Cheat Sheet Q&A


Topic:  Best path to pay back debt and restore credit

(For nearly 2.5 years I worked without a reliable paycheck from my employer).  Do to the lack of pay and instability in my paycheck I depleted my savings and ended up having charge offs from 2 credit cards which I was unable to sustain.

        Move forward to the present, I’m trying to restore the damage done during this time period.  I’ve pulled a copy of my report and I want to make good on previous debts during my time of difficulty.  I have been told that paying the charge offs would be damaging because it would lower my score making them current items instead of dated several years back however my morals tell me I should pay off the debt.   I’ve seen in some forums that this could damage me as much as 40 points per item.  What should I do?  Will I be harmed if I pay the debt, is there a way I can pay the debt and not be harmed or should I pay the debt and just accept the damage to my score which could drop from a mid 600S to mid 500S based on what I’ve read. Any pointers would be most appreciated.


Bottom Line:  So we have two competing lines of thought.  Moral and structural impact on your credit score.  In your particular case I have potentially positive news.  What’s moral and what’s best for you are likely one in the same. 


It is possible that if you reengage a creditor to repay a debt that you may experience a short term dip in your score.  The reason this could occur is that typically when a lender sells off bad debt to a debt collector they stop reporting the debt as being active and unpaid.  Once it’s sold off to a debt collector they will typical close their reporting as a delinquent account indicating that it was never paid.  Over time if you’re otherwise back on your feet your credit score can improve.  Once you reengage it is possible that the lender will begin reporting the credit account as being behind and active once again which is why your credit score could dip in the short term.  However it’s to your benefit to resolve this over the longer term.  Here’s why…


Not all credit scores are considered equal these days.  If you have impaired credit (which you do regardless of what you decide) but you had a good credit history prior to that 2.5 year period of time and you’re back on track these days and lender is far more likely to extend credit to you than if you have a similar credit score but it’s clear your purposely choose not to pay back obligations when you had the opportunity to do so.  Millions of Americans were in the same boat during the Great Recession and many lenders have realized that a credit score doesn’t tell the whole story.  In fact the FHA recently announced a Mortgage loan that’s available for someone who had a home foreclosed  after just twelve months if that individual can demonstrate that they had income loss that led to the foreclosure and had good credit before and after the income loss. 


Now the caveat is if you need a line of credit in the very near term.  If you will be seeking a new line of credit prior to paying back your outstanding debts your strategy may be a little different on the timing.  If you have specific questions or want assistance with the handling of your situation I can recommend the non-profit organization


If you have a topic or question you’d like me to address email me: 


Audio Report:    


Update on Florida's power future via EPA mandates – how much more you’ll be paying for power


Bottom Line:  Yesterday I identified several power plants in Florida that would be the most impacted by the new EPA mandates on carbon to be phased in by 2030.  Today I have new information that paints a clearer picture of what the actual impact will be. 


While the Federal mandate is a reduction of 30% in carbon output by 2030, Florida’s mandate is actually even higher than that figure.  The EPA has mandated a 38.3% reduction in carbon output in Florida.  Without specific explanation it appears as though the EPA based what each state would contribute to the Federal average based on the capabilities with alternative energy sources in each state.  In Florida we have great solar capability so I think that heavily factored into our mandate being greater than average.  So what does this mean to us?


Based on the size of the mandate and cost estimates for conversation of plants and the generally more expensive cost of generation for alternative energy sources (than coal for example) – it appears as though our power bills will rise by about 15% between 2020 and 2030 (at a minimum & if not sooner).  That will means about an additional $20 per month for the average family in Florida.


Audio Report:   

93% of medical needs rose in cost at a rate greater than inflation:


Bottom Line:  As I’ve articulated many times previously…  The biggest issue with ACA is that it didn’t do anything to address the real problem with healthcare…  The cost of it.  In fact it actually exacerbated the problem.


Based on the latest information from Medicare for 2012, of the 98 different categories of healthcare, only 7 didn’t rise faster than the rate of inflation.  That means the about 93% of all types of healthcare rose yet again at a rate that’s unsustainable.  And what’s worse is that there is no end in sight.  Until and unless we become better consumers of healthcare and force price competitiveness and market forces into the healthcare market – this is going to continue.  We need to break the back of our reliance on the insurance model in which we hand over an insurance card and sign a piece of paper that says that whatever happens in the medical facility (which you aren’t likely even aware of) you’ll pay for whatever the insurance company doesn’t cover.  We’re great consumers and excellent at identifying good value when we are tasked to do so.  The health insurance market has taken all market competitiveness out of the equation.  It’s up to us to become better consumers (and vote differently) to change this repressive course.

Audio Report: 


Back to the future with online habits?


Bottom Line:  Have you changed your online surfing and shopping habits as a result of the rash of security issues?  Most have. 

According to USA Today’s most recent study 56% of Americans have change their online surfing habits (most commonly by not visiting sites they’re not familiar with) so far this year in response to security concerns.  24% of us are actually shopping less online as well.  These are significant changes and it’s another challenge for smaller businesses who are trying to establish themselves online.  So as a local business what can you do?


If you are involved in Ecommerce – this gets back to needing to have a strategy to sell on, EBay, Groupon’s (newer small business service) & Etsy.  Those are the sites people are still going to and trust.  That doesn’t mean that you shouldn’t attempt to attract people directly to your website but you do need, in my view, spending the majority of your time and money adapting to the big sites people trust and will continue to visit and shop.  


Audio Report:


Need a job or know someone who does?  Where the biggest shortages are right now:


Bottom Line:  Manpower produced their top ten list of professions with the biggest shortages right now.  What I found to be significant is that about half of the list is comprised of professions that don’t require degrees and extensive education to qualify for the opportunities.  Here they are: 


  1. Skilled Trade Workers
  2. Restaurant and Hotel Staff
  3. Sales Representatives
  4. Teachers
  5. Drivers
  6. Accounting and Finance Staff
  7. Laborers
  8. IT Staff
  9. Engineers
  10. Nurses


Audio Report:


The Great Recession may have been a blessing for recent and future marriages:


Bottom Line:  We know that the most common reason for divorce is money.  More than half of all divorces cite money issues as the leading factor.  So if we’re on the same page and have a plan and understanding with our prospective spouses prior to getting married, we’d certainly have a better chance of staying married right? 


Experian has noticed interesting trends in their data collection for married couples in recent years.  What they found is that prior to the Great Recession only 35% of couples comprehensively discussed finances prior to getting married.  During the recession that jumped to 60%.  In the years since it’s up to 80%!  That’s great progress.  If history holds that should mean that marriage outcomes should improve and ironically we’d have the recession to thank for the change.


Audio Report: