by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Sometimes things happen that we have not planned for, (such as medical emergencies, loss of overall household income, excessive credit spending etc.) all of which lead to very high expenses and we have no idea how to stem the tide. Month after month, our bills become steadily bigger even as our income remains static.
This is truly a worrying development, and therefore before we know it, we are deeply in debt and there seems no way out of the quagmire.
But, there is light at the end of the tunnel. With a bit of fiscal discipline you just might be able to cope with those troublesome runaway expenses. Here are a few ideas:
· The ‘top three expense’ method
Runaway expenses are an acquired trait that, given time, can be dealt with effectively. It is simply a matter of finding out just what you biggest money drains may be.
As a rule, few people include basic necessities as their biggest expenses. Mostly the money is spent on leisure items and entertainment such as eating out, clubbing, and buying extra clothes, electronic appliances and the list goes on. Once you have figured out which categories are unimportant and yet a big drain on your resources, simply curb spending in those categories and before you know it, your runaway expenses would be firmly in control.
· Understand the importance of savings
Runaway expenses exist when we spend all (or even more than what we earn) on what ever we deem necessary.
The opposite of spending is saving i.e. spending less than we earn so as to create a ‘nest egg’ for any future eventualities. However, saving is easier said than done. If you think that you would be able to save any residual leftover amount from your monthly income, think again. If you are truly serious about saving your earnings, then deduct a certain amount at the ‘beginning’ of the month rather than waiting for the month to end. This savings amount should be separated from your regular expense money and preferably invested.
· Involve other people in your game plan
Many times curtailing excessive spending is a collective rather than an individual effort. If you feel that you cannot do it alone, it is always better to involve your friends, family and other people you trust into this initiative. Talk to your kids and explain to them why it is not possible to go out for outings as much as before. Take your spouse into confidence. And, if you are part of a free wheeling overspending crowd that laughs at budgets and savings plans, may be you should consider spending less time with them.
· Be wise – prioritise
This age old adage is still as refreshingly applicable today, as it ever was before. You simply have to set your priorities straight if you are ever going to get the better of your runaway expenses. Your hard money would continue to bleed if you decide that you simply must have that brand new smart phone that has been recently launched into the market. Such spending habits, when your financial means are clearly not enough to support them, could spell disaster in the long run.
by admin | Consumer Proposal, Credit Counseling, Uncategorized
It is an axiomatic assumption that large families tend to have larger budgets. In fact the larger the family the more its expenses. Moreover, before you know the runaway expenses may well spell financial ruin for you and as a direct consequence, your loved ones will be affected as well. This is why it is imperative to have a properly planned budget in place so as to ensure that you are safe from any unforeseen financial emergencies in both the short as well as the long term.
1. Cash is in
Its altogether very tempting to use credit to buy things that we can’t afford at a particular point in time. After all the ‘buy now pay later’ aspect of credit cards make life easy, right? Wrong! Basically, using credit cards to buy stuff you cannot afford effectively means you just might end up driving yourself into penury. If you are not in a position to afford something on your current income, buying the same thing and then paying interest to your credit card service provider is certainly not a good idea.
In order to avoid cards, make sure you do not carry them with you in the first place.
2. Categorize your budgets
Alternately, you may draw your salary at the beginning of the month and then allocate portions of that amount to specific mini budgets such as grocery shopping, children’s entertainment, eating out etc. Once the amount for that mini budget has been spent, try not to use amounts meant for other contingencies to ‘refresh’ that particular budget.
3. Eat at home
Eating out arguably makes one of the biggest dents on any large family’s budget. To curtail these expenses involve your children when you go grocery shopping and (within limits) allow them to buy what they like. You may also consider making weekly lunch and dinner menus with individual family members being allowed their own choice of a meal on specific days. This would not only be healthier for the overall fitness of your family, but would give your wallet some relief as well. Moreover, it would cement your family’s ties as well, if all meals were to be taken together.
4. Teach your children to save
Kids as young as seven or eight may be taught the value of saving so that they do not treat you as an unlimited expense account. You may give them a weekly allowance and make them responsible for their own entertainment expenses. You might also encourage them to keep an ‘expense journal’ so that they are able to realise just when and where they have been spending their money.
5. Set priorities
Make sure that you have your priorities right. Basic household expenses such as energy bills, children’s education and groceries are your first and foremost priority followed by contingency saving. Only after the basic requirements have been met, should you feel free to go and splurge on that giant screen LED 3D TV or other consumer items of a similar nature.
by admin | Consumer Proposal, Credit Counseling, Uncategorized
5 Important Points to Consider when Saving for Emergencies
Emergencies have a tendency to hit us like a bolt from the (proverbial) blue and they are unheralded as they are unexpected. This is why we should always have a contingency plan in place for such unforeseen eventualities. There are certain steps we may take to ensure that we are never caught ‘wanting’ just when our need is dire.
1. You must have an element of (financial) balance in life
Saving can be defined as “Putting aside some money for utilizing that amount later”. It is always important to save at least a small part of your monthly earnings for the proverbial ‘rainy day’. If it is not possible to save hefty amounts at once, then try to save at least ten to fifteen percent of your salary/income day in day out. However, it is imperative that the amount saved is done so with absolute consistency. Even if you manage to save up to only fifteen percent of your total earning every month without using your original savings, (thus defeating the purpose of the whole exercise) then within a short period of time you would be able to accumulate a fairly big amount of money that you may then be able to use for any eventuality.
2. Always keep a strict watch over your spending habits
It is important that you keep a strict eye on your overall spending habits and pre-planned budget for your weekly, monthly and even yearly expenses. The weekly and monthly budget would be for day to day needs while the yearly budget would account for any big expenses you have in mind. A portion of your budget must be dedicated to ‘contingency planning’ and moreover, this budget must be rigidly followed so that you are well placed to take care of any pressing need that may arise.
3. Expenditure Journal
You should keep a monthly expenditure journal so as to be able to understand your own spending patterns for the duration of the month and how best to manage your budget.
4. Don’t try to keep up with the Joneses
Thanks to runaway consumer spending, we tend to copy others more well off then us irrespective of our monetary stability (Or lack of it thereof). If your best friend has just purchased the latest model smart phone, then let it be. It should not be a motivating force for you to set about acquiring one on your own if you cannot afford it. Remember, in case of an emergency you would not be able to sell that smart phone at its original cost but may well end up recovering only a small part of your initial outlay.
5. Understand the gap between dreams and reality
It is always sensible to understand your own financial limitations. Remember dreams are unending and they have tendency of being markedly bigger than our incomes. Trying to fulfill each and every dream would inevitably mean a lifetime of being indebted to others and in effect being helpless in case of any financial emergency.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
How refinancing can help modify your house
Basically refinancing your mortgaged home denotes the pay off, of loan and its replacement by another loan. There may be many uses for refinancing such as taking advantage of LIRs (lower interest rates) utilizing the huge equity of your home to buy something of high value, or to allow massive renovations to your house in order to turn it into a dream home.
Broadly speaking refinancing should not be undertaken for small projects such as putting up a spare window or replacing a warped door or covering the gate with a fresh coat of paint but for bigger projects. These may include putting up a sunroom near the front garden or creating a spare bedroom or completely overhauling your house. This would have the dual purpose of not only allowing your house to look better and be a more comfortable for you and your family but it would also greatly appreciate the overall value of your property.
Such refinancing may allow the homeowner a substantial amount of funds for large scale home improvement projects. Once the prospective home owner has been declared to be eligible for refinancing by the financial institution, (this outcome may be dependent on his credit history) they may potentially be able to refinance a sum of money that may even be greater than the original mortgage amount they had acquired initially. This excess liquid cash may then be utilized for any costly home improvement project.
To get the most value for the funds you have acquired through refinancing, it is advisable to go for only those renovations to your house that increases the overall value of the property. Since not every home improvement plan has the potential to increase the value of your property so choose carefully as to what works best for you. (Bathroom, kitchen and sunroom upgrades are generally considered very popular in Canada these days)
Important points to consider before availing the refinancing option
However, the refinancing option for major home improvement upgrades should be undertaken only after careful deliberation due to a variety of reasons:
- If you have utilized a ‘cash back’ option in addition to your refinance, your cumulative debt may actually increase and in the long run you just might end up paying markedly higher monthly repayments.
- You should also keep in mind that home renovations are no guarantee that your property value might increase and once you have renovated your house you would be selling it at a profit and moreover, will also be able to pay off all your debts.
- The real estate market tends to be mercurial and subject to change with Canada being no exception to the rule. Should property prices register a steep decline once you have availed the refinance facility, you would be paying off more then you could earn from selling your home
- It pulls equity out of your home, thus effectively eroding your investment.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Going bankrupt is a tough time indeed for anyone and it becomes even more stressful when a bankrupt individual decides to try and get a job in order to make his financial position more tenable. There are a veritable host of questions in his mind that might make the prospect of future employment quite daunting. However, it is not as bad as it looks. Here is why:
Effect of Bankruptcy on Job Applications
When it comes to government employment, no agency in Canada may consider your bankruptcy when deciding whether to hire you. Unfortunately, this rule does not apply to the private sector. And it is certainly possible that a prospective employer in the finance industry would be wary of hiring you especially when it comes to dealing with sensitive tasks such as making or supervising the disbursement of payrolls, general accounting and the like.
Honesty is the best policy
The key thing is to be upfront about it and to refrain from hiding your financial history if your prospective employer asks you. Rather than ‘fudging’ the question or out rightly lying (an almost certain way of losing out on your prospective job just when you need it the most) it is always better to speak the truth. If not for any other reason than the simple one that many prospective recruiters conduct a summary credit check on almost all would be employees as a matter of course. All details of your bankruptcy would be shown in that report and if you have lied, it would seriously tarnish your reputation as well as any chances of gainful employment in that organisation, since its altogether very easy to find out any information about your bankruptcy from your credit report.
While it is certainly true that all potential employers do require your specific permission before they can extract details of your credit history, however not giving consent to access such information would almost certainly compel any prospective recruiter that you have something to hide and so deny you any employment opportunities in that organisation. Therefore, it would always be in your own interest to be honest and up front about your bankruptcy during the application process.
Losing a job due to bankruptcy
As a general rule being bankrupt does not automatically mean that you would end up losing your job due to the fact that your personal financial history should not have any visible affect on your work. Your employers have no legal ground to dismiss you per se.
However, that does not always hold true and there are certain cases where your financial history may prove detrimental to your current and future job prospects, such as:
- Being employed in the financial industry including banks and other money lenders that deal with their clientele’s money (and therefore trust)
- If you are a credit councillor or an insolvency and bankruptcy lawyer, your current employers may not wish to allow you to continue in that position.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Not all of us have the financial wherewithal to stay out of debt. Sometimes we simply want more then we earn or just want to impress our neighbours, friends or our spouse and so we spend more than we are capable of paying back, or alternately make financial decisions that lead to disasters. Under the circumstance we have to understand how it would affect our better half, both in terms of legal ramifications as well as the emotional toll on the marriage itself. While on his or her part, the spouse has to understand the tremendous trauma you are going through when you are on the verge of declaring bankruptcy and losing all of your property.
Legal ramifications
If you were to file for bankruptcy in Canada, just remember that doing so will ‘not ‘directly affect your wife, husband or common law partner. This is primarily due to the fact that your loans and bills are essentially ‘your” loans and the “In sickness and in health till death do us part” bit of your marital vows does not make your spouse liable to pay your debts. Once you declare bankruptcy your personal debts would be recovered from you through your property and your spouse will not be legally responsible for them.
It is however, a fairly common misconception that spouses are somehow responsible for each other’s debts. This is quite simply not true in spite of collection agents telling you that if you do not ‘pay up’ they will approach and extract the required amount from your spouse. This is nothing but a blatant ‘scare tactic’. You and you alone are wholly and solely responsible for your own personal debts.
However there is an exception to this cardinal rule and that is if it’s a ‘joint loan.’ Or alternately if your wife, husband or common law spouse has signed on as either a guarantor or a co-signee to the loan in which case he or she is also legally responsible for the debt as well. The loan may be either a bank loan or a credit card bill issued to the same account. However, in case of a supplementary credit card issued to him or her under your instructions and on the basis of your personal account than you will be responsible for paying the bills accrued on that particular card.
Movable and immovable assets
Quite apart from debt, once bankruptcy has been filed, a key problem (that a married couple may potentially face when either one of the spouses becomes insolvent) is the evaluation of who holds which assets. If your spouse holds property in his or her name only than it will not become part of bankruptcy proceedings. For example if your husband’s home is in his name only, then it would be party to bankruptcy proceedings provided you have filed for bankruptcy rather than him. However, if the property is in his name and moreover, he has become insolvent and filed for bankruptcy than he might lose the property, even though you would also be living in the same house.
