Money Matters: Dealing with debt collectors can be like trying to reason with an alligator to not make you lunch while wearing a suit made of aged meat.

And navigating the waters of debt consolidation and negotiation can be just as daunting a situation, often leaving you tired, frustrated and ready to call it quits.

However, while it may not be the easiest journey to claw your way out of debt we are here to help…

Giving you some simple and easy to implement strategies to get started negotiating with those soulless carnivores…I mean debt collectors.

Survey says: The average American household with credit card debt is paying around 20% for their interest rate right now! Meanwhile, a personal loan for debt consolidation lands between 9% and 21.64% depending on your credit.

This could be a valid option to help get your debt under one roof, but more on that in a bit.

Here is what on that portioned plate today:

 😎 Our Favorite Resources
👍Simple Debt Negotiation Strats and Easily Use them
👌 #1 Tip That Helped Me Personally Get out of Credit Card Debt ($15k worth)
🤷‍♀️ What’s up for next week

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Our favorite resources

👀ICYMI - On a much related topic our article Snowball vs Avalanche debt payoff methods is a great resource for planning.

📜Quote - "The art of life is a constant readjustment to our surroundings." — Kakuzo Okakaura (which is basically what debt negotiation is all about!)

Today’s Main Event

Your Map to Negotiation That Works

A lot of people never come to the realization that you can actually negotiate with debt holders; leaving them adrift at sea feeling hopeless facing the every increasing waves of debt.

That may be you and if it is that’s why you’re here! So let’s start with some positive news shall we.

A Lending Tree study showed that about 3 out of 4 people who called to lower their interest rate on debt succeeded!

The average decrease was 6%! Which can save hundreds of dollars for you depending on how much you owe.

That’s huge for just about anyone, and I want to show you the strategies that can help you be one of those 3 out of 4 people.

Step-by-step Family Negotiation Plan:

Hardly anyone achieves something they want without some sort of plan first so let’s start with how to approach the negotiation:

1. Check your credit score: You can get this for free once a year. This is a check to see where you are currently and how much leverage you have during these conversations.

2. Write down how long you’ve been a customer: If you have been a customer for quite a while this could give the company more incentive to work with you.

3. Note your payment history: If you have just fallen on hard time and your payment history has been good then this can give you a lot more leverage and show good faith when making the call.

4. Confirm how much you owe: This is imperative! You need to know your total amount owed and what your actual APR is. If you are past due you may be suffering the penalty APR.

5. Call and outline your terms: Be polite and just explain yourself and where you are coming from. If you are told no, don’t be afraid to politely ask if you can talk to a manager to see if there are additional options.

6. Take notes during the call: Write down the names of who you talked to, the case/ticket number and details of the negotiation.

7. Get the agreement in writing: Nothing is binding unless it’s in writing especially if you get a lowered interest rate. Make sure you make it official.

Here is a example script you can take and use:

"Hi, my name is [NAME]. I've been a customer for [X YEARS] and have [GOOD PAYMENT HISTORY if true]. I've recently received offers from [COMPETITOR NAMES] with significantly lower interest rates. I'd like to keep my business with you, but the current rate of [YOUR RATE] is making that difficult. What's the lowest rate you can offer me today?"

Then comes the most important part—SHUT UP. Seriously, just be quiet and wait. The silence feels awkward, but it works magic. Let them make the first offer.

If the first offer stinks (and it usually will), try this follow-up:

"I appreciate that offer, but I was hoping for something closer to [X%]. Otherwise, I'll need to consider transferring my balance to one of these other offers. Is there any way you could do better?"

If you are unsuccessful in negotiating a lowered interest rate then you still have a few options. However, each of these does come with a down side that you should be aware of.

The downsides don’t mean you shouldn’t use them but you need to know them so you can make an informed decision.

Lump-sum payment: This is where you and the debt holder agree to a lower total amount you are willing/able to pay. For instance, paying $10,000 back on a $15,000 loan.

However, the IRS will likely tax you on the difference of $5,000 and you’ll receive a 1099-c cancellation of debt form.

Hardship Agreement: This may come in the form of a reduced payment amount or temporary waived interest or fees. This normally is for those that have a proven life event that is impacting their finances I.e job loss.

Forbearance: This can fall under a hardship agreement but deserves its own explanation. This is the pausing of loan payments under certain terms and for a set amount of time.

Often you will still accrue interest during this time increasing your loan balance. This doesn’t take any steps to resolve the debt but may give you breathing room to figure out next steps.

Debt Consolidation: Is It Right for Your Crew?

A quick note before jumping into debt consolidation.

Many people consider using debt settlement companies…

While researching to write this issue, I saw 0 great things said about using these companies. At best…using them is a solid “meh” and it’s not unoften that using them could be detrimental to you overall.

If I were you I’d stick it out on your own and if you do want help find a registered credit counselor to advise and help you through your exact situation.

Moving on!

Personal Consolidation Loans: A new loan from a bank or online lender that pays off your existing debts Best for: Families with good credit (650+) and multiple high-interest debts Average interest rates: 7-18% depending on credit Family strategy:

Have the person with the best credit apply, but consider having a spouse co-sign if needed.

Home Equity Loans or HELOC: Borrowing against your home equity to pay off other debts Best for: Homeowners with significant equity and discipline Average interest rates: 5-8% (much lower than credit cards)

DANGER ZONE!!!: You're putting your HOME on the line. This is serious business!

Family strategy: Have a family meeting before considering this option. Everyone needs to understand what's at stake.

The Family 401(k) Loan Option: Borrowing from your retirement account to pay off high-interest debt Best for: Absolute emergencies only! 

Why it might work: You pay interest to yourself, not a bank

Why it might be terrible (and probably is): If you leave your job, the loan comes due FAST. PLUS you are borrowing against your future and are often penalized for taking this money early. This option isn’t one I would personally ever choose.

Family strategy: Consider this your absolute last resort, and have a solid repayment plan in place

Is Consolidation Right for YOUR Family? Here's a quick checklist to decide:

Consider consolidation if:

• Your credit score is 650+ (you'll get better rates)

• You're currently paying 15%+ interest on your debts

• You can stop using credit cards while paying off the consolidation loan

• Your total debt (excluding mortgage) is less than 40% of your annual income

• Your family is united in the commitment to avoid new debt

Skip consolidation if:

• Your credit score is below 600 (you'll get terrible rates)

• Your debt problem is from overspending (fix the behavior first!)

• You've already consolidated in the past few years

• You're planning a major purchase (house, car) in the next 6 months

The one thing NOBODY tells you about consolidation: You need an emergency fund first! Otherwise, you'll just end up back in credit card debt the first time the car breaks down.

Pro tip: Put $1,000 in a savings account BEFORE you consolidate. It's your family's debt defense shield!

The Strategy That Helped My Family Get out of $15,000 of Credit Card Debt

First off, I didn’t come up with this strategy. I learned about it from family that used it to help them get out of credit card debt.

Furthermore, I’ve talked to many other people that have used the same strategy to help themselves. Anyone can do this, but there are some requirements.

0% Balance Transfer Credit Cards

1. First find another credit card company that is doing a 0% interest for an intro period of 12-24 months.

2. Apply and get that card and setup a balance transfer from your old credit card to the 0% card in the amount of your available balance on the new card.

3. Pay the minimum payment each month on your old credit card that has interest.

4. Pay as much as possible each month and attack the new credit card balance with 0% interest.

5. If you reach the end of the 0% interest period then you will need to transfer the balance to another credit card with 0% interest until you finish paying it.

   1. This can often be the first credit card you transferred from as a lot of credit card companies want to hold your debt.

When my wife and I got married I had $15,000 in credit card debt as a result of a lot of poor life choices.

However, we were able to knock that out in less than 2 years once we started transferring our balances to 0% interest cards.

You will have to pay a transfer fee of 3-5% but this usually is well worth it as it is less BY FAR than the interest you would’ve paid instead.

Until Next Time

What’s Up Next Week

Whether you're negotiating down your current debts or consolidating them into a more manageable package, remember that this is a family journey. The skills you're teaching your kids—standing up for themselves, negotiating respectfully, understanding how debt really works—these are life lessons they'll carry forever.

Check back next week to see Jimmy do his best Michael Myers impression while writing “Slashing Childcare Costs while Stashing More Cash”.

Stay focused but live the life you have now!

Peace out,

Nico & the Hootsquad

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.