Personal Finance and Avoiding Debt Collection: What Not to Do

Personal finance

Sooner or later most of us will face a situation that will leave us with bills that we can’t pay. Loss of job, death in the family, divorce, illness, and emergencies happen and often it leaves us financially broken. This is when the debt collectors start calling. This is a scary time and if we have never faced these problems before, we may try to hide from them. We simply do not know what to do. We are trying our best, but our options seem nonexistent.

First, let us look at what we should not do.

Do not ignore or avoid the contact.

This is not going to work. Computers and technology are so advanced that even a novice collector can find you in little to no time. They will first access the information on your credit application. This contains your address, place of employment, relatives, other companies you do business with and your banking information. Even if you have changed addresses, this is enough information to find you. It is amazing what comes up when they do a basic and free background check online, done by a private citizen. This is nothing compared to the programs the collection companies use.

Stop the bleeding. A debt collector is not out to ruin your life. Their job is to collect money for their employer. That is how they stay in business. They would rather work with you than against you. In most cases, the collector is one of your best allies. Debt settlement is your best option. Many times they can stop additional charges from adding up which absorbs the money you send them. If you explain the situation, they have programs to help. Sometimes payments are deferred and interest payments are accepted to allow more time on the principle.

What happens next?

The calls stop?

Of course, every debtor who ever checked their call waiting is hoping that the bill collector will just give up and go away. While it could happen, the chances are slim. People think because they get a small window of time when the phone is quiet that they gave up. More often than not, they are escalating their efforts. Sometimes that means they are selling your debt to another company. For whatever reason, they feel it is better to receive a portion of the money and let your account become someone else’s headache. Enjoy your break, because your procedure just began again with a new company.

This new company buys hard to collect debts, because they have the tools and resources to collect them. They will probably come at you harder and be less willing to work with you. Your credit report takes another hit from a new collector.

They reach further

In a last-ditch effort to find you before they take the matter to legal measures, they contact people associated with you. The secretary at work tells you about a person who complained that you would not return their call. Your neighbor mentions someone calling asking for your number. Your family members get calls. This adds more stress and embarrassment to your life. Even now, it is wise to return the calls. This company is going to take the next step if you do not find a resolution. It is embarrassing, but it is just a phone call.

Legal action

Time is up. They have tried to reach you and they have tried to work with you. But your fear held you back. Now they will bring a lawsuit against you. You can fight the lawsuit, but if you owe the money and you have a broken contract, you will not win. If the lender wins in court, he can then garnish your wages and get his money directly from your employer. Your credit score takes a major hit with a judgement against you for lack of payment. Recovery from the situation could take years. If this happens enough times, by enough creditors, you may end up in bankruptcy.

4 tips to maximize your cash back rewards

This That and The MBAAs long as you pay off your balance, using a rewards credit card for everyday purchases is a smart money move, but there are a few tricks to stack additional savings on top of the credit card rewards you are already earning. Use these 4simple tips to get the most possible cash back rewards when buying what you need:

1.   Shop online whenever possible. Here are just a few of the many reasons why:

  • The electronic cart helps you stay in your budget
  • Less temptation at checkout for impulse buys
  • No pressure from the sales staff
  • Ability to use online coupons plus earn more cash back from a cash back rewards website

2.   Use a coupon code. Find the best coupon code to save the most by checking a comprehensive savings website. Scan through all the offers for whichever store you are purchasing from and select the best offer for what you are buying. Consider a percentage off, set dollar amount off or free shipping offer and use the one that what will save you the most money. Feel free to use a calculator to compare offers and review the shipping fees before making your purchase to make an informed decision. A good savings website will provide coupons for free as well as clearly indicate the expiration date and additional details such as restrictions. Insider tip: Trust a coupon site that stands behind the offers they post with a guarantee and has customer service available to assist you if you need assistance.

For example, using a 20% off coupon on a $100 purchase means $20 saved just by typing in a coupon code that may take you 60 seconds to find.

3.   Earn cash back from a savings website. Similar to credit card cash back rewards earnings, online shopping cash back programs give you a portion of your transactions. Your online shopping earnings are deposited into your account. When you are ready to cash in, you get paid out at no cost to you. Best of all, since these programs reward you for shopping online, you can stack your cash back by earning it from the savings site plus from your rewards credit card.

For example, with a 5% cash back rate on your $80 purchase (after your 20% coupon off your $100 total), you earn $4 cash back from online shopping, and all you had to do was click a link from the savings site to the store you already planned to shop at.

4.   Select the best rewards credit card to pay with. By following the steps above and using a card with a great cash back rate, you are stacking two cash back earnings, which do not interfere with each other. If you have multiple rewards credit cards, consider which one provides the most benefit before completing your payment details at checkout.

In this example, if your rewards card provides 5% cash back, you’ll earn another $4 cash back from your credit card on your $80 total, for a grand total of savings in this example of $28 on a $100 purchase, with $8 from two forms of cash back.

This is a guest post from Jon Lal, founder of coupons & cash back website BeFrugal.com and couponing & savings expert. BeFrugal.com offers cash back for online shopping at 3,000+ online stores with a current average rate of 7%.

Do you know what a reimbursement accountant is?

excel screen shot, old excel, financial statementsWell I didn’t either so keep reading and you will find out.   Lately I have been thinking a lot about where I would like this blog to go in the future.  I have drawn out plans as to how I see it in the future.  While not working on the site in the past few days I have been deep in thought.  I conducted an interview for a newspaper and I have been busy at work.  This time of the year is especially busy in hospital finance. 

Each year as the financial audits are coming to a close, the reimbursement staff in hospitals are beginning to get their gears going.  They are driving through every statistic that makes up the hospital that they work at.  They are figuring out which dollars are for salaries, which are for benefits and which are just capital costs.  The reason you ask is why, why go through such great lengths to determine what a salary dollar for a nurse is or what a discharge in the ICU is. 

The way that capital costs and salary dollars are allocated to the specific departments can have an impact on how that particular operating unit is paid.  Understanding the payment systems of Medicaid and Medicare is no easy feat to grasp; I have been working here for 3.5 years and still at times have difficulty. 

The financial and statistical data is submitted to Medicare and Medicaid to analyze and put into the hospital rates in the future.  This report is filed annually for all the hospitals across the country that participates in the program.  This is a time consuming and arduous process that takes more than a month to complete, in fact I start working on it after the start of the New Year and do not finish until the end of May for Medicare and the end of June for Medicaid.  When completed each of the reports is close to 200 pages long.

What do you think; did you think there was much data compiled by Medicare and Medicaid?  This is in addition to all the government tax forms like the 990 and payroll stuff.  If you are bored Google CMS 2552-10 to find out about some of the forms that are necessary to be completed.  So with that said, I have revised my posting schedule for the time being to Monday, Wednesday and Friday. 

Go ahead and subscribe to my feedburner right now to stay up to date with This That and The MBA.

 PHOTO BY: MicrosoftSweden

WTF (Wait That’s Finance) Part II: The Down and Dirty on the Naked Put

call option, options picture, futures marketOk not really about the naked put, but now that I have your attention we are going to talk about put options in general.  Go ahead and check this post out on derivatives to get up to speed.  Wait make sure that you come back.   Are you up to speed now?  Today I decided to take an in-depth look at the put option and try to explain it in layman’s terms.  Sure I cannot cover every possible scenario in this post but I hope to explain it to you and give you a better understanding so next time you hear it you will be able to chime in with your 2 cents. 

The put option is a strategy that is seldom talked about among individual investors, but it is a strategy that is popular among savvy investors and options traders.  The put buyer pays a premium to the seller for the option to purchase the underlying security. (no pun intended, ok it was!)

What is a put option? 

A put option simply is an option that gives the buyer the right, but not an obligation, to sell the underlying security at a certain price and certain time.  If the buyer decides to exercise the seller of the put option has to purchase the underlying security at the strike price if the buyer exercises the option.  The put option is sold in 100 share increments.  American put options can be exercised any time prior to the expiration date.  The expiration date for American put options is the third Sunday of every month.  Confused? Great I will provide an example later. 

Why would you enter into a put option?

A buyer thinks the price of the security will decrease by the exercise date.  The buyer pays a premium.

A writer/seller thinks that the price of the underlying security will increase and collects the premium

Example of a Put Option:

Groupon is currently selling for $11.96

With all the bad press recently that Groupon has received, we expect the price of the shares to decline.  We buy a put option with a strike price of $11.00.  We would start to make a profit once the price of the shares falls below $11.00.  We are trying to catch the profit off the downward movement of the underlying security. 

Trading this type of financial instrument we are using leverage, while this situation we anticipate a positive outcome, there can be severe consequences using any type of leverage.  It is best to seek out a financial advisor before using options on your own. 

Class are you ready to explore put options on your own?  Have you had any practice trading options on your own? Were you successful at it?

PHOTO BY: yojspew

Your grandfather used to do it why not you…

this that and the mba, thisthatandthembaHave you ever noticed the price of razor blades keeps going up and up?  What is the deal with that?  It is not World War II when we were rationing the use of metals.  I am not sure how many blades Gillette is up to now but I have been using the Mach 3 as of recent.  My wife went to the store to pick up a pack of them the other day and I was shell shocked at the price of a 5 pack it was close to $15.  I checked out some of the other blades and saw the Fusion Proglide Power for close to 19 bucks for a 4 pack. 

Have you ever tried shaving with a straight razor?  Well it may be time to pull one out.  A while back I purchased a straight razor that you could interchange the disposable safety razor blades. 

The great thing is they are a few bucks for 10 blades.  Sure it is going to take you a little bit of time to get used to but as soon as you pick one up and shave with you will not want to put it down.  Not only are you saving yourself a bundle of money, you probably spend about $50-60 a year in cartridge costs if you use the Mach 3.  Considering that is old technology out in the marketplace today if you use one of the new fancy ones you are probably spending more. 

Why not be more budget conscious and pull out a single blade to shave your face.  It is just like what our grandfathers and great grandfathers used to do.  It is not hard, but the first time I used one it looked like I was in a knife fight.  After that I rarely nick myself and you will notice an improvement in your skin as well.  The shave is much closer than those 10 blade gadgets claim to get your face!  It will give you a reason to put on aftershave as well; your wife will certainly appreciate your attention to your skin. 

So are you with me?  What do you think; do you want to give it a try?  Any other ideas on ways to cut down on the cost of a shave?  I have tried those cheap blades but they rip up my face!  Consider the savings over a lifetime!

PHOTO BY: superde1uxe

Dear Debt, I am going to defeat you!!!

Beating debt, this that and the mba, mba, thisthatandthembaWhat does national financial literacy month mean to you?

Well for my wife and I, we have set up a plan to pay down some of our debt.  We have accumulated some debt over the past few years.  It was by choice so that she could stay home with our two beautiful children.  I wrote a post the other day asking you to take a moment to review your situation because April is National Financial Literacy Month.

Did you take a few moments to see where you stood?  Are you going to do anything about your situation?

Our goals are to have all of this done by June 1.  She has 4 payments left on her car and then it is ours baby!!!!  It will be nice to receive that title and see no liens.  Our approach is going to be contrary to what scholars recommend; which is to pay down card with highest interest rates first.  We are taking the approach to hitting a few with moderate rates to pay them down first.  We want the satisfaction of bringing down the overall amount of cards with balances on them down.  The minor victories are going to give us momentum to push ahead and pay down other debt that we have.

This past weekend my wife and I sat down to formulate a plan on how we were going to do it.  I am not going to get into detail right now, but this weekend I paid every bill that we had for the month.  It is really nice to have a second income now to give us the flexibility to do this.  Mind you that we chose to bring this all on, we wanted my wife to stay home with our kids we were fully aware of the situation we would be in.  Your kids are only little once, and money was not as important as their well-being.

My wife and I both have our master’s degrees and are both working now and our debt will be paid down hopefully by the end of the year. We are taking an aggressive approach to get back on track.  It is going to work great for us and I cannot wait to tell you all about it!!  Who ever thought paying down bills would be so fun!!

Did you give yourself a financial tune-up?

PHOTO BY: Eric731