The Importance of Financial Communication

Studies have shown that money is one of the most frequents points of contention between married couples. But most of us do not need a scientific study to tell us that. Whether you are pinching every penny for all it is worth or have more money than you know what to do with, sharing finances with someone else is bound to cause some disagreements.

Even the most compatible couples often have different ideas of how money should be handled. But that does not mean they should call it quits if they canít see eye to eye on financial issues. In many cases, it just means that they need to work on communication and compromise.

In many (if not most) couples, one is appointed as the financial manager of the household. This may happen after much discussion, or it may just happen without a conscious decision being made. The person managing the finances usually pays the bills, makes banking decisions and manages debts as he or she sees fit. This is not necessarily a bad thing in itself, but it tends to separate the other partner from the financial picture. And when he or she does get a glimpse of it, if it is not as good as imagined, it can cause problems.

Thatís why it is so important for both partners to have a hand in the finances. If one does not want to pay bills and such, that is fine, but he should be kept in the loop about everything. If necessary, consider having a weekly meeting in which you discuss the state of your finances. This will eliminate unpleasant surprises and the arguments they may cause.

Keep Track of Spending

A frequent source of friction in a marriage or domestic partnership is spending. One partner might strive to be as frugal as possible so that more money can be saved or used to reduce debt, while the other feels that buying something she wants every now and then is fine. Instead of trying to work out a compromise, they might hide money or spending to avoid confrontation.

But when such lies are discovered, they are bound to cause serious problems. That is why it is crucial to be completely honest about not only your own spending, but your expectations for your partner's spending. You may not see eye to eye, but being completely honest is the only way to truly know the state of your finances. It enables you to make a budget as well, and this can be a helpful tool in working out such differences.

When it comes to finances in a relationship, clear, honest communication is a must. Sharing your goals and ideas on how to achieve them will help you approach money matters as a team rather than fighting over them. Even if you have very different views on financial matters, itís almost always possible to find a middle ground that both of you can live with.

Five Tips for Dealing with Debt Collection Agencies

When debt collectors start calling, we might consider throwing the phone out the window. But that's not the best way to deal with collection efforts. If you ignore them, they will keep calling for months or even years on end. And no one wants to live in fear every time the phone rings.

Debt collectors are rarely as unreasonable as we imagine them to be. They want to collect the money they're owed, but they realize that they are more likely to succeed if they work with us. And the law prohibits them from threatening or harassing us. Here are five tips for effectively dealing with collectors:

1. Know your rights. It pays to familiarize yourself with the Fair Debt Collection Practices Act, which protects consumers from unscrupulous collection practices. If at any time you feel that your rights have been violated, you can report the incident to the Federal Trade Commission or file a lawsuit to collect damages.

2. Be honest. Let the collector know if there are extenuating circumstances that have caused you to fall behind or stop making payments altogether. This won't stop them from trying to collect the debt, but it could buy you some time and make it more likely that they will work with you to get things resolved in a way that is acceptable to both parties.

3. Know how much you can afford to pay each month, and don't let them convince you to pay more than that. Even if they take all of your obligations into consideration and tell you that you should be able to pay a certain amount, you may not be able to pay that much realistically. If the collector insists on not accepting less than a certain amount, you may want to seek legal advice.

4. Take notes. Each time you speak to the collection agent, write down the highlights of the conversation along with the date and time of the call. Keep these notes for future reference, and if the collector contradicts himself, you'll have your notes to refer to. These notes will also be helpful if you end up filing a complaint or lawsuit.

5. If you reach an agreement, stick to it. As long as you keep up your end of the bargain, the collection agency can make no further efforts. If you find that you won't be able to make a payment on time, contact the debt collector immediately and let him know when you will be able to pay.

No one looks forward to dealing with a collection agency. But if you are honest and reasonable, it's rarely as bad as you think it will be. In most cases, you can work out a mutually agreeable arrangement, get your debt paid off and get on with your life.

Importance of Keeping Lines Open with Creditors

Unless we're independently wealthy, most of us face financial troubles at some point in our lives. Sometimes we incur unexpected expenses, such as car repairs or medical bills. Sometimes our income drops due to health problems or job loss. This often results in trouble paying the bills.

Often, those who are having problems meeting financial obligations avoid their creditors. They do this because they believe that the creditor will be unsympathetic and demand payment right away. What they don't realize is that when we are honest with creditors, they are usually willing to work with us.

It's true that creditors want to be repaid, and they want their money when it is due. But being inflexible rarely works to their advantage. When creditors demand things that debtors cannot deliver, it can damage the relationship. That means that some debtors pay off their accounts when they are able and then close them, and others become unwilling to pay up at all. The first scenario results in a lost customer, and the second forces the creditor to incur much greater costs in trying to collect the debt.

For these reasons, most creditors are happy to help debtors who have fallen on hard times. They can often extend payment deadlines or waive late fees, and they may be able to set up a more favorable payment schedule. For loans, they might refinance, which can make payments lower and possibly postpone repayment.

Talking to creditors may be intimidating, but if you are straightforward with them, it will usually work out to your advantage. Here are some tips that can help them help you:

* Don't wait for a creditor to contact you. Call your creditors as soon as you realize that you won't be able to pay on time. This can help you avoid late fees and shows them that you care about meeting your obligations.

* Be prepared and willing to explain why you can't make your payment. "I don't have the money" is not a good enough excuse. Giving a legitimate reason will help maintain trust and make it easier for them to come up with a viable solution.

* Offer to make a reduced payment on time, or give a date when you can make a partial or full payment. Creditors are more willing to work with debtors who do these things, because they demonstrate a commitment.

* If you can't get anywhere with the first person you talk to, ask to speak to a supervisor. Some creditors have procedures in place that only allow supervisors to make certain concessions. 

* Be sure to answer calls from creditors, and answer them promptly. If you're keeping them up to date they shouldn't have to call you very often, but if they do make sure that they know you're not avoiding them.

Dealing with creditors can be a scary proposition, but it's rarely as bad as we imagine it will be. It is to a creditor's advantage to work with those who want to repay their debts but are having trouble doing so. Being straightforward with them can save you money, and it can help keep your credit in good shape.

The Price of Divorce

Getting a divorce is emotionally taxing. The end of a marriage is not a happy occasion in itself, and dividing property and deciding who will have custody of the kids can be a long and excruciating process. And when it comes to financial matters, divorce usually has a serious impact on both parties.

When you're married, everything you or your spouse acquires belongs jointly to both of you. This includes real estate, automobiles, household items, income, money and pretty much everything else. There are a few exceptions, but these are rare.

When a couple divorces, the assets acquired during the marriage must be divided. How they are divided depends on where you live. Some states extend the concept of each spouse owning an equal share in everything to the division of assets in divorce. These so-called "community property" states divide everything equally, without regard to each party's situation. But most states take an equitable distribution approach, which takes into account factors such as each party's earning capacity, how much property each brought into the marriage, tax consequences and the need for a home for the custodial parent.

The aspect of divorce that tends to have the greatest financial impact is the division of marital debts. If the parties cannot agree on how the debts should be divided, the court may divide them on an equitable basis, similar to the equitable division of assets. Debts acquired during the marriage may be divided regardless of whose name is on the debt.

Although the court may assign joint debts to one party, the other party is still responsible for them in the eyes for creditors. That means that if your spouse is assigned a joint debt but doesn't pay it, creditors can take legal action against you. There are legal remedies for this, but such a situation can have a devastating impact on your credit rating.

After a divorce, bankruptcy also becomes more complicated. Generally, debts that are assigned by a divorce decree cannot be discharged through bankruptcy. This is intended to protect the other party from being held responsible for the debt. But if you find yourself in a position of needing to file for bankruptcy, you may be out of luck.

Although spouses are jointly responsible for debts acquired during marriage regardless of whose name is on them, if you haven't had any credit in your name, it will be difficult to establish it after a divorce. If your name has not been on any accounts, it's just like you have never had any credit in the eyes of potential creditors. You may have to start over from scratch, getting co-signers and paying higher interest until you establish a good credit record of your own.

Divorce is expensive in a number of ways. Attorney fees can be substantial, and one partner may have to pay alimony and/or child support. But what often takes divorcees by surprise is all of the hidden costs. A good lawyer can help you get a fair shake, but you could still experience a number of financial setbacks.  

What Is a Debt Management Plan?

Debt is not necessarily a bad thing. Sometimes we need or want to make a purchase but can't pay in full up front. Credit can enable us to buy now and pay over time. But when we take on too much debt, it can have a negative impact on our lives.

When debt becomes too much to handle, the first thing we need to do is stop taking on new debt. Then we must find a way to pay off the debt we owe. This can be accomplished with a debt management plan.

In its simplest form, a debt management plan is a budget that focuses on paying off loans and credit cards. It usually reallocates money to make more than the required payment on each debt, allowing us to pay them off more quickly. This frees up more money for savings and everyday expenses and saves us money that would have gone toward interest.

Those who do not have enough money in the budget to increase payments to creditors may choose to negotiate with them. Creditors are often willing to accept reduced payments or lower interest rates for those who are having a hard time making ends meet. They reason that by making terms more favorable to the debtor, they decrease the chances of him filing bankruptcy or simply ceasing to make payments.

Credit counseling services can help debtors establish a debt management plan. They negotiate with creditors on the debtor's behalf, usually getting lower interest rates and payments than the debtor could have gotten on his own. Once negotiations are complete, the debtor sends one monthly payment to the credit counselor, who forwards the appropriate amount to each creditor.

Credit counseling agencies do charge fees, but they are usually taken out of the creditors' money. Creditors agree to this because those who participate in such programs are more likely to pay their obligations in full.

Those who participate in formal debt management plans are usually required to abstain from using old accounts or opening new ones until the program is complete. A note also appears on their credit report stating that they are undergoing credit counseling during this time. But when all debts have been paid off, the note is removed and it no longer affects their credit. If you work out your own debt management plan, there is nothing stopping you from obtaining new credit. However, it's much easier to pay off old debts when you're not acquiring new ones.

A debt management plan can help avoid bankruptcy by allowing debtors to make payments that fit into their budgets. Creditors benefit because they can collect all or most of the principal owed plus interest, and debtors benefit because they do not end up with a serious blemish on their credit records. If you're having trouble making payments but could manage if those payments were lower, a debt management plan could be the answer.