Bankruptcy is not a process anyone wants to resort to. It can be seen as a way to get out from under a mountain of debt, but it also becomes a part of your credit report history. Put this option on the back burner and instead consider some options to avoid bankruptcy in the first place.
Create a budget. A budget is a tedious job, but it can save a lot of headache over debt later. Make a list of all the bills that are owed each month. Leave out incidentals like entertainment, eating out, and credit card payments. Subtract this amount from the monthly income. What is left is what will be used to pay credit card bills, put away in savings, and spend for leisure time activities.
Keep track of your bills for three or four months. This will give you an average amount for the bills that you can plug into your budget. If you can enroll in equal payment plans for utility bills, the payments will be the same every month. Creating a budget will help avoid debt, due to your discipline in following the guidelines that you have set. You can still enjoy a night out now and then as a reward for saving money.
Avoid using credit cards more than necessary. Credit cards carry high interest rates. We’ve all seen the commercials where things run smoother in the store when everyone pays with plastic. That may be, but using that plastic too much can leave you with a debt worthy of bankruptcy. Keep one credit card and get rid of the rest. Companies extend you credit with the hopes that you get overextended and then they can charge higher interest rates and all sorts of fees. Save yourself the headache and avoid using them.
When you get behind on a payment, call the credit card company. Everyone hits a road bump. A layoff or an illness can send things spiraling out of control with your finances. Let credit card companies know that you are in a bind at the moment. They may suggest ways to lower the payments or suspend them for a month or two until you are in better financial shape.
It takes several missed payments before a creditor reports the delinquent account to an outside agency. Instead of waiting for the hammer to fall, take the initiative to solve the problem before it gets worse. The company may suspend late fees and other charges when they become aware of your situation.
Go for debt consolidation advice. You hear a lot about debt consolidation. Agencies want your business. Check them out. These credit counselors are certified professionals that know the debt game and the creditors. For a small fee, they can negotiate with your creditors to find solutions to the financial problem. If you are considering bankruptcy, debt consolidation may work as an alternative.
Liquidate assets. You may have two cars, but can you make due with one for now? Selling property can free up the cash you need to pay off major debts. With a smaller debt, you may be able to talk to creditors and make payment arrangements. Move into a smaller house if the kids have moved out. Anything is a better alternative than bankruptcy.
Bankruptcy is not a process that people look forward to. Bankruptcy ruins your credit and may not entirely get you out from under. Learn to avoid this unfortunate choice before it’s too late.
Teaching Teens about Taxes
Teens are literal people. When you offer them a job for a certain amount of money, this is what they expect to receive. In the world of work, this is not the case. Teaching your teen about taxes can make the transition less of a shock.
Income taxes are collected from everyone no matter how much money they earn. The government creates revenue for itself through our tax dollars. They can fund the military in wartime and provide social programs to benefit its citizens.
For your teen, the hourly wage gives them an idea of what they will earn for the hours worked during a pay period. This number is not the amount that they will receive on pay day, however. Prepare your child by telling them how the income tax system works.
When they gain employment, their employer will give them a tax form to fill out. They probably won’t understand it, so parents need to help them fill it out and explain what it means. The state and federal government determines how much money to take through taxes from the information recorded on the form.
For teens with a job, the earning potential is not enough to file a tax form on April 15th of the following year. There is an amount that, if a person’s earnings fall below it, they are not subject to income tax filing. Your teen will almost surely fall in that exempted category.
Show your teen how to get the most money that they can on their check. Even teens are allowed to claim deductions. They can claim one deduction even if they are included on their parents’ tax return. That deduction will net them more money in their pocket. Since they won’t make enough to file, this is a wise decision for them to make.
Teens also need to understand that when their earnings increase after high school or college, the tax laws change for them. More earnings mean that they will file a tax return and pay more taxes. But, for now, they have an advantage and should take full benefit of it.
Babysitting and other self-employment is subject to taxes if they make over a certain amount of money. Selling items on eBay could push your teen over the allowable limit for non-filers. In that case, discuss the forms needed to be filled out at tax time. Encourage your teen to save their money wisely in case the IRS deems that they owe tax money. Check with the IRS website to find out what the income limit is for the current filing year.
Taxes can be a shock for teens when they open their first check. Discussing the matter with them when they take on their first neighborhood job will prepare them for the eventuality. Foster the idea of good record keeping so it is easy to find out if they need to file or not at the end of the year.
Income taxes are collected from everyone no matter how much money they earn. The government creates revenue for itself through our tax dollars. They can fund the military in wartime and provide social programs to benefit its citizens.
For your teen, the hourly wage gives them an idea of what they will earn for the hours worked during a pay period. This number is not the amount that they will receive on pay day, however. Prepare your child by telling them how the income tax system works.
When they gain employment, their employer will give them a tax form to fill out. They probably won’t understand it, so parents need to help them fill it out and explain what it means. The state and federal government determines how much money to take through taxes from the information recorded on the form.
For teens with a job, the earning potential is not enough to file a tax form on April 15th of the following year. There is an amount that, if a person’s earnings fall below it, they are not subject to income tax filing. Your teen will almost surely fall in that exempted category.
Show your teen how to get the most money that they can on their check. Even teens are allowed to claim deductions. They can claim one deduction even if they are included on their parents’ tax return. That deduction will net them more money in their pocket. Since they won’t make enough to file, this is a wise decision for them to make.
Teens also need to understand that when their earnings increase after high school or college, the tax laws change for them. More earnings mean that they will file a tax return and pay more taxes. But, for now, they have an advantage and should take full benefit of it.
Babysitting and other self-employment is subject to taxes if they make over a certain amount of money. Selling items on eBay could push your teen over the allowable limit for non-filers. In that case, discuss the forms needed to be filled out at tax time. Encourage your teen to save their money wisely in case the IRS deems that they owe tax money. Check with the IRS website to find out what the income limit is for the current filing year.
Taxes can be a shock for teens when they open their first check. Discussing the matter with them when they take on their first neighborhood job will prepare them for the eventuality. Foster the idea of good record keeping so it is easy to find out if they need to file or not at the end of the year.
Teaching Kids Money Responsibility
It’s never too early to learn about money. Money makes the world go around. We need money to live our lives in today’s society. Kids who learn about money matters at an early age develop a healthy respect for handling it. Here are some usuful tips on how to teach kids money responsibility:
Parents are the first teachers for their kids. Don’t wait until the unit about money comes up in the third grade math class. Teaching the importance of money starts at home between parent and child.
Money doesn’t buy happiness, but it does keep one from starving. Mom and Dad have jobs that pay for the house, the food, the utilities, and everything a family needs. Kids need to know that their parents are not like money trees that you can shake until enough green falls down for a new bike or a new doll. There is only money to spend as long as the parents go to work and earn it.
Kids can start with their birthday and holiday money. Instead of spending it right away, show them how to save the money until there is more to add to it. Once they have saved enough, they can buy something that they want instead of settling for buying something with the little money they have received at that moment.
It is not enough to know that money exists. Kids must be able to handle it responsibly. Create a family budget and let the kids participate in the process. They will see how their parents divide their money between the bills and leisure activities.
Ask each child what they want to do for a special event each month. Setting up a fund for this purpose ensures that there will be money available to finance your ventures. Kids learn that instant gratification is not the only way to be happy. Using money the right way becomes a reward for discipline.
Not teaching kids about money can lead to a disaster. Without proper advice, they could turn to friends who may not be money savvy at all. Acquiring money without a plan for how to keep it results in a lot of money slipping through the cracks.
Kids that can’t manage their own money will expect Mom and Dad to do it for them. Whenever they get in a financial bind, they will call their parents to bail them out. Parents don’t want kids to suffer through unpleasant situations, but kids won’t learn important life lessons when not held accountable for their actions. Teaching this once the bad habits have been formed will be harder than you think.
Responsible money management doesn’t happen as an adult. It begins in childhood with that first birthday five dollar bill. Don’t wait; talk to them now about money. It matters.
Parents are the first teachers for their kids. Don’t wait until the unit about money comes up in the third grade math class. Teaching the importance of money starts at home between parent and child.
Money doesn’t buy happiness, but it does keep one from starving. Mom and Dad have jobs that pay for the house, the food, the utilities, and everything a family needs. Kids need to know that their parents are not like money trees that you can shake until enough green falls down for a new bike or a new doll. There is only money to spend as long as the parents go to work and earn it.
Kids can start with their birthday and holiday money. Instead of spending it right away, show them how to save the money until there is more to add to it. Once they have saved enough, they can buy something that they want instead of settling for buying something with the little money they have received at that moment.
It is not enough to know that money exists. Kids must be able to handle it responsibly. Create a family budget and let the kids participate in the process. They will see how their parents divide their money between the bills and leisure activities.
Ask each child what they want to do for a special event each month. Setting up a fund for this purpose ensures that there will be money available to finance your ventures. Kids learn that instant gratification is not the only way to be happy. Using money the right way becomes a reward for discipline.
Not teaching kids about money can lead to a disaster. Without proper advice, they could turn to friends who may not be money savvy at all. Acquiring money without a plan for how to keep it results in a lot of money slipping through the cracks.
Kids that can’t manage their own money will expect Mom and Dad to do it for them. Whenever they get in a financial bind, they will call their parents to bail them out. Parents don’t want kids to suffer through unpleasant situations, but kids won’t learn important life lessons when not held accountable for their actions. Teaching this once the bad habits have been formed will be harder than you think.
Responsible money management doesn’t happen as an adult. It begins in childhood with that first birthday five dollar bill. Don’t wait; talk to them now about money. It matters.
Teach Kids to be Thrifty Spenders
Have you ever heard that it is easier to teach things to kids than adults? It’s true. This goes for money, too. If you want your kids to save more than they spend, start at an early age. Here are some tips:
Play money games with your kids. Monopoly was a popular game when I was a kid and kids still like it today. Choosing to buy or sell properties and negotiating fees with other players is good practice for dealing with real money. Just because you have the money to develop your properties doesn’t mean that you have the money for upkeep. Players have to make decisions based on present and future earnings.
It’s easy to forget about money matters when the parents are footing the bill for everything. A five dollar magazine didn’t seem so expensive then. But when they have to pay for it themselves, more thought goes into the process. They’ll think about whether they really need that magazine or not.
Don’t let your kids get hooked on name brand clothing at an early age. It’s okay to have a few name brand items, but they are not the only clothes that will fit their bodies. Take them shopping when you go to Wal-Mart, Target, or a consignment shop. As they choose what to wear, advise them to peruse all of the racks to compare all the prices instead of picking the most expensive clothing.
Take your kids to the grocery store with you. Let them help you make out the grocery list and clip the coupons. As you bargain shop, tell the kids what you are doing. You don’t have to go into great detail; just give them an overview of the process.
Practice what you preach. Resist the temptation to impulse shop when you have extra money. This can set a bad example for the kids, not to mention that it could derail your budget. Save for the things you want and don’t let your emotional state control the purse strings.
Purchase a coin bank. Some kids think that the best money is the kind that folds, but the kind that jingles will spend just as easily. Empty your purse and pockets of their spare coins and collect them in a jar or piggy bank. It may be a good idea to give each child a piggy bank to collect their loose change. Even let them choose their own bank.
You’ll be surprised how quickly the coins will collect. I find coins on the floor and in the couch cushions all the time. Every three months or so, take a trip to the coin machine in the grocery store and find out how much you have saved. The kids can put a portion of their money away for savings and keep the rest to use as they wish.
Learning how to use money is a trial and error kind of process. The money that you give to your kids or that they earn is their money. As a parent, you can advise them how to act, but they must deal with the good choices and the consequences of poor ones. Lessons learned will speak more than scolding.
Play money games with your kids. Monopoly was a popular game when I was a kid and kids still like it today. Choosing to buy or sell properties and negotiating fees with other players is good practice for dealing with real money. Just because you have the money to develop your properties doesn’t mean that you have the money for upkeep. Players have to make decisions based on present and future earnings.
It’s easy to forget about money matters when the parents are footing the bill for everything. A five dollar magazine didn’t seem so expensive then. But when they have to pay for it themselves, more thought goes into the process. They’ll think about whether they really need that magazine or not.
Don’t let your kids get hooked on name brand clothing at an early age. It’s okay to have a few name brand items, but they are not the only clothes that will fit their bodies. Take them shopping when you go to Wal-Mart, Target, or a consignment shop. As they choose what to wear, advise them to peruse all of the racks to compare all the prices instead of picking the most expensive clothing.
Take your kids to the grocery store with you. Let them help you make out the grocery list and clip the coupons. As you bargain shop, tell the kids what you are doing. You don’t have to go into great detail; just give them an overview of the process.
Practice what you preach. Resist the temptation to impulse shop when you have extra money. This can set a bad example for the kids, not to mention that it could derail your budget. Save for the things you want and don’t let your emotional state control the purse strings.
Purchase a coin bank. Some kids think that the best money is the kind that folds, but the kind that jingles will spend just as easily. Empty your purse and pockets of their spare coins and collect them in a jar or piggy bank. It may be a good idea to give each child a piggy bank to collect their loose change. Even let them choose their own bank.
You’ll be surprised how quickly the coins will collect. I find coins on the floor and in the couch cushions all the time. Every three months or so, take a trip to the coin machine in the grocery store and find out how much you have saved. The kids can put a portion of their money away for savings and keep the rest to use as they wish.
Learning how to use money is a trial and error kind of process. The money that you give to your kids or that they earn is their money. As a parent, you can advise them how to act, but they must deal with the good choices and the consequences of poor ones. Lessons learned will speak more than scolding.
Once You Have a Plan to Relieve Debt, Stick to It
You've recognized that you have a debt problem, and you've come up with a plan to get rid of it. You've made a budget, you've cut back where you can, and you've allocated funds to put toward each of your bills each month. You've come a long way, but the most important thing is to stick to it for the long haul.
Sticking with a debt relief plan is the hardest thing for many people to do. Part of the problem is that many debtors just aren't good at managing their finances, and that is part of the reason they got in too much debt in the first place. Others had their debt under control until they lost a source of income, and they have trouble adjusting.
There are things we can do to help us stick to our debt relief plans. Here are some ideas:
* Eliminate the source of temptation. If you have trouble saying no to purchases when you have a credit card in your pocket, put all of the plastic away in a safe place. If just knowing where the credit cards are tempts you to use them, have your spouse or someone else you trust hide them.
* Write down all of your expenses. Many planners have budget pages you can use for this, but a notebook will work just fine as well. Writing down the exact amounts that we spend and what they were spent on holds us accountable, making us less likely to slip up.
* Close accounts when they are paid off. An account with a zero balance can be too much temptation for some people to withstand. If you think it will be too much for you, simply close the account and be done with it. Keeping only the account with the lowest interest or most favorable terms will allow you to obtain credit easily enough if you need it after you're all caught up.
* Shred credit card and loan offers as soon as you get them in the mail. When you're already in too much debt, the worst thing to do is to acquire the means to take on more.
* Don't beat yourself up if you slip up. Just pick up where you left off and keep paying down that debt. Too often, debtors make mistakes and decide that it's just too hard to pay their debts off, so they go back to their old habits. But one mistake is not the end of the world, and if you keep trying you will eventually eliminate your debt.
Coming up with an effective plan to pay off your debt is quite an accomplishment. Sticking with it can be difficult, but it is imperative if you want to get rid of your debt. By getting rid of temptation and holding ourselves accountable for our spending, we can greatly increase our chances of success.
Sticking with a debt relief plan is the hardest thing for many people to do. Part of the problem is that many debtors just aren't good at managing their finances, and that is part of the reason they got in too much debt in the first place. Others had their debt under control until they lost a source of income, and they have trouble adjusting.
There are things we can do to help us stick to our debt relief plans. Here are some ideas:
* Eliminate the source of temptation. If you have trouble saying no to purchases when you have a credit card in your pocket, put all of the plastic away in a safe place. If just knowing where the credit cards are tempts you to use them, have your spouse or someone else you trust hide them.
* Write down all of your expenses. Many planners have budget pages you can use for this, but a notebook will work just fine as well. Writing down the exact amounts that we spend and what they were spent on holds us accountable, making us less likely to slip up.
* Close accounts when they are paid off. An account with a zero balance can be too much temptation for some people to withstand. If you think it will be too much for you, simply close the account and be done with it. Keeping only the account with the lowest interest or most favorable terms will allow you to obtain credit easily enough if you need it after you're all caught up.
* Shred credit card and loan offers as soon as you get them in the mail. When you're already in too much debt, the worst thing to do is to acquire the means to take on more.
* Don't beat yourself up if you slip up. Just pick up where you left off and keep paying down that debt. Too often, debtors make mistakes and decide that it's just too hard to pay their debts off, so they go back to their old habits. But one mistake is not the end of the world, and if you keep trying you will eventually eliminate your debt.
Coming up with an effective plan to pay off your debt is quite an accomplishment. Sticking with it can be difficult, but it is imperative if you want to get rid of your debt. By getting rid of temptation and holding ourselves accountable for our spending, we can greatly increase our chances of success.
Should I Give an Allowance?
The first money a child makes is not from a job but from an allowance. The idea of an allowance is an old one, but some parents question if it is the right thing to do. Should you give your child an allowance?
An allowance used to be fifty cents a week. That was a long time ago. Now, an allowance can be as much as five or ten dollars a week. It seems like a small amount, but if you have more than one or two kids, it can add up rather quickly.
An allowance is not the same as money earned for chores performed. An allowance represents a way to teach kids about handling money. In my family, we used to get three dollars each week for allowance. On the weekends, we would ride our bikes to the store and stock up on goodies before heading to a nearby park. We learned early on that if we put our money together, we could buy more snacks than we could separately.
Allowance is based on parental income and the age of the child. If you are struggling to make ends meet, the allowance may have to wait, or it can be small until you can afford for it to be more. When a child asks why they are getting the money, say that it is because they have the privilege of being your son or daughter.
The child receiving the allowance should be able to understand the concept of money. Waiting until the child learns about money in school is an option. The allowance can be a demonstration of the principles that they are being taught in school.
Giving an allowance is an ease into the idea of money and its uses. The child may not want to buy anything at that point, but you can explain the importance of saving a portion of the allowance and keeping the rest available for their needs. If you just bought Jane a new doll and she wants another one, discuss the price and how much money she will need to save to buy her own.
With a goal to work towards, children look forward to receiving their allowance each week and watching the money pile begin to grow. Once they reach the amount they need, it is up to them whether to purchase the doll or keep the money. You have just shown the benefits of delayed gratification.
An allowance is helpful for kids to develop a healthy attitude about money. They didn’t earn the money, but that doesn’t mean that they should squander it either. When they start doing odd jobs around the house for more money, they will already know how to save what they earn.
There is nothing wrong with giving a child an allowance each week or each month. The money is theirs, but it is the parents’ job to help them handle it with care. They will make mistakes, but there is time to correct these before they become responsible for themselves.
An allowance used to be fifty cents a week. That was a long time ago. Now, an allowance can be as much as five or ten dollars a week. It seems like a small amount, but if you have more than one or two kids, it can add up rather quickly.
An allowance is not the same as money earned for chores performed. An allowance represents a way to teach kids about handling money. In my family, we used to get three dollars each week for allowance. On the weekends, we would ride our bikes to the store and stock up on goodies before heading to a nearby park. We learned early on that if we put our money together, we could buy more snacks than we could separately.
Allowance is based on parental income and the age of the child. If you are struggling to make ends meet, the allowance may have to wait, or it can be small until you can afford for it to be more. When a child asks why they are getting the money, say that it is because they have the privilege of being your son or daughter.
The child receiving the allowance should be able to understand the concept of money. Waiting until the child learns about money in school is an option. The allowance can be a demonstration of the principles that they are being taught in school.
Giving an allowance is an ease into the idea of money and its uses. The child may not want to buy anything at that point, but you can explain the importance of saving a portion of the allowance and keeping the rest available for their needs. If you just bought Jane a new doll and she wants another one, discuss the price and how much money she will need to save to buy her own.
With a goal to work towards, children look forward to receiving their allowance each week and watching the money pile begin to grow. Once they reach the amount they need, it is up to them whether to purchase the doll or keep the money. You have just shown the benefits of delayed gratification.
An allowance is helpful for kids to develop a healthy attitude about money. They didn’t earn the money, but that doesn’t mean that they should squander it either. When they start doing odd jobs around the house for more money, they will already know how to save what they earn.
There is nothing wrong with giving a child an allowance each week or each month. The money is theirs, but it is the parents’ job to help them handle it with care. They will make mistakes, but there is time to correct these before they become responsible for themselves.
Seven Ways Teenagers Make Money
Child labor laws regulate what jobs teens can hold and at what age. Teens that are too young to get a job are between a rock and a hard place when they need more money than their weekly allowance offers. Here are seven ways that teenagers can make some extra green, whether they are just under working age or right in the middle of it.
1. Babysitting. This is the basic teenage job. Once they are old enough and can demonstrate responsibility for their younger siblings, let your teen try their skills on other kids. Neighborhood families are always looking for babysitters. If they are not comfortable with babies, start the babysitting service at age two and up.
2. Mow the lawn. Most people would rather help a child that wants to work than pay a lawn care service. Invest in a good lawnmower and get going. The business will be busy in the spring and summer months. Keeping a date planner with appointment times and dates avoids booking more work than they can handle. Lawn mowing is hard work, but rewarding work.
3. Help the elderly. Older neighbors may have a difficult time getting around. Starting an elder care service could be what the neighborhood needs. If you teen is old enough to drive alone, their services can include chauffeuring seniors to appointments, doing the grocery shopping, tidying up, and yard work. Create a flyer and decide on fees. Parents can help in that area. The amount charged should be commensurate with the time commitment involved in each task.
4. Walk those dogs! I’ve seen people come home from work to take care of a new puppy. They need set schedules to train them to go to the bathroom and play time to exercise those limbs. A pet service could be the thing your teen needs to make some money. This service can be just pet walking or it can include a certain amount of grooming. If they have their own pet, they will have learned how to care for them and that expertise can be valuable.
5. Apply for work at a department store. See if they like retail work. They can apply for a summer job or seasonal work at the mall. One advantage is a discount on clothing and other merchandise in the store.
6. Clean out the garage. If your garage looks like mine, that is a job and a half. Enlist the organizational skills of your teenager to set the garage to rights. The fee can be negotiated ahead of time depending on what actually needs to be done.
7. Start a business on the Internet. Kids are usually savvier than parents when it comes to navigating the Internet. EBay offers a forum for selling goods and services. A teen with a talent can make cash here. Does your teen want to write? Use that reporter’s instinct to create articles for sites like Associated Content and get paid for them.
Teenagers today have more options than ever before of making extra money. Explore these seven ways as a start. Your teen may already have an idea in mind.
1. Babysitting. This is the basic teenage job. Once they are old enough and can demonstrate responsibility for their younger siblings, let your teen try their skills on other kids. Neighborhood families are always looking for babysitters. If they are not comfortable with babies, start the babysitting service at age two and up.
2. Mow the lawn. Most people would rather help a child that wants to work than pay a lawn care service. Invest in a good lawnmower and get going. The business will be busy in the spring and summer months. Keeping a date planner with appointment times and dates avoids booking more work than they can handle. Lawn mowing is hard work, but rewarding work.
3. Help the elderly. Older neighbors may have a difficult time getting around. Starting an elder care service could be what the neighborhood needs. If you teen is old enough to drive alone, their services can include chauffeuring seniors to appointments, doing the grocery shopping, tidying up, and yard work. Create a flyer and decide on fees. Parents can help in that area. The amount charged should be commensurate with the time commitment involved in each task.
4. Walk those dogs! I’ve seen people come home from work to take care of a new puppy. They need set schedules to train them to go to the bathroom and play time to exercise those limbs. A pet service could be the thing your teen needs to make some money. This service can be just pet walking or it can include a certain amount of grooming. If they have their own pet, they will have learned how to care for them and that expertise can be valuable.
5. Apply for work at a department store. See if they like retail work. They can apply for a summer job or seasonal work at the mall. One advantage is a discount on clothing and other merchandise in the store.
6. Clean out the garage. If your garage looks like mine, that is a job and a half. Enlist the organizational skills of your teenager to set the garage to rights. The fee can be negotiated ahead of time depending on what actually needs to be done.
7. Start a business on the Internet. Kids are usually savvier than parents when it comes to navigating the Internet. EBay offers a forum for selling goods and services. A teen with a talent can make cash here. Does your teen want to write? Use that reporter’s instinct to create articles for sites like Associated Content and get paid for them.
Teenagers today have more options than ever before of making extra money. Explore these seven ways as a start. Your teen may already have an idea in mind.
Setting Limits on Children’s Spending
We live in an instant society. With the microwave oven, cash machines, and the Internet, whatever we want is at our fingertips in a matter of seconds. Children have learned to want everything right away. Setting limits on your children’s spending habits can curb the urge to be less than patient when it comes to money.
An allowance is one way to influence the spending habits of your children. Start as soon as they can understand about money; set up a weekly allowance for your children. It doesn’t have to be much. The point of it all is to teach them to respect money and understand what it can do for them.
Money can also be given for jobs done around the house above and beyond their regular chores. Children are very creative. If they need to earn more money to buy a special item, they will propose almost anything to find the money.
Once you set an amount for the job, don’t flounder. Some parents see how hard their kids are working and they either help them finish the job or pad their agreed upon price. Resist the urge to help them. They will learn the value of a dollar truly earned if you let them do it themselves.
Don’t offer to pay for half. It is okay to make up the difference if they forget to account for tax and are short a few dollars. Coming to the rescue and offering to pay half encourages children to spend over their limits. If Mom and Dad are going to pay half for everything, then the kids will see their money as instantly doubled.
When parents don’t have the money to purchase something, they have to wait until they have it. The sooner your children learn this fact the better. Managing their money at an early age gives them the skills to handle a pay check when they are old enough to get a job.
With money from birthdays, holidays, and allowances, your children will have a good deal of cash. Every time you leave the house they’ll want visit the toy store or the video store. In advance, decide that shopping trips will be limited to once or twice a month. Choose the days and stick to it unless some unforeseen emergency crops up.
In that time, your child will save more money. They already know the rules of shopping, but they will still try to get you to change the deal. Waiting until the appointed time teaches patience. It takes patience to save money and also discipline. They are learning both at the same time.
It is easy to give in to those cute little faces and buy the kids whatever they want. But, this won’t teach them to form good habits where money is concerned. When you set limits and schedules, stick to them.
An allowance is one way to influence the spending habits of your children. Start as soon as they can understand about money; set up a weekly allowance for your children. It doesn’t have to be much. The point of it all is to teach them to respect money and understand what it can do for them.
Money can also be given for jobs done around the house above and beyond their regular chores. Children are very creative. If they need to earn more money to buy a special item, they will propose almost anything to find the money.
Once you set an amount for the job, don’t flounder. Some parents see how hard their kids are working and they either help them finish the job or pad their agreed upon price. Resist the urge to help them. They will learn the value of a dollar truly earned if you let them do it themselves.
Don’t offer to pay for half. It is okay to make up the difference if they forget to account for tax and are short a few dollars. Coming to the rescue and offering to pay half encourages children to spend over their limits. If Mom and Dad are going to pay half for everything, then the kids will see their money as instantly doubled.
When parents don’t have the money to purchase something, they have to wait until they have it. The sooner your children learn this fact the better. Managing their money at an early age gives them the skills to handle a pay check when they are old enough to get a job.
With money from birthdays, holidays, and allowances, your children will have a good deal of cash. Every time you leave the house they’ll want visit the toy store or the video store. In advance, decide that shopping trips will be limited to once or twice a month. Choose the days and stick to it unless some unforeseen emergency crops up.
In that time, your child will save more money. They already know the rules of shopping, but they will still try to get you to change the deal. Waiting until the appointed time teaches patience. It takes patience to save money and also discipline. They are learning both at the same time.
It is easy to give in to those cute little faces and buy the kids whatever they want. But, this won’t teach them to form good habits where money is concerned. When you set limits and schedules, stick to them.
What Is the Right Allowance Amount?
An allowance is money given to a child because they are your child. It is not based on chores done or not done, but not contributing can see the allowance suspended until things get back on track. Even at this rate, what is the right amount of allowance to give to a child? Here are some suggestions.
Consider the age of your child. A seven or eight year old is not into clothing and shoes with enough interest to want to own a tremendous wardrobe. Money is mostly for teaching purposes, and fifty cents to a dollar is enough at this age. The most that kids will want is a small toy or a piece of candy. There can be weekly or monthly trips to the dollar store so they can use their money to buy items they want.
As kids approach the older elementary ages, they are usually interested in sports and looking good. As parents, we buy their clothing and other necessities for school and home. Anything that they want above that can be purchased with their allowance money. The allowance can be raised to three dollars a week.
Outside of the basic necessities, kids don’t need too much. They may see a new video game, but they can save their allowance to purchase it. Depending on the price of the game, they may need a month or two to save the money for it.
As the kids reach the tween years, five dollars a week is a healthy amount. It is enough to go and see a movie with friends. If they want any refreshments, they’ll have to save two weeks allowance. You are still buying their school clothes, so their money will be reserved for time spent with friends or personal wants.
Teenagers who are not old enough to have jobs need a little more than five dollars. They are becoming social butterflies who want to spread their wings. Money can be saved for a new pair of shoes or going out on a date with someone they like. Ten to twenty dollars a week is good for them. Once they get a job the allowance can be stopped in favor of earned income.
With an allowance come the responsibilities of being a part of a family. There will be chores that are required for kids to do around the house because they live there. These chores are not for additional money, but a non-negotiable duty.
Younger children can be responsible for picking up their toys after a play session. The toys are small enough that they can pick them up. Clap and smile to assure them that they are doing a good job.
The chores increase in number and difficulty as the child gets older. Older youngsters can load and unload the dishwasher and keep their rooms clean. If you have boys this will likely be the single most frustrating chore for you and for them. They usually don’t like to be neat and most moms can’t stand a messy room.
By the time they are teenagers, the chores are more involved. Teens can take out the trash, vacuum the floors, and clean their bathrooms. If your teen has a job, the chores can be spread out to accommodate their work schedule, but it is still a family responsibility to perform them.
Consider the age of your child. A seven or eight year old is not into clothing and shoes with enough interest to want to own a tremendous wardrobe. Money is mostly for teaching purposes, and fifty cents to a dollar is enough at this age. The most that kids will want is a small toy or a piece of candy. There can be weekly or monthly trips to the dollar store so they can use their money to buy items they want.
As kids approach the older elementary ages, they are usually interested in sports and looking good. As parents, we buy their clothing and other necessities for school and home. Anything that they want above that can be purchased with their allowance money. The allowance can be raised to three dollars a week.
Outside of the basic necessities, kids don’t need too much. They may see a new video game, but they can save their allowance to purchase it. Depending on the price of the game, they may need a month or two to save the money for it.
As the kids reach the tween years, five dollars a week is a healthy amount. It is enough to go and see a movie with friends. If they want any refreshments, they’ll have to save two weeks allowance. You are still buying their school clothes, so their money will be reserved for time spent with friends or personal wants.
Teenagers who are not old enough to have jobs need a little more than five dollars. They are becoming social butterflies who want to spread their wings. Money can be saved for a new pair of shoes or going out on a date with someone they like. Ten to twenty dollars a week is good for them. Once they get a job the allowance can be stopped in favor of earned income.
With an allowance come the responsibilities of being a part of a family. There will be chores that are required for kids to do around the house because they live there. These chores are not for additional money, but a non-negotiable duty.
Younger children can be responsible for picking up their toys after a play session. The toys are small enough that they can pick them up. Clap and smile to assure them that they are doing a good job.
The chores increase in number and difficulty as the child gets older. Older youngsters can load and unload the dishwasher and keep their rooms clean. If you have boys this will likely be the single most frustrating chore for you and for them. They usually don’t like to be neat and most moms can’t stand a messy room.
By the time they are teenagers, the chores are more involved. Teens can take out the trash, vacuum the floors, and clean their bathrooms. If your teen has a job, the chores can be spread out to accommodate their work schedule, but it is still a family responsibility to perform them.
Reasons Debt Management Doesn't Always Work
Few people go into debt with the intention of getting in over their heads. Most of us borrow to get the things we need and want, with every intention of paying back every penny. But sometimes things do not work that way.
In some cases, debt problems can be attributed to poor financial management. But sometimes even the best money managers end up in too much debt. Here are some reasons that debt management may not work:
1. People lose their jobs. Job security is not what it once was, and an increasing number of people are becoming victims of downsizing or outsourcing. An unexpected job loss can be a source of financial hardship, making it difficult to pay bills for necessities, and leaving little or nothing to pay debts.
2. Health problems cause money troubles. Accidents can render people unable to work, as can a variety of illnesses. Between the lack of income and the medical bills, people whose health has taken a turn for the worse often find themselves unable to repay their debts on schedule.
3. Unexpected expenses arise. Sometimes people have expenses creep up on them that they haven't budgeted for, causing them to be unable to pay their usual bills. Expensive car repairs are a common expense that we may not be aware of until it becomes a necessity. Weather could cause property damage that is not covered by our insurance, or appliances that are not under warranty could suddenly quit working. All of these things can put a damper on our financial plans.
4. We don't keep adequate savings. Many financial problems can be avoided, or at least made less burdensome, if we have some savings to fall back on. This is one area of the budget that many people either don't think about or do not take seriously. Making room in the budget to put some money into savings each month is an asset to any debt management plan.
The same problems that often cause us to get into too much debt in the first place can also derail us when we're already in too much debt and trying to get out. When these things occur, it may become necessary to seek outside help. Consolidating our debts may make things easier, but sometimes even that is not enough. When all other options are exhausted, some debtors end up filing for bankruptcy.
The best way to manage debt is to keep it under control in the first place. Putting money into savings can help for when unexpected things occur. And if all else fails, we may need help in reorganizing our finances. Getting our finances back under control may be difficult, but the peace of mind we gain from doing so makes it all worthwhile.
In some cases, debt problems can be attributed to poor financial management. But sometimes even the best money managers end up in too much debt. Here are some reasons that debt management may not work:
1. People lose their jobs. Job security is not what it once was, and an increasing number of people are becoming victims of downsizing or outsourcing. An unexpected job loss can be a source of financial hardship, making it difficult to pay bills for necessities, and leaving little or nothing to pay debts.
2. Health problems cause money troubles. Accidents can render people unable to work, as can a variety of illnesses. Between the lack of income and the medical bills, people whose health has taken a turn for the worse often find themselves unable to repay their debts on schedule.
3. Unexpected expenses arise. Sometimes people have expenses creep up on them that they haven't budgeted for, causing them to be unable to pay their usual bills. Expensive car repairs are a common expense that we may not be aware of until it becomes a necessity. Weather could cause property damage that is not covered by our insurance, or appliances that are not under warranty could suddenly quit working. All of these things can put a damper on our financial plans.
4. We don't keep adequate savings. Many financial problems can be avoided, or at least made less burdensome, if we have some savings to fall back on. This is one area of the budget that many people either don't think about or do not take seriously. Making room in the budget to put some money into savings each month is an asset to any debt management plan.
The same problems that often cause us to get into too much debt in the first place can also derail us when we're already in too much debt and trying to get out. When these things occur, it may become necessary to seek outside help. Consolidating our debts may make things easier, but sometimes even that is not enough. When all other options are exhausted, some debtors end up filing for bankruptcy.
The best way to manage debt is to keep it under control in the first place. Putting money into savings can help for when unexpected things occur. And if all else fails, we may need help in reorganizing our finances. Getting our finances back under control may be difficult, but the peace of mind we gain from doing so makes it all worthwhile.
Parents’ Money Management Affects Children
Children learn by watching others. Who do they watch more than their parents? As parents, we need to be careful to put our best foot forward in matters of money in order to give our kids a healthy start in that arena.
A parent that spends money today without giving thought to tomorrow will almost certainly teach their child to do the same. Using money as a means to an end is not a good lesson to pass on. Money is important because it is a necessary tool of life. Money does not turn a house into a home, but it does keep a roof over one’s head and food on the table.
Money that is handled with respect is money that will be around for more than one day. Lack of money is the reason why many couples in a marriage argue. Parents that come from two different backgrounds when it comes to money will likely butt heads. Before the children become adversely affected, the parents need to talk out their differences and come to a common viewpoint on how to handle the family finances.
Learning to save takes time even for parents. We didn’t all grow up with money-savvy parents. But now it’s time to break the cycle of overspending and debt. Parents can take a money management class or read a book on the subject. As they learn, so will the children. The information can be shared at family meetings.
If the family doesn’t have a financial plan, start one. Gathering the family together to do this is another way to include children in financial decisions. Being part of a family meeting shows children the role money plays in the home. Family meetings can be a place to voice any concerns about money and to find answers together.
As a child, my family didn’t have a lot of money. When I was old enough to have a job, I would spend my money on whatever I wanted. I didn’t want to live a life where I was deprived of things because I didn’t have money. I worked hard, but spent every cent.
This carried over into my adult life and created problems when I got married and started a family. My parents didn’t do anything wrong, there just could have been a few more “right” things done. We never talked about money. It was a “grown-up” thing and children weren’t included. I went with what I perceived to be the truth when it came to money.
It is better to explain money matters to your children instead of letting them draw their own conclusions. That doesn’t mean that each decision you make needs to be run by them first. But when major money changes occur, include the children in the discussions so that they know what is going on and how the family plans to deal with the situation.
Poor money choices, even for the right reasons, can affect the way children deal with money. You may think that the children aren’t watching, but they are — carefully. Make use of every opportunity that you have to arm them with the tools that produce good money management decisions.
A parent that spends money today without giving thought to tomorrow will almost certainly teach their child to do the same. Using money as a means to an end is not a good lesson to pass on. Money is important because it is a necessary tool of life. Money does not turn a house into a home, but it does keep a roof over one’s head and food on the table.
Money that is handled with respect is money that will be around for more than one day. Lack of money is the reason why many couples in a marriage argue. Parents that come from two different backgrounds when it comes to money will likely butt heads. Before the children become adversely affected, the parents need to talk out their differences and come to a common viewpoint on how to handle the family finances.
Learning to save takes time even for parents. We didn’t all grow up with money-savvy parents. But now it’s time to break the cycle of overspending and debt. Parents can take a money management class or read a book on the subject. As they learn, so will the children. The information can be shared at family meetings.
If the family doesn’t have a financial plan, start one. Gathering the family together to do this is another way to include children in financial decisions. Being part of a family meeting shows children the role money plays in the home. Family meetings can be a place to voice any concerns about money and to find answers together.
As a child, my family didn’t have a lot of money. When I was old enough to have a job, I would spend my money on whatever I wanted. I didn’t want to live a life where I was deprived of things because I didn’t have money. I worked hard, but spent every cent.
This carried over into my adult life and created problems when I got married and started a family. My parents didn’t do anything wrong, there just could have been a few more “right” things done. We never talked about money. It was a “grown-up” thing and children weren’t included. I went with what I perceived to be the truth when it came to money.
It is better to explain money matters to your children instead of letting them draw their own conclusions. That doesn’t mean that each decision you make needs to be run by them first. But when major money changes occur, include the children in the discussions so that they know what is going on and how the family plans to deal with the situation.
Poor money choices, even for the right reasons, can affect the way children deal with money. You may think that the children aren’t watching, but they are — carefully. Make use of every opportunity that you have to arm them with the tools that produce good money management decisions.
Overspending is Too Common
Have you ever written a check for something that you knew you didn’t have the money for? People do that more than you think. They play the game of “robbing Peter to pay Paul”. This is a common practice that can lead to debt and bad money management.
When you take a job, you are given a salary. The salary only changes if you get a promotion. For those that work an hourly wage, the amount of your check changes if you work more or less hours each week. Despite our paychecks being fairly consistent, people continue to spend more money than they earn.
One cause of this is the “buy now and pay later” trap. Knowing that the first payment is two years away gives consumers a false sense of security. They may have walked into the store to purchase a bed, and end up walking out with the entire bedroom set because they don’t have to make payments until 2009! If you didn’t have the money to purchase more than a bed in the first place, what is the logic of purchasing furniture worth three times that much? In two years you may still not have that much.
Credit cards can also be a trap if not used with discretion. Statements come at the end of the month. Erroneously you might think that although you don't have the money now, you will have it when the bill comes due. The problem with this thinking is that you haven’t figured in the budget the money you just charged to the card. Once you pay the other bills, there won’t be enough to pay the card balance so you pay the minimum. An unpaid balance on the credit card results in a larger balance next month even if you don’t charge anything else.
We have to learn to be financially responsible or the debt situation will worsen. More people will file for bankruptcy or pay credit counselors to fix the debt problem. While these options are available to help those who have gotten deep into debt find their way out, far too few people take advantage of the help that is offered.
Carrying a certain amount of debt has become a status symbol. Everyone else has debt so why shouldn’t I? People are not pressed to get rid of their debt. As long as they can pay minimum balances it doesn’t seem to matter that it will take five years and several hundred more dollars to pay off a credit card.
As long as there is a credit company or store willing to extend more credit, the problem of overspending will continue. How we handle money affects the next generation of consumers. They learn from watching us. What are we teaching them?
When you take a job, you are given a salary. The salary only changes if you get a promotion. For those that work an hourly wage, the amount of your check changes if you work more or less hours each week. Despite our paychecks being fairly consistent, people continue to spend more money than they earn.
One cause of this is the “buy now and pay later” trap. Knowing that the first payment is two years away gives consumers a false sense of security. They may have walked into the store to purchase a bed, and end up walking out with the entire bedroom set because they don’t have to make payments until 2009! If you didn’t have the money to purchase more than a bed in the first place, what is the logic of purchasing furniture worth three times that much? In two years you may still not have that much.
Credit cards can also be a trap if not used with discretion. Statements come at the end of the month. Erroneously you might think that although you don't have the money now, you will have it when the bill comes due. The problem with this thinking is that you haven’t figured in the budget the money you just charged to the card. Once you pay the other bills, there won’t be enough to pay the card balance so you pay the minimum. An unpaid balance on the credit card results in a larger balance next month even if you don’t charge anything else.
We have to learn to be financially responsible or the debt situation will worsen. More people will file for bankruptcy or pay credit counselors to fix the debt problem. While these options are available to help those who have gotten deep into debt find their way out, far too few people take advantage of the help that is offered.
Carrying a certain amount of debt has become a status symbol. Everyone else has debt so why shouldn’t I? People are not pressed to get rid of their debt. As long as they can pay minimum balances it doesn’t seem to matter that it will take five years and several hundred more dollars to pay off a credit card.
As long as there is a credit company or store willing to extend more credit, the problem of overspending will continue. How we handle money affects the next generation of consumers. They learn from watching us. What are we teaching them?
Money Management Tips for Parents
The importance of money becomes obvious when we have kids. We could have squeaked by living paycheck to paycheck when it was just ourselves, but now that there are others to think about we have to start saving our pennies. Here are some money management tips for single and two parent households.
Use generic brands as often as you can. The generic brands of a lot of foods are the same thing as the name brands, but bought wholesale from a distributor. If kids don’t like generic cereal, ease them into it. Nine times out of ten, it is the name brand that they are hung up on. Pour the cereal out of the package and into a container. They probably won’t be able to tell the difference.
The dollar store sells many name brand and generic varieties of common toiletries: soap, laundry detergent, shampoo, and household cleaners. To save money, shop here for frequently used items before visiting the grocery store. Then, when you do shop at the grocery store, use coupons for name brand items or take the opportunity to try the generic version.
Clean your clothing at home. Some of us are addicted to professional cleaning. Dry cleaning can be expensive—more expensive than it needs to be. The grocery store sells Dryel® dryer sheets. Dryel® is formulated to dry clean clothing in a home dryer much the same way as a dry cleaner cleans clothing. You can dry clean four to six pieces of clothing per sheet and it is cheaper than using a dry cleaning service.
Purchase a used car. We all want a new car, don’t we? The truth is cars depreciate as soon as they leave the dealer’s lot. Purchasing an inspected used car from a reputable dealer saves money on car payments. Check to see that the car has a good service record and that it has not been damaged in any way before you agree to buy.
Buy clothing in unexpected places. Famous named stores are not the only place to shop. Thrift stores, yard sales, flea markets, and consignment shops all sell good quality clothing. You can even find name brand items here, too. You will have to take the time and search through racks and racks of clothing, but it will be worth it to find clothing for yourself and your family at a fraction of the cost of regular department and specialty stores.
Deduct money for savings directly from your paycheck. We all mean to put a little something away each pay period but we can be forgetful. If you have direct deposit, make provision for a certain amount of money to be automatically sent to your savings account as soon as you get paid. This can still be the arrangement if you have to deposit your paycheck every two weeks. Set up a transfer with the bank to move that money to the savings account each time you deposit your paycheck.
There are no easy ways to save money. It takes effort and focus. We don’t always want to take the time to manage our money wisely, but our kids are worth it.
Use generic brands as often as you can. The generic brands of a lot of foods are the same thing as the name brands, but bought wholesale from a distributor. If kids don’t like generic cereal, ease them into it. Nine times out of ten, it is the name brand that they are hung up on. Pour the cereal out of the package and into a container. They probably won’t be able to tell the difference.
The dollar store sells many name brand and generic varieties of common toiletries: soap, laundry detergent, shampoo, and household cleaners. To save money, shop here for frequently used items before visiting the grocery store. Then, when you do shop at the grocery store, use coupons for name brand items or take the opportunity to try the generic version.
Clean your clothing at home. Some of us are addicted to professional cleaning. Dry cleaning can be expensive—more expensive than it needs to be. The grocery store sells Dryel® dryer sheets. Dryel® is formulated to dry clean clothing in a home dryer much the same way as a dry cleaner cleans clothing. You can dry clean four to six pieces of clothing per sheet and it is cheaper than using a dry cleaning service.
Purchase a used car. We all want a new car, don’t we? The truth is cars depreciate as soon as they leave the dealer’s lot. Purchasing an inspected used car from a reputable dealer saves money on car payments. Check to see that the car has a good service record and that it has not been damaged in any way before you agree to buy.
Buy clothing in unexpected places. Famous named stores are not the only place to shop. Thrift stores, yard sales, flea markets, and consignment shops all sell good quality clothing. You can even find name brand items here, too. You will have to take the time and search through racks and racks of clothing, but it will be worth it to find clothing for yourself and your family at a fraction of the cost of regular department and specialty stores.
Deduct money for savings directly from your paycheck. We all mean to put a little something away each pay period but we can be forgetful. If you have direct deposit, make provision for a certain amount of money to be automatically sent to your savings account as soon as you get paid. This can still be the arrangement if you have to deposit your paycheck every two weeks. Set up a transfer with the bank to move that money to the savings account each time you deposit your paycheck.
There are no easy ways to save money. It takes effort and focus. We don’t always want to take the time to manage our money wisely, but our kids are worth it.
Stop Ignoring Debt Collectors and Start Working With Them
If you're drowning in debt, it makes life much more difficult. You have trouble getting credit for the things you need, and you probably spend a lot of time trying to juggle your finances. And then there is the matter of debt collectors calling day in and day out.
Debtors often avoid answering the phone when debt collectors are calling. They don't want to be reminded of how much they owe and how far they are behind, because they simply don't have the means to pay their debt. But what they don't realize is that debt collectors are often willing to help them get back on track.
It's true that creditors want their money. That is why they are calling you. But it's also the reason that they will often work with you. They are often willing to lower interest rates, reduce monthly payments, or waive late fees to help you. Many creditors realize that by helping debtors, they are more likely to get payment in full than they would by making demands.
How to talk to debt collectors
When a debt collector calls, it's important to tell them about your circumstances. Whether you've had problems that were no fault of your own or just spent too much and got in over your head, letting them know that there is something keeping you from paying them is important. They will be much more willing to work with you that way.
Once you've explained yourself, they may offer assistance. Listen to what they have to say, and if it sounds doable, accept. If the debt collector does not offer a solution, ask if there is any way that your interest, payments, or fees can be lowered to put them within reach.
If the person you speak with is not helpful, ask to speak to a supervisor. It could be that the person calling does not have the authority to extend the assistance you need. Once the supervisor is on the line, explain your situation again and tell him or her what it would take for you to be able to get your payments current.
What if they won't help?
In some cases, debt collectors are not willing to be of assistance. If this happens to you, try to work something out with your other creditors so that you can afford to make payments to everyone. If that doesn't work, you may need to talk to a credit counselor. They have the clout and experience necessary to work out deals with creditors that consumers may not be able to.
No one likes to talk to debt collectors, but sometimes doing so can be beneficial. It certainly doesn't hurt to try. You just might be surprised at how willing they are to help.
Debtors often avoid answering the phone when debt collectors are calling. They don't want to be reminded of how much they owe and how far they are behind, because they simply don't have the means to pay their debt. But what they don't realize is that debt collectors are often willing to help them get back on track.
It's true that creditors want their money. That is why they are calling you. But it's also the reason that they will often work with you. They are often willing to lower interest rates, reduce monthly payments, or waive late fees to help you. Many creditors realize that by helping debtors, they are more likely to get payment in full than they would by making demands.
How to talk to debt collectors
When a debt collector calls, it's important to tell them about your circumstances. Whether you've had problems that were no fault of your own or just spent too much and got in over your head, letting them know that there is something keeping you from paying them is important. They will be much more willing to work with you that way.
Once you've explained yourself, they may offer assistance. Listen to what they have to say, and if it sounds doable, accept. If the debt collector does not offer a solution, ask if there is any way that your interest, payments, or fees can be lowered to put them within reach.
If the person you speak with is not helpful, ask to speak to a supervisor. It could be that the person calling does not have the authority to extend the assistance you need. Once the supervisor is on the line, explain your situation again and tell him or her what it would take for you to be able to get your payments current.
What if they won't help?
In some cases, debt collectors are not willing to be of assistance. If this happens to you, try to work something out with your other creditors so that you can afford to make payments to everyone. If that doesn't work, you may need to talk to a credit counselor. They have the clout and experience necessary to work out deals with creditors that consumers may not be able to.
No one likes to talk to debt collectors, but sometimes doing so can be beneficial. It certainly doesn't hurt to try. You just might be surprised at how willing they are to help.
Help, I'm in Debt and Can't Get Out!
Debt overload has become quite common over the years. Many people are taking on more credit card debt than they can handle, or their circumstances are changing in a way that makes debt that was once manageable hard to repay. Does this sound familiar?
Why are so many people in too much debt?
Sometimes people end up in too much debt through no fault of their own. They may incur debt sensibly, but lose their jobs or become ill and unable to work. Unless they can find some way to bring their income back to the level that it was at, they could find themselves saddled with debt that they can no longer afford.
Another reason that people end up over their heads in debt is poor financial management. Credit card companies are often willing to extend credit that the borrower may not make enough money to pay back. And an increasing number of people keep multiple credit cards, which essentially multiplies their debt. Although they may be able to keep up with the minimum payments, interest keeps them in debt for many years.
How to keep your debt manageable
The best way to keep control over your debt is to not let it get out of hand in the first place. Shop around for the best possible interest rates, and keep your open accounts to a minimum. No one needs a pocketful of credit cards. One or two should be plenty.
When paying back your debt, making more than the minimum payment will prevent interest from accruing. The best thing to do is pay the balance in full each month. This will keep your credit in good shape and save you lots of money. If something comes up and you need to charge more than you can pay back in a month, stop charging until the balance is paid off.
How to get out of debt
If you're already in more debt than you can handle, all is not lost. It takes discipline, but you can get yourself out of debt on your own in most cases. The key is realizing that there is a problem before it is too late.
When you realize your debt is out of control, the first thing to do is stop taking on new debt. Then it's time to work out a budget, and start putting all of the money you can into paying off your debts. You'll need to at least make the minimum payment on everything each month, but what works best for most people is putting all of their extra money toward one debt until it's paid off, and then moving on to the next. Paying debts off in the order of highest to lowest interest is the least expensive course of action.
If you've tried to manage your debts on your own but are having trouble coming up with any extra money to put toward them, or even enough to make the minimum payment, you may need some assistance. Talk to your creditors. They may be willing to reduce your interest and payments if you tell them about your situation. If that doesn't work, credit counseling and debt consolidation are options. Bankruptcy is also an option, but it should be the last resort. It is often possible to get things under control without filing bankruptcy.
Getting into too much debt can be a scary thing. But it is often possible to regain control on your own. If not, help is available. Don't be afraid to seek it out.
Why are so many people in too much debt?
Sometimes people end up in too much debt through no fault of their own. They may incur debt sensibly, but lose their jobs or become ill and unable to work. Unless they can find some way to bring their income back to the level that it was at, they could find themselves saddled with debt that they can no longer afford.
Another reason that people end up over their heads in debt is poor financial management. Credit card companies are often willing to extend credit that the borrower may not make enough money to pay back. And an increasing number of people keep multiple credit cards, which essentially multiplies their debt. Although they may be able to keep up with the minimum payments, interest keeps them in debt for many years.
How to keep your debt manageable
The best way to keep control over your debt is to not let it get out of hand in the first place. Shop around for the best possible interest rates, and keep your open accounts to a minimum. No one needs a pocketful of credit cards. One or two should be plenty.
When paying back your debt, making more than the minimum payment will prevent interest from accruing. The best thing to do is pay the balance in full each month. This will keep your credit in good shape and save you lots of money. If something comes up and you need to charge more than you can pay back in a month, stop charging until the balance is paid off.
How to get out of debt
If you're already in more debt than you can handle, all is not lost. It takes discipline, but you can get yourself out of debt on your own in most cases. The key is realizing that there is a problem before it is too late.
When you realize your debt is out of control, the first thing to do is stop taking on new debt. Then it's time to work out a budget, and start putting all of the money you can into paying off your debts. You'll need to at least make the minimum payment on everything each month, but what works best for most people is putting all of their extra money toward one debt until it's paid off, and then moving on to the next. Paying debts off in the order of highest to lowest interest is the least expensive course of action.
If you've tried to manage your debts on your own but are having trouble coming up with any extra money to put toward them, or even enough to make the minimum payment, you may need some assistance. Talk to your creditors. They may be willing to reduce your interest and payments if you tell them about your situation. If that doesn't work, credit counseling and debt consolidation are options. Bankruptcy is also an option, but it should be the last resort. It is often possible to get things under control without filing bankruptcy.
Getting into too much debt can be a scary thing. But it is often possible to regain control on your own. If not, help is available. Don't be afraid to seek it out.
Can a Government Grant Really Help Relieve Debt?
Those who are in debt are often searching for things that will help them get out of debt. There are several methods of debt consolidation available, including home equity loans, personal loans, and low-interest, high-limit credit cards. But perhaps one of the most interesting concepts in debt relief is the government grant.
There are television commercials, radio ads, and websites that tell us that we can get government grants to pay for almost anything, including debt consolidation. This sounds like a debtor's dream come true, but it's not as simple as it sounds. In fact, it is downright misleading.
What kind of grants are they talking about?
It's true that the government gives out some grants. But most of these grants are for things like assisting people in starting a business or helping first-time homebuyers. There are no programs specifically aimed at helping debtors pay off their debts.
The only type of government grant that is remotely related to personal debt relief is the small business grant. One could conceivably start a small business using grant money, make a profit, and use that profit to pay off debts. These small business grants are few and far between, however, and are designated for use by specific types of business that meet the government's needs.
What about other grant sources?
The government is not the only source of grants. Many corporations also give away grant money to individuals. But this money is earmarked for those who meet specific qualifications as well, and these qualifications depend on the company's needs. Paying off someone's debt rarely does anything to meet a large corporation's needs.
That said, it is conceivable that a corporation might give away grant money to help those in need. Large companies sometimes do charitable things to give back to the community or improve their images. But it's not something we should count on. There are much more reliable ways to get rid of debt.
Where can I get debt assistance?
While it's unlikely that you will be able to get someone else to pay your debt for you, there is help available. You may be able to negotiate with your creditors to have interest rates and minimum payments lowered, on the condition that you can't take on any new debt with them. There are also credit counseling agencies that may be of assistance.
There are also some free resources online that can help you take control of your finances. You can learn how to make a workable budget and put extra money toward your debt payments. It may not be as easy as getting money from the government, but you can often get your debt under control on your own.
There are television commercials, radio ads, and websites that tell us that we can get government grants to pay for almost anything, including debt consolidation. This sounds like a debtor's dream come true, but it's not as simple as it sounds. In fact, it is downright misleading.
What kind of grants are they talking about?
It's true that the government gives out some grants. But most of these grants are for things like assisting people in starting a business or helping first-time homebuyers. There are no programs specifically aimed at helping debtors pay off their debts.
The only type of government grant that is remotely related to personal debt relief is the small business grant. One could conceivably start a small business using grant money, make a profit, and use that profit to pay off debts. These small business grants are few and far between, however, and are designated for use by specific types of business that meet the government's needs.
What about other grant sources?
The government is not the only source of grants. Many corporations also give away grant money to individuals. But this money is earmarked for those who meet specific qualifications as well, and these qualifications depend on the company's needs. Paying off someone's debt rarely does anything to meet a large corporation's needs.
That said, it is conceivable that a corporation might give away grant money to help those in need. Large companies sometimes do charitable things to give back to the community or improve their images. But it's not something we should count on. There are much more reliable ways to get rid of debt.
Where can I get debt assistance?
While it's unlikely that you will be able to get someone else to pay your debt for you, there is help available. You may be able to negotiate with your creditors to have interest rates and minimum payments lowered, on the condition that you can't take on any new debt with them. There are also credit counseling agencies that may be of assistance.
There are also some free resources online that can help you take control of your finances. You can learn how to make a workable budget and put extra money toward your debt payments. It may not be as easy as getting money from the government, but you can often get your debt under control on your own.
You Can Get Out of Debt On Your Own
There are lots of options out there for those of us who are too far in debt. There is credit counseling and debt consolidation. There are lawyers offering to have your debt reduced for a fee, and in extreme cases, there is bankruptcy. With all of these choices, one might imagine that it's impossible for a person to get out of debt on his own.
The truth is that it is quite possible to get out of debt with no outside help. Even those who don't think there is room in their budget to pay down their debts are often surprised. It takes willpower and determination, but you can usually get out of debt on your own.
How do I get out of debt on my own?
Are you too far in debt? If so, in order to get out of debt on your own you will need to develop a plan and stick to it. Here is a good plan to follow:
1. Stop accruing new debt. Put the credit cards away, and refrain from taking out new loans or refinancing old ones to borrow more money.
2. Create a budget. You need to know where your money is going each month, and in which areas you can cut back to free up more money to pay off your debts. If you're not sure where your money is going, write down all of your expenses for a month and then make your budget.
3. Cut the unnecessary items out of your budget, and cut back anywhere else you can. Set this money aside to pay down your debts.
4. Determine which debt needs to be paid off first. If you have secured debts other than a long-term mortgage, you may want to pay them off first. Debts with high interest should also take priority, unless you have lower interest credit cards that charge exorbitant annual or monthly fees.
5. Pay the minimum payment each month on all of your debts except the one that you have given top priority. Put all of your extra funds toward that debt, and continue to do so until it is paid off. If you get a bonus at work or unexpected money from some other source, consider putting it toward your debt as well.
6. When you get one debt paid off, start putting your extra money toward the next one. Repeat until all of your debts are paid in full.
Paying off debt on your own is often easier than you think. By taking a realistic look at our finances, we can often find ways to come up with the money to pay debts off without the help of anyone else. Doing so helps us maintain good credit, or rebuild our credit if it is imperfect.
The truth is that it is quite possible to get out of debt with no outside help. Even those who don't think there is room in their budget to pay down their debts are often surprised. It takes willpower and determination, but you can usually get out of debt on your own.
How do I get out of debt on my own?
Are you too far in debt? If so, in order to get out of debt on your own you will need to develop a plan and stick to it. Here is a good plan to follow:
1. Stop accruing new debt. Put the credit cards away, and refrain from taking out new loans or refinancing old ones to borrow more money.
2. Create a budget. You need to know where your money is going each month, and in which areas you can cut back to free up more money to pay off your debts. If you're not sure where your money is going, write down all of your expenses for a month and then make your budget.
3. Cut the unnecessary items out of your budget, and cut back anywhere else you can. Set this money aside to pay down your debts.
4. Determine which debt needs to be paid off first. If you have secured debts other than a long-term mortgage, you may want to pay them off first. Debts with high interest should also take priority, unless you have lower interest credit cards that charge exorbitant annual or monthly fees.
5. Pay the minimum payment each month on all of your debts except the one that you have given top priority. Put all of your extra funds toward that debt, and continue to do so until it is paid off. If you get a bonus at work or unexpected money from some other source, consider putting it toward your debt as well.
6. When you get one debt paid off, start putting your extra money toward the next one. Repeat until all of your debts are paid in full.
Paying off debt on your own is often easier than you think. By taking a realistic look at our finances, we can often find ways to come up with the money to pay debts off without the help of anyone else. Doing so helps us maintain good credit, or rebuild our credit if it is imperfect.
Frugal Spending Tips
We all could use some help when it comes to saving money. That odd trip to the store for a sweater that results in a new wardrobe, or a trip to buy a new phone and we walk out with a phone, an answering machine, and a digital camera. These things happen, but adopting some frugal spending tips can make saving instead of impulse spending the norm.
Don’t shop on payday. This is when you have the most money. You haven’t paid the bills or put money away for savings. In error, we believe that we have more money at our discretion than we really have. At the end of the shopping trip, we are a few hundred dollars in the hole and a bill goes without being paid.
Don’t shop for groceries on an empty stomach. This is a universal rule. It never fails; if you shop when you are hungry you can be talked into buying anything. The shopping list goes out the window and so does the grocery budget for the month. Shopping when hungry could also cause you to stop for fast food on the way home because you can’t wait to fix something to eat.
Visit thrift stores and consignment shops. This works for kids when they are babies and toddlers. These stores have beautiful clothing that is in excellent condition. All it takes is a little searching to find a treasure or two at a fraction of the cost. Name brand clothing can be found here also. Thrift stores are a good alternative to “hand-me-down” clothing for younger kids.
Buy in bulk only if it is something that you need. Buying everything in bulk is not necessary. Some bulk prices have a higher unit price than buying a couple of boxes of cereal or baby formula. Carrying a calculator to the store with you can aid in figuring up which is the best buy. Join a shopping warehouse if you frequently buy bulk items.
Ask for a rain check. Some stores don’t give them for certain sale items, but it doesn’t hurt to ask. A rain check can save you money. Don’t buy a six dollar case of water if you can get it for two dollars with a rain check. Buy up to the limit you are allowed to purchase and stock up.
Bargain shop when looking for services. There’s no rule that says you have to go with the first plumber that you call. All companies don’t charge the same amount. Checking two or three places will give you a good idea of how the prices stack up. Choose the one with the most services for the lowest price. If you are not sure, ask a friend who may have had the same need that you do now.
Purchase gifts throughout the year. Don’t wait until right before the holidays or someone’s birthday. Finding gifts throughout the year saves money. Sales after Christmas are the perfect time to find all sorts of merchandise that would make good gifts for the following Christmas. Store your gifts in a cabinet for that purpose so that you are never without something to choose from for gift giving.
A few frugal spending tips can save a lot of money. It takes a conscious effort to start, but once you get the hang of it, it will become second nature.
Don’t shop on payday. This is when you have the most money. You haven’t paid the bills or put money away for savings. In error, we believe that we have more money at our discretion than we really have. At the end of the shopping trip, we are a few hundred dollars in the hole and a bill goes without being paid.
Don’t shop for groceries on an empty stomach. This is a universal rule. It never fails; if you shop when you are hungry you can be talked into buying anything. The shopping list goes out the window and so does the grocery budget for the month. Shopping when hungry could also cause you to stop for fast food on the way home because you can’t wait to fix something to eat.
Visit thrift stores and consignment shops. This works for kids when they are babies and toddlers. These stores have beautiful clothing that is in excellent condition. All it takes is a little searching to find a treasure or two at a fraction of the cost. Name brand clothing can be found here also. Thrift stores are a good alternative to “hand-me-down” clothing for younger kids.
Buy in bulk only if it is something that you need. Buying everything in bulk is not necessary. Some bulk prices have a higher unit price than buying a couple of boxes of cereal or baby formula. Carrying a calculator to the store with you can aid in figuring up which is the best buy. Join a shopping warehouse if you frequently buy bulk items.
Ask for a rain check. Some stores don’t give them for certain sale items, but it doesn’t hurt to ask. A rain check can save you money. Don’t buy a six dollar case of water if you can get it for two dollars with a rain check. Buy up to the limit you are allowed to purchase and stock up.
Bargain shop when looking for services. There’s no rule that says you have to go with the first plumber that you call. All companies don’t charge the same amount. Checking two or three places will give you a good idea of how the prices stack up. Choose the one with the most services for the lowest price. If you are not sure, ask a friend who may have had the same need that you do now.
Purchase gifts throughout the year. Don’t wait until right before the holidays or someone’s birthday. Finding gifts throughout the year saves money. Sales after Christmas are the perfect time to find all sorts of merchandise that would make good gifts for the following Christmas. Store your gifts in a cabinet for that purpose so that you are never without something to choose from for gift giving.
A few frugal spending tips can save a lot of money. It takes a conscious effort to start, but once you get the hang of it, it will become second nature.
Five Ways to Save More Than You Spend
Is it just me or do paychecks seem to be spent as soon as we get them? Then you look around and wonder where the money went. We have probably all had that problem at one time or another. Here are five ways to help you save more and spend less each month.
1. Have a financial plan. We all need one. Plan to save or you won’t save anything at all. Before you spend a dime on anything else, put aside ten percent of your paycheck at least once a month. It would be ideal to do it with each paycheck that you earn in a month, but sometimes that is not possible. Start with a goal of one paycheck and work your way up. To keep from forgetting, you can have the money deducted from your check and sent to a savings account each pay period. That way, you don’t even have to think about it. It is done before the rest of the money is deposited in your checking account.
2. Grocery shop with a shopping list. Have you ever gone to the store for one or two items and come out with a cart full of stuff? Me, too. A list is like a blinder. It requires you to locate the things written there and ignore everything else. When creating the list, look in each cabinet and cupboard to see what you need. If you’re absent-minded like me, attach a magnetic grocery pad to the refrigerator and record when you run out of something. Your list will create itself.
3. Clip coupons. Coupons are generated mostly for the grocery store, but department stores have store coupons that offer a percentage or a specific dollar amount off of your purchases. Get that sweater at the end of the season when the store marks clothing down forty percent and offers additional coupon savings. Don’t shop at a store just because it has a coupon. Chances are the price has been marked up before the coupon is applied to make you think that you are getting a deal. Only use coupons for items and stores that you frequent. Stores that offer free discount cards also have weekly specials that, when combined with a coupon, could save you even more money.
4. Don’t impulse buy. Rule of thumb: Don’t purchase anything the first time you see it. This rule goes for big ticket items like cars, furniture, appliances, and electronics. Give yourself time to comparison shop to find the best deal. All the stores of the world won’t sell out of DVD players overnight. Waiting may show that the item you wanted to buy was a want and not a need. In that case, after clearing your head, you might not go back and buy it anyway.
5. Reward yourself. Spending money on something that you want can be thought of as a reward and a privilege earned. Make a list of your “wants”. Prioritize them and save until you can afford to get it. In the meantime, you will have added to your savings account and the discretionary fund for the item you dream of buying. Knowing that there is a pot of gold at the end of the financial rainbow can be a good deterrent to overspending.
Saving money is a good practice. Not only does it make your finances more stable, but there is also money for a rainy day.
1. Have a financial plan. We all need one. Plan to save or you won’t save anything at all. Before you spend a dime on anything else, put aside ten percent of your paycheck at least once a month. It would be ideal to do it with each paycheck that you earn in a month, but sometimes that is not possible. Start with a goal of one paycheck and work your way up. To keep from forgetting, you can have the money deducted from your check and sent to a savings account each pay period. That way, you don’t even have to think about it. It is done before the rest of the money is deposited in your checking account.
2. Grocery shop with a shopping list. Have you ever gone to the store for one or two items and come out with a cart full of stuff? Me, too. A list is like a blinder. It requires you to locate the things written there and ignore everything else. When creating the list, look in each cabinet and cupboard to see what you need. If you’re absent-minded like me, attach a magnetic grocery pad to the refrigerator and record when you run out of something. Your list will create itself.
3. Clip coupons. Coupons are generated mostly for the grocery store, but department stores have store coupons that offer a percentage or a specific dollar amount off of your purchases. Get that sweater at the end of the season when the store marks clothing down forty percent and offers additional coupon savings. Don’t shop at a store just because it has a coupon. Chances are the price has been marked up before the coupon is applied to make you think that you are getting a deal. Only use coupons for items and stores that you frequent. Stores that offer free discount cards also have weekly specials that, when combined with a coupon, could save you even more money.
4. Don’t impulse buy. Rule of thumb: Don’t purchase anything the first time you see it. This rule goes for big ticket items like cars, furniture, appliances, and electronics. Give yourself time to comparison shop to find the best deal. All the stores of the world won’t sell out of DVD players overnight. Waiting may show that the item you wanted to buy was a want and not a need. In that case, after clearing your head, you might not go back and buy it anyway.
5. Reward yourself. Spending money on something that you want can be thought of as a reward and a privilege earned. Make a list of your “wants”. Prioritize them and save until you can afford to get it. In the meantime, you will have added to your savings account and the discretionary fund for the item you dream of buying. Knowing that there is a pot of gold at the end of the financial rainbow can be a good deterrent to overspending.
Saving money is a good practice. Not only does it make your finances more stable, but there is also money for a rainy day.
Five Ways Kids Can Make Money
Kids are enterprising people. When they need more money, they will actually ask what they can do. Teach your children the value of a dollar earned with these five tips for them to make money.
1. Find work around the house. These additional jobs do not have to include their usual chores. Resist creating a job just for them to make the money. This is the same as opening your wallet and handing the cash over to them. Examine what already needs to be done and choose an age-appropriate task. Asking what they need the money for can drive the fee paid for the service. Don’t make it unreasonable, though. Cleaning out the closets may be worth ten dollars but certainly not thirty or forty.
2. Start a needed service in your neighborhood. Parents have the responsibility of upkeep inside and outside the house. As soon as your child is old enough, they can begin a lawn care business. You will need to help them. Create flyers and deliver them door-to-door or put them in mailboxes. State your services and the fee. Elderly neighbors and those that are too busy to do the work make ideal clients. Monitor your child at each job. Only help when they need you to pitch in.
3. Create crafts to sell on eBay. Your child may be the type that enjoys making crafts. If they have the knack, there is a market to sell their wares. EBay offers a no-pressure situation where kids can see business in action. Follow the policies for setting up an account. If they are too young, you may have to own the account. Take pictures of the items and assist your child in writing a description of them for a viewing audience. Selling on eBay introduces kids to the art of owning and maintaining a business.
4. Enlist their help in monitoring younger siblings. A child of seven or eight is old enough to keep an eye on a three year old while you are in the house. This is not a babysitting job, but a monitoring one. If you need to cook dinner or finish some other household chore, hire your youngster to keep an eye on their brothers and/or sisters while you do so. Stress the main points: Keep toys out of their mouths; keep them away from the stove; go where they go. Too many instructions will have your child zoning out.
5. Hold a yard sale. If a child wants some extra cash, they can get rid of toys and clothing that they don’t play with or can no longer wear. Enter the yard sale. Yard sales are an excellent way for kids to make a few bucks and clean their rooms at the same time. Instead of throwing away these items or storing them in the attic, let others derive the same benefit that your child received from them.
Kids are hard workers. Asking for more work is a sign that they are learning how valuable money can be to their lives. These five ways to make money are a start. Add more of your own as you think of them.
1. Find work around the house. These additional jobs do not have to include their usual chores. Resist creating a job just for them to make the money. This is the same as opening your wallet and handing the cash over to them. Examine what already needs to be done and choose an age-appropriate task. Asking what they need the money for can drive the fee paid for the service. Don’t make it unreasonable, though. Cleaning out the closets may be worth ten dollars but certainly not thirty or forty.
2. Start a needed service in your neighborhood. Parents have the responsibility of upkeep inside and outside the house. As soon as your child is old enough, they can begin a lawn care business. You will need to help them. Create flyers and deliver them door-to-door or put them in mailboxes. State your services and the fee. Elderly neighbors and those that are too busy to do the work make ideal clients. Monitor your child at each job. Only help when they need you to pitch in.
3. Create crafts to sell on eBay. Your child may be the type that enjoys making crafts. If they have the knack, there is a market to sell their wares. EBay offers a no-pressure situation where kids can see business in action. Follow the policies for setting up an account. If they are too young, you may have to own the account. Take pictures of the items and assist your child in writing a description of them for a viewing audience. Selling on eBay introduces kids to the art of owning and maintaining a business.
4. Enlist their help in monitoring younger siblings. A child of seven or eight is old enough to keep an eye on a three year old while you are in the house. This is not a babysitting job, but a monitoring one. If you need to cook dinner or finish some other household chore, hire your youngster to keep an eye on their brothers and/or sisters while you do so. Stress the main points: Keep toys out of their mouths; keep them away from the stove; go where they go. Too many instructions will have your child zoning out.
5. Hold a yard sale. If a child wants some extra cash, they can get rid of toys and clothing that they don’t play with or can no longer wear. Enter the yard sale. Yard sales are an excellent way for kids to make a few bucks and clean their rooms at the same time. Instead of throwing away these items or storing them in the attic, let others derive the same benefit that your child received from them.
Kids are hard workers. Asking for more work is a sign that they are learning how valuable money can be to their lives. These five ways to make money are a start. Add more of your own as you think of them.
Examine Your Spending Habits
Most people don’t fall into a pile of debt overnight. It takes time to rack up credit card bills and get behind in house payments. The key is managing your spending habits before things get out of control in the first place.
Take a look at your spending habits. Each of us is either a spender or a saver. There are distinct characteristics for both types of people.
Spenders love to buy things. They go with their first impressions. Impulse buying is their specialty. Not allowing time to think about a purchase before making it leaves them with stuff that they could have done without. Spenders live for today with little thought to the future. Why save when you can be happy now?
Savers are on the opposite end of the spectrum. They think about the future all the time. In fact, they give more thought to the future than they do to the present. They sacrifice to the point of piety. Enjoyment of life is not in their equation. The sad part is that they may not even enjoy themselves when they reach the point in life that they have been saving for. A penny saved is a penny earned.
Striking a balance between the two polar opposites is the best character trait to possess. While we should think about the future, we mustn’t obsess to the point that the present holds no meaning other than to service the future. Money is a means to live life to the fullest, but not the only one.
Start with last month’s purchases. Look at bank statements, credit card statements, and ATM receipts. The ATM machine is usually the fastest way to overspend. You put in your card and it spits money out at you. Most people don’t even ask for a receipt. At least if you had one, the amount could be recorded later when you returned home.
A budget is the best way to keep an eye on your money. Know what you have allotted to each category and stick to it. After the first few months you will be able to fine tune the line item amounts. Don’t cut yourself to the bone, thus making a budget hard to follow. On the other hand, don’t give yourself so much leeway that you go over budget every month.
Do you need that new sweater? Check the closet. There may be a clothing item or two that still fits and looks good. Visiting the mall just to “window shop” is too strong a temptation for the big spender. Instead of walking out empty-handed, they’ll pick up a few things that were on sale.
If ATM’s or debit cards are a problem, carry cash. Make one withdrawal a week for groceries, gas, and other incidentals. When the money is gone, that’s it. Writing checks for bills encourages you to track them in a ledger or electronically. Using cash may seem antiquated in today’s society, but it is still the best way to keep track of your spending. Receipts can be kept until the end of the month and then reconciled.
Taking the time to see where your money is actually going can help to curb those spending habits. Try to spend a little and save a lot each month. Hold out for those things that you want to see if you still want them a month or two from now when you have saved up the money.
Take a look at your spending habits. Each of us is either a spender or a saver. There are distinct characteristics for both types of people.
Spenders love to buy things. They go with their first impressions. Impulse buying is their specialty. Not allowing time to think about a purchase before making it leaves them with stuff that they could have done without. Spenders live for today with little thought to the future. Why save when you can be happy now?
Savers are on the opposite end of the spectrum. They think about the future all the time. In fact, they give more thought to the future than they do to the present. They sacrifice to the point of piety. Enjoyment of life is not in their equation. The sad part is that they may not even enjoy themselves when they reach the point in life that they have been saving for. A penny saved is a penny earned.
Striking a balance between the two polar opposites is the best character trait to possess. While we should think about the future, we mustn’t obsess to the point that the present holds no meaning other than to service the future. Money is a means to live life to the fullest, but not the only one.
Start with last month’s purchases. Look at bank statements, credit card statements, and ATM receipts. The ATM machine is usually the fastest way to overspend. You put in your card and it spits money out at you. Most people don’t even ask for a receipt. At least if you had one, the amount could be recorded later when you returned home.
A budget is the best way to keep an eye on your money. Know what you have allotted to each category and stick to it. After the first few months you will be able to fine tune the line item amounts. Don’t cut yourself to the bone, thus making a budget hard to follow. On the other hand, don’t give yourself so much leeway that you go over budget every month.
Do you need that new sweater? Check the closet. There may be a clothing item or two that still fits and looks good. Visiting the mall just to “window shop” is too strong a temptation for the big spender. Instead of walking out empty-handed, they’ll pick up a few things that were on sale.
If ATM’s or debit cards are a problem, carry cash. Make one withdrawal a week for groceries, gas, and other incidentals. When the money is gone, that’s it. Writing checks for bills encourages you to track them in a ledger or electronically. Using cash may seem antiquated in today’s society, but it is still the best way to keep track of your spending. Receipts can be kept until the end of the month and then reconciled.
Taking the time to see where your money is actually going can help to curb those spending habits. Try to spend a little and save a lot each month. Hold out for those things that you want to see if you still want them a month or two from now when you have saved up the money.
Do You Need to Eat Out Every Day?
This is a question we need to seriously think about. It’s fun to eat out with co-workers, but can our budget handle it? Following the group could be part of the problem that is siphoning our hard earned money each payday.
No one wants to be left out. Eating lunch together is a way to bond away from the office. Besides it’s only six dollars, right?
This scenario demonstrates how we think when it comes to spending money on food. Food and good times seem to go together in our culture. Eating out is not the only way to bond over food.
When setting up a budget, a category is created for groceries. A weekly or biweekly shopping trip to the grocery store brings enough groceries in the house to feed the family. Buying lunch when there is food in the house blows the budget.
Ask co-workers to try bringing in their own lunch at least three times a week. Make a plan to eat in the break room together or outside at a picnic table for lunch. They will save money also.
When you eat out, you probably choose the same one or two places. Make some of your favorite dishes at home and take them for lunch. The grocery trips are not just for breakfast and dinner items. Buy foods that are good in a packed lunch. Most workplaces have a microwave and/or a toaster oven. You can prepare your food and eat it piping hot.
If you have a group of co-workers that you spend most of your time with, why not start a lunch club. Each person takes a day and fixes something for the others in the group to enjoy. No one has to prepare a meal more than once a week and they will know in advance when it is their turn.
The extra food can be figured into the grocery bill. The lunch club idea may catch on and more people will want to join. The more people are involved, the less often each person has to contribute a meal. The meals don’t have to be elaborate. There are many delicious meals that require only a few ingredients.
You can still eat out once a week or maybe even twice. Add it to your budget. Pay for your meal in cash. This eliminates the temptation to overspend that can happen when using a credit card. Eating lunch out means that dinner will have to be eaten at home to balance spending habits.
Lastly, if the group still wants to eat out more often that your budget allows, opt out. Tell them politely that you can’t go and brown bag it. They’ll still be your friendly co-workers, and you’ll have learned a valuable lesson about resisting the temptation to follow the crowd at the expense of your money.
No one wants to be left out. Eating lunch together is a way to bond away from the office. Besides it’s only six dollars, right?
This scenario demonstrates how we think when it comes to spending money on food. Food and good times seem to go together in our culture. Eating out is not the only way to bond over food.
When setting up a budget, a category is created for groceries. A weekly or biweekly shopping trip to the grocery store brings enough groceries in the house to feed the family. Buying lunch when there is food in the house blows the budget.
Ask co-workers to try bringing in their own lunch at least three times a week. Make a plan to eat in the break room together or outside at a picnic table for lunch. They will save money also.
When you eat out, you probably choose the same one or two places. Make some of your favorite dishes at home and take them for lunch. The grocery trips are not just for breakfast and dinner items. Buy foods that are good in a packed lunch. Most workplaces have a microwave and/or a toaster oven. You can prepare your food and eat it piping hot.
If you have a group of co-workers that you spend most of your time with, why not start a lunch club. Each person takes a day and fixes something for the others in the group to enjoy. No one has to prepare a meal more than once a week and they will know in advance when it is their turn.
The extra food can be figured into the grocery bill. The lunch club idea may catch on and more people will want to join. The more people are involved, the less often each person has to contribute a meal. The meals don’t have to be elaborate. There are many delicious meals that require only a few ingredients.
You can still eat out once a week or maybe even twice. Add it to your budget. Pay for your meal in cash. This eliminates the temptation to overspend that can happen when using a credit card. Eating lunch out means that dinner will have to be eaten at home to balance spending habits.
Lastly, if the group still wants to eat out more often that your budget allows, opt out. Tell them politely that you can’t go and brown bag it. They’ll still be your friendly co-workers, and you’ll have learned a valuable lesson about resisting the temptation to follow the crowd at the expense of your money.
Ditch the Credit Cards
The society of today is built on plastic — the “charge and go” kind. It makes you wonder what people did before credit cards were invented! With those plastic wonders has come a mountain of debt. If this applies to you, to keep that debt from growing any larger consider giving your plastic the boot.
Did you know that some credit cards carry an interest rate as high as twenty-nine percent? You wouldn’t want an interest rate that large on your home or car, so why settle for it on your credit cards? For those credit card companies that offer a super low interest rate at the beginning, if you miss one payment, the interest rate jumps up to around a whopping eighteen percent or more. Read the fine print.
Credit cards are a way of establishing credit. Purchasing items and making payments on time lets potential credit lenders know that you are an acceptable risk for them. Good credit helps people to qualify for low interest loans on houses, cars, and furniture.
But that good credit standing can quickly change if you begin to charge more on those credit cards than you can possibly pay back. Interest is tacked on each month that the credit card carries a balance. It may be only a few dollars now, but let the balance linger for a few months and you will see the difference.
Using credit cards for intangible things encourages debt. It is convenient to purchase groceries, gas, pedicures, and other services on a credit card, but in a few weeks there will be nothing to show for it. When the bill comes, the food will have been eaten and the gas gone from the tank.
There’s no need to get rid of all of the credit cards. Keeping one card is okay for emergencies. We’ve all had the odd bit of car trouble now and then. Or, even worse, something happens to the heating unit or something else in the house. A credit card provides emergency money for the types of things that are unexpected.
What about the other cards? Cut them up! As soon as the balance reaches zero, call the credit card company and cancel them. Be aware that the representative will try to entice you to stick around. They may even offer to up the credit limit. It’s a trap, so don’t fall for it.
Before there was plastic, people used to pay with cash. Remember cash? If people didn’t have enough money, they waited until they did. We all could take a page from their book. People are too comfortable carrying around a boatload of debt.
Get rid of your debt for good. Keep one credit card for emergencies and let the rest go. Pay with cash or not at all. If it is meant for you to purchase a particular item, then it will still be there in three or four months when you've got the cash.
Did you know that some credit cards carry an interest rate as high as twenty-nine percent? You wouldn’t want an interest rate that large on your home or car, so why settle for it on your credit cards? For those credit card companies that offer a super low interest rate at the beginning, if you miss one payment, the interest rate jumps up to around a whopping eighteen percent or more. Read the fine print.
Credit cards are a way of establishing credit. Purchasing items and making payments on time lets potential credit lenders know that you are an acceptable risk for them. Good credit helps people to qualify for low interest loans on houses, cars, and furniture.
But that good credit standing can quickly change if you begin to charge more on those credit cards than you can possibly pay back. Interest is tacked on each month that the credit card carries a balance. It may be only a few dollars now, but let the balance linger for a few months and you will see the difference.
Using credit cards for intangible things encourages debt. It is convenient to purchase groceries, gas, pedicures, and other services on a credit card, but in a few weeks there will be nothing to show for it. When the bill comes, the food will have been eaten and the gas gone from the tank.
There’s no need to get rid of all of the credit cards. Keeping one card is okay for emergencies. We’ve all had the odd bit of car trouble now and then. Or, even worse, something happens to the heating unit or something else in the house. A credit card provides emergency money for the types of things that are unexpected.
What about the other cards? Cut them up! As soon as the balance reaches zero, call the credit card company and cancel them. Be aware that the representative will try to entice you to stick around. They may even offer to up the credit limit. It’s a trap, so don’t fall for it.
Before there was plastic, people used to pay with cash. Remember cash? If people didn’t have enough money, they waited until they did. We all could take a page from their book. People are too comfortable carrying around a boatload of debt.
Get rid of your debt for good. Keep one credit card for emergencies and let the rest go. Pay with cash or not at all. If it is meant for you to purchase a particular item, then it will still be there in three or four months when you've got the cash.
Discipline Yourself to Spend Less
No one wants to go into debt. We try to avoid it if we can, but we fall into the traps of credit cards and delayed payment specials so easily. Curbing our spending requires discipline and an honest effort.
As consumers, we have to learn to live within our means. This is more than having enough money in a paycheck to pay our bills. Financial security is having something in a savings account and money left over from our paychecks to use in an emergency if we need it.
Living paycheck to paycheck can be dangerous, especially if you have a family. Children get sick; cars break down. Taking money from the bills is not a wise decision, but if you are in a bind, you do what you have to do. The way to break this cycle is to spend less money each month.
Everyone wants to know how to do that. Discipline begins with a plan. A sound financial plan begins with a family budget. The first budget will be the hardest to develop, but once you get the hang of it, it won’t be so time-consuming the next time.
A budget is only as good as the people using it. Keep yourself accountable to someone — your spouse, your friend, your parents. Have a person who will call you out if you are spending too much money.
It takes two weeks to make or break a habit. Start at the beginning of a month and try out your budget. If you eat out for lunch at work, why not prepare your lunch for a month. Include lunch items on the grocery list and pack your lunch the night before.
Spending less requires changes in other areas besides the finances. Lunches for the kids and yourself can be fixed at night so no one forgets in the morning. Thaw out a meat for dinner in the morning so there is no excuse to eat out. Leave notes on the bathroom mirror and the refrigerator if you have to until you get the hang of the new way of doing things.
Don’t run out armed with your credit card or checkbook each time anyone wants something. Ask if it is necessary to have that particular item. Search around the house first to see if you already have it. I seem to buy a new pack of crayons each time my kids have a project. At the end of the school year, I find at least five boxes of crayons lying around. I would only have invested in one if I had taken the time to look. Okay, crayons aren’t that expensive, but it is the discipline that we are going for here.
Don’t alter your new spending habits when you get a raise at work or a holiday bonus. Treat the extra money as a way to save more. Don’t include it in the monthly budget. Simply take the cash and put it in the savings account.
Spending habits don’t change overnight. It takes time to change a shopaholic into a frugal fan, but it can be done when you try.
As consumers, we have to learn to live within our means. This is more than having enough money in a paycheck to pay our bills. Financial security is having something in a savings account and money left over from our paychecks to use in an emergency if we need it.
Living paycheck to paycheck can be dangerous, especially if you have a family. Children get sick; cars break down. Taking money from the bills is not a wise decision, but if you are in a bind, you do what you have to do. The way to break this cycle is to spend less money each month.
Everyone wants to know how to do that. Discipline begins with a plan. A sound financial plan begins with a family budget. The first budget will be the hardest to develop, but once you get the hang of it, it won’t be so time-consuming the next time.
A budget is only as good as the people using it. Keep yourself accountable to someone — your spouse, your friend, your parents. Have a person who will call you out if you are spending too much money.
It takes two weeks to make or break a habit. Start at the beginning of a month and try out your budget. If you eat out for lunch at work, why not prepare your lunch for a month. Include lunch items on the grocery list and pack your lunch the night before.
Spending less requires changes in other areas besides the finances. Lunches for the kids and yourself can be fixed at night so no one forgets in the morning. Thaw out a meat for dinner in the morning so there is no excuse to eat out. Leave notes on the bathroom mirror and the refrigerator if you have to until you get the hang of the new way of doing things.
Don’t run out armed with your credit card or checkbook each time anyone wants something. Ask if it is necessary to have that particular item. Search around the house first to see if you already have it. I seem to buy a new pack of crayons each time my kids have a project. At the end of the school year, I find at least five boxes of crayons lying around. I would only have invested in one if I had taken the time to look. Okay, crayons aren’t that expensive, but it is the discipline that we are going for here.
Don’t alter your new spending habits when you get a raise at work or a holiday bonus. Treat the extra money as a way to save more. Don’t include it in the monthly budget. Simply take the cash and put it in the savings account.
Spending habits don’t change overnight. It takes time to change a shopaholic into a frugal fan, but it can be done when you try.
Debt Settlement Basics
We all get into financial situations that we can’t handle from time to time. Sometimes the debt we incur is more than we can cope with and we need help. If this applies to you, then debt settlement is one possible solution. However, be aware of all that it entails in order to make an informed decision about whether it is right for your situation.
Debt settlement involves using a third party to manage the debt situation. You may have tried to talk to the creditors but to no avail. Each month that the payment is late, there is a fee. Once the fees push the balance over the credit limit, there is another fee. Things can get out of control in an as little as a few months.
Debt settlement puts you in touch with an agency that specializes in helping individuals deal with serious debts. Debt settlement agencies will review your situation to see if you qualify. Debt settlements are mainly done for unsecured debt. This includes unsecured credit cards, store charge cards, gas cards, and the like. There is nothing backing the extension of credit except your good name. Creditors have taken a risk with you as to whether you can repay any debt that you create.
Debt settlements can still affect your credit in a negative way. Creditors may report that you are entering into a debt settlement plan and other notations that can turn away future creditors. If you use a third party debt settlement agency, make sure that you understand this fact.
Once your case has been accepted, the debt settlement agent will look at several factors to determine a repayment plan for the debt. The amount of the debt is important. It needs to be beyond your ability to repay without some intervention.
The debt settlement agent will look at the interest rates being charged by the credit card company. During a debt settlement, they may be able to talk the creditor into lowering the interest rate to a more manageable one. The same goes for late fees. If late fees are a problem, the creditor may waive them in the interest of recouping some of the debt owed to them.
Working with an agency, the monthly payments agreed upon are made to the debt settlement agency. From there, they forward the payment to the appropriate creditors in accordance with the terms of the debt settlement. Your payments may include their fee for the services rendered.
Working with a debt settlement agency can keep the creditors off your back. Those annoying phone calls will stop most of the time once arrangements have been made for creditors to get their money. A few may still try to harass you, but the majority will be glad they are getting something from you.
Debt settlement agencies aren’t for everyone. Try to work out a deal with the credit card company before using a third party to do it for you. Besides the fees that may be charged to you, your credit could take a hit in the process.
Debt settlement involves using a third party to manage the debt situation. You may have tried to talk to the creditors but to no avail. Each month that the payment is late, there is a fee. Once the fees push the balance over the credit limit, there is another fee. Things can get out of control in an as little as a few months.
Debt settlement puts you in touch with an agency that specializes in helping individuals deal with serious debts. Debt settlement agencies will review your situation to see if you qualify. Debt settlements are mainly done for unsecured debt. This includes unsecured credit cards, store charge cards, gas cards, and the like. There is nothing backing the extension of credit except your good name. Creditors have taken a risk with you as to whether you can repay any debt that you create.
Debt settlements can still affect your credit in a negative way. Creditors may report that you are entering into a debt settlement plan and other notations that can turn away future creditors. If you use a third party debt settlement agency, make sure that you understand this fact.
Once your case has been accepted, the debt settlement agent will look at several factors to determine a repayment plan for the debt. The amount of the debt is important. It needs to be beyond your ability to repay without some intervention.
The debt settlement agent will look at the interest rates being charged by the credit card company. During a debt settlement, they may be able to talk the creditor into lowering the interest rate to a more manageable one. The same goes for late fees. If late fees are a problem, the creditor may waive them in the interest of recouping some of the debt owed to them.
Working with an agency, the monthly payments agreed upon are made to the debt settlement agency. From there, they forward the payment to the appropriate creditors in accordance with the terms of the debt settlement. Your payments may include their fee for the services rendered.
Working with a debt settlement agency can keep the creditors off your back. Those annoying phone calls will stop most of the time once arrangements have been made for creditors to get their money. A few may still try to harass you, but the majority will be glad they are getting something from you.
Debt settlement agencies aren’t for everyone. Try to work out a deal with the credit card company before using a third party to do it for you. Besides the fees that may be charged to you, your credit could take a hit in the process.
Debt Management 101
When many people think of debt management, they think of rearranging their budget so that they can pay off debts. But there is more to it than that. In fact, debt management is most effective when it's done before debts get out of hand.
Debt management simply means keeping debts down to a level where they do not present a problem. Those who have managed debt successfully can usually pay off credit card balances each month, and they often put extra money toward loans to pay them off more quickly. They do not take on more debt than they can handle, so they have no trouble paying it back.
Tips for managing debt successfully
* When going into debt for a necessity like a house or car, shop around for the best interest rates. This will keep your monthly payments lower. But that doesn't mean that you can't put extra money toward the payment each month and pay the loan off ahead of schedule.
* Shop around for credit cards as well. They are not all created equal. Some have higher interest rates than others, and some charge annual fees while others do not. If possible, get a card that offers cash back on purchases.
* Limit your credit cards to one or two. The more credit cards you have, the more temptation you will face. If you are managing your debt properly, you won't need more than two cards anyway.
* Refrain from getting cash advances. These usually carry a higher interest rate than regular purchases. If you need cash in an emergency and must get an advance, paying it back as quickly as possible will minimize the charges.
When debt gets out of hand
One of the most important aspects of debt management is knowing when you're getting into too much debt. People often do not realize that they're in too deep until their debt has become completely unmanageable, making it much more difficult to get back on track. By recognizing when debt levels are getting too high, you can retain control of your finances.
Early signs that you're getting into too much debt include the following:
* You are having trouble making your minimum monthly payments.
* You use credit cards to buy everyday necessities, without paying the balance in full each month.
* Your total charges each month add up to more than your total payments.
* You are approaching your credit limit.
If you find that you are heading toward too much debt, taking action quickly could save you a lot of trouble - as well as a lot of money. By recognizing the early signs of debt overload and paying debt off as quickly as possible, you could regain control over your finances before you know it.
Debt management simply means keeping debts down to a level where they do not present a problem. Those who have managed debt successfully can usually pay off credit card balances each month, and they often put extra money toward loans to pay them off more quickly. They do not take on more debt than they can handle, so they have no trouble paying it back.
Tips for managing debt successfully
* When going into debt for a necessity like a house or car, shop around for the best interest rates. This will keep your monthly payments lower. But that doesn't mean that you can't put extra money toward the payment each month and pay the loan off ahead of schedule.
* Shop around for credit cards as well. They are not all created equal. Some have higher interest rates than others, and some charge annual fees while others do not. If possible, get a card that offers cash back on purchases.
* Limit your credit cards to one or two. The more credit cards you have, the more temptation you will face. If you are managing your debt properly, you won't need more than two cards anyway.
* Refrain from getting cash advances. These usually carry a higher interest rate than regular purchases. If you need cash in an emergency and must get an advance, paying it back as quickly as possible will minimize the charges.
When debt gets out of hand
One of the most important aspects of debt management is knowing when you're getting into too much debt. People often do not realize that they're in too deep until their debt has become completely unmanageable, making it much more difficult to get back on track. By recognizing when debt levels are getting too high, you can retain control of your finances.
Early signs that you're getting into too much debt include the following:
* You are having trouble making your minimum monthly payments.
* You use credit cards to buy everyday necessities, without paying the balance in full each month.
* Your total charges each month add up to more than your total payments.
* You are approaching your credit limit.
If you find that you are heading toward too much debt, taking action quickly could save you a lot of trouble - as well as a lot of money. By recognizing the early signs of debt overload and paying debt off as quickly as possible, you could regain control over your finances before you know it.
Do Debt Consolidation Services Really Work?
Paying off everything we owe on our own is the preferable way to handle debt. But sometimes that's easier said than done. Our circumstances often change, making it impossible to even make our minimum monthly payments.
Debt consolidation is a solution sought out by many debtors who are in too deep. This can be achieved by transferring all debt to a low-interest credit card, or by taking out a home equity loan. There are also debt consolidation or credit counseling services that consumers can utilize.
How do these services work?
Credit counseling consists of negotiating with a client's creditors for lower interest and/or lower payments. Late and over-the-limit fees are often waived as well. Then the client sends the credit counseling agency one payment each month, and the agency distributes the money to creditors as agreed upon.
The pros
If you're unable to negotiate lower rates and payments with creditors on your own, a credit counselor can usually do it for you. This will save you money and help you get your debt paid off more quickly. The credit counselor can also help you write a budget to help you stick to the payment plan while still being able to afford all of your other expenses.
The cons
One problem with credit counseling is that it sometimes does not result in a monthly payment that the client can afford. Creditors are only willing to negotiate so far, and if you owe a lot of money you may not be able to afford the best deal they will give you. If that is the case, you'll have to either find another means of paying your debt or consider bankruptcy.
Another thing about credit counseling is that it isn't free. Credit counseling agencies may charge monthly fees for their services, adding them on to your monthly payment. If they don't, they have to get the money to pay their employees somewhere. That "somewhere" is usually from your debtors, as a percentage of your payment.
There is some debate as to how going through credit counseling affects your credit. It is noted on your credit report. In most cases, you can't get new credit until you complete the program. But it could also affect you after your debts are paid off. Many lenders consider credit counseling as being similar to Chapter 13 bankruptcy.
And finally, it is imperative to check out any credit counseling agency that you are considering. Just like any other business, there are some that are not trustworthy. The Better Business Bureau is a good source of information on credit counseling agencies.
Credit counseling may be able to help you get your debts paid off. But it is important to consider the pros and the cons of entering such a program. Trying to work out a deal with creditors on your own may work, eliminating the need to get a third party involved.
Debt consolidation is a solution sought out by many debtors who are in too deep. This can be achieved by transferring all debt to a low-interest credit card, or by taking out a home equity loan. There are also debt consolidation or credit counseling services that consumers can utilize.
How do these services work?
Credit counseling consists of negotiating with a client's creditors for lower interest and/or lower payments. Late and over-the-limit fees are often waived as well. Then the client sends the credit counseling agency one payment each month, and the agency distributes the money to creditors as agreed upon.
The pros
If you're unable to negotiate lower rates and payments with creditors on your own, a credit counselor can usually do it for you. This will save you money and help you get your debt paid off more quickly. The credit counselor can also help you write a budget to help you stick to the payment plan while still being able to afford all of your other expenses.
The cons
One problem with credit counseling is that it sometimes does not result in a monthly payment that the client can afford. Creditors are only willing to negotiate so far, and if you owe a lot of money you may not be able to afford the best deal they will give you. If that is the case, you'll have to either find another means of paying your debt or consider bankruptcy.
Another thing about credit counseling is that it isn't free. Credit counseling agencies may charge monthly fees for their services, adding them on to your monthly payment. If they don't, they have to get the money to pay their employees somewhere. That "somewhere" is usually from your debtors, as a percentage of your payment.
There is some debate as to how going through credit counseling affects your credit. It is noted on your credit report. In most cases, you can't get new credit until you complete the program. But it could also affect you after your debts are paid off. Many lenders consider credit counseling as being similar to Chapter 13 bankruptcy.
And finally, it is imperative to check out any credit counseling agency that you are considering. Just like any other business, there are some that are not trustworthy. The Better Business Bureau is a good source of information on credit counseling agencies.
Credit counseling may be able to help you get your debts paid off. But it is important to consider the pros and the cons of entering such a program. Trying to work out a deal with creditors on your own may work, eliminating the need to get a third party involved.
Credit Counseling Explained
The average person carries several thousand dollars of debt. While this may not be a lot in the grand scheme of things, it does make a difference to a person’s creditworthiness if they can’t pay. If this is where you fall, credit counseling may be the answer. Here are some facts about the credit counseling process.
A person with a sizeable debt that is hard to manage may consider talking to a credit counselor. A credit counselor is someone who is well versed in the area of debt management and repayment. Their job is to help an individual not only to get out from under their debt situation, but also to educate them on how not to end up there again.
Credit counselors work for the consumer. They exist to help you work out an agreement with the creditors to get them their money and you back into financial shape. A credit counselor will listen to the particulars of the credit debt situation and come up with suggestions for a debt repayment plan.
The debt repayment plan takes into account your assets, earnings, and ability to pay. The monthly payment will be based on what you can pay without causing other bills to fall behind. These counselors have established a rapport with many creditors and know what they will and will not accept concerning payment arrangements. As much as fifty percent or more of your outstanding debt could be forgiven.
Credit counselors usually have backgrounds in business and/or finance. They also know how to counsel people in such matters. They must keep up credit counseling certification to be recognized as a legitimate practitioner of this service. Training and testing are involved in the process of becoming a certified credit counselor.
Credit counselors will offer information on credit repair. They advise clients about how to rebuild credit after they have gone through debt restructuring. They stress the importance of reviewing and understanding a credit report. Most importantly, they discuss how to manage money wisely so that debt is not a way of life, but something to be avoided in the future.
Credit counselors do not repair your credit. Some people are under the impression that credit counselors will help to fix credit after the repayment plan is completed. You, the consumer, can fix your credit in as much time as it will take them. Ask for advice on how to go about the process, but work on fixing credit on your own. It will be a helpful learning experience.
Credit counseling services may charge a fee. Check into the programs that appeal to you and find out what, if any, fees will be asked of you. If the credit counselors are reputable, go with a company that charges fifty dollars over the one that charges a higher rate. More expensive doesn’t mean that the services are better.
Credit counselors are there to help you. They work with creditors to lower payments for the consumer. If you have reached the point of pulling your hair out, give them a call and find out what they can do for you.
A person with a sizeable debt that is hard to manage may consider talking to a credit counselor. A credit counselor is someone who is well versed in the area of debt management and repayment. Their job is to help an individual not only to get out from under their debt situation, but also to educate them on how not to end up there again.
Credit counselors work for the consumer. They exist to help you work out an agreement with the creditors to get them their money and you back into financial shape. A credit counselor will listen to the particulars of the credit debt situation and come up with suggestions for a debt repayment plan.
The debt repayment plan takes into account your assets, earnings, and ability to pay. The monthly payment will be based on what you can pay without causing other bills to fall behind. These counselors have established a rapport with many creditors and know what they will and will not accept concerning payment arrangements. As much as fifty percent or more of your outstanding debt could be forgiven.
Credit counselors usually have backgrounds in business and/or finance. They also know how to counsel people in such matters. They must keep up credit counseling certification to be recognized as a legitimate practitioner of this service. Training and testing are involved in the process of becoming a certified credit counselor.
Credit counselors will offer information on credit repair. They advise clients about how to rebuild credit after they have gone through debt restructuring. They stress the importance of reviewing and understanding a credit report. Most importantly, they discuss how to manage money wisely so that debt is not a way of life, but something to be avoided in the future.
Credit counselors do not repair your credit. Some people are under the impression that credit counselors will help to fix credit after the repayment plan is completed. You, the consumer, can fix your credit in as much time as it will take them. Ask for advice on how to go about the process, but work on fixing credit on your own. It will be a helpful learning experience.
Credit counseling services may charge a fee. Check into the programs that appeal to you and find out what, if any, fees will be asked of you. If the credit counselors are reputable, go with a company that charges fifty dollars over the one that charges a higher rate. More expensive doesn’t mean that the services are better.
Credit counselors are there to help you. They work with creditors to lower payments for the consumer. If you have reached the point of pulling your hair out, give them a call and find out what they can do for you.
Should College Students Pay For Their Education?
High school graduation is upon you and your child wants to take the next step. College is not cheap these days. The costs continue to rise each year. This fact has some folks asking, should college students pay for their education?
Higher education is a necessity these days. A student with an advanced degree beyond the high school diploma has a world of options available to them. Depending on the program of study, college students can apply for internships and gain valuable experience while they are still in college. All of this adds up to a brighter future in the world of work.
Parents continue to support their children through the college years. A summer job is hardly enough work to finance an education, so parental help is necessary. Some parents, however, don’t have the finances to fund a college education for one child, let alone two or three.
Students begin the journey towards a college education when they are in high school. Here, they map out a plan to get them to the college of their choice. These are the years when grades, volunteer work, and other opportunities are worked on. High school sets the stage for college.
Students that use high school as a staging area for further educational pursuits are, in essence, trying to pay for their education. Good grades can lead to local scholarships. Athletic students can earn tryouts from college scouts that could lead to scholarships.
Financial aid can come in the form of grants, loans, institutional scholarships, and private funding. Senior year is the time when aid is applied for. Hard work pays off in the form of a lucrative aid package that limits the amount of funding parents need to provide. With just a bit of help from the parents, college students have paid for their education.
On the other hand, parents can start an educational savings fund for their kids as soon as they are financially able. A total of 529 plans exist for each state, and can be used for all educational needs of the college student. This also relieves the financial burden on parents because even a small amount added over time equals substantial funding for college.
If parents are worried about how they will manage to run a household and support a college student, start early. Prepare your child to shoulder some of the responsibility by getting their act together and following a game plan for the high school years. Parents can prepare early by starting a college savings fund in the name of each child.
By working together, the problem of funding a college education becomes less painful. Should college students pay for their education? Yes, but not alone. They should do everything within their power to obtain the money they need. Parents need to do the same. College is a rite of passage - make it a smooth one.
Higher education is a necessity these days. A student with an advanced degree beyond the high school diploma has a world of options available to them. Depending on the program of study, college students can apply for internships and gain valuable experience while they are still in college. All of this adds up to a brighter future in the world of work.
Parents continue to support their children through the college years. A summer job is hardly enough work to finance an education, so parental help is necessary. Some parents, however, don’t have the finances to fund a college education for one child, let alone two or three.
Students begin the journey towards a college education when they are in high school. Here, they map out a plan to get them to the college of their choice. These are the years when grades, volunteer work, and other opportunities are worked on. High school sets the stage for college.
Students that use high school as a staging area for further educational pursuits are, in essence, trying to pay for their education. Good grades can lead to local scholarships. Athletic students can earn tryouts from college scouts that could lead to scholarships.
Financial aid can come in the form of grants, loans, institutional scholarships, and private funding. Senior year is the time when aid is applied for. Hard work pays off in the form of a lucrative aid package that limits the amount of funding parents need to provide. With just a bit of help from the parents, college students have paid for their education.
On the other hand, parents can start an educational savings fund for their kids as soon as they are financially able. A total of 529 plans exist for each state, and can be used for all educational needs of the college student. This also relieves the financial burden on parents because even a small amount added over time equals substantial funding for college.
If parents are worried about how they will manage to run a household and support a college student, start early. Prepare your child to shoulder some of the responsibility by getting their act together and following a game plan for the high school years. Parents can prepare early by starting a college savings fund in the name of each child.
By working together, the problem of funding a college education becomes less painful. Should college students pay for their education? Yes, but not alone. They should do everything within their power to obtain the money they need. Parents need to do the same. College is a rite of passage - make it a smooth one.
Should College Students Have Credit Cards?
It was scary enough to think of them driving a car at sixteen. Now they are heading off to college. Most parents are not worried about their teenagers getting their hands on a credit card — the plastic of choice for college students. But should they have credit cards in the first place?
It never fails. If you advice your child against something, they will want to do it even more. That goes for credit cards, too.
College students are the fastest growing untapped market. They are not fully adults but not children either. They represent millions of dollars in buying power. They qualify for loans to attend college and other financial aid.
Credit card companies often make deals with colleges to distribute applications to their students in exchange for credit cards that carry the college logo or school name. It’s too bad that those applications are not accompanied by some literature or a course in money management. When the college students qualify for those high credit limits, they don’t account for the fact that they don’t have the income to repay their purchases.
The question is not whether college students should have credit cards but instead, who should give them one. They will acquire one whether parents want them to or not. To head off disaster, parents can be the one to supply the credit card for their college student.
You can add your college student to your own credit card account. You can have a card issued to them in their name but where you can see what they purchase on the account. Set some ground rules and see what becomes of the situation. If good money management has been a part of their life up until then, the student will have a fighting chance of resisting the temptations of plastic.
Go over the statements once a month with them. This can be done over the phone if they attend school far away, or in person if they can make it home for a weekend. Keeping in touch and setting up payments adds accountability to the equation. With a credit card, they will need that from you.
Another option is to open a bank account and get a debit card. Your college student can use the debit card like a Visa or MasterCard. By adding a certain amount of money to the account each month, you are setting a “credit limit” for them. If they can manage the money in this account over a period of time, they could prove themselves ready for a credit card.
College students may not realize the importance of a good credit score, but their parents do. In an attempt to keep their credit good, help them ease into the world of plastic by providing a proving ground of your own making to test their mettle.
It never fails. If you advice your child against something, they will want to do it even more. That goes for credit cards, too.
College students are the fastest growing untapped market. They are not fully adults but not children either. They represent millions of dollars in buying power. They qualify for loans to attend college and other financial aid.
Credit card companies often make deals with colleges to distribute applications to their students in exchange for credit cards that carry the college logo or school name. It’s too bad that those applications are not accompanied by some literature or a course in money management. When the college students qualify for those high credit limits, they don’t account for the fact that they don’t have the income to repay their purchases.
The question is not whether college students should have credit cards but instead, who should give them one. They will acquire one whether parents want them to or not. To head off disaster, parents can be the one to supply the credit card for their college student.
You can add your college student to your own credit card account. You can have a card issued to them in their name but where you can see what they purchase on the account. Set some ground rules and see what becomes of the situation. If good money management has been a part of their life up until then, the student will have a fighting chance of resisting the temptations of plastic.
Go over the statements once a month with them. This can be done over the phone if they attend school far away, or in person if they can make it home for a weekend. Keeping in touch and setting up payments adds accountability to the equation. With a credit card, they will need that from you.
Another option is to open a bank account and get a debit card. Your college student can use the debit card like a Visa or MasterCard. By adding a certain amount of money to the account each month, you are setting a “credit limit” for them. If they can manage the money in this account over a period of time, they could prove themselves ready for a credit card.
College students may not realize the importance of a good credit score, but their parents do. In an attempt to keep their credit good, help them ease into the world of plastic by providing a proving ground of your own making to test their mettle.
Children’s Savings Accounts
When your child’s piggy bank or other money collecting device gets full, it may be time to open an account at the bank. A bank account allows children to keep track of money they have saved more easily. Here are some types of savings accounts that parents may want to consider.
A savings account can be started as soon as a child has money to put in one. Choose a day when you both have some free time and make a trip to your local branch of the bank. Talk to a teller or bank associate about starting an account for your child.
You and your child can open a statement savings account. This account gives both of you a monthly report of all account activity. It includes all of the deposits that your child has made into the account and all of the money that they have taken out of the account.
Read over the statement carefully with your child. Explain the various parts of the statement to them. Show them how much money they had and what they ended up with after interest payments and other account activity. Most statements list withdrawals and the date but not a detailed description of the transaction. You can write on the statement what each transaction was for so that the children get an idea of how they are spending their money.
There are also passbook savings accounts. I actually had one of these when I was in college. Each account holder is given a small book. Each time a deposit is made or a withdrawal is requested, the book is run through a machine that records the transaction on the pages of the passbook. This way, your child finds out his or her new balance right away instead of waiting for a statement at the end of the month. Some kids like that because they can look at their money as often as they want.
Banks are not the only institutions that issue savings accounts to children. Credit unions also have savings accounts available to the children of their members. There are special savings accounts that are designed for kids of various ages. When the account is opened, they receive an ATM card with their picture on it and other free gifts for starting the account.
An ATM/debit card can be used as cash by your child for their purchases. Parents can keep the receipts and teach children how to check them against their savings account statements each month. Allowance money can also be deposited in the savings account each month.
If a child is under eighteen, some states will issue custodial savings accounts. These accounts list the parent’s name as the account holder and the child’s name underneath. The account ownership can be transferred to the child when they turn eighteen.
Savings accounts are a great tool for teaching money management skills. Kids can keep track of their money easily and even use an ATM/debit card to make purchases or withdraw cash.
A savings account can be started as soon as a child has money to put in one. Choose a day when you both have some free time and make a trip to your local branch of the bank. Talk to a teller or bank associate about starting an account for your child.
You and your child can open a statement savings account. This account gives both of you a monthly report of all account activity. It includes all of the deposits that your child has made into the account and all of the money that they have taken out of the account.
Read over the statement carefully with your child. Explain the various parts of the statement to them. Show them how much money they had and what they ended up with after interest payments and other account activity. Most statements list withdrawals and the date but not a detailed description of the transaction. You can write on the statement what each transaction was for so that the children get an idea of how they are spending their money.
There are also passbook savings accounts. I actually had one of these when I was in college. Each account holder is given a small book. Each time a deposit is made or a withdrawal is requested, the book is run through a machine that records the transaction on the pages of the passbook. This way, your child finds out his or her new balance right away instead of waiting for a statement at the end of the month. Some kids like that because they can look at their money as often as they want.
Banks are not the only institutions that issue savings accounts to children. Credit unions also have savings accounts available to the children of their members. There are special savings accounts that are designed for kids of various ages. When the account is opened, they receive an ATM card with their picture on it and other free gifts for starting the account.
An ATM/debit card can be used as cash by your child for their purchases. Parents can keep the receipts and teach children how to check them against their savings account statements each month. Allowance money can also be deposited in the savings account each month.
If a child is under eighteen, some states will issue custodial savings accounts. These accounts list the parent’s name as the account holder and the child’s name underneath. The account ownership can be transferred to the child when they turn eighteen.
Savings accounts are a great tool for teaching money management skills. Kids can keep track of their money easily and even use an ATM/debit card to make purchases or withdraw cash.
Chapter 7 Versus Chapter 13 Bankruptcy
Is the financial situation in your life such that you need to file for bankruptcy? If so, there are two types of bankruptcy that apply to the individual: Chapter 7 and Chapter 13. They differ in many ways. Learn the details of both before choosing which type of bankruptcy to file for.
Chapter 7 bankruptcy is the one that most people seek to file. When a person files for bankruptcy under Chapter 7, their assets are liquidated to pay what is owed to the creditors. The courts decide on a reasonable amount for payment based on individual circumstances.
All of the assets are not liquidated. Each state has its own policy as to what assets are considered a part of the liquidation equation. You may be allowed to keep your home and car.
In October 2005, the laws concerning Chapter 7 bankruptcy were changed. Now, there are tests that have to be passed in order to file for Chapter 7 bankruptcy. A person’s income must be lower than the determined median income for the state in which they reside. Also, a person must not have the assets available to pay at least twenty-five percent of their debt owed in order to qualify to file under Chapter 7.
Special circumstances have to be demonstrated by the filer in order to override the testing requirements. Special circumstances were extended to victims of Hurricane Katrina so that they could have the chance of a new start after the flooding disaster that destroyed their homes. If the judgment is against filing for Chapter 7 you may appeal, but this involves another trip to the courts and extra expense. If you feel that you need to be heard, it could be worth it.
Chapter 13 bankruptcy involves repayment of the debt owed to creditors. You are given a time frame to pay off your debt and means are developed for you to do so. The assets that you own are not liquidated. The courts look at your finances and determine what you can reasonably afford to pay back to the creditors.
Under the new bankruptcy laws, this process is a little different. The court used to decide what expenses where necessary for you to pay and what were not. Necessary expenses where things like rent/mortgage, groceries, utilities, and so forth. Under the new law, a formula developed by the IRS determines this.
The government wants people to think long and hard about filing for bankruptcy. Before any bankruptcy proceedings take place, the potential filer must attend credit counseling. Also, the government can liquidate or non-exempt any assets that were purchased right before bankruptcy was declared. The attempts to hide money within property not subject to seizure are no longer an option for abusers of the system.
Bankruptcy filing is a serious matter. If you are determined to file, know which type you stand a chance of qualifying for with the courts. Since laws are tougher, be aware that bankruptcy lawyers will charge more for their part in the process.
Chapter 7 bankruptcy is the one that most people seek to file. When a person files for bankruptcy under Chapter 7, their assets are liquidated to pay what is owed to the creditors. The courts decide on a reasonable amount for payment based on individual circumstances.
All of the assets are not liquidated. Each state has its own policy as to what assets are considered a part of the liquidation equation. You may be allowed to keep your home and car.
In October 2005, the laws concerning Chapter 7 bankruptcy were changed. Now, there are tests that have to be passed in order to file for Chapter 7 bankruptcy. A person’s income must be lower than the determined median income for the state in which they reside. Also, a person must not have the assets available to pay at least twenty-five percent of their debt owed in order to qualify to file under Chapter 7.
Special circumstances have to be demonstrated by the filer in order to override the testing requirements. Special circumstances were extended to victims of Hurricane Katrina so that they could have the chance of a new start after the flooding disaster that destroyed their homes. If the judgment is against filing for Chapter 7 you may appeal, but this involves another trip to the courts and extra expense. If you feel that you need to be heard, it could be worth it.
Chapter 13 bankruptcy involves repayment of the debt owed to creditors. You are given a time frame to pay off your debt and means are developed for you to do so. The assets that you own are not liquidated. The courts look at your finances and determine what you can reasonably afford to pay back to the creditors.
Under the new bankruptcy laws, this process is a little different. The court used to decide what expenses where necessary for you to pay and what were not. Necessary expenses where things like rent/mortgage, groceries, utilities, and so forth. Under the new law, a formula developed by the IRS determines this.
The government wants people to think long and hard about filing for bankruptcy. Before any bankruptcy proceedings take place, the potential filer must attend credit counseling. Also, the government can liquidate or non-exempt any assets that were purchased right before bankruptcy was declared. The attempts to hide money within property not subject to seizure are no longer an option for abusers of the system.
Bankruptcy filing is a serious matter. If you are determined to file, know which type you stand a chance of qualifying for with the courts. Since laws are tougher, be aware that bankruptcy lawyers will charge more for their part in the process.
Change Your Money Attitude
Some people spend and some people save. Why is that? Our attitudes and thinking about money determine our spending habits. Changing the way you spend requires an attitude adjustment.
How do you view money? We learn from an early age about money. We watch our parents and how they handle the money that they make. Some may have had very little because Mom and Dad were low wage earners. Some had a lot of money because Mom and Dad had good jobs.
Whatever your environment, your money views were probably shaped by the people around you. Unhealthy views of money begin here. If money was a bone of contention in your home, you will likely make every effort to avoid confrontation when it comes to money. That could lead to overspending becoming a hush-hush topic in the home.
If money flowed freely, then you could become a free spender as an adult. Even if your means are more limited than your parents’, you may continue to spend as if you had a million dollars. This type of money attitude can lead to a debt burden too big for you to carry.
Many scenarios can be drawn from childhood exposure to money. Remember Ebenezer Scrooge? He grew up with no money and it consumed him. During his adult life he shunned all other pleasures for the love of money. No one wants to end up like that.
Change your attitude towards money. Having the desire to do so is the first step. It is not an easy process, but if you are determined to learn how to do it, you have a fighting chance.
Visit with a financial advisor. Talk to them about your money woes and your views about money. Tell them what you want to accomplish with your money. A financial advisor can take your money and other assets and create a portfolio for you. The portfolio includes how to invest and what to invest in.
A financial adviser may be able to help with a budget. For frugal spenders, a budget can set aside money for one's enjoyment each month. A frugal person may not take more than one day of freedom, but it is a start. As time goes on, they will relax the reins and learn to enjoy money now and in the future.
A big spender will use a budget to curb spending. It is okay to spend, but make it special and not an everyday occurrence. Money doesn’t always flow freely unless we plan for it to do so. That requires a spender to realize that it is okay not to spend it all at once, but to save some for later.
What is your money attitude? Is it helping or hurting you? To improve your life, why not talk to a financial expert about healthy changes to your money attitude.
How do you view money? We learn from an early age about money. We watch our parents and how they handle the money that they make. Some may have had very little because Mom and Dad were low wage earners. Some had a lot of money because Mom and Dad had good jobs.
Whatever your environment, your money views were probably shaped by the people around you. Unhealthy views of money begin here. If money was a bone of contention in your home, you will likely make every effort to avoid confrontation when it comes to money. That could lead to overspending becoming a hush-hush topic in the home.
If money flowed freely, then you could become a free spender as an adult. Even if your means are more limited than your parents’, you may continue to spend as if you had a million dollars. This type of money attitude can lead to a debt burden too big for you to carry.
Many scenarios can be drawn from childhood exposure to money. Remember Ebenezer Scrooge? He grew up with no money and it consumed him. During his adult life he shunned all other pleasures for the love of money. No one wants to end up like that.
Change your attitude towards money. Having the desire to do so is the first step. It is not an easy process, but if you are determined to learn how to do it, you have a fighting chance.
Visit with a financial advisor. Talk to them about your money woes and your views about money. Tell them what you want to accomplish with your money. A financial advisor can take your money and other assets and create a portfolio for you. The portfolio includes how to invest and what to invest in.
A financial adviser may be able to help with a budget. For frugal spenders, a budget can set aside money for one's enjoyment each month. A frugal person may not take more than one day of freedom, but it is a start. As time goes on, they will relax the reins and learn to enjoy money now and in the future.
A big spender will use a budget to curb spending. It is okay to spend, but make it special and not an everyday occurrence. Money doesn’t always flow freely unless we plan for it to do so. That requires a spender to realize that it is okay not to spend it all at once, but to save some for later.
What is your money attitude? Is it helping or hurting you? To improve your life, why not talk to a financial expert about healthy changes to your money attitude.
Bankruptcy Is Not the End
So you had to file for bankruptcy. Unforeseen circumstances can cause this to be the only option. However, just because you were once bankrupt does not mean that your future is grim.
Bankruptcy is a hard choice to make. Millions of people have experienced it and come out on the other side. It won’t be easy, but you can recover from this type of financial disaster. Bankruptcy is not the end.
Your credit can be repaired after going through a bankruptcy. Start by paying your bills on time. If you filed for a Chapter 7 bankruptcy, your debt would have been wiped out along with some of your assets.
Be responsible with what you still have left. You still have your home. Make utility payments on time. Establishing a record of timely payments is one way to work towards fixing your credit.
After a few months, apply for a secured credit card. Secured cards require the cardholder to pay a deposit. This is the money that you will start with. Over time, you may qualify for an unsecured credit card.
Stick to one credit card and avoid making regular charges on it. Keeping the card for emergencies is a good idea. Having a credit card re-establishes your credit.
Train yourself to pay for everything in cash. Unless you have cash to back up a purchase, don’t buy anything; this could be one reason bankruptcy was filed in the first place. Going back to using cash is a healthy way to build up a bank account and savings account balance.
Create a plan for success. You have been bankrupt once so you don’t want to go there again. Divide discretionary money between savings and a fund for emergencies. Since your debt was wiped out, there should be no credit card payments to consider at this time.
Once you get that first credit card, companies will start hounding you. Don’t give in to them. Be flattered, but resist the urge to get started with the credit card debt cycle again.
Discipline yourself to live within your means. This includes saving for a rainy day. Consult a financial advisor or go to credit counseling. Credit counselors can give you information about money management and spending tips.
A financial advisor can take the extra money that you put in a savings account and show you how to invest for the future. One day you will want to retire. Retirement could last as long as twenty to thirty years. Having enough money to live out that portion of your life is important. Concentrate on that part of your financial future as you wait with patience for your credit to be re-established.
Bankruptcy is not the end of the story. People can recover from it and develop a healthy financial picture. However, it takes time and patience.
Bankruptcy is a hard choice to make. Millions of people have experienced it and come out on the other side. It won’t be easy, but you can recover from this type of financial disaster. Bankruptcy is not the end.
Your credit can be repaired after going through a bankruptcy. Start by paying your bills on time. If you filed for a Chapter 7 bankruptcy, your debt would have been wiped out along with some of your assets.
Be responsible with what you still have left. You still have your home. Make utility payments on time. Establishing a record of timely payments is one way to work towards fixing your credit.
After a few months, apply for a secured credit card. Secured cards require the cardholder to pay a deposit. This is the money that you will start with. Over time, you may qualify for an unsecured credit card.
Stick to one credit card and avoid making regular charges on it. Keeping the card for emergencies is a good idea. Having a credit card re-establishes your credit.
Train yourself to pay for everything in cash. Unless you have cash to back up a purchase, don’t buy anything; this could be one reason bankruptcy was filed in the first place. Going back to using cash is a healthy way to build up a bank account and savings account balance.
Create a plan for success. You have been bankrupt once so you don’t want to go there again. Divide discretionary money between savings and a fund for emergencies. Since your debt was wiped out, there should be no credit card payments to consider at this time.
Once you get that first credit card, companies will start hounding you. Don’t give in to them. Be flattered, but resist the urge to get started with the credit card debt cycle again.
Discipline yourself to live within your means. This includes saving for a rainy day. Consult a financial advisor or go to credit counseling. Credit counselors can give you information about money management and spending tips.
A financial advisor can take the extra money that you put in a savings account and show you how to invest for the future. One day you will want to retire. Retirement could last as long as twenty to thirty years. Having enough money to live out that portion of your life is important. Concentrate on that part of your financial future as you wait with patience for your credit to be re-established.
Bankruptcy is not the end of the story. People can recover from it and develop a healthy financial picture. However, it takes time and patience.
Bankruptcy - Is It the Answer?
For those who feel that they are in serious financial distress, bankruptcy may have crossed their minds. Bankruptcy is not something to be taken lightly. While your debt may be wiped clean, there are far-reaching consequences for that “new freedom”.
When a person’s debt has risen to a level that they can’t hope to get under control, they may consider filing for bankruptcy. For a consumer there are two bankruptcy choices: Chapter 7 and Chapter 13. Chapter 7 bankruptcies involve wiping out the debts in part or in their entirety and liquidating assets to do it. Chapter 13 bankruptcies are more of a debt restructuring plan that gives you more time and a plan to pay back a portion of the debt that is owed to creditors.
Bankruptcy damages a person’s credit. A bankruptcy judgment stays on credit reports for as long as ten years. During that time, any credit that is applied for will disclose the bankruptcy to the creditor. If filing Chapter 13, you still have to pay back part of your debt and the judgment stays on your credit report for ten years.
In the past, people have taken advantage of the bankruptcy laws. For instance, people have been able to file more than once for Chapter 7 bankruptcy. They have used it as their own personal “debt eliminator”.
Each state decides on what assets they will exempt from being seized during a bankruptcy hearing. Knowing that, some may use available cash to purchase those items (homes, cars, etc.) in an effort to avoid payment and still retain the stuff they purchased. In this instance, creditors receive little or nothing from the bankruptcy settlement.
The new laws concerning bankruptcy have changed this. Whereas courts used to have the leeway of deciding who could file for Chapter 7 bankruptcy, there are now criteria that must be met first. In order to file for Chapter 7 bankruptcy, a person has to have an income that is below the median income for the state where they live. Their income must be put through a calculation that determines if they have enough disposable income to pay twenty-five percent of their outstanding debt.
More people that file bankruptcy will have to file under Chapter 13. The courts decide what a person could pay from the information provided to them. There is an allowance made for rent/mortgage, food, and other pertinent bills. With the new bankruptcy law, standards set by the IRS determine allowable values for each of these bills. A certain amount is exempted, and the payments are determined from the rest.
Because there are more hoops to jump through, bankruptcy lawyers are charging more for their services. The whole process of bankruptcy will cost the filer more than before, which will make them think twice about the process. Credit counseling sessions are also required as a precursor to filing for bankruptcy. A credit counselor may determine that they can help you and thus eliminate the need for bankruptcy proceedings.
Bankruptcy should always be a last resort. While it will give you a clean slate, it comes at a price.
When a person’s debt has risen to a level that they can’t hope to get under control, they may consider filing for bankruptcy. For a consumer there are two bankruptcy choices: Chapter 7 and Chapter 13. Chapter 7 bankruptcies involve wiping out the debts in part or in their entirety and liquidating assets to do it. Chapter 13 bankruptcies are more of a debt restructuring plan that gives you more time and a plan to pay back a portion of the debt that is owed to creditors.
Bankruptcy damages a person’s credit. A bankruptcy judgment stays on credit reports for as long as ten years. During that time, any credit that is applied for will disclose the bankruptcy to the creditor. If filing Chapter 13, you still have to pay back part of your debt and the judgment stays on your credit report for ten years.
In the past, people have taken advantage of the bankruptcy laws. For instance, people have been able to file more than once for Chapter 7 bankruptcy. They have used it as their own personal “debt eliminator”.
Each state decides on what assets they will exempt from being seized during a bankruptcy hearing. Knowing that, some may use available cash to purchase those items (homes, cars, etc.) in an effort to avoid payment and still retain the stuff they purchased. In this instance, creditors receive little or nothing from the bankruptcy settlement.
The new laws concerning bankruptcy have changed this. Whereas courts used to have the leeway of deciding who could file for Chapter 7 bankruptcy, there are now criteria that must be met first. In order to file for Chapter 7 bankruptcy, a person has to have an income that is below the median income for the state where they live. Their income must be put through a calculation that determines if they have enough disposable income to pay twenty-five percent of their outstanding debt.
More people that file bankruptcy will have to file under Chapter 13. The courts decide what a person could pay from the information provided to them. There is an allowance made for rent/mortgage, food, and other pertinent bills. With the new bankruptcy law, standards set by the IRS determine allowable values for each of these bills. A certain amount is exempted, and the payments are determined from the rest.
Because there are more hoops to jump through, bankruptcy lawyers are charging more for their services. The whole process of bankruptcy will cost the filer more than before, which will make them think twice about the process. Credit counseling sessions are also required as a precursor to filing for bankruptcy. A credit counselor may determine that they can help you and thus eliminate the need for bankruptcy proceedings.
Bankruptcy should always be a last resort. While it will give you a clean slate, it comes at a price.
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