Should I File Bankruptcy? If I Do, Should I Feel Guilty?

a woman with unpaid bills has...

I get a lot of questions about the best way to get out of debt, but few about the morality of different choices. Here’s a reader email that addresses the issue.

My name is Jodi. I currently owe about $20,000 in credit card debt. I was told by a lawyer that I should file for bankruptcy. I don’t feel right about bankruptcy because it’s my bill and I feel I should at least make an effort with the companies to see if they could lower the amount so that I can consolidate the bills. Can you please educate me as to what would be a better deal for me? Your newsletters are very helpful.

While dealing with debt is pretty cut-and-dried, dealing with the moral obligation to repay a debt is a bit slippery. The type of person you are, your resources and the type of debt you owe all play a part. Over the years I’ve met many people who agonized over the moral dilemma of filing bankruptcy and many others who never gave it a thought. Before becoming a consumer advocate,

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Why Millennials, Gen-Xers Should Worry About Estate Planning

group of friends meeting in the city center

Failing to plan wisely for your own death or disability can create serious consequences for your loved ones.

If you don’t have a valid will in place, the state will decide how your possessions and assets are distributed. That could tie up your estate in a complicated process that leaves less in the end for your survivors. Or, if you are rendered mentally disabled, who will be responsible for your care? If you go into a coma, who would pay for your medical care? All these decisions will dictated by the court if you don’t plan in advance. By failing to create a will, you are leaving the fate and financial security of your family at the mercy of strangers.

Don’t make the mistake of thinking that estate planning is only for the elderly and the rich. Nobody likes to think about the prospect of being old, disabled, incapacitated, or about dying, especially when you’re still young and healthy. But this is actually the right time to pause

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Know the Risks of Year-End Mutual Fund Purchases

focus on mutual fund investing
When it comes to investing, most experts offer the same advice: If you are a typical mutual fund buyer saving for college or retirement, don’t try to time the market. It’s a loser’s game.

Except that you might tweak your timing a little — just a little — at the end of the year, or you may get hit with a tax bill on year-end capital gains distributions that you don’t deserve. Because stocks have done well in recent years, many funds are sitting on large profits that could create big tax bills.

“Many mutual funds are expected to make sizable capital gains distributions this year,” says Mike Piershale, president of Piershale Financial Group in Crystal Lake, Illinois. “Some funds are paying out gains for the simple reason that the securities hit the manager’s price targets.”

Other funds, he says, trigger taxes by selling profitable holdings to pay cash to shareholders who are pulling out, disappointed by this year’s lackluster results, or who want to move to funds less likely to trigger big year-end tax bills in the future.

“This has

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Many newcomers to the Forex market and people who just want to start trading

Many newcomers to the Forex market and people who just want to start trading, do not have a lot of experience and knowledge and often make common mistakes. About common mistakes and ways to overcome you can read in forex trading tips for success. Forex trading tips has most important questions of newbie trader.

The most common error allowed the trader – is wrong open orders, without the use of stop-loss and Take- profits, late open transaction, errors related to the psychological factor, for example, traders often close their positions in a small plus, not allowing the deal to bring the maximum profit. Or, traders continue to hold the position open, when she goes to a large loss in the hope that the trend will reverse.

Another example, is too risky trade, opening disproportionately large transactions. As well as the work on the Forex market on the principle of the casino. Relying on the fact that today carries me – not advisable.

And finally, training on a demo version. Many new traders think that learning in the demo version, they can acquire the skills needed for successful trading in the Forex market. But working with virtual money, a trader develops skills unacceptable

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4 Questions to Answer Before You Retire

It’s an achievement to make it to retirement. Years of hard work pay off once you have saved enough and get to hand over a resignation letter to your boss. You say farewell, and there may be a few tears as you part ways with your former life. But there’s also the excitement of finally starting the new leisurely chapter of your journey.

The next day there’s no reason to get up before 10 a.m. You feel so grateful you no longer need to wake up early just to get ready for boring morning meetings. You get up and go downstairs, brew a morning cup of coffee and sit down at the table and ask, “Now what?”

The start of retirement is a time of exploration for some people. There is a new life routine to figure out. Here are a few questions to ponder as you enter retirement.

Do you plan to reduce stock exposure? It’s commonly accepted that you should gradually decrease the risk in your portfolio as you age and accumulate more assets to protect. Many people do this by adding bonds to their portfolio in order to reduce volatility during retirement. Unfortunately, there isn’t a simple asset allocation that

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It’s Cash Over Mobile Payments This Holiday Season

Chances are you’ll be spending about $805 this holiday season, according to the National Retail Federation.

But chances are high you won’t be using mobile apps to pay for presents and party favors.

According to Bankrate.com, mobile payments just aren’t catching on with U.S. consumers of age groups. “Just 14 percent of U.S. adults who use a smartphone or a similar handheld device plan to use services such as Apple Pay or Android Pay even once this holiday shopping season, including 19 percent of millennials,” Bankrate states. “Among those who don’t plan to make mobile payments, the top reasons were ‘not secure enough’ (36 percent) and ‘other payment methods are more convenient’ (31 percent).”

About 70 percent of shoppers will use cash or debit cards to pay for holiday purchases. 22 percent will use credit cards, Bankrate reports.

What’s interesting about consumers and mobile payments is that the most common fear linked to digital payments — angst over security breaches — might be overblown. “The most common misconception surrounding mobile payments is that they are not secure,” says Mike Cetera, an analyst at Bankrate. “Truth be told, fraud is much more likely to occur on ordinary credit and debit card transactions. And of course

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5 Habits That Will Inevitably Sabotage Your Finances

Money is an important part of our lives. We buy what we need with it, we fund our future with it and we support others with it.

Unfortunately, there are a number of bad habits that can sabotage our financial well-being. Some of these habits won’t destroy our finances right away, but over time, we may find ourselves in a dire situation with little hope of recovery.

Let’s take a look at some of these bad habits and how you can avoid or conquer them as quickly as possible.

1. Smoking. According to the CDC, “Tobacco use remains the single largest preventable cause of death and disease in the United States.” Talk about bad for your finances and your health.

Let’s pretend for a moment that the only cost from smoking is what hits your wallet — not your lungs. OK, how much will you be spending?

Let’s say that a pack of cigarettes costs you $4.49 — although the price widely varies from state to state. And, let’s say you smoke two packs a day. That’s $8.98 a day.

There are 365 days in a year, so that’ll cost you about $273.14 a month. That’s a lot of money — especially when you figure that

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Avoid These 5 Common Holiday Budget Pitfalls

According to a recent survey from the National Retail Federation, holiday shoppers are planning to spend an average of $805 on gifts this holiday season. The same survey found that shoppers plan to spend an average of $463 on family members. That’s the highest this figure has ever been.

To make sure that you don’t overspend this year — no matter your target number — be sure to create a holiday spending budget. That way, you’re far less likely to find an unpleasant surprise when that credit card bill shows up in January.

Here are five things you shouldn’t do when planning your holiday shopping budget.

1. Don’t Let Guilt Break Your Budget

Maybe your sister-in-law buys your kids three gifts each. This doesn’t mean that you have to do the same for hers. If your budget calls for just one gift for your in-laws’ kids, stick to it. It’s easy to let guilt lead you to overspending during the holidays. But don’t feel like a scrooge because you aren’t spending as much as your other relatives. If your budget is tight this year, don’t break it in a misguided attempt to keep up with the spending of others.

2. Don’t Add Last Minute Gifts

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Is the Force With the New Star Wars Credit Card?

As fans all over the world eagerly await the December release of “Star Wars: The Force Awakens,” we are continuously reminded that the global Star Wars phenomenon isn’t just about movies.

Sure, it all starts with the movies, which have earned billions of dollars at the box office. However, it extends far beyond the movie theater. There are novels, comic books, video games, lunchboxes, clothing of all shapes and sizes, breakfast cereals, action figures, bobbleheads and even a Darth Vader refrigerator — all of which you can buy with a Star Wars Visa credit card. But is this card something that Star Wars fans should add to their collection or something they should avoid like a confrontation with Darth Vader? Let’s break it down …

The card is part of Chase’s Disney Visa card program and is available in three different Star Wars-themed designs: one featuring Darth Vader, another with Yoda and another with R2-D2 and C-3PO. It also comes with rewards aimed toward fans of the films, including:

  • 10 percent off purchases $50 or more when you use the card at the Disney Store or DisneyStore.com. (Reminder: In 2012, Disney bought Lucasfilm, the company that created the Star Wars franchise under founder
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Should You Get a Store Credit Card?

At checkout registers in department stores across the country, you can expect to receive a smile and a sales pitch. Well, at least a sales pitch. Store credit cards are moneymakers for businesses, and you can expect clerks to dangle a nice discount in front of you in the hope you’ll apply.

The discount on store merchandise and other rewards are often tempting — and many of us take the bait — but are store credit cards a good deal?

Pros of store credit cards

Store credit cards aren’t all bad. In fact, they can come with some nice benefits. As we see it, there are four major pros for getting a store credit card.

  • Discounts: Not only do you get an initial 10 percent to 20 percent discount when you sign up, you may also be in line to receive extra discounts all year long. Store credit card holders may be the first to receive special coupons or gain access to exclusive sales events as a reward for their loyalty.
  • Flexibility: Some, but not all, store credit cards are affiliated with one of the major credit card companies. That means your department store card can also be used for purchases elsewhere as a regular
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6 Money Strategies for the Sandwich Generation

When her father was diagnosed with a respiratory disease about seven years ago, Joy Frank-Collins juggled her work schedule and parenting demands to maximize the time she spent by his side. Frank-Collins, a 41-year-old who heads her own communications firm in Marietta, Ohio, also coordinated with her siblings to pay for expenses that weren’t covered by insurance. “If you know your parents will need your help, you have to think, ‘What can I set aside to provide the necessary support for my parents?'” she says. After a long fight with his illness, her father died at age 75 in January.

As a member of the sandwich generation — adults who simultaneous care for children and aging parents — Frank-Collins had to navigate what is becoming an increasingly familiar challenge. “Individuals who find themselves in the sandwich generation are forced with contemplating taking care of things today in a way that may negatively impact their future,” says Rebekah Barsch, vice president of financial planning for Northwestern Mutual. Family members might cut back on their work hours or sacrifice savings in order to care for aging parents, she adds. “The pressure, both financial and emotional, weighs on people,” she says.

Those pressures are one

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How to Avoid Holiday Season Credit Card Rip-Offs

“Buy now, pay later” is the modern way of life. Credit cards are a highly profitable business for the companies that issue them, so it’s no surprise that banks continue to inundate consumers with credit card offers, especially during the shopping frenzy of the holiday season. These come-ons are among several financial traps lurking out there today.

Visa (V), MasterCard (MA), Discover Financial Services (DFS) and American Express (AXP): Their cards are common fixtures in hundreds of millions of wallets around the world. According to Federal Reserve data, the average credit card debt per card-holding U.S. household is $16,140. In total, the average American consumer owes $918.5 billion in credit card debt.

You probably get credit card offers in the mail all the time; the volume of unsolicited offers tends to increase the day after Thanksgiving. Here’s some important information that will help you sort through the pitches and separate the good values from the rip-offs.

The Introductory Rate

The introductory rate, or “teaser rate,” expires after a designated period of time. Federal law requires introductory rates to remain in effect at least six months after signup. This rate is below market and typically applies

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Why Defensive Stocks Aren’t Safe Anymore

Nervous investors should think twice before diving into so-called defensive stocks, especially those securities with high dividends. You might end up putting more risk into your portfolio than you realize.
Stocks that have less volatility than the overall market and pay higher dividends than most other stocks are often seen as a way to reduce risk in a portfolio. Traditionally, these are found in the defensive sectors, including consumer staples, utilities and health care.

Given the state of the world, it’s easy to see why investors would want to get defensive. The war in the Middle East is certainty getting hotter. Cities are under the threat of terrorist attacks, and tensions between Russia and Turkey increased when Turkey shot down a Russian warplane on the Syrian border. Meanwhile, the European economy still looks saggy and the once-fast growing Chinese economy is decelerating. And the Federal Reserve looks set to start raising the cost of borrowing money sooner rather than later.

Sectors are trading at high multiples. The problem is that “the defensives are expensive,” says Ramona Persaud, portfolio manager for Fidelity Global Equity Income fund (FGILX), the Fidelity Dividend Growth fund (FDGFX) and the Fidelity Equity Income fund (FEQIX). Many of the

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7 Secrets to ‘Regifting’ Without Getting Caught

Thinking of regifting this holiday season? You’re probably not alone.

A few years ago, 92 percent of those surveyed by the yard sale aggregator site Bookoo.com said that recycling gifts was OK, and almost as many were pretty sure they had received regifted items.

Done poorly, the practice can be downright insulting. Some of those surveyed reported receiving “gifts” such as 2-year-old fruitcake, monogrammed items (with someone else’s initials), fingernail clippers and a used toilet seat.

Then why regift? Several reasons:

  • It’s a budget booster. Having a couple of great things you can give means two gifts you won’t have to buy.
  • It’s eco-friendly. Instead of buying more stuff, you are recycling unused items.
  • It busts clutter. It helps clear your house of items collecting dust. These regifting guidelines can help you from crashing and burning on Christmas Day:

1. Make sure it looks new. Original packaging is best, folks. Something that’s been sitting unprotected on a shelf has likely picked up grime and might have faded where the sun hit it. If it’s been in the basement, it might smell musty.

If you have to blow dust off it, pass.

2. Remove any sign that the item is recycled. Flip through books to see if your dad underlined

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6 Things to Consider Before Paying Off a Mortgage Early

Living debt-free sounds great, and depending on where you are in life it may actually be attainable. But even if you can pay off your mortgage early, should you?

Although it may be tempting, first consider the opportunity cost of paying off your mortgage early at the expense of other goals or investment options, as well as the impact to your tax situation.

Opportunity cost. By paying off your mortgage early, you’ll save on the additional interest expense that would have been incurred in your regular payments. This savings can be significant, and will increase with the prepayment amount. However, by directing excess cash towards paying down a mortgage, those funds are no longer available for investment. The lower your interest rate, the less you stand to benefit through early retirement of debt.

Getting out of debtStart Now »View all Courses

How can you decide whether it is best to invest excess cash or pay off your mortgage early? Consider the following example:

Suppose the stated interest rate on your mortgage is 4 percent and you are in the 28 percent federal income tax bracket. Your after-tax mortgage rate is roughly 2.9 percent, perhaps lower if you can also deduct the mortgage interest on your

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3 Risks of Investing in Annuities

Investing can be scary, especially in the short term. When you retire, it’s hard to watch the value of your lifetime of savings fluctuate as financial markets bounce up and down. Fear is a powerful sales tool.

Immediate annuities are an insurance product that prevents you from losing money and offers the benefit of guaranteed payments. However, there is a catch with those guarantees. Many annuities aren’t guaranteed to keep up with inflation, so the purchasing power of those guaranteed payments could decline over time. Tying up a significant portion of your money in an annuity also takes away some of your financial options and flexibility, because you can’t always get the money back out easily. And some annuities are outright expensive.

Here are some of the issues you could face if you invest your retirement savings in an immediate annuity.

Inflation risk. Inflation has been artificially low for years due to manipulation by central banks and the slow growth patterns of the economy. As a result, many people have forgotten how inflation can reduce the buying power of fixed income payments and guaranteed rates of return.

What is Inflation?Start Now »View all Courses

Inflation is a normal occurrence as the cost of goods and

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4 Golden Rules of Investing

Whether you’re new to investing or a market veteran, these time-tested tips can help you build your fortune.

Rule Number 1: Diversify. Since some investments zig when others zag, divvy your money across several investment categories, from stocks to bonds to real estate. Also diversify within categories. Diversification spreads risk and guards against a catastrophic decline in any one investment.

Rule Number 2: Rebalance. Review your portfolio yearly to make sure your mix of investments hasn’t strayed from your original goals. If it has, sell investments that have performed well and use the proceeds to invest in underperformers to regain balance.

Rule Number 3: Dollar-cost average. Fear can cause investors to miss buying opportunities when prices are low. Euphoria can cause them to buy high. By investing the same amount in the same investments on a regular basis, dollar-cost averaging takes emotion out of the equation.

Rule Number 4: Keep costs down. You can’t control how much your investments earn, but you can control how much you pay to invest in them. Save by using an online discount broker, and stick with low-fee index funds and actively managed no-load funds.

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7 Ways to Raise Your Credit Score

Here’s the simple truth: Your low credit score is costing you a fortune.

Folks with the best credit get the best terms when it comes to mortgages, car loans and credit cards. They get the lowest interest rates and the lowest fees. They get the biggest sign-up bonuses. They’re more likely to get the benefit of the doubt when asking to get a fee waived or a credit line increased. Add it all up and you get an awful lot of reasons to make 2016 the year you get your credit in shape.

How exactly do you that, though? Well, it won’t always be easy and it won’t always be quick, but the good news is that it can be done. The truth is that you have more control over your credit than you think. You just have to put in the work.
Here are some ways that you can boost your credit score in 2016.

1. Get your credit report, and report any errors you find.

Any move to boost your credit score must begin with checking your credit report. Get a free copy of your report from all three credit bureaus – Experian, Equifax and TransUnion – once a year from AnnualCreditReport.com,

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How to Put Yourself on a Money Diet

For the past six years, Eliza Cross, a professional blogger and freelance writer in Denver, has put herself on what she calls a “money diet.”

Not that she coined the phrase. “Money diet” is a term that’s been around since at least the 1980s. For a stretch of time, maybe a week and often a month, you spend no money, except on essentials like groceries, gas and medicine. Unlike a food diet, where you want to lose pounds, the goal is to gain money. And if you do it right, Cross says, you should have more money than usual at the end of the month, and you may gain better financial habits as well.

Cross has been putting herself on a money diet every January, for all 31 days. She writes about it and commiserates with her readers on her blog, HappySimpleLiving.com.

And while Cross does it every January – “it’s a good time of year when we’re motivated to make changes in our lives, and a lot of us have been spending a lot over the holidays,” she says – you can obviously go on a money diet any time. That said, some parts of the year are probably more challenging than

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The Best Credit Cards for Customer Satisfaction

Lindsay bought a memory foam mattress from a store that guaranteed no interest financing for two years. Fourteen months after the purchase, interest charges surfaced on her bill.

A credit card David did not open showed up on his credit report as delinquent. The debt, which he discovered because he kept getting denied new credit, will remain on his credit history for seven years.

Joyce’s son purchased a wedding band on her credit card without her approval. When she contacted the jeweler, the store refused to do anything about it.

Though their names have been changed for this article, these are all real complaints consumers have filed with the Consumer Financial Protection Bureau.

U.S. News & World Report’s Best Credit Card rankings​ take into account consumer stories​ like these to evaluate credit cards on the market​. One factor of the methodology​, customer experience, uses CFPB complaints to determine how satisfied customers are with their credit cards.

Of the 18 credit card companies U.S. News reviewed, the issuers offering the best customer experience included American Express, BB&T and JPMorgan Chase.​ ​

To control for differences in the size of credit card issuers (banks and credit unions that offer credit cards)​, U.S. News divided

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