1. Debt Overload

2. Good Debt vs. Bad Debt ► “ Good debt ” would be considered any debt that will help you improve your education and/or your ability to earn a higher income. ► Student loans ► Mortgage loans ► Automobile loans ► “ Bad debt” is what keeps many otherwise smart and successful individuals from reaching personal savings and homeownership goals ► Revolving Debt

3. How Did I get here? ► Job loss ► Medical issues or illness ► Overspending

4. Getting Out of Debt ► Recognize you are in a difficult financial situation: IN DEBT ► Write down all of your debts and monthly payments ► Make a BUDGET and stick with it  Mathematical (High Interest First) vs. Psychological (Dave Ramsey’s Snowball method) ► Contact your Creditors ► Contact a reputable Credit Counseling Service ► Consider Bankruptcy only as a last resort

5. Contact your Creditors ► If you are having trouble making payments contact your lenders immediately ► Ask for the “ hardship ” department if your situation is temporary ► Credit issuers are usually willing to work with you if you have a good relationship and solid pay history with them ► Try to renegotiate terms of credit agreement on your own.

6. Credit Counseling ► National Foundation for Consumer Credit www.nfcc.org or (800)388-2227 www.nfcc.org ► For profit and not for profit counseling organizations ► Financial education should be included in the program to help you avoid future money management mistakes ► Make sure payments are made immediately to creditors for minimal impact to credit score

7. Bankruptcy ► Chapter 13 bankruptcy protection is a form of debt reorganization. Chapter 13 requires you to pay some of your debts back through a court appointed trustee over 3- 5 years. Creditors accept whatever the court has approved as payment in full. ► Chapter 7 bankruptcy is a total liquidation of assets which should be avoided if at all possible. Under Chapter 7 you are released from the obligation to repay your debts, but will risk losing some or all of your property in the process. ► Bankruptcy does not eliminate student debt!!

8. What works to repair Credit ► There is nothing any credit repair agency can legally do for you which you can ’ t do for yourself for free. ► A reputable Credit Counselor will not just negotiate payment plans and take your money, rather they will offer and in some cases require that you complete a budget and money management courses as part of their program ► Negotiating a reduced payment will probably have a negative impact on your credit score. It is still sometimes better to take the hit and get the debt behind you. ► Debt Management Plans are payment contracts set up with your creditors with newly negotiated terms. You pay the credit counseling company and they in turn pay your creditors

9. What doesn ’ t work to repair Credit ► Credit “ piggy backing ” : Credit piggybacking is a legal method of improving a personal credit rating by adding an individual as an "authorized user" onto an account of a person who already has good credit. This quickly and dramatically raises the authorized user's credit score. ► Going to payday lenders, finance companies and pawn shops for help alleviating debt ► Ignoring your debt situation

10. How to Stay out of Trouble ► Make a BUDGET and stick with it ► 70-20-10 Rule ► Use Credit Sparingly ► Have 3-6 months emergency savings to cover living expenses