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If I Can’t Balance My Checkbook, How Can I Help You Balance Yours? Jerry Bauerkemper, BS,CCGC Executive Director Nebraska Council on Compulsive Gambling.

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Presentation on theme: "If I Can’t Balance My Checkbook, How Can I Help You Balance Yours? Jerry Bauerkemper, BS,CCGC Executive Director Nebraska Council on Compulsive Gambling."— Presentation transcript:

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2 If I Can’t Balance My Checkbook, How Can I Help You Balance Yours? Jerry Bauerkemper, BS,CCGC Executive Director Nebraska Council on Compulsive Gambling

3 About the Presenter Jerry Bauerkemper, BS, CCGC Executive Director of the Nebraska Council on Compulsive Gambling Jerry Bauerkemper, BS, CCGC is the Executive Director of the Nebraska Council on Compulsive Gambling Mr. Bauerkemper was the first director of problem gambling for the state of Nebraska. He is an internationally recognized trainer on Problem Gambling. He received the First Step award for his work with Gamblers.

4 GAMBLE: To play for money; to risk, especially by financial speculation; to lose or squander in speculative ventures; a risking undertaking, a reckless speculation. -Webster’s Dictionary

5 You Just Won the Lottery Take several minutes and write down what you would do with Lottery winnings Recovering gamblers skip this assignment

6 How did you feel doing the assignment” Did you have pleasant thoughts? Did you get excited? Did you have negative anxious thoughts? Welcome to the world of the gambler!

7 If I Can’t Balance My Checkbook, How Can I Help You Balance Yours? Money vs Action -Gamblers Never Lose -Time + Money = Opportunity to Gamble

8 What’s money got to do with it? EVERYTHING

9 The reason we should talk about money. 73% of Americans report that money issues are their #1 stressor ahead of work, physical health, and children. American Psychological Association Survey, March 31, 2004

10 Results from Gambler’s Focus Groups Gamblers wanted to talk about money the first session Gamblers and family members were very concerned about referrals/support group confidentiality Counselors need an understanding and a willingness to work on debt

11 A Brief Money Exercise 1.People with money are… 2.When I have money, I usually… 3.My Dad thought money was… 4.My Mom thought money was… 5.If I could afford it, I would…. 6.Money makes people… 7.To have more money, I need to…. 8.In my family, money always caused…

12 A Brief Money Exercise 9.If I had more money, I’m afraid I would… 10.Money is… What else do you know about money as a result of the life you have lived so far? --Open for discussion Tool Chest Brian H. Farr, LPC

13 What does money mean to the problem gambler and/or family member? Have the client define: Money Values Beliefs

14 DSM V How many of the criteria have to do with money and finances?

15 Diagnostic Criteria DSM V A.Persistent and Recurrent Maladaptive Gambling 1. Preoccupied with gambling-past experiences, handicapping, planning next venture, planning ways to get money to gamble. 2. Needs to gamble with increasing amounts of money in order to achieve desired excitement. 3. Has repeated unsuccessful efforts to control, cut back or stop gambling. 4. Is restless or irritable when trying to cut down or stop gambling. 5. Gambles as a way to escape problems or relieve dysphoric mood e.g., guilt, helplessness, anxiety, depression.

16 Diagnostic Criteria DSM V 6. After losing money returns to get even or “Chasing” one’s losses. 7. Lies to family, therapist or others to conceal the extent of involvement with gambling. 8. Jeopardized or lost a significant relationship, job, or educational or career opportunity because of gambling. 9. Relies on others to provide money to relieve a desperate financial situation caused by gambling (Bailout). B.Gambling is not better accounted for by a Manic Episode.

17 I don’t want to be a Financial Counselor Majority of work done by client Do this in steps not all at once Homework is best Spend minutes per session for 5 weeks Spend 5 minutes per week after the budget made Family recovery based on family buy in

18 I don’t want to be a Financial Counselor Week 1: send home Assets and liabilities form Week 2: send home snapshot form Week 3: Send home budget planning form Week 4: review budget plan Week 5: Concentrate on bills you can help reduce or eliminate based on priorities

19 Step 1 Divide a piece of notebook paper in half Top half Write “Assets” Explain it as income sources Bottom half write “Liabilities” Explain it as bills and who you owe Send this home with them to begin to identify who and what they owe

20 Step 2 SNAPSHOT: Your Average Month Date: ______________ EXPENSES (Money Moving Out) EACH MONTH Rent/Mortgage/Property Tax/Home Insurance $________________ Home Repairs and Maintenance (Average) $________________ Auto Payments and Auto Insurance $________________ Groceries and Household Supplies (Average) $________________

21 SNAPSHOT: Your Average Month Medical/Dental/Therapy/Prescriptions (Average) $________________ Insurance Premiums (Medical, Disability, Life) $________________ TOTAL MONTHLY EXPENSES $________________ Information provided by Brian H. Farr, MA, LPC, NCGC-II

22 Step 3 Budget planning form Expense Item How Much How Often Monthly Amount

23 First Budget Planning form: clients write down expenses Housing Rent, mortgage Insurance Taxes Electricity Gas Water Sanitation

24 Automobile Payment – 1 Payment – 2 Insurance Gas Maintenance License/Taxes Other: Other Transportation Insurance Life Medical Other: Financial Planning Savings Investments Retirement College Savings

25 Food Groceries School lunches Eating out Other: Debts Credit Card 1 Credit Card 2 Credit Card 3 Loan Other:

26 Debts Credit Card 1 Credit Card 2 Credit Card 3 Loan Other: Medical Doctor Dentist Prescriptions Other:

27 Children Tuition Child Care Activities/Sports Babysitter Academic materials Hair cuts Clothing Allowance Child support paid out Other:

28 Recreation/Entertainment Activities Vacations/Trips Subscriptions Club Membership Other: Adults Barber Beauty Salon Clothing Cell phone Alimony paid out Toiletries Cosmetics Union/Club dues Counseling/Therapy Other:

29 Miscellaneous Pet Food Pet Care Cleaning supplies Laundry supplies ‘Paper’ goods Postage Film/Photos Other: Gifts Monetary donations Christmas/Holiday Birthdays/Anniversaries Cards Other:

30 Income Source Primary Employment Secondary Employment Inheritance Child Support Alimony Disability State Assistance Property Income Spouse or S.O.’s Income Donations/Gifts Other Total Income: Minus Expenses: Total amount available for repayment:

31 Creditor Name Balance Owed Payment Due Monthly Payment Months in Default Co-Signer List of Creditors This sheet is to compile the list of bills that are not regular monthly expenses which would go on your Expense Sheet. Here, list all other “ onetime ” bills in the following order: 1) Bad checks or debts for which you may be prosecuted, 2) Court ordered judgments, 3) Credit Unions, 4) Bank or Finance Company loans, 5) Back Taxes, 6) Credit Cards, 7) Bookmakers and loan sharks, 8) Family and Friends, 9) Other

32 Step 4 Review budget planning form and ask for word documents of all following forms

33 Creating a Realistic Spending Plan Write out a plan List monthly sources of income List extra sources of income List basic monthly household expenses

34 Spending Plan-Step 1 Identify Income Sources Wages after taxes (Gambler) Tips/Commissions (Average each month) Pension/Retirement plan benefits Unemployment benefits Food stamps Trust fund Wages after taxes (Others) Investment income (dividends, interest, etc.) Social security Welfare payments Child support/alimony payments Other Tool Chest finance/general/2007/08/28/budgeting-101.aspx Motley Fool website

35 Spending Plan-Step 2 List Expenses Rent/mortgage payment, groceries (average), utilities (average), telephone, home maintenance/repair (average), savings, clothing (average), car payment, car insurance/gas/repairs (average), other transportation, life/medical insurance premiums (average), homeowners/renters insurance, medical bills (average), child care, gambler’s allowance, loans/credit card payments, taxes, entertainment (average), cable TV, meals out (average), sports activities/events (average), charitable contributions, gifts (average), cigarettes/alcohol (average), long distance telephone (average), travel/vacations (average), gambling debts (this guide will explain later why this should be a low priority), other Total Expenses $____________________

36 Determine the Amount of Debt and List Creditors Car loans Credit Cards Home equity loans or second mortgages Furniture loans Department stores Payday loans Bank loans Medical bills Utility bills Back taxes Child support Education loans

37 Spending Plan-Step 3 Compare Income/Expenses Total Income from Step 1 $___________ Total Income from Step 2 $___________ Subtract expenses from Income $__________

38 Spending Plan-Step 4 Make Adjustments If there is not enough income to cover expenses, you have three choices: Earn additional income, such as through a second job or a better paying job Reduce expenses Reduce expenses and boost income Income and expenses change over time. Review the spending plan every few months and make adjustments if necessary

39 Monthly Financial Report Gross Income Salary Dividends/Interest Other LESS: 1. Giving 2. Taxes NET SPENDABLE INCOME

40 Identifying Assets and Sources of Income Items missing from the house Furniture Appliances Other valuables that could have been sold for cash A check from an insurance company to pay for property damage (such as roof or car) Ignoring financial obligations, such as quarterly estimated tax payments Is there a chance the gambler may try to sell personal assets through an on-line auction?

41 Budget Creation Continued 3. Housing Amount Mortgage/Rent Insurance Taxes Electricity Gas Water Sanitation Telephone Maintenance Other:

42 Budget Creation Continued 4. Food Amount School Lunch Groceries 5. Automobiles Payments Gas Insurance License/Taxes Maintenance Other Transportation Other:

43 Budget Creation Continued 6. Insurance Amount Life Medical Other 7. Debts Credit Cards Loans Other

44 8. Recreational amountNeeded? Eating Out Activities Trips/Vacations Subscriptions Cable Internet Club memberships Babysitter Other:

45 Budget Creation Continued 9. Clothing AmountNeeded? Adults Children 10. Financial Planning Savings Investments Retirement College Savings

46 Budget Creation Continued 11. Medical AmountBehind? Doctors Dentist Prescriptions Counseling/Therapy Other:

47 Budgeting Monies For Gambling Treatment The treatment of a gambling addiction can be difficult, time- consuming, and costly. Most medical insurance policies and managed care providers don’t pay for the treatment. Some health plan carriers pay for treatment only if the patient suffers from additional disorders such as alcoholism, drug addiction, or depression. Consequently, the gambler may need to pay for treatment out of his or her pocket and this must be factored into the budget. Gambling clients may ask you to reduce fees because of financial problems. Experts commonly recommend that therapists no reduce fees as this is seen as another form of bailout.

48 Budget Creation Continued 12. Miscellaneous Amount Pet Food/Care Cleaning Supplies Paper/Plastic goods Laundry and supplies Postage Film/Photos Hair Care Toiletries/Cosmetics Other:

49 Budget Creation Continued 13. Children Amount Child support paid out Tuition Child Care Activities/Sports School Materials Allowance Other:

50 Budget Creation Continued 14. Adults Amount Alimony paid out Union/Club dues Cell Phone Allowance Other: 15. Gifts Monetary Donations Christmas/Holidays Birthdays/Anniversaries Cards Other:

51 Budget Creation Continued 15. Gifts Amount Monetary Donations Christmas/Holidays Birthdays/Anniversaries Cards Other:

52 Final stage of Budget Total Expenses Amount INCOME VS. EXPENSES Net Spendable Income Less Expenses TOTAL Child support received Alimony Received Unallocated Surplus Adjusted Total

53 Step 5 Prioritize bills to be paid off Concentrate on emergency needs first (mortgage, electric bill, gas, childcare) Second medical and auto insurance needs Third high interest loans (credit cards cash advance) Fourth Friends and family Fifth Illegal loans etc

54 Important Questions Do you have any legal charges pending or fear of possible charges, i.e. insufficient fund checks, kited checks, advanced checks, theft, embezzlement, drug charges, forgery, credit card theft, insurance fraud, DWI, back child support, assault? A Chance for Change Book 5: Florida Council on Compulsive Gambling

55 Important Questions (cont.) Outstanding Debt Mortgages, 1 st, 2 nd, 3 rd Life Insurance Credit Card Debt Utilities Car Payments Child Support Business Loan

56 Important Questions (cont.) Outstanding Debt Friends & Family Bookies Check Advance Gambling Establishments Collection Agencies Courts, Fines, Restitution

57 Internet Gambling, Credit Reports Is there a computer in the house that’s hooked up to the Internet? Web browsers, the software that allows the user to navigate the Web, contain a record of what Web sites were recently visited. A check of Web browsers might reveal on-line gambling. Credit reports can be obtained from one of three credit bureaus: Equifax (800) Experian (888) Trans Union (800) https://www.annualcreditreport.com /cra/index.jsp

58 How to reduce credit card offers Call and ask for your name to be removed from the mailing list.

59 Possible Immediate Financial Actions Working With the Loved One 1.Provide an overview of the strategies problem gamblers might take. 2.Explain the possible financial consequences of continuing to gamble. 3.Ask the gambler to list his/her creditors and how much they are owed. 4.Have the non-gambler hide, cut up or cancel credit cards. 5.Have the non-gambler change the personal identification numbers. 6.Store valuables in a safe-deposit box. 7.Recommend that someone other than the gambler take over paying household bills. Personal Financial Strategies for Loved ones: SAMHSA's National Clearinghouse for ALCOHOL and DRUG INFORMATION P.O. Box Pueblo, CO (800)

60 How to Work Financially with the Problem Gambler At a minimum, there are financial issues you should be familiar with in order to help the gambler recover. These actions include: Identifying income and assets the gambler can use to feed his/her habit Establishing a spending plan Shifting control of the finances to the non-gambler Setting up a repayment plan for gambling and non-gambling debts Avoiding bankruptcy Deciding whether to have an investment program

61 Possible Immediate Financial Actions The loved ones may have been “bailing out” the gambler on occasion by loaning him/her money to satisfy gambling debts. Refusing bailouts not only slows or stops the financial bleeding, but may force the problem gambler to finally confront his/her addiction.

62 The Gambler’s Stash A “stash” is any source for cash that the problem gambler does not disclose to a spouse, partner, treatment professional, financial advisor, or others attempting to help the gambler’s recovery. It might be cash stuffed in an unknown safe deposit box, an unreported credit card, pawned jewelry, unreported pay from work, a secret bank account, or individuals such as a loan shark. Income from a business the gambler owns, especially a business that deals a lot in cash can be easy to hide.

63 The Gambler’s Stash To uncover these stashes, begin by asking the problem gambler to tell you about them. Be firm and blunt. “Jog” the gambler’s memory by suggesting places he/she may have hidden money—just in case the gambler “can’t remember.” Emphasize that lack of cooperation and honesty will only make the financial and psychological recovery efforts more difficult. A loved one familiar with the gambler’s finances also may be able to help the gambler remember.

64 Pay Your Monthly Bills Simply The Envelope Method Manage your monthly payments with a simple system that keeps everything you need in one place. After you establish the system, you will find that paying your bills becomes more streamlined and less of a struggle. Bill-Paying Kit (to keep everything you need in one place) ► Some large manila envelopes labeled: ■ “Bills to be paid by the 10th” ■ “Bills to be paid by the 25th” ■ “Charge card receipts” ■ “Paid” – you’ll need a new “Paid” envelope for each month (or quarter). ► Stamps ► Blank envelopes and return address labels ► Small calculator, pens, pencils, markers ► Zip-Loc bag for keeping smaller items together ► Basket, bag or folder that is large enough to hold all the items in your Kit

65 Pay Your Monthly Bills Simply The Envelope Method Bill-Paying System On your calendar, write yourself reminders on the 10th and the 25th of each month: “Pay Bills”. When you receive a bill or statement, open the envelope on the same day it arrives. Keep only the bill and the return envelope. Toss any offers, notices or other loose papers. Put the bill into the manila envelope labeled “Bills to be paid by the 10th” or “Bills to be paid by the 25th”. On the 10th of the month and the 25th of the month, take out your Bill- Paying Kit. 1. Before you write this month’s check, look at the balance on the current bill or statement to verify that last month’s payment was credited to your account. 2. Write the check, and write your account number on the face of the check to ensure that your payment will be properly credited.

66 Pay Your Monthly Bills Simply The Envelope Method 3. Enter the check number and the payment amount into your check register. 4. Write the payment amount, the check number and the date on the face of the bill or statement. Put the bill or statement into the “Paid” envelope for this month (or quarter). 5. Put a stamp on the return envelope. Put the check and the return statement inside, making sure that the address shows in the envelope window. 6. Put stamped envelopes in your coat pocket or on top of your briefcase or purse for mailing. If you like technology – and if you are comfortable with technology – you may want to investigate electronic bill paying. Automatic deductions and/or Internet bill-paying can simplify financial paperwork. Of course, electronic bill-paying is not a good idea if your bank accounts are not stable, i.e., if you frequently have over-drafts. Source: ADD Friendly Ways to Organize Your Life, Judith Kolberg & Kathleen Nadeau; adapted by Brian H. Farr, MA, 2005

67 Tips On Cutting Expenses Sticking to a shopping list Shopping for bargains and sales Comparing prices Using coupons Eating out less often

68 Additional Budgeting Tips Recommend breaking larger periodic bills (i.e. auto insurance) into smaller monthly bills Have a non-gambling significant other put that amount each month into savings account or cash in envelope If an envelope is used, it should be hidden from the gambler Advise gambler to use small notebook for tracking miscellaneous cash expenses (coffee, movie, etc.). Incorporate into spending plan Have gambler mark on calendar when bills are due. Bills paid on time improve individual’s credit rating and eliminate the expense of late payment charges

69 Limiting Gambler’s Access To Money Have a spouse, partner, parents, a trusted friend or relative, or a third party serve as a “roadblock” to the gambler’s money Can be as simple as putting the problem gambler on an allowance or as extensive as transferring legal control of all assets into the sole name of the trusted individual Before taking drastic financial steps, encourage the family to seek professional financial, tax, and/or legal advise

70 Establish Controls For Paying Household Bills Non-gambler assume management of daily household finances (includes payment of all bills). Gambler may assist, but only under supervision Pay as many bills possible automatically through bank or credit union Paychecks, social security, pension payments, etc. should be automatically deposited whenever possible For checks that cannot be deposited automatically, the gambler should be encouraged to hand over the checks to a non-gambler to deposit into the appropriate accounts

71 Retirement Accounts Gambler who raids retirement accounts for gambling funds subjects those withdrawals to income and penalty taxes The money taken out can no longer grow tax deferred Gambler may have to face the possibility that he/she can never afford to retire

72 Mortgage Refinancing Or Home Equity Loans If gambler fails to repay the loan, he/she could lose the family’s home One way to reduce the risk is for the gambler to transfer ownership of the home so he/she doesn’t have access to loan monies

73 Gambling Winnings Any gambling winnings won while gambling in treatment should not go toward paying bills Money should be put in childrens’ trust or Money should be donated to charity NO WINNINGS SHOULD CONTRIBUTE TO ALLIEVIATING GAMBLING PROBLEM

74 Repaying Gambling Debts Debts may be a major cause of friction and worry in household Relieving the debt burden can reduce the problem gambler’s anxiety and guilt, and help in recovery Debt repayment must be done in a way that is different from how a non- gambling household would normally reduce debt

75 Establish A Debt Repayment Plan Avoid quick repayment of debts, especially gambling debts. Although this means higher total interest payments, it reminds the gambler of the nightmare that his/her addiction has created Avoid loan consolidations or refinancing a home. This may embolden the gambler to return to betting and pile new debt on old Some debts may require a higher priority than others. Some creditors may not accept reduced payments. Creditors with secured loans may threaten to repossess the property

76 Tax Issues Problem gamblers often owe back income taxes, resulting in additional penalties and interest charges Gamblers often underreport their income Although the gambler ideally should have stopped gambling at this point, taxes may be owed on previous winnings. Unless gambler has carefully documented losses, he/she won’t be able to write off losses against any wins Money pulled out of tax-deferred retirement accounts to pay gambling debts is subject to regular income taxes. Younger than 59 ½ years will probably have to pay 10% penalty “Gamblers often underreport their income. If the IRS catches them, it will assess back taxes, penalties, and interest.” tax questions

77 Declaring Bankruptcy Is A Last Resort Chapter 13 Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $360,475 and secured debts are less than $1,081, U.S.C. § 109(e). These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor. Id. An individual cannot file under chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.

78 Chapter 7 To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). Subject to the means test described above for individual debtors, relief is available under chapter 7 irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent. An individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court. One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.

79 Where to find forms est.aspxhttp://www.idph.state.ia.us/IGTP/Toolch est.aspx (request financial finance/general/2007/08/28/budgeting- 101.aspxhttp://www.fool.com/personal- finance/general/2007/08/28/budgeting- 101.aspx Motley Fool website

80 For more information contact: Jerry Bauerkemper NCCG Nebraskacouncil.com


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