Podcast

Sarae: Hi. You’re listening to the Clear Money program’s podcast. I’m your host, Sarae Kurth, Community Relations Coordinator at Zing Credit Union. Zing is a not-for-profit financial institution serving the people of Denver, Jefferson, Arapahoe, and Adams Counties. On this show, I’d like to welcome Helen Gibson. Helen is Zing Credit Union’s Vice President of Marketing and Education. Thanks for joining me.

Helen: It’s my pleasure, Sarae.

Sarae: Could you start off by telling us what your role is at Zing and a little about your background in financial education?

Helen: Oh, of course. So, I began at Zing quite a few years ago, now, and I started as a financial education specialist, which meant I got to share about financial education and different parts of creating a better financial future our members for many years. Since then, I have gotten the, I guess the, opportunity to oversee all our outreach, and all of our marketing and our internal training at the credit union. And it’s pretty much the best place to be for me, and I enjoy doing what I do every day.

Sarae: Fantastic. Are you familiar with the oxygen announcement on the airplane?

Helen: Oh yea, you mean like the, “Put the oxygen mask on yourself before assisting your children and others”?

Sarae: Exactly.

[Laughter]

Helen: Yes. That was quite a switch, but I am with you.

[Laughter]

Sarae: Yes. That was quite a transition. So, why is that an important rule for ensuring our survival and wellbeing? Most people’s instincts are to help others, especially their kids, first.

Helen: Well, that’s very true, and like I said, I started as a financial education specialist at the credit union, which meant that I’ve been able to sit down in the room and talk to members one-on-one about what’s going right and what’s going wrong as they take care of their own finances. And one of the things I’ve seen, going back to that oxygen mask thing, is that, you know, members are supporting children and grandchildren while driving themselves further into debt, or making choices that cause more fees or expenses all because there is that driving force of putting that oxygen mask, so to speak, on their children first. It’s hard as a financial educator to see that because I know our children can use financial aid for college, our children have their working lives ahead of them, and yet we are sitting here with parents who don’t have that anymore. They’re looking at only Social Security as income, and they’re not fully able to take care of themselves and in the end, even though they are trying to protect their children, they end up in a situation where their children actually need to take care of them more than they would like in their older age, because they haven’t put that oxygen mask on themselves first. They actually cause some weight on their children and grandchildren. It’s a cycle that I’ve seen, so I think that it is really important for us to think about how we can take care of ourselves, so that we can take care of the people we love.

Sarae: Absolutely. It’s a powerful metaphor for our own wellness, including how we manage our finances and credit. So, what is one of your top financial well-being tips for listeners?

Helen: So, one of my philosophies is don’t tell yourself, “I should, I should, I should” all the time, and create, instead, some concrete goals that get you closer to your goal. The thing people can do, and I was just talking to someone on our staff about this today, who was particularly looking at homebuying, I said, “Save money.” It doesn’t have to be a ton of money. It’s just about starting that habit of saving, and putting together an emergency savings for yourself, so that – it’s not if you car is going to break down, it’s when your car is going to break down, and you want to continue living your live and doing the things that matter to you, and pay for your car repairs. And the only way to do that, the only way to get ready for home buying, they only way to make sure you are ready for those little expenses that always pop up, is pay yourself first, and develop that habit of saving. And, you know, some people don’t have a ton to save, so maybe they’re only saving, you know, ten dollars a paycheck. The goal is to start it, and if possible, automate it. That is, working with your credit union or working with your bank, or working through your online banking so that it automatically happens. I know I save out of my paycheck, first thing. So my paycheck hits Thursday, so Friday, I’ve got money going to specific savings accounts, like my kid’s college, for my haircuts which, probably I’m spending too much on them, but oh well, I’m not going to worry too much about it because I’m saving and practicing those habits that will give me a strong foundation to help the people in my life, and to make sure I can achieve my goals.

Sarae: Great. Building savings is crucial. What if there’s an unforeseen emergency and savings aren’t sufficient to cover expenses that must be met. Where do you recommend people, and members, turn to for help if they have a financial emergency?

Helen: So, this stuff happens. I don’t care how good you are at saving. These days, emergencies happen where maybe you don’t have everything. As far as where people should turn to, they should turn to their credit union. The credit union, or their bank, may have some programs that may be able to help them, and if they don’t, I’d encourage looking for a credit union or bank that does have those programs. In the case of the credit union, we’re here to serve our members, so we want our members to be successful, so if they’re struggling, or have an unexpected emergency, there are things to help them here. We even have emergency loans for members who aren’t credit qualified, but we also have loans that are credit qualified. If you go to your credit union, they’re going to be able to help you build to that point where you can handle those emergencies on your own. But until then, go to them, and they can help you figure out the solution in the meantime.
Now, I talked about credit qualifying loans. The best loans are going to be ones where you qualify for credit. Not everyone has great credit to start with. In fact, everyone should start at 18 with zero credit, ideally. That means they have clean credit. So, everyone has to build it, and that’s really important to get the best loan rates for your future.

Sarae: Absolutely. So, speaking of credit, what is most important for improving or building credit? Helen: The number one thing people can do to build their credit, is to pay their bills on time, especially any loans they have out there. That is the number one most important thing, and prioritizing certain loans, not certain loans, making sure you pay those bills, especially your mortgage, especially your rent, and keep that financial stability under you. A vast majority – I shouldn’t say a vast majority – About 35% of your credit score is whether or not you are paying your loans on time. So, there are some things that can report if you are not paying them on time, like your cellphone bill, so I just say pay all your bills on time. Think about those due dates. Automate, if possible. If you are like me, you’ve got 100 things going on. You’re not necessarily remembering, “My cellphone bill is due on the 3rd day of every month, so I’m going to sign into online banking on the 3rd day and pay it.” I would say, if you are like me, automate, so you pay your bills on time. That is the number one thing you should do. The second think you can do is make sure you look at your credit report, and make sure it’s accurate. I alluded to this earlier. At 18, you should have a clean credit report, because you’re not supposed to build credit before you’re are 18, but a lot of people don’t. There’s a lot of stuff out there. Their Social Security has been stolen. That stuff is happening, so I encourage people to make sure their credit report is accurate and there aren’t errors. Especially if they have a really common name, pull that credit report. You can go to annualcreditreport.com. That’s one place to check it. That’s probably the best place to check it. If you are worried about spending money, never enter your credit card number because they do try to get you to buy something or other, just keep going forward, and check that report and make sure it’s accurate. In Denver, in metro Denver, we have financial empowerment centers that can help you, and you can actually call them and set up an appointment, and they can help you pull your report. Their number is 720-944-2498 , and they’ll do appointments and help people with that credit report, because it can be scary, especially the first time you look at it.

Sarae: Yea, definitely. It can be like reading a foreign language when you aren’t familiar with how credit reports are formatted, and they all look different. That is depending on the credit bureau you’re getting it from, and the source. What resources do you recommend, in addition to the financial empowerment centers, for listeners interested in learning more about credit or money management strategies to improve their financial wellness?

Helen: So, while you are putting that oxygen mask on yourself, I think that the most important thing to remember is you are the person in charge of putting that oxygen mask on, right? So, there are a lot of things that don’t feel fair out there or doesn’t feel like the system is set up to help you, so the number one thing you can do is just realize, “I am the best helper for me.” And taking that responsibility because finances do feel hard. So, taking that on, and knowing that hundreds of people conquered it before, and you can do it too. So, then you might want to reach out for help once you do that. We have the Clear Money Program podcasts on iTunes, so if you have iTunes on your phone or on your computer, you can actually search the podcasts for our Clear Money Program, and listen to tons of topics about credit or budgeting on that, in the comfort of your own home. You can find them on our website, too. At Zing, we have classes, which are both online and on-site, and they are very accessible.
They are taught for our members. They’re not in weird languages you can’t understand, like with fancy financial terms. They’re meant to be practical, easy steps to move forward. We also have personal finance tips and community news on our Twitter and Facebook, and I would also say we have financial coaching at the credit union that can be personalized. We can refer you to non-profits in the community that can help you with specific items. There’s lots of resources out there, but the first place to start is, probably go to our website, which is denvercommunity.coop/education, and that’s a great place to start looking at all those resources.

Sarae: Great. Thank you very much for your time and for sharing your expertise, Helen. Thanks for listening!

Helen: Thank you Sarae!

Sarae Kurth: 00:00 Hello, you’re listening to the Clear Money Program’s podcast. I’m your host, Sarae Kurth, Community Relations Coordinator at Zing Credit Union. Zing is a not-for-profit financial cooperative serving the people of Denver, Jefferson, Arapahoe, and Adams counties. Today I’m speaking with attorney Frank Danzo of the Chayet and Danzo, LLC. about trusts, which are a popular state planning tool, has presented many classes on this topic at the credit union and is very experienced in this field. Hi Frank.

Frank Danzo: 00:31 Hi Sarae. How are you?

Sarae Kurth: 00:31 Well, thank you. Thanks for joining us.

Frank Danzo: 00:34 Glad to be here. Glad to be here.

Sarae Kurth: 00:36 Could you please tell our listeners a little about yourself and why you decided to practice law in the area of estate planning?

Frank Danzo: 00:44 Sure. Uh, I picked kind of a long road to get to where I am, but, uh, it first started when I was about 10 years old and my aunt, my mom’s sister, was in a very serious head-on car accident and ended up in a coma for about 10 years. And so I spent a lot of my teenage years going to visit her in a nursing home, and she ended up being in a coma for about 10 years, and never woke up. So I have a firsthand experience, uh, as a teenager with what it’s like to have someone you’ve known, um, go through that. And so that kinda set the tone for a wanting to help people in this area. Then I had the opportunity when I got out of law school to go into this area and I tried almost every other area of the law, and it turned out I really enjoyed this area, and I enjoy visiting with people and hearing their stories, and learning about their family, and helping them plan to avoid a lot of the mistakes and problems that we all face at some time or another. And uh, so to me, it’s very enjoyable because I’m not having to go fight like most other areas of the law. I do more planning, and I get to know people and be involved with them.

Sarae Kurth: 01:57 That’s great. Thank you for sharing. So what is the purpose of a trust? Exactly, and how does it function?

Frank Danzo: 02:04 Well, um, a lot of people think that trusts are, um, new and their wills or the old way and trust are the new way, but actually trusts are the older of the two. Trusts have been around for
about 2000 years since the Romans, and uh wills have been around since about 1244 AD with the statute of wills in England and because we follow the English system of law, uh, we have been using wills for the last 250 years in the United States, uh, and trusts were sort of forgotten, but they have been around, and over the last 50 years, they’ve become more and more popular. And the reason for that is when you do a will based plan, you were relying on the statutes and the courts because it is a supervised court administration process to deal with your state and your assets. When you use a trust, you’re actually
using a private contract to try to do pretty much the same thing.  But you’re trusting someone to handle those affairs without having to go to court. And so the concept of a trust is giving someone else, the trustee, the ability to manage things, and you give them the instructions, what you would like them to do, and then you trust them to carry out those wishes. Uh, so that is the basic concept of a trust. The reason they have become so popular in the United States and in Colorado over the last 50 years is because people keep looking around and saying, man, it’s really time consuming and expensive and it’s a real hassle to go through the government and the courts, and the system, and is there a better, more efficient way to do that? And so when we’re talking about the issues of probate, guardianship and
conservatorship, which are all the different court processes to help take care of you and take care of your assets, people get really upset at those because they’re very intrusive. They’re very cumbersome, they’re very time consuming. Uh, and they’re very expensive. And a trust is a great way to use that private contract to create a plan to say who’s in charge and what do we do to take care of me and take care of my assets if I can’t do it for myself for any reason, whether I’m incapacitated, or I pass away,

Sarae Kurth: 04:23 Right. So, many people assume that a will is able to take care of all the basic inheritance matters, and the trusts are only a tool used by the wealthy are those who have really significant
amount of assets. How do trusts differ from wills?

Frank Danzo: 04:37 Well, wills are the traditional way that we’ve done here in the United States to deal with things when you pass away. And so your last will and testament is, this is what I would like to see
happen. This is who I would like to be in charge, my executor, or in Colorado we call that personal representative, and this is who I would like to get my things when I’m gone. And that is the traditional way that came from England 800 years ago, and it is uh, supervised by the courts and administered by the courts. And so, um, when you use a will, first of all, it only takes effect when you pass away, so it cannot help you while you’re alive. And second of all, it must go through the court system if we’re going to use it. The process of administering your will is probate, and that’s what probate is. The process of making sure that your wishes are followed and because we want to guarantee that we send it through the court system to make sure your wishes are carried out. A trust is a little bit different. It is a private contract. And with that private contract you were picking a trustee which would be like your executor and you were giving them the instructions on what you would like to see them do. The difference being you do not go to court to do everything. They, you are trusting them to do it privately and handle things without going to court. And so even though most people think trusts are only for the uber-wealthy, and the
Rockefellers, and the Kennedys, and multi-generational with millions and millions of dollars, they’re actually a pretty good tool for the rest of us because they allow you to create that plan that says who’s in charge and what do we do to take care of me and take care of my assets if I can’t do it for myself.

Sarae Kurth: 06:16 Right. So, that would cover someone in the event that they become incapacitated – they’re in a car accident or um, have a stroke or something like that? Um, whereas a will, as you mentioned, would only set in if they are deceased.

Frank Danzo: 06:30 Correct. So the beauty of the trust is, and there’s really, it’s a really flexible tool. Um, first of all, you didn’t have to give up any control when you’re creating your trust. Because the most
popular type of trust, the revocable living trust allows you to actually keep control. You have the ability to revoke it, amended, or change it whenever you want. You have the ability to put stuff in today, pull it out tomorrow. You can buy, sell, swap, change it whenever you want, and so you’re not giving up any control, but if something goes wrong and you were unable to handle your affairs for any reason due to a stroke, or an accident, or Alzheimer’s, or anything like that, then the trust kicks in, and you have a backup plan to say who’s taking over, and how are they going to take care of me and use my assets to take care of me. So it’s a great tool for avoiding going to court for probate, guardianship, and conservatorship, as well as for providing for your beneficiaries when the time comes.

Sarae Kurth: 07:30 Right. And you mentioned it can be amended, and changed, and updated as needed for the revocable living trust. Correct?

Frank Danzo: 07:38 Correct. So the beauty of that one is it allows you to change it whenever you need to, and sometimes it will be changes in the law. Sometimes there will be changes in your family. Sometimes it will be changes in your finances, and as we all know, life happens and we have to deal with what happens and there will be changes as things go along. None of us can predict the future. None of us know exactly how things are going to go and so allowing us, you know, on average maybe five to 10 years, you’ll make some adjustments to the plan to tweak it to make sure that it’s still doing what you want it to do.

Sarae Kurth: 08:14 Great. So I know it, it really varies depending on how, um, how much goes into a trust. But what do trusts, a trust typically costs to set up?

Frank Danzo: 08:23 Yeah. You know, the range, it really depends. Um, there are firms downtown that will charge seven to $10,000 to do stuff. I’m generally, I would say we’re somewhere around half that range, probably more in the $1,500 to $3,500 range. You can try to go on someplace like Legal Zoom, or something, and do one for probably around a $1,000. Generally, I don’t recommend that, but it is an option. And um, I would say in general for most people, for the most popular type of revocable living trust, you would probably be somewhere in the $1,500 to $2,500 range. It really depends on if we’re doing any tax planning, if we’re doing any special needs planning for, uh, children or if we’re doing any other kind of asset protection planning, if that’s involved in there as well. But for most people it’s in a pretty reasonable range when you talk about the overall cost for estate planning and what it’s going to take.

Sarae Kurth: 09:21 Okay. And just to give some comparison, what does the probate process typically cost?

Frank Danzo: 09:28 Yeah. In Colorado, we have what’s called simplify probate. So we actually have one of the kinder, and gentler, and cheaper systems that you’ll find anywhere in the country, but on average it probably takes about nine to 18 months, and it probably costs about $8,000 to $10,000 to go through a pretty garden variety probate here in Colorado. And so to give you an idea, when I started 21 years ago, it was about $3,000 to do that. So it’s about tripled over the last 20 years, and it will probably triple over the next 20 years again. So, um, it is, you know, not the end of the world, but it’s also every $10,000 adds up and for most people they much prefer to see that go to their family then go to the courts and the system.

Sarae Kurth: 10:13 Sure. Thank you so much for your time and expertise. Could you please share your firm’s contact information so that listeners can reach out if they have any questions?

Frank Danzo: 10:32 Absolutely. So I’m one of the partners at Chayet and Danzo. My partner Marco Chayet, and myself, Frank Danzo, we are located in Cherry Creek as one of the premier, a boutique elder law and estate planning firms here in Colorado. And our website is www.coloradoelderlaw.com. All one word. And our main phone number is 303-355-8500, and my email if you wanted to reach me directly is Frank@Coloradoelderlaw.com, and we would be happy to help.

Sarae Kurth: 11:06 Great. Thank you. And thanks listeners for tuning in. Our website is denvercommunity.coop/education. There, you can find the upcoming wills and trusts classes if you’re in the Metro Denver area and want to get some more in depth information, and you can also find other podcasts we’ve recorded with regards to estate planning with Frank. Follow us on Zing on Facebook and Twitter for personal finance tips and community news. Thanks for listening.

Sarae: 00:00 Hello, you’re listening to the Clear Money program’s online radio show. I’m your host, Sarae Kurth, Community Relations Coordinator at Zing Credit Union. Zing is a not-for-profit financial cooperative serving the people of Denver, Arapahoe, and Adams counties. On this show, I’d like to welcome Ms. Amy Fidelis, who was the Financial Education Director at mpowered, formerly Community Credit Counseling Services. Mpowered as a non-profit resource for individuals and families in Colorado who want to learn about money management and participate in coaching to achieve their personal definition of financial success. We’ll be talking about top tips for improving your credit. Hi, Amy. Thanks for joining me.

Amy: 00:39 Hey there. Thanks for having me.

Sarae: 00:42 Let’s start out by having you tell us a little about your background and what you do at mpowered.

Amy: 00:45 Sure. I’m one of the accredited credit counselors here. We do financial coaching and our mission is to empower families and individuals to think, feel and act differently about their money, which means we do individual coaching and classes in the community and try to get awareness and information out around, you know, a healthy financial lifestyle, which might mean paying off that or building up savings.

Sarae: 01:13 Yeah, it sounds like it. So what are the top strategies that you would recommend for improving someone’s overall credit?

Amy: 01:19 Sure. Well, the first thing you need to do is know what’s on your credit. So seeing your credit report is crucial. You can do that in a couple ways. One is through annualcreditreport.com. That’s the free website that connects to all three bureaus and is sanctioned by the Federal Trade Commission. You could also see a non-profit like us. We can pull all three reports and scores and analyze that and let you know what the next best steps are to take. But really, you know, knowing what’s on there is the first step.

Sarae: 01:47 And what are you looking for when you look at your credit report? Are you just looking to see that everything on there is yours or is there a time factor that you should consider as well?

Amy: 02:00 Sure. Yeah, I mean, you want to make sure, did you actually take out that loan? If something has gone to collections, how long has it been since you paid on it or since the debt originated? Are the balances correct? Is, you know, even the payment history correct? So you are looking to see if there are errors and then if something is correct, how is that in that impacting your score?

Sarae: 02:22 Right. And I was surprised to learn a few years back that every late payments stays on your credit report for seven years. So is that something that is heavily weighed when factoring into your credit and credit score?

Amy: 02:36 Sure. So your payment history is 35 percent of your overall score. So a late payment certainly would have an impact and yes, negative information can stay on for seven years and depending on the type of information, like a bankruptcy, depending on the type might stay on for even longer. So you know, its impact on your score can go down if you make up for it by continuing to make on time payments or building other, what we call trade lines, which are things that report to the credit bureaus.

Sarae: 03:09 OK. And so even if paying off collections and catching up on late payments doesn’t necessarily improve a credit score, does your credit look better to lenders and creditors if you are continuing to pay down that debt even though it might not necessarily erase the negative items from your credit report?

Amy: 03:27 Sure. So there’s a couple things going on in that question. One is yes, the amount of overall debt you have as part of your credit score. And so having, for example, a credit card with $100 limit and then you use $99 of it every month. That’s a problem because it shows that you’re using up to the limit basically. But lenders also look at the rest of your credit picture. So you know, what’s your character like? What’s your capacity? Do you have any collateral? So in other words, what’s your overall debt to income ratio? How long have you been at your job?

Sarae: 03:27 Right.

Amy: 04:02 You know, those types of things, to how much money do you have in savings? They’ll look at the bigger picture. It’s also important to know that on your credit report itself, only certain things report whether they’re positive or negative. So those are traditional loans like student loans, car loans, mortgage, lines of credit, those are going to report whether you’re positive or negative. On the other hand, we have things like rent and utilities and medical bills that only show up once they’ve gone to collections. And so it’s important to pay all those things on time so they never even reached your credit report in the negative.

Sarae: 04:37 OK, cool. And you had mentioned credit card utilization. Is there an ideal, meaning you know, what percentage of your credit limit should you charge or utilize month to month?

Amy: 04:48 Sure. Generally speaking, the recommendation is 30 percent or less. So not letting your balance go above that. You could alternatively raise the limits on your cards, but you know, then you’re getting into a sticky situation where you’re just maintaining a level of debt, which you know, for your overall financial picture, there’s credit and then there’s your overall financial health. Credit is a huge part of it, but you don’t want to go into debt just to have a good credit score necessarily, right?

Sarae: 04:48 Right.

Amy: 05:13 You want to keep everything in view and make sure you’re making good healthy choices for you and your family.

Sarae: 05:20 Yeah, that makes sense. And so what about the mixed use of credit? Is it helpful for someone’s credit to have an installment loan, a student loan, mortgage, car loan, as opposed to only having revolving loans, like credit cards or lines of credit?

Amy: 05:35 Yes, installment loans definitely have a better impact on the score and can be a huge benefit, and all those types of you mentioned are great examples. You can also kind of create an installment pattern with a credit card by paying a set amount every month. You could, you know, do a credit builder loan, like some credit unions have like Zing where the credit union money puts money in your certificate and you make payments against it. So anything that reports in a set monthly pattern is great compared to revolving debt.

Sarae: 06:07 Very cool. Well, thank you so much for sharing your time and knowledge, Amy. Could you please share your contact information with our listeners so they can reach out if they have any questions?

Amy: 06:16 Definitely. Any questions or if you want to have your credit looked at by a non-profit, give us a call here 303-233-2773 or email me directly amy@mpoweredcolorado.org. That’s M in money powered Colorado dot o, r, g.

Sarae: 06:32 Thanks again for more information about this topic. Feel free to email education@denvercommunity.coop. Follow Zing on Twitter or Facebook for personal finance tip and community news. Our website is www.DenverCommunity.coop/education. Thanks for tuning in.

Sarae: 00:00 Hello, you’re listening to the Clear Money program’s online radio show. I’m your host, Sarae Kurth, Community Relations Coordinator at Zing Credit Union. Zing is a not-for-profit financial cooperative serving the people of Denver, Arapahoe and Adams counties. On this show, I’d like to welcome Ms. Amy Fidelis, who is the Financial Education Director at mpowered, formerly Community Credit Counseling Services. Mpowered is a non-profit resource for individuals and families in Colorado who want to learn about money management and participate in coaching to achieve their personal definition of financial success. On this program, we’ll be discussing the best ways to establish credit history. Hi Amy. Thank you for joining me.

Amy: 00:00 Oh, sure. Thanks for having me.

Sarae: 00:44 Absolutely. Let’s start out by having you tell us a little bit about your background and what you do at mpowered.

Amy: 00:53 I am one of the personal finance coaches here at mpowered. Previously I was a financial counselor or coach at Zing and I’ve done financial education in the local community for about seven or eight years now. I also handle our marketing partner outreach.

Sarae: 01:07 Great. So why is credit history important beyond allowing someone to qualify for loans and credit cards?

Amy: 01:15 Well, that’s a good question, and it’s because more and more industries are using it. So landlords or large rental companies might check your credit to see if they want to rent you an apartment. A job might look at it, security clearance, insurance for premium. So it’s just used so widely now. Even banks and credit unions just for checking or savings account might at least look at it. So it’s really important to know what everyone else is seeing.

Sarae: 01:41 Absolutely. And so credit scores can only be established through credit history. Most young people, especially minors under 18 have no credit history, but there are many adults including foreign natives who also don’t have any credit history. Is it possible to have a credit history without having any credit cards or loans?

Amy: 02:02 Sure, you know, you just have to look for different products out there or be an authorized user on someone else’s credit card. So from a personal example, my husband is from Brazil. We have a
credit card and he’s an authorized user and that’s building him a credit history. Additionally, you know, you could look at products like Zing has the stored, I’m sorry, the credit builder loan where money is put in a certificate and the person makes payments that are reported and then at the end of the term they get all the money that was in their certificate and they’d built up a credit history.

Sarae: 02:35 OK, and so how can you be sure that you have no credit history in case there are payments reflected on there from utility bills and that kind of thing?

Amy: 02:44 Sure, you need to check your credit report. You’re entitled to one free report every 12 months from all three bureaus. The best way to get that is annualcreditreport.com. We also do that in our office. We can pull all three with all three scores and do an analysis for you, but for the consumer, under law for free every 12 months, go to annualcreditreport.com.

Sarae: 03:07 Ok, and it’s a bit of a catch 22 because you need good credit to be extended credit by lenders, but how do you establish credit history without being given credit? So what are the best ways to establish credit history for young people as well as adults?

Amy: 03:23 Sure. You know, I mean, one way you could be an authorized user on a card. Do you want to be careful because you don’t want to immediately get into credit card debt or especially to be racking it up for someone else. The credit builder loan that we just talked about is effective. You know, student loans that report will actually build a history for you. You could do a retail card. Those are or can be fairly expensive or you can do a secured credit card so you can put money in a savings account or a share certificate and then that’s used as your limit. Your limit is equal to the same amount and you make on time payments. Obviously auto loans, home loans, both things can build credit fairly rapidly as well.

Sarae: 04:02 OK. And before applying for a loan or credit card, is it a good idea to make sure that the creditor or lender reports the account activity to the credit bureau or is that something that is automatically done?

Amy: 04:16 No, it’s a great question to ask because they don’t necessarily report to all three and that’s fine, but you do want to know what account is reporting where and if, especially if your main purpose is to build credit, then you do want to make sure that that’s actually gonna get reported. Some products that folks use like payday loans and things like that don’t necessarily report to rent-to-own centers. You don’t necessarily report and so if your goal is to build credit, you’re not actually building credit in the mainstream system.

Sarae: 04:45 Is that how that usually operates for utility bills as well and cell phone plans? You or they don’t report to the credit bureaus unless you are late making a payment?

Amy: 04:58 Right. Yeah, exactly. That’s another issue is not understanding what reports when. So typically if it’s a loan that’s a traditional loan like a credit card, car loan, home loan, student loan, those things report whether you’re on time or you’re late, and then just like you said, there’s a whole host of really any kind of bill. If it goes through the collections process, will then only show up on your report once it’s negative.

Sarae: 05:23 Ok. And does it help borrowers to have a credit union or bank accounts such as savings or checking accounts from a lender’s perspective?

Amy: 05:32 Sure. I mean, so a lender is looking at lots of things. Not just your credit score and one thing would probably be a relationship with their own financial institution or a financial institution in general. But yes, that does show that you’re established, that you have those types of relationships.

Sarae: 05:52 OK. And do employment history and a resident’s history factor into lenders’ determinations about whether to approve you for a loan or credit card as well?

Amy: 06:01 Yes, it can because they’re, again, looking at more than just the credit report and score. All those are important pieces. They want to know what’s your capacity, what’s your character, what collateral do you have, right? It’s commonly referred to as the three c’s of credit, or sometimes, you know, even more. So you just want to be able to present a picture of a responsible borrower because the lender is trying to make sure that they’ll be paid back. So whatever you can do to show that that’s what they want to see.

Sarae: 06:30 OK. Well thank you so much for sharing your time and knowledge, Amy. Could you please share your contact information so that listeners can reach out, establish any questions?

Amy: 06:39 Oh sure. Our phone number here at mpowered is 303-233≠2773, or you can email me directly, amy@mpoweredcolorado.org, and that’s just M as in money, powered, Colorado.org.

Sarae: 06:54 Thanks again for more information about this topic, feel free to email education@denvercommunity.coop. Follow Zing on Twitter or Facebook for personal finance tips and community news. Our website is www.DenverCommunity.coop/education. Thanks for listening.

Sarae: 00:02 Hello, you’re listening to the Clear Money program’s online radio show. I’m your host, Sarae Kurth, Community Relations Coordinator at Zing Credit Union. Zing is a not-for-profit financial cooperative serving the people of Denver, Arapahoe and Adams counties. Today I’m talking with attorney Frank Danzo of Chayet & Danzo about power of attorney. Mr. Danzo has 17 years of experience in estate planning and instructs the free Wills and Trusts class we offer throughout the year. Hi, Frank.

Frank: 00:02 Hi, Sarae.

Sarae: 00:34 Could you please tell our listeners a little bit about yourself and why you decided to practice law in the area of estate planning?

Frank: 00:44 I would be happy too. As I got into my legal career out of law school, I discovered that this is one of the few areas of the law where you get to help people plan for things before something goes wrong as opposed to most other areas of the law where you’re always fighting about something after it’s already gone wrong. I really enjoy helping people plan instead of fighting all the time.

Sarae: 01:06 That makes sense. How does power of attorney operate exactly, and when does it take effect?

Frank: 01:12 Yeah, so power of attorney is just a document where you give someone else the power to act on your behalf. They become your agent and it can take effect under a couple different scenarios. The most common of which is just immediately. As soon as you signed the document, your agent has the powers that you give in that document. It can also have various triggers, sometimes called springing powers, and those would take effect upon some condition or trigger like when I become incapacitated is probably the most common a springing power of attorney.

Sarae: 01:47 OK, and what are different types of powers of attorney?

Frank: 01:52 I think powers of attorney a fall into a couple different classes. There are a specific powers of attorney where you give someone just a very specific power, like the power to sign your name and at real estate closing if you’re selling your house and you’re going to be out of town and there can also be general powers of attorney where you give someone the power to do pretty much anything you could do. Powers of attorney mostly fall into two main classes, though. There are medical powers of attorney that cover all the things that can happen to you if something goes wrong, and then there are financial powers of attorney that covered all of the things that can deal with all of your assets. So most people are looking to have those two areas covered for sure. Most people want more than just a specific power. If they’re doing estate planning, they want to cover all of the things they might need done.

Sarae: 02:45 Ok, and as far as financial power of attorney goes, would that elaborate on the conditions that you have in your trusts and wills so that if you’re incapacitated, someone can deal with your finances? Is that how that works?

Frank: 03:03 Well, yeah. So, a power of attorney is kind of the opposite side of the coin from a will. A will not take effect until you pass away, and a power of attorney ends when you pass away. And so will do not do anything while you’re alive, and powers of attorney do not do anything after you’ve passed away. So they’re kind of covering opposite sides of that coin. What are we going to do with all of this? What are we going to do with you and what are we going to do with all your stuff if something goes wrong? One is covering while you’re alive and the other is covering after you’re gone.

Sarae: 03:37 OK, and powers of attorney, therefore, are mostly for a plan for incapacity. So as far as medical power of attorney goes, does it cover HIPAA (Health Insurance Portability and Accountability Act)?

Frank: 03:47 Well, you would like to think so. Most of the free ones that you get handed out around town, most of the free ones you download off the internet and most of the statutory ones do not cover HIPAA because they were all created and the statutes were created before HIPAA was created, which is a federal statute. Most powers of attorney statutes are state statutes and so they haven’t all been updated. But a good medical power of attorney will absolutely cover HIPAA, and it will designate your agent as an authorized HIPAA representative meaning that they are you for all purposes under HIPAA. Which is really what you need because we never know exactly which doctors and medical personnel you’re going to need to speak with.

Sarae: 04:31 OK, that makes sense. So is there a difference between a living will and medical power of attorney?

Frank: 04:38 Yeah, that’s a great question, Sarae. There’s a huge difference between a living will and medical power of attorney. In theory, a living will is a very specific document created by statute that says what to do in a very specific situation, which is if you have a terminal condition and you’re never going to wake up, do we keep you on artificial machines or do we pull the plug and take you off. A medical power of attorney is going to cover not only that situation but every other situation that might involve any kind of medical issues for you. And about 99 percent of the time, it does not involve pulling the machines off or pulling the plug. It involves all of the other range of medical decisions where we might be able to save you or help you or get you back. But we have to know what to do in a crisis where you’re unable to communicate for some reason. So a medical power of attorney should include what’s in a living will and everything else. And it is by far the most critical document you could have.

Sarae: 05:38 So it’s a lot more inclusive.

Frank: 05:42 Exactly. And I would say, you know, it’s probably the most important document in your estate plan. Most people, the number one document they have as a will, which is fine, but that’s going to cover what happens to your stuff after you’re gone. Medical power of attorney covers what happens to you while you’re still here. And to me I would think that would be pretty high on your list of things you want to plan for.

Sarae: 06:07 Oh yeah. Absolutely. And so since it is more inclusive than a living will, would it cover for example, you were incapacitated temporarily, like you were unconscious, and, I mean, you came back 20 minutes later, but would it kick in then, or is it…?

Frank: 06:25 Yeah, so medical power of attorney covers or gives your agent the power to act anytime you’re unable to communicate and in theory, if you’re able to communicate again, your agent doesn’t need to do anything for you. So there really shouldn’t be a conflict there. Your agent cannot override your wishes, and if you’re able to communicate, you’re free to express your wishes. So really the only time your agent’s going to do anything is if you’re incapable of expressing your wishes, which is exactly when you need help.

Sarae: 06:52 Ok. And I know a lot of people don’t want to think about something horrible happening to them and everyone, as we know, eventually passes away. But what are the odds of someone becoming incapacitated at some point during their lifetime?

Frank: 07:08 Yeah, you know. It’s surprisingly higher than you think. Depending upon who you talk to, it’s generally estimated to be somewhere around 40 to 45 percent chance, which is almost flip a coin almost one in two. And so, you know, they’ve gotten a lot better over the years with medical technology of keeping us alive longer, but not always in tip-top shape. It used to be if you had a heart attack or stroke, most of the time you just passed away because they couldn’t do anything about it. Now we’ve gotten to the point where they understand what’s happening, the response times are much faster and they’ve learned ways to slow down or stop the damage. And so they can’t completely eliminate it, but they can keep you from passing away. The problem is, you may become incapacitated at that point and we haven’t really figured out a way to fix the damage yet. And so that’s where the incapacity issue with the aging population and that ability to keep us alive longer has created this huge potential for people to be incapacitated. So it’s a real issue.

Sarae: 08:06 Wow. Yeah, that’s a very stunning statistic and that’s definitely something we’re considering. I would agree with you that a medical power of attorney is very crucial document. And as far as designating multiple or backup agents in the power of attorney document, is that possible? For example, if in the event that your designated agent is deceased or incapacitated at the same time that you become incapacitated if you’re in the same car accident or something like that?

Frank: 08:35 Yeah. So I think that’s one of the critical parts of any plan, is we always want to have a couple backups for any position that we pick. Whether it’s your executor, trustee, agent under power of attorney, the idea is, if your first choice can’t do it, we want to go on to the next person. Sometime people may be out of town. They may be too busy. They may sick themselves. They may have passed away. So the idea with naming multiple backups gives you a little bit more flexibility. It gives you a little bit more control as far as not having to amend your plan every time something happens with someone that you know, because stuff does happen. It’s part of life.

Sarae: 09:13 Absolutely. Must have power of attorney document be drawn up in conjunction with a will?

Frank: 09:19 A will and a power of attorney or separate documents so you do not have to do them together. But I usually recommend that most people should have at least a basic will and a good medical power of attorney. And then probably a financial power of attorney and it usually makes sense to do them around the same time because you want to cover your plan and cover all the bases at the same time. And generally speaking it will be less expensive if you do them all together, then it will be if you are doing them piece by piece.

Sarae: 09:53 Right. And then that way you have all of the conditions satisfied whether you are incapacitated or have passed away.

Frank: 09:53 Exactly.

Sarae: 09:59 Ok. Well, thank you very much for your time and expertise, Frank. could you please share your contact information so that listeners can reach out to you if they have any questions?

Frank: 10:08 There’s a couple different ways you can reach me. Our main phone number is 303-355-8500, and you can reach me at our law firm of Chayet & Danzo that way. You can also reach us on our website, which is www.ColoradoElderLaw.com. ColoradoElderLaw.com. Or you can reach me by email at frank@coloradoelderlaw.com.

Sarae: 10:44 Ok, thank you. For more information about this topic, my email is education@denvercommunity.coop. I can also be contacted under the Twitter handle Zing. You’re invited to attend any of our upcoming free classes on Wills and Trusts. Please call 303-573-1170 or visit our website to register or learn more. Our website is www.DenverCommunity.coop/education. Thanks for listening.

Sarae Kurth: 00:00 Hello, you’re listening to the Clear Money Program’s online radio show. I am your host, Sarae Kurth, Community Relations Coordinator at Zing Credit Union. Zing is a not-for-profit financial cooperative serving the people of Denver, Arapahoe and Adams County. On this show, I’d like to welcome Miss Lindsay Gafford, a home buyer education instructor who was also the special projects coordinator with Brothers Redevelopment. Brothers Redevelopment is a key player in housing solutions across the age spectrum from free home buying education classes to affordable housing communities for seniors, and supportive programs for homeowners in between. Brothers is relied upon to meet housing needs of low income seniors and disabled residents in its fifth decade of service. This non-profit continues to focus on safe, affordable, and accessible housing, and housing services through home maintenance and repair, the annual paint-a-thon, foreclosure prevention counseling, including oversight of the Colorado foreclosure hotline and management of 13 affordable housing communities. Today we’ll be discussing how to prepare for the home buying process. Hi Lindsey.

Lindsay Gafford: 01:14 Hi Sarae.

Sarae Kurth: 01:34 Let’s start out by having you tell us a little bit about yourself and what you do at Brothers Redevelopment.

Lindsay Gafford: 01:49 Well, I’m kind of one of those people who wear a lot of hats at work. I fill in places where things are needed. I’ve done everything from home buyer education and that’s been pretty consistent over the past two and a half years that I’ve been here. So I’m basically the person that fills in the gaps wherever it’s needed.

Sarae: Awesome. So there are a lot of things that can be done in advance to prepare for and simplify the home buying process. What would be the first steps that you would recommend someone take with regards to their personal finances to make sure that they’re on the right track?

Lindsay: Well, as I’m sure most people know, you definitely want to make sure that you’re in a solid financial situation before you pursue home-ownership because even now when rent prices are higher and your mortgage payment may be a lot lower than your rent, you’re going to have a lot of new expenses, primarily home maintenance related things to account for that you haven’t had to account for before. So the first thing you really want to look at is your debt. Um, not only will paying down debt put you in a better situation to purchase a house, but it may also be a necessary action required by your lender. Most mortgage loans require that you don’t have a higher than a 43 percent debt-to-income ratio to qualify for that mortgage, and what that means is your debt-to-income ratio, or you may hear your lender call it tour DTI, is calculated by looking at the debt that appears only on your credit report. Nothing like childcare or anything like that, only the debt on your credit report in relationship to your gross monthly income. So really to be prepared to buy a house and to qualify for buying a house, that can’t be more than 43 percent of your gross monthly income. Now, when you’re working on paying down your debt, which is a good enterprise, no matter what I think will agree, you’re already working on the second point, which is to make sure your credit is in good shape, without going into too many specifics, because that could take an hour in itself. Um paying down a loan or a credit card. Debt is one of the quickest and most effective ways to raise your credit score and which that’s a great thing because in most cases you’re going to need a FICO score, and that’s your credit score, of 640 or higher to qualify for a mortgage loan. And really, if you want to get the best rates that are out there, and right now they’re still really great, um, you really want to have a 720 or higher to get those great rates. And then on top of all that, you want to make sure you have a really healthy emergency savings account prior to purchasing a home because you just never know what’s going to immediately come up during that process. And most people don’t realize you have to have a good amount of money to put in up front in the home-buying process, which can add up pretty quickly and you don’t want to be caught off guard.

Sarae: That makes sense. So if your debt is under control and your credit is in good shape, what other financial steps should you take to make sure you’re prepared for the mortgage process?

Lindsay: Well, like I said, you want to have that healthy emergency savings account, but really you want to have a good amount of money set aside beyond that as well. If you’re looking into using an FHA loan, which um most most people do, look into using an FHA loan because it’s available to a mid to lower income purchasers. Um, you’ll need to have a minimum of 3.5 percent of the purchase price of the house set aside for a down payment which can add up pretty quickly. Um, that doesn’t include the money you’ll need to have readily available, almost kinda like cash as earnest money deposit, which is your skin in the game. You’re showing that you’re committed to this house. Um, home inspection, which can range from $200 to $400, and that’s if you don’t get any extra inspections on top of that. And really one thing that most people don’t think about is you need to have money set aside for changing the locks the minute you close on that house and get those keys. So there are downpayment assistance programs that can be used to help out with that 3.5 percent or maybe even more, and attending one of the CHAFA/HUD approved home buyer education classes throughout the metro area is a really great way to find out about those. And typically a home buyer is expected to have at least a thousand dollars minimum to contribute towards the process. And that’s not including inspection fees and those other things we talked about earlier. Um, one of the most important things when you’re considering purchasing a home is to determine how much home you can actually afford. And this is where people, I think get a little overwhelmed because there’s math involved. When you’re shopping for a mortgage and a lender is determining how much mortgage you can afford, they’re going to be looking at your gross monthly income and that means they’re looking at your income prior to any deductions, like taxes or insurance being taken out, what you as the buyer want to be looking at is how much house you can afford based on your net monthly income or the amount of money that actually comes through the door after all those deductions. And I don’t know about you, but that’s a pretty significant difference in my paycheck. So I’m sure it is for most home buyers out there to typically an affordable housing ratio or that’s also all that means is how much of your income are you going to be spending on your house versus your total income. So an affordable housing ratio is considered to be 31 percent or less of your gross monthly income. But like I said, you want to make that calculation based on the your net monthly income, not your gross. So here’s just kind of a quick example. Let’s say your gross monthly income is $4,500 and your net monthly income is $3,200. So 31 percent of $4,500 is 1395, whereas 31 percent of $3,200 is $992 and that is so that’s a $400 difference which can make or break somebody’s budget and um, and that’s also a big difference in what your purchase price is going to be on that house because you have to remember you want some wiggle room, there’s not a landlord coming around to fix fixings for free anymore and you’re going to have to be doing that yourself. Do you want to have the ability to do that.

Sarae Kurth: 07:54 Yeah, that’s great advice. Um, so when you are budgeting for mortgage, it’s important to know what is and isn’t included in a mortgage payment. So what I’d like to ask is what is covered and what is not covered by a standard mortgage payment?

Lindsay Gafford: 08:09 This is where a lot of those, um, confusing bank terms seem to come into play. So let’s break it down a little bit. When you’re talking about a mortgage payment, you’re going to hear a couple of terms in particular thrown around. One is PI, which stands for principle and interest, and the other is PITI, which stands for principle interest, taxes and insurance. So most most mortgage loans that are issued these days are going to be PITI. So what that means is the principal and interest is what is actually being paid toward the balance owed on your home. The longer you stay in a home, the less interest you’ll be paying each month, so for about the first five years that you are in a house, you’re likely going to be paying more interest than principal per month, but that that flips around after about that five years and then your taxes refers to the property taxes that are paid each year and the mortgage servicer will calculate what will be owed, and then divide that evenly up over the year to be included with your mortgage payment. And insurance is referring to hazard insurance or homeowners insurance, which the homeowner is responsible for obtaining this policy and then maintaining it and making sure it stays up to date for as long as they live in the home. It’s important to shop around in these cases because in Colorado, especially with the flooding and the wildfires, we’ve seen those rates go up a little bit, so shopping around is definitely recommended by pretty much any housing counselor you’ll talk to, um, and then so they’ll pay for the policy and then divide that up over the year again with your mortgage payments and you may hear taxes and insurance referred to as the amount that’s in escrow after you have your mortgage as well. And then one more term that you might hear is mortgage insurance, MI, and if you have an FHA loan, MI, or mortgage insurance, will be another expense you’ll have added into your mortgage and [inaudible} mortgage payment each month.

Sarae Kurth: 10:21 Good to know. Um, do you have any tips about estimating the full cost of home ownership, including some of the things you mentioned, like upkeep, maintenance, Hoa fees, utilities and so forth, so that home buyers can accurately budget for a mortgage and the associated costs of owning a home?

Lindsay Gafford: 10:40  Yeah, I mean we mentioned earlier that your housing payment should account for about 31 percent or less of your monthly budget. So if you’re considering moving into a condo that has an associated HOA or Home Ownership Association fee, uh, that should be considered as part of your 31 percent monthly payment. So that may mean you qualify or you want to shop for a condo or a house that costs a little less so you can account for that HOA fee. Um, as far as utilities go, you know, most home sellers are willing to share that information so you can, you can get your real estate agent to ask their real estate agent to get that information, what do utilities, average and all of that. And another thing would be when you are attending your home inspection, um, get the inspector to point out things that can make your home more energy efficient and may help you save money in the long run, long run like that. And beyond your normal savings, which I know all your listeners are already doing. Um, a good rule of thumb is to save one percent of your home’s value per year for home maintenance repair and you may not even access all that money, but when it comes time for a big expense like, I don’t know, replacing a roof which can cost you $10,000, you’ll have that money set aside. You’re not going to be strapped for cash and feel like you’re in a position where you might start falling behind on your mortgage payments and the really, really the best thing a potential home buyer can do to prepare themselves for this process and to get an idea of what the expense is going to be is again, to utilize one of the many home buyer education classes that are available throughout the metro area. At the very beginning of the process, like right when you’re starting to think about it, um, the number one comment we get is, “I wish I had done this sooner.” So those certificates are good for nine months and it’s a free class. So definitely that is one of the best things you can do in addition to sitting down with a financial coach, um, like you have at Zing Credit Union, to really take an in-depth look at your spending plan and your expenses and make sure you’re ready for such a large purchase, and that you can handle it.

Sarae Kurth: 13:00 Great advice. Thank you so much for your time and expertise. Lindsey, could you please share your contact information so that listeners can reach you if they have any questions?

Lindsay Gafford: 13:08 No problem. The best way to contact me is via email, which is Lindsey and that’s spelled L-I-N-D-S-A-Y at Brothers Redevelopment dot o r, g (lindsay@brothersredevelopment.org), or you can call the offices of Brothers Redevelopment at 303-265-9397. And we’d love to talk to anyone who wants some more information about this whole process.

Sarae Kurth: 13:34 Thanks again. Follow Zing on Twitter or Facebook for personal finance tips and community news. For more information about this topic, feel free to email education@denvercommunity.coop. Our website is denvercommunity.coop/education. Thanks for listening.

Sarae: 00:00 Hello, you’re listening to the Clear Money program’s online radio show. I am your host, Sarae Kurth, community relations coordinator at Zing Credit Union. Zing is a not-for-profit financial cooperative serving the people of Denver, Arapahoe, and Adams counties. On this show, I’d like to welcome Mr. Carlos Coln, on a personal finance coach at mpowered. Mpowered ia a non-profit resource for individuals and families in Colorado who want to learn about money management and participate in coaching to achieve their personal definition of financial success. We’ll1` be discussing what types of federal student loan forgiveness programs are available for those in the public service sphere. Hi Carlos. Thank you for joining me.

Carlos: 00:00 It’s a pleasure, Sarae.

Sarae: 00:44 Could you please tell us a little about yourself in what you do at mpowered?

Carlos: 00:50 Sure. At mpowered, I’m a financial coach. I’m bilingual, so I’m able to serve both a Spanish speaking and English speaking communities.

Sarae: 00:57 Great. So what is the Public Service Loan Forgiveness Program, or PSLF, and how does it work?

Carlos: 01:08 Well, for borrowers, it mainly represents a way to get loans forgiven and free of taxes. So the amount that is forgiven is tax free. But mainly I think it’s intended to encourage people to enter and continue full time public service jobs. And basically it requires a 120 qualifying payments or 10 years on the loans and being employed full time for a public service provider.

Sarae: 01:38 And so what are the specifics of the 120 qualifying payments then?

Carlos: 01:45 Well, they have to be on time, full, and scheduled. So extra payments don’t count, right? And they have to be full payments. The loans that qualify are direct loans, so it’s payments towards direct loans, and they have to be after October 1, 2007

Sarae: 01:45 Ok. So the loan had to have been administered after 2007.

Carlos: 02:14 Not necessarily. Well, they have to be direct loans. In that case, yes. It would have to be either an original direct loan or consolidated direct loan. So yes.

Sarae: 02:21 Ok, and what kinds of employment qualifies as Public Service for the purpose of this program?

Carlos: 02:27 Sure. So any level of government, whether it’s municipal, state or federal, and also 501c3 nonprofits, in general, qualify. Other non-profits may also qualify, and I would recommend checking those on a case by case basis.

Sarae: 02:43 OK. And how many hours a week are considered full time for the Public Service Loan forgiveness program?

Carlos: 02:50 I think the technical number is close to 30 hours a week. But basically you need to be employed full time or have a two part time jobs that qualified as a public service.

Sarae: 03:04 Ok, and because it takes 10 years for someone to make the 120 qualifying payments necessary to qualify for the program, how would you recommend people keep track of their eligibility?

Carlos: 03:20 It doesn’t necessarily take 10 years. So for example, a person might take longer if they have intervening years were they were, they don’t work in public service or they don’t work at all, so it doesn’t have to be consecutive 120 payments. But assuming that you make a 120 consecutive payments, then it’s 10 years. I hope that makes sense. In any case, you don’t have to track your employment. You can do it at the time of application 10 years after. But I imagine that a lot of listeners can imagine that it might be hard to verify employment of, you know, 10 years ago. Who knows if that particular entity still exists? Who knows that there’s people there that know you, that can verify your employment, or if the organization kept good paperwork and so forth. So in that sense, I recommend keeping track every year at least every time you change employment.

Sarae: 04:14 Thank you so much for your time and expertise. Carlos, could you please share your contact information so that listeners can reach you if they have any questions?

Carlos: 04:21 Absolutely. So our phone number at mpowered is 303-233≠2773, and my email is carlos@mpoweredColorado.org.

Sarae: 04:49 Great. Thank you again. Listeners, please visit StudentAid.ed.gov/publicservice for more details about the Public Service Student Loan Forgiveness Program we discussed. Follow Zing on Twitter or Facebook for personal finance tips and community news. Our website is DenverCommunity.coop/education. Thanks for listening.

Sarae Kurth: 00:00 Hello, you’re listening to the Clear Money Program’s online radio show. I am your host Sarae Kurth, Community Relations Coordinator at Zing Credit Union, Zing is a not-for-profit financial cooperative serving the people of Denver, Arapahoe and Adam’s counties. On this show, I’d like to welcome Mr. Carlos Colon, a personal finance coach at mpowered, mpowered as a non-profit resource for individuals and families in Colorado who wants to learn about money management and participate in coaching to achieve their personal definition of financial success. We’ll be discussing what types of student loan repayment plans, based on income are available. Hi Carlos. Thank you for joining me. Could you please tell us a little about yourself and what you do at mpowered to get started?

Carlos Colon: 00:47 As you mentioned, I’m a personal finance coach at mpowered. I’m bilingual, so I’m able to serve both Spanish and English speaking communities. I also teach a lot of our classes through our partner agencies and uh, have been asked to continue Amy Fidelis’ wonderful work with the curriculum and class development.

Sarae Kurth: 01:07 Cool. So before we get into it, I want our listeners to please note that the repayment plans that we will be discussing only apply to federal student loans and plus loans made directly to students, not parents. You should contact your private student loan service or directly to discuss what repayment plans they have available. So Carlos, what is the most popular income based student loan repayment plan and how does it work?

Carlos Colon: 01:33 I think that most borrowers would qualify for the, uh, also called income based repayment plan. Um, basically, it’s calculated based on your income, of course, your total amount of student loan debt and your household size. And household size, my understanding, is it’s different from, from a number of dependents which you claim on their tax preparation, so on the tax preparation, you would claim only your, your dependence,
whereas on household size you’d claim everyone who lives in the house, um, that is dependent, that is involved in your income or the finances, right? So you would kind of, your spouse as well. Um, and some occasions also the total amount
of student loans that your spouse has can count towards the calculation.

Sarae Kurth: 02:21 Cool. That’s good to know. Um, how has an income contingent repayment plan or ICR plan different from an income based repayment plan?

Carlos Colon: 02:33 So the ICR, or the income contingent, it’s an older repayment plan. It has less benefits in the sense that the payments are slightly higher than the income-based repayment option. Um, but it’s the only option that is available for parents with a student loan. So student loans to take out a part of me. So parents who take out loans on behalf of their children, that’s parent loans. Um, my understanding is that the income contingent is the only income based repayment option for them. Um, so even though it’s an older program, it remains a useful for that part of the community.

Sarae Kurth: 03:16 That’s good to know. Um, are there any other federal student loan repayment plans that are based on income?

Carlos Colon: 03:23 Yes. The newest form that has been added recently is the pay as you earn and that one provides the most benefit. It’s only available for uh, new borrowers. Borrowers that have don’t have student loans before October 1st, 2007 have loans, a direct loans only. By the way, after 2011.

Sarae Kurth: 03:50 OK. Um, so with the income based repayment plan, the income contingent repayment plan and the pay as you earn repayment plan, is it possible to qualify for forgiveness of the outstanding balance of your student loan if you meet certain requirements over a specified period of time?

Carlos Colon: 04:13 Yes, um, the specified period of time depends on the repayment option. For some, it’s the years, um, for income based repayment is 25. You do have to pay taxes. Um, on the amounts forgiven, so the, the amount forgiven it’s going to be considered taxable income. But if you’re repaying loans for 25 years, in this case, any amount over that is going to be forgiven. They also qualify. You are very useful for people who are in public service
or something called public service loan forgiveness. A lot of people unfortunately don’t know about qualified based on your employer, not the job that you do necessarily. So anyone who works for any level of government, municipal, state or federal, also employees of non-profit 501c-3s, I know qualify and other non-profits may qualify as well on a case by case basis that would have to be verified. Um, and basically the goal there is to be under one of these payment plans so that you can minimize your monthly payment and thereby maximize the amount that gets forgiven in 10 years. So you have to make a hundred and 20 qualifying repayments and it has to be under repayment, a student loan status. I know it’s a lot to take in.

Sarae Kurth: 05:37 It’s really good to know all the details about that. So yeah. Thank you for sharing. Um, and I appreciate your time and expertise. Carlos, could you please share your contact information so that listeners can reach you if they have any questions?

Carlos Colon: 05:51 Sure, so you can reach me or anyone at mpowered at 303-233≠2773 and my e-mail at mpowered is carlos@mpoweredcolorado.org.

Sarae Kurth: 06:05 Great. Thank you so much. Please visit student aid dot e, d dot g o v for more details about student loan repayment plans that we discussed followed Denver community on twitter or facebook for personal finance tips and community news or website has done for community that c o o p slash education. Thanks for listening.

Sarae Kurth: 00:00 Hello, you’re listening to the Clear Money Program’s online radio show. I’m your host, Sarae Kurth, Community Relations Coordinator at Zing Credit Union. Zing is a not-for-profit financial cooperative serving the people of Denver, Arapahoe and Adams counties. On this show, I’d like to welcome Miss Amy Fidelis, who is the Financial Education Director at mpowered, formerly Community Credit Counseling Services. mpowered is a non-profit resource for individuals and families in Colorado who want to learn about money management and participate in coaching to achieve their personal definition of financial success. Hi Amy, thank you for joining me.

Amy Fidelis: 00:36 Thanks for having me.

Sarae Kurth: 00:37 Let’s start out by having you tell us a little bit about yourself, what you do at mpowered.

Amy Fidelis: 00:42 Sure. I’m one of our accredited credit counselors here. I help do our financial coaching and um, really further our mission to empower families and individuals to change the way they think, act and feel around money. And what that looks like is, um, individual coaching sessions to help you pay off debt through that management plan, or checking your credit and helping you improve that or maybe a class in the community. So there’s lots of ways that we can reach folks, but it’s really exciting because it’s something I’m fairly passionate about, so I’m happy to be here.

Sarae Kurth: 01:14 Absolutely. So, many people don’t realize what their credit looks like until they were about to apply for a loan or credit card. Consumers are entitled by Law to request a free annual credit report from all three credit reporting agencies, but credit scores are not provided free of charge. Is it important to know what your exact credit score is?

Amy Fidelis: 01:35 It is. In the case that you mentioned, if you’re applying for a loan, you want to know what kind of rate you’re looking at because we’re talking about thousands of dollars that you are going to either pay or save depending on what kind of score you have. So it really is worth taking the time to figure out what it is. If you’re not in, you know, um looking for a loan, a job, a place to live or better insurance rates, then you know, you don’t have to worry about your score that much, but it’s pretty comprehensive.

Sarae Kurth: 02:03 And does each of the credit bureaus have their own credit score for consumer?

Amy Fidelis: 02:08 They’ll each have an individual number. They, um, typically what lenders look at and care about is the FICO scoring model. There are variations of that, that are exist, but yeah, so you could have maybe let’s say a 720 with Experian, a 740 with Equifax ,and maybe a 732 with TransUnion.

Sarae Kurth: 02:30 But, they’re kind of based on the same framework to decide how the credit score is calculated?

Amy Fidelis: 02:38 Exactly. They’re using the same model, the FICO model. Um, so they have the same percentages that go into what activities influence your score, but they are going to be different because each lender might report to only one or two of the bureaus, or maybe all three. So maybe a loan I have over here with Bank A shows up on Experian, but it doesn’t show up on TransUnion because they don’t report to them. So that’s how some of those differences in the score.

Sarae Kurth: 03:06 That makes sense. If someone is denied a loan or a credit card, are they entitled to the credit score the lender pulled when the consumer tried to open an account with them?

Amy Fidelis: 03:17 Well, um, if they have what’s called an adverse action, then they are entitled to get a free copy of the report. Um, my understanding is that under risk based pricing rules, then they might also get their score, but the adverse action term generally just refers to the report itself. Does that make sense?

Sarae Kurth: 03:38 And so what are the fastest and most effective ways to improve any credit score?

Amy Fidelis: 03:44 Um, well, yeah, sometimes fast and effective are contradictory. One thing is you’ve got to look at your report to know what’s on there and clean up any mistakes, and that can take time because when you order your report, if you get it through the mail, especially as slower, um, and then you dispute the items and the bureau goes to investigate, and then you go on from there. That can take awhile, but definitely worth doing, um, because there are mistakes on the report that happens very easily. Um, you know, credit is a lot about prevention. So keeping it from going downhill by making on-time, monthly payments. Um, you know, making sure you use a product that actually reports to the bureaus and is also good for your budget, right, not just going into credit card debt just to create a credit score, but on time payments and generally speaking, if you are struggling with your credit score, they’re probably items in collections. So cleaning them up is a great way to quickly and easily improve your score. And then creating a new trade line and a new credit payment pattern can help immensely. And especially that’s an installment loan. So, you know, sometimes
we’ll even tell clients to if they can, if they have cash and can use that as collateral or to even, um, you know, let’s say they buy a car and then can pay it off much more quickly than the original terms that they can go get an installment loan for short term and that can help boost their score. Of course, that has to fit within your budget and your overall financial goals. We don’t advise doing something just for the sake of credit. It has maintenance for your overall financial picture.

Sarae Kurth: 05:31 And so paying more than, than the minimum would contribute to paying down your overall debt, which was also improve your credit score?

Amy Fidelis: 05:38 Sure. That’s a huge area that you could do to help. And you’re right, I should’ve maybe mentioned that off the top. Pay Down your debt. Uh, you know, that, that helps because part of your credit score, a huge part of your credit score is based on how much debt you have out there. Um, so let’s say I’ve got a credit  card with a thousand dollars and I’m, I’ve got a $900 balance that’s really hurting my score. I want to bring that down to below 30 percent of the limit. Um, and then that’s going to help my score immensely. And then obviously bringing it down to zero would help both my budget and my score because now I’m not paying interest anymore.

Sarae Kurth: 06:14 And approximately how much time does it usually take to increase the credit score when you’re making a concerted effort to follow some of the tips that you shared?

Amy Fidelis: 06:23 Um, so, you know, we say between six and 12 months, but I’ve seen folks improve it in as short as two months. So what happens with the scoring model is 35 percent of your score, your payment history, 30 percent is the amount owed, 15 percent is 10 percent is new credit and 10 percent is types of credit use. So the 35 percent and the 30, those are the big areas, right? So let’s establish an on-time payment history and let’s pay down your debt and those are great ways to really impact credit and again, we like to tell people the longer amount just so that they can be patient and stick with it. But I have seen improvement in a very short amount of time.

Sarae Kurth: 07:07 Cool. And so you mentioned, um, the length of time you’ve had credit, is it typically not a good idea to close accounts that you have open because it would shorten your credit history?

Amy Fidelis: 07:19 I know it’s only 15 percent as opposed to 30 or 35 bucks. Right. But it’s still a factor. And so yes, that is a good question. And again, I would say, does it fit within your overall financial picture? Is this a card that’s constantly charging you fees or you don’t like the way they do business, but you can just stop using it. You don’t have to close it out because keeping the trade line open is an important part of your overall credit history and also can contribute to that overall credit limits. So, um, you know, if you have an open card with an available 5,000, that makes it look like you’re not maxing everything out if it’s not being used.

Sarae Kurth: 08:03 And um, so as you said, it’s, it’s possible that the credit score isn’t the most important thing. It’s possible to carry a lot of debt and have a good credit score. So it’s not necessarily the best indicator of financial well-being because the score doesn’t factor in your debt to income ratio, which a lot of lenders look at before approving a loan. But if you are not just solely focused on the credit score, as you said, it’s a good idea to pay down debt, pay things on time. Any other tips for financial well-being that help your credit score? But aren’t necessarily factors on there, you mentioned cleaning up mistakes, uh, do those mistakes disappear from your credit report after you’ve, you know, paid off a collection account or do they stay on there even if you’ve paid them?

Amy Fidelis: 08:50 Right. So once a negative item is on there, if it’s accurate and verifiable, it will stay. It’ll, it’ll just go down to a zero balance or could show as paid in full. But it will remain on the report for seven years. How much it factors into your score depends on other things that you’re doing to clean it up. But yeah, credit is not the be all and end all of your financial life. But don’t get me wrong, it is very, very important. Um, especially because how many agencies and industries are using it? Right? So like I mentioned earlier, insurance, jobs, um, places to live, security clearance, loans, you know, they’re all looking at that and using that. So it does play a key role, but we want to look at the person’s whole financial picture and their whole life. So other pieces that are important are how much money do you have in savings? Right? So if something happens, are you going to immediately need to rack up a big credit card bill or will you be able to take care of it with the money you saved up? Do you know how much money you make and how much money you spend so that you can again, build those savings. Are you paying into retirement so that in the future you won’t have to rely on
credit so much. So again, you can do things outside of credit that will impact your credit even though they don’t show up on your report. Because if I’ve got an emergency fund, I don’t have to max out on my credit cards. Um, and so then my credit’s going to stay in good shape and my stress levels are going to go down. It’s just getting to the point to be able to build up that fund. That can be tough. Um, but you know, so that’s one of the reasons why as a non-profit, we offer debt management plans in addition to checking your credit and helping you improve that because we want to be able to help you do the things that will improve your credit, um, outside of just looking at the report, like paying down debt.

Sarae Kurth: 10:44 Thank you so much for your time and expertise. Amy, could you please share your contact information with listeners so they can reach out if they have any questions?

Amy Fidelis: 10:52 Sure. If you want help checking your credit or paying off debt or building up savings, come see us. Give us a call 303-233-2773, or email me, amy@mpoweredcolorado.org. You can also find us on the web, www.mpoweredcolorado.org. That’s “m” as in “money”, powered Colorado.

Sarae Kurth: 11:13 Fantastic. Thank you again for more information about this topic. Feel free to email education@denvercommunity.coop. Follow Zing on Twitter or Facebook for personal finance tips and community news. Our website is www.denvercommunity.coop/education. Thanks for listening.