Episode Transcript
[00:00:00] Speaker A: Welcome to Financial cures. Hi, I'm Dr. Wendy Labotte and today we begin with mindset transformation. Wayne Dyer says, when you change the way you look at things, the things you look at change.
You're watching now Media Television.
Welcome to financial cures. I'm Dr. Wendy Labotte, financial healer and on this show we look at financial challenges the way we might look at a health problem.
We identify the symptoms, understand the system underneath them, and build a treatment plan that leads to stronger financial habits and better long term outcomes. For many people, the visible symptom is a low credit, too much debt, not enough cash left at the end of the month. But those numbers often point to a deeper set of issues.
Limited financial education, inconsistent habits, income pressure, poor planning, or decisions made without the right information.
Now, my guest today is Aldeva, which I'll be calling her Ali Gretarol and I can't roll my Rs.
Founder of Recovery Credit Report, Inc.
Ali is an entrepreneur, certified Freddie Mac credit counselor, tax preparer, and business advisor who has spent decades helping individuals, families and entrepreneurs improve credit health, strengthen their financial foundations and create new opportunities through education and informed decision making.
Ally welcome to the Financial Cures.
[00:01:41] Speaker B: Thank you so much for having me, Wendy.
[00:01:46] Speaker A: Well, when folks come to you and they say they're worried about their credit or debt, how do you determine the visible problem that's the real problem, or if it's only something deeper? You know, everybody wants perfect credit. They want to say, okay, I want you to fix my credit. They want you to, you know, wave a magic wand and it'll be good. So what, what do you look at or what do you consider to get those real underlying problems?
[00:02:14] Speaker B: So the first step is always, of course, looking at their credit report.
We have to see exactly what's on there. How old are the debts?
When did they last physically make a payment?
Who was the debt sold to? Are there any red flag debts? And what I mean by that is, is it a collection or an account that I know will suit?
So we have to look at the overall health of the credit profile and then we also look at how they're currently handling their existing revolving debt and their existing installment debt because that also plays into their current credit scores. So there's a whole consultation that goes behind, that goes behind every consultation and there's a lot of credit education that goes along with it. So that when the client leaves here, either if they come in person or via Zoom or over the phone, they leave with a better understanding as to what they have control over and the Things that we can assist them with.
[00:03:19] Speaker A: Okay, now, what are some of the most common financial blind spots? When somebody comes in and they feel like they're stuck and they're making good money, but they still, still have bad or poor credit?
[00:03:33] Speaker B: Well, a lot of it is they, they're not looking at their credit report.
They don't even know what's on there. I've had so many people come in and say, ally, I have horrible credit, I don't know what to do. And then I pull their credit report and they're 18 again. They have no credit because they thought that, that this bad credit was going to follow them forever. And they don't realize that bad credit only stays, stays on your credit report for seven years.
So I love telling them, hey, you're 18 again, let's start over.
[00:04:07] Speaker A: Now, I find that most people don't understand really what a credit report is other than saying that they pay. Well, they assume is that they pay their bills on time, but it's more than that. So can you kind of give us some, some of the elements of a credit report?
[00:04:25] Speaker B: Yeah. So with a credit report and first of all, I want everyone to know that There are over 60 different FICO score algorithms out there. Okay, so what does that mean?
There's over 60 different ways to calculate a credit score, and it's all based on the permissible purpose behind the poll. So if you're trying to purchase a home, your lenders are pulling a FICO to FICO 4, FICO 5. If you're getting a credit card, your lenders are pulling a FICO 8. If you're getting solar, they're pulling a FICO 9 if you're getting a different type of loan. Like, it all depends on the algorithm. So I love when I go shopping and people go, so, Ali, where do you think your scores are? And I tell them, well, what algorithm are you pulling? And I'll tell you where my scores are. And they don't even know the response to that question.
So. And some of you are looking at Credit Karma, which is great because at least you're monitoring your credit. But That's a Vantage 3.0 score. It's not even a FICO score. And then you're like, okay, Ali, well, I'm looking at Credit Karma. And I also have experience.
Great. So you're looking at advantage 3.0, which is credit Karma, who gives you transunion and equal facts. And you're looking@your experian.com, which is a FICO 8 algorithm.
So it's important to understand this because sometimes you get offended or people get offended when someone says, your scores are here. And then you whip out your app and you go, no, no, no, my scores are here. And they're like, no, no, no. On paper, it's here. And that's because the algorithm that they're looking at is for the permissible purpose behind the pull of what you're trying to purchase.
[00:06:14] Speaker A: Yeah, because some people think that just because their score on, like I said, on paper, may say 695, but that's just sort of like a raw score, like you said, with the different algorithm, but based on what they're trying to do to get purchase in a house that factors in other things that will change that score. And people, you know, kind of like you said, get offended or think, oh, no, what happened to my credit?
Now, could you also talk about.
I know those are what makes the.
What? Well, you kind of said what, you know, the algorithm would be based on what they're trying to use it for. But how can someone get the true algorithm without actually, you know, going somewhere and letting them pull their credit report? Say, if I wanted to buy a car and. And I wanted to see what it would look like for an auto loan, would I be able to pull that particular report with that algorithm for car loans?
[00:07:14] Speaker B: So here's the beautiful thing about car loans. They are not based on FICO scores. They're based on an Auto Vantage score.
So let's say that you're 20 years old, you have your credit cards, you've always made your payments on time, and you have a 700 score. So you walk confidently onto the car lot to go purchase your first vehicle, and the car lot says you don't have a credit score. And you're like, yes, I do. I have all these cards. Here's my credit score.
But because you've never purchased an automobile, you don't have an Auto Vantage score.
So I personally, Personally, I like myfico.com because myfico.com gives you all of your algorithms in one place.
I don't work off those credit reports.
But if you want to know where you stand on all your algorithms, myfico.com is a good place to look at it.
[00:08:14] Speaker A: Okay, can you kind of explain the difference between, say, a FICO score and an Experian?
And the other, the transunion, the other credit reporting agencies for, is it, you know, based on geography or, you know, what you're trying to use it for? Kind of give us an, you know, definition or Explain that to us.
[00:08:38] Speaker B: So we have three main bureaus that everyone's aware of, which is Experian, TransUnion, and Equal Facts. But in reality, we have 11 different credit reporting agencies. There's like, there's Nexus, there's Innovis, there's CoreLogic, SageStream. There's so many more that people don't. Don't know about that are out there. But I'm going to focus on the main three.
Why do we have one account, three bureaus, three different scores.
And that's because your creditors are the ones who pay to report to the bureaus.
So some creditors may pay to report to only one bureau.
Some pay to report to 2. Some pay to report to all 3. If they would all pay to report to all 3 bureaus the exact same way, the exact same time, we would have to be at the exact same scores between the three bureaus. So it has nothing to do with demographics. It has everything to do with how you handle your payment history, especially on revolving debt. Okay? Revolving debt, they focus on, this is my credit limit, this is my balance. Okay? So I want you to think of a teeter charter. If you keep everything level, right, no balance, no payments, your level, nothing pushing you up or down. But the more I charge on my card, the more my scores drop, the less I charge my card, the more my scores go up.
So when you think of debt up, scores down, debt down, scores up, that's how credit works, okay? When it comes to installment debt, installment debt are your auto loans, mortgage loans, payday loans, just because you can loans, they focus on the payment.
So you make your payments on time every month.
You never miss the payment. And then the glorious day comes where you're like, I'm paying this off. Here's my final payment. And what happens to that account?
It closes and it deems you 50 points because you just took away payment history.
So it's important to understand things.
[00:10:56] Speaker A: Yeah, that's really important. Now we'll talk more about that on the other side.
But financial recovery starts with clarity. And when we understand the numbers and what telling us, we can stop reacting to the symptoms and begin changing the system that produced them. So after the break, we will go deeper into that. I love that analogy with the teeter totter. We'll go deeper into that, deeper into credit restoration and what can actually be repaired, what takes time, and how consumers can rebuild financial credibility without failing or falling for the quick fix. You know, I can fix your credit and you can get an 800 score. When your score is 500. So we're gonna deal with those topics when we come back. We'll be right back with more financial cures to help you heal your financial ills become financially free. So stay tuned.
And we're back.
I'm Dr. Wendy Labotte, the financial healer, and this is the financial cures on NOW Media Television. Let's continue your financial healing experience.
Welcome back to Financial Cures. Stay connected to this show and every NOW Media TV favorite live or on demand, anytime you like. Download the free Now Media TV app on Roku or iOS and unlock nonstop bilingual programming in English, English and Spanish. If you're on the move, catch the podcast version at www.nowmediatv.
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Welcome back to financial cures. I'm Dr. Wendy Labotte, the financial healer, and I'm here with Allie Gratterall. I'm sorry, Allie messing up your last name. She' the founder of Recovery Credit Repair, Inc. Now, before the break, we talked about diagnosing the financial system behind symptoms. Now we're focusing on the areas that creates most of the confusion and anxiety for consumers, which is credit. Now, you were talking about the teeter totter. I like that. That's a good example to help people understand that the more you, you charge on your credit card, the lower your score gets. But I was surprised to hear that when you pay off that debt, you lose 50 points because I thought paying off the debt would show a good indicator that you, you know, that you do pay your bills and do pay and pay it off. So tell us a little bit more about that.
[00:13:49] Speaker B: Yeah, so it's, it's really anytime you close an account, okay, so you pay off your car, make the final payment, it closes the account.
You pay off your home, make that final payment, it closes the account.
So anytime you close an account, even a credit card, that will ding you 50 points because you just closed an account which takes away your payment history, which is 15% of your credit score.
Now, I'm going to talk to you listeners out there and everyone watching. A lot of you have a firm on your credit reports.
And I have a love hate relationship with the firm. I say that because they're a great tool for you to access what you want.
Six months, same as cash, no interest.
But a firm is strictly installment debt. Okay? So what that means is they're all micro loans.
So every time you buy something for $200 and you make four payments and you pay it off, you Got the line of credit, made your payments on time, paid it off, lose 50 points. Then you get another affirmed thing. Make your payments on time, pay it off, lose 50 points.
So is it worth it to get that? No interest, same as cash.
That's up to you to decide. But those are the indicators that you're playing with and you're gambling with. On your own credit report is that payment history that gets taken away every time you pay off an account.
So just little things to think about.
[00:15:29] Speaker A: That's good. Now, one thing I want to, and one thing I've advised my clients about with credit cards is, you know, keep your, you know, your usage under 30%. But if you pay it off, don't close it, just don't use it. Is that a good strategy? You keep it open, but have a zero balance or maybe charge, you know, $100 or less just. And pay it off. So give me a little perspective on that.
[00:15:55] Speaker B: Yeah. So there's two important dates on, on the credit card statement. One everyone watching should know, because y' all need to know, and that's the date that you need to make your payment by your due date. Right.
The other one that many of you ignore and don't focus on because no one ever educates you on it, is your statement ending dates.
Why is this important?
Let's say today's the 26th. My credit card payment's due today, and my next Statement date is September 6th in 10 days. Right.
So August 26th, I pay off my bills, pay off my balance.
September 6th, I maxed out my card.
What's going to be reported to the bureaus?
That I paid off the debt or my current balance?
[00:16:46] Speaker A: No, your current balance is going to be shown, isn't it?
[00:16:50] Speaker B: Correct. So whatever balance you have on your statement ending date is what gets reported to the bureaus. So that's why it's important to be aware of that. Because if life happens, which happens to everyone, and you need to max out a card, it's okay.
But be aware of that statement ending date, because if you're maxed out that date, it's going to drop your scores 80 to 120 points.
But if you pay down your card at least down to 30% before the statement ending date, wait till the day after the statement ending date passes, and then recharge on your card again.
Now that lower balance is going to be reported to the bureaus, your scores are going to go up and not down.
[00:17:43] Speaker A: So it's just.
[00:17:45] Speaker B: Yeah.
[00:17:46] Speaker A: Just understand. Yeah, I, I know those dates, but I didn't realize that my, the statement ending date was what was reported. You know, I, I didn't know for sure, but I know now. So thank you for that bit of information because I. Now what about when you don't have a credit limit?
How do they determine whether it's maxed out as far as reporting the crit to the credit report?
[00:18:13] Speaker B: Those are normally corporate business cards.
Those are normally corporate, yeah. So corporate business cards. So if you own a business.
Here's the beautiful opposite of what I just said.
When you own a business, your business credit, as long as you're an llc, an S corp or a C corp with an ein gets reported to your business credit and not to your personal credit.
So if you max out those cards, it's okay because they know that they're used for business.
On the personal side, if you max out the cards, it drops you 80 to 120 points.
So. And typically cards like the corporate cards with no credit limit, they're typically net 30 people are paying off their balances every 30 days.
So that's credit and personal credit.
[00:19:11] Speaker A: And it's important to distinguish that, especially for our entrepreneurial audience. You know, know the difference in how it's reported for your business and for your personal. And even if you're a personal guarantee on that credit, company credit, does it reflect on your personal, if it's good at all or just only if it's charged off or something? How does that reflect if you're the personal guarantee or on a corporate credit card or corporate line of credit and it gets defaulted?
[00:19:48] Speaker B: So that's actually a great question. Okay, I'm. This is a two part answer. Now there's one credit card that's a corporate card that does report on your personal credit. And I'm not a fan of it. And that's the Capital One Sparks card. Okay, that one, even though it's in the business name in the business ein, it's still attached to you personally with your social and it reflects on your personal credit.
Now when it comes to corporate cards, what does personal guarantee mean? So I'm going to pick on American Express because anyone who has a business typically has an American Express corporate card.
You have ABC Inc. A corporation that you're running, ABC Inc.
Shuts down.
Typically if you're not a personal guarantor, then ABC Inc. Dissolves and you that, that goes away.
When you're a personal guarantor, ABC Inc. Goes out of business.
You are now guaranteeing that you will repay back the debt regardless of ABC Inc. Going out of Business.
So be careful not to do personal guarantees when you own a business if you can avoid it.
[00:21:14] Speaker A: That's good information. And that's a lot of stuff that people don't even consider. It's like, okay, sign their name, but then they think it's company business. They don't think that they're actually, you know, responsible for it if something goes south or if they've got partners that, you know, renege or something like that. So that's good information.
Now we talked about, well, we're mentioned credit repair. Kind of give us a little do's and don'ts about that. You know, what is that all about? Because people think, like I said, that's, oh, I'm paying this person to get my credit repair because they think it'll, that it'll work. So give us some, the true reality of that whole process of what that means.
[00:21:56] Speaker B: Yeah.
So if you see the words I promise, I guarantee you're going to get back this many points in this much time, please know that that's against the, the law because we are not allowed to promise or guarantee results.
We control our work, we control what we do. We do not control how your creditors or how the bureaus respond.
Okay, that's number one.
If someone is asking you to, to falsify documents, for example, I see a lot of people doing false identity theft claims because that's an easy way to remove information.
Do not allow anyone to do anything falsified in your name. Why? A creditor can come back and realize that it was actually you who did the debt and they can sue you.
So why would you want to open up that kind of box?
Always make sure that everything you're doing is actual and factual, that you're, you're disputing the validity of the debt. If there is something to actually dispute. Sometimes you were late March, April and May and they reported you were late March, April and May. Can you dispute that? Yes. Should you?
It's a factual reporting.
So the answer is usually no, you know, so you need to really be careful with.
[00:23:36] Speaker A: Okay, well, credit improvement is most important when it becomes part of a larger financial reset. The goal is not only to change a report, it's to change the decisions and systems that determine what the report looks like next year and even five years from now.
Next we'll connect personal financial health to find to entrepreneurship and look at what business owners need to understand about credit taxes, cash flow and financial readiness before they try to grow. So we'll see you on the other side after the break. We'll be right back with more financial cures to help you heal your financial ills.
Become financially free. So stay tuned.
And we're back. I'm Dr. Wendy Labotte, the financial healer, and this is the Financial Cures on NOW Media Television. Let's continue your financial healing experience.
Welcome back to Financial Cures. We've been talking with Ali Gretara about credit, health and financial recovery. Now I want to shift the conversation to entrepreneurs because personal financial habits and business financial decisions often collide in ways that can either create opportunity or create serious pressures.
Allie works with business owners as well as individuals. And her background includes tax preparation, business advisory services, and entrepreneurship that gives her practical views of what happens when someone has a great idea.
But the financial foundation behind the business is not yet strong enough to support the growth.
So we talked about, and I like the way we're kind of integrating the personal and the business because they, you know, they can make you a break. You like they said.
So what financial habits do entrepreneurs need to change when they move from earning income for themselves to running a business and, and possibly creating income for others?
[00:25:49] Speaker B: That's a really good question. And here's what I tell all my business owners in the beginning.
And I was the same way. So what I'm going to tell you, I'm not pointing fingers because I did it too.
In the beginning. We're all focused on the income. We're focused on the sale.
We're focused on closing the deal.
What we forget is after the deal, we have debts to pay, payroll to pay, insurance to pay. And we don't live off the gross. We live off the Net.
So if you're not, if you're not doing QuickBooks or any type of accounting software, you're not balancing your books every month. You're not producing a profit and loss statement. You're not looking at a balance sheet. You have no idea where your money's going. And that's one thing I see a lot of entrepreneurs say is I make all this money, but I'm broke.
Right? You're broke because you're not focused on where did the money go.
I'm gonna pick on advertising. Not all advertising makes you money. So how many of you ever look at, I just invested this much money here.
How many clients did I get from here?
Or I invested this much money here, but I got all of these clients from here. So I'm gonna pivot my money from here to here where I know I'm getting a good rate on return. And this one's just Throwing money down the drain.
And if you're not analyzing your expenditures, you are literally throwing away money just because you think you're doing something good. And because you're not focused, you're focusing on where's the next sale going to come from, how am I going to make money as opposed to, I brought in $100,000, I paid all this money and I have 20,000 left. That's my net profit. It's not the 80 grand that went out the door.
So that, those are things that as a lot of business owners fail.
Yeah.
[00:28:05] Speaker A: And I what I find too, especially when you're out networking, you hear people say, oh, My company did $5 million last year, but you know, that's a gross sales number. You know, what did, what was the net profit? You know, how much did it cost you? Were you spending 5 million and $1, you know, to make that 5 million? And that's so, you know, people really tend to, you know, just overlook the actual real numbers as far as the net profit. They don't even really know what their net profit is. So that, that's a very good point.
Now one thing, especially this, I guess is something I deal with, with people that do have, you know, say their LLCs or sole proprietors and they commingle their funds, their business and their personal funds. You know, tell us a little bit about giving some, you know, realities and some horror stories. I have one myself that I can share with a client about a client, but, you know, let me turn that over to you. It's important to keep those separate, personal and your business because, you know, you don't want to mess with the irs, for one. But there are other, you know, factors that, that can create problems. So kind of tell us a little bit more about that.
[00:29:20] Speaker B: Of course. So when you have an llc, an S corp, a C corp, a non profit, even if you're a sole proprietor, please have a separate bank account for your entity. Okay, I understand you need to pay yourself. So as an llc, you cannot be, if you're a manager or member, you cannot be on payroll. You can, you have to do an owner's draw. But if you're an S corp or a C corp, you have to be on payroll. As a sole proprietor, you can be on payroll or you could do an owner's draw. What I tell everyone is make out a check from your entity to you.
Deposit that check into your personal account.
You could do whatever you want with those funds.
Do not transfer.
Okay. Do not use your business money for your personal expenses. Why, if you were to get sued, heaven forbid, and they discover you are commingling funds, that protection of the llc, S Corp or C Corp gets pierced and now the creditors or whoever suing you can come after you personally because you have now commingled funds and opened up that umbrella of protection.
So be very, very careful with that. Always write a check from your business to yourself personally deposited into your personal account. You could do whatever you want with that money.
[00:31:01] Speaker A: That's some good information. And I said I learned something there. I thought the only difference would be worrying about the irs. I didn't realize that protection umbrella was pierced. That's really good information. So I'm learning a lot today.
Now this is such good information.
Tell our audience how they can get in touch with you.
[00:31:22] Speaker B: Yeah, so I know you mentioned recovery, credit, repair by change that name two years ago. So we're now Aldivas Financial solutions and it's ficodiva.com f I C-O-I-V-A.com.
we do business bookkeeping. We do personal and business taxes, estate planning, IRS tax resolution.
You name it, we do it. We life insurance, we do all kinds of things.
So with that, we are a trilingual company. Sponsored speak Spanish and Portuguese and you can call us at 559-372-2823, text us at 559-744-4011 or go on to our website, ficodiva.com we meet with our clients in person over zoom or over the phone.
[00:32:18] Speaker A: I like that name.
Diva. All right.
But that's some good information. You are, I mean, so, so much. You're a wealth of information and that's what's so important. People just don't know. And if you don't know, you know, you make the wrong decisions because you, you know, you're not making decisions from, you know, informed base. You're, you know, just guessing. Now, what should small business owners understand about tax preparation and record keeping before tax season?
Tax season.
[00:32:50] Speaker B: Yeah. So a lot of we have business owners who show up and say, here's my receipts, Merry Christmas.
So we have to sit there, calculate everything and figure out where they stand. Right.
Some people try to write off gas. Well, gas doesn't make sense to write off. And I'm going to give you a really quick example. Let's say that a gas of tank, I mean a tank of gas, forgive me, costs you $70 to fill up and that one tank of gas will give you about 500 miles. Okay, so would you rather write off $70 for a tank of gas or write off your miles. Well, let's do the math. 500 miles times 0.765, which is the IRS rate for miles.
It's going to give you a credit of $382.50.
So what makes more sense, tracking business miles or writing off a tank of gas?
[00:33:53] Speaker A: Business miles. I do miles for all my clients. Yeah, I agree. Miles. And a lot of people don't understand that. They think, you know, because especially now the gas prices are so high, they think that would be, you know, the best route. But, you know, when you track your miles, you'd be surprised at how many miles you are doing conducting business. And even though people work remotely or run their business remotely, you still have to, you know, get out there and you still have to put those miles on your, on your vehicle. That's for sure.
Yeah, I know that's right.
And then me. You know, sometimes you have to show up in person for, you know, networking events, you know, business meetings, you know, following up with your clients. They want to see you sometime on the zoom. Especially after Covid, people got tired of looking at folks on the screen. They want to see you in person, you know.
So how can personal credit health affect a business owner's ability to access financing, negotiate opportunities, and invest in growth?
[00:34:59] Speaker B: So whenever you have a new llc, S Corp or C Corp, the first two years, people will tap into your personal credit. You need to know that your company hasn't been established at least two years, so it's considered new.
So therefore, the banks will look at your personal credit. If your personal credit's low, it can cost. It can keep you from obtaining business credit. So it's important to keep your personal credit health healthy so that you can be able to obtain those loans, especially in the beginning. There are some companies out there that work with new entrepreneurs who don't have any credit yet. Maybe they have low credit scores personally, but because they're a new company, they might be able to access grant money or things like that.
So there are some things out there that you can could work on.
But keeping your personal credit healthy is important because it can make or break you from getting something on the business side, especially the first two years of business.
One thing, if you are a new LLC for C Corp, please get yourselves a secured credit card and a business name.
[00:36:18] Speaker A: Okay, that's a good point.
Entrepreneurship creates opportunity. But growth becomes much harder when the owner is operating without clean records, clear cash flow, or strong financial foundation.
Financial discipline is not separate from the strategy for your business. It's part of the business strategy. And after the break, we'll bring the conversation together with habits, education and community impact that can turn financial knowledge into long term financial freedom. We'll see you on the other side. We'll be right back with more financial cures to help you heal your financial ills become financially free. So stay tuned.
And we're back. I'm Dr. Wendy Labotte, the financial healer, and this is the Financial Cures on NOW Media Television. Let's continue your financial healing experience.
Welcome back to Financial Cures. Stay connected to this show and every NOW Media TV favorite live or on demand, anytime you'd like, Download the free Now Media TV app on Roku or iOS and unlock non stop bilingual program programming in English and Spanish. If you're on the move, catch the podcast version at NOW Media tv. From business to new business and news to lifestyle, culture and beyond, NOW Media TV is streaming around the clock. Ready whenever you are.
Welcome back to financial cures. I'm Dr. Wendy LaBotte, the financial healer and we're closing today's conversation with Ali Gradall.
And we've talked about diagnosing financial problems, rebuilding credit, creating a stronger financial foundation for entrepreneurship.
And in the final segment, I want to focus on what makes those improvements last, whether it's education, consistency, informed decision making, and ability to pass better financial habits onto your family and community.
So financial freedom is rarely created by one dramatic move.
It is built through repeated choices, understanding the numbers, asking better questions, protecting credit, planning for taxes, using opportunities wisely, and helping the next generation start with more knowledge than the last one had. So with those things in mind, what is your strategy when you talk about financial freedom to your clients? And what does that mean beyond simply having a higher income or a high credit score?
[00:39:11] Speaker B: So really it's, it's about understanding how credit works.
We have clients who pay off their credit cards every 30 days, which is great.
But a little way to trick your algorithm, if you're one of those, is allow a five or ten dollar balance to report. Yes, you're going to pay interest on that five or ten dollars, I don't want to hear it. But leaving that little balance on your credit card actually tricks your algorithm and it can increase you 15 to 25 points.
So like little tricks sometimes like that can help people.
Also, you need to know that if life happened in the past, it's okay. You're not the first, you're not the last, and life happens to everyone.
Now here's the beautiful thing I know all of you watching have an 850 credit score, but you guys have friends, family and exes that don't. Okay, so it's important to know how long is debt legally collectible in your state? State, for example, California, Nevada, Texas, they only have four years to collect on the debt from date of last payment.
Florida is a five year state.
Arizona, Oregon, Washington, they have six years.
So Tennessee and Wyoming, they have 10 years.
So every state has their own statute of limitations.
So I want you guys to look up what is the statute of limitations for debt in my state because sometimes some of you are trying to pay off time bar debt.
So let's pick on a debt that was from 2023. Next year it'll be seven years old and it's going to fall off your credit report, right? No, I'm sorry, it'll no longer be collectible in California. Forgive me, I still the wrong thing.
It'll no longer be legally collectible in California and you pay it off this year.
And it should be falling off of your credit report 23, 24 in 2030.
But because you just paid it off this year, it's now going to be a paid collection for seven years from today day's date as opposed to falling off in 2030, it'll fall off in 2033.
So it's important to look at the dates of last payment. Even like let's say that some debts are from God, what, from 2019.
Okay? Any debt from 2019, depending on the month, is already falling off of your credit report.
So you're like, I want to get this debt off of my credit report, I'm just going to pay it off. So instead of it falling off next month, let's say it's supposed to fall off next month. You make a payment today and now it's going to stay on there for another seven years instead of falling off.
So it's really important to look at these dates and understand how long is that legally collectible.
And if you didn't get sued once the statute of limitations expire, if you pay it off, you're gifting away your money.
[00:42:36] Speaker A: Now what about those companies that buy up the debt for like pennies on a dollar and then come after you to, you know, get paid?
You know, that's a, that's a big market right now. I mean a lot of companies doing that. And does that mean that when you pay them, when they come to you and you make that payment, that starts the clock all over again?
[00:42:57] Speaker B: It sure does.
[00:42:59] Speaker A: Because does that mean that you oh, go ahead. I'm sorry.
[00:43:04] Speaker B: Does that mean that you can.
[00:43:07] Speaker A: I'm sorry. Okay. Even if you, you know, if they come to you with that kind of situation, say, look, that dead is time bar, you know, you better go somewhere because I don't owe that, you know, it's already, it's too late to collect. So it's too late for them to sue you because the debt is already should be gone because it's time barred. But if you pay them, it starts to clock over and then they're entitled to sue you for a debt that they, that could have gone away already.
[00:43:35] Speaker B: Correct.
So the minute you make one payment after the statute of limitations date, you just reset your clock. The minute even, even within the statute of limitations date, like, like I said, California is four years. If I make a payment within the four years, I just gave them an extra four years to take me to court.
[00:43:55] Speaker A: Three years.
Yeah, yeah. So many people are getting caught up with that. You know, they got two or three collections from the same original debt because they paid, you know, this collection A.C. then they decided not to pay them. So it's really crazy. So know what you're dealing with. You know, this is so important. You know, knowledge is power. So I'm like, okay people, this is a good episode. Watch it over and over if you need to.
No financial,
[00:44:29] Speaker B: let's say be careful when you're buying a home because your mortgage lenders, sometimes they use what's called a what if simulator. And what this what if says is what if this client Jane Doe pays off this debt, how many points will Jane Doe get back?
The simulator says, hey Jane Doe, pay off this debt, you're going to get back 75 points. Jane Doe goes, pays off the debt, lender does a rapid rescore and Jane Doe got back zero points. Why? Because the debt was already too old to matter. And now she gifted away her down payment money on money that towards bad debt that could have gone towards her down payment.
[00:45:13] Speaker A: Yeah. Wow, that's so unfortunate for them to even advise her to make that payment when they know it wouldn't make a difference.
But you know, I said knowledge is power. If you know what you're dealing with and what your laws are and statute of limitations, those are so important.
Now what financial habits have you seen create the biggest long term difference for families trying to build stability and opportunity?
[00:45:41] Speaker B: The biggest thing is, is being on top of your finances really starting to pay attention. Stop, stop the mindless spending. I don't like Apple pay, Google pay just because I can't pay because how many of you go, I have a thousand dollars in the bank.
I go to a store and bloop, I just spent three.
Now I have $700.
We don't think that way. We're focused on, oh, I have $500 in the bank. I could spend that.
We're not focused on how much money did we spend this month eating out? How much money did we spend this month on coffee? How much money did we spend this month on utilities, how much money is left over?
A lot of people, even personally are not budgeting. They're not looking at where the money's going. They just know I work so hard and I'm broke. Okay, but let's sit down and understand where your money's going because that's going to empower you and help you stop the mindless shopping that you're doing.
[00:46:52] Speaker A: That's so true. I give my clients a spending challenge because I tell them when they, first thing they say I can't afford is like, you know, you got the money. Do the spending challenge. It'll help you find the money to pay for things that you're saying you can't afford. So it's there. Like you said that mindless spending is where the money is.
Now for the viewer who wants to begin a financial reset this week, what are the first three things you would challenge them to review or to change?
[00:47:21] Speaker B: First thing is, is we're in August right now, so get your July Spanx statement, sit down and allocate all of your expenses.
This went to food. This went to eating out. This went to repairs and maintenance. This went to gas.
This went to medical. This went to prescriptions like, figure out where your money went and start seeing where you're spending your money.
We're almost at the end of August now. Look at your current month and see where is my money going?
And then keep doing that month after month after month.
When you start cutting things, subscriptions that you forgot that you're not even paying attention to. But every month they're going auto, debit, auto debit, auto debit, cancel those things.
Right? There's opportunity to open up your, your bank account and, and increase your cash flow if you get rid of things that are just eating away at your money.
[00:48:24] Speaker A: That's true.
So financial healing is not about perfection.
It's about replacing confusion with clarity. Now, reactive decisions with informed choices and short term fixes with systems that can support a stronger future like Allie just described will help you find that money to pay for things you think you can't afford board now for all for viewers who want to learn more about your work, connect with you or explore you know your resources that are available through ficodivo.com where should they go? Should they go to ficodivo.com yeah go
[00:49:03] Speaker B: to ficodiva.com F I C O-I-V A.com give us a call 559-372-2823 send us a text 559-744-4011 follow us on Tick Tock Fico Diva Follow us on Instagram Fico Diva Follow us on Facebook Fico Diva so keep us in mind.
Forward to hearing from you.
[00:49:31] Speaker A: So Ali, thank you so much for joining us on Financial Cures and for helping us see that credit, debt, taxes and financial habits are not safe separate problems. They are connected parts of a financial system that can be understood, improved and managed with the right information and consistent action for everyone. Watching your financial numbers are information, not your identity. Use them to diagnose what needs attention, build a plan you can sustain and make new decision, the next decision stronger than the last one. I'm Dr. Wendy Labotte, the financial healer. And remember, when you think right, speak right and do right, things will flow right to optimize your financial health. Thank you for watching Financial Cures on Now Media TV.
Thank you for watching Financial Cures with Dr. Wendy Labatt. Join us next time for more empowerment, more transformation and more clarity. Take your finances from where they are to where you want them to be on NOW Media Television.
