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By LIZ PULLIAM WESTON
Keeping Secrets About Your Financial Hole Adds To Stress
Dear Liz: I'm a 25-year-old mom of a five-year-old, living with his father in a one-bedroom apartment. We split all expenses down the middle, which is fair. I work while Dad receives disability income. I'm about $4,000 in debt, which isn't a lot, but on my salary, I can't afford the payments the credit card companies want. The constant collection calls are really stressful. No one knows that I'm in money trouble and the secret is killing me. The stress is affecting my life on all levels. I can't seem to save any money. I feel like I'm drowning and have no idea where to turn for help. Liz, please if you can, could you give me any advice on how to tackle this so my life won't feel like such a wreck?Answer: If you're close enough to live with someone and have his child, you're close enough to discuss finances – including debt. You're going to need to make changes to deal with these bills, and you're unlikely to accomplish that if you're still trying to keep the problem a secret.
You may be a good candidate for a credit counselor's debt management plan, which would stop the collection calls and allow you to pay back your debt at lowered interest rates. You can find an agency near you through the National Foundation for Credit Counseling.
Even with a debt management plan, you'll probably have to cut expenses, earn more income or both. Let your son's daddy help with this process and you can speed up the day when you'll be debt free.
By the way, marriage provides more than a thousand legal and financial benefits. It's definitely worth considering.
Dear Liz: I recently sold a house to a young couple on a contract basis. They asked if I could report their payment history to a credit bureau. Am I able to do this and if so, how? I haven't been able to get an answer to this by Googling or by phone.
Answer: The short answer is that you could, but it would be prohibitively expensive to do so. The credit bureaus don't publicize the exact costs to subscribe to their services, but Maxine Sweet of Experian says those fees are substantial.
Companies that subscribe to Experian's credit reporting services have to pay for a thorough background check, including a physical inspection of the property, Sweet said. Companies are required to sign a contract detailing all relevant laws and Experian policy, plus participate in an automated dispute system that provides instant transmittal of complaints and responses.
"So it might be possible for an individual to meet all the requirements," Sweet said, "but one must consider the cost of the initial sign-up, the monthly administrative fee to maintain the contract, the processing and transmittal of data updates each month and the cost to purchase the software and systems required to respond to disputes. That makes it highly unlikely that an individual would be able to report."
As Sweet points out, there are plenty of other ways for your purchasers to establish a credit history. You needn't feel guilty that you can't afford to help them with this one.
Dear Liz: In a recent column, you told a reader who wanted to use one credit card for rewards to ask for a credit-limit increase as a way to improve her credit score. I pay off my balance each month, but because I use my card for business, I routinely have $10,000 on the card each month. When I asked for a credit-limit increase, I used both my gross business income and my net income, which are vastly different numbers. The increase was denied, based on "too low an income," which clearly referred to the net income. Is there a way to pursue this?
Answer: If you're using this card for business expenses, your net income is pretty much irrelevant. Try your request again, using just the gross figure – and perhaps requesting a somewhat less substantial limit increase than you did the first time. Asking for big jumps in credit limits all at once can alarm an issuer; asking for a series of limit hikes over several months is often the better way to go.
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© 2008, No More Red Inc. Liz Pulliam Weston is author of the new book “Easy Money: How to Simplify Your Finances and Get What You Want Out of Life.” She regrets that she cannot respond personally to inquiries, but questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., #238, Studio City, CA 91604, or use the “Contact Liz” form at her website, www.lizweston.com.
