Education

• Arrow accounts have been sold.  If you have an Arrow account and received  notice of who the new collector on this debt is, contact DMCC right away at  866-619-3328. 
• Some OneMain (formerly Citifinancial) branches have been closing.  If the branch that your loan was approved has closed and you have received notice of a new payment address, contact DMCC. 

DMCC Your Guide To Debt Freedom

 A Quarterly Educational Publication

Ways to Make Extra Income Without Much Work   Seth Porges is a major world traveler, with about a dozen countries visited in the last five years. He enjoys meeting new people and learning new cultures, but now with the demands of being a full-time magazine editor in New York, this travel enthusiast has found a way to bring the world directly to his apartment instead—and get paid all the while.  Using airbnb.com, a fast-growing peer-to-peer lodging website, Seth has been renting out the second floor of his two-story duplex apartment to travelers seeking short-term stays in the New York area. He’s been active on the site for about a year and earning great reviews from previous visitors on the site. “I’m booked solid through November,” he says, adding he charges about $90 per person, per night, sometimes more. The extra revenue is helping him pay his monthly bills and bulk up personal savings.   READ MORE

Your Guide to Preventing and Managing Overdraft Fees   An overdraft can occur when you try to spend more money than you have available in your checking account. For example, let’s assume you have $40 in your account. You ask the phone company to electronically deduct $35 from your checking account to pay the bill. You now have $5 available. Next, you use your debit card to make a $10 purchase. You could overdraw your account if the bank allows the $10 purchase to be processed. This could cost you expensive overdraft fees. The amount you are overdrawn plus your bank’s fees will be deducted immediately, in full, from your next deposit(s) — including from payroll deposits made by your employer, government benefit deposits, and other direct deposits on which you may depend. These deductions will lower your account balance once again and may increase the risk of more overdrafts and costly fees.  READ MORE

Debt, Money & Credit Concepts  Our current economy has many consumers worried about their finances.  The media has proclaimed that perhaps the homeowners that are or may face foreclosure in the future could have avoided this financial distress by educating themselves better before acquiring their home loans.  This is just one of the important issues that DMCC would like to cover with their educational program.  READ MORE

Client’s Corner:  Click HERE to read important information regarding your account.

Ask DMCC:  In each newsletter, DMCC will answer a question from one of our clients. If you have a specific question you would like answered, you can submit it to education@dmcconline.org. Click  HERE to read the latest question submitted by one of our readers.

Letter from The Executive Director

Mission Statement/IRS Treatment of Client Payments to DMCC/Disclosure

FEATURE ARTICLE: How to shop smart at a used car lot

So how do you tell a deal from a lemon? Below is a break down of exactly what you’ll find on a used car lot and provide tricks to help you find a quality vehicle at a great price.

Determine the price

Admittedly, used car prices have gone up over the past few years because of a decrease in new car sales, which has made inventory tight. Prices will vary by make and model, but according to Larry Gamache, the communications director for CarFax.com, used cars currently cost an average of $12,000 to $15,000.

That’s not to say you can’t get a good used car at a lower price, but it does mean that if you see a 5-year-old SUV for only $7,000, you might want to start asking questions.

To determine whether a price is too high or suspiciously low, you’ll need to do some research.

Various online tools can help you determine a fair price for a particular vehicle. Kelley Blue Book, for example, provides suggested retail values for used cars by looking at dealers’ traditional asking prices for a particular model and the going rate for trade-ins. You can also enter the vehicle’s current mileage into the quote search to get a more accurate estimate.

There is also this interesting distinction: “It’s not always about how much it sold for when new,” says James Bell, an analyst for Kelley Blue Book. “It’s about how well it sold.”

That is why vehicles that failed to catch on when they were initially released can be particularly good buys as used cars. As an example of how this can work in the consumer’s favor, Bell cites the Kia Virago, a two-seater coupe released in 2009. The subsequent influx of that particular vehicle into the used car market caused its secondhand price to plummet.

“There was nothing wrong with the car,” Bell says. “It was just a victim of bad timing in the marketplace.”

Get the facts about financing

One drawback to purchasing a vehicle used is that you can end up paying more to finance it.

Bell says interest rates on loans for used vehicles traditionally run about a few percentage points higher than those on loans for new ones. Rates on new cars tend to run from 0% to 4%, while rates on used cars are often from 6% to 7%.

However, “the rate will be completely dependent on your credit score,” Quincy says.

Two types of financing can be used to purchase your used car. In-house financing, known in the business as “buy here, pay here,” is convenient, because you can do the paperwork on the premises, but this financing doesn’t always offer the best deal. If you have more time on your hands, you may be able to get a lower interest rate from a bank or credit union.

“You just have to be willing to do your research,” Quincy says.

Check the inventory

Of course, doing your research means more than finding the lowest interest rate to purchase a used vehicle. You’ve also got to ask about the inventory.

Most of the vehicles on a used car lot are purchased from new car dealerships after coming off a lease, or they’re trade-ins from customers now in the market for a different car. Other used cars are typically bought at auctions or from rental car companies or insurance companies. If a dealer tells you that a vehicle is from that last category, consider it a big red flag.

“You don’t want to buy a car that was purchased from an insurance company,” says Sergio Stiberman, the CEO of LeaseTrader. “It means the car was totaled.”

Conversely, vehicles that have just come off their leases are often less likely to be lemons, since people who lease don’t want to pay fees when they return the car to the dealer.

Keep in mind, however, that no origin represents a sure thing. A lemon can come from anywhere, especially if the dealership you’re visiting buys its cars indiscriminately. Once you’re on the lot, your job is not simply to learn where the car came from, but also what it has experienced.

Stiberman says you can do this by asking the following questions:

• Has the car ever been in an accident?
• Has it been totaled?
• Has it had body work done?

If you want something in writing, many experts say, you could also ask to see a CarFax Vehicle History report, which will tell you whom the car was purchased from, how many times it changed ownership and whether it was involved in any wrecks. Some dealers, especially the more reputable ones, will provide this report for you, but you can get one yourself for $34.99.

Consider a certified vehicle

There’s also the option of purchasing a Certified Pre-Owned Vehicle, a car that a dealership repaired and inspected after receiving it back from a lease in good condition.

These cars aren’t always found on a traditional used car lot. You might need to find a dealership that sells both new and used vehicles, since such dealerships are more likely to invest in the inspection process.

Additionally, these cars can cost more. Bell says you can expect to spend an additional $1,000 for a compact car and as much as $3,000 to $4,000 more for a luxury vehicle.

However, Bell says, the cars have been formally inspected and often come with special warranties that make the extra cost worth it to consumers who want peace of mind.

Check the books

If you want to further minimize your risk of getting hosed, you should stick to models that have proven reliability records. Consumer Reports has a ranking of the best and worst used car models to buy. Among the best are the Acura MDX, the Honda Accord and the Lexus GS. Quincy says cars that have good track records when they’re new will also have good track records when purchased secondhand.

Regardless of whether these models fit your needs or preferences, it’s a good idea to have a car in mind and know its current going price when you arrive at the lot. That reduces your odds of getting steered toward a damaged car by a predatory dealer.

If a dealer is pushing a car and you find yourself drawn to it, be prepared to go home and do your research on that make and model before you buy.

Once you have found what looks like a good vehicle at a fair price, there are two things left to do, experts say.

First, take the car for a test drive to make sure it’s running properly. Second, have it inspected by a third-party mechanic.

Gamache says consumers can have a basic inspection done for $50 to $100, though savvy shoppers may be able to get the dealership to pay with the promise of a sale.

Our experts say these requests are perfectly reasonable and that if the dealer gives you any pushback, it may be an indication you need to take your business elsewhere.

“You’ve got to be prepared to walk away,” Bell says, noting that finding a reputable dealer is an integral part of buying a used car. “You’ve got plenty of options. You should be able to find a comparable deal elsewhere.”

This article was reported by Jeanine Skowronski for MainStreet.

MONEY SAVING TIP: That tango class on Groupon was such a great deal! Too bad you didn’t ask your sweetie if he wanted to learn to dance. Now you’re out $45.

Or maybe not. A secondary market for Groupon and other social commerce deals has sprung up. Sites likeLifesta, DealsGoRound and Coup Recoup provide a way to unload unwanted vouchers.

They’re also a playground for bargain-seeking consumers. Missed a screamin’ deal from Groupon, Living Social, Tippr, Buy With Me or another social buying site? You might get a second chance.

You can even buy another massage voucher if you originally bought just one and then decided it would be more fun with a friend.

The resale sites cover the same categories as the originals, with vouchers for restaurants, theaters, museums and other entertainment. Need a haircut, new glasses, a dental exam, an exercise class or someone to help an elderly relative with heavy chores? You can meet these and other everyday needs cheaply through social buying.

DID YOU KNOW…Some home improvements can reduce the cost of homeowners insurance. Something as simple as installing a fire extinguisher or a deadbolt lock can take a significant bite out of your insurance bill.

FEATURE ARTICLE: New Rules about Credit Decisions and Notices

Starting in 2011, many credit-seeking consumers will get more information about how their credit report or credit score can impact a lender’s decision to grant credit and the terms under which credit is offered. Beginning January 1, new rules from the Federal Reserve and the Federal Trade Commission require lenders to provide new information to consumers under certain conditions.

What type of notice will I receive? Why?

Depending on the circumstances, when you apply for credit, you may receive a notice with information about your credit report or credit score. The new rules introduce several types of notices:

• Credit Score Notice. In some cases, you will get a notice that states your credit score and information about how it compares to other consumers’ scores. A lender would provide this “credit score notice” to all credit applicants, whether you apply for a mortgage, auto loan or another type of credit.
• Risk-Based Pricing Notice. Not all lenders provide a credit score notice to all applicants. Instead, you may receive a “risk-based pricing notice”. You would only receive this if you are offered credit on terms that are less favorable than the terms offered to other consumers because of information in your credit report. For example, you may receive this type of notice if you have negative information in your credit report and you are offered a loan with an annual percentage rate (APR) that is higher than the APR offered to other consumers who apply for that loan.
• Account Review Notice. If your APR on an existing credit account is increased based on a review of your credit report, you may receive an “account review notice”. For example, some credit card issuers conduct periodic reviews of customers’ credit reports. If there has been a change in your report since you initially applied for the card, the issuer may increase your APR. Under these circumstances, you would receive this notice providing you with the credit report information that resulted in the APR increase.

What do the notices do for me?

These new notices give you the opportunity to check the accuracy of the information in your credit report. The notices identify the credit bureau that provided your credit report or credit score to your lender, allowing you to dispute any information that you believe is incorrect. All of the notices provide information on how to obtain a free credit report. In addition:

• A “credit score notice” will include your credit score. You can check the accuracy of your credit report by obtaining a free annual credit report, which is available to all consumers regardless of whether they have received a notice.
• A “risk-based pricing notice” or an “account review notice” will not include your credit score, but will include information about how to obtain a free credit report from the credit bureau identified in the notice within 60 days of receiving that notice. This report will be in addition to the free annual credit report available to all consumers.

What should I do if I receive a notice?

1. Review the notice. If you receive any of these notices, read it carefully to make sure you understand how your credit report or credit score may affect the price you pay for credit. Ask the lender to explain anything in the notice that you do not understand.
2. Obtain and examine your credit report. If you get a “risk-based pricing notice” or an “account review notice”, get your free credit report by following the instructions on your notice and review the information in it right away. If you get a “credit score notice”, and you are surprised by how your credit score compares to the scores of other consumers, you may want to get your free annual credit report from the credit bureau identified in the notice and review it for accuracy.
3. Dispute any errors. If you find errors in your credit report, you may dispute the information and request that the information be deleted or corrected.

MONEY SAVING TIP: Lower your hot water thermostat 10 degrees, but no lower than 120 degrees. You’ll still get all the hot water you need and save 25 kilowatt hours a month.

DID YOU KNOW…that you can check to see the star rating of your bank, credit union or thrift? Check out this link and follow the directions to make sure your institution is safe enough for your money  https://www.bankrate.com/insurance/car/cheap-car-insurance-companies/.

FEATURE ARTICLE:  Fraud Alert: Text Messages, Pop-Ups and Downloads to Avoid

Be on guard against “urgent” requests and unsolicited “deals” on the Internet

FDIC Consumer New has reported how criminals masquerading as legitimate businesses or government agencies have tricked consumers into divulging valuable personal information over the computer, phone or fax in order to drain bank accounts. Here are our latest tips for protecting against new schemes using electronic devices.

Think twice before responding to “urgent” text messages. One recent scam involved a text message sent to cell phones and smartphones (a hand-held device to access the Internet and make calls) warning bank customers that their debit or credit card had been blocked for security reasons. The message urged users to call a hotline to unblock their card, but instead they reached an automated response system asking for their card number, personal identification number (PIN) and other information.

“Unfortunately, this was enough information for thieves to create counterfeit cards and commit fraud,” said Michael Benardo, Chief of the FDIC’s Cyber-Fraud and Financial Crimes Section.

Why are smartphone users now being targeted by scammers? “Smartphone users almost always have their phone handy and tend to respond to calls and e-mails quickly, so the expectation is that many of them may not realize that a message is fake until it’s too late,” Benardo explained. “Not only that, but fake Web sites are also harder to spot on a small screen.”

Be on guard against unexpected pop-up windows on Web sites, including your bank’s. If after you’re logged onto your bank’s Web site — or on any Web site, for that matter — and you get an unexpected pop-up window asking for your name, account numbers and other personal information, that is likely a sign that a hacker has infected your PC with spyware and is trolling for enough information to commit identity theft and gain access to your bank account.

“It’s normal for your bank to ask for your login ID and password when you first log in and to ask you to answer a ‘challenge question’ if you want to reset your password or start using a new computer,” advised David M. Nelson, an FDIC fraud specialist. “But your bank will not ask you — through a pop-up window — to type your name and information such as your date of birth, mother’s maiden name, bank account and cell phone numbers. Banks only need that type of detailed personal information when the account is initially opened.”

Be suspicious of unsolicited offers to download games, programs and other attractive “apps” (applications) onto your smartphone. Those “deals” could contain malicious software directing you to fake Web sites or install spyware used to steal information that can lead to theft. “You should consider using anti-virus software specifically designed for smartphones and other mobile devices,” added Nelson.

What are your best defenses against a variety of high-tech scams?

• Be aware that cyber criminals always look for ways to use new technology such as smartphones to try to commit fraud;
• Stop and think before giving personal information in response to an unsolicited request, especially one marked as urgent, no matter who the source supposedly is;
• Only communicate with your bank using phone numbers or e-mail addresses you are certain about — such as the customer service number on your bank statement or the back of your card — and add these important numbers to your phone’s contact list; and
• Only install programs that you know are from legitimate Web sites, such as your Internet service provider, financial institution, wireless phone company or trusted app vendors.

For additional tips on avoiding Internet fraud, visit www.onguardonline.gov.

Article provided by FDIC

MONEY SAVING TIP: Check out the local beauty school for bargains on everything from haircuts and manicures to spa facials and highlights.

DID YO U KNOW…That the Internal Revenue Code offers many tax-saving options for individuals who want to further their educations. The tuition and fees deduction can help you take up to $4,000 off your taxable income and is available without having to itemize.

The Lifetime Learning Credit could provide some students (or their parents) up to a $2,000 credit.

Don’t forget the American Opportunity tax credit, which offers a dollar-for-dollar tax break of up to $2,500. This new education tax break was created as part of the 2009 stimulus package as a short-term replacement for the Hope tax credit and subsequently was extended through tax year 2012.

FEATURE ARTICLE: Social Networking Sites Attract Online Criminals

Social networking sites are popular among consumers who keep in touch with friends and relatives by chatting online and sharing pictures, Web pages, video clips and other information. But computer hackers also visit social networking sites to install malicious software on network members’ computers, smartphones and other devices.

“By clicking on a link from a supposed friend who says ‘check out this awesome video,’ you may end up with spyware on your PC that can be used to access your online bank account,” said David M. Nelson, an FDIC fraud specialist.

To avoid problems, be careful about information you disclose on social networking sites, learn how to limit access to your personal information with your privacy settings, and be careful when clicking on videos, pictures and links.

For more tips, see recommendations from the Internet Crime Complaint Center atwww.ic3.gov/media/2009/091001.aspx.

DID YOU KNOW…that you can go to college for free?  Through grants, scholarships, service in the military, work for school programs, tuition waivers through merit or need. Each school usually has some sort of program that allows for students to attend without having to pay full tuition. Do your research at the school of your choice.  If it is a state school, review what the state may be able to provide in order to make your scholastic experience a free one.

FEATURE ARTICLE: If you’re in debt, you’re not alone. Consumer debt in America is extraordinarily high. Sometimes it’s hard to know – or admit – if you have a problem with debt. It can be overwhelming to realize that you’ve gotten in over your head, and to worry that you won’t be able to pay back what you owe. The key to getting out of your situation is to act now. Don’t procrastinate. Taking charge of your finances and creating a plan for tackling your debt will cut down your anxiety and get you on the path toward a better financial future.

First, ask yourself whether debt has become a problem for you. Here are some circumstances that might indicate it has:

• Next month’s bills arrive before last month’s have been paid
• Your bills often include late fees
• You avoid opening bills when they arrive in the mail
• You procrastinate balancing checkbooks
• You bounce checks

Write it Out
Do you actually know how much debt you have? Many people don’t. Start by making a list of everything you owe, whether it’s a mortgage, a credit card balance, student loans or even money you borrowed from family or friends. Write down:

• The lender’s name
• The amount you owe
• The term of the loan
• The interest rate and fees

Then total them up. Looking at the numbers can be worrisome, but this is a positive – and necessary – first step to tackling your debt.

The power of 50
Paying the minimum amount due on your credit cards is one of the fastest ways to fall further into debt, and it can keep you in debt for years or decades.

If you have a credit card with a $3,000 balance at an annual interest rate of 18%, and you pay only the 2% minimum monthly payment of $60 per month, it would take you 8 years to pay off your bill. Not only that, you will have paid $5,780 by the end of the 8 years – almost double the $3,000 you thought you were spending when you made the charges.

Paying just $50 above the minimum amount due each month will make an incredible difference in how quickly you can pay down what you owe. If you pay an additional $50 per month toward your $3,000 balance for a total payment of $110 a month, you could pay off the debt in 3 years instead of 8, and save yourself over $1,800 in interest. Imagine what you could do with $100 more per month.

But if you can pay an additional $50 per month on that debt, for a total payment of $110 a month, you will pay down more of the $3,000 you originally owed. And that means less money for the creditor to charge interest on. As a result, you would pay off the debt in 3 years and save over $1,800 in interest payments.

Imagine what you could do with $100 more per month.

Be realistic
Now that you have analyzed your debt situation, it’s time to look at your monthly budget and set realistic goals. That trip you had planned for next summer, or the new car you were hoping to buy may not be in the cards right now given your new outlook on reducing your debt.

Don’t get discouraged
Reducing debt is like losing weight. You’re not going to lose 50 pounds in a month – you need realistic goals in reasonable timeframes, and debt works the same way. For most people, it takes years to become debt-free. This doesn’t mean you have to stop enjoying your life. It’s just a reminder to live within your means and be diligent about adjusting any spending habits that have contributed to the situation you are in today. Dedicating yourself to paying off what you owe and becoming debt-free will be worth the wait, with the payoff being a brighter financial future.

For a complete budget worksheet, click here.

MONEY SAVING TIP: Wanting or needing to purchase a computer?  Check out Apple or Dell for great deals under their refurbished section.  They even offer free shipping!

DID YOU KNOW… about the Rule of 72? Doubling your money is easy to figure with the rule of 72. To determine about how many years it will take to double your money, divide 72 by the interest rate. For example, if you have a 10% interest rate, divide 72 by ten. At that rate, you’ll be able to double your investment in 7.2 years.

You can use the same principle to understand what interest rate you’ll need to double your money in a targeted number of years. To find out, divide 72 by the number of years you want to keep your money invested to come up with the interest rate required. For example, if you want to invest for 15 years, divide 72 by fifteen to find that you can double your money in fifteen years with an interest rate of 4.8%.

FEATURE ARTICLE: Top 5 red flag items that may drive you into debt.

1. Cosigning.  When deciding if you should cosign for someone, the most important question you need to ask yourself is, “can I afford to pay for this loan?” Ultimately, if things go wrong with the original borrower, you will have to pay for it. When you cosign, you are equally responsible for the loan.  Your credit report also takes a beating if the original borrower is late on payments. Once that happens those negative marks stay on YOUR report for seven years.
2. Misusing. When you live beyond your means, you are misusing your credit; and this only leads to mounds of never-ending credit card debt.  If you find that you need to use your credit card for everyday items like gas and groceries, take immediate action and readjust your budget or find an additional source of income, i.e. a second job. Always spend less than what you earn. Forget about what your neighbor has and be comfortable with what you have. Keeping up with the Jones’ by using credit only leads to trouble.
3. Not saving. If you are not putting somewhere close to 10% of your net income into savings, you are only hurting yourself. When that rainy day arrives and you have to depend on a credit card to bail you out, you will be sorry. When a major medical expense occurs or some other event dampers your finances, it’s better to have those extra funds than to revert to a card that charges you high interest.
4. Driving upside down. If you are driving a car that is worth less than the amount you owe on it is bad. Everyone is well aware that a car depreciates immediately after it’s driven off the lot. Unless you make a big down payment toward the purchase of the car, it will quickly become upside down on the loan.  You will also experience this if you tag on the loan of a previous car on the car you’re purchasing. Be careful with this big purchase; if the monthly payment is a stretch for you, a change in your financial status may put you upside down and in default.
5. Borrowing. The two popular assets people borrow from are their home and their retirement account. This is ok only if it’s absolutely necessary and IF you have a good, firm plan to pay the loan back.  A good tip…keeping the equity line (mortgage loan) under 80% or less of what the home is valued at. Your retirement is inevitable, so try not to mess with this account unless you’re ok with its risk.

Always refer to your budget to keep you in check and under financial control. If you need assistance creating a budget, contact DMCC. Their certified credit counselors can help you over the phone or you may download their free educational worksheets to create your own budget at home.

MONEY SAVING TIP: Cheapism.com is a buying guide for consumers who want to spend as little as possible on something that will last as long as possible. The site’s editors evaluate the lower price ranges in almost 100 product categories – including electronics, appliances, home, beauty, fitness, and travel. Check it out!

DID YOU KNOW?….that warehouse clubs are worth the cost?  Warehouse clubs have great deals on eggs, butter, milk, cereal and cheese as well as other household staples. The savings on big-ticket items like furniture and electronics can more than pay for the annual membership fee of $40 to $50. However, you must use your membership wisely. You must only purchase what you are going to use. Make sure that the amount of food and items you buy are comparable to what you or your family consumes in order to get the most out of the membership.  And if you’re not certain, ask the customer service clerk to see if there is a way you can make your first purchase as a guest to see if the membership is something you will use. Most warehouses offer something like this as an incentive to get more members.

FEATURE ARTICLE: Tips for Avoiding Loan Modification Scams

According to the Federal Trade Commission (FTC), these are the most prevalent scams;

Lease-Back or Repurchase Scams – In this scenario, a promise is made to pay off your delinquent mortgage, repair your credit and possibly pay off credit cards and other debt. However, in order to do this, you must “temporarily” sign your deed over to a “third party” investor. You are allowed to stay in the home as a renter with the option to purchase the home back after a certain amount of time has passed or your financial situation improves. The trouble is once you have signed away your rights in your property, you may not be able to repurchase the property later, even if you can and want to. After the new owner takes ownership of your property, the new owner can evict you. Furthermore, the scammer is under no obligation to sell the house back to you. Typically, after the deed is signed away, the property changes hands numerous times. The scammer may have taken a new mortgage out on your home for hundreds of thousands of dollars more than your mortgage, making it impossible for you to buy back your home.

Partial Interest Bankruptcy Scams – The scam operator asks you to give a partial interest in your home to one or more persons. You then make mortgage payments to the scam operator in lieu of paying the delinquent mortgage. However, the scam operator does not pay the existing mortgage or seek new financing. Each holder of a partial interest then files bankruptcy, one after another, without your knowledge. The bankruptcy court will issue a “stay” order each time to stop foreclosure temporarily. However, the stay does not excuse you from making payments or from repaying the full amount of your loan. This complicates and delays foreclosure, while allowing the scam operator to maintain a stream of income by collecting payments from you, the victim. Bankruptcy laws provide important protections to consumers. This scam can only temporarily delay foreclosure, and may keep you from using bankruptcy laws legitimately to address your financial problems.

Refinance Scams – While there are legitimate refinancing programs available, look out for people posing as mortgage brokers or lenders offering to refinance your loan so you can afford the payments. The scammer presents you with “foreclosure rescue” loan documents to sign. You are told that the documents are for a refinance loan that will bring the mortgage current. What you don’t realize is that you are surrendering ownership of your home. The “loan” documents are actually deed transfer documents, and the scammer counts on your not actually reading the paperwork. Once the deed transfer is executed, you believe your home has been rescued from foreclosure for months or even years until you receive an eviction notice and discover you no longer own your home. At that point, it is often too late to do anything about the deed transfer.

Internet and Phone Scams – Some scam lenders convince you to apply for a low-interest mortgage loan on the phone or Internet. They then extract vital information, such as your social security and bank account numbers. In this scam, the loan is immediately accepted, after which you start faxing the documents and sending wire transfer payments to the phony company without even meeting the lender. Unfortunately, this scam will put you in twice as much trouble–your personal details have been stolen or sold, putting you at risk of identity theft, and your home is still at risk of foreclosure.

Phantom Help Scams – The scam operator presents himself as someone who is able to help a homeowner out of foreclosure or qualify for a government loan modification or refinance program. In exchange for his or her “services,” outrageous fees are charged and grand promises are made for robust representation, which never occurs. The “services” performed entail light paperwork or occasional phone calls that you could easily have made yourself. In the end, you are worse off than before, because you have little or no time to save your home, or seek other assistance.

If you think you may have fallen victim to any of these or another type of scam, contact the FTC at their toll-free helpline: 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Or visit their website at www.ftc.gov.

MONEY SAVING TIP:  Use less.

Purchasing appliances that are energy efficient to cut down on the utility bill is a wise idea.  However, these appliances can be costly.  Instead, have your power company do an “Energy Audit” on your home appliances.  This audit is free for the consumer and it can teach you which of your appliances is braking the bank.  If you live in a cooler climate, put a sweater on before turning on the heat/furnace.  If your climate is more tropical, invest in fans.  Fans can circulate air and are much less expensive than running the air conditioning unit. Check the air filters in the air conditioning/heating unit.  Make sure they are clean and replace them regularly.  This will allow your equipment to run more efficiently.

DID YOU KNOW  that there are warning signs to look for to alert you that you may be dealing with a mortgage foreclosure scam operator?

If the company:

• Has no legitimate organization that works with borrowers to avoid foreclosure or negotiate a loan modification will ever ask for money up front.
• Makes unsolicited offers or “lofty” advertisements, claiming they can help save your home.
• Recommends you break off contact with the lender and any counselor that you may have been working with.
• Advises you to stop making mortgage payments or tells you to send your mortgage payment to anyone other than your loan servicer.
• Instructs you to transfer ownership of your property.
• Asks you to sign a document that has blank lines or spaces

Protect Yourself

Know with whom you are dealing. Before you hand over any money or provide any personal information, check out the company or person. You can check your local Better Business Bureau or state consumer protection office to see if the company or organization is legitimate and if any complaints have been filed.

Contact reputable non-profit housing or financial counselors, such as those you can find by contacting the:

• U.S. Department of Housing and Urban Development (HUD)
  at (800) 569-4287 or
  Talk to a Housing Counselor
• Homeownership Preservation Foundation
  at (888) 995-HOPE or
  www.995hope.org.

Report suspicious activity to the Federal Trade Commission, your State Attorney General’s Office or your state and local consumer protection agencies. Reporting con artists and suspicious schemes helps prevent others from becoming victims.

FEATURE ARTICLE:  Being prepared with a will

In an effort to start the new calendar year off right, it is time to think about those issues that perhaps have taken a back seat; for instance, a will. If you are an adult with assets or a parent, you need to prepare yourself for the unexpected so that your assets and children are taken care of in the event of unforeseen circumstances. Otherwise, you are at the mercy of your state’s statue; which may not be what you had intended for your belongings or your children.

Many individuals think that after their death, the spouse receives their inheritance (excluding joint ownership of a house); this is a false belief. Your inheritance will get divided between your spouse and children. If you have no children, it gets divided between your spouse and living parents. In the event of your and your spouse’s death, the courts will appoint a guardian for your children if there is not an appointed guardian in your will. Many individuals verbally appoint a guardian, but often fail to write it down.Verbally asking someone to take care of your children after your death will not hold up in court; you must create a will.

Hiring an attorney to look over your will is not a bad idea. Attorneys can think of things that you perhaps have overlooked; this can be particularly helpful if you are in a second or third marriage and have children with your previous spouses or your spouse has children from previous marriages.  They can also assist you if you are part owner of a business or have many assets that could create a family dispute after your death.

In the event that you are single and without children, evaluate all of your assets as well as tangible property (referring to the contents of your home). If you would like specific pieces to go to certain people that are not related to you or perhaps a charity, then you need to name these individuals in the will.

Once the process of a will has been completed, make it valid. Some states do not find a handwritten will with just your signature binding. You may want to check with the state you reside in to make sure. Otherwise, type it and sign it in front of at least two witnesses and then have them sign it as well.

Keep it updated. Just because you created a will and made it valid, does not mean you are done. Review your living will every two years or if you get married, divorced or have children. You do not have to rewrite the entire will if you have acquired new assets; you may just add an amendment. Attorneys advise against making changes directly onto your will as this may nullify the entire will.

For more information on this topic visit bankrate.com or nolo.com. Both websites are helpful and educational.

MONEY SAVING TIP:  Use less.

Purchasing appliances that are energy efficient to cut down on the utility bill is a wise idea.  However, these appliances can be costly.  Instead, have your power company do an “Energy Audit” on your home appliances.  This audit is free for the consumer and it can teach you which of your appliances is braking the bank.  If you live in a cooler climate, put a sweater on before turning on the heat/furnace.  If your climate is more tropical, invest in fans.  Fans can circulate air and are much less expensive than running the air conditioning unit. Check the air filters in the air conditioning/heating unit.  Make sure they are clean and replace them regularly.  This will allow your equipment to run more efficiently.

DID YO U KNOW that the price is wrong?…there’s a markup

Know before you spend. A few helpful calculations:

Bottled water: 4,000% markup.
Text messages: 6,000% markup. A typical text message costs you .20 cents and the phone company .3 cents to transmit, according to the Chicago Tribune. If the phone company applied text-message rates to a short phone call, you’d pay $120 for the call. If the phone company applied text-message rates to a short phone call, you’d pay $120 for the call.
Move theater popcorn: 1,275% markup.
Brand-name drugs: 200 to 3,000% markup.
Hotel minibar: 400% markup.
Coffee on the go: 300% markup. A $3 cup made by a barista costs .25 cents at home.
Wine at a restaurant: 300% markup.
Greeting cards: 200% markup.
In-room hotel movies: 200% markup.
Precut produce: 40% markup.

From AOL

FEATURE ARTICLE:  Could Free Trial Offers Be ‘Fee’ Trial Offers in Disguise?

Free trial offers can be an efficient way to sample a new product or service without paying for a membership, subscription or extended service contract. Sometimes, though, if you accept a free trial offer and don’t cancel on time or according to the stated policy, you may be unintentionally agreeing to a contract to buy additional products and services.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, says “try before you buy” offers can be effective ways to market. If you like what you try, you may want to go ahead and make the purchase. But if you don’t want to buy the product or service, you may need to cancel or take some other action on a particular timetable to avoid being charged.

When a company takes your failure to cancel before the end of the trial period as permission to continue billing you, you’ve made a “negative option” purchase. Sometimes, unscrupulous merchants make it tough for consumers to take the action that would prevent negative option billing: these merchants may hide the terms and conditions of their offers in teensy type, use pre-checked boxes as the default setting, and put conditions on returns and cancellations that are so strict it could be next to impossible to stop the deliveries and the billing.

Whiter Teeth? Flatter Stomach? Shiny Hair?

If you see a free trial offer online for a product you’re interested in, stop – and read the details.

Find the terms and conditions of the offer. If you can’t find them or can’t understand exactly what you’re agreeing to, look for another merchant. You don’t want to commit to recurring charges for products or services by mistake – or before you’ve tried them and made your decision.

Pay attention to pre-checked boxes. That check may bind you to terms and conditions you’re not comfortable with – or ready to accept.

Look for information about how you can cancel future shipments of merchandise or services if you don’t want them. Do you have to pay? Do you have a limited time to respond? If you’re not satisfied with the information in the offer, look for another one that meets your needs.

Read your credit and debit card statements very shortly after you’ve responded to a free trial offer – and often afterward – looking for charges you don’t recognize or didn’t authorize. Contact the merchant first to try to resolve the issue; notify the card issuer promptly if you see any unusual or unauthorized charges.

Reprint of FTC article 2010

MONEY SAVING TIP:  Tune it up.

Your vehicle will not only thank you for treating it to routine tune ups, but you will also reap the financial benefits.  Oil, air filter changes, the correct tire pressure, all of these things keeps your car running efficiently reducing the amount of gasoline it uses to run.  It will also prevent from high costs of repairing your car from poor maintenance.

DID YOU KNOW…that if you co-sign it becomes your debt? Before you answer someone’s request to co-sign, make sure you understand what co-signing involves.

• You are being asked to guarantee this debt.  If the borrower does not pay the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to and that you want to accept this responsibility.
• You may have to pay up to the full amount of the debt is the borrower does not pay.  You may also have to pay late fees or collection costs, which increase this amount.
• The creditor can, in certain circumstances, collect this debt from you without first trying to collect from the borrower.  The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, or garnishing your wages.  If this debt is ever in default, that fact may become a part of your credit record.
• When you cosign a loan, your ability to borrow is reduced because your personal debt load has increased.

Studies of certain types of lenders show that for co-signed loans that go into default, as many as three out of four cosigners are asked to repay the loan.  When you are asked to cosign, you are being asked to take a risk that a professional lender will not take.  If the borrower met the criteria, the lender would not require a cosigner.

In most states, if you cosign and your friend or relative misses one payment, the lender can immediately collect from you without first pursuing the borrower.  In addition, the amount owed may be increased by late charges or by attorney(s) fees if the lender decides to sue to collect the debt.  If the lender wins the case, your wages and property may be taken.

FEATURE ARTICLE:   Be Careful When Using that Debit Card

Millions of people use their debit cards every day and if you have been in line at your favorite coffee shop or fast food restaurant, you can’t help but notice people make the smallest purchases with them. All the more reason you should keep your receipt and check your bank statement frequently. Although Federal Law limits your liability for fraudulent transactions to $50, if you are negligent and do not report fraudulent activity in a timely basis, you could be held liable for all of the transactions.

Loss of Funds; if somebody fraudulently used your debit card, the money comes out of your account (savings and or checking) in real time. By the time you report to the bank your money is gone and you wait for the bank to do their investigation and credit your funds, maybe a few days or a few weeks. We all know what happens next when we cannot pay our bills. Conversely, fraudulent use of your credit card means you do not have to pay the bill.

Merchant Disputes; if you make a purchase with a credit card, and it is broken or damaged; you can dispute the charge and stop payment. Not so with a debit card purchase. Once the merchant has the funds they may not be eager to assist you with your problem.

Extra Charges??; if you use your debit card to check in at a hotel and a “hold” will be put on your card for more than you are spending to allow for incidentals like meals, phone use, etc. Similarly a gas station purchase or rental car companies may put a hold for a larger amount than your purchase since they do not know how much the purchase will be when you swiped the card initially. If you are running a tight budget, you may not have allowed for these extra charges and this could lead to bounced checks on other payments. Conversely, a hotel will take your credit card and run only the charges incurred at check out.

Overdraft charges; if you have a debit card the bank you have probably signed you up for overdraft protection. This means if you inadvertently used the card or wrote a check for more than you have in your account, then the bank will honor the transaction and charge you anywhere from $30 to $40 for the privilege. That means that $2 value meal purchase now cost you quite a bit more. You would think that the bank should disallow the charge in the first place but just think of the money they would lose if you were not charged the overdraft fee. Expect the Government to review these practices and offer more consumer protection laws later in 2010.

Illegal Card Readers ; it is almost impossible to stop a crook when he is using technology to read your card info when paying at the pump at a gas station or ATM. Crooks can open these machines and place a card reader which will record your account number and pin code leaving your bank account vulnerable and empty within seconds.

In closing we can only stress how important it is that you review your statements, (daily if you have an on-line access) and rethink how and when you use your debit card. Ultimately, the bank or financial institution has made it very convenient for you to have access to your money and if you are not careful, so will everyone else.

MONEY SAVING TIP:  Actual Cash Value or Replacement cost

When you file a homeowners claim the insurance company calculates how much to pay you by evaluating the cost to replace your property with new property of the same kind and quality. But here is the critical distinction; if your policy covers your personal property (your home’s contents) for its actual cash value, the insurance company deducts depreciation from your personal property’s overall value before arriving at a figure.  Your check will be significantly less than the amount it will cost to restore, repair or replace the damage or loss.  However, if you have replacement-cost coverage, the insurance company will pay what it costs to repair or replace your damaged possessions at today’s prices without deducting for depreciation.

Review your insurance policy and make sure you understand what you are buying.  It could save you money if you have to make a claim.

DID YOU KNOW: that if you are a coupon clipper you can visit www.dealcatcher.com and get some great coupon and other deals.

www.dealcatcher.com is a website that is loaded with coupons, rebates and newspaper circulars with weekly specials.  You can also practice your smart shopper techniques and compare prices. If comparison shopping is your thing, check out these sites for a good overview, www.pricegrabber.com, www.shopping.com, www.mysimon.com www.shopping.yahoo.com, www.shopzilla.com and www.nextag.com.

FEATURE ARTICLE: Rent to Own Furniture and Appliances. Bad Idea!

Financing furniture from a rent to own store sounds like a great idea when you’re looking to fill up your home with appliances, furniture and electronics on a tight budget, but are those no-interest, no-payment offers as good a deal as they seem? Not usually.

How do these stores work? Pretty simple, come in pick out the items you want and the store will offer you a payment plan to make the purchase. Make your payments as per the agreement (no late payment allowed) and over a period of time you will own the items. Be late once and the items will be repossessed and any chance of ownership has now vanished. The price you pay for a particular item is full retail with no discounts that you may find at another store. Also beware that the item you purchase may not be new but a repossessed unit that has come back to the store. All items financed over the long term carry a high interest.

Here is a typical example. A $1,000 television purchase as stated on CNN.

“Let’s say that a company rents a $1,000 TV to a customer for $100 per month for a term of 24 months. At the end of the 24 months, the customer owns the TV, but has paid a total of $2,400 for a $1,000 TV that is now 2 years old! That is like financing it at 103% over those two years! They are doing well in this economy because they are preying on the weak and many consider it predatory lending.”

Same as cash 90 day plan. All of these stores offer you a no interest 90 day plan when you make a purchase. They will let you pay for the item in full if you pay it completely off in 90 days. Remember that you paid a full undiscounted retail price. If after 90 days you cannot pay in full, they will put you into a one or two year payment plan with the interest starting from the original date of the purchase. If at any point you are late on your payment, even by a day, they will come to your home and repossess your purchases and all of the money you paid is gone.

Payment plans carry stiff penalties and finance charges if not paid on time. No-interest and no payments as advertised in promo offers for given number of months sounds like a dream come true; but what are the consequences when you fail to pay off your balance before the end of the offer’s term?

Unfortunately, that good deal immediately turns into a very bad deal. Typically you will be expected to pay interest on the item going all the way back to the date of purchase; and since store financing generally carries a much higher interest rate than most credit cards, the interest total can be quite shocking which combined with the original purchase price means you have more than doubled the original cost of the item.

Paying over time means you pay full sticker price. Cash is still king! Ask the store manager to give you a discount for paying cash and you will probably get it especially in these hard economic times. While you are in a negotiating mode, why not ask for free delivery, setup, and a free lamp? The worst that can happen, is they may say no but you may be pleasantly surprised.  Not so when it comes to financing your purchase. This means you will often pay full price and high finance charges for the convenience and privilege of delaying your payment.

How secure is your employment? Many consumers making a purchase at these stores find it so very convenient to make a list and get all of the items they always wanted in one purchase. They also assume that their income is fixed for the future also.  Assuming you do not lose your job, or become ill, things may work out. The finance plans associated with these purchases will not erase your debt just because your circumstances have changed. This simple fact  is financing any purchase is a risk. Yes the store will offer you an insurance plan to guarantee that your payments are uninterrupted but if you are on a budget that is an added expense you do not need. You must remember that if you are late or miss a payment, all of the payments made to acquire the item are forfeited as well as the item.

What’s the Alternative?
Cash is definitely the best alternative to a store finance plan. If you do not feel comfortable handing over cash to a store, a debit card will yield the same result with the added protection of the bank and the issuing credit company.

Realistically cash may not always be an option. For the times when you are forced to finance a purchase, use a credit card instead of the offered in-store financing. You will probably have to start making payments right away, but at least you won’t have to worry about inflated interest charges or unnecessary damage to your credit. We recommend that you delay the gratification of purchasing a new TV and save the cash for it. Better yet, why not purchase a TV from a site such as Craigslist or eBay? Or, if things are really tight you may consider some thrift store purchases like the Salvation Army.

MONEY SAVING TIP:  Consolidate your plugs.

Between 5 % and 15% of the power used by electronics is consumed when they’re turned off.  Plug your TV, DVD player, cable box, and home entertainment system into a power strip or surge protector, then unplug it at night and when you’re not home.  If your electric bill runs $120 per month, this is a savings of $216 per year.

DID YOU KNOW…your credit reports are all different?

Each of the credit bureau agencies, Equifax, Experian and TransUnion, are separate companies and therefore they not only receive different information from your creditors but choose to report it differently. The speed at which they update their records is not the same either.  One agency my update your address change or employment status as soon as it happens, while the other agencies may be delayed doing so.  It is rare that all three of your credit reports show the same information, this is why checking them for accuracy is crucial once every 6 to 12 months.

FEATURE ARTICLE:  Have a New Born in the Family? Here are Some Easy Ways to Save Money.

As the cost of the most basic goods and services have increased with the size of the American economy, so too has the cost of raising a child. The US Department of Health & Human Services estimates the cost to raise a newborn to the age of 18 to exceed $250,000 with the first two years to be the most expensive. The cost of clothing, medical care, child care and food add up very quickly. Here are a few simple ways to save.

Make Your Own Baby Food
Making your own baby food can be a nutritious and low cost alternative to purchasing commercial brands. Although commercial baby food is safe as well as convenient, it is also higher in starch, sugar and water then what homemade baby food. Additional resources on how to prepare baby food can be found at http://www.wholesomebabyfood.com/

Use Cloth Diapers
Using cloth diapers may generate concerns about diaper rash and allergic reactions. However, according to the Journal of Pediatrics, the report of rashes during use of cloth diapers is 10% less frequent then during use of plastic diapers. Even though the plastic diapers will hold larger amount of liquid and won’t need to be changed as frequently, the increased use of cloth diapers from changing still results in a savings of $25 to $55 per month.

Share Toys and Clothing
If friends or family with children may have baby toys or clothes that may be usable. Even if you receive a couple of outfits or toys, the savings certainly add up. Always remember that the first step in preparing a budget is knowing your expenses and what can be reasonably lowered. It is important to make sure that quality isn’t sacrificed, especially with children. Although the cost of raising a child can be high, the joy of a happy and healthy baby is immeasurable.

MONEY SAVING TIP:  Saving for School

• Check out study supplements from the library. Don’t buy them.
• Buy used text books.
• Take advantage of free pens and pencils at business conferences.
• Keep track of your pens and pencils. You ’ll spend less on them if you don’t lose them all the time.
• Buy back packs that your kids can use for years. While they might think the Sponge Bob Square pants one is cool in 2nd grade, they probably won ’t think it’s cool in 4th.

Do you know how to Budget for the Holidays?

Thanksgiving will be here quickly and it seems within days Christmas will be here and we know what’s next. Remember last year when you were trying to figure out how you were going to pay for everything and you promised yourself that this year it would be different. It is time to make good on your promise and start planning. Remember that rent, car payments and groceries and other bills you have been paying for the last 11 months must be paid during the holiday season. So if you are going to buy gifts and hold a Christmas or New Year party this season plan for it from now.

Here are a few tips to help you along.

Take out your monthly budget form you have been using for the past year and review how you can reallocate money you can put aside for the holiday season. If you have been thinking about having a Christmas Party, you could have started saving from September. If you are spending $100 per month on entertainment expense you may decide to stay at home and set those funds aside for your party expenses. Tally it up and think hard about whether you can afford to spend that much. If the total figure makes you uneasy, think about areas in which you might cut back. Then stick to your budget.

If you’re buying gifts, start listing items that you plan on purchasing. It’s likely that you don’t know what everyone on your shopping list wants, so start asking. Many people will start their gift buying late in the summer when merchants are slow and the savings are substantial. You may also be able to buy items for your party long before the prices are marked up for the last minute shoppers. Try to buy gifts using cash and keep the credit card at home.

Don’t forget about such minor items as wrapping paper and holiday greeting cards. They’re not widely available yet, but they will be soon. Keep your eyes open for sales. If you start early, you can buy these items a little at a time and store them, instead of having to spend a lot of money all at once.

If you’re planning on serving guests, plan ahead. Things like cake mixes, spices, canned goods, and liquor can all be purchased a little bit at a time and placed aside until it’s time to use them.

Are you creative or artistic? Consider making some of your gifts instead of buying them.

Split the cost of major items with friends or family. For example, if someone you know wants a new TV, pitch in with two or three other people. It will save all of you money, and the person who wants the TV will be happy to get it.

Avoid the mall if you can. Everything is more expensive there. If you must go to the mall, look for sales.

If something is not affordable, don’t buy it. This is often easier said than done, but remember the holidays are not a spending contest, they’re supposed to be about spending time with people you care about. Emptying your checkbook won’t make them any more special.

Buy gift certificates. Let your friends and family get what they want. This not only helps you control how much you spend, you can avoid long holiday lines by purchasing them early.

Leave your credit card at home. You are more likely to make expensive purchases with your credit card than with cash. Credit cards make those expensive purchases even more expensive. For instance, let’s say your holiday shopping costs you $2,000. If your account had an 18% interest rate and you paid the minimum payment due, it would take you approximately 18 years and cost you more than $5,600 to repay. Don’t use your credit cards unless you can pay the balance in full when you get the bill.

During the holidays, it’s very common for stores to offer discounts to anyone who applies for their credit card. Don’t do it. First of all, an entry called an inquiry is made to your credit report every time you apply for credit. If you have too many inquiries, you can hurt your credit rating. Second, store credit cards come with notoriously high interest rates, so unless you pay the balance in full, your “discount” actually results in an unnecessarily high bill.

As you can see, planning ahead and shopping wisely can save you a lot of money and keep your budget intact. Start now!

Dear Client,

It is with great pleasure that I can inform you that DMCC has recently been approved by both the U.S. Department of Justice as an approved provider of bankruptcy counseling and education, and by the U.S. Department of Health and Urban Development as an approved Housing Counseling Agency. These approvals follow a long and thorough application process, which our staff worked diligently on to achieve.

As an approved provider of bankruptcy counseling and education, DMCC is able to issue the certificates required by the U.S. Trustee from all consumers filing bankruptcy in the United States. Consumers filing bankruptcy are required to receive budget counseling prior to filing and complete a personal financial management course after filing. DMCC is approved to provide both of these required services and issue consumers the completion certificates they must submit to the bankruptcy court.

DMCC’s initial approval from HUD is to provide personal budget counseling to consumers, which has always been an integral part of our charitable mission. Over the next few months, several members of the DMCC staff will be trained in additional housing areas in order to expand our HUD approved services. These new services will include pre-purchase home buying counseling, reverse mortgage counseling and home mortgage loss mitigation.

Recognition by these government agencies as approved providers of their regulated services is a significant accomplishment for which we should all be proud. However, we truly hope that as existing clients of DMCC, you will never need most of these new services.

Sincerely,

Phil Heinemann
Executive Director

FEATURE ARTICLE:  Are You At Risk of Predatory Lending?

Predatory lending is most commonly associated with mortgages, but it also affects consumers seeking other types of loans. Knowing credit and lending terminology helps to avoid misunderstanding or otherwise deceptive practices and a through list of these can be found on our website at www.dmcccorp.org. Click on “Educational Materials,” and then refer to the credit terminology in the educational handbooks.

What is predatory lending?
With millions of consumers hard hit by fallout of the sub-prime lending market, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

• Sell properties for much more than they are worth by using false appraisals.
• Encourage borrowers to lie about their incomes, expenses or cash available for down payments in order to get a loan.
• Knowingly lend more money than a borrower can afford to repay.
  Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
• Charge fees for unnecessary or nonexistent products and services.
• Pressure borrowers to accept higher-risk loans such as balloon loans, interest-only payments and steep prepayment penalties.
• Target vulnerable borrowers to cash-out
• Refinance offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
• “Strip” homeowners’ equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
• Use high-pressure sales tactics to sell home improvements, and finance them at high interest rates.

What tactics do predators use? Predatory lenders or investors insist that they are your only chance of getting a loan or owning a home.

Take your time to shop around and compare rates, prices and homes. Buying a home will be one of the largest financial activities a person can make and will require much deliberation. Here are some signs that you could be dealing with someone who is not considering what is in your best interest:

• The house you are buying costs a lot more than other homes in the neighborhood, but isn’t any bigger or better.
• You are asked to sign a sales contract or loan documents that are blank or that contain information that is not true.
• You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud; it does not.
• The cost or loan terms at closing are not what you agreed to.
• You are told that refinancing can solve your credit or money problems.
• You are told that you can only get a good deal on a home improvement if you finance it with a particular lender.

Protect yourself!

1. Don’t take the lender’s word for it that you qualify. Scrutinize your finances to make sure that you can repay the loan.
2. Watch out for prepayment penalties. Occasionally, a respectable lender will charge a fee for paying off a mortgage early – when the house is sold, for example, or when the borrower wants to refinance. But a predatory lender charges excessively large fees to pay off a mortgage early. If those fees are on top of balloon payments and mortgage life insurance, you’re being set up to have your house repossessed if you can’t make the payments.
3. Don’t sign forms with blank lines or spaces. If you sign blank documents you run the risk of somebody adding costs and fees you never agreed to.
4. Make sure the lender signs and dates all papers. Get your own copies of all papers and immediately confirm that the information is correct and that it matches what was promised to you.
5. Pay attention to fees and points. A lender might offer a good interest rate, then charge thousands of dollars in fees and require you to pay an excessive number of points.
6. Don’t be intimidated by jargon. If you don’t understand, ask the lender or refer to the credit terminology section in the educational handbooks online at www.dmcccorp.org.
7. Request references from people who have borrowed from your prospective lender.
8. Hire a personal attorney to be present with you, or to review any documents before signing them, if you feel that the lender may be taking advantage of you.

MONEY SAVING TIP:  Low cost ways of making extra money Sell your old stuff, like CD’s and books on eBay and Amazon.

• Turn your hobby into a business. Pretty much anything you do can be turned into a business of some sort.
• Sign up with an online survey company like Survey Spot.
• Become a mystery shopper.Not only can you make some extra money, you might get some free stuff as well.
• Have a yard sell.
• Start a blog and put Adsense on it. You might only earn 4 cents a week, but it’s something.
• Become a consultant. Do you know a lot about a particular skill? Put that knowledge to work by helping others.
• Do freelance work on the side. If you’re a good writer, photographer, artist, or programmer you can make some extra money by selling your talent to companies.
• Start an errand Service. Offer to pick up groceries or dry cleaning for others.
• Waiting service. People these days don’t have time to wait on the plumber of cable guy. Charge by the hour to do the waiting for other people.

DO YOU KNOW….If  That Deal is Really a Deal?

Have you ever been enticed by a great offer? It is particularly alluring if the product being sold is something you really need. Before you sign on the dotted line, make sure you review the fine print first. Understanding the terms and conditions, billing policy and disclosure statements are imperative to benefit from these types of offers. Otherwise, that special promotion you signed up for may not be a great deal after all.

A good way to understand what you are getting yourself into is to examine these offers and what they really mean. Take for example, the popular promotion given by furniture and home good stores for “no payments, no interest until the year 200X.” It may seem like a great deal, but careful examination could make you think twice. A few questions that may help you decide are:

Does interest accrue until the promotion expires? How high is the interest rate and is it a fixed rate? What does the interest rate increase to if you miss a payment? Will the interest be added if the item isn’t paid in full at the end of the promotion? Is the savings that you are supposed to receive lost in the financing deal?

Fortunately for you, it is the law to disclose all of the financial terms and conditions along with billing methods. You will be well informed if you read and understand the contractual agreement. Most importantly, ask a customer service representative to explain anything that is unclear to you. Especially inquire if you must qualify for the offer. They may refer to this clause as, “other details may apply.”

Furthermore, you want to make sure that the “deal” is actually a deal. If you can find the
merchandise for less money somewhere else, why even bother? Some retail stores may honor their competitor’s promotions. Always make sure you know who else is selling the same product and at what price to really get the best deal.

Let us suppose you visit the local furniture store and get excited about a living room set which will cost you close to $3,000. You plan to take full advantage of their offer and make no payments for one year. Once the statements arrive you have planned to pay $75 per month. The chart below illustrates how long it will take you to pay the furniture back and the actual cost of your furniture.

You spent $3,000.00 on November 1, 2009
You plan on paying $75 per month starting November 1, 2010
Interest Rate: 23.99%
Option 1:
Monthly Payment: $75.00
Total Interest Paid*: $3,091.88
Duration of Loan: 82 months (6.8 years)
Total Paid: $6,091.88
Option 2:
Monthly Payment: $100.00
Total Interest Paid: $1,626.06
Duration of Loan: 47 months (3.9 years)
Total Paid: $4,626.06
*The above example assumes that interest is not accrued during the year of the promotion.

The ideal situation would be to submit payments before the offer expires and you are required to make payments. Unfortunately, this option is not what makes these promotions popular.

Finally, do not be timid if you feel that you are not getting the best service from a store or financial institution. Speak up. Other businesses will be happy to accommodate you and perhaps match an offer you have previously explored. Whatever decision you make in regards to credit, always be certain that the monthly payments will fit into your budget. Make sure that you have explored all of the other financing options available and that the one you choose is the best for your lifestyle.

FEATURE ARTICLE:  Gearing up for the Holidays

Gearing up for the holidays seems a little silly when Halloween hasn’t even arrived. The truth is the sooner you start the better you will be financially. Waiting until the last minute to do holiday shopping causes many consumers to overspend. A good way to begin preparing for gift shopping is by revisiting your budget and making sure you have your financial obligations taken care of so you know exactly how much money you have left over to shop for friends and family.

If you need assistance getting started with a budget, click here you can follow along with the categories on this worksheet or simply use it for ideas or reminders of your own expenses. Remember to always put something in savings. Even if the amount you are putting away is modest, it will continue to increase the funds in your account and get you closer to those financial goals you have in mind.

Continue your planning by making a list of those gifts you would like to purchase. If the list gets overwhelming, think of other ways to make this holiday season special without having to purchase gifts. Get crafty and make something for your friend or frame a special picture.

If after reviewing your budget you realize that you need to cut back on some expenses, check out the list below for ideas on savings.

Energy costs. If your electric bill is out of control, take a stand and purchase a economical, programmable thermostat. Prices for these start around $50 and even though that doesn’t sound cheap, it will eventually save you much more on your heating and/or cooling bill.

Brown bag it. Instead of purchasing lunch every day, which can cost anywhere from $8 to $10, plan ahead and make your lunch the night before. It might require a little extra time on your part but the calculations speak for themselves: $8 x 20 days (4 week month) = $160 x 12 months = $1,920!!! (for $10/day = $2,400).

Negotiate your rate. Here’s the most costly of your expenses if you have a credit card with a balance – your interest rate. If you have tried lowering this APR on your own and have had no luck get in touch with a reputable credit counseling agency that can negotiate the rate for you and get you out of debt soon. For more information on how to get this started visit http://www.dmcccorp.org/ .

MONEY SAVING TIP:  Save Money While You Shop

• Visit your local library. People don’t really go to the library anymore, but they should. If you’re trying to cut costs and you like to read or watch movies, then this should be your next stop. If you rent a movie per week or buy a book per month, this could mean up to $30 in savings.
• Forget the gym. All of the exercises you do at your costly gym can be done for free either in the comfort of your own home or outside. Some cities even have community centers that offer exercise classes for free.
• Review your auto policy. If you haven’t reviewed your auto insurance policy in a while, check it to see if it’s still the coverage you need. If it is, call your insurance company to see if there are any discounts you qualify for, such as, safe driver. Or, check out http://www.insweb.com/ to compare other rates in your area.
• Shopping Avoid impulse buying. Practice tantric shopping.
• Buy as much as you can online.
• Negotiate the price on big ticket items like cars, electronics, and large appliances.
• Use cash as a negotiating tool. Nothing makes a seller ’s mouth water than cold hard cash in their hand.
• Before you buy something, ask if the item will be put on sale in the near future.
• Don ’t buy extended warranties. Eighty percent are never used, and they’re a major profit item for the vendor. That’s why they push you so hard to buy them!
• Keep receipts and send in rebate slips.Very few consumers actually return rebate coupons. Which is, of course, exactly what the manufacturers are hoping for.

Here are some websites that give you good discounts:

www.dealcatcher.com
www.pricegrabber.com
www.shopping.com
www.mysimon.com
www.shopping.com
www.shopzilla.com
www.nextag.com

Did you know… that the online banking information about your account may not be accurate?

Because of all the electronic transactions that may take place on your account, online banking has become complicated. Deposits may show before they are actually available, and some withdraws or purchases may take up to 48 hours or longer to post to your account. Gas stations and restaurants are just two business that put holds on funds which can make it tricky to get an accurate balance online.

The best way to make sure you have an accurate balance on your account is for you to keep track of it. If you use your debit card, write a check, make a deposit or withdraw funds from your account – write it down! Non-sufficient-funds (NSF) fees are high these days and one small purchase can trigger multiple NSF charges resulting in havoc to your account. Yes, some banks will do a courtesy adjustment and forgive one or two of these charges (if you beg), but don’t expect this to bail you out every time. This type of courtesy only occurs one time per year.

If you share an account with someone, the best way to make sure you both are not overspending is by taking out an allowance. Give yourselves enough money for the week and leave the rest of the funds in your account alone. If you must tap into that account, inform your banking partner of your move to prevent overdrafts.