5 Tips for Talking to Your Parents About Retirement

Many adult children eventually find themselves switching roles with their aging parents. Whereas you were once the child in need of guidance, your parents gradually seem to need your help more and more. Suddenly, you realize that you’re the one with concerns about your parents’ health and finances. If you are concerned about your parents’ retirement plans – you’re not alone. Studies show that approximately 26% of Americans ages 50 to 64 don’t have any kind of retirement savings. If your parents are facing retirement with no plan, it’s not too late to intervene. Here are some tips for opening a dialogue with them about retirement options.

1. Be Honest, But Gentle

Ambushing your parents with a bunch of questions is definitely not the best way to start a healthy conversation. Be direct, but give them time to prepare for your chat. Tell them you are worried about their retirement plans and ask when would be a good time to talk. Start by getting an idea of whether or not your parent shares your concerns. If they do, these concerns will be a good place to start a conversation. If not, get prepared to make your argument as respectfully as possible.

2. Don’t Lecture; Ask Questions

The important thing to keep in mind is that this is a two-way conversation. Lecturing your parent about what he/she should or shouldn’t be doing is not likely to lead to anything productive. Ask your parent lots of questions. Do they have any savings? What do they expect their retirement expenses to be? Do they have any debt? These questions can open a dialogue and give you a better understanding of how prepared they are for retirement. Ask to see documents if they have them and go over the information together so you both know all the details.

3. Be Realistic About Your Ability to Help

Some parents assume their adult children will be able to care for them in their later years. Be honest about your ability to help them in the future. If you are not prepared to provide housing, care, or financial assistance, now is the time to make them aware of this. Keep in mind that helping a retired parent doesn’t have to involve fully supporting them forever. Even putting some of your money aside into an emergency fund for your parent(s) could be quite helpful.

4. Let Them Make Their Own Choices

Ultimately, the retirement choices your parents make are theirs and theirs alone. As much as you may want to intervene and do what you think is best, you have to respect the fact that these decisions are theirs to make. You can provide them with as much information as you possibly can to help them make an informed decision about their financial future, but you cannot dictate their choices. Be patient and understanding.

5. Keep the Conversation Going

Talking to your parents about their retirement plans is not a once and done deal. This is likely a lifelong conversation that you will need to have repeatedly as your parents get older and their financial circumstances continually change. Creating an open dialogue will make both of you feel more comfortable voicing your concerns when they come up over the years. Check in with your parents every once in a while to ensure that they are still on track with their retirement goals.

Where your parents are at financially when they retire is the result of decades worth of financial decisions and life choices. There is no way for you to turn back the clock and reverse everything for them. However, starting a dialogue now about money and retirement can help your parents prepare for life in their golden years.

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The Importance of Life Insurance in NJ Estate Planning

If you have people relying on you, no doubt you have spent some time thinking about how to protect them in the event that something happens to you. In order to create a solid estate plan, life insurance should be a component of providing security for your loved ones even after you’re gone. Most life insurance policies fall into two categories: term life insurance and whole life insurance. How do you know which life insurance plan is best for you?

• Term life insurance is only in effect for a specified period of time.
• Whole life insurance covers you until death no matter when that is.

You’ll pay lower premiums for term life insurance than for whole life insurance. Other things to consider when selecting a life insurance policy include:

1. How much coverage do you need?

The end goal of term life insurance is to substitute the income you would have provided your family with. If you live past the coverage period of the policy, you receive nothing. Most policies cover for 10, 20, or 30 years. The premium (payment) for a term life policy is static throughout the life of the policy and is based on your age, health conditions, and lifestyle. Regarding term life insurance, the insurance company is betting that you will outlive the policy and they will not have to pay anything to your beneficiaries. Hence the lower premiums.

2. What kind of payments can you afford?

Whole life policies, on the other hand, are more complex. Because there is an absolute value and guaranteed payout for every policy, premiums are much more expensive. Insurance companies cannot gamble on whether or not they will have to pay out for your policy—they know they will have to.

3. How is your general health?

4. Do you make relatively smart lifestyle choices?

5. Do you want the option to borrow from your insurance policy?

Often, a complete health and wellness exam is required before an insurance company will issue a whole life policy. With whole life policies, part of the money you pay in premiums will go directly toward the value of the policy itself. This is your money. If you cancel the policy, you would still get some money back. While it will diminish the death payout of the policy, you can even borrow against a whole life policy.

6. What is your relationship status?

7. How much debt do you have?

If you are single, debt-free, and dependent-free, you probably don’t need life insurance at all. For most of us, this isn’t the case. Ask yourself what problems may arise if you were to die today. For instance, if you still have 20 years left on your mortgage, you might want to consider a term life insurance policy for 20 years so you know your mortgage will always be covered. On the other hand, if you have a lifelong dependent who requires constant care, setting up a whole life policy to cover their long-term care is probably the better choice.

8. How old are you?

Some people decide to invest in both a life and a term life insurance policy. When you’re younger, you may not be in the financial position (or have the need) to pay the premiums for whole life insurance. Many life insurance companies allow you to convert your policy from term to whole life as your circumstances change and as you age. Your new premiums would be based on your age when you convert. You may have to submit to a new medical exam, but by converting, you can benefit from lower premiums when you are younger while still putting money toward (what will become) a whole life policy to cover you later in life.

Estate planning, and life insurance in particular, can seem like intimidating tasks, but they don’t have to me. Veitengruber Law offers long-term planning guidance for all stages of life. We believe in utilizing personalized strategies to help our clients protect themselves and their loved ones. Schedule your free consultation to discuss all of your estate planning concerns.

Getting Savvy About Your Student Loans

You did it! You got the degree, graduated college, and are ready to branch out into your career. Graduation is a time to look forward to your bright future after years of hard work. But it’s also worth taking a look back—especially at your student loans. Many college students graduate without really knowing how much they owe, when payments are due, or even who they owe. How long will these loan payments be in your life? Organizing your student loan debt is a big first step towards your bright future after graduation. Here are six steps you can take to get on top of your student loan debt.

1. Who do you owe?

Are your loans federal or private? This is a good time to figure that out. Most college students have some kind of federal student loan debt. Go to studentloans.gov and enter your FAFSA information to see what loans you have and to find the government-hired company that services the loan. This will be the company you contact for all future interactions concerning your loan.

If you have private student loans this can be a little more difficult to track, especially if you weren’t exactly the world’s most organized filer when you were 17 years old. Your loan(s) also could have been sold to a completely different company than you initially used. In these instances, your college admissions office should be able to lend a helping hand. Your alma mater should have a copy of any loan agreements with your records that can tell you who your loan servicer is. Your credit report can also help you determine information about any private loans.

2. How much do you owe?

This is really a two-fold question: What is the amount you initially borrowed and what is the current amount of principal you owe? If you have been making some payments towards your loan, it is important to find out if these payments went towards the principal of your loan or if they went towards interest. Federal student loan balances are frequently not up to date, so contact the lender directly for the true amount of your loan. Private student loans should be up to date with your most recent statement, but it never hurts to make direct contact if you have any questions about what you owe and what you’ve already paid.

3. What is the interest rate?

Knowing which loans have higher interest rates can help you determine which loans should take priority as you begin repaying your debt. All federal loan interest rates after 2006 are fixed, meaning the rate remains the same over the duration of the loan. Private student loans as well as federal loans taken out prior to 2006 may have variable interest rates. Find out how often the rate changes and if there is a cap on how high the rate can go. If you have an unreasonably high interest rate, it is likely due to a poor credit score when you applied for the loan. Ask us how to refinance your student loan!

4. What are my payment options?

Your lender should be able to tell you the estimated payoff dates of your loans which can help you establish a payment plan that works for you.

• Federal loan monthly payments will automatically calculate based on a standard 10-year repayment plan. If you cannot afford these payments, there are many income-driven repayment plans that can allow you to make smaller payments more in line with your budget. It’s important to understand any special conditions of these plans and how smaller payments may impact your loan balance.
• Private loans are much less flexible when it comes to payment options. Review your loan agreement. Most private loans will spread out payment equally month by month for the duration of the loan. If you are struggling to pay back your private student loans, reach out to your lender to discuss payment alternatives. They would much rather you be making smaller payments than none at all.

Student loans will be part of your financial reality until you pay them off. It can be daunting to think about paying back this debt while you’re still establishing yourself professionally, finding a place to live, and making your mark on the world. Don’t panic! Answering the above questions can help you create a plan of action to pay off your debt and get back to planning for your bright financial future. If ever in doubt, reach out to Veitengruber Law. We can help you make sense of your loan repayment options.

What the Equifax Breach Means for Consumers and How to Take Action

The Federal Trade Commission recently reached a settlement with Equifax over a data breach that has impacted around 147 million Americans. The popular credit monitoring agency admitted to a leak that included social security numbers, addresses, birth dates, driver’s license numbers, and credit card information. Nearly half of all adults in the United States have been affected and are therefore eligible to file a claim in the settlement to receive compensation from Equifax.

What does the Equifax breach mean for you?

The first thing you should do is check to see if your information has been impacted by this breach. On the official Equifax Data Breach Settlement website, you can enter your last name and the last six digits of your social security number to see if your data was part of the breach. Make sure you are using the official, government approved website before entering any personal information. If you determine that your data was indeed breached, you have a few things to consider. The settlement includes three options for compensation:

– A one-time payment of up to $125

– 10 years of free credit monitoring services

– A one-time payment of up to $20,000 if you can prove you spent time or money on identity theft services due to the data breach

In order to receive any of the above compensations, you must fill out the application on the website by January 22, 2020. You can also choose to opt out of the settlement. In order to officially opt out, you must formally exclude yourself by November 19 of this year.

It is important to consider how this breach could impact you before you decide on a settlement option. Despite the low payout amount, consumers should not take this data breach lightly. Once your private, identifying information has been leaked, it can spread indefinitely. Data hackers can sell and re-sell your information forever. If your information is actively being used, $125 is not even close to enough money to cover the cost it will take to repair and protect your finances. Equifax has allotted $425 million for financial compensation—meaning actual, per person payments will likely be much less than the $125 listed. Early applicants will have a better chance of getting the full amount.

Because of this, financial advisors are suggesting that consumers opt for the free credit monitoring or exclude themselves from the settlement all together. Credit monitoring and identity theft services could serve you much better than $125 in the unfortunate event that your information is being sold on the dark web. Opting out of the settlement would allow you to sue Equifax as an individual, giving you more legal power to recuperate your financial losses in the event of a significant identity theft situation. Additionally, if your information has been seriously compromised and you have experienced significant financial loss due to identity theft, it is important to speak with a NJ lawyer who has experience with identity theft.

The one thing you can and should do right away in response to the Equifax data breach is to start practicing better cyber hygiene. Hackers look for more than just social security numbers and credit card information. Oversharing other personal information can be just as costly online. To protect yourself from identity theft online, these three steps can help keep your information secure:

1. Social Media: Make sure all of your social media accounts (Facebook, Instagram, Twitter, LinkedIn, etc.) are private so the only people who can see your information are those you choose to connect with. Even if your account is private, carefully consider what you share. Hackers can use your hometown, your birthday, your employment history, and other pieces of information commonly shared on social media platforms to acquire your private data.

2. Data Check: Google your name and city and see what pops up. If your full name, address, e-mail, or other personal information appears, this should make you wary about sharing additional information online. The more free information a hacker has access to, the easier it is for them to assume your identity to gather critical data about you, such as your social security or credit card number(s.)

3. Passwords: Get into the habit of changing all of your online passwords regularly and never use the same password twice. If a hacker is able to breach one account, they will try the same password over and over again. This can be disastrous for those who use the same password repeatedly.

With the global transition to online platforms, the way we protect our personal information and financial data has to change. Unfortunately, events like the Equifax data breach are becoming more and more common. Learning how to protect yourself and your personal information from hackers could save you a lot of time, money, and emotional distress. Minimizing the amount of personal information available online can be your first defense against cyber hackers.

 

 

Should You Buy a Fixer-Upper?

With the success of popular HGTV shows like Fixer Upper and the prominence of DIY house projects, purchasing a fixer-upper is a common dream for some potential home buyers. Fixer-upper properties are often lower-priced while offering the opportunity to greatly increase the value of the home far beyond what the buyer paid for it. At the same time, fixer-upper properties can sometimes be more work than people think they will be. The final product may not be worth the time, effort, and money it took to get there. So how can you tell if buying a fixer upper is the right move for you?

A lot of factors go into determining if the fixer-upper you are looking for is a good investment. Fixer-uppers can offer ample opportunity for creativity, personalization, and savings. But they can also come with costly renovations, increased risk, and a monopoly on your time. Ultimately, whether or not you should buy a fixer-upper comes down to you and your unique circumstances as a home buyer. Here are some ways to decide if you have what it takes to buy a fixer-upper:

1. Are You Ready For the Work?

Doing all the work needed to bring your vision for a fixer-upper to life is time consuming and stressful. It is a huge undertaking even for the savviest DIY enthusiast. There is a reason many home buyers will spend the extra money for a newly renovated and updated home. The price tag of a fixer-upper might not seem worth it after you calculate the cost, time, and labor you will have to put into the home after purchase.

The commitment required of your time and energy is no small order. If you’ll be doing the renovations yourself, you need to be up to the physical task. If you are hiring professionals for the renovations, you will still need to be on site regularly and be able to take the time to shop for materials and appliances. The work can quickly become overwhelming, so make sure you are prepared.

2. Are You Connected?

When it comes to home renovations, hiring the right people can make or break a project—and your bank account! Time is money with contract work. Do you know trustworthy professionals to help you achieve your vision? Knowing architects, contractors, project managers, and other people in the construction business can be a major leg forward for your project. If you do not know anyone personally, ask trusted friends or family if they know any reliable project managers or general contractors. These professionals can make the renovation process more efficient and cost-effective for your bottom line.

3. Where Will You Live?

Are you prepared to live in a construction zone for months on end? Alternatively, if your renovations don’t allow you to live on site (if you’re gutting your bathroom, for instance), are you financially prepared to maintain two residences simultaneously? Make sure you look into all of your options. If a close friend or family member has room for you nearby, you could save money by bunking with them throughout the reno project. Finding an economical rental is also a good option if you cannot live in your new property while it is being renovated.

4. Do You Have the Vision?

Sure, it looks easy when Joanna and Chip Gaines do it on HGTV, but bringing a housing vision into reality isn’t something everyone is capable of doing. Getting a realistic mental image of how you want your home to look and then explaining that vision to the professionals helping you can be difficult. Some creative preferences and ideas can get lost in translation, leaving you with something you didn’t exactly want. A lot of creativity goes into renovating a home. Make sure you have thought through your ideas before you sign the dotted line for a fixer-upper.

A fixer-upper can be a fantastic investment opportunity for potential homebuyers. As with any real estate transaction, there are a lot of details and complex contracts involved in buying and fixing up an outdated home. Veitengruber Law is a full-service real estate law office with experience in all areas of contract review, real estate representation, and closing services. We can help ensure you are protected and supported as you purchase your dream home.

How to Avoid Bankruptcy in Retirement

Bankruptcy filings for retirees are rapidly increasing across the US. As poorly funded pensions and retirement savings shrink, retirees look to bankruptcy to put a stay on some of their monthly payments. Rising healthcare costs, adult children living at home for longer, and the financial inability to properly save for a retirement that extends into longer lifespans have all contributed to the rising senior bankruptcy rate. How can you avoid this trend and spend your golden years in peace? Here we look at a few ways to make sure you aren’t filing for bankruptcy after retirement.

1. Settle Your Debts

Regardless of how much you have invested into your retirement, if you’re carrying a mountain of debt into retirement you could end up financially strapped pretty quickly. Paying off as much debt as possible before retirement should be your number one goal. High interest credit cards are the most important to pay off, followed by your mortgage and car payment. The less debt you carry into retirement, the more money you will have to cover your living expenses. If you are struggling to tackle your debt and you are approaching retirement, sit down with a debt negotiation attorney to figure out what your options are.

2. Be Clear with Children and Other Family Members

It is very tempting to be generous with family members and other loved ones. However, you need to be realistic about when you can actually afford to help and how much this will impact your retirement savings plans. Parents should not feel obligated to pay for college, a wedding, or other big life events if they do not have the means to do so. The best thing to do is communicate these financial boundaries early. Adding more debt to your plate in order to help a family member can be disastrous for seniors looking at retirement. After all, if you do not prioritize your financial health over that of your loved ones, you could end up becoming a financial burden to them later on.

3. Downsize

Retirement comes with a lot of big life changes. More leisure time, the freedom to travel, and the ability to explore new hobbies come hand-in-hand with some harder lifestyle changes. With the inevitable reduction of income in retirement, retirees often find they cannot afford to keep up with their day-to-day expenses. Buying a smaller home or renting and downsizing to one vehicle instead of two or three can help you establish a leaner budget before retirement. This should make it easier to embrace a reduced retirement income.

4. Be Smart About Social Security Benefits

The biggest concern most people have about retirement savings is running out of money. Getting a part-time job to boost your retirement portfolio can help buoy your finances in retirement. Most retirees need about 80% of their pre-retirement income to maintain their lifestyle. Your Social Security benefits will mirror the average of your pre-retirement wages. It is important to keep in mind that your social security benefits will likely not cover even half of your retirement expenses. The longer you can go without tapping into social security, the better your financial situation will be in retirement. Even if you have the option to start using your Social Security, only do so when it is absolutely necessary.

5. Invest!

The shakiness of the market over the last two decades has many Americans making uber conservative investment decisions about their retirement. Investing doesn’t have to be scary. In order to keep up with cost of living adjustments and to give yourself a generous nest egg to work with in retirement, it is important to invest savings into a diversified portfolio of common stocks. Especially if you are a few decades away from retirement, it is a good idea to use the time you have to put your assets into money market funds. Investing your money, as opposed to letting it sit in a bank, can make all the difference for your funds in retirement.

Many seniors and those approaching retirement age have anxieties about the financial realities of retirement. Veitengruber Law can provide the services you need to establish a robust retirement plan. From asset protection and debt management to bankruptcy litigation, we can help you get the peace of mind you need. We also work with a diverse network of professionals who can help you invest, downsize, and make a comprehensive retirement plan that will be effective. Don’t wait until you are enjoying your golden years to have second thoughts about your retirement plan. Take action today to secure your financial future.

What is the Roth IRA 5-Year Rule?

Retirement plans are not a one size fits all deal. There are many different options for saving, investing, and insuring your golden years. The Roth IRA has been a longtime favorite for retirement savings because of the tax-free withdrawals people can enjoy during retirement. But as with any kind of tax break, it is important to pay close attention to the fine print. Not every withdrawal from your Roth IRA will be tax-free. Many people with a Roth IRA don’t know about the five-year rule. This rule requires those holding a Roth IRA to wait five years before making tax-free withdrawals from their investment earnings. Before you consider investing in a Roth IRA, you need to know how the five-year rule is applied and how it will impact you as an investor.

Once you make your first Roth IRA contribution, you will need to wait five tax years before you can withdrawal your earnings from this account without being subject to taxes. This five-year period applies across the board no matter the status of the account owner. If the owner were to pass away, the beneficiary would also be expected to wait the full five-year waiting period before taking out any earnings tax-free. It is important to note that the five-year rule only applies to investing earnings, not direct contributions. Any money you put directly into your Roth IRA is considered an after-tax contribution and is available to take out before the five-year waiting period is over. You can always remove direct contributions, but the earnings you make off of these contributions must follow the five-year rule.

Even after five years have passed, you will still need to meet specific criteria to make a tax-free withdrawal. To avoid taxes and penalties, you must be age 59 ½ or older to withdrawal earnings from your Roth IRA. There are some circumstances that may allow you to make early withdrawals from the account without penalty. If you are disabled or intend to use the withdrawal for a big life circumstance, like buying your first home, you may be able to take a distribution without paying taxes or fees. Inherited Roth IRAs still follow the five-year rule from the date of the original account owner’s first contribution, not the date of inheritance.

The five-year period goes by tax years, not calendar years. This means you could make a contribution on the last day of a tax year (the day before your income taxes are due) and the contribution will count for the previous calendar year. This can shorten the waiting time to make a tax-free withdrawal by one year. For instance, if you make a contribution to your Roth IRA the day before your taxes are due in 2020, the contribution will count toward your 2019 tax year. Therefore, you will be eligible to make a tax free withdrawal of earnings in 2024 instead of 2025.

The clock starts with your first contribution to any Roth IRA. Once you get through the five-year requirement for one Roth IRA, any additional Roth IRAs will also be considered “on hold” for five years. Since the five-year waiting period can be applied across other accounts, the earlier you start contributing to a Roth IRA, the less likely you are of running into problems with the five-year rule. Start making contributions well before you plan on needing to make a withdrawal.

A Roth IRA is a great way to save for retirement. Understanding the tax rules surrounding your Roth IRA can help you make the most of your contributions.

Tips for Estate Planning After Divorce

Getting through a divorce can be rough. Divorce is expensive, time consuming, and emotionally draining. While it might seem daunting to add another task to the list of decisions you need to make, re-working your estate plan after a divorce is very important. While a divorce is ongoing, your current spouse will maintain some rights. Your goal is to keep as much control over your assets while still meeting your legal obligations. After divorce, it is a good idea to go through your estate plan and make necessary changes. Here are five important estate planning changes to consider after a divorce.

1. Health Care Proxy

Your health care proxy is the person who will be making big health care decisions for you in the event that you become incapacitated. By default this is often your spouse, but you may even have a signed health care proxy indicating your spouse as the person in charge of these decisions. You should change your health care proxy as soon as you can to ensure someone you truly trust is making these major medical decisions for you.

2. Power of Attorney

A power of attorney allows someone to act on your behalf for all legal or financial matters if and when you cannot do so yourself. If you had an old power of attorney document naming your ex-spouse, you should get it revoked and if necessary provide notice to your ex-spouse. You will also want to execute a new power of attorney wherein you name a relative, trusted friend, or legal advisor as your designated agent for your assets. Especially if a divorce is not amicable, you will want to do this as soon as possible.

3. Guardianship

This can be tricky. In the event of your death, your ex-spouse would very likely become the guardian of any minor children you share. You can choose to name them as the guardian in your will, but if there is a question of your ex’s fitness as a parent, things can get a little more complicated. You can name someone other than your ex-spouse as the guardian of any minor children. However, should your former spouse seek custody after your death, your designated guardian will need to prove in court that the ex-spouse is unfit. This often means leaving behind a sum of money for your designated guardian to cover litigation costs.

4. Will and Trustee

If you do not want to leave anything to your former spouse, it is important to remove the provisions for such from your will. If your ex is listed as the executor or trustee of your will, you will need to change this. You need to make sure he or she does not receive any of your assets and has no control over your will once you’re gone. In addition to this, if you are designating a minor child as the recipient of any of your assets, your ex will have control of your child’s finances until they turn 18. To avoid your ex-spouse gaining access to this money, you should set up a revocable trust naming someone of your choosing as the trustee to access these assets on behalf of your children.

5. Beneficiary Designations

People often forget about their beneficiary forms. Make sure that your 401(k), IRA, and life insurance beneficiary designation forms are consistent with the terms of your divorce agreement. If you do not make these changes, it can lead to litigation troubles for the person who should be receiving these benefits in the event of your death. Even if you still want your former spouse to remain the beneficiary, you should update this designation after the date of divorce and leave a letter explaining your intentions.

If you have recently gone through a divorce, one of the first things you need to do is get your divorce agreement into the hands of your estate planner. They will be able to ensure you are meeting your legal and financial obligations to your former spouse while still protecting your assets. Veitengruber Law provides full asset protection and estate planning services, and our personalized strategies can help you plan long-term for all stages of life.

How Debt can Impact Your Mental Health

Debt impacts almost everyone to some degree. A mortgage, a car loan, student loans, credit card debt, medical expenses—once everything is added up, debt can be overwhelming for some people. Unmanageable debt has obvious financial impacts, but owing money can have a major negative effect on your mental health.

In a 2017 survey by the American Psychological Association, 62% of Americans indicated money as a “significant stressor” in their lives. Financial uncertainty, overwhelming debt, or a major economic event can increase stress and cause many mental and emotional side effects, like: guilt, shame, denial, resentment, anxiety, anger, fear, insomnia, panic attacks, substance abuse, high blood pressure, and even suicide. There are many different circumstances that can lead to debt-relate stress. Divorce, illness, and a change in employment status are all factors that compound mental health issues related to debt. The bottom line is that not having enough money to pay bills can significantly impact mental and emotional wellbeing.

Whatever the cause for your debt-related stress, here are 6 ways to manage your stress and work on creating a healthier financial life:

1. Admit the Problem

Sometimes, just admitting to yourself that you have a debt problem can be powerful. It can be easy for people struggling with anxiety and depression to ignore the root cause of their mental and emotional turmoil. Ignoring the underlying issue will only make it harder for you to get the help you need to tackle your debt and, in turn, improve your mental health.

2. Get Professional Support

If your mental health symptoms are impacting your ability to function as you want to, it may be time to seek the help of a qualified professional. Especially if you are experiencing anxiety or depression, it is important to talk to someone about your debt-related stress. Be open and honest with a therapist about your financial situation.

3. Get Your Finances in Order

Face your debt head on. Gather all your financial information together in one place so you can get a clear picture of your debt situation. This can seem overwhelming at first, but once you know how much you owe, you can come up with a plan to work on paying off the debt. Knowing that you have a clear understanding of what you need to do, your stress level will start to diminish.

4. Set Realistic Goals

Every debt situation will be completely different from the next. Your goals for getting out of debt should be based on how much debt you owe and your capacity to reasonably make payments. Achieving a small but realistic goal will encourage you to continue towards bigger goals. Paying down debt can be a long process, so establishing realistic expectations for yourself can improve your outlook as you pay down your debt.

5. Find an Accountability Buddy

People facing a lot of debt can feel isolated from everyone around them. The shame and embarrassment many people associate with debt can cause them to closet their debt issues. Find someone you can trust—a friend, family member, or a debt support group—and be open with them about your debt issues. Ask them to help hold you accountable for reaching your debt repayment goals. Talking about your debt issues can be a huge stress reliever.

6. Work with a Debt Relief Professional

Seeking help from an experienced and trusted NJ debt relief attorney is an excellent step towards financial health and peace of mind. The right experts can help you assess problem areas in your finances and look for solutions fit to your needs. A debt relief attorney can even look into your terms with lenders and utility companies to negotiate for more affordable terms.

Not all debt is bad debt. The decision to take on debt can allow us to get an education, provide a home for our families, or get life-changing medical care. When debt becomes unmanageable, it is not the end of the road. Veitengruber Law provides full-service debt relief solutions that are tailored to each client’s unique situation. Our team has years of experience restoring financial health through debt negotiation. We know how heavily debt can weigh on the hearts and minds of our clients, which is just one of the myriad of reasons why we do what we do!

10 Purchases You Should Never Make with a Credit Card

Credit cards can be powerful financial tools. They offer convenience, the opportunity to build credit, and can act as a loan to buy bigger ticket items. But when credit cards are not used wisely, they can cause a great deal of financial trouble. Overspending can lead to unmanageable credit card debt. To avoid out of control credit card debt, here are 10 things you should never purchase or pay for with a credit card.

1. Mortgage Payments

Most mortgage companies will not allow you to make direct payments with a credit card. If you do find a way to circumvent the rules of your mortgage servicer to make your payment with a credit card, you are asking for trouble. If you cannot pay off your credit card balance in full before your next payment is due, you will be paying for interest on a substantial balance. This added interest, on top of the interest you already pay on your mortgage, means you will end up paying much more for your mortgage payment than you should be.

2. Household Expenses

There are some arguments that favor paying for household expenses with a credit card. These arguments point out the convenience of online payments and credit card rewards. But the risk of paying your monthly home bills with a credit card is that you can easily lose track of your balance. If you go over your credit limit, you could face fees and heavy interest rates, not to mention potential late fees if your card is declined and you cannot pay your bill. Linking your online accounts to your debit card and checking account offers the same ease of payment without the added risks.

3. Medical Bills

The cost of medical care is expensive and many people struggle to pay off their medical debt. Paying for medical expenses with a credit card only makes this situation worse. If you find you cannot pay a medical bill immediately, get in touch with your medical care provider to see if they can set up a payment plan for you. Payment plans through the hospital will likely charge you much less in interest than a credit card issuer.

4. College Tuition

Most schools charge a 2-3% convenience fee for charging payments. If you cannot pay off the bill before interest accrues, you will end up paying even more. If you need help paying your tuition, the interest for student loans are often much lower than for credit cards. Talk to your financial aid department about work study opportunities, grants, scholarships, and other ways that can help you pay for college costs.

5. Wedding Expenses

Big, lavish, Pinterest-worthy weddings are all the rage right now. The average wedding costs $35,000.00. It can be tempting to start charging all your expenses to a credit card to pull off the wedding of your dreams. But unless your dreams also include crippling credit card debt, this is the worst way to budget your wedding. When you’re paying with a credit card, it can be easy to lose track of your budget and spend way more money in interest. It is better to save money ahead of time and start planning once you have enough money put away.

6. Business Startup Expenses

Paying for business expenses or startup costs with your personal credit card can be a recipe for disaster for your new business. It can take years for a business to become profitable, which means you could end up paying high interest on debt you cannot afford to pay back. Instead, opt for a small business loan which tends to have a lower interest rate. Looking for investors can also give you the cash you need up front to finance your startup.

7. Taxes

While you can pay your taxes with a credit card, you will end up paying more money which does not make good financial sense. The payment processing services that handle federal and state tax payments charge between 2-3% for using a credit card on top of a $2-$3 flat convenience fee. If you owe thousands in taxes, your processing fees can really add up!

8. Down Payments

Using a credit card to cover the down payment on your house, your car, or any other big purchase that comes with a loan is a good sign you can’t actually afford the loan. By charging the down payment, you are adding a large cost in the form of interest rates to the sales price of your item. If you find yourself scrounging around for the money for a down payment, you are better off waiting and saving.

9. Big Ticket Items You Can’t Really Afford

A good rule of thumb for credit cards is if you can’t pay it off in full by the end of the month, don’t pay for it with a credit card. This goes for cars, appliances, furniture, equipment, and any other big purchase you can’t afford outright. The interest you will accrue carrying this balance statement to statement will make these purchases more expensive in the long run. If you need to finance these kinds of purchases, look into financing options directly from the seller or loans that will allow you to include these purchases in your monthly budget.

10. Small Indulgences

These are the things you don’t really think about: your morning coffee, a sandwich for lunch, a few drinks with friends. It is convenient to just swipe your card, but without being super careful about your spending, this can lead to an out of control balance. Unless you are taking advantage of some kind of credit card rewards, it is best to pay for these items in cash. This will help you stick to a budget and spend more mindfully.