Americans cant afford to eat

In his State of the Union Address, President promised to pursue “an agenda that will raise standards of living.”

But a study released today by the America’s Second Harvest shows that Bush has fallen short. Nine million Americans sought aid from food pantries and soup kitchens last year, even though they were members of households where at least one person had a job.

A look at why working Americans are struggling to put food on the table:

– After adjusting for inflation, wages have not risen during the last three years. In fact, real hourly wages fell for most middle and low-income workers in 2005.

– An individual who works full-time at the current minimum wage earns about $10,700 a year —$5,390 below the 2005 poverty line for a family of three, and $8,650 below the poverty line for a family of four.

– The inflation-adjusted value of the minimum wage is 29 percent lower today than it was in 1979.

So far, Bush has succeeded only at creating low-wage jobs and long lines at the nation’s soup-kitchens.

How Corporations Avoid Paying Taxes

Drug companies and other multinational companies based in the U.S. systematically avoid paying tax in the U.S. on their profits. The companies elect to realize profits in low-tax countries and because of this the rest of us have to pay billions of unnecessary taxes to make up for the shortfall, writes Peter Rost, an ex-pharmaceutical executive.

The biggest tax scam on earth has a very innocent sounding name. It is called “transfer prices.” That almost sounds boring. It is, however, anything but boring. Abuse of transfer prices is a key tool multinational corporations use to fool the U.S. and other jurisdictions to think that they have virtually no profit; hence, they shouldn’t pay any taxes.

Corporations involved in this scam are “model corporate citizens,”or so they would like us to believe. The truth is that they rob us all blind. The money we lose can be estimated in the tens of billions, or possibly hundreds of billions of dollars every year. We all end up paying higher taxes because rich corporations make sure they don’t.

But don’t take my word for this.

A few weeks ago U.K.-based GlaxoSmithKline (GSK), one of the largest pharmaceutical companies in the world, together with the Internal Revenue Service (IRS) announced that GSK will pay $3.4 billion to the IRS to settle a transfer pricing dispute dating back 17 years. The IRS alleges that GSK improperly shifted profits from their U.S. to the U.K. entity.

And U.K. pharmaceutical companies are not alone with these kinds of problems. Merck, one of the largest U.S. drug companies, also this month disclosed that they face four separate tax disputes in the U.S. and Canada with potential liabilities of $5.6 billion. Out of that amount, Merck disclosed that the Canada Revenue Agency issued the company a notice for $1.8 billion in back taxes and interest “related to certain inter-company pricing matters.” And according to the IRS, one of the schemes Merck used to cheat American tax payers was by setting up a subsidiary in tax-friendly Bermuda. Merck then quietly transferred patents for several blockbuster drugs to the new subsidiary and then paid the subsidiary for use of the patents. The arrangement in effect allowed some of the profits to disappear into Merck’s own “Bermuda triangle.”

I have described many more ways the global drug industry cheats and defrauds our government in my recent book, “The Whistleblower, Confessions of a Healthcare Hitman.” In this article, however, I’m going to focus on how they, and other rich multinationals, use the tax system to defraud us.

So what’s going on here, how have multinational drug companies been able to gouge us for years selling expensive drugs and then avoid paying tax on their astronomical profits?

The answer is simple. For companies in certain businesses, such as pharmaceuticals, it is very easy to simply “invent” the price a company charges their U.S. business for buying the company’s product which they manufacture in another country. And if they charge enough, poof; all the profit vanishes from the US, or Canada, or any other regular jurisdiction and end up in a corporate tax-haven. And that means American and Canadian tax payers don’t get their fair share.

Many multinational corporations essentially have two sets of bookkeeping. One set, with artificially inflated transfer prices is what they use to prepare local tax returns, and show auditors in high-tax jurisdictions, and another set of books, in which management can see the true profit and lost statement, based on real cost of goods, are used for the executives to determine the actual performance of their various operations.

Of course, not every multinational industry can do this as easily as the drug industry. It would be difficult to motivate $6,000 toilet seats. But the drug industry, where real cost of goods to manufacture drugs is usually around 5% of selling price, has a lot of room to artificially increase that cost of goods to 50% or 75% of selling price. This money is then accumulated in corporate tax-havens where the drugs are manufactured, such as Puerto Rico and Ireland. Puerto Rico has for many years attracted lots of pharmaceutical plants and Ireland is the new destination for such facilities, not because of the skilled labor or the beautiful scenery or the great beer—but because of the low taxes. Ireland has, in fact, one of the world’s lowest corporate tax rates with a maximum rate of 12.5 percent.

In Puerto Rico, over a quarter of the country’s gross domestic product already comes from pharmaceutical manufacturing. That shouldn’t be surprising. According to the U.S. Federal Tax Reform Act of 1976, manufacturers are permitted to repatriate profits from Puerto Rico to the U.S. free of U.S. federal taxes. And by the way, the Puerto Rico withholding tax is only 10%.

Of course, no company should have to pay more tax than they are legally obligated to, and they are entitled to locate to any low-tax jurisdiction. The problem starts when they use fraudulent transfer pricing and other tricks to artificially shift their income from the U.S. to a tax-haven. According to current OECD guidelines transfer prices should be based upon the arm’s length principle – that means the transfer price should be the same as if the two companies involved were indeed two independents, not part of the same corporate structure. Reality is that standard operating procedure for multinationals is to consistently violate this rule. And why shouldn’t they? After all, it takes 17 years for them to pay up, per the GSK example above, even when they get caught.

Another industry which successfully exploits overseas tax strategies to cheat us all is the hi-tech industry. In fact, Microsoft Corp. recently shaved at least $500 million from its annual tax bill using a similar strategy to the one the drug industry has used for so many years. Microsoft has set up a subsidiary in Ireland, called Round Island One Ltd. This company pays more than $300 million in taxes to this small island country with only 4 million inhabitants, and most of this comes from licensing fees for copyrighted software, originally developed in the U.S. Interesting thing is, at the same time, Round Island paid a total of just under $17 million in taxes to about 20 other countries, with more than 300 million people. The result of this was that Microsoft’s world-wide tax rate plunged to 26 percent in 2004, from 33 percent the year before. Almost half of the drop was due to “foreign earnings taxed at lower rates,” according to a Microsoft financial filing. And this is how Microsoft has radically reduced its corporate taxes in much of Europe and been able to shield billions of dollars from U.S. taxation.

But remember, this is only one example. Most of the other tech companies are doing the same thing. Google recently also set up an Irish operation that the firm credited in a SEC filing with reducing its tax rate.

Here’s how this is done in the software industry and any other industry with valuable intellectual property. A company takes a great, patented, American product and then develops a new generation. Then, of course, the old product disappears. Some, or all, of the cost and development work for the new product takes place in Ireland, or at least, so the company claims. The ownership of the new generation product and all income from licensing can then legally be shared between the U.S. parent company and the offshore corporation or transferred outright to the tax-haven. The deal, to pass IRS scrutiny, has to be made using the “arms-length principle.” Reality is that the IRS has no way of controlling all these transactions.

Unfortunately those of us working and paying tax in the U.S. can’t relocate our jobs and our income to Ireland or another tax haven. So we have to make up the income shortfall. In the U.S. we have a highly educated society with a very qualified workforce, partly supported by our tax payers. This helps us generate breakthrough products. But once a company has a successful product, they have every incentive to move the second generation of a successful product overseas, to Ireland and a few other corporate tax havens.

There is only one problem for U.S. companies with this strategy, and that is that if they repatriate this money to the U.S. they have to pay full corporate taxes. In fact, according to BusinessWeek, U.S. multinational corporations have built up profits of as much as $750 billion overseas, much of it in tax havens such as the Ireland, Bahamas, and Singapore to avoid the stiff 35% levy they’d face if they repatriated the funds back into the U.S.

But of course, Congress, which is basically paid for by our multinational corporations, generously provided for a one-time provision in the corporate tax code, so that they could repatriate profits earned before 2003, and held in foreign subsidiaries, at an effective 5.25% tax rate.

And so the game goes on.

In the end, multinational corporations live in a global world which allows them to pretty much send their money to corporate tax havens at will, and then repatriate this money almost tax free, with the help of the U.S. Congress.

The people left holding the bag are you and me.

Tax Terms Most Know

AGI — Adjusted gross income, AGI, is all the income you receive over the course of the year such as wages, interest, dividends and capital gains minus things such as contributions to a qualified IRA, some business expenses, moving costs and alimony payments. The adjusted gross income is the first step in calculating your final federal income tax bill.

Credits — Tax credits are much like credits you get from a store. After you calculate your tax bill, you can use the credit to reduce the amount of the check you must write to Uncle Sam. Tax credits are more valuable than deductions because they directly cut the amount of tax you owe, rather than reducing the amount of taxed income. A $200 credit, for example, will turn a $1,000 tax bill into only $800. And a few could even give you a refund you weren’t expecting.

Deductions — Deductions are expenses that the Internal Revenue Service allows you to subtract from your AGI to arrive at your taxable income. In most cases, the lower your income, the lower your tax bill. If, for example, a single filer has income of $35,000 and $5,000 in deductions, then he would pay taxes only on $30,000. The IRS offers all filers a standard deduction amount (more on this later). Some other deductions, such as student loan interest, moving expenses, deductible IRA contributions and alimony payments, also are listed directly on the 1040A or long Form 1040. But the term is most commonly associated with the itemized deductions (more on this later, too) that are claimed by taxpayers who file Schedule A.

Standard deduction — This is a fixed dollar amount that a taxpayer can subtract from his or her income. The standard deduction is available to all filers and is determined by the taxpayer’s filing status. The amounts change each year because of inflation adjustments; you can find the current standard deduction levels listed on each of the three individual tax forms. This deduction method is used by most taxpayers and eliminates the need for them to itemize actual deductions such as medical expenses, charitable contributions or state and local taxes.

Itemized deductions — These are expenses that can be deducted from your AGI to help you reach a smaller income amount upon which you must calculate your tax bill. Itemized deductions include medical expenses, other taxes (state, local and property tax), mortgage interest, charitable contributions, casualty and theft losses, unreimbursed employee expenses and miscellaneous deductions such as gambling losses. Some itemized deductions must meet IRS limits before they can be claimed. When you itemize, you must file Form 1040 and detail your deductions on Schedule A.

Exemption — This is an amount that the IRS lets you subtract from your income to reflect all the people who count on your income. Exemptions can be claimed for yourself, your spouse and your dependents. The IRS allows a set amount for each exemption and, as with deductions, this total is subtracted from your adjusted gross income to come up with your final, lower earnings amount upon which you must figure your tax bill. Your personal exemption amount is in addition to any deductions, either standard or itemized, that you claim.

Progressive taxation — This is the system in which higher tax rates are applied as income levels increase. The U.S. tax system uses progressive taxation with tax brackets starting at 10 percent and rising to 35 percent for the wealthiest taxpayers.

Taxable income — Your overall, or gross, income reduced by all allowable adjustments, deductions and exemptions. It is the final amount of income you use to figure just how much tax you owe.

Voluntary compliance — This describes the philosophy upon which our tax system is based: that U.S. taxpayers voluntarily comply with the tax laws and report their income and other tax items honestly.

Withholding — Also known as pay-as-you-earn taxation, this method enables taxes to be taken out of your wages or other income as you earn it and before you receive your paycheck. These withheld taxes are deposited in an IRS account and you are credited for the amount when you file your return. In some cases, taxes also may be withheld from other income such as dividends and interest.

Cut Taxes

1: Avoid the AMT

The AMT is a shadow tax system. Basically, people have to calculate their taxes under both the normal and the alternative AMT code. They pay whichever liability is higher. But since the AMT is not indexed for inflation and there aren’t as many deductions, more and more middle class families are getting hit with the AMT tax.

<!– Video More video <!~~ CNN’s Gerri Willis has four things you can do in a weekend to improve your credit score. (November 25) Play video ~~> –>

By 2010, it’s estimated that about 35 million families will have to pay this tax. If you live in an area with high local and state income taxes, make over $125,000 as a couple, or you have a lot of personal exemptions and itemized deductions, you may be in the Alternate Minimum Tax Danger zone.

Run the numbers with tax software or with an accountant, advises Donna LeValley of J.K. Lasser. You can also use form number 6251 at IRS.gov to calculate your risk.

There are some strategies that could help you. For instance, not making advance payments on your property taxes or holding off on taking out an equity loan to pay for college could keep you out of the danger zone.

And while some congressional leaders have pledged to rescue middle-class families from the alternative minimum tax, don’t hold your breath - experts we talked to said it’s unlikely that any AMT tax reform will take place.

2: Think energy efficiency

Putting in new windows, adding insulation or buying a hybrid car before Dec. 31 will give you some tax credits this year. If you install new windows or doors or you add insulation to your home, you’ll be able to claim a tax credit for up to 10 percent of the cost.

But remember, there are limitations. You can only get $200 total toward your windows. If you buy energy efficient appliances, you could get tax credits from your state or local government.

Check out energystar.gov to see what your options are. If you’re more ambitious, you can get an annual credit worth up to $2,000 if you install solar panels or solar water heaters.

3: Up the ante

Putting more money into your retirement account is going to save you big time. This year, you can contribute $15,000. That’s $1,000 more than last year. If you’re over 50, you can put up to $20,000. That’s $5,000 more than last year.

As for IRAs, the max contribution for people under 50 is still $4,000, but it’s now $5,000 if you’re over 50 years old. You have until April of next year to make your 2006 IRA contribution. But you only have until the end of December to contribute to a 401(k).

4: Get your telephone rebate

If you own a phone (and this includes cell phones), you’re entitled to at least $30 back from Uncle Sam. The refund is payback for an old telephone excise tax the government has been making people pay for over a century.

Originally, this tax was levied to help pay for the Spanish American War back in 1898. You’ll get up to $60 for families of four or more. Claiming this standard credit will be much easier than digging up your phone bills for the last 41 months and figuring out exactly WHAT you’re owed.

5: Split your refund

You’ll have more options this year when it comes to getting your refund check. For the first time, you’ll be able to get your check split up into three accounts, like your checking, savings and IRA account. Just fill out Form 8888.

America the land of the: RAT RACE

A rat race is a term used for an endless, self-defeating or pointless pursuit. It conjures up the image of the futile efforts of a lab rat trying to escape whilst running around a maze or in a wheel. In an analogy to the modern city, many rats in a single maze run around making a lots of noise bumping into each other, but ultimately achieve nothing (meaningful) either collectively or individually.

The rat race is a term often used to describe work, particularly excessive work; in general terms, if one works, one is in the rat race. This terminology contains implications that many people see work as a seemingly endless pursuit with little reward or purpose. Not all workers feel like this. It is the perceived Conventional Wisdom, for example, that those who work for themselves are generally happier at work.

The increased image of work as a “rat race” in modern times has led many to question their own attitudes to work and seek a better alternative; a more harmonious Work-life balance. Many believe that long work hours, unpaid overtime, stressful jobs, time spent commuting, less time for traditional family life, has led to a generally unhappier workforce/population unable to enjoy the benefits of increased economic prosperity and a higher standard of living.

Ways to escape

• A description of the movement, of either the Home or Work Location, of previously City Dwellers or Workers to more rural locations, possibly beyond the “urban growth boundary“.
• Retirement in general or no longer needing / having to work.
• Moving from a high pressure job to a less intense role either at a different company or within the same company at an alternative location or department.
• Changing to a different job that does not involve working 9 to 5 and a long commute.
• Working from home.
• Becoming financially independent from an employer.
• Becoming a hobo or hippie.
• Simple living or Voluntary Simplicity.

Tools To financial Destruction

Some people say that a credit card is a great tool… for clearing an icy windshield, for cleaning underneath your fingernails, or for scraping gook off any surface.

Seriously, though, a credit card can be a valuable financial tool. It’s convenient to use, especially when ordering through the mail, or off the Internet, and it gives you the power to buy the things you want.

Consider this - - if your credit card charges you an 18% Annual Percentage Rate, and your balance is a low $1,000, which you pay $50 on every month, you’re going to celebrate nearly five birthdays with that credit card debt!

Keep in mind this is the cost for just one credit card account. Most people have more cards than just one; about seven accounts on the average, and with even higher balances!

Financial experts say the majority of American households are an estimated $10,000 in credit card debt. Let’s take that ten thousand dollar charge debt and times it by an 18% Annual Percentage Rate to see what we come up with:

$10,000 X 18% APR = Approximately 90 monthly payments of $200 bucks each.

Now, let’s compare it with a lower interest credit card:

$10,000 X 10% APR = Approximately 69 monthly payments of $200 bucks each.

The latter card balance would be paid off nearly two years earlier! What a remarkable difference a lower interest rate makes!

Note - The “APR”, or, “Annual Percentage Rate” is the interest rate that you are charged every year. On the other hand, the “Periodic Rate” is the rate of interest you are charged each billing period. The periodic rate is usually calculated by dividing the credit card’s APR by 12. For example, a 12% APR would break down to a periodic rate of 1%. If your card has different rates for different types of transactions, such as purchases and cash advances, then different periodic rates will apply to those individual balances.

An added note here- be careful not to exceed your credit limit! Late payments can mean a rise in your interest rate!

2. Does this credit card offer a standard grace period?

The grace period is the time between the date of your purchase and the date that the interest charge begins. You should choose a credit card that has a standard 25-day grace period. Then, you can pay off your balance in full without the added expense of interest charges. Some cards don’t offer a grace period, and you get charged from Day 1 - -from the day you made the purchase! This is a bad deal! Ditch this type of card and shop around for a better deal you can live with!

3. Do I pay an annual fee for the privilege of carrying this card?

Some credit card issuers charge $25 or more, while others don’t charge you a fee. There are literally hundreds of credit card issuers out there, so why would you want to keep a card that you have to pay the company to use? As long as your credit rating is good, you don’t have to accept a credit card that tacks on this extra fee every year.

4. Does this credit card charge me a transaction fee every time I use the card at the ATM?

Some credit card companies don’t charge you a fee if you use the card at your own bank. A usage fee of two bucks or more is normally charged otherwise.

5. How Much Am I Charged On Cash Advances?

Be ye warned that cash advance transactions are beneficial for the credit card issuer, and rarely beneficial for you! It is often common practice for credit card issuers to charge a transaction fee on top of finance charges that start on the very first day you borrowed the money!

Choose a credit card that offers the lowest fee for cash advance transactions. Typically, you can expect to pay around 2%.

6. What kind of billing cycle does this credit card issuer use?

If the company uses a “Two-Cycle Billing” method, and you carry a balance from one month to the next, then the interest becomes retroactive clear back to the date you made the charge! Your grace period is eliminated!

Shop around for a credit card that uses the “Average Daily Balance Method.” By using this method, you will be given credit for your payment from the first day the company receives it, and, the interest on your balance will be computed on your average balance from just one month.
Unchaining Yourself From Credit Card Debt

Now that you have completed your Credit Card Audit, your next goal is to pay those credit card accounts off, and save yourself hundreds, or even thousands of dollars!

Pay A Lower Interest Rate

1. If you have very good credit, don’t settle for less than you deserve. If you are paying more than 12 - 15% interest on your credit cards, then you’re paying too much. Think about it. With the prime interest rate at 9 or 10%, lenders that charge 18% or more interest per year on credit card balances have their hands on your checkbook! You should be able to obtain a credit card rate for between 10% and 12%.

Be sure to check the “Valuable Resources” section of this book to find out where you can find a list of the lowest credit card rates.

Warning: Someone Doesn’t Want You To See This!

I’ll let you in on a little secret that your credit card companies probably do not want you to know:

Do you know what state the lowest-rate credit cards are known to come from? Arkansas! Yes, Arkansas, the home of Bill Clinton, our 42nd United States president.

Pay Off Higher Interest Cards

2. If you can get a lower interest credit card, you might be able to utilize their cash advance option to your benefit. I warned you earlier about the cons of taking cash advantages, but here’s a “pro” that can benefit your wallet!

If you can take a cash advance at a lower interest than some or all of your higher interest credit cards, then you can pay off those balances and save yourself tons of interest debt! Be cautious, though. Some credit cards charge a high fee for transferred balances, so be sure the transaction would be a good deal for you. Make sure you can pay off the balance before a higher rate takes effect too!
Use Your Savings Wisely
3. You might think about using just part of your savings to pay off some of your debt. If you’re getting paid 2 or 3 % interest on your savings account, while you’re paying - let’s say - even a low annual rate of 12% on a credit card debt, think about how much money you could save if you paid that charge debt off now! Just be careful to leave enough savings in your account in case you need that money for an emergency.

Ever Considered A Home Equity Loan?

4. If you don’t have enough savings to pay off all or part of your consumer debt, then you have another option, and that’s a home equity loan. Interest rates on home equity loans are much lower than most credit cards, and come tax time, you can deduct the home equity loan interest from your taxes!

“No Fee” Credit Cards

5. Look for “no fee” credit cards when you’re shopping around for the best deal. Why should you pay $25 or more each year for the privilege of carrying a lender’s card? That’s nonsense! They should be paying you! But since that will never happen, you’ll have to be content with a card that at least doesn’t charge you a fee for having it.

Consolidation Might Be Your Answer!

6. You might be able to either transfer a low balance, high-interest credit card balance to another low-interest credit card, as I said previously. Or, if your debts are really high, you might consider combining the total balances and taking out a mortgage loan or a home equity loan to pay the debts off. You’ll earn a Goliath - sized savings amount between paying 18% interest on credit cards, and an estimated 8% on your mortgage loan amount.

Consolidation is only half the battle plan, though, as you still have to plan on paying off the new loan.

Pay Them Off One at a Time

7. Start this process by sitting down and making a list of all your credit card debts. Mark down each card name along with its corresponding balance and the interest rate that lender charges. Now, you will first want to look for the card that has the highest interest rate. This is the card that you’ll want to work on paying off first.

Then, simply pay as much above-and-beyond the minimum payment every month on that account until the balance is completely paid off. Then, go back to your list of credit card balances and find the next-highest interest rate. Use the amount of the monthly payment from the first card you paid off and add it to the minimum payment amount of your second card. Apply this total amount towards the second card balance. You will probably be shocked at the speed in which your credit cards will be paid off! Plus, you will probably be even more surprised to see how much you’ll save by paying these debts off early!

You may even choose to put an income tax refund, a bonus from work, or any other additional income towards the balance to help whittle it down even faster! Repeat this process and go down your list until you have all of your accounts completely paid off!

Start with that balance and pay as much on it as you possible can. Then, when it’s paid off, you go to the next highest card which would be the 18% one. The minimum payment is around 80 bucks a month also, but you apply the payment of 80 bucks that you were paying on the first credit card balance, and apply it to the second.

So you will pay 160 bucks every month on the second highest card which will be like making two monthly payments instead of one. So, that account will be paid off in essentially half the time it would normally take! See how this works?
Keep going and you will save an incredible amount of cold, hard cash in interest payments. And, at the end, you will be free of credit card debt!

Tips on Staying Debt Free

Once you get yourself out of credit card debt, there are some tips you can use to help stay debt-free and save interest charges too:

1. If you do use a credit card, pay off the total balance by the due date.

2. If you decide to keep credit cards for emergency purposes, then keep only one.

3. Keep track of the exact amounts you spend on your credit card.

4. Don’t make your payments late! You’ll lose money in two ways if you do: The credit card issuer will sock a late fee of around $25 on your account for every month your payment is late, plus, you’ll run the risk of losing your low interest rate.

5. Want to purchase a bigger ticket items? Wait until you have the money or use a “Same - As - Cash” payment plan if the seller offers one.

Don’t Be A Victim of Credit Card Fraud

Credit card fraud is a crime that is committed every day! Thieves use your name and your social security number to obtain everything from cell phone service, to additional credit cards and credit lines!

Don’t let yourself become another victim! Protect yourself and your family by following these simple guidelines:

Do:

Use a copying machine to duplicate each and every one of your credit cards, front and back. Place these copies in a safe place - - not in your wallet or purse - - along with the phone number and address of each credit card company, and, the names and numbers of the three national credit reporting agencies.

If any of your credit cards are lost or stolen, you should immediately call these companies to place a “Fraud Alert” on your name and social security number. The alert means that any company that checks your credit will know your information was stolen.

Here are the toll-free numbers for the 3 national credit-reporting agencies:

Equifax Fraud Alert Line: 1-800-525-6285
Experian (formerly TRW): 1-888-397-3742
Trans Union Fraud Victim Assistance: 1-800-680-7289

You will also need to notify each one of your credit card companies immediately to report/cancel your lost or stolen credit card(s).

File a police report immediately in the jurisdiction where your card(s) was/were stolen too!

Added note- the number for the Social Security Administration Office of the Inspector General Fraud Hot Line is 1-800-269-0271. You should notify this office if your social security card is stolen.

Sign your credit cards as soon as you get them.

Save charge slips and reconcile them with your monthly billing statements.

Report any problematic charges to the credit card company right away.

Notify card companies in advance if you change your address.
Don’t:

Lend your card(s) to anyone.

Leave your cards in an unsecured place.

Sign a blank receipt.

Give out your account number over the phone unless you’re making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Disputing your bills:

When you reconcile your monthly credit card statements, and you find a charge that you don’t believe you made, there is a procedure to assist you in disputing the charge. Generally, you must give the exact details of your complaint in written form to the lending company.

The Federal Truth-In-Lending Act requires the lender to then investigate the disputed charge(s) and let you know what their findings are. If the vendor cannot prove you made the purchase, the charge will be removed.

As long as the charge is in dispute, you don’t have to pay that portion of your bill. You do, however, have to continue paying any other amounts you may have on the same card.
A Note About “Credit Repair” Companies

You probably have seen numerous advertisements for “credit repair” companies. You may even have considered checking out one of these companies to help get you out of debt. These companies typically offer services like debt counseling or debt reorganization plans.

Before you consider turning your finances over to an outsider, it would be wise to investigate the company you choose thoroughly. Be sure you understand what services the business provides and what the costs will be. Also, make sure you check them out with the Better Business Bureau and your local consumer protection office before you do any business with them!

So Many Money Making OPTIONS

The internet offers us a plethora of opportunities that offline ventures just plain can’t reproduce. We enjoy spending money like online shopping, losing money from gambling, and making money with online internet marketing. Many people who dream of financial freedom want to learn how to make money on the internet. What’s the best way?There’s really no easy answer to that question. The internet offers so many possibilities. Almost any hobby or skill can be use to make money on the internet. You can sell an ebook on a subject your passionate about, or you can sell other people’s products and earn affiliate commission. Other people choose the freelance route, such as freelance writing, web-designing, typing, and programming.

Some internet entrepreneurs have learned that simply having a web site with traffic can generate a good income. Placing other companies’ ads on their traffic generating website can be very lucrative. This method can take quite a bit of time and work, but in time, you can build up your “virtual real estate” to produce massive amounts of income. These are just a few of the MANY ways to earn an income online. However, many people are interested in making the most money possible.
The bottom line is that that there is no best way to make money online. The easiest way for you to start generating income online is to use your imagination and be creative, utilizing your natural talents and abilities. Some people say doing what you love is always the best way, and that’s always a good place to start. Doing what you enjoy doing, and making money in the process – what could possibly be better than that?

There are also many “get rich quick” schemes floating around. Don’t buy into the fact that all get rich quick systems are scams. Many people will tell you if it’s too good to be true, it usually is. But when it comes to the internet, I’ve found the opposite to be true. The fact of the matter is, most people that feel they just got scammed by another product, are really only scamming themselves. They buy a product that promises them riches beyond their belief, and then in return, expect that product to magically work for them. This is NEVER the case. Every system, every “scheme”, and every get rich product requires the right attitude, effort, and perseverance.

The truth is, 90% of the people who buy a new product that promises them riches will fail. However, it’s not the product that is at fault, it’s the person. Success is 80% mentality and 20% skill. For example, that same product that made one person fail, can be deadly in the hands of the right person, with the right attitude. I’ve seen people fail with spectacular products, and I’ve seen people explode their income with dead-beat products.

I promise that if you treat your new online business as a business, with the right work ethic and mentality, you will succeed every time. The internet is wide open with possibilities, and the money is out there. You just need to find your niche. Here’s to your success.

Read more about the Authors successful online business ventures at MyMillionaireSystem

Is Social Security unfair to African Americans

Proponents of Social Security privatization are trying to claim that the current program is unfair to African Americans and that a privatized program would serve African Americans better. This argument lends support to the privatization agenda while at the same time giving its advocates a compassionate gloss. But the claims about African Americans and Social Security are wrong.

The Old Age Survivors and Disability Insurance Program (OASDI), popularly known as Social Security, was put in place by Franklin Roosevelt to establish a solid bulwark of economic rights for the public – specifically, as he put it, “the right to adequate protection from the economic fears of old age, sickness, accident, and unemployment.” Most Americans associate Social Security only with the retirement – or old age – benefit. Yet it was created to do much more, and it does.

As its original name suggests, Social Security is an insurance program that protects workers and their families against the income loss that occurs when a worker retires, becomes disabled, or dies. All workers will eventually either grow too old to compete in the labor market, become disabled, or die. OASDI insures all workers and their families against these universal risks, while spreading the costs and benefits of that insurance protection among the entire workforce. Currently, 70% of Social Security funds go to retirees, 15% to disabled workers, and 15% to survivors

Social Security is a “pay as you go” system, which means the taxes paid by today’s workers are not set aside to pay their own benefits down the road, but rather go to pay the benefits of current Social Security recipients. It’s financed using the Federal Insurance Contribution Act (or FICA) payroll tax, paid by all working Americans on earnings of less than about $90,000 a year. While the payroll tax is not progressive, Social Security benefits are – that is, low-wage workers receive a greater percentage of pre-retirement earnings from the program than higher-wage workers.

In the 1980s, recognizing that the baby boom generation would strain this system, Congress passed reforms to raise extra tax revenues above and beyond the current need and set up a trust fund to hold the reserve. Trustees were appointed and charged with keeping Social Security solvent. Today’s trustees warn that their projections, which are based on modest assumptions about the long-term growth of the U.S. economy, show the system could face a shortfall around 2042, when either benefits would have to be cut or the FICA tax raised.

Those who oppose the social nature of the program have pounced on its projected shortfall in revenues to argue that the program cannot – or ought not – be fixed, but should instead be fundamentally changed. Privatization proponents are seeking to frame the issue as a matter of social justice, as if Social Security “reform” would primarily benefit low-income workers, blue-collar workers, people of color, and women. Prompted by disparities in life expectancy between whites and African Americans and the racial wealth gap, a growing chorus within the privatization movement is claiming that privatizing Social Security would be beneficial to African Americans.

Opponents attack the program on the basis of an analogy to private retirement accounts. Early generations of Social Security beneficiaries received much more in benefits than they had paid into the system in taxes. Privatization proponents argue those early recipients received a “higher rate of return” on their “investment” while current and future generations are being “robbed” because they will see “lower rates of return.” They argue the current system of social insurance – particularly the retirement program – should be privatized, switching from the current “pay-as-you-go” system to one in which individual workers claim their own contribution and decide where and how to invest it.

But this logic inverts the premise of social insurance. Rather than sharing risk across the entire workforce to ensure that all workers and their families are protected from the three inevitabilities of old age, disability, and death, privatizing Social Security retirement benefits would enable high-wage workers to reap gains from private retirement investment without having to help protect lower-wage workers from their (disproportionate) risks of disability and death. High-wage workers, who are more likely to live long enough to retire, could in fact do better on average if they opt out of the general risk pool and devote all their money to retirement without having to cover the risk of those who may become disabled or die, although they would of course be subjecting their retirement dollars to greater risk. But low-wage workers, who are far more likely to need disability or survivors’ benefits to help their families and are less likely to live long enough to retire, would then be left with lower disability and survivors’ benefits, and possibly no guaranteed benefits. This is what the Social Security privatization movement envisions. But you wouldn’t know it from reading their literature.

And when the myths about Social Security’s financial straits meet another American myth – race – even more confusion follows. Here is a look at three misleading claims by privatization proponents about African Americans and Social Security.

Several conservative research groups argue that Social Security is a bad deal for African Americans because of their lower life expectancies. “Lifetime Social Security benefits depend, in large part, on longevity,” writes the Cato Institute’s Michael Tanner in his briefing paper “Disparate Impact: Social Security and African Americans.” “At every age, African-American men and women both have shorter life expectancies than do their white counterparts. … As a result, a black man or woman earning exactly the same lifetime wages, and paying exactly the same lifetime Social Security taxes, as his or her white counterpart will likely receive a far lower rate of return.” Or as the Americans for Tax Reform web site puts it: “A black male born today has a life expectancy of 64.8 years. But the Social Security retirement age for that worker in the future will be 67 years. That means probably the majority of black males will never even receive Social Security retirement benefits.”

The longevity myth is the foundation of all the race-based arguments for Social Security privatization. There are several problems with it.

First, the shorter life expectancy of African Americans compared to whites is the result of higher morbidity in mid-life, and is most acute for African-American men. The life expectancies of African-American women and white men are virtually equal. So the life expectancy argument can really only be made about African-American men.

Second, the claim that OASDI is unfair to African Americans because their expected benefits are less than their expected payments is usually raised and then answered from the perspective of the retirement (or “old age”) benefit alone. That is an inaccurate way to look at the problem. Because OASDI also serves families of workers who become disabled or die, a correct measure would take into account the probability of all three risk factors – old age, disability, and death. Both survivor benefits and disability benefits, in fact, go disproportionately to African Americans.

While African Americans make up 12% of the U.S. population, 23% of children receiving Social Security survivor benefits are African American, as are about 17% of disability beneficiaries. On average, a worker who receives disability benefits or a family that receives survivor benefits gets far more in return than the worker paid in FICA taxes, notwithstanding privatizers’ attempts to argue that Social Security is a bad deal.

Survivors’ benefits also provide an important boost to poor families more generally. A recent study by the National Urban League Institute for Opportunity and Equality showed that the benefit lifted 1 million children out of poverty and helped another 1 million avoid extreme poverty (living below half the poverty line).

Finally, among workers who do live long enough to get the retirement benefit, life expectancies don’t differ much by racial group. For example, at age 65, the life expectancies of African-American and white men are virtually the same.

President Bush’s Social Security commission proposed the partial privatization of Social Security retirement accounts, but cautioned that it could not figure out how to maintain equal benefits for the other risk pools. The commission suggested that disability and survivor’s benefits would have to be reduced if the privatization plan proceeds.

This vision is of a retirement program designed for the benefit of the worker who retires – only. A program with that focus would work against, not for, African Americans because of the higher morbidity rates in middle age and the smaller share of African Americans who live to retirement.

African Americans have less education, and so are in the work force longer, than whites, and yet Social Security only credits 35 years of work experience in figuring benefits. Tanner says, “benefits are calculated on the basis of the highest 35 years of earnings over a worker’s lifetime. Workers must still pay Social Security taxes during years outside those 35, but those taxes do not count toward or earn additional benefits. Generally, those low-earnings years occur early in an individual’s life. That is particularly important to African Americans because they are likely to enter the workforce at an earlier age than whites….”

This claim misinterprets the benefit formula for Social Security. Yes, African Americans on average are slightly less educated than whites. The gap is mostly because of a higher college completion rate for white men compared to African-American men. But the education argument fails to acknowledge that white teenagers have a significantly higher labor force participation rate (at 46%) than do African-American teens (29%). The higher labor force participation of white teenagers helps to explain why young white adults do better in the labor market than young African-American adults. (The racial gaps in unemployment are considerably greater for teenagers and young adults than for those over 25.)

These differences in early labor market experiences mean that African-American men have more years of zero earnings than do whites. So while the statement about education is true, the inference from education differences to work histories is false. By taking only 35 years of work history into account in the benefit formula, the Social Security formula is progressive. It in effect ignores years of zero or very low earnings. This levels the playing field among long-time workers, putting African Americans with more years of zero earnings on par with whites. By contrast, a private system based on total years of earnings would exacerbate racial labor market disparities.

A third claim put forward by critics of Social Security is that African-American retirees are more dependent on Social Security than whites. Tanner writes: “Elderly African Americans are much more likely than their white counterparts to be dependent on Social Security benefits for most or all of their retirement income.” Therefore, he concludes, “African Americans would be among those with the most to gain from the privatization of Social Security – transforming the program into a system of individually owned, privately invested accounts.” Law professor and senior policy advisor to Americans for Tax Reform Peter Ferrara adds, “the personal accounts would produce far higher returns and benefits for lower-income workers, African Americans, Hispanics, women and other minorities.”

It’s true that African-American retirees are more likely than whites to rely on Social Security as their only income in old age. It’s the sole source of retirement income for 40% of elderly African Americans. This is a result of discrimination in the labor market that limits the share of African Americans with jobs that offer pension benefits. Privatizing Social Security would not change labor market discrimination or its effects.

Privatizing Social Security would, however, exacerbate the earnings differences between African Americans and whites, since benefits would be based solely on individual savings. What would help African-American retirees is not privatization, but rather changing the redistributive aspects of Social Security to make it even more progressive.

The current formula for Social Security benefits is progressive in two ways: low earners get a higher share of their earnings than do higher wage earners and the lowest years of earning are ignored. Changes in the formula to raise the benefits floor enough to lift all retired Social Security recipients out of poverty would make it still more progressive. Increasing and updating the Supplemental Security Income payment, which helps low earners, could accomplish the same goal for SSI recipients. (SSI is a program administered by Social Security for very low earners and the poor who are disabled, blind, or at least 65 years old.)

The proponents of privatization argue that the heavy reliance of African-American seniors on Social Security requires higher rates of return – returns that are only possible by putting money into the stock market. Yet given the lack of access to private pensions for African-American seniors and their low savings from lifetimes of low earnings, such a notion is perverse. It would have African Americans gamble with their only leg of retirement’s supposed three-legged stool – pension, savings, and Social Security. And, given the much higher risk that African Americans face of both death before retirement and of disability, it would be a risky gamble indeed to lower those benefits while jeopardizing their only retirement leg.

Privatizing the retirement program, and separating the integrated elements of Social Security, would split America. The divisions would be many: between those more likely to be disabled and those who are not; between those more likely to die before retirement and those more likely to retire; between children who get survivors’ benefits and the elderly who get retirement benefits; between those who retire with high-yield investments and those who fare poorly in retirement. The “horizontal equity” of the program (treating similar people in a similar way) would be lost, as volatile stock fluctuations and the timing of retirement could greatly affect individuals’ rates of return. The “vertical equity” of the program (its progressive nature, insuring a floor for benefits) would be placed in greater jeopardy with the shift from social to private benefits.

Social Security works because it is “social.” It is America’s only universal federal program. The proposed changes would place Social Security in the same political space as the rest of America’s federal programs – and African Americans have seen time and again how those politics work.

Few Ways To make Money On the Internet

Since the advent of the Internet, a lot of people have been trying to make money online. Some have succeeded; some have not only failed, but have also lost a lot of money; and some are still trying, hoping their luck will change.

The list of ways to make money online is long: Affiliate programs, Multi Level Marketing (MLM), High Yield Investment Programs (HYIP), Surveys, Resale Rights Products, creating and selling your own products, niche/content websites, writing articles for content sites, paid to surf, and the list goes on.

Although there are a lot of genuine and legitimate ways to make money online, the internet has also been flooded by many frauds and scams that promise people instance riches overnight.

So those wanting to try their hand at making money online, or to change their luck for the better, ask: Is there really THE best way to make money online? The simple answer is NO.

The basic fact is that what is a good way to make money online for one person may not be for the other person. What makes someone else a million dollars in six months’ time may only make you a few hundred dollars within the same timeframe. Your dedication, effort and knowledge is what normally makes the difference.

Each person has to find what works for them and their experience and skills and interests. Everybody have their own ways to make money online - there are no BEST ways, and there are No easy ways.

It is noteworthy that an online business is no different from any other business. You have to make the investment, in terms of time, money, effort etc. You should be prepared to learn a lot, work hard and you must have lots of patience.

So what constitutes the ‘best’ and easy way to make money online?

1. Whatever you feel the most comfortable with. It is important for you to explore what interests you and be confident in the products or services you represent. If you are passionate about your online business and the products or services you represent, and work hard at it, you can easily succeed.
    
2. A business that will give you a repeating income and does not rely solely on your own efforts. Residual income is what set apart the winners from the losers on making money online – you must do the work once and get paid five years from now. Instead of relying on only your efforts to build your online wealth, you can build your wealth through the efforts of many sub-affiliates. Instead of making your online wealth from 100% of your own efforts, you can make it from 1% of 100 sub-affiliates. A good online business is one which earns you some residual income.
    
3. A business that will give you multiple streams of income from diverse business ventures. Do not put all your eggs in one basket. A good online business can be a combination of several affiliate programs, or sites setup in all sorts of niches, free/paid membership sites or selling your own or other people’s e-books.
    
4. A business that gives you a secure and lasting way to earn a living online such as selling a product which you can develop or upgrade over time. A well executed site targeted to a very specific refined area selling a hard to find product or e-book is a good online business. These can be your own products or someone else. An online business is similar to any other business – long term security is important. It is therefore advisable that you start an online business that has long term success potential.
    
5. A business that suits your skills and experience. For example, for most people, affiliate programs tend to be the easiest way to start with. They have minimal investment requirements and some very good ones come with a step-by-step guide to help you start making money with the affiliate programs.
    
6. A good online business is one for which you have a well executed marketing plan. How you market any business can make or break that business, so the marketing plan you have for your business – whatever it is - and how effective that marketing plan is, will determine how good your online business will be for you. How you decide to promote what you choose to do online will make the difference.
    
7. A business with which you can have a long term focus, which you will be able to work on consistently to grow it. The key to making an online business succeed is to work the opportunity every day without fail, and to stick to it. A lot of people come across good online business opportunities, but most of them quit before finding financial freedom, and they jump onto the next online business opportunity. This is mainly because the internet is full of ‘business opportunities’ some of which are scams, and also, some wealth seekers think that there are some easy and quick ways to make money online. Pick a proven online business that suits your interests and experience, focus on it long enough, do not get distracted, and you’ll make money. 

Regardless of what you will consider to be the ‘best’ online business for you based on your interests and experience; in order to make real money, you will need to have some ‘leverage’ and use some tips which will ensure that your online business is a success.

Whatever the type of online business you will take on, you will need the following to succeed and make your way of making money online THE best way to earn money:  

1. Build your own subscriber list or affiliate program which will become an asset that you can draw money out of continually over time. You will need a customer base to make money with any online business.
    
2. Whatever your business is, set up your web site so that you can get free organic and viral traffic. This is a very powerful form of leverage that will offset your marketing expenses.
    
3. Have an in-demand product, which can easily be leveraged to recruit affiliates, perform joint ventures, build a list or even sell resale licenses.
    
4. Build a solid reputation. This form of “leverage” will exponentially increase your sales over a competitor, can help you easily get into joint ventures, and will literally market your products and services for you.

If you identify a strategy that is working ‘best’ for you then you can put more effort there! It is recommended that you diversify by having for example affiliate programs, offline businesses, MLM, own products etc.

Be aware of credit fraud

Credit Repair: Self Help May Be Best

You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

• “Credit problems? No problem!”
• “We can erase your bad credit — 100% guaranteed.”
• “Create a new credit identity — legally.”
• “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

Do yourself a favor and save some money, too. Don’t believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.
This brochure explains how you can improve your creditworthiness and gives legitimate resources for low or no-cost help.

The Scam

Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.

The Warning Signs

If you decide to respond to a credit repair offer, look for these tell-tale signs of a scam:

• companies that want you to pay for credit repair services before they provide any services.
• companies that do not tell you your legal rights and what you can do for yourself for free.
• companies that recommend that you not contact a credit reporting company directly.
• companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
• companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.

The Truth

No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):

• You’re entitled to a free report if a company takes adverse action against you, like denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
• Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report, at your request, once every 12 months.
  The three companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print the form from ftc.gov/bcp/conline/edcams/credit/ . Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. For more information, see Your Access to Free Credit Reports at ftc.gov/bcp/conline/edcams/credit/ .
  Otherwise, a consumer reporting company may charge you up to $9.50 for another copy of your report within a 12-month period.
• You can dispute mistakes or outdated items for free. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.

STEP ONE

Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the one on page 6. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reportincompany also must send you written notice that includes the name, address, and phone number of the information provider. If you request, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

STEP TWO

Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct – that is, if the information is found to be inaccurate – the information provider may not report it again.

For more information, see How to Dispute Credit Report Errors at ftc.gov/bcp/conline/edcams/credit/ .

Reporting Accurate Negative Information

When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.

For more information, see Building a Better Credit Report at ftc.gov/bcp/conline/edcams/credit/ .

The Credit Repair Organizations Act

By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. The law contains specific protections for you. For example, a credit repair company cannot:

• make false claims about their services
• charge you until they have completed the promised services
• perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees

Your contract must specify:

• the payment terms for services, including their total cost
• a detailed description of the services to be performed
• how long it will take to achieve the results
• any guarantees they offer
• the company’s name and business address

Have You Been Victimized?

Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams.

If you’ve had a problem with a credit repair company, don’t be embarrassed to report it. While you may fear that contacting the government will only make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.

Need Help? Don’t Despair

Just because you have a poor credit report doesn’t mean you won’t be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Some may look only at more recent years to evaluate you for credit, and they may grant credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.

If you’re not disciplined enough to create a workable budget and stick to it, work out a repayment plan with your creditors, or keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But not all are reputable. For example, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

If you are considering filing for bankruptcy, you should know about one major change to the bankruptcy laws: As of October 17, 2005, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
For more information, see Knee Deep in Debt and Fiscal Fitness: Choosing a Credit Counselor at ftc.gov/bcp/conline/edcams/credit/ .

Do-It-Yourself Check-Up

Even if you don’t have a poor credit history, some financial advisors and consumer advocates suggest you review your credit report periodically

• because the information it contains affects whether you can get a loan or insurance — and how much you will have to pay for it.
• to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
• to help guard against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

Sample Dispute Letter

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,
Your name

Enclosures: (List what you are enclosing)