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Getting Ahead
4th Quarter 2010

In this issue:

Managing Debt and Credit

Elder Care

Handling the Unexpected

Tips for Recognizing and Avoiding Fake Check Scams

Managing Debt and Credit

Credit was once defined as "Man's Confidence in Man." But, in fact, the definition of credit today is more like "Man's Confidence in Himself." Using credit today means you have confidence in your future ability to pay that debt. Forty years ago, your parents may have paid cash for their homes and their cars, a largely unheard-of event today. If they borrowed money at all, chances are it was from a relative or friend, and not a financial institution. Today debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility. Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced.

Installment Debt

Installment debt allows you to purchase items at a competitive interest rate, in monthly payments. At first, most of the monthly payment consists of interest. In later years, principal begins to be paid down. Installment debt is easily budgeted and the debt is eliminated on a predetermined date.

Revolving Credit

A revolving line of credit, also called "open-ended credit," is made available to you for use at any time. Examples of revolving credit are credit cards. While revolving credit is a convenient way to borrow, it can also become an endless pit of minimum payments that barely cover the interest due. Many cards charge annual rates of interest of 18% or higher. As you pay off your debt, the minimum payment is also reduced, thus extending your payoff period and, consequently, the interest you pay. Paying just the minimum due on a $2,000 credit card loan could mean making monthly interest payments for 10 or more years! But some people can easily yield to the temptation that the convenience of credit cards offers. Impulse buying, failing to compare costs, and purchasing large items you can't afford are all downfalls brought on by always available purchasing power. Spending more than you earn in any given period is a dangerous practice at best, but doing it over an extended period of time can be financial suicide.

Using Credit Wisely

To use credit intelligently, start by examining the terms of the card(s) you are currently using. Keeping track of your cards, their rates and your current balances will help you to be aware of how you use credit cards. Increased competition in recent years has led some credit card companies to offer enticing features to attract new cardholders, including no annual fees and low interest rates for an introductory period. And credit card companies sometimes will give their introductory rates to existing cardholders so that they won't transfer their balances to another credit card company.

Eliminating Credit Card Debt

If you think you may have too much credit card debt, begin to address it by honestly evaluating your spending habits. Examine your existing expenses to analyze how your money is spent. You will most likely be able to identify the problem areas where you are more likely to spend too much or too readily with credit cards. Then, based on your current spending practices, create a realistic budget to pay off your credit card debt in the shortest time possible while not adding any more debt to it.

The Role of Debt

Today, carrying installment debt is almost a fact of life. Mortgages, car loans, or small-business loans (to name a few) are part of almost everyone's life. On the other hand, carrying credit card debt is usually not a good idea. At interest rates of 16% and up, it's hard to justify keeping savings that could pay off that 18% department store credit card in the bank at 2%.

Debt and credit play increasingly important roles in our lives. As the aging Baby Boomers get closer to their peak earning years, many are realizing the need to reduce debt and increase savings. Even though analyzing your spending habits and creating a budget to address your debt may seem a little overwhelming, the simplicity of the philosophy of the Depression era still stands: Never spend more than you earn. Once you have come to grips with this basic fact, managing your debt will become far easier and more rewarding.

Article courtesy of Yahoo!. To view entire article, click here.

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Elder Care

Caring for the elderly is a challenge and can be overwhelming if not given proper consideration. Factors to consider include the choice between professional and home care, as well as a number of financial and legal issues.

Long-Term Care
For those who can no longer take care of themselves, long-term care is a broad term for many different options including nursing homes and in-home care. Long-term care can be expensive - $40,000 per year or more. Prescription drugs, legal fees and other costs can creep up quickly as well. But insurance premiums can also be fairly expensive - up to $6,000 per year. Decide what type of care you want, find out the uninsured cost for it and compare it to the insurance premium that would cover it.

Long-term care usually consists of some combination of skilled care, intermediate care and custodial care. Skilled care is the most expensive service involving round-the-clock care by a registered nurse under the close supervision of a physician. Intermediate care is less intense and includes occasional nursing and rehabilitative care under the supervision of medical personnel. Custodial care is home care. It provides for the basic, non-medical needs of a patient such as cooking, bathing and other day-to-day needs.

Selecting An Insurance Provider
Long-term care insurance is becoming increasingly popular as a way of easing the financial strain that long-term care can impose. Shopping around for long-term care insurance is important because all policies are different and you will need to find a policy that will fit your particular needs and budget.

With the wide variety of services that are available, choosing the right insurance provider can be difficult. There are a few questions, however, that will help you decide.

  • How are the benefits paid? Are they sent directly to the provider or do you have to pay the charges and receive reimbursement?
  • Who determines if the patient needs home health or nursing home care?
  • What level of care does the policy provide?
  • What is the waiting period from when the service begins to when benefits are paid?
  • Does the policy cover Alzheimer's disease and related disorders?
The Legalities of Elder Care
When you assume care of an elderly relative, there are many legal documents and formalities that may need to be completed. These should be taken care of as soon as possible and, if the person you are taking into your care can help you, it will make the process go more smoothly. Keep in mind that when someone completes these documents, they are, in fact, giving up some control of their own lives. Only a very close friend or family member with no conflicting motives should be given these powers.
  • Letter of Instruction A letter of instruction provides important information and instructions a caretaker may need. It includes the contact information for close family and friends, a list of assets and liabilities, a list of insurance policies and information on all financial accounts.
  • Will A will designates who will receive major assets after a person dies. It also includes guardianship of any children under the age of 18. Smaller items such as heirlooms, furniture and other household goods should be addressed in a separate testamentary letter. This letter should be referenced in the will.
  • Powers of Attorney If the people under your care are unable to make decisions for themselves because they are somehow incapacitated, you will need to have power of attorney to make these decisions for them. Of course, they will need to create powers of attorney before they are actually needed. There are two main types of powers of attorney:
    • A durable power of attorney gives a person, or people, authority to manage finances and other legal affairs if the person needing care is not capable of managing them. It can be long-term or short-term and allows the party that has power of attorney to use money to provide care, sign tax returns, handle investments and other important matters.
    • A healthcare power of attorney allows the person designated to make healthcare decisions if the person being cared for is unable to make them himself or herself. For example, someone holding power of attorney may be able to decide against dangerous surgery if he or she feels that is in the patient's best interest.
  • Living Will A living will is a clear statement about wishes regarding artificial life support. If a person's brain is dead yet the body remains functioning only with the help of life support, a living will directs attendants in what choice to make - to keep the machines functioning or turn them off.
Article courtesy of To view the entire article, click here.

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Handling the Unexpected

There's nothing harder to plan for than the unexpected. Many times the emotional impact is hard enough to handle without financial uncertainties. The key to successfully surviving these life-changing events, financially at least, is to anticipate hard times, shore up your financial situation now, and give yourself some breathing room.

Build an emergency fund to get you through the rough times. You'll need three months' living expenses as a minimum, more if your industry is subject to prolonged layoffs.

Set money aside every month. But unlike retirement savings, keep your emergency savings fairly liquid, in a savings account or a money market fund. Hopefully you will never need it. But if you do, you'll be glad it's there.

A New Financial Picture
Once the immediate financial matters are taken care of, you need to settle into your new financial situation. Creating a budget is the first step toward financial security.

Create a budget by writing down your expenses to find out where your money is going. Pull out your credit card bills and bank statements from past years as guides to your spending habits. Then estimate how much your new bills will be. Be sure to include expenses for entertainment, clothing and other major expense categories. Put in some money for savings. It may take several months to fine-tune your budget.

Now estimate your monthly income. Don't include potential income - only income you are sure to receive. Make sure you know which benefits you will be receiving and for how long.

Check your budgeted expenses against your income. If you have extra income, you should try to save even more. If your expenses are greater than your income, you need to trim your expenses until they match your income.

Article courtesy of To view the article, click here.

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Tips for Recognizing and Avoiding Fake Check Scams

Fake Check scams are cleaver ploys designed to steal your hard earned money. You can avoid being a victim by recognizing the way the scam works and understanding your responsibility for the checks you deposit into your account.

To help educate the public financial institutions in Georgia are partnering with the Consumer Federation of America and the Governor's Office on Consumer Affairs on a campaign to combat such scams. For more information on common check scams go to:

In December 2008 a survey from the Opinion Research Corporation found that nearly one-third of all adult Americans have been approached with fake check scams, and about 4.5 million have fallen for them. Scams all start when someone you don't know gives you a realistic-looking check or money order and asks you to wire them money somewhere in return.

  • There are many variations of the fake check scam. It could start with someone offering to buy something you advertised, pay you to do work at home, give you an "advance" on a sweepstakes you've supposedly won, or pay the first installment on the millions that you'll receive for agreeing to have money in a foreign country transferred to your bank account for safekeeping. Whatever the pitch, the person may sound quite believable.
  • Fake check scammers hunt for victims. They scan newspaper and online advertisements for people listing items for sale, and check postings on online job sites from people seeking employment. They place their own ads with phone numbers or email addresses for people to contact them. And they call or send emails or faxes to people randomly, knowing that some will take the bait.
  • They often claim to be in another country. The scammers say it's too difficult and complicated to send you the money directly from their country, so they'll arrange for someone in the U.S. to send you a check.
  • They tell you to wire money to them after you've deposited the check. If you're selling something, they say they'll pay you by having someone in the U.S. who owes them money send you a check. It will be for more than the sale price; you deposit the check, keep what you're owed, and wire the rest to them. If it's part of a work-at-home scheme, they may claim that you'll be processing checks from their "clients." You deposit the checks and then wire them the money minus your "pay." Or they may send you a check for more than your pay "by mistake" and ask you to wire them the excess. In the sweepstakes and foreign money offer variations of the scam, they tell you to wire them money for taxes, customs, bonding, processing, legal fees, or other expenses that must be paid before you can get the rest of the money.
  • The checks are fake but they look real. In fact, they look so real that even financial institution tellers may be fooled. Some are phony cashier's checks, others look like they're from legitimate business accounts. The companies whose names appear may be real, but someone has dummied up the checks without their knowledge.
  • You don't have to wait long to use the money, but that doesn't mean the check is good. Under federal law, financial institutions have to make the funds you deposit in your checking account available quickly - usually within one to five days, depending on the type of check. But just because you can withdraw the money doesn't mean the check is good, even if it's a cashier's check. It can take weeks for the forgery to be discovered and the check to bounce.
  • You are responsible for the checks you deposit. That's because you're in the best position to determine the risk – you're the one dealing directly with the person who is arranging for the check to be sent to you. When a check bounces, the financial institution deducts the amount that was originally credited to your account. If there isn't enough to cover it, the financial institution may be able to take money from other accounts you have at that institution, or sue you to recover the funds. In some cases, law enforcement authorities could bring charges against the victims because it may look like they were involved in the scam and knew the check was counterfeit.
  • There is no legitimate reason for someone who is giving you money to ask you to wire money back. If a stranger wants to pay you for something, insist on a cashier's check for the exact amount, preferably from a local financial institution or a financial institution that has a branch in your area.

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