YOUR MONEY, YOUR GOALS

A financial empowerment 

toolkit for Legal Aid 

organizations

Consumer Financial

Protection Bureau April 2015

i YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Table of contents 

Overview ......................................................................................... 1

An introduction to the CFPB ............................................................................. 1

Protecting consumer rights—the CFPB and consumer finance laws ............... 4

Submitting a complaint ................................................................................... 12

An introduction to Your Money, Your Goals ................................................. 14

How to use the toolkit ......................................................................................15

Benefits of using the toolkit with clients ......................................................... 22

Tool 1: Submitting a complaint to the CFPB .................................................. 25

MODULE 1: Assessing the situation ................................................ 29

Starting the money conversation .................................................................... 30

Tool 1: My money picture ............................................................................... 37

MODULE 2: Setting goals and planning for purchases ...................... 43

Life events and large purchases ...................................................................... 44

Setting SMART goals ....................................................................................... 46

Building a plan ................................................................................................. 48

Tool 1: Goal-setting tool ..................................................................................51

Tool 2: Planning for life events and large purchases ..................................... 55

Tool 3: Buying a car ........................................................................................ 59

MODULE 3: Tracking and managing income and benefits .................. 63

Income ............................................................................................................. 63
 ii 

Public benefits programs ................................................................................. 65

Receiving income and benefits ........................................................................ 67

Tool 1: Income and resource tracker .............................................................. 69

Tool 2: Ways to increase income and resources ............................................ 73

Tool 3: Choosing how to receive your income and benefits .......................... 77

Tool 4: Increasing your income through tax credits ...................................... 81

Tool 5: Understanding garnishment .............................................................. 85

MODULE 4: Paying bills and other expenses.................................... 89

Spending .......................................................................................................... 89

Planning and paying for bills .......................................................................... 90

When cash is short .......................................................................................... 92

Tool 1: Spending tracker ................................................................................. 95

Tool 2: Bill calendar ....................................................................................... 101

Tool 3: Choosing ways to pay bills ............................................................... 105

Tool 4: Strategies for cutting expenses ........................................................ 109

Tool 5: When cash is short—prioritizing bills and spending ........................ 115

MODULE 5: Getting through the month ........................................... 119

Making a cash flow budget ............................................................................ 120

Tool 1: Cash flow budget ................................................................................ 121

Tool 2: Cash flow calendar ............................................................................ 131

Tool 3: Improving cash flow checklist .......................................................... 133

Tool 4: Managing cash flow when circumstances change ............................ 141

MODULE 6: Dealing with debt ....................................................... 147

Understanding debt: The basics..................................................................... 147

Medical debt .................................................................................................. 150
iii YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

How much debt is too much debt? ................................................................ 153

Addressing debt collection issues under the FDCPA .................................... 154

Where to go for information on consumer issues ......................................... 158

Tool 1: Debt worksheet ................................................................................. 163

Tool 2: Debt-to-income worksheet ...............................................................167

Tool 3: Debt-reduction worksheet ................................................................ 171

Tool 4: Student loan debt .............................................................................. 175

Tool 5: When debt collectors call ..................................................................179

Tool 6: Avoiding debt traps .......................................................................... 187

MODULE 7: Understanding credit reports and scores ....................... 195

Why do credit reports (sometimes called consumer reports) and credit scores 

matter? ........................................................................................................... 196

What is in a credit report? ............................................................................. 196

Negative information .................................................................................... 199

What are the relevant laws? .......................................................................... 199

Example credit report ................................................................................... 200

What are credit scores? .................................................................................208

Tool 1: Getting your credit reports and scores ............................................. 213

Tool 2: Credit report review checklist .......................................................... 219

Tool 3: Improving credit reports and scores ................................................ 227

Tool 4: Protecting your identity ................................................................... 233

Tool 5: Keeping records to show you’ve paid your bills ............................... 239

MODULE 8: Saving for emergencies, goals, and bills ....................... 243

What is savings? ............................................................................................ 243

How to save—opportunities .......................................................................... 244

A safe place to save ........................................................................................ 246
 iv 

Banking history reports ................................................................................. 247

Savings plan ................................................................................................... 248

Tool 1: Savings plan ...................................................................................... 255

Tool 2: Benefits and asset limits .................................................................. 261

Tool 3: Finding a safe place for savings ....................................................... 267

MODULE 9: Money services, cards, accounts, and loans: 

Finding what works for you ....................................................... 271

Choosing financial products .......................................................................... 272

Tool 1: Know your options: Understanding what you need ........................ 275

Tool 2: Ask questions: Choosing where to get what you need ..................... 281

Tool 3: Money services and banking basics ................................................. 285

Tool 4: Opening an account checklist .......................................................... 291

Tool 5: Remittances ...................................................................................... 297

Tool 6: Managing a bank or credit union account ....................................... 299
1 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Overview 

An introduction to the CFPB 

The Consumer Financial Protection Bureau (CFPB) works to make markets for consumer 

financial products and services work for consumers—whether they are applying for a mortgage, 

choosing among credit cards, or using any number of other consumer financial products. 

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 no important information is buried in fine print. 

Congress established the CFPB through the Dodd-Frank Wall Street Reform and Consumer 

Protection Act of 2010 (Dodd-Frank Act). To create a single point of accountability in the federal 

government for consumer financial protection, the Dodd-Frank Act consolidated many of the 

consumer financial protection authorities previously shared by seven federal agencies into the 

CFPB. The CFPB: 

 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. 

The CFPB’s primary strategies are: 

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

practices. 
OVERVIEW 2 

 Oversight—The CFPB supervises banks, credit unions, and other financial companies, 

and enforces federal consumer financial laws. 

 Regulations—The CFPB writes rules to create a fair marketplace and works to ensure 

that rulemaking is conducted in an informed, fair, and efficient manner in accordance 

with the law. 

 Study—The CFPB gathers and analyzes available information to better understand 

consumers, financial services providers, and consumer financial markets. 

The CFPB has exclusive supervisory authority and primary enforcement authority for federal 

consumer financial law over insured depository institutions or insured credit unions with assets 

totaling over $10 billion and their affiliates. The CFPB also has authority to supervise many 

nonbanks, such as mortgage servicing companies, private student lenders, payday lenders, and 

larger participants of the consumer reporting, consumer debt collection, and student loan 

servicing markets. 

The Dodd-Frank Act also mandated creation of offices to develop financial education and policy 

initiatives to support the financial well-being of particular segments of the consumer population. 

These offices focus on servicemembers, students, older Americans, and “traditionally 

underserved” consumers. 

The Office of Financial Empowerment within the Division of Consumer Education and 

Engagement, the Office tasked with serving low-income and traditionally underserved 

consumers, developed this toolkit because legal aid providers meet with thousands of consumers 

who need financial information and tools to help them address financial issues more effectively. 

The CFPB hopes legal service providers will use this information, the tools found within this 

toolkit, and the resources at http://www.consumerfinance.gov with as many of their clients as 

possible. As they do, they’ll help inform and empower the individuals in the communities they 

serve to manage their finances in ways that help them achieve their goals and dreams. Of course, 

as legal aid staff adopt, implement or make recommendations based upon these materials, they 

should remain cognizant of professional standards applicable to their provision of services. 

CFPB resources for legal aid organizations 

Beyond this toolkit, the CFPB provides a range of additional services and information that are 

especially useful to legal aid organizations. Examples include the following: 
3 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Regulatory information. As a regulator, the CFPB has developed a long list of 

materials—including compliance guides —designed to explain regulations to industry 

and make compliance as straightforward as possible. Those same materials are of 

interest to legal aid organizations as concise guides to laws and regulations designed to 

protect consumers. http://www.consumerfinance.gov/regulatory-implementation. 

Included among these is a guide on the new mortgage servicing rules. 

http://files.consumerfinance.gov/f/201312_cfpb_mortgages_help-for-strugglingborrowers.pdf.

 Ask CFPB. This ever-growing compilation of answers to consumer questions covers a 

range of consumer protection issues related to financial products, services, and 

providers. http://www.consumerfinance.gov/askcfpb.

 Get Assistance materials. In addition to Ask CFPB, the Get Assistance section of the 

CFPB’s website includes consumer friendly resources such as Paying for College and 

Trouble Paying Your Mortgage. http://www.consumerfinance.gov. 

 Submit a complaint. When a client has an issue with a consumer financial product or 

service, he or she can submit a complaint – online or via phone, fax, or mail. The CFPB 

will forward the complaint to the company and work to get a response from them. 

http://www.consumerfinance.gov/complaint/. Legal aid staff can also submit a 

complaint on behalf of a client. Complaints help with the CFPB’s work to supervise 

companies, enforce federal consumer financial laws, and write better rules and 

regulations. Information about anonymized consumer complaints is available to the 

public through the CFPB’s Consumer Complaint Database at: 

http://www.consumerfinance.gov/complaintdatabase.

 Resources for Servicemembers, Students and Older Americans. The CFPB has 

materials and resources addressing financial issues facing these populations. These can 

also be found at the Get Assistance section of the website. 

http://www.consumerfinance.gov.
OVERVIEW 4 

Protecting consumer rights—the CFPB and 

consumer finance laws

The CFPB enforces various consumer financial laws, including the Fair Debt Collection 

Practices Act and the Fair Credit Reporting Act. These laws provide key protections for 

consumers against harmful practices they may encounter in the financial services marketplace. 

The following consumer protection laws establish certain 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 with which legal aid staff should be 

familiar. 

Read the summary of each law below. Then follow the link listed within the “Short Description” 

or visit our website at http://www.consumerfinance.gov for more information. 

Consumer protection law Short description 

Equal Credit Opportunity Act and 

Regulation B 

Promotes the availability of credit to all creditworthy applicants 

without regard to race, color, religion, national origin, sex, 

marital status, age, receipt of public assistance income, or 

good faith exercise of certain consumer rights. 

Prohibits creditor practices that discriminate on the basis of 

any of the above factors. 

Generally requires a creditor 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 certain 

other characteristics in applications for certain residential 

mortgages. 

 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. 
5 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Consumer protection law Short description 

Home Mortgage Disclosure Act 

(HMDA) and Regulation C 

Provides the public with loan data that can be used to: a) help 

determine if financial institutions are serving the housing needs 

of their communities; b) assist public officials in distributing 

public-sector investment to attract private investment to areas 

where needed; and c) assist in identifying possible 

discriminatory lending patterns and enforcing antidiscrimination 

statutes. 

Requires financial institutions to report data to the appropriate 

federal agency about home purchase loans, home 

improvement loans, and refinancing that the institution 

originates or purchases, or for which it receives applications; 

and to disclose certain data to the public. 

For more information about this law, visit: 

http://www.consumerfinance.gov/hmda. Scroll down to the 

section about HMDA. 
OVERVIEW 6 

Consumer protection law Short description 

Electronic Fund Transfer Act 

(EFTA) and Regulation E 

Establishes the basic rights, liabilities, and responsibilities of 

consumers who use electronic fund transfer services and of 

financial institutions that offer these services. This refers to 

transactions, for example, where a consumer swipes his or her 

debit card at checkout, makes purchases with a card by phone 

or online, makes deposits or withdrawals at an ATM, or sends 

remittance transfers (commonly called wire transfers). 

Protects individual consumers engaging in electronic fund 

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 nonrecurring 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-yourstatus-when-it comes-to-overdraft-coverage. 

For more information on remittance transfers (also covered 

under Regulation E), visit: 

http://www.consumerfinance.gov/regulations/final-remittancerule-amendment-regulation-e. 

For more information about payroll cards and EFTA, see 

guidance issued by the CFPB: 

http://www.consumerfinance.gov/f/201309_cfpb_payroll-cardbulletin.pdf. 
7 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Consumer protection law Short description 

Fair Debt Collection Practices Act 

and Regulation F 

The Fair Debt Collection Practices Act (FDCPA) is the main 

federal law that specifically governs debt collection practices. 

The FDCPA prohibits debt collectors from using abusive, 

unfair, or deceptive practices. 

The FDCPA covers the collection of consumer debt, i.e. debts 

from transactions done primarily for personal, family, or 

household purposes. It covers personal debt, not business 

debts. 

The FDCPA does not generally cover collection by the person 

or business from which the consumer first borrowed money 

(e.g. the creditor) —it covers third-party debt collectors (debt 

collection agencies and debt buyers involved in collection), 

including attorneys engaged in debt collection. 

The CFPB published an Advanced Notice of Proposed 

Rulemaking (ANPR) November 12, 2013 to gather additional 

information regarding debt collection practices. The ANPR may 

inform additional rulemaking activities. 

For a summary of this law visit: 

http://www.consumerfinance.gov/askcfpb/329/what-is-the-fairdebt-collection-practices-act.html. 

Consumer Leasing Act and 

Regulation M 

Ensures that people who lease personal property receive 

meaningful disclosures that enable them to compare lease 

terms with other leases and, 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-orlease-whats-difference.html. 
OVERVIEW 8 

Consumer protection law Short description 

Privacy of Consumer Financial 

Information – Gramm-Leach-Bliley 

Act and Regulation P 

Governs the treatment of nonpublic personal information about 

consumers by financial institutions and by institutions that reuse or re-disclose information from financial institutions. This 

type of information includes account information and Social 

Security numbers. 

Provides a method for consumers to prevent a financial 

institution from disclosing that information to unaffiliated 

businesses or individuals by “opting out” (there are exceptions 

to this). 

Restricts when financial institutions may disclose nonpublic 

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. 

For information about how privacy rules affect the reporting of 

elder financial abuse, see guidance at: 

http://www.consumerfinance.gov/newsroom/federal-regulatorsissue-guidance-on-reporting-financial-abuse-of-older-adults. 
9 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Consumer protection law Short description 

Fair Credit Reporting Act and 

Regulation V 

Provides guidelines and limitations for persons who get and 

use information about consumers to: 

 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 file 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 with companies that report information and with 

consumer reporting agencies. The information must be 

corrected or deleted if it is inaccurate, incomplete, or 

unverifiable. 

For answers to common questions regarding this law, visit: 

http://www.consumerfinance.gov/askcfpb/search?selected_fac

ets=tag_exact%3AFair+Credit+Reporting+Act. 
OVERVIEW 10 

Consumer protection law Short description 

Real Estate Settlements 

Procedures Act and Regulation X 

Provides advance disclosures of settlement costs to 

homebuyers and sellers. 

Prohibits kickbacks or referral fees for settlement services. 

Regulates mortgage servicers’ management of escrow 

accounts established to ensure the payment of real estate 

taxes and insurance. 

Requires mortgage servicers to implement policies and 

procedures including: 

 To correct errors on request and provide certain 

information requested by borrowers. 

 To provide information about mortgage loss mitigation 

options to delinquent borrowers. 

 To establish policies and procedures for continuity of 

contact with servicer personnel regarding available 

loss mitigation options. 

There are a number of recent updates to these rules. To find 

out more, please visit: 

http://www.consumerfinance.gov/mortgage. 

http://www.consumerfinance.gov/regulations/2013-real-estatesettlement-procedures-act-regulation-x-and-truth-in-lendingact-regulation-z-mortgage-servicing-final-rules. 
11 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Consumer protection law Short description 

Truth in Lending Act and 

Regulation Z 

Promotes the informed use of consumer credit by requiring 

disclosures about its terms and cost. 

Establishes uniform terminology for credit disclosures, such as 

APR (annual percentage rate). 

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 variablerate contracts secured by the consumer's dwelling. 

 Requires periodic monthly mortgage statements for 

borrowers, which includes additional information for 

borrowers in default. 

 Imposes limitations on home-equity plans and mortgages, 

including limiting mortgage loan originator compensation 

and requiring analysis of a consumer’s ability to repay a 

mortgage. 

 Regulates practices of creditors who extend private 

education loans. 

For more information on this law and recent updates, visit: 

http://www.consumerfinance.gov/regulatory-implementation or 

http://www.consumerfinance.gov/eregulations.

Truth in Savings Act and 

Regulation DD 

Ensures consumers are able to make informed decisions about 

accounts at depository institutions. 

Requires depository institutions (banks, credit unions, and 

thrifts) to provide disclosures so that consumers can make 

meaningful comparisons among depository institutions. 

For more information on this law, visit: 

http://www.consumerfinance.gov/regulations. 
OVERVIEW 12 

Submitting a complaint 

There are many laws that protect consumer rights when it comes to consumer financial products 

and services. The CFPB enforces several of these laws and handles consumers’ complaints about 

consumer financial products and services. 

As of January 2015, the CFPB accepts complaints related to the following consumer financial 

products and services at http://www.consumerfinance.gov/complaint: 

 Credit cards 

 Mortgages 

 Bank accounts and services 

 Private student loans 

 Vehicle or consumer loans 

 Money transfers or virtual currency 

 Credit reporting 

 Debt collection 

 Payday loans 

 Prepaid cards 

 Other financial services (including check cashing, credit repair, traveler’s checks) 

As of the end of 2014, the CFPB has handled approximately 518,400 complaints. Complaints 

inform the CFPB about business practices that may pose risks to consumers and help with its 

work to supervise companies, enforce Federal consumer financial laws, and write better rules 

and regulations. See Tool 1: Submitting a complaint to the CFPB. 

Submitting a complaint on behalf of someone else 

Legal aid staff can submit a complaint on behalf of a client, and the CFPB will handle the 

complaint as described below. This is another opportunity for legal aid staff to provide financial 

empowerment assistance to clients. In addition, providing a clear description of the complaint is 
13 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

very helpful in the CFPB’s enforcement and supervision efforts, because complaints help 

identify bad actors and prioritize resources. 

To submit a complaint for a client, legal aid staff should 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. 

After clicking the “submit” button, there are a series of steps to complete. Under the third tab - 

“My Information” - the person submitting the complaint is asked whether the complaint is being 

submitted on behalf of “Myself” or “Someone else”. The submitter should check the “Someone 

else” box and provide the submitter’s contact information in the “My contact information” 

section. Then, in the “Someone else” section, the submitter should indicate their relationship to 

the client and provide the client’s contact information. 

Please note: Companies may require authorization to communicate with a consumer’s 

representative before responding. 

Public Consumer Complaint Database: Complaints help with the CFPB’s work to 

supervise companies, enforce federal consumer financial laws, and write better rules and 

regulations. Information about anonymized consumer complaints is available to the public 

through the CFPB’s Consumer Complaint Database at: 

http://www.consumerfinance.gov/complaintdatabase.

Contact information 

Online: http://www.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 
OVERVIEW 14 

Addressing consumer complaint process issues 

The CFPB Ombudsman’s Office is an independent, impartial, and confidential resource to help 

legal aid staff and their clients resolve process issues arising from the CFPB activities. Legal aid 

staff can contact the Ombudsman’s Office at any time, but this office asks individuals to try the 

existing CFPB avenues for resolution first. 

CFPB Ombudsman contact information 

Online: http://www.consumerfinance.gov/ombudsman 

Email: CFPBOmbudsman@cfpb.gov 

Phone: (855) 830-7880 

TTY: (202) 435-9835 

Fax: (202) 435-7888 

An introduction to Your Money, Your Goals

The CFPB designed Your Money, Your Goals to help legal aid staff help their 

clients become financially empowered consumers. Why? Finances affect nearly every 

aspect of life in the United States. Many people feel overwhelmed by their financial situations, 

and they don’t know where to go for help. The financial stresses that legal service organization 

clients face may interfere with their progress toward their legal case and their other goals. 

Staff members of legal aid organizations often work with clients on issues involving or related to 

their finances or financial status, so they are in a unique position to provide that help. Providing 

financial empowerment information and tools is a natural extension of the kind of work that 

legal aid staff members are already doing. 

The goal of the toolkit 

The goal of the Your Money, Your Goals toolkit is to improve client outcomes by making it 

easier for staff at legal aid organizations to help clients become more financially empowered. 

Within the toolkit’s modules, there are two kinds of information to help legal aid organizations 

achieve this goal: 

1. Information addressed to legal aid staff to help them better understand financial 

empowerment, including information about financial services and products, and how to 
15 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

talk to their clients about these issues. This information can help them help their clients 

with financial decision making. 

2. Tools that are written for the client to help them navigate their financial challenges, 

make decisions, and better recognize consumer financial protections. Most importantly, 

the information is designed to help them develop the “know how” to take action. 

Your Money, Your Goals is a Modularized Toolkit – not a curriculum: Because the 

process is designed to be client-driven, this isn’t a curriculum that requires staff to use the 

materials in the order in which they are presented. Legal staff should use the modules and the 

specific tools within each module as needed. 

How to use the toolkit 

The Your Money, Your Goals toolkit is designed to help legal aid staff integrate financial 

empowerment into the work legal aid organizations already do with their clients. 

The general structure and staffing of the legal aid organization may influence how financial 

empowerment is integrated and how staff members use the toolkit. Each legal aid organization 

should consider how its organizational structure corresponds to these potential roles for legal 

aid staff members: 

Intake staff

 Incorporate questions from this toolkit into the routine intake process to assess the 

financial empowerment needs of clients. (See Module 1). 

 Use their organizations’ case management systems to flag clients that are candidates for 

financial empowerment information, referrals, or other support from paralegal staff, 

attorneys, and others. 

 Distribute tools and available information throughout the organization—including the 

tools found in this toolkit—based on the intake. 

Paralegal or staff attorney 

 Use assessment information gathered by intake staff and other knowledge about the 

client to help identify specific modules and tools most beneficial for client. 
OVERVIEW 16 

 Integrate conversations about finances into meeting(s) with client(s) based on the 

amount of time you have, instruction in how to use specific tools to address financial 

challenges and possibly provide tools as “homework” for client. 

 Follow up on information and tools covered in previous meetings. This provides 

accountability and momentum in dealing with financial challenges. 

Some legal aid organizations have integrated a co-located social worker into their legal aid team. 

At least one legal aid provider has integrated a financial counselor. Clients are sent “down the 

hall” to these staff resources as a supplement to the legal aid they receive through the 

organization. Whether it is a separate staff person tasked with “financially empowering” clients 

or other staff in the organization integrating these concepts and tools into discussions with their 

clients, it is beneficial to help everyone understand better how to manage their financial lives. 

Financial empowerment centers 

The Cities for Financial Empowerment Fund works with a diverse set of communities 

across the United States to promote financial empowerment initiatives through municipal 

engagement. The CFE Fund’s Financial Empowerment Centers offer free, professional, 

one-on-one financial counseling to enable residents to address their financial needs and 

to plan for their futures. The centers are an example of the types of local partners 

available to legal aid offices and are currently operating in thirteen cities. For more 

information visit http://www.cfefund.org. 

Making the most of your time with clients 

The amount of time legal aid staff have to address financial empowerment issues with clients 

will vary. At the beginning of each module, (starting with Module 2), a table suggests how to 

make the most of the 10 minutes, 30 minutes, or multiple sessions. Here is an example from 

Module 3: Tracking and managing income and benefits. 
17 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

If you have 10 minutes with a 

client... 

If you have 30 minutes with a 

client... 

If you have multiple sessions 

with a client... 

 Tool 1: Income and 

resource tracker 

 Tool 2: Ways to increase 

income and resources 

 Tool 3: Choosing how to 

receive income and 

benefits 

 Tool 4: Increasing your 

income through tax credits 

 Tool 5: Understanding 

garnishment 

Making referrals 

Are legal aid staff expected to provide all of the 

financial empowerment expertise a client may 

need? The answer, of course, is “no.” 

Legal aid can make a big difference in the lives of 

clients by introducing them to financial 

empowerment especially as it relates to their legal 

case and providing them with some new 

information and tools to help them solve specific 

financial challenges. But some clients may need 

more help—help legal aid staff may not feel 

comfortable providing because: 

 It is technical. 

 It is beyond what staff feel comfortable 

addressing. 

 It is more involved than they have time to 

adequately address. 

This is where a resource and referral network will 

be important. 

Community referral partners may include certified, non-profit credit counselors, free volunteer 

tax assistance sites sponsored by the IRS, and financial education programs, among others. It is 

important that the referral base of experts does not try to sell products or services to clients 

when they are seeking financial empowerment assistance. It’s also important that these 

Referral partners 

When identifying referral partners, 

make sure they: 

 Have expertise in the area for 

which you are referring clients to 

them 

 Have the time and interest to 

meet with and assist your clients 

 Are objective, which means they 

can show clients the potential 

positive and negative 

consequences of specific actions 

 And will not sell products or 

services in the context of helping 

your clients
OVERVIEW 18 

partners are objective—able to show clients the upside and the downside of 

specific actions they take and the impact these actions have on their financial 

situations. 

A template for financial empowerment resources 

Legal aid organizations often have lists of resources or referral guides, possibly online through 

the state specific legal assistance sites, e.g., http://www.lawhelp.org or other site for their 

clients. The following is a template, a list of the types of resources specific to financial issues that 

an organization can use to develop its resources for clients. The organization can compare this 

list to its existing resource or referral guide to see if there are any types of resources missing. 

Legal aid organizations may have their own restrictions on making referrals and will have to 

take that into account when developing or updating the list. To complete the template, use: 

 Staff’s knowledge of the community 

 The organization’s own community resource guides, and 

 Consider working with an organization or coalition familiar with financial empowerment 

providers in the community, for example: 

 A local United Way (http://apps.unitedway.org/myuw) 

 A JumpStart Coalition (http://www.jumpstart.org/state-coalitions.html) 

 A nonprofit credit counseling organization 

(http://www.nfcc.org/FirstStep/firststep_03.cfm) 
19 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Area of 

assistance Possible referral partner Contact information 

Cash flow 

budgeting 

 Housing Counseling Agency: 

http://www.consumerfinance.gov/find-a-housingcounselor 

 Community Action Agency: 

http://www.communityactionpartnership.com

 Non-profit Credit Counseling Organization: 

http://www.nfcc.org

 Tribal Organization 

 Other Community-based Non-profit Organization 

 Community College 

Benefits 

screening 

 Community Action Agency: 

http://www.communityactionpartnership.com

 Other Community-based Non-profit Organization 

 Tribal Organization 

 Community College 

 Local Social Services network – This could be a local 

211 information and referral services, a local United 

Way, or a local Community Action Program 

(http://www.communityactionpartnership.com). Click 

on the Community Action Network tab) (Note: While 

not comprehensive, this is a good place to start.)

 Social Security Administration: http://www.ssa.gov

and benefits management through My Social Security

at http://www.ssa.gov/myaccount

Income tax 

preparation and 

filing 

 Local VITA site: http://www.irs.gov/Individuals/Find-aLocation-for-Free-Tax-Prep

 Public Library 

 Local Social Services Network 

Managing debt 

 Legal Aid: http://www.lsc.gov or 

http://www.lawhelp.org

 Non-profit Credit Counseling Organization: 

http://www.nfcc.org

 Tribal Organization 

 Bank or Credit Union 
OVERVIEW 20 

Dealing with debt 

collectors 

 Non-profit Credit Counseling Organization: 

http://www.nfcc.org

Understanding 

credit reports 

and scores 

 Housing Counseling Agency: 

http://www.consumerfinance.gov/find-a-housingcounselor 

 Community Action Agency: 

http://www.communityactionpartnership.com

 Non-profit Credit Counseling Organization: 

http://www.nfcc.org/ 

 Bank or Credit Union 

Fixing errors on 

credit reports 

and scores 

 Non-profit Credit Counseling Organization: 

http://www.nfcc.org/

 Financial Education Provider 

 Housing Counseling Agency: 

http://www.makinghomeaffordable.gov/getstarted/finding-the-right-program/Pages/default.aspx

 Community Action Agency: 

http://www.communityactionpartnership.com

 Bank or Credit Union 

 CFPB, including “Submit a Complaint:” 

http://www.consumerfinance.gov/blog/is-your-creditreport-wrong-how-to-find-out-and-fix-it/ 

Using financial 

services 

 Housing Counseling Agency: 

http://www.consumerfinance.gov/find-a-housingcounselor 

 Community Action Agency: 

http://www.communityactionpartnership.com/

 Non-profit Credit Counseling Organization: 

http://www.nfcc.org

 Individual Development Account Provider: 

http://www.idaresources.org

 Local Bank On: http://joinbankon.org or Alliance for 

Economic Inclusion coalition 

 Bank or Credit Union 

Protecting 

consumer rights 

 Consumer Financial Protection Bureau: 

http://www.consumerfinance.gov

 State Attorney General 
21 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Asset building 

 Asset Building Programs Provider: 

http://assetsandopportunity.org/network/coalitions/ 

 Housing Counseling Agency: 

http://www.consumerfinance.gov/find-a-housingcounselor 

 Community Action Agency: 

http://www.communityactionpartnership.com

 Non-profit Credit Counseling Organization: 

http://www.nfcc.org

 Individual Development Account Provider: 

http://www.idaresources.acf.hhs.gov

 Tribal Organization 

 Other Community-based Non-profit Organization 

Other  Social Security Administration: http://www.ssa.gov

and benefits management through My Social Security

at http://www.ssa.gov/myaccount

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.
OVERVIEW 22 

Benefits of using the toolkit with clients 

Sharing financial empowerment information and tools with clients may feel like a completely 

different job—one more thing added to an already-heavy workload. But once legal aid staff learn 

the contents of this toolkit, it can become natural to integrate them into the organization’s work 

with clients. 

One of the jobs of legal aid staff is likely to involve assessing clients’ financial situation. The 

toolkit includes an assessment to help discern clients’ financial goals and the financial 

challenges they may be facing. This can help staff find the right information or tools to help their 

clients. 

The CFPB developed Your Money, Your Goals because using the information and 

tools can improve outcomes for both clients and legal aid organizations. 

Benefits for clients 

For clients, integration of financial empowerment means that at a single point of service, their 

legal issues are resolved, and they are able to access information, tools, and referrals to begin to 

address their most pressing financial problems. 

This toolkit can help legal aid help clients: 

 Bring their cash flow budgets into balance to help pay bills on time. 

 Set goals and calculate how much money they need to save to reach these goals. 

 Establish an emergency savings fund. 

 Access and use tax refunds. 

 Track the specific ways they are using their money. 

 Make a simple plan to pay down debt. 

 Know better how to respond to debt collectors. 

 Get and review their credit reports. 
23 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 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. 

This toolkit helps link relevant financial information through a trusted source. Often, 

information from a lawyer or other legal aid staff carries more weight than the same information 

from another source. Hearing about the importance of financial empowerment from 

legal aid staff may prompt clients to take action when they otherwise wouldn’t.

That action may prevent future problems that could become legal problems. 

Benefits for legal aid organizations 

Legal aid organizations will benefit from integration of financial empowerment services as well. 

 Financial empowerment aligns with the mission of legal aid organizations to 

help low-income clients address legal challenges that may affect their ability to achieve 

financial stability. 

 Financial empowerment may help legal aid organizations achieve their 

outcomes as well as outcomes that legal aid organizations support such as working 

toward a reduction in poverty. 

 Financial empowerment may help clients resolve their legal issues more 

quickly. Clients of legal aid organizations sometimes find themselves repeatedly facing 

the same legal challenges. Without a change in underlying financial conduct, these 

clients are likely to seek the same service again and again. For example, a client may 

repeatedly face eviction due to late rent. By using a tool that helps clients manage bill 

payments more effectively, the toolkit offers a means to help clients begin to address 

what may be an underlying cause of the legal issue. The result can be a reduction in 

repeated services for clients, freeing up the organization’s resources to help other clients. 

 Discussing financial issues and resources can help link legal aid to more 

resources in the community. Building partnerships with other organizations that 

can help clients with their financial challenges helps strengthen the reach and 

connection of legal aid organizations in the community. 

25 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 1: 

Submitting a complaint to the 

CFPB 

There are many laws that protect your rights when it comes to consumer financial products and 

services. The CFPB enforces several of these laws, and handles consumers’ complaints about 

consumer financial products and services. 

The CFPB accepts complaints on consumer financial products and services such as: 
OVERVIEW 26 

 TOOL 1: SUBMITTING A COMPLAINT TO THE CFPB 

How to submit your complaint 

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 loan, debt 

collection, or vehicle/consumer loan. 

Fill out the form, providing as much detail as possible. The form will ask for 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 

contact centers can help you in over 180 languages and can also take calls from consumers who 

are hearing impaired, or speech-disabled. 

 
27 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

What will happen to your complaint? 

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. 

Review and route: The CFPB will forward your complaint and any documents you provide to 

the company and work to get a response from them. If we find that another government agency 

would be better able to assist, we will forward your complaint to them and let you know. 

Company response: The company reviews the information, communicates with you and the 

CFPB as needed via the secure “company portal.” After your complaint is sent to the company, 

the company has 15 days to provide a 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 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 makes 

anonymized consumer complaint data available to the public on its website at: 

http://www.consumerfinance.gov/complaintdatabase. 
OVERVIEW 28 

 TOOL 1: SUBMITTING A COMPLAINT TO THE CFPB 

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 

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. 
29 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 1:

Assessing the situation 

Financial empowerment is a big topic. Knowing 

where to start can be hard. See below for some 

suggestions about how to start the money 

conversation. Using Tool 1: My money picture (a 

client and financial situation assessment) may 

help staff identify what is going on with each 

client and provide her with the right information, 

tools, or referrals. 

Staff should consider using this assessment when: 

 Clients fill out intake paperwork for their organization or program—during intake. 

 They meet with clients for an initial assessment or first meeting. 

Legal aid staff 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 clients. 

Finally, staff should have a system for keeping the completed assessments confidential. This 

may simply mean applying the confidentiality and document storage policies that your 

organization uses for legal documents and other sensitive materials. When discussing this 

assessment with clients, staff should be sure to provide assurance of confidentiality. 

My money picture, Tool 1 of this module, should be filled out by the client or by legal aid staff to 

help assess which modules may be helpful for the client. Before jumping in to identify financial 

challenges for their clients, legal aid staff may want to find out how financially savvy they are by 

Situation assessment 

A picture of conditions today used to 

create a plan for actions to change 

conditions in the future.
MODULE 1: ASSESSING THE SITUATION 30 

taking the Knowledge assessment available at www.consumerfinance.gov/your-money-yourgoals. The questions and answers may help staff with their own financial decision-making as 

well as helping their clients. 

Starting the money conversation 

Top money conversations 

Your Money, Your Goals covers a wide range of topics. These “top money conversations” cover 

some of the most important financial issues the people you serve may be facing. 

Top Money Conversations 

Do you have goals for yourself and your family? Are they goals you want to reach soon 

or in the next few years? How do you plan to reach them? 

See Module 2: Setting goals and planning for purchases. Use Tool 1: Goal-setting tool to 

help the person: 

Brainstorm a list of hopes, needs, wants, and dreams and determine whether they are shortterm or long-term. 

Turn those hopes, needs, wants, and dreams into SMART goals. 

If the goal requires saving or setting money aside to pay down debt, figure out how much to 

save each week (or month) to reach the goal. 

Identify the first steps the person can take to get started, and when they’ll be completed. 

How do you handle unexpected expenses? Saving money now for unexpected expenses 

and emergencies can save you money later. 

See Module 8: Saving for emergencies, goals, and bills. Use Tool 1: Savings plan to help 

someone make a plan to save money for goals, expected and unexpected expenses, and 

emergencies. 
31 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

It sounds like you’re having trouble coming up with the money for certain bills. 

Sometimes that’s because the timing of your income doesn’t match the timing of the 

bills. Would you like to take a look at a tool that can help you look at your “money-in” 

and “money-out” to try to get the timing to work better? 

See Module 5: Getting through the month. Use either Tool 1: Cash flow budget or Tool 2: 

Cash flow calendar to help someone find ways to better match the timing of income and 

expenses so that he or she doesn’t come up short. If they’re interested in ways to cut spending, 

use the tools in Module 4: Paying bills and other expenses.

Do you feel like you have too much debt? Did you know that there are rules debt 

collectors have to follow when they contact you? 

See Module 6: Dealing with debt. Use Tool 1: Debt worksheet to help someone account for 

his or her debt. This is an important first step toward managing and reducing debt. Tool 5: 

When debt collectors call includes information on the process and sample letters people can 

use to correspond with debt collectors. 

Your credit history doesn’t just determine whether you get a loan. It can also affect how 

much you pay for deposits on your cell phone and utilities, how much insurance costs, 

and even whether you can get the job you want. I’ve got some tools you can use if you’re 

interested in getting your free credit report and checking to make sure it’s accurate. 

See Module 7: Understanding credit reports and scores. Use Tool 1: Getting your credit 

reports and scores, along with Tool 2: Credit report review checklist, to help someone 

identify mistakes on his or her credit report. 

It sounds like you’re having trouble getting an answer from the company about those 

extra charges on your account. You can submit a complaint to the CFPB and they’ll 

forward it to the company and work to get a response for you. 

If someone has a complaint about a financial product or service (bank accounts or services, 

credit cards or prepaid cards, mortgages, student loans, vehicle loans or leases, payday loans, 

consumer loans, debt collection, credit reporting, money transfers or virtual currency) see

Overview: Protecting consumer rights for information on submitting a complaint to the 

CFPB. 
MODULE 1: ASSESSING THE SITUATION 32 

Use the assessment tool 

If staff has a lot of contact with someone, one of the easiest ways to bring up money is to use the 

My money picture tool. Going over this series of questions will give staff a clearer picture of 

where the person stands and what information might be most useful. Remember, staff can: 

 Ask a person to complete the assessment either during a meeting or at home. 

 Cover the questions in a conversation. 

 Ask a person to answer only a few of the questions. 

Make the most of short-term contacts 

It’s great to be able to build trust and discuss financial issues with the individuals legal aid 

serves over the long term, but sometimes there isn’t that kind of time. Staff can work on 

empowering people financially during short-contact meetings, too. For example, if it’s early in 

the year and the staffer is winding up a brief meeting with someone he’s just met, he could say: 
33 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 
MODULE 1: ASSESSING THE SITUATION 34 

Respond when people initiate 

Sometimes a person brings up a financial issue directly or indirectly. Here’s an example of how 

it could sound if someone brings up a financial issue directly. 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 someone brings up a financial issue indirectly. For 

example, during a meeting staff asks Aaliyah how her kids are doing, and she says: 
35 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Discussing difficulties or problems 

Many people have difficulty with credit or other financial products or services, and some may 

feel shame or embarrassment because of the situation. When discussing these problems, legal 

aid staff should first be empathetic. Then suggest or discuss in clear terms how to avoid a similar 

situation in the future. Explain 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. Use or give to the 

client the Overview section’s Tool 1: Submitting a complaint to help him understand how to 

contact CFPB and how to submit a complaint if that is an action he wants to take. 

37 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 1: 

My money picture 

Where I am—and where I want to go 

Please answer the following questions based on where you are today. There are no right or 

wrong answers. Your answers can help us provide you with information and resources that can 

help you with the financial issues you care about. 

If you could change one thing about your financial situation, what would it be? 

________________________________________________________________ 

________________________________________________________________ 

Question Response 

1. Do you have dreams for you or your children 

that require money to make them happen? Yes No I don’t know 

2. Are you behind on rent, car payments, or 

your mortgage? Yes No I don’t know 

3. Are you behind on utility payments? Yes No I don’t 

know 

4. Can you count on having about the same 

amount of income every week? Yes No I don’t know 

5. When unexpected expenses or emergencies 

happen, do you have some money set aside 

to cover them? 

Yes No I don’t 

know 

6. Do your money, benefits, and other resources 

cover all of your bills and living expenses 

each month? 

Yes No I don’t 

know 
MODULE 1: ASSESSING THE SITUATION 38 

TOOL 1: MY MONEY PICTURE 

7. Do you have student loans or other debts 

you’re having trouble paying? Yes No I don’t know 

8. Has your credit history made it hard to get a 

car, insurance, a phone, or a job? Yes No I don’t know 

9. Do you have an account at a bank or credit 

union? Yes No I don’t know 

10. Do you feel like you’re spending too much to 

get your money and use it to pay bills? Yes No I don’t know 

11. Have you had issues with a financial product 

or service like a bank account, loan, 

mortgage, debt collector, or credit report that 

you haven’t been able to resolve? 

Yes No I don’t 

know 

If you answered that you have dreams for yourself and your family, what are they? 

__________________________________________________________________

__________________________________________________________________ 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information.
39 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

My money picture key 

Use the following chart to help you determine where to start the financial empowerment work 

with the people you serve. 

Use the answers to the first and last questions as additional information to help you pinpoint the 

module and tool that will be most useful right now. 

When the person you’re talking with is facing bills they can’t pay today or this week, first help 

them address that situation. As you do, let them know that if they’d like, you or someone else 

can help them start working on ways to bring their income and expenses into balance. 

Question Resources 

1. Do you have dreams for you or your children 

that require money to make them happen? If No or I don’t know, see Module 2. 

Quick Tips 

 Brainstorm a list of your hopes, wants, and dreams. 

 Pick one and turn it into a goal with a timeframe. Make it specific and measurable. 

 Figure out how much you need to save or set aside each week (or month) to reach your goals. 

2. Are you behind on rent, car payments, or your 

mortgage? 

If Yes, call 211 or an emergency assistance 

center. For homeowners, call (888) 995-

HOPE. 

See Module 4, Tool 5: When cash is short—

prioritizing bills and spending 

Quick Tips 

If “yes”, call 211 or local emergency assistance center. By dialing 211, people in need of assistance are 

referred, and sometimes connected, to appropriate agencies and community organizations. 

For homeowners, call 888-995-HOPE or CFPB at (855) 411-CFPB (2372). You can find certified 

housing counselors on CFPB’s website at www.consumerfinance.gov/find-a-housing-counselor. 

3. Are you behind on utility payments? If Yes, call 211 or local emergency assistance 

center. 
MODULE 1: ASSESSING THE SITUATION 40 

TOOL 1: MY MONEY PICTURE 

4. Can you count on having about the same 

amount of income every week? 

If No, Module 3 for information on tracking and 

managing variable income. 

Call 211or local emergency assistance center. 

Make a referral to your local workforce 

opportunity center,

5. When unexpected expenses or emergencies 

happen, do you have some money set aside 

to cover them? 

If No or I don’t know, see Modules 4 and 8. 

Quick Tips 

 Think about your last unexpected expense. How much did you have to spend the last time your 

car broke down or something unexpected happened? 

 Keep track of everything you spend money on for a week. 

 Review your spending and figure out whether you can make some changes. 

 If you can, put aside a small amount each week. If you usually receive a tax refund, think about 

setting a goal for how much of it you want to save. 

6. Do your money, benefits, and other resources 

cover all your bills and living expenses? If No or I don’t know, see Modules 4 and 5. 

Quick Tips 

 Write down your total income and benefits and when they come in – both your wages and any 

benefits you receive (like SNAP or rental assistance.) If your pay is irregular or changes from 

paycheck to paycheck, use the amount you receive in a week when you don’t work extra hours. 

 Write down your bills and the due dates. 

 Write down your total expenses – Add all of your expenses and other uses of cash (including 

savings and debt repayment) for the week. 

 If you have enough income and resources in a month to cover the bills, but your income arrives after 

the bills are due, reach out to the companies to see if it’s possible to change the due date or 

make bi-weekly payments. 

 Look for expenses you might be able to pay less for or temporarily cut back. 
41 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

7. Do you have student loans or other debts 

you’re having trouble paying? If Yes or I don’t know, see Module 6. 

Quick Tips

 Make a list of your debts with the amount of your payments and when they are due. 

 If you can’t make a payment, call the business. Ask if they can change the due date, the 

payment plan, or the terms of the loan. 

 If you want to reduce your debt, track your spending to see if you can make changes and 

increase your payments. 

 Tools for student loan repayment options are available at www.consumerfinance.gov/paying-forcollege. 

 If you need or would like help managing your debts, visit the National Foundation for Credit 

Counseling: at http://www.nfcc.org/ or find a housing counselor at www.consumerfinance.gov/finda-housing-counselor. 

 If you would like to speak with an attorney about a lawsuit by a creditor or debt collector, 

information on finding a lawyer can be found at: 

http://www.consumerfinance.gov/askcfpb/1433/how-do-i-find-lawyer-or-attorney-represent-melawsuit-creditor-or-debt-collector.html. 

8. Has your credit history made it hard to get a 

car, insurance, a phone, or a job? If Yes or I don’t know, see Module 7. 

Quick Tips 

 Pull your free annual credit report to find out what’s on your credit record at 

www.annualcreditreport.com. 

 If there are errors, contact credit reporting agencies to address them or visit 

www.consumerfinance.gov with questions. 

 If you need help or would like help strengthening your credit, check out the information and 

resources listed in Module 7 that can link you to local credit or housing counselors. 

9. Do you have an account at a bank or credit 

union? If no see Module 9. 
MODULE 1: ASSESSING THE SITUATION 42 

TOOL 1: MY MONEY PICTURE 

Quick Tips 

 If you don’t have an account and want to open one, shop around and compare several banks or 

credit unions 

 Ask them questions about:

 Their hours and the services they offer (like online tools) 

 The fees they charge (monthly fees, overdraft fees, etc.) 

 The amount you need to open the account 

 Any other rules about the account 

 If you want an account and have been turned down, ask the bank or credit union to tell you exactly 

why they are denying you an account. 

 Review the report they give you and check for any errors 

10. Do you feel like you’re spending too much to 

get your money and use it to pay bills? If Yes or I don’t know, see Module 9. 

Quick Tips 

 Think about how you use financial services. Do you need to cash paychecks? Do you need to 

pay your bills? Do you want a safe place for your money? Does your employer or benefits provider 

require direct deposit? 

 Ask yourself what’s most important to you if you want these services. Are hours and location 

more important to you than things like customer service, available products, or fees? How 

important is safety and security to you? 

11. Have you had issues with a financial product 

or service like a bank account, loan, 

mortgage, debt collection, or credit report that 

you haven’t been able to resolve? 

If No or I don’t know, see Overview, Tool 1. 

Quick Tip 

You can submit a complaint to CFPB at https://www.consumerfinance.gov/Complaint or call them tollfree at (855) 411-CFPB (2372). 

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. 
43 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 2: 

Setting goals and planning for 

purchases

Does the client have clear goals? 

Is the client satisfied with his or her financial situation?

If you have 10 minutes with a 

client... 

If you have 30 minutes with a 

client... 

If you have multiple sessions 

with a client... 

 Tool 1: Goal-setting tool

 Tool 1: Goal-setting tool 

 Tool 2: Planning for life 

events and large 

purchases 

 Follow up to see if client 

has written goals. 

 Follow up to see if client 

has made any steps 

toward reaching goals. 

 Consider using Tool 3: 

Buying a car (if this is the 

client’s goal) 

Goals provide the direction for financial planning. To start the goal setting or financial planning 

process, consider asking clients questions such as: 

 How would you like your life to be different? 

 What kinds of things do you want from life? 

Setting goals is a powerful process for helping clients think through their futures—in the shortterm and long-term--and finding ways to turn their visions into reality. It helps clients turn their 

wants, hopes, and dreams for the future into something concrete and achievable. 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 44 

Setting goals helps clients: 

 Work toward making the future better. 

 Prioritize how they use money so that it goes toward things that really matter to them. 

 Measure and track their progress toward getting the things they want out of life. 

 Take pride in bettering their own lives and the lives of their children. 

Life events and large purchases 

People often put off saving for life events and large purchases, because they feel like they don’t 

have enough money to save or they are busy struggling to make ends meet today. They feel like 

they can’t think or worry about saving for goals, large purchases, or even life events in the 

future. This can create financial challenges in the future. Not thinking about, planning for, or 

saving for large purchases and life events in particular may mean that there is no money to 

cover: 

 Moving in with a partner, getting married, getting separated, getting divorced, or 

becoming widowed 

 The birth of a child 

 Faith-based celebrations associated with children 

 A daughter’s quinceañera 

 A son’s bar mitzvah 

 A child’s high school graduation celebration 

 Post-high school training or education expenses for children 

 Purchase of a car 

 Purchase of a home 

 Training or education to help get a different job or a higher paying position 

 Starting a new job 
45 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Tools or equipment needed for one’s trade or profession 

 Wedding expenses for children 

 Short- or long-term disability 

 Illness 

 Loss of a job (Covering the gap unemployment benefits don’t cover) 

 Celebration for a landmark birthday or anniversary 

 Illness or death of a family member 

 Retirement 

 Final expenses, e.g., the cost of a funeral 

Some of these events are likely to occur, and others may never happen to the client. But some of 

these events are inevitable. Because of the expenses that are associated with life events, people 

often set goals, particularly long-term goals, around them. 

Some short-term goals can take just a week, a month, or a few months to reach. Clients may also 

have long-term goals—things that will take many months or even years to reach. Regardless of 

whether they are short-term or long-term, identifying and planning for goals can help a person 

achieve them. 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 46 

Costs of life events 

What is a life event likely to cost? While there are many variables that affect the cost of 

life events from one person or family to another, here are some average costs of life events 

in the U.S.:

 Out of pocket childbirth expenses for women with insurance coverage—$3,4001

 Out of pocket expenses associated with breast cancer—$712/month2

 Quinceañera—coming of age celebration for 15-year old girls in Latino families--

$15,000 to $20,0003

 Typical cost for final expenses—$10,0004

1. Rosenthal, Elizabeth, American Way of Birth, Costliest in the World, NY Times, June 30, 2013. See 

http://www.nytimes.com/2013/07/01/health/american-way-of-birth-costliest-in-the-world.html?pagewanted=all&_r=0. 

2. Andrew, Michelle, Cancer Costs Can Be Prohibitive Even with Insurance, Washington Post, October 10, 2011. See 

http://www.washingtonpost.com/national/health-science/cancer-treatment-costs-can-be-prohibitive-even-withinsurance/2011/10/06/gIQA8iBfaL_story.html. 

3. Kennedy, Bruce, These Girls’ Parties Can Cost More than a Wedding, MSN Money, August 9, 2013. 

4. Gibbs, Lisa and Mangal, Ismat Sarah, The High Costs of Saying Goodbye, CNN Money, November 9, 2012. See 

http://money.cnn.com/2012/11/01/pf/funeral-costs.moneymag. 

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, help the client think about 

the following: 

Specific 

Ask yourself: Who will achieve or benefit from the goal? What specific 

thing will I accomplish? Why is the goal important? Is this goal related to 

covering the expenses associated with an expected life event? 

A specific goal has a much greater chance of being met than a general 

one, because it provides something defined to reach for. 
47 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Measurable Ask yourself: How much? How many? How will I know when it is done? 

You should be able to track your progress toward meeting the goal. 

Able to be 

reached 

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 

millionaire in a year, but for most of us, those are totally impossible goals. 

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. 

Relevant 

Ask yourself: Is this something that I really want? Is now the right time to 

do this? 

Set goals that matter to you and are a priority in your life. 

Time bound 

Ask yourself: By what date must this goal be reached? 

Goals should have a clearly defined time frame, including a target or 

deadline date. This helps ensure they are measureable and that actions 

are planned to reach the goal by the target date. 

Here are some hopes, wants, or dreams a client may have and examples how they can be 

converted to strong goals. 

Hopes, wants, or dreams Strong goals 

I’d like to be able to pay all of my bills each 

month. 

Short-term goal: I will review my budget to see if 

there are ways to cut my spending by the end of the 

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 

something happens in the future and I lose 

my job. 

I will save $50 over the next six months to start an 

emergency fund. 

I want to get out of credit card debt. I will pay down $1,000 of my debt over the next 18 

months. 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 48 

I’d like a safe, stable place to raise my 

children. 

Short-term goal: I will save $800 for the required first 

month rent in the next six months so that I can move 

into a new apartment. 

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’d like to buy a new television. I will save $400 and purchase a new television in six 

months. 

I’d like to help my child go to college. 

Short-term goal: I will read to my child every night to 

show that school and learning are important. 

Long-term goal: I will save $5000 in a fund to help 

pay my child’s tuition in ten years. 

Building a plan 

Talking to clients about achieving goals may help them with their financial challenges. The 

following may help legal aid staff in discussing goals with clients. 

Every goal requires two things: commitment and time. To reach goals, clients may also need: 

 Information 

 Tools 

 Assistance from a professional 

 Transportation 

 Other resources 

 Money 

 An action plan—small steps needed to reach a goal 

For goals that require money to reach, clients will want to ask: 

 How much do I need to set aside every week (or month) to meet my goal? 
49 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

They need two pieces of information: the total amount needed to reach the goal and the 

number of weeks they have to reach the goal. Then they can put that information into this 

equation: 

Here is an example. 

It is January 1st, and Anton just set a new goal to save $500 in an Emergency Fund by the time 

his kids start school at the end of August. He already has his first piece of information: the total 

amount needed for the goal $500. To get the second piece of information, the number of weeks, 

he needs to count the number of months from January to August and multiply by 4--(8 months 

x 4 weeks), which is 32 weeks.1

Or, he can use the number of months. 

He can plug these numbers into the formula: 

Weekly Goal Monthly Goal 

$500 ÷ 32 = $15.65 per 

week (rounded) 

or $500 ÷ 8 = $62.50 per 

month 

Anton would need to set aside about $15.65 every week or $62.50 each month in order to have 

$500 by the time his kids start school. If he felt that he could not set aside that much every week 

or month, he could lengthen the time to reach his goal. 

Other goals may not require a client to set aside money every week. They may require 

a client to get more information, help from a professional, use a new tool, or create an action 

 

1

 This calculation is designed to simplify planning and can result in individuals reaching their goal more quickly. 

Because there are 35 weeks in 8 months, this can also allow them to miss their target for up to three weeks in the 

period and still reach their goal. 

Total amount 

needed for goal 

Number of 

weeks to reach 

goal

Amount to set 

aside each 

week or month
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 50 

plan. For example, someone’s goal may be: “I want to pay my bills on time every month starting 

next month.” 

Assuming lack of money is not the primary reason bills are not being paid on time, here are 

some steps the client could take to reach that goal: 

 Collect credit card statements, loan payment statements, utility bills, phone bills, and 

documentation of other payments made each month. 

 Highlight payment amounts and due dates. 

 Fill in the bill paying calendar tool. 

 Consider using automatic payment methods for some recurring bills or online bill 

payment. 

 Set up text or email alerts on a mobile phone or computer to remind about paying bills. 

The following tools can help clients identify and take action to achieve their goals. The tools also 

can help clients plan for major purchases, such as a car, if that is a goal for the client. 
51 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 1: 

Goal-setting tool 

This tool can help you with the goal-setting process. Identifying goals is important because it 

helps you plan for and reach what is most important to you. When it comes to your finances, 

goals provide the direction for all of your plans. If you don’t plan to save or set aside for your 

goals, you probably won’t. And in order to save or set aside for your goals, you have to know how 

much money you’ll need and by when. 

All goals take time and commitment to reach. Many goals also require information, help from a 

professional, tools, action plans, and money. 

There are four 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: Create an action plan to reach your goals. For long-term goals, your action plan may be 

long and involve many steps. For other goals, you may only need to take a few steps to reach 

your goal. 

Step 4: Finally, for goals that require money, figure out how much you need to set aside each 

week (or month) to reach your goal. 

If you decide to make a budget or a cash flow budget (See Module 5), be sure to 

include money you need to set aside for your 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 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 52 

TOOL 1: GOAL-SETTING TOOL 

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 

What I want to achieve for myself or my family 

within six months. 

Long-term 

What I want to achieve for myself or my family 

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 are 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. 

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?) 
53 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Step 3: Action plan 

Use the following worksheet to create an action plan. Remember to include resources you may 

need to reach your goals including: 

 Information 

 Tools 

 Assistance from a professional 

 Transportation 

 Other resources 

Steps to goal Resources 

needed 

Date to 

complete 

step 

Check 

when 

complete 

 

 

 

 

 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 54 

TOOL 1: GOAL-SETTING TOOL 

Step 4: Figure out amount of money to set aside to reach 

goal 

Use the chart below to figure out the amount you will need to set aside each week to reach your 

goals. Only use this worksheet if your goal requires money. 

Goals Amount 

needed 

Number of weeks to 

deadline 

Amount needed ÷ 

Number of weeks to 

deadline = Weekly set 

aside 

Short-term 

Example: I will save $50 

within 6 months to start an 

emergency savings fund. 

$50 24 weeks $50 ÷ 24 = $2 per week 

(about $8 per month) 

Goal: 

Long-term 

Goal: 

Once you know how much you need to set aside each week to reach a goal, be sure to add it into 

your budget or cash flow budget. For more information on cash flow budgets, see Module 5: 

Getting through the month. For ideas on finding money to save, see Module 8: Saving for 

emergencies, goals, and bills

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information.
55 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 2: 

Planning for life events and 

large purchases 

This tool can help plan for life events and large purchases, such as your daughter’s quinceañera, 

a car, or even tools of the trade you may need to make a living. Follow these steps: 

1. Think about the life events you are likely to experience and large purchases 

you might need to make. If you rely on a car to get to and from work, you will 

probably need to replace this vehicle at some point in the future, maybe even more than 

once. If you use tools in your trade, they may need to be updated or replaced periodically 

due to normal wear and tear. Brainstorm a list of those expenses using the timeline chart 

below. Consider where you are now, and when you are likely to experience some life 

events (your daughter’s quinceañera or bat mitzvah) or need to make large purchases. If 

your daughter is eight years old now, her quinceañera will be in seven years. If your car is 

five years old or has a lot of mileage on it, you will likely need to replace it within the next 

five years. 

2. Estimate the costs of these expenses. Research the costs of large purchases or life 

events. If the life event or need to make a large purchase is likely to happen more than 

five years from now, remember that the cost of almost everything gradually increases 

over time. This increase is called inflation. 

3. Identify potential ways to pay for the large purchases or costs associated 

with life events. For example, you can borrow money to buy a reliable used or new car. 

If you plan to borrow money, consider saving some money for a down payment to keep 

your monthly payments as low as possible. Large purchases may require a combination 

of financing and savings to cover the cost. 

4. Identify ways to keep the costs as low as possible. For example, for your 

daughter’s quinceañera or bat mitzvah, can you save on the rental of a location by 

holding it in a rent-free or reduced-rent facility like a community hall in your community 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 56 

 TOOL 2: PLANNING FOR LIFE EVENTS AND LARGE PURCHASES 

of faith? Can you save on the meal by involving family and friends in helping you prepare 

food rather than hiring a catering company? 

Planning for live events and large purchases worksheet 

Large purchase 

or life event

Cost of large 

purchase or 

life event

Ways to pay

Ways to cut 

expenses/ reduce 

the overall cost

Within 1 year 

Between 1 

and 2 years 

from now 

 

Between 2 

and 5 years 

from now 

 
57 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Between 5 

and 10 years 

from now 

 

Between 10 

and 15 years 

from now 

 

Between 15 

and 20 years 

from now 

 

Over 20 years 

from now 

Use Tool 1: Goal-setting tool to estimate the money you need to set aside to cover 

the large purchase or life event. 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 58 

 TOOL 2: PLANNING FOR LIFE EVENTS AND LARGE PURCHASES 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information.
59 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 3: 

Buying a car 

Next to buying a home, the cars people buy are 

the largest purchases many of them will make 

throughout their lives. In fact, auto loans are the 

third largest category of household debt, behind 

mortgages and student loans. 

When you buy a car, you can: 

 Pay for it in cash 

 Borrow money to pay for it and pay it 

back over time 

If you choose to borrow money to pay for it, you can get an auto loan from: 

 Credit unions 

 Banks 

 Finance companies 

 Car dealers 

When you borrow money with an auto loan, you will pay more for the car because of the interest 

and fees on the loan. The amount of interest and fees (the annual percentage rate, or the APR) 

you will pay on a loan may depend on: 

 Your credit history 

 Your credit score 

 The car you are buying, including whether it is new or used 

APRs are lower for people with positive credit histories and high credit scores. The APR is also 

generally lower when you buy a new car. 

Depreciation 

Depreciation is the gradual decrease 

in the value of an asset. Assets are 

things that you own that have value. 

A car is an example of an asset. Every 

year that you own a car, it is worth 

less because of wear and tear. 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 60 

TOOL 3: BUYING A CAR 

Shop for a car loan before shopping for a car 

When you decide to buy a car, you can check with several banks, credit unions, or other lenders 

to get a pre-approved loan. Get that pre-approval before you go to buy a car and take the preapproval with you when you go shopping. Having a loan offer in-hand when you shop for the car 

puts you in a strong position. 

Some people have concerns that shopping around for a loan will have an impact on their credit 

score. For most people, concentrating your applications in a short period of time can minimize 

the effect on your credit score. Any negative effect will be small while the benefits of shopping 

around could be big.2

When comparing loans, make sure you’re comparing all the terms. If you get competing offers 

from different lenders, including a dealer who offers you financing, you should take a close look 

at each of the loan terms, including the amount financed and the length of the loan. 

Some lenders may tell you they can tailor the monthly payments to suit your budget, but lower 

monthly payments could involve extending the lifetime of the loan. That could mean you still 

owe on this car when you are ready for your next one. 

For more information about buying a car, visit http://www.consumer.ftc.gov/topics/buyingowning-car.

Deciding on a down payment 

When it comes to buying a car, making a down payment can reduce the amount of interest you 

pay because you are reducing the amount you have to finance. Here is an example: 

Austin can get a reliable used car for $12,000. He has saved $2,000 for the down payment, 

but one of his friends has suggested that he finance the full amount of the car. 

For a 4-year (48-month) loan at 4% APR for the full $12,000 cost of the car, Austin would 

pay $270.95/month and pay $1,005 in interest over the life of the loan. 

If Austin made a $2,000 down payment, he would only have to borrow $10,000. His 

monthly payment would be $225.79, and he would pay $837.95 in interest. His monthly 

 

2 See Module 7: Understanding credit reports and scores for information on how credit scores are calculated. 
61 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

payment would be more than $45 less than the monthly payment if he borrowed the full 

amount for the car. Over 4 years, this lowers his monthly expenses by $2,160. This includes 

the $2,000 he made as a downpayment and a savings of almost $170 in interest. 

Down payment Amount borrowed Monthly payment for 

48 months 

Interest paid over life 

of loan 

$0 $12,000 $270.95 $1,005.00 

$2,000 $10,000 $225.79 $837.95 

Decrease in monthly 

expenses and 

interest savings 

with $2,000 down 

payment

$45.16/month $167.05 over 4 years 

Get the big picture 

It is important to do your research before buying a car. Getting a good price on a car and 

considering the monthly costs of owning a car can help lessen your debt load and improve your 

cash flow. Some widely recognized independent sources such as the National Automobile 

Dealers Association or Kelley Blue Book offer resources that can help you compare the cost of 

purchasing, owning and operating a vehicle. It may make sense to pay a little more for a car with 

consistently lower operating and ownership costs, because it may save you money over the long 

term. 

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. 
 MODULE 2: SETTING GOALS AND PLANNING FOR PURCHASES 62 

TOOL 3: BUYING A CAR 

Resources 

For estimates on the value of a vehicle and its cost of ownership: 

National Automobile Dealers Association: 

http://www.nadaguides.com/ 

Kelley Blue Book: 

http://www.kbb.com/ 

If you would like help managing debt or rebuilding credit, visit the National Foundation for 

Credit Counseling: 

http://www.nfcc.org/ 

Housing counselors can provide advice on buying a home, renting, defaults, foreclosures, 

and credit issues: 

www.consumerfinance.gov/find-a-housing-counselor

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 

More information about buying a car: 

http://www.consumer.ftc.gov/topics/buying-owning-car.

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.
63 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 3: 

Tracking and managing 

income and benefits 

Does the client have enough income?

If you have 10 minutes with a 

client... 

If you have 30 minutes with a 

client... 

If you have multiple sessions 

with a client... 

 Tool 1: Income and 

resource tracker 

 Tool 2: Ways to increase 

income and resources 

 Tool 3: Choosing how to 

receive income and 

benefits 

 Tool 4: Increasing your 

income through tax credits 

 Tool 5: Understanding 

garnishment 

Income 

Legal aid clients often struggle to make ends meet because of limited income and resources. But 

helping clients get a handle on their income and financial resources can help them achieve 

financial stability. According to the Internal Revenue Service,3 Earned Income includes all the 

taxable income and wages that a person gets from working or from certain disability payments. 

Examples of income that is not Earned Income include retirement income, Social Security 

benefits, unemployment benefits, alimony, and child support, as well as pay received for work 

while incarcerated. 

 

3 Internal Revenue Service, What is Earned Income? See http://www.irs.gov/Individuals/What-is-EarnedIncome%3F. 
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 64 

 

Income can be: 

 Regular—comes in a predictable amount and at a predictable time during the month. 

Note that income and benefits can be temporary (as with a benefits program that 

provides support over a certain time period) or indefinite (as with a job that has no end 

date). 

 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). 

Managing income can be very challenging if it is irregular, seasonal, or one time only. 

Individuals may not know how much money is coming in or when it will be coming in. Bills and 

expenses, however, continue. Rent will be due every month even if the income does not come in. 

This can be very stressful and difficult for clients to manage. 

Tool 1: Income and resource tracker can help figure out how much income and other resources 

like SNAP a client gets each week and if a client’s income is regular, irregular, seasonal, or onetime within a year. It is the first step in planning how to help manage income differently to cover 

spending in months with no or little income. This is also an important step in creating a cash 

flow budget, which is explained in Module 5: Getting through the month.

If there are unpaid bills and garnishment may be an issue, either now or in the future, use 

Tool 5: Understanding garnishment. 

If the client wants to focus on ways to increase income, use Tool 2: Ways to increase income 

and resources.

Deductions from pay 

If a client is an employee, there are two kinds of deductions that can be taken from pay: 

 Mandatory, which means they must be taken out 

 Voluntary, which means they may be optional 

While some clients—such as day laborers or self-employed—do not have amounts deducted from 

pay, most do. Mandatory deductions generally include: 
65 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Federal income tax 

 Social Security, which is part of FICA (Federal Insurance Contributions Action). 6.2% of 

your pay is held for Social Security with your employer contributing another 6.2% on 

your behalf4

 Medicare, which is also a part of FICA. 1.45% of your paycheck is withheld for Medicare 

with your employer contributing another 1.45% on your behalf 

 State income tax (in most states) 

 Local taxes (in some communities) 

 In some cases, wage garnishments 

Voluntary deductions may include: 

 Employee share for health, dental, and/or vision insurance 

 Employee contributions to employer-sponsored retirement (401K or 403B plans) 

 Union dues 

 Employee contributions to life insurance premiums 

 Charitable contributions 

If the client is self-employed or under contract, no deductions are generally taken from pay. The 

individual is responsible for ensuring all taxes owed are paid in full and on time to avoid 

penalties. 

Public benefits programs 

Many legal aid programs play an important role in helping people obtain or retain public 

benefits from local, state, or federal government. The benefit programs are designed to help 

individuals and families that do not have the resources to cover their basic living expenses and 

are often temporary. 

 

4 FICA and Medicare contributions are accurate as of November 2014. 
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 66 

 

There are two principal categories of public benefit programs — those that provide benefits 

regardless of income and those that limit assistance to people with low or modest incomes. The 

first category of programs includes the major social insurance programs such as Social Security, 

unemployment insurance, and Medicare. Programs in the second category are often referred to 

as “means-tested” programs.5

Some programs provide cash assistance, e.g., Temporary Assistance for Needy Families (TANF) 

and other programs are for specific types of benefits, e.g., food assistance from the 

Supplemental Nutrition Assistance Program (SNAP), formerly food stamps. Benefits received 

for specific uses can only be used for those purposes. For more information about various 

benefits available by state, see www.benefits.gov. 

Individuals and families can only get benefits if they apply for and are eligible for them. Some 

programs are funded by the federal government and run by the states. Others are administered 

directly by the federal government, e.g., Social Security. For many benefits, clients are entitled to 

apply in their own language. See http://www.lawhelp.org/resource/your-right-to-assistance-inyour-language-bas for more information. For most means-tested benefits programs, eligibility is 

based on: 

 Income 

 Circumstances. For example, whether the client has dependents or whether the 

individual has a disability 

 Assets such as savings, a vehicle (or more than one vehicle), money in investments 

Benefits are important financial resources that cover living expenses, which is the reason clients 

must be encouraged to think about and track benefits like 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 

 

5 Center for Budget and Policy Priorities, Public Benefits: Easing Poverty and Ensuring Medical Coverage, August 

2005. See http://www.cbpp.org/cms/?fa=view&id=508. 
67 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Cell phone service 

 Debt repayment 

Receiving income and benefits 

There are different ways to receive income and benefits. In some situations, individuals do not 

have a choice. For example, some public benefits must be received electronically, where benefits 

are directly deposited to an EBT card or a bank account. Some employees may receive their pay 

via a traditional paycheck. A consumer may receive income or benefits in one or more of the 

following ways: 

 Cash 

 Personal Check 

 Paycheck 

 Direct Deposit into a checking or savings account or onto a card 

 Payroll Card (prepaid card arranged by employer) 

 Electronic Benefits Transfer (EBT) cards 

In some states, people receive their unemployment benefits and other government benefits on a 

prepaid card.6 Instead of getting checks, they receive a card, and 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, people receiving benefits can 

choose direct deposit to a checking or savings account or a prepaid card of their choice. 

If the EBT card is lost or stolen, the client needs to report it lost or stolen right away—the 

number to 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. 

 

6 Some states also distribute child support via prepaid card. 
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 68 

 

The amount charged in fees for using the card depends on the contract between the government 

agency and the financial institution providing the card account. Clients should be sure to read 

the cardholder’s agreement carefully before using the card. 

Why does it matter how income or benefits are received? Each way has advantages and 

disadvantages. Some of these advantages and disadvantages may make it easier or harder for a 

client to manage his or her income. To better understand the pros and cons of each method, use 

Tool 3: Choosing how to receive your income and benefits.

Once clients track their income, they should add it into their written budgets. For 

more information on cash flow budgets, see Module 5: Getting through the month. 
69 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 1: 

Income and resource tracker 

Income is the money that comes into your household. Benefits are financial resources that come 

into your household. 

You can use this tool to track all of income and financial resources that you receive during a 

month. Once you have written the amount and when you receive the income, 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) 

It is usually easier to track net income, because that is the money you actually have available to 

pay for your living expenses. Gross income is what you earn before taxes or other deductions are 

taken from your pay. 

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 5: Getting 

through the month. 

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. 
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 70 

TOOL 1: INCOME AND RESOURCE TRACKER 

Income for the Month of: ____________________________________ 

Wee

k 1 

__/_

_/__ 

Wee

k 2 

__/_

_/__ 

Wee

k 3 

__/_

_/__ 

Wee

k 4 

__/_

_/__ 

Total 

by 

sourc

e 

Regu

lar 

Irreg

ular 

Seas

onal 

Onetime 

Job 

Second job 

Selfemploymen

t Income 

 

SNAP 

TANF 

SSI 

SSDI 

Childcare 

payment 

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 5: Getting through the month. For more 

information on financial services that may help you manage your income, see Module 9: Money 

services, cards, accounts, and loans: Finding what works for you.
71 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

73 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 2: 

Ways to increase income and 

resources 

If you feel like you may not have enough income and other financial resources to pay for all of 

your obligations, needs, and wants, 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 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 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 bring in more income or resources on a regular basis. This would include getting a 

part-time job, applying for benefits you may not be receiving, or starting a small business. 

Increasing income through workforce development programs 

One way to potentially increase income for the long term is by participating in workforce 

development programs in your community. Workforce development programs provide skills 

training that can prepare you for a new job where you work now or for another company or 

organization. Workforce development programs can be run by public or private organizations. 

The workforce development system includes vocational schools, career-technical schools, 

community colleges, universities, unions, and other apprenticeship programs. Programs often 

focus on helping individuals develop the skills to fill high-demand jobs or jobs that are predicted 

to be high demand. 
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 74 

 TOOL 2: WAYS TO INCREASE INCOME AND RESOURCES 

How do you find a workforce development program in your community? Start with 

the U.S. Department of Labor services locator: http://www.dol.gov/dol/location.htm. If you 

enter your zip code, you will get a list of programs in your area. 

You can also visit a CareerOneStop Center (http://www.careeronestop.org) to explore careers, 

find out about education and training required for different careers, get advice on applying for 

jobs and interviews, and more. To find a center near you, visit: http://www.servicelocator.org. 

Your state likely also has a state career or workforce development website or portal. These sites 

often include online interest and skills assessments, as well as links to in-person and on-line 

training. Many community colleges also provide these types of assessments and services. 

Ways to increase cash, income, and other resources 

Use the tool to identify ways you can increase your income. Note that not all of these will apply 

to you. Check those that may be an option for you, and use this as a plan for getting more 

information or resources. 

Check if 

option for 

you 

Strategy for increasing cash and sources 

of financial resources 

Information or resources you 

need to access this information 

One-time activity 

 Hold a yard sale/garage sale 

 Sell items online 

 Claim tax credits if you qualify 

 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 or 

help you get a better job 

Change tax withholding (if you generally 

receive a large tax refund.) 
75 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 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 

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 5: Getting through the month. 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

77 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 3: 

Choosing how to receive your 

income and benefits 

Salaries, wages, and public benefits can be provided in a variety of ways. These include cash, 

paychecks, direct deposit, payroll cards and electronic benefits transfer (EBT) cards. Each has 

pros and cons when it comes to convenience, security, and fees. 

The table below highlights some of the pros and cons of each method. When you are given a 

choice, this will 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. 

Method Definition Benefits Risks 

Cash 

Paper or coin money 

minted by the U.S. 

Government 

Accepted everywhere 

Could be lost or stolen 

Some people find it 

tempting to spend cash 

they have on hand (it 

“burns a hole in your 

pocket”). 

Can be more difficult to 

track spending for personal 

budgeting and tax 

purposes. 

Not all bill payments can be 

made in cash. 

TIP: Avoid carrying around or leaving in your home large amounts of cash. If cash is lost or stolen, it’s 

hard to get it back.

 This is a good option for me. Ways to get more information: 

 This is not a good option for me.
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 78 

 TOOL 3: CHOOSING HOW TO RECEIVE YOUR INCOME AND BENEFITS 

Paychecks 

A check for salary or 

wages made out to an 

employee 

Income can be deposited 

to a checking or a savings 

account or onto a prepaid 

card. 

If you do not have a bank 

account, some banks and 

credit unions do not charge 

a fee to cash “on us” 

checks that are written 

from accounts that are held 

with their institution. 

Otherwise, you will have to 

pay a check cashing 

service to cash them. 

Bank and credit union 

accounts are sometimes 

the only cost-free way to 

cash paychecks. 

If you don’t have an 

account, unless your 

employer’s bank or credit 

union cashes “on us” 

checks for free, you may 

have to pay to cash them 

at a bank, credit union, or 

check cashing service. 

If you deposit a paycheck 

in a bank or credit union 

account or onto a prepaid 

card, you may not be able 

to access all the funds 

immediately. 

TIP: If you cash your checks at a check cashing store, these stores may try to offer you a payday loan or 

overseas money-wiring service. These services can be very expensive – if you’re considering one, make 

sure you understand the costs.

 This is a good option for me. Ways to get more information: 

 This is not a good option for me.
79 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Direct 

deposit 

Employee pay is 

electronically sent to 

your bank or credit 

union account or your 

own prepaid card 

without the use of a 

paper check. 

Reduces your risk of loss 

or theft compared to 

carrying cash or checks. 

Funds are usually available 

to you immediately. 

Funds can be accessed via 

a debit card, ATM card, or 

personal checks. 

For direct deposits made to 

a checking account, the 

account’s debit card has 

full consumer protections 

for funds taken by error or 

theft. 

Income can be sent to a 

bank or credit union 

account. 

Many employers allow you 

to split the deposit between 

checking and savings 

accounts, which can help 

you build savings. 

No check cashing fees. 

Many banks and credit 

unions also offer 

checking/savings accounts 

with no monthly fees when 

you set up direct deposit. 

If direct deposit is made to 

a prepaid card, the card 

may lack full consumer 

protections for funds taken 

by error or theft. 

Can be charged fees if you 

write checks or use debit 

card without sufficient 

funds. 

Have to go to an ATM or 

get cash back at a 

merchant to get cash. 

May not be offered by all 

employers. 

TIP: Ask your employer how to arrange for direct deposit. If you receive your pay through direct deposit, 

your money is often available on your payday. 

 This is a good option for me. Ways to get more information: 

 This is not a good option for me.
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 80 

 TOOL 3: CHOOSING HOW TO RECEIVE YOUR INCOME AND BENEFITS 

Payroll 

cards 

Prepaid cards arranged 

by an employer through 

which employees 

access their salary or 

wages 

Safer and more secure 

than carrying cash or 

checks 

The payroll card has full 

consumer protections for 

funds taken by error or 

theft. 

Potential inactivity and 

service fees. 

Fees can be charged if you 

use the card without 

sufficient funds. 

Requires some extra effort 

to access cash when cash 

is needed. 

TIP: Ask questions about fees for using the payroll card. Your employer can require direct deposit, but 

must give you a choice between direct deposit to a payroll card and a bank or credit union account that 

you choose.

 This is a good option for me. Ways to get more information: 

 This is not a good option for me.

Electronic 

benefit 

transfer 

(EBT) card 

EBT cards replace 

paper-based benefits 

for programs such as 

Temporary Assistance 

to Needy Families 

(TANF), Supplemental 

Nutrition Assistance 

Program (SNAP), 

Women, Infants, and 

Children (WIC) 

program, and other 

programs.7

Safer and more secure 

than carrying cash or 

checks 

Looks like a debit or credit 

card 

Use it just like a prepaid or 

debit card 

Not all merchants accept 

EBT cards. 

Some EBT cards are 

subject to fees. 

Certain cards lack full 

consumer protections for 

returning funds taken by 

error or theft. 

WARNING: For EBT cards, some benefits can be lost if they are not used within a certain amount of time. 

Be sure to ask if this applies to your benefit and keep track of your balance. 

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. 

 

7 The availability of EBT cards, their fees and other details vary from state to state and program to program. 
81 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 2014 tax year the following income limits and maximum tax credits apply:8

Household size 

Income limit if filing as 

single or married filing 

separately 

Income limit if married 

filing jointly Maximum tax credit 

Three or more 

qualifying children $46,997 $52,427 $6,143 

Two qualifying 

children $43,756 $49,186 $5,469 

One qualifying child $38,511 $43,941 $3,305 

No qualifying children $14,590 $20,020 $496 

Also, investment income must be $3,350 or less for the year. 

 

8 http://www.irs.gov/Individuals/Preview-of-2012-EITC-Income-Limits,-Maximum-Credit--Amounts-and-Tax-LawUpdates
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 82 

 TOOL 4: INCREASING YOUR INCOME THROUGH TAX CREDITS 

Your kids are “qualifying children” if: 

 They have lived 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.” 

 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 by up to $1,000 for each 

qualifying child under the age of 17. For the Child Tax Credit, a child is qualified if they meet the 

following tests:9

 Relationship Test - To claim a child for purposes of the Child Tax Credit, they must 

either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, 

stepsister or a descendant of any of these individuals, which includes your grandchild, 

niece, or nephew. An adopted child is always treated as your own child. An adopted child 

includes a child lawfully placed with you for legal adoption.  

 Support Test - In order to claim a child for this credit, the child must not have 

provided more than half of their own support.  

 Dependent Test - You must claim the child as a dependent on your federal tax return.

 Citizenship Test - To meet the citizenship test, the child must be a U.S. citizen, U.S. 

national, or U.S. resident alien.  

 Residence Test - The child must have lived with you for more than half of the year. 

There are some exceptions to the residence test, which can be found in IRS Publication 

972, Child Tax Credit. 

 

9 http://www.irs.gov/uac/Ten-Facts-about-the-Child-Tax-Credit
83 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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-Factsabout-the-Child-Tax-Credit.

Consider visiting 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 or pay your bills and expenses. Find one at 

http://irs.treasury.gov/freetaxprep or call (800) 906-9887.

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. 
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 84 

 TOOL 4: INCREASING YOUR INCOME THROUGH TAX CREDITS 

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 

Housing counselors can provide advice on buying a home, renting, defaults, foreclosures, 

and credit issues: 

www.consumerfinance.gov/find-a-housing-counselor

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

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. 
85 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 5: 

Understanding garnishment 

If you owe money and have not paid that money, you may be at risk for garnishment. What is 

garnishment? 

Garnishment is a legal process that allows a creditor to attach your wages or 

remove funds from a bank or credit union account to satisfy a debt that you have 

not paid. Garnishments from a private debt generally require a court order that 

results from a judgment.

If you’ve been sued for an unpaid debt and a court orders you to pay it, the creditor may work 

with you to create a plan to pay it. They may, however, seek payment from your assets (real 

estate, vehicles, bank accounts, future wages, etc.) This can involve the forced sale of, for 

example, your house or car. A common way for a creditor to collect an unpaid debt is to garnish 

your wages. Garnishment is a tool that can be used to collect an unpaid debt directly from your 

wages or from your bank account. 

Garnishment of wages

A wage garnishment allows a creditor to get paid for debts you owe directly from the wages your 

employer pays to you. 

If the creditor you owe money to is not a government (such as a credit card company or a doctor 

or hospital) the creditor may sue you on the debt, and then get a court order to get paid directly 

by your employer from your wages. There are federal limits to how much of your paycheck the 

creditor can take. There may also be additional state limits. 

Generally, federal law limits the amount that can be garnished from your wages to whichever of 

the two following formulas comes out to the smaller amount: 

 25% of disposable income 

or 
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 86 

TOOL 5: UNDERSTANDING GARNISHMENT 

 The amount that a person earns each week over the amount that equals the federal 

minimum wage times 30 (for example, $7.25 X 30 = $217.50).10 

In other words, if someone earns $300 a week: 

 25% of their disposable income would be $75.00

 The amount that person earned each week over the amount that equals the federal 

minimum wages times 30 would be $82.50 

 Minimum wage ($7.25) x 30 = $217.50 

 $300 - $217.50 = $82.50

In this example, only $75.00 could be garnished because $75.00 is less than $82.50. 

All mandatory deductions are protected from garnishment outright including: 

 Federal, state and local taxes 

 FICA contributions 

Generally, money received for Social Security, disability, retirement, child support, and alimony 

is protected from garnishment by regular creditors. If you owe the federal government or 

student loans, however, this money may not be protected. Voluntary deductions are not 

protected. 

The process for getting a garnishment order from a court varies depending on what state you are 

in. But in all cases before a private creditor can garnish your wages the creditor should have 

sued you for an unpaid debt and gotten a court judgment saying you owe the creditor money, 

and how much. You should have received notice of that lawsuit and had a chance to raise any 

defenses to the debt. In most cases you also should receive notice that the private creditor is 

trying to get paid from your wages, and you should have a chance to raise any defenses to the 

garnishment. 

Because garnishment of wages by a private party involves getting court orders, and complicated 

formulas for how much of your wages can be taken, you should consider consulting a lawyer. 

This can help you understand your legal rights and responsibilities and take steps to protect 

your rights if that becomes necessary. 

 

10 Note that the federal minimum wage is subject to change. See www.dol.gov for updates. 
87 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

There may be a legal aid office or legal clinic in your area that can offer you free legal help if you 

meet their criteria. You can find a legal aid office at http://lsc.gov/find-legal-aid or 

http://www.lawhelp.org. 

Servicemembers should consult their local JAG office. You can find one at 

http://legalassistance.law.af.mil/content/locator.php.

You can also contact a lawyer referral service in your area and ask for an attorney with 

experience in garnishment and debt collection. Some attorneys may offer free services or charge 

a reduced fee. 

If the debt you owe is to the government or is for child support there are different rules. In this 

case the creditor may not need to get a court order, and the amount the creditor can take from 

your wages may be different. This kind of garnishment can be complicated too, so you may want 

to consult a lawyer. 

Garnishment from your bank or credit union account 

A creditor to whom you owe money can seek to be paid directly from your bank or credit union 

account by garnishing the account. Whether a creditor can garnish money from your bank 

account depends on where the funds in your bank account came from. 

Generally, money in your bank account that is from your wages or from another person can be 

garnished. But certain money in your bank account cannot be garnished by private creditors. 

This includes money from: 

 Social Security Payments 

 Supplemental Security Income 

 Veteran’s Benefits 

 Railroad Retirement Board Benefits 

 Federal Employee and Civil Service Retirement Benefits 

Other income may also be protected from garnishment by private creditors. Examples include 

state public assistance, federal student assistance, payments from a disability insurance policy, 

and income from a retirement plan. In some states, state unemployment compensation may also 

be exempt. 
 MODULE 3: TRACKING AND MANAGING INCOME AND BENEFITS 88 

TOOL 5: UNDERSTANDING GARNISHMENT 

Proving that money in your bank account comes from a protected source can be difficult and 

complicated. For this reason, Federal law requires banks to have special procedures to ensure 

that the bank or credit union where you have your account can identify the Federal benefits that 

are exempt. If you believe that your federal benefits or other money in your account have been 

improperly taken from it, you will need to take steps to protect your rights. You should talk to 

your bank or credit union and consider consulting a lawyer. 

If the debt you owe is owed to the government (for example for taxes or student loans) or is for 

child support there are different rules. In this case the creditor may be able to garnish Federal 

benefits in your bank account. If this happens, you may want to consult a lawyer. 

Money you owe to the bank or credit union where you have 

your account 

If you owe a debt to your bank or credit union, other than regular account fees, the bank may be 

entitled to take money from your account to pay itself. This will depend on your deposit contract 

with your bank. Generally, your bank or credit union is not allowed to pay itself from money in 

your account that came from federal benefits or another protected source. 

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.
89 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 4: 

Paying bills and other 

expenses 

Does the client pay her bills in full and on time each month?

If you have 10 minutes with a 

client... 

If you have 30 minutes with a 

client... 

If you have multiple sessions 

with a client... 

 Tool 1: Spending tracker 

 Tool 3: Choosing ways to 

pay bills 

 Tool 4: Strategies for 

cutting expenses 

 Tool 5: When cash is 

short—prioritizing bills and 

spending 

 Tool 2: Bill calendar 

Spending 

People who are financially healthy spend less than they earn. But that guidance may not feel 

helpful for people who may not have enough income and financial resources to pay all their bills 

and living expenses. For others, balancing their personal priorities and cultural expectations can 

create a challenge. If someone’s income comes from work that is seasonal or irregular, they may 

be able to cover everything when they’re working, but struggle to cover expenses in months or 

weeks when they’re not. 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 90 

 

Where does the money go? 

Understanding the differences among needs, obligations, and wants is an important starting 

point for all clients. 

 Needs are those things an individual 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. 

 Obligations are those things an individual must pay because he owes money 

or has been ordered to pay someone money. Debts are examples of obligations. 

Child support and alimony as well as judgments are also examples of obligations. 

 Wants are the things an individual 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. 

Being able to separate needs, obligations, and wants can empower clients to cut back on those 

areas they determine are optional in their life. Financial empowerment is about 

providing people with options to help them make choices for themselves. 

To help the client get a clear picture of how she or he uses money and financial resources now, 

use the Tool 1: Spending tracker. For specific ideas on cutting back on use of money and 

financial resources, use Tool 4: Strategies for cutting expenses. Also consider using Module 2: 

Setting goals and planning for purchases, including Tool 1: Goal-setting tool and Tool 2: 

Planning for life events and large purchases to help the client make connections between their 

needs, wants, and obligations and their financial goals. 

Planning and paying for bills 

Many people have recurring obligations like rent, utilities, car payments, child support 

payments, debt payments, and insurance payments. Most of these obligations have a fixed 

due date, and if clients are late, even by just a few days, they will likely pay an extra 

fee and risk a negative entry in their credit reports. Clients can work toward 

avoiding late fees and other consequences of late or nonpayment by: 
91 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Writing down the regular bills they have. 

 Setting up a bill-paying calendar so they 

can easily see when payments are due. 

Tool 2: Bill calendar can help clients document 

what they owe and when. If clients use 

smartphones, text messaging, or e-mail, they 

might prefer to explore bill reminder services and 

applications (apps). These services can send them 

reminders when it’s time to pay their bills or help 

them send the payments via a mobile payment 

channel. 

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 or mobile bill payment 

Tool 3: Choosing ways to pay bills can help a person decide which method of paying bills will 

work. For example, if the client prefers to pay bills in cash, she’ll have to travel to a payment 

location, which costs time and money for gas. If she has a checking account and has set up 

automatic bill payment, she’ll save time, but she’ll need to ensure that she has money in the 

account on the day the automatic payment is made. Otherwise, she’ll probably have to pay an 

overdraft fee. 

With information about the advantages and disadvantages of each method of bill payment, the 

client can be empowered to make choices that can help save time or money, avoid additional or 

unnecessary fees, and create a reliable record of bill payment. 

Co-payments 

Many health care providers require a 

co-payment (or “co-pay”) at the time 

of service. The amount is set by the 

client’s health, dental, or vision 

insurance company. Instruct clients 

to check their insurance cards or the 

insurer’s websites for the amounts of 

their co-pays. Amounts may vary 

depending on the reason for a visit 

(illness/check-up) and type of 

provider (primary care/specialist).
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 92 

 

Expenses that can surprise clients 

Managing unexpected and periodic expenses can put a strain on someone’s budget. Here are 

some examples of unexpected expenses: 

 Fees for a school field trip for a child 

 Tools of the trade or expenses related to work that were unanticipated 

 Attending the funeral of a friend or family member in another state 

 Car or home repairs 

 Health-care related expenses resulting from illness or injury 

Periodic expenses are different. These are expenses that happen occasionally. They are often 

predictable, but they can be hard to manage if clients do not plan for them. Common periodic 

expenses include: 

 Car insurance payments 

 Life insurance payments 

 Renter’s insurance 

 Income taxes (if clients owe money) 

 Property taxes 

 Holiday-related expenses 

 Health-care related co-payments (not related to illness or injury) 

When cash is short 

Even after a client has tracked spending and found some ways to cut back to help make ends 

meet (Tool 1 and Tool 4), he may still find himself to be short on cash to pay bills. This is even 

more likely to happen if he has periods without income because he is temporarily out of work or 

gets fewer hours than usual. 
93 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

The client is responsible for paying all obligations on time. But when he doesn’t have enough 

money to cover obligations and living expenses he may have to make a short-term plan to get 

through the month. 

Sometimes the plan may involve paying some bills late or missing a bill. When bill collectors are 

calling and he’s trying to decide which obligations to pay first, it can sometimes just seem easiest 

to pay the “squeakiest wheel” – but this might not be the best approach. Sometimes the plan will 

mean ignoring the squeaky wheel for a short time until he can build a plan for repayment. 

Part of making this short-term or longer-term plan is making sure the client understands the 

consequences of delaying paying certain bills. If he finds he can’t pay all of the bills on time, he 

can try calling his creditors to make short-term arrangements. He should not ignore them. This 

generally makes the problem worse. 

Finally, after examining the consequences of not paying or paying bills late and creditors have 

been called, the client can make a short-term plan. Use Tool 5: When cash is short—prioritizing 

bills and spending, to make a plan. This tool is designed to help first protect expenses associated 

with earning an income. If the client misses these costs, he may harm his ability to earn the 

money he needs to pay any of his bills. 

Action Some potential consequences 

Five days past the due date for 

your rent 

Pay the late fine as outlined in your lease agreement. 

Risk creating a pattern of late payment, which could lead to the 

landlord terminating your tenancy through the courts—eviction. 

Strain your relationship with your landlord. 

Create stress for you. 

Miss a credit card payment 

Pay the late fee as outlined in your credit card agreement. 

Risk an increase in your interest rate on what you already owe (if 

you are 60 days late). 

Risk a negative entry on your credit reports. 

Risk a drop in your credit scores. 

Miss your car payment 

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. 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 94 

 

Create a situation in which you need more cash the following 

month—to catch up the car payment you missed. 

Risk a negative entry on your credit reports. 

Risk a drop in your credit scores. 

Miss your electric bill payment 

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 and risk a 

drop in your credit scores. 

Risk a drop in your credit scores. 

If you are late for several months, your electricity could be cut 

off. To get it turned on, you will have catch up on payments and 

pay a restore fee to get your service turned back on. 
95 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 1: 

Spending tracker 

Whether they have a lot of money to spend or are struggling to make ends meet, most people 

can’t tell you how they spend their money during a month. Before deciding on changes to your 

spending, it is a good idea to understand how you use your money now. This takes three steps 

and commitment: 

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 and want to eliminate or cut back on. 

3. Use this as information to figure 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 include what you purchased, take a few seconds 

and write this on the receipt. If you don’t get a receipt, write one out on scrap paper. 

Analyze your spending. Use the Analyze Your Spending tool, for each week of the month. Go 

through your receipts. Enter the total you spent and the date in the column that makes most 

sense to you. See how much you spend in each category and add the weekly amounts. 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. 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 96 

 TOOL 1: SPENDING TRACKER 

Here is a list of the categories that are used in the spending tracker. 

Savings Saving for goals, emergencies, children’s education, saving for 

retirement, holiday purchases, for back to school shopping 

Debt payments Credit card payments, payday loan payments, pawn loan 

payments, car title loan payments, and other loan payments 

Housing and utilities Rent, mortgage, insurance, property taxes, electricity, gas, 

water, sewage, phone, television, Internet service, cell phone 

Household supplies and 

expenses 

Things for your home like cleaning supplies, kitchen appliances, 

furniture, other equipment 

Job related expenses/tools 

of the trade 

Tools, equipment, special clothing, job-related books, 

machinery, working animals or livestock, union dues 

Groceries Food and beverages to be brought into the home, including 

baby formula and food 

Eating out (meals & 

beverages) Any meals or beverages purchased outside of the home 

Pets Food, healthcare costs, and other costs associated with caring 

for your pets 

Transportation Gas, car payment, insurance payment, repairs 

Health care Co-payments, medication, eye care, dental care, health care 

premiums 

Personal care Haircuts, hygiene items, dry cleaning, pet costs

Childcare and school 

expenses 

Child care costs, diapers, school supplies, school materials 

fees, field trip and other activity fees 

Entertainment 

Going to the movies, going to concerts, sports equipment/fees, 

sporting events, lottery tickets, memberships, alcohol, 

books/CDs, subscriptions 

Court-ordered obligations Child Support, restitution, etc. 

Gifts, donations, and other Donations to religious organizations or other charities, gifts, 

other expenses 
97 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Analyze Your Spending: Week ____ for the Month of ____________________ 

On this worksheet, enter each amount from your receipts into its matching category column. Take care to make also matches the correct date. Add each column. Add the total of all of the columns to get total spending for the w

complete multiple copies of this sheet to analyze spending over the period of a month or longer. 

Date of month 

Savings 

Debt payments 

Housing and utilities 

Household supplies and 

expenses 

 Job related expenses; 

tools of the trade 

Groceries 

Eating out 

Pets 

Transportation 

Health care 

Personal care 

Childcare & school 

Entertainment 

Court-ordered oblig

__ __ __ __ __ __ __ 

Total 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 98 

 TOOL 1: SPENDING TRACKER 

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 in. 

Spending that cannot be cut Reason 

Are there items that can be completely eliminated? If yes, the money you spend on these items 

can be used on other things like 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 5: Getting through the month. For 

more information on financial services that may help you pay your bills, see Module 9: Money 

services, cards, accounts, and loans: Finding what works for you.
99 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

101 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 2: 

Bill calendar 

Bills are a fact of life – and while they are not fun to pay – most are at least predictable. 

Figuring out which bills you expect throughout the month can be helpful in a couple of ways. It 

helps you plan to have enough money or other financial resources on hand to pay them. 

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 when they arrive in the mail. 

Create a bill calendar using the following tool: 

 Print the bill calendar. 

 Fill in the name of the month and year. 

 Add numbers to represent the days of the month. Start with this week as the first week. 

 Gather all of the bills you pay in one month OR use the information from your Tool 1: 

Spending tracker. 

 Write the due dates for these bills. 

 Since due dates are when bills must arrive, 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. 

 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. 

 Put this calendar somewhere you will see it every day to ensure you are not forgetting 

about important bills. 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 102 

 TOOL 2: BILL CALENDAR 

Here is a sample week to show you how the tool works: 

Sun. Mon. Tues. Wed. Thurs. Fri. Sat. End of 

Week 

1 2 3 4 5 6 7 

Bills: Bills: 

Phone 

bill, $60 

Rent, 

$500 

Bills: Bills: Bills: Bills: 

Car payment, 

$180 

Bills: Total 

bills for 

week: 

$740 

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 9: Money services, cards, accounts, and loans: Finding what works for 

you.

 
103 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

______, 20__ 

Sun. Mon. Tues. Wed. Thurs. Fri. Sat. End of 

Week 

__ __ __ __ __ __ __ 

Bills: Bills: Bills: Bills: Bills: Bills: Bills: Total 

bills for 

week: 

__ __ __ __ __ __ __ 

Bills: Bills: Bills: Bills: Bills: Bills: Bills: Total 

bills for 

week: 

__ __ __ __ __ __ __ 

Bills: Bills: Bills: Bills: Bills: Bills: Bills: Total 

bills for 

week: 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 104 

 TOOL 2: BILL CALENDAR 

Sun. Mon. Tues. Wed. Thurs. Fri. Sat. End of 

Week 

__ __ __ __ __ __ __ 

Bills: Bills: Bills: Bills: Bills: Bills: Bills: Total 

bills for 

week: 

__ __ __ __ __ __ __ 

Bills: Bills: Bills: Bills: Bills: Bills: Bills: Total 

bills for 

week: 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information.
105 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 3: 

Choosing ways to pay bills 

With information about the advantages and disadvantages of each method of bill payment, you 

can make choices that may help you: 

 Save time 

 Save money 

 Avoid additional or unnecessary fees 

 Create a reliable record of bill payment 

Bill payment 

method Advantages Disadvantages 

Cash 

Easy to understand. 

Often no additional costs associated 

with cash, such as buying a special 

product (money order) or overdraft 

fees (checking account). 

May be inconvenient as this requires 

in-person payment of bills. 

Fees may be charged for cash 

payments made through a bill-payment 

service. 

May be difficult to prove payment 

unless you have a receipt. 

Cost of traveling to the businesses you 

are paying money to. 

Cash can be lost or stolen. 

Money order 

Easy to understand. 

Can be mailed, so more convenient 

than cash. 

Can be safer than a check in some 

cases, as no personal banking 

information appears on the money 

order. 

May be inconvenient because you 

have to purchase the money order. 

Cost per money order. 

May be difficult to prove payment 

unless you have the money order 

receipt and receive a receipt for 

payment. 

Costs of mailing the payments. 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 106 

 TOOL 3: CHOOSING WAYS TO PAY BILLS 

Check 

Convenient once the checking 

account is set up at a bank or credit 

union. 

Can be mailed, so more convenient 

than cash. 

Easier to prove payment should a 

dispute arise. 

Option for online bill payment through 

the bank or credit union. 

Funds in checking account are safe. 

Requires an account at bank or credit 

union; you may not be able to get a 

checking account if you have a 

negative banking history report. 

The bank or credit union may charge 

nonsufficient fund fees, overdraft 

charges, or returned check fees if you 

pay bills by check without enough 

money in your account. 

May be difficult for some people to 

understand and manage a checking 

account. 

Time to write out checks and mail 

them. 

Costs of mailing the payments. 

Credit cards 

Convenient. 

Can pay bills over the phone or 

online. 

Easier to prove payment should a 

dispute arise. 

Credit card protections. 

Can be set up to automatically pay 

recurring bills with no risk of 

overdraft. 

Creates debt—you are borrowing 

money to pay for bills and other items. 

Costs more than paying for the 

purchase with cash or a check if you 

can’t pay the credit card balance in full 

and have to pay interest on the 

balance. 

Automatic debit 

Convenient. 

No chance of being late—set it up 

once and forget it. 

Can be linked to a debit card 

(checking account) or credit card. 

Easier to prove payment should a 

dispute arise. 

Saves time. 

If set up for automatic debit (payment) 

from a checking or savings account, 

you could run the risk of the debit 

occurring when there is not enough 

money in the account to cover the 

transaction. You would then have to 

pay additional fees. 
107 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Online bill 

payment 

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 

payment. 

If set up through your bank or credit 

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. 

Takes time to set up and learn. 

Possible risks of overdraft. 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information.

109 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 4: 

Strategies for cutting 

expenses 

If you do not have enough money or financial resources, 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 may apply to you. Check the ideas that may be an option for you, and use this as 

a plan for getting more information or resources. 

Strategies list 

Check

if an 

option 

for you 

Strategy for cutting expenses 

and other uses of financial 

resources 

Additional information or 

resources you need to access 

this information 

Estimate $ 

value of 

spending cut 

you select 

Cut back on regular (recurring expenses) 

 Television Check with your provider about 

lower cost plans or discontinue 

cable. 

 Internet 

 Phone Check if you qualify for a 

“Lifeline” phone rate.11

 

11 For more information on Lifeline phone rates, see http://www.fcc.gov/guides/lifeline-and-link-affordabletelephone-service-income-eligible-consumers. 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 110 

 TOOL 4: STRATEGIES FOR CUTTING EXPENSES 

Check

if an 

option 

for you 

Strategy for cutting expenses 

and other uses of financial 

resources 

Additional information or 

resources you need to access 

this information 

Estimate $ 

value of 

spending cut 

you select 

 Cell phone plan Review prepaid or fixed call 

plans. Check if you qualify for a 

“Lifeline” phone rate. 

 Review insurance; increase 

deductible on auto insurance to 

lower premium payment 

Check to see if moving all 

insurance coverage to one 

company will save you money 

and for other discounts. 

 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. 

Check to see if you’re eligible for 

weatherization programs or other 

incentives. 

 Other: 

Get rid of regular (recurring) expenses 

 Online video membership 

 Discount store memberships if 

not using regularly 

 

 Gym/health club membership (if 

not used) 

 

 Credit monitoring services 

 Other: 
111 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Check

if an 

option 

for you 

Strategy for cutting expenses 

and other uses of financial 

resources 

Additional information or 

resources you need to access 

this information 

Estimate $ 

value of 

spending cut 

you select 

Avoid fees 

 Review financial services. 

Are you paying to cash your 

checks? 

Are you paying maintenance 

fees on checking or savings 

accounts? 

Are you paying ATM fees? 

Do you pay overdraft fees? 

Are you paying annual fees for 

credit cards? 

Know the fees you are paying 

for your loans. 

Could you switch to a no-fee or 

lower-fee account?

 Pay bills and fines like parking 

tickets on time 

Parking tickets and other fines 

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 eating out; cut one meal 

out per month 

If you buy lunch at work, could 

you save money if you bring 

lunch instead? 
 MODULE 4: PAYING BILLS AND OTHER EXPENSES 112 

 TOOL 4: STRATEGIES FOR CUTTING EXPENSES 

Check

if an 

option 

for you 

Strategy for cutting expenses 

and other uses of financial 

resources 

Additional information or 

resources you need to access 

this information 

Estimate $ 

value of 

spending cut 

you select 

If you have children, identify the 

restaurants that have “kids eat 

free” nights – but check what is 

included. 

 Avoid bottled water 

 Avoid buying fountain drinks 

and coffee out 

 

 Use coupons 

 Buy second hand furniture or 

clothing if you need to replace 

either 

 

 Do not buy or rent DVDs or 

CDs 

Visit your local public library. To 

avoid late fees, you have to 

return the items by the due 

dates. 

 Buy items you use in bulk if 

they are cheaper that way 

Look at the price label for cost 

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 5: Getting through the month. 
113 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

115 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 5: 

When cash is short—

prioritizing bills and spending 

Even when you have done everything you can to increase sources of income or cut spending, you 

may still find yourself to be cash short. 

You are responsible for paying all of your obligations on time. But when you truly don’t have 

enough money to cover your legal obligations and living expenses—this means you have cut out 

everything that isn’t a “need”—you may have to make a short-term plan to get through the 

month. Take time to consider how each of your bills impacts these areas – protecting your job, 

your shelter, your assets, and meeting your legal responsibilities. 

Use the following tool to help you make a short-term plan to get through the months you cannot 

pay your bills or living expenses. 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 
MODULE 4: PAYING BILLS AND OT

 TOOL 5: WHEN CASH IS SHORT—PRIORITIZING BILLS 

Protect your income Protect your shelter Protect your assets Pay your If you need a car to get to and from work, stay current on your car payment and insurance. Maintain other expenses needed to keep your job, such as the tools you need or to pay for required licenses.

Whether you rent or have a mortgage, the costs of losing your home are big. Be sure to pay taxes, condo fees, mobile home lot payments, too.

If possible, maintain your utilities. They are difficult to live without, and reconnection is expensive.

Don’t let essential insurance coverage lapse; this includes auto, renters / homeowner’s, health. Not having insurance may mean you cannot drive your car and puts your assets, including your health/your family’s health, at risk.

Example in

Child suIncome Student 

Your expenses: Your expenses: Your expenses: Your expe

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. 
117 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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#.UM6BmXPjkt8 

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/ 

Housing counselors can provide advice on buying a home, renting, defaults, foreclosures, 

and credit issues: 

www.consumerfinance.gov/find-a-housing-counselor

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 

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. 

119 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 5: 

Getting through the month 

Is the client able to make ends meet each month?

If you have 10 minutes with a 

client... 

If you have 30 minutes with a 

client... 

If you have multiple sessions 

with a client... 

 Tool 3: Improving cash 

flow checklist 

 Tool 1: Cash flow budget 

or Tool 2: Cash flow 

calendar 

 Tool 4: Managing cash 

flow when circumstances 

change 

 Check in on cash flow 

development or 

management 

Timing is critical for how clients manage their income from money or benefits. People often 

have more income or benefits one week—and pay several bills at once or splurge on something 

fun—but come up short the next week for a necessity. 

That’s why monthly budgets sometimes don’t work. If the timing of income doesn’t match the 

timing of expenses and the client hasn’t prepared for it, the client may come up short. 

A cash flow budget is a projection of how and when cash and other financial resources come in 

and how they are used. 

A cash flow budget is different from a regular budget, because it includes not only 

the amount for each budget item, but the timing of income (including other 

financial resources) and expenses. It breaks the monthly budget down week by week, 

accounting for when money is expected (income, benefits, and other financial resources) and 

when it must be spent on needs, obligations, and wants (expenses). 
MODULE 5: GETTING THROUGH THE MONTH 120 

 

A cash flow budget can help the client identify 

where he is falling short within the month and 

help ensure he has the financial resources on 

hand to cover the most important expenses. A 

cash flow budget can also help better target areas 

where spending could be cut back. 

A cash flow budget is even more important for 

people who have irregular, seasonal, temporary 

or one-time income. It can help the client project 

and plan ways to spread the income over the 

months when money is not coming in. 

Making a cash flow 

budget 

Making a cash flow budget involves three steps: 

 Keeping track of everything earned or brought in and spending for a week, 

two weeks, or one month. Use the income and financial resource tracker from 

Module 3 and the spending tracker from Module 4 to do this. 

 Analyzing spending. Use the spending tracker from Module 4: Paying bills and other 

expenses to do this. 

 Using this information to create a cash flow budget. Use Tool 1: Cash flow 

budget to complete this step or Tool 2: Cash flow calendar. The cash flow budget is 

about setting targets for how a person uses income going forward. 

Cash flow and financial 

services 

Some banks and credit unions 

provide online financial management 

tools including income and spending 

tracking budget, and cash flow tools. 

If your client has an account at a 

bank or credit union, she can check to 

see if these tools are available. 

Your client may also want to explore 

using online financial management 

tools. Clients should ensure the 

website is secure when entering their 

personal or banking information. 
121 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. 

There are expenses such as rent and your car payment that you cannot cut back. These are 

commonly called fixed expenses. Cutting back on these expenses requires major changes, such 

as 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 some other areas, put these new target levels of 

spending on your cash flow budget. For example, if you spend $350 per month on 

groceries, you may decide to buy and cook food in bulk and cut out bottled water to decrease the 

amount you spend on groceries to $300. It’s important to be realistic when you set targets. Your 

cash flow budget is about setting targets for how you will use your income going forward. 

You can create a cash flow budget using the following form. 
MODULE 5: GETTING THROUGH THE MONTH 122 

TOOL 1: CASH FLOW BUDGET 

Here are some important tips to get you started: 

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 

Sources of cash and other financial resources 

Income from job $305.34 $290.80 

SNAP $280.00 

Public housing voucher $650.00 

Total sources of cash and other 

financial resources $1,272.34 $433.17 

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) 

Transportation $240.00 $60.00 

Total uses of cash and other financial 

resources $1,129.97 $235.50 

Ending balance for the week $142.37 $197.67 

Move your ending 

balance from the 

previous week 

forward. 

To get a starting 

balance, total your 

cash, prepaid card, 

and account 

balances. 
123 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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

Beginning balance for the week $37.00 $142.37 

Sources of cash and other financial resources 

Income from job $305.34 $290.80 

SNAP $280.00 

Public housing voucher $650.00 

Total sources of cash and other 

financial resources $1,272.34 $433.17 

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) 

Transportation $240.00 $60.00 

Total uses of cash and other financial 

resources $1,129.97 $235.50 

Ending balance for the week $142.37 $197.67 

Add your beginning 

balance and all of 

the sources of cash 

and financial 

resources for the 

week. 
MODULE 5: GETTING THROUGH THE MONTH 124 

TOOL 1: CASH FLOW BUDGET 

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 foods12 

 

12 For details on eligible food items, see http://www.fns.usda.gov/snap/retailers/eligible.htm. 
125 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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

Beginning balance for the week $37.00 $142.37 

Sources of cash and other financial resources 

Income from job $305.34 $290.80 

SNAP $280.00 

Public housing voucher $650.00 

Total sources of cash and other 

financial resources $1,272.34 $433.17 

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) 

Transportation $240.00 $60.00 

Total uses of cash and other financial 

resources $1,129.97 $235.50 

Ending balance for the week $142.37 $197.67 

Total sources 

minus total uses. 

This becomes your 

beginning balance 

for the next week. 
MODULE 5: GETTING THROU

TOOL 2: CASH 

Cash flow budget worksheet 

 Week 1 Week 2 Week 3 Week 4 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 
127 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 
MODULE 5: GETTING THROU

TOOL 2: CASH 

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 Pet food and care 

Total uses of cash & other financial resources Ending balance for the week (sources - uses) 
129 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Be sure to use tools you may have completed in other modules to build your cash flow. Look at Mgoals and planning for purchases; Module 8: Saving for emergencies, goals, and bills; Module managing income and benefits; Module 4: Paying bills and other expenses; and Module 6: DealThis Tool is included in the Consumer Financial Protection Bureau’s toolkit. The CFPB has prepared this material as a resource for the public. This materi

and information purposes only. It is not a replacement for the guidance or advice of an accountant, certified financial advisor, or otherwise qualified profe

responsible for the advice or actions of the individuals or entities from which you received the CFPB educational materials. The CFPB’s educational efforts 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 usresponsible and has no control over how others may use the information that you provide to them about your personal or financial situation. The CFPB reinclude names or account numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

131 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 Module 3, Tool 1: Income and resource tracker and Module 4, 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 Beginning bal.: 

$130 + 

Total sources 

including 

SNAP: 

$585 – 

Total uses 

including 

SNAP: 

$450 = 

Ending bal.: 

$265 

Sources 

SNAP, 

$280 

 Pay, 

$305 

Uses 

Food, 

$180 

Phone 

bill, $60 

 Gas, 

$30 

 Car 

Payment, 

$180 
MODULE 5: GETTING THROUGH THE MONTH 132 

TOOL 2: CASH FLOW CALENDAR 

______, 20__ 

Sun. Mon. Tues. Wed. Thurs. Fri. Sat. End of Week 

__ __ __ __ __ __ __ 

Beginning bal.: 

_________ + 

Total sources: 

_______ – 

Total uses: 

_______ = 

Ending bal.: 

__________ 

Sources 

 

Uses 

 

Reproduce this sheet to manage your cash flow for additional weeks. 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 
133 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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: 

1. Smooth out cash flow by avoiding large periodic payment and making smaller payments 

throughout the month or year. 

2. Cut out spending. 

3. 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 the ones that may be options for you 

and use this checklist as a plan to put the ideas into action. 
MODULE 5: GETTING THROUGH THE MONTH 134 

TOOL 3: IMPROVING CASH FLOW CHECKLIST 

Strategy list 

Check

if 

option 

for you 

Strategy for improving cash 

flow 

Tips and more information Notes 

Smooth out cash flow 

 Negotiate new due dates for 

bills to better line up with when 

you get income. 

Check with businesses you have 

had a long-standing relationship 

with first. 

 Negotiate splitting a monthly 

payment into two smaller 

payments. 

For example, if a $700 rent 

payment is due the first of the 

month, see if you can make a 

$350 payment on the 1st and a 

$350 on the 15th. 

 Avoid large, lump sum or 

periodic payments by making 

monthly payments—car 

insurance and taxes, for 

example. 

You may have to pay a small fee 

to make this arrangement, but it 

may make handling these 

payments more manageable. 

 Set up a savings account and 

automatically deposit the 

monthly amount of large, lump 

sum payments into the 

account so you are prepared 

when they are due. 

For this you need regular income 

and a bank or credit union 

account. 

 Explore level payment plans 

for utilities. 

This is especially important in 

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. 
135 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Check to see if you qualify for 

an energy assistance 

program. 

Ask for a referral to the agency in 

your community that manages 

energy assistance programs. 

 Explore debt consolidation. If you have many debts and good 

credit, consider 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. 

Remember that if you consolidate 

your debts into your mortgage, 

falling behind on those payments 

could put your home at risk. 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 

for lower interest rates if 

possible or explore extending 

the time you will repay the 

loan. 

If you have a home loan, talk 

with your lender about the 

possibility of a modification. 

Be sure to do the math to ensure 

the new rate (including the fees) 

really does save you money over 

time. While it may cost you more 

in the long run and may impact 

your credit reports and scores, it 

may make monthly payments 

more manageable. 

 Check to make sure your 

withholding enough tax with 

your employer. 

This can help ensure you do not 

end up with a large income tax bill 

because your withholding was too 

low. 
MODULE 5: GETTING THROUGH THE MONTH 136 

TOOL 3: IMPROVING CASH FLOW CHECKLIST 

 If you have student loans, 

check to see if you have 

repayment options. 

See if you qualify for incomebased repayment or other 

programs. 

http://studentaid.ed.gov/repayloans/

 Other: 

Cut out spending 

 Television, Internet, Phone, 

and Cell phone Plans. 

Check with your provider about 

bundling and lower cost plans or 

discontinue cable. 

Check to see if you qualify for a 

“Lifeline” phone rate. Visit 

http://www.fcc.gov and your 

state’s public utilities commission 

website.

 Review insurance; check to 

make sure you have the right 

deductibles for auto and home 

insurance. 

Check to see if moving insurances 

to one company will save you 

money, and check for other 

discounts. 

 Find ways to save on energy: 

Turn off and unplug unused 

electric appliances; 

Insulate and use weather 

stripping around doors and 

windows; or 

Set thermostat higher in 

summer and lower in winter. 

Check to see if eligible for 

weatherization programs or other 

incentives. 

 Eliminate online video or 

music pass membership. 

 

 Eliminate gym/health club or 

discount store memberships if 

not using regularly. 

 
137 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Eliminate credit monitoring 

services if you are paying for 

them. 

You can check each of your three 

credit reports for free once a year at 

www.annualcreditreport.com. Some 

states have laws that allow for an 

additional credit report from each 

major credit reporting agency. 

 Pay bills and renew license 

and registration on time to 

avoid late fees. 

 

 Return library materials, 

rented DVDs, etc. on time. 

 

 Access community resources 

for some living expenses. 

See if you qualify for community 

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 

you may qualify. 

Visit http://www.benefits.gov.

 File taxes so that you can 

receive a refund if you qualify. 

Consider saving some of your 

refund to help pay bills for the rest 

of the year.

 Other: 

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. 
MODULE 5: GETTING THROUGH THE MONTH 138 

TOOL 3: IMPROVING CASH FLOW CHECKLIST 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

Resources 

For MyMoney.gov budgeting resources, visit: 

http://www.mymoney.gov/Fast/Pages/Results.aspx?k=Budgeting%20worksheets&s=All

If you want more information on budgeting, visit: 

http://www.mymoney.gov/tools/Pages/tools.aspx

For more information on benefits, visit: 

http://www.benefits.gov

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, you can 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 

If you lose your job, visit the following for more information: 

http://www.benefits.gov/ 

http://www.dol.gov/ebsa/publications/joblosstoolkit.html 

Housing counselors can provide advice on buying a home, renting, defaults, foreclosures, 

and credit issues: 

www.consumerfinance.gov/find-a-housing-counselor

If you would like help managing your debt or rebuilding credit, visit the National 

Foundation for Credit Counseling: 

http://www.nfcc.org/

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 
139 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. 

141 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 4: 

Managing cash flow when 

circumstances change 

When life circumstances change, managing cash flow can be difficult. This can be especially true 

if you go from two incomes to one income or from one income to no income due to: 

 Separation or divorce. 

 Death of a partner or spouse or other family member on whose income you rely. 

 Loss of a job. 

 Short-term or Long-term disability. 

Life circumstance change can also mean: 

 Another child. 

 Responsibility for elderly parents or other family members. 

 Retirement. 

All of these situations as well as others will impact cash flow. Following is a checklist of 

strategies for dealing with major life changes and managing your cash flow. 
MODULE 5: GETTING THROUGH THE MONTH 142 

 TOOL 4: MANAGING CASH FLOW WHEN CIRCUMSTANCES CHANGE 

Strategy list 

Strategies Notes 

Determine the amount of income you have. Use the income tracker. If 

you have lost a partner or spouse due to death, determine if you may be 

eligible for survivor benefits by contacting the Social Security 

Administration (http://www.ssa.gov), your partner or spouse’s former 

employer, and other public or private sources of survivor benefits. If you 

are independent because of divorce, consider whether alimony or child 

support is a possibility. You will likely need the help of an attorney. If you 

cannot afford an attorney, you may be eligible for legal aid – check 

http://www.lsc.gov or http://www.lawhelp.org. 

Identify all of your expenses. This may be a particular challenge if you 

are now responsible for the finances for the first time. Get help from a 

trusted friend or family member to locate bank statements, bills, loan 

agreements, contracts, and other documents that can help you understand 

how much money you have going out. Ask your legal aid lawyer for 

Module 4, Tool 1: Spending tracker to help you identify your expenses. 

Figure out if you can eliminate any bills related to the change in 

status. 

Identify ways you can cut back on spending in the short term and 

long term: 

 Short term: Groceries, gasoline, cell phone plans, for example 

 Long term: Change in housing, transportation, health care coverage, 

for example 

With separation or divorce, work to separate accounts and set up 

your own bank or credit union account and credit cards. Jointly held 

assets and liabilities will be divided through the divorce proceedings based 

on your state’s laws and the circumstances of your divorce. Start making 

an inventory of the things you own and owe together, as well as the things 

you owe or own individually. It can be difficult to know which things are 

yours alone, or were yours together, so you may want the help of an 

attorney. If you cannot afford an attorney, you may be eligible for legal aid 

– check http://www.lsc.gov or http://www.lawhelp.org.

Examine expectations—determine whether the lifestyle you have been 

living is going to be possible with one or no income or with increased 

financial responsibilities (such as another child or raising grandchildren). 
143 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Strategies Notes 

Apply for public benefits. With your change in circumstances, you may 

be eligible for: 

 SNAP 

 TANF 

 Medicaid/Medicare 

 Unemployment benefits 

 Social Security benefits 

 Others 

Set up a new cash flow budget to help you manage your new 

circumstances. 

Get support from other people who have been through similar 

situations. There are support groups for people who are: 

 Divorced 

 Widowed 

 Raising grandchildren 
MODULE 5: GETTING THROUGH THE MONTH 144 

 TOOL 4: MANAGING CASH FLOW WHEN CIRCUMSTANCES CHANGE 

Resources 

For MyMoney.gov budgeting resources, visit: 

http://www.mymoney.gov/Fast/Pages/Results.aspx?k=Budgeting%20worksheets&s=All 

If you want more information on budgeting, visit: 

http://www.mymoney.gov/tools/Pages/tools.aspx 

For more information on benefits, visit: 

http://www.benefits.gov 

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 

If you lose your job, visit the following for more information: 

http://www.benefits.gov ; http://www.dol.gov/ebsa/publications/joblosstoolkit.html 

Housing counselors can provide advice on buying a home, renting, defaults, foreclosures, 

and credit issues: 

www.consumerfinance.gov/find-a-housing-counselor

If you would like help managing your debt or rebuilding credit, visit the National 

Foundation for Credit Counseling: 

http://www.nfcc.org 

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 
145 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

147 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 6: 

Dealing with debt 

Is the client able to manage his debts? 

If you have 10 minutes with a 

client... 

If you have 30 minutes with a 

client... 

If you have multiple sessions 

with a client... 

 Tool 2: Debt-to-income 

worksheet 

 Tool 1: Debt worksheet 

 Tool 5: When debt 

collectors call 

 Tool 6: Avoiding debt traps 

 Tool 3: Debt-reduction 

worksheet 

 Tool 4: Student loan debt 

Understanding debt: The basics 

What is debt? 

Debt is money borrowed from a person or a business, and it creates a liability. When someone 

owes money, she must pay it back, sometimes in scheduled payments. Debt 

obligates future income—it is from income not yet earned that people will make 

their debt payments. While borrowing money may give clients access to something today, 

they may have monthly payments for months or years going forward. This obligation can 

decrease clients’ options in the future. 

Debt is different from credit. Credit is the ability to borrow money. Debt results from using 

credit. Someone can have credit without having debt. For example, an individual may have a 

credit card but no outstanding balance on it. Or he may have used that credit card in the past, 

but paid off the balance and not made new purchases with it. 
MODULE 6: DEALING WITH DEBT 148 

 

Secured debt and unsecured debt 

Secured debt is debt that has an asset attached to it. When debt is secured, a lender can collect 

that asset if the payments are not made. In some cases, a lender can also attempt to collect on 

the difference between the value of the secured asset and the outstanding loan amount. (This is 

called a deficiency balance.) 

Here are examples of secured debt: 

 A home loan or mortgage—the debt is secured with the home that is purchased. If 

payments are not made on the loan, the lender can foreclose on the home, sell it, and use 

the money from the sale to cover some or all of the loan. Home equity and refinance 

loans are also secured with the home. 

 An auto loan—the debt is secured with the car that is purchased. If payments are not 

made on the loan, the lender can repossess (repo) the car and sell it to cover some or all 

of the loan. 

 An auto title loan—the debt is secured by the title to a car owned by the consumer. 

 A pawn loan—the debt is secured with the item pawned. If a payment is not made 

when it is due, the pawned item can be sold. 

Unsecured debt does not have an asset attached to it. Here are examples of unsecured debt: 

 Most credit card debt (some credit cards are secured by a deposit made by the consumer) 

 Department store charge card debt 

 Signature loans (also called personal loans that rely on only the borrower’s signature and 

promise to pay the loan back) 

 Student loan debt 

If secured or unsecured loans are not paid as agreed, the creditor may attempt to collect the debt 

itself, hire a debt collector to collect the debt for the creditor, or sell the debt to a debt buyer who 

may, in turn, attempt to collect the debt or hire an outside debt collector. 
149 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Rent-to-own arrangements 

In rent-to-own arrangements for consumer goods such as furniture, fixtures, electronics, or 

appliances, the consumer leases the items and typically has the option to purchase the item by 

continuing to make payments for some specified period of time, or by paying off the balance 

during the term of the lease. Items rented/purchased this way tend to be more expensive. If the 

payments are not made as agreed, the lessor/seller can take the item back. The consumer also 

has the option to return the item at any time. If the item is returned by the consumer or taken 

back by the lessor/seller the consumer does not get a refund of money already paid. In most 

states, these transactions are treated as leases, but in some states they are considered credit 

sales under state law. Check the relevant state law. 

Co-signers: Still obligated 

A co-signer of a loan may not understand the extent of his or her obligation. Parents or friends 

may sign for a student loan or a loan to finance a car, for example. While these consumers may 

have the best intentions, they often do not realize that they are now also responsible for 

repayment of the loan. 

Many consumers do not understand that under most circumstances a co-signer is in fact a coborrower and has the same obligation to pay a debt as the borrower. In most cases a lender or 

creditor does not even have to first attempt to seek repayment of a debt from the borrower 

before seeking repayment from a co-signer. Co-signing a loan is not simply serving as a 

character reference for someone else; a co-signer is at risk of having to repay any missed 

payments. And, if the borrower defaults on the loan, a co-signer has generally agreed to repay 

the entire loan. The co-signer’s credit score may also be affected if the borrower is late with or 

fails to make any payments. 

Co-signing a loan may also affect a co-signer’s ability to obtain a future loan because a creditor 

may take into account the increased amount of debt that a co-signer has as a result of co-signing 

for a loan. 

Lenders sometimes ask for a co-signer when they are concerned that a prospective borrower will 

not be able to repay a loan. The co-signer helps decrease a lender’s concern about repayment. A 

consumer should read the terms of the loan and consider carefully before taking on the risk of 

co-signing. 
MODULE 6: DEALING WITH DEBT 150 

 

It is against the law for a debt collector to harass or make false statements to a co-signer (or a 

borrower). 

Authorized users v. Joint account holders 

Finally, there is a difference between an authorized user and a co-signer or joint account 

holder. For example, a credit card account holder may request that a credit card company 

provide a spouse or other individual with a card (containing the spouse or other person’s name 

on the card), but the account is not a joint account. Although that person is an authorized 

user, that person is not necessarily responsible to pay for the use of the card. On the other 

hand, when an account is joint or co-signed both persons are responsible to pay for the use of 

the card and a creditor should have an agreement and proof of the joint or co-signed account. 

Medical debt13

For many Americans, medical debt comprises a large amount of the money they owe. Forty one 

percent of working age adults in America reported having trouble paying for medical bills in 

2012. 

Medical debt has increasingly been a major factor in decline in credit scores for some 

individuals. And medical debt is becoming a greater factor in the reason people file for 

bankruptcy—they could make ends meet were it not for their medical debts.14 The majority of 

individuals who filed for bankruptcy due to medical debt had health insurance.15 

Finally, once people have medical debt, they are much less likely to seek medical care—whether 

preventative or prescriptive.16 This can increase the amount they have to spend on treatment, 

because by the time they get medical care, the situation has become more acute and, therefore, 

more expensive to address. 

 

13 For more information on medical debt and its impact on consumers see the CFPB’s Consumer Credit Reports: A 

study of medical and non-medical collections at http://www.consumerfinance.gov/reports/consumer-creditreports-a-study-of-medical-and-non-medical-collections/ 

14 Associated Press, New Medical Billing Standards, February 13, 2014. See http://bigstory.ap.org/article/newbilling-standards-help-patients-debt 

15 http://www.cnn.com/2009/HEALTH/06/05/bankruptcy.medical.bills/ 

16 Kalousova, Lucie and Burgard, Sarah A. Debt and Forgone Medical Care, University of Michigan Institute for 

Social Research. July 2012. 
151 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

What are the factors that can lead to medical debt?

Medical debt is almost always the result of an unplanned event—someone 

becoming ill or injured. Even with health insurance, co-pays and deductibles can add up. 

This is one reason that emergency savings is important for building financial stability. 

Secondly, the costs of the care are almost never fully known upfront. Unlike the cost 

of a house or car, where one should know what to pay when one signs the loan agreement, when 

a person accepts responsibility for payment of treatment at a hospital or other medical provider, 

he generally has no idea how much the treatment will cost. He may also not know his share of 

the cost. 

Invoices and bills may be confusing. Rather than one itemized bill, a client may receive 

several bills over a period of weeks or months with hospital stays or situations that involved 

multiple health care service providers. Because of this confusion, people may be more likely to 

not recognize the information contained on the invoice or hesitate or delay paying a medical bill. 

They may have questions about whether the amount was already paid by insurance, whether the 

correct amount was billed, or whether they actually received the billed treatment. 17

And without knowing how much the total cost should be, how much the insurer will cover, and 

how much of the cost will be passed on to the individual, it becomes difficult to determine 

whether he is being charged the right amount. That leaves consumers in a position where they 

need to review each medical bill carefully and contact providers or insurers when they have 

questions.

Uninsured individuals are generally charged more for services. Insurance companies 

negotiate discounts for services. This means that if one is uninsured, the bill will likely be higher 

than the bill that someone who has insurance receives for the same procedures and care. 

 

17 The Healthcare Financial Management Association (HFMA) notes “There is confusion among healthcare 

consumers about how to obtain clear, understandable pricing information. The differences among healthcare 

charges and prices and the widespread variations in service, quality, and outcomes all are shrouded in an air of 

uncertainty and complexity. The all-too-common result is misunderstanding.” (Brian Workinger, Front-Line 

Perspectives on price Transparency and Estimation, HFM Magazine, Sept. 2014). 
MODULE 6: DEALING WITH DEBT 152 

 

So what can a person do to avoid medical debt? 

While there are no easy answers, there are specific things to do to lessen the impact of medical 

debt:18

 Get cost estimates up front—then the person can decide whether to proceed or delay 

elective procedures. 

 Find out whether there is a prompt payment discount, which can be substantial. 

This may mean cutting back in other areas for a few months in order to pay the bill and 

secure the discount. 

 Ask for a discount on the treatment. 

 Ask about “charity care” from the hospital and government before or immediately 

following treatment. 

 If asked to put a hospital bill on a credit card, watch out. Many hospitals have 

some obligation to provide for charity care for those who can’t afford treatment. Once a 

person puts a hospital bill on a credit card, he won’t be considered for a later write-down 

of the bill under the charity care program. Some medical providers even offer a credit 

card for the person to use at the provider’s office. Healthcare credit cards can have tricky 

terms, so clients should know what they’re getting into. For tips on healthcare credit 

cards see: http://www.consumerfinance.gov/blog/whats-the-deal-with-health-carecredit-cards-four-things-you-should-know/.

 If a person can’t afford to pay for the care even after charity care and discounts have been 

applied, they should take steps to work with the provider to set up a reasonable 

repayment plan. As one negotiates, he should ensure that as long as he pays as agreed, 

reports made to credit reporting agencies will reflect that he is making payments as 

required by the plan. Clients should get their repayment plan agreement in writing. Also, 

they should consider asking for the following terms: 

 No interest on the debt 

 Monthly statements showing the amount paid and the outstanding balance 

 

18 Ibid. 
153 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Request that the debt not be turned over to a third party collection agency – that the 

debt servicing stays in-house 

 Clients should not sign an agreement that states they will make full payment of the debt 

if they are late or miss a payment on your plan. 

 Check the credit report to make sure resolved bills are reported accurately or any errors 

are removed from their credit history. If the credit reporting agency doesn’t respond, 

contact the client’s state consumer protection agency, attorney general, or the Consumer 

Financial Protection Bureau. 

 If the person does get sued by a medical service provider or hospital, they should 

respond. They can get legal assistance from the legal aid organization in the community 

or a lawyer. 

Consumers should be sure they do not jeopardize their ability to earn income or pay for shelter 

or food because they have paid more income than they can afford to cover a medical debt. 

How much debt is too much debt? 

How can a client know if she has too much debt? One way a consumer may know she has too 

much debt is based on the level of stress her debt causes her. If a client is worried about debt, 

she likely has 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 a person pays out each month for debt payments to his income 

before taxes and other deductions. The resulting number, a percentage, objectively shows how 

much of income is dedicated to debt—the debt load. 

Debt-to-Income (DTI) Ratio 

The debt-to-income ratio is a simple calculation: 

Total monthly debt payments ÷ Monthly gross income (income before taxes). 

The result is a percentage that tells an individual how much income is going toward covering 

debt. 
MODULE 6: DEALING WITH DEBT 154 

 

For example, if someone has a debt-to-income ratio of 36%, she has $.64 out of every dollar 

earned to pay for everything else, including all of her living expenses and taxes. 

If adding on a new monthly payment for a purchase means there won’t be enough money left to 

pay for other living expenses and still have some left over for emergencies and unexpected 

expenses, an individual may be taking on too much debt for her or his income level. 

Using Tool 2: Debt-to-income worksheet, will determine the consumer’s debt load. If it is higher 

than a client wants, Tool 3: Debt-reduction worksheet helps him make a plan to get out of debt. 

Addressing debt collection issues under the 

FDCPA 

What is a debt collector? 

A consumer typically repays a debt to a creditor. In many instances, if the consumer becomes 

late with his or her payments the creditor may decide to have a third party—a debt collector —

attempt to get the consumer to repay the debt. Under the federal Fair Debt Collection Practices 

Act (FDCPA), a debt collector generally is a person or a company that regularly collects debt—

defaulted debts—owed to others. Debt collectors include collection agencies or lawyers who 

collect debts as a principal purpose of their business. Companies that buy defaulted debts from 

creditors or other businesses and then try to collect them are also debt collectors under the 

FDCPA. 

There is no specific time at which creditors ordinarily send a debt to a third-party debt collector 

(sometimes called “sending it for collection” or “putting it into collection”). Some creditors will 

send a debt to a third-party debt collector when the debt is 90 days past due but other creditors 

may continue to try to collect a debt themselves for much longer before sending a debt to a 

third-party debt collector or selling the debt. 

In addition, the FDCPA does not require a creditor to “write off” or “charge off” a debt or 

designate a debt as “uncollectable” after a set period of non-payment. For accounting reasons or 

to comply with directions from a regulator, a creditor may designate a debt as charged off (or 

use another term) once it no longer anticipates getting repaid. However, even if a consumer 

has been told that a debt has been charged off, the original creditor, the debt 
155 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

collector, or a subsequent debt buyer is not prohibited from attempting to collect 

the debt. In addition, the fact that a debt has been charged off does not mean the delinquency 

will be removed from a consumer’s credit report. 

What protections does the federal Fair Debt Collection 

Practices Act provide to consumers?

There are both federal and state laws that govern debt collection practices. 

The Fair Debt Collection Practices Act (FDCPA) is the key federal law that specifically governs 

debt collection practices. The FDCPA prohibits debt collection companies from using abusive, 

unfair, or deceptive practices to collect debts. 

The FDCPA covers the collection of consumer debt—debts from transactions done primarily for 

personal, family, or household purposes. It covers personal debt, not business debts. It also does 

not generally cover collection efforts by the person from whom the consumer first borrowed 

money. 

Contacting the consumer 

In general, debt collectors may not contact consumers at an unusual time or place, or at a time 

or place they know or should know is inconvenient. If a debt collector knows or should know 

that the consumer is not allowed to receive the debt collector’s calls at work, the debt collector is 

not allowed to call the consumer there. 

If a debt collector knows that an attorney is representing a consumer, the debt collector 

generally must stop contacting the consumer and must contact the attorney instead. This is only 

true if the debt collector knows, or can easily find out, the name and contact information of the 

attorney (the consumer should provide the collector with the attorney’s name and contact 

information). If the consumer tells a debt collector in writing to stop contacting him, the debt 

collector may not contact the consumer again except to: 

 Say there will be no further contact, or 

 Notify the consumer that the debt collector or the creditor may take certain specific 

action it is legally allowed to take, such as filing a lawsuit. 
MODULE 6: DEALING WITH DEBT 156 

 

However, if the consumer tells a debt collector to stop contacting him, it does not prevent the 

debt collector from pursuing other legal ways to collect the debt from the consumer if he owes it, 

including filing lawsuit or reporting negative information to a credit reporting company. 

Contacting others 

Under federal law, a debt collector generally may contact other people only to find out where a 

consumer lives, a phone number, and where the consumer works. Although there are exceptions 

in the law, debt collectors are generally prohibited from contacting other people for this purpose 

more than once to get information about the consumer’s location, and collectors may not tell 

other people they are trying to collect a debt from a specific consumer. 

Generally, a debt collector may not discuss the debt with anyone other than the consumer, the 

consumer’s spouse or parents (if the consumer is a minor), the consumer’s guardian, or 

attorney. If the debt collector knows an attorney is representing the consumer about the debt, 

the debt collector must contact the attorney instead of the consumer. 

Information about the debt 

Any debt collector who contacts the consumer claiming the consumer owes payment on a debt is 

required by law to tell the consumer certain information about the debt. That information 

includes: 

 The name of the creditor to whom the debt is owed, 

 The amount owed, and 

 Statements concerning how to dispute and seek verification of the debt. 

If the debt collector doesn’t provide that information in the initial contact with the consumer, 

the debt collector is required to send a written notice including that information within five days 

of the initial contact. 

Disputing the debt 

The consumer can dispute the debt if he believes that he does not owe the debt or is unsure 

whether he owes money to a creditor or how much he might owe. 

If the consumer disputes a debt in writing within 30 days of the required notice from the debt 

collector, the debt collector has to stop all debt collection activities until after the dispute has 
157 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

been investigated and the debt collector has provided the verification of the debt in writing to 

the consumer. 

A consumer can also request that the creditor provide the name and address of the original 

creditor. If the consumer makes that request in writing within 30 days of the initial contact, the 

debt collector has to stop all debt collection activities until the debt collector provides the 

consumer the information verifying the debt. 

When a consumer gets the requested information or the response to a dispute from the debt 

collector, the consumer can see if his records agree with the information the debt collector 

provided. If the consumer doesn’t recognize the name of the creditor, it might be useful to ask if 

the debt collector purchased the debt from another company that first made the loan and, if so, 

what the name of that company is. 

A number of states also have laws about debt collection practices, many of which are similar to 

the FDCPA. 

Put it in writing 

A consumer must make a dispute with a debt collector in writing. This should be done by written 

letter sent via certified mail, with a return receipt. The consumer should always keep a copy of 

the letter, showing the date he wrote it, so that he has a record of the request. 

The CFPB has sample letters at consumerfinance.gov and in Tool 5: When debt collectors call 

that a consumer could use to respond to a debt collector who is trying to collect a debt, along 

with tips on how to use the sample letters. 

Harassment 

The FDCPA says debt collectors may not harass, oppress, or abuse the consumer or any other 

people they contact. Some examples of harassment are: 

 Repetitious phone calls that are intended to annoy, abuse, or harass. 

 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). 
MODULE 6: DEALING WITH DEBT 158 

 

The FDCPA also says debt collectors cannot use false, deceptive, or misleading practices. This 

includes misrepresentations about the debt, including the amount owed, claims that the 

collector is an attorney if he is not an attorney, false threats of arrest, threats to do things that 

cannot legally be done, or threats to do things that the debt collector has no intention of doing. 

Debt collectors also are not allowed to use certain practices that are considered unfair. 

Consumers should keep good records of their communications with a debt 

collector. It is a good idea for the consumer to keep a file of all letters or documents a debt 

collector sends, copies of anything sent to a debt collector and maintain a record of the dates 

and times of any phone or email conversations along with notes about what was discussed. 

These records can help if the consumer has a dispute with a debt collector, meets with a lawyer, 

or goes to court. 

Where to go for information on consumer 

issues 

Each consumer seeking assistance with debt collection issues has a unique set of facts and story 

to tell. But many of the issues that arise in the debt collection area are similar. The following are 

some examples of the typical questions that arise when consumers face debt collection issues 

and need places to go for information. 

Consumer issues Relevant laws Information and links 

What are a client’s 

rights under FDCPA? 

FDCPA: 

http://www.law.cornell.e

du/uscode/text/15/chapt

er-41/subchapter-V 

FAQs on debt collection: 

http://www.consumerfinance.gov/askcfpb/sear

ch?q=debt+collection

What type of debt does 

the client have? 

FDCPA: §1692a(5) 

http://www.law.cornell.e

du/uscode/text/15/1692

a (list of covered debt) 

Introduction section to this module 

The FDCPA covers personal debt, not debts 

incurred for business purposes. 
159 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Who is trying to collect 

from the client? 

FDCPA – §1692a(6) 

http://www.law.cornell.e

du/uscode/text/15/1692

a 

DFA § 1031, as codified 

at 12 U.S.C. § 5531 

Generally, the FDCPA applies to: 

 Third-party debt collectors 

 Entities that purchase debt that is in default 

at the time it is obtained 

 Attorneys who collect debts for third parties 

on a regular basis 

A creditor, if it collects in a name other than its 

own that would lead a person to think a third 

party is attempting to collect the debt 

A creditor (the original lender and others) may, 

in collecting its own debts, violate state law 

prohibiting unfair and deceptive acts. 

Also see the CFPB Bulletin on prohibition of 

unfair, deceptive, or abusive acts or practices 

in the collection of consumer debts (July 10, 

2013). 

How can the client tell 

whether it is a scam 

debt collector? 

How to identify scam debt collectors: 

http://www.consumer.ftc.gov/articles/0258-

fake-debt-collectors

How can the client 

indicate that the debt is 

not his? 

Sample letter: I do not owe this debt

Is the debt old? 

Check FDCPA and 

State law. If a debt is 

too old, debt collectors 

may be prohibited from 

suing to collect the debt. 

But, it depends on the 

type of debt, the statute 

of limitations and the 

state law. 

FCRA – 15 USC §1681 

et seq. 

In many situations, debt 

that is too old cannot be 

disclosed on a credit 

report. 

For information about time-barred debts: 

http://www.consumer.ftc.gov/articles/0117-

time-barred-debts. 
MODULE 6: DEALING WITH DEBT 160 

 

Has the client been 

harassed by debt 

collectors? 

FDCPA – 15 USC 

§1692d 

See sample letters: 

 Sample letter: I want the debt collector to stop 

contacting me (But note that stopping 

communication may mean that the consumer 

does not receive information that would alert 

the consumer that the collection will be 

escalated in the future.) 

 Sample letter: I want the debt collector to only 

contact me through my lawyer

 Sample letter: I want to specify how the debt 

collector can contact me

The client is afraid she’ll 

continue to be called 

and doesn’t know what 

to do or say. What can 

she do? 

FDCPA – 15 USC 

§1692c See sample letters (above).

The client received 

notice that there was a 

judgment against him. 

Can this affect his credit 

report? 

FCRA – 15 USC 

§1681c 

Generally, the judgment can stay on the credit 

report for seven years but there are 

exceptions. See Module 7 for information on 

“negative information” and how long 

judgments can stay on a person’s credit report. 

The client 

acknowledges the debt, 

but says it was paid off 

years ago. What can he 

do? 

FDCPA – 15 USC 

§1692 g(a),(b) 

The consumer should dispute the debt. Before 

engaging in further collection activity, the 

collector will have to verify that the consumer 

owes it and send that verification to the 

consumer. See: 

 http://www.consumerfinance.gov/askcfpb/3

31/what-information-do-debt-collectorshave-to-give-me-about-my-debt.html 

 http://www.consumerfinance.gov/askcfpb/3

38/if-i-dispute-a-debt-that-is-beingcollected-can-debt-collectors-still-contactme-about-it-how-can-i-stop-debt-collectorsfrom-contacting-me.html 
161 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Is the client “collection 

proof”? 

Information from 

Department of Labor on 

garnishment 

Employment Law Guide 

- Wage Garnishment 

Information on state wage garnishment laws: 

http://www.small-claims-courts.com/WageGarnishment-Laws.html

Does the client want the 

creditor to contact him 

in a certain way? 

FDCPA – 15 USC 

§1692c 

Sample letter: I want to specify how the debt 

collector can contact me

Does the client only 

want to be contacted 

though a lawyer 

representing the client? 

FDCPA – 15 USC 

§1692b(6) 

Sample letter: I want the debt collector to only 

contact me through my lawyer

The client has medical 

bill debt. Does FDCPA 

apply? 

FDCPA – 15 USC 

§1692a(5), (6) 

Who is trying to collect 

the debt? 

Medical provider – the 

FDCPA may not apply 

Third-party debt 

collector – the FDCPA 

applies to medical debt 

A health care provider can disclose information 

to a debt collection agency under the Health 

Insurance Privacy Administration Act (HIPAA). 

See 

http://www.hhs.gov/ocr/privacy/hipaa/faq/disclo

sures/268.html and related FAQs. 

Whether the FDCPA applies generally 

depends on which entity is trying to collect: the 

creditor, like the medical provider who sent the 

bill, to which the consumer originally owed the 

debt or a third-party collector. 

The client has federal 

student debt. What are 

her rights? 

See Tool 4about federal student loans 

http://www.consumerfinance.gov/askcfpb/655/

what-are-my-options-when-dealing-collectionagency-working-us-department-education.html 

http://www.studentaid.ed.gov/repay-loans

The client is a co-signer 

on a loan. Can the debt 

collector contact him? 

FDCPA – 15 USC 

§1692a(3) 

Yes, see above discussion on co-signing a 

loan. 
MODULE 6: DEALING WITH DEBT 162 

 

The client states that 

the debt was owed by a 

person who is now 

deceased. What should 

he do? 

FDCPA – 15 USC 

§1692c 

A debt collector generally may not contact 

someone who is not the executor or 

administrator of the consumer’s estate unless 

the person is also a debtor on the loan. 

http://www.consumerfinance.gov/askcfpb/1481

/64-i-already-told-debt-collector-who-calledabout-my-deceased-relative-talk-executor-oradministrator-estate-they-keep-calling-me-allhours-day-and-night-and-leaving-threateningmessages-what-can-i-do.html 

Should a consumer use a debt settlement service? 

Debt settlement companies say they can renegotiate, settle, or in some way change the terms of 

a person’s unsecured debt to a creditor or a debt collector. That may include reducing the 

balance, interest rates, or fees a person owes. The consumer can try to do this himself by 

contacting his creditors. Debt settlement companies often charge expensive fees, and some 

charge illegal up-front fees. Some debt settlement companies advertise that they will help 

consumers, but they provide little or no assistance. If a client has a debt collection-related 

problem, legal aid staff can submit a complaint on behalf of the client. (See Tool 1 of the 

Overview section for information on submitting a complaint to the CFPB.) 

Consumers should avoid doing business with any company that promises to settle 

the debt if the company: 

 Charges any fees before it settles the consumer’s debts. 

 Touts a “new government program” to bail out personal credit card debt. 

 Guarantees to the consumer it can make the debt go away. 

 Tells the consumer to stop communicating with the creditors. 

 Tells the consumer it can stop all debt collection calls and lawsuits. 

 Guarantees that the unsecured debts can be paid off. 
163 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 1: 

Debt 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 owe 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. 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 
MODULE 6: DEALING WITH DEBT 164 

TOOL 1: DEBT WORKSHEET 

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. 

Debt worksheet Lender Total amount borrowed 

Amount outstanding Total payment amount Payment due date Secured? If yes, by what. Interest rate Other important terms 

Mortgage 

 

Vehicle loan 

Appliance/furniture loan 

Student loan 

Credit card/Charge card debt 

Payday loan 

 

Car title loan 

 

Other 

Total monthly debt payment 
165 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

167 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 that 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 take steps to reduce your debt. As you pay 

down your debts, your debt-to-income ratio will also decline. This means money is being freed 

up to use on other things like saving for your goals, unexpected expenses, and emergencies. 
MODULE 6: DEALING WITH DEBT 168 

TOOL 2: DEBT-TO-INCOME WORKSHEET 

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 certain percentages, 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-toincome ratio may also impact your ability to get additional credit, because creditors may be 

concerned that you wouldn’t be able to handle their debt on top of what you already owe. 

The following debt-to-income ratio ranges are guidelines, not rules. In fact, many creditors set 

their own rules. 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 just for 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-toincome ratio should be below 36%. 
169 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 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.19 

If your debt-to-income ratio is above these limits, you may want to use the 

following tool—Debt-reduction worksheet—to develop a plan to reduce your debt 

and lower your debt-to-income ratio.

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

 

19 See http://www.fha.com/fha_requirements_debt. 

171 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 

have many small debts. For some people, this 

creates momentum and motivation. 

You may pay more in total because you are not 

necessarily eliminating your most costly debt. 

 
MODULE 6: DEALING WITH DEBT 172 

TOOL 3: DEBT-REDUCTION WORKSHEET 

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. 

Debt reduction worksheet 

Check the method you are going to use, and then follow the instructions. 

Highest interest rate method 

 List your debts from highest rate to lowest rate. 

 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. 

 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 

 List your debts from smallest to largest in terms of the amount outstanding. 

 In the column labeled Extra payment, list the extra payment you will dedicate to the 

smallest debt until you have it paid off. 

 When this debt is paid off, allocate the entire payment (monthly payment + extra 

payment) you were making to the next debt on the list. 
173 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS Lender Total amount borrowed Amount outstanding Monthly payment Extra payment Monthly Due date Date paid off in full 

 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

175 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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/ 

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 generally 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. A summary of some of the repayment options includes: 
MODULE 6: DEALING WITH DEBT 176 

TOOL 4: STUDENT LOAN DEBT 

 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 of 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. 

 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 career school, a graduate fellowship, or a rehabilitation 

program for individuals with disabilities 

 During unemployment 
177 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 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 some situations, including: 

 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 very difficult to eliminate federal student loan debt 

even in bankruptcy. If you are interested in filing bankruptcy to discharge your student loans, 

you may want to talk with a bankruptcy lawyer. 

It’s important to note that unpaid federal student loans can be collected in special 

ways. For instance, the Department of Education can garnish some federal benefits, such as 

Social Security and certain Veterans’ Assistance benefits. If you are afraid that your federal 

benefits could be garnished to pay off federal student loans, you may want to consider talking to 

a lawyer. 

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. 

179 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 5: 

When debt collectors call 

Debt collectors use persuasive techniques to get you to send in money to pay your debt. Before 

you send in money, you should confirm that: 

 You actually owe the debt.

 The collection isn’t fraudulent and is legitimate. 

You may be able to confirm this information during an initial or follow-up discussion with the 

debt collector, but be careful of fraudulent debt collectors. You should ensure that you recognize 

the debt and know that you owe it and have not paid it before. 

The letter you receive from the debt collector should contain a notice about your right to request 

more information about the debt. 

If you are contacted by debt collectors, remember that federal law prohibits a debt collector 

from deceiving you by threatening to take actions they can’t take or don’t intend to take. 

Ask for more information 

If you have questions about the debt, ask the debt collection agency to verify the debt before you 

send money or acknowledge the debt. You can do this by sending a letter within 30 days of the 

debt collector’s providing you with certain information regarding the debt. That information 

includes the name of the creditor, the amount owed, and statements concerning how to dispute 

and seek verification of the debt. 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. 
MODULE 6: DEALING WITH DEBT 180 

TOOL 5: WHEN DEBT COLLECTORS CALL 

Send this letter as soon as you can and, if at all possible, within 30 days of when a debt 

collector provides you with certain information regarding the debt. Even if 30 days have passed, 

you can still ask for the information. 

If you ask in writing before 30 days have passed, a debt collector has certain legal 

responsibilities to give you some information. 

If the debt collector makes vague statements about what will happen if you do not pay, read 

their response to your letter carefully. Debt collectors are prohibited 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. 

For additional sample letters you can use if you have been contacted by a debt collector and 

want to dispute the debt, to specify how you wish to be contacted, or to request that the collector 

contact you through your lawyer, visit http://www.consumerfinance.gov/askcfpb/1695/ivebeen-contacted-debt-collector-how-do-i-reply.html. 
181 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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? 
MODULE 6: DEALING WITH DEBT 182 

TOOL 5: WHEN DEBT COLLECTORS CALL 

 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. 
183 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 

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] 
MODULE 6: DEALING WITH DEBT 184 

TOOL 5: WHEN DEBT COLLECTORS CALL 

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 may not have 

to reach out to tell you about options that you may have to avoid foreclosure. 

Example letter asking a debt collector to stop contacting you

[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, 

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] 
185 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. 

187 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 6: 

Avoiding debt traps 

If you are considering short-term loan products that meet an immediate need, it’s important to 

know how to avoid debt traps on your path to your goals. Short-term loans that have to be paid 

back in just one payment or a couple of payments can lead to a debt trap. 

A debt trap is a situation where people take a loan and have to repeatedly 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 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 and do not have the money to repay the loan and the finance charges when 

they are due. 

Short-term 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 

Make sure you understand how your loan will be repaid and how much the loan could ultimately 

cost you before agreeing to use this form of credit. If you find that you cannot make your loan 

payment and cover your other expenses without taking a new loan, talk with the provider about 

repayment options that can allow you to pay over a longer period of time. 

Payday loans and deposit advance products 

A payday loan – which might also be called a “cash advance” or “check loan” – is a short-term 

loan, generally for $500 or less. 
MODULE 6: DEALING WITH DEBT 188 

TOOL 6: AVOIDING DEBT TRAPS 

Payday loans generally come due your next payday. You must give lenders access to your 

checking account or write a check for the full balance in advance that the lender has an option of 

depositing when the loan comes due. 

Other loan features can vary. For example, payday loans are often structured to be paid off in 

one lump-sum payment, but interest-only payments – "renewals" or “rollovers” – are not 

unusual. In some cases, payday loans may be structured so that they are repayable in 

installments over a longer period of time. 

Some ways that lenders might give you the loan funds are providing cash or a check, loading the 

funds onto a prepaid debit card, or electronically depositing the money into your checking 

account. 

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 annual percentage rate 

(APR) of almost 400%. By comparison, APRs on credit cards can range from about 12 percent to 

30 percent. 

State laws and other factors can influence how much you can borrow and the fees you are 

charged. Some state laws do not permit payday lending and in other states lenders may choose 

not to do business rather than abide by the state’s regulations. 

There are special protections through the Military Lending Act for active duty 

servicemembers and their dependents who use certain payday loans and other 

small dollar credit products. 
189 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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.
MODULE 6: DEALING WITH DEBT 190 

TOOL 6: AVOIDING DEBT TRAPS 

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. For example, the loan may be limited to 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 financial institutions began discontinuing this product in 2013, but clients may still find 

them at some institutions.

If you are considering these products, it’s important to be aware of common misunderstandings 

and the facts about payday and deposit advance loans. 

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 America20 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. 

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 study21 found that 

payday borrowers are in debt for a median of 199 days (nearly seven months) of the year 

and pay a median of $458 in fees (not including the principal). The Pew Charitable 

Trust22 found similar results – that on average, payday 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. 

 

20 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. 

21 Consumer 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_paydayfactsheet.pdf. 

22 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. 
191 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

The CFPB study also found that more than half of deposit advance borrowers end up 

taking out $3,000 in advances in a year. When they paid off their loan, those borrowers 

tended to take out a new loan in 12 days or less and were in debt more than 149 days in 

the year. 

Alternatives to high-cost credit 

There are ways to avoid the risk of a debt trap if you’re in a situation where you need money 

quickly. If you are short on cash, consider other alternatives, including: 

1. Using your own emergency savings. 

2. Using lower-cost short-term loan alternatives from a credit union or bank. 

3. Borrowing from a friend or family member. 

4. Using a credit card – while it will increase your monthly card payment, it may prove 

cheaper in the long run. 

5. Negotiating for more time to pay if the loan is for a bill that is due. 

6. Bartering for part or all of what you are borrowing the money to cover. 

7. 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, not purchasing it, or waiting until you have the money for 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. 
MODULE 6: DEALING WITH DEBT 192 

TOOL 6: AVOIDING DEBT TRAPS 

COST TO REPLACE SPARK PLUGS IN YOUR AUTOMOBILE = $350 

Emergency 

savings Credit card Payday loan 

Amount $350 $350 $350 

APR23 21.99% annual percentage 

rate (APR) 

$15 for every $100 borrowed for 14 days. 

This means a 391% annual percentage 

rate (APR).24

Payment 

Must pay at least a certain 

amount each month.25 (For the 

purposes of the example, the 

individual is choosing a fixed 

monthly payment of $50.) 

Must pay back loan amount ($350) plus 

fee ($52.50) within 14 days. If entire loan 

cannot be paid within 14 days, it can be 

rolled over (or extended) for another 14 

days for an additional fee of ($52.50).26 

Total 

additional 

cost and 

time to 

repay 

$0 

You would pay $28.11 in 

interest in addition to the 

principal borrowed. It will take 

just over eight months27 to pay 

back the full amount. 

The total cost depends on how long it 

takes you to save up to pay back the 

entire loan. If you renew or roll over this 

loan seven times, you would be in debt 

for 14 additional weeks and could pay up 

to $367.50 in fees.28 

 

23 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-paydayloan.html. 

24 Some states have adopted laws that limit the amount of loan above a certain amount and/or limit the interest rates 

of these loans. 

25 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. 

26 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-dapwhitepaper.pdf. 

27 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. 

28 Two–thirds of repeat payday borrowers take more than seven loans in one year. Consumer Financial Protection 

Bureau, Payday Loans and Deposit Advance Products. 
193 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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-CreditCards.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 

Housing counselors throughout the country can provide advice on buying a home, renting, 

defaults, foreclosures, and credit issues: 

www.consumerfinance.gov/find-a-housing-counselor

CFPB.gov, Know Before You Owe: 

http://www.consumerfinance.gov/knowbeforeyouowe

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

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 
MODULE 6: DEALING WITH DEBT 194 

TOOL 6: AVOIDING DEBT TRAPS 

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. 
195 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 7: 

Understanding credit reports 

and scores 

Has the client ever reviewed his or her credit report? 

Has the client been denied employment, a place to live, or a loan or credit due to 

his or her credit?

If you have 10 minutes with 

a client... 

If you have 30 minutes with 

a client... 

If you have multiple sessions 

with a client... 

 Tool 1: Getting your credit 

reports and scores 

 Tool 2: Credit report 

review checklist 

 Tool 3: Improving credit 

reports and scores 

 Tool 4: Protecting your 

identity 

 Tool 5: Keeping records to 

show you’ve paid your bills 

A credit report is generally a record of some of a consumer’s bill-paying history, public record 

information (such as a filing for bankruptcy), and prior inquiries by a creditor into the 

consumer’s credit history at the time a consumer applies for credit. Credit reports show 

information about how much credit an individual has, how much of the available credit is being 

used, whether payments are made on time, and whether a delinquent debt has been sent to a 

debt collector. 

A credit score is calculated based on the information in the report. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 196 

Why do credit reports (sometimes called 

consumer reports) and credit scores 

matter? 

Some people think consumer reports and scores don’t matter to them because they are not 

planning to take out a loan to buy a house or a car. But many people and businesses use 

consumer reports and scores to make decisions about consumers. 

 A bank or credit card company may use them to decide whether to give a loan or offer a 

credit card and what interest rate to charge. 

 A landlord may use them to determine whether to rent an apartment to someone. 

 An insurance company may use them to determine whether to provide insurance 

coverage. 

 Other service providers, like cell phone companies and utility companies, may use them 

to screen a consumer for deposit levels and cost of service. 

 A prospective employer may use them to determine whether to offer an individual a job. 

Check state law - some states do not allow or limit this use. 

A client who does not have a positive credit history or good credit scores may face obstacles and 

may end up paying more for loans, credit cards, and other services. 

Because credit reports and scores can be used for so many things, it is important for consumers 

to pay their bills on time and make sure the information in their credit report is accurate. This is 

also important so consumers can tell if they have been the victim of an identity theft – 

something that would be indicated if items on the credit report are not those of the consumer’s. 

(Of course this might just be the result of an error by the credit reporting agency.) 

What is in a credit report? 

Creditors generally are not required to report a consumer’s history of making payments, though 

entities that do report information have a legal obligation to report accurate information and are 

required to have reasonable policies and procedures regarding the accuracy and integrity of 

information they report. 
197 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Although consumers typically use the term 

“credit report,” the statutory term from the key 

federal statute specifically regulating this area, 

the Fair Credit Reporting Act, is “consumer 

report” and the companies that collect consumer 

information and sell it to users are called 

“consumer reporting agencies.” 

There are also specialty-reporting companies that 

compile and sell information about payday 

lending, check-writing history, and other 

consumer financial activity. Consumer reporting 

agencies collect information about consumers 

from many sources. They organize this 

information into reports, and they sell these reports so that users of the reports can make 

decisions about consumers. For example, an employer or a landlord may purchase a consumer 

report containing background information in order to determine if the person applying for a job 

or to rent an apartment has a history of paying his obligations or has been arrested or convicted 

of a crime. To access further information about these and other consumer reporting agencies by 

categories including those that produce specialty consumer reports, visit: 

http://files.consumerfinance.gov/f/201501_cfpb_list-consumer-reporting-agencies.pdf. 

Consumer reporting agencies that compile and report public record and credit account 

information on consumers residing nationwide are known as nationwide consumer reporting 

agencies. The three biggest nationwide consumer reporting agencies or credit bureaus are 

Equifax, Experian, and TransUnion. Each of these companies is likely to have a file on a 

consumer unless the consumer has never had a credit card, an auto loan, a student loan, or a 

home mortgage loan or been an authorized user on an account. 

A consumer’s files at each of the three major credit-reporting agencies are likely to be similar, 

but there may be differences depending on the information each company has collected. 

Sections of a credit report 

A credit report typically contains five sections. These sections include: 

Furnisher 

An information furnisher is any 

business that reports information to a 

consumer-reporting agency. Most 

often, these are creditors, including 

credit card companies and banks or 

credit unions that have extended an 

auto loan or mortgage. Collection 

agencies are other examples of 

information furnishers. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 198 

1. Header/identifying information—This includes name and current address and 

other identifying information such as a Social Security number. This information may 

not be complete. For example, all of the jobs the person has held 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. 

2. 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 the 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. 

3. Collection agency account information—This section will show if there are or were 

any accounts with a collection agency and the status of those accounts. 

4. Credit account information—In general, the credit account or “trade line” section 

may include accounts the consumer currently has or that he 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 the consumer is current or late with 

payments) and the balance, whether there is a past due bill, and the date information was 

reported to the credit bureau. Some accounts may not be listed, especially older accounts 

or those that the consumer has closed. It is important that what is listed, however, does 

or did belong to the consumer whose file it is. 

5. Inquiries made to a consumer’s file—Companies typically look at credit reports 

when individuals apply for credit. The fact that a lender has reviewed a consumer’s report 

when the consumer applied for credit is typically called an “inquiry” and becomes part of 

the credit record. 

Each consumer-reporting agency has its own unique format despite having the same categories 

of information. 
199 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

How long can information stay on a credit report? 

Some of your clients may be confused about why late payments appear on a credit report after 

the loan has been brought current, or a client may need help understanding how long an item 

can remain on a credit report. Consumers sometimes believe that once they have brought an 

account current then the fact that they were behind for a few months should no longer be 

reflected on a credit report. 

Negative information 

In general, under the Fair Credit Reporting Act negative information can be reported on a 

consumer’s 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. 

What are the relevant laws? 

Familiarity with certain laws and documents is important if you work with consumers on debt 

collection and credit reporting issues. These laws include the Fair Credit Reporting Act (FCRA), 

the implementing Regulation V, and the Fair Debt Collection Practices Act. You should also find 

out if your state has any laws in this area. For example, some states have a state debt collection 

practices act that is different from the Federal statutes. You might also be interested in reading 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 200 

the Federal Trade Commission Rules regarding disposal of information and the “red flags” of 

identity theft (http://www.ftc.gov/tips-advice/business-center/privacy-and-security), and 

reports such as the Federal Trade Commission’s July 2011 report, “40 Years of Experience with 

the Fair Credit Reporting Act.” http://www.ftc.gov/reports/40-years-experience-fair-creditreporting-act-ftc-staff-report-summary-interpretations. 

Example credit report 

Each of the three major credit reporting agencies—Equifax, Experian, and TransUnion—has its 

own presentation format. This example of a credit report highlights the key sections you will 

find in all three agencies’ credit reports.

 
201 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Example document: 

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.

File number: 12345678 

 Date issued: 9/30/2013

Personal information 

Name: 

Miguel Smith 

SSN: 

XXX-XX-1234 

Other names: 

Miguel S Smith 

Miguel Simon Smith 

Date of birth: 

12-1-1980 

Telephone number: 

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

 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 202 

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

 
203 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 

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 

Payment 

$395 $395 $395 $395 $395 $395 

Amount Paid $0 $395 $395 $395 $395 $395 

Past Due $395 $0 $0 $0 $0 $0 

Rating 30 OK OK OK OK OK 
MODULE 7: UNDERSTANDING CREDIT REP

Bank of Wisconsin (B42394), Account# 543298760192XXXX29Balance:$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 

Balance $3,683 $3,764 $3,848 $3,933 $4,020 $4,109 $4,200 $4,29Scheduled Payment 

$147 $151 $154 $157 $161 $164 $168 $17

Amount Paid 

$147 $151 $154 $157 $161 $164 $168 $17

Past Due $0 $0 $0 $0 $0 $0 $0 $Rating OK OK OK OK OK OK OK O

Continued... 

29 This example is fictional. The credit card payment schedule is based on a credit card with a 22% APR. In this example, the individ

balance of $9,869, paying the minimum payment each month calculated at 4% of the balance. He is not using the card to make addcredit card companies use a variety of methods to determine finance charges, a simple interest calculation was used for the purposAmounts were rounded to the nearest dollar. According to the credit card payment calculator on Bankrate.com, making the minimtake the consumer 15 years and 3 months to pay off this credit card debt. He will also pay $8,165 in interest assuming no late fees. 
205 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 11/2012 10/2102 9/2012 8/2012 7/2012 6/2012 5/2012 4/2012 

Balance $4,485 $4,585 $4,686 $4,790 $4,896 $5,005 $5,115 $5,22Scheduled Payment 

$179 $183 $187 $192 $196 $200 $205 $20

Amount Paid 

$179 $183 $187 $192 $196 $200 $205 $20

Past Due $0 $0 $0 $0 $0 $0 $0 $Rating OK OK OK OK OK OK OK O
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 206 

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 

90 President Lane, Big City, WI 43529 

Requested on: 

6/2013

Super Store 

100 First Street, Anytown, IA 78691 

Requested on: 

12/2012

Promotional inquiries 

The following companies received your name, address and other limited information about you 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 

31 Fashion Lane, Big City, WI 43530 

Requested on: 

7/2012

EZ Loan Store 

220 4th Avenue, Littletown, MI 09876 

Requested on: 

4/2013

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 

457 State Street, Big City, WI 43532 

Requested on: 

3/2013

Terms used on credit reports can be confusing. Here are the definitions of some key terms used 

on credit reports: 

Term Explanation 

Authorized user 

A person permitted to use a credit card account, but who is not responsible for 

the account. The payment status of the account (positive or negative) is usually 

shown on the credit report of both the authorized user and the account’s 

owner. 
207 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Payment status The history of the account including on-time payments as well as delinquencies 

and other negative items. 

Delinquent An account that has not been paid on time and is late. Generally delinquencies 

are expressed as being 30, 60, 90, or 120 days or more delinquent. 

Default 

Default means that the consumer is not meeting the requirements agreed to 

when they took out the loan. An account that has been delinquent (late) for 

several 30 day billing cycles is generally considered to be in default. 

Charge off 

A debt is charged off when it is so delinquent that the lender can no longer 

consider it as something that it is likely to be able to collect. This doesn’t mean 

that the debt itself is erased – the consumer still legally owes the debt and it 

can be collected. In many cases the right to collect the debt is taken over by a 

collection agency. 

Closed date 

The date an account is closed. An account can be closed by the business or 

the consumer. If there is still a balance when the account is closed, the 

consumer is still responsible for paying this. 

Discharge When the court releases a consumer of responsibility for a debt as part of the 

bankruptcy process. 

Chapter 7 

bankruptcy 

A legal process in which the consumer’s assets are used to pay off creditors. 

Any eligible debts not paid through the assets are discharged. This will be in 

the public records section of the credit report. 

Chapter 13 

bankruptcy 

A legal process in which a consumer enters into a payment plan to pay off 

creditors using future income. These are arranged by the courts. Once the 

payment plan is complete, remaining eligible debts are discharged. This will be 

in the public records section of the credit report. 

Dispute 

A right consumers have to challenge and request investigation of information 

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 

furnisher 

A business or individual that reports information to a credit reporting agency. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 208 

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 – such 

as information on the number and type of loans and other forms of credit you have used and are 

currently using, whether you’re making your payments on time, and whether you’re 30 days or 

more late (delinquent) on any of these accounts. The formulas are created by looking at how 

other people whose credit file looks like yours have paid their bills over time. 

Credit scores provide a standardized way for businesses that offer credit to understand the risk 

that you may have difficulty paying back a loan. The current common credit scoring formulas 

are designed to predict whether someone is likely to fall behind on loan payments for 90 days or 

more. For these scores, the higher the number, the less risky you are predicted to be. 

These scores can make it easier for businesses to make decisions about whether to offer you 

credit and how much interest they will charge. Without scores, they would have to take more 

time to read and interpret both your credit application and your credit report. 

There are multiple companies that calculate and sell credit scores. Credit scores vary because 

different score companies use the information stored by the three large credit bureaus in 

different ways. Scores produced by different companies may also vary because they don’t always 

share the same score range. Sometimes the three large credit bureaus store slightly different 

information used to calculate the score, which can also contribute to differences. 

As a result, you have more than one credit score. Each company generates its own scores, and 

they may differ from each other, sometimes significantly. And, each company that creates credit 

scores generates different scores for different kinds of users—they may sell educational scores to 

consumers, but provide different scores to lenders. This can make deciding which credit score to 

purchase, if any, confusing for consumers. 

How are scores calculated? 

FICO scores (calculated using formulas made by Fair Isaac Corporation) are the most commonly 

used scores. These scores range from 300 to 850. A FICO score above 700 is considered good by 

most businesses, and the scores considered the best are 750 and higher. 
209 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

The actual way that FICO scores (and other scores) are calculated is considered a trade secret. 

But FICO makes some information available to the public on what goes into its scores.30

FIGURE 1: WHAT GOES INTO FICO SCORES?31

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 impact on a score from a single late or 

missed payment decreases over time. Paying your bills on time can help increase your score, and 

debts that go to collections and to judgment will cause it to fall. 

Amounts owed include the amount you are paying down on 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. As your revolving balance relative to the credit limit increases, your score 

will drop. 

Length of credit history is the next factor that impacts your scores. Your score increases the 

longer you have a credit history. The more established credit accounts you have, the “thicker” 

your credit file will be. This is a credit record with strong evidence of how you use credit and 

 

30 Pie chart values are from FICO. See http://www.myfico.com. 

31 “Amounts owed” relates to the percentage of a revolving credit limit that is being used and the percentage of an 

installment loan that remains to be paid off. 

35%

30%

15%

10%

10%

Payment history

Amounts owed

Length of credit history

New credit

Types of credit used
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 210 

your payment behavior. If you have just one or only a few credit accounts, you will have a “thin 

file.” 

New credit is tracked by measuring your inquiries for credit. 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 credit, however, you can compare 

offers for a home, car, or student loan. FICO and most other models give you a short window of 

time – generally 30 days – when multiple inquiries for the same type of product will be 

considered as only one inquiry. And your score is not affected at all when companies “prescreen” you for credit or when you check your credit report yourself (such as at 

annualcreditreport.com). 

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) in good 

standing. Generally, it is considered a positive to have a mortgage, an auto loan, and not too 

many credit cards. 

Scores provided by VantageScore, another score provider, range from 300 to 850. Scores 

calculated with its earlier models ranged from 501 to 990.32 Like the FICO Scores, the actual 

method used to calculate VantageScore credit scores is secret. But VantageScore provides 

information to the public like the graphic below, which explains how your credit history, credit 

usage, and other actions can influence the scores it calculates. 

 

32 See http://your.vantagescore.com/score-influences. 
211 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

FIGURE 2: WHAT GOES INTO VANTAGESCORES?33

 

 

33 “Recent behavior” refers to recent credit behavior and inquiries. “Age of credit” refers to the length of time accounts 

have been open. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 212 

Credit utilization rate 

If you want to maintain your credit score, many experts advise keeping your use of 

revolving credit low in relation to your credit limit. 

That’s because credit scoring formulas 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 a 

certain percentage of the revolving credit you have available to you. 

For example, you may have a high percentage of your credit limit charged on a card, and 

you want to qualify for better rates on new credit. In this case, you may want to lower the 

amount you are revolving from month to month by paying down your credit card before 

you apply for new credit. 

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 has 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% 

If she sets a goal of lowering her revolving utilization of this card to 25% or less, her 

revolving balance should be no more than: 

$5,000 (the credit limit) multiplied by .25 (25%) = $1,250 

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 your total charges are higher than the 

limit the credit scoring model is based on, you run the risk of lowering your credit score. 
213 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 may help you: 

 Get and keep a job (though this depends on state law) 

 Get and keep a security clearance for a job, including a military position 

 Get an apartment 

 Get insurance coverage 

 Get lower deposits on utilities and better terms on cell phone purchase plans 

 Get a credit card 

 Get a 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 and territories allow for an additional free report each year: Colorado, Georgia, 

Maine, Maryland, Massachusetts, New Jersey, Vermont and Puerto Rico. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 214 

 TOOL 1: GETTING YOUR CREDIT REPORTS AND SCORES 

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 

Track when you have printed or received your credit reports. 

Source of credit 

report 

Equifax 

PO Box 740241 

Atlanta, GA 30374 

(877) 784-2528 

www.equifax.com 

Experian 

(866) 200-6020 

www.experian.com 

TransUnion LLC

PO Box 1000 

Chester, PA 19022 

(800) 916-8800 

www.transunion.com 

Date report printed or 

received 

Beware of imposter websites offering free credit reports. Some companies offer free credit 

reports, but you may have to buy another product or service to get it. 
215 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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: 

1. You are an authorized user or joint owner on an account 

2. You are an emancipated minor 

3. Your state law allows you to enter contracts at 17, and you have done so 

4. You have student loans 

5. 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 childidtheft@transunion.com 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. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 216 

 TOOL 1: GETTING YOUR CREDIT REPORTS AND SCORES 

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 your 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. 

Tracking when you ordered scores 

To order your FICO score 

visit 

http://www.myfico.com 

Each credit score will cost. 

This company also offers 

other credit reporting and 

monitoring services for a 

fee. 

Equifax score: Date: 

Experian score: Date: 

TransUnion score: Date: 

You have the right to get a free credit scores if: 

1. 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. 
217 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

2. Your application for credit is turned down and the lender used your credit score. You 

will get a notice (disclosure) from the provider explaining this with your credit score. 

3. You get less favorable terms from a lender than the terms available to most people 

who get credit from that lender, and the lender used your credit score. You will get a 

notice (disclosure) from the provider explaining this with your credit score. 

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. The CFPB recommends that you do not 

include names or account numbers and that users follow their organization’s policies regarding retention, storage, and disposal

of documents that contain personal information. 

219 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. 

Credit report review checklist 

Today’s date: __________ Name of credit reporting agency ____________ 

Check for 

“yes” 

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 the employment history they have listed for you 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. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 220 

TOOL 2: CREDIT REPORT REVIEW CHECKLIST 

 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 circumstances where 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, 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. 
221 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 

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 

By phone: Phone number provided on credit report or (888) 397-3742 

TransUnion 

Online: http://www.transunion.com/personal-credit/credit-disputes-alerts-freezes.page 

By mail: Download and complete the dispute form: 

http://www.transunion.com/docs/rev/personal/InvestigationRequest.pdf 

Mail the dispute form with your letter to: 

TransUnion Consumer Solutions 

P.O. Box 2000, 

Chester, PA 19022-2000 

By phone: (800) 916-8800 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 222 

TOOL 2: CREDIT REPORT REVIEW CHECKLIST 

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 also choose to start the process by contacting the 

creditor or the debt collector 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. 

You can also submit a complaint to the Consumer Financial Protection Bureau at 

https://www.consumerfinance.gov/complaint or by calling 877-411-2372. 

Steps to filing a dispute checklist 

Check for 

“yes” 

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. 
223 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 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. 

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. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 224 

TOOL 2: CREDIT REPORT REVIEW CHECKLIST 

Example letter

Be sure to keep copies of everything you send to the credit reporting agencies, 

including the dates you sent the items. 

[Your name] 

[Your return address] 

[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] 

[Phone number] 

Enclosures: [List what you are enclosing.] 
225 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

227 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 and bills 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. 

You may want to talk with a specialized credit or housing counselor to build your plan to 

improve your credit report and scores. See the Resources list at the end of this tool for links to 

get you started in finding an accredited counselor. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 228 

 TOOL 3: IMPROVING CREDIT REPORTS AND SCORES 

Check if 

you plan 

to 

implement 

Strategy for improving credit reports and scores Other 

information or 

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 2: Credit report review checklist) 

 Disputing errors found on the reports 

(Use Tool 2: Credit report review checklist) 

 Understanding credit scores 

(Use Module 7) 

 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%34 of the credit available.) 

 

34 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/rebuildyour-credit.
229 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 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. 

If you close some credit card accounts and put most or all of 

your credit card balances onto one card, it may hurt your credit 

score if this means that you are using a high percentage of your 

credit limit on that account.

 Developing a plan to take care of outstanding judgments or 

liens. You may be able to negotiate with a collector (See 

Module 6). 

 Diversifying credit sources 

 If you have medical debt, you may be eligible for assistance with 

your bills or may be able to get on a payment plan. 

Paying down old debt or debt in collections. This will improve 

your credit history – your report – but may not impact your credit 

score. Before you make a payment on debt that you have not 

paid for a long time, such as three or more years, you may wish 

to consult with a credit specialist or attorney regarding the 

statute of limitations on the debt. If the statute of limitations 

period has passed, making a payment may re-start the clock on 

creditors’ ability to file a lawsuit to collect the debt, depending on 

the debt and state law. 

 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. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 230 

 TOOL 3: IMPROVING CREDIT REPORTS AND SCORES 

 Other: 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

Resources 

If you would like help managing your debt or rebuilding credit, visit the National 

Foundation for Credit Counseling: 

http://www.nfcc.org

Certified housing counselors can provide advice on buying a home, renting, defaults, 

foreclosures, and credit issues: 

www.consumerfinance.gov/find-a-housing-counselor

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 

or 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
231 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. 

233 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 4: 

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. They can 

then buy things on accounts that you own or are under your name. This leaves you with 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 checklist 

Check 

for 

“yes” 

Steps to protect your identity 

Check your credit report 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 234 

TOOL 4: PROTECTING YOUR IDENTITY 

Check 

for 

“yes” 

Steps to protect your identity 

Remove your name from all three credit bureaus’ (Equifax, Experian, and TransUnion) 

mailing lists by calling to opt-out at 1-888-567-8688 or online at 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 7: Understanding 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. This gives thieves fewer 

opportunities to steal your information. 

Remove yourself from most telemarketers’ lists by registering your phone number with the 

Do Not Call Registry at 1-888-382-1222 or at http://www.donotcall.gov. Numbers 

registered with the National Do Not Call Registry after February 2008 remain on it 

permanently.35 

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. 

Only give out your Social Security number when it is 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!). 

 

35 See http://www.consumer.ftc.gov/articles/0272-how-keep-your-personal-information-secure#offline. 
235 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Check 

for 

“yes” 

Steps to protect your identity 

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 with whom you are dealing. 

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. This means 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. 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 236 

TOOL 4: PROTECTING YOUR IDENTITY 

 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: 

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: 1 800 525 6285 

 Experian: 1 888 397 3742 

 TransUnion: 1 800 680 7289 

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 from 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. 
237 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. 

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 http://www.ftc.gov/complaint or 1-877-438-4338; TTY: 1-866-653-4261. 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. 

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 the CFPB has prepared. 

239 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 5: 

Keeping records to show 

you’ve paid your bills 

When repairing or building credit – or managing finances more generally – it is important to 

create a paper trail. What does this mean? It means you must keep records. You keep records so 

you can prove you have: 

 Paid a bill on time that a creditor has reported late. 

 Paid a debt that a creditor has reported unpaid. 

 Sent a letter to a debt collector who has claimed he did not receive it. 

 Insurance coverage. 

 A warranty for a cell phone. 

 Paid your rent in cash (receipt). 

This can be difficult. Here are a few steps to getting your record keeping system in place. 

 Get a calendar or use the Bill Calendar. Write onto the calendar when regular 

payments are due. Ask legal aid staff for help on getting started with this using tools from 

Module 4. 

 Hang this calendar in a place you will see it daily or in your money 

management spot. 

 Find a money management spot in your home. It can be a desk, a file cabinet, a 

drawer, or a crate. 

 Get folders. You may want to use colored labels or colored folders. Give each category a 

color. 

 Income in green folder 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 240 

 TOOL 5: KEEPING RECORDS TO SHOW YOU’VE PAID YOUR BILLS 

 Saving and Asset Investments in yellow folder 

 Expenses in blue folder 

 Debt in purple 

 Credit reports in manila folder 

Put insurance policies, deed to home, title to car, birth certificates, warranties for big 

items like washer and dryer, and other permanent documents in another folder. Consider 

storing this folder in a portable fireproof box—portable so you can take it if you need to 

evacuate your home and fireproof so it is protected in case of a fire. Alternatively, you can 

store these in a safe deposit box at a bank or credit union. 

 Put information in the right folder during the month. 

 Receipts from grocery store—put it in the blue folder 

 Slip from deposit into savings—put it into the yellow folder 

 Checking account statement—put into the yellow folder 

 Paycheck stub—put it in the green folder 

 Credit card bill—put in green folder 

 Dispute letter to credit reporting agency and return receipt—put in manila folder 

 Once a week, sit down to pay bills. Always check them for accuracy first. Check your 

account balances. Total up spending so far in each category if you have a budget. 

 Then take all of the records for the month and store them together. Either: 

 Keep them in the folders, put a big rubber band around them and put a label with the 

month on it OR 

 Take the information out of each folder and put it in a big envelope and write the 

month on it. 

By doing this, you keep all of the information for each month together. 

For bills paid online or via mobile or taxes filed using electronic filing (efiling), print out confirmation pages and store that as described above. 
241 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Keeping records checklist 

Check if 

“yes” 

Important Record 

Tax returns and supporting documentation including e-fling confirmations 

Paycheck stubs 

Bank records 

Debts—loan agreements, statements of payment 

Insurance documents 

Monthly credit card statements – paper or electronic 

Receipts—for anything that you need to include on your taxes, for any big 

purchases, for anything you may want to return. 

Technology and appliance instructions and warranties 

Medical bills and anything related to prescriptions 

Wills, power of attorney, or any other important legal document 

Birth certificates, marriage license, death certificates 

Retirement documents 

Documentation of money owed to you 
 MODULE 7: UNDERSTANDING CREDIT REPORTS AND SCORES 242 

 TOOL 5: KEEPING RECORDS TO SHOW YOU’VE PAID YOUR BILLS 

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 

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 

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 the 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. The 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.
243 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 8: 

Saving for emergencies, 

goals, and bills 

Does the client have money set aside for emergencies or unexpected 

expenses?

If you have 10 minutes with a 

client... 

If you have 30 minutes with a 

client... 

If you have multiple sessions 

with a client... 

 Tool 1: Savings plan  Tool 2: Benefits and asset 

limits 

 Tool 3: Finding a safe 

place for savings 

What is savings? 

Savings is money set aside from income today for use in the future. Saving money helps clients 

mitigate the impact of unexpected expenses and emergencies in the future. Without savings, an 

unexpected expense can create financial problems, including the creation of new expenses (fees 

from late payments or interest on money borrowed) and lead to nonpayment of other bills such 

as utilities or rent. 

When people save for unexpected expenses and emergencies in advance, they can handle them 

when they happen without having to skip paying other bills or borrow money. Saving will help 

them avoid the additional costs of being late on bills or borrowing to cover those extra costs that 

can make it harder to reach their goals. 

Talking to clients about savings is hard when they struggle to even pay the bills. But even small 

amounts of money set aside can help clients. Seven dollars put into a savings account each week 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 244 

for a year will mean around $350 in emergency savings—the median amount borrowed from 

payday lenders.36

Saving money now for unexpected expenses and emergencies can save money 

later. 

How to save—opportunities 

Anyone who has tried to save knows that setting money aside isn’t easy. First, a client must 

make the decision to save. Then she must find the money to save. There are basically only two 

ways to find money to save: 

 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. 

But the big challenge is turning that “money saved” into savings. Money saved 

by not spending can be put away into a savings jar or envelope at home and then into a 

savings account at a bank or credit union or onto a prepaid debit card. If there isn’t a 

place to set it aside, it can be easy to spend it instead of save it. 

 Increase income. Clients may be able to find a part-time job or file tax returns to claim 

any tax credits they qualify for. For example, the 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. See Module 3, Tool 4: Increasing your income through tax 

credits. 

Introduce clients to Tool 1: Savings plan to figure out why they need to save, how much they 

need to save, and how they can start to find the money to save. 

 

36 Consumer 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_paydayfactsheet.pdf. The median amount borrowed by consumers in the sample was $350. The mean loan size was $392, 

signaling that there are more consumers with loan sizes substantially above the median than substantially below. 

Most loans in the sample cluster were around $250, $300, and $500.
245 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Making savings automatic 

If the client receives a regular paycheck, one way to build savings is through direct deposit into a 

bank account or onto a payroll card. 

1. Using direct deposit saves both time and money. With direct deposit your client 

doesn’t have to get his check cashed to use it. And the funds are generally available as 

soon as they are deposited. That means the client gets paid on time, even if he isn’t 

working on payday, and he gets paid at the start of the payday, not the end of the day. 

2. With a bank account, the person can have some of the deposited money 

moved automatically to a savings account. If the weekly paycheck of $245 is 

directly deposited into a checking account every week, the account owner can have $10 

automatically transferred into a savings account. Once this system is set up, the account 

holder may forget about that $10. And by the end of the year, he will have over $500 in 

that account. 

If the client’s employer allows him to split his direct deposit, he could consider putting some of 

his paycheck into savings and the rest into his checking account for bills and other expenses. He 

should ask the bank about any fees associated with the checking and savings accounts. 

Some payroll cards have a savings or “purse” feature. This feature lets the person set aside some 

of his paycheck on the card for savings. The client should ask his employer about the specific 

features of the payroll card. He also should ask about the card’s fees. 

Savings and public benefits—asset limits

If the client is receiving public benefits, he or she may want to know about asset limits. Asset 

limits are rules about how much a person can have in assets before his or her benefits are 

reduced or eliminated. Different benefits have different limits. 

Assets are things that have value. Money in a savings or checking account is an asset. A car, 

home, business inventory, and land are examples of assets, too. 

Assets help build financial security, but if the consumer receives public benefits, the 

assets may affect the amount of benefits he or she can receive. Generally, the assets 

that may be counted when applying for benefits are “liquid”. This includes money in checking 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 246 

accounts, savings accounts, and investment accounts. If the consumer owns a home or a car, 

these assets will generally not count against qualifying for benefits. 

Use Tool 2: Benefits and asset limits to understand the asset limits of the benefits consumers 

receive. 

A safe place to save 

Depending on the financial situation the client faces, setting aside money can be a very 

challenging task. But it is also an opportunity to discuss the relevance of savings, especially for 

emergencies, and options for safe places to save. It’s important to understand the risks and the 

benefits of each of the places where money can be put away until it is needed. A key 

consideration is the potential cost of each financial product. 

Tool 3: Finding a safe place for savings can help consumers identify the best option for where 

to save, but here are some things to keep in mind. 

Federal insurance for financial institutions 

Banks and credit unions are insured depository institutions. They offer protection against loss in 

the event something happens to the institution. 

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. FDIC and NCUA do NOT insure 

money that people use to buy stocks, mutual funds, 

life insurance policies, annuities, or other securities, 

even if they are purchased from a bank or credit 

union. 

How can a client determine if deposits in a bank or credit union are insured? Instruct clients to 

look for these FDIC or NCUA logos. These will be on the door, displayed on the bank or credit 
247 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

union’s websites, or on all materials from the bank or credit union. With prepaid cards, the 

clients should look on the website to see if the card has FDIC insurance. 

Banking history reports 

A person’s banking history report may have a negative impact on the type of account he may be 

able to open. 

When a consumer completes an application to open a bank account, the bank or credit union 

contacts companies like ChexSystems, TeleCheck, Early Warning, and others like them to find 

out if the consumer has had prior difficulties using a checking account, including writing bad 

checks or engaging in 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, such as routing transit number and/or account number 

 The date information was reported about an account 

 The reason for the report 

 Information on returned checks from retailers and other businesses that is reported to a 

reporting agency such as SCAN (Shared Check Authorization Network) 

If a consumer is denied an account based in whole or in part on a report from any of these 

specialty consumer reporting agencies, he has the right to a free disclosure of certain 

information in his file from the agency. The notice he receives from the bank or credit union will 

give the name, address, and phone number of the consumer reporting agency and how he can 

contact it to obtain his free disclosure. 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 248 

Finding and fixing mistakes in your banking history report 

If you find mistakes in your banking history report, you can dispute them by sending a 

letter (you may choose to use regular or certified mail) describing the mistake and 

including copies of any evidence. 

You can order your own free ChexSystems report online at 

http://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. 

Savings plan 

Most people in the U.S. don’t have enough savings to cover a $1,000 emergency.37 Whether they 

are low-income or high-income, most people can expect around $2,000 worth of unexpected or 

emergency expenses in a year.38 These include medical bills that aren’t covered by insurance, 

 

37 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. 

38 Consumer Federation of America. See http://www.consumerfed.org. 
249 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

auto repairs, home and appliance repairs, and bills that still need to be paid even if a consumer 

loses his job. They could also include legal judgments that a consumer is ordered to pay.

What is a savings plan?

A savings plan is a plan that includes: 

 The person’s reasons for saving. This could include goals, setting up an emergency 

fund, money to pay for automobile insurance in three months, or to ensure there is 

enough money set aside for back to school expenses. 

 The amount the person needs to save. This is the total amount of money the 

person needs to save. Does this have to be saved all at once? No. The savings plan will 

help consumers come up with an amount of money they can save each and every week or 

month to reach all of their savings goals.39 

 How to find that money to save. This refers to the specific strategies the consumer 

will use to find that money she needs to save. Many 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 example 

of a strategy is using automatic-savings-direct deposit or transfer of a set 

amount into a savings or other account if there is a regular paycheck. 

 Where to put that savings. Savings should be in a safe and secure place to make sure 

the money saved is available when needed. An important part of a client’s savings plan is 

identifying specifically where the money saved will be put. 

What are the benefits of a savings plan? 

 It builds a client’s own personal safety net. 

 Clients can have peace of mind knowing they have a little set aside for the unexpected 

expenses or emergencies. 

 As they watch small amounts add up, clients will move closer to reaching their goals and 

almost always pay less than when they use credit and rent-to-own. 

 

39 While the target amount for an emergency fund will vary from client to client based on their needs, $500 to $1,000 

has been suggested as a starting point. See http://www.AmericaSaves.org. 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 250 

 And, the client can save money by avoiding late fees, interest charges, and other costs 

related to not covering expenses or borrowing money. And when she avoids borrowing, 

she doesn’t have to commit future income to paying off 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. 
251 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

COST TO REPLACE SPARK PLUGS ON YOUR AUTOMOBILE = $350. 

Emergency 

savings Credit card Payday loan 

Amount $350 $350 $350 

APR40 21.99% annual percentage 

rate (APR) 

$15 for every $100 borrowed for 14 

days. This means a 391% annual 

percentage rate (APR).41

Payment 

Must pay at least a certain 

amount each month.42 (For 

the purposes of the example, 

the individual is choosing a 

fixed monthly payment of 

$50.) 

Must pay back loan amount ($350) 

plus fee ($52.50) within 14 days. If 

entire loan cannot be paid within 14 

days, it can be rolled over (or 

extended) for another 14 days for an 

additional fee of ($52.50).43 

Total 

additional 

cost and time 

to repay 

$0 

You would pay $28.11 in 

interest in addition to the 

principal borrowed. It will take 

just over eight months44 to 

pay back the full amount. 

The total cost depends on how long it 

takes you to save up to pay back the 

entire loan. If you renew or roll over 

this loan seven times, you would be 

in debt for 14 additional weeks and 

could pay up to $367.50 in fees.45 

 

40 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-paydayloan.html. 

41 Some states have laws that limit the amount of loan and/or limit the interest rates of these loans. 

42 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. 

43 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-dapwhitepaper.pdf. 

44 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. 

45 Two–thirds of repeat payday borrowers take more than seven loans in one year. Consumer Financial Protection 

Bureau, Payday Loans and Deposit Advance Products. 

253 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Saving for education 

Individuals with children may want to work toward making a better life for their children. 

Saving for children’s postsecondary education or training may be one of their financial goals, 

because they see it as a path to “a better life.” 

Postsecondary education, which means training or education after finishing 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 3: MEDIAN WEEKLY EARNINGS, 2012 

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 increasing costs of training and education 

after high school. Money saved for postsecondary education 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. 

 $-

 $500

 $1,000

 $1,500

 $2,000
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 254 

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 www.collegesavings.org. 

Savings accounts for children 

People 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
255 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 1: 

Savings plan 

This tool can help you make a plan to save money for: 

 Your goals 

 Expenses 

 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 that follows. To complete this worksheet, 

you will need to know: 

1. Your savings goals. If you haven’t set these, consider using the information and tools 

in Module 2: Setting goals and planning for purchases. 

2. 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. 

3. Where you will put the money you save. 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 256 

TOOL 1: SAVINGS PLAN 

Is an emergency fund or rainy day fund right for you? 

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? 

For example, automobile insurance, renter’s insurance, back to school 

expenses, birthdays, holidays (gifts, special food, etc.) 

Yes No 

Unexpected Expenses and Emergencies: Do you have money set aside 

for unexpected expenses or emergencies? 

For example, a flat tire or other car trouble, medical expenses, need a new 

appliance, job loss 

Yes No 

If you answered no to any of these questions, developing a savings plan may be a 

great next step for you. 
257 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

For questions above to which you answered “no,” how do you pay for goals, 

expenses that come one to four times each 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 so I can 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. 

____ I ask people who owe me money to pay it back. 

 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 258 

TOOL 1: SAVINGS PLAN 

Savings plan46

Name _________________________________________ Date ______ 

Savings 

goal 

Total 

amount 

needed 

Months 

to reach 

goal 

Monthly 

amount 

to save 

Strategies for saving 

Amount 

saved 

per 

month 

Safe and 

secure 

place for 

savings 

Example: To 

save $1,000 

in an 

emergency 

fund within 

10 months.

$1,000 10 $100 

Cut back to basic cable $40 Savings 

account 

at a bank 

or credit 

union. 

Will 

generally 

require a 

minimum 

deposit. 

Cut out one fast food meal 

per week for family $60

Total saved per month $100 

 

 

 

 

 

 

 

 

Once you have your savings plan, be sure to add it into your cash flow budget. For 

more information on cash flow budgets, see Module 5: Getting through the month. 

For more information on setting up an account to save in, see Module 8: Saving 

for emergencies, goals, and bills.

 

46 This table refers to a monthly savings plan. Irregular savings deposits from places such as Federal and State EITC 

returns can also be entered as a one-time deposit. An example could include depositing $200 of a $2,000 EITC 

return. 
259 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information.

261 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 2: 

Benefits and asset limits 

If you are receiving public benefits, you may 

want to complete this tool to know how your 

savings might affect your benefits. 

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.” They include money in checking 

accounts, savings accounts, and investment accounts. If you own your own home or a car, these 

assets will generally not count against qualifying for benefits. In some states, however, if a car 

exceeds a set value, the amount over that value may be counted. 

If you have saved money from the Earned Income Tax Credit, this savings is generally not 

counted against your limit for up to 12 months. 

Do you receive public benefits? 

For example, food stamps (SNAP), cash assistance (TANF), Supplemental 

Security Income (SSI), Medicaid, etc. 

Yes No 

If you answered “yes” to the question above, you may want to review the following tool. 

It 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 state. Please note that 

rules regarding benefits change regularly, so check this annually to ensure 

accuracy. 

Asset limits and savings 

Even if you receive public benefits, you 

can generally have some savings. 

Savings are important for building 

your financial stability. 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 262 

TOOL 2: BENEFITS AND ASSET LIMITS 

Benefits and asset limits list 

Benefit47,48

Do 

you 

have 

this? 

Asset limits Contact and other information 

SNAP49

Supplemental 

Nutrition 

Program, also 

called Food 

Stamps 

While the states have discretion, 

the Federal Asset Limits for 

SNAP benefits are up to $2,000 

in countable resources (bank 

account) or $3,250 if one 

household member is over 60 or 

disabled. 

States using broad-based 

categorical eligibility have no 

asset limits.50 51 This means that 

if an individual qualifies for 

TANF, SSI, or General 

Assistance, he or she 

automatically qualifies for SNAP. 

To get information about SNAP 

benefits in your state, call your 

state hotline number. You can find 

the hotline number by visiting: 

http://www.fns.usda.gov/snap/stateinformationhotline-numbers

 

47 This information is current as of November 2014 and pertains to 2014. 

48 United States Department of Agriculture Food and Nutrition Service. See 

http://www.fns.usda.gov/snap/eligibility. 

49 In general, only your liquid assets – like cash or money in savings or checking accounts – are counted. This means 

that you may still be 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. 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. 

50 States have 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. 

51 United States Department of Agriculture Food and Nutrition Service. See 

http://origin.www.fns.usda.gov/snap/rules/Memo/BBCE.pdf. 
263 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Benefit47,48

Do 

you 

have 

this? 

Asset limits Contact and other information 

TANF - 

Temporary 

Assistance 

for Needy 

Families 

$1,000 to $3,000 in most states. 

Nevada’s limit is $6,000.52 

Colorado, Illinois, Ohio, 

Louisiana, Alabama, and 

Virginia have eliminated asset 

tests for TANF eligibility. 

To find out more about your state 

or tribal TANF program, visit: 

http://www.acf.hhs.gov/programs/of

a/help

SSI - 

Supplemental 

Security 

Income 

$2,000 if single 

$3,000 if married 

To find out more about SSI or to 

apply for benefits, visit 

http://www.socialsecurity.gov/agenc

y/contact/ to get the contact 

information for your local Social 

Security Administration Office 

SSDI 

Social 

Security 

Disability 

Insurance 

No asset limits 

To find out more about SSI or to 

apply for benefits, visit 

http://www.socialsecurity.gov/agenc

y/contact to get the contact 

information for your local Social 

Security Administration Office 

Public 

Housing 

Generally, only the income from 

assets is counted. 

To find out more about public 

housing options and eligibility, 

contact your local housing office: 

http://portal.hud.gov/hudportal/HUD

?src=/states

Rental 

Assistance 

In addition to income 

requirements, these programs 

may have asset limits. 

To find out more, contact the 

agency that provides this benefit. 

 

52 Nevada increased its limit to $6,000 in 2014. https://dwss.nv.gov/TANFFacts.html#DWSSresources 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 264 

TOOL 2: BENEFITS AND ASSET LIMITS 

Benefit47,48

Do 

you 

have 

this? 

Asset limits Contact and other information 

Low Income 

Energy 

Assistance 

Program 

(LIHEAP) 

Grantees—state and tribal 

governments—can use 

categorical eligibility for LIHEAP. 

This means if someone in the 

household receives TANF, SSI, 

or SNAP, they are eligible for 

LIHEAP benefits. 

While most states do not have 

asset limits, where they exist 

they range from $2,000 to 

$5,000. 

To find out about your state or tribal 

LIHEAP, visit: 

http://www.liheap.ncat.org/snapshot

s.htm

Other Energy 

Assistance 

Programs 

In addition to income 

requirements, these programs 

may have asset limits. 

To find out more, contact the 

agency or organization that 

provides this benefit. 

Family 

Medicaid53

No asset limit test due to 

Affordable Care Act Regulations 

that took effect in 2014. 

To find out more about your state’s 

Medicaid program, visit: 

http://www.medicaid.gov/medicaidchip-program-information/bystate/by-state.html

State Child 

Health 

Insurance 

Program 

(SCHIP or 

CHIP) 

No asset limit test in most 

states; contact state 

administrator for details. 

To find out more about your state’s 

CHIP program, visit: 

http://www.medicaid.gov/medicaidchip-program-information/bystate/by-state.html

Other: 

 

53 See https://www.federalregister.gov/articles/2012/03/23/2012-6560/medicaid-program-eligiblity-changesunder-the-affordable-care-act-of-2010#h-28. 
265 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 

267 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 might have given up premium cable or satellite dish service for basic. Or 

you have found a way to earn more income. You have taken on another 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. Even though it 

has some drawbacks, a secret place in their home may feel like a safe place for some people. 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 

your 

money 

Benefits Risks Other important 

information 

A secret 

place in 

your home 

No costs to maintain it 

Easy to access 

Convenient 

Can be lost, stolen or 

destroyed in a fire or natural 

disaster 

Might put you at risk of a 

home invasion crime 

With a 

family 

member or 

friend 

No costs to maintain it 

Can be lost, stolen or 

destroyed in a fire or natural 

disaster 

Might put your friend or 

family member at risk of a 

home invasion crime 
 MODULE 8: SAVING FOR EMERGENCIES, GOALS, AND BILLS 268 

TOOL 3: FINDING A SAFE PLACE FOR SAVINGS 

Safe place 

to keep 

your 

money 

Benefits Risks Other important 

information 

On a 

prepaid 

debit card 

(stored 

value card) 

Easy to access 

Convenient 

No bank or credit union 

account needed 

May have fees for activation, 

loading funds, using the 

card, etc. 

May not be insured for you or 

have the same protections 

from loss or theft as a 

savings account if the card or 

PIN are lost or stolen. 

Check the card 

agreement to ensure 

that you understand 

the fees and whether 

you have protection 

from loss or theft. 

In a 

federally 

insured 

savings or 

checking 

account 

If the institution is 

federally insured, up to 

$250,000 per depositor 

is protected. 

Unlike cash, the money 

cannot be lost, stolen, or 

destroyed in a fire or 

other disaster. 

You can generally get it 

back if someone steals it 

by using your ATM or 

debit card. 

May be charged fees if you 

do not follow the rules for the 

account. Rules may include 

keeping a minimum balance 

to avoid a monthly fee. 

You may not be able 

to open an account for 

a period of time if you 

have had an account 

closed because of 

unpaid account fees 

and debts in the last 

five years. 

Be sure you 

understand any 

monthly fees and other 

fees. 

U.S. 

Savings 

Bonds 

The money cannot be 

lost or destroyed in a fire 

or other disaster. If you 

have a paper bond, the 

funds can be recovered. 

The rate is guaranteed 

for the length of the 

bond. 

You lose some of the interest 

if you cash the bond before it 

matures. 

Other 

Based on this information, the best place for me to keep my savings is: ________. 
269 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. 

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

271 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

MODULE 9: 

Money services, cards, 

accounts, and loans: Finding 

what works for you 

Has the client considered using different financial products or services to help 

manage income and expenses?

If you have 10 minutes with a 

client... 

If you have 30 minutes with a 

client... 

If you have multiple sessions 

with a client... 

 Tool 1: Know your options: 

Understanding what you 

need 

 Tool 2: Ask questions: 

Choosing where to get 

what you need 

 Tool 3: Money services 

and banking basics 

 Tool 4: Opening an 

account checklist 

 Tool 5: Remittances 

 Tool 6: Managing a bank 

or credit union account 

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 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 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 272 

 Check cashers and payday lenders – check cashing, money transfers, bill payment, 

money orders, prepaid cards, and short-term loans 

 Online or mobile providers —money transfers, bill payment services, loans, financial 

management tools, online “wallets” or “accounts,” and prepaid cards 

 Mortgage companies—loans for homes 

 Commercial tax preparers—refund anticipation loans 

 Consumer finance companies—loans 

 U.S. Postal Service—money orders and money transfers 

 International money transfers—storefront, online, and mobile vendors 

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 or credit union account. 

Choosing financial products 

Selecting a financial service provider can be hard because there are so many choices in today’s 

marketplace. Helping a client select the right financial service provider starts with figuring out 

the reason he needs one. Does he need a safe and secure place to put the money he is saving 

toward a financial goal? Is he looking for a convenient way to pay his bills? Does he need a loan 

to purchase a car? 

Use Tool 1: Know your options: Understanding what you need to help figure out the primary 

reason the client needs financial products or services. 

Then use Tool 2: Ask questions: Choosing where to get what you need to help your client ask 

the right questions before using a financial service provider. Tool 3: Money services and 

banking basics offers more information about the financial services that are available. 

If a bank or credit union account is the client’s choice, use Tool 4: Opening an account checklist

and Tool 6: Managing a bank or credit union account to help him get started. 
273 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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 transfers and authorized 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. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 274 

 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. 
275 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 1: 

Know your options: 

Understanding what you need 

Deciding where to get financial products 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. 

Checklist of common reasons to find a financial service provider 

Pick the top three reasons for you. 

Ranking What I want to do or accomplish? 

 I want a safe and secure place to keep my money. 

 I want to be able to make purchases without having to carry cash or go into debt. 

 I want a low cost and easy way to pay and manage my bills. 

 I want to bank and pay bills 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. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 276 

 TOOL 1: KNOW YOUR OPTIONS: UNDERSTANDING WHAT YOU NEED 

Find the three reasons for finding a financial service product and provider you identified above. 

Circle them and read about the providers and products that may be the best fit for your 

priorities. 

Reason for a financial 

service provider Financial service provider Products that can meet your need 

I want a safe and secure 

place to keep my money. 

Bank or credit union Savings account, checking account, 

or certificate of deposit 

Retailer, check cashing 

store or online 

Prepaid debit card (May currently 

lack the same consumer protections 

as a debit card linked to a checking 

account) 

TIP: Don’t carry around large amounts of cash or leave cash in your home. It’s not safe and could be 

stolen or lost. Banks and credit unions are safe places to keep your money. To avoid fees, be sure to 

ask if you have to keep a minimum amount in the account and always know how much money you 

have in it. 

I want to be able to make 

purchases without having to 

carry cash or go into debt. 

Bank or credit union Debit card (attached to a savings or 

checking account) 

Retailer, check cashing 

store, or online Prepaid debit card 

TIP: Read the information you receive about the fees related to using your product. If you are being 

charged fees that you don’t understand, ask questions. If no one can explain the fees to you, it could 

be a red flag! 

I want a low cost and easy 

way to pay and manage my 

bills. 

Bank or credit union 

Checking account 

Bill payment services 

Money orders 

Retailer, check cashing 

store, or online 

Money orders 

Bill payment services 

Prepaid debit cards (some can be 

used for bill payment) 

U.S. Postal Service Money orders 
277 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

TIP: Make sure to check how you can pay for most of your bills. Some utilities and other companies 

accept only certain bill payment options. 

I want to bank and pay bills 

online. 

Bank or credit union Checking account and online banking 

Internet-based bill paying 

service Online bill paying 

Retailer, check cashing 

store, or online 

Prepaid debit card with online bill 

payment 

I want to have my paycheck 

directly deposited. 

Bank or credit union Savings account or checking account 

Employer Payroll card (prepaid debit card) 

Retailer, check cashing 

store, or online Prepaid debit card 

I want to accumulate 

savings. Bank or credit union Savings account or certificate of deposit 

TIP: You can open an account for yourself or a joint account with your spouse or another person. If 

you open a joint account with someone, that person will usually have the same rights to the money in 

the account that you do, so only open a joint account with someone you trust with your money. To 

avoid fees, be sure to ask if you have to keep a minimum amount in the account. 

I want to buy a car. 

Bank or credit union Car loan 

Automobile dealer Dealer financing 

I want to buy a home. 

Bank or credit union 

Mortgage company 

Mortgage 

I want to be able to get 

small loans quickly and 

without a hassle. 

Credit card company Credit card 

Pawn shop Pawn loan 

Some credit unions and 

Banks 

Finance company 

Deposit advance loans (requires a 

bank account) 

Signature loan 

Payday loan provider Payday loan (requires a bank account) 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 278 

 TOOL 1: KNOW YOUR OPTIONS: UNDERSTANDING WHAT YOU NEED 

TIP: Use the annual percentage rate (APR) to compare how much loans cost. You can compare the 

cost of loan products with different fee structures on an “apples-to-apples” basis. It also takes into 

account the amount of time you have to repay the loan. Consider the long term impact a loan may 

have on your net worth and feeling of financial well-being. Check the Total of Payments because that 

amount (or a similar amount, if you refinance) will reduce the total amount that you will have available 

for other expenses in your life, such as providing for your retirement. 

I want to build my credit 

history. 

Bank or credit union Credit builder loan 

Bank or credit union Loan for an asset (car, home, etc.) 

Other lenders 

Credit builder loan 

Credit card 

Credit card company 

Secured credit card 

Credit card 

TIP: Check your credit reports regularly and make sure the information in your credit reports are 

correct. Visit AnnualCreditReport.com to get a free copy of your credit report from the nationwide 

credit reporting companies. You can receive a free credit report once every 12 months. Call 1-877-

322-8228 or visit www.annualcreditreport.com. 

I want to send money to 

someone. 

Retailer, some check 

cashing stores, U.S. 

Postal Service, online 

companies 

Money Transfers 

Bank or credit union Wire Transfers or other money 

transfers 

TIP: New protections apply when you send money abroad. Before you pay, you will learn more about 

the exchange rate, the fees and taxes you’ll pay, and the amount that will be received. You will also 

receive information about when the money will be available at its destination, your right to cancel the 

transfer, how to get help if errors are made, and how to submit a complaint. Other protections also 

may be available to you, depending on how you send the money and the laws in your state. 

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. 
279 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information.

281 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 2: 

Ask questions: Choosing 

where to get what you need 

Once you know the reasons you want a financial product or service and the type of place that 

offers it, use this tool to compare businesses that can offer you those services. Using this form, 

you can compare up to three financial service providers at one time. If there are services or 

features that don’t matter to you, just put a line through the entire row. 

Financial service provider comparison 

 Financial 

service 

provider 1: 

__________ 

Financial 

service 

provider 2: 

__________ 

Financial 

service 

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) 

 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 282 

 TOOL 2: ASK QUESTIONS: CHOOSING WHERE TO GET WHAT YOU NEED 

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? 

 

Is 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? 

 
283 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Are there fees for using online banking 

services? 

 

What are the fees if you 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 you earn interest on savings? 

What is the rate of interest you 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 you 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? How long will it 

take to repay? What will the total cost be? 

 

Other: 

Other: 

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. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 284 

 TOOL 2: ASK QUESTIONS: CHOOSING WHERE TO GET WHAT YOU NEED 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 
285 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 3: 

Money services and banking 

basics 

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. 

Common financial products or services 

Check if you 

want to learn 

more about it 

Common 

financial 

products or 

services 

Description Where can you 

get this 

product or 

service? 

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 transacting. 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. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 286 

 TOOL 3: MONEY SERVICES AND BANKING BASICS 

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 

machine (ATM) 

card 

Deposit in or withdraw money from a 

savings or checking account. Many 

ATM cards are also debit cards that 

can be used to make purchases. An 

ATM card that is not also a debit card 

cannot be used to make purchases at 

businesses. You will often not be 

charged a fee by using ATMs that are 

owned by your bank or credit union 

or within the same ATM network. 

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, and 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. 
287 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 288 

 TOOL 3: MONEY SERVICES AND BANKING BASICS 

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 / 

Signature loan 

Borrow small amounts of money. 

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. 
289 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

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, 

which is given as collateral. 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. 

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. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 290 

 TOOL 3: MONEY SERVICES AND BANKING BASICS 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information. 
291 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 4: 

Opening an account checklist 

Opening an account at a bank or credit union 

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. 

TIP: 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 understand. 

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: 

 Your Social Security card 

 A bill with your name and address on it 

 Your birth certificate 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 292 

TOOL 4: OPENING AN ACCOUNT CHECKLIST 

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. 

Accounts that pay interest 

Interest is considered income. If you earn interest, you must pay taxes on it. In order to open an 

account that pays interest (most commonly called an interest bearing account), such as a savings 

account, you must have a Social Security number or an Individual Taxpayer Identification 

Number (ITIN).54 

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 an account that does not pay interest. 

Barriers to opening an account 

Not having the proper identification can be one barrier to opening an account. Another potential 

barrier is a 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: 

 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 

 

54 Internal Revenue Service. See http://www.irs.gov/Individuals/General-ITIN-Information. 
293 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 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. You can 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. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 294 

TOOL 4: OPENING AN ACCOUNT CHECKLIST 

Opening an account checklist 

Use this checklist to ensure you have what you need to open an account at a bank 

or credit union. 

Check 

for 

“yes” 

Information needed Additional questions 

 A U.S. or foreign government issued form of 

identification with your 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 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 an account that does not pay interest. 

 Money to open the account 

Information about: 

 Minimum balance required in the account to avoid 

monthly service fees 

 Monthly service fees 

 Direct deposit and whether it eliminates the monthly 

fee 

 Per-check or transaction fees 

 Fees associated with use of automated teller 

machines (ATMs) 

 Internet banking and online bill pay access and any 

costs 

 Overdraft fees 
295 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

 Low balance alert notifications 

 Other: 

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. The CFPB recommends that you do not include names or account 

numbers and that users follow their organization’s policies regarding retention, storage, and disposal of documents that contain 

personal information.

297 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 5: 

Remittances 

Consumers in the United States send billions of dollars in remittance transfers each year. The 

Consumer Financial Protection Bureau has issued rules to protect consumers who send money 

electronically to foreign countries. 

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. 

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. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 298 

TOOL 5: REMITTANCES 

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. 

What is covered? 

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. 

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. 

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. 
299 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Tool 6: 

Managing a bank or credit 

union account 

If you decide to open a bank account, it’s your responsibility to keep track of how much money 

you have in the account, and how much you have committed to be paid out of the account. You 

also have to be aware of under what circumstances your bank may charge you a fee. You should 

start with learning the rules of your new account from your bank or credit union. If you don’t 

follow the rules of your account, the bank or credit union may charge you 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 has finally cleared. Keep 

in mind that the money may be available for your use before it has cleared. For 

example, if someone writes a check to you and you deposit it in your bank account, 

the money may be available to you before the check “clears” the bank account of the 

person who wrote the check to you. If the check later bounces for any reason, your 

bank can take the money back from you, even if you’ve already taken the money out 

of the bank account. 

 Ask your bank how it processes debits to your account (debits are when money is 

taken out of your account). Does the bank process debits in the order in which they 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 300 

 TOOL 6: MANAGING A BANK OR CREDIT UNION ACCOUNT 

are presented to your bank, or does it pay the highest amount presented in any given 

day first, or use some other method? 

 Know that your charges and withdrawals are not always processed in the order in 

which you make them. 

 Monitor your account online, with text alerts, or with a mobile app. 

 Be aware that if you take out a loan from the same institution where you have your 

account, the institution may be able to take money from your account if you stop 

paying your loan. 

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. For most banks, the overdraft fee is a 

fixed amount regardless of the amount of the transaction. You can incur several 

overdraft fees in a single day. This means that your $4 cup of coffee can end up costing 

you $35 and a small pack of gum can cost you another $35 all in the same day. 

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 and 

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 being charged 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, and 

even subject you to criminal prosecution. 
301 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

When you are short of funds—overdraft coverage 

An overdraft occurs when you spend or withdraw more money than is available in your checking 

account. Banks or credit unions can agree to advance you money to cover the shortfall and 

charge you a fee. This is sometimes called overdraft coverage or overdraft protection. You 

should check with your bank or credit union to see what type of overdraft program 

it has. 

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. Finally, you must pay the bank or credit union back for both the 

amount covered by the financial institution and the fees. 

ATM and one-time debit card transactions: You can’t be charged a fee for an overdraft 

with your debit card unless you “opt in” to overdraft coverage and fees. This means you have to 

actively choose to have it. If you have opted in previously, you can opt out now. Though you 

can’t be charged a fee if you do not “opt in,” you also may be denied a purchase using your debit 

card at the point-of-sale (POS) if there is not enough money in the account to pay for it. 

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. Remember, 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 as a rent payment or utility bills, will be 

paid. 

 Link your checking account to your savings account, credit card, or line of credit. If you 

run out of money in your checking account, the bank will pull money from the place 

you’ve chosen. The fee for this is usually much lower than an overdraft fee. 
 MODULE 9: MONEY SERVICES, CARDS, ACCOUNTS, AND LOANS: FINDING WHAT WORKS FOR YOU 302 

 TOOL 6: MANAGING A BANK OR CREDIT UNION ACCOUNT 

Garnishment from your bank or credit union account—when 

money can be taken from your account 

A creditor to whom you owe money can seek to be paid directly from your bank or credit union 

account by “garnishing” the account. Whether a creditor can garnish money from your bank 

account depends on where the funds in your bank account came from. 

Generally, money in your bank account that is from your wages or from another person can be 

garnished. But certain money in your bank account cannot be garnished by private creditors. 

This includes money from: 

 Social Security Payments 

 Supplemental Security Income 

 Veteran’s Benefits 

 Railroad Retirement Board Benefits 

 Federal Employee and Civil Service Retirement Benefits 

Other income may also be protected from garnishment by private creditors. Examples include 

state public assistance, federal student assistance, payments from a disability insurance policy, 

and income from a retirement plan. In some states, state unemployment compensation may also 

be exempt. 

Proving that money in your bank account comes from a protected source can be difficult and 

complicated. For this reason, Federal law requires banks to have special procedures to ensure 

that the bank or credit union where you have your account can identify the Federal benefits that 

are exempt. 

If you believe that your federal benefits or other money in your account have been 

improperly taken from it, you will need to take steps to protect your rights. You 

should talk to your bank or credit union and consider consulting a lawyer. 

If the debt you owe is owed to the government (for example for taxes or student loans) or is for 

child support there are different rules. In this case the creditor may be able to garnish Federal 

benefits in your bank account. If this happens to you may want to consult a lawyer. 
303 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR LEGAL AID ORGANIZATIONS 

Money you owe to the bank or credit union where you have your account 

If you owe a debt to your bank or credit union, other than regular account fees, the bank may be 

entitled to take money from your account to pay itself. This will depend on your deposit contract 

with your bank. Generally, your bank or credit union is not allowed to pay itself from money in 

your account that came from federal benefits or another protected source. 

Resources 

If you would like help managing debt or rebuilding credit, visit the National Foundation for 

Credit Counseling: 

http://www.nfcc.org 

Housing counselors can provide advice on buying a home, renting, defaults, foreclosures, 

and credit issues: 

www.consumerfinance.gov/find-a-housing-counselor 

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 

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

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.