Category: Finance

Importance in Creating a Home Budget

With all the demands of today’s twenty first century household; you might as well be running a corporation. If you are running your house like a business than you should probably have a budget, if you don’t all ready have one. A budget is a collection of expenses and incomes put together nicely on a spreadsheet so that you can see the bigger picture of what is going on each and every month. According to a budget creation article, you should consider spending a few hours on building this home budget. You can use the pen and paper method to create your budget. However, by creating it in electronic form, it will make adjusting it easier when new bills come on board or a new sources of income. According to an article on US News, it is not as difficult as it sounds to create a home budget and it can come in real handy when you are looking for some extra cash. The first task in going about creating a home budget is to gather up all of the information that is going to go into the budget. Some of the items that you will have to gather include: pay stubs, credit card statements, bank statements, receipts, and any other documents pertaining to bills and or sources of income. Once the budget is made, the next task will be to adhere to it. If you ever want to obtain your financial freedom than you need to stay focussed on the task at hand.

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How To Solve Rolling Over Credit Cards

A pocket full of plastic money gives one a feeling of success and security. Using your credit cards for purchases is so easy, choose what you want to buy and pay for it with a piece of plastic instead of cash: bought, done. That is fine as long as you keep your spending limited within your monthly income and pay the full amount of your accounts by the date due. Unfortunately, in many cases, there is not enough income to cover the payments. This starts many people to begin using two or three or even more credit cards, making payments by rolling money from one of them to another in order to survive.

Credit limits

Use of cards comes with a credit limit that you can buy for. This is set by the bank issuing it and is dependent on monthly income. Each bank has a different limit setting as well as some of the cards having budget payment facilities where as others do not offer this kind of service.

Acquiring a card is usually easy to get as long as you qualify financially. In fact, the banks are only too willing to give them to you so they can make some easy money. The bank charges on overdue card payments are high and it is not difficult for people to end up not meeting their commitment by the due date. Instead of being careful about their spending they run up their cards to the maximum. If you have surplus money rather put it into a savings account and gain interest.

Making minimum payments

If you only pay the minimum amount due on your credit card you are going to end up paying astronomical amounts of interest that compound monthly. Overall, it is far wiser to pay the full amount due as hen all you have to pay extra is the monthly charge for card usage.

Applying a sensible strategy to spending is the best way of making monthly purchases. A credit card is ideal for paying grocery shopping, or, for any other items needed for the household, or any other payments. The problems with plastic purchasing arise if you overstep buying your necessities and spend freely on expensive unnecessary luxury items.

Costs of living today have risen to such an extent that it is difficult to maintain the standards you are used to and which was the normal way of life in the past. Thrift has unfortunately had to enter our existence on a daily basis.

Worldwide there are many people now forced to live far beyond their means. This encourages rolling over of their credit cards in order to continue the existence of a lifestyle in the way they are accustomed to. This eventually is going to prove such a financial strain that many people will find they have to resort to downsizing their homes, cars, schools, and forms of entertainment expenditure in order to be able to survive. Otherwise, they will be without money, credit cards, and bankrupt.

Guide To Choose The Best Corporate Credit Cards

When it comes to business privileges and perks, one of the most common ones that employers give to their employees are corporate credit cards. Although this does not necessarily mean that you can use this card anytime and anywhere you want to as this is limited to company rules, still this gives you convenience and security whenever you are in a business trip.

And having said this, it is very important that you know how to choose the best ones. Here are some tips that you can use as your guide in your selection.

  • Choose a corporate credit card that offers high spending limit. There are different types of cards and these offer different spending limits. Depending on your job position or your role in the company, it should provide you with just enough spending limit so you can pay for the things and services you need.
  • Choose a corporate credit card that has specific perks. If your company requires you to travel a lot for business or to meet up with some clients abroad, you should choose a card that gives travel perks. There are several different types of cards and all of them offer several different perks. If you are assigned to make or close deals with clients, it is best to choose a corporate credits card that offers dining privileges. This is best for those who regularly meet up with clients over lunch or dinner.
  • Choose a corporate credit card with easy payment option. This is usually an arrangement between the issuing bank and your company. Some companies prefer to have their cards linked to their corporate bank accounts so that payments are taken directly from the accounts. This is a convenient and hassle-free option to save time and effort.
  • Choose a corporate credit card provides 24/7 customers service options. This is actually very important especially if you are travelling abroad or internationally when you need to call for assistance for certain circumstances such as lost card or captured card. Having a 24/7 customer services assistance is perfect to make sure that you are covered anytime of the day. Business owners may also need to update some card restrictions especially when an employee is no longer connected with the company and calling the bank that provides 24/7 customer assistance is a huge advantage.

These are only some the factors that you need to consider when choosing the best credit card to use for your business. Know more about corporate credit cards here.

This Is How Corporate Credit Cards Work

When used wisely, corporate credit cards can definitely help businesses simultaneously achieve career goals and reap personal perks. On the contrary, this can lead to a corporate free-fall when used poorly.

Corporate credit cards are different from both personal and small business credit cards. These are offered only be a few issuers. Generally, such accounts are established by businesses by utilizing a banking relationship or through a deal negotiated directly with a card issuer. In order to develop such kind of relationship, the company’s credit will be considered.

Companies may give their employees with corporate credit cards for the payment of business-related expenses, which are often travel-relation. Though it is often issued in the company’s name, be aware that it can also display the name of the employee cardholder.

They are categorized into 2 – individual payment cards and company payment cards. Those who opt for individual payment cards, they will be the ones responsible for submitting their own expense report. Also, they will be paying the issuer directly for any charges. On the other hand, the employer will pick up the tab for all company-sanctioned changes with the company-payment cards. But for any personal or unapproved charges, the employee will still pay the issuer directly.

Tips When Using These Cards

Be aware of your company’s policies – Cardholders must familiarize themselves with the reporting and spending rules provided by their employers. Also, they must educate themselves about the policies specific to their position or department. They need to know the types and limits on making charges. It is highly recommended that cardholders must attend training sessions and be updated on the policies.

Learn how to avoid pitfalls – There are indeed a lot of pitfalls cardholders must avoid. These will include the unapproved charges that can end up hitting your wallet and combining personal expenses with business spending that may put you on a collision course with the management.

Use your common sense – The lack of simple common sense is indeed among the biggest dangers from having corporate credit cards. Prior to swiping it, ask yourself if such expense is directly related to your job.

Always secure your card – Be sure to keep your card in a safe place to avoid theft or loss. Immediately after noticing that you have lost it, report it to the authorities. This will help prevent fraudulent charges. Cardholders must be aware that when they have lost their card, they can be provided with a new card or new account number immediately during emergency cases.

Avoid These Credit Trap

Our eldest daughter recently graduated from college (1 down – 3 to go). She headed West to take an internship that will assist her in obtaining some certifications that she needs. During her college years our mailbox was filled with Student Loan companies making sure that she knew that they were there for her – to lend her what she needed to complete her degree. Now that she has her degree – our mailbox is full of offers from credit card companies offering her the credit that “she needs” to get her life in full gear.

I have been shredding the offers as quick as they come into the house. And I have shared with her the trap that these companies are setting for her and her contemporaries. Last week instead of shredding the offers – I let them accumulate in a pile on my desk. We opened them and the first few sentences of each letter was quite eye-opening.

“You worked hard to achieve your degree and that hard work earned you our respect… “

“Congratulations on achieving your college degree. As you begin your professional life you may need to rely on credit to get you started… “

“Great job. Let us reward you with a great opportunity to assist you to build your credit rating… “

Here is the normal way that this ends up for our young adults. As the offers come in the recent graduate accepts a few of them – feeling great that their hard work has been recognized and with the noble objective to have the cards in case of an emergency. The card companies may tout credit limits in the $1500 to $2000 range – but the reality is that once the applications are submitted – unless the graduate has already achieved excellent earnings – most times they will be given a smaller limit – in the $500 range.

Once they have the cards the temptation to use them becomes almost impossible to overcome. Perhaps it’s a piece of clothing, or a night out with friends, or even the purchase of a gift for a loved one. The intent – as we all know – is always the same. “I will use the card to purchase this… and I will pay the balance off when the bill comes in”. Then when the bill comes in and the minimum payment is only $25 – most will pay the minimum because they have other cash flow needs that seem more important at that time. And this cycle repeats itself month after month.

The credit companies will start to offer increases in credit limits as time moves forward. As they see payments being made on time – that little limit of $500 – moves to $750 – then to $1000 – then to $1500. Move the clock ahead 5 years and these young adults can find themselves in $20,000 plus of credit card debt – paying minimum payments of $500 per month – and in reality making no dent in the principal balances. It is a cycle of financial paralysis.

My suggestion to you is that you share this with any young adults in your circles. Make sure they know what is at stake and why these companies are trying their best to get them into a revolving credit nightmare. Explain to these young adults the concept of “delayed gratification” – instead of what the credit companies are offering – “instant gratification”.

Credit is important – no argument there. But the proper utilization of credit and understanding the pitfalls is equally (if not more) important. Spread the word.

How To Survive After Bankruptcy

Review your credit report

After 60 days of closing the bankruptcy case, request for your credit report. Check for any errors (inaccurate, outdated, incomplete or unverifiable information) which can be legally corrected or removed by the credit report agency. Write a brief statement to the agency explaining the reasons that led you to file for bankruptcy and what you’ve done to solve your financial problems. This explanatory statement (30- 50 words long) will always appear on your credit report unless you request for it to be removed.

Get a secured credit card

With a bankruptcy charge, it’s important to demonstrate that you are credit worthy. Get approved for a secured credit card. With this type of credit card, you are only allowed to spend what you’ve deposited in your account ahead of time. Make timely payments before any interest accrues so that the bank can forward a good account history to the reporting agency.

Choose a secured credit card from an issuer who reports to one of the three major credit reporting agencies to ensure it helps to rebuild your credit score. Try not to apply for too many credit cards (or new credit) because creditors always check your rating before approval and this may lower your score.

Automatic payments

To rebuild your credit by making sure you pay all bills on time, choose to automate all your recurring bills. This includes rent and utilities. Consider taking steps to reduce your monthly bills such as moving to a cheaper home where rent and utilities costs less, getting rid of cable and cell phones.

Set a realistic budget

Write down your expenses for the last three months and compare this with your monthly income. Set boundaries as to how much you can spend by making sure you live within your means.

Using your bank account

Always avoid overdrafts, bouncing checks or incurring bank charges. Use your bank account responsibly because whatever you do will show up in your credit report. Even the small bills should be paid on time.

Make smart financial choices

Avoid any situation that will put you in debt again. Whether it means changing your group of friends, taking a different route to work so you don’t pass your favorite mall or cutting back on eating out, simple changes can make a big difference to show the credit company you’ve reformed.

Set aside an emergency fund

Work towards rebuilding your savings by setting aside 5% of your net income every month. You can set up a standing order at your bank that automatically withdraws the money from your checking account and sends it to your savings account. It will help you to avoid borrowing money or worse, taking a payday loan during emergency situations.

Share your plan

Talk to your family regarding the bankruptcy case and the mistakes that led to that experience. Let them understand what lifestyle changes need to be made in order to rebuild your credit. Some members of your family can really hold you accountable.

The situations that led you to file for bankruptcy did not happen overnight. In the same way, it’s likely to take some time before you can rebuild your credit history. The key is to learn from your mistakes and make sure all your payments are made in good time, all the time.

Guide to Recover From Filing After Bankruptcy

The Fastest Ways to Recover from a Bankruptcy

No one expects being in a financial bind (personally or business wise) that makes them have to file for bankruptcy. In the worse case scenario if you have to file for bankruptcy (whether it is chapter 7 or chapter 13) understand that it is not the end of the world. All you have to do is understand that there is a way to rebuild your finances back up to normal and eventually live life stress free again (at least in this situation).

Save, save, save!

The main key to recovering from a bankruptcy is beginning to save your money wisely. After a financial burden such as bankruptcy you will not only have to pay off your debt (which could include interest) in addition to daily living. Once you begin saving your money and budgeting correctly you will be able to pay off your debt while being able to pay current bills and other life necessities.

Re-adjust your lifestyle

This element goes hand in hand with the first step, which is to save your money. Although it may be a bit tough mentally to scale back on your lifestyle, at the end it will be all worth it. Maybe you will not be able to go out and splurge on entertainment events or eat your favorite food every single day. It will take some time to adjust and get back to. Don’t worry… in due time you will be able to get back to your normal lifestyle. When you do, be sure to reward yourself once you are back to where you are financially stable and comfortable.

Apply for a secured credit card when it is time

Once you get back to a place where you can begin rebuilding your credit, it is important to start off small. The time in which you can apply for a secured credit card line will vary depending on your situation. This time frame can be 6 months or 2 years. Just remember to not make the same mistakes you made before.

Keep a positive attitude

Although this is not the best situation to be in and it may be easier said than done, stay positive. In due time, everything will be taken care of and it will only hurt you more (mentally) if you keep reflecting on the negative more than the positives that will happen as you recover from bankruptcy.

How To Improve Your Credit Score After Bankruptcy

Most people don’t pay much attention to their credit score, which is easy to do when you’ve always been able to pay your bills on time and haven’t acquired much debt. But even the most responsible consumers can be hit with unforeseen circumstances such as a job loss or medical bills. Credit cards may be able to float the expenses for a while, but eventually the debt can mount up to a point where payments are no longer manageable. Missed or late payments can lower your credit score, but you may avoid bankruptcy, hoping to stop any further damage. However, sometimes bankruptcy is the correct choice, and there are things you can do to rebuild your credit score after filing.

Your Credit Report

If you have a pattern of late payments, filing bankruptcy can discharge many of your unsecured debts and put an end to those late payments. A bankruptcy will lower your credit score, but after you file, you’ll be given a “Discharge of Debtor” document that shows your debt has been forgiven. At this point, negative credit events stop, and you can begin establishing a positive credit history. First, you’ll need to request credit reports from the three credit reporting agencies: Equifax, Experian, and Trans Union. Review all of the information listed on your report to ensure accuracy, particularly that any debts included in your bankruptcy show a zero balance. You can correct any errors by contacting the credit agency.

Rebuilding

After ensuring you have a clean credit report, you can begin the work of adding positive elements. You will most likely receive credit card offers as soon as your case is resolved, but be sure you review the terms carefully before accepting. You may need to start with a secured credit card with high interest rates and steep fees. While this is not ideal, it’s a place to start, and you can avoid paying any interest by making only small purchases and paying them off completely, on time each month. You might even want to use the credit card for a small monthly bill and set up an automatic payment, essentially ignoring the fact that you have access to credit to avoid the temptation to overspend. As time goes by, you’ll receive better offers for new credit cards or may be able to renegotiate the terms of your current card. Soon, your credit score will improve and you’ll qualify for better and better options.

Moving Forward

Just like most negative events in life, ignoring your credit will not result in improved circumstances. It’s best to be fully informed about your financial situation and take direct action to make changes. If you’re in debt that you feel you’ll never be able to pay off, the first step is to determine if you can revise your budget to get back on track. If this isn’t possible, let me help you explore your bankruptcy options. After making this bold move, the opportunities to rebuild your credit will present themselves, and you’ll get back on your feet.

When Bankruptcy Discharge Tax Debt

It’s no secret that being in debt is one of the most stressful life events one can experience. But for most types of debts, there are solutions. Many creditors, such as credit card companies and medical facilities, will be glad to set up payment plans for you to ensure your debt is taken care of. Some hospitals even have funding available for those who cannot pay their medical bills. You may also be able to discharge unsecured debts through bankruptcy. However, when it comes to tax debts, the federal government can be a little more difficult to work, and tax debts are not dis chargeable through bankruptcy. There are always exceptions, and a Bankruptcy Attorney can help you work with the government to take care of your tax debts.

How are Tax Debts Handled?

While you may not be able to discharge tax debts through a Chapter 13, the amount you owe will be taken into consideration as we design your repayment plan. You may be able to discharge back taxes when you file a Chapter 7, but only if you meet these five criteria:

1. In general, only income taxes may (or may not) be included in a bankruptcy; all other types of taxes are generally excluded.

2. You may not include your tax debt if you’ve committed tax fraud or intentionally evaded paying taxes. In these situations, you’ll also be facing other legal consequences as well.

3. Your tax debt must be at least three years old as of your bankruptcy filing date.

4. You need to have filed a tax return for the year that you owe taxes at least two years prior to filing bankruptcy.

5. You’ll need to meet the “240-day rule,” which means the taxes either need to be not yet assessed or have been assessed at least 240 days before filing bankruptcy.
If you fall far enough behind on your taxes, the IRS may issue a tax lien against your property. In these situations, you may be able to include the taxes in your bankruptcy, but this would not apply to your lien. You’ll still owe the lien amount, but the IRS cannot garnish your wages or take control of your bank accounts to collect the debt. To take care of the lien, you may need to sell your property and pay back the debt, negotiate a payment plan, or even negotiate a settlement for a lower lump sum. This can be tedious and stressful, but may be worth the effort on your part.

Professional Guidance

If you’ve received notifications from the government, especially related to tax debt and liens, it’s important to act quickly. It can be intimidating to deal with government agencies, especially when money is involved. A Bankruptcy Attorney can offer professional advice so that you can confidently move forward and take control of your situation.

Tips When You Cant Pay Your Taxes

Not paying your taxes on time entails various consequences. If you are having trouble paying your taxes in full, don’t let it hinder you in filing your tax return timely. Consider paying as large a percentage of the amount owed or borrow money from others in order to settle your tax liability in full. Filing a return and not including full payment can save you large amounts of penalties and fees. Moreover, payment plans are available and being on a current payment plans avoids IRS collection process which may include, property seizures, garnishments etc. Most CPA firms can advise you on these matters.

These are the ordinary penalties:

· “Filing Failure” penalty

5% per month on the amount of tax due on the return to a maximum of 25%

· “Payment Failure” penalty

.5% per month on the amount of your tax due on the return to a maximum of 25%

· Both “Filing Failure” penalty and “Payment Failure” penalty apply

The “Filing Failure” penalty lowers to 4.5% per month and “Payment Failure” penalty is

.5% per month. The combined penalty stays at 5%. The maximum penalty for both is 25%. Then, the “Payment Failure” penalty continues at.5% per month another 45 more months. Both penalties can go to a maximum of 47.5%.

Besides the penalties above, interest is charged on late payments. Also when you are self-employed, you take full responsibility for paying the taxes as money is earned through the year.

Payment extensions are provided when it can be proven that unwarranted hardship exists. Inconvenience caused by paying the tax isn’t enough grounds for unwarranted hardship. The taxpayer must show that paying the tax would cause significant difficulty and/or expense. For example, a fire sale, selling property at an extremely discounted price, since the person faces the difficulty of paying taxes.

When a payment extension is granted, interest is still charged but the “Payment Failure” penalty is waived. The payment extension is usually good for six months from the due date of the return. The IRS will lengthen time allowed for a payment extension due to some circumstances..

To apply for a payment extension use Form 1127. Form 1127 requires a taxpayer to provide detailed statements of; assets and liabilities, statement income for each of the 3 months prior to the due date of the tax return and statement expenses for each of the 3 months prior to the due date of the tax return.

Paying Income Taxes With Borrowed Funds

Borrowing money to settle tax obligations is an option. Here are some various scenarios:

· Loan From Individuals

Borrow from relatives or friends. Interest rates are probably lower.

· Loans From Banks Or Other Commercial Institutions

Interest on this type of loan is usually considered a non-deductible personal interest expense. Typically a financially troubled taxpayer has a hard time to qualify for this type of loan.

· Home Equity Loan

Interest rates may be lower than with other types of loans. The interest payments may be tax-deductible. This is usually the cheapest option.

· Credit Card

There are a number of companies approved to accept credit cards or debit cards to pay income tax. Note, interest charges may be high and is usually considered a non-deductible personal interest expense. On top of this interest, the companies approved to accept credit cards or debit cards to pay income tax charge a service fee.

Monthly Payment Agreement Request

File form 9465 to apply for a monthly payment agreement with IRS, this can be done online at WWW.IRS.GOV. This process can be done after a hardship extension expires. Form 9465 requires less information than Form 1127 regarding the hardship extension. No financial statements are required if tax due is under $50,000.

When the amount owed is more than $50,000 Form 433-A Collection Information Statement for Wage Earners and Self-Employed Individuals is required. This form helps the IRS obtain detailed, information about you. Consider consulting a CPA Firm about allowable expenses and national living standards that correspond to Form 433-A.

There is a fee for the monthly payment agreement and it is deducted from the first payment if the request is approved. When the payment agreement request is approved, interest on any tax due date is still imposed. However the “Payment Failure” penalty is reduced to.25 % instead of.5% if the return is timely filed.

The monthly payment agreement has a fee of $120. The fee is reduced to $52 when a person permits the IRS auto debit from their account. In the event the taxpayer qualifies as a low-income the fee is reduced to $43.

Monthly Payment Agreements may be terminated if IRS thinks the probability of obtaining payments are at risk. The IRS will also terminate a monthly payment agreement if the financial information supplied was not accurate or complete.

Other reasons for terminating the agreement are the following:

• Failing to make a monthly payment.

• Failing to pay another tax liability when it’s due.

• Failing to provide updated financial information.

• IRS finds out that your financial condition has improved.

A written notice will be sent by the IRS 30 days prior to changing or terminating a monthly payment agreement. IRS will also provide the grounds for changing or terminating a monthly payment agreement. The requirement for written notice does not apply when the IRS believes the collection of tax owed is at risk.

Thus, it is very important that tax returns are filed properly even if full payment cannot be made. Options like hardships extensions or monthly payment agreements may be availed to prevent further charges, penalties and other serious consequences.

We hope this article was helpful. This article is an example for purposes of illustration only and is intended as a general resource, not a recommendation.