Welcome to the Biggest Loser: Debt Edition Contest!

Transcription

1 Proverbs 22:7: The rich rule over the poor, and the borrower is the slave of the lender. Welcome to the Biggest Loser: Debt Edition Contest! Debt makes you a servant to someone other than God: a bank, a business, a friend. The goal of the Economic Empowerment Ministry (EEM) in this contest is to empower our church body by encouraging debt reduction. Our prayer is that by reducing debt, not only will our family units be strengthened, but our members will be freed from obligations to others and be better positioned to financially assist in the ministry of Wheeler Avenue Baptist Church. The contest will begin on April 26 th and end on September 13 th. Over the 4 1/2 months, we pray that you will have fun, develop great habits for financial management and build stronger financial health. To motivate you on this journey, we will award cash prizes up to $2500, as well as many other fun & helpful prizes. In addition, we will issue helpful financial tips throughout the contest. This package includes: General information and contest rules Contest Deadlines Honor Commitment Halftime Report Card Frequently asked questions Sample Debt to Income Worksheet Debt to Income Worksheets Thank you for joining us as we all take a big step towards stronger financial freedom. If you have any questions, please stop by the Economic Empowerment Ministry (EEM) table in the Christian Life Center after service on Sundays throughout April (except Easter) and the first Sunday of each month through most of the contest. Or, feel free to us at [email protected]. Now, let s go reduce that debt! And don t forget, our kickoff will be on April 26 th at our Economic Empowerment Ministry Workshop. See you there! In Christ, Economic Empowerment Ministry Wheeler Avenue Baptist Church Rev. Dr. Marcus D. Cosby, Senior Pastor Rev. William A. Lawson, Founding Pastor Emeritus

2 General Information and Contest Rules Event Description Participants confidentially compete to lose the largest percentage of their non-mortgage debt over the designated time period. Debt categories include: credit cards student loans auto and car title loans bank loans signature / personal / peer to peer loans / loans from any lending institution home equity loans or home equity lines of credit (HELOC) Co-sign loans where you are now responsible to pay due to defaults Debt-in-collections (e.g., medical, old unpaid bills, pay day loans, etc.) Time Period 4 1/2 months. April 26 th September 13 th Launch: April EEM Workshop on April 26, 2014 End: Results/winners announced September 28 th, 2014 Signup period: March 30 April 26 th Eligibility for Grand Prizes WABC members only (adults in household must be members). Participant/household must tithe during competition period, i.e. 10% of gross income. Must have debt to income ratio greater than 15%. Must submit a signed Honor Commitment at the beginning of the competition. Must complete and submit Debt to Income Worksheet (Initial) and Debt to Income Worksheet (Final) in accordance with contest deadlines. Must complete and submit Halftime Report. To claim a grand prize, must submit official financial statements (e.g., credit reports, pay stubs) dated prior to the beginning of contest (Apr 26 th ) and ending (September 13 th ) for review at in order to validate the largest percentage loss. Grand Prizes (CATEGORIES SUBJECT TO CHANGE) Category 1 (30.01% or more Non-mortgage Debt to Income Ratio) - $2,500 Category 2 (25.01% to 30% Non-mortgage Debt to Income Ratio) - $1,000 Category 3 (15% to 25% Non-mortgage Debt to Income Ratio) - $500 Eligibility for General Prizes WABC members/households & non-members/households Must submit a signed Honor Commitment at the beginning of competition. Must complete and submit Debt to Income Worksheet (Initial) and Debt to Income Worksheet (Final) in accordance with competition deadlines. Must complete and submit Halftime Report.

3 General Prizes (Subject to Change) Free issue of Kiplinger s Personal Finance Magazine Dave Ramsey s Financial Peace University Kits Nook Color ebook reader (WiFi Only) 21 Day Financial Fast: Your Path to Financial Peace and Freedom by Michelle Singletary Starbucks Gift card 1 year subscription to Kiplinger s Personal Finance Magazine Gas Card Keriug K-cup Home Brewer INVESCO Boot Camp for Women - partnership with UH Royal CX80 Cross Cut Paper/Credit Card Shredder Intex comfort Rest Deluxe Raised Queen Airbed w/ built in AC pump TurboTax software Other prizes (subject to change) How to Win Within each category, the winner will be the member with the greatest percentage of debt reduction from the initial worksheet through the final worksheet. (Note: The committee will finalize the categories once all participants have submitted their initial worksheets. The committee will aim to balance the participants across three (3) categories to ensure all participants have a close to equal chance of winning the cash, grand prize for their category.) Example Person Initial Nonmortgage Debt Amount Final Nonmortgage Debt Amount Change % Reduction (Difference divided by Initial Debt) Status A $20,000 $13,000 $7,000 35% WINNER B $25,000 $18,000 $7,000 28% In this example, Person A wins because she/he reduced her/his non-mortgage debt by 35%, which was greater than Person B s 28% reduction.

4 CONTEST DEADLINES 1. By APRIL 26, 2014: Submit the following at the workshop or at the EEM table in the ChLC: Completed debt/income worksheet (Initial) Honor commitment (EEM copy) 2. Between JULY 6 AND JULY 13, 2014: Submit the following at the EEM table between worship services or in the Biggest Loser: Debt Edition box in the ChLC. Completed Halftime report card 3. SEPTEMBER 13, 2014: Submit the following at the EEM table between worship services or in the Biggest Loser: Debt Edition box in the ChLC Completed debt/income worksheet (Final) To honor your confidentiality, each participant is assigned a random number. These numbers are on the stickers attached to the envelope and on the worksheets, the honor commitment, and the halftime report card. Note: All documents submitted for this contest MUST have the number on it.

5 PLACE RANDOM NUMBER STICKER HERE HONOR COMMITMENT EEM COPY (MUST BE SUBMITTED BY APRIL 26, 2014) I commit to follow all rules of the contest including: a. I will submit my halftime report. b. I will make every effort to complete the contest. c. I will pay my mortgage & all other monthly obligations on time. d. I will not take out loans from other people, institutions (e.g., banks, pay day loans) or my assets (e.g., retirement savings, etc.) to pay down debt during this contest. e. I will report all non-mortgage debt & all household income. By writing your sticker # below, you sign this commitment. Please do not sign your name. Sticker #:

6 HONOR COMMITMENT PERSONAL COPY (FOR YOUR FILES) I commit to follow all rules of the contest including: a. I will submit my halftime report card. b. I will make every effort to complete the contest. c. I will pay my mortgage & all other monthly obligations on time. d. I will not take out loans from other people, institutions (e.g., banks, pay day loans) or my assets (e.g., retirement savings, etc.) to pay down debt during this contest. e. I will report all non-mortgage debt & all household income. By writing your sticker # below, you sign this commitment. Please do not sign your name. Sticker #:

7 PLACE RANDOM NUMBER STICKER HERE HALFTIME REPORT CARD EEM COPY (MUST BE SUBMITTED BY JULY 6, 2014) Submit at the EEM table between worship services or in the Biggest Loser: Debt Edition box in the ChLC. Enter Total Amount of Non-mortgage Debt Paid Off Since Start of Contest: $

8 Frequently Asked Questions (FAQs) 1. How will you maintain confidentiality? We are using a random numbering system for participants. Names will not be associated to the random numbers assigned to each participant. However, to claim a grand prize, a participant will need to provide the necessary documentation in order for the debt reduction to be validated. All information submitted will be kept strictly confidential. If winners choose to claim their grand prize, they will not remain anonymous and some of the information will be used for contest communications. 2. Can I refinance my home or do a reverse mortgage and use that extra cash to pay down these debts? No. In certain circumstances, these can be an effective strategies to consolidate debt at a lower interest rate or pay off debt, however, doing so for a short term gain (i.e. win the contest) will disqualify you from receiving cash prizes since mortgage debt is not included in this contest. Be sure to consider potential unintended long term consequences & risks with these types of loans (e.g. If your home value decreases after you refinance, you could be at risk of owing more on your home than what it is worth which could prevent you from selling.) 3. Can I use a home equity loan or a home equity line of credit to pay down my non-mortgage debts? Yes. Both are included when calculating your bad debts even though these can be effective strategies to consolidate debt at a lower interest rate. Be careful that this does not encourage decision making for a short term gain (i.e. win the contest) without considering potential unintended long term consequences & risks with these types of loans (e.g. if your home value decreases after you refinance, you could be at risk of owing more on your home than what it is worth which could prevent you from selling your home.) 4. Are payday loans included in the contest? No. Even though payday loans are a prime example of bad debt, these loans will not be included for this contest. They are very short term loans designated for short term cash flow issues and are typically required to be repaid in 30 days or less. 5. How will you verify one s debts? For those who would like to be considered for the grand prize, they will need to submit their financial statements verifying all starting & ending debt balances, monthly income along with a recent credit report(s) for the member(s). The credit report will be used to verify all accounts have been accounted for. 6. Can we take a personal loan from a friend or family to win the contest? No. We would like to encourage best practices and this is not one of them. Further, as part of the honor commitment you will sign, we are asking you to refrain from doing this. 7. How does one sign up? Complete the signup package and submit it. 8. How will households be treated? It s all or none. Either all of the household members participate or none of them participate. This will ensure fairness in the contest for those who may not have more than one adult in the household. All adult members of the household will have to meet the eligibility and verification criteria. 9. Who is defined as a WABC member? One/households that has/have joined the church prior to the end of the contest, September 13 th Will there be ongoing assistance for those who need help? Yes. On each first Sunday, participants may stop by the EEM table between worship services and a ministry member will do their best to assist you. In addition, we will publish a monthly / paper 1 pager with some tips, motivations, etc.

9 11. What is tithing criteria and how will this be verified? 10% of gross income. Must have evidence of tithing throughout the contest (April, May, June, July, Aug and September). 12. What are the different Categories? To ensure as much fairness as possible, we will have the contest based on the participant s non-mortgage debt to income ratio at the start of the program. Based on this starting point ratio, participants will be placed in one of three categories. The debt-to-income ratio is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed. To calculate your debt-to-income ratio, you add up all your minimum monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out. This contest is focused only on non-mortgage debt. Examples: Person Gross Monthly Income (A) Monthly Non-mortage payments (B) % (B)/(A) Category A $2,500 $650 26% 2 B $5,000 $2,000 40% Do the cash prizes have tax implications for the church or the recipients? Yes. Cash prizes must be reported as income by the recipient. 14. Do all participants get recognition? Yes. All participants will get certificates and a free copy of the Kiplinger s Personal Finance magazine. All participants will be eligible for general prizes. 15. What happens if there s a tie? The grand prize will be split equally between all winners.

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11 BIGGEST LOSER: DEBT EDITION DEBT TO INCOME WORKSHEET PERSONAL COPY (KEEP FOR YOUR FILES) SOURCES OF INCOME GROSS MONTHLY AMOUNT (Before Taxes) MONTHLY TITHE (10% OF GROSS) PAYCHECK #1 PAYCHECK #2 PAYCHECK #3 PAYCHECK #4 SOCIAL SECURITY PENSION INCOME RENTAL INCOME OTHER (CHILD SUPPORT, ALIMONY, ETC) TOTAL MONTHLY INCOME (A) $ - $ - Minimum Payment Total Balance Owed REVOLVING LOANS CREDIT CARD/DEPARTMENT STORE #1 CREDIT CARD/DEPARTMENT STORE #2 CREDIT CARD/DEPARTMENT STORE #3 CREDIT CARD/DEPARTMENT STORE #4 CREDIT CARD/DEPARTMENT STORE #5 HOME EQUITY LINE OF CREDIT INSTALLMENT LOANS AUTO LOAN #1 AUTO LOAN #2 PERSONAL/SIGNATURE LOAN #1 PERSONAL/SIGNATURE LOAN #2 AUTO TITLE LOAN STUDENT LOAN COLLECTION ACCOUNTS UNPAID DEBT #1 UNPAID DEBT #2 UNPAID DEBT #3 UNPAID DEBT #4 TOTAL MONTHLY PAYMENTS (B) TOTAL DEBT $ - NON-MORTGAGE DEBT/INCOME RATIO (B/A)