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.
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