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Financial Problems in Retirement: Is Bankruptcy the Right Choice?

The following is a guest post. Enjoy! 

Retirement is supposed to be a time for reflection on your life, relaxation, and maybe even a chance to finally see your dreams become a reality. But for a startling number of retirees, retirement only brings financial problems, making seniors the fastest-growing segment of bankruptcy filers. This doesn’t mean seniors are financially irresponsible, though; quite the contrary. More than half (62%) of bankruptcy filings are the result of exorbitant medical bills.

If you’re facing the prospect of bankruptcy during your retirement, you may feel overwhelmed and frightened. Bankruptcy may help you, but knowing all of your options is key to getting out of financial trouble.

Keys to Avoiding Bankruptcy

Bankruptcy can happen to anyone, but if you’re in the early stages of financial trouble, you may still be able to avoid it. To stay out of bankruptcy:

• Avoid taking on debt that’s not absolutely necessary; no credit cards to pay for vacations or clothing!
• Maintain up-to-date health insurance so that you’re not saddled with medical debt, and be sure to sign up for Medicare.
• Don’t loan money to children or other loved ones if you can’t afford to lose the money.
• Don’t retire early if you don’t have enough saved up.
• Consider taking a part-time job in retirement.

Remember, seniors have options for protecting their financial health and assets that younger people don’t have. In addition to Medicare and Social Security, seniors can also tap into reverse mortgages. If you own your own home, a reverse mortgage can provide a steady stream of income, but you get to keep your home.

What Bankruptcy Offers

If you’re considering filing for bankruptcy, know that bankruptcy does not have to be the end of the financial road for you. Every bankruptcy is different, so you should talk to a lawyer before making any major decisions. Generally, though, bankruptcy will eliminate most of your debts, except for student loans, which can’t be discharged in bankruptcy. The downside is that your credit will be wiped clean, eliminating your ability to get a loan, credit card, or new home for a few years. In general, you can usually get a credit card about two years after bankruptcy. A Chapter 7 bankruptcy will fall off of your credit report in 10 years, while a Chapter 13 takes seven years.

When You’re In Over Your Head

If you’re considering filing for bankruptcy, slow down before making any decisions you can’t take back. Then take the following steps:

• Talk to a financial advisor or credit counselor to explore possible alternatives out of debt.
• If you have loved ones who may be able to help you, consider seeking help paying down your debt in return for something else. Perhaps, for example, your kids can pay off your credit cards in return for weekly baby-sitting for a year.
• Seek an experienced bankruptcy attorney who works with seniors. Steer clear of lawyers who run volume-based practices, since their job is little more than signing paperwork. It may cost a bit more to hire a lawyer who takes his or her time, but this strategy ensures your assets are protected.

Bankruptcy can be scary, but it doesn’t have to ruin your financial life for good. And when you’re in over your head, bankruptcy may even be the lifeline you need to regain control.

The Benefits of Tracking and Maintaining a High Credit Score

Having a good credit score is critical for so many things in life: from applying for a loan for a new car or house, to applying for a new credit card, how much interest you’ll have to pay on a loan or on insurance, or applying for a student loan to help get you through college.

According to a study from the Corporation for Enterprise Development (CFED), 56% of Americans have a subprime (a.k.a. bad!) credit score, making understanding how credit scores work and how to maintain a healthier, high credit score is critical for economic development not only for the individual, but for the health of this country’s economy as a whole.

What Is A Credit Score?

Your credit score is basically a mathematical calculation of the predictability of risk.  In other words, when you have a credit card or have any kind of bill that requires payment, you’re making a promise that you will pay it back by a specific date.  If you don’t pay, then you are penalized.  To the creditors, you are now at a higher risk of non-payment again in the future. There is no room for a one-time error in these mathematical equations: you mess up and don’t pay your bills one month and your credit score suffers.

Credit scores range anywhere between 300 and 850, with 850 being the highest score one could have, also making that person at the lowest risk for defaulting on their loans or other bill payments.  Having a significantly lower score sends a red flag to potential creditors that you may not be trusted to actually pay back the money you promised, giving those creditors doubts on whether or not to even approve your loan to begin with.  Or, perhaps they’ll approve it, but at a significantly higher interest rate.

How To Fight For Disability Claims

The following is a guest post. Enjoy!

Many people work hard for their entire lives. Then, an accident happens which causes them to be seriously injured, making it impossible for them to work any longer. In these cases, a person depends on their insurance to cover the cost of their recovery, as well as compensate them for their lost wages. Unfortunately, insurance companies are often not willing to pay the money they owe without a fight.

You must remember that insurance companies are publicly traded. They have a fiduciary responsibility to their shareholders to raise the value of the company’s stock. This can’t happen if they are constantly paying out claims. Therefore, they often reject perfectly legit claims in an effort to save money. If you believe your claim has been denied unjustly, you need to stand up for your legal rights. Are you in need of a disability lawyer? Here is how you can find one.

1. Talk to people who have hired disability lawyers

If you are looking for a lawyer who specializes in long term disability insurance, the first thing you should do is to talk to people who have been in the same situation you find yourself in now. Ask all of your friends and family if they have ever had a disability claim rejected. This is a very common occurrence, so there is a good chance that a friend or relative of someone you know has gone to court to contest an unfairly rejected disability claim. If you are able to track down some people who fall into this category, ask them about the lawyer who helped them with their case. Did he or she have many years of experience handling disability cases? Ideally, you want to hire a lawyer who focuses on personal injury law. Ask the person if their lawyer handled the case professionally. Did the lawyer win the case? If you are satisfied with what you hear, give the lawyer a call to set up a meeting.

2. Explore the Internet

Every lawyer has a website these days. If you are unable to secure the number of personal injury lawyer references you had hoped for, there are other ways you can track down a lawyer to represent you. Dealing with horrible doctors after an injury? The Internet is a vast resource, so you should put it to work for you. Do a search for disability lawyers in your area. Read their websites to find out how long they have been practicing. You should avoid a lawyer who is fresh out of law school. Your case is too important to be handled by a raw rookie. There are some lawyers who handle a wide range of legal issues. Although these lawyers might be competent enough to handle your case adequately, you should strive to find a law firm that only deals with personal injury cases.

3. Get recommendations from people online

As mentioned earlier, the Internet is a great resource. However, there are other ways for you to find a good personal injury lawyer besides pursuing their websites. You can also visit a wide variety of review websites. These are sites where people can post their personal experiences regarding doctors, lawyers, contractors, mechanics and other professionals they have done business with in the past. You should be able to get a good number of references from these sites.

Protecting Yourself Against Identity Theft and Financial Fraud

Identify theft and other financial fraud is a relatively common crime, but if you take certain preventative measures, you can help minimize your risk and be comforted in the fact that your ID and your money are a little safer than they might be otherwise.

Here are just a couple of things you can do:

Monitor Your Credit Report

Using free services like annualcreditreport.com, check your credit report just once per year to make sure there isn’t anything hurting your score than you were not responsible for. Look for suspicious activity or new accounts that were opened without your knowledge.  Monitoring your credit report once a year will allow you to not only maintain your credit if it’s good already, but also catch possible identity theft early if it happens.

Initiate Fraud Alerts From Each of the 3 Credit Bureaus

Another great way to protect yourself against financial identity fraud is to set up fraud alerts from the 3 major credit bureaus: Transunion, Experian, and Equifax. These sites not only help you monitor your credit report on a yearly basis, but you can also set up free fraud alerts so that the company may catch a potential source of fraud sooner than you may have during your yearly check.  This way, you don’t have to worry about a fraud occurring in February and you not knowing about it until you check your report again the following January.

Use a Credit Card For All Your Online Purchases

Sure, often times when someone steals your financial identity, it’s your credit card information.  Still, using a credit card for all your online purchases is much smarter than say sending money via a bank transfer because with a credit card you can more easily refute the charges.

Additionally, some credit cards have special programs in place to help prevent financial identity theft.

Unfortunately, identity theft and financial fraud continue to be an issue in today’s society.  Thankfully, now there are a lot of programs out there to help you stay ahead of the game and to help ensure your financial safety.  While none of these programs will stop the thieves completely, they are all designed in such a way to stop them quickly and to ensure your financial identity is not permanently compromised and so you can rest easy knowing your money is in good hands.

***Photo courtesy of https://www.flickr.com/photos/intelfreepress/7853146846/in/

How Can You Reduce Financial Stress?

Recently, I found out that April is Stress Awareness Month. I was very pleased to find out about this Awareness Month, as in today’s society, it seems that we are becoming increasingly connected and pulled in many different directions at one time.

Going along with this, I figured it would only be fitting to take a moment (on this personal finance blog) and share the ways/techniques that I personally use to manage my financial stress.

Overall, I believe that the 3 most effective ways that I am able to reduce financial stress are: 1) having an emergency fund savings account, 2) automating my finances, and 3) using a passive investing strategy.

Let’s walk through each of these one by one….

Emergency Fund

As I’ve covered previously, an emergency fund is a very stable, liquid, accessible, and/or cash account in which you place anywhere from 6-18 months’ (depending on your situation) worth of expenses. These funds can then be drawn upon in emergencies, such as losing a job or becoming injured.

By placing the emergency fund savings process as a very high financial priority and accumulating a substantial balance in this account, it can very effectively reduce your financial stress.

An important consideration in order for an emergency fund to reduce your financial stress is deciding ‘where’ this account should be located. As mentioned, you want your emergency fund account to be very accessible (liquid) and sheltered from financial fluctuations of the stock market. Online money market savings accounts are my favorite vehicle of choice for an emergency fund, as they offer these features. In today’s competitive banking environment, there are many options to choose from.

Automating My Finances

My second favorite way to manage financial stress is to automate my finances as much as possible. Since most financial transactions can take place electronically these days, it has become very easy to do this.

So, what exactly does automating your finances mean? Basically, it entails the following:

• Scheduling auto-payments for your credit card bills each month.
• Scheduling auto-payments for your utility, TV, internet, and other bills each month.
• Scheduling auto-payments for your rent or mortgage.
• Scheduling automatic transfers for your savings goals as well. This includes setting up automatic transfers from your checking account to your emergency and other savings accounts, IRAs, and 401ks.

The idea behind automating your finances is that since we are all human, we are bound to make mistakes and forget to pay bills and/or save for our goals at some point in our lives. By taking the human factor out of the equation and not having to think about things, I find that it not only helps me reduce my financial stress, but also helps me better achieve my financial goals.

With all of this automation, you still want to make a note for yourself to check your accounts at least once a month to make sure everything is functioning properly.

Passive Investing / Asset Allocation Strategy

The third favorite way that I reduce financial stress is to employ a passive investing strategy with an appropriately selected asset allocation.

First, let’s discuss the asset allocation portion of this method. What this means is that I select a pre-defined split between equity (stocks, which have more risk and more return) and fixed income (more-stable) investments to maintain on a month to month basis. I have selected a 70% equity / 30 % fixed income asset allocation because I figured that I would be able to lose ~30% in portfolio value in one year, given my risk tolerance and personal situation. In my experience, most people are overexposed to equity, and hence overexposed to risk, which will increase financial stress greatly when the markets are experiencing a downturn.

Next, I reduce financial stress by investing in passively managed index mutual funds. These are mutual funds which instead of attempting to beat the stock market indices, simply mimics the performance of the stock market. By employing this strategy, it makes it so that I do not have to constantly monitor my portfolio and worry if I am investing in the ‘correct’ stocks.

How about you all? How do you find is best to reduce your financial stress?

Share your experiences by commenting below!

***Image courtesy of https://www.flickr.com/photos/83633410@N07/7658305438

What Cars Hold Up Best Against Depreciation?

Have you ever wondered why it is that a new car loses (depreciates) 30% of it’s resale value the minute that you drive it off of the new car lot? I mean, after all, the car still has that new car smell, right?! 🙂

Well, it all comes down to the idea that some people take better care of their car than others, and new car buyers are simply willing to pay much more for the assurance that the car is in “pristine” shape / has not been mis-represented by the previous owner.

Going along with this idea, it is also well established that some cars (typically ones that are more reliable) hold up their resale value much better than others.

Back in 2012, I sold my 2004 Honda Accord (which my family purchased for around $15k new) for $5k to CarMax. We didn’t think this was too shabby since the car was 8 years old!

For future car purchases, it’s good to know which cars hold up their resale value so you can maximize the amount you receive on the back-end of your car-buying purchase when you decide to sell.

A good resource for this researching is Kelley Blue Book’s Best Resale Value list. These selected vehicles are being recognized for their projected retained value through the initial five-year ownership period.

The 2015 model-year brand and category winners of the annual Best Resale Value Awards are shown below. You can hop on over to KBB.com to view the full list.

For me, an intriguing finding of these results is how well Suburu did, earning the top resale value slot in most of the car categories, along with Lexus. Where I live in Colorado, Suburu is considered the “unofficial state car,” and my wife and I will likely purchase one when we go to purchase our next car. It’s good to know they are not only reliable, but also hold up their resale value after 5 years or so!

4 Reasons To Hire A Financial Advisor

The following is a guest post. Enjoy! 

The decision to hire a financial advisor is a big one – and one that shouldn’t be taken lightly. It’s a decision that is extremely personal and most people will approach it differently.

While I am not here to say whether hiring a financial advisor is a good idea or a bad idea, I am here to offer several examples that motivate people to go the professional route.

Let’s look at the list.

1 – It’s too complicated to do on your own

Just because something is easy to do, it doesn’t mean it is easy to do well. Financial planning is one of these things. On the surface it’s simple to start a financial plan. However, financial planning becomes increasingly complicated as your success evolves.

For example, contributing to a 401(k) is easy. Sign up with your company, review the mutual fund options and choose the best one for you. But understanding the planning opportunities and tax implications of net unrealized appreciation of company-owned stock in a 401(k) plan can be difficult. See what I mean… does that sentence leave you cross-eyed?

Receiving restricted stock from your employer is easy. But understanding the benefits and drawbacks of incentive stock options and how different execution strategies impact alternative minimum tax and long-term capital gain treatment is hard.

Setting up a will is easy. But equalizing the estate of a family-owned business when some family members are in the business and others aren’t is difficult.

It’s important to realize what pieces of your plan are self-manageable and what portions may need an expert’s guidance. Just because you have executed some planning doesn’t mean you have covered it all.

2 – You need a second opinion

If you are a do-it-yourselfer, it may make sense to have an expert look at your plan to confirm it’s in good order (review reason #1 for hiring a financial advisor). Even the best do-it-yourselfers can miss a strategy or idea that could benefit them dramatically.

Because of this, it may make sense to pay an expert to confirm or challenge your plan.

3 – You don’t know what you are talking about

“I haven’t looked at my investment statement in years.” “I don’t know what insurance I have.” “I have no idea how much I am contributing to my retirement.”

Comments like these may indicate you don’t understand personal financial planning. But not knowing is perfectly normal. If you’ve never been educated in the topics related to personal financial planning, why should you know?

I have said it before and I will say it again…

In my opinion the most successful people in the world know what they are good at, and more importantly they know what they aren’t good at.

What should you do when you acknowledge you are not good at something? You can spend the time and energy to learn and become an expert. Or, you can make an executive decision to delegate and bring in an expert to help.

In most situations when you don’t know what you are doing, it makes sense to delegate. Look for a professional in the industry, someone with experience and credibility. I would suggest, however, avoiding friends or family members who do investment research as a hobby.

4 – You don’t have time to do it

Most of our adult life is spent balancing the various commitments of work, family, friends and other activities. Rarely do we have ample extra time to do what we want. My guess is that when you do find free time, studying up on personal financial planning rarely bubbles to the top of your activities list.

However, you shouldn’t overlook personal financial planning. It is too important.

Developing a financial plan that coordinates your investments, insurance, estate, retirement and other goals takes time. Additionally, it takes a trained eye to stay current on changes to markets, laws and other outside factors that could affect the plan through the years. Hiring a CFP® professional also means that when life changes occur you have someone to help you update your financial plan. Becoming an expert in the required specialties, and remaining an expert, is a full time job.

Next steps

More than anything, you should be looking at your own financial plan to make sure you are “doing the right things.” For some that may mean a financial plan developed and managed by yourself. However, for the majority of people, hiring a professional to build a plan not only gets the ball rolling, but quite possibly could lead to a significantly improved outcome.

Saving Money On Holiday Gifts

With the holidays upon us and so many people to get gifts for, it can be difficult to actually save any money.  However, coupons make it a lot easier for you to get great deals on many gifts for nearly everyone on your list, and helps save you a lot of money while making your friends and family very happy during the holidays and beyond.

Here are just a few examples of how you can use coupons on gifts to help get you through the holidays without breaking the bank.

• Electronic Gifts

Electronics are on nearly everyone’s Christmas lists these days, it seems.  As you probably know already, many electronics are pretty expensive!  Getting these types of gifts for a bunch of family and friends can get really expensive, but thankfully coupons can be used to help you save some money.

• Weight Watchers Program Gift:

For those on your lists that are looking to shed a few pounds, avoid the dreaded holiday weight gain, or just trying to maintain a consistent healthy diet, there are a lot of coupons out there available for Weight Watchers, NutriSystem, or different gyms.  Get an early start on those New Year’s Resolutions and save money at the same time with these and other similar coupons.

• SkyMall gifts for the frequent flyer:

If you or anyone else on your Christmas list is like me when they are flying, the SkyMall is a frequently read and enjoyed magazine that helps pass the time away and gives you a lot of ideas for gifts for others or for yourself.  SkyMall offers  several different coupons for various sales and discounts, which will make SkyMall enthusiasts jump for joy.

• Kid-related gifts:

Did someone on your Christmas list just have a new baby?  There are lots of coupons out there for many kids stores and websites to help save Mom and Dad some much needed cash with their new bundle of joy.  From  deals with Diapers.com that will give 20% off coupons for new customers, 20% off Earth’s Best Baby Food, or 20% off of many different toys and games, you can find the right coupon for you or the kids on your list  Raising kids can be expensive, but it certainly doesn’t have to be with coupons!

From electronics to gardening and from kids to grown-ups, there are coupons for just about everyone on your list.  A great way to make your loved ones happy during the holidays and keep a little more green in your wallet!

 https://www.flickr.com/photos/jimmiehomeschoolmom/4165199870/in/

Saving Money For A Rainy Day – Prepare For Emergencies

The following is a guest post. Enjoy! 

With so much to pay for on a regular basis, it can be easy to look for quick fix solutions such as payday loans. Of course, tools will help you make informed decisions about your financial situation, but one of the best ways to prepare for the future is to save. Sure, you might have bills to pay left, right and center, but putting some money aside could prove extremely beneficial in an emergency, so here’s how to hold onto your hard-earned cash.

Make essential cutbacks 

Do you know exactly where your money’s going each month? If not, it could be time to take a closer look at your incomings and outgoings in order to set a strict budget. To do this, start by writing down all payments that need to be made on a regular basis, such as rent, council tax, utility bills and such like. Tally up the figure and ensure you have this amount safe and secure to avoid running into financial problems. Next, look at how much you spend on food, as while you need to eat there are many ways to cut the cost of your weekly shop. Finally, look at all your non-essential expenditure, such as expensive gym memberships, magazine subscriptions, days at health spas and such like, and see if there’s anything you could cancel. Put any money you manage to save into a savings account and you could be well on your way to building a nest egg.

Set a realistic savings goal 

In life, it’s important to be prepared for any unexpected expenses and changes in circumstance, such as losing your job. As a rule, it’s wise to save up to three month’s living costs in advance, including your rent, to ensure you have enough breathing space if something bad were to happen. To ensure this figure is correct, take the amount you spend on essentials every month and times it by three to get the sum you need – this will be your savings goal. By downloading a savings app and entering your targets, you’ll also be able to follow your savings progress and work out exactly how long it’ll take you to reach a certain figure, if you put a set amount aside over a specific period. Financial apps do all the hard maths for you, leaving you to focus on cutbacks, where possible.

Avoid common pitfalls and traps 

Many people think taking out payday loans and other quick fix solutions will help them overcome financial problems and get them back on the straight and narrow. Unfortunately, it can actually work in the opposite direction, as with high interest rates and short payback times it’s surprisingly easy for debt problems to spiral out of control. Instead, try to pay for things as you go, stick to the budget you’ve set yourself and save where you can. If you fail to put money aside one month, don’t worry too much. Simply put it behind you and try to save a bit more the following month to even things out.

Saving for a rainy day is easier than you might think, so follow these tips and look forward to a more secure financial future.

7 Brainiac Teens That Made it Big Before 21

The following is a guest post. Enjoy! 

According to the latest research, the average age of the successful entrepreneur running today’s first-time tech startups is 39 years old. You may know this fun fact already, but did you know that the median age of the highly-innovative entrepreneur is slowly and steadily dropping even lower than that? Although the reasons may be partly due to modern technology and the availability of all kinds of information, what sets these modern heroes apart may surprise you.

The majority of these young geniuses didn’t have the best of educational opportunities. In fact, most of them were lacking financial backup, too. The common denominator in all of these amazing young inventors, all of whom have not even seen the age of 21, is the ability to discover a need or a problem – and then solve it without wavering from their original vision. They had drive and determination – what the original inventors called “stick-to-it-tive-ness.”

A good idea may have sparked the fire under these exceptional tech entrepreneurs, but it was their inherent drive to innovate – to change their world for the better, that sustained them throughout the process, even when it sometimes became tedious. Through their examples, they prove that if you think you have a good idea, you must first believe in yourself and remain steadfast. Their strength and determination will inspire and amaze you – and hopefully, you’ll see that anything is possible if you work hard enough.

It’s all about choices, as these inspiring stories will show you. What you decide to do with your dreams and desires will ultimately determine your life’s successes – and failures. These smart kids took a tiny seed of an idea, then planted and watered it, nurturing it and watching it grow. From the top websites and apps, to preferred platforms and web hosting services – even fixing computers and providing office chairs, these budding entrepreneurs have arrived. Find out how they took something we all have right now – a good idea – and made our world a better place to live.