Consumer Debt: Victim or Victor?

When I was in Mrs. Brewer's third grade, we participated in the school field day. My best friend, Debbie, was set to run the 50 yard dash and her mom made her braids extra tight that day so they wouldn't get in the way. She was placed in line next to Dee Dee, a competitive blond who had super long legs and a wicked smile. About 25 yards into the race, Dee Dee ran into Debbie's lane, tripping her and causing her to fall. Stunned, Debbie shook herself off, got back up, and ran to the finish line where she came in second--right behind Dee Dee (who was later disqualified for unsportsmanlike conduct.) Debbie was declared the winner.

My friend could have stayed on the ground and milked the "victim" routine for all it was worth but she wasn't interested in that kind of attention. She just wanted to finish the race and taste victory.

When I look at the consumer debt bubble that is bursting at this time, I see a lot of different scenarios: some people have lost jobs, others have had excruciating medical bills or suffered a failed small business. While the vast majority have the ever present scenario of a consumptive lifestyle that led to their debt. Some of these are built in "victim" cases--after all, how can you control job loss, medical bills or a failed business?

I, too, qualified to be an alleged victim when it came to the $40,000 of inherited consumer debt we had when we got married. Instead of staying down on the ground, when tripped up by circumstances, we chose to follow Debbie's example and we got back in the race, determined to finish well by getting rid of that debt. On a military man's salary, with lots of kids to financially support and only one income, we were able to pay down all of that consumer debt in two years and we've remained debt free ever since! If we had played the victim card, we would probably still be waiting for some event or some person to bail us out.

So how do you get out of consumer debt? Stay tuned for specific, targeted tips next week on how we did it and how you, too, can be a victor rather than a victim!

Ellie Kay

America's Family Financial Expert (R)

http://www.elliekay.com/

Avoiding Last Minute Christmas Panic!

So....here's this year's Christmas photo, which was mailed the day after Thanksgiving. On Black Friday, I also got all my shopping done and was on my way to a simple holiday--no last minute panic, no stress--just a simple life. Then last week, somehow, I got rooked into having "some work" done in our kitchen that was "a three day job." I stressed that, with all the college kids coming home for the holidays, I didn't want my house in a mess. NOW, with most of my kids home and 6 inches of snow on the ground that completely shut down our desert California town, I have A MESS OF A HOUSE WITH AN INCOMPLETED KITCHEN! Workers can't drive in snow. No holiday baking so far, no traditional truffles, nothing but a sense of panic that there's too much to do and not enough time!

Whether you're still shopping for last minute gifts, prepping your cards, cooking for the big meal or cleaning the house, you can avoid the associated expense and stress that comes with last minute panic by becoming proactive and purposeful in the midst of your panic. Here are some tips to attack the anxiety before it attacks you.

• Simplify – It’s been a tough year economically with the housing market, rising prices, increased unemployment and an uncertain financial future. It’s the ideal time to simplify the holidays by taking a deep breath and thinking about what you do have rather than what you don’t have. I believe that each of us has two kinds of attitudes within us: there is a minimalist as well as a materialist in each of us. It’s time to tap into the minimalist and give the materialist less power in your life. The holidays are all about friends and family, they’re really not about spending yourself into oblivion or stressing the small stuff.

• Strategize – At the root of most of our last minute anxiety is a basic lack of control. In order to separate emotional panic from the plan, take charge by implementing a specific strategy for these last two days.
  1. Step One: Take ten minutes to write down what you have left to do (gifts, grocery shopping, cards, baking, cleaning, etc). Maybe you don’t really have as much to do as you thought and that, in and of itself, will help eliminate stress.
  2. Step Two: Go back over your list and mark the items as optional or mandatory (do you really have to paint the bathroom before the guests arrive?—optional; do you really have to change the sheets in the guest room before your mother-in-law arrives?—mandatory; do you have to bake those three step chocolate truffles or can you get them at the local bakery?--optional)
  3. Step Three: Take the optional items and place them on the bottom of the list. If you get to them—fine, if you don’t fine. This takes off TONS of pressure

• Stash the Cash – It's soooo hard to really stay on budget with only days before Christmas. One tried-and-true way our family has been able to stay on a last minute budget is to get the budget remainder in cash and divide it into specially marked envelopes, for example, “food” and “gifts.” When I’m in the grocery store, I take the food budget envelope and it serves as a visual reminder of what I have left. On one hand, it keeps me from splurging on some treats if I’m running out of cash but on the other hand, it can also allow me to splurge (guilt free) on certain products if I realize that I have money leftover!


• Split the Efforts – This may come as a news flash but… you don’t have to do everything in order for it to get done right! This is not the time to be Miss Polly Perfectionist. In this step, we need to delegate responsibilities. Assign tasks to different family members and cut your work in half. In fact, I use this time as an opportunity to teach our teens the value of a dollar. I let them go to the store for me and get the items on my list, asking them to find the best deals. If they are not certain, then they text me the options (what teen doesn’t love to text?) I text them back some suggestions and in the process they are learning to evaluate a good deal and a bad deal.

• Separate – It’s highly likely that you’re going to be charging some last minute expenses on your credit cards. But don’t let those purchases hurt your FICO (Fair Isaac Credit Score) by charging more than 50% on any one card. Check your credit card limits as well as your balances online or by phone and then make certain that you charge on the card that is lowest proportionally. Even if you are able to pay off these credit card bills next month, charges of more than 50% of the available limit on any given card can hurt your FICO. So be strategic by separating those purchases and saving your credit score.

• SAVE – It used to be that Black Friday was just a day, this year it’s an entire season. It’s truly a buyer’s market amongst retailers and there are last minute deals to be had, especially electronics and clothing. But what if you don’t have time to go and battle the crowds at the store? There’s an easier way to give last minute gifts that simplifies your time, saves you money and keeps you on budget.
  1. Gift certificates (online and physical cards) – If you want to send an online gift certificate to someone, it’s as easy as pointing and clicking. They’ll receive notification in their in-box that you’ve bought them a gift certificate and you can follow up with an e-card alerting them that the notification they will receive from the retailer is not spam. For some great options, go to restaurant.com for discounts on eating out or check out potential deals at fatwallet.com. For a review of codes that can give you a better deal, go to couponcabin.com or dealhunting.com.
  2. Gifts of Time – Some of the most memorable gifts I’ve ever received are gifts of time. One girlfriend gifted me with a certificate good for lunch at my favorite bistro. My kids have given me handmade “coupons” that are good for doing the dishes, cleaning the living room, babysitting a younger sibling or not back talking me for a week (hey, I’m happy for a day). You could write out your own coupon and give the recipient a card that says, “This card entitles you to dinner and a movie” or “This card can be redeemed for a night out on the town while we babysit your teething twins.” This can be FUN!

• Share – I’m all about multitasking and getting the most out of my efforts as well as my money. Now is the perfect time to give to charity in a way that also benefits you financially with your taxes. This year, given the current economy and the great material needs in communities why not consider giving the “gift” of a donation in someone’s name? You could make a donation to the local food pantry, a homeless shelter or a scholarship fund for underprivileged kids. Look over your list of people and consider making a donation in their name instead of giving them a material gift. You don’t have to tell them the amount of the gift and you can make one donation in the names of several people—thereby giving an amount that allows you stay within your budget. Furthermore, this kind of gift could be tax-deductible and help you (if you itemize) on your taxes as well. It’s a gift that keeps on giving.
  

Merry Christmas!
Ellie Kay
America's Family Financial Expert
www.elliekay.com

Tis Tax Season - Smart End of the Year Money Moves

What happens when you come between a mean, barking dog and a young girl? Answer: A Trip to the Emergency Room! Yep, I grabbed the dog's collar and he whipped it around and bit my hand. One tetnaus shot, one x-ray (revealing a dislocated thumb), a prescription of heavy duty antibiotics, one small surgery on the thumbnail and one bottle of vicodin later--and I was on my way.

That dog bite reminds me of how suddenly you can get bit by the tax guy if you don't grab the end of this year by the collar and then run for cover! Here are a few of the end of the year tax tips that I'm recommending:

• Give It Away! -- When you're putting away those holiday ornaments and your attic, the closets and the garage are a mess anyway, start a "donation" pile that you can give to a qualified local charity. Be sure to get a tax deductible receipt and go to http://www.salvationarmyusa.org/ to get a fair valuation of the good to excellent quality items you donate. Remember that you have to itemize your donations in order to get this benefit. Cash donations require that the taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. To get all the details (and as a good cure for insomnia) see IRS Publication 526.

• Give Next Year's This Year -- Maybe you have some donations you'd like to make in January but don't have enough donations for 2008 to itemize. Donations charged to a credit card before the end of the year count for 2008. This is true even if the credit card bill isn’t paid until next year. Also, checks count for 2008 as long as they are mailed this year. By making this extra donation early, you might have enough to itemize.

• Pay Deductible Expenses by Credit Card -- Just as a donation made by a credit card in 2008 will count toward the 2008 tax year, the same applies to business expenses charged before the year ends.

• Bonus IRA -- Invest this year's bonus in an IRA to reduce your taxes. If you have a certain income bracket, you can invest in the Saver's Credit. Check with your tax professional to see if you qualify, or follow the link to look at the tax brackets.

• More 401(k) -- You may already be contributing to your 401(k) in order to get the benefit of your company's matching funding. But keep in mind that you can reduce your paycheck by paying a little more to this fund up to a specified percentage of your salary. Every time you reduce your paycheck, you increase your tax savings!

• Mortgage UP! -- I saw a really lame movie a few years ago called "Cowboy Up" starring Kiefer Sutherland. It was lame because you found yourself crying and you knew the movie was too smarmy to cry! A forgettable flick before he was an unforgettable star. Do your yourself a favor and Mortgage Up to make an extra payment in order to deduct the interest on 2008's taxes.

Don't let this year's taxes take a bite out the hand that feeds it, thereby making you next April's fool. Take the time to tend to taxes--after all, tis the season!

Ellie Kay

"America's Family Financial Expert" (R)

http://www.elliekay.com/

Gift Card Warning!

As a pilot, my husband, Bob loves this warning sign. But it's not too funny if your car has ever been hit by a crop dusting airplane! This holiday season has a HUGE warning sign attached to it regarding what consumers chose as their #1 gift option for the last two years--GIFT CARDS!

With all the store closings, you really have to be cautious in buying gift cards because when a store files for bankruptcy or closes, it's up to the bankruptcy courts & too often, they don't have to honor the existing gift cards. Some closed stores are walking away from 20 million dollars in unhonored cards!

So, if you want the convenience and portability of a gift card, then stick to the prepaid credit cards (Visa is a common one that I use for my college kids) or a major store that ain't gonna ever close like www.walmart.com . In fact, some families may appreciate a card to a major discount retailer because it will allow them to buy groceries and clothing without having you, the giver, go to the additional expense of what a prepaid Visa card costs.

Here's a list of stores that are cutting back, closing or have closed. If you have exisiting gift cards for these stores USE THEM NOW!

Ann Taylor closing 117 stores nationwide A company spokeswoman said the company hasn't revealed which stores will be shut. It will let the stores that will close this fiscal year know over the next month.

Circuit City – strong potential for closure

Linens n Things – all closing

Mervyns – all closing

Eddie Bauer to close more stores Eddie Bauer has already closed 27 shops in the first quarter and plans to close up to two more outlet stores by the end of the year.

Cache closing stores. Women's retailer Cache announced that it is closing 20 to 23 stores this year.

Lane Bryant, Fashion Bug, Catherines closing 150 stores nationwide.

Talbots, J. Jill closing stores. About a month ago, Talbots announced that it will be shuttering all 78 of its kids and men's stores. Now the company says it will close another 22 underperforming stores..

Gap Inc. closing 85 stores. In addition to its namesake chain, Gap also owns Old Navy and Banana Republic . The company said the closures - all planned for fiscal 2008 - will be weighted toward the Gap brand.

Foot Locker to close 140 stores.

Zales, Piercing Pagoda closing stores. The owner of Zales and Piercing Pagoda previously said it plans to close 82 stores by July 31. Today, it announced that it is closing another 23 underperforming stores.

Disney Store owner has the right to close 98 stores. The Walt Disney Company announced it acquired about 220 Disney Stores from subsidiaries of The Children's Place Retail Stores. The exact number of stores acquired will depend on negotiations with landlords. Those subsidiaries of Children's Place filed for bankruptcy protection in late March.

Home Depot store closings Nearly 7+ months after its chief executive said there were no plans to cut the number of its core retail stores, The Home Depot Inc. announced Thursday that it is shuttering 15 of them amid a slumping U.S.economy and housing market.

CompUSA (CLOSED) clarifies details on store closings. Any extended warranties purchased for products through CompUSA will be honored by a third-party provider, Assurant Solutions. Gift cards, rain checks, and rebates purchased prior to December 12 can be redeemed at any time duri ng the final sale. For those who have a gadget currently in for service with CompUSA, the repair will be completed and the gadget will be returned to owners. http:// www. news.com/8301-10784_3-9834177-7html

Macy's - 9 stores.

Hollywood Video/Movie Gallery - 160 stores as part of reorganization plan to exit bankruptcy.

Pacific Sunwear - 153 Demo stores.

Pep Boys - 33 stores.

Sprint Nextel - 125 retail locations.

J. C. Penney, Lowe's are scaling back.

Ethan Allen Interiors: The company announced plans to close 12 of 300+ stores in an effort to cut costs.

Wilsons The Leather Experts - 158 stores.

KB Toys posted a list of 356 stores that it is closing around the United States as part of its bankruptcy reorganization. To see the list of store closings, go to the KB Toys I nformation web site, and click on Press Information.

Dillard's to Close More Stores. Dillard's Inc. said it will continue to focus on closing underperforming stores, reducing expenses and improving its merchandise in 2008. At the company's annual shareholder meeting, CEO William Dillard II said the company will close another six underperforming stores this year

A Happy Shopper is a Cautious Shopper!

Ellie Kay

America's Family Financial Expert (R)

www.elliekay.com

Dr. Laura features Ellie Kay's "Heroes at Home"

Today, Monday, November 17th, Dr. Laura is featuring my book, “Heroes at Home” on her radio show and will give away 30 copies of the book. So call in today and get your free copy! http://www.drlaura.com/reading/. Her son is an American paratrooper and there’s nothing like having your baby go and jump out of a perfectly good airplane to make you want to reach out to other military families and help them!

That’s what I did last week on Veteran’s Day when I was on Midday Connection, a large national radio call in show. One of the callers was Kelly, a girl who had read “Heroes at Home” and was in the audience when I spoke at the Stryker Brigade in Alaska two years ago. It was a horrible, no good, very bad time for these families as their military members, who had been gone a year, came home and were sent back for another four months. Donald Rumsfeld was sent out to play “clean up” batter and the community of Fairbanks, Alaska brought me out to play “pinch hitter.” He spoke of “reasons” and I spoke of “reality.”
On the phone, Kelly thanked me and talked about what it was like for her and her husband during that time and how our “Heroes at Home” team made a big difference. I remember telling them not to vent on their spouses in Iraq, but to tell them three simple things, “I love you, I’m proud of you, I’ll be all right.” Then when they came home from Iraq, they could let him change diapers.
Later in the program, a female soldier called in who was also in the Stryker Brigade during that difficult time and shared the perspective of what it’s like from the other side of the ocean. She said she remembered hearing what our team did for the families during that trip and thanked me from a soldier’s perspective.
Finally, Bill called and gave us a retiree’s perspective. His voice sounded so feeble, but Anita, the host, and I quickly realized it sounded that way because he was emotional. His quietly told us that he (and others) had been honored at a special Veteran’s Day event at a local middle school. Anita had to drag his own story out of him because he was too humble to let us know that he was a tail gunner in B-17s in WWII. He said, “This program, what they did for us, was very meaningful.” Then he began to cry. It was a powerful moment. Somehow, I held it together enough to thank him for his service and Anita had to cut to a break because she, too, was feeling the power of a grateful heart.

Michelle Obama to Meet Ellie Kay & Discuss Military Families??

Sometimes I hear that I've been featured in the media and didn't know it until someone told me. This happened last month with The Today Show and The New York Times. Sure, in some cases like the NYT, I posed for photos in my office, but I still didn't know when it would run. But this past weekend this phenomenon bordered on the absurd when I was on The Happy Homewives Club radio show and the host asked me, "So what was it like meeting with Michelle Obama?" I was speechless.

It's one thing to be featured in the media and not know it, but it's quite another to have a meeting with the future First Lady and not know it! I blurted out, "I didn't meet with Michelle Obama! Why did you think I did?" She went on to say, "I got a press release from the DNC that said, Ellie Kay to meet with Michelle Obama and discuss military families."

So, I'm waiting for the call (and I may be waiting a while) but I think someone (besides me) may be confused. After writing the book Heroes at Home and speaking to military families around the world about their finances and lifestyle, I do have a few things to offer up to Mrs. Obama that I think can help her understand what military families are facing and how she can make a positive impact in their lives.

Veteran's Day is tomorrow and I'd encourage you to not only say "thank you" to a man or woman in uniform, but I'd say take it a step further--thank those military families for their contributions as well. After all, they are the Heroes at Home.

To all veterans--past and present--and to their families I say, "Thank you for your service."

Ellie Kay

America's Family Financial Expert (R)

http://www.elliekay.com/

Wanna Be on National TV With Me?

I love a challenge and am something of a risk taker. But I try to play it safe, too. Does that make sense? In other words, if I'm going to jump out of an airplane, I'm going to make sure the skydive center is certified, has a solid safety history and my instructor is experienced. In the happy pic, you can see where I'm in the sky with Jack Hammer, who had 3,000 jumps to his credit.

I'm also one to look at our present economic crisis as a challenge as well. I don't recommend risky endeavors like speculative investments or get rich quick techniques. However, I do think it's appropriate to take other "risks" to get out of debt--like downsizing a house, or going from a two car family to a one car family for a season. Even shopping at consignment stores or growing your own veggies can be an adventure to some.

Families are trying to recover from the mortgage and wall street meltdowns just in time to face the next big challenge--credit card debt. Stay posted to get the latest news on how to manage your credit card debt and here's a special announcement for those who are right in the middle of this challenge. It's an adventure you and I can take together!

SPECIAL ANNOUNCEMENT

Are you a young family struggling with consumer debt? If you are over $20K in credit card debt and need support, there is an opportunity to work with me as I help you negotiate with your lenders and work towards paying down your debt. A national television show may follow you every step of the way. Email us at assistant@elliekay.com if you are interested.

Just remember that no matter what the headlines read today, you can still take steps to face the challenge and succeed. But watch out for that first step, it's a doozie!

Ellie Kay
America's Family Financial Expert (R)
http://www.elliekay.com/