Financial experts answer your questions about getting out of debt....and you kept them busy!
Our panel of Certified Financial Planners on November 14th included:
Grace Ghezzi, Benefit Consulting Group (474-1707 x460
Richard Jenkins, Diversified Capital Management (472-6221)
Sue Hansen, Hansen's Advisory Services (637-5153)
Most of our questions dealt with either credit card debt or mortgages. Here are some tips:
>Paying off multiple cards:
Many people think you pay off the one with the highest interest rate first. Here's a better strategy:
Put your money beyond the minimum payments on each card toward the card with the lowest balance. Once it's closed
move up to the next
>Consolidating debt:
If you're tempted by those mail offers of 0% APR for transferring balances, some reminders:
~you may be charged for transferring out of an existing card
~your new card may have 0 interest, for awhile, but there's probably an up-front fee for transferring in.
~if you are late or miss a payment, the card company can instantly jack up your interest to its highest rate (often 20%+!)
~Debt consolidation companies may charge you up front fees before helping you reduce what you owe, which adds to your debt.
~Consider a not for profit credit counseling agency. ClearPoint (the former Consumer Credit Counseling) will help create a budget and pay off existing debt. They're at 800-479-6026 or on their website
>Use your cards 'safely'
Don't use credit unless you can pay it off monthly.
Do use plastic to keep track of expenses...you'll always have a record, through statements.
'Bonuses'--points or cash rewards: be sure you're getting a deal before using a card just for that. Do some comparison shopping on incentives!
>How your FICO (it stands for Fair Isaac Corporation--deciding your credit score) is determined:
35% depends on your payment history
30% the amount owed
15% length of credit history
10% types of credit used
10% new credit applied for
>Keeping track of your credit rating, and keeping your credit scores up:
Do not use more than 10% of the available. (example: if you have a $10,000 credit limit, don't use more than $1,000) Even if you pay it off monthly, if you use more it will count against you on your FICO calculation (see above).
If you have a rating of 780 or above, you get the best rates. You can get your score at www.myFICO.com, but it will cost you $16. You can get FREE credit reports at www.annualcreditreport.com (there are 3 major companies--check with one each four months to keep tabs).
>If you're 'Under Water' (hopelessly behind on mortgage payments, or your house is worth less than the payments you still owe:
Options include foreclosure or 'selling short' Both affect your credit rating, though selling short may be less damaging.
Foreclosure could impact job applications, as well.
Some changes coming: After 2012, debt forgiveness could be taxable.
If you're in this situation, talk to a counselor for your best options.
>What's an investor to do, to NOT lose money?
~Set a realistic goal of what you want your retirement or savings portfolio to do, then stick to it--make sure it stays in balance and adjust if some stocks are not performing to expectation.
~Diversify! Don't have just one category of stock or investments. If you're close to retirement, don't have all your future in just your company's stock!
~Don't panic! Watching the daily ups and downs of the market can be upsetting (even if indicators are down, they may not reflect your particular stock holdings). And, don't react after the market has acted!
We answer your questions every Monday evening in our 5 - 6:30pm news on NBC3. You can email us in advance at money@cnycentral.com
