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How Does Co-Signing a Loan for Someone Affect Me?

by Patrice Washington

Before helping out a friend or family member by co-signing a loan, it’s important to understand what it means for your own financial health. When you co-sign for a loan, you basically tell the lender that you accept equal responsibility for the loan’s repayment. You’re guaranteeing that if the borrower fails to pay, you’ll make the payment! Studies have shown that as many as three out of four co-signers (75%) ultimately end up making payments on the loan.

If you’re considering co-signing a loan for a friend or a relative, please remember these tips:

  1. Know the person you’re attempting to help. Before agreeing to sign on the dotted line, study the person’s financial habits and make sure you’re comfortable with his or her money management skills.
  1. Verify that person’s employment and take home pay by reviewing paycheck stubs and bank statements. If the borrower doesn’t want to share that type of personal information, he shouldn’t be asking you to put your credit-worthiness in jeopardy.
  1. Understand your own capability. Make sure you have enough income left over each month to pay the minimum payment on this account should something occur unexpectedly.

So what do you do if you have co-signed on a loan and the borrower defaults?

  1. If the lender decides to sue and wins, your wages can be garnished or liens and judgments can be placed against your personal property until the debt is satisfied.
  1. Your credit report can be severely tarnished from several months of late payments, as well as a judgment against you.
  1. You may eventually have to pay the full amount of the debt in addition to late fees or other collerca3Dction costs.

Listen, your credit is vital to your own long-term financial success. Think about the reason this person can’t qualify for a loan on his or her own before you move forward. There’s good cause for why the bank isn’t willing to take on that risk. And maybe you shouldn’t either.

If you feel uncertain about one or more of the above points, seriously reconsider co-signing and focus on rebuilding or even maintaining your own credit using my 7-step process in Real Credit Answers. It’s a step-by-step guide that’ll help you reach your credit score goals and regain control of your own financial life.



Are You Dating A Financial Deadbeat?

by Patrice C. Washington

On the surface a lot of guys can come across as “ballers,” but its up to you to be alert and pay attention to the waving red flags that make it clear this stud is really being a bum with his money.  Before dating becomes “I do,” look for these warning signs and clues I mention in Real Money Answers for Every Woman.  If you find them, run OR go through some serious counseling before walking down the aisle! Remember, most marriages end over financial disagreements, but be clear that people who enter marriage with bad money habits don’t magically begin them because they’re married.  They were showing signs all along!

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Should I Say Yes to My Future Mate’s Debt?

by Rhonda J. Williams

So you say you’re in love and it seems like the most perfect relationship ever, eh? You almost know each other’s thoughts at this point and you can’t imagine life without each other. That’s beautiful!

There’s an old saying that goes “money can’t buy you love”, but being broke doesn’t buy it either. Not talking about money is one of the top 10 mistakes couples make in marriage. Quite often couples are so drunk in love they don’t take the time to explore deeper issues that could create problems when the “love high” is gone. Here’s a small suggestion, before you dive head-first into the sea of love without a life jacket, take the blinders off and have a tall glass of reality. Schedule a “Debt Discussion Date” before you make your trip down the isle of wedded bliss. Here are five things you must know before you say yes to the debt.

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Should Your Kids Get An Allowance?

by Patrice C. Washington

Most money experts agree that children should be given an allowance in order to learn financial skills at an early age. I disagree. Children should earn money just like we do. And, most importantly they must be taught what to do with the money once they receive it.

I speak on high school and college campuses monthly and to my astonishment, I meet young people who have never worked a day in their lives. At the age of 21 years old there are people in this world who still believe for some reason that money either really is grown on trees or that it magically falls from the clouds. There is a distinct disconnect between young people and the concept of earning money.

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Have You Made a Man Your Financial Plan?

by Patrice C. Washington
I can’t believe I’m saying this, but I think reality shows like the Basketball Wives and even the Real Housewives franchises are getting a bad rap. . . Okay, well maybe not a bad rap, but far too much credit in creating what some may call “gold diggers.” I’ve heard several times recently that these shows are teaching young women that the only control they have over their financial destinies is keeping themselves attractive enough to trap, uh I mean, catch a baller. Yes, I’ve even been guilty of blaming 50 Cent for the hook, “Have a baby by me and be a millionaire,” when I speak to high school and college aged women across the country. But truthfully, way before rap artists and cable television, many women were taught in their homes first and foremost that their job, no matter how educated they became, was to find a suitable and stable man whom they could marry and live happily ever after with. Although times have changed, similar “advice” still runs rampant today.

Who Gives You Money Advice?

by Patrice C. Washington

Your success, in any area of life, is strongly determined by the people you surround yourself with. Not only do you require the support and encouragement of others to make meaningful progress, you will often find yourself leaning on them for advice, as well. But, as much as you may love and appreciate others, you simply can’t take financial advice from everyone!

Don’t take advice from someone who is not where you want to be or has never been where you are going.

  • You can’t take advice on how to start a business from someone who’s been on a 9 to 5 job for 30 years.
  • You can’t take advice on how to negotiate the purchase of a car from someone who depends on public transportation daily.
  • You can’t take advice on how to buy a home from a serial renter.
  • Can each of these people support and ecourage you? Yes! . . .  . Advise you? No.
  • No matter how much they think they know about something, we usually learn our best lessons through experience.  Apart of being successcul is seeking wise counsel  – NOT listening to any and every one with a opinion.

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Are You in a Financially Abusive Relationship?

by Patrice C. Washington

An enabler is one that enables another to achieve an end; especially: one who enables another to persist in self-destructive behavior (as substance abuse) by providing excuses or by making it possible to avoid the consequences of such behavior.

Before you move on to the next post feeling some peculiar air of superiority, please note that while the definition cites substance abuse as a self-destructive behavior, it doesn’t disqualify the many of you that enable friends and family financially, as well.  It’s one thing to assist someone who may find themselves in a bind from time to time, but it’s another to allow people to become another line item on your own struggling budget.  When you do, I believe you might actually be guilty of financial abuse.

Not only is helping them, actually hurting them, but it can be hurting you, as well.

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