3 Reasons Why ‘Self-Help” is the Best Way to Tackle Debt and Credit Issues

Do it Yourself 3 Reasons Why ‘Self Help” is the Best Way to Tackle Debt and Credit Issues

As a bankruptcy and foreclosure survivor, after gaining 20 plus years of experience with credit and lending, and after speaking to numerous and credible consumer debt settlement and credit experts, we all agree; “self-help is the best way for any amateur consumer to tackle their credit and debt issues.

Amazingly enough, there are many personal finance bloggers and others on the “interwebs” that espouse the views that using credit counseling agencies, debt consolidation loans, and debt settlement companies, are the best course of action to take when tackling debt issues.  As for credit and that awesome oxymoron of a term called “credit repair”, everybody and their brother has an opinion, view, or some level of claimed expertise to want to write about it.  Below, I give you 3 powerful and straight to the point reasons why “self-help” is the best way to tackle debt and credit issues!

Reason #1: The Federal Trade Commission (FTC) Says So  

The fact is there’s no quick fix for creditworthiness or getting yourself out of debt! You can improve your credit and finances yourself, but it takes time and a conscious effort to gain a little know-how!  When it comes to credit repair, the FTC says to help yourself and provides you with a simple step by step process on how to dispute credit errors.

In fact, in my free Better Credit Blueprint Lecture series, I explain why, with a little personalization, the only dispute letter I use to correct errors and inaccuracies on my personal credit report is the one shown on the FTC’s website!

When it comes to being Knee deep in debt, the first advice the FTC gives consumer is about “self-help”.  Yes, the FTC also lists other debt relief services available to you, but the fact is that you should attempt to settle your debts on your own first!  For any blogger or consumer who disagrees, please listen to these public service announcements from the FTC and then continue reading:

Reason #2: Maximizes the Power of Your Money

The Federal Trade Commission (FTC) says do yourself a favor and save some money too by tackling your debt and credit issues yourself!  Again, all you need is time and a conscious effort to gain a little know-how!  When it comes to credit repair, the only reasons you would pay anyone to correct errors and inaccuracies in your credit report are; you don’t have the time and you do not want to put forth the conscious effort it will take to gain the know-how!

And if that’s the case, to that I say; really?  You don’t have the time to make sure that your economic reputation and what is being said about you is correct?  Then read this previous blog post titled “What Does Your “Credit” Resume Say About You?” and then answer that question again.  Hell, the Better Credit Blueprint Lecture Series is FREE and proven to help you become a better guardian of your economic reputation, so there’s your “know-how”.  Just make the conscious effort to watch it!

Reason #3:  Insight and Control of the Process!

Charles Phelan, noted consumer debt settlement expert and creator of Zip Debt – a “self-help” guide to settling debt and avoiding bankruptcy, wrote in his special report about settling debt yourself that a frequent complaint of folks who dropped out of credit counseling programs was they had little, or no insight, into what the agency was doing on their behalf and they had virtually no control over the process.

Why do you think Credit Counseling is the most touted way to handle debt settlement by the banks themselves?  The answer is; since the credit counselor is only negotiating the terms, full-repayment is still being made!  If this is all that is happening, again I ask; do you have the time and can you make the conscious effort to gain the know-how you need to do this for yourself? Of course you can!

The same is true with a debt settlement company.  Why would you pay for any service to settle your debt when with a conscious effort and a little know-how, you can be in control of the process and use 100% of your available funds to eliminate that debt instead of paying unnecessary fees.

What about your credit rating?  Think a credit counselor or a debt settlement company is concerned with asking for a favorable credit rating on your behalf?  Not a chance, which is why I wrote my special report “How Credit Card Debt Settlement Affects Your Credit Report and What You Can Do About It”.  I wrote this eBook to let you, the amateur consumer, know that if you don’t ask, you won’t get, and credit counselors or a debt settlement company will definitely not ask, so they definitely won’t get!

The One Argument for Outside Help

At the end of the day, what there can be no doubt about is this:  there is a tremendous need for solid consumer education!  Yet, Who Can You Trust When Taking Credit and Financial Advice?  Check out this previous post to read my opinion on this topic.  So the only argument you can have against not attempting do-it-yourself debt settlement or correcting errors in your credit report yourself is this; you don’t have the time or you don’t want to make the conscious effort it will take to gain a little know-how!

I would love to hear your take on this subject and the only way we can engage is for you to leave a comment below icon smile 3 Reasons Why ‘Self Help” is the Best Way to Tackle Debt and Credit Issues

Top 10 Reasons Why Credit Is Not Your Friend


Credit Hell2 Top 10 Reasons Why Credit Is Not Your Friend

Pay close attention to this post because all of the advice comes from actual experiences!  Here are my top 10 reasons why credit is not your friend:

1.  Gets You Into Debt:  Of course, this goes without saying.  While some people may argue there is such a thing as good debt, getting into debt leads to all kinds of problems.   I can tell you, money and debt worries are a major source of argument and conflict in a relationship. See #2.

2.  Attacks the Fabric of Your Home:  Being in a committed relationship is supposed to improve your mental well-being and health.  In fact, according to a 2004 study by the Centers for Disease Control and Prevention (CDC), mortality rates were found to be the lowest in married couples.  But add the pressures of debt to your relationship and painfully watch the bloom fall of the rose.

3.  Makes You Lose Focus of the Big Picture:   The small picture is the monthly payment; you can probably afford it, right?  The big picture truly is; what’s the total cost?  By focusing on the “affordable payment”, you will psych yourself into debt!  By focusing on “overall cost”, you will focus on the questions that need to be asked; can I afford this now and do I really need this anyway?

4. Robs Peter to Pay Paul:  When you use credit, you’re robbing from your financial future to obtain something now.  In return, you get “obligation” which we know, is the act of binding oneself.  In this case…to debt!

5.  Inhibits Your Resourcefulness:    I know this one all too well having gone from having a high 6 figure middle class living to being broke!  I use to throw money at a problem, not use credit. But this applies to people who have credit – but not the money too.

Instead of looking at the big picture (#3) you decide you’ll buy a product or service that could solve your issue, whether personal or for business, instead of finding ways to solve those issues without spending any money first.  Sound like you?  Well I can tell you this use to be me!  (This could be a whole post in itself)

6.  Makes You an Awful Steward of Your Children’s Future:  Say it with me; financial literacy is the key to our children learning how to manage their credit and financial future. If you’re home life is stressful because of money and debt worries, you’ve mortgaged your financial independence to keep up with the Jones’, and you haven’t learned that no one has a greater stake in, or is a better guardian of, your financial security than you – then you’ll be a horrible role model!

Teach them frugality, show them by how you live your life with them, that money is something to be valued!  And as Katy Wolk-Stanley says in her blog; “Use it up, wear it out, make it do, or do without”.  Pay particular attention to the “do without” part; I have!

7.  Blurs the Line Between What is, and What isn’t:  What’s the difference between credit and cash?  Credit is money you think you have and cash is the actual margin your life works within.  Got that?  If you can’t reach into your pocket or you don’t have it in a savings account, then you don’t have it to spend – PERIOD!  This “cash only mindset” can really set you on a course of building your wealth, which leads us to number 8…

8.  Inhibits the Creation of Wealth:  It’s a proven fact that using credit can affect not only how much you spend, but what you buy!  If you use plastic, you are unconsciously willing to spend more than those who pay with cash!  And if you are reading this saying to yourself, “yeah, but I pay off my credit card balance in full every month”, you are still hurting yourself.  Just because you pay off your card balances every month to supposedly avoid finance charges (I use to do this all the time myself) doesn’t mean using credit cards isn’t hurting you.

You are still overspending, simply because of the payment method you chose to make those purchases with.  See #3 and #7. Plus, last time I checked, none of us has a crystal ball so how can you see something cataclysmic and unexpected coming?  The answer is; you can’t!  What’s your plan B in case you can’t pay that balance in full?

9.  Makes You Spend More of Your “After Tax” Income on Debt:  In a recent report titled “Damage of Debt” written by Katherine Porter, she wrote that in the last decade, on average, more than one million consumer bankruptcy cases were filed annually.  To put that number in context, one million bankruptcy cases means that in 2012, more women will go bankrupt than will divorce, and the annual number of freshly minted bankruptcy debtors will exceed the number of new college graduates.  Can you say WTF?

She goes on to write the bankrupt are only a small subset of those struggling with debts.  In 2006, one in seven families was contacted by a debt collector.  The foreclosure crisis and the recession have only expanded the number of people struggling with debts and I went through every single one of those scenarios.  So the million dollar question is; why would you want to?

10.  Lose the Freedom You Seek:  Living a life without any debt means more freedom in deciding what to do with your life and how to live it!  What about peace of mind; does that qualify as freedom?  Knowing you don’t owe money allows you to sleep like you just took a whole ambien!  Knowing exactly where you stand financially gives you freedom!   Why would you ever willingly want to give that up?

Developing a Spending Plan Will Help

Knowing what’s coming in (your income) and what’s going out (your expenditures) and then carefully deciding what is, and what isn’t necessary, is the key to living a wonderful, peaceful, and happy life.  Living your life unwisely using credit and getting into debt will go a long way toward keeping you from achieving that freedom!

What other reasons can you think of for not using credit and staying out of debt?  I’d love to read what you have to say on the subject.  Please leave me a comment below and I’ll respond icon smile Top 10 Reasons Why Credit Is Not Your Friend

As included in the Carnival of Financial Planning 12/7/12 @ Master The Art of Saving Blog

Did You Know? Credit Bureaus Are Not Your Friend and We Are Not Their Client!

TAC Blog Pixel Template 1024x681 Did You Know? Credit Bureaus Are Not Your Friend and We Are Not Their Client!

Experian, through a recent press release, just announced the launch of TrueTraceSM.  In the release they state the product is the latest addition to Experian’s debt collection product suite! But not before boasting they are the leading global information services company which provides best-in-class skip-tracing capabilities across industries. 

And if you didn’t already know, Experian is one third of the band Rape, Pillage, and Plunder! OK, you got me; they aren’t really part of a band :).  Experian is actually one of the Big 3 Credit Bureaus with the other two being Equifax and TransUnion.  If you don’t know this fact, the 80’s called and they don’t want you back!

Role of the Credit Bureau

Look folks, there’s no need to research this and look up definitions.  Why don’t we just see what Experian themselves say their role is?  According to their own website, their role is to:

  • Promote and facilitate a data sharing culture amongst the subscribers
  • Provide the users with accurate information and solutions to support objective application processing models
  • Help the lenders reduce the risk of granting loans likely to default
  • Support fraud prevention procedures
  • Enable loans to be granted without “security”
  • Protect consumer against over-indebtedness by allowing for responsible lending by the grantors

Deciphering the Code Talk

Let’s make this simple, shall we?  The terms “subscribers”, “users”, and “lenders” don’t apply to you and me!  You may be asking yourself “But what about the consumer part; that’s us, right?”  Yeah; that one is us but they do not elaborate about anything concerning “consumer” or “consumer rights” other than stating Protect consumer against over-indebtedness by allowing for responsible lending by the grantors as one of their roles.

So Experian protects us, the amateur consumers, against getting in over our heads by telling their subscribers,” Hey, don’t extend that guy anymore credit because he can’t afford it?  Really?  I must be missing something here.  One of the things credit bureaus do not list on our credit report is income.  So one; how do they know we are over extended other than knowing what our debt to credit ratio is? And two; if they are actually doing this, then they are failing miserably!

What, with millions going bankrupt every year and credit counseling and debt settlement companies making millions every year as well!

Time To Call “Horse Shit” Again   

If you recall, in my post “Who Can You Trust When Taking Credit and Financial Advice”, I had to call horseshit a few times and here are 2 reasons why I’m calling horseshit on this one too:

  1. A credit bureau does not decide whether you should be extended credit. It collects, stores, and reports the relevant identifying and credit information of credit-active Americans. Using this information, credit grantors alone decide what standards you must meet to be granted credit.  So how in the hell do they Protect consumers against over-indebtedness?
  2. A credit bureau does not know the specific reasons why you are given or denied credit. The credit bureau does not track the decision a credit grantor makes after ordering a credit report; favorable or not. Need I ask the question again?

Say it with me people; HORSESHIT!

Libraries or Debt Collectors?

Let’s look at this “role” question again, shall we?  Consumer credit bureaus supposedly serve as control storehouses — or libraries — of credit repayment information. They collect the credit information from credit grantors such as banks, credit unions, finance companies, and retailers.  These credit grantors then access this combined information from the bureaus to help them make lending decisions.

But now they also market Debt Collection and skip-tracing products too?  Oh, it gets better! In the press release they state TrueTraceSM allows clients (not you and I) to designate accounts that require special handling (bankruptcy, deceased, litigious consumer scrubbing and more) and reduce regulatory risk.

Is this how they Protect consumers against over-indebtedness and getting in over their heads?  No my friends; this is how they make money!  In case you didn’t know, they are not a government entity nor a non-profit.  They are here to generate revenue and they do it well – consumers be damned!

Say it with me people; HORSESHIT!   What’s your opinion of the credit bureaus?  Are you OK with them working all the angles in the name of profit? Do you think this is a conflict of interest? Please lend your voice to the conversation by leaving a comment.