Lynnette Khalfani

Lynnette Khalfani - The Money Coach™ Newsletter 11-22-2004

Greetings and happy holiday season from The Money Coach! Many of you will spend time with your family and friends this week to celebrate the Thanksgiving Holiday.

As you enjoy yourselves on Turkey Day and beyond, hopefully without adding too many pounds, J be careful that you don’t add too much credit card debt either, by over-spending.

In this edition of the newsletter:

What people are buying for the holidays – and how they’re spending to prevent credit card debt. Read more

Why a new law that gives you a FREE credit report is good, but not enough. Read more

5 Things you can do to simply your finances. Read more

TV and radio updates from The Money Coach. Read more

When Dr. Phil called Zero Debt and my story – of how I got out of $100,000 in credit card debt – “amazing” and urged his audience to “go buy the book,” TV viewers really listened. Copies of Zero Debt are flying off the shelves … so my apologies to those of you who’ve searched high and low for the book, only to find it out of stock at various retailers. We’ve reprinted (again!) and back-orders are currently being filled, so don’t worry, you’ll definitely get your copy ASAP.

Meantime, you can get Zero Debt online from http://www.amazon.com, via my website http://www.themoneycoach.net, or you can check the book out from your local library. If they don’t have Zero Debt, all you have to do is ask them to order it. They’ll need the book’s ISBN#, which is 1-932450-75-0.

Many thanks again to all of you who have written me – telling me about your challenges, as well as your success stories.

Here’s wishing you health and wealth!

Best,

Lynnette Khalfani

http://www.themoneycoach.net

What – and How – We’re Buying This Holiday Season

Black Friday, the day after Thanksgiving, is traditionally one of the busiest shopping days of the year, kicking off a flurry of spending that will last through the December holidays. And 2004 will be no exception. The National Retail Federation predicts that holiday sales will hit $219.9 billion – a 4.5% increase over last year, when the average shopper spent about $670.

This year, however, more consumers will use debit and/or check cards rather than credit cards to make purchases. According to a survey from the NRF, 34.7% of shoppers plan to use debit or check cards as their primary form of payment during the winter holidays. That’s up from 30.7% in 2003. The survey also concludes that fewer consumers will use credit cards this holiday season, just 29.5% versus 30.1% in 2003.

“Consumers have been budgeting and planning ahead for the holiday season, so it’s no surprise that credit will take a backseat to debit cards this year,” says NRF President and CEO Tracy Mullin. “With debit cards, consumers can keep a handle on the money they have to spend without worrying about carrying cash."

Interestingly, only 25.9% of those polled say they’ll pay for holiday merchandise with cold, hard cash.

And what’s hot this season? The NRF surveys says CDs, DVDs, videos, video games and books lead the pack – with 60.1% of shoppers planning to buy these items. Clothing and accessories ran a close second (59.5%), along with gift cards (51.8%) this holiday season. Meanwhile, 43.3% of consumers will purchase toys.

What’s on the Money Coach’s Holiday Wish List?

Help make Zero Debt a national bestseller by Jan. 1, 2005! If you haven’t completed your holiday shopping, consider buying a friend or family member a copy of Zero Debt: The Ultimate Guide to Financial Freedom or Investing Success: How to Conquer 30 Costly Mistakes & Multiply Your Wealth. Either book would make a great holiday gift item! J

New Law Provides A Free Credit Report, But You Need More

Starting December 1, 2004, a new law called The FACT Act entitles consumers nationwide to get free copies of their credit reports. FACT stands for the Fair and Accurate Credit Transactions Act of 2003.

The law amends The Fair Credit Reporting Act, and is designed primarily to help consumers and banks fight identity theft.

According to Consumer Credit Counseling Services, here are some of the highlights of the new FACT Act:

Consumers will be able to receive a free copy of their credit report once a year

Consumers may receive additional free reports if identity theft is suspected

Identity theft victims will only have to make one call to receive advice, set off a nationwide fraud alert, and protect their credit rating

Identity theft victims who file police reports will be able to block fraudulent information from appearing on their credit reports

Identity theft victims will have access to business records that list an identity thief's fraudulent transactions

Credit reporting agencies must ensure that all credit requests are legitimate after a credit report has been flagged for suspected identity theft

Active duty military personnel may place special alerts on their files when they are deployed overseas

Only the last five credit card number digits may be listed on store receipts

Lenders and credit agencies must take action even before an identity theft victim is aware of the crime

Debt collectors must inform a creditor of fraudulent information

As you can see, the new law contains many facets. But the one likely to garner the most attention is the provision allowing you to now get a free copy of your credit report, no matter what state you call home. Previously, only consumers in eight states – CO, CT, GA, ME, MD, MA, NJ and VT – were entitled to free credit reports. Unemployed persons, the indigent, those turned down for credit, and people who were victims of identity theft could also get credit reports without charge.

However, all that has changed with The FACT Act – and everyone can now get a free credit report.

“It’s a good first step, but we want consumers to know that they shouldn’t stop there,” says Ryan Sjoblad, a spokesman for Fair Isaac Corp., the Minneapolis-based company that provides credit scores, along with credit reports. “Credit reports are just raw data, and people still need to check their FICO scores to see what lenders are looking at.”

Sjoblad is correct. There’s no doubt that you should get your credit report at least once a year. That way you can check it for mistakes and make sure no one has opened any unauthorized accounts in your name. But you also should get your credit score – and in particular your FICO credit score, because FICO credit scores are the most widely used credit scores by lenders who issue credit. FICO scores range from 300 to 850. The higher your score, the better your credit history. Presently, three out of four mortgage lenders use FICO scores to decide whether or not to give you a mortgage, home equity loan or home equity line of credit. Additionally, 98% of the top 50 credit card companies use FICO scores to decide to whom they will grant credit – and at what interest rate.

For instance, let’s say you’re getting a $150,000 fixed rate, 30-year mortgage. Looking at prevailing interest rates as of late November 2004, having a FICO score of 700 means you’ll get a 5.73% interest rate and have a monthly payment of $874. But if your FICO score slips just one point – to 699 – that same mortgage will be granted at a higher rate: 6.27%. And your monthly note will be $926.

Want to know what that one point drop in your FICO score will cost you?

$52 a month more for the next 30 years;
About $19,000 over the life of the loan

You see, with the 5.73% rate, you pay back your $150,000 in principal, plus $164,446 in interest, for total payments of $314,446. But with the higher 6.27% interest rate, you repay your initial loan of $150,000, plus $183,188 in interest, for total payments of $333,188.

So by all means, get your credit reports, but make sure you also know your FICO score, as I recommend in my latest book, Zero Debt: The Ultimate Guide to Financial Freedom. To order your credit score today, visit http://www.myfico.com.

Reader Question of the Week: Topic – Simplifying Your Finances

Q: My finances are a mess. Is there anything I can do to get organized and simplify things?

A: By all means, there are many things you can do to simplify your finances. Here are five ideas:

1) Organize your financial paperwork

There’s nothing more stressful than having financial records all over the place. Decide what type of record-keeping is easiest for you to create and manage on an ongoing basis. Do you need to keep paper files? Are you an ace at making spreadsheets? Whatever method works for you, create a system that you can track and maintain paperwork pertaining to your income, expenses, investments, property records and so forth. For more tips on getting financially organized, check out Chapter 12/Day 12, entitled “Set Up a Good Filing System,” in Zero Debt.

2) Write down all your debts

To get a clear sense of your finances, your really need to know how much you owe, to whom, and how much interest you’re paying on your debts. Many of us have anxiety about our finances because we really don’t know where things stand or where our money is going. You don’t want to guess about debts. Do you owe $5,100 or is it more like $9,100? Getting your bills listed in black-and-white is a sure-fire way to start simplifying your finances and seeing where your cash is going. To get a jumpstart on this process, go to the Free Info area of http://www.themoneycoach.net and download the form called “I Debticate Myself to Being Debt Free.”

3) Create a realistic spending plan

Don’t stress yourself out by having a budget that’s tighter than J. Lo’s jeans! When you create your budget, give yourself some wiggle room. Plan for emergencies or unexpected expenses – and set aside money to deal with them. Also, work into your budget the occasional treat, such as a restaurant dinner or a family night out at the movies.

4) Pay your bills online

Online bill payment is a great service for busy people. Use it as a time saver to pay those fixed monthly expenses, such as your mortgage, car note, or insurance payments. Online bill payments also helps ensure that you don’t forget to pay bills – which can result in late payments or negative marks on your credit report.

5) Make savings/investing automatic

David Bach’s new book, The Automatic Millionaire, offers dozens of great examples and ideas about how easily people can become wealthy simply by sticking to an automatic plan of saving and investing. The idea is to create a way to allow the power of time and compounded interest to work on your behalf – without you even thinking about it. For instance, have your employer take money out of your check automatically and deposit it into your 401(k). Nine times out of 10, you won’t even miss the money.

What’s New with The Money Coach …

TV Appearances

Viewers in Atlanta may have seen The Money Coach this morning on the local FOX affiliate …

In other TV news …

Folks in Dallas who tuned into ABC’s “METRO” program last night learned heard Lynnette explain how to avoid holiday debt.

Radio Broadcasts …

Do you happen to be in the Kansas City, MO region? Then listen to KYYS 99.7 FM or KQRC 98.9 FM on Sunday, December 5^th, 2004 for money-saving tips and debt elimination advice from Lynnette Khalfani, The Money Coach.

You can also hear Lynnette’s personal finance wisdom every Wednesday at 6:50 a.m. on WLIE Business Talk Radio (syndicated from NY).

Seminars/Workshops

Back by popular demand! The Money Coach will return to Harlem’s Hue-Man book store on December 3^rd, 2004 for another Zero Debt workshop … The last seminar Lynnette held at Hue-Man had customers buzzing, and asking for more.

On December 2nd, 2004, Lynnette will be a featured speaker/panelist at Essence Magazine’s Work &
Wealth Seminar in Bethesda, MD. Lynnette and other panelists discuss savvy ways to save more, live within your means, and budget properly.

The event features free hors d’oeuvres and complimentary mini-spa treatments. So ladies, if you’re in the greater Washington D.C. area, come out to meet The Money Coach -- and get pampered too! To RSVP for the event, visit: http://www.essence.com/essence/nylife or call 800-816-1782.