"A Penny Saved Is A Penny Earned"

Monday, April 27, 2009

Debt Collection Rights

Fair Debt Collection Rights

When using the "debt elimination" method or 'Snowball" method, you may be contacted by a "debt collector", so it's good to know your rights. If you use credit cards, owe money on a personal loan, or are paying on a home mortgage, you are a "debtor." If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a "debt collector".  

You should know that in either situation the Fair Debt Collection Practices Act requires that debt collectors treat you fairly by prohibiting certain methods of debt collection. Of course, the law does not forgive any legitimate debt you owe.
What debts are covered?
Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.
Who is a debt collector?
A debt collector is any person, other than the creditor, who regularly collects debts owed to others. Under a 1986 amendment to the Fair Debt Collection Practices Act, this includes attorneys who collect debts on a regular basis.
How may a debt collector contact you?
A collector may contact you in person, by mail, telephone, telegram, or FAX. However, a debt collector may not contact you at unreasonable times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves.
Can you stop a debt collector from contacting you?
You may stop a collector from contacting you by writing a letter to the collection agency telling them to stop. Once the agency receives your letter, they may not contact you again except to say there will be no further contact. Another exception is that the agency may notify you if the debt collector or the creditor intends to take some specific action.
May a debt collector contact any person other than you concerning your debt?
If you have an attorney, the debt collector may not contact anyone other than your attorney. If you do not have an attorney, a collector may contact other people, but only to find out where you live and work. Collectors usually are prohibited from contacting such permissible third parties more than once. In most cases, the collector is not permitted to tell anyone other than you and your attorney that you owe money.
What is the debt collector required to tell you about the debt?
Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.
May a debt collector continue to contact you if you believe you do not owe money?
A collector may not contact you if, within 30 days after you are first contacted, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.
What types of debt collection practices are prohibited?
Harassment. Debt collectors may not harass, oppress, or abuse any person. For example, debt ollectors may not:

  • use threats of violence or harm against the person, property, or reputation.

  • publish a list of consumers who refuse to pay their debts (except to a credit bureau)

  • use obscene or profane language

  • repeatedly use the telephone to annoy someone

  • telephone people without identifying themselves

  • advertise your debt.

False statements. Debt collectors may not use any false statements when collecting a debt. For example, debt collectors may not:

  • falsely imply that they are attorneys or government representatives

  • falsely imply that you have committed a crime

  • falsely represent that they operate or work for a credit bureau

  • misrepresent the amount of your debt

  • misrepresent the involvement of an attorney in collecting a debt

  • indicate that papers being sent to you are legal forms when they are not

  • indicate that papers being sent to you are not legal forms when they are.

Debt collectors also may not state that:

  • you will be arrested if you do not pay your debt

  • they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so

  • actions, such as a lawsuit, will be taken against you, which legally may not be taken, or which they do not intend to take

Debt collectors may not:

  • give false credit information about you to anyone

  • send you anything that looks like an official document from a court or government agency when it is not

  • use a false name.

Unfair practices. Debt collectors may not engage in unfair practices in attempting to collect a debt. For example, collectors may not:

  • collect any amount greater than your debt, unless allowed by law

  • deposit a post-dated check prematurely

  • make you accept collect calls or pay for telegrams

  • take or threaten to take your property unless this can be done legally

  • contact you by postcard

What control do you have over payment of debts?
If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe you do not owe.
What can you do if you believe a debt collector violated the law?
You have the right to sue a collector in a state or federal court within one year from the date you believe the law was violated. If you win, you may recover money for the damages you suffered. Court costs and attorney's fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector's net worth, whichever is less.
Where can you report a debt collector for an alleged violation of the law?
Report any problems you have with a debt collector to your state Attorney General's office and the Federal Trade Commission. Many states also have their own debt collection laws and your Attorney General's office can help you determine your rights.
If you have questions about the Fair Debt Collection Practices Act, or your rights under the Act, write:

Correspondence Branch,
Federal Trade Commission,
Washington, D.C. 20580.

Although the FTC generally cannot intervene in individual disputes, the information you provide may indicate a pattern of possible law violations requiring action by the Commission.

Less is more,


Friday, April 24, 2009

Debt Elimination Tips

Debt Elimination Calendar

Debt is the biggest hindrance to wealth. Debt is someone else's claim on your future. Debt is really not conducive to living a frugal lifestyle. So how do we get rid of it?

A debt elimination calendar is a plan to eliminate your debt in a systematic and progressive way. Some people call it snowballing your debt (as a snowball rolls down hill it gets bigger and bigger), where you pay the minimum payment on all debts and then as one debt is paid off, you then apply the payment of that debt to the next one and so forth, until all are paid off (a snowball gaining momentum).

Now there are some tricks to this method, some people say pay off the highest interest debt first, but the method that seems to work better is to pay the debt with the lowest amount of total debt. That way you gain traction or success sooner and we all know that success bread success. You want to achieve momentum for that snowball.

Next, if you have any extra funds after you set your budget or you get that tax return or gift money apply it to that first debt and just keep paying the minimum on the rest. Then when you have that first debt eliminated, take the first debt payment and apply it to the next debt in line, thereby increasing your payment or snowballing.

Now, lets take a look at how to set up a debt elimination calendar or snowballing:

credit Card/Med./Car/Student
Jan. $100/ $50/ $200/ $300

Feb. $100/ $50/ $200/ $300

Mar. $100/ $50/ $200/ $300

Apr. $ ---/ $150/ $200/ $300

May $ ---/ $150/ $200/ $300

Jun. $ ---/ $150/ $200/ $300

July $ ---/ $ ----/ $350/ $300

Aug. $ ---/ $ ----/ $350/ $300

Sep. $ ---/ $ ----/ $350/ $300

Oct. $ ---/ $ ----/ $ -----/ $650

Nov. $ ---/ $ ----/ $ -----/ $650

Dec. $ ---/ $ ----/ $ -----/ $650

NOTE: On a piece of paper write across the top each creditor equally space, starting in order with the lowest amount owed to the highest amount owed. Down the side list out the months. Draw vertical lines between each creditor creating vertical columns for each. Now, go down each column and list the monthly payment for each creditor, until the loan is repaid. Finally, after the first creditor is paid off, add the payment from the first column to the second column and then when that's paid off and both payments to the next and next and so forth... until all loans are paid off.

Less is more,


Thursday, April 23, 2009

Family Meals for Under $5 - Chicken and Vegetable Stew

Family Meals for Under $5 - Chicken and Vegetable Stew
Lately I’ve noticed sections in my weekly grocery circulars that read “feed a family of 4 for under $10!”. I’m sure most of you have laughed at this as I did. As a result, I began to wonder what does dinner really cost for my family of 8? I figured if I kept it under $5, I was doing good.
My challenge became what meals I could come up with that were both healthy and tasty (my family does not like beans) and cost me $5 or less. This includes everything, main dish and side dishes.
We’ll see how I do. Here’s my first post in this series:
Chicken and Vegetable Stew
¼ c butter - On sale for .99c a Lb = .25c
3 potatoes - .68c for a 10 Lb bag = .09c
3 carrots - $1.24 for a 2 Lb bag = .18c
3 stalks celery - on sale for .88c a bunch = .24c
1 small onion - on sale for .99c for a 5 Lb bag = .02c
4 c chicken stock = .52c
1 can diced tomatoes = .54c
3 c cooked chicken - whole chicken on sale for .58c a Lb = $1.50
1 clove garlic = .05c

*Melt butter in pot add vegetables one at a time and saute until slightly tender. Add stock, tomatoes and chicken. Season with salt and pepper to your liking. Bring to a boil. Reduce heat and simmer 30 min.
Serve with tossed green salad (Romaine lettuce on sale for 50c ea = .25c), rolls = .25c and milk = $1.00.
After doing all of my calculations I figured this meal cost just under $5. I included milk in the cost since it was needed to make this a well balanced meal. I probably couldn’t do it so cheap without some really good deals on the chicken, butter, lettuce and potatoes. And, this doesn't even take into consideration gardening, where we grow our own food, instead of buying it. Still, it just goes to show that it is possible to feed your family a healthy meal for under $5.

Thanks Aunt Pat for this great recipe.
Less is more,

Thursday, April 16, 2009

Budgeting Tips

Budgeting Tips

Money is a funny thing, if you don't decide beforehand where you want it to go, it will still go. An old friend mine use to say, "money is like gas it expands to fill the space". If it's a small space it fits that, if it's a large space it fits that. What he meant was that even though he would make more money it always got spent. There always seemed to be more month than money and he never seemed to have extra. But, at the times in his life where he lost income (because of a job change, etc...), he always seemed to make it work or just barely get by.

Over the years because of a unique position I was in, I had the opportunity to look at a lot of people's finances and one thing I realized is that it doesn't seem to matter how much money you make. I would see the family making $20-30,000/yr doing just fine and then the family making $200-300,000/yr getting behind each month OR the reverse, with the family making $20-30,000/yr getting behind each month and then the family making $200-300,000/yr doing just fine, along with every income level in between. So what this told me is that it doesn't matter what you make, it matters more how you manage it.

This is where this post comes in or where we talk about budgets. There's an old saying that rings true when it comes to budgets, "If you fail to plan, you plan to fail". A budget is a plan for your money, so let's learn how to plan.

To follow the 70/30 rule from my earlier post and get your budget there, you need to first establish where you are. So a budget that has both an "actual" and "planned" section is what we're after. here's a good one to use:

BUDGET FOR _______________(Month/Year)

Wages (after taxes) __________
Other income _______________
Total income _______________



*Charity P_____________/ A _____________
*Savings P_____________/ A_____________
*Food Storage P_____________/ A_____________
Food P_____________/ A_____________
Mortgage or Rent P_____________/ A_____________
Utilities P_____________/ A _____________
Transportation P_____________/ A_____________
Debt P_____________/ A_____________
Insurance P_____________/ A_____________
Medical P_____________/ A_____________
Clothing P_____________/ A_____________
School expenses P_____________/ A_____________
Spending Cash P_____________/ A_____________

Total Expenses p_____________/ A_____________

Points to Remember:
  • When doing a budget always make sure every cent is allocated! Your income should equal your expenses. If not, the extra will disappear or "expand to fill its space". Your goal is to live under your means, but by following the 70/30 rule, you are doing that, so any extra should go to debt first and then savings. Otherwise the extra gets spent.

  • Always have a "spending cash" item or "misc. money" item, where you can spend the money on anything you want and it's not accountable to any other budget item. If you don't have this item on your list, most people will spend it anyways, but if you do most will stick with the amount allocated. For example, say you only have an extra $5 every month, but you don't budget it and so when you're out you stop and get a meal which cost you $10 and then your spouse spends another $20 on something they wanted and now you're over budget by $25. Sound familiar? Now, if you knew you only had $5 most people have a tendency to only spend $5 or darn close. Personally, there's been times in my life when the budget only allowed $5 and so my wife got $2.50 and I got the other half. She would go garage selling with her half, so she could get her shopping fix and I would buy off the dollar menu. But there's also been times when the budget allowed for hundreds of dollars for spending cash. Reality is that most will blow money anyways, so always set aside something no matter how small, the trick is to not be surprised at the end of the month and know what you're going to spend beforehand.

  • Budget for a specific period of time (such as weekly or monthly) according to your pay schedule. If income and expenses vary from week to week or month to month, prepare a new budget each and every pay period, until you can become stable.

Remember "If you fail to plan, you plan to fail".

Less is more,