Debt Help

Reverse Mortgages
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If you are age 62 or older and are "house-rich, cash-poor," a reverse mortgage (RM) may be an option to help increase your income. However, because your home is such a valuable asset, you may want to consult with your family, attorney, or financial advisor before applying for an RM. Knowing your rights and responsibilities as a borrower may help to minimize your financial risks and avoid any threat of foreclosure or loss of your home.

This article will attempt to explain how RMs work. It describes similarities and differences among the three RM plans available today: FHA-insured; lender-insured; and uninsured. It also discusses the benefits and drawbacks of each plan. Each plan differs slightly, so be careful to choose the plan that best meets your financial needs. Organizations and government agencies that offer additional information about RMs are listed at the end of this brochure.

How Reverse Mortgages Work
A reverse mortgage is a type of home equity loan that allows you to convert some of the equity in your home into cash while you retain home ownership. RMs works much like traditional mortgages, only in reverse. Rather than making a payment to your lender each month, the lender pays you. Unlike conventional home equity loans, most RMs do not require any repayment of principal, interest, or servicing fees for as long as you live in your home. Funds obtained from an RM may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel, and maintenance costs.

Requirements and Responsibilities of the Borrower
To qualify for an RM, you must own your home. The RM funds may be paid to you in a lump sum, in monthly advances, through a line-of-credit, or in a combination of the three, depending on the type of RM and the lender. The amount you are eligible to borrow generally is based on your age, the equity in your home, and the interest rate the lender is charging.

Because you retain title to your home with an RM, you also remain responsible for taxes, repairs, and maintenance. Depending on the plan you select, your RM becomes due with interest either when you permanently move, sell your home, die, or reach the end of the pre-selected loan term. The lender does not take title to your home when you die, but your heirs must pay off the loan. The debt is usually repaid by refinancing the loan into a forward mortgage (if the heirs are eligible) or by using the proceeds from the sale of your home.

Common Features of Reverse Mortgages

Listed below are some points to consider about RMs.

• RMs are rising-debt loans. This means that the interest is added to the principal loan balance each month, because it is not paid on a current basis. Therefore, the total amount of interest you owe increases significantly with time as the interest compounds.

• All three plans (FHA-insured, lender-insured, and uninsured) charge origination fees and closing costs. Insured plans also charge insurance premiums, and some impose mortgage servicing charges. Your lender may permit you to finance these costs so you will not have to pay for them in cash. But remember these costs will be added to your loan amount.

• RMs use up some or all of the equity in your home, leaving fewer assets for you and your heirs in the future.

• You generally can request a loan advance at closing that is substantially larger than the rest of your payments.


• Your legal obligation to pay back the loan is limited by the value of your home at the time the loan is repaid. This could include increases in the value (appreciation) of your home after your loan begins.

• RM loan advances are nontaxable. Further, they do not affect your Social Security or Medicare benefits. If you receive Supplemental Security Income, RM advances do not affect your benefits as long as you spend them within the month you receive them. This is true in most states for Medicaid benefits also. When in doubt, check with a benefits specialist at your local area agency on aging or legal services office.


• Some plans provide for fixed rate interest. Others involve adjustable rates that change over the loan term based upon market conditions.

• Interest on RMs is not deductible for income tax purposes until you pay off all or part of your total RM debt.

How Reverse Mortgages Differ

This section describes how the three types of RMs -- FHA-insured, lender-insured, and uninsured -- vary according to their costs and terms. Although the FHA and lender-insured plans appear similar, important differences exist. This section also discusses advantages and drawbacks of each loan type.


• FHA-insured. This plan offers several RM payment options. You may receive monthly loan advances for a fixed term or for as long as you live in the home, a line of credit, or monthly loan advances plus a line of credit. This RM is not due as long as you live in your home. With the line of credit option, you may draw amounts as you need them over time. Closing costs, a mortgage insurance premium and sometimes a monthly servicing fee is required. Interest is charged at an adjustable rate on your loan balance; any interest rate changes do not affect the monthly payment, but rather how quickly the loan balance grows over time.

The FHA-insured RM permits changes in payment options at little cost. This plan also protects you by guaranteeing that loan advances will continue to be made to you if a lender defaults. However, FHA-insured RMs may provide smaller loan advances than lender-insured plans. Also, FHA loan costs may be greater than uninsured plans.


• Lender-insured. These RMs offer monthly loan advances or monthly loan advances plus a line of credit for as long as you live in your home. Interest may be assessed at a fixed rate or an adjustable rate, and additional loan costs can include a mortgage insurance premium (which may be fixed or variable) and other loan fees.

Loan advances from a lender-insured plan may be larger than those provided by FHA-insured plans. Lender-insured RMs also may allow you to mortgage less than the full value of your home, thus preserving home equity for later use by you or your heirs. However, these loans may involve greater loan costs than FHA-insured, or uninsured loans. Higher costs mean that your loan balance grows faster, leaving you with less equity over time.

Some lender-insured plans include an annuity that continues making monthly payments to you even if you sell your home and move. The security of these payments depends on the financial strength of the company providing them, so be sure to check the financial ratings of that company. Annuity payments may be taxable and affect your eligibility for Supplemental Security Income and Medicaid. These "reverse annuity mortgages" may also include additional charges based on increases in the value of your home during the term of your loan.


• Uninsured. This RM is dramatically different from FHA and lender-insured RMs. An uninsured plan provides monthly loan advances for a fixed term only -- a definite number of years that you select when you first take out the loan. Your loan balance becomes due and payable when the loan advances stop. Interest is usually set at a fixed interest rate and no mortgage insurance premium is required.

If you consider an uninsured RM, carefully think about the amount of money you need monthly; how many years you may need the money; how you will repay the loan when it comes due; and how much remaining equity you will need after paying off the loan.

If you have short-term but substantial cash needs, the uninsured RM can provide a greater monthly advance than the other plans. However, because you must pay back the loan by a specific date, it is important for you to have a source of repayment. If you are unable to repay the loan, you may have to sell your home and move.

Reverse Mortgage Safeguards

One of the best protections you have with RMs is the Federal Truth in Lending Act, which requires lenders to inform you about the plan's terms and costs. Be sure you understand them before signing. Among other information, lenders must disclose the Annual Percentage Rate (APR) and payment terms. On plans with adjustable rates, lenders must provide specific information about the variable rate feature. On plans with credit lines, lenders also must inform you of any charges to open and use the account, such as an appraisal, a credit report, or attorney's fees.

For More Information

If you are interested in obtaining a current list of lenders participating in the FHA-insured program, sponsored by the Department of Housing and Urban Development (HUD), or additional information on reverse mortgages and other home equity conversion plans, write to:

AARP Home Equity Information Center American Association of Retired Persons 601 E Street, N.W. Washington, D.C. 20049

For additional information, you also may contact the:

National Center for Home Equity Conversion 7373 - 147 St. West, Suite 115 Apple Valley, MN 55124

This organization requests that you send a self-addressed stamped envelope.
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Debt Help
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Debt Consolidation and Settlement
http://Debt-Company.com

Drowning in debt? Let Debt-Company.com pull you to safety.

Let’s see if this sounds familiar. You have several credit cards in your wallet, and you’re not afraid to use the. You’ve run up a fair amount of debt, but so far you’ve been able to stay one step ahead of the debt collector by making the minimum payment on each card every month.

At this rate, guess when you’ll get out of debt?

If you’re $20,000 in debt on credit cards charging 18 percent interest, it would take you 28.5 years to pay them off if you make the minimum payments. Your actual cost to pay off the debt? A whopping $68,000?

What’s worse, that’s $68,000 that you didn’t save to buy a house. Didn’t save for your kids’ college education. Didn’t save for your retirement. You’re now in danger of being among the 90 percent of Americans who slide into poverty once they retire.

And you’re not alone. American consumers have amassed more than $700 billion in credit-card debt. Some 100,000 of us file for bankruptcy every month.

Filing for bankruptcy will stain your credit history for up to 10 years, and could make it hard to get new jobs, insurance and credit.

You could go the credit-counseling route. Guess what? Banks and credit-card companies love people who do that. They shave a little off your interest, and set you up to pay off 100 percent of your debt in four to seven years. Of course, the payment schedule is so unrealistic that credit counseling is successful only between 30 percent and 50 percent of the time.

So you figure maybe a consolidation loan is the route to take. It might be, especially if you own your home. You take out a new loan, pay off the credit cards and pay less each month. Uh-oh, one problem. Statistics show that 92 percent of the people who take out consolidation loans to pay off credit-card debt find themselves in twice as much debt within just two years.

Don’t let the facts get you down, though. Debt-Company.com has a life-ring to throw you in the form of something called debt negotiations. Our team of crack negotiators haggles with your creditors, typically getting you out of debt within two years for about 50 cents on the dollar.

That means if you owe $20,000 in unsecured debt, we’ll be able to get you free and clear for approximately $10,000, and that includes all our fees!

Did you know that Debt-Company.com has a 97.5 percent success rate getting its clients out of debt? Why does it work? Because we know what we’re doing, and because credit-card companies know that it’s better to get something than nothing.

Debt-Company.com doesn’t stop with negotiating a settlement with your creditors. We also review your tax filings and monthly expenses, create a financial plan and set you on the road to becoming an investor instead of a debtor. All at no extra cost.

For more information, go to our website at www.Debt-Company.com.

Debt Settlement or Negotiation
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A Debt Reduction Settlement is a process used by both debtors and creditors to settle a debt for less than what is owed. The process is also called Third Party Debt Negotiation. If negotiated properly on behalf of the debtor it can quickly and dramatically reduce the debtor's debt. Settlements typically range from 20% to 80% of the current debt, with the typical debt settled for less than 50 cents on the dollar.

While debtors may try to negotiate their own debt settlement, it is usually best working through a professional who knows the ropes, so to speak, and can watch out for the debtor's best interest. There is definitely a right way and a wrong way to handle this procedure and failing to do so correctly may yield negative results. Debt negotiation requires some knowledge and expertise in order to negotiate the most favorable settlement. The process is very different than that used to place consumers in a Debt Management Program.

Most professional debt negotiator fees are contingency-based. You are not billed by the hour as do most attorneys, but rather charged a percentage of the savings that are negotiated for you. If a debt settlement is not reached for you within YOUR desired range, there is usually NO settlement fee. The beauty of this fee arrangement is that it is in the agency's best interest to get you the best possible deal. The more the agency saves you, the more the agency earns. And vice-versa; the more the agency earns, the more it saves you. It is truly a win-win situation for all concerned

For more info visit:
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http://www.1-debt.com
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If you are a consumer with unsecured debt of at least $5,000, you may be able to reduce your debt 20% to 80% through a Debt Reduction Settlement. While a typical debt is settled for about 50 cents on the dollar, how much you save will depend on numerous factors.

Examples of the types of debt which may be settled include credit card debt, store charges, medical bills, service contracts, lease defaults, billing disputes, repossession deficiencies, signature loans, charge offs, past due utility bills, liens, judgments, attorney fees and debt stemming from lawsuits. Most any types of unsecured debt can be settled!

There are numerous factors to consider when negotiating a debt settlement. Some of these factors include, the type of debt, who the creditor is, the amount of debt, how old is the debt, your ability to pay the debt as agreed, your assets and liabilities, and so on.

But there is another important factor÷the ability to settle the debt. Debt settlements often require up-front cash to settle the debt. For example, if you have a $1,000 debt, you may need $500 cash to settle it, although the amount could be more or less. Most debtors, however, do not have ready cash to settle their debt÷and chances are, neither do you!
But don't fret! As you will soon learn there are effective ways to resolve this problem by various methods consumers can use to raise the funds required to settle their debt. In addition, a debt settlement specialist can help you establish a strategic savings plan in which to use to chip away at your debt.

It is important to understand that money obligations can often be settled over a period of time, settling each account as funds are raised. Because of all the factors involved, the first step in the debt settlement process is to determine if you have money obligations that meet the requirements of a successful debt settlement. For example, you may have a half dozen accounts of which all of them qualify, some of them qualify, or none of them qualify. The only way to determine this is to analyze your accounts and weigh all the factors with your objectives.

http://www.nfff.us/resources/debt/debt_settle.html

Credit Scores: Facts & Fallacies
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Fallacy: My score determines whether or not I get credit.

Fact: Lenders use a number of facts to make credit decisions, including your FICO score. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is low, or decline your request for credit although your score is high.


Fallacy: A poor score will haunt me forever.

Fact: Just the opposite is true. A score is a "snapshot" of your risk at a particular point in time. It changes as new information is added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so they have the most recent information available. Therefore by taking the time to improve your score, you can qualify for more favorable interest rates. Click here to see how improved scores can lead to savings.


Fallacy: Credit scoring is unfair to minorities.

Fact: Scoring considers only credit-related information. Factors like gender, race, nationality and marital status are not included. In fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit. Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.


Fallacy: Credit scoring infringes on my privacy.

Fact: Credit scoring evaluates the same information lenders already look at - the credit bureau report, credit application and/or your bank file. A score is simply a numeric summary of that information. Lenders using scoring sometimes ask for less information - fewer questions on the application form, for example.


Fallacy: My score will drop if I apply for new credit.

Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called "inquiries") will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

http://www.1-Debt.com

Credit Score

http://www.American-Debt.com
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When applying for credit, lenders review a variety of information to help them in their decision of whether or not the consumer is a good lending candidate. In this process, they will review one or more credit scores of the consumer applying for credit. A credit score is a number that tells a lender how likely an individual is to repay a loan, and if their payments will be made on time. A ñscorecardî or scoring model is used to determine the overall credit score. This is a mathematical equation that evaluates many types of information contained in the consumerâs credit report. This information is compared to a database of past credit reports and the scoring determined identifies what level credit risk the consumer is.

There are different types of credit scores; the most common scoring method used is the risk scoring system from Fair Isaac, commonly known as a FICO score. FICO scoring (Fair Isaac Company) is an automated rating process for credit reports. The score is meaningless by itself and must be used in conjunction with a validated strategy, which may be different for every creditor.

With the FICO system, there are five major categories that comprise a credit score.

1) Payment History: 35% of score.

This is a huge determining factor in determining a credit score. Lenders obviously want to know how a consumer has managed their financial obligations in the past. Late payments are not a complete negative, however, they are definitely frowned upon. An overall good credit score can outweigh one or two instances of late payments. It is important to realize that having no late payments does not constitute automatic approval either.

This factor evaluates:

• Payment information. This includes payments on various types of loans such as Visa, MasterCard, American Express, retail store credit cards, installment loans, finance company accounts and mortgage accounts.

• Public record and collection items. This includes bankruptcies, judgments, lawsuits, wage garnishments and collection items. These are considered serious, however, older items count less than recent items.

• No late payments. Each account that shows no late payment will increase a credit score.

2) Amounts Owed: 30% of score.

Many consumers carry balances on their credit cards, car loans, mortgages and other types of accounts. Depending on the amounts owed, it can mean the consumer is overextended, which may lead to late payments, or no payments at all. This factor determines if the consumer can currently manage more credit responsibly.
This factor evaluates:

• What is owed. Even if an account is paid in full, a credit report may still show a balance on that account. The balance on the consumerâs last statement is generally what is shown on their credit report.

• Who is owed. Part of this score takes into consideration the amount owed on specific types of accounts, such as credit cards and loans.

3) Length of Credit History: 15% of score.

A longer, positive, credit history will increase a score. However, those with shorter credit histories may still get high credit scores depending on what the rest of their credit history is like.

This factor evaluates:

• The age of accounts. This considers the age of the oldest account and an average age of all the accounts.

• How often accounts are used.

4) New Credit: 10% of score.

Opening several new accounts, or having many inquiries into credit history in a short period of time will affect the chances of qualifying for credit. The FICO scoring system distinguishes between searching for many new credit accounts and shopping around for the lower rates.

This factor evaluates:

• New accounts. This considers the age of newest accounts.

• Recent credit history. If there is a period of late payments and the consumer has re-established their credit, the score will rise over time.

5) What Types of Credit Used: 10% of score.

This factor usually doesnât play a big part in the lenderâs decision in extending credit, however, if there is not a lot of other information in the other factors, this factor will become more important. This takes into consideration the mix of credit cards, loans, finance accounts and mortgages the consumer has.

This factor evaluates:

• Creditors: If the consumer exclusively deals with ñDî lenders, it will put them into a high-risk category even if their payment history is perfect.

These factors are all considered when establishing the consumers credit score; no one factor will determine the score. Depending on the information in the credit report, one factor can play a more important role in the overall score regardless of the percentage the particular factor contributes. When a lender receives a credit score, they will also receive up to four ñscore reason codes.î These codes explain the reasons the score was not higher (if it is low.)

The information within this publication is designed to provide accurate and authoritative information in regard to the subject matter covered. If legal advice or other expert assistance is required, the services of a competent professional should be sought. All information is deemed accurate and reliable at time of release.
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Debt Consolidation Loan

Who Should Consider A Debt Consolidation Loan?

A debt consolidation loan is the traditional way to handle your debt in a monthly payment. You go to a bank or credit union for a debt consolidation loan to pay off your creditors, and your debts are rolled into one monthly payment. You pay the bank back and the single monthly payment works better within your budget.

Depending on your income and debt ratio, you may be able to see your financial institution for a debt consolidation loan. This loan could be either secured (backed up by collateral) or unsecured. Talk with a loan officer about your options, because it is important you feel comfortable with the person serving you and the advice that is being given. You can also talk to other financial institutions to find if they offer a better deal before signing on the dotted line.

If You are Considering a Debt Consolidation Loan...

Keep in mind that it is very common for a lot of consumers to have a tendency to continue to use their credit cards after they have consolidated their old debt. This results in increasing their total debt load and severely limiting their ability to repay all outstanding debts."

What if You Can't Get a Debt Consolidation Loan?

Remember that you still have options. They may be simplified, but they are still options. Dealing with debt will come down to your ability to pay. Look at your budget to see what you have left over to deal with your debt.

Knowing that you don't have the option of a bank loan, what do you think would be the most realistic way for you to become debt-free? Talking with a financial advisor or credit counselor will give you ideas for working with your budget to payoff your debts. You can ask whether Debt Management Plan could work for you.

Learn more about Consolidation Loans as compared to Debt Settlement at:
http://no-debt-consolidation.com

Marrying Again

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If you are marrying for the second or third time, you are not alone. The United States has the highest remarriage rate in the world; more than 40% of marriages are remarriages for one or both partners. Most of us remarry with more experience than we had when we married the first time. We also come with more financial complications.

Whether remarrying after a divorce or after the death of a spouse, those who marry again are likely to have some ideas about how they want this marriage to be different. Sometimes in the flush of emotions surrounding remarriage, couples may put aside the very real need for discussions and decisions about how they will manage money in a new marriage. But avoiding money management discussions and decisions can have significant consequences.

T A L K I N G About Money

Often, people who are reluctant to talk about money will tell you that financial problems contributed to a prior divorce. However, as difficult as it may be, talking about money management prior to a remarriage is one way to pave the road for future financial success. That’s why the National Endowment for Financial Education® (NEFE®) has written this brochure—to help you and your future spouse talk to each other about important money management matters. While all questions in this brochure may not apply to your situation, discussing those that are a fit may help to create the financial future you both envision.

http://www.nefe.org/fple/remarriagepage1.html

LIFE AND RETIREMENT PLANNING TO FINANCIAL PLANNING
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A Meeting Sponsored by the National Endowment for Financial Education
St. Louis, Missouri—November 14, 2000

Thirty years after its birth, financial planning continues to evolve. What began as more or less a better sales tool for financial services product providers is today recognized as a profession in its own right. Thanks to aggressive marketing and public relations by the various organizations and associations that support financial planning, and by planners themselves, a majority of American consumers are familiar with the term "financial planner," the advisory role that planners can fill, and the profession's most prominent designation, the CFPTM license. One can easily make the argument that financial planning has grown and prospered because people need what it has to offer.

As the planning profession matures, there is at least anecdotal evidence that its emphasis may be starting to shift from financial planning to a more personal and holistic focus on their financial and non-financial needs.

In November 2000, the National Endowment for Financial Education® (NEFE®), a non-profit foundation headquartered near Denver, hosted a day-long meeting, "Practical Applications of Life and Retirement Planning to Financial Planning," to explore the concept of "life planning." The participants included CFP licensees, researchers and consultants in retirement planning and productive aging, a professor of gerontology and age-related employment issues, human resources consultants and executives, a wealth and philanthropy counselor, a minister and vocational specialist, a vice president of a major brokerage firm, and life planning specialists. Many of the participants are involved in some form of life planning—as they self-define it—in their financial planning practices or in positions within corporations or other organizations.

One participant noted that, in his opinion, the life planning "movement" comes down to this key question for clients: "Is life just about putting the numbers together—or is there more?" The NEFE Life Planning meeting brought professionals together to explore this fundamental issue and whether or not the concept of life planning represents a new "model" for financial planning for both the profession and the public. As a first step, the meeting participants agreed that a professional dialogue on life planning requires a thorough examination of its multi-faceted messages and a definition.

What Is Life Planning—and Where Did It Come From?
Several of the Life Planning meeting participants noted that aging Baby Boomers—a generation of 77 million Americans whose leading-edge members are facing retirement in just a few short years—are prompting a shift in the relationship between planners and clients. Confronting the transition that retirement represents, Baby Boomers are contemplating a new "vision" of retirement. According to a 1998 AARP survey, 80 percent of Baby Boomers said they wanted to work in retirement but in a more flexible framework—this generation is seeking more options than just all work or no work. A May 1999 NEFE meeting explored this new vision, which sees retirement as a life-period with many "models" that individuals choose and self-define, rather than as a single event.

The challenges for financial services professionals become even more complex when a longer life span, earlier retirement, new definitions of "work," and significant changes to income sources at retirement (defined contribution vs. defined benefit plans) are added to this changing picture of retirement. But, commented one participant at the Life Planning meeting, "the real questions for clients and planners looking toward the future are not just 'Will my money be there?' Instead, they are more soul-searching: How will I spend my time? What do I really like to do? What will keep me motivated? How will I—and my family—react to my not having a job?" Helping clients think through and answer those questions, the participants decided, is a major part of life planning, with significant implications for financial planning practitioners.

The meeting participants first reviewed the accepted definition of "financial planning" and then offered thoughts on how "life planning" is, would, or could be different. Facilitator Steven S. Shagrin, J.D., CFP, CRPC, CRC, a vice president with Salomon Smith Barney in Youngstown, Ohio, offered the following thoughts on the subtle, but significant, differences between financial planning and life planning: "[financial planning's accepted definition] presents the establishing of personal and financial goals as the first step. It is my belief that life planning is the process of bringing a deeper structure and framework to this very important step. It does so with an approach that the client tends to appreciate, understand and, most importantly, revisit over time—more so than a standard financial plan. This is because clients come to realize that, as fellow financial planner Michael Stein, CFP, has so aptly put it, 'life is not a dress rehearsal'."

Life planning, offered Shagrin, adds a "holistic" element to the process of financial planning by considering the non-financial needs of life transitions, including the one most people aim for—retirement. Shagrin, who uses a life planning approach in his practice, believes that as clients age they recognize the truth in Michael Stein's comment and begin to view life planning as personal and tied firmly to one's values. Shagrin described how he incorporates life planning into his work with clients. "I take the approach of first helping clients think about their lives and how they want them to evolve based on their values and goals. Then, we assign a financial cost to their needs and wants. We talk about how life's transitions require that they model out how they might 'look' financially so they can see if things are on the right track. Then, we talk about choices we have to make for adjustments in today's activities to better prepare for tomorrow."

One definition of life planning, written by Carol Anderson, a researcher, writer, and consultant on retirement preparation and life planning, and Joyce Cohen, the founder of Unconventional Wisdom, a firm specializing in creative aging, career transition, and retirement preparation, was offered to participants. Life planning, write Anderson and Cohen, "is a comprehensive approach to planning that is appropriate and useful for all ages—young adults as well as those nearing retirement. It is based on the philosophy that the most successful and satisfying retirement experiences are based on a series of thoughtful, future-focused decisions made throughout one's adult life. Skills, values, attitudes, resources, and relationships that are developed and honed during one stage of life all contribute to meeting the challenges and recognizing the opportunities of the next stage of life."2 Life planning, says Cohen, explores and honors past knowledge and experience; assesses and confirms present reality; and, finally, visualizes and designs future possibilities. In a practical sense, life planning is an on-going exercise in "what if?" scenarios that can help people sort out the possibilities and use creative solutions to shape the lifestyle they desire.

It is worth noting that nowhere in either of these two working definitions of life planning are the words money, finances, financial resources, wealth, or investments used. That message is reiterated in the introduction to Putting Money In Its Place by Ken Rouse, formerly president and founder of The Rouse Companies and currently a principal with Ernst & Young's Personal Financial Counseling division, in Phoenix, Arizona. It begins: "Welcome to a discussion of money which does not begin with money at all. It begins with you!"3

Closely aligned with this approach is the work of Barbara Culver, CFP, CLU, ChFC, of Resonate, Inc., in Cincinnati, Ohio. Culver writes that life planning is a new model that "takes clients from transaction to transformation; away from product to process; from compartmentalized planning to comprehensive planning; and shifts the planner's focus from the client's economic value to their human value. This approach provides expert and caring life planning, as one helps link the valuation of the client's financial assets with the values of their lives." As for how this approach would change financial planning as we know it today, Culver believes "what financial planners will find is that by employing this approach, their daily activities change focus from merely helping the rich get richer to helping the successful find significance in their lives."4 The comments of one CFP practitioner who attended the meeting support this definition. "Many of my clients," said this participant, "have their retirement and future financial security in place. For them, it's like 'enough is enough.' It's what they're seeking for everything else about their lives—values, satisfaction, a legacy—that they're looking to me for help with."

Culver's definition of life planning is similar to that offered by Av Lieberman and Barry LaValley of The Retirement Education Centre, Inc., in British Columbia, Canada. Lieberman and LaValley say life planning is a dynamic educational process that allows people to visualize their personal goals, and then to model the financial consequences of those choices. Financial planning, they say, starts when life planning leaves off—you don't start with the financial plan and then work the life plan into it.

Participants at the NEFE meeting offered certain meaningful terms5 they believe reflect the philosophy of life planning:

Choice—Life planning focuses on identifying the choices an individual has in mid-life and beyond. Having choices is a goal for individuals planning for their future. These choices are expressed in financial strategies, retirement decisions, and quality-of-life decisions such as careers, relocation, meaningful use of time, and personal and professional growth.
Consequences of options—Part of life planning addresses not only the choices but the consequences of choices. It requires a "thinking through" of decisions. In fact, if the consequences are not considered, exercising a choice may be ineffective, inappropriate, or even useless.
Self-direction—Self-direction implies that individuals are responsible for themselves; they may not be able to control their future, but they can influence it. Self-reliance and personal responsibility are two overriding themes in life planning.
Intentional—Life planning is not an accidental occurrence. It is a process of intention. At times, this intent needs definition, direction, and clarification. Professionals in life planning can facilitate this process.
Empowering—The life planning process is designed to empower individuals to make good decisions for themselves and their loved ones. At times, individuals need to recognize that they have the power to design their own future. This is closely aligned to being self-directed and intentional in one's efforts.
Holistic—Life planning is holistic. Webster's dictionary defines holistic as "an emphasis on the functional relationship between the parts and the whole." Life planning exemplifies this relationship: financial security is only a part, an extremely significant part, of the whole, which comprises the values, visions, and aspirations of individuals now and in the future. The relationship between finances and how individuals plan to live their lives is an irrefutable connection. A holistic approach will strongly increase the probability for individuals to successfully plan and implement their retirement strategies—affecting every aspect of their lives.
Integrity—Integrity suggests honesty. The intention of life planning is one of candor. Individuals make an attempt to be honest with themselves in designing their lives. Professionals are honest in their analysis, presentation of options, and counsel. The professionals involved in life planning consistently keep the welfare of the client as a top priority.
Personal—Life planning is focused on the individual. Therefore, it is highly personal. No two individuals are the same. The uniqueness of each individual is valued on a personal level.
Comprehensive and specialized—Those involved in life planning cannot be experts in every area, but they should have knowledge and understanding of the total planning challenge. Financial experts should be knowledgeable about non-financial issues; equally important, those dealing with non-financial issues should have some understanding of the financial issues. Ideally, life planning will be approached as a team endeavor for the benefit of the adult planning his or her future.
Increased self-efficacy—Self-efficacy implies self-reliance and growth or, using Maslow's approach, self-actualization. One of the values of life planning is to enhance opportunities for growth, self-reliance, and self-satisfaction. These values cross both the financial and non-financial areas.

Life planning, however, is more than just a philosophy. If it is to be meaningful and valuable, it needs to integrate specific "outcomes" that represent its philosophy. The Life Planning meeting participants identified these outcomes as follows:

Be motivated to make wise choices
Be educated about life choices
Live purposefully
Be prepared to meet challenges and opportunities
Provide structure and flexibility
Make informed decisions and take action to improve total well being
Be self-aware
Be personally fulfilled
Use and replenish resources, i.e., stewardship of resources and sustainability
Give back to the community, in all ways

Incorporating both life planning's philosophy and desired outcomes, the participants agreed on the following definition of life planning for financial planners: "Life planning is the process of (1) helping people focus on the true values and motivations in their lives, (2) determining the goals and objectives they have as they see their lives develop, and (3) using these values, motivations, goals, and objectives to guide the planning process and provide a framework for making choices and decisions in life that have financial and non-financial implications or consequences."

Life Planning vs. Financial Planning—Individual and Societal Implications
Although life planning at its best is envisioned as extraordinarily personal to each individual, the NEFE meeting participants explored the "incredible" societal ramifications implied. As one participant noted, since money is the most powerful secular force on the planet today, financial skills have become 21st century survival skills—"and they don't come in the DNA." How, one participant asked, do people function in an economy that demands you respond to money as though you are an intelligent, rational human being if you can't fill out an employment application? Or make informed choices about careers, housing options, or intra-family issues? Financial planners, this participant commented, can provide the crucial links between individuals and the money-based world around them.

These survival skills, it was discussed, go beyond helping people live better lives. There are also social implications for life planning, especially with an expected $40 trillion projected to change generational hands in the next 10 years and a staggering $140 trillion in the next 30 years—an enormously significant shifting of the keys to the kingdom, if you will. Large amounts of money will go into the hands of people who, for a variety of reasons, may or may not understand what money means in terms of stewardship and the responsibilities that wealth brings. As one participant commented, life planning and money issues "include everything from the most 'micro' issue of what you're going to order for lunch—or even that you have the power to order anything for lunch, for that matter—to global issues like how we use our resources and how we deal with expanding populations and advancing age."

While many financial planners may actually be "practicing" life planning by implicitly creating relationships that reflect its philosophy, many aren't—or, at the very least, they are not perceived that way by consumers. And, according to the participants, rarely do large, institutional financial services organizations take it to that level. Despite the advantages of these companies—depth of talent, skills, and enormous market reach—they frequently fail to address the individual needs that are part of life planning and make financial planning personal. Many, in fact, are still working with a "broken sales model," according to one participant. Another recounted an incident at a large firm that illustrates this point: a young planner had a client who had just exercised $40 million in stock options. The participant asked the planner what the client was going to do with his life in view of his newfound wealth. The planner replied he had no idea—"That's not my problem. It's not what we get paid to do. We get paid to show people how we can reduce taxes or increase their returns."

Yet, says Steven Shagrin, this is precisely the problem. "Financial planners," he explains, "concentrate on building wealth, while life planners emphasize helping clients find ways to use their wealth effectively to get more out of life." He tells the anecdote about an older divorcee who was living comfortably on her retirement savings—but was also unhappy with her "empty" life. Shagrin, her financial planner, helped the woman to identify a number of core interests that eventually led her to look for, and find, a job she enjoys. Her new "interest" is satisfying her emotional and social needs—while also supplementing her savings. Says Shagrin, "People don't want to run out of money before they run out of breath; yet they shouldn't spend their lives dwelling on where their next dollar is coming from, either. They should act based on their interests, their likes and dislikes, and not solely to build wealth."

Minnesota financial planner Ross Levin, CFP, describes another situation in which a couple's need for more living space for themselves and their children triggered a host of issues and challenges. Although not married, the partners were deeply committed to their relationship, their home of many years, and their neighborhood. One of them also enjoyed considerable, though not outwardly visible, inherited wealth. Should they stay in the house they loved, or move? Would a large addition to the home seem ostentatious, even "broadcast" their wealth? How would this affect their relationships with friends and neighbors? What impact would it have on them—as well as their already uncomfortable relationship with money? Did it matter that the home's value didn't support the costly improvement? Levin ended up counseling the couple about not only the financial aspects of their decision, but the emotional and psychological issues they were struggling to resolve, as well.

These examples illustrate how the concept of life planning—with its emphasis on a personal and relevant understanding of clients' goals and dreams, rather than just a focus on taxes, asset allocation, money management, and estate planning—can "transform" financial planning, and not only for the wealthy. After all, as one participant said, money "surprises" and "failures" are not specific to a given population group or economic strata. Several participants agreed that life planning may be even more critical for those with fewer financial resources—single parents, divorced women with limited career experience to fall back on, young adults just entering the workplace. These individuals are not always well represented in the typical financial planner's practice, but they comprise a large, and contributing, part of our society. One way to do that, the participants agreed, is to disassociate money from work within the context of life planning—to practice values-based financial planning, not economic-based financial planning. Doing so requires not an event-based approach, but an embedded client approach which recognizes that "life happens—continuously." As one participant put it, "We all live in a world where we may not make it to dinner tonight; or, we may have to account for the next 60 or 70 years." While life is certainly the great unknown, the participants agreed that life planning can help individuals better prepare for its many potential outcomes.

Life Happens—Throughout Life and Throughout the Generations
Participants at the NEFE Life Planning meeting acknowledged that "life planning" is almost an oxymoron. In other words, said one, "life happens—all during the time you're trying to plan for it." The continuum of life, with its inherent "happenings," should be the focal point for financial planners and clients. As one participant noted, a planner's value can be in "showing people how their decisions fit together along the life planning continuum." The participants also noted that while many "life junctures" are shared by all generations, discrete differences also need to be addressed.

Participants examined three generational groups:

The Silent Generation—those born before 1946
The Baby Boomer Generation—both early Boomers (born 1946-1955) and late ones (born 1956-1964)
Generation X—those born between 1965-1982

For each generation, the breakout groups examined 13 life-happening "Facets" and each facet's related "Dynamic." By better understanding the nature and influence of the different generations' dynamics, life planners address these dynamics in the holistic, interrelated way that the very term "life planning" suggests. Although financial planners and other professionals who advise clients of different generations are aware that one generation is different from another, rarely do as many of a generation's life dynamics need to be addressed, together, as they do in a life planning approach.

The Silent Generation
Unlike their "noisy" and "activist" offspring—who challenged institutions, conventions, mores, and values in a dramatic and visible way—the Silent Generation is more compliant, deeply rooted in a strong work ethic, and accepting of a lifelong career of relative sameness. This generation also has a deeper respect for the inviolability of marriage and less interest in and understanding of the need for "personal growth."

Key points discussed for this generation's "Facets" and "Dynamics" include:

Financial—The Silent Generation is less inclined to ask for, and is more resistant to, financial help. They are learning to live on limited resources. Women of this generation are far less financially literate and aware. They are being impacted financially by the changing dynamics of health care.
Work—This generation is more or less split between those who desire to continue working in their later years and those who believe that retirement is their due. They have more firmly and longer-held notions about work and retirement. They ascribe to a lifelong belief of "work hard—get ahead."
Leisure—Members of this generation expect "leisure" in retirement but have limited experience in developing leisure activities.
Physical Health—Their self-reported physical health status is "high," although they are experiencing the beginning of chronic health conditions.
Mental Health—This generation has the lowest suicide rate.
Relationships—Although they grew up with a belief in marriage as a long-term commitment, there is an increased level of divorce among the Silent Generation. Members of this generation are beginning to lose their spouses and, because of increasing mobility, may live long distances from adult children.
Family Matters—Although they experience it to a lesser degree than many Baby Boomers—who are the "sandwich generation"—the Silent Generation's younger members may be facing issues related to elderly parents, as well as new relationships with now-grown children.
Home Life—This generation also faces, among its members and their adult children, the complexities inherent in re-marriage and "combined" families.
Housing—Most of the Silent Generation are homeowners in the literal sense of the word. They are facing decisions on relocating, downsizing, and alternative housing such as assisted living communities.
Personal Growth—The Silent Generation doesn't particularly embrace "personal growth" as important to one's life. Life or financial planning discussions that use this terminology could create a barrier to reaching this generation. The notion of therapists and counselors to help them "fix" aspects of their lives is not something they're used to, although they do tend to trust and rely on "experts" (e.g., a trusted doctor).
Problems and Surprises—Unfortunately, the Silent Generation has sometimes found that "work hard—get ahead" is not necessarily true. Widowhood is common and presents unique challenges and, often, crises. Members of the Silent Generation are uncomfortable with the term "aging." They face an extended life expectancy that may challenge their preparations for retirement, both financially and in other ways.


The Baby Boomer Generation
No group of people has had a more dynamic impact on society than the 77 million Baby Boomers, from those who came of age in the still-innocent '50s to the Woodstock-and-Vietnam War generation of the '60s and '70s. They challenged, mocked, and even frightened the previous generation but, as it turns out, they have now become the previous generation—middle-aged people with mortgages, career concerns, family pressures, and financial uncertainty, who are closer to retirement than to Woodstock.

Key points discussed for this generation's "Facets" and "Dynamics" include:

Financial—Baby Boomers are more financially savvy, yet more burdened with debt—both credit card debt and big mortgages—than their parents. They also have far more complex financial choices in their lives. They are simultaneously living with having to be much more self-reliant for financial security in retirement than their parents and with expecting significant inheritances from those parents and the implications of "sudden money." Their status as the "sandwich generation" may require them to assist aging parents financially at the same time they are putting children through college.
Work—Because of the corporate downsizing phenomenon in the '80s and early '90s, Boomers have come to distrust company "stability" and have much less corporate loyalty than the Silent Generation. Their sheer numbers have resulted in many Boomers bumping up against the reality that they won't always rise to the top in their career. Many are creating second careers or have become self-employed. Consulting or self-employment may lead to isolation and some disconnect from the rest of the working world. Boomers are still looking for "meaning" in their work. They expect, and often desire, to work far beyond "traditional" retirement age.
Leisure—Because of the demands of work and parenting, Boomers think of leisure as a foreign concept and often experience it only as short bursts of immediate gratification, such as a luxury trip to Europe. Time pressures lead to a lack of ritual or routine for leisure.
Physical Health—As parents age and die, Baby Boomers are beginning to confront their own mortality and are taking steps to maintain physical health. The stress associated with mid-life career transitions or disappointments, high debt loads, and other financial obligations, is impacting their health.
Mental Health—As a generation, Boomers are coming to grips with mortality, struggling with both discouragement about whether this is all there is and empowerment that the best is yet to be created. Stress is high, resulting from career pressures, aging parents, and the financial obligations of raising children. Boomers are dealing with a creeping sense of fatalism as they hit mid-life and mid-career.
Relationships—Boomers are often losing parents and spouses, due to death or divorce. Blended or stepfamilies are common. Single status is not necessarily a stigma, but presents unique financial planning challenges. Members of this group are trying to come to grips with what their obligations are to parents and children.
Family Matters—Heavily influenced by their diverse, and changing, relationships, Boomers are struggling with "sandwich generation" issues. Many have young children at a much later age than did their parents. Education is a priority, but having children later has made funding college education a financial drain in later life.
Home Life—Boomers place a high priority on home life but feel its quality is often compromised by competing demands on time.
Housing—Housing isn't the comfort to this generation that it has been to the Silent Generation. Mortgages are high and will likely be carried into later life. Boomers who own second homes are under increased financial pressure. Many Boomers may desire to relocate or downsize housing as their children go to and through college. Conversely, some may actually upsize, to accommodate a live-in aging parent.
Personal Growth—Boomers are still trying to figure out "what it all means." Because things have not always worked out as they envisioned in their earlier, idealistic days, Boomers are becoming very introspective about their lives. They are beginning to think about a moral or values-based "legacy" and want signs that their lives have personal significance.
Problems and Surprises—This generation believed they were entitled to a better world and have paid for it—but not with their own money—so they are now reaping the results of their spending habits. Divorce, unemployment, mid-life health problems, and the death of family members are frequent "problems." Unexpected financial windfalls and an incredibly strong investing environment in the 1990's have been pleasant surprises.


Generation X
Though they have been referred to as "slackers," the typical Generation X individual is often extremely work-focused. Their work, though, has been in a dramatically different environment than that of previous generations—a jeans-wearing independent contractor today might be employed by a "dot-com" company in a converted warehouse loft, for example. Gen Xers are also fit, healthy, nutrition-conscious, technology-savvy, less committed to a serious relationship at an early age, and somewhat wary of big corporations.

Key points discussed for this generation's "Facets" and "Dynamics" include:

Financial—Generation Xers learn about credit, money, and their own buying power at a much younger age.
Work—This generation lives and works in a "24/7" environment. Its members will experience much mobility in their work lives and careers. They have jobs that previous generations couldn't even imagine.
Leisure—Gen Xers tend to think of leisure as a "right" in their lives. They are more likely to be involved in "extreme" leisure activity. They expect their employer to help them find the balance that allows leisure in their lives.
Physical Health—Because of their relative young age, they currently think of themselves as "invincible." Yet, Gen Xers are very fitness- and health-oriented, except when they're living on fast food because of their work schedules.
Mental Health—This generation is more "medicated" than previous ones. Their mental health is unburdened by exposure to any serious national or international political or economic crisis.
Relationships—Because of technology, Generation Xers have many on-line "relationships," which indicates that they, too, seek a sense of community, even if through a computer. Gen Xers are experiencing later or delayed commitment in long-term relationships. They are more flexible in their views about relationships and more open to diversity in them.
Family Matters—Many members of this generation grew up in "non-traditional" families—single-parent families, extended families, non-related families—so their definition of family is often different than that of previous generations.
Home Life—GenXers indicate that this is "important" to them.
Housing—Generation X expects, and demands, more conveniences, such as on-line shopping and delivery of products to their homes. They are a generation of microwaves, not gourmet grocery stores. Their housing necessities include TVs, VCRs, and, of course, computers.
Personal Growth—Gen Xers would like to experience a sense of spiritual "peace," and many are beginning to explore it. The challenge for this group is being able to disconnect from a hectic work life to find it. On the whole, they are interested in "balance" in their lives.
Problems and Surprises—Life, for members of this generation, often seems disjointed. They live with an overload of information and too many choices. Sometimes it's hard for Gen Xers to sort through it all and make relevant choices. They frequently have unrealistic expectations about money and jobs.


Generational Dynamics and Their Implications for Life Planning and Individuals


So what can financial planners do to better incorporate life planning "facets" and "dynamics" into their relationship with clients? As a start, they need to realize that if life planning is to be meaningful and valuable to individuals of different ages and generations, it will have to address both message and medium for each market. It also will have to address individuals' and generational groups' deeply rooted feelings about money—even as it seeks to distance money from life goals.

For example, noted participants at the NEFE meeting, Baby Boomers have both a love affair with and a fear of money. To this generation, money frequently represents achievement, status, and a way to "keep score." And yet, it also represents a looming crisis. Many Boomers, commented one planner, are scared to death about retirement because they think they can't afford it. This generation has lost control because they started using money in the wrong way—and it just kept getting worse.

But given the fact that the Boomer generation is also rooted in notions of idealism and individualism—or, "what is my life all about?"—life planning's focus on personal relevance and individual choices can resonate with this group. They also are at mid-life, a time for re-evaluation and reflection, a time when they recognize that "oops" at 50 is far different than "oops" at 30. Life planning, said one participant, is in a position to be able to offer much to this generation, to be able to say: "No matter how fallible you are, no matter how imperfect your life may seem right now, you still have time to do what you want, you still have time to make a difference. Here are the baby steps to begin that."

Generation Xers, on the other hand, may feel there is so much time ahead of them that life planning is not yet critical. The opportunity with this generation may lie in the fact that a 25- or 30-year-old has yet to form an unyielding opinion about "financial planners." Tapping into this generation early on allows financial or life planners to create and mold an individual's expectations about a planner's role in their life. Creating personal relevance—and strong personal relationships—is both a challenge and an opportunity. After all, these technologically savvy young people can have any amount of information they desire. Considering a specific investment? They can log on and get as much information about it as any analyst in a top money management firm—all at the click of a mouse. Stereotypically skeptical about large institutions, marketing gimmickry and, perhaps, investment and financial professionals, Gen Xers may respond better to those life-planning messages that stress personal empowerment, not financial choices and consequences. In addition, because they are seeing certain crises of both the soul and the balance sheet for the Boomer group ahead of them, life planning could emphasize safe harbors for this group—"financial fluoride," in the words of one participant. This financial fluoride would, in effect, say to Gen Xers, "Here are ways you can protect yourself in advance from the possibility of certain things happening to you."

The Silent Generation also poses unique challenges for life planning's messages—a general wariness of things "new" and less black-and-white, a reluctance to pay for services that aren't easily defined, more resistance to change, a tendency to believe money is a "private" issue. But many of the later Silent Generation members—someone age 67, for example—realize their lives may stretch another 20 years, and life planning could feed the awakening desire to create new types of retirement. And retirement, as Silent Generation members are seeing, includes decisions on housing, leisure, health care and, quite possibly, community service or philanthropy.

For all generational groups, clarification of values, especially as they relate to money, could provide a universal life planning thread—values are formed in early adulthood, questioned and re-examined in mid-life, and affirmed and often acted on in later life.

Obviously, there is much groundwork to be laid and significant effort required for life planning to be understood and accepted by individuals. Participants at the Life Planning meeting identified several ways that life planning could be "mainstreamed." These include:

Refine the message, but continue to focus on life planning as being "beyond money."
Treat life planning as a "brand."
Create a "process" or "curriculum" for life planning, similar to that done for financial planning.
Identify the "gatekeepers" and "centers of influence" for each generational group and develop appropriate communications, coaching, and/or training programs for them.
Identify life planning's entry points—or "interest junctures"—for members of different generations.
Develop a media strategy for championing life planning.
Use multiple delivery channels—i.e., both the broader media and other outlets, such as the "bully pulpit" of government, to disseminate the message, as well as highly specific outlets. Life planning's messages, the participants agreed, must be delivered where the people are—in companies, faith communities, on-line. "We can't expect people to come to us to get the message," said one participant.
Explore partnerships for delivering the message—in other words, develop a life planning "distribution system." These partnerships could include a variety of groups or professions. For example: Certified Employee Benefits Specialists, accredited human resources managers who help employees explore options for retirement and who manage work-life programs and benefits, could partner with life planners. Life planning, in fact, is already getting some attention within this community. A December 1999 article in Employee Benefits Journal proposes "total life planning" as a new work-life program. These total life planning programs, says the article, "are designed to help workers examine the most important aspects of how their professional and personal lives are working today. Employees look at life as a whole, assess relationships, emotional and physical well-being, career, spirituality, and their personal financial situation."6

Since life planning may be a new model for financial planning, the Certified Financial Planner Board of Standards, Inc., and the Financial Planning Association would be likely organizations to research and explore education, advocacy, and championing of the brand and the message. Other professional groups—the American Bar Association, the American Medical Association, the American Institute of Certified Professional Accountants, the Association for Financial Counseling and Planning Education, small business associations, personal coaches, philanthropy consultants, community service organizations, credit counseling organizations, and professional associations for gerontologists, social workers, and marriage and family counselors—could be linked to the life planning movement.

Ultimately, however, more important than how the message is championed and by whom is the message itself: it must be clear enough so individuals from all walks of life recognize its benefits. It should help them answer the question, "What does the world look like when you integrate planning into your life?" Life planning, the meeting participants agreed, must not only have an agreed-upon definition, the definition must also be understood by consumers in a practical, results-oriented way:

Life planners are people who. . .

and

Life planning is a process that . . .

With an emphasis on the non-financial events, transitions, and goals of an individual's life, life planning could also be viewed by more people of all generations as "affordable." It's not about minimum investable assets or net worth or stock options or even current income. For individuals, it represents a shift from making life choices based on one's economics to making economic choices based on one's life.

Ideally, the participants agreed, life planning would become a part of the national lexicon. "In a perfect world," said one participating planner, "it would filter throughout society, be taught to children through the educational process, be in the workplace, and be part of families' conversations. It may take a generation, but it should be like breathing."

The Challenges for the Financial Planning Profession
"There's an old saying that when the student is ready, the teacher will appear. At some point, maybe soon, a lot of people are going to be ready for the life planning message." This comment from a participant at the meeting assumes financial planners will embrace life planning as their new mission and model. Will they? Should they? Are they already? If so, what challenges confront them—both individually and as a profession? Or is some other profession going to fill the "teacher" void? As some participants noted, if the life-planning message begins from the bottom—with individuals—and rises, will financial planners be left scrambling?

For life planning to become "like breathing," financial planners and those in related professions must be able to build a viable and profitable business around it, participants at the Life Planning meeting concluded.

A key question to be addressed should be: "Is life planning part of financial planning, or is financial planning part of life planning?" The answer may lie in two distinct models of a financial planning practice for the future—planners who come from the "analytical" side, and whose clients respond to this approach, and those who come from the "counseling" side, with clients who respond to and value that accordingly. Under either scenario, financial planners can create a network of related professionals—therapists, social workers, employee assistance professionals, money dynamics counselors, and career counselors for those who wish to quarterback from the "analytical" side. For those who concentrate on the "counseling" side, the network could include investment managers, money managers, portfolio specialists, attorneys, and CPAs. Either way, life planning could be made personal and relevant by treating its philosophy and activities as an ingrained and dynamic part of the planner-client relationship.

The participants agreed that financial planners have the knowledge to help people achieve their goals, serving as facilitators to bring the broadest range of expertise to the life planning process. "Our role might be to provide clients with access to the other experts," said one participant. Many planners already have moved "beyond product" with their clients; those who have are well positioned to continue to add value to clients' lives by incorporating a life planning team approach into their services.

The financial planning profession also will have to address the issues of training, accreditation, competency, ethics, and compensation if life planning is to become the "new financial planning." Compensation, the participants agreed, is a critical component of building a viable and profitable practice around life planning. Unfortunately, commented one participant, "if financial planners of the future look more like social workers, we may end up being paid more like social workers."

Compensation, one participant predicted, "could be a brutal reality to deal with, as well as the fact the people delivering financial planning today may be vastly different from those delivering it tomorrow." Others agreed, noting that while there has to be a "delivery system" for life planning, nobody will deliver it if compensation is inadequate. "What will the real world look like for financial planners who integrate life planning into their practices?" asked one participant. "Will people pay planners for 'good ideas' about their lives? Something has to be 'sellable' for a delivery system to develop." Life planning has to become so valuable that people will seek and pay for it, or companies will offer it as a benefit to employees, said another. The financial planning profession has recently enjoyed several good business years, another participant commented. "We're strong, we're prospering, and I believe we have a responsibility to pass the life planning message on. We have been privileged lately, and with privilege comes responsibility."

Although it remains to be seen whether life planning is the new financial planning, whether it will resonate with clients (especially the 84 percent of consumers who make financial decisions without an advisor, according to a 1999 Consumer Survey done by the CFP Board), and how financial planners will incorporate life planning into their individual practices, financial planners can and should be players in this evolution, said the meeting participants.

"We talk about this notion of 'life happens,' but life planning happens, too," said one planner. "It's already happening. And it's going to happen with us or without us."

Where Does Life Planning Go From Here?
The participants in the NEFE life planning meeting committed to certain action items that they believe will help advance the life planning concept, among them:

Write a funding proposal to make a "business case" for life planning. The business case could center on life planning being an employee productivity issue, a mental health issue, a societal impact issue, or others to be explored and/or determined. Participants felt that without a strong business case for the benefits of life planning it wouldn't realize its potential.
Write a fact sheet on life planning's definition, mission, and expected outcomes.
Write and seek to publish articles on life planning in various financial planning publications.
Write a draft of the "universal concepts of life planning."
Write a series of articles about life planning with the goal of developing potential partnerships with other professional groups or associations.
One participant at the NEFE Life Planning meeting noted, "We all run practices where we market some form or another of life planning. We understand what it is from our standpoint." The challenge for those wishing to move life planning forward will be to make it understood from the standpoint of the larger financial planning community and the public.

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Since October of 2003, the credit card companies have become much more lawsuit happy. This is due to the hand-slapping the banking industry, which includes consolidators and credit counselors, received from the Federal government.

The banks really get you coming and going. First they offer you credit cards, and lots of them, enticing you into their web of financial doom with low interest rates. Maybe you get offered instant cash, better known as signature loans. Either way, it's all based on false moneys that aren't really there anyhow ... after all that's what credit is, pretend money.

So, you use their credit and run up a bill, maybe too much of a bill. Opps! Wow, it's gotten harder to make your monthly payment. And, that just what the creditors want. They want you to fall behind in just one payment because then, they've got you. Be late on one payment, one time, and your interest just went from 8-9% to 27-28%. And guess what, no matter how many times you phone them and ask for it to be lowered, they tell you NO.

So, you ignore it for awhile. And, pretty soon you realize you're quickly falling deeper and deeper into debt with absolutely no way to bail yourself out. The creditors refuse to work with you, what are you to do?

Now for their next hook. The banking industry also pays for the services of the consolidators and the credit counselors. Chances are you'll end up contacting one of these groups because you don't know any better. Perhaps you do a search on a search engine to find out information, and guess who is paying a lot money for the top advertising? That's right, the banks.

Let's look at each of these separately. Debt consolidators offer to take all your debt and lump it into one payment. You end up having to make your unsecured debt, secured debt. Do you know the difference? Secured debt is tangible. It means if you default, you'll loose everything. Unsecured debt has no assets attached to it. Your credit cards and signature loans are unsecured debt. The banks can't touch your assets unless they sue you and win. When you consolidate your debt, you make all of your assets within reach of the creditors. That's a bad thing.

Now, how about the credit counselors. You know they tell you they are a non-profit organization and then, they demand a "donation" from you. What's that about?! Well, hello ... there's a reason why they got hand-slapped by the Feds. A credit counselor will help you get your interest rate lowered ... yeah, you remember when you called the bank and asked them to lower your interest rate and they said NO. Funny how the credit counselor, who is paid by the banks, can call and get your interest rate lowered for you. Who's kidding who here? It's all a sham. And, you'll only get it lowered to 12-14%. You'll never see that 8-9% again.

I saw a statistic that said 95% of all people who enter a credit counseling program drop out. Want to know why? In a credit counseling program you get to keep your credit card. How nice is that? You get to keep running up your debt. Yeah, they've got you coming and going alright.

So, how does all of this relate to the increase in lawsuits? When the Feds slapped the hands of both of the debt management groups, the banking industry responded with ... fine, we'll just take those clients to court and go after their assets. Thus, the increase in lawsuits.

So, when people ask me about lawsuits I explain quite bluntly, here are your real choices: screwed, screwed and maybe screwed.

If you choose bankruptcy, you're screwed. Your credit is messed up for 7-10 years, and just so you know there are marks that go onto a bankruptcy credit report that will be there forever even though by law that's not supposed to happen. They have ways of marking you for having filed bankruptcy forever. You're screwed.

If you choose to do nothing, you're screwed. The lawsuit will be filed and there will be a judgment against you. You will loose and your wages will be garnished, possibly a lien place on your properties. You have to come up with about $5,000 in attorney fees. You're screwed.

The third option is debt settlement. Here you're going to be playing the odds and hence the maybe screwed, but it's really your only hope to get out of this quickly and avoid the lawsuit. Debt settlement means they work for you, not the banks. They close your credit card accounts and they negotiate your debt down with your creditors. They make you pay as much as you can to pay off your debt as quickly as possible to get out from under the debt before the banks might possibly decide to pursue a lawsuit. If accepted into a debt settlement program, you will be out of debt in three years or less. It's no picnic in the park either. You're creditors are going to try all sorts of lies to get you to drop out of a debt settlement program. They might even offer you more ways to amass debt. BEWARE! Debt settlement is your best choice hands down.

sponsor: http://www.american-debt.com

10 Ways to Get Out of Debt!
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1) Use your Assets
If you have assets with some significant equity, such as a home or a car you may be able to use these to get control of your debt. For example, you could get a loan on your home sufficient to pay off your debts. You could be saving a considerable amount of money on interest if you pay off high interest credit card debt in return for lower cost debt.


If you have a car, consider selling it, paying off your debts and buying a cheaper car. Be careful though! Your don't want a "cheaper" car that will cost you a fortune in repair costs.

2) Get a Second Job
Use the money from this job to only pay off your debts. List your debts noting the interest rates. Pay off the debts with the highest rates first and work your way down the list.

3) Put your Credit Cards on Hold
One of the best steps you can take to get out of debt is to immediately stop using credit cards. At the very least destroy all your cards keeping just one card for emergencies.

4) Set up a Repayment Plan
Cut back on your expenses and/or use freed up cash to pay down your debts. Pay off the debts with the highest rates first and work your way down the list.

5) Get a Consolidation Loan
A consolidation loan can make lots of sense. Get a loan to pay off all your many debts and have just one payment to make. The new loan usually has a smaller payment and a lower interest rate.


6) Use the Services of a Credit Counselor

In The News
November 20 '03 - Credit counselors controlled by credit card companies. Statement to the Subcommittee on Oversight of the Committee on Ways and Means

October, 24 '03 AmeriDebt to Stop Seeking New Customers Because of Recent "negative publicity."

Sept. 11 '03 - State of Missouri Sues Credit-Counseling AmeriDebt


There are two types of credit counselor, for profit and "nonprofit". We do not distinguish between the two as they provide similar services and both charge a fee. Credit counselors can assist you in acquiring the discipline you need to get control of your debt. Be careful! Many people do not fully understand all the ramifications involved such as:

Impact on your credit rating.
The credit bureau will record that a plan is in place.

Are your payments too high?
Your payments should be high enough to significantly reduce your debt but not so high that you have "no life". If you do not have money left over at the end of the month to pay for the small pleasures in life you may find that you end up defaulting on your payments.

For how long should you pay?
Most experts feel that the term should be three to four years. It is a stipulation in the new Bankruptcy Reform Bills that the term be 3-5 years. Terms longer than this have a very high failure rate, because people cannot see a "light at the end of the tunnel".

7) Informal Proposal - Payments over time.
In some cases you can make a proposal to your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money to pay off your creditors.

8) Informal Proposal - Lump sum payment.
You may be able to pay less than 100 cents on the dollar. For example, a relative may be willing to pay a lump sum to the creditor of say 50% of the amount owed in order for the balance of the debt to be written off. Your creditors will be more willing to accept this offer rather than have you file Chapter 7.

This works best when there are few creditors.

9) Chapter 13 Bankruptcy
You are probably a good candidate for Chapter 13 bankruptcy if you are in any of the following situations:

You have a sincere desire to repay your debts, but you need the protection of the bankruptcy court to do so. You may think filing Chapter 13 is simply the "Right Thing To Do" rather than file Chapter 7.
You are behind on your mortgage or car loan, and want to make up the missed payments over time and reinstate the original agreement. You cannot do this in Chapter 7 bankruptcy. You can make up missed payments only in Chapter 13 bankruptcy.
You need help repaying your debts now, but need to leave open the option of filing for Chapter 7 bankruptcy in the future. This would be the case if for some reason you can't stop incurring new debt.
You are a family farmer who wants to pay off your debts, but you do not qualify for a Chapter 12 family farming bankruptcy because you have a large debt unrelated to farming.
You have valuable nonexempt property. When you file for Chapter 7 bankruptcy, you get to keep certain property, called exempt. If you have a lot of nonexempt property (which you'd have to give up if you file a Chapter 7 bankruptcy), Chapter 13 bankruptcy may be the better option.
You received a Chapter 7 discharge within the previous six years. You cannot file for Chapter 7 again until the six years are up.
You have a co-debtor on a personal debt. If you file for Chapter 7 bankruptcy, your creditor will go after the co-debtor for payment. If you file for Chapter 13 bankruptcy, the creditor will leave your co-debtor alone, as long as you keep up with your bankruptcy plan payments.
You have a tax debt. If a large part of your debt consists of federal taxes, what happens to your tax debts may determine which type of bankruptcy is best for you.
Chapter 13 Bankruptcy Information

10) Chapter 7 Bankruptcy

If these alternatives will not work for you, bankruptcy may be the only way for you to get a fresh start. Chapter 7 Bankruptcy offers a quick solution to getting out of debt.

Chapter 7 Bankruptcy Information.

http://www.bankruptcyaction.com/10waysoutofdebt.htm


21 December, 14:56 How to Reduce Debt
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How to Reduce Debt

Action plan to reduce your debt
Getting out of debt can take a long time. However, with a little extra effort and a solid plan a consumer can speed the process up and lessen the time it takes to get out of debt.

Resist temptation.
This is a prerequisite for debt reduction. Before buying, stop and consider if the item you covet is really necessary. If the answer is a resounding "Yes," then investigate alternate price structures from competing products or services. Is there a substitute that's just as good but not as expensive.

Stop using credit cards and start paying cash.
You might even consider canceling all but a few charge card accounts.

Develop a specific monthly budget for you and/or your family.
This plan should address a plan of action that eliminates spending on unnecessary goods and services.

Ask your creditors to reduce your interest rate.
These days, the competition between credit-card issuers is so intense that you can often negotiate your interest rate. Chances are that your current credit-card company will match the interest rate of a competitor.

Consolidate your debt by transferring outstanding balances to lower-rate cards.
Take the time to research the competition. Your savings could translate into the thousands depending on how often or how much you rely upon your credit cards as a part of your lifetstyle.

Pay more than the monthly minimum required by your credit card company.
You can eliminate debt and save money by paying more than the minimum monthly amount on your credit cards. Because credit card companies make their money from interest payments, they purposely set those payments low so it will take you years to pay off the balance. If you're paying the minimum, you're accruing interest charges faster than you're paying down the principal. At that rate, your debt will be around longer than you will.

Pay off credit cards with the highest interest rates first.
Take a step by step approach toward eliminating your debt. List your cards by highest interest rate and then pay them off in order of the highest rate. If you have multiple cards and can't seem to get your monthly balance reduced, analyze the rates and try to work out a plan that allows you to make a dent in each card's principal.

Consider a Consolidation Loan.
Look into low interest loans that can be used to consolidate high interest credit balances. This is a popular loan category for people with multiple credit cards.

Ease up on your IRA contributions.
Consider cutting back on contributions to your retirement savings plan and use the extra funds to pay down debt. But make sure to first ask an account administrator if you can adjust your contributions in the future.

Set up a realistic payment timetable and stick with it.
If you need to readjust your timetable, do so. If you have trouble, talk to a professional.

Track your spending.
Track your spending to find out where your discretionary income is going. You may want to use one of the personal finance software programs available to track your spending.

Look into debt-management counseling.
If you're overextended, these no-cost or low-cost organizations can work deals with your creditors to reduce monthly payments and help put you back on track financially

http://www.edebthelp.org/debt-reduction.htm

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