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Applying for a Mortgage

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There’s always talk about home-buying and mortgages, but with interest rates being at all-time lows over the past few years, I feel like the talk about those things have picked up. Not only that, interest rates are likely going up this year so people are trying to get in before it’s too late. In this post, I want to talk about mortgages, how they work, and what happens when applying for a mortgage.

What’s a mortgage?

A mortgage is a loan you get from the bank or another lender to buy a house. When you submit an offer to buy a house, you’ll apply for a mortgage, and it’s a very involved process. More on that later.

In a mortgage, you’ll have options for what your term is. Your typical options are 15-year, 20-year, and 30-year.

You’ll also have to make a down payment. Current trends show that a lower down payment is pretty common. Depending on the type of loan, you can put down 3+%. And how much you put down matters. If you put down less than 20%, you’ll have to pay Primary Mortgage Insurance (PMI).

Here are the pieces of your typical mortgage payment – principal, interest, taxes and insurance, and PMI (if applicable). Taxes and insurance are commonly put in an escrow account and paid when they’re due by the lender.

Mortgage application process

From application to closing, it’s about 45-60 days. During that period, you’ll go through underwriting. In underwriting, they’ll have you submit documentation to confirm your credit report, annual income, current assets and liabilities, employment information, prior tax returns, among other things.

After you’ve cleared underwriting and they’ve confirmed everything, you’ll head to closing. At closing, you’ll sign a lot of papers. You’ll likely need to bring your checkbook with you as well.

There are closing costs associated with your mortgage. Some of these can be added to your total mortgage and some of them need to be paid. Closing costs are normally 3%-6% of the total mortgage and can include real estate commissions, taxes, insurance premiums, title fees, and record filing fees.

And if you’re buying, you’ll also need to write a check for the down payment.

Who gets a mortgage?

There is a slough of factors you need to meet when applying for a mortgage. Credit score matters. Usually, you’ll need at least a 620 credit score (all else being equal) to get a mortgage. Though the better the credit score, the better interest rate you’ll get.

The debt to income ratio needs to be under 50%. The lower the debt to income ratio (all else being equal) the more you can afford. If you have a 45% debt to income ratio and can afford a $250,000 mortgage, you’d probably be able to afford a $300,000 if your debt to income ratio is 25% (this is just an example, I didn’t do the math on this).

Condition of the home. With an FHA mortgage, they are a little pickier on the condition of your home. Usually, it’s just the outside of the home they’re picky with. Chipped paint is a typical thing they take issue with, so just be aware of that.

Applying for a mortgage is necessary for most people so it’s important you understand how they work.

Related reading:

Understanding 15-Year vs. 30-Year Mortgages in the USA

What to do when you’re one month behind on your mortgage

Why Financial Literacy is Important

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

End of Year Money Moves

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We’re getting close to the end of the year so I think it’s a good time to review how to set yourself up for success for next year. Here are some end-of-year money moves you should make.

Year in review

I think it’s important to reflect on the year that has been – financially, emotionally, physically, and spiritually. If you’re not evaluating your progress as a human, I think you are doing yourself a disservice.

We’ll stick with the finance side of things in this article. Did you achieve the goals you set out to reach when the year started? If you had a goal to pay off debt, did you? If you had a goal to increase your savings rate for retirement, did you?

I think that’s important for two reasons. One, you review your progress to see if you were successful or not. Two, you use this year’s progress to help set your target for next year. If you achieved your goal, you can set a higher target for next year. If you didn’t, maybe keep the same goal and try to hit it next year.

It’s also a good idea to review your investment/retirement portfolio at the end of the year. If you’re investing your retirement savings, there are some sectors or asset classes that performed better than others throughout the year. If that’s the case with your portfolio, the percentage you’re at now is probably different from where you started.

Typically, I like to leave it be, but if you’re in a stage of life where you have to be more selective, then being overweight in a risky asset is probably not a good idea. When you review your investment portfolio make sure that you’re still in good shape with regard to your risk tolerance and time horizon, and you’re pleased with your account’s performance.

Set goals for next year

After you review your progress from this year, set your goals for next year. If you saved more than you set out to at the beginning of the year, use the ACTUAL savings as your goal for next year. If you paid off some debt, redirect toward another one.

What happens if you don’t have any more debt? Congratulations! Then make sure your emergency savings are adequate. If it’s sufficient, beef up your retirement savings or something else you’re saving for.

When you’re making your money moves for next year, make sure you’re designating time to assess your progress throughout the year.

Related reading:

How to Set Investing Goals

Worthy Goals to Set and Crush

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Divorcing and Drowning In Debt? Take These Steps Now!

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divorcing and drowning in debt

Whether you’re preparing for an upcoming divorce or the proceedings are already underway, ending a marriage when you’re also overrun with financial woes isn’t easy. However, that doesn’t mean you can’t come out of the other side in one piece; you just need to use the right approach. If you’re divorcing and drowning in debt, here are some steps that you should take immediately.

Assess Your Financial Situation and Start Planning

Before you do anything else, you need to take a close look at your financial situation. You’ll want to review all of your current income sources, expenses, and debts. That way, you can create a functional budget that will serve you as well as possible until your divorce finalizes.

Until that day arrives, your goal should be to simply remain afloat, particularly if it isn’t clear who will assume responsibility for specific debts. Concentrate on making minimum payments on the debts only, ensuring you can keep your credit intact.

If you have extra money that you’d like to put toward debts that may be your responsibility after your divorce, you may want to open a new savings account in just your name and set it there instead. However, you might need to review local divorce rules and regulations in your area first to make sure such action isn’t barred or viewed poorly during proceedings.

Additionally, you may want to estimate how your situation will change once your divorce is final. In some cases, this is fairly straightforward if you know what debts you’ll be taking over alone. However, if you don’t, then you might want to explore several scenarios. That way, you can get a general idea of how your financial life may change once everything is finalized.

Avoid Adding to Your Debt

If your debt situation is already challenging, don’t make it worse by adding more to the equation if it isn’t absolutely necessary. Ideally, you want to use cash for all of your necessary expenses. That way, you aren’t increasing balances before your divorce is finalized.

If you can’t avoid using credit cards to handle necessities, then limit your spending as much as possible. Superfluous spending could backfire when it’s discussed in court, so you want to make sure you’re only using credit when you had no other choice, and the charge is easy to justify.

Review Your Credit Report and Score

One step many people in the middle of a divorce overlook is reviewing their credit report and score. However, it’s a vital task, especially if you may soon be exploring options for dealing with a significant amount of debt. It lets you know your general standing, making it easier for you to estimate whether you’d qualify for certain financial products, like a low-interest debt consolidation loan.

You can see each of your credit reports for free by heading to AnnualCreditReport.com. When it comes to your credit score, you may have options for checking that for free, too. Some credit card accounts or banks let customers review their scores for no additional cost. There are also a few apps that give you access to scores.

Just keep in mind that you’ll want to review your FICO score if you may be looking for credit soon, as that is the one that lenders typically use. Many free credit score options show you a VantageScore instead, which doesn’t match your FICO score. If you aren’t sure where to get your FICO score, you can get your Experian FICO score for free through Experian. While that only covers one of the bureaus, it can work well as a starting point.

Redirect Your Income to a New Account

If you’re concerned about your soon-to-be-ex having access to all of your income, you may want to open a new checking account and have your direct deposit shifted there. That way, they won’t have access to your pay, giving you more control.

However, you may want to consult with a lawyer as you take this step. Completely cutting off your spouse could come with consequences, particularly if they don’t have their own income, are providing care for your child during the divorce, or certain other conditions apply. An attorney can help you determine how you should ultimately proceed, ensuring you act appropriately as the situation unfolds.

Prepare to Update Your Credit Accounts

Usually, there are two moments when you may need to update some of your accounts. First, as soon as you separate, taking your spouse’s name off of certain accounts could be wise. For example, if they are an authorized user on a credit card that is in your name, you may need to remove that authorization. That way, your soon-to-be-ex can’t run up a bill that may ultimately become your responsibility.

However, you may want to speak with a lawyer before you being removing their access to the accounts. Rules regarding debt ownership during a marriage vary by location, and an attorney can give you insights into that. Additionally, they can help you see how taking them off certain accounts could be perceived in court, ensuring any action on your part isn’t viewed as malicious.

When you have your divorce decree, you’ll have a roadmap outlining which debts are whose responsibility. As soon as your divorce finalizes, it’s critical to take action immediately if any particular obligation is no longer yours to handle.

If your name is on a debt that is assigned to your now ex-spouse, don’t assume that your ex-spouse will manage the update with the lender. Instead, reach out to the lender to find out what needs to happen to remove you. You may need to send in a copy of the divorce decree or take other steps to ensure you’re pulled off of the account, and some of them can take time to process. As a result, the sooner you act, the better.

Come Up with a Plan

Once you know which debts are yours, it’s time for formal planning. Review the obligations and your income first. Then, see if you can create a budget that lets you pay down the debts while also handling your living expenses.

If it’s tight but doable, and you already have a decent emergency fund, you may want to simply push forward. If it’s unmanageable, then you’ll want to start exploring other options immediately.

How you need to proceed may depend on your broader financial picture. If you have solid credit and a reliable source of income, exploring a debt consolidation loan could be worthwhile. Essentially, it’s a type of personal loan that lets you pay off your existing debts and replace them with a single monthly payment, at times with a lower interest rate. Just make sure you focus on loans from reputable lenders, as there are many scams in this category that you’ll need to avoid.

If your credit isn’t great or your income is limited, then you may want to connect with a credit counseling agency for help. You can find reputable counselors by using the right resources, such as the National Foundation of Credit Counseling. Then, you can get assistance with creating a new budget or may be able to debt management plan set up, allowing you to tackle your debt more affordably.

Not All Counselors Are Legit

Like with debt consolidation products, not all counselors are legit. Reputable organizations won’t push debt management plans as the first and only solution, so keep that in mind when speaking with counselors. Additionally, they’ll be upfront about their fee structures and won’t upsell unnecessary services. Traditionally, they also don’t pay counselors using a commission-based approach either.

In most cases, you want to avoid agencies that advertise the ability to “repair your credit” or that promise significant score increases in a short time. Similarly, any place that focuses on debt settlement, using phrases like “handle your debt for pennies on the dollar” should often be avoided.

You may find that a debt management plan is enough to get you back on track. If so, you’ll simply need to follow the program’s rules, allowing you to handle your obligations with greater ease.

Consider Bankruptcy

If repaying your debt just isn’t possible, then you may need to explore bankruptcy. However, this should be treated as a last resort, as the harm to your credit is significant and pretty long-lasting. Plus, you may need to hire a bankruptcy attorney, and that can be costly.

Still, if you’re drowning in debt and no other option is manageable, bankruptcy could be the right choice. Just make sure that you wait until your divorce is finalized, ensuring you’re focusing just on what you owe.

Do you have any tips that can help someone who is divorcing and drowning in debt? Have you been there yourself and want to tell others how you got through it? Share your thoughts in the comments below.

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Financial Resolutions: Debt, Savings, Investing, Real Estate, and Crypto

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The new year is right around the corner so I thought it fitting to layout some resolutions for a few different financial topics. Here are financial resolutions for crypto, investing, real estate, savings, and debt.

Debt

Pay down or pay off your debt. If you have credit card debt, make it a goal for next year to pay it off completely. The interest rates that credit card companies charge are so brutal. Getting rid of credit card debt would relieve a lot of stress and save you a lot of money that you’re wasting on interest. Not to mention, whatever you’re currently paying towards your credit card can be used for something way more productive.

If all you have is a mortgage, make extra payments. If you have no debt, congratulations! Try and save more so there’s no chance of you going into debt again.

Savings

Would you like to buy a house next year? Save for your down payment. The bigger your down payment is the smaller your responsibility will be; in terms of monthly payments and in terms of total money owed. Especially if your down payment is 20% or more. If that’s the case, you don’t have to pay mortgage insurance (AKA PMI).

If a down payment isn’t something you need to save for, increase your savings rate for retirement. Or set yourself up to cover some unexpected expenses by creating an emergency fund. Do some math, establish a goal number (emergencies, down payment, retirement savings), and then create a plan to save and hit that number.

Investing

For the most part, investing will take place in your retirement account. And for most people, the amount of time you have until retirement is a couple of decades. With that said, you can be a little more aggressive with your investments.

If this description doesn’t fit you, then figure out what works for you. Determine your time horizon, risk tolerance, and what you’d be able to tolerate in terms of short-term losses. If you’d like to get a good idea about what your preference is, take our risk tolerance quiz.

Real Estate

This one is a little challenging because it’s not like you’re going to move once per year. Also, investing in real estate isn’t for everyone. So I’m going to try and hit a few groups with this one.

Buy a new home. If you need more space for your growing family, you got a new job that requires relocation, you want to be closer to your church or family members, then make a move.

Make improvements to your current home to increase the value of your home or to make better use of the space. It can also improve tax credits especially if you use sustainable materials like solar panels. Either way, the improvement has a positive effect on your living situation.

Most people can invest in real estate, they just do it differently. Some people are going to invest in physical properties and some can invest in Real Estate Investment Trusts (REIT). Either way, you need to be picky (like all investments) so you get a good return on your money.

Crypto

This applies to everything in this post, but especially here…do your homework. I like crypto. I think there are investment opportunities, but I also think there’s a possibility it all collapses. I like the technology it’s created on, but I don’t know how it’ll transform and what the adoptability will be. Invest only what you can afford to lose is my best advice. With all that said, make financial resolutions to get more educated about cryptocurrencies and the blockchain.

Related reading:

8 Ways to Improve Your Retirement Savings in 2018

Diving Deep into Debt

Worthy Goals to Set and Crush

How to Invest in Cryptocurrency: A Guide for Beginners

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

How to Prep your Finances Before you Quit your Job

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There are a lot of jobs open right now. Maybe you’re not particularly happy in your current role so you’re looking for other opportunities. Before you leave, you need to make sure you have your affairs in order. Here’s how to prep your finances before you quit your job.

Some things to make note of first.

Plan Ahead

If you want to quit, but don’t have anything lined up yet, get that process started ASAP. There may be a plethora of jobs available right now, but that doesn’t mean you’re going to get one right away.

Ideally, you’ll have an accepted job offer before you quit your current job, but that won’t apply to everyone.

You could be leaving a hostile work environment, you could have a bad work/life balance, or you’d like to explore different opportunities.

That’s why you must do your best to always be prepared because you never know what is going to happen. You can’t predict the future.

Before you quit your job, here’s what you have to do.

Have Money Saved

Make sure you have money saved. You truly don’t know how long it’s going to take to find another job. That’s why I say you should have one lined up before you quit your current job. That’s also why the common advice is to have 3-6 months of living expenses saved in case you lose your job.

It’s also important to see what’s out there. As I mentioned in the beginning, there are a lot of jobs available, but that doesn’t mean you’re going to find a better one. Do your research.

Prep Your Finances

If you want to be able to have less liquid money available, work on your expenses. Cut down where you can. If you’re servicing debt, get it paid off so you don’t have that liability sitting out there. If you don’t have any liabilities, you remove the chance that you’ll miss a payment (which is bad for your credit score). Your credit score is important in today’s economy, especially when looking for a job.

Back-Up Plan

Whether you are exploring a different field entirely or looking for a better role in your current industry, it’s a good idea to have something to fall back on. Even with a record number of job offerings, the job market is still unpredictable. Make sure you have a contingency job picked out that matches your skillset and expertise just in case the role you’re pursuing doesn’t work out.

Make Money in the Meantime

Learn how to make money…quickly. If the job hunt is taking longer than you expected, find a way to supplement the income you lost. There are several ways to hustle your way into a wage nowadays. Uber, Lyft, Instacart, UpWork, Fiverr, and more. There are plenty of companies that’ll hire you as a contractor. If you’re making money, that could enable you to be very picky on the job you take.

Health Insurance

Last thing. Don’t forget about healthcare costs. If you get benefits from your current job, figure out how/if you’re going to get health insurance while you are out of work. Short-term plans might meet a need if you’re just looking for disaster coverage, but if you’re someone that requires ongoing medical care, there’s probably something else that’ll meet your needs better.

Prep your finances BEFORE you make a move.

Related reading:

Can an Employer Charge you Fees to Turn Over your 401(k) After you Quit your Job?

Why Financial Literacy is Important

Everything you Need to Know to Set Up Your Emergency Fund

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Here Is What To Do If You Have Debt In Arrears

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This article is a response to a reader’s question about paying off debt on an irregular income. They write:

Can you advise me how to manage to settle my absa loan & credit card because they are in arrears

At my work I earn with commission , sometimes I didn’t earn.

Here is my answer:

Being in debt is a challenge. It takes away money you could use for more productive things. It’s even more difficult when you’ve missed payments and your debt is now in collections. If that’s you, here are some tips to help you settle your debt that’s in arrears.

Pay down debt

Utilize some debt repayment strategies.

Debt snowball – pay your smallest balance first while making minimum payments to your other debts. When you pay off your smallest balance, move on to the next smallest balance. As you get rid of debts, you’ll be able to make larger payments to the following debt.

Debt avalanche – pay your highest interest rate first. Similar strategy as the “snowball”. Once your highest interest rate debt is eliminated, pay as much as you can towards the debt with the next highest interest rate.

Use retirement funds to pay off your debt. You’ll likely, depending on your age, pay a 10% tax penalty, however (if you’re under 59 1/2). Do you have any cash accumulated in a whole life insurance policy? Use that cash value to pay off your debts

Negotiate

How much, in terms of dollars, can you pay to your creditors as a settlement? Figure out what that number is before you start contacting creditors.

It may take a couple of phone calls, so don’t get discouraged. If you don’t like what you’re hearing from the representative you’re talking to, try and get a hold of a different one. Remember the dollar amount you can pay and don’t go over that amount. If you can pay 50% of what you owe, start with an offer to pay 30%. The creditor will counteroffer and hopefully, the agreed amount is 50% or lower.

Make sure you’re clearly communicating the financial hardship you’re experiencing that put you behind on your debts. Getting sympathy from a representative could help you! Get any settlement or repayment plan in writing as soon as possible.

Make sure you’re speaking to your creditors, not collections agencies. Collections agencies will take a settlement amount and sell whatever is left to another agency. Before you’ll know it, they’ll be after you again. Speak to the creditor you initially owed. Also, be prepared to pay taxes on the forgiven amount.

Bankruptcy

Nobody likes to think about it and it would be a very difficult decision, but it might be one to strongly consider if you want to settle your debt.

If you don’t have luck with negotiations, you might have to consider bankruptcy. There are generally two options – Chapter 7 and Chapter 13. Chapter 7 clears all of your debts. Chapter 13 is more of a reorganization.

Check credit reports

Clarify with the credit reporting agencies how things were settled. Clean up the report and it could help your score a little. Late payments and charge-offs stay on your credit report for 7 years. Debts in collections stay on your credit report for 180 days.

Debt settlement is about commitment. There are penalties if you miss ONE payment of your agreed-upon settlement, so don’t miss!

One more thing. Know your rights. There are several things collectors can’t do:

  • They can’t threaten you
  • They can’t shame you
  • They can’t force you to repay your debt
  • They can’t falsify their identity to trick you
  • They can’t harass you

It’s a tough road, but getting out of debt is paramount for your psyche and your financial success. Utilize strategies to pay down debt. Speak with your creditors about negotiating. If negotiation doesn’t work, consider bankruptcy. Once you settle your debt, review your credit report and dispute errors.

Related reading:

What you need to know about bankruptcy

Diving deep into debt

How to improve your finances on a low income

What to do about debt collectors

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Should You Stay Married Until You’re Out of Debt?

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Should I Stay Married Until You're Out of Debt

Money is often a point of contention in marriages. So much so that it’s often cited as a leading cause of divorce. However, many spouses wonder if getting a divorce while in debt is a smart move. They think maybe it’s better to wait until the debts are repaid before severing the relationship. If you’re trying to figure out if you should stay married until the broader debt situation is solved. Here’s what you need to know.

How Debt Is Handled During a Divorce

Before you decide whether you should stay married while debt is in the equation. It’s important to understand how those obligations are handled during a divorce. Usually, any debt in both spouses’ names is considered a joint obligation. Regardless of who spent the money.

However, if you live in a community property state. Even debt not in your name could fall on your shoulders. If the debt was incurred during the marriage, particularly if the resulting spending benefited both parties, both spouses can be deemed responsible.

If you live in a common-law state instead. The situation above doesn’t usually apply. The main exceptions tend to be if you cosigned on a debt. Even if it wasn’t ultimately jointly owned. In those cases, debts in your spouse’s name can also be viewed as yours.

In the end, the situation can be surprisingly complex. It ends up even more complicated if you and your spouse aren’t in agreement about debt responsibility. Should that occur, a judge may make the final determinations about where debts go, and that may not come out in your favor.

Dealing with Debt Before a Divorce

In many cases, the only way to avoid a court potentially deciding who is responsible for various debts is to pay them off. By eliminating the obligations. They are no longer part of the equation.

If both spouses agree about the goal of paying off debt and are willing to work together for mutual benefit, this could be plausible. For this to work, transparency needs to be a priority. By being open and honest with each other about the financial situation, it’s easier to move forward toward the shared goal without any unnecessary hardship.

However, it’s important to understand that paying down the debt first can be complicated depending on the state of the relationship and where you live. As mentioned above, in a community property state, debts incurred during the marriage are viewed as joint even if both parties don’t have their names on the account. That could allow a disgruntled spouse to open new credit accounts without the other’s knowledge and saddle them with a financial burden without their knowledge or permission.

Similarly, on joint revolving credit accounts in any state, either spouse could continue to spend that money. Since both names are on the card, they are each potentially legally responsible.

Making the Choice

If your relationship isn’t currently amicable, then you need to consider what could occur and plan accordingly. In common law states, you may want to start removing each other’s names from various debts (and bank accounts), creating a degree of separation. That may allow you to focus on paying down debt before moving forward with a divorce.

If your relationship is hostile and you’re in one of the community property states, waiting to get divorced may not be the best choice. While the division of debt during the proceedings may not go the way you’d like, officially separating it could be the safer road.

However, if you and your spouse agree on debt and the risk of nefarious action is low, paying it off is a smarter move. It lets you both move out of the relationship with fewer monetary obligations, potentially easing the transition and increasing your odds of financial success down the line.

Ultimately, only you can decide what’s right. Reflect on the state of the relationship, consider how debt can be divided in your state, and head in the direction that’s the best fit for your situation.

Do you think people should stay married until both parties are out of debt? Why or why not? Share your thoughts in the comments below.

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Economic Pressures

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There’s a lot of movement in the economy. Several different news threads and innovations have the ability to change the direction and velocity in which our economy moves. In today’s newsletter, we’re going to talk about some of those economic pressures, what they entail, and what they mean for our economy.

Taxing corporations and the wealthy

A news story recently came out about taxes. More specifically, this news shed light on how the wealthy manipulate the tax code in their favor.

I think the information shared in this story was well known already, or assumed rather, but served as a confirmation. A large number of wealthy individuals aren’t “paying their fair share” in taxes.

This will only add fuel to the fire. The fire I’m talking about is the tax overhaul in the tax code. The Biden administration has said that they want to increase taxes on corporations and wealthy individuals/families.

If they’re successful, it would mean more tax revenue for the federal government, which is a good thing. Is there a chance that the increase in taxes creates a disincentive for those corporations and wealthy individuals?

Perhaps, but I don’t think it’s very likely, broadly speaking. I have only one reason…those corporations and individuals are good at making money, and I believe that will continue.

Government spending

As I said, the change in the tax code will generate more income for the federal government. You may be thinking, “Great! We can reduce the national debt!”

I think that’s very unlikely. That may sound skeptical, and it probably is on some level, but both parties are spenders now. It doesn’t matter if it’s a Republican or a Democrat in the White House, they’re both going to print money to push forward their agenda.

Borrowing costs

I’ve talked about inflation a lot lately, and I promise I’ll tone down after I make this point, but I haven’t explained why runaway inflation is a bad thing.

Now don’t get me wrong, there are advantages (i.e. increased rates on savings accounts), but the disadvantage is higher prices. Households can run into trouble because they can’t afford necessities anymore.

The larger problem, however, is the cost of borrowing. Over the last, almost 15 years, rates have been low. And they’ve stayed low, other than an attempt to increase in 2018.

People and corporations borrowed a lot of money. Some bought things they didn’t need. Others to increase research, development, and innovation. Some people used record amounts of leverage to take part in the wild stock market (as of late).

With that said, the cost of borrowing will go up and the cost to service that debt will go up. The higher rates go, the more money that will be needed to pay for/down the debt. When that happens, less money will be spent on “productive” things.

That can slow growth and negatively impact the economy. That’s why central banks reduce rates in times of negative or low economic growth. It reduces borrowing costs and incentivizes people and companies to spend money instead of saving it.

Labor

The last thing I’ll say that has the ability to tie into the last point is the current labor shortage. There are more jobs available right now than people to take those jobs.

Small businesses, in particular, find it especially difficult to fill vacancies. Couple a labor shortage with a strong push from workers, unions, and government bodies to increase wages, and you get wage inflation.

When wage inflation becomes more prevalent, price inflation (CPI) becomes more likely. If companies have to pay their employees more, they need to account for that increased expenditure somehow. They turn to increase the prices of their products and/or services.

Demand is unlikely to suffer because of higher wages. People are making more money, so they should be able to afford higher prices, right?

Conclusion

If you read back some of my other posts, you’ll see I’m optimistic in select areas of the market, and I’ll stay optimistic in those areas no matter what type of economic pressures the country faces.

With all that I said, I believe there are enough economic pressures to cause a decline in the market and the economy, but there’s no telling when that’ll actually happen.

Related reading:

Employment, Stimulus, Rising Prices

Inflation, Gold, Semiconductors

Why Financial Literacy is Important

Disclaimer

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Don’t File Bankruptcy Due to Medical Debt-Do This Instead!

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bankruptcy medical debt

Medical debt can create a serious financial hardship. Many health-related bills are surprisingly high, and you may not be presented with a lot of options for handling it in a manner that feels manageable. However, that doesn’t mean that you have to turn to bankruptcy to address these debts. There are other approaches that can work. If you aren’t sure where to begin, here’s a look at what you can do instead of filing for bankruptcy due to medical debt.

Review Your Medical Bills for Accuracy

First, before you do anything, you should review all of your medical bills to make sure the charges are accurate. If the healthcare facility didn’t send an itemized bill automatically, request one. Then, review every single line item and charge to make sure you are only billed for services you actually received.

If you find an inaccuracy, reach out to the facility and dispute it. That way, you can ensure that any medical debt you have is genuine.

Ask About Cost-Reduction Programs

If you are part of a low-income household, you may be eligible for financial assistance programs through the healthcare facility that are designed to eliminate your medical debt burden. Some will reduce the amount you owe by a specific percentage based on your income level and the amount owed.

With those programs, you usually need to complete some paperwork to prove eligibility. Additionally, if you don’t have health insurance, you may be required to apply for Medicaid to qualify. However, once that is done, all or a portion of your debt is essentially eliminated.

Negotiate for a Lower Rate

In some cases, you can actually negotiate your medical debt down. This is especially true if you are able to make a substantial lump sum payment but can’t cover the full amount. Some facilities may accept what you can offer in exchange for closing out the bill. They’ll consider it paid-in-full, even though you paid less.

At times, you may be able to use other approaches as well. For example, if you can prove that other nearby healthcare facilities charge less for an item or service, you may be able to leverage that into a discount if the difference was significant.

If you aren’t comfortable negotiating yourself, you can opt to hire a medical bill advocate. These professionals can assist with the process, ensuring you get the best deal possible.

Work Out a Payment Plan

Most large healthcare facilities have payment plan options. Some are income-driven, while others are purely time-based. With the former, how much you pay each month is derived from your income, ensuring that you don’t have to pay more than a specific percentage of your income each month. With the latter, the amount you owe determines how long you can repay. Then, the debt is divided by that set number of monthly payments.

Usually, you can find out about these programs by contacting the provider directly. In some cases, simply requesting to be placed on a plan is enough. In others, you may need to complete paperwork and provide supporting documentation, though the process tends to be straightforward.

Now, even if there is a set payment plan formula, that doesn’t mean you can request something outside of the norm. This is especially true if what you owe is close to crossing the threshold for a better deal.

For example, if the facility offers an 18-month payment plan for debts of $5,000 or more and a 12-month plan for debts under that amount, if you owe $4,925, they might honor your request for the 18-month plan. However, not all facilities will, though that doesn’t mean you should ask.

Do you have any other tips that can help someone avoid bankruptcy and deal with medical debt? Share your thoughts in the comments below.

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Rockville Advisors Reviews: The Benefits of Debt Consolidation

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Are you living your life owing money to multiple creditors? Having this kind of debt to various people will cause a lot of stress, anxiety, and depression. It feels overwhelming because you probably don’t know where to start, but it doesn’t have to be this way. When you are struggling with debt and you don’t know what to pay back first, how much you need to pay, and what will help you overcome debt in a reasonable amount of time, you should look into working with debt professionals. Rockville Advisors can help you get out of this hole by working with you to consolidate your debt.

Debt to multiple credit entities is confusing, annoying, even terrifying. Putting your debts into place will help you get a handle on what you owe and pay it back as soon as possible. Rockville Advisors reviews will offer a clear perspective on what to do when you have no idea what your path should be.

Who are the Rockville Advisors?

The company Rockville Advisors is a financial firm that specializes in debt. They help clients pay back what they owe by working with them to consolidate their debts. Reviews on Rockville Advisors not only provide a new perspective that will give you the peace of mind necessary to go forward, they will put together a plan that’ll help you pay off debt. When you work with financial professionals like Rockville Advisors, you’ll find some of the best debt consolidation options out there. Consulting the professionals will inevitably lead you to Rockville Advisors debt consolidation.  

What is Debt Exactly?

Debt is when you have taken out a loan of some kind and you haven’t paid it back yet. If you don’t have the money to pay what you owe back, you will have to make payments. The longer you go without paying it back, the higher your interest rates will be. You will pay more. Debt is something you owe to someone else, you won’t be able to get rid of it and raise your credit score if you don’t pay it back. That’s why a lot of people look into debt consolidation for bad credit. While no debt is good, a lot of it can have you spinning out of control.

How Much Debt is Too Much?

Debt becomes a big problem when you have high outstanding debts to multiple creditors. While it may seem counter-intuitive, a debt consolidation loan can help you get a handle on what you need to pay back every month. When you have a lot of debt, it gets more and more difficult to beat. If you are wondering how to consolidate debt, any amount is too much but you can work on it with professional consultants. With reviews on Rockville Advisors, they provide avenues to get out of debt.

How Do I Get Out of Debt?

The best way to consolidate debt is to work with the people who understand it the most. Rockville Advisors provide the knowledge and understanding to give you a path forward. They will show you what you should pay off immediately, what you should consolidate, and how much you need to pay every month to get on top of your debt.

While it may include a debt consolidation loan, your credit score will not improve if you can’t pay off what you owe. It will take a dip at first, but then you will be able to raise your score and work towards financial freedom. With the right help, you’ll have the opportunity to get through this and work towards true financial independence.

Why Should I Consider Debt Consolidation?

You should consider debt consolidation because it is likely what you need if you have multiple debts to creditors. It is very difficult to get out from under debt on your own, contacting the professionals who can not only provide a clear path but offer you care and support that you need during this time. You’ll be a lot better off with people in your corner who understand debt and the consolidation process because you will have real guidance and people who know what needs to get done.

How Do Debt Consolidation Loans Work?

Debt consolidation loans are loans that you take out to pay off small debts. You will be taking out a larger debt from a single creditor instead of having to pay multiple entities higher interest rates. This gives you the opportunity to overcome your debt by lowering the amount you owe.

However, it is very important to keep up with payments and never pay the minimum. But don’t fear there is also the benefit that you will have a single monthly payment. When you strike the balance between what you can afford and what you absolutely have to pay to make progress, you’ll be able to pay back debt and feel good about it.

Changing your mindset is so important. If you are going through debt that you can’t get a handle on, you need someone to show you that it is going to be okay. When you have a concise plan that works for you and your financial situation, the stress will be alleviated and your anxiety will go down. You will feel better and feeling better is crucial to seeing progress and keeping up with your payments.

How Can the Rockville Advisors Help?

The Rockville Advisors don’t just offer expert guidance when it comes to your debt consolidation plan, they will give you the peace of mind you need. They will show you understanding and care. The path forward will show you that you can do this if you stick to your payments and do your best to pay off what you owe every time you have the money.

A company like Rockville will keep you accountable but they will also be nice to you. They will empathize with your struggle and tell you everything is going to be okay. You will get better with their plan and guidance. Don’t let debt take over your life, get started today.