Resource Guide Financially

Educational Resources
The Tools You Need

To
Empower Yourself
Financially
Table of Contents
A I
36. Identity Theft
1. Asset Allocation
37. Identity Theft Prevention
2. Automotive Expenses
38. Insurance
3. Autos: Buying vs. Leasing
39. Interest-only Loans
4. Autos: New vs. Used
40. Investment Options
B J
5. Bad Checks
41. Job Search
6. Bankruptcy
42. Judgment
7. Budget- Money Saving Tips
8. Budget – Planning L
9. Budget – Spending Percentages 43. Loan Calculator
10. Budget - Worksheet M
C 44. Marriage, Divorce & Debt
11. Child Support 45. Medical Savings Account
12. Collections O
13. College Education Savings 46. Opt Out
14. Coping with Job Loss
15. Co-signing for Credit P
16. Credit Cards – Accelerate Your Pay-off 47. Payday Loans
17. Credit Reports 48. Prioritizing Debts
18. Credit Report Disputes R
19. Credit Scores 49. Renting vs. Buying a home
D 50. Repossession
20. Debt Settlement 51. Retirement Savings
21. Disputing Credit Charges 52. Reverse Mortgages
E S
22. Educating Kids 53. State Abbreviations Listing
23. Education Expenses 54. Student Loan Information - Repayment
24. Emergency Fund 55. Student Loan Information - Types
25. Establishing Credit T
26. Eviction Process 56. Tax Tips – Charitable Donations
F 57. Tax Tips - General
27. Fair Credit Billing Act (FCBA) 58. Truth in Lending Act
28. Fair Credit Reporting Act (FCRA) U
29. Fair Debt Collection Practices Act (FDCPA) 59. Unsecured Personal Loans
30. Foreclosures 60. Utilities
31. Frugal Living
V
G 61. Vacationing on a budget
32. Garnishments
W
H 62. Wants vs. Needs
33. Holiday Saving Tips
34. Home Equity Refinancing
35. Home Mortgages
Ctrl. 75 Rev. 3 1/31/05

Asset Allocation
Asset allocation refers to the way in which a person (an investor) chooses how to divide their
investments. An asset can refer to stocks, bonds, real estate, and cash. The division is determined
by the needs of the individual. The goal is to maximize investment return.
Investors who have an investment plan through their company, such as a 401(k), a 403(b) or a 457,
may inquire with the plan administrator (usually a bank or stock broker) for information on allocation
options. By anticipating the amount of desired return, the administrator will be able to advise how to
allocate, based on past performance. For those with individual retirement accounts (IRAs) directly
through a financial institution, inquire with the branch manager for assistance.
There is also the option of obtaining an “asset allocation fund” which is specifically designed to
accomplish the goal of allocation on its own. These funds invest in a variety of different areas to
provide the investor with the desired result of diversity, without the hassle of purchasing a huge
amount of funds separately.
Allocating assets is a complicated process requiring in-depth knowledge. The best course of action
when considering changing your allocation is to consult with a professional. Do not rely on
publications even if you feel they are from reputable companies. Financial information changes
frequently, and publications can be outdated even if new.
Websites that can provide additional information:
www.investorwords.com
www.investorhome.com
www.gofso.com
The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is provided
as a courtesy resource, and is not intended to replace consultation with an industry professional.
Automotive Expenses
Over the course of time, any car owner will be faced with automotive expenses. Some expenses are
routine and can be planned for – oil changes, new tires, tire rotation/balance, etc. Double-check
your warranty to see if some of these simple items are covered. Nonetheless, many expenses
catch us by surprise -- the starter goes up, the air-conditioner quits working, a tire blows out and
must be replaced.
In the surprise instances, it is important to have money set aside for these occasions. By budgeting
money each month in an emergency fund, you will be prepared when emergencies happen.
Consider adding rental insurance to your insurance policy to allow for an alternate transportation
source should the need arise.
www.frugalliving.about.com/library/weekly/aa060600a.htm
www.thestreet.com/funds/mutualfundmonday/10003078.html
www.bankrate.com/brm/news/financial-literacy/faq-emergency-savings1.asp
Autos: Buying vs. Leasing
When you are in the market for a new car, there are many options available to fit your financial situation. To
help you decide whether leasing or buying is best, review the list below for a comparison of different features.
Buying
• The vehicle is yours when payments are completed.

• Initial costs may include cash price or down payment, title, taxes, registration and other fees.
• Monthly loan payments are usually higher than lease payments.
• There are no mileage limits.
• There are no fees for excessive “wear and tear” on the vehicle.
• Selling or trading the vehicle is your responsibility. Value will be determined in part by mileage,
“wear and tear,” and depreciation.
Leasing
• The vehicle is not yours. It must be returned at the end of the lease.
• Initial costs may include down payment, security deposit, first month’s payment, taxes, registration
and other fees.
• Monthly lease payments are usually lower than loan payments.
• There are limits to the number of miles driven per year.
• There may be fees if there is excessive “wear and tear” on the vehicle.
• At the end of the lease, you may renegotiate with the dealer to continue your lease, purchase the
vehicle, or lease a new vehicle.
• Selling or trading the vehicle is the responsibility of the dealer.
Things to consider:
• Compare different lease offers and negotiate terms.

• A lower “sticker-price” can reduce your monthly payment.
• Ask for “gap” coverage in case the vehicle is stolen or totaled.
• Negotiate the mileage allowed and per-mile charges for excess miles.
• Be sure to get everything in writing before you sign.
www.federalreserve.gov
www.leasesource.com
www.leaseguide.com
www.carclicks.com
Autos: New vs. Used
Purchasing a new vehicle can be a lot of fun. It is also a lot of responsibility. Before you make that
big commitment, consider the pros and cons of buying a new vehicle versus a used one. It may turn
out that buying a used vehicle will suit your budget and needs equally as well as, if not better than, a
new one.
New Cars
• Condition of vehicle is perfect

• New vehicles can be customized to suit buyer’s needs
• Vehicle will be more reliable
• Vehicle will have a full warranty – or a variety of options
• Interest rates on a new vehicle are generally lower
• New vehicles will have a higher purchase price/monthly payment
• Insurance premiums are higher
• Higher depreciation (about 40% of the car’s value is lost in the first three years)
Used Cars
• Condition of vehicle varies; choice will be limited

• Reliability varies - unless you buy a certified pre-owned vehicle
• Vehicle warranty will be limited
• Higher interest rates on loans
• Used vehicles will have a lower purchase price/monthly payments
• Lower insurance premiums
• Lower depreciation
• Lower registration and license fees
• Possible maintenance costs such as replacing tires, brakes, etc.
www.bestautousa.com
www.creditoption.com/autosites.htm
www.auto-buying-tips.com
www.consumerreports.org
Bad Checks
Whether you’ve written a “bad” check or someone has stolen yours and used them, it’s important to know what to do.
It’s also important to understand how to keep from bouncing checks in the future, as it is a costly mistake.
If your checks have been stolen or misused, close the account and ask your bank to notify the appropriate check
verification service. While no federal law limits your losses if someone steals your checks and forges your signature,
state laws may protect you. Most states hold the bank responsible for losses from a forged check, but they also require
you to take reasonable care of your account. For example, you may be held responsible for the forgery if you fail to
notify the bank in a timely way that a check was lost or stolen. Contact your state banking or consumer protection
agency for more information.
You also should contact these major check verification companies. Ask that retailers who use their databases not
accept your checks.
TeleCheck — 1-800-710-9898 or 927-0188
Certegy, Inc. — 1-800-437-5120
International Check Services — 1-800-631-9656
Call SCAN (1-800-262-7771) to find out if the identity thief has been passing bad checks in your name.
It’s equally important to understand laws that may affect you as a consumer. A new law that went into effect October 28,
2004 is “Check 21” or Check Clearing for the 21st Century Act.
The aim of this law is to “foster innovation in payments system and enhance its efficiency by reducing some of the legal
impediments involved with check processing.
Here are some other points to know about Check 21:

• You won’t get your original paper checks back.
• Checks you write will clear sooner, possibly the same day you write it.
• You may not get access to funds from checks that you deposit any sooner.
• Only a substitute check (not regular copies of the original) can be the legal equivalent of the original and only a
substitute check triggers your rights to re-credit disputed funds.
Some possible hazards to processing electronic images vs. the original:
• A double payment could occur - one payment on the paper check and one on the electronic image.
• Check payment amounts might be changed in the process of transferring checks back and forth between paper
and electronic formats.
• It may be impossible to prove a check has been forged or altered without the original.

http://www.federalreserve.gov/paymentsystems/truncation/
http://www.aba.com/About+ABA/CheckTruncationAct.htm
Bankruptcy
There are two types of bankruptcy that affect consumers: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 completely absolves the consumer from unsecured debt. It allows almost all unsecured debts to be
completely discharged. The debtor loses all property except that which is exempt by law (varies by state). A consumer
should seek the advice of an attorney to determine which items are exempt. Necessary items such as car and home are
usually exempt. Once the bankruptcy is discharged, the consumer will not have any debt from anything filed under that
specific bankruptcy. *
Chapter 7 bankruptcy can only be filed once every seven years and remains on the credit report for a period of ten
years.
Chapter 13 Bankruptcy:
Chapter 13 is for individuals who wish to repay their debts and seek court protection while they negotiate a plan of
reorganization with their creditors. This is an alternative to Chapter 7 bankruptcy and is designed for “wage-earners.”
The plan is usually for a period of three years, unless otherwise approved by the courts, but not to exceed five years.
Chapter 13 bankruptcy can be filed during any difficult financial situation. The information remains on the credit report
for a period of seven years if discharged, ten years if dismissed.
Discharged: Once a debtor has satisfied the Chapter 13 payments, the court will order a termination of the
proceedings, usually relieving the individual of the obligation. A discharge will remain on the report for seven years.
Dismissed: When a debtor fails to make payments on a Chapter 13 plan, the bankruptcy court will dismiss the debtor.
All creditors will then have the same rights to pursue the debtor as before the filing of the Chapter 13. A dismissal will
remain on the report for ten years.
Things to Consider
• Before filing for bankruptcy, a consumer should consider all of the alternatives
• Bankruptcy may not be necessary if the consumer has no attachable assets or if assets are exempt
• The cost of filing bankruptcy varies – shop around just as you would for any other major purchase
• Get a second opinion and consider the negative effects of filing bankruptcy
• All creditors may be notified, including landlords or mortgage lenders
• Bank accounts may be frozen or closed
• Credit cards may be revoked
• Significant assets could be claimed, including life insurance policies, pensions or savings
• Psychological stress or depression may be experienced
• It may be difficult to gain employment
• Cost of insurance, both home and auto, may increase significantly
• It may be difficult to obtain meaningful credit
• Taxes, student loans, debt from prior bankruptcy, spouse/child support, criminal fines/penalties, and credit card
charges made within 40 days of filing, cannot be included in any type of bankruptcy
www.findlaw.com/01topics/03bankruptcy/index.html
www.bankruptcy-courts.net/
www.thebankruptcysite.com
www.nolo.com
nd
*Aiello, John et al. (2002). Credit counseling: keys for success. National Institute for Financial Counseling Education, 2 Edition.
Budget - Money Saving Tips
Housing
• Refinance your home
• Sell your home and buy a more affordable one
• Rent out an empty room or basement
• Move to a less expensive apartment
• Compare your insurance or bundle it with auto insurance
Transportation
• Sell your car and buy a more affordable one
• Carpool to reduce gas expenses
• Shop around for less expensive car insurance
• Use regular gas instead of premium grade
• Do some maintenance yourself such as replacing windshield wipers and air filters
• Sell unnecessary items such as boats, RVs, or ATVs
Utilities
• Eliminate unnecessary services such as extra telephone or fax lines, caller ID or other phone
features. In times of extreme financial hardship, terminating these services will provide extra
income for necessities.
• Reduce usage. Turn off lights not in use. Turn off the water when brushing teeth or shaving.
• Make changes to your home to save on your bills:
Use an insulation blanket for your water heater
Lower water heater temperature from 140° to 120°
Adjust temperature settings to 78° in the summer and 70° in the winter
Replace regular bulbs with compact fluorescent bulbs
Use energy-efficient shower heads
Use toilet dams or water savers
Use faucet flow restrictors
Food
• Use bonus cards and coupons
• Buy generic brands instead of name brands
• Shop with a list
• Don’t buy pre-packaged convenience items such as salads – Buy fresh.
• Canned and frozen vegetables are less expensive than fresh ones
Budget - Money Saving Tips (cont’d)
Clothing
• Buy only what you need
• Shop at less expensive stores
• Start a clothing swap with friends, church members or neighbors
• Shop at consignment stores
• For growing children, buy pants and dresses long and hem them. You can let out the hem as
they grow.
Medical
• Ask for generic prescriptions
• Compare monthly prices on insurance including comparisons of co-pays and other out-of-
pocket expenses
• Use preventive medicine to reduce serious medical costs
• Maintain a balanced diet and drink plenty of water
• Get plenty of rest and exercise
Miscellaneous
• Adjust or eliminate cell phone plans or pager services
• Reduce or eliminate internet services
• Reduce or eliminate cable TV
• Use cell phones during off-peak hours
Personal
• Start a walking club in your neighborhood rather than paying expensive gym fees
• Smoke less or quit altogether
• Volunteer your time rather than donating money to charities
• Reduce or eliminate personal care expenses (hair, nails, salon)
• Do not pay for private school if you can’t afford it
Recreation
• Look for free activities and programs
• Go to the matinee show
• Eat at restaurants less often
• Use coupons for amusement parks
• Reduce or eliminate media purchases (books, magazines, CDs)
Unsecured Debts
• Pay your bills on time
• Ask for reduced interest rates
• Pay off high-interest rate cards first
• Purchase items with cash only
Budget - Planning
One of the most helpful tools for becoming debt-free is a budget. Here are some steps to help you get started as well as
a sample budget worksheet:
• Gather all the facts
Calculate your monthly income. Be sure to include all sources including child support, alimony, pensions, etc.
Record all expenses. Include fixed monthly expenses (housing, car payment, insurance, etc.) and varying expenses
(utilities, groceries, etc.). Be sure to include items such as school supplies, snacks at work and membership dues. For
bills that you pay once or twice per year, such as car insurance or property taxes, be sure to allot sufficient funds each
month to cover that expense when it comes due.
• Determine spending patterns
Identify where you are spending money. If you are having trouble determining where your money is going, keep a
notepad and record each purchase.
• Set temporary short-term goals
Short-term goals should be set to keep you motivated. Short- term goals may include paying off a credit card, saving for
a vacation or purchasing a new appliance. “Big ticket items” should be planned out before the purchase is made with a
specific pay-off date. If the item cannot be purchased and paid off within three months, you should not buy the item at
that time.
• Establish long-term goals
Long-term goals may include having a certain amount in savings, purchasing a home, or saving for a college education.
• Monitor and record financial progress
Once a budget is created, it should not be set aside and forgotten. Revisit your budget and goals on a monthly basis to
keep yourself focused or make necessary adjustments. If you make a plan but don’t stick to it, then it doesn’t do you any
good.
www.betterbudgeting.com
www.moneyadvise.com
The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is provided as a courtesy
resource, and is not intended to replace consultation with an industry professional.
Debtscape Budget Worksheet
Name: ________________________________________________________ SSN: ___________-___________-___________
Debtscape can assist you with creating a budget that is realistic and easy to maintain. Fill out all applicable categories, and your Debtscape
Certified Credit Counselor will review your budget with you along with any necessary changes. *Note: If an item is deducted from your paycheck,
such as health insurance, do not list it again as a monthly expense.*
Monthly Food Expenses
Monthly Income – All Sources
(For wages, use amounts after taxes, insurance and Groceries $_____________
medical are deducted) School/Work Lunches $_____________
Snacks/Other $_____________
Salary/Wages $_____________ Dining Out $_____________
Salary/Wages (spouse) $_____________
Social Security Income $_____________ TOTAL FOOD EXPENSES $_____________
Pension Plan/Retirement $_____________
Military Income $_____________
Interest Income $_____________ Monthly Clothing Expenses
Real Estate Dividends $_____________
Investment Dividends $_____________ Clothing $_____________
Unemployment Income $_____________ Dry Cleaning/Laundry Service $_____________
Disability Income $_____________
Alimony/Child Support $_____________ TOTAL CLOTHING EXPENSES $_____________
TOTAL MONTHLY INCOME $_____________ Monthly Miscellaneous Expenses
Cellular Phone/Pager $_____________

Monthly Housing Expenses Internet Service $_____________
Cable Television $_____________
Mortgage Payment 1 $_____________ Personal Care (Hair/Nails) $_____________
Mortgage Payment 2 $_____________ Education (Training/Supplies) $_____________
Rent Payment (Apartment) $_____________ Tobacco/Alcohol $_____________
Rent Payment (Other) $_____________ Alimony/Child Support $_____________
Insurance (Homeowner/Renter) $_____________ Donations (Religious/Charity) $_____________
Fees (Homeowner/Condo) $_____________ Child Care (Day Care/Sitters) $_____________
Utilities (Oil/Gas/Elec/Telephone) $_____________ Club Dues or Fees (Health or other) $_____________
Water/Sewer $_____________ Magazines/CD’s/Movies/Books $_____________
Trash Removal $_____________ Children’s Activities (Sports, etc.) $_____________
Alarm/Security Service $_____________
TOTAL MISC. EXPENSES $____________
TOTAL HOUSING EXPENSES $_____________
Monthly Savings Expenses

Monthly Transportation Expenses
Savings Account Deposits* $_____________
Automobile Loan 1 $____________
Automobile Loan 2 $____________ TOTAL MONTHLY SAVINGS $_____________
Automobile Loan 3 $____________
Automobile Lease $____________ Monthly Unsecured Debts
Boat/RV/ATV Loan $____________
Automobile Insurance $____________ Credit Card $_____________
Gasoline $____________ Credit Card $_____________
Repairs/Maintenance $____________ Credit Card $_____________
Personal Loan $_____________
TOTAL TRANSPORTATION Student Loan $_____________
EXPENSES $____________ Collections/Judgments $_____________
TOTAL MONTHLY
Monthly Medical Expenses UNSECURED DEBT $_____________
Prescriptions $____________
Co-Payments $____________ BUDGET SUMMARY
Life & Disability Insurance* $____________
Health & Dental Insurance* $____________ TOTAL MONTHLY INCOME $_____________
(Subtract your)
TOTAL MEDICAL EXPENSES $____________ TOTAL MONTHLY
EXPENSES (total all boxes) $_____________
TOTAL LEFTOVER (+/-) $_____________

The goal is to have leftover income that equals 5-10% of
your total take-home income.
Budget Spending Percentage Guide
The following are national averages to help you determine where your client is overspending. To
obtain the average for the client, take the monthly payment amount, and divide that by the total
amount of monthly income. For example:
Total Spent on Housing: $750.00

Total Monthly Income: $1920.00
$750.00 divided by $1920.00 equals: 39%
This client spends 39% of the monthly income on housing. This is over the recommended
national average. See below for details:
Housing 25-35%
(Mortgage, Rent, Insurance, Fees)
Transportation 10-15%
Utilities 5-10%
(Oil, Gas, Electric, Water/Sewer, Phone, Trash, Alarm/Security)
Food 5-15%
Clothing 2-7%
Medical/Health 5-10%
Savings 5-15%
Miscellaneous 2-5%
(Cell/Pager, Internet, Cable TV)
Personal 5-10%
(Personal Care, Education, Tobacco/Alcohol, Alimony/Child Support,
Donations, Child Care)
Recreation 5-10%
(Club Dues, Magazines/CD/Movies/Books, Children’s Activities)
Unsecured Debts 5-10%

Child Support
Many families are suffering due to divorce. Single parents are trying to care for their children with
only one income. This is a difficult and stressful situation. If you have a client who mentions that
their ex-spouse or child’s non-custodial parent is not paying child support, here are some links to
help them get the money that is owed.
www.childsupport.com/index.asp
www.acf.hhs.gov/programs/cse/
www.supportkids.com/
Collection Agencies
When an account is past due, and the creditor has exhausted all efforts to collect this debt from the consumer,
the creditor will then hire a third-party collection agency to attempt to retrieve the debt. The creditor may
either hire the agency to work on their behalf or sell the account to the collection agency.
Most consumers find dealing with a collection agency both aggravating and difficult. Collection agents tend
to be more aggressive as compared with the original creditors. From the perspective of the creditor, this is fair
– a consumer has borrowed money and the creditor wants to be repaid. When we accept a credit card and
spend someone else’s money, we also accept the responsibility for repayment at the creditor’s terms.
Furthermore, because most collection agents are paid by commission, the payment amounts are determined by
the drive to earn more money, not to work out an affordable repayment plan for the consumer. However, due
to over-aggressive behaviors and deceptive tactics, Congress passed the Fair Debt Collection Practices Act
(FDCPA) in 1996 to protect consumers from undue abuse from third party collectors. This law does not
apply to original creditors. While some feel that even one phone call per day is abusive, that would be an
incorrect assessment. The collection agency does have rights, but so does the consumer. The following items
taken from the FDCPA are very important to remember when dealing with a third-party collection agency:
• Collection agents surprise consumers by calling them by their first name – “Hello Bill, how ya doin’?”
Consumers, caught off guard will then identify themselves. The FDCPA states that a collection agent
MUST identify themselves by name and company. If the caller will not identify themselves, hang up
the phone.
• Collection agents try to control calls by refusing to disclose full information about the debt. They
attempt to bully and scare consumers into making payments without even knowing what is being paid!
They push consumers into a “check by phone” payment. Often, consumers are afraid and do whatever
the agent tells them to do. Consumers are entitled to FULL disclosure - including the original
creditor’s name and balance. It is your right under the FDCPA to receive full disclosure in writing
prior to payment. Request the information in the mail. If they refuse, ask to speak with the
supervisor or compliance officer.
• Collection agents will often threaten to take legal action against the consumer, or threaten to garnish
their wages. Although some creditors DO hire lawyers to represent their interests, the collection agent
may not be a lawyer, and may not be authorized to take any such action. It is against the law for a
collection agent to identify themselves as a lawyer, if in fact, they are not. That is why it is vital to
know to whom you are speaking. If you are actually being sued by a creditor, you will receive a
certified or hand-delivered summon to appear in court.
www.ftc.gov
www.ustreas.gov
The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is provided as a
courtesy resource, and is not intended to replace consultation with an industry professional.
College Education Savings
There are many options available to those who are trying to finance a college education.
• 529 Plans are education savings plans operated by a state or educational institution. It
allows you to establish an account on behalf of a designated beneficiary (the student) and
provide some tax benefits to you (the plan participant).
• The Coverdell Education Savings Act (ESA) was formerly known as the Education IRA.
This investment option is a tax-advantaged savings account designed to help pay for eligible
education expenses.
• Government Series EE Savings Bonds can be purchased at your local bank or directly
from the U.S. Treasury for as little as $25.00.
• UGMA’s (Uniform Gifts to Minors Act) and UTMA's (Uniform Transfers to Minors Act)
allow you to establish a savings account on a child's behalf. Current laws allow you to give
up to a maximum of $11,000 per year to any person without tax penalties.
• Hope & Lifetime Learning Credits are tax credits available to a parent or child who pays
out of pocket for qualified tuition expenses.
• Student Loan Interest Deductions may allow you to deduct student loan interest. Loans
must be for your dependents, and must be for qualified education expenses.
• Scholarships can vary depending on certain factors. Some can be applied to any school,
while others are school-specific.
• Financial Assistance is available in the form of loans, grants, and work-study programs.
• The Reserve Officer's Training Corp (ROTC) has full and partial scholarships plus a
spending allowance for those who make a commitment to military service. The US Military
Academies are four-year colleges that are tuition free. They also require a commitment to
serve in the military.
• Grandma and Grandpa (and other relatives) should make the check(s) payable directly to
the school. Tuition payments made directly to the school are not subject to a federal gift tax.
• Home Equity Loans allow you to tap into the value of your home. Although this is an
available option, it may not be your best option. Taking out a home equity loan can seriously
affect your retirement plans. You may be making second mortgage payments well into your
eighties.
• Retirement Funds like 401(k) plans, allow borrowing at favorable rates to pay for college.
One potential problem with funding all or part of your child's education with your retirement
fund is that you risk having to fund your retirement all over again. Also, the potential for long-
term growth is interrupted when you withdraw funds.
(continued next page)
page 2
All of these options are viable, and may be used in combination with one another. The age of your
child will determine the best option. If you have a newborn or young child, 529 plans and Education
IRAs are great options with plenty of time for your investments to grow. Savings bonds are good
options if you have limited amounts of money to invest. Although they will not fund all tuition costs,
they can be purchased $25.00 at a time. If your child is already a teenager, you might have fewer
options available. Check into scholarships, ROTC, financial assistance, or a home equity loan. The
Hope and Lifetime Learning credits do not require advanced planning; however, you will need to
remember to take advantage of this at tax-time. The best advice for college planning is to start as
early as possible.
www.fastweb.monster.com/cpt/
www.fafsa.ed.gov
For websites and toll free numbers for state plans, visit www.collegesavings.org
To compare 529 plans for each state, go to www.savingforcollege.com
For the Hope and Lifetime Learning Credits, see IRS publication 970.
Coping with Job Loss
There are two aspects to consider when dealing with job loss: emotional stress and financial stress.
Everyone deals with job loss differently. For some, it can be similar to a death in the family. For others, self-
image and self-worth may be affected. Others may become depressed. It’s OK to have these feelings. Seek
support from friends and family, or a professional.
The financial aspect of job loss can create a lot of stress and an overwhelming sense of hopelessness. It is
important to create a plan and restructure your finances. The main goal is to minimize hardship and damage
until you are back on your feet.
• Evaluate your finances. Make a list of assets and debts. Calculate your monthly expenses.
• After adjusting the budget, contact the creditors. Explain your situation and ask if they offer a hardship
program or temporary repayment plan.
• Reduce your expenses. In times of severe financial distress, non-essentials such as cable TV, cell
phone, bowling leagues, etc., are not necessary.
• Check with your employer for information on COBRA, which allows you to retain your insurance
coverage even after you leave.
Some serious changes to consider:
• Sell a second car to eliminate car payment, insurance payment, gas, repairs.
• Look for extra sources of cash such as items that can be sold.
• Sell your house and rent until you can afford another mortgage.
• Use a 401(k) or home equity loan if the situation is temporary.
• Perhaps a spouse can obtain a second job.
• Look for a job outside of your profession. Draw upon other skills you have.
• If jobs in your profession are not available in your area, consider relocating.
You may also seek assistance from a non-profit credit counseling organization. They will be able to provide
information on several options including a debt management plan, possible home equity refinancing and
even bankruptcy. A certified, professional credit counselor can advise you of your best options.
www.extension.umn.edu/distribution/businessmanagement/DF6499.html
Co-signing for Credit
Co-signing for someone else is a big responsibility and potentially a big liability. The co-signer
lends their name and good credit history to the primary borrower (or maker). If the primary borrower
dies, loses a job or just decides not to pay, the co-signer is legally responsible for the debt.
Co-signers beware! Here are some points to consider before making a decision to help someone in
need.
• If the borrower defaults, the creditor will come after you for repayment. You could have your
property seized or your wages garnished even though you are only the co-signer.
• Official documents and statements are only sent to the primary borrower. Protect yourself by
asking the lender to provide notification to you in writing should the borrower default on a
payment.
• Be sure to get copies of all documentation from the lender. Keep them in a safe place until
the loan is repaid.
• Although this is usually a transaction between friends or relatives, treat this like a business
transaction.
• Obtain a notarized written agreement with the borrower.
• Define the expectations of both parties. Will the primary borrower be responsible for the
entire debt? What responsibilities does the co-signer have?
• If it is a secured debt, whose names will appear on the title?
• If the loan balance is paid down to a certain amount, will the co-signer be released from the
responsibilities to the lender in case of default?
• How will this affect the co-signer’s credit? Will future lenders consider this a risk to the co-
signer’s credit rating? The co-signer may need to show documentation that he/she are not
making payments toward this debt at all.
• When there is a default on the loan, the creditor can demand payment from the co-signer
rather than trying to collect from the primary borrower.
• When in doubt, don’t co-sign.
www.bankrate.com
www.moneycentral.msn.com/content/Banking/Yourcreditrating/P38054.asp
Credit Cards – Accelerate Your Pay Off
So, you’ve decided to handle your bills on your own. With the high interest rates on your credit
cards accruing monthly, a debt consolidation loan may be tempting; however, you may not want to
take on another debt payment. Or, maybe you can’t get approved for another line of credit. That’s
OK. Here are some steps to take for getting rid of your debt without mortgaging the house.
1. Ask your creditors for an interest-rate reduction. This may seem to be an obvious action
to take, but surprisingly, many people overlook this option. The worst they can do is say no.
2. Discontinue using your credit cards. Most people have great intentions of paying off their
cards, but continue using them for “emergencies.”
3. Create a budget. Determine how much you can afford to spend to pay off your debt and how
soon you would like to be debt-free.
4. Always send more than the minimum payments. Choose how much you can pay towards
each card and consistently send that amount until the debt is paid off. Even an extra $10
each month will make a big difference.
5. Roll payments into remaining accounts’ payments. When an account has been paid off,
put that payment towards your other accounts, increasing pay-off time.
Some people like to pay off the card with the lowest balance first (reducing the number of accounts
you have), while others prefer to pay off the account with the highest interest rate (saving you
money in interest). Regardless of the plan you prefer, the key is to stick with it!
Here is a calculator to help you determine how much to pay and how long it will take.
• http://extension.usu.edu/cooperative/powerpay/
If you are really committed to getting out of debt, examine your budget. Look for unnecessary
expenses that you can reduce or eliminate. Use the extra money to pay off your credit cards.
Examples include:
Cable Services
Cell Phone Services
Snacks
Entertainment
Un-needed vehicles (boats, ATVs, etc.)
Dry-cleaning
There are other ways to reduce your spending in order to put more money towards your
bills. Ask your counselor for more information.
Credit Report Disputes
According to a recent study, 70% of consumers who order their credit reports find errors. Errors can include incorrect
spelling of name, incorrect address, name changes, incorrect place of employment, incorrect date of birth, or unknown
accounts. Even the simplest of mistakes can prevent a consumer from obtaining the credit they deserve. Furthermore,
the prevalence of identity theft creates an additional need for consumers to maintain accurate credit files. Each credit
report ordered will arrive with a form to dispute any incorrect items. It is important to order reports from all three of the
credit bureaus due to the fact that some creditors do not report to each one.
In order to dispute an item on the credit report, you must first obtain a copy of the report from the credit reporting
agencies. If your credit report has been pulled by a third party (for example a mortgage broker or automobile finance
company), you must still obtain a report directly from the credit reporting agencies. In order to dispute an item, you
must have your credit report in hand.
Due to changes made to the Fair Credit Reporting Act (Fact Act of 2003), it is now possible to dispute credit report
items directly with the source of the information (i.e. creditors). To have information corrected, you must notify the
creditors in writing. The credit bureaus may be notified either in writing or via their website. Utilize the form that is
provided with the credit report, or visit the website of the credit reporting agency for their online dispute form. You
must include your name, current address, date of birth, and Social Security number. Be sure to include as much
information as possible regarding the error. In most cases of incorrect personal information, you will be required to
provide documentation with the correct data. This could include a copy of your marriage license, driver’s license, pay
stub, etc.
If you are disputing a listing on your report, give as much information about yourself or the account as possible. It may
be a good idea to contact the creditor to obtain documentation to support your claim. For example, a letter stating that
your account is closed, and paid in full, may be sufficient documentation to correct an error. In other words, if you
recognize the account as yours, you may contact the creditor directly for supporting details. If you do not recognize the
creditor listing, you may contact them to obtain whatever documentation that they can provide, and then forward that to
the credit reporting agency so that they may open an investigation. If the creditor is unable to provide documentation,
initiate an investigation with the credit reporting agency.
By law, the credit reporting agencies (CRAs) must investigate your claim and respond within 30 days. Be sure to send
your correspondence via certified mail, return receipt requested, and keep copies of everything for your files. Once the
investigation is completed, you should receive an additional copy of your credit report from the CRAs to review
www.equifax.com
www.experian.com
www.transunion.com
Credit Reports
A credit report is a record of your payment history to companies that have lent you money. All payment activity is
recorded – both positive and negative – generating a credit score. Your score is then used by creditors to determine
how much credit to extend, and at what interest rate credit will be offered. Generally, activity remains on the report for
a period of seven to ten years.
Credit Bureaus
Equifax — www.equifax.com
To order your report, call: 1-800-685-1111
or write: P.O. Box 740241, Atlanta, GA 30374-0241
To report fraud, call: 1-800-525-6285
and write: P.O. Box 740241, Atlanta, GA 30374-0241
Experian — www.experian.com
To order your report, call: 1-888-EXPERIAN (397-3742)
or write: P.O. Box 2104, Allen, TX 75013
To report fraud, call: 1-888-EXPERIAN (397-3742)
and write: P.O. Box 9532, Allen, TX 75013
TransUnion — www.transunion.com
or write: P.O. Box 1000, Chester, PA 19022.
and write: Fraud Victim Assistance Division
P.O. Box 6790, Fullerton, CA 92834-6790
It is important to order reports from all three of the credit bureaus due to the fact that some creditors do not report to
each one.
In accordance with the FACT Act of 2003, every consumer is entitled to free credit reports from each credit bureau once
each year. You are also entitled to a free copy of your credit report if any of the following conditions apply:
• You have been denied credit, insurance, employment or other benefits within the last sixty days.
• You can certify that you are unemployed and seeking employment.
• You are a recipient of public welfare assistance.
• You believe that your file contains inaccurate information due to fraud and can provide supporting details.
• You reside in California, Colorado, Georgia, Massachusetts, Maryland, New Jersey or Vermont.
If the above conditions do not apply or if you have already received your free reports for the year, the state in which you
reside will determine your fee. Most states charge $9.00; however, residents of Connecticut pay $5.00, while residents
of Minnesota and Maine pay $3.00.
Note: To obtain your free credit reports, you must request them through www.annualcreditreport.com. In other
instances, the credit report will only be free, or at the above price structure, if ordered directly from the Credit Reporting
Agency via telephone or letter. Online reports are not free, regardless of circumstance.
Credit Scores
The most widely utilized scoring system is FICO, created by Fair, Isaac and Company. The score represents the credit
risk associated with lending to the consumer. Your credit score is made up of several different factors. Let’s look at a
breakdown of these factors.
• Approximately 35% of your score is based on payment history.

• Approximately 30% of your score is based on the amounts owed and the types of accounts to which you owe.
• Approximately 15% of your score is based on the length of your credit history.
• Approximately 10% of your score is based on new credit and recent credit inquiries.
• Approximately 10% of your score is based on the variety of types of credit you have.
Payment History
Amounts/Types Credit Scoring
Length of History Above 730 Excellent Credit

700-729 Good Credit
New Credit & 670-699 Average Credit
Inquiries 585-669 Below Average Credit
Mix of Credit Below 584 Poor Credit
Tips for Raising your Credit Score
• Pay your bills on time! Delinquent payments have a negative effect on your score.
• Pay off collection accounts! Paying off a collection account will not remove it from your credit report, but the
account will be shown as paid which is a positive reflection.
• Keep revolving credit card accounts low. The amount of available credit, compared to the amount of credit being
used on the account, is a factor that determines your score.
• Pay off debt instead of moving it around. Transferring balances from one card to another will not pay off the
debt and creditors do not view this method of payment favorably.
• Avoid opening new accounts that you do not need. Focus on successfully managing the cards that you already
have. Opening new accounts will not drastically increase your score and may actually decrease it.
www.experian.com
www.equifax.com
www.transunion.com
Debt Settlement
Debt settlement is an alternate solution if you have tried a credit counseling service, do not wish to file
bankruptcy, and cannot afford your payments. With a debt settlement, you pay the creditor a percentage of
what you owe. There are generally two ways to arrange a debt settlement. One way would be dealing
directly with the creditor or collector; the other way would be through a debt settlement company.
Here are some things to keep in mind:
• Any ‘forgiven debt’ or ‘settled debt’ in excess of $600 is considered income by the Internal Revenue
Service (IRS). You will receive IRS form 1099-C. You will be taxed $350 for every $1000 that is
forgiven. It is wise to check with a certified public accountant for details.
• Settling a debt is not the same as filing bankruptcy. In bankruptcy, debts are either fully discharged,
or repaid at an alternate schedule with court protection. Your credit report shows that you filed for
bankruptcy. With a debt settlement, you will pay back a fraction of the original amount that you owe
and the credit report shows “account paid as settlement.” While this is not viewed as bankruptcy, it
may still carry a negative effect for future credit.
• Bankruptcy is a public record and settlements are not. When you settle, you can still answer “No” to
the question “Have you ever filed bankruptcy?”
• You need to be quite delinquent before you can settle, usually about six months or more.
• When a settlement amount is offered, it may be more cost effective to accept repayment terms earlier
in the process. Holding out for a better offer may result in hundreds of extra dollars in late/over-the-
limit fees and finance charges added to the balance.
(Example: If your balance due is $1000.00, and you are offered a settlement of 75% of that balance -
$750.00, it may be wise to accept. If you hold out for a better offer, for example 50%, you may accrue
late fees, over-the-limit fees and additional finance charges while you are waiting. That may very well
total MORE than the $250.00 you were attempting to save).
• You are allowed to handle the negotiating yourself – you do not need to pay a company thousands of
dollars to do this.
• Even if you are in the process of settling, the creditor still retains the right to pursue you in court.
• Never disclose where you work or bank. If the company obtains a judgment against you, it makes
their job that much easier to garnish your wages.
• Be sure that the creditor agrees to indicate “paid in full” in your credit report. Ask for this in writing as
part of your settlement.
www.credit.about.com
www.nolo.com
Disputing Credit Charges
Each month, your creditor is required to send you a bill. It is your responsibility as a consumer, to
double-check the bill for errors. The Fair Credit Billing Act protects your rights if you do find an error.
It also defines your obligations for getting the error corrected.
According to the FCBA of 1974, in order to preserve your rights, you must do the following:
• Write to the creditor at the address given for “billing inquiries.” Include your name, address,
account number, and a description of the billing error.
• Send the letter so that it reaches the creditor within 60 days of receiving the first bill that
contained the error.
• Send your letter by certified mail, return receipt requested to ensure that it was received.
Include copies, not originals, of sales receipts or other documents to verify your claim.
The creditor must respond to your inquiry within 30 days, in writing, unless the problem has been
resolved. The dispute must be resolved within two billing cycles after receiving your letter.
• You will still need to make payments on the undisputed portion of your bill.
• The creditor may not take legal action to collect on the disputed amount during investigation.
• Your account cannot be closed or restricted, but the disputed amount may count against your
available credit.
• The creditor must explain any corrections in writing. If crediting your account, the creditor is
required to remove all finance charges, late fees or other charges related to the error.
• If you owe a portion of the disputed amount, you are entitled to receive a written explanation.
• If the bill is correct, you must be notified promptly in writing about the amount that you owe
and why. You will owe the amount in dispute plus any charges that accrued while the amount
was in dispute.
• You may request copies of any documents that the creditor is using to prove its decision.
• Any collector who does not follow proper procedures may not collect the amount in dispute,
or the related finance charges (up to $50), even if the bill turns out to be correct.
www.ftc.gov
Educating Kids
Children don’t need to be accountants by the age of ten, but it is important to teach them the value of a dollar when they are young.
We live in a consumer-driven economy wherein it is vital to learn how to manage money, spend responsibly, and save for the future
by planning ahead. The earlier we address these issues with our children, the more likely lessons will be retained.
For the youngest children (ages 3-5)
• Introduce them to money by playing shopkeeper. Label some items around the house and have them “purchase” the items.
Keep the “revenues” in the “bank.” Trade roles so that they can see both sides.
• Let children handle coupons at the grocery store. You can foster a fun environment by allowing them to match coupons to
products, and then allow them to keep the savings for the items that they have matched correctly. This is a concrete
example of how saving a few pennies here or there can add up.
• Teach them why sale items are cheaper and how buying in bulk affects the price. Let them handle coins and bills. Teach
them how the different sizes have different values. Let them trade in their pennies for quarters.
For young children (ages 6-8)
• It is time to start an allowance. Children this age should begin handling money and counting it. Let them hand over money to
a cashier. Allow them to keep the change if they choose the correct bills.
• Compare name brand and bargain brand items for taste or quality versus price. Make it a game to find markdown or sale
items.
• Start setting limits on what you, as a parent, are willing to spend on clothing, toys or sporting events. If the child wants more,
then they need to make up the difference with their allowance. This will help teach children how to live within their means.
For older children (ages 9-12)
• It is time for them to supplement their allowance. Allow them to do chores around the house for extra income. Perhaps a
paper route or lawn-mowing job would be appropriate.
• If your child is constantly asking, “Why can’t I have it?” they may require a visual example. You can either cash your
paycheck or use play money. Put the money into stacks that represent housing expenses, utilities, auto insurance, food,
savings, etc. Also, show what is leftover after all bills are paid. This will show that you are not made of money and why we
cannot always have what we want, unless we save.
• Teach your pre-teen to set short-term goals. Create a plan and a schedule. Allow them to make the deposits into your
savings account and help them to keep track.
Teenagers
• Teens can begin to earn extra money by picking up a part-time job. Their primary job should be as a successful student,
so don’t allow the paying job to interfere with study time.
• Teenagers should open their own savings account. Also, opening a checking account and learning to keep the
checkbook balanced will be very valuable.
• Introduce them to the idea of credit. Teen credit cards are available and teen mathematical skills are sufficient to
understand the concepts of finance charges and annual percentage rates.
• If your teen is interested, investing in the stock market may be a good tool for teaching them about investment and risk.
The newspaper lists the trading information daily – this is a good place to start learning.
www.moneyinstructor.com
www.msgen.com
Education Expenses
When we think of education expenses, we usually think of college expenses. While we realize there are
many plans available to those attending college or university, there are also plans available for use at any
school, for a variety of expenses.
Coverdell Education Savings Act (ESA), formerly known as the Education IRA-this investment option is a
tax advantaged savings account designed to help pay for eligible education expenses.
• Assets withdrawn to cover educational expenses are tax-free.
• Principal and earnings can be used to cover K-12 costs such as tuition, tutoring, computer equipment,
room and board, and uniforms.
• You may contribute until the child is eighteen unless he/she has qualifying special needs.
• You may contribute up to $2000.00 per year.
• Contributions do not affect eligibility to contribute to the full $3000.00 traditional IRA
• Contributions are not tax-deductible
• Contributions can be made until April 15th for the current tax year.
• Contributions must be made in cash. You cannot use stocks or bonds to supplement the IRA.
If you are planning on sending your child to private school for any portion of their schooling, the ESA would
be a good option. Begin this plan when the child is a newborn. If there is any money left after they graduate
from high school, it can then be applied to college expenses.
Government Series EE Savings Bonds

• You may buy bonds for small amounts of money. You only need a minimum of $25.00 to invest.
• You may buy them at your local bank or directly from the US Treasury Department.
• There is a lower risk than most investments since principle and interest are guaranteed by the US
government
• Lost, stolen, or destroyed bonds can be replaced.
• Bonds are exempt from state and local tax; tax can be postponed until you cash in your bond or until
it reaches maturity at thirty years.
• Money invested directly helps finance our nation’s borrowing needs.
• Because these carry a lower risk, the return on your investment is not as aggressive.
• The interest rates are generally lower than other options available.
UGMA's (Uniform Gifts to Minors Act) and UTMA's (Uniform Transfers to Minors Act)
• Allows you to establish a savings account on a child's behalf.
• Current laws allow you to give up to $11,000.00 per year to another person without any tax penalties.
• This type of account may lower the family annual tax bill because earnings on the account are taxed
at the child tax rate which is lower.
• When the child reaches the age of majority, he/she has full control of the account. This type of
account does not have to be for educational expenses.
Grandma and Grandpa (and other relatives)

Sometimes relatives are willing to help pay for nieces, nephews or grandchildren. Rather than giving money
directly to the student or parent wherein the gift tax may apply, have the relative make the check payable
directly to the school. Tuition payments made directly to the school are not subject to a federal gift tax.
www.ustreas.gov
www.entrustadmin.com/open_an_account/open_education_IRA.html
www.principal.com/investment/ind/coverdell.htm
www.invest-faq.com/articles/tax-ugma.html
as a courtesy resource, and is not intended to replace consultation with an industry professional
Emergency Fund
Emergency savings should be those that are specifically for emergencies. Money that you set aside
should not be used for random purchases or luxury items. There are two types of emergency
savings—long-term and short-term.
Short-term savings
In the event that your car breaks down, the refrigerator dies or a pipe bursts, you should have the
peace of mind knowing you can just write a check or hand over some cash. Most people rely on a
credit card for emergencies, but paying cash ensures you pay only once, rather than paying for it
several times over due to interest and fees on credit.
Long-term savings
In the event that you lose your job, face a legal situation or major medical expense, it will be
important to have money set aside. The general rule suggests that three months worth of living
expenses in the bank should be sufficient. This may take some time to build up, but there is no time
like the present to start. Even if you begin with only $10.00 per month or per pay check, it’s better
than nothing at all. Over time, you may be able to increase the contributions to your Emergency
Fund.
The key to building your savings is to treat it as if it were a bill. When you decide how much you can
afford to save each month, pay your “bill” before having fun. Once you’ve reached your goal
amount, you will have become accustomed to not having that extra money and will be able to put it
towards your retirement fund or other investments.
Establishing Credit
Having credit is important in today’s society. It is required for major purchases such as automobiles
and homes. If you have good credit, you will receive better interest rates and more favorable
repayment terms, meaning you will pay less for the money that you borrow. But how do you
establish credit in the first place? Here are several ways to establish credit, and some Do’s and
Don’ts.
• Co-signing allows you to “use” someone else’s credit history in order to obtain a loan or line
of credit. By paying the bills on time, you are then establishing your own credit history.
However, defaulting on the payments will affect the co-signer’s credit as well.
• Secured credit cards allow you to have a credit line reported to the credit bureau. With this
method, opening a savings account is required, and purchases with the credit card are
permitted up to the amount in the savings account.
• Department and gasoline credit cards are also relatively easy to obtain and can be a good
start to establishing credit.
There is a process for establishing meaningful credit. Once a debt is created, wait for the initial
statement to arrive, and pay it on time and in full. If payment in full is not possible make payments
until it is paid off. Do not make more purchases! Repeat the process until your score is sufficient to
obtain unsecured credit. Remember a very important part of maintaining and establishing good
credit is to always make payments on time.
Do’s
• Open a bank account and use it responsibly
• Pay utilities on time
• Pay loans and credit accounts on time each month
• Review your credit report annually to ensure accuracy
Don’ts
• Don’t overdraw your account
• Don’t make late payments to loans and credit accounts
• Don’t let other people use your accounts
• Don’t leave utilities in your name if you move
www.beginnersinvest.about.com/cs/establishcredit/?terms=secured+credit
www.credit-land.com/establish.php
www.credittalk.com
Eviction Process
There are several steps that will occur before you are evicted from your rental property or your
home is foreclosed upon.
For Renters:
If you do not pay your rent, your landlord has certain rights, including taking you to court or evicting
you from the property. This can take as little as two weeks or as much as two or three months,
depending on the state in which you live.
The first step to eviction is a Notice to Quit or Notice to Vacate. This tells the renter to pay up or
move out. It is a warning to the renter that he can stay put only if he pays his back-rent and
becomes current on the payments.
After the time has expired on the Notice to Quit, the landlord can file an eviction order with the
court. The renter will receive a summons to appear in court. If you do not attend the hearing, a
default judgment is entered, and the sheriff will serve the eviction notice. If you have not vacated the
premises by the date stated on the notice, your belongings can be removed and put on the street.
For Homeowners:
After missing one or two payments, the lender will contact you by phone and letter. After sixty to
ninety days, you will receive a notice in the mail, called a Notice of Default. This is the first step in
the foreclosure process. From this point, you have 90 days to “cure” the debt (bring the account
current).
If you do not make up your missed payments, or contact the lender for payment arrangements, you
will receive a Notice of Acceleration. At this point, the full amount that you owe is due
immediately to avoid foreclosure.
After that there will be a Notice of Sale. This gives the date and time that the foreclosure will take
place. The foreclosure process can take anywhere from six to eighteen months depending on the
circumstances of the case.
www.911tenant.net
www.consumeraffairs.com
www.expertlaw.com/library/pubarticles/Real_Estate/evicted_tenant.html
www.nolo.com
Fair Credit Billing Act
The Fair Credit Billing Act (FCBA) was created to protect consumers from improper billing practices. It designates a fair
system to which creditors must adhere when crediting payments and correcting mistakes. It ensures payments are
credited promptly, and provides protection to consumers in cases of defective goods, or services that were incomplete.
It applies to “open-end” accounts like credit cards or department store cards. It does not cover items paid by fixed
monthly installments, such as personal loans or car loans.
According to the Fair Credit Billing Act of 1974, your rights include protection from billing errors resulting from:
• unauthorized charges;
• charges that list the wrong date or amount;
• charges for items that you didn’t accept or that weren’t delivered as agreed;
• mathematical errors;
• failure to promptly post payments, credits, etc.;
• failure to send bills to the current address (Consumers are responsible for providing address changes in writing,
at least 20 days before the billing period ends);
• charges for which you ask for an explanation, or written proof of purchase along with a claimed error or request
for clarification.
According to the FCBA of 1974, in order to preserve your rights, you must do the following:
• Write to the creditor at the address given for “billing inquiries.” Include your name, address, account number,
and a description of the billing error.
• Send the letter so that it reaches the creditor within 60 days of receiving the first bill that contained the error.
• Send your letter by certified mail, return receipt requested to ensure that it was received. Include copies, not
originals, of sales receipts or other documents to verify your claim.
The creditor must respond to your inquiry within 30 days, in writing, unless the problem has been resolved. The dispute
must be resolved within two billing cycles after receiving your letter.
• You will still need to make payments on the undisputed portion of your bill.
• The creditor may not take legal action to collect on the disputed amount during investigation.
• Your account cannot be closed or restricted, but the disputed amount may count against your available credit.
• The creditor must explain any corrections in writing. If crediting your account, the creditor is required to remove
all finance charges, late fees or other charges related to the error.
• If you owe a portion of the disputed amount, you are entitled to receive a written explanation.
• If the bill is correct, you must be notified promptly in writing about the amount that you owe and why. You will
owe the amount in dispute plus any charges that accrued while the amount was in dispute.
• You may request copies of any documents that the creditor is using to prove its decision.
Any collector who does not follow proper procedures may not collect the amount in dispute, or the related finance
charges (up to $50), even if the bill turns out to be correct.
This act covers billing errors only. It does not allow the consumer to dispute the quality of the goods or services.
These disputes can be handled directly with the credit card issuer if the purchase was made in your home state, or
within 100 miles of your current billing address. You must have also made a good faith effort to resolve the issue
with the seller.
The FCBA also states that businesses offering “open end” credit must also:
• provide written notice that describes your right to dispute billing errors;
• provide a statement for each billing cycle in which you owe more than one dollar;
• send your bill at least 14 days before the due date;
• credit all payments to your account on the date they are received;
• promptly credit or refund overpayments owed to your account;
You can sue a creditor if they violate the FCBA.
www.ftc.gov
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) was created to protect the consumer. It promotes accuracy, fairness, and
privacy of information regarding an individual’s credit file. The FCRA provides guidelines for the Credit Reporting
Agencies (CRAs) defining their obligations to report and maintain accurate information.
The Fair and Accurate Credit Transaction Act (FACTA or FACT Act) of 2003 amends the FCRA by adding provisions
to “prevent identity theft, improve resolutions for consumer disputes, improve accuracy of consumer records, make
improvement in the use of, and consumer access to credit information (www.ftc.gov).”
Our credit reports are viewed not only when we attempt to obtain new credit, but also when we apply for insurance, and
sometimes even employment. According to the FCRA, if your credit report is used to make a negative decision, you are
entitled to an explanation in writing stating which CRA report was utilized. You have the right to then obtain a free credit
report, if you request the report within 60 days of being denied. You must be given the name, address, and phone
number of the CRA where the report was obtained. In addition:
• You have the right to request an investigation if you think information on your report is inaccurate. At your request,
the CRA is required to investigate your claim within 30 days. If it is inaccurate, it must be removed or corrected. If
the dispute is not resolved, you have the right to add a statement to your file.
• Consumers are also entitled to a free report every 12 months, and additionally, if one of the following applies:
o You are unemployed and plan to seek employment within 60 days
o You are receiving public assistance
o You have reason to believe there is fraudulent activity on your report
• You have the right to review your file and be given a list of anyone who has recently requested your file.
• The CRA must remove or correct inaccurate or unverified information. The CRA is not required to remove accurate
data unless it is outdated.
• If an item is in dispute with a creditor, the CRA must report the account information along with a notice of the
dispute.
• CRAs must not report negative information that is older than seven years (ten years for bankruptcies).
• A CRA must not disclose information, without your written consent, to an employer or prospective employer.
• You may sue a CRA if they violate any portion of the FCRA.
• All “Credit Repair” companies are now regulated under the FCRA. It is illegal for them to make promises that they
can “change your social security number” to hide a negative credit background. Furthermore, a consumer can work
directly with the CRA for resolution, free of charge, without outside assistance.
Additionally, the FACT Act requires the following:
• Creditors must notify you prior to adding negative information to your credit file, reducing the number of inaccurate
records going into the file.
• Restricted access to private health information
• Allow consumers to place fraud alerts on their file.
• A one-call-for-all protection against identity theft by requiring the credit bureaus to share consumer calls.
• Creditors must take extra precautions before extending credit to consumers with fraud alerts in their files.
• Merchants may only print the last 5 digits of a credit card on an electronic receipt.

www.fair-credit-reporting.com/
www.pueblo.gsa.gov/cic_text/money/fair-debt/fair-dbt.htm
www.ftc.gov
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) was created to provide the
consumer rights and privileges with regards to debt collectors.
According to the FDCPA, collection agencies may not:
• Give misleading or false information about the debt to others;

• Call before 8am or after 9pm within the client’s time zone;
• Interrupt the work flow at the client’s place of employment;
• Make excessive phone calls as a method of harassment;
• Send a letter in a format that appears to be an official government document;
• Threaten to take legal action unless such action is imminent or underway;
• Imply that any physical harm may come to the client or the client’s property;
• Deposit a post-dated check before the date on the check;
• Misrepresent themselves as a government agency or a law practice;
• Continue to harass the client after being notified in writing to stop.
• Refuse to identify themselves and their employer and relate the reason for the call.
Collection agents may:
• Ask for personal information. However, the client does not have to reply.
• Offer partial payments or other incentives to motivate the client to pay.
• File a claim against the estate of a deceased debtor.
• Ask if the client can be called at work. If the person answering the phone gives permission,
the agent may proceed and call the debtor at that number.
www.ftc.gov
www.nolo.com
Foreclosure
If you are facing a situation in which your mortgage payments are going to be late, contact your creditor immediately.
They are more willing to work with you before there is a problem rather than after the problem has already occurred.
If you have already fallen behind, there are several short-term solutions that may be available to you.
• Reinstatement occurs when you can afford to make a lump sum payment to bring your mortgage current by a
specific date.
• Forbearance allows the homeowner to delay payments for a short period of time, with the understanding that
another option will be used to bring the account current in the future.
• A Repayment Plan may be established allowing you to add a portion of your past due amount to your current
payments until you bring the account current.
• Recasting is another solution that some lenders offer. This allows you to add the late payments to the back end
of your mortgage.
If these options are not available to you, or are not applicable to your situation, you may need to look at long-term
solutions.
• Mortgage Modification allows you to extend the length of your loan, or take other steps to reduce your
payments.
• Selling your home may be your best option. The lender may be willing to delay foreclosure in order to provide
you time to sell your home.
• Deed in lieu of foreclosure is when you give back the property in return for debt forgiveness. The bank
accepts the deed, and does not pursue official foreclosure proceedings. The former homeowner may be
responsible for a deficiency balance. The lender may require that you attempt to sell the home prior to
accepting this arrangement. This option may not be available if there are other liens on the home.
• For FHA loans, you may be able to apply for a one-time payment from the FHA Insurance Fund. You may
qualify if your mortgage is between four and twelve months past due. The funds must be repaid, usually when
your mortgage is paid off or if you sell the property. HUD will ask you to sign a promissory note and place a lien
on your home. The loan is interest free.
• For VA loans, you can contact the VA Regional Loan Center at 1-800-827-1000 for financial assistance or
counseling.
• HUD-approved counselors are available if you do not wish to contact your lender first. Call 1-800-569-4287 to
find an approved agency. They may be able to negotiate payment arrangements on your behalf with the lender.
www.hud.gov
www.drfg.com
For approved HUD counseling offices:

www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm
For foreclosure laws in your state:

www.drfg.com/info.php
Frugal Living
The word frugal is often viewed as a negative word. Consumers may think that if they are on a
budget or trying to live more frugally, that this is somehow boring or restrictive. Well, that is true - it
can be! However, it is OUR attitude towards the topic that makes it positive or negative. It is our
job to learn to be content with what we have, and to understand that more “stuff” does not equal
more happiness. Living a simpler, more frugal lifestyle will ultimately help a consumer save more
money, identify the difference between necessities and desires, and realize long-term financial
goals. Regardless of economic status or financial wealth, a frugal lifestyle will also benefit society
as a whole. Reducing our consumption of natural resources will ensure that those resources are
available for future generations.
• Create a budget and stay focused. We must know how much money is coming in and
how much money is being paid out before we can accomplish financial goals.
• Grocery shopping should be a planned event. Prepare a list, clip coupons, and be sure
to sign up for any bonus card programs. Avoid impulse purchases at check-out.
• Bring your lunch to work! The cost of constantly buying meals adds up!
• Make a romantic dinner at home rather than dining out – the internet is filled with recipes
that require no more than the ability to read and count! Your dinner will be a fraction of
the cost, and the dining environment will be more private!
• Reduce utility bills by paying more attention to consumption. Turn off lights when not in
use. Do not run water while brushing teeth or shaving. A little effort creates more
money in your pocket.
• Create your own crafts and gifts and cards for birthdays and holidays. We must
understand that just because something is purchased, it does not necessarily have more
“value” than a hand-made gift. Visit your local craft store for more ideas.
• Attend movies during the matinee hours when prices are lower.
• Check your local newspaper for free weekend events.

www.coolsavings.com
www.frugalvillage.com/
www.frugalliving.about.com/
www.frugalcorner.com/
www.allthingsfrugal.com/
www.frugalfamilynetwork.com/
www.frugalhomemaker.com/
Garnishment
Once a creditor has exhausted all other avenues to collect a debt, wage garnishment is the final step. Once the creditor
has obtained a judgment from the courts, garnishing a consumer’s wages is a legal and equitable process. The
arrangements are made through the consumer’s employer, and the employer is responsible for withholding and
distributing the designated amount to repay the debt. Most garnishments require a court order; however, debts owed to
the federal government can be repaid via administrative garnishments for non-tax debts, or by levies for IRS and tax
collection.
The Consumer Credit Protection Act (CCPA) limits the amount of earnings that can be garnished, and protects an
employee from being fired if pay is garnished for only one debt. The law designates earnings as wages, salaries,
bonuses, commissions, and distributions from a retirement fund or pension. Tips are not considered earnings for the
purposes of wage garnishment. The law also allows for disability and social security income to be garnished, if the debt
is owed to the Federal Government.
The amount of pay subject to garnishment is called “disposable earnings.” This is the amount of earnings remaining
after deductions are made for taxes, Medicare and Social Security. This does not include deductions for life/health
insurance, union dues, or retirement funds.
The law determines the amount that may be garnished, regardless of the number of garnishment orders the employer
receives. A wage earner must be left with at least $154.50 per week. This amount is equal to the Federal minimum
wage ($5.15) times thirty hours. Consumers who earn less than this are exempt from garnishment.
Generally, consumers have one garnishment at a time deducted from their paycheck. However, the judge decides how
much a creditor is allowed to garnish, up to the maximum allowed by law. If the maximum is not utilized, then there is
“room” for another creditor to garnish.
For ordinary garnishments, the government specifies that a person must be left with at least $154.50 per week. If a
wage earner earns at least $206.00 per week, the amount garnished will be up to 25% of the total earnings. (If the wage
earner earns more than $154.50 weekly, but less than $206.00 weekly, the garnishment can equal the difference
between the two. Example: $203.00 minus $154.50 equals $48.50)
For example, if an employee’s paycheck shows $400.00 per week for gross pay and has deductions for federal and
state income tax, Medicare tax, and Social Security tax equal to $100.00, disposable earnings would equal $300.00.
25% of $300.00 is equal to $75.00. The debt would be repaid at $75.00 per week, leaving the wage earner with
$225.00 per week.
For child support and alimony, the law is different. If a worker is supporting only one ex-spouse or child, the law
allows up to 60% of a worker’s disposable earnings to be garnished. If the worker is supporting more than one ex-
spouse or child, the law allows up to 50% of the earnings to be garnished. An additional 5% may be garnished for
support that is in arrears.
For debts owed to the Federal Government, collection agencies acting on their behalf are authorized to garnish 15%
of earnings for debts defaulted to the Federal Government.
For defaulted student loans, the Department of Education guaranty agencies can garnish up to 10%.
Check your state garnishment laws to see if they vary from Federal laws. If there is a difference, the lesser
amount will be applied. These laws change frequently.
www.carreonandassociates.com/articles/collectionlaws.htm
www.carreonandassociates.com/articles/garnishments.htm
www.overdue.com/Garnishment_Statutes/
Holiday Saving Tips
The best way to prepare for the holidays is to make an early commitment to remaining organized
and focused throughout the year. Most people will leave shopping to the last minute, battling the
crowds of disorganized, panicked bargain hunters at the mall – all the while promising that NEXT
year will be different. By planning ahead, you can avoid that stress and strain, and even have extra
gifts handy, just in case.
• Create a budget. Stay within your limits! Figure out how much you have to spend and adjust
gift selection accordingly. Remember – it is NOT about how much you spend on the gift!
• Create a list! Purchase throughout the year. Each pay period, purchase a few gift cards at
popular stores. When the time comes, you can use the gift card to purchase the gift, or give
the recipient the card to purchase what they choose. Either way, funds were allotted well
ahead of time.
• “Secret Santa” is a good choice for larger families, or at the office. Throw names into a hat,
and each person chooses one recipient. Gift selection has a maximum value, and each
person only purchases one gift. That will save money and time for all who participate.
• Handmade gifts are often the most treasured. A card or craft is a wonderful alternative to
high-priced gifts. Baked goods are also well appreciated during the holidays. Create your
crafts throughout the year so that you have plenty of time. Local craft stores will have plenty
of ideas to get you started.
• Coupon books can be created to give your services to the recipient. New parents, for
example, might really appreciate a babysitter for an evening out. Or, an elderly person might
appreciate landscaping or other cleaning service. Be creative! Our capacity to give is not
limited by our wallet!
www.organizedchristmas.com
www.dummies.com
www.frugalliving.about.com
www.thefrugallife.com
www.thelaboroflove.com/forum/dollar/22.html
Home Equity Refinancing
Homeowners have the additional options of obtaining a loan or line of credit secured by the equity
value in the home. Choices include a second mortgage (also called a home equity loan) and a
home equity line of credit. A second mortgage is a lump sum loan, given to the borrower in cash.
Repayment terms are fixed monthly installments, usually paid back within fifteen years. Interest
begins to accrue immediately. A line of credit is different – interest will only begin to accrue once
the funds are accessed. A lump sum of cash is not given to the borrower, but rather, the borrower
decides how much to take and when. The borrower may access up to the full amount of the credit
line, with a revolving payment structure. Once the balance is paid down, the borrower may use the
remaining credit much like a credit card.
A lender will require that the homeowner is fully current on the mortgage, has good credit, and has a
debt to income ratio that is within acceptable parameters. Obtaining these types of loans will allow
a consumer to pay off their existing creditors immediately, and then repay the loan to the lender at a
more favorable interest rate.
• A loan will only be an effective solution if the consumer closes the credit card accounts, and
is able to successfully manage their spending.
• Two thirds of all homeowners who take out home equity loans do not close the credit card
accounts – and unfortunately, max them out again, creating a far worse situation.
• Using a secured loan option transfers unsecured debt from a credit card to the secured value
of the home. Missing loan payments could result in losing the house whereas missing credit
card payments has less severe penalties.
• Interest rates on lines of credit are often adjustable – not a good option for the consumer who
desires a fixed interest rate.
• Secured loans should never be considered for generating extra cash, or other frivolous
matters. While a line of credit can be retained without accruing interest until the need
presents itself, a second mortgage is a lump sum payment that should only be considered if
there is an immediate use for the funds.
• A good place to begin research for a loan would be a local bank or credit union where the
consumer does business.
www.about.com
www.mortgage101.com
www.mbaa.org
www.hud.gov
Home Mortgages
Purchasing a home is a big step. For the uninitiated, the process can be daunting, confusing, and
frustrating. By doing a little homework beforehand, the process can move a lot more smoothly.
Before beginning a search for a home, it is important to check your credit rating. Order credit reports
from all three agencies so that you may review the reports, make necessary corrections, and check
your debt-to-income ratio.
The debt-to-income ratio will be an important factor for determining how much you can afford to
spend on a monthly mortgage. It tells the lender how much income is available once all financial
obligations have been deducted. Once this has been determined, the lender will “pre-qualify” you
for a loan. This means that you will know exactly how much you may borrow, and in what price
range to begin your search. At this point, it will be helpful to enlist the services of a real estate
agent.
Do you have funds for a down payment? Loan companies may offer better rates if you have a down
payment. Also, without a down payment, you may not qualify for as many loans as you would with
some extra cash.
Items and terms to learn:

.
• Points
• Adjustable Rate Mortgage (ARM) versus Fixed Rate Mortgage
• differences between pre-qualified, pre-approved and loan commitment
• differences between VA loans, FHA loans and HUD loans
• differences between mortgage brokers and mortgage lenders
www.mortgage101.com
www.homebuying.about.com/od/mortgagefacts/index.htm?terms=mortgages
www.fanniemae.com
Identity Theft
Identity theft is one of the fastest growing crimes in the United States. Identity theft is when someone uses your
personal information such as name, Social Security number, bank account number, or other personal data to commit
fraud or criminal activity. Your information may be used to open new credit card accounts, bank accounts, even to
secure personal loans and mortgages. A person who has been the victim of identity theft must prove that any fraudulent
activity was done without their knowledge. Repairing such damage can take years and cost hundreds of dollars.
If you think you are the victim of identity theft…

• Contact the fraud department of any one of the three major credit bureaus to place a fraud alert on your
file.
Once the credit bureau confirms your fraud alert, the other two bureaus will be automatically notified to place fraud
alerts. All three credit reports will be sent to you free of charge, for your review. The fraud alert requests creditors to
contact you before opening new accounts or making changes to existing accounts.
• Close the accounts you know or believe have been tampered with or opened fraudulently.
Use the ID Theft Affidavit when disputing new unauthorized accounts.
• File a police report and get a copy for your records

You may need documentation for your creditors or others who request proof of the crime. Contact county or state police
if local authorities will not help. If identity theft is not a crime in your state, file a "miscellaneous incident report."
• Contact the Federal Trade Commission

Call 1-877-438-4338 or visit www.consumer.gov/idtheft to file a complaint. The FTC maintains the Identity Theft Data
Clearinghouse which is a database used by law enforcement agencies for investigations.
Consider this:
• New credit reports should be ordered to verify changes were made.
• Report lost or stolen cards immediately.
• For stolen checks, stop payment and ask the bank to notify their check verification service.
• Follow up all calls in writing. Send your letters by certified mail, return receipt requested. Keep copies for your
files.
Credit Bureaus
To order your report, call: 1-800-685-1111 To notify retailers not to accept your checks:
To report fraud, call: 1-800-525-6285 Telecheck 1-800-710-9898
Certegy, Inc. 1-800-437-5120
Experian — www.experian.com International

To order your report, call: 1-888-EXPERIAN (397-3742) Check Services 1-800-637-9656
To report fraud, call: 1-888-EXPERIAN (397-3742) To find out if bad checks have been passed:
SCAN 1-800-262-7771
and write: Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
Identity Theft - Prevention
Identity theft is a serious crime. It is one of the fastest growing crimes in the United States. Identity theft is when
someone uses your personal information such as name, Social Security number, bank account number, or other personal
data to commit fraud or criminal activity. Your information may be used to open new credit card accounts, bank
accounts, even to secure personal loans and mortgages.
A person who has been the victim of identity theft must prove that any fraudulent activity was done without their
knowledge. Repairing such damage can take years and cost hundreds of dollars.
There are several things that can be done to help prevent becoming a victim of identity theft.
• Be proactive! Order your credit report once per year. Some victims may not realize they are victims for up
to five years!
• When ordering checks, use only your initials in place of first and middle name. DO NOT list your social
security number or home phone number on your checks (You can fill this in when making a purchase, if
required).
• When sending a payment to a credit card company, do not list the complete account number on the “For”
line of your check. Include only the last 4 digits. The creditor knows the additional information.
• Make copies of everything in your wallet, front and back. Keep the photocopies in a safe place. This will
ensure you have all the information required to take action, if necessary.
• Never reveal personal or banking information over the phone unless you have initiated the call. For
incoming calls, request all relevant account information from the caller. Then, hang up and call the creditor
directly to ensure that you are being contacted by an authorized individual.
• Make sure internet purchases are done over a secure server.
• Do not give out your credit card information to anyone—friends and family may seem trustworthy, but
better safe than sorry.
• Do not give out personal information in response to emails.
• If you have already been a victim, prevent further identity theft by adding fraud alerts to your credit files.
Experian — www.experian.com
To order your report, call: 1-888-EXPERIAN (397-3742)
To report fraud, call: 1-888-EXPERIAN (397-3742)
and write: Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
Insurance
When attempting to balance the budget and save on household expenses, many people do not think about their insurance plans.
Costs can vary greatly, with benefits and details often overlooked. Be sure to carefully consider all companies when selecting a
provider. Here are some other factors to consider:
Auto Insurance
• Insurance companies can set their own prices, within reason. Compare similar features in the policies - not just dollar
amounts. Mention your age and marital status as this may affect rates.
• You may be able to reduce your premiums by 10% by changing your deductible from $250.00 to $500.00. Be sure you have
the financial means to pay that deductible in case of accident or incident.
• Remove coverage items you don’t need, such as towing, car rental, etc.
• Ask about lowering your coverage amounts. Is the reduction in coverage worth the money saved?
• Ask about “low-mileage” and “clean driving record” discounts.
• Sports cars and high-performance vehicles cost more to insure.
• Policies generally cost more in urban areas versus rural areas.
• Vehicles kept in garages cost less to insure – they are far less likely to be vandalized or stolen.
• You may receive discounts for anti-theft devices, air bags, anti-lock brakes, or other safety devices.
• Most companies offer multiple-vehicle or multiple-policy discounts. Purchasing auto, life, and renter’s or homeowner’s
insurance from one company will most likely result in savings.
• Discounts may be available for non-smokers, senior citizens, or carpooling.
Health Insurance
• Check the price of co-payments, deductibles, and co-insurance requirements.
• Can you choose your own health-care providers?
• Does the plan include all of the health services that you need?
• Does the plan include the health-care providers you're currently using?
• Does the plan offer family as well as individual coverage?
• Does the plan cover pre-existing conditions? What is the waiting period, if any?
• Does the plan include a Prescription Discount Program?
• What is the insurance company’s reputation in the industry?
Homeowner’s and Renter’s Insurance

• These policies generally cover damages to the home or personal property due to theft, fire, smoke and lightning, bursting
pipes, ice and snow.
• These policies also protect guests in the house if they are injured on the property.
• Some items are expressly NOT covered – for example - damage due to flooding, and coverage of excessively expensive
jewelry and other luxuries. Companies will offer separate policies or “riders” to cover these items, at an additional cost.
• For those who rent, renter’s insurance will function in a similar manner, covering those items that are not covered by the
apartment complex policy.
Life Insurance
• Periodic review of your coverage is recommended. Do not purchase more coverage than you need.
• The healthier you are, the better the rates - smokers will automatically pay higher rates.
• Buy sooner rather than later - premiums increase as you grow older.
• You don't necessarily have to pay a commission; look for “no-load” policies.
• If affordable, pay your insurance quarterly or annually – there is usually a discount.
• Don't rely solely on the life insurance offered by your employer - this may not cover all your needs.
• Tell the whole truth and nothing but the truth - if you lie about your health to get better coverage, the policy could be null and
void if the insurance company finds out.
www.insure.com
www.insurance.com
www.iii.org
Interest-only Loans
Interest-only loans were very popular in the 1920’s. Back then, the note was interest-only for the term of the
loan. The borrower refinanced at term, which worked out, as long as the house didn’t lose value or the
borrower didn’t lose his/her job. With the Great Depression, most of these loans went into foreclosure and
lenders stopped writing them. Now, lenders are willing to do the interest-only portion for a fixed period of
time.
What is an interest-only loan?
An interest-only loan is a home loan that allows the borrower to pay just the interest on the mortgage for a
certain period of time (5-15 years). No money is paid towards the principal during this time. After the interest-
only period is up, the monthly payment increases to include principal over the remaining term of the loan.
Why would anyone want one?
Interest-only mortgages offer a lower monthly payment. Borrowers are able to afford more house than their
finances would normally allow. Once they have paid off high-interest debt, they can then begin making higher
payments. Most homeowners expect to sell or refinance prior to the interest-only period expiring.
Some borrowers would rather use the difference in payments to invest in retirement or some other
investment. If a loan is only 5% interest and an investment can earn 8% interest over the same 15 year time
period then the borrower would end up 4% ahead.
Examples:
• Consider a home loan for $200,000 at a fixed rate of 6.5 percent, paying only interest for the
first five years. During the first five years, payments would be $1,083 a month, plus taxes and
insurance, with nothing contributed towards the home’s equity. After the five year period,
payments would rise to $1,350 in order to pay off the loan over the next 25 years.
• A traditional mortgage with the same terms would have monthly payments of $1,264. After
five years, the borrower would have accumulated almost $13,000 in equity.
http://www.bankrate.com/brm/news/mortgages/20030904a1.asp
http://www.dfscorp.com/downloads/Cashflow_IO_Loan.pdf
Investment Options
Regardless of economic status or income, saving money is a sensible action. It is particularly important to plan for
retirement. Today, it is predicted that Social Security funds may not be available for future generations – including
perhaps yours! The range of savings and investment options is vast. A consumer should first determine the goal of
saving. Are the savings for a short-term goal or a long-term goal? What is the level of risk that the consumer is willing
to take? Will the consumer require continual access to these funds? The answers to these questions will help to
determine what type of savings options to choose. The following is only a sample of these options.
• Savings Accounts: A savings account at the local bank or lending institution is the simplest place to begin. A
savings account will accrue only a very small amount of interest, however, the funds are always available for
immediate withdrawal. Be sure to select a bank that is a member of the Federal Deposit Insurance Corporation
(FDIC).
• Retirement Accounts: If your company offers any tax-free savings plans, this is a great option for creating a
retirement account. Examples include a 401(k), a 403(b) and a 457. The funds are deducted ‘pre-tax’ from
your paycheck. You have flexibility in choosing how much you place into the account. Sometimes your
employer will match what you have deposited, basically giving you money just for choosing this option. The
funds are then invested by the account administrator (usually a bank or brokerage firm) and the results of the
investments are added or subtracted from your account. You will also have a choice in how the funds are
invested. The account balance will vary as the market fluctuates; however, long-term performance is what
matters most. If your company does not offer such savings plans, you can open an individual retirement
account (IRA) at a local bank or lending institution. These accounts are designed to provide funds upon
retirement.
• CD (Certificate of Deposit): A CD is an interest-bearing savings tool wherein the deposited funds are not
available to withdraw for a certain period of time. A consumer “purchases” a CD at a bank or lending institution.
The “cost” of the CD will vary, depending on the amount of interest that will accrue. The bank will then hold the
funds within the CD until the time limit has expired. The consumer will then receive those funds back, plus
whatever interest has accrued. It is a means for a bank to “borrow” money from you and then pay you back
with interest. Example: A six-month CD has a minimum deposit of $1000.00 and will pay 2% interest. A
consumer “purchases” the six-month CD by depositing $1000.00. Those funds will not be available until six
months after the date of deposit – however, six months later that $1000.00 will be worth $1020.00.
• The Stock Market: Investing funds in the stock market requires research and attention. Whether you are a
millionaire with thousands to invest, or a young adult with $25.00 per week to invest, utilizing the stock market
as a means to accumulate wealth is a realistic, but risky venture. It may require a level of risk that the average
consumer is not willing to take. It is possible to lose everything, so careful consideration is necessary! A stock
broker will be able to give you advice depending on your circumstances. A minimum amount may be required
to open an account with a broker, and broker fees apply when your stocks are traded, bought, or sold. A
consumer can buy, sell, and trade stock on their own, if they are able to understand the process. The daily
newspapers include the market activity on a regular basis. Consumers new to the stock market should try to
read as much as possible on how the stock market operates before deciding to choose this option.
www.stocks.com/
www.ourbusinessclasses.com/link/documents/save_invest_where_1000.htm
www.mutualfunds.about.com/
Job Search Tips
Update Your Resume
Be sure to include:
• Any training you’ve received (certifications, licenses)
• Any skills that relate to the job (customer service, typing, etc.)
• Any type of military service or volunteer work
• Computer skills or training
• Dates of training, service, and employment
Circulate Your Resume
• Submit your resume to an online job-search engine such as Monster.com

• Submit your resume to a recruitment firm
• Attend career fairs
Be Prepared For Interviews
• Dress appropriately
• Do your homework – Learn some information about the company before you go
• Maintain eye contact
• Avoid touching your face or playing with your hair
• Answer interview questions appropriately
o Most interviewers want to know what you can do for the company
Network, Network, Network
One of the best ways to learn about job openings is to network. According to an article in the
Harvard Business Review, nearly 80% of the openings available at any one time are never
advertised.
Follow-up and Keep Records
Be sure to keep records of where you sent your resume, who you talked to, thank you letters sent
and any other pertinent information.
Be Persistent
Going on interviews can be disheartening if you aren’t offered a job. Do not blame yourself. Change
your strategy and keep trying. Maintain your network.

http://www.free-resume-tips.com/10tips.html
http://www.taos.com/resumetips.html
Judgments
A judgment is the court’s final decision on a particular subject. In matters of debt, a judgment in
favor of the creditor officially states that the debtor owes the money to that creditor. A judgment
allows the creditor to then pursue further action such as wage garnishment. A judgment
communicates to the public (and future creditors!) that the consumer literally had to be forced to
repay the debt by court order. Future creditors may assume that this consumer probably will not
bother to repay any other debt. A judgment carries negative, long-term ramifications.
A consumer should do whatever it takes to avoid a judgment. This can be accomplished by setting
up a payment plan with the creditor directly, or through a non-profit, credit counseling organization.
You may still have to appear in court, but you will be able to provide documentation that you are
intent on repaying the debt.
• Generally a consumer must be given thirty days notice prior to a hearing.
• ALWAYS appear in court if you are served. If you do not show up, the court may
automatically enter a “default judgment” against you.
• Any out of court settlement or negotiation must be in writing!
• Check on the statute of limitations (SOL) for debts in your state. An expired SOL is a valid
argument to take to court.
• If you believe you have been sued by mistake, you may file a “Motion to Vacate.”
Consultation with an attorney is highly recommended to pursue this option.
www.carreonandassociates.com/collectionlaws.htm
www.nolo.com
www.castlelaw.com/lit1.htm
www.legal-definitions.com/legal-definitions-j.htm
Loan Calculators
Loan calculators are used to determine pay-off time. The following list contains links
to online calculators that can help you estimate your pay-off time for credit card debt,
personal loans and mortgages.
www.interest.com/hugh/calc
www.lowermybills.com
www.bankrate.com/overkeyword/rate/calc_home.asp
cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp
www.needhelpwithbills.com/debt_calculator.htm
Marriage, Divorce and Debt
When couples decide to marry, often times they do not consider what would happen if they were to
divorce. With divorce rates continuing to climb, and more and more couples citing ‘money trouble’
as one of the main reasons for divorce, the topic is certainly worth additional exploration. In addition
to the emotional stress of dissolving the marriage and beginning life anew, couples will also be
tasked with dividing and distributing property and possessions. This is especially true regarding
credit and debt. Debts (both joint and individual) that were incurred during the marriage will need to
be addressed to create a fair and equitable repayment strategy with which both parties can be
satisfied. Since most creditors will view BOTH parties as equally responsible for said debts, the
wisest action would be to consult an attorney as soon as possible.
• Information that will be helpful for the attorney will include details on ALL joint accounts –
mortgages, automobiles, credit cards, utilities, tax returns, etc.
• Both parties should consider the effect that the divorce will have on individual credit ratings.
• Accounts that can be closed should be closed. This will reduce the incidence of ‘revenge
spending’ wherein one spouse may try to accrue a lot of debt to spite the other spouse.
• Again, both parties may be held responsible even if the account only has one signature, so
the best course of action is to meet with an attorney immediately.
For the most part, the state in which the couple resides will be the determining factor for the division
of property and debts. Each state has a different system for dividing property when a partnership
has ended. Accounts will have to be severed; each creditor has a different policy. Contact each
individual creditor to determine what must be done. Because laws vary from state to state, only an
attorney can direct you to the appropriate action for your situation.
www.divorcesource.com
www.experian-creditreport.com
www.divorcehq.com
www.divorceinteractive.com
www.wife.org
www.insurance.com
Medical Savings Accounts
Medical savings accounts (MSAs) are tax-exempt savings accounts, similar to IRAs, which are used
for medical expenses. The money can be applied to qualified out-of-pocket medical expenses, such
as prescriptions or co-payments. Unspent money left in the account can build interest for future
expenses or retirement.
• Any qualified, self-employed person or company with fifty or fewer employees is eligible.
• The individual or the employer can make contributions to the MSA, but not both within the
same year.
• Distributions can be made at anytime for qualified medical expenses without penalty. If the
money is withdrawn for other purposes, it is subject to taxes and penalties.
• Insurance is required to participate in the MSA. Tax advantages take effect when you have
low-premium, high-deductible insurance.
• There is a maximum dollar amount that can be contributed per year.
• Once an account reaches $3,500.00, any additional monies can be invested elsewhere.
www.msaadvantage.com
www.medicalsavingaccount.com/index.html?side.htm&0
www.msainfo.net/
OPT OUT
While it is true that consumers seek out credit by contacting the creditors directly – it is also true that creditors
contact us even when we have not asked for their service! Is your mailbox cluttered with “pre-approved”
credit card offers? Are you tired of the enormous amount of junk mail that you are receiving? Would you like
to know why you are receiving all this mail?
Credit cards companies and lenders rely on the information that is in your credit report to determine if they
can offer you a “pre-approved” account. Most often, consumers who receive “pre-approved” credit card
offers will sign up immediately – providing instant profit for the credit card company. Creditors know this,
and they rely on this to increase their profits.
Credit card companies and lenders can retrieve credit reports on whomever they choose – unless you have
“opted-out.” When you choose to “opt-out” you are restricting those companies from having access to your
credit report and score. They will no longer be able to initiate contact with you without your approval.
Call 1-888-567-8688 to OPT OUT!
www.experian.com
www.equifax.com
www.transunion.com
Payday Loans
Payday loans, also known as cash advance loans, post-dated check loans, or deferred deposit check loans, are a very
costly way to borrow money. Check-cashers and finance companies are making short-term, high-interest loans secured
by your personal check. Here’s how the process works:
• The borrower writes a post-dated personal check made payable to the lender for the amount borrowed plus a
fee.
• The company gives the borrower the amount of the check minus the fee. For example, the borrower wants
$100.00 until payday. He/she writes a check for $115.00.
• The lender gives $100.00 to the borrower and agrees to hold the check until the next payday.
• At that time, the lender either deposits the check, or the borrower can redeem the check by paying $115.00 in
cash.
• You may be allowed to roll-over the check by paying a fee to extend the loan for another two weeks. Then, it
would cost $30.00 to borrow the original $100.00. In this example, the initial cost of the loan is the $15.00
finance charge and an Annual Percentage Rate (APR) of 391%.
• Under the Truth in Lending Act, interest and finance charge information must be disclosed to the consumer in
writing.
Tips and alternatives to payday loans
• Shop carefully, compare offers. Look for a loan with the lowest APR.
• Consider a small loan from your bank.
• Borrow the money from a friend or relative.
• Ask your employer for a pay advance.
• Obtain cash advances from your credit card.
• Ask creditors for more time to pay the bills. The late fees/finance charges may be less than the APR on the
payday loan.
• Create and maintain a budget to avoid the need for a payday loan.
• Find out if you have, or can get, over-draft protection on your bank account.
• If you must use a payday loan, borrow only as much as you can afford to pay back with your next paycheck.
• If you need help with your budgeting or to work out a repayment plan with your creditors, contact a non-profit,
credit counseling agency.
www.credit.about.com/cs/consumerwisdom/a/042100.htm?terms=pay+day+loan
www.ftc.gov/bcp/conline/pubs/alerts/pdayalrt.htm
The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is
provided as a courtesy resource, and is not intended to replace consultation with an industry professional
Prioritizing Debt
If a consumer has fallen behind on their payments, and funds are in short supply, it will be necessary to
prioritize the debt.
Is the debt secured or unsecured? The answer to this question will define the repayment strategy.
A secured debt is one that is backed by collateral. Collateral can be legally seized by the lender in the event
of a delinquency. Examples of secured debt include home mortgages and automobile loans. Falling behind
on these debts means loss of property. No matter how strained the budget, the focus must remain on basic
survival needs – housing, transportation, and food. Since homes and automobiles are usually secured debts,
pay these first to ensure that essentials are maintained.
An unsecured debt is one that is not backed by collateral. Examples of unsecured debt include credit cards
or medical bills. If you have fallen behind, the most important factor to remember is that OPEN and
HONEST communication with the creditors is the key to receiving assistance. Most creditors have their own
‘hardship’ program that is designed to help those in need. Also, a non-profit credit counseling organization
may be able to design a repayment plan with creditors. In either case, a consumer who takes action at the first
sign of trouble is more likely to be eligible for assistance. A consumer who ignores letters and phone calls,
and evades the creditor at every turn, will ultimately find that the options from the creditor are few. Finally, if
all attempts to collect by the creditor have failed, the creditor will then “charge-off” the account, and enlist the
services of a third-party collection agency. That agency will then contact the consumer to collect the debt.
• An account that has been “charged-off” as a bad debt is NOT exempt from repayment! Companies are
required to report their profits and losses for tax purposes. When a creditor “charges-off” an account,
they are confirming that the account cannot be considered as profit for the company. The creditor,
however, would still retain the right to take legal action to attempt to collect the debt. The consumer is
still responsible for repaying the debt.
• A lender of unsecured credit must first pursue and win a court judgment before money or property can
be seized. Bear in mind that while court action is infrequent, it is still the right of the creditor.
www.ftc.gov/bcp/conline/pubs/autos/carrepo.htm
www.northeastfinancial.com/faq.html
www.realtytimes.com/rtnews/rtcpages/20021111_workouts.htm
www.iasfinancial.com/reposessors.htm
www.kellygrover.com/foreclosure-prevention_workouts_help_financially-troubled_homeowners.htm
Renting vs. Buying a Home
The decision to purchase a home or to rent a home is largely determined by the needs and desires of an
individual. Many times we are advised the “American Dream” is to own a home, while renting a home is
merely “throwing money in the trash!” This is not necessarily accurate. Circumstances regarding lifestyle,
finances, and employment, should all be examined in order to make the most logical decision. For some,
renting will be the wisest and most economical choice. For others, ownership will be the best selection.
Consider these pros and cons:
Renting – Pros
• More flexibility, temporary commitment – leases can be short or long-term

• Generally, only a “security deposit” is required in advance
• Utilities are often included in rent cost
• Not responsible for maintenance and repairs
Renting – Cons
• Rent can be raised at anytime – there is no guarantee you can stay put
• Equity is not built by renting
• Less privacy – sharing of common areas required
• Landlord dictates all rules, changes to property not permitted
• You may have to wait for repairs
Buying – Pros
• Ownership of the property when the mortgage is paid in full

• Property value should increase over time
• Potential tax savings
• Freedom to make changes to the property
• Repairs can be made without delay
Buying – Cons
• Large amount of funds required up front for settlement costs

• Large amount of funds may be needed for repairs and maintenance
• Long-term commitment required
• Potential required adherence to neighborhood rules
Websites that can offer additional information:
www.invest-faq.com/articles/real-es-rent-vs-buy.html
www.ourfamilyplace.com/homebuyer/buyorrent.html
www.theknot.com
Repossession
When you purchase or lease a car, truck, boat, motor home or other vehicle, the lender holds the
rights on the vehicle until you have paid it in full. The title to the vehicle is retained until full payment
is received. These rights are established by the signed contract and state law. If you make late
payments or default on the contract in any way, the lender has the right to repossess the vehicle.
The state laws vary greatly. In many states, the lender has legal authority to seize the vehicle as
soon as you default. There is no advance notice requirement, and they are generally allowed on
your property without your permission. In other states, however, there are stricter procedures for
repossession of a vehicle. The law states that a “breach of peace” in conjunction with the
repossession is not allowed, but different states have different laws defining a breach of peace. For
example, removing a car from a closed garage may constitute such a breach. The lender may be
required to reimburse you for damages to you or your property for harm done. Each situation must
be evaluated according to state law.
Once the car has been repossessed, the lender may keep the car as compensation for your debt, or
sell it to recoup some of the costs. In many states, you must be notified of the date of auction or
private sale.
In either case, you may be entitled to buy back the vehicle by repaying the full amount that you owe,
plus expenses associated with the repossession. In some states, you can reinstate the contract by
paying only the amount that is past due, plus any costs associated with the repossession.
Lenders are not allowed to keep or sell any of the personal belongings inside the car.
If the car is sold, usually there is a deficiency balance. This is the difference between the amount
that you owed and the amount for which the car was sold. For example, if you owe $2500.00 on the
car and your creditor sells the car for $1500.00, the deficiency balance is $1000.00. You would also
owe any additional fees according to your contract. These fees can include those related to the
repossession and early termination of your lease or early pay-off of your financing.
In most states, the creditor is allowed to sue you for this deficiency balance.
It is easier to prevent repossession than to pick up the pieces afterwards. Contact your lender as
soon as you realize there might be a late payment. You may be able to negotiate a delay in
payment or an altered schedule of payments. Make sure to get any changes in writing to avoid
confusion later.
www.ftc.gov
Retirement Savings
There are few things in life that are certain. Given the fact that you will live long enough, there will
be a time when you will stop working. That time is called retirement. You need to begin planning
early. For many generations, Social Security will not be a viable option. Planning for retirement is a
time consuming job, but well worth the time spent.
Because there are many unknown factors, it is difficult to plan exactly how much money you will
need to save for retirement. Here are some ideas to consider:
• Imagine your future
How old are you now? When do you plan to retire? To what age do you expect to live? Do you want
to live at your current level? Do you want to keep working after you “retire?” Do you want to travel
or stay close to home?
• Define your goals
Now put those dreams into reality. If you want to retire early, you need to save more aggressively.
How important is that goal?
• Determine your income requirements
Determine your current spending level. Generally, retired folks spend the same amount of money,
just on different things. While there may a decreased or eliminated mortgage payment, increased
medical expenses will ensue. Estimate your benefits from Social Security. Estimate the return on
your investments. Average return over time is about twelve percent for investments. By calculating
about four percent return, you can allow sufficient leeway for inflation.
• Plan your investment strategy
Use an investment calculator to determine how much money you need to save between now and
retirement. Plan accordingly by using different investment vehicles such as stocks, bonds or
annuities.
For additional help, seek the advice of a professional financial planner.
For worksheets or calculators:
www.smartmoney.com/retirement/planning/?nav=LeftNav
Reverse Mortgages
Simply put, a reverse mortgage is a “loan” designed to provide income for older consumers who
own their homes outright. While a conventional mortgage loan is designed to build equity in the
property, a reverse mortgage takes the equity out of the property and converts it into cash that the
homeowner can borrow. To qualify for a reverse mortgages, a consumer needs to be at least sixty-
two years of age, and occupy the property as a principal residence. Reverse mortgages are offered
through government programs, as well as through public lenders.
• The most popular type of reverse mortgage loan is a Home Equity Conversion Mortgage
(HECM).
• There are no income or credit requirements for reverse mortgages.
• The amount of the loan will depend on the age of the applicant and the value of the property.
If one applicant is younger than the other, the youngest applicant’s age is used for
calculation.
• Interest rates and closing costs will also affect the amount that is available.
• A homeowner will still be responsible for repairs, paying property taxes and maintaining
insurance coverage for the property. Failure to maintain these obligations may result in
default of the loan.
• Reverse mortgages can affect tax liability, as well as eligibility for certain state and federal
government assistance programs.
• Because of the complicated nature of reverse mortgages, The Truth in Lending Act specifies
a reverse mortgage must be explained in terms of the Total Annual Loan Cost (TALC).
www.hud.gov
www.aarp.org
www.reverse.org
Student Loans - Repayment
After you graduate, leave school, or drop below half-time enrollment, there is a six to nine month
period before loan repayments begin. You will be notified by your loan provider regarding upcoming
due dates.
If you are unable to make payments, contact your lender to set up either forbearance or deferment.
Otherwise, the maturity date on each promissory note is accelerated and the balance will be
immediately due in full. Other negative consequences include wage garnishment, federal tax refund
withholding, and losing eligibility to obtain other government loans like FHA or VA.
There are many options available to people who have defaulted on their student loans.
• You can set up a repayment plan with the guaranty agency to repay the loan
• You can consolidate your loan through the FFEL loan consolidation program or the William
D. Ford Direct Loan program.
• You can rehabilitate the loan by entering the loan rehabilitation program.
Consolidation allows you to combine several types of loans to simplify repayment. For the FFEL,
you must be in repayment on a defaulted loan and have made at least three consecutive on-time
payments. Depending on the balance due, the new consolidated loan payment period may extend
to as long as thirty years.
The loan rehabilitation program allows you to set up reasonable, affordable payments. After you
have made twelve consecutive payments, the Department of Education will agree to reinsure the
loan. The loan will then be eligible to be repurchased by a lending institution. Once the loan is
rehabilitated, it will be taken out of default, the negative credit bureau information will be deleted and
you will be able to pay the loan over a nine year period. You will again be eligible for additional Title
IV student aid funds.
For more information on the loan rehabilitation program, call 1-800-621-3115
You can call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243), to
find out which guaranty agency holds your loan
Websites that can offer additional information:
To find a listing of the guaranty agencies:

http://bcol02.ed.gov/Programs/EROD/org_list.cfm?category_ID=SGA
For information on loan rehabilitation:

www.ed.gov/offices/OSFAP/DCS/index.html
Student Loans - Types
There are different types of grants and loans available. Each school generally has a financial aid
office to which you may inquire.
• Federal Pell Grants are designed for lower income families. The maximum annual award
equals about $3,000.00. Pell grants are not available for graduate studies.
• State Grants are needs-based grants, usually for residents attending in-state schools.
• Federal Supplemental Educational Opportunity Grants (FSEOG) are needs-based grants

for undergraduate students. The Federal Work Study Program is part of the FSEOG.
Typically, students work somewhere on campus (library or bookstore) and receive a
paycheck and sometimes a break in tuition.
• Federal Perkins Loans are needs-based, low-interest loans (5%) for undergraduate and
graduate students. Repayment must begin nine months after graduation or when schooling
ends.
• Stafford Loans are needs-based loans, backed by the Federal Government. They can be
either subsidized or unsubsidized. The circumstances of the applicant will determine
eligibility. The loans are typically payable after leaving school.
• PLUS Loans for Parents are not based on need and are the responsibility of the parent(s).
They offer reasonably competitive rates, but you'll need a solid credit record to qualify.
www.fafsa.ed.gov
Tax Tips - Charitable Donations
Donating to a charitable organization is a great way to help those in need, and to receive a tax break. Here is
some general information on taxes as applicable to charitable donations.
• You must itemize your taxes using Internal Revenue Service (IRS) tax form Schedule A. If
your deductions (items such as mortgage interest, state and local income and property taxes,
and donations) won’t exceed the standard deduction amount, there is no need to itemize. (It
would be better to have a yard sale!)
• If you are donating less than $250.00, you don’t need a receipt.
• If you are donating between $250.00 and $500.00, create an itemized list of what you’ve
donated and get a receipt to keep with your records.
• For donations over $500.00, you will need to fill out Form 8283, which requires a description
of all donated property and the address of the charity that received the donations.
• Any donation worth more than $5,000.00 requires a certified appraisal.
• The fair market value of an item is the price you would pay for that item in its current
condition, not the cost to buy the item new.
• Be sure to donate to an IRS-qualified charity or you won’t be eligible for deductions.
• If you receive any benefits or goods from the donation, you must subtract the value of the
goods received from your donation. For example, if you attend a charity dinner and pay
$3,500.00, you will have to subtract the cost of the dinner from the donation ($3,500.00 -
$250.00 = $3,250.00).
Fair market value guide for donated items

www.salvationarmy-usaeast.org/help/valuation_guide.htm
IRS Tax Questions and Assistance

(800) 829-1040
www.irs.gov
Tax Guide for Investors

www.fairmark.com
Smart Money Taxes

www.smartmoney.com/tax/
Tax Tips – General
For the average consumer, taxes are always due on or before April 15th. If you seem to owe a lot in taxes
every year, you may need to adjust your deductions at work. If you are receiving a large refund, it may be
nice to receive a lump sum; however, you may also adjust your deductions to take advantage of that money
on a monthly basis. It doesn’t make any sense to allow the Federal Government to borrow your money
interest-free when you could be investing it in an interest-bearing savings account or investment fund. Better
yet, pay off those high-interest cards and get out of debt.
For those who receive a big tax bill each year, owing money to the Internal Revenue Service (IRS) isn’t as
scary as it was in the past. The IRS does have a payment plan that allows you to divide what you owe into
fifty-eight months or less. According to the IRS, interest is charged on any unpaid tax from the due date of
the return until the date of payment. The interest rate is determined every three months and is equal to the
Federal short-term rate, plus three percent. Interest is compounded daily.
If you have paid the net amount of tax that was due based on your return, but were subsequently advised
that more tax should have been paid, the IRS will then charge a “failure to pay” penalty and send you a bill.
If the IRS bills you for any tax, penalty, or interest, the bill must be paid within twenty-one calendar days (ten
business days if the amount equals or exceeds $100,000.00) to avoid an additional late payment penalty.
The due date is calculated from the date the original “failure to pay” penalty was charged. Missing this due
date will result in additional penalties unless you can show reasonable cause for the failure.
In addition, if you filed on time but didn't pay the net amount due, you will generally have to pay a late
payment penalty. This penalty will be equal to one-half of one percent of the tax owed, for each month that
the tax remains unpaid. This penalty can range up to twenty-five percent. However, you will not have to pay
the penalty if you can show reasonable cause for the failure.
• Keep all relevant receipts together throughout the year to be better prepared for tax time.
• Clean out your closet! Donating old clothes to charity equals a tax deduction for you.
• Excessive health care costs can be deductible.
• Interest paid on a mortgage or points paid to refinance a home may be deductible.
• Higher education expenses may be deductible (ask about Hope and Lifetime Learning Credits).
• Hybrid vehicles (half-electric, half-gas) qualify for deductions.
• The Earned Income Credit (EIC) is a tax credit for individuals who qualify. They must be employed,
earn less than $34,692.00 and meet certain criteria. It reduces the amount of taxes that you owe and
may give you a refund.
Contact a professional tax planner or certified public accountant (CPA) to maximize your deductions.
To contact the Taxpayer Advocate Service, call the toll-free telephone number: 1-877-777-4778 or TTY/TTD: 1-800-
829-4059. Or you can call, write or visit the local taxpayer advocate office for your state. A list of Taxpayer Advocate
Service offices may be found in Publication 1546, The Taxpayer Advocate Service of the IRS, which may be
downloaded and printed from the www.irs.gov website.

www.ustreas.gov
www.irs.ustreas.gov/pub/irs-pdf/p596.pdf
Truth in Lending Act
The Truth in Lending Act (TILA) protects the consumer by ensuring that creditors fully disclose ALL
credit terms in a contract.
According to TILA, lenders and creditors are subject to TILA regulations when the following four
criteria have been met:
• Credit has been offered to consumers;

• The company offering credit does so on a regular basis (extends credit more than 25 times
per year);
• The credit is subject to a finance charge or is payable by written agreement in more than four
installments;
• The credit is for personal, family or household purposes.
A company offering credit cards for any purpose is regulated by TILA. Credit extended (loans or
lines of credit) for business, commercial, agricultural, or organizational purposes are otherwise
regulated. Student loans are protected by Title IV of the Higher Education Act of 1965.
According to TILA, the following disclosures are required from creditors for closed-end credit
transactions:
• Identity of the creditor

• Amount financed
• Itemization of the amount financed
• Annual Percentage Rate (APR), including applicable variable-rate disclosures
• Finance charge
• Total of payments
• Payment schedule
• Prepayment/Late payment penalties
• If applicable to the transaction, (1) total sales cost, (2) demand feature, (3) security interest,
(4) insurance, (5) required deposit, and (6) reference to contract
According to TILA, for open-end transactions such as credit cards, the following disclosures are
required:
• Annual Percentage Rate AND any variable-rate disclosures

• Method of determining finance charge and balance upon which finance charge is imposed
• Amount, or method, of determining membership or participation fees
• Security interests, if applicable to transaction
• Statement of billing rights
www.ftc.gov
www.about-all-credit-cards.com/Credit_Laws_Rights/truth-in-lending-act.html
Unsecured Personal Loans
An unsecured loan does not require the consumer to have collateral. Credit is given to the
consumer based solely on the ability to pay, as determined by the credit score. An unsecured loan
can be obtained through a bank, credit union or finance company. Sometimes these loans are
referred to as “Personal Loans” or “Signature Loans” or “Signature Lines of Credit.” These options
are usually available to those with a good credit rating, and a debt to income ratio that is within
acceptable parameters. Obtaining a personal loan or line of credit will allow the consumer to pay off
existing creditors immediately, and then repay the loan to the lender at a more favorable interest
rate.
• If the purpose of the loan is debt consolidation, a loan will only be an effective solution if the
consumer closes the credit card accounts.
• Depending on credit rating, interest rates will vary – Shop around!
• A good place to begin research for a loan would be a local bank or credit union where the
consumer does business.
• Finance companies may be an option for those with less than ideal credit scores. The
interest rates will most likely be higher than usual, so be sure to pay close attention.
• Ensure that the terms of repayment are clearly understood. Ask if there are any penalties or
fees if the debt is paid off earlier than scheduled.
• Some lenders will require that you purchase insurance to cover the cost of the loan in the
event of death or disability. Before accepting any insurance plan from the lender, check with
your existing life insurance provider, to determine if you have sufficient coverage to repay the
loan already.
www.about.com
www.bankrate.com
Utilities
How to save money on utilities
Discount Plans: You may be eligible for reduced rates or a ‘Budget Billing’ plan with utility companies. Many
companies have these types of programs available. Low-income households may qualify for assistance through the
Federal Low Income Housing Energy Assistance Program (LIHEAP). Contact the local utility company or the state
public utility commission for more information on these programs.
Unnecessary Services: Many utilities that we consider vital are only conveniences. Examples include cable television,
internet service, extra telephone or fax lines, and cellular service. In times of extreme financial hardship, terminating
these services will provide extra income for necessities.
Usage Reduction: You may save even more by using specialized fixtures available at the local home improvement
store. Ask for energy-efficient light bulbs and ‘low-flow’ faucets or shower heads. Be frugal! Electricity, gas, and
water are precious resources. Turn off lights not in use. Turn off the water when brushing teeth or shaving. Extra
effort equals a big change in usage costs. Furthermore, “weatherizing” your home will decrease overall heating and
cooling expenses.
Knowing your rights and reducing your utility bills
Consumer laws provide some protection against termination of utility services. Laws vary from state to state. Again,
check with your state’s public utility commission.
In most cases,
• The consumer must be given written notice of an upcoming service termination.
• Consumers must be given the right to a hearing.
• Consumers are protected from service termination during winter months.
• Consumers who rely on electronic medical equipment and those who are seriously ill are protected from service
termination.
• Landlords cannot terminate service to renters.
NOTE: A private utility company may not be required to follow these regulations. Service may be terminated
without warning.
www.consumeraffairs.com/links/state_pucs.html
www.ncat.org/liheap/tables/resleg.htm
www.dps.state.ny.us/stateweb.htm
Vacationing on a Budget
Living on a budget does not mean you are not allowed to take a break! Everyone needs time away from the stress of
everyday life. However, taking a vacation does not mean taking a vacation from budgeting. By planning in advance and
examining your options carefully, you can get the recreation that you need, without breaking the bank.
First things first – determine your budget. Once you know how much you will be able to spend, you will be able to plan
accordingly.
Next, determine the date that you would like to travel. Prices are determined, in part, by the availability of space on the
airplane or at the hotel.
Finally, visit a local travel agency. Initial consultation services are free, as are most of their other services. Let the agent
know your operating budget. The agent will be able to offer several destinations that will fit, as well as provide you with
brochures on these locations.
• Avoid planning vacations during “peak” times or holidays when rates are higher.
• Start saving for your vacation in advance. Check with your employer to see if overtime is an option to
provide additional funds.
• Set money aside each month that is designated specifically for your vacation.
• Shop around for the best rates. The internet makes it easy to compare. Also, libraries and travel bookstores
have books about bargain traveling.
• If your travel dates are flexible, check with the agent for any last minute travel bargains.
• Consider a destination that is close to your home. Ability to drive to a destination will save in airfare.
www.asta.com
www.expedia.com
www.travelocity.com
www.orbitz.com
Wants vs. Needs
Consumers today are lost between a desire to stop spending and an inability to resist the urge to splurge. We reach for a
new pair of shoes knowing that we do not have cash to pay - we purchase new items to replace items that are still in
perfect working condition – we are shocked by the growing demands from our children. Then, surrounded by all of our
purchases, we still feel like something is missing. Why?
There are psychological reasons behind our spending habits. Studies indicate that the habits that we call our
“personality” are the very factors that work against us. If we are not careful, we will pass these habits onto our children,
increasing household budget stress, and creating unreal expectations for the very futures we strive to protect.
Today, we are convinced that we need certain items, when these items are conveniences, not necessities. Combine this
fact with personality influences and our easy access to money and credit…and we have a recipe for a debt disaster.
Additional factors that influence spending behavior include the media and the internet. Each minute in front of the
television adds to our perceptions that we must have certain things in order to be happy. Advertisers are trained to push
triggers that will make us shop. The internet makes the situation worse – we can shop to our hearts desire without ever
changing out of our pajamas! If we make an effort to steer clear of technology – take a walk, read a book, go to the park
with our children – we will find we are spending our money more wisely, and becoming healthier and happier.
• Competitive Spenders are racing to ‘keep up with the Joneses’; to outspend everyone else; to make themselves
feel better by amassing material wealth
• Revenge Spenders are spending money to punish someone else
• Compulsive Spenders spend to eliminate the sense of emptiness and unhappiness; to make up for a bad day at
work or a fight with a loved one
• Co-dependent Spenders try to control others by showering them with gifts
• Narcissistic Spenders spend to beautify themselves to compensate for feelings of inferiority
• The People Pleaser spends to receive love and ensure popularity by buying things for others
Temptation is hard to resist. Yes, we need to purchase some items. Purchasing wisely is the key. Do not be lured by
sales – just because an item is on sale does not mean that we must make a purchase! Take cash instead of using credit
cards – studies PROVE that we spend less when we spend cash. Make a list of what is needed and stay focused. Check
newspaper advertisements and compare prices. Finally, if you find you are frequently experiencing “buyer’s remorse”
you are most likely falling into one of the above listed spending personalities – shopping not out of need but out of an
artificially created desire.
No matter what reason we have for overspending, we are likely to find that the “finer things in life” do not equal
happiness. The old adage "mind over matter" is equally applicable as "mind over money." We each have the power to
make the needed changes in our lives to accomplish our goals - the question is - where will we go from here?
www.missourifamilies.org/quick/financeqa/finqa115.htm
www.dca.org/news/releases/052302PRMoneyAbuse2.htm
Index of Websites
Asset Allocation
www.investorwords.com
www.investor.com
www.gofso.com
Automotive Expenses
Autos: Buying Vs. Leasing

www.federalreserve.gov
www.leasesource.com
www.leaseguide.com
www.carclicks.com
Autos: New vs. Used

www.bestautousa.com
www.creditoption.com/autosites.htm
www.auto-buying-tips.com
www.consumerreports.org
Bad Checks
http://www.federalreserve.gov/paymentsystems/truncation/
http://www.aba.com/About+ABA/CheckTruncationAct.htm
Bankruptcy
www.findlaw.com/01topics/03bankruptcy/index.html
www.bankruptcy-courts.net/
www.thebankruptcysite.com
www.nolo.com
Budget Planning
www.betterbudgeting.com
www.moneyadvise.com
Child Support
www.childsupport.com/index.asp
www.acf.hhs.gov/programs/cse/
www.supportkids.com/
Collections Agencies
www.ftc.gov
www.ustreas.gov

www.fastweb.monster.com/cpt/
www.fafsa.ed.gov
-For websites and toll free numbers for state plans, visit www.collegesavings.org
-To compare 529 plans for each state, go to www.savingforcollege.com
-For the Hope and Lifetime Learning Credits, see IRS publication 970.
Coping with Job Loss

www.extension.umn.edu/distribution/businessmanagement/DF6499.html
Co-Signing for Credit
www.bankrate.com
www.moneycentral.msn.com/content/Banking/Yourcreditrating/P38054.asp
Credit Cards – Accelerate Your Pay Off

http://extension.usu.edu/cooperative/powerpay/
Credit Reports, Credit Scores, Credit Disputes.

www.equifax.com
www.experian.com
www.transunion.com
Debt Settlement
www.nolo.com
Disputing Credit Charges

www.ftc.gov
Educating Kids
www.moneyinstructor.com
www.msgen.com
Education Expenses
www.ustreas.gov
www.entrustadmin.com/open_an_account/open_education_IRA.html
www.principal.com/investment/ind/coverdell.htm
www.invest-faq.com/articles/tax-ugma.html
Emergency Fund
Establishing Credit
www.beginnersinvest.about.com/cs/establishcredit/?terms=secured+credit
www.credit-land.com/establish.php
www.credittalk.com
Eviction Process
www.911tenant.net
www.consumeraffairs.com
www.expertlaw.com/library/pubarticles/Real_Estate/evicted_tenant.html
www.nolo.com
Fair Credit Billing Act (FCBA)

www.ftc.gov
Fair Credit Reporting Act (FCRA)

www.fair-credit-reporting.com/
www.pueblo.gsa.gov/cic_text/money/fair-debt/fair-dbt.htm
www.ftc.gov
Fair Debt Collections Practices Act (FDCPA)

www.ftc.gov
www.nolo.com
Foreclosure
www.hud.gov
www.drfg.com
For approved HUD counseling offices:

www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm
For foreclosure laws in your state:

www.drfg.com/info.php
Frugal Living
www.frugalvillage.com/
www.frugalliving.about.com/
www.frugalcorner.com/
www.allthingsfrugal.com/
www.frugalfamilynetwork.com/
www.frugalhomemaker.com/
www.coolsavings.com
Garnishment
www.carreonandassociates.com/articles/collectionlaws.htm
www.carreonandassociates.com/articles/garnishments.htm
www.overdue.com/Garnishment_Statutes/
Holiday Saving Tips

www.organizedchristmas.com
www.dummies.com
www.frugalliving.about.com
www.thefrugallife.com
www.thelaboroflove.com/forum/dollar/22.html
Home Equity Refinancing

www.about.com
www.mortgage101.com
www.mbaa.org
www.hud.gov
Home Mortgages
www.mortgage101.com
www.homebuying.about.com/od/mortgagefacts/index.htm?terms=mortgages
www.fanniemae.com
Identity Theft
www.consumer.gov/idtheft
www.equifax.com
www.experian.com
www.transunion.com
Identity Theft – Prevention

www.equifax.com
www.experian.com
www.transunion.com
Insurance
www.insure.com
www.insurance.com
www.iii.org
Interest-only Loans
http://www.bankrate.com/brm/news/mortgages/20030904a1.asp
Investment Options
www.stocks.com/
www.ourbusinessclasses.com/link/documents/save_invest_where_1000.htm
www.mutualfunds.about.com/
Job Search
http://www.free-resume-tips.com/10tips.html
http://www.taos.com/resumetips.html
Judgments
www.carreonandassociates.com/collectionlaws.htm
www.nolo.com
www.castlelaw.com/lit1.htm
www.legal-definitions.com/legal-definitions-j.htm
Loan Calculator
www.interest.com/hugh/calc
www.lowermybills.com
www.bankrate.com/overkeyword/rate/calc_home.asp
cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp
www.needhelpwithbills.com/debt_calculator.htm
Marriage, Divorce and Debt

www.divorcesource.com
www.experian-creditreport.com
www.divorcehq.com
www.divorceinteractive.com
www.wife.org
www.insurance.com
Medical Savings Accounts

www.msaadvantage.com
www.medicalsavingaccount.com/index.html?side.htm&0
www.msainfo.net/
Opt Out
www.equifax.com
www.experian.com
www.transunion.com
Payday Loans
www.credit.about.com/cs/consumerwisdom/a/042100.htm?terms=pay+day+loan
www.ftc.gov/bcp/conline/pubs/alerts/pdayalrt.htm
Prioritizing Debt
www.ftc.gov/bcp/conline/pubs/autos/carrepo.htm
www.northeastfinancial.com/faq.html
www.realtytimes.com/rtnews/rtcpages/20021111_workouts.htm
www.iasfinancial.com/reposessors.htm
www.kellygrover.com/foreclosure-prevention_workouts_help_financially-troubled_homeowners.htm
Repossession
www.ftc.gov
Retirement Savings
www.smartmoney.com/retirement/planning/?nav=LeftNav
Reverse Mortgages
www.hud.gov
www.aarp.org
www.reverse.org
Renting vs. buying a home

www.invest-faq.com/articles/real-es-rent-vs-buy.html
www.ourfamilyplace.com/homebuyer/buyorrent.html
www.theknot.com
Student Loan Information – Repayment

To find a listing of the guaranty agencies:
http://bcol02.ed.gov/Programs/EROD/org_list.cfm?category_ID=SGA
For information on loan rehabilitation:

www.ed.gov/offices/OSFAP/DCS/index.html
Student Loan Information – Types

www.fafsa.ed.gov
Tax Tips – Charitable Donations

Fair market value guide for donated items
www.salvationarmy-usaeast.org/help/valuation_guide.htm
IRS Tax Questions and Assistance
(800) 829-1040
www.irs.gov
Tax Guide for Investors

www.fairmark.com
Smart Money Taxes
www.smartmoney.com/tax/
Tax Tips – General

www.ustreas.gov
www.irs.ustreas.gov/pub/irs-pdf/p596.pdf
To contact the Taxpayer Advocate Service, call the toll-free telephone number: 1-877-777-4778 or TTY/TTD:
1-800-829-4059. Or you can call, write or visit the local taxpayer advocate office for your state. A list of
Taxpayer Advocate Service offices may be found in Publication 1546, The Taxpayer Advocate Service of the
IRS, which may be downloaded and printed from the www.irs.gov website.
Truth in Lending Act

www.ftc.gov
www.about-all-credit-cards.com/Credit_Laws_Rights/truth-in-lending-act.html
Unsecured Personal Loans

www.about.com
www.bankrate.com
Utilities
www.consumeraffairs.com/links/state_pucs.html
www.ncat.org/liheap/tables/resleg.htm
www.dps.state.ny.us/stateweb.htm
Vacationing on a Budget
www.asta.com
www.expedia.com
www.travelocity.com
www.orbitz.com
Wants vs. Needs

www.missourifamilies.org/quick/financeqa/finqa115.htm
www.dca.org/news/releases/052302PRMoneyAbuse2.htm

Resource Guide Financially

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Educational Resources

The Tools You Need

Ctrl. 75 Rev. 3 1/31/05

Websites that can provide additional information:

Websites that can provide additional information:

• The vehicle is yours when payments are completed.

• Compare different lease offers and negotiate terms.

Websites that can provide additional information:

• Condition of vehicle is perfect

• Condition of vehicle varies; choice will be limited

Websites that can provide additional information:

TeleCheck — 1-800-710-9898 or 927-0188

Certegy, Inc. — 1-800-437-5120

International Check Services — 1-800-631-9656

Here are some other points to know about Check 21:

Some possible hazards to processing electronic images vs. the original:

Websites that can provide additional information:

Websites that can provide additional information:

• Gather all the facts

• Determine spending patterns

• Set temporary short-term goals

• Establish long-term goals

• Monitor and record financial progress

Websites that can provide additional information:

TOTAL MONTHLY INCOME $_____________ Monthly Miscellaneous Expenses

Cellular Phone/Pager $_____________

Monthly Savings Expenses

TOTAL LEFTOVER (+/-) $_____________

Total Spent on Housing: $750.00

Unsecured Debts 5-10%

Websites that can provide additional information:

Websites that can provide additional information:

Websites that can provide additional information:

To compare 529 plans for each state, go to www.savingforcollege.com

Some serious changes to consider:

• Use a 401(k) or home equity loan if the situation is temporary.

• Perhaps a spouse can obtain a second job.

Websites that can provide additional information:

• Obtain a notarized written agreement with the borrower.

• If it is a secured debt, whose names will appear on the title?

• When in doubt, don’t co-sign.

Websites that can provide additional information:

Websites that can provide additional information:

• Approximately 35% of your score is based on payment history.

Amounts/Types Credit Scoring

Length of History Above 730 Excellent Credit

Tips for Raising your Credit Score

Websites that can provide additional information:

Here are some things to keep in mind:

Websites that can provide additional information:

Websites that can provide additional information:

For the youngest children (ages 3-5)

For young children (ages 6-8)

For older children (ages 9-12)

Websites that can provide additional information:

Government Series EE Savings Bonds

Grandma and Grandpa (and other relatives)

Websites that can provide additional information:

Websites that can provide additional information:

Websites that can provide additional information:

Websites that can provide additional information:

You can sue a creditor if they violate the FCBA.

Websites that can provide additional information:

Additionally, the FACT Act requires the following: