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Getting Ahead
1st Quarter 2008

In this issue:

Americans Who Understand Compounding Boost Savings

Tips on Cutting Household Expenses

Worried About Debt?

Teaching Your Preschooler about Spending and Saving

National Credit Union Youth Week

Don't Fall For Subprime Credit Cards

GettingAhead Association Annual Meeting
Americans Who Understand Compounding Boost Savings gets Americans fired up about saving money? According to a survey released in October 2007, it's a simple message: Give examples of the miracle of compound interest (Consumer Federation of America, Dec. 11).
When told that saving $200 a month for 40 years at a 5% interest rate would grow to more than $300,000, four out of five survey respondents said this example of the miracle of compounding would help persuade them to save money. Compound interest is calculated not only on the initial principal, but also on the accumulated interest of previous periods, so you're building savings at a much faster rate.

The survey of more than 2,000 adult Americans sought to understand why Americans do, or don't save money. Respondents reported several factors that influence their savings: access to contributory retirement programs such as a 401(k) easy access to savings accounts paying 5% and automatic transfers from checking or payroll deposits to savings.

Of the more than 1,300 savers in the study, nine out of 10 said that avoiding credit card debt was an important factor in saving money. Other factors cited as successful saving strategies:

• Planning and monitoring spending
• Making regular contributions to an employer's retirement plan
• Transferring surplus balances to savings
• Saving a portion of financial windfalls
• Making mortgage payments to build home equity
• Automatic transfers from checking to savings or to other investments
• Saving loose change

One of the easiest ways to save for future goals is to take advantage of tax-deferred retirement plans. If your employer offers a 401(k) plan, contribute as much as you can; you'll not only build savings faster with the employer match, you'll also cut your tax bill. For those in the 25% federal tax bracket, every $1,000 socked into a 401(k) trims your taxes by $250 (, Feb. 27). The earlier you start, the more savings you'll build with the miracle of compound interest.

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Tips on Cutting Household Expenses
Make your home more energy efficient by taking the proper steps needed to heat and cool it. Making smart decisions year round will make your home comfortable and save you money. Here are a few tips to help you see some real savings on your heating and cooling bill.

1. Set your water heater to 120 degrees Fahrenheit. Several hours after resetting, check the     water temperature with a thermometer and adjust if necessary.

2. Insulate your water heater with an insulation blanket.

3. Purchase a water-saving showerhead. Take shorter showers, using a timer to let you know when time is up. If you don't change your showerhead, don't set the water on full force.

4. Update your toilet with a new water conserving model. These types of toilets have greatly improved in the past few years and can save gallons with every flush.

5. Wash clothing with warm or cold, not hot, water. Manufacturers make laundry detergents especially for cold water loads to help you get clean clothes while using less energy.

6. Wash a full load of clothes. If washing a smaller load, change the water level to the appropriate setting to conserve water.

7. Always run full loads in the dishwasher. Use a short wash cycle whenever possible and avoid pre-rinse cycles.

8. Don’t leave the water running while hand washing dishes.

9. Set the refrigerator for 38-40 degrees Fahrenheit and keep the door closed as much as possible.

10. Turn off the lights when you leave a room or if you don't need the extra light.

11. Install lower wattage bulbs in overhead fixtures and compact fluorescent bulbs for often used lamps.

12. Consider a natural gas stove. Often, natural gas is cheaper than electricity.

13. Turn off the television, radio and computer when not in use.

14. Set your programmable thermostat to 78 in the summer and 68 in the winter. For each degree you lower the thermostat, you can save about 1 to 3 percent per degree.

15. Replace the filters in your heating and air conditioning units often.

Bonus: Contact your utility company and ask them to send an energy expert to your home to do an analysis to see where you can make changes that will save you money and energy.

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Worried About Debt? should review their finances every year and watch for the warning signs of being overextended on credit. Some warning signs are:

-- Paying only the minimum payment month after month
-- Being out of cash constantly
-- Being late on important payments, such as rent or mortgage
-- Taking longer to pay off balances
-- Borrowing from one lender to pay another

Consumers who are having trouble paying down their debts have options available. Some tips:

-- Talk with creditors; hiding only makes the problem worse;
-- Don’t charge more purchases until you pay off your current debt;
-- Avoid bankruptcy; it’s a short-term solution with long-term consequences;
-- Contact CredAbility (formerly known as Consumer Credit Counseling Services) at (800) 251-2227.

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Teaching Your Preschooler about Spending and Saving learn about money from many sources. Long before they enter school, they observe adults using money and buying things. They watch television daily and see thousands of commercials each year. Like it or not, money is a part of your child’s life.

The spending behavior children witness affects their attitudes about the uses of money. Some of these beliefs will help them as adult consumers and some will not. For example, they might get the message that saving is important or they might learn that spending is fun.

As a parent, you will not be the only influence on what your child learns about using money. But when you teach basic lessons about money, you increase the chance that your child’s values will be similar to yours.

The suggestions below are parent-and-child tested, and are meant to give you ideas for:

• teaching how money works and what it can do,
• talking about how your family uses money, and
• modeling good money management.
How can I teach my preschooler…

¿Cómo puedo enseñarle a mi niño de edad preescolar...
National Credit Union Youth Week
Got Green? Grow It at your Credit Union credit unions across Georgia and across the country, April 20-26, 2008 for National Credit Union Youth Week and give your children the opportunity to learn about growing their green (money that is).

Visit a participating credit union to find out what’s planned for young people and how you can participate.

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Don't Fall For Subprime Credit Cards an effort to improve their credit history, many consumers are unknowingly signing up for subprime credit cards—often with disastrous consequences (USA Today, Dec. 9).

Targeted to young adults with no or little credit history, as well as to those with a tarnished credit history, issuers of subprime credit cards are taking advantage of vulnerable consumers who can least afford the excessive fees.

How excessive? In one example, with a low credit limit of $250, some applicants were socked with an array of fees that totaled $178, leaving the user just $72 to spend on that card during the year. Instead of improving their credit history, victims are sinking deeper in debt.

The National Consumer Law Center, Boston, issued a warning to consumers that these high-fee, low-credit predatory credit cards are merely a way for some issuers to extract as many junk fees as possible from consumers desperate for credit.

What should you watch for?
  • Low limits. If the card carries an unusually low line of credit—say, only a few hundred dollars—that's the first clue it may be a predatory credit card.
  • Phrases that may not sound like fees. In the fine print, look for phrases such as account maintenance, account set-up, program, participation, and activation fees.
  • Fees that put you over the limit. Excessive fees, which add up quickly, reduce your available balance right off the bat. Cardholders who don't deduct those fees from their available balance increasingly are slapped with over-the-limit fees.
  • "Good-guy" claims. The issuer may make the claim that it's going out of its way to help users get out of debt and give credit to subprime borrowers. One issuer justified its predatory credit card by stating that its "mission" is to bring affordable banking services to minority communities. And with millions of cash-strapped homeowners facing foreclosure, claims like these may sound enticing.
Looking for an alternative? Get a secured credit card, says Susan Tiffany, director of personal finance information for adults at the Credit Union National Association's Center for Personal Finance. "You'll have to deposit money with your credit union or other reputable lender, and then use that line of credit to build a good credit history. Repay purchases in full and on time each month. Then after a time, say six months to a year, apply for a traditional unsecured card with a higher limit."

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Getting Ahead Association Annual Meeting
On January 8, 2008, the GettingAhead Association held its annual meeting, during which reports were presented by the Chairman, Mark Outler and Treasurer, Dan McCue. Additional information shared with those in attendance included a review of improvements to the GettingAhead Association Resource Center Web site. Three positions were up for re-election, resulting in the following: Mark Outler retains his seat as chairman, Dan McCue remains the organization’s treasurer, and Patricia Harris maintains her seat as board member at large.

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