How To Reduce Your Debt

Unless you live on Mars, you likely have outstanding debts to pay. You can throw the bills into a garbage can, but that won’t make them go away and you can’t simply wish them away. But you can pay it down with determination. Here are but a few ways to reduce your debts:

1. Pay more than the minimum
First, break the habit of paying only the minimum required each month. Paying the minimum, usually 2% to 3% of the outstanding balance, only prolongs the agony. Besides, it’s precisely what the banks want you to do. The longer you take to repay the charges, the more interest they make, and the less cash you have in your pocket. Don’t play their selfish game.

Instead, bite the bullet and pay as much as you can each month. If your minimum payment is $100, double that to $200 or more. Examine your normal expenses, you can find the money. We all have “luxuries,” and you know what yours are.

2. Snowball your debt payments
Take a long, hard look at all your credit cards. Pay particular attention to the one with the lowest interest rate. Have you reached the maximum limit on that card? If not, consider transferring a higher-interest bill to that one. Many credit cards permit this, and it’s positively foolish not to trade an 18% debt for one at 12%.

3.  Borrow against your life insurance
Do you have life insurance with a cash value? If so, borrow against the policy. Yes, you’re borrowing your own money. But the interest rate is typically well below commercial rates, and you can take your time repaying the loan. Do repay it, though. If you die before it’s repaid, the outstanding balance plus interest will be deducted from the face value of the policy payable to the beneficiary

4. Finagle family and friends
Perhaps your family or friends could lend you the money. Who else knows, trusts, and loves you like they do? Unless you’re really the black sheep of the flock, chances are you’ll get a very favorable interest rate. They may even tolerate a late payment or two. But if you want to maintain the relationship, it’s best to keep things on the straight and narrow by using a written agreement. You should clearly establish the interest and repayment schedule in writing to avoid misunderstandings and hard feelings. And it goes without saying that you must be scrupulous about adhering to that schedule. Otherwise, you can forget the family reunions and birthday presents.

5. Borrow from your 401(k)
Do you participate in a 401(k)qualified retirement plan at work? Most 401(k) plans have a feature that lets you borrow up to 50% of the account’s value, or $50,000, whichever is smaller. Interest rates are usually a point or two above prime, which makes them cheaper than that found on credit cards. Not only is the interest typically much lower than that on credit cards, the best part is you pay it to yourself. That’s right, every dime in interest paid on a 401(k) loan goes directly into the borrower’s 401(k) account, not the lender’s. Check with your accountant or financial adviser for more detail for any possible drawbacks.

6. Renegotiate terms with your creditors
OK, you’ve done all you can. Savings are gone; relatives have been tapped out; you don’t have a home or 401(k) to borrow against. You feel like you’re against that proverbial wall. The money just isn’t there. Is bankruptcy the only way out? No way. Try pulling an ace out of your sleeve prior to taking that step. What ace? The threat of bankruptcy, of course.     Let your creditors know your situation. Tell them that if you are unable to renegotiate terms, you’ll have no other recourse but to declare bankruptcy. Ask for a new and lower repayment schedule; request a lower interest rate; and appeal to their desire to receive payment.

7. As a last resort, file bankruptcy
What if you decide you can’t pay down your debt using any of the methods listed above? What should you do? The absolute last resort is bankruptcy. Although we firmly believe everyone has a moral obligation to repay their debts to the utmost of their ability, there are times when repayment may be impossible. In those cases, bankruptcy may be the only available course of action. Nevertheless, be aware of the significant drawbacks.

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Easy Ways To Buy A House In Foreclosure

One person’s misfortune can become someone else’s blessing – and that’s particularly true with foreclosures on residential property. When homeowners are unable to keep up with their mortgage payments, lenders foreclose and take the house back. But the lender doesn’t want the house. It wants the money it loaned for the purchase. The only way it can get that money is to sell the home to someone else.
Get Pre-approved for a Mortgage
When you bid on or make an offer on a foreclosed home, it’s a good idea to line up your financing ahead of time. The foreclosure process generally ends with the house being auctioned to the highest bidder. You’ll need cash for this type of sale.
The lender who foreclosed doesn’t automatically finance a new mortgage for you if you buy the house. If you buy from the owner or the lender during or right after the foreclosure process, you’ll need preapproval for a mortgage.

Buying a House Before Foreclosure

Foreclosure is a long, drawn-out process. The house you want may be scheduled for auction in approximately a month’s time, if the owner does’t come up with the past-due payments. In this case, you can approach the homeowner directly and make an offer before the auction takes place.
If your offer covers the existing mortgage, you can add a cushion so the owners have enough money to relocate. Even added together, this amount might still be below market value.

Buying a Home After Foreclosure

Lenders don’t have to let the house go to the highest bidder at auction if the bid is less than the mortgage balance. When this happens, the lender keeps the house. You can make a purchase offer to the lender, but it will generally want market value for the property, not just the amount of the outstanding mortgage.

Set Aside Money for Repairs

Whether you buy the home from the lender, the owner, or at auction, you take it in “as is” condition. If the house you buy needs repairs, neither the owner nor the lender will make them. It can be difficult to know how much to set aside for repairs if you buy at auction, because you may not have a chance to inspect the house first.

Be Wary of Liens on Property

If you buy at auction, and if one of the owner’s creditors took a lien against the property, you’re usually responsible for paying it after the sale. The lien transfers to you as the new owner.

A Foreclosure Lawyer Can Help

The law surrounding the purchase of foreclosured residential property is complicated. Plus, the facts of each case are unique.  For more detailed, specific information, please contact our office.

Pick The Right Insurance Policy

Owning a home may be the American dream. But it’s also a mighty valuable asset, often filled with some expensive possessions, which you will want to protect in case of fire, theft, lawsuits and more.
Enter homeowner’s insurance, which is a type of property-casualty insurance. The property insurance covers your home and its contents. The casualty insurance protects against legal liability caused by injury to other people or damage to their property.  Now, do you have enough coverage?
Grabbing An Umbrella Policy
If you’ve lived in your home for five years or more and haven’t reviewed your coverage, you may be underinsured against a major loss. It’s easy to fix this. First, read the coverage limits when your policy comes up for renewal each year. If it would be impossible to rebuild your house for the amount specified in the policy, call the insurance company and have the coverage increased. Since it may cost more to rebuild your home than its current market value, insure it for replacement cost. While the market value of your home includes the land, don’t include land in the replacement cost.
A yearly insurance check-up should also account for any major purchases or additions. If you have put in a new kitchen and appliances, added a room to your house or purchased a large home-entertainment system, you may want to increase your coverage. You may also want separate riders to cover expensive jewelry or artwork. But since the purpose of insurance is to prevent a financial disaster and to cover every small loss, consider whether you can afford to replace these items out-of-pocket.
All homeowner’s and auto policies come with liability coverage to protect against judgments arising from injury to others on your property or in an auto accident. But standard liability coverage, even if it’s $300,000 to $500,000, will not be enough to protect against a court judgment that could be $1 million or more. For this, you might want an “umbrella” or “excess liability” policy. According to the Insurance Information Institute, you can typically buy a $1 million umbrella policy for about $150 to $300 a year. The next million will cost about $75 and about $50 for every million after that. The cost may be higher in large metropolitan areas. You will likely have to buy the umbrella policy from your existing homeowner’s or car insurance company.

Credit Card Fraud On The Phone

Credit cards: Americans love them and so do the Scam Artists. With the convenience of having a credit card comes some risks – credit card fraud. The following scam has been around for some time and continues to defraud people
The Scam
You receive a call from a person claiming to be employed either at Visa or MasterCard. The caller claims to be calling from the Security and Fraud Department and tells you that your card has been flagged for an unusual purchase pattern. The caller then cites a particular purchase (typically under $500) and asks if you really purchased the questionable item. When you respond, “No”, the caller then promises to credit your account with the amount and begin a fraud investigation. The caller typically asks certain identity question, such as address and more importantly, your credit card security number (the 3 or 4 digits in the back of the card).
The caller succeeds in obtaining the security information on your account and then uses that information to make a purchase. Unless you know this is a scam, when you get your credit card statement and see the fraudulent charge, you assume that the investigation is under way and is being taken care of. Meanwhile, this is all a scam. The purpose of the scam is to get that 3-4 digit security number.
How Can You Protect Yourself?
With this particular scam, don’t give out any information over the phone unless you call the number provided in the back of your card. If you do receive a phone call reporting a fraudulent charge, hang up and call the number provided on your card.
If you have already fallen victim to this or a similar scam, contact your credit card company. Visa and MasterCard have also been encouraging defrauded consumers to file a police report.
Credit Card Fraud Prevention Tips
Credit card fraud is a serious crime as well as an inconvenience. Follow these tips so you may be able to avoid scams and fraudulent charges.
1.  Keep an eye on your credit card every time you use it, and make sure you get it back as quickly as possible.
2.  Be very careful to whom you give your credit card.
3.  Don’t give out your account number over the phone unless you initiate the call and you know the company is reputable. Never give your credit card information out when you receive a phone call. For example, if you’re told there has been a “computer problem” and the caller needs you to verify information. Legitimate companies don’t call you to ask for a credit card number over the phone.
4.   Never respond to e-mail messages that request you provide your credit card info via e-mail, and don’t ever respond to e-mail messages that ask you to go to a Web site to verify personal (and credit card) information. These are called “phishing” scams.
5.  Never provide your credit card information on a Web site that is not a secure site.
6.   Shred all credit card applications you receive in the mail.
7.   Don’t write your PIN number on your credit card – or have it anywhere near your credit card (in the event that your wallet gets stolen).
8.   Never leave your credit cards or receipts lying around.
9.   Shield your credit card number so that others around you can’t copy it or capture it on a cell phone or other camera.

10.  Keep  a  list  in  a  secure  place  with all of your account numbers and expiration  dates, as well  as  the  phone  number and address of each bank that  has  issued you a credit card. Keep this list updated each time you get a new credit card.

11.   Only  carry  around credit cards that you absolutely need. Don’t carry around extra credit cards that you rarely use.
12.   Open  credit  card  bills  promptly  and  make sure there are no bogus charges. Treat  your credit card bill like your checking account – reconcile it  monthly.  Save  your  receipts  so  you  can   compare  them  with  your monthly bills.

13.  If  you find any charges that you don’t have a receipt for – or  that  you don’t  recognize – report  these  charges  promptly  (and  in writing)  to the credit card issuer.

14. Always void and destroy incorrect receipts.
15. Shred anything with your credit card number written on it.
16. Never  sign  a  blank  credit card receipt. Carefully draw a line through blank   portions   of   the   receipt   where   additional   charges   could   be fraudulently added.
17. If  there  is  a  carbon that is used in a credit card transaction, destroy it immediately.
18. If you move, notify your credit card issuers in advance of your change of address.

Protect Yourself From Identity Theft

Everyone should be worried about their identity being stolen. You may think that an online thief wouldn’t bother with you. How could he when you are armed with information like your social security number, bank account number, personal security code or your mothers maiden name. However, in just a short amount of time a whole new “you” can be created out of thin air, complete with credit cards, mortgages and expensive purchase. Only this “you” fails to pay “your” bills and is on the road to financial ruin.  And all of this can happen without your knowledge. Even the most simplest of identity thief’s will change the addresses on your bills, so they’ll never be sent to you. And the only warning you’ll get is when the creditors come knocking on your door. By then the thief could have used your stolen identity to charge thousands of dollars of purchases and ruined your good credit scores

Could you become the next victim of a stolen identity?

Whether you know it or not, your PC is storing all kinds of valuable information about you. And if a hacker were to attack, he might get a hold of your sensitive personal information like your social security number, your bank account, your passwords and more. Armed with these details you could easily become the next case of a stolen identity. Simply shredding your mail and your financial statements is NOT enough. Most think of the physical ways a thief could steal one’s identity, as when one’s wallet or sensitive documents are stolen or misplaced. But this is not the only way to become a victim of stolen identity.

How to prevent a case of an online stolen identity?

Protecting your personal information while you’re on the Internet is one of the most crucial steps you can take in preventing identity theft.  Beware of emails that come from a financial institution you trust (like your bank) that ask you to click on a link to update your account information. DO NOT enter any personal information like your social security number, back account number or passwords. DO NOT enter your personal information on a website that is not secure.

What if your identity has been stolen?

If you believe that you are a victim of identity theft or fear that you may become one — for example, you lost your wallet, gave personal information to a stranger, or had your house burglarized — take these steps immediately:

1 . Contact the Credit Bureau

2.  Call the police

3.  Fill out an Identity Theft Victim’s Complaint and Affidavit. (

4.  Change your PINs.

5.  Deal with debt collectors.

6.  Contact the local postal inspector

7.  Contact the Social Security Administration (SSA)

8.  Contact your state’s department of motor vehicles.

What You Can Do When Your Health Policy Insurance Is Cancelled

News that health insurers are ending the policies of what might be millions of Americans has rattled consumers and added to the debate over the health care law. If you or a family member has been notified that your individual policy is being canceled at year’s end, you may be stunned and upset.

Health and Human Services Secretary Kathleen Sebelius said in testimony that the law generally didn’t require insurers to discontinue plans that were in effect at the time of the law’s enactment in March 2010.  No one knows how many of the estimated 14 million people who buy their own insurance are getting such notices, but the numbers are substantial. Some insurers report discontinuing 20 percent of their individual business, while other insurers have notified up to 80 percent of policyholders that they’ll have to change plans.

Here’s a guide to help you understand the bigger picture, including why your premiums and benefits are likely to change next year and what you should consider as you shop for a new policy.

Why are these cancellations happening?    The health care law targeted the so-called individual market because it didn’t work well for many people who don’t get coverage through employers, particularly those who were older or had health problems. The latter often were rejected for coverage, were charged more or had their conditions excluded from coverage. Some policies provided only the barest of coverage when someone did fall ill.

Starting Jan. 1, insurers no longer can reject people who are sick or charge them more than the healthy under the Affordable Care Act. They also must beef up policies to meet minimum standards and must add benefits such as prescription drug coverage, maternity care and mental health services.

If you got a cancellation notice, most likely your plan didn’t meet all the new standards. Some policies that fail to meet the law’s standards may still be sold if the insurer decides to continue them and if they’re “grandfathered,” meaning that you purchased one before March 2010 and neither you nor the insurer has made any substantial change since then. Adjusting an annual deductible, which many people do each year to keep premiums down, is a change that could end grandfathered status.

How are insurers picking the policies to discontinue?   Some consumers fear they’re being targeted because they’re unhealthy or otherwise unprofitable for an insurance company. But insurers say they’re ending policies that don’t meet the law’s standards or weren’t grandfathered.

My insurer says that if I renew before the end of the year, I can keep my current plan. What does this mean?   In some states, insurers are offering selected policyholders a chance to “early renew,” meaning they may continue their existing plans through next year, even if they don’t meet all the law’s standards. If you choose this option, your premium might still go up, but the cause would be medical inflation, rather than the need to add benefits because of the health law. Not all states allow early renewals.

Why are premiums changing?   Under the old rules, insurers could decide whether to accept you, and how much to charge, based on answers to dozens of medical questions. Starting Jan. 1, insurers no longer can charge women more than men, or reject people who are sick or charge them more. They’re also adding new benefits.

As they drew up the rates for 2014, insurance firms had to make educated guesses about how many customers would stay, how many new ones they would attract, and what the health conditions of those new members might be. Actuaries say that it is possible that older buyers or those who had above-average health problems may find their premiums going down. Younger or healthier people, on the other hand, may find premiums going up, sometimes sharply.  Under the new rules, consumers “are not paying based on their own health status, but an average health status,” said Robert Cosway, an actuary with the consulting firm Milliman.

I’m healthy. Why do I have to pay for people who are sick?   Except for a fortunate few, everyone is likely to develop some kind of health problem or face an accident sometime in his or her life. Policy experts and regulators say insurance works best when it spreads the risk across a large group of people. Your house may not burn down this year, but you pay for insurance coverage just in case.

What should I do now that I’ve received a cancellation notice?  Experts say people should scrutinize the terms of their soon-to-be-discontinued policies and compare them with what new policies offer. The monthly premium is just one factor in cost. Also note the deductible. Is it per person? What’s the maximum deductible if two or more family members fall ill in the same year? Finally, note the annual out-of-pocket cap, which is the maximum you’d pay in deductibles and co-payments for medical care during the year. An independent broker can also show you plans from various carriers.

Ways To Reduce Your Credit Card Debt

1. Take stock. Before you start reducing your credit card debt, know where you stand. A lot of people will say they’ve got a certain amount of debt, let’s say $10,000, when in reality, it’s $15,000 or $18,000. You’ll never hit your target if you don’t know where it is, so be brutally honest with yourself.    Action plan: Write down the debt, and the interest rate, on every card you have.

2. Improve your rates. The quickest way to save big on your credit card bills is to negotiate a lower interest rate. If you can shave off even a percentage point or two, you can save hundreds of dollars as you pay off your debt. A simple phone call and a polite request may be all it takes. While your credit score will play a large role in whether or not you get a rate cut, it’s not the only factor. Every lender has their own approach to this issue. It never hurts to give it a shot.    Action plan: Call up each credit card company and request lower interest rates.

3. Track your costs. Write down all your regular, committed expenses (mortgage, utilities, insurance, car payments, minimum credit card payments, phone, gym, cable, etc.), and track other variable expenses such as restaurant meals, entertainment and travel. This will serve as the foundation to your budget.   Action plan: Study up to a year’s worth of credit card bills and bank statements to get an accurate sense of your monthly spending, and keep tracking your expenses with a notebook or financial software.

4. Create a budget.  It’s time to take an ax to some of those expenses. The key is to be realistic: You’ll have to make some sacrifices, but you don’t need to live on bread and water. “Cutting back can be more effective than cutting out,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, a leading accrediting agency for credit counseling firms. “It’s hard to adjust your lifestyle too dramatically, and often, little adjustments can add up to big savings.” Cutting out a single pizza dinner each week, ratcheting down your gold-plated cable plan and changing your thermostat by a few degrees can give you the jump start you need. Be sure to give yourself a bit of breathing room in your budget in case an unexpected expense pops up.   Action plan: Write down three ways you can cut back immediately, and cancel or downgrade some services. Divide your monthly discretionary budget into weekly allotments so you’ll have a better handle on whether you’re staying on track.

5. Choose your payoff strategy. There are two common credit card payoff strategies. The first is to use any extra cash into the highest-interest card while paying the minimums on the others.  A second strategy is to pay off your card with the lowest balance first while continuing to pay the minimums on the others. Though this is not the most cost-effective way to banish your debt, it’s the fastest way to eliminate debt on a single card, and it can be a psychological boost to eliminate a bill for good.   Action Plan: Choose your strategy, then rank cards in the order you’ll pay them off.

6. Stash your plastic. Research has shown that people who chose to pay by credit card rather than cash, can spend twice as much than those who pay by cash.    Action plan: Store your credit cards where you won’t have easy access to them, but don’t cancel them. Plan to pay in cash whenever possible.

7. Find your motivation and support. Create concrete goals to stay focused. Maybe getting rid of debt will allow you to save for a down payment on a house, go on a dream vacation or stop worrying about every bill that hits your mailbox.   Action plan: Write down your goals and keep them near you. If you get tempted to overspend, take a look at them to remind yourself of the bigger picture.

8. Track your progress. While you don’t want to spend every day fretting over your bills, keep an eye on your spending. Revisit your progress every few months. You don’t want this to consume your life. It took you awhile to get into debt, and it’s going to take you awhile to get out of it.   Action plan: Put reminders in your calendar to check up on your finances. Keep the page with your starting balances, and compare them to check your progress.