Good advice takes at least two people to have an impact. It's amazing how pride and just plain stubborness can sabatoge one's goals.

Recently, I spoke with Client A who was out of work and struggling to pay his bills.  His unemployment check was enough to cover his mortgage, utilities, food and transportation and, in case you're wondering, he doesn't live in New York (even with maximum unemployment benefits, we would be unable to cover our rent!).  Yet, he didn't have enough to make his credit card payment, his hope to skip a few months with his creditor's blessing.  And while his auto lender was lenient, agreeing to an extension, I explained that credit cards rarely do this unless one enrolled in their rip-off credit insurance plan prior to a lay-off.  Rip-off because, though insurance might become activated, it merely puts payments on-hold and the entire debt is still left to be repaid when the insurance stops.  Then the premium ends up (in effect) jacking up the interest rate by 10% or so.

Still, as Client A only needed to find $100 - $200 in his budget in order to work with the creditor, I started to brainstorm some ideas with him.  Knowing that he split the mortgage and utilities with his fiance, I asked about her situation.  After all, if she was in better financial shape, she might be willing to shoulder more of their shared expenses and enable him to get out of debt. 

Well, he quickly (and rather angrily) dismissed this idea as if I'd insulted his manhood simply by bringing it up.

Onto idea #2.  What about Angel Food Ministries? (For more information about this program, click this link to my recent entry about non profits.)

Cutting me off mid-sentence, he exclaimed that he'd rather sell his house than take a handout.  And when I tried to reason with him that this was not a handout but rather a mutually beneficial program that helps the church, the farmer, the baker (and the candlestick maker!), he refused to listen.  Client A was too proud.

Sensing that we were getting nowhere, I explained that all was not lost if he did fall behind on the card.  That once things picked up and he found new work, his creditor would be willing to get him back on track, dropping the interest rate back down and giving him reasonable payments.  I also warned that his APR might skyrocket and his payment may double while he fell behind, but only temporarily.

His reaction? 

"Screw 'em! If they do that, I'll just stop paying them altogether!"

Perfect!  Intentionally mess up your credit rating, Client A, because a bank has hurt your feelings.

Thankfully, most of my clients are not this stubborn.  I wouldn't last as a credit counselor if they were.

I've been encouraged by people not only through their open minds, but by their following through on plans of action that we develop.  When Client B walked into my office past-due on her car note and utilities, plus a number of collection debts that she'd lost track of, it was painful for her to look over everything.  But she kept her focus on the future.

We met again a month later.  Client B had completed her taxes.  And with a large upcoming refund, she was ready to catch up on the car note and utility bills.  She freed up money in her budget by putting her student loans on hold and, in doing so, automatically brought the loan current without paying a dime.  Also, she attempted at reducing her cable bill by eliminating some channels.  

However, thanks to her cable company's refusal to lose her business, Client B was able to lower her bill AND keep her package in place (guess I'm not alone in successfully negotiating with a cable provider)! 

Client B not only faced her collectors, but she later tracked them down.  Her fires put out, a new fangled budget and collection letters in hand, she empowered herself to get on a payment plan and is now on her way to becoming debt-free.

Client C came to see me after she'd witnessed her sister's success in working with Greenpath.  Down to one income after her husband was laid off, the couple was struggling and so we agreed on some ideas to help improve their cash flow. 

She returned a few weeks later.  They'd cut their grocery bill from $600 to $150.  How?  By taking advantage of her eligiblity for food stamps and finding a better deal on groceries. They cancelled their costly credit insurance.  Her mother agreed to take over her student loan payments (for now).  And, lo and behold, in this horrible economy, her husband found a new job! 

Not only was Client C able to start-up a payment plan, but she and her husband actually can agressively pay down their debt and save at the same time.  His new job may not be long-term, but it will be a great opportunity for a savings cushion.

The theme in this last case was communication.  Client C's sister talked us up.  The client spoke with her mother who offered to temporarily pay on the student loan. 

Regarding the first case above, however, we saw a complete lack of communication.  Client A refused to discuss anything financial with his fiance.  He had HIS problems and she had HER problems.  No sense burdening the other person.  But honestly, why get married then?  If he treats everything separately, even if the debt was in place before the relationship started, how will the couple ever get on the same page? 

It's sad, but I just cannot see a successful marriage Client A's future.

As for the other 2 women...  While it may not be smooth sailing in the years ahead, their focus and dedication so far predicts that their debt will soon vanish.  And all it took was an open mind.

--- Chris Dlugozima
financialloft@deborahsteinberg.com