Financial Counseling and Problem-Solving Techniques, Exams of Career Counseling

Download Financial Counseling and Problem-Solving Techniques and more Exams Career Counseling in PDF only on Docsity! 1 / 22 NACCC CFC test prep study guide 1.Five stages of counseling: 1. Rapport and relationship building 2.Assess and define the problem/gather info 3.Goal setting 4.Strategy implementation 5.Follow-up 2.Objective measures of financial health: Positive debt/income ratio Adequate insurance Steady and adequate salary Adequate savings for emergencies Adequate savings for retirement Good credit rating Adequate cash flow to meet everyday expenses Established and utilized spending plan etc. 3.Subjective measures of financial health: A sense of fulfillment A sense of happiness Peace of mind 4.What are some of the specific concerns clients bring to counseling?: Im- prove credit (score, access, etc) Resolve marital conflicts over money Avoid bankruptcy Deal with creditors Cut expenses Increase income etc. 5.Describe how process goals differ from outcome goals: Process goals are the domain of the counselor and have to do with how the client experiences the counseling. These work to create trust, respect, and rapport. Outcome goals are the domain of the client and have to do with the goals the client sets for themselves, such as improving their credit score. 6.According to the Business/Human model, what do clients need at the human level?: Attention Courteous 2 / 22 treatment Respect Acceptance 7.Name the five types of communication: Social Persuasive Non-verbal Expressiv e Cognitive 8.List ways counselors can improve communication with their clients: Adopt an accepting attitude Express clearly Listen for the total meaning Be physically attentive Observe non-verbal communication Share responsibility for the communication Be expressive, be yourself Be assertive, not aggressive Avoid "you should" messages (can use "I" messages instead) Show empathy 9.Common barriers to communication: Anxiety and self- centeredness Needless interruption Hidden agenda Overreacting to emotional words Passing judgement Stereotyping 10.Explain how effective counselors establish trust with their clients: Empathy Genuineness Positive regard Counselor communicates to client that they have their best interest in mind Counselor demonstrates expertise and knowledge necessary to help with client's dilemma 11.Explain how counselors show positive regard to their clients: Affirmation Remain non-judgemental Respect Acceptanc e 5 / 22 bills? Are you working right now? Do you want to improve your credit score? 6 / 22 22.Three examples of open-ended questions: What feelings come up for you when you think about money? How is your work life? What differences exist between you and your partner when it comes to finances? 23.Maslow's hierarchy of needs: physiological, safety, love/belonging, esteem, self-actualization 24.Types of economizing: substituting: replacing a more expensive item with a like item of similar quality at a lower price, e.g. an off-brand item conserving: take care of your stuff to extend its life, e.g. perform needed maintenance of possessions for everything from laundry to vehicle cooperating: trade home-repair skills with friends and neighbors, help each other, barter, etc. utilizing community resources: libraries, local assistance w/ energy costs, govern- ment discount programs, public transit 25.Steps in the foreclosure process: Notice of default Notice of acceleration Notice of sale ? 26.Non-installment credit: ... 27.Meyers-Briggs :: Perceiving (P) type: Improvises and adapts easily ... I(ntrover) - E(xtrovert) N(intuitive) - S(ensing) T(hinking) - F(eeling) J(udging) - P(erceiving) 28.Effective goal setting includes the following: Developing a thorough action plan ... 29.Unsubsidized loan characteristics: Accrues interest during the grace period ... 30.Subsidized loan characteristics: Does not accrue interest during the 7 / 22 grace period Cannot be discharged through bankruptcy ... 10 / How will the client reach stated goals? (work on getting there: time to act; brainstorm for options, evaluate each option, act on the best one; come up with a plan that works) 37.Cultural encapsulation: term coined by Gilbert Wrenn (1962) to describe in- sensitivity to cultural differences 38.Net worth: Assets minus liabilities 39.Spending percentage guidelines: Used in budgeting to determine whether someone is spending within an acceptable range within any particular category. For instance, that a person should target no more than 25-35% of their income spent on rent, 5-15% on food, 5-10% on utilities, and save 5-15%. 40.The three "A"s of money relationships: Money and achievement (people work hard and want something to show for it, which may translate into purchasing high-ticket items) Money and approval (make money to seek acceptance by and belong to social groups; keeping up with the joneses) Money and agitation (spend money to alleviate stress, feel better about themselves, or out of spite 41.Types of spenders: The fanatical shopper (bargain hunter to the extreme) The impulsive buyer (lack of control, no shopping plan) The passive buyer (pushover, easily persuaded to buy things they don't want or need and then blame others, generally don't like to shop, put little time and effort into it) The ulterior motive spender (shops as a means of escape, to deal with stress/difficult feelings, as a form of revenge, or to gain approval) The esteem spender (keeping up with the joneses, shops in prestige stores and to impress others) The special interest spender (spends on a hobby, collection, or activity that eats up a lot of income; may also be addicted to gambling or drugs, or a habitual drinker; they could be bored or have a need to be unique) The hot potato spender (they procrastinate, worry about making new and unfamiliar purchases, then buy at the last minute to put an end to the ordeal quickly; in the end, what they buy is probably far from what they needed) 42.Liquidity ratio: Total cash/liquid assets divided by total monthly expenses; meant to show how many months a person could meet their expenses in the event of losing their income 43.Front-end ratio: A type of debt/income ratio that takes only monthly mortgage (PITI) or rent payment divided by gross monthly income; also 11 / known as the housing ratio 44.Back-end ratio: A type of debt/income ratio that takes all debts into account divided by monthly gross income 12 / 45.Types of expenses: Fixed: e.g. mortgage payment Variable: e.g. utilities Periodic: irregular or large-impact payments, e.g. car maintenance Discretionary: e.g. entertainment 46.Life-cycle planning: Career planning Savings planning Retirement planning Debt planning Insurance planning Investment planning Estate planning (after death, e.g. will, tax planning) 47.How can Maslow's Hierarchy of Needs be used to gain insight into a client's spending habits?: Counselor can use it to determine client's motivation for spending, consumption patterns, and to help client differentiate between needs and wants 48.Three steps to decision-making: Gather info: what's the problem, what needs work, what could be improved Process info: client analyzes and processes the problem; they will do this according to their own values, beliefs, feelings, and attitudes; some clients will try to skip this stage entirely and jump to a decision Choose and execute: point of commitment to act; important that client decides and acts according to their values and counselor helps client clarify those values; counselor also helps client develop a bias towards action versus doing nothing 49.Locke and Latham's key aspects of goal-setting: Set short and long- term goals: they feed off each other (short-term goals add up to the long-term objective, while the long-term goal gives short-term goals meaning) Participative goal-setting: client should take an active role in setting goals, while counselor should facilitate the goal-setting instead of making suggestions; client will be more likely to commit to and achieve stated goals Feedback: keeps client on track 50.Four steps of planning: State goals in specific terms Create a plan for how to achieve each goal Evaluate progress towards the goal 15 / behaviors Client's underlying belief-systems Client's sense of powerlessness 57.Albert Bandura's willingness to take action: Outcome expectations: the client believes that the action will result in the desired outcome, e.g. a client believes that maintaining a budget is crucial to controlling spending Self-efficacy expectations: the client must believe that they can successfully engage 16 / in the necessary behavior to achieve the desired outcome, and thus an action will occur; e.g. the client is reasonably sure they can do what it takes to resolve outstanding debt: consistent payments, increasing income, cutting expenses, and creating the necessary conditions to do those things If either of these conditions is missing, client inertia will set in. 58.Bandura's self-efficacy: I believe I can do something because I have the skills and resources to achieve it Client may need help building self-efficacy: e.g. they want a better paying job, but lack interviewing skills; help them get connected to resources to practice interviewing to build their self-efficacy around that and the hiring process in general 59.Four ways to boost client's self-efficacy: Monitor progress: e.g. acknowledge- ment of small wins to boost client confidence to tackle larger problems Inspire by example: "seeing is believing and believing is what self- efficacy is all about"; e.g. share examples of yourself and others who overcame obstacles and resolved problems to inspire client Encourage and challenge: "you can do it" leads to "I can do it"; help client identify self-defeating beliefs and challenge them, then replace them with notion that desired outcomes are possible and realistic Help clients overcome anxiety: fear of failure can lead to non-action; identify w/ client by listening and acknowledging fears, then help dispel them with practical, reliable info 60.Rotter's locus of control: Determines to large extent how clients view posi- tive/negative circumstances in their lives; informs their belief about what they can and cannot do, their designated responsibilities, and their willingness to act Internal: client takes more personal responsibility, sees their role in their circum- stances; an internal locus of control fosters responsibility and engenders self-effica- cy, so it should be encouraged in clients External: client takes less personal responsibility, does not easily see 17 / their role in their circumstances, may blame others; e.g. "the bank documentation was wordy and confusing, and nobody explained it to me, so I didn't understand what I was signing" 20 / cards: write unhealthy thought down on small card, carry it with you and occasionally look at it to remind yourself you are in control of it worry time: set aside time each day to face and address negative thoughts: e.g. coffee at 9am with five minutes to acknowledge that you feel pathetic sometimes, followed by five minutes of positive affirmations; eventually, you will no longer need the 9am appointment 64.Solution-focused approach (SFA) to counseling: espouses the optimistic notion that change is a natural, everyday process; people are not destined to be stuck in a rut SFA is not therapy, it is assisting client discover and activate their strengths and resources SFA is goal-oriented: once those are identified, along with the barriers to them, it is now a matter of removing the barriers SFA highlights client strengths rather than their weaknesses; the counseling session is positive and self-affirming for the client SFA focuses on the future, not on the past, or mistakes, or patterns of self-deception SFA is used in the present moment as a springboard to discover and actualize a positive future 65.Reframing: involves a change in perception that activates possibilities by taking a situation out of its former context and placing it in a new one that offers a positive outcome; e.g. a layoff is an opportunity to up-skill 66.The miracle question: a solution-focused technique that asks clients to imagine how their life would be different if they woke up tomorrow and they no longer had their problem; once there, work with the client to understand what they could have done to create this new scenario, and how does the client act within the miracle scenario? 67.The exception question: Used in solution-focused therapy to help clients re- member times when they haven't had their current problems; what was different about those times, their situation, or their behavior that allowed for things to be okay back then? 68.Benefits of miracle/exception questions: help clients explore what they 21 / want to be different in their lives 22 / help clients identify strengths and resources to make these desired differences a reality situate the desired future squarely in the present moment 69.Economizing: allocating spending for the maximum benefit of everyone in the household 70.Four benefits of creating a spending plan: identify overspending promote honest interpersonal communication and accountability (e.g. it helps as an objective starting point for addressing difficulties within families and relationships around spending/financial matters) increase motivation (e.g. is part of creating a tangible goal and leading the way there) track success (e.g. is a tool to monitor success on the path towards goals) 71.Daily expense record: record and track everyday expenses by listing exact amounts for each item at point of purchase 72.Prevalent reasons for indebtedness: easy access to credit easy access to money consumer culture changing technology lack of financial literacy financial setbacks spending too much lack of benefits planning 73.Types of spending: compulsive spending: overcome emptiness by binge shop- ping/frivolous spending codependent spending: create dependency in others by showering them with per- ceived necessities narcissistic spending: overcome feelings of inferiority by spending to establish a certain image revenge spending: one person exacts punishment on another by spending their money 25 / credit that they were granted by accident or through predatory practices 78.Types of debtors in terms of how they handle debt (from Anselm Bassano)- : panickers: fail to prioritize debts properly and regularly borrow more to pay off existing debt 26 / mourners: initially in denial, they then blame creditors for their problems in their anger rationalists: do it the right way by ranking importance of different debt and negotiating payment plans based on available resources fraudsters: set out to abuse system with no intention of paying back what was lent to them 79.Types of debt collectors: credit grantors: collections department at original creditor institution (e.g. VISA's collections department); reserves right to legal action so long as they continue to own the debt and haven't sold it to a collections agency collection agencies: outside agency that assumes responsibility for collecting unpaid debt, act on commission basis and charge fees; have a right to sue for the amount of the debt if they've purchased the debt from the original creditor attorneys: delinquent account may be referred to an attorney when collection agency has been unsuccessful; usually only done when amount of debt is substantial given high attorney fees; can initiate legal action against debtor, which results in a summons being served upon the debtor 80.What can unsecured debt collectors do to recover debt?: revoke credit privileges damage credit rating of debtor sue debtor to collect the debt 81.How to communicate with collectors: prevent harassment before it begins: don't ignore an unpaid bill, speak with the creditor and explain, work something reasonable out request termination of contact: once account is with a collections agency, send a letter requesting that all contact cease; this may result in collector sending a final notice outlining further action to be taken dispute all billing errors: consumers have 60 days to dispute any errors 27 / on their bills in letter form; creditor must respond within 30 days with some explanation of the charge; consumer cannot be reported as delinquent during this process until dispute is settled, although the creditor can continue to add finance charges on the amount; dispute must be resolved within two billing cycles or no later than 90 days dispute the debt: a collection agency must send written statement of nature of debt 30 / 83.Process of foreclosure: Notice of default (one or two mortgage payments, or 60-90 days, of missed payments, now person has 90 days to "cure" the debt by making payment plus all fees) Notice of acceleration (person did not respond to notice of default, and now every- thing is due immediately) Notice of foreclosure (may receive a summons to respond) Notice of sale (did not respond to summons or any prior notice, and now the notice of sale gives the time and date that foreclosure will take place) Whole process can take 6-18 months to complete 84.Common mortgage workout agreements: "cure" a default by adding a per- centage of the outstanding debt (the arrears) to the regular monthly payments until the debt becomes current recast the outstanding debt: homeowner can make monthly payments but cannot make up past-due installments, so arrears are deferred or recast so that they no longer represent a present obligation request temporary or permanent interest rate reduction or a temporary moratorium on mortgage payments, depending on the situation 85.Deficiency balance: the difference between the amount a repossession can be sold for and what the person owes on the property repossessed, e.g. if a person owes $14k on a car but it gets repossessed and sold for $10k, the person owes $4k 86.Why are threats by creditors to seize property rarely carried out?: Requires a court decision in unsecured-debt cases Can be expensive for the creditor litigation is costly and time- consuming workouts can be made with lenders debtors may be convinced to settle with creditors because of sentimental value of items resale value of items seized may not justify expense of seizing them 87.Possible actions by creditors who have won court judgements against debtors: seize property wage garnishments judgement liens bank account seizures 31 / 88.Consumer options to resolve debt: workouts bankruptcy debt-consolidation loans like home equity loans or 0% transfers credit counseling (may involve debt- management plan) 32 / debt settlement (may involve negotiated lump-sum payment) budget counseling self-help debt-repayment 89.Types of self-help debt-repayments: avalanche approach: line up credit cards by interest charged, with client paying off highest rate card first, then the next, then the next snowball approach: client pays off lowest balance card first, then the next, then the next the painful method: client reviews debt and focuses on card that is causing the most pain, then concentrate their repayment efforts on that account; payments towards that account increase as minimum payments drop on other cards 0% balance transfer method: client takes advantage of a balance transfer offer 90.Difference between chapter 7 and 13 bankruptcy: chapter 13: stop foreclosure protect non-exempt property debt-problem involves co-signers and you want to protect them debts from a divorce-decree are owed must wait two years before filing another one, or four years if you've previously filed a chapter 7 debtor repays all or a portion of what is owed over a five year period payments begin within 30 days of the filing case can be modified at any time you want to do the "right thing" chapter 7: have to take a means test relief needed from debts that cannot be paid get rid of high medical bills must wait 8 years before filing another one, or six years if you've previously filed a chapter 13 sometimes referred to as a "liquidation" bankruptcy complete credit counseling within 180 days of the filing debtor education within 45 35 / landlord as a first step in eviction process 97.Three needs for self-determination: autonomy competence relatedness 98.Four key skills of emotional intelligence: personal competence: self-awareness 36 / self-management social competence: social awareness relationship management 99.Steps of solution-focused approach: identify problem address emotional impact brainstorm solutions prioritize solutions choose a solution commit to the solution/take action 100. Components of FICO credit score: payment history - 35% amounts owed - 30% length of credit history - 15% credit mix - 10% new credit - 10% 101. Five "C"s of credit: capacity collateral commitme nt conditions character 102. Federal Pell grant repayment reasons: student withdraws prior to 60% of semester being over student changes enrollment status student receives other aid or grants that reduce their financial need 103. Federal Pell grant: for undergraduate students who have not yet earned a degree these students have demonstrated need, commitment to going to school for a full year, enrollment status, and cost of attendance 104. Which loans does interest accrue on during grace period?: direct unsub- sidized loans direct PLUS loan some private loans 37 / 105. Which loans does interest NOT accrue on during grace period?: direct subsidized loan perkins loan some private loans 106. To whom are Perkins loans repaid?: the school attended 40 / analyze the other party choose strategies and tactics 116. Distributive negotiation: your goals are usually in direct conflict with the goals of the other party 117. Softball tactics: make extreme offers and small concessions avoid take it or leave it approaches change your counterpart's resistance point by influencing their beliefs about the value of the deal guard info carefully and try to get as much info from the other party as possible manage your emotions make them feel that the settlement point is the best they can get avoid commitments provide alternatives assume the close explode offers use sweeteners 118. Hardball tactics: - Good Cop/ Bad Cop - Lowball/ Highball - Bogey - Nibble - Chicken - Intimidation 119. Integrative negotiation: depersonalize the problem focus on interests, not positions 41 / create a list of possible options by redefining the problem set brainstorm take time out to cool off explore your differences keep decisions tentative until all aspects of the final settlement are complete 42 / validate the other's perspective be motivated and committed to work together reframe the negotiation situation this is win/win negotiating 120. Negotiating with problem people: get their attention call a spade a spade put their fears to rest insist on playing by the rules put the ball in their court use the silent treatment do the sidestep meet the enemy head-on refuse to be punished ask questions point out the consequences