How To Calculate Your Debt-to-Income Ratio

Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. Lenders will use a debt-to-income ratio to measure a potential or current borrowers ability to handle monthly payments to repay borrowed money.  If you apply for a loan modification, this is often one of the metrics by which the servicer of the loan will approve or deny your request. Calculating your debt-to-income ratio can help you see how your debt comes across to potential lenders before you apply for a loan. Here is everything you need to know about your debt-to-income ratio.

 

When calculating your debt-to-income ratio, add up all your monthly debt payments and divide them by your gross monthly income, or what you earn every month before taxes and other deductions are taken out. For example, the total debt for someone with a $1,000 mortgage, a $200 car payment, and $300 in other debts is $1,500 a month in debt payments. If this person brings in $5,000 a month before taxes, their debt-to-income ratio is 30% ($1,500 is 30% of $5,000).

 

For mortgages, there are two components lenders will look at when determining a DTI ratio: the front-end ratio and the back-end ration. The front-end ratio, also called the housing ratio, shows what percent your gross monthly income goes towards your housing expenses, including your mortgage payment, property taxes, homeowners insurance, and any HOA dues. The back-end ratio shows what portion of your monthly income is used to pay for your monthly debt payments, including mortgage and housing expenses as well as credit cards, car loans, child support, student loans, and any other debts. Most lenders typically agree that the ideal front-end ratio should be no more than 28% while the ideal back-end ratio should be 36% or lower.

 

So why is the debt-to-income ratio important? This ratio was essentially created to protect potential borrowers from predatory lenders and to ensure they do not bite off more debt than they can chew. There is evidence that borrowers with a higher debt-to-income ratio are more likely to have issues making regular monthly payments. Generally, lenders see consumers with a high DTI as risky borrowers. Because of this, 43% is the magic number for debt-to-income ratios. In accordance with the Consumer Financial Protection Bureau guidelines, 43% is the highest ratio a borrower can have and still receive a Qualified Mortgage.

 

There are some exceptions to this 43% rule. Small creditors—those with less than $2 billion in assets and who made no more than 500 mortgages in the previous year—can offer a Qualified Mortgage when your debt-to-income ratio is higher than 43%. Larger lenders may also be able to give you a mortgage loan if your ratio is higher than 43%, but they will need to prove they have made an effort to determine whether or not the borrower can actually pay back the loan.

 

If you need to lower your DTI ratio to get a loan or a loan modification, there are a few things you can do. Start by making a plan to pay down your debts as quickly as possible. Cut out unnecessary expenses and make a budget that emphasizes paying off your debt. You can also try to see if your lenders or credit card company will lower your interest rate. If your account is in good standing and you regularly pay your bills on time, you may be surprised at how willing your creditors are willing to work with you. Consolidating your debt by transferring high-interest balances to an existing or new account with a lower rate may also help you manage monthly payments. Most importantly, avoid taking on more debt until your DTI ratio is where you need it to be.

 

Figuring out your debt-to-income ration can be useful in determining how much debt you can handle. Veitengruber Law is a full service debt negotiation law firm. We can help you determine your DTI ratio and help you lower your ratio if needed. Whether you are looking to lower your ratio to buy a house, modify a mortgage payment, or simply get out from under your debt, Veitengruber Law can help.

Disclosure Obligations When Selling Your Home in New Jersey

Applied to real estate transactions, “let the buyer beware” means that the buyer is responsible for doing their due diligence to determine the status of a property. But if you are the seller of a residential property, there are certain things you should disclose to a potential buyer in order to avoid them backing out of the transaction or worse—taking you to court. In New Jersey, there are laws in place to protect buyers against sellers who fail to disclose important information about a property.

 

Here are some things you must disclose if you are selling your NJ home:

 

  1. You Must Promise the House is Fit to Live In

 

If you are selling a residential property in NJ, you are legally implying that the house is fit to live in. This is the case whether you are trying to sell it as habitable or not. Therefore, you cannot sell the house “as is” to escape the requirement.

 

  1. You Must Disclose Any Known Latent Material Defects

 

A latent material defect is one that is concealed but known to the seller. For example, if you know there is a leak in your attic but there is no obvious evidence of this leak, you must disclose this to the buyer. Hidden defects that may impact the future health or safety of the buyer are specifically important to disclose. As the seller, any false statements you say or write, or any omissions you make, can result in a lawsuit if they result in loss to the buyer or make the property uninhabitable. A lawsuit can be brought before closing or many years after depending on the specific statue of limitations laws specific to the lawsuit, such as for fraud or misrepresentation.

 

  1. Disclosures Pertinent to the Sale Contract

 

The sale contract itself will often tell you what kind of representations or promises you are making about the property. These are typically items about which there are not specific laws, but their presence in the sale contract makes you subject to their terms. One of these promises is that all systems and equipment are functional. The contract can also compel you to identify how you have used the property and ensure you are using the property legally under current local zoning laws. Similarly, you will need to state that any work done to improve the property was done after obtaining the necessary permits and approvals. The buyer will want to know the work was done up to code and that the property tax includes any property improvements.

 

  1. “Intangible” Problems

 

There are some issues with a property that buyers cannot discover through an inspection. A property can contain some intangible problems that are impacted by psychological or other factors that have nothing to do with the physical condition of the property. A property could be considered less desirable to live in due to a history of deaths in the house, an incident of violence on the property, or even a supposed haunting. While under NJ law a seller is not required to tell a buyer up front about these issues, if a buyer specifically asks about them, the seller has to answer honestly.

 

If defects you were unaware of surface on an inspection, don’t panic. The discovery of home defects will not automatically lead to the transaction falling through. Most contracts include provisions that will allow the sale to go through. This provision will allow the seller time to make necessary repairs or enable the buyer to accept the property with a price reduction.

 

You should always disclose any physical issues or other defects about a property when selling it. If you fail to follow the disclosure obligations laid out by New Jersey law, you could end up paying for it. The money you would lose to price reductions or repairs by being up front about the problems won’t come close to the cost you could incur by trying to lie about them. Ideally, the buyer and the seller will be up front with each other concerning all information important to the real estate transaction.

 

A standard real estate contract will include many promises and representations. Contracts of Sale are long, complex legal documents. Veitengruber Law is an experienced, local real estate attorney. We can review the contract with you and explain any uncertain terms and the importance of any listed disclosures.

The Pros and Cons of Starting a Family Business in NJ

Our families are who we spend our lives with. We celebrate holidays, birthdays, and important milestones together. So much of our everyday lives are spent surrounded by family—but what about our work lives? Starting a business with a family member or joining the family business is a big decision. There are some major incentives and equally compelling challenges to running a family business. Before you take the big plunge, here are some pros and cons to help you make a confident business decision.

Pro: Invested Stakeholders

Having a personal investment in the business is a great motivator for job performance. Your family will have the same level of investment in the success of the business as you do. They will be much more likely to make the sacrifices necessary to ensure a successful future for the business. Finding willing workers for holidays, extended hours, or weekends shouldn’t be too difficult when the people you are counting on are all in the family.

Con: Family Leaders Face Unique Challenges

Leaders may be reluctant to make necessary business decisions if they could negatively impact fellow family members. Firing or demoting an underperforming employee can be  much harder if it is your brother or cousin. Likewise, leadership succession can cause serious conflict amongst family members if clear guidelines have not been established.

Pro: The Ultimate Coworkers

You know your family better than anyone else. You’ve likely perfected the best way to communicate with individual family members, allowing for an easy and honest exchange of ideas. This can make for a super efficient team of skilled communicators, maximizing on collaboration. You’ll also have the added bonus of coworkers you can count on to genuinely care about you and the business.

Con: Workplace Conflicts Become Family Drama

When you work with your family, small workplace issues can boil over to full on family feuds. A disagreement at work can turn into a serious rift between family members. It is not uncommon for these disagreements to extend to court litigation, which can permanently damage relationships between parents and children, siblings, and other relatives.

Pro: A Relaxed Work Environment

There’s no need to put on airs when you are working with your family members. Small talk, intimidating meetings with superiors, and one-upmanship take the backseat to a relaxed environment of mutual support and shared goals. Your family members are also much more likely to be empathetic during setbacks, allowing for increased flexibility in expectations of business performance.

Con: Things Can Get Too Relaxed

When you work with your family it’s easy for things to get too comfortable. This relaxed environment can reduce the drive for excellence and compromise workplace professionalism. Business growth can slow down over time if you and your family lose focus on doing what is best for the business on a daily basis.

Pro: Strong Market Appeal

Family owned businesses tend to brand themselves with hard work, tradition, and wholesome mom n’ pop shop appeal. Consumers often view family businesses as stable and trustworthy, leading to strong market appeal. Likewise, potential investors may see family-owned businesses as a safe investment.

Con: Clinging to Tradition Can Stifle Progress

Holding on to family traditions can promote closed-mindedness, resistance to change, and a lack of creative thinking. Family-owned businesses can be closed off to innovation and miss out on expanding their business as a result. Without outside help to shake things up, the stagnancy of ideas can kill a family business.

Pro: Less Fuss With Hiring

If you are in a hurry to get your business on its feet, going through the process of vetting and hiring potential employees can be a cumbersome barrier. With family members investing in and working for your business, you won’t have to conduct interviews, background checks, or follow-up on qualifications if you are working with your family. You know what your family members bring to the table and how to best utilize those skills.

Con: Non-Family Workers Feel Out of the Loop

With a strong group of family decision makers in the business, it might be harder for outsiders and non-family member employees to feel comfortable voicing their ideas. Family businesses can also have little or no system of meritocracy in place, only promoting family members regardless of job performance. This can lead to unqualified family members landing leadership positions in the business over otherwise well-equipped employees. Without a healthy system of promotion based on merit, potentially talented employees will have little motivation to excel.

Ultimately, the decision to go into business with your family is a very personal one. Family businesses are highly variable in their potential for success and depend mostly on the interpersonal relationships of individual family members. You know yourself and your family best. Sitting down for an open and honest conversation with your family about your potential business is a great first step to success.

Filing Your NJ 2019 Taxes: Go it Alone or Use a CPA?

Everyone knows April 15th is tax day. For months you’ll see the ads everywhere for tax filing services. If you’re reasonably good with numbers you may be wondering if you can handle filing your taxes yourself or if you should use an accountant. There are a lot of factors to consider so it’s best to know all of the options before you file.

 

When should you go it alone?

Filing taxes yourself is best when you’re taxes are fairly simple. If you are filing singly and taking the standard deduction your tax preparation will be fairly straightforward. However if you have dependents, student loan interest, a mortgage, or own a business you will want to itemize in order to get the maximum benefit. That can get complicated quickly. Certain itemizations can raise red flags for an IRS audit. In that case you will have been penny wise and pound foolish. You’ll have to hire a CPA to represent you in an audit in addition to back taxes and fees you’ll have to pay.

 

Not all accountants are created equal.

Anyone who studied accounting can call themselves an accountant. Your college roommate who took a few accounting courses is an accountant. Your cousin’s wife who read Accounting for Dummies is an accountant. Does that mean you should put your tax preparation in their hands?

 

You may think that going to an office like Jackson Hewitt or H&R Block means that you’re putting your taxes in the hands of professionals. The term ‘professionals’ is misleading. Their websites don’t even call their employees accountants or professionals, they call them ‘tax pros.’ Workers filing your taxes are trained on how to use accounting software, that’s it. Hiring one of these companies is hardly a step up from filing yourself using TurboTax.

 

An Enrolled Agent, or EA, is an accountant who has been certified by the IRS. To become an EA, several requirements must be met:

  • Must have a Preparer Tax Identification Number (PTIN), which must be renewed annually
  • Must achieve passing scores on all three parts of the Special Enrollment Examination (SEE) within two years
  • Apply for enrollment
  • Payment of enrollment fee
  • Pass a background check
  • Pass a suitability check of past tax filings
  • Renew EA certification every three years
  • Obtain continuing education after certification

An EA does not have to have a college education. When choosing an accountant to file your taxes, an EA will probably be more affordable than a CPA. An EA is also capable of legally representing you in the event of an audit.

 

A Certified Public Accountant, or CPA, must have a bachelor’s degree from an accredited college or university with 150 total semester hours. Of these, 24 must be in accounting and 24 in business. In order to be licensed in New Jersey, a candidate must pass the CPA exam and provide evidence of at least one year of experience working for a CPA. During that term, 25% of your time must be spent auditing and accounting and the remaining 75% on tax services. Maintaining a CPA license requires 120 hours of continuing professional education to be completed every three years including a New Jersey Law and Ethics course.

 

A CPA is the most well-educated and experienced person you can have handling your taxes. If you need help finding an NJCPA, Veitengruber Law has close relationships with CPAs with impeccable reputations. George can recommend a CPA that will handle your taxes with accuracy and honesty beyond reproach.

 

Who should use a CPA?

Anyone not taking the standard deduction should have their taxes prepared by a professional. When itemizing your taxes, a CPA can help you find deductions you might have missed, express concerns about possible red flags, and let you know about upcoming tax law changes for the new year that you can prepare for.

 

In the event of an audit, you’ll want a CPA on your side. They will have experience navigating an audit and won’t be intimidated by the IRS officials. They may even have worked with the IRS agent before on other cases and know what to expect.

 

While most tax returns could benefit from the eye of a CPA, these are some categories of filings that definitely should be itemized:

  • Buying or owning a home
  • Owning a rental property
  • Moving and moving expenses
  • Moving to a new state and filing 2 sets of taxes
  • Medical expenses and medically related travel
  • Owning a business
  • Working from home in a home office
  • Paying student loan interest

 

It’s best not to leave your tax returns to chance. Hiring a CPA for your filing is the best way to ensure you get the maximum benefit on your return.

Do I Have to Pay Rent if My Landlord is in Foreclosure?

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As a renter in New Jersey, you may wonder exactly what rights you have if the home you reside in happens to go into foreclosure. First and foremost, you need to know if and when you’ll need to look for a new place to live. Hopefully, the property owner (your landlord) has been forthright with you about any foreclosure on the home, along with your rights during said foreclosure.

Of course, there are many less-than-desirable landlords in New Jersey – plenty of whom only care about their bottom line. If your landlord falls into this category, s/he probably isn’t too concerned with where you and your family (if you have one) are going to stay if s/he fails to make mortgage payments on the home.

In this circumstance, you may not even find out about the foreclosure from your landlord; rather, you may read about it in the newspaper or hear about it from someone you know. It’s possible that you won’t know that the home you’re living in is in foreclosure until you see the foreclosure notice taped to the door. Some renters who do not live in the main building often never even see the notice, thereby leaving them completely in the dark until the foreclosure has occurred. If that happens to you, seek counsel immediately to get your belongings back and to sue your landlord for failure to alert you.

If, however, your landlord lets you know about the upcoming foreclosure, the question remains: Should you continue to pay rent?

It would seem that the obvious answer would be “Of course not!”

If your landlord isn’t paying the mortgage, why should you then be required to pay him rent money every month? Alas, it may not make perfect sense, but in this case, you must continue paying rent to your landlord as your lease dictates. Failure to do so could give him or her a case to evict you or sue you for the rent you didn’t pay. Furthermore, if you retain your tenancy throughout the foreclosure, new owners may allow you to continue renting from them, unless you have a history of not paying your rent.

The bottom line in this case is that you should continue to pay rent even if you discover that your landlord isn’t paying the mortgage. Keep your house in order by making timely rent payments so that your record looks good. This will ultimately make it easier for you to continue living as a tenant in New Jersey. For more information about what to do if your rental home is in foreclosure, you can read more here.

Always seek professional legal assistance in NJ if you feel that you are in danger of being evicted without cause, whether due to your landlord’s financial issues or otherwise.

 Image credit: Beatrice Murch

Avoid Payday Loans! Try These Alternatives Instead

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Payday loans are an almost guaranteed way for the poor to get poorer – FAST.

What exactly is a payday loan?

Essentially, payday lending is an easy way for people who are strapped for cash to borrow enough money to tide them over “just until their next paycheck.”

Those who are desperate enough may be enticed by one of the 20,000+ payday lending institutions in the U.S. The idea may initially sound like it could work: you’re out of money, you’ve got bills to pay, you can borrow what you need and pay it back as soon as you next get paid.

The problem with this type of short term lending is that the borrower is often unable to repay the full amount borrowed right away, which immediately causes all kinds of finance charges to start accruing. Unable to make good on their original payday loan, many people take another loan to pay off the first one, and the cycle begins.

The average interest rate charged on a payday loan is somewhere around 400%. Some states have some regulations in place, but many do not. Would you take MasterCard up on a credit card offer that charged 400% interest?

What are the alternatives?

So, instead of creating a gigantic financial mess for yourself, what can you do when you’re short on cash? Here are some responsible ways to get your bills paid until you can get yourself back on track:

  • Credit Union Loan – If you’re a member of a Credit Union, you may be able to take a small loan from them – either a payday advance (at a much more reasonable interest rate of around 12%), or a small traditional loan with interest rates that usually don’t go above 18%. Credit Union loans are a great option for members because they also allow additional time for loan repayment, including installment plans.
  • Ask your employer directly – In certain emergency situations, you may be able to speak directly to your boss about giving you a one-time advance on your paycheck. Since it’s your own money, there will be no one to pay back, and no interest.
  • Small Dollar Bank Loan – Several years ago, the FDIC ran a Small Dollar Loan Pilot Program that allowed banks to grant smaller amount loans while being insured by the FDIC. The Pilot was successful in showing many banks that smaller dollar amount loans can be successful. More banks are now willing to grant smaller loans – ranging from $500 – $2,500.
  • Negotiate with your current lenders – If your main financial struggle is paying your current creditors, or even making your monthly utility payments, you may be able to negotiate lower payments that work for you.
  • Credit counseling – Instead of jumping at the chance for a payday loan that will inevitably end with financial crisis, reach out to a professional who can actually help to get your finances functioning better for the long haul. Your best bet is to look for someone in your state who has a lot of experience and success in assisting clients with money and/or credit problems.  This is likely to be a bankruptcy attorney in New Jersey or the state that you reside in. Hiring a bankruptcy attorney does not mean you have to file for bankruptcy! They have a vast amount of expertise in getting people back on their feet in a variety of ways, and their fees will be much lower than you’d spend on a payday loan.

Choose the alternative(s) above that work for you, but please avoid payday lending at all costs (no pun intended). Payday loans are definitely no laughing matter. Call Veitengruber Law for a FREE assessment of your finances now.

Image Credit: LendingMemo (Flickr)

What to Expect When Your Debt’s in Collections

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Did you know that 29% of New Jerseyans have a debt in collections? That’s a pretty significant number, and if you happen to be in that 29%, there are some important things you should know about what to expect.

If you’re being hounded by one or more debt collectors, the very first thing you need to do is make a plan. Before making any moves toward getting out of debt, you have to figure out:

  1. How far in debt are you?
  2. What are your monthly obligations (other than the debt)? and
  3. What is your monthly income (and can you make more)?

After you’ve taken a good look at your current financial obligations and income, you’ll have a better idea of how much you can afford to put toward paying back your debts. Naturally, you’ll want to put all of your efforts into paying off one debt at a time, which is known as a debt snowball. Focus on any debts that have been sent to collections first, because these are the ones that are affecting your credit the most, and if not resolved, will eventually affect your ability to buy a home or take out any other loans. Long-standing overdue debts may even prevent you from getting hired or promoted.

Going it Alone

It is possible to negotiate with collections agencies yourself, but it isn’t going to be pleasant or easy. As you may have already experienced, the people who are employed by collections companies are trained to get as much money out of you as possible. They are usually extremely aggressive, and can often manage to talk you into an agreement that you realistically can’t fulfill.

Asking for Professional Help

Turning to an experienced New Jersey attorney who specializes in debt relief services will make the whole process much less painful. Believe it or not, by hiring an attorney to help you organize your debts,  you’ll actually end up spending less money in the long run. How is that possible? After all, don’t attorneys charge outlandish fees?

As it turns out, not all attorneys in New Jersey want to overcharge you. Some actually want to help people like you, and have a reasonable flat fee or hourly rate that will not see you dipping further into the dark recesses of debt.

George Veitengruber, Esq. is one prime example of a debt relief attorney in New Jersey who prides himself on helping people turn their financial lives around. He even offers a free consultation to anyone who mentions this blog post! (You can also ‘like’ Veitengruber Law on Facebook for a free consult).

Sitting down with a professional is the perfect way to lay out all of your debts, expenses and income. You’ll have a second (highly trained) pair of eyes working with you to create a plan that WORKS.

A real plus of working with a professional in debt relief is this: Your attorney will do all of the negotiating for you. This means you won’t have to make any nerve-racking phone calls which will lift a huge weight off your shoulders. Yes, you will still be financially responsible for the plan that your attorney negotiates for you, but he will give you expert guidance along the way, helping you to decide the most effective plan of action.

Finally, the best reason to hire someone to help you eradicate your debts is that he has the experience and practice in negotiations needed to bring the total amount of your debts DOWN. He’ll do all the work, and you’ll still pay LESS than if you dealt with the problem on your own.

Call today and set up your free consultation. (732) 695-3303. You won’t be sorry you called. 🙂

Image credit: StockMonkeys

Is Your Home ‘Under Water’?

8224569761_fd4d816a21_zImage Credit: StockMonkeys.com

The loss of 1,300 jobs in New Jersey this March, means that New Jersey’s job market is once again in a slump. When compared with New York, New Jersey has had a very weak recovery from the recent recession. NJ lost around 258,000 jobs during the recession, and has only been able to recover around 36% of those jobs.

Because of this and several other factors, many New Jerseyans continue to struggle financially, with some families living off of unemployment checks or much lower salaries than they were accustomed to before the recession hit. The financial struggles faced by many new Jerseyans means that they are struggling to pay their bills and make good on their debts.

Reports now show that almost 20% of New Jersey homes are considered ‘underwater’ in terms of equity.

What that means is that more homeowners are falling behind on their mortgages, unable to keep up with the high payments due to the “economic pause” that’s occurring in our state along with several other states in the US.

Those homeowners who feel like their house is “underwater” regarding equity, are forced to consider losing their home to a foreclosure. However, because foreclosure is so devastating to a credit score, other options should be considered before going down that road.

Two good options for struggling homeowners are: deed in lieu of foreclosure and short sales.

A deed in lieu of foreclosure involves the homeowner voluntarily relinquishing their home to the bank or lender in order to have the loan canceled. The bank takes ownership of the home and does not pursue foreclosure proceedings. Additionally, if any foreclosure proceedings have already been started, the lender in this case agrees to put a stop to them. In a deed in lieu of foreclosure, some lenders will forgive deficiencies (overdue or late payments), and some will not.

Another option for homeowners who are trying to swim to the surface and get ahead of their debts, is to sell the home as a short sale. A short sale must be done with the permission of the bank or lender, as they will be agreeing to take less money than is currently owed on the property. Often, the difference is forgiven, allowing the homeowner to walk away after the short sale, and work on rebuilding their credit without an overly expensive mortgage hanging over their heads. It is an important to make sure that you are clear on all of the terms of your short sale before you sign any documents. Homeowners must be sure that the deficiency balance is not going to be their responsibility.

Remember, there are options that can help you get out of the unfortunate situation you may have found yourself in. At Veitengruber Law, we can help you decipher the differences between a short sale and a deed in lieu of foreclosure so that you can make the best decision for your life and circumstances. We negotiate with your lenders for you. Get out from underneath a sinking property now! Give our office a call – we’ve helped many like you and we guarantee that we can help you as well.

How to Keep Your Holiday Spending in Check

Every November in recent history, consumers have been sounding off, becoming increasingly agitated about the fact that retailers seem to want us to forget Thanksgiving altogether.

In the past, Black Friday has traditionally started off the yearly holiday shopping season. It’s called Black Friday because in years past, it could often give retailers the push needed to tip them over into profitability (being in the black), instead of ending the year unprofitable (in the red).

In order to encourage shoppers to spend money on more than just one day, many big box stores have been shifting the beginning of their holiday sales further and further back on the calendar. This year, many of these stores are seemingly ignoring Thanksgiving altogether, keeping their stores open for all or part of the holiday.

If watching the holiday shopping season slide earlier and earlier leave you scratching your head, well, there’s a reason why retailers want to blur the lines between Thanksgiving and Christmas.

The National Retail Foundation forecasts that holiday shoppers plan to spend less money this year, which has been a trend since 2008. Every year since then, consumers have been spending approximately 2 to 4% less on their holiday shopping, pushing stores toward more drastic action. Although complaints about blending the two holidays together have been ricocheting around the Internet, (and even employees who will be working on Thanksgiving have expressed their unhappiness), more and more consumers have reported that they plan to participate in early holiday shopping events.

Why would consumers participate in something that they’re ultimately against? It boils down to what “makes the world go-round”: money. If you’re one of those consumers weighing the pros and cons of saving a few dollars versus not wanting to encourage retailers in their efforts to create a holiday mash-up, take a minute to come up with an alternative that works for you.

When we really stop and think about it, doesn’t everyone we know already have everything they need? Aside from a million dollars and a yacht, I mean. With some exceptions, most of us give gifts just to give them, which means they often end up being meaningless, useless and in the end, a pointless reason to spend money that we don’t have lying around.

3576571288_8f088880c1Photo courtesy of Isaac Wedin

Every day, we make it our mission to help our clients get their finances in order. One piece of advice we give is to avoid spending money that you don’t have. Especially this year, if you’re upset and/or angry about stores opening up for the holiday season on Thanksgiving, make a statement by doing something a little different.

  • Make your own photo cards. Instead of shelling out tons of money to have a photo company make them for you, set up a backdrop in your own home using a sheet or solid curtains. Take a family photo with a tripod, then import the photo to Powerpoint to add text and designs. Print them on photo paper at home if you can, or simply send them to your local printer to be printed as regular photos instead of cards. Even cheaper: send an e-card!
  • Give the gift of experience. Instead of following through with your “obligation” to buy gifts that may ultimately end up on the recipient’s yard sale table next year, give someone the gift of time with you. Plan a day of fun adventures for young children who are close to you (zoo, aquarium, movies with popcorn, visit family out of state). Adults could pool their money and take a vacation somewhere warm with the entire family!
  • Give the gift of food. Especially if you love cooking or baking (and have a knack for it), sharing the wealth of delicious food or baked goods is a wonderful way to stay in the tradition of gift giving without the risk of your gift being unwanted or unneeded.  Everyone loves food!
  • Offer up your services. If you’re not the chef in the family but have another admirable talent, give the gift of your services FREE of charge. Give out homemade coupons offering to babysit so friends can spend a night out alone, for example.
  • Shower them with flowers. For those who live in warmer climates (or those who keep a greenhouse going year-round), consider creating a luscious arrangement of your home grown blossoms. Giving arrangements that can thrive indoors is the best idea, so your gift recipient can brighten up their home’s interior through the cold winter months.
  • Use your words to create a gift. Have a talent for writing? Write a short book about a child near to your heart, or perhaps some framed poetry for your adult friends.
  • Make a Craft-in-a-Bag. Hit up a few craft stores and peruse their clearance sections. Some thrift stores often have bags of miscellaneous craft items for extremely affordable prices, too. You can give a child hours of fun for a mere few dollars.

If you’ve got children who also want to get into the holiday spirit, help them come up with gift ideas that won’t take a huge bite out of their allowance, or, in many cases, your own wallet once again.

  • Frame it. Help your child create a meaningful picture collage to put in a pretty frame as a gift for grandparents, their other parent, or aunts and uncles.
  • Play it up. What kid doesn’t like hamming it up for the camera? With your help, they can act out a fun play while you man the camera. Their first dramatic debut will be a unique gift that close relatives won’t soon forget.
  • Go extreme. Couponing isn’t only good for groceries! Children and teens who are on a spending budget can make coupons offering their services for almost anyone. Things like car washing, raking leaves, making dinner, one free night of babysitting, snow removal and cleaning are all things that many people would be quite happy to receive.

Most importantly, plan ahead so that you can execute some or all of these money saving suggestions. While these ideas may require more time, if you plan well enough in advance, you’ll never have to charge another thoughtless gift to your credit card again. As a result, after the holidays are over, you’ll be left in good spirits about the great gifts you gave, and your credit score will be in good standing, too.

Maybe you can have your turkey and eat it, too!

Will I Lose My Timeshare if I File for Bankruptcy?

timeshare

Photo courtesy of Krystal Vacations

Many Americans are able to enjoy fairly lavish getaways through a partial ownership of a vacation property known as a timeshare. Timeshares are essentially vacation homes that are owned by a number of people who share usage of vacation time at the home, condo, apartment or townhouse. Also shared are the maintenance responsibilities in the form of monthly or yearly payments. Investing in a timeshare makes what may otherwise be an unaffordable getaway attainable for average households around the world.

As you are not the sole owner when you invest in a time share home, you may be wondering what will happen to your percentage of the timeshare if you file for bankruptcy. This is actually a pretty common concern and question among bankruptcy clients, because of the fact that a timeshare simply isn’t a straightforward property ownership situation.

In our experience, clients who are already deep into debt often just want to be relieved of the timeshare responsibilities and upkeep payments. If this is the case for you, unloading a timeshare is possible but be prepared to lose money. According to financial experts – a timeshare is a poor investment even in the best financial market.  They simply don’t increase in value. In fact, many desperate timeshare owners just want to be out from under the yearly maintenance fees, which can easily add up to thousands of dollars.

You can sell your timeshare on the open market on sites like eBay if your goal is to be rid of the maintenance fees at a time when your finances are already unmanageable. More specific websites focus solely on timeshare sales, making it quite simple to unload your vacation time – if that’s what you’re aiming for.

Keeping a timeshare through a bankruptcy is a little tricky, but it can be done if you follow some rules, and if there is an exemption available for timeshares in your bankruptcy filing. You may find the most success in transferring your timeshare over to your bankruptcy trustee, if s/he is open to the idea. This solution may permit you to still enjoy taking a week-long vacation during the year in which you are filing for bankruptcy, if you can work out an agreeable deal with the trustee. If the trustee is unable to sell the timeshare right away, it’s possible that s/he may be amenable to renting to your family for your vacation week.

The above scenario will most likely only occur during the first year after transferring ownership of your timeshare to your bankruptcy trustee, because chances are high that the trustee will want to sell it as soon as possible to avoid accumulating debt of his/her own.

If you happen to own the timeshare completely, another scenario may present itself: repurchasing the timeshare back from the estate. In order for this to work out in your favor, you’ll need the right bankruptcy attorney to ensure that the right investor purchases the Note in order to bring in enough money to satisfy creditors, and giving you the ownership of the timeshare once again. It is vitally important that you find a qualified attorney who has solid working relationships with a variety of investors, and respectable experience handling bankruptcy matters.

For more information regarding filing for bankruptcy, timeshares, and getting your financial life back in order, call our office today, or click on over to our contact form. Want a free consultation? All you have to do is “like” us on Facebook!