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Success Online Financial Education Newsletter

 

Money Management International Improving Lives Through Financial Education
SUCCESS NewsletterFebruary 21 2013 newsletter
 
Treating the symptoms of debt isn't enough 

Don't just treat the symptoms of debt

By Jesse Campbell, Copywriter

The process of breaking up with debt is not an easy one.

Whatever your ultimate financial goals may be, if your debt has become too much for you to handle, it takes hard work and dedication to turn things around. It’s something you can absolutely do on your own, but the beautiful thing is that you don’t have to do it alone. In fact, in many ways working with a certified credit counselor can make all the difference when it comes to your long-term success.

Why?

Because your issues with debt have causes and they have symptoms. You may not know the causes, but you can see the symptoms. And, quite frankly, treating the symptoms just isn’t going to get the job done.

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How frequent are credit reporting errors?

Credit reporting errors can be costly

As many consumers know, one of the most influential factors in your ability to obtain credit and favorable interest rates on personal and secured loans is your credit score. Your credit score is determined primarily by your payment history (charting all missed or late payments within the last seven years), with additional emphasis placed on the amount of credit currently extended to you and the amount of debt already in your name (among a number of other factors).

Because your credit score is used by lenders and credit card companies to determine your “credit worthiness” having a low score could end up costing you a lot of money in the long run. This is because a low score is interpreted as a high risk, which lenders balance by charging higher interest rates. If you have a high credit score you’re considered to be less of a potential risk, which allows lenders to extend you more money at lower rates.

The problem is that the process of compiling the information that makes up your credit score isn’t foolproof. All three major reporting bureaus (TransUnion, Equifax and Experian) may report different information about a consumer and, according to a recent study conducted by the Federal Trade Commission (www.ftc.gov), errors are even more frequent than originally believed.

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Financial Education learn more

Sharpen Your Financial Skills with 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. Take the first step toward financial wellness by enrolling in a Web seminar today!

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

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

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About Money 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 hours a day, 7 days a week by telephone and Internet. Services are available in English or Spanish. To learn more, call
866.530.9869 or visit MoneyManagement.org.

 

Your tax refund: save, spend or reduce debt? 

If you are like many Americans, you are probably anxiously awaiting your tax refund from the Government. While your annual tax refund may look and feel like free money, it’s not. You worked hard to earn every penny of your income—including your tax refund.

This year’s tax refund dilemma may be weighing heavily on the minds of many taxpayers. Several hundred or thousands of dollars could make a big difference for many families who are struggling to make ends meet. As our national economic downturn as dragged on it's become increasingly important to carefully consider all financial decisions, including how to make the most of your refund. Before making any hasty decisions concerning your tax reimbursement, consider the following suggestions offered by Money Management International:

  • Save - It may be hard to hear, especially if you've been living with a tight budget for a while now and hoping to use your refund money on a big purchase, but placing your windfall money in a savings account could be the difference between a financial setback and a financial disaster. Besides, you work hard for your money, so make your money work hard for you. Depositing $2,000 into a savings vehicle that earns 8 percent interest can really add up. After 5 years, it will be worth $2,939. After 10 years, it will be worth $4,318.
  • Spend - After months of living frugally, it might be tempting to splurge and may even feel a bit more acceptable. If you choose to spend your refund, spend smart now for big savings later. Upgrade your appliances to energy-efficient models that can lower your electric, gas, and water bills and save money in the long run. Complete car maintenance and home repairs to help add value and preserve the life of your investments.
  • Reduce debt - Reducing your debt allows you the freedom to make smart future financial choices. For consumers struggling with credit card debt, using a refund to accelerate debt payments is an easy financial decision. If you pay the minimum monthly payment of 4 percent on a $6,000 credit card debt with an 18 percent interest rate, it would take more than 13 years to repay. In that time, you would pay more than $3,500 in interest charges.

Finally, if you’re tired of facing the “tax refund dilemma,” consider reducing the withholding on your W-4 and see more money on your paycheck. Calculators at www.irs.gov can help you figure your appropriate amount. Just think, if your refund this year was $2,000, you could have increased your take-home pay by $167 a month.


MMI Debt Management Plan Client Corner
Tips for Success

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Sign up for DepositDirect! It's secure, convenient and easy! Enroll online today!

Update your account balances online. When you receive your creditor statements, update your balances by visiting your MMI account .

If you would like more information about a Debt Management Plan, visit MoneyManagement.org.


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