Volume 2 Issue 8 ___________________________________________________________________September 2005

Truth in Lending Act

Back on April 20, 2005, President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act. As of October 17, 2005, the Act will go into effect. Bankruptcy is confusing enough, and now there are a lot of changes to regard before you file for bankruptcy. We will highlight, in two parts, some of the more important changes to help you better understand them.

We begin with the amendments to the Truth in Lending Act that deals with the responsibilities of credit and charge card companies.

Certain disclosures will now come with monthly billing statements. They will include the due date and the date that late fees will be assessed, and for how much. Statements will also include a warning box. The warning box will inform customers the dangers of only making the minimum monthly payments, and the estimated cost and length of time it will take to erase the debt. This may be an example of what you might see on your statement:

There are new regulations when a company tries to get you to apply for a credit card. Some of the application’s fine print will be easier to read and understand. There will be detailed explanations on the introductory rates and disclosure of any rates that will follow it.

If you are offered a credit card that includes a discounted or low introductory rate it must include the following disclosures: 1.) The term “introductory” must be in immediate proximity to each listing of the temporary annual percentage rate. (That way you know that the low rate is only temporary.) 2.) The length of the introductory rate and the amount of the rate increase that follows the introductory period. (Basically, they are disclosing how long the introductory rate will last and how much the rate will be after the introductory rate period. So, if you have an introductory rate of 4% for the first year they have to disclose that it will jump up to 10% after that year.)

These provisions are to help protect consumers by disclosing as much information possible to help make better decisions on what lender to choose.

We will continue our article on page four with more explanations of the amendments to bankruptcy terms and qualifications.

This information is not provided, or to be taken as legal advice. If considering Bankruptcy it is important to contact an attorney for any questions. The bankruptcy reform contains many provisions and circumstances, depending on each individual and the state that they reside in.

I'm sure it won’t come as a surprise when I tell you that babies are expensive. Many of you may already be parents and have experienced the wonderful bliss of children and the amount of bills that come with it. For those of you that are planning your first child, We will provide some money saving tips and information that will help you plan for your new bundle-of-joy.

There is some information you should find out before you plan on getting pregnant. You will need a well-planned budget to see if you can afford the extra costs. If you are employed you will want to discuss and review your company’s “maternity leave” policy. Examine your health insurance to see what will be covered. If you feel that your current policy doesn’t cover enough, you may want to shop around for a policy that fits more of your needs.

Questions about your Health Insurance plan:
Does it cover prenatal care?
Does it cover laboratory tests,
medications, and sonograms?
What hospital costs are covered?
Is there a deductible? How much?
Is newborn health care included?
What is covered if there are complications from pregnancy, delivery, and post-delivery?
Does it cover nursery costs?

As an expecting mother you will generally need to change your eating habits and wardrobe. There are certain nutritional needs while pregnant which can include foods or even vitamins that you generally don’t buy. Prepare to increase your monthly food budget to accommodate for the specific foods. Your doctor can help you determine your specific nutritional needs. It is important to stick to those guidelines for the health of the baby.

Another good idea before you are expecting is to start a baby fund. Open up a savings account especially for baby expenses. Commit a certain amount of each paycheck and any extra income. Instead of using that spare change for a soda, keep it in a jar and deposit it into the account at the end of nine months. You might be surprised how much change you accumulated. You can then use the baby account for expenses that come up during pregnancy and stock up on baby supplies if they are on sale before the baby is born.

Maternity clothes will also have to be considered. Here you have more options to save some money. You can always borrow maternity clothes from a friend. You should buy gradually, what fits at four months may not fit at eight months. Buy sale items and check out resale stores for good deals. Don’t limit yourself to only looking in the maternity store or department. Chances are you can find a good deal on loose fitting clothes in other departments. Most importantly though, is to buy for comfort.

Some soon-to-be mothers may be fortunate to receive gifts at a baby shower. If shopping for items yourself there are ways to save. For items like cribs and car seats it is important to buy for quality and you may need to look for a sale on a new one instead of buying an older one second hand. Make sure they meet safety guidelines. Baby clothes can be fun to buy but it can definitely add up. Try to avoid expensive “cute” outfits that may only fit the baby once. You’ll be surprised how many outfits that the baby will never get a chance to wear before they have grown out of it. Friends and second hand stores are the best sources for used baby clothes or toys. Summer time rummage sales can be a gold mine for baby and maternity clothes, and toys.

Having a child is a wonderful thing and with smart planning and budgeting it can be less stressful which is important for you and your new addition.



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Have you ever noticed that you seem to recognize car commercials more when you are in the market to want or need a new vehicle? Many people will tell you that you should buy, while others say that leasing is the way to go. The good news is that they are both right. Whether you should buy or lease is ultimately up to you. We will look at both sides and you can then determine if you should buy or lease.

Leasing is basically the use of the vehicle over a contractual period, while you are making monthly payments on it. There is no ownership included. At the end of the lease you do have some options. You either turn the car and keys in, you can buy the vehicle for the residual value (stated in the lease contract), or you can lease another vehicle.

When you purchase a vehicle you are making monthly payments in pursuit of owning the vehicle out-right. You either finance a loan through a bank or dealership, or you pay for it all together with the money you have saved.

One leasing benefit is that the monthly payments are generally smaller and require little, if any type of down payment. Most leases last for 2-3 years, and you don’t have to worry about selling the vehicle after the contract term. This also gives you an opportunity to get into another new vehicle and lease.

Be careful though, most leases restrict the amount of miles you can put on the vehicle during the lease. Going over the contract miles can cause charges when the vehicle is returned. You can calculate the estimated miles you put on a vehicle per year. Find out how far you travel to and from work, to the store, or any family trips where the miles would add up. If you find out that you put a lot of miles on your vehicle each year you may not want to lease.

Consider your personality. Can you live with the factory stereo, or do you need a six-disc CD changer with surround speakers and a sub-woofer. Do you need a ski or luggage rack, or love the collection of ski resort stickers that usually plaster your bumper? If you like to personalize your vehicle than you will definitely want to consider purchasing a vehicle, as most leases will not allow you to make any personal changes to the cars appearance or features.

Do you know your way around the gears and belts of a car? Or, do you take your car into the shop and describe what is wrong by making funny imitating noises? By leasing a vehicle you have the benefit of having the vehicle under warranty and can take it in to get repaired. If you can fix minor problems or recognize big ones and do not mind repairs, than the purchase of a vehicle could suit you. Remember, whether leasing or buying, regular scheduled maintenance (changing the oil, replacing the air filter, or rotating tires) is important to the value of the vehicle. If you lease a vehicle and do not take proper care of it, you can be charged for the abuse.

If in the past you have bought a car, and as soon as it was paid for you were looking into another new vehicle, you may want to consider leasing. It is generally the same idea and you will be able to do so with a lower monthly payment. However if you buy a vehicle and drive it for around ten years, than leasing may not appeal to you.

If you choose to try and get out of a lease contract early, you will be able to, but you will probably incur heavy fees. It is good to make sure that the vehicle you choose will suit your needs for the length of the contract. For example, if you are looking into starting a family in the next couple of years, you may not want to lease a small two-door sports car if in a year you are going to need a larger or safer vehicle for your family.

If you decide to lease or buy your next vehicle it’s important to do your homework. Research a variety of cars, and shop around different dealerships. If you feel pressure from a salesman you can always leave. Ask for help and advice from friends or family members who have purchased or leased a vehicle recently. Bring someone you know who is good with a salesperson. Spend as much time on it as you need to feel 100% comfortable. When you finally choose the right vehicle and terms, make sure to read every word of the contract and ask questions about anything you don’t understand. The more information you know beforehand, the more equipped you are to get the better deal and you will feel more comfortable.

So the next time you see that car commercial and your in the market for that car or truck, do your homework and determine if you a buyer or leaser. Remember, it’s all up to you.


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Bankruptcy Abuse Prevention and Consumer Protection Act

Continuing from the front page, we will now highlight some of the new amendments of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Again, to go into affect as of October 17, 2005.

The qualification abilities have changed. The bankruptcy attorney will actually administer a “means test” established by the IRS. The “means test” is different for every state. Part of the new “means test” requires that you disclose, or file if you haven’t filed, your most recent tax return, to verify your actual earned income. You have to have below the average income in your state to fail the “means test”. For example, living in South Dakota, and if you are single, that income is $27,000.00 per year and it increases for a family. If you are below that then you fail and you will be able to file a Chapter 7, which in essence erases your debts, and you walk away. Under Chapter 7 bankruptcy you will be able to wipe out all your unsecured debt, such as your credit card debt and personal loans, but will still owe all your secured debt, including your mortgage. If you are above the $27,000.00 you will be required to file a Chapter 13 re-organization and you will have to pay back the debts over a 60-month period. The court may order you to eliminate or reduce unnecessary spending.

Another important reformation requires all applicants receive credit counseling and budget analysis by a nonprofit credit counseling agency within 180 days prior to filing. The Executive Office for U.S. Trustees (EOUST) must approve the agencies that qualify to administer the credit counseling. Counseling can be provided in person, on the phone, or through the Internet.

There are a few exceptions to this rule. Persons on active military duty in a combat zone are exempt from counseling. Those who are not physically able to participate in a counseling session or that are incapable of making rational financial decisions due to mental illness are not required to take credit counseling. The bankruptcy judge can waive counseling if the agencies in a specific district are deemed inadequate to meet the services of individuals.

Along with the pre-bankruptcy counseling, debtors will have to complete a Financial Management Course. The course will provide the consumer with educational information covering budget, savings, money management, and consumer information. These programs aim to educate debtors on previous mistakes and to prevent future financial mistakes.

The applicant is required to file a certificate from the credit counseling agency describing the services provided, and file any debt repayment plan developed with the agency. The applicant is only required to file the certificate if the applicant chooses to continue with Chapter 13 bankruptcy. The goal is to have a credit counseling agency accomplish an affordable repayment plan similar to a Chapter 13 without the mark of a bankruptcy, and ultimately reduce the number of uneccessary bankruptcy filings.

During the counseling process, if a creditor refuses to reasonably work with an agency and debtor, resulting in having to file Chapter 13, then that creditor will receive less (up to 20%) from the debtor than a creditor who is willing to cooperate. This is referred to as a reduced claim to creditors.

Here are a few other important bankruptcy changes taking place on October 17.

If you are filing for Chapter 13 bankruptcy you will have to pay the full loan amount owed on your car loan regardless of the condition of the car. Previously you only had to pay what your car was worth (“blue book” or fair market value).

Bankruptcy attorneys must now certify your financial statements to the court and will be held financially responsible if the statements are false.

The filing fee has increased from $155 to $200 for Chapter 7, but decreased from $155 to $150 for Chapter 13. (Note: This is just the fee to file for bankruptcy – it is not the fee that attorneys will charge for legal work done on your behalf.)

Under the new law, if you have filed for Chapter 7 bankruptcy you may not file for Chapter 13 within four years of the Chapter 7 being discharged. Current law allows debtors to file a Chapter 13 bankruptcy immediately following a Chapter 7 bankruptcy in order to pay remaining outstanding debts.

Hopefully this helps you to better understand some of the important changes in the bankruptcy laws.

This information is not provided, or to be taken as legal advice. If considering Bankruptcy it is important to contact an attorney for any questions. The BAPCPA contains many provisions and circumstances, depending on each individual and the state that they reside in.

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Fun Activity

A Child's Savings Chart

Plain Paper
Pencils, pens, crayons or markers
Scissors, glue
Newspaper or magazine ads
Empty cereal box

Step 1: Explain to your child the purpose of the savings chart. It will help your child buy something at the store that costs more than they have now.

Step 2: Ask your child what they want to buy at the store. Start small and their goal will be reached faster.

Step 3: Find out the price of the item your child wants to buy (include sales tax). Find an ad showing the desired item. Cut out the picture and glue it on the cereal box cardboard. Cut it into puzzle pieces. Each piece will represent a coin amount that is needed to reach the goal. For example, if the item is $5.00, cut the picture into 20 parts and designate each piece at the value of a quarter. ( 20 pieces X $.25 = $5.00) Give your child one puzzle piece for each coin saved until the puzzle is complete.

This project will teach your child about saving. Explain that when people do not have enough money to buy something, they wait until they do have enough. Saving is a way to get something you want by yourself instead of wanting someone to get it for you. You can also save to buy things for other people.

The savings chart is a fun, easy way to introduce your child to the importance of saving.


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For many teenagers there is no better way to start earning money than with a promising babysitting job. We will provide some tips and considerations that come with the job and how you can learn some financial responsibility.

First and foremost, you have to like kids. If you don’t like kids then you and the kids you are babysitting will be miserable. Babysitting is not just limited to girls, it is for any young adult who is responsible and wants to earn money. It’s recommended to take a CPR or babysitting class. Start babysitting children of family and friends. As you become more responsible with babysitting you may want to recruit new clients. Take your parents to meet with all clients before taking on a job and don’t feel obligated to take every job. There may be some families or children you don’t feel comfortable babysitting for.
Safety is key. Give your parents the address, number, and time that you will be working. If the job is running late inform your parents. Arrange a safe ride to and from the job. Never let strangers into the home.

Babysitting charges are determined by factors, such as, location, experience, or the number of and age of children. If you are just starting out you may start at a lower rate, and when you gain more experience you can feel comfortable asking for more. Before you begin a job have your rates figured out and any extra charges if situations would arise. Do you charge hourly or per child? Will you charge extra if it is a holiday or if you have to stay until after midnight? It is a good idea to ask a friend who baby-sits what the rate is for your neighborhood. You don’t want to ask for too much and never get a job, but you also don’t want to not charge enough. It is a good idea to have this information and discuss it with the parents before hand, that way there is no confusion on how much to pay when the session is over.

So now all has worked out and you are getting steady babysitting jobs and good money. Now what? Time to take that money and run. Just kidding, this is a great opportunity to learn money management. Start by opening a savings account and put a pre-determined amount in there each time you get paid. Many credit unions offer special accounts for teenagers. Make a list of goals you want to save your money for. Perhaps you can save for your first car, a student trip, college tuition, or as simple as new school outfits. After you committed a certain amount to savings, allow yourself some small purchases, a CD, a book, or pair of shoes. Reward yourself for all your hard work. Just make sure you stay committed to your savings first. You will need to cut back some purchases if you are not meeting the amount you set for your goal.

Babysitting is a distinguised job that teaches responsibility and will come with great rewards when done effectively. By using your money wisely you can reach your goals while gaining some financial freedom from mom and dad.

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Gaming Behavior

The thrill of lining up the three 7’s, the excitement of a game-winning field goal, or the anticipation of scratching a lottery ticket. Every year millions of Americans spend billions of dollars with some form of gambling. Whether its betting on their favorite football team, buying a local lottery ticket, or spending time feeding slot machines, gambling can lead to a financial disaster.

The majority of Americans that engage in some form of gambling can do it responsibly. But, four to six percent of gamblers develop into problem or pathological gamblers. Pathological gambling is a progressive disease and is a chronic inability to resist the impulse to gamble. It affects the gambler, their family, their work, and their finances. It is a disorder of impulse control and can be diagnosed and treated.

Gambling can cause catastrophic damage to your finances. Using money that should go towards bills or borrowing from someone to win-back your losses can easily put you in the hole with little to no chance of getting out. It is best to recognize and treat the signs of problem gambling before it spirals into pathological gambling. Problem gambling is gambling that causes difficulty for the individuals but not at the extremes of a pathological gambler. There are questions and warning signs you can recognize and get yourself back on the right track.

There are many national organizations that help families get through and overcome gambling addiction. The National Council on Problem Gambling strives on educating people on the dangers of gambling. They have a national helpline and information for anyone concerned with gambling addiction. Gam-Anon is a support group for friends and families that are affected by someone’s gambling addiction. Gambler’s Anonymous is a 12-step program for people trying to overcome their compulsion to gamble.


National Council on Problem Gambling

Gambler’s Anonymous


Illinois Institute for Addiction

With the rise in popularity of poker and online fantasy sports teams, more younger people are getting involved with gambling. There are warning signs that you can be aware of to prevent your teenager from becoming hooked.

Unexplained need for money.
Money or possessions missing from the home.
Unexplained charges on credit card bills.
Withdrawn from friends and family.
Missing school or classes.
Frequent anxiety, depression or mood swings.
Dropping of outside activities and interests.
Excessive watching of TV sports.
Upset at the outcome of a sports match.
Late night calls.
Sudden drop in grades.
Interest in sports teams with no previous allegiance.
Calling 900 numbers for sports scores and point spreads.
Displays of unexplained wealth.

If you are experiencing financial troubles caused by gambling it is a good idea to get a hold of a financial or credit counselor. They will work with you on setting up a budget and educating you on how to get your finances back on track.

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Back to School Safety

The new school year is just around the corner. We would just like to provide a few safety reminders for parents, kids, and motorists.

Here are some good rules to follow when walking to school or to the bus stop. Plan a safe route with your kids. Walk the route with them and then tell them not to take short cuts. Choose a safe route that includes cross walks and crossing guards, and a route that other children travel along. While walking the route discuss safety rules like, cross the street at crosswalks, look both ways before crossing the street, and do not talk or take rides from strangers.

When riding a bike to school it is important to follow all safety rules. Avoid loose fitting clothing that could get tangled in the bike chain. Have your children learn hand signals for turning and other rules for safe riding. Wear reflective clothing and make sure your bike is equipped with reflectors, lights, and horns. And remember ALWAYS WEAR A HELMET! Helmets can prevent brain injury or death by 45-80%! This goes for parents as well, it’s important to set a good example and you are just as likely to be injured as a child.

Many children ride the bus to school. Many accidents that are bus related are from entering or exiting a bus. Have children wait for a bus away from traffic or the street. Keep away from the bus until it comes to a complete stop and the bus driver motions you to get on the bus. When exiting the bus beware of any traffic and go to the curb and wait safely until the bus has left and the street is clear to cross.

Here are a couple items to keep with your child. Give them enough change to make a phone call and tell them it is to only be used in an emergency. Take a note card or business card and write down all the numbers they might need to get in contact with you. Work and cell numbers, neighbors, and family members, just to name a few. Then laminate the card and punch a hole in the corner and fasten it to your child’s backpack, or if you have older children they can carry it in a purse or wallet. Make sure that if they are going to be late for any reason that they need to get a hold of you.

We can give plenty of safety tips to parents and children, but the best thing anyone can do is to be aware. Drive the speed limit and obey the speed in school zones. Don’t distract yourself with cell phones, make up, or the radio. Motorists can prevent many accidents by driving cautiously and by being observant.

By following these rules we can minimize the dangers of going back to school.

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