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Financial re-evaluation

Money Report

Take control of your finances

It can all seem overwhelming, but there are ways to take control of your finances. According to John Wills of the nonprofit Consumer Credit Counseling Service, which has offices in Savannah and Beaufort, people need to take several steps to make sure their financial house is in order.

Here’s a step-by-step process:

Set goals

“First, you need to know where you’re going and what you want to achieve,” said Wills. “Do you want to pay off debt? Do you want to save for a home? A vacation? Retirement? It really comes down to a question of needs versus wants.”

There are two things you can do to impact your budget: Pare back or increase your income, he said.

“On paring back, if you’re going to set goals, you need to know where your money is going. You need to be able to track expenses. You can’t adjust your rent or a car payment, but you can look at discretionary spending. Do you really need that pizza or that Starbucks?

“On increasing your income, if you’re getting a tax refund, take a look at changing how much is being taken out so you can get more in your paycheck. Take a look at everything coming out of your paycheck. For instance, donate time to charity rather than money if you can’t aford it.”

Examine credit cards

Almost everyone has credit cards and most people are carrying balances.

“If you have credit cards and are paying the minimum, take a look at the interest rate and call the credit card company and try to negotiate or barter on an interest rate,” said Wills. “Let them know that you might consolidate your credit card debts with a diferent credit card company. Let them know you have other ofers. And sometimes if one person turns you down, you might get a diferent response by talking to someone else.”

Wills also emphasized that people should not treat credit cards as supplemental income. “If it’s not in your budget, don’t spend it,” he said.

He also advises to always try to pay more than the minimum due and to look for reward cards that have incentives, like frequent fier miles or reward points.

Look at your mortgage

Many of the problems that brought about so many foreclosures were based on ARMs or balloon mortgages, said Wills. But, there are options to make sure you hold onto your home, such as working with the mortgage company; elongating the terms of mortgages; or going from an ARM to a fixed mortgage.

Wills also said people should never buy a house that is more than 2.5 times the owner’s annual gross income.

Check credit reports

There are often mistakes that can be fixed, said Wills.

Only one web site is authorized to fill orders for a free annual credit report, which you are entitled to under law: annualcreditreport.com (or call 1-877-322-8228), according to the Federal Trade Commission. Other web sites that claim to ofer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program. In some cases, the “free” product comes with strings attached. For example, some sites sign you up for a supposedly “free” service that converts to one you have to pay for after a trial period. If you don’t cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card, says the FTC.

In other words, those annoying TV commercials for a free credit report are a scam.

Avoid credit repair clinics

“Don’t buy into those debt settlement commercials,” said Wills. “They are very deceptive and they can actually hurt your credit. Also, car title loan and check cashing businesses will charge exorbitant fees and when the client wants out, they can’t get out without paying more fees.”

Beware of: a lender who isn’t interested in your credit history; fees that are not disclosed clearly; a loan that is ofered by phone; a lender not registered in your state; or a lender who asks you to wire money or pay an individual.

Pay bills before bankruptcy

Many people have fallen on hard times or are over their heads in debt. That’s when an agency like Consumer Credit Counseling Services can really help. The nonprofit can work with creditors, help get interest rates down, help stop late and over-limit fees, and, according to Wills, help some people get out of debt in four to five years.

Call 1-800-821-4040 or visit www.cccssavannah.org.