All Financial Matters

There are many different attitudes when it comes to money matters; some people spend what they earn in a hand-to-mouth fashion whilst some people save for a rainy day. Why is that? It’s our attitudes and thinking about money that determine our spending behaviour. That means in order to change the way you spend you also need to change your attitude towards money.

How do you view money? We all learn from an early age about money. We watch our parents and how they handle the money that they earn. Some may have had very little because Mom and Dad were low paying jobs whilst others had a lot of money because Mom and Dad had a good income.

Whatever your environment, your money views were probably shaped by those around you. This is where unhealthy views of money begin. If money was a bone of contention in your home, you will likely make every effort to avoid confrontation when it comes to money. That could lead to overspending becoming a hush-hush topic in the home.

If money flowed freely, then you could become a free spender as an adult. Even if your means are more limited than your parents’, you may continue to spend as if you had a million dollars. This type of money attitude can lead to a debt burden too big for you to carry.

Many scenarios can be drawn from childhood exposure to money. Remember Ebenezer Scrooge? He grew up with no money and it took over his life. During his adult years he shunned all other pleasures for his obsession with money. I’m sure nobody wants to end up like that.

It’s not an easy process to change your attitude towards money, but having the desire to do so is the first step. Having the determination to make a change gives you a real chance of making it happen.

It’s important you visit a financial advisor and discuss with them your money problems and your views about money. Let them know what it is you want to accomplish with your money. A financial advisor can take your money and other assets and create a portfolio for you. The portfolio includes how to invest and what to invest in.

A financial advisor may be able to help with a budget. For frugal spenders, a budget can set aside money for one’s enjoyment each month. A frugal person may not take more than one day of freedom, but it is a start. As time goes on, they will relax the reins and learn to enjoy money now and in the future.

A big spender will use a budget to curb spending. It is okay to spend, but make it special and not an everyday occurrence. Money doesn’t always flow freely unless we plan for it to do so. That requires a spender to realize that it is okay not to spend it all at once, but to save some for later.

Ask yourself, what is your money attitude? Is it beneficial or setting you back? To improve your life, why not meet with a financial expert to discuss healthy changes to your money attitude?

For those who feel that they are in serious financial distress, they may have considered bankruptcy as a possible solution however, bankruptcy is not something to be taken lightly.  Whilst your debt may be wiped clean, there are far-reaching consequences for that “new freedom”.

When a person’s debt has risen to a level that they can’t hope to get under control, they may consider filing for bankruptcy.  For a consumer there are two bankruptcy choices:  Chapter 7 and Chapter 13.  Chapter 7 bankruptcies involve wiping out the debts in part or in their entirety and liquidating assets to do it.  Chapter 13 bankruptcies are more of a debt restructuring plan that gives you more time and a plan to pay back a portion of the debt that is owed to creditors.

Bankruptcy damages a person’s credit rating.  A bankruptcy judgement stays on credit reports for as long as ten years.  During that time, any credit that is applied for will disclose the bankruptcy to the creditor.  If filing Chapter 13, you still have to pay back part of your debt and the judgement stays on your credit report for ten years.

In the past, people have taken advantage of the bankruptcy laws.  For instance, people have been able to file more than once for Chapter 7 bankruptcy.  They have used it as their own personal “debt eliminator”.

Each state decides on what assets they will exempt from being seized during a bankruptcy hearing.  Knowing that, some may use available cash to purchase those items (real estate property, vehicles, etc.) in an effort to avoid payment and still retain the stuff they purchased.  In this instance, creditors receive little or nothing from the bankruptcy settlement.

The new laws concerning bankruptcy have changed this.  Whereas courts used to have the leeway of deciding who could file for Chapter 7 bankruptcy, there are now criteria that must be met first.  In order to file for Chapter 7 bankruptcy, a person has to have an income that is below the median income for the state where they live.  Their income must be put through a calculation that determines if they have enough disposable income to pay 25% of their outstanding debt.

More people that file bankruptcy will have to file under Chapter 13.  The courts decide what a person could pay from the information provided to them.  There is an allowance made for rent/mortgage, food, and other pertinent bills.  With the new bankruptcy law, standards set by the IRS determine allowable values for each of these bills.  A certain amount is exempted, and the payments are determined from the rest.

Because there are more hoops to jump through, bankruptcy lawyers are charging more for their services.  The whole process of bankruptcy will cost the filer more than before, which will make them think twice about the process.  Credit counselling sessions are also required as a precursor to filing for bankruptcy.  A credit counsellor may determine that they can help you and thus eliminate the need for bankruptcy proceedings.

Bankruptcy should always be a last resort after careful consideration of alternatives as well as the consequences of filing for it.  While it will give you a clean slate, it does come with a heavy price.