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Facing the Financial Capability Month Facts

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April is Financial Capability Month. You probably won’t find any greeting cards celebrating that fact, but don’t let that stop you from taking a closer look at your personal economic situation.

It’s always fun to see how we stack up against our peers, and the NFCC’s hot-off-the-press 2013 Financial Literacy Survey is a great way to do that.

This year’s survey results provided somewhat of a mixed message. More than one in four respondents indicated they are spending more than last year, yet 77 percent admitted to having financial worries, listing insufficient savings as their top financial concern. Yes, you read that correctly. Americans (that means you) are spending more, but at the same time are worried about a lack of savings.

Taking a closer look at consumers’ top financial concerns, check out the following. (Respondents were allowed multiple responses, so don’t worry about the percentages not adding up to 100.)

  1. Not enough savings – Overall, 57 percent of Americans indicated they are worried over a lack of savings, including 43 percent who are concerned about not having enough “rainy day” savings for an emergency, and 38 percent concerned about retiring without having enough money set aside. Although fairly evenly divided, the data suggest that having enough money to resolve daily emergencies takes precedence over the longer term retirement planning.
  2. Not being able to pay financial obligations – A total of 26 percent of those responding, or roughly 61 million people, were worried about servicing their debt commitments, including concerns around paying credit card debt (13 percent), repaying student loan debt (8 percent), an inability to make monthly vehicle payments (7 percent), and not being able to pay off existing medical debt (6 percent).
  3. Health insurance – One in four (25 percent) are worried about health insurance – either not being able to afford it (19 percent) and/or not having any (17 percent).
  4. Credit – While 19 percent were worried about their credit score and/or lack of access of credit overall, 16 percent were anxious about their score, with 9 percent concerned over their lack of access to credit, suggesting that consumers continue to realize the importance of credit in their lives. However, most adults have neglected to review their credit report (65 percent) or score (60 percent) in the past year.
  5. Job loss – Eighteen percent, or more than 42 million Americans indicated fear of job loss as a major concern, a number that is disturbingly high.
  6. Foreclosure – As the least of consumers’ concerns (among those listed), a comparatively small 4 percent of Americans are worried over losing their home to foreclosure, undoubtedly a positive signal for the housing industry and the economy as a whole.

The good news is that 20 percent of U.S. adults indicated they do not have any financial worries, a strong sign of consumer confidence.

Remaining stubbornly consistent over the past three years, 40 percent of adults gave themselves a grade of C, D, or F on their knowledge of personal finance. How would you grade yourself? Should you put yourself in financial time-out?

Based on this poor report card, it is not surprising that nearly four in five (78 percent) agree that they could benefit from additional advice and answers to everyday financial questions from a professional.

Know that there is ample opportunity for you to improve your level of financial literacy and take steps to resolve any financial problems. Not surprisingly, most adults indicated that if they were having financial problems related to debt, they would first turn to their friends and family for assistance (28 percent). A similar number (27 percent) also said they would reach out to a professional nonprofit credit counseling agency for help, demonstrating a high level of confidence in the value of credit counseling.

So, how did you fare? If any of this data hits too close to home, take action. Ignoring a financial problem rarely solves it, and looking the other way only makes the problem harder to solve. To get started, consider renaming April My Financial Capability Month and resolve to make positive changes that will move you into a more stable financial future. Then start planning your Financial Capability Month 2014 party!

How to Identify and Dispute Errors on Your Credit Report

A recent study on credit report accuracy found that 1 in 5 of the participating consumers had an error on at least one of their three credit reports.

Why Do Credit Report Errors Matter?

Errors on your credit report can negatively affect your credit score, which is used to evaluate your applications for credit cards, loans, jobs, housing, insurance, and more.

What Can You Do?

Check Your Credit Report
Check your credit report with all three credit reporting agencies at least once a year. You are entitled to one FREE credit report annually from each agency (Experian, TransUnion, and Equifax).

Checking your report will help you identify and correct errors that could be affecting your credit score and help protect you from identity theft.

Dispute Errors
If you find an error on any of your credit reports, follow instructions on the report that explain how to dispute errors. If errors have not been corrected after you’ve disputed them with the credit reporting agency, you can file a complaint with the Consumer Financial Protection Bureau.

Get more information about disputing errors on your credit report.

AnnualCreditReport.com is the only website authorized to give you the free annual credit report you’re entitled to each year. Checking your credit report regularly will help you spot any problems or may alert you if you’ve been the victim of identity theft.

How to Choose a Credit Counseling Agency

It’s easy to get into debt. It’s much harder to get out of it.

Fortunately, there are credit counseling agencies that can help you get your finances in order. They can help you figure out a budget and stick to it while managing your debt and avoiding future financial pitfalls.

However, not all credit counseling agencies are the same. Some offer free or low-cost services while others charge high fees or might not be trustworthy. The following tips will help you choose the right credit counseling agency.

Look for Agencies with a Good Reputation

Most reputable credit counseling agencies are nonprofits that offer free or low-cost services. However, the fact that an agency is a nonprofit does not guarantee that it is affordable or that it has a good reputation. Here are some tips for selecting a credit agency you can trust:

  • Ask family members and friends if they can recommend an agency. It’s best to pick one that has been around for several years and has a well-established reputation.
  • Use credit agencies or credit counseling services referred by credit unions, banks, universities or military bases.
  • Choose a credit agency that’s been approved by the Federal Government.

You can also check out state and local consumer agencies to find out if a credit agency has complaints.

Compare Services and Costs

Once you have a list of agencies you can trust, the next step is to take a closer look at the services and costs they offer so that you can choose the one that best serves your needs. Be careful with credit agencies that charge high fees for services that you can get for free somewhere else.

Some of the most common services offered by credit agencies include:

  • Professional, person-to-person assistance with managing your money and debt.
  • Help putting together a family budget and sticking to it.
  • Free workshops and educational material.

Ask Lots of Questions

Before finally choosing a credit agency, it’s worth writing down a list of questions you might have so that you can avoid surprises such as hidden fees or limited services. Here are some questions to help you pick the right credit agency.

  • Are there different fees for different services? Some agencies might charge for initial consultations or a monthly fee. Be careful with agencies that pay their employees more depending on the services you sign up for.
  • Will you be signing a contract before getting counseling? If so, be sure to read the contract before signing it.
  • Does the agency have the right certifications to provide credit counseling? It’s best to use agencies that have been certified by independent organizations.
  • What is the privacy policy of the agency? It’s important that your personal and financial information is protected.

This guide from the Federal Trade Commission can help.