I often say that “informed consumers have a better chance of achieving financial success.” And because I believe that to be a true statement, I want to take a time-out from blogging to respond to a recent report by the Colorado Attorney General. The report was based on information collected from 42 Colorado registered debt settlement and credit counseling companies. The data for individual organizations and companies is not being made public; however, the aggregated statistics are troubling.

Let me start by saying that I am glad to see states, like Colorado, take an interest in helping consumers understand their options for managing debt. Unmanageable levels of debt have a far reaching impact that can easily damage the foundation of a family’s financial security. I feel strongly that consumers should research all of their options and choose the solution that is best for their unique situation—and I hope that this study encourages consumers to do just that. My greatest concern is that this report will discourage consumers from seeking the help they desperately need. After speaking to a representative from the Attorney General’s office, I felt that some clarification was necessary. Therefore, I would like to specifically address some of the study’s findings.

First, the report reviews nonprofit credit counseling organizations, for-profit credit counseling firms, and debt settlement companies. There are distinct differences between organizations that offer financial help and consumers will want to know exactly who they are working with (take, for example, this recent article in the Star-Ledger). The Attorney General’s office acknowledges this fact and has even created a document to help consumers understand the differences between service providers.

Trustworthy agencies will offer free education and detailed information about all the services they provide. Their counselors will discuss consumer’s entire financial situation and help them develop a plan based on the best option for their personal financial needs. Some things to consider when choosing a reputable credit counseling agency include:

-The credit counseling agency should have a strong history.
-The credit counseling agency should be accredited by a neutral third party, such as the Council on Accreditation (COA). If they state that they’re accredited, make sure the accreditation is current, not lapsed.
-The counselors at the credit counseling agency should be certified by an independent organization such as the National Foundation for Credit Counseling (NFCC).

According to the report, Colorado consumers paid an average of $495 for credit counseling. Credit counseling through a reputable credit counseling agency is free. Money Management International (MMI) is a nonprofit organization that also offers education services and housing counseling services to consumers free of charge. If a client chooses to establish a Debt Management Plan (DMP) with MMI, there is a one-time setup fee and a monthly charge to contribute to the administration of the Plan. Under Colorado law, the maximum setup fee is $50 and the maximum monthly fee is $50. MMI and other reputable agencies do not charge either of these maximum amounts and even waive or reduce fees based on a client’s inability to pay. In contrast, debt settlement providers may charge 18 percent of the total principal amount at the time of enrollment.

The report only addresses debt management and settlement. Reputable credit counseling agencies have multiple ways to help consumers achieve their financial goals. Here are a few of MMI/CCCS’s statistics to consider.

In 2008:
-MMI conducted a record 608,533 counseling sessions;
-more than 96,000 consumers benefited from MMI’s education seminars and community outreach programs;
-the total number of delinquent mortgage sessions increased an astonishing 215 percent over the previous year to more than 126,000;
-MMI helped consumers begin the process of seeking 40,000 loan modifications through our affiliation with the Hope Hotline;
-nearly $1 million was granted to more than 1,700 homeowners through the Preserving Homeownership And Savings Education Strategy program;
-MMI helped 47,475 older Americans understand their financial options through reverse mortgage counseling sessions; and
-more than 1.7 million consumers visited MoneyManagement.org for financial education and guidance.

In addition to credit and budgeting counseling, foreclosure prevention counseling, and reverse mortgage counseling, MMI is also approved to deliver bankruptcy counseling and education services.

Also according to the Report, less than 10 percent of Colorado consumers successfully resolved debt through a debt management plan or debt settlement. Speaking specifically “success rates” is personally difficult for me because I truly believe that MMI’s success rate is 100%. Our mission is to improve lives through financial education. The value of counseling and advice is to share information and clarify goals. We don’t tell clients what to do; we value their ability to make the best choice for their particular circumstances.

As for the consumers who elect to establish a Debt Management Plan (DMP), success comes in a number of forms. Some consumers need temporary assistance while others repay their debts entirely through the program—both are successful. Even clients who struggle with debt repayment take away valuable information about budgeting and money management. All that being said, I can safely say that the majority of clients who start DMP with MMI end up successfully completing or taking over and self administering their situation after being on a plan for a period of time. The minority close purely for non-payment at MMI.

According to the report, the average contract term was nearly 41 months for credit counseling. I agree with Attorney General Suthers when he says that credit counseling is not a quick fix. In fact, I would urge someone to proceed with caution if they are promised a quick fix for digging out of debt. Consumers should carefully consider all their options and understand that it will take time and determination to meet their goal of becoming debt free.

I wrote this post because I want to be sure that people who really could benefit from MMI’s many services are not discouraged from doing so. Just last month, I received hundreds of letters from former clients telling me how their lives have improved since repaying their debts. They use words like “free,” “incredible,” and “proud.” We understand that the Debt Management Plan (DMP) is just one of the many ways to repay debt; however, for many, it is good choice.

Thank you for the opportunity to share my thoughts.

This past week I encountered a situation that was both a financial issue and a very painful family issue. A young man, age 34, was in a traffic accident and seriously hurt. His family was told that his condition would not improve and were asked if he had any type of Will or Health Care Directive. Through tears and much sadness, his mother replied that her son did not have much in the way of assets and he could not afford to have that sort of document written up. The hospital then informed them that they had to use all life saving procedures available.

I don’t want this to be a debate about health care cost, about his right to die but more about the few steps that we can all take to help avoid the decisions and issues this family had to face.

I was able to accompany the family to their sons home and as gently as I could, try to help them go through his personal papers to see if there was any document that he had create that would give direction and convey his wishes should this event occur. In two hours, we were able to find out that he did have assets. He had a life insurance policy worth twice his salary, a 401K plan that had over $23,000 in the plan, two life insurance polices from organizations where he had memberships and 35 shares of stock—a gift form his grandparents. This young man had approximately assets of $87,000. His mother could not get over how much he had saved and that he had listened to her about saving money and buying life insurance.

The part that she did not tell him is that you need a few other documents to protect and direct those assets. He needed a Will that would help the court distribute his assets and he needed a Health Care Directive, that would let his caregivers know of his intentions should be in a condition that he could not communicate about his wishes that related to his care and treatment.

As I continued to look in files, I found one red file folder marked “NET WILL” and knew he had done the right thing. Yes, he had downloaded a very basic Will and Testament and had completed the forms.

The family attorney is now reviewing the paper work and the fate of the young man is still in the balance. When ask about the cost of a simple Will, the family attorney advised the family that he would have prepared a simple Will for less than $200. He mentioned that many companies have Pre-paid legal plans that offer simple and basic documents for less than $100. There are forms at office supply stores and yes even on the net.

No legal advice here friends. Just the simple request that you SPEND, yes spend the time and a maybe the price of weekend away to have a Will drawn up and let your family know that you have this document. While you may have debts, you have assets. Please make this your money resolution for November 2009. WILL you?

The new book Three Feet from Gold will be released on Tuesday, October 6. Three Feet from Gold is based on the 1937 best-seller Think & Grow Rich and promises “practical wisdom and inspiration to help people find their own personal path to success.”

I had the opportunity to ask one of the book’s authors, Sharon L. Lechter some questions about the book. Ms. Lechter is also a member of the President’s Advisory Council on Financial Literacy and was co-author of the international best-seller Rich Dad, Poor Dad and 14 books in the Rich Dad series. Following is my question and answer session with Ms. Lechter.

This book is based on Napoleon Hill’s Think & Grow Rich. What do you think made this book such a huge success?

Ms. Lechter: It was the right message at the right time. Published during the Great Depression, Napoleon Hill revealed the keys to success. Think & Grow Rich provided a road map to success along with the inspiration for all who read it. Many of today’s greatest success stories attribute their success to reading Think & Grow Rich.

How did you come up with the title Three Feet from Gold?

Ms. Lechter: The title Three Feet from Gold comes from the first chapter in Think & Grow Rich. The story of R.U. Darby, a young man who went west during the Gold Rush to find his fortune in gold. After running out of gold in his mine, Darby gave up and returned east, selling his mine to the junkman. The junkman had studied mining for years and brought in the expertise of a mining engineer. He discovered one of the richest gold veins in history….just three feet from where Darby had started digging! It is the story of perseverance, finding the right advisors, and having faith that you are on the right path!

Think & Grow Rich came out in 1937. Why did you choose to publish Three Feet from Gold now, after all of these years?

Ms. Lechter: Think & Grow Rich came out during the Great Depression and is widely credited for helping people find the courage to create great success in their lives. Given the current economic downturn, we felt that Napoleon Hill’s initial messages of success and perseverance were even more imperative to help people through their current struggles. Three Feet from Gold highlights his teachings using leaders of today and shares their stories of how they persevered through rough times and turned their obstacles into opportunities.

What is just one of the many important messages, or key take-aways, that you’d like to share with our audience?

Ms. Lechter: When asked to co-author this book, I was dealing with my own struggles and I was at a cross-roads. I was considering giving up…even though I knew I should persevere. Hearing the stories of the people we interviewed gave me the courage to keep going and it was a tremendous gift. I hope our readers will find the same motivation and encouragement that I did from these incredible people.

Who will benefit most from reading it?

Ms. Lechter: Anyone who is facing difficulties. Anyone who wants to improve their lives and create a foundation of wealth and success for themselves and their families. AND most of all, anyone ready to seize the opportunities that are just three feet in front of them!

Could you please share one of your favorite Napoleon Hill quotes—one that really sticks with you?

Ms. Lechter: My personal favorite from one of our experts is “Replace your wishbone with a backbone,” by John St. Augustine. We have all heard of the power of attraction… the power of positive mental attitude and it is tremendously important. But as John so correctly points out, you must combine that positive mental attitude with ACTION if you truly want positive results.

My favorite Napoleon Hill quote is, “Are you waiting for success to arrive, or are you going out to find where it is hiding?”

For more information about the book , visit ThreeFeetAway.com.