E244 - Innovative programs are available to help deal with the financial pressures you are experiencing, both personally and professionally | with Jen Lee - Jeff Mendelson | Automation Superhero

E244 – Innovative programs are available to help deal with the financial pressures you are experiencing, both personally and professionally | with Jen Lee

Many people are dealing with financial pressures that were not a part of their lives before Covid. Jen Lee, a credit strategist and debt attorney helps clients create feasible solutions to get their finances back on track without filing for bankruptcy. Co-Author of Preventing Credit Card Fraud: A Complete Guide for Everyone from Merchants to Consumers, Jen knows the shame people experience when they have financial difficulties. By addressing the elephant in the room right away, Jen removes the uncomfortable parts of the conversations, allowing her clients to be solution-oriented. Listen to this episode of the One Big Tip podcast, and discover alternate solutions for the financial stressors you may be experiencing. 

Jen Lee of Jenleelaw.com is the person you want on your side when you have a credit or debt problem. Having come up in the field during the 2009 housing crisis and recession, Jen took a unique approach to her talents and combined her love of numbers with her legal degree. With over 70% of Americans having debt and credit card problems, bankruptcy filings were high. Jen realized that there were alternate solutions as long as you kept an open mind and could move past the social stigma associated with credit card debt.  

The first step in tackling debt in either your personal or professional life is setting up goals and benchmarks that you want to reach. Often, people’s issues can be solved rather quickly, but they tend to fall back into the same patterns that created the debt initially. One thing that stood out to Jen was that most people aren’t struggling because they are trying to keep up with the Joneses. Most people are in debt due to divorce, medical bills, or something unexpected that drained them financially. 

Jen works with her clients by creating a list of options. Always starting with the least aggressive solution, such as budgeting, to the most aggressive or last resort, such as filing for bankruptcy. Jen looks at the situation from a pure numbers perspective without any emotions attached. It’s easy for her to see where there is spending that can be cut, but like with everything in life, the best approach is the one you will use consistently. Whichever option Jen chooses with her clients, she tries to ensure that it doesn’t affect the roof over their heads. Many people talk about debt consolidation, but that is not always the best choice due to the high-interest rates the programs charge. Another option that’s not always the best is writing the debt off via bankruptcy. Many people forget the tax implications associated with bankruptcy. Keep in mind that writing debt off doesn’t mean it doesn’t hit your credit score, and if it does go on your credit report, it affects your score for many years until it falls off. 

When Jen takes you on as a client, the first step she has you do is add up all the debt you have. Once you have a precise number of your entire debt, you approach the situation differently. The next step in using Jen’s framework is to stop using credit cards to fund your lifestyle. She pushes her clients to live strictly within their monthly income without using their credit cards as a clutch. After that, she encourages them to make more than just the minimum payment due every month, so you bring down the principle. That’s the only way to truly make a dent in a large balance that rolls over with interest month after month. Another strategy that Jen uses with her clients is committing to paying off one credit card at a time. This makes your debt more manageable. The longer you continue with this practice, the fewer credit card balances you have to pay down. Jen typically recommends paying off the card with the highest interest rate first. 

If you realize that you have a large amount of debt and can’t pay it off with your monthly income, bankruptcy becomes a viable solution. Most Americans view bankruptcy as a failure. However, Jen understands that it can be used as a strategy for having large amounts of business debt wiped out. Throughout her career, Jen realized that financially savvy people are not ashamed to use bankruptcy as a tool in their business. In today’s episode, you will learn about the different strategies Jen shares with her clients to help decrease their debt so they can start to live a more financially carefree life.  

In this episode:

[2:15] Why Jen chose to use her legal degree to help others in financial distress

  • The bailouts of 2009 put a large portion of the population into financial distress overnight
  • Over 70% of Americans struggle with debt management

[5:46] How to employ short and long term goals to pay down debt

  • You need to understand what actions and habits put you in financial distress
  • People fall back into old habits that created their financial struggles in the first place
  • Tackling debt is not a one size fits all approach 

[8:02] Debt Consolidation

  • There are a lot of negatives to debt consolidation that is not touched upon until you’ve signed on the dotted line. 
  • Carrying a large amount of debt can negatively impact your mental health

[11:50] Creating an action plan that is laid out with clear steps is the best way to tackle debt

  • You need to tally up all your debt so you can see the big picture and know how much you owe overall
  • Credit card balances should be paid off in order of the highest interest rate
  • Paying the minimum monthly payment doesn’t help lower your overall debt

[15:22] Bankruptcy is a tool that can be used to your advantage

  • When you file for bankruptcy, the amount of money you write off is considered income
  • Beware of the tax consequences when you file chapter 11
  • Bankruptcy can be used as a strategic tool in your business when done correctly

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