My Financial Story – Then And Now

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I was fortunate enough to grow up in a middle-income family, living a middle-income lifestyle, learning the same financial mistakes that most other middle-class kids learn growing up. There was very little discussion of personal finances except for the one piece of advice that if I put away $100/month starting when I was 18, I would be a millionaire when I retired. Although it sounded like an astronomical sum of money at the time, I never took that advice and it turns out the numbers don’t quite work out anyway.

I spent the first 35 years of my life learning two things: no matter how much space you have in your house/apartment, you will fill it with stuff and no matter how much money you make, you will spend all of it (and sometimes a little more).

I never had much money in my teenage years but whatever I made I spent on stuff. I spent my college years living off the money I earned working part-time during the school year and full time in the summer (I didn’t receive much financial education when I was young but I did learn the value of hard work). I got some help from my parents as well and the balance was made up with a few student loans. I finished school with only about $15,000 in loans so I had some money sense back then.

And Then There Were Two

When I got married, my wife and I spent the first 5 years living under the burden of servicing a $10,000 credit line that we used to pay for the wedding. My wife had (and still has) a good paying job in a profession that is very stable so she was the breadwinner and since our expenses were low we got by just fine. We accepted the debt we were carrying to be a normal part of life and just continued on spending a little more than we made.

Fast forward a few years… As our incomes grew and I got a better job, we continued spending more and more. We bought a house and I renovated most of it myself. We took vacations to Hawaii and Napa Valley. We were making about $140,000 combined and slowly falling deeper and deeper into debt. None of it was credit card debt, I could never stomach the interest rates; our debt drug of choice was the credit line and when we finally came to our senses in September of 2009, we were almost $28,000 in debt.

It wasn’t like I didn’t know we were in that much debt. I have always been interested in personal finance, budgeting and investing so I always knew the status of our finances but I never cared. We were young and we had plenty of time to pay our debts. We had managed to save a small nest egg in RRSP’s (very similar to a 401K in the US), and the equity in our house was over $100,000 (the real estate market on the west coast of Canada was virtually unaffected by the economic downturn of 2008/2009). We felt pretty good about our situation and our growing debt was considered a necessary evil to continue to buy the things we wanted.

Time To Change

In July of 2009, I started listening to the Dave Ramsey show podcast and it changed my view of our personal finances and the role that debt plays in our lives. Our growing debt was no longer ok, it was unacceptable, and on September 1st, 2009 my wife and I pledged we would get rid of our debt. We reeled in our spending and paid off $28,000 by May 21st of 2010. In nine months, we paid off all our debt and it felt great; it felt like a weight was lifted off our shoulders.

And Then There Were Three (Four Counting Murphy)

Since then we’ve had a baby and my wife has resumed her career working part-time. We had an emergency fund built up but a bigger vehicle (older and used of course) to accommodate our growing family, some sloppy spending, and an emergency roof replacement on our home has eaten up the emergency fund plus a little more. We are once again in a small amount of debt (something I swore would never happen again) but we are confident we will have things under control again by Christmas.…

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If Debt Consolidation Sounds Too Good To Be True, Trust Your Instincts

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Americans have historically loved to rack up debt — so much that the average household has nearly $15,000 in credit-card debt. But today’s staggering consumer debt loads are usually about a lot more than shopping sprees. The economy has taken a very serious downturn, bringing job losses and the disappearance of accompanying medical insurance benefits. Sinking house values have wiped out homeowners’ equity. In this unstable financial climate, people have maxed out their credit to handle medical crises, divorces and debt schedules that were manageable in good times. In these difficult times, paying off mountains of personal debt has become downright impossible for many individuals and families.

Among the millions of Americans who can’t pay their bills, many have considered turning to questionable debt-consolidation firms that promise the moon and the stars. Their advertisements may claim that they can erase much of your debt simply by having you make regular payments to them, and promising to negotiate lower principal and interest payments with your creditors.

However, the reality of the situation is often far bleaker. For example, many of these firms charge high upfront fees; and often pay themselves first out of your money and apply small amounts, if anything at all, to your debt. They may get your debt consolidated into a smaller overall monthly payment, but because of more interest due over a longer debt term, in many cases, you’ll end up paying more when all is said and done than the cumulative debt you started out with.

Federal Action

The Federal Trade Commission is the main U.S. governmental agency fighting for consumer protection and the FTC has responded in a big way to reign in unscrupulous debt-relief services. Federal law gives the agency real power to investigate violations of consumer protection laws, and to enforce them through the agency itself or through the federal courts. According to April 2010 FTC testimony before Congress, stopping abusive debt-relief practices is one of the FTC’s top priorities in these hard times, and investigation and enforcement actions have been vigorous.

FTC Commissioner Julie Brill testified that almost 500,000 consumers have gotten relief from financial exploitation through 20 FTC lawsuits brought in the previous seven years against deceptive debt-relief firms. The FTC also has the power to enact consumer-protection regulations that affect entire industries. Currently the agency is in the final stages of the rulemaking process to enhance its Telemarketing Sales Rule in ways that would help prevent misrepresentation and abuse by more tightly controlling what debt-relief services can say and promise over the phone to potentially vulnerable consumers. Action by the State of FloridaIn the past couple of years, the FTC has actively partnered with several state governments to clean up the practices of abusive debt-relief firms.

As part of this initiative, the Florida Attorney General has filed several significant lawsuits based on violations of state and federal laws by these firms. In one suit, the firm charged its victims exorbitant upfront fees in exchange for promises of undeliverable financial-relief services. In another action, the firm misrepresented that it could settle consumer debts for greatly reduced amounts. Many financially victimized consumers have received financial relief through these lawsuits brought by the Florida Attorney General.

Even when debtors sign up with sometimes more credible, nonprofit credit-counseling services, many individuals are unable to maintain the payment schedules established with creditors that can take years to pay off. Depending on the amount of debt you have along with your ability to pay, experts say it may be wiser to simply contact your creditors directly yourself to work out realistic payment plans.

In the event that you really can’t pay your bills, even after trying to negotiate with your creditors, it’s wise to contact an experienced bankruptcy attorney who is a consumer advocate. Your lawyer can explain your legal options, assist you with stopping creditor harassment, and help you decide whether bankruptcy or dealing with your debt in another way is the best option.…

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Things You Should Know Before Having A Car Insurance

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We are all legally obligated to have car insurance for any of our vehicles. It is illegal to operate a vehicle that is not properly insured on any roadway. The expense of insurance is high and there are several motorists who cannot afford the high rates and are looking for the best ways to save money and lower their rates. There are many different approaches to saving money on car insurance premiums.

In order to know you are getting the best quote you have to shop around. Comparing rates can be done on the internet or by calling over the phone to various insurance companies and this is the best way to ensure you are getting the best coverage and lowest quotes. After you have obtained several quotes you will need to look at all the details before deciding which is right for you. The best quote is not always the least expensive and in many cases you will find that several of the insurance quotes will have very similar rates. It can make it tough to decide on the right one so before making your final decision be sure to get all the details.

The policy you choose should have enough coverage to satisfy your needs. It is not the time to find out your coverage is not enough after an accident or while filing an insurance claim. If selecting liability coverage policy you should be aware that your vehicle is not going to be covered if it is involved in an accident that is your fault, if the vehicle is stolen or damaged due to vandalism or natural causes such as hail or storms. Full coverage insurance will protect your vehicle as well as your passengers in the occurrence of an accident even if it was your fault. Many insurance policies include underinsured or uninsured motorist protection on their policies and this is something to be considered.

It is illegal to drive a vehicle that does not have insurance but many people still do and many people have the bare legal minimums for coverage and if you are involved in an accident with someone like this you may be left holding the bill without that added protection. The deductibles are an important part of your monthly premiums costs. The larger the deductible the smaller your monthly premium. Several insurance companies offer a small deductible but you have to know that you are paying the difference somewhere in your quoted policy. The deductible amount should be large enough that your monthly payments are lowered but not so large that you will not be able to afford if you file a claim. Many of the quotes will include details like road side assistance

or rental car options, these details can be eliminated to help reduce your policy. Ask the insurance agent about the company?s policy for forgiveness of accidents or moving violations and find out their process for filing claims. Ask the agent for any information you might not understand so you can make the correct decision. Do not try to hide the truth or leave out information when gathering quotes. You A lot of time can be wasted on giving insurance agents false or incomplete information only to find that the quote you received will change as soon as the agent finds out the truth, and they always do. Consumers in the automobile insurance market often come across “incidence rates”.

This phrase, while confusing to some people, is actually a simple method for determining the level of risk for a specific vehicle. When one applies for insurance the company is not only interested in their driving record, but also in the kind of car they drive. There are several factors that may affect the incidence rate of a car, such as its popularity among car thieves due to value after disassembly, weaknesses that could lead to accidents or failures, or the temptation that the driver will engage in reckless driving due to superior performance levels. Any insurance company will have data that shows the likelihood of cars being stolen, how often they’ll be in accidents, etcetera. This is what your insurance agency will use to determine how high the risk level of your vehicle will be and the effect this will have on your policy rates, if you have a vehicle that falls in to one or more of the high risk categories for incidents then your rate will be dramatically higher than you would like.

It seems common-sense that sports cars are more likely to be involved in reckless driving incidents or speeding violations. But there are also some incidents that are not so obvious. For instance, statistics show that a white or light-colored vehicle is more likely to be involved in accidents than darker vehicles. Knowing this information can help consumers make better decisions about the types of vehicles that they choose. Incidence rates can be found either by searching the Internet, or by asking a car dealership for the information. By knowing this information and how it affects your insurance premiums, you will be able to see why your quotes differ from other drivers with similar driving records.

The vehicles that are more likely to be stolen according to the data are given much higher rates as some cars are never returned. You should consider installing some antitheft devices, such as an alarm or a GPS tracker. A GPS tracking device will increase your chances of the vehicle being recovered as well as decrease your monthly premiums. Vehicle color has a much lesser affect on determining premiums. While a white car may be more difficult for other motorists to see, and thereby more likely to be involved in an accidents, it will generally be the other driver who is at fault, and his insurance company, not yours, must reimburse you for any damages.

It may be wise to purchase an Uninsured Motorist or an Underinsured Motorist policy in case the other driver either does not have insurance, or his insurance will not fully reimburse you. By having this additional coverage, you can greatly reduce, if not eliminate, the additional premiums that you would otherwise have to pay. By knowing the incidence rates associated with your vehicle and the ways to offset them you can ensure lower rates, but it works both ways. It’s possible to research and seek out the cars that have the lowest theft rates and best safety records in order to get the lowest possible insurance rates. When advertisers note good performance and safety records they’re really drawing your attention to the possibility of lower rates.…

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survive after bankruptcy

6 Tips To Survive After Bankruptcy

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The stigma of filing bankruptcy will probably never completely disappear; however, there is life after bankruptcy.

At least that is what I tell my clients to help them feel less anxious about filing for bankruptcy relief. Some assume that I am just doing my job as a bankruptcy paralegal but the truth is I know because I had to file for bankruptcy relief myself years ago.

The reasons why people file for bankruptcy relief are as varied as the creditors listed in each case. My case was because I was young, had no health insurance and had overwhelming medical bills that I would never be able to pay no matter how hard I tried.

Some of my clients file for the same reason; others because they lost their jobs and unemployment has run out while others have lost their spouse and cannot pay the bills on one income. I will admit there are some, although fewer than people think, that have just been reckless with their personal finances and gotten in over their heads.

I filed for relief under Chapter 13 of the Bankruptcy Code, which means I paid a bankruptcy trustee each month for five years.

My bankruptcy plan paid my creditors back almost in full but not quite. Through my bankruptcy, I was able to reorganize my personal finances, pay back most of my debt and learn how to live without credit cards, loans or finance companies for five years.

After my bankruptcy plan was completed, I found that my credit score had improved a little because I finished my plan.

I was able to purchase a car and finance the balance due within a year of finishing my bankruptcy plan. By paying my car payments on time each month, I was able to improve my credit rating to the point of qualifying for a mortgage loan.

My clients who file for relief under Chapter 7 also find that there is life after bankruptcy.

Chapter 7 is a liquidation rather than a personal reorganization. Debts are discharged, with a few exceptions, and debtors are allowed to keep some or all of their personal property (depending on the exemption laws in the state where the case is filed).

Chapter 7 debtors can reclaim their credit rating after their bankruptcy is discharged by continuing to pay secured creditors (i.e. mortgage payments, car loans, etc.) and non-dischargeable debts (i.e. student loans, taxes, alimony and child support) on time.

They should also avoid jumping back into debt with the first credit card offer they receive – which will come with a high interest rate and low credit limit.

I was able to survive after bankruptcy and so do the clients I work with as a paralegal. There are ways to improve your credit rating and take control of your personal finances after bankruptcy as long as you are committed to your goals.

1. Create a budget: If you never lived by a budget before, this is the time to do so. Creating and sticking to a budget is essential for having a successful financial future.

2. Pay everything on time: Continue making all payments on time each month – that means before the due date not during the grace period before a late fee is added.

3. Build an emergency fund: Things happen and it pays to be prepared for them. Start a savings account for unexpected expenses instead of incurring debt on credit cards, with finance companies or cash advance companies.

4. Get one credit card: The limit will be small and the interest rate may be a little larger than you like; however, both will improve as you demonstrate your ability to pay each month on time. Rather than pay in full each month, make the minimum payment plus a little extra each month to show you are dependable.

5. Monitor your credit report: Check you credit report often and note items that are lowering your credit score. Most of the top credit reporting agencies now offer explanations of what items are lowering your credit score and how to improve them.

6. Do not fall for scams: Companies that promise to raise your credit score fast without any hard work on your part are probably scams. If it sounds too good to be true, then stay clear and keep plugging along. Your hard work will pay off sooner than you think.…

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