Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then...

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Transcript of Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then...

Page 1: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections
Page 2: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Module 4: Debt LessonPart 2

Page 3: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Module 4: Debt LessonPart 2

Getting Rid of Your Debt Forever

Page 4: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

The Lesson Blueprint

✓Where do I Start First?

✓What Tools Can I Use?

✓Rookie Mistakes

Page 5: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Where Do I Start?

✓Debt Snowball

Page 6: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Debt Snowball

✓Lists Your Debts From Smallest to Largest (Not the Mortgage)

✓Ignore the Interest Rates!

✓Minimum Payments on Everything

✓ATTACK the First Debt!

Page 7: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

✓ List them all out on

this form

✓ Min Payment Due to

Keep Current

✓ Attack Top One

✓ Roll that into Next

One

✓ Roll that into the 3rd

one

✓ Keep going…..

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Debt Snowball

Why Does it Work?

✓You will Start Knocking Out Debts Early On

✓Behavior Change

✓ It is Step-by-Step

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Debt Snowball

Why Does it Work?

✓ It is Visual

✓ It is Really a Goal Sheet

Page 10: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Debt Snowball✓Exceptions to the Debt Snowball

✓Student Loans in Deferment

✓ If you owe the IRS

✓ If you have a loan against your retirement account

Page 11: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

But I Don’t Have The Money

What Should I Do?

Page 12: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Credit Card Debt✓ UNSECURED Debt

✓ If you Don’t Have the Money, then you Don’t Have the Money

✓ If it goes into Collections, it goes into collections

✓ Your Family Eats BEFORE Visa gets paid

✓ They took a Risk too!

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Auto Debt

✓New Cars lose 60% - 70% in the first 4 years!

✓Should I Sell the Car?

✓2 Year or Less Rule

Page 14: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Auto Debt

✓Upside Down in the Loan?

✓What if Have a Car Lease?

✓ Call the Leasing Company & Ask for the Payoff or Buyoff

amount

Page 15: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Auto Debt

“I cannot make the payment, what should I do?”

✓See what the car is worth and sell it Private Party

✓You will probably need a small loan to cover the

difference

Page 16: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Auto Debt

“I cannot make the payment, what should I do?”

✓ Avoid a Repo at all costs!

✓ They will sell your car quick (cheap) and sue you for the

difference

Page 17: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Going from $31,000 Loan to a Paid For Car in 12 Months

✓ You owe $31k on a Truck at $482 for the next 66 months

✓ The Truck is worth $28k

✓Get a Smaller Loan for $6k

✓ Sell Your $28k Truck and Buy a $3k Used Car

Page 18: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Going from $31,000 Loan to Paid For Car in 12 Months

What Happened?

✓ You just went from a $31k Debt to a $6k Debt

✓ Average Car Payment in America: $482

✓ ~12 Months

Page 19: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

The $3,000 Beater!

Page 20: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Credit Report Inaccuracies

1977 Federal Fair Debt Collections Practices Act

states:

All Credit Bureaus are Required to Remove all Credit

Report Inaccuracies within 30 days of you notifying

them

Page 21: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Credit Report Inaccuracies

✓ If they can’t get it done in 30 days or they ignore

you, the item MUST be removed from your report.

It’s Law.

✓Always Create a Paper Trail (Letter or Email)

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Collection jerks People

✓They want to create an emotional response to get

you to pay them

✓They will Lie, Lie, and Lie again to get you to Pay

Page 23: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Collection jerks People

✓ They don’t want to help you

✓Their job is to Harass You

✓Not all Collectors are Jerks (just most of them)

Page 24: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Collection jerks People

✓ Your rights under the Federal Fair Debt Collections

Practices Act of 1977

✓ They can only call you between 8:00am – 9:00pm YOUR

LOCAL TIME

✓ Collectors Cannot Call you at Work

http://www.consumer.ftc.gov/articles/0149-debt-collection

Page 25: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Collection jerks People

✓ They cannot garnish wages without a lengthy court

process

✓ Every collector must send you a written “validation

notice” telling you how much money you owe within five

days after they first contact you

http://www.consumer.ftc.gov/articles/0149-debt-collection

Page 26: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Debt Morals

If You Signed for the Debt, You Have a Legal &

Moral Obligation to Pay it Back

You Still Come First

Page 27: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Action Steps1. Pull Your Credit Reporthttp://www.annualcreditreport.com

Experian, TransUnion, Equifax

2. Debt Snowball

3. Insert into Your Budget

4. Attack, Attack, Attack!

Page 28: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Rookie Mistakes

✓ You STILL use the Math

✓ You Make Yourself the Exception

✓ You Do Nothing and Expect Change

Page 29: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

It’s Up To You!

✓ What Does Your Life Look Like Debt Free?

✓ How Much Longer Can You Go On Like This?

✓ Will You Change Your BEHAVIOR?

✓ There Isn’t Another Option

Page 30: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

Wrapping Up

✓ The DEBT SNOWBALL Works Every time

✓ Knowing Your Rights

✓ If you have the money – Pay it

✓ Get it out of your life Now & Forever

Page 31: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

In the Next Module…

What Insurance You Need?

Why You Need It?

The Break Down of Each?

Page 32: Module 4: Debt Lesson Part 2 · Credit Card Debt UNSECURED Debt If you Don’t Have the Money, then you Don’t Have the Money If it goes into Collections, it goes into collections

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