We cover a lot of topic here. Most of them are of the informative and how-to nature. I wanted to change that up a bit today. Today we are going to discuss the how to screw things up. Not only that, but we are going to give you the best ways to manage your debt incorrectly. Brace yourself for stupidity.

-If you are in debt up to your ears (as many of us are these days), the most illogical thing to do is to continue spending your butt off. But hey, you are already drowning in debit, might as well keep swimming away from the beach right? Spend away my friend.

–This idea that you are already so far behind the 8 Ball that you are more like Indiana Jones with that big rock is the wrong mindset. Yes, you are in debt, but X more dollars do and will matter.

-You have a house. Using that home equity loan is a sure fire way to get out of your deep debt gallows. Using a home equity line of credit to pay off the monster of credit card debt seems like a smart move. Besides, the rate of the mortgage debt is lower than those high interest rate credit cards.

–Over-spenders make the best money managers. Doing this little tactic will make your woes go away…for now. Then those zeroed out credit card balances will lure your smart-budgeted self  right back into spending on them. Now you are venturing deeper into your debt inferno. For those who take this route and then eventually can’t make the newer mortgage payments, foreclosure comes too fast.

-Borrowing from your loving family worked when you were 16. It should still be able to be tapped into right? Sure. Your loved ones, they, well- love you. They’d be happy to help their struggling family member.

–Never a good idea. Let’s face it, if you have rich family members you are close to, you probably wouldn’t be playing hot potato with Peter and Paul. If they want to help, fine. But accept at your own risk. If they say: “OK, but I really need you to get it back to me soon.” Don’t you dare. You don’t have any true obligations or game plans when paying back relatives or family. You will undoubtedly destroy the relationship with your requested loan.

-What debt? There is no way I saw that. Nope there are no impending threats to my financial position on the horizon.  As long as we are hitting the minimum payments and no bill collectors are calling, we are just fine.

–Wrong Sparky. The worst thing you can do is be unconcerned about the debt red flags. Ignoring the problem doesn’t make it fly far away. Out-of-sight-out-of-mind is not a luxury with financial obligations.

Come back to reality. When In reality, whenever you can only afford minimum payments, you constantly use credit card balance transfers to keep up with your debts, and you’re maxed out on one or more credit cards, something isn’t right. This is where you can still be responsible. How you react to your debts will determine if they eventually spiral out of control through life’s ups and downs.

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Long and short of it, if it sounds like you shouldn’t, that’s probably the case.

These days people call you all the time. You get offered stuff all the time. And you also get promised the fast fixes and the sure fire things. A relatively new scam not only falls on all three, but could also put you, the one being scammed, behind bars.

The scam itself is an illegal scheme that is being used to convince customers with unfavorable credit and huge amounts of debt to go and obtain new taxpayer or employer IDs under false pretenses. These “credit repair” companies con the subjects into going to doing so and then convince them to hide their true credit identities from creditors. THIS IS HIGHLY ILLEGAL.

For a “modest” (really not considering court costs) fee, the companies promise to give advice about performing this file segregation of the client’s credit files.

FILE SEGREGATION IS ILLEGAL AND CONSUMERS WHO EMPLOY IT ARE COMMITTING A FELONY.

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I still get asked to break this down all the time. So I figured a post about it was due yet again.

A credit RATING is a number which most lenders use to determine whether they will extend you a line of credit or give you a loan. The rating is generated by three separate credit reporting bureaus. When applying for a loan, a lender will usually acquire a report from at least two of these sources.  Different lenders favor different bureaus for their needs. The accuracy is a opinion really, hence the reason two or all are used in most cases.

The FORMULA used to calculate this score in-house at these bureaus is known as FICO. So a FICO score is a credit rating based on the Fair Isaac Credit Organization formula. The resulting number is one ranging from 300 to 900. This number outlines the amount of risk you pose to a prospective lender; 300 being the most unfavorable. Your financial history and current assets and liabilities are what are fed into the FICO formula, thereby generating the score.

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We’ve been around for awhile now, and people send me all kinds of questions, tips,  concerns, and of course…junk mail. But I have had a few people ask for a post like this. So, after a number of requests I decided to finally compile a Protect Identity Resource List.

Credit Agencies:

Remember that you get a free report from each of these every year. A request can be made to receive all of the at the same time. If such is the desired case, you need only to contact one and specify the request. They can me reached online, by phone or via mail.

Equifax
(888) 766-0008
Consumer Fraud Division
P.O. Box 740256
Atlanta, GA 30374
http://www.equifax.com

Experian
(888) 397-3742
Credit Fraud Center
P.O. Box 1017
Allen, TX 75013
http://www.experian.com/

TransUnion
(800) 680-7289
Fraud Victim Assistance Department
P.O. Box 6790
Fullerton, CA 92834
http://www.tuc.com

Government Agencies:

The government takes ID theft and credit scores serious too. If they did not, their own information, and ultimately the structure of the American financial system falls to failure. Here are a few government agencies advocating the protection of your identity.

U.S. Department of Justice
This site provides a wide range of basic information about identity fraud.
http://www.usdoj.gov/criminal/fraud/idtheft.html

Financial Fraud Task Force
Established by President Obama in November 2009, this organization holds accountable those who helped bring about the last financial crisis as well as those who would attempt to take advantage of the efforts at economic recovery.
http://www.stopfraud.gov/about.html

Federal Trade Commission
This is the main U.S. government site for identity theft information. You can also file an online report of identity theft.
http://www.ftc.gov/bcp/edu/microsites/idtheft/

Social Security Administration
This electronic fact sheet describes identity theft and links to other useful publications.
http://www.ssa.gov/pubs/idtheft.htm
Fraud hotline: (800) 269-0271
This automated hotline provides answers to questions about identity theft in both English and Spanish, and you may speak to a representative in person.

U.S. Department of Education
(800) 872-5327
Students can learn how to protect themselves against identity theft at this site for the U.S. Department of Education’s Office of Inspector General.
http://www.ed.gov/about/offices/list/oig/misused/idtheft.html

Nonprofits:

As the name often implies, these organizations are acting to further awareness, cease the crimes spread, and assist those who have become victims.

Identity Theft Resource Center
(858) 693-7935
This nonprofit organization provides consumer alerts, scam warnings and instructions for victims of identity theft.
http://www.idtheftcenter.org/

Privacy Rights Clearing House
(619) 298-3396
This nonprofit consumer information and advocacy organization offers fact sheets about privacy issues and identity theft.
http://www.privacyrights.org/identity.htm

National Organization for Victims Assistance
(800)-879-6682
This is a private, non-profit organization of: victim and witness assistance programs and practitioners, criminal justice agencies and professionals, mental health professionals, researchers, former victims and survivors, and others, all committed to the recognition and implementation of victim rights and services.
http://www.trynova.org/

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Not going to lie guys, this one is a doozie. Apparently, there were these scammers that were charging small one time transactions to people’s accounts. This is where it gets good. The charges were routed through “dummy” corporations here in the US to banks in Asia and Europe. The FTC just recently got a federal court to halted the online scam, which (you guessed it) used identity theft to place more than $10 million in bogus charges on consumers’ credit and debit cards.

The alleged scammers were using fake company names similar to real names and information taken from identity theft victims in the United States. They opened over 100 “merchant” accounts with companies who process charges to consumers’ credit and debit card accounts. The FTC believes these defendants actually ran credit checks on their prospective victims prior to scamming; to be sure they were creditworthy.

The majority of consumers didn’t notice the charges on their bills or didn’t seek reimbursement because of the size of the amounts, which ranged from 20 cents to $10. People that called the phone numbers appearing on their statements found them disconnected or heard recorded messages instructing them to leave a message, but no calls were returned.

Check you statements every month. If you or your wife can’t identify the charge, CALL THE BANK OR CREDIT CARD COMPANY! Stay on top of your credit too.

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