Ask Karen Gibbs

Congratulations!  You’ve almost made it through 2014.  I hope it was a good year for you and that 2015 will be even better.  Here are some steps to make it so.

You did make a budget for 2014, didn’t you?  Well, now is a good time to review your budget.  Did you stick to it?  Did you spend more than you planned?   What worked and what didn’t work for you in 2014?

Let’s start with the obvious.  To get ahead you must pay yourself first.  You are your most important asset and it pays to protect that asset.  Do you have disability insurance in place to replace your income if you become disabled or too sick to work?  Loss of income can lead to loss of home, car, etc. 

How about health insurance?  Did you enroll in Medicare or open an account via www.Healthcare.gov? 

Are you taking advantage of your company’s retirement savings program?  Are you maximizing the company “match”?  ...

Karen, how can I deal with the financial stress of the holidays?
    Crystal, Randallstown

Crystal, the holidays can be stressful with a full house and high expectations.  You can lower your financial stress with smart thinking about your money.

First, congratulate yourself.  You’ve made it through Thanksgiving door buster sales, Black Friday, Small Business Saturday and Cyber Monday.  With a few shopping days left until Christmas, it's time for smart shopping.

Have you set a budget?  Most of the financial stress of the holidays comes from overspending.  Avoid this by making a list.  For whom are you buying gifts?  Do you really need to by one gift for everyone?  Can you combine gifts for the household?  Have you considered cash for the babysitter, paperboy and the beautician instead of gifts?

If you have a special gift in mind, have you done your research and comparison shopped online?  Often, the deals you see advertised ...

Good news for consumers with unpaid medical bills!  The creator of the all-important and most widely followed credit score – FICO – is changing the way medical debts are used to determine your credit score.

Due to lost jobs and expensive health insurance, many consumers are in debt because of large medical bills that may have gone to a collection agency.  A study done by Harvard University points to medical expenses as one of the biggest reasons people file for bankruptcy.

Recognizing the reality of health care costs, debt and the burden it places on consumers, FICO adjusted the way it uses medical debt to rate your credit worthiness.

Under the new system, medical debt won’t be as heavily weighted when calculating your credit score, opening the door to potentially lower interest rates when applying for credit cards, auto loans and maybe even mortgages.  In addition, FICO will no longer ignore already paid debts that had fallen into collection.  Previously, ...

Hi Karen, I’m drowning in debt and need help.  Will credit counseling hurt my credit score?
    Underwater in Carroll County

Dear Underwater, you are not alone.  The Urban Institute, a nonprofit, nonpartisan economic and social policy think tank based in Washington DC, just released a study showing that one in three Americans is behind in paying debts. 

In their study, Delinquent Debt in America, they found that roughly 77 million Americans have a debt in collection – a debt that is more than 180 days in arrears and has been placed with a debt collector.

This debt is exclusive of mortgage debt and consists of credit card debt, late utility payments, back child support, medical bills, parking tickets and even unpaid membership fees.  The average debt outstanding is $5,200/person.  This debt acts as a drag on the economy as consumer spending accounts for 70% of economic activity.  If households are having trouble paying their debts, ...

Hi Karen, I just received a phone call with my phone number as the caller ID.   What gives?
    Stephanie, Pikesville

Stephanie, it seems crooks never take a break, but they do take advantage of technology which allows them to run scams on the unsuspecting.

This time it’s a new twist on an old trick; trying to get you to fall for something familiar and drop your guard.   Since many people use caller ID to screen out unwanted calls, crooks will disguise the number to look like a number you know – sometimes even your own – in the hope that you’ll answer and give out your private information.

If you do answer the call and hear an automated voice, hang up.  Don’t engage in any conversation; don’t follow any prompts to press any keys.  Technology has evolved so rapidly that your number and pass codes can be compromised.

If a friend or relative’s number has been compromised, the caller may assume their identity ...