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Featured, Health, News

How Weight Loss Helped This Couple Pay Down $22,000 of Debt

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Photo courtesy of Brian LeBlanc

Brian LeBlanc was fed up. The 30-year-old policy analyst from Alberta, Canada, had struggled with his weight for years. At the time, he weighed 240 pounds and had trouble finding clothes that fit. He decided it was time to change his lifestyle for good.

LeBlanc started running and cutting back on fast food and soft drinks. He ordered smaller portions at restaurants and avoided convenience-store foods. About a year into his weight-loss mission, his wife Erin, 31, joined him in his efforts.

“The biggest change we made was buying a kitchen food scale and measuring everything we eat,” Brian says. “Creating that habit was really powerful.”

Over two years, the couple shed a total of 170 pounds.

But losing weight, they soon realized, came with an unexpected fringe benefit — saving thousands of dollars per year. Often, people complain that it’s expensive to be healthy — gym memberships and fresh produce don’t come cheap, after all. But the LeBlancs found the opposite to be true.

Erin, who is a payroll specialist, also managed their household budget. She began noticing a difference in how little money they were wasting on fast food and unused grocery items.

Photo courtesy of Brian LeBlanc

“Before, we always had the best intentions of going to the grocery store and buying all the healthy foods. But we never ate them,” she says. “We ended up throwing out a lot of healthy food, vegetables, and fruits.”

Before their lifestyle change, Brian and Erin would often eat out for dinner, spending as much as $80 per week, and they would often go out with friends, spending about $275 a month. Now, Brian says if they grab fast food, they choose a smaller portion. Now they might spend only $22 on fast food per month, instead of over $200.

What’s changed the most is how they shop for groceries, what they buy and how they cook. Brian likes to prep all his meals on Sunday so his lunches during the week are consistent and portion-controlled. They also buy only enough fresh produce to last them a couple of days to prevent wasting food.

Losing weight — and student loan debt

Photo courtesy of Brian LeBlanc

Two years after the start of their weight-loss journey, they took a look at their bank statements to see how their spending had changed. By giving up eating out and drinking alcohol frequently, they were spending $600 less a month than they used to, even though they’ve had to buy new wardrobes and gym memberships.

With their newfound savings, the LeBlancs managed to pay off Brian’s $22,000 in student loans 13 years early. Even with the $600 they were now saving, they had to cut back significantly on their budget to come up with the $900-$1,000 they aimed to put toward his loans each month. They stopped meeting friends for drinks after work, and Erin took on a part-time job to bring in extra cash. When they needed new wardrobes because their old clothing no longer fit, they frequented thrift shops instead of the mall.

When they made the final payment after two years, it was a relief to say the least.

Now the Canadian couple is saving for a vacation home in Phoenix, which they hope to buy in the next few years, and they’re planning to tackle Erin’s student loans next. They’re happy with their weight and lives in general, but don’t take their journey for granted.

“There were times we questioned our sanity, and we thought we cannot do this anymore,” says Erin. But they would always rally together in the end.

“There are things that are worth struggling for and worth putting in the effort,” Brian says. “Hands down, your health is one of those things.”

Other Ways Getting Healthy Can Help Financially

Spending less on food isn’t the only way your budget can improve alongside your health. Read below to see how a little weight loss can tip the scales when it comes to your finances.

  • Spend less on medical bills. Health care costs have skyrocketed over the past two decades, but they’ve impacted overweight and obese individuals more. A report on the “state of obesity” in America found that obese adults spend 42% more on healthcare per year than those of normal weight.
  • Buy cheaper clothes. Designers frequently charge more for plus-size clothing than smaller sizes. Some people claim retailers add a “fat tax” on clothes because there are fewer options for anyone over a size 12. It might not be fair, but it’s the way things are.
  • Save on life insurance. Your health is a huge factor for life insurance rates. Annual premiums for a healthy person can cost more than for someone who is overweight, because BMI (body mass index) may be a factor for determining pricing.

Getting Healthy for Cheap

Still worried that an active lifestyle will require you to spend more money? Here are some tips on keeping costs low while you improve your lifestyle.

  • Get a family membership. Gyms often provide a discount if you sign up for a family membership instead of an individual one. Most of these deals are only beneficial for households with children, but some might offer a lower price if you sign up with a spouse or partner. Always ask the gym about any special deductions they might have.
  • Skip the fancy gym. Many would-be exercisers skip the gym pass because they assume it will be expensive. Before you give up, call around and compare prices. Try your local YMCA, as they often have income-based membership.
  • Shop at thrift stores. Finding inexpensive workout clothes can be another barrier to exercising. Who wants to spend $75 on yoga pants? Don’t visit the mall for your new duds. Your local thrift shop or consignment store will have running shorts and tank tops for only a few dollars. Secondhand clothes also make more sense if you’re in the midst of losing a lot of weight and changing sizes frequently.
  • Go vegetarian. Meat is often the most expensive item in your grocery cart. If you’re trying to eat healthier and concerned about money, try vegetarian protein options like lentils, beans,and quinoa. You don’t have to fully adopt the vegetarian lifestyle, but just reducing your meat intake can have a significant impact on the grocery bill.
  • Buy frozen produce. Frozen produce is often as healthy as buying fresh, but it can be significantly less expensive. Frozen veggies and fruit also last longer, decreasing the risk of food waste. You can often find coupons, and the long shelf life makes it easy to stock up if there’s a sale on your favorite green beans.
  • Cut back on eating out. Ever wonder how restaurant-quality food can be so much better than what you make at home? You guessed it: more salt, more sugar, more butter and more fat. By limiting the meals you eat out, you’ll avoid all that — as well as those outrageous restaurant markups. If you do eat out, you can do your best to pick the healthy choice. You may also choose to take advantage of cashback credit cards that may reward you for your healthy dining out.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Zina Kumok
Zina Kumok |

Zina Kumok is a writer at MagnifyMoney. You can email Zina here

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Credit Cards, Featured, Pay Down My Debt

Guide to Credit Counseling: 7 Key Questions to Ask

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

couple talking to a financial advisor
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If you have little knowledge on the topic of personal finance and are struggling with your own money issues, you might want to think about getting credit counseling.

Credit counselors can help you set a budget and advise you on how to manage your debt, which can include credit card debt, student loan debt and even housing debt.

Reputable credit counseling organizations have certified counselors who are trained in consumer credit, budgeting, and money and debt management. Credit counselors will work with you to come up with an individualized plan to address any money problems you may have. This can be done in person, over the phone or online.

Seeking credit counseling is typically voluntary but can be required when filing for bankruptcy. In this guide, we’ll answer some key questions you might have about credit counseling and whether it’s right for you.

How do you find a credit counselor?

Before settling on a credit counseling organization, do your homework to make sure they are not only reputable but will also be the most helpful for your particular financial circumstances. Check with your state’s attorney general and consumer protection agency to see if there have been any complaints filed against the organization.

Ensure that the organization is accredited and certified. Check to see if they are members of the National Foundation for Credit Counseling or the Financial Counseling Association of America. Most non-profit credit counseling agencies are associated with these organizations.

When researching agencies, first ask what information or educational materials they provide for free. Organizations that charge for information are typically more interested in their bottom line than in helping you. Also, ask about the types of services they offer. Limited services can be a red flag. The fewer services they offer, the fewer solutions they may provide for you.

You should also attempt to understand the organization’s fee system — not only how much services will cost but also how employees are paid. If employees make more based on the number of services you receive, look for another credit counseling organization.

MagnifyMoney has come up with a list of some of the best credit counseling options, which is a great place to start. If you are looking for credit counseling as a pre-bankruptcy measure, the U.S. Trustee Program has a list of approved credit counseling agencies that can provide pre-bankruptcy counseling.

How much does credit counseling cost?

Credit counseling can involve both start-up and monthly maintenance costs. The Department of Justice says that $50 per month is a reasonable fee. Further, the National Foundation for Credit Counseling (NFCC) suggests that a start-up fee should not exceed $75 and monthly maintenance fees should not be more than $50 per month.

Credit counseling agencies may offer fee waivers or reductions, depending on your income levels. Where credit counseling is required, the DOJ says that, if household income is less than 150% of the current poverty line, the client is entitled to a fee waiver or reduction.

Other regulations, such as when fees can be collected and circumstances that would warrant a fee reduction or waiver, may also be outlined by your state.

How long does credit counseling last?

While the length of your credit counseling session depends on the complexity of your financial problems, sessions typically last 60 minutes. After the initial session, credit counselors will follow up to ensure you understand the actions you need to take and that you have been able to get started on the plan they developed. Another session may be necessary depending on how your financial situation unfolds following the first session.

What do you accomplish with credit counseling?

According to the NFCC, reputable counseling involves three things. First, there must be a review of a client’s current financial situation. You cannot move forward unless you know from where you are starting. Second, there should be an analysis of the factors that contributed to the client’s bad financial situation. You don’t want bad habits to undermine your progress. Lastly, there must be a plan to address the situation without incurring negative amortization of debt. Negative amortization occurs when the amount of debt you have increases because you aren’t paying enough to cover the interest, even though you are making payments.

Understanding these three factors of good credit counseling gives you a place to start in improving your financial situation.

What is the difference between credit counseling and debt management programs?

A debt management plan is just one solution a credit counselor may recommend based on your financial situation. Having a debt management plan is not the same as credit counseling.

A debt management plan involves the credit counseling organization acting as an intermediary between you and your creditors. Each month you will deposit an agreed upon amount of money to your credit counseling agency, which they will, in turn, apply it to your debts.

The credit counseling agency works with your creditors to determine how the amount will be applied each month, and negotiates interest rates and any fee waivers. It’s important to call your creditors directly to check whether they are open to negotiating interest rates or offering waivers for fees. In some cases, a credit counseling firm may promise to negotiate those items for you but be stonewalled when they discover a creditor isn’t even open to the discussion.

Before agreeing to a debt management plan, make sure you understand any fees associated and any choices you might be giving up. For example, some debt management plans may require you to give up opening up new lines of credit for a specified period of time. Remember that a debt management plan is just one of many solutions a credit counselor may advise you to consider.

How does credit counseling impact your credit score?

Not directly. While the fact you are in credit counseling may show up on a credit report, that does not affect your credit score. The actions you take as a result of credit counseling, however, can impact your score.

For example, if you don’t choose a reputable credit counseling agency, the agency may submit a payment on your behalf late to your creditors. So even though you submitted your payment on time to the credit counseling agency, your score may still be dinged. This is just one reason why it’s important to make sure you use a reputable credit counseling agency.

Who should consider credit counseling, and when?

While credit counseling is sometimes required, such as in instances of bankruptcy, you always have an ability to seek credit counseling.

Boston-based Bankruptcy attorney Julie Franklin explains, “For bankruptcy purposes, there are two course requirements — a debtor must complete the first credit counseling course prior to filing and obtain a certificate that is filed with the court in their initial bankruptcy petition documents. Post bankruptcy filing, the debtor is required to take a second course, and upon completion, the certificate that is issued must be filed with the court in order for the debtor to obtain an order of discharge.”

Anyone struggling with their personal finances can consider credit counseling as an option. Franklin also notes that “the first credit counseling course is a tool for debtors, as it compels the individual taking the course to closely examine the household assets, income, liabilities and spending habits to determine if there’s a way to save the debtor from having to file bankruptcy.”

If you are considering bankruptcy, you will have to attend some credit counseling anyhow, but doing so could also help you avoid filing for bankruptcy at all. Keep in mind that filing for bankruptcy will always have a significant effect on your credit score, and can hurt your changes for getting loans or new credit for years to come. If you can avoid it, you probably should.

Voluntary credit counseling might not help if you are already being sued to have a debt collected. However, you may be able to negotiate terms with the debt collector that result in a withdrawal of the suit if you agree to enroll in credit counseling and possibly a debt management program. Not all creditors will agree to such terms, but it is possible.

Bottom line

Many people run into trouble with their finances, whether they have too much credit card debt, are struggling to make their housing payments or just find general budgeting to be a challenge. Some people are dealing with more serious issues, such as potential bankruptcy. There are credit counselors available to help you with any difficult financial situation you may be facing. The most important thing is to ensure you work with a reputable credit counseling agency, so do your research first. A good credit counselor can help you get on the road to financial health, but working with a bad one can lead to more problems than you already have.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Liz Stapleton
Liz Stapleton |

Liz Stapleton is a writer at MagnifyMoney. You can email Liz here

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Featured

4 People With Perfect Credit Scores Tell Us How They Did It

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Credit-Score_lg (1)

Have you always dreamed of being able to say you have a perfect credit score — that all-important 850 on the FICO scale?

First, you should know that having an 850 credit score isn’t really all that important. In fact, the real “perfect credit score” is closer to the 760 mark. Why? Because that’s about as high as your score needs to be to get the best treatment from lenders.

As of 2018, approximately 22% of U.S. adults could say they earned a FICO score of 800 or above. Around 36% of U.S. consumers have a score between 700 and 799.

Despite the fact that the idea of “perfect” is, in this realm, something of an illusion, you should try to get the best score you possibly can. To give you some ideas of how you might do this, we have profiled four people who have perfect (or darn near perfect) credit scores.

To keep things fair and consistent, we asked everyone to run their FICO score using the free Discover credit score tool. (This FICO score is based on data from Experian, one of the three major credit bureaus.)

What we found were four very different pictures of “perfection” — and what it takes to achieve it.

Dominique Brown

Dominique Brown

32 years old
Alexandria, Va.

His score: 850

His credit stats: Dominique has 25 revolving credit accounts on his credit report and another 14 in the form of installment loans (as a REALTOR, he invests in real estate properties). Overall, the average age of these accounts is just under 15 years. Dominique has one hard and fast rule about how much available credit his family uses: “We never go over 20% utilization ever in any billing period.” He’s not kidding. His credit report shows a super low utilization rate of 2%.

How he uses credit: Dominique’s credit card habits begin and end with his budget. “In my house, we plan every dime that we make before the month starts,” he said. “For every purchase that we can, we put it on the credit card and just pay it off in full by the due date.” Because he pre-plans his monthly earnings and spending, Dominique never worries about needing enough to afford a certain bill. And by using credit almost exclusively, he earns tons of rewards points.

His secret: Dominique credits his mother with instilling good financial habits in him at an early age. “She would give me an allowance every two weeks for chores, and I had to manage my money for savings, fun and goals, just like an adult,” he said. His mother also gave him three rules to live by: Save 10% of his money, always stick to a budget and never spend more than he earned.

Thoughts on hitting 850: “This may sound weird to some, but to have an 850 credit score was not a milestone for me financially,” he said. “I realized a long time ago that your credit score is only half the battle … cash flow management is what matters the most.”

Brenda

Brenda Vaughn

44 years old
Athens, Ga.

Her score: 825

Her credit stats: Brenda has six credit cards, including three general-use credit cards (cards that can be used anywhere) and three retail store credit cards. Her credit history is 25 years old. She has a mortgage loan with a balance. And she has borrowed money to buy cars and to pay for tuition.

How she uses credit: Brenda still has the first credit card she opened at age 19, at her mother’s urging. She admits it took her a while to get the hang of it. “I didn’t always [pay my bill on time], and it was out of control a couple of times,” she said. Nowadays, she uses her cards primarily to earn cash back, and pays them off every month. “My parents gave me a set amount of money each month while I was in college and said if I needed more, then I needed to get a job, and so I did,” she said.

Her secret: Even with a history of missed payments on her accounts, Brenda’s score is incredible. She has time on her side there. Because she hasn’t missed a payment over the past 15 years, those old negative marks have long been removed from her credit report. Negative marks will generally only stay on your credit report for up to seven years.

Jim

Jim Droske

51 years old
Willowbrook, Ill.

His score: 830

His credit stats: Jim has nine credit cards and, when we spoke with him, he had a total of $7,720 on those cards. That balance seems pretty high, but because he has such a high total available credit across all his cards — $88,000 — his utilization rate is very low. He’s using only 9% of the credit he could be using. Jim’s credit history is 32 years old, and the average age of his accounts is about 10 years.

His secret: To put it simply, Jim is the perfect credit customer. He’s never missed a payment and he’s never had an account go to collections. At age 24, Jim was thrown into a job in finance, running the lending department at an auto dealer. He saw firsthand how important credit scores were when it came to getting the best finance rates from lenders.

“I read a lot about how credit and credit scores work, and still do,” he said. With Jim’s long credit history and perfect payment record, it’s no wonder his credit is stellar.

How he uses credit: Jim is steadfast about what he charges — and what he doesn’t. “I only use credit for bigger purchases that can not reasonably be paid for in cash,” he said. “I do not charge for points, and always pay much more than the minimum payment due until it is paid off.”

john

John Ulzheimer

48 years old
Atlanta, Ga.

My score: 850

My secret: Yes, I also have a perfect credit score. Like most of the people I spoke with for this piece, I have one huge advantage here: I’m kind of old! And that means my credit history is older than average — 22 years and counting.

Fortunately, credit scoring models take age into account when they calculate scores. The older your credit history, the higher you score will be. I also have a stellar payment history. I can say I haven’t missed any payments since 1991, when I graduated from college and started working at Equifax.

My credit stats: I have 13 credit cards and a total of 19 accounts, active and inactive on my credit report. As of last month, I carried a total of $9,500 on those cards, with a total credit capacity of $133,000. That makes my utilization rate a low 7%.

How I use credit: I pay my cards in full each month and have never carried a balance. The beauty of not carrying a balance is that I never have to pay interest, no matter what my APR is. In fact, I have no idea what my APRs are, because they’re irrelevant to me. I don’t shy away from applying for credit but only do so when I actually need it. I learned about credit from my years working for Equifax and FICO.

So what’s the real secret to getting a perfect (or almost perfect) credit score?

Here’s what everyone profiled in this piece has in common: None of us avoid credit. In fact, we all have a TON of credit cards.

But we use them wisely. None of us have negative marks on our credit reports, and we keep our monthly balances low relative to our total credit limit. Last but not least, we all have credit histories that are at least 15 years old, which makes up 15% of your FICO score alone. Keep in mind that, while your FICO score isn’t your only credit score, it is the one used most by lenders.

What else makes up your FICO score? As you work to get your best score, keep this five-part breakdown in mind.

  1. The most important factor of your credit score is your payment history, which makes up 35% of the total. In short: If you make late payments, you will damage your score. If you make on-time payments, you’ll help boost your score. Do everything you can to avoid ever sending a payment in late. Setting up autopay, so you can be sure to never forget a payment, could be a great idea.
  2. Amounts owed makes up 30% of your score. This includes your credit utilization. As discussed before, the lower your utilization rate (that is, the amount you have charged on your cards versus the total amount of credit available to you), the better it is for your score.
  3. As noted above, the length of your credit history makes up 15% of your FICO score total. You may have some older cards you rarely use, and perhaps you think it would be best to cancel them. This would actually be the wrong move to make on your journey to a strong credit score — the longer your credit history, the better. So even if you rarely use those cards, you should consider making small purchases on them and paying those balances off in order to keep them in rotation, and keep your credit history intact. (Note: Sometimes credit card issuers will cancel a card if it is never used.)
  4. The next factor is the kind of credit you have, and this makes up 10% of your score. It is best to have different kinds of credit (installment loans including auto and mortgage loans, as well as revolving credit, such as credit cards) rather than just one type.
  5. New credit makes up another 10% of your score. If you aim to open up a lot of new credit at around the same time, resulting in hard inquiries on your credit report, it could ding your score by a small amount. However, in general, you should not fear applying for new credit — as long as you use it responsibly, it’s more likely to help your score over the long run than to hurt it. If you are in the market for a mortgage, however, you should avoid opening up any new credit card accounts if possible, as it could have a negative effect on the process.

There are several ways you can access your credit score for free so you can keep on top of it. MagnifyMoney’s parent company, LendingTree, has a credit monitoring service available to anyone who wants to sign up. LendingTree uses the VantageScore model, which is slightly different than the FICO model but uses the same scoring system.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

John Ulzheimer
John Ulzheimer |

John Ulzheimer is a writer at MagnifyMoney. You can email John here