April 1997 Issue of AFCPE Newsletter

“Quick Loans” may be
the industry’s preferred method
of consumers acquiring debt, I
believe that the effect of quick
loans on today’s consumers is
similar to what President
Thomas Jefferson intended the
effect of debt would be on
Native Americans.

“Our system is to live in
perpetual peace with the
Indians… When they withdraw
themselves to the culture of a
small piece of land, they will
perceive how useless to them
are the extensive forests and
will be willing to pare them off
in exchange for necessaries for
their farms and families. To
promote this, we shall push our
trading houses, and be glad to
see the good and influential
individuals among them in debt,
because we observe then these
debts go beyond what the
individual can pay, they become
willing to lop them off by a
cession of lands…”

President Thomas Jefferson,
excerpt from a letter written to
Indiana Territory Governor
William Henry Harrison.

Who says quick loans are a
new phenomenon? Obviously
President Jefferson knew the
power of debt, and the appeal of
the quick loan.

Today’s “Quick Loans” are
repaid with money rather than
land, and in particular it is the
monies owed due to interest
compounding that is fueling the
economic boom in the
consumer credit industry. The
debt laden CONSUMER is the
golden goose who is laying the
golden egg. Here are some
examples.

TRUE IDENTITY LOANS.


This type of loan occurs when
you are offered an additional
discount on merchandise in
exchange for opening an in-house charge account. It is
called true identity because all
you need is two forms of
identification to open the
account. For the consumer who
has the ability to pay off the
balance at the end of the month
this loan is a good deal, but for
the consumer who only makes
periodic payments, the amount
of the interest may exceed the
discount.

INSTANT TAX REFUND.


This loan is offered primarily
by tax preparers and it allows
the consumer to immediately
receive a portion of their
projected tax refund. The
drawbacks are obvious. First,
they have taken on another loan
obligation, perhaps without
realizing it, and second if the
IRS (Internal Revenue Service)
determines the refund is less
than projected, they may owe
more money to the creditor.

AUTOMOBILE LEASE.
The lease is a new quick loan
which carries many drawbacks,
the obvious is that the consumer
owns nothing. In addition, if the
car has been driven more miles
than originally estimated, added
fees will accrue for each
additional mile. If you are a
member of the military and are
transferred, you may no longer
be able to take the car with you,
you cannot sell the lease to
someone else, and it may cost
you more to cancel the contract
than the vehicle is worth.
Finally, because there are so
many variable terms in the
contract, there is no way for a
consumer to know if they have
negotiated a good deal.

PAWN SHOPS.


Pawning goods is one of the
oldest types of quick loans
available. In many cases, after
the consumer places personal
goods in hock for a sum of
money, the goods usually are
never redeemed.

SHAM “BUY, LEASE BACK
CONTRACTS”.


On paper, a company will
purchase a consumer’s
household appliances and lease
them back to the consumer. The
consumer receives a $200 loan
but provides to the merchant
two post dated checks, one for
$200 and one for $50. If the
$250 is not repaid to the
merchant before the date on the
checks, the merchant then
cashes the checks.

Quite simply, I am not an
advocate of “Quick Loans”. Just
as President Jefferson hoped to
use the debt of the Native
Americans to dispossess them
of the forests, today’s creditors
hope to reap the rewards of
compound interest and
dispossess consumers of their
savings.

In this respect, little has
changed since Jefferson’s time,
because when one acquires
debt greater than their ability
to pay, the creditor gains power
over the individual
disproportionate to the actual
amount owed.

Karen Varcoe, Cooperative Extension
Service, University of California
Riverside

On January 1, 1997, I began the
first of two years as your
President. In fact, since the by-law
changes at the meeting in Grand
Rapids, I will be the last AFCPE
President to serve a two-year
term.

Candidates Needed for 1998


In Summer, 1997, we will select
a President -Elect who will serve
one year as President-Elect and
one year as President. If you have
any suggestions about who that
person should be, please contact
the Nominations Committee Chair,
Janet Beckman.

Members Needed for
Committees


The past two years have been a
time of transition for AFCPE. The
Board and I are hopeful that, with
the transitions behind us, AFCPE
can move forward and develop
new opportunities for our growing
membership. One of my primary
goals for this year is to review our
committee structure and increase
membership involvement in
committees. The strength of the
organization is membership
involvement. Committee chairs are
making a concentrated effort to
ensure that all interest groups
within AFCPE are represented on
their committees so that the
diversity of the membership is
adequately reflected in the work of
the committees. This will help to
ensure that the interests of all
members are represented. This also was the
logic behind another recent by-law
change that calls for each specific interest
group to have at least one
representative on the Board.

Apply for Committee Service


Enclosed in this Newsletter is an
application for Committee Service.
Please take a moment to fill this
out and return. Your committee
assignment will begin at the
December conference. Having
your applications now will help us
to organize our committees and
have them in place prior to the
conference. Committee work helps
you to become more involved in
AFCPE, to learn more about the
organization, and to meet new
people. Your work also helps to
make the organization stronger.
So, get involved. I know you have
heard this before, but AFCPE
really is only as strong as we make
it.

Annual Conference Schedules


I know that some of you are
concerned about the date change to
December for the 1997 Annual
Conference; however, many of you
are happy with the date change.
So, the conference will be held in
December this year and in 1998 as
we already have a signed contract
for a lovely hotel in Ft. Lauderdale
for 1998. Please be assured that
the issue is not resolved and the
Board will be asking for your input
before making a decision about the
1999 Conference.. (Editor’s note:
In the January Newsletter readers
and members were also asked to
respond to this issue.) If you have
strong comments, please put
them in writing to me via snail
mail or e-mail at:

karen.varcoe@ucr.edu

I look forward to serving as your
President and to welcoming you to
San Diego for the 1997 Annual
Conference. ……Karen

To do so, please send Tom
Garman — e-mail, tgarman@vt.edu
or Virginia Tech, HIDM-0424,
Blacksburg, VA 24061-0424, your
e-mail address. People without e-mail may just send their name,
address, fax, and telephone.

It is anticipated that a web site
on Personal Finance Employee
Education will be established by
late summer.

Tom Garman, Virginia Tech

How Do We Counsel?



In a counseling session the
husband said in a quiet voice, “this
was really the way to go.” I knew
this was a break-through to an
insight from the previous session
when I’d given them the Power
Pay printout for debt repayment.
As he talked further, I felt
confident that progress would be
evident.

When I took this case for group
supervision, I had given a brief
description of the case–that it
was a couple who had debts and
there had been impulse spending.
After playing a segment of a tape
from the session, my colleagues
began reflections. The question
was asked about what would replace the
impulse spending for the need it
had been filling?

This was an important question
for two reasons. First, I believe
that group reflection is important
for all counselors or therapists to
help open up areas the counselor/
therapist may have overlooked or
recognize possible transference
issues. I have appreciated my
professional affiliation with the
American Association of Pastoral
Counselors, which requires
supervision. I believe we gain
insights into our counseling and
learn counseling skills from this
process.

Secondly, this is where as
financial counselors, we need good
insights, intuition, and counseling
skills. The question then becomes
one of where our ethical boundary
is at least in the states which have
licensing laws for counseling. Do
we know enough counseling skills
to be effective in understanding
the underlying needs of the client
and address them so that if a
behavior is changed, it won’t just
be transferred to another area? I
think we all agree that
mismanagement of money has
deeper implications. Where is the
point of crossing into psycho-
therapy, which requires licensing
in some states? This question
remains for us personally and for
us as a group of professional
financial counselors.

Peggy Shorney, Financial Counseling
Services, Lincoln, NE

OR, click here for Web Call

This year’s conference will be
held at the U.S. Grant Hotel in
the heart of downtown San
Diego’s business and historic
cultural district.

Built in 1910, a recent $80
million restoration has preserved
the U.S. Grant Hotel’s legendary
beauty and superb craftsmanship.
Its guest rooms are lovely and
spacious. The hotel contains an
award- winning restaurant, a
lounge featuring live jazz, and a
fitness center. Afternoon tea is
served in the lobby from 4 to 6
p.m. Monday through Saturday.

We have tried to keep meeting
locations centralized. Continental
breakfasts will be served Thursday
through Saturday just outside the
meeting rooms so you will be able
to eat, socialize, and arrive at your
meeting location on time. The
exhibits will be located in the
room adjacent to our main meeting
room.

The Grant is within walking
distance of the Convention Center,
shopping at Horton Plaza and the
Paladion, theaters, restaurants and
the harbor.

Complimentary airport shuttle
service is available to the San
Diego Airport.

If you have any questions about
the hotel or local area, feel free to
contact me at: University of
California, 135 Highlander Hall,
Riverside, CA 92521, (909) 787-
5241, or connie.costello@ucr.edu.

Connie Costello


Local Arrangements Chair

Meetings for 1997 and 1998
have been scheduled for early
December. If this change in time
makes it difficult for you to attend,
it is important for you to let Board
members know. And, as we plan
ahead for 1999 and beyond, please
let Board members know what
time of the year would be best for
you.

Deanna Sharpe, University of Missouri. email: cfedls@showme.missouri.edu