Reverse Mortgage Pros and Cons

Like most financial products, borrowers should proceed with caution

A reverse mortgage can be a powerful tool for seniors struggling to make ends meet in retirement. That being said, it can also be damaging if used incorrectly.  The good thing about this products is that prior to receiving a loan an individual is required to receive counseling from a HECM (Home Equity Conversion Mortgage) counselor.  Your counselor will educate you about the process, what to expect, and answer any questions you may have.

This week’s Personal Finance 120 video (available here) provides an overview of reverse mortgages, so I recommend you review it as part of the learning process. What I wanted to focus on in today’s post is the pros and cons.  So, without further adieu:

Reverse Mortgage Pros:

• Use funds to pay off existing debts (mortgage / credit cards)
• Receive income based on your equity
• Reverse mortgage funds are generally tax free
• No restrictions on fund usage 

Reverse Mortgage Cons:

• Product is a loan; therefore, interest will accrue
• The loan will diminish the equity in your home
• If you do not maintain taxes or insurance you run the risk of foreclosure.

Is a reverse mortgage for you?  It all depends. The best way to assess the product’s usefulness is to speak with a Reverse Mortgage Counselor.  Feel free to contact one of Cambridge’s counselors who would be happy to answer your questions – contact Cambridge.

Until Next time I’m Thom Fox for Cambridge Credit Counseling.

Interview Tips for Senior Workers

Telling an energetic story can make all the difference.

So, you’re an older worker, but you still have a lot to offer.  Thankfully the tide is changing in your favor.  As we reported in this week’s Personal Finance 120 video, older workers are back in demand.  Just because you’re marketable it doesn’t mean the offers will come rolling in.  Even if they do, you still have to interview for the job, which presents some challenges for older workers. Instead of the old dog and pony show, older Americans have to tell the story of their experience.  Build a narrative describing your skills and real world experience.  Sprinkle in talking points of your more challenging projects, talk about your leadership style, or how you’ve mentored subordinates throughout your career.   

As an older interviewee you’ll also have to breakdown stereotypes. Some folks see people in their 50’s and 60’s as walker-bound silver-hairs waiting for Wheel of Fortune to sign-off so they can hit the sack.  Obviously, this is not the case, so bring your energy to the interview. Leave them thinking you’re a 20 year old with the mind of a sage.

Interviewing can be challenging for anyone, so don’t feel discouraged by the process.  By projecting the best of what you have to offer you’ll increase your chances of success.  Until next time I’m Thom Fox for Cambridge Credit Counseling Corp.

You Pay For What You Don’t Know!

Making blind financial decisions costs you in the long run. 

On my desk I have a diagram of ‘Information,’ which is represented by a large circle.  In the middle of that circle is a dot with the tagline – ‘More Than You Could Ever Dream of Knowing!’  No one knows it all, and this is especially true when it comes to finances.  We have jobs to do, families to raise, and lives to live; we’re busy!  So busy… we sometimes lose focus.

When it comes to our money, we have to be focused. That’s not to say we have to dawdle over every financial decision, frozen by information persuasion. But, we do need to know how to use financial resources to reach our goals.  In today’s fast moving world we have to be lifelong learners. Aside from seeking good advice, we have to do our research.  Thanks to the internet, it’s extremely easy to locate relevant information.

To stay on top of your financial game, do your homework.  Whatever you’re looking to do, Google it.  Whether it’s buying a house, a car, or planning for retirement, you will find loads of helpful information to aid you in your decision.  Also, read financial blogs.  There are hundreds of knowledgeable experts offering insight into the world of money.  To get you started, here is a list of the Top Personal Finance Blogs compiled by Wisebread.com. Take a look around, and find a few blogs to follow.

Until next time, I’m Thom Fox for Cambridge Credit Counseling.

Three Steps to Salvage a Bad Job Interview

Interviewer inexperience, workload, and boredom can derail your job interview.  

Looking for a job is stressful, especially the interview process.  Many job hunters spend hours polishing their ‘pitch’ and researching talking point.  But, what if these efforts are for naught?   That just might be the case in some instances.

Many times, the person conducting your interview is not a professional interviewer.  It is merely an additional duty to them – and can be viewed as an interruption to their day.  This can be crushing, so you have to be prepared to deal with inexperienced interviewers.  For instance, novice interviewers spend an inordinate amount of time discussing themselves, or the organization.  Sure, this is less stressful; BUT, you don’t have the important opportunity to focus on WHY you are the best fit for the position.  You’ll have to find creative ways to recapture the conversation to refocus the interview.  Use your personality, research, and anecdotes to get them focused on what’s important – YOU!

As this is someone’s additional duty, you may also have to combat the interviewer’s inattention.  Let’s face it; if they have a deadline, or are dealing with an internal crisis, you are the furthest thing from their mind.  If you notice the interviewer is checking the time frequently, or seems distant, you’ll have to bring them back to the table with some ‘dazzle.’  Be affable, tell an impactful story, do whatever you can to grab their attention.

Lastly, be sure to provide a copy of your résumé at the onset of the interview.  You would imagine interviewers would read your résumé prior to you meeting, and most do, but it could have been days earlier.  When you greet each other, hand them a copy of your résumé and don’t be bashful about guiding them through it.  This is your show, and you require your audience to be engaged so they can properly assess your value.

Until next time, I’m Thom Fox for Cambridge Credit Counseling Corp.

Landing Your Next Job

Writing a Powerful Cover Letter Opens Doors.

An important part of your finances is your career.  Your income allows you to take on a diverse set of economic challenges, such as saving for retirement and establishing your quality of life. As the economy thaws from a frosty recovery, businesses have begun hiring.  If you’re looking for a job, or interested in new career challenges, you have to stand out among the crowd.  One great way to do so is crafting a stellar cover letter to go along with your résumé.

A cover letter describes your interest in a position; but, it offers much more.  A cover letter provides an additional opportunity to market your skills.  When drafting your cover letter, keep these tips in mind:

Connect your skills to those of the desired candidate.  For instance, when applying for a managerial position point out your experience in managing people and your accomplishments.

Put your personality into your correspondence.  Don’t go overboard (it’s not a weekend BBQ); but, use humor, intelligence, and compassion in your writing.  Be you – that’s who they’re buying.

Don’t write like you’re blogging.  In all seriousness, there is no way to turn off an employer more than poor grammar and spelling mistakes.  Have a friend or family member give your cover letter the once over before sending it along.

Drop names of people within your network.  If you met an employee of the company, mention it in your cover letter.  Hopefully they had great things to say about working there.  If so, let the hiring manager know.

These are just a few things to consider.  For more information on cover letters, Google Search – How to Write a Cover Letter. 

Until next time, I’m Thom Fox for Cambridge Credit Counseling.

What to Do With Your Tax Return

“Should I spend or should I save… that is the question.”

We’re only human, and when we get a big chunk of change… well, it almost burns a hole in our pocket. Depending on your situation, you may get a sizable return from the government this tax season.  As of March, the average American received a refund of $2,790.  Not too shabby. But what will most people do with that refund?  Well, you have options.  If you’re in a good place financially, you can choose to put that money toward the repayment of debt, or even add it to your emergency savings or retirement fund.  If things are tight, you can pay some bills. What you should not do is blow it on something frivolous – be smart and put that cash to good use.

Another thing to consider at refund time is adjusting your withholdings on your W-4 (or Employee’s Withholding Allowance Certificate.)  Your refund is, essentially, the reimbursement of overpaid taxes.  By adjusting your withholdings you put more money in your pocket each month.  Let’s take a look at this using this year’s average return of $2,790.  If you adjusted your withholding to cover anticipated taxes, you would put an extra $232.50 in your pocket each month.  Sure, you would not receive a refund in 2014, but you would have more money at your disposal each month.

Talk to your tax planner to see if this is a good option.  If so, visit your Human Resource Department to complete a new W-4.

Until Next time, I’m Thom Fox for Cambridge Credit Counseling Corp.

The Economic Impact of Student Loan Debt

Does getting ahead set you back? 

For years people have been talking about the potential fallout from high levels of student loan debt.  Many believe the rising tide of indebtedness will cause problems similar to those experienced with the housing crisis, essentially stalling our economy.  Makes sense.  If we are preoccupied with servicing high levels of debt, we’ll have less money to use for other purchases. Now, I’m not talking about the ability to hit the Mall on a Saturday for Retail Therapy. I’m talking about purchasing homes and automobiles.

We’re already seeing the impact of student loan debt.  A recent report by the Federal Reserve shows some younger Americans are shying away from homeownership.  Historically, predominant amounts of young homeowners were those carrying student loan debts; however, that trend has reversed.  In our new economy homeownership is sought by younger Americans free of student loans.  It does not stop there.  These graduates have also shyed away from auto loans. Will this trend continue? Will things get worse?  Probably, unless we develop programs to help graduates find a proactive approach to loan repayment.  

To learn more, I encourage you to read Student loan borrowers shy away from buying new homes for additional insight into the student loan crisis.

Until next time I’m Thom Fox for Cambridge Credit Counseling Corp. 

Let’s Talk About… Credit Card Debt.

New report adds credit card debt to list of taboo subjects. 

Debt! We’re all familiar with it in one way, shape, or form.  Some of us are paying off student loans, mortgages, and, of course, credit card debt.  If you’re lucky, you’re dealing with the trifecta and repaying all three (just kidding.)  On a serious note, credit card debt is taking its toll on the population.  A new poll conducted by CreditCards.com illustrates the uneasiness associated with debt.  According to their findings, people are more comfortable talking about politics and religious views than the amount of credit card debt they’re carrying. Wow, talk about a 180.

Just a few short years ago credit card debt was seen as a way of American life.  Prior to the recession, credit cards were ‘cool.’ “Don’t have cash? No worries… use plastic.”  However, the last few years have wholloped our wallets.  We had foreclosures soar, lost a good amount of our retirement savings, and have dealt with relatively flat incomes.  The American Dream resembled more of a nightmare than anything, and now we’re living this reality – wide-awake and cognizant of the trouble debt can cause.

If you’re struggling with credit card debt, don’t stick your head in the sand.  It’s important to have open and honest conversations with reliable individuals who can help you dig out of your situation.  Contact one of Cambridge’s counselors who will lend an empathetic ear, and solutions to help stabilize your situation – Get help Now!.

On the subject of debt, April is Financial Literacy Month and we’re celebrating by holding a very special contest. If you answer the most money related questions on our website correctly throughout the month, you could win a coaching session with ‘America’s Money Answers Man,’ Jordan Goodman.  To enter, simply answer our Question of the Day at Cambridge Credit’s Financial Literacy Month Contest.

Until next time I’m Thom Fox for Cambridge Credit Counseling Corp.

How Do You Define Your Relationship With Money?

Our relationship with money is often derived from our relationships with others. 

We are first exposed to the world of finance as kids, and as such we adopt the views of our caregiver’s on the subject.  For instance, if you come from a wealthy household, money could be seen as trivial, as is the case with Lavish a teen who apparently squanders thousands of dollars because his parents are loaded. Now, if you come from a modest household, you may look at money as a means to an end, as was the case with my upbringing.  I lived with my grandparents who maintained a distrust of the banking system.  They lived through the Depression, and their idea of money management was spending less than you make and hiding the rest under your bed.

These are both extremes, but are important points in defining our own relationship with money.  Although I’ve kept some of the financial lessons of my grandparents, I had to define my own approach to money management.  Times change; so do economies. The lessons of the past can be helpful, but you have to find your own path.

For some thoughts on redefining your relationship with money, I encourage you to read How to Break “Bad” Money Habits. The article offers simple advice for redeveloping the way you look at your finances.

Also, remember to join our Financial Literacy Month contest.  If you answer the most questions correctly throughout the month, you could win a coaching session with ‘America’s Money Answers Man,’ Jordan Goodman.  To enter, simply answer our Question of the Day at Cambridge Credit’s Financial Literacy Month Contest.

Until next time I’m Thom Fox for Cambridge Credit Counseling Corp.

Old Debt: Buried… But Not Dead!

Things to know about removing old debt from your credit report.

As a credit counseling agency, we get A LOT of questions about negative marks on credit reports.  Many people want to know how to quickly remove these items.  Well, you can’t.  But, the good news is there are laws in place to make sure you don’t suffer from negative entries for the rest of your life.

Many times people confuse two issues with old debt – the statute of limitations and length of time information remains on their report.  The statute of limitations refers to the amount of time a creditor can attempt to collect on a past due debt.  Once a debt has reached its statute of limitations, it is considered time-barred. In this instance, the law would no longer consider the debt collectable. The amount of time it takes a debt to become time-barred varies from state to state. Here is an interactive chart on state statutes via creditcards.com.  Ok, no on to the length of time information can remain on your credit report.  Thankfully, this is rather straight forward.  After seven years from the original date of delinquency the debt becomes eligible for removal (five years for NY state residents.)

Now, the best way to avoid negative entries is to make your payments on-time.  If you fall behind, develop a plan to catch your account up to a current status, and negative entries will age into obscurity (the longer the information remains on your report, the less weight it has on your credit score.)  For more information on this topic, check out – How Long Does old Debt Stay on Credit Reports?

As a reminder we’re holding a contest in celebration of Financial Literacy Month.  If you answer the most questions correctly throughout the month, you could win a coaching session with ‘America’s Money Answers Man,’ Jordan Goodman.  To enter, simply answer our Question of the Day at Cambridge Credit’s Financial Literacy Month Contest.

Until next time I’m Thomas Fox for Cambridge Credit Counseling Corp.