Surviving Debt After The Holiday Season

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Now that the holidays are over, and due to the fact that some of us might have spent a little bit more money than what we had originally budgeted for, it is time to regain

control of our financial lives and create feasible and realistic budgets for the new year. Many have decided that in 2005 they will restructure their finances and plan ahead to be able to rid themselves of high interest credit card debt and other bills which consume most of their disposable income. What most have to realize is that in order to reach financial freedom and deal with financial problems effectively, it is imperative to commit to fixed budgets, to carefully analyze and consider all of the different choices available to us, and to make the best decisions available to us after considering all the surrounding circumstances.

The first step is to create a list of your fixed monthly expenses. Include bills such as utilities, membership dues, rent, mortgage, insurance, etc. Next estimate how much money you need each month for flexible expenses such as entertainment, food, and clothing. Subtract these expenses from your monthly net income. Hopefully you will have money left over to place into savings accounts. If not, you will need to revisit your flexible expenses list and look for ways in which you can reduce or eliminate the amount of money you spend. Since most people tend to spend more money than normal over the holidays, the best way to balance these additional expenses is to cut back during the months that follow. Consider the small ways in which you spend your money. Do you really need to stop at your favorite coffee shop on the way to work? If you eliminate that two dollar coffee each morning you can save ten dollars a week or over forty dollars a month. Being conscious of spending at all levels will help you to save in the end.

Once you have evaluated your expenses, take the time to set some goals. The first should be to determine a date when you would like to have paid back all of the extra money you borrowed or used during the holidays. Then you will be ready to create a budget. Calculate how much money you will need set aside each month in order to reach your first goal. This amount will now become a new fixed expense and you must view it as such. If you do not plan to pay this amount each month, chances are that it will not happen.

Setting goals is important; however, complying with those goals is equally important. Make it a point to revisit your financial goals periodically, for example on a monthly basis, and assess how you are doing. Are you on track? If not, review your goals to see if they are realistic and make adjustments as needed.

With a positive attitude and discipline you can manage holiday debt. Just remember to be honest about your spending, set goals and maintain them.

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Surviving Debt After The Holiday Season

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Social Security Disability Filing a claim for Social Security disability benefits could be one of the most important financial decisions you make in your life. However, people mistakenly view it as the "last great act of their working career." Thus, they delay in filing a claim for years, or worse, they never file a disability claim.

To delay in filing a claim, or to never file a claim could have disastrous financial consequences to you, your family, and eventually your Social Security retirement benefit. When should you file a disability claim with Social Security? Simply put, when you reasonably expect that you will be unable to work for a minimum of 12 continuous months, or you expect that your medical condition will result in death.

Thus, you do not need to wait 12 months after you last worked to file a disability claim; however, Mr. Davis recommends that you wait at least 5 months after your last day of work to file a claim. The value of your Social Security disability benefits prior to retirement age can be staggering. For example, a claimant in their mid- forties with a monthly disability benefit amount of $1,000 could easily have disability benefits worth well in excess of $250,000 if they never return to work. This amount does not include the automatic Medicare health insurance benefits one is entitled to twenty-nine (29) months following the date the Social Security Administration (SSA) finds that you became disabled.

You are eligible for Social Security disability benefits because you have worked and paid taxes most of your life! It is important to understand you are insured for disability insurance benefits by SSA if you have worked 5 of the last 10 years (the years do not need to be consecutive). In essence, you have purchased a disability policy from the federal government. You paid the premiums for this disability insurance either by paying Social Security withholding (FICA) taxes or self-employment tax.

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After several years, your failure to file a disability claim becomes a problem because SSA does not know you are disabled and it figures you simply decided to stop working. Thus, the agency will average in "all your disability years with zeroes" with the years you did work to calculate your retirement benefit.

Of course, the averaging in of so many years of zeroes to your lifetime earnings can and will have a dramatic negative impact on your monthly retirement benefit. However, when you file a claim for Social Security disability and are found disabled, your earnings record and your retirement benefit is "protected" or "frozen" during the time you are disabled. This is because SSA does not average in the zero years when calculating your retirement benefit.

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The monetary benefits and health insurance you will receive from SSA will reduce your stress and allow you and your family time to recover from your illness. Your taxes paid for this disability insurance from SSA, please view it no different than life, health or automobile insurance.

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Rizzo & Dierson, S.C.

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