CFPB Your-Money-Your-Goals Toolkit English

YOUR MONEY, YOUR GOALS
A financial empowerment
toolkit for Social Services
programs
Consumer Financial
Protection Bureau April 2015
Table of contents
MODULE 1: Introduction to the toolkit .....................................................................1

An introduction to the CFPB............................................................................. 2

Financial empowerment and your life .............................................................. 4

Financial empowerment: A way to improve client and program outcomes .... 4

Making referrals ................................................................................................ 6

The goal of Your Money, Your Goals................................................................ 7

MODULE 2: Assessing the situation ........................................................................9

Tool 1: Financial empowerment self-assessment ........................................... 11

Tool 2: Client goal and financial situation assessment.................................. 21

MODULE 3: Starting the conversation ...................................................................27

When should I bring up money topics? ..........................................................28

How should I bring up money topics? ............................................................ 29

MODULE 4: Emotional and cultural influences on financial decisions ...............39

Emotional influences on financial decisions .................................................. 39

Cultural influences on financial decisions ......................................................40

Cultural conflicts ............................................................................................. 41

How can this understanding help my clients?................................................ 41

MODULE 5: Using the toolkit ..................................................................................43

How does it work? ........................................................................................... 43

i YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS
Tool 1: Client financial empowerment checklist ............................................ 45

MODULE 6: Setting goals ........................................................................................49

Setting SMART goals.......................................................................................50

Turning goals into savings targets .................................................................. 52

What about revising goals? ............................................................................. 54

Saving for education........................................................................................ 55

Tool 1: Goal setting tool.................................................................................. 57

MODULE 7: Saving for the unexpected, emergencies, and goals .......................61

What is savings? .............................................................................................. 61

How to save ..................................................................................................... 62

Savings and public benefits............................................................................. 63

Savings plan ..................................................................................................... 63

What are the benefits of a savings plan?......................................................... 65

A safe place to save .......................................................................................... 67

Direct deposit and savings ..............................................................................68

Tool 1: Savings plan .........................................................................................71

Tool 2: Benefits and asset limits .................................................................... 75

Tool 3: Finding a safe place for savings ......................................................... 79

Tool 4: Increasing your income through tax credits......................................83

MODULE 8: Managing income and benefits ..........................................................87

Income ............................................................................................................. 87

Benefits ............................................................................................................88

Getting income ................................................................................................89

Tool 1: Income and financial resource tracker............................................... 93

Tool 2: Strategies for increasing sources of cash and financial resources .... 97

ii YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS
Tool 3: Cash, paychecks, direct deposit, payroll cards, and EBT—
understanding the benefits and risks.............................................................101

MODULE 9: Paying bills and other expenses ......................................................107

Paying bills..................................................................................................... 108

When cash is short: Prioritizing bills ............................................................. 111

Tool 1: Spending tracker................................................................................ 115

Tool 2: Bill calendar.......................................................................................121

Tool 3: Strategies for cutting expenses ........................................................ 125

Tool 4: When cash is short—prioritizing bills and spending ....................... 129

MODULE 10: Managing cash flow.........................................................................133

What is a cash flow budget? .......................................................................... 133

Making a cash flow budget ............................................................................ 134

Tool 1: Cash flow budget............................................................................... 135

Tool 2: Cash flow calendar ........................................................................... 145

Tool 3: Improving cash flow checklist.......................................................... 149

MODULE 11: Dealing with debt .............................................................................157

What is debt? ..................................................................................................157

Good debt, bad debt?......................................................................................157

Tool 1: Debt management worksheet........................................................... 169

Tool 2: Debt-to-income worksheet ...............................................................173

Tool 3: Debt-reduction worksheet ................................................................177

Tool 4: Student loan debt ..............................................................................181

Tool 5: When debt collectors call ................................................................. 185

MODULE 12: Understanding credit reports and scores .....................................193

What are credit reports?................................................................................ 193

iii YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS
Why do credit reports and scores matter? .................................................... 193

What is in a credit report? ............................................................................. 194

Negative information .................................................................................... 196

Example credit report.....................................................................................197

Disputing errors on credit reports ................................................................204

What are credit scores? .................................................................................207

Tool 1: Getting your credit reports and scores ..............................................211

Tool 2: Credit report review checklist ...........................................................217

Tool 3: Improving credit reports and scores................................................223

MODULE 13: Evaluating financial service providers, products, and
services .............................................................................................................227

Financial service providers ........................................................................... 227

Choosing financial products..........................................................................228

Managing a bank account..............................................................................229

Tool 1: Selecting financial service products and providers.......................... 235

Tool 2: Evaluating financial service providers .............................................239

Tool 3: Types of financial services................................................................243

Tool 4: Opening account checklist ...............................................................249

MODULE 14: Protecting consumer rights ............................................................255

Consumer complaints.................................................................................... 256

It’s your money—be aware and take care...................................................... 257

Tool 1: Red flags............................................................................................ 261

Tool 2: Protecting your identity ...................................................................263

Tool 3: Submitting a complaint....................................................................269

Tool 4: Learning more about consumer protection..................................... 273

iv YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS
MODULE 1:
Introduction to the toolkit
Welcome to the Consumer Financial Protection

Bureau’s Your Money, Your Goals: A financial Case manager
empowerment toolkit for social services
The term “case manager” is used
programs! If you’re reading this, you are
throughout this toolkit, and it refers
probably a case manager, or you work with case
to anyone who works directly with
managers.
people with low or moderate income
Finances affect nearly every aspect of life in the in a wide range of organizations and
United States. But many people feel overwhelmed on a broad range of issues. Staff may
by their financial situations, and they don’t know have different titles, but they
where to go for help. As a case manager, you’re in generally come from non-profit or
a unique position to provide that help. Clients private sector organizations or city,
already know you and trust you, and in many county, or tribal governmental
cases, they’re already sharing financial and other organizations, and they are generally
personal information with you. The financial responsible for the following with
stresses your clients face may interfere with their clients:
progress toward other goals, and providing

 Conducting needs assessments
financial empowerment information and tools is
a natural extension of what you are already doing.  Developing action plans with
clients
What is “financial empowerment” and how is it
different from financial education or financial  Providing resources and referrals
literacy? needed to implement action plans
Financial education is a strategy that provides  Monitoring progress and
people with financial knowledge, skills, and evaluating results
resources so they can get, manage, and use their

money to achieve their goals. Financial education
1 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS
is about building an individual’s knowledge,
skills, and capacity to use resources and tools, Financial empowerment
including financial products and services.
Empowerment is the process of
Financial education leads to financial literacy.
increasing the capacity of people to
Financial empowerment includes financial make choices and transform those
education and financial literacy, but it is focused choices into actions and desired
both on building the ability of individuals to results, according to the World Bank.
manage money and use financial services and on Financial empowerment is building
providing access to products that work for them. the knowledge and ability of
Financially empowered individuals are informed individuals to manage money and use
and skilled; they know where to get help with financial services products that work
their financial challenges. This sense of for them.
empowerment can build confidence that they can

effectively use their financial knowledge, skills,
and resources to reach their goals.
We designed this toolkit to help you help your clients become financially empowered
consumers. This financial empowerment toolkit is different from a financial education
curriculum. With a curriculum, you are generally expected to work through most or all of the
material in the order presented to achieve a specific set of objectives. This toolkit is a collection
of important financial empowerment information and tools you can access as needed based on
the client’s goals. In other words, the aim is not to cover all of the information and tools in the
toolkit - it is to identify and use the information and tools that are best suited to help your
clients reach their goals.
An introduction to the CFPB

CFPB is the abbreviation for the Consumer Financial Protection Bureau. The CFPB’s mission is
to make markets for consumer financial products and services work for Americans—whether
they are applying for a mortgage, choosing among credit cards, or using any number of other
consumer financial products.
Above all, this means ensuring that consumers get the information they need to make the
financial decisions they believe are best for themselves and their families—that prices are clear
up front, that risks are visible, and that nothing is buried in fine print.
We are working to give consumers the information they need to understand the terms of their
agreements with financial companies. We are working to make regulations and guidance as clear
and streamlined as possible so providers of consumer financial products and services can follow
the rules on their own.
Congress established the CFPB through the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (Dodd-Frank Act). The Bureau:
 Writes the rules for providers of financial products.
 Oversees compliance with the rules.
 Brings enforcement actions to stop violations.
 Educates the public to help them navigate the market for financial services.
 Answers consumers’ questions, handles their complaints, and shares data with the public
about the consumer financial experience.
Our primary strategies are:
 Education—An informed consumer is the first line of defense against harmful
practices.
 Enforcement—We supervise banks, credit unions, and other financial companies, and
we enforce Federal consumer financial laws.
 Study—We gather and analyze available information to better understand consumers,

financial services providers, and consumer financial markets.
The Office of Financial Empowerment within the Division of Consumer Education and
Engagement developed this toolkit because case managers like you meet with thousands of
consumers that need high quality, unbiased financial information and tools to help them
address financial issues more effectively. This toolkit can help you help your clients reduce
financial stress as they become more financially empowered.
We hope you will use this information, the tools found within this toolkit, and the resources at
http://www.consumerfinance.gov with as many of your clients as possible. As you do, you’ll help
inform and empower the individuals in the community you serve to manage their finances in
ways that achieve their goals and dreams.
Financial empowerment and your life
As a case manager, you may sometimes hesitate

to share information about financial Case managers and financial
empowerment, because you feel like you don’t empowerment
know enough about it. Or you may feel like you
As a case manager, you are in a good
know the information but haven’t applied the
position to provide financial
information and tools to your own life. In other
empowerment services to your
words, you might sometimes feel like you don’t
clients. Case managers like you have
have the “right” to provide financial
access to and the trust of millions of
empowerment information, because you may feel
individuals who are most in need of
your own financial house may not fully be in
financial empowerment services. You
order.
may feel more equipped and
You can help your clients face money issues that empowered to provide these services
may be complicating their lives if you feel when you read the content and use
knowledgeable about money and comfortable in

the tools provided in the toolkit.
your own approach to money management,
credit, debt, and financial products. As you work
through each module of this toolkit, you will learn both the information and how the tools work.
As you try out the tools, you may also find ways to use your money to reach your own goals more
efficiently and effectively.
Financial empowerment: A way to improve

client and program outcomes
Sharing financial empowerment information and tools with clients may feel like a completely
different job—one more thing you’re being asked to add to your workload. But, once you become
familiar with the resources in this toolkit, we believe it can become natural to integrate its
contents into the work you do. That’s because its core functions relate to what you already do.
As a case manager, one of your job responsibilities is likely to be assessing client or client and
family needs. The toolkit starts you off with an assessment to help you understand your clients’
goals and the financial situations they may be facing.
You then develop a plan to help your clients
receive your organization’s services. You often Financial empowerment and
have to gather and coordinate information, tools, outcomes
and other resources to share with them.
Financial empowerment may help
This is the exact function of the toolkit. It brings your clients transition from the
together information, tools, and links to other services they receive from your
resources you can use to help your clients build program. This won’t happen solely
skills in managing money, credit, debt, and because of the way that you use the
financial products. Having all those resources in information and tools in the toolkit.
one place can make it easier for you to integrate But sharing the information and tools
financial empowerment into your meetings with with your clients may help increase
clients. their financial stability and reduce

their future need for services.
We developed the Your Money, Your Goals
toolkit because using the information and tools
can improve outcomes for both your clients and your program or organization. As you share the
toolkit with them, your clients will have new understanding of financial concepts and financial
tools to apply to their own lives and to reaching their goals of financial stability and self-
sufficiency.
Depending on what your clients need, you may be able to help them:
 Set goals and calculate how much money they need to save to reach these goals
 Save money
 Establish an emergency savings fund
 Access and use tax refunds
 Track the specific ways they are using their money
 Bring their cash flow budgets into balance
 Make a simple plan to pay down debt
 Get and review their credit reports
 Fix errors on their credit reports
 Evaluate financial products and services
 Recognize when their consumer rights may have been violated and know how to take
action
With these new skills and tools, you may be able to help your clients transition from the services
they receive from your organization, too. This won’t happen solely because of the way that you
use the information and tools in the Your Money, Your Goals toolkit. But when you provide
these services, they may play a role in helping your clients increase their financial stability and
reduce their future need for services.
Making referrals
Are you expected to provide all of the help clients need? The answer, of course, is “no.”
You can make a big difference in the lives of your clients by introducing them to financial
empowerment and providing them with some new information and tools to help them solve
specific financial challenges.
Because your clients trust you, they look to you for quality information and referrals on topics
such as the following:
 “My credit report has information that’s not accurate. How can I fix it?”
 “How can I know if the school loan I can get at the bank is better than one I can get at
school?”
 “Should I borrow money from my credit card or take out a small loan to cover my bills
until my next paycheck?”
 “My employer says I have to have direct deposit. Everywhere I go, the banks and credit
unions seem to charge fees. How can I find the right account for me?”
But some of your clients may need more help—help you may not feel comfortable providing
because it is technical, beyond what you feel comfortable addressing, or not available within
your organization. This is where your resource and referral network will be important.
Referral partners in your community may include certified, non-profit credit counselors,
independent loan specialists, free volunteer tax assistance sites sponsored by the IRS, and
financial education programs, among others.
These referral partners are often found at non Referral partners
profit agencies. It is important that your referral
When identifying referral partners,
base of experts does not try to sell products or
make sure they:
services to clients when they are seeking financial
empowerment assistance. It’s also important that  Have expertise in the area for
these partners are objective—able to show your which you are referring clients to
clients the upside and the downside of specific them
actions they take and the impact these actions  Have the time and interest to
have on their financial situations. meet with and assist your clients
To get you started in making these types of  Are objective, which means they
referrals, there are instructions and a template can show clients the potential
for making a referral guide in the supplemental positive and negative
module entitled Making a financial consequences of specific actions
empowerment resource and referral guide. If
you are working with a local financial  And will not sell products or
empowerment trainer, this person has or will services in the context of helping
provide you with a list of websites and local your clients
organizations you may find helpful in your work
with clients.
The goal of Your Money, Your Goals

The goal of the Your Money, Your Goals toolkit is to improve client outcomes by making it
easier for you as a case manager to help clients become more financially empowered.
The Your Money, Your Goals toolkit is divided into 14 modules:
 Modules 1 through 5 are introductory modules.
 Modules 6 through 14 include information on specific topics and tools clients can use to
put that information to work.
You should note that these modules are designed to be used as needed. Because the process is
designed to be client-driven, this isn’t a curriculum that requires you to start with
Module 6: Setting goals and work all the way through Module 14: Protecting consumer rights.
Consider each module a specific set of tools to be
used as needed with each client. Giving clients tools
For example, you may have a client who has just Giving clients tools to take home to
lost her job. Starting with Module 6: Setting work on can be helpful. At home, they
goals would likely not be useful to this client. But may have access to accurate
tips for managing cash flow and identifying new information to complete the tools.
resources if she doesn’t have enough cash to But take care to not send too many
cover basic living expenses (Module 10: tools home with them at once.
Managing cash flow and Module 8: Managing Getting all of the tools at once or even
income and benefits) could be useful for this five tools at one time can be
client at this particular time. overwhelming for most clients. A
better approach is to identify the
You may have a client who wants to get out of
topic and tools that will make the
debt. A focus on cash flow (Module 10:
biggest difference for each client at
Managing cash flow) may be useful, but you and
that specific time.
the client might decide to start by developing a
simple plan to lessen her debt (Module 11: And if you decide to send tools home
Dealing with debt). with your client, limit it to just one or

two that you have shown them how to
If your work only allows you to meet with a client use.
infrequently—or even just once—this toolkit will
also help you identify ways to start a
conversation that opens the door for you to make referrals to others in your community who
may provide financial education or work with your client to build financial empowerment.
To make the best use of the toolkit, however, we advise not giving clients all of the tools at once.
Getting too many tools at one time would likely be overwhelming for most clients. A better
approach is to identify the topic and tool that will make the biggest difference for each client. If
you are going to send tools home with your client, limit it to one or two that you
have worked with them on how to use. If you give them too many tools at once, none of
the tools are likely to be used.
The Consumer Financial Protection Bureau (CFPB) has prepared this material as a resource for the public. This material is provided
for educational and information purposes only. It is not intended to be a replacement for the guidance or advice of an accountant,
certified financial advisor, or otherwise qualified professional. The CFPB is not responsible for the advice or actions of the
individuals or entities from which you received the CFPB educational materials. The CFPB’s educational efforts are limited to the
materials that the CFPB has prepared.
MODULE 2:
Assessing the situation

Before you start providing financial empowerment services to clients, we want to be sure you
have some tools to help you figure out what your clients may need.
We also want to give you tools to understand your own knowledge and level of confidence about
money management, and the opportunities you have to provide financial empowerment services
to clients.
In this module of the Your Money, Your Goals toolkit, we provide two assessment tools to give
you a starting point. The assessment tools include the following:
Tool 1: Financial Empowerment Case Manager Self-Assessment is a three-part tool to help you
understand how much financial knowledge you already have. Learning more will not only
benefit your clients, but may also benefit you as you apply what you learn to your own life.
Tool 2: Client Goals and Financial Situation Assessment is designed to help you and your client
understand the client’s goals and financial situation. This information can help you target the
right module of the toolkit for each client. For example, if a client has a goal to buy a car or a
home, you can target Module 12: Understanding credit reports and scores because learning
how to improve his credit history may help him qualify for a lower cost loan. If you have a client
that is struggling to make ends meet every month, you can target Module 10: Managing cash
flow.
This tool will help you match each client’s goals and financial situation with specific modules
and tools within the toolkit.
Tool 1:
Financial empowerment self-

assessment
Some case managers may find the idea of
providing financial empowerment information to Financial Empowerment
clients overwhelming. For some, it’s because they
Financial empowerment involves
feel like they just don’t know enough about it. But
building the ability to use financial
the truth is that no one knows everything there is
management knowledge, skills, and
to know about financial empowerment.
tools to access resources, products,
Since financial empowerment covers a wide range and services to achieve your goals.
of topics, it can be hard to know where to start.
Identifying what you know and don’t know may
be the best place to start. Using this approach, you may find that you know more than you think
you know. You may also find areas where you could benefit from a little more information or
know-how.
Use the following self-assessment to develop an understanding of your own level of financial
knowledge, skills, and confidence—your level of financial empowerment. Questions asked in this
assessment are related to topics in the Your Money, Your Goals toolkit.
Case manager financial empowerment self-assessment

As someone who works with clients, it’s important for you to understand your own level of
financial empowerment. Use this three-part self-assessment to develop an
understanding of your financial knowledge, skill, and confidence. As you will see in
the answer keys, the questions asked in this assessment are directly related to modules in the
Your Money, Your Goals toolkit.
Case manager self-assessment: Part 1
Answer each of the following questions by checking either the “true” or “false” column.
Question True False
1. Goals are not important to financial planning or budgets.
2. To have enough money for emergencies you must save 3 to 6 months’

worth of living expenses.
3. A cash flow budget helps you track whether you will have enough cash to
cover your bills from week to week.
4. If you can’t pay all of your bills and collectors are calling, the “squeaky
wheel” that calls you the most should be paid first.
5. The only way to receive the income you’ve earned from working is by
receiving a paycheck.
6. Credit is when you owe someone money.
7. The amount of your monthly debt payments may impact your ability to pay
your other bills and living expenses and to access new credit.
8. A poor credit history may keep you from getting an apartment, insurance in
some states, or even a job.
9. There are no risks or additional costs associated with having a checking

account.
10. As a consumer, you have almost no rights when it comes to financial

products.
Financial empowerment self-assessment: Part 1 results
Number Correct: ________________ out of 10
Topics to Learn
More About:
Case Manager Self-Assessment: Part 2
Use check marks to show which word or phrase (rating) best describes how you feel today.
Statement Rating
Does Strongly Disagree Agree Strongly

not disagree agree
apply
1. I am satisfied with the amount

of money I save.
2. I know about state and federal

tax credits and how to claim
them.
3. I am not concerned about how

much money I owe.
4. I am confident about my credit

reports and scores.
5. I do not worry about being able

to pay my monthly living
expenses.
6. I understand how credit works.
7. I know how to fix incorrect

statements on my credit report.
8. I feel confident about helping

clients begin to manage some
of their financial challenges.
9. I know where the resources

are in my community for credit
and debt counseling and for
free tax filing assistance.
10. I know where to get help if I

have questions about financial
issues.
Case manager self-assessment: Part 3
Use check marks to show whether your answer to each question is “yes,” “no,” or “I don’t know.”
Question Answer
Yes No I don’t
know
1. I have a savings or checking account at a bank or credit

union, and I use this account (make deposits and
withdrawals regularly).
2. I have applied for, received, and used a credit card.
3. I have applied for and received a loan for a car or a

home.
4. I have applied for and received a payday loan.
5. I have requested my own credit report and reviewed it.
6. I track my income and spending.
7. I have received a loan from a pawn shop.
8. I have used the services of a check cashing business.
9. I have had a car or other type of personal property

repossessed for nonpayment.
10. I have received calls from debt collection agencies.
11. I understand my rights and know what to do if I believe a

financial services provider has tried to take advantage of
me.
12. I receive my earnings from work via a method other than

a paycheck. (Payroll card, direct deposit, or cash, for
example.)
Case manager self-assessment: Part 1 answer key
Here are the correct answers for Part 1 of the “Financial Empowerment Self-Assessment.” If you
did not answer the question correctly, see the module in the toolkit listed next to the answer for
more information. Reading through the module indicated will help you understand the answer
to the question and build your financial empowerment knowledge and confidence.
Questions True False Module
1. Goals are not important to financial planning or budgets. Module 6
2. To have enough money for emergencies you must save

Module 7
3 to 6 months’ worth of living expenses.
3. A cash flow budget helps you track whether you will

have enough cash to cover your bills from week to Module 10
week.
4. If you can’t pay all of your bills and collectors are calling,
the “squeaky wheel” that calls you the most should be Module 9
paid first.
5. The only way to get the income you earn from working
Module 8
is receiving a paycheck.
6. Credit is when you owe someone money. Module 12
7. The amount of your monthly debt payments may impact

your ability to pay your other bills and living expenses Module 11
and to access new credit.
8. A poor credit history may keep you from getting an

Module 12
apartment, insurance in some states, or even a job.
9. There are no risks or additional costs associated with

Module 13
having a checking account.
10. As a consumer, you have almost no rights when it

Module 14
comes to financial products.
There are no right or wrong answers for Part 2 of the “Financial Empowerment
Self-Assessment.” That’s because the answers are your opinions about your own financial
knowledge, feelings, and situation. Use the following chart to count up how many of each answer
you had:
Rating Does not Strongly Disagree Agree Strongly

apply disagree agree
Total for
each
Total of strongly disagree + Total of agree + strongly

disagree: agree:
 If the total of agree + strongly agree is greater than the total of strongly disagree +
disagree, you feel good about many aspects of your financial life.
 List any that you rated as disagree or strongly disagree below and read the modules
that relate to these areas in the Your Money, Your Goals toolkit to learn more.
 If the total of agree + strongly agree is less than the total of strongly disagree +
disagree, you may be feeling stress about many aspects of your financial life.
 Consider reviewing the entire toolkit and working through the worksheets on your
own before you using them with the clients you serve.
If your rating is disagree or strongly disagree,
Statement
check out . . .
1. I am satisfied with the amount of

Modules 6 and 7
money I save.
2. I know about state and federal tax

Modules 7 and 8
credits and how to claim them.
3. I am not concerned about how

Modules 10 and 11
much money I owe.
4. I am confident about my credit

Module 12
reports and scores.
5. I do not worry about being able to

Module 9 and 10
pay my monthly living expenses.
6. I understand how credit works. Module 12
7. I know how to fix incorrect

Module 12
statements on my credit report.
8. I feel confident about helping

clients begin to manage some of Consider reviewing all of the content modules.
their financial challenges.
9. I know where the resources are in

Supplemental Your Money, Your Goals information on
my community for credit and debt
making a financial empowerment resource and referral
counseling and for free tax filing
guide
assistance.
Supplemental Your Money, Your Goals information on

10. I know where to get help if I have
making a financial empowerment resource and referral
questions about financial issues.
guide
There are no right or wrong answers for Part 3 of the “Financial Empowerment
Self-Assessment” because it helps you identify the financial products or services with which you
have had experience. If you have not used some of these products or services that your clients
may use, you may need to learn more about them. Use the materials in Modules 7, 8, and 9 to
learn more about products, services, and financial service providers. You may also find it
beneficial to review those modules even if you have experience with the products, services, and
financial service providers.
Question Modules of interest
1. I have a savings or checking account at a

bank or credit union, and I use this
If no or I don’t know, see Module 13.
account (make deposits and withdrawals
regularly).
2. I have applied for, received, and used a

If no or I don’t know, see Modules 12, and 13.
credit card.
3. I have applied for and received a loan for If no or I don’t know, see Modules 11, 12, and
a car or a home. 13.
4. I have applied for and received a payday If yes or I don’t know, see Modules 10, 11, and
loan. 13.
5. I have requested my own credit report and

reviewed it.
6. I track my income and spending. If no or I don’t know, see Module 8.
If yes or I don’t know, see Modules 10, 11, and

7. I have received a loan from a pawn shop.
13.
8. I have used the services of a check

If yes or I don’t know, see Modules 8 and 13.
cashing business.
9. I have had a car or other type of personal

property repossessed for nonpayment.
10. I have received calls from debt collection

If yes or I don’t know, see Module 11.
agencies.
11. I understand my rights and know what to
do if I believe a financial services provider If no or I don’t know, see Module 14.
has tried to take advantage of me.
12. I receive my earnings from work via a

method other than a paycheck. (Payroll For any response, see Module 7.
card, direct deposit, or cash, for example.)
This Tool is included in the Consumer Financial Protection Bureau’s toolkit. The CFPB has prepared this material as a resource for
the public. This material is provided for educational and information purposes only. It is not a replacement for the guidance or
advice of an accountant, certified financial advisor, or otherwise qualified professional. The CFPB is not responsible for the advice or
actions of the individuals or entities from which you received the CFPB educational materials. The CFPB’s educational efforts are
limited to the materials that CFPB has prepared.
This Tool may ask you to provide sensitive personal and financial information. The CFPB does not collect any information from you
or the organization using this Tool. The CFPB is not responsible and has no control over how others may use the information that
you provide to them about your personal or financial situation. Be cautious how you use this Tool. CFPB recommends that you do
not include names, account numbers; that you lock up completed hard copies and encrypt completed soft copies of the Tool that
contain sensitive personal and financial information; and shred hard copies that contain sensitive personal and financial
information when no longer needed.
Tool 2:
Client goal and financial

situation assessment
You may be wondering where you should start
with a client. The Client Goal and Financial Situation Assessment
Situation Assessment may help you figure out a
A picture of conditions today used to
beginning point with a client.
create a plan for actions to change
Use of this assessment is optional. It can help you conditions in the future.
efficiently and effectively determine where to

start in the toolkit, but you may find that you
already ask similar questions in your existing assessment protocol.
If you do use this assessment, consider using it when:
 Clients fill out intake paperwork for your organization or program
 You meet with clients for an initial assessment
 Clients are waiting for other services (such as waiting to have their tax returns prepared
at a Volunteer Income Tax Assistance site)
You may also choose to:
 Send this home with clients to fill out privately
 Use it as a guide to ask questions in a conversational style to better understand the

financial concerns and goals of your clients
 Ask the questions over several sessions with your client
How does it work? When you feel the time is right, you can simply ask a client to complete the
assessment. You can match her answers with modules in the Your Money, Your Goals toolkit as
a starting point for assistance.
Because the assessment is simple and only has a few key questions, you might often be able to
gather the information in a conversation. Reading the assessment and recording the answers for
her may be useful if you are working with a client that has limited literacy levels, is an English
language learner, or with whom a question and answer format would be more productive.
Introducing the assessment may be uncomfortable if you’re not used to asking these types of
questions. Module 3 of the Your Money, Your Goals toolkit provides tips on starting the
conversation. With the assessment, you can use a statement like the following as an
introduction:
We know that many issues in running a household involve money. One thing we would like
to do is provide you with information and tools to help you use your money to reach your
goals. To get us started, we have this questionnaire, which you’ll see covers several topics.
You know where you are and where you’d like to go, and your answers will help us build a
plan to get you the information and tools that are going to be most useful to you right now.
We will not use the information you provide in any other way.
Remember, financial empowerment is a big topic. Knowing where to start can be hard, but using
this assessment will help you identify what is going on with your client and provide her with the
right information, tools, or referrals.
Finally, be sure you have a system for keeping your clients’ assessments completely confidential.
When discussing this assessment with your clients, be sure you can provide assurance of
confidentiality and describe your system for keeping this information secure (e.g., a locked
drawer in a file cabinet). As you proceed, be sure to follow your organization’s data policy
guidelines and retention policy.
Your goals and financial situation
Please answer the following questions based on where you are today. There are no right or
wrong answers. The purpose of this questionnaire to ensure the right financial information and
resources are provided to you to help you reach your goals.
Question Response
1. Do you have financial goals and know how I don’t

Yes No
much money you need to reach them? know
2. Are you in danger of losing your housing or I don’t

Yes No
car because you cannot make payments? know
3. Are you in danger of having any of your I don’t

Yes No
utilities shut off because of nonpayment? know
4. Do you have a regular and reliable source of I don’t

Yes No
income? know
5. Do you have money set aside to cover I don’t

Yes No
emergencies or unexpected expenses? know
6. Are you able to cover all of your bills and I don’t

Yes No
monthly living expenses each month? know
I don’t
7. Do you owe a person or business money? Yes No
know
8. Do you have student loans or other debts you I don’t

Yes No
can’t pay? know
9. Have you been unable to get a job, cell

I don’t
phone plan, insurance, apartment, credit Yes No
know
card, or car due to a bad credit record?
10. Do you have an account at a bank or credit I don’t

Yes No
union? know
11. Have you been denied a savings or checking I don’t

Yes No
account? know
12. Do you feel like the financial services you use I don’t
Yes No
cost you too much? know
13. Do you know who to call with a complaint I don’t
Yes No
about a financial product or service? know
14. If you answered that you have financial goals, what are they?
__________________________________________________________________
__________________________________________________________________
15. If you could change one thing about your financial situation, what would that be?
__________________________________________________________________
__________________________________________________________________
Client goals and financial situation assessment key
Use the following chart to help you analyze the “Client Goals and Financial Situation
Assessment.” This analysis will help you determine where to start financial empowerment work
with your client. If your client seems to have several high-priority areas, you can list them and
ask the client to prioritize them with you.
Question Response
1. Do you have financial goals and know how

much money you need to reach them?
If yes, call 211 or local emergency assistance

2. Are you in danger of losing your housing or
center. For homeowners, call (888) 995
car because you cannot make payments?
HOPE.
3. Are you in danger of having any of your If yes, call 211 or local emergency assistance
utilities shut off because of nonpayment? center.
If no, call 211, workforce opportunity center, or

4. Do you have a regular and reliable source of
local emergency assistance center and see
income?
Module 8.
5. Do you have money set aside to cover

If no or I don’t know, see Modules 7 and 13.
emergencies or unexpected expenses?
6. Are you able to cover all of your bills and

monthly living expenses each month?
If yes or I don’t know, see Modules 10, 11, and

7. Do you owe a person or business money?
12.
8. Do you have student loans or other debts you

can’t pay?
9. Have you been unable to get a job, cell phone

plan, insurance, apartment, credit card, or car If yes or I don’t know, see Module 12.
due to a bad credit record?
10. Do you have an account at a bank or credit

union?
11. Have you been denied a savings or checking
account?
12. Do you feel like the financial services you use

cost you too much?
13. Do you know who to call with a complaint

about a financial product or service?
Answers to Questions 14 and 15 will vary. Use the answers to these two questions as additional
information to help you pinpoint the module and tool that will be most useful for your client
right now.
MODULE 3:
Starting the conversation
Everyone has questions about money. Even the

wealthiest people in the world may turn to Starting the conversation
someone when they have financial questions.
If financial empowerment is not a
It can be difficult, though, to talk about money, part of your regular work with clients,
even with people that you know well. It can feel knowing when to bring up the topic
uncomfortable to raise the topic of personal can be a challenge at first. Ways to
finance because it’s so personal. Because the start the conversation include:
subject of money is deeply personal, it can seem  Using the existing assessment
even more difficult to talk about it with clients tool in intake or assessment
that you don’t know well. meetings with clients
But you talk with clients all the time about other  Making the most of shorter
personal issues. Talking about money can get discussions you have with
easier if you start the conversation with clients to introduce a tool or
your clients at the right time in a way that make a referral
acknowledges their desire to have control
 Integrating financial
over their own lives. By approaching financial
empowerment into
issues in a non-judgmental way, you will build
organizational programs or
trust that allows you to work with clients to
procedures
address their financial challenges.
 Following up with clients
Most people are working to get their financial
when they bring up financial
houses in order. But even if you are among the
issues directly or indirectly
few who have never had money struggles
yourself, chances are that you’ve seen someone
you care about struggle with financial issues.
Use the experiences that you’ve had in your own life to help you empathize with your clients and
understand where they’re coming from. When they feel that you respect them and that they can
trust you, they will be more willing to open up and discuss financial topics that might otherwise
make them feel uncomfortable.
When should I bring up money topics?

The right time to bring up money topics will depend on the people that you work with and your
relationship with them. For example, the needs of people transitioning from a shelter into
permanent housing are very different from the needs of people who own their own homes and
are at risk of foreclosure. Likewise, discussing money topics will vary depending on how much
contact you have with your clients. A conversation about financial topics with a client you see
once a year will be very different than the discussion you’ll have if you see him or her weekly or
monthly. Like every other intervention, you need to balance meeting clients where they are with
the expectations of your program.
If you are screening someone for benefits, follow your organization’s protocol closely when it
comes to financial questions so that clients don’t feel like you are trying to find out more
information than is required for screening them. In this case, talking about financial
empowerment at the wrong time could undermine their trust in you. Instead, you may use this
opportunity to build trust by suggesting resources they may qualify for such as free tax filing
assistance or claiming the Earned Income Tax Credit as a way to bring more money into the
household.
Clients may also share problems they’re having with a financial product or service provider. As
you listen to the challenges they’re facing and how they have tried to resolve the problem, if
appropriate, you can offer to help them submit a complaint to the CFPB.
How should I bring up money topics?
Use the assessment tool
If you have a lot of contact with a client, one of the easiest ways to bring up money is to use the
Client Goal and Financial Situation Assessment from Module 2. By going over this series of
questions with your client, you will have a clear picture of where he or she stands and what
information might be most useful. Remember, you can:
 Ask your client to complete the assessment individually either in your office or at home
 Cover the questions in the assessment orally or in conversation format
 Ask your clients to complete or answer only a few of the questions
Make the most of short-term contacts

While it’s great to be able to build trust and discuss financial issues with your clients over the
long term, sometimes you just don’t have that kind of time. But that doesn’t mean that you can’t
work on empowering your clients financially during short-contact meetings, such as when a
client applies for public benefits or comes in for job skills training. For example, if you had a
brief meeting with a new client, George, who came in to apply for an energy assistance program,
you could say:
Build it into existing program procedures
Take a look at your existing organizational purpose, program procedures, and protocols. Often,
you may find that introducing financial topics, such as credit, debt, savings, and cash flow, help
clients to become more economically self-sufficient. If economic self-sufficiency or a similarly
stated purpose is part of your organization’s mission or is required by your funders, can you add
these topics into your existing protocols, procedures or program offerings to help empower your
clients financially?
In the next sections, we’ll offer you specific suggestions, tools, and tips for broadening and
improving existing financial conversations that you have with your clients. For example, if you
are working on obtaining employment and building job skills with your client, Javier, you can
talk with him about banking and savings after he gets a job in order to help him effectively
manage his income.
Respond when clients initiate
Sometimes an opportunity to talk with a client about financial issues will arise outside of a
formal assessment or procedure. This happens when a client brings up a financial issue directly
or indirectly.
Here’s an example of how it could sound if a client brings up a financial issue directly. For
example, your client, Aaliyah, with whom you have regular and focused contact, says in one of
your early meetings:
Here’s an example of how it could sound if a client brings up a financial issue indirectly. For
example, during a meeting you ask Aaliyah how her kids are doing, and she says:
Discussing difficulties or problems with financial products with

your clients
Many people have difficulty with credit or other financial services, but your clients may feel a
sense of shame or embarrassment because of their situation. When discussing what has
happened with your clients, be sure to explain in clear terms how to avoid a similar situation in
the future and how to get help from the CFPB and other federal, state, or local agencies if they
can’t resolve problems with the financial services provider. See Module 14: Protecting consumer
rights for information on submitting a complaint to the CFPB and other authorities.
Alternatively, you can submit a complaint on behalf of your client.
Submitting a complaint on behalf of another person

CFPB’s online complaint system allows you to submit a complaint on behalf of another person
but the forms and the way in which you submit may vary depending on the type of complaint. To
submit on behalf of someone else, go to the complaint area of the website. Fill out the first two
sections—“What happened?” and “Desired Resolution”—and then you will arrive at the “My
information” section. At the top of the “My information” section in some intake forms, you will
be asked whether you are submitting a complaint on behalf of “myself” or “someone else.”
Choose the “someone else” option and you will be prompted to another section where you can
fill out the consumer’s contact information. In other forms, you may be able to enter
information about the contact person that is different from the information provided about the
consumer. You should upload a copy of the Representation Agreement as an attachment when
provided an opportunity on the last page of the form.
This is what one of the online forms looks like with notes for how to complete it for a client:
Here is what will happen to the complaint:
 Complaint Submitted: The CFPB will screen you complaint based on several criteria.
These criteria include whether your complaint falls within the CFPB’s primary
enforcement authority, whether the complaint is complete, and whether it is a duplicate
of another complaint you have submitted.
 Review and Route: If a particular complaint does not involve a product or market that
is within the Bureau’s jurisdiction or that is not currently being handled by the Bureau,
the CFPB refers it to the appropriate regulator. Screened complaints are sent via a secure
web portal to the appropriate company—the business you have the complaint with.
 Company Response: The company reviews the information, communicates with you
as needed. It then determines what action to take in response. The company reports back
to you and the CFPB via the secure “company portal.” After your complaint is sent to the
company, the company has 15 days to provide a substantive response to you and the
CFPB. Companies are expected to close all but the most complicated complaints within
60 days.
 Consumer Review: CFPB then invites you to review the response and provide
feedback. Consumer Tracking: You can log onto the secure “consumer portal” available
on the CFPB’s website or call a toll-free number to receive status updates, provide
additional information, and review responses provided to the you by the company.
 Review and Investigate: The CFPB reviews your feedback about company responses,
using this information along with other information such as the timeliness of the
company’s response, for example, to help prioritize complaints for investigation.
 Analyze and report: Complaints help with the CFPB’s work to supervise companies,
enforce federal consumer financial laws, and write better rules and regulations. The
CFPB also reports to Congress about the complaints we receive and makes anonymized
consumer complaint data available to the public on the website:
www.consumerfinance.gov/complaintdatabase/.
Contact information
Online: consumerfinance.gov/complaint
Toll‐free phone: (855) 411‐CFPB (2372), 8am‐8pm EST, Monday ‐ Friday
TTY/TDD phone: (855) 729‐CFPB (2372)
Fax: (855) 237‐2392
Mail:
Consumer Financial Protection Bureau
PO Box 4503, Iowa City, IA 52244
MODULE 4:
Emotional and cultural

influences on financial
decisions
Everyone has situations where they know what they think they “should” do, but find themselves
doing something else instead – especially when it comes to money. For example, you may have
decided to save part of your tax refund to build an emergency fund. Instead, you use it to help a
family member pay down his medical debt, because not helping a family member pay off a debt
would go against the cultural norms you were raised with. Or, you may use it to splurge on
something you have wanted because you’ve been working hard and making this splurge for
yourself or family feels good.
Financial decisions, no matter how well intended, are never made in a vacuum. Many things
influence both our short- and long-term financial decisions. This module focuses on two
influences on financial decision-making: emotions and culture.
Emotional influences on financial decisions

When people talk about money, it’s not just about the numbers—what they are really discussing
is what money means to them. Attitudes and behaviors around money are wrapped up in
feelings around security, failure, family, love, and status. It’s important to observe your clients to
try to determine their emotional reactions to money and its meaning, and integrate their
emotions and feelings into your discussions about their finances. If someone is “upset or rattled
about money, they tend to swing too far in one direction or the other. The best approach takes a
middle path – talk to both head and heart.”1
Instead of just asking your clients to provide you with the basic numbers, try asking your clients
questions about how they feel when you’re discussing their finances. You could try questions
such as:
 “What does money mean to you?”
 “What is your first memory involving money?”
 “What is the most difficult thing about money for you? For your family?”
Helping clients become aware that financial decisions are influenced by emotions and past
experiences may help them understand what drives some of their financial practices. It can also
help you better understand their unique strengths and challenges.
Cultural influences on financial decisions

No decisions, including financial ones, are made in a vacuum. People make all of their decisions
within the very powerful context of culture, including family, ethnicity, region, community,
socio-economic status, generation, and religion. Each of these factors influences beliefs, values,
and experiences about money and the way financial decisions are handled.
Cultural influences are heavily rooted in values. Consider how common American values—such
as individualism, practicality, honesty, and hard work2—might influence the financial choices
people make. Values around money are also influenced by businesses, governments, changes in
financial markets, and the media.
1 Mellan, Olivia and Christie, Sherrie, Second Thoughts: Making Better Decisions, ThinkAdvisor, February 25, 2013.
See http://www.thinkadvisor.com/2013/02/25/second-thoughts-making-better-decisions.
2 Kohl, L. Robert, Values Americans Live By, 1984. See

http://www.claremontmckenna.edu/pages/faculty/alee/extra/American_values.html.
Cultural conflicts
Sometimes, you will find that clients are caught in the middle of cultural conflicts around
money. Their family culture may emphasize saving and avoiding debt, while their broader
community may ascribe status to material things like new cars or expensive clothes, which could
require taking on debt to purchase. Or the culture in which they were raised might emphasize
caring financially for parents as they age, while their peers at work are not expected to take on
the same level of responsibility.
Sometimes, these conflicts aren’t just internal, but take place within a family: one spouse may
have cultural influences or a family background that encourage them to save for their children’s
education, while the other may feel that children should be responsible for their own
educational expenses. Consequently, one parent may want to save the family’s tax refund; the
other will think that money should go towards things the family needs or simply wants now.
These conflicts can lead to emotional decisions that may not look rational on the outside but
make perfect sense given their background, values, and culture.
How can this understanding help my

clients?
Discover your clients’ cultural and emotional context
When discussing clients’ financial behavior, don’t just accept their expressed wants at face
value; probe gently to discover their underlying attitudes, needs, goals, and roadblocks. Ask
them questions like:
 “Who handles the finances in your family?”
 “How does your community of faith view money?”
 “How did your family handle finances when you were growing up? Did you discuss
money openly?”
 “How do your friends view money? How do you think this may influence you?”
 “What do you want your children to learn about money? What do you think they are
learning from you now?”
It’s often difficult for people to open up about money, but taking the time to really understand
and connect with your clients’ cultural and emotional values and needs around money will build
empathy, making you more successful in achieving both client and program outcomes.
Recognize emotional and cultural influences

An example of how a difference in cultural values might affect financial behavior is that Western
culture values individuality and personal well-being, which means it’s generally considered
appropriate for each person to support themselves financially. In some other cultures, family
members support each other financially throughout their lives—if they save money, it may go to
a family member they believe needs it. If a client chooses to spend his disposable income on his
extended family instead of saving it in an emergency fund, this doesn’t mean that he has bad
financial habits, just that he is making financial choices in a different cultural context than you
may be familiar with.
Helping to bridge cultural and emotional roadblocks

It’s important to understand these cultural influences without being judgmental. In discussing
financial goals and choices with clients, seek to understand their values and cultural influences,
so that you can help them reach their true goals in a way that makes them feel understood and
respected. Though they might agree to a financial plan that makes rational sense, and know that
it’s what they have agreed to do, this is often not enough to override their feelings or cultural
context in the moment when decisions are made. Remember that while their priorities may
seem counterproductive to you, within their own culture, they may feel completely appropriate.
Once you understand the cultural factors that are guiding your clients’ behavior, you can coach
them toward financial choices that help them effectively manage their obligations and line up
with their true values and desires. This might mean that you help them figure out a compromise:
for example, how to ensure that they take responsibility for their own financial needs and
obligations without asking them to abandon their commitment to help their extended family.
MODULE 5:
Using the toolkit

How does it work?
At this point you may be wondering: How am I ever going to find the time to add financial
empowerment into my already packed schedule? One way to think about this financial
empowerment work is that it is not an “add-on” service, but rather something to be integrated
into the work you are already doing with clients.
Does this mean that it doesn’t require time on your part? Of course not. But that time will be
front-loaded. In order to integrate financial empowerment into the case management or other
supportive services you provide, you will have to invest time into:
 Learning the toolkit content
 Becoming comfortable with the topics and the tools in the toolkit
 Thinking about ways to introduce financial empowerment in the context of the case
management you provide
 Potentially capturing the outcomes of financial empowerment in the work you do
Integration
Integration of financial empowerment means identifying where and how you can weave
financial empowerment information and tools into the work you are already doing.
Why is integration of financial empowerment such a promising strategy? Here are a few
reasons:
 It builds on established relationships you may have with clients.
 Clients are busy—there is efficiency in addressing many issues in one stop.
 Financial and economic issues cut across situations and challenges: basic needs
housing, health and health care, child rearing and care, work, transportation, and
so on.
 Financial empowerment integration may present a more holistic approach to

working with clients.
 It provides opportunities for reinforcement during “natural” discussions with

clients.
 It may result in better outcomes for the clients and programs.3
This module provides you with a tool to get you started: the Client Financial Empowerment
Checklist. The purpose of this tool is to provide you with a tracking template for use with each
client you provide financial empowerment services to. It’s meant to be a simple way to keep
track of the tools or information you have shared with a particular client as you integrate
financial empowerment into the work you are already doing with clients. It can also be used to
share output level data with your organization and as a case management tool to connect one
meeting with a client to the next.
3 Giuffrida, Inger, Integrating Financial Education into the Work that You Do, April 2010.
Tool 1:
Client financial empowerment

checklist
This financial empowerment checklist can help you:
 Identify the financial empowerment information and tools to share with your clients
 Keep track of the information you have shared including any referrals you have made for
a client
The checklist is organized by financial empowerment topic or module with each tool associated
with that module following. The question(s) following each module name can help you identify
the financial empowerment problem addressed in the module and through the tools.
The goal is not to cover all of the tools with each client, but rather to find the right
module or tools given the client’s most pressing financial empowerment problem
or the area in which they have expressed an interest to get more help.
Use this checklist as follows:
 Print a copy of the checklist for each client.
 Write the client’s name on the checklist.
 When you have covered the topic or tool, put a check next to the tool or write in the date.
 Use the notes section if you are working with a client on an ongoing basis. Include
information about your discussion, specific challenges, and whether you made a referral.
 Keep the checklist with the file so each time you work with the client, you can check in on
their financial empowerment progress.
Client Name: ____________________________________________
or Tool Notes and referral information

date
Module 6: Setting goals—Does the client have clear goals? Is the client satisfied with his or her
financial situation?
Goal setting tool
Module 7: Saving for emergencies, the unexpected, and goals—Does the client have money set
aside for emergencies or unexpected expenses?
Savings plan
Benefits and asset limits
Finding a safe place for

savings
Module 8: Managing income and benefits—Does the client have enough income?
Income and financial

resource tracker
Strategies for increasing

sources of cash and
financial resources
Cash, paychecks, direct

deposit, payroll cards, and
EBT— understanding the
pros and cons
Increasing your income

through tax credits
Module 9: Paying bills and other expenses—Does the client pay bills on time each month?
Spending tracker
Bill calendar
Strategies for cutting

expenses
When cash is short:
prioritizing bills and
spending
Module 10: Managing cash flow—Is the client able to make ends meet each month?
Cash flow budget
Cash flow calendar
Improving cash flow

checklist
Module 11: Dealing with debt—Is the client able to manage his or her debts?
Debt management
worksheet
Debt-to-income worksheet
Debt reduction strategies

worksheet
Module 12: Understanding credit reports and scores—Has the client ever reviewed his or her credit
report?
Getting your credit reports

and scores
Credit report review

checklist
Improving credit reports

and scores
Module 13: Evaluating financial service providers, products, and services—Has the client considered
using different financial products or services to manage income and pay expenses?
Selecting financial
products and providers
Evaluating financial
service providers
Basic definitions of
financial services
Opening an account
checklist
Module 14: Protecting consumer rights—Does the client know about basic steps to be protected from
scams, cons, fraud, and identity theft? If the client has a question or a problem with a financial
product or service, does he or she know how to contact the CFPB?
Red flags
Protecting your identity
Learning more about

consumer protection
Filing a complaint
This tool is included in the Consumer Financial Protection Bureau’s toolkit. The CFPB has prepared this material as a resource for
This tool may ask you to provide sensitive personal and financial information. The CFPB does not collect any information from you
or the organization using this tool. The CFPB is not responsible and has no control over how others may use the information that
you provide to them about your personal or financial situation. Be cautious how you use this tool. CFPB recommends that you do not
include names, account numbers; that you lock up completed hard copies and encrypt completed soft copies of the tool that contain
sensitive personal and financial information; and shred hard copies that contain sensitive personal and financial information when
no longer needed.
MODULE 6:
Setting goals
Every person or family has a different idea of the future they want to build. Some of the ideas
they have are focused on the next few months, and others are long-term. What do you want for
yourself and your family in the near future? What do you want to see in the next few years?
But people sometimes hesitate to set goals because they feel like their life is out of control and
that they can’t change the direction they’re going.
One way to think about financial empowerment is to begin by thinking about your goals. Once
you know where you are now and where you’d like to go, that can help you take the first step in
the direction you’ve chosen.
If you’re like most people, you’ll need money to achieve some of your goals. Your goals may
include, for example, having enough money to pay all of your bills each month, or having
enough money to pay off a short-term loan from a family member or lender. Your goals could
also include saving money to buy gifts at holiday time, set up an emergency fund, purchase a
used car, move to a nicer apartment, make a repair on your home, send your child to college, pay
for education for yourself, or put into a retirement account.
To start the process, ask yourself how you would like your life to be different. Ask yourself what
you really want most from life, too.
This process of figuring out where you want to go in life and knowing what you want to achieve
for yourself or for your family is called setting goals. As you know, depending on the goal, it can
take just a week, a month, or a few months to reach some goals. These are short-term goals. You
may also have long-term goals—things that will take many months or even years to reach.
Setting goals is a powerful process for thinking through your short-term and long-term future
and finding ways to turn your vision into reality. It helps you turn your needs, wants, hopes, and
dreams for the future into something concrete that you can take steps to achieve.
Setting goals helps you to:
 Work toward making your future better
 Prioritize how you spend your money so that it goes toward things that really matter to
you
 Measure and track your progress toward getting the things you want out of life
 Take pride in bettering your life and the lives of your children
Setting SMART goals

SMART goals have five important characteristics. They are specific, measurable, able to be
reached, relevant, and time bound. When setting a new goal, think about the following:
Ask yourself: Who will achieve or benefit from the goal? What is
specifically being achieved? Why is the goal important? Is this goal related
Specific to covering the expenses associated with an expected life event?
A specific goal has a much greater chance of being met than a general,
because it provides something defined to reach for.
Ask yourself: How much? How many? How will I know when it is done?
Measurable
You should be able to track your progress toward meeting the goal.
Ask yourself: Is this goal something that I can actually reach?
You might want to get out of high credit card debt tomorrow or become a
Able to be
millionaire in a year, but for most of us, those are totally impossible goals.
reached
That doesn’t mean that your goals should be easy. Your goal may be a
stretch for you, but it should not be extreme or impossible.
Ask yourself: Is this something that I really want? Is now the right time to
Relevant do this?
Set goals that matter to you and are a priority in your life.
Ask yourself: By what date must this goal be reached?
Goals should have a clearly defined time frame, including a target or
Timebound deadline date. This helps ensure they are measureable (Did I achieve the
goal by the target date?) and that actions are planned to reach the goal by
the date.
Here are some hopes, wants, or dreams you might have for your family and how they could be
translated into strong goals.
Hopes, wants, or dreams Strong goals
Short-term goal: I will review my budget to see if

there are ways to cut my spending by the end of the
I’d like to be able to pay all of my bills each month.
month. Short-term goal: I will meet with the Community
Action Program to see if I qualify for job training and
other benefits by the end of the month.
I really want to save some money in case

I will save $50 over the next six months to start an
something happens in the future and I lose
emergency fund.
my job.
I will pay down $1,000 of my debt over the next 18

I want to get out of credit card debt.
months.
Short-term goal: I will save $800 for the required

first month rent in the next six months so that I can
I’d like a safe, stable place to raise my move into a new apartment by June.
children. Long-term goal: I will save $3,000 for a down
payment, apply for additional down payment help,
and purchase a home in four years.
I will save $400 and purchase a new television in six

I’d like to buy a new television.
months.
Short-term goal: I will read to my child every night to

show that school and learning are important.
I’d like to help my child go to college.
Long-term goal: I will save $5000 in a fund to help
pay my child’s tuition in ten years.
Turning goals into savings targets
For goals that require money to reach, you will want to know: How much should I save every
week (or month) to meet my goal?
When figuring out how much you need to save every week to meet your goal, you need two
pieces of information: the total amount that you’d like to save and the number of weeks you have
to save. Then, you can plug those two pieces of information into this formula:
Number of Amount to set

Total amount
weeks to reach aside each
needed for goal
goal week
Here is an example: It is January 1st, and you’ve just set a new goal to save $500 in an
Emergency Fund by the time your kids start school at the end of August. You already have your
first piece of information: the total amount you’d like to save is $500. To get the second piece of
information, the number of months, just count the number of months from January to August
and multiply by 4. You should arrive at 32 (8 months X 4 weeks).
You can plug these numbers into the formula:
$500 ÷ 32 = $15.65 (rounded)
The formula shows that you would need to save about $15.65 every week in order to have $500
by the time your kids start school. (To get the monthly total, divide the savings goal by 8 months
instead of 32 weeks.)
Here is another example: It’s the beginning of May and your new goal is to save $500 to buy new
school shoes, clothing, and school supplies for your kids at the end of August. How much do you
need to save every week to meet this goal? Your first piece of information is that you need a total
of $500. To find the number of weeks you have to save, count the months from May until August
and multiply by 4. You have 16 weeks. Now, plug it in to the formula:
$500 ÷ 16 = $31.25 per week
You would need to save $31.25 per week (or $125.00 a month) in order to meet this goal.
After doing these examples, did you notice how the three pieces of information (total amount of
savings, number of weeks, and amount needed to save every month) are related to each other?
Though the amount of total savings is the same in both, you’d need to save more each week in
the second example, because you have fewer weeks to save. This relationship is a good rule to
remember.
If you shorten your length of saving time (like from 32 weeks to 16 weeks), but keep your money
goal the same ($500), you will need to increase the amount of savings per week (from $15.65 to
$31.25) to reach your goal.
It’s helpful to use this formula when figuring out if your goal is actually reachable. For example,
in September you decide to buy a new television by the end of November. You’ve looked at
models, and the one you want is $600. If you start saving at the beginning of September, you
have twelve weeks to save. You can plug this into the formula to see how much you’d need to
save each month.
$600 ÷ 12 = $50 per week
You would need to save $50 every week (or $200 every month) in order to meet this goal. But
what if you don’t have $50 extra dollars in your cash flow budget? Does that mean buying a new
television is a bad goal?
No – it just means you need to make an adjustment to either the amount of savings or to the
length of time you have to save so that the goal is attainable. Are you willing to buy a less
expensive television? Here is an example of adjusting your goal and purchasing a less expensive
($300) television:
$300 ÷ 12 = $25 per week
By lowering the total amount of savings to $300, you bring your monthly weekly savings to $25,
which might fit more easily into your cash flow budget. But if you don’t want to buy a less
expensive television, what else could you do to make this goal attainable? You can decide to
lengthen the savings period. Instead of saving for three months, you extend the time to six
months or 24 weeks to save for the television:
$600 ÷ 24= $25 per week
By giving yourself 24 weeks to save instead of 12, you can bring your weekly savings down to $25
and purchase your desired television in February instead of November.
Once you have your savings goal, be sure to add it into your budget or cash flow budget. For
more information on cash flow budgets, see Module 10: Managing cash flow. For ideas on
finding money to save for your goals, see Module 7: Saving for the unexpected, emergencies,
and goals.
What about revising goals?

Goals aren’t something to set and then forget. You need to keep your goals in sight, and you may
sometimes need to revise them when:
 The goal has been achieved
 The amount of saving every week or month toward the goal exceeds what makes sense
for your family
 Emergency savings are used and need to be replenished
 Your circumstances change (such as when you lose a job or get a new job, start earning
more money, have a new child, have a health emergency, etc.)
 Your values change and a goal no longer feels relevant
To revise one of your goals, take a look at what has changed.
If one of your goals has been achieved, it’s time to start the process again and set a new goal.
Think about what you want for yourself and your family and create a new goal.
If the amount of saving every week or month toward the goal exceeds what is possible for you,
think about if you can change either the length of time you have to save or the total savings. Ask
yourself if this goal can wait a bit longer. If it can, adjust the length of time you have to save,
which will bring down the amount of your weekly or monthly savings. If you can’t adjust the
length of time, you can lower the amount of total savings, which will also bring down the
amount of your weekly or monthly savings.
If your Emergency Savings have been used, they’ve done their job. Now it’s time to replenish
them. Create a new goal by figuring out how much Emergency Savings you’d like to have and by
when. Calculate the amount you need to save weekly or monthly and start saving. (See Module
7: Saving for the unexpected, emergencies, and goals for more information on this topic.)
When your circumstances change (such as when you lose a job or get a new job, start earning
more money, receive a lump sum from a tax refund or inheritance, have a new child, have a
health emergency, etc.), take stock of your new situation and your goals. If you have less money
to put toward savings goals, adjust the length of time and/or the total savings for your goals to
make them manageable in your new situation. For example, if you get a tax refund, consider
putting some of the lump sum toward one of your goals. This may help you reach the total you
need for a goal faster.
When your values change and a goal no longer feels relevant, think about what you want for
your family in the future. If the goal you set before no longer feels relevant to your life, set it
aside and begin setting new goals that do feel relevant.
Savings accounts for children
Clients who want to teach their children about saving may be able to start a savings
account for their children. Each financial institution has its own policies, so research both
local and online bank and credit union options.
What are the benefits of opening a savings account for a child?
 Providing a safe place for a child to put money earned or received as gifts
 Introducing a child to saving and using financial services
 Helping a child to build assets and learn to plan for the future
Saving for education

Clients with children may want to work toward making a better life for their children. Saving for
children’s postsecondary education or training may be a financial goal for these clients, because
they see them as a path to “a better life.”
Postsecondary education, which means training or education after completion of high school,
can be an important investment of both time and money. Training and education after high
school graduation (including completion of a General Education Development test or GED) is
likely to lead to higher wages on average, less chance of unemployment, and a greater chance for
financial security.
FIGURE 1: MEDIAN WEEKLY EARNINGS, 2012
$2,000
$1,500
$1,000
$500
$
Source: Bureau of Labor Statistics, Employment Projections. Education Pays…, accessed April 2014. See
http://www.bls.gov/emp/ep_chart_001.htm.
Saving for children’s education can help pay for the costs associated with training and education
after high school. These savings can also reduce the amount of money that must be borrowed
and may increase the number of options children have for schooling after high school.
There are many financial products geared toward helping people save for children’s education,
but the first step is setting a goal and setting aside money specifically for it. Once someone has
done this, he can save for postsecondary education in a savings account, a certificate of deposit,
or an investment option designed specifically to help people save for postsecondary education.
One option is a 529 college savings plan. These are tax-advantaged savings plans designed to
help parents, guardians, and grandparents save for children’s education. For more information
on saving for college using a 529 Plan, visit http://www.collegesavings.org.
Tool 1:
Goal setting tool

This tool can help you with the goal-setting process. Why are goals important? Identifying goals
helps you plan for and reach what is most important to you. And when it comes to your finances,
goals provide the direction for all of your plans. If you don’t plan to save for your goals, you
probably won’t. And in order to save for your goals, you have to know how much money you’ll
need and by when.
There are three steps in the goal-setting process:
 Step 1: Brainstorm a list of the hopes, wants, and dreams for yourself or your family.
Determine whether they are short-term or long-term. Write these in the chart below.
 Step 2: Turn your hopes, needs, wants, and dreams into SMART goals using the second
worksheet.
 Step 3: Finally, figure out how much you need to save each week (or month) to reach
your goal using the final section of the worksheet.
If you decide to make a budget or a cash flow budget (See Module 10), be sure to
add in your monthly savings goals.
Step 1: Brainstorm list of hopes, wants, and dreams

Fill in the chart below by listing the hopes, wants, and dreams you have for yourself and your
family. Write the things you hope, want, or dream about achieving in less than six months in the
short-term column. Write the things you hope, want, and dream about achieving in more than
six months in the long-term column.
Short-term Long-term
What I want to achieve for myself or my family What I want to achieve for myself or my family
within six months. that will take more than six months.
Step 2: SMART goals

Use the list of brainstormed hopes, wants, and dreams to create SMART goals. Use the checklist
to make sure your goals specific, measurable, able to be achieved, relevant, and time bound.
You may have many things you want to achieve. If you can focus on one or two, you may have a
better chance of reaching that goal. (If you want to write more than one short-term goal and one
long-term goal, make another copy of the worksheet for this step.)
Short-term goal
Goal:  Specific
 Measurable
 Able to be reached
 Relevant (important to you)
 Time bound (is there a
deadline?)
Long-term goal
Goal:  Specific
 Measurable
 Able to be reached
 Relevant (important to you)
 Time bound (is there a
deadline?)
Step 3: Figure out weekly savings target
Use the chart below to figure out how much you need to save for those goals that need money.
Start with the goals you circled above and then calculate your monthly savings goal. Note: To
figure out an estimated weekly goal, divide your “monthly savings goal” by 4.
Goals Amount Number of weeks to Amount needed ÷

needed deadline Number of weeks to
deadline = Weekly
savings goal
Short-Term
Example: I will save $50 $50 24 weeks $50 ÷ 24 = $2 per week

within 6 months to start an (about $8 per month)
emergency savings fund.
Goal:
Long-Term
Goal:
Once you have your savings goal, be sure to add it into your budget or cash flow budget. For
more information on cash flow budgets, see Module 10: Managing cash flow. For ideas on
finding money to save, see Module 7: Saving for the unexpected, emergencies, and goals.
Resources
For additional resources, visit the Consumer Financial Protection Bureau website:
http://www.consumerfinance.gov/AskCFPB
If you have a consumer complaint, visit:
http://www.consumerfinance.gov/complaint
no longer needed
MODULE 7:
Saving for the unexpected,

emergencies, and goals
What is savings?
Savings is money you set aside today to use in the future. People save for many reasons. Two big
reasons they save are for:
 Unexpected expenses and emergencies
 Their own goals, like a new TV, appliances, a home, their children’s education, and
retirement
Why save for unexpected expenses and emergencies? Because they will happen.
Everyone has unexpected expenses and emergencies—this could be a suddenly needed car
repair, the need to travel to help a sick family member in another state, a cutback in hours or
even the loss of a job.
When you save for unexpected expenses and emergencies in advance, you can handle them
when they happen without having to skip paying your other bills or borrow money. Saving will
help you save the additional costs of being late on bills or borrowing to cover those extra costs
that can make it harder to reach your goals.
When you skip paying other bills to pay for an emergency, you often pay late fees. And if it
results in loss of service (your utilities are shut off, for example), then you have to come up with
more money to turn them back on.
When you borrow money, you have to pay fees and sometimes interest. And on top of that, you
will have to use some of your income going forward to pay back the money you borrow.
Borrowing money to cover unexpected expenses and emergencies both costs you more and uses
up some of your income every month until you have paid back the money. So saving money now
for unexpected expenses and emergencies can save you money later.
How to save
Anyone who has tried to save knows that setting money aside isn’t as easy as it sounds. First,
you have to make the decision to save. Then you also have to find the money to save. There are
basically only two ways to find money to save:
 You can decrease spending on one item or many things. Then, put that money
“not spent” into savings. The easiest way to find a chunk of money to save is to eliminate
one major cost. This may mean cutting back on television services (from premium cable
service to basic), phone service (from unlimited texts and calling to a limited or prepaid
plan), or on a service you’re paying for but may not be using.
If there are not “major costs” to cut, you may have to cut back a little bit in several
different categories of spending—cutting out one meal out per month, for example, or
consolidating errands to spend less on gasoline.
But the big challenge is turning that “money saved” into savings. You have to move that
money you have saved by not spending it into a savings jar or envelope in your home and
then into a savings account at a bank or credit union or a savings bond. If you don’t have
a place to set it aside, it can be easy to spend it instead of save it.
 You can also increase your income. This can mean taking another part-time job or
ensuring you file your taxes and claim tax credits you qualify for. For example, your tax
refund can be saved for emergencies or unexpected expenses, set aside for annual
expenses (back to school or holiday shopping), used to pay down debts, used to take care
of car repairs, or set aside for household maintenance. Again, you must make sure that
some of that new income gets moved into the place you have decided to save it. You can
use Tool 1: Savings plan to figure out why you need to save, how much you need to save,
and how you can start to find the money to save. Tool 4: Increasing your income
through tax credits explains the Earned Income Tax Credit (EITC) and the Child Tax
Credit and how they can help you increase the income you have available to pay bills, pay
down debt, or save for your goals.
Savings and public benefits
If you are receiving public benefits, you may want to know about asset limits. Asset limits are
rules about how much you can have in assets before your benefits are reduced or eliminated.
Different benefits have different limits.
Assets are things you own that have value. Your money in a savings or checking account is an
asset. A car, home, business inventory, and land are examples of assets, too.
Assets help you build financial security for you and your family. But if you receive public
benefits, some of your assets may affect the benefits you receive. Generally, the assets
that may be counted when applying for benefits are “liquid”—money in checking accounts,
savings account, and investment account are examples of liquid assets. If you own your own
home or a car, these assets will generally not count against qualifying for benefits.
You can use Tool 2: Benefits and asset limits to understand the asset limits of the benefits you
receive. This can help you save without unexpectedly losing your benefits.
Savings plan
Did you know that most people in the U.S. don’t have enough savings to cover a $1,000
emergency?4 Whether you have low income or high income, most people can expect around
$2,000 worth of unexpected or emergency expenses in a year.5 These unexpected expenses
include medical bills that aren’t covered by insurance, auto repairs, home and appliance repairs,
and bills that you still have to pay if you lose your job are the most common. For individuals
with fluctuating or seasonal income, the amount of money needed to cover weeks or months
when the income is less than expected or nonexistent will be even greater than the $2,000 for
unexpected or emergency expenses.
4 Dickler, Jessica, Most Americans can’t afford $1000 in emergency expenses, CNN Money, August 11, 2011. See
http://money.cnn.com/2011/08/10/pf/emergency_fund.
5 Consumer Federation of America. See http://www.consumerfed.org.
What is a savings plan? A savings plan is a plan that includes:
 The reasons you are saving. This could include your goals, setting up an emergency
fund, money to pay for your automobile insurance in three months, money to cover the
months you are likely to be laid off due to seasonal availability of work, or to ensure you
have enough money set aside for back to school expenses.
 The amounts you need to save. This is the total amount of money you need to save.
You do not need to save this all at once. Your savings plan will help you come up with an
amount of money you can save each and every month to reach all of your savings goals.6
 How you are going to find that money to save. These are the specific strategies
you are going to use to find that money to save. Most people do not have unused income.
They have to make choices about cutting back on one expense (or more) to afford
something else. Or they have to figure out a way to get more income. Another strategy is
using direct deposit or transfer of a set amount into a savings account if you have a
regular paycheck. Tool 4: Increasing your income through tax credits explains the
Earned Income Tax Credit (EITC) and the Child Tax Credit and how they can help you
save for your goals.
 Where you are going to put that savings. You have to work hard to save money.
You want to make sure you put it in a safe and secure place. An important part of your
savings plan is identifying specifically where you will put the money you have saved.
6 While the target amount for an emergency fund will vary from person to person based on their needs, $500 to
$1,000 has been suggested as a starting point. See http://www.AmericaSaves.org.
Emergency fund
An emergency fund or a rainy day fund can be an important part of your savings plan.
Having your own money set aside to cover unexpected expenses can save you money,
because you won’t pay interest, fees, or other costs that come from borrowing the money
you need.
How much should you save? Start with $500 as your goal. This is enough to cover a lot of
common emergencies: many car repairs, a plane ticket to care for a sick family member,
or to pay minor medical costs.
Once you reach $500, consider reaching for $1,000. This may be enough to cover your
rent if you lose your job, take care of major car repairs, and pay for many household
repairs.
What are the benefits of a savings plan?

 Your plan builds your own personal safety net one paycheck at a time.
 As you build savings, you can have peace of mind knowing you have a little set aside for
the unexpected or emergencies.
 As you watch small amounts add up, you’ll move closer to reaching your goals and
almost always pay less than when you use credit and rent-to-own.
 And, you’ll save money by avoiding late fees, interest charges, and other costs related to
not covering expenses or borrowing money. And when you avoid borrowing, you don’t
have to commit future income to paying off your debt.
Here is an example scenario using different options for taking care of emergency expenses. The
example examines the costs of paying for an unexpected expense with emergency savings, a
credit card, or a payday loan.
COST TO REPLACE SPARK PLUGS ON YOUR AUTOMOBILE = $350.
Emergency
Credit card Payday loan
savings
Amount $350 $350 $350
$15 for every $100 borrowed for 14 days.

21.99% annual percentage rate
APR7 This means a 391% annual percentage
(APR)
rate (APR).8
Must pay at least a certain Must pay back loan amount ($350) plus
amount each month.9 (For the fee ($52.50) within 14 days. If entire loan
Payment purposes of the example, the cannot be paid within 14 days, it can be
individual is choosing a fixed rolled over (or extended) for another 14
monthly payment of $50.) days for an additional fee of ($52.50).10
The total cost depends on how long it

You would pay $28.11 in interest
Total takes you to save up to pay back the
in addition to the principal
cost and entire loan. If you renew or roll over this
$0 borrowed. It will take just over
time to loan seven times, you would be in debt
eight months11 to pay back the
repay for 14 additional weeks and could pay up
full amount.
to $367.50 in fees.12
7 These are for example purposes only. Actual credit card and payday loan terms vary, and some states restrict payday
loans. The CFPB notes that, APRs on credit cards can range from about 12 percent to 30 percent. For payday loans,
the CFPB notes that the cost of the loan (finance charge) may range from $10 to $30 for every $100 borrowed. A
typical two-week payday loan with a $15 per $100 fee equates to an APR of almost 400%. See CFPB, What is a
payday loan? November 6, 2013. See http://www.consumerfinance.gov/askcfpb/1567/what-payday-loan.html.
8 Some states have adopted laws that limit the amount of loan above a certain amount and/or limit the interest rates
of these loans.
9 Most credit card companies allow customers to pay a percentage of the amount owed, which makes the minimum
payment vary from month to month. For the purposes of this example, we are showing a fixed monthly payment.
10 These numbers and terms are for example purposes only. Actual costs and terms of payday or signature loans will
vary. See Consumer Financial Protection Bureau, Payday Loans and Deposit Advance Products: A White Paper of
Initial Data Findings, April 24, 2013. See http://files.consumerfinance.gov/f/201304_cfpb_payday-dap
whitepaper.pdf.
11 To pay off this credit card balance in full, the individual will have to make $50 payments for seven months, and
then pay just over $28 in the eighth month.
12 Two–thirds of repeat payday borrowers take more than seven loans in one year. Consumer Financial Protection
Bureau, Payday Loans and Deposit Advance Products.
A safe place to save
Setting aside money to save can be hard and it’s important to understand the risks and the
benefits of each of the places you can put the money until you want or need to use it. As you
consider the options, you’ll want to make sure to be aware of the potential costs of each financial
product.
Tool 3: Finding a safe place to save can help you identify where you’d like to keep your savings.
Federal insurance for financial institutions

There are two agencies established by the federal
government to make certain that the money people
deposit in banks or credit unions will be there when
the person wants to withdraw it. The Federal
Deposit Insurance Corporation (FDIC) insures
money in banks. The National Credit Union
Administration (NCUA) insures money in credit
unions.
In general, the limit is $250,000 per depositor, per

insured institution. So, if you have no more than
$250,000 in a savings account in an insured bank
and the bank fails, you will get all your money back.
The FDIC and NCUA do NOT insure money that
people use to invest in stocks, mutual funds, life
insurance policies, annuities, or other securities,
even if they are purchased from a bank or credit
union.
How will you know if deposits in a bank or credit union are insured? You can look for these
FDIC or NCUA logos. These will be on the door, displayed on the bank or credit unions websites,
or on all materials from the bank or credit union.
Direct deposit and savings
If you receive a regular paycheck, one way to build savings is through direct deposit into a bank
account or onto a payroll card.
 Using direct deposit saves you both time and money. You don’t have to get your
check cashed to use it. And the funds are generally available as soon as they are
deposited. That means you get paid on time, even if you aren’t working on payday and
that you get paid at the start of the payday, not the end of the day.
 If you have a bank account, you can arrange to have some of the money
deposited moved automatically to a savings account. If your weekly paycheck of
$245 is directly deposited into your checking account every week, you can have $10
automatically transferred into a savings account. Once you set this system up, you may
forget about that $10. And by the end of the year, you will have over $500 in that
account.
If your employer allows you to split your direct deposit, consider putting some of your paycheck
into savings and the rest into your checking account for your bills and other expenses. Some
payroll cards have a savings or “purse” feature. This feature lets you set aside some of your
paycheck on the card for savings. You will need to find out the specific features and fees of the
payroll card offered through your employer.
Check with your employer to learn more about direct deposit.
Your banking history report

If you are considering opening a savings account, it’s important to understand the impact that
your banking history report may have on the type of account you may be able to open. The
information below can help you learn more and take action to correct any mistakes in your
report.
When you complete the application to open an account at a bank or credit union, the bank or
credit union often contacts specialty consumer reporting agencies that have information on
checking account history. Banks and credit unions contact companies like ChexSystems,
TeleCheck, Early Warning, and others like them to find out if you have had prior difficulties
using a checking account, including writing bad checks or suspected fraud.
These agencies collect information about how consumers manage savings and checking
accounts. They do this for financial institutions that are a part of their network. Financial
institutions use the information to assess the risk of opening an account for a specific person
based on his or her past history of managing similar accounts.
The report includes information about the accounts that have been reported (routing transit
number and/or account number), date information was reported about an account, and then the
reason for the report. The report also includes retail information, which refers to returned
checks. Retailers and other businesses report this type of information to SCAN (Shared Check
Authorization Network).
If you are denied a checking account based in whole or in part on a report from any of these
specialty consumer reporting agencies, you have the right to a free disclosure of certain
information in your file from the agency. The notice you receive from the bank or credit union
will give you the name, address, and phone number of the consumer reporting company and
how you can contact it to obtain your free disclosure.
If you find mistakes, you can dispute these by sending a letter (you may use regular or certified
mail) describing the mistake and including copies of any evidence.
You can order your own free ChexSystems report online at www.consumerdebit.com, call for
more information at (800) 428-9623, or send a written request to: Chex Systems, Inc., 7805
Hudson Road, Suite 100, Woodbury, MN 55125.
You can request your annual file disclosure from TeleCheck Services by calling (800) 366-2425.
You can order your TeleCheck Services Report by sending a written request and include a
daytime phone number, a copy of your driver’s license, your social security number, and a copy
of a voided check to: TeleCheck Services, Inc., Attention: Consumer Resolution – FA, P.O. Box
4514, Houston, TX 77210-4515.
To request your Early Warning report, call (800) 325-7775.
Tool 1:
Savings plan
This tool can help you make a plan to save money for your goals, expenses, and unexpected
expenses and emergencies.
There are two steps to making a savings plan. First, answer the set of questions below to see if
setting up an emergency fund or rainy day fund may be right for you. If yes, complete the
savings plan using the worksheet. To complete this worksheet, you will need to know:
 Your savings goals. If you haven’t set these, consider using the information and tools in
Module 6: Setting goals.
 Strategies you can use for saving money. The worksheet encourages you to be as specific
as possible. See the example in the worksheet to get started.
 Where you will put the money you save.
Answer the following questions to see if setting up an emergency fund or rainy day fund may be
right for you and your family.
Goals: Do you have the savings needed to reach your goals? Yes No
Expenses: Do you have money set aside for expenses that come one to
four times per year?
Yes No
For example, automobile insurance, renter’s insurance, back to school
expenses, birthdays, holidays (gifts, special food, etc.)
Unexpected expenses and emergencies: Do you have money set aside

for unexpected expenses or emergencies?
Yes No
For example, a flat tire or other car trouble, medical expenses, need a new
appliance, job loss
Living expenses for months no income or income that is less than

expected: Do you have money set aside to cover your living expenses Yes No
during the months you will be earning little or no income?
If you answered no to any of these questions, developing a savings plan may be a great next step
for you.
For questions above to which you answered “no,” how do you pay for goals, expenses that come
one to four times per year, and unexpected expenses and emergencies? Check all that apply to
you.
____ I don’t know. It just seems to work out.
____ I don’t pay other bills to cover the emergency or unexpected expense.
____ I borrow money from other family members or friends.
____ I get a payday loan.
____ I get cash through a pawn shop.
____ I use a credit card.
____ I use a refund anticipation loan (RAL).
____ I use my tax refund.
____ I use a car title loan.
Savings plan 13
Name _________________________________________ Date ______
Amount Safe and

Total Months Monthly
Savings saved secure
amount to reach amount Strategies for saving
goal per place for
needed goal to save
month savings
Cut back to basic cable $40 Savings

account
Example: To Cut out one fast food meal at a bank
save $1,000 $60 or credit
per week for family
in an union.
$1,000 10 $100
emergency Will
fund within generally
10 months. Total saved per month $100 require a
minimum
deposit
Once you have your savings plan, be sure to add it into your budget or cash flow budget. For
more information on cash flow budgets, see Module 10: Managing cash flow. For more
information on setting up an account to save in, see Module 13: Evaluating financial service
providers, products, and services.
13 This table refers to a monthly savings plan. The training also emphasizes irregular savings deposits as well from
such places such as Federal and State EITC returns. An example could include depositing $200 of a $2,000 EITC
return.
information when no longer need
Tool 2:
Benefits and asset limits

If you are receiving public benefits, you may want
to complete this tool to know how your savings Asset limits and savings
might affect your benefits.
Even if you receive public benefits,
Assets are things you own that have value. Your you can generally have some savings.
money in a savings or checking account is an Savings are important for building
asset. A car, home, business inventory, and land your financial stability. Knowing your
are examples of assets, too. state’s asset limits can help you make
a savings plan.
Assets help you build financial security for you
and your family. But if you receive public
benefits, some of your assets may affect the benefits you receive. Generally, the assets that may
be counted when applying for benefits are “liquid”— money in checking accounts, savings
account, and investment accounts are examples of liquid assets. If you own your own home or a
car, these assets will generally not count against qualifying for benefits.
If you have saved money from the Earned Income Tax Credit, this savings is not counted against
your limit for up to 12 months.
Do you receive public benefits? Yes No
For example, food stamps (SNAP), cash assistance (TANF),

Supplemental Security Income (SSI), Medicaid, etc.
If you answered “yes” to the question above, you may want to review the following tool with your
case manager.
It is important to note that some benefits are federal, and some benefits come from the state. Be
sure you find out the rules that apply to the benefits you get in your own state.
Your case manager will share with you a completed copy of this chart. Please note that rules
regarding benefits change regularly, so check this annually to ensure accuracy.
Do you Contact and other

Benefit14,15 Asset limits
have this? information
Up to $2,000 in countable
resources (bank account) or
SNAP16 $3,250 if one household
Supplemental member is over 60 or
Nutrition Program, disabled17
also called Food
Stamps States using broad-based
categorical eligibility have no
asset limits.18,19
TANF - Temporary
$2,000 to $3,000 in most
Assistance for Needy
states
Families
SSI - Supplemental $2,000 if single

Security Income $3,000 if married
14 This information is current as of January 2013 and pertains to rules for 2012.
15 United States Department of Agriculture Food and Nutrition Service. See http://www.fns.usda.gov/snap/eligibility.
16 In general, only your liquid assets – like cash or money in savings or checking account – are counted. This means
that you may still eligible to receive benefits even if you own a home or, sometimes, a car. Whether an asset counts
against the limit depends on the program and the state.
17 Certain resources are NOT counted, such as a home and lot, the resources of people who receive Supplemental
Security Income (SSI), the resources of people who receive Temporary Assistance for Needy Families (TANF,
formerly AFDC), and most retirement (pension) plans. The procedures for handling vehicles are determined at the
state level. See United States Department of Agriculture Food and Nutrition Service,
http://www.fns.usda.gov/snap/eligibility.
18 States have had the option to enroll people using broad-based categorical eligibility. This effectively eliminates the
asset test specifically for SNAP because people are enrolled based on their enrollment in other programs. See
http://www.fas.org/sgp/crs/misc/R42054.pdf.
19 United States Department of Agriculture Food and Nutrition Service. See

http://origin.www.fns.usda.gov/snap/rules/Memo/BBCE.pdf.
Do you Contact and other
Benefit14,15 Asset limits
have this? information
SSDI
Social Security No asset limits
Disability Insurance
Rental assistance
Energy Assistance
No asset limit test due to

Affordable Care Act
Family Medicaid20
Regulations that took effect
in 2014
No asset limit test in most

State Child Health
states; contact state
Insurance Program
administrator for details.
Other:
no longer needed.
20 See https://www.federalregister.gov/articles/2012/03/23/2012-6560/medicaid-program-eligiblity-changes
under-the-affordable-care-act-of-2010#h-28.
Tool 3:
Finding a safe place for

savings
Setting money aside can be hard. It often means you have to cut back on spending somewhere
else. For example, you may have given up premium cable or satellite dish service for basic. Or,
you have found a way to bring in more income – you’ve taken on a part-time job, or you received
a tax refund.
Once you have set money aside, you need to find a safe place to store that money. For some
people, a secret place in their home may feel like a safe place. For other people, it may be an
account in a bank or credit union.
If you do not know where to put your money or want to make sure the place you have chosen is
safe, use the following tool. Think about the benefits and risks of each option. There are some
benefits and risks of each option listed already to get you started.
Safe place
to keep Other important
Benefits Risks
your information
money
No costs for maintaining Can be lost, stolen or

A secret it destroyed in a fire or natural
place in disaster
Easy to access
your home Might put you at risk of a
Convenient home invasion crime
Can be lost, stolen or

With a destroyed in a fire or natural
family No costs for maintaining disaster
member or it Might put your friend or
friend family member at risk of a
home invasion crime
Safe place
to keep Other important
Benefits Risks
your information
money
May have fees for activation,

loading funds, using the Check the card
On a card, etc.
Easy to access agreement to ensure
prepaid
May not be insured for you or that you understand
debit card Convenient
have the same protections the fees and whether
(stored
No account needed from loss or theft as a you have protection
value card)
savings account if the card or from loss or theft.
PIN are lost or stolen.
If the institution is You may not be able

federally insured, up to to open an account for
$250,000 per depositor a period of time if you
is protected. have had an account
In a
federally Unlike cash, the money closed because of
May be charged fees if you unpaid account fees
insured cannot be lost, stolen, or
do not follow the rules for the and debts in the last
savings or destroyed in a fire or
account five years.
checking other disaster.
account Be sure you
You can generally get it
back if someone steals it understand any
by stealing your ATM or monthly fees and other
debit card. fees.
The money cannot be

lost or destroyed in a fire
or other disaster. If you
U.S. have a paper bond, the You lose some of the interest
Savings funds can be recovered if you cash the bond before it
Bonds matures.
The rate is guaranteed
for the length of the
bond.
Other
Based on this information, the best place for me to keep my savings is: ________.
no longer needed.
Tool 4:
Increasing your income

through tax credits
Tax credits can make a big difference. They may give you a refund that can be saved for
emergencies or unexpected expenses, set aside for annual expenses (back to school or holiday
shopping), used to pay down debts, and more. The Earned Income Tax Credit (EITC) is a benefit
for working people who have low- to moderate-income. Your tax refund is based on your income
and filing status.
For the 2013 tax year the following income limits and maximum tax credits apply:
Income limit if filing as

Income limit if married
Household size single or married filing Maximum tax credit
filing jointly
separately
Three or more
$46,227 $51,567 $6,044
qualifying children
Two qualifying
$43,038 $48,378 $5,372
children
One qualifying child $37,870 $43,210 $3,250
No qualifying children $14,340 $19,680 $487
Also, investment income must be $3,300 or less for the year.
Your kids are “qualifying children” if:
 They have lived with you in the U.S. with you (or your spouse if married filing jointly) for
more than half of the year;
 Are under age 19 or under age 24 if they are a full-time student or are “permanently and
totally disabled;” and
 Are related to you: your son, daughter, stepchild, eligible foster child, brother (including
step or half), sister (including step or half) or are a descendant of any of these.
If you do not have any qualifying children, you may still be entitled to the credit if you are
between ages 25 and 65, live in the U.S. for half of the year, and do not qualify as a dependent
for anyone else.
There is also a Child Tax Credit, which reduces the taxes you owe. If the amount of your Child
Tax Credit is greater than the amount of income tax you owe, you may be able to claim the
Additional Child Tax Credit. The Child Tax Credit phases out if your adjusted gross income
exceeds the following:
 $110,000 if married filing jointly
 $75,000 if single, head of household, or qualifying widower
 $55,000 if married filing separately
This information changes every year. To make sure you have the most current
information, visit: http://www.irs.gov/Individuals/EITC-Income-Limits,-Maximum-Credit-
Amounts-and-Tax-Law-Updates.
More information on the Child Tax Credit is available here: http://www.irs.gov/uac/Ten-Facts

about-the-Child-Tax-Credit.
Be sure to visit a Volunteer Income Tax Assistance (VITA) Program to file your taxes and make a
plan to use your tax refund. The volunteers are trained by the IRS, and getting your taxes done
doesn’t cost you anything. This preserves your income. This can make a big difference in your
ability to start and fund your savings and in your life. Find one at
http://irs.treasury.gov/freetaxprep or call (800) 906-9887.
Resources
The CFPB has prepared this material as a resource for the public. This material is provided for educational and information
purposes only. It is not a replacement for the guidance or advice of an accountant, certified financial advisor, or otherwise qualified
professional. The CFPB is not responsible for the advice or actions of the individuals or entities from which you received the CFPB
educational materials. The CFPB’s educational efforts are limited to the materials that CFPB has prepared.
MODULE 8:
Managing income and

benefits
Income
Income is the money that comes into your household. You use income to pay for the things you
need and want. You get income from part- or full-time work, self-employment, and investments.
You can also get income in the form of gifts from others, tax refunds, or even inheritance.
Income can be regular—this means it comes into your household on a schedule and in an
amount that you can count on. Or it can be irregular—this means you cannot predict
accurately when you will receive it or how much you will receive. These ups and downs can make
it hard to be sure that you’ll have money to pay your bills and have enough on hand for expenses
like food and transportation.
Sometimes income is seasonal—you may receive it for only some months out of the year. For
example, if you work in the building industry, you may be very busy with work from March
through November, but not working at all from December through February, especially if you
live in a northern state. Finally, income may be a one-time occurrence. Your tax refund is an
example of a one-time source of income within a year.
Managing income can be very challenging if it is irregular, seasonal, or one-time-only, because

you may not know how much money is coming in or when it will be coming in. Your bills and
expenses, however, continue. For example, even if your income does not come in, your rent will
still be due every month.
It can also be hard to use irregular, seasonal, or one-time income to cover expenses in the
months you may not have income. When you have the money, you may need or want to spend it
rather than setting it aside for bills and expenses in other months.
You can use Tool 1: Income tracker to figure out if your income is regular, irregular, seasonal, or
one-time within a year. It is the first step in planning how you can manage your income
differently to cover spending in months you may not have income. This is also an important step
in creating a cash flow budget, which is explained in Module 10: Managing cash flow.
If you find that your income is less than you need or want, you can use Tool 2: Strategies for
increasing income and resources.
Benefits
Benefits are payments from local, state, or federal government. They are designed to help
individuals and families that do not have the resources to cover their basic living expenses.
You can only get benefits if you apply for them. And then, you will only receive them if you
qualify for them. For most benefits programs, eligibility is based on:
 Income
 Circumstances – whether you have dependents or have a disability, for example
 Assets – savings, a vehicle (or more than one vehicle), money in investments, for
example
Benefits are like income in that they can be used to pay for some of the things you need. The
difference between income and benefits is that benefits may often only be used for a specific
purpose. For example, if you qualify for the Supplemental Nutrition Assistance Program
(SNAP), you can only use those benefits to purchase groceries. If you qualify for Medicaid, you
can only use those benefits to cover qualified health expenses.
Benefits are important financial resources that cover living expenses. That’s why it is important
to track benefits the same way you keep track of your income. Having benefits can also free up
cash to pay for other living expenses not generally covered by benefits, such as:
 Utilities
 Gasoline for an automobile
 Car repairs
 Cell phone service
 Debt repayment
In some states, people receive their unemployment benefits and other government benefits on a
prepaid card.21 Instead of getting checks, they receive a card, and each month the benefit
amount is loaded onto the card. These government benefit cards are sometimes called Electronic
Benefit Transfer (EBT) cards.
The federal government also provides prepaid cards for receipt of certain federal benefits, such
as veterans’ benefits or Social Security benefits. In most cases, you can also choose direct deposit
to a checking or savings account or a prepaid card of your choice.
If your EBT card is lost or stolen, be sure to call to report it lost or stolen right away—the
number you call will depend on the issuing agency. If someone else uses the card and PIN
number, there is chance these benefits will not be replaced.
The amount you can be charged in fees for using the card depends on the contract between the
government agency and the financial institution providing the card account. Be sure to read the
cardholder’s agreement carefully before using the card.
One major advantage of both EBT cards and direct deposit to a checking account or prepaid card
for benefits is that individuals do not have to go anywhere to pick up benefits each month.
Benefits are automatically transferred to the household’s account or card each month on a
specific date.
Getting income
There are different ways to receive income and benefits. In some situations, you do not have a
choice. For example, some public benefits you must receive using EBT where benefits are
directly deposited to a card or a bank account. Some employers may only pay you using a
traditional paycheck. You may get your income in one or more of the following ways:
 Cash
21 Some states also distribute child support via prepaid card.
 Personal check
 Paycheck
 Direct deposit (to a checking or savings account or prepaid card)
 Payroll card (prepaid card arranged by employer)
 Electronic benefits transfer (EBT)
Why does this matter? Each way to get income has advantages and disadvantages. Some of these
advantages and disadvantages may make it easier or harder for you to manage your income. To
better understand the pros and cons of each method, use Tool 3: Cash, paychecks, direct
deposit, payroll cards, and EBT—understanding the pros and cons.
After you have you have tracked your income, be sure to add it into your budget or cash flow
budget. For more information on cash flow budgets, see Module 10: Managing cash flow.
Garnishments
There are two kinds of garnishment:
 Wage garnishment—your earnings are garnished or attached to pay for a debt
 Nonwage garnishment—money in a bank account is attached or garnished to pay for

a debt
Wage garnishments give the government or creditors the right to collect money directly out
of someone’s paycheck. This can generally only happen with a court order.
Common reasons for wage and nonwage garnishment are:
 Taxes owed to the IRS or the state
 Money owed for child support
 Money owed for delinquent student loans
 Other unpaid or delinquent debts such as credit card or medical debt
With a wage garnishment order, only a certain percentage of the employees disposable earning
can be withheld. Title III of the Consumer Credit Protection Act details the limits the wage
garnishments. Generally, the amount must be the lesser of two figures:
 25% of disposable income
or
 The amount that a person earns each week over the federal minimum wage ($7.25) times
30 ($7.25 X 30 = $217.50). (Note that the federal minimum wage is subject to change.
See http://www.dol.gov for updates.)
All mandatory deductions are protected from garnishment outright:
 Federal, state and local taxes
 FICA contributions
Voluntary deductions are not protected.
Some states have additional protections. Find a legal aid organization in your community to
learn more about protections from wage garnishment.
All income and money in an account is available for garnishment unless you receive it from a
protected income source:
 Social Security Payments
 Supplemental Security Income
 Veteran’s Benefits
 Railroad Retirement Board Benefits
 Federal Employee and Civil Service Retirement Benefits
If you owe money for federal taxes, child support, or federal student loans, even protected
income sources can be garnished. If you owe state or federal debt, no court order is needed to
attach your bank account.
Tool 1:
Income and financial

resource tracker
Income is the money that comes into your household. Benefits are financial resources that come
into your household.
Use this tool to track all of income and financial resources that you receive during a month.
Identify whether the income is:
 Regular—comes at a predictable time during the month
 Irregular—is not predictable
 Seasonal—is only received during some months during the year
 One-time—only comes one-time or once a year (a gift or tax refund, for example)
You can track either gross income or net income. It is easier to track net income, however. This
is the money you actually have to use to pay for your living expenses.
This will help you understand the money and financial resources you have to work with and is
an important step in creating your cash flow budget, which can be found in Module 10:
Managing Your Cash Flow.
Income for the Month of: ______________________________________________
On this worksheet, enter net income you have earned in each category.
 Add each column to get weekly income totals. Add the total for each week to get the monthly total.
 Get a total by source by adding each row.
 Put a check in the column that best describes the income: regular, irregular, seasonal, or one time.
Week 1 Week 2 Week 3 Week 4 Total by

Regular Irregular Seasonal One-time
__/__/__ __/__/__ __/__/__ __/__/__ source
Job
Second job
Self- employment
Income
SNAP
TANF
SSI
SSDI
Childcare
payment
Week 1 Week 2 Week 3 Week 4 Total by
Regular Irregular Seasonal One-time
__/__/__ __/__/__ __/__/__ __/__/__ source
Child support
Gift
Tax refund
Other
Weekly total
Once you have tracked your income, be sure to add it into your budget or cash flow budget. For more information on cash flow
budgets, see Module 10: Managing cash flow. For more information on financial services that may help you manage your income,
see Module 13: Evaluating financial service providers, products, and services.
This Tool is included in the Consumer Financial Protection Bureau’s toolkit. The CFPB has prepared this material as a resource for the public. This material is provided for educational
and information purposes only. It is not a replacement for the guidance or advice of an accountant, certified financial advisor, or otherwise qualified professional. The CFPB is not
responsible for the advice or actions of the individuals or entities from which you received the CFPB educational materials. The CFPB’s educational efforts are limited to the materials
that CFPB has prepared.
This Tool may ask you to provide sensitive personal and financial information. The CFPB does not collect any information from you or the organization using this Tool. The CFPB is not
responsible and has no control over how others may use the information that you provide to them about your personal or financial situation. Be cautious how you use this Tool. CFPB
recommends that you do not include names, account numbers; that you lock up completed hard copies and encrypt completed soft copies of the Tool that contain sensitive personal
and financial information; and shred hard copies that contain sensitive personal and financial information when no longer needed
Tool 2:
Strategies for increasing

sources of cash and financial
resources
If you feel like you may not have enough income and other financial resources to pay for all of
your needs and wants, you can do one of two things:
1. Increase your sources of cash, income, or other financial resources.
2. Decrease your spending or uses of cash and other financial resources.
This tool focuses on ways to increase sources of cash and financial resources.
Before you use the tool, you should note that there are two ways to bring in more income. You
can sometimes bring in more income through a one-time activity. This would include selling
items in a garage sale or on sales websites. This would also include getting a tax refund by
claiming tax credits for which you qualify.
You can sometimes bring in more income on a regular basis. This would include getting a part-
time job, applying for benefits for which you qualify, or starting a small business.
Use the tool to identify ways you can increase your income. Note that not all of these may apply
to you. Check those that may be an option for you, and use this as a plan for getting more
information or resources.
if
Strategy for increasing sources of cash Information or resources you
option for
and financial resources need to access this information
you
One-time activity
Hold a yard sale/garage sale
Sell items online
Claim tax credits
Other:
Regular income
Seek a raise or additional hours at current job
Seek opportunities for training or education

that would increase wage at current job
Change tax withholding (if you generally

receive a large tax refund.)
Get a part-time job
Do odd jobs (providing childcare, doing yard

work, running errands for someone, etc.)
Rent a room in your home
Start a part-time small business or use your

talents or hobbies to make items to sell
online
If you qualify, apply for public benefits (TANF,

SNAP, Medicaid, public housing)
Search the Internet for reputable

opportunities to provide services to other
businesses
Other:
Other:
Once you have identified strategies for increasing income, adjust your cash flow—see Module
10: Managing cash flow.
Tool 3:
Cash, paychecks, direct

deposit, payroll cards, and
EBT—understanding the
benefits and risks
Salaries, wages, and public benefits can be provided in a variety of ways: cash, paychecks, direct
deposit, payroll cards and electronic benefits transfer (EBT) cards. Each has potential pros and
cons related to convenience, security, and fees.
The table below highlights some of the pros and cons associated with each method in order to
help you make an informed decision about how to receive income and benefits.
*Note that the availability of EBT cards—and the fees and other details regarding their use—vary
from state to state and from program to program.
Definition Benefits Risks
Could be lost or stolen

Some people find it
tempting to spend cash
they have on hand (i.e.
“burns a hole in your
Paper or coin money Accepted everywhere
pocket”).
Cash minted by the U.S. Not subject to garnishment
Government Can be more difficult to
or other collection
track for personal
budgeting and tax
purposes
Not all bill payments can be
made in cash
 This is a good option for me. Ways to get more information:

 This is not a good option for me.
Bank and credit union

accounts are sometimes
Income can be deposited the only cost-free way to
to a checking or a savings cash paychecks.
account or onto a prepaid If you don’t have an
card. account, unless your
If you do not have a bank employer’s bank or credit
account, some banks and union cashes “on us”
A check for salary or
credit unions do not charge checks for free, you may
Paychecks wages made out to an
a fee to cash “on us” have to pay a check
employee
checks that are written cashing service to cash
from accounts that are held them.
with their institution. If you deposit a paycheck
Otherwise, you will have to in a bank or credit union
pay a check cashing account or onto a prepaid
service to cash them. card, you may not be able
to access all the funds
immediately.

Safer and more secure
than carrying cash or
checks
Funds are usually available
immediately.
Reduces trips to bank If direct deposit is made to
a prepaid card, the card
Funds can be accessed via
may lack full consumer
a debit card, ATM card, or
protections for funds taken
personal checks.
Employee pay is by error or theft.
electronically routed to If the direct deposit is made
Potential overdraft fees if
your bank or credit to a checking account, the
Direct employee writes checks or
union account or your account’s debit card has
deposit uses debit card without
own prepaid card full consumer protections
sufficient funds
without the use of a for funds taken by error or
paper check. theft. Requires some extra effort
to access cash when cash
Income can be routed to a
is needed
bank or credit union
account. May not be offered by all
employers
Many employers allow you
to split your deposit
between a checking and
savings account, which can
help you build savings.
No check cashing fees

Potential inactivity and

Safer and more secure service fees
Prepaid cards arranged than carrying cash or
checks Potential overdraft fees if
by an employer through
Payroll employee uses card
which employees The payroll card has full
cards without sufficient funds
access their salary or consumer protections for
wages funds taken by error or Requires some extra effort
theft. to access cash when cash
is needed

EBT cards replace
paper-based benefits
Not all merchants accept
for programs such as
EBT cards.
Temporary Assistance Safer and more secure
Electronic to Needy Families than carrying cash or Some EBT cards are
benefit (TANF), Supplemental checks subject to fees.
transfer Nutrition Assistance
Looks like a debit or credit Certain cards lack full
(EBT) card Program (SNAP),
card consumer protections for
Women, Infants, and
returning funds taken by
Children (WIC)
error or theft.
program, and other
programs.22

22The availability of EBT cards—and the fees and other details regarding their use—vary from state to state and from
program to program.
Resources
For MyMoney.gov budgeting resources, visit:
http://www.mymoney.gov/Fast/Pages/Results.aspx?k=Budgeting%20worksheets&s=All
If you lose your job, visit the following for more information:
http://www.benefits.gov/
http://www.dol.gov/ebsa/publications/joblosstoolkit.html
If you are in a natural disaster, visit the following for more information:
http://www.fema.gov/disaster-survivor-assistance
If you have a medical emergency you cannot afford, visit your state department of health
and human services listed here:
http://www.hhs.gov/recovery/statewebsites.html
If you would like help managing your debt or rebuilding credit, visit the National
Foundation for Credit Counseling:
http://www.nfcc.org
http://www.consumerfinance.gov/Complaint
The CFPB has prepared this material as a resource for the public. This material is provided for educational and information
purposes only. It is not a replacement for the guidance or advice of an accountant, certified financial advisor, or otherwise qualified
professional. The CFPB is not responsible for the advice or actions of the individuals or entities from which you received the CFPB
educational materials. The CFPB’s educational efforts are limited to the materials that CFPB has prepared.
MODULE 9:
Paying bills and other

expenses
This can be a struggle for many people. For some
people, there is never enough income to cover Needs, wants, and obligations
their needs, wants, and obligations. For others,
Needs, wants, and obligations are all
balancing their personal priorities and their
things you spend money on. But,
cultural expectations can create a challenge.
what are the differences among
The general guideline for financial health is to needs, wants, and obligations? Needs
spend less than you earn. But, if your earnings do are something you must have to live.
not cover even very basic living expenses, this rule Wants are things you can survive
of thumb may not seem very helpful. without. Obligations are things you
must pay because you owe someone
No matter what your situation, it is important to money (a car loan) or have been
start by understanding the differences among ordered to pay someone (child
needs, obligations, and wants. support).
Needs are those things you must have to

live. Shelter and utilities, food, clothing, and
transportation are examples of needs. The difficulty with needs, however, is that there is a wide
range of options for shelter and utilities, food, clothing, and transportation. Determining what
you can afford to get and to maintain or sustain can be a challenge with respect to needs.
Obligations are those things you must pay because you owe money or have been
ordered to pay someone money. Debts are examples of obligations. Child support, alimony,
and judgments are also examples of obligations.
Wants are the things you can survive without. For example, while a reliable car to get to
work is a need, a new car with expensive features is both a need and a want.
Separating out needs, obligations, and wants can be challenging because what one person may
view as a want, another person may see as a need. Financial empowerment is about providing
people with options and letting them make choices for themselves. Being able to separate needs,
obligations, and wants for yourself empowers you to cut back on those areas you determine are
optional in your life.
To get a clear picture of how you use your money and financial resources now, use the Tool 1:
Spending tracker, to get started. Many people who track their spending for a week or a month
discover that they are spending money in small ways that add up and sometimes don’t match
their priorities. Once they track their spending, they’re better able to make decisions about
which bills and expenses can be reduced.
If you are trying to make ends meet or find money to save, you may also want to cut back on the
money and financial resources going to bills and living expenses. When this is the case, the key
is to identify which bills and expenses can be cut. For specific ideas on cutting back on uses of
money and financial resources, use Tool 3: Strategies for reducing expenses.
Paying bills
Many people have recurring obligations—rent, utilities, car payments, child support payments,
and insurance payments are examples of these obligations. You may avoid late fees and other
consequences of late or nonpayment if you can:
 Inventory the bills you have
 Set up a bill paying calendar so you can visually see when payments are due
Tool 2: Bill calendar was designed to help you document what you owe and when it is due. You
could also explore reminder services for bills as well as apps. These are designed to send
reminders when bills are due and should be paid. Another part of bill payment is how bills are
paid. In general, you can pay your bills using:
 Cash
 Money orders
 Checks
 Credit cards
 Automatic debit
 Online bill payment
With information about the advantages and disadvantages of each method of bill payment, you
can be empowered to make different choices—choices that may help you:
 Save time
 Save money
 Avoid additional or unnecessary fees
 Create a reliable record of bill payment
Bill payment
Advantages Disadvantages
method
May be inconvenient as this requires

in-person payment of bills.
Fees may be charged for cash
Easy to understand. payments made through a bill-payment
Often no additional costs associated service.
Cash with cash such as buying a special May be difficult to prove payment
product (money order) or overdraft unless you have a receipt.
fees (checking account).
Cost of traveling to the businesses you
are paying money to.
Cash can be lost or stolen.
May be inconvenient because you

Easy to understand. have to purchase the money order.
Can be mailed, so more convenient Cost per money order.
than cash.
Money order May be difficult to prove payment
Can be safer than a check in some unless you have the money order
cases, as no personal banking receipt and receive a receipt for
information appears on the money payment.
order.
Costs of mailing the payments.
Requires an account at bank or credit
union; you may not be able to get a
checking account if you have a
Convenient once the checking
negative banking history report.
account is set up at a bank or credit
union. The bank or credit union may charge
nonsufficient fund fees, overdraft
Can be mailed, so more convenient
charges, or returned check fees if you
than cash.
pay bills by check without enough
Check
Easier to prove payment should a money in your account.
dispute arise.
May be difficult for some people to
Option for online bill payment through understand and manage a checking
the bank or credit union. account.
Funds in checking account are safe. Time to write out checks and mail
them.
Costs of mailing the bills.
Convenient.
Can pay bills over the phone or Creates debt—you are borrowing
online. money to pay for bills and other items.
Easier to prove payment should a Costs more than paying for the
Credit cards dispute arise. purchase with cash or a check if you
Credit card protections. can’t pay the credit card balance in full
and have to pay interest on the
Can be set up to automatically pay balance.
recurring bills with no risk of
overdraft.
Convenient.
No chance of being late—set it up

If set up for automatic debit (payment)
once and forget it.
from a checking or savings account,
you could run the risk of the debit
Can be linked to a debit card
Automatic debit occurring when there is not enough

(checking account) or credit card.
money in the account to cover the

Easier to prove payment should a
transaction. You would then have to
dispute arise.
pay additional fees.
Saves time.
Convenient.
You may have the option to automate
outgoing payments or manually make
the payments using your bank or
credit union’s online banking portal.
Minimizes chances of being late if
bills are set up for automatic
Online bill payment. Takes time to set up and learn.
payment If set up through your bank or credit Possible risks of overdraft.
union, you may receive warnings or
alerts if you do not have enough
money in your account to pay a bill.
May include options for setting up
payment from cell phones/smart
devices.
Saves time.
When cash is short: Prioritizing bills

Even when you cut spending, you may still find yourself to be short on cash.
But when you’re trying to decide which of your obligations to pay first and bill collectors are
calling, it can sometimes seem easiest to just pay the “squeakiest wheel.”
You are responsible for paying all of your obligations on time. But when you have cut out
everything that is not a “need” and truly do not have enough money to cover your obligations
and living expenses, you may have to make a short-term plan to get through the month.
Sometimes this may involve paying some bills late. Sometimes it may mean missing a bill. This
can be an extremely stressful situation, but it requires careful, clear-headed thinking. Part of
making this short-term plan involves understanding the consequences of delaying paying
certain bills. And sometimes it means ignoring that squeaky wheel for a short period of time
until you can build a plan for repayment.
For example, what are the potential consequences of the following scenarios?
Action Some potential consequences
Pay the late fine as outlined in your lease agreement.

Risk creating a pattern of late payment, which could lead to
Five days past the due date for eviction–the landlord terminating your tenancy through the
your rent courts.
Strain your relationship with your landlord.

Create stress for you.
Pay the late fee as outlined in your credit card agreement.

Risk an increase in your interest rate (if you are 60 days late).
Miss a credit card payment
Get a negative entry on your credit reports.
Risk a drop in your credit scores.
Pay the late fee as outlined in your loan agreement.
Risk creating a pattern of late payment, which could lead to
repossession of your car.
Miss your car payment Create a situation in which you need more cash the following
month—to catch up the car payment you missed.
Get a negative entry on your credit reports.
Pay the late fee.
Create a situation in which you need more cash the following
month—to catch up the electric bill you missed.
Potentially get a negative entry on your credit reports.
Miss your electric bill payment

If you are late for several months, your electricity could be cut
off. To get it turned on, you will have to not only catch up on
payments, but also pay a fee to get your service turned back on.
If you find you can’t pay all of your bills on time, try calling your creditors to make short-term
arrangements. Do not ignore them, because ignoring them generally makes the problem worse
for you.
Finally, after you have examined the consequences of not paying or paying bills late, and have
called your creditors, make a short-term plan. Use Tool 4: When cash is short: prioritizing bills
and spending, to make a plan. This tool is designed to help ensure you protect first those
expenses associated with earning an income. If you don’t cover these expenses, you may
jeopardize your ability to earn the money you need to pay any of your bills.
When creditors call

 Do not ignore bills you can’t pay. If you must miss a payment, call and explain that you
will miss a payment and the reason for it.
 If a creditor (such as a credit card company or medical provider) threatens to sue you,
respond to any court documents.
 When possible, do not risk additional expenses associated with protecting your income,
shelter, assets, and failing to meet other legal obligations.
 Consider the risk to your income, shelter, assets and the legal implications of delaying
payment on your court-ordered obligations first, and then decide which bills to pay first.
For more information on what creditors and debt collectors can and cannot do if you owe them
money, visit Ask CFPB at http://www.consumerfinance.gov/AskCFPB.
At the Ask CFPB page, you can search for the kind of information you specifically want on this
and other topics.
Your rights in debt collection
The Fair Debt Collection Practices Act (FDCPA) says debt collectors may not harass,
oppress, or abuse you or any other people they contact. Some examples of harassment
are:
 Repeated phone calls that are intended to annoy, abuse, or harass you or any
person answering the phone
 Obscene or profane language
 Threats of violence or harm
 Publishing lists of people who refuse to pay their debts (this does not include
reporting information to a credit reporting company)
 Calling you without telling you who they are
The FDCPA also says debt collectors cannot use false, deceptive, or misleading practices.
This includes misrepresentations about the debt, including the amount owed, that the
person is an attorney, threats to have you arrested, threats to do things that cannot legally
be done, or threats to do things that the debt collector has no intention of doing.
It is a good idea to keep a file of all letters or documents a debt collector sends you and
copies of anything you send to a debt collector. Also, write down dates and times of
conversations along with notes about what you discussed. These records can help you if
you have a dispute with a debt collector, meet with a lawyer, or go to court.
Tool 1:
Spending tracker
Many people cannot tell you exactly how they get

and spend their money during a month. Whether Spending
they have a lot of money to spend or are
Money you use to pay for a wide
struggling to make ends meet, most people
range of basic needs, your financial
cannot account for all of the ways they use their
obligations, and other things you may
money.
want.
Before you think about making any changes, it’s a

good idea to understand how you use your money now.
How can you do this? It takes three steps and commitment. The three steps are:
1. Keep track of everything you spend money on for a week, two weeks, or one month. A
month is best, because all of your income and your bills will be included. But, keeping
up with the tracking for a month may be a challenge.
2. Analyze your spending. See how much you spend in each category. Notice trends.
Identify areas you can eliminate or cut back on.
3. Use this information for figuring out where you can make changes.
It takes commitment, because this is a lot of work. But, it’s important work. Many people are
actually able to find money to save for emergencies, unexpected expenses, and goals by doing
this work. Others are able to make their budgets balance.
Get a simple plastic case or envelope. Every time you spend money, get a receipt and put it
into the case or envelope. If the receipt doesn’t list what you purchased, take a few seconds and
write it down on the receipt. If you don’t get a receipt, write one out on scrap paper.
Analyze your spending. Use the following tool, Analyze Your Spending, for each week of the
month. Go through your receipts. Enter the total you spent in the column that makes most sense
to you. Be sure to write it in on the correct date. See how much you spend in each category. At
the end of each week, add the amounts for each category. Once you have these totals, add them
together to get a total spending for the week. You can track your spending for one week, two
weeks, or an entire month.
Notice trends. Circle those items that are the same every month (for example, rent, car
payment, cell phone payment). These are often your needs and obligations. This will make
creating your budget easier. Identify areas you can eliminate or cut back on—these will generally
be wants.
Here is a list of the categories that are used in the spending tracker:
Saving for goals, for emergencies, for children’s education, for

Savings
retirement, for holiday purchases, for back-to-school shopping
Credit card, installment loan, payday loan, pawn loan, and car
Debt payments
title loan payments; other loan payments
Housing Rent, mortgage, insurance, property taxes
Electricity, gas, water, sewage, phone, television, internet

Utilities
service, cell phone
Household supplies and Things for your home like cleaning supplies, kitchen appliances,
expenses furniture, other equipment
Food and beverages you bring into the home to prepare,

Groceries
including baby food and formula
Eating out (meals &

Any meals or beverages purchased outside of the home
beverages)
Food, healthcare costs, and other costs associated with caring

Pets
for your pets
Gas, car payment, insurance payment, repairs, public

Transportation
transportation
Co-payments, medication, eye care, dental care, health care

Health care
premiums
Personal care Haircuts, hygiene items, dry cleaning
Childcare and school Child care costs, diapers, school supplies, school materials
expenses fees, field trip and other activity fees
Going to the movies, concerts, or sporting events; sports
Entertainment equipment/fees, lottery tickets, memberships, alcohol,
books/CDs, subscriptions
Court-ordered obligations Child support, alimony, restitution, etc.
Donations to religious organizations or other charities, gifts,

Gifts, donations, and other
other expenses
Analyze your spending: Week ____ for the month of ____________________
On this worksheet, enter each amount from your receipts into its matching category column. Please take care to make sure the
entry also matches the correct date. Add each column. Add the total of all of the columns to get total spending for the week. Print
and complete multiple copies of this sheet to analyze spending over the period of a month or longer.
Household suppl., exp.
Gifts, donations, other

Court-ordered oblig.
Childcare & school
Debt payments
Transportation
Date of month
Entertainment
Personal care
Health care
Eating out
Groceries
Housing
Savings
Utilities
Total
Pets
__
__
__
__
__
__
__
Total
Review your spending for the week or month. Which items cannot be cut or reduced? List these
in the chart below. When you make your cash flow budget, you will just fill these into the cash
flow.
Spending that cannot be cut Reason
Are there items that can be completely eliminated? If yes, the money spent on these items can be
used on other things such as saving for emergencies or goals or paying down debt.
Spending that can be eliminated Steps to eliminate
Are there items that can be realistically reduced? If yes, list them below. Set new spending
targets for these items and include them in your cash flow.
Spending that can be reduced Strategies for reducing
Once you have tracked your spending, be sure to add it into your budget or cash
flow budget. For more information on cash flow budgets, see Module 10: Managing cash
flow. For more information on financial services that may help you pay your bills, see Module
13: Evaluating financial service providers, products, and services.
Tool 2:
Bill calendar
Bills are a fact of life and—while they are not fun to pay—most bills are at least predictable.
Figuring out which bills you expect throughout the month can be helpful in a couple of ways.
Doing so helps you to plan to have enough money or other financial resources on hand to pay
them. In addition, thinking about the amounts and timing of your bills might help you think of
ways to reduce your expenses over the course of the month. Finally, some people find that
thinking ahead about their bills helps reduce the stress of being surprised by bills when they
arrive in the mail.
Create a bill calendar using the following tool:
1. Print the bill calendar.
2. Fill in the name of the month and year.
3. Add numbers to represent the days of the month.
4. Gather all of the bills you pay in one month OR use the information from your Tool 1:
Spending tracker.
5. On another piece of paper, write down the due dates for these bills.
6. Since due dates are when bills must arrive, also write the date bills must be sent:
 If paying by mail, mark the due date at least 7 days before it is due.
 For in-person or automatic bill payment, mark one or two days before the due date to
ensure you are not late.
7. Then fill in the calendar with the business or person you owe the money to, the date the
money must be sent to arrive on time, and the amount that is due.
8. Put this calendar somewhere you will see it every day to ensure you are not forgetting
about important bills.
Here is a sample week to show you how the tool works:
End of
Sun. Mon. Tues. Wed. Thurs. Fri. Sat.
Week
1 2 3 4 5 6 7
Bills: Bills: Bills: Bills: Bills: Bills: Bills: Total

bills for
Phone Car pay
week:
bill, $60 ment,
$180 $740
Rent,
$500
Once you become comfortable with this tool, you may want to explore online bill reminder
services or apps that help keep you on track for paying your bills on time.
For more information on financial services that may help you pay your bills, see
Module 13: Evaluating financial service providers, products, and services.
______, 20__
End of
Sun. Mon. Tues. Wed. Thurs. Fri. Sat.
Week
__ __ __ __ __ __ __

bills for
week:
__ __ __ __ __ __ __

bills for
week:
__ __ __ __ __ __ __

bills for
week:
__ __ __ __ __ __ __

bills for
week:
__ __ __ __ __ __ __

bills for
week:
Tool 3:
Strategies for cutting

expenses
If you do not have enough money or financial resources to pay your bills and expenses, you can
do one of two things:
 Increase your sources of cash, income, or other financial resources.
 Decrease your spending or uses of cash and other financial resources.
This tool focuses on ways to decrease spending or uses of cash and other financial resources.
Not all of these strategies may apply to you. Check those that may be an option for you, and use
this as a plan for getting more information or resources.
if an Strategy for cutting expenses Additional information or Estimate $

option and other uses of financial resources you need to access value of
for you resources this information spending cut
you select
Cut back on regular (recurring expenses)
Television Check with your provider about

bundling and lower cost plans or
discontinue cable.
Internet Check with your provider about

bundling and lower cost plans.
Phone Check if you qualify for a

“Lifeline” phone rate.23
23For more information on Lifeline phone rates, see http://www.fcc.gov/guides/lifeline-and-link-affordable

telephone-service-income-eligible-consumers.
Cell phone plan Review prepaid or fixed-price call
plans. Check if you qualify for a
“Lifeline” phone rate.
Insurance Review insurance and consider

increasing deductible on auto
insurance to lower premium
payment.
Check to see if moving
insurances to one company will
save you money, and for other
discounts.
Energy costs Check to see if eligible for

weatherization programs or other
energy efficiency/savings
incentives.
Find ways to save on energy:
turn off and unplug unused
electric appliances, insulate and
use weather stripping around
doors and windows, set
thermostat higher in summer and
lower in winter.
Other:
Get rid of regular (recurring) expenses
Online video membership
Discount store memberships if

not using regularly
Gym/health club membership

(if not using)
Credit monitoring services
Other:
Avoid fees
Review financial services. Could you switch to a no-fee or
lower-fee account?
Are you paying to cash your
checks?
Are you paying maintenance fees
on checking or savings
accounts?
Do you pay overdraft fees?

Are you paying annual fees for
credit cards?
Know the fees you are paying for
your loans.
Pay bills and fines like parking Parking tickets and other fines
tickets on time. cost more if you pay them late.
Return library materials, rented

DVDs, etc. on time.
Renew license and registration

on time.
Other:
Other methods
Negotiate a new due date for

bills to make them easier to
handle in cash flow.
Avoid or cut back on eating out. Cut one meal out per month.
If you buy lunch at work, could

you save if you bring it instead?
If you have children, identify the
restaurants that have “kids eat
free” nights.
Avoid bottled water. Reuse water bottles.
Avoid buying coffee or soda

out.
Use coupons.
Buy second hand furniture or

clothing if you need to replace
either.
Do not buy or rent DVDs or Visit your local public library. To

CDs. avoid late fees, you have to
return the items by the due
dates.
Buy items you use in bulk if Look at the price label for cost
they are cheaper that way. per serving. Sometimes larger
quantities don’t actually save
money.
Maintain your car. Get regular oil changes and keep

tires inflated. This can save on
fuel and can prevent major
repairs.
Other:
Total reduction in spending for one month
Once you have identified strategies for cutting your spending, adjust your cash
flow. See Module 10: Managing cash flow.
Tool 4:
When cash is short—

prioritizing bills and spending
Even when you increase sources of income or cut spending, you may still find yourself to be cash
short. But when bill collectors are calling, it can seem easiest to just pay the “squeakiest wheel.”
Take time to consider how each of your bills impacts these areas: protecting your job, your
shelter, your assets, and meeting your legal responsibilities.
You are responsible for paying all of your obligations on time. When you truly do not have
enough money to cover your obligations and living expenses—this means you have cut out
everything you don’t need—you may have to make a short-term plan to get through the month.
Sometimes this may involve paying some bills late. Sometimes it may mean missing a bill. This
can be an extremely stressful situation. While stressful, it requires careful, clear-headed
thinking. Part of making this short-term plan involves understanding the consequences of
delaying paying certain bills. And sometimes it means ignoring the squeakiest wheel for a short
period of time.
Use the following tool to help you make a short-term plan to get through those months where
you cannot pay all your bills or living expenses.
Protect your income Protect your shelter Protect your assets Pay your obligations
If you need a car to get to Whether you rent or have a Do not let essential insurance Example include:
and from work, stay current mortgage, the costs of losing your coverage lapse; this includes
 Child support
on your car payment and home are big. auto, renter’s / homeowner’s,
insurance. health.  Income taxes
Be sure to pay taxes, condo fees,
 Student loans
Maintain other expenses to mobile home lot payments, too. Not having insurance puts your
keep your job. assets, including your
If possible, maintain your utilities.
health/your family’s health, at
They are difficult to live without,
risk.
and reconnection is expensive.
Your expenses: Your expenses: Your expenses: Your expenses:
Remember, you are responsible for all of your bills and expenses.
If you miss payments now, you will have to make those up in the future.
Resources
http://www.benefits.gov
http://www.dol.gov/ebsa/publications/joblosstoolkit.html
If you are in a natural disaster, visit the following for more information:
http://www.fema.gov/disaster-survivor-assistance
http://www.nfcc.org
MODULE 10:
Managing cash flow

What is a cash flow budget?
When it comes to money, timing matters. People
often find themselves flush with cash one week— Cash flow and financial services
and pay several bills at once or splurge on
something fun—but come up short the next week Some banks and credit unions
for a necessity. provide online financial management

tools including income and spending
That’s why monthly budgets sometimes don’t tracking budget, and cash flow tools.
work. If the timing of your income doesn’t match If you have an account at a bank or
the timing of your expenses and you haven’t credit union, check to see if these
planned for it, you’ll come up short. tools may be available for you.
A cash flow budget is a projection of how you will You may also want to explore the use
get and use your cash and other financial of online financial management tools.
resources. A cash flow budget is different from a Ensure the website is secure when
regular budget, because it includes not only the entering personal or banking
amount for each budget item, but the timing of information.
your income and expenses. It breaks your
monthly budget down week by week, accounting
for when money is expected (income) and when it must be spent on needs, obligations, and
wants.
A cash flow budget can help you identify where you’re falling short within the month. It can help
you ensure you have the financial resources on hand to cover the most important expenses—so
you don’t fall short covering the rent, for example. A cash flow budget can also help you better
target areas where you could consider cutting back.
A cash flow budget is even more important for people who have irregular, seasonal, or one-time
income. It can help you project and plan ways to spread the income you receive over the months
you don’t have money coming in.
Making a cash flow budget

Making a cash flow budget involves three steps:
1. Keeping track of everything you earn and spend money on for a week, two weeks, or one
month. You can use Tool 1: Income and financial resource tracker from Module 8 and Tool
1: Spending tracker from Module 9 to do this.
2. Analyzing your spending. You can use Tool 1: Spending tracker from Module 9 to do this.
3. Using this information to create a cash flow budget. You will use Tool 1: Cash flow
budget to complete this step or Tool 2: Cash flow calendar. Your cash flow budget is about
setting targets for how you will use your income going forward.
Tool 1:
Cash flow budget

Building a cash flow budget is important because when it comes to money, timing matters. It
can help you make sure you have the resources on hand to cover the most important expenses.
This is especially important if your income is irregular, seasonal, or one time.
You can create a cash flow budget using the following form. There are “fixed” expenses such as
rent and your car payment. These are expenses that you cannot cut back or that you would have
to make major changes to lower, such as by moving or selling a car. Sometimes, though, you
may find that you need to do this to make your cash flow work.
If you find you want to cut back in other areas, put these new target levels of spending in your
cash flow budget. For example, if you’re spending $350 per month on groceries now, you may
decide to buy and cook in bulk and cut out bottled water to decrease that amount to $300.
But remember, it’s important to be realistic when you set new spending targets. Your cash flow
budget is about setting achievable targets for how you will use your income going forward.
Here are some important tips:
1. Beginning balance for the week
Your beginning balance for each week is the ending balance from the week before. When you
start a cash flow, count the money you have in your pocket, on a prepaid debit card, or in an
account you use to pay your bills to get your beginning balance.
Week 1 Week 2
Beginning balance for the week $37.00 $142.37
Move your ending

Sources of cash and other financial resources
balance from the
Income from job $305.34 $290.80 previous week
forward.
SNAP $280.00
Public housing voucher $650.00 To get a starting

balance, total your
Total sources of cash and other
$1,272.34 $433.17 cash, prepaid card,
financial resources
and account
Uses of cash and other financial resources balances.
Housing $650.00
Utilities $59.97 $95.50
Groceries $180.00 $80.00
Eating out (meals and beverages)
Transportation $240.00 $60.00
Total uses of cash and other financial

$1,129.97 $235.50
resources
Ending balance for the week $142.37 $197.67
2. Total sources of cash and other financial resources
Add your beginning balance for the week to the other income you get that week. The total is the
amount you have to pay for all of your expenses during that week.
Week 1 Week 2
Income from job $305.34 $290.80
SNAP $280.00
Public housing voucher $650.00

$1,272.34 $433.17
financial resources
Add your beginning
Uses of cash and other financial resources balance and all of
the sources of cash
Housing $650.00
and financial
Utilities $59.97 $95.50 resources for the
week.
Groceries $180.00 $80.00
Eating out (meals and beverages)
Transportation $240.00 $60.00
Total uses of cash and other financial

$1,129.97 $235.50
resources
3. Total uses of cash and other financial resources
Add all of your expenses and other uses of cash (savings and debt repayment) for the week. Note
that some financial resources may only be used for specific expenses. For example, SNAP
(Supplemental Nutrition Assistance Program) benefits can only be used for food and for plants
and seeds to grow food for your household to eat.
SNAP cannot be used for:
 Any nonfood item, such as pet foods, soaps, paper products and household supplies,
grooming items, toothpaste, and cosmetics
 Alcoholic beverages and tobacco
 Vitamins and medicines
 Any food that will be eaten in the store
 Hot foods24
24 For details on eligible food items, see http://www.fns.usda.gov/snap/retailers/eligible.htm.
4. Subtract your total uses of cash and other financial resources from your total
sources of cash and other financial resources
This will give you your ending balance for the week. It will also show you whether you have
enough cash and other financial resources to make it through the week.
Week 1 Week 2
Income from job $305.34 $290.80
SNAP $280.00
Public housing voucher $650.00

$1,272.34 $433.17
financial resources
Uses of cash and other financial resources
Housing $650.00
Utilities $59.97 $95.50
Groceries $180.00 $80.00
Eating out (meals and beverages) Total sources
Transportation $240.00 $60.00 minus total uses.

This becomes your
Total uses of cash and other financial beginning balance
$1,129.97 $235.50
resources
for the next week.
Cash flow budget worksheet
Week 1 Week 2 Week 3 Week 4 Week 5
Beginning balance for the week
Sources of cash & other financial resources
Income from job
Income from part-time job
Income from self-employment
TANF
SNAP
Public housing voucher
Other:
Total sources of cash & other financial resources
Uses of cash & other financial resources
Credit card payments
Payday loan payments
Personal loans
Other debt
Other payments
Savings: emergency fund
Savings: goals
Savings: children's education
Savings: retirement
Rent or mortgage payment
Homeowners or rental insurance
Electricity
Gas
Water and sewer
Cable or satellite television
Internet service
Phone and cell phone service
Groceries
Eating out (meals and beverage)
Car payment
Gas for car
Car maintenance
Health insurance
Health care deductibles and co-pays
Personal care
Childcare, diapers, and school fees and supplies
Entertainment
Contributions
Total uses of cash & other financial resources
Ending balance for the week (sources - uses)
Be sure to use tools you may have completed in other modules to build your cash flow. Look at Module 6: Setting
goals, Module 7: Saving for the unexpected, emergencies, and goals, Module 8: Managing income and benefits,
Module 9: Paying bills and other expenses, and Module 11: Dealing with debt.
This Tool is included in the Consumer Financial Protection Bureau’s toolkit. The CFPB has prepared this material as a resource for the public. This material is provided for educational
and information purposes only. It is not a replacement for the guidance or advice of an accountant, certified financial advisor, or otherwise qualified professional. The CFPB is not
responsible for the advice or actions of the individuals or entities from which you received the CFPB educational materials. The CFPB’s educational efforts are limited to the materials
that CFPB has prepared.
This Tool may ask you to provide sensitive personal and financial information. The CFPB does not collect any information from you or the organization using this Tool. The CFPB is not
responsible and has no control over how others may use the information that you provide to them about your personal or financial situation. Be cautious how you use this Tool. CFPB
recommends that you do not include names, account numbers; that you lock up completed hard copies and encrypt completed soft copies of the Tool that contain sensitive personal
and financial information; and shred hard copies that contain sensitive personal and financial information when no longer needed.
Tool 2:
Cash flow calendar

A cash flow approach to managing your money involves paying attention to the timing of your
sources and uses of cash and other financial resources. This is important, because timing
matters when you are making sure you have enough to cover your expenses. Tool 1: Cash flow
budget uses a table to track those sources and uses from week-to-week. This tool takes the same
cash flow approach, but uses a calendar format to plan for the weeks ahead.
Use the information from your Module 8, Tool 1: Income and financial resource tracker and
Module 9, Tool 1: Spending tracker to create a cash flow calendar using the blank calendar
provided here. Start each new month by carrying over your balance from last month. Then enter
the sources and uses of cash and other financial resources for each day of the week.
At the end of every week take your beginning balance, add your total sources, and subtract your
total uses. That number will be what you have left, your weekly ending balance.
Here is a sample week to show you how the tool works:
Sun. Mon. Tues. Wed. Thurs. Fri. Sat. End of Week
31 1 2 3 4 5 6
Sources Beginning bal.:

$130 +
SNAP, Pay,
$280 $305 Total sources:
$585 –
Total uses:
Uses
$450 =
Food, Gas, Car Ending bal.:
$180 $30 Pay
ment, $265
Phone
$180
bill, $60
______, 20__
__ __ __ __ __ __ __ Beginning bal.:
Sources _________ +
Total sources:
_______ –
Total uses:
Uses _______ =
Ending bal.:
__________
__ __ __ __ __ __ __ Beginning bal.:
Sources _________ +
Total sources:
_______ –
Total uses:
Uses _______ =
Ending bal.:
__________
Reproduce this sheet to manage your cash flow for additional weeks.
Tool 3:
Improving cash flow checklist
If you created a cash flow using the spreadsheet or the calendar, you may find that some weeks
are not working out—you are not able to pay your bills on time.
Improving cash flow comes down to one of three strategies:
 Smooth out cash flow by avoiding large periodic payment by making smaller
payments throughout the month or year.
 Cut out spending.
 Increase income or other resources.
Sometimes short-term changes to expenses or finding ways to temporarily increase income can
help improve your cash flow now, and sometimes the changes you make will need to stay in
place for a long time to make a difference.
Some of these suggestions may not work for you. Check those that may be options for you and
use this checklist as a plan to put the ideas into action.
if Strategy for improving cash Tips and more information Notes
option flow
for you
Smooth out cash flow
Negotiate new due dates for Check with businesses you have
bills to better line up with when had a long-standing relationship
you get income. with first.
Negotiate splitting a monthly For example, if a $700 rent

payment into two smaller payment is due the first of the
payments. month, see if you can make a
$350 payment on the 1st and a
$350 on the 15th.
Avoid large, lump sum or You may have to pay a small fee
periodic payments by making to make this arrangement, but it
monthly payments—car may make handling these
insurance and taxes, for payments more manageable.
example.
Set up a savings account and To do this you need regular

automatically deposit the income, a bank or credit union
monthly amount of large, lump account, or a reloadable prepaid
sum payments into the debit card.
account so you are prepared
when they are due.
Explore level payment plans This is especially important in

for utilities. extreme climates—with high
heating bills in the winter or high
cooling bills in the summer. You
often have to be a customer in
good standing to qualify for these
programs. Check with your local
utility providers.
Check to see if you qualify for Ask for a referral to the agency in
an energy assistance your community that manages
program. energy assistance programs.
Seek credit counseling or If you have many debts and good
explore debt consolidation. credit, consider credit counseling
exploring debt consolidation with a
bank or credit union. This can
make managing your cash flow
easier because the monthly
payment may be smaller – but it
may take you longer to completely
pay off the debts and cost more in
the long run. Be sure you
understand the terms and are not
paying more interest with your
new loan. See the Resources list
at the end of the module for credit
counseling links.
Refinance your car or home Be sure to do the math to ensure

for lower interest rates if the new rate (including the fees)
possible or explore extending really does save you money over
the time you will repay the time. While it may cost you more
loan. in the long run, it may make
monthly payments more
manageable.
Check to make sure your This can help ensure you do not
withholding enough tax with end up with a large income tax bill
your employer. because your withholding was too
low.
If you have student loans, See if you qualify for income-

check to see if you have based repayment or other
repayment options. programs.
http://studentaid.ed.gov/repay-
loans/
Other:
Cut out spending
Review television, internet, Check with your provider about

phone, and cell phone plans. bundling and lower cost plans or
discontinue cable.
Check to see if you qualify for a
“Lifeline” phone rate. Visit
http://www.fcc.gov.
Review insurance and check Check to see if moving insurances

to make sure you have the to one company will save you
right deductibles for auto and money, and check for other
home insurance. discounts.
Find ways to save on energy: Check to see if eligible for

weatherization programs or other
Turn off and unplug unused
incentives.
electric appliances.
Insulate and use weather
stripping around doors and
windows.
Set thermostat higher in
summer and lower in winter.
Eliminate online video or

music pass membership.
Eliminate gym/health club or

discount store memberships if
not using regularly.
Eliminate credit monitoring

services if you are paying for
them.
Pay bills and renew license

and registration on time to
avoid late fees.
Return library materials,

rented DVDs, etc. on time.
Access community resources See if you qualify for community
for some living expenses. food programs, clothing closets,
transportation voucher programs,
childcare subsidies, etc.
Other:
Increase income
Take another part-time job if

your schedule allows.
Work odd jobs.
Apply for benefits for which Visit http://www.benefits.gov.

you may qualify.
File taxes so that you can Consider saving some of your

receive a refund if you qualify. refund to help pay bills for the rest
of the year.
Other:
Resources
If you want more information on budgeting, visit:
http://www.mymoney.gov/tools/Pages/tools.aspx
For more information on benefits, visit:
If you want more information about finding a job, visit this site to get started:
http://www.dol.gov/dol/audience/aud-unemployed.htm
Or visit your state department of labor website for state specific resources.
To find a one-stop career center located near you, visit:
http://www.servicelocator.org
http://www.dol.gov/ebsa/publications/joblosstoolkit.html#.UM6BmXPjkt8
http://www.nfcc.org
MODULE 11:
Dealing with debt

What is debt?
Debt is money you have borrowed from a person or a business. When you owe someone money,
you have a liability. When you owe money, you have to pay it back, sometimes in the
form of scheduled payments. Often you use money from your future income to
make those payments. While borrowing money may give you access to something today, you
may have monthly payments for months or years going forward. This obligation may decrease
your options in the future.
Debt is different from credit. Credit is the ability to borrow money. Debt results from using
credit. You can have credit without having debt. For example, you may have a credit card but no
outstanding balance on it.
Good debt, bad debt?

Sometimes people label debt as good debt or bad debt. Some debt can help you reach your goals
or build assets for the future. People will often say that borrowing for your education, for a
reliable car, to start a business, or to buy a home can be a good use of debt.
But it’s not always that simple. For example, borrowing to further your education may be a good
use of debt because earning a certification or a degree may lead to a better paying job and more
job security. But if you take on the debt and don’t earn the certificate or degree, this student debt
has set you back instead of helping you reach your goals.
Taking out a loan for a reliable car to get to and from your job can help you stay on track to meet
your goals. However, if you borrow 100% of the car’s value, you may end up owing more than
the car is worth. Or if you buy a more expensive car than you need, you’ll have less money for
other bills each month. While it may get you to work, it might keep you from getting to your
financial goals.
Borrowing money to start a business may help create income for yourself and others. If the
business fails, however, you may end up owing money and not having any income you can use to
make the payments.
Finally, taking out a loan to buy a home of your own may be a way to reach your personal goals.
But if you are unable to keep up with the payments or you end up owing more than your home is
worth, that debt may set you back for a long time.
This information is not meant to scare you. It’s simply meant to show you that even debt that
many people consider “good” should be approached with caution.
Some people consider loans such as credit card debt, short-term loans, and pawn loans “bad”
debt. This is because they carry fees and interest, and when they have been used for things you
consume (like meals out, gifts, or a vacation) they do not help build assets. But, these sources of
debt can help cover a gap in your cash flow if you have a way to repay them. So, there is no one
type of debt that is “good” or “bad.” That’s why it’s important to first understand your goal or
your need. Then you can shop for the credit you need, especially for purchases like a car or a
home, before you make your final decision on your purchase.
Another way to understand debt is whether it is secured or unsecured.
Secured debt is debt that has an asset attached to it. When debt is secured, a lender can collect
that asset if you do not pay. Here are examples of secured debt:
 A home loan. The debt is secured with the home you are buying. If you do not pay your
loan, the lender can foreclose on your home, sell it, and use the money from the sale to
cover your loan.
 An auto loan. The debt is secured with your car. If you do not pay your loan, the lender
can repossess (repo) your car and sell it to cover the loan.
 A pawn loan. The debt is secured with the item you have pawned. If you do not make
payment when it is due, the pawned item is eventually sold.
 A secured credit card. The debt you incur is
secured by funds you deposit at a bank or

Rent-to-own
Student Loan versus
Debt installment
credit union. Your credit limit will generally
plans
For many people, student loans
equal your deposit. For example, if you
In a rent-to-own arrangement,
make up a big portion of the debt
deposit $300, your credit limit will be $300.
consumers lease itemspeople
such as
they owe. Sometimes
furniture,
borrow moreelectronics,
than theyorwill
appliances
be able
Unsecured debt does not have an asset attached
and typically
to afford givenhave
the the option
likely to
pay they
to it. Here are examples of unsecured debt:
purchase.
will earn in their profession.
 Credit card debt from an unsecured card Sometimes people get into trouble
This can be done by continuing to
because they do not understand the
 Department store charge card debt make payments for a set period of
terms of their loans and the
time or by paying off the balance
 Signature loans consequences of letting interest
during the term of the lease. If you
build up.
 Medical debt don’t make the payments made as
agreed, the item can be taken back
 Student loan debt
and you don’t receive a refund for
If these loans are not paid as agreed, they often go any of the rental payments.
to collections.
Using Tool 1: Debt management worksheet, you

can list all of your debts and determine whether they are secured or unsecured. For more
information on student loan debt, see Tool 4: Student loan debt.
How much debt is too much debt?

One way to know if you have too much debt is based on how much stress your debt causes you.
If you are worried about your debt, you likely have too much.
A more objective way to measure debt is the debt-to-income ratio. The debt-to-income ratio
compares the amount of money you pay out each month for debt payments to your income
before taxes and other deductions. The resulting number, a percentage, shows you how much of
your income is dedicated to debt—your debt load. The higher the percentage, the less financially
secure you may be, because you have less left over to cover everything else. Everything else is all
of the other needs, wants, and obligations you pay each month that are not debt.
These include:
Debt-to-income ratio
 Rent
The debt-to-income ratio is a
 Savings simple calculation:
 Taxes Total of your monthly debt

payments ÷ Monthly gross income
 Insurance
(income before taxes).
 Utilities
The result is a percentage that tells
 Food you how much of your income is
going toward covering your debt.
 Clothing
For example, if you have a debt-to
 Childcare income ratio of 36%, you have 64
cents out of every dollar you earn to
 Health care (that has not turned into debt)
pay for everything else, including
 Child support and other court-ordered all of your living expenses and
obligations taxes.
 Charitable contributions and gifts
 Other family expenses
Using Tool 2: Debt-to-income worksheet, you will determine what your debt load is. And if you
find out that it is higher than you want, you can use Tool 3: Debt reduction strategies worksheet
to make a plan to get out of debt.
Avoiding debt traps

If you are considering loan products that meet an immediate need, it’s important to avoid debt
traps on your path to your goals.
A debt trap is a situation where people take a loan and have to take new loans to
make the payment on the first loan. It is called a trap because for many people, it becomes
difficult to escape the cycle of borrowing and taking on more debt to cover the loan payment and
still be able to pay for other expenses like food, rent, and transportation.
A debt trap can happen when people use short-term loans that have to be paid back in just a
couple of payments such as payday loans. Signature loans and deposit advance loans are other
examples of short-term loans.
These loans have many things in common. They:
 Are small dollar loans— generally under $500
 Must be repaid quickly—14 days is the median term of payday loans
 Require the borrower to give creditors access to repayment through an authorization to

present a check or debit a borrower’s deposit account
Common misunderstandings about payday loans and deposit

advance products
If you are considering these products, it’s important to be aware of common misunderstandings
and the facts about payday and deposit advance loans.
1. The money is borrowed for emergencies.
Fact: Most borrowers do not use their first loans for emergency expenses. The Pew
Charitable Trusts’ Payday Lending in America25 found that 69% of first-time borrowers
use the loan to pay for regular bills, while only 16% use them for emergencies such as a
car repair.
2. The borrowers can pay back the loan.
Fact: While they may pay it back on time, many borrowers have to either immediately
take a new loan or take another one in the same pay-period. A CFPB study26 found that
payday borrowers are in debt for a median of 199 days (nearly seven months) of the year
25
The Pew Charitable Trust State and Consumer Initiatives. Payday Lending in America. October 2013.
http://www.pewstates.org/research/featured-collections/payday-lending-in-america-85899405692.
26Consumer Financial Protection Bureau. Consumer Financial Protection Bureau Study Finds Debt Trap Concerns
with Payday and Deposit Advance Loans. April 2013. http://files.consumerfinance.gov/f/201304_cfpb_payday
factsheet.pdf.
and pay a median of $458 in fees (not including the principal). The Pew Charitable
Trust27 found similar results – that on average, borrowers are in debt for five months out
of the year and pay an average of $520 in fees on top of the money they have borrowed.
Deposit advance loans

Deposit advance loans are short-term loans made by banks. The loan is secured by the
borrower's deposit account to which the bank has access. The loan is limited to a
percentage of the recurring direct deposit: the lesser of $500 or 50% of the scheduled
direct deposit based on the amount from the previous deposit into the account.
Repayment is due the next time the direct deposit is made into the account. The bank
sweeps the amount of the loan plus the fees from the account before any transactions can
be made from the account. In some instances, this puts the borrower into overdraft
(where she is charged more fees for any subsequent draws on the account).
Many banks are discontinuing this product, but clients may still find them at some banks.
27
The Pew Charitable Trust State and Consumer Initiatives, Payday Lending in America, October 2013.
http://www.pewstates.org/research/featured-collections/payday-lending-in-america-85899405692.
How do payday loans work?
Here is an example of how a 14-day payday loan generally works:
Borrower visits a storefront payday lender and completes application (there is

generally no credit check or ability to repay the loan; the
borrower only needs a deposit account so he can write a post-dated
check). Loans also be taken out
Borrower gets loan (the median loan amount is $350) and pays $10-$20 per $100
borrowed ($15 per $100 is the median fee).
The borrower provides the lender with 14-day post-dated check for the amount of
the loan + the fee or $350 + $52.50 = $402.50 or authorization to present a debit
against the borrower's account.
In 14 days, the loan is due. Often, the borrower does not have $402.50 to satisfy the
debt. Instead he will pay the fee ($52.50) and renew the loan for another 14 days.
(Note: 14 days is used for example purposes only. Repayment may fall on the next
payday or another minimum period as specified by state law.)
Every 14 days, the borrower must pay the full amount or renew the debt for $52.50.
The average borrower has 10 transactions a year. Applied to this loan, that would
mean a fee of $525 to borrow $350.
Alternatives to high-cost credit
There are ways to avoid a debt trap if you’re in a situation where you need money quickly.
If you are short on cash, consider other alternatives, including:
 Using your own emergency savings
 Using lower-cost short-term loan alternatives from a credit union or bank
 Borrowing from a friend or family member
 Using a credit card – while it will increase your monthly card payment, it may prove
cheaper in the long run
 Negotiating for more time to pay if the loan is for a bill that is due
 Bartering for part or all of what you are borrowing the money to cover
 Determining whether the item or circumstance you are borrowing the money for is a
need, an obligation, or a want. If it’s a want, consider whether it’s possible to spend less
money for it or not purchasing it.
The cost of high-cost credit

Here is an example scenario using different options for taking care of emergency expenses. The
example examines the costs of paying for an unexpected expense with emergency savings, a
credit card, or a payday loan.
COST TO REPLACE SPARK PLUGS IN YOUR AUTOMOBILE = $350
Emergency
Credit card Payday loan
savings
Amount $350 $350 $350
$15 for every $100 borrowed for 14 days.

21.99% annual percentage rate
APR28 This means a 391% annual percentage
(APR)
rate (APR).29
Must pay at least a certain Must pay back loan amount ($350) plus
amount each month.30 (For the fee ($52.50) within 14 days. If entire loan
Payment purposes of the example, the cannot be paid within 14 days, it can be
individual is choosing a fixed rolled over (or extended) for another 14
monthly payment of $50.) days for an additional fee of ($52.50).31
The total cost depends on how long it

You would pay $28.11 in interest
Total takes you to save up to pay back the
in addition to the principal
cost and entire loan. If you renew or roll over this
$0 borrowed. It will take just over
time to loan seven times, you would be in debt
eight months32 to pay back the
repay for 14 additional weeks and could pay up
full amount.
to $367.50 in fees.33
28 These are for example purposes only. Actual credit card and payday loan terms vary, and some states restrict
payday loans. The CFPB notes that, APRs on credit cards can range from about 12 percent to 30 percent. For payday
loans, the CFPB notes that the cost of the loan (finance charge) may range from $10 to $30 for every $100
borrowed. A typical two-week payday loan with a $15 per $100 fee equates to an APR of almost 400%. See CFPB,
What is a payday loan? November 6, 2013. See http://www.consumerfinance.gov/askcfpb/1567/what-payday
loan.html.
29 Some states have adopted laws that limit the amount of loan above a certain amount and/or limit the interest rates
of these loans.
30 Most credit card companies allow customers to pay a percentage of the amount owed, which makes the minimum
payment vary from month to month. For the purposes of this example, we are showing a fixed monthly payment.
31 These numbers and terms are for example purposes only. Actual costs and terms of payday or signature loans will
vary. See Consumer Financial Protection Bureau, Payday Loans and Deposit Advance Products: A White Paper of
Initial Data Findings, April 24, 2013. See http://files.consumerfinance.gov/f/201304_cfpb_payday-dap
whitepaper.pdf.
32 To pay off this credit card balance in full, the individual will have to make $50 payments for seven months, and
then pay just over $28 in the eighth month.
33 Two–thirds of repeat payday borrowers take more than seven loans in one year. Consumer Financial Protection
Bureau, Payday Loans and Deposit Advance Products.
Dealing with a debt collector
Often people find out they have a debt in collection when they receive a letter or phone call from
a debt collection agency. Sometimes, they don’t remember owing a debt, so they are surprised
when they’re told a debt has gone to collections. For some people, this can feel overwhelming.
Debt collectors use persuasive techniques to get you to send in money. Do not send money or
even acknowledge the debt the first time you are contacted. This is because:
 You want to make sure you actually owe the debt.
 You want to make sure the individual contacting you really has the authority
to collect the debt.
If you know the debt is not your debt, you can ask the debt collector to stop contacting you.
Before sending money or acknowledging the debt, ask the debt collection agency to verify the
debt. Do this by sending a letter within 30 days of the debt collector’s first contact asking them
to verify the debt is yours and that they have the authority to collect it. Use the sample letters in
Tool 5: When debt collectors call to get started.
Even if the debt may be yours, you have the right under the Fair Debt Collection Practices Act
(FDCPA) to ask the debt collector to stop contacting you. Once you make this request, they can
contact you to tell you that they won’t contact you again. Or they may notify you that they or the
creditor could take other action (for example, filing a lawsuit against you).
Stopping them from contacting you does not cancel the debt. You still might be
sued or have debt reported to the credit reporting agencies (Equifax, Experian,
and TransUnion).
You can ask a debt collector to stop contacting you at any time, so keep in mind that you could
ask them for more information before deciding whether to tell them to stop contacting you.
Your rights in debt collection
The Fair Debt Collection Practices Act (FDCPA) says what debt collectors can and cannot
do. This law covers businesses or individuals that collect the debt of other businesses.
These are often called “third party debt collectors.” This law does not apply to businesses
trying to collect their own debts.
The law states that debt collectors may not harass, oppress, or abuse you or any other
people they contact. Some examples of harassment are:
 Repeated phone calls that are intended to annoy, abuse, or harass you or any
person answering the phone
 Obscene or profane language
 Threats of violence or harm
 Publishing lists of people who refuse to pay their debts (this does not include
reporting information to a credit reporting company)
 Calling you without telling you who they are
The law also says debt collectors cannot use false, deceptive, or misleading practices. This
includes misrepresentations about the debt, including the amount owed, that the person
is an attorney, threats to have you arrested, threats to do things that cannot legally be
done, or threats to do things that the debt collector has no intention of doing.
Keep a file of all letters or documents a debt collector sends you and copies of anything
you send to a debt collector. Also, write down dates and times of conversations along with
notes about what you discussed. These records can help you if you have a dispute with a
debt collector, meet with a lawyer, or go to court.
Tool 1:
Debt management worksheet
Before you can make a plan for your debt, you have to know where you stand. You can start by
making a list of who you owe money to and how much you owe them. This is the first
step in managing and reducing your debt.
Be sure to include debts to friends and family, credit card companies, banks, department stores,
payday lenders, and the federal government (for student loans and income taxes, for example).
On the debt management worksheet, you will include:
 The person, business, or organization you own money to
 The amount you owe them
 The amount of your monthly payment, which includes the principal, interest payments,
and any fees you may owe
 The interest rate you are paying and other important terms
To complete this worksheet, you may need to get all of your bills together in one place.
Use this worksheet to list who you owe money to and how much you owe them. This is the first
step in managing and reducing your debt.
Total amount
Payment due
yes, by what.
Interest rate
outstanding
Secured? If
important
borrowed
payment
Amount
amount
Lender
terms
Other
Total
date
Mortgage
Vehicle loan
Appliance/furniture loan
Student loan
Credit card/Charge card debt
Payday loan
Car title loan
Other
Total monthly debt payment
Tool 2:
Debt-to-income worksheet
Your debt-to-income ratio is like your blood pressure. Your blood pressure measures the
amount of pressure on your heart; your debt-to-income ratio measures how much pressure debt
is putting on your budget.
Your debt-to-income ratio is a simple calculation. It is the total of your monthly debt payments
divided by your monthly gross income. Gross income is the amount of your income before any
taxes or other deductions are taken.
The result is a percentage. This tells you how much of your income is going toward covering
your debt.
Another way of seeing the debt-to-income ratio is that it represents how much of every dollar
you earn goes to cover your debt.
For example, if your debt-to-income ratio is .45, or 45%, then 45 cents out of every dollar you
earn goes toward your debt. This leaves you with 55 cents of every dollar to cover your rent,
taxes, insurance, utilities, food, clothing, child care, and so on.
In addition to using the debt-to-income ratio to measure how much pressure debt is putting on
your budget, you can also use it as a benchmark if you implement a debt reduction plan. As you
pay down your debts, your debt-to-income ratio will also decline. And this will result in money
being freed up to use on other things, such as saving for your goals, unexpected expenses, and
emergencies.
Use the following tool and the analysis to figure out your debt-to-income ratio.
Your total monthly debt payment (from Tool 1)
DIVIDED BY
Your monthly gross income (Income before taxes)
EQUALS
Your current debt-to-income ratio
Understanding your debt-to-income analysis

If your debt-to-income ratio is higher than these percentages below, it could be difficult to pay
all your monthly bills because so much of your income will be going to cover debts. A high debt-
to-income ratio may also impact your ability to get additional credit because creditors may be
concerned that you would not be able to handle their debt on top of what you already owe.
The following debt-to-income ratio ranges are guidelines. These ranges are not rules. In fact,
many creditors set their own guidelines. What is an acceptable level of debt to one creditor may
not be to another.
 For renters: Consider maintaining a debt-to-income ratio of 15% -20% or

less.
 This means that monthly credit card payments, student loan payments, auto loan
payment, and other debts should take up 20% or less of your gross income.
 For homeowners: Consider maintaining a debt-to-income ratio of 28% -35%

or less for just the mortgage (home loan), taxes, and insurance.
 This includes the monthly principal, interest, taxes, and insurance (called PITI).
 For homeowners: Consider maintaining a debt-to-income ratio for all debts

of 36% or less.
 This means that if you have a mortgage and other debts—credit card payments,
student loan payments, auto loan payment, and payday loan payments–your debt-to
income ratio should be below 36%.
 If you have court-ordered, fixed payments, such as child support, count these as debt
for this purpose.
 Some lenders will go up to 43% or higher for all debt.34
If your debt-to-income ratio is above these limits, you may want to use the
following tool to develop a plan to reduce your debt and lower your debt-to-income
ratio.
34 See http://www.fha.com/fha_requirements_debt.
Tool 3:
Debt-reduction worksheet
When it comes to reducing your debt, there are two basic strategies:
Highest interest rate method
Focus on the unsecured debt with the highest rate of interest, and eliminate it as quickly as
possible, because it is costing you the most. Once it is paid off, focus on the next most expensive
debt.
PRO CON
You eliminate the most costly debt first. You may not feel like you are making progress
very quickly, especially if this debt is large.
Snowball method
Focus on the smallest debt. Get rid of it as soon as possible. Once you have paid it off in full,
continue with the payment, but now dedicate it to the next smallest debt. This is called the
“snow ball method.” You create “a snow ball of debt payments” that keeps getting bigger as you
eliminate each debt. How? You keep making the payments, but you are redirecting them to the
next debt as each debt is paid off.
PRO CON
You may see progress quickly, especially if You may pay more in total because you are
you have many small debts. For some people,

not necessarily eliminating your most costly
this creates momentum and motivation.

debt.
There are other things you can do, too.
 Call your creditors to see if they will lower your interest rates. If you have paid all of your
bills on time, they may lower it to maintain your loyalty. If you are in a difficult position,
you could explain your hardship and ask them to lower the rate.
 Get another job in the short-term. Use all of your additional earnings to eliminate debts.
 Sell something, and use the income to pay off a debt or debts.
 If you are eligible, file for tax credits, and use your refund to pay down or eliminate
debts.
Check the method you are going to use, and then follow the instructions.
 Highest interest rate method
1. List your debts from highest rate to lowest rate.
2. In the column labeled Extra Payment, list the extra payment you will dedicate to the
debt with the highest interest rate until you have it paid off.
3. When this debt is paid off, allocate the entire payment (monthly payment + extra
payment) you were making to the next debt on the list.
 Snowball method
1. List your debts from smallest to largest in terms of the amount outstanding.
2. In the column labeled Extra payment, list the extra payment you will dedicate to the
smallest debt until you have it paid off.
3. When this debt is paid off, allocate the entire payment (monthly payment + extra
payment) you were making to the next debt on the list.
Date paid off in
Extra payment
Total amount
Monthly Due
outstanding
borrowed
payment
Monthly
Amount
Lender
date
full
Tool 4:
Student loan debt

The CPFB has a section on its website dedicated entirely to helping you plan for ways to pay for
postsecondary education. In fact, the tool will help you think through the entire process of
planning for and paying for school including:
 Researching schools
 Filling out the Free Application for Federal Student Aid (FAFSA), a first step in figuring
out how to pay for college
 Choosing a loan
 Comparing financial aid packages and college costs across more than one school
 Managing your money while in college
 Repaying your student loans
If you have student loan debt, start with the Repaying Your Student Loans section of the tool,
which can be accessed at: http://www.consumerfinance.gov/paying-for-college/repay-student
debt/#Question-1.
Repaying federal student loans

There are two general kinds of student loans: federal student loans and private student loans.
Federal student loans are loans that are funded by the federal government. Private
student loans are nonfederal loans made by a lender such as a bank, credit union, state
agency, or a school. In both federal and private student loans, delinquent payment will impact
your credit history and scores and may result in collections. Private student loans do not offer
the flexible repayment terms or borrower protections featured by federal student loans.
There are many options for paying back federal student loans. Do not ignore student loan
paperwork—nonpayment and delinquency reduces options for payment plans as many require
loans in good standing to qualify. Some of the repayment options include:
 Standard Repayment. Most borrowers start with this payment plan. This repayment
plan has fixed payment of at least $50/month for up to 10 years.
 Graduated Repayment. The payment is lower the first year and then gradually
increased every 2 years for up to 10 years.
 Extended Repayment. The payment is fixed or graduated for up to 25 years. The

monthly payments are lower than the standard or graduated repayment plans, but you
will pay more interest over the life the loan(s).
 Income-Based Repayment (IBR). Payment is limited to 15% of discretionary

income, which is the difference between your adjusted gross income and 150% of the
Federal Poverty Guidelines. Payments change as income changes and the terms can last
up to 25 years. After 25 years of consistent payment (you have missed no payments or
caught up with payments), the loan will be forgiven. You will have to pay income tax on
the portion of the loan that is forgiven. To qualify for IBR, you must be able to show
partial hardship.
 Pay as You Earn. Payment is limited to 10% of discretionary income as defined above,
payment changes as income changes, and the loan term is 20 years. After 20 years of
payments, the loan is forgiven as described above, and taxes will be owed on the amount
forgiven. To qualify for pay as you earn, you must be able to show partial hardship.
 Consolidation Loan. You pay off all of your existing federal student loans with a new
loan. This simplifies paperwork and payment for you—you go from monthly payments
on multiple loans to one payment per month on the one new loan. Your loans must be in
good standing to qualify. This results in lower monthly payments as the term is 30 years;
however, you will pay more interest over the life of the loan.
You may also qualify for deferment or forbearance in certain circumstances. In deferment,
payment of both principal and interest is delayed. If you have a subsidized federal loan, the
government pays your interest during the deferment. Otherwise you must pay interest or it
accrues, which means builds up. When interest builds up on student loans, it becomes part of
what you owe. This means you ultimately end up paying interest on the interest. Deferments
are only granted for specific circumstances including:
 Enrollment in college, a trade school, a graduate fellowship, or a rehabilitation program

for individuals with disabilities
 During unemployment
 During military services
 During times of economic hardship, including Peace Corps service
Forbearance means that you stop paying or pay a lesser amount on your loan for a 12-month
period. Interest accrues during forbearance.
When applying for a repayment option, be sure to continue making your loan payments until
you receive written notification that you have been approved for IBR or forbearance, for
example. This ensures your loan continues to be in good standing.
Finally, you may also apply for loan forgiveness, cancellation, or discharge in the
following situations:
 Total and permanent disability
 Death (someone would apply on your behalf)
 Closed school
 Teacher loan forgiveness ( if you are a teacher working in certain educational settings)
 Public services loan forgiveness (if you work in a public service sector and have made 120
loan payments)
Except for the above circumstances, it is nearly impossible to eliminate federal student loan debt
even in bankruptcy. And your wages and bank accounts can be garnished for nonpayment.
Tool 5:
When debt collectors call

Ask for more information
Before sending money or acknowledging the debt, ask the debt collection agency to verify the
debt. You can do this by sending a letter within 30 days of the debt collector’s first contact
asking them to verify the debt is yours and that they have the authority to collect it.
You can use the sample letter on the next page to ask for more information about this debt.
 Read the information below.
 Edit the letter as needed to fit your situation. Delete any bullets that don’t apply to you,
or isn’t information you’re looking for.
 Print and send the letter as soon as you can. Keep a copy for your records.
Send this letter as soon as you can and, if at all possible, within 30 days of when a debt
collector contacts you the first time about a debt. Even if 30 days have passed, and a debt
collector isn’t legally required to give you certain information, you can still ask for it.
If you ask in writing before the deadline, a debt collector has certain legal
responsibilities to give you some information. But if the collector doesn’t provide
everything you request, that doesn’t necessarily mean the debt collector has broken any laws or
has given up a legal right to collect a debt. The debt collector could still be allowed to demand
that you pay, or file a lawsuit. If you have specific questions, contact an attorney.
If the debt collector makes vague statements about what will happen if you do not pay, read
their response to your letter carefully. Federal law prohibits a debt collector from
deceiving you by threatening to take actions they can’t take or don’t intend to take.
But if they tell you that they intend to sue you, you should take that seriously.
State laws, have statutes of limitations, or limited time periods when creditors or debt collectors
can file a lawsuit to collect a debt. These periods of time can be two years or longer; the period of
time varies by state and by the type of debt. In some states, even a partial payment on the debt
will restart the time period. You may want to consult an attorney or the applicable law in your
state to know when the statute of limitations expires before making any payment on a debt.
Knowing whether or not a debt collector is licensed is useful (though not all states require
licenses) because if the debt collector isn’t conducting itself properly, you can contact the state
licensing agency which in many cases is the state attorney general.
Example letter to a debt collector asking to verify the debt
[Your name]
[Your return address]
[Date]
[Debt collector name]
[Debt collector address]
Re: [Account number for the debt, if you have it]
Dear [Debt collector name]:
I am responding to your contact about a debt you are trying to collect. You contacted me
by [phone/mail], on [date] and identified the debt as [any information they gave you
about the debt]. Please supply the information below so that I can be fully informed:
Why you think I owe the debt and to whom I owe it, including:
 The name and address of the creditor to whom the debt is currently owed, the
account number used by that creditor, and the amount owed.
 If this debt started with a different creditor, provide the name and address of
the original creditor, the account number used by that creditor, and the
amount owed to that creditor at the time it was transferred. When you
identify the original creditor, please provide any other name by which I
might know them, if that is different from the official name. In addition, tell
me when the current creditor obtained the debt and who the current creditor
obtained it from.
 Provide verification and documentation that there is a valid basis for

claiming that I am required to pay the debt to the current creditor. For
example, can you provide a copy of the written agreement that created my
original requirement to pay?
 If you are asking that I pay a debt that somebody else is or was required to
pay, identify that person. Provide verification and documentation about why
this is a debt that I am required to pay.
The amount and age of the debt, specifically:
 A copy of the last billing statement sent to me by the original creditor.
 State the amount of the debt when you obtained it, and when that was.
 If there have been any additional interest, fees or charges added since the last
billing statement from the original creditor, provide an itemization showing the
dates and amount of each added amount. In addition, explain how the added
interest, fees or other charges are expressly authorized by the agreement
creating the debt or are permitted by law.
 If there have been any payments or other reductions since the last billing
statement from the original creditor, provide an itemization showing the dates
and amount of each of them.
 If there have been any other changes or adjustments since the last billing
statement from the original creditor, please provide full verification and
documentation of the amount you are trying to collect. Explain how that amount
was calculated. In addition, explain how the other changes or adjustments are
expressly authorized by the agreement creating the debt or permitted by law.
 Tell me when the creditor claims this debt became due and when it became
delinquent.
 Identify the date of the last payment made on this account.
 Have you made a determination that this debt is within the statute of limitations
applicable to it? Tell me when you think the statute of limitations expires for this
debt, and how you determined that.
Details about your authority to collect this debt.
 I would like more information about your firm before I discuss the debt with
you. Does your firm have a debt collection license from my state? If not, say why
not. If so, provide the date of the license, the name on the license, the license
number, and the name, address and telephone number of the state agency
issuing the license.
 If you are contacting me from a place outside my state, does your firm have a
debt collection license from that place? If so, provide the date of the license, the
name on the license, the license number, and the name, address and telephone
number of the state agency issuing the license.
I have asked for this information because I have some questions. I need to hear from
you to make an informed decision about your claim that I owe this money. I am open to
communicating with you for this purpose. In order to make sure that I am not put at
any disadvantage, in the meantime please treat this debt as being in dispute and under
discussion between us.
In addition to providing the information requested above, please let me know whether
you are prepared to accept less than the balance you are claiming is owed. If so, please
tell me in writing your offer, with the amount you will accept to fully resolve the
account.
Thank you for your cooperation.
Sincerely,
[Your name]
You can ask a debt collector to stop contacting you

The following example letter tells the debt collector to stop contacting you unless they can show
evidence that you are responsible for this debt. Stopping contact does not cancel the debt. So, if
the debt collector still believes you really are responsible for the debt, they could still take other
action. For example, you still might be sued or have the status of the debt reported to one or all
of the three credit reporting agencies—Equifax, Experian, and TransUnion.
You may not want to make a request to stop contact if the debt is your home
mortgage. If you ask your mortgage servicer to stop contacting you, the servicer will not have
to reach out to tell you about options that you may have to avoid foreclosure.
Example letter
[Your name]
[Date]
[Debt collector name]
[Debt collector Address]
Re: [Account number for the debt, if you have it]
Dear [Debt collector name]:
I am responding to your contact about a debt you are attempting to collect. You
contacted me by [phone/mail], on [date]. You identified the debt as [any information
they gave you about the debt].
Please stop all communication with me and with this address about this debt.
Record that I dispute having any obligation for this debt. If you forward or return this
debt to another company, please indicate to them that it is disputed. If you report it to a
credit bureau (or have already done so), also report that the debt is disputed.
Thank you for your cooperation.
Sincerely,
[Your name]
Resources
Consumer.gov, Coping with Debt:
http://www.consumer.ftc.gov/articles/0150-coping-debt
MyCreditUnion.gov, Pocket Cents:
http://www.mycreditunion.gov/what-credit-unions-can-do/Pages/paying-off-Credit
Cards.aspx
StudentAid.ed.gov, Repay Your Loans: http://studentaid.ed.gov/repay-loans
Medicare.gov, 4 Programs that Can Help You Pay Your Medical Expenses:
http://www.medicare.gov/Pubs/pdf/11445.pdf
CFPB.gov, Know Before You Owe:
http://www.consumerfinance.gov/knowbeforeyouowe
Foundation for Credit Counseling: http://www.nfcc.org
no longer needed.
MODULE 12:
Understanding credit reports

and scores
What are credit reports?
A credit report is a consumer report that looks at some of your bill paying history, public record
information, and a record of your applications for credit. Your credit reports shows information
about how you have used credit, such as how much credit you have, how much of your available
credit you are using, whether you have made your payments on time, and whether anyone has
sent a delinquent (late) debt you owe to a debt collector.
Why do credit reports and scores matter?

Some people think credit reports and scores don’t matter to them, because they never want to
get a loan. But many people and businesses use reports and scores to make decisions about you.
 A bank or credit card will use them to decide whether to give you a loan or offer you a
credit card.
 A credit card company may use them to decide what interest rate you will pay on your
future charges if you are approved.
 A landlord may use your reports or scores to determine whether to rent an apartment to
you.
 In many states, an insurance company may use your reports or scores to determine
whether to give you insurance coverage and the rates you will pay for coverage.
 Other service providers, like cell phone and utilities companies, may use them to screen
you for deposit levels and cost of service.
 A potential employer may use your reports to determine whether you will get a job.
(Note: According to the credit reporting agencies, actual scores are not used by
employers. A special version of the credit report is used by employers.)
 An existing employer may use your reports to determine whether you will get a
promotion.
Having a positive credit history and good credit scores can open doors for you. Not having a
positive credit history or good credit scores can create obstacles for you and end up costing you
more money in terms of the price you will pay for loans, credit cards, and other services.
That’s why it’s important to pay bills on time and pay attention to what’s in your credit report.
The score is calculated based on the information in the report – so take the time to make sure
the information in your report is accurate.
What is in a credit report?

Companies collect information about consumers from many sources called information
furnishers. These companies organize this information into reports and then sell these reports to
businesses so they can make decisions about you. The biggest companies, called nationwide
credit reporting agencies or credit bureaus, that create credit reports include Equifax, Experian,
and TransUnion. Each of these companies is likely to have a file on you. Your files at all three are
likely to be similar, but there may be differences.
A credit report contains five sections. These sections include:
 Header/identifying information—This includes your name and current address, as

well as other information that can be used to distinguish or trace your identity, either by
itself, like your Social Security number, or when combined with other personal
information, including date and place of birth. This information may not be complete—
all of the jobs you have held, for example, may not be listed. But what is listed should be
accurate. A credit report does not include some personal information such as race or
ethnicity.
 Public record information—This section includes public record data of a financial
nature, including consumer bankruptcies, judgments, and state and federal tax liens.
Records of arrests and convictions generally do not appear on your credit file, but other
types of consumer reporting agencies, such as employment background screening
agencies, often include them. Other public records that usually do not appear in credit
reports are marriage records, adoptions, and records of civil suits that have not resulted
in judgments.
 Collection agency account information—This section will show if you have or have
had any accounts with a collection agency and the status of those accounts.
 Credit account information —This section may include accounts you have now or
that you had before with creditors. This includes the company name, account number,
date opened, last activity, type of account and status, date closed if the account is no
longer open, credit limit, items as of date (any amount currently owed and whether you
are current or late with payments) and the balance, whether you have a past due amount,
and the date information was reported to the credit bureau. Some accounts may not be
listed, especially older accounts or those you have closed. So there may be
inconsistencies across credit files and credit reporting agencies in the contents of this
section. It is important to make sure what is listed, however, does or did belong to you.
 Inquiries made to your account—Companies look at your credit report when you
apply for credit, when they review your account, or when they offer you a special
promotional rate. When you apply for credit and a lender reviews your credit report, it is
listed as an “inquiry” on your report. Promotional inquiries, periodic reviews of your
credit history by one of your creditors, and your requests for a copy of your report aren’t
listed as an “inquiry.”
In general, negative information can be reported to those who request your credit report for only
a specified period of time—seven years for most items. A bankruptcy can stay on your credit
report for 10 years, and certain other court records can be reported on your credit report for
longer than seven years. For civil suits and judgments, as well as arrest records, the information
can be reported on your credit report for seven years or for the duration allowed by the statute of
limitations, whichever is longer. For criminal convictions, there’s no time limit. There is no limit
to the length of time that positive information can stay on your credit report.
Even though the information is not able to be reported beyond the limits provided in the Fair
Credit Reporting Act, the credit reporting agencies may continue to keep the information in your
file. Why? Because there is no time limit in terms of reporting information (positive or negative)
when you are:
 Applying for credit of $150,000 or more
 Applying for life insurance with a face value of $150,000 or more
 Applying for a job with an annual salary of $75,000 or more
Companies collect this information and sell it to other businesses, which use it to make decisions
about you. How do they use this information to make decisions? Businesses that use this
information believe that how you have handled credit in the past is a good predictor of how you
will handle credit in the future. If you have struggled with managing your credit in the past
(especially the recent past), they believe you are likely to struggle again.
Each of the three major credit reporting agencies—Equifax, Experian, and TransUnion—has its
own presentation format. Here is an example of a credit report that highlights the key sections
you will find in all three agencies’ credit reports.
Negative information
In general, negative information will be reported on your credit report for seven years. There are
exceptions including:
 Bankruptcy—Depending on the type of bankruptcy, up to 10 years
 Tax Liens—seven years from the time the liens are paid
 Account sent to collection or charged off —seven years plus 180 days from the
delinquency
 Criminal Convictions—Indefinite
There is no time limit to the reporting of negative information when you are:
 Applying for credit of $150,000 or more
 Applying for life insurance with a face value of $150,000 or more
 Applying for a job with an annual salary of $75,000 or more
Example credit report
This is an example credit report and not based on the format of any one credit reporting agency.
The italicized text explains what types of information are found in each section.
It is for example purposes only. Readers should note that each credit reporting agency has its
own format that will vary in layout, look, and level of detail reported.
This example is fictional. The credit card payment schedule is based on a credit card with a 22%
APR. In this example, the individual is paying down a high balance of $9,869, paying the
minimum payment each month calculated at 4% of the balance, and not using the card to make
additional purchases. While credit card companies use a variety of methods to determine
finance charges, a simple interest calculation was used for the purposes of this example.
Amounts were rounded to the nearest dollar.
According to the credit card payment calculator on Bankrate.com, making the minimum
payment of 4%, it will take the consumer 15 years and 3 months to pay off this credit card debt.
The consumer will also pay $8,165 in interest assuming no late fees.
File number: 12345678 Date issued: 9/30/2013
Personal information
This includes your name, current address, as well as other information that can be used to
distinguish your identity by itself like your Social Security number, or when combined with other
personal information, including date and place of birth.
Name: Miguel Smith SSN: XXX-XX-1234
Other names: Miguel S Smith Date of birth: 12-1-1980
Miguel Simon Smith Telephone: 555-555-1000
Addresses reported:
457 First Street, Littletown, MI 09876
13476 Avenue A, Big City, WI 43526
Employment data reported:
Employer name: Riviera Restaurants Position: Manager
Date reported: 3/2013 Hired: 11/2010
Employer: Freer Chiropractic College Position: Food services
Date reported: 6/2008 Hired: 3/2008
Public records
This section includes public record data of a financial nature, including consumer bankruptcies,
judgments, and state and federal tax liens.
Big City Wisconsin Court Docket# 200900001467
515 C St, NE, Big City, WI 43528
Date filed: 8/3/2009 Type: Chapter 7 Bankruptcy
Amount: $11,987 Responsibility: Individual
Big City Municipal Court Docket# 200700056712
4326 Fourth Street, SW, Big City, WI 43530
Date filed: 4/14/2007 Type: Civil Judgment
Amount: $4,763 Responsibility: Individual
Plaintiff: Bank of Big City Plaintiff attorney: Lisa Perry
Collections
This section will show if you have any accounts with a collection agency and the status of those
accounts.
Reliable collections (Y76381) Account# 3629
Original creditor: ABC Megastore Amount placed: $2,500
Opened: 7/2/2009 Account type: Open
Balance: $1,000 Responsibility: Individual
Account information
This section includes accounts you have now or that you had before with creditors.
Littletown Bank (B62391) Account# 2010004637
Balance: $14,285 Pay status: 30 days past due
Date updated: 8/30/2013 Account type: Automobile
High balance: $16,500 Responsibility: Individual
Past due: $395 Date opened: 2/5/2013
Terms: $395/month 48 months
Responsibility: Individual Payment received: $349
Account type: Automobile Last payment made: 7/5/2013
8/5/13 7/5/13 6/5/13 5/5/13 4/5/13 3/5/13

Balance $14,285 $14,680 $14,988 $15,294 $15,598 $15,901
Scheduled $395 $395 $395 $395 $395 $395
Payment
Amount Paid $0 $395 $395 $395 $395 $395
Past Due $395 $0 $0 $0 $0 $0
Rating 30 OK OK OK OK OK
Bank of Wisconsin (B42394) Account# 543298760192XXXX
Balance: $3,603 Pay status: Paid or paying as agreed Date updated: 8/30/2013
Account type: Revolving; Credit Card High balance: $9,869 12/09 Responsibility: Individual
Credit limit: $10,000 Past due: $0 Date opened: 6/1/2008
8/2013 7/2013 6/2013 5/2013 4/2013 3/2013 2/2013 1/2013 12/2012

Balance $3,683 $3,764 $3,848 $3,933 $4,020 $4,109 $4,200 $4,293 $4,388
Scheduled $147 $151 $154 $157 $161 $164 $168 $172 $176
Payment
Amount $147 $151 $154 $157 $161 $164 $168 $172 $176
Paid
Past Due $0 $0 $0 $0 $0 $0 $0 $0 $0
Rating OK OK OK OK OK OK OK OK OK
11/2012 10/2102 9/2012 8/2012 7/2012 6/2012 5/2012 4/2012 3/2012

Balance $4,485 $4,585 $4,686 $4,790 $4,896 $5,005 $5,115 $5,227 $5,345
Scheduled $179 $183 $187 $192 $196 $200 $205 $209 $214
Payment
Amount $179 $183 $187 $192 $196 $200 $205 $209 $214
Paid
Past Due $0 $0 $0 $0 $0 $0 $0 $0 $0
Rating OK OK OK OK OK OK OK OK OK
Inquiries made to your account
This section includes a record of anytime a company requests information from a credit
reporting agency about you.
Inquiries that display to others

The following companies have received your credit report.
Auto Loan Store Requested on: 6/2013
90 President Lane, Big City, WI 43529
Super Store Requested on: 12/2012
100 First Street, Anytown, IA 78691
Promotional inquiries
The following companies received your name, address and other limited information
about your so they could make a firm offer of credit or insurance. They did not receive
your full credit report. These are not displayed to others and do not affect your credit
scores.
Dress for Success Fashion House Requested on: 07/2012
31 Fashion Lane, Big City, WI 43530
EZ Loan Store Requested on: 4/2013
220 4th Avenue, Littletown, MI 09876
Account review inquiries
The companies listed below obtained information from your consumer report for the
purpose of an account review of business transaction. These are not displayed to others
and do not affect your credit scores.
Bank of Wisconsin Requested on: 3/2013
457 State Street, Big City, WI 43532
Terms used on credit reports can be confusing. Here are the definitions of some key terms used
on credit reports:
Term Explanation
A person permitted to use a credit card account, but who is not responsible for
Authorized user the account. The payment status of the account (positive or negative) is shown
on the credit report of both the authorized user and the account’s owner.
The history of the account including on-time payments as well as delinquencies

Payment status
and other negative items.
An account that has not been paid on time and is late. Generally delinquencies
Delinquent
are expressed as being 30, 60, 90, or 120 days or more delinquent.
Default An account that has been delinquent (late) for several 30 day billing cycles.
When a business decides an account is uncollectible. However, the consumer

Charge off
is still responsible for the debt, and collections will likely continue on this debt.
The date an account is closed. An account can be closed by the business or

Closed date the consumer. If there is still a balance when the account is closed, the
consumer is still responsible for paying this.
When the court releases a consumer of responsibility for a debt as part of the
Discharge
bankruptcy process.
A legal process in which the consumer’s assets are used to pay off creditors.
Chapter 7
Any eligible debts not paid through the assets are discharged. This will be in
bankruptcy
the public records section of the credit report.
A legal process in which a consumer enters into a payment plan to pay off
Chapter 13 creditors using future income. These are arranged by the courts. Once the
bankruptcy payment plan is complete, remaining eligible debts are discharged. This will be
in the public records section of the credit report.
A right consumers have to challenge and require investigation of information

Dispute they believe is incorrect on their credit reports. Consumers must initiate the
dispute process.
End user The business or individual that receives a credit report.
Information
provider or A business or individual that reports information to a credit reporting agency.
furnisher
Disputing errors on credit reports

If you find something wrong on your credit report, you should dispute it. You may contact both
the credit reporting agency (most often TransUnion, Equifax, or Experian) and the
company that provided the incorrect information (the information furnisher). You
will need to explain what you think is wrong and why. If you have evidence (a receipt for
payment, copy of a cancelled check, etc.) you can include a copy of this and a copy of your credit
report with the incorrect information highlighted.
Never send original documents—only send copies. You may want to send this information with
your letter using certified mail return receipt requested. This will give you notification of when
the credit reporting agency and information furnisher receive your dispute letter.
The credit reporting agency generally has 30 - 45 days to respond to your request from the time
it receives it (and you will know this because of the return receipt you have).
You can use this example dispute letter from the Federal Trade Commission to a credit reporting
agency as a guide for writing your own letter.
Example letter
[Your name]
[Date]
Complaint Department
[Company Name]
[Street Address]
[City, State, Zip Code]
Dear Sir or Madam:
I am writing to dispute the following information in my file. I have circled the items I
dispute on the attached copy of the report I received.
This item [identify item(s) disputed by name of source, such as creditors or tax court,
and identify type of item, such as credit account, judgment, etc.] is [inaccurate or
incomplete] because [describe what is inaccurate or incomplete and why]. I am
requesting that the item be removed [or request another specific change] to correct the
information.
Enclosed are copies of [use this sentence if applicable and describe any enclosed
documentation, such as payment records and court documents] supporting my
position. Please reinvestigate this [these] matter[s] and [delete or correct] the disputed
item[s] as soon as possible.
Sincerely,
[Your name]
Enclosures: [List what you are enclosing.]
Be sure to keep copies of everything you send to the credit reporting agencies,
including the dates you sent the items.
You can contact the primary nationwide credit reporting agencies online, by mail, or by phone:
Equifax
Online: http://www.ai.equifax.com/CreditInvestigation
By mail: Download and complete the dispute form:
http://www.equifax.com/cp/MailInDislcosureRequest.pdf
Mail the dispute form with your letter to:
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374
By phone: Phone number provided on credit report or (800) 864-2978
Experian
Online: http://www.experian.com/disputes/main.html
By mail: Use the address provided on your credit report or mail your letter to:
Experian
P.O. Box 4000
Allen, TX 75013
TransUnion
Online: http://www.transunion.com/personal-credit/credit-disputes-alerts-freezes.page
http://www.transunion.com/docs/rev/personal/InvestigationRequest.pdf
TransUnion Consumer Solutions
P.O. Box 2000,
Chester, PA 19022-2000
By phone: (800) 916-8800
If the dispute results in a business changing the information it reported, the business must
notify the credit reporting agencies to which it has provided the disputed information. And vice
versa, if the consumer filed a dispute with a credit reporting agency, the agency must first fix the
file and notify the creditor of the error.
You can also submit a complaint to the Consumer Financial Protection Bureau. To do so:
 Visit our website at http://www.consumerfinance.gov/complaint.
 Select the icon labeled “credit reporting.”
 Complete and submit the online form.
If you suspect that the error on your report is a result of identity theft, visit the Federal Trade
Commission’s Fighting Back Against Identity Theft website for information about identity theft
and steps to take if you have been victimized. This will include filing a fraud alert and possibly
filing a security freeze.
What are credit scores?

Credit scores sum up key pieces of your credit history in a number at a moment in time—like a
photograph. Companies that make credit scores each use their own complicated mathematical
formulas to do this. The information used in this formula comes from your credit reports. The
formulas are created by looking at how other people whose credit file looks like yours have paid
their bills over time.
Credit scores make it easier for businesses to make decisions about whether to do business with
you. This is because scores provide a standardized way for businesses to understand the risk that
you may not repay your loan. Without it, they would have to take the time to read and interpret
your credit report.
With credit scoring formulas, the higher the number, the less risky lenders believe you are likely
to be. In fact, most credit scoring formulas say that you are unlikely to default on a loan if your
credit scores are high.
FICO scores (calculated using a formula made by Fair Isaac Corporation) are the most
commonly used scores. These scores range from 300 to 850. People with the very best credit
scores have FICO Scores of 750 and higher. A score above 700 is considered good by most
businesses. According to the FICO Banking Analytics Blog, in 2012, just over 24% of the
population had FICO scores below 600, 22% of the population had scores from 600 to 699, and
53% of the population had scores of 700 or above.35
35
FICO, FICO Scores Reflect Slow Economic Recovery, Bank Analytics Blog, September 18, 2012. See
http://bankinganalyticsblog.fico.com/2012/09/fico-scores-reflect-slow-economic-recovery-.html.
Finally, it is important to note that you have more than one credit score – each agency generates
a score, and they may differ from each other, sometimes significantly. In addition, an agency
generates different scores for different kinds of users, and the score it sells to you may be
another different score called an “educational score.”
What goes into FICO scores?

The actual way the FICO scores (and other scores) are calculated is considered a business secret.
But we do know generally what makes up FICO Scores.36
FIGURE 2: WHAT GOES INTO FICO SCORES?
10%
10%
35%
Payment history
Amounts owed
Length of credit history
15% New credit
Types of credit used
30%
Payment history tracks whether you are paying your bills on time and as agreed. This is the
biggest factor in your FICO Scores. Paying bills late, not paying bills at all, and having bills that
go to collections will cause your scores to drop. The older this information is, the less impact it
has on your scores. This is the reason is it more important to stay current with active accounts
than it is to pay off old debts. Debts that have gone to collections have already damaged your
scores.
36 Pie chart values are from FICO. See http://www.myfico.com.
Credit utilization rate
Credit scoring models penalize you for using too much of the credit you have available to
you. This means your credit score may drop if you use more than 30% of the revolving
credit you have available to you. The easiest way to understand credit utilization is
through an example:
If someone had a credit card with a $5,000 credit limit, and she had charged $3,500 on
this card, her credit utilization rate is calculated as follows:
$3,500 (amount charged to credit card) divided by $5,000 (credit limit) = .7 or 70%
To figure out the maximum that she should charge on this card if she wants to maintain
her credit score:
$5,000 (the credit limit) multiplied by .3 (30%) = $1,500.
Does this mean that only the unpaid balance is counted toward the credit utilization rate?
The answer is no. If at any time during the month you use more than 30% of your
available credit limit, you run the risk of your credit score dropping.
If you know you have more than 30% of your credit limit charged on your card, you may
want to get your credit utilization rate below 30% by paying down your credit card before
you apply for new credit.
Amounts owed includes whether you are paying down your loan balances as agreed. It also
includes your credit utilization rate. Your credit utilization rate is how much of your available
credit you are using. If you use more than 30% of your credit limits, your scores may drop.
Length of credit history is the next factor that impacts your scores. Your score increases the
longer you have a credit history.
New credit tracks your inquiries. If you have too many inquiries, the model interprets this to
mean you have a high demand for credit, which may be an indicator of risk, and your scores may
drop. When you are shopping for a home,, car, or student loan, however, most models give you a
short window of time when multiple inquiries can be made for some types of credit without
causing your score to drop.
Finally, types of credit used are considered. Your FICO scores increase if you have both credit
cards (revolving credit) and loans (installment credit such as a mortgage or car loan). Generally,
it is considered a positive to have a mortgage, an auto loan, and not too many credit cards.
Tool 1:
Getting your credit reports

and scores
Getting your reports
Getting your credit report is the first step to improving your credit. It is important to think about
credit, because a good credit history can help you:
 Get and keep a job
 Get security clearance for a job including a military position
 Get an apartment
 Get insurance coverage
 Get better prices on cell phone plans and utilities
 Get a credit card
 Get loan from a bank or credit union including a loan for a house (a mortgage)
 Get a better credit score—all of the information used to calculate your score comes from
credit reports
If any of these things are important to you, improving your credit report can help you get them.
Start with your free annual report

You can get a free copy of your report from each of three agencies every 12 months.
Some states allow for an additional free report each year: Colorado, Georgia, Maine, Maryland,
Massachusetts, New Jersey, Vermont and Puerto Rico.
To order through the website, visit https://www.annualcreditreport.com. You will complete a
form with basic information (your name, Social Security number, address, etc.). You will select
the report(s) you want—Equifax, Experian, and/or TransUnion.
Then for each report, you will be asked a series of security questions such as: former addresses,
amount of a loan you have, phone numbers that have belonged to you, counties you may have
lived in, etc. If you are unable to answer these questions, you will have to use another method.
You will save a PDF version of your report, print the report, or both.
Be sure you do this in a safe and secure location. Avoid doing this on public computers, such as
those at a library.
Alternative methods
Order by phone: (877) 322-8228. You will go through a verification process over the phone.
Order by mail: Download the request form from https://www.annualcreditreport.com. Print

and complete the form. Mail the completed form to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Use this table to track when you have printed or received your credit reports.
Source of credit Equifax Experian TransUnion LLC

report
PO Box 740241 (866) 200-6020 PO Box 1000
Atlanta, GA 30374 www.experian.com Chester, PA 19022
(877) 784-2528 (800) 916-8800
www.equifax.com www.transunion.com
Date report printed or

received
Beware of imposter websites offering free credit reports. Some companies offer free credit
reports, but you generally have to buy another product or service to get it. DO NOT use a search
engine (Google or Yahoo, for example) to find the annual credit report site. Go directly to:
https://www.annualcreditreport.com or go through http://www.consumerfinance.gov.
You can get an additional free report if you:
 Are unemployed and plan to look for employment in the next 60 days
 Are receiving public assistance
 Have been the victim of fraud including identity theft
 Have had adverse action taken (you have been denied credit, employment, insurance,
etc.) because of information in your credit report. In this case, you have 60 days to
request your report.
If you are under 18, you should not have a credit report unless:
 You are an authorized user or joint owner on an account
 You are an emancipated minor
 Your state law allows you to enter contracts at 17
 You have student loans
 You have been the victim of identity theft and credit or financial fraud
Currently, only Experian allows minors (once they reach the age of 14) to obtain their own credit
reports. Call (888) 397-3742 to get your file.
With TransUnion, you can send an email to [email protected] to see if a credit file
exists. Or you can visit the TransUnion website and complete the Child Identity Theft Inquiry
Form. If the minor has a legitimate credit history (he or she is the joint owner of or an
authorized user on an account), then a parent or guardian must order the report.
For the Equifax report, call (877) 784-2528. Currently, an adult—the parent or legal guardian—
must order the credit report on behalf of the minor.
Getting your credit scores

Unlike your credit report, which you can get at no cost to you, you usually have to pay for your
credit score. There are certain instances in which you are entitled to your credit score for free,
for example if you are denied a loan on the basis of your credit score.
There are many credit scores you can purchase in the marketplace. The type of credit score most
used by lenders is a FICO score. Another score also used by lenders is the Vantage Score, which
you can purchase through TransUnion.
Credit scores offered online are approximations of your scores. They are not the actual scores
businesses will use to make decisions about you. However, some people find they can be useful
for education. You can generally see if your credit scores are moving up or down. But the actual
number may not reflect your actual FICO Scores. So this may be confusing.
You cannot know ahead of time whether the scores you purchase will vary moderately or
significantly from a score sold to creditors. You should not rely on credit scores you purchase
exclusively as a guide to how creditors will view you credit quality. Knowing what is in your
credit report and fixing errors is more important to building your credit than
buying a credit score that may not tell you what you need to know before you apply
for a loan.
To order your FICO score Equifax score: Date:

visit
http://www.myfico.com
Each credit score will cost. Experian score: Date:
This company also offers
other credit reporting and
monitoring services for a TransUnion score: Date:
fee.
You have the right to get a free credit scores if:
 You apply for a mortgage loan and the lender uses your credit score. The lender must
send you a notice telling you this and include your score.
 Your application for credit is turned down or you have to pay a higher initial deposit for a
service (cell phone plan for example). You will get a notice (disclosure) from the provider
explaining this with your credit score.
 You get less favorable terms from a lender than the terms available to most people who
get credit from that lender. You will get a notice (disclosure) from the provider
explaining this with your credit score.
no longer needed.
Tool 2:
Credit report review checklist
Once you get your credit report, you will want to review it carefully. Ordering it is not enough—
you have to read it. Credit reports may have mistakes. And if there are mistakes, you are the only
one who is likely to find them.
Use the following worksheet to review each section of your credit report. Do this for each credit
report you get throughout the year. Then, keep the completed checklist with your credit report.
Your credit report contains a lot of personal and financial information. Be sure to keep any hard
copies of your credit reports in a safe and secure place. If you do not want to hang on to your
credit reports, be sure to shred them before getting rid of them.
Today’s date: __________ Name of credit reporting agency ____________
Checklist item
Is your name correct?
Is your Social Security number correct?
Is your current address correct? Is your current phone number correct?
Are the previous addresses they have listed for you correct?
Is your marital status listed correctly?
Is your employment history accurate?
Is everything listed in the personal information section correct?
Is there anything listed in the public record information? Is it correct? Highlight the
information you think may not be correct.
Review each item under the credit account (trade account) section. Are the accounts on
the list still open?
Are all of the current balances correct?
Are accounts where you are an authorized user or joint owner listed?
Are zero balances recorded for debts discharged in bankruptcy? For debts paid in full?
Are you listed as a co-signer on a loan? Is this correct?
Are accounts that you closed listed as “closed by the consumer”?
Is negative information reported on each credit account correct? Look for late payments
and missed payments. Highlight those items you think are not correct.
Are any accounts listed more than once? Check to make sure the same account is not
listed multiple times in the collections section.
Is old negative information still being reported? If yes, highlight the information that has
exceeded the negative information reporting limit, which is usually seven years.
Do you suspect that you have been the victim of identity theft after reviewing your credit
reports?
If you find something wrong with your credit report, you should dispute it. You may contact
both the credit reporting company and the creditor or institution that provided the information.
Explain what you think is wrong and why.
To correct mistakes, it can help to contact both the credit reporting company and
the source of the mistake. You may file a dispute not only with the credit reporting
company, but also directly with the source of the information, and include the same supporting
documentation. However, there are certain types of disputes that creditors and furnishing
institutions are not required to investigate.
You may file your dispute online at each credit reporting agency’s website.
If you file a dispute by mail, see the example letter earlier in this module. Your dispute letter
should include: Your complete name, address, and telephone number; your report confirmation
number (if you have one); and the account number for any account you may be disputing.
In your letter, clearly identify each mistake, state the facts, explain why you are disputing the
information, and request that it be removed or corrected. You may want to enclose a copy of the
portion of your report that contains the disputed items and circle or highlight the disputed
items. Include copies (not originals) of documents that support your position.
Send your letter of dispute to credit reporting companies by certified mail, return receipt
requested, so that you will have a record that your letter was received. You can contact the
nationwide credit reporting companies online, by mail, or by phone:
You can contact the primary nationwide credit reporting agencies online, by mail, or by phone:
Equifax
Online: http://www.ai.equifax.com/CreditInvestigation
http://www.equifax.com/cp/MailInDislcosureRequest.pdf
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374
Experian
Online: http://www.experian.com/disputes/main.html
By mail: Use the address provided on your credit report or mail your letter to:
Experian
P.O. Box 4000
Allen, TX 75013
TransUnion
Online: http://www.transunion.com/personal-credit/credit-disputes-alerts-freezes.page
http://www.transunion.com/docs/rev/personal/InvestigationRequest.pdf
TransUnion Consumer Solutions
P.O. Box 2000,
Chester, PA 19022-2000
By phone: (800) 916-8800
Keep copies of your dispute letter and enclosures.
If you suspect that the error on your report is a result of identity theft, visit the Federal Trade
Commission’s Fighting Back Against Identity Theft website for information about identity theft
and steps to take if you have been victimized. This will include filing a fraud alert and possibly
filing a security freeze.
If the error is with a specific account, you can first contact the creditor (information furnisher)
to resolve the dispute.
Whether you file your dispute directly with the creditor (information furnisher) or the credit
reporting agency, they generally have 30 - 45 days to investigate your claim and 5 days to send
you written notice once their investigation is over.
If the dispute results in a business changing the information it reported about you, the business
must notify the credit reporting agencies. And vice versa, if you filed your dispute with a credit
reporting agency, it must fix your file and notify the creditor of the error.
Steps to filing a dispute
Write a letter to the credit bureau that sent you the report.
Provide the account number for the item you feel is not accurate.
For each item, explain concisely why you believe it is not accurate.
If you can, include copies of bills or cleared checks (money order stubs) that show you
have paid them on time.
Provide your address and telephone number at the end of the letter so the credit
bureau can contact you for more information if necessary.
Make a copy of your letter before you send it to the credit bureau.
Send the letter. You may choose to use Certified Mail with Return Receipt to have
proof of when the letter was received. The consumer reporting agency or the creditor
generally has 30-45 days to investigate your claim.
no longer needed.
Tool 3:
Improving credit reports and

scores
Your credit report shows information about how you have used credit, such as how much credit
you have, how much of your available credit you are using, whether you have made your
payments on time, and whether anyone has sent a loan you owe to a debt collector.
A credit score is a number that is used to predict how likely you are to pay back a loan. Your
credit score starts with the information about you from your credit report. A mathematical
prediction formula is applied to this information about you from your credit report. That
prediction formula, which is called a scoring model, creates a number, and this number is your
credit score.
To get and keep a good credit score:
 Pay all your loans on time
 Make sure information in your credit report is correct
 Don’t use too much of the credit that is available to you
If you want to qualify for credit, focus on improving your reports and scores now. Use this
worksheet to ensure you are focusing on the areas that matter most.
if you Strategy for improving credit reports and scores Other
plan to information or
implement resources you
need
Obtaining free credit reports annually

Online at https://www.annualcreditreport.com
By phone: Call (877) 322-8228

By mail: Go to https://www.annualcreditreport.com to print the
form
(Use Tool 1: Getting your credit reports and scores)
Reviewing the credit reports for accuracy

(Use Tool 3: Credit report review checklist)
Disputing errors found on the reports
(Use Tool 3: Credit report review checklist)
Understanding Credit Scores
(Use Tool 2: Getting your credit reports and scores)
Paying bills on-time is the most effective way to improve your

credit reports and credit scores.
Keeping the amount of credit available that you use low. (While
there is not an “official” published limit, many financial experts
recommend keeping the amount of credit used between 25%
and 30%37 of the credit available.)
Keeping unused credit accounts open—credit card company

may close account because of inactivity. (They are not allowed
to charge fees if this occurs.)
However, if your goal is paying down debt and you may be
tempted to use the card, keeping the account open may not help
you reach your goal.
Developing a plan to take care of outstanding judgments or liens
37 For two examples, see http://www.chicagotribune.com/classified/realestate/sns-201204201830--tms-

realestmctnig-a20120428apr28,0,222450.column and http://www.experian.com/blogs/news/2012/09/24/rebuild
your-credit.
Diversifying credit sources
Getting on payment plan for medical debt—ensure provider is

not reporting balance as outstanding
Asking for a “good will” deletion for an unusual late payment
Negotiating with collection agency to “not report” in exchange for

payment
Paying down old debt or debt in collections
Using credit building products
Secured credit cards. This can be a way to build a positive credit

history. But because credit limits tend to be low with these cards,
be sure to watch your credit utilization rate and not get too close
to using the full limit.
Credit building loans. Visit a bank or credit union to find out
about these products. With some credit builder loans, you make
monthly payments first, and receive the loan amount when it is
paid off. This helps you avoid taking on debt while you build a
positive payment record. These loans can be very effective in
creating new history and will have a positive impact on your
reports and scores.
Other:
Resources
FDIC.gov, Credit Repair:
http://www.fdic.gov/consumers/consumer/ccc/repair.html
Consumer.gov, Building a Better Credit Report:
http://www.consumer.ftc.gov/articles/pdf-0032-building-a-better-credit-report.pdf
MODULE 13:
Evaluating financial service

providers, products, and
services
Financial service providers
Understanding financial products and services can be complicated, because there are so many
people and businesses that provide financial services. Banks and credit unions probably come to
mind first. But there are many other places that offer financial services. Here are a few:
 Department stores—credit cards or charge cards
 Automobile dealers—car loans
 Retail superstores, convenience stores, grocery stores, and other stores—check

cashing, bill payment, money orders, prepaid cards, and money transfers
 Check cashers and payday lenders–check cashing, money transfers, bill payment,
money orders, prepaid cards, and short-term loans
 Online companies—money transfers, bill payment services, loans, financial

management tools, online “wallets” or “accounts”
 Mortgage companies—loans for homes
 Commercial tax preparers—refund anticipation loans
 Consumer finance companies–loans
 U.S. Postal Service—money orders and money transfers
The federal government issues student loans, offers savings bonds, and provides the Direct
Express® card to recipients of federal benefits if they do not have a bank account.
The key to finding the right financial service provider is figuring out the reason you need one.
For example, you may want:
 A safe and secure place to put the money you are saving for your goals, unexpected
expenses, or emergencies (see Module 4: Setting goals and Module 5: Saving for the
unexpected, emergencies, and goals).
 A convenient way to pay your bills (see Module 6: Managing your cash flow).
 A loan to buy a car (see Module 11: Dealing with debt).
 A way to repair or build your credit history to improve your credit scores (see Module 8:
Understanding credit reports and credit scores).
Choosing financial products

Financial products and services are the tools you can choose from to do all of these things and
more. But selecting a financial service provider can be hard because there are so many choices in
today’s marketplace.
Use Tool 1: Selecting financial service products and providers to help you figure out the
primary reason you need financial products or services.
Then use Tool 2: Evaluating financial service providers to ensure you get the right questions
answered before choosing a financial service provider. If you are not clear about the different
kinds of financial service providers or the products and services they offer, use Tool 3: Types of
financial services to learn more about them.
If you feel you want to use a bank or credit union account, use Tool 4: Opening an account
checklist.
Managing a bank account
If you decide that you’d like to open a bank account, it is your responsibility to take care of it.
This starts with learning the rules of your new account from your bank or credit union. When
you do not follow the rules of your account, the bank or credit union may charge your fees.
No one likes to see fees reducing their checking account balance every month. You may not be
able to eliminate all the fees charged by your bank or credit union, but here are six steps to
reduce the number or amount of fees you pay:
1. Keep track of your balance to avoid spending more than you have available or going below
your minimum balance requirement.
For example:
 Check your balance at the ATM before you withdraw cash.
 Ask if your bank or credit union offers low-balance warnings via e-mail or text.
 Ask your bank or credit union when the money you deposit will be available for your
use.
 Ask your bank how it processes debits to your account (debits are when money is
taken out of your account). Debits are not always processed in the order in which
they occur.
 Monitor your account online, with text alerts, or with a mobile app.
2. Find out if fees can be waived. Many financial institutions waive monthly service fees if
you maintain a minimum balance or sign up for direct deposit. Compare fees.
3. Watch out for overdraft fees. Overdrafts occur when you spend or withdraw more money
than is available in your checking account. If you have more than one overdraft in a day,
many banks and credit unions will charge you between $30 and $35 for each one.
4. Use your financial institution’s ATMs. When you use ATMs in your bank’s network, there
is generally no charge. Many banks or credit unions offer ATM locator maps on their
websites and mobile apps.
5. See if there’s a low-fee checking account for you, such as a senior or student account, or
just a basic checking account with a low minimum balance requirement. This account
may have a limited number of “free” checks and withdrawals.
6. Open and review all of the mail from your bank or credit union. Review account
statements every month to make sure they are correct and report errors immediately.
You must also be notified when your minimum balance requirement, fees, or other
account terms change.
Finally, it is important to never knowingly write a check for funds you do not have in your
account. This can create a number of problems for you. In addition to fees for nonsufficient
funds from the bank or credit union and the merchant (if the check was written to a merchant),
it could severely impact your ability to access financial services in the future.
Federal insurance for financial institutions

There are two agencies established by the federal
government to make certain that the money people
deposit in banks or credit unions will be there when
the person wants to withdraw it. The Federal
Deposit Insurance Corporation (FDIC) insures
money in banks. The National Credit Union
Administration (NCUA) insures money in credit
unions.
In general, the limit is $250,000 per depositor, per

insured institution. So, if you have no more than
$250,000 in a savings account in an insured bank
and the bank fails, you will get all your money back.
FDIC and NCUA do NOT insure money that people
use to invest in stocks, mutual funds, life insurance
policies, annuities, or other securities, even if they
are purchased from a bank or credit union.
How will you know if deposits in a bank or credit union are insured? You can look for these
FDIC or NCUA logos. These will be on the door, displayed on the bank or credit unions websites,
or on all materials from the bank or credit union.
Overdraft coverage programs
An overdraft occurs when you spend or withdraw more money than is available in your
checking account. Banks or credit unions can advance you money to cover the shortfall
and charge you a fee. This is called sometimes overdraft coverage or overdraft protection.
At its surface, overdraft programs can seem like they might be a good deal—they prevent
people from being charged bounced or returned check fees by the merchant and the
financial institution. But in reality, this protection can be expensive. The bank or credit
union can charge you daily when you overdraw your account. And these fees can add up.
Finally, you must pay the bank or credit union back for both the amount covered by the
financial institution plus the fees.
You can’t be charged a fee for an overdraft with your debit card unless you “opt in” to
overdraft coverage and fees. (This is a relatively new law.) This means you have to actively
choose to have it. If you have opted in previously, you can opt out now.
Even if you don’t opt in, however, you can still be charged an overdraft fee if a recurring
payment you have set up with your debit card number or via a direct billing arrangement
overdraws your account. If you want to have a checking account and don’t want to pay
overdraft fees, use one of these approaches:
 Keep track of your balances. And remember, that not all deposits are available for
use immediately.
 Sign up for low balance alerts at your bank or credit union.
 Know when regular electronic transfers, such a rent payments or utility bills, will
be paid.
 Link your checking account to your savings account. If you run out of money in
your checking account, the bank will pull money out of your savings account. The
fee for this is usually much lower than an overdraft fee.
 Link your checking account to a credit card or line of credit.
New remittance rules
The Consumer Financial Protection Bureau has issued rules to protect consumers who send
money electronically to foreign countries. These transactions are called “remittance transfers.”
The new rules took effect on October 28, 2013.
Background: A “remittance transfer” is an electronic transfer of money from a consumer in

the United States to a person or business in a foreign country. It can include transfers from
retail “money transmitters” as well as from banks and credit unions that transfer funds through
wire transfers, automated clearing house (ACH) transactions, or other methods.
Consumers in the United States send billions of dollars in remittance transfers each year. The
Dodd-Frank Wall Street Reform and Consumer Protection Act established new standards with
respect to remittance transfer and authorizing the Bureau to issue implementing regulations.
Disclosures: The rules generally require companies to give disclosures to consumers before
they pay for the remittance transfers. The disclosures must contain:
 The exchange rate
 Fees and taxes collected by the companies
 Fees charged by the companies’ agents abroad and intermediary institutions
 The amount of money expected to be delivered abroad, not including certain fees
charged to the recipient or foreign taxes
 If appropriate, a disclaimer that additional fees and foreign taxes may apply
Consumers must also receive information about when the money will arrive and how the
consumer can report a problem with a transfer. Instead of issuing a separate pre-payment
disclosure and receipt, a company may provide a single combined disclosure before the sender
pays for the transfer, so long as proof of payment is given when payment is made.
Companies must provide the disclosures in English. Sometimes companies must also provide
the disclosures in other languages.
Other protections: The rules also generally require that consumers get 30 minutes (and
sometimes more) to cancel a transfer. If it has not yet been received, consumers can get their
money back if they cancel.
 Companies must investigate if a consumer reports a problem with a transfer. For certain
errors, consumers can generally get a refund or have the transfer sent again free of
charge if the money did not arrive as promised.
 Companies that provide remittance transfers are responsible for mistakes made by
certain people who work for them.
The rules also contain specific provisions applicable to transfers that consumers schedule in
advance and for transfers that are scheduled to recur on a regular basis.
Coverage: The rules apply to most remittance transfers if they are:
 More than $15
 Made by a consumer in the United States
 Sent to a person or company in a foreign country
This includes many types of transfers, including wire transfers. The rules apply to many
companies that offer remittance transfers, including banks, thrifts, credit unions, money
transmitters, and broker-dealers. However, the rules do not apply to companies that
consistently provide 100 or fewer remittance transfers each year.
Tool 1:
Selecting financial service

products and providers
Selecting a financial service provider can be hard because there are so many choices. Before you
decide which type of provider to use, think about the reasons you need a financial product.
Here is a checklist of common reasons to find a financial service provider. Pick the top three
reasons for you.
Ranking Reason for a financial service provider
I want a safe and secure place to keep my money.
I want to be able to make purchases without having to carry cash.
I want a low cost and easy way to pay and manage my bills.
I want to pay bills, manage my finances, or conduct other transactions online.
I want to have my paycheck directly deposited.
I want to accumulate savings.
I want to save for retirement, my children’s education, or other life events.
I want to buy a car.
I want to buy a home.
I want to be able to get small loans quickly and without a hassle.
I want to build my credit history.
I want to send money to someone.
On this chart, find the three reasons you identified above. Circle them and read about the
financial service providers and products that may be the best fit for your priorities.
Reason for a financial

Financial service provider Products that can meet your need
service provider
Savings account, checking account, or

Bank or credit union
I want a safe and certificate of deposit
secure place to keep
my money. Retailer, check cashing store Prepaid debit card (if set up so that the
or online individual funds are fully insured by FDIC)
I want to be able to Debit card (attached to a savings or

make purchases checking account)
without having to
carry cash or go into Retailer, check cashing store,
Prepaid debit card
debt. or online
Checking account
Bank or credit union Bill payment services
Money orders
I want a low cost and
Money orders
easy way to pay my
bills. Retailer, check cashing store, Bill payment services
or online
Prepaid debit cards (some can be used
for bill payment)
U.S. Postal Service Money orders
Bank or credit union Checking account and online banking
Internet-based bill paying

I want to bank and Online bill paying
service
pay bills online.
Retailer, check cashing store, Prepaid debit card with online bill
or online payment
Bank or credit union Savings account or checking account
I want to have my
Employer Payroll card (prepaid debit card)
paycheck directly
deposited.
Retailer, check cashing store,
Prepaid debit card
or online
I want to accumulate
Bank or credit union Savings account or certificate of deposit
savings.
I want to save for

retirement, my Savings account, certificate of deposit,
children’s education, and investment accounts
or other life events.
Bank or credit union Car loan

I want to buy a car.
Automobile dealer Dealer financing

I want to buy a home. Mortgage
Mortgage company
Credit card company Credit card
Pawn shop Pawn loan
I want to be able to
get loans quickly and Some Credit Unions and Deposit advance loans (requires a bank
without a hassle. Banks account)
Finance company Signature loan
Payday loan provider Payday loan (requires a bank account)
Bank or credit union Credit builder loan
Bank or credit union Loan for an asset (car, home, etc.)
I want to build my Credit builder loan

credit history. Other lenders
Credit card
Secured credit card

Credit card company
Credit card
Retailer, some check cashing
stores, U.S. Postal Service, Money Transfers
I want to send money
online companies
to someone.
Bank or credit union Wire Transfers or other money transfers
Tool 2:
Evaluating financial service

providers
Once you know the reasons you want a financial product or service and have identified possible
providers, use the following tool to compare businesses that can offer you those services. Using
this form, you can compare up to three financial service providers at time. If there are services
that don’t matter to you, just put a line through the entire row.
Financial Financial Financial

service service service
provider 1: provider 2: provider 3:
__________ __________ __________
Convenience and access
Close to where I work or live?
Open during hours I can visit (at lunch and after

work, for example)?
Can I pay bills and check balances by phone,

online, or with a mobile app?
Products and services
Does it offer depository services? (savings,

checking, CDs)
If I get a checking or savings account, will I get

an ATM card? Debit card?
Does it offer credit services? (credit cards,

small dollar loans, mortgages, lines of credit)
Does it offer transactional services? (check
cashing, money transfers, bill payment)
Does it offer additional services? (Notary

Public, safe deposit boxes)
Customer service
Do I feel welcome?
Are the products and services described in

terms I can understand?
Are staff available to answer my questions in

person or by phone?
Safety and Security
If I am depositing money, is it FDIC or NCUA

insured?
Is my money protected if someone steals my

debit card or uses it without my permission?
If I transfer money, will the provider guarantee

the time it will arrive and give me information
about the fees, taxes, and the exchange rate
before I pay for the transfer?
Fees
Are there transaction fees or other costs, such

as activity fees or, for international transactions,
exchange rates? What are they?
Is there a fee for making a deposit?
Is there a fee for going below the minimum

balance?
Are there monthly account maintenance fees?
Are there fees for using debit cards to make

retail purchases or inactivity fees?
Are there fees for using online banking
services?
What are the fees if I overdraft?
What are the fees associated with getting a

loan?
What are the fees associated with getting a

credit card? Are there annual fees?
Interest and statements
Will I earn interest on savings?

What is the rate of interest I will earn (APY)?
What is the interest rate on the loan?

What is the interest rate including all fees on
the loan (APR)?
How often will I receive account statements?
Other criteria important to me
If I am transferring money, how convenient is it

for the recipient to receive the funds?
If I am borrowing money, how much will my

payment be? When is it due?
Other:
Other:
Tool 3:
Types of financial services

Part of selecting the right financial service provider is knowing what product(s) or service(s) you
need. Use the following tool to learn more about the basic financial products or services that
may be available to you. Identify the places in your community where you can get the products
or services you are interested in.
if you Common financial Description Where can you

are products or services get this product
interested or service in
your
community?
Transaction or payment products or services
Checking account Deposit money in and withdraw

money from this account by writing
checks or using a debit card. Suitable
for frequent transactions. Many
checking accounts include access to
mobile and online bill pay. Always
keep track of your account activity to
ensure sufficient balances to cover
payments and withdrawals and avoid
overdraft fees.
Check cashing Turn paychecks, government checks,

or personal checks into cash, often
for a fee.
Debit card You can use this card to make

purchases at businesses (like
grocery stores and gas stations) with
money in your checking account. You
can also use this card to make
deposits to and withdrawals from a
checking account at ATMs.
Automated teller Deposit in or withdraw money from a
machine (ATM) card savings or checking account. You will
often not be charged a fee if you use
ATMs that are owned by your bank
or credit union or within the same
ATM network. Many ATM cards are
also debit cards. An ATM card
cannot be used to make purchases
at businesses unless it is also a debit
card.
Prepaid debit card A card that you use to access money

you have paid in advance. A prepaid
card can refer to a number of
different types of cards. Gift cards
are prepaid cards that typically are
used up after you deplete the value
on the card. You can also buy
prepaid debit cards that you can add
money to (reload) and continue using
over and over. Some types of
prepaid cards also allow you to take
money out at an ATM. Reloadable
prepaid cards generally charge a
monthly maintenance fee. Some
charge for deposits or each time you
use the card. Prepaid debit cards
may carry fewer consumer
protections in the event of loss or a
disputed charge than debit cards.
Money transfer Send money from one place to

another.
Bill payment services Use cash, a money order, a bank

account, or another payment method
to pay utility, mortgage, or other bills,
in person, by phone, through a
website, or through a mobile phone
application.
Money order Buy a money order to pay a business

or other party; can be used instead of
a check.
Depository products or services
Savings account Deposit money in and withdraw

money from an account; earn interest
(currently interest rates are low). Not
intended for frequent transacting.
Certificate of deposit Deposit a fixed amount of money for

a specific amount of time. Funds are
generally inaccessible during the CD
term unless you forfeit interest as a
penalty. The size of the penalty
varies, and could amount to more
than the interest you have earned if
you withdraw the money before the
maturity date. Generally earns more
interest than savings.
Credit products or services
Credit card Borrow money up to an approved

credit limit. Make purchases using
the card or the number and card
security code. A minimum monthly
payment is required. Will be charged
interest on unpaid amounts; can be
charged other fees based on terms of
contract.
Line of credit Borrow money up to an approved

credit limit. Getting approved for a
line of credit is different from a credit
card. It may be secured with
collateral (such as a home), or be
unsecured. Can be used for overdraft
protection in a checking account.
Car loan Borrow money to buy a used or new

car. This will be an installment loan.
The car will generally be pledged
against the loan (collateral).
Business loan Borrow money to start or expand a
business. This will be an installment
loan. Equipment or other business
assets, or personal assets may be
pledged against the loan (collateral).
Mortgage Borrow money to build or buy a

home. This will be paid back in
installments. The home will generally
be pledged against the loan
(collateral).
Credit building products or services
Secured credit card Borrow money up to a limit that is

secured by a deposit. This deposit
acts as collateral if you do not pay
the credit card as agreed.
Credit building loan Borrow money specifically to improve

credit scores. This may be available
at banks or credit unions in your
community.
Other products or services
Small dollar / Borrow small amounts of money.

Signature loan Generally, the loans have to be paid
back quickly and the interest rate and
fees are higher than bank or credit
union loans or credit cards.
Payday loan Borrow small amounts of money. You

provide a check written for some time
in the future—generally two weeks. If
you don’t repay the loan and fees in
full, the lender can cash the check. If
your account does not have enough
money in it to cover the amount, you
may have to take out a new loan for
the amount you don’t repay.
Pawn shop loan Borrow money against an item. If you
do not pay back the loan as agreed
or renew the loan, the pawn shop
can sell the item to cover the debt.
The loan amount is often much less
than the item is worth.
Car title loan Borrow money against your car. If

you do not pay back the loan as
agreed or renew the loan, the car can
be sold to cover the debt. The loan
amount is often much less than the
car is worth.
Technology-based services
Online banking Manage your bank or credit union

account through a secure website.
This option may include a method to
pay bills from your account, and is
available through many banks and
credit unions.
Mobile banking Use your smart phone to manage

accounts and make payments
through your bank or credit union’s
website or mobile application.
Tool 4:
Opening account checklist

Opening an account at a bank or credit union 38
If you decide that a checking or savings account is the right product for you, opening an account
at a bank or credit union is really quite simple.
First, you may want to get a recommendation from a trusted friend or family member for a bank
or credit union. Find out about:
 The services they offer
 The interest they pay for savings accounts
 The fees they charge
You will usually need between $25 and $100 to open a savings or checking account. Be sure to
find out how much you must keep in the account at all times to avoid fees. This is
called the “minimum balance requirement.” This may not be the same amount of money
you need to open the account, so it’s important to ask.
You will also need two forms of identification to open an account. Some banks or credit unions
will take one form of identification and a bill with your name and address on it. You will usually
be required to present:
 A U. S. government or state issued form of identification with your photo on it, such as a
driver’s license, U. S. Passport, or military identification
and one of the following:
38 From Take it to the Bank: Your Guide to Opening a Bank Account produced by the Community Affairs Office of the Federal
Reserve Bank of Dallas and Texas Appleseed.
 Your Social Security card
 A bill with name and address on it
 Your birth certificate
If you do not have a U. S. government-issued form of identification, some banks and credit
unions accept foreign passports and Consular IDs, such as the Matricula Consular card, which is
an official Mexican Government identification document. (Other countries, such as Guatemala
and Argentina have similar IDs.) Consulates in the United State offer them. Visit your country’s
consulate for more information about how to get an ID card, and with the banks and credit
unions about whether they accept it.
Interest-bearing accounts
Interest is considered income. If you earn interest, you must pay taxes on it. In order to open an
interest bearing account, such as a savings account, you must have a Social Security number or
an Individual Taxpayer Identification Number (ITIN).39 Or, you must be able to show evidence
that you have applied for an ITIN.
If you do not have a Social Security number, you do not have an ITIN, or you have not applied
for an ITIN, you can open a non-interest bearing account.
Barriers to opening an account

Not having the proper identification can be one barrier to opening an account. Another barrier is
a potentially negative rating with specialty consumer reporting agencies like ChexSystems,
TeleCheck, Early Warning, and others that report on checking accounts or banking histories.
These agencies collect information from merchants, banks, and credit unions about how
consumers manage savings and checking accounts. They do this for financial institutions that
are a part of their network. Banks and credit unions use reports developed by these agencies to
decide if someone can open a new account. You may have a negative rating if you or someone
you had a joint account with has struggled with a checking or savings account in the past and:
39 Internal Revenue Service. See http://www.irs.gov/Individuals/General-ITIN-Information.
 Had a lot of bounced checks and non-sufficient funds (NSF) fees
 Not paid debts and fees owed to a bank or credit union related to an account
 Been suspected of fraud related to a checking account
 Have had an account closed (involuntarily) by a bank or credit union within the last 12
months
Involuntary closures stay on your ChexSystems report for five years and on the Early Warning
System report for seven. Overdrafts remain on your consumer record for five years, even if you
have paid back what you owe the bank or credit union. Each bank or credit union has its own
policies about the way the information in your banking history report impacts your ability to
open an account. This can include the amount of time that has passed since events like an
involuntary closure or repeated overdrafts occurred.
Some banks and credit unions require you to pay these old charges and fees before you are
allowed to open a savings or checking account. In other cases, you may be offered the
opportunity to open a “second chance” or checkless checking account that has different features
and restrictions than standard checking accounts offer. Depending on the account’s rules, you
may be allowed to open a standard checking account after six to twelve months if you have not
over drafted or bounced any checks.
You can order your own ChexSystems report online from ChexSystems at
http://www.consumerdebit.com, call for more information at (800) 428-9623, or send a written
request to:
ChexSystems, Inc.
7805 Hudson Road, Suite 100
Woodbury, MN 55125
You can order your TeleCheck Services Report by sending a written request to:
TeleCheck Services, Inc.
Attention: Consumer Resolution – FA
P. O. Box 4514
Houston, TX 77210-4515
To request your Early Warning report, call (800) 325-7775.
If you find mistakes, you can dispute these by sending a letter (you may choose to use certified
mail) describing the mistake and copies of any evidence.
Use this checklist to ensure you have what you need to open an account at a bank
or credit union.
Information needed Additional questions
A U.S. or foreign government-issued form of

identification with my picture on it. Note that each
bank or credit union has its own policy on which
foreign IDs it accepts.
Another form of identification:
Your Social Security card

A bill with your name and address on it
Birth certificate
A Social Security number or ITIN (individual

taxpayer identification number); if not, you may
only be able to open a noninterest bearing
account.
Money to open the account
Information about:
Minimum balance required in the account to

avoid monthly service fees
Monthly service fees
Per-check or transaction fees
Fees associated with use of automated teller

machines (ATMs)
Internet banking access and any costs
Online bill pay access and any costs
Overdraft fees (see note that follows)
Low balance alert notifications
Other:
Resources
FDIC.gov, Credit Repair:
http://www.fdic.gov/consumers/consumer/ccc/repair.html
Consumer.gov, Building a Better Credit Report:
http://www.consumer.ftc.gov/articles/pdf-0032-building-a-better-credit-report.pdf
If you have a consumer complaint, visit: http://www.consumerfinance.gov/complaint
MODULE 14:
Protecting consumer rights

Part of being a smart consumer is understanding your rights. When you know you have rights,
you can protect yourself. There are many laws that protect your rights when it comes to financial
products and services. It is the CFPB’s job to enforce these laws and handle consumers’
complaints about financial products and services.
The CFPB has already handled thousands of consumer complaints about:
 Credit cards
 Mortgages
 Bank accounts and services
 Private student loans
 Vehicle or consumer loans
 Payday loans
 Debt collection
 Money transfers
 Credit reporting
Based on these complaints and research, the CFPB takes action to stop practices that are unfair,
deceptive, abusive, or otherwise violate the law. In many cases, we partner with other federal
agencies and state officials to address these problems.
Through our enforcement actions, the CFPB can require companies to refund money to
customers when their consumer rights have been violated.
Consumer complaints
Submit a complaint
To submit a complaint, go to: http://www.consumerfinance.gov/complaint. From there, select
the product or service that your complaint is about, for example: bank account or service, credit
card, credit reporting, debt collection, money transfer, mortgage, student loan, payday loan,
money transfers, or vehicle/consumer loan.
Fill out the form, providing as much detail as possible.
You will then be able to review and edit any information before clicking “Submit” to send your
complaint. If you need help while you’re online, click on the link that says “Form Trouble? Chat
now.” to talk with CFPB team members on the site.
If you don’t use a computer or need help in a language other than English, you can also submit a
complaint over the phone by calling the CFPB at (855) 411-CFPB (2372), toll free. U.S.-based
call centers can help you in over 180 languages and can also take calls from consumers who are
hearing impaired or speech-disabled.
Para presentar una queja en español, llamar al (855) 411-2372.
If you want more information on how complaints are handled, you can read the Privacy Impact
Assessment for the Consumer Response System available at
http://www.consumerfinance.gov/privacy-office/consumer-response-database/.
What happens when I submit a complaint?

Tool 3: Submitting a complaint provides detailed information on how to submit a complaint,
and how you can track the process.
CFPB screens the complaints it receives and forwards them via a secure web portal to the
appropriate company—the business you have the complaint with.
The company has 15 days to provide a substantive response to you and to the CFPB. Companies
are expected to close all but the most complicated complaints within 60 days.
CFPB then invites you to review the response and provide feedback. The CFPB reviews your
feedback about company responses and uses this information along with other information such
as the timeliness of the company’s response, for example, to help prioritize complaints for
investigation.
Complaints help with the CFPB’s work to supervise companies, enforce federal consumer
financial laws, and write better rules and regulations. The CFPB also reports to Congress about
the complaints we receive and makes anonymized consumer complaint data available to the
public on its website: http://www.consumerfinance.gov/complaintdatabase.
It’s your money—be aware and take care

It’s your money. Ask questions.
It can be hard to ask about financial planning or products.
 Don’t be intimidated.
 If you want to work with a financial counselor or adviser, interview a few before choosing
one.
 Before you sign anything or give personal or financial information about yourself to an
adviser, ask questions: What are your qualifications? How do you get paid? Are you
working in my best interest?
 If your friends or family members give you advice or information, it’s up to you to
question them: Where did you get the information? Who gets paid what? Are you making
any money on this?
“I have an amazing opportunity, just for YOU!”

Have you ever seen or heard something like this? Most of us have, such as in an email offering
us an opportunity to receive millions of dollars from a foreign prince or a lottery you did not
enter, or in potential jobs that say you can earn $80/hour while working at home.
Unfortunately, if the "opportunity" appears too good to be true, it probably is. If you run across
an amazing sounding opportunity, job, or product, do your research with a critical eye.
Especially if you are receiving the “opportunity” via an unsolicited email!
In general,
 Beware of promises to make fast profits and investments that claim to offer high returns
at little or no risk.
 Do not invest in anything unless you really understand the deal fully. Consider running
the opportunity by others that you trust to make sure that they share your
understanding.
 Don't assume a company is legitimate based on "appearance" of the website.
 Beware of requests for money from people you do not know. Research the parties
involved and the nature of the deal or job. If you don’t know how to do this, ask someone
that you trust to help you, or don’t deal with that person!
 Contact state and local consumer agencies to see if there is a complaint against the
company.
 Don't open spam. Delete it unread and never respond to spam.
 Don’t open e-mail attachments from people you don’t know or attachments that you did
not expect to receive.
It’s your money. You can say no.

Scammers target polite people because they have a harder time saying no.
 If you feel pressured to make a decision, chances are you are being scammed.
 It may be hard, especially if it is a friend or relative, but just saying “No, I am not
interested,” may save you from a financial loss.
 You don’t have to stay on the telephone line if you feel uncomfortable. Tell them to take
you off their list and then HANG UP.
It’s your information. Take care of it.

Never give out personal information, such as account numbers, passwords, or answers to
security questions, over the phone or through email unless you know the company and you
initiated the call or directly typed in the website address and you see signals that the site is
secure, like a URL that begins with “https.” Telephone and online scams are common and
constantly changing, so you have to be proactive and protect yourself. It may be hard to believe
it’s a scam when you get a call from someone far away that needs help or tells you that your
family member needs help. But it usually is.
You can prevent identity theft by guarding your identifying information carefully and only
sharing it with a few trusted people. Use the checklist in Tool 2: Protecting your identity to
make sure you are taking the right precautions in protecting your identity.
Tool 1:
Red flags
When making purchasing decisions, watch out for the following red flags. Use this checklist
when you are considering a product or services. If you find you have checked one or more of
these items, be sure to take a closer look at the product, the service, or the business that offers it.
Red flag Description
Sales tactics and red flags for loans and other financial products or services
Pressured sales You are pressured to purchase things or to take out loans you
tactics don’t want or can’t afford.
Different staff or salespeople are telling you different things

Lack of uniformity
regarding pricing or other information.
No one will give you clear information in writing—even when you

Won’t put it in writing
ask for it.
No one can explain what certain fees are for or why they are so
Unexplained fees
high.
No clear cancellation There’s no clear cancellation or return policy. Don’t assume that
or return policy you are able to return a product or cancel a purchase.
Inconsistent
The salesperson tells you about an interest rate, but the APR on
information on interest
the form is much higher.
rates
Pushed to purchase You are being pushed to make a big-ticket purchase immediately.
Aggressive sales tactics are used to steer and coerce you toward a
Steering and coercing high cost loan, even though you could have qualified for regular
prime loans.
Red flags when signing loan documents
Paperwork doesn’t The promises made to you by a salesperson are not in the papers
match the sales pitch that you are asked to sign.
A good rule of thumb is to refuse to sign anything that you don’t

Confusing fine-print
understand.
You are asked to sign a contract with blank spaces to be filled in

Incomplete paperwork
later.
Some lenders may insist on, intimidate, or imply that borrowers

Additional insurance must buy unnecessary items—additional insurance, unneeded
and other add-on warranties, monitoring services, etc. They get incorporated into the
products loan amount, and the borrower pays interest on them over the life
of the loan.
Prepayment penalties are fees lenders require a borrower to pay if

Prepayment penalties
the borrower pays off a loan early.
Language is included in the fine print of the loan terms and

conditions making it illegal for the borrower to take legal action
Mandatory arbitration against the lender. The loan documents require the borrower to
submit to arbitration. Borrowers can find it difficult to find legal
representation for mandatory arbitration proceedings.
Tool 2:
Protecting your identity

Though it might not seem like it, your identity is one of the most precious things you possess.
Criminals who are able to steal your identifying information can pretend to be you, buying
things on accounts that you own or are under your name. This leaves you getting their bills! It
can also create problems with your credit reports and scores.
Identifying information is anything that is specifically unique to you, such as your:
 Credit card and bank account numbers
 Driver’s license number
 Date, city, and state of birth
 Social security number
 Passwords or PIN numbers
Many people think that identity theft happens primarily online, and if you don’t shop online,
you are safe. The reality is that most identity thefts take place offline—just the opposite of what
many people think. In addition, in over half of the cases of identity theft, the thief is someone
that the victim knows. Because of this, it’s important to be cautious with your identifying
information–both online and in the real world.
Steps to protect your identity
Check your credit report
Remove your name from all three credit bureaus’ (Equifax, Experian, and TransUnion) mailing
lists by calling to opt-out at (888) 567-8688 or online at http://www.optoutprescreen.com –
choose “forever” removal option. This prevents prescreened offers from falling into other
people’s hands.
Check your credit at all three credit agencies each year using the free
https://www.annualcreditreport.com. If you see anything that is incorrect or suspicious, contact
them immediately. (See Module 12: Understanding Your Credit Reports and Scores for more
information).
Limit access to your information
Don’t carry your Social Security card or number in your wallet or purse.
Remove your name from many direct mail marketers’ lists by registering with the Direct
Marketing Association online form at http://www.dmachoice.org. Removing your name from
marketers’ lists will create fewer opportunities for thieves to steal your information.
Remove yourself from most telemarketers’ lists by registering your phone number with the Do
Not Call Registry at (888) 382-1222 or at http://.www.donotcall.gov. Numbers registered after
February 2008 remain permanently on the National Do Not Call Registry.
Never give your personal information to someone who calls you and asks for it, even if they say
there are from your financial institution.
Use a shredder, scissors, or your hands to tear all papers with identifying information or
account numbers into tiny pieces before throwing them out.
Give out your Social Security number only when absolutely necessary. Often when someone
asks for it, you are not required to give it to them.
Practice online security
Commit all passwords to memory. Never write them down or carry them with you (not even on
a post-it by your computer!).
Make sure passwords include upper- and lower-case letters, numbers, and do not include any
words that can be found in a dictionary or names and dates that can be associated with you
(your children’s names and birthdates, for example). Longer passwords are better. The best
practice is to have a different password for each account. If you find it too hard to keep track of
so many passwords, have separate, longer, harder-to-guess passwords for your financial
accounts than for ordinary uses like your e-mail.
Don’t give out your financial or personal information over the Internet, unless you have initiated
the contact or know for certain who you are dealing with.
Never share identity information online unless the site is secure with an encryption program so
no one can intercept your information. If secure, the web site address will start with https,
not http. There will also be a lock icon () in front of the web address.
Do not reply to emails asking for personal banking information, even if they have a bank or
PayPal logo! Financial Institutions will never ask for personal information via email.
According to the Federal Trade Commission (FTC), identity protection means treating your
personal information like cash or a valuable commodity—being careful not to leave it around,
and being thoughtful about who is asking for it, why they need it, and how they’re going to
safeguard it for you.
This is the FTC’s list of common red flags that your identity has been stolen:
 There are mistakes on your bank, credit card, or other account statements.
 There are mistakes on the explanation of medical benefits from your health plan.
 Your regular bills and account statements don’t arrive on time.
 You get bills or collection notices for products or services you never received.
 You receive calls from debt collectors about debts that don’t belong to you.
 You get a notice from the IRS that someone used your Social Security number.
 You receive mail, email, or calls about accounts or jobs in your minor child’s name.
 You receive unwarranted collection notices on your credit report.
 Businesses turn down your checks.
 You are turned down unexpectedly for a loan or job.
If you determine your identity has been stolen, the FTC recommends the following steps:
1. Place a fraud alert on your credit file
Call one of the nationwide credit reporting agencies, and ask for a fraud alert on your credit
report. The company you call must contact the other two so they can put fraud alerts on your
files. An initial fraud alert is good for 90 days. If you want to place an extended alert on your
credit report after your identity has been stolen, you must file either a police report or a report
with a government agency such as the FTC, known as an “identity theft report.” An extended
alert is good for seven years. An extended alert requires that the creditor contact you in person
or through the telephone number or other contact method you designate to verify whether you
are the person making the credit request.
 Equifax: (800) 525-6285
 Experian: (888) 397-3742
 TransUnion: (800) 680-7289
2. Consider a security freeze
You can also place a “freeze” on your credit report. A security freeze means that potential new
creditors cannot access your credit report. Only a limited number of entities can see your file
while a freeze is in place, including existing creditors, certain government entities like child
support agencies, and companies that monitor your credit file at your direction to prevent fraud.
Because most businesses will not open credit accounts without checking your credit report, a
freeze can deter identity thieves from opening new accounts in your name. Be mindful that a
freeze does not prevent identity thieves taking over existing accounts. Credit reporting agencies
may charge for this service. In some states, identity theft victims are not charged to place a
security freeze.
3. Order your credit reports
Each company’s credit report about you is slightly different, so order a report from each
company. When you order, you must answer some questions to prove your identity. Read your
reports carefully to see if the information is correct. If you see mistakes or signs of fraud, contact
the credit reporting company.
4. Create an identity theft report
An Identity Theft Report can help you get fraudulent information removed from your credit
report, stop a company from collecting debts caused by identity theft, and get information about
accounts a thief opened in your name. To create an Identity Theft Report, first file a complaint
with the FTC at ftc.gov/complaint or (877) 438-4338; TTY: (866) 653-4261. Your completed
complaint is called an FTC Identity Theft Affidavit. Next, you can take your FTC Affidavit to
your local police, or to the police where the theft occurred, and file a police report. Get a copy of
the police report. The two documents comprise an Identity Theft Report.
For more information from the Federal Trade Commission, visit:

http://www.consumer.ftc.gov/features/feature-0015-identity-theft-resources.
Tool 3:
Submitting a complaint
There are many laws that protect your rights when it comes to consumer financial products and
services. One of the CFPB’s primary functions is to enforce several of these laws and handle
consumers’ complaints about consumer financial products and services.
The CFPB accepts complaints on consumer financial products and services such as:
 Credit cards
 Mortgages
 Bank (checking and savings) accounts and services
 Private student loans
 Vehicle or consumer loans
 Money transfers
 Credit reporting
 Debt collection
 Payday loans
To submit a complaint, go to: http://www.consumerfinance.gov/complaint. From there, select

the product or service that the complaint is about, for example: bank account or service, credit
card, credit reporting, money transfer, mortgage, private student loan, payday loans, debt
collection, or vehicle/consumer loan.
Instructions for a consumer to submit a complaint

Fill out the form, providing as much detail as possible. The form will ask for pertinent
information about the circumstances of the complaint and, in general, will:
 Ask you to describe what happened, in as much detail as possible
 Ask you what you think a fair resolution to the issue would be.
 Ask you for your information (name/address/email).
 Ask for detailed information about the product and company you are complaining about.
Please scan and upload any documentation that you have here (Account agreements,
monthly statements, proof of payment, etc.).
You will then be able to review and edit information before clicking “Submit” to send your
complaint.
If you need help while you’re online, click on the link that says “Form Trouble? Chat now.” to
talk with CFPB team members on the site.
If you don’t use a computer or need help in a language other than English, you can also submit a
complaint over the phone by calling the CFPB at (855) 411-CFPB (2372), toll free. U.S.-based
call centers can help you in over 180 languages and can also take calls from consumers who are
hearing impaired, or speech-disabled.
Here is what will happen to your complaint:
1. Complaint submitted: The CFPB will screen your complaint based on several criteria.
These criteria include whether your complaint falls within the CFPB’s primary
enforcement authority, whether the complaint is complete, and whether it is a duplicate
of another complaint you have submitted.
2. Review and route: If a particular complaint does not involve a product or market that
is within the Bureau’s jurisdiction or that is currently being handled by the Bureau,
Consumer Response refers it to the appropriate regulator. Screened complaints are sent
via a secure web portal to the appropriate company—the business you have the
complaint with.
3. Company response: The company reviews the information, communicates with you
as needed. It then determines what action to take in response. The company reports back
to you and the CFPB via the secure “company portal.” After your complaint is sent to the
company, the company has 15 days to provide a substantive response to you
and the CFPB. Companies are expected to close all but the most complicated
complaints within 60 days.
4. Consumer review: CFPB then invites you to review the response and provide
feedback. Consumer Tracking: You can log onto the secure “consumer portal” available
on the CFPB’s website or call a toll‐free number to receive status updates, provide
additional information, and review responses provided to the you by the company.
5. Review and investigate: The CFPB reviews your feedback about company responses,
using this information along with other information such as the timeliness of the
company’s response, for example, to help prioritize complaints for investigation.
6. Analyze and report. Complaints help with the CFPB’s work to supervise companies,
enforce federal consumer financial laws, and write better rules and regulations. The
CFPB also reports to Congress about the complaints we receive and makes anonymized
consumer complaint data available to the public on its website format:
http://www.consumerfinance.gov/complaintdatabase.
Contact information
Online: consumerfinance.gov/complaint
Toll‐free phone: (855) 411‐CFPB (2372), 8am‐8pm EST, Monday ‐ Friday
TTY/TDD phone: (855) 729‐CFPB (2372)
Fax: (855) 237‐2392
Mail:
Consumer Financial Protection Bureau
PO Box 4503, Iowa City, IA 52244
Tool 4:
Learning more about
consumer protection
Protecting your rights as a consumer starts with knowing that you have rights. The following
consumer protection laws establish consumer rights related to financial services and products.
This is not a comprehensive list, but it provides a starting place for understanding some of the
many rights and responsibilities about which financial educators and coaches should be
familiar.
Read the summary of each law below. Put a check in the “Follow Up for More Information”
column if knowing a little more about this law will help you or people you know. The follow the
link listed within the “Short Description” or visit our website at
http://www.consumerfinance.gov for more information.
Consumer Short Description Follow

Protection Up
Law
Regulation B:  The Equal Credit Opportunity Act (ECOA), implemented by Regulation B,

makes it illegal for a creditor to discriminate in any aspect of a credit
Equal Credit
transaction on the basis of race, color, religion, national origin, sex, marital
Opportunity
status, age (provided that the applicant is old enough to enter into a
Act
contract), receipt of public assistance income, or good faith exercise of
certain consumer rights.
 ECOA and Regulation B prohibit certain creditor practices, such as the
refusal to provide credit if an applicant qualifies for it; the discouragement of
an applicant from applying for credit; an offer of less favorable terms to an
applicant than terms offered to someone similarly situated; on the basis of
any of the above listed characteristics.
 ECOA and/or Regulation B require(s) creditors, among other things, to:
 Notify applicants of actions taken on their applications.
 If it furnishes information to credit bureaus, do so in the names of both
spouses on an account.
 Retain records of credit applications.
 Solicit information about the applicant's race and other characteristics
in applications for certain residential mortgages for government
monitoring purposes.
 Provide applicants with copies of appraisal reports used in connection
with residential mortgage applications.
For more information about this law including information about how to detect
discrimination, visit http://www.consumerfinance.gov/fair-lending.
Regulation C:  The Home Mortgage Disclosure Act (HMDA), implemented by Regulation C,

Home requires certain mortgage lenders to collect and report loan data that can be
Mortgage used to: a) help determine if financial institutions are serving the housing
Disclosure needs of their communities; b) assist public officials in distributing public-
Act sector investment to attract private investment to areas where needed; and c)
assist identifying possible discriminatory lending patterns and enforcing
antidiscrimination statutes. This data is available for use by the public as well
as by federal and state regulatory and enforcement agencies.
 Data fields required to be reported under HMDA include, for each application,
the action taken by the creditor; the location of the property to be mortgaged;
the race, ethnicity, and sex of the applicant; and the income relied on in the
application.
For more information about this law, visit
http://www.consumerfinance.gov/learnmore.
Regulation E:  Establishes the basic rights, liabilities, and responsibilities of consumers who
Electronic use electronic fund transfer services or send remittances and of the financial
Fund institutions and other companies that offer these services. “Electronic fund
Transfer Act transfers” include transactions, for example, where you swipe your card at
check-out, make purchases with your card by phone or online, or make
deposits or withdrawals at an ATM. “Remittance transfers” sometimes called
international wire transfers), include many common ways of transferring
money to people in other countries.
 Protects individual consumers engaging in electronic fund transfers or
remittance transfers.
 Restricts inactivity and service fees and limits how quickly funds can expire
for gift cards, gift certificates, and certain other prepaid cards. Requires all
fees and other important terms to be clearly communicated in writing.
 Applies to any transaction initiated through an electronic terminal, telephone,
computer or magnetic tape in which a financial institution is told to either
deposit or withdraw from an individual’s account at the financial institution.
Establishes “opt in” provisions for overdraft fees on ATM transactions and
non-recurring debit card transactions; financial institutions are prohibited from
charging overdraft protection fees on these unless consumers opt in.
For more information on the “opt in” provisions for overdraft fees, visit
http://www.consumerfinance.gov/blog/whats-your-status-when-it-comes-to
overdraft-coverage.
For more information on remittance transfers (also covered under Regulation
E), visit http://www.consumerfinance.gov/regulations/final-remittance-rule
amendment-regulation-e.
Regulation F:  The Fair Debt Collection Practices Act (FDCPA) is the main federal law that
Fair Debt governs debt collection practices.
Collection  The FDCPA prohibits debt collection companies from using abusive, unfair or
Practices Act deceptive practices to collect past due debts from you.
 The FDCPA covers the collection of consumer debt such as mortgages,
credit cards, medical debts, and other debts primarily for personal, family, or
household purposes. It covers personal debt, not business debt.
 The FDCPA does not generally cover collection by the person or business
from whom you first borrowed money—it covers third party debt collections
(debt collection agencies and debt-buyers involved in collection) and
attorneys who collect debt on behalf of their clients.
For a summary of this law visit
http://www.consumerfinance.gov/askcfpb/329/what-is-the-fair-debt-collection
practices-act.html.
Regulation M:  Ensures that people who lease personal property receive meaningful
Consumer disclosures that enable them to compare lease terms with other leases and,
Leasing Act where appropriate, with credit transactions.
 Limits the amount of balloon payments in consumer lease transactions.
 Provides for the accurate disclosure of lease terms in advertising.
For more information on leasing an automobile, visit
http://www.consumerfinance.gov/askcfpb/815/should-i-buy-or-lease-whats
difference.html.
Regulation P:  Governs the treatment of nonpublic personal information about consumers by

Privacy of financial institutions and by institutions that use or re-use or re-disclose
Consumer information from financial institutions. This type of information includes your
Financial account information and your Social Security number.
Information  Provides a method for consumers to prevent a financial institution from
(Gramm disclosing that information to other businesses or individuals by “opting out”
Leach-Bliley (there are exceptions to this).
Act)
 Restricts when financial institutions may disclose non-public personal
financial information to other businesses or individuals.
 Requires financial institutions to send privacy notices to consumers in
specified circumstances.
For a link to Regulation P, visit: http://www.consumerfinance.gov/regulations.
Regulation V:  Provides guidelines and limitations for persons that get and use information
Fair Credit about consumers to:
Reporting Act  Determine the consumer's eligibility for products, services, or
employment;
 Share such information among affiliates; and
 Furnish information to consumer reporting agencies.
 Limits the reporting of outdated negative information.
 Limits who can access information in a consumer’s credit file.
 Establishes consumer rights including the following:
 Consumers must be informed their filed has been used against them—
the information has led to a denial of a product, service, or employment.
 Consumers have the right to know what is in their file.
 Consumers have the right to dispute incomplete or inaccurate
information; consumer reporting agencies must correct or delete
inaccurate, incomplete, or unverifiable information.
For answers to common questions regarding this law, visit
http://www.consumerfinance.gov/askcfpb/search?selected_facets=tag_exact
%3AFair+Credit+Reporting+Act.
Regulation X:  Provides advance disclosures of settlement costs to home buyers and

Real Estate sellers.
Settlement  Prohibits kickbacks or referral fees for settlement services.
Procedures
 Regulates mortgage servicers’ management of escrow accounts established
Act
to ensure the payment of real estate taxes and insurance.
 Requires Mortgage servicers to correct errors and provide certain information
requested by borrowers
 Requires mortgage servicers to provide information to delinquent borrowers
about mortgage loss mitigation options and to establish policies and
procedures for continuity of contact with servicer personnel regarding these
options.
For more information about this law, visit
http://www.consumerfinance.gov/knowbeforeyouowe and
http://consumerfinance.gov/regulatory-implementation.
Regulation Z:  Promotes the informed use of consumer credit by requiring disclosures about
Truth in its terms and cost such as APR (annual percentage rate).
Lending Act  Establishes uniform terminology for credit disclosures, such as APR.
 Gives consumers the right in certain circumstances to cancel credit
transactions that involve a lien on a consumer's principal dwelling.
 Regulates certain credit card practices.
 Provides a means for fair and timely resolution of credit billing disputes
 Additional examples of what this law covers:
 Requires a maximum interest rate to be stated in variable-rate contracts
secured by the consumer's dwelling.
 Imposes requirements on home-equity plans and mortgages.
 Regulates practices of creditors who extend private education loans.
For more information on this law, visit
http://www.consumerfinance.gov/askcfpb/787/what-truth-lending-disclosure
when-do-i-get-see-it.html.
Regulation  Ensures consumers are able to make informed decisions about accounts
DD: Truth in offered at depository institutions.
Savings Act  Requires depository institutions (banks, credit unions, and thrifts) to provide
disclosures so that consumers can make meaningful comparisons among
depository institutions.
Resources
Consumer.gov, Identity Theft:
http://www.consumer.ftc.gov/features/feature-0014-identity-theft
FBI.gov, Identity Theft:
http://www.fbi.gov/about-us/investigate/cyber/identity_theft

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What are the main topics covered in the toolkit?

What are the main topics covered in the toolkit?

What are some tools included to help assess clients' financial situations?

What are some tools included to help assess clients' financial situations?

YOUR MONEY, YOUR GOALS

MODULE 2: Assessing the situation ........................................................................9

MODULE 3: Starting the conversation ...................................................................27

MODULE 4: Emotional and cultural influences on financial decisions ...............39

MODULE 5: Using the toolkit ..................................................................................43

MODULE 6: Setting goals ........................................................................................49

MODULE 7: Saving for the unexpected, emergencies, and goals .......................61

MODULE 8: Managing income and benefits ..........................................................87

MODULE 9: Paying bills and other expenses ......................................................107

MODULE 10: Managing cash flow.........................................................................133

MODULE 11: Dealing with debt .............................................................................157

MODULE 12: Understanding credit reports and scores .....................................193

MODULE 13: Evaluating financial service providers, products, and

MODULE 14: Protecting consumer rights ............................................................255

Introduction to the toolkit

Welcome to the Consumer Financial Protection

stresses your clients face may interfere with their clients:

progress toward other goals, and providing

Financial education is a strategy that provides  Monitoring progress and

people with financial knowledge, skills, and evaluating results

resources so they can get, manage, and use their

Financial empowerment includes financial make choices and transform those

their financial challenges. This sense of for them.

empowerment can build confidence that they can

An introduction to the CFPB

 Writes the rules for providers of financial products.

 Oversees compliance with the rules.

 Brings enforcement actions to stop violations.

Our primary strategies are:

 Education—An informed consumer is the first line of defense against harmful

 Study—We gather and analyze available information to better understand consumers,

As a case manager, you may sometimes hesitate

knowledgeable about money and comfortable in

your own approach to money management,

credit, debt, and financial products. As you work

efficiently and effectively.

Financial empowerment: A way to improve

clients. their financial stability and reduce

 Establish an emergency savings fund

 Access and use tax refunds

 Track the specific ways they are using their money

 Bring their cash flow budgets into balance

 Make a simple plan to pay down debt

 Get and review their credit reports

 Fix errors on their credit reports

clients the upside and the downside of specific them

The goal of Your Money, Your Goals

The Your Money, Your Goals toolkit is divided into 14 modules:

 Modules 1 through 5 are introductory modules.

Dealing with debt). with your client, limit it to just one or

Assessing the situation

Financial empowerment self-

Case manager financial empowerment self-assessment

Question True False

1. Goals are not important to financial planning or budgets.