Debt Bytes Blog

Debt Collection: Something Different This Way Comes

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By some estimates, more than a third of the adult population in the US is going to come in contact with a debt collector at some point. If you have never had to deal with debt collector before, your only exposure to the industry could be from the media, and perhaps by way of this hilarious anecdote about debt buying from John Oliver. Or, you may have tuned in to random soundbites on the nightly news promoting wariness about debt collection scams that flare up.

Count yourself lucky if you have missed out on financial setbacks and have not had to contend with collection issues. Count yourself luckier still if your contact with the legitimate collection side of the debt and credit industry was only in the last couple years.

You are the luckiest if you first come in contact with a debt collector in the near future, say 12 or more months from now. I say this with confidence because the wild west days of debt collection are over. Some people just have yet to catch up with this fact.

Whats different about debt collectors today.

I’ve discussed much needed changes in the debt collection marketplace in the past, but you may be surprised (I still am somewhat) that we are fast entering a time where debt collection is highly civilized (said with a lilt in my voice from Old Spice commercials).

Because of rules and law changes at the state level, and also due to CFPB investigation and enforcement actions against banks and debt collectors, there is much that has changed over the last few years in the debt collections landscape. I want to touch on some of the most dramatic developments that have already influenced collections first, then wade into what debt collections may look like as soon as next year.

Debt collectors made changes in some of the following ways:

  • Starting with the recession, and record credit card default rates, debt collectors at banks and at the larger third party agencies took on a “we are here to help the customer” tone. This stood in stark contrast to the more normal stern sounding, stress the customer out – your full balance is do right now – debt collection tone that existed prior. Record default rates are no longer, but the change in tone of debt collectors largely stuck.
  • Legitimate debt collectors are far more compliant with existing rules and laws than ever before. Things like not calling before 8 am or after 9 pm, or the frequent calls to family and neighbors under the auspices of “locating the consumer” (when they already confirmed your address and talked to you on your phone 3 days ago) happen only seldom, and when they do, it is likelier today you are dealing with a blatant collection scam (I have another article coming next week about the rash of scams I am seeing of late).
  • Banks are putting collections agencies they work with under much higher scrutiny and auditing them stringently. You really have to have your ducks in a row as an agency to get accounts from anyone other than small local creditors and service providers. This has cleansed some of the questionable actors from dialing for dollars all by itself.
  • Banks have to follow new OCC guidance about who they may sell accounts to (transferring the legal rights to unpaid debts is quite normal since the 1990’s). This guidance from a primary regulator like the OCC has been compounded by federal regulatory action by the CFPB against major banks, debt collectors, and debt buyers. The affect of this has been less debt for sale, though that market may be thawing. More on this development below. But suffice to say that the John Oliver video I linked to above would have been much more applicable, say 6 years ago, than today. While I laughed throughout the video, most of the concerns it raised are already managed by state and federal regulators in just the last few years, and will be even more so in the months ahead. While buying a portfolio of really old, out of statute to sue in court medical bills is unfortunately still possible, you would not be able to buy fresh default credit card debt how Oliver did.

Debt collectors and new realities.

There are only a few states with what I would consider excellent consumer protections from certain debt collector practices. California recently enacted the Fair Debt Buying Practices Act, and New York is getting serious about how collectors interact with its residents. There are several states considering legislation to further protect people from questionable collection practices. Regulators have already made meaningful impacts by issuing new guidance to banks, and through existing and pending enforcement actions.

Regulatory actions from the CFPB against the largest credit card issuers, debt buyers, and a large collection law firm, set beside new bank guidance by the OCC regarding how banks sell or place debt for collection, have combined to give somewhat clearer visibility of more formal changes to come that bring a national impact with them.

Fair collection practices for collectors.

Some existing actions prevent the sale of debts that cannot be properly documented to the standard a court may set, or that have been part of a bankruptcy filing. Other actions prevent how or when someone will be sued by a debt collector.

Last week the CFPB announced an upcoming July 28th field hearing about a required small business impact study regarding proposed debt collection rules. We should get to see more details about those proposed rules for the first time in nearly 2 years.

Here is a wish list of a sort that I hope to see changed nationally, and with all players, when it comes to debt collection.

Debt Documentation

Similar to the provision of the FDBPA in California I mentioned above, we need every flavor of debt collector (whether banks collecting post charge off, a collection agency, collection attorney, or debt buyer) to provide every consumer making payments an accurate accounting of how those payments are being applied.

It is ridiculous the trouble people express to me about making payments to a law firm or collection agency, and sometimes for years, without any invoicing and billing system to reflect the amount remaining owed. They try in vain to get some kind of accountability and get nowhere, and that is because it is often not required. It is shameful we have gone as long as we have without this fundamental math being readily provided.

I believe legitimate collections over payment installments would actually increase the more the consumer could see what is left owing. And the debt collection industry as a whole would gain a huge bump in credibility if accurate payment invoicing were the norm.

And while we are on the subject of debt documentation, it should be required that all debt collectors (banks too) are required to send consumers an outline of what they are agreeing to accept as payments, or settlement in full, prior to the consumer remitting the first monthly payment, or full settlement amount, on charged off debts. This practice became widely adapted by the entire industry during the recession, but there are still notable exceptions. Synchrony, a huge branded credit card issuer, still messes with consumer confidence by delaying documentation,  and Portfolio Recovery Associates, the second largest debt buyer in the nation, appears to think its okay too.

If I am the OCC I would want to know why Synchrony values this practice. And if I was thinking about selling debt to a debt buyer like PRA, I would think twice until they got this ridiculous “no soup for you” policy in line with what they partly already have to do for newly purchased debt in California.

Post Charge Off Interest

Just because you can does not mean you should. Banks charging default interest when accounts go bad is part of the carrot/stick principle of lending. It is also part of the “what the crap… how is making an un-payable debt more un-payable going to help you collect” question I have had for years.

If the IRS is not going to treat an amount as income if cancelled or forgiven, than why have post charge off interest at all? Someone with a huge data set please run the numbers and show me the meaningful benefit when you measure balance accretion on the 1/5 of the accounts that go more than 90 days late (that will ever be collected on), against the safety and soundness principles of our banking system, and the confidence of consumers and the public dealing with collections.

Is that return a benefit to lending practices as a whole? Is there more to be gained by eliminating post charge off interest from accruing? My guess is NO to the former, and YES to the latter.

Bank and Creditor Notifications

Some early indications from recent regulatory action is that large credit card issuers are sending what many call a “Goodbye Letter”. This is the bank notifying a former customer – that could not keep up required minimum payments – that their account has been assigned or sold, and who to.

These types of consumer notices will help a percentage of people – who are still trying to actively manage their financial setbacks – to know who is legitimately collecting, and to be prepared for future communication and resolution efforts.

I imagine better lettering to consumers will help everyone in the collection life cycle. I hope this becomes a required practice.

Attorney Fair Collection Rules Carve Out

Please… for all that is good and gracious… do not carve out attorneys from new rules designed to protect consumers. Attorney collection abuses are no different than any other debt collector. In many cases it can be worse, as judgments lend credibility to bad practices and the impression that bad acts and practices are court sanctioned.

I have participated in regulatory changes at the federal level. Attorneys were provided some limited carve outs from consumer protection in debt relief. That door left ajar created 100’s of millions of dollars of consumer abuse (that we know about so far).

According to Jared Strauss, a former debt collector for attorney and non attorney agencies “If attorney’s are carved out – regular collection agencies could largely cease to exist”. Jared has keen insights into debt collector behavior, such as how debt collectors look at your credit, and why debt validation letters can cause trouble. I share his concerns.

The abuse we have seen in legal collections is not limited to the court procedural stuff, such as running collection mills with attorneys supposedly supervising thousands of cases a month, affidavit and notary chicanery, or the foundation lacking to prove a claim once it is brought.

Employees that man the phones for debt collection attorneys are some of the most egregious offenders when speaking to consumers.

Beware the unintended consequences.

Fair Collection Rules for Banks

I have called out some of the best banks out there for how much of an improved debt collection environment they created for their card members and customers for unsecured accounts. Much of those changes came as a result of the recession. And like I mentioned above, the changes have largely stuck. But as can be seen from consent orders between the CFPB and banks, there is reason to extend fair debt collection rules to credit issuers.

If credit card originators were subject to debt collection rules it may lead to some banks assessing the benefits to internal collections. They may opt to outsource all collections after 90 day defaults. Some banks who are not selling debt, like American Express and Discover, may start to look at the benefits of that type of recovery. Maybe Wells Fargo will sell debts instead. If collectors there blatantly lie to me, what can the consumer expect?

Compliance and legal costs at originators, set beside expectations on recovery from post charge off collections, may create a more robust collection space. And that space may soon be filled with nothing but meaningfully regulated entities, rather than years past where we are left to point to the cleanest dirty shirt.

The changes I know would benefit consumers and the collection industry alike are not limited to those above. There are many nuanced things to come that I will cover in greater detail here and on the Debtbytes video channel.

Rebuild Credit in 5 Important Steps

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I need to rebuild credit for myself, and am doing so right now, so I thought I would walk you through some of the steps I’m taking to meet my new credit goals.

Please understand that there is no “quick fix” for your credit. Your credit report is created based on your use of borrowed money, whether responsibly or irresponsibly. You can, however, put in some effort to improve your credit by following the steps outlined below.

You can get immediate results with some of the steps, but to the rest, I’ll say, “Time heals all wounds.”

What to Pay Attention to When You Rebuild Credit

In the last 5 years, I’ve had some seriously derogatory marks added to my reports due to some unforeseen events in my life. I’ve also not had any credit cards in the past, BUT I also have no debts (which is both good and bad). This is a big reason why I need to rebuild credit, because it affects my “credit history”, which is a significant factor in deciding my credit score, but there are other more important factors.

According to FICO, these are the top 5 most important things that affect your score, in order of importance:

  • 35% Payment History – Paying your accounts on time (collections, late payments, etc.). This is likely what’s currently affecting your credit negatively right now, but it’s also what is vital to your success here. This is the most important marker for your credit. Making your payments on time, consistently, will have the most positive affect on your credit, but it will also take the longest. Negative accounts will remain for 7 years, but will become less important to your credit score as they age.
  • 30% Amount Owed – Combines debt, credit utilization, and number of accounts. You want a small utilization rate (credit balance to credit limit ratio – keep it low, no more than %30 but shoot for under 20%).
  • 15% Credit History – Age of accounts and how often you use them. You don’t have much control over aging, but try to keep positive accounts active. Small, infrequent charges.
  • 10% Credit Mix – Types of accounts (installment, revolving, mortgage, etc)
  • 10% New Credit – Don’t open too many accounts in a short amount of time.

As you can see, payment history and the amount owed adds up to more than half of your credit score, so these are the two you should focus on the most. Amount owed encompasses a few things, and what they mean is you need to keep your debts low and your credit utilization even lower, with a manageable number of accounts.

As a side note, I would like to mention that too many hard inquiries will have a mildly negative impact, and public records may have a more significant negative impact to your credit. Public records include liens, bankruptcies, etc.

Set Some Personal Credit Building Goals

Next, you’ll want to set some credit goals, and to do that, you need to locate the part of your report that talks about why your score is low. It will usually be titled something like “understanding your score” or “factors affecting your score”. This will give you some clues as to what is hurting your credit and what you can do to improve it.

In goal setting, you should also include a short-term credit score milestone, and once you reach that, a longer-term credit score milestone. Please set realistic goals for yourself, so they’re reachable. You want to feel encouraged as you move forward and know that what you’re doing is helping, because it can be a frustrating and slow process. As far as credit scores go, here are the ranges for FICO:

  • Poor: 300-579
  • Fair: 580-669
  • Good: 670-739
  • Very Good: 740-799
  • Exceptional: 800-850

I tend to use the cut-offs as my milestone goal. If I’m in the low 500s, then I strive for 580 to reach “fair”. Don’t worry if it takes you longer than expected. As long as you’re making progress, you’re doing great!

Step #1: Get to Know Your Credit Reports

To start to rebuild credit is a major task and takes time, but in the long run, it will be worth it.

The first thing you’ll want to do to rebuild credit is to get to know your credit reports intimately. Get your hands on all three of your credit reports and scores, if you don’t already have current copies. You can get all three reports (no scores) through annualcreditreport.com for free, every 12 months, or you can order them directly through the credit bureaus’ websites. Experian offers all three reports with scores for $39.99.

You can also sign up for sites that aggregate your credit report data and share that with you without charging a fee, such as Credit Karma. The aggregators may not have information from all the credit bureaus, and may not have the most up to date information (for those working toward an immediate goal).

Step #2: Dispute Anything Legitimately Inaccurate

Once you have your credit reports, look over them carefully for inaccuracies. Lenders and credit bureaus both make mistakes when reporting, so if you find that you need to dispute inaccuracies or out-dated information, please see my post on How to Dispute.

This includes everything from names, jobs, and contact information to the accounts themselves. Be sure to clean it up and make sure everything is accurate and up to date. The information reported will vary from one credit report to the next, so be thorough.

Step #3: Resolve Any Key Derogatory Debts

I don’t know why this is never mentioned in credit building articles and posts, but paying off your bad debt is vital to improving your credit score.

If you have unpaid balances, charge-offs, and/or are in collections, this will continue to be a derogatory mark on your credit report for 7 years before it comes off of your report. Even if you pay it, it will still remain on your report for 7 years, but it will show that it’s PAID, and that changes things. This little shift will help boost your credit score and make you more attractive to lenders.

Being delinquent on secured or unsecured debt is one of the most damaging things to your credit reports, so it’s absolutely step #1 in improving your credit score.

If you have any unresolved debt, I suggest you stop here, and get a debt resolution plan together today. You’re in the perfect place to do so. There are many options here for getting debts paid off right here on this website.

Step #4: Apply for New Credit (Pay on Time and Keep Utilization Low)

Once any disputes are completed to your satisfaction and you have your goals in mind, it’s time to take action. For me, since having no revolving credit was hurting me, I decided to get a secured card through Discover for $500 and only use it at a 10-15% debt-to-credit ratio, meaning I never charge more than $50-$75 on it each month, and pay it off completely and on time. After six months, I can be reevaluated for a larger credit line, and possibly an unsecured credit card.

Don’t apply for multiple revolving accounts in a short period of time, as this appears to lenders as though you need credit. I only applied for one secured card and will wait 6 months before considering any other revolving accounts.

And, don’t apply for anything you can’t afford to pay on time, every single time. And, keep your credit utilization rate under 30%, but ideally under 20% or lower.

Over time, your positive credit tradelines will outweigh the negative ones, but it takes time and patience.

Note:Generally speaking, new accounts may temporarily show negatively on your credit report until around 90 days of on-time payments.

Small Installment Loans

I needed to improve my credit mix and was already in the market for a “new” used car for my oldest daughter, and it occurred to me that this may be an opportunity to help rebuild credit by financing. At first, I was concerned that my credit may not allow the financing, but I soon learned that “fair” scores are considered borderline “good” at a car dealership.

I got a 7.24% interest rate, which isn’t great, but that’s not really the point. The point is the bank will make a little money off of me, and in return, I will use them to build up my credit. Another win-win!

I didn’t want to be in debt with this purchase or pay massive interest, so I saved up the money in advance and put it in a separate savings account to guarantee that I would have the money to make my payments in full, and on time. I put a nice  down payment on it (banks like to know you have cash to put down), and was able to finance the rest over 48 months. Of course, I’ll be paying it off in less than a year without penalty, but don’t tell the financing company!

If you prefer to start smaller, consider a credit builder loan, but I have to be honest and say that I don’t consider this a good option unless you really need it for a specific reason because of the interest charges.

Step #5 (optional): Become an Authorized User to Build Credit

If you have someone you trust who is willing to add you as an authorized user on their credit card account, this is something to seriously consider. This is, by far, the quickest and easiest way to give your credit a boost!

There are risks for both parties, though, so be sure it’s someone reliable, you can trust. Make sure this person has a revolving credit card account that has a strong credit limit, has great scores, good credit utilization, pays on time, etc. All of this amounts to a credit card in good standing. Anything less than this will not be helpful to you, and in fact, could be detrimental to your credit.

It’s important to remember that you are just using this option as a means to build credit and should not be given this person’s card to use for purchases. We’re trying to build credit, not create debt.

The Bottom Line

I don’t believe credit is essential to life, but it’s definitely essential to qualifying for a mortgage. Most other things you can reasonably save up for, even a used car. Only buy what you can truly afford, even if you finance it, and pay on time, every time.

Everyone makes mistakes, even with credit, or especially with credit, but it can be remedied over time with a little patience and forethought.

I will post my credit scores and any changes in them over the next months, or possibly years. I’ve already seen a 41 point increase in my Equifax score in the last month, but I think that’s only the beginning. If you are beginning to, or in the middle of, improving your credit, post more about your story and goals in the comments below. You can help others and get expert feedback on many related issues you may have.

Update 6/6/2019: In the last six months, I’ve manage to jump to 700, but this puts me at good, and my goal is to get above the 740 mark for “very good” – I’ll dream about 800 much later. This is a big step for me and I hope to keep it going, as I strategize my next steps. I’ll keep you posted.

Update 7/15/21: It’s been five years since this post! My credit scores currently hang between 780 and 810, and have been such for approximately the last three years, so it really only took me just a few years to accomplish my credit rebuilding goals. I have jumped the 800 mark a few times, but then I got a car loan, so I had a small, but temporary, drop for awhile. Just remember, there will always be a “reaction” from your credit report as you make new decisions about your credit.

How to File a Credit Dispute Online: DIY Credit Repair

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When you file a dispute for inaccurate tradelines on a credit report, for removal, it is affectionately known as “credit repair”, and although I’m no expert, I still feel more qualified to do it than most credit repair companies, who tend to be underhanded in their approach and charge a pretty penny.

DIY credit repair? Yes, and it’s better than the alternative. Doing it yourself is relatively easy, 100% free, your financial information is kept between you and the credit bureaus, and you have total control over your approach, although not necessarily the outcome.

I have previously written about how I haven’t used a credit card in many years, and feel that credit is not essential to life. I still strongly believe that, but in the face of a possible home purchase in the somewhat near future, I can see that it’s in my best interest to repair and “bulk up” my credit now. This doesn’t mean I’m going to run hog wild with credit cards. Instead, I recently funded a $500 prepaid card through Discover, and I’m using it wisely  at a 10-15% debt-to-income ratio while paying it off each month. My main focus today, however, is to dispute inaccurate and out-dated information on my credit report, which will, in turn, raise my credit score with little to no effort on my part.

The Fair Credit Reporting Act is what gives the right to privacy and accuracy from the credit bureaus in charge of reporting your credit information (Equifax, TransUnion, Experian). The FCRA also allows you the opportunity to file a dispute against entries on your credit report that are erroneous or out-of-date.

Why Should I File a Dispute?

There’s nobody saying you need to dispute anything, however, you should know that certain types of inaccuracies can have a seriously negative impact on your credit score. These can vary greatly, so it’s in your best interest to monitor your credit report to be sure it’s up-to-date and accurate.

How to file a dispute online against entries on your credit report.

The information reported on your credit report is used to create your credit score, which is used to assess whether you are credit worthy. This is a huge deciding factor in whether you qualify for any credit at all (including a home mortgage), but it also plays a huge role in how much interest you pay on your loans and credit cards. If these things are important to you, then your credit should be a top priority.

What is a dispute?

A dispute is, essentially, a disagreement. When it comes to credit reports, you will generally be disputing an item that falls into one of the following categories (most common):

Incomplete or inaccurate Information – Examples:

  • an account that’s been paid but is still reporting a balance
  • personally identifiable information being reported incorrectly
  • accounts closed by you but show as closed by “grantor”

Possible Mistaken Identity – Examples:

  • any account listed that doesn’t belong to you
  • unfamiliar “hard pull” inquiries when you haven’t applied for credit
  • previous addresses or phone numbers listed that have never been yours

Out-of-date Information – Examples:

  • paid tax liens reporting as unpaid. An unpaid tax lien will remain on you report for 10 years, but a paid one will only stay for 7 years from the date paid.
  • a negative account reporting past the statute of limitations, which is 7.5 years from when payments stopped. Positive accounts can potentially remain on your credit report forever.
  • any account that is still being reported after it was discharged through a bankruptcy. The bankruptcy itself will remain on your credit report for 10 years.

*** DO NOT TRY TO FILE A DISPUTE AGAINST LEGITIMATE DEBTS THAT YOU KNOW YOU OWE. ***

Getting Your Credit Reports

The first step to dispute is pulling your most current credit reports. You can pull all three for free using annualcreditreport.com, but only once every 12 months. Unfortunately, I found the website to be less than user-friendly. I tried to get all three of mine, but only ended up being able to view my TransUnion report. I had to pay for the other two through their company websites (equifax.com and experian.com). You may have more patience than me (I could have written in to get my free ones from the two I could not access immediately online).

Once you have your credit reports, print them out. You may notice an inconsistency between them, but this is mostly due to the imperfections of the system itself. Some lenders report to one bureau and not the others, or maybe you had one account while you were married, then opened a new one after your divorce. Not to mention the timing of the updates can all vary and show up at different times on your report. The system is the system… for now.

Focus on one report at a time and study it. You need to become familiar with your credit reports and know what’s on them, who you owe and who you don’t. This may sound pretty basic, but for people with debt, this may prove to be a challenge. If you have unpaid balances, chances are those debts have been sold off to a debt buyer or debt collection attorney, and will not show up under the original creditor’s name, making it difficult to identify. Or, it may be missing from your credit report altogether, if those buyers got their hands on your account recently and haven’t done anything with it yet.

How can you find your debt? Usually, you can call your original creditor directly, and they can tell you who they sold it to, but if it’s been a few years, it could have been sold more than once and, in that case, you’ll have to follow the breadcrumbs to find it. Michael Bovee talks more about this here:

Where to Look in Your Credit Report

The next step is to identify which entries are valid and which are not. Most potential disputes are going to be found under the “Negative Accounts” area within the credit report, so start there. In my case, though, significant errors were found under public records, so be sure you cover the entire report from each credit bureau.

A special note on personal information. Please make sure your name, addresses, phone numbers, and employment are all correct. This is just as important as the accounts themselves, because if you’re listed at a previous address or have a phone number reporting that’s never been yours, it may signify a possible mix-up in identity, which is vital to correct immediately. I found an out-of-state phone number on mine I will also be disputing.

Note: When you file disputes, do so all at once, as another one cannot be filed until your first dispute request is complete, which can take up to 30 days.

The Best Way to File a Dispute will Vary

Submitting your dispute is relatively easy, in most cases. The majority of people will submit theirs online through each credit bureau’s website, like I did. You’ll have the option to upload any supporting documentation and you can check the status of your dispute during the 30-day investigation.

You can also call or write the credit bureaus. Most credit experts will recommend writing the bureaus directly, so you can tell your side of the story and provide documented evidence, especially if you have a unique issue or complicated case to plead. This option also leaves a “paper trail”, in case things don’t go your way and you decide to sue for damages at a later time.

Note: You can’t sue for credit damage unless you dispute it first. And, don’t send in any original documentation that you aren’t willing to part with permanently.

I filed my disputes online because it was quick and easy. If you also prefer to file a dispute online, make sure and read the fine print, as you may be agreeing to arbitration down the road – in lieu of a trial – if you ever did want to pursue an action against a credit bureau (such as an FCRA violation).

Call Experian-1-888-397-3742
Online Dispute – https://www.experian.com/disputes/main.html
Mail – https://www.experian.com/disputes/experian-mailing-address.html

Call TransUnion – 1-800-916-8800
Online Dispute – https://www.transunion.com/credit-disputes/dispute-your-credit
Mail – https://www.transunion.com/resources/docs/rev/personal/InvestigationRequest.pdf

Call Equifax-1-800-685-1111
Online Dispute – https://www.equifax.com/personal/credit-report-services/credit-dispute/
Mail – https://www.equifax.com/cp/MailInDislcosureRequest.pdf

Getting Results

If disputing items on your credit report that are legitimately wrong or out-dated, and the documentation to support it is provided, there shouldn’t be a problem getting the bureaus to update it accordingly.

If the credit bureaus don’t see your side of things and the result is negative, then it may be advisable to contact the furnisher of the information. If you decide to make a second go of it, I would strongly encourage you to do so in writing and include all the details, reasoning, and evidence to support your case. If this also fails, you do have the option of filing a complaint with the Consumer Financial Protection Bureau (CFPB).

In any online dispute, providing supporting documentation obviously helps the bureaus to make quick work of a file and get it resolved quickly. In doing this, Equifax had my changes updated and resolved in two days! It was pretty straightforward, and I provided everything they needed to make the correction, so things moved along quickly without issue.

I don’t imagine the rest will come through as quickly, as I have two more disputes pending with TransUnion, but surprisingly, none with Experian (<—most accurate for me). I will be checking the status of these disputes in the coming weeks, and update you with the final results. 

Now I wait impatiently.

UPDATE 6/27/16: TransUnion completed my two disputes; a tax lien showing as unpaid even though it had been paid, and another tax lien I did not recognize and could not find in the secretary of state database, so I disputed it as an error. The former was updated to show as “released” and “paid”, and the latter was proven to be mine, but as “released” and “paid”. TransUnion provided me with an updated credit report to review these changes, which was nice. I didn’t receive that through Equifax.

Through my Discover account, I was able to see a 41 point “bump” in my credit score (I have access to my TransUnion credit score for free)! This could be due, in part, to my new secured Discover credit card I opened when I recently repaired my credit.

Anyone with questions, concerns, or feedback about the information provided on your credit reports or the submission of  disputes is welcome to post in the comments below for expert feedback.

First Progress Secured Credit Card from Synovus

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Earlier in the week I engaged in a string of comment replies with a reader who had paid some old collection accounts and is working on rebuilding his credit and improving his FICO score. We exchanged some comments about getting approved for a First Progress secured credit card as a tool to start rebuilding his credit. I asked him to submit his experiences (as he was so thorough in his comments) so we can start a new page.

You can read the original comment exchange about paid collections now on his credit reports. What follows are Jason’s own words about his experience researching the First Progress secured card, and what lead him to choose that card over others.

Here’s the whole story!

Declined for an Unsecured Credit Card

Michael, thanks for the suggestion! I did try Cap One and they declined and provided me with my credit score on the low end mentioned above (521). I went online and researched the Better Business Bureau and found a secured card by First Progress (Synovus Bank) Rated A+.by BBB. I carefully read all reviews, complaints and resolutions and got a good grasp of not only how they operate but how they respond to complaints.

I learned a lot about the ins and outs of working with them. A lot of the complaints [about the First Progress card] revolved around insufficient knowledge of methods of payment, times to process payment , length of time it takes to process an application, etc. I’ll leave it to the reader to research on their own via the BBB website.

I did go ahead and apply and fund the First Progress card. The $200 security deposit is quite a lot to me, but might be worth more than many times the investment over the long term. They do report to the three major credit bureaus unlike some outfits such as Fingerhut. They do caution that this also means NEGATIVE behavior is also reported.

I called customer service and even though I was not yet a customer, I was able to ask pointed, directed questions regarding the application, approval and monthly payment process. The Synovus rep was very helpful and courteous and confirmed what I had read in the BBB reviews as to their company practice. If I am not approved, they will return the $200 via ACH (mine was $200 but amounts can vary from under $100 to as much as $300); generally according to the rep, unless you have open fraud on your record or open bankruptcy most are approved. We will see.

credit card

The bottom line is you have to do research and I am planning for the day when I get better to be able to have a more positive credit rating so I can get back on track again. This entire experience has been a lesson and your pages have been invaluable.

Review of First Progress Secured Credit Card

I checked and read through most of the comments, complaints and resolutions about the First Progress secured card. An A+ by the BBB rates highly in my book and I don’t mean to seem like an advert! The First Progress website is available online and I am not here to advertise.

My initial read through of the home page was rather straightforward. It explained how the process works and that they do report to the three credit bureaus and who the underlying bank issuer is.

The “About the Program” section goes a bit deeper into the weeds and requires careful reading. This could stand to be cleaned up a little. How to apply explains the three classes of cards credit cards they offer with a lower annual fee and a higher APR to a higher annual fee and lower APR; it does state if approved for one, you are approved for any. As always, read the important disclosures.

The FAQ page is generally helpful, the one thing lacking is a well defined and easy to define customer service number as they gear heavily toward written or online customer service. Fortunately, the BBB web page customer service number is valid and is listed as (866) 706-5543.

Upon calling, I had to navigate the ever popular IVR and enter 0# repeatedly when it prompted for a card # to get routed to a rep. Once I reached a rep, I stated I was not yet a customer but had applied and both times I called, I was treated well, respectfully, courteously and the rep went in to check the status of the application. Using the questions and points garnered from the BBB complaints/resolutions I asked the same questions and received consistent answers.

One important fact (discovered from reading BBB issues) is they rely on mailed in payments or payments over the phone for which there is a $10 charge (for phone). They heavily promote bill pay transactions instituted from your bank (for which there is no charge and no hold period). There is a 10 day hold period on crediting mailed in payments which has resulted in some unexpected late charges, so folks want to MAKE SURE THEY ACCOUNT for that. ***you may want to verify this as I am digesting A LOT of information*** I am certain this probably was instituted because the company was burned by NSF check charge backs; so they wait for the check or payment to post and clear. In terms of complaints received by BBB regarding this they seem to willingly reverse late charges/negative credit impacts, despite these being spelled out in the terms/agreements somewhere.

Credit Rebuilding Takes Time

Another issue revolves around the application process time. This was brought up in the BBB complaint section. I think a lot of folks apply when they really need some money and don’t realize that the process takes time.

Two different reps indicated that the credit department mails in requests to the bureaus and waits for responses, and there is a big difference between “No credit history required” as stated on the page where the choice of cards is offered and the fact that while that is true, they most certainly do run your credit report, and if there is additional information required that may also add to the time. Federal laws come into play here which the banking industry is bound by. Obviously providing correct contact information is critical and since this updates credit bureau files with new tel# and addresses, some folks may be leery of this, fearing a barrage of new collection activity. Some get tired or impatient and wind up complaining to the BBB this is a “scam” but most if not all of the responses from this organization resulted in a cancellation of the application and an initiation of an electronic refund.

I would recommend you also thoroughly review the BBB complaint/resolution section for a complete grasp of the issues.

Nonetheless an A+ rating carries a lot of weight and a lot of issues are from folks not understanding the terms and conditions. They do seem to work favorably for the customer once aware of the situation.

Debt Collection and Financial Setbacks Happen

As for my story, its one of ignorance basically. I was in a good job and with a hostile takeover in 2002 was laid off. Going from $50,000 a year to unemployment resulted in a mess, culminating in Chapter 7 in 2005. I got a new much lower paying job and had services established prior to filing Chapter 7 and all debts were discharged.

Well, my credit is trashed I thought. I didn’t check it. My spouse and I had joint accounts for water, insurance, power, utilities, the works. In 2011, I took a new job in another state. I left three months earlier to get established, find a place to rent, my spouse was to finish packing, close out the accounts and join me in the new state. I was able to get services there immediately as nothing in the old state was in delinquency. I set up house, opened a new bank account there and my spouse would close the old one. What I did not know was:

  • -My spouse over drafted the old state checking account at the credit union by $25.27 and did not tell me; although the CU rep called 5x and wrote 5X to my spouse. It would have been easy to fix in 2011. It went into charge off for $280 (rounded). Since I had opened a new account prior to this, there was no issue, but later, when relocating to IL in 2016 (after the marriage ended and after suffering a debilitating illness) my SSN was blocked due the charge off. I couldn’t open a bank account. I called the former state’s CU and spoke to the rep who had handled the case herself in 2011. Federal law, penalties and interest. No way to settle for less she said.

That’s when I pulled my credit report. Dish network was left unpaid, the old state power bill was left unpaid (it was a budget bill and totaled nearly $700) , the Banfield account was left unpaid, TWC Internet was left unpaid. These were all accounts where I was the primary SSN and account holder.

My Responsibility for Credit Clean Up

Fortunately, we still had a joint bank account and I made it clear, I would be paying these debts out of that account and would reimburse 40% to my former spouse because I had done the work in contacting and settling and was not told these accounts were left unpaid. I was responsible though as my SSN was listed as primary and I could have taken advantage of the free annual credit report in the intervening years.

Despite my current situation; it would have been overkill to file a new Chapter 7; opening another 10 year window, when the total debt owed was minor overall.

I researched your website among others, read form letters requiring “debt verification” on some sites and how debt validation works, but also learned it can sometimes do nothing but rearm the creditor for a lawsuit since they are now in possession of the facts needed to file one and indicate an active interest in credit repair making them less apt to negotiate.

I considered the reporting age off, and how these accounts would remain on file to almost the end of the decade and by that point, I would hopefully be better off, and will be needing a car, a place of my own and a job. Weighing those options, vs the debt amounts, for me the choice was clear. Clean up the negative. Otherwise if I was well within a year, I would likely find it difficult to find a job (if they pulled credit), find an apartment (if they pulled credit), find a car-even used- or even private party sale used and get a good insurance rate.

I also knew that simply cleaning up the negative credit was just a part of the problem. I had to establish a record of good credit. Despite a stellar payment history to all Missouri utilities and not one NSF in 4 years; these are not reported to the credit bureaus.

Even having settled, unsecured credit card companies wouldn’t touch me yet. I had:

  • “Too soon since negative item payoff”
  • “Serious delinquency record of collection action filed”
  • “Time since derogatory record or collection is too short” – all variations on a theme.

I researched. I could do Fingerhut Webbank, but they don’t report positive info. I then looked into “secure credit cards”. That led to a wide variety of selections, some with very poor records; (BBB), some with misleading terms, some who did not report positive info.

What I needed to do was find a secured card where I could afford a lump sum security deposit (as painful as that was) to where I could charge a small amount, co-pays, meds, a cell bill, etc. I also learned not to charge and pay right away as that does not establish a payment history. Rather, charge and pay the minimum amount due+ for several months, then pay it off, charge anew and repeat. Over time, this builds a positive history and as the negative info recedes and falls off; your score will improve. Don’t blow this chance though, don’t be late, or don’t fail to pay. You’ll be back to negative credit which will eventually morph into no credit-which is just as bad–and this time the secure credit card companies might just not give you that next chance.

Thanks Jason! That is a great contribution to the site. Hopefully you will subscribe to the comments and offer more of your feedback, and let people know how you progress on your credit rebuilding journey. If anyone has questions or concerns about using the First Progress unsecured credit card, or other accounts designed to improve your credit after collections, and other set backs, post in the comments below for feedback.

Is your spouse an obstacle to saving money?

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  • I only ask because my mine is, and really always has been one of our many obstacles to saving money. He is my little spendthrift. Not that I’m blaming anyone for our lack of savings, but it does make saving a bit more difficult. How can it not? Honestly, though, I think it comes down to a difference of opinion in the way life should be lived.

Could your significant other be an obstacle to retirement?

Somewhere Between Thrifty and Practical

By no means do I consider myself a frugal person. In fact, if we were rich, I would definitely want to be spoiled. Frugality is a state of mind that my brain can’t quite wrap itself around. It borderlines on penny-pinching, and I just can’t bring myself to do it. In other words, I don’t want to trip on pennies to get to retirement, but I’ll get fired up to fight for those dollars.

I don’t clip coupons, but I thrift shop or buy off the clearance racks. I buy whole and nutritious foods and cook at home. I trim the fat in our household bills, and I don’t think we’ll ever buy a new car again, but that doesn’t mean that I don’t want to experience life. It means that I also want to think ahead to an adventurous and relaxing future… and that takes A LOT of money.

It’s estimated that to enjoy retirement, you need like 2 million dollars in the bank. 2 million.

My Dad was a very generous man. When my eyes would bulge at the bill for a fancy dinner or when he surprised us with a big vacation, he would always smile, shrug and say “You can’t take it with you.”, and he was right. You can’t take it with you. You can save it, retire on it, vacation with it, or leave it to your loved ones, though. You know how they say you’re going to marry someone just like your Dad? “They” were right. I did.

A Heart of Gold with a Taste for It

He wants the best in life for all of us, bless his sweet heart, BUT so do I, and not just in the moment, but in a million moments we haven’t reached yet. What he refuses to accept is that I don’t need a new car, a big house, or fancy meals to make me happy.

I just want to secure our future, which will, in turn, allow a little “seed money” for our kids when we’re long gone. This is my dream… not jewelry or vacations.

Get Your Spendthrift to Be Thrifty-er

Thrifty is just not in their nature. It’s not about changing who they are, but working together to meet a goal that you set together. This will require many conversations about money to share what’s important to each of you. There will be many compromises, but I promise it will be worth it in the long-run. Here are some ideas on how you can work together to save money for your future, whether that’s an emergency or rainy day fund, college savings, or for your retirement:

  • Compromise on the big things. If he/she wants to spend money on a big vacation, find a nice bed and breakfast in a town that’s within a day’s drive instead, and downgrade it to a weekend trip instead of a week-long trip. If it’s for the whole family, do the same, but with outdoor activities in mind.
  • Thinking of a new car? Cater to his/her practical side with discussion on how less debt, low miles, and regular maintenance might be better for your financial outlook.
  • Entice your spouse to stay home for dinner with a good home-cooked meal. There are thousands of recipes online that will cure that itch for going out, which is usually initiated by boredom or lack of food in the fridge.
  • Bigger isn’t always better. A bigger house usually means more space to clean, more repairs, lawn maintenance, more space to heat and cool, and a lot more debt. Whether you’re renting or buying, talk about your family’s true needs in regards to housing before you jump in with both feet.
  • Take your spouse shopping with you and show them how easy it is to find something they like on a sale rack or in the thrift shop. It’s always better to show and share than it is to tell.
  • Cut the credit cards. Okay, maybe you don’t need to cut them just yet, but discuss some rules or boundaries that you both should stick to when, or if, you use them. And, make sure you know when one of you is charging something, so you can prepare to pay it off.
  • Come up with a small saving plan that you both commit to on the spot. Talk about the pros and cons, then how you can be consistent and the amount per month that works well with your finances. Then, agree to reassess your savings goals again in 6 months.

Talking about money doesn’t have to be difficult. I guarantee that your husband or wife is not opposed to saving money, although it may feel that way at times. Perhaps he/she just wants to enjoy life and be in the here and now, and in most cases, that’s a good thing. Brainstorm and figure out how you can do both.

Marriage requires a lot of things, especially compromise, so it’s important to talk about money concerns when they arise. That’s the only way you can both get in the same book, and on the same page.

My 5 Most Disastrous Financial Mistakes

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Mistakes. Nobody wants to make them, but we do, and by the time we realize it was a mistake, it’s probably too late to do anything about it. And, financial mistakes are some of the worst, because they don’t just affect you. It involves your family, your current income, and your future savings.

I’m a 40-something woman with a family, and I consider myself to be somewhat intelligent in most things. By most things, I mean just about everything but politics, and finances. I didn’t know what I didn’t know about finances, saving money, and investing until very recently. And, I still don’t know a LOT about any of it, but I’ve put my best foot forward to learn as I go, so that’s what I’m doing. What else can I do?

Financial Mistakes are Embarrassing

I’m going to share what I consider to be mine and my husband’s biggest financial mistakes. There are many more than just these 5, but these were the most damaging to our life, and to our future  together. We very much regret the way we mishandled our money and are trying to get on track to set things straight, and get ahead. Every cell in my body knows that we’ll accomplish this lofty goal, but my patience will definitely be tested.

I hope that by sharing our financial mistakes, we cause you to pause. Whether it’s to guide you away from certain things or makes you rethink a plan, then it’s worth my embarrassment. And, make no mistake, I am embarrassed. When your mother tells you to think things through, you really should take heed.

Purchasing the Wrong Home, then Remodeling

This was one big financial mistake, but we sure learned a lot. Hindsight is 20/20, right? Many years ago, we bought a beautiful home. Acreage, a huge garden, spacious and private. We had the money, but not much else. We were excited and in our 30s, which is pretty normal for first-time buyers…maybe even a little late.

The problem with this purchase was two-fold – we didn’t have a stable income and we wanted to “improve” the house. We went way over budget on the remodel and two years later, had to sell the house. We didn’t even break even, as the housing market crashed and we went in the hole due to the remodeling costs.

RETROSPECT: We should have waited, or at least shopped around more, and purchased a smaller home that was more suited to our needs at the time.

How some financial mistakes can hurt your future.

Using Emergency Fund for Non-emergencies

We have become used to living a certain way, so because our income can have it’s ups and downs, financial stability can change quickly. When it was good, it was really good and we stocked some money away, but when it wasn’t, we went back to our savings to live on it. Now, some would say that’s what an emergency fund is for….to lean on. Unfortunately, we didn’t lean on it, we relied on it and emptied it.

In other words, we still went out to dinner, bought the kids new clothes, and traveled, even though we, technically, couldn’t afford to do any of those things. We didn’t trim the fat when it was required. There was nothing frugal about our thinking back then, and that prevented us from saving more for our future together. Although we regret our inability to curb our bad habits, we know better today, and we’re working on building better financial habits.

RETROSPECT: Obviously, if I could go back in time, I would have lowered our cost of living by way of rent and monthly bills in any way I could, ditched the fancy coffees, cooked more at home, and bargain shopped a lot more, among other things.

Living on Inheritance Money Instead of Investing

I am going to go out on a limb here and say that this was, bar none, the biggest money mistake we ever made. This could have been a financial turning point for us, but it wasn’t due, in part, to selfishness and guilt.

Have you ever felt like no matter how hard you worked, you could not afford to give your family what they needed or wanted? It feels awful. This is where we were mentally when a substantial (to us) inheritance came our way. Financially, we were hurting and not even making ends meet.

We talked about what to do with the money. Debt settlements were discussed, vacations, savings, business needs, housing, everything. We argued. We made lists. I so badly wanted to pay off debts, and he so badly wanted to spoil our children and do things to make us happy. We tried to do both, while catching up on just about everything, but within the year, the money was gone. We had squandered it away.

RETROSPECT: Of course, we should have been practical and caught up for the month, paid off ALL DEBTS, given ourselves enough for an emergency fund (and used it correctly), and then invested the rest long-term.

Using Credit Cards to Fund our Business & Life

We’re, regrettably, still paying for this mistake. We did what most people still do – used our credit cards to keep paying for things we couldn’t afford. That got us into a world of debt trouble. Double trouble, because we each had our own credit cards. We also had to keep our business afloat…with a credit card and a few lines of credit.

We were in deep, and although we’ve managed to pay off almost all of our debt over the years, the ones used for the business are still knocking at our door. Honestly, I’m not thrilled that we lost control of our spending with credit cards, which also hurt our credit scores, but I don’t regret using it to save our business… because it’s now thriving.

RETROSPECT: Credit cards carry a lot of risk and responsibility. This was a hard lesson and we haven’t hand any credit cards since. They can help AND hinder, and sometimes it’s hard to tell the difference. We should have left the personal credit cards out of the situation altogether and got a business loan instead. It would have been more economical in the long run.

Upgrading to New Cars Instead of Buying Used

Should we file this mistake under obsession? It’s so strange because we didn’t have a choice but to buy used cars starting out, but after our first new car, we just couldn’t stop. We kept upgrading before they were paid off, one loan after another. We lost so much in depreciation, it’s hard to talk about. On top of that, we were paying out in interest too. It was a lose-lose situation. Granted, we had a nice reliable car, but at what cost?

Yes, they were bright and shiny, and smelled heavenly. But lesson learned! We finally paid off our last new car recently, and man, were we pleased with ourselves! Yes, it’s a tad worn, but it runs like a champ and we love it. We will never buy a new car again. It’s just not worth it.

RETROSPECT: We probably could have saved tens of thousands of dollars over the years. We bought a LOT of new cars – easily 7 in 12 years! In the future, we will do our research and buy used. Pinky swear.

Is it really okay to make money mistakes?

Yes and no. Making mistakes is part of life, but if you’re making big ones like these, ones that can be prevented, then you’re doing you and your family a great disservice. And some of these mistakes can dramatically shape your future – whether it’s for the worse or not really depends on the size of the mistake and how well you rally.

Believe me, I know you can’t see every obstacle coming, but you can be smart, think ahead, and plan. Then, think again.

Saving Money in a Digital World

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Saving money is already hard. Life is expensive and it’s tough to put anything aside for the unforeseeable future. Not only does it take discipline, but you also have to find that little bit of money that you wanted to save in the first place…and maybe you just can’t find it. Well, I have good news and bad news.

There are plenty of small ways to save, as we discussed in “Can’t Save Money or Won’t?”. And, the good news is that one of the ways to save mentioned in that post is absolutely free – it’s called Digit. The bad news is that you may not have heard of it until now, which means you’re not using it, which also means you’re not saving more money with it… yet.

But, you’re here now, thanks to this glorious thing we call the internet!

digit-logomark-branded.94b42bf0

Digit is not an app or software program. I need to make sure you understand this because most everything else is, so it’s in our nature to assume it’s like everything else, but it isn’t. It’s based in texting (SMS), so although different, it’s extra-easy. You don’t need to download anything, and once you sign up for a Digit account and connect it to your bank account, you’re all set.

Being set up like this allows for simplicity. You don’t have to login and check account balances or tell it what to do. Digit already knows what to do and is going to keep you updated every step of the way. You have to trust this little (but very smart) system. For example, if you want to withdraw some money, then just text “withdraw”.  It will ask you how much, confirm it, and let you know what day to expect your deposit (usually one day later). Done.

If you want to pause Digit, text “pause”. It’s that simple. 

How does Digit save me money?

Digit analyzes your spending habits and finds money to save. I know it sounds strange, but it works! Digit uses an algorithm to decide how much money to take and when to take it from your bank account and put it in your Digit account. It will differ from one person’s account to another, but it’s saved in small increments every few days, so you’ll hardly notice it’s gone. If you find that it’s taking too little money, or too much, just text “save less” or “save more” to adjust it.

The best news? It’s all automated. After set up, there’s nothing to do but save money!
(Is it just me or are banks really missin’ the boat on this one? Auto-deposit isn’t enough.)

And, it updates you daily, weekly, or as often as you like, to let you know what’s going on and how much they were able to save for you. You can also access your account online, but it’s really not necessary, unless you want to view your savings history or have a question.

Use Digit and save more money!

Security
I’m sure you’re immediately concerned about security, like I was, so you’ll be happy to know they provide bank-level security and your money is FDIC-insured. Oh, and no, they won’t overdraw your account – they actually guarantee it. If they ever do, they’ll pay the penalty for you. I guess they feel very strongly about that algorithm. 😉 

Rewards
Digit just announced Digit Plus, which allows rewards for those who keep their money in their Digit account rather than withdrawing it. By leaving it in there, you can earn $.05 for every $100 in your account, every three months. This is a very small incentive, but as we’ve discussed, every penny counts. I probably won’t leave my money in there because I know I can do better.

Here’s what I plan to do instead.

How I Use Digit to Fund Acorns

Since I want to save money so that I can invest money, which, in turn, will make me more money, I need a plan to get started. The problem is that I’ve really just started to save money, so I don’t have the minimums required for the larger investment companies, but, fortunately, I don’t need one for Acorns.

You lost me, Mrs. MoneyJar. What the hell is Acorns?

In simplest terms, Acorns is an app that connects to your bank accounts and rounds up your debit card transactions and invests the difference in a pre-packaged portfolio (for a small fee).

I opened up an Acorns account right before I found Digit, realizing that I really wanted to put at least $100 per month into Acorns (on top of the round-ups). This wasn’t possible because I was struggling to save enough to do that…until Digit.

I have only been using Digit for 7 weeks, so almost two months. That isn’t very long, but in that short time, I’ve magically saved $150! That’s just shy of what I want monthly for Acorns, but I can probably save a little more this month, so I know I’ll hit my monthly target. What’s crazy is how easy it was to save money with Digit – I hardly noticed it was gone from my checking account, and what this tells me is that I do have the money in there to save, but I couldn’t find it because I was probably mindlessly spending it on less important things.

I’m predicting that I’ll meet my $100 savings goal via Digit by the end of this month! So, each time I get my text from Digit announcing that I’ve reached my milestone of $100, I’ll withdraw it and put it in Acorns, because I’m a beginner investor and it gives me the opportunity to help my money grow a little bit.

In the meantime, get Digit-al and save more money, because this is gonna be big. 

51 Ways to Side Hustle Your Way to More Money

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Our last step in the 5 Steps to Get Out of Financial Purgatory blog series is making more money. Although I believe everyone can save money, no matter how much or how little they make, an exception to this would be for those who feel better about having separation between what you live on and what your brain considers to be “extra”. In other words, some may adapt better to saving with a little psychological trickery. Enter the side hustle.

The side hustle is just a cooler way of saying side job or side gig. And, all that means is that you’re adding to your current income by doing something temporary, or when you need to. Honestly, though, it can be anything you want it to be – a one time gig, weekly part-time job, or an odd job you do every now and again, seasonally, or when you have the time. That’s the beauty of the side hustle – it’s what you make it.

I will not be discussing jobs that require significant investment, certifications/licensing, are overly complicated, require degrees, or in-depth training. No accountants, photographers, notary publics (states limit what you can charge), or substitute teachers will be listed here.

Before this crazy eruption of side hustle ideas, I tried a few of the most common ideas myself last year:

My Worst Side Hustles

  1. Transcription: You must follow different grammatical “rules” for every transcription, learn how to use specialized software for speed/efficiency (plus have good headphones), time is lost in repeated playback for difficult transcriptions (interviews, interruptions, etc), and you get paid pennies for each job – and even less if you’re slow. There also may be tedious tests to take to even qualify for many of these side hustles.
  2. Mystery Shopping: Some people are able to turn this into a decent paying side hustle, but I live in a small town and I found that there weren’t many jobs available, and the paperwork could be very time consuming. The most lucrative jobs were probably the inventory jobs, but they were a full days work, in most cases, and almost an hour out of my way. Not worth it for me, but if you live in a large city, it could definitely be a great side hustle! Pay varies per job, I saw $8-$85 per “shop” to start.
  3. Surveys & Paid Searches: Sites like Swagbucks are known for paying you (in gift cards) to take surveys, watch videos, and use their search bars, etc. Honestly, this isn’t a bad idea, I just couldn’t make it a habit and it takes a significant amount of time to build up Swagbucks to redeem.

My Favorite Side Hustles

  1. Blogging: Blogging doesn’t make money, per se, but if it’s a good blog with good traffic, it gives you an avenue for advertising, which does make money. Google Adsense is an obvious choice for most bloggers, but there are other ways to advertise too. You can sell ad spots directly to companies or become a product affiliate for Amazon or another company that fits in well with your blog. You can also do sponsored reviews (paid up front or for free products) by just emailing and asking.
  2. Network Marketing: This can be hit or miss, but I’ve had success with it in the past. I would recommend it to those who can market online, over the phone, and/or have great people skills. I would also be sure you choose a company that you truly believe in, with a product you care about. There’s everything from health to travel opportunities, but to each his or her own.
  3. YouTube Ads: YouTube is different, even though it still falls into the advertising category. The major difference is that it’s not on a blog. If you have a video camera, basic editing skills, know your way around YouTube, and have something to share, you should consider it. It takes time to build a following, but once you do, the money starts trickling in.

Sell Stuff: Old, Found, or Handmade

  1. Yard/Garage Sale: Good for the junk that you don’t want or don’t use, but customers expect to get stuff on the cheap, so unless you’re doing fundraising, save your good stuff for online sales.
  2. Ebay, Craigslist, Facebook Market, or one of the many apps for selling: For the good stuff, use Ebay – you’ll get a better return. I’ve been with them for years, usually when I need some cash fast. You’ll find that you can sell with a basic listing, and keep more of your money. Also, keep your seller rating up – people tend to buy from those they can trust.
  3. Consignment: When you put things on consignment, you may get paid up front (probably for less money) or they may tag your items and see what they can get for them, leaving you to get paid later, IF they sell at all. I used to do this with some of my girls’ clothing and made a few bucks – nothing to write home about. My best return came from letting go of a painting on consignment with an art gallery.
  4. Farmer’s Market: My local farmer’s market takes 8% of sales – not too bad. If you make jam, baked goods, crafts, soap, jewelry, birdhouses, have fresh eggs, grow vegetables, etc., your local farmer’s market is probably nearby and the customers are already waiting for you, so go get ’em!
  5. Creatives: For the artisans and crafty folks, there is a wealth of opportunity online to sell your handcrafted goods. Local craft fairs are also easy to get into. I sold on Etsy and ArtFire for awhile, and found it profitable, but there’s a lot to factor in…taxes, shipping, materials, etc. It’s hard to make a killing, but it’s an easy way to turn a small profit on your hobbies.

Natural Skills You can Easily Exploit

Freelancing is a great way to make cash on the side.

For freelance work, or to list your skills, check Fiverr and Upwork (oDesk and Elance are now part of Upwork) and connect with people you know online and offline to let them know what you’re doing.

Identify any special skills you have. These are the things that your friends and family call you about, when they need help. They have already recognized these in you. For example, I get called on for graphics, blogs, and computer help, even though I’m not a graphic designer or coder. I’ve just been on the internet too damned long.

  1. Computer/Internet: If you’re self-taught on the computer, then chances are you can charge people a small fee to help them with small projects like WordPress or blog help, creating an ad or logo, doing voiceovers, making flyers, or setting up social network accounts for them.
  2. Freelancing: If you’re a decent writer, consider freelancing on the side for some extra cash. You can make good money for a couple hours of work on articles, blog posts, print material, or copywriting. Pay can vary dramatically, so know how to optimize your rate.
  3. Kindle Publishing: And, if you want to take your writing to the next level, try Kindle Publishing – it could turn into passive income later, with royalties. I’m going to start this very soon – sounds promising. My daughter actually turned me on to this!
  4. Sharing: Got followers? Get paid to share videos on your social networks.
  5. Assistant: Good at multi-tasking, communication, scheduling, or research? You can be a virtual assistant or personal assistant locally. Life is busy, and people need help with the details. Check out FancyHands to get started.
  6. Ghost Writing: Some people have a great story to tell, but can’t write. I’ll let you do the math.
  7. Resumes: Resumes can be tricky if you’ve never done them before. There’s formatting, what information to include, cover letters, etc. If you’re good at this sort of thing, it would be easy to charge a small fee for this service.

Picking Up the Odd Job

Check care.com, taskrabbit.com, and handy.com for listings. Or, just market your skills in a local online directory or newspaper.

Use pet care and dog walking as your next side hustle!
  1. Child Care: You can pick-up and drop-off kids to school, babysit them on the weekends, or just be on call. Don’t take on more kids than you can handle and you should probably know first aid and CPR. $10-15/hour.
  2. Pet Care: Dog walking, pet sitting, washing and grooming, cleaning litter boxes, and feeding and watering them. If you can do that all with love, you’re golden. $10-25/hour.
  3. Cleaning: If you’re good at details, or a little obsessed when it comes to cleaning, this might be just the thing for you. Chances are you have all the cleaning essentials you need for this side hustle right in your kitchen or laundry room. $10-15/hour.
  4. Cooking: Some people are so busy, they don’t have time to cook homemade meals. This is where you come in. If you’re an awesome home cook, you can play chef or prepare the meals at home and drop them off for warming up later.
  5. Errands: It’s probably the same type of stuff you do every day anyway….mail, dry cleaning, groceries, picking up stuff, and then dropping off something else. You just need a driver’s license and a little time.
  6. Shopper: If you like clothing and have good fashion sense, then maybe being someone’s personal shopper is just what the doctor ordered.
  7. Sewing: I have to pay for alterations and it’s not cheap. If you can do alterations as a service, for less, I think you found yourself a side hustle.
  8. Organization: You can help people organize their garage, closets, and home.
  9. Party Planning: You can put this skill to work planning parties. I have a friend who who a side hustle here and there as a wedding planner. You just have to network with the local caterers, florists, and performers, and have an eye for the details.
  10. Home Staging: That eye for detail would also be great for home staging houses for sale or vacation homes for rent. I had an realty agent offer me this job just based on my decor in my home.
  11. Housesitting: This one is for those who can be away from home for days at a time, but it’s a great way to make money on the side, if you have a flexible schedule. $25-50/day.
  12. Fixer: Chances are you already have the tools, so market your skills locally and see who needs some help around the house. Come to my place – the disposal is sketchy and there’s a questionable washing machine.
  13. Yard Care: Landscaping is expensive, so finding someone local to do some yard work is a service most people would love to find. Weeding, planting flowers, clean-up, trimming bushes are all relatively simple tasks.
  14. Hauling: Got a truck? Well, not everyone does, so offer to pick up junk and haul it away for a small fee (don’t forget to include the dump fee, if there is one).
  15. Heavy Lifting: This can be anything from helping someone move furniture around to helping them move altogether, so if you got some muscle, use it and pocket the cash.
  16. Painting: I have painted a lot of rooms. If you know your way around a paint brush and a ladder, this is a great way to make some extra money on painting rooms or old furniture.
  17. Gutters: Yeah, it’s a little gross, but it doesn’t take much time and nobody wants clogged gutters, so help out a neighbor for some cash!
  18. Teaching: If you have a special skill like a second language, you’re especially good at English or math, you know how to play an instrument, or can teach someone how to use a specific software program, you can charge for lessons.
  19. Wash Cars: You can wash and detail cars in your driveway for a fee. You probably already have everything you need in your garage.
  20. Umpire: Some will eventually coach Little League, but it’s a volunteer position. You can get paid about $30/game to umpire.
  21. Winter Work: Snow shoveling, putting up Christmas lights, chopping firewood, and weatherizing homes. Not everyone is up to these tasks, so get out your shovel, ladder, axe, and faucet covers.

Side Hustle off the Beaten Track

They are on the side, but not all of them are necessarily common or for everyone, but they DO have the potential to make money on the side, so they’re still worth a look.

Take your side hustle to the street or oddball job. So many side job ideas!
  1. Clinical Studies: I’m not ok using my body as a medical experiment, but if you have medical issues, it might be something you’re interested in. The time, pay, and eligibility can vary greatly between research studies, so do your homework.
  2. Plasma: Plasma takes some time, and you have to be ok with needles, but you can donate twice a week and make $20-30 per visit, so up to $200/month. There’s a screening process, but it’s simple. I did this years ago and it was pretty painless.
  3. Street Performer: So, I was walking down the street two days ago and a teenager was playing her fiddle downtown with the case open for tips. Her mother was sitting on a bench nearby, knitting away. If you have talent, book a local gig or just perform. People will show their appreciation. I promise.
  4. Focus Groups: You can participate in focus groups in person, online, or by phone. 20/20 Panel is a bit different in that it takes it’s focus group online in a discussion setting and pays $50-150 for your opinion.
  5. Web Tester: Test and/or review websites for $10-12 per session at UserTesting or IntelliZoom.
  6. Car Wrap: You can get paid up to $400/month if are willing to drive your daily routine with your car wrapped in advertising. You must be 18 years old with a clean car, good driving record, insurance, a clean background check, and able to drive daily.
  7. Hair Donor: Depending on the length and health of your hair (virgin hair is in demand), you could make anywhere from $200 to $1,000 or more selling your hair. The good news? It grows back.
  8. Recycling: If you have, or are willing to collect old cell phones, tablets, or Apple devices, Gazelle pays well. I’ve sold multiple iPhones to them for over $100 each. I love Gazelle because they make it easy! You do have to know how to erase the data on your phone first, though. Google it.
  9. Sperm and Eggs: Guys, you’re going to do this anyway, so you may as well be paid for it, because it could help someone have a baby who otherwise couldn’t. You must be between 18 and 35 years old, 5’10”, medium-build, have a post-secondary education, and commit to “donating” on a regular basis, but you could make up to $1,000/month (2-3 donations per week) for a set number of months. Girls, you can help others have babies, too, but it’s a lot more complicated. You can make several thousands donating your eggs, but it’s not without discomfort, a great deal of time, and health risks. Please do your research!
  10. Driving: Use your own car and taxi people around in it through Uber or Lyft. I know this is becoming popular, but I still find the idea of driving strangers around in my car a little weird.
  11. Rent Space: Rent out an extra room or space on a regular basis or rent it as a vacation space (trailer, an extra room, cottage, MIL apartment, yurt, rv space, etc) on airbnb.com.
  12. Rent Your Car: RelayRides is a great place to list your 2005-or-newer car for rent (preferably under 100k miles). If you have an extra car or work from home, this is an easy way to pocket some extra $$$. I’m totally considering this right this minute.

That’s all I have for now. I’d like to do another post on side hustles that require more of an investment of money and/or equipment too, like photographers and start-ups, but that’s for another day. I think you will find something in this list that will help you get ahead financially. And, remember, just as you prioritize your regular income, it’s equally important to prioritize this “extra” income – for debt, savings, or whatever goal you have set for yourself or for your family.

Although not a side hustle, technically, you can also “make money” by saving money too, so please consider cutting down some of your monthly expenses and other ways to start saving. After all, every dollar counts! If you have more ideas for a side hustle you have done well with in the past, please comment below. I’d love to add more jobs to the list!

Disclaimer: Payments for jobs will vary. Any amounts listed were from local companies or websites. Things may differ in your state, and for odd jobs, you can usually barter for your pay, time, and experience. No guarantees implied.

Can’t Save Money or Won’t?

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If you say you can’t save any money at all, I’m going to immediately call bullshit. You only think you can’t save any money. I have been living paycheck to paycheck most of my life and I thought I couldn’t save any money either, but you know what? I can. I just have to get off my ass, commit to myself, and actually do it. As it turns out, there are a few simple ways to get started.

In 5 Steps to Get Out of Financial Purgatory, I briefly mentioned how vital saving money is, but now we’re going to talk about the “how” part of saving. First, let me beat you to your excuses: I can’t afford to save. I don’t want to sacrifice having fun. I need every penny I can get my hands on. Get over yourself. I was delusional for years too, and am just now waking up. Yeah, at 40-something. I didn’t learn how to handle money in school, and my parents didn’t know enough about money themselves to teach us anything about using it, saving it, or building a massive empire out of it (it’s not like they were wealthy). They were broke and in debt, too.

Start saving, right now, in small ways.So, I’m middle-aged, with financial regrets, and little to no savings, and it’s (finally) time to do something about it. I’m not helpless or stupid. I’m just out of excuses, realizing I don’t want to work until I die. I have lots that I want to do! Obviously, this epiphany occurring 20 years ago would have been more convenient, but there’s only one direction to go from here – forward.

Just because I don’t make billions of dollars doesn’t mean I can’t save. Who says I have to start big? I can start anywhere, as long as I start somewhere, and I have some ideas I’ve recently implemented that you can start today.

Look Down to Save Up

Sometimes looking under your car seats, at the bottom of your purse or depths of your wallet are the best places to find your savings. We want to pay close attention to the little leftovers from recent purchases. Let me expand on that a little bit.

Skimming:  I don’t like to budget, so instead, I take a little off the top and stash it away each time I get paid and do what I want with the rest. In essence, I’m paying myself first. I’m making myself a priority, and it feels pretty damn good. So, if you get paid at the same time every week or month, set up an automatic transfer to your savings account. If you don’t, do it manually when your check comes in, or just pull out the cash and stash it somewhere safe (not in your sock drawer).

  • I’m not putting my savings in a high-yield savings account for a reason. I believe they’re a waste of time, as rates are little more than worthless right now. Instead, I prefer to save  a small emergency fund, then invest a small amount and make some returns that way. I’ll show you how to “start small” in investing in some future posts, because even people like us (without significant net worth) can participate in investments.

Right now, I can swing saving about 5-8% of our income, but I strongly suggest choosing the largest percentage you think you can get away with, but if it starts at only 1%, that’s okay too. Start there and bump it up a percentage (or more) next month and the month after that. Consistency is what we’re after – good saving habits.

Money Jars:  Hi, I’m Mrs. MoneyJar… as in Money jar. I have two money jars in my office and my children each have one, plus their own checking and savings accounts. I have one 5-gallon “jar” for loose change and one very large (gallon) mason jar for tightly rolled $1 bills and $5 dollar bills. I put money in them at the end of every single day. If you’re not ready to drop your fives in there, then just start with the $1 jar and the change jar. You’ll be amazed how it builds up in a month!

Going Digital:  If having a money jar nearby is too tempting, then get digital with Digit (yes, it’s a referral link – because I use it, love it, and it works). Digit actually analyzes your checking account, and then decides when and how much to pull from your account based on your income and spending habits. They guarantee to never overdraw your account and you can control as much or as little savings as you like – you can even hit “pause” for a few days. And it’s kind of fun getting their text updates on what they saved you for the week!

It makes saving money so easy because it’s automated, secure, and free! And the weekly texts are fun and motivating. I don’t have to do anything, or even think about it, and I hardly notice when money is pulled out of my account. And, if I want to withdraw, I just send a text and get my money the next day. Seriously, you can’t go wrong with this if you have a phone with texting capabilities. It’s perfect. I talk more about Digit and it’s features here.

Small Savings = Big Future (eventually)

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki

These are three of the best ways I have found to get started saving in small ways without negatively affecting my day-to-day life. Doing these things (by the way, I’m doing all 3 right now) is helping me start a small savings. My current goal is to have an emergency fund of $2500 (to start) and $500 or more to invest. Your starting goal may be different than mine and that’s perfectly fine, but I urge you to start small, because it’s critical for your goal to be within easy reach so that you can succeed, then you can create a bigger goal.

Once I make my first goal, I’ll make it grow with small, simple investments (while still continuing to save). I’m learning that there are many ways to accomplish this, depending on the type of investment, amount of money invested, level of risk, and reinvestment. The idea is exciting, though, isn’t it? We’re going to grow money!

My parents always told me that money doesn’t grow on trees, but if we plant some seeds and make good decisions, maybe it can….

Get Out of Debt Before it Gets Out of Control

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If you’ve already read my first article, 5 Steps to Get Out of Financial Purgatory, you know that we’ve reached step #3 on the list. And, although, I am definitely not an expert on getting out of debt, life has taught me that you can’t wish it away or bury your head in the sand. I know, because I’ve tried. Debt, like the notorious bully, will become more aggressive, punk you for your lunch money, and may even morph into something scarier as time goes on.

Debt, as a whole, may contain an array of both secured and unsecured debt, but debt is debt and there are solutions for most debts that have gotten out of hand. How do you know it’s out of hand? Well, can you save money? Are you paying your bills on time? No? Then, it’s time to take a closer look at your finances. Is it worse than that? Are debt collectors breathing down your neck? Were you surprised by a Summons at your door? You’re not alone, and there is still hope.

Credit card debt, specifically, is the third largest debt in the U.S. and can be pretty damned sneaky with introductory rates, annual fees, late fees, and the promise of “rewards”. And, I bet when you applied for that credit card, you probably thought you could pay off the balance every month, or at least pay more than the minimum payments, and it would be paid off in no time. No harm, no foul. Unfortunately, that’s not always the case, as life (or other bills, debts) can and does get in the way.

“All told, the average American today owes about $225,000 in debt, in a country where the median household income is just barely more than $53,000.” – Credit.com

Debt can grow fairly fast.

When introductory rates fall to the wayside, debt can grow bigger due to interest rate hikes, late fees, and annual fees. That can set you back a bit, but if it goes to collection, that can be when you’ll really see the fees add up. If you let it go long enough, it will get so big, you may be inclined to throw your hands up and give in, but I would caution you in doing that.

Debt can steal from you.

When debt starts to spiral out of control, it will start to affect other areas of your life, and even steal things from you, now and in the future. As many of you probably already know, money problems can create friction in your relationship and stunt your family’s ability to do the things you need to do. Being delinquent can also hurt your credit, making it more difficult for you to  purchase a home or vehicle.

Debt can morph and change direction.

What I mean by this is that your debt (credit card debt, medical bills, etc) can be bought by debt buyers, be turned over to lawyers, and you can be sued. All of the sudden that debt has become a judgment, which now has to be dealt with differently. Judgments are more complicated to settle, and can cause more damage if you don’t take action (garnishments, liens, etc).

Debt can start small, but grow into a seemingly unmanageable size. Get help.

Options for Getting Out of Debt

Pay it Off

The most obvious thing to do is to not acquire anymore debt and pay off your current debt by any means necessary. I’m sure you’ve heard of the debt roll-up, stacking, the ladder or avalanche method, or the ever popular, debt snowball. Most of these repayment methods all follow the same basic principle, and focus on the debt with the highest interest rate (you can also try a balance transfer to lower interest rates). For some, this may be hard to do if their highest interest rate debt is also their highest monthly payment. If you need to start small, then do the “snowball” and make more than the minimum payment on your smallest debt (regardless of interest rates) and roll it up from there.

Additionally, you may have some savings you don’t want to part with, but putting it towards your debt will most likely save you hundreds (if not thousands) of dollars in interest charges. Another options is to borrow money from friends and family to pay off debts in full, then repay the loan to your brother or parents interest free. Or, maybe you have a car, furniture, or jewelry you can sell that will enable you to throw some more money at your debts – the faster you pay it off, the better. Where there’s a will, there’s a way, my friends!

If paying is not an option for you, then keep reading.

Credit Counseling

The time to consider credit counseling is when you’re just starting to miss payments on your credit card bills, store cards, or medical bills. When this happened to me several years ago, I walked in to a local CCCS office and asked for help. They asked me to fill out some paperwork, then cut up my credit cards right there in the office (ouch). They then explained how they would get lower monthly payments, then consolidate them altogether so I could just make a single payment.

I’m proud to say that 18 months later, things were back on track, but you do have to qualify for credit counseling services. This is not necessarily difficult, but it’s worth noting, and you can learn all the details by reading Michael’s report on lowering monthly credit card payments.

Having been in credit counseling taught me a valuable lesson at a fairly young age (that would, unfortunately, revisit me later in life):

“Mistakes are the growing pains of wisdom.” – William Jordan

Debt Consolidation

Consolidation is for those who want to save on interest, but haven’t fallen behind on their credit card payments. It’s not for everyone, and consolidation isn’t as easy to do as it used to be, but if you’re 1) not behind on your credit card bills – yet 2) want lower interest rates 3) are willing and able (credit qualified) to open up a 0% interest account with a large enough credit line to cover your high interest rate balances, then this might work for you.

Consolidating your credit cards can be a bit tricky, as you may have to bounce from one card to another (to maintain those nifty intro rates), and you can’t become delinquent, as that would affect your credit score, thereby affecting your ability to open the large line of credit that would help you in the first place. If you have a credit card with a lower interest rate and some room to spare, you might be able to do a balance transfer. And, depending on your current rates and credit score, you might also consider a consolidation loan through peer to peer lending such as Lending Club or Prosper.

If you can walk the fine line, then by all means, start walkin’.

Debt Settlement

This option is for those who have already fallen way behind on their credit card bills. Getting a good settlement requires communication, timing, a lump sum payment, and hardship. You can call your creditor on your own or you can hire someone to do it for you, but you should first consider whether debt settlement is an appropriate solution for your situation and learn the fundamentals of getting a good settlement.

Debt settlement is for specific financial situations and will not work for everyone, and is something you do before considering bankruptcy.

I have settled debts in the past. The discounts I was able to negotiate were because the debts had gone so long without payment. I was lucky to not have been sued for collection. I could have filed for bankruptcy, but the balances on the debts I had to quit paying were relatively small. Had my debt load been bigger I would likely have chosen to wipe the debts out with a chapter 7 bankruptcy filing.

Bankruptcy

Bankruptcy is used when your credit card and other debts have become overwhelming. It’s considered a last resort, and although bankruptcy has negative connotations, that’s not how it should be viewed. People in my family and some of my friends have been through bankruptcy. I don’t view them as failures, but as people who looked at their situation and made the best financial decision they could for themselves.

If you’re considering bankruptcy, keep in mind that you will be filing for Chapter 7 or Chapter 13 (7 will require a means test to qualify, depending on your state). There will also be a cost involved when you hire a bankruptcy attorney, but your initial consultation should be free and it’s highly recommended to get your questions answered, even if you decide against this route.

More importantly, consider bankruptcy as a second chance. You have the opportunity to get rid of your debt and start over, and this time you can do things differently!

Doing Nothing

This really isn’t a viable option for anyone. Debt is like cancer…early detection and immediate action to eradicate the problem is vital for your success. In doing nothing, you’re allowing the banks, collectors, lawyers, and courts to decide your fate. And, believe me when I say that they do not have your best interests at heart.

The only time doing nothing might make even a little bit of sense is if you’re having hardships such as medical issues, divorce, brief unemployment, or some other temporary life event that would consume income that would otherwise be used to pay off your debts. If you are judgment proof (little to no income and/or assets that are exempt in your state), doing nothing about collection debts can mean looking over your shoulder…. forever.

Look, dealing with debt is, at best, a real pain in the ass. And, the longer you let it go, the harder it’s going to be to get rid of it. BUT, no matter what method you choose to use, when all is said and done, I promise you’re going to feel like you just crawled out of a 6-foot hole to see your first ray of sunshine.

Stand up for Yourself

Debt can definitely come off like a bully, pushing you around and making your life miserable, but only if you let it. Take control of the situation, be brave, and fight back! Bullies all have one thing in common: they have a deep-rooted fear that you will stand up to them one day.

Do your homework. The above-mentioned methods for getting out of debt can be extremely helpful, but you have to pick the right tool for the job. So, assess your financial situation, find where you fit in, and get to work.