Newsletter
[March 11, 20011]
Getting Through The Ecomonic Crisis
Gone are the days where you could work overtime, buy a house with zero down, sell a house and actually make money, or you didn’t need perfect credit. Incomes are falling, jobs are less secure, home prices are falling, and credit is harder to get. We don’t know when things will turn around, however there are several things you can do to lessen the burden of the crisis and survive.
Reduce your debt.This may sound difficult but it is critical in surviving these economic times. Reducing your debt does several things. First, it takes control from the banks and puts you in control of your money. Second, the less debt you have the less worry if you are faced with unemployment. Third, it will free up money that you can save or put into money making accounts. Payoff what you can and take advantage of programs being offered to help reduce debt, such as a loan modification. Compare the interest rates: are you doing better paying off a high interest debt, or saving in a low interest savings account?
Get rid of the credit cards. This may be the single most difficult thing to do as we have all learned to depend on credit cards when the cash is lacking. This forces you to make a budget and stick to it, there is no room for that vacation you might want to splurge on. It also saves you hundreds or even thousands of dollars spent on interest charges and late fees. Again, it also is one less thing to worry about paying should your income decrease.
Simplify your life and your bills. Living without credit means you must budget, which often forces you to reevaluate what you are spending your money on. Make a list and really track where your money is going. Cut back on the things you do not need such as magazines, cable, a second or third car, fast food and eating out, coffee, etc. Keep the bills you need and alleviate the stress of worrying about paying the mortgage or electric bill by cutting your bills to only the essentials.
Lifestyle change. All of the suggestions in this article require major lifestyle changes to take place. Many of us are used to being frivolous, and change is not easy, but it is possible. Avoid going out to dinner, make your own coffee, carpool, take public transportation, instead of family night out try staying in and watching movies or playing games. The options are endless as to how to not spend money.
Whether you are out of work, getting by, or have not truly felt the effects of this crisis these suggestions will benefit you. They may just help you get back on your feet, stay on your feet, or prevent you from falling at all.
Is Bankruptcy The Best Option?
For many people, reducing debt or getting rid of credit cards is not an easy task and bankruptcy might be the best option to get back on your feet. Bankruptcy has become very useful in helping people get control of their finances and make a fresh start. The stigma of Bankruptcy has all but worn off during the economic crisis and it is viewed as a tool for consumers rather than a crutch.
What does Bankruptcy do? Bankruptcy allows you to eliminate certain debt so that you are no longer responsible for paying it back and creditors can never try to collect those debts from you. Bankruptcy also allows you to regain control of debts that you are behind on such as a mortgage or a car. It creates a payment plan to help you pay off some debt, catch up on other debt to allow you to keep your property, and eliminates other debt.
What does Bankruptcy not do? Bankruptcy does not eliminate certain debts such as student loans, tax debts, and debts owed to most government agencies. Bankruptcy does not require you to lose all of your assets. In certain situations high value assets could be at risk of being sold to pay off outstanding debt, however in most situations this is unlikely. The Court allows many asset exemptions to allow people to maintain their assets. Bankruptcy does not affect your ability to obtain credit again. It will adversely affect your credit score for a time, however this will not last for more than a few years.
What will bankruptcy do for me in the end? Bankruptcy will alleviate most if not all of your debt depending on the type of debt you have. It allows you to start from scratch and eliminate or seriously reduce your debt to income ratio. It also gives you the opportunity to rebuild your credit. The goal of bankruptcy is to provide consumers with a fresh start.
Is Bankruptcy right for me? The decision to file for Bankruptcy is a very personal decision and should be well thought out. There are many questions surrounding the process, which type of bankruptcy is best for you, and whether it is the best option given any one person’s specific debt situation. If Bankruptcy is something you have thought about or if you have already determined you would like to explore it, be sure to discuss your situation with a professional. It is critical that you get answers to all of your questions, understand the different types of bankruptcy and what would benefit you the most, and have an understanding of the process and how it will affect you personally.
[November 11, 2009]
3 Reasons Not To Use Pre-Printed Legal Forms
There have been a growing number of websites and stores that provide pre-printed legal forms to consumers ranging from creating a will to creating a business. While these appear to be inexpensive, fast, and accurate resources, there are a number of problems with using pre-printed legal forms. Legal documents are the tools we use to protect our rights and our assets. It is imperative that these tools are utilized properly. There are a number of issues to consider when thinking about using pre-printed forms.
The accuracy and enforceability of pre-printed forms should be the number one concern when considering whether to use them. Pre-printed forms are often very generic and do not address specific issues that may arise when drafting legal documents. Each state has their own set of rules regarding various legal issues. The variations in state law may appear to be minor differences, but often times those variations are the difference between an enforceable document and a useless document. Pre-printed legal forms do not accurately reflect these variations and could lead to a bad document that has no legal effect.
Each individual has different needs to address when drafting documents. Pre-printed forms do not address those needs. Everyone’s goals are different when drafting contracts, wills, or any other legal document. The generic language of a pre-printed form does not address your specific needs and may not adequately protect your rights or accomplish your goals.
The origin of pre-printed forms is unknown. Pre-printed forms do not tell you who created these forms or whether they were created by a legal professional. Only lawyers have the skill and knowledge to create an accurate and enforceable document. Pre-printed forms do not disclose where the document came from or whether the person who wrote it has any legal background.
The second most important issue to consider when thinking about using pre-printed forms is that you have no one to fight for you if the document is challenged. These forms often come with disclaimers and no warranties. Disclaimers should immediately raise a red flag. The maker of the document has disclaimed any responsibility over mistakes, they have not addressed your specific needs, and once you buy the form they are completely immune. Having a lawyer draft any documents avoids this problem. You know it will be done correctly, you have someone to fight for you, and you have someone to take responsibility for the drafting of the document.
The third reason pre-printed forms are not a good idea is that they may cost you more money down the road. Using pre-printed forms may seem like a way to save time and money, but in the long run it could prove more costly. If a document is challenged or there is a risk that it is unenforceable, the costs of dealing with it in Court can be extremely expensive and time consuming. Taking the time to have an attorney review your individual needs and tailor a document at the start can save you or your family costly legal expenses down the road.
Legal documents are a vital tool to protect many areas of our lives, areas that affect our families, our livelihoods, and our hard earned wealth. It is important that those tools are used accurately and to our advantage to adequately protect and preserve the things we have worked hard to earn and the people we earn them for.
[August 10, 2009]
In a depressed economy, people actively seek out ways in which to reduce their spending, cut their expenses, and save money any way they can. This is a normal, and for the most part, constructive, practice. But where are you looking for budget cuts? Are you getting rid of luxuries that, believe it or not, you can do without? Or are you cutting out essential protection that you’ll regret not having? It seems like we sometimes incorrectly value the benefit we receive from a certain expenditure.
An example is telling: 56% of Americans pay for cable television, but only 53% have life insurance. Is your favorite show more important than your financial well-being? Probably not. How about this: only 45% of Americans have a will; that’s 11% less than have cable!
The point is, we all feel the need to cut expenses right now. But people should be cutting the extraneous fluff, rather than the necessities that will protect them and their loved ones now and in the future. Let’s take a look at a few of those things:
Retirement Planning
Many people tend to stop throwing money into their retirement accounts when they see those numbers dropping in the stock exchange, and with good reason: we need to be very careful about our investments right now. But people also tend to forget that when share prices drop, that monthly deposit is buying more shares. When share prices go back up (and they will), you’re worth even more.
On the other hand, the longer you go without building your retirement savings, the worse your situation may be upon retirement (or, the longer you’ll have to wait to retire). It makes sense to proceed with caution in volatile economic times; it makes little to no sense to cut this type of spending in order to save money in the short run.
Estate Planning
Too often, a person looks at a will, or a medical directive, or a trust, as expendable. Fifty-five percent of America has no estate planning in place! But these people, who feel that they don’t own enough to justify a will, or that their beneficiaries obvious so no planning is needed, fail to account for many other issues: do you have funeral arrangements to specify? Do you need tax planning to ensure your beneficiaries get the most they can? Do you have children who need a guardian? What if you’re hurt in an accident and can’t make your own decisions—does someone know what you want done? Do they have the authority to get it done? These questions are far too important to ignore just to save a few hundred dollars. When you’re looking to cut costs, it isn’t wise to cut the cost of future planning and security.
Life Insurance
Life insurance is another item easily ignored. With no immediate benefit, and no immediate loss, it’s easy to forego this type of spending when money gets tight. But should you? Life insurance isn’t just a tool to get some money to your loved ones when you die. Properly used, it can be a retirement planning vehicle, an emergency fund, a college savings account, and more.
There is no doubt people are looking for ways to save money. But are those people also thinking ahead when doing so? Some things we see as necessities aren’t so at all: fancy cars, premium cable channels, or dinners at nice restaurants. Some things, like proper planning and protection, get thrown to the wayside. When looking for a way to tighten your belts through these down times, get the advice of your accountant, your attorney, your insurance agent, your investment planner, or another professional adviser, before thinking that your personal protection is an expendable investment.
Carucci Di Lorenzo, LLC, offers free initial consultations with the exception of domestic cases.
