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Your Money... And Your Life

Volume I, Issue 3     January 2004

Happy New Year! And welcome to the New Leaf Financial Counseling Newsletter

Did you make New Year’s resolutions? Did they include “Get out of Debt”? How are you doing so far? If the answer is “not so well” or “don’t know where to start”, then this issue is for you. You’ll learn not only how get out of debt, for good, but also how to have a life while you’re doing it.

Money problems are, of course, always about money, but often they are not only about money... they are about many other areas of life: work, relationships, dreams, even our spiritual life. This newsletter is dedicated to you -- who want to turn over a new leaf in your relationship with money and begin a new life where money is in balance with all other aspects of your life.

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Looking for speakers for your parent or church group? Engage Kim to speak on "Raising Money-Healthy Kids".

Book of the Month: “Money Troubles, Legal Strategies to Cope With Your Debts”, by Attorney Robin Leonard, published by Nolo Press (6th edition, January 2000). Excellent reference book which explains all aspects of debt, including negotiating with creditors, your rights, and all options, including bankruptcy.

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Feature Article: Live debt-free - even while you are still in debt!

According to figures recently released by the Federal Reserve, consumer debt is at an all time high, at $1.98 trillion in October 2003. Are you in one of the 60% of all households in the US that carries a balance on one or more of your credit cards? Is your outstanding balance less than or greater than the average $12,000 debt in these households? Are you paying $1000, $2000, $3000 or more in credit card interest per year? Think what you could do with an extra $2500 per year – for many people, this is the equivalent of an extra paycheck (or even two) after taxes.

The tragedy of overwhelming credit card debt goes far beyond the financial cost: in the physical and emotional toll caused by lack of sleep, stress and anxiety; the marital toll of constant arguments over finances; the time and attention taken away from not only your work but life’s pleasures as well. If you are in credit card debt, it’s very likely you are putting your life on hold until the bills are paid off – feeling that you can’t take a vacation or repair the roof or fix up the kitchen, even see the dentist, until you get rid of the debt.

Most people in debt underestimate its impact on their lives emotionally, physically and even financially. Debt is almost never an isolated problem you can fix with a good consolidation or refinancing plan; rather it’s an indication of how you have lived your life, how you make choices every day; it’s a symptom of deeper problems. You'll never manage to become debt free, and stay debt free, until you confront – and change – the behaviors, patterns and values that put you in debt to begin with. Read Full Article

Money Tool of the Month: Debt Reduction Worksheet

Absolutely critical to any attempt to reduce debt is to get a really clear picture of your current debt situation. The Debt Reduction Worksheet, created by Karen McCall (founder of the Financial Recovery Institute), is extremely valuable in not only getting clear, but in developing and carrying out a strategy to eliminate debt once and for all. I use this worksheet with all of my clients who are working to reduce and eliminate their debt; the example here is a simplified version of that worksheet.

The first step is to gather all of your bills for unsecured debt – that is, all the bills for your credit cards, store cards, student loans, personal (non-auto) loans, computer or furniture financing, and the like. Don’t worry for now about your car loans and your mortgage, they are both examples of secured loans, and also are likely to have significantly lower interest rates. The exception to this general rule might be if you are behind on a car loan or your mortgage; you might include it and note the amount overdue, which definitely should be taken into consideration in creating a debt reduction strategy. Read Full Article