Financial quicksand: How to dig your way out of debt

Welcome back this morning on today's consumer how you can dig yourself out of financial quicksand so here's what happens yesterday. Vicki mentioned this phrase when she joined us and she talked about credit credit card interest rates sitting at 23% take a listen what she said. Think about that means if you spend a $100 and you don't pay it off right away, you owe a $123 that's financial quicksand who said it who we say so the phrase that resonate with a lot of your reached out to to Vicki directly with their quicksand stories of it. Thanks for coming back. I want to start this email that you actually got from a viewer we're going to call him Scott yeah, Scott said he is what for 6 their homeowners they've got about $35,000 in debt credit scores about 6.20 they want to pay off the debt because of the credit score to local banks will give them personal loans and home equity loan will offer enough cash. What she do yeah, yeah, this is a great question first thank you Scott for being so candid and writing in and here's the thing he's not alone right. There's a trillion dollars in credit card debt in Americans right now, here's what he said we can't borrow the money to pay off our credit card debt because our credit scores are too low we can't borrow the money to pay off our credit card debt because our credit scores are so low we can't borrow it this vicious crazy cycle right. So we went to the expert at the National Foundation for credit counseling they said good job Scott you went to 2 banks go to more there are lenders out there expand your search they will work with people who have average or low credit. They said also try to transfer your credit card balance to another company because here's the thing even if you can't get that 0% introductory rate you might get a lower rate than what you're trying to pay now then find a strategy stick to it, you've got 12 months you've got 18 months chip away at that $35,000 and even afterwards if there's some money left over pay above the minimum payment and never miss your payment never the NFCC says missing payments accounts for 35% of your credit score. So if you're paying on time that's going to help boost your credit score and that is very important and finally there are free nonprofit resources out there they'll sit down with you look at your budget line by line and help you craft a specific plan to pay down your credit card debt use those nonprofit one thing that you suggested was negotiating negotiating with lenders and I think we're intimidated by that they're thinking like what do I do I call what if I don't have the confidence right, what's the way to do it like am I really going to call MasterCard and be like or my interest rate right, yes, you absolutely are going to be really nice about what's the template help you say you find that 800 number you call you call in the morning because usually the experience veteran customer service agents are working in the morning, not at night that's when people are training if you get the sense the person you're talking to doesn't have the authority you need kindly ask them for a supervisor, someone that can escalate this request you say you say hi listen, I've got this much credit card debt, I'm paying this interest rate can you help me what would you do if you were in my shoes, yeah, and listen lending tree did a whole survey they found 3 in 4 people who just asked yeah, could you lower my rate maybe 20% to 18% they're not going to go down to 2 or 0, I will give you something yes, absolutely just asking you shall receive and if at first you don't succeed try try again get different people on the phone at different times of the day. But those are that's exactly what you're going to ask and always tell your story because people understand you're trying to pay down their debt, yeah, you're being proactive about it, yeah, work with me help you also heard from a woman who's apparently watching the Fed she asked you how that could affect Social Security pay for older Americans might be watching or listening. Yeah, these low rates help them avoid the quicksand yes, so she actually reached out to me on instagram it's a great question so we asked the chief financial analyst at bankrate dot com he said look the federal interest rate like the Fed cut doesn't directly affect Social Security payments that's actually determined by the consumer price index and and your payments are determined each year by the cold of the cost of living adjustment, but here's the thing when inflation goes down the price of goods goes down that's the concept those 2 things don't always track perfectly which is why we should have the conversation about high yield savings accounts for retirees putting your money somewhere where it's going to earn 4 and a half 5% instead of half of a percent see these certificates of deposit another great way for seniors to get a steady rate of return you're getting a fixed amount of money to the bank for a fixed period of time it could be 3 months it could be a year they're going to give you a much more interest on your money than you would if it was just sitting in a plane traditional savings account. You have to come back and do this again if you really good working for the people that we want help to help people get out of that I got a quick thank you for you all right.