Manage spend, debt and increase your savings

Before rushing to a lawyer to assist you in filing for bankruptcy, you have to make sure what is bankruptcy and what is not. Only then will you have to find a bankruptcy lawyer that you can work with in filing your case. Many people rush to file for bankruptcy thinking that it will solve their financial problems. The opposite is often true.

Declaring your business to be legally bankrupt, only mean that you have done everything you could and there is no way for recovery. It means being deep in debt that it will already be impossible for you to sustain the business.

There are kinds and variations to bankruptcy and the legal process will depend very much on where you are coming from but the purpose is the same. Bankruptcy cases will take years to resolve. The court will determine what debts do not have to be repaid and what will be directly deducted from your income.

In the interim, credit lines will be closed to you. Your credit history will be tainted and no credit institution will want to do business with you. Back taxes that you owe will still have to be paid and obligations will still be enforced like alimony and child support.

When there is no resolution that is possible, finding a good bankruptcy lawyer will then be the only recourse.

A good bankruptcy lawyer should be someone you can be comfortable talking with. Someone you can trust and someone who has displayed competence in handling bankruptcy. This is very important as communication between you and the lawyer must be based on trust. There have been so many instances when the client holds back on information that he thinks is not so significant only to learn later on that the piece of information that was withheld posed additional complication to the case. Withholding information from your bankruptcy lawyer pose problems where non existed before. Bankruptcy lawyers can only help the client to the extent of the knowledge that the lawyer has. It is crucial then that the client works with the lawyer. This is in the first place the client’s future that is at stake.

Do not hesitate to interview the lawyer prior to retaining him. Ask the lawyer questions and a good lawyer must answer you in a language that you can understand. If you don’t, do not be afraid to clarify statements that could be ambiguous to you. Find out a bankruptcy lawyer that already has an extensive experience in handling bankruptcy cases. Whenever possible find a bankruptcy lawyer who is a specialist. Avoid the generalist, as they may not be able to help you as much.

If you feel uncomfortable talking with a particular bankruptcy lawyer, find another one. You can visit the local bar association to find out their recommendation.

When you visit your bankruptcy lawyer, bring a list of all the creditors that you owe, including payments to personal loans that you are not left behind and a list of all your assets and liabilities. The more information you provide the bankruptcy lawyer, the better and more accurate the recommendations he will give you. Remember that lawyers can only work as good as the information that you provide.

Cooperate well in giving your lawyer the data regarding your case because you are in the best position to give those to him. You also will be the person that will either suffer or benefit from the outcome.

Most newly-married couples are having a hard time adjusting to a different way of life, especially when it comes to financial matters. As separate individuals, your spending habits will differ. This is why you both need to make certain adjustments to combine the household budget.

Here are some ways on how you and your partner can make the ‘financial aspect’ of your marriage harmonious and organized:

1. Understand the way that you both look at money.

If you and your spouse have different beliefs when it comes to money matters, sit down and discuss it. The key here is to be able to compromise. For some people, money is a security measure that needs to be saved. Other people spend it luxuriously and look at spending money as a means to reward themselves for their work. Still, other people are very thrifty that they hardly ever spend a cent of what they have earned.

Understand that the way that you both treat and spend money stems from how you were brought up by your parents. Think of everything that you need to discuss when it comes to your household budget. If possible, set rules on how you will spend your combined income on utility bills, food, mortgage, car maintenance, etc.

2. Set future financial goals.

If you are newly weds and you are planning to have a baby soon, consider this when organizing your finances. If you are a couple nearing the age of retirement, you can make plans on where you will spend your leisure years. Setting long-term and short-term goals will help you finalize your financial plans.

3. Share your money-saving skills with your partner.

If you have different family backgrounds, then you would have something to contribute towards organizing your joints assets. Make each other aware of your personal finances then think of ways on how you can further boost your money-handling tactics.

By following these tips, you will surely have your finances organized to lead a more comfortable lifestyle.

Consumers already burdened by higher energy costs are being saddled with another drain on their finances : higher minimum credit card payments.

The higher minimum credit card payments are the result of January 2003 guidelines issued by the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision. The Office of the Comptroller of the Currency, or OCC, regulates national banks and is concerned that many cardholders have credit card debts that will take decades to pay back. To prevent this problem, these regulatory agencies proposed that, by the end of 2005, credit card issuers establish reasonable periods for paying back balances, such as a seven- to ten-year payback or amortization period

Card issuers were supposed to adopt the raised minimum payments by the end of 2003. The federal regulatory agencies acted after years of seeing credit card issuers lower minimum payments because of "competitive pressures and a desire to preserve outstanding balances." Credit card lending consistently yields greater profits for large bank issuers than other services, Federal Reserve data show. But these profits could decrease if consumers pay off debt faster or default on payments, leading to debt write-offs.

The agencies expressed alarm that some banks were setting minimum credit card payments at levels that did not even cover interest. These were seen as predatory lending practices targeting low-income and financially naive consumers. The result was predictable: consumer debt load surged. Consumers were being encouraged to accumulate debts they could not service, resulting in high levels of default and bankruptcy.

Before the new government guidelines were issued, many banks required only 2% of outstanding balance to be paid off each month. For example, take the case of a credit card with $10,000 of debt and an 18% interest rate. Almost 58 years would pass before this debt was completely paid off, assuming the cardholder stuck to the minimum payment each month, according to Bankrate.com’s credit card calculator. Total interest paid during that time would be almost three times the original debt, or $28,931. Now, the same cardholder paying 4% of outstanding balance each month would pay back the debt in a more reasonable 15 years and would pay only $5,916 in interest.

In recent years, banks have also raised the charges for cash advances, late payments or spending over the credit limit, helping push more consumers further into debt. These latest changes target credit card holders who don’t pay their bills in full at the end of each month. A 2005 survey by the American Bankers Association (ABA) showed that 43% of consumers carry a balance on their cards.

Nearly three years after regulators said minimum monthly payments should let cardholders pay off debt in a "reasonable period of time," most banks finally acted. The majority of the top 10 credit card issuers raised their minimum payments in 2005, in most cases, during the last quarter.

Regulators encouraged banks to adjust their minimum payments by the end of 2005. The banks’ delayed response to the January 2003 guidelines caused consumers to be hit with higher credit card bills during the 2005 Christmas season. The increase was combined with a new bankruptcy
law which has made it more difficult to erase debt with a Chapter 7 bankruptcy. More consumers are now allowed to declare only Chapter 13, which forces them to repay their debts on a fixed schedule.

Banks say the delay was caused by the time it took to update systems in accordance with the regulators’ instructions. "These are not simple changes," stated Alan Elias, a spokesman for Washington Mutual. Still, most banks were in compliance at the end of 2005.

Contrary to some rumors, regulators did not require minimum payments to be raised by a fixed amount. However, they said payments should cover fees and finance charges, plus 1% of principal. Some card holders are seeing their minimum payment double, to 4% of the balance from 2%. On a $10,000 balance, payment could rise from $200 to $400.

In the long run, the change is healthy for consumers, since it forces them to pay off credit cards more quickly. Until now, some of the banks charged minimums which did not even cover the interest owed, so debt would just keep growing, resulting in more indebtedness by consumers. But initially, consumers not prepared for the higher payments can experience financial hardship, especially those with lower incomes.

Budgeting. It’s a word we’re all familiar with. Everyone knows what a budget is, right? Yet how many of us actually make and stick to a solid monthly budget? The truth is that most of us start out with the best of intentions, but an unexpected expense comes up and busts our budget. Then we give up and go back to juggling our finances and worrying about having too much month left at the end of the money. However, if you are striving to create a budget for the purpose of systematically paying off your debts or to start a savings and investment program, then it’s critical to develop a workable and realistic budget.

So what’s the problem? Why do most of us fail at the simple task of creating a budget so we can live within our means? The simple truth is that most budgets don’t work because they fail to account for irregular or variable expenses. Everyone knows how much their rent or mortgage payment is. It’s the same amount month after month. If your rent is $1,000 per month, that’s a no-brainer. The same is true of many other fixed expenses, such as auto loan payments, cable TV subscriptions, insurance premiums, and so on. It’s easy to budget for these expenses because the amounts don’t change from one month to the next.

Besides expenses that are the exact same figure each month, there are numerous types of expenses that vary a little from one month to the next, yet we still have a pretty good idea what we spend each month. A good example is our grocery bill. Most of us have a fairly clear picture of how much we spend each week at the supermarket. So, we can insert a realistic figure into our budget-in-progress and not be too far off the mark. The amounts may go up or down slightly each month, but we usually know the range we’re dealing with. Other examples of this category include telephone bills, utility bills and gasoline (when prices are stable, that is).

The real culprit in busted budgets is the variable or irregular expense. How much will you spend on car repairs over the next 12 months? What about medical bills? Home maintenance costs? It seems that bills for these types of expenses hit us out of left field, and there goes our budget. Before long, we’re using food money to cover a new set of tires for our car and the whole budget comes crashing down.

So what’s the solution? There is no perfect answer to this problem. But we can come to a close approximation by using the simple technique of monthly averaging. Start by gathering 12 months’ worth of checkbook registers, bank statements, and credit card statements. Write down (or enter into a spreadsheet) how much you spent each and every time your money went toward something that was not a fixed expense. Group these expenditures into categories, such as auto, home maintenance, clothes, etc. Don’t try to break it down too far. What you want is a handful of useful categories. Then keep listing each of these expenses under their relevant categories for the full 12-month period.

When you are done with this exercise, you should have an excellent idea of your total annual expenditure for these variable expenses. For example, if you add up all the automobile repair or maintenance expenses for the year, and the figure comes to $1,200, then divide by 12 to get the result of $100 per month average. That’s how much you need to allow in your monthly budget in order to build up enough reserves to handle an auto repair when it comes up. Again, this method isn’t perfect, because an expense may come up that exceeds your estimated outlay, but at least it takes into account a closer approximation to reality than simply guessing, or worse, ignoring auto maintenance in
your budgeting.

The trick here is to set up a separate savings account in which to set aside these "extra" funds. Let’s say the "extra" $100 goes into the savings account for six months, and then you get hit with an auto repair for $400. You pull the money from your $600 savings that was purposely built up for this type of expense. This way, you’re automatically setting aside amounts intended to cover each type of irregular expense that you encountered over the previous year.

Most people are shocked when they perform this 12-month analysis of irregular expenses, and it immediately becomes clear why their budget is always breaking down. This technique leads to the discipline necessary to recognize that "extra" money is seldom really extra. If we think we have our bills covered, and there is some cash burning a hole in our pocket, our tendency is to spend it on something fun. But if we know that there really is no cash left over, because we haven’t yet set aside the extra $100 needed to keep our car on the road, then we’ll be less inclined to spend it on pizza, beer, and movies.

Budgeting can be successfully accomplished by this technique of monthly averaging, especially if we consistently apply it year after year. As we move forward, our understanding of our true expenses becomes clearer and clearer, and we are no longer surprised by the occasional unexpected expense.

The best way to implement this approach is to set up a regular savings program, where the amount you’re setting aside to cover irregular expenses gets automatically deducted from your paycheck and forwarded to your savings account. If the money is deducted from your paycheck before you even see it, then you will be less tempted to skip this critical part of the budgeting process, and you will greatly increase the chances of making a budget work over the long term.

Banks serve a tremendous purpose in this world.

They take in individual’s deposits and pool them together to lend them to businesses or individuals who need the capital for a business opportunity they have. This business opportunity could be a company that wants to expand or an individual who wants to buy a home.

The more that people save, the more money that is in the banking system and this increased money leads to more loans and more economic growth. This growth is natural and healthy because people’s savings represent capital they could use in the future for more purchases. Thus, when a business borrows more money and invests that capital to be able to manufacture more goods it is a smart decision because people already have more money saved to spend on these goods.

This becomes a healthy circular formula that is summarized as such: "higher savings" leads to "more loans to businesses" which leads to "more business investment" which leads to "great consumer choices" and of course more jobs are created along the way which further fuels the economy forward.

Well, most of us are aware that the rate of US savings was actually negative last year, meaning we spent more than we made. This is down from saving 7.5% of our salaries only 30 years ago. So we see that this current economic boom has not been built upon by people’s savings.

On the other hand, economies also grow when interest rates are set artificially low as they were set in the US. These low rates spurred the real estate bubble to new, incredible prices never before seen in the US and the world. And the amazing thing is that there is no economic justification for these high home prices outside of the herd mentality thinking that prices will keep going up.

Well, we have passed that point and are now seeing decreasing prices and increasing inventories of homes available for sale.

The problem with banks is that they get caught up in the herd mentality as well, increasing the amount of money they lend for people to buy homes. And not only that, they are doing so in a riskier and riskier fashion using adjustable rate mortgages.

Currently, US commercial banks face incredible risks because over 60% of their total earning assets are mortgage-related!!! Let me repeat that, over 60% of US commercial bank’s assets are mortgage related – a postwar record high.

As a result of the above risks faced by banks any problems happening in the real estate market would have strong negative ramifications for the US banking system. As an example, the Japanese banking system was crippled after the boom of the 1980′s when they concentrated much of their capital in real estate. Japan spent the following 14 years in an economic doldrum and is now just beginning to see the light of day.

Now that interest rates are going up, and will continue going up, people who used adjustable mortgages are feeling the pinch of increasing monthly mortgage payments. As a result, foreclosure rates are up 38% over last year and bank’s bottom lines are feeling this pinch.

Billionaire Warren Buffet recently said that he has been studying recent bank balance sheets and is very concerned about the growing number of defaults on their books.

The point is that even though banks aren’t prepared and well diversified it means that you should be even more so! How to prepare yourself is discussed in detail in the recently issued eReport entitled "Recession – How To Survive and Thrive".

When people feel the need of money rising in their household budget, they try to plan out different ways to sustain their expenses. The borrowers can get money for their needs without pledging collateral with the lender. This can be obtained through Cash Loans which are available to borrowers at their comfort.

The borrowers who are in need of money may require it for personal uses which are urgent and can’t wait for the next salary to arrive. These purposes can be problematic in the future if left unfulfilled. These can be like credit card repayment, home or car repairs, grocery or electricity bills, etc.

The borrowers can take up an amount in the range of

That’s a good question, do you know whether or not your pension plan is stable, and if so will it remain that way? Well, if you’re part of your employers pension plan, you should find out the answers to these questions. Once you find out, stay informed about your pension plan.

You say you know you have a pension plan but really don’t know what this is. A pension plan is a retirement account that your employer contributes funds as part of your future retirement. The amount paid to your retirement fund by your employer is based on the number of years you have worked and the amount of income you have earned.

How long will it take for me to become eligible for my employer’s pension plan? It is normally between 3-5 years that you become eligible for the plan offered by your employer.

What if I no longer work for the employer after I become eligible will I still be vested? Yes.

I hear some employers have terminated their pension plans, why is this? Some employers are finding it very expensive to continue with their pension plans due to: increased number of retirees, low interest rates and instability of the stock market.

My employer is terminating our pension plan, how will this affect me? The government agency Pension Benefit Guaraty Corporation will pick up pension payments when the employer defaults. Note, this agency pays a certain amount of your pension benefits on an annual basis. Unfortunately in most cases you will receive less for your annual pension amount then you would normally have received via your employer.

Is there any way to know if my employer’s pension plan is in trouble? If your company is showing signs of financial trouble, normally the first thing to go is the pension plan. If you are trying to find out if your employer may be headed for financial trouble consider checking the following: financial news information on your company, newspaper financial section, stock market, business financial magazines and the internet.

I just recently found out that an employer I worked for a few years ago just went out of business. How would I find out about the status of my pension plan that I had with this employer, I’ve been unable to contact them directly? If your past or former employer defaulted on it’s pension plan, check the Pension Benefit Guaraty Corporation website at www.pbgc.gov to see if this program has taken over the handling of your former employer’s plan.

Stay on top of your pension plan, by keeping yourself informed of your plan’s current status. This is important because your pension is part of your retirement for your future! If you don’t stay informed about your pension, you may loose valuable funds that are important for your future retirement funds.

1. Health Savings Accounts (HSA)

This is a strategy where the employer buys a health plan with a large deductible. Typically, these are groups that are coming from a plan with a very low deductible. Since the higher deductible plans are usually much less money, the money saved is used to put into the employee’s "Health Savings Account." The money in this account is used by the employee to pay qualified medical expenses. If it’s not used, the money rolls over to the next year. The money belongs to the employee, even if they leave the company.

2. Health Reimbursement Arrangements (HRA)

This is very similar to the HSA above but a portion of the qualified medical expenses not covered by the insurance is "pledged" by the employer, that is, the employer only spends the money, if there is a portion of the bill not paid by the insurance. This would be more favorable to the employer since on an HSA the money goes to the employee, whether there are claims or not. The problem with HRAs is that there are very few carriers that offer them right now.

3. Medical Reimbursement Accounts

This is very similar to HRAs above and extremely flexible. It’s otherwise known as partial self-funding. Employer buys a larger deductible and if the employee uses up that deductible, the employer pays all or a portion of it, depending on how a pre-arranged agreement is written. This goes for other expenses not paid by the insurance. The idea is that the employer self insures the typically smaller expenses with their own cash, (presumably, the savings in premium dollars from going to a higher deductible.) The downside to this is that many carriers prohibit the use of this strategy with their plans. It can be very effective but make sure you use an experienced third party administrator as there may be some legal and tax documentation required. Otherwise known as Section 105.

4. Kaiser.

More and more groups are moving to Kaiser. It is typically, benefit for benefit, less money than just about every other plan. Kaiser is spending billions on the future and their quality control is promising.

5. Offering Blue Cross and Kaiser side by side. Blue Cross has a new program where only five employees need to enroll with Blue Cross. The rest can be with Kaiser. This is a ground breaking opportunity in flexibility.

6. Blue Cross Elect. Blue Cross has a portfolio called Elect with 16 plans in it comprised of HMOs, PPOs, and an EPO plan. Each of these plans is priced from low premiums up to a much higher premium.

The beauty of this program is that Blue Cross allows the employer to "define" how much premium they are willing to pay towards an employee’s cost. For example, Blue Cross offers a $10, $20, $25, $30, $35, and a $40 copay PPO plan. The $10 plan is the most expensive of this group.

After viewing all of the premiums for the various plans, the employer can establish, arbitrarily, which plan they are willing to pay, say the employee only premium for. In this case, let’s say it’s the $25 copay plan. The employee can buy the $25 copay plan and it doesn’t cost them anything. However, if they want the more expensive $10 copay plan, the employer would payroll deduct the difference in premium costs.

Let’s say they have dependents they want to cover but the employer only wants to pay for the employee only. The employee could take the lesser expensive $40 copay
plan, and use a little bit of the savings to help them with the costs of adding their dependents.

This has been a highly successful program because it gives the employees a greater number of choices, helping the employees be more definitive in their costs and needs, and at the same time, allows the employer to more efficiently define their costs.

This information is time sensitive and can change at anytime. If you have a question or need more information, please contact me at mail@thestrategyguide.com. –Todd Rich

Todd Rich is an expert on California Small Group Health Insurance Plans and has written four books on the subject. To learn more about Todd and his books, please visit www.TheStrategyGuide.com/ezines

"Seek4finance is a financial site based in the UK that looks after all your financial needs. It offers excellent tips and articles on a variety of financial products and solutions such as investment, banking, credit cards and insurance. The site also features news from the world of finance that are updated every day. Seek4finance contains a directory of the most reputed financial organizations in the field of banks, corporate finance, pensions, mortgages, etc along with their contact details. If you look in the A-Z financial services directory you will be pleased to find the different financial organizations listed alphabetically.

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Every time you apply for credit, for example a credit card or a loan, the lender will request to see your credit history from a credit reference agency. The information they hold is so detailed that there’s really no need for us to fill out that long application form, because within a fraction of a second they can see all they need to know from Experian, Equifax or Callcredit, the three main credit reference agencies. You would be very surprised to see just how much they know about you.

Banks, building societies and other financial institutions providing credit have been passing on details of your financial transactions to the credit agencies. Every time you apply for a credit card, every time you miss a mortgage repayment – it gets noted. They know whether you pay the minimum or the balance each month, they even know details of your credit limit on each credit card. They also look to public records, the voters’ roll and the public register of court actions because that is where all county court judgements are listed. It all happens automatically, and when your credit history is requested, the computer will provide a statistical analysis of your financial habits and provide an assessment of your suitability. It enables, the industry argues, lenders to make an accurate judgement about whether they should lend you money or not.

However, there is one piece of financial information that the credit agencies are not allowed to access, and that’s the student loans. Despite the industry’s remonstrations to the government, nothing has changed, and they are not allowed to access the information. The reason? Student loans constitute a debt to the taxpayer, they were not funded by commercial business.

Before September 1998, the student loan system worked like this: once graduates were working and earning the national average, which was