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Money Management International Improving Lives Through Financial Education
SUCESS Newsletter Financial Education Newsletter
Consider these pros and cons carefully before risking your home to kill credit card debt.

The Debt Advisor

by Steve Bucci
Bankrate.com

The Debt Advisor

by Steve Bucci
Bankrate.com

Dear Debt Adviser,

I am 27 years old. I have a mortgage, school loans and an auto loan. I also have about $20,000 dollars in credit card debt. I am able to pay all my bills every month. In most months, I am able to pay a little extra to each of my credit cards. I have stopped using my credit cards and I am trying to get my life back on track. My question is do I continue to pay off my credit cards like I am doing or should I look into a home equity loan?
-- Amy

Dear Amy,

Before I get into any practical considerations, the parent in me needs to talk to you. You have accumulated a lot of debt for someone who is only 27. It looks like you have been spending about $100 a week more than you earn for a long time. I'm glad you have stopped spending, but I am concerned that any unexpected expense, illness or reduction in income could push you over the edge.

As part of your plan to get your debt down, I want you to simultaneously begin to save for an emergency fund. You can do this fairly painlessly by devoting half of any new income into a separate emergency savings account -- half of your next raise, half of any bonus, half of any tax refunds. You get the idea. Set up the account so that money comes directly from your paycheck into the account. Using direct deposit from your paycheck greatly increases your odds of success.

Now, to your question, it is great that you have stopped using your credit cards. The first step in paying off credit card debt is to stop adding to the balances. So, you are already one step ahead. It is also great that you have enough income to meet all of your obligations and have some income left over to do with as you choose.

Your question is whether you should continue to pay down your credit card debt or obtain a home equity loan. An argument could be made for both sides, so let's take a quick look at some of the positives and negatives of taking your unsecured credit card debt and converting it into a secured home equity loan.

Using home equity loan to pay off credit cards
PositivesNegatives
Interest paid on the loan is tax- deductible.Unsecured debt becomes secured by your home.
Fixed interest rate is set for the life of the equity loan.If your home drops in value, you could owe more than your home is worth and not be able to move for a new job or other opportunity.
Lower interest rate and payment are available.A default could mean possibly losing your home.

Based on the limited information in your question and the current economic picture, I believe you would be better off paying down your credit card debt without a home equity loan. There are four reasons. One, if you continue to pay more than the minimum amount due, you should be able to pay off what you owe in five years or less -- about twice as fast as you would with a home equity loan. Two, your home will not be placed in jeopardy in a tumultuous economy and job market. Three, as long as your credit score is above 700, should your current credit card issuer make changes in your cardholder agreement that you don't like, you can opt out of the new terms, close the account and repay under current terms. You could also apply for a new card and transfer your balance to a different card issuer. And four, you'll lessen the chances that you may become upside down on your mortgage, or owe more than the home's value, which could keep you from selling your home to move for love or money.

At your age, the world is full of possibilities and opportunities. Don't jeopardize this wonderful time by tying yourself down with debt obligations.

Finally, good luck!

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of "Credit Repair Kit for Dummies."


Regifting

Regiftng for a cause

For several years now, MMI has promoted regifting as a way to save money and the environment during the holidays. This year, in honor of National Regifting Day, we’re shaking things up a bit and highlighting regifting for a cause in addition to our typical regifting exchanges. Contributing some of our regifts to those in need (and encouraging others to do the same) is one way we can give back to the community and support the trend of going green for the holidays. Every little step can make a huge difference!

You too can contribute by donating regifted (or new!) goods to any charitable organization near you (check out Regifting 101: Charitable Donations), or by holding your own charity drive. Remember that your unwanted gifts, no matter how big or small, can very well be a welcome donation to a charitable organization. You know what they say, “one person’s trash is another person’s treasure.” Keep in mind that there are still rules to regifting even when you’re giving to a charity, so read up on the rules of regifting before you do, and reduce, reuse, recycle…regift!

Will you be regifting to charity this year? If so, share your acts of kindness in the comment section or at Regiftable.com for your chance to win our very desirable prize packages!


Financial Educationlearn more

Sharpen Your Financial Skills with Free Online Courses-

The goal of our highly trained professionals is to arm you with the knowledge necessary to take control of your financial situation. Our online seminars stress the development of skills that can assure long-term success. You will gain the peace of mind that comes from improved spending habits, increased savings, and the wise use of credit. Take the first step toward financial wellness by enrolling in a web seminar today!

Learn More

In-Person Workshops Are Also Available In The Following Areas:

Arizona | California | Connecticut | Colorado | Illinois | Louisiana | Maine | Massachusetts | New Jersey | New Mexico | New York | Pennsylvania | Rhode Island | Texas - Fort Worth Area | Texas - Houston Area | Virginia | Greater Washington D.C. | Washington State

View upcoming financial education workshops


Ten things I love about the new MoneyManagement.org

Posted by Kim McGrigg
MMI Community Manager

I am so pleased to announce the launch of the brand new online home of Money Management International.

What I should tell you is that here at MMI, we continually seek ways to find the newest and best ways to offer you the financial tips, resources, and services you are looking for to improve your financial situation. What I want to tell you is that I am really excited about this new site because (in my humble opinion) it is, in every way, better than the old one. In fact, I don’t even want to talk about that old site. The new site still has everything you loved about the old one, but this one looks and functions oh-so-much better. But with the beauty, also comes brains. There are a ton of new features on the site and I invite you to explore them all. In case you miss something, following are ten things I love about the new MoneyManagement.org.

  1. Upgraded search functions. Easily search for what you want and find it. Fast.
  2. More articles. From credit to family finances, we’ve got articles covering the financial topics you need to know about.
  3. Library of free eBooks. We offer not one, not two, but three free eBooks (with more to come!)
  4. More multimedia features. We now have more ways than ever to communicate. Webinars, webcasts, videos, and pictures—however you like to learn, we deliver.
  5. Experts answer your questions. For years, I answered individual questions through the Advice Team portion of our old Web site. The newly named “Ask the Experts” column offers you the same opportunity: real answers to real life financial dilemmas.
  6. You can share your story. We care about you and we want to hear about your struggles and successes. The new site offers you a chance to share your stories with us, and possibly, a larger audience.
  7. You can find job. The new careers section makes it easy to find out what jobs are available and you can even create an online resume. (Working here is awesome, so you should probably go ahead and do that now.)
  8. Client access. MMI clients can access and manage their accounts in a much more attractive looking environment (not to mention the improved functionality!)
  9. The blog is here! The blog has been very lonely over at its own URL, so now that it is integrated into the new site, I hope you find yourself reading (and commenting) regularly!

Welcome to the new MoneyManagement.org!


MMI Debt Management Plan Client Corner
Tips for Success

Don't risk missing a payment-sign up for DepositDirect. DepositDirect Authorization allows us to withdraw your deposit from your bank account and save time and money each month. It's secure, convenient and easy! Enroll online today!

Update your account balances online. When you receive your monthly statement from your creditors, login to your MMI account and update your balances. It is important that we have the most accurate balance information possible on file.

If you would like more information about signing up for a Debt Management Plan through Money Management International, visit MoneyManagement.org.


Tweet for Change

Tweet for Change

Interested in following trending twitter topics about all things financial? If so, check out the popular feeds on TweetForChange.com. In just once click, you’ll be able to see what is on people’s minds right now (in 140-characters or less!) Social media expertise is not required!

This summer has brought record breaking temperatures to much of the country. That’s no exception for Texas where, in Houston alone, we have topped 100 degrees more than a few times this summer – a record that hasn’t been broken since 1980. Although we’re quite used to the heat, these higher than average temperatures have brought higher than average energy bills along with them. Desperate times call for desperate measures, and high electricity bills coupled with a down economy has many resorting to clever ways to save money.


About Money Management International Management International

Money Management International (MMI) is a nonprofit, full-service credit counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24/7 by telephone and Internet. Services are available in English or Spanish. To learn more, call
800-762-2271 or visit moneymanagement.org.


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