The thought of having to file for bankruptcy is horrifying for most people. Most of us have been conditioned to believe that we should pay all of our debts, regardless of the hardship it causes in the household, and to believe that people that file for bankruptcy are behaving less than honorably. When facing the choice of filing for bankruptcy, many people feel as if they are all alone in their situation and are reluctant to seek help because of their embarrassment at their financial predicament. These people need to realize that filing for bankruptcy is more common than they think and that there is nothing for them to be ashamed of. Here are some of the most common reasons that people file for bankruptcy.
Loss Of A Job
If a person loses their job and has difficulty finding another that pays the same amount or more, their bills and expenses can quickly pile up to an unmanageable amount. If they try to use their credit cards to cover the gap, they can also find themselves facing mountains of high interest credit card debt. This debt spiral will continue until the person finds a job that will allow them to begin paying off this debt or they file for bankruptcy to stop the financial hemorrhaging and the badgering of unpaid creditors.
Unexpected Medical Expenses
Unexpected medical expenses is another reason why many people have to file for bankruptcy. A recent study from Harvard University showed that approximately 62 percent of personal bankruptcies in the United States are due to medical expenses, with 72 percent of those who filed having health insurance at the time of their illness or injury. A single hospital stay can result in thousands of dollars in charges not covered by health insurance, leaving those unprepared for the expense with little choice other than to file for bankruptcy.
Loss Of A Spouse
The loss of a spouse due to death or divorce is already a traumatic experience, but the experience can get even more distressing if the loss of income and the amount of debt carried by the couple is now on the shoulders of one party. In these cases, the only way to protect the assets that the person has accumulated over their lifetime is to file for bankruptcy for protection from creditors. While choosing to file for bankruptcy will not wipe the slate clean, it will give the person a better foundation to rebuild their finances in the future.
According to Lanemegleren, the average American household that has one or more credit cards carries around $16,000 in credit card debt. At any given time the average interest rate runs anywhere from 16 to 19%. Borrowing is not always bad; there are some debts that are considered to be good and necessary.
Borrowing for your college education or to buy a home is considered a sensible option. Just make sure to go only for the best rates and do not borrow more than what you can pay. On the other hand, a bad debt is incurring a debt for something that isn’t really necessary or is beyond your means like using your credit card for expensive meals or luxury vacations. These are expenses that you can instead save for.
Following are some tips to control and manage your personal debt:
- Get a grip on your spending habits.
A lot of people spend a lot of money buying on impulse. List down and analyze your regular monthly expenditures. Cut down on items that are not really necessary and set aside the money you save to pay off your existing debts.
- Settle first the debts that bear higher interest rates.
You can get out of debt more quickly if you prioritize reducing the balance of the credit card or loan that charges the highest interest rate. Just make sure to make at least the minimum payments for the rest of your debts. Once the priority debt is fully settled, focus on the one that has the second highest interest rate, and so on.
- Mind where you obtain credit.
Although it is very tempting to dip into your 401k or borrow against your home, it is a very risky proposition. For one, you could possibly lose your home or you may fall short of your investment target once your time to retire comes.
- Prepare for emergencies.
Make sure you save at least an equivalent of 3 to 6 months’ worth of living expenses to be used for emergency purposes. If you have nothing stowed for emergencies like a damaged car or broken heating system, your finances may be seriously upset.
- Don’t be over eager in paying off your mortgage.
If you have other debts to pay, do not put all your available funds to pay your mortgage off. For one, mortgages usually charge lower interest rates than most other debts. You can opt for refinancing if you wish to lower your monthly payments.
- Never fall for the minimum payment trap.
Paying just the minimum due on all your credit cards will only cover the interest and very little of the principal. Thus, it will take you many years to fully pay all your debts. In essence, you will end up paying a lot more in finance charges than the original amount you borrowed or charged to your card.
- Don’t hesitate to ask for help if you need it.
If you feel your debt is getting out of hand, seek help before it’s too late. You can consult a debt counselor to find ways on how to better manage your finances. Just be wary of unscrupulous debt counseling agencies out there that are only after a quick buck.
Saving money is an important part of financial management, but it is often the most difficult part to accomplish. Without savings, it becomes very difficult to handle unexpected financial issues and people have ended up with significant amounts of debt due to not having savings on hand for a financial emergency. To increase their savings, some people have resorted to some crazy ways to save money, obtaining impressive results from their efforts. Here are some of the best crazy ways to save money.
Use The Internet To Become A Do It Yourself Expert
If you have patience and an internet connection, you can learn how to do just about anything for yourself, saving yourself the substantial sums you would have paid someone else to do it for you. While some consider this crazy ways to save money, many people do not realize that the trend of paying other people to change or fix things for them is a fairly new one historically. In the past, many people did their own home improvement projects, fixed their own cars, and made their own furnishings. The internet has made finding the information on how to perform these tasks simple. By typing what you are looking for into the search bar, you can find a wealth of information on your chosen project.
Grow Your Own Fruits And Vegetables
The cost of fresh fruits and vegetables at the grocery store can take a huge bite out of your grocery budget, but growing what you can at home can considerably reduce the amount that you pay in grocery expenses each month. For another of the best crazy ways to save money, consider turning part of your backyard into a garden where you can plant easy to care for fruits and vegetables, like strawberries, green beans, cucumbers, and zucchinis. See what fruits and vegetables grow best in your regional area and try a few to see which ones will do well in your location. People that live in homes without considerable green space can still grow some items like tomatoes and herbs inside their homes in large planters. The more you can grow yourself, the less you will need to buy at the store.
Teach Your Cat To Use The Toilet
If you want more crazy ways to save money, how about teaching your cat to use the toilet? If you think about it, the cost of flushing a toilet is much less than the amount you spend on kitty litter each month, not to mention the time and energy it takes to clean out the litter box. For between $15 and $30, you can purchase training accessories that will help you teach your cat how to use the toilet instead of the litter box and never have to purchase kitty litter, scooper, or pet waste bags ever again (so the advertisements say).
The credit card industry has become increasingly competitive over the last decade, with many credit card companies now offering reward credit cards with lucrative perks to entice new customers into signing up with them. While the rewards for these credit cards are prominently advertised to potential customers, many of the other features of the credit cards are not as obviously displayed. It is important to review these other features as well before deciding whether the reward credit card is the right one for you. Here are the reward credit card features you should consider before signing up.
Annual And Maintenance Fees
The first thing you should review when signing up for a reward credit card is whether you will be charged an annual fee or account maintenance fees for carrying the credit card. Many reward credit cards charge users an annual fee for the privilege of having the card, with the amount automatically charged to the card every year on the anniversary of its acquisition. Annual fees and account maintenance fees can be expensive, effectively reducing the benefit you get from earning rewards with the credit card. If you will not earn reward amounts higher than the fee amounts with your regular use of the reward credit card, then that card is not the right credit card for you.
Interest Rate For Purchases
Another thing that you should take into consideration is the interest rate you will be charged for purchases when using the reward credit card. Many people make the mistake of assuming that the interest rate for purchases on a reward credit card will be competitive with other credit cards on the market, but this is often not the case. Some credit card companies charge a higher interest rate for their credit cards that offer rewards to offset some of the costs of the rewards they will be issuing to customers. Make sure the reward credit card you are considering offers a competitive interest rate for purchases before signing up for the credit card.
Interest Rates For Other Transactions
Many credit cards have different interest rates for different types of transactions made with the card and reward credit cards are no different. So you are not surprised by a high charge at a later date, review the interest rates charged for balance transfers, cash advances, foreign transactions, and any other types of transactions that can be made with the card. Knowing what these interest rates are will dictate how you can use the reward credit card to your best advantage.