Who’s Controlling Your Wealth? A Cautionary Tale

A quick introduction- My name is Mike, and I’ve been covering the Blue Jackets as a blogger since 2007, when I started up a small personal blog with the purpose of putting my thoughts and opinion out there for discussion with other fans of the team. It was, and remains difficult for me to chat in detail about the team I’ve chose to pledge my allegiance to, as I live way out of the Columbus market. Since 2009 my blog has been part of the SBNation network of sites, and I’ve since been given media credentials from the club.

As a regular reader of Plunged in Debt, you may already know who I am- not from my work covering the Jackets, but rather as Catherine’s “Hubby”.

Catherine and I both have our own respective careers, but we each use blogging as a creative outlet for our passions- personal finance and hockey, respectively. A story broke in November that was pertinent to both of us, a story of a Columbus Blue Jacket player whose personal wealth was mishandled by those he trusted the most, forcing him to declare bankruptcy and sending his personal life into chaos.

Jack Johnson is a leader for Columbus, one of the Jackets’ top defensemen. In his nine-year career he’s earned almost $21 million, and according to Aaron Portzline of the Columbus Dispatch, that money is almost all gone.

Most pro athletes hire an agent to oversee their money. In the case of Johnson, his current contract is valued at seven years, $30.5 million. Most athletes don’t have the financial know-how to deal with the finances that you or I deal with day-to-day, let alone the financial responsibilities that come with being a multi-million dollar athlete.

In Johnson’s case, whether he was pressured to or not, in 2008 he fired his agent, giving control of his finances to his parents.

This is where the story takes a turn for the bizarre. He didn’t entrust his wealth to a second-rate agent, or a scheming investor. He entrusted his wealth to his parents- the people he would have never suspected would hurt him.

The opposite was true, however, as his parents almost immediately used his wealth and guaranteed future earnings to take out a series of high-interest loans, from a series of questionable lenders. After a series of unsurprising defaults, the law suits started to pile up. His parents ensured him that everything was under control. Now, he’s bankrupt with his NHL paychecks being garnished before he can touch them. According to Portzline, he’s since cut off all contact with his parents.

Whether you are a pro athlete earning millions of dollars a year, or a career person earning five-to-six figures a year, it’s absolutely essential to closely monitor your own personal wealth. Ensuring that your money is being cared for by accredited professionals will prevent horror stories like Johnson’s from happening.

You’d never think that your own parents would betray you, but Johnson’s case shows that even the people you love and trust the most can lead you to financial ruin if they aren’t trustworthy professionals, and if you don’t take the time to closely monitor what’s happening with your money.

Johnson’s tale is a cautionary one- and it can happen to anybody, from the super-rich to the blue-collar career person. Take the time to become knowledgeable with how basic finances work. Find reputable professionals who will truly take care of you.

In the end, you can sleep well knowing that your hard-earned money is safe, and your life won’t be forever changed by the betrayal of an inexperienced entity with potentially ulterior motives.

Even if it’s family.

Make Sure You Know the Ins and Outs of Bankruptcy Law Before You File

Bankruptcy is something that can impact both individuals and businesses. This occurs when a person or a company owes more than it can ever comfortably pay back. Filing for bankruptcy as an individual can lower your credit score and cause you problems for a number of years. Creditors are less likely to extend you a line of credit based on your past troubles. Therefore, before you file, you should meet with an attorney who will work with you in court. You must look at several factors and better understand the ins and outs of the law before filing for bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a type of bankruptcy that wipes the slate clean. The court will only grant you a Chapter 7 bankruptcy if you can show that you do not make enough to pay off your debts. If the court determines that you have a higher salary, the judge may decide that you only qualify for Chapter 11 bankruptcy. Once you finish the filing process, creditors cannot come after you for any money that you owe later. The court generally will not remove student loans or child support back payments from your debts. However, if you meet certain requirements, the court may remove all or a portion of your student loan debts.

Chapter 11 Bankruptcy

A Chapter 11 bankruptcy is a type of bankruptcy that lets you slowly pay down your debts. The court will look at the debts that you have, how much you make and how much you need to live. Your creditors will agree to accept a portion of what you owe in exchange for removing the debts from your credit report. For example, if you owe $3,000 to a credit card company, the company may agree to accept half or less. The court will help you set up repayment plans with each creditor.

What Can Creditors Take?

One worry that many have is what creditors can take when they file for bankruptcy. The court will look at all the assets you have and what assets can go towards paying your debts. If you can prove that you need your vehicle for work and that you cannot survive without a car, the court will often let you keep your vehicle. Courts will generally let you keep your personal assets as well, including your furniture, jewelry and clothing.

How Long Does a Bankruptcy Remain on Your Credit Report?

Financial law experts such as Wilson Neely can tell you that a bankruptcy will remain on your credit report for seven to 10 years. A Chapter 13 bankruptcy will generally remain on your credit report for a period of 10 years. This can impact your ability to obtain a loan for a new home or a car loan. A Chapter 7 bankruptcy will usually remain on your credit report for seven years. If you can pay off your debts faster, you might find that it leaves your report earlier.

Filing for bankruptcy involves help from a dependable lawyer. A good lawyer will go over your finances with you, walk you through the laws in your state and help you decide which type of bankruptcy is right for your particular situation. When you can no longer pay your debts, bankruptcy might be the best choice for your future.

Playing Online Games Safely

iosThese days I’m all about trying to stay within my strict entertainment budget so I can put as much money toward reaching my financial goals (aka: paying off debt) as possible. This means I’ve had to cut back on more expensive hobbies and recreational activities in favor of things that are free or cheap.

But just because I’ve cut my budget doesn’t mean I don’t like to have fun. Now I just like to have frugal fun instead. One of the things I occasionally do for fun is play games on the internet.

The internet is full of games that can help you pass the time and stay entertained, and there are games of every kind for everyone and every personality. Most games are free, but occasionally a game will cost money to play or unlock certain items that are necessary to advance further in the game.

When you play games that cost money to advance or obtain certain achievements, they can easily become addicting. Here are just a few things you can do to make sure you don’t become addicted to internet games.

Limit Your Time

Set a time limit for how long you are allowed to play your internet game. If you find yourself losing track of time while playing, set an alarm on your phone or use a kitchen timer that beeps when your game time is up. When the time is up, close out of your game and, if possible, leave the room that houses your computer.

Limit Your Money

Much like limiting you time, you should also limit the amount of money you spend on internet gaming. Having a set amount to spend on gaming each month (or week) will help keep your gaming under control and ensure that you don’t use all your food money to unlock the latest level or achievement in your game.

Find Accountability

If you have trouble staying accountable to yourself and your self-imposed gaming limits (monetary limits or time limits), be honest about it and seek help from a friend or family member. Having a strong-will friend or family member on your side can do a lot to help your accountability. It’s a lot harder to break your limits if someone else is counting on you.

Go Cold Turkey

If you are already at the point that none of these suggestions work to help curb your internet gaming, take yourself away from the situation all together. Only use computers when absolutely necessary, like at work. Don’t have a computer at home if you can’t handle the temptation, or set up an internet blocker that won’t allow you to access internet gaming sites.

Overall, internet gaming is not a bad way to have a little fun now and then as long as you do so responsibly.

What internet games are you favorite? Casino slots is one game I like to play whenever I’m feeling lucky!

December 2014 Debt Repayment Update

wpid-img_20141225_102409.jpg

Maria on Christmas day, who insisted on holding her bookbag for the picture ;)

I’m a little late with this post but it has to happen to keep me accountable (because, you know, if I stop we’ll fall into a quick downward spiral and throw all efforts out the window ;))Really though, I just enjoy keeping track and we all love talking about money!

December was an expensive month, surprised? We went over our Christmas (cash) budget by a bit but it didn’t interfere with meeting our goal and we don’t regret any extra money spent. We have a pretty low budget as it is so going a bit over isn’t going to break us.To remind, we want to put at least $2,068 towards debt, every month (to be debt free in 36 33 months), and despite monthly overages managed an even $2,100 for the month of December. An extra $32 so I’ll take it!

I’m excited about 2015. I already wrote about our lopsided budget for the year and I’m optimistic we’ll pull everything off.

To help with our additional costs and extra money for our goals, I picked up a few extra shifts at work in the next few months, the beauty of living on budget with flexibility! I love having an hourly wage for this reason, every 15 minutes worked is more cash in my pocket.

I had reservation about returning to work after maternity leave and only working four days per week but it’s working out beautifully for us. On days that I work, I don’t get much time with my daughter since I’m away from home a long period of time so my extra day home give us time together which is more important than any other goal in my life.

The added bonus is that it forces us to budget with me only working a four day work BUT with the potential of me being able to work five days, if needed. Even with added daycare cost for the day, my net pay for the extra day can be fairly significant for our budget; but it’s not enough of a draw to make me want to do it every week. As I always say life is so much about creating as much balance as you can, and the extra day I have at home is circuital for my family. Not just for the selfish time I get with my daughter but for the family as a whole and they’re why I do everything!

How did everyone else do last month??

Benefits of Online Job Applications

Getting a new job in today’s tough economy is not so easy. Job openings are fewer and farther between, companies are cutting their budgets, and the employee portion of benefits has never been more expensive. If you are looking for a new you, you better be ready for fight. Luckily with the birth of the digital age and online job searching and applications, applying for jobs has become quicker and easier than ever before. Here are just a few ways that online job applications are beneficial for today’s job seekers.

Convenience

With internet based job searching, you don’t need many resources to look for a job. The only things you need to start your job search are: a computer or tablet and an internet connection. This means that if you have internet at home, you can easily search for a new job while lounging on your couch at the end of the day.

If you don’t have internet at home, don’t worry. More and more businesses and public locations have free Wi-Fi connections these days. Local libraries, lots of restaurants and coffee shops, hotels, and college campuses tend to have free Wi-Fi. If you are unsure about a location having Wi-Fi or if it’s free for public access, just politely ask an employee.

Internet job searches can also be performed at any time of the day, even while businesses are closed. This limits the “I don’t have time” excuse that holds many people back.

Speed

As mentioned, you can job search at any time of day using the internet, this means you no longer have to limit your job searching to “regular business hours” or waste time making phone calls or driving to offices when the hiring official may be out of the office.

Additionally, lots of job search databases will allow you to sign up for instant email alerts so you will know as soon as new jobs are listed that meet your criteria.

Cost

Nearly all internet job search websites are free. Many of them required you to sign up for an account and add documents, like your resume and cover letter, but there is no charge for most of them. The only cost you will have is your internet connection.

More Listings

Job databases, like http://www.trud.co.uk/leeds/jobs/, have a huge list of employers that they work with. When you sign up for job search websites and add your resume, it’s available for lots of employers to look at, and you can also send it to multiple employers with job openings with just a few mouse clicks.

Location Independence

Not only are more employers usually listed online than in your local Sunday paper, online job search engines are not limited by location. Generally, you can narrow the listings down to your desired area, but you are not required to do this. It’s simple to look for jobs all across the country with online job databases, which can be helpful if you are planning on moving to a new location anyway.

 

Have you ever used the internet to look for a job?

2015: Our Lopsided Debt Repayment Year

I’ve already talked about how much, and why, I love budgeting into the future. During my Christmas break I completed our budget until August 2015. We have a trip planned with our entire family in July and I needed to plan where the funds were coming from. We also have plans to add a heat pump to our home, something we’re so happy and excited to finally be doing.

I’ve had a few people ask me what a heat pump is, here’s the Wiki answer but essentially it will save us a ton of money on our power bill (much, much cheaper heating and cooling solution) so we want one. We will definitely get our money back when go to sell and will keep us more comfortable for the next three to four years that we live here. They aren’t cheap though. We’re fortunate that my husband works in an industry that can give us some serious hook-ups and it looks like we can have one installed for about half what most people pay. It will still cost us about $2,000.

Given that we want the heat pump installed, and our trip paid for in cash come July, both within the first seven months of the year, most of these additional funds will be coming from our regularly budgeted ”extra” debt repayment money. I’m still hopeful we’ll come close to our monthly goal of about $2,100 though, despite these added goals, but if we’re short a bit each month I’m ok with it. I’m also hopeful that from August to December we can do more than $2,100. If all goes according to plan, we’ll even-out come year-end.

My goal for debt from January to July is to put $2,000 towards debt (down from $2,100) but from August to December put $2,275-$2,300/month.

I was entering 2015 hoping I could do at least $2,275/month for all 12 months, which ended up being about $2000 more on principal than I anticipated for 2015 initially, but long-term we’ll be glad we did the heat pump. Entering 2016 our power bill will also be lower which will allow more for debt as well. So if everything works out it’s a win-win-win situation overall.

When we came up with our 36 month debt-free plan I mentioned it was realistic for our life and this situation validates my point. I didn’t make our goal so overly ambitious that we couldn’t do anything else. I know if we did nothing else with our lives but work and pay off debt we could have it gone in 24 months, but life is about living and balance isn’t it?

Feeling Motivated and Refreshed for 2015

wpid-img_20150102_122939.jpgAs you know I took an extended break from this blog over the Christmas/New Year holiday and boy did I need it! As much as I missed updating here and reading/commenting on my favorite blogs, my to-do list was getting out of control and I’m happy to report it’s almost non-existent now. The continuing tasks are still there and ongoing, but that’s life.

Mike and I accomplished so much in the last two weeks, and it feels amazing. Naggy stuff that everyone puts off, like going through years worth of paperwork and finally tackling it. I took time to do stuff like dissembling our even door and scrubbing it clean after I somehow managed to drop what I think was pancake batter inside the glass door, almost a year ago…

I had reservations about essentially stepping away from this site for two weeks, and traffic definitely totally dropped off, but sometimes you need to take a break. Though I spend a LOT of time devoted to blogging and writing, it isn’t my entire life and when you work full-time, have a kid, husband, house, life, the internet needs to chill out once in a while.

We managed to organize a huge portion of the house and it feels great. Especially after Christmas and trying to make room for Maria’s new toys, it was totally overwhelming. I spent a little money and bought some things that helped me get everything organized, like new tables for Maria’s play area. I have a hard time parting with money most of the time, but these are things I’ve been putting off and spending some money to replace stuff like broken laundry baskets helps my sanity.

I’m happy to report that I took an entire evening to work on our budget and we’re completed until August 2015 :) I needed to get it done until that point because we’re going on a family reunion/vacation in July and needed to plan it out, now and not in May. We also have plans to buy and install a heat pump for the house which, again, requires planning.

The break has left me feeling really good. I regained some control of things and am ready to attack this year. I hope everyone had an amazing Christmas and New Year’s. I can’t believe it’s 2015!

How to Spend Less without Sacrificing Your Lifestyle

Saving money is a hot topic on blogs, magazines and television with a quick search turning up hundreds of tips for saving money on daily expenses such as entertainment or groceries.

Strategies such as couponing can build savings over time, but the sacrifice is pretty steep when you consider the actual ROI. If you’re looking to save for a new home, retirement, or to get out of debt without sacrificing your lifestyle, try some of these big-picture methods.

Be Smart with Education

Whether you’re funding a child’s college tuition or hitting the books yourself, shave thousands off the final bill with smart planning. Paying cash lets you avoid loans; even low-interest government loans add to the cost of education. When possible, shorten your time in school. High school students may be able to earn credit before hitting college or test out of lower-level classes. Adults returning to college should ask about portfolio credits; some universities will review an individual’s professional experience for a fee and grant appropriate credits.

If you live near a community college that works with local four-year universities, save hundreds by enrolling for two years in the community college and then transferring those credits to the four-year university. Community college credits often cost a third less than four-year universities.

Join Reward & Subscription Programs

Cut the costs of certain necessities by planning ahead and joining rewards programs. New moms, for example, may want to join Amazon Mom, which lets you access deep discounts, free shipping and scheduled deliveries. Homeowners may be more interested in Target’s subscription service which saves up to 10% on house essentials. If you travel frequently, consider an airline credit card that gives hefty rewards. Do some research- you can easily find rewards programs even if your purchases are irregular.

Spend Less on Weddings and Honeymoons

Weddings and honeymoons can cost thousands, and many couples dip into retirement savings to help fund the events. If you’re a couple that is established in life, it’s probably safe to say that you have plenty of kitchen tools and household items. Instead of registering with a department store, consider travel or wedding-planner registries. A number of companies offer websites that allow your friends and loved ones to donate to the wedding or honeymoon in lieu of a gift.

Spend Less on Vacations

Put your Internet skills to use up to a year before a planned family vacation. If you’re flying a complicated route, consider using Flight Fox or Skiplagged. Both sites help travelers find inexpensive flights better than the massive booking sites like Expedia.

Don’t stop with the big expenses, though. Search for CityPASS or other discount programs for your destination; CityPASS offers one low price for a number of attractions in a given area. Purchase gift cards via Restaurant.com before you travel to save up to 50 percent on dining costs.

Take Full Advantage of 401(K)s Offered

Another easy way to force you to spend less is to take additional money from your paycheck. Contributing the maximum percentage of your paycheck to an employer-matched 401(K) is a no brainer. Since 401(K) contributions are taken out pre-tax and often matched by your employer, you can effortlessly save up to 17,500 each year.

Can’t consistently spare that much from your paycheck? Have you employer split your paycheck and deposit it into two separate accounts- one checking and one savings. If an emergency arises, you can easily transfer money from savings to checking.

Cutting costs on everyday items is always a good idea, but working to reduce large expenses lets you save thousands on one item without reducing your quality of life. Invest those savings, and you can multiply them before retirement.

I’m Taking a Blogging Break

wpid-20141201_222038.jpgIt won’t be for long but for the most part I won’t be around much the next two weeks. History has taught me that traffic seriously drops off these last two weeks and quite honestly I’d rather take the mental break than worry about posting during my Christmas break.

Instead of blogging I’ll be spending time with my family and friends and lots of running around! I may get caught up on some other online work but just won’t be here too much (knowing me I will likely break this rule though…). You’ll probably still see me around your blogs if you post but quite honestly I look forward to this blogging break every year, I think any blogger can respect how much work it is to keep up with everything!

If I’m being honest, I’ll still be glued to my phone so very easily reachable if you decide you need to get in touch. I hope everyone has an amazing Christmas and safe New Year’s. I’ll be back in January, likely recapping with a post about busting our Christmas budget (yeah, that’s happened already ;))

Expecting to Owe the Taxman in 2015?

EOY Tax Tip infographic English