Contact Us

Certified Logo
Kreps Financial Counseling
CLICK PLAY BELOW to listen to Dave Ramsey talking about Joseph Kreps

Why Counseling? / Myths About Finances

Why Counseling?
Snapshots of personal finance in America today show that normal in American is broke or at best stressful

Snapshots of American Finances
According to The Wall Street Journal nearly 70% of all consumers live from paycheck to paycheck.

In 2005 there were 2,078,415 personal bankruptcies filed in the United States.

Christian Financial Concepts say that in 1929 only 2% of the homes in American had a mortgage against them and by 1962 only 2% DID NOT have a mortgage against them.

Over 62% of Americans retire on annual incomes of below $10,000 according to the U.S. Census Bureau.

Consumer Reports Money Book says the typical household has $38,000 in debt and that total consumer debt has almost tripled since 1980. In 1980 the total consumer debt was $1.3 trillion and is now over $5.9 trillion.

A Marist Institute poll published in USA Today stated that 55 percent of Americans “always” or “sometimes” worry about their money.

A recent article in Medical Economics states that mortgage debt has increased 300 percent since 1975 and foreclosures are up 25 percent over just three years ago.

According to The Department of Commerce in the new millennium, the personal savings rate fell to around -2.2% –the lowest in 60 years.

A new report in Psychology Today finds that conflict over money is still the leading cause of divorce today.



  • Myth: Debt is a tool and should be used to help create prosperity.
  • Truth: Debt is not a tool; it is a method to make banks wealthy, not you.

Debt is a tool and should be used to help create prosperity.

Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you're in debt then you're a slave, in the sense that you do not have the freedom to use your money to help change your family tree. According to a recent USA Today article about debt, 78 percent of baby boomers have mortgage debt, 59 percent have credit card debt, 56 percent have car payments.

It takes a lot of will, discipline, courage and help to slay the debt monster. But it can be done. Imagine how much you could put toward retirement if you just didn't have a stinking car payment? This is how the wealthy build their wealth. Debt is really dumb. Welcome to the real world! Start your Total Money Makeover Now.

Get more information on debt.

Debt Help

  • Myth: I can get quick debt help over the phone or internet.
  • Truth: True debt help is not quick or easy, and it starts in the mirror with you.

I can get quick debt help over the phone or internet.

Where do most people go for debt help? Most people try credit repair companies, debt consolidation, debt management companies or bankruptcy. These services almost never help solve the true problem - behavior. Companies touting quick, pain-free fixes are really scams that cause more harm than good.

So, my Total Money Makeover begins with a challenge. The challenge is you. You are the problem with your money. The financial channel or some tape sets aren't your answer; you are. You are the king of your future, and Dave has a plan.

Debt Consolidation

  • Myth: Debt consolidation saves interest and you have one smaller payment.
  • Truth: Debt consolidation is nothing more than a "con" because you think you've done something about the debt problem.

Debt consolidation saves interest and you have one smaller payment.

Debt consolidation is dangerous because you treat only the symptom. The debt is still there, as are the habits that caused it. You just moved it! Our counselors will not recommend debt consolidation for a client.

The reason that we do not use debt consolidation to get out of debt is because it doesn't work. You end up paying about the same amount, which doesn't really help you pay your debts off faster. Most people end up taking on more debt after consolidation and several end up in bankruptcy.


  • Myth: I'll just file bankruptcy and start over; it seems so easy.
  • Truth: Bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage. Avoid bankruptcy if at all possible.

I'll just file bankruptcy and start over; it seems so easy.

Bankruptcy is listed in the top five life-altering negative events that we can go through. Chapter 7 bankruptcy, which is total bankruptcy, stays on your credit report for 10 years. Chapter 13 bankruptcy, more like a payment plan, stays on your credit report for seven years.

Bankruptcy, however, is for life. Loan applications and many job applications ask if you have ever filed for bankruptcy. Ever. A common misconception is that you can use credit repair services to fix the damage from filing bankruptcy. If you lie to get a loan because your bankruptcy is very old, technically you have committed criminal fraud.

Debt Management

  • Myth: The debt management companies on TV, like Ameri Debt, will save me.
  • Truth: You may get out of debt but only with your credit trashed.

The debt management companies on TV, like Ameri Debt, will save me.

Debt management companies are springing up everywhere. These companies help "manage" your debt by taking one monthly payment from you and distributing the money among your creditors, with whom they've often worked out lower payments and lower interest, but at a price.

When you use one of these companies and then try to get a conventional, FHA or VA loan, you will be treated the same as if you had filed Chapter 13 bankruptcy. Mortgage underwriting guidelines for traditional mortgages will consider your credit trashed, so don't do it. Get a Total Money Makeover instead.

Debt Reduction

  • Myth: I should pay off the debt with the highest interest rate first to get out of debt quickly.
  • Truth: You should pay off the smallest debt first to create the greatest momentum in your debt reduction.

The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20 percent head knowledge and 80 percent behavior. You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.

We've developed a little process called the "Baby Steps" to do one thing at a time and keep the debt reduction process simple. The Baby Steps are the foundation for your Total Money Makeover.


  • Myth: I don't have time to work on a budget.
  • Truth: You don't have time not to.

I don't have time to work on a budget.

The dreaded "B" word. Budget. The only other word that starts with "B" that might generate a worse reaction in most people is the word bankruptcy. Unfortunately, the word budget has gotten a bum rap. It is basically just a plan. When you budget, you're spending on paper, on purpose, before the month begins. But many people view a budget as a straight jacket that keeps them constrained. Freedom and budget just don't seem to go together.

However, when you see that a budget is just spending your money with intention, you'll actually experience more freedom than before. Many people say they found even more money when they created a realistic budget and stuck with it.

Here are a few of the steps we will teach you:

1) Pay off all debt except the house and have a full emergency fund (3-6 months of expenses) in place.

The reason it's so important to knock out the debt first is because once you've paid off the student loans and other debt, you'll have freed up a considerable amount of income to invest. And the more you invest, the better off you'll be in the long run. You shouldn't work hard and earn money to throw it away at 18% interest to American Excess. That's bad math. Make the numbers work for you instead of against you.

2) Put 15% of your earnings into retirement savings, which will ensure that you retire with dignity.

If your workplace offers a 401(k) with company match, start there, but don't count the match as part of your 15%. If something happens (you change jobs, the company quits matching, etc.), you know you're still putting in what you should. If 4% is matched, put in 4%. Any time your employer gives you free money, take it.

If your company doesn't offer a match or a retirement plan at all, start investing in a Roth IRA. If you are married and both spouses are working, you both should take advantage of this powerful wealth-building tool. The best part of the Roth IRA is the interest and distributions on it are tax-free. If you put in $3,000 a year for 30 years in a growth stock mutual funded Roth IRA averaging 12% (the 70-year stock market average), at the end of the 30 years you will have invested $90,000 but it will have grown to $873,000 with no taxes to pay!

Currently the contribution limit is $4,000. In 2008, you will be able to put up to $5,000 in a Roth IRA. If you are 50 years of age, you can put in an extra $1,000 on top of the limit to "catch up." Take advantage of this if it's applicable to your situation.

One more thing. If you start this process early enough (and you should start as soon as possible, regardless of age), hopefully you'll know how to swim because you'll be swimming in money.

The reason I tell you to save for college and retirement before paying off the house is because I’ve counseled 72-year-olds who have a paid-for house with absolutely no retirement savings. You only need to contribute 15% to your retirement, which should leave you plenty to save for college and pay extra on the house to get it paid off sooner. The average baby-stepper pays off their house, while funding their retirement and college savings, in seven years, after they complete the first three baby steps.

Kreps Financial Counseling, a division of Kreps Law Firm, LLC of Birmingham, Alabama represents Birmingham, Alabama Dave Ramsey Financial Counseling clients in and around the greater Birmingham area including Shelby County, St. Clair County, Jefferson County, Bibb County, Chilton County, Talladega County, Tuscaloosa County, Walker County, and Blount County and the communities of Birmingham, Vestavia, Centreville, Clanton, Columbiana, Jasper, Lincoln, Oneonta, Alabaster, Gardendale, Harpersville, Chelsea, Montevallo, Helena Pell City, Tuscaloosa, Talladega, Trussville, Vestavia Hills, Fairfield, Leeds, Hueytown, Center Point, Hoover, Jasper, Homewood, Mountain Brook, Bessemer, Irondale, Pelham, and Northport.

No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.

Kreps Financial Counseling
A division of Kreps law Firm, LLC
502 Montgomery Highway, Suite 202
Birmingham, Alabama 35216
Toll Free: (866) 348-2889
Fax: (205) 824-6548

Call Us Now (866) 348-2889 | Email Us