This is part two of Adam Townsend’s (known here on Tenacious Me as “Mr. Man”) two-part guest post about our experience with AAA Fair Credit Foundation. Enrolling in their debt management program (DMP) and significantly reducing our credit card debt are two of our major financial goals for 2010. Check out the AAA Fair Credit Foundation brochure — we do not benefit from anyone signing up with them.
We called AAA Fair Credit Foundation and got a quote – we gave them all our credit account numbers and balances, and the representative created an estimate of how much our monthly payment would be. Once Laura Lee and I discussed the prospect of enrolling and figured we would save roughly $2,000 in interest payments, we called back to complete the process.
Our monthly payment will include a startup fee of $50 for the first month and $35 every month thereafter.
To us, the monthly fee is worthwhile. Not only does AAA negotiate with our creditors for lower rates, but they also offer budgeting tools and financial counseling (but not investment advice).
For example, Jenna Innis, one of our certified personal finance counselors, informed us that they provide us with an online account where we can view the progress we are making with our creditors and update our balances. We can link to our DMP account by visiting our portal at MyFairCredit.org. Or, we can update our balances by calling client support at 1-800-351-4195.
We also get access to their financial educational Web site, Consumer Cents. All the financial information there is free to download.
Another benefit to our DMP with AAA Fair Credit Foundation is that we have one payment debited automatically every month from our account, rather than dealing with seven different payments of varying amounts all due at different times. Most importantly, we still save thousands of dollars, even paying the fee monthly. It comes down to simple arithmetic.
The foundation does not offer debt consolidation services. Though you have to close all of your open accounts and promise not to sign up for another credit card, all of those accounts are still in your name. If you default on a payment to AAA, you’re still responsible to the individual creditors.
This is a great way to handle it because enrolling with an organization like AAA Fair Credit doesn’t affect your credit score, mathematically. Your creditors will attach a note to your report that you are enrolled in a debt management program (DMP), but that disappears as soon as your debts are paid off. The number remains unaffected, according to Will Vandercuen, a AAA Fair Credit Foundation counselor.
What might lower your score slightly is closing all your accounts, Vandercuen said.
That might be a problem if you’re trying to buy a house or some other major expense, but in our case, the benefit of paying down our accounts and lowering our interest rates far outweighs any minor, temporary damage to our credit scores, both of which are already above 700.
The only sticky part is that you have to allow almost 30 days for the agency to get access to your bank account.
Luckily, we get three paychecks in January. We paid our credit bills for January, and then AAA Fair Credit Foundation will access our bank accounts after the mid-month to pay February’s bills. They send you an agreement to sign and a budgeting spreadsheet to complete through e-mail before you ever give them your bank account number.
From here forward, we’ll be a month ahead of all our bills.
It’s such a relief to take positive action to control your finances and reduce credit card debt. I have no problem paying credit card debts every month – that’s what I signed up for when I opened my lines of credit. It’s a horrible feeling, though, to be milked for cash like a farm animal and subject to monthly mob shakedowns by giant corporations.
Now, so far at least, it seems we have some control over our debtors and a better handle on our personal finances. Though I’m no financial adviser, I’d recommend that anyone who has substantial credit card debt join AAA Fair Credit Foundation or a similar organization.
Adam Maxwell Townsend is an artist, writer and totally awesome husband. You can view his published cover illustrations, fine art, courtroom illustrations, informational graphics and other art here. To read some of his other writings, search “Adam Townsend” at The Orange County Register. He is employed there as a newspaper reporter and illustrator. You can also email him at firstname.lastname@example.org.
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