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Volume 2 Issue 12 ___________________________________________________________________December 2005
Each year many families are faced with a holiday dilemma. Not only do people add to their debt by overspending, some choose to skip payments in the month of December. Many choose to skip a payment on a bill in order to buy something nice for their child/children. It can be a struggle for a parent when they cannot afford as nice of things for their children as other people. It is important though that you do not sacrifice the hard work you have been doing to try and repair your credit by skipping a payment to a creditor. There are plenty of alternatives for gifts that are affordable to your budget instead of being financially irresponsible. We understand that your families’ happiness is above everything, by continuing to repair and rebuild your credit by making your payments on time, will benefit your family the most.

If you still find that you cannot make a monthly payment you need to contact your creditor as soon as possible. Most lenders are willing to work with you if you take action and get a hold of them as soon as you think there is a problem.

When it comes to your mortgage payment, it is vital to not skip a payment. If you skip December’s payments you will need to turn around and make a double payment the next month to cover both December and January. Most people cannot come up with two mortgage payments in one month. Nothing will damage your credit more than being delinquent with your mortgage payments.

Some creditors will occasionally allow customers to skip a monthly payment. This is especially common during the holiday season. While these offers might seem attractive, be aware of the cost of skipping payments.

This practice is most common among credit card issuers, but other creditors, including mortgage and loan companies, make similar offers. Skipping a payment increases the cost of credit, even when a deferral fee is not assessed. That is because interest continues to accrue on the unpaid balance during the time period the payment is skipped. Since there is no payment to reduce the balance, more interest will accrue.

Some creditors assess an additional fee when customers decide to skip a payment. When an additional fee is assessed, it is commonly called a deferral fee.

It would be best to use “skip a payment” for dire needs if you or a family member become sick or injured or any other family emergencies. Christmas gifts are not an emergency. Skipping a payment can have lasting effects that will carry on until next Christmas where you will find yourself in the same financial predicament.

Plan ahead for Christmas by putting a little away starting a few months prior to December. Remember, quality time spent with your family is what the holidays are really about.

 

   
 
 

Christmas is a great time to save money and still have fun. We have decorations, events, and gifts that will cost you next to nothing and keep your budget intact over the holiday season.

Events

Check with your church calendar to find when their Christmas play will be put on. If it is still early you may want to volunteer your services or even choose to participate in the play. Many schools will also have plays or concerts that are always a fun time and will put you in the holiday spirit.

Many communities have holiday themed parades. You can pack your own snacks and fill a thermos with hot chocolate and enjoy the beautiful festivities. Avoid buying anything that they may sell at the parades or festivals.

Load up the kids in the car and take a scenic drive through town to look at Christmas lights. Many newspapers will feature a list of addresses for homes that participate in the communities “house decorating contests”.

Decorations

The best and least expensive decorations are ones children make at school and bring home. You can add little touches to them as well. Candles go a long way and can usually be bought very cheap. Cut some branches from your Christmas tree to “spruce up” your decorations.

Save jars to put candles in. You can fill the jars with peppermints, pebbles, or sand, and then drop a tealight candle in there. Tie a ribbon around the jar for the final touch. Group with other jars of different sizes and you have a nice holiday candle display.

Take down your picture frames and wrap them like a gift, then hang them back on the wall. This one is always a big hit. Wrapping paper can be expensive, but if you wait and buy it after Christmas you can save a ton. You can also use it all year, for birthdays, weddings, or any other holiday, just use the side with no printing on it and decorate it yourself.

Don’t bother buying gift tags. Use scraps from wrapping paper for the gift tags. You get to use up unused wrapping paper and you don’t waste money on overrated tags.

Gift giving game

Here is a fun idea for gift giving at a large family gathering. Everyone brings a gift that is under five dollars. It can be a funny gift, or something from your house, or a nice gift that you happen to find. Every person in the room draws a number for the order in which they pick a gift. The person who drew first will go and pick a gift under the tree and open it. The next person can either take the gift from the first person or choose a gift from the tree. If the first person’s gift is taken then they have to pick another gift from under the tree. The next person always has the option of taking anyone's gift before them or choosing from under the tree. You continue to go down the line of numbers until the last person has picked. Everyone is too busy having fun to care about the value of the present, which is the spirit of the holiday season.

 

 

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Returning to the Nest


There is a growing trend happening to many families right now. Some of our readers may be experiencing it. You sent your kids off to college to become an adult and gain the knowledge and skills needed to start a successful career. The only problem is that many students don’t find job offers tucked in with their diploma. So what do they do? They return home to once again take over their room that you wanted to turn into your home office.

There are many reasons that this “boomerang generation” is moving back in with their parents; everything from graduate school, unemployment, debt problems, or divorce. The point is that it can have financial effects for both you and your adult kids.

On the positive side this can be a huge benefit for your kid. Rising rent costs and a slow job market can be hard for a recent graduate to save and start their own life. Moving back home can be a wise financial move for adult children. Instead of struggling month-to-month and running up credit cards, they can stay at home and save up a significant amount of money to get them started on the right path.

There are also negative side effects for the parents. Parents may be trying to save up for retirement and there will be some extra costs that will come with another resident. Parents can expect larger grocery bills and utility bills as there will be more water used from showers and laundry and more electricity due to an extra TV or computer being used. Even though there are extra costs many parents welcome, if not enjoy, having their children back home with them, as long as it is temporary.

The best way to do this successfully is to set up a set of ground rules before your child decides to move back in. You can write up a rent contract and be open to negotiating. Set a time frame and guidelines for length of stay. A time frame will give them a goal to reach. Discuss with your kids realistic steps that will need to be taken in order for them to reach their goals of saving money, moving out at a specific date, looking for a job, paying off debt, and so on.

Make sure they are not going out every night spending the money they should be saving on a party lifestyle. You may need to step in if your son tells you he is spending a week in Colorado for a big ski trip.

Even though your son/daughter is an adult now you can still request that they abide by your house rules, whether it is calling if they are going to be out late, or use of your car.

As far as rent goes, it is up to you. If the extra expense of your child moving back in is causing you a strain, then by all means charge an amount that will compensate for the expenses. Charging them a high amount or an amount similar to rentals in the area is defeating the purpose of them moving back home.

You can start out with a small amount of rent and then raise the price to encourage them to find a place.

You can have them pay a set amount and share the amount of the utilities and groceries. If you find that you are not in need of the money it still may be a good idea to charge rent. Have them pay you then put the money in an account and then you can surprise them with a nice gift when they move out. In lieu of rent have them pitch-in with chores or have a specific night where they will cook.

More than likely, your child will not be covered under your health insurance anymore. Encourage your child to get their own life insurance plan. If they are just starting out and do not have the money to pay the premiums, it may be worth it to help them pay. Even something as little as stitches can easily take a hit from anyone’s savings without insurance.

Parents can even receive a tax break by having their kids move back in with them. Parents generally can claim their children, regardless of age, as dependents if they are unmarried, have less than $3,050 in gross income (or are younger than 19, or younger than 24 and a full-time student), and receive more than half of their total support from them. The dependent exemption could save parents in the 15% tax bracket more than $400.

The best thing you can do is leave the lines of communication open and address any concerns as soon as they happen.

So if your child is close to getting their degree, you may want to wait a little longer before turning tier room over to an interior decorator.

 

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There are many government programs aimed at helping mothers and families who are in need of financial assistance. There are times when you may need assistance for the health of you and your family. We will provide some information on some of these beneficial programs.

WIC

WIC is the Special Supplemental Nutrition Program for Women, Infants, and Children. They provide nutritional food, counseling, and referrals to health and social services at no charge. Participants in the WIC program include low income pregnant, postpartum, breastfeeding women, infants and children up to 5 who are at nutritional risk. WIC is available in all 50 states and serves approximately 7. 6 million qualified participants.

Applicants must meet specific income guidelines, a State residency requirement, and individually determined to be at “nutrition risk” by a health professional.

WIC participants receive checks or vouchers to buy specific foods each month that are designed to supplement their diets. Some states have specific WIC warehouses to pick up the food or others may deliver the food to the home monthly. WIC provides different food packages for certain categories of participants.

Food Stamps

The Food Stamp Program is another program that provides nutritious food to those with little or no income. Food stamp benefits come on a plastic card that is used like a check card at your grocery store. Food stamps can be used to purchase items such as; foods like breads and cereals; fruits and vegetables; meats, fish, and poultry; and dairy products. Benefits can also be used to purchase seeds and plants that produce food for the household to eat. You cannot use food stamps to buy beer, wine, liquor, cigarettes or tobacco; nonfood items such as pet food, soaps, paper products; vitamins and medicines. Deli foods are also not allowed through food stamps.

In order to qualify for food stamps you need to meet eligibility requirements and provide certain information about your household circumstances. You will need to provide proof for verification. Qualifications are based on your Net monthly income. This is the amount you have left after childcare, shelter costs, and a few other expenses are deducted. There are many requirements specific to each state. (The contact information at the end of this article will assist you in any further inquiries.)

Child Support

Child Support is money that one parent pays the other parent who is supporting the child. The support helps pay for the expenses that come with raising a child. Child support is a court order resulting from divorce, paternity suits, order of protection, or a child custody action. You can receive child support if: you are the parent of minor child or have court-ordered custody of a minor child; the child lives in your household, the child is financially dependent on you; you are responsible for a child where both parents for the child are absent.

Child support can help provide you with these services: locate noncustodial parents; paternity establishment; establish and enforce court orders for child support and medical support; review and modify court orders for child support; enforce alimony if child support is also being collected; work with other states to enforce support when a parent doesn’t live in your state; and payment collection and processing.

When it comes to the health and the welfare of you and your child it is important to use all the resources necessary to provide for adequate nutrition. Explore your local branches for more information and qualifications.

Resources:

WIC
http://www.fns.usda.gov/wic/

Food Stamp
http://www.fns.usda.gov/fsp/
Contains links and information to contact local branches

Child Support Assistance
Child Support Network
www.childsupport.com
1-800-398-0500
Assists in finding missing parents and collecting payments

 
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Christmas Break

A two-week holiday break is every kid’s dream. Many kids anticipate it as much as summer vacation, but for some parents it can be a chore to figure out ways to keep their children busy and supervised.

When both parents work and the children are not old enough to stay home by themselves there can be a problem on what to do with the child/children. A few weeks before break compare rates for daycares, or better yet, recruit a teenager to baby-sit over the break. Chances are they will be cheaper. You can even offer some money up front to influence them to spend their break working, that way the babysitter can use the extra money to buy gifts.

If you have the opportunity to be at home with your kids over the holiday, you will need to find affordable activities to keep them busy. Depending on where you live, the weather can play an important role on what you may be able to do.

Spend a day at the library. There are plenty of educational activities to do and it won’t cost you a dime.

Instead of spring cleaning, do a little winter cleaning. Spend some time tidying up a place in your house that could use the extra attention. You may want to go through some of your children’s old toys that you can donate, especially if they are going to get a few new ones for Christmas.

A great way to spread holiday cheer is to offer your services. If you are able to spend all of the break with your children, offer to have a friend’s child spend the day at your place.

We’ve done an article on how to save money on heating costs by conserving energy and there is now a website for kids that will teach them the same important lessons. It has fun interactive games that teach kids how to conserve energy in each room of the house. The website is www.energyhog.org and is sponsored by the Alliance to Save Energy.

For an electronic-free evening, turn off the TV, video games, computer, etc. Clear the table, pop some corn, and get out board games or puzzles. Board games provide time for all your family to visit, interact, and have fun together.

Before your scheduled game time, check your local thrift shop for games and puzzles at one-tenth the price you would pay for them new. Check the box and count the game pieces. If pieces are missing, buy a second game and still save eighty
percent. If the rules are missing, you can find them free online at http://boardgamecentral.com.

Read aloud together. This is the number one, all-time greatest thing to do together as a family. Select a special book to read during your break and divide the number of pages by the number of reading times (e.i., after lunch and/or dinner). Take turns reading aloud. Make this time as relaxed and enjoyable as possible, but stop to explain or discuss items that come up.

No matter what amount of time that you are able to spend with your kids over break make it quality and take time out to teach your children some of the lessons of Christmas.

 

 
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One of the hardest people to shop for is a teenager. They are too old for toys and they highly doubt you know what’s cool when it comes to clothes. So here are a few ideas that they can enjoy, as well as, save you some money.

Go to the dollar or discount store and buy a plastic bucket, the kind you use to wash your car. Fill it with, an air freshener, car wax, a chamois, ice scraper, key ring, tire cleaner, car shampoo, etc.

For college students, help them prepare for next semester. There are all sorts of little things students can use, from electric pencil sharpeners, notebooks, staples, pens and pencils, folders, etc.

Most people love a little greenery in their dorm. When it comes to plants, sometimes smaller is better. Almost everyone has a little niche where a pretty plant would look nice.

If there's an avid reader on your list, purchase a gift card from the bookstore, tuck it in a gift bag along with a Christmas mug ( from the dollar store for under a buck), and a few envelopes of hot chocolate mix or maybe herbal tea bags.

A magazine subscription is a great gift because it keeps on coming all year. Find a magazine your child buys regularly and tear out the subscription card. You will also be saving them money by getting the subscription.

When in doubt a gift card to their favorite store will always work.

When it comes to your teenager, keep it simple. They are at a stage where things they need will be better gifts than things that they want.


 
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Insure your Future

It's a plan that many employers offer, yet many employees are hesitant to sign up for their employer’s 401k benefits. So for those of you who are not sure what a 401k plan is or what it means for your retirement, we will explain and hopefully answer some of your questions so that you can take advantage of the plan.

A 401k is a retirement plan that is offered through your employer. Many businesses offer 401k plans to their employees. The first thing you will want to ask is if your company has a 401k plan. Each company may have different stipulations and conditions. Then find out if they match your contributions, or what the maximum required for them to match is. It’s like free money, whatever you contribute to the 401k your employer will match.

Remember the saying “Out of sight, out of mind”? That’s what a 401k plan embraces. The money you agree to contribute comes right out of your paycheck. Your paying yourself before you or anyone else can spend the money. Even if you are stretching your paycheck, it is important that you try to at least contribute the minimum amount allowed.

The money you put into a 401k plan is taken out before taxes, meaning the rest of your take home pay is taxed less.

When you are enrolled in a 401k plan all of the work is done for you. Experienced professionals handle all the complications and confusing investment-lingo. Popular investment options for your company are mutual funds, which are low risk investments, as it is spread out among many stocks instead of all riding on one stock. Your plan may also include other investment options. Make sure to review and discuss all investments that your plan will involve.

Many plans give you access to your contributions in the event of a financial emergency. It is important that you try and avoid this at all costs. The whole purpose of a 401k plan is to ensure that you can have a comfortable retirement. When you borrow against it, you are just setting yourself back further. You can take out a loan against your plan where you agree to pay back what you borrowed, with interest, or you can make a withdrawal from your account. When you take a withdrawal you do not pay it back.

There are certain circumstances where you can take a withdrawal. The most common type is hardship withdrawal and according to IRS regulations there are four types of hardships that allow this. They are: payment of certain unreimbursable medical expenses incurred by the participant, the participant’s spouse, or any dependents; Cost relating directly to the purchase of a participant’s primary residence (excluding mortgage payments); Payments of tuition, related to educational fees, and room and board expenses, for the next year of post-secondary education for a participant, the participant’s spouse, or any dependents; payments necessary to prevent eviction or foreclosure on the mortgage of a participant’s principal residence.

There are a few variations of a 401k plan. They come with the same benefits and characteristics as a regular 401k plan. A 403b plan is a plan for university, civil government, and not-for-profit employees. A 457 plan is for state and federal government employees.

You can keep yourself informed about the status of your 401k account. Many companies mail out statements full of information about your account balance, account value, and the loan balance if your borrowed against it. Other ways to monitor your account is through automated telephone services and online.

If you leave or change jobs you can rollover your 401k plan into your new empoyer’s account or into a personal IRA (Individual Retirement Account). This is the best choice as you do not have to start over your benefits if you start a new job. When you start a new job, ask your employer about their 401k plan and if your previous plan will rollover with the same benefits. Ask them what their conditions are. The process of rolling over your account can take awhile and require some paperwork.

When it comes to retirement it is important to start early and be committed to paying yourself. Many people plan or expect to work well into their retirement age, but many things can prevent that from happening. Your 401k will insure that when the time comes to retire, you will be ready.

More information that will help answer any of your questions:

Fidelity Investments
www.401k.com

www.401k-site.com

 
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In November the Pioneer Pilot proudly celebrated one year in publication. Within the year we have provided financial articles on savings, financial laws, retirement, home buying, and much, much, more. Whether you have been a long-standing client with PCC or have just come on board, we want to remind everyone that back issues of the Pioneer Pilot are archived on our website at www.pioneercredit.com under the Educational Services tab. Here is a list of some of the important topics we have covered in the last year.

Holiday Savings
Saving at the gas station
2005 Bankruptcy Reform
Identity theft
Lending and borrowing money
Buying a home
Gambling addiction
Retirement
Taxes
And our popular Budget Boosters feature:
Clipping Coupons
Winter and summer energy
conservation
Homemade cleaners
Vehicle Maintenance
Planning for a child

If you have been to our website lately, you may have noticed that the layout has changed. We would love your feedback on the new look and navigation of the site. Our goal was to make it easier for you, the customer, to find the information you needed. For feedback on the website please send an email with your comments to nathana@pioneercredit.com.

Our clients come from all over the country, so if there is a topic or information that you want to see covered in the Pioneer Pilot, please feel free to contact us

by email:
nathana@pioneercredit.com

or for letters:
Pioneer Pilot
1644 Concourse Dr. PO Box 6860 Rapid City, SD 57709-6860.

It has been a pleasure providing our customers with useful financial information and we look forward to another successful year.

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