How to Get Out of Holiday Debt for Good

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So many people have a tendency to hugely overspend on friends and family during the holiday season – charging hundreds to thousands of dollars on credit cards. The holiday hangover comes in January when the bill start rolling in.

In fact, countless people are still paying off holiday debt from years past [PLURAL]. However, it does not have to be that way! There are steps that you can take to reduce your overall credit debt and specifically, your impulsive holiday spending spree. Facing pressure from children, friends and family members, more and more people are spending higher dollar amounts during the holidays in order to get the gift that everyone wants. You are not alone, and there is hope!

The first step to eliminating the extra credit card balances that you racked up in November and December, is to admit that you have a problem. Put the credit cards down. Take them out of your wallet and put them in a place where you can’t easily access them. Start using your debit card for all shopping so that you are forced to use only the money that you actually have in your bank account. To continue using your credit cards after December will only compound the problem.

Sit down and open up all of your credit card bills. This may be a difficult and emotional step, but ignoring the bills will not make them disappear. List all of your credit cards, their balances, their percentage rates, and the minimum monthly payments. Determine how much money you can allocate toward credit card payments each month.

One effective debt reducing method is tackling the credit card with the highest balance first. In doing so, you will eliminate your biggest money suck, and you will have more money to throw at your remaining cards. During this phase, pay only the minimum on any other credit cards. This is known as debt stacking, and will save you a lot of money in the long run.

Another option is to pay off the card with the smallest balance first, working your way up to the card with the highest balance. Debt snowballing gives consumers a quick taste of success with the first card paid off quickly, which may be the motivation you need to keep going.

It’s also a good idea to call up your credit card company in an attempt to negotiate a lower percentage rate (APR). Use language like, “In an effort to reduce my bills, is there any way to lower my interest rate in order to help me pay this debt off?” Avoid telling them that you can’t pay your bill. You can also look for offers from credit card companies offering 0% interest for balance transfers. By transferring your highest balance onto this card, you’ll save on interest payments and will be able to pay your debt off that much faster.

Find one or two expenses that you can eliminate in order to push that money towards eliminating your holiday debt. Call your gym and ask about freezing your monthly membership. Alternatively, find a cheaper gym. Talk to your cable or satellite provider about lowering your monthly payment by stepping down to a lower package temporarily. You can reward yourself by reinstating your original package once your debt is paid down. Resolve to not purchase any new clothing or unnecessary items until you have managed to eradicate your holiday debt. Check out local thrift shops like Goodwill and Salvation Army if a need arises like an outfit for a job interview or a warmer winter coat. Remember to check eBay and Craigslist for other absolute necessities that may arise during your debt elimination period.

If all of these changes aren’t making a big enough dent in your holiday debt, you may have to find another way to make additional money, at least temporarily. Have a yard sale, or scour your house for any valuable items that may be in demand and try your hand at eBay. You may have jewelry, art or expensive clothing that is just sitting around the house. It’s better to sell some things than risk going into further debt and not being able to find your way out.

Finally, remember that there will be another holiday season at the end of 2014. The sooner you start planning for it, the better. As soon as your previous year’s holiday debt is wiped out, set up a holiday budget and start taking notice of what your friends and family are interested in now. Buying slowly throughout the year, while looking for sales and using coupons and promo codes, will allow you to shop for the holidays with cash, hopefully avoiding a holiday hangover in 2015.

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Drowning in Student Loan Debt? Veitengruber Law Can Help.

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For millions of Americans, repaying their educational loans has become nigh on impossible. As we’ve previously discussed, the steadily increasing student loan delinquency rates have resulted in a nationwide debt of around a trillion dollars.

The harsh outlook in the current job market has only very slightly improved over the past six months. If you’re one of the many people without a job, or with a job that just doesn’t pay well enough, it probably doesn’t help to know that you’re not alone.

Most likely you’ve already run through your options in your head more times than you can count. Knowing that it’s difficult to have student loans discharged in a bankruptcy is a really frustrating fact for those who’ve reached out for financial help. It can be extremely disheartening to feel like there’s no relief available!

Undue Hardship

While it may be challenging to get any student debt relief through a Chapter 7 bankruptcy, it has been done. However, in order to have student loans discharged, you’ll need to prove to the bankruptcy court that you’re suffering what is referred to as undue hardship.

Although your first reaction to this information may be celebratory (because of course you’re dealing with hardship if you’re considering filing for bankruptcy!), hold the confetti for just a moment.

In a bankruptcy setting, the term ‘undue hardship’ has a legal definition, due to Brunner v. New York State Higher Education Services, 831 F.2d 395 (2nd Cir. 1987). You’ll have to prove that you’ll never be able to repay the loan(s), and that you’ve tried, but failed to do so. The aforementioned court case brought about a three step test that decides whether you’re experiencing true undue hardship:

  1. being completely unable to maintain even the most minimal standard of living for yourself and your family,
  2. this inability to maintain a minimum standard of living must continue for a significant period of time (and you’ll have to prove that it will, and why)
  3. having made at least a decent effort to try repaying your student loan debt, even if you were paying less than the minimum due each month

Additionally, you’ll have to be employed to the maximum level that you reached by getting, what else? Your college degree! Alternatively, you’ll need to show the court that you are permanently disabled in such a way that it prevents you from ever having the ability to reach your full earning potential.

Now, if you’re hanging your head because you’ve realized that you don’t meet one or more of the three steps in the ‘undue hardship’ assessment, that does not mean that there’s nothing you can do about your student loans.

Treading water is one thing, but if you’re going under – you DO have options. Some of these options include: Filing for a Chapter 13 repayment plan, debt reorganization, principle reduction, and more. Best of all, the lender cannot harass you throughout the length of your Chapter 13 plan, if you should choose that option. That means you’ll have several years (typically 3-5) wherein you will not have to make payments on student loans. The reorganization plan you’ll be left with will leave you in a much better position all around once you are required to start making payments again.

Need help now and want a free consultation? Fill out this simple contact form, like our Facebook page, and you’re well on your way to breaking the surface.

Can’t Afford Your Minimum Payment? How to Handle Rising Credit Card Debt

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If you’ve recently received a credit card bill in the mail and realized that even the minimum payment is more than you can afford, your first reaction may be to panic. First things first: as soon as you realize that you’ll be unable to make a payment, make every effort to get in touch with your credit card company’s customer service department. If you’re in this situation because you’re experiencing some unexpected and temporary financial distress, be up front with them and ask to have your payment due date moved back a few weeks just this one time. Also, if this is your first infraction, keep reminding them that you have always paid your bill on time and that you plan to straighten out your current situation ASAP. Request that any late fees be waived due to your impeccable behavior as a cardholder in the past. It is always best to speak directly with your credit card company as soon as you realize you will miss a payment. Emails can go unanswered, so bite the bullet and pick up that phone. Being proactive gives the lender confidence that you really do want to make good on your debts.

Assuming that you really do have a good track record with this credit card company, they may be inclined to help you work out a very temporary situation that will allow you to get back on track with regular payments next month. If they’re not willing to budge, you’ll have to prioritize your bills in order of importance. Recurring bills that must be paid first include: mortgage/rent, health insurance, food and medicine for you and your family members, car insurance, car payment/lease payment, and utility bills such as electricity, gas and water. Never forsake any of these bills to pay a credit card bill because the ramifications of missing any of the aforementioned, will be much more severe than missing a credit card payment.

If your “temporary” lack of funds is going to last longer than the immediate future, you’ll also have to take a good, hard look at how you’re spending the rest of your money.

If you haven’t already done so, set up a monthly budget. Write out all of your expenditures versus all of your income, including what you make and/or spend each month in cash. This will act as a visual aid, and will enable you to determine where you can reduce spending. Non-necessities such as cable/satellite TV, internet access, cell phone packages, satellite radio subscriptions, magazine subscriptions, Netflix, dining out and other entertainment should be reduced to the bare minimum until you’re able to pay all of your monthly bills and have some money left over.

Take a look around you and determine if you have anything of value to sell. It may sound tacky, but what’s the point of holding onto something you never use if selling it means saving your credit? You can get ideas on sites like eBay and Craigslist for the things people want to buy. You may have a real money maker stashed away in your attic.

If budgeting and cutting back on luxury expenses, along with selling a few valuable items isn’t enough to dig you out of the money pit you’ve fallen into, you should consider contacting a bankruptcy attorney in New Jersey. Doing so may seem like a step in the wrong direction, but who better to help redirect your financial inertia than someone who expertly handles these issues on a day-to-day basis? Being in over your head isn’t a fun place to be. Let this be a learning experience for you so that you never find yourself living beyond your means again. Be proactive now so that you can secure a future with less money stress. It won’t be a fun process to get back in the black, but with perseverance and the courage to ask for help, you’ll be out of the red soon.

I Can’t Afford My Car Payment!

8567864994_eab342aebdImage courtesy of Rachel Titiriga

Purchasing a new vehicle is a very exciting event for anyone. For most, it is a decision that’s made after months and months of planning, saving and waiting for just the right deal. Even so, every year there are a number of consumers who have realized only in hindsight that they really cannot afford a new car.

The reasons for this include but are not limited to: job loss, demotions, divorce, surprise or emergency expenses, unexpected medical conditions, the decision to buy a home or other changes in life circumstances. Whatever the reason(s), the realization that you can no longer afford to make your car payment can be overwhelming and scary. If you’ve found yourself in this position – you do have a few options, but you may not know which one will give you the best results.

Should you stop making your car payments? Giving your car back to the dealership and not owing them any money would be ideal. Unfortunately, it’s just not that simple. Once you have agreed to purchase the car and have signed your name to a loan agreement, you are legally obligated to keep the loan current. Returning the vehicle to the dealer or lender is an option; however, the act will be reported to credit agencies as a repossession and will put a black mark on your credit report. The car will be sold for much less than you owe on the loan, with you left holding the bag for the difference.

If the deficiency (the amount still owed on the vehicle) isn’t paid, the lender will likely sue you for the money. If you feel that surrendering the vehicle to the lender is your best bet, attempt to work with the lender ahead of time to arrange for a reduction or complete waiver of the deficiency amount. Otherwise, you’ll end up with a repossession on your credit report, a lawsuit against you, and you’ll still owe money on the car that you no longer have.

Should you trade in the car for something less expensive? Communicating with the dealership about your difficulty with the payments may work in your favor. All dealers want your business and loyalty. Explain that you had a significant change of circumstance and asked to trade in your current vehicle for something less expensive. Another similar option would be to work with your lender or dealership to refinance the life of the loan or the interest-rate on the car you currently have – potentially lowering your monthly payments into a range that is affordable.

Should you sell the car yourself?  This is a good solution if you can manage to sell your vehicle for at least the amount that you still owe on the loan. This would allow you to pay off the loan and hopefully purchase a much less expensive pre-owned vehicle, or to look into the public transportation options in your area.

Should you file for bankruptcy? By surrendering your vehicle in a Chapter 7 bankruptcy, you would be able to forfeit any and all responsibility for the deficiency amount. This is the only solution that will absolve you of paying for the loan and any deficiency after it is re-sold. There will be a mark on your credit, but unlike some other options, you won’t be making anymore payments.

The most important thing to remember when making a significant decision such as this, is to speak with a reputable New Jersey bankruptcy lawyer, especially if you are seriously considering filing for bankruptcy. Hiring an experienced bankruptcy attorney will pay for itself with the money you’ll save once your debts are discharged. He’ll also show you how to get your finances back on track and how to keep them that way.

Financing the Future: Teaching Money Mastery to Kids

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More than likely, if you’ve made any resolutions this year, they’ve got nothing to do with teaching your kids about money. At the beginning of each new year, many resolutions are, in fact, directly related to finances: to save more money, make more money, spend less money or make wiser money choices, but hardly anyone gives a lingering thought to involving children in the process.

Why not?

After all, if we don’t teach our children how to successfully manage their money, who will do it for us? Sure, they’ll learn the number value of each coin in grade school, but their parents’ actions and attitudes towards money will have a much greater impact on how they handle their own finances later in life.

Along with your own personal self-improvement goals, set out to make 2014 the year that your kids get a better grasp on the real value of money.

  • First and foremost, remember that talking about money with kids isn’t forbidden. While it’s true that many of our parents (and their parents) felt the topic was off-limits – that doesn’t mean we have to continue that trend. With consistent practice, you’ll get more comfortable with being honest and open about things like the economy, the cost of utilities, debt, investments and making purchases.
  • Constantly swiping your debit or credit card can send kids the message that there’s a never-ending source of money at the other end of that ‘magic’ card. If the concept of a bank account is never explained, it will be many years before they’re able to really understand the value of money. Try to make purchases with cash around your children as much as possible, especially when they are young. The concrete visual of handing dollar bills over to the cashier will help kids in understanding that, once you spend those dollars, they’re gone.
  • It’s common practice to present children with monetary rewards for earning good grades. Most parents believe they’re doing their children a favor by encouraging superior report cards, guaranteeing their entrance into a respected university. Furthermore, that college education will provide the children (now young adults) with impressive job opportunities, leading to an upscale and lavish lifestyle. The problem with this line of thinking is that a reliable or even abundant income alone does not ensure financial success. In recent research performed by Financial Finesse, the results showed that regardless of income bracket, the most important skills for financial success are the ability to maintain a personal budget and having an effective plan for growing their money. So, when you hand out those monetary rewards, go one step further and teach your kids the best ways to manage the money they’ve earned.
  • Put your money where your mouth is. Remember that your kids will learn by watching you, and this includes how you spend. Reinforce the importance of living within your means and not spending more money than you have. Teach your children the difference between a “need” and a “want.” Also resist the urge to give your children everything they ask for to reinforce that “wants” are for special occasions.

It’s always a good idea to remember that, as a parent, you’re priming a little person so that he or she can grow into a successful adult. You teach them the ABCs, the colors of the rainbow, manners…an endless list of things that totals the person they’ll turn out to be. Why not give them a leg up when it comes to money, too?