Regionally, the South had the highest percentage of people -- as high as 44% in some parts; while the Northeast had the lowest at less than 30%.
And among the 100 largest metropolitan areas, Minneapolis-St. Paul had the lowest percentage of residents with debt in collections at 20%, while McAllen, Texas claimed the highest percentage at 51%.
'It's too expensive to go to school' At least with credit cards, debt won't go into collections unless it's more than 6 months past due. But time frames can differ from place to place when talking about debt like parking tickets and medical bills.
Once it is categorized as in collections, however, it can follow one of three courses, according to the Urban Institute report. The creditor can charge it off and sell it to a debt buyer, put the account into default, or seek to collect what's owed through an in-house department or a third-party debt collector.
In any of those cases, however, the cost to the consumer is high and long-lasting.
"[It] can harm credit scores, which can tip employers' hiring decisions, restrict access to mortgages, and even increase insurance costs," said Caroline Ratcliffe, a senior fellow at the Urban Institute.
Indeed, the case can stay on your credit report for up to 7 years even if you've paid off the debt. And it will lower your credit score for years - most dramatically when it first goes into collections status and then less so as time goes on, said a spokesman for the credit-score software company FICO.
Of course, you also do your credit score no favors when your payment is merely "past due" by 30 to 180 days. An estimated 5.3% of adults -- or 1 out of 20 with a credit file - were in this predicament in 2013, according to the Urban Institute report.
The study, conducted with Encore Capital Group, is based on a random sample of 7 million people's TransUnion credit files in 2013.
First Published: July 29, 2014: 3:25 AM ET
Americans have a debt problem. An estimated 1 in 3 adults with a credit history -- or 77 million people -- are so far behind on some of their debt payments that their account has been put "in collections."
That's a key finding from a new Urban Institute study.
It examined non-mortgage debt, including credit card bills, car loans, medical bills, child support payments and even parking tickets.
The debt in collections ranged from as little as $25 to a whopping $125,000. But the average amount owed was $5,200.
Geographically, no area of the country is untouched.
Among the states, Nevada had the highest percentage of residents with debt in collections -- 47% - as well as the highest average amount owed - $7,198. That was helped in part by the Las Vegas metro area, where 49% of residents had debt in collections.
By contrast, North Dakota had the lowest percentage of residents with debt in collections at just 19%, while the District of Columbia had the lowest average dollar amount owed per person at $3,547.
Dave Ramsey's investing lesson is one of the weeks I get the most questions about. Can you really get 12% should you work with an adviser? How should the adviser be paid? Lots of questions. Here is a resource that I follow. I'm sharing it hear to help you make an informed decision on your investing strategy.
Exerpt below then follow link for more - Bogleheads® investment philosophy
The Bogleheads® follow a small number of simple investment principles that have been shown over time to produce risk-adjusted returns far greater than those achieved by the average investor. Many of these ideas are distilled from Nobel prize-winning financial economics research on topics like Modern Portfolio Theory and the Capital Asset Pricing Model. But they are very easy to understand and to implement, and they work. In fact, the basis of all of these principles is the idea that successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort.
These ideas come from the investing philosophy of Vanguard-founder Jack Bogle. They have been further distilled and explained in thousands of posts on the Bogleheads forums, starting with original contributors Taylor Larimore and Mel Lindauer. More advanced concepts were first widely introduced to the Bogleheads community by investing author Larry Swedroe, a tradition that has been carried on by Rick Ferri among many others.
This wiki article provides many details about how to apply these principles, given constraints, such as the specific tax-advantaged accounts an investor has available. For a video presentation of Bogleheads principles, refer to Video:Bogleheads® investment philosophy.
A friend showed me the way he and his wife were banking and was very excited about it. I'm just beginning to check it out and have opened an account and am waiting for the initial funding to be posted. It looks very promising. I'm not looking at it to replace my main banking account (that's what they all want right?). Rather as a replacement for SmartyPig. Neither have quicken functionality so that is a push but the web app and online Goals interface seems fresh and Simple uses a different approach than SmartyPig. You might want to Check it Out. The "Safe to Spend" concept is pretty cool to if you were to use it as your main account. Here is a link https://www.simple.com/
In this episode, Andy gives three words that have the potential to change your financial world forever. (And no, he's not selling anything.)
Link to Video here http://yourmove.is/watch/guardrails/5/
I recently came across some great material at Kahn Academy on this topic. We talk a lot in FPU classes about renting vs buying and when is a good time to buy a house. I advise participants be on Baby Step 3b before buying a house. Baby Step 3 is Debt Free with a 3-6 month emergency fund in place. Baby Step 3b adds a 20% down-payment that you use towards a 15 Year fixed rate loan that is no more than 25% of your take home pay. An additional consideration when house planning is to have margin if you have an interruption in employment. Ask questions like: Do both spouses want to / need to work full time to fund this house purchase? Could we make it financially on one income if we chose to or had to? Elizabeth Warren has a good book out on this topic called the Two Income Trap. Renting makes perfect sense depending on your stage of life, roots to the community etc. If you move a lot for work renting is generally the better option. To help unpack this check out the 3 part video series on rent vs buy at Kahn Academy. I've attached the spreadsheet below from lesson 3. Renting vs Buying Lesson link
My friend Greg emailed me a part of this blog post. I found Carey's leanings insightful and compelling. I hope it sparks conversation and action at your house. Here is a link to his de-brief.
My year long spending fast is over.
For the last year, I’ve been on a 12 month personal spending fast. The rules are here if you want to read them, along with two updates I gave along the way (at 3 months and 8 months). (The 8 month update includes the only case where I broke the rules.)
But basically it meant I agreed to purchase no new technology, music, apps, clothing or other discretionary personal items for a year.
I was inspired to begin it by my assistant Sarah, who had spent the previous year on a personal spending fast. You can read about Sarah’s fast here.
My twelve months came to an end on the weekend.
- See more at: http://careynieuwhof.com/2013/03/7-lessons-from-my-year-long-spending-fast/
Based on last nights FPU discussion I decided to put a Credit Freeze on my credit report with the 3 reporting agencies. It was pretty easy and cost me $30 ($10 each) With Equifax & Experian I was able to complete the process online without creating an account. With TransUnion the online process failed, the automated phone process failed, and I had to speak to a representative with a very thick accent that helped me complete the process. So at this point my file is frozen and I must "Thaw" it to allow any inquires, soft or hard. If your not ready to put a freeze on your account you might want to consider the identity theft insurance Dave recommends. He advocates it includes restoration services. Check your homeowners policy to see if this is already included. Below are detailed instructions on how to do so with each of the agencies courtesy of www.clarkhoward.com
We did not talk about this last night but a MUST for all FPU participants is to use the Optoutpressscreen service. I encourage everyone to do this immediately. It blocks credit issuers from doing a soft inquire against your credit file to determine if they want to send you unsolicited offers of credit. Who needs that! Use the link above to sign up today.
EQUIFAX CREDIT FREEZE - [Website]
EXPERIAN CREDIT FREEZE - [Website]
TRANSUNION CREDIT FREEZE - [Website]
FPU Clinton Twp Campus - Spring 2014 Class starts March 30th 10:30am in the in the Creuse Cafe @ the JPAC Click here to register
Class meets in the Creuse Cafe inside the John Armstrong Performing Arts Center (JPAC) Please purchase your membership kit online when you register. If your already a FPU member we would still like you to register online. Just indicate you already have your membership materials. New format workbooks are available here. The class materials for the first two weeks are available on the Resources page of this site. You can download and bring them to class if you want to check it out before purchasing a kit or if your kit has not arrived yet.
Hi Everyone - I was cleaning up an old laptop and found this video that originally ran on Fox Business Channel back in 2008. It's a great motivational video if you are taking FPU now or want to re-ignite your Gazelle intensity. Dave takes you through the whole program in about 1 hour. The video is very similar to a Live event I attending in Grand Rapids with my Dad back in 2005. It was a great father and son road trip. You can see I had more hair and a few more chins back in 2005! I hope you enjoy the video and it inspires you to live out Biblical truths and principles in your financial life.