What’s More Important; Having Cash or Saving Your Credit?

Cash or Credit What’s More Important; Having Cash or Saving Your Credit?

Over the weekend, I had the occasion to think about everything I had gone through in the last 5 years.  Don’t ask me why; I just did!  Like a bad movie on an endless loop, I kept replaying everything that conspired to send me to credit and financial hell and before we get to answering the question, I need to set the stage for you first!

2007: My cousin, who had been like a sister to me growing up, confided in me that she and her domestic partner (hereby referred to as Satan) had lost millions gambling and that they were on the cusp of 2 foreclosures, car repossession, and soon to be out on the street!  Better yet, she had my mom set the stage for her!

At the same time, my mortgage business was about to be hit by a tsunami, as was the housing market in general, across these United States.  Mind you; at this time I had ZERO debt other than my mortgages and car leases.  I had some investments, life insurance policies, and over $200,000 in liquid cash.  I thought I was good, but I WAS WRONG!

Stupid is as Stupid Does

Foolishly, even though I had anticipated what was about to happen in my business, I decided to help my cousin and Satan out.  It gets worse!  They had two homes and on one of them, they had a sub-prime Country Wide mortgage with a sky high interest rate.  On the other, they had a “hard equity” mortgage they were paying almost $5000 a month for.

How they got that mortgage in the first place was beyond me!  There was definitely a usury issue with that mortgage and I’m sure if an attorney had looked at that paperwork, they would have agreed.  Oh, wait, I forgot; the mortgage was originated by a Miami Attorney who made the loan in the first place.   But anyone who’s ever done business in South Florida knows; that’s Miami!

What the F*#K was I Thinking About?

The first home I had ‘quit claimed’ to me so I could refinance it to a better mortgage.  This effectively cut the mortgage payment in half.  I had an agreement and a lease drawn up, they would make the payments, and I would help them rebuild and correct their credit report so we could ‘reverse’ the process.

The other house was an almost $800,000 dollar home that would be used as the catalyst to repay my loans and put my cousin and Satan back in business.  I drew up a sales contract to purchase the home and since it was an investment property, I had to put down 10% percent to purchase it.  After paying off liens, open permits, insurances, and the like, I was now a $100,000 dollars plus lighter!

They had been in business for many years as furniture manufactures and when Hurricane Wilma hit in 2005 and destroyed their warehouse, they had cashed out on a $3 million dollar plus insurance policy which they promptly blew over the course of the next 2 years gambling.

Confusing  Empathy With Stupidity

In a meeting, they convinced me that with $100,000 in cash, they would have their business up and successful in no time.  Now Satan may have been Satan, but she was a very business savvy woman with a proven track record of business success.  What I wasn’t aware of was just how bad her gambling habit was!  My cousin made sure of that!

Since the mortgage payoff was roughly $400,000 for that home, they would stand to pocket more than $300,000 from the sale.  That would supply the $100,000 they needed to restart their business and cover all expenses for at least 6 months and then repay the money I had lent them which at this point, was over $164,000 dollars!  Hell, they would even have $40,000 dollars to survive on for the next year!

Here’s What I Didn’t Tell You

What I didn’t tell you was that I had a tax bill coming due of $64,000 dollars which I didn’t think twice about because I thought I had it all planned out!  My cousin would be saved from financial ruin, they would have an opportunity to do what they had already been successful at, I would get my money back, and all would be fine!  But funny thing happened on the way to “being fine”; my cousin and Satan showed up to the closing with no bank account!

I should have stopped the closing there…but I didn’t!  Don’t ask me why – I just didn’t!  We walked them downstairs and tried to open up a checking account but couldn’t; they were in ChexSystems for bouncing checks.  They made a phone call to their old bank and said they would have an account open by the next day.  Off they went and as I said earlier, I had everything done legally, written up by an attorney, notarized, and I thought my ass was covered.  After all; this was my cousin – family.  She would never screw me; would she?

Next Stop; Credit and Financial Hell

The closing agent was supposed to cut me out a check to make me whole per the agreement we had signed.  But at the last minute, he refused to do so.  To this day I have not gotten a ‘satisfactory’ answer other than the Underwriters were now frowning on cutting out checks to anyone other than the seller.  I didn’t believe it then, and I don’t believe it now.   This was a person I’m sure I provided more than half his title closing income for over several years, but that no longer mattered.  Whatever could go wrong, was officially going wrong!

On top of that, Satan had disappeared! I could not reach her and she had a check in hand for $300,000 dollars plus; I had “gots”.  If you’re Italian or ever watched the Soprano’s, you know what I mean.  Two days later I got a call from the closing agent informing me that a bank called to confirm the origins of the check and provided me with all their information.  I promptly got the bank manager on the phone, faxed her all of the paperwork, and told her I was contacting their corporate security as Satan was about to perpetrate a fraud on me and she would be complicit if she allowed this transaction to continue.

Satan Really Is Satan!

The Bank Manager got Satan to call me on her speaker phone.  She agreed that I was due the monies and the bank manager said she would be faxing me a letter to confirm my wiring instructions.  She would wire the funds directly into my account.  Finally, all’s well that ends well, right? WRONG!

Somewhere between my faxing that letter back to the bank and whoever wired the funds, instead of getting $164,000 dollars plus wired to me, I only got $64,000.  Somehow, Satan managed to change those numbers and I’m sure there was some help along the way.  But it doesn’t end there.  As I fought to get that money, Satan did not vacate the house and instead ‘squatted’ on the property!  Since this wasn’t the 1920’s, I couldn’t just show up to the house, baseball bat in hand, and throw everyone out!  I had to use the legal system even though the house was mine!

It Can Always Get Worse

It most certainly can always get worse and for me, that’s exactly what happened.  My cousin was now in on the dastardly deed as well.  This whole thing was planned out!  They had failed to pay me the first month’s rent and since I never took any deposit money when signing the lease, their was no ‘consideration’ so it became null and void!  They tried to have the check for the rent delivered to my office 2 days after the fact, but I did not accept it.  Instead, I had to get a lawyer to get them out of not one, but 2 houses, of which I was paying almost $5000 dollars a month not to ruin my credit.

Almost 2 years and a quarter of a million dollars later, I was squarely residing in credit and financial hell and… I brought my family along for the ride!  So let’s get to that question; what’s more important; having cash or saving your credit? As you can see, this question became very relevant to my situation and one I should have thought about way before I entered the gates of credit and financial hell!

So What’s Your Answer?

One more thing; before I completely hit rock bottom, the IRS smacked a tax lien on my credit that basically rendered me useless!  This hit my report just as I was about to turn my lease into a purchase so I could remain with my car.  Instead of a credit score that was hovering near 800, I now was in the low 500′s.  I had over $150,000 dollars in available credit that in a matter of only a few months, turned into ZERO!  Not because I used it, but because I now was deemed not worthy, even though I had perfect payment history, credit, and most of the cards didn’t even have a balance to begin with.

Credit cards that had high limits in the 4 digits each, now had credit lines of a hundred dollars!  So I ask you; what’s more important; having cash or saving your credit?  Should I have stopped paying things sooner and put the cash away to help me recover from what I already knew was coming? What would you have done?  I know what I wish I would have done,  but I’d like to hear your take and your answer.  And yes, before you go stating the obvious; of course I should have never allowed myself and my family to be put into such a financial bind…but I did!  Fire away!



How to Get the “Big Boys” Help in Deleting Credit Errors

TAC Blog Pixel Template4 1024x681 How to Get the “Big Boys” Help in Deleting Credit Errors

By a show of hands, how many of you reading this post have attempted to correct errors in your credit report? What’s that you say? Well of course I can’t see your hands silly (unless you take a picture and post it on my Facebook page :)), but without seeing them, I’m betting quite a few of you have raised your hands.

Here’s another question; how many of you have had the credit bureaus send back one of these responses when you did?

  • A stall letter asking for more information.
  • A rejection letter on the grounds that the dispute is “frivolous or irrelevant.”
  • A rejection based on the grounds that the credit bureau believes you are manipulating the system (or thinks you might be using a credit repair company)

Without needing any pictures posted to the Amateur Consumer Facebook page, without a doubt, if you have attempted to correct errors in your credit report, undoubtedly you have received one of many letters like these.

And the Results Are…

If all goes well, you might receive a letter announcing that your investigation has begun or you may receive a new credit report altogether,  showing the results of an investigation.  But what if in reviewing that report, instead of seeing an item you disputed deleted,  like shown below;

Equifax Dispute Response How to Get the “Big Boys” Help in Deleting Credit Errors

despite all of the corresponding documentation you might have sent to the bureaus, you get a letter like this:

Experian Report2 How to Get the “Big Boys” Help in Deleting Credit Errors

Your Next Steps

If you do get a letter like the one above, the next step you should take is sign up for my free video series, the Better Credit Blueprint.  In it, I go over topics just like this in great detail as well as perform -on video – a “Credit Audit & Verification” using 3 different versions of my own credit report.  You will also learn exactly how to create dispute letters to ensure a successful outcome.

But…no matter how good the letter and how strong the corresponding evidence you send the credit bureaus might be,  there will be times when you get a response just like the one I received, shown above.  Whatever you do, NEVER USE A TEMPLATE LETTER TO DISPUTE CREDIT ERRORS!  Yes, you read that right.  In fact, this topic is so important, I’m going to share an excerpt from video #8 of the Better Credit Blueprint video series that explains factually why you shouldn’t!

Must Go Through The Credit Dispute Process First

As you can see, this is critical information you must know as an Amateur Consumer, but let’s get back to how the CFPB can help you with your credit disputes. To be clear, you must go through the credit disputing process first before you can get the Consumer Financial Protection Bureau to help you.

As you can see in the letter Experian sent, they state; “We store address information as it is sent to us by your credit grantors or from information contained in public records.  One or more sources of information reported the address you questioned and it is a part of your credit history.” WRONG!

Time to Get Medieval

In the Better Credit Blueprint video series, I clearly demonstrate to Experian, who is reporting the address as a previous residence, that I have never lived there – EVER!  It’s why both TransUnion and Equifax deleted that address from my personal information section.

Now I have to go and get ‘medieval’ on Experian!  It’s amazing how they state to “contact the source of the information who reported the address.”  Hello, McFly; anyone home? When disputing errors in your credit report, the bureaus must provide the source of the information…but not here?

So Now They Think They’re Libraries

In recent testimony before The House Financial Services Committee Subcommittee on Financial Institutions & Consumer Credit, Evan Hendricks, who has been qualified by the courts as an expert witness in the Fair Credit Reporting Act, stated,  “In the FCRA, Congress declared, “There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.” Yet there have been instances in which CRAs, when confronted with their specific failures to ensure accuracy or correct inaccurate
disputed data, have argued that they are like “libraries” that passively receive data from creditors similar to the way in which libraries put books on the shelf without screening them. The reality is that the Big Three see their primary duty to faithfully put on consumers’ reports what creditors and debt collectors dictate – even when there is compelling evidence to the contrary”.  

Well I had compelling evidence to the contrary that both Equifax and TransUnion agreed with – but not Experian!

Hendricks also said that the big Three, Equifax, Experian, and TransUnion, see their primary duty to faithfully put on consumers’ reports what creditors and debt collectors dictate, despite the FCRA’s requirement that they maintain “reasonable procedures for maximum possible accuracy.”!  Again; I’m about to get medieval on Experian and you’ll see that happen in the Better Credit Blueprint Video Series.

Time To Call in the “Big Guns”

If Experian does not provide me with the source of that erroneously and incorrectly reported address, and I show proof through irrefutable evidence such as Driver’s License, County Tax Records, and Deed (which I already have) that I have never lived at that address, guess what Experian must do?  DELETE!

If they don’t, now I can call in the “Big Guns”,  the Consumer Financial Protection Bureau, and you can too should you find yourself in a similar situation as me. But remember; first you have to go through the credit disputing process as I demonstrate in my free video series.  Then, if the problem isn’t corrected, you should contact the consumer agency. When you do, you’ll be given a tracking number to check on the status of your complaint, and as part of the CFPB’s process, you’ll also have an opportunity to dispute the credit bureaus response to your complaint.  LOVE IT!

Hey Credit Bureaus…Get Some!

Here’s the best part of the whole process; the CFPB says they expect consumer-reporting agencies to respond to complaints within 15 days and the response has to include steps they have taken, or plan to take, to correct any errors.  I just got goose-bumps thinking about it! icon smile How to Get the “Big Boys” Help in Deleting Credit Errors

The watchdog agency has just begun accepting individual complaints about credit bureaus and if Experian doesn’t get my dispute right, that’s my next call – maybe.  Since I know I’m 100% unequivocally correct in my dispute, if they don’t get it right, I may just take them to small claims court and take their money – stay tuned!

We Have the Right to an Accurate Credit Report

Fact is, as Amateur Consumers, we all deserve an accurate report and the chance to easily dispute errors and get timely corrections made; plain and simple!  This is why you need to learn how to perform a “Credit Audit & Verification” of your credit report.  After all, credit reporting accuracy is first and foremost a consumer protection issue!  Get educated and protect yourself!

Here’s how you can file a complaint against the credit bureaus; go online to www.consumerfinance.gov/complaint or call toll-free to 855-411-2372. You can also fax your complaint to 855-237-2392 or mail it directly to the Consumer Financial Protection Bureau at; P.O. Box 4503, Iowa City, Iowa, 52244.  Unlike the Credit Bureaus, this complaint can be expedited online!

What experiences have you had with disputing errors on your credit report?  Is there a dispute you gave up on because you were tired of the runaround you got from the credit bureaus?  If so, and you have correctly gone through the credit disputing process, what are you waiting for?  Contact the  Consumer Financial Protection Bureau today!



How Marketing Tricks Can Stress Your Credit Score and Bank Account

TAC Blog Pixel Template 1024x681 How Marketing Tricks Can Stress Your Credit Score and Bank Account

The following is a guest post from Glenn Sosa, Author of  SOLD: Don’t Go Poor and Miserable Being Sold Happiness.  To find out how you can guest post, read my guest posting policy and contact me through the page.

ESPN recently aired a 30 for 30 documentary titled Broke. The documentary featured the stories of several formerly prominent athletes who went from millionaire status to bankruptcy. The stories poignantly showed how someone’s inability to control spending can destroy their net worth – not just  financially but also emotionally.

Since the original airing of Broke, I’ve had a few discussions with college counselors at prominent universities that produce a lot of professional sports talent. These counselors are responsible for teaching their student-athletes the life skills that can help them avoid the fate of the players featured in Broke. It was interesting to hear how those curricula, for the most part, focused on explaining financial products.

Marketing Tricks and Gimmicks

There was no indication that any of the curricula dealt with the root cause of spending problems and what leads consumers to feel that “wants” are “needs”, and that root cause is marketing.  Without an understanding of the marketing tricks and gimmicks that organizations and salespeople use and how those techniques tug at emotions, consumers will remain very vulnerable.  This is true  regardless of whether you are an average consumer or a superstar athlete.

Yes, it’s smart to understand how credit works and it’s wise to have a budget (there’s no questioning these two personal finance tools), but credit histories and family budgets of all sizes have been blown out of the water by a well structured sales pitch or marketing promotion that pushes the right buttons.  So how can you protect your credit score and your bank account? Here are three tips:

1. Understand the difference between “wants” and “needs”

All good personal finance authors, especially when dealing with budgeting and consumer credit, will help consumers understand that needs come before wants. But what is a “need?” You’d think that these would be easy to agree on; food, a place to live, and clothing are some commonly noted needs. And yes; consumers need to eat, live and sleep somewhere suitable, and clothe themselves adequately as well.

But what if you think you need a $500,000 McMansion versus a more modest $150,000 2-bedroom house? Or you argue with your spouse about needing a late model Lexus rather than a practical, attractive, and reasonably-priced Ford?

You are not going to find a one-size fits all definition for consumer “needs” and “wants”. The differences will vary from person to person. It’s up to you to figure out where “needs” end, and “wants” begin. A written budget will go a long way toward helping you figure this out. The sooner you do this, the easier it will be to manage your spending moving forward.

2. Learn about the marketing techniques that are used to sell to you

I gave a talk on the traps of wants versus needs and I asked everyone who attended whether they have ever had to sell something and whether they were trained to sell that something. Almost everyone raised their  hands – that is; everyone who had worked in sales, quite naturally had been trained to sell.

I then asked the same group whether they had ever purchase something. Of course, everyone raised their hand. The next question was the most interesting; “Who here has received buying training?”  No hands went up; not one.  You see, buyers are at a disadvantage. You need to equip yourselves with an understanding of how organizations and sales people sell to you.  That’s why I wrote SOLD: Don’t Go Poor and Miserable Being Sold Happiness; to be a consumer guide to help level the marketing playing field.

3. Have a buying process

Knowing how not to be sold is great. And knowing the difference between wants and needs is also important. But when you have a true need and go to the market place to buy it, how can you do that in the best way possible? You need a simple buying process.  Fortunately, my book covers this as well.  From step 1, “Realize a Need”, to step 7, “Purchase and Experience Ownership”, you’ll learn simple tools on how to avoid the most common pitfalls.

Don’t repeat the mistakes that so many superstar athletes have made!  Learn how to handle the root cause of credit and budgeting problems and by understanding how marketing tricks and gimmicks lead you to believe that wants are really needs, when they’re not!

Glenn Sosa is the Author of SOLD: Don’t Go Poor and Miserable Being Sold Happiness

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