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Avoid these costly mistakes when trying to reduce your debts

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Consumers are damaging their financial health by using the wrong debt-reduction strategies.

Reserve Bank data shows household debt in Australia ballooning to record levels compared to household income, and borrowers are being urged to avoid the common mistakes that can cost them dearly.

Marketplace lender SocietyOne’s CEO, Mark Jones, said not knowing what you owed – or the interest rate being paid – was a key error.

“Apathy can cost you a lot in interest,” he said.

A lack of understanding around loans, when combined with bad habits such as impulse buying, can be extremely costly.

Marketplace lender SocietyOne’s CEO, Mark Jones, said not knowing what you owed – or the interest rate being paid – was a key error. Picture: Supplied

Marketplace lender SocietyOne’s CEO, Mark Jones, said not knowing what you owed – or the interest rate being paid – was a key error. Picture: Supplied

Some borrowers keep money in cash deposits earning next to nothing, or offset against their home loan interest rate to save 3-4 per cent, but still have thousands of dollars of credit card debt costing them 20 per cent interest a year.

Others have jumped on the buy now, pay later bandwagon, embracing products such as Afterpay and Zip Pay that technically don’t charge interest but impose costly penalties on people who don’t repay on time.

Mr Jones said another debt-reduction mistake was being dazzled by zero per cent balance transfer credit cards.

“The problem is even if you do pay the transferred debt off in the interest free period, the temptation of a card is still there in your pocket and you’re likely to make new purchases charged at high interest … and so the circle of debt starts again,” he said.

Mr Jones said people should make a conscious effort to change their borrowing habits and look for products with an end date, such as a personal loan.

Consumer finance specialist Lisa Montgomery said borrowers sometimes got the wrong advice around reducing debt, while others used credit repair or debt advice companies that charged high fees.

“They pay money for someone to reorganise their finances when they really could have employed some simple strategies and not have to pay a company to do that,” she said.

 

 

The Australian Securities and Investments Commission has previously warned consumers against paying high fees to credit repair firms and debt solution services, especially when free financial counselling is available.

Debt consolidation can be a powerful strategy as long as it’s done correctly.

Ms Montgomery said it was dangerous to consolidate consumer debts into a mortgage but not change your behaviour.

“Sometimes people think it’s the amount of debt that’s getting them into trouble, but often it’s not that – it’s the actual behaviour of spending money,” she said.

People who consolidated consumer debts into their home loan and then took 25 years to pay it off could spend much more on interest overall, Ms Montgomery said.

She said it was “never too soon” for people struggling with debt to approach their financial institution. “They will often have a solution rather than letting that debt spiral.”

Consumer finance specialist Lisa Montgomery

Consumer finance specialist Lisa Montgomery



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4 QC agencies receive emergency help

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Four Quad-City area agencies are among 35 in Iowa that will receive Emergency Solutions Grant Program funds.

In Scott County

  • Family Resources will receive $142,092 for shelter and outreach and $75,600 for homelessness prevention and rapid rehousing, for a total of $217,692.
  • Humility Homes and Services, Inc. will receive $200,000 for shelter and outreach, and $273,335 for homelessness prevention and rapid rehousing; for a total of $473,335.
  • The Salvation Army Quad Cities Family Services will receive $75,000 for shelter and outreach and $229,119 for homelessness prevention and rapid rehousing, for a total of $304,119.

In Muscatine County

  • The Muscatine Center for Social Action (MCSA) will receive $200,000 for shelter and outreach programs, and $140,568 for homelessness prevention and rapid rehousing, for a total of $340,568.

About the program

Iowa Gov. Kim Reynolds announced Friday that a total of nearly $9 million in assistance is available to assist eligible low-income Iowans at imminent risk of eviction and individuals who have lost housing to quickly regain housing stability, a news release says. The funding also will provide support for homeless-shelter operations. The funds are made available through a supplemental appropriation to the Emergency Solutions Grant program through the federal CARES Act.

“Throughout the pandemic, our focus has always been on protecting the lives and livelihoods of Iowans,” said Reynolds. “The funds announced today will assist those at risk of eviction while also providing support to homeless shelters supporting Iowa’s homeless population at this critical time. I appreciate the continued collaboration with our federal partners in support of the state’s pandemic response.”  

“Providing housing assistance for Iowans in need remains a top priority,” said Iowa Finance Authority Executive Director Debi Durham. “The ability for Iowans to thrive and prosper begins with a safe, stable place to call home and the program announced today will be essential in helping Iowans get back on their feet.”   

The Emergency Solutions Grant program will help to prevent households from becoming homeless because of eviction, assist Iowans who have lost their homes to eviction regain rental housing, and provide homeless shelters with financial support to assist with operations and outreach while they work to serve Iowans in need and mitigate the spread of COVID-19.  

To be eligible for eviction-prevention assistance to avoid homelessness, Iowans must have an income of 50% of the area median income or less and be at imminent risk of eviction, in addition to meeting other eligibility criteria. To be eligible for assistance in rapidly regaining housing, Iowans must currently be experiencing homelessness.   

Examples of assistance available to eligible individuals include rent and utility payments, including in arrears, legal assistance, application fees, security and utility deposits, moving costs, case management and credit repair. All financial assistance is paid directly to landlords and service providers.    

Individuals in need of assistance must apply through the Coordinated Entry help line in their area, available along with additional eligibility and program information at iowahousingrecovery.com.   

Thirty-five agencies were awarded a total of $8.8 million in Emergency Solutions Grant Program funds. The full list of awards is available here. The assistance will remain available until all funds are exhausted or Sept. 30, 2022.   

The Emergency Solutions Grant program is administered by the U.S. Department of Housing and Urban Development and the Iowa Finance Authority in partnership with participating Iowa service agencies.  

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Gov. Reynolds announces assistance to low-income Iowans in preventing eviction or regaining housing

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DES MOINES, Ia. (KMTV) — Statement from the office of Governor Kim Reynolds

Governor Reynolds today announced that a total of nearly $9 million in assistance is available to eligible low-income Iowans who are at imminent risk of eviction and individuals who have lost housing to quickly regain housing stability. The funding will also provide support for homeless shelter operations. The funds are made available through a supplemental appropriation to the Emergency Solutions Grant program through the federal CARES Act.

“Throughout the pandemic, our focus has always been on protecting the lives and livelihoods of Iowans,” said Gov. Reynolds. “The funds announced today will assist those at risk of eviction while also providing support to homeless shelters supporting Iowa’s homeless population at this critical time. I appreciate the continued collaboration with our federal partners in support of the state’s pandemic response.”

“Providing housing assistance for Iowans in need remains a top priority,” said Iowa Finance Authority Executive Director, Debi Durham. “The ability for Iowans to thrive and prosper begins with a safe, stable place to call home and the program announced today will be essential in helping Iowans get back on their feet.”

The Emergency Solutions Grant program will help to prevent households from becoming homeless due to eviction, assist Iowans who have lost their home to eviction to regain rental housing as well as provide homeless shelters with financial support to assist with operations and outreach as they work to serve Iowans in need and mitigate the spread of COVID-19.

To be eligible for eviction prevention assistance to avoid homelessness, Iowans must have an income of 50% of the area median income or less and be at imminent risk of eviction in addition to meeting other eligibility criteria. To be eligible for assistance in rapidly regaining housing, Iowans must be currently experiencing homelessness.

Examples of assistance available to eligible individuals include rent and utility payments, including in arrears, legal assistance, application fees, security and utility deposits, moving costs, case management and credit repair. All financial assistance is paid directly to landlords and service providers.

Individuals in need of assistance must apply through the Coordinated Entry helpline in their area, which is available along with additional eligibility and program information at iowahousingrecovery.com.

Thirty-five agencies were awarded a total of $8.8 million in Emergency Solutions Grant Program funds. The full list of awards is available here. The assistance will remain available until all funds are exhausted or September 30, 2022.

The Emergency Solutions Grant program is administered by the U.S. Department of Housing and Urban Development and the Iowa Finance Authority in partnership with participating Iowa service agencies.



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Dovly, the Credit Repair Engine, Welcomes Todd Davis, Co-Founder and Former CEO of LifeLock, to Advisory Board

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PHOENIX, Dec. 3, 2020 /PRNewswire/ — Dovly, the credit repair engine that tracks, manages, and fixes your credit, today announced the appointment of Todd Davis, co-founder and former chief executive officer (CEO) of identity protection leader LifeLock, to its board of advisors.

“Todd is one of the most innovative marketers and business leaders in the personal finance industry,” said Nirit Rubenstein, CEO and co-founder of Dovly. “His unique understanding of consumer mindsets and financial technology enabled him to create and scale a transformational business. His insights will help us take Dovly to the next level.”

“Millions of Americans have at least one serious mistake on their credit reports,” Todd Davis, co-founder and former CEO of LifeLock, explained, “yet far too many of those people aren’t even aware of it, nor do they understand the impact these mistakes have on credit scores. Dovly is a game changer.”

After launching his career with Dell in the early 1990s, Davis co-founded LifeLock in 2005. Five years later, the company ranked eighth on Inc. Magazine’s list of the 500 fastest growing companies in America, and in 2012, the company went public. By 2014, LifeLock had over three million subscribers and 700 employees. Symantec acquired the company in February 2017 for $2.3 billion. Davis now serves as chairman of the board of Kadenwood and Aesthetics Biomedical.

Dovly also welcomed Jacky Chiu, the former vice president of product of LifeLock, to its advisory board. Chiu is the co-founder and chief technology officer of Brightside, a financial technology company that recently secured a $35 million series A funding round led by Andreessen Horowitz.

About Dovly

Dovly is an advanced credit repair engine that tracks, manages, and fixes your credit. Dovly’s fully automated technology enables customers to get ahead financially by leveraging credit intelligence to repair credit scores. The company is headquartered in Phoenix, Arizona, and has increased its customer base by 160% this year alone. In June of 2020, Dovly raised a $2.25 million round of seed funding led by NFX, with participation from 1984 Ventures.

Learn more at www.dovly.com.

SOURCE Dovly

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