Category: Money

A Budget: Your Ultimate Financial Management Tool, Part III

(Continued from Part II.)

Now let’s look at how to start organizing your family budget.

THE FAMILY BUDGET

If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what you are spending money on both collectively and together to run your household. If there is a lot of fat that needs to be trimmed, try to take it a step at a time. Remember, there is no blame involved, it is just looking at the cold hard facts.

Often just looking at them is to see a problem, and once you see it, you can start to work together to come up with a solution.

 

SHORT TERM AND LONG TERM FINANCIAL GOALS

The next step is to discuss  joint financial goals are in both the short and long term. Car, vacation, house, kids, college, retirement, these are pretty standard goals for most people. You may have other personal goals too, like going to grad school, having to pay off student loans, and so on.

Whatever the goals are, the first step is to identify them. That way you can plan your route to get to those goals.

Every journey begins with a single step, so the first step to attaining your goals is to make a realistic budget that you, or you and your partner,  can live with.

 

NO STARVATION RATIONS

A budget should never be a financial starvation diet. That won’t work for the long term any more than living on lettuce for three months to trim the fat would work. All you will do is get sick of it, and binge.

So, be honest, and realistic. The rate of inflation is about 5%, so make reasonable allocations for food, clothing, shelter, utilities and insurance and then add on 5% for a bit of wiggle room.

Set aside a reasonable amount for entertainment and the occasional treat. If you want a vacation, set aside a certain amount each month, but be clear it will have to come out of your budget, and not from a credit card or at the expense of other crucial items.

Continued in: A Budget: Your Ultimate Financial Management Tool, Part IV

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A Budget: Your Ultimate Financial Management Tool, Part II

Continued from Part

PLANNING YOUR FINANCIAL FUTURE

 

BUDGET FIRST

The first thing you should do is work out your budget. That means looking at the reality of your situation here and now.

There are a number of free online tools and sample worksheets you can use, including at the America’s Debt Diet website. There are also templates in the Microsoft suite as well.

Then get out your most recent pay stub, and all your rent/mortgage, utility bills, and start filling in the blanks. Look at the receipts for all the things you’ve bought in the previous week. Work out in round figures how much you spend on items like gas, electric, cell phone, regular phone, food, clothes, and entertainment.

 

EASING YOUR CREDIT CRUNCH

Then look at your credit card statements, and the minimums you are paying each month. Is there anything left at the end of your calculations?

If yes, great.

If no, not so great. But take heart.

Now look again. Is there anything you can cut back on, any ‘luxuries’ you could do without, or do with less of? How much would you save each month.

Look at your credit card statements, at the balances, but also at the APRs, the annual percentage rates for the money you are basically borrowing for that new sweater or great pair of jeans you ‘just had to have’.

 

PAYING DOWN DEBT

If you took the money you saved from the luxuries, how soon could you pay down that debt?  If there is any left over, pay down the ones with the highest APR first, then the second, then the third, and so on.  You will improve your credit score very rapidly too if you don’t always pay at the last minute, but rather pay as soon as the bill comes.

In a lot of cases you can even pay quickly and easily online, free of charge.

 

SPREADING OUT YOUR BILLS

Once you have filled in your budget, make a calendar for yourself of when all the bills are due. It is easy to lose track of one and then end up with big problems on your hands.

Look at whether your pay cycle is weekly, bi-weekly, or monthly. Then you can space out the payments over X number of checks you are getting.

 

Continued in: A Budget: Your Ultimate Financial Management Tool, Part III.

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A Budget: Your Ultimate Financial Management Tool, Part I

 

A builder uses a set of house plans, or blueprints, whenever he builds a house or office building.

Rocket scientists would never begin construction on a new booster rocket without a detailed set of design specifications.

Yet most of us go blindly out into the world without an inkling about finances,  and without any plan at all as to how we’re going to achieve our  lifestyle goals in the short term and long term.

 

A BLUEPRINT FOR FINANCIAL SUCCESS

The most financially successful people have a blueprint or plan, called a  money plan is called a budget, to help keep them on track in both the short and long term when it comes to achieving their financial goals.

Without a plan, they would spend whatever they wanted, whenever, and basically end up living hand to mouth. Worse still, they might end up running up a great deal of debt, spending more than they earned, until they couldn’t even meet their credit card minimums any more.

 

THE CURRENT ECONOMIC CLIMATE: CREDIT CARDS ARE NOT YOUR FRIENDS

Credit has been easy to come by for the past few years, but in this current economic climate, a lot of credit card companies are pulling the plug on consumer credit. They might also be inflicting much heavier penalties on anyone who misses a payment, or increasing the interest rate, or, in some cases, even changing the payment date in the hope that you WILL make an error.

They are also making a great deal of money preying on people’s fears of credit card fraud, rather than taking the sensible steps of trying to cut back on credit card fraud in whatever way they can.

So credit cards are not your friend, and yes, it may be tough to get along without them, but your budget will be a lot better for it in the long run. Your budget is the one way to try to make sure you don’t end up on the rocks of a financial disaster. Or, if you think you’re already in danger of running aground, it can be the action plan that helps get you out of danger with persistent effort.

 

Continued in: A Budget: Your Ultimate Financial Management Tool Part II

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Common Questions About Probate Answered

In this article, we want to deal with some of the most common questions regarding probate.

What is probate?

Probate is the process by which an estate left by a loved one who dies or “decedent” is administered, process and ultimately transfered to the heirs and beneficiaries of the estate.

The estate is first inventoried, then any debts against the estate are paid, any moneys due to the estate are collected, and then the remaining assets are distributed to the beneficiaries and heirs.

What property is excluded from the probate process?

Any property that is held by the decedent and someone else jointly or as “joint tenants with right of survivorship,” any property in a trust account that are “payable on death (POD) or “transfer on death TOD)” to a named person or persons, and any insurance or retirement benefits that have a named beneficiary will not go through the probate process.

Why does the property have to go through probate?

The probate process exists to protect all parties involved. Probate endows the executor or personal representative for the estate to handle the assets legally. Then, probate allows creditors the opportunity to make claims against and collect debts from the estate before the property ownership is transfered to the heirs and beneficiaries.

What are the normal steps to the probate process?

The probate court will appoint an executor in the case of a will, or a personal representative or administrator in the case of no will involved. The executor or administrator will accomplish the following tasks: care for the property, receive payments due to the estate, pay all legitimate debts against the estate, gather name, addresses, and other pertinent information of interested parties, pay all outstanding taxes against the property, and finally, distribute the remaining assets to the heirs and beneficiaries.

What are the costs of probate?

Each type of document that is filed in probate has a separate cost associated with it, typically around $200 per document. There can be attorneys fees charged for handling each part of the process, but these fees mostly must be approved by the probate court. The executor or administrator can also be paid a percentage of the estate for handling the case.

How long can probate take?

The length of probate cases vary from case to case. If the estate is relatively small, does not require filing state income tax, and has no complex creditor issues, the case can be settled in as little as six months. However, several factors can stretch out the process. If the estate must go through a tax audit, or if someone contests the will for any reason, the process can be delayed up to several years. Most probate cases are resolved anywhere from nine months to one year.

What about a will?

It is always a good idea to have a will properly drawn up. A will will make sure that your assets and property end up with the person or persons you intend. You can also name your own executor and settle any matters of dependent children in the will. It is always a good idea to review your will with an attorney to make sure that it meets your current needs. If you do not make out a will, your property will be distributed according to the inheritance laws of the state where you live. Will or not, your property will go through the probate process; a will just gives you more control in the outcome.

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What Does Probate Involve?

Probate is the legal process of administering the property and assets left by someone when they die (the decedent). The probate process also oversees the payment of claims, debts, taxes and other related expense against the estate are all paid according to the law.

Probate property is defined as property in the decedent’s name alone and is distributed by the directions of the will or according to the law. The probate proceedings take place in the county where the decedent lived and owned the property. If the decedent also owned property in another state, additional probate court proceedings may be required in that state.

Some property owned by the decedent may not be considered in the probate process and is not known as probate property. Any property held by the decedent and another person jointly, any property held in a trust, any bank or other accounts that are “payable on death,” or “transfer on death” to a named beneficiary, and any insurance and retirement benefits that have a named beneficiary are not considered probate property. However, all property is considered estate property and is still subject to federal or state taxes, whether or not it is probate property.

The probate process is necessary to legally give the executor or personal representative of the estate the right to handle the decedent’s probate assets.

The process gives the executor the duty of safeguarding the assets and property of the estate for the benefit of the heirs and beneficiaries.

Probate then allows for the creditors against the estate to be able to collect any debts owed by the decedents before the remaining assets are distributed to the heirs. There are costs in the administration of this sometimes lengthy process that must be paid from the estate also.

What are the duties required by probate? The first task of the probate court is to appoint a person to administer the estate. This person is called the personal representative or administrator, or if so named in a will, the executor. The executor or administrator can be a single person, a trust company, or a bank.

The executor or administrator has many tasks to complete in the probate process. He or she must care for all of the property and assets of the decedent. He or she must receive any payments due to the estate from interest, income, or dividends of any sort and then collect and legitimize any debts due to the estate.

Then, all names, addresses, and pertinent information about the heirs and beneficiaries must be gathered. The executor or administrator must then collect and validate any debts against the estate and pay the outstanding debts, which includes filing state and estate tax returns and paying the taxes for same.

The last task of the administrator is to distribute the remaining assets to the heirs and beneficiaries according to the will and the laws of the court.

The probate court judge and the probate court task supervises the entire process. Each separate action requires that the appropriate paperwork and numerous documents be filed in a timely and lawful way.

Each step of the process can be tricky and time consuming. As an executor or personal administrator, he or she may want to consult an attorney specializing in probate matters and a certified public accountant to handle the tax issues.

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The Probate Process

Probate is the process of handling the estate and assets of a person who passes away. The probate courts make sure that all the outstanding debts of the deceased are paid, and that the beneficiaries of the estate get what is left.

The important documents relating to the probate court case are known as the probate records. The first and most important document relating to the probate case is the will. The will should list the assets of the estate, who will be the beneficiaries, who will act a a personal representative for the estate, and who will be the guardian for any minor children. The will has to be legally drawn up with properly witnessed and notarized signatures.

There are many ways to draw up a legal will. Courts and law firms give away forms for will writing, and today, there are books, CDs, computer software, websites and e-books dealing with writing wills. Whichever method you choose to use to write your will, it is a good idea to get a lawyer specializing in wills to look over the final draft.

Another important document in the probate process is the proof of assets. The proof of assets is basically a list of the estate assets, which can include bank accounts, IRAs, stocks, securities, life insurance benefits, property, Social Security benefits, Tax Refunds, and any other item of value owned by the deceased.

There are other important administrative papers that are also necessary in the probate process. One of these is the petition for letters of administration, which is filed with the death certificate.

A judge conducts the probate court proceedings. With a letter of appointment, he appoints a person as executor of the will who administers the assets and handles the general proceedings.

Sometimes the judge will hold probate hearings and answer questions that are raised about the probate case by issuing written directions or “orders.” For example, the judge will issue an order to pay the deceased’s debts and taxes, then divide what is left among the beneficiaries.

The next step in the process is to post a Notice of Administration. This document is also known as the Notice to Creditors. The personal representative will give this notice after identifying, appraising, and safeguarding the probate assets, to the local newspaper. This document is published in the newspaper so that anyone, creditors included, can learn of the current status of the estate.

This will allow the creditors to take action if there is a claim to be filed against the account. The creditor would then file a “Creditor’s Claim,” which would allow them to get back any money owed by the deceased. In some states, like Washington, the Notice to the Creditor is optional.

After the creditors have been paid, the personal representative will distribute the remaining assets to the beneficiaries and heirs, who will then sign a document, the “Receipt and Waiver,” which says that the beneficiaries received their fair shares of the estate.

The last step for the personal representative is to submit all of the Receipts and Waivers and a document known as the “Declaration of the Completion of Probate” to the court for final processing.

Finally, the probate court will declare an order for the transfer of assets and property to the beneficiaries and heirs. With this declaration, the probate process is completed.

Probate is an essential part of estate management. The rules differ from state to state so be sure to look up the most recent information on probate in your state.

NOLO Publishers also has a useful website with Probate FAQs and a place to make your own will online. Go into your local library as well; chances are they will have some of the NOLO books right there for you to consult.

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Why Probate is Better Than Foreclosure

If you are trying to make a profit in the business of foreclosures, you have probably found out how hard it is. It seems as if the market is flooded with people who are working to get a piece of that market. In many areas, this task is almost impossible, even for the most hard-working.

When you work in foreclosures, you often have to deal with sellers who are desperately unhappy. They do not really want to sell to you, and may view you as a vulture, preying upon their misery in a time when they are losing property they may still want.

The people in foreclosure are often losing their homes, the very roof over their heads. Can we blame them if they sometimes get irritated or downright nasty during the proceedings?

In probate, the situation is very different. The sellers in probate are usually eager to sell, and the house in question is probably not their primary residence. You are dealing with people who are motivated to sell and to be cooperative, not highly stressed people just trying to “get through” a bad time in their lives. It makes a huge difference in the way they will deal with you.

Many heirs are actually very eager to sell to you so they can quickly settle the estate. A friend of mine recently lost his mother and he inherited her house. During the next few weeks, he was required to travel back and forth, about 50 miles each way, to deal with the various legalities and hassles of property ownership.

My friend confided in me that if someone would just offer him a reasonable price for the house, he would probably take it. He even said that he would not dicker too much over the offer, because he would just want to complete the deal quickly and easily and liquidate the asset.

When someone you love dies, you not only inherit all of their property, but also all of their problems too. No one who is going through the grieving process for a loved one wants to take on a very large project at the same time. If you can offer these people a simple and fast solution of “What to do with Mother’s house,” they will take it, so probate is ideal.

Also, often after the estate goes through probate, several siblings or relatives will inherit jointly, which can cause all types of problems. Maybe the siblings live in different places or do not get along. Getting rid of property you own but do not live close to is sometimes difficult.

In most of these types of cases, none of the parties involved want the property, so they don’t want to buy each other out. Instead, they just want to split the money from the sale of the property. This fact is especially true if there are outstanding debts against the property, and also if they are going to have to pay a lot of inheritance tax on it, but can’t actually get at any cash. This is where you can step in to supply the heirs with a solution to what can be a difficult problem.

Another factor can come into play with this situation. Many senior citizens, 65 years or older, defer their property taxes until after their death in what is called a “senior deferral.” Once the senior citizen passes away, these taxes come due.

If the heirs to the estate inherit the property, they also inherit the past due taxes. Most people just want to get these taxes paid as quickly as possible, so that they can pay them and any other outstanding debts to the estate, and then see what is left over. They are eager to sell and resolve the matter, and pay off the hefty tax bill.

In conclusion, probate is better that foreclosure. The market is easier to work in because fewer people are buying in the probate market, and the sellers are more eager to sell to you. It’s much better to buy from people who are looking at you as a hero rather than a vulture swooping down to pick over their carcass and rob them of their home.

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