February 15, 2007


D.I.Y. or Die

One day you're spending money like usual. A little swipe here, another there. Then suddenly, irrationally, powerfully... your debt strikes terror into your heart. It's the one thing holding you back from your dreams. How did it get so big? What do you do now?

Well, if you're like most of us, your enthusiasm and urgency dies after the monotony of monthly payments kicks in again. Sure, you might make a dent or two with a couple of big payments, but the debt doesn't disappear fast enough. When will you ever be done paying off all this money? Who can figure that out with all the compounding interest and revolving credit lines?

Then out of the Internet / infomercial a solution is born. You've seen them. They say 'erase your debt'. 'Get rid of your financial worries.' Of course they have a plan, a "Debt Management Plan", that is.

So how does a DMP work? Well, basically this is the process...
  • You agree to have an agency contact your creditors and make a payment plan
  • They re-age your accounts (stop late fees by bringing them 'current')
  • They lower your interest rates
  • They tell you how long it will take to pay off the total debt
  • You pay the agency a monthly amount to divide among your creditors
  • You also pay them a monthly service fee, usually between $15-30, plus they get the total first month's payment
All of which can be done by yourself! Do it yourself. Ask your creditors to lower your interest rates, they'll do it.

So what's the problem with a debt management plan? Well, first of all, the fact that you are engaged a plan shows up on your credit report ie. lowering your score. Secondly, all of your accounts are frozen and cannot be used.

And then there's the horror stories... many of them. I've heard them from friends, co-workers and clients. I'd like to hear yours. Please leave a comment and share one of your own, or maybe it was a positive experience. Let us know.
Posted by Tom on February 15, 2007 @ 3:22 PM | 6 Comments | Post a comment

February 9, 2007


Holidays (round 2)

Don't let the winter get you down! It's Tax Season! A time of hope and renewal for many.

"Wha...?", you say? It's true!

It's a popular story around this time of year. 'Sure, I've fallen behind on those rent payments and, okay I admit it, the credit cards too. But it's okay! The tax man is coming and a massive refund he brings.'

For many with poor money management skills a cash windfall simply means getting right, maybe back to normal again. (...not to mention wasting money on "instant refunds"...)

For those of you in the know, however, it probably means something more. So what do YOU plan on doing with that refund?


Posted by Tom on February 9, 2007 @ 3:07 PM | 1 Comments | Post a comment

February 2, 2007


Home is Where the Heart Is

It's an exciting time in the world of homeless services. There is more media attention than ever on the need for affordable housing. People are talking about 'living wages' and there's the potential increase in the minimum wage.

Now, Fairfax County is starting an innovative housing program geared towards homeownership. We at Good Shepherd Housing are particularly excited because one of our own clients has been accepted into this competitive pilot program.

It basically works like this: clients get a voucher, similar to Section 8, that allows them to pay only 30% of their income towards rent, allowing more money to go towards savings. Then clients receive five years of support services from a case manager and access to Fairfax County's excellent Homeownership Programs. These programs include down payment assistance, low-interest mortgages and even set-aside properties at a reduced rate.

Obviously, this is quite a big step forward in terms of helping low-income families escape poverty and build wealth. Homeownership is one of the primary ways to build wealth and establish stability. We wish our client and everyone else involved the best of luck.
Posted by Tom on February 2, 2007 @ 10:31 AM | 0 Comments | Post a comment
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