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Financial trauma, such as anxiety, stress, and guilt over personal financial matters, can be influenced by past experiences and upbringing. A survey by Experian found that over two-thirds of adults in the US have experienced financial trauma, with negative thoughts and anxiety being common when dealing with financial issues. Factors like inflation, lack of affordable housing, and low income can contribute to financial stress. Children who witness financial difficulties are also affected. Communities of color and individuals with disabilities often face additional challenges. The impact of financial stress can last across generations, shaping attitudes towards money and credit. Open conversations about hardships and finding alternative ways to move forward are crucial in overcoming financial trauma. I'm your co-host, Destiny White, and I'm so excited to guide you through this new chapter of Credit Chat Live. Let's get into the episode. You know, financial trauma directly impacts your financial habits. What someone's experienced in their past or their upbringing can absolutely impact how they view credit and financial management, financial health. With that being said, I'm really looking forward to unpacking this topic. Bruce, would you like to share a little bit about the NFCC? The National Foundation for Credit Counseling is a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. It's a non-profit organization. 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So, Experian recently deployed a survey of 2,000 consumers across the U.S. and found that more than two-thirds of adults have experienced financial trauma and 65% of adults experience negative thoughts, flashbacks, or anxiety when dealing with financial issues, which I can totally resonate with. Bruce, can you tell us about what financial trauma is and some factors that might lead to financial trauma or stress? Yeah. I mean, financial trauma is something that occurs when you experience anxiety, depression, stress, or guilt over different aspects of your personal financial life. And, you know, these kind of things make it difficult to focus on work or other important aspects of life, relationships and other things. And this financial stress can be caused and triggered by a number of different things, but it's essentially just that shock that comes from something that occurs in how you're managing your personal finances and the kinds of things that are related to that. I might add, too, a little bit to that. Please. In some ways, financial trauma can occur before you actually have any finances. If you think about when you're young, what happens in your life around money? You know, I overshare about my life, but, you know, my parents thought about money a lot, and I know that impacted my approach to money as I got older and the way I thought about it and the way I managed it and sometimes didn't manage it, which led to more trauma. So it's, I guess, more stress, certainly. And, you know, so I think you're thinking about what happened in your past around money. Did you learn about money? What did you learn about money? How did you learn about money? And is it investments? Is it credit? Is it checking and savings? How does cash flow work? All of those things that I think most of us probably don't really get a good grounding in when we're young. And if all we hear is, you know, arguments about money and people being upset about it, never learn to have a good relationship with money. And that's what really is what you have to sort of grow into over time. Definitely, Rod. And it can be common to grow up and you hear your parents fighting about money and that is the only basis that you have on money management and that it's this taboo thing and that mom and dad were fighting over it and we're struggling to survive. I just wanted to throw out there that I personally experienced something, Hurricane Katrina. I dealt with that at a very young age where I'm wondering, where's the next place that we're going to live? You know, are we going to be okay tomorrow? Are we going to lose this housing that we have now? I started my life feeling like the rug could get ripped right from underneath at any point because I dealt with that trauma so early on. And it's just so important to normalize having conversations about hardships and not making those past hardships that you went through a basis of how you view money forever, how you view survival. That there's other ways to move forward that you can excel even though you've experienced past trauma or your parents did or even your friends, your community. It's just important to talk about. Who is most impacted by financial trauma or financial stress? What are some examples of populations that might deal with that? Yeah, these days it's hard to imagine who isn't dealing with financial trauma and financial stress. We've got a situation right now where we've gone through a period of extraordinary inflation, increases in the cost of living, the lack of affordable housing. I mean, I can go on and on and on and on. So it's hard to even imagine whose lives have not been affected by these kind of things that lead to financial stress. And I think going back to what was addressed earlier and what Rod communicated so clearly is that, you know, these things not only affect adults, they affect the children who are witnessing the adults going through these kind of difficulties and the world around them. And so, you know, it's having a very broad impact right now, the economy is on people's lives and causing that kind of stress. But I think people who are more vulnerable to these types of stresses, I think top of the list are people who were already struggling financially, low-income households, low-wage earners, especially single-parent households where the paycheck has to be stretched even further to make ends meet, not enough to be able to put aside into savings, not enough to be able to provide for the basic needs under normal circumstances, and then there's this difficulty with the economy that's happening right now. So I think top of the list are low-income wage earners, people with disabilities face different challenges financially. So that's another area where this has a tremendous impact. And also diverse communities of color that are typically underserved by traditional financial services, that is still an issue and that is still a challenge that we as a society are trying to overcome. So in times of financial stress, lack of services in those communities makes it even more difficult for families to get by and to survive. To summarize what Bruce just said, everyone, at some point in life we all face financial stresses. And Destiny, like you said, Hurricane Katrina, we saw what we called the Great Recession from about 2007 to 2010-12, and a lot of millennials experienced their parents at that time at a really formative time in their life going through financial stress, and so that affects their approach to money. We saw millennials, it was really interesting, having been around some people, all this gray hair, I didn't have this when I started this career, or then so much. But when millennials were, they were early teens, teenagers young enough to see what was happening with their parents as the Great Recession went on. What we saw over that period was that millennials were slower to use credit, in large part because of what they saw their parents go through. So adopting credit cards, for example, came later for an entire generation. And that's indicative of a financial period that was creating a financial stress and financial trauma for everyone. So there are really some really strong markers out there. What happens? Well, you can point to the entire millennial generation going, I don't think I want to use credit cards because I saw what happened to my parents when all of this happened. My own father, he grew up in the Great Depression, and so it was the same kind of impact that had on his generation, and that led to some of the ways that he managed household finances when I grew up and his reluctance to get into debt and his very careful decision-making process when it came to anything budget-related for the household. 100% makes sense. Those backgrounds, that could last generations, the financial impact depending on what generation your parents and grandparents came from. The more we're able to talk about money, even if it's in general terms, I think is helpful. It lets us learn. And in a lot of ways, it lets us know that other people share the same experiences or similar experiences. So we're not alone, and I think that can really help improve relationships with money and how you approach money and make it less animosity. What's the word I'm trying to use, Bruce? I'm getting less animosity statistic. It's not a word. Something like that. Animosity, fear, and also what you were saying, Rod, about credit. There was a generation where credit cards, using credit cards was just looked at as a little bit more taboo due to the economic situation that the world was in. And I'm also glad that we're able to provide a platform to spread education and knowledge from reputable resources and reputable sources to discuss best practices of using credit. And credit is not the bad guy. It's not the end of the world to open a credit card because you're in a position where you're not able to handle your finances this particular month. But as long as you have a game plan going on, it's just because your parents thought about the fact that maybe dad didn't pay the credit card bill and you have to hear it slamming doors because, you know, your mom opened up another credit card. Like, it's just, you don't have to have the same habits and experiences that your parents had. As long as you open yourself to have education from reputable resources on how to use credit, right? I have another question specifically for Rod. What advice would you give people who may not have grown up learning about money at home? It's now your responsibility. You know, that's not always a, you know, that doesn't sound like an uplifting kind of answer. But it really is because you are empowered to take action and to learn and improve your position and your relationship with money. It's like everything, everything's about relationships it seems like in our lives and money is a relationship. So if you didn't learn about money and you're listening to this conversation, you're taking action to help improve that relationship and to learn more about what you can do to make money a financial tool instead of it seeming like this barrier to everything you're trying to achieve. So seeking out knowledgeable people and organizations, asking for help. You know, we know that people a lot of times don't talk about money because they're embarrassed or they're ashamed because they think they've done something wrong. And, you know, I was telling them that you can talk to me because I've done it all and made all of the mistakes. And so, you know, we need to talk to each other and be more open about money. And credit is one thing that people don't know about. I didn't know anything about credit really until I started working for Experian. So, you know, I always share the story that when I, my first experience with a credit report was applying for a loan to buy a used motorcycle. A lot of people go, well, then it shouldn't have been a good experience. And the banker was not in a little town in Kansas and he didn't like motorcycles. And I applied and it was like a $2,000 or something. And we were at the counter and he said, okay, I've got an application. He said, I'll be back. I have to check your credit. And he left. And I was standing there for like 20 minutes and I had no idea what he did, but he came back and said, well, your credit's good enough. I have to give you the loan. And well, that's good. And I said, well, that little MG you drove gets wrapped around the telephone, pulled in a date. That bike's about the same size. So I think we're pretty even, none of your business. Then I started working for Experian and I finally went and learned where he went. So he put me in the back room to check my credit report. Bruce and I have known each other for quite a long time. And he knows that, you know, I tell people talk to NFCC. It's not there just when you're having a problem either. You know, you can talk to a reputable counselor. I'm doing an ad for NFCC, but it's true. You can go in and they can help you learn the budget. They can help you learn how credit works and they can give you advice based on your particular circumstance and situation, your financial reality. And so ask for help. You know, that's really crucial. Take ownership of your situation and act on it. That's the only way to really overcome that, that relationship challenge, I guess. And I would follow up on that answer. I mean, that was a really complete response. And I would just say that some of the challenges that people have in taking that first step is the shame and the embarrassment or the lack of trust of some of the sources of help that are being offered. But if you take care in taking that first step and you work with reliable, trusted sources, like going to Experian and looking at the information and the consumer education that's available through Experian, or talking to a nonprofit credit counselor, like those available at the NFCC through NFCC.org. I mean, those are two great places to start. You can get individual one-on-one guidance from experienced financial professionals, and you can get some good information about how to take those first steps and learn more. So I think that can help in taking the first step. But you shouldn't feel ashamed in taking that first step, going back to the point that Rod made initially. You know, just the fact that you're doing that, the fact that you're even watching this, for example, is something you should be proud of because you're making yourself more self-sufficient, knowledgeable, and capable of making better informed decisions for yourself when it comes to finances. Emotion is a huge piece of the money challenge. So finding people who can give you objective advice based on your data, being a data company, what do the numbers say, and take that emotion out of it is really important. So obviously people will say, well, talk to your family and friends. And I can say that maybe it depends on who your family and friends are and if they have any real knowledge. And so finding someone who can give you objective, non-emotional guidance can be really helpful, too. Yes. Yes. Thank you, Rod. Thank you, Bruce. That was super duper insightful. And if you're listening right now, just know you're taking an amazing first step. I mean, it could be your first step or you're already extremely educated with financial literacy, but this is a great step and tool. And also, you know, going to NFCC.org, going to Experian.com. There are tons of resources for you there. And I love what Rod said about credit being a financial tool, just looking at it as a tool and just using whatever tools you have to just increase your knowledge day by day. I have a question for Bruce. So that is definitely a major factor that could be causing financial stress for consumers. Of course. I mean, look at today's day and age. What are some strategies that you have for managing and paying off debt? Some people feel like they're backed into a corner with their debt and they don't think there's any solution to make it more affordable, more manageable, getting it back on track. The truth is there's typically in most situations, there's more than one option. And sometimes it's just seeing your way through the stress and the confusion to finding those options. And I guess just briefly touching on what was said earlier, sometimes talking to a third party objective advisor can help you see your way clear. But just in the broad sense of answering the question, I can offer a few options that are available to people in situations where they're struggling with their debt and they're trying to make it more affordable. I think if you have good credit and you've been managing your debt responsibly, paying up to date, keeping your payments on time, you probably can look at options for consolidating your debt, refinancing to obtain a lower interest rate, lower fees, possibly getting a credit card that has features that might be more desirable or useful to you. So there are all kinds of things that you can do in restructuring your debt if you have a good credit score, if you have healthy credit, and if you're managing your debt in a way that looks good. If you're not in that situation, and this is the case with a number of Americans right now who are struggling just to keep things on track and to stay afloat financially, your options might be a little bit fewer. If you went to look at refinancing and you didn't have a top credit score, for example, you might not be able to achieve the goal of lowering your interest rate, which is, I think, something that should be a priority any time you go and refinance or restructure your debt. You should never end up in a situation where your interest rate goes up instead of down because the goal is to save money over time, not just your monthly payment. So even if refinancing may not be an option, you may be able to try to pay extra each month above your minimum payment. Look at your budget for answers to the issue of paying down your debt and getting clear of your debt faster. And the more you pay over your minimum payment, the faster you can pay off your debt because more of that money is going to principal. And then over time, the less interest you pay and so you're saving money over the long term. But that may not be the answer that people are looking for there either. So if you're past due, if you're struggling to keep your accounts on track and you've already fallen behind, that's when you may want to reach out and look at the option of talking to a credit counselor, a nonprofit credit counseling agency connecting with someone through nfcc.org, and they can take a look at your entire financial situation. These are one-on-one interactions with financial professionals who are nonprofits, so they can look at your budget, they can look at your housing costs, they can look at your consumer debt, your credit cards, your loans, and they can give you a solution that is holistic. And that's very important because your credit card debt doesn't live in a vacuum, your student loan debt doesn't live in a vacuum, neither does your mortgage. And if you're already struggling and you're falling behind, this could be an answer because there are programs available through nonprofit credit counseling agencies that can help you achieve a lower interest rate, that can help you automatically get back on track with your creditors so that it shows paid as agreed, and to help you with budgeting challenges so you can live more affordably and achieve financial stability. So that's also an option there as well. So those are just a few options. But, again, if you're in a deep state of financial distress and you're really struggling, I think it's important to get advice before making any key decisions that affect your future. So that's the one thing I would mention in closing here is not to act quickly, not to give in to the urgency of the crisis. Yeah, absolutely, Bruce. That was super helpful, I will say. Rod, did you have anything to add to Bruce's amazing color that he added to people who are experiencing debt or financial issues and are just looking for a way to dig themselves out of this hole that they could be in? There's no quick fix, right? And that's what people always, how can I change this fast? And the answer is, well, it took time to get into a situation that's going to take time to get out. There are those who prey on that desperate sense and lack of knowledge, and will tell you things like, if you just pay me, I'll get that accurate stuff off of your credit report. And I always caution people because when that happens, they're violating federal law right out of the gate. Their credit repair firms cannot take money up front, and they can't promise to remove accurate information. So know you're right, and understand that it will take time. There is a lot of digging. There was digging to get into debt, and there's digging to get back out, and that takes time. But be patient. People will often, it's that desperation and that sense of, my credit report, it's forever, and it's not. It's not like the history books in school. Your credit report can change, and you can change it. It's just going to take time. And be patient. Seek good advice, and follow up, and make sure that you have a plan. Don't feel like it's forever, and don't feel like you can't change it. Don't give up because we're, again, I can't tell people enough, we've all been there, and you're not alone. And we want to help you get back to a place of financial success, financial health. And it's about knowing that there's help for you, and that you can help yourself too. But don't give up. 100%. And I also just wanted to quickly add to that. There may be people listening who are starting from ground zero. Maybe they experienced so much financial trauma that they are under the impression that starting any sort of credit lines, opening a credit card, anything is going to be harmful. And they might be in a position where they are listening and they are considering entering the credit atmosphere and opening a credit card, and they don't have any credit history, any background. And Experian is a wonderful resource. We have Experian Go, where you are able to create an online account, and you'll be able to get into the credit ecosystem, and you will have an Experian credit file. And you would also be able to sign up for things like Experian Boost. And if you have a Netflix account, something as simple as that, or even potentially your rent payments could be added on to Experian Boost, and that is a way to start building credit. And it might take time. Like Bruce and Rod are saying, this could be a gradual process, and eventually you'll get to the place that you want to be if you're starting from ground zero. And I don't know if either of you had anything to add to that. Take advantage of those tools. Know that they're free. Know that they're permission-based, so you tell us if you want us to include those accounts or not. And the other thing I always share, though, is the most powerful word in credit is no. Simple little two letters that can be really hard to say, but you can always say no. And that's the thing you have to master. But know when to say yes, know when to say no, and then use the tools that are available today that weren't just a matter of weeks or months or years ago. You know, there are steps you can take to build credit the right way, but you should never borrow needlessly. And so it's, you know, take the steps, the first steps with things that you already have going on that you may not have thought would help your credit history. That goes back to what Rod said. When you look at the benefit of using a service like Experian Boost, being able to count your rent payments, being able to use Netflix and watch movies to help build your credit, just choose the movies wisely. But there are things you could already be doing that could be helpful to building your credit, and then you can take the steps towards opening up new lines of credit and borrowing when you need to in order to reach your financial goals. Because at some point there are some big things in life that might require financing where you just can't get around the step of borrowing. If we're buying a house, for example, or getting a car. So doing these things in the early stages to establish a solid credit history makes that process so much easier when the time comes for those things. A million percent. Thank you. Thank you so much, Bruce. And I want to thank you both so much for your insight today. I'm sure you've helped so many people. Light bulbs probably went off in people's minds for first steps to improve their situation. So thank you so much. And before we close, can you please let everybody know where they can learn more about you and the NFCC? They can reach the NFCC at nfcc.org. If you don't feel like going online, you can call the NFCC. 1-800-388-2227 is the toll-free number. That will connect you with a counselor. And you can talk to them about your budget, your finances. If you're struggling to keep up with your debt, that would be the number to call. And I would certainly encourage people to visit the website, though, because there's a lot of really good information there. We try to keep it up to date with some of the latest things that are happening, especially right now with student loan debt and so many people having questions about that. Some of the things that are happening and the challenges for people managing credit card debt. So, again, nfcc.org would be where I'd recommend that people go. Thank you for listening to this episode of Credit Chat Live. I'm Destiny White, your co-host. Signing off for now. Don't forget to subscribe and stay tuned for more. Bye.
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