Avoid the Ostrich Effect Dealing With Debt

           

           Just about every person I meet with at Halcomb Singler, LLP, is dealing with debt in some way or another.  What these folks have in common with each other is that they have all tried to fix the debt problem they are dealing with on their own.  I am sure most if not all have sat down and written down their income and expenses and tried to figure out a way to pay all of their bills.  However, many of those people come to the conclusion that they just don't have enough money coming in to pay their bills and that is when danger of "the ostrich effect" sets in.

           I am sure I am not the first one to use this terminology.  But, I call it the ostrich effect when people decide there is nothing that they can do about their debt and instead do nothing.  The ostrich effect is different depending on the person.  However, some signs that you or someone you love may be dealing with the ostrich effect are:

1.  Not opening bills.  Just letting them pile up in a drawer;
2.  Not answering the telephone for fear of collection calls;
3.  Full voice mail (result of #2);
4.  Letting the mail pile up in the mailbox and refusing to bring the mail into the house;
5.  Have received a lawsuit to collect on a debt and don't do anything to address it;
6.  Wages are being garnished;
7.  One spouse is hiding bills/bank account statements or any other financial reports from the other.

           The bottom line is that those dealing with major financial stress often become very overwhelmed, which causes paralysis.  But the good news is that there is almost always some way to deal with debt.  The solution may be to get a second job, selling a vehicle, cutting back on expenses such as canceling cable or internet, or to file Chapter 7 or Chapter 13 bankruptcy, or to negotiate with creditors to pay less than owed on debts.

           I typically tell the people I meet with at my Carmel, Indiana law firm that once they have showed up at my office the hardest part is over.  The hardest part is picking up the phone and asking for help.  I don't tell every person that comes in to meet with me that they should file for bankruptcy.  However, sometimes it is the best option to give that person relief from the stress of debt.  But I can say that people who meet with me typically have a plan regarding how to deal with their debt, which helps alleviate stress and also curtails the ostrich effect.

             If you are drowning in debt, regardless of your income, I may be able to help.  If there is one thing that I know it is that doing nothing to solve your debt problem is not the solution.  The stress that having debt causes a person often puts strains on their personal relationships (often causing divorce), seems to cause weight gain, and overall puts a person in a bad mood.  I offer free initial consultation to those struggling with debt.  If you want to set up an appointment just give me a call or click here.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses. 

Kick Out Your Adult Children...Your Wallet Will Thank You

         
           As a bankruptcy attorney in the Indianapolis/Carmel area of Indiana, I meet with lots of people who are having financial problems.  In my initial consultation with these people at Halcomb Singler, LLP, I go over their income, expenses, debts and assets.  As a part of this, I ask them to tell me how much they are paying for living expenses such as mortgage payment, car payment, cell phone payment, etc.  Over the past few years I have noticed a trend that is causing financial difficulty.  Adult children are staying in the household longer and longer....and the parents are paying for the adult children.

              More and more I am hearing stories about adult children living with their parents at ages 23, 25, and even up to 30.  On top of the fact that virtually all of the kiddos are living rent-free, they are also sapping off of mom and dad for expenses such as food, car insurance, cell phone payments, clothing and whatever else mom and dad will offer.  Many people I meet with are also putting their personal finances at risk to co-sign for student loans or car loans.  Many of these adult children don't have jobs and really do not contribute in any way to the household.  In my opinion, this is a big problem.

             Yes.  I am aware that the job market for 20-somethings is not the best at the moment.  However, I don't think that parents who allow their children to live long-term in their homes are doing themselves or their adult children any favors.  First of all, parents have paid for their adult children for at least 18 years.  They typically have put themselves last financially for this amount of time and have gone without themselves rather than allowing their children to go without.  And the bottom line is that with the current economy most parents need their income for their own expenses and retirement without the added impact of paying for an adult child.  In addition, the adult children are not gaining any positive character traits while sitting on the couch at home eating the food mommy and daddy bought.  Isn't it better for that adult child to "have some skin in the game" by paying something to live in the house?

              Now, I am also not an advocate of such tough love that you are throwing your adult child out on the street without any notice.  It seems to me that a timeline is in order.  For example, perhaps you agree that for the first 4 months your child lives with you that they do not have to pay for any rent or food.  For the record I am never an advocate of paying for you child's cell phone, car, car insurance or gas.  These things should be paid for by the child to promote responsibility.  After the initial period of 4 months collect rent in the amount of $300.00 per month.  After another 4 months make the adult child responsible for $500.00 per month plus a pro-rata share of the utilities.  I would think that after living at home for a year on these reduced expenses that any adult child should be able to get their finances together in order to put a deposit down on an apartment.  Make one year the cut-off.  The adult child must be out of the house within one year.  No exceptions.  Make sure you are up front with the adult child and let him or her know your timeline from the beginning.  The timeline can vary based on what your situation, but it seems to me that there must be a timeline.

             Parents need to remember that they are not going to be around forever.  The job of parents is to raise their children to be productive and self-sufficient members of society.  How is that happening if 27 year-old Junior is staying up until 3 am playing video games and sleeping until noon?  How is that happening if Junior did get a job that pay $8.00 per hour and works 25 hours a week and is content to live at home?  Lets teach adult children that it is more than ok to work hard.  Lets teach them that if they are making $8.00 per hour that they might need 2 or 3 jobs until they can find a higher paying job.  Lets teach them that they have to earn what they have and build character and future leaders in the process.  And finally, lets not either bankrupt mom and dad or put them in a position where they have to rely on Junior in the future because supporting Junior in his adulthood prevented them from saving enough for retirement.

             Lets stop making excuses for the shortcomings of our adult children and help them succeed.  Does anyone have a success story of how they got their adult child out of the house and on a path to financial freedom?  I'd love to hear it.  Please post it in the comments section.  Happy Thanksgiving!

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses. 

Don't Let the Holiday Follow You Home In January

           

         Dave Ramsey says in his "Financial Peace" videos that if you use credit to pay for your vacation it will follow you home the next month in the form of a credit card bill.  I am adapting this slightly to allow for Christmas....but you get the idea.  As a bankruptcy attorney in Indiana, I can attest that nothing is worse than overspending in December only to receive the bill in January and realize it.  So, how do you avoid overspending at Christmas time?

              The first thing I will say is going to be painful, but here goes.  If you are truly broke this Christmas don't buy any gifts.  Yep.  I said it.  If you don't have any money to buy presents for your family then tell them you are short on funds and they will understand.  I can just hear all of the readers in unison right now saying, "But what about the kids?!?  I have to buy the kids gifts for Christmas!"  Ok.  I am not heartless.  I agree you should probably try to get your kids a few presents (and only your kids).  But I have seen Christmas trees at houses with 2 children that rival a toy store in their volume of gifts.  Do not go that route.  I suggest letting your children know that this year you are going to concentrate on the religious part of the holiday and are going to scale back on gifts.  Another tip to help stretch the presents for the kids is to talk to the grandparents.  Let them know you are having a hard time and that you don't want to go into debt for Christmas.  I think many grandparents would allow you to add your name to a gift or two.  Lastly, this is a great opportunity to make sure you stretch your dollar on the gifts you do buy.  Don't just go out and buy the tea set Suze wants this year.  Wait for it to go on sale and look into whether there are any other discounts available.  Finally, on Christmas (depending on the age of your kids) you may think about waiting until after dinner to open gifts.  A lot of the fun is in the anticipation, isn't it?  Make sure that you open gifts one at a time so that you are able to stretch out the fun!

               For those of you who do have a bit of money to spend on Christmas, I hope you have set a budget by now.  If not get out a piece of paper and list out the people who you need to buy for as well as a dollar amount.  In a perfect world you would have started to save by at least October by taking cash each month and putting it in an envelope.  Then when you do go out shopping plan in advance what you plan to buy for each person on your list and then use the cash to pay.  Once the cash is gone NO MORE  PRESENTS!  Seriously, if you are out of cash and haven't bought your kid's teacher, the mailman, the paper carrier or the bus driver a gift life will go on.  Consider baking cookies or bread for gifts for people you want to acknowledge on Christmas without breaking the bank.

              I certainly didn't invent the Christmas envelope idea.  One personal finance expert in Indianapolis, Peter Dunn, does what he calls a holiday savings league.  In the event you signed up for his saving league using this program you may even win gifts.  I do subscribe to Peter Dunn's blog (you may know him as Pete the Planner) and I find he has some great ideas, advice and inspiration.  I recommend that you read his blogs as well.

              I wish you all a Happy Thanksgiving, Christmas, Hanukkah and whatever other holidays you might be celebrating this season.  I hope that we are all able to remember that this time of year is not about the number of gifts under the tree, but is about the time spent with out family members and in our faith.  At the same time I do understand that dealing with debt (especially during the holiday season) can be overwhelming.  If you live in Indiana and are struggling with debt and considering bankruptcy I offer free consultations at the Carmel office of Halcomb Singler LLP where I can answer your questions about bankruptcy and debt and give my recommendation regarding whether you would benefit from Chapter 7 or Chapter 13 bankruptcy.  Feel free to call me at (317) 575-8222 to schedule your consultation.


Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses. 

The Fiscal Fast

           

            I have a new favorite television show.  It's called "Extreme Cheapskates" and is shown on TLC.  This weekend I found myself glued to the TV for an embarrassing amount of time watching this show.  The name says it all.  The show follows people who live in extreme ways to save money.

              For example, one woman in New York went through dumpsters at high end grocery stores to find food instead of buying it (that's the photo above).  Another man who lives with his wife and two children went without a couch and had only a card table and folding chairs in his living room.  When that man took his family out for dinner, as he did only once a year, he paid the $98.00 bill at a chinese buffet all in change.  Lastly, another person cut up fabric to use as toilet paper and washed it after use instead of buying toilet paper.

              I was obsessed with this show.  As a bankruptcy attorney, I am always looking for tips to give people on how they can save money so that after bankruptcy they can start out on the correct financial track.  However, most of the things the people in this show did were a bit too much in my opinion.  But there was one idea that really sparked my interest as a potential great way to save money:  the fiscal fast."  One of the people on the show took one week every year and agreed that neither him nor his wife would spend any money that week.  The couple used the "fiscal fast" as a way to cut back on spending by using what they already had on hand.  Toward the end of the week the husband rode his bike around town looking for spare change and ended up buying two goat heads to cook for dinner with about seven dollars he had found in change.

             While you are not going to catch me eating a goat head, I really think the fiscal fast is one of the best money-saving tips I have heard.  I often believe that if you can make a game out of it, that you are more likely to spend less and save more.  What better game than having a fiscal fast?  Take some fixed amount of time and agree that the family is not going to spend any money.  Your family may start out with one day on its first fiscal fast and slowly move up from there.  There are many families that swipe the debit or credit card 20 times a day.  For them going only one day without spending any money would be an exercise in restraint.

             The reason I love the idea of the fiscal fast so much is that it not only helps you save money because you aren't spending any more for a week; it also makes you realize how often you would typically spend money in that same week.  I think many of us spend and spend because we are used to spending and don't even realize how often we spend money at all.  The fiscal fast, in my opinion, will really open the eyes of those who are overspending.

            Has anyone ever done a fiscal fast?  If so I would love to hear about it.  How much money were you able to save?  Did the fiscal fast impact your spending habits long-term?  Did you find the fiscal fast worthwhile?  Just post your answers to the comments section below.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.