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DEBTSMART EMAIL NEWSLETTER - Tools for financial success! 
A Free E-Mail Newsletter from DebtSmart Online and Press One Publishing. 
ISSN 1538-6740
July 6, 2001 Issue 3 
Scott Bilker, Editor and Publisher, mailto:publisher@debtsmart.com  
Richard Crammer, Editor, mailto:editor@debtsmart.com 
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For instructions to SUBSCRIBE, see bottom of this email.

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IN THIS ISSUE
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=> Sponsors

=> Letter from the Publisher

=> No Money Down

=> Car Debt or Credit Debt First?

=> 10 Reasons People Overspend

=> Credit Card Tip (Don’t cut up those cards!)

=> Feedback/Survey/Contest

=> Subscription Information
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Letter from the Publisher 
by Scott Bilker

Hello everyone!

Good news--the Federal Reserve keeps lowering interest rates...the bad news is that your credit card bank isn’t going to lower your rate as quickly.

Why is that?

First of all, credit card rates, in general, are very competitive right now. Many banks are moving toward fixed interest rates and have also put a floor on lowering rates. Additionally, many banks adjust their rates quarterly so you’ll need to wait to get the benefits from the last Fed rate cut.

What about mortgage rates?

Don’t hold your breath waiting for the last Fed rate cut to affect any pending mortgages or refinances. This is because mortgage rates move in anticipation of rate cuts, plus they’re tied to the long-term, ten-year rate.

Anyway, no matter what the current market for interest rates, if you have been a long-time credit card user of a specific bankcard then they should be treating you like GOLD! If you’ve been paying on time, then you should have a decent rate. I would say something less than 12% for sure!

If your rate is greater than 12% then give that bank a call and let them know that they’ll have to drop that rate to keep you as a customer. Remember that we’re the consumers, we’re spending our money, and we have many choices!

You can reach me with your comments at:
mailto:publisher@debtsmart.com

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 No Money Down 
by Gary Forman The Dollar Stretcher

Question: I see a guy on TV all the time. He says that you can buy a home with no money down and then come from closing with money in your pocket. Supposedly people buy homes and make millions a year. Do you know about this? How this could be done? Is it worth the 3 payments of $59.99? Or is it a scam?

Answer: Sure sounds tempting. You walk in with nothing, sign some papers and walk out with cash and the keys to a house. And, you can do it over and over until you make a million!

Much as we'd all like to believe that the road to riches was that easy, it's not. Yes, you can make...

Read the rest of this article by clicking below:
http://www.debtsmart.com/cgi-pl/go/010706_email_news.cgi?1&7428

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Car Debt or Credit Debt First? 
by Scott Bilker

Question: Scott,

First off great site, very informative.

I've already organized my debt with the highest interest debt to be paid off first. Only thing is, my car loan is up toward the top and it's getting close to the time when I would need to roll over the payments of paid off debt to the next highest interest rate debt, my car loan.

Does it make sense to start increasing my payments on this loan? Isn't it fixed what I will pay on the loan? If this is the case shouldn't I start paying on the next highest interest debt (another credit card) instead? Thanks for any help!

Mike

Answer: Mike,

Thanks your positive comments about DebtSmart!

It's great that you've already set up a payment program that pays the highest-interest-rate debts back first. Many financial "experts" advise to pay off the lowest-balance debt first but that's simply wrong, meaning, more expensive!

Since your car loan is about to become the most expensive debt, highest interest rate, you should "roll" your payments from the last debt into the car loan. This is the most efficient method of repaying your debt.

There are however, a few details you need to check: 1) Are you allowed to pay off your car loan early with larger payments? There are some loans that have pre-payment penalty conditions so call the bank to make sure you can send in more money toward the loan principal.

2) When you send in your payments be sure the bank knows to apply the entire payment toward your balance. There are a few instances when the bank will apply the scheduled payment and hold the extra for the next payment. You don't want that situation.

3) Will you need that extra cash in the near future? If you pay more toward a credit card you can always get that cash back if you need it by using a cash advance or making purchases with the card. When you increase the payment on the car, that money becomes part of the car and cannot be converted back into cash again until the car is sold.

In summary, you are correct. It makes perfect sense to send the extra payment to the car loan because it's the most expensive debt on your list. Just be sure there are no penalties for paying off the loan early. If there are penalties, you'll need to consider if the savings from the interest charges are greater than penalties. Chances are you can pay off the loan early; if there are penalties let me know.

Keep up the good work!

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10 Reasons People Overspend 
by Debra Vaughn 
Family Budgeteer

There are as many reasons that people overspend as there are budgets to help get people out of the debt overspending has caused. By talking to people, conducting surveys, and helping people throughout the years, I have made a list of ten reasons for overspending that I hear most often. Take a look to see if you fall in line with one or more of these causes to indulge.

10. Keeping up an image Many people feel that if they fall below a certain image that the neighbors set, the neighborhood will think less of them. This is known as keeping up with the Jones'. The truth behind this is that the neighbors are thinking and feeling the same way.

9. Avoidance I cannot tell you how many people, in all financial situations, have told me that the reason they spend too much money for lunch out with friends, shopping with the girls, etc is to not have to admit that they cannot afford to pay the bill for the whole table. If your friends drop you because you cannot afford to buy them lunch are they really friends?

8. The money is on it's way I have heard this over and over "I thought...

Read the rest of this article by clicking below:
http://www.debtsmart.com/cgi-pl/go/010706_email_news.cgi?2&7428

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Credit Card Tip (Don’t cut up those cards!) 
by Scott Bilker

What should you do when you finally pay off a credit card?

Many financial experts advise to cancel the card and cut it up. However, I suggest that you shouldn’t be so hasty because, when you cut up your credit cards you cut out your options.

Borrowing money is just like shopping. When you go shopping, you’re looking for the best deal. And in order to find the best deal, you need to have more than one store to shop in. When you cut up all your cards you limit the places you can shop for a new loan.

When I need to borrow money I just start calling my credit cards. I say, “hey, what’s your best rate because I’m about to cash advance $1,000 and if you can give me a good rate I’ll borrow the money from your bank, otherwise I have plenty of other banks to call today.” The result is that I can always get a great rate when I need to borrow money.

When I do pay off a card, I keep the account open and put the card in a safe place in my files. Usually after a short period of inactivity I start receiving new low-rate offers from these banks as they attempt to get me to do business with them again.

Remember, we’re the ones spending the money for the credit so let’s make them work hard to get our business.

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Feedback/Survey/Contest 
by DebtSmart.com

Please help us deliver the best content to you by completing the online feedback survey.

Plus, enter “The Best Credit/Debt Story” contest to win an autographed copy of Scott Bilker’s best-selling book, “Credit Card and Debt Management,” and get YOUR story published in the next email newsletter!

“The Best Credit/Debt Story”--an interesting, and informative, personal story, about your experience with credit cards, credit counseling, debt, etc.

Winner is determined by votes from DebtSmart Editors and will be announced in the next email newsletter 7/20/01.

Complete survey and enter the contest by clicking below:
http://www.debtsmart.com/cgi-pl/go/010706_email_news.cgi?3&7428

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