This edition of Footsteps Along the Path was initially issued by Clear Path Financial Education Services which has now become Kuehn Financial Education Services LLC. For more information about Kuehn Financial Education Services LLC, please email or visit www.kuehnservices.com.

Clear Path Credit Consultants believes:
If you build on your own skills,
Rely on your own abilities,
Increase your range of knowledge,
And get help when you need it,
You are the investment that will succeed above all others.


Welcome to the sixth edition of Clear Path Credit Consultants' Footsteps Along the Path. The goal of this newsletter is to provide relevant and succinct information on financial management to consumers and small business owners. It is designed to build upon previous issues, developing a clear path to financial freedom. Reader feedback is encouraged.

Please feel free to forward Footsteps Along the Path. If you have received this from a friend or colleague, and wish to be added to the newsletter distribution list, simply provide a response E-mail with this request. The same applies if you do not desire further contact, your name will immediately be deleted from the list.

Twenty Something and a Mountain of Debt: The Economic Impact on Youth and America's Future

Going into debt starts early in America. The hallowed halls of education are littered with credit card companies offering free t-shirts and high interest rate credit cards. The majority of college freshmen received no education on personal finances, either from their parents or school system. As a result, college graduates are more burdened by debt than ever.

The ramifications of unmanageable debt extends beyond the young adults and their families. Please keep in mind two-thirds of our nation's economy depends on consumer spending. This sizeable topic is presented in a bite size piece.

Graduates' behavioral impact on their future:
1) Graduates' incomes are paying off old debt, therefore, they can not provide financial security for the present and future. In essence, they are starting out in life behind the eight ball.
2) Graduates struggling to find jobs pay their credit card bills late or not at all, further injuring their creditworthiness.

The credit industries impact on graduates:
1) Low credit scores make it difficult to land a professional job. The majority of companies pull credit bureau reports to examine an applicant's money management as a testament to character. A credit score can act as a tie breaker between two candidates with equal ability to perform the job. The one with the higher credit score wins.
2) Purchasing power is diminished thanks to high interest rates. Young people with high balances to credit limits are more risky to banks. They will either be denied loans or offered them with hefty interest.

Graduates impact on our economy:
1) Higher interest rates and more restrictive credit terms for all consumers are occurring. Creditors will make up their losses by increasing interest and fees for everyone.
2) Predatory lending is growing and young people are vulnerable. It is the old law of supply and demand coupled with lack of knowledge on personal finances.

Concepts parents should discuss with their children:
1) Why is credit extended to students ... do you believe credit is extended because of your ability to repay the debt?
2) What are the consequences of spending beyond what is in your pocket and savings account?

Clear Path Credit Consultants will be speaking September 23 at Phoenix College during the Women's Economic Forum "Let's Talk Money: Financially Literacy for Women." Incorporated into a portion of Deborah Kuehn's presentation will be advice for college students using credit cards. Please join her for this free forum, which provides access to financial resources. For more information see "Workshops Worth Your Time."

Being a Knowledgeable Consumer is a Powerful Thing

Got to love those New York Democrats! Whether you are Republican, Independent, Libertarian or Green party, it is okay to admit the democratic politicians from the liberty state are good consumer advocates. For example, years ago Senator Schumer forced credit card companies to create a straight forward lay out for the public to view credit card terms. This is appropriately named the Schumer box. Next time you receive a credit card application, turn the offer over and view the formatted box displaying interest rate, compounding, grace period and fees. However, please do not be lulled into it's simplicity. Greedy creditors have side stepped the consumer friendly intention and "asterisk" terms with complicated agreements. Therefore, it is necessary to read the fine print.

Currently, New York Democratic Representative Ackerman added an amendment to the anticipated Fair and Accurate Credit Transaction of 2003 (FACT), that would require creditors to notify consumers that derogatory information about their account was being conveyed to the major credit bureaus. This would be key in alerting the public of misinformation in their credit files! How grand, not to be surprised by erroneous data that causes a sub-prime rate or denial of a loan. From the same political party and state, Carolyn Maloney proposed that FACT would require creditors to clearly and conspicuously declare when they will increase the annual percentage rate (APR) and when an introductory APR will be removed or rise.

Not only is the Bankruptcy Reform Act of 1998 sitting on Capitol Hill (refer to the last edition of Footsteps Along the Path), but so is FACT. The House Financial Service Committee is in the revision process with FACT. This legislation entails what consumer advocates pray for, such as: * an annual free credit report, * disclosure of credit scores in conjunction with loan applications (however please recall Clear Path's info on Adverse Action Notice and advice to find another lender if scores are withheld upon your inquiry) * explanation of factors depressing a credit score * notification that creditors' excessive inquiries are lowering credit scores * rapid rescoring to correct inaccurate credit info in 72 hours and * privacy of medical information by requiring it to be encoded in consumer reports.

Arizona Republican Representative John Shadegg is member of the House Financial Services Committee. He offered and withdrew an amendment that would have limited the number of actions by creditors with respect to an individual's social security number.

(Note: Being a knowledgeable consumer is a powerful thing and readers of Footsteps Along the Path will be kept abreast of the ruling on Fair and Accurate Credit Transaction Act of 2003.)

Consumer Alert: Old debts come back to haunt

In an increasing trend, credit card companies are doing away with collection agencies. Why and how? In regard to the "why" please recall last month's article "Do Inferior Credit Card Offers Yield Inferior Customers: The Bankruptcy Reform Act." Bankruptcy is at an all time high and payment delinquency is rising. So, creditors are looking for unique ways to recoup revenue. In addition, collections agencies are a costly middleperson. The "how" is the fascinating part. Creditors are buying old debts from other creditors and "reaffirming" this debt when a consumer applies for a new credit card!

Consider this scenario, Ms. Smith has a $3000 charge off (nonpayment of debt) to Citibank Visa from 2001. This makes her a substandard customer. However, Smith is elated to receive an offer by Capital One for a low interest rate and a high credit limit Visa. She applies for the card. Her first statement reflects the $3000 charge off along with her new purchases. Now, imagine Smith's surprise that Capital One paid Citibank for her previous charge off.

This is legal, if the credit card solicitation spells out that with the new card comes old debt. So, if you had credit card problems in the past that include charge offs and receive a to good to be true offer, it is imperative to read the fine print. Many consumers cry they were not aware of the terms.

Capital One, although not the only company with this tactic, is aggressive with debt reaffirmation. By FTC regulation creditors must be upfront with this procedure. However, Clear Path has seen credit applications in general stating, "...and agree to receive Capital One's Privacy Notice later along with other account information." If you respect your money, never agree to this. Before you put your John Hancock on any document, know the contract.

Seminars Worth your Time

Clear Path Credit Consultants recommends the following seminar: "Money and the Family: Healthy Wealth" presented by experts in their fields, Charles C. Scott, Sharon Cottor, M.S.W. and Robert Cottor, M.D. The workshop will address: Family psychology of wealth, meaning of money in our culture, impact of wealth and money on relationships, money and divorce, and life/financial planning. The presentation will be held Friday, September 26, 2003 at Sunburst Resort 4925 N. Scottsdale Rd, Scottsdale from 8:00 am to noon. $40 in advance (9/19) & $45 after 9/19, includes continental breakfast. Contact Cheryl Beard at 480-755-7922 to register.

"Let's Talk Money: Financial Literacy for Women" will offer an in-depth look at the financial triumphs and challenges of three successful career women and their approaches to financial success. Deborah Kuehn MBA will be one of the three panelists. The other panelists are Betty Harris Jackson, owner of Jackson Airport Enterprises and Briiana Leon from the city of Phoenix Street Transportation Department. This is a free forum sponsored by the Phoenix Women's Commission, city of Phoenix Equal Opportunity and Personnel departments and Phoenix College. Held Tuesday, September 23, 11:30 a.m. to 1 p.m. at Phoenix College 1202 W. Thomas Road, Room C-102. Register by calling 602-261-8242.

"Women Winning in Business Expo 2003" topics included in this half day expo are: marketing, strategic planning, financing, defining your vision to grow your business. Held at Pointe Hilton Resort at Squaw Peak, Saturday September 27, 8:00 a.m. to 1:00p.m. $25.00 per person. For more info contact Patti Brings at 623-810-3823.

Upcoming in Footsteps Along the Path

Next issue look for information on tips to take charge of your charging

---

Deborah A. Kuehn is the sole proprietor of Clear Path Credit Consultants, a financial management education service. Kuehn views herself as a consumer advocate that assists people in leading a debt free and credit worthy lifestyle. She has a MBA with a B.A. in Communications. Clear Path Credit Consultants' services include: spending plan development (budgets), cash flow budgets and forecasting, credit bureau report analysis, money management skills sessions, assistance with interest rate negotiations, along with community and corporate lectures.
"Clear Path Credit Consultants: Helping you sleep better at night."
PH: 623-580-9293


This issue is dedicated to the families that lost loved ones on September 11, 2001.


Written by Deborah A. Kuehn MBA
All rights reserved
Clear Path Credit Consultants is a registered trade name
Issue VI
September 16, 2003

Back to Footsteps Along the Path List