Using Your Money Wisely

How can I protect myself when buying goods and services?

  • You have the right to ask questions and be clear about what you want.

  • Take a day to think before making a large purchase and handing over your hard-earned money.

  • Keep all receipts and any warranty information for expensive items.

What should I know about contracts?

  • Always read a contract in full before signing it. Once you sign, you may be stuck with it!

  • If you don’t understand something in it, try to get help from someone you trust.

  • If there is a finance charge, there must be a written contract. A finance charge is the cost of borrowing money.

What am I looking for when I read a contract

  • A contract should talk about everything the buyer and seller agreed to do.

  • If you are paying for an item with four or more payments or if there is a finance charge, there must be a written contract that lists: interest rate (APR is the annual percentage rate), total interest amount, principal (the amount borrowed/financed), principal amount plus interest, due date, and number of payments

  • Make sure you know the total cost to buy the item over time, don’t just look at the monthly payment.

YOU HAVE THE POWER!  It is your money, so you have the power to make or break a deal! If you are getting pushed around or it doesn’t feel right, it’s always OK to walk away!

What if a contract leaves out something important?

Ask to add it in! A buyer and seller can agree to add things to a contract any time before it is signed. If you write in some changes, have everyone who signs the contract put their initials next to all changes.

Example: When looking at a car, the salesperson promised you they would give you free oil changes. But, when you read the contract, it doesn’t mention oil changes. Make sure the car dealership adds this promise to the written contract before you sign it!

Buying a Used Car

  • Most car lots selling used cars must have a Buyer’s Guide in the front passenger window. Read both sides of it and see if the vehicle is sold “as is-no warranties.” If there is a warranty, the terms must be on the Buyer’s Guide. “As is–no warranties” means what it says – the seller doesn’t promise to fix anything!

  • “Lemon laws” do not apply to used vehicles – just new ones. (Lemon laws are laws that protect buyers of new cars when the car has problems shortly after you buy it.) Lemon law info 

  • Check out the price of the vehicle to see if it is fair. You can get information from online sources or go to your local library to see if one of the librarians will help you look it up.

  • Be sure to test drive the vehicle, and if you can, get an independent mechanic to check out the vehicle before you sign any contract.

TIP: Make sure you keep the Buyer’s Guide and all papers you get when you buy a car, but…don’t put them in your glove compartment! If your car is ever repossessed, the papers an attorney will need will be taken with the car. Keep only the documents you need in the vehicle (registration and proof of insurance).

Predatory Lending

Predatory lending is when someone borrows money for a short time with high interest rates. These deals always favor the lender a lot more than the borrower. It is easy to get one of these loans if the borrower has regular pay from a job, Social Security, or other income.

What are payday loans and check advances?

  • A payday or check loan is when a lender gives a borrower cash in exchange for a postdated check. (A post-dated check is a check with a date in the future.)

  • The lender agrees to hold the check until the borrower’s next paycheck or benefits payment date. Sometimes this is called a check advance. The borrower will always have to pay the loan back later at the set date.

  • The lender charges a big fee for this service. The interest may even be as high as 600%!

What happens if a payday loan or check advance is not paid when due?

  • The lender may let you change to a later payment date but will charge another fee to do this. (Borrowers may feel trapped and keep getting deeper in debt by borrowing more and more money, stretching out payment due dates, and getting more fees added!)

What is a title pawn?

  • Title pawn dealers give a small cash loan in exchange for a borrower signing over the title to their car or truck. They seem like a good idea to get fast cash and keep your car or truck but be careful… you may be signing away rights to your only way to get around!

  • Try to avoid getting a title pawn, and if you must get one, pay it off as soon as you can.

What happens if a title pawn is not paid when it’s due?

  • You may be able to pay a renewal fee to stretch out the due date, but this fee does not lower the amount you borrow; it will make the debt bigger.

  • Sometimes, people keep paying more renewal fees because they cannot pay off the original amount borrowed, and they could pay more than the vehicle is worth in the end!

  • If the borrower can’t pay the original debt or another renewal fee when due, the lender can pick up the vehicle (remember it has the title) and sell it. Even if the vehicle sells for more than the debt owed, the lender gets to keep all of the money from the sale.

HOT TIP: Easy-to-get money almost always comes at a high price so always try to avoid it! These places make a lot of money. If you must do a title pawn, payday loan, or check advance, try to pay it off as soon as possible.

What is Rent-to-Own?

  • Rent-to-Own is where a company sells big items (like furniture or electronics), and you pay for them on a weekly or monthly payment plan. You get the item’s total price when you add up ALL the total payments on a rent-to-own deal. You could end up paying as much as five times what the item would cost with cash!

  • On top of the item’s total price, rent-to-own deals may have other charges like insurance and late payment fees. (Example: A TV that costs $300 cash could be $1,200 with a rent-to-own deal when you add up all the payments and charges.)

Bill Collectors and Debts

Handling Bill Collectors: Creditors are calling and stressing me out! What can I do?

  • A creditor is a company that has loaned money or provided services to you with the understanding that you will make payments on the debt to them. Keep in mind you could be sued by the original debt holder or another company that took over the debt (a debt buyer).

  • If your bills get out of control, always ask the creditor for help first. Be careful to promise only what you think you can do, or it can make things worse.

  • It is usually NOT a good idea to take on a loan to pay off a loan. If you can’t pay now, you may not be able to pay them later either.

  • Debt buyers are under federal laws that say they cannot be abusive, unfair, or tricky when collecting debts from you. You can report a debt buyer harassing you to the Consumer Finance Protection Bureau (CFPB) at: (855) 411-2372 or here 

What happens if I get sued over a debt?

  • You will know a lawsuit has been filed if someone (the sheriff’s office or another process server) hands you court papers. Remember, you could be sued by the original debt holder or another company that took over the debt (a debt buyer).

  • The lawsuit paperwork will tell you how much time you (or your lawyer) have to file a written answer with the clerk.

  • Always file an answer in writing with the court clerk. If you don’t, the company suing you will automatically win and get what they asked for in their papers!

What happens if a creditor wins a debt collection lawsuit against me?

  • You will not go to jail for not paying debts. (Except child support and tax debts)

  • The creditor may garnish wages or your bank account. (Garnishment is when a creditor gets a court order to collect a debt from your paycheck or bank account.) If the court issues a writ of execution, creditors can use that to get your home, land, or personal property.

  • A creditor probably can’t get your Social Security, veteran’s benefits, or other federal benefits. (Unless it’s a federal debt like a student loan or tax debt)

  • A creditor probably can’t get your child support or spousal support

What is bankruptcy?

Bankruptcy is when debtors file a case in bankruptcy court to get help managing their debts. Sometimes bankruptcy can get rid of debts, but not always.

  • It is not free to file for bankruptcy! Debtors have to pay court fees and often pay an attorney to help them. A bankruptcy filing stays on your credit history for a long time.

What are the different kinds of bankruptcy?

  • Most people file Chapter 7 or Chapter 13. (Family farmers might file Chapter 12)

  • Chapter 7 is what most people think of when they think of bankruptcy. Whatever the debtor owns is sold to pay off debts. Some things are exempt from being sold (with limits).

  • Chapter 13 is basically a payment plan to pay off debts with creditors over time.

How do I know if I should file for bankruptcy and what kind do I need to file?

Try to talk to a lawyer to find out whether you should file for bankruptcy and, if so, what kind. Often, a lawyer can do something else to help you avoid it!

Avoiding Scams and Identity Theft & What to Do if it Happens

Identity theft and scams

Every day people are the target of identity theft and scams. If it happens to you, know that you are NOT alone; scammers use every trick in the book. You have the power to get help!

What is identity theft?

  • Identity theft is a crime where someone takes another person’s information by fraud or trickery to get their money.

  • A thief steals your name and address, credit card or bank account numbers, Social Security number, or medical insurance account numbers.

  • An identity thief could use your information to: Buy things with your credit card, get new credit cards in your name, steal your tax refund, open a phone, electricity, or gas account in your name, use your health insurance to get medical care, and more!

What should I do if identity theft happens to me?

  • ACT RIGHT AWAY! Call the companies where the fraud happened to alert them.

  • Call to put a fraud alert on your credit report. You can call any of the three credit reporting agencies to do it. If you call just one of them, they must let the other two know! Experian (one of the three agencies) is 888-EXPERIAN (888-397-3742)

  • Report identity theft to the FTC (Federal Trade Commission) at 1-877-438-4338 or go to:

How can I protect myself from identity theft?

  • Protect papers and cards with your account numbers & don’t give out your Social Security number— very few places need it these days. Just give the last four numbers—not the full number. Never give out numbers over the phone unless you placed the call.

  • Throw away papers carefully—shred or use a black marker to mark out private info.

  • Watch your mailbox—bring your mail inside as much as you can so it does not pile up.

  • The IRS, Medicare, and Social Security will NEVER call, e-mail, or text you to ask for information (unless they are returning YOUR call).

Friends, family, and fraud—it happens more than you might think.

Sometimes, a family member or friend uses information to buy something or open an account without permission.

  • If it happens, RIGHT AWAY, talk to the business, bank, or place where it happened and let them know about the fraud.

  • You may have to file a report with your local police to get help with getting your money back or to get off the hook for the debt.

  • Many people don’t want to report a friend or family member, but that is often the only way to get help.

How can I protect myself from scams?

  • Get on the free Do Not Call Registry. Call 1-888-382-1222 (TTY: 1-866-290-4236) from the phone you want to register or go to

  • Don’t talk to strangers! If you can see who is calling and you don’t know them, don’t answer it. Let the call go to voice mail if you have it.

  • If you can’t bear to hang up on someone, you can say, “I will check that out,” then get off the phone and find out on your own if they are telling the truth.

  • Be extra careful when someone comes to you instead of you finding them, and it involves money. It’s your money, so YOU decide who gets your business!

TIP: If something seems too good to be true, it likely is. There is no “easy money” out there. If a caller you don’t know is pushy or trying to scare you, beware. They may be a scammer or trying to sell something you don’t need. Take control and hang up!

Watch Out For These Popular Scams!

  1. A caller or texter says your family member is in jail (or another emergency), and you need to send them money (they may often know your family member’s name)

  2. A caller or texter says that they are with a charity (often right after a disaster) and need donations

  3. A caller or texter asks you to send money to someone else for them (this is called a money mule scam)

  4. A caller or texter asks you to buy and send gift cards (gift cards are always a red flag for scams!)

  5. A caller or texter says your bank account has been frozen and wants information from you (Hang up and call your bank to check)

  6. A caller or texter says they are from a bank, the IRS, or Social Security, and they want you to tell them your private information (the IRS and Social Security NEVER call or email you unless you have called them and someone there is returning your call)

  7. Someone you don’t know calls or visits you to make repairs to your home (check them out first before hiring them, and don’t pay until the job is done!)

  8. You get a check you didn’t expect, and you don’t know the sender (talk to your bank about it before depositing it)

Report all fraud and scams to the Federal Trade Commission (FTC) at:
1-877-382-4357 or go to: 

Table of Contents

(VIDEO) Financial Literacy: Avoiding Scams & Fraud