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A Look at Personal Bankruptcy & What to Expect
One of the most difficult decisions that you can face is whether or not to file for bankruptcy. For individuals, there are basically two types of personal bankruptcy, which includes Chapter 7 and Chapter 13. Designed to give the filer a fresh start in life by wiping out certain debts, a Chapter 7 bankruptcy will rid the filer of credit card and other unsecured debt. A chapter 13 bankruptcy, on the other hand, is a court-approved payment plan in which the filer is required to repay a predetermined percentage of their debt. The determination of which chapter to file will be based on the filer’s disposable income, if any, after paying their necessary monthly bills. When many people file for bankruptcy, their first thoughts are of their assets and whether or not they may lose their home. In a Chapter 13 repayment plan, the majority of filers are allowed to keep their property in exchange for repaying a portion of their debts. A Chapter 7, however, is designed to be a liquidation process that often results in the sale of non-exempt property. Which property is non-exempt in a bankruptcy proceeding? Each state has it’s own laws pertaining to the amount of property that an individual or married couple can keep without having to worry about it being liquidated. The official bankruptcy process begins upon filing a petition with the local bankruptcy court. This can either be done individually, also known as pro se, or with the help of an attorney. For most, hiring an attorney is the best way to make sure that every form is completed accurately and in order to make sure their assets are protected as much as possible. Upon the filing of a bankruptcy petition, the court will assign a trustee to the case and will set a date for a Meeting of the Creditors. Although creditors of the filer are invited to attend, they are not required to do so. The filer, however, is required to attend and will be questioned by the trustee, under oath, while having the meeting recorded. This meeting is typically the only appearance required of the filer unless special circumstances are present. Following the Meeting of the Creditors, often referred to as the 341 meeting, the creditors will have 30 days to object to the filer’s property exemptions and another 30 days to object to the discharge if the filing is a Chapter 7 bankruptcy. In a Chapter 13 proceeding, creditors may object to the payment plan but the discharge will not be granted until the payment plan is complete. A Chapter 13 bankruptcy can last for up to 5 years before the payments are completed and a discharge is issued. Following the discharge, the bankruptcy case will be closed and the process will be complete. This article is to be used for informational purposes only. It should not be used as, in place of or in conjunction with professional legal advice regarding bankruptcy. Anyone who is considering filing a petition for either personal or business bankruptcy should consult a licensed attorney in their area for additional information and/or legal...
read more7 Indicators That You May Be Carrying Too Much Debt
Debt has practically become a national pastime. The United States and its citizens largely run on credit. While credit can be a great convenience, it can also create major financial challenges. Carrying too much debt creates a lot of additional costs and stress that are unnecessary. Anyone who’s had a sleepless night because of debt knows how much it can negatively influence your life. Most of us are used to having a significant amount of debt. But, how much is too much? Look for these signs that you’re carrying too much debt: You’re carrying a credit card balance. If you’re carrying a credit card balance each month, it’s critical to your financial health to pay this debt down. If you’re unable to pay it off, that’s a sign that you have too much debt. You have to use credit cards to pay for everyday items. Using a credit card to buy food or pay your utility bills is another sign your debt might be out of control. If you lack the money to pay your routine bills, it might be time to face your debt. You’re only making the minimum payments on your credit cards. The minimum payment amounts are designed to keep you paying for an eternity. The less you’re paying on the principal, the more you’ll be paying in the long run. If you’re unable to pay more each month, you’re on a slippery slope. You’re regularly making late payments. Many people think that credit card companies get most of their income from interest, but studies have shown that it’s actually the late fees that account for most of their income. Regardless of the type of bill, if your payments are regularly late, you’re paying a lot more than necessary. It’s also a strong sign that you’re carrying too much debt. You’re using payday loans. Payday loans can be thought of as credit cards for those that are either unable to get a credit card or that have hit their credit limits. Payday loans are perhaps the worst loan you can get. These loan companies get around state usury laws by charging outrageous fees. This is the only way they can legally make as much money as they do. You’re lying to others about your finances. It’s easy to argue that your finances are nobody else’s business. If you’re lying to family members about your spending habits and your financial well-being, there might be an issue. You don’t have any savings. One sign of financial health is the ability to save money regularly. If your monthly finances aren’t allowing for a regular contribution to your savings account, you’re probably playing with fire. Carrying too much debt is a common occurrence in the United States. Debt can be likened to climbing a mountain with a boulder on your back. If you’re displaying any of these signs of debt, it’s time to do something about it. The solution might be as simple as cutting back or as severe as filing for bankruptcy. Assess your debt and put a plan into place that will ease your financial burden. You’ll be glad you did....
read moreHow to Use Store Credit Cards
Many of us have and use store credit cards. We’re commonly enticed to complete store credit applications by promises of discounts and rebates. But are these store credit cards a smart decision? It isn’t easy to know. A little self-evaluation is likely to yield the best answer. Stores issue credit cards in hopes that you’ll shop in their stores more frequently. They’re also betting that you won’t pay your full balance each month. Companies that issue credit cards make a lot of money from interest payments and late fees. Be cautious and avoid falling into those common traps. Store credit cards can be useful, if they’re used correctly. The savings can be great, but the interest rates are high. The value of store credit cards is largely dependent on using them responsibly and intelligently. As with anything, there are advantages and disadvantages to using these cards: Credit. An additional line of credit can be useful. It’s another opportunity to build your credit history and boost your credit score. It’s important to use credit wisely. Another line of credit is also another opportunity to create additional debt and financial headaches. The greater your total credit limit, the greater the potential for financial disaster. Discounts. Holders of store credit cards frequently receive discount offers. It’s also common to receive coupons in the mail. The savings can accumulate over time and add up to a considerable amount. It’s important to take advantage of discounts and coupons offered through store credit cards rather than essentially giving them back by carrying a balance on your account. Rewards. Many store credit cards also have perks. These might be in the form of rewards points that can be redeemed in some fashion. Similar to traditional credit cards, free merchandise or gift cards are the norm. It’s also possible to receive other perks, like free gift wrapping. Interest charges. Of course, if you pay your balance in-full each month, the interest is irrelevant. Credit card companies know that most consumers will eventually carry a balance and return those discounts back in the form of interest payments. Store credit cards have some of the highest interest rates out there. Limited use. Using store credit cards is limiting because you can only use them in the store that issued the card. Store credit cards can potentially be a valuable financial tool because there are significant savings to be had. However, be responsible with these cards. Store cards typically have low credit limits and high interest rates. The limited acceptance can limit the overall utility. Consider how much money you’ll actually be saving over the course of a year. Additionally, judge your ability to pay your balance each month. The answer will tell you if a store card will enhance or challenge your financial situation. It’s these little decisions that can have a great impact on your financial well-being. A traditional credit card may be a better option. Even if you’re unable to receive the same discounts, you might be eligible for additional perks, such as airline miles or gift cards. More importantly, it’s possible for most consumers to find a credit card with a much lower interest rate and a higher credit limit. If you have weak credit, a store card can be easier to obtain than many traditional...
read moreWhy You Need a Living Will
You don’t need to be an economics major to figure out that if health care is going up 10% or more every year while income is only going up 2-3%, things are not looking too good. It is entirely possible for a person to work their entire life and retire with a nest egg of $500,000 or more only to have it wiped out by one major medical issue. This is especially the case when machines must be used to keep you alive due to a severe injury or illness. It is in tragic times like these that a living will can be the difference between saving or breaking a family—economically at least. A living will is a legal document granting another person the right to cease treatment in the event a person becomes unable to live, eat, and function without the aid of machines or medical care. A feeding tube may be removed, a ventilator turned off, or any other machine or device that is being used to keep a person alive may be discontinued or turned off if the executor of a living will determines so. Of course, there are certain conditions that must be met in order for the executor of a living will to be able to make the decision to cease treatment. Unfortunately, there are no uniform and concrete set of conditions to be met in a living will because they differ from state to state. In general, however, physicians must determine that a person is unlikely to improve and in a debilitative or painful state. Also, the person must not be able to care for themselves and thus require a machine or other medical device in order to remain alive. At that point, a person with a living will can have treatment terminated if the executor requests doctors to do so. Of course, there are instances when a living will is contested by other family members not named in the living will. In most cases, the courts have ruled in favor of the wishes made clear in the living will and rarely ordered the continuation of treatment. And honestly, that treatment is very expensive and run into the thousands of dollars—each and every day. No one wants to see the passing of a loved one but no one wants to see them suffer, either. If a person took the time to have a living will drafted and they found themselves in a situation covered by the document, then chances are they would want treatment stopped. While an unpleasant topic, the fact remains that medical situations arise where the person will not recover and is only being kept alive by machines. Prolonging life at that point only costs everyone more suffering, confusion, and money. A living will is the responsible alternative that takes a potentially painful decision out of other people’s hands and puts it squarely in yours—where it...
read moreHow to Prepare Your First Budget
No financial planner, no problem. The fight for financial freedom isn’t fair. No matter what kind of spin you try to put on it, the path to comfortable living seems either impossible or too long to attempt. Many people these days are spending copious amounts of money going to see professional financial planners for advice on how to get their money situation under control. But let’s be honest, while a financial planner can show you how to prioritize your spending and how to go about consolidating your debt, surely there must be a way to plan your finances that doesn’t cost you visits to a professional? This article has been written to open some people’s eyes to the fact that it is possible to properly plan your finances from the comfort of your own home. The main aim when planning your finances is to make everything as simple as possible. There is nothing worse than sinking so far into depression that you can’t see a way out. Whether you are in debt and looking to get out of it of if you are simply looking for a way to keep a little more spending money aside each month, the simpler you make your planning the better the result you will get. From the beginning, you need to be realistic. I’ll start with the example of a single income situation, firstly you need to calculate what your net pay is per month. If you’re self-employed or not on a regular pay, always calculate the worst-case-scenario, what is the lowest you might get paid. Then go through your monthly bills and write down the ones that are a fixed amount. Do the same for all other bills but use the worst-case-scenario again, what is your estimation of the most that those bills might be. Add everything up and subtract it from your net income total. Next onto the incidental expenses you might run into on a monthly basis. These might include fuel, car upkeep, public transport fares, food etc. make a list of all the little expenses you might need money for in a month. Even things that you’re not sure you might need to buy. Don’t add general spending money to the list, be specific. Always add more to the totals if you’re not sure as you can fine tune it later. Again, subtract your total from the money left over from your bills. Don’t worry if you’ve gone into the negative figures here, we can fix it. Once you’ve got your expenses total in front of you, obviously any money that is left over is your profit for the month. In the event that you have nothing left or have gone into the minus figures, the next step is to minimize your expenses. Pretty straight forward, huh? Any incidental expenses that you might not need, remove them. And any expenses you know you will have, like food and gas for example, really get down to the lowest spend on them. How much do you really need to spend on them? Your aim should be to save at least $50 per month after spending money. All that extra builds up and gives you a nice stash at the end of a few months! If you are in a multiple-income situation,...
read moreDevelop a Good Home Budget
This is probably the most requested topic that I receive, normally after someone gets a large unexpected expense, or they start thinking about retirement and realize that they have saved a woefully inadequate amount of money. I recommend using a monthly time-frame to look at your cash inflows and outflows, because most bills are monthly and four weeks is a short planning period that most people can manage. The first thing to do is determine your monthly after-tax income. Usually, this is the amount of money from your paycheck that gets deposited into your checking account. If your income is variable, then use an average of the last three months. (Any savings account interest income would be a bonus.) Next, list out your fixed monthly expenses, such as rent, mortgage, car payment, phone, electric bill, etc. All of these numbers can be changed in the long-term, but first you need to determine a baseline budget of where you are right now. Make sure you include all of your utilities; some are only paid quarterly or annually, like car insurance, the water bill, or an association fee. Take these expenses and calculate what they would be on a monthly basis. For example, if your water bill comes quarterly, divide it by 3. If you have semi-annual car insurance, then divide it by 6. So now you have your fixed monthly income and your fixed monthly expenses. Deduct one from the other, and you have the variable amount of money that you are free to spend any way you want for the remainder of the month. From this remaining amount of money, start listing out your main categories of variable spending: groceries, entertainment, medical expenses, clothing, dry cleaning, personal care (haircut, nails, etc.), and gifts. Take each of these variable expenses and put an amount next to them that you think represents your average monthly spending for that category. Make as many subcategories as you need to make an accurate estimate. The more precise it is for your spending habits, the more effective it will be for you. For example, food can be broken down by grocery store/fast food/dining out/work lunch/etc. Then go through the last few months of your checkbook and credit card statement looking for any spending that hasn’t been covered so far that you need to include for your situation. Now you should have a total number for your monthly income, total monthly fixed expenses, and total monthly variable expenses. The moment of truth is when you deduct the two expenses from your income to see if there is anything left over. Don’t panic if it is a negative number – it is far better to discover this out now, rather than building up credit card debt later. Most people comment somewhere along this process, “Oh, so that is where my money is going. I had no idea I spent so much on that!” Seeing all the numbers in black & white can help you prioritize (and negotiate with all the other spenders in the family). From this beginning budget, you can start to set monthly targets for spending categories, you can focus on reducing the largest expenses, and find areas where you should start doing some price-comparison shopping. And did I mention that saving a 5-15% of...
read moreDevelop a Family Budget in 7 Steps
How to Create a Family Budget For singles, creating a budget is relatively easy. They tend to have a good handle on how much money they have coming in, and when tracking expenses, they only have their own to think about. But creating a family budget is a whole new ball game. Most families have multiple sources of income. And when there are multiple spenders, that makes things much more confusing. This is one of the main reasons that families lack a formal budget. But having a budget and sticking to it can greatly improve a family’s financial outlook. Making a family budget may be tricky, but it can be done. Here’s how. 1. Take inventory of all income. If a certain source of income fluctuates from month to month, use the lowest amount or average it out. 2. Keep track of all expenses for a month or so. Keep all of your receipts, and ask all family members to turn theirs in to you each day. 3. Add up your monthly expenses. Be sure to include bills, debt payments, groceries, and everyday expenses such as lunch money and transportation costs. 4. Get the family together and discuss ways you can trim the budget. Getting input from other family members will help you determine which expenses are necessary and which ones could be cut down or eliminated. Maybe you or your spouse could start taking lunch to work instead of eating out, or maybe the kids can drop an extracurricular activity. 5. In addition to individual expenses, discuss how you can cut down on the electric bill, groceries and other necessary family expenses. Consider such things as carpooling or taking public transportation, buying more generic foods and adjusting the thermostat. 6. Estimate how much you can save on regular expenses, and cut the completely unnecessary items out of the budget. Then refigure it and see where you stand. 7. If you end up with a surplus, allocate a portion of it to savings. If you’re in the red, go back and rework the budget until you have more income than expenses. Being Realistic One reason that family budgets often fail is because they’re just not realistic. It’s great to cut down on expenses, but sometimes we tend to go too far. For example, cutting entertainment out of the budget completely might look good on paper, but we all need a little diversion every now and then. Instead of cutting such things out of the budget completely, consider finding ways to lower the cost. Going back to the entertainment example, maybe you’ve been going to dinner and a movie as a family twice a month. But eating in and renting a new release would be much cheaper, and you would still get to spend quality time together. Individual expenses can also be tricky. This can be resolved by allocating a certain amount for each family member to spend each week. If someone spends his entire amount before the week is up, reevaluate his expenses and adjust if necessary. Creating a family budget can help keep spending under control, leaving more money to pay down debts and save for future goals. But in order to succeed, close monitoring is essential. Your efforts will be rewarded, however, with less financial stress and...
read more10 Tips to Make Sure Your Financial Budget Will Succeed
10 Tips to Make Sure Your Financial Budget Will Succeed You’ve analyzed your past expenses, put them into spreadsheets, loaded Quicken with all of your data and come up with a budget. Now what? The tough part! You actually have to stick to your budget and put your plans into action. This is easier said than done. In many cases you will have forgotten about your budget and your financial goals 6 months or a year down the road. How do you keep this from happening to you? Here’s how. Make sure you follow some of these tips below so this doesn’t happen to you. 1. Create a budget with realistic targets – Let’s say one of your budget goals is to not eat out for lunch or dinner on a regular basis. If you are honest with yourself you may find this to be an unrealistic goal. Sometimes it’s a nice break to eat out and have a relaxing rewarding evening. In other words, don’t set the bar too high. Drastic and unrealistic goals are one of the surefire ways your budget will not succeed. 2. Budget for expenses that don’t occur on a routine basis – Make sure you give consideration to expenses that occur once a year, such as holiday presents, birthdays, vacations, weddings, car maintenance costs, etc. These expenses don’t occur every month and they will bust your budget plans wide open. Make a list of these events on a calendar and put a dollar figure to them. Place them in the month they are expected to occur so you can plan in advance how you will pay for them. The regular routine expenses are not the reason your budget will fail. It is these “gotchas” that will wreak havoc on your budget if you don’t plan for them. 3. Put your budget in writing – Take the time to write down your budget plans. Making a mental note of your budget goals is a recipe for failure. Don’t assume that your financial future will take care of itself by making a simple mental note to yourself. If you have your budget goals detailed in writing you can review and remind yourself weekly and monthly of your financial goals. 4. If you have a bad month or week, don’t give up! – Let’s say you have been reaching your budget goals for three months. In the fourth month, for whatever reason, you didn’t reach your budget goals. Maybe you even stopped trying to stick to your budget! If this happens, don’t just throw your hands up in the air and admit to failure. Everyone falls off the wagon sometimes. Your budget is a journey. There will be bumps in the road, so the key is to realize that everyone makes mistakes. This relates to a story I like about a great old time golfer named Walter Hagen. Before each round of golf, he told himself that he would have 4 or 5 bad shots. During the golf round, if he hit his ball into a bunker, he would tell himself, “There is one of my bad shots that I was expecting”, hit the ball out of the bunker and move on. It didn’t phase him one bit because he had knew there would be some...
read more3 Tips to Stick to Your Budget
So you’ve made your budget and it looks good on paper. Great! Now it is time to implement it. But are you ready to follow the budget you’ve developed? Here are some helpful tips to keep you on track with your budget. 1. Determine why you made a budget. There is a reason you have put time into developing your budget, now you need to put into writing what your goals are. Do you want to be debt free, live on one income, or save for retirement? Make this into your personal or family financial mission statement. Write it down or type it up nicely and then have it laminated and display it in a prominent place where you can see it often. Many times we just need a reminder to ourselves for why we are doing a particular thing, and that can be just enough incentive when things get tough. 2. Set small range goals so you can see progress. It can be very difficult to keep up the discipline necessary to stay on budget if you can’t see any measurable progress. Develop some short term goals that you can celebrate meeting. If your goal has been to reduce your grocery spending by $100 per month, then your weekly goal would be to cut grocery costs by $25. Likewise, if your goal is to pay off debt, make a chart to show how much you’ve paid off. Reward charts just aren’t for children! Use a type of chart where you can color in a bar to show your progress, and then color it in every time you make a payment so you can see the progress you are making. Put it up on your refrigerator or bathroom mirror as a reminder that your hard work is paying off! 3. Identify your weak spots and develop a plan to battle them. In sticking to your budget, you need a clear idea of where you may be tempted to break the budget. If you are prone to impulse spending, then you must remove that temptation from yourself. If you go window shopping, leave your credit cards and check book at home! Especially in the early days of sticking to your budget, it is important to re-train yourself to curb spending. Making a budget is really the easy part in financial management. It is sticking to the budget and making your spending match your plan that is the difficult process. By disciplining yourself and retraining your spending habits, you can achieve your budget...
read moreGet Richer by Changing Your Thinking
Get Richer by Changing Your Thinking Imagine two situations; 1) finding $1000, that is yours to keep with no strings attached and 2) earning $1000 through hard-work. I’m curious – is there any difference between the value of them? Do you consider one to be worth more than the other? Is there any difference in how you would spend them? Are they different to you in some way? You can do exactly the same thing with them. I wonder if you really would. Well if you do attach a different value to them you could be missing out; read on to learn how to get more for free! My point in all this questioning is that if we only value the ‘things’ that we have to work hard for there is a danger that the ‘things’ that we can have with ease just pass us by – they are unvalued and do not grab our attention. These ‘things’ are not just money of course but skills, knowledge, relationships to name a few; they are all valuable assets. The secret of success is to consider this all in two parts: 1) the value of it – that is how well it meets your needs, not just monetary value. This applies whether it was easy to come by or not. 2) the recognition of the achievement in attaining it. Some things can be harder to acquire than others and we should reward ourselves through recognition when we acquire such things. You see, it is worth the same whether you had to acquire new skills or resources to get it or rely on the existing (carefully honed) ones that you take for granted. How about if, from now on, you recognize what you have for what it is worth and separately for what it took to achieve it. Seeing it as two parts will open your awareness to the things that you can have that are already available to you without effort. When you see yourself making these changes and getting different results be sure to thank yourself. Your mind wants to please you and likes gratitude. In return it will do it all the more for you. Enjoy saving money and living...
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