budgeting

5 Ways to Not Let Your Overwhelming Debt Ruin the Holiday Season

master — Sat, 06 Dec 2014 18:22:06 +0000

5 Ways to Not Let Your Overwhelming Debt Ruin the Holiday Season master Sat, 12/06/2014 - 13:22

Being in overwhelming debt is never fun but it can be even more stressful around the holidays when you feel obligated to give gifts to friends, when kids expect a list of toys and there are holiday parties and meals to prepare and all of this costs money. If your budget is already strained or you're living paycheck to paycheck, the start of the shopping season can be the start of your stress season. But you shouldn't let debt ruin your holidays. Here are five ways to balance money issues and the demands of the season:

#1 Know where you are financially
Before you spend a dollar or swipe your credit card even once for Christmas gifts, you need to know what you can truly afford. Looking at your budget can be stressful. Many families that are living paycheck to paycheck are constantly shifting money around and just paying what must be paid in that moment rather than getting a grip on the big picture. Now is the time to do this. Get out your bills, your pay stubs and your debit card statement so you can see what you're spending. Figure out how much you bring home in pay, how much your bills are and where you can cut back to have holiday money.

#2 Come up with a holidays gift budget
Make a list of everyone you plan to gift and jot down some gift ideas and approximate dollar amounts. Total it up and see how it compares to your disposable income. If it exceeds what you know you should spend, you need to come up with some options. Pare the list of gifts you have to purchase down to those you absolutely must gift. And for those you do need to gift, don't let guilt push you to purchase more than you can afford. Instead, think about other ways to show you care like offering services, making home baked goods or crafts. Massage your list until it aligns with your budget.

#3 Get creative to address any shortfall
If you clearly don't have enough money to meet your holiday needs, you have a few choices. One is credit card spending or borrowing – this is a bad option that will make life worse later. Second is cutting back on how many gifts you give or how much you spend on each gift. Third is to try and scrape up some extra cash. Hold an impromptu garage sale, throw unneeded items on Craigslist or look for some seasonal work to generate some green. It may be a hardship to work extra hours in the busy holiday season, but it's better than piling on more debt you'll have to face in the New Year.

#4 See if you can get others to cut back
It can be awkward if everyone at your workplace is swapping gifts with each other and you're the lone hold out. Suggest a name draw or a white elephant exchange so you can buy just one gift rather than having to gift everyone at the office. For family outside of your immediate family, a name draw can also be a great idea so everyone gets a gift but no one has to fork out a pile of cash. Gifts for immediate family, particularly your kids, are going to be a higher priority and that's okay. For family, coupons for favors and services can be very meaningful but may not be as welcome at work.

#5 Prioritize your financial well-being
It's really easy to let generosity (or guilt) get the better of you at Christmas and lead you to over-buy. You will regret digging yourself into a financial hole. And psychological studies have shown that giving kids too many gifts is unhealthy for them. Instead of going for a quantity of gifts, go for quality and choose items they really want rather than trying to achieve a certain number of gifts or amassing a pile of a certain size. Your best bet is to do what you must to not accumulate debt for Christmas. This means cash only, no credit cards, shop the sales and set a firm budget that you stick to. You'll have a happier New Year if you do.

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7 Pieces of Money Advice for Married Couples to Help You Get Ahead

master — Sat, 01 Nov 2014 16:30:51 +0000

7 Pieces of Money Advice for Married Couples to Help You Get Ahead master Sat, 11/01/2014 - 12:30

While marriage is on the decline in some parts of the world, for many it's still the traditional option that they prefer. Matrimony is all about sharing your love, but it's also about sharing your finances. What can be hard to fathom in the first blushes of your romance is that money problems can cause problems so serious that love may not be enough to get you past them. It's important that you both go into your marriage with eyes wide open about each other's financial situation. From there, you can work together to keep your finances healthy and in check so your marriage can be happy as well.

Here are some pieces of money advice for married couples:

#1 Set financial goals together
You likely had goals of your own when you met and married, but are they the same as your partner's? Do you want a house more than anything? Does your significant other want to hold off until you have fewer debts? Both short and long-term financial goals should be discussed, negotiated and then planned for so that each of you can feel you're getting to do what you want to a certain extent. Compromise will be necessary, but that's much better than holding onto individual conflicting goals that split your money matters.

#2 Share costs
If you lived on your own as an adult for a while before you married, you're accustomed to managing your own money, paying your own bills and generally taking care of just yourself. But once you're married, it pays to combine your money for a variety of reasons. We've written before that people that are co-habitating, but not married, should think carefully before combining money. But once you're wed, it may make good sense to. You should share your costs as you're sharing your life.

#3 Pool money for big purchases
Even if you keep your money separate to some extent, pooling it makes sense when it comes to major investments and purchases. Things like a down payment for a house, a car or a vacation are better (and faster) accomplished when both of you are driving toward the same goals together. Pooling money means you'll have more to put down which can get you better terms and will save you both cash in the long run. Take a partnership approach to big stuff not only in deciding

#4 Respect each other's strong points
Different people are good at different things and this holds true for money as well. Some of us are natural-born savers, some have a good head for numbers and budgeting while others just like to spend like there's no tomorrow. Be aware of which of you in the marriage is better at which financial skill and divide up tasks accordingly. If you're the spender, maybe you shouldn't be the one in charge of the debit card. But if your good financial planner is bad at sending out payments on time, that may be a better task for you. Figure out what each of you is best at when it comes to money and respect each other's skills.

#5 Be supportive
One of the biggest side effects of money troubles is stress. This won't do your marriage any favors, especially not on top of financial problems. Money issues are one of the leading causes of divorce, but even if your money is tight it doesn't have to drive you apart. It's easy to play the blame game and point the finger at one another for whatever financial difficulties you're having, but that won't create more money. As long as you're supporting each other, difficult times can actually bring you closer together and strengthen your marriage.

#6 Communicate, even if you separate
If your marriage is falling apart (it happens) whether money is to blame or not, keeping the lines of communication open is important because your finances don't break up quite as easily as a marriage. It's easy to get bitter when things don't work out, but it's best to hold it together until you can get your finances separated. This can mean selling your home, transferring car titles, closing out joint accounts and opening new separate ones and making sure none of your credit cards and bills are left with both your names on it. Once the marriage ends, neatly severing the financial ties is necessary and can be done more easily if you can communicate and stay civil throughout the process.

#7 Do bankruptcy together, even if you separate
For many couples, divorce can also mean money problems. If there are financial issues prior to the split, divorce can often make these worse since you'll be maintaining two households and the extra expenses that go along with this scenario. If both your names are on bills you can't pay and one of you files bankruptcy, the other partner will be left financially culpable. It's better to file bankruptcy together, then file for divorce. This will give both of you the best shot at a clean slate, both emotionally and financially.

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7 Frugal Celebrities That Pinch Pennies Just Like You Do

master — Tue, 28 Oct 2014 16:20:50 +0000

7 Frugal Celebrities That Pinch Pennies Just Like You Do master Tue, 10/28/2014 - 12:20

Sarah Michelle Gellar is a very frugal celeb

When we write about celebrities here on our blog, it's usually about celebrity bankruptcy. Today, we're switching this up and featuring celebrities who are uber-frugal despite having big bucks. It's far too easy to let your money habits get out of hand when you start earning more money, but this is one of the worst things you can do. One of the main reasons celebrities end up filing bankruptcy is letting their lifestyle get out of control. Let's take a look at some celebs that are keeping it real when it comes to finances:

Teri Hatcher
This Desperate Housewives diva got her start on Lois & Clark back in the 1990s. She has a net worth of $50 million, yet lives modestly. She has never purchased a mega-mansion and drives her cars for 10 years until they have at least 100,000 miles on them. As a single mom, she's careful with her money and is passing on her smart money habits to her daughter. Nice to know she'll never be desperate for money.

Sara Michelle Gellar
This cutey slayed vampires as Buffy on her hit WB show, but she also kills for a bargain. She takes reusable bags to Whole Foods to get a discount, shops at Bloomingdale's only on double reward days and uses coupons for dry cleaning and other services. Growing up with a single mom instilled smart money values in this savvy celeb.

Paul McCartney
The former Beatle is worth more than a billion dollars but spends like he lives on Penny Lane. Believe it or not, he flies commercial and sits in economy, sent his kids to public school and when he throws parties, never offers an open bar. He also continues to work and tour even though he's well past retirement age.

Kristen Bell
Actress, cutie and new mom Bell says she always shops with coupons and her fiance Dax Shepard appreciates her cheap ways. Her favorites are the 20% off from Bed, Bath and Beyond and she says she even steals coupons from her neighbors mailboxes when she's out walking her dog. We don't recommend swiping coupons, but at least she's frugal.

Lady Gaga
It may be hard to believe that the wackadoo pop star has a normal bone in her body, but she does. She says she always shops the sale racks, bargains with sales associates to try and get discounts at stores and clips coupons to use at the grocery store. She credits growing up in a working class New York family for her cheap habits.

Sarah Jessica Parker
And speaking of New York, the star of Sex and the City is nothing like her HBO role. She grew up with her family on welfare and eating free lunch and, as a result, says she's nervous about spending money. She wears 20 year old long johns to walk her kids to school and invests conservatively. She takes costumes home from her movie sets and always takes modest family trips.

Bill Gates
Although he's worth a billion dollars, he and his billionaire buddy Warren Buffett share coupons they use for even the cheapest of eateries – McDonald's. He's also held up lines at Seattle grocery stores scrounging for 50 cents off coupons buried in his pockets. And although he's got big, big bucks and a personal chef, Gates and his family opt for modest meals like mac and cheese.
No matter how much or little you're earning, adopting a frugal lifestyle makes good money sense. Clipping coupons, opting for hand me downs, buying clothes at thrift or consignment shops and driving your car until it's on its last legs are all habits that will keep you out of the poor house. And if Bill Gates isn't embarrassed to pull out a coupon, why should you be?

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3 Cool Apps to Help You Manage Your Money Smarter

master — Thu, 23 Oct 2014 15:20:47 +0000

3 Cool Apps to Help You Manage Your Money Smarter master Thu, 10/23/2014 - 11:20

Let's face it, not everyone has stellar money management skills. When clients come in to see us because they're struggling with money problems, there is usually an underlying cause and the financial problems are the symptoms. Sometimes it's an illness or job loss, other times it's divorce. But once money gets tight, it's hard to make smart decisions because of the stress of being cash-strapped. Today we'll take a look at some apps that can help you wrap your head around making better better money decisions whether you're pre-bankruptcy and still struggling or post-bankruptcy and getting back on your feet financially.

OnBudget
This is a cool new app that comes along with a pre-paid debit card that's totally free and linked to your existing bank account. You can get a card for you and your spouse or partner as well. From there, you use OnBudget for one month so it monitors your income and spending habits to set up your starting budget. You have to load money from your bank account to your card. This limits your spending.
The app shows you your spending habits so you can see where your money is going and where the problems are. From there, you get free access to Budget Advisors that will help you get your spending on track. This is a great tool for those whose head swims looking at spreadsheets with numbers and prefer simple visuals. It shows you spending by category and by person so you can adjust behavior as needed.

Better Haves
We've recommended the envelope budget system before and this app essentially does this for you but virtually without the paper cuts. This app is designed to allow you to share your virtual envelopes with your spouse or spending partner so neither of you goes over budget and you can both see how slim the money is getting in a certain category so you can take steps to curb spending ASAP.
The only downside is that Better Haves is not available for iPhones yet but you can get it on your tablet on GooglePlay if you're an iPhone user. You set up your categories and your budgeted amounts in each folder. When you spend in a category, you note it and it depletes that amount. You can both see what you're spending. You can also see your savings goals and how much you're progressing toward each goal. The app is free but has a few bugs that they are updating constantly. It's simple and effective.

Check
The Check app was designed by top-notch software firm Intuit. It watches all of your money all the time for you. It will monitor your bank accounts, credit cards and bills. It's like your own personal Big Brother for your money. When you get low on cash, it lets you know. When a bill is due, it lets you know. This helps you avoid late charges, disconnect fees and other bad consequences of missing bills.
You can also pay the bills directly from the app for no fee. Once you set up access, you can login to the app with a PIN rather than logging in to all your separate accounts to monitor them. This is a huge time saver. You can glance at your accounts as often as you want or wait for Check to notify you when there's an issue. This is an app that offers peace of mind, but doesn't really help with your budgeting.
An approach to consider is to try out OnBudget or BetterHaves to see which you like to help you develop or improve your budgeting skills and then use Check as well as a safeguard. All of the apps are free and can help you manage your money much more effectively. And if your bills are spiraling out of control and your income simply won't allow you to cover them, contact the law offices of John T Orcutt for a free consultation on meaningful debt relief solution.

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3 Great Alternatives If You Can't Get a Bank Account Because of Your Money Problems

master — Wed, 22 Oct 2014 14:42:00 +0000

3 Great Alternatives If You Can't Get a Bank Account Because of Your Money Problems master Wed, 10/22/2014 - 10:42

There's a large segment of the US population that is unbanked or underbanked – roughly 30% of us in fact. Not having a bank can make life hard. For those without a bank account, simple things like having paychecks direct deposited are impossible and getting a paycheck cashed is a time wasting hassle. You can either head to the financial institution where your employer banks or pay a fee to get your check cashed. This makes life much harder on those already struggling and is just senseless.

Traditional banks have made it much harder to get an account with them than in any other time in history. At one point, they would simply check to see if you were listed on the bad check registry (ChexSystems or another similar service). But now, most banks run full credit checks and reject those they deem unworthy, even for savings accounts that run little or no risk for the banks. So what can you do if your bank has asked you to leave or you can't get an account?
The good news is, there are many great options from trustworthy institutions that offer you all the services that come with brick and mortar banks without the cost and inconvenience. In fact, by choosing one of these non-bank alternatives, you may end up getting more for your money than you would by choosing a traditional bank. Here are three of the top non-traditional banking programs to consider:

#1 American Express Bluebird
The blue chip of credit card companies has reached out to the unbanked in a big way with an excellent service offering. You can register for free online and be sent a Bluebird debit card or purchase a starter kit at your local Walmart. You register online and then AmEx sends you a permanent card. With that in hand, you can sign up for direct deposit for your paychecks and pay bills online for no cost.
If you have cash you need to get into your account, you can do it at a WalMart ATM designated to accept Bluebird deposits. If you have a check to deposit, you can use the Bluebird app on your smart phone to scan it for auto-deposit to your account. There are no fees for any of this. The only fee you'll see is if you take out money at a non-system ATM. This is cheaper than any bank you'll find but the one downside is that when you want to swipe the card, some places don't take AmEx.

#2 GoBank
GoBank was launched by Green Dot which is a prepaid debit card. This bank alternative is great for those who are handy with technology since it's smartphone-based. What's interesting about GoBank is that they don't charge you a monthly fee, but if you want to pay one, you can – kind of like a gratuity for good service at a restaurant. The only mandated charge is an-out-of network ATM fee. If you're not tech-savvy, you can opt for the Green Dot card alone, but GoBank is really a better alternative.
You can deposit cash at a number of stores including CVS and Walmart (starting in October) and there are ATMs for no fee all over North Carolina. They also offer direct deposit and online bill pay. What's cool about GoBank is that you can pay bills for things that don't accept online bill pay and they'll send a check out for you like for your rent. You can also send money for free directly to others. GoBank also offers money management tools to help you stay on budget. If you're not great at juggling your money, this can be a great help.

#3 H&R Block Prepaid Emerald MasterCard
You can stop by any H&R Block office to sign up for this great non-bank program. It's free to sign up, offers direct deposit and smartphone check upload. There are no monthly fees but they do charge modest fees for checks scanned with the app (2%-4% with a minimum $2 fee). ATMs cost $2.50 and there is a $2.50 per month inactivity fee after three months of no use. Bill pay costs $.95. It does offer cashback rewards for spending which the other cards don't, but this may not offset the fees depending on how you use the card.
While this is a more costly alternative than the other two, it rounds out the three highest rated non-bank programs along with the two above. It is highly rated for both convenience and safety, but we have placed it third on out list because it offers fewer features and charges more fees (although these are more modest than most traditional banks charge their customers). This is the better alternative for those that aren't accustomed to smartphones and apps and prefer to deal with ATMs.

Final thoughts
WalMart has just cut a deal with GoBank/Green Dot to make it easier for customers to sign up and use this traditional bank alternative. Once this is fully in place in October, it will be interesting to see if they scale back on support for the AmEx Bluebird card including the starter packs and access at their ATMs. You may want to try a blend of the first two above, particularly if you're in a two income household. If one of you opts for Bluebird and the other for GoBank, you'll have both an AmEx and a VISA/Mastercard and can enjoy the benefits of both programs.

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Why Filing Bankruptcy Will Make You Better With Money and Why It Benefits You in the Long Run

master — Sun, 19 Oct 2014 14:41:57 +0000

Why Filing Bankruptcy Will Make You Better With Money and Why It Benefits You in the Long Run master Sun, 10/19/2014 - 10:41

The time period leading up to when you file bankruptcy will likely be one of the most stressful in your life. You'll have unpaid bills piling up, past due statements rolling in and your phone ringing off the hook from creditors and their debt collectors calling demanding their money. This can affect your work and can lead you to make terrible decisions that will make your money matters worse. But what you may not realize is that filing bankruptcy can actually enable you to make better money choices.

Decision Making Under Pressure Leads to Mistakes
Research from Vanderbilt University shows that our brains function differently when making snap decisions versus well thought out decisions. Mulling over decisions without time stress usually leads to wiser decision making. The study indicated that only when it's a do or die situation should high-pressure decision making be indulged. Professor Jeffrey Schall, the lead researcher, said, “If the decision is whether or not to shut down a nuclear reactor in the presence of a potential meltdown, I'd prefer haste.”
But when you get a call from a debt collector who is using aggressive practices (perhaps even illegal ones) like making threats if you don't pony up some cash on the spot, it can feel like a meltdown. When this happens, you may give the squeaky wheel the grease in the form of money you can't afford to give them that would be better devoted to paying rent or buying food. When you get behind on bills, you may be put in the situation time and again and dole out your sparse funds in ways you should not.

Tight Money Situations Are Self-Perpetuating
Research out of Harvard and Yale by a behavioral economist and a cognitive psychologist found that people living paycheck to paycheck are in a vicious behavioral cycle that can keep them in a cash-strapped predicament. When we have to think about every single dollar so that even small decisions like buying a loaf of bread or which minimum credit card payment should be made when there's not enough money to pay them all actually diminishes our mental functions.
When today's financial demands are so all consuming, planning for a better financial future becomes cognitively impossible. The test showed that your mental bandwidth can drop by the equivalent of 13 IQ points when we overtax our brains when we have to make too many stressful decisions constantly. Having enough money to throw bread and milk into the cart without worrying that you won't then have enough money to put gas in the car enables you to make better decisions.

What the Research Has Us Thinking About Bankruptcy
As soon as you file bankruptcy, all debt collection efforts must stop. You get an automatic stay on all debts, even those that will survive the bankruptcy. This creates automatic breathing room and some peace of mind. In this moment of calm, you can more carefully consider how your money is best spent. And it's not just the automatic stay that helps, but the alleviation of nearly all your unsecured debts (when you opt for a Chapter 7 bankruptcy) that will give you more space to think.
With a huge chunk of your debt gone, you can better focus on how to allocate your money between your remaining debts. With the time crunch gone, you'll think more clearly and be able to make better decisions about your finances. This will allow you to get on track for a better long-term financial future. So, in a way, we can conclude that filing bankruptcy can make you functionally smarter. And that's a good thing.
To make the smart money decision to get yourself out of debt and off to a brighter financial future, contact the law offices of John T Orcutt for a free consultation about filing a North Carolina bankruptcy today.

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8 Ways to Save Money This Summer When the Kids Are Home, Fussing for Fun and You're Broke

master — Wed, 11 Jun 2014 12:26:11 +0000

8 Ways to Save Money This Summer When the Kids Are Home, Fussing for Fun and You're Broke master Wed, 06/11/2014 - 08:26

Image source: Flickr User Jim Pennucci

We understand that many families are making do on tight budgets and summers are even harder because the kids are home all day and demand to be entertained. What's a cash-strapped family to do? Plenty! We've found eight categories of fantastic, fun and mostly free things to do this summer to keep a smile on your kids' faces, whines to a minimum and your money outlay virtually non-existent.

#8 Hiking and Geocaching
Summer days can get hot and sticky, but staying indoors is no solution. Get your kids out and moving and they'll be fitter and will fall asleep faster at night because you wore them out. There are so many free places to hike in NC that it's an embarrassment not to get out and take a walk. From the beaches to the mountains and everywhere in between, there's much to see and do.
If you're not one for aimless wandering and have a smart phone, sign up for a free Geocaching.com account and splurge $10 on the official app or try a free one like c: Geo. If you've never tried caching, it's a GPS-based scavenger hunt where you find containers other players have hidden. You sign the log to score a “find.” You'll be surprised how many hidden treasure troves there are within a mile or two of your house – in the woods, under park benches – even in grocery store parking lots.

#7 Indulge in Classic Movies and Must-See TV
Rainy days and exhausted evenings often see us plopped on the couch channel surfing as a family, but there's not much on in the summer. This is a great time to take advantage of free trial offers from Netflix, Amazon Prime, Redbox Online and Hulu. If you have a Blu-Ray player, most have built-in apps for these services. Alternately, hook your laptop up to the TV and stream through there or gather around the laptop for smaller screen viewing. Most Avengers movies are streaming for free this summer along with a huge array of TV and big screen blockbusters. Trial offers range from two weeks to a full month. If you try them out one at a time, you'll have enough weeks to view all summer for free with no late fees.

Geocaching is low-cost summer fun

Image source: Flickr User Bob n Renee

#6 Movie and Concert Outings
The Halle Cultural Arts Center offers free Tuesday morning movies (1st and 3rd of the month) in June and 1st Wednesday movies free in the evenings for teens and grown ups. They are also offering outdoor Friday night movies (PG and PG-13) and concerts. Check their site for dates and times. Carmike Cinema's summer movies are no longer free ($4 gets you in plus a kid-sized popcorn and drink) but Regal has kept theirs cheap at $1 for 10 am Tuesday morning movies.

#5 Museum Outings
North Carolina Museum of Natural Sciences – Located in Raliegh, the museum is free, but you can offer a donation. 3D movies and the rainforest special exhibit come at a fee, but the rest is gratis. North Carolina Maritime Museums (one in Southport and one in Beaufort) and the Hatteras Graveyard of the Atlantic Museum are also free. The North Carolina Museum of Art is admission-free, as is the North Carolina Museum of History, the Ackland Art Museum and the City of Raleigh Museum. The Nasher Museum of Art at Duke is free Thursday evenings from 5-9pm as well. Check museums near you for unadvertised free events, days and evenings and special summer programs and promotions.

Summer reading programs are free and fun

Image source: Flickr User KOMUnews

#4 Summer Library Programs
Your kids may balk at the idea of exercising their brains this summer, but there are some great library programs (all free) in the summer that go beyond books. In addition to Wake County's Summer Reading Program which rewards readers with stickers, gold stars and chances to win drawings for cool prizes, they're hosting Super Specials for K-5th graders which includes science programs, reptile visits, music, magic and petting zoos. Come for the books, stay for the fun and do it often since it's 100% free. If you're not in Wake, check your local county library site for similar programs in your area. Also, most libraries now have stupendous DVD collections that they update as soon as new releases come out. Check out for free and save the Redbox fees!

#3 Water Fun
If your neighborhood doesn't have a pool, check with your local parks and recreation department to see what's in the county. The City of Raleigh charges $2 for kids and $4 for adults for a dip but if that's out of your price range, head to a local swimming hole for a dip in one of nature's swimming pools (aka lakes and waterfalls). Having grown up swimming mainly in lakes and rivers, the chlorine smell of concrete pools just doesn't evoke “summer” quite like rafting in natural waters. Slip and slides and getting squirted in the yard with a garden hose are all classics that cost nearly nothing and make for great cooling off fun. For less than $5 you can get a sturdy roll of plastic at Home Depot to slide on - add some baby shampoo for even more slippery slides.

Slip n slides make the backyard a low cost water park

Image source: Flickr User Ryan Poplin

#2 Vacation Bible School and Church Camp
Growing up in the South, aside from swimming holes, also meant a summer of Vacation Bible School at yours and friends' churches. This is free, safe fun for your kids that will also give you a break for a few hours a day. Click here to see a list of many VBS offerings or Google for ones near you. Many and various VBS events can be found in your city for every faith and many are non-denominational. Also check into church camps – these sleep-away camps are usually one-third to one-tenth the price of a commercial camp and may offer scholarships for low-income families for kids to attend for free.

#1 Staycations and Parent Co-op Fun
We wrote a piece recently on cheap vacations, but staycations are also an option. This is when you stay home, but still take your work days off to spend with your kids. Camping in your yard, playing board games, chasing lightning bugs and just giving your kids your time and attention can create meaningful memories and happy kids without breaking the bank. And if you have some talented friends, you can coordinate staycation activities. Know a science teacher? Get her to host an afternoon of slimy chemistry. Got an artist in the mix? Get him to have several families of kids over for a finger painting extravaganza. How about a fix your own bike workshop? Teach the kids to diagnose and repair their bikes and they've got a fun activity and a life skill as well. The possibilities are endless.
If your money woes are ongoing and you can't seem to get caught up on bills, it may be time for a serious debt intervention. Contact the law offices of John T Orcutt for a free consultation on Chapter 7 or Chapter 13 bankruptcy to find out if you're a candidate for either and if this is a viable option for you.

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The 50/30/20 Budget Rule - How Much You Should Be Spending on Everything in Your Life

master — Fri, 09 May 2014 12:52:38 +0000

The 50/30/20 Budget Rule - How Much You Should Be Spending on Everything in Your Life master Fri, 05/09/2014 - 08:52

See how the 50/30/20 budget rule can get your finances right for life

One of the most challenging aspects of dealing with personal finance is overspending. Many of our clients that come in looking for bankruptcy solutions to their debt have overextended themselves in one way or another – most because they didn't have a budget. For some, it's a mortgage that was too much to manage when they had a change in circumstances. For others, it's credit card debt that piled on to other obligations.
No matter what caused your financial problems, it's important that after you get out of debt through bankruptcy, you make the most of your fresh start. To do this, you need a budget, but this can be more complicated than many people think. The debtor courses required by bankruptcy law are helpful, but if you don't understand budgeting, you'll struggle to make one that you can stick to. And this means your financial problems can get bad once again.
But how do you know what you should be spending on your rent, transportation and all the other things you need to live your life? You don't want to hear “it depends” - you want a concrete answer. Although the dollar amount will vary based on your income, there is a handy rule that can help keep you on track known as the 50/30/20 rule. Here's how it works.

#1 Start with after-tax income – This is the amount of your take home pay. We caution people about not over-withholding on taxes simply to get a big tax refund at tax time. You shouldn't let the government keep your money all year long. Instead, based on your most recent tax return, look at what your refund was so you can adjust your withholdings. If you had a $2,400 refund, that means you overpaid roughly $200 in taxes per month. If you are paid every two weeks, you should increase your deductions so that you get $92 less in federal taxes taken out and that amount increased in your take home pay. If you have a state refund each year, adjust those withholdings, as well.

#2 Apply 50% of your after-tax income to necessities – Once your take home pay is adjusted, you can safely devote 50% of it to things you must have to live. This includes rent, utilities, transportation, food, child care, health insurance, loan payments, etc. If your take home pay every two weeks is $1,500, you have $39,000 in after-tax income each year. 50% of this is $19,500 which equates to $1,625 per month for necessities. If you have $1,000 rent, $200 car note and $300 in utilities, you can see that you can't live on the $125 left over. You need to cut back on rent, most likely, and live within your means. You may not like it, but living within your means is something you must learn to do.

#3 Apply 30% of your after-tax income to luxuries – By luxuries, we don't mean fur coats – we simply mean things you can live without. This includes vacations, new clothes, eating out, going to the movies, gifts, décor for your home and all the other things you want, but don't absolutely have to have. In the $1,500 per payroll take home scenario, here's what you would have: 30% of your annual after-tax income is $11,700 annually, or $975 per month, or $243 a week. That may sound like a lot, but it goes fast. That also includes items that don't fall under utilities such as your monthly Netflix, cable TV, internet, lunches eaten out during your work week, etc.

#4 Apply 20% of your after-tax income to debt and savings – Your mortgage should fall under the 50% and you should be saving at least 10% of your take home pay to savings either in the bank and/or your 401(k). In your $1,500 payroll scenario, that means each month $650 is available to pay your credit cards, put money into 401(k), savings and to service any other debts. If your mortgage or car loan fall outside of the scope of your 50% above, they can overflow into this category, but the goal is to not consume more than 10% in this category. Credit card debt should only fall into the 20% to the extent you carry over a balance. What you spend on your cards each month should be included under #2 and #3 above.
It's likely that you may struggle with the 50/30/20 budget rule at first, but right after you file bankruptcy, particularly if you use Chapter 7 that wipes out your unsecured debts, is the best time to scale back on what you spend to ensure you don't get into more debt than you can manage again.
If you're deep in debt and looking for a serious solution, contact the law offices of John T Orcutt for a free consultation on how bankruptcy can help you get a financial fresh start. You can choose from any of our convenient North Carolina locations for your no-obligation debt consultation. Call now.

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budgeting

Successful Budget that Actually Works? Follow these 5 Tips

master — Tue, 19 Nov 2013 14:21:14 +0000

Successful Budget that Actually Works? Follow these 5 Tips master Tue, 11/19/2013 - 09:21

There are a few classic pitfalls that stymie many attempts at a successful budget: being too aggressive, forgetting the small stuff, and the ever-present belief that tomorrow will be different from today. But don’t worry. Armed with a few tips, you can create an effective budget that you can actually stick with.

1. Don’t budget every single dollar

Unexpected expenses do crop up. Rather than being blindsided, plan ahead and keep a small, unallocated fund. That way, you’re covered if all your friends happen to have a birthday in the same month, or you have a weakness for pumpkin spice lattes, or your car needs an urgent repair. If you haven’t spent your free-floating fund by the end of the month, treat yourself!

2. Allocate must-pay items first

Before you make your budget, list all your budgeting priorities in order from unavoidable to flexible. For example, your list might look like:

Must pay: Minimum payments on loans, health insurance
Can cut back with some effort: Rent, groceries, gas
Can cut back easily: Eating out, entertainment, new clothes

Now that you have your list, put your funds to the must-pay items first, and keep going down the line. If you run out of money before you’ve run out of things to spend it on, eliminate the easy items first. Having a prioritized list makes cutting back a bit less overwhelming.

3. Build up an emergency fund

If you don’t have a rainy day fund, try to save a little extra for the time being in order to establish some breathing room. Your first priority should be saving enough to live for 3-6 months in case your employment situation changes. I’d also recommend establishing an idiot fund – you know, for the times when you do something really dumb. You might feel foolish when you drop your smartphone in a puddle, but you’ll feel slightly less so for having anticipated it.

4. “Debt-free above all” isn’t right for everyone

Many people are tempted to try and get debt-free before handling other priorities. While this can be an effective strategy for long-term financial health, in some cases, you’re better off only making the minimum payments and putting your money elsewhere. Here are a few such circumstances:
You don’t have an emergency fund yet. As we mentioned above, your first priority should be to make sure you’re protected for 3-6 months if you lose your job.
Your debts have very low interest, and you can make more money elsewhere. For example, if the APR on your car loan is 3% and your employer offers a match on your 401(k) program, you’ll probably get a higher return if you channel your spare funds into the retirement account.

5. Keep it real

Someone who smokes three packs of cigarettes per day isn’t the best candidate to quit cold turkey. Similarly, if your lifestyle is way out of line with your income, sticking to a rapid downsize might not be realistic.
Gradually trim your budget until you’re comfortable with your level of spending. This may mean reducing your entertainment expenses by 5% per month until you reach your goal of a 30% reduction, for instance. It’s better to take your time than to go all in, suffer a nervous breakdown and jump ship two weeks later.

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budgeting

financial management