This article is the first in a series on financial coaching. California Council of Churches is honored to collaborate with Daniel Leibsohn, President and Executive Director of Community Development Finance to offer a series of instructional blogs on helping low income, working families and individuals solve their credit problems.
 
Many of CCC’s member denominations are engaging their congregations in this work. Consumer, health, and other debt, bad credit ratings, usurious lending and many other factors all contribute to growing income inequality and financial ill health among our communities and their members.
 
CCC will offer various topics on practical steps Mr. Leibsohn has outlined that can assist congregations as they learn how to help those in need. These are not just excellent essays but “tool kits” to guide people on how to extract themselves from credit problems.
 
We are delighted to have this opportunity to have Mr. Leibsohn’s experience and wisdom to share with you and your  social justice activists. ​

by Daniel Leibsohn
 
Introduction 
Debt is one of the largest issues facing many Americans.  We often do not earn enough money to cover the monthly costs of basic living – housing, food, health care, transportation, children’s costs, etc.  As a result, we may need to borrow money to make ends meet.  Some people may have either more difficult or easier access to debt sources and these sources can have varying loan terms with higher or lower rates, shorter or longer length of the loan term and other loan terms such as fees, late payment levels, etc.  When people with lower incomes also have bad credit, the terms available to them, if they have any access at all, often are very problematic.  When bad loan terms are combined with a lower income level inadequate to meet basic needs, the result can be a long-term debt circle/trap that becomes very difficult to get out of.
 
Credit cards are one such source of individual debt.  They are not available to everyone, for example if someone has defaulted on credit card or other debts in the past or if some or all of the total debt has been assigned for collections.  Other people may have a low credit score and can qualify only for a bad credit card that has high rates, high fees and a low spending cap.  Still others only may qualify for a secured credit card.  As a result, many people have credit cards with both various terms and conditions along with a total amount of debt that can be very burdensome. 
 
The amount of total credit card debt in the U.S. reached an all–time high of $870 billion in December 2018.  The average American owes over $5,500.  A little over 41% of Americans have credit card debt and the highest balances are carried by people in the Northwest and West Coast, as the average balances vary a great deal among states.  Delinquencies are increasing again after falling for a few years since the Great Recession.  The total amount of interest earned by credit card companies is estimated to reach $122 billion in 2019 up from $113 billion in interest paid in 2018.  (“How Fed Rate Hikes Change Borrowing and Savings Rates”, Nick Clements, magnifymoney.com, June 14, 2019.)  Including fees, the total earnings grew to $180 billion in 2017 according to Bernie Sanders.
 
Credit Card Debt Impacts and Payment Strategies
The impacts of too much credit card debt can be damaging in several different ways. The interest payments can add up to a great deal of money over the repayment period.  If late payments have accrued, the interest rate may be increased further and there are likely to be late payment fees.  And, if the card holder continues to use the card, the total debt keeps increasing along with the amount of interest owed.
 
As a result, many people get to a point where they can only make the required minimum monthly payments.  When this is the case, it can take many years to pay off a debt.  For example, assume a $1,500 credit card debt with a minimum payment of $30 per month (2% of the outstanding balance).  With an 18% interest rate and if the original $30 minimum monthly payment is maintained throughout the repayment period, this loan will take 94 months (7.8 years to repay) and the credit card holder will pay $1,293.35 in interest over the period plus repaying principal.  
 
And these results are obtained with relatively favorable assumptions: the minimum monthly payment of $30 is higher than some minimums.  (Different institutions use different formulas to determine the size of the minimum payments – Bank of America charges the greater of $25 or 1% plus fees and interest, for example.)  The 18% rate could be increased if any payments have been missed; and if there are any late payments, there will be late fees and interest to pay as well.  Also, the minimum payment for the first payment was maintained throughout the repayment period in this example rather than reducing the minimum payment each month as a small amount of principal is repaid monthly.  If the revised minimum payment is used each month, the repayment term is much longer and the interest paid is much higher.  
 
To see the impact of alternative terms, assume for example a minimum payment of $25 per month instead of $30 on the loan in the example above; the interest paid will be $2,366 over 155 months, or 12.9 years.  If the payment goes down to $20 a month, the debt will accrue negative amortization – the interest paid will not be enough to cover the amount of interest due and the deficiency will be added to the principal balance.  And, if you have surpassed your credit limit for the month (say $1,200 instead of the $1,500 debt), there usually is a fee for that misstep too.  Finally, if cash advances are used, their rates are typically higher than the rate for charged items on the credit card.
 
The standard minimum monthly repayment fee is a crucial area of focus.  This payment used to be 5% of the outstanding balance in the 1970’s; however, when the card companies saw that the card holders could have reduced pressure while the companies would be much more profitable, the minimums were reduced to around 2% by the early 2000’s.  (“Credit Card Minimums: Perfectly Calibrated to Keep You in Debt”, Claire Tsosie, Nov. 7, 2016, Nerdwallet.)   
In some cases, making minimum monthly payments can take up to 20 or 30 years to repay, depending on the requirements.  If minimum monthly payments instead of fixed monthly payments are made, it would take 232 months (19.3 years) to repay the $1,500, 18%-interest loan, and the total interest paid would be $2,897.  Or, this same loan with a fixed monthly payment of $23 would take 258 months to repay, or 21.5 years, and the total interest payments would be $4,414.   
On the other hand, making a monthly payment slightly above the minimum payment allows the card holder to repay the debt much more rapidly.  The table below shows all these different scenarios where the impact of more rapid repayment clearly can be demonstrated.  So contrast these minimum payment scenarios with making monthly payments even slightly higher than the minimum required, or $40 in this example: 
 
Credit Card   Interest Rate  Fixed              Months           Years          Interest       Savings
Balance                                  Payment         to Repay         to Repay      Paid
$1,500             18%                 $30                    94                    7.8             $1,293
$1,500             18%                 $40                    56                    4.7             $  721           $572
$1,500             18%                 $25                  155                  12.9             $2,366
$1,500             18%                 $23                  258                  21.5             $4,414
 
 
So it is very important to pay as much over the monthly minimum as possible.  
 
Here is another example shown in the table below: a credit card balance of $5,000, with an 18% APR, and minimum payment as 2% of the credit card balance. Making fixed payments set by the minimum payment for the first month, it would take 7.8 years and $4,311 in finance charges to pay off this debt, not including any fees incurred over the life of the credit card balance.  Increasing payments to $125 a month would allow a pay-off of the same debt in 4.6 years and with $1,774.42 spent in interest.  
 
Credit Card   Interest Rate  Minimum       Months           Years         Interest       Savings
Balance                                  Payment         to Repay         to Repay      Paid
$5,000             18%                 $100                94                    7.8                   $4,311  
$5,000             18%                 $125                62                    5.2                   $2,693       $1,618
$5,000             18%                 $240                26                    2.2                   $1,040      $3,271
$5,000             14%                 $100                76                    6.3                   $2,547     $1,764
$5,000             23%                 $100                168                  14                    $11,740    ($7,429)
 
 
The impact of paying off even faster also is evident.  If affordable, a monthly payment of $240 could repay this debt in a little over 2 years with a total of $1,040 paid in interest and a substantial savings of $3,271.  The impact of a lower rate also is clear.  If this card holder’s credit score is better, the rate can be lowered.  In this example, a 14% rate with $100 monthly payments results in a 76-month repayment period (6.3 years) instead of 94 months (7.8 years) and interest paid of $2,547 instead of $4,311.
 
Your credit card statement is required to show how long it will take to pay off the debt using the minimum payments.  Additionally, there are many credit card calculators on the internet that will help with determining how fast the debt can be repaid with different levels of payment, how much total interest is paid with these different monthly payments, etc. (For example, seehttps://www.bankrate.com/calculators/managing-debt/minimum-payment-calculator.aspxwhich includes both minimum payments and fixed payments.) 
 
These calculations can get tricky.  That is because each minimum monthly payment may include some amount of principal repayment each month.  When that occurs, the next minimum monthly payment goes down because it is set as a percent of the remaining principal.  This method results in much longer repayment terms and a much higher amount of paid interest.  So it is critical to keep paying the debt at the same actual monthly dollar amount or higher throughout the repayment process rather than re-setting the monthly payment lower as each payment is made.
 
Using the minimum monthly payments results in much longer repayment periods and much higher total interest payments.  There are other repercussions from too much credit card debt and/or late or missed payments.  First, your credit score probably will fall.  35% of your score depends on making payments on time.  It is crucial to make payments on time and not miss any payments.  It is damaging if you can only make minimum payments on the debt as you will be judged less likely to be able to be a good risk for other debt; but even if you make minimum payments, they should be made on time and no payments should be missed.   
 
And another 30% of the credit score is based on the utilization rate on your card – the percent of the credit maximum that you have charged on the card; this rate should not be more than 30% -- and preferably lower – to positively impact the credit score.  For example, if your credit access line is $5,000, you should not carry more than $1,500 (30% of $5,000) on your balance the next month; if the amount, and therefore the percent, is higher, it can negatively impact your score.  It is likely that your score will fall when you are in a situation where you are paying only the minimum monthly payments because the utilization rate is likely to be too high.  
 
If you have missed two consecutive payments – i.e. if you are late for 60 days – the card company may be able to increase the rate on your card (check your agreement with the card company to determine the specific policy).  If you default on your credit card, the interest rate you pay can increase to as high as 30%. Now, look at the same loan in the table above – $5,000 with a $100 monthly minimum payment – but with an increased rate of, for example, 23%.  This loan requires 168 months or 14 years (compared to 7.8 years) to repay and the amount of interest paid is $11,740 (compared to $4,311) or an extra $7,429 in interest.
 
If someone has this type of situation on more than one card, the impact is further multiplied.  If the same person continues this pattern for several years or decades, the impact grows. So it is not just one card and one debt that typically is the issue.  It can be many cards over many years along with other debts.  In these situations, the extra interest that has to be repaid can be extremely burdensome and have a great impact on someone’s life.
 
 In addition, if your credit score falls, it can increase the rates you have to pay on other loans, such as car loans or mortgages which often are determined by your credit score.  There is a very great impact on how much you pay for these loans depending on how you handle your credit card and other debt and what your resulting credit score is.  The impact on someone’s life becomes even greater in this situation and can be repeated over many decades.
 
The examples above showed how much interest the card holder has to pay over the course of repayment when only the minimum payments are made.  If you still have to use your credit card while making these minimum payments, the total debt amount escalates quickly as does the minimum monthly payment; when this situation occurs, the debt becomes more burdensome and the likelihood of late or missed payments exists – which brings more fees and interest payments.  
 
Repaying Credit Card Debt
It clearly is beneficial to repay credit card debt as quickly as possible using as high a monthly payment as possible.  But how can that be done when the credit card holder can only afford to make the minimum monthly payments or slightly higher than the minimum?
 
A process to get out of this trap is available.  The first step is to review your budget, in-depth.  At Community Development Finance, we use a very detailed budget on an excel spreadsheet to help people go through their expenses.  A very helpful preliminary step is first to track every amount of money you spend for a couple of months and then separate these expenses into categories and add any other payments that you haven’t made during the two months that you might make on a periodic basis – bi-monthly, quarterly, semi-annually or annually.  Once someone sees the actual expenditures, it often becomes very clear where cutbacks can be made that will free up some extra cash each month that can be added to the minimum payments.  In addition, there are ways to earn additional income; one of CDF’s financial training workshops covers ways to earn money on the internet through a computer or phone by doing things such as taking surveys, playing video games, submitting grocery shopping bills, etc.  Either or both of these methods combined can generate a certain amount of extra cash each month.
 
With this extra amount of money, someone facing debts can utilize either one of two different methods to repay debt: the Snowball or the Avalanche.  For either one of these methods, all the debts need to be put on a spreadsheet of some kind.  Since we are discussing only credit card debt, only the credit cards will be included in this discussion, but this method is used to create a strategy for addressing all debt and we will return to this method when we discuss all kinds of debt in a later blog.
 
For this spreadsheet, each credit card should be listed along with the total amount of debt, the interest rate and the minimum monthly amount required by the card company.  With the Snowball method, the smallest debt amount is paid off first.  So, list all the credit card debts starting with the smallest amount first leading down to the highest amount of debt.  With the Avalanche method, the card with the highest interest rate is paid of first and the list is made by starting with the highest rate first and moving down to the lowest.  
 
In either case, the minimum monthly payment will be paid on all the debts except the first one that is targeted.  For the first one, take the extra funds you have made available through reducing your expenses through the budgeting exercise described above and/or the extra income created by some other method (using the internet as described above or an extra part-time job, selling some of your unused belongings, etc.) and add that to the minimum monthly payment for the first targeted credit card debt.  Then pay that debt off as soon as possible using these higher monthly payments. Then, when that debt is repaid, use the payment amount from repaying the first debt plus the minimum payment amount on the next debt to repay the second debt.  And so on until the debt is repaid.  
 
The Snowball method uses the smallest debts first as repayment targets.  This approach gives a sense of accomplishment as you watch the smaller debts fall off the list.  The Avalanche method pays off the highest interest rate debts first; these debts may be higher amounts and may take longer and results may not be seen as quickly.  But the total amount of interest paid can be smaller using the Avalanche method.
 
For example, assume credit card debts in the following amounts and terms:
Amount           Rate                 Minimum Payment
$750                15%                 $25
$2,000             20%                 $30
$3,500             25%                 $30
 
For the Snowball method, you would start with the $750 card debt.  The minimum monthly payment of $25 would be added to the additional income created by re-budgeting or adding more income of, for example, $150 per month for a total of $175 paid per month.  This first debt could be repaid in about 5 months.  Then, take the $175 monthly payment used to repay the first debt and add the minimum payment from the next smallest debt of $30 for the $2,000 debt for a total monthly payment of $205.  This debt could be repaid in 11 months.  When that occurs, take the $205 paid on the $2,000 debt and add in the minimum payment that was being made on the last debt of $3,500 for a total monthly payment of $235.  This debt could be repaid in about 19 months and then the holder should be free of the $6,250 credit card debt in 34 total months.  
 
The Avalanche method would start with the highest interest rate debt or the $3500 balance.  Using the $175 monthly amount available, this debt would be repaid in 27 months.  Then the $2000 debt would be repaid using $205 per month and it would be repaid in 11 months.  The last debt of $750 would be repaid in 4 months.  This method took longer in this example, and the interest paid was greater than the amount using the Snowball method.  In other situations, the amount of interest paid using the Avalanche method will be smaller.  The holder can figure out the results ahead of time and make a decision based on interest saved, the amount of time required, and the type of psychological results that are considered more desirable.
 
Other Repayment Options
There are other ways to attack repayment of credit card debt that can be undertaken in combination with one of the above methods or used alone:

• Transfer the debt to a zero-interest card.  The rate will stay low or zero for a pre-determined amount of time, maybe 6 to 24 months; during this period, pay off as much of the debt as possible – preferably all of it.  Be aware that there often are fees for these transfers that can be up to 5% of the outstanding balance; it probably is best not to pay more than 3%, if that.  In any case, if there are fees, run the numbers to determine that the amount paid in fees will be lower than the interest you would have paid if you stayed with the older card(s).  If not, do not transfer to the new card.  In addition to the transfer fees, there may be credit score limitations on these offers as they typically are available to people with good credit.  In addition, the rate that starts after the zero interest period may be higher than the rate you are presently paying so you will want to have the debt repaid by the end of the zero-interest period.  Finally, if any payments are missed, the zero interest rate may no longer be available.  So be careful with an option that looks good on the surface in the short term but may be damaging over the longer term; be certain to research these issues and make an informed choice.  One approach is to keep making these shifts to another zero interest card when the present term expires if you need more time to repay and these other factors would make it useful to make these switches.  These zero interest accounts represent losses for the credit companies. 

 
Credit card issuers make up for the rate hike with the automatic rise in variable back-end rates, as well as the increasing spread between the prime rate and what consumers pay on new accounts. They can also increase other fees, like late payment fees or balance transfer fees to keep long 0% deals viable.  (“How Fed Rate Hikes Change Borrowing and Savings Rates”, Nick Clements, magnifymoney.com, June 14, 2019.)

• Find an online lender and consolidate the debt with this lender.  Here, all the individual credit card debts are consolidated into one loan, often at a lower rate and fixed monthly payments.  (There may be credit score limits on these loans though.)  Sometimes, you can negotiate with the credit card companies and lower the debt amount if you have the funds to pay them quickly which, in this case, would be available with the consolidated loan.  This may be especially true if the debt is in collections and the credit card company has sold the debt to another company for pennies on the dollar, making negotiations much easier.  But beware.  There are many online lenders that have rates and terms much more difficult that credit cards – higher rates, long loan terms, high fees, and lower monthly payments but higher interest payments over the full loan term.

 

• A similar approach can be used with debt management companies.  All the debt can be transferred to one of these companies that will require only one monthly payment while they make the credit card payments.  But here too, you have to be very wary about many of these companies which often try to scam borrowers.  Check them out thoroughly.  And do not work with any company that asks for up-front fees.  Typically, the appropriate companies are nonprofit organizations that help you create a budget and offer other financial counseling services for little or no fee.  They should be accredited (e.g. Council on Accreditation), set the terms acceptable to you in a contract, protect your privacy and not push or rush you into working with them.

 

• Talk to a local bank or, more likely, a credit union.  If you have not defaulted on the credit cards and have no or few collections, your credit score may still be high enough to obtain a loan from a mainstream institution (usually after 6 months or some specified period of time of membership in a credit union).  So be certain to check with the institution about its credit score and other requirements for a personal loan before moving any of your accounts.  Credit unions tend to charge much lower interest rates if the borrower’s credit score is in a higher range.  Even if your credit score is too low for a loan at this time, it could be useful to join a credit union right now and work to raise your credit score (see the credit score discussion in the next section); then, at a later time when your score has increased, you will be ready to work with a credit union and will not have to wait for the introduction period.  

 

• Negotiate with the credit card companies. Sometimes, they will lower their rates. You can also try to increase the spending cap or limit in order to lower your utilization rate, as described below.

 

• If you are paid on a bi-weekly basis, set up automatic credit card payments on a similar schedule rather than monthly. This can result in making two extra payments per year and, if the monthly payment is roughly the same, the debt will be paid off faster.

Using Credit Cards to Increase Credit Scores While Paying Off Debt
A bad credit score can be very costly.  Many rates may be attached to credit scores; some mortgages, car loans, credit card rates and others are lower if the credit score is higher or they are higher when the credit score is lower.  This can cost a lot of money over the years.
 
For example, consider a $5,000 amortizing car loan with a 5-year term.  
With a High credit score:       $5,000 loan at 8% for 5 years 
Payment = $101.38 per month
With a Low credit score:        $5,000 loan at 26% for 5 years
Payment = $149.70 per month
DIFFERENCES:                    $48.32 per month        
                                                $579.87 per year
                                                $2,899.34 over 5 years
 
The gap for credit cards can be less extreme, but burdensome nonetheless:
For borrowers with high credit scores, the average rate was 17.73 percent last week (May 2019), compared with 16.71 percent a year ago. For those with poor credit scores, the average is now about 24.99 percent, compared with 23.77 percent a year ago.  “Sanders, Ocasio-Cortez want to cap credit card interest rates at 15 percent”, Renae Merle, Washington Post, May 9, 2019.  
Now, imagine if you have similar loans at different times during your lifetime and imagine you also might have much larger loans, such as a larger car loan or a mortgage. The amount of additional money spent on interest rates when you have poor credit can create a substantial financial burden on you and your family over your lifetime.
 
Use of your credit cards can impact your credit score positively or negatively.  A credit score tends to be comprised of the following elements:

• 35%: Payment History. Making payments on time
• 30%: Amounts Owed. Utilization rate – keep total debt to 30% of the card’s credit limit.
• 15%: Length of Credit History. How long the consumer has had a credit history.
• 10%: Types of credit used, or credit mix.  Use both lines of credit (e.g. a credit card) and installment loans (home mortgage, car loan, etc.).  
• 10%: New Credit.  Opening a lot of new credit sources.

So, you can create a strategy with your credit cards and other debt to improve your credit score:

• Always pay on time, even if it is the minimum.
• Try to pay more than the minimum payment for credit cards.

• Maintain lower utilization rates on credit cards, i.e. do not use over 30% of the stated debt limit on each card, as determined at the end of each month. The lower the better.
  • Pay off as much of the debt as possible if the utilization rate is over 30%.
  • Ask for increased credit limit on your cards to lower the utilization rate, but be very careful about not increasing your spending as a result. 
• Length of Credit History
  • Keep older cards if possible, rather than newer ones.
  • Try not to close credit cards, especially the major onces without a good reason.
• If you don’t use your cards very often, try to use your credit cards occasionally – every month or two, even for small amounts, in order to keep them active.
• Types of credit or credit mix.  Try to maintain a mix of amortizing credit (e.g. car loan, mortgage) and an open-ended line of credit (credit card);
• New Credit
  • Try not to open many new credit sources at the same time
  • If needed, space them out over time.
  • Limit hard inquiries.  Make certain that anyone checking your credits gets your permission first.
• Other issues
• Check your credit scores periodically so you can track changes and the reasons.
• Dispute any errors you find and get them corrected.
• Check for identity theft and fraud and take corrective steps immediately.

Follow these steps with your credit card use and your credit score should increase.  It is very difficult to find out many of the definitions and structures behind credit scoring and the three major agencies – Transunion, Equifax and Experian.  However, some information does exist:
Several years ago, FICO also allowed us a peek behind the curtain and showed usexactly how badly common credit mistakes can mangle your credit score. A few examples of mistakes and their effects that FICO revealed at that time include:

• Maxed-out card: This mistake costs 10 to 30 points for someone with a 680 FICO score, and 25 to 45 points for someone with a 780.
• 30-days-late payment: 60 to 80 points, and 90 to 110 points
• Debt settlement: 45 to 65 points, and 105 to 125 points
• Foreclosure: 85 to 105 points, and 140 to 160 points
• Bankruptcy: 130 to 150 points, and 220 to 240 points

 
The higher your score, the more points you’ll lose due to such mistakes. Keep in mind thata perfect FICO score is 850, and you’ll generally need a score of at least 730 to 760 to get the best possible rates on loans, depending on the lender. (“The True Cost of Bad Credit”, Stacy JohnsonMay 18, 2017.)
 
Again, the impact of mistakes or avoidance of issues with credit cards can have a large impact.
 
Final Tips

• If your credit is very bad and no credit card is available, consider using a secured card.  It can help rebuild credit and lead to a full service credit card.
• Cards issued by department stores and other stores tend to not be a good deal in general.  They often have higher rates and sometimes lower spending caps.  Many department stores are now using profits from credit cards to prop up their falling sales as they face the digital onslaught and, in some cases, massive debt run up by their new private equity owners.

At Macy’s, the money from branded credit cards accounted for 39 percent of the company’s total profit of $1.9 billion last year (2016), up from 26 percent in 2013, according to an analysis by Morgan Stanley.….At Kohl’s, the profit from plastic totaled 35 percent, up from 23 percent, over that same period. At Target, it made up 13 percent of total earnings, up from 11 percent in 2013.  (“Profits From Store-Branded Credit Cards Hide Depth of Retailers’ Troubles”,Michael Corkeryand Jessica Silver-Greenberg, New York Times, May 11, 2017.) 
And these cards can have a high rate as noted in the same article: “In some cases, customers end up owing more in interest than the original bill. Many store cards carry rates around 30 percent.”

• Credit card companies also can play various tricks:
  • The advertising can offer very low rates in large letters, but use terms like “as Low as” or use an asterisk to describe much higher rates depending on different factors such as credit score.  Read the fine print.
  • Business credit cards may seem like a good deal, but they can be problematic too.  They may require support by the holder’s personal credit, not the business’s.  They also don’t have some of the legal protections that personal credit cards do; so there may be higher rates and fees and other surprises.
  • Bonuses offered, such as cash back or airline miles, may be tied to difficult goals such as spending a certain amount in the first few months of holding a new credit card.
  • Many card offers appear to be tailored for each specific consumer and labeled as “Important” or “Pre-Approved”.  But these are just advertising gimmicks and each person still has to go through the full approval process.

• Know the signs of having too much credit card debt and too much debt in general.  If possible, pay off the credit card bill each month, as between 30% to 35% of credit card holders do.
• Pay in cash if you can and keep your credit cards at home except for unusual situations and large charges.  Try to limit use of credit cards whenever possible.
• Automate the payments if possible and if it is comfortable for you to do.
• Combine a good cash-back credit card with discounted gift cards and rebate websites to save money on your purchases.
• Beware of scams.  Do not give out credit card or other personal or financial information over the internet, email or the phone.
• Pay credit card bills as soon as they are received.  Many of us have been taught to pay bills by the end of any grace period and that holds true for most bills.  But credit card payments are determined by the average outstanding daily balance.  Card holders pay for each day the debt is outstanding.  So, unless you pay off your card each month, it is better to make whatever payment that you make as soon as possible after receiving the bill rather than waiting.
• Try to watch the economic changes to understand how they impact credit card and other personal debt.  For example, FED interest rate increases can have a large impact on rates paid, especially credit card debt where the rates typically are tied to increases in the prime rate or some other measure.  “When rates are increased by 0.25%, the monthly minimum due on a credit card will increase $2 for every $10,000 of debt.”. (“How Fed Rate Hikes Change Borrowing and Savings Rates”, Nick Clements, magnifymoney.com, June 14, 2019.)  This may seem like a small number but these small changes in the minimum payments can have a large impact, as shown in the tables above.

 
Conclusion
Credit card debt can be a huge issue for most of us.  We are pressured by society’s values to buy things and lead certain lifestyles.  But the typical American may not earn enough to support these lifestyles and many do not earn enough to cover basic monthly costs.  Nevertheless, credit has been made available relatively easily to allow us to support these lifestyles.  But then, it is possible to get into problematic or even deep debt issues. There are ways to address these issues and keep credit card and other debt within workable limits.

© 2019 Daniel Leibsohn and the California Council of Churches.  All rights reserved.  calchurches.org/financial-coaching.html  Permission is granted to reproduce this article for noncommercial use in local congregations as long as this copyright notice and link are included.

Dear friends,

​In January this year, four humanitarian workers with No Mas Muertes – No More Deaths – were convicted in the US Federal Court in Tucson AZ for the crime of leaving water and food for immigrants crossing into the USA.
 
New standards of law had been put into place to increase the penalties specifically for aid workers. Convicted of trespass, of being in a federal land area without a permit, and of ‘abandoning personal property’ anyone else would have received a fine.  Now the law specifically aimed at these people of faith, may sentence the volunteers to six months in prison plus a hefty fine.
 
Another volunteer, Scott Warren, is currently on trial in the same jurisdiction for “harboring” undocumented immigrants for also providing two men with water and food as they took refuge in an abandoned building.  He faces much stiffer charges for both harboring immigrants and conspiring to harbor them.
 
All of the volunteers are people of faith, Warren’s defense rests on the recent Religious Freedom Restoration Act established by former US Attorney General Jeff Sessions.  However, the American Civil Liberties Union has raised serious questions about the unequal application of the law. 
 
Warren asserts that his faith (he is Unitarian Universalist) requires that we aid the alien in our midst.  He states that he is motivated by many faith directives to assure that all people in need, including undocumented people, are protected against death and harm from hunger and thirst.  That is the underlying motivation for the entire organization, and Warren was acting upon it.
 
In a chilling declaration, the US Department of Justice has declared that this is not a religious belief to be upheld.
 
The government opposed the motion, saying the prosecution does not substantially burden Warren's beliefs. DOJ lawyers said Warren “is not required by his beliefs to aid in the evasion of law enforcement. Nor were the people associated with these charges ‘in distress.’ ”  (www.npr.org October 18, 2018.)
 
With this administration creating laws and standards within those laws that target only specific beliefs – ban on contraceptive coverage for Hobby Lobby and the rights not to bake cakes for same sex weddings – the First Amendment protections themselves are now under assault as much as the humanitarian workers.
 
The assault on religious freedom should alarm each and every one of us. In past cases such as the anti-abortion movement, the standards of law were universal. When barriers were erected around women’s clinic doors, the guidelines were consistent with all types of protests such as labor strikes, as were standards for federal injunctions that established permissible and non-permissible actions. There was one standard applied to all. 
 
These recent cases in Arizona federal court are setting legal standards today that are directed against certain people by employing different sets of norms and consequences from those for anyone else.  
 
We are also being told our faith values do not exist. They are the wrong values for this administration.
 
The immediate concern is the well being of the workers facing prison and further charges.  If you would like to help, please go to nomoredeaths.org
 
You can also find links there to details about their work in general and to Scott Warren’s trial in specific and may make donations to the organization’s legal fund.
 
These are uneasy days for both humanitarian action and for equality before the law.  We encourage you to take your voices to our elected officials on behalf of absolute equality in all matters pertaining to law and to conscience.  We have a First Amendment for a reason.  The law cannot undermine it for some groups while upholding it for others.  That is the pathway to tyranny. 
 
Thank you.

If you are looking for a meaningful last-minute gift, please consider making a gift in your loved one's honor to a worthy nonprofit!  This guide from our friends at the California Association of Nonprofits, makes some great suggestions for gifts that reflect your values and also some important cautions about online giving.

Of course, we would be thrilled if you would choose to honor someone with a contribution to the California Council of Churches here, or California Church IMPACT here; but we urge you to support the nonprofit that most reflects your values.

Thank you!

Black Lives Matter Madonna (Copyright: Bromickeymcgrath)

Art by Mickey McGrath, O.S.F.S,: We need images of the Black Madonna now more than ever






​A powerful reimagining of The Magnificat by our dear friend, the Rev. Jim Burklo, Senior Associate Dean of Religious Life at the University of Southern California.  You can read more in his blog, musings, here.








God in the Belly 
 
Full of God, full to birthing,
Mary howls: head back, hair tossed,
Hands skyward with joy
That wrongs are about to be righted,
Salvation's about to be sighted.
No more groveling for crumbs of charity:
She pronounces justice with crystal clarity.
She's done waiting for the concentrated wealth of the 1%
To trickle down magically to the other 99.
The Santa System is stuck in the chimney;
And she won't be burned by it again!
A new kind of Christmas is coming -
To undo the dogma of domination,
Snap out of blame-the-victim hypnosis,
Chase money-changers out of the temple,
Redistribute the common wealth,
Restore power to the people,
And send the Religious Right empty away.
With one magnificent rhetorical swing,
Mary bats the political center into left field.
Pundits fumble, talk-show hosts mutter,
Super-PAC donors quiver, campaign strategists stutter:
Mary out-Magnificats them all.
So let's get in her line and carry her sign
And holler and act as if we, too,
Have God in our bellies!

An essay by our Director of Public Policy Elizabeth Sholes

I always tried to pay attention to Albert Einstein’s sarcastic comment, “I love humanity. It’s people I can’t stand!” 
 
For years I’ve heard people sneer at those of us who do social justice work saying that is precisely what we do – ignore the people. Then they add (as if they were experts) that if we really knew the people for whom we advocated, we’d hate them.  The final kicker is, if we’re working to find solutions to homelessness, the opposition will snarl, “So how many drifters have you taken into your house?”
 
Well, now I can answer that last question:  twenty-two.  Plus three dogs and one cat.  Oh yes, a toad that lives in an aquarium.  Some stayed inside temporarily, some lived on either the front porch (the police asked us not to do that) or in the backyard in a sheltered gazebo or the garage.  Others came to dinner for the holidays and still others come over to visit and share food.
 
Do I like all of them? Yes, actually, I do.  Even Speedy.  Speedy is pretty hapless because he has no idea how to be polite.  I’ve given up doing much more than feeding him  because the biggest success I’ve had in five years is to make him stop saying, “Yo! Mama!” when he sees me. That’s all I’ll ever get from him. It’s enough.
 
We are not called to like everyone who deserves help.  I freely admit I do judge some actions more than others. I don’t interact with people who hold arguments with other people I can’t see.  I don’t tolerate drug use at my home ever, and I do push sobriety where I can.   
 
My one demand is that, over a period of time, they get signed up for the programs we have, as advocates, fought tooth and nail to obtain for them – food stamps, health care, basic minimal income.  If I’m giving out money, they need to make that effort so I can give out less.  I agree with folksy, progressive radio commentator, Jim Hightower: “Money’s like manure, he said. “You gotta spread it around.”  When people have basic benefits, my own fertilizer goes further.
 
This all started with a very simple act – I let homeless people use our address for their mail.  This is life altering for them since with an address for their mail they know when they have to update their records, know they have benefits at all, and prevent loss as reporting changes occur.  We get our own first class mail at a PO Box anyway, but it was such a simple thing and has made an enormous difference for all those people. 
 
Having protection from the vagaries of both homelessness and being out of touch has made a difference.  A lot of them are Vietnam vets, have worked, and are too old to find employment anymore. A few have disability income finally, one is on Social Security, and others have applied.   The cat lived on a harness and leash for two years to keep him safe, and now he and his owner have their own small apartment because they regularized their social service contacts via our address. We are thrilled for them both.  Others have gone home to family, and still others have VA or HUD housing.  All of this happened because they had an address.
 
I come by this outreach honorably.  During the Depression years, my grandmother fed “hoboes and bums” in the backyard in exchange for some work.  At some point one of them carved a simple figure on the gate – a curled up cat – telling other such men that “a kind-hearted woman lives here.”  Well I don’t have the sign, but everyone knows who we are, including the police who look away because our corner of the universe is calm, peaceful, and clean.  Our neighbors love the men living in the backyard and hire them for weekly clean up and small jobs. 
 
I can walk my extended neighborhood and see people I don’t know who know who I am.  When I had a medical crisis (that turned out to be nothing but was temporarily very painful) I was surrounded by care from everyone we’d helped.  We are a community. I consider them my friends. I’m afraid of no one because no one would let anything happen to me.
 
Obviously what helps this along is that there is a public bathroom a block away that is open 24/7.  I don’t think I have a solution for that where such things don’t exist.  But I’d probably rent a porta-potty or buy a compost toilet – it’s really not too much to do.
 
But if I did nothing more than make sandwiches and hot soup or cold drinks depending on the weather, just sharing our front porch mailbox would, to them, have been enough.  We morphed into the living situations. It’s not for everyone, but it works for us.  There are, however, totally possible solutions we can offer.
 
How life changing would it be if churches put up cubbies with numbers that become “apartments” in the public records to give homeless people an address they can access during business hours? They would keep their social services, have a contact if they got ill, and otherwise just make stability in a small way where otherwise the system rolls over those who are already just barely scraping by?
 
How hard is it to put out a water station and plastic cups (plus a waste basked) in the heat of summer days?  How hard is it to have “cup o’ noodles” and insulated cups for cold weather? 
 
Homeless people give back.  Recently an entire field got cleaned up because a friend who leaves home baked goodies for the people who camp there got harmed.  She does cat rescue work, leaves food bins to make it easier, and those bins got stolen. She got REALLY mad and took them back forcefully from the new homeless man who’d taken them.  The other homeless people who saw what happened rallied around, drove the thief away, and then cleaned up every inch of the mess he (mostly) had made.  She was amazed.  I told her – they did this for you. They know what good you do for animals and for them, and they wouldn’t tolerate the decay of their fragile community stability that teeters on the kindnesses you show them.
 
I am adamant no one needs to repay me, but they DO have to “pay if forward” to others in harm’s way.  They do that – I’ve seen it repeatedly. But they also bring me presents. I have a gorgeous scarf one gave me, bracelets, a bird feeder- things they found, nice things they salvaged – to say thanks.  I treasure them. And no – these things aren’t stolen.  You’d be appalled at what people throw away.  The homeless are masters of finding and salvaging what others merely toss.
 
They are smart, funny, kind, and engaging.  Yes, some have mental health issues, now with Medi-Cal largely under control.  Some have records, freely disclosed and, from me, not judged.  They work hard both at keeping body and soul together and keeping our neighborhood clean and crime free.  Being poor is the hardest work there is, and they put their shoulders to the wheel, day after day.
 
Arrests for illegal camping are almost non-existent in our area because if they are rousted, they can temporarily leave their things in the backyard while they move their sites.  Nothing is more stupid than the ‘cat and mouse’ ticketing of homeless for sleeping outside and making them move their stuff, then ticketing them if they can’t.  Then comes the warrants for their failure to appear (they have no transportation to court or work details), then jailing them for 3 days only to have the cycle repeat.  Just giving them a place to store things while they relocate has cut down on the cycle and let them get legally placed. 
 
One woman a block over – I dislike her far too much to consider her a neighbor – hates the homeless.  She has made as many as 52 calls in one night to the police claiming one man – ONE – was doing terrible things in the alley by her house. These are all lies.  Why isn’t she cited for false police reports? She’s a homeowner. That’s why.  When my homeless friend asked her why she was so angry with him (he had permission to sleep several houses down from her) she said, “Because I’m a CHRISTIAN!” 
 
Seriously.  She said that. 
 
She has called the police on us, to no avail, for giving access to our own property.  She has filed complaints that we are messy and lowering property values (thanks to the homeless men, our house is lovely – neat, trimmed, clean, raked.)  So her brand of “Christianity” does not prevail, thank goodness.  I see her peeking down my driveway from time to time, so I recently put a sign in the front window, “Matthew 25:40 Lives Here.”  For some reason she hasn’t been by since.  Wonder why…
 
“As ye have done to the least of these…”  That is the crux of what faith teaches me. No rules, no ritual, no rites will matter so much as that one directive. Walking the walk on whatever level you can is all we are asked to do.  It’s amazingly simple to find a way to be kind.  And guess what?  You get back friends.  Who knew?  

December 05, 2017 by Rachel Held Evans


It’s an unconventional birth announcement.
Defiant.
Prophetic.
Unsentimental.
We like to paint Mary in the softer hues—her robes clean, hair combed and covered, body poised in prayerful surrender—but this young woman was a fierce one, full of strength and fury. When she accepts the dangerous charge before her, (every birth was risky in those days, this one especially so), rather than reciting a maternal blessing, Mary offers a prophecy:
My soul magnifies the Lord, and my spirit rejoices in God my Savior,
for he has looked with favor on the lowliness of his servant.
Surely, from now on all generations will call me blessed;
for the Mighty One has done great things for me,    
and holy is his name.
His mercy is for those who fear him    
from generation to generation.
He has shown strength with his arm;    
he has scattered the proud in the thoughts of their hearts.
He has brought down the powerful from their thrones,    
and lifted up the lowly; he has filled the hungry with good things,    
and sent the rich away empty.
He has helped his servant Israel,    
in remembrance of his mercy, according to the promise he made to our ancestors,    
to Abraham and to his descendants forever. 
When sung in a warm, candlelit church at Advent, it can be easy to blunt these words, to imagine them as symbolic, non-specific, comforting.
But I’m not feeling sentimental this Advent. I’m feeling angry, restless. 
And so in this season, I hear Mary’s Magnificat shouted, not sung: 
In the halls of the Capitol Building…. 
"He has filled the hungry with good things, and sent the rich away empty.”
In the corridors of the West Wing…
“He has brought down the powerful from their thrones, and lifted up the lowly.”
In the streets of Charlottesville…
“He has shown strength with his arm; he has scattered the proud in the thoughts of their hearts.”
Among women who have survived assault, harassment, and rape...
“He has looked with favor on the lowliness of his servant. Surely, from now on all generations will call me blessed.”
Among the poor, the refugees, the victims of gun violence, and the faithful ministers of the gospel who at great cost are speaking out against the false religions of nationalism and white supremacy…
“His mercy is for those who fear him, from generation to generation.”
With the Magnificat, Mary not only announces a birth, she announces the inauguration of a new kingdom, one that stands in stark contrast to every other kingdom—past, present, and future—that relies on violence and exploitation to achieve “greatness.” With the Magnificat, Mary declares that God has indeed chosen sides.
And it’s not with the powerful, but the humble.
It’s not with the rich, but with the poor.
It’s not with the occupying force, but with people on the margins.  
It’s not with narcissistic kings, but with an un-wed, un-believed teenage girl entrusted with the holy task of birthing, nursing, and nurturing God.
This is the stunning claim of the incarnation: God has made a home among the very people the world casts aside. And in her defiant prayer, Mary—a dark-skinned woman, a refugee, a religious minority in an occupied land—names this reality.  
“God is with us. And if God is with us, who can stand against us?”I hear a lot of professed Christians right now suggesting that it’s okay if powerful men resort to a little lying, bigotry, abuse, and misogyny as long as Americans “get to say Merry Christmas again.” Besides the fact that virtually no one in this country has ever been prohibited from saying “Merry Christmas” in the first place, such a sentiment stands in blasphemous contradiction to the very doctrine of incarnation we are meant to embrace this time of year.
God did not wrap himself up in flesh, humbling himself to the point of birth in a stable and death on a cross, eating, laughing, weeping, and suffering as one of us, so that I can complain to management when a barista at Starbucks wishes me “Happy Holidays” instead of “Merry Christmas.” The incarnation isn’t about desperately grasping at the threads of power and privilege. It’s not about making some civic holiday “bigger and better.” It’s about surrendering power, setting aside privilege, and finding God in the smallness and vulnerability of a baby in a womb.
To claim that the lighting of a national Christmas tree each year makes this country “a Christian nation,” while its powerful systematically oppress the poor, turn away refugees, incite violence against religious and ethnic minorities, molest and harass women and girls and call them liars when they dare to speak up, is, in the words of the prophet Amos, sickening to God.
“I hate, I despise your festivals,” God says in Amos 5, “and I take no delight in your solemn assemblies… Take away from me the noise of your songs; I will not listen to the melody of your harps. But let justice roll down like waters, and righteousness like an ever-flowing stream.”
We cannot claim to embrace the Holy Family while withholding justice from those who would most identify with them. We cannot talk of “making Christmas great again” while taking the side of powerful and violent over the vulnerable. 
The season of Advent is meant to be a time of waiting.
 In years past, I lit candles, sang “O Come Emmanuel,” and pondered in stillness the joy of Christ’s first coming and the hope of his second.  
But this year I cannot be still. This year, hope is hard, belief is hard.
And so I’m waiting with the angst of the prophets, with the restlessness of the psalmist who cried “How long, oh Lord, will You hide your face forever?” and with the stubborn, unsentimental hope of a woman so convinced the baby inside her would change everything, she proclaimed in present tense that the great reversal has already arrived--
The powerful have already been humbled.
The vulnerable have already been lifted up.
For God has made a home among the people.
God has made a home with us.

https://rachelheldevans.com/blog/unsentimental-advent