Discharging Student Loans Through Bankruptcy

488960049Student debt is weighing on you like a baby grand piano on your back. You honestly have no idea how you can make payments. You’re considering throwing up your hands and declaring bankruptcy to rid yourself of the unworkable debt. But not so fast. There are a few things you need to know before you go down this path.

Who can have loans discharged?
In order to have your student loans discharged, you must show that paying them would cause an “undue hardship” for you and/or your dependents. Generally speaking, in practice this is a very tough standard to reach.

How is hardship determined?
Each court can determine what standard they use to determine undue hardship. A common measurement is known as the Brunner test. Under this test, you are allowed to discharge your student loans only if:

  • You cannot maintain a minimum standard of living for yourself or your family because of a very low income
  • Your current financial hardship is likely to endure for the life of the loan
  • You have made a concerted effort to repay your loans

Other tests bring different factors into the equation, but in general the recurring themes are a very low income and a financial situation that will probably remain difficult.

How do I know if I can discharge?
Given the varying methods for handling these types of cases, your best bet is to consult with a bankruptcy attorney in your area who has experience dealing with student loan issues. If you’re worried about the cost of using the services of an attorney, research organizations that provide free or low cost help in your area, such as Legal Aid.

If you feel like the above hardship criteria apply to your situation and you don’t foresee being able to pay back your loans, you should definitely get in touch with an attorney. Just know that you’ll need to show evidence of your difficult situation and that the going may be tough.

Regular vs. Student Credit Card

iStock_000000080595MediumIf you’re a college student, a credit card can be a great way to learn the ins and outs of using credit wisely while also building a nice credit rating. But it’s important to keep in mind that just because your card has the same logo as mom’s or dad’s, that doesn’t mean all the terms are the same.

While credit card companies are willing to offer you a credit card, they still see your student status as a risk. You likely have a small income – if any – and scant experience using credit. Because of these factors, the issuer of your student credit card is probably going to make a few tweaks to the terms for your card. These often include:

  • Larger annual fees
  • Higher interest rate for charges made to the card
  • Lower credit limit
  • Scaled-down cash-back offers, reward points or other benefits
  • Requirement of a co-signer

If you’re going to use a student credit card – or any credit card for that matter – you need to have a plan in place for how you’re going to use it. If you’re like most college students, your best course of action is to have one regular, fairly small expense that you pay with the card. An example would be a monthly trip to the grocery store.

It’s also vital to know all the particulars of a credit card before you fill out any paperwork or pixelwork. High interest rates or low limits aren’t necessarily deal breakers if you are planning on using the card judiciously and paying it off each month. The annual fee, though, is something generally worth paying attention to since it is a cost you will definitely have to pay.

Many websites allow you to compare various student credit cards, so use their side-by-side charts to identify cards with low fees and other favorable terms. Also be sure to contact your local credit union or community bank to see what they offer. Avoid signing up for a card on-the-spot because you get a free gift or the sales pitch sounds enticing.

Assuming that your plan isn’t to be a student forever, it’s also wise to ask what happens to the card when you are out of school. If you’ve used the card in a responsible way, will the limit be raised and the interest rate dropped? Will you have to open a new account to get better terms? Knowing this before you open the card can make the decision easier.

As long as you know what you are getting into, a student credit card can be a wonderful tool for preparing you for financial life outside of academia. Study up on the important factors and never be afraid to get help for the confusing parts.

Homeowners Insurance Discounts Checklist

iStock_000007589790SmallDoes looking at the rates for your homeowners policy make you long for the days of renting…or even living under someone else’s roof? If so, don’t throw in the towel just yet. There are ways to save on homeowners insurance that you may not have even thought of yet. As an added bonus, some of them involve steps you may have already taken to improve or protect your house. Be sure to ask your insurance provider about discounts for:

  • Smoke alarms
  • Sprinklers
  • Fire extinguishers
  • Security cameras
  • Alarm systems
  • Deadbolt locks
  • New electrical writing
  • New furnace
  • New foundation
  • New pipes
  • Roof repair or replacement
  • Lack of claims in the past
  • Membership in a Homeowner’s Association (HOA)
  • Not smoking
  • Gas sensors
  • Moisture sensors
  • Handrails next to your stairs
  • Bundling insurance policies
  • Getting a policy through an employer, professional association or alumni group
  • Being above 55 and/or retired
  • Living in a gated community
  • Renovating your home
  • Making your home more earthquake resistant (in certain areas)

If you’ve maxed out your savings from each of these measures, consider raising the deductible on your policy. This can in turn lower your premium. However, make sure you will be able to afford the higher deductible in case a claim is needed.

In general it’s a good idea to stay in contact with your insurance provider. First, you may learn about improvements to your home that basically pay for themselves. Second, by calling your provider at least once every six months, you can stay on top of any of the latest breaks being offered.

As with most policies or plans, if you periodically do some digging you can find some savings. If you’re currently paying for homeowners insurance, making a commitment to learning about savings and staying in touch with your provider can save you thousands over the life of your policy.

How to Rent Like You’re Going to Own

473009317If you’re currently renting an apartment but would like to own a home someday, you’ve probably started to think about what it will take to get the keys to that house. As a renter, you should know that there are a number of ways you can use your time paying for your lessor’s mortgage as a springboard toward getting your own.

Live below your square footage means
Bottom line: splurging on a big apartment with all the extras can feel satisfying, but it can also take money away from your home-buying goal if it comes with a bigger price tag. Consider downsizing your current living situation to get into a house more quickly.

Don’t accumulate aggressively
If you’re earning a comfortable income, you may also be experiencing a desire to feather your nest a bit. Not only will a larger pile of possessions cost more to move into a home, but it can also lead you to buy more house than you need just to fit it all in. Getting in the habit of creating a comfortable and pleasant home without a lot of clutter will help you save and also make for a thriftier transition.

Goal reminders
Your apartment doesn’t have to be just the place where you store your stuff and sleep at night. It can also serve as a way to keep you focused on your home-purchasing goal. Keep pictures of the type of home you are interested in taped to your laptop or fridge. Keep a saving chart displayed prominently inside a cabinet or your wallet. By having these reminders around, you can maintain your focus even when saving isn’t at the forefront of your mind.

Get utilities smart
Consider renting as a trial run for mastering the delicate art of efficient use of utilities. By brainstorming ways to save on water, electricity, heat, etc., you establish positive habits that will serve you well when you make the big move into a home of your own.

Be lease careful
In your drive to improve your credit, don’t forget about the potential impact to your credit of breaking a lease. Like individual rent payments, breaking a lease isn’t going to show up on credit reports in most cases. However, if the person or company leasing you the apartment takes legal action against you to recover the deficiency amount you owed on the rental agreement, this could result in an ugly judgment showing up on and damaging your credit reports.

Pay your mortgage now
If you haven’t done so already, now is the time to sit down with pencil and paper – or laptop and spreadsheet – to figure out what you can truly afford for a future mortgage payment. While there are different ways to arrive at this number, a rough estimate in many cases is to figure that your mortgage payment should be no more than 35% of your monthly pre-tax income. If this 35% figure is more than your current rent payments, make a commitment to start depositing the difference into a savings account each month. This way, you train yourself to adjust to this new monthly obligation while also beefing up your down payment, closing fee or maintenance fund.

Renting an apartment doesn’t have to feel like serving out a sentence while waiting to get to the home you really want. Instead, think of it as a way to prepare yourself for dominating the process of getting into that home.

How to Keep RFID Credit Cards Safe

iStock_000000080595MediumMany technologies have emerged in the past few years to make your financial life easier. However, these new tools have also created the potential for criminals to find new ways into your sensitive data. RFID credit cards are a chief example of this new dynamic.

What are they?
RFID stands for radio frequency identification. Like a smart phone, these smart cards allow for transactions to take place without the card being swiped in a card reader. The technology is intended to make paying for goods and services as simple as possible. It is often marketed as way to pay by “tapping” or “waving” your card.

How do I know if I have one?
To figure out if your credit card has RFID, you can:

  1. Look on the card for the logo or name of a company providing RFID services. Common names are PayWave, PayPass, ExpressPay and Zip.
  2. When in doubt, call the issuer of the credit card and simply ask.

What is the risk?
Thieves have taken advantage of scanning devices that can allow them to intercept the information from your card while they are in close proximity to you. This allows them to quickly process a payment from your card to an account they control.

What steps can I take to protect my information?
You can:

  • Not get an RFID card if you are concerned about the risk
  • Buy a special protective wallet, sleeve or card case
  • Make a homemade protective shield out of tin foil or Tyvek
  • Monitor your account information for suspicious activity

There isn’t any evidence currently of widespread data theft through RFID technology. But if you decide to go with an RFID card, you should only do so after implementing a plan for protecting your information. If you are concerned about the potential risk, you may be better off opting for a card without RFID capability.

7 Tax Factors That Could Increase Your Audit Odds

8663948The IRS has taken steps to project a kinder, more understanding image in the past few years, but that doesn’t mean getting an audit from them is going to be lollipops and rainbows. You’re still much better off avoiding the pitfalls that can lead to a closer look from the IRS.

Failing to report income
You aren’t the only one getting copies of your 1099s and W-2s. The IRS gets these too, so if you want to avoid a sit-down with an auditor, you’ll do well to include all forms of income you’ve earned.

Higher than normal deductions
The IRS calculates average expected deductions for different levels of income. If the amount you are deducting doesn’t fit with how much money you have coming in, this could raise a red flag. This shouldn’t dissuade you from taking the deductions you are due; just know that you may be asked to provide further documentation.

Improper home office deduction
Keep in mind that there is a somewhat complicated list of qualifications you have to meet in order to take home office deductions. Be careful to review the IRS verbiage in this area carefully and/or consult with a tax professional.

Unreported investment income
Remember when we talked about the IRS getting your work income records? They also get your investment data, so don’t fudge the numbers in this row either.

Unfinished return
To the IRS, an incomplete return can look like a sign of general sloppiness in tax preparation. Missing information in one area can make them start wondering what else you forgot.

Hobby losses
A popular tactic for some taxpayers in the recent past was to write off expenses from a hobby as business losses. The thinking was that this practice could be justified by claiming that the pastime was a money-making venture that simply failed to get off the ground. However, the IRS has taken measures to try to ferret out this kind of practice. If you are going to write off a side-gig as a business loss, make sure you meet the standards for doing so.

Excessive Schedule C deductions
Schedule C is a terrific way for the self-employed to deduct expenses relating to running their business. Don’t go overboard, though. You are required to keep documentation for these types of deductions, so don’t try to “slip by” any questionable items.

Studies have shown that less than 1% of taxpayers in the United States get audited. To put yourself on the happy side of that number, your best bets are always to err on the side of caution, keep detailed documentation and work closely with a tax professional.

The Money Buddy System

iStock_000000479959LargeLike losing weight or quitting a smoking habit, improving your money choices can be easier when you have someone who is going through the same thing. If you are trying to stay on the right path but find yourself veering off, you may find it easier to stick to your plan if you have someone to gently nudge you in the right direction from time to time. Like any partnership it takes the right approach and the right techniques.

Find someone with a similar situation
If your neighbor has 5-digits in his monthly pay and you are in the low 4-digits, the resulting difference in goals and spending/savings habits is likely to make him not the best buddy for you. While you don’t have to ask for a copy of a prospective buddy’s latest tax return, try to gauge whether or not you are in a similar financial circumstance.

Be a good listener
What you get out of the buddy system will depend in large part on what you put into it. Make yourself available to hear out your buddy when a problem arises. Also, don’t be afraid to share your own experiences. In most cases, you’ll find that your buddy has been through something similar.

Talk about goals
Share your short-, medium-, and long-term financial goals with your buddy. It will be a lot easier for your buddy to help you stay motivated if they know what you are saving for and can bring that up at crucial times.

Share budgets 
It can be intimidating to have another person examine your personal financial details, but by allowing your buddy to look over your spending and savings plan, you open up more possibilities for finding better ways to maximize your money. Your buddy may have tips for saving money that you never even thought of.

Shop together
Ordinarily, financial experts recommend shopping alone as a way to save money. However, if you could use that good angel on your shoulder at critical times, schedule your shopping with your trusted buddy. Review your proposed purchases together before checking out. Don’t be afraid to accept constructive criticism.

Be firm
If you feel your buddy has made or is about to make a bad choice, don’t hesitate to say so. It’s smart to be tactful, but if you are too bashful about offering advice, you run the risk of becoming an enabler of bad decisions.

Find alternatives
One of your best strategies for avoiding retail therapy is to find free alternatives that you enjoy with your buddy. Whether it’s going for a walk, having a nice conversation, or playing a game of cards, identify activities that you both enjoy and can use to blow off a little steam.

Share tips
A good money buddy contributes to the collective betterment on a regular basis. Share articles, blog posts, or other helpful information you find. By fostering a sense of togetherness, you can bring strength to your partnership.

Money is a big topic with a lot of complexity and emotion involved. You should never have to feel like you are tackling your financial situation alone. If you could use a helping hand, don’t be afraid to reach out.

Filing an Internet Crime Complaint with IC3

93087206One of the most frustrating things about encountering criminal activity on the internet is that it is very tough to find out who is perpetrating it. For example, an email meant to trick you into giving up your sensitive information doesn’t give you any real clues into who actually sent it. While you may not have the ability or the resources to track down the people behind online scams, there is a way for you to pass along information to people who do.

The Internet Crime Complaint Center (IC3) is the result of a partnership between the FBI and the National White Collar Crime Center. Its purpose is to:

  • Research complaints
  • Develop the complaints into information useful for investigations
  • Forward that information to the appropriate law enforcement or regulatory agencies

While IC3 doesn’t intervene in individual matters, they do aim to make the internet safer for everyone by detecting patterns of criminal activity.

If you suspect you have witnessed or been a victim of criminal activity on a website or via email, you can file a complaint at: www.ic3.gov/complaint

Per the IC3 website, you should be prepared to include the following in your complaint:

  • Your name
  • Your mailing address
  • Your telephone number
  • Name of the individual or business that defrauded you
  • Address of the individual or business that defrauded you
  • Telephone number of the individual or business that defrauded you
  • Website and email address of the individual or business that defrauded you
  • Specific details on how you were defrauded
  • Any other relevant information necessary to support your complaint

It’s important to remember that filing a complaint with IC3 doesn’t take the place of contacting law enforcement to file a police report.

While registering a complaint with the IC3 might not rectify your current situation, it can certainly make the internet experience safer for you and everyone else in the future.

Steps for Disposing of a Credit or Debit Card

iStock_000004015725XSmallWith all the data breaches and other security issues going on these days, you may be finding yourself replacing credit and debit cards on a regular basis. If you’re using the old method of cutting the card in half and throwing it in the recycling bin, you may not be doing enough to secure your information. Instead, you should:

1. Cut lengthwise (from side-to-side) along the black bar on the back of the card. This will destroy the magnetic strip that houses your vital personal details.

2. Cut the resulting two pieces of card into as many pieces as possible, so that your name, account number, 3-digit security code, etc. are unreadable.

3. Make sure the RFID/smart chip has been cut through and thus destroyed. It is usually a shiny overlay or insert on the front of the card.

4. Dispose of the various pieces of the chopped up card in different recycling or trash receptacles to lessen the chances that an identity thief will be able to reassemble the card.

It may sound like overkill to cut your card into a hundred pieces, but it only takes a little effort and it protects your identity from being taken over by a dumpster diver.

How to Avoid Getting Scammed on Craigslist

iStock_000019621846XSmallPeople are buying and selling all kinds of things these days on craigslist, the online classified ads site. You can get everything from gardening services to opera tickets to watercraft. But with the site offering no real way to verify claims made by buyer or sellers – or even to check that they are who they say they are – transactions can feel pretty risky.  It’s definitely a good idea to tread cautiously on craigslist and keep a few important rules in mind when doing business there.

Ask questions
If a seller is offering the hottest electronic gadget on the market for a fraction of the normal secondhand price, ask why. The seller can always make up an excuse, but by engaging them in conversation – preferably on the phone – you can get a better feel for where they are coming from.

Don’t be afraid to walk away
Unless they start allowing people to offer up their vital organs on craigslist, chances are what you’re looking to buy isn’t a MUST get. Don’t let yourself get sucked into the emotion of getting a great deal. As much as possible, stay detached and rational – then you won’t let yourself make a decision that deep down you know is wrong.

Get some face time
Don’t ever trust someone who promises to send you an item as soon as you send them the money. Only do deals that allow you to meet the seller in person with the exchange of goods/money taking place there. If you’re concerned about your safety, meet in a public place.

Share carefully
It’s OK to share your email or phone number with a buyer or seller to make the transaction go more smoothly, but if they start asking for account numbers, Social Security number or other sensitive data, it’s time to pull the plug.

Examine the goods
To borrow a phrase from the corporate world, an “agreement in principle” is a good way to make sure you haven’t committed to buying an item without being able to look it over first. Even if that couch looks amazing in the pictures, the smell might be another story.

There are without a doubt some great opportunities for both buyers and sellers on craigslist. If you’re careful about how you proceed with potential deals, you can put yourself in line for many happy outcomes.