Letter from the Executive

Dear Client,

It is with great pleasure that I can inform you that DMCC has recently been approved by both the U.S. Department of Justice as an approved provider of bankruptcy counseling and education, and by the U.S. Department of Health and Urban Development as an approved Housing Counseling Agency. These approvals follow a long and thorough application process, which our staff worked diligently on to achieve.

As an approved provider of bankruptcy counseling and education, DMCC is able to issue the certificates required by the U.S. Trustee from all consumers filing bankruptcy in the United States. Consumers filing bankruptcy are required to receive budget counseling prior to filing and complete a personal financial management course after filing. DMCC is approved to provide both of these required services and issue consumers the completion certificates they must submit to the bankruptcy court.

DMCC’s initial approval from HUD is to provide personal budget counseling to consumers, which has always been an integral part of our charitable mission. Over the next few months, several members of the DMCC staff will be trained in additional housing areas in order to expand our HUD approved services. These new services will include pre-purchase home buying counseling, reverse mortgage counseling and home mortgage loss mitigation.

Recognition by these government agencies as approved providers of their regulated services is a significant accomplishment for which we should all be proud. However, we truly hope that as existing clients of DMCC, you will never need most of these new services.


Phil Heinemann
Executive Director

Thrifty Spending Issue 48

FEATURE ARTICLE:  Are You At Risk of Predatory Lending?

Predatory lending is most commonly associated with mortgages, but it also affects consumers seeking other types of loans. Knowing credit and lending terminology helps to avoid misunderstanding or otherwise deceptive practices and a through list of these can be found on our website at www.dmcccorp.org. Click on “Educational Materials,” and then refer to the credit terminology in the educational handbooks.

What is predatory lending?
With millions of consumers hard hit by fallout of the sub-prime lending market, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

  • Sell properties for much more than they are worth by using false appraisals.
  • Encourage borrowers to lie about their incomes, expenses or cash available for down payments in order to get a loan.
  • Knowingly lend more money than a borrower can afford to repay.
    Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
  • Charge fees for unnecessary or nonexistent products and services.
  • Pressure borrowers to accept higher-risk loans such as balloon loans, interest-only payments and steep prepayment penalties.
  • Target vulnerable borrowers to cash-out
  • Refinance offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
  • “Strip” homeowners’ equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
  • Use high-pressure sales tactics to sell home improvements, and finance them at high interest rates.

What tactics do predators use? Predatory lenders or investors insist that they are your only chance of getting a loan or owning a home.

Take your time to shop around and compare rates, prices and homes. Buying a home will be one of the largest financial activities a person can make and will require much deliberation. Here are some signs that you could be dealing with someone who is not considering what is in your best interest:

  • The house you are buying costs a lot more than other homes in the neighborhood, but isn’t any bigger or better.
  • You are asked to sign a sales contract or loan documents that are blank or that contain information that is not true.
  • You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud; it does not.
  • The cost or loan terms at closing are not what you agreed to.
  • You are told that refinancing can solve your credit or money problems.
  • You are told that you can only get a good deal on a home improvement if you finance it with a particular lender.

Protect yourself!

  1. Don’t take the lender’s word for it that you qualify. Scrutinize your finances to make sure that you can repay the loan.
  2. Watch out for prepayment penalties. Occasionally, a respectable lender will charge a fee for paying off a mortgage early – when the house is sold, for example, or when the borrower wants to refinance. But a predatory lender charges excessively large fees to pay off a mortgage early. If those fees are on top of balloon payments and mortgage life insurance, you’re being set up to have your house repossessed if you can’t make the payments.
  3. Don’t sign forms with blank lines or spaces. If you sign blank documents you run the risk of somebody adding costs and fees you never agreed to.
  4. Make sure the lender signs and dates all papers. Get your own copies of all papers and immediately confirm that the information is correct and that it matches what was promised to you.
  5. Pay attention to fees and points. A lender might offer a good interest rate, then charge thousands of dollars in fees and require you to pay an excessive number of points.
  6. Don’t be intimidated by jargon. If you don’t understand, ask the lender or refer to the credit terminology section in the educational handbooks online at www.dmcccorp.org.
  7. Request references from people who have borrowed from your prospective lender.
  8. Hire a personal attorney to be present with you, or to review any documents before signing them, if you feel that the lender may be taking advantage of you.

MONEY SAVING TIP:  Low cost ways of making extra money Sell your old stuff, like CD’s and books on eBay and Amazon.

  • Turn your hobby into a business. Pretty much anything you do can be turned into a business of some sort.
  • Sign up with an online survey company like Survey Spot.
  • Become a mystery shopper.Not only can you make some extra money, you might get some free stuff as well.
  • Have a yard sell.
  • Start a blog and put Adsense on it. You might only earn 4 cents a week, but it’s something.
  • Become a consultant. Do you know a lot about a particular skill? Put that knowledge to work by helping others.
  • Do freelance work on the side. If you’re a good writer, photographer, artist, or programmer you can make some extra money by selling your talent to companies.
  • Start an errand Service. Offer to pick up groceries or dry cleaning for others.
  • Waiting service. People these days don’t have time to wait on the plumber of cable guy. Charge by the hour to do the waiting for other people.

DO YOU KNOW….If  That Deal is Really a Deal?

Have you ever been enticed by a great offer? It is particularly alluring if the product being sold is something you really need. Before you sign on the dotted line, make sure you review the fine print first. Understanding the terms and conditions, billing policy and disclosure statements are imperative to benefit from these types of offers. Otherwise, that special promotion you signed up for may not be a great deal after all.

A good way to understand what you are getting yourself into is to examine these offers and what they really mean. Take for example, the popular promotion given by furniture and home good stores for “no payments, no interest until the year 200X.” It may seem like a great deal, but careful examination could make you think twice. A few questions that may help you decide are:

Does interest accrue until the promotion expires? How high is the interest rate and is it a fixed rate? What does the interest rate increase to if you miss a payment? Will the interest be added if the item isn’t paid in full at the end of the promotion? Is the savings that you are supposed to receive lost in the financing deal?

Fortunately for you, it is the law to disclose all of the financial terms and conditions along with billing methods. You will be well informed if you read and understand the contractual agreement. Most importantly, ask a customer service representative to explain anything that is unclear to you. Especially inquire if you must qualify for the offer. They may refer to this clause as, “other details may apply.”

Furthermore, you want to make sure that the “deal” is actually a deal. If you can find the
merchandise for less money somewhere else, why even bother? Some retail stores may honor their competitor’s promotions. Always make sure you know who else is selling the same product and at what price to really get the best deal.

Let us suppose you visit the local furniture store and get excited about a living room set which will cost you close to $3,000. You plan to take full advantage of their offer and make no payments for one year. Once the statements arrive you have planned to pay $75 per month. The chart below illustrates how long it will take you to pay the furniture back and the actual cost of your furniture.

You spent $3,000.00 on November 1, 2009
You plan on paying $75 per month starting November 1, 2010
Interest Rate: 23.99%
Option 1:
Monthly Payment: $75.00
Total Interest Paid*: $3,091.88
Duration of Loan: 82 months (6.8 years)
Total Paid: $6,091.88
Option 2:
Monthly Payment: $100.00
Total Interest Paid: $1,626.06
Duration of Loan: 47 months (3.9 years)
Total Paid: $4,626.06
*The above example assumes that interest is not accrued during the year of the promotion.

The ideal situation would be to submit payments before the offer expires and you are required to make payments. Unfortunately, this option is not what makes these promotions popular.

Finally, do not be timid if you feel that you are not getting the best service from a store or financial institution. Speak up. Other businesses will be happy to accommodate you and perhaps match an offer you have previously explored. Whatever decision you make in regards to credit, always be certain that the monthly payments will fit into your budget. Make sure that you have explored all of the other financing options available and that the one you choose is the best for your lifestyle.


Thrifty Spending Issue 47

FEATURE ARTICLE:  Gearing up for the Holidays

Gearing up for the holidays seems a little silly when Halloween hasn’t even arrived. The truth is the sooner you start the better you will be financially. Waiting until the last minute to do holiday shopping causes many consumers to overspend. A good way to begin preparing for gift shopping is by revisiting your budget and making sure you have your financial obligations taken care of so you know exactly how much money you have left over to shop for friends and family.

If you need assistance getting started with a budget, click here you can follow along with the categories on this worksheet or simply use it for ideas or reminders of your own expenses. Remember to always put something in savings. Even if the amount you are putting away is modest, it will continue to increase the funds in your account and get you closer to those financial goals you have in mind.

Continue your planning by making a list of those gifts you would like to purchase. If the list gets overwhelming, think of other ways to make this holiday season special without having to purchase gifts. Get crafty and make something for your friend or frame a special picture.

If after reviewing your budget you realize that you need to cut back on some expenses, check out the list below for ideas on savings.

Energy costs. If your electric bill is out of control, take a stand and purchase a economical, programmable thermostat. Prices for these start around $50 and even though that doesn’t sound cheap, it will eventually save you much more on your heating and/or cooling bill.

Brown bag it. Instead of purchasing lunch every day, which can cost anywhere from $8 to $10, plan ahead and make your lunch the night before. It might require a little extra time on your part but the calculations speak for themselves: $8 x 20 days (4 week month) = $160 x 12 months = $1,920!!! (for $10/day = $2,400).

Negotiate your rate. Here’s the most costly of your expenses if you have a credit card with a balance – your interest rate. If you have tried lowering this APR on your own and have had no luck get in touch with a reputable credit counseling agency that can negotiate the rate for you and get you out of debt soon. For more information on how to get this started visit http://www.dmcccorp.org/ .

MONEY SAVING TIP:  Save Money While You Shop

  • Visit your local library. People don’t really go to the library anymore, but they should. If you’re trying to cut costs and you like to read or watch movies, then this should be your next stop. If you rent a movie per week or buy a book per month, this could mean up to $30 in savings.
  • Forget the gym. All of the exercises you do at your costly gym can be done for free either in the comfort of your own home or outside. Some cities even have community centers that offer exercise classes for free.
  • Review your auto policy. If you haven’t reviewed your auto insurance policy in a while, check it to see if it’s still the coverage you need. If it is, call your insurance company to see if there are any discounts you qualify for, such as, safe driver. Or, check out http://www.insweb.com/ to compare other rates in your area.
  • Shopping Avoid impulse buying. Practice tantric shopping.
  • Buy as much as you can online.
  • Negotiate the price on big ticket items like cars, electronics, and large appliances.
  • Use cash as a negotiating tool. Nothing makes a seller ’s mouth water than cold hard cash in their hand.
  • Before you buy something, ask if the item will be put on sale in the near future.
  • Don ’t buy extended warranties. Eighty percent are never used, and they’re a major profit item for the vendor. That’s why they push you so hard to buy them!
  • Keep receipts and send in rebate slips.Very few consumers actually return rebate coupons. Which is, of course, exactly what the manufacturers are hoping for.

Here are some websites that give you good discounts:



Did you know… that the online banking information about your account may not be accurate?

Because of all the electronic transactions that may take place on your account, online banking has become complicated. Deposits may show before they are actually available, and some withdraws or purchases may take up to 48 hours or longer to post to your account. Gas stations and restaurants are just two business that put holds on funds which can make it tricky to get an accurate balance online.

The best way to make sure you have an accurate balance on your account is for you to keep track of it. If you use your debit card, write a check, make a deposit or withdraw funds from your account – write it down! Non-sufficient-funds (NSF) fees are high these days and one small purchase can trigger multiple NSF charges resulting in havoc to your account. Yes, some banks will do a courtesy adjustment and forgive one or two of these charges (if you beg), but don’t expect this to bail you out every time. This type of courtesy only occurs one time per year.

If you share an account with someone, the best way to make sure you both are not overspending is by taking out an allowance. Give yourselves enough money for the week and leave the rest of the funds in your account alone. If you must tap into that account, inform your banking partner of your move to prevent overdrafts.