Articles by jmolito

Debt, Diets, and Dinosaurs

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Overeating and debt have a lot in common.  Like the facility of chugging ice-cold eggnog, it’s easy to charge things on your credit card in a frenzy of impulse buys. For instance, the act of going to the grocery store on an empty stomach can encompass both gluttony and spendthrift. As your stomach is growling and you look in your cart, you say to yourself, “Am I really going to eat bibb lettuce and toilet paper for dinner tonight?”

For me, as soon as my cart hits the frozen food section, it’s over: the boxes of pizza and ice cream can hear my rolling cart and appetite as I make the inevitable turn down the frigid aisle. To draw a comparison to Jurassic Park, it’s as if I’m a T-Rex and the frozen foods are the children in the SUV watching water in the glass shake as I approach closer and closer. But does it always have to be like this?  Where does the line between discipline and logic get crossed? Will I actually eat a blood-sucking lawyer out of sheer hunger?

The answer to the latter is no, but it’s easy to let yourself get carried away with credit card debt and overeating. Especially amidst the holiday season, society places an unnecessary burden for people to provide for their families. Not in the traditional sense with food, water, and shelter, but more millennial and new age: video games, DVDs that you will only ever watch half of, and the latest electronic gadgets.  All of sudden, and I’m sure Black Friday can attest, we have morphed into the T-Rex from Jurassic Park consuming (or swiping) everything in our path.

As a debt relief company, we would not be in business if consumers were not financially in over their heads, but this does not mean we do not care about our clients’ well being. This holiday, try your best to keep your appetite, financial and otherwise, in check.  Remember, when one part of your life begins to indulge, it’s easier to let other facets follow suit.

One thing we will allow though, is the chugging of eggnog. Cheers to a happy and safe holiday!

Refined Debt

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Do you ever wonder if refined, British people can, in actuality, really be the product of massive amounts of personal debt? But of course.

On November 20, RT News reported that the “total personal debt in the U.K. has reached record highs – 1.4 trillion pounds, a new report has shown.” The article goes on to say that this is roughly the equivalent of 94% of the United Kingdom’s economic output. The main culprit is that a majority of citizens have little to no savings, a trend that most of our clients can relate to.

When you focus all your energies on debt repayment, this leaves little wiggle room to actually save money. It’s as if your paycheck comes, and just as quickly as that direct deposit hits, you watch your hard earned money float away to creditors and bills.

After spending a month on vacation with my mom in Scotland this past September and getting back in touch with our ancestral roots (my tolerance for whiskey and predilection towards dark liquor definitely comes from the Scottish side) this news about debt in the U.K. came as a shock to me because most of its citizens lived seemingly modestly. For instance, all of the houses that we came across were small in comparison to the McMansions of the States. In fact, cars were smaller, meals were smaller, and roads were smaller. So how did all this overspending occur?

Smaller does not necessarily translate into less spending. Money is still relative to a town, state or country’s economic situation; the cost of living still rises, housing markets and unemployment are perpetually in flux, and people will always borrow. Just because a car in England looks like a big toe compared to the SUV-clogged highways in the U.S., that doesn’t mean it’s going to be any cheaper.   Similarly, all British people are not refined: on my trip, I also saw a television show called “Sex, Lies and Rinsing Guys.” Looks, and accents, can be quite deceiving.

One area where the U.K. and the United States are matched is having a complex financial system, both a blessing (more opportunities to borrow money) and a curse (more opportunities to rack up personal debt). While Freedom Debt Relief currently does not operate abroad, if you are having trouble maintaining a refined wallet, give us a call.

Small Business Debt

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Opening up a small business always seems like a good idea: it helps the local economy, provides jobs and lets you, the owner, do something that you’re passionate about. In fact, Freedom Debt Relief started out as a small business with only five employees.

Now, while we are a mid-sized company, our passion for debt relief has only grown even stronger. This is not to say that we have not endured our share of tough times. Every small business goes through rough patches. To paraphrase the hook of a popular Kelly Clarkson song, what doesn’t kill you, or force you to file Chapter 7 Bankruptcy, only makes you stronger!

Believe it or not, small businesses, like college graduates or middle-aged divorcees, can get in over their heads with credit card debt. One main difference between a business credit card and personal credit card are the consumer protections. The Credit Card Accountability Responsibility and Disclosure Act of 2009 has helped to keep consumer interest rates at bay and has given some degree of solace to the masses in credit card debt. Small businesses though do not receive the same treatment and can be subject to finance charges and interest well above the rates for personal cards.

There are pros to using a company card: for everyday purchases like staplers, computers and going to happy hour on company time, a business credit card lets you build points and get rewards which can go far. Just like personal credit cards though, these rewards are relative. That happy hour beer won’t taste nearly as refreshing if it’s paired with a 30% APR no matter how many points you get. In fact, it will likely leave you bloated and with a headache that will only get worse when your monthly statement comes in the mail.

At Freedom Debt Relief, we know the effort that owners put into their small businesses. If you’ve fallen onto hard times as a business owner and you have bankruptcy knocking on your front door, before opening it, give us a call to see if your situation could be helped with our Freedom Fresh Start program.  Trust us, you’ll be amazed at how much more enjoyable happy hour is without a bloated wallet.

Credit, Debt, and Relief

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Do you ever look at the word debt and wonder where it came from? It’s a pretty ugly word and the placement of that silent ‘b’ is misleading at best, but that’s the way debt rolls: subtly. And credit cards most certainly operate under the same MO, with hidden fees operating under the guise of low APRs and ‘rewards.’

The definition of ‘credit’ on Merriam-Webster.com is: “money that a bank or business will allow a person to use and then pay back in the future.” In theory this definition sounds appropriate but in practice, people who have credit card debt would probably want to tack on the phrase, “albeit with exorbitant amounts of interest.” And it’s true, besides borrowing money from your family, what business or bank is going to lend you credit without getting the principal plus interest in return?

Borrowing money from your family has both pros and cons. On the upside, you pay little to no interest, there’s no official paperwork and there’s no binding agreement. One con is that you then have to kiss that family member’s feet at every holiday party. Paying back interest or stroking your rich cousin’s bloated ego – which is the lesser evil?

The bottom line is when you are in debt from all the credit you’ve racked up, you have to resolve it. The definition of ‘debt’ is: “an amount of money that you owe to a person, bank, company, etc.”  Again, that part about repayment of interest is absent. Related words for debt include: delinquency, bankruptcy, default, embarrassment, and insolvency. While these power words can make you feel weak, feeble, and akin to the feeling you get when you weren’t chosen for your high school cheer squad even though your best friend was captain of the team, there is hope.

Here at Freedom Debt Relief, we embrace the battle of fighting debt. While your debt may be piling over your head, once you enroll in our Freedom’s Fresh Start Program, we immediately start cheering for you. Once you get on the road to resolving debt, all those feelings that held you back will melt away, and embarrassment, bankruptcy and insolvency will be replaced with confidence, stability and pride.

The definition of ‘relief’ is: “a pleasant and relaxed feeling that someone has when something unpleasant stops or does not happen.” Now that is a definition we can stand behind!

Wise About Debt

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Do you ever browse your credit card statements from months ago and reflect on how you got into debt in the first place? Well, if you’re like me, you did this last Friday. I do not have massive amounts of debt, but I do have the ever-revolving $1,000.00 that I owe to Barclays. Looking over my statement, I am in awe of how much I completely wasted: a seldom used gym membership, a $100 bar tab, $18 of bath salts. It all quickly adds up and the end result is always the same: continual debt.

Many of us go out shopping with a “treat yourself” mentality. If it’s the weekend, we justify frivolous purchases by telling ourselves that we worked hard all week long and because we only live once and life is short, go ahead and splurge on those $18 bath salts. They’re 100% natural and plucked right out of the Himalayas so $18 is worth it to turn your bathtub, if only momentarily, into a Nepalese lagoon, right?

I hate to burst your bubble bath but this mentality is dead wrong.

If you want to treat yourself, then the most rewarding thing you can do for yourself is not stress about your finances. Honestly, how relaxing will those bath salts be when you can’t fully unwind because you’re thinking of the interest charge it’s inevitably going to cost you.

The old adage “penny wise and pound foolish” comes to mind, which means one is good at saving and scrounging on small items, like using coupons and focusing on the smaller picture of finance, but rather inept when it comes to actually saving money and spending wisely on larger purchases. For me, it’s more like “penny foolish and not enough savings to buy a pound.”

It’s time to change that mindset from short-term to long-term goals. What in the long-term is going to justify all your hard work? Owning a house, providing better for your loved ones, saving up for a well-earned vacation? These are all things that can be achieved with the proper tools. If you have credit card debt, create a plan and become both pound and penny wise. If you’re in over your head, give us a call to see if you’re a fit for our Freedom Fresh Start Program.

Speaking of wise, I think I’ll also start going to that aforementioned gym more frequently. I still might end up spending too much at the bar, but at least I’ll look good doing it.

Debt – What History Has Taught Us

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Debt – We can learn a thing or two about it from history…

Believe it or not, people have literally been getting deep into debt since ancient times. What has changed over the course of the past few millennia is the way people have been getting out of debt. As the inventions of the abacus, algebra and APR interest can attest, humans, and credit card companies, are quite savvy. They are also a merciless breed when it comes to getting their money back.

In Ancient Rome, you could pledge yourself as collateral in order to borrow a loan but if you failed to repay, then you would consequently become an indebted slave, forced to work off your remaining balances. If this was still 400 BC, could you imagine becoming a slave simply because you couldn’t control your impulses to indulge in fanciful cloth, bountiful feast, and Italian wine containing no sulfites? Collection calls really pale in comparison with shackles on your feet.

During Europe’s Middle Ages, the advent of debtor’s prisons became a popular way to punish those who could not repay their debts. It was then the burden of the debtor’s friends and relatives to pay down their balance. It’s a very bleak scenario: just imagine one of your relatives locked up, suffering from starvation and the bubonic plague, and as their family member it’s your responsibility to pay off their debt. Talk about stress. I would almost prefer to get beheaded…

At Freedom Debt Relief, we get it: being a slave or prisoner to debt, whether literal or figurative, is no way to live your life. If we can learn two things from the history books: 1.) Thank your lucky stars that the debt collection laws have evolved over the course of the last few millennia, and 2.) overextending on credit will always bite you in the rear. While life can be hard at times, if you are struggling with credit card debt, whether it be from that authentic Italian dinner at Olive Garden or buying too much low-sulfite wine, it’s time to do something about it, lest you lose your head.

A 401 (What!?) Plan

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Yesterday I got a package in the mail labeled “Time Sensitive Transition Information Enclosed.” Since it was larger than a regular sized envelope and not from a bill collector, I quickly rushed to tear it open. After a cursory read with the words 401K plan, risk, diversify, vest, and blackout period popping out at me, I suddenly felt like I was in calculus with Charlie Brown’s teacher. In other words, what on earth do all these terms mean?

To put it succinctly, for those of you who, like me, feel like CNBC is in another language, a 401K plan is essentially a savings account in which you invest your money so that you don’t have to live on social security or cat food by the time you retire. Like all savings accounts, the longer you save and the more you put in, the more your nest egg will grow, right?

Well, kind of…

What I failed to grasp before yesterday’s notice is that it pays to diversify your 401K with a healthy mixture of stocks, bonds, and other financial instruments. For instance, to diversify one’s portfolio basically means to have a healthy array of little investments in all types of securities, like a colorful pie chart, or those frozen cheesecakes at Trader Joes that have a mixed variety of plain, tuxedo, chocolate chip, and triple chocolate.

Depending on your financial savoir-faire, you can choose to diversify your portfolio with low volatility (bonds) or high volatility (stocks). Perhaps you want to divvy up your 401K with 70% stocks and 30% bonds. You then must diversify your portfolio within these categories.  For instance, you don’t want to invest your entire 401K into one type of stock, like healthcare or financial services, in case one of those industries goes bonkers, à la 2008.

This is the point where the light bulb went off in my head, as before yesterday the term ‘diversified portfolio’ gave me visions of waiters in Los Angeles with an eclectic mix of head shots hidden behind each menu. While researching 401K plan options are not nearly as sexy and glamorous as getting a coveted role on General Hospital, the end result in both instances should involve you making more money.

To be frank, the only appetites that are whetted by 401K plan talk are those of financial planners, Suze Orman, and human resource personnel; the latter of which is mostly feigned interest to give hope to employees. But if one wants to get in control of their finances, one must pull up their sleeves and get a little dirty with financial terminology. I suggest www.401k.org for an elementary understanding. After this base knowledge, you can scour all over the web for tips on how to diversify your portfolio.

As I am only 27, I have a lot of time left to save up for that glorious retirement, but, as many finance websites will tell you, it’s never too soon to start saving, and diversifying.

And remember, you’re not the only one who’s confused.

(Less) Extreme Couponing

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We’ve all seen it: the determined woman in the super market line, with her bag of coupons. Through dedication and a little bit of time, she saves a substantial amount of money on groceries because of her coupon clipping abilities. I always think to myself, “Good for her! I should start clipping coupons too.” It wasn’t until I came across an episode of ‘Extreme Couponing’ on TLC that I realized the subculture of people who are addicted to the rush that clipping coupons provides.

The two main things I took away from a marathon viewing of the show are: 1.) There are millions upon millions of coupons in circulation, and 2.) People hoard useless stuff. The first point is one that we can all apply to our own finances.  If there is a product that you use, you can usually find a coupon.

Most of the ‘extreme couponers’ on the show devote nearly 40 hours a week to finding coupons and then research which local deals are happening in their supermarkets. When they pair the coupon with the local deal together, it creates a force so powerful that the shopper can usually buy the item for very cheap, or even free. I don’t have the time, and even if I did, I don’t think I would devote myself full-time to the pursuit of couponing, but for items that you will use daily and weekly, seek out a couple of products and use a coupon.

Personally speaking, in my apartment where my roommates and I always argue about who’s going to buy dish soap, paper towels, and toilet paper, after applying the lessons we learned in ‘Extreme Couponing’ we now pay next to nothing for these common household items. If there isn’t a coupon available, one ‘extreme couponer’ suggests writing to the manufacturer to tell them how much you like their product, and they will shower you with coupons as a sign of gratitude. While I have yet to pen a letter to Charmin or Bounty, it’s a smart tactic for getting freebies.

Now, on to the second point of people hoarding useless stuff…  After watching the episode where a single, middle-aged man was hoarding a massive stockpile of tampons, simply because he got them for free, this is where the line is crossed, and you’re half-expecting a social worker from ‘Intervention’ to pop out from behind the shelf and confront him about his problem. Plus, even if he was stocking up for the impending apocalypse, I doubt that a thousand boxes of tampons are going to save humanity.

Couponing is a simple way to save money, cut some corners, and beef up your finances, but don’t get carried away. While I admire the savoir-faire and enjoy the entertainment value of the ‘extreme couponers,’ nary a sane person does it make.

Which items would you cut coupons for?

Debt and Studying Abroad

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After graduating from college, I had a minor bout of credit card debt. As much as I would like to admit that I racked up my balances from textbooks and other educational fundamentals, in all honesty, it was the semester in France where I stuffed my face with fresh-made croissants, choked down liters of Belgian beer, and hopped on impromptu flights to Madrid, Dublin and Budapest. It seemed like a good decision at the time. I mean, when would be the next time that I would be this young, fun, and French-spoken? It was a no-brainer, and I had to live it up.

Well, all that beer and travel soon revealed itself in the form of $6,000.00 in credit card debt. The balance soon became even more obese with its fatty meals of interest and finance charges for dessert. I became mildly depressed at the idea of paying off this burden, but instead of ignoring it, I decided to proactively do something about it.

First, when I received a new credit card offer in the mail, I transferred my balances to cards where I would pay 0% interest for a year. You can usually find cards that will allow a year of no interest on balance transfers, so this step effortlessly gives you an instant cash flow that you would normally devote to finance charges.

I then sought cards that would offer me, the debtor, something in return for providing the creditor with my business. Specifically, I transferred one of my balances to a Virgin America Visa card through Barclays so that I would get points for travel. I am based in San Francisco, and my mom lives just outside of New York City, so the free airline points are a great bonus just for transferring my balances.

After a year of heavy discipline and cheap living (more on this in another post), I reduced my balances significantly, increased my credit score, and have roughly 15,000 points to use to fly home to visit mom on her 60th birthday. Now if I could only tackle my student loan debt, mais c’est la vie.