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									Get   OUT   of   DEBT

Description, Objective, Mission .......................... 3
10 Financial Danger Signals ................................. 4
                                                                                 Earn up to
Getting into Debt ................................................. 5         1,500 PlusPoints
Debt Self-Assessment ....................................... 5 - 7             by attending
Eight Steps to Debt Reduction ............................ 7                Member Workshops!
Step 1: Stop Creating Debt ................................ 7
                                                                             If your dream is to “be
Step 2: Analyze Your Debt .................................. 7                debt free,” attend all
Step 3: Improve Cash Flow ................................ 8                three classes: A Budget
                                                                              for All Seasons, Know
Step 4: Refinance and/or Consolidate debt .... 8
                                                                             Your FICO IQ, and Get
Step-down principle ............................................ 9          Out of Debt and receive
Step 5: Use Credit Wisely ................................... 10            100 PlusPoints for each.
                                                                                Complete all three
Read Your Credit Report ..................................... 11
                                                                            and get a 500 PlusPoint
Learn Your Credit Score ...................................... 11                      bonus!
Truth in Lending Act (1968) ............................... 12
                                                                             If your dream is to “own
The Fair Credit Reporting Act (FCRA) (1971) ... 12
                                                                            a home,” attend all three
Sample Retraction Letter to Credit Bureau ...... 13                          of the classes in the “be
Step 6: Develop a Plan ..................................... 14             debt free” track AND one
                                                                               Homeownership class
Step 7: Set Goals ............................................... 14           (worth 200 PlusPoints).
Smart Goals ........................................................ 14       Complete all four and
                                                                               get an additional 500
Smart Goals Worksheet ....................................... 15
                                                                                  PlusPoint bonus!
Step 8: Implement and Monitor the Plan ......... 16
                                                                           Workshop registration fee is $5 and is
Resources ...................................................... 17-18
                                                                           refunded upon attendance. Certain
Notes ............................................................... 19    rules apply. See or call
                                                                                   512-421-2818 for details.

Financial freedom begins with changing the behaviors that lead
to debt. In order to win the credit game, you have to know how to
play. This workshop examines factors involved in getting into debt,
                                                                          “The person who achieves
strategies for getting out of it, reconstructing existing credit to its
                                                                          their goals has a VISION that
greatest advantage, and best practices for building good credit.          MOTIVATES them. We become
                                                                          what we think about all day.
                                                                          To change our lifestyle we must
                                                                          change our thinking habits. We
OBJECTIVE                                                                 change our thinking habits by
By the end of this class, participants will understand how to             focusing on desired goals.”
develop a strategy to get out of debt. You will be able to:                  Bob Webb, Elements of Motivation,
  • Identify your personal motivation for getting into debt.

  • Identify ways to decrease spending and increase income.
                                                                                 Track Your Goal
  • Discern the facts about credit, credit reports, and credit scores.

  • Write clear and prioritized goals.

  • Determine what impact debt has on your ability to

    achieve your goals.

  • Implement the eight steps to debt reduction.

A+ Federal Credit Union is dedicated to providing the
communities we serve with FREE financial education resources
to help everyone achieve financial independence. We believe that
learning smart money skills is important at EVERY life stage. To
learn more about free seminars, financial education resources
for children, professional development for teachers, and other
educational opportunities, call the Community Education
Director at 800-252-8148, Ext. 2802 (Dawn).

According to a 2006 survey by the American      10 Financial Danger Signals
Psychological Association (APA), finances
are one of the most significant causes
of stress among adults. Ironically, the         1. Do you borrow to pay bills?
very spending habits that can cause great
                                                               YES                    NO
stress are what some people turn to in order
to relieve their stress – temporarily. With
little money in the budget for personal         2. Do you charge everyday things and small items on credit?
spending, financially stressed people may
feel an overwhelming need to do something                      YES                    NO
for themselves in order to cope. Studies
conducted by the U.S. Department of Health      3. Do you argue about money at home?
and Human Services have shown that
financial hardships and the associated                         YES                    NO
stress can lead to additional
unhealthy behaviors such as excessive
                                                4. Do you pay too much on credit and installment payments?
drinking, smoking, and overeating, all of
which take a toll on a person’s physical and                   YES                    NO
emotional well-being.

The processes and practices of getting          5. Do you skip or lower payments to pay for food and other
our personal finances in order are simple       household needs?
to understand but difficult to implement
because they involve behavior changes.                         YES                    NO
At some point in time, the behaviors that
led us into debt provided something of
                                                6. Do you get this month’s bills before you pay last month’s?
value, whether it was instant gratification,
                                                                YES                    NO
attention from others, an increased sense
of self-worth or pride, or the enjoyment of
a shopping spree. Possibly, we turned to        7. Do you lack funds for expected expenses? (insurance
credit during times of hardship, such as job    renewals, auto repair/registration, etc.)
loss and unforeseen health problems. At the
time, it seemed to be the only way to get by.                  YES                    NO

Unfortunately, these behaviors create a
                                                8. Do you extend or renew old debts before you pay off an
vicious cycle of debt accumulation. There
is hope! Follow the steps outlined in this
workbook, and you will be on your way to                       YES                    NO
financial freedom!

                                                9. Do you owe more than you can pay off in 12 months?
                                                              YES                  NO

    “The saving man becomes
    the free man.”                              10. Do any of your credit card balances get bigger each
                          Chinese Proverb       month?

                                                               YES                    NO

Getting into Debt                                                Circle the answer that represents
People get into debt for any number of reasons. While            your opinion:
there are some who have plenty of money and are truly            My money goal is...
irresponsible with it, the cause is often the result of things   a) to save as much as possible.
like an illness, a job loss, social pressure, an emergency,
                                                                 b) to have enough to pay for my basic needs
or a business venture that doesn’t pay off. The ensuing
depression that sometimes accompanies such a dramatic            and have some left over to save or invest.
change in circumstances can make it even more difficult to       c) to have enough to buy whatever I want.
summon up the will or the energy to deal with it.                d) to be able to treat myself every now and then.
Self-Assessment                                                  e) I don’t really have any goals.
Do you live beyond your means? Answer the
                                                                 Which of the following statements
following questions truthfully to find out!
                                                                 best describes how you feel about
                                                                 your income?
Circle TRUE or FALSE for each of the following:
1. I’m willing to work at a job I don’t particularly enjoy to    a) I am doing o.k. with what I make, but a

make more money.                                                 little more to put aside or invest would be nice.
                  TRUE                    FALSE                  b) I make enough to cover my bills, save for

2. I will pay more for an item with a name brand that others     my future, and invest for retirement.

will recognize.                                                  c) It would be nice to have some extra
                  TRUE                    FALSE                  money for when the credit card bills are

3. I usually compare quality and price before making an          higher than what I anticipated.

expensive purchase.                                              d) I could use a lot more than I am making right
                  TRUE                    FALSE                  now to get the things I have always wanted.

4. I consider myself to be very frugal.                          e) Everyone can always use more money, I am

                  TRUE                    FALSE                  just not sure how much more I would need.

5. When I go shopping, I always buy something.                   My budget…
                  TRUE                    FALSE                  a) is tremendous fun! I love playing with

6. I have bought many things I have never used or used           it each month and making sure that
very little.                                                     everything has its place.
                  TRUE                    FALSE                  b) could use some work. No matter how

7. I only spend my money on things that are important to me.     hard I try, I just seem to come up short or to
                  TRUE                    FALSE                  barely make it each month.
                                                                 c) is usually pretty accurate. It’s not
8. I make only the minimum payments on my credit cards.
                  TRUE                    FALSE                  something I necessarily love doing, but I do
                                                                 feel good about making it work.
9. I’d rather be shopping right now.
                                                                 d) is something that I get very nervous
                  TRUE                    FALSE
                                                                 thinking about or doing.
10. I don’t measure self-worth by what I or others own.
                                                                 e) is something I think I may have read
                  TRUE                    FALSE
                                                                 about in a book once.

When I feel down in the dumps,                          When I bought my car...
spending money…                                         a) I bought what I liked and worried about the cost later.
a) always makes me feel better.                         b) I ended up spending more than I had planned.
b) on ways to make more money makes me                  c) I found a compromise between what I wanted and what I
feel better.                                            could afford.
c) is not what I do to make me feel better.             d) I very carefully researched every detail, ensuring that it
d) makes me feel worse. Saving money helps              would fit into my budget and made sure that I got exactly
me feel better.                                         what I had planned.
e) is not something I would do. Reviewing               e) I didn’t really do any research; I was more worried about
my budget to make sure that I have enough               whether or not they would accept me for financing.
money makes me feel better.
                                                        When it comes to borrowing money…
When I want a certain item but it’s
                                                        a) I try not to, but, when I have, I find it hard to keep track
not within my budget:
                                                        of my progress in paying it back.
a) Either I’ll decide I don’t really want it, or I’ll
                                                        b) I try never to borrow money from others.
buy it and figure out how to pay for it later.
                                                        c) I’m willing to borrow large amounts if it will help me
b) If I want it, I will buy it. I can always
                                                        make more, but I worry about amassing debt if the profits
figure out a way to pay for it.
                                                        don’t show up quickly.
c) I will buy it, whether I can afford it or not.
                                                        d) I’ve borrowed money quite often, and I’m pretty casual
d) Most of the things I want are not
                                                        about paying it back.
expensive luxury items, so I can afford
                                                        e) I borrow only for absolute necessities.
them. If I do want something outrageous, I
may buy it, but the purchase will make me               I would take (or have taken) a loan under these
feel very uncomfortable.                                circumstances…
e) If the item is important enough to me, I’ll          a) To pay off debts, to go on vacations, or to buy something
figure out how to adjust my budget to afford            I really wanted.
it. If it isn’t that important, I’ll forget about it.   b) To finance my education — maybe. (I’ve never borrowed
                                                        money, and I never want to.)
Which of the following statements
                                                        c) To set up or expand a business or to make an investment
most accurately describes your
feelings about credit cards?                            that would yield a high return.

a) I am always surprised by how much I have             d) To make essential repairs or to increase my future security.

put on them when I get the bill each month.             e) To deal with medical emergencies or other unforeseen

b) I probably use them too much, but it                 circumstances but not for anything else.

rarely bothers me.
c) I rarely use them or pay them off every                              TIP: Visualize the Effect of Debt
month.                                                    Carry a sheet of paper and note each time you think about
d) I don’t use them at all.                               being in debt—how many times a week does this happen?
                                                             Write down how you feel about being in debt (angry,
e) I use them too much, and it bothers me.               nervous…). Now, write down how you’d feel if you weren’t in
                                                         debt (free, happy...). Cut this page in half. Hang the positive
                                                         emotions in a spot you’ll see each day. Carry the negative list
                                                                 with you, and review it before each purchase.
When it comes to providing for emergencies…                        Step 2: Analyze Your Debt
a) I don’t have enough saved to provide for emergencies. I         As you continue your journey toward
                                                                   financial well-being, consider the amount of
just think the money will come.
                                                                   money you currently owe. The sooner you
b) I have no money set aside for emergencies, and I almost never
                                                                   identify exactly how much debt you have,
think about what I would do if something bad were to happen.       the sooner you can make a plan to pay it
c) I keep thinking that I’ll have enough to start saving for       off. The quicker you pay it off, the less you’ll
emergencies soon, but I’m still not quite there!                   have to pay in expensive interest charges,
                                                                   and the more money you’ll have available
d) I’ve put aside a sizable amount for emergencies, but I
                                                                   for meeting your financial goals.
still worry about them!
e) I try to save regularly for an emergency fund.                  Create a Liability Summary. List
                                                                   everything you owe to everyone. Use the
                                                                   five W’s and an H: Who, what, where, when,
                                                                   why and how. Figure out:
                          STOP                                       • Who are you borrowing from?
                      CREATING DEBT                                  • What is the cost?
                                                                     • Where are you spending the money
                                                                       you’ve borrowed?
  IMPLEMENT AND                                                      • When do you borrow?
                                         ANALYZE DEBT
 MONITOR THE PLAN                                                    • Why do you borrow?
                                                                     • How much do you owe?

       SET GOALS
                                          CASH FLOW
                                                                         TIP: You may want to use an online
                                                                         calculator to help you. One excellent
                                                                           calculator is from our partner at
                                     REFINANCE AND/OR                       MoneyMix: Launch Your Life
                                     CONSOLIDATE DEBT                            and can be found at

                    USE CREDIT WISELY                              Calculate Your Debt-to-Income Ratio.
                                                                   Add up your total monthly income including
                                                                   salary and dividends on savings accounts
Step 1: Stop Creating Debt                                         and investments. Add up all of your monthly
Seems simple, right? Many people have become                       debt payments. Finally, divide your total
accustomed to using debt to sustain a certain lifestyle.           monthly debt payments by your total
Until you learn to live within your means, transferring            monthly income to get your ratio.
debt will simply increase your borrowing capacity and
undermine your ability to achieve financial freedom.               EX: If you came up with a $2,000 total
You have to stop borrowing! That means no more “no                   debt payment number and monthly
payments until next year” purchases, no more accepting             income of $6,000, that leaves you with
“zero interest for 18 months” offers, no more credit card               a debt to income ratio of 33%.
purchases, no more trading in a car on a new model before
you’ve paid off enough to match its depreciation in value.

                                Debt-to-Income Worksheet
      To find out how much consumer debt is reasonable for you, complete the following:

 Yearly net income after taxes and deductions is                                              = $__________

 Monthly net income is                                                   = $__________ (yearly income / 12)

 Amount of consumer debt per month                                                   (monthly income x 0.15;
                                                $__________ to $__________
 that I should not exceed is                                                         monthly income x 0.20)

 Each month, I can afford to pay between        $__________ to $__________             for my consumer debt.

Less than 35%: Awesome, this is a healthy          Step 3: Improve Cash Flow
debt load for most people.                         You may have to sacrifice something to reduce debt and
                                                   improve cash flow. Some ideas for increasing income and
36%-40%: Okay, but you’re getting close to
                                                   decreasing spending include:
the edge... don’t fall off by nipping away at
your debt.                                            Increase Income
                                                         Ask for overtime
40%-49%: Not so good... you’re headed for
                                                         Take a second job
a disaster unless you do something to knock
                                                         Sell something
down your debt. Talk to your credit union to
                                                         Review your withholdings
put a plan together.
                                                         Take advantage of income tax programs, such as
50% or more: Do something NOW... talk                    the Earned Income Tax Credit.
to your credit union to help you aggressively            Start a home-based business
reduce debt.                                             Rent out a room

Lenders tend to look at two key debt-to-              Decrease Spending
income ratios when it comes to mortgages.               Review your insurance
First, they look at the front ratio, which is           Back to basics
the debt to income ratio that includes all              Don’t shop recreationally
housing costs. Then, there is the back ratio,           Use the public library
which looks at your non-mortgage debt to                Join a buying co-op
income ratio. Generally speaking, lenders               Use a programmable thermostat
would like to see your front ratio at 36% or
less and your back ratio at 28% or less.           Step 4: Refinance and/or Consolidate debt
                                                   By consolidating various smaller debts like credit cards
                                                   or personal loans into one large debt, you may be able to
     TIP: To calculate your debt-to-income         reduce interest rates or lower your monthly repayments.
    level, use the chart above or an online        Plus you only have one loan to keep track of.
       calculator at http://ow.lyl3xBKi
                                                   Make sure you have some definite objectives in place.
                                                   Know the exact reasons why you need to refinance. Try not
                                                   to refinance outside the realms of necessity, for that can
8                                                  be a significant source of refinancing problems, especially
         TIP: Use the “Step-Down” principle imagine a staircase with 5 steps. On the top step is
     the most expensive way to purchase. On the bottom step is the least expensive way to purchase.
    Determine where you are on the steps and take one step down at a time so you don’t feel deprived.
       This principle also works with spending frequency eliminate in steps how often you spend.

if you don’t have clear refinancing goals. One reason to        Be conscious of the term when using
refinance is to pay off your debts such as credit cards by      home equity to refinance and consolidate
rolling them into your home loan since the interest rate for    revolving debt. If the sole purpose of the
a home loan is typically lower than credit card APRs.           home equity is to consolidate, the term
                                                                should be as short as possible because any
   Expenses associated with refinancing:                        extended term really defeats the purpose
      • Home Equity loan to pay off debt = $154.00              of the refinance. As you know, extended
      • 1% Origination fee which is 1% of the loan amount       terms – above 60 months for this type of
                                                                consolidation – will accrue unnecessary
Even an interest rate reduction of one-half of a percent        interest charges. The issue gets cloudy if
can make a noticeable difference in the payments. Due to        you are using the equity for other things,
the fact that fees associated with refinancing can extend       like home improvement, college tuition, in
into the thousands of dollars, it is important to go over the   addition to debt consolidation because the
numbers and make sure that the home will be occupied            balance may be significant and you may
by the residents long enough to recover the costs of this       need the extra term (120 months) to make
type of transaction. For example: If the total closing costs    the payment manageable. Also bear in mind
for the refinancing of the loan comes to $2,000 and the         that your home is now collateral for the
monthly payment is reduced by $80, it will require a            loan, and you could lose it if you fail to make
period of almost twenty-five months to break even. It is        your payments.
important for the homeowner to know if the costs that
come with the refinancing are worth it in the long run.         Keep the term less than 120 on all home
Consider it an invested short-term loss for long-term gain.     equity loans for debt consolidation AND
                                                                home improvement, and 60 months if
There is a general rule in the industry that states that if     the loan is solely for debt consolidation
the present interest rate is lower than the mortgage by two     depending on the size of the loan and
percentage points, refinancing is something to consider.        the budget constraints of the individual
The benefit of refinancing using a Home Equity Loan at A+
is that the interest is tax deductible, up to a 15 year term,
total loan amount of 1st and 2nd lien can’t exceed 80% of
the County Assessed Tax Value.
                                                 Establishing Credit. Credit can be used for many good
                                                 and worthwhile purposes, such as buying a home. Credit
        TIP: Use the mortgage refinancing        cards are very convenient when making purchases as long
 calculators at https://ow.lyl3xCaj to find      as you have the money to pay off the credit card bill. Credit
 out if refinancing is a good option for you.    is like many other things in life: When used incorrectly, it
                                                 can hurt you. Credit card companies simply make offers of
                                                 credit to you based on mailing lists or research they have
Refinancing and/or consolidating debt            performed. It is your responsibility to determine whether
can be worthwhile, but avoid a pattern           you can afford to accept their offer. Shop around, or look
of refinancing, which undermines                 at offers sent to you in the mail. Consider either a student
progress toward a stable financial future        credit card or secured credit card.
by diminishing the equity in your home,
reducing your capacity to borrow funds if a      If you’re just beginning to use a credit card, a secured
true emergency arises or diverts funds from      card can help you impose some self-restraint. A secured
important goals.                                 credit card is backed by money you deposit and keep in an
                                                 account. The deposit serves as security for the credit card.
Use the “roll-up” method to repay                If you don’t pay several credit card bills or if you walk away
your debts. If you are working to repay          from the account (default), the money in your account will
multiple debts, when you pay off one credit      be used to cover that debt.
card, roll that monthly payment into the
payment on your next card, loan, or other        Regardless of what type of card you select, keep track
debt. For example, if you were spending          of what you charge, just as you would with a checking
$100 on Credit Card A and you have               account. This way, you won’t be shocked when the
completely repaid it, roll the $100 to Credit    statement arrives. Pay credit card bills as soon as they
Card B to increase that payment until it is      arrive, to avoid late-payment fees. Always pay more
paid off. Remember, it’s not “extra” money       than the minimum balance due. If at all possible, pay off
until all debts are repaid.                      the entire balance each month. If the balance begins to
                                                 increase, quit using the card for a while.
Step 5: Use Credit Wisely
Read Your Credit Report                          Save for big-ticket items instead of putting them on a card.
Review your credit report at annualcredit        If you must borrow for that item, less expensive loans The information in your credit       usually are available from your credit union.
report can impact your future choices and
opportunities. It will affect your ability to    Repairing Credit. A poor credit history often comes from
purchase a home or a car, employment             poor money management.
options, and the cost of credit. Credit scores
may also be used by insurance, utility, and      If you see any old collection accounts outstanding on your
cell phone companies.                            credit report, pay them off. For old accounts, collection
                                                 agencies may be willing to accept payment arrangements
Negative information is reported for 7 years,    or a settlement. Be sure to get all arrangements in writing!
while positive information may stay on
indefinitely. Negative information will be       To repair a poor credit history, obtain a small secured
less damaging as time passes.                    loan or a secured credit card in which personal savings
                                                 are deposited to guarantee the credit line. Repay this debt
                                                 promptly to build a history of on-time payments.

Do not hire a credit repair firm that promises to make                Step 7: Set Goals
past credit problems disappear. They cannot do anything               Knowing what your goals are makes it a lot
for you that you can’t do for yourself (plus, some of the             easier to map out a process to see what you
actions they suggest may be illegal). Seek credit rebuilding          have to do to meet them. Decide how much
programs from your credit union instead. Contact                      debt you are willing to support as part of
information is listed in the Resources section of this                your budget and figure out how you will get
handout.                                                              there.

Finally, to repair your credit, make a commitment to timely           Examples:
payments going forward.                                                  • Pay off all credit card debt by year-end.
                                                                         • Eliminate all debts except the
Step 6: Develop a Plan                                                   mortgage in three years.
Your spending and saving plan, or budget, should
                                                                      Whatever your goals might be, you have a
grow and change as your priorities and circumstances do.
                                                                      better chance of achieving them if you write
To understand your current spending patterns, track your
                                                                      them down. As you list your goals, divide
income and expenses for one month. At the end of the
                                                                      them into three categories: Short-term (0-
month, subtract your expenses from your income.
                                                                      12 months), Medium-term (2 to 5 years),
If your total is negative at the end of the month, look at            and Long-term (more than 5 years).
where your money is going. Can you cut back on some
                                                                      Try to set SMART goals. These are goals
expenses? Be honest with yourself. You are the only one
                                                                      that are Specific, Measurable, Attainable,
responsible for your spending habits. Use the information
                                                                      Realistic, and Time-bound. Make sure
gleaned from your tracking for a month to develop a plan
                                                                      you prioritize your goals. Which ones are
to keep you on track in the next month.
                                                                      the most important to you? Work toward
                                                                      achieving these goals first. Putting your
Continue tracking your expenses on a daily, weekly, and
                                                                      financial goals in writing can make them
monthly basis. Revisit your budget periodically – at least
                                                                      seem more concrete and achievable. To
every 3-6 months – to not only track your progress, but
                                                                      help you set your goals, use the Smart Goals
to reevaluate your income and expenses and ensure that
                                                                      Worksheet on the next page.
your budget reflects your current needs. Updating your
spending and saving plan should become a regular part of
your money management to keep pace with your changing
income, goals, and spending habits.

      Specific            Measurable              Attainable               Realistic            Time bound
                                                 “I’ll work lots
                         “I want to pay a                                “I’ll buy lottery
    “I want to get                              of overtime and                                “I want to pay it
                         bunch of money                                 tickets and hope
     out of debt.”                             get a second job to                              off by spring.”
                           on the card.”                                   that I win.”
                                                pay off my card.”
         vs.                    vs.                    vs.                     vs.                     vs.
                                                “I’ll sell my extra
                                                                       “I’ll pay $107/50
   “I want to pay          “I’ll need to        belongings that I
                                                                       a month from my        “I want to pay it off
   off my student        pay the entire       don’t need anymore
                                                                       paycheck for the          by March 1st.”
    credit card.”       balance of $645.”     in a garage sale and
                                                                        next 6 months.”
                                              make $500 profit.”

                                   Grow Your Savings
Goals              Your


         Smart Goals Worksheet

                                Weekly    Monthly
  Goal      Cost     Timeline
                                Savings   Savings
Step 8: Implement                                 a commitment journal to track your progress, and an entire
and Monitor the Plan                              support community. There’s no requirement to wager
Make adjustments as needed. Remain aware          money, but doing so provides extra motivation. It gives
of your progress. Celebrate milestones.           your goal extra stickiness.

Establish an accountability system.               An Accountability Partner is a trusted and respected
It’s a good idea to get a second set of eyes on   person who coaches another person in terms of helping the
your financial picture. This person should be     other person keep a commitment. Hold regular meetings
someone you trust, such as a family member        with your Accountability Partner who will challenge,
or friend, and someone who has resources          motivate, mentor, encourage, and inspire you to achieve
and knowledge to help you see your finances       maximum results. Regular meetings can be weekly, bi-
objectively. Your accountability partner          weekly or monthly, but consistency is the key. Knowing
should help you set yourself up for success.      that you will have to report your successes or failure
                                                  at a pre-determined date can give even the most guilty
                                                  procrastinators the drive to achieve their prearranged goals.

 “True freedom begins and ends                    He or she should be someone who will challenge, engage,
 with personal accountability.”                   and evoke a sense of accomplishment in you. Also consider
                                                  choosing an Accountability Partner whom you trust to
                               –Dan Zadra
                                                  keep confidence as you may get into financial and personal
                                                  discussions that are confidential in nature. Some other
The Commitment Contract concept                   benefits of utilizing an Accountability Partner include:
is based on two well-known principles of
behavioral economics:                                   • Assistance in organizing ideas, thoughts, and tasks into
                                                          specific, measurable, attainable, and realistic goals
   1. People don’t always do what they                  • Assistance in prioritizing an effective and consistent
      claim they want to do, and                          goal plan
   2. Incentives get people to do things                • Ensuring accountability for task follow through
                                                        • Mentoring through difficulties and indecisiveness
Entirely unique to each person, a                       • Sharing advice, personal knowledge and experience
Commitment Contract obliges you to                      • Follow up on your success
achieve your goal within a particular time-
frame. It includes some form of reminders,

                                  The Cost of Making Minimum Payments

                                                                                                   Total Years
            Item                   Price          APR          Interest Paid      Total Cost
                                                                                                    to Pay Off

             TV                    $500           18%              $439              $939               8

         Computer                 $1,000          18%             $1,899            $2,899              19

         Furniture                $2,500          18%              $6,281           $8,781              34

Personal Finance educators and counselors                   Final Thoughts
serve critical roles in helping individuals and             Getting out of debt is not something that happens
families from all walks of life make effective financial    overnight. It requires a commitment to the process
decisions. View the Resources section of this handout       which could take, in general, 3-5 years or more
for contact information on the Credit Union’s free          depending on your debt load. Follow the 8 Steps to
Financial Wellness Coaching.                                Debt Reduction, and remember, “The hardest part of
                                                            any journey is taking that first step.”

IN THE COMMUNITY                                            Austin Freecycle Network (AFN)
A+ Financial Wellness Coaches                     
800-252-8148, Ext. 6879 (Keith)                             Connects Austinites with unwanted items and people
A+ Financial Center                                         wanting those items.
800-252-8148, Ext.6863 (Nadine)
Community Tax Centers
                                                            The webs site for SAT both I and II, as well as the CSS
A Foundation Communities Program
                                                            Profile, a widely used financial aid evaluation tool required
                                                            by many colleges. Good organizational site for college search
3036 S. 1st St., Suite 200
                                                            and financial aid info.
Austin, TX 78704
                                                            Consumer Action
Cornerstone Financial Education
A non-profit organization dedicated to helping people by
                                                            A national non-profit education and advocacy organization
providing financial education, home ownership and debt
                                                            offering many free services to consumers.
management services.
1-800-336-1245                                              Debt in Focus
3011 N. Lamar Blvd.                               
Austin, TX 78705                                            This free and anonymous service will help bring your debt                                              into focus.
My Money
                                                            Federal Trade Commission’s section on Consumer
                                                            Protection, including a section on investment scams
United Way of the Capital Area
                                                            Home & Family Finance Center
2000 E. Martin Luther King Jr.
                                                            Source for personal finance information with professionally
Austin, TX 78722
                                                            researched articles and survey results weekly, daily news
ONLINE                                                      updates, and calculators to answer everyday questions.                                          
The AARP site provides advice on a host of retirement       Site for innovative prepaid tuition plan for more than
planning issues. Link to “Money and Work” for               240 private colleges with protection against future tuition
information on financial planning                           increases

Anytime Adviser®: Personal Finance Guides                             A comprehensive financial dictionary online with
Interactive coaches offer you the tools you need to learn   educational content and tools to help empower the
more about finances and become a savvy consumer.            individual investor.

                                                       RESOURCES                                             RECOMMENDED READING
Investors of all ages can link to “Investing Basics,” and for     Money Management
kids, the site includes “Kid’s Savings Calculator”                Cents & Sensibility by Bethany & Scott Palmer
I live here I give here                                           Get a Financial Life by Beth Kobliner                                        On My Own Two Feet by Manisha Thakor and Sharon Kedar
Central Texas’ campaign for philanthropy dedicated to
                                                                  Smart and Simple Financial Strategies for Busy People by
educating Central Texans about the needs of our community
and the non-profits serving us.                                   Jane Bryant Quinn
                                                                  Suze Orman’s 2009 Action Plan
MoneyMix: Launch Your Life
                                                                  The 9 Steps to Financial Freedom by Suze Orman
For anyone age 18 to 30 – Blogs, calculators, and articles to     The Difference: How Anyone Can Prosper in Even the
help you learn how to finance your goals and dreams.              Toughest Times by Jean Chatzky                                                       The Motley Fool: Personal Finance Workbook by David &                                                   Tom Gardner
The U.S. government’s website dedicated to teaching all           The Ten Commandments of Financial Happiness by Jean
Americans the basics about financial education.                   Chatzky
National Endowment for Financial Education                        The Wall Street Journal: Complete Personal Finance                                                  Guidebook by Jeff Opdyke
A private, national, non-profit foundation dedicated to
                                                                  Your Money or Your Life by Joe Dominguez and Vicki Robin
improving the financial well-being of all Americans.

PlanIt: Retire Ready                                              Saving & Investing                           Start Late, Finish Rich by David Bach
For anyone over the age of 30 – Articles, videos, and
                                                                  The Automatic Millionaire by David Bach
calculators to help you prepare for the economy’s changing
landscape.                                                        The Millionaire Next Door by Thomas Stanley and William
Smart About Money                                           The Only Investment Guide You’ll Ever Need by Andrew
Site dedicated to your financial wellbeing includes information   Tobias
on facing major life events and financial decisions.              Throw Out 50 Things by Gail Blanke
Spendster                                                         What Women Need to Know About Retirement by Jeffrey                                             R. Lewis and Cindy Hounsell
A safe haven where you can talk about what you should
not have bought. Share your story of impulse buying, over-        Debt
spending or just plain wasting money on the stuff you don’t
                                                                  Debt-Free Living by Larry Burkett
                                                                  Debt is Slavery by Michael Mihalik                                                  Generation Debt by Carmen Wong Ulrich
Bureau of the Public Debt’s Web site features pages on
                                                                  Maxed Out by James Scurlock
savings bonds, a savings bond calculator and instructions
for buying bonds online                                           Pay it Down! by Jean Chatzky
                                                                  The Credit Road Map by Patrick Ritchie
US Securities and Exchange Commission’s Investor                  The Debt Diet by Ellie Kay
Information section for online help with investing and
consumer protection questions
Social Security Administration’s Web site pages on
retirement and a kid’s page including information for
parents and teachers. You can request a Personal Earnings
and Benefits Estimate Statement


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