All posts by Barbara & James Peterson

Barbara & James Peterson

‘Twas The Nightmare after Christmas: Holiday Debt


Did you know it takes the average consumer a little more than two years to pay off debt that they incurred during the Christmas holiday? And that’s only Christmas debt. What about the bills incurred before the holiday season began? There has to be a way out of this vicious spending frenzy that occurs every December. So, before your go out and spend money that you don’t have, here are a few pre-holiday tips.

For starters pay your December bills before you purchase any gifts. If you’re one of those consumers whose mindset is to pay December’s bills with the January bills, we are talking to you. It’s time that we as consumers change our thought process when it comes to bill-paying. We know you may not have a lot of money to purchase gifts if you pay your bills first. Do not panic, this indicates that you are not in control of your finances. Not to worry, all is not lost. You can be in control of your finances, and you can start by paying your December 2013 bills when they’re due. It’s that simple. It makes no sense trying to keep up with Joneses. They’re probably in more debt than you are!

Secondly, whatever happened to the days when fathers said, “I’m the big cheese around here, and what I say, goes? And whatever happened to the mothers who used to say, “Because I said so”? Let’s bring those fathers and mothers back and teach our children a thing or two about spending. We’ve become parents who go deeply into debt for children who’re bringing home mediocre grades. And these are the kids with a gazillion gifts under the tree. What is wrong with this picture?

Can you remember the gifts that you received last year? Can your children remember the gifts that they received last year? If so, where are the gifts from last year? In the back of the closet? And more importantly, are you still paying down Christmas debt from the previous year? If you are, we are talking to you. Starting in January (December, if you are smart) get yourself a Christmas Club account for next year. During the Thanksgiving and Christmas holidays we also purchase more groceries. Holiday grocery spending can add an additional $400 to $600 to our budgets. Let’s not forget the all-seafood menu that many of us enjoy on New Year’s Day. That alone can set a budget back another $300. Your 2014 Christmas Club money can help with food as well as gifts. Be smart, start socking some cash into a Christmas Club account.

As consumers living in Syracuse, we also have to keep in mind that winter here brings other expenses such as higher-than-normal heating bills. If you charged Christmas on your credit cards, not only will those holiday bills be due in January, so will your gas and electric bill. Do not be fooled into thinking that your utilities cannot be shut off in the winter. The local utility company is required to give you a 72-hour notice (that is three business days) before they can shut your service off. The Public Service Commission requires the local gas/electric company to give 72-hour notices from Nov. 15 through April 15.

Having your utilities shut off during the winter months is a disaster. If there’s a chance that you may forego paying your electric bill to purchase a gift or two, it’s just not worth it.

Sure, it’s easy to get caught up in the holiday merriment. Advertisers entice us on television, on radio, billboards, every¬where. The malls are decorated beautifully all to get us to spend, spend, spend. Merchants invest big bucks to get your dollars. When the new year arrives and you miss a payment, those same merchants start calling you at home and on the job, asking when can they expect payment. Did you know they like it when you miss a payment? Yes, that is how they make their money. Because you missed a payment, they can raise your interest rate, charge you over-the-limit fees etc. That’s how they make their money. If you pay your bills on time, retailers benefit but not as much as when you miss a payment or pay late. Keep that in mind when you get sentimental over Christmas shopping.

We don’t want to sound like Scrooge, but it’s time for Syracuse to get off the debt roller-coaster. If sounding like Scrooge is going to help you, call us Scrooge and we will respond with a ‘Bah Humbug.’ To avoid spending more than you can afford this holiday, use discipline to manage your purchases. Do not get taken in by those 60-percent-off deals or those ‘no interest until 2016’ deals. Do not get tempted by liquidation sales. Liquidators are in business to make money, they are not giving you a deal, liquidating is what they do. Don’t be fooled. That flat screen television that you purchased at the liquidation sale for $1,199, you could have purchased it at BJ’s for $799. And BJ’s would have given you a warranty. Liquidators do not accept returns nor do they give warranties.

Make yourself a Christmas shopping list. Santa checks his list twice, so go Santa one better and check your list three times. Do you really want to buy gifts for everyone on your list? It’s alright if you want to splurge on everyone, but remember, you are feeling the hype of the season. Trust us, it will go away on Dec. 26.

Get creative in your gift-giving this year: take a picture of the person to whom you want to give a gift. Now purchase a nice silver picture frame at the Dollar Store. Then go to Macy’s for a gift box. Need we say more? Get unconventional. Does someone on your list love their car? Purchase a car-wash gift certificate for them. It truly is not the amount of the gift that counts. It’s the thought that counts.

Do you have a few women on your list? Forever 21 has beautiful multi-colored scarves for $10. Go back to Macy’s and get a few more boxes, throw a scarf in each box. No one has to know you spent $10 on them. Do you have a niece who would love a fancy hair style? Do you have a nephew who needs driving lessons or an elderly aunt or uncle who needs an oil change or a tune-up ? Gift certificates are always affordable and much-appreciated.

Lastly, remember that when you use your credit card you are simply borrowing from your future income. When you use your debit card to purchase a Christmas gift, ask yourself what bill will not get paid because of that purchase. You know your finances better that anyone else. Be honest with yourself. Can you really afford it?

It’s time to break the cycle of spending money that you know you don’t have.

James and Barbara Peterson are local financial experts. To schedule a seminar for your group, or business, call 446-4668,or email info@yourcreditworthiness.org. A version of this article originally ran in December 2008.


Your Credit Worthiness: Giving Out Your Social Security Number

Many businesses and governmental agencies are legally entitled to know your Social Security numbers. Those companies and entities that are legally entitled to your Social Security Number are as follows: Internal Revenue Service (IRS), various federal, state governmental agencies and departments, banks, employers and agencies that administer government programs. If you are applying for credit, you will need to provide your SSN to those companies.

Not on the list: doctors’ offices, telephone companies, utility (gas and electric) companies and retailers. Yes, retailers (stores at the mall) are now asking to see your Social Security card. And this is when you are making your purchase with cash. Why do they need your SSN? If you are not applying for credit, tell them ‘no’. It is your decision as a consumer whether you want to give them your SSN or walk away and do business elsewhere.

Many consumers wonder whether businesses that are not entitled to receive their SSN can deny them products, services and goods if they refuse to give their SSN. Yes, companies may attempt to deny you products, services and goods. Remember, if you do not know your rights, you do not have any rights. There are also companies that ask for your SSN in unobtrusive ways. For example, when you call a company to ask about a bill you just received in the mail, let’s just say you think the bill is wrong. So, you call them…when someone comes on the line they immediately say something along these lines, “ABC company how can I help you”. You respond by saying, “I just received my bill and I think it is wrong”. They immediately respond with, “Yes, I can help you with that, what is your SSN”. Why not ask you for your account number?. Also, most businesses can access your account information by your telephone number. So, why not ask you for your telephone number?

The problem is the companies that are not entitled, will still ask for it. As a informed consumer you need to know who is entitled to your SSN and other personal information and who is not. What recourse is there for people who don’t want to disclose their number? Why is it so critical to protect Social Security numbers now? Identity theft is why. Identity theft is rampant in this country today.

The telephone company and the gas/electric company are asking for our Social Security numbers. Why? As consumers, telephones, electricity and gas to heat our homes are essentials that we need. So why do these companies insist on getting our Social Security numbers when legally they are not entitled to that information? We suspect, that these companies have millions and millions of dollars worth of bad debt on their books. If they can match your SSN with a SSN on one of those bad debt accounts, they can resume or start collection activity or better yet…they may simply wait for your new service to be activated and then transfer that bad debt or old bill to your new account. Sounds underhanded, but if the Social Security numbers match, they’ve got you.

The Federal Trade Commission said identity theft continues to be a major problem in this country. The number of victims are in the millions each year.

Social Security numbers play a major role in facilitating identity theft. Many businesses use our Social Security number to identify us. For example, your bank account number may be your Social Security number or a derivative of the number. In some areas of the country wholesale clubs use a portion of your Social Security number as your account number. Don’t ever think that it is too time consuming for someone to steal your information, it is big bucks for them. This is the reason it is critical for consumers to limit access to their Social Security numbers and other pertinent information.

Remember, most identity theft does not occur because you lost your wallet or someone stole your wallet. Identity theft occurs because someone stole your information. We’ve read in the newspapers how employees are being prosecuted because they stole from their companies. Many of these company employees steal from their employers customers. To sweeten it up, they simply call it embezzlement or they use some other flowery terminology. Oh and yes, those employees, when caught, have to pay the money back, they receive 6 months probation and community service. They obviously do not reside in our neighborhood. But that’s a whole different story. For those of you who have had your identities tampered with, who is to say it was not some clerk who used your SSN to apply for a credit card in your name. Some of you are probably saying to yourself, ‘that’s impossible’. We have nothing against working clerks or customer associates, but many of them are barely making minimum wage and they have bills to pay and children to feed, same as everyone. Do not think for a minute that it cannot happen. Guard your personal information from everyone.

As a consumer you can ask companies (that need your SSN) to use a different identifying number instead of a SSN, many companies are willing to do that. Those companies who are not willing are probably companies who are not legally entitled to it. Try offering them your driver’s license number instead.

What about companies who already have our SSN? You can ask them to replace it with another identifier. Remember, they are not compelled to oblige. And you have no recourse legally. Never assume that your SSN is secure with these companies. There are many factors that are outside the control of these companies such as hackers and as we mentioned earlier, dishonest employees.

Individuals have attempted to sue companies when their personal information has been breeched. If there is no evidence that your personal information has been breached, it will be difficult to say the least, for you sue and be successful in your suit. The most that these companies will offer you is free credit monitoring, after the fact. As consumers we need to be pro-active in protecting our personal information. We should all have a credit monitoring service in place to prevent breeches of our SSN and other pertinent information. Call us at 315-446-3294 for some names of some reputable companies

OTHER WAYS TO PROTECT YOUR PERSONAL INFORMATION

Do not carry your Medicare or Medicaid card, especially if your medical providers have previously copied it Shred documents with personal data on them before discarding. Remove personal data such as your income-tax return from your computers’ hard drive. Never respond to e-mail from a stranger asking for your personal information. We know that the million dollars that they are offering is tempting, but please ignore their emails. Do not download free music or videos because it allows crooks to snoop into personal data on your computer. The free music can be tempting also, but keep in mind that identity crooks, may be crooks, but they are also smart and they are experts in their field. Monitor your credit reports quarterly for free at http://www.annualcreditreport.comor call (877) 322-8228. Get your SSN removed from ID cards if possible. Place a fraud alert on your credit reports so that no one can apply for credit without you being contacted. Check your Social Security statements to see that no one’s working using your number. Immediately file a police report if your SSN is stolen. Place a security freeze on your credit reports so that no stranger can access your credit history. Do not carry your Social Security card in your wallet unless you need it that day. Do not carry your credit cards with everyday, carry them on the days you plan on using them.

And last but certainly not least, the people who are most likely to steal our SSN and other personal information are those that know: parents, siblings and other relatives. It’s up to you to press charges.


Taking Care of Your personal Business: UNDERSTANDING THE BASICS OF YOUR SOCIAL SECURITY CONTRIBUTIONS

Over a lifetime many Americans contribute substantial amounts to Social Security, especially when the portion contributed by the employee is matched by the employer.
These contributions, the government refers to them as contributions. The word ‘contributions’ sound as though it is voluntary. These so-called contributions are actually required taxes. These contributions are made by over 100 million workers, either weekly or monthly. When we begin to think about it more, that is slightly over 2 billion records of dollar amounts that are matched my names and account numbers. And they are tallied each and every year. Our hats off to the Social Security Administration, they do a good job of keeping track of these very important records. But what happens when the records are not correct?

Have your accumulated earnings been properly credited to your account at the Social Security Administration? If they have not, your monthly Social Security Benefits at retirement may be less than the amount to which you are entitled.

Social Security Benefit payments change from one taxpayer to the next depending on different factors including retirement age and the specific amount of earnings credited to each taxpayers account. We know that the computer age has reduced the number of errors in the tabulation of earnings. Mistakes are bound to happen. So, what’s a hard working person to do? For starters, you can make sure you’re getting the proper credit for your account by receiving a copy of your Social Security earnings record periodically.

The Social Security Administrative headquarters located in Baltimore, Maryland has a special mailer of your recorded earnings that it will send automatically to you three months before your birthday. If you request it, they will furnish you with a statement that includes all covered earnings credited to your account from 1937 through present. There is a posting time lag of six months to one year at the SSA. Depending on your age, your statements will be broken down as follows:

Earnings for each recent year postings have been completed; total earnings from 1952 to present; and total earnings from 1937 to 1951.

When you receive the statement, be sure to compare the figures against copies of your old W-2 forms or income tax returns. Remember, only earnings that were subject to Social Security tax will appear on this record. If you worked for a non-profit organization that did not participate in Social Security, those earnings will not appear. For example, if your earnings totaled $95,000 in 2004, the statement will show only $87,900 because earnings more than that, were not subject to the FICA tax that year. If your records do not agree with the SSA, contact your local office as soon as possible. Disability benefits require that the disabled person have a minimum number of quarters of coverage as a contributor to Social Security. This is very critical factor for people who have long periods of unemployment or those who have periodic employment in the non-profit sector or abroad.

Quarters of Coverage, or what are now called Credits, are also detailed on the Social Security Statement sent to you before your birthday or on request. This aspect of coverage is very critical for people who are close to, but may not have met or exceeded the minimum requirement. It might make it practical for you to consider part-time employment in a FICA covered firm. If a former employer has failed to report your earnings, or perhaps the record was never posted to your account, it will take a long time to have your records revised. The time to be doing this is when you are well, and there is no pressure. For this reason, we strongly encourage you to audit all adult accounts every three years. Be sure to ask for both the amount of coverage as well as the quarters of coverage.

SO, HOW MUCH WILL I RECEIVE?

Your retirement benefits are based on your average wages, price indexed to reflect the income level and purchasing power they represented when earned. The government will eliminate several years of low earnings and average out the rest. There is a special formula applied to ‘average earnings’ to calculate your basic benefit amount.

The basic benefit amount is used to figure the actual monthly amount you receive. The payment can be more or less than the basic benefit, depending on your full retirement age (FRA). The benefit payments are geared toward the normal retirement age of 65 if you were born prior to 1938. This normal age will gradually be increased to 67. Eventually, all people retiring before age 67 will receive reduced benefits.

Age 62 is the earliest retirement age to receive retirement benefits. However, electing to begin benefits at this age will reduce your basic benefit permanently. How much your benefit will be reduced for early retirement depends on your age when the benefit begins and how many months younger you are than your full retirement age. For example, for persons born 1943 – 1954 the full retirement age is 66 and the reduced benefit is 75%. For persons born after 1959, the full retirement age is 67 and the reduced benefit is 70%.

FULL RETIREMENT AGE

Year of Birth FRA
1938 65 & 2 months
1939 65 & 4 months
1940 65 & 6 months
1941 65 & 8 months
1942 65 & 10 months
1943 – 1954 66
1955 66 & 2 months
1956 66 & 4 months
1957 66 & 6 months
1958 66 & 8 months
1959 66 & 10 months
1960 & later 67

In addition to receiving retirement benefits yourself, your spouse and children may qualify to receive payments. The monthly payments they receive will be based on your full basic benefit. A spouse must meet one of the following conditions to receive payments. Spouse is 62 or older when you retire (Or the spouse must be at least 60 at your death.). Or your spouse is caring for a child receiving benefits. This child must either be under 16 or, if disabled, up to age 22.

The amount of benefits received by your spouse will vary depending on certain conditions, such as age and prior employment. If you plan to retire soon and have always earned the maximum covered earnings, the estimated monthly benefits you and your spouse will receive depends on inflation and the increase in average wages. These benefits may increase yearly. However, the automatic escalation of benefits is subject to review by Congress. If there is sufficient pressure, this increase may be delayed, reduced or eliminated. It is best to plan assuming a level benefit.

If eligible for two, one receives the larger benefit. However, a person may not receive both. For example, a wife who has worked will be eligible for a spouse’s benefit as well as the benefit accumulated on her own work record. However, she will receive only the larger amount.
To schedule a workshop/seminar for your group, church organization, please contact Peterson Ministries at 315-446-3294.


FINANCIAL NEW YEAR’S RESOLUTIONS

  • New Year’s resolutions are made to help us kick bad habits, get healthier, etc. For most of us, getting fit financially is a top priority. We have listed a few things to help you get started.

    The most important financial tip is to pay yourself first. By this we mean start making contributions to an IRA (Individual Retirement Account). Everyone should have an IRA. As long as you have earned income (in other words, you have a job), you qualify. If your spouse is employed and you are not, you qualify under your spouse. Strive to fully fund your IRA. For example, if you are over the age of 50 you can contribute $6,000.00 into your IRA. If you are under the age of 50, you may contribute $5,000.00. Contribute the maximum whatever your age.

    Most employers offer 401(K) Retirement Plans. Many people do not sign up for these because they reduce take home pay. But the reality is you are not losing out by joining your employer’s 401(K) plan, you are simply taking some of your income now and investing it in your future. You are simply taking a buck now and multiplying it for later. Do not let what has happened on Wall Street deter you from joining a 401(K) plan. Most 401(K) plans have matched contributions from the employer. This is considered free money and free money is always good.

    Another way to pay yourself is with CD’s (Certificate of Deposit). You can start with a six month or nine month Certificate of Deposit. When the CD matures, re-invest it in another CD. Everyone should have a basic savings account. You should strive to have six months salary in your savings account. A savings account comes in handy when the unexpected happens: you need new tires for your car, your 20-year old refrigerator is on its last leg, your spouse is laid off, you get laid off…any number of things can happen. It is always better to be pro-active than re-active.

    Be sure to sign up for the Flexible Spending Account at work. This is a great way to reduce your tax burden and we all want to pay less taxes. Not sure what a Flexible Spending Account is. Real quick: if you purchase over the counter medicine, prescriptions, if you go to the doctor’s, if your children go to the doctor’s, if you pay for daycare you need to have a Flexible Spending Account. Let’s say your income is $40,000.00 per year. And you spend a total of $$60.00 ($3,120 for the year) for an after school program for your child. You also spend approximately $600 per year on co-pays, over the counter medicines (keep in mind most of us spend much more) your total would be $3,720.00. Instead of paying taxes on $40,000.00 you pay taxes on $36, 280.00. This could very well put you in a lower tax bracket. It is a win-win situation.

    Every consumer wants to get out of debt and getting out of debt is always a New Year’s resolution. This year is no different. But, we can make it count this year, for starters, make a plan, write it down on paper. Get yourself a spiral notebook dedicated to your finances. Write your ‘Get Out Of Debt’ plan in your notebook. This is your year to get rid of Credit Card Debt. If you have 3 credit card bills, tackle one at a time. On the other two, negotiate with the credit card companies to lower your interest rate. If you have paid on time for a minimum of six months, they will lower the interest rate for you. If trying to get out of debt is too much for you to do alone, consider a non-profit credit counseling or budget planning services. Make sure the company you use is licensed by the State of New York Banking Dept. You can also contact the National Foundation for Consumer Counseling at 800-388-2227 for a referral.

    Paying off debt may take you more than a year, but we guarantee if you start this year, it will make a difference. Ask yourself everyday: What can I do to get out of debt? Before you make a purchase (no matter how small) ask yourself: Is this purchase necessary? We, as consumers, must be able to check ourselves. No one is going to do it for us. If things are not getting better for you financially, whose fault is it?

    Last, but not least. The only way to save money is to make more than you spend. If you do not earn enough to get yourself out of debt in 1 -2 years, consider starting a home-based business. Perhaps what you do on your full time job can be parlayed into a second income from home. For example, you may be a billing clerk full time. Doctors and dentists are always looking for someone to do their billing. Keep your full time job and start a home based billing service. Chances are you will make more money doing part time billing out of your home than you make on your full time job.

    Everyone has something that they love to do, we suggest
    that you turn it into a money maker. We must come to the realization that working for someone else is not going to make us rich. Check it out for yourself. When you go to work, look around. Look at your co-workers. Really look at them from head to toe. Do they look rich? Let’s make it easier, do they look well off? Now, look at your immediate supervisor. Does your immediate supervisor look as though they have it all together financially? If not, why are they your supervisor? Now, find someone who you know that is definitely well off or better yet, rich. Who do they work for? They probably work for themselves. We are not saying to quit your full time job, just start a part time business. Who knows, that part time business may be just the ticket you need.

    To sum things up, this year we must begin to eliminate our debt and we must do at least 3 of the following:

    1. Start an IRA.

    2. Participate in our employer’s 401(k) plan.

    3. Sign up for the Flexible Spending Plan at work.

    4. Start a home-based business.

    5. Start a basic savings account

    6. Start purchasing CD’s (certificate of deposit).

    Be sure to tune in to our radio broadcast, ‘Improving Your Credit Worthiness’ on WSIV 1540 AM every Wednesday 2 – 2:30pm. To schedule a workshop for your group or company please call James or Barbara Peterson at 315-446-4668


    PETERSON SEWING SCHOOL

    Sewing Classes, Pattern Making, Fashion Design
    Jewelry Design,Quilting, Home Decor
    Fiber Art Classes & More

    920 Euclid Ave (inside Erwin First United Methodist Church)
    Syracuse, New York 13224
    315-446-4668


    TWAS THE NIGHTMARE AFTER CHRISTMAS: HOLIDAY DEBT

    Did you know it takes the average consumer a little over two years to pay off debt that they incurred during the Christmas holiday? And that is just Christmas debt. What about the bills you had before the holiday season began? There has to be a way out of this vicious, spending frenzy that occurs every December. So, before your go out and spend money that you do not have, we have a few pre-holiday tips.

    For starters: pay your December bills before you purchase any gifts. If you are one of those consumers whose mindset is to pay December’s bills with the January bills, we are talking to you. It is time that we as consumers change our thought process when it comes to our bill paying habits. We know you may not have a lot of money to purchase Christmas gifts if you pay your bills first. Do not panic, this is indication that you are not in control of your finances. Not to worry, all is not lost. You can be in control of your finances, you can start by paying your December 2008 bills when they are due. It is that simple. It makes no sense trying to keep up with Joneses, they are probably in more debt than you are. Just keeping it real.

    Secondly, whatever happened to the days when fathers said, “I’m the big Cheese around here and what I say, goes. And whatever happened to the mothers who use to say, “Cause I said so.” Let’s bring those fathers and mothers back and teach our children a thing or two about spending. We have become consumers/parents who go deep into debt for children who are bringing home mediocre grades. Let’s be honest, some of our children are bringing home downright ugly grades. And these are the kids with a ga-zillion gifts under the tree. What is wrong with this picture? The school marking period in Syracuse ended November 15th. Look at your children’s grades, are those grades worth going into Christmas debt? Debt that will probably take over two years for you to pay off. Be honest with yourself.

    Can you remember the gifts that you received last year? Can your children remember the gifts that they received last year? If so, where are the gifts from last year? In the back of the closet? And more importantly, are you still paying down Christmas debt from the previous year? If you are, we are talking to you. Starting in January (December, if you are smart) get yourself a Christmas club account for next year. During the Thanksgiving and Christmas holidays we also have to contend with purchasing more groceries. Holiday grocery spending can add an additional $400 – $600 to our food bill. Let’s not forget the all-seafood menu that many of us enjoy on New Year’s day. That alone can set a budget back another $300.00. Your 2009 Christmas Club money can help with food as well as gifts. Be smart, start socking some cash into a Christmas Club account.

    As consumers living in Syracuse, we also have to keep in mind that winter in this area brings other expenses such as higher than normal heating bills. If you charged Christmas on your credit cards, not only will those holiday bills be due in January, so will your gas and electric bill. Do not be fooled into thinking that your utilities cannot be shut off in the winter. The local utility company is required to give you a 72-hour notice (that is 3 business days) before they can shut your electric/gas service off in the winter. The Public Service Commission requires the local gas/electric company to give 72-hour notices from November 15 – April 15th. Having your utilities shut off during the winter months is no picnic. If there is a chance that you may forego paying your electric bill to purchase a gift or two, it just is not worth it. Just keeping it real.

    We understand that it is easy to get caught up in the holiday merriment. Advertisers are enticing us on television, on the radio, billboards, everywhere. The malls are decorated beautifully, all to get us to spend, spend, spend. Merchants invest big bucks to get your dollars. When the new year arrives and you miss a payment, those same merchants (who pulled out all of the stops to get you to purchase from them) start calling you at home and on the job, asking when can they expect payment. Did you know they like it when you miss a payment? Yes, that is how they make their money. Because you missed a payment, they can raise your interest rate, charge you over the limit fees, etc. That is how they make their money. They don’t really want your monthly payment to come in on time. If you pay your bills on time, merchants and retailers benefit, but not as much as when you miss a payment or pay late. They make more when you pay late. Keep that in mind when you get sentimental while Christmas shopping.

    It is not our intent to sound like Scrooge. It’s time for Syracuse to get off the debt roller coaster. If sounding like Scrooge is going to help you, call us Scrooge and we will respond with a ‘Bah Humbug.’ Although this holiday season may entice you spend more than you can afford, discipline is the key to helping you manage your purchases. Do not get taken in by those 60% off deals or those ‘no interest until 2012’ deals. Do not get tempted by liquidation sales. Liquidators are in business to make money, they are not giving you a deal, liquidating is what they do. Do not be fooled. That flat screen television that you purchased at the liquidation sale for $1199.00, you could have purchased it at Walmart or BJ’s for $799.00. And BJ’s and Walmart would have given you a warranty. Liquidators do not accept returns nor do they give warranties. Don’t get mad, we’re just keeping it real.

    Make yourself a Christmas shopping list. Santa checks his list twice – go Santa one better and check your list three times. Do you really want to buy gifts for everyone on your list? It is alright if you want to splurge on everyone, it just an indication that you care. Remember, what you are feeling is the hype of the season, trust us, it will go away on December 26th.

    Get creative in your gift giving this year: take a picture of the person you want to give a gift to. Now, go to the Dollar Store and purchase a nice silver picture frame. Now go to Macy’s and get a nice gift box. Need we say more? Get unconventional in your gift giving: do you have someone on your gift giving list who loves their car more than they love air? Purchase a car wash gift certificate or two for them. It truly is not the amount of the gift that counts, it is the thought that counts. Do you have a few women on your gift giving list? Forever 21 has beautiful multi-colored scarves for $9.80. Go back to Macy’s and get a few more boxes, throw a scarf in each box. No one has to know you spent $9.80 on them. Do you have a niece who would love a fancy hair style but a fancy hairdo is not in the family budget? An appointment at a hair salon makes a nice, affordable gift. Do you have a nephew who needs driving lessons? A gift certificate from a local driving school makes an ideal gift. Do you have an elderly aunt or uncle (on a fixed income) who needs an oil change or a car tune up.

    A gift certificate for an oil change or a tune up makes a nice, inexpensive gift. Be sure to check the newspaper for a coupon. You can even purchase his and her pedicure gift certificates – young and not so young couples would appreciate and enjoy this type of gift. There are ways to shop for Christmas without breaking the bank and going into debt.

    Lastly, please keep in mind when you use your credit card, you are simply borrowing from your future income. When you use your debit card to purchase a Christmas gift, ask yourself what bill will not get paid because of that debit card purchase. You know your finances better that anyone else. Be honest with yourself, can you really afford it? Break the cycle of spending money that you know you do not have. If you are saying to yourself, ‘That’s why I work everyday, to buy nice things for myself’ we are talking to you.

    Be sure to tune into James and Barbara Peterson’s weekly radio broadcast, ‘Improving Your Credit Worthiness’ on WSIV 1540 AM every Wednesday 2:00 -2:30pm. To schedule a workshop or seminar for your group, church, community center or business please call 315-446-4668 or email: info@yourcreditworthiness.org


    RAPID RE-SCORING, COULD IT BE FOR YOU?

    Rapid re-scoring is the act of removing negative aspects of a credit report in a very short period of time, usually within two to three business days. I like it, keep talking…

    Rapid re-scoring is very different from the fraudulent services that frequent our television sets. We hear fix your credit promotions on the radio, on the television. These ‘let us fix your credit’ commercials and infomercials seem to think if they bombard us, we will begin to think they are legitimate and honest approaches to repairing credit. They are not, there is always a catch. The manner in which their commercials are done give us the impression that they have been sanctioned by the three major credit bureaus, Equifax, Experian and TransUnion. These companies word their advertisements to make us think their credit repairing is rapid re-scoring, they are not.

    Rapid re-scoring can work for you if you meet certain criteria. First of all, rapid re-scoring companies will not fix or repair something on your credit report unless it legitimately needs to fixed. For example, suppose you have been a victim of identity theft and there is a credit card account that you did not open showing up on your credit report as 30 days late. Under normal circumstances it could take 6 months to over a year to clear this matter up and get it removed from your credit report. Meanwhile, this identity theft item has lowered your credit score to 650. Let’s say you’re closing on new home in 30 days. With a credit score of 650, your mortgage will be approved, but your interest rate will be 7% instead of 5.7%. You ask your mortgage lender to contact a rapid re-scoring company to have that credit card account removed from your credit and you ask them to re-calculate your credit score. Three days later, your credit score is now 780 and you qualify for a mortgage loan of 5.7%. A credit score of 780 will lower your monthly mortgage payment by $130. Without rapid re-scoring your monthly mortgage payment would be $130 more. Over thirty years that is a savings of over $45,000.00 in interest.

    So, who should use rapid re-scoring? Those with FICO credit scores of 600 – 650 (and lower) should check in to rapid re-scoring, especially if you are planning to apply for a mortgage loan within the next few months.

    However, it would be much better to try and fix the problems yourself a good six months before you even apply for a mortgage loan. This is because a rapid re-scorer cannot get negative items, such as late payment notations, or items that are in dispute removed. A rapid re-scorer also cannot improve your credit score if your problem is too much debt that you simply cannot pay off today. A rapid re-scorer can only improve your credit score if the creditor admits to a mistake or agrees to remove specific information. For example, you might owe a big balance on a credit card that is negatively affecting your ability to get a lower mortgage interest rate. You can pay off the credit card electronically today and have a rapid re-scorer get your credit score recalculated within 72 hours rather than waiting for your payment to show up on your credit report a month or two later.

    A rapid re-scorer requires evidence to complete the rescoring process. For example, a creditor may have sent you with a letter admitting their mistake and that the account being reported as yours really isn’t yours and they intend to remove it from your credit history. Or, a creditor might admit that an account was fraudulently opened in your name by a thief and has agreed to remove it from your credit report. Although a rapid rescoring company usually requires that you provide proof, some rapid re-scorers may contact the creditor directly and obtain the proof for you.

    It is also important to remember that a rapid re-scorer cannot fix all problems within 72 hours as they often claim in their advertising. Sometimes it might take them a week or two, but in any event, it is always more faster than fixing credit report errors the traditional way — by mail, waiting a month or two for changes to occur in one’s credit report before a new, improved credit score can be calculated.

    There is a cost for rapid re-scoring. It could be as low as $25 for each up to as much as $100 for each item. A small price to pay if it means the difference between renting and home ownership. Rapid rescoring companies do not advertise, so they may difficult to find. The best way to locate a rapid re-scorer or a rapid rescoring company is through a mortgage broker. Mortgage brokers can be your best friend if your credit score is not what it should be.

    Again, it is better to improve your credit score at least six months before you apply for a mortgage loan. To get the process started, order your free credit reports now at http://www.annualcreditreport.comand start working on correcting errors and paying off debt before you even apply for a mortgage loan. You can also order your three FICO credit scores at myfico.com for a small fee.

    Be sure to tune into our radio broadcast, Improving Your Credit Worthiness every Wednesday on WSIV 1540 AM from 2 – 2:30pm. To schedule a seminar or workshop for your family, organization, group or church call us at 315-446-4668. We also conduct empowering, wealth building workshops. Visit our website at: http://www.yourcreditworthiness.org. You may also contact us via email: info@yourcreditworthiness.org.


    RECOGNIZING THE DANGER ZONES OF TOO MUCH DEBT

    How do you know if have too much debt? What are some of the red flags. Pretty much everyone in America is walking around with debt of some sort. Many of us have mortgages, car loans. For the purposes of this article let us deem that mortgages and car loans are considered good debt. So, how can we determine what is too much debt?

    Well, for starters, go grab a yellow highlighter. What we want you to do is highlight everything that pertains to you. Do not panic if you find yourself highlighting everything on the list.
    We will list some things that you can do to get rid of those ‘red flags’.

    RED FLAGS THAT TELL YOU ARE IN OVER YOUR HEAD

    1. It is normal thing for you to spend more than you earn.

    2. You are maxed out on all of your credit cards or very close to it.

    3. You use your credit cards to pay for groceries, fast food, concert tickets. Basically, if you are purchasing items that are not visible a month later, you are in the danger zone.

    4. You have recently been turned down for credit or a loan. Or if you need a co-signer and you are an adult.

    5. You only pay the minimum amount due on your credit cards each month.

    6. You don’t even know what or who you owe or what is on your credit report.

    7. You are not prepared for emergencies. For example, if you need to replace the tires on your car, you pay for it with your credit card because you do not have the cash.

    8. You toss and turn at night, cannot sleep, thinking about your bills.

    9. Argue with your spouse about money issues. Or you hide items that you purchased in the trunk of your car, so your spouse will not see.

    10. You miss payments on one bill in order to pay another. This is called robbing Peter to pay Paul.

    11. You are upside down in your car. Meaning, you owe more on your car than what it is actually worth. Either you had to finance the vehicle at a high interest rate because your credit score was so low or you sold your old vehicle and you still owed money on it and you let the car salesman talk you into rolling the money you owed on that car into your new payment.

    12. You do not have an emergency fund of 3 to 6 months salary saved.

    13. When your creditors call, you tell your children to say you are not at home.

    14. You get caller id to screen creditor telephone calls. Hey, we’re just keeping it real, many, many people do this. But they do not realize is, they are willing to pay for caller id instead of paying the creditor they are attempting to avoid.

    15. You do not have a savings for yourself, you have no college fund set up for your children.

    16. You do not contribute to the 401K plan at work because you say you cannot afford it.

    17. You do not have health insurance because you say you cannot afford it, but you manage to purchase everything else you want. Some examples: you get you hair done like clockwork and you get your nails done.

    Determine what your debt to income ratio is. Your debt to income ratio is how much of your salary goes toward bill paying. Keep in mind that the debt to income ratio is based on your gross pay. If your salary is $800.00 per week, then your monthly salary would be $3,200.00.

    Now let’s suppose your bills for the month total $1,1200.00. That would make your debt to income ratio 35%. What does that mean to you? A debt to income ratio that is less than 30% is considered excellent by banks and lenders. A debt to income ratio that falls between 30 % to 36% is good.

    It means you will not have problems getting loans (as long as you have a decent credit score). But you should still try to bring your ratio under 30%. A debt to income ratio that falls between 36% and 40%.

    All this means is, there are some bankers and lenders out there who would still give you a loan, but you may struggle with making your payments. And with debt to income ratio within this category will mean you will be paying high interest rates. A debt to income ratio of 40% or above is a definite red flag. At this level, your credit situation needs your immediate attention and a band-aid too.

    An increasing number of people are in the 41-49% range, a zone where financial trouble is certain. A debt-to-income ratio above 50% is living dangerously. The best ratio is as close to 0% as possible, that means living a debt-free life. As we stated earlier, everyone has bills to pay, we must strive to eliminate recurring debt (credit card debt).

    Why continue making the rich richer? Use your money to make yourself rich. Think about Bill Gates, he was not always rich. If he can do it, so can you. And we all know Oprah’s background. Look at her now. She had to start somewhere.

    The important thing is, she started. Even if you do not have your sights set on millionaire status, you may want a home or you may simply want to pay your bills on time and have money left over to enjoy life without stressing. Get started, now is the time.

    So what can you do to help yourself? The first step is recognition. Many consumers do not want to face the music. They do not want to quantify that they are in the danger zone. They do not want to admit that they’ve been cruising along robbing Peter to pay Paul, juggling credit cards and charging up their credit cards whether they have the money to pay those bills or not.

    Make a (mental) note of what you are going through (are you sad, angry or happy) each time you make the decision to charge up a storm. Determine to find out what emotion is triggering your spending.

    Keep track of how many times you spend and tell yourself you will find a way to pay for it later. Ask yourself, “Why am I really buying this item?” Are you trying to impress someone, a co-worker, a new guy or girl? You had a bad week or a difficult day, so you tell yourself you deserve to splurge.

    In a small notepad, record everything you purchase for a month. Whether you pay cash or you use your credit card. The purpose is to help you see where you are wasting money. You would be surprised at how much you spend on clothes, food (especially buying lunch during the work week).

    And for all of those coffee and latte drinkers out there, you would be surprised to know if you saved that money for two years, you would have enough money for a down payment of a house. Keep track of what you spend on coffee and latte for one week, then multiply that by 52.

    That’s your home buying money that you are throwing away. And for those who are already homeowners, you could use that money to pay off one of your high interest credit card debts. Better yet, homeowners you that coffee and latte money and put into a CD (certificate of deposit). Hmmm, something think about.

    The next time you want to throw your credit card on a purchase, use cash instead. It is much more difficult to fork over $100 cash on an item as opposed to using a credit card. Besides, you will pay more in the long run if you use the credit card. And that is not smart. And we know as well as well you do, your mother did not raise a fool.

    Last but certainly not least, make a commitment to pay off your debt. Give yourself a specific date to have all of your credit card paid off.

    Put pressure on your mouth…speak the words: I WILL BE OUT OF DEBT ON JULY 31, 2009. Be specific! Pay off the high interest rate debt first. And do not forget, after six months of paying on time, ask those creditors to lower your interest rate. Do this every six months whether you decide to pay off your debt or not. It is time we started thinking smart as a people.

    Take this little test. Think about how you feel with no money in the bank. Now think about how you would feel if you had $50,000.00 in the bank. We bet you a cup of coffee, that a smile creeped across your face.

    And if you need encouragement, give us a call at 315-446-4668. Or if you prefer, email us at:

    info@yourcreditworthiness.org. Tell us about the progress that you are making.

    Be sure to tune in to our radio broadcast, Improving Your Credit Worthiness, every Wednesday on WSIV 1540 AM from 2 -2:30pm. To schedule a seminar or workshop for your group or church call us at 315-446-4668 or send an email to: info@yourcreditworthiness.org


    DEBT SETTLEMENT, DEBT FORGIVENESS AND THE IRS…WATCH OUT!!!

    Getting a credit card to cancel your debt or reduce it, lifts a huge burden off you and your family. Before you breathe a sigh of relief, you need to know the IRS considers that debt reduction, taxable income.

    Exactly what is debt settlement or debt cancellation? If you borrow or charge money or merchandise from a lender or creditor and that lender or creditor cancels or forgives the debt. For example, let’s say you have a $3,000.00 debt you owe a particular company. We’ll call that company ABC credit. For whatever reason, you failed to pay ABC credit. ABC credit offers you a deal to settle (pay) $1,500.00 of that $3,000.00 debt. The $1,500.00 that you did not have to pay is considered debt relief or debt forgiveness.

    At the end of the year, ABC credit company will send you a 1099C form that shows the $1,500.00 as income. We like to call this invisible money because it is not tangible, you cannot see it, you cannot deposit it in your bank account. Does the IRS care that you never actually received this money? Of course not. Their only concern is that you pay the taxes on that $1,500.00. If you could not afford to pay the original debt, why would the IRS think you can pay the taxes on so called income that you never received? Nice way to kick them while their down.

    The IRS considers the amount of reduction of the original debt as income if it is over $600.00. So, the above example of $1,500.00 will either increase your tax bill of reduce any refund that you are expecting to receive.
    You see, when personal debts are reduced or cancelled by the creditor, the amount forgiven or reduced is treated as income by the IRS. To make matters worse, the creditor is required by law to report the amount that was cancelled or reduced to the IRS. There is no way around it.

    Homeowners are protected, thanks to the Mortgage Cancellation Tax Relief Act of 2007, which allows homeowners to exclude income from debt cancellation on their principal residence. No such luck for those with credit card or consumer debt.

    Cancellation of a debt is not always taxable income. Common situations when cancellation of debt is not considered taxable income include:

    1. Bankruptcy. Debt discharged through bankruptcy are not considered taxable income.

    2. Insolvency. If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. What makes a person insolvent? You are insolvent when your total debts are more than your total assets. The IRS just does not take your word that you are insolvent, you must provide documentation (bank statements etc). You see, insolvency is somewhat complex to determine and you may need a tax professional if you feel you qualify for this particular exception.

    3. Farm debt. If your debt was incurred directly in operation of a farm, more than half your income from the prior three years was from farming.

    4. Non-recourse loans. A non-recourse loan is a loan in which the lender’s only recourse in case of default is to repossess the property being financed or used as collateral.

    Before you consider debt settlement or debt reduction, make sure you understand that the IRS considers them both sources of income when the amount is over $600.00. If this is not enough, think about what debt reduction and debt settlement does to your credit score – it plunges to an all time low.

    You ask, what is your recourse? Never take on more debt than you can afford to pay back. And if you must take on debt, make sure it is not something that will disappear in a month. Examples: groceries, fast food, gas, toiletries, etc. If you are putting items such as these on your credit card, it is time to reassess your financial position or lack thereof.

    Be sure to tune into our radio program, Improving Your Credit Worthiness on WSIV 1540 AM every Wednesday from 2 – 2:30pm. Call us at 315-446-3294 to schedule a workshop or seminar for your church, group or company. For more credit tips please visit our website: http://www.yourcreditworthiness.org
    James and Barbara Peterson


    THE 21ST CENTURY ACT AKA THE CHECK 21 LAW

    What is the Check 21 Law. It is a federal law that is designed to enable banks to handle more checks electronically. This makes check processing faster and more efficient. If you are consumer who writes checks, you should have a working knowledge of Check 21. Under the new law, the checks that you and I write can be (and are sometimes) replaced with paper copies called substitute checks. This substitute check is the legal equivalent of your original check. I like to call the substitute check the first part of the law.

    WHAT IT MEANS TO YOU. You may not get your original checks with your bank statement anymore. Most of us are accustomed to that. If you request a copy of a recently written check, you will receive a substitute check, a paper copy of the front and back of your check. The substitute check is slightly larger than the original. It is a legal copy of your check. You can also use it as proof of payment should the need ever arise. Some banks still send canceled checks with your account statements (consider yourself fortunate). You will continue to receive canceled checks unless your bank notifies you.
    The Check 21 Law allows banks to process your checks quickly. This eliminates the float time on our checks. If you write a check on Tuesday thinking as long as you get the money in the bank by Thursday or Friday, you will be safe, think again, my friend. Instead of physically moving paper checks from one bank to another, Check 21 will allow banks to process more checks electronically. Banks capture a picture of the check, front and back, with the payment information and transmit it electronically. This whole process takes anywhere from 24 hours to 48 hours.

    To envision a clearer scenario, suppose your checking account is with M & T Bank and you are paying your Sears bill. Suppose, Sears uses Charter One Bank to make their deposits. Once upon a time your M & T check would be mailed to Sears to pay your bill. Sears would then deposit your check into their account at Charter One Bank. Charter One Bank would then mail your check to M & T Bank to receive the monies due. This whole process would take several days. Check 21 eliminates that antiquated process.
    If you are mailing a check to a creditor within the city you reside, according to the United States Postal Service, your creditor will receive your check the next day. With the enactment of the Check 21 Law, your check has an excellent chance of being processed that same day.

    UNDERSTANDING THE DIFFERENCE BETWEEN CHECK 21 and programs that convert checks to electronic payments. If you write a check, your rights are governed by check laws and regulations. Some merchants, Price Chopper Food Markets for example use your check as a source of information to create an electronic fund transfer. Electronic fund transfers are governed by different laws and have *different consumer rights* than check payments. Under these circumstances merchants will immediately return your check to you before you leave the store. Consumers who write checks that are electronically processed must remember to enter electronic withdrawals in their check register.
    Suppose your car insurance company is located in the city you reside in; you mail your premium on Tuesday, your car insurance company receives your payment on Wednesday. More than likely, your check will clear your bank that same Wednesday. Why is that? Most companies convert your payment electronically. Gone are the days when it takes 2 – 3 days for the bank to cash your check. Many consumers are not aware of this and are continually receiving bounced check fees. Remember, knowledge is POWER!

    Be sure to tune in to Improving Your Credit Worthiness with James & Barbara Peterson on WSIV 1540 AM every Wednesday 2 – 2:30pm. To schedule a credit improvement workshop/seminar for your group, please call 315-446-3294.
    For more credit tips and our speaking schedule, visit our website: http://www.petersonministries.org.