June 2008 - Financial Tip of the Month

DUMP THE PUMP
Rising Gasoline Prices Lead to New Ways of Saving

SAN DIEGO, May 20, 2008 – The rising costs of crude oil and jet fuel are causing gasoline prices to reach record breaking highs. Since the beginning of the year, gas prices have increased by almost 20% and according to the Automobile Club of Southern California, the average price of gasoline is about 45 cents higher than this time last year. By the end of the summer, it is predicted that gas prices could possibly be well over $4 per gallon due to the rising cost of oil and because gasoline is typically more expensive to produce during the summer.

As gas prices continue to rise, San Diegans need to start thinking about alternative ways to cut down on driving expenses in order to save money during such costly times. Whether it means carpooling with co-workers or riding your bike to run errands, the less time spent in the car and on the road means the less money being spent on gasoline. So, next time you decide to get into your car, think about how much money that quick trip will cost you in gas prices and try an alternate way of transportation so that you can save your money.

Debt-Free America offers the following tips and suggestions on how consumers can save money during times of record breaking gas prices:

Take the Bus or the Trolley

Leave the car at home and try utilizing the expansive public transit system that San Diego has to offer. By taking the bus or riding the trolley rather than getting in your car, you not only save money, but you are also helping the environment by keeping less smog-omitting vehicles off the road. Riding the bus also gives you some free time to do things you didn’t have time to accomplish. On your stress-free ride to work, for example, you can balance your checkbook or read that book you always wanted to explore.

Carpool

Rather than making the long trip to and from work alone, get together with some of your co-workers and organize a carpool. This will cut down on driving expenses for everyone because you can switch off who drives each week and everyone can help with gas money. Also, using the HOV lanes for two or more person vehicles saves you time from having to stay in bottleneck lanes or waiting for merging-lane lights to change. Also, riding with someone else can make the car ride more enjoyable overall.

Ride Your Bike

As the weather outside is heating up, getting out for some fresh air and sunshine sounds a lot better than sitting in a stuffy car. So next time you decide to go the corner store or run to the bank, why not take your bike for an afternoon ride? Not only is this a good form of exercise, but it will also cut down on money spent towards gas if you leave the car at home. Riding your bike helps you save on fuel and also helps eliminate gym fees. You can also avoid riding in traffic by using secondary roads which are less congested. It might be a few extra miles, but you can enjoy the ride, still get a great work out for your body, and it’s a great trade-off. Always remember to wear a helmet.

Best Time to Fill Up

If you do have to take the car out and fill up the tank, try going during early morning hours or late evening hours when it is cooler outside. Gasoline is the densest during these times and gas pumps measure based on volumes of gasoline, not fuel concentration. By filling up during cooler times, you end up getting more for your money.

Car Maintenance

Before you take the car out for a long drive, make sure that all four tires are inflated to maximum capacity so they don’t have to work as hard while spinning on the road. Also, you get better gas efficiency if you do not exceed the speed limit and drive with windows only down by 10% so that it does not create any drag from the wind. Keep up with regular tune-ups and oil changes as well to make sure that your car is getting the best possible mileage per gallon. Also, by cleaning out any unwanted materials or junk from your car, you will attain better gas mileage. The less weight in your car the better your car will drive.

Stay In

One of the easiest ways to save money rather than spending it on ever rising gas costs is to simply stay in and do things around the house. Rather than constantly going out to eat or driving downtown on Friday nights, don’t drive, stay in and enjoy a peaceful evening at home. This will not only save you money on the gas it takes to go anywhere, but it will also save you from spending lots of money on an expensive nightly outing

Debt-Free America is a 501(c)(3) non-profit, community service organization offering confidential credit counseling, debt management program options, and financial literacy education to consumers nationwide. Debt-Free America is dedicated to providing FREE counseling and educational services to help financially distressed families and individuals effectively manage their personal finances. The Board members and operations staff have a long term commitment to helping anyone in debt crisis, and even those not in a debt crisis. Debt-Free America has been in the business since 1997 and is now serving over 17,500 clients nationwide. Visit them on the web at www.debtfreeamerica.com.

May 2008

MONEY TIPS FOR STAY-AT-HOME MOMS
What You Need To Consider Before a Change in Career

SAN DIEGO, April 28, 2008 – So, you have decided to put your career on hold and take on the non-stop, paycheck-free task of being a stay at home mom. While there are many benefits to being a stay at home mom, you may be concerned about whether you will be able to live off only one income, the impact it will have on your career when you return and the social implications it could potentially have. Financially, it may seem like it is already difficult enough with two salaries to pay the bills, but there are ways to make it through being a stay at home mom, without breaking the bank. These steps can help you develop a successful financial plan; maintain your career path and a normal social life, all while enjoying the benefits of staying home with your kids.

Debt-Free America offers the following tips for women considering to begin the new challenging career as a stay-at-home mom:

Practice before jumping in

Before you leave your job and begin living on a single salary, do a practice run first to see what it is like. Take your paycheck and use the opportunity to start an emergency savings account, using only your spouse’s paycheck to pay the bills. It is hard to imagine how you will manage on just one income without actually trying it, so before you leave your job, take a few months to ensure that this change will be economically viable before making any permanent lifestyle changes.

Preparing your budget

It is difficult determining what all your expenses are, but compile them as best you can. Look at the essentials, such as mortgage payments, insurance premiums, utilities, food, etc. A rule of thumb is that these are ideally kept to 60% of your income. The remainder of the pie needs to pay for things like short and long term savings goals, retirement contributions, ‘fun money’ and maintenance of your emergency savings. The proportions of these will vary from family to family, but each of these expenses needs to be considered when doing you budget. While 60% may seem like far too little to pay for all your basic expenses, it is a good goal to keep in mind. And make sure you are not forced to scrimp on your retirement savings.

Hedging your Bets

Make sure you look into your spouse’s insurance benefits. With only one income, you need to make sure that you are well insured to limit any large scale expenses that may arise. The better insured you are, the more secure you are in your job as a stay at home mom.

Make sure your spouse’s health insurance provides adequate coverage and reasonable co-payments for you and your child. Check to see if your spouse’s company offers a flexible spending account. Flexible spending accounts are tax advantaged accounts that allow you to withdraw pretax dollars to cover co-payments, medications and child care expenses. If your spouse’s company does not offer one of these accounts, then look into high deductible insurance coverage which allows you to get a Health Savings Account on your own. From an account like this, you can withdraw tax advantaged money to cover medical expenses in much the same way.

An added layer of security you may want to consider is term life insurance. Term life insurance is relatively inexpensive and protects your children financially in case anything should happen to you. When selecting a policy, consider all of your child’s expenses, not only in the short term, but in the long term as well.

Goodbye bonuses, vacation days and adult interaction

While you may be able to overcome the financial issues of being a stay at home mom, the other hard part for stay at home moms is the lack of social interaction they feel with other adults. You need to consider this when developing your financial plan. It is often referred to as the “second shift”. A mother’s job does not end at 5pm like many other jobs do, and as such, it is easy for childcare to occupy the entirety of a mother’s life. It is important that your spouse is able to be home during certain hours to relieve you, so you can pursue social activities outside the home. There are many different websites which advertise local social events for mothers. Not only are these events a great chance to get out of the house and be social for a while, but they are a good chance to see how other moms are beating the financial single-income crunch.

Keep walking that career path

Studies show that mothers who take time off their careers to take care of children, make 20 percent less than other women who have not gone through a similar employment gap. It is difficult to develop professionally while being a stay at home mom, but ensuring that you stay somewhat connected to your career while out of paid work will minimize the overall impact that the time off has on your career. While you are not working, which means no paycheck, you should never completely give up on your career as there are professional and personal benefits to staying involved:

Attend Conferences pertaining to your field – Staying in touch with the industry you are in means that not only will it be easier to reenter the field when your children have grown, but depending on your field, it also could allow you to start working out of your home when the kids start school and you have sufficient time.
Start doing research around issues pertaining to your career – Although you may not end up getting published, it is something to put on your resume to minimize your employment gap.
There are many different small businesses you can start from home, which are designed with stay at home moms in mind. Most moms find they have no time for this sort of the thing in the beginning, but as time goes on, and children become more independent, you may find you want this sort of project. They require little time and you work on your own schedule. This not only brings in a small income for the household, but it gives you an opportunity to pursue something other than childcare and to practice your business skills.

Not only will doing these sort of things increase your potential salary when you return to work, it will provide you with a sense of professional development that a lot of stay at home moms claim to miss.

If you are considering staying at home with your child, then you probably have already considered the benefits of being a stay at home mom. The financial drawbacks can be a big concern, but with help, you can address those issues and develop an effective financial plan that allows you to stay home with your child and still be financially secure. It begins with planning and understanding your expenses, protecting yourself against risk and then ensuring that you can enjoy your new role as a stay at home mom without completely cutting off your social life or career. Debt-Free America can offer services and council you on developing a successful financial plan to allow you the freedom to be a stay at home mom.

WHO: Debt-Free America

WHAT: Money Tips For Moms: What you should consider before a change in career

WHEN: Interviews are available immediately and ongoing

WHERE: In-studio or phone interviews with Debt-Free America

April 2008

GOOD CREDIT, BETTER JOB?
How a Good Credit History Can Increase Your Chances Of Getting Hired

SAN DIEGO, February 28, 2008: These days, you need more than just a resume and a nice suit to impress potential employers at a job interview. A good credit history can put you above the curve in the eyes of prospective employers.

According to the Federal Trade Commission, in most states employers can pull your credit report when reviewing your job application. In fact, the number of companies that choose to run credit checks has risen to 35 percent, up from 19 percent in 1996.

The reality is, that with this recession-like environment and sluggish job market, employers can afford to be selective. So, this is the time to start enhancing your credit’s image.

Debt-Free America is dedicated to educating families and individuals on the importance of their credit. With the following helpful guidance, your credit history can reflect those qualities that employers look for in an effective employee.

What’s In My Credit Report?

Your credit report essentially reflects your financial history. It documents past loans, bankruptcies, current debt and payment history. If your report suggests you have an unstable economic background, it may deter potential employers that associate good credit with responsibility and maturity.

“Your credit is a mirror on how financially responsible you are,” says Gary Symington, the president of Debt-Free America. “Employers are interested to see how you manage this important area of your life, as it can be an indicator of how you handle your work responsibilities.”

What Causes Bad Credit?

While credit cards are convenient, they can be over used and often abused. According to the Federal Reserve Board, almost 70 percent of households are using credit to just “make it by” because they are unable to afford their monthly expenses. Of these households, the average debt per credit holderis over $9,000. Also, the purchases we make on credit can cost markedly more than if we simply used cash or a debit card, leading us to pay more money in interest every year, money better spent elsewhere. Other factors that contribute to poor credit are outstanding loans, bankruptcies, and even a case of identity theft.

It is recommended that consumers review their credit reports at least once a year. According to Debt-Free America, about 70 percent of people who pull their credit report find some sort of error, which could be costing them money. The credit score is the key to viewing your financial health, and just like maintaining a good diet and exercise program, it is important to check your financial pulse on a regular basis. You are entitled to one free annual credit report from each of the three reporting agencies. To request a report you can visit annualcreditreport.com or contact one of the three agencies directly.

Trans Union, (800) 888-4213

Equifax, (800) 997-2493

Experian (formerly TRW), (888) 397-3742

On your credit report, review your personal information to ensure is up to date and correct, all accounts are current with correct balances and the list of all debts is accurate. The credit report should provide you with an accurate picture of where your credit score stands. The credit score is a snapshot of your credit health, and is used by both lenders and employers for a variety of decisions such as terms of car and home loans, or future employment.

Getting and Maintaining Good Health – How To Boost Or Build Good Credit

You NEED Credit

Before you panic and cut up all of your credit cards, set the scissors aside – remember it is important to have credit, so cutting up cards and/or closing accounts will not bode well on your credit accounts. These actions actually look unstable on your credit report. Keeping cards open, even if you do not use them, will create credit longevity and offer you more substantial credit history. But, it is important to put a plan in place to pay down high-interest and high balance cards, in order to improve your credit score.

If you have already paid down your balance, it is best to make small purchases with your credit card and pay the balance off each month. This will help boost your credit score and shows credit activity.

Don’t Be Late

When assessing your monthly bills, make sure you always pay your bills on time. Not only will creditors charge you unnecessary late fees, but they could report your missed payment as soon as one day after the due date. This will negatively affect your credit history and possibly affect your future purchases.

Less Is More

If you are just starting out and building your credit history, make sure you don’t go overboard and apply for too many cards or credit accounts at one time. Each time you apply, your score is impacted and excessive inquiries are a red flag to many lenders. Remember, a healthy credit history and portfolio has a mix of credit over time, and includes credit and retail cards, mortgages and installment loans.

For consumers who have questions about their credit reports, Debt-Free America has counselors who are available to help you understand the details of your report and answer any questions you may have.

February 2008

IMPRESS YOUR HONEY WITHOUT A LOT OF MONEY
Fun and Frugal Ideas For Valentine’s Day

IWho ever decided to make Valentine’s Day just seven short weeks after Christmas? As you are just coming to the realization of how much you actually spent this holiday season, there is another money-indulgent holiday right around the corner. Last year, love birds spent $16.9 billion on Valentine’s Day, an average of $120 per person just on a gift. This is not including going to dinner or other expenses on Valentine’s Day. So close to the holidays, this expense can have an even deeper impact than Cupid’s arrow. Lucky for you, how much you spend does not equal the depths of your love. By getting creative this Valentine’s Day, you will not only avoid slipping into debt, but you will impress your loved one with your thoughtfulness and originality.

Valentine’s Day is marketed as the most romantic day of the year – a time to show your love for your significant other. Just remember that you don’t need to spend more money than you can afford just to show someone you care about them…something they should already know. Debt-Free America offers the following tips to avoid breaking the bank to express your love this Valentine’s Day:

Recreate the magic

If you fell in love at the beach, go back to that spot and have a romantic picnic under the stars. Or you can recreate your first date or your first kiss. If you first told them you loved them over Chinese food, order in and have a candlelit dinner at home. Consumers tend to stick with the traditional gifts at Valentine’s Day: flowers, chocolates, cards and maybe even jewelry. But nothing says I love you more than personalizing your gift for your sweetheart.

Dinner at home

Spending an evening together at home is much more romantic than sitting in a crowded, loud restaurant. You can avoid the high prices and long waits by making your special someone their favorite meal at home and lighting a few candles. You can even still get dressed up for it. Then after dinner make dessert together. Get heart-shaped cookie cutters and use icing to write messages to each other. They will express your love and taste delicious!

Also, consider picnicking or packing a homemade dinner up, and spend your Valentine’s Day dinner in the park or at the beach.

Homemade candy

Why buy an expensive box of candy when you can make your own. All it takes is a little time and effort, which your loved one will appreciate much more than if you had just picked it up at the store. Simply take one of those white t-shirt boxed that you got for Christmas and decorate the top with tissue paper and cut-out hearts. Or get red velvet from a fabric store to cover the outside of the box. Then fill the inside of the box with tissue paper to hold the candies. You can dip strawberries, bananas, pieces of doughnut and Oreos in chocolate to fill the box for much less then it would cost you in a candy store.

Write down how you feel

Buy an inexpensive box of valentines and write down the reasons why you love them. Leave them in places where your sweetheart will find them all day long. This is a fun and romantic way to let them know how much they mean to you.

Make a memory jar

Decorate a jar and type up or write out some favorite memories. Fold them up and stick them inside. You and you’re sweetie will have lots of fun reminiscing as he or she unfolds them one by one.

Make Valentine’s Day last all year long

Think of twelve nice things to do for your Valentine throughout the year and write them down on decorated index cards and arrange them in a nice box or basket. You will both start to look forward to the 14th of every month, and you don’t have to limit demonstrating your love to just once a year.

Being together is most important on this holiday and you don’t have to go broke to show your loved one how you feel. With a little thought and creativity this Valentine’s Day could be the most romantic and cost effective one yet.

WINTER CHILLS WILL BRING HIGH BILLS
How to keep those utility bills low this winter

Are you worried about how you are going to make ends meet through the holiday season? Over the holiday season, many families will have get together, and with this extra family time comes a higher utility bill due to more people and events in your home. The U.S. Energy Information Administration projects costs will increase this year for all home-heating fuels. Last year the average winter fuel bill was $889. This year it's expected to jump to $977. Before you panic about the extra bills during this festive time of year, read on for some useful tips on how to reduce your utility expenses over the chilly winter months.

First, call your utility company to see if they will provide a free audit on your residence. This will tell you where your leaks are and give you a starting point in fixing the problem. Once you know where the leaks are (or even if you don’t), Debt-Free America offers the following tips to help reduce your utility bill this holiday season.

QUICK AND EASY TIPS FOR EVERYONE

Put throw blankets on the sofa, so you can use them while relaxing during a cool winter evening without turning on the heat.
Wear warm sweatshirts, sweatpants or pajama bottoms, instead of wearing a t-shirt and shorts while at home. This will allow you to keep your thermostat set at a lower temperature.
Spend more time in or around the kitchen, where it is naturally warmer because of the use of the stove and oven.
Invest in a heating blanket or heavy comforter for your bed.
Reverse your ceiling fan direction. It will blow the warm air that normally rise up down and help keep your room a bit warmer.
Make your home more energy efficient by wrapping your exposed hot water pipes. With an investment of $22 at a local major home improvement store and two hours of time, you can wrap your copper hot water pipes with tubular insulators. You will not only reduce your water consumption but reduce your gas bill. And the biggest bonus is the water gets to the needed application quicker and hotter.
If you install a programmable thermostat, you can save about $150 a year in energy costs and it costs less than $50.

MORE PERMANENT SOLUTIONS

Floors

Start with under the floor. You may find that floors are usually the least of your problems however make sure they are well insulated. If they are not well insulated you can purchase insulation at any hardware store. The insulation comes with instructions and is fairly easy to install. If you have hardwood floors, you can also put large throw rugs down to keep the heat in better.

Switches and Sockets

You would be surprised how much air drifts through your sockets and switches. Go to your local hardware store and look for the insulated plates. If you can't find them don't be ashamed to ask, not a lot of people have heard of them. If you can't find the insulated plates, you can get the expandable foam insulation and put it in the empty space around the outlet.

Windows

Most people are hesitant about covering their windows due to the large amount needed to be covered in their home, which will become costly. However, it will be more beneficial in the long run because of the reduction in your utility bill.

First, measure your windows and be sure to be exact as possible. Then, go to your local hardware store and find the plastic part that can be installed inside the house and tightened with a hairdryer. Stick the plastic to the rim of the window with adhesive that has been included, cut the plastic to fit the window, and then slowly tighten the plastic with a hairdryer. This costs around $100.

If that is still out of your price range, you can also use heavy duty curtains on your windows. If you are looking for something that is pleasing to the eye or not as noticeable the plastic, curtains may be best. It will also help keep that summer heat out too.

Insulation

You should also check the thickness of the insulation in your attic. Be sure you are wearing gloves and a mask so you don't inhale the fiberglass. The insulation should be about 14 inches thick to reach an R-38 level.

"R" stands for resistance to winter heat loss and summer heat gain and is more precise than inches in designating insulation performance. Although one type or brand of insulation is thicker or thinner than the other, it will provide the same resistance to heat loss if the R-value is the same.

Keep in mind that the majority of houses only have about 6-8 inches of insulation so double checking your thickness is important this winter. Also, depending on how old the house is or the area that you live in you should check for small cracks in the exterior of your home and fill those with insulation so they don't let the cold air in either.

Debt-Free America is a 501(c)(3) non-profit, community service organization offering confidential credit counseling, debt management program options, and financial literacy education to consumers nationwide. Debt-Free America is dedicated to providing FREE counseling and educational services to help financially distressed families and individuals effectively manage their personal finances. The Board members and operations staff have a long-term commitment to helping anyone in debt crisis, and even those not in a debt crisis. Debt-Free America has been in the business since 1997 and is now serving over 17,500 clients nationwide. Visit them on the web at www.debtfreeamerica.com.

January 2007

DEALING WITH PESKY DEBT COLLECTORS
Don’t Let Those Aggressive Debt Collectors Ruin Your New Year

Imagine this scenario: You are home wintry evening, sipping hot chocolate in front of your fire while enjoying the twinkling lights of your Christmas tree, and the phone rings. You are slightly startled, but imagine the call could be from a long-lost loved one wanting to wish you a festive time of year – it is the holiday season. Instead you hear, “If you don’t pay this week you will find yourself in JAIL!” You are jarred back into reality as the deep husky voice of the pesky debt collector on the other end of phone threatens you, causing flashes of fear and panic in your mind over your holiday shopping debt that has followed you into the New Year. The voice continues, “If that money isn’t received by Friday we will alert your neighbors and coworkers of your debt!” Again a feeling of dread and turmoil comes over you; you are starting to regret ever buying Grandma that expensive robe she wanted for Christmas. It seems like a nightmare and you wonder how could these debt collectors’ threats be legal?

In fact, you are correct, the debt collecting tactics that are illustrated above are NOT legal. Although illegal, the above scenario, while seemingly nightmarish, is actually occurring to debtors across America everyday. Yet, what few people in similar situations know is that the tactics used above were ruled illegal in 1996 by the Fair Debt Collection Practices Act. These scare tactics are outlawed as are many other tactics in the strict list of rules debt collectors now must follow. These empty threats however are just one of many worries people face when trying to deal with debt collectors.

If the holidays have once again put you into a pit of credit card debt, those annoying debt collectors will undoubtedly be calling. But you no longer have to worry about empty threats, instead you can focus on how to handle the collectors and work with them to avoid stress and to get past your debt problems. Believe it or not, there are ways to get rid of these aggravating debt collectors so you can go back to living a normal life and not be constantly reminded of the debt you accrued from last year’s holiday shopping extravagances.

Debt-Free America provides the following five steps to shake off pesky debt collectors and handle them the right way:

First Step: Verify Your Debt

When the debt collector calls, the first thing that you should do is verify your debt. By verifying your debt, you can make sure that the amount you owe is correct and that there are no errors. Creditors and debt collectors are not perfect by any means; therefore it is always a good idea to make sure you understand what you owe and why you owe it. Asking over the telephone is not good enough proof to verify it, what you want is to see it in writing. You have 30 days from when you first received notice of your debt to write to the collector asking for more detailed clarification to be sent to you in writing. It is important from this step on that you save every document you send and receive and take note of every phone call including writing down the name of each person you talk to.

Second Step: Know What Is Illegal

Debt collectors can be very aggressive, after all, it is their job to collect as much money as possible from you as fast as they can. And more often than not, many will involve themselves in shady tactics and often cross the line and get away with it. Therefore it is important to know what they can and cannot do.

Debt Collectors Cannot:

Speak to anyone other than you or your lawyer about your debt. All those comments about them telling your neighbors or boss are simply empty threats. They legally cannot discuss your debt with anyone but you or your lawyer.
Call after 9PM or before 8AM. There are boundaries set for appropriate times for contact as well as means of contact. They are allowed to contact you via phone, fax, email, regular mail or in person.
Falsify information in attempts to collect your debt. They are not allowed to fake legal documents, misrepresent themselves or imply that you may be arrested if you don’t follow through with their demands.
Threaten you in any way. Whether this is the threat of jail, or other punishments, they cannot by law threaten you.

If the debt collectors do harass you or break any of these laws in trying to collect your debt, you should report them immediately to the State Attorney General’s office or the Federal Trade Commission. It is always a good idea to tape record phone conversations either secretly (if legal in your state) or by permission to ensure the collector is following the laws.

Third Step: Negotiate

By offering the collectors some sort of a payment, you can get them to ease off you a bit. The bottom line is they want money from you, and if you offer them some sort of payment, even if it is not the whole debt, they will at least be a little satisfied and stop bothering you for the moment. Be sure to tell them that you cannot afford to pay off the entire debt now because of budget constraints, but that you would be willing to pay a percentage of it. Experts say that an offer of 50 percent is acceptable for a debt incurred within the last year or two, while a 20 or 25 percent offer is a good starting point for any debts older that two years. You can negotiate with them and see how flexible they are and see what the best payment plan is that fits within your budget. Once you agree on a payment plan it is important to get this agreement down in writing to ensure it is a set deal and to avoid future trouble.

Forth Step: Old Debt, New Trouble?

If you have a debt that is four or more years old, there are actually statues of limitations on how long a debt collector can come after you for that money. In some states, collectors can only come after you for four years before they have to stop. So, if you have an old debt it is a good idea to check your state laws and see what the statue of limitations is to check if you even have to deal with the debt anymore. The most important thing to remember is if your debt has exceeded the statue of limitations; do NOT get involved with it again. Once you make a payment on the old debt, or get involved with the creditor to which you owed, the clock starts all over on the debt and you may have to deal with years of debt collectors yet again.

Fifth Step: Keeping the Collectors Away For Good

Just because you have taken care of the debt collectors does not mean your work is done. It is now imperative that you keep a good credit score and pay off all your credit as soon as possible to avoid ever going back into debt. Stay away from new creditors no matter how tempting their offers are. If you ever need a reminder not to get back into debt, just the thought of those bothersome debt collectors should be enough to scare you away from ever being in debt again.

Following these five steps can help alleviate the stresses of dealing with debt collectors and help to not have a devastating impact to your credit score. Enjoy your holiday season and start the new year off right by tackling your holiday debt instead of letting debt collectors lurk for all of 2008.

Debt-Free America is a 501(c)(3) non-profit, community service organization offering confidential credit counseling, debt management program options, and financial literacy education to consumers nationwide. Debt-Free America is dedicated to providing FREE counseling and educational services to help financially distressed families and individuals effectively manage their personal finances. The Board members and operations staff have a long-term commitment to helping anyone in debt crisis, and even those not in a debt crisis. Debt-Free America has been in the business since 1997 and is now serving over 17,500 clients nationwide. Visit them on the web at www.debtfreeamerica.com.

December 2007

SMART SAVINGS
Small Cut Backs That Make a Big Difference

Living the “American dream” is becoming increasingly harder, if not impossible, for the average American. A recent study found that over 40 percent of all Americans save less than five percent of their annual household earnings, and 52 percent of people in the workforce live paycheck to paycheck. What was once considered normal and “affordable”- owning a house, luxury cars and the latest trends, is now an extravagance, unattainable to most. Additionally, with the housing market in developed cities, such as San Diego, increasingly on the rise, it is nearly impossible to afford such conveniences on one income.

Debt-Free America, a non-profit credit counseling company dedicated to providing confidential and knowledgeable advice about financial matters, provides some easy tips to cutting cost without sacrificing comfort.

Be a savvy shopper

Going grocery shopping on a whim or without a plan can be a disastrous mistake for your bank account. Many people buy in excess without thinking about what they really need. Shoppers who go with a plan could save as much as 50 percent more than others -meaning more money left over to put into a savings account.

Here are a few other shopping tips to help you save - if you plan in advance:

Go through the Sunday newspaper to clip coupons for your shopping trip. Many sites offer online coupons as an option. Newspapers’ virtual coupon organizer and stores savings lists can provide more easy savings options.

If you are sticking to a name brand out of habit rather than quality or taste purposes, branch out for cheaper alternatives on sale items. If you must have a particular brand item, watch for it to go on sale and stock up so you will not have to pay more later.

Instead of spending money all at once at the end of the year for Christmas, buy things throughout the year when you find something on sale for someone. You can get most of your shopping done before December and not have to spend money all at once.

Revamp your daily routine!

The unnoticed habits in your every day life could be costing you big money in the long run. Spending just $3 a day on coffee adds up to $21 a week and $1092 for the entire year. Try writing down everything you spend for one week to access exactly where your money is going. Then make small changes that will not sacrifice your comfort or your hard earned paycheck.

If Starbucks is a wake-up necessity, try switching to a cheaper alternative at a gas station convenience store. Many offer a variety of options and flavors. Or buy a coffee maker and make coffee at home and treat yourself to a gourmet drink once a week.

Instead of running to the nearest vending machine on your afternoon break, plan ahead. Buy snacks, bottled water and gum in bulk to avoid marked up single versions.

Baking soda in the laundry -- Adding a little bit of baking soda to your regular wash load makes clothes cleaner, brighter, fresher smelling and costs a lot less than some expensive laundry detergents. It's also good for pre-treating grease and oil stains.

Energy proof your house

Utility bills are one payment that will never go away but they can be greatly reduced by making small changes in household energy use. Leaving lights on, running the thermostat and forgetting to turn off water are small things that add up over time. Setting aside time to check your house for energy waste will add up to long term savings.

Take a Saturday to renew weather stripping, fix leaky faucets and replace energy hogging light bulbs.

Set up a family meeting to discuss simple ways to conserve energy. Turn off lights when no one is in the room. Shut off the computer at the power strip to avoid using energy even when it is in off mode. Wash clothes only when you have a full lode and on the cold setting. Your local utility supplier can offer many more energy saving suggestions on their website.

Make your home more energy efficient, wrap your exposed hot water pipes. With an investment of $22 at a local major home improvement store and two hours of time, you can wrap your copper hot water pipes with tubular insulators. You will not only reduce your water consumption but reduce your gas bill. And the biggest bonus is the water gets to the needed application quicker and hotter.

Rethink that gas guzzler

Owning a car is a necessity to most people but cutting down on commutes, speeding and not forgoing your vehicles regular tune-up could cut down on gas expenses and repairs.

Making sure your vehicle is in its best condition will ensure premier performance as well as save money on gas. A vehicle that does not receive regular oil changes and other necessities can use 25 percent more gas.

Reckless driving can sacrifice your gas as well as your safety. Practice accelerating slowly, coast up to traffic jams and drive at a steady pace on the free-way. Driving at 70mph takes 20%-30% more gas than at 50mph.

On your commute to work car-pool with employees to conserve on gas. Plus you’ll get to forgo traffic by taking advantage of the carpool lane.

Save For A Rainy Day

For those of you paid by your employers on a biweekly basis, there are a total of 26 paydays during each calendar year. That means there are always 2 months during the year when you will have three paydays per month. The other 10 months you will have just two paydays per month. If you budget your monthly income and expenses based on two paydays per month, you can deposit the extra paychecks into your savings account during the months when you have a third payday, use them to pay down debts or do both. It's like receiving two bonus paychecks each year.

If living the “American Dream” often feels unattainable, these small cut backs can make an overwhelming difference to your wallet. Make it your 2008 resolution to save money by cutting back and it could be your most prosperous year yet.

Debt-Free America is a 501(c)(3) non-profit, community service organization offering confidential credit counseling, debt management program options, and financial literacy education to consumers nationwide. Debt-Free America is dedicated to providing FREE counseling and educational services to help financially distressed families and individuals effectively manage their personal finances. The Board members and operations staff have a long-term commitment to helping anyone in debt crisis, and even those not in a debt crisis. Debt-Free America has been in the business since 1997 and is now serving over 17,500 clients nationwide. Visit them on the web at www.debtfreeamerica.com.

November 2007

Tips to provide you peace of mind and secure your financial future.

Keep your Check Book Balanced

Balancing your checkbook is very important tool in sticking to your budget. An unbalanced record of your expenditures may set you up to potentially run out of money before your next pay check. Keeping your checkbook balanced will ensure you have the money you think you have in your account and avoid overspending.

Follow these steps throughout the month to ensure your account is reconciled properly when your bank statement is received.

1. Reconcile Your Checks
Determine if there are checks that haven't cleared the bank. Sort your cancelled checks in check number order, or use the listing of your cleared checks in numerical order shown on your statement. In your checkbook register, check off each cancelled check returned to you or each check that appears on the check listing, making sure the amount you recorded is the amount the bank shows.

2. Reconcile Your Deposits
Make sure each deposit shown on your bank statement is recorded in your check register (especially if you have direct deposit, which you can easily forget to record). Also, go through your deposit slips, paycheck stubs, etc., and make sure the bank statement shows all the deposits you made. Check off the deposits in your check register as you did for checks.

3. Reconcile Your ATM Withdrawals and Debit Card Purchases
Go through the same process with your ATM withdrawals or debit card purchases, checking off each transaction on the bank statement in your check register. If the bank shows transactions that aren't included in your check register, record them now.

4. Record Interest Earned and Bank Fees
Check your bank statement for any other fees and record them in your checkbook register. Also record any interest earned in your checkbook register.

5. List Outstanding Checks
Now go through your checkbook register and in column two of the balancing form list your outstanding checks (the checks that you did not check off in your check register as having cleared the bank), as well as any outstanding debit purchases or ATM withdrawals that have not yet cleared the bank. Total the column of outstanding checks, debits, and ATM withdrawals.

6. List Outstanding Deposits
Go through your checkbook register and in column one of the balancing form list the outstanding deposits (the deposits that you did not check off in your check register as having cleared the bank). Total the column of outstanding deposits.

7. Record Your Bank's Ending Balance
On line one of the bottom section of the Checkbook Balancing Form, enter the ending balance shown on your bank statement.

8. Enter Outstanding Deposits
On line two of the bottom section of the Checkbook Balancing Form, enter the total outstanding deposits from column one.

9. Enter Outstanding Checks
On line three of the bottom section of the Checkbook Balancing Form, enter the total outstanding checks from column two.

10. Calculate Your Balance
Use a calculator to total lines one through three, as indicated by the plus and minus signs on the form, and enter the new total on line four. This should equal the balance shown in your checkbook register. If it doesn't, check for math errors in your checkbook register, such as reversed numbers (e.g., $53 instead of $35), subtracting a deposit instead of adding it, adding a check written instead of subtracting it, automatic payments that you forgot to record, etc.

Found at: Financial Planning

October 2007

What is a Balanced Budget?

• Housing 35%: mortgage/rent, taxes, home repairs and improvements, insurance and utilities

• Transportation 20%: car expenses, parking costs or public transportation

• Debt 15%: credit card, student loan and personal loan monthly payments*

• Investments & Savings 10%: stocks, bonds, etc…

• Other Expenses 20%: food, medical bills, clothes, personal care, entertainment, etc…

*If you avoid debt, you can put this additional 15% into saving and for future “wants” such as a dream vacation, college education or additional real estate.

Ideally your budget fits into the guidelines above. But if your expenses fall outside of this guideline look at where the differences are and find out what changes you can make which will bring more of a balance to your monthly budget. Click here to download a free booklet Debt-Free America Knows Budgeting.

Determine your Debt-to-Income Ratio

You do this by adding your monthly bills & expenses together and subtracting the total from your monthly take home pay.

Shortcut: Use the mini-budget calculator to get a breakdown of how your money is being spent; housing, transportation, debt payments (credit cards, school loans, other loans), living expenses (groceries, entertainment, medical) and savings.

balanced budget

Note: If your disposable income is in the negative than you are spending and/or paying out more money each month than you can truly afford. Review all of the monthly expenses and bills to find out where you are overspending or if you have created too much debt to handle. If this is the case, it is important to figure out where you can cut back on your expenses, and see how you might cut down on bills to avoid putting yourself in debt. Consider contacting one of our certified credit counselors for a free consultation at 1-888-268-2926.

Have an Emergency Fund: In a perfect world we’d all have a three to six months worth of salary in the bank as a cushion. Somewhere between the living expenses, the debt repayments and savings you should have an addition fund to cover unexpected expenses, such as car repairs and or medical emergencies, and avoid dipping into your savings and/or potential your future earnings.

Have a Savings Account: Whether it’s a bank account, a 401K or personal IRA.

For more tips and information sign up for our quarterly newsletter Education Update.

September 2007

Plan Your Spending
Create a calendar of your all monthly bills (including utilities, rent, taxes, personal loans anything that has an amount due each month); write down the creditors’ names, amount and dates each are due. Do not include expenses such as entertainment, eating out, gas or miscellaneous expenditures. If possible, try to determine a dollar amount you are going to spend on groceries and personal care items, and select dates you’ll shop and put this on the calendar too.

Example:

Use this self made calendar as a tool to help you plan your spending and avoid running out of money at any time during the month. This is the first step in seeing how your money flows and how a budget will make your finances easier to manage.

For more tips on how to save check out: Articles & Online Resources of Interest.

August 2007

Tips to provide you peace of mind and secure your financial future.

Save for the Future
Throughout life many things will change such as your income level and career path, the type of house you live in and its month expenses, even where you like to vacation, but saving for retirement is one goal which you should keep a diligent focus on despite any of these changes. The average life expectancy may bring you long past your working years, making your retirement 20 or more years.

Easiest ways to save:
401K plans; your employer will deduct these pre-tax dollars and you won’t miss it since it’s already gone from your paycheck.

Automatic transfer; many banks offer an automatic-draft option which will move a designated amount from your checking to your saving on the date of your choice. This is a very effective way to save extra without feeling like your sacrificing.

Put 75% or more of work bonuses, tax refunds and any additional earned income into your savings account and pad your checking account with the additional 25%. This way you have a little to splurge with and a lot saved.

Save your change; throw your spare change in jar, and once it’s full, put all that cash into your savings account and start all over.

July 2007

Spend Less
Be realistic about the financial means you have. Know the difference between absolute necessities, needs and wants. You absolutely need housing, food, warmth, clothing and medical care. You want a night out-on-the-town every Saturday night, the latest fashions/hi-fi toys, a sports car and luxury vacations.

Absolute Necessities: rent/mortgage payment, groceries, utilities, basic clothing needs and healthcare.

Needs: car payment/insurance/gas/maintenance, household items, personal items and entertainment

Wants: excessive clothing/shoes, luxury cars, first class vacations, buying coffee every morning at the local java hut or ANYTHING YOU BUY ON A CREDIT CARD that you can’t afford to pay cash for at that moment

Aim this month to only buy absolute necessities.

Write down the items, along with the price, of what you “wanted to purchase” but didn’t because of this one-month exercise.
Total these “non-purchased items” and use this dollar amount saved as an incentive to start a budget which will save you roughly
this amount each month.
Consider this exercise as a baby step towards a fiscal life-style change and not as punishment for overspending in the past.

Debt-Free America is a 501(c)(3) non-profit, community service organization offering confidential credit counseling, debt management program options, and financial literacy education to consumers nationwide. Debt-Free America is dedicated to providing FREE counseling and educational services to help financially distressed families and individuals effectively manage their personal finances. The Board members and operations staff have a long term commitment to helping anyone in debt crisis, and even those not in a debt crisis. Debt-Free America has been in the business since 1997 and is now serving over 17,500 clients nationwide. Visit them on the web at www.debtfreeamerica.com.