Friday, November 8, 2013

Part 2: An In-Depth Look at the Student Loan Crisis

This week we have part two of our interview with Larry L. Gilmore, president of the Student Loan Alliance (SLA).  Larry is an expert on both the mortgage and student loan crises, and joined us last week for part one of this interview.



What is your advice to someone who can’t pay their student loans on time? 

Seek immediate help. 

There are a number of for profit debt management companies charging high fees to assist borrowers with workout options.  While a number of these services are free, it is complicated to sort out what repayment options you qualify for, the best option for you, and completing the application.  I strongly encourage they visit studentloanhelp.org, complete the online questionnaire, register, and get connected to a certified consumer credit counseling agency.



There seem to be the same players with student loans are there are with housing loans:  the government, the servicers, and the borrowers.  Are there strategies for each that would avert a student loan crisis?

The Government - More assertively incorporating the role of a 3rd party counseling organization to provide objective assistance.  Similar to the mortgage industry foreclosure crisis, the student loan industry could benefit from a federally mandated funding mechanism to pay for counseling sessions (similar to the National Foreclosure Mitigation Counseling Program).

Servicers – aggressively seek partnerships with independent nonprofit counseling agencies that can assist in increasing borrower contact, qualify borrowers for available options, and assist in improving overall performance.  Private servicers need to increase and make transparent what available workout options exist and provide a public contact list for escalation specifically for use by trusted 3rd party counselors.


Borrowers - Again, there are a number of for profit debt management companies charging high fees to assist borrowers with workout options. While a number of these services are free, it is complicated to sort out.  I strongly encourage they visit www.studentloanhelp.org, complete the online questionnaire, register, and get connected to a certified consumer credit counseling agency.

Friday, November 1, 2013

An In-Depth Look at the Student Loan Crisis with Larry Gilmore

Here at the MK blog, we wanted a better understanding of the growing student loan debt issues that are making the news.  And we found the man with the answers.
This week is the first of a two-part interview with Larry L. Gilmore, president of the Student Loan Alliance (SLA).  SLA is an online resource for borrowers challenged with excessive student loan debt, helping them to receive comprehensive holistic financial counseling, education and assistance.  
Larry was also past cofounder, CEO, and president of the HOPE LoanPort, the mortgage industry portal designed to facilitate the submission of full modification applications to mortgage servicers.  He’s held a variety of high-level positions in the mortgage industry, including VP of Emerging Markets for Option One, Associate Director of Industry Relations at the Mortgage Banking Association, and Manager of Market Opportunities for Norwest Mortgage (now Wells Fargo).

Tell us a little bit about the Student Loan Alliance, and the goals for your group.

The Student Loan Alliance is the sole national organization representing nonprofit credit counseling organizations active in providing borrowers student loan counseling.  Core objectives include:

      Standardizing the delivery of counseling – traditionally, student loan counseling has been specific to entrance and exit education or primarily focused on the student loan debt itself.  Existing measures don’t exist in standardizing the mediums in which counseling is provided and measuring the quality of that counseling

      Providing multiple mediums meeting borrowers where their most comfortable for assistance – SLA currently connects borrowers through our website StudentLoanHelp.org, in which counseling is provided via phone and face to face in some cases.  Our goal is to expand this to include a toll free line and other communication mediums.

      Increasing borrower awareness of their best workout options – for federal loans, there are a number of repayment options available in which a small number of borrowers are currently taking advantage.  SLA will develop major national campaigns to increase awareness, connect borrowers to counseling, and assist with application submission.

      Promoting affective private, public, nonprofit partnerships – Currently there are ongoing challenges student loan lenders, collection agencies, and regulators have making right party contact, ensuring borrowers are aware of their options, and ensuring applications are submitted in a timely fashion.


You have some experience with the housing industry and the housing crisis.  How do the current student loan issues compare? 

These to industries have numerous similarities and a few glaring differences that include:

Dual Markets – Like the prime and subprime mortgage industry, the student loan industry has federal and private lending.  Like the subprime lending industry, private student lending provides less borrower protections, fewer work out options, risk based priced lending, and a higher concentration of underserved segments that use these loans.

These industries are not similar in that:

Your average at risk homeowner has few loans; borrowers are more likely to know who their lender/servicer is and the general status of their loan.  Student loan borrowers have more than four loans and in many cases don’t know whether their loans are federal/private, subsidized/unsubsidized.

Though mortgage servicing practices have had their challenges and have slowly improved, there is less standardization in how student loans are serviced, what repayment options exist, and public transparency related to workout options particularly among private loans.


What does the future look like for student loans?  Do you think education costs will continue to outpace the average American student’s ability to pay?

Yes.  More federal workout options exist, online educational materials have been developed, and increase performance requirements on colleges to reduce cohort default rates are good steps forward.  The current cost of higher education, though I foresee it increasing at a slower rate, will take some time before borrower’s ability to pay can catch up with today’s rates. I don’t see today’s rates decreasing substantially considering the ongoing high demand for higher education.

(Please join us next week for part two of this interview.)



Monday, October 7, 2013

Housing and the Government Shutdown

As we enter week #2 of the government shutdown, we took a hard look at how it would affect the mortgage market.  Here's what we found:

*  If the shutdown lasts only another week or so, the impact will be minimal.
*  Fannie and Freddie aren't affected.
*  FHA is continuing to process loans, but with a much much smaller staff.  According to a recent WSJ article, HUD, of which the FHA is a part, is working with only 64 of its 2,972 employees.
*  The biggest hassle for those buying homes or looking for a loan modification right now?  The IRS is shut down, which means they aren't issuing Form 4506-T.  So what, you ask?  This form is what mortgage lenders use to verify borrower income.  Lenders are being forced to decide whether or not to close loans or give loan modifications without this form.  In this age of increased scrutiny, it's a tougher question than you might think.

What concerns us most, however, is the 800,000 government employees who have been essentially laid off without pay.  Keeping their financial house in order becomes more difficult without a paycheck.  MK's resources are here to help, offering local help in 20+ categories to those in need.  Those affected should contact their mortgage lender, or see their website for the MortgageKeeper icon.

Monday, September 16, 2013

The Housing Recovery That Wasn't

We've talked in this space before of the housing recovery being perhaps overstated.  As the usage of our products--which help struggling homeowners find local resources to help them stabilize their finances--increases, we can't quite get on the recovery bandwagon.

A recent article in The Guardian supports our view:  the reason a recovery isn't starting is not because interest rates are high (historically, they aren't).  It's stalled because the first-time homebuyer is being left out.

As The Guardian article puts it, "In a nutshell, what's hurting the housing recovery is that there aren't enough houses to buy, and those that are available are too expensive."

Thus new homebuyers can't afford to join in the recovery, and they continue to rent, or live with their parents.  As our record usage numbers point out, personal finances aren't recovering.  And without new homebuyers, the housing market will continue to limp along. 

Monday, August 19, 2013

Debt Free is the New Sexy

A few of us here at MortgageKeeper live and work from Minneapolis...home of long winters, glorious (but short) summers, and the Mall of America.

Today at the Mall, one of us was people-watching.  What we saw was a twenty-something sporting a charcoal colored tee shirt with these words:

"Debt Free is the New Sexy."

True?  False?  Is being debt free better these days that being wealthy?  Or attractive?  What do you think?

Wednesday, August 7, 2013

A Debt-Free College Education? Persistence is Key

We were moved by an article on the Opinion page of The Wall Street Journal late last month.  Entitled, "It's Possible to Graduate Debt-Free.  Here's How" it details one young woman's persistent effort to finish college without debt.  She succeeded, but the work it involved seemed to us nothing less than Herculean.  Online classes, going to a different college freshman year because of an attractive scholarship, searching endlessly for additional scholarships, raising and selling cattle, full-time summer employment--all got her to her goal.  (She didn't mention meals of Ramen noodles, but the parent in us is not convinced she finished college without missing a lot of nutritious eats.)

After reading the article, we were left feeling a little hollow inside.  While we applaud this woman's tenacity and resourcefulness, we wondered how we--as a society that seems to value education--got to this point.  Why are only 38% of student loan holders making payments?  Why is student loan debt estimated to be more than $1 trillion?  And how can any student without a trust fund make payments on loans of $40,000 a year?  Many smart minds are seeking solutions, and others are joining MortgageKeeper in figuring out ways to help those who hold loans hold their own.

Here's hoping we all work as persistently to find solutions as this young woman did to buck the borrowing trend.

Tuesday, July 30, 2013

Foreclosure is Down, Home Prices are Up. So Why is MK Breaking Records?


It's a question we here at MortgageKeeper have asked ourselves.  The Housing Crisis seems to be easing.  Foreclosure is down.  For sale signs in our neighborhoods are replaced by "sold" signs a lot faster these days.  So why is the demand for MortgageKeeper reaching record levels?

To be sure, we've improved MK's market coverage--160 cities and counting.  We have more clients, and our data has a new interface that our users seem to like.

But this doesn't explain why long-time users of our product are seeing their need for our product go through the roof.

The punchline:  markets are up, but most Americans aren't seeing their incomes increase.  Poverty rates are still higher now than they were before the recession started.  

The catalyst for past housing recoveries has been first time homebuyers.  But where are they this time?  Answer:  they are saving for a hefty downpayment. Typical first time buyers are middle income Americans--those with little savings and less-than-perfect credit. With these limitations, qualifying for a mortgage in this stricter environment can be almost impossible.   

Many buyers this time around are investors or retirees--who are more likely to pay cash and win any housing bidding war (see this summary of a  recent article in The Wall Street Journal).

So while a recovery seems to be on the horizon, MortgageKeeper continues to help thousands of struggling homeowners every day to find their financial footing--hopefully in time to take advantage of the sunnier housing outlook.

Monday, July 8, 2013

Single Women, Single Men, and Homeownership

I have many single friends--men and women.  If I were to generalize among them, I'd say my single male friends tend to rent their homes, while my single female friends overwhelmingly own.

The National Association of Realtors has discovered the same thing.  Their research found:

* Single women purchase at nearly 2x the rate of single men
* Single women made up 18% of households, while single men accounted for 10%
* Single women are more discriminating, with nearly half needing to "love" the house before they consider its value and cost.  More than 75% of men considered value and cost first in their home buying decision.

These numbers are especially interesting when women's salaries are only 82% of what the average man makes.  As the article explains, "...women are 'making the most sacrifices to get into a home, but they're still placing a high value on owning a home of their own.'"

Does this research seem viable to you?  Do your friends and acquaintances fit with these stats?

Tuesday, June 25, 2013

Recovery Brings More Foreclosures

As we continue to wonder if this recovery is here to stay, the insightful folks at RealtyTrac have shown us statistics that renew concern about foreclosure rates.

Foreclosures apparently are on the rise, as banks attend to a foreclosure backlog, and can repossess homes and resell them more easily in this improved market.  In May, they say that 1 in 885 U.S. homes had a foreclosure filing.  This is still good news:  in Q1 2006, 1 in every 358 households was in foreclosure.

As we come to the end of another record quarter at MortgageKeeper, we can't help but agree with this pessimistic outlook.  In addition, we are noticing that the recovery varies from state to state, market to market, and sometimes even neighborhood to neighborhood.  This is why local, targeted resources to help with a homeowner's financial needs is more important than ever.  So while things are looking up, there are still homeowners needing help.



Wednesday, June 19, 2013

Celebrating National Homeownership Month

Even as more and more Americans choose to rent their homes, homeownership still seems to be an ideal for which we strive.  And for good reason--it builds and creates the strongest communities.

We've pulled together some of our favorite celebrations of the occasion on the Web for this week's More Knowledge Blog.  We hope you enjoy them.

*  Money Management International (MMI) believes financial education to be a key to successful homeownership.

*  Agriculture Secretary Tom Vilsack stresses the USDA's "renewed commitment to providing safe, affordable housing in our small towns and rural communities."

*  Springboard Nonprofit Consumer Credit Management encourages pre-purchase education for prospective borrowers.

*  NeighborWorks America promotes homeownership "the NeighborWorks way:  prepare, invest, and retain."

*  In an interesting twist, The National Association of Exclusive Buyer Agents (an organization of real estate professionals who advocate for home buyers) offers five reasons not to buy a home.

*  The Homeownership Preservation Foundation (HPF), the originators of the 888.995.HOPE Hotline, highlight the importance of third party, independent housing counselors in sustaining homeownership.

*  HUD Deputy Secretary Maurice Jones announces the U.S. Department of Housing & Urban Development's theme for Homeownership Month:  Rebuilding the Middle Class.

*  And here at MK?  Yesterday (June 18) we saw 4,400 counselors search our MKDesktop product.  The supplied 3,900 resource referrals to homeowners and renters in 20+ U.S. states looking for support, solutions and financial stability.  We celebrate homeownership like this every day.


Wednesday, June 5, 2013

MK Customers Speak Out

Asking your customers to complete a survey is a little like asking your significant other if  an outfit makes you look fat.  You *think* you want to know the answer, but then again...!

We here at MortgageKeeper bit the bullet last month and asked our users how they interacted with our MKDesktop product--their likes, dislikes, and ideas for improvement.  (MKDesktop gives professional counselors and customer service agents who work with distressed and transitioning homeowners the tangible, local resources they need to bring their household budget under control.  The resources also address major life events like unemployment and natural disaster.)

A whopping 40% of our users responded.  Here's what we found:
  • 96% agreed that MKDesktop is easy to use and that it provides their clients with helpful, local resources that they would not have otherwise known about. 
  • 98% said the MKDesktop interface saves them time and returns local referral results quickly. 
  • 64% believed that MKDesktop referrals saved their average client more than $51/month, with 27% saying the amount was more than $250/month.
  • 97% agreed that MKDesktop is reliable and available when they need it.

As far as improvements needed?  More rental resources for those transitioning out of homeownership.  Better copy/paste functionality.  More up to date foreclosure law information.  So our work for the next few months is very clear.

In the words of astronaut Neil Armstrong, "Research is creating new knowledge."  Thanks to our customers for making us smarter than we were before.  We'll use this information to make MKDesktop better than ever.




Sunday, May 19, 2013

Where is the Economy, Anyway?

Statistics are tricky things.  They can be massaged and repurposed to say just about anything to support...well...just about anything.  As Mark Twain has it, "Facts are stubborn, but statistics are more pliable."

We remember this as we come to grips with the statistics that say the economy is improving.  And yet our MortgageKeeper data and that of others says there are still many Americans struggling financially.

An article we saw recently helps to explain why this could be.  Phil Baldwin, CEO for CredAbility is quoted on DSNews.com: “The jump in Social Security taxes in January forced people to save and spend less compared to the previous quarter. With nearly 49 million people on food stamps and almost 12 million still unemployed, there are still a lot of challenges facing many families.”

So while signs of recovery are certainly greeted with a collective sigh of relief, the work for struggling homeowners must continue.

Tuesday, May 7, 2013

Emotional Spending

We were interested in a recent blog appearing in The Christian Science Monitor describing the relationship between emotion and spending.  The author describes some hard and fast ways to keep your emotions from affecting your wallet.

Some of us come from the world of marketing and advertising.  In 2013, this industry spent $140 billion to get you to part with your hard-earned cash.  The industry uses emotion, humor, drama, guilt--the works. Resisting will work some of the time, but likely not all of the time.  Best case?  You'll find a product that improves your life markedly.  Worst case?  Debt--in the form of out of control credit cards, mortgages, and even student loans.

Here at MortgageKeeper, we offer companies a way to help their debt-ridden customers.  With more than 7,000 listings for local, best-in-class services from government and nonprofit agencies, getting back on your feet can be made much easier.

Learn more about our work at mortgagekeeper.com.  








Wednesday, April 24, 2013

Help Arrives for Student Loan Borrowers

We've been inspired recently by former British prime minister Tony Blair, who when he first took office described his priorities as "Education, education, education."  He made good on his promise, raising per pupil funding 48%, adding 35,000 teachers, and raising teaching pay 18%.

In this country, we find that education is not always lifting its students higher, but rather saddling them with tremendous debt that siphons off much of the money they make during their early earning years.  Some are forecasting a student loan crisis that may rival the recent housing crisis in this country.

This is why we at MK are enthusiastic about StudentLoanHelp.org, a new initiative sponsored by the Student Loan Alliance.   

The site brings together student loan counselors (many of whom are MK counseling clients) to support those whose education left them struggling financially.  It offers online loan advice and assistance, and gives practical, actionable options for those in need.

So a tip of the MK hat to this new initiative, which proves that education should lift us up--not drive us down. 

Monday, April 15, 2013

Is the Housing Crisis Continuing? "Thinking Makes It So..."

Of interest here at MortgageKeeper is the question, is the housing crisis over, or not?  The feeling in our hearts is that the worst is past us.  But the Man on the Street says it just ain't so.

The MacArthur Foundation's "Housing Matters" survey made headlines this past week with Americans' pessimistic view of the end of the crisis.  Of those surveyed, 58% believe that we are "still in the middle of it" and an additional 19% believe that "the worst is yet to come."  

Then there's Bloomberg Government's Senior Finance Analyst Nela Richardson, who says because foreclosures are down, housing prices are up, and Fannie and Freddie are enjoying profits, the housing recovery is underway.  But she brings out that until first time homebuyers believe that there's a recovery, nothing will be changing anytime soon.  

Here at MortgageKeeper, our Q1 2013 numbers up 41% over the same time last year.  That meant housing counselors and servicing customer service representatives were using our product at never-before-seen levels to find help for struggling homeowners.  So, it seems that while housing as a whole is improving, homeowners and potential homeowners are still needing assistance, and thus meeting the "end" of the housing crisis with healthy skepticism.  

We are reminded of Shakespeare's line in Hamlet, "There is nothing either good or bad, but thinking makes it so." If the overwhelming thought of Americans is that housing is still in decline, we may be headed for a long slow return to normal.




Wednesday, April 10, 2013

Guest Blog: Homeownership Preservation Foundation's Josh Fuhrman

One of MortgageKeeper's long-time clients is the Homeownership Preservation Foundation (HPF)--the folks behind the national Homeowner's HOPE hotline, 888-995-HOPE.  Their counselors have fielded more than 6 million homeowner calls since 2007, and 70% of these callers are still in their homes a year after their call.  Amazing results!  

They also have their finger on the pulse of the housing crisis, so we recently talked with Josh Fuhrman, HPF's Senior Vice President, Government and Community Relations.  Josh has been in the counseling industry for more than 15 years, and is currently a board member of the Consumer Advisory Council for the Federal Reserve.


      HPF is no longer just about the 888.995.HOPE hotline and foreclosure intervention counseling.  How have you branched out to help homeowners in other ways?

While we still operate our 24/7 HOPE Hotline for foreclosure prevention counseling, we’re also developing several other exciting initiatives that will extend beyond helping homeowners in crisis and address a greater range of financial issues common among consumers.  In conjunction with various lenders, we’ve introduced pre-purchase counseling and education, which helps people better understand the mortgage process before buying a home; we’re also working with several banks on post-modification counseling, which caters to homeowners who have already been approved for a trial loan modification but who now need help managing their other financial obligations to ensure their modification becomes permanent and that they become long-term, sustainable homeowners.


      Economists see the housing crisis easing, but conversely MortgageKeeper is seeing an uptick in the need for our services.  Is HPF finding this true as well?

2012 was the fifth consecutive year that HPF received over one million calls, and we continue to receive a high volume of calls, upwards of 4,000 daily, from distressed homeowners looking for financial guidance. Unfortunately, foreclosures are still occurring at levels that are three times what they were pre-crisis, and foreclosure activity is actually increasing in several pockets around the country. It was just recently reported that over ten million homeowners are still “underwater” on their mortgages, or owe more on their mortgage than what their home is currently worth. Looking at just those in foreclosure or underwater, we see 14 million Americans who could potentially benefit from HPF’s foreclosure prevention counseling.


    What are the main changes you expect to see in the housing market in 2013?

We expect that there will be an increase in foreclosures over the next year due to lenders learning to comply with new standards set in motion by the various servicing regulations. What we want consumers to know is that, even if it is impossible to retain your home, there are alternatives to foreclosure that allow for a graceful exit. These include short sales, in which the bank agrees to sell a home for less than it’s worth, or a deed in lieu, in which a homeowner agrees to give the deed back to the lender. Both of these alternatives have less negative effects on your credit score and give homeowners a chance to prepare for what’s ahead rather than face the anxiety and fear associated with waiting for an eviction notice.

    What barriers do you see to relief in the housing market?

There is still a lack of awareness about the positive impact of housing counseling among consumers, as well as a general sense of distrust in the mortgage lending industry.  This is an unfortunate combination, because housing counseling is the tool that can once again bring the sense of trust back into the homeownership process. Looking beyond the housing crisis, HPF’s goal is to make sure that housing counseling is always available as an option for homeowners at any stage of the process, whether they are first-time buyers trying to figure out what they can afford or homeowners who fear they may not be able to make their next payment. Having a third-party ally has been proven to help in both of those situations. 

Wednesday, March 27, 2013

Home Matters--To All of Us

We've recently come across a nifty idea that's become an entire movement.  Called "Home Matters," it stresses the idea that home isn't just four walls and a roof.  A home gives self-worth and health, protection to families, security to communities, and ultimately makes America itself more formidable and stronger.

To us here at MortgageKeeper, Home Matters underscores why we work so hard to keep people in their homes.  By providing local resources to help out, we hope to mend family budgets so that mortgage payments are more easily met.  The folks at Home Matters (who find support from sponsors like Citi Community Development, NeighborWorks America, and Wells Fargo), are working together to think more about this concept, and make homeownership not just the "American Dream" but a reality.

What do you think of Home Matters?  Let us know in the comments below.

Thursday, March 7, 2013

Out of Control Homelessness

According to a recent article in The Wall Street Journal, more than 50,000 homeless people are in NYC shelters on any given night.  But rather than fitting the stereotype of older men, nearly half of these are children (1% of the city's youth).  For the first time since 1987, the average homeless family is staying in a shelter for more than a year.

Now homelessness in New York is, sadly, nothing new.  But in the words of the article, " it has become an escalating crisis in recent years amid a chronic shortage of affordable housing and an unemployment rate higher than state and national levels."  And New York is not alone.  Other U.S. cities have seen their homeless numbers increase, creating a national trend.

Here at MortgageKeeper, we've seen a gradual uptick in the searches for "basic need" services.  Counselors and individuals have made food assistance and affordable housing very popular in our list of 20+ categories.

It's not a trend we love to see.

As the economic stall in the United States continue, those hardest hit will need more and more of the basics until they can get back on their feet.  Here at MK, we continue to make sure that our data provides the best information possible to those who desperately need it.



Monday, February 11, 2013

Job Help...from Your Bank

We read with interest The Wall Street Journal's recent article on Fifth Third Bancorp.  Seems that the enterprising folks at Fifth Third Bank are expanding a job coaching program that offers training for homeowners who have fallen behind on their payments.  It specifically targets delinquent homeowners who have lost their job or had a significant drop in their income.

The tiny pilot program was quite a success.  Eleven of the 28 participants found jobs after 6 months.  Best of all, none of the participants were foreclosed upon, although Fifth Third maintains that they kept "the foreclosure clock" running.

Here at MortgageKeeper, our data consistently points to the need struggling homeowners have for job assistance.  It is consistently one of the top three needs of folks who don't know how they will make their next mortgage payment.  To paraphrase the old saying: Giving a homeowner a loan modification will help decrease his payments, but teaching a homeowner to find stable employment will help them never to be delinquent again.    

MortgageKeeper has many mortgage servicer clients who provide employment and other support to their borrowers, using our products to help delinquent homeowners get to the root of their financial problems and find a way to make their financial picture whole again.  We look forward to hearing more of Fifth Third's successful program.


Tuesday, January 29, 2013

The Rent vs. Own Debate

A childhood friend of mine recently posted the following on Facebook:

"I was listening to NPR's Marketplace weekend show, and there was a piece on renting versus buying a home. The generation after ours has seen how the housing bubble burst, and they're tending to rent with no plans to ever buy a house/condo.   Any opinions? As for us, we bought our house at the height of the bubble and then watched it lose almost $30K in value in one year. We're slowly gaining equity again, but we certainly didn't expect this to happen."

Wednesday, January 16, 2013

The Service We Offer That Hopefully Goes Unused

If you are familiar with MortgageKeeper, you know that we offer 20+ categories where folks can find help to their personal and financial crises.  From prescription drugs to property tax, child care to credit counseling, we have it pretty well covered.

That is, except for disaster relief services.

We only began seriously considering this category in the last year or so.  But after Hurricane Sandy, it seems like a wise and prudent move to offer our clients a means to refer their callers or online users to the most up to date relief available to them during a crisis.

We're sure hoping that a disaster relief category gathers a lot of dust.  But it will be there if it's needed.

Thursday, January 3, 2013

Top 5 Money Resolutions for 2013


We here at MortgageKeeper are jumping on the resolution train.  To have a look at getting our finances in order, we welcome Karen Carlson, Director of Education for one of our newest clients, InCharge Debt Solutions, as our guest blogger.

Top Five Money Resolutions for 2013

By Karen Carlson, Director of Education at InCharge Debt Solutions

Looking to shore up your finances this year? Become in charge of your money with resolutions you can take to the bank.

1.  Pay off your credit card debt. If you are among the nearly 40% of Americans who carry credit card debt from month to month, it’s time to kick the habit and pay it off. If your total debt is less than 15% of your annual income, you should be able to pay it off in one year. Divide the amount owed by the number of paychecks you receive in a year. Pay your debt payments first, on payday.

2.  Build an opportunity fund. Typically called the emergency fund, we like to cast money stashed away ‘just in case’ in a positive light. What opportunities could you take advantage of in 2013 or 2014 if you had money saved? Where could you go? What experiences could you have? Set up direct deposit from your paycheck to your savings account and put your money where your dreams are in 2013.

3.   Stop living paycheck-to-paycheck. What’s worse than working 40 hours a week for 10 years with nothing to show for it? Working 40 hours a week for 20 years with nothing to show for it. In fact, a large percentage of baby boomers have worked the majority of their adult lives and have accumulated little in the way of assets. Paycheck-to-paycheck living will rob you of the ability to save, invest and retire with dignity. Learn how to live with less. Be creative. Draw a line in the sand and find room in your budget this year.

4.  Grow Your Income.  As the unemployment rate drops, there will be more opportunities to work longer hours or pick up a second job.  But recognize that the US job market is in the middle of a dramatic shift, toward jobs that require higher education and greater technological skill. Get educated. Get certified. Improve your income potential and employability, even if it means a temporary pay cut. Consider creating a job by starting a small business.  

5.  Reach Out When You Need Help. If you’re struggling financially and you need help, all you have to do is ask. Reputable nonprofit organizations are standing by to help you analyze your financial situation, make a budget and illuminate a path to stability. These include InCharge—who also make referrals using the MortgageKeeper data application to find local agencies that can help.

Making a resolution is the first step, but sticking to it can be difficult. Behavior change research shows that successful resolutions are followed by detailed action plans. This means committing to your resolution to writing, breaking it down into small ‘bite-sized’ goals (weekly milestones, for example), and tracking your progress. It’s okay to have a slip-up, but get back on your plan as soon as possible. 

Good luck and Happy New Year.