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OPENING PRAYER 1 OPENING PRAYER 1

HOUSEKEEPING ISSUES n n n n INTRODUCTION REST ROOMS BREAKS CELL PHONES CLEAN UP HOUSEKEEPING ISSUES n n n n INTRODUCTION REST ROOMS BREAKS CELL PHONES CLEAN UP CHAIRS AND TABLES EVALUATION FORMS WITH RECOMMENDATIONS 2

Agenda n n n n n My background Why are we here What do Agenda n n n n n 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 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 n “To promote economic self-sufficiency to individuals, families CCCS OF MD & DE MISSION n “To promote economic self-sufficiency to individuals, families and communities through financial education and counseling” 5

Consumer Credit Counseling Service of MD & DE n n n n CCCS of Consumer Credit Counseling Service of MD & DE n n n n 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 n Matthew 6: 24 “ No one can serve two masters; for God’s word n 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 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 n n n n Exodus 36: 1 - GOD WANTS US TO BE PROSPEROUS n n n n 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 n n n Deuteronomy 29: 9 – Carefully follow the SPIRITUAL CONDITIONS FOR PROSPERITY n n n 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 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”. n n n 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 n n Matthew 25: 21 – “His master replied, ‘Well done, good and STEWARDSHIP n n 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 n n I Timothy 6: 17 -19 – Command those who are rich GIVING n n 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 n n Proverbs 22: 7 – The rich rule over the poor, and DEBT n n 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 n n Genesis 41: 34 -36 – They should collect all SAVING & INVESTING n n 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 n n n n n A $5000 credit card balance take 21. 5 Facts n n n n n 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 n n n n n Thou shall save – direct THE TEN FINANCIAL COMMANDMENTS n n n n n 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 n n n n Becoming a good steward of Gods What are your goals n n n n 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 n n Household debt is $13. 8 trillion or $45, 000 for Startling Statistics n n 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% 2 years ago and was 11% in 1987 Congregational giving is approximately 2. 2%

Startling Statistics n n n Bankruptcies rose past one million up 28% from same Startling Statistics n n n 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 n n n n n 780 BILLION IN CREDIT CARD DEBT 2. 5 FACTS n n n n n 780 BILLION IN CREDIT CARD DEBT 2. 5 TRILLION IN LIMITS RATES FROM 9 - 24 % TO 25 – 36% 3. 5 BILLION PIECES OF SOLICITATION PER YEAR AVERAGE BALANCE 9 k 568 MILLION CARDS AVERAGE # CARDS CARRIED 5. 2 LEADING REASON FOR DIVORCE, FINANCES 9% HAS A NEGITIVE NET WORTH n n n n 3 RD, 4 TH AND 5 TH MORTGAGES COMMON 34. 3 BILLION IN DELINQUENCY BANKRUPTCY 1. 7 MILLION PAST 12 MONTHS NEW BANKRUPTCY BILL PENDING AVERAGE BANKRUPTCY 10 K AVERAGE 26 AVERAGE STOCK MARKET RETURN 11. 5% 90% have no financial plan 21

Facts continued n n n If you have a credit card balance of $5000 Facts continued n n n 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 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 n n n n n Can no longer achieve God’s Signs of financial bondage n n n n n 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 n TITHE FIRST n PAY YOURSELF n HAVE A SHORT TERM THREE GOLDEN RULES n TITHE FIRST n PAY YOURSELF n HAVE A SHORT TERM AND LONG TERM PLAN 25

FINANCIAL FITNESS CHECKLIST n n n n ARE YOU USING MORE OF YOUR INCOME FINANCIAL FITNESS CHECKLIST n n n n 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 1 Timothy 5 God requires Christians to operate between 2 points Paul said in 1 Timothy 5 God requires Christians to operate between 2 points n Romans 13: 8 “Owe nothing to anyone except to love one another for he who loves his neighbor has fulfilled the law” n Psalms 37: 21 “ The wicked borrows and does not pay back but the righteous is gracious and gives” 27

Families and Financial Distress n n n n Single parents Retired seniors Recently divorced Families and Financial Distress n n n n 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 n n n Establish common goals What is How to better communicate about money n n n 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 n n n Definition and examples First step in budget reduction NEEDS, WANTS, DESIRES n n n Definition and examples First step in budget reduction Ask yourself these questions n n 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 n n n It is what God wants Why is a spending plan important n n n 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) n n n Establishes financial controls Helps Why Is a Spending Plan Important? (cont) n n n Establishes financial controls Helps avoid overspending Budgets for emergencies Helps achieve Goals Controls impulse buying 32

Preparing a spending plan PAST n n n Review your spending habits Understand how Preparing a spending plan PAST n n n Review your spending habits Understand how to spend and save Look at the last 3 months of n n n Cash spent Checking account Credit card usage 33

How can I track my spending PRESENT n n n n Write down all How can I track my spending PRESENT n n n n 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 n n n Reveal your financial condition Income A good spending plan can FUTURE n n n 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 n n n n Where money What do I learn from tracking my expenses n n n n Where money goes How much I eat out Entertainment Clothing Funding priorities Savings How much debt I reduced 36

Expense tracking n n n Track your Cash- Use a small book. Keep it Expense tracking n n n 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 n n List your income Get a total disposable income n n BUDGETING INCOME n n List your income Get a total disposable income n n Total net income x 52 weeks spouse 1 Total net income x 52 weeks spouse 2 Divide by 12 = monthly income Gives total income 38

Income n n n n Job income/Wages Retirement income Child support Dividends/interest 3/5 year Income n n n n 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 n n n List monthly fixed expenses List monthly variable expenses Review Budget analysis n n n 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 n n n S = Specific M =Manageable/Moveable Budgeting SMART A budget must be n n n S = Specific M =Manageable/Moveable A = Attainable R = Reasonable T = Timely 41

Budget Analysis n Fixed Expenses Tithe Savings Housing Utilities Cable Internet phone Cell Insurance Budget Analysis n Fixed Expenses Tithe Savings Housing Utilities Cable Internet phone Cell Insurance Food Car payment Gas Repairs Parking Transportation Laundry Medical Medicine Dental Loans Credit cards Lunches Tuition Childcare n n Variable Expenses Entertainment Restaurants Clothing Health clubs Pet care Charity/donations Emergency funds Vacations Bank charges Postage Other Cleaning services Babysitting Gifts _____________ n Total n n n n n n n n n n n 42

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

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

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

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

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

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

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

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

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

Reducing Daily Expenses 1) 2) 3) 4) 5) 6) 7) 8) 9) Utilities Cable Reducing Daily Expenses 1) 2) 3) 4) 5) 6) 7) 8) 9) Utilities Cable Internet Phone Insurance Food Lunches Entertainment Restaurants TOTAL $80 $40 $60 $30 $150 $25 $100 $615 CCCS your partner in education, counseling and debt repayment + 40 + 20 +150 +100 $310

Save big when shopping n n n n n Get a Sunday paper Pre Save big when shopping n n n n n 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 Food Transportation Entertainment Savings Insurance, Medical Church/Charity Personal Debt Clothing Expense Allocation Chart Housing Food Transportation Entertainment Savings Insurance, Medical Church/Charity Personal Debt Clothing 23 -33% 12 -29% 7 -10% 4 -6% 5 -10% 7 -10 % 5 -10% 8 -18% 4 -7% 54

Trick yourself to wealth n n n I. R. S. refunds Save a Dollar Trick yourself to wealth n n n I. R. S. refunds Save a Dollar a day Coupon clipping Cut $10 a week Auto deduct $50 mo TOTAL $2300 $ 365 $ 730 $ 520 $ 600 $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 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 n 56

Rule of 72 n n A formula that shows you how long it takes Rule of 72 n n A formula that shows you how long it takes to double your money Example n 72 divided by 4% interest rate = 18 years n 72 divided by 6% interest rate = 12 years n 72 divided by 12% interest rate = 6 years 57

Rule of 72 Year Rate of return 6% Year Rate of return 12% 1 Rule of 72 Year Rate of return 6% Year Rate of return 12% 1 $10, 000 13 $20, 000 7 $20, 000 25 $40, 000 13 $40, 000 19 $80, 000 25 $160, 000 58

Compound Interest n Assumptions n n n $2000 per year X ten years = Compound Interest n Assumptions n n n $2000 per year X ten years = $20, 000 Invested for 20 years the $20, 000 is worth $178, 504 $4000 per year X ten years = $40, 000 Invested for 10 years the $40, 000 is worth $79, 098 59

Saving Money Fact n n If you saved $5. 00 per week (with no Saving Money Fact n n If you saved $5. 00 per week (with no interest) you would save $5200 IN 20 Years Rate Investment 20 Yrs n n n 6% $5200 8% $5200 10% $5200 30 Yrs $9624 $20, 924 $12268 $31039 $15, 817 $47082 60

10 Commandments of Investing n n n n n 1)Set clear goals 2)Know your 10 Commandments of Investing n n n n n 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 Credit and Debt Management “Today, there are three kinds of people: the have's, the havenot's, and the have-not-paid-forwhat-they-have's. ” Earl Wilson 62

Personal financial statement n Assets n n n n Checking/savings account Accounts receivable Marketable Personal financial statement n Assets n n n n Checking/savings account Accounts receivable Marketable securities Pension/401 k Real estate Vehicles/boats Furniture Total assets n Liabilities n n n n n Accounts payable Loans Taxes Credit cards Real estate Misc debt Total liabilities Net worth Total assets/liabilities 63

Debt to income Ratio Monthly income Take home pay, alimony, commissions, dividends, interest, other 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 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 n n A needed financial tool Costly to use Pros and Cons of CREDIT n n 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 n Personal n Credit Accounts n Public Record CREDIT REPORT CONTAINS YOUR FINANCIAL RESUME n Personal n Credit Accounts n Public Record n Inquiries FRAUD FREEZING YOUR REPORT n n n Pin code DISPUTING ITEMS LETTER 67

OBTAIN YOUR REPORT n n n Yearly from Equifax, Experian, and Trans Union www. OBTAIN YOUR REPORT n n n 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 n n n n A number that summarizes your report Used by CREDIT SCORE n n n n 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 n Credit Score breakdown 35% 30% 15% 10% Payment History How Scores Are Calculated n Credit Score breakdown 35% 30% 15% 10% Payment History amount Owed Length of Credit History New credit Type of credit 70

CREDIT SCORE * FAIR ISAACS CREATOR • * 350 -850 • * PREDICTS FUTURE CREDIT SCORE * FAIR ISAACS CREATOR • * 350 -850 • * PREDICTS FUTURE NOT PAST * SUMMARY OF YOUR REPORT * USED BY LENDERS • • DETERMINES YOUR LEVEL OF CREDITWOTHINESS QUALIFIES YOU FOR HIGHER/LOWER RATES DETERMINES INSURANCE RATES COULD IMPACT PROMOTIONS 71

IMPROVE YOU REPORT IMPROVE YOUR SCORE n n Check for Accuracy YOU are responsible IMPROVE YOU REPORT IMPROVE YOUR SCORE n n 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. n Loan How An Improved Score Can Save You Money Car Loan: 48 Mos. n Loan Principal: $10, 000 n Current Score: 500 -599 n Improved Score: 690 -719 Current Score Av. Nat’l APR 18. 4% Monthly Pmt $295. 84 Total Interest $4, 200. 64 n Savings on monthly pmt Savings over life of loan Improved Score 7. 9% $243. 66 $1, 695. 63 $52. 18 $2, 505. 01 73

Bankruptcy n n n Purpose: to provide new start to those overwhelmed by debt Bankruptcy n n n 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 n Chapter 7 – provides for discharge for all unsecured debt. Types of Bankruptcy n Chapter 7 – provides for discharge for all unsecured debt. Can only receive discharge once every 8 years n Chapter 13 – a 3 -5 year repayment plan n Chapter 11 – for businesses 75

Bankruptcy Continued n n n Law change October 2005 Means test Budget and Credit Bankruptcy Continued n n n 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 Mortgage Crisis 77

Definitions Glossary Of Terms- see handout n n n n Deed-in-Lieu Deferred Payments Forbearance Definitions Glossary Of Terms- see handout n n n n 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! n n n n n What to do Call your mortgage company for resolution! n n n n n Attempt a refinance Modification Forbearance Reverse Mortgage Look foreclosure events Contact an attorney Contact a reputable counseling service Get everything in writing 79

My Refinance was declined, why? n Equity position n Delinquency n Investor owned-I/O and My Refinance was declined, why? n Equity position n Delinquency n Investor owned-I/O and Arms 80

What not to do n n n n Stop looking for a resolution Avoid What not to do n n n n 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 n Consumer Credit Counseling Services Of Maryland Delaware Inc. n n Where to turn n Consumer Credit Counseling Services Of Maryland Delaware Inc. n n Maryland Hope Hotline n n n www. makinginghomesaffordable. gov Federal Government n n www. mdhope. org Making homes affordable n n www. cccs-inc. org www. ftc. gov State Attorney General Better Business Bureau 82

Where to turn n n Investigate counseling companies for help Insure they are a Where to turn n n Investigate counseling companies for help Insure they are a true non profit n n n 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 n Fraud- any misrepresentation or omission of information during a mortgage FRAUD AND SCAMS n Fraud- any misrepresentation or omission of information during a mortgage process n You can sue for damages n 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 n n n n n Guarantees to stop foreclosure You are told RED FLAGS n n n n n 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 FIRST TIME BUYER IS THE TIME RIGHT 86

Own Your Home n Advantages n n n Usually good investment Tax Incentives Equity Own Your Home n Advantages n n n Usually good investment Tax Incentives Equity buildup Pride of ownership Privacy 87

Own your home n Disadvantages n n n n Long term commitment Maintenance Lack Own your home n Disadvantages n n n n Long term commitment Maintenance Lack of flexibility Usually more expensive than renting High up front costs Foreclosure Property taxes 88

Renting n Advantages n n n Possible lower housing cost Shorter term commitment No/minimal Renting n Advantages n n n Possible lower housing cost Shorter term commitment No/minimal maintenance repair costs 89

Renting n Disadvantages n n No Tax incentives No fixed housing costs No equity Renting n Disadvantages n n No Tax incentives No fixed housing costs No equity build up Less Privacy 90

NAR/MAR FACTS n n n n n Average price of homes in US are NAR/MAR FACTS n n n n n Average price of homes in US are down 20%+/Rates are now at avg of 4. 75% Buyers market Great 1 st 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 92 The Buying Process 92

Monthly Mortgage Payments n $ borrowed rate n n n 180, 000 200, 000 Monthly Mortgage Payments n $ borrowed rate n n n 180, 000 200, 000 220, 000 240, 000 260, 000 6. 5 6. 5 P&I Payment $1138 $1264 $1390 $1516 $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 n $200, 000 MTG @ 6. 5%, 30 yr fixed RENT Projected Tax Savings n $200, 000 MTG @ 6. 5%, 30 yr fixed RENT Income Standard deduction Interest Deduction Property tax Taxable Income $60, 000 5, 000 0 0 $55, 000 Tax Due (@35% rate) $19, 250 BUY $ 60, 000 - $ 13, 392 - $ 3500 $ 43, 108 $ 15, 088 SAVINGS $4162 or $347 a month NOTE THESE ARE PROJECTIONS ONLY, SEE YOUR TAX ADVISOR 94

Expense reduction ideas n n Reduce Fees Money pits n n n Big house Expense reduction ideas n n Reduce Fees Money pits n n n Big house Big cars Investment properties Tight budgets means less non essentials Cable TV Lunches n n n Hot water heater cover Seal duct seams Programmable thermostat Seal drafty windows and doors Fuel additives 95

Expense reduction ideas n n n n Increase Insurance deductible Insure only house not Expense reduction ideas n n n n Increase Insurance deductible Insure only house not land Unplug electric items Compare fees Shop Rates www. money. com www. bestrate. com Flatten toilet paper n n n Coupon clipping Florescent bulbs Review deductions from pay Turn jarred items upside down Ketchup/vinegar Brass cleaner Stale potatoes chips 96 Phones

Avoid Fees n n n n Over limit $39 ATM Fees $2. 50 Foreign Avoid Fees n n n n Over limit $39 ATM Fees $2. 50 Foreign C. C. fees Late fees Bad deposit fee Checking Acct Fees Bi weekly payment n n n n Car rental Ins Heavy bag fees Paper ticket fees Change flight fee Talking to Airline Gift card fee Hotel fees, internet, resort fee, bell fees Broker fee 97

Saving Web sites n n n n n Shopzilla. com Pricegrabber. com Sortprice. com Saving Web sites n n n n n Shopzilla. com Pricegrabber. com Sortprice. com Couponcabin. com Couponbug. com Edeals. com Couponmom. com Salescircular. com Dealnews. com Bilshrink. com (cells) Retailmenot. com(coupons Accuquote. com(home ins) Insurance. com(life) Insweb. com(auto) Myfico. com (credit score) Healthinsurance. com www. 66 ways. org www. energynear. gov WWW. ANGELFOODMINISTRIES. COM n n n n n Gasbuddy. com Magazinepricesearch. com Smartbargin. com Annualcreditreport. com www. moneyanswers. com Ruelala. com Bluefly. com Overstock. com bigwords. com(text books) Gasprices. mapquest. com Energystar. com Gethuman. com(cust. Ser. ) Kayak. com(travel) us. lastminutetravel. com Taxcalculatorkiplinger. com www. ssa. gov/estimator www. energysavers. gov http//tax-coalition. org/programs. cfm 98

Websites Continued n n n n n www. ftc. gov www. quickenonline. com www. Websites Continued n n n n n www. ftc. gov www. quickenonline. com www. livingto 100. com www. kiplinger. com www. thestreet. com www. investinginbonds www. morningstar. com www. myfico. com www. kiplinger. com www. ssa. gov www. ehealthinsurance. com www. coverageforall. org www. medicare. gov www. accuquote. com www. insure. com www. insweb. com www. accucoverage. com www. naic. org/cis (bonds) ( stocks and funds) (credit score) (tax calculator) (Social Security Calculator) (health insurance) (Medicare) (life ins) (auto ins) (home ins) (commissioner cust. service complaints for ins) 99

Debt Consolidation Loan: Risks & Benefits n n n Creating more DEBT to pay Debt Consolidation Loan: Risks & Benefits n n n 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 n n n Consistent Monthly Payment ALWAYS pay Strategies to Reduce Credit Card Debt n n n 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. n n Jim Contact Information Consumer Credit Counseling Service of MD and DE, Inc. n n Jim Harris CCCS - 1 -800 642 2227 CCCS Website www. CCCS-inc. org Email - [email protected] org 102