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On money

Personal Finance editor
huntley

HELEN
HUNTLEY

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By HELEN HUNTLEY

© St. Petersburg Times,
published June 24, 2001


Do your homework before picking debt repayment plan

Q. I was left with considerable debt after my divorce. I want to pay my debts and not declare bankruptcy. I am considering debt consolidation but was told this is the same as declaring bankruptcy. What are the ramifications of debt consolidation? Is there a stigma? Does this ruin my credit after I have paid off everyone?

A. The best way to get back on your feet is not the same for everyone, so explore your options before you take out another loan.

A debt consolidation loan will hurt your credit in the short run, but if you pay off your debts, your score should get a boost. One problem associated with these loans is that you can end up deeper in debt unless you close all your other accounts. If this is a home equity loan, you are putting your home in jeopardy if you cannot make the payments.

Before you sign up for a consolidation loan, be sure you understand the terms, including all fees, interest rates and penalties.

"If consolidating debt into one chunk will help somebody dig their way out of a credit hole faster, then in some ways the credit score doesn't matter," said Craig Watts, spokesman for Fair, Isaac, which compiles the credit scores used by most lenders.

Your choice is not simply bankruptcy versus debt consolidation. One option is negotiating with individual creditors to reduce your interest payments or settle your debts. Another would be a debt repayment plan through a credit counseling service.

Get some financial counseling to help you evaluate which approach suits you. One source is a consumer credit counseling service; call (800) 388-2227. Many non-profit agencies also offer financial counseling to people who qualify as their clients. Often these organizations serve a specific group such as the elderly, single women or families with children.

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Q. I invest money in CDs for a 94-year-old man. I have been told that if he dies, the bank would be required to cash the CDs without penalty, which would then allow me to distribute the money to his heirs. Is this true, and if so, wouldn't it be smart for me to just buy the longest-term CD and get the highest rate?

A. The bank is not legally required to do it, but it is common industry practice to cash a CD without penalty when the accountholder dies. Because this is important to you, ask the bank where you do business about its policy.

If death is the only contingency you are concerned about, you would be smart to go for the term that produces the best yield. But you may not want all the money locked up long term in case it is needed for medical expenses. Many people hedge their bets by buying CDs with staggered maturities.

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Q. My late husband worked for United Dressed Beef, which was a division of Swift & Co., and I think he paid into a pension fund. I wrote to the Pension Benefit Guaranty Corp. to ask if he might be entitled to a benefit but never received a reply. Is there a way to find out about this pension? The company eventually went out of business at that location.

A. Since Swift & Co. is still in business, your best bet is to go directly to the company with your questions. Swift & Co. is headquartered in Greeley, Colo., and is part of ConAgra Foods Inc. of Omaha, Neb.

The Pension Benefit Guaranty Corp.'s primary role is to protect benefits when a pension plan is terminated. It also helps match up pension plans with lost workers. You can search the database online (http://www.pbgc.gov) by the name of a worker or company. However, neither Swift & Co. nor United Dressed Beef appears in this database. You also can send a query by email (missing@pbgc.gov) or write PBGC Pension Search Program, 1200 K Street N.W., Washington, D.C. 20005.

Online money map

What's the value of your life? You may think it's priceless, but the life insurance industry is willing to put a price tag on it. To see how you stack up on their terms, check out the "human life value calculator" at the Life and Health Insurance Foundation for Education (http://www.life-line.org/life).

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-- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731, or to huntley@sptimes.com by e-mail.

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Paper: Date: 6/24/01 +

Page: 3H Section: BUSINESS +

Byline: LAURA T. COFFEY Headline: Ten tips +

Notes:

Don't let money problems wreck your marriag

The lack of money is the root of all sorts of marital friction. Many couples live paycheck to paycheck and grapple with overwhelming debt, frequently caused by overspending with credit cards. Consider these tips to get a handle on your finances.

1. Conduct an honest assessment. Are you clear about how much money you owe? Do you even want to know? It may be painful, but the first step toward getting out of the hole is to survey its depth.

2. Don't make matters worse. This is not the time to sign up for more credit cards or take on additional debt.

3. Come up with a game plan. Concentrate on paying off credit cards with the highest annual percentage rates. If possible, consolidate your credit card debt onto one card with a low interest rate. Always pay more than the minimum payment.

4. Create a budget. This doesn't have to be complicated. Simply add up your monthly expenses and take note of how much money is going toward variable expenses, such as food and entertainment, and fixed expenses, such as rent. This will show you where you can free up money to repay your debt.

5. Cut up your plastic. Destroy unnecessary credit cards. Keep one or two, and store them in an inconvenient place.

6. Use cash only. This sounds harsh, but financial advisers say that people who pay with cash spend 70 percent to 80 percent of what credit card users spend. Note: This approach will require you to be disciplined about how many trips you make to the ATM.

7. Seek legitimate help. A certified counselor with a non-profit credit counseling agency can contact your creditors, reduce or eliminate fees, lower interest payments and set up debt repayment programs. To find the agency nearest you, call the National Foundation for Credit Counseling at (800) 388-2227.

8. Nip fights in the bud. If you have children, try to present a united front. Rather than fighting about money in front of them, make the effort to discuss the matter in private.

9. Plan ahead for regular expenses. Instead of shopping for food every day or eating out, plan your meals for the week. Shop for food once a week, and don't exceed the set amount you can afford to spend.

10. Set goals. Many couples discuss money only when it's in short supply. Instead, sit down and define your financial goals. Do you want to own a home? Have kids? You'll be in a much better position to do such things if you pay off your debt and agree on a savings plan together.

- Compiled by Laura T. Coffey.

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Sources: Consumer Credit Counseling Service of San Diego and Imperial Counties (http://www.cccssdic.org); MSN MoneyCentral (http://www.moneycentral.com); and Parenting magazine (http://www.parenting.com).

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Paper: Date: 6/24/01 +

Page: 5B Section: HILLSBOROUGH +

Byline: Times staff writer

Notes:

TAMPA -- Police officers have arrested a fourth man in connection with last month's robbery and drowning death of a man in the Hillsborough River

James I. Murray, 18, was picked up about 10:15 p.m. Friday at his grandmother's home in Tampa, said police spokesman Katie Hughes. He was charged with first-degree murder, robbery and burglary of a car and was being held without bail at the Orient Road Jail.

Murray, of 1748 E Mulberry Drive in Tampa, and three other men are accused of robbing Eddie George and Jennifer Simon at Temple Crest Park on May 12 and forcing them into the river. Simon made it to shore. George drowned.

Police said evidence in the couple's car, including fingerprints, led to the arrests Friday. Also charged are Anthony Francis, 18, Tremayne Hall, 18, and Lucious Williams, 22, all of whom have lengthy arrest records.

The Florida Department of Law Enforcement lists 10 previous arrests for Murray, most of which involved car theft. His first arrest came in 1996 when he was 13. His latest previous arrest was in October.

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