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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
September 14, 2001 Issue 8
Scott Bilker, Editor and Publisher, mailto:publisher@debtsmart.com
Richard Crammer, Editor, mailto:editor@debtsmart.com
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For instructions to SUBSCRIBE, and DISCLAIMER, see bottom of this email.

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IN THIS ISSUE
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=> Advertisers

=> Cool Debt Statistic

=> Letter from the Publisher

=> Excerpt from "Credit Card and Debt Management"

=> CONTEST RESULTS from 8/17/01 (Fuzzy Math)

=> The Do's and Don'ts of Bouncing Back From Bankruptcy

=> Single Parent Homeowner

=> I Wasn't Paying Attention: Where Does My Money Go 
     and How Can I Get Some Back?

=> Subscribe/Disclaimer Information
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We have done our best to ensure that all advertisers included in the DebtSmart Email Newsletter offer quality products and services. However, if you have any problems, please let us know by sending mailto:comments@debtsmart.com 

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COOL DEBT STATISTIC
Source: Bureau of Public Debt

As of 7/31/01 the total public debt of the US was $3,266,222,376,162.12.

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Letter from the Publisher
by Scott Bilker

It has been quite difficult to take in the enormity from this week's horrific acts of terrorism. Our thoughts and deepest sympathies are with all that have been affected by these events and their families and friends, and all of the courageous firefighters, paramedics and police officers that also may have lost their lives in an effort to rescue victims.

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Emergency Resources:
American Red Cross
http://www.redcross.org/ 

Federal Emergence Management Agency
http://www.fema.gov/ 

Airlines:
United Airlines
http://www.ual.com/ 

American Airlines
http://www.aa.com/ 

News Organizations:
CNN
http://www.cnn.com 

MSNBC
http://www.msnbc.com 

BBC
http://www.bbc.co.uk/ 
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As you may know, we've been having some problems with our web site. I believe these problems have been resolved, at least for now.

If you experience any trouble using the links in the email newsletter just save the email and try later. If you can't get through to the web site at all then please send an email to let me know.

FYI, the DebtSmart Email Newsletter is currently being delivered on Friday. We're going to make a change to Wednesday effective for the next email newsletter.

Also, check out this issue's contest-results article. It's about the "fuzzy math" that some companies may try to use to get you to take an inferior loan. A must read for all.

Enjoy!

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Excerpt from "Credit Card and Debt Management,"
Chapter 5 (Math and Money)
by Scott Bilker

I want to begin this chapter with a personal story. My father asked me to help him pick out a new car. After visiting several new car dealers in the area we finally found one with a car that had the price and features we were looking for. Once the negotiations were complete, and the price was agreed upon, it was time for the dealership to add in those extras such as; tags, processing fees and anything else they could.

Finally, the balance due for the car was presented and we decided to finance it. The salesman told me the length of the loan and the interest rate. I already knew the amount to be financed so it was easy to calculate the monthly payments. It was at this time that we were instructed to go into a separate office to read and sign the loan agreement. When the contract came out of the computer the monthly payment shown was $65 a month higher than I had calculated! That $65 per month for entire length of the 5-year loan would total $3,900! I expressed my concern and was told that, "you can't figure out monthly payments with a simple calculator" and "the computer is right." I informed the salesman that unless...

To read the rest of this article click here:
http://www.debtsmart.com/cgi-pl/go/010914_en.cgi?1&7428 

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CONTEST RESULTS from 8/31/01 (Fuzzy Math)
by Scott Bilker

Congratulations to John who won the fourth contest offered in the DebtSmart Email Newsletter! John's answer was the only completely correct solution submitted. This is a tricky question so please read through the entire answer. It's this type of "fuzzy math" that can end up costing people a bundle!

QUESTION:

Which loan is better and why?

Loan 1: $100,000.00, 30-year loan, with monthly payments of $665.31. That's a total out-of-pocket cost of $665.31 x 360 months = $239,511.60.

Loan 2: $100,000.00, 15-year loan, with monthly payments of $1,014.27. That's a total out-of-pocket cost of $1,014.27 x 180 months = $182,568.60

ANSWER: Loan 1 is better because it really does cost less!

Let's pretend that I already have loan 1. Now imagine having a mortgage broker trying to sell me loan 2 to replace my loan 1.

Here's the pitch. "Scott, listen, if you do a 15-year mortgage with the $1,014.27 monthly payment, you'll save $56,943.00! Just sign here!"

Is the broker lying? Well, not technically, however it is true that loan 2, even though it "seems" like it saves you money, is actually more expensive!

Even under the sales pressure I would go get my calculator to figure out the most important cost for any loan, the interest rate (APR).

It turns out that Loan 1 is 7% and Loan 2 is 9%. I used the DebtSmart Loan Calculator to get the rates. Use this link to find out how you can get the calculator:
http://www.debtsmart.com/cgi-pl/go/010914_en.cgi?9&7428 

Armed with that information I'd say to the mortgage broker, "Why would I want to use the 15-year, 9% loan over the 7% loan?" To which the response is, "Rate doesn't matter, you save $56,943.00! Scott, are you trying to tell me...

Click here to read the rest of the article:
http://www.debtsmart.com/cgi-pl/go/010914_en.cgi?2&7428 

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The Do's and Don'ts of Bouncing Back From Bankruptcy
Excerpted from Bounce Back From Bankruptcy
by Paula Langguth Ryan

Bankruptcy is the hardest financial decision you'll ever face. It can be a fresh start, or it can be the start of the biggest financial nightmare ever. To make sure you truly get a fresh start after bankruptcy, follow these "Do's and Don'ts":

DO's

1) DO get copies of all three credit reports and make sure that the accounts
    in your bankruptcy are listed as discharged.

2) DO get a secured credit card but make sure the card issuer reports your
    payments, has a grace period, and doesn't report your card as secured.

3) DO set up a DebtBuster Strategy for your undischarged debts and pay
    them off as quickly as possible.

4) DO wait at least two years before applying for a mortgage...

Click here to read the rest of this article:
http://www.debtsmart.com/cgi-pl/go/010914_en.cgi?4&7428 

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Single Parent Homeowner
by Gary Foreman

Dear Dollar Stretcher,
I am in the process of a divorce and want to keep the family home. Are there any programs out there for single parents that would offer a more favorable interest rate for re-financing?
 --Sarah

Sarah's question brings good news and bad news. The bad news is that she's not likely to find anyone to offer her a lower rate because she's a single parent. The good news is that there are some things that she can do to stay in her home.

Only a non-profit agency would consider a special rate for borrowers like Sarah. Some do offer help for needy home buyers. But I'm not aware of any that will help with refinancing. The reason that a regular mortgage company doesn't have special rates is simple. Her ability to repay the mortgage will be hurt by the divorce.

The mortgage company looks at a borrower's total assets and liabilities. They also compare the amount of income to monthly expenses.

Sarah's income will be going down. Even if she was the major family breadwinner, she's probably going to be taking a big income hit when her husband leaves.

Unfortunately...

Click here to read the rest of the article:
http://www.debtsmart.com/cgi-pl/go/010914_en.cgi?5&7428 

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I Wasn't Paying Attention: Where Does My Money Go and How Can I Get Some Back?
by Janet Hall

Tracking, planning, and "overhalling" your hard earned money can help you reach any financial goals that you have, help you in getting out of debt, and help you gain back control of your money, your future, and your life.

Dawn Rivers Baker of WAHM & Mompreneur has a great series, Financial Management 101 in which she writes, "Managing cash flow is the simple matter of projecting cash receipts and needed cash outlays within a certain period of time - a week, a month, a quarter, a year - ...

Good cash management consists very basically of three things: knowing when you need money, knowing where that money is going to come from, and knowing where you can get money from if you fall short. With good cash management, you may find yourself with a bit of money left over when you have..."

Click here to read the rest of the article:
http://www.debtsmart.com/cgi-pl/go/010914_en.cgi?6&7428 

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HOW TO SUBSCRIBE TO THIS NEWSLETTER

TO SUBSCRIBE to this newsletter click on the below link and complete the subscription form:
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Please contact mailto:comments@debtsmart.com with any comments, problems, or concerns.

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The author(s), Press One Publishing, and DebtSmart.com shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly by the information contained in this email newsletter and/or at the DebtSmart.com web site. The information, methods and techniques described may not work for you and no recommendation is made to follow the same course of action. Every effort has been made verify the accuracy of all content contained herein. However, there may be mistakes; typographical, mathematical or in content. This email newsletter and the DebtSmart.com web site have been created for your entertainment only. You must always seek the proper professional advice before taking any financial or legal action. You have been warned.

Copyright (c) 2001 Press One Publishing. All rights reserved. Please do not reprint, or host on your Web site, without explicit permission. However, if you found this newsletter helpful, we grant you permission, and strongly encourage you, to e-mail it to a business associate or a friend. Thank you.