This probably belongs on my Comcast / AT&T post but I will break it out since that one is kind of long. When Comcast comes out, they bring you a modem. I advocated in my last post that you get the skinniest bundle of telecom services possible - which means just the basic Internet for most people. If you are Internet only or internet/TV only, you can purchase a refurbished Arris cable modem on Amazon for $35.00. First check Comcast's site or tech support to ensure compatibility. Comcast will charge you $11/month to use their modem. This amounts to savings of around $229/ 2 years to buy your own. While that may not be huge, the focus is on developing frugal/smart consumer habits and making many small smart decisions that, taken together, can result in huge savings and improved consumer self-confidence. I believe AT&T may include the equipment, but if not investigate purchasing your own.
Car purchases are the second largest purchases for most people. other than a house. As such, this is a big opportunity for a business to take advantage of us or get us to overspend. It deserves a more detailed blog post than I can write today, but I will comment on a few things while a bigger more detailed post is in the works.
Payments - like the cell phone, we overspend on cars by focusing on the monthly payments. There are at least two transactions in a car purchase, really, for most people. Part 1 is the purchase price negotiation. Part 2 is the financing negotiation and closing the deal.
Car dealers are great at getting us to jump to Part 2, and this enables them to make us overspend on both the car and the financing. My suggestion is that you enter the dealership telling them you plan to pay by cashier's check, and begin negotiating the price. Costco and insurance companies like USAA offer car-buying services that may make this practice much easier. I usually buy used, but the one time I did buy new I found the USAA service to be excellent and the best price I got by far on a new Subaru. Focus first on price. You should almost always go for the base or mid-level trim. The car company makes lots of money off leather seats and alloy wheels! When you go to sell, you won't recoup more than a small fraction of these expenses.
Once you have the best purchase-price deal, tell the dealership you plan to shop around for the best financing and ask them what they can do. Once you get your answer, walk out even if it is a good deal. Go home and call your bank or credit union - look online for rates.
Suppose the dealer has the best rates so you go back to finalize things. If so, they will next take you to who I call the "ripoff dude". He will try to sell you an extended warranty, some sort of spray for underneath the car he says makes it not rust, and an alarm. Say a firm no to all of it and whatever else he has. The ripoff dude on my Subaru purchase resorted to guilt tripping me - saying they needed to make some money and I needed to help out! Dealers do not make nearly as much off new vehicles but they have replaced this revenue stream with financing and rip off dude's array of unnecessaries. If you want the extended warranty, you can get it later and you may be able to buy it online from another dealership of the same car that discounts them over the Internet.
Physical cash is on the way out - the writing is on the wall. Venmo, Google Pay, Apple Pay - along with good old Visa and Amex - is where the future is. Some stores no longer accept cash in the US, and this is even more common abroad. This is unfortunate, because using physical cash is a great budget-discipline tool.
In short, it is much more painful to pull out physical cash and hand it to the teller than it is to insert the chip. This pain will instill discipline in us. Retailers would hate it if we switched back to cash from "easy money plastic" because we would spend so much less.
Spending cash has a cost - no frequent flier miles, some of the purchase protection aspects of a good credit card. But especially for casual shopping trips, I encourage my clients to only spend physical cash for 90 days, and see whether they are cutting back their spending.
Since bankruptcy is both the end of the road and a new beginning for credit, many clients have no choice but to use cash or an ATM card for purchases. An overwhelming number have told me they were just as happy, and had everything they needed, and were spending much less than they did in their plastic days. A large number have told me they continued to do this voluntarily despite having restored their credit.
If you do not want to employ this strategy for all or even most purchases, consider using it when shopping for non-necessities or things that you think you tend to overspend on.
Like me, many of my clients shop at Costco. I have thought a lot about dollars and sense and Costco trips. On the one hand, they have great deals on things we all need like paper towels and detergents. But they also have lots of things we can live without and they are great at getting us to buy them. I have a two-fold strategy I use and suggest my clients use to keep down the Costco bill.
First, sign up for Google Express for delivery of large, bulky stuff. It can be delivered to your door without extra charges. In addition to the convenience? It keeps you out of the store!
I have noticed how when it rains and I go to Costco, there are great looking umbrellas for sale as soon as I walk in the door. A little nip to the air, and sure enough - a great deal on Patagonia jackets just past the membership-card checker lady! Costco is great at what I call "need discovery enabling."
You go in the store, and the next thing you know, you realize there are all these things you needed that you didn't even know about! The umbrella, the jacket, the camping supplies. The enormous bag of organic veggie chips. Enough to throw a raging party for a bunch of vegans! Do yourself a favor and spend less time at Costco by signing up for Google Express.
A further strategy is to only shop off a list when you are there. If you see something you want, write it on the list for next time. You may find you don't really want it when you think about what else you could do with your money.
Lastly, they have a great return policy. Don't be shy about taking things back when buyer's remorse kicks in. You don't want to be back in my office, needing to file bankruptcy again.
Do you look at your cell phone bill and immediately feel cheated? Sure, I use my Iphone a lot, but most of the time it is connected to wi-fi at home. So I have to pay $85.00 just to send a few ten-digit texts a day and read the newspaper while I am sitting in the car waiting for three year old to wake up? Say it isn't so!
The most obvious way for almost every consumer bankruptcy client I see to improve their finances immediately is by reducing their spending on telecommunications bills. Comcast and AT&T bills are a good place to begin your financial decluttering.
I am developing a new blog to help clients and other site visitors avoid bankruptcy. This is obviously against my economic self interest as a bankruptcy lawyer, but is the right thing to do and something I feel very passionate about. Having filed hundreds of bankruptcy cases, I have been in a position to review my clients' household budgets, tax situations, family finances, and work situations. I also assist them with obtaining new car and home refinance. Unfortunately, I see many avoidable mistakes prior to the clients coming in my office the first time. More unfortunately, I see these same mistakes being made twice! While it is nice for my clients to keep in touch, I want to hear how they are doing better and that they feel more at peace since we met, and not have them asking whether they qualify for another Chapter 13 or 7 discharge yet!
Additionally, when it comes to my own finances, I have always really liked getting good deals, and have also tried hard to avoid bad deals. The bad deals make me feel bad about my finances, and worse about my own judgement. There is a temptation to mentally "write off" small economic errors that cumulatively add up to very large amounts of money. These mistakes may not be the primary cause of bankruptcy. However, when the bankruptcy is over or while it is in progress, making changes to the household budget could mean the difference between eventual economic security (including a rainy day fund), a more comfortable retirement, and self-empowerment, versus being "played" by multinational financial institutions. These "players" are all around us!
I try to be vigilant, but I had some experience with this fairly recently. As my practice quickly expanded in the early 10s, I took on many software subscriptions, probably bought a few too many computers and Iphones, and generally overlooked small insults to my finances on the basis that I was trying to "focus on the big picture" - making my practice successful and busy. Once I took a step back from that "big picture" and cut my expenses, I found that the benefits far exceeded the financial benefits. I felt better about myself when I had fewer financial commitments, was getting better deals, and had less equipment and vendor relationships to manage. There is a recent, very popular book by Marie Kondo about de-cluttering our homes to reduce stress. One big-picture purpose of this blog is to advocate for financial de-cluttering. Whether or not you have any interest or reason to file bankruptcy, I want to help you save money, save stress, and generally feel like a more prudent consumer.
We walk out of our houses every day, and so-called reputable corporations have their hands in our pocket - almost from the beginning. So I want to point out these pocket-pickings so my clients benefit financially, and feel more in control of their financial destiny. I come across good deals, bad deals, and flat-out ripoffs almost daily, so I will use this blog to point those out - along with other consumer tips.
The Northern District will be initiating a new mediation program for bankruptcy filers to have the Bankruptcy Court supervise their mortgage modification process. This program is designed to function as a forum for individual debtors to explore mortgage modification options with their lenders for real property in which they have an interest or are obligated on the promissory note or mortgage. The goal of the MMM Program is to facilitate communication and exchange of information in a confidential setting and encourage the parties to finalize a feasible and beneficial agreement under the supervision of the United States Bankruptcy Court for the Northern District of California. Options available under the MMM Program include modification of a mortgage or surrender of real property owned by an individual debtor.
Is your lender losing your documents and failing to return your calls about your mortgage modification? Thankfully, under the court program, available August 2015, the court will have information systems to facilitate communication between the lender and borrower (bankruptcy filer). In addition, the lender will be accountable to the bankruptcy court for its compliance and good faith in adhering the mediation system. Major mortgage lenders will be participating.
Law Office of Jason Honaker will offer advocacy in mortgage modification mediation as a service for new and existing clients beginning in August 2015, once the court program is in place.
If you are considering filing bankruptcy, as a general rule, you probably should be considering it. Most people do not contemplate it without good reason to at least consider it. It has been our experience that there are more people who need to think about filing bankruptcy who are not considering it than people who do not need to file bankruptcy who are wanting to file.
However, we understand why people get caught procrastinating. We think that there is a great deal of misinformation out there and that the costs of this misinformation are huge, so we want to try to set the record straight on some common misconceptions.
Here's one: "I'll just pay the interest for now. Bankruptcy seems major and not something I ever thought might happen...." - A lot of people delay filing bankruptcy, thinking "I'll just show the creditor I am trying my best a bit longer, and talk to some of my family and friends about what they think I should do."
This interest paid in the meantime is wasted money you probably need to live on or pay for your children's education. But what these people fail to consider is that very often during these months, the value of their assets and sometimes their income has gone up, making this delay far more expensive than the interest paid on their debts in the meantime. This has been particularly true for homeowners in the Bay Area recently. Over the November to April period last year, some neighborhoods saw price increases of 20% or more. This created a situation where a homeowner who could have filed a Chapter 7 case or Chapter 13 plan with a very low plan payment a few months back, but instead ends up having to file a Chapter 13 case that pays back a large percentage of debt - or sometimes, cannot file at all.
Example 1: It is November 2015. John and Mary, parents of two young children, own a home in San Mateo county and have about 100k of equity they could realize if they were to elect to sell their home. John and Mary started a business and lived off credit cards during that time, but most debt is related to business. Suppose the amount of their debt is 65,000. Houses in the neighborhood have been selling for approximately 700,000 the last time one sold. No houses nearby have sold for the last 2 1/2 months though. Assuming they have no other major assets, John and Mary could probably file bankruptcy Chapter 7, or bankruptcy Chapter 13. They would like pay back less than 10% of their debts in Chapter 13, or none in Chapter 7, if they take action. Chapter 7 would be the cheapest option, and Chapter 13 the safest option. Two affordable options are on the table for John and Mary. Things look great, as long as they take action they can move on with their lives and put their debt behind them.
Example 2: Same as above mostly, but it is now March 2016 - only four months later. John and Mary procrastinated on seeing a bankruptcy attorney and getting some advice. Suppose that the economy is good (as it has been since 2012) and two houses of similar size and condition in the neighborhood sell well over the asking price a block away in February and March. Due to the home values and seasonal selling patterns in the Bay Area, most of a "yearly" price increase in home values may actually occur over the "spring buying season." John and Mary get a modest raise at work. Due to this small percentage increase in home values and income, John and Mary may now have to pay back as much as 100% of their debts. Chapter 7 is not an option, and Chapter 13 is an expensive proposition. The problem? Their income has changed only very slightly. So not only is the remedy less affordable, it may not be available at all unless they want to sell their house.
Summary? By procrastinating talking to a bankruptcy attorney, depsite overwhelming debts, John and Mary have let a condition which was easily manageable and which would have allowed them to keep their home to escalate into a situation that bankruptcy can only mitigate, but not entirely resolve.
You will not read much about this problem I have described on national bankruptcy websites or publications. Why? The combination of high real estate prices and high volatility in those prices is relatively unique to the Bay Area and a few other parts of the country. Our prices, and the amounts those prices change, are both extremely high, and this can have a huge impact on homeowners with debt problems. Relative to home prices, California home exemptions are not particularly generous. In addition, incomes here can be very volatile here too, particularly for people in "boom and bust" industries like technology, real estate, construction, some sales and finance jobs, and jobs that may allow for more generous overtime when the economy is good.
How many times have we seen this in the last few years - with real people sitting in the office talking to us who have costs themselves tens of thousands or even hundreds of thousands by putting off debt resolution? Too many to count.... We have seen people who could have discharged all debt, including their second mortgage in 2012 who are not not eligible to completely discharge any debt now. (Sometimes it can be paid back with no or low interest, still saving enormous amounts of money). Still, this represents a "swing" of 100,000 of more. Procrastination has literally cost them hundreds of thousands of dollars. Sadly, many times "trying to do the right thing - paying back debt longer" also led to these unfortunate results. We have seen others who do not own a home who have had increases in stock holdings and salaries that have made any debt resolution considerably more expensive than it would have been when it was first clear there was a major problem. When it comes to bankruptcy, timing can be everything.
The good news? If you are reading this, you are probably considering bankruptcy and it is probably not too late. Home prices in the Bay Area are volatile over time - and so are incomes. You should plan in advance so you are ready to take action: now or whenever the market allows you to use the legal options that are on the table to help you manage your debt. We can tell you what your options are - without charge - at a free consultation. Give us a call. Don't procrastinate.
We receive a lot of calls about fees. This is understandable that people want this information. We want to provide people with information about our basic fees online so they can call us about their case. Accordingly we added a tab to our homepage.
We have made an important change. Beginning this month, in June, we are offering to build 100% of attorney fees into ordinary Chapter 13 plans.
Up to 100% of our fees will go in the plan as long as you can promptly provide your documents and make your first plan payment. If you are ready to get started, our fees won't get in the way.
If it is an emergency case or second time filing, or you need more time to start plan payments, a modest additional fee will be required. Please call us for more details or send us a contact form.
Our basic Chapter 7 case fee is still 1200.00. Note the Bankruptcy Court raised its filing fees June 1, 2014.
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Law Office of Jason Honaker