What Happens If You Don’t Have a Personal Budget?

Having a planned personal budget and following it daily will surely help you meet your financial needs. Personal budget is a tool that helps you have control over your money. It gives an idea of how much you can afford for your various needs. It will enable you to determine whether a certain purchase will fit within your monetary constraints or not.

Whereas, not having a personal budget disturbs your personal financial situation. Your money goes haywire, and you will be left with no money in times of emergencies. The below article helps you understand how not having a personal budget affects your personal finances. Here are some possibilities that may occur if you have no proper personal budget in place.

You spend more than you earn

Budgeting helps you plan and track your expenses. Without having a proper budget, you tend to spend more than what you earn. There are people, who irrespective of their income levels, spend every penny they earn. Spending culture is getting worse day-by-day with the changes in lifestyles and unabated consumerism. This kind of behaviour can lead you to troubles, as it leaves you with nothing at the end of the month.

You start borrowing money

As you get into the habit of living pay cheque to pay cheque, you will be left with no money to save. Hence, you start borrowing money either to maintain your expensive lifestyle or to attend your unexpected needs. It is not only the lack of financial discipline that makes you get into debt-trap but also some sudden emergencies for which you may have not prepared. Also, there are some people who are struggling to pay off their current debts and still borrow debt to maintain an expensive lifestyle.

Most of your income goes into repaying debt

Debt, if not controlled, spreads like a virus. You will take more debts to clear current debts. This way, most of your income is used to repay your debts and you will struggle to manage your finances. Using credit cards is not a bad idea. But doing so without a budget and plan on repaying the debt will lead you again into financial hardships. Further, debt issues can also impact your mental health and family relationships.

The end result – you have nothing left

Impulsive spending behaviour, uncontrolled desires and no proper personal budget are the main reasons for getting you into financial troubles. These habits leave you with no money at the end of your life. If you live pay cheque to pay cheque, you cannot save money for short-term or long-term goals.

Hence, have a proper monthly personal budget. Prioritize your spendings. Allot money for all necessary expenses and set aside some money as savings. Cut costs on unnecessary expenses like eating out, drinking and smoking, night parties, vacations/tours, etc.

Personal budget helps you stay disciplined and organized about your finances. It helps you improve your overall living condition, by allowing you to understand and change your spending behaviour. Also, it helps you to plan and solve your monetary issues.


Tax Relief – Don’t Forget These Deductions

The key to reducing taxes and getting the maximum tax relief are the deductions. As a taxpayer, make sure that you know what the most recent deductions are and include all that are applicable to you on your tax return. Don’t forget these frequently forgotten deductions that can be included on your tax return:

1. Charitable Contributions – Though it’s not likely that you’ll forget the large donations you made, the smaller ones add up. If you volunteered as a make-up artist at a function, remember to deduct the cost of the make-up items you used.

2. State Sales Tax – You are allowed to deduct the entire amount of state income tax or sales tax you paid in the year before. If no state or local income tax applies in your area, then deduct the entire sales tax paid.

3. Medical Expenses – When your adjusted gross income is calculated, if your medical expenses for one year adds up to 7.5% of this adjusted gross income, you are allowed to deduct it from your taxable income.

4. College Tuition – A deduction of $4000 is allowed for college tuition on dependents, spouse or yourself. When a taxpayer’s income is over the limit to qualify for the Hope or Lifetime Learning credit, this deduction is very helpful.

5. State Taxes Paid the Year Before – Additional state taxes paid in the previous year can be deducted from current income tax return. State income tax taken from your salary can also be deducted.

6. Cost of Preparing Income Tax Forms – This includes the cost of the services or tax software purchased. You can claim it in the tax year you paid them

7. Jury Payments – There are employers who pay employees the full salary when said employee is on jury service. These employers ask the employee to give up the jury payments. In such cases, a person can deduct the total sum of this forfeited amount.

Each of these deductions adds up to significant tax relief, so make a note of them and claim all to which you are entitled.


Rental Property Tax – Don’t Leave Money on the Table!

Whether you own one rental property or fifty you should take a hard look at your real estate taxes. And we are not referring to income taxes but rather the rental property taxes. Many people are not aware that you can “appeal” these taxes and save hundreds to thousands of dollars per year, per property (or more).

Of the investors that are aware of the appeal process many assume it would be too cumbersome in both time and research to bother. Others are intimidated by debating their city and would rather stay “under the radar.” Here are a few facts that may make this more interesting for you:

1. It is estimated by industry experts that 65% of all properties are over assessed (both commercial and residential, owner occupied or investment).

2. Less than 2% of all property owner’s appeal their taxes.

3. 70% of the 2% that appeal win some type of rental property reduction.

These stats came from the National Tax Payers Union. The first thing to do, is figure out if your city claims that your property is worth more than it actually is. Don’t let the city’s jargon throw you off with all of their various terms (Many people believe they do this on purpose). That is what this is all about, i.e. is your property worth less than what they report it is, and what the tax it off of?

Rental Property Tax – Assessed Value

Every state and city has an assessed value and an assessment ratio. The ratios vary from state to state and often from town to town. Some city assessment ratio equals the actual market value (their opinion of it) with others; it’s a percentage of the market value. A 2 minute call to your city will determine the answer.

In our home state of Michigan the Assessment Ratio is 50% in every jurisdiction. So, if our city claimed the assessed value of a property is $400,000 that means they think the market value of the property is $800,000 (.5/$400,000).

Say on that same example that we knew three other properties that where similar, that recently sold for $600,000; we would know that the property was being over taxed and would deserve a property tax reduction. The savings on that example would look like this.

$200,000 (over valued amount) x.50 (the assessment ratio of 50%) = $100,000 over assessed $100,000 x.052 (our local millage rate for rental properties) = $5,200 of annual real estate tax savings.

Note this annual saving normally goes on year after year. And if you really learn what you are doing or hire someone that does, you can show an over payment in previous years and potentially qualify for a rebate. For example if you can prove that you over paid $5,000 per year for five years you would technically be owed $25,000 from your city. Also, note that the annual tax savings has an interesting affect on your net operating income, and actually theatrically increases your properties value by getting the reduction on the rental property tax. It’s found money.


Don’t Invalidate Fire Insurance

Don’t invalidate your fire insurance policy.

I find this a very strange case but it just shows how important it is to read the small print as if you ignore the conditions of the policy your policy could be invalidated.

In this case it was a condition of the FIRE insurance that the SECURITY Alarm was maintained and monitored. Times had been tough for the insured and he let the maintenance of the security alarm lapse and as the ARC had not been paid for 6 months they stopped monitoring the site.

Vandals broke in and set fire to the factory. It was a furniture company and they incurred losses of over £750,000.

The case went to the High Court, the judge had nothing but sympathy for the Directors of the Company and he took ‘no pleasure’ in ruling that as it was a condition of the combined insurance policy that alarm was to be monitored by an external firm, the Insurers did not have to meet the claim.

There are often conditions attached to the insurance policies we take out which relate directly to the risk. We need to make sure our cars have valid MOTs in order not to invalidate the policy. We are required to notify the insurance company if we get a speeding fine but, to my mind oddly, you do not have to tell them if you decide to do the Speed Awareness Course rather than pay the fine.

I have just come across a case, now in front of the insurance Ombudsman, where an insurance company voided the policy and returned all the premiums because the policy holder had unwittingly exceed the value of the ‘valuables’ within their contents insurance. They had insured the contents of their house for £60,000 but there was a clause stating that the value of the valuables should not exceed 66% of this.

They had to rush their daughter to hospital, and while they were out the thieves struck taking goods and damaging the property to the value of £70,000. When assessing the claim the loss adjusters calculated that the value if the valuables in the house exceeded £40,000. Normally claims would be ‘averaged’ to reflect the under insurance, but the insurance company in this case argued that the under insurance voided the policy. As I said this case is in front of the ombudsman as I write.

Back to case in hand where a fire insurance claim was dismissed as a security alarm and monitoring were allowed to lapse. Clients of ours run a hotel and there is someone on reception all the time so if the fire alarm is activated there was always someone on duty to respond. We came round to the time when the annual contract with the ARC [monitoring station] needed to be renewed. The Hotel Manger wanted to cancel it as it was considered an unnecessary expense. I said I agreed but asked him to check with his insurers to make sure they had no objections. The Insurers confirmed; monitoring was a condition of the policy.

Often with in the insurance policy there is a clause that the fire alarm is maintained in accordance with British Standards. It would be interesting to know whether a similar claim has been dismissed as the Fire Alarm has not been adequately maintained.


New Drivers Don’t Have to Pay So Much for Car Insurance

Are you a new driver? If yes, are you planning on purchasing a car? I remember when I got my driver’s license, it was a few years back and I can tell you, it feels good! New drivers want to quickly buy a car and start driving on their own. However, you should know a few things before you go searching for a car to buy. With rising gas prices and other vehicle maintenance fees, it can be quite expensive to maintain a car. You not only have to pay for gas and vehicle repairs, but insurance as well. As bad as it sounds, car insurance is mandatory and you will need it.

When it comes to car insurance, it’s not just that you are a new driver, but if you are younger than twenty five, you are expected to pay more than older drivers. Younger inexperienced drivers don’t have the necessary practice with handling road conditions, calculating stopping distance and making appropriate manoeuvres. Although this may feel like a burden on you, don’t be discouraged. There are several things you can do to avoid paying as high as you should. The following are some of the things you can do from the point you get your driver’s license.

The Type of Car You Purchase: The type of vehicle you purchase will affect the cost of your insurance plan. Most young drivers have dreams and wishes to buy luxury vehicles, but they don’t realize that it will cost them quite a bit apart from the cost of the vehicle. Insurance is something you have to pay on a yearly basis, and it doesn’t cost a few hundred, but it goes well in the thousands. It is not only the luxury vehicles that have high insuring costs, but some of the well-known brands as well. Some examples include Acura, Infiniti, Lexus, and BMW just to name a few. You can sort of get an idea by looking at the price of the vehicle and its reputation in the real world.

Your Level of Driving Experience: As a new driver you don’t have much experience on the road, and the insurance company knows this very well. There are many claims submitted on a daily basis, and a large majority is from inexperienced drivers. When you approach an insurance company to provide you with coverage, they will ask you for your drivers licence, from this moment on, you are considered a new driver. In order to get a discount on your coverage, there is one thing you can do. Insurance companies have accredited driving schools around the region they operate in, and you have the opportunity to take a driving course at this school. When you pass the course, you will have showed the insurance company that you can drive safely and according to the law, and in return you will be in for a discount. You will definitely be pleased when you find out how much discount a driving course could get you!


Don’t Mess With Car Insurance: Avoid The Commotion

In India, as per the Motor Vehicles Act of 1988, it is compulsory that every vehicle being driven on the road be insured. This car insurance is classified as third-party car insurance and comprehensive car insurance. Though third-party car insurance is mandatory by law, buying a comprehensive policy is only as per one’s wish.

What to consider before buying a car insurance policy

It is rightly said, “Never trouble trouble till trouble troubles you”. However, why be troubled when you can easily analyze your own needs and choose the right cover for your car?

1. Analyze your coverage

Understand and analyze your coverage. Make sure you cover your car adequately. We are not advising you to be covered insufficiently, however paying huge premiums also does not really make sense. For Example, third-party car insurance is mandatory by law. If your car meets with an accident, coverage is guaranteed to the third party only in the event of bodily injuries, permanent disability, and accidental death. What happens to your car now? In this case your assets could be at risk if it had to be a major accident. Hence going for a comprehensive insurance would now make sense to avoid the major repair expenses.

2. Go Shopping

With the variety of Insurance companies available, you can narrow down your search of selecting the correct insurance policy as per your requirement. Some online insurance portals like provide good comparison of different insurers on the basis of premium, cashless garages, claim settlement ratio etc. By comparing the car insurance policies you save a lot of money since this involves less paper work. You also get a wider range of products. So compare car insurance and give a thumps-up for your wise decision.

3. Pay extra, go for Add-ons

When you own a car, getting it insured is the first step. However, protecting it wisely by going for suitable add-ons becomes like a cherry on cake. Insurance companies provide different add-ons, such as bumper to bumper, paid driver cover, engine protector, roadside-assistance and passenger cover to name a few. In short, you pay a little extra to cover all your risks. However again, check what add-on best suits your car and then opt for one.

4. Free Look Period

Free look period is a time frame decided by the Insurance companies during which you can decide whether to continue the policy or not. If you are unhappy with the policy terms and conditions or with the services of the Insurer, you may go for policy cancellation and ask for full refund.

5. Ask for discounts

Why feel shy to ask for discounts, if it can actually help you save some bucks? You can earn good discounts for being a good driver! The most costly parts of the car like the gear lock, safety equipment’s, air bags etc. can actually benefit the insurer since it reduces the cost thereby giving you rewards for your safe and responsible driving.

6. Keep an eye on the Insured declared Value

Always keep in mind the value of the car before buying the Insurance policy. Insured declared value or the IDV is the factor that decides the premium of the car. Always make sure the premium charged is correct because lower the IDV, lower would be the premium. In the event of total damage, ensure that your IDV is right. If it happens to be incorrect, you would then have to shell out a huge amount from your savings. Hence always declare the correct value of the car.

So avoid the commotion and choose the right coverage. We hope this article was beneficial for you to keep in mind the minute details before buying car insurance for your prized possession.

Student Loans

Filing Bankruptcy on Student Loans – I Don’t Think So

Over the last 20 years, the US has put a high priority on higher education. Everyone wants their kids to go to an Ivy league university and get a high-paying job after graduation. The only problem with this theory is it doesn’t work. There aren’t any high paying jobs available to college graduates these days. In fact, the unemployment rate of new college graduates is around 40% when these kids get out of school. To add insult to injury, they will be burdened with student loans from this expensive education. Many unaware young adults think they can file for bankruptcy and eliminate these loans, not so. Sure education is good but not when it leads to filing bankruptcy. The problem is when young adults are saddled with student loans, the minimum wage job they can get isn’t enough to help them survive. So now you have a new generation of college graduates sleeping on mom’s couch while they’re filing for bankruptcy to get rid of other debt they can’t afford to pay because of the student loans.

Many of these students continue their education to avoid paying the student loans. There are many young college graduates applying at big-box retailers that have PhD’s and master’s degrees. It’s not that they didn’t want to get out of school and get a job, but when they found out that no jobs were available, they double downed and went back to school to further their education. One thing that many people don’t know is student loans aren’t paid back while the individual is going to school. So many are now becoming professional students as they’re racking up huge amounts of debt. The student loan debt has gotten to such exorbitant amounts, it is now called a bubble by many experts. This debt has now surpassed $1 trillion in the US. This is just plain old crazy, what happened to the days when kids went to junior college for two years and transferred to a four year university, working their way through school waiting tables. Back in those days, kids emerged from school being debt free. There are multiple people here to blame when it comes to this topic. First, there has been a high priority but on higher education all the way from K. through 12. It has been pounded into the kids heads that they won’t be anything unless they get an expensive education. Second, the government has made these guaranteed loans available for anyone and everyone that asks for one. Consequently, many of these individuals don’t realize what they’re getting into and find themselves changing careers early in life while not making enough money to live and pay these loans back.

Now, when a young in debt adult decides to file bankruptcy, the first question they will ask the bankruptcy attorney, is it possible to wipe out student loans in the bankruptcy discharge? When the bankruptcy attorney says no, they will probably follow up with they heard it was possible because they read it on the Internet. Technically, it is possible, but the burden of proof is pretty extreme for an individual to be able to include them in their bankruptcy filing. The person will need to show that they never will be able to pay these loans off. So as a rule of thumb, a bankruptcy attorney will look at the person’s age and physical condition. Just because someone can’t get a job isn’t a good enough reason to discharge these loans. Usually, it will take someone suffering a catastrophic accident or illness where they become disabled or someone is becoming elderly and no longer in the job market. It’s probably much easier to find the elusive Chupacabra in the wilderness. In other words, it’s next to impossible to file bankruptcy on student loans.

Student Loans

Don’t Pay Your Student Loans, Have them Forgiven

Okay so you went to college, had a good time, went to a few parties, studied hard (hopefully) and graduated. So it’s six months later and time to pay back those student loans, but wait wouldn’t it be great if you didn’t have to pay back your student loans? I know what you are thinking, YES!!!!

The Federal Government has put together several programs that will allow your students loans to be forgiven. That means for certain people employed in certain occupations you will not have to repay your student loans. So pay attention I might just make your day and trust me the list is longer than you may think.

Here are some of the professions that qualify:

o Full-time teachers employed in public or nonprofit elementary or secondary

schools in districts eligible for ESEA Title I-A funding, where the percentage of children from low-income families enrolled in the school exceeds 30% of total enrollment

o Full-time Head Start staff

o Full-time special education teachers in public or nonprofit elementary or secondary schools (including teachers of infants and toddlers) or qualified professional providers of early intervention services under the Individuals with Disabilities Education Act (IDEA)

o Members of the Armed Forces for service in an area of hostilities

o Volunteer service under the Peace Corps Act or the Domestic Volunteer Service Act of 1973

o Full-time law enforcement or corrections officers (including prosecuting attorneys, but not public defenders), for service in local, state or federal law enforcement or corrections agencies

So really I know it’s good to give back to the community but now if you are employed in any of the above professions you get an extra incentive. You can have anywhere from $5,000 or up to 100% of your student loans forgiven, it really depends on your profession and how long you have been employed.

Wealth Building

Don’t Let Poor Estate Planning Tear Your Family Apart

Even if your kids are grown up with families of their own, you can probably remember scenes of intense sibling rivalry when they were younger. In some families, that competition continues into adulthood; for others, it recedes as children age and mature. But it can all come flooding back while trying to divide up your estate after your death as your kids argue over who gets what.

If you die without a will, a court will decide, based on state law, who will inherit your property. In most cases, the result might be contrary to your wishes. Think of all the assets you’ve accumulated: house, car, jewelry, investments, family heirlooms and more. “It is simply not enough to say ‘let them just divide it evenly or work it out themselves,'” says Gerald A. Youngs, president of the National Association of Estate Planners & Councils (NAEPC). This is sure to create problems and expenses due to probate laws, state laws and court appointed strangers making family decisions.

“While many people worry about the federal estate tax, the truth is most of us won’t have a tax problem under the current tax laws,” says Youngs. “But the ‘family tax’ is a very real concern,” he adds. The family tax is the price paid by children, grand-children and favorite charities when you do not express your wishes legally. The family tax is paid not only with money, but also with hard feelings.

But it doesn’t have to be this way. You can make it easy on you and your family by taking a few simple steps to make sure your estate is in order. Whatever the size of your estate, the first step is to have your intentions put in writing, either in a basic will or a will plus the trust documents that will be needed to carry out your wishes. An estate planning professional can help you make the best decision for your situation.

Once you have a plan in place, discuss it with your family. If anyone has any questions about the details, or any quibbles, you can address them and put to rest any future squabbles. While your family shouldn’t dictate your actions, they should be informed about them.

This is also a good time to discuss dividing up personal property. People often arrange for the executor of their will to divide personal property their spouse doesn’t want (such as furniture and jewelry) among their children. Simply leaving it at that can cause problems. It is better to put together a list with a description of the property and who you’d like to have it – if you have specific requests or wishes. You can put this list together with input from your children to alleviate any hard feelings later. (See footnote at end of this article).

Putting together an estate plan is not as daunting as it might seem at first, and it pays big dividends in the long run. Not having an estate plan in place can cost you not only in dollars and cents, but also in family discord.

If you need help finding specialists in this kind of planning, look for individuals who have earned the designation AEP (Accredited Estate Planner) or EPLS (Estate Planning Law Specialist); ask about the Estate Planning Council members in your area; or call the National Association of Estate Planners & Councils at 866-226-2224 (toll free) or visit their website at for a referral to a professional near you.

(This article originally appeared in the NAEPC newsletter – National Association of Estate Planners & Councils. Reprinted by permission from

NOTE: The system for division of property taught in THE SETTLEMENT GAME: How to Settle an Estate Peacefully and Fairly may provide a better solution to this problem. It teaches how to divide property fairly, yet keep peace and avoid conflict among siblings or other family members when going through this process.

Contributed by Angie Epting Morris, Author


How to Settle an Estate Peacefully and Fairly


Wealth Building

Say What? You Don’t Have An Estate Plan . . . !

If you haven’t taken the time to prepare your estate plan, you’re not alone. According to a survey conducted by, a whopping 55% of Americans haven’t even taken the time to have a will prepared, and 67% don’t have a living will in case they become incapacitated or terminally ill.

But that’s not all! The survey also found that even those who did have a will generally did not keep it updated. In fact, nearly 40% said they had not updated their will within the last five years.

It’s not as though people are unaware of the need to plan their estates. Estate planners and many other professionals have preached the need for wills, and other estate planning documents for years. Most recently, the Terri Schiavo case brought the issue of living wills to national prominence. Yet, despite the brief surge in demand for living wills and other estate planning documents during that time, most Americans seem to have lapsed back into complacency about planning for their incapacity or death.

“That, in itself, may be the problem,” says Attorney Alan H. Berman of Hartford, Connecticut. People don’t like talking about death and dying, especially when they’re talking about themselves or their loved ones.” Attorney Berman says that many of his clients put off having a will prepared until the very last minute. “I get a lot of calls just before they have to get on an airplane,” he says. “Then they know they can’t put it off any longer.”

Death and dying are nobody’s favorite topics, to be sure. But, there seems to be more to it than that. The Allianz American Legacies Study, which was sponsored by the Allianz Life Insurance Company, surveyed 2,627 people of all age groups “to identify how they define leaving a legacy and how families are communicating about these sensitive issues today.”

One of the interesting – and, probably, most revealing – facts to come out of the Allianz American Legacies Study was this – seniors and baby boomers both ranked money last on their list of important estate planning issues. Ranked ahead of money was the idea of leaving a legacy which, according to the study, “captures all facets of an individual’s life – including their family traditions and history, sharing stories, values and wishes.”

Attorney Berman agrees with the assessment of the Allianz American Legacies Study. “From my experience,” he says, “people seem to clam up as soon as you start talking about money. They’d rather talk about their family history or certain mementos – prized personal possessions that might not have a lot of monetary value but certainly have a lot of sentimental value.”

Another reason why many people procrastinate when it comes to estate planning is their feeling that they don’t have enough money to bother with an estate plan. However, as Attorney Berman is quick to point out, “estate planning is not just about money. In fact, it’s about taking care of your loved one’s needs in the event you can’t do it on your own. Money is often a means to an end, but the end is often the well-being of loved ones.” That’s the “legacy” that seems to motivate most people when it comes to estate planning.

If we are to learn anything from the Allianz American Legacies Study, it would seem to be that estate planners should direct their efforts toward “legacy” planning rather than “inheritance” planning. Unfortunately, most estate planners spend their time learning about the intracacies of the estate tax laws and the probate laws when they should be learning about assessing a client’s attitudes about family traditions and history, about sharing stories, and about their values and wishes. Not that the estate tax laws aren’t important, because they are. It’s just that they’re not going to motivate many people who just don’t care about such things.

That seems to be in accord with the findings of the Allianz American Legacies Study. In that study, it was found that “[t]he top qualities both generations look for in a legacy advisor are honesty, trustworthiness, compassion, a good listener and a strong and clear communicator.”

So there you have it! If you haven’t taken the time to have your estate planning done, it may be because your focus was on money. Instead, try focusing on your family and all the things that you love and cherish. You might find that you’re suddenly anxious to find a legacy advisor that will make your estate planning experience a very memorable one. You’re family will love you all the more for it.

Just one more thing! According to the Allianz American Legacies Study, it is estimated by Paul Schervish and John J. Havens of the Boston College Center on Wealth and Philanthropy that $41 trillion is set to be willed, passed on, and/or left to others over the next 50 years. So, even though we don’t like to talk about it, it is an integral part of everyone’s estate planning.