Preparing For Bankruptcy

When you are considering a trip, usually, you make substantial preparations in anticipation of that trip. You make travel arrangements; you make sure you have a place to stay; you make reservations for any activities in which you wish to participate. You will often make significant plans and preparations for any “big” event. Bankruptcy is no different. It is a significant life event that demands some thought and preparation before you embark on it.


In talking with potential bankruptcy clients, it seems that a lot of them wait until the last minute before contacting a bankruptcy lawyer to find out how bankruptcy may help them. While visiting a bankruptcy lawyer most likely does not rank high on most people’s “bucket list,” if you are struggling financially, it most likely makes sense to determine if and how bankruptcy can help you sooner rather than later.

So, how can “preparing” for bankruptcy help? First, you will need to have the fees for the lawyer and for the court available. For now, for a chapter 7 filing, just the filing fee is $306.00. Additionally, before you file, you must complete a consumer credit counseling session and get the certification that must be filed with the court. If you “fail to plan” for your bankruptcy filing by finding out what you need ahead of time, when your car is on the verge of getting repo’d, you may not have the time and/or money to retain a bankruptcy lawyer.

Second, you can carefully go over your income and expenses and see where the trouble lies. Certainly a bankruptcy lawyer can help you identify the problem (with appropriate information) but you also need to know how you got into this financial mess. Some problems are easy to identify–temporary loss of income; extraordinary medical bills; overspending for a bit, etc. Bankruptcy can assist in overcoming those past problems but you need to be aware of the problem so that you can avoid it in the future. Bankruptcy is designed to be a “fresh start.” You can greatly assist in obtaining that “fresh start” by breaking or modifying some of the habits that perhaps got you here in the first place.

Third, make sure you know who you owe and how much. Find out if there is any collateral associated with the debts and gather up loan documents. Your lawyer will need this but, more importantly, you need to know your own financial picture. Credit reports are freely available and can be a big help. Also, if lawsuits or foreclosures have been filed against you, make sure you have that paperwork–all of it! It is important!

Finally, change your mindset. In dealing with individuals facing financial problems, it is often much more difficult instead of dealing with distressed businesses. That is because a business looks at assets and liabilities and can make a rational decision as to whether keeping an asset is worth the corresponding liability. Understandably, people are attached to their “things.” But, after all, they are just “things” and you have to consider carefully whether retaining a “thing” is worth the potential stress and headache. As an example, if you suffered a decrease in income and you have two relatively late model cars. No one wants to give up one or two cars but sometimes it is better to surrender a vehicle or two in order to keep your house (if that is important to you). There will be some emotional attachment to some “things” but it is imperative that you do this. Determining what is important to you is important for your bankruptcy lawyer in setting achievable goals for your bankruptcy filing.

Finally, do some research. There is a lot of information about bankruptcy that is freely available. However, you should exercise extreme caution in considering the information. Not that the information is inaccurate (some info may be outdated or simply inapplicable) but it takes an experienced profession to know what is appropriate and what is not. But, by familiarizing yourself with some basic bankruptcy information, you will be in a better position to appreciate and assist your bankruptcy lawyer in setting realistic and achievable goals.

After all, the real goal of a bankruptcy filing is a “fresh start.”


Source

Should I Short Sale My House Or Declare Bankruptcy?

By Orfelia M Mayor, Esq.
You bought your home during the real estate rush a few years ago and now your dream home has turned into an upside down nightmare with adjustable interest rates. The rates are going up while the value of your home is going in the opposite direction. In addition, credit card debt is mounting since credit card companies have been on a mission to raise interest rates to the 25 - 29% level. What's a consumer to do?

Unfortunately, there's not much one can do to stem the tide of today's economic climate. The banks are going to do what they are going to...the credit card companies are going to raise their rates (regardless of your credit history) and to top it off, you never know if your job will be there tomorrow.

When it comes to your home, you do have a couple of options. If you cannot afford the payments on your home anymore, you can try to have the loan modified to a more affordable payment under the HAMP legislation. Banks are moving very slowly in this area and although they are reducing interest rates, they are not forgiving principle and closing the gap between your home's value and what is owed.

Another option is to short sell your home to a buyer. A short sale is when you sell the house for less than what is owed on it. This requires the bank's approval since they are taking a loss on the original mortgage. This process usually takes months and is not always successful. The difference between what you owed on the house and what it was sold for is called a deficiency. Banks will issue you a 1099 Misc for the amount of deficiency and you will have to declare it as income on your taxes. Yes, you will have to pay income tax on that amount. The good news is that until 2012, deficiencies on primary mortgages (your homestead home) are forgiven through legislation that President Bush signed. After 2012, you will have to pay taxes on deficiencies unless the law is extended by Congress.

In a bankruptcy, you can choose to surrender the home and all of your personal liability for the loan amount is forgiven. That includes any potential deficiency between what was owed and what the bank ends up selling the house for. There's no haggling with the bank, no approvals to wait for - no doubts as to what the future will bring. Additionally, filing bankruptcy will eliminate all of your other unsecured debt so you can truly get a fresh start and a good night's sleep.

If you'd like more information on bankruptcy options for eliminating debt, please visit http://www.ombankruptcy.com/

Orfelia M. Mayor, Esq.
Bankruptcy Law Firm of Orfelia M. Mayor, P.A.
Fort Lauderdale, Florida
http://www.ombankruptcy.com/

Credit Card Management Services, Inc. D.b.a. Debthelper.com
4611 Okeechobee Blvd., #114
West Palm Beach, FL 33417
P: 1-800-920-2262 – F: 1-866-561-2622

Newlyweds: 5 Money Matters For A Recession-Era Marriage

Stephanie Christensen, provided by

Monday, June 27, 2011

You made it through the wedding planning and budgeting process, and started your life as a married couple. But have you decided as a couple how will you handle your finances? (Marriage can be like doubling an income, as long as you avoid doubling these expenses. Check out Marriage: For Richer Or Poorer?)
Handled improperly, marriage and unaddressed money issues can wreak havoc on a relationship. In 2009, The New York Times reported the findings of a Utah State University study which indicated that "couples who reported disagreeing about finance once a week were over 30 percent more likely to get divorced than couples who reported disagreeing about finances a few times a month."

The best way to avoid financial disagreements with your new spouse is to address challenges openly, have a shared plan of action, and to understand how credit and the financial system works. Maxine Sweet, vice president of public education for Experian and Wedding Planning Expert Kimberly Schlegel Whitman offer their expert advice for the top five money matters facing recession-era newlyweds.

1. Fight the Newlywed Homeowner Fantasy

Though you're starting a new life as a married couple, one's financial past does not go away so easily. Particularly if one spouse owns real estate that has lost significant value in the housing downturn, it's important to be realistic and plan for your new financial life together, with a broad vision on the long-term. If you're swept away by the fantasy that a newly married couple should purchase a home together to begin a new life, it's time for a reality check. Schlegel advises couples that own a home they can't sell to consider staying in the existing home until the market improves. If you're itching to buy housing right after marriage, consider renting as a temporary option to build savings and a solid financial foundation. Agree as a couple how long you will stay there, and how you will start saving and building your assets for home buying in the future. "The most important thing is to protect your credit history, so that when you are positioned to be able to buy a new home together, you can get approved, and at the best interest rate," says Schlegel.

2. Save for Worst-Case Scenarios

While the economy is making a slow recovery, job security is still wavering in many industries. Though double income may leave you feeling like money is pouring in, Schlegel advises married couples to have savings amounting to at least six months (preferably nine) of your total monthly income as a couple, in the event that one spouse loses a job, or some other disaster strikes. Choose an interest-bearing savings account together, and establish an automatic savings plan (ASP), so that a portion of each spouse's paycheck is deposited to the account regularly. Destroy the ATM card so there is no temptation to dip into the funds.

3. My Debt, Your Debt

While joining finances can be a "rite of married passage" for couples, Sweet urges newlyweds to remember that as a married couple, you are both responsible for debt incurred on a joint account. If you decide to consolidate finances, joint accounts will be reported on each of your individual credit reports, and both spouses are financially responsible for any debt incurred. Likewise, a missed payment will negatively impact both of your credit scores and histories. If you live in a "joint property state," which are predominantly located in the Western part of the United States, Sweet reminds that both spouses are held liable for debt, even if your name is not on the account.

4. Maintain Your Individuality

While financial planning should be a joint activity after marriage, Sweet also recommends keeping at least one individual account in each spouse's name open. This approach will ensure that each individual has easy access to credit in case of an emergency. If you do find yourself facing divorce one day, having an established account in your name will also help you rebuild your individual credit history. (Does signing a prenuptial agreement put your marriage on shaky ground, or is it just smart planning? See Marriage, Divorce And The Dotted Line.)

5. Understand Credit as a Married Couple

In today's tightened lending environment, credit is more important than ever. Sweet reminds that while each spouse will always have an individual credit history, even after marriage. Lenders will often consider both of your financial standings when you apply for credit jointly, especially for major purchases like a car or home. Missing just one payment on one of your individual accounts, could impact your future ability to open joint accounts.

The Bottom Line

Money and marriage can be a challenging and stressful issue for many. For recession-era newlyweds, the unique circumstances presented in an economic downturn make sound financial planning as spouses even more critical. Use these five steps as a guide to pave the way for your new job as joint money-managers, and ensure that you'll start your new financial life as a married couple on the right foot. (Strengthen your marriage by discussing these financial pitfalls. Refer to Top 6 Marriage-Killing Money Issues.)

Original story - Newlyweds: 5 Money Matters For A Recession-Era Marriage

Copyright (c) 2011 Investopedia US. All rights reserved. Investopedia.com is a division of ValueClick, Inc.

Important facts about bankruptcy

by Jamie Billings


Bankruptcy is a tough road that best reserved for those who do not have any other options. Generally speaking, filing a Bankruptcy is a last resort. While it should not be entered into lightly, it may prove itself to be a positive solution for you. If you cannot pay your debts or you are dealing with a lawsuit bankruptcy maybe an option for you. Bankruptcy is an option when you have little or no income in order to make any kind of monthly payment to your creditors. The court will take away from you the responsibility of paying your debts. Bankruptcy usually lasts 12 months, after which time, any unpaid debt is written off.

One of the major aims of bankruptcy law is to give a financially distressed person an opportunity to make a new financial start. Bankruptcy laws help people who can no longer pay their creditors get a fresh start through liquidating assets to pay their debts or by creating a repayment plan. It also protects troubled businesses and provides for orderly distributions to business creditors through reorganization or liquidation.

Bankruptcy is an important decision and the law and it application to one's particular situation can be very complicated. It is generally recommend that one consult with an attorney with experience in the personal bankruptcy field.

If you feel comfortable with attempting the bankruptcy process without an attorney there are several online bankruptcy services and information that may assist you. Bankruptcy information provides an expert advice and a live forum alongside a regular roundup of the latest news, statistics, and research from the world of debt solutions. You may also find reports on issues surrounding bankruptcies.

If you are deeming for a bankruptcy help, you should first understand the different consequences of bankruptcy so you will then be able to make informed decisions about the alternatives available to you. You can also try and come to an informal repayment arrangement with your creditors you can consider a formal arrangement.

There are a number of factors to consider in deciding whether bankruptcy is an appropriate option. You may wish to consult an attorney before proceeding to file for bankruptcy.

Bankruptcy laws help people who can no longer pay their creditors get a fresh start through liquidating assets to pay their debts or by making a repayment plan. Bankruptcy laws also guard troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation.

Bankruptcy will really give you a fresh start. However, careful consideration should be given before filing for bankruptcy, because doing so may affect your credit and like any ordinary phenomena, it have other consequences.

Source

What To Do When Your Unemployment Checks Stop Coming?

By Tisha Tolar, on April 6, 2011


You’ve learned to live off of your unemployment benefits. You’ve cut your budget and are finally starting to make some progress in the new job market. Right when all seems to be going well, the rules change. It is expected that many more states will start the process of cutting back on the unemployment benefits they are issuing to their unemployed residents.
The bottom line is many states are broke. Cutting back on unemployment helps solve a portion of this immediate financial problem. In addition to saving a state budget funds, the cuts are being considered because of the unemployment taxes companies have to pay. The hope is that if business taxes can be decreased, more companies would begin to hire new employees.
Changes Are Coming

States across the nation are inundated with claims for unemployment benefits since the recession came about. Employers were quick to downsize to keep the company afloat, leaving many in the lurch without reliable income or the prospects of finding a new job immediately. The unemployment trust funds set up in each state took a serious beating, prompting some to take a loan from the federal government in order to meet the demand for covering eligible benefit distributions to those without jobs.

The states of Florida and Arkansas are currently looking at reducing the number of weeks unemployed workers can receive benefits. Florida’s legislature has proposed cutting the benefit receipt time by 6 weeks. Indiana has been working to reduce the number of jobless that are eligible to receive benefits in the first place. Govenor of Indiana Mitch Daniels recently signed into law a bill that limits eligibility for unemployment benefits. The law also changes the way payments are calculated and these changes will start in July 2012. There are a total of 32 states which still owe monies back to a federal unemployment fund. For now, the total owed is estimated at $45.7 billion and states are expected to repay about $1.4 billion back in interest.

This is not the first time states have had to borrow federal funds and make cuts to unemployment benefits. It happened in the 1980s when a recession forced states to borrow $28 billion to meet the unemployment benefits needs for laid-off workers. During that time 40 of the 50 states made changes to the way money was distributed for unemployment, even going as far as changing up the eligibility guidelines for workers.

How to Prepare for Benefit Cuts

Above all you need to get off unemployment benefits. Even with multiple Congressional extensions they will eventually run out. Aside from that, the best thing you can do now if you are worried about cuts and changes to your unemployment benefits is be proactive about learning the facts. Follow the news in your state about the impending changes on benefits guidelines so you know what to expect.

You should also look at the big picture and work to save enough cash as you can while you look for work. It may not be easy to get by even with the benefits you are now receiving, but planning budget cuts of your own is a good start.

Brush up on old skills or learn new ones as you continue to look for a new job. There are often community accessible courses where you can learn new skills and improve your existing knowledge. Many of the unemployment departments in your state will either already require some job polishing efforts by recipients and often have resources available for free that can help spice up your resume. You will also be able to find opportunities to seek work through the unemployment office in your state.

Most changes will not be immediate but it is important to plan for the inevitable, especially if you have gone a while without securing a new source of income.

Source

My Life Experience with Bankruptcy

by Andrew Bernstein
Certified Personal Finance Counselor 

In 1985, I had completed my first 10 years in the newspaper business, 5 as a managing editor, which had been my dream all through school and life. The opportunity was presented to me to open my own publishing company and start to produce my own magazine and newspapers. I literally jumped in without even thinking about it. I knew how tough it was going to be and that there might be a stretch that finances would be tight.

My partner and I got great backing from a few local banks and investors and we were off and running. Our first publication, a women’s magazine, was an instant critical success. We had hired a great staff and of course with my experience as a managing editor, I was able to put a gentle hand in things. The problem was that we didn’t have a great sales and marketing team. We were relying on an outside company to do it and unfortunately their staff was not totally geared to the job. After a few months, we were able to cover costs, but had little left over for my partner and I. AND THAT IS WHERE MY TROUBLE BEGAN!!!

My credit had always been great. Buying cars, homes, etc., had never been a problem. I had 4 or 5 credit cards and I started living off them. Within about a year, the debt had crept up to the $10,000 mark, which back then was very significant. I was making all the mistakes, using one card to pay off another, using cash advances, etc.


It appeared as though I was heading for a small disaster and indeed I was. At some point I had maxed out all the cards and I was looking for more. I did get a little more and then the nightmare hit home. I started missing payments and got hit with penalties and late fees. The debt soared by several thousand and I was beginning to panic. I had always been taught that good credit is essential.

At this point, my ex-boss and good friend decided to lend me a hand. He would spot me a loan to pay off the debt and I would take on managing one of his publications in my spare time. It seemed like a good deal. The only problem was that I had not learned from my recent mistakes and started using the cards again out of necessity. Again the debt soared and while all this was going on, my partner decided to leave the business and when he did, I found out that he had left some major unpaid bills, so that of course effected the business.

It was the true perfect storm, no way to pay the bills, no way to pay myself and/or the credit card companies and the loan. To say the least it was depressing, at worst, it was totally devastating. My dream was about done and I was overwhelmed by all the debt. At that point I decided the only way out was a bankruptcy.

I filed for Chapter 7 on the personal side and I was going to file for a Chapter 11 business bankruptcy and then decided against it. I knew that it was a long shot to ever be able to open again, so I just let it go, despite pleas from certain leaders of the community to keep things going.

For the next year, I virtually lived in hiding, my reputation tarnished and my future looking bleak. There were no real credit counselors at the time per se, so there was no one to talk to about rebuilding, other than friends and interested colleagues. I started doing some consulting work for businesses that were having problems. It seemed so strange to see so many of them going through what I had just been through. I was able to help turn some of them around or at least delay the inevitable. It was then I also started seeing some potential in the fledging credit counseling industry. I joined a company in the late 1990’s and acted as a mediator between clients and their creditors. I felt as if I were getting a second chance. My own finances were now under control and I had decided to limit my credit cards to the minimum that I felt I needed.

My employer decided to move to FL in 2000 and I moved with them. I had always wanted to live in FL and this was a perfect opportunity, except that exactly a year later, the owner decided to move back to NY. I wanted to stay, so I was able to hook up with a similar company and in a short period of time, I became a floor manager and then general manager. The company was sold in 2004 and I immediately got hired by the company I work for now. I was doing counseling and began to conduct financial literacy seminars. It grew to the point where I was presenting programs in prisons, county jail facilities, the Air Force and many other agencies. I had and have truly found my niche. Of course, it’s not publishing, but I do get to write and create a lot of good and useful information. I have also learned to live exactly within my means and I keep to a tight monthly budget. It is the budgeting process that I love to teach at my seminars.

Most of all, I have discovered that there is life after bankruptcy and this is the message I like to convey to all my clients; that is, if I could come back from total economic devastation, so can they.


Andrew Bernstein

ABernstein@debthelper.com
Certified Personal Finance Counselor
Credit Card Management Services, Inc.
4611 Okeechobee Blvd. #114
West Palm Beach FL 33417
1-800-920-2262

How much it costs to attend Super Bowl XLV

If you are a penny pincher, which, let's face it, most of us are, we will not be attending the big game this year. If by some chance you're debating, this will change your mind. I had no idea the costs behind just getting there. Yeah yeah I knew the tickets were expensive, but everything else added up.... Gimmie a break! This is the best way to go broke if your on a budget! ...and if your on a strict budget and decide to go anyway, you need our help. Call us 800-920-2262. We'll change your mind. You can thank us later. Debthelper.com

Break out your credit card. Better yet, several
By Jay MacDonald

Headed to Dallas for Super Bowl XLV?

Bring a credit card -- heck, bring a deck of them -- because everything in Texas is supersized this weekend, including the prices.

First and foremost, you're going to need a ticket. Good news: the NFL Ticket Exchange lists 21,032 seats still available as of Tuesday afternoon in the new $1.2 billion, 105,000-capacity Cowboys Stadium.

The bad news? They run between $2,400 and $23,730. Yes, apiece. Which might at least push your card's credit limit.

On the other hand, if you recently sold the ranch, you might want to consider an XLV offer on eBay for a private, 25-person luxury suite on the 40-yard line just two doors down from Cowboys owner Jerry Jones, complete with catering, attendant and private loo, for just $599,000.

For the ultimate in NFL street cred, Barclay's new official NFL Extra Points rewards card enables diehard fans to flash their team's colors and logo with every purchase. NFL Extra Points cardholders enjoy a 20 percent discount at NFLShop.com and earn loyalty points toward game day tickets, memorabilia and fan experiences with every purchase.

You can even cash in your rewards points for a seat at next year's Super Bowl, but you'd better get busy -- it will cost you 200,000 points at $1 per point.


Your Pockets after Super Bowl

 Let's talk parking. According to ParkWhiz.com, you'll spend between $550 and $990 for a parking space one-tenth of a mile from Cowboys Stadium, no discount for steer horns on the grill. Ouch, right? If you don't mind riding a free shuttle, you can park one mile away for a mere $55.

As for accommodations, this might be the year to reconnect and crash with that geeky guy from high school who wound up in Big D. CBS MoneyWatch reports that the cost of a queen room at the Arlington Super 8 Motel goes for $1,198 plus tax for Friday and Saturday night. 'Nuff said.

If you plan to pull plastic to partake of the more exclusive Super Bowl parties, you may want to brace your card company first. A single ticket to the marquee Sports Illustrated soiree featuring the Black Eyed Peas -- the halftime performers for the big game -- runs $1,500. Hey, that's cheap; a stage-side cabana for 12 goes for $80,000. Admission to a private party with Prince will set you back $1,500 per as well, which makes the $750 cover charge to rapper Diddy's "Fantasy" blast seem like a steal.

Game: 60 minutes; commercials, 46

The SB wouldn't be the SB without those 46 wacky minutes of TV commercials that have garnered a following all their own over the years. The big game has become the big reveal for ad spots that feature celebrity send-ups, anthropomorphic animals and zany sports spoofs from major brands and bet-it-all upstarts alike.

The cost to join the XLV commercial lineup? A record $3 million for a 30-second spot. The reason? Last year's viewership topped 106 million, roughly one-third of the U.S. population. This year's viewership is predicted to exceed 110 million.

Among this year's most anticipated time-outs, Ozzy Osbourne and Justin Bieber take a "Star Trek" turn for Best Buy, reality star Kim Kardashian attempts to make Sketcher's Shape-Up shoe look sexy, comedians Richard Lewis and Roseanne Barr follow last year's Betty White mudfest in Snickers' clever "You're not yourself when you're hungry" shtick, NASCAR driver Danica Patrick and fitness gurl Jillian Michaels push the envelope for GoDaddy.com and rapper Eminem follows Ozzy into Claymation for Lipton Brisk iced tea.

E*Trade, which has featured its talking baby day traders for the past three years, will unleash the diapered dealers again this year, including a pregame "talk" with Fox Sports.

It's the only event where advertising is not the uninvited guest. Commercials come on, people stop talking.

-- Nick Utton
E*Trade chief marketing officer

"It's the only event where advertising is not the uninvited guest," E*Trade chief marketing officer Nick Utton told the New York Times. "Commercials come on, people stop talking."

Of course, the bigs will be back in force. Anheuser-Busch, which has unveiled everything from talking frogs, lizards and gorillas to a lamb streaker in 23 consecutive Super Bowls, has five spots this year -- its first as exclusive Super Bowl beer advertiser through 2014. Pepsi will air six spots for Pepsi MAX and Doritos, General Motors will roll out five and Hyundai three. If you can't wait for the show, the website SuperBowl-ads has posted 2011 Super Bowl ad previews.

Conspicuously absent from the XLV lineup are credit card commercials. Past Super Bowls teemed with credit card ads. This year, all we have is the pregame campaign from Visa, whose "Never Miss a Super Bowl Club" spots feature four weathered gents who have missed family births and weddings for 44 years in order to attend the big game.

Betting on the national anthem

There's little doubt that XLV will redline more than a few credit cards before the winning QB plants a wet one on the Lombardi Trophy this year. It is equally predicable that a fair number of cardholders will try to hedge their spending spree with a wager or two on the big game -- placed on their card, of course.

SBNation.com reports that MGM has already accepted a $1 million bet on the Packers. Win or lose, that's one cheesehead that's likely to stand alone!

With this gridiron classic too close to call -- Las Vegas odds makers favor Green Bay by 3 -- many soon-to-be super-debtors are hoping to hit on "prop bets" to prop up their finances. A "prop bet," or proposition bet, is a bet made on a proposition or outcome.

XLV's most intriguing prop bets?

•Coin toss: heads or tails?

•Which team will win the toss? Unexplainably, the NFC has won 12 straight Super Bowl coin flips. Will the Packers extend the streak?

•How long will it take Christina Aguilera to sing the national anthem? Over/under 1:50 minutes.

•How long will she hold the word "brave?" Over/under 6 seconds.

•Will her hair be any color other than blond?

•Will she wear a cowboy hat?

•How many times will controversial former Packers quarterback Brett Favre be mentioned? Over/under 2.5

•How many times will the word "lockout" be mentioned? (Why "lockout"? Owners have mentioned that they will likely lock players out in the offseason as the two sides continue contentious labor negotiations. Some believe that the lockout could continue for months, even putting next season in peril.) Over/under 1.5

•What color Gatorade will be dumped on the winning head coach? According to Pregame.com, a $100 bet returns $150 for yellow, $300 for clear or orange, $400 for red, $500 for lime green and $1,500 for blue.

Whoever emerges victorious, whether on the field, the advertising response or the tote boards, the only guaranteed winner of Super Bowl XLV will be the Dallas metroplex, which stands to rake in a record $202 million, according to a PricewaterhouseCoopers estimate.

Not bad for a week's work.

 Source

5 Reasons You Will Always Be Broke

Being broke sucks. I’ve had extended periods in my life where I have been living on the edge of financial ruin, so I know how stressful and overwhelming it can be. When you’re broke and hating your job, things are much worse. It's hard to leave ANY job, regardless of how insanely miserable it is. This is the reason I still need to work at my loathsome job as a financial planner.


Over the last 9 years working in financial planning (and struggling with my own budget), I have seen some commonalities when it comes to people living beyond their means.

Struggling with a job you hate job is hard enough, but when you never seem to have enough money to pay the bills, let alone get ahead, things can be damn depressing. Financial stress is extremely difficult on you, your marriage, and your children. I am speaking from personal experience here.

Getting ahead financially is not especially difficult, even in the absence of a high paying job. It all comes down to your spending habits. It seems so simple; spend less than you earn. In reality though is much more difficult than that.

Our society has taught us how to be greedy, needy, over spenders. In fact, it's empowered us to be downright irresponsible. We want what we want and then we go buy it! If we don't have the money, we buy it anyway.

With this in mind, here are the top 5 reasons that you will always be broke:

Your Spouse Is Out Of Control.

I've seen this time and time again. A non-working wife decides that she needs to fill her empty day with spending their money on anything and everything that looks remotely interesting. Ok, this is a little extreme, but having a spouse that is out of touch with the family finances (and reality), is very difficult to manage. If both partners are not on the same page with the money, things can, and usually do, get very ugly.

You're In Denial.

Millions of people reside here. This is when you refuse to accept that you need to take a serious look at your financial picture. Doing so would mean you might actually have to stop spending and do without the things that your cool neighbor has. Who wants to do that?

You Are A Dreamer.

I worked for a multi-level marketing (MLM) company about 15 years ago and I was taught that if I followed their "proven system", I would become wealthy. Guess what, thousands of us bought into it. We spent like we didn't have a care in the world, hell, we we're going to be RICH in 5 years. As it turns out, it was not what we all thought it was and the company, along with our hopes of becoming a millionaire, went down the toilet.

Dreams are fine and long as long as the execution plan is injected with a sense of reality. Blindly following hype is a sure path to pain and agony.

You Have No Budget.

Budgeting is a word that strikes fear into our hearts and sends us running for the hills. Why? Because it's absolutely boring, limiting, humbling, and at times depressing. At work, I have no problem building Excel spreadsheets and PowerPoint Presentations all day - still, I hate doing a budget. Now imagine the regular person who has no financial background and doesn't even know what Microsoft Office is. Are they going to budget? I think not. Calculators and graph paper don't have a ton of appeal.

You Waste Too Much Money.

This is supremely obvious, but you would be surprised at how few people actually track their discretionary spending. In know, in your brain right now you're saying that the last point was 'budgeting'. I'm not talking about that here. I'm talking about tracking. People don't think about the coffee and bagel in the morning or the afternoon soda and candy bar they buy, but guess what? They will have spent around $1,700 in a year on this stuff. The $1,700 that could have taken your family on vacation.

Start tracking every dime you spend and you will see the difference! Once you've tracked, you can budget. Without tracking, you have no idea what needs to me eliminated or limited in the first place!

There are a number of other reasons why you could be broke, but these are the 5 most common I've seen. So what do we do?

How NOT To Be Broke

It is certainly possible to turn our finances around and actually start showing in the black, but it takes work, often A LOT of work.

Here are 5 ways to avoid being broke:

Talk With A Professional.

This IS NOT a solicitation to get your business or to endorse any service! Remember, I hate my job and don't really want to help you manage your money. However, I do recommend finding a Certified Financial Planner (CFP) that can help you implement a comprehensive financial plan. Let's face it, most people are clueless when it comes to money.

I have clients with $500k in cash that don't have any idea what a mutual fund is. It's not that they're stupid, they just never took the time to learn. On top of that, investing jargon is confusing and often intimidating.

Use Cash Only.

Say what!!! Too many people fall victim to thinking they can just use their credit card this one time and they will pay it off when the bill comes. That one purchase turns into two and then into $40,000 in Visa and MasterCard debt. If you think you're smarter than that and are going to use your debit card instead, I've got news for you - it doesn't work either. You will end up over spending and getting slammed with $35 overdrawn account fees (and those annoying letters telling you about it). Budget out your needs for the month and use cash only. Use the Envelope Method to control spending. It's cheesy, but it works.
Cut Your Expenses.

I'm not talking about canceling your power or living off of Ramen Noodles, I'm talking about things like limiting eating out, avoiding buying movie theater snacks (a $5 candy bar, really?), reducing your tv cable stations from 800 to 200, and generally avoiding buying anything on impulse. It can be done, it sucks big time, but it can be done.

Set Up Automatic Savings From Your Paycheck.

This is one of my favorites because we totally forget that we are saving. I, unfortunately, have never been a good saver. I am fantastic at spending, but not so great at putting money away. Once you figure out exactly how much money you have going out each month, take a portion of the excess and have it taken out of your check and put into some form of savings vehicle. Also, put it into something that is not readily liquid. You will be much more likely to take it out and piss it away if it's sitting in cash at your bank. Buy a CD with a early withdrawal penalty or a Mutual Fund which charges a fee if you sell it before a certain period. Perhaps that will deter spending. (note: Don't use those account types for emergency funds. You can't get penalized for needing money when the furnace breaks!)

Educate Yourself.

Many of the folks who struggle with their bills are not educated when it comes to finance. People tend to bury their heads in the sand when the topic comes up. You cannot afford to do that anymore. Go find a book on personal finance and spend some time reading and understanding it. You should at least know the basics. The more you understand about money, saving, investing, budgeting, etc., the more likely you are to take control of your finances. If you let it control you, you will always be broke.

The bottom line is that if you're living beyond your means, you MUST take control of the situation immediately. I have seen too many people lose everything because they just couldn't get it together.
Don't let that be you too.

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