MAJORITY OF AMERICANS WERE UNAWARE OF PAYROLL TAX CUT’S IMPACT ON PAYCHECKS

The following information was taken from a 2/1/2012 NFCC Press Release.


As Congress continues to debate extending the payroll tax cut, they may want to review the results of the National Foundation for Credit Counseling (NFCC) January online poll to determine if the objective of the tax cut is being realized. The overwhelming majority of close to 1,800 respondents, 66 percent, were unaware that their paychecks were larger last year.

“Even if the dollar increase is small, consumers should be aware of it,” said Gail Cunningham, spokesperson for the NFCC. “Not recognizing that the paycheck was larger begs the question of how the additional money was spent. Knowing how much you make and consciously determining how to spend it are basic building blocks of financial stability. This poll provides another example of the need for increased financial education.”

As an example, the two percent Social Security payroll tax cut puts $1,000 back into the pockets of a family earning $50,000 annually, a significant amount of money that could mean the difference between financial stability and financial distress each month.

Those aware of the increase appeared to have allocated the money responsibly, with the largest number of respondents indicating they used it to pay off debt (18 percent), while the second highest number (eight percent) caught up on past-due bills.

Smaller percentages either increased their retirement contributions (four percent), or saved the money (three percent). Only one percent indicated that they spent the money on something for themselves.

“Consumers should become familiar with the format of their paychecks, and upon receipt promptly confirm that all entries are correct, taking any questions to their payroll supervisor,” continued Cunningham. “This way, whether it’s a raise, bonus or payroll tax cut, they will be able to make conscious decisions regarding how the increase should be spent to best benefit their financial situation.”

For professional assistance determining the best use of your hard-earned money, consider an appointment with a Certified Consumer Credit Counselor at an NFCC Member Agency. To be automatically connected to the Agency closest to you, dial (800) 388-2227, or to locate a counselor online go to http://www.debtadvice.org/. For assistance in Spanish, dial (800) 682-9832.

The actual results of the English poll were as follows:

With the 2011 two percentage point payroll tax cut, last year I
A. Saved most of it = 3%
B. Caught up on past-due bills = 8%
C. Increased my retirement contributions = 4%
D. Treated myself to something special = 1%
E. Used it to pay off debt = 18%
F. Didn't realize my paycheck was larger = 66%

Note: The NFCC’s January Financial Literacy Opinion Index was conducted via the homepage of the NFCC Web site (http://www.debtadvice.org/) from January 1 - 31, 2012 and was answered by 1,797 individuals.


The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation’s largest and longest serving national nonprofit credit counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. NFCC Members annually help more than three million consumers through close to 800 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC Member, call (800) 388-2227, (en Español (800) 682-9832) or visit http://www.nfcc.org/. Visit us on Facebook: www.facebook.com/NFCCDebtAdvice, on Twitter: twitter.com/NFCCDebtAdvice, on YouTube: www.YouTube.com/NFCC09 and our blog: http://financialeducation.nfcc.org/.

Its Official!

2012 Youth Financial Literacy Summit. Check it out!

Consumers Remain Committed to Using Credit Cards

National Foundation for Credit Counseling Poll Reveals Top Financial Resolutions

Washington, DC – According to the National Foundation for Credit Counseling (NFCC) December online poll, consumers remain very connected to their credit cards. When asked to rank their 2012 financial resolutions, only six percent of more than 2,300 respondents indicated that decreasing dependence on credit cards was their number one goal.

“At first glance, that statistic could appear to be a warning sign of future trouble. However, credit is not the problem. Instead, it is the misuse of credit that leads people into financial distress,” said Gail Cunningham, spokesperson for the NFCC.

Balancing the continuing reliance upon credit, an encouraging statistic from the poll is that the overwhelming majority, 62 percent, selected decreasing debt as their focus for 2012. “If consumers are able to decrease their debt load, continuing to use credit responsibly will help them meet the goal selected by 24 percent of respondents, that of increasing their credit score,” continued Cunningham.

While decreasing debt is always a positive, consumers should not neglect savings, yet that is exactly what respondents appear to be doing. Only eight percent of those weighing in ranked saving as their most important resolution. Without the security of a well-funded emergency savings account, consumers are living without a financial safety net, as unplanned expenses will occur, usually at the worst possible time.

The poll also revealed some interesting trending from 2010 when the identical question was posed. Showing the largest percentage difference between the years, the 2010 poll noted 69 percent of respondents were most interested in decreasing debt, compared to 62 percent in 2011.

The second largest year-over-year difference involved improving the credit score, with that category posting a six percent increase. In 2010, 18 percent of consumers chose increasing their credit score as their main goal, while in 2011, 24 percent selected that category as most important in the New Year. This increase indicates that consumers understand the relationship between the credit score and obtaining credit, confirming their interest in continuing to have access to credit.

“The poll suggests that consumers have recognized the importance of achieving financial stability, and intend to action. Nonetheless, even though paying down debt and improving the credit score are positive steps, the low priority placed on savings is disturbing,” said Cunningham.

The actual poll question and answers are as follows:

My #1 financial New Year’s resolution for 2012 is to:

A. Decrease debt 62% (December 2010 poll = 69%)

B. Increase savings 8% (December 2010 poll = 7%)

C. Improve my credit score 24% (December 2010 poll = 18%)

D. Decrease my dependence on credit cards 6% (December 2010 poll = 7%)

Note: The NFCC’s December Financial Literacy Opinion Index was conducted via the homepage of the NFCC Web site (www.DebtAdvice.org) from December 1 - 31, 2011 and was answered by 2,319 individuals.

How much will you spend on Christmas?

NFCC POLL REVEALS FORTY PERCENT OF AMERICANS WILL SPEND ZERO ON HOLIDAY PURCHASES

Washington, DC – The November poll hosted on the National Foundation for Credit Counseling (NFCC) website, www.DebtAdvice.org, revealed that 40 percent of respondents do not intend to spend any money on holiday purchases, as they anticipate experiencing further financial distress in the future.

The poll sends a strong signal that in spite of the increase in sales during Black Friday and Cyber Monday, a significant number of people lack enough confidence in their financial future to begin spending, even on traditional holiday expenses.

“Historically, consumers have put aside their financial concerns during the holidays, even if to their detriment, and spent at some level,” said Gail Cunningham, spokesperson for the NFCC. “These figures provide a snapshot of the desperate situation in which consumers find themselves, and how seriously they are taking their situation.”

Of note is the statistically significant increase reflected in the year-over-year trend. The NFCC posed the identical set of poll questions in the same month one year ago. Between November 2010 and November 2011, there was a six percentage point increase in the number of consumers who indicated they will spend zero dollars during the holiday season, evidence of the depth of the financial despair in the country.

Also disturbing is that slightly more than half of all poll respondents indicated they would cut back on holiday spending, as their financial situation is worse this year than last. Combining those who will cut back on spending with those who will not spend at all, a full 91 percent of consumers are clearly concerned enough about their financial circumstances that they will remain on the spending sidelines this holiday season.

Looking at the two categories with the lowest responses, seven percent revealed that they will spend as they did in 2010, and a modest three percent will spend more than they did last year.

“Consumers are doing themselves a disservice if they do not reach out to a legitimate credit counseling agency for help surviving these difficult economic times, as there may be solutions available that have not been considered,” continued Cunningham.

For professional assistance regarding your financial questions, consider an appointment with a certified consumer credit counselor at an NFCC Member Agency. To be automatically connected to the Agency closest to you, dial (800) 388-2227, or to locate a counselor online go to www.DebtAdvice.org. For assistance in Spanish, dial (800) 682-9832.

The November poll question and results are as follows:

This holiday season I will…

A. Spend as I did last year because my financial life is stable = 7% (2010 = 7%)

B. Cut back on spending, since I am worse off financially this year = 51% (2010 = 57%)

C. Spend more than last year because I am in a better financial position = 3% (2010 = 2%)

D. Not spend at all, because I anticipate further financial distress = 40% (2010 = 34%)

FIVE THINGS TO DO BEFORE LEAVING HOME ON BLACK FRIDAY

Washington, DC – For many, shopping on Black Friday has become as much of a Thanksgiving tradition as turkey, with friends and families whipping up a shopping strategy along with the dressing and gravy.

The National Foundation for Credit Counseling advises consumers to shop smart by planning ahead. Following are five steps consumers should take before hitting the stores on Black Friday, helping them enjoy their shopping excursion without harming their pocketbook.

· Beware of special credit card offers – Issuers are tempting consumers by offering incentives such as no interest balance transfers, extra perks by meeting certain spending levels, and increased cash back in specified categories. However, no deal is a good deal if you can’t afford it. Responsible shoppers will commit to spending no more than what they can repay in full when the bill arrives, regardless of how many bonuses are tacked on.

· Know what you currently owe – Review all existing debt obligations, tallying what you’ve already spent and committed to repay. This reality check may put a temporary damper on your holiday mood, but that’s better than digging the financial hole even deeper.

· Create a plan – Knowing who you’re shopping for, what items you hope to find, and most importantly, how much you intend to spend is critical to a successful shopping day. Commit in advance to stick to your plan, and enlist an accountability partner if necessary, as it is very easy to be caught up in the excitement of the moment and get off course.

· Find the best deals at home – Shop from home before heading for the stores. Compare prices online, as well as local circulars for sales in your area. Be aware of time restrictions, as some prices may only apply during certain time periods throughout the day. Once the actual shopping begins, going directly to the store which has your item at a good price will save you time, gas, money and frustration.

· Remove all unnecessary cards from your wallet – Spreading purchases across multiple cards makes you feel as though you’re charging less and can trick you into overspending. Designate one card for holiday spending, and remove all others from your wallet. This will not only help you stay within your budget, but will also lessen the damage in case of loss or theft.

“It is important for consumers to shop with their head, not their heart,” said Gail Cunningham, spokesperson for the NFCC. “Preparing in advance will help you stick to your budget, in spite of the decorations, carols and Santa himself beckoning you to spend.”

The Great American Smokeout on November 17th

ARE YOU ADDICTED TO YOUR BAD FINANCIAL HABITS?

Washington, DC - The Great American Smokeout on November 17^th is a day dedicated to helping consumers overcome their addiction to the smoking habit. The nationwide event encourages people to put down their cigarettes in favor of a healthier lifestyle.

The National Foundation for Credit Counseling (NFCC) also supports a healthy lifestyle, one which includes financial health. “In addition to the known health risks associated with smoking, it is also damaging to your pocketbook,” said Gail Cunningham, spokesperson for the NFCC. “A pack-a-day- habit can easily cost $150 per month, often taking money from priority expenses such as housing, groceries or gasoline.”

Smoking certainly isn’t the only habit that can be costly to your financial well-being, nor is it the only one that can become addictive. In this economic environment where consumers often struggle to make ends meet, they may resort to desperate measures when in need of money. Since quick fixes are often habit-forming, the NFCC recommends evaluating the following behaviors, giving consideration to kicking your own financial addictions.

Payday Loans - On the surface, getting the cash you need may seem worth it at any cost. But it’s that cost and the addictive nature of seemingly easy money that can become financially back-breaking. To obtain a payday loan, you write a post-dated check for the amount of the loan plus any fees the lender tacks on. You then receive the amount of money you initially needed to borrow, promising to pay back that amount plus the fees. The term of the typical payday loan is one to two weeks, at which point the lender cashes your post-dated check. Most payday lenders will charge a certain dollar amount per $100 borrowed. For example, they may charge $15 for every $100 they loan you. Thus, if you needed $300 until your next paycheck arrived, your post-dated check would be for $345. What’s $45 when you desperately need $300? Here’s the catch…that $45 represents an Annual Percentage Rate of 390 percent. You wouldn’t dream of taking out any other type of loan with triple-digit interest. And, if this isn’t bad enough, many consumers cannot repay the loan at term, and end up rolling it over, thus adding on more fees and interest.

Pawn Shops – People can do several things at pawn shops. They can borrow money by putting up something of value as collateral in exchange for cash, they can sell their merchandise outright, or they can buy the merchandise that is for sale at the shop. There are bargains at pawn shops, but only for those buying the merchandise, not for the sellers. Typically, the person pawning the merchandise receives a sum of money (usually nowhere near the true value of the item) which he or she agrees to repay with interest. If the loan is repaid by the end of the term, the merchandise is returned to the owner. If the loan is not repaid, the consumer can renew the loan, or the merchandise is forfeited. What’s the problem? Again, it’s the interest and fees, with APRs typically in the triple-digit range once all charges are included. Further, some studies have shown that only 60 percent of pawners end up reclaiming their merchandise, thus they have essentially sold an item for cents on the dollar, something they wouldn’t otherwise do.

Rent-to-Own – Everyone wants nice things, and if the family is coming over for the holidays, you may be tempted to spruce up your home. A quick trip to the furniture or electronics store could confirm that a new living room set and flat panel TV are out of your price range. Then you notice an ad for similar items with affordable monthly payments. It seems too good to be true, and guess what, it is. The problem once again lies in the interest and fees. For instance, if you bought a $200 item and agreed to make the seemingly affordable weekly payments of $15 for 78 weeks (basically one and one-half years), you’d end up paying $1,170 for that $200 item at an APR of 388 percent. Adding insult to injury, it is likely that you could have purchased the same item at a traditional store for a fraction of the overall cost.

“People wonder why anyone would agree to the terms imposed by payday loan companies, pawn shops and rent-to-own businesses. The answer is that consumers who utilize such concerns typically do not qualify for loans from banks or credit unions, and would not be approved for in-store lines of credit. Nonetheless, people need to understand that even though there is always a cost to credit, when that cost becomes unreasonable, the consumer is better off considering other options or doing without. The real answer lies in breaking your addiction to these easy money solutions by probing to understand the root of the problem and resolving it,” Cunningham continued.

If you need assistance breaking your financial bad habits, reach out to an NFCC Member Agency where you’ll find legitimate help through a trained and certified credit counselor. To be automatically connected to the agency closest to you, dial (800) 388-2227, or to locate an agency online, go to www.DebtAdvice.org. For assistance in Spanish, dial (800) 682-9832.

The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation’s largest and longest serving national nonprofit credit counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. NFCC Members annually help more than three million consumers through close to 800 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC Member, call (800) 388-2227, (en Español (800) 682-9832) or visit www.nfcc.org. Visit us on Facebook: www.facebook.com/NFCCDebtAdvice, on Twitter: twitter.com/NFCCDebtAdvice, on YouTube: www.YouTube.com/NFCC09 and our blog: http://financialeducation.nfcc.org/.

South Carolinians Are Getting Out of Debt with Help From Family Services, Inc.

Individuals and families should be advised that there is help available to clean up personal financial wreckage fueled by the recession. Michaele Pena, Director of Family Services, Inc’s Consumer Credit Counseling Services encourages consumers to be proactive and seek free credit counseling. Family Services, Inc.’s Debt Management Program is designed to help reduce high interest rates and set up a payment plan to pay back unsecured debt. There is no minimum debt that is required to participate in the program, “You do not have to be in a delinquent status to explore the debt management program or enroll,” advises Pena, “Get help early rather than later. One of our licensed financial counselors will work with you and outline options that may help you improve your financial situation.”

Family Services, Inc.’s Debt Management Program works to help credit burdened consumers pay off their unsecured debt within five years and receive free financial literacy education. Consumers are invited to attend free counseling over the phone or in person to learn where their money is spent unnecessarily, develop a personal budget that they can live with, how to take the initial steps towards improving their credit by paying their monthly bills in a timely/consistent manner, and determine if they qualify for the Debt Management Program. In 2011’s third quarter, 9 previously credit burdened individuals successfully completed Family Services, Inc.’s Debt Management Program and collectively paid back $223,176 while they were enrolled in the program. Year to date, 45 credit burdened individuals successfully completed the program and collectively paying back $1,241,499; an average of $27,588.

“Clients who successfully complete the program are always very thankful for our help. The debt management program provides an alternative to filing bankruptcy.” Pena states, “I am quick to remind our clients that they did the hard work, with guidance and encouragement from their counselor and the Debt Management Program staff. Graduates of the Debt Management Program prove that financial hardships can be turned around to the positive. It takes dedication to live within your means financially and following the program to be debt free from all unsecured debts.” For information on how you may benefit from Family Services, Inc.’s Debt Management Program contact Michaela Pena at 843735.7840 or visit www.fsisc.org