Thoughts From the FSAP: How Is Your Financial Health?

Do you time your check-writing to coincide with your direct deposit transactions?

Is your salary at the highest you have ever earned, while your financial debt is at its worst?

Managing your finances is a tricky business.  Making only a few late payments or bouncing only a few checks can lead to many financial troubles.  Financial adviser Margaret Daly shares these warning signs.  Most experts advise that two or more of the following could signal trouble:

• You are dipping into savings or taking out loans to pay off old bills.
• Your credit card cash advances and checking overdraft loans are mounting.
• As soon as you pay off large balances, you run up similar debts.
• You are consistently paying only the minimum due on credit card accounts.
• You are receiving second notices on a number of bills.
• You are delaying payments for essentials, such as utilities and healthcare, in order to pay your credit card bills.
• You have had credit cards cancelled because you have exceeded your credit limits.
• The monthly total due in installment, credit card and other non-mortgage loans is consistently greater than 20 percent of your take-home pay.

What can you do and where can you go for help?

The answer to that question is getting more complicated, as more reports surface about the abuses of the credit counseling industry.  According to The Washington Post, the Internal Revenue Service may soon recommend criminal prosecution for credit counseling agencies that operate more for the financial benefit of their executives than their customers.^[1]  Customers in debt need to be wary when looking for outside help dealing with debt.

Identifying your financial problem may mean confronting an issue with overspending.  Debtors Anonymous (DA) is a fellowship of men and women who share experience, strength and hope to help each other solve their common problem and control overspending.  DA supports a 12-step process for controlling overspending:

1. Identify your problem.
2. Build a support network. Have friends, relatives or a DA group member help talk you out of unnecessary purchases and share your successes in resisting temptation.
3. Assess current debts and income, and build a workable budget for paying off debts.
4. Approach your creditors to negotiate payment plans you can fit into the budget you?ve built.
5. Use your support network to help you change your shopping/buying behavior.
6. Set up realistic financial goals and a timetable for meeting them.
7. Keep track of your progress: share your successes. Do what you can to stop any backsliding, but don?t dwell on it.
8. Pay off all outstanding credit card debts.
9. Set up new guidelines for responsible credit use.
10. Begin saving money for your financial goal.
11. Reward yourself for accomplishments (not by spending money)
12. Check your financial status on a regular basis and adjust any backsliding.  Set new financial goals as you accomplish the old ones. And--now that you know the way--help someone else who is a chronic overspender.

You can also enlist the help of local, non-profit resources. The Consumer Credit Counseling Service of Greater Washington, DC, is a community non-profit corporation, established to provide a FREE debt counseling service for families and individuals with financial problems.  It is not a lending institution.  It is fully supported by contributions from banks, consumer finance companies, industry, credit unions and other community-minded firms and individuals.

In addition, the Faculty and Staff Assistance Program is designed to assist individuals who may be experiencing personal or health problems, such as financial difficulties. Feel free to contact us for community resources as well as to schedule an appointment to discuss your financial concerns.

To reach any of the groups in this article:

Consumer Credit Counseling Service of Greater Washington, DC
15847 Crabbs Branch Way
Rockville, MD 20855
www.cccsdc.org
800-747-4222
(Other locations in and around Washington, DC)

Debtors Anonymous
P.O. Box 76106
Washington, DC 20013-6106
www.capitalareadebtors.org
202-319-0229
(Meetings are held at a number of locations at different times during the year.)

*Note: Strict laws protect debtors from harassment by creditors.  Contact local consumer rights groups if you feel your rights are being violated.