financial management

5 Reasons to Take a Second Job No Matter Your Budget

master — Sat, 24 Jan 2015 15:29:28 +0000

5 Reasons to Take a Second Job No Matter Your Budget master Sat, 01/24/2015 - 10:29

Whether your budget is super tight and you're living paycheck to paycheck or you're doing well, you may want to consider taking a second job. A second job can offer many benefits over and above the money you'll bring in, although there are down sides to consider including being tired or stressed from working extra hours and time lost from your family or social life. But with these caveats in mind, here are five reasons to consider a second job – especially at this time of year when the holidays and gift buying season are rapidly approaching.

#1 Pay Your Bills on Time
If you can't pay your bills on time, a second job can help you meet your obligations. If you experienced unemployment that left you with additional credit card debts or other bills piled up, a second job can help you tackle the extra money needs and get back on track. Once you're caught up, you can leave your second job or use it for one of the other reasons below.

#2 Create an Emergency Fund
If you don't have an emergency cash stash set aside to cover unexpected expenses like a larger than usual power bill, a car repair or extra medical bills, you really need one. Working and putting aside a few thousand dollars in a hands-off emergency fund can make a huge difference in your life. This can be easily accomplished with a seasonal job and then if you have to use the fund, you can do the same thing again.

#3 Have a Fallback
If your primary job is at risk because your company is in financial trouble, there are layoffs, or your boss is giving you the stink-eye, having a second job can be a smart preventative strategy. Even if your part-time job isn't in your usual area of work, it can be a critical safety net if you do lose your job to keep you out of dire financial straits.

#4 Cover Additional Expenses
If you want to take a vacation but your usual budget won't allow it, your holiday gift list exceeds your available cash, or you need a down payment on a house or a car, a second job can allow you to take care of these things without taking away from your present take-home pay. This can help you meet financial or life goals you may not otherwise be able to attain.

#5 Other Benefits
If you take a part-time job in retail, it can come with discounts that can help you pay for Christmas gifts. Or, if your primary job doesn't offer a 401(k), but your part-time gig will, that can help you put aside some money toward retirement. Look for a job that will offer benefits you don't already get from your primary job to round out your life.
Before you take on a second job, it's important to consider if it will cost you more than it offers. For instance, if you need to pay for child-care to free up your time to work, that will reduce the bottom line impact of the additional work. Or, if you have to purchase new clothes, drive a significant distance, pay for parking, obtain a professional license of some sort or take on another expense associated with the job, these should all be taken into account to ensure that your new job nets out to a boost to your bottom line.

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financial management

4 Ways Credit Cards Can Cause Your Finances to Spin Out of Control

master — Fri, 23 Jan 2015 15:29:27 +0000

4 Ways Credit Cards Can Cause Your Finances to Spin Out of Control master Fri, 01/23/2015 - 10:29

Credit cards are not necessities and are not needed for most things in life – renting a car is the only activity that requires an actual credit card. Most transactions can be taken care of with a debit card from shopping online to online bill pay and more. But, used wisely, credit cards can help improve your credit score. Used unwisely, they can trash your score and cause you significant financial problems. Here are four ways credit cards can send your finances spinning out of control.

#1 Lower your credit score even if you pay on time
The best strategy for credit cards is to use 30% or less of your available credit each month and pay it off in full each and every month. You can do this by charging gas or groceries and then paying it off promptly. If, however, you keep a balance of more than this or, worse yet, max your card out and then pay just the minimum balance, your credit score will drop even if you make those payments promptly. The credit score calculation is designed to reward you for having credit, using it responsibly and paying on time.

#2 Late fees drive up balances if not paid on time
If you are even a day late on your payment, many credit cards slap you with a significant late fee of $20-$50. If you are already at or near your credit limit, this can put you over the edge. This can greatly increase the amount of your monthly payment and, if it's ongoing, can run you $240-$600 a year more in fees alone and when interest is factored in can cost you an extra thousand a year in increased interest – or more.

#3 Over-limit fees drive up balances
Sometimes credit card companies will let you charge beyond your credit limit but then will assess you a significant fee for doing so. Over-limit fees also run $20-$50. Even if you respect your limits for charges, if you run late on a payment and are assessed a fee, this can push you beyond the limit resulting in an over-limit fee. These charges tend to pile up.
For example, if you have a $500 limit and are at $490 them make a payment late and are hit with a $30 late fee, that puts you at $520 – in excess of your limit. Then you'll be assessed the over-limit fee of $30 (for example) which pushes you to $550. This means you'll need to pay your regular payment plus that $50 to get back under your minimum. If you don't get it down to under the minimum, you can get hit with this fee every month and if you're late, that one as well. This can spiral into an unmanageable balance quickly.

#4 Penalty interest rates
You may have scored a great interest rate when you first got your credit card – most consumers average about 11%-12% interest on their cards – but that doesn't mean it will stay reasonable. Even one late payment or one time going over your credit limit can throw you into what's known as a “penalty interest rate.” This is in the fine print of your credit card agreement which, if you're like most people, you haven't read.
Most credit card agreements are printed in such a small font you likely couldn't read it without a magnifying glass, even if you wanted to. Buried in many card agreements is the caveat that if you violate the terms of the agreement, your interest rate can be increased immediately. The average penalty interest rate is about 29% but if you already have a high interest card, the penalty interest may be significantly more.

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credit cards

financial management

6 Ways to Budget Better if You're Living Paycheck to Paycheck

master — Thu, 15 Jan 2015 15:04:33 +0000

6 Ways to Budget Better if You're Living Paycheck to Paycheck master Thu, 01/15/2015 - 10:04

More than 25 million Americans are living paycheck to paycheck. Most of these people fall into the middle class category, but even some higher earners are living on the edge financially. If this is the situation you find yourself in, there are some ways to budget better and make this tight money scenario more manageable. Check out these six tips for budgeting smarter to avoid financial disaster when your money is tight...

#1 Budget Together
Money problems can cause a lot of stress in a marriage, but the last thing you need to do is let your finances cause you to stop communicating. If you're both spending but you're not discussing how much and on what you're spending, things can quickly spin out of control. Sit down with your bills, figure out what to pay, what you can spend on expenses and then set limits together. Communicate clearly if you go over limits and work together to get back to rights.

#2 Budget Weekly and Check in Daily
Sit down each week and figure out which bills you must pay that week, how much money you've got coming in and how much that leaves you for living expenses. Set a budget for the week and then check in every day or two to make sure you're still on track so you have time to make adjustments before things get out of hand. It can be harder to budget more than a week in advance when you're just getting by, but even a short term budget is better than none at all.

#3 Sort Your Budget by Category
Dave Ramsey recommends the envelope budget method but if you prefer to use your debit card for most expenses, you can use a modified method to track your budget by category. Label an envelope for each category like food, fuel, toiletries, etc and write down the budget amount for that week based on your available money. Instead of taking cash out of the envelope to pay, swipe your card and then get a receipt. Place the receipt in the envelope. This lets you track by category as well as overall.

#4 Look for Opportunities to Trim Excess Expenses
If you're living paycheck to paycheck, it's a good time to look at how you spend your money to see if there are any obvious ways to cut your budget. If you smoke or drink daily, that's a serious expense. Ditching your vices can add hundreds of dollars back into your budget each month. You may also need to cut back on cable, car pool to save on gas and brown bag it for lunch instead of eating out. It can be painful to trim, so look for places you're blowing cash first before cutting into other expenses.

#5 Save When You Get Windfalls
When you end up with a windfall like a tax refund, bonus from work or birthday money, it can be tempting to treat yourself with a splurge like a night out or something you've been wanting to buy. Instead of blowing the money, consider tucking it away in a rainy day fund so that you've got a little buffer for emergencies or unexpected bills. It can be tempting to spend the sum, but the peace of mind of having a nest egg can be much better than whatever you're consider treating yourself to.

#6 Consider Bankruptcy
If you're tired of living paycheck to paycheck, never being able to take a vacation, eat out or just have breathing room in your budget, it may be time to take a more drastic step to get yourself a financial fresh start. If you have loads of credit card debt, medical bills you can't pay, are being sued for unpaid debts and are being hounded by debt collectors, Chapter 7 bankruptcy is a serious debt relief solution that can get much of your debt eliminated.

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financial management

Last Minute, End of the Year Financial Checklist to Finish Out 2014

master — Wed, 14 Jan 2015 15:04:32 +0000

Last Minute, End of the Year Financial Checklist to Finish Out 2014 master Wed, 01/14/2015 - 10:04

The end of the year is nigh upon us, but before you break out the champagne and fire crackers to ring in 2015, there are a few things you need to take care of to finish out 2014 in fine financial form. You may think that it's too late to do anything about your finances, but up until midnight on December 31st, you still have some time to monkey around with your money to lower your income tax bill and have a better 2015. Here are a few things to consider...

Make Last-Minute Charitable Contributions
So long as you donate by 11:59 pm on December 31st, the donation will still count for your 2014 income taxes. After you're done wrapping gifts, go through your closets and pull out clothes you no longer wear, toys your kids are done with and other stuff you don't use. Take it to Goodwill or another 501(c)(3) organization and be sure to get a tax receipt. This is a great way to reduce your income taxes without breaking a sweat.

Use Up Money Left in Your Flexible Spending Account (FSA)
FSAs typically expire at the end of the year and unspent money may or may not roll over. If it doesn't, you've lost out on your cash so it's best to max this out. If you don't have any medical bills due, consider using your FSA to stock up on vitamins, over the counter medications or buy a pair of frames from your optical center now and just have lenses put in later when you need glasses. If you just got new glasses, buy a pair of prescription sunglasses.

Adjust Your Payroll Tax Withholdings
If you overwithheld in 2014 and are anticipating a big refund, why not have less taken out of your paychecks in 2015 so you have more money in your pocket year round rather than a refund in April 2016? Use this IRS withholding calculator to estimate what you should withhold so you don't end up owing the tax man next year or end up giving the government a tax-free loan of your money all year long.

Sign Up for Health Insurance
If you haven't already signed up for health insurance under the Affordable Care Act, you should know there are less than 50 days before the February 15th enrollment deadline. Go to HealthCare.gov to check out available plans in your area. Many taxpayers are eligible for incentives that help make health insurance coverage more affordable. Don't assume you can't afford to participate – go check it out and get signed up before the deadline passes.

File Bankruptcy, If You're Drowning
If you're living paycheck to paycheck, have medical bills piled up that you can't pay, have maxed out credit cards and are in a financial mess, there is a way out. Chapter 7 bankruptcy can help wipe out these debts and can put off foreclosure. Chapter 13 bankruptcy can buy you a more significant window of time to get caught up on your bills and save your home and car if you're behind on these loans.

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financial management

Thanksgiving for Less – 6 Tips to Spend Less on Turkey Day

master — Sun, 14 Dec 2014 18:21:57 +0000

Thanksgiving for Less – 6 Tips to Spend Less on Turkey Day master Sun, 12/14/2014 - 13:21

A big Thanksgiving can be costly to put together, particularly if you host a lot of friends and family for the big day. If you're on a budget – like most people – you don't want to spend a fortune on the meal, but you also don't want to disappoint your diners. And, since Black Friday offers some of the best gifting deals, it would be nice to have some money left over to shop. Check out these six tips to spend less on your meal without skimping on the celebration.

#1 Let others pitch in – First, don't say no to guests that want to pitch in, but do coordinate the efforts. You don't want three people bringing mac and cheese. Instead, think about who's coming and their signature dishes. If your Aunt is renowned for her pecan pie and she offers to make something, remind her that everyone loves her dessert. She'll be flattered and that's one less dessert for you to make. A potluck Thanksgiving is cost-effective for everyone and, if you have plenty of guests coming, you may be able to provide just the turkey and let everyone else do the desserts and sides.

#2 Skip the soda – Serving sodas, wine or other boozy beverages can quickly increase the costs of your get together. Instead, make up pitchers of homemade tea, lemonade and keep the coffee maker churning. Also put out pitchers of iced water with lemon slices. No one will go thirsty and you'll save big. This is also much easier on clean up than dealing with a ton of cans and bottles. Be sure to let your guests know it's BYOB or put the kibosh on alcohol altogether if you've got someone in the family that turns up the drama when they drink.

#3 Buy frozen and large – Large turkeys are cheaper than smaller ones and if you really want to get thrifty, buy frozen. Frozen turkeys are 30-40% cheaper than fresh and there is no difference in quality. In fact, frozen turkeys are safer and tastier. Frozen turkeys are flash frozen immediately after butchering while fresh turkeys have sat around for many days and so are not really “fresh.” Just be sure to allow yourself time to thaw it properly. Turkeys should be thawed in the fridge (not out on the counter). Allow one day of thawing for each four pounds of turkey weight.

#4 Buy ahead – Some Thanksgiving staples may go up in price closer to the holiday, so don't be afraid to buy ahead. If you have freezer room, you can actually buy your turkey months in advance. Canned foods like cranberry sauce can be bought well ahead. Keep your eye out for sales and coupons for items you know you'll need such as bread crumbs for stuffing, frozen pies (if you don't bake), whipped cream for desserts, paper goods and other items that will keep until they're needed. Also watch for sales and coupons for décor.

#5 Don't overbuy – You may want a few leftovers, but you don't want piles of food left over after Thanksgiving. Buy 1 to 1 ½ pounds of turkey per person unless you're also serving another protein. Bottom line, buy this amount of protein per person. For mashed potatoes, plan on one medium sized or two smaller potatoes per person so you don't end up with a pile of potatoes left over. 1/3 to 1/2 cup of cranberry sauce per person will do. Check out this Food Network portion planner to make sure you don't waste money overbuying.

#6 Go green – You may be tempted to splurge on paper plates and cups to make clean-up easier, but this can quickly bump up the cost of your big dinner. Instead, break out the fancy china – the stuff you save for special occasions but then never bother to use. Pull out the good glasses, cloth napkins and tablecloths and only put plastic stuff at the kiddie table. Sure you'll have to do some dishes, but you can farm that out to those that didn't cook or the teenagers. This will save you from pounds of trash and is a more eco-friendly way to serve up your savory goodies.

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building credit

financial management

Start Planning Now for a Cheaper Christmas 2014 – 5 Tips to Save on the Holidays

master — Sun, 09 Nov 2014 14:03:31 +0000

Start Planning Now for a Cheaper Christmas 2014 – 5 Tips to Save on the Holidays master Sun, 11/09/2014 - 09:03

Christmas comes with great expectations, particularly if you have kids that want a pile of presents. But to keep your spending under control, you need to set a firm budget and stick to it. On average, most families spend around $800 on Christmas allotting roughly $222 per child and per spouse. But if your child is hoping for a new iPhone or a game system, that money might not go very far toward their wants. Today we'll look at some tips to have a cheaper Christmas without dialing down the fun.

#1 Establish Expectations
No matter how large or small your holiday budget, you should let your children know ahead of time what requests are reasonable and which are out of reach (either by your money limit or because you don't want to spoil them). If you have younger children, they may default to asking Santa for a gift if you tell them no on something, but you can address this simply by telling them Santa has a budget too.
Older children may be satisfied to receive one costlier gift while younger kids are more likely to be happier with a number of presents to open. Review your kids' wish lists and talk through them ahead of time to make it clear what may or may not be under the tree so there are no hurt feelings. And don't worry too much – kids change their minds constantly about what they want so they'll likely be happy to have some of what's on their list.

#2 Set a Budget
Your family's gift lists should not be what determines your budget – it should be what you can afford – preferably without tapping into credit. It can be tempting to swipe your plastic to pay for the holidays, but this will leave you with a spending hangover in January. Instead, figure out what disposable income you can reasonably devote to the holidays and set your budget based on this.
To have a more robust budget, consider taking on some extra hours at work or even a part-time job to help out at the holidays. Also, read this post on last minute payroll tips to see if you have an opportunity to boost your take home pay in the last months of the year. Cash spending is the best approach for the holidays if you can manage it and there are ways to accomplish this without having to wait until the last minute to shop. See #3.

#3 Get the Most Bang for Your Buck
Once you have your budget, you can start planning your shopping even if you won't have all the money in hand until year end. See which stores offer free or low-cost layaway then browse their sales fliers for deals on wish list items and put them on hold so you can make payments each payday and still have the gifts in time for Christmas.
Black Friday and Cyber Monday are just a month away and that's often a great time to score low cost deals on most-wanted items, although it can be a huge hassle. Having some cash on hand to take advantage of these competitive offers is also a smart strategy. WalMart offers a price match so you can often get other stores' best prices there.
WalMart also offers a cool new tool called Savings Catcher where you scan your receipts and if they find a lower price elsewhere, they give you back the money. It accumulates on your app and then you can download it to a gift card once you're ready to spend. This app could save you big bucks over the holidays when competitors put products on deep discount.
And if your kids are asking for electronics, consider buying them used on Amazon or Craiglist. When buying from Craigslist, be sure to test the product before you hand over the money as they don't offer returns or exchanges. This can be a great way to get a game system or last-gen tablet or iPhone at a deep, deep discount and your kids will be happier with a used item than not getting it at all. Plus, it teaches them a good waste not, want not lesson.

#4 Limit Gifting for Non-Immediate Family
One of the ways to cut your budget is to minimize what you spend on others outside of your immediate family. For extended family and co-workers, consider a name draw so that everyone gets a gift, but no one has to go bust giving to absolutely everyone. If this isn't an option, consider giving out baked goods to co-workers and offering gift certificate services to family members (babysitting, housecleaning, airport pickup/dropoff, carwash, etc).

#5 Share Gift Ideas with Extended Family
Another way to clear more items off of your kids' gift lists is to share the gift list. If your kids routinely get stuck with gifts they don't like because aunts, uncles and grandparents are guessing what they want, help them out. While you don't want to look like you're gift-seeking, it's certainly reasonable (and likely welcome) if you offer gift ideas to those you know will be shopping for your kids.
Another way to go about this is to set up a public Amazon wish list for each of your kids and load items on it that you know you won't be purchasing. Then when you send out emails to make holiday plans you can casually mention that there are wish lists on the web if they need any gift ideas. Most will likely welcome the help in selecting gifts they know will be appreciated.

Remember, your budget shouldn't determine how happy your Christmas is and with some planning and determination, you can deliver a great holiday to your family without breaking the bank.

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financial management

8 Pieces of Miracle Money Advice for Everyone

master — Thu, 06 Nov 2014 14:03:29 +0000

8 Pieces of Miracle Money Advice for Everyone master Thu, 11/06/2014 - 09:03

There is a lot of financial advice floating around in the world, but if you flip through a magazine or browse a web article with money tips, you may be left with the feeling that it doesn't apply to you. Today, we've got money tips that apply to almost everyone. Whether you're just starting out, are established with a family, are earning great wages or struggling along, check these out:

#1 Credit Cards Are Bad
Unless you exercise perfect control with your plastic, never roll a balance over month to month and never buy anything you can't afford to pay that month, credit cards are a slippery slope. If times get tight, it's easy to abuse them. Limit yourself to one card to be used only for credit-only situations (like renting a car) and don't build up debt.

#2 Skipping Coffee Isn't the Answer
Many articles tell you that staying out of Starbucks and avoiding $4 lattes is the key to financial success, but a daily coffee isn't going to break the bank. Instead, look at your housing and car costs as the real indulgences that need to be controlled. Spending too much on where you live and what you drive is a much bigger issue.

#3 Insure You and Your Stuff Wisely
Health, life and auto insurance are smart buys as long as you don't overpay, set deductibles as high as you can and still afford to pay them. But don't insure your travel plans, new iPhone or buy an extended warranty or payment protection on anything. These unnecessary “protections” greatly increase the costs of living without offering real benefit.

#4 Be Careful How Much House You Buy
No matter how much you want a home, buying foolishly will come back to bite you for years to come. Try to put down at least 20% on your home, don't buy the most expensive home you can afford. Finally, your total costs of ownership – mortgage, home insurance, property taxes and homeowner's association shouldn't exceed 25% of your take-home pay.

#5 Save However You Can
Different tactics to save up money work better for different people, but as long as you're saving money, it's a good thing. Sending a dedicated chunk of your paycheck to a savings account, investing windfalls like bonuses in savings bonds or high-yield CDs and having a piggy bank for spare change that you deposit when it gets full are all valid ideas.

#6 Don't Play the Tax Refund Game
It may feel like a gift from the government when you get a tax refund, but it's important to remember that's your money that you've been gifting the government with all year long. Instead of having out interest-free loans to the Feds, adjust your withholdings so you end up getting back just a few bucks or writing a check for a few bucks.

#7 Don't Increase Spending After a Raise
When you get a raise, try to put the difference in pay towards savings rather than more spending. Most people see a bump in income as an opportunity to upgrade their lifestyle, but if you can keep your spending in check and use the additional income to invest in retirement or pay down debt, that's a much smarter approach.

#8 Don't Spoil You Kids
Not only is spoiling your children a costly policy, but it's not healthy for them. Kids that are overindulged grow up to be spoiled consumers that may end up in money trouble. Set yourself up as a financial role model for your kids to benefit everyone. Let them see you make smart money choices, work hard and save.

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financial management

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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financial security

Bankruptcy and High Income Earners – How Going Broke Can Happen At Any Salary

master — Fri, 31 Oct 2014 16:33:17 +0000

Bankruptcy and High Income Earners – How Going Broke Can Happen At Any Salary master Fri, 10/31/2014 - 12:33

We write here about those struggling with unemployment and low income and, on the other end, about celebrities that go bust. But what about those that are earning a good living but still struggling? In fact, many that come into our offices to file bankruptcy are neither low income earners nor outrageously wealthy but are earning a salary that most would find envious – around $100,000 a year – and still struggling. How does this happen?

Enhanced lifestyle
When you start making good money, it's natural to want to upgrade your lifestyle. This can happen after college when you start to move up in the world or when you make the move to management, find your true calling in life or any other change that amps up your earnings power. It's natural that you want to reward yourself for a job well done and do nice things for your family that has supported you along the way.
If you've been driving an older used car and can suddenly afford a new car payment, it's tempting to take out a loan and buy one. If you never owned a home, a higher salary is the ticket to get a loan and once a realtor finds out how much money you make, they'll show you homes that will max out what loan amount your salary can secure. This is a slippery slope to over-consumption that can get you in trouble if you're debt spending (i.e. taking out loans to buy things).

Lack of savings or safety net
The other thing is that even if you get a major pay bump overnight, that still comes in the form of paychecks over time. Even going from earning $40k to $80k – a doubling in earnings – means going from a take-home pay every two weeks of about $970 after FICA, federal withholdings, insurance and 401(k) to a take-home pay of about $1,610 (or less). Because you pay more in taxes and other expenses, your take home won't double.
If you double your expenses based on the idea that your take-home pay will double, you'll get in trouble quickly. And if you weren't saving and then ramp up your expenses, you won't be able to start saving. This means you have no safety net and higher expenses. It's very common for high earners to have the same amount of savings as lower earners (little to none) and that can cause problems if anything happens.

Life throws you curve balls
If you're living conservatively, below your means and save up some money, you'll have a buffer in case something happens like a bout of unemployment, illness of you or someone in your family or you have unexpected expenses like a major car repair. But know matter how much you're earning, if you're not saving, are running up credit card debt and are living at the limit of your income, any little thing can send you over the edge.
Even going without a job for just a few weeks or a month or two is enough to send people deep into unrecoverable debt. If you're living paycheck to paycheck, it doesn't matter how big the check is if it won't cover all your bills. Many people you wouldn't expect to have turned to personal bankruptcy for help – even doctors, high earning executives and corporate lawyers. While bankruptcy filing have actually dropped for moderate earners, for higher earners, filings have actually increased.
Chapter 7 is open to people of most income levels so long as your debt far outweighs your income and you didn't incur the debt fraudulently. No matter what you're earning, if you can't afford to pay your bills and it doesn't look like your circumstances will reverse, contact the North Carolina bankruptcy professionals at the law offices of John T Orcutt for a free consultation on your financial circumstances.

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financial management

financial security

Debt Collectors Know When You Get Money! Find Out How to Protect Your Cash

master — Thu, 30 Oct 2014 16:20:51 +0000

Debt Collectors Know When You Get Money! Find Out How to Protect Your Cash master Thu, 10/30/2014 - 12:20

If you're behind on your bills, you'll get calls from bill collectors, but if you're unemployed and totally broke, you may notice that other than an occasional letter, you seem to drop off their radar. But as soon as you get a job and have some cash rolling in, your phone starts ringing again, almost like magic. How do debt collectors know you've got money? Simple – they use technology to know when they can likely shake you down for what you owe.

Why debt collectors stop pursuing you
Once a debt collector finds out you're unemployed or are earning such a small amount that they know they can't collect from you, they will essentially put your file into uncollectible status. In addition to having to pay their collectors an hourly wage, collection agencies' bread and butter is getting you to pay up and keeping a cut of it, or if they've bought the debt, they keep all of what they collect after the cost of what they paid. Either way, if they know you have no money to get, they'll give up.

Why debt collectors start pursuing you again
The most successful debt collectors are those that use research and technology tools. One of the best tools at their command is credit report monitoring. Some debt collectors purchase credit monitoring information and as soon as they see your credit score start to improve, they pounce. Your credit score will improve once you get a job and start to pay some bills so, essentially, as soon as you start to try and get yourself right financially, collectors make it even harder for you to do so.

The right way to improve your finances
If you experience a period of unemployment or underemployment, you'll get behind on your bills and may see them pile up. It can get worse and worse until you're completely under water. Once you do get a job and start trying to pay bills, everyone pounces. They often will get very militant once they know you have money. This can mean that even though you're trying to pay your back debts, no one is patient, no one is willing to work with you and everyone wants to be first in line.
In order to try and get you to pay them first, collection firms may get super aggressive. This means they may call you several times a day, may file a lawsuit and may do everything they legally can (and some things they legally shouldn't to harass you into paying them). This isn't fair, but it's a harsh reality that can exist with creditors once they smell blood in the water (i.e. cash in your bank account). This may sound strange, but the best thing to do may be to pay none of them.

How bankruptcy helps
If you start chipping away at your bills and all your creditors play nice, cooperate and let you take care of them as soon as you can, that's great. (It's a miracle, really.) If so, you should go that route so long as you can afford to and won't end up paying a mountain of interest and fees for the debts being outstanding for so long. Also bear in mind that the item will be on your credit for seven years from the date of your last payment and will show negatively for a long, long time dragging your FICO score down.
If your creditors aren't playing nice, filing a Chapter 7 bankruptcy may be a better option. You'll be able to unload your unsecured debt including credit cards, medical bills, old utility bills and other unsecured lingering debt. You may even be able to unload old unpaid taxes as long as the returns were filed on time. This means that you can have a financial fresh start to go along with your new job and can enjoy peace of mind free from lingering debts.

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financial management

financial security