A New Way of Paying Off Credit Card Debt. A New Way to Save. A New Way to Live.

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1 A New Way of Paying Off Credit Card Debt A New Way to Save. A New Way to Live.

2 ARE YOU OVERWHELMED BY CREDIT CARD DEBT? FEARFUL THERE IS NO LIGHT AT THE END OF THE TUNNEL? DESPONDENT THAT YOU WILL ALWAYS LIVE IN THE RED? We have helped thousands of people pay down their debt and enjoy life again. Now it is your turn. Welcome to the beginning of your journey to financial freedom... U N L I K E T H E C O N S U M E R CREDIT COMPANIES, WE ARE HERE TO HELP YOU ACHIEVE F I NANCIAL F R E E D O M. W E W A N T YO U TO S U C C E E D.

3 You are not alone on your journey Lean on us as you gain an understanding of your current financial situation. Let us help you track your progress and reach your goals. Call us with questions about your revolving credit and your plan to eliminate it. Allow us to help you create a financial plan for your future. SAVINGS IN A BANK? TRY SAVING WITH DEBT MANAGEMENT. The credit card companies plans could literally take you a lifetime to pay off your debts. Forget about accumulating any savings for your future. Your Personal Payment Plan excites your finances with a new way of saving. Simply by making the indicated payments, on time, you can save thousands of dollars in interest fees, freeing up money to do the things you want to do a dream vacation, new car, kids college funds. If you have a $3,000 balance on a credit card with an interest rate of 21% and you only make the minimum payment of 2%, it will take you 836 months, or about 70 years, to pay off your debt and you will pay $18,200 in interest! TAKE CONTROL AND SAY GOOD-BYE TO APPREHENSION AND ANXIETY. Your Personal Payment Plan turns debt management into an exciting experience. Once you see how easy and empowering paying down your debt can be, you ll never look back. Start following your debt elimination plan today and see the light at the end of the tunnel. Begin building your financial future. The longer you wait, the more money you lose. CAN T YOU JUST SEE THE BLACK CLOUD MOVING AWAY? You will soon see how exciting getting out of debt can feel. DON T SPEND THE REST OF YOUR LIFE CHAINED TO YOUR DEBTS. Your personalized plan is laid out month-by-month with payoff summaries, payment schedules and balance reports. You can see at a glance how much you owe to each creditor on a monthly basis and when each will be paid off 3 to 5 times faster than if you followed the credit card companies payoff plan!

4 A simple tool empowering you to become debt free A DEBT ELIMINATION PLAN WITH AN END IN SIGHT Your payoff summary will let you know exactly when each debt will be eliminated. So plan that I m debt free party, tropical vacation, or reward purchase. Follow the easy to use plan and enjoy peace of mind as you pay off your debts faster than you could have ever imagined. THE THREE KEYS TO DEBT ELIMINATION SUCCESS 1. Understanding how credit card companies make their money. 2. Staying focused. 3. Following the plan. We want you to succeed. So we are going to educate you on how credit card companies work, as well as offer organizational and practical tips designed to help you become free from debt. We ll provide you with the knowledge, tools and support you need to start down the path to financial freedom. The power to achieve financial freedom is in your hands... We ll help you get there.

5 ALARMING CONSUMER CREDIT STATISTICS - 78% of American households (about 91.1 million) have one or more credit cards 1 - Consumers have an average of 5.4 cards 2 - There are nearly 1.5 billion credit cards in use in the United States 3 - The average consumer has 13 credit obligations 4 - The average consumer s oldest credit obligation is 14 years old 5 - In 2008, Americans credit card debt was $ billion 6 - The average outstanding credit card debt per household is $10, The average American has $16,635 in debt 8 - Total consumer debt at the end of 2008 was $2.56 trillion 9 - Americans are facing financial distress due to high debt. In 2007, before the recession even began, 14.7% of American families had debt exceeding 40% of their income 10 TO CREATE A BETTER FINANCIAL FUTURE, YOU NEED TO UNDERSTAND YOUR CURRENT FINANCIAL PICTURE In creating your Personal Payment Plan, we have already analyzed and organized your outstanding debts, as well as reviewed your credit report. In order to fully grasp your financial profile, you need to understand the importance of your credit report, how your score is determined, and what both are used for. WHAT IS A CREDIT REPORT? A credit report is a record of your borrowing, charging and repayment activities. It lists your credit card accounts, mortgage, car loan, and any other loans or accounts on which you have balances and/or make regular payments on. A credit report also shows if any actions have been taken against you because of unpaid bills, foreclosure or bankruptcy. WHAT IS A CREDIT SCORE? A credit score is meant to be a summary of your creditworthiness. It is often called a FICO score, short for Fair Isaac Corp., the company that developed the system that it is based on. Credit scores are designed to give lenders a quick, accurate prediction of your creditworthiness. 1.Nilson Report, April Experian marketing insight snapshot, March U.S. Census Bureau Nilson Report, April Nilson Report, April U.S. News and World Report, The End of Credit Card Consumerism, August Federal Reserve s G.19 report, February U.S. Congress Joint Economic Committee, Vicious Cycle: How Unfair Credit Card Company Practices are Squeezing Consumers and Undermining the Recovery, May 2009 f o c u s. f o c u s. f ocus. To become financially free, you need to remain focused. The best way to do that is to set both long and short-term goals, such as: - Gaining understanding of your current financial situation - Keeping your finances organized - Creating savings - Improving net worth - Enhancing your credit score - Obtaining fair pricing from lenders Every time you reach a goal, you are one step closer to financial freedom. YOUR PERSONAL PAYMENT PLAN IS THE MAP FOR YOUR JOURNEY TO FINANCIAL FREEDOM. IT IS UP TO YOU TO STAY ON COURSE OR TAKE A DETOUR.

6 The 9secrets consumer credit companies DON T want you to know! 1. THE MINIMUM PAYMENT TRAP The credit companies tell you minimum payments are convenient for you because they free up money for you to spend on other things. In reality, minimum payments make money for the credit companies, extend the life of your outstanding balance, and cost you money and time. When you make a minimum payment, most of it goes toward interest, which is why it takes so long to pay off the original debt. This is compounded by the fact that your minimum payment amount declines as your outstanding balance decreases. And when your minimum payment decreases, the amount applied to the principal balance also decreases keeping you in debt longer and costing you exorbitant interest fees! Where is the convenience in that? 2. DUE DATES Credit card companies have taken to mailing statements closer to the due dates than in the past. This gives you less time to pay your bill leading to late fees and possible interest rate increases making more money for the credit companies and leaving you holding the bill. 3. DOUBLE CYCLE BILLING Many credit cards practice double cycle billing which allows you to avoid interest charges only if you have paid your last two balances in full. Say you have a $5,000 balance in April and you pay $2,500 that month. You would think you would only be paying interest on the remaining $2,500 the next month. Unfortunately, that is not the case with double cycle billing. In May, when you pay the outstanding balance ($2,500 plus the interest) you will be charged interest on the entire $5,000 April balance, not just on the remaining $2,500. What a racket!

7 Knowledge is power. Understanding how consumer credit companies work and their dirty little secrets will help you stay focused on your goals and stay on course. 4. UNIVERSAL DEFAULT Did you know that even if you are current and in good standing with one credit card, that lender can increase your interest rate if they believe your actions with your other credit cards signal you are a credit risk? This is called Universal Default. For example, even if you always pay that one credit card on time and have never missed a payment, the lender can raise your interest rate if your credit score decreases because you were late paying on another card. Shockingly, that credit card company can even raise your rate if an inquiry on your credit report is made because of an application for a new car, home or credit card! 8. BALANCE TRANSFERS While 0% and low APR transfers sound like a great thing, watch out! Most credit card companies apply payments to the lowest rate balance first. So while you pay off your 0% or low interest transfer balance quickly, you unfortunately accumulate high interest fees on your new purchases. And those balance transfers can also lower your credit score, which in turn can increase your interest rate. Where is the savings in that? 9. COMPOUND INTEREST If you look at the fine print, not only can the consumer credit companies raise your interest rate, they can apply this new rate to old balances, thereby increasing your principal balance. This act of earning interest on interest is called compounding. 5. TEASER RATES You have probably gotten applications in the mail from credit card companies offering a low interest rate for a specified period of time. They sure are tempting, but BEWARE! Credit card companies can increase that teaser rate if you are late with a payment, over your credit limit, charge too much, charge too little, or are a future credit risk using Universal Default as their justification. That 0% on most offers will automatically jump to a rate of 29.9% if you are late by even a day or miss one payment! You need to look carefully at all of the restrictions buried in the fine print of your Disclosure Agreement. 6. CHANGE IN CREDIT TERMS Just as credit companies can change that teaser rate, they can change your credit terms, including your interest rate! It s all in the fine print! Check out your credit card companies disclosures and you will most likely find the generic We reserve the right to change the terms at any time for any reason. In fact, 93% of cards allow the lender to raise interest rates at any time by changing the account agreement. (Pew Safe Credit Cards Project, March 2009) You wouldn t pay $7,000 for an item that is clearly marked with a $2,000 price tag, would you? That is exactly what you are doing when you buy it using a credit card with an 18% interest rate and then only pay the minimum due each month 7. FEES, FEES, AND MORE FEES Credit card companies make their money on interest and fees. Late fees, over the limit fees, paying by phone, year-end summaries, charging outside of the country. If they can charge you a fee, they will!

8 Get a good How important is my credit report and FICO score? credit score HOW IS THE SCORE DETERMINED? The score is compiled from all of the information on your credit report using a formula to calculate a single number. Scores range from the 300s to 850, with most people falling in the 600s and 700s. The higher your score, the better your creditworthiness. In determining how high your credit score will be, the calculation takes into consideration any past account unpaid delinquencies, late payments, maxed out accounts, how close you are to credit card limits, the age of all of your credit accounts, the number of times you ask for credit, and the mix of your credit. HOW DOES A CREDIT REPORT/SCORE AFFECT INTEREST RATES AND/OR RATE CHANGES? Your credit report and score determine the pricing you will get from lenders. This affects not only applications for new credit cards and loans, but your existing accounts as well. Think back to that good old practice of Universal Default that was mentioned in the 9 secrets. HOW ELSE IS A CREDIT REPORT/SCORE USED? In addition to lenders banks, credit card companies, merchants using credit reports/scores when evaluating applications to determine interest rates, insurance companies use them to see how much of a risk you are, landlords rely on them as part of their tenant background checks, and employers utilize them to see how well prospective employees manage their finances.

9 Stop feeding the credit card companies coffers. ORGANIZATION BREEDS EFFICIENCY, CONTROL, SUCCESS. Keeping your financial statements in order places important information at your fingertips and helps you stay on top of your credit and debit transactions, due dates, and interest rates. Additionally, knowledge of how much money you have and where it is going keeps you in control of your debts instead of vice versa. And control is key to achieving financial freedom. To help you stay abreast of your finances, you should: - Analyze your bills, noting any changes in interest rates, fees and/or penalties - Pay attention to due dates to avoid late fees and increases in interest rates - Regularly check your credit report for any errors - Monitor your income and expenses Notify your financial planner immediately of any changes or discrepancies to avoid any negative effects they may have on your payments. SHOW ME THE MONEY! By following your plan, you are saving thousands of dollars in interest fees and years of payments. That alone should be enough to keep you focused! To save even more money in interest fees, you can pledge an additional amount each month towards paying down your debt. Even a small amount of $10 can have an impact. difference between your assets and liabilities. Your Personal Payment Plan is one of the fastest, easiest ways to improve your net worth. By systematically paying down your debt, you are decreasing your liabilities and increasing your assets, thereby increasing your net worth. How motivating is it to know that you could soon be out of the red and in the black? Improving net worth takes a determined effort to do all the right things... paying down debt, saving, planning, staying on course. ENHANCE YOUR CREDIT SCORE. Now that you know how important your credit score is, you can really see the overall value of your plan. Paying down debt and making payments on time can actually improve your credit score. Even if you have paid bills late in the past, if you start now and keep timely, your score will raise over time, as older late payments become less significant. If you are serious about saving for your future, once you are debt free, you can continue to make those monthly payments to yourself. You could deposit them in an investment account making your money work for you instead of the credit card companies. INTERESTED IN IMPROVING YOUR NET WORTH? Net worth sounds like such a technical, complicated concept. It is, however, very simple. Your net worth is merely the Diligence, consistency and perseverance all affect credit repair.

10 BETTER SCORE. BETTER INTEREST RATES. By making timely payments in the amounts specified, you can improve your credit score, enabling you to receive better rates from future lenders. Those actions also put you in a position to request even lower interest rates from current lenders down the road. STAY ON COURSE. You now know the credit card companies traps as well as tips for staying focused on the plan. It is up to you to follow the map to financial freedom. - Pay on time to avoid late fees. - Pay the amount specified or more every month. - Because your plan is set up for your existing debt, do not incur any new charges on your accounts. If you do, however, make sure to pay them during that billing cycle to avoid increasing your balance and interest fees. - Advise your financial plannerof anything that could affect your ability to pay the specified amounts. Get started today and feel the weight lift off your shoulders. The shortest distance between two points is a straight line.

11 Tips to keep you in the fast lane 1. Spend less. Those plastic cards make it easy for us to purchase things we truly can not afford. Don t buy something unless you physically have the money to pay for it. Have a true grasp of your income and expenses. Create a budget and stick to it. 2. Pay cash. How many times have your charged things then have been shocked by the amount of your monthly statement? If you pay cash, you will know how much you are spending. If you don t have the money, you probably cannot afford to buy it! 3. Ignore credit card offers. Use credit cards only in emergencies. 4. Payoff credit cards. Always pay over the minimum and pay on time. Large balances and high interest rates are bad combinations. 5. Be realistic. We live in an I need it now society for pretty much everything from televisions to the latest cell phone to shoes. If you don t need it, don t buy it. If you really want it, save up for it and pay in cash.

12 ENJOY THE JOURNEY... You have your plan. You have the tools. You have the knowledge. You have our support. Everything you need to start down the road to financial freedom. Stay focused. Stay the course. Remember, you did not accumulate this debt overnight. Getting out of debt will take time and perseverance. But you don t have to do it alone. Think of us as your co-pilot. We are here whenever you need us. Keep your eyes on the prize.

13 frequently asked questions Will my new lower credit card interest rates apply retroactively to my existing balances? Yes. When you reduce credit card interest rates, the new rates apply to your existing balance from the date of the interest rate change. How do lower credit card interest rates improve my credit score? When you lower your interest rate you reduce your debt ratio, increase your credit score and improve your overall credit rating. What is a debt ratio? It is a key indicator of your true financial picture and one of the credit industry s leading measures of fiscal health. The ratio is calculated by dividing monthly debt payments (excluding mortgage, rent, utilities, food, and entertainment) by monthly gross income. For example, someone with a monthly gross income of $2,000 who is making minimum payments of $400 on debt (loans and credit cards) has a debt to income ratio of 20% ($400 divided by $2,000). Although the formula varies from lender to lender, with some lenders raising ratios to account for mortgages, lenders seem to agree that a debt ratio of 10% or less is acceptable. Will I save more money if I send in my credit card payment early? Most credit card companies calculate interest based on your average daily balance. If you carry a balance on your credit card, and want to get out of debt fast, making early payments can help you reduce your credit card debt. The sooner your credit card company posts your payment, the less interest you will owe. If my credit card offers a grace period are my purchases interest free? It depends on if you are carrying a balance. Typically your purchases are interest free if you start your billing cycle with a zero or negative balance AND you pay those purchases in full by the due date. If you carry a balance, however, the credit card company will charge interest from the date of purchase.

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