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0:00felt in his 10 plus years of education in personal finance. Welcome our community outreach coordinator, Felipe Arevalo. Oh, Chase, thanks for having me. Look forward to the presentation. We're very excited. So, I will have a couple of housekeeping things and notes before we get started. We will have plenty of times to answer time to answer questions after the presentation. The presentation will be about 20 minutes long, so that'll leave us anywhere from 10 to 15 minutes for all your questions, and we will do our best to get to all of them. As you can see, what we would like if you can do is in the chat, if you have a question, you can write that out just like you can see in the chat box. And in this case, it's just how do I boost my credit score? Very very simple question. And if you do that, then we will then get to those questions the order that they came in. And if there's multiple questions, we'll try to answer those as well. All right? You will notice also that the questions go directly to the hosts, so we will kind of can stay away from having active chats on the side. So, after further ado, Felipe, take it away, bud. All right. Thank you everybody for joining us for our pilot, our first Smart With Your Money Live. Today, we're going to start with the very important, very popular topic, how to boost your credit score. And yeah, we'll get right to it. Don't want to take up anybody's time. So, today we're going to go over what is a credit score? How many credit scores do you have? Because believe it or not, you have more than a few. What are the factors to a FICO score? And how to improve your credit credit score in four easy steps. So, if you stick around, you'll definitely hopefully learn something new and and get some tips that will help you along your financial journey. First of all, credit score variations when it comes to FICO, and FICO is the Fair Isaac Corporation, abbreviated down to FICO because we all like shorter names. But according to myfico.com, consumers have over 29 different credit scores. And then you take into the account the fact that we have three different credit reports, you can see how it really adds up to the different variations of scores that you can have at any given point in time. Currently, the most widely used FICO variation is the FICO 8. It's not the newest FICO score, but it is still the most widely used. When FICO puts out new credit scores, it then becomes the choice of the lenders to whether they want to switch or if they don't want to switch. And sometimes that switch can be an expensive conversion. You got to change a lot of things, so it's not always here's a new credit score and everybody is using it. The first version of the FICO score was created in 1989. It's been around for a little bit.

3:00And uh it's it's definitely gained popularity since then. Uh the FICO score models are they're updated. They they change because we know lending changes and trends change. So um you know they they adapt them to the different uh different ways of borrowing and lending that take place throughout time. Uh you know just to keep them as relevant as possible. Within FICO uh they have traditional and industry specific scores and that's how they come up with so many different credit scores is you have your traditional kind of encompassing everything score like a FICO 8. And then you have other ones that are specific to any given industry or different industries where lending is a common practice. For example you have you may have an auto lending uh auto FICO auto score uh one specifically for credit cards and another one that may be specific to mortgages. And this just allows the lender to gauge the the level of risk that any individual has more hyper focused on their industry. So you're asking for an auto loan they can gauge uh with a little bit more accuracy uh you know what the different how likely you are to make or not make your car payments. When it comes to uh credit scores and and this is something that's very important to remember when when comparing credit scores. You know you may get a free credit score from uh a website maybe your credit card company maybe you're out trying to make a credit card um or a vehicle purchase um you know there there's different um there's different scores. So you have to make sure if you're comparing one credit score to the other that you're comparing apples to apples. So just because you've got a free credit score uh on a website or from your credit card company and then you go get another one at the car dealership when you're trying to buy a car it it may be a difference in in the score. It could be even a significant difference. It doesn't necessarily mean that your credit has changed drastically in the time it took you to drive from home to the car dealership. It just may mean that you're not looking at the same credit scores. The most popular non FICO credit score is going to be the Vantage score and it was created uh as a team effort between the three credit reporting bureaus. It was first introduced in 2006. So that itself has been around for a while uh but compared to FICO it was a little late into the game and and FICO is still the predominant

6:00score and the one that's used in over 90% of credit decisions. So, you know, it's important to understand that there are other scores out there, but the FICO is still kind of the one you you you want to concentrate on the most. Also, some larger lenders uh may develop their own custom scoring models in which they will incorporate your FICO score, your Vantage score, and add a few more variables that they deem important to try and come up with a new customized score. Uh so whenever you get a credit score, you're looking at your credit score, be sure to try and and and look and see what credit score you're looking at and if possible also what credit report that information came from so that later down the road if you compare it or you compare it to a different credit score that you got elsewhere, you can kind of gauge whether you're looking at the same score or not. And it's very important so that you don't, you know, panic and you say, you know, wow, my credit score dropped or you know, increased drastically in the last 5 minutes and all I did is log into a different uh credit card website. All right. So you have your average uh credit score by age and and the reason I wanted to include this slide is um it's an average. So if you're if you're not at the average for your age group, that's okay. You can still get to whatever credit score you want to get to. Um but as you see uh typically as people get older, they their credit score increases uh with time. Now, so many different factors that go along with that. Uh you know, from, you know, learning to use credit more responsibly to having a longer credit history, um you know, being able to start paying off certain things, whether it be, you know, early credit card debt that that someone may have gotten themselves into, paying down cars, paying down student loans, paying down mortgages. Uh but as you progress, your credit score, you know, the average credit score goes up. So you can kind of see where you fall within your uh age bracket and then and then work your way from there to to try and Uh this is especially useful for the really young, if we have any really young uh listeners right now. Uh sometimes, you know, when we talk to college students, they they get a little discouraged, but it's it with time you can get your credit score to be uh where you need it to be or where you would like it to be. All right. So what are the different factors to a FICO score? And this is important. This is one of the most important slides that we have here in in this presentation and and pretty much all of our presentation our credit presentations as a whole. And, you know, the the five different factors that go into

9:00FICO score. We don't know the formula. The formula is going to be, you know, but we know what goes into it. Uh and the first most important thing is going to be 35% of your FICO score is your payment history. And that's why it's very important to always make your payments on time and that's why it's very important to, you know, when you can, not miss payments, pay attention to your credit, um and and get into the habit of making that uh monthly payment. Next you have your debt to credit ratio. That's 30% of your credit score. So, and and this one's a a little bit more confusing. The the payment history is pretty straightforward, make your payments on time every month. Uh your debt to credit ratio is the amount of money that you owe compared to the amount of money you have available to spend, your credit limit. And you want to keep that below 30% usage. Uh once you start going over that 30% usage, you you'll start to see the negative effects on your score. Uh if you want to be a real high achiever, uh keep it below 10% or or at zero, somewhere in the single digits. You know, use your credit every month and then pay it off every month uh to keep that debt to credit ratio down. Um you know, if if you have credit card debt, uh it's okay because as you make payments, and this is why it's important to pay down your credit card debt, uh as you start to make payments, your debt to credit ratio starts to decrease and therefore, you know, your credit score, your FICO credit score will start to uh move in the direction that we all want our credit scores moving. The next biggest factor, and this one's hard if you're new to credit, if you're just getting started with credit again, uh is your length of credit history. How long have you been using credit? How um, you know, do you have that history to for lenders to look into? Um you know, if you just started using your credit card for the first time or or any type of credit for the first time two months ago, there's not much for them, not much data in there as far as payment history, as far as your usage for them to judge, you know, how or make an accurate guess on how you're going to uh work with credit. It's just not there. If you have, you know, a long payment history, now there's more uh ability to predict which way you're going to do. Are you going to borrow a lot? Are you going to make your payments on time? So that it just takes time to build. And we talk to people all the times that, you know, how can I improve my credit real fast? Unfortunately, improving your credit real fast is a tough thing. It doesn't really happen unless you have some really uh unless you have a lot of errors on your credit, which will be an upcoming presentation here.

12:00um your credit score can go down very quickly. It's a very slow steady climb. So, you know, and that comes partly because of the length of credit history. And then you have your types of credit. Uh you want to have a mix of credit between your revolving debt, uh that would be your credit cards, and your installment loans, your car payments, your student loans, your mortgage where, you know, it's a monthly installment, same payment every month compared to your credit cards where you have the ability to go incur more debt and you also have the ability to pay down more debt. You can pay it off in full, you can not use it this month, you can go on a shopping spree next month. You know, so it it allows them to show it allows uh them to predict, you know, your your habits and you want to have a good mix between the two types of credit. And then lastly, uh the 10% is your credit inquiries and this is going to be times hard inquiries. So, there's two types of inquiries and it's important to make the distinction between the two. Um you have uh you can pull your credit as many times as you want yourself and it won't hurt your credit. Right now due to COVID and um you can actually check your credit report once a week and and and it's maybe a little excessive to do it weekly, but it's a good practice. Usually it's once a year for each of the three uh credit reports. But if you wanted to, you could check it over and over and over and it won't hurt your credit. Those are considered soft inquiries. So, you know, if you pull your own credit, if you go and you have uh Debt Wave pull your own your credit, those are soft inquiries. Your bank or credit union maybe pulling your credit to offer you your free score uh when you log into your, you know, online banking. Those are going to be soft inquiries. They will show up on your credit report, but they don't get calculated into your credit score. The ones that get calculated into your credit score are going to be hard inquiries. When you authorize someone to pull your credit with the purpose of acquiring new or more credit, that's going to be a hard inquiry. So, if you're at the car dealership and, you know, they say let's run your credit, let's see what kind of numbers we can do, let's see what kind of payments we can get you, those are going to be hard inquiries. You know, you sign it, they go back, they pull your credit. Now, if you go out car shopping this weekend and you go to three or four different car dealerships because you're trying to find the right car, you're trying to get the best deal for yourself, it's not going to go in as three or four different hard inquiries. They're all going to get grouped into one event, so it's not going to be the most devastating thing in your credit.

15:00increase. Yeah, they can hurt your credit, but it's not going to be a huge negative impact where you can say, you know, oh wow, my score is just gone because I pulled my credit this weekend. Um so and and then just don't go to the mall, you know, for Black Friday and, you know, start trying to uh make your credit report look like a mall directory because that will have a negative effect on your uh credit score. So now, we've kind of gone over the different types of credit, the fact that there are different credits, and we've gone over the different factors to the FICO score. But the important question, the question everyone's here for is what do I need to do to have better credit? How can I boost my credit? Because that's kind of the question, that's the goal for uh most of us or is to increase our credit score as much as possible. And here you go, four easy steps. Anyone could do it. It doesn't matter who you are. Um it doesn't matter, you know, your your credit history up until this point. You know, it's just it'll just mean a different starting point. It, you know, it doesn't doesn't matter who you are. Um four things you can do to better your credit score, to make sure that down the road when you need your credit score, it is where you want it to be. Um and here they are. Step number one, never miss a payment. Make your payments on time. Uh you don't want to get in the habit of making just the minimum payment. You know, that can get very expensive. You end up paying a lot of finance charges, but if that's all you can afford, at least make the minimum payment. You know, if that's all you can afford this month, or talk to your lender and and see if there are special programs out there. Um you know, but but don't miss a payment. Now, if you your payment was due yesterday, but you had a very busy day, kids started school, Zoom and Google were down, and you just totally forgot to schedule the payment. You've actually haven't been reported to your credit to the credit bureau yet. Uh you may have incurred the fees, your APR may go up. Uh so there are a lot of negatives that could happen, but you haven't ruined your credit yet. Your credit your late payment with the creditors isn't going to be reported until you go 30 days past due. And that's why it's important to just always make those payments. But if you go 30 days past due, you're going to start to see uh possibly a very significant decline in your credit score just by going one credit card one time 30 days past due. You know, you could see a a significant dip there in your score. Uh step two, pay down your debt. And I know uh a lot of you watching this right now um are on the the debt management program here at DebtWave. And and this is where this will be a big benefit because you are paying down your debt and you

18:00want to pay down your debt as fast as possible. Uh that will allow you to take care of that debt to credit ratio that I mentioned earlier. And and if you have less money going towards your interest, you have more money going towards your principal. That's going to get you out of debt faster and that's going to help get your credit score going in the right direction a lot faster. So you make your monthly payments on the debt management plan and that decreases your debt faster and now you see the increase in credit score uh a lot more rapidly. Step three is get the healthy mix of credit. That kind comes naturally. You don't want to rush into that. You don't want to go get a car loan just because you want to have an installment loan. That'll just kind of come with time and you may have your student loans that you're paying back. Uh you may have your car loan or a personal loan that you're paying back eventually maybe or maybe you already do. You have a mortgage. You know that comes naturally to you. But you do those things and apply for credit sparingly. You're going to get a new credit card, do your research first, you know. And by that I don't mean go applying for five different credit cards to see which one's the best one you can get. Is try and figure out which one best suits your needs and you might get approved for as well. Uh and then going to applying just to that one credit card just because they're offering you an extra 5% off on a t-shirt or what or your purchase today doesn't necessarily mean that's the best card for you. Just because you've been pre-approved doesn't mean that's the best card for you at this point in time. So apply for credit only when you need it. Now uh DebtWave clients, I know I'm out of time here. I am just about done. Um if you're interested in a free credit counseling session with our credit coach, uh her name is Christa Williams. You may have already spoken to her. Uh she can be reached at the regular DebtWave line, 888-686-4040 and her extension is 143. Um you know reach out. It's great. It's one-on-one uh evaluation of your credit and then tips that are specifically tailored to you. Lastly for me here before we get to questions and I do see we have some coming in so I do appreciate that. Uh feel free to continue learning. We do have a podcast uh that we have. It's a weekly podcast on everything personal finances. We do have a credit uh episode on there uh where we have it on every personal finance topic we could think of. Uh and and there's a new weekly episode. Uh so if you do podcast, check it out. You can find it anywhere you find your favorite podcasts. And uh we'll get started with some questions. Thank you everyone. All right. All right, Phil. So I know that people could send a few different questions. They could go to you or me and I have a few but if you got a few that you want to answer, go right ahead. Uh

21:00We can go with uh I think we get them at the same time, but um you have questions. I think we I think Katie's got some uh from Facebook. Um and someone mentioned what is the average credit score for someone paying off credit card debt? And and this is one where you definitely want to join us uh in two weeks for our next swim live because that is specifically what that one will be about. Uh someone can be paying down debt and have a great credit score, and they could just be in debt uh way more than you can imagine. And then someone may have no debt at all and a pretty and a really poor credit score. So as far as, you know, someone paying off debt and and what their credit score is, it really depends on so many other factors as far as how much debt compared to how much available credit they have, what their payment history is, because someone can have a lot of debt and always make their payments on time, and their credit score will be higher than someone who has a lot of debt but misses payments here and there. Um so it's definitely going to be uh a very case-by-case uh type of scenario. Yeah, and it depends on their credit limit as well. Like if they have very high credit limits uh on their credit card, but they're still carrying a lot of debt, that doesn't mean they're financially in good shape. It just means that that ratio is is up there. Yeah. And then someone asked uh will we be sending out a transcript? The audio is not working. Uh don't know if we're going to have a transcript, but I do know that this video will be available on Facebook uh at some point today after the presentation, so you can always go back and check it out there. Um and and then uh don't know specifically regarding the transcript. We'll have to get back to you on that one. But if you shoot us a uh an email or or if you get in contact with us, we can definitely try and figure out that audio problem. Um So Felipe, I have a question here. Yeah. Uh it the question is if if I am trying to reestablish my credit and I have paid back my debts, what is the best way to reestablish the credit? Okay. So credit is is one of these uh tricky things, almost like a catch-22 where you have to use credit to build credit. So if you've paid down your debts and you're looking to reestablish, re-increase your credit, uh you do need to be using your credit. Now, I'm not saying go on a shopping spree by any means. I'm not saying, you know, go go fall back into debt, but but you want to be using it, whether it's you're paying off um a student loan, a car loan, a mortgage, or simply getting a credit card if you have one already, using it every month for something you were going to buy anyways, whether it be your cell phone bill, uh groceries, gas, whatever it is, something you were going to As long as you're not paying more to use

24:00at the gas station for example, uh something you're going to use anyways and then pay it off every month. And and you do that repeatedly over and over and over. It keeps your debt to credit ratio at or about zero because you're paying it off every month and it creates that payment history. And you do those two things over and over and over 35% payment history, 30% your debt to credit ratio over and and that's you know that's 65% of your FICO score. You do it over and over and over that gives you good positive credit history and you've taken care of 80% of your credit score by just doing those two things. Um and and that's going to be really beneficial to trying to build your credit uh whether it's starting over or starting anew. So another question we have is what if you want to buy a home? Is the first time home buyer a good route if you are still paying down debt? Is buying a home while paying down debt a good is that the question is? Yeah, it says what if you want to buy a home? Is the first time home buyer a good route if you are still paying down debt? So basically should I be going in adding should I be looking at buying a home when I'm trying to pay down debt? And here's one where it's very it's going to be very case by case. Um it really depends on your budget and and what that allows and how much debt because you know someone might be saying you know I I'm paying down debt. It feels like a lot. I owe $1,000 uh but to someone else that $1,000 debt may not seem may not be that big of an impact. So it really depends on so much on your budget. Um you know the amount of debt compared you know your your amount of debt compared to your available credit uh and obviously anytime it has to do with houses the housing market uh that has to come into play and that's a very complex uh situation in itself. We're out here in San Diego. The housing market is very expensive um and and and getting worse. Uh so you know there's so many more factors that come into play and it's very case by case because paying off debt can mean I'm almost done but it could also mean I'm drowning in debt in which case you want to hold off on the And typically your lender when you're working with your mortgage lender they're going to go through all of that very closely as well. So they're going to be able to see all of the debt that you have versus uh what you have as your assets and your income. So that will be really discussed in that situation. So it is a good idea to work with a lender, figure out where you stand, you know somebody that really knows what they're doing so they can really look at it and they can say look this is the amount that you could handle right now um or you know if we pay this back down a little bit more where you might be in a little bit better shape in a year. So coming up with a game plan is a really good uh thing and and and as somebody mentioned if you want to buy a home you need to establish

27:00more than one credit card. Yeah, that is very very true. It's just the the the question was, you know, should I be doing it if I was still um paying down debt? Um another question, is it smart to add your child to one of your credit cards to help them build credit for the future? So, it's called uh pigbacking and you can um add your child to your credit card. Just be aware that um they will receive good or bad credit. So, if you have a credit card that has a high, you know, 90% credit usage and, you know, you're missing payments here and there, it could potentially be more of a detriment than a help to your your child. Um you know, and just because you put them on the account doesn't mean you actually If you do decide to do it, it doesn't mean you actually have to physically give them a card so they don't have to go on a have the ability to go on a spending spree uh with your credit card. Uh but it could help them get that get, you know, get started uh so that when they do go apply for their credit, they have some kind of payment history. Now, this is assuming that it's like a uh older, you know, you don't want to put your three-year-old on there because it's not really going to do much for them at that point. Yeah, that doesn't do much. I This is assuming that it's a 18 19-year-old uh uh child that you're putting on there. Yeah. Um Authorized user. Yeah. So, I do have another question here from from Katie in Facebook. Um Someone asks, how much will my credit score change on a weekly basis and what is the benefit of checking every week? So, your credit score can change all the time. It's very dynamic. Now, it shouldn't be giant leaps and bounds in any direction, otherwise that's definitely going to be a red flag. Uh you know, if your credit score takes takes a nosedive, definitely want to look into it and make sure that you, you know, pinpoint why that is that happened. But small fluctuations within your credit, it it's going to happen, you know, especially if you're out there using credit cards, you're making payments. And a few points either way, uh you're not It's not going to be something where, you know, oh my credit score changed three points, I have to go determine what caused that. Um now, if you're looking at like a 25-point drop or or things of that nature, you definitely want to look into it and make sure that you pinpoint why that is that happened. This is assuming you're comparing the same credit scores. And then someone asked, what is the benefit of checking the same question. Uh benefit of checking every week. The benefit of staying on top of your credit. It could. Um you know, it it's just having that constant uh awareness and that constant looking at your credit report is going to help you spot possible fraud or errors a lot faster. Um and I think that's why it was put in place that you can check it

30:00more often right now because so many people are um you know there's so many people across America struggling and and unfortunately sometimes that's when uh the scammers and the and the fraud artists are are out uh taking advantage of people at their most vulnerable points so you it's just an extra tool that you have to check your credit uh constantly. And I have another one on Facebook. Uh Katie thank you for relaying those to us. Um I don't have a student loans or a mortgage and I don't need a new car. Uh is not having an installment loan really hurting my credit? And no. And and remember that was only 10% of your total FICO score. So if you don't have an installment loan it's not going to be a huge detriment to your credit. Uh eventually you want to get some in there and and remember things stay on your credit report for seven years. So if you had a car payment you paid off two years ago that installment history in that payment that loan is still on your credit. You don't have to actually be paying it uh right the second. Um so no it's not something where oh you don't have a installment loan go out and buy a car even though your budget says don't do it or you don't really need one. That's not what we're talking about but it may have a small impact but it's not going to be a huge detrimental thing where you have to go run out and get one. Um Phil I got another one here. Uh it it asks how come when I look at how come there are three different credit scores when I look at them? Yeah. Okay so it's a good question and the reason that you have you could be looking at the same like FICO eight and you'll you could have three different scores and the reason for that is uh all of us as consumers have three credit reports one for each of the three credit bureaus the Experian Equifax and TransUnion. Uh and in a perfect world your credit scores will all line up exactly the same but we don't live in a perfect world as we've all figured out. Um you know so there may be slight variations on your credit reports. You may have one lender especially with smaller lenders that may only be reporting to one or two of your credit bureaus and not reporting to the other. So now that what that creates is different information that's being put through the FICO algorithm so it pops out different credit scores and and that's where the variation is going to be uh you know and and and if you're checking all three of the credit reports and you check them side by side you you can usually tell like oh wow look my you know furniture store credit card is only on this one not on the other two and good or bad that creates a difference in your credit uh profile. It says when you okay here's another question it says um

33:00Are there specific credit cards you recommend in trying to build your credit score? So, and this is going to be we get this question all the time. Uh what's the best credit card? It's different. Uh it's it's very individual uh to each individual situation. Uh things to take a look at and and consider is going to be, you know, fees, uh APR, which stands for annual percentage rate, you know, at any point in time if you're going to go get a new credit card, you want to make sure that you can get the best one that your credit profile will allow you to get. So, something with a low APR, uh something that has low fees. Normally, you want to stay away from store cards or gas cards or things of that nature because even with great credit, your APR is going to be higher under those credit products. Uh definitely take a look at your credit unions if you have any around. Uh they they tend to offer sometimes lower rates. Uh but do your research beforehand online and and try and figure out, you know, for your credit profile, whatever that happens to be, what is the best card I can qualify for? Uh and and each individual situation will be different. Phil, I have if you could go back one um screen and put Crystal's number up there again. Uh there are a few people that are looking for her number. Yes. Yes. 888-686-4000 extension 143. So, we want to give that out. Thank you. Uh and I think we have time for like one more two we'll try to get in two more questions. Um this question says, when you use your credit card and want to pay it off every month, is there a length of time to wait? If I purchase something today, can I pay it off next week? Oh, I understand what you're saying. So, uh so you're saying like or do I have to wait until like I think what you're saying is is there any benefit for me to pay this off as soon as I like make the purchase, right? So, do I get brownie points for paying it off within a week? And the answer to that is no. Um you want to just pay it off within that billing cycle because none of us are paying interest on new purchases until that first billing cycle comes through. And so, there is no hurry in paying it off. As long as you pay it off within that billing cycle when that payment is due and it's off, then you're not paying interest on those purchases. Yeah, so you get your statement and it has the statement balance. If you send in that or more, then you'll be before the due date, you'll be okay. Um so, but you're more than welcome, you know, some people just don't like to see the balance sitting there. Um and you want to schedule or maybe you get paid uh you know, every other week or every week and you want to pay off some of it that way. Um you know, whatever works for you, just make sure that you at least pay off the last statement balance before the next due date and that'll keep you from accruing any any kind of finance charges. Yeah. And I think this

36:00The last question we have, it says, where can I check my credit score? Ah, your credit score. So, um, your credit report you can check on annualcreditreport.com and there you can, that's the website you can pull all three of your credit reports for free. That doesn't give you your credit score for free, just the report. Um, as far as where you can get your credit score for free, um, if you, if you're with that way, you know, give your counselor a call, give Crystal a call and that's definitely something they can help you out with. Um, Experian. What was that? Experian credit score. Yeah, your Experian credit report. Uh, you can't get all, we don't have all three of them. Uh, but you can also, if you have a credit card, um, they may offer it free monthly, uh, depending on which one of the lenders you have. Most of the ones I've seen now are starting to offer some kind of credit tracking, um, where you may have to opt into it, but you can get it for free there and you can always go back and it updates weekly, monthly, depending on, you know, which bank it is. Um, uh, there, there's myfico.com you can pay for it. myfico.com you can pay for it. Um, you know, but, you know, then it just adds another expense to your monthly budget. Um, there are other places that may provide you your score. You just want to be careful that you're, you know, which score are they providing you for free? You know, is it Advantage Score? Is it a FICO score? And then weighing that with, with any possible future, uh, decision making. So if you're getting Advantage Score and you're thinking I'm going to go buy a car, just be, be, you know, cognizant to the fact that that may not be the same credit score that the auto lender is going to use to determine whether or not, uh, to, to give you new credit or how much credit you can get. So just being aware of that, um, I think is, is, is going to be key, knowing which score you are getting if you are getting a free score from somewhere. Yeah, and we, we've had a few people mention that like Chase Bank, Capital One, most of the banks do that now as an added benefit to you banking with them. So that's always a good way to go as well as, as looking into see if your, the place you bank with, um, has that opportunity as well. Yeah, a lot of them have it. Citi, Discover, uh, a lot of the credit unions now offer it. Um, Well, Phil, I think, you know, we'd like to thank everybody for joining us today. That is our allotted time. Uh, I do want to let everybody again to know if you, if you want to go one-on-one, please contact Crystal. She's available and she can talk with you specifically about your situation. Also, uh, make sure that you join us next time for our Smart With Your Money Live, uh, on Wednesday, September 23rd, our next episode at 1:00 p.m. Eastern and 10:00 a.m. Pacific.

39:00Phil, thank you very much for the information today. Absolutely. Thanks for having me. It was fun and thank everybody for taking time out of their day to to show up and listen. Somebody asked what is the fee to consult with Crystal? Zero. Correct. That will cost you nothing. All right. Thank you everybody. Thank you everyone. Wednesday on the 23rd.

Machine-generated from the audio; names and numbers may contain errors. Timestamps mark 3-minute sections.

0:00apologize for the delay. We had technical difficulties uh with our Facebook feed, um but we're going to get going here so we don't waste your guys's time. I want to welcome you all to Smart With Your Money Live. This is episode two. Uh I am your host, Chase Peckham. I am the director of community outreach and education at the San Diego Financial Literacy Center, the the education arm of DebtWave Credit Counseling. We are excited to bring you episode two of this new series and the topic of a bi-weekly series that we have Wednesdays at 10:00 a.m. Pacific. I'd like to introduce today's presenter, and he was our presenter a couple weeks ago. This week's topic is pay off debt or improve my credit score. What should I do first? He has thousands of presentations under his belt and his 10 plus years of educating the public in personal finance. Welcome our community outreach coordinator, Felipe Felipe Arevalo. All right, thank you. Uh good morning, everyone. Thanks for joining us. Um if you're joining us from the East Coast, happy afternoon. Uh today we're going to go over uh debt and credit scores, um what should you focus on first, kind of the ins and outs, and and kind of explain how uh they're related, uh which may not be how you think they're related. So we'll get right to it. Um All right, today we're going to go over the common misconceptions of debt and credit scores, uh the credit card debt effect, and then having your cake and eating it too because that's uh sounds pretty good. Um so some of the common misconceptions when it comes to debt and credit score, uh 80% of survey respondents in a Experian uh survey that they did in uh last year believe that having higher debt hurts your score. When in fact that may be the case, but it's not always the case. Having debt does not necessarily mean having a bad credit score. And being debt-free doesn't necessarily mean that you have a good credit score, which is kind of the opposite of what uh so many people think. Uh you know, 80% of people thought that that correlation uh went the other way, and it's not always the case. In fact, people with the top credit credit score ranges, so those with a FICO score of 800 to 850, the really top of the credit score uh section, actually carry more debt than consumers in any of the other credit score ranges. And you might be sitting there thinking, how is that? Um you know, how is it that Well, we'll we'll kind of explain it to you in the presentation. That's a very important distinction to make. Uh so just kind of a visual here of how the different credit score brackets and and the debts that they are or the average debt that they carry, and you'll notice as the

3:00credit score uh decreases over on this column, so does the average total debt and the average credit score. So it it's something where individuals with more debt have a higher score and and and there's a reasoning for it. You know, once we get to it, you'll sit there, oh okay, that makes a little more sense. But at first, you're looking at this chart, you might be looking at this chart thinking, what? How does that work? Um well, we're we're going to explain it, but you know, just kind of a little visual here to see how it correlates in the opposite direction that most people actually thinks thought that it would. So another uh last little chart and then I'm done with the stats because this is not a math class. Um the average credit score per age range, so people in their 20s, 30s, 40s, it actually increases as people get older on average. And then you also remember now looking back at the last chart, wow, that also your debt increases. Well, you know, it's important to differentiate which type of debt because there are different types of debt. There are uh you know, what you would call quote-unquote good debt and quote-unquote bad debt. Uh and and and how they're calculated and how they're different and they will affect your credit score differently. I mean, you might think someone in their early 20s, you know, they haven't figured out how the credit industry works. Maybe they haven't even started using credit. They have no credit history. And then as they progress through their financial life, they go ahead and start learning how to do it. You know, maybe they made the mistakes earlier on and they're just kind of, you know, building up to it or they say, you know, I've made mistakes, I'm not going to do it again. And and and the credit profile starts to fill in. So important distinction to make is the different types of credit and therefore the different types of debt that are available to us as consumers. The first one is your revolving credit and these are your credit cards. And revolving because it's ever-changing. The balance can change. You can go on a shopping spree. You can pay it off. You can pay off part of it. You can make just the minimum payments, which can be dangerous, you know, future episode right there, or or you can make, you know, big chunks of payments. And this month's balance doesn't necessarily mean that's going to be next month's balance. There's always something going on. That's why it's revolving. And then you have your installment credit and these are going to be like your car loans, your personal loans, your student loans. And that's going to be an installment amount, a fixed monthly payment for the life of the loan. Uh the little exception here is federal student loans. They do have different repayment options. You can play around with your payments uh and do

6:00different things, so those aren't always going to stay, you know, set in stone. But everything else you're you're talking uh you know, your car payment. You have that monthly car payment every single month for the term of the loans. And then you have your mortgage, which is a form of an installment loan. However, it's huge balance amounts usually uh and long terms, 15 30-year loans. Um and the last type of credit is your service credits. That's for a whole another presentation. Just remember that one doesn't actually build your credit. Just wanted to make sure we did include it. But what we're really concentrating here on is is that revolving and the installment and differentiating between the two of those. And and and that will help realize why more debt necessarily doesn't mean um worse credit or yeah. So, if you were at the last presentation, which I think some of you were, I'm glad I didn't scare you away. Um we went over the five different factors of a FICO score. Uh the the biggest one is going to be your payment history. So, regardless of how much debt you have, you can always make your minimum payments, at least your minimum payments. You don't want to get in the habit of that. But you can always make your payments on time. That's regardless of if you have a little bit of debt or a huge amount of debt. And that also plays in the fact that you could have very little debt, close to nothing, and miss payments all the time and still hurt your score. So, the payment history that which is the biggest factor to a FICO score can go either way. It doesn't necessarily have to correlate with balance at all because you can have someone who barely uses their card but always forgets to send in payments and falls behind and hurts their credit while not having a lot of debt. And you can have someone who's drowning in debt but barely making the minimum payments just on time and and and they that that portion of their credit score is not being negatively affected because the payments are getting there on time. And here's where it really comes into play. It's your debt-to-credit ratio. And this is where you'll see the correlation. Debt-to-credit ratio means the amount of money that you owe compared to the amount of money that you have available on your revolving accounts. And those are going to be your credit cards. And and that's an important distinction to make because it it it doesn't take into account your car loan, your student loans, your mortgage. Yes, that is part of your debt, but it's not part of your debt-to-credit ratio. So, it doesn't negatively affect or positively affect this 30%, which is the second biggest factor to that FICO score. It's going to be and and and that's where the the 10% over there

9:00comes in words the different types of credit. You know, a $50,000 student loan is going to be treated differently on your credit score than $50,000 worth of credit card debt. Or or 50,000 on a mortgage, you know, or 10,000 on a car loan. It's going to look different than than that amount if it were in a revolving account. And the magic number you want to aim for is you don't want to use more than 30% of your available credit. If you start using more than 30%, you start to you start to see a decrease or you start to see it negatively affect your score. You want to be a real high achiever, you want to keep it in the single digits, less than 10% or pay it off every month. And and that will, you know, really increase your score. But if you go over 30% usage, that's when you're going to start to see that negatively affecting your score more drastically. So number example here, let's say you have $10,000 for easy math purposes of available credit. And you owe $2,000. That's 20%. You're still within you're still less than that 30%. Now someone, you know, your neighbor has $5,000 available credit and they also owe $2,000. They're at 40%. So now they're on the other side of that 30% marker. So their that same $2,000 debt is having a much more negative effect on their credit score than it does on your credit score. And that's where the distinction really comes in where, you know, someone can have a lot of debt and still have a solid credit score because that debt could be in other places. That debt could be in a mortgage, that debt could be in car loans, you know, and at the same time, if someone has a really big available balance available credit limit where, you know, with all their cards they have thousands and thousands of dollars of available credit, they can without hurting their score afford to carry a bigger balance than someone who has a very small credit limit as far as credit score goes. Obviously, you know, at any point you can go overspend and find yourself drowning in debt, which is not where you want to be. But as far as credit score goes, the different debt loads will will affect everyone differently. And then that 15% length of credit history, that's part of the reason those 20 and 30-year-olds might be struggling more with credit. They don't have that credit history. And then lastly, the credit inquiries, which is just, you know, don't apply for credit you don't need. So hopefully that makes sense. It's not just the amount of debt, it's the type of debt.

12:00So, so when it comes to credit card debt and this is where we really want to concentrate on, uh that's the key to the debt to credit ratio and and then that correlation with your credit score. The higher credit card debt uh can hurt your score or worse it can suffocate your your budget. It can make it very hard you know to do and to accomplish some of your other financial goals. Um the other big drawback to having more credit card debt than the other types of debt is that it's oftentimes much more expensive due to higher interest rates. You know a credit card interest rate can be significantly higher than you would on a mortgage or a car loan or a personal loan. You know it's something where they're carrying that big balance there is different and it's going to be more expensive in the long run. And the lower credit card debt if you can get and this is where it says what should I do first? If you can pay down your credit card debt it is going to allow you to have a healthier budget, to have a better financial standing uh because it's going to free up money so you can put money away for savings, retirement, put that money away for a rainy day and get that peace of mind. So if you have the credit card debt there uh and and it is important to eliminate it as soon as possible, the best you can uh not just so that you can help your debt to credit ratio but so you can help your overall financial health. So even if it's not hurting your credit you'll be doing better off if you didn't have the debt. Uh so it's something to to keep in mind you know whether you're doing it to help your score or whether you're doing it just to to help your financial standing it is important to pay back debt in a timely manner as quickly as possible. So let's say you have debt uh and you know what do you do? Well first thing you got to do is create that budget. You know if if if you work with with debt wave and you're on the DMP that is one of the first things that you do is you you create that budget and it's important to when you whether you had someone help you create a budget, you did it on your own, you did it on Excel spreadsheet, piece of paper, you use an app however it is you want a budget because everyone's budget's going to be different and everyone's going to find a different way of budgeting that works for them. Um you know have it so that you create that budget that works for you and then follow the budget. You know follow your game plan. Don't uh it's easier to get distracted than it is sometimes to continue on your financial path that you've set for yourself because if your budget

15:00tells you that you can you will accomplish you know XYZ paying off this card at this time paying off that card eventually becoming debt-free if you can follow that budget it it will happen. It's not something where you set up a budget and it's a magical thing and all of a sudden you're debt-free next month. Uh otherwise you know we there wouldn't be any debt and we wouldn't have to tell people to budget it'd be very easy. But it's important to have that game plan and then not just set up a budget and then forget about it. You want to allow it to become part of your everyday life incorporate it into your everyday life and allow it to become um you know just something that you do it becomes part of your habits and once it becomes a habit it becomes easier to follow. If you've never budgeted before and all of a sudden you start you might be thinking what did I get myself into? Uh this is a lot harder than I thought and yeah I can tell you from being someone who didn't budget for a long time and then tried and failed many times to actually set up a budget it's not easy some of our minds don't work that way mine doesn't. But if you try over and over and you you you set it up and you try again and you try again eventually you figure it out and then it just kind of becomes something you do. And when it comes to personal finances you want to try and avoid the Instagram trap and what do we mean by that? Well we have social media unfortunately Facebook isn't working right now but you guys will get to see the video later I'll make sure it gets posted. Um you have that social media where you might load up and you see your friends are on vacations and your other friend bought a new car and you know they're they're taking pictures with their new and expensive phone uh and you're sitting there wow man that person's doing really good for themselves they just bought a car I I they just bought another one before they're on their second car since I got mine. And and it's important to to realize and differentiate that what you see isn't always uh a reflection of someone's financial state. So someone may have that really fancy car may be wearing that really fancy clothes or have that a whole bunch of really nice purses or shoes or whatever it is that they're showing off watches on Instagram that doesn't mean that they're doing well financially because they may be in debt where they can barely stay afloat and and they may have all their credit cards maxed out. So it's important to to realize that as an individual and stay within your financial means because carrying a lot of that revolving debt will start to negatively affect your credit score and that shopping spree in the long run especially if you carry that balance for a long time could start to see a declining you could

18:00to see decline just because you were trying to keep up with the Joneses and trying to keep up with you know the latest trends. So trying to avoid that extra spending and and purchase the things you need and try and save up for some of the wants. Um because carrying that high revolving debt is going to be key. So kind of in in in summary having the debt won't necessarily mean that you have a bad credit score because you can carry debt um and and have a good score if you carry a a debt amount that is financially responsible to your own personal financial situation. Now if you have debt by all means you want to pay that back as soon as possible in a timely manner so that you know you save money because it is expensive and if you start looking at interest rates and how much you pay over time especially if you start making only the minimum payments you will realize that you know it gets expensive. So it it is in your best interest to pay it off as soon as possible at the lowest rates available because that's going to save you the most money. It's going to make it easier and however being debt-free doesn't necessarily mean you have a good credit score. We talk to people sometimes who during our presentations you know tell us well I must have good credit because I've never used credit and that's not the case. You need to use credit in order to build your credit score because you have to have that payment history. You have to get that mix of of different types of debt. You have to have that you know that history that's 15%. So not using credit or not having any debt at all doesn't necessarily mean a good credit score. You want to use credit responsibly and use it as a good financial tool so that some day down the road when you need to apply for credit for whatever it is you're looking for you have that credit score to back up your income to back up you know whatever it is that you're trying to get a loan for. So you know make sure that you do pay down the debt if you have it but realize that having the debt doesn't necessarily mean it's going to hurt your score. Yes paying it down is good so pay it down but concentrate on on paying it down for your financial health more than necessarily your credit and and the credit will follow. You know if you have a lot of credit card debt as you start to pay it off in a timely manner your credit score should go up if you take care of everything else as far as those factors go. So if you do if if your client is already or if you're not and you are interested in a counseling session with our credit credit coach

21:00I know after the last one uh she had a few people call her so uh if you are interested uh she can go ahead and give you one-on-one uh credit recommendations. Her name is Crystal Williams. She is at 888-686-4040 her extension 143. Um and if you want to continue learning uh or you think another think of another topic that maybe we haven't covered we do have a podcast. Uh it's available wherever you get your podcast. It's called Talk Wealth to Me. Uh and and we talk about everything personal finances. Some episodes may apply to you some episodes won't. Uh let us know what you think and let us know if there's anything else we should cover and I am happy to take questions. I'm sorry it went just a little over. Thanks a lot Felipe. Yeah if you want questions if you have any I have a few already but if you would like to keep adding them go ahead and and type them in there with the questions and we will do our best to answer and and Felipe thank you very much. I know that uh that's always a a a struggling question that people have because we take great pride in our credit scores and we don't want to ruin those but the bottom line is they kind of go hand in hand and you will eventually if you pay down the debt you'll be not only feeling much better uh you will you will psychologically feel so much less stress about the payments uh because you don't have them uh as much or as as expensive. Um that credit score if you just use it pay it off every month it will build itself uh quickly. Um so the first question I had Phil was um if I'm looking at my debts what should I decide to pay off first? If you're looking at your debts um you should you want to pay the as far as like if you have different types of debt uh you definitely want to pay off some of those credit cards first. Well the highest interest if you have any of those ultra high interest rate cards that we definitely don't recommend you go out and get like a a payday loan or something like that that that needs to go first. Uh but then after that you go go to your credit cards and and start paying down the ones with the highest interest rate or whichever method you you come up with works best for you. You you know sometimes like the snowball method but you you start taking care of that revolving debt and what that will do is it'll decrease your debt to credit ratio and you'll start to see a bigger faster increase in your credit score uh than if you would you know sending extra payments to like a mortgage or a student loan because that's not reducing your debt to credit ratio and that's probably at a much lower interest rate. Thank you Phil. We got another question. Uh does it help your credit score to cancel store credit cards that you no longer use? That's a great question. That's a great question. So canceling your card is is a tricky scenario and it and it's going to affect everyone differently. Uh if you have a card that you don't use it doesn't have a balance however

24:00that open line of credit is being taken into account on your debt to credit ratio. So if you're carrying a balance on some of your other cards and you close out the card with no balance, what that does is that reduces your available credit limit and and then it could shift your debt to credit ratio that percentage, you know, from below 30% to above 40% if you're right on that borderline. Now, if it's something where you have already 70 80 90% credit card usage, you're not your credit score is already being negatively affected. If you have no credit card debt and you have other open lines of credit and you close that store card, you're not going to see as big of an impact. So like so many things with uh credit scores and personal finances, it's very much case by case, but just be aware that closing that card does reduce your available credit, which then shifts your debt to credit ratio uh and it's going to make it increase if you're carrying some debt. Uh now if you have a lot of debt like I said and you're 80 something percent 80% credit usage and it bumps it up to 85% credit usage, how much more is it going to affect you? Probably not as much. If it shifts you from a 5% credit usage to a 7% credit usage, again, not that much. But if it takes you from 20% to 40%, now you've crossed that 30% threshold and that could potentially have a much more adverse effect. There's a a good thing to look at too is store cards don't always have uh a limit. Um they typically will let you go to a certain amount. So check and see what kind of store card you have, but also if you have six or seven credit cards and you've been with those for a while and that, you know, take it all into consideration. If you're not using it, they're eventually going to close it on you anyway. Uh so it really just take a look at at your situation and if you have two credit cards and then you're going to cancel that one and then now you have the bulk of your credit limit, then that could be I I would say keep it open. But if you've got five or six credit cards and that's not going to affect your ratio as Felipe mentioned, then you know, it's not a bad idea to sometimes it's good to consolidate and and get rid of one every once in a while, especially if you've had credit for a while. Next question. Uh I've been paying more on my car payment because I want to pay it down, but I still have credit card debt. Am I doing the right thing? Well, it's always there's that benefit of paying down, you know, debt as fast as possible, especially uh you know, like a car loan. Eventually once it's paid off, you know, you'll have that added uh flexibility in your monthly budget because you won't

27:00car payment. However, it's important to take a look at what that car payment, what that interest rate on that car loan is compared to your average credit card interest rate. If your credit card interest rates are going to be, you know, are 20, 25%, 30% like like we see, you know, regularly unfortunately, and your car loan is at 4%, you know, you're going to see a lot more in savings uh by attacking some of that credit card debt. And as far as credit score goes, uh you're going to see bigger benefit by starting to pay down those that credit card debt than you would by paying down that card debt any faster because of the different types of credit and because that credit card debt is is affecting your ratio whereas your car loan shouldn't be affecting your ratio. Um so if you're looking to have the quickest, most positive impact to your credit score, paying down your credit card debt would be uh more beneficial. If you're like a few months for that full payment amount at your debt, at your revolving debt, you know, then it could, you know, make things a little easier, but for the most part, you want to concentrate on that higher cost debt, uh which oftentimes is those credit cards. And And that's going to have the biggest effect on your score because it affects your 30% uh credit utilization. This This is a really great question and this is one we get it quite often. If I have only one or two credit cards and I have a low uh limits on my cards, should I open up new cards to create a larger limit? So again, there's so much that goes along with this one in that you don't you don't want to go falling into more debt. And oftentimes, opening up a new line of credit if if you already have debt on your other cards and you're like, man, I'm close to maxed out, I'm just going to open up another credit card to give myself more credit. If you don't change the habits that maxed out your previous credit cards, you're probably going to max out this new credit card. Um and then you're going to find yourself with even more debt. Uh so it's a very dangerous uh game. Plus then you're in in the short term, you're opening up a new line of credit, you have a new credit inquiry. So opening up that new line of credit will actually in the short term see a decrease in your credit score just by the fact that you opened up a new card. Uh just the fact that you were out applying for a new card and then you open up the card. When it comes to your debt to credit ratio, yes, that will lower your debt to credit ratio, but you're going to you're going to have that negative effect from opening it and then and then you open up the potential to acquire

30:00even more debt. Uh so you've not actually you haven't really paid off and at some point you can have too much available credit where it starts negatively affect you and then you might have a hard time going and getting a car loan or going out and getting a mortgage because you just have way too much credit already. You've kind of overstretched your income or your financial situation. Yeah, it's really dangerous. I mean the the I think what he said at the very beginning when talking about creating that plan and paying down the existing debt that you have instead of opening new accounts which by the way in the short term could affect your credit because there is the whole thing about inquiries a small small percent you're opening up new debt credit score could go down a little bit but again remember credit scores fluctuate if you watched a couple weeks ago our first episode they do fluctuate based on what you do. So if your positive habits good habits and you get those start paying those things down and you're paying them on time that's the paying those things on time paying them down getting those those balances low that's going to be your key and that that's going to help a very healthy credit and not only a healthy financial life but a good credit score as well. Um we have time for one more question if anybody has it go ahead and type it in. If not I will give a couple housekeeping things. I'd like to thank you everybody. Remember we do these bi-weekly. Our next episode will be Wednesday October 7th at 1:00 p.m. Eastern 10:00 a.m. Pacific and we will next week we will on the 7th we will have our special guest he is outside from us expert Jory McCarron. He is of Score Shuttle and this topic will be help my account is in collections. That again will be on Wednesday October 7th 1:00 p.m. Eastern and 10:00 a.m. Pacific. We want to thank everybody for joining us today. We are again apologize to our Facebook listeners for for whatever reason we could not connect. Um we will get that taken care of and we will also get it posted to Facebook. Um this will also be reposted if you missed anything. So thank you all very much and thank you for joining us. If you have a last second question get it in there and we'll try to answer it. Thanks again for joining us. Thank you everyone. Phil can you put it back to Crystal's phone number please? Yeah. Oh sorry I hit stop sharing. Crystal's phone number. Awesome thank you.

33:00All right. Thanks everybody and we'll look forward to seeing you on October 7th. Great job, Phil. Thanks. Let me stop recording. I cannot figure out. I've been looking at this whole thing and it won't give me won't give you control. Interesting. I mean I I I mean I was just afraid of also just

Machine-generated from the audio; names and numbers may contain errors. Timestamps mark 3-minute sections.

0:00So today's agenda is you know a lot of people when they get that first phone call and they it's it's a voice that they don't recognize a number they don't recognize and they are told that they owe money on something. Let's discuss today about the process of collections and then what to do when you're contacted by that agency. Okay. Uh that's a lot of question or that's a lot of discussion but uh just uh from from the collection standpoint um typically collections means that your accounts have been a minimum of 180 days uh of delinquency. Uh at that point it reaches what is referred to as a charge-off status in which the original creditor has the capability or the ability to sell off to said third-party collection agency. Um at that point that third-party collection agency will obviously aggressively uh make attempts to collect on that debt. Um the funny part about it however is the third-party collection agency when they approach the original creditors they're not buying that specific account they're buying a portfolio of accounts for literally pennies on a dollar. Um so the unfortunate part is these collection agencies once they assume the debt or they acquire the debt if you will they make an attempt to collect the full amount knowing very well that they did not pay that full amount that the um the consumer does owe. Um so with that being said um there's all kinds of options that the consumer does have and I'm sure we'll get into that um but uh that's essentially the collections process if you will. So when they no longer own that debt then what goes through what what happens when they initially get that phone call? There's all kinds of things that can go on during that phone call as a matter of fact there's there's all kinds of violations that the third-party collection agency uses um in their collection tactics. Uh one of the most common is calling outside of hours you should be able to only receive phone calls from a collection agency from 8:00 a.m. to 9:00 p.m. Um oftentimes they will lie and tell you um or they'll lie to other lenders out there about your credit information. Um they will oftentimes lie about the amounts that you actually owe there's all kinds of different things they will say that they can come take something from you or there's some type of uh you can literally go to jail something along those lines but there's all kinds of harassment um that the collection agency can uh use uh when they're on that phone call. Um but the most important is knowing your rights I would say. Um you need to know exactly who it is that you

3:00You need to know who the individual it is that is trying to claim that that you owe them at this point. Um you need to know obviously how much you owe and then obviously you need proof that they can legally collect on that debt. So let's talk about that a little bit when most people when they get that phone call and they and they get a little bit panicked that they owe it. Um there are things that those collection agencies have to do by law. What are those as far as the information they have to get to you? And within how long? Well first and foremost Well first and foremost within five days of them acquiring the debt they have to notify you whether it be via phone call or via mail. Uh most often the the common or I should say the most common is in writing it has to be within five days I should say. Uh who it is, what they're attempting to do, and the amounts that they're attempting to collect uh from you. Uh that that's a given. That's obviously that's by law they have to do that. So when people get that phone call we often hear that uh talk about aging of of debt that's owed because they're going to contact you away and they're going to say they own that debt but they have a specific period of time or you have a specific period of time that you would need to owe that debt, correct? Correct. Um I believe if I'm not mistaken you're referring to the statute of limitations. Yes, sir. Um the statute of limitations is the uh legal amount of time that uh any type of lender or creditor or collection agency can collect and or sue you on that debt. Um the statute of limitations is very important um because of the fact after the statute of limitations has expired they can no longer legally collect on the debt itself. Uh however there's caveats to it. Uh for example every time you answer the phone, every time you have any type of anything that is deemed as correspondence if you will with that said third party uh that will re-trigger the statute of limitations. So for example if you have an account in which your specific state the statute of limitations is five years, you have a debt that is four years old and all of a sudden after four years you decide to call them up because you came into a windfall of money but you don't necessarily want to pay them at this time. As soon as you make that phone call it starts all back over at square one. So now it re-ages that statute of limitations. So let's take What happens if you don't think that debt is yours? Like you really have no idea what they're talking about. They're being and and oftentimes there's there's uh they have a reputation of being a little bit aggressive on the telephone uh in what they in what they say uh which can be just emotionally daunting into itself. You're quickly most of the time what should they do when they don't first of all don't know who's calling them and second of all

6:00whether that debt is actually theirs. Right. Well, first and foremost, that's the scariest part, right? Not think not believing that that debt is even yours. Uh first and foremost, I would highly recommend disputing with with all three of the credit bureaus, Equifax, Experian, as well as TransUnion. Um you can file a dispute stating your claim which, you know, there's all kinds of template letters throughout Google that can kind of coach you through this process. Um that's the most important part is number one is you know, I always look at it if somebody I'd never even have laid eyes on or ever spoken to comes up and tells me I owe them money, the first thing I'm going to ask them is who are you? Second thing I'm going to say is prove to me that I owe you the debt. Uh and that the dispute process will allow you to take that initial step uh of proving that that debt is yours. Uh the great part is is the bureaus will in fact um investigate and if you can provide valid proof that uh you know, that debt is not necessarily yours, then in fact by law that that item has to be removed from the credit report. Uh it sounds easier said than done, um but that is definitely the first step. And how many days typically after you submit that does do they have to prove that the debt is actually valid? Great question. The bureaus are given 30 days by law to uh verify and or investigate your dispute. Um you're protected that way as well because the bureaus are inundated with disputes. Uh so there is a likelihood they may not even get to your dispute, but if that is the case, you're also protected by law because if in fact they cannot verify or they cannot quote get to your dispute uh within that 30 days uh or that 30-day time frame, then again by law that item has to be removed as well. We hear a lot uh that collections will say callers will say, you know, we're going to sue you for the debt. We we're going to take you to court. What is their actual recourse um when it comes to that? Because a lot of times that's they're just threatening you, right? Um that's usually their first line of defense is they're going to threaten you with a lawsuit. Um by law they can in fact as long as it is verified and a validated debt, um they can in fact take you to court and sue you. Um as long as it's within that statute of limitations time frame as we mentioned earlier. Um quite frankly, it is an extremely long process and it is extremely expensive um for that uh third-party collection agency to take that individual to court, especially if that individual is located outside of the brick and mortar state in which uh or the state in which their brick and mortar is established. Um realistically speaking, the higher the debt load, the more susceptible the more susceptible you are to having legal action taken upon you. Uh but

9:00Always remember with an unsecured debt, a third-party collection agency cannot physically come take anything from you. This isn't a car loan. This isn't a mortgage. You have no collateral. This is what we refer to as unsecured debt. They simply gave you money based on your previous or prior credit history or current credit history if you will. So always remember that no matter what threat they give you, always remember from a consumer standpoint, they can't physically come take anything from you. That's good to know. I guess this just goes down to common sense these days especially that I know that my wife will never answer a phone number if it doesn't come up with a name on it. But in the bottom line is when you do get that call and you don't recognize it, what steps should you take as far as how much of a conversation should you have with them? From my professional standpoint, zero. As anyone probably does nowadays with a cell phone, if you don't recognize the number, don't answer. If it's important enough, they're going to leave a voicemail. That voicemail is going to dictate whether or not you whether or not you're going to call that individual back. Bottom line. I would have the least amount of correspondence with a third-party collection agency as possible. Okay, so they probably will leave a message for you to call back and so but that is the point in time when you can use that to really find out and do your research on what it might be, right? So should they call them back? Any expert in this industry would probably tell you no. Yeah, I figured you were going to say that. They're not some people you really want to talk with anyway. No. A lot of times people will think that their individual account was sold from their original creditor to somebody, but that's not necessarily the case on how this happens, right? That's true. There's acquiring a debt and there's assuming the debt. Typically, a third-party collection agency that acquires the debt will be able to negotiate some type of payment plan or something along those lines in which let me back up. So if they acquire the debt, they've actually purchased it. If they've assumed the debt, they are doing nothing more than collecting on behalf of the original creditor. Okay, and is there a difference? Yes, there's definitely a difference because assuming the debt is you're doing nothing more than getting paid to make collection efforts on the debt for the original creditor. Acquiring the debt means you've purchased the debt and now you now you now own that debt. So you can essentially call the shots assuming that there's any negotiations made and whatnot. When going back to the assumption of the debt, they cannot speak on behalf of the original creditor. So you can arrange

12:00some type of negotiation, but they will always have to get back to you because they'll have to talk to their quote said client, which is the original creditor. So let's say it's a working with Capital One. Capital One is having somebody try to collect the debt on their behalf. They don't they can't make that final answer. They have to go back to Capital One to see if it's an if it's an okay deal. 100%. All right. So now while we're there, kind of discuss uh what um what is it that somebody if they're trying to uh negotiate with somebody explain how when they buy the debt when they buy an amount of debt, let's say let's go back to Capital One, and Capital One is going to sell this debt to a ABC collection agency, how do they go about doing that? So again, it goes back to very early in our conversation. So ABC collection agency will approach Capital One and say, "Hey Capital One, I understand you have call it for number sake, you have $10 million charged off said bad debt. Uh tell you what, we'll take that off your books and we'll take that off your hands and we'll give you say a million dollars." So they've basically purchased $10 million worth of debt for 1 million. And actually that number's probably lower than that, but anyhow, the point I'm trying to make is they purchase it for pennies on the dollar. So anything that the collection agency can obtain from more than what they've purchased, that's pure profit for them. Right? So um that's why, you know, oftentimes and this is probably another segment that I'm sure you guys will talk about, but that's why third-party collection agencies are willing to quote negotiate or settle the debt for a lesser amount. But that lesser amount or that negotiated amount um has to be more than what they purchased it for. And there's all kind of algorithms that they use, so on and so forth. Um but the fact of the matter is that's why they're so quick and willing to, you know, let you let you off for a lesser amount than you owe is because of the fact they didn't pay in full and quite frankly to any consumer out there, if you have a third-party collection agency asking you to pay if you owe 5,000 they're asking you to pay 5,000, it's like, well you didn't pay 5,000, why should I have to? So that's the way I look at it. If it's if it's in that position, then they should definitely if they're planning on paying it back um they want to pay it back, they definitely should then negotiate. Um now for instance, I look, I pay taxes. Um I have a home that has plumbing. I don't do my own taxes and I'm definitely not fixing my own plumbing. Talk very briefly about when is it the right time to look for an organization to help them um with that those debts that could that are typically in collections? It's very simple. When

15:00you're not aware of your options and you're not sure what to do, there's always third-party companies out there that are willing to assist you. Um there's all kinds of options that you have as a consumer. Uh and quite frankly, that's the problem with our country, I think, is the lack of education uh from a financial standpoint. Um there's all kinds of options that you do have. Don't don't be afraid to hop on Google and just reach out, right? Um you know, whether you're current with your debts and you just, you know, you can't see an end of the light or a light at the end of the tunnel, whether you're behind and you just think you're drowning. Um there's all kinds of options that you do have and as soon as you think I'm not sure what to do, that's when you make the call. And that can actually save you a a a lot of money and they'll be honest with you for the most part and look, if this is your debt, you should we should negotiate this. Right. And there's all kinds of regulations within that industry as well that protects the consumer. So um you know, there's there's not a company that's going to come to you and where it says if it or it sounds too good to be true, because if it is, that's when you start running. Um most of them are So if they say that they can fix your credit no matter what, you're good to go, you should be very wary of that. Yeah, absolutely. Absolutely. Great. And and so we talked about places that you can go um to look at what your rights are as a as a consumer and two of the big ones are the Fair Debt Collection Practices Act and the Fair Credit Reporting Act, right? Do you recommend that people go to those to um really find out what their rights are? 100%. Absolutely. Um I would say the Fair Debt Collection Practices Act, if you're being harassed, that is uh probably the number one. Um just because you need to know your rights as a consumer. Um the Fair Credit Reporting Act, that is a little bit different. That's just, you know, how it's being reflected on your credit report. Um That's if something's not yours, right? Cuz a lot of times people will get the phone calls and and that's where they may not even be aware of what's on their credit report and there's accounts that aren't even theirs. Exactly. Right. Number one. Number two, what if that account is inaccurate? What if it's saying you owe 5,000 but you actually owe three? Well, that is in violation of the Fair Credit Reporting Act. It has to be removed. You know, things of that nature. Yeah, I mean, I know Those are very two important uh Right. And I I know that 50% of all credit reports have errors on them. I mean, it's it that's the one thing about credit reporting, right? Is is they are not making sure that the information that is submitted to them is correct. So that's on us. I think it's more I think it's higher than 50%. I think it's three out of every five, if I'm not mistaken, has at least at least one type of inaccuracy on their report. That's astonishing. That's that's crazy. Jory, thank you very very much. Um I think it's now time. We're going to sit there and we have times for questions. So if any of you out there have questions and you've been sending them to Felipe, please My pleasure.

18:00fire away. Perfect. Thank you, Chase. And we do have some questions over from Facebook. Uh so we'll get to those and then if uh the attendees here have some, uh feel free to drop those questions in. You guys touched on some of these uh briefly, but uh this one's kind of a combination of two questions. Um the uh what should you do if um you have some debts on your credit report that are not yours uh because they've been getting phone calls and they're confident that it's not their account? Uh first and foremost, uh submit a dispute to all three bureaus, Equifax, TransUnion, as well as Experian. Um there's all kinds of template letters that can guide you through that process um online. You can simply Google a uh you know credit card dispute letter if you will. There's all kinds of templates you can find, but that's that's the first line of defense is dispute it first. And if that debt is not yours um in fact, it should be easily cleaned up. However, that's not necessarily the case. So what I would highly recommend is it's not it may not just take one letter. It might take a couple of it might take a couple of months to get this process taken care of. Um but you know stay the course, stick with it, grind it out because I mean pound the table because if if the debt is not yours, the debt is not yours, period. Yeah, I mean there's been horror stories from people that literally identification uh they might have the same name but live in completely different states. Um so it can take time and and hang with it. Absolutely. And kind of a follow-up to that, Chase, I know you briefly touched on it. Uh can someone hire someone to remove these from their credit report? Absolutely. There's all kinds of services out there. Um I'm sure that you hear that there's you know well, first and foremost, I should say one can do it on their own. Um let's you know let's establish that. Um however um without the expertise and without the knowledge in the industry, it may not be advantageous. And from a financial standpoint, if you can afford you know a nominal fee um trust me on this one, there are third-party companies out there that can help assist you with that process. Um and you know relatively speaking in the financial world, um again I I I go it is a very nominal fee. Perfect. And I have another one here from Facebook. Uh I forgot to pay my credit card bill last month and I realized I'm about 10 days past due. Am I going to be sent to collections? Absolutely not. Um as a as a matter of fact

21:00Um typically it takes uh 180 days before it's actually considered charged off now um collect or excuse me third party or excuse me original creditors do scare clients once they've reached the 30 or 60 day uh delinquency limit uh they'll say that they're now in collections which simply means they are in the collections department within that bank or within that lender um as far as going to a third party collection agency that can't happen or will not happen until you're a minimum of 180 days delinquent. And I believe that's law now correct? Yes yes. That was part of the fair credit protector or uh the CFPB uh with that the Fair Credit Act um and also if you're if you're 10 days um past your due date um they're not going to even like Doria mentioned they're not even going to bother with you because they'll just you'll get your next invoice now if you don't pay that they they'll send that to your credit report but just being late on your date if you pay it before the next billing cycle you're good to go you're just going to pay a late fee they're not going to even send you to your credit report at that point. Correct. Perfect and uh just going down the list here on Facebook questions what would you say the biggest challenge when it comes to fixing your credit or correcting a credit report? The biggest challenge that consumers have is their patience um you have to take into consideration the credit wasn't ruined overnight so it cannot be fixed overnight. Um you know obviously there are third party companies that can assist you with that um there are ways to go about it on your own uh but the biggest challenge is knowing your rights um using them to your advantage and having a little bit of patience. Um the good there are there if there is a positive out of having bad credit um or poor credit if you will um is it can always be fixed it can be repaired it can be restored it's not the end game right um it's just a little hump we got to get over uh but it just takes patience. Perfect and we have some questions here from some of our uh attendees live um do fraudulent and fake debt collection claims exist and how can consumers protect themselves to responding from false calls or letters what are some red flags uh they should be looking out for? Uh first and foremost if you don't think the debt is yours uh zero correspondence the first thing you do is take that letter and then file a dispute explaining that you know that in fact is not your debt you don't recall it so on and so forth um I mean you got to take common sense into play here uh if you know for a fact that debt is not yours why would you even correspond you know

24:00take the necessary steps from a legal perspective on ways that you can go about on your own to verify or validate that that debt is even yours to begin with. And that goes back to the disputing process as we mentioned earlier. Yeah, and be very very careful and wary of emails that you get regarding that you owe a debt because they're really good at making it look like Bank of America or Capital One or what have you. Um they're not going to send you an email um demanding their money. So be very don't click on it. That they're that's that's phishing. There's there's horror stories where you could have like for instance like uh Chase you had mentioned they will have like let's just say hypothetically speaking the normal website is bankofamerica.com, right? Well, they might have Bank of America with two A's at the end of america.com. Well, the average individual is going to see that that email and not even pay attention to the actual link it's coming from. So that's other ways that they could go about um I know the government's cracked down on that since then uh but that was a way in which that they they used to make attempts on fraudulently trying to collect on debts. Yeah, and they're they're still trying. I mean I get we we get emails all the time with that you know scare tactic. Yeah. Oh, I bet. I bet. Perfect. And we have some more uh questions here from attendees. Um once a negotiation is reached with a collection agency, uh how does a consumer go about obtaining proof that the debt has been settled? And what reassurance can the consumer have that another collection agency will not approach them about that same debt? That's a great question. Uh I actually get that a lot. Uh first and foremost, should you ever attempt to negotiate or settle a debt for a lesser amount, the first thing you do prior to sending any type of money to that uh third-party collection agency is tell them you want to see something in writing stating that you this debt once once you receive your funds this debt has now been resolved and or settled for less, whatever the case may be. Another tip I would uh mention is also make a request that once you do submit that payment to them and the debt has been resolved that they will submit a request to have that removed from the credit report as well. Okay? Um last but not least, um if in fact you have resolved the debt and you have proof that the debt has been resolved and you notice say two months from now that in fact it's still being reported as though it's a debt that you owe, simply take that letter that states that you that debt has been resolved and submit that to all three bureaus and it should come off just like that. I say it's just like that but again it's going to take It doesn't feel just like that. No. Which is kind of uh another leads us to one of the next questions is how long does it take for the average person to clean up an error on their credit report?

27:00Um that's going to be a case-by-case scenario. And the reason why I say that is there's more than one factor. There's more than that payment history and derogatory items listed on a credit report uh when it comes to factors of a credit report or excuse me credit score. Um I would realistically say that um if you have derogatory or inaccurate items on your credit report uh and you're making um I guess you could say uh what's the word I'm looking for? If you're making you know um monthly attempts to get these items removed realistically speaking it should not take you anything between I would say anywhere from 6 to 8 months give or take a couple of months either way. Some items may be a little bit tougher than others. Perfect and I have uh one more question as of right now. Um someone is wondering about if you could touch on more a little bit on settling debt at lower amounts uh once they are in collections. Correct. Um so if in fact you they verified the debt, they validated the debt and it is in fact yours uh but you want to resolve it. Um however you may not have the amount of money that they're currently asking for or you take my advice and truly not pay the amount that they're asking for and again this is a third party collection agency. Um as long as you have the financial means to do so number one uh first and foremost do not attempt to negotiate unless the funds are available immediately. Uh number two never start with your maximum amount that you can pay. Uh realistically speaking um the experts will tell you you probably want to start at like 30% and they'll probably come at you with 80 and then you guys can go from there to where you meet to a happy spot in the middle. Uh but it's kind of like you know negotiating a car price. You never really want to go in there with the maximum amount of money that you can pay because they're always going to come in a little bit higher. Um so that would be my advice there. And what does what happens when you guys when when when an organization is going to negotiate on the behalf of someone do they go through that same process? Absolutely. Uh but they have a little bit of leverage uh and oftentimes the reason why they have that leverage is because they have thousands of other clients that they've negotiated on their behalf and chances are they've negotiated with the same collection agency that you are currently looking to negotiate with. Um so they have a little bit of leverage. Um oftentimes they'll they'll go in there with a portfolio of individuals that are ready to settle at that time which could work on your behalf and they might even get you an even lower percentage of settlement than you were anticipating

30:00Awesome. Felipe, do we have any more questions? No, that is it for the questions right now, unless there's any last minute ones. Fantastic. Um if you're interested or if if you just not sure if if you want to negotiate with them, this is um Score Shuttle. This is an organization we recommend highly if if you've got those accounts and and you're looking to remove some accounts that you don't necessarily know are yours or they're older, you just don't even know where you stand and you have questions, uh go ahead and give them a call uh on the number on the board. And we will have that available. Also, we have our Talk Wealth to Me podcast, so uh they're a little bit longer, they're a little bit more in depth, uh and talk about everything personal finance. That's Talk Wealth to Me. You can find that at Spotify, you can find that on our website as well, uh on the DebtWave website, and just uh or wherever podcasts are found. And don't forget next uh Wednesday, October 21st uh is our next uh episode of Smart with Your Money. And if I remember correctly, I believe we are how to look at your credit report, uh how to read it. And as if anybody has ever tried to attempt to read their credit report, it can be quite daunting. So we will go over that on October 21st. Thank you everybody. We appreciate it. Jory, we can't thank you enough uh for being here today and giving us uh your expertise. And I know that for our listeners uh who are either watching live or watching this again, either via Facebook or recorded, um there's so much information that uh that you gave us today. I appreciate it. Thanks again for having me. Um again, if you guys have uh any questions or concerns, Jason, Felipe are the ones to uh to speak. They're the experts, man. Thanks a lot everybody. We appreciate it and we'll see you on October 21st. Thanks again guys. Thank you.

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0:00Okay. Uh it's may or may not be live. Okay, it's showing live now. All right. Well, welcome everybody to Smart With Your Money Live. I'm Chase Peckham. I am the Director of Community Outreach and Education at the San Diego Financial Literacy Center, the education arm of DebtWave Credit Counseling, and we're very happy to have all of you here today and broadcasting to talk about how to read your credit report. I would also like to introduce my colleague, Felipe Arevalo. He is the Community Outreach Coordinator for the SDFLC. And a few things that I want to discuss before we go. We are going to take questions uh as we go. So if you do have the questions, please uh if you're on Facebook, go ahead and drop them into Facebook. If you are joining us on the on the Zoom uh during the actual presentation, please just drop it into the chat and we will do our best uh to answer your questions. We will also have around 15 minutes for questions and answers uh afterwards, so we will have plenty of time to discuss it. Even if it isn't just about today's topic, we can try to get in an answer for you. Uh so let's take it away, Phil. How to read your credit report. Yeah, it's it's uh incredibly important. Uh it's something that can be done very quickly and with today's technology um I mean, you have it at your fingertips. Uh it's always around you because you always have your phone. Uh so, you know, how to read your credit report and we'll get started here. First and foremost, uh you got to find a way to get your credit report. Uh if you want your full credit report, we we are normally uh as consumers authorized to receive or we get to receive one free credit report per year for each of the three credit bureaus. And those three credit bureaus are Experian, Equifax, and TransUnion. I'm sure you've heard of a few of them uh in the past. Uh the website that you can get your free credit report at is annualcreditreport.com. Uh no, like I said, normally you get one free one per year. Due to COVID, uh due to the situation that we're all in, from now until April of next year, 2021, you can actually get your credit report for free once a week. Now, I'm not saying go pull all three credit reports once a week every single, you know, every single week. That might be a a little excessive. You're more than welcome to. Um but yeah, so it's a great feature that's out there. And and Chase, I think there's a lot of uh consumers, a lot of uh you know, people out there who don't realize that they do have that added access currently. That's right,

3:00you the reason that you want to take advantage of this if you have a chance is I mean we're all familiar with credit scores right we've talked about that before we're going to talk about that again in a couple weeks um and and you can get your credit scores uh from your banks there's so many ways to get them now but the credit score just tells you a little piece of the pie right it just tells you a little bit of how good or bad you're you're doing right or how whether your credit is good or it's bad and Like your GPA in school. That's right and and so the credit report is actually what information that different organizations so if you have a credit card or if you have a bank loan uh that owns you know your car loan or your home loan uh this information when we pay monthly goes to these credit bureaus and so you have a little bit of you have this information that goes there every month to where your credit report is being built so basically it's just like a giant book report right and every single one of us have has these as long as we have some type of credit and it's not that we want to we need to sit there and keep track right it's not like we need to sit there and go okay i hope i i understand all of these things but what is the real important reason that we need to look at these reports it's really a matter of trying to find those errors trying to find that errors or you know worst case scenario fraud and identity theft that that can be on your credit report credit reports have errors if you haven't found an error on your credit report there's a good chance at some point you will and really the one of the last places you want to find out that there's an error or fraud or identity theft on your credit report is if you're sitting across the desk from someone trying to get credit for whatever it is that you're trying to purchase whether it be a car or worse yet if you're looking to start the home buying process because you really want to be uh on top of your credit report to catch those errors catch that fraud or identity theft as soon as possible so that you can start the process of uh you know taking care of that that situation yeah we were just in a conference this just this week and more than half of all credit reports have mistakes on them and big enough mistakes to have an effect on your credit report so and sometimes it's just misidentification sometimes it's just as you mentioned just bad people make doing bad things you know you using your line of credit your name your social security number somehow um they get a hold of that so it's really important in that reason now the reason that we're discussing this today as well is that most of the time when people pull their credit reports it's like boom like what is all this information that's in front of me right so i think what we want to talk about is what is the real important things that you look at what

6:00is on your credit report. Uh what do you need to look out and concentrate on um first? Yeah, if you've never looked at your credit report, you might pull your credit report and find that you have pages and pages of information to look through. So, it's really what we want to do is give you a breakdown of, you know, what to look for. So, let's take a look at that. Yeah. So, first things first is the identifying information. And this is really interesting because it can have uh let's say your name is Charles, right? You could have your name Charles, your middle name, your last name, and you could also have all the different maybe surnames that you go after. And I'm using my father's as a example because he goes by Cap, he go, you know, it could be Chuck, it could be all different kinds of things that uh it's it's really interesting how how how that it can be distributing your name. Uh I my name's Chase and look, there's not many ways to to change my name uh but but this they found a way. Uh There's a lot of ways to misspell my name. There is. You You also have your addresses, your your current address, so it's typically where your bills are sent, but it can also have addresses from old residents. Um I was looking at my credit report not just the other day and it still has residents from when I was in college. And I don't want to mention how long ago that was, but but it it was it was quite a while. It's important to try and remember those too because when you do pull your credit report on annual credit report, they may use that information to verify your identity. And that's when it can get really tricky because if you haven't lived there in a while or you only lived there for a semester uh and you answer that question incorrectly, there is a chance that they will make you, you know, take further steps to prove your your identity just to protect you uh although it may cause a little bit of an inconvenience on your end. Right. That's right. And And just so everybody knows, uh we're talking about the way you read your credit report. This is It's like you see social security number here on the screen. Nobody else is going to see that social security number. That's strictly for you. Uh when when somebody's pulling your credit and they're looking at your credit report for other reasons, they don't see that information. So, that's not something that you should worry about. And And we're going to really show you a a an actual credit report and what it looks like. But the other things that are on here are public records. Uh those tend to be on there um in the next line. They They put these by different sections. Um so that can be anything. Public record is anything like if you've been through a bankruptcy, if you haven't paid taxes and they're coming back after you with tax liens, if you've been a foreclosure on your house, if you've ever been sued, uh if you've been in an accident and the insurance that you had didn't cover it all, and now you have uh more that you're having to pay out monthly that it went through the courts, that information will be there. And And if you don't have any of those things, that that section's going to be blank. Blank. Yeah. Yeah. And then it really goes into your your credit accounts, your trade lines. And this includes negative information, uh positive information, uh including, you know, things credit cards, loans,

9:00student loans, car pay car loans, and it also include the negative information like uh accounting collections for example. Uh that used to be a credit card now it's in in collections. The the other thing with the credit accounts is if there's any negative information that's going to float to the top. That's going to be uh what people see and what you see first and foremost with with these. And another big piece if you were with us when we did the credit score presentation is it'll include your payment history uh which will be big and you want to make sure that you know that's accurate and you don't have miss payments that shouldn't be on there or things of that nature as well on your credit accounts. Yeah, and I think it's important to say here we have trade lines on there and that is a technical term here in the financial world. You don't really need to worry about that. Really what that is is is you're looking at accounts. Are those accounts yours? Um do you recognize these accounts that you have? And if you think that you might potentially uh be in collections and something like that happen, you might see an account that you don't recognize but it will tell you that okay, I am this is an account but what is it related to? And typically on that new account that you might not recognize, it will tell you if it's related to account an account that you currently or or you you know had in the past. Yeah, and when you're looking through them, you want to make sure that you're careful with uh you know as you're going through it. If you've never looked at it before, sometimes if you have like a store card or something along those lines, those may be uh uh provided to you as part of a bigger bank. You know, for example, you have a you know you might be seeing I only have an Amazon credit card. Where is that? Well, that could be a Chase Bank card. Or HSBC or there's banks that handle those Or yeah, so so there's lots of different uh accounts that are on there. Right. And then the other thing that is on there is uh inquiries and and that is both inquiries what are considered hard inquiries which are when you apply for credit and and if that applies to your credit score a little bit, we've talked about that in the past. Um and then soft inquiries. You can actually look I mean because these credit reports are not built for just you and I. They are actually built for marketing. Uh there are different organizations that that fake or or all that junk mail that you get with these different offers. You know, they're looking at your credit reports and they're able to tell oh, what accounts do you have? Who are you banking with? What you know what kind of uh credit products do you have? And so they're going to offer you these different uh these different products that they have because they know that they would love to get you uh as a client. Um and those have nothing to do with your credit reports but you can look on your credit report and see who is looking at your report. So Phil, let's go ahead and let's take a look at uh an actual report. This is a sample of the first part where

12:00with your identifying information. As you'll notice, as Chase mentioned, you have the different names with the middle initial, with his, you know, full name and and there could be a long list of them. You'll also notice the address and and occasionally that's where you'll see other addresses as well, uh as well as some of your other personal identifying information. Some of this information may not be on your credit report. They may not have your phone number on file or things of that nature. Uh so if you don't see some of it, you know, it's it's okay. Don't be alarmed. You don't have to see all of it. Right. Right. All of the different bureaus, the three different bureaus, I believe this is an example of uh Experian. This is an Experian one. Uh they they're all very similar uh nowadays. Uh they but you got to understand that not all of your information as well will be on all three uh because some organizations will just send to certain ones. Most of your major credit products, your car, your home, most credit card companies, the major ones especially, will send to all three. Uh it's very rare. Typically, it's it's the smaller things that will send to one or two. Yeah, and so here we have some sample of what it may look like if you have some of the negative uh information on there, uh some like a judgment or a tax lien or if you have a bankruptcy on there. And it'll just provide you more information along with the amount of money it is. It's going to give you more info on the court or a reference number, filing date, all that information that could be relevant to uh that particular account. And remember, uh and and I know this is a little bit difficult to see. We tried to blow it up as best we could for this. Uh but remember, if you have any questions at any time or you need us to go back, please let us know. We will and we can answer those questions as best you can. So this is real important. This is an actual account um that I believe is is a credited account um and it's basically showing the different things that you want to look at is A, is it mine? Is this something that I recognize? You can see where it was opened, but you can also see what you want to look at is what are your balances? Do they have the contact information right? But look at right down at the bottom where you see payment history and you will see it has all the different months that you've paid. Usually it goes back uh anywhere from a year to a year and a half. Um and you can see that it's these little green things that are okay, okay, okay, okay. That means you've paid on time. And then right up here at the very beginning, you'll see that in the yellow, very small yellow, that usually will say 30. And that means if you've gone late, if you've missed a billing cycle, that doesn't mean your bill came in and it was due on the third and you paid it on the fifth. It will not be sent to to your credit report and that. You have to go one full billing cycle, one whole month without paying before they will even think

15:00about sending it to your credit report. So don't don't freak out if if you make a late payment, you're just going to have to incur that late fee, which none of us like to do. Right. It may have cost you money because you made with a fee and they may, you know, increase your APR to some kind of penalty APR scenario. So it can get expensive, but you haven't ruined your credit if your due date was, you know, Monday and now it's Wednesday and you have to Correct. So looking at the bottom of that page, you want to look at that payment history. That payment history is really important. And if it's all green or it all or it has these little okay's, you're in really good shape. Uh the other one that you want to look at is where are you um when it says uh uh what is your current state? And you want that current state to say uh that area to say current. Um that's where you want your account to say current. If it says it's behind or that it's um delinquent, you know that you that that that's a problem. That's the biggest one that you that those are the biggest things that you want to look at. Other all that other information uh it's just it's a ton. Like you can see payment status there. All of that other stuff is minutia. Don't worry about it. You want to look at payment status. You want to look at is the account yours and are you up to date? Yeah, the other information is just there. Some of it you may be able to use to identify the cards if if you're not sure if you have that card. Uh you know, to see if it's an auto loan or a credit card or, you know, that kind of thing. So one of the things we wanted to touch on before we move on to questions is the availability of Right. Correct. your credit history, your credit report on today's technology. Uh because there are so many options and features available, whether it be apps through, you know, third party apps, through your bank or credit union, uh where you have the availability to you have your credit report there in a much more simplified way in in a manner that you can access it weekly if you wanted to or or every every month or whenever it is you schedule your payments, however you want to do it. But you have access to it. You don't have to go through pages and pages and pages of information. Once you've looked at your credit report and you found an app or a service that you already have provided to you through your bank or credit union, and and and once you have you have it set up, it'll notify you if you have any kind of changes. So as long as you don't see any as long as you continue to get the notifications with the thumbs up, you're doing well, and you don't see that there's a new account open or a new missed payment or things of that nature, you're monitoring your credit report constantly uh as long as you continue to receive those updates. Or sometimes it's you're doing your online banking and there's one more little click that you need to do to take you to your credit uh

18:00profile or whatever they call it at your particular uh bank or credit union. And it's right there in front of you. You can do it, check on it every time you log in to schedule some payments or whatever, pay your rent, and and just kind of monitor it and say, okay, we're doing good. I don't see anything new that doesn't belong. And and that will keep you up to date. With today's technology, it's not a matter of having to pull your credit report once a week, every single week. You know, there there are tools that can help you monitor your credit without making it an extra task that you have because we all have plenty of tasks to do already with everyday life. Yeah, I I it just it's it seems like it's super complicated and believe me, the first couple times we looked at it, I looked at mine and it was like, what happened here? But it really doesn't. If you just look at those few things uh and just stay on top of it at least twice a year, I would recommend uh just to make sure and I will tell you just exactly, I mean, for this very reason, my kids who have uh bank accounts, um both were um had fraud and and they were siphoning money out of their bank accounts just we just found out uh last night, uh which is crazy. My, you know, my daughter had $70 in her bank account and we got an update from Bank of America that she was low at $10 and so and they had found out that somebody had got their debit card numbers. So that stuff can happen all the time. So it's really important that that we try and and stay on top of that. Uh you know, shame on me. I I keep track of my wife's and mine, but I forgot to keep track of my kids' bank accounts. Yeah, and it's very and it can happen. If you have a very common name, you also want to be particularly careful. Uh you know, like the Sarahs of the world, like my wife, where every time we go anywhere, there's two other Sarahs. Uh you know, it it's something where if you have a very common first and last name combination especially, you want to pay close attention because you can accidentally have someone else's information put onto your credit report. So it's not like you're not dealing with identity theft. It's a genuine accident. Uh and and you can go ahead and and you know, request for that to be removed. You just don't want to not pay attention to it and find out that you have information on there when you're in need of your credit, when you're getting ready to use your credit for something. Right. And I think we should also remind everyone that if you want your credit report looked at and gone over with, uh we have somebody at Debt Wave Credit Counseling that can help you with that as well. Crystal uh can help you, work with you, and she and we and she does that for free. Um so if you want to look at anything in particular, uh she can help you with that. Yeah. So Chase, we have a question from the Facebook uh feed. Um what is the difference between a free credit report

21:00I get from a data breach and ordering a credit report. There's no real difference. That is just that is the vehicle for people to go to that they get for free that annualcreditreport.com that we showed at the very beginning. There is no difference. If you have a credit monitoring service that is helping you and they pull those credit reports, it's pulling from the same place. It just might it has a different title on it because of where you're you know the company that's pulling it for you, but it will come from TransUnion, Experian, or Equifax. Yeah, so as long as if you have one of those, try and determine which one of the three credit reports they're using if they're only using one, and then make sure that you monitor the other two because as Chase mentioned earlier, they may not always have matching information and you may only have errors on the one that you're not monitoring and that might be the one that they use at the car dealership or you know when you're applying for a loan or whatever it is. Yeah, I actually had a friend who got a really good deal on a car and they just happened to pick his Experian report and he was nervous because he thought he was going to get this higher interest rate and it ended up that the information was only on his TransUnion report, so the car dealership never even saw that. Now that doesn't happen with mortgages. They do it a much they pull the information a much different way, but you know it's roll of the dice, I guess. Yeah, we have another question here from Facebook. Will my credit report look different from the different bureaus? I think we're that's a great question. Yeah, aesthetically it may look a little bit different the layout, the coloring, that kind of thing, but the information that's within it is going to be the same. So it may not look exactly like this example. It may have but for the most part the information is going to look it's going to be very similar. It's going to contain the same information for those accounts. It will be very similar. Great question. All right, I have another one here from Facebook. If I'm married, does my spouse's information show up on my report? It should not. No, it shouldn't. The only way that your spouse's information will show up on your report is if you both are on that account. So it'll have an account name and then it will have who is on the account. So it could be and it'll say what kind of an account is it. It will mention that it's a co-signed account, so it'll have both names on it. Correct. A mortgage. You know if you get a mortgage with your spouse, then then your information will show up that information will show up on both your reports if you both went into the car dealership, things of that nature. It may show on your identifying information a little line that says spouse and then have their name if you do have them marked down as spouse

24:00on certain co-sign things. But other than that, their accounts that are individually their accounts are not going to automatically uh merge with your accounts. It it it doesn't uh marriage doesn't do that. And on this sample, you'll see on the on the all the way on the right uh column at the bottom, which is not super long, it says responsibility and right underneath it, it says individual. Uh if that was another, it would say co-sign. And if you were the co-signer, it would say co-signer. Yeah. Good questions though. Any other I guess I should Any other questions? slide. All right. Oh, so peaceful. Yeah, so So, well, if there aren't any other questions, we'll hang around for a little bit. But Phil, that was uh thanks a lot very much for that information. I want to remind everybody as well uh that you can join us again for our next Smart with Your Money Live. It is next Wednesday, November 4th, again 1:00 p.m. Eastern and 10:00 Pacific. And we're going to talk about credit scores, myths versus reality. And two weeks after that, we're going to talk about uh ways that you can prepare for the holidays, holiday shopping, uh and how to budget for those. Should be a fun one. It's a very important one. Very, very important one. So again, next or two Wednesdays from now, November 4th, credit scores, myths versus reality. Thank you everybody for joining us, and we'll see you next time.

Machine-generated from the audio; names and numbers may contain errors. Timestamps mark 3-minute sections.

0:00Verify that it has in fact gone live. And we are live on Facebook. So we're good to go. All right. Welcome everyone. Thank you for joining us with our biweekly episodes of Smart With Your Money Live. I am Chase Peckham. I am the Director of Community Outreach at the San Diego Financial Literacy Center, the education arm of DebtWave Credit Counseling. I am joined by my compatriot Felipe Arevalo and today we are going to discuss credit scores, myths versus reality. And before we jump into that, I do want to mention a couple things. You will notice that if you have any questions, please feel free uh to go ahead and start asking those questions in the chat. You'll notice that it goes right to us. If you are watching on Facebook Live, please go ahead and and type in any questions you have there so we can get right to you because we will be answering questions and then we might even answer as we're doing the discussion. Uh but we will for sure have time in the next 15 minutes or so after we end. It's a short program. It's only about 20 minutes uh just because we want to obviously get everybody in and get everybody out so they we can value everybody's time. And also uh we will go over any questions you may have including if you have any questions that are kind of outside the credit scores myths versus reality. Uh so with that being said, uh Phil, credit scores myths versus reality, we've been doing this for over 12 years, well over I mean thousands and thousands of presentations and workshops and conferences and boy, if every year, every presentation, there aren total misconceptions and myths versus the realities of credit scores and credit reports. Oh, we get them all the time uh from constituents, all different parts of the county where we present, uh all different age groups. Uh and it's good to be able to create this and be able to put this information out there so that everyone can have a better idea of some of the myths that are out there and some of the things that people are not sure but might actually be true. Uh just kind of knowledge is power and you want to make sure that you uh have the best information available. So we can get started here and uh we'll start off with number one. And the first slide is always a little tricky. There you go. Uh so myth one is you can hurt your score by checking your own credit. This is the one. This is the doozy. All

3:00ways do we get this? We get this all the time and it is not true. Not even a little bit, Phil. Not even a little bit true. No. You can You can check your credit as much as you want. Um you know, it's something where they've even made commercials uh about it. You know, we've seen the commercials with one friend sitting on the bench and they're checking their credit and the other friend throws their phone in a pond because they're trying to save them from ruining their credit. And And as silly the commer- as the commercials are, they they are accurate in in this case. And you can check your credit and that what what what what that will do is it'll create a soft credit inquiry. And there's a very important distinction to make between soft inquiries and hard inquiries. And you'll still see the credit pull on your credit report, but you're going to be the only one seeing that credit pull. It doesn't get sent to lenders. It doesn't get sent to any of the different uh credit score calculating models. It's just there for your information. Now, if you go and you start applying for credit and all of that and you create hard inquiries, you know, as we went over on the credit score presentation a couple weeks ago or a few weeks ago, uh that can have a negative effect, minor, but a negative effect on your score. Uh whereas soft inquiries, you checking your own credit, do it as much as you want right now, uh due to COVID and and and the pandemic, you can check your credit report uh up to weekly For free. on annualcreditreport.com for free. So, you know, do you need to do it every week? I I don't know that you do unless you're That might be a little overkill. I don't think a lot's going to change. But, you know, you definitely want to um you know, be on top of it. Be diligent. You want to be on top of it. And just so everybody knows, we use these technical terms, inquiry. All that really means is that's just showing that somebody has looked at your credit report. Uh because those, as you guys know, these credit reports are marketing. These the credit bureaus are marketing companies. They sell our information, our financial information to outside entities. And that's why we get all that junk mail. So, the great news is is that when you look at your credit report, you can see it at the uh uh you can see who's looking at your credit report. And if you're pulling yours, that's just that means that's a soft. So, just so everybody knows that. It It's uh those technical terms can be a little bit, but inquiries is uh just look out for them. Not a big deal. You In fact, you can even, just for your own knowledge, check and see how many times you've pulled your credit uh over a a two-year period. Uh you can see all those different organizations that are looking at your credit just because they want to send you junk mail and try to get you to to transfer your balance or whatever that might be. So, go ahead, take a look. Not going to bother you at all. So, And we definitely have a timely question on this one before we move on is uh how often is it reasonable to check your credit?

6:00I honestly in this time I would say once a quarter probably. Uh and and it really also depends if if there's anything bigger that you need to do like you're looking into buying a home or you're thinking about buying a car or something like that. You're thinking about opening up a new line of credit uh to to do something. That's when you know be a little bit more diligent. But once a quarter in this day and age especially just because there's so much identity theft and not only that but just misinformation. Uh that there can be I just identity mistakes. Um literally if especially if you have a and we've talked about this before if you have a relatively uh popular name and a common name you know that that can happen quite a bit. So that's a good question I would say. Normally I would say once I mean I check mine once every uh twice a year every six months but lately we've been checking a little bit more just to be a little bit more diligent and the fact that it's free and a lot of your banks are going to let you do the same thing. Good question. What's what's behind door number two there Phil? All right number two when I pay off past due a past due account such as a charge off or collection account it will show paid and no longer be a negative. And we know What do we think Johnny? We know that is not true although part of it could be. Some of it is. That's how you get the false start. You know so so when when you when you pay off the the past due account it will get changed. If it gets changed to paid you know that's better than showing that you still owe the the the money. Uh but that doesn't mean that it's necessarily going to disappear off your credit report. It's still going to stay on your credit report and it's still going to be on there and it's still going to look like a negative. Uh and and things stay on your credit report for up to seven years at that point then it would drop off. Uh and and that's not to say that as time goes on you know that that paid off account is going to you know affect you less and less but it's not going to just disappear because you paid it unfortunately. Right. The bottom line is that nobody's making anyone put this on and it can be uh pulled off at any time. So if you get into that situation where you are paying off a collection account and we talked about this a couple weeks ago is make that a part of the deal. You're you're paying off this account and you would like that removed from your credit report. Then if it's not there it can't count against you. And they can pull it. Nobody says they're If you make it part of the negotiation it'll it'll allow you to remove it and then at that point it's not there anymore. Yeah it's not there. All right. Let's see number three that we have here. Um the credit bureaus are a branch of the government and their records are infallible and we do hear this. Yes and I got to tell you that

9:00one makes me laugh all the time and and I don't mean to laugh but it's amazing how often we get this that people thinks that the credit bureaus that Equifax TransUnion and Experian are government entities and they're not they are publicly traded for-profit businesses again we talked about this at the beginning they're there to sell information you know they're not there for us to help guide us with our information but it is our responsibility to take a look at it and as we just talked about a few seconds ago that identity theft and there's mistakes and those kinds of things I mean there are literally millions and millions and millions of credit reports out there and and credit profiles there's no way that they're checking up on all of these to be able to make sure that their their information is correct that information is sent to the credit bureaus they put it up it is unfortunately and by no no fault of our own it's our responsibility to take a look and make sure that those accounts that are on there are ours and if they're not we need to dispute them but by no means now that being said right Phil that they're they have to follow all kinds of guidelines that the government does put there are laws they need to follow. They do have regulations and things that they have to follow and if you dispute things then there is a process that they you know then you can get things removed if they're inaccurate but you have to create the initiative to go on there and request for that process to start. In fact we went we covered that at length a few a few episodes ago so if you'd like you can go back and you can find that on our website. Yeah so definitely uh not true so we'll move on to number four and number four here we have closing an account will help your score um and and we hear this one often as well and that's not the case um you know it it's something where the the act of closing the account uh could actually have depending on your financial situation and we get this question all the time when people say if I close out one of my credit cards that I haven't used in a while what's that going to do to my credit? And it's so it's impossible for us or anyone really to answer that because there's so many other things that are going along with your credit and the closing an account can have a significantly different outcome for one person as the other but the act of actually closing the account itself doesn't mean that your credit score is is going to go up what they can do is it'll mess it can if you have a balance that you're carrying it can actually reduce your available credit limit it will reduce your available credit limit and it could increase your debt to to available credit ratio which we went over in in a previous presentation is the second highest factor to your credit score. Right those five factors get affected by if account is closed but if if you're a person that has five credit cards and you don't have many balances on them

12:00and then this credit card you're just not using very often, it's better to close it yourself than it is if it's inactive and eventually the the bank is going to say, you know what, it's inactive, we're going to close it for you. Uh so so it is okay to close an account every once in a while, but if you are somebody that has two accounts, let's say, or three and uh you have a little bit of debt that you're play uh you're trying to pay down on those and then you close one that has a lot of available balance there, then closing that's probably not a great idea. And one other thing we will mention is if it's one that is older and you have had it for a long time, it's got a lot of history, you might want to think about if you want to close that one because history does matter. It's only 15% of your score, but it does, you know, it it's again, it really depends on your situation, but look into it, do your homework before you just go closing an account. Yeah, and we've had people say, you know, I got declined for a credit card, I'm just going to close one of my other ones that I don't use and go apply again. And that's really not very productive. That's going to Yeah, get that backer opposite effect at that point. So closing it should not be a I'm going to close it so that I can jump my score up a little bit more. Yeah. 100%. I mean, the only thing is is if if you look, let's say I'm I'm I'm in an age where I've been I've had credit for 25 years and I have a credit card that I still had uh when I I was I got in college and that credit card isn't doing anything for me anymore. There's no special benefits. It's not really It's got a high interest rate, whatever it might be. And I've got four others that I also have a long history with, then I'm I can think about closing that just cuz I'm really not using it and I'd rather me close it again than than the bank close it. Yeah. Perfect. So we're moving on to number five. And number five is if I build enough good credit, it'll offset my bad credit and make me creditworthy. And, you know, for this one, uh we have the false start again because it's not That rep is busy. Uh yeah, I know. You know, it's not necessarily uh it's not true, but there is some truth to it. Um and it's it's an important distinction to make is um it will help your credit, but it won't eliminate your bad credit history. The the bad credit history there it's there and and with time, as you continue to make more and more good credit history and that negative, whatever the negative was, starts to become older and older and older, you will see a shift with to with your credit score and you will see it increase, but it's a slow, steady climb from from uh some kind of negative uh scenario. It's definitely not an offset, right? It's not offsetting penalties and let's do the down over again, right? If you want to use a football term. Uh but again, all information as it gets older carries less weight. The most recent information on your credit report is going to carry the most amount of weight

15:00when it comes to your score. So the older something negative gets, those good habits that you've created, those good accounts that you've that you're building, those payments are on time, you're paying down your debts, you're going to build that credit score back up because that negative information is getting older. And then eventually when it drops off, it'll be like it won't get there. So it may not be like a major 100 point jump because you got this new great account, but it is going to steadily increase. Yeah. So keep working. Keep working at it. Eventually it will uh help your score. Absolutely. So onto number six. Uh number six is it is illegal for creditors to take a negative accurate listing off my credit report. The law requires that these items remain on your credit report for the last seven years. This is where there's a lot of confusion. This is there's a lot of confusion and that is not true. And and the reason is it's the reason for the confusion I think is the the similarity just depends a little bit on how you word uh the the explanation. Now the law requires that after seven years things fall off of your credit report. It doesn't require that they stay on for the full seven. Uh so it's just a little bit of a terminology. It's one of those where, you know, the terminology or the grammar really matters. And you know, it's Correct. just because it's on there doesn't mean it has to stay on for the five. Uh as we mentioned, you know, we mentioned in the previous uh swim live when negotiating a a a debt that's, you know, been in collections, you can make this part of the negotiation to have that removed. And and you know, creditors are they can remove things if if if they so want to. Um they don't have once it's on there, they don't have to leave it on for the full seven. Absolutely. And just we can reiterate this that there is no law that tells any company that they have to put our information on our credit reports. They purely do this because they would like as accurate a reading as when they're pulling credit, when when you're trying to apply for something, you or I, whoever it might be, they would like the most accurate information. So they have to so they want to report information as well. But that's why you'll notice sometimes and you'll see commercials about it where your credit score might be different based on the different credit reporting agency. And that's because there are some organizations that report to some, that don't report to others. So again, there is no law that says that anybody has to put anything on and there's no law that says they can't remove it. Yeah. So again, it's very similar to like the maybe like the cell phone industry. They're not going to report your positive payment history, you know, for just for for just for the sake of doing it. But if you, you know, stop paying and you don't pay the early termination fee and they're trying to find you and they're trying to get

18:00anyway. At that point, they they potentially could go ahead and put the negative information onto your credit report. You know, it's not that they have to, it's that they're, you know, they're trying to get some of their uh money in return. Without question. So so it's something to keep in mind there as we move on to number seven. Um and we have one that's true. Um you have to use Yeah, we have one right there at the end. You have to use credit uh to have a good credit score. Uh now this is another one where the terminology really matters. You you have to use credit, you don't have to carry debt. We do? Yeah. Uh you don't have to be in debt to build good credit, but you do have to use your your credit. And and the reason for that is the way this credit scoring uh models work, and you can go back and watch those, is so much of it depends on Absolutely. payment history, on, you know, the usage and the And if you don't have anything to to for them to judge your creditworthiness on, you know, then then at that point you're you you have there's no way for them to make a determination on whether or not you're likely to pay something back if there's no history there. Well, think about it, Phil. I mean, and I'm sure everybody here has loaned money to people, right? And they have I bet a lot of people have loaned money to people and then didn't get paid back, and we learned that the hard way, right? And we know Now if that person came back to us again and said, "Hey, can I borrow some money?" you're going back to this report in your mind and you're going, "Man, this guy didn't or person didn't pay me back. Why would I lend them money again?" And it would be like somebody that you don't know coming up to you and asking to borrow $100. You don't know them from Adam. You don't know if you'll ever get paid back. Why would you loan them money? And that's basically what comes down into this is you have to show these uh these people that you know how to use the credit if they're going to give you a loan. And that's as simple as what this is for. Yeah, really it's just a matter of is there information there for them to use to trust you. But again, as Phil said, there is you do not have to go into debt to do this. It is not a good idea to go out and buy a $25,000 car because you want to build your credit. It's, you know, that that's just not a good idea. You can, you know, using a credit card, using it to pay I mean, literally you can only you can use it once a month. You could buy a tank of gas with it. You could use it as a cell phone bill payment, pay it off every month like you do anyway, and that's it. I mean, you're making positive payment history and you're using credit. You don't have to You don't get any brownie points by paying off a big chunk of debt. You just you're not. Unless, of course, you've got a lot of debt now you're paying down those balances and but that's a whole different story. Yeah. So, you know, hopefully um this was helpful. We we have some questions. Those are our top seven, and there are more, but those are our top our top seven. Yeah, we want to Let's see. I have a question here. Um it was earlier in the presentation. We didn't have a chance to get

21:00to it. Uh but unfortunately now I don't know what it was referring to. Uh what resources do you suggest we use to establish what you were discussing? Unfortunately I missed what part of the presentation that come in. So if you please send that one back, I'd be more than happy to answer it. Uh in the meantime, we have one over from Facebook. Chase, we have one here. Um how can you get proof that a collection agency payoff will be taken off your credit report? I understand negotiating, but they can say one thing and do another, right? They absolutely can and unfortunately that that's the bummer of it. But before you do anything when you're working with a creditor, especially uh any creditor but especially a collections agency, is you get everything in writing. Uh you get it third, you know, first class mail, uh whatever it might be, but you get it in writing. And when if that doesn't happen within a month or two, you can send that information to the credit bureau and uh and let them know that that was supposed to happen uh and that you had that deal with the group. Uh you know, unfortunately when you're dealing with collection agencies, you're not always dealing with the most uh honest of of people. Now that's not to say there aren't really good collection agencies that that follow the letter of the law, but like with any industry that we find ourselves working with, you can have some bad apples. Yeah, and it could be something where maybe it's not even malicious. They're trying to get the money, they get the money, and now they're like, okay, that's done. And then they not go through the extra step of, you know, actually going through and requesting for for that to be removed. Uh we have another question here. Should we pay off a credit balance right away or wait for one billing cycle? Oh, that's a good question. Actually, you you can do whatever you like. If you're there's two scenarios to this. If you are if you had just bought something and you don't have any other balances on your credit card and that is the only balance, there's no brownie points for paying it off as soon as you get the bill. As long as you're paying that bill within that that billing cycle, so let's say the due date is, oh, let's just say in this case November 28th, you're not going to get brownie points by paying it off except peace of mind maybe uh for paying it off early because you have a grace period before they start charging interest. It's only after that date that if there's any other balances sitting on your balance that they're going to start uh with uh the the interest rates going against you. Now, if you're carrying already a balance and you're adding to it, remember only the purchase is going through that grace period. Any balance that's already there is accruing interest every single day. So the earlier you pay that off, uh the better. Yeah, so if you zeroed out your account last month and then you you you can use your credit card and then when the next billing cycle ends and they generate a statement, it'll have a statement balance and then a due date. As long as you pay at least the statement balance or more by that due date and you zero it out again every month, then

24:00you know, you won't be getting charged finance charges. It'll be same as cash. And that's when you can benefit from things like uh reward points and miles and all that fun stuff. Same as cash. Miles and Absolutely. Uh that's when a when a credit card can really work to your advantage is if you're really on top of it. It's a great question though. Let's see. Any other questions? Is there anything else, Phil, that you get that are myths uh that that we run into that that off the top of your mind, the ones that we didn't cover? Uh off the top of my head uh as far as credit, we get a lot of budgeting ones too. Um you know, but as far as credit goes um Those are the big ones. Those are the big ones. I think I think there's some that go uh with student loans. Some people feel that I'm not in school, I have no payment due, so my student loans won't be on my credit report. Right. And they're not charging interest either. Uh and that's Right. And that's false. As soon as you take out the student loan, it's going to go on your credit report. Now, it will show that you're in school status, you don't have a payment due and all of that. You it'll show you're you're not going to fall behind or anything, but they will be showing on your credit report. And I think that's because people have that grace period while they're in school with their student loans. They feel that they have that same grace period where it's not showing up on their credit report and and that's inaccurate. It is showing up. And if you have student loans or you've taken out multiple student loans, you may have one semester worth of student loans and have three or four individual student loans because there's different types of loans and things like that and each one will be reported separately. Different types of loans. Fantastic. Do we have any other questions out there that we can answer? Even if it's not directly about the topic we're talking about today, we can do our best to answer those for you if you have something pressing on the top of your mind. And a good idea too is if there's a lot of Oh, somebody has one? Oh, somebody asked? Yeah. Who can you ask to remove a negative uh credit from your from the report? So, I think your question is, you know, who can you If you see something wrong with your report, what do you do about it? And and really if you pull your credit report on annualcreditreport.com and and you're and it'll link you to directly to to get your credit report from the Experian, Equifax, or TransUnion, whichever one you you select or all three, right then and there while you're viewing your report, if you identify an error um or you identify something that doesn't belong to you, you can dispute it and and start the dispute process right then and there. It it it doesn't take very long. Uh you know, last time I checked, they had character limits, so it's not like you get to write a bunch even if you wanted to. Right. Um and and you can start the dispute process yourself right there. Um if you if it's something where it's an error and and you know, you can reach out directly to that creditor

27:00uh whether it be like a credit card company or collection agency and ask them to remove it if it was just some kind of mistake clerical mistake like all of a sudden your credit card shows that you went past due last month but you have record and you show that you didn't uh you can reach out to them and they should be able to you know take care of it especially if it's if it's an error Absolutely. Especially if it's the original granter credit you know if it's your current credit card company or your bank they're if there's a mistake they're going to fix it pretty quick. Collection agency is a little bit different animal. Yeah and then there are so yeah hopefully that that helps out but there are others little specific scenarios but for the most part you know I've had errors on my credit report before and it it it literally took about five minutes to start the dispute process and then it was just a matter of kind of just keeping an eye on my uh in my email and just waiting for the dispute to complete and I got a thing sorry for the inconvenience it was removed here's another credit report verified it was gone and it's gone it never popped back up so it it's actually a pretty easy process to to get going. And we should probably put the information for Crystal up there too if anybody wants to discuss and and help somebody help them look at their credit report decipher what's going on uh talk to them about their credit scores uh we have one right there that Crystal Williams is she's phenomenal she'll sit down with you discuss it you I mean obviously over the phone uh but we she can go over that whole thing with you and uh help you kind of figure out what's on it and really help you. Yeah and give you tips on on what to do and and that kind of thing yeah I think it's a great resource it's there for for the community at large so anyone can you know reach out to her um and you know get get more information and more information is always uh is always a good thing. Are there any more questions Phil have you seen I don't have any coming my way. I don't think I've seen I have a chat here um I think people think you're just a lot smarter than me because nobody asked me a direct question. I think I started it and I have it set to email host only. Oh maybe oh that's why okay. I think I think yeah we should have made a a co-host Sure. Oh that's okay you know what that that's absolutely fine I mean one way or the other we we both can answer this information. We have a fun question from from Facebook is uh what is your favorite Halloween candy? My kids asked me this they and they always think I just don't eat candy uh peanut M&Ms. Yeah I think if if we're going specifically Halloween candy I think I like candy corns and not because they're great but I think the scarcity of them because you can only get them around this time of year makes them taste so much better um. Uh to answer your question Anna yes we this is a non-profit 100% 501c3. Yeah and we do this every uh two weeks so if this is your first time joining us we hope that that you'll join us for more and

30:00we have a a couple different resources available. We have our podcast. It's a weekly podcast where we talk about different things in personal finances. We have experts on and get their opinion and get their feedback on some topics that maybe we don't specialize in or we don't deal with on a daily basis. Uh so you can get that anywhere you get your favorite podcasts. And we have one coming up here uh next or two Wednesdays from now. And that should be a fun one. So This one's going to be a fun one. Five holiday budgeting tips, right? Yeah. And And with the holidays coming up, you know, hopefully you've been saving uh and you started earlier in the year saving for the holidays because if if that expense is coming, it's usually a big one. But, you know, give you guys some tips to uh how to better prepare for those. Absolutely. And we have one more thing we'd like to push out there for anybody that if if you ever have wanted to work with a uh financial planner, a certified financial planner, and you haven't had the chance, you just don't think that that there's any need for it, but you just aren't sure about your 401k or your 403b or or you just want to talk about, you know, your budgeting, uh you can you can do that. We have a program for it called our our uh financial opportunity clinics. We're doing them virtually right now. So go ahead and you can go to sdflc.org uh and and you can find out information about that. And that's all free. All right, Phil, this was fun. I love these. Yeah. Thank you everybody for coming. It was great. I'm glad. If If you have any more questions, we'll stick around for a couple more minutes. Uh but uh we really we had a great time. Yeah, appreciate it. Thanks everybody for stopping by.

Machine-generated from the audio; names and numbers may contain errors. Timestamps mark 3-minute sections.

0:00And good morning. Welcome to Smart With Your Money Live. I am Chase Peckham. I am the director of community outreach at the San Diego Financial Literacy Center, the education arm of DebtWave Credit Counseling, and I am joined as I am every week by my cohort and uh community outreach coordinator Felipe Arevalo. Hello Felipe, how are you? Hey Chase, how's it going? Thank you everybody for joining us. This should be a fun one. It is a fun one. And you know what? That is not a virtual background behind me. That is truly a a Christmas tree. My wife has started extraordinarily early. Um we have now This has been uh a full week and a half since I've had my tree up. So I am wondering if I'm how much I'm going to love it by the time the holidays really come around. You know, it's uh a little early normally for me, but you know, this is 2020, so a lot of the normalities are out the door. And whatever can bring anyone a little more joy, I say Yes. It does. And I've seen my wife be and my kids obviously are both they're very excited. The kids and my wife are all excited uh for the holidays. And which, you know, this time of year as we I mean, I can't believe Thanksgiving is right upon us. Uh this typically kicks off the holiday season, right? And this is when the for most people and in in normal times, when the holiday shopping season uh really begins. And so this is a good time to start talking about five holiday budgeting tips uh in this series of Smart With Your Money Live. Yeah, and you know, like everything else this year, 2020 uh holiday shopping is going to be a little different. Uh but that doesn't mean that people aren't going to be out necessarily shopping. So we felt it's a good idea get some of these uh tips in here and uh we'll get started here with the first tip. Start early. If you haven't started planning for 2020 holiday season, unfortunately, it's a little late now because it is here. Uh you know, 2020 is that longest and shortest year all in one. Uh so normally, we would say start planning early. And and you know, the best time to plan for 2021 is right when you finish 2020 uh and start The earlier you start, the easier it makes it when you get to it. I think it's like anything else, right? We we talk about if you're wanting to save for a vacation or you're saving for a car or house or whatever it might be, the the earlier you start, the better, right? And if you start thinking about that, you're going to be able to think about the I mean, let's face it. I mean, a lot of us think about the holidays all year round, and we look at something and we might say, gosh, that would be a great Christmas present uh or a great holiday present

3:00Hanukkah, whatever it might be, that this is a great uh present for them. And then we think, oh, but we'll we'll we'll wait, right? Because it we're nowhere near the holidays. But uh you can start putting things away uh and start saving for those things as early as January. Yeah, the earlier you start, the easier it is on your monthly budget. Absolutely. And we I want to mention Sleep M, sorry. I I forgot to write at the beginning, but if you have any questions, you'll notice that you can ask questions at any time uh in the chat. It'll go straight to us, uh the hosts, and we'll try to answer uh as best we can. And if we don't have time for, you know, answering those questions during the presentation, we will definitely have time to put dialogue between all of us uh right at the end for about 10 or 15 minutes if uh if need be. And if you're watching on Facebook, feel free to drop a comment. The question will find the your question will find its way to us. Uh so we'll get to those as well. Absolutely. All right, so we got the first one out of the way. Let's go on to our second uh tip here. Make a list and set a budget. Yeah, he's got a long list. Uh it looks like my kids' list. Um you know, make a list of who you're going to give gifts to this holiday season and and establish a budget for each individual and then an overall budget. If you're going to give yourself gifts, make sure you add yourself to the list to make sure that you incorporate yourself into a budget. Um but then, you know, Chase, the most important part of making the list is then going ahead and And sticking to it. Sticking to it. Yeah, that's hard to do. Um but it it is. I mean, especially if if you make it a whole family thing, too. If if you happen to have family or you've got nieces and nephews and brothers and sisters and things like that is just really set that budget limit on what you're going to spend. And a lot of people, you know, we've talked to experts throughout uh the years and we constantly they constantly say, look, set a budget for everybody and kind of stick to that. Uh and if you do that, the holidays are going to be a lot easier. The problem is we get super excited and go, oh, let's get that and let's get that. And and then it can get a little bit overwhelming because let's face it, we all get excited to give, right? I mean, it's it's fun to do that. Yeah, especially if you started shopping early and then before you know it, you're like, oh, a great present for for my brother. And then you realize, oh, I bought my brother's 2 months ago. Now I have two of them. Oh well, I'll just keep one for me. You know, but if you don't stick to that budget, maybe you write your budget down and then as you buy something for that individual, cross them off, put a check next to them, and then write down what it is and where you hid it so that you can later go find it when it's time to start wrapping the presents. Holidays is like a giant Costco list, right? I mean, if you're going to go to Costco, you have to have a list, right? Because if you don't, we're all going to walk into Costco or Target or whatever those big

6:00and there's always something that is going to get us, right? Always going to be oh, I need that. Oh, that looks awesome. Oh my gosh, there's a sale on that. You know, especially when you walk into Costco this time of year and there's these big giant blow up Santas or something like that and the kids are with you and they go, oh, we have to have that. Man, make the list and the and the holiday list is exactly the same. We we all get excited. We all are going to that especially this time of year, what kind of deals can I get? And then oh, almost always our lists end our our present list gets very inflated. Yeah, and you start with a list and then you start thinking, oh, I forgot so and so or oh, I can just I can get so much of a better gift if I just add $10 to that person's budget. You really got to try and hold back from that because your budget is what it is. That should be what you're comfortable with and what gets you through, you know, with the least amount of financial uh concerns down the road. Without question. So on to the next one. We have make it a game. Uh we've all played them and we've all heard them, secret Santas, you know, white elephants, other games that gift exchange games and you know, 2020 is no different except maybe you're not going to all gather in someone's living room and and or at the office in exchange, but if you make it a game, set a budget for for that game and and you can make it fun where you only have to worry about buying one gift and and that means you only have to spend on one gift. That's going to be really interesting in 2020 to see what happens, right? Is uh especially now things are spiking all around, you know, people are thinking twice maybe even about their travel plans and going to visit for the holidays and I know that that people are already figuring out how they're going to do secret Santas virtually and and everybody set a limit, right? On on what kind of game you can have. That that really helps the budget, right? I mean outside you've got all the your mom or your dad or your your brothers and sisters and if if everybody sets a limit on what a minimum on what you can spend and a maximum, then you're going to that budget's going to stay pretty on base there and that's really really important. Uh and especially if we're not traveling right now and we're going to try to do these things virtually, uh there's a lot of very very uh interesting ways that people are figuring out how to do these uh virtually. Yeah, you can do it virtually and then you can do the gift exchange like uh distance gift giving. Yeah. You know, we're down here in San Diego. Uh it could be easy to to maybe meet somewhere like a park or a parking lot at the bay or something and keep your distance and exchange gifts that way. Uh get creative, make it fun and if you set a limit, you know, or a range, you're going to get something you pretty much know exactly where you're going to get something and you get that one thing and you can make it fun and exciting for everyone involved. Exactly and not only

9:00I mean to talk about a budget buster if if if setting that minimum is really important. $20 maybe to $30 maximum because you don't want to be the one that gets stuck with the $5 gift that Aunt Betty ended up giving you or regifting you, right? Yeah, from last year's Secret Santa. Hey, I remember giving that to you. Exactly. So, and if you have a big family like me, you know, that's a lot of gifts. Even if you did little gifts, that would add up really quick. Whereas you can just concentrate on finding a good deal on that one gift that you think is going to be cool. You know, it saves you money, saves you time, which is you know, always a good thing as well. You know, it's really interesting too is the talking about a game with the kids, talking about um the kids get all excited about Santa and they were asking us the other day, how do we um you know, Santa can make that, right? And my son wanted a PS5. And he's like, well, you know, Santa'll just make it. And I'm going, how do I explain to him that Santa can't just make a PS5? It's a little bit expensive. So, I we did explain that that Santa does have to um reach out to organizations to break those things. Yeah, right. He has to stick to the budget too. Yeah, he's not an electrical engineer, so sometimes he's got to reach out to the Sonys and Microsofts of the world for a little help. Exactly. Um, you know, so I want a PS5 too. Luckily, we're we're the same. Uh, but I'm not getting one. Um, I don't think he's getting one either. So, you know, make it exciting, make it fun. You can even make it a little expensive. And then on the thing with kids, do it yourself. If you have a little artist who can help you out, have them make a gift that that can have that, you know, sentimental added benefit to it. Um, and you could save a little money if you or a lot of money if you have the arts and crafts already laying around. Um, you know, or if maybe you're arts you have those kinds of skills. Unfortunately, I don't. Um, and do something where you can create it yourself. Yeah, you know, Felipe, some of the most cherished things that I have even after my mom passed away and my father gave my brother and I some of our stuff was things that we had made when we were really little kids that we put on the tree or whatever it might be. It might be something that we put on the walls and decorate the house with. Those arts and crafts that are created, they can last for generations. Um, and that really is much cooler than even, you know, the ones that you buy at the store for $5.99 or whatever it might be. Yeah, and if you have, you know, an arts kid who's very into arts and crafts like I do, um just let them have at it and decorate the whole place. Then you don't have to buy decorations. Um, and they have fun. I'd love to love to try to get that by my wife. But they have fun doing it as well. So, you know, you entertain them. Arts arts are good because it helps

12:00out and and saves you some money. So, if you're not going to do it yourself, either way, regardless of whether you make a list or you uh are out shopping, avoid the emotional overspending. And we're we're all guilty of doing this uh from time to time. This is the biggest one, I think. This is the hardest. Yeah, and and this messes up all the other tips before if you're not careful with it. Uh you know, the the uh the list can go out the window if you go ahead and and get started on the emotional spending. Yeah, one of the biggest things that we run into, and I think with all of us, I mean, is we all want to uh create the greatest holiday season for our kids or our spouses, you know, depending on where you are in life. And we all get into that, you know, that gosh, they got to have the greatest holiday season. And And the thing is is as as we all as adults probably can remember is it's what we remember the most is not the gifts that we really got, right? I mean, how many gifts do you really remember as a child that you got? I mean, I the one thing that stands out in my mind is is a baseball bat that I got as a little kid. But how many presents did I get as a child over that many years? And and I have one present that really sticks out. So, really, it's the time spent with everyone and and the the the love of of the the spirit that comes with the holidays really becomes bigger, doesn't it? It does. And that's really what's going to matter in the end. And and, you know, how many times, especially if you have really little kids, do you give them a toy and then they spend hours playing with the box that it came in? Um you know, it it's we we got a a new one of those mattress in a box months ago, and the kids still have the the box. They enjoy playing with that box so much. You know, it it's very simple for for sometimes for the kids. And we as parents are guilty of, well, I want to make sure that I go get them more. Which really gets back to that list, right? That list that we mentioned in the first or second, I think it was the second uh slide that we had is is really do your best to stick to that because it's so easy to get stuck into, oh, well, this kid has four things and oh my gosh, I only have three things for this one. And we tend to forget the cost, right? We forget to think about we think about the numbers of things that the kids get to open, but we forget really about uh how how we um how much we spend on one individual. Like we again, we mentioned I mentioned PS5, my they're like, okay, I mean, if we think about those kinds of things, that might be the only gift, right? And and we feel as parents guilty about it because it didn't last long enough or it wasn't as drawn out as we'd like it to be. And we we just it's not smart to get stuck into that. Yeah, definitely if you're going to buy a big ticket item, let them

15:00No, that's that's it. Yeah, you know, the other thing that's really smart when you come up into lists is thinking about budget conscious thing, especially when it comes to uh you know, my daughter came to me and said it was my teacher's birthday the other day and she she's very uh very very sweet when it comes to spending my money on different gifts. So, there are really good little things like gifts like a $5 gift card to Starbucks if especially if you know things for like coaches and teachers and things like that because there is that extended, I don't want to say, but you have your extended friends and or your kids teachers, your coaches, especially in this world of uh of rec sports and and um club sports that we're all in now. Um I I don't want to say go on the cheap, but there are things that are really sweet that you can do that are really cheap and like those gift cards and you can like you go to Target and you can find $5, $10 gift cards uh for all the different kinds of things. Yeah, you can even buy like a pack of them and it's like three $5 gift cards for $15 pack and you can give it to someone and if it's to somewhere like a Starbucks For sure. uh or even Amazon itself, eventually they're going to use it, you figure. Most people will go ahead and eventually use it at some point. Absolutely. So, we do have some bonus uh bonus tips and this is a big one, Chase. I know you're a big fan of this next one. Um to consider just avoiding gifts altogether, just skip them and and save that money for experiences, whether it's, you know, eventually hopefully 2020, hopefully sooner rather than later, we can get back to doing the things that we like to do and how many of us are sitting there thinking, I can't wait to just go somewhere. Uh Yeah, well. maybe you 21 22, we're all going to be excited to go somewhere. Travel's going to be a little more fun. Travel's going to be a whole different thing, but maybe you uh make it so that, you know what, as your present in whenever we get back to to traveling, we're going to take that money and we're going to go wherever it is that you want to go. I don't I don't know, depending on where you want, maybe you drive up the coast if you're here in California. Um you know, you you turn it into an experience, something that isn't a thing but will create that memory. And you can also like kill two birds with one stone, right? You're talking about the idea that you if if you're going to have a vacation further in the year, you can use that as a gift like for the whole family, right? Oh, we get to go to Mexico or we get to go to Hawaii or we get to go uh to the Grand Canyon and that's like a gift for them to open, right? And it's so you were going to go do it anyway, little do they know, but here it is as as a gift. So, that's really really like a good idea. And we do have a puppy on the gift here. Uh that is a very popular uh purchase that people are doing. Just this is a sign of if you're going to get a puppy, the adoption fee for the puppy or buying the puppy at

18:00isn't the last money you'll spend on it. And that would be the cheapest thing that you do, right. Pets, I'm telling you, they're extraordinarily expensive. So think about the long-term effects uh that that you know those puppies are cute and a lot of people in fact I've had like six or seven friends through COVID that swear they would never have an animal in their family, let alone a dog, and they all have puppies now or have rescued dogs. In fact, you go into a rescue or you see a dog or cat or something up for adoption and they're gone like that. Uh so Oh, my family's been over me, my my kids, my my wife, they want one bad. So you know I've started doing research months ago for hopefully getting a dog sometime later next year uh because I like to over research things like that. And every time you see a puppy pop up at a shelter, you go in and look for it a few days later, that puppy's gone. Uh which is a good thing that they're being adopted, but but it also is remember the long-term effects of that potential experience. Without question. You know one thing that one thing that actually we we all do every year and and the US Postal Service and shipping, especially in 2020 I would imagine since we're probably not going to be traveling as much, think about the cost of shipping too. So if if you're going to give a gift uh that is a little bit larger in nature um and not only getting it out in time and planning ahead to making sure that it gets there in time, you definitely have to think about the total expense uh between the gift and the shipping uh and getting it there because that can add up really really quickly uh whether you go UPS or FedEx uh or if you want to chance uh USPS. Uh you have to take that into consideration. Yeah, shipping costs um and then shipping delays that uh appear to be or they happen every year already during the holidays, so I would imagine that 2020 is just going to amplify that. Right. Exacerbate that by far. All right, so we have come to the questions and ideas pages. If you have a great holiday idea um that we didn't go over, uh we'd love to hear it. Uh and if you have any questions, we'd love to do our best to answer them as well. Absolutely. Pull my chat here. It's going to be very interesting to see uh we were looking at holidays, we were thinking about traveling to visit our our family back east and we're uh and that was before numbers really went up. Uh but again, plane tickets it was really really cheap earlier on in the year, but during the holidays, both Thanksgiving and and Christmas

21:00the holiday season, man, those prices have gone way back up again and we decided we just we can't do it. We'd love to, but uh those those those costs for travel uh this time of year are apparently have not been affected by COVID very much. It'll be interesting to see uh if a lot of reservations have been canceled or postponed. Yeah, we definitely normally would have included travel, but you know, given that less and less people are be traveling uh this year, we we left it off, but definitely want to go ahead and plan that out early and calculate that added expense. So, we got a good uh question from uh from someone and she says, what gifts should I get for my four-year-old little girl um and how much should I spend? And the the great question uh for one, what are the thing you know, let me ask you something, what are the kind of things that she really loves? But not only that, what do you feel in in all honesty you want to spend um because really that's going to be determined on what is your budget? How much money do you have coming in? How much room do you have to what you're already spending in outgoing bills? And with a four-year-old, you know, they're still pretty young. A lot of things that you could give them uh can be pretty inexpensive uh that they would still love. Uh and it could be uh you know, whether it might be a doll or it could be um even uh arts and crafts that she can um create, like puzzles and creating bows. I know that when my daughter was four, my wife got my daughter uh we talked about this a lot, but it was super it was really inexpensive, just some ribbon and they did they learned taught each other and played with each other on how to make bows um and they made pretty bows for their hair, they made pretty bows for the wrapping for next year's wrapping paper, and she remembered the next year that she had made bows and we used those for gifts for her uncles and her brother. So, those can be things that could be really really fun. Yeah, and someone asked it kind of like as a recap, that was one of them do it yourself, you know, making the list and and uh sticking to that list and and Yeah, I mean it really it depends on the personality of your child too, right? I mean, if you would ask my son to do arts and crafts, he'd have looked cross-eyed at me, but you do something like with my daughter and she is all over it. I mean, she is all about decorating the house, she's all about creating cards for people. In fact, this year's Christmas cards, we didn't even go out, we didn't do the family photos this year. We just for whatever reason, we couldn't get ourselves together with it and my daughter ended up painting something and we took a picture of that and that's our holiday card this year and ends up being really inexpensive. That's cool and it's unique. Yeah, for sure. Yeah, it's not it's not a you're not going to find it at a Hallmark, I mean, unless she's got to deal with Hallmark, which would be Um Another another great

24:00question is it bad to go into debt for Christmas presents um or have some charges on your credit card and the the the answer as a financial professional would be absolutely I mean there's you really you don't have no idea how many people we meet with in January right that have that credit card hangover uh because it it got inflated because again we got that emotional we got wrapped up in the emotional part of of the season which is really hard not to do um but it's it never a great idea because it's bleeding you know you might look back and you go gosh that was great but at the end and you get into January and you get into February in the new year you want to be looking towards the next holidays right and thinking about putting yourself together not paying for the last holiday uh with and and that can really kind of it's it's fun and it is a tough cycle because as excited as you get about the holidays coming you feel just as you can feel just as bad towards the holidays after because you're paying back it's kind of like not really being excited about that vacation afterwards if you're paying it off for the next year you want to try to avoid that and remember it may be hard but the more we plan out for anything just like our regular budget during the year just like we talk about saving for things and going forward with uh what we want to accomplish in our goals you can set the holidays as being goals that you want to create a certain holiday and you want to have a certain holiday for your kids and family plan ahead for it and that's going to help that's going to alleviate stress that's going to avoid debt you're going to put money aside for those things that's really going to help yeah and then we have some ideas for some extra good holiday gifts that you can give that are budget friendly uh someone mentioned holiday cookies they're a budget friendly way to spread some holiday cheer I'd be happy if I got some cookies so yeah I would imagine that and you can and especially if it's something you like to do you already like to bake cookies you already make them anyways you can give them as gifts again we so we are doing that this year my daughter loves found out she just loves to bake uh and so so many of our friends and family are getting that and it's really you don't nobody thinks of that as the cheap way out nobody they think of how sweet it is that they took the time to make something for us and included us in the holidays and that's really what you know it's cliché and it's cute but it is absolutely uh the the thought and and people appreciate that so much yeah I I agree and and and you get that like oh wow they took the time to make something for me and then it adds an extra level of uh you know oh that was cool think about the time you get to spend with your loved ones when you're doing it think about the time you're spending in the kitchen making it right and you you're going to remember that time forever more than you're going to

27:00for the actual cookies. I hope my kids don't want to bake cookies because I am not good at baking. Um. You could give that to Sarah. Actually, I could, yeah. I I love cooking. Baking, no, because you have to actually follow the recipes or you mess things up. Um. You have to Yeah, that's tougher. Yeah, I don't do well with those. And we got another budget tip. Uh, only buy gifts for the kids. You know, skip out on buying gifts for the adults. This is a great one. Um, you know, just discuss it ahead of time. You know, reach out to, you know, your your circle, your bubble, or whoever you're going to do holidays with and just kind of, hey, you know, maybe we skip gifts. Um. And then we go We've done that for years, my wife and I. I mean, we we have little like every year my wife gives me because I don't like to wear pajama bottoms, so she gives me holiday pajama bottoms from Old Navy, right? Those We're not breaking the bank there, but every year I go, oh, that And they're comfortable. Um, socks, things that I don't like to buy, and and it becomes kind of a a fun little go-between where we we get each other things that we would normally need that we have to buy on a regular basis, and we put a bow on it. And it's And it's fun to see with what we come up with. You can really be pretty creative uh with with things like socks and those kinds of things. Yeah, and if it's something they were already going to You know, if you're buying something for your significant other and you know that's something they were going to buy anyways, you're not really spending any money that you don't need because it was going to be spent anyways. It's just you taking the initiative to go out and buy it for them and avoid them the hassle of going and buying it later. Absolutely. And Jenny, Jen, you had a great idea. You you mentioned the Secret Santa. Uh, we do that as well with extended family. I hadn't thought of doing that uh within just my, you know, our our four uh family right here, but that's a great idea as well. Yeah, and don't buy uh expensive presents for your pets. Um. If you buy them presents, you should. You should buy your pets presents. No, avoid the presents for the kids or for the for the dog or cat. But maybe don't go breaking the bank because honestly, if we have a dog, sometimes you get them that uh that uh last holiday, you know, the chew toy from last holiday at the PetSmart at the checkout that are like 70% off, 80% off, and they love that just as much as if you get them the current holiday one. So if you buy them a Halloween pumpkin, they're going to love it as much as the Christmas tree, and it's going to cost you a lot less. You know, it's really funny. My kids found this really awesome stick last year and gave that to our dog, and the dog still plays with that stick. There you go. Put a bow on it. It's a present, and the dog And the And the animal The The pet doesn't know any different. Maybe a treat. Maybe a treat. Maybe Maybe a food treat. Yeah, there you go. I think that's all the questions. Are there any other questions anybody else might have even outside of the holiday budgeting? We'd be happy to answer any of those that we can.

30:00As someone mentioned again, yes, like family pictures. Yeah, and you you know, and I I forgive me my friends who are professional photographers, but uh you can get pretty good holiday photos now taking them on our own. Um you can get by with those. Uh we don't even, you know, we used to do them every year. We haven't done them every year. We do them every couple years uh professionally. Uh but for the most part, you can get a couple some good ones taken just with our the way the phones are now. It's true. And you're right. I hope your your Great question here I got from somebody filled before we sign off. How much should I save per month to prepare for the next holidays? Uh again, you want to look at what your budget is. Yeah. A great idea is to say what can we live on? It's kind of like paying yourself first. That savings account that you're that you're putting in maybe $25 $50 and have it taken out of your bank account or have it taken out of your check uh once a month and have it put into a savings account or something where you can even create another uh we've had friends and I actually we we have a holiday savings account that we created. We have four or five savings accounts that we create specifically for different things. Uh one being a vacation. We have a holiday bank account so you can see exactly how much you're putting in every month and you can have your office, your HR department when it comes to the uh your paychecks can put a certain amount, a dollar amount into each individual account so you can almost forget how much you're putting away there every month uh and and you're and you can live on the rest every year. Instead of waiting to save at the end, think about saving at the beginning. But again, it depends on that budget. Get together here in January, even do it now and maybe think about for next year. What do you want to say? What do you want to do for next year? Is it a vacation you're thinking about saving for? Is it uh your son or daughter has been wanting something for a long time and you're you're thinking, okay, it's they they've done really good in school and I'm going to really seeing is going to go overboard this year. If you can afford $25 a paycheck, put $25 a paycheck away. Yeah, you know. If you can afford $10, put $10 away. Doing budgets with with people, we I've, you know, sometimes um you mentioned like $50 and someone already sitting there thinking, well, that's a lot of money. But if you're going to travel, if you have a large family, if you're going to spend $600 in the holidays of added expenses between gifts, travel, that kind of Food. That's the same as $50 a month. Right. It's like you've now spread it out throughout the course of the whole year as opposed to trying to figure out how you're going to pay it in December or putting it on a card and then figuring it out. And yeah, exactly having the $600 on your credit card balance. Right. Right. Absolutely. That's a really good idea. And if anybody wants to discuss these things, if anybody needs their budget, take if they need their finances looked at or or if they just want help with ideas, uh

33:00to just watch these swim lives even though we love you doing it. Um you can give us a call. Uh you can you can contact us and we can go through the budget and set a course help help set a course for you uh into into for the holidays of 2021. Yeah and we also have our podcast and we mentioned like pets and that kind of thing uh where some episodes we've done full hour or so episodes on the added cost of adopting a a pet or a whole bunch of different topics regarding personal finances. So if you're a podcaster you like listen to podcasts or you just want to do a little bit more learning some of these might apply to you some of them won't but feel free to check them out anywhere you get your favorite podcasts. Absolutely. And finally uh we'll be back December 9th. Uh stick with us uh that on uh December 9th 1:00 p.m. Eastern 10:00 a.m. Pacific here the next will be creating a game plan to pay off debt. Um so we can help you with that. Perfect. All right thank you everybody for uh joining us. Absolutely thanks everyone. Thanks for all the great questions.

Machine-generated from the audio; names and numbers may contain errors. Timestamps mark 3-minute sections.

0:00Yes, going. Okay, we are All right, we are live. All right. Hello everybody. Welcome to Smart With Your Money Live. Happy December and happy holidays everyone. My name is Chase Peckham. I am the director of community outreach and education at the San Diego Financial Literacy Center, the education arm of DebtWave Credit Counseling. Today's topic, creating a game plan for paying off debt. And as usual, I am joined by my compatriot Felipe Arevalo, who is the uh coordinator of uh education at the San Diego Financial Literacy Center and community outreach. Felipe, happy holidays, buddy. Happy holidays. We are right at the end of 2020. We are, we are. And normally this this creating a game plan for paying off debt is something that we would talk about uh at well, a lot in January. Uh and yet we decided that maybe this is something that we should all think about a little bit and start looking at as we head into the new year so we're not just absolutely steamrolled by it when we start seeing the credit card bills when they come around mid-January or into February. Yeah, let's get ahead of the Blue Monday. Yeah, and and before we go, I I just want to do a little housekeeping. Uh we want you to interact. We would love to have you ask your questions in the chat. You will notice that you could ask myself or Felipe. You'll have one of us to ask those questions. I'd like to also welcome those on Facebook. Please ask questions if you're if you're live on Facebook. Join us. Go ahead, put it in there, ask your questions, and we will try to get to them. And we will definitely definitely uh have about 10 minutes after the presentation or or the discussion uh for questions and answers uh either a part of this topic or even any others that we might be able to uh answer at that time. So without further ado, Felipe, let's get this going. All right, let's get started. Um today we're going to go over the creating a game plan for debt. And if it clicks through to the next one, step number one is it seems it may seem obvious, but it's one of the most important things is realize that you have debt. Uh realize that the debt has become uh an issue and that it becomes something that you want to address. And even if it isn't an quote unquote issue right now, it's something to take a look at because if we ignore it, if it's just something that we say all the time that oh well, everybody's got a little credit card debt, the thing is is true, but it it seems to snowball. It it tends to build up over time and all of a sudden we go, oh my gosh, my minimum payments are what?

3:00Yeah, if the debt's there, it's not going to go away by itself without you making any changes. So, it's important to realize, you know, it's there and I I need to address it. Exactly. There's no doubt. So, if you share your finances with a significant other um or or a family, uh you've got to talk to your loved ones. It it it it it's a team effort and and if one person uh is the only one who's aware of it and making the effort to change something, it's not going to work. Phil, I'm telling you, if if you spent $5,000 uh a month on donuts and you were my significant other, I don't think I'd be very happy with you. No, it would really be some kind of an expense there. And that really is the gig, right? We talk about it a lot um and when we do our our other workshops, we talk about the most important thing you can do is be honest with your whoever you're sharing your budget with or who you're sharing your household expenses with. Uh and the reason for this is you want to be on the same page. And if you think about it, in in as crazy as this sounds, but if you think of your household like a business, like what is what is the uh goal of a business? I want to make a profit. Make a profit. Your Your goal is to turn a profit every month, right? You want to make more money for your business than you are spending and that's exactly what we want to do with our households. And if you two are not on the same page, if the CEO and the CFO and the other top management and your and your middle managers are not on the same page with things, then the business isn't going to run very efficiently and eventually the business is going to go out of business. So, we want to keep our household in business and we want a profit every month. And that includes even those months where, you know, we're in the holidays right now and spending typically for people's going to be a little bit higher. So, being on the same page is incredibly important. Yeah, you don't want to be If one person's really cutting back and trying to be better with their money and the other person's continuing to spend or even making up for the other person's lack of spending, uh it may one person may start to feel like maybe they're just spinning their wheels and not making any progress. So, it's an important conversation to have and then to continue to have as you move on. And then after you've both decided and you've come to the realization, it's time to calculate how much debt you have. Yeah, and and one thing I'd like to bring up uh right before we get there is if you're not, if you're in a situation where you don't have a family and and you are on your own, look in that mirror and have a discussion with it, right? That That's important. You need to be honest with yourself and how you're spending your money and that leads directly into calculating it, which this is the biggest leap, right? This is what we found in the 12 years or 11 11 and 12 years that I've been doing this, this is the most difficult part for most people is being honest and taking a nosedive looking at everything and how much debt you have. And even though that's scary and it's

6:00you just it makes you nervous and you may want to oh god I really just don't want to see it. This will be the best thing you ever do for yourself. Yeah, you definitely want to know and and adding it up and knowing how much you owe is not going to make it any more debt. It's not going to create more debt for you. Uh it's often times you know about how much debt do you have and and people say oh so much I don't even want to know. You do want to know because you want to have that starting point. You want to have um you know how can you come up with a plan on how to pay back debt if you don't even know how much debt you have. If you have credit cards at multiple banks all over Yeah. you know if you have one credit card it makes it easier. You look at your balance and you see how much you owe. But if you have multiple credit cards like so many people do um it may not be as obvious how much debt you actually have. For sure absolutely and and we talk about the metaphor that we use all the time is you're planning on a vacation or you're planning to go somewhere a trip uh whether it be you know you're trying to set out a road map for yourself. It's hard to set a course when you don't know where you start right? So if you just closed your eyes and you're like I got to get to New York but you don't know where you're starting that's going to be a hard road to navigate. Yeah. Yeah, you definitely want to know um and that'll help you make the decisions going forward. You may have not doesn't have an often but you may have less debt than you think um or usually the other side where you end up wow did I really owe that much. But at least you know now and and then you're on the road of doing something about it. Correct. And then you have uh you have to revisit your budget. If you don't have a budget you've got a create a budget. Uh we can do a whole presentation on budgeting you know and and this is our most common presentation that we do out in the community when when we get to go out in the community um because it's it's so important as so many other things and paying off debt is no different. Um I think people get a little bit nauseated when they hear you and I talk because every it seems like every workshop we do the budget comes up somewhere. The fact is that we can't do any of these finances. We can't do investing. We can't do any of the things that we want to do if we don't have that. That budget needs to be your road map so to speak and if you don't have that then it's very difficult to do all the other things that you want to do. Right. Yeah, that's your foundation when it comes to personal finances. You can't continue to build if you don't have that solid foundation to build upon. Uh little things you want to you know take a look at is um or parts of a budget briefly. You can go back and watch the budgeting one if you'd like but um you know identify your income. How much money do you have to spend? Track your expenses. Track your expenses. That's a really big one especially these day like this month right or in November and

9:00December. There's a lot There tends to be a lot more spending. There's those extra spending, but but also those everyday things that you say it's just $2, it's just four bucks. You know, that adds up with time. Um you know, don't forget to add the periodic expenses. Maybe you pay your insurance every quarter or every six months. Uh and those tend to sneak up on people if you don't add it to a budget. When we do budgets with people, you know, sometimes we say how much do you get for gifts? And they'll say, well, not in December, but in other months they say, um zero. And it's like maybe this month you didn't. But if you do, you want to account for that year round. Right. Um and then revisit your budget often. Someone asked in the question As we talked about last week. Yeah, and I'm just going to mention it because we're in the middle of it. Do you recommend Mint as a tracking tool for your budget? I do. Um especially because you use if you use different cards, whether they be debit cards or credit cards, it just kind of at different places, it kind of brings it all into one place and it makes it nice and neat. Without question. There are a lot of great budgeting apps out there and a lot of great softwares, but Mint really is like the grandfather of all of them and has really evolved over time. It's free. There's a lot of other ones out there that do all these kinds of things for you that are, you know, will cost you. This Mint, you know, it's fantastic and it really is good. It alerts you to all kinds of stuff. I got alerted the other day that I got a And believe it or not, Felipe, I forgot to pay a bill and I was two days late uh because I was Anyway, I'm never late with a payment, but I was. It happens. It's 2020. Yep, and Mint alerted me that I had a a fee. So I went okay, and then I called my credit card company and I said, hey, I am never late. And they said, no problem, Mr. Peckham. We're going to take that right off. We're sorry. We know that you're a great customer and you never late. So it never hurts to call. Never hurts to call. I mean the worst they could do is tell you no. Right. Right. And they won't very often unless you're like late every month. Unless you try again next month, then they'll probably tell you no. Right. Um so, you know, and revisit your budget. The cool thing about Mint and technology in general, uh you get to carry your budget around with you at all times. Yeah. You all can probably reach out and grab your phone right now, meaning you could probably reach out and grab your budget if you have it in an app or or something along those lines. And what's great about that too is both if if again, we're going to get back to if you're in a family atmosphere or you're in a household where you have a significant other that's sharing uh your finances, you can both have the same work from the same budget and that's really important. A lot of people don't want to do that because they don't necessarily want their spouse or their significant other to know where they're spending their money, but that's a whole different thing to talk about. Absolutely, me too. I like the extra accountability. Um you know, I joke. I'm not scared of my wife, but if I go to GameStop and swipe my card, I know she's getting an email and I know I'm going to have to hear about it later, which is

12:00fair. Um so, you know, I like the the extra level of accountability. Right. So, spend cash when you buy your your significant other Oh yeah, the present. You're buying them a present this year. Use cash. That's the hardest thing with this technology is being able to surprise your significant other with a gift. You get alerts for everything. Yeah. Oh, I know. I tried to surprise her with a Sephora gift card for for the holidays and I used her rewards points, so she got an email before I got home. She knew I'd purchased it. Uh that was a brain fart on my point. Um but now you have a budget. You know how much money you have to spend. You can account for all your spending. It is important that with this new budget in hand, you stop using your credit cards. I'm just getting myself in all kinds of trouble with my wife doing that. Your wife's going to love that. Yeah, I know. So, stop using your your your credit cards. Put them away. Cut them if you must. Um you know, just store them where you don't carry them around with you. You shouldn't need them. If you've established a budget where where it covers all your expenses, you shouldn't need your credit cards anymore because you have money set aside for all the things you need to purchase. And what we mean by that is is discretionary use of your credit cards, right? That means going out and just throwing it down when you're at a store. If if you have something like let's say a uh a credit card or a uh phone bill that goes directly to your credit card and it's $89, well, when you're figuring out how to pay it back, you have to include that monthly payment. But it's the discretionary spending on your credit card, so put them away. Uh just don't you don't use them, freeze them, cut them up, do whatever you can, but it's very very very hard to pay back debt if you are using them. Yeah, it's just that accumulating extra debt and then it just kind of throw your whole plan out of uh out of the loop. So, you you've got to stop uh using the credit cards when you do that. And then you have your budget, you've stopped accumulating more debt, Without question. select your payoff method. What method are you going to use to pay back your debt? And some of them might work together or sometimes it's the same, but uh here are some of the ones we wanted to highlight today. Uh the first one is you might have heard of it, the snowball method. Basically, you take your you you organize your cards and you find out what your minimum payments are for everything. You make sure everyone gets at least the minimum payment. And then everything else you have extra after you set up your budget that you have set aside for paying off your debt, you throw at the account with the lowest balance. Um Right, so you know when you add them up, it's one payment. So, you are not one payment, but it's one amount that you're spending every single month and you're going to stick with that until everything's paid off. Once one credit card falls off, the lowest balance, you take what you were spending on that one and put it on the next lowest balance. And pretty soon it just like like this big avalanche out here, it keeps picking up a bunch of snow and

15:00just keeps getting bigger and bigger and so you're paying it off faster and faster and faster. It's a really good way because we get to watch for those of you who just get to you like what we all we like to see success right? So if you like to pat yourself on the back and you get to see uh yourself making a difference then this is the method for you. Absolutely and and if you have many many credit cards this could be a way to start reducing the amount of payments that you're making faster because you start paying off some of these lower balances that's one less payment you have to worry about making on time every single month. Yes sir. Um and then we have your debt avalanche same thing you make sure everyone gets at least their minimum payment but then all the extra amount I know you got the snow it's not because it's winter this is the same analogy as you're around um and and you you have that all that extra amount goes towards the account with the highest APR um so what that'll do is in you know nickels and dimes you're saving the most money because that's your most expensive debt uh that card may also be the one with the highest balance in some cases so you know that may delay you paying off that first card but then as things start to fall off and you start paying things off you gain a lot more momentum by the time you get to these lower balance cards potentially you could be paying them off a lot faster. Right so if you're the person that's you know really dedicated to it and and you're a mathematical person and and every cent counts this is this I mean efficient wise this is the way it's going to work best for you you're going to save more money but again and maybe it works out in your favor right maybe your lowest balance does have the highest interest rate and so you're doing both the avalanche and the snowball at the same time and that's awesome at least for a few of them right but if if you're really really good at spreadsheets and or you know you're following that budget and looking at that and making sure and you can handle that budget or that credit card being there for a while then you're probably going to save more money but you just you may not see the success and you could get frustrated and that's why a lot of people quit and and that's why we we really recommend the snowball because you do get to see more success more often. Yeah and then another option is to consolidate your debts with a new line of credit which can be difficult especially if you have a lot of debt you may not be able to go out and get a new line of credit that offers you better interest rates than what you have so it's not for everyone and and the problem is and take this from someone who tried it in college and failed um you you may pay off these credit cards with a new consolidated whether it be loan or balance transfer offer or something like that but then if you don't change the habit that got you into debt to begin with you start to say well I'll just use this card this month and I'll pay it off and then you have that new debt and then you end up with double the debt in and you know that promotional APR on that balance transfer might expire before you get a chance to pay it off.

18:00and now your APR is even higher than it was before. It can be very tricky. You really want to be careful with this one. Yeah, without question. I don't We don't really recommend that one. No, it it it's going to be a tough one. Um and then you have your But it's popular, so we want to make sure that we we we highlighted it. And then you have your your your debt management plan. And this is for someone who maybe has a lot of credit card debt at high interest rates. You know, we've seen them where average APR in the mid-20s with a lot of store cards or things like that. Uh you know, those high APR cards. On a debt management plan, cards get paid off uh in three to five years due to the fact that it's a fixed monthly payment, much like the snowball and the debt avalanche. And the benefit usually comes from reduced APR. So you may get your APR down from 29%, 24% into the single digits sometimes. And that right there makes it so that you're not spinning your wheels just paying finance charges every single month. Um and it makes it one payment where you don't have to make a whole bunch of payments. Yeah. Oh, that's it. One payment. That's that's a good deal. And and again, right, it it's a it's a great plan and it and it really kind of takes the pressure off you, right? You just You just make sure that you make the payment every month and you're kind of done with it and and the plan takes care of itself and you know you're going to be out of debt within a certain period of time if you keep it up. And you know, regardless of what method you pick, here here's a big key. You've got to stick with it. Uh you've got to make sure that you It's not going to happen overnight with any of these methods. And and and you you've got to stick to it, stay disciplined, stay on your budget, and make sure that you continue to do the things that you need to do to pay it off whichever way you decide to handle it. Um it it's going to be key. And and this could mean, you know, revisiting your budget uh with your significant other, with your family, and and and checking to see if you're on progress. Absolutely. I mean, the thing to look at it and the reason we bring up credit cards is I mean, if you have a higher car payment or you have things like that, uh other debts, um you got to look at the at the interest that you're paying on those things and take into consideration, you know, how important Obviously, a vehicle's important. You need to get around, right? You have to get to your job in normal times. Um and and with credit card debt, it typically It's the worst loan you can get. I mean, typically a new credit card is anywhere from 15 to 18%. Um so it's really important that you you take a look at all the debts you have because you're right, debt is debt. But there are some like a like a mortgage. Um there are some that will build in value for you. Right. Student loan you're getting a career. Student loan. You can get lower APR. You know, I've heard people say I'm really attacking my student loan uh with a lot of extra money, but you have credit card debt that's 20% higher than your student loan. You should be trying to take care of that uh that credit card debt first and then start attacking some of this other loan. Right. Yes. Um Without question. So, you know, you definitely want to

21:00pay attention to that. And then celebrate and stay debt free. Once you pay off your credit card debt, uh you really want to make sure that you stay on your budget. Uh and by celebrate, I don't mean go and get a new credit card and go on a trip you can't afford. But stay on your budget. Start saving some of that money that you used and then stay debt free. Uh you you you probably at this point realize at this point in the process how hard it is to get out of debt. It's a lot easier to just stay out of it in the future. Yep. And if you're interested uh in a credit counseling session, we do have our credit coach. Uh it doesn't you don't have to have debt to talk to her. Uh maybe you just have credit questions uh or anything like that. Yeah, just want to build your credit. Just want to build your credit score. Um so uh at that point, we would be happy to answer any questions uh that you have. Drop them in the chat and uh let us know if you have any questions. Thank you for stopping by up until this point. Hopefully, you have some questions and you stick around. That would be good. And happy holidays to everybody. Uh it's going to be different this year as 2020 has been. Any other questions out there about any other topics too? I mean we can holiday spending, um credit score, credit questions. It doesn't have to be about just today's topic. We can answer anything you'd like. How do debt management programs affect your credit score? So a debt management program in itself doesn't report to the credit bureaus in any way. The the the credit counseling company. Um so so the the actual it doesn't go into the reporting. Where it can positively uh affect your score is you're going to be paying down your debt uh faster. And if you make your payments on time, then you also get credit for that timely monthly payment history. One of the benefits to to a debt management plan is you do have to you do get that APR reduction. In return though, the creditors will um look to have you in return you'll have to close your accounts. So that initial closing of the accounts uh you know could have an effect on your score. How much? It really depends. And it really depends. Yeah. There's no direct answer. But we do know over time that that we have seen that for the majority of people that over a period of time their credit score goes right back up and actually builds it. Um but the way credit works is really crazy. If you have really great credit, um one or two things that you do are going to have a lot more of an effect than if you're kind of in the middle of the road. Uh so I mean I missed one payment and if I would have gone one

24:00time my credit scores I think the last time I looked it was 797 um it would have had probably deeper effect if that would have go to the credit bureaus. We did do recently I know on the next slide we're going to mention we do have a podcast uh it's called the talk wealth to me podcast we recently did a whole episode on the debt management plan uh if you're interested in in in that and it's like a 30-minute episode or something like that uh with more of the specifics on that uh if if you're interested it's wherever you find your favorite podcasts I like to say your other favorite podcasts because I like to think that we're a favorite. Oh that's good. Any other questions? All right. Well if there aren't and it seems like everybody's uh had all their questions answered uh asked oh what is your podcast it is the talk wealth to me podcast um there you go you can find it really anywhere you get podcasts uh thank you to the apple podcast listeners because majority of our listeners come from there um thank you to all those who listen. Yeah. We have a we have a good time doing it and we learn so much as well. Well with that I think if there are no other questions I will say we're going to take a little break from the talk wealth to me uh we possibly might come on for a fun one coming up but for the most part we know that we will be back January 6th 1:00 p.m. Eastern 10 Pacific 1:00 p.m. Eastern 10 Pacific and uh 2021 we will have our fingers crossed that we are on the road to a much different year a much much more back to normal year um but I as we all know it's going to it's kind of like paying back debt this looks like this whole thing's going to take its time but we're on the road. So thank you everybody for joining us today. Thank you everybody thanks for joining us and uh we'll be happy to be back in 2021. To all those on Facebook thank you. Facebook thank you.

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0:00Good. Okay. Just about there and there we go. And we are live on Facebook as well. Hello everybody and welcome to Smart With Your Money Live. I am Chase Peckham. I am the director of community outreach at the San Diego Financial Literacy Center, the education arm of DebtWave Credit Counseling. And as we are every other week with Smart With Our Money Live, we are joined by Felipe Arevalo. He is the coordinator for community outreach at the San Diego Financial Literacy Center. And this week we're going to talk about how to establish smart goals. And Phil, the last swim live we had, we we did cover this a little bit, but we're going to go into great depth today. Yeah, we started covering it a little a couple weeks ago and hopefully everyone was able to join us. And if you missed it, you can go back, check it out on YouTube, Instagram, Facebook, wherever you watch your videos. And but today we're going to go more in depth on how to turn your money goals into smart goals. And you may have heard of them in other places in education. Smart goals are very popular. Uh but but today we're going to concentrate on those on the money side of things. And if you can create smart goals for other things, you know, why not create them for for personal finances as well? It's funny, we covered this on the podcast that's going to be coming out this Friday talking about how many times we've probably heard about smart goals through school at different portions or different times in our lives, whether it be in junior high, middle school, high school, and even in college. Depending on the course, somebody has talked about smart goals and that is something that we talk about in our budgeting workshops quite a bit because you know, people poo-poo them, but they but they work. Right. There's a reason they've been around for so long. We didn't invent this. We did not invent these, right? Although we do put our own little twist on it. We put our twist on it. You might see some a little bit different during the presentation. But basically, smart is an acronym. It stands for specific, measurable, achievable, realistic, and timely. That's the smart goal acronym. So, you know, but it fits in very nicely. It's a nice little acronym. Yeah, because one of the biggest difficulties that people have with starting out something new, especially when it's coming up as a budget or it's paying off debt, it's coming up with what is it that they want to do instead of these grandio

3:00giant uh I'm going to pay off all my debt in a year. Can you really do that? And if you find early on that you're not able to accomplish that, you quit pretty quick. For sure. There's a lot of components that uh allow you to make these goals work. And and each slide from here on on is going to touch on each individual letter uh you know separately and and we'll kind of run through it and explain it and we'll give some examples uh for you as well. So I love this, Phil. You are the king of the SMART goal. I do like SMART goals. I I uh I blame my brother when he was in college. He made me proofread some long 20-page paper on goal setting theory uh because he would obviously find no one else to proofread it. Um so he got stuck with me. Uh so I blame my brother for this one. Uh but the first one is specific. You make your goal specific. Um you know what is it that you're trying to accomplish? What you know it it's it's difficult to concentrate your efforts on something when you say, you know, I want to do better with money. What does that entail? What does that That's a That's pretty broad. Right. That can mean anything. You know your definition of being good with money is is probably different than mine, is different than Chase's, is different than everyone else's. Uh so so make your goal specific. You know what is it that you're trying to accomplish? So let's say today uh specifically uh for our swim live that uh we're going to talk about saving money because that's really one of the biggest things that we hear from people when it comes to New Year's resolutions on a even on a just a regular basis that saving money tends to be the most difficult thing. Correct. So let's say for for my example I have here uh let say you want to save money and then how do we make that specific? Well maybe you want to save Is it a long-term goal? Is it a short-term goal? And and and then you go from there. For a long-term goal maybe you want to save $20,000 in 10 years. Now $20,000 is an intimidating amount of money to say I put that in a savings account. Um but then you break down the goals uh and and this will touch on with with other letters coming up here. But maybe you make your your initial short-term goal that you want to save $2,000 this year. And and what you've done there is is your goal is specific. You have a deadline by the end of the year and you have a specific amount of money I want to save x amount of dollars. So whatever your goal is, you know, I want to pay off $10,000 worth of credit card debt in 5 years. I want to, you know, pay off the last $2,000 on my credit cards um you know by the end of the year.

6:00make them specific. And with money, you know, there's that added with money goals, there's an added component. There's usually a price tag on your goal. So it allows for that portion of it to be very specific. You need X amount of dollars to accomplish XYZ. Right. Right. So which kind of brings us to the next one is to make sure that your goals are measurable. And they kind of go hand in hand in that in money goals, the easiest way to measure whether or not you've accomplished something is do you have enough money to make the purchase? Do you have enough money saved up? Do you have that dollar amount that you require for whatever it is your financial goal happens to be? Yeah, you can't say I want to save $10,000 if there's not $10,000 to save. Right. And it's something, you know, I I mention it all the time when when we do presentations at at high schools and uh at colleges that you know, you know, I ask the students, do you have before I start, do you have personal finance goals? Do you have money goals? And a lot of them, you you get some hands, but then a lot of them don't raise their hands. So I like to follow up with, you know, do you have something you want to buy? And everyone has something they want to buy, whether it's today, tomorrow, uh the next day, or or in the long term. And then I remind them that so you do have some personal finance, some money goals. You just have never taken the time to sit there and and put it together. Because everything you're going to buy requires you to have a measurable amount of money. Exactly. Which kind of brings us to the next one. Is the goal achievable? Um now your personal finance goals in theory to to to better your personal finances should be challenging. Um you don't want to make them too easy. It's good to, you know, give yourself a layup here and there, of course. But uh is it something that you can achieve? Is it something that's within your means? Exactly. And this is we go back to talking about not biting off more than you can chew, right? And thinking about one, so baby steps. And if you think about like walking for instance, right? Or or let's let's put it into uh I want to lose 30 lb uh in 2 months. That might be not really achievable, right? And probably not safe. But you mentioned it last week that if you just start taking a walk every day and maybe it's a day. And then the next couple weeks you're taking 20-minute walks. And soon enough in the next year or two maybe you're doing a 5K and then a 10K and so on and so forth. And it's the same kind of thing uh with with money is saying I want to save, but what is achievable? So let's say if you wanted to save what, $2,000 in a year, right? You just want to put that away because you've never done that. What is it going

9:00take to do that. So if you look at it, I think if you most people are what it's a month, let's just say monthly. Yeah, you think monthly, that's $166. You know, I know people who pay that much for you know, cable, 500 channels so they could watch the same four channels over and over and over. Um so if you do it on a on a monthly basis, you know, that becomes much more achievable. You break it down weekly, that's $42 a week. Right. Yeah, so it it it You broke up a little bit there. I did. I apologize. The live 2020 now it's 2021 edition. Um I did get a little notice like weak internet connection, but I think I'm back. That's okay. You are back. You're good. Um yeah. So I don't know which part I broke up on, but You didn't go away completely. We did hear you. It just was a little, you know, spotty. Okay, good. Oh, okay. Um you know, so you break down those bigger goals to see if it's something that's achievable. Uh see if it's something that you can with your current financial situation. Maybe you have to make adjustments. Uh but but it's something that can be done, which kind of ties into this one, which is realistic. Um This is the one part of the SMART goal that I never really cared for that much because it's so close to achievable. Correct. Um right. Is it something that's realistic? Well, if you can achieve it, then it's realistic. Then it's realistic. And if you can't achieve it, then it's not realistic. So I started looking around, and again, I didn't invent this next part uh as I didn't invent most of this uh any of this really except for finding the right gifts. But maybe we called our relevant. Make your personal finance goals relevant to you because if they're not relevant to you, what incentive do you have to put in the effort to accomplish them? Right. And so many times people will for especially in money situations are uh stressed out and they are struggling to make ends meet, so they want to pay off everything so fast. And the problem is is that you don't get into debt super fast and you're not going to get out of it super fast. That's why creating these SMART goals is important. And now the relevancy part is figuring out what little part do we want to kick away at first and can we do multiple um parts of that. And so that relevancy really has to do too with if you're a couple sitting down and making sure you guys are on the same page wanting to achieve the same things. Absolutely. Yeah, if if if one of the two decides, you know, I want to uh pay off my credit card debt in the next year or two, let's say year. Um and the other one of the other half of that money equation is thinking, you know, I really just want to have a good time and

12:00try and put 2020 behind us and go on vacations and they have to match and and how much effort is is the individual who doesn't realize or doesn't hasn't bought into the idea of paying off that debt. How much effort are they going to make to be conscious with their spending to cut back here and there? Uh you know if someone gave you one of their goals are you going to put any effort into accomplishing it? The answer is no. It's got to be relevant. It's got to be something you want to accomplish. Otherwise why would you put in any of the other parts of the effort? So I kind of like changing this R uh changing it to relevant uh from realistic because to me if it's achievable then it's realistic. And if it's not achievable it's not realistic. So that R is covered. Let's go with relevant for now and and and and and make sure that your goals are something that you want to accomplish. They're your financial goals, not mine, not anyone else's. So they have to become yours. And and people ask all the time like how do I motivate myself? How do I motivate my significant other, my kids, my parents, whoever they're trying to help with money to be better with their money? And I always default back to what are their financial goals? And I think that the relevancy here plays a big role. You use that to motivate themselves. You know it's hard to motivate someone else but if you can find out what it is that they want to accomplish with money that's the motivation that they're looking for because now it's important to them. Right and it's watching these smart goals become an actual plan and putting it into practice because that's what works out. A goal is a goal which is great but if it's not put into practice then really it's just a well thought out wish, right? It's got to be put in to practice and following these steps is going to help you do that. And that's why we recommend it's it's trying if you want to get start small and then create make it larger as you go because now you're more used to the practice of creating these goals. Right. It's become a habit too. Right. Yeah. So then we go on to the last one T and it is timely. Uh give yourself This is probably the most important I think. Create urgency for yourself. Give yourself a timeline. Give yourself a deadline. When do you want to accomplish this by? You know if you say I want to pay off my credit card debt that's a good goal. You have that debt. You want to pay it off. Good job. You know how much debt you have. That good job. When do you want to accomplish this by? You know so that you can monitor your progress along the way. You know if you have $5,000 worth of credit card debt and you say at the end of the month well I paid down my debt by $10 technically you're moving towards your goal but how long is it going to take to accomplish that goal? Give yourself a deadline uh to create that urgency to you know track your progress. And so many of us are going to say but I'm terrible at math. I don't know how to figure out that equation but the thing is is there are

15:00so many different places online that you can go to to get these payoff calculators that will help you see right in front of you how much and you put in everything from your interest rate to how much you're going to pay back every month and it'll show you exactly how much you're going to need to pay to accomplish the goal that you have set ahead of you. So if it's I want to pay off all that debt in five years, you're going to know that this is what I'm going to have to pay every single month and then of course not add to it. And if on the other side if you're trying to save, it's the same kind of thing and that's actually an easier equation, right? It's I save this much per pay period. So if you're bi-weekly what that's 26 pay periods in a year. Uh I think it's twice two times a year that you get paid three times in a month. A lot of people think that's an extra payment. It's not. It's still it's still averages the same just the month gets a little quirky. Um but you're good you know that if you're going to save $77 uh every pay period that that'll add up to $2,000 or so by the time that you're finished. Right. Yeah, and it's definitely something you can just kind of look at it and and do the math and and say okay break it down depending on your pay schedule. You know military families know first and 15th. They're not getting paid. They're getting paid twice every month. Uh you know teachers get paid once a month and then you might have to watch out for summer depending on your school district where you might only get 11 paychecks or two half paycheck in the summer. However it is that it's worked out in in your school district. Uh working in education that was that was an adjustment. That monthly that monthly payment in my college years that was that was how I got paid once a month. Um and that was when I was not good with my money so it made it very difficult there to stretch it out for a whole month. Uh but make your goals timely and then don't give up. Uh they're your financial goals. You set them for yourself because it was something important to you. It was something you wanted to accomplish. Um so you know don't give up. Are you going to encounter some obstacles along the way? Absolutely. That's just something we that's just life. Uh but you you know if you stumble you get back up and you keep moving forward. You find out what you're going to do to uh change it and to keep making progress towards your goals. Um Teachers are going to know once a month. Right. And again once you start these goals and creating them as you mentioned before they're they're going to be habits eventually and it's something that you're going to be able to just keep going and then building upon it. Uh that $77 may become $100 uh because now you're going man that was easy and we got a lot of money left over. Let's put this much more to it because once you figured out the pattern for yourself and what works best creating those goals and putting them into practice it's going to be so much easier to keep up uh than than trying to do it all at once and and you know because we we as human beings tend to be instant gratification especially in this world of the 24-hour news cycle. We we have information at the Internet is so

18:00asked except for minor and friendly. It it really is. I mean, I just watching my kids who would plays a video game and watches a video at the same time because he can. Last night, my kid uh my my my son was like, oh, how could we how come we have to wait for next week to watch this program? Because he's so used to watching, you know, binge watching a season in a row. My wife and I just laughed and said, man, when we were speaking of friends, you had to wait to the next week. You had to have patience to find out what happened to Phoebe and Joey by the by the next week, right? So the same thing goes with creating these these plans. Once especially that's why I said important. Keep it up. It becomes habit and next thing you know, you you don't even realize that you're you're making the progress you're making. And you can add to it so easily. Right. Yeah, yeah, absolutely. So get out there, make your goals, you monitor, have your goals, maybe take the time to adjust them and turn them into smart goals and see where that goes. See if that helps. See if that uh if you don't have goals or you think you don't have goals, try and think of what you're trying to accomplish with money because chances are you do have some goals. Uh you just haven't thought of them as financial goals in the past and and and doing so can be can be big. Um and if you miss last two weeks ago's presentation, I do recommend you go back and and kind of watch it. It kind of goes hand in hand with with this week. Uh more than happy to take any questions whether it's on here or on Facebook um and and those will be relayed to us. Feel free to And if you feel comfortable and you'd like to you know, you know, speak or talk, you're you're able to do that as well. But uh but if you want, just put those questions in the chat and we will answer them even if it's not directly what we were talking about today. Uh if it's if you have a finance question, personal finance question that's even off this topic a little bit, uh we will do our best to answer it for you in the time allotted. Phil, I have a question for you. Has there been any goals that you've put into practice lately that you can share with us that you that have worked for you? Yeah. Yeah. Um well, I'm trying to lose weight um which in the past has been uh challenging. I've been successful and then otherwise. Uh but this time I'm starting off a little bit slower. Um it's just more a matter of, you know, not doing necessarily a New Year's resolution for for that, but work out twice a week, uh three times a week is what I figured I can start off with. Um and then after a while, it becomes easier and easier as you go. Um you know, on the personal finance things, I'm this year I am not doing groceries more than once a week. Um it's just I've realized through 2020 and COVID that you can in fact only go to the grocery store once a week and I'm like one and a half weeks between grocery trips at the moment. Uh

21:00you just plan it better. It eliminates waste. Uh it keeps me from uh overspending on on those yummy items that I shouldn't be eating anyways, uh frozen foods, chips, that kind of thing, cookies. Um and so make a list, go to the grocery store once, and then not go back. Instead of saying, you know, oh, I went to Sprouts on Monday, I'm going to Costco tomorrow. That was unnecessary enough. Putting that into play 2021 at most once a week. So that really gives you a good idea on what you want to spend or what you're going to spend uh month weekly and then monthly on your groceries, uh which helps your budget, right? I would imagine then by you trying to lose weight, um going to the that that's helping as far as what you're buying. Cuz if you go every other if you go a couple times a week, three times a week, cuz you don't know what you want to eat, you're really good at the beginning of the week, right? And you buy all the vegetables, and then you eat them maybe once or twice. And then by the end of the week, you're like, well, those don't really sound good anymore. So you go to the store some more, and then those vegetables go bad. So if you only go the once a week, you're going to eat them, right? And which which or figure out ways to in uh implement them into your meals, you're saving a bunch of money, especially considering uh the amount of times that you're going. Yeah, for sure. And then and then something that was mentioned in the chat, you know, um so there once you set your goals, um you know, and and you start on this path, and and Chase you mentioned where, you know, maybe you look at it and you're like, I could put in a little bit more extra money. Seeing that progress sometimes will motivate individuals to say, you know what? I'm making I'm making progress now. Maybe I'll go get this side hustle. You know, maybe whatever it is. Maybe um uh you know, maybe I go and I I get um uh an extra part-time job on the weekends. I do Uber or Yeah, my wife did that. And she's very successful PR director. And she went to Rodan and Fields because she liked their product. And now has been selling, you know, doing that for a couple years. And that's she that that's good side money that she she uses for things that she normally wouldn't have bought. And has nothing to do with me. And then you increase You take that increased uh money and then because you're already able to allocate funds, instead of incorporating that if if let's say your goal is to pay off debt, instead of incorporating that into now I have more spending money, maybe for the time being while that debt is there, you incorporate it into I can make this much more progress. Um and and and accomplish your goals even I do live near a fire station, so I apologize for the fire sirens. Um I try to mute myself fast enough. Your audio is so good. I thought that they were out

24:00at my house just so you know. Any other question? I will tell you that there was one thing my wife tried to do this month um and we created goals to do it. Uh even though it didn't work out real well was she was going to have a no spend January. And you want to talk about spitting off more than you can chew. It just wasn't reality and I kept looking at her and and saying how do you why do you want to do this no spend January? I mean obviously there's something that's bothering her and through this COVID she was buying more athleisure wear, right? And and we talked about this on the podcast a little bit. Uh but I instead of doing that especially because my birthday's right in the middle of the month and she was going to do a no spend January. I'm I'm like come on. I I feel like it's a little intentional. That's I think so. I think she's kind of giving me a hint. Um but it ended up just being you know why don't you have it be a no spend athleisure wear January? Sorry Viori. Uh but that sounded a lot less daunting than no spend January on anything because that's just not reality. That was more than she could chew. So creating that game plan of saying you know we just we have everything we need and we're going to set aside to just not do buying something online any kind of clothes online. That was way more doable than just not spending any money um on random things in January. Absolutely. And it makes it so that you can accomplish the goal. You know it makes it so that you can uh and then once you accomplish that goal it encourages you to say you know what I did that. I can do the next one. Um and and and it just kind of can evolve into all of a sudden you're setting up all kinds of goals and then crushing those goals and making sure that you knock them out the park and just start rolling through your goals whether they're short-term ones or long-term ones. Yeah. Figuring out those goals getting together with your family is so important and as our as our says the goals are only as good as the actionable plan that you put into place. And that's the most important and Felipe's going in and out so I think that uh I wasn't sure if it was me or if it was you this It might have been. Oh no well I don't think so. Um but just to let you know we will be back. One or both of us have a Yeah it's it could be both of us. Um but we we are coming up uh a week from Wednesday uh two weeks from today we will be back and we are going to be discussing uh Valentine's Day and creating Valentine's Day on a budget. Uh so that's February 3rd uh 1:00 p.m. Eastern 10:00 p.m. Pacific. Uh we'll be back live and uh oh nice little title you put on there. Roses are red violets are blue uh what is it say? There you go. It was covered by my

27:00I apologize. That's about it. If there aren't any other questions, we will say thank you for joining us. We really appreciate it. We love doing these things and the more interaction we have with you all, the better. Perfect. Thank you everybody for stopping by. Thanks to all those that were watching on Facebook. Yes, thank you.

Machine-generated from the audio; names and numbers may contain errors. Timestamps mark 3-minute sections.

0:00All right. Welcome to everyone joining us on Facebook. Should be live on there as well. And welcome to the Valentine's Day edition of Smart With Your Money Live. I am Chase Peckham. I am the director of community outreach and education at the San Diego Financial Literacy Center, the education arm of DebtWave Credit Counseling. And as always, I am joined by my cohort, our community outreach coordinator, Mr. Felipe Arévalo. And Felipe, happy early Valentine's Day. Happy early Valentine's Day to you as well. Yeah, it's going to be a different one as everything else has been uh this this go around. Um but you know, it's a expensive holiday for some. And and you know, anyone who goes to the grocery store can know that it's heavily marketed. I mean, there's been Valentine's Day things for a while now. It is heavily marketed. And depending on who you are, it's it can be extraordinarily stressful. Uh it can be give a little bit of anxiety. Uh if you're in a new relationship and there's you feel like there's expectations, whether there are or not for Valentine's Day, it does seem to give us that expect those expectations of having to do something uh kind of grandiose, right? Kind of big and over the top. Um and it just really depends on where you are in your life. Um some people Valentine's Day is a thing and some people it's not. Sometimes it's just Absolutely. a little, you know, it's kind of fun to celebrate a holiday because it's a holiday, especially in the world of of a pandemic where we try to look forward to just about anything that'll bring us some happiness. Any excuse for a little bit of joy. Um I kind of wanted to throw a party yesterday for Groundhog's Day. Um But you know what the joke about isn't it hasn't it been Groundhog Was it yesterday or Monday? It was Monday. But hasn't it been Groundhog's Day like every day since last March? I know. It's uh you know, Seems like it to me. my buddy the groundhog Phil uh even took it virtually this year. So even he's on the virtual. Uh but yeah, let's get started. Valentine's Day is just another opportunity to throw your budget out the window, but it doesn't have to be. Um and being in the personal finance uh room, I've been waiting to use this gift for a long time, but it doesn't usually apply. It it does here though because you don't have to uh throw your budget out the window just because we've reached yet another uh another holiday. Um and and you know, we're going to go over a couple a bunch of different opportunities, a bunch of different things you can do that are budget friendly, oftentimes free. Absolutely. And again, you you said it right at the beginning of this that

3:00it's it's marketing, right? And we get marketed to a lot. And I don't know about you, and my wife is always on social media. Um, I'm barely ever on social media, but when I am, boy, do I ever get marketed to. Like I there my wife was going to buy it because she saw me using it for Valentine's Day, but the the the do-it-yourself hair trimmer that is it's like on the side and you just and I'm like, there's no reason to throw 40 bucks at that. But it sounds so cheap and efficient, right? Right. What a great way to keep my sideburns and the side of my hair from curling. So, but I said, it's okay, babe, I don't need a present for Valentine's Day. Who knows? Maybe she'll still get you something. Maybe she'll watch this and She probably will. She'll just surprise me because Yeah. Maybe she'll take some of these tips. Maybe she'll bring your breakfast in bed. Um, this is a nice one. It's easy. It can be it's for all intents and purposes can be free because you were going to eat breakfast anyways. Just get up a little early. This year it's on a Sunday. Uh, you know, bring them breakfast in bed. I'm simple. You could bring me a cup of like if my kids got the idea, brought me a cup of coffee black and a peanut butter and jelly. Golden. That that so you know you know what they like and and you can uh um you know not going to cost you extra money. It doesn't cost you anything really extra. I mean the idea that it's on a Sunday this year is really great because our significant others or or even if our kids decide to do it. So I'm going to throw some hints can bring us breakfast in it sounds clichéd, right? I mean does it get much older than breakfast in bed? But boy does it ever work. And and it's and it doesn't cost you anything else. And the idea that somebody went through the effort to make you feel more comfortable and did something nice for you, uh I think it speaks volumes. Yeah. I just you got to be careful though. My kids will probably end up spilling the coffee on me uh or on themselves trying to get it to me. Yeah, that could be dangerous. But if you have if you're you're maybe you're crafty or you have crafty kids, hand make some uh cards or gifts. Um, you know, cards are easiest, but you know, if you have other do-it-yourself uh things that you're good at, you know, maybe you hand make the gift and and it just takes up time, which if you're stuck at home, you may have extra time that you didn't previously have. Um, you know, so this gives you the opportunity to spend little to no extra money depending on if you have the supplies and and just turn your time into a gift that may be even more meaningful than something you could buy. You know, it's interesting that you could even make some money on this. My daughter, who is the crafty one of the family, the only one, the rest of the three of us not at all, uh she was doing some doodling and and made us some Valentine's Day artwork and friends of ours happened to see the work that she did and asked her to do some for them for Valentine's Day and they paid her $10

6:00for it. And so now she's she's done six orders already. So she's found a little side business on creating like little home car Valentine's Day like artwork. And it's unique and that individual gets something that you know they're going to be able to give something that no one else is going to have. So so it's really a great idea and you can even that's perfect. Turn it into a side hustle. That happened on accident. She loves it. She's all in now. That's the best side hustle though. Well the one that doesn't feel like you're doing any extra work. It's just you doing what you like to do and then you can some find some way find a way to monetize it. Absolutely. 100%. So maybe you're not crafty but maybe you can cook and and do dinner in or maybe you know you know you can do something simple but you know we may have been eating in a lot more than usual. I was going to say we've been doing that a lot. If I try and get you know turkey tacos for Valentine's Day again we have that all way too often. We need to diversify. So maybe you jump in and you find one of these apps like a like a Tasty or something like that if you don't want to order or you pick up your phone and and order in from an inexpensive uh you know restaurant that you can do like a DoorDash or or you know Postmates or whatever it is. But they have all these great recipes on social media which you know sometimes tends to get us into financial trouble more than anything but take advantage of the free apps, Pinterest, Instagram. There's all these recipes that you can try. Amazing recipes uh that you can find and not only that but the idea of dining in which we've all done but in this case if you want to do something special maybe it's something that your significant other or your kids love that you don't necessarily love and you don't have all the time and you can create that dinner that you know that this like for instance I love teriyaki chicken. I know that sounds weird but my wife since we've had kids has had an aversion to that. So like chicken is like a no-go in the family now because when she was pregnant chicken just whatever reason got to her. Um but she knows that that is something that I absolutely love and so for this Valentine's Day she actually mentioned that she's going to make me a a variation of teriyaki chicken but chicken cordon bleu which and you can do it very cheaply. So I don't get that ever. I'm like super excited. So that is something that that you can do that it's just out of the ordinary. So it's not just your standard dining in. Right. Make it special. Make it a little you just add a little bit of a variation that makes it special for that person and then that can go a long way to making it a special afternoon. Just be cautious with the we were mentioning when we were talking about this with these Tasty videos and all those recipe videos. It's always deceiving how quickly they get stuff done. Cuz they put them in super fast motion and they go oh my gosh that's so easy to make and yeah. I've tried a few times and 30 minutes later you're sitting there looking at it like is this where I give up

9:00and call for pizza. Right. Or because it's a Sunday, maybe you do a movie night or a movie day at home and you just watch TV all day. We have streaming services that we pay for, oftentimes don't use as much as we could. You know, make a list of movies um and you know, but you want to make it a little different for Valentine's Day. You don't just throw on whatever show you've been been watching for the last month and and maybe you find something that they want to watch and maybe you don't want to watch usually or you find a an old classic, something you watched on uh on a first date or things like that. Yeah, and this is kind of along the same lines as the food and and and dining in, right? Which we can do both. But we are so conditioned nowadays, especially through the pandemic, and we have streaming that we just binge watch these shows, right? And it becomes a part of our fabric in our life and we can't wait to find out what happens in Yellowstone or or or different shows um that we all love. Um but those movies like sitting back and watching a Casablanca or something that we haven't seen. I was we were talking about it the other day, Pretty in Pink, something like that from, you know, when my my wife and I were younger and that was really big back then, like a Brat Pack movie. Now I'm dating myself. Uh my wife goes, Brat what? Uh but you get the idea. It's something that we all, maybe it's an old movie that we loved and we just wouldn't watch anymore and make our kids struggle through it. Yeah, or like maybe you're not into romantic comedies but your significant other is. Maybe you say, hey, let's watch you know, one of these uh Sweet Home Alabama or something and then maybe in return you get to have them sit through Star Wars or something that they normally wouldn't watch. Or end game from Marvel, right? From the Avengers. You know, my wife would never watch that stuff. So we actually have we're we're going to do a a well, I can't tell you because it's coming up. I'm excited for you to see it. That's right. Surprise, there we go. I almost jumped the gun there. I'm so excited. That's right. Or you create yourself a a scavenger hunt. Uh you know, create a scavenger hunt for if you bought a little gift or or just for fun, especially if you have kids, this could be a way to entertain them for, you know, much longer with a simple gift and then you have them go around the house, hopefully not, you know, Big Brother style destroying the whole house, but carefully looking for uh whatever item you have hid and and have them go around the place, you know, looking for them. Adds an extra level of of fun to the gift that you already purchased for no extra uh expense. You just get a piece of paper and start writing clues on it. Uh so it's just a way to make it more special. And even if it's, you know, candy or those those little hearts we used to get that say be mine on them, kids love that stuff. Like if you make a game out of it and they're searching for whatever it might be,

12:00um because Valentine's Day isn't just about you and your spouse right Valentine's Day nowadays is especially the way they market it it's for everybody it's for the kids as well and uh I think that that could be a really fun thing to do as long as they're not doing that to to my house. That would be bad if if it turns into that kind of scavenger hunt maybe you don't put a timer on it and you just let them take their time but be careful. Um No doubt. Or have yourself an arcade night at home if you have any kind of entertainment system maybe you dig up an old Super Nintendo or you know old PlayStation one or something from the past or you simply get computer games you know nothing wrong with a little Oregon Trail um Now I've dated myself um but you know have an arcade night at home maybe your significant other's not into video games and or or they like different games than the ones you would normally play and if you have kids this is a great way to you know say you know what I'm going to sit down and I'm going to play oh for me it would be I'm going to sit down and play Minecraft for an hour and I'm not going to be distracted and I'm genuinely going to give this game a try even though I don't understand it and don't know what I'm doing you know but to to to my seven-year-old that would be a special moment to just sit and get to teach me how to you know do whatever it is he does on there. Absolutely and you're already paying for it right it's something that they genuinely like to do and it's father-son time at the time right so my son would do the exact same thing he's way into sports games baseball football whatever it might be I just never was into video games but he really really loves it when I play with them and this could be one of those times that that you do that even with a family we actually uh my wife promised she's going to play uh MLB the show with us uh we're going to do a family MLB the show uh this on Sunday night. Right. Yeah exactly. Nice. It was exciting MLB the show was right. So it's showing that you care about them and that you're genuinely interested in what they're interested in. Yeah MLB the show was in the news actually uh Fernando Tatis uh our Padres player is going to be on the cover yeah for our San Diego crowd um you know or maybe you discover a new game together my wife not about video games I think the last video game she played was actually Super Mario from the last gift but through uh through through you know being stuck at home a lot more she discovered a new game that she likes um in this case Animal Crossing it actually has a money component to it yeah it has financials to it there's money or bells and and there's a stock market because you buy turnips and then you sell them at a higher or lower price it's a little bit of a gamble um so you know maybe you discover something new where if it's something new you may end up paying more but there's demos that you can try and and if you find one that you know with video games you know if you find one that you know a good deal on one

15:00that initial expense could generate hours and hours of entertainment. At least that's how I always validated it to my to my budget. Well, it is true. And again, that goes back to budgeting and whatever that you enjoy and whatever you uh like what is if it's worth if you get if you think about it as an hourly, you know, getting paid hourly or paying hourly and you get that that value out of it, then it maybe not necessarily it's not wrong, right? And and it could be something that uh is of greater value because of the emotional component. Right. Correct. Yeah. It's kind of like a destresser. And then Speaking of emotion. speaking of smart spending, it's not necessarily about not spending at all. It's about being smarter with how you spend. Maybe flowers are are you or your significant other's thing and instead of ordering them or you know, and then especially if you're a little bit of a procrastinator on on Valentine gifts like I tend to be and you know, having to pay for rush shipping and all that extra thing, you know, maybe you go get the flowers at the grocery store and and buy them for a fraction of the cost, deliver them yourself with a hug, and there you go. Uh you know, save a lot of money and and and go down to the grocery store and you just put in a little leg work yourself. Yeah, I mean flowers is such an interesting thing, but being, you know, very few of us are in the office these days and Valentine's Day it it became like who could you know, it was an emotional thing and you're excited if you were sitting at your desk and the gentleman or or person come the delivery person comes in and says, here you go. Is this so and so? And they get the big bouquet and it sits on your desk and everybody in the office gets to look and go, oh, somebody really loves you. Boy, are you lucky. You know, and then as and then as the person who did it, you're like, yeah, I got brownie points. We don't really even have that right now, right? And and and if you listen to our podcast last weekend with our significant others, they were both of them said, Right. That's right. yeah, really don't waste the money on the flowers. The gesture is great, but you can do flowers so much more inexpensive and they don't sponsor us or anything, but Trader Joe's, I mean, you can spend $5 on a really nice bouquet of flowers. Yeah, because they're going to they're going to die relatively quickly. Yeah, regardless of where you get them from, you know, they're going to they're going to go away in a few days. Um you know, especially if you don't know how to take care of them, which is a thing. Chase is telling me I I don't get flowers for myself, so I have no clue how I would take care of them and I probably Right. Totally. I mean, there's certain flowers that have to have sunlight so much. There's certain flowers that cannot have sunlight. There's certain flowers that can't handle heat. Like we had flowers that died because we turned the heater on when we had a cold spell here. They lived for a while and then boom, woke up the next morning and there's petals everywhere. So, I mean, it's don't just I mean, I guess it's just the gesture, but um it doesn't have to be expensive. Right. Yeah. One of my favorites that hiking, go do an outdoor activity. You know,

18:00maybe it's something where uh you know you haven't been able to go out much obviously if you're watching in the northeast uh somewhere where it's snowing you don't want to go outside um if you don't have to but if it's safe and you can go out and do you have a nice day you know go out for a hike doesn't have to be a 13 14 mile hike but something um a little bit you know shorter for sure i mean this is always a nice one and boy this would be a big give for me because i know that uh i know my my wife and my daughter love to hike but i know that uh i'm not a big hiker especially since i've gotten older and back issues but um yeah i i would i would do that for her but that's a big give and then lastly get creative not all these ideas are going to work for everyone if you get me to you know bake a cake for example you're going to end up with something from nailed it on netflix um that actually looks like what my daughter did just not too long ago and our kitchen looked like that too very colorful yeah not so good so not good for everyone everyone's a little bit different and maybe uh you know find whatever works for you and and your significant other and and and whatever makes the day special for them which brings us to and your kids yeah which brings us to any other ideas that that you guys might have any any questions or questions even if it's outside valentine's day which by the way i always was scared to death of and because i just even i've been married 17 years and it's always that does she really expect something she always says she doesn't but does she and if i don't give something am i really letting her down those kinds of things and i think that you know again communication comes into it as with all finances and everything else and relationships for kids and setting expectations um so you know it really just depends on the relationship right and communicate that's the biggest thing absolutely i know i'm sure i i i think our our colleague katie her husband's a big gamer and loves gaming and I know that she wasn't much into it before but later got into it so i wonder if the on valentine's day she's going to she's going to do that video game day yeah video game day she might say video game days every day now i mean for all we know who knows yeah maybe she's the gamer now um and and if you want to continue on the topic in this particular case we actually our most recent episode of our podcast talk wealth to me uh we we had our our wives on um and we talked valentine's day and valentine's day ideas a fun conversation and uh apparently it's popular people are listening to it so uh get it wherever get our podcasts wherever you get your um your podcasts and uh it's called talk wealth to me and then the most recent episode is it kind of a longer version of this but a little more conversational where uh we took the chance had both our wives on the show at the same time

21:00it worked out all right. We didn't get into too much trouble. Yeah, that was a fun one and uh we really get kind of deep into the emotional side of these kinds of holidays and and what uh works for us and and what they really like and just taking a female perspective which was really really uh really really interesting and fun. Yeah. And lastly, two weeks from today. Yeah, don't don't miss it. Uh uh two weeks from today on February 17th car buying the car buying checklist, five tips before you drive off uh the lot uh or make that purchase online which you can do now by the way. You can have those cars delivered to your door which is it's almost like Amazon for cars. So, be careful. Someone down the street had one delivered yesterday. It was very my my uh my son was very excited to see that. He's like that's the one from the commercial. So, it was Is there any questions on Facebook? Any of those that are out there on Facebook that have any questions before we wrap this up? Um we'd love to answer them if we can. And if there isn't, we'll thank everybody for their time and thank you for joining us and we hope uh we hope everybody enjoyed this uh Smart With Your Money Live.