wise is ticking back up. Yeah, they’re saying that two million homeowners are actually behind in their mortgage.

Six million renters are behind in their rent payments. Some of these people, actually 25% of these people, had even tried to borrow from families and friends. But you know, who do you borrow from if nobody has the money? We’ve seen it in our own lives. And I’ve seen it at Cambridge, where borrowing from friends and family is just, it very rarely works out for either party.

Yeah. And here’s the recommendation. There’s got to be an agreement. It cannot be verbal. It has to be an agreement.

And the family needs to talk about the potential consequences if things go bad. Because nothing’s to say that the person that borrowed the money, just like with a lender, something might happen. They might lose their job. They might get sick. They might be out of work for a while for some reason.

And those are the kind of things that, if not addressed before that transaction takes place, relationships can get ruined. And we’ve seen it time and time again. I think people expect their friends and family to be so lenient with it that they can kind of miss payments. They don’t treat it as any sort of real loan. So the key is getting everything on paper, setting up a payment schedule, and then adhering to it as much as you can.

Treat it as a professional situation if you have to do this. Another great example of that, we just talked about reverse mortgages. And senior citizens trying to help their children when they’re in that retirement phase. Not a great idea. Because again, if that goes bad, and now the person that’s in retirement has only these resources to rely on, that can cause all kinds of problems.

And we’ve seen that also. So let me give you a quote from the article. The trend that we’re talking about, about credit cards ticking up, reversal is reflected in the most recent numbers of the Federal Reserve Bank of New York. Its quarterly report on household debt and credit found that credit card bills rose by $17 billion in 2021's second quarter to $790 billion nationally. This was the first uptick after four straight quarters of declines.

That’s wild. And I know, I was looking at the article as well, and it also says the auto loans are growing by $33 billion in the quarter, and mortgage debt by $282 billion. And lastly, if we’re on it, those concerns are highlighted in a recent survey by real estate firm Clever. Almost one in five of those with credit card debt, 18% report having bills over $20,000. Meanwhile, 40% of those who carry a monthly balance haven’t been debt free from credit cards since before 2018, and 15% have been struggling with it for more than 15 years.

So again, you know troubling times are coming, and that’s the beauty of this show, trying to use this platform with our partner, Cambridge Credit Counseling, to get this information out for people to be in the know. I know we say it a lot, but this truly is a labor of love because there’s just so much people don’t know about finance. Like the average person isn’t going to look at these statistics and go out of their way because a lot of people don’t want to think about debt. $20,000, if you have bills over $20,000, I mean, that’s a huge percentage of what people make a year. So truly, It’s a conversation that needs to be had and needs to be started.

Teaching financial literacy to students

And getting back to your first real people, real problems example, the criticism has been out there that financial literacy isn’t taught enough. And you can start with certain programs by teaching children that are in the lower grades, first, second, third grade, starting with simple habits on how to start this journey about being responsible with money. Absolutely. And that just goes right back to the Credit for Life Fares with junior achievement. It’s going into high schools and having high school students experience what it’s like.

I mean, one of the things we do at the credit counseling booth is actually offer the kids an opportunity to have a credit card. So we run them through a basic credit card application. All of the kids are given a random credit score. So they kind of come to the table with this real life situation of, OK, if I don’t have enough money to pay the bills that I opted to have as I went around this, as I ran the circuit, I have this credit card now and I can use it. So at the end, we review their budget and we talk to them about what it’s like and you’d be surprised how many kids just put bills on their credit cards and not understand that one time expenses are completely different than their monthly bills.

This is like the Thornton Mellon back to school example where real life versus what you might be being taught are certainly not the same thing. All right, if you’re just joining us, this is Gordon Oliver with the Cambridge Connection. Arianne, what do we got for our second Real People, Real Problems segment? OK, so like I said, these are representative of really commonly asked questions. So credit is actually our number one requested topic.

Interest rates and payday loan risks

Deborah H from Michigan wants to know about our second most requested topic. And she says, hi there. I have some questions on interest rates. I have approximately $5,000 in credit card debt on one credit card. I was working remotely and needed to start working back into the office, which meant my car needed some repairs.

In fact, many more repairs than I thought. Then my first week back at the office, my dog fell very ill and needed to be rushed to the vet for several emergency surgeries. It’s horrifying as it’s just been my dog and I for the last two years. It’s hard to talk about this because I’ve always paid my bills on time. And I’ve never had substantial debt.

My credit card interest rate is 18%. And I’m paying a little bit more than the minimum payment a month. But my balance isn’t going down. I don’t understand why. I know that I’m paying money on my interest with that monthly payment.

But how am I ever supposed to pay this all off? So Gordy, this is a really good time for her to kind of consider alternatives for paying down her debt if she can’t make more than that. Absolutely. And if this was a situation where she was really struggling to make the payments, this could be an opportunity for Cambridge Credit Counseling to at least give her a counseling session. When budgets are tight, people are stuck at high interest paying just the minimums to be on time to avoid falling behind.

And that is an endless road to nowhere. That’s without adding anything else to the credit card. So if you’re using it for gas, if you’re using it for groceries, you can pretty much know that every month you’re really just going nowhere. So it is all about having a plan. And it all comes down to, are you able to do it on your own?

Can you call your credit card company and ask to reduce the interest rate? And here’s where it gets tricky. If you’re a good credit risk, there usually is an opportunity to call your credit card company and see some type of program where you can get an interest rate reduction to get more money going toward the balance. The problem is when you become a risk in the creditor’s eyes, they not only raise the payment, but they raise the interest, which is why at Cambridge Credit Counseling, counselors will see people being charged 22%, 25%, 27% interest. So when you’re making the minimum payment, you’re really not getting anything to go toward the balance.

So it is all about having a plan. In this case, even if it’s one account, if you felt you needed credit counseling to talk to a counselor because you don’t have a budget and you know everything is tight, that’s the time to call 1-800-CAMBRIDGE. And again, not an infomercial, just an opportunity to get some great advice from a certified credit counselor. If you’re looking for help with your debt, the key is look for the nonprofits, check the reviews, go online, do your due diligence. But there are other ways to get out of debt as well.

They’re not always advantageous for the consumer. So one of the examples you always think of is a payday loan. So the average interest rate on a payday loan is 400%. And it could go up to 600%. So the rate on her credit card is 18%.

But if you’re taking out a payday loan, you’re gonna need to pay it back with incredible interest. Yeah, so the payday lenders, it’s even worse. And you just get roped into a cycle because you really can’t afford to pay the next paycheck. So they just roll you over into another loan and then roll you over again into another loan. And the next thing you know, you’re paying 400% every week or two weeks that it’s time to pay the bill and borrowing again.

The best advice that I could give, payday loans are one of the worst vehicles. And if people are at the point where they need payday loans, there’s a much bigger problem. Because if it were for one cycle and they just needed a quick amount of money to take care of something, that’s one thing, but it really never turns to that. And more importantly, looking back at your financial situation, the root cause, I would recommend to anybody listening, if you don’t have six months of all of your bills in savings to deal with a shortfall in income. Which most people don’t.

Most people don’t, we already know that. And then more importantly, let’s say you’re working a job and you work in overtime and all of a sudden overtime gets cut. How are you planning to deal with that cut in income? But six months is the safety net so that if situations like this happen, instead of borrowing at 400% interest, you’re actually being able to tap into some reserves that you’ve created to be able to keep everything running the way it’s supposed to while you work on solutions for your financial situation. All right, well, that’s it for me this week.

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Join us next week, same bad time, same bad channel, for our Real People, Real Problems segment, where we answer your questions on the air. org. Let’s talk. Have a great week, everyone. Stay positive, test negative.

Thank you, Arianne. And coming up next, we’ll have Tina Marie, the rockstar credit counselor from Cambridge Credit Counseling with her Cambridge Credit Success Moment. This is Gordon Oliver with The Cambridge Connection right here on WHMP. Hi, everyone. This is Christopher Viale, President of Cambridge Credit Counseling.

My staff and I are proud of our accomplishments over the past 25 years, including being named the Nonprofit of the Year by the BBB and earning our high rankings from financial websites. We work hard for our clients, but our expertise is limited, which is why we work with lots of other great businesses and service providers to help you get where you want to be. If you need financial help, Cambridge and our friends will help you find solutions. Call us today. ♪ 1-800-CAMBRIDGE ♪ Hi, this is Alison Ebner, Director of Membership for the Employers Association of the Northeast.

EANE supports over 1,000 business members across the region with improving their people process. Now more than ever, business leaders and HR professionals need a resource they can count on to provide compliance, employee relations, and training opportunities that drive engagement and create better business models. Put the EANE team to work for you. org or reach out to me directly at 789-6400. ♪ 1-800-CAMBRIDGE ♪ Welcome back.

Client success story and program support

This is Gordon Oliver with The Cambridge Connection and we’re gonna do our Cambridge Credit Success Moment and I’m here with the rockstar credit counselor, Tina Marie, who has been a certified credit counselor for 25 years and has literally helped thousands with credit and debt problems. How are you, Tina Marie? I’m fabulous. I love coming here to be able to share some success stories, some good news finally with the way things are going. It’s nice to hear that there are some successful moments with people in their financial lives.

Well, we know for a fact that there are people out there that are sitting struggling right now, maybe in that you hear the financial treadmill where they’re just kind of revolving each month, paying bills, getting up in the morning, going to work. And to hear these success stories, it really is motivational to see people go from struggling both mentally and physically with debt problems and then coming up with solutions and actually having success through counseling. And just knowing that there’s light at the end of the tunnel. This week, I wanna talk about James from Florida. James was forced into early retirement and because of this, his income had reduced by $700 a month, which was significant for him being in retirement now he’s on a fixed income.

James had a credit card with about a $10,700 balance. He was paying 22% interest. At that time, his payment was $401 a month. And with the cut in income, he was lost. So just, we’ve talked about these situations when something happens, right?

We recommend six months of your bills in savings to deal with something unexpected like this. So this is the same exact scenario that people deal with frequently. Correct, and as you both mentioned earlier, not too many people have six months worth of savings. So what I did was I went through his budget with him, once again, very extensively, went over everything he’s got, what’s coming in, what’s going out, and we determined that the debt management program would be the right solution. I was actually able to reduce his payment from $401 down to 251 a month.

So that 700 that he lost in income, now you reduced his payment so that he could afford it, maybe making some other adjustments. Correct, and because we were able to get the interest rate reduced down to 20, from 22%, I should say, down to 11, his payoff period was 56 months. Wow. Well, this is the problem that we came into. He was all set to enroll.

He was excited, ready to go forward. We had him ready to start his payments in June. So then one day he called me. He was so excited to make his payments, but something came up and he fell behind on his mortgage, or he was going to fall behind on his mortgage. And he was so eager to start the program that he said to me, I’m considering a payday loan to keep up on my mortgage and still be able to make my payment to you to start the plan.

And I said, oh God, no, no, no, no, no, no, we’re not going to do that. We’re not going to do that. As you discussed earlier, the interest rates. And I knew once he would have taken out that payday loan, he would have been in a world of trouble. So I had suggested, and I never would suggest don’t pay your bills, but in his situation, he was already behind on his credit card.

So I told him, you know, pay your mortgage. Obviously you need a place to live. Pay your mortgage. We can start you in July. And unfortunately, because he went another month without a payment, his account did accrue another late fee.

However, he stayed current on his mortgage. He didn’t have to take out that payday loan. Once I got him set up on the program in July, all his future late fees were eliminated. Couple of very important distinctions here. When people are looking into how to improve their credit profile, this is a perfect example where if not talking to a counselor, a lot of things could have gone bad here.

And even though one more month went by with a mispayment, once you get current, whether it’s on your own or on a program, if you have some derogatory information in your credit profile, every month that you stay on time with everything, you’re moving away from it and building up your credit profile again. So six, 12, 18 months of being in good behavior, making your payments on time, you’re actually building things back up again, which is a perfect scenario. If he didn’t know these things were possible, who knows what could have happened to this consumer. Exactly. That $500 payday loan could have turned into $2,000 very easily.

It’s almost like taking two steps back before five forward. Yeah, you fall behind a month or two. But guess what? After one to three on-time consecutive payments through the debt management program, you’re current again. Remember, I said at the onset of the show, there are solutions out there if you’re willing to reach out and make sure you’re reaching out to trusted, safe places.

One other last distinction, and we’re running out of time. Cambridge Credit Counseling has a support cast of customer service and all the people that work for the company that don’t do the actual credit counseling that are there to support clients once they’re on the program in case these things happen in the middle of a plan. So it is all about knowing that you have support and knowing that you can get sound advice when dealing with struggling with your finances, whether it’s before a program, during a program, or even on your own. And we actually tell our consumers that when they enroll in the plan, if you’re looking to obtain a loan or something for emergency purposes, call us first so that we can give you the proper road or avenue to take. Sometimes people are just fooled by the quick fix.

And the quick fix is ultimately the end. Which will cost more money and cause more problems. Exactly. Well, Tina, thank you again for joining me this week. I look forward to our next success story next week.

So that’s a wrap for this week. Thank you to Ariane, my co-pilot, the digital maven from Cambridge Credit Counseling, Tina Marie, the certified rock star counselor from Cambridge Credit Counseling with the success story. Don’t forget, if you’ve missed any of this show or any of the previous shows, you can find us at WHSN. You can find us on SoundCloud and any of your favorite podcast networks. Thank you to everyone out there tuning in.

5 and 1400 AM at 930. org. You can follow me on Twitter at Gordon O’Kares. That’s G-O-R-D-O-N-O-C-A-R-E-S. And at Facebook at Gordon O’Kares.

That’s forward slash G-O-R-D-O-N-O-C-A-R-E-S. If you’d like a free consultation with a counselor from Cambridge Credit Counseling, just call 1-800-CAMBRIDGE. Counselors are always standing by to answer your credit and debt questions. And seriously, people, it’s a free call to 1-800-CAMBRIDGE. Did you know financially distracted employees are less productive?

Hi, I’m Christopher Viale, President of Cambridge Credit Counseling. As a Western Mass non-profit, we can help your employees manage their debt safely and responsibly, and the partnership is free. We already proudly partner with companies like AAA and the Mass Teachers Association. So call me, Christopher, at 1-800-CAMBRIDGE, and let’s talk about bringing financial peace of mind to your employees. Hey, everyone.

Gordon Oliver here, and I’m the host of the brand new Saturday morning show, The Cambridge Connection. , we’ll spend 28 minutes together that will change your relationship with money for the better. I’ve been a financial counselor for 20 years, and I’m here to get you excited about being in financial control. Join me next Saturday right here on The Cambridge Connection. , right here on WHMP.