Pathways to Success Paying the Bills (lesson #11)

1. Pathways to SuccessPaying the Bills(lesson #11) By Sissy Osteen, Ph.D., CFP PowerPoint by Cindy Clampet Revised 2017

2. In this lesson you will learn: • How to pay the bills • How to control spending • How to make good financial decisions

3. If expenses are more than income: • You can: • Cut up and throw away credit cards • Sell unused items for cash • Eat out less • Trade you car for a less expensive one • Return items you just bought for credit on credit cards • Reduce your cell phone plan • What else can be done to reduce expenses? (list on page 2 of booklet)

4. Ways people might deal with too many expenses and not enough money: • Stop making payments • Consolidate loans • Work with creditors • Get credit counseling • File bankruptcy • Start a wage earner plan Each of these choices have some positive and some negative results. We will look at each of them to see if the positive outweighs the negative. People need to be very careful when making financial decisions.

5. What if you stop making payments? • Could be a good move… • You will be able to balance your budget. • You will have more money to buy the things you want • You may have some time before creditors will act against you. • Could be a bad move… • You may lose the items you still owe money on • You may have utilities shut off and have to pay extra to get them turned back on. • You will have a late payment on your credit report • You will owe even more money in late charges • You may have to pay all your debts at once • You may lose part of your take home pay..(creditors can garnish your paycheck) • You may have to move • You will still owe the money

6. What if you consolidate loans? • Could be a good move… • You will make just one payment • The loan company will pay off all your bills for you • The one payment may be less than all the old payments added together • Could be a bad move… • Since payments are lower, you will hve to pay longer • You may be in debt longer to make the monthly payment lower • You will be paying more in interest • You may be fooled into buying more on credit cards since you only have one payment

7. What if you talk with your creditors? • Could be a good move… • Your payment will be lower if the loan is changed to a longer time • You will be able to keep the items you bought on credit. Most creditors don’t want the items back, they would rather have the money. Smaller payments are better than no payment • Could be a bad move… • You will pay more interest if the loan is change to a longer time • You may find it hard to admit you made a mistake and need some help. • You must make the new payment. Creditors may not give you a break a second time around.

8. How to talk to creditors • Know how much you can pay and when. (look at your budget) • Call and ask to speak to the person in charge of bill payments. • Explain your problem and if you need to make an appointment and what you need to bring • Ask to have payments reduced • Tell the creditor you want to work with him to get the bill paid • Write down the details of the new payment plan • Get the creditor and yourself to sign the new plan

9. More creditor talk… • Some creditors may not talk with you. • Some may not like the plan you propose. In that case, ask them for ideas as to what to do. If your payments cannot change, you still have to pay. • If you can’t see the creditor in person, write a letter, telephone or both. Tell them why you can’t pay the full bill, tell them how much you are able to send as part of the payment • Keep a copy of the letter. If you phone, keep a calm voice, and write down who you spoke to, the date, and the details of the plan

10. What if you get credit counseling? • Could be a good move… • The counselor manages your money, makes a plan and arranges your payments • You will be under less stress • You will learn how to pay your bills • You will not have to file bankruptcy • Could be a bad move… • You will lose your credit counseling help if you do not follow the new plan • You may not get the right kind of help • Before going to credit counseling find out who is doing the counseling, what is the cost and how does the program work?

11. What if you file bankruptcy? • Could be a good move… • You will list all the people you owe money to, how much you ow, and all the property you own • Your debts will be forgiven if your creditors agree • You will have to go to financial counseling to assess your situation • You must attend money management education • Could be a bad move… • You will have to pay your lawyer before you can file bankruptcy and it can cost a lot • You may lose some things if they are sold to pay for what you owe • Your credit rating will have a bad mark for a long time.

12. What if you start a wage earner plan? • Could be a good move… • You will not have to file bankruptcy • You will get to keep your things while paying off your debts • Creditors will not hassle you • You will not have to pay any extra interest or late charges • Could be a bad move… • You will lose some of your take home pay • Your employer will give a fixed amount to the courts to pay your debts for you

13. What would you do? • Discuss what you think is the best option.

14. How to keep out of trouble with creditors • 1) decide which bills to pay partially or delay. • Rank bills according to what you think will happen if you cannot make a payment. Pay bills for basic needs first such as rent and electricity • 2) contact creditors you cannot pay such as the credit card co. • Never miss a payment without explaining it to the creditor • 3) ask if due dates can change to go along with your pay check • Pay your debts before buying anything else

15. Cont… • 4) pay off loans with the smallest balance first • Or pay off loans with the highest interest rates first. • 5) start a regular savings account to help pay unexpected • 6) stick to your plan for paying bills • Do not use any more credit until you get back on your feet • decide never again to get so deeply in debt