Chicago Bankruptcy Lawyer Blog

I realize that today’s economy is bad for a lot of things – first and foremost, having money. But the optimist in me likes to focus on how it brings out the best in people.

For instance, I see us learning to curb our spending urges, doing more with less, and opening up as we discuss our financial lives with our family, friends and neighbors—stuff we never would have talked about with anyone before.

In some of us, though, the economy unfortunately brings out a darker side. I’m talking about scam artists. They’ve always existed—for instance, hacking into online bank accounts and tricking old ladies into coughing up their retirement funds—but as more people grow desperate for money, scammers have come up with new ides.

Their latest tactic takes advantage of the new stimulus plan. I’ve seen the ads myself on Facebook. A guy says he got a $12K check from the new stimulus package and, if you sign up for his program, he’ll help you get one, too. What’s the catch? Well, the government is not actually handing out checks—and definitely not checks for $12,000.

It’s certainly not the first scam to pop up on the Internet. If you’ve been looking for a job, maybe you’ve noticed the “work from home” ads. Once you pay for their kit, the advertisements say, you can make thousands of dollars a month just by writing letters, stuffing envelopes or reading e-mails. Or how about the kits (which, again, you must purchase) that show you how to start your own blog or website so you can start raking in cash from advertisers? I’ll let you in on a little secret—if you have to pay upfront for something, chances are it’s a not legit.

It’s only natural to be lured by the idea of an easy way out but, the truth is, there’s only one way to get out of debt—and it involves work. Just like exercising and eating right is (unfortunately!) the only way to lose weight, improving your financial habits is the only way to save money.

At DebtStoppers, we won’t make you buy some miracle kit. We know we can’t snap our fingers and make your debt disappear. But we can make the process easier. As debt relief experts, we can coach you out of a debt hole, a spending rut or a foreclosure trap.

Let us schedule a free debt analysis for your family so we can evaluate your finances to create a plan tailored to your individual needs. Send away for our free Financial Toolkit, check out free articles and videos on our website or sign up for one of our free community workshops in Chicago or Atlanta to learn how to spend less, save more and avoid foreclosure. It takes no cost to get started. No tricks, no scams, no strings, just permanent debt relief solutions.

I noticed something missing from the road recently—shiny new cars. Just one look around the freeway or parking lot and it’s easy to see GM and Ford aren’t bluffing when they say Americans have stopped buying their products.

The trend hasn’t really affected me personally because I’ve actually never purchased a new car (it's not that I’m trying to be some holier-than-thou thrift goddess—my family just happens to be in the used car business). But I know many people who, until recently, would lease a new vehicle every two years or less. They changed cars almost as much as they changed cell phones. These are the people who laughed at friends with 20-year-old (and still running) Toyotas and scoffed at those who bought “pre-owned.” But they’re not laughing anymore. They’re too busy making super-high car payments—or trying to figure out how to avoid repossession.

But even if you’re guilty of buying a new set of wheels before the economy tanked, there are ways to avoid being in the same boat. First, avoid buying another car if possible. If you can make it through just a few more years of payments, you’ll be free and clear (if your current driver does bite the dust, though, consider buying used—and, unless you trust the seller, ideally from a reputable company like Carmax). Second, take good care of the car you have—it will save money in the long run. Here’s how.

Use preventive maintenance

Think of this as healthcare for your car. You wouldn’t go without brushing your teeth and then be shocked to get a cavity, right? Well, forgo regular oil changes and car checkups and you are asking for trouble. Most car service centers recommend changing oil every 3,000 miles, while car manuals warn not to go over 7,000 or so. Under normal driving conditions, you can probably get away with somewhere in between (but to be on the safe side, stick to the 3,000-rule—especially if you tow things with your car or you live in a cold climate where it’s often started up in freezing weather). Also have your mechanic check small stuff, like tires, belts and fluid levels. Preventive maintenance is a small price to pay if it prevents the need for major repairs down the road.

Slow down

Every 10 mph you drive over 60 is the equivalent of gas going up 54 cents per gallon, according to CNN Money. The faster you go, the more air resistance your car faces—and the lower your fuel economy will be. I’m not saying to drive like Granny, but at least follow the speed limit. Not only does slowing down save gas and wear and tear to your car, but it reduces your chances of causing an accident and gives you more time to react when another driver does something stupid. Fewer accidents lead to lower insurance.

Save on insurance

Speaking of insurance, you should consider getting it if you don’t have it (and consider keeping it if you do). Yes, it’s expensive (I know I cuss every time I see our bill) but there are ways to make it less painful. Go online to a website like Carinsurance.com to compare rates. If you already have insurance but find you can’t afford it, consider changing your coverage. Lowering your comprehensive and collision coverage (to a level you’re comfortable with, of course) can save big bucks. Switching to a higher deductible can also lower payments, though you’ll have to go a couple years accident-free for it to really pay off. Other ways to save include buying a used car (or holding off on buying a new one)—the older your car, the lower your insurance cost—and decreasing mileage (by carpooling, for instance).

Carpool

Not only does carpooling save money on gas (which is slowly but surely getting more expensive), but it reduces mileage. When you lower your overall mileage, your insurance company will usually reward you with a lower bill. Calculate how much mileage you’ll save each year with your carpool schedule, and let your insurer know. That’s not all, though. Less mileage equals less oil changes, less wear on tires, and less time stuck in traffic (time is money, you know), not to mention less nasty pollution.

For more ideas on how to save, order our free Financial Toolkit. Or receive it in person when you sign up for our upcoming community workshops. And if you’re worried about more than just saving a few bucks—say, you’ve dug yourself a serious debt hole and now you can’t afford insurance or creditors are threatening to take your vehicle—we can help you there, too. When you fill out our free debt evaluation form, we’ll schedule a one-on-one analysis with a debt relief attorney who specializes in helping people dig their way out of debt while keeping their cars and homes.

Take care of what you have—be it your finances or your car—and it will last longer. And don’t worry that the grass is greener (or the cars are shinier) on the other side of the fence—it’s also a heck of a lot more expensive over there.

My foray into the work world started out responsibly enough. Most of every check I earned at my town’s burger joint went straight into my brand new savings account. That is, until I’d accumulated enough to finally purchase my dream car (OK, not really, it was a Ford Festiva). At which point I decided to reward myself for my discipline by blowing every cent on whatever I felt like—clothes, CDs, fast food, you name it. As you might imagine, it really got out of control once I got my first credit card.

Of course, I eventually grew up and started paying the bills. But while my spending wasn’t as frivolous, my saving was still nonexistent. Old habits die hard. As long as I had enough to pay off my minimum balances, I guess I thought I was OK.

There were two problems with this line of thinking, though. First, I didn’t always have enough to pay the bills. Second, I wasn’t thinking of the future. Basically, I was in denial. I finally came to my senses when I realized that, even though I was diligently making minimum payments, my credit card debt was still growing. If I didn’t do something, I wouldn’t be able to keep my car or apartment, let alone have enough to someday buy a house. Living paycheck to paycheck just wasn’t going to cut it anymore. I had to start saving.

Now I try to sock away 10% of each paycheck. If I can save even more than 10%, I will. When I have a rough couple weeks, sometimes I don’t save at all (I’m working on that, though). Of course, I haven’t had the fun of watching my stash build up yet because most of the money has gone to erasing my debt. But I know it will pay off in the long run.

Think about it: If you’re paying minimum balances (often just 2% of the entire balance) on a credit card with an annual interest rate of 20% or more, you’ll be making payments every month for the rest of your life because you’ll barely be covering more than interest. But if you can bite the bullet and cough up a bit of your paycheck each month, you can pay off debt in years, not decades. And every penny you save after that day will be for you, not your creditors.

There’s really no way around it. If you want to stop worrying about whether you’ll be able to make the rent or mortgage, you’ve got to get out of debt. And if you want to get out of debt, you’ve got to save money.

If you’re not sure where to start, why not consider saving the average of $8 a week most Americans are supposed to receive thanks to the new stimulus package? It’s money that you were doing without anyway, right? That same principle can be applied elsewhere, too. Take that gym membership you don’t use—you’re doing fine without that spending leak, so why not just cancel it and save the money?

For lots more ideas on ways to save—and help staying on track—check out our Give Yourself a Raise flyer (and the other cool stuff in our free Financial Toolkit). Or join us at one of our upcoming community workshops in Chicago and Atlanta for in-person advice on debt relief, how to avoid foreclosure and more (not to mention a free dinner and Dell laptop giveaway). And, as always, you can also sign up for a free one-on-one debt analysis. Enough with paying credit card companies. We’ll show you how to start paying yourself.

I used to have a pretty good relationship with my bank. I always met my minimum balance and never bounced checks, and in return they took care of my money. Or so I thought.

I recently noticed they had started automatically deducting $8 from my checking account every month. Why? Because I don’t have direct deposit. While I’d love to have steady money deposited automatically into my account monthly, I’m currently self-employed—which means I don’t get paid regularly by one employer. So my bank was basically levying its own self-employment tax.

I called them up and demanded they waive the fee. They couldn’t, but could transfer me to a different account so I could avoid the fee by keeping a much higher balance (which I probably won’t be able to maintain). Fine, I said.

In the process, the customer service rep on the phone all but scoffed at me for obsessing over a measly $8. I guess most people just accept it. But to me, it was about principles. I’ve given up a lot of little luxuries lately—regular haircuts (I used to joke that I couldn’t remember what my natural hair color is—now I know…it’s brown), manicures, name brands and my favorite coffee shop. With $8, I could be treating myself to a couple mochas or a lunch away from my desk. Instead, it was just getting tossed away. I wouldn’t burn 8 bucks—so why should I be OK with having my bank take it?

Once I got fired up about the bank fee, I started inspecting my statements more closely. I realized I’d been throwing away a lot of money. There was a $9 monthly fee for a business website—which I never set up. Another $10 was going to Netflix each month—even though I still have an unwatched DVD I received before Christmas. I made some cancellations, and with one fell swoop, saved $30 a month. That adds up to $360 a year. Not enough to make me rich, but no small change, either.

If there’s a moral to this story, it’s to check your bank statements. And your credit card statements. In fact, don’t pay anything without reading the fine print. You don’t know what someone is trying to steal. You have the right to every post-tax penny you earn. Anything you save—no matter how small—will pay off in the future.

If you really want to make your savings work for you, pay off your debt first. When you make minimum payments on your balance—usually just 2% of the total—you’re mostly paying interest.  Since creditors are probably charging you 20% interest annually, you might not ever touch the principal (the amount you charged in the first place)—meaning you could be paying your credit card company for the rest of your life! The more you pay over the minimum each month, the less interest you will pay in the long run—and you will spend less years of your life paying it off.

Saving money is a challenge as it is. It doesn’t make it easier that bank and creditors will stoop to any level to squeeze more interest and fees out of you. If you’re looking for an ally in the fight to keep your money, you’ve come to the right place. Sign up for our personal debt evaluation and we’ll come up with a plan to get you out of debt. So your hard-earned savings can stop flowing into the greedy hands of banks and start going into the pockets of your family—where it belongs.

Today is supposed to be the most romantic day of the year. But truth be told, a crappy economy can be a big romance killer. In fact, money in general is one of the leading causes of family disagreements—and divorces. But it doesn’t have to be that way.

Want to give your honey the best Valentine ever? (OK, maybe not the best, but the most practical?) Give them your promise that you’ll do whatever it takes to get out of debt—together. Read on for some tips on staying in love while spending less.

Communicate

I admit it. I used to come home with a new pair of shoes, dispose of the box and receipts like they were a dead body, and casually start wearing them as if they’d been in the closet forever—all to make my boyfriend think I was low-maintenance. Of course, it didn’t work long. Mostly because he’s not blind—or stupid. But not all debts are as visible as a new pair of heels.

Many debts deepen because the partner who overspends handles their own checkbook and bills (or worse, they handle the finances for both people in the relationship). As they sink further in debt, they fear their partner’s reaction and hide the problem. Because they don’t ask for help, the debt accumulates. In the worst case scenario, they hide the unpaid mortgage bills and eventually the foreclosure notice—but then it’s too late.

So what’s the solution? Start talking! When you’re open about money, you strip away the guilt, fear and anger—so you can worry about fixing your finances, not a strained relationship.

Work together

There are some things that are just too difficult to suffer through alone. Take exercise. No matter how good my intentions (and how many extra pounds I have to burn), I just can’t stick to a workout plan myself. There are too many good excuses out there. But when I make plans to go for a jog with a friend, I can’t bring myself to let her down. It’s motivating knowing someone is rooting for me—and that I need to be strong for them.

It’s the same thing when you’re trying to get out of debt. Rather than avoid your problems, work on them together. Two heads are better than when one when brainstorming ways to budget. And because a strict budget can be hard to stick to, you’ll be there to keep each other in line. Maybe come up with a reward plan—for instance, if you can cut out shopping trips and restaurants for a month, you’ll treat yourselves to a date night. It will be good for your wallet and your love life.

Ask for help

There are plenty of reasons why relationships don’t work out. People disagree about values, religion and politics—and sometimes they’re just plain incompatible. But money doesn’t necessarily have to be one of those reasons. Sure, if someone is just plain irresponsible—with everything, not just spending—chances are they won’t change. But if they’re otherwise a decent human being? There’s still hope. Like cigarettes and nail biting, spending is a habit that can be broken. At DebtStoppers, we can show you how.

I watched madness break out at a department store the other day. Shoppers crowded the Valentine’s Day sale aisle, frantically snatching up items like pink and purple plastic dishes with kissy lips on them and T-shirts printed with candy hearts. I just tried to stay out of the way.

Surely most of the stuff these women bought can only be used a couple times a year, at most. It begged the question, “Could there be such a thing as a bad sale?"

For me anyway, the answer is yes. Just like there really are stupid questions, sometimes there are stupid sales. On the surface, sales seem like they should be good just by nature. You’re getting a product at a discount, right? But if you pay $50 for an item that is normally $100 but that you wouldn’t have purchased at regular price—then the sale has cost you $50. Meaning you’ve just fallen victim to a store’s marketing scheme.

So how do you tell when a discount really is a deal? As a rule of thumb, buy only the things you need—or for which the benefits outweigh the costs. I’ll give you a couple of examples.

Like a lot of people, I eat cereal for breakfast most days. While cereal—name-brand cereal, anyway—certainly isn’t cheap, there are so many types that there’s always something on sale. If Cheerios are two for $5 one day when they’re normally $4.50, I can get them at nearly half price. The same goes for all kinds of other grocery goods, from coffee (that’s the stuff you buy in the store, not at Starbucks) to meat (stock up on chicken when chicken’s on sale, beef when beef’s on sale) to paper towels and toilet paper.

(Of course, there’s another option. Buy generic and you’ll save every time, often get very similar quality and don’t have to bother looking for sales or clipping coupons.)

Here’s another example. For a long time now, I’ve had my eye out for a nice, warm winter parka. I’ve been getting along just fine wearing layers under my wool coat, mind you, but I want something I can snuggle up in on the weekend, wear when I’m working in the yard (my coats aren’t exactly machine-washable) and that’s preferably waterproof.

If I see one on sale that meets all my qualifications—good price, good quality, good fit, etc—I’m going to buy it. If not—or if I get in a tight place where I can’t shell out any extra money—I’ll keep waiting and make do with what I have for the rest of the winter.

My point is, you can still shop sales, but be selective. Don’t let this week’s coupons determine everything that goes on your shopping list—compare you’re shopping list to this week’s coupons and clip accordingly. For more tips on making do with less (and learning how to save up to $20,000 a year in the process), take a look at the “Give Yourself a Raise” tool in our free Financial Toolkit. And don’t forget to visit us on the Web, where you can sign up for a complimentary debt analysis , find information about our upcoming community workshops and get even more advice.

And remember: When in doubt, just don’t buy it. Hey, if you’ve been getting along just fine without it so far, why mess with what works?

When it comes to Valentine’s Day, people tend to fall into two camps. On the one side, you’ve got your traditionalists, who always have Feb. 14 dinner reservations—or at least exchange gifts. Then you’ve got your non-believers—people who write off V-day as just another holiday invented by Hallmark, ala Mother’s Day and Grandparent’s Day.

I used to fall squarely into the first camp. It wasn’t so much that I was materialistic or enjoyed wasting money—I just like a good excuse to dress up. So I’d make my boyfriend get reservations a month ahead, buy a brand new outfit (probably some new makeup to go with it) and get him a card and small gift. When the day came, we went out to a nice (albeit, pricey) restaurant and then maybe to a movie. And of course, he’d buy me stuff. In all, it probably set the two of us back a couple hundred bucks.

I never had a problem with the notion that Valentine’s Day might have been created to sell cards. Fine, cards are a couple bucks a pop. But I’m finally starting to accept what I’d been denying: that it’s morphed into a much bigger, scarier industry than just cards. Between clothes, shoes, makeup, fancy lingerie, haircuts, jewelry, roses, candy, and teddy bears, the average couple could blow a small fortune for Feb. 14. And there’s nothing romantic about going broke.

With the economy in shambles, I can’t waste a dime. But I don’t want to give romance up for good! So I’ve come to a compromise.

Rather than peg Valentine’s Day as a total fraud, I say we should make it about love. Get back to the heart of the matter, if you will. And maybe buying a bunch of commercial stuff isn’t the best way to show your boyfriend/girlfriend/spouse that you love them. If today’s economy has taught us anything, it should be to find meaning in every purchase we make—otherwise, we shouldn’t make it.

So consider cooking your sweetie a homemade dinner and dessert—something chocolate, perhaps?—and picking out a DVD at home (you know you have a ton that you never watch!). Do you live near the city? Sometimes taking a stroll downtown can be romantic—and free. And if you happen to walk by advertisements beckoning you to come into the jewelry store or chocolate shop to drop big bucks? Just ignore them.

I’ll admit that cutting costs does take discipline—but I bet it’s less painful than you might imagine. For a wealth of ideas to get you started saving, try our free Financial Toolkit. Think you’re beyond help? Nonsense. It’s never too late! Give us a click or a call at DebtStoppers. With our free debt analysis, we’ll work out a personalized plan to get you out of debt (and save your house, too!).

Saving money isn’t impossible. Nor is it boring. When you’re forced to search for ways to indulge, it makes the indulgences you are able to partake in all the more sweet.

As Americans, it seems we’re always on the lookout for a miracle. Miracle cures, miracle diets, miracle debt relief. Turn on the TV or flip through nearly any magazine and you’ll see what I’m talking about—ads for a dating website that will hook you up with your dream guy in a month (or you’ll get another month for free), a casino that pays off every time, a job where you can work at home answering e-mails and rake in six figures, or a weight loss pill that can melt off the pounds without diet or exercise.

But these aren’t real miracles. They aren’t supernatural phenomena or acts of God—they’re just examples of us looking for the easy way out. And most of them don’t even work (think about it—if being skinny was really as easy as taking a pill, we’d all look like supermodels by now).

Don’t get me wrong, I wish I could tell you there was a miracle for making it though tough economic times. I’ve spent time waiting for one myself. But the truth is, fixing your finances takes old-fashioned hard work. Just like the only way to lose weight is through diet and exercise, the only sure way to have more money is through saving it.

It’s simple math. You get a paycheck. You pay bills and buy the basics you need to survive. Whatever is left over is yours to spend (or save). But if you’re like me, it probably wasn’t enough at some point or another. So you spent more than what was left over, and it went on the credit card. Maybe you bought cell phones, CDs, Starbucks, clothes, restaurant meals, books—it doesn’t matter, because the end result is the same. You ended up in debt. So along with the necessities like food and the mortgage, you found yourself making payments on dozens of other things you didn’t really need.

So what can you do about it now? Well, there might not be a miracle, but fortunately there is a cure. Spend less than you take in. It’s as simple as that. And if you think you can’t save because you’re struggling just to buy the bare necessities, it’s time for a budget.

Find as many places as you can to cut back. Then do it. I make my own coffee every morning and afternoon so I can’t find an excuse to visit the coffee shop anymore. And I treat myself to new books—from the library. Maybe you can make time to brown bag your lunch instead of eating out—at least for most of the week. Or hit the pavement in your neighborhood instead of paying for the gym.

We’ve got a bunch of ideas to get you started in our free Financial Toolkit. Or schedule a free one-on-one debt analysis with one of our attorneys for a personalized solution. Maybe we can’t perform a miracle, but—with a little time and effort on your part—we can show you how to make your debt disappear.