The ultimate solution to joblessness is getting a job, but while you are unemployed, there are some common sense things you can do to survive.  No, this isn’t going to be as much about bankruptcy as common sense, but sometimes when you are in the middle of the storm, common sense isn’t so common.  That’s OK, there will be a litany of people giving you advice, myself included, pick the advice that makes the best sense to you and discard the rest.  Don’t worry, I won’t hold a grudge if some of these tips don’t suit your fancy.

Tip #1, figure out your financial situation.  If you are newly laid off and collecting unemployment and you have some money saved in the bank, you may not be in a terrible situation at all.  Unemployment lasts a while these days, in some areas as long as 99 weeks, and while I would hope you’d find employment before that, at least there is that cushion.  If on the other hand you have nothing in the bank and you aren’t able to collect unemployment, you are definitely in some hotter water.  It is best to be armed with as much information as possible, and as painful as it may be to look at your account balances dwindle, you need to know where you stand.

Tip #2, coupons.  Coupons are very high on the list of awesomeness! Companies are giving you discounts on items you probably buy anyway, so clip away.  Our local newspaper the Morning Call advertises hundreds of dollars in savings every week.  I don’t know if that’s true or not, but I know a good deal when I see one and when I can routinely get $50 in savings on things I would buy anyway from a $1.25 Sunday newspaper, that’s a steal.

Tip #3, buying in bulk.  One of the best quotes from one of my favorite cult classic movies, Employee of the Month, is “Buying in bulk is our God-given right!”.  Well I didn’t see anything like that in a version of the Bible but even so its still a good idea if you can store food.  If you can’t and it rots, well you lose money, but if you can, it can be a Godsend, and I promise you I’ve gotten more mileage out of my Sam’s Club membership than what it cost.  Think about it.  If you spend $8 for 24 rolls of toilet paper, is that a better deal than $19 for 96 rolls of toilet paper?  No it isn’t, and since toilet paper doesn’t go bad, it makes perfect sense to buy this sort of thing in bulk.  As long as it can be stored safely and bought at a discount and it’s going to be used (bulk purchases of brussels sprouts are not a deal if they aren’t eaten), its worth it to buy more ahead of time.

Tip #4, The Best By Date on the Milk Carton was Created By Lawyers, the Sniff Test by God. God gave you a nose for a reason.  One of the big reasons for the olfactory sense is to know when we are about to eat something we shouldn’t.  While I’ve wondered who was the first person to look at a cow and think, “hmm, I bet that tastes great?”, the milk isn’t bad unless it smells bad.  You can’t always trust the best by date either.  As a teenager I poured some wonderfully sour milk into Cheerios and wow, you don’t forget that.  My wife will tell you that I will sniff the milk twice or three times, every time I pour my kids cereal.  Yeah, you don’t forget that.

Tip #5, a car burns gas faster with the air conditioner on.  It’s true.  I don’t know why it works like that but it does.  On days where it is 100 degrees out (like today), you probably need to have the air conditioner on (although I had a 1977 Chevy when I was in college and it didn’t have air conditioning and that was Missouri in the summer), but on a day where its in the high 70s to the low 80s, roll the window down, enjoy the fresh air.

Tip #6, when you have less money coming in, prioritize what you spend money on.  Power, water and food comes first.  Then transportation.  Don’t fall too far behind on your car loan, they will repossess it and then you will have to pay the whole balance to get the car back.  A mortgage you can fall further behind on, but don’t deliberately do it.  If you can’t afford your mortgage, you can usually stay in your house a year before it is foreclosed on in Pennsylvania.  Hopefully you will be back to work before then and can work something out with your bank, but if you can’t consider Chapter 13 bankruptcy, I know a lawyer who is pretty good at that.  Your credit cards are the last people who get paid.  They will hoot and holler and call you all sorts of nasty names, but if its between whether feeding your kid or having someone berate you on the phone, I choose feeding my kid every time.  Don’t let these jokers bully you, because if they do, they could find themselves being sued.  I stole one of my favorite lines from Dave Ramsey, “I’d sure like to own a collections company.”

Tip #7, cut the fat.  I’m not talking about your diet, however if money is scarce going on a diet might make things seem a little less oppressive.  I’m talking about the things we can’t live without that we probably can live without.  Cable TV is probably the first thing on my list.  Cable has become expensive, and frankly not worth it.  The cable/internet/phone deal costs almost $150 per month in my area, but you can get internet for $50 a month and Netflix for $8 per month.  Couple that with an antenna (used to be called rabbit ears) to get local programming and you will have almost everything you had anyway.  Do you really need an extra two food channels?  Is your life better because you get MSNBC or FOX News?  Do you really need a land line phone when everyone and their child has a cell phone?  No, you could cut your entertainment budget in a third and if you really need to see a TV show, most stations are streaming current TV shows on their web-site.

Tip #8, Never Surrender! Don’t give up.  When you get knocked down, get up and try again.  We’re Americans, it’s what we do.  The West would never have been won if the original settlers gave up the first time they encountered trouble.  If you want to live in a country that is going to coddle you from the day you are born until the day you die but you will never really get a chance to be successful, try France.  It may take a year, it may take longer to find a job.  You may never find another job.  When I got laid off , I start
ed this law practice because it was clear that the legal jobs that I was qualified to do were drying up and being sent overseas.  You may find something that you have always wanted to try but couldn’t because it would be too much of a pay decrease.  Now it won’t be.  One day, and maybe not to long from now, I’m going to try something new, something different.  For you, that day may be today, so go for it with all the gusto you have. But most of all don’t give up, don’t ever give up.

If you find yourself in a financial position that you can’t handle or you can’t get a handle on and you need to talk to a competent professional, call 610-400-3093 for a free consultation.  You don’t have to do this alone, and you may not even need legal advice, just friendly advice.  It would be my privilege to provide you with either.

The two things for the consumer to know is that BACPA (the act passed in 2005 that made bankruptcy more difficult and expensive) considers bankruptcy lawyers debt relief agencies and that bankruptcy lawyers cannot advise their client to take on more debt before filing bankruptcy.

Lets take this case one part at a time.  The idea that Congress has lumped bankruptcy lawyers together with credit counseling, debt settlement agents, mortgage modification firms and other associated crooks is infuriating, but that is what the law that the banks paid for says.

The second and more nefarious part of this decision is that attorneys may not advise their clients to take on more debt prior to filing bankruptcy.

On its face, that makes common sense, but what about the automobile issue?  Every few years, people will need to change cars.  Buying a reliable car prior to bankruptcy has two positives for the client:

1. A reliable vehicle is a necessity everywhere but the major metropolitan areas, and
2. A reasonable car note that is kept in bankruptcy can serve as a means to improve one’s credit score after filing bankruptcy

Footnote 6 (which does not have the force of law) indicates that purchasing a car, buying groceries, paying medical bills or making purchases that a reasonable in anticipation of filing bankruptcy are acceptable.

While I am hesitant to advise a client based on a footnote, it seems to clear that the Supreme Court allows bankruptcy lawyers to have frank discussions with their clients about life.

While I am still infuriated by being lumped into a group of thieves, that was Congress’ doing, not the Supreme Court, and my representative Charlie Dent and my Senator Arlen Specter who both voted for this.  I wonder if they would like a do-over considering the current economy.  I’m going to email his office and let you know.

Oh, and perhaps Congress should be considered by a debt relief agency since they are the greatest group of crooks and frauds ever assembled.

My dad was a car guy.  He loved driving around in a long Cadillac or a Corvette.  He didn’t pass the desire for flashy cars to his son though, my Kia is sitting out in the parking lot.

Other people seem to have the car gene, and I have to admit that when I was behind the wheel of a 2002 Chevy Impala, I almost paid cash for it.

I said almost.  Paying cash for a vehicle is the best way to do it.  For starters, if I were to pull out $8,000 cash and put it on the dealer’s desk, it would hurt more  than 36 months at $250.  It is almost the same thing, except when its in your hand, there is a real connection to the brain, that is why dealers are so ready to offer credit.  Its not because they are nice guys (they might be), it’s because the car salesman already knows that if you have dig into your pocket to write a large check to buy a car, you are not going to do it unless you absolutely need the vehicle.

The following rules are rules I picked up from my father about dealing with vehicles (he had a lot of do as I say, not as I do rules), but I have done my best to follow them and they have kept me out of financial trouble.

1. Before you buy a teenager a car, make sure they have some miles under their belt… only a dummy buys a new driver a new car.
2. Always go for the higher deductible on insurance.  Changing your deductible from $500 to $1000 can save you as much as $50 a month on your insurance.  You will have that money saved in short order… if you save it.
3. When you have a paid off car, save up the equivalent of a monthly car payment.  My last car payment was $278.  When it was paid off, I saved $278 per month.  I wasn’t able to fully pay for the new car (I should say newer, it wasn’t new), but I had the down payment and then some.
4. Never buy a brand new car.  Most people buy a brand new car for the smell… you can get it in a can.  Buy a four year old car that has already lost most of its value, let someone else take the financial beating on it.
5. Never buy a car without sleeping on it.  I don’t care what the dealer says or how much the salesman insists that the deal won’t be there for you tomorrow… it will be.  Buying a car is a big financial decision, don’t let a salesman bully you into making it a day early, if its the right car for you, you’ll still feel good about buying it in the morning.
6. A car with 100,000 miles on it is just being broken in, don’t trade in your vehicle until at least 150,000 miles have been driven on it because you will get similar trade in value.  You might as well get the extra 2-3 years out of the car, and if you are saving your monthly payment you might be able to pay cash for the next car, and not having a car payment is nice.

I’m not saying don’t buy a car.  I’m not saying don’t buy a new car, I’m saying use your brain when you look for a car.

Far too many people drive themselves into bankruptcy.  I see it every day.

In Pennsylvania, having a reliable car is a must, there is no getting around it.  Our public transportation system is pitiful, but don’t let the need for an automobile be converted into a want for an expensive automobile.  Buy the car you can afford, and if possible pay cash, and if not, get the lowest payment you can afford and save so next time you don’t have to beg the bank for a loan to buy a car.

What does that have to do with Groundhog Day, and more importantly, what does that have to do with debt?

A lot actually.  Bill Murray is the lead in the movie Groundhog Day.  For those who are not familiar with the film, Murray’s character Phil Connors plays a grumpy weatherman who is unhappy with his lot in life and everyone around him is the worse for it.  He finds himself reliving February 2 over and over again until he can get it right.

Our financial lives can be a lot like Groundhog Day.  We do the same things over and over again and expect a different result, but it doesn’t happen.

I had a client in my office last week who traded in their $1300 luxury car payment for a $1450 luxury car payment because they were bored with a car they bought six months ago.  $1450 is a mortgage payment and then some to a lot of people, but this person was trained to attach their self-worth to the fanciness of their vehicle.

While this borders on the extreme, a lot of our financial woes come from not writing a budget, and if you want to avoid sitting in my office at the end of your rope, a personal budget and emergency savings plan can help.

One of the great tools a bankruptcy lawyer has is the Schedule J.  Schedule J is an expense budget for a bankruptcy filer.

Click here to see Schedule J

The person filing the petition is forced to put their expenses on paper and on purpose and stick to it.  Schedule J is a big reason why Chapter 13 plans succeed.

You don’t have to be in bankruptcy to have you own Schedule J.  Schedule J is basically a budget, and you can have a budget without being in bankruptcy.

Some of the things on Schedule J include:

• Rent/mortgage
• Food
• Electricity
• Heating
• Gasoline for car
• Car payments
• Other loan payments
• Clothing
• Other expenses

Having a budget and sticking to it is key to keeping your finances in order.  I would add the following as well:

• Emergency Fund
• Fun and Entertainment

Try to save $100 per month in an emergency fund every month.  Dave Ramsey suggests starting an emergency fund of $1000 but then not adding to it until you are debt free.  While I agree in the first part, I think saving an additional $100 per month will help you avoid borrowing more money down the line.  Think about it, when was the last time you had an emergency that cost only $1000?

In all fairness, Mr. Ramsey is based out of Tennessee, and things are cheaper down there, but I recommend starting with $1000 and adding $100 per month.

Now its time for me to take some of my own advice.  Its been about two years since I’ve revised my budget, and life certainly has changed.  I certainly don’t want to wake up tomorrow morning and find out its still February 2nd and I still don’t have a financial plan.