Spending Plan by yaohongm

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									OPENING




     PRAYER
              1
HOUSEKEEPING ISSUES
   INTRODUCTION
   REST ROOMS
   BREAKS
   CELL PHONES
   CLEAN UP
   CHAIRS AND TABLES
   EVALUATION FORMS WITH
    RECOMMENDATIONS
                            2
Agenda
   My background
   Why are we here
   What do we hope to accomplish
   Partnership
   Maryland Saves
   Stewardship
   Understanding credit
   Mortgage Crisis
   Buying a home
   Potential tax savings
                                    3
Welcome!
Our Mission
Bridgeway Community Church
TO EDUCATE AND EQUIP THE BODY
OF CHRIST TO BECOME BETTER
STEWARDS OF GOD’S ASSETS
THROUGH EDUCATION, COUNSELING
AND FAITHFULLNESS”
                                4
     CCCS OF MD & DE MISSION
   “To promote economic self-sufficiency to
    individuals, families and communities
    through financial education and counseling”




                                             5
Consumer Credit Counseling
Service of MD & DE
   CCCS of MD & DE Services
   Budgeting
   Debt Management Plans
   Housing Counseling
   Pre-file Bankruptcy Counseling
   Pre-discharge Bankruptcy Education
   Financial Literacy Education
                                         6
God’s word
   Matthew 6:24 “ No one can serve two
    masters; for either he will hate the one
    and love the other, or he will hold to
    one and despise the other. You cannot
    serve God and Mammon”




                                           7
What are your goals
Learn to become a better steward of Gods
  assets?
Learn how to budget?
Buy a home?
Save for retirement?
Become a millionaire?
Financial security for you and family?
Do you have financial goals?

                                           8
GOD WANTS US TO BE PROSPEROUS

   Exodus 36:1 - God gives us abilities and skills
   Genesis 39:2-3 - God gives us success –– Joseph prospered
   Psalm 75:6-7 - God gives us promotion
   Jeremiah 29:11 – “For I know the plans I have for you”, declares the
    Lord, plans to prosper you and not to harm you, plans to give you hope
    and a future”.
   Ecclesiastes 5:19 – Moreover, when God gives any man wealth and
    possessions, and enables him to enjoy them, to accept his lot and be
    happy in his work – this is a gift of God.
   Deuteronomy 8:18 – But remember the Lord your God, for it is he who
    gives you the ability to produce wealth….
   Genesis 24:35 – Abraham was wealthy
   Job 1:1-3 – Job was wealthy
                                                                         9
SPIRITUAL CONDITIONS FOR PROSPERITY

   Deuteronomy 29:9 – Carefully follow the terms of this covenant so that you
    may prosper in everything you do.
   Psalm 1:1-3 – Blessed is the man who does not walk in the counsel of the
    wicked …….. Whatever he does prospers.
   Malachi 3:9-10 – “You are under a curse – the whole nation of you – because
    you are robbing me. Bring the whole tithe into the storehouse, that there may
    be food in my house, Test me in this”, says the Lord Almighty, “and see if I will
    not throw open the floodgates of heaven and pour out so much blessing that
    you will not have room enough for it”.
   Matthew 6:33 – “But seek first His kingdom and His righteousness…
   Proverbs 13:21 – Misfortune pursues the sinner, but prosperity is the reward
    of the righteous.
   Joshua 1:8 – Do not let this Book of the Law depart from your mouth;
    meditate on it day and night, so that you may be careful to do everything
    written in it. Then you will be prosperous and successful.

                                                                                    10
CHARACTER CONDITIONS FOR PROSPERITY


Leviticus 19:11,13 – “Do not steal. Do not lie. Do not deceive one
   another. Do not defraud your neighbor or rob him”.

   Exodus 20:17 – “You shall not covet your neighbor’s house. You shall
    not covet your neighbor’s wife, or his manservant or maidservant, his
    ox or donkey, or anything that belongs to your neighbor”.

   Proverbs 25:28 – Like a city whose walls are broken down is a man
    who lacks self-control.


   I Timothy 6:9-10 – People who want to get rich fall into temptation
    and a trap and into many foolish and harmful desires that plunge men
    into ruin and destruction. For the love of money is a root of all kinds of
    evil.
                                                                            11
       STEWARDSHIP
   Matthew 25:21 – “His master replied, ‘Well done, good and faithful
    servant! You have been faithful with a few things; I will put you in
    charge of many things. Come and share your master’s happiness!

   Luke 16:10 – “Whoever can be trusted with very little can also be
    trusted with much….”

   Proverbs 28:20 – A faithful man will be richly blessed, but one eager
    to get rich will not go unpunished.

   Romans 13: 7 – Give everyone what you owe him: if you owe taxes,
    pay taxes; if revenue, then revenue…..



                                                                           12
       GIVING
   I Timothy 6:17-19 – Command those who are rich in this present world
    not to be arrogant nor to put their hope in wealth….command them to
    do good, to be rich in good deeds, and to be generous and willing to
    share.

   Proverbs 11:25 – A generous man will prosper; he who refreshes
    others will himself be refreshed.

   Proverbs 28:27 – He who gives to the poor will lack nothing, but he
    who closes his eyes to them receives many curses.

   Philippians 2:4 – Each of you should look not only to your own
    interests, but also to the interests of others.

                                                                          13
DEBT
   Proverbs 22:7 – The rich rule over the poor, and the borrower is
    servant to the lender.

   Psalm 37:21 – The wicked borrow and do not repay, but the righteous
    give generously; those the Lord blesses will inherit the land but those
    he curses will be cut off.

   Romans 13:8 – Let no debt remain outstanding, except the continuing
    debt to love one another…..

   Proverbs 17:18 – A man lacking in judgment strikes hands in pledge
    and puts up security for his neighbor.




                                                                          14
SAVING & INVESTING

   Genesis 41:34-36 – They should collect all the food of these good
    years that are coming and store up the grain under the authority of
    Pharaoh, to be kept in the cities for food. This food should be held in
    reserve for the country, to be used during the seven years of famine
    that will come upon Egypt….

   Proverbs 30:25 – Ants are creatures of little strength, yet that store up
    their food in the summer;

   Proverbs 21:5 – The plans of the diligent lead to profit as surely as
    haste leads to poverty.
   Proverbs 13:22 – A good man leaves an inheritance for his children’s
    children



                                                                              15
Facts
   A $5000 credit card balance take 21.5 years to payoff
   If you save $350 per month for 30 years at a 10% return you
    would have approximately $765,000
   48% have a difficult time making ends meet
   36% have more expense than income
   50% have no emergency, 3 months or more
   58% have never analyzed retirement needs
   12% have no checking or savings account
   62% never looked at a credit report
   64% never looked at their credit score
   70% felt they had good finance knowledge only 46% passed a
    test about finances


                                                            16
THE TEN FINANCIAL COMMANDMENTS


   Thou shall save – direct deposit is best
   Thou shall give – tithes & offerings
   Thou shall help those less fortunate than yourself
   Thou shall not overspend
   Thou shall budget
   Thou shall not covet your neighbor’s lifestyle
   Thou shall diversify – business, stocks, real estate
   Thou shall have financial advisors
   Thou shall have good credit
   Thou shall not be in debt
                                                           17
What are your goals
   Becoming a good steward of Gods assets?
   Setting a budget so you can tithe?
   Get out of debt?
   Buy a home?
   Save for retirement?
   Become a millionaire?
   Financial security for you and family?
   Do you have financial goals?
                                              18
Startling Statistics
   Household debt is $13.8 trillion or $45,000 for
    every man woman and child in the USA. (Consumer
    and Mortgage)-Federal Reserve
   Consumer Debt is 2,596 billion dollars or $8,467
    for every man, woman and child in the USA – Federal
    Reserve
   Personal savings is 6.4%,was –1% 2years ago and
    was 11% in 1987
   Congregational giving is approximately 2.2%
Startling Statistics
   Bankruptcies rose past one million up 28% from
    same time last year ( ABA)
   Foreclosures up 23% over same time last year
    (Realty Trac)
   National Debt/Gross Domestic product is 75%,
    the highest since WWII years (Bureau of Economic
    Analysis)
   Unemployment 9.4% highest since 1982
   Credit Card Debt up 500% in 10 years, in 2009 we
    realized the first downward trend in 20 years
                  FACTS

   780 BILLION IN CREDIT         3RD,4TH AND 5TH
    CARD DEBT                      MORTGAGES COMMON
   2.5 TRILLION IN LIMITS        34.3 BILLION IN
   RATES FROM 9- 24 % TO 25       DELINQUENCY
    – 36%                         BANKRUPTCY 1.7 MILLION
   3.5 BILLION PIECES OF          PAST 12 MONTHS
    SOLICITATION PER YEAR         NEW BANKRUPTCY BILL
   AVERAGE BALANCE 9k             PENDING
   568 MILLION CARDS             AVERAGE BANKRUPTCY 10K
   AVERAGE # CARDS               AVERAGE AGE 26
    CARRIED 5.2                   AVERAGE STOCK MARKET
   LEADING REASON FOR             RETURN 11.5%
    DIVORCE, FINANCES             90% have no financial plan
   9% HAS A NEGITIVE NET
    WORTH



                                                         21
      Facts continued
   If you have a credit card balance of
    $5000 and paid 2% minimum payment
    it would take 21.5 years to pay off
   If you saved $4000 per year @ 10%
    average return for 30 years you would
    have $763424
   The average return on the stock market
    history is 8.5%

                                       22
Money and Life

  It’s About Stewardship


    “Be willing to do today
    what others won’t do,
   so you can live tomorrow
    like others can’t live.”
                               23
Signs of financial bondage
   Can no longer achieve God’s will
   Impulse buying
   No plan/budget
   Can no longer pay bills
   Cannot help others
   Cannot meet family needs
   Bondage of work
   No money
   Out of control

                                       24
THREE GOLDEN RULES
   TITHE FIRST

   PAY YOURSELF

   HAVE A SHORT TERM AND LONG TERM
    PLAN


                                 25
             FINANCIAL FITNESS
                 CHECKLIST
   ARE YOU USING MORE OF YOUR INCOME TO PAY DEBT
   DO YOU MAKE ONLY MINIMUM PAYMENTS ON CREDIT CARDS
   ARE YOU NEAR YOUR CREDIT LIMITS
   ARE YOU PAYING BILLS WITH MONIES MEANT FOR OTHER THINGS
   DO YOU OFTEN PAY BILLS LATE
   ARE YOU DIPPING INTO YOUR SAVINGS TO PAY BILLS
   DO YOU HAVE A SAVINGS PLAN
   DO YOU PUT OFF VISITS TO THE DOCTOR DUE TO NO MONEY
   HAVE COLLECTION AGENCIES CALLED YOU LATLEY
   ARE YOU WORKING MORE THAN ONE JOB TO MAKE ENDS MEET
   ARE YOU BORROWING MONEY OR USING CREDIT CARDS TO PAY FOR
    THINGS YOU USED TO BUY WITH CASH
   IF YOU OR YOUR SPOUSE LOST YOUR JOB, WOULD YOU BE IN
    FINANCIAL TROUBLE RIGHT AWAY
   DO YOU WORRY ABOUT MONEY A LOT
   HAVE YOU FORGOTTEN TO DO A BUDGET OR A SPENDING PLAN



                                                         26
Paul said in 1Timothy 5
God requires Christians to operate between 2
 points
   Romans 13:8 “Owe nothing to anyone
    except to love one another for he who
    loves his neighbor has fulfilled the law”
   Psalms 37:21 “ The wicked borrows
    and does not pay back but the righteous is
    gracious and gives”


                                           27
Families and Financial Distress
   Single parents
   Retired seniors
   Recently divorced people
   Unemployed/under-employed people
   Recently married couples
   Families with children
   Blended families
                                       28
How to better communicate
       about money
   Establish common goals
   What is important to the entire
    household
   Set ground rules for financial decisions
   Make commitment to be open and
    honest
   Identify common problems

                                           29
NEEDS,WANTS,DESIRES
   Definition and examples
   First step in budget reduction
   Ask yourself these questions

       How does Needs, Wants and Desires
        relate to Overspending and Impulse buying??

       Is this purchase a need, want or desire??

        Homework- analyze 3 months of Credit Card
        Statements with N W D
                                                      30
Why is a spending plan important
   It is what God wants
   Better Stewards of God’s assets
   Enables you to tithe
   Enables you to begin saving
   Helps save money for an emergency
   Helps you achieve financial freedom


                                          31
Why Is a Spending Plan
Important? (cont)
   Establishes financial controls
   Helps avoid overspending
   Budgets for emergencies
   Helps achieve Goals
   Controls impulse buying



                                     32
Preparing a spending plan
                PAST
   Review your spending habits
   Understand how to spend and save
   Look at the last 3 months of
       Cash spent
       Checking account
       Credit card usage
                                       33
How can I track my spending
              PRESENT
   Write down all purchase
   Track your cash in a small book
   Track your checks written
   Track credit card usage
   Track fees in small book (ATM)
   Transfer to a computer for comparison
   Compare month to month

                                            34
A good spending plan can
               FUTURE
   Reveal your financial condition
   Income vs. expense
   Establish financial direction
   Breaks down financial control and direction
   Stop overspending
   Stop impulse buying

                                                  35
      What do I learn from
      tracking my expenses
   Where money goes
   How much I eat out
   Entertainment
   Clothing
   Funding priorities
   Savings
   How much debt I reduced
                              36
       Expense tracking
   Track your Cash- Use a small book . Keep it
    in your pocket and write down all cash, ATM
    charges on a daily basis.
   Review your credit cards- Need, want or
    desire?? Review your spending habits. Are
    you living on them???
   Review your checking account
   Count all three – Add all 3 together, this is
    your spending level vs. your income
   Track monthly – track on computer, buy
    software, take charge                      37
    BUDGETING INCOME
   List your income
   Get a total disposable income
       Total net income x 52 weeks spouse1
       Total net income x 52 weeks spouse 2
       Divide by 12 = monthly income
       Gives total income



                                               38
Income
   Job income/Wages
   Retirement income
   Child support
   Dividends/interest
   3/5 year average bonuses, tips, commission
   Tax refunds
   Government program
   No overtime
                                             39
Budget analysis
   List monthly fixed expenses
   List monthly variable expenses
   Review for area to reduce expenses
   Review area that needs to be increased
   Tithe first, pay yourself second
   Set short, intermediate goals and long
    term goals



                                         40
     Budgeting SMART
      A budget must be
   S = Specific
   M =Manageable/Moveable
   A = Attainable
   R = Reasonable
   T = Timely


                             41
Budget Analysis
   Fixed Expenses      Variable Expenses
   Tithe               Entertainment
   Savings             Restaurants
   Housing             Clothing
   Utilities
                        Health clubs
   Cable
   Internet            Pet care
   phone               Charity/donations
   Cell                Emergency funds
   Insurance           Vacations
   Food                Bank charges
   Car payment         Postage
   Gas                 Other
   Repairs             Cleaning services
   Parking
                        Babysitting
   Transportation
   Laundry             Gifts
   Medical             _____________
   Medicine            _____________
   Dental              _____________
   Loans
   Credit cards
   Lunches
   Tuition
   Childcare

   Total

                        Total




                                             42
Reducing Daily Expenses
      1)   Utilities
      2)   Cable
      3)   Internet
      4)   Phone
      5)   Insurance
      6)   Food
      7)   Lunches
      8)   Entertainment
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities  $80
      2)   Cable
      3)   Internet
      4)   Phone
      5)   Insurance
      6)   Food
      7)   Lunches
      8)   Entertainment
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities   $80
      2)   Cable       $80
      3)   Internet
      4)   Phone
      5)   Insurance
      6)   Food
      7)   Lunches
      8)   Entertainment
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities   $80
      2)   Cable       $80
      3)   Internet    $40
      4)   Phone
      5)   Insurance
      6)   Food
      7)   Lunches
      8)   Entertainment
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities   $80
      2)   Cable       $80
      3)   Internet    $40
      4)   Phone       $60
      5)   Insurance
      6)   Food
      7)   Lunches
      8)   Entertainment
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities   $80
      2)   Cable       $80
      3)   Internet    $40
      4)   Phone       $60
      5)   Insurance $30
      6)   Food
      7)   Lunches
      8)   Entertainment
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities   $80
      2)   Cable       $80
      3)   Internet    $40
      4)   Phone       $60
      5)   Insurance $30
      6)   Food        $150
      7)   Lunches
      8)   Entertainment
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities                  $80
      2)   Cable                      $80
      3)   Internet                   $40
      4)   Phone                      $60
      5)   Insurance                  $30
      6)   Food                       $150
      7)   Lunches                    $50
      8)   Entertainment
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities                  $80
      2)   Cable                      $80
      3)   Internet                   $40
      4)   Phone                      $60
      5)   Insurance                  $30
      6)   Food                       $150
      7)   Lunches                    $50
      8)   Entertainment              $25
      9)   Restaurants

               CCCS your partner in
           education,counseling and debt
                    repayment
Reducing Daily Expenses
      1)   Utilities                  $80    + 40
      2)   Cable                      $80
      3)   Internet                   $40
      4)   Phone                      $60
      5)   Insurance                  $30    + 20
      6)   Food                       $150   +150
      7)   Lunches                    $50
      8)   Entertainment              $25
      9)   Restaurants                $100   +100
            TOTAL                     $615   $310
               CCCS your partner in
           education,counseling and debt
                    repayment
Save big when shopping
   Get a Sunday paper
   Pre plan menu
   Shop Alone
   Don’t buy bulk, unless justified
   Make a list
   No impulse buying
   Use coupons
   Don’t go hungry
   Take an inventory of pantry and freezer

                                              53
 Expense Allocation Chart
Housing              23-33%
Food                 12-29%
Transportation       7-10%
Entertainment        4-6%
Savings              5-10%
Insurance, Medical   7-10 %
Church/Charity       5-10%
Personal Debt        8-18%
Clothing              4-7%
                              54
Trick yourself to wealth
   I.R.S. refunds        $2300
   Save a Dollar a day   $ 365
   Coupon clipping       $ 730
   Cut $10 a week        $ 520
   Auto deduct $50 mo    $ 600
                TOTAL     $4515

6% x 20 years this equates to approx $300,000




                                                55
Compound Interest
 “ The most powerful force in the world
  is compound interest”
               Albert Einstein
Insanity – doing the same thing over and
  over again and expecting different
  results


                                      56
Rule of 72
   Rule of 72
       A formula that shows you how long it takes to
        double your money

       Example
          72 divided by 4% interest rate = 18 years

          72 divided by 6% interest rate = 12 years

          72 divided by 12% interest rate = 6 years




                                                        57
Rule of 72
Year   Rate of return 6%   Year   Rate of return 12%



  1       $10,000             1          $10,000

  13      $20,000             7          $20,000

  25      $40,000            13          $40,000

                             19          $80,000

                             25          $160,000




                                                       58
Compound Interest
   Assumptions
       $2000 per year X ten years = $20,000
       Invested for 20 years
       20 years the $20,000 is worth $178,504

       $4000 per year X ten years = $40,000
       Invested for 10 years
       10 years the $40,000 is worth $79,098

                                                59
Saving Money Fact
   If you saved $5.00 per week (with no
    interest) you would save $5200 IN 20
    Years
   Rate Investment 20Yrs      30 Yrs
       6%  $5200     $9624   $20,924
       8%  $5200     $12268 $31039
       10% $5200     $15,817 $47082


                                           60
10 Commandments of Investing
   1)Set clear goals
   2)Know your finances well
   3)Question Authority
   4)Don’t be a follower
   5)Be humble
   6)Be patient
   7)Use moderation in investing
   8)Knowledge is power, know your investments
   9)Don’t be a high risk taker, know your risk tolerance
   10)Don’t worship mere men

                                                       61
Credit and Debt Management

“Today, there are three kinds of
people: the have's, the have-
not's, and the have-not-paid-for-
what-they-have's.”
                    Earl Wilson




                                    62
Personal financial statement
   Assets                         Liabilities
       Checking/savings               Accounts payable
        account                        Loans
       Accounts receivable            Taxes
       Marketable securities          Credit cards
       Pension/401k                   Real estate
       Real estate                    Misc debt
       Vehicles/boats
       Furniture                      Total liabilities
       Total assets                   Net worth
                                       Total assets/liabilities

                                                            63
      Debt to income Ratio
Monthly income
  Take home pay, alimony, commissions,
  dividends, interest, other income

Minimum debt payments
  Auto payment, loan payments, credit cards, past medical
  care. (Regular monthly payments)

Payments divided by monthly income equals your debt to
  income ratio

SEE THE HANDOUT. HOW DO YOU STAND



                                                     64
How is my debt to income ratio
0 to 10%
   Excellent keep up the good work

  10.1 to 19.9%
   Not bad, but as you approach 20% you are starting to place strain on your budget

  20 to 24.9%
     Your debt may already be a problem. Start a spending plan now even if this is
     temporary.

  25 to 37%
     Immediately review your spending habits and develop a budget. Look for ways to cut
     spending now. Look at all options to reduce your debt

  37.1% or Greater
     Get counseling. Your ratio is way too high. Budgeting and tracking your spending are
     not options at this point. Debt Management programs may be a good alternative.
     ACT NOW!




                                                                                      65
Pros and Cons of CREDIT

   A needed financial tool
   Costly to use
   Can lead to over spending
   Total consumer debt in the U.S. now at
    $2.03 Trillion as of May 31, 2007.


                                        66
CREDIT REPORT CONTAINS
 YOUR FINANCIAL RESUME
 Personal

 Credit Accounts

 Public Record

 Inquiries

FRAUD FREEZING YOUR REPORT
       Pin code
       DISPUTING ITEMS LETTER

                                 67
OBTAIN YOUR REPORT
   Yearly from Equifax, Experian, and
    Trans Union
   www.annualcreditreport.com
   If denied credit
   Potential Fraud
   Free copy yearly starting in 2005 thanks
    to the Fair and Accurate Credit
    Transactions Act (FACTAct)

                                         68
CREDIT SCORE
   A number that summarizes your report
   Used by Lenders
   Determines your level of creditworthiness
   Qualifies you for higher/lower rates
   Higher Insurance rates
   Higher interest rates
   Promotions lost


                                                69
How Scores Are Calculated
   Credit Score breakdown

      35%   Payment History
      30%   amount Owed
      15%   Length of Credit History
      10%   New credit
      10%   Type of credit




                                       70
CREDIT SCORE
* FAIR ISAACS CREATOR   •   DETERMINES YOUR
                            LEVEL OF
* 350-850                   CREDITWOTHINESS

                        •   QUALIFIES YOU FOR
* PREDICTS FUTURE NOT       HIGHER/LOWER RATES
  PAST
                        •   DETERMINES
* SUMMARY OF YOUR           INSURANCE RATES
  REPORT

* USED BY LENDERS       •   COULD IMPACT
                            PROMOTIONS




                                              71
IMPROVE YOU REPORT
IMPROVE YOUR SCORE
   Check for Accuracy
   YOU are responsible
   Pay bills on time
   Review quarterly




                          72
How An Improved Score Can
Save You Money
  Car Loan:              48 Mos.
  Loan Principal:        $10,000
  Current Score:         500-599
  Improved Score:        690-719
                   Current Score                Improved Score
Av. Nat’l APR        18.4%                          7.9%
Monthly Pmt        $295.84                       $243.66
Total Interest     $4,200.64                     $1,695.63

Savings on monthly pmt              $52.18
Savings over life of loan           $2,505.01




                                                                 73
Bankruptcy
   Purpose: to provide new start to those
    overwhelmed by debt with no means to repay

   Intended to be a last resort

   Bankruptcy filings often precipitated by job
    loss, divorce, illness, death in family


                                                   74
Types of Bankruptcy
   Chapter 7 – provides for discharge for
    all unsecured debt. Can only receive
    discharge once every 8 years

   Chapter 13 – a 3-5 year repayment plan

   Chapter 11 – for businesses

                                         75
Bankruptcy Continued
   Law change October 2005
   Means test
   Budget and Credit Counseling
    Certificate
   Pre Bankruptcy discharge Certificate
   60 months of payments, no free rides


                                           76
Mortgage Crisis




                  77
Definitions
Glossary Of Terms- see handout
     Deed-in-Lieu
     Deferred Payments
     Forbearance
     Foreclosure
     Modification
     Refinance
     Short Sale
     Mitigation – To act in such a way as to cause an
      offense to seem less serious

                                                     78
What to do
       Call your mortgage company for resolution!
         Attempt a refinance
         Modification
         Forbearance
         Reverse Mortgage
         Look for foreclosure events
         Contact an attorney
         Contact a reputable counseling service
         Get everything in writing

                                                   79
My Refinance was declined,
why?

   Equity position

   Delinquency

   Investor owned-I/O and Arms
                              80
What not to do
   Stop looking for a resolution
   Avoid calling your mortgage company
   Ignore warning letters
   Sign a contract under duress
   Sign documents without counseling
   Sign a contract with blank lines
   Never sign over your deed
   Give up
   Walk away from your home
   Procrastinate
   Sign documents without reading them
   Make a payment to anyone but the lender
   Make a deal with unsolicited sources
                                              81
Where to turn
   Consumer Credit Counseling Services Of Maryland
    and Delaware Inc.
       www.cccs-inc.org
   Maryland Hope Hotline
       www.mdhope.org
   Making homes affordable
       www.makinginghomesaffordable.gov
   Federal Government
       www.ftc.gov
   State Attorney General
   Better Business Bureau

                                                      82
Where to turn
   Investigate counseling companies for help
   Insure they are a true non profit
       Do they charge upfront fees?
       Are they local?
       Can you get both phone and in person counseling?
       Did you call the BBB or Attorney General for
        complaints?
       Get a Mortgage counseling session


                                                    83
FRAUD AND SCAMS
   Fraud- any misrepresentation or omission of
    information during a mortgage process

   You can sue for damages


   Call 1-888-784 0136 ,Department of Labor, if you
    think you are a victim of mortgage fraud or a victim
    of a rescue scam



                                                      84
RED FLAGS
   Guarantees to stop foreclosure
   You are told not to contact your lender
   Needs fees before they can start service
   Only accepts wire transfers and certified funds
   Lease back your home and repurchase later
   Make mortgage payments directly to them
   Tells you to transfer the title to them
   Offers cash for the house below the market
   Offers to fill out all paperwork for you
   Pressures you to sign papers

                                                      85
FIRST TIME BUYER

IS THE TIME RIGHT




                    86
Own Your Home
   Advantages
       Usually good investment
       Tax Incentives
       Equity buildup
       Pride of ownership
       Privacy



                                  87
Own your home
   Disadvantages
       Long term commitment
       Maintenance
       Lack of flexibility
       Usually more expensive than renting
       High up front costs
       Foreclosure
       Property taxes

                                              88
Renting
   Advantages
       Possible lower housing cost
       Shorter term commitment
       No/minimal maintenance repair costs




                                              89
Renting
   Disadvantages
       No Tax incentives
       No fixed housing costs
       No equity build up
       Less Privacy




                                 90
NAR/MAR FACTS
   Average price of homes in US are down 20%+/-
   Rates are now at avg of 4.75%
   Buyers market
   Great 1st time homebuyer programs
   Selling your home for less you are buying new for less
   Over a 6 year period the average owners still has 85% increase
    in home value
   Renters assets rose $4500 vs. buyers $185,000 in past 5 years
   www.mdrealtor.org      www.realtor.org

   NOTE: PLEASE CHECK THE WEB SITES ABOVE FOR UP TO
    DATE STATISTICS THEY MAY HAVE CHANGED



                                                              91
                                                           The Buying Process
                                                                                                       TIMELINE FOR TRACKING SALES
                                                                                             FROM DATE OF CONTRACT THROUGH DATE OF SETTLEMENT

                                                                     PLEASE NOTE DOWN AND KEEP TRACK OF ALL CONTRACTUAL DEADLINES AND OTHER IMPORTANT DATES.
                                                         GIVE A COPY TO YOUR CUSTOMERS AND/OR CLIENTS SO THEY ARE ALSO ABLE TO TRACK THE PROGRESS OF THEIR PURCHASE/SALE.

PROPERTY ADDRESS: ___________________________________________________ BUYER: ______________________________ SELLER: ____________________________

   1. Contract                  3. Seller Requests          5.   Deliver                7. Buyer             9.    Last day 11. Buyer to
                                                                                                                                                             13. Schedule       15. Deadline to              17. Pre-
                                Resale Packet for         Buyer’s Request             Responds To             for Buyer to  Receive                                                                                               19. Day of
     Acceptance                                                                                                                                               Settlement         Deliver Condo               Settlement
                                   HOA + Condo             for Repairs to            Seller’s Decision        Review HOA    Written Loan                                                                                          Settlemen
                                                                                                                                                              Date/ Send         Docs to Buyer               Walk –Thru
                                                             Seller/LA                 Re: Repairs                Docs      Commitment
    ___/___/___                                                                                                                                                  Notice
     Date when final                  ___/___/___
  signatures and initials   Owner must obtain from             ___/___/___
    are on all pages of       Courthouse or from                                         ___/___/___             ___/___/___             ___/___/___                                   ___/___/___           ____/___/___        ___/___/___
                                                            Within 3 Days                                                                                      ___/___/___
   contract & addenda          Management Co.                                          Within 3 days of      Within 5 days of           30-45-60 days                                15 Days Prior to         5 days Prior      Buyer Brings
                                                            From Date of                                                                                     30 days Prior to
   Turn paperwork and         Must be delivered to                                    Receipt of Seller’s    Receipt of Docs         From Contract Date                             Settlement + 7 day       to Settlement     Certified Funds
                                                             Inspection                                                                                        Settlement
 good faith deposit check    Buyer w/in 20 days of                                   Decision to make or       from Seller                                                            Review Period                              Seller Gives
      into Processing         Contract Ratification                                   not make Repairs                                                                                                                          Possession to
        Department                                                                                                                                                                                                                  Buyer


                                                                                                                                                       13
 START              1                  3                   5                         7                       9                      11                                                 15                      17            19
                                                                                                                                                                                                               
RATIFIED
                                                                                                                                                                                                                               THE
                            2                   4                      6                      8                         10                    12                          14                     16                 18
CONTRACT                                                                                                                                                                                                                              FINISH
                                                                                                                                                                                                                                       LINE!


 2. Buyer to
                             4. Home                                                                             10. Conduct                                                                16. Last Day                 18. Client To
 Have Made                                           6. Seller Responds                  8. Deadline to                                  12. Appraisal           14. Agent to
                            Inspection                                                                           Well and/ or                                                               for Buyer to                   Review
 Mortgage                                           To Request for Home                  Deliver HOA                                     Received by             Order Termite
                            Takes Place                                                                             Septic                                                                  Review Condo              Settlement Sheet
 Application                                        Inspection Repairs                   Docs to Buyer                                   Lender                  Inspection
                                                                                                                  Inspection                                                                Docs
    ___/___/___               ___/___/___                 ___/___/___                       ___/___/___                                                                                                                        ___/___/___
                                                                                                                   ___/___/___              ___/___/___             ___/___/___               ___/___/___
   Usually within           Within 10 days          Within 5 Days Of Receipt               20 days From                                                                                                                  Title Co. Faxes HUD-1
                                                                                                                 30 days prior to        30 days from Date        30 days Prior to          Within 7 Days of
    7-10 days of            Of Contract Date         By Seller of Buyer’s list            Contract Date +                                                                                                                    1-2 Days before
                                                                                                                   settlement               of Mortgage             Settlement              Receipt of Docs
   Contract Date                                           of Repairs                     5 days to review                                                                                                                     Settlement
                                                                                                                                            Application                                       from Seller
                                                                                                                                                                                                                             92
Monthly Mortgage Payments
   $ borrowed rate             P&I Payment
       180,000   6.5           $1138
       200,000   6.5           $1264
       220,000   6.5           $1390
       240,000   6.5           $1516
       260,000   6.5           $1642

    Note: payment above does not include, Property tax, HOA,
    insurance.
    Under this analysis a $5000 increase in the amount
    financed will increase your payment by $31.50 P&I




                                                               93
Projected Tax Savings
   $200,000 MTG @ 6.5%, 30 yr fixed
                           RENT          BUY
Income                      $60,000       $ 60,000
Standard deduction             5,000
Interest Deduction                 0    - $ 13,392
Property tax                       0    - $ 3500
Taxable Income               $55,000    $ 43,108


Tax Due (@35% rate)        $19,250     $ 15,088

SAVINGS                            $4162 or $347 a month
NOTE THESE ARE PROJECTIONS ONLY,SEE YOUR TAX ADVISOR



                                                           94
Expense reduction ideas

   Reduce Fees                  Hot water heater
   Money pits                    cover
       Big house                Seal duct seams
       Big cars                 Programmable
       Investment                thermostat
        properties
                                 Seal drafty windows
       Tight budgets means       and doors
        less non essentials
       Cable TV                 Fuel additives
       Lunches

                                                  95
Expense reduction ideas

   Increase Insurance          Coupon clipping
    deductible                 Florescent bulbs
   Insure only house          Review deductions
    not land                    from pay
   Unplug electric items      Turn jarred items
   Compare fees                upside down
   Shop Rates                 Ketchup/vinegar
   www.money.com               Brass cleaner
   www.bestrate.com           Stale potatoes chips
   Flatten toilet paper       Phones            96
Avoid Fees
   Over limit $39          Car rental Ins
   ATM Fees $2.50          Heavy bag fees
   Foreign C.C. fees       Paper ticket fees
   Late fees               Change flight fee
   Bad deposit fee         Talking to Airline
   Checking Acct Fees      Gift card fee
   Bi weekly payment       Hotel fees, internet,
                             resort fee, bell fees
                            Broker fee

                                                     97
Saving Web sites

   Shopzilla.com
                                     Gasbuddy.com
   Pricegrabber.com
                                     Magazinepricesearch.com
   Sortprice.com
                                     Smartbargin.com
   Couponcabin.com
                                     Annualcreditreport.com
   Couponbug.com
                                     www.moneyanswers.com
   Edeals.com
                                     Ruelala.com
   Couponmom.com
                                     Bluefly.com
   Salescircular.com
                                     Overstock.com
   Dealnews.com
                                     bigwords.com(text books)
   Bilshrink.com (cells)
                                     Gasprices.mapquest.com
   Retailmenot.com(coupons
                                     Energystar.com
   Accuquote.com(home ins)
                                     Gethuman.com(cust. Ser.)
   Insurance.com(life)
                                     Kayak.com(travel)
   Insweb.com(auto)
                                     us.lastminutetravel.com
   Myfico.com (credit score)
                                     Taxcalculatorkiplinger.com
   Healthinsurance.com
                                     www.ssa.gov/estimator
   www.66ways.org
                                     www.energysavers.gov
   www.energynear.gov
   WWW.ANGELFOODMINISTRIES.COM      http//tax-coalition.org/programs.cfm



                                                                         98
Websites Continued
   www.ftc.gov
   www.quickenonline.com
   www.livingto100.com
   www.kiplinger.com
   www.thestreet.com
   www.investinginbonds       (bonds)
   www.morningstar.com        ( stocks and funds)
   www.myfico.com             (credit score)
   www.kiplinger.com          (tax calculator)
   www.ssa.gov                (Social Security Calculator)
   www.ehealthinsurance.com   (health insurance)
   www.coverageforall.org     (health insurance)
   www.medicare.gov           (Medicare)
   www.accuquote.com          (life ins)
   www.insure.com             (life ins)
   www.insweb.com             (auto ins)
   www.accucoverage.com       (home ins)
   www.naic.org/cis           (commissioner cust. service complaints for ins)




                                                                                 99
Debt Consolidation Loan:
Risks & Benefits
   Creating more DEBT to pay DEBT
   Loss of Property if secured
   Running up cards again
   Lower interest rate
   Reduce reliance on credit, IF close old
    accts


                                          100
    Strategies to Reduce
    Credit Card Debt
   Consistent Monthly Payment
   ALWAYS pay more than minimum
   Avoid Cash Advances
   Avoid purchasing with credit cards
    during repayment period
   Adhere to a Spending Plan


                                         101
Contact Information
Consumer Credit Counseling
Service of MD and DE, Inc.
   Jim Harris
   CCCS - 1-800 642 2227
   CCCS Website www.CCCS-inc.org
   Email - Jharris@cccs-inc.org




                                102

								
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