Index
Numbers
401(k) plans. See also retirement savings
contributions
neglecting employer matches, 9-10
403(b) plans, loans from, 134
457 deferred compensation plans, loans from, 134
A
adjustable-rate mortgages, 73-74
after-tax rate on tax-deductible debts, 19-20
airline-affiliated credit cards, 59
alimony payments, renegotiating, 166
all-in-one loans (construction loans), 94
Amazon.com, selling possessions on, 187
AMT (Alternative Minimum Tax), 20, 87
AnnualCreditReport.com, 22
authorized users on credit cards, 57
autos. See cars
B
balance-transfer offers on credit cards, 49-51
balances on credit cards, carrying, 40-41, 47
balancing car expenses with other spending, 125-126
bankruptcy. See also debt crisis
Chapter 7 versus Chapter 13, 170
effect on retirement savings, 140
finding bankruptcy attorneys, 37
when to file, 38
bills. See debt
borrowing. See loans
building credit, steps in, 56-58
“buy here pay here” lots, 149
buying
as better than renting (home-buying myth), 67
versus leasing (cars), 126
C
calculating after-tax rate on tax-deductible debts, 19-20
Capital One Cash Rewards, 60
capital spending, effect on cost of college education, 114
car company-affiliated credit cards, 60
car insurance, savings tips, 122
car lenders, contacting during debt crisis, 162-163
“buy here pay here” lots, 149
credit scores and, 127
length of, 6
lowering interest rates on, 178
owing more than worth of car, 121-122, 128
prepayment penalties, 128
carrying balances on credit cards, 40-41, 47
balance-transfer offers, 49-51
fees, 49
minimum interest rates, 47
balancing with other spending, 125-126
leasing versus buying, 126
owing more than worth of, 121-122, 128
paying with home equity loans, 91
reducing spending on, 183
case studies, financial flexibility planning, 27-30
Case, Karl E., 66
cash
advances on credit cards, 152
raising (as part of debt management plan), 186-188
cash flow, improving short-term, 150-151
cash-advance fees on credit cards, 52
cash-back credit cards, 60
cash-out refinancing for home improvement projects, 93
cashing out 401(k) plans, 142
Chapter 7 bankruptcy, 170
Chapter 13 bankruptcy, 170
checking accounts, setting up, 56
child support payments, renegotiating, 166
closing costs (mortgages), 80
clothing, reducing spending on, 184-185
collection agencies
for student loan debts, 163-164
cost of. See also student loans
scholarships and grants, 106-108
statistics, 101
effect on salary and unemployment rate, 101
paying with home equity loans, 91
company match on 401(k) plans, 143
company stock in 401(k) plans, 144
compounding, 137
consolidation of student loans, 111-112
construction loans for home improvement projects, 93-94
construction-only loans, 94
contracts for personal loans to family/friends, 156
contributions to 401(k) plans
neglecting employer matches, 9-10
conversion fees on credit cards, 52
Craigslist, selling possessions on, 187
Credit CARD Act of 2009, 48
credit card debt
amount in United States, 6
paying down, 27
credit card interest as tax deductible, 21
credit card issuers, contacting during debt crisis, 165-166
carrying balances on, 40-41, 47
balance-transfer offers, 49-51
fees, 49
minimum interest rates, 47
cash advances, 152
debt-suspension contracts, 50
lowering interest rates on, 178
paying in full each month, 42
paying minimum on, 40
with home equity loans, 90
protections provided by, 40
small business funding with, 44-45
stopping use of, 37
tips for using, 62
usage statistics, 46
credit counseling, 37
credit reports
obtaining free, 22
car loans and, 127
credit card balance transfers and, 50
credit counseling and, 165-166
default risk and, 154
home equity lines of credit and, 89
home equity loan rates and, 88
mortgage interest rates and, 78
reward cards and, 61
credit unions, loans from, 152
contacting during debt crisis, 160-166
failed negotiations with, 174
currency conversion fees on credit cards, 52
D
delayed payments, 153
good debt, dangers of, 4
prioritizing, 5, 33, 35, 189-192
debt consolidation loans, 32, 151
debt crisis. See also bankruptcy
collection agencies, handling, 170, 172-174
creditors
failed negotations with, 174
statute of limitations (SOL) on debts, 167-169
debt elimination fraud, 32
debt management plan, 15-16, 177-178
financial goals, 23
information gathering phase, 17-20
matching resources to debts, 35-36
paying off debt with debt, 31-32
prioritizing debts, 33-35, 189-192
unsecured debt consolidation loans, 32
debt negotiation services, 32
bankruptcy, when to consider, 12-13
limited financial flexibility, 8
neglecting retirement savings, 9-10
debt-cancellation contracts, 50
debt-free in retirement, 14
debt-suspension contracts, 50
debtors’ prison, 5
default risk and credit scores, 154
defaulting on student loans, 112
deferred payment programs (student loans), 112
defined benefit pensions, 24
defined contribution plans, 24
delayed bill payments, 153
demographics, effect on cost of college education, 116
direct-deposit advances, 148
Discover More card, 60
The Dollar Stretcher website, 30
“driving out of the loan,” 128
E
early retirement, effect on retirement savings, 141-142
early withdrawals. See withdrawals from retirement savings
eBay, selling possessions on, 187
EBRI (Employee Benefit Research Institute), 24
education. See college education
emergency funds, paying with home equity loans, 92. See also financial flexibility
Employee Benefit Research Institute (EBRI), 24
employer match on 401(k) plans, 9-10, 143
employers, paycheck advances from, 152
enabling, helping versus, 156
essential bills, 34
expenses
cutting (as part of debt management plan), 182-185
fixed expenses, list of, 179
weekly expenses worksheet, 180
F
faculty salaries, effect on cost of college education, 114
FAFSA (Free Application for Federal Student Aid), 106, 109
Fair Debt Collection Practices Act, 171
family
borrowing from, 152
federal student loans, 108-109
payment options, 163
fees
on credit cards
on balance transfers, 50
with paying in full each month, 52-53
usage fees, 49
FICO scores. See credit score
financial aid, effect on cost of college education, 115. See also student loans
limiting, 8
financial goals, 23
first-time home buyers’ programs, 79
fixed expenses, list of, 179
fixed rates, 19
fixed-rate mortgages, 73
food, reducing spending on, 184
forbearance, 5
foreclosure, avoiding, 141, 161-162
“forgiven debt,” tax implications of, 173
Franklin, Ben, 5
Free Application for Federal Student Aid (FAFSA), 106, 109
free credit reports, 22
friends
borrowing from, 152
G–H
GAP (guaranteed auto protection) insurance, 121, 129
GM Card, 60
goals. See financial goals
good debt, dangers of, 4
grace periods on credit cards, 52
guaranteed auto protection (GAP) insurance, 121, 129
Half.com, selling possessions on, 187
handshake agreements, statute of limitations, 168
helping, enabling versus, 156
high-rate loans, 147
“buy here pay here” lots, 149
debt-consolidation loans, 151
direct-deposit advances, 148
pawnshop loans, 149
payday loans, 148
refund anticipation loans, 148-149
rent-to-own deals, 148
tips for, 157
title loans, 148
home buying. See also mortgages
determining affordability, 70-72
myths about
buying as better than renting, 67
house as great investment, 65-67
tax breaks of homeownership, 67-69
when to buy, 65
real estate bubble’s effect on, 63-64
tips for, 84
home equity
amount in United States, 6
interest as tax deductible, 20
home equity lines of credit versus home equity loans, 87-89
for cars, 91
for credit card debt, 90
for education, 91
for emergency funds, 92
home equity lines of credit versus, 87-89
for home improvement projects, 92-93
for investments, 90
for luxuries, 90
for paying off student loans, 113-114
tips for, 96
paying for
with cash-out refinancing, 93
with construction loans, 93-94
with Title 1 loans, 93
hotel-affiliated credit cards, 59
household expenditures statistics, 120
housing bubble
role of mortgage debt in, 4
housing expenses, reducing spending on, 182
HUD-approved housing counselors, 161
hybrid mortgages, 73
I
important bills, 34
income. See also resources
increasing (as part of debt management plan), 186
irregular income (as part of debt management plan), 181-182
increasing income (as part of debt management plan), 186
individual retirement account (IRA), withdrawals from, 134. See also retirement savings
inflation, debt payments and, 7
information gathering phase (debt management plan), 17-20
insurance, savings tips, 122
interest rates
balance-transfer offers on credit cards, 49-51
on credit cards
minimizing, 54
minimum rates, 47
fixed versus variable, 19
on home equity lines of credit, 89
on home equity loans, 88
lowering (as part of debt management plan), 178-179
on mortgages, effect of credit score on, 78
paying down credit card debt, 55
interest-only mortgages, 74-75
investments
paying with home equity loans, 90
houses as (home-buying myth), 65-67
IRA (individual retirement account), withdrawals from, 134. See also retirement savings
irregular income (as part of debt management plan), 181-182
IRS
contacting during debt crisis, 164
tax implications of “forgiven debt,” 173
J–K–L
joint users on credit cards, 57
judgments, effect of statute of limitations on, 167-169
junk fees for mortgages, 79-80
late fees on credit cards, 49
leasing versus buying cars, 126
lenders. See creditors
lifetime cost of cars, 123-125
limiting financial flexibility, 8
loan forgiveness (student loans), 111
car loans. See car loans
construction loans for home improvement projects, 93-94
debt-consolidation loans, 151
high-rate loans. See high-rate loans
home equity loans. See home equity loans
installment loans, 57
lowering interest rates on, 178-179
mortgages. See mortgages
PLUS loans, 91
from retirement savings, 11, 133-134, 152
student loans. See student loans
Title 1 loans for home improvement projects, 93
local community banks, loans from, 152
lowering interest rates (as part of debt management plan), 178-179
luxuries, paying with home equity loans, 90
M
matching resources and debts, 35-36
medical bills, paying with retirement savings, 140
medical providers, contacting during debt crisis, 164-165
minimum interest rates on credit cards, 47
minimum payments on credit cards, 40
mortgage brokers, 78
mortgage debt in housing bubble, 4
mortgage lenders, contacting during debt crisis, 161-162
determining affordability, 70-72
interest as tax deductible, 20
lowering interest rates on, 178
tips for, 84
MyFico.com, 22
N–O
National Association of Consumer Bankruptcy Attorneys, 37
National Foundation for Credit Counseling, 37
neglecting retirement savings, 9-10
negotiations
with collection agencies, 173
with creditors, 174
nonessential bills, 34
online sales (as part of debt management plan), 187-188
open-ended accounts, statute of limitations, 168
oral agreements, statute of limitations, 168
over-limit fees on credit cards, 49
P
pawnshop loans, 149
paycheck advances, 152
payday loans, 148
payments
prioritizing, 5
penalties for prepayment, 19
Perkins loans, 109
personal loans
statistics, 155
“pink slip” loans, 148
PLUS loans, 91
points (mortgages), 77
preapproval for mortgages, 79
prepaying
car loans, 128
penalties for, 19
prequalification for mortgages, 79
prioritizing
financial goals, 23
productivity, effect on cost of college education, 114
promissory notes, statute of limitations, 168
Q–R
quick fixes, dangers of, 193
raising cash (as part of debt management plan), 186-188
re-aging credit card debt, 165
real estate bubble
role of mortgage debt in, 4
rebuilding credit, steps in, 56-58
recession, effect on home buying, 63-64
reducing
spending (as part of debt management plan), 182-185
refinancing
refund anticipation loans, 148-149
remodeling projects. See home improvement projects
renegotiating child support and alimony payments, 166
rent-to-own deals, 148
renting, buying as better than (home-buying myth), 67
repayment plan. See debt repayment plan
resources, matching to debts, 35-36
retirement, debt-free in, 14
retirement savings. See also 401(k) plans
bankruptcy and, 140
withdrawals from
IRAs/Roth IRAs, 134
taxes on, 11
revolving debts, 17
rights regarding collection agencies, 171-173
rollover loans (construction loans), 94
Roth IRA, withdrawals from, 134
S
salary, effect of college degree on, 101
saving. See also retirement savings
savings accounts
paying off debt with (as part of debt management plan), 186
setting up, 56
secured credit cards, 57
selling possessions (as part of debt management plan), 186-188
settling student loan debt, 112
Shiller, Robert J., 66
short sales, foreclosures versus, 161-162
short-term, adjustable-rate mortgages, 74
short-term cash flow, improving, 150-151
short-term, fixed-rate mortgages, 73
small businesses, funding with credit cards, 44-45
social lending sites, 156
Social Security, 24
SOL (statute of limitations), 167-169
spending
reducing (as part of debt management plan), 182-185
tracking (as part of debt management plan), 179-181
Stafford loans, 109
statistics
college education costs, 101
credit scores and default risk, 154
household expenditures, 120
personal loans, 155
statute of limitations (SOL), 167-169
stocks in 401(k) plans, 143-144
Stretcher.com, 30
student loan lenders, contacting during debt crisis, 163-164
dangers of, 4
defaulting on, 112
deferred payment programs, 112
federal student loan payment options, 163
forbearance, 5
interest as tax deductible, 21
loan forgiveness, 111
paying off with credit cards/home equity loans, 113-114
prepayments, 8
settling the debt, 112
Subaru Rewards Card, 60
subsidized student loans, 109
T
tax authorities, contacting during debt crisis, 164
tax breaks of home ownership (home-buying myth), 67-69
tax implications of “forgiven debt,” 173
tax-deductible debts
after-tax rate, calculating, 19-20
adjusting withholding (as part of debt management plan), 186
AMT (Alternative Minimum Tax), 20, 87
itemized deductions, 20
personal loans to family/friends and, 156
on retirement savings withdrawals, 11, 136
Title 1 loans for home improvement projects, 93
title loans, 148
tracking spending (as part of debt management plan), 179-181
traditional mortgages, 73
transportation. See cars
travel expenses, currency conversion fees on credit cards, 52
travel-reward programs, 59
U–V
unemployment rate, effect of college degree on, 101
unsecured debt consolidation loans, 32
unsecured lenders, contacting during debt crisis, 166
unsubsidized student loans, 109
“upside down” on car loans, 121-122, 128
used cars, advantages of buying, 127
utilities, reducing spending on, 182
variable rates, 19
vested, definition of, 134
W–Z
Warren, Elizabeth, 72
websites
AnnualCreditReport.com, 22
Dollar Stretcher, 30
MyFico.com, 22
National Association of Consumer Bankruptcy Attorneys, 37
National Foundation for Credit Counseling, 37
weekly expenses worksheet, 180
wish lists, 193
withdrawals from retirement savings
IRAs/Roth IRAs, 134
withholding, adjusting (as part of debt management plan), 186
written agreements, statute of limitations, 168