Steps to Control Money

To get the most from income a family needs to:

• Set short- and long-term goals
• Plan spending and saving
• Build financial security
• Avoid excessive consumption (including unnecessary tax and credit costs)
• Reevaluate spending and saving as conditions change
• Get Debt Relief

A money control system based, on a BUDGET or SPENDING PLAN, can provide debt relief and get you out of debt in a shorter time that trying to simply make minimum credit card payments alone. Such a plan can reduce or eliminate many money concerns and help a family meet their financial needs.

A plan for spending and saving will show not only the family’s projected income and expenditures, but should also be able to help reach goals, build financial security, avoid excessive consumption and eventually provide long-term debt relief.  The family will need to analyze the plan and perhaps look for alternative ways to increase income or decrease expenditures.

In addition, the family must protect what it does own by avoiding misuse of its property and making use of insurance to guard against the risk of loss.  The family can also increase total income by using personal resources such as time, ability and materials on hand instead of money whenever possible.  By continuing to evaluate, make necessary changes and follow the spending plan, a family will be better able to take charge of its money and get the most from it.

Spending Plan Requirements

How people spend money indicates their values and goals.  No one can tell a family how to spend its money or what their lifestyle should be.  Each family needs to decide how its income is allocated.

Family members must work on the plan as a team.  A great deal of discussion is necessary so that individual differences can be heard and common goals identified.  Each member must practice money control in order to stick to the plan.

Each person needs a personal allowance, beginning as early as age 5 or 6.  This amount is for personal spending and an individual may not need to account for it.  A spending plan does not need to be a straightjacket.

Finally, record keeping should be kept simple so that records are helpful and keeping them is not a burden.  The person who enjoys record-keeping the most should be in charge, but all members should know what records to keep track of and where the complete set of family records can be found at all times.

Defining Goals

Often MONEY INCOME is confused with REAL INCOME and PSYCHIC INCOME.  While money income is the actual income in dollars and cents, real income is the total goods and services that income will buy.  A wise family can use sound buying habits to achieve greater real income from its money income.  Psychic income, on the other hand is the amount of satisfaction one receives from purchased goods and services.  Ultimately, psychic income satisfaction is most important for families.  Only through a system of conscious goal setting and money management can this satisfaction be attained.

Effective money management depends on the way a family chooses to live and the goals it plans to achieve.  Think about where your family is today and where it wants to be five or ten years from now.  Make plans and set goals to attain these dreams.  It is extremely important to write down goals and make them specific.  As circumstances change, and as individuals and the family go through various stages of their life cycle, the family’s goals, timetable and spending plan will need to be revised.

The whole family should be a part of the budgeting process, since every decision either helps or hinders achievement of individual goals.  Take time for a family discussion of this important phase of the budgeting process.

The object of the plan is to help the family reach its goals, not to make the family follow confining rules.  Don’t get discouraged if the first plan doesn’t work.  Rework the plan to fit your family’s changing needs and desires.  Review or analyze it periodically to be sure that the spending plan continues to help the family manage the income effectively to reach its goals.

Long-term goals and objectives can give overall direction to your financial planning.  These goals are usually set for five to 10 years or more in the future.  Stock investments or a down payment on a house might be long-term goals.  Keep in mind that many factors will influence these plans.  Be willing to be flexible and make adjustments as needed.

Intermediate goals should be obtainable within one to three years.  A dream vacation or a new kitchen may be intermediate goals.  Short-term goals are those attainable in the next three months to one year, such as buying a new appliance or winter coats.

Both intermediate and short-term goals are often a part of a long-term goal (such as saving a portion of funds each year for college education).  For example, a long-term goal of saving for a college education may be broken down into annual goals of saving $500 for each child in a college fund.  When writing your intermediate and short-term goals be specific in dollar amounts so that you can easily measure your progress in achieving your long-term goal.

If we continue to carry credit card debt, it can often be overwhelming and create a need for debt relief. As mentioned earlier, getting out of debt can often be a process that is made easier by proper money management. Such plans can often help people feel more satisfied with their current income and get more accomplished with less money needed.  It is a known fact that we spend money every day and don’t even think about it.  We all do it and money leaves our pocket, wallet, or purse and is forgotten. We simply do not remember or register what we do with our funds and this creates debt problems and drives the need people for seeking debt relief.  For example, when you stopped at Starbucks this morning, how much was the coffee, the scone, the tax and tip? Is that money you could have used to pay down debt? While small by itself, it ads up and can make a real difference over time.

If we begin to track our spending, and see it in black and white, we can then begin to understand where the money goes and if our decision to spend the money in a certain way was in fact wise or not. Once you understand this, you can make significantly better decisions on how to spend, how to save and truly get out of debt.

The good news is that in many cases, bankruptcy can be avoided. Hundreds of thousands of people needlessly file bankruptcy each year. While bankruptcy may seem like the best solution to your problems, in many cases, it’s not. Make sure you properly look into all options prior to making the decision to file. The following is a link to information on some of those other debt relief options that may help in your decision making process.

Many people think that filing bankruptcy is the silver bullet that will fix all of their debt and credit related problems; however, filing bankruptcy is the worst thing you can do to your credit. Most lending institutions will consider your bankruptcy when evaluating you for a personal loan even after the bankruptcy has expired. Qualifying for a loan after filing for bankruptcy can be very difficult and could cost you considerably more than a person that has not filed for bankruptcy. It is understood that some situations will require you to file for bankruptcy. However, you should avoid bankruptcy if at all possible. Debt Regret can help eliminate most, if not all, of your unsecured debt so that you do not have to file for bankruptcy. If you require additional information on the subject of bankruptcy you may want to contact a bankruptcy attorney in your area.

Many people do not realize that there are five types of bankruptcy options available under the U.S. Bankruptcy Code; however, for most consumers there are really only two viable options; Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 bankruptcy is entitled Liquidation: In a Chapter 7 bankruptcy, a court-supervised procedure occurs during which a court-appointed trustee collects the assets of the debtor’s estate, converts them to cash for repayment, and makes all necessary distributions to the debtor’s creditors; however this is all done within the debtor’s right to retain certain exempt property. Traditionally, there is little or no nonexempt property in a chapter 7 bankruptcy.

Due to this fact, there may not be an actual liquidation of the debtor’s assets. In this case, it is called a “no-asset bankruptcy.” It is important to realize that a creditor that is trying to collect on an unsecured claim will only get a distribution from the bankruptcy estate if the case is an “asset bankruptcy” and the creditor can provide proof of their claim with the bankruptcy court. In almost all chapter 7 bankruptcies, the debtor will be grated a discharge that releases them of personal liability for most dischargeable debts. The entire process normally takes just a few months from the time the bankruptcy petition is filed. 

Chapter 13, bankruptcy is entitled Adjustment of Debts of an Individual with Regular Income: A chapter 13 bankruptcy is traditionally used for people who have a regular source of income or a full-time job. For many people, chapter 13 is preferable to chapter 7 because it allows the debtor to keep some assets. A chapter 13 bankruptcy allows the debtor to repay creditors over time.

This time traditionally varies from three to five years. This type of repayment proposal takes place at a confirmation hearing.  During this confirmation hearing, the court will either approve or disapprove the debtor’s repayment plan. This decision largely depends on whether the repayment plan meets the Bankruptcy Code’s requirements for confirmation. In a Chapter 13 bankruptcy the debtor is usually able to remain in control of their possession and property while making payments to creditors; however, payments are made via a court trustee. 

Unlike chapter 7 bankruptcy, the debtor does not receive an immediate discharge of their debts. Under chapter 13 bankruptcy, the debtor must complete the repayment plan before the discharge is granted; however, the debtor is protected from lawsuits, garnishments, and other creditor action while the plan is in effect.

It is important to remain cognizant of the fact that not all debts are discharged under bankruptcy. The debts that are able to be discharged will vary under each chapter of the Bankruptcy Code. However, the most common types of non-dischargeable debts are tax claims, debts that are not presented by the debtor to the court while filing for bankruptcy, debts for spousal or child support or alimony, debts to governmental units for fines and penalties owed to government entities, debts for personal injury caused by the debtor’s operation of a motor vehicle while driving intoxicated, debts for willful and malicious injuries to person or property, debts for government funded or guaranteed educational loans, and debts for certain condominium or cooperative housing fees. 

In order to file for bankruptcy, you must file a petition in federal bankruptcy court. You must file a statement of assets and liabilities as well as schedules listing of your creditors. Once you have finished filing bankruptcy, your creditors can no longer take action against you to collect discharged debts.

In chapter 13 bankruptcies, you may end up paying back 50% or more of your current debts. Additionally, if you miss a regularly scheduled payment at anytime during your chapter 13 bankruptcy repayment plan, you could end up in violation of the court and forced to repay all the debt!

One of the most difficult parts of bankruptcy is learning to live with the fact that filing bankruptcy limits your personal spending to items that the court considers absolutely necessary. In most cases, debtors do not complete their chapter 13 bankruptcy repayment plans. Most people filing chapter 13 bankruptcies think they will be able to complete their repayment plan; however, only about a third of them actually do. Additionally, chapter 7 bankruptcies may stay on your credit longer than a chapter 13 bankruptcy. This time ranges from 7-10 years for most people. Many people do not realize that if you own a home with a sizable amount of equity, have a fair amount of assets to protect, or have co-signers on a loan, you most likely will not be able to file chapter 7 bankruptcy under current law. Now that the new bankruptcy legislation has passed, it will be even more difficult to file for bankruptcy.

 Note: This should not be considered legal advice of any kind. All information on this site is for informational purposes only! If you need any type of legal advice or advocacy, you must contact a licensed attorney.

Here are some basic tips for finding the best Debt Settlement Company: 

Tip 1: Research a lot on different Debt Settlement companies 

Performing research on all the different Debt Settlement companies you are interested in can often help you in finding the best debt settlement company for you. While researching, make sure to check two important aspects for all considered companies:

 i. Accreditations of company The best Debt Settlement companies are usually accredited (not simply a member) with either:a) The Association of Settlement Companies (TASC)b) United States Organization of Bankruptcy Alternatives (USOBA)

ii. Reputation of the company While reputation does play an important factor in the decision making process, you have to make sure you are looking in the right places. For example, many people feel the BBB might be a good place to start; however, nothing could be farther from the truth. Unfortunately, the BBB does not yet recognize Debt Settlement as an industry. This is due to, in my opinion,  being poorly informed about the effectiveness and success rate of debt settlement programs. As a matter of fact, the BBB has a rating scale that is skewed to give all Debt Settlement companies a D or F rating just for the industry they belong to. This is a disservice for consumers, because it does not allow consumers to distinguish between the best Debt Settlement companies and those that are less then desirable. For consumers that are really wanting to do research to select a qualified Debt Settlement company, a great place to start is The Association of Settlement Companies website, which is http://www.tascsite.org TASC is an industry trade association and watchdog that enforces a strict code of standards and requires extensive disclosures of its member companies. Further, companies are monitored through a third party monitoring program to make sure the Debt Settlement companies are consistently upholding the high standards that TASC requires of its members.

Tip 2: Ask for sample settlement letters 

The best Debt Settlement companies are always able to provide, recent, sample settlement letters to help demonstrate the services they are able to provide and typically have IAPDA certified Debt Arbitrators on staff to help in the negotiation process. An IAPDA certified debt arbitrator is required to maintain a strong understanding of the rules and laws governing the Debt Settlement industry and fully understand your current financial obligations. The best Debt Settlement companies will always have IAPDA certified arbitrators on staff.

  Tip 3: Choose the best Debt Settlement Company 

The best Debt Settlement Company will not only help you get out of debt, but also help educate you on how to stay out of debt in the future and provide you with information and budget materials for living a debt-free life. The best companies in the Debt Settlement industry typically help their customers to remain debt-free by providing moral support, continuing education and helpful guidance, when necessary.  

 Tip 4: The best Debt Settlement companies will help you with fees and payment programs 

If you come across financial problems, while in a debt settlement program, and have trouble in making ends meet, the Debt Settlement Company should be able to, from time to time, help try to get you back on track. They should be more than happy to work out a customized solution to your problem.

 These tips will help you in finding the best Debt Settlement Company for your particular needs.