Smart Money Decisions

Don’t Get Fleeced!

We could all take a lesson from the skinflints and cheapskates of the world. They are skeptical of
the marketing game aimed at separating the public from its money. A real penny pincher will realize how sellers are tacking extra dollars onto a transaction while the masses simply follow the herd and lose their hard earned cash.

Search for the lowest tickets on the internet and buy them in advance online. Arrange your schedule to travel on off-peak days like Saturday or Tuesday through Thursday for the best savings. Car rentals rates are best found on the internet, but they don’t usually show additional charges and insurance which can be expensive add-ons. Shop for your own gas and check your insurance so you only purchase the additional coverage you need.

Buying a New Car
To help qualify for those super low interest rates make a large down payment. Check the web for the most competitive financing rates. Check consumer publications to be sure the vehicle you are considering offers the operating and maintenance economy you expect. Numerous new car websites will reveal the lowest possible price, so you are prepared to negotiate your new car purchase while avoiding the hidden charges and add-ons that fatten up dealer profits. If you lease, do it for better reasons than an advertised low monthly payment. Always treat the price and terms of a lease in the same way you would a purchase. Many buyers accept charges in a lease they would quickly reject in a purchase. Insurance is also a big factor in your auto expenses and rates vary widely, so be sure to check a number of sources before automatically sticking with the insurer you have been using.

Other Insurance
Purchase enough homeowner’s insurance to cover your home and its contents but go with higher deductibles to get the best rate. When buying life insurance, buy term insurance. Generally speaking, whole life or universal life plans cost far more than their investment returns are worth. You can do much better with a separate investment using the same dollars.

Pennypinchers hate ATM fees and so should you. Avoid them by only using your bank’s ATM or find an account that provides for free ATM use anywhere. Find a free checking account and inquire about reduced fees for direct deposit. Eliminate interest on your bank cards by paying them off each month or switch to a card with a low rate and switch your balances to it. When choosing a credit card, find out about fees and penalties in advance. Some credit card late charges are very high. Online banking and bill paying can offer big advantages. In addition to saving time and auto expenses, you can make sure your bills are paid at a definite time rather than risking big late charges due to unreliable mail delivery. The rule of thumb for refinancing your mortgage is to consider it only if you can reduce your interest rate by at least a full percentage point and if the points and loans fees are very low.

Explore innovative ways to insulate your home, paying close attention to the windows and doors. Look for tax breaks and rebates on improvements that will save money on your electric bill. Research ways to get involved in load-management and off-hour rate programs with your power company. New designs in appliances and air conditioners now use far less electricity. Replace your incandescent light bulbs with compact fluorescent bulbs that give off better light while using 70% less electricity and lasting 10 times longer

Pulling the Plug: Is Bankruptcy The Answer? Escape or Making Matters Worse?

When there seems to be no way out of financial troubles, bankruptcy is always a last resort…or is it?

There are many things about bankruptcy most people don’t know.

In the back of our minds, bankruptcy is thought to be a remedy for a worst-case-scenario, but most people do not know what is involved in actual bankruptcy until they face it.

According to the Administrative Office of the United States Courts, more that 1.5 million bankruptcies were filed in 2002, a 25 percent increase over 2000 and a 6 percent increase over 2001. Experts say this is the result of the debt binge in the 1990’s.
In 2001, Americans averaged $8,100 each in credit card debt, which is a 171% increase over 1990.

If you are in financial trouble it is important not to panic and file bankruptcy before you have considered your options. For example, if credit card debt is a primary factor in the breakdown of your ability to pay your obligations, a credit counseling service could provide an individually tailored program to manage and repay that debt in a manner you can afford, while taking the pressure off and allowing you to manage your other expenses. In this case, the legal and credit problems associated with bankruptcy can be avoided.

There are two basic bankruptcy options, Chapter 7 and Chapter 13.

Chapter 7 may be filed by those able to pay living expenses but not able to pay their debts. In a Chapter 7 filing, the court will require you to sell or liquidate certain assets and apply the proceeds to your debts. You may be allowed to keep certain equity in a primary residence, a vehicle, some jewelry, tools of your trade and some household goods and furnishings, provided you continue to pay any outstanding loans related to those assets. The actual values for items you can keep vary depending on the state you are in. Chapter 7 will not eliminate tax debt or federally subsidized student loans in some circumstances, alimony or child support, or debts resulting from fraud. The majority of personal debt discharged by Chapter 7 will be credit card debt or unsecured debt. With any secured debt, such as auto loans or mortgages, you will lose the collateral as partial payment for that secured claim, unless you continue to pay the loan.
When you consider that the debt discharged by Chapter 7 is limited and that you are still left with many obligations, as well as a bankruptcy on your record for 10 years, other options such as credit counseling services could become very attractive.

Chapter 13 is basically for those who can pay some of their debts but not all of them according to the creditors’ terms. This program helps to prevent foreclosure on your home and preserve your assets while participating in a court payment plan with your creditors over a 36 to 60 month term. The idea is that you will be able to catch up! After the conclusion of the term you will be able to maintain and complete your repayment schedule.

A major key to deciding whether or not you should decide to go bankrupt is to make certain you are considering all the alternatives, getting good advice and not acting out of panic. Once you have declared bankruptcy, you can’t undo it. Keep in mind that it may be in the best interest of those who provide bankruptcy legal services to advise you to do it. An unbiased look may show that you could have alternatives with fewer drawbacks than bankruptcy. Therefore, seek professional advice and learn about all of your options before making any decisions about bankruptcy.