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Drowning In Debt? A DIY Lifeline For You!

December 1st, 2009 by Matthew C. Keegan | 4 Comments | Filed in Money Management

Tens of millions of consumers today are facing financial difficulties ranging from late payments on their utility bills to foreclosure on their homes. Job loss, illness, overspending, and other problems can weigh in, putting untold pressures on the American family.

credit cardsNot every financial situation should mean imminent ruin, although taking action sooner rather than later can go far in turning your condition around. Smart budgeting, credit counseling, debt consolidation, and bankruptcy are four do it yourself (DIY) avenues for you to explore; chances are you’ll be taking one or more paths in order to improve your financial condition.

Smart Budgeting

What is smart budgeting? Essentially, it is a budgeting plan that makes sense for you. This means being realistic and developing a plan that works. That doesn’t mean setting pie-in-the-sky goals, near impossible requirements whereby you think you’ll correct many years of financial problems in twelve months or less or pay off your mortgage quicker when you’re still on the brink of foreclosure.

Step by step changes can bring about real results, helping your conquer your problems gradually. This also means negotiating payments with creditors or finding out a way to work with bill collectors. Print out a money tip road map to help you get back on track.

Credit Counseling

Although a “do it yourself” method can work for some people, others may find that professional assistance can go far in helping them conquer the debt monster. Credit counseling organizations can help you develop a repayment plan with your creditors, help you track your bills, an develop a workable budget for you.

A few things to keep in mind: not all credit counselors are on the up and up, some charge very high fees, while others may promise more than what they can deliver. For example, when a creditor says you can pay just pennies on the dollar for your debt, be suspicious. Learn about fees and other costs before agreeing for assistance and check references!

Debt Consolidation

One way to reduce your credit costs is to consolidate your debt, oftentimes by taking out a second mortgage or a home equity line of credit. You’ll be putting your home up as collateral which means that if you stop making payments or make them late you could lose your home.

Certain tax advantages exist when consolidating a loan; check with your financial adviser to learn more.

Personal Bankruptcy

One way to discharge all or some of your debt is to file for personal bankruptcy. Chapter 7 bankruptcy is liquidation of your assets, whereby mostly everything you own is sold off except for exempt assets, which vary from state to state. You’ll be required to take a “means test” to ensure that your income does not exceed a certain amount.

Chapter 13 bankruptcy is less drastic, allowing you to keep a car or your home as long as you keep up payments, while discharging some if not all of your unsecured debt. Changes to the US Bankruptcy Code in 2005 has made personal bankruptcy a less desirable option as some previously forgiven obligations remain in place. Contact an attorney familiar with tax law who can advise you.

Financial Resolution

There is no magic solution to financial problems which means patience and adjusting as you go are important attributes for the person who wants to get back on his feet again. Creating a sensible plan and sticking with it is a good start; seeking professional guidance may be the best choice that you make.


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Budgets And Why You Need One

November 3rd, 2009 by Matthew C. Keegan | 1 Comment | Filed in Consumer Tips

One of the most despised words for some people is the word budget as it offers to them certain negative connotations such as restrictiveness and deferment. True, a budget will put a check on the way that you spend and when you spend, but it can also help you save money in the long run.

Precise Budgeting

piggybankThere are some budget plans out there which are extremely precise, wanting you to track all of your expenditures including that pack of gum you bought at the convenience store or the newspaper you picked up on the way home from work. But, those kinds of budgets often discourage the reluctant budgeter who may be tempted to simply give up.

Here’s some things you should consider when establishing a budget:

Budgets are a help, not a hindrance – Certainly, there is a measure of restrictiveness and deferral when creating a budget, but a budget should help you learn how you’re spending money, where your money is going and tracking your progress as your reach your financial goals.

Budgeting shouldn’t be a drag – The more precise you are, the better you’ll be when it comes to tracking how the money comes in and where it goes. But don’t go crazy for the sake of hunting down a few missing dollars. Forget the small change, but do keep an eye on those things which tend to add up: the $8 lunches, impulse purchases, scenic Sunday afternoon drives, etc.

Necessities v. luxuries – Basic cable may be all that you need, while having 500 channel access, HBO and movies on demand may strain your budget. Evaluate how and what you’re spending your money on, making a decision to stick with those things you really need.

Pay yourself too – In addition to setting aside money for your church and favorite charities, are you also saving money for yourself? Make a plan outlining where you want to donate money over the next year and stick with that plan. In addition, set money aside for the following funds: home improvement, new car down payment, college and retirement funds, vacation and Christmas accounts, and more.

Stick with limits – One surefire way to get into a financial mess is to spend what you don’t have. While credit cards can be helpful, you may end up spending more than you should for your purchases. Even if you pay off your card every month, you may be buying more than what you need. Evaluate your spending habits!

Bank the pay increase – If possible, bank your pay increases instead of spending the extra money. This can be hard for young, growing families to do but if you are in a position to live on less, then save more. You’ll increase your savings faster and have more for retirement.

Get some help – Use budgeting software to help you get started and to track where you’re going. If your financial problems are severe, meaning a budget isn’t doing the trick, seek professional guidance to help you move forward.

Financial Picture

With even a basic budget in place you’ll have a better grasp of your financial picture, which is important these days given the challenges of today’s economy.

Adv. — Colder weather is here, but do you have the clothing that you and your family need for the winter months? Shop the value retailers to find quality goods at bargain prices.  The Baby Outlet, Boden, Be Wild and Greek Gear offer stylish fashion choices for chilly days.


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How To Save Money

August 3rd, 2009 by Matthew C. Keegan | 1 Comment | Filed in Money Management

As the recession lengthens, we’ll be hearing contradictory reports that it has eased, ended even worsened. There are a number of different metrics used to determine when a recession ends with most of these tools not able to do so until months after a recession has ended.

For cash strapped consumers, finding ways to save money during a difficult economy is challenging enough itself. But there are ways you can save money even if your income is down and your finances tight:

You may not be able to save a bundle of money from the start, but if you examine your spending habits, savings can add up over time.

You may not be able to save a bundle of money from the start, but if you examine your spending habits, savings can add up over time.

Don’t Buy Anything – Seriously, you have to purchase food and you may need some new clothes, but when it comes to mostly everything else, do you really need a new car, television or video game right now? Delaying your purchases until a later date will leave more money at your disposal. Try not to purchase anything but the bare essentials for three months to see how your finances shape up. Likely, you’ll have some cash left over and you won’t miss what you didn’t buy.

Cut Your Expenses – There are some simple ways for you to trim your overhead. If you have cable, phone service and an internet connection, consider bundling these services to one plan. If you have low deductibles on your car insurance, consider raising these levels to $500 or $1000 in order to lower your premium. Run your air-conditioning on 78 degrees and run your heat on 68 degrees. Cancel unneeded magazine and newspaper subscriptions, buy generic drugs, clip coupons. You get the idea — pay attention to your outgo and you’ll preserve more of your income.

Avoid Credit Cards – Unless you’ve already been paying off your credit cards every month, then using credit cards can do a number on your finances. Even then you may find yourself spending more on something then if you had cash on hand, so why not try making all of your purchases for the next month with cash and/or your debit card?

Deduct Money Automatically – One of the reasons that so many people have a tough time saving is that once the money is in their hands, they’ll spend it. Some of the ways you can build savings is by automatically transferring money from your checking account to a savings account on a periodic basis. On a weekly basis, transfer a set amount of money from your main bank to an online institution where it’ll take an extra step to get your money out. Money will accumulate steadily and before you know it, you’ll have a tidy sum of cash on hand!

Expand Your Income – Trying to get a raise in this economy is difficult to do, but not impossible. If you have been working hard and producing measurable results, your boss may be willing to share some of that profit with you. Naturally, if your company is reporting record losses and threatening lay offs, then waiting until after things settle down is wise. But, even during tough times companies find ways to retain their best help which means that you may have some leverage the next time you seek a pay raise.

Finally, if you’re the type of person who is new to an austere way of living, then not buying anything can seem dull and unrewarding. So that you wont’ flag in your zeal when it comes to your finances, why not reward yourself on a periodic basis especially as you reach one or more of your clearly defined goals? Dinner out, taking in a concert, a quick getaway to the beach or some other splurge type event can help you stay right on course.

Adv. — Everyone wants to save money, but we’re often hesitant to ask for a lower price from merchants. You may be paying too much for your mortgage even with rates at historically low levels. Why not seek to refinance your loan or pay off your mortgage sooner, if possible? Please visit SayRecession.com for timely tips on how to stay ahead of the game during trying economic times.


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Contemplating Bankruptcy? Don’t Do It!

February 16th, 2009 by Matthew C. Keegan | 2 Comments | Filed in Debt Management

These are stressful times for many consumers who are finding it difficult to keep up with their bills and manage their debt. For some, the only way out could be personal bankruptcy, an option being considered by as many as one in nine Americans, according to a survey conducted by FindLaw.com.

The number of consumer bankruptcy filings has nearly doubled in the last three years, from 573,000 in 2006 to 1,064,927 in 2008, according to the National Bankruptcy Research Center.  In addition, the FindLaw survey revealed the following about what Americans are doing regarding their own finances:

  • Ten percent of Americans say they have considered filing for personal bankruptcy at some point in their lives.
  • Two percent of Americans say they have actually filed for personal bankruptcy at some point in their lives.

“Bankruptcy can be a powerful, useful tool for debtors,” said Stephanie Rahlfs, an attorney and editor at FindLaw.com. “However, it is often a complicated and difficult process, and there are many misconceptions about what bankruptcy can and cannot do to help relieve debt burdens. For instance, some debts — such as taxes, student loans, child support and alimony — are typically not discharged in bankruptcy. In addition, there are alternatives to bankruptcy, including credit counseling and debt management. All of the various options have pros and cons, depending on a person’s particular situation, so it’s important that people have competent, qualified legal help if they are contemplating bankruptcy.”

FindLaw says that their survey was conducted using a demographically balanced telephone survey of 1,000 American adults and has a margin of error of plus-or-minus three percent.

SayEducate.com encourages everyone to weigh all of their options when it comes to managing their personal finances.  Since we launched this site in October 2007, it has been our mission to educate, inform and offer constructive advice when it comes to managing many different aspects of your life, including your finances.  Please search our archives for related helpful material or visit SayRecession.com for tips on how to set aside an emergency fund.
All of our tools are offered online for free, so please peruse them.

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