5 Ways to Avoid Overspending During the Holidays

5 Ways to Avoid Overspending During the Holidays

By Tracy L. Hirsch

Worried about draining your wallet on holiday gifts? These tips will ensure that you’ll have a smile on your face when your January bank statement comes.

It’s the most wonderful time of the year! And… It’s the most expensive. Did you know that the average American without children spends nearly $1,000 on holiday gifts, and that the average American with children spends an average of $1,700?

It’s predicted that the United States will spend roughly $500 billion dollars on holiday gifts this year, and a majority of those gifts will end up on credit cards. While it’s fun to get caught up in the holiday spirit, it can easily lead to unwanted debt that you’ll be paying off until the end of next year (with interest no less).

So how can you experience the joy of Christmas, Hanukkah, and Kwanza without the regret of overspending that often comes in the months afterward? If you’ve gone over budget in the past, here are five tips for avoiding debt in this upcoming holiday season:

1.) Start making a list and checking it twice.

Before you start thinking about what you’re going to buy, first think about who you’re going to buy gifts for this year.

It’s best to make two lists: one that contains close family and friends, and another that contains people who fall under the “acquaintance” category, such as neighbors, co-workers, and your kids’ school teachers.

While your family members and friends might get gifts such as electronics, clothing, home appliances, and gift cards, you shouldn’t feel obligated to give the same type of expensive gifts to acquaintances.

Instead, you can show your appreciation to neighbors and others with a homemade cookie tray and a card, a bag of locally-roasted coffee beans, or an inexpensive bottle of wine. Once you have your list of gift recipients, it’s time to set a spending limit.

Don’t let the joy of the season lead to financial decisions that bring the post-holiday blues. 

2.) Have yourself a merry little budget.

Nobody wants to have a budget, but unless you’re the CEO of Amazon, you most likely don’t have tens of thousands of dollars in extra spending money.

While a budget may seem like a buzzkill, it’ll actually make your New Year a lot brighter when you have enough money to pay all of your monthly expenses for January.

It’s important to decide how much money you can afford to spend on gifts, not how much you want to spend.

Create an Excel spreadsheet with your allowed amount at the top, and then insert each recipient’s name with the maximum amount that you’ll spend for each recipient. Then add columns for the amount you’re spending, and the remaining balance.

If you don’t have Excel, no worries! You can create a table in a Word document, use the ‘Notes’ app in your phone, or even write it down on a piece of paper.

Here’s an example:

                           Total Holiday Gift Budget: $500

Recipient
Maximum Amount
Amount Spent
Remaining Amount
Mom
$75.00
$67.50
$7.50
Dad
$75.00
$69.25
$5.75
Hubby
$75.00
$74.65
$0.35
Jackson
$100.00
$89.75
$10.25
Willow
$100.00
$91.40
$8.60
Neighbor #1
$15.00
$12.50
$2.50
Neighbor #2
$15.00
$12.50
$2.50
Jackson’s Teacher
$20.00
$17.95
$2.05
Willow’s Teacher
$20.00
$17.95
$2.05
TOTAL:
$495.00
$453.45
$41.55

Remember that you don’t have to use your full budget amount. The ultimate goal is to have some left over in the ‘remaining amount’ category, but as long as you aren’t in the negative in the last category (i.e. below zero), you’re golden!

a merry christmas pic

3.) Thinking about using credit cards? Let it go, let it go, let it go!

If you’re able to use your credit card knowing that you can pay it off in full on your next billing cycle, then gather up those rewards and get your 3% cash back!

However, if you’re tempted to go over your set budget by charging multiple credit cards (and if you’ve done that in the past), it’s best to either use cash or a debit card. Maxing out several credit cards and then planning on paying them off throughout the following months of the new year is never a good idea.

When you tack on high interest rates, plus the fact that you’ll need to pay your regular monthly expenses (groceries, mortgage, utilities, etc.), you could end up in a situation where you’re paying hundreds of dollars in interest every month AND you’re without enough funds to pay your other bills.

While paying cash may seem like an old-school way of shopping, you’ll be glad that you did it when you don’t have any holiday debt next year.

4.) Do you see what I see? Your accountability partner will!

If you have a history of overspending around the holidays, ask a trusted friend or family member to hold you accountable in regards to your budget. Put dates on your calendar where you check in every few days so that they can ask you how much you’ve spent on each recipient so far.

If you haven’t been keeping track as closely as you had hoped, ask your accountability partner if they’re willing to sit down with you and look at your receipts to make sure that you’re still within budget.

If necessary, ask them to keep your credit cards in a safe place for the next few weeks so that you’ll rely solely on cash (or your debit card) for your holiday gift purchases.

5.) Find some corn for poppin’ (and some movies for watching)!

If your budget is really tight, and you can’t afford to buy your spouse an Apple Watch or your best friend front row tickets to their favorite concert, there’s no shame in that whatsoever.

While it may seem in vogue to max out your credit cards for the latest gadgets, it takes a lot more wisdom and self-control to live within your means. If you’re honest with yourself and your loved ones, you’ll end up having a less stressful holiday season where you can focus on each other instead of the gifts.

This means that you can think outside of the box, and give creative gifts that can even be homemade! Does your significant other love old Christmas movies?

Find a small basket and fill it with homemade caramel popcorn, hot chocolate, and a DVD of “It’s a Wonderful Life” or “Miracle on 34th Street.” You’ll only spend $15 or $20 on the contents of the gift basket, but you can’t put a price tag on the thoughtfulness!

*****

The holidays shouldn’t have an adverse effect on your finances, and with these five tips, you’ll be able to experience the joy of the season (and the peace of mind that comes with staying inside of your budget).

Are there other things that you would add to the list? If you’ve already implemented other tried-and-true methods for avoiding overspending during the holidays, be sure to keep up the good work!

All the best,

Tracy L. Hirsch

Louisville Bankruptcy Lawyer

Do you have an overwhelming amount of debt? Do you need a fresh start? Let's chat!

(502) 435-2593

Need help immediately? Text or call Tracy Hirsch on her cell phone!

How to Save Hundreds of Dollars a Month in 2019

4 Clever Ways to Save Hundreds of Dollars a Month

By Tracy L. Hirsch

Looking for practical ways to save money in the year ahead? We’ve got the inside scoop on apps, digital coupons, rewards programs, and more for your everyday expenses.

We’re all familiar with the typical New Year’s financial resolutions: set a budget, save money, and pay down debt. While those are great goals, how exactly can you implement them in practical ways?

Not buying a new car or house is certainly an obvious way to stay within your budget, but what most people don’t realize is that their smaller monthly living expenses are the actual culprits when it comes to overspending.

Here are some practical tips on how to save hundreds of dollars a month on these four basic needs:

1.) Gas

If you’re like most Americans, you probably shed a tear or two whenever you have to fill up the gas tank in your SUV. Your commute to work every day, running errands, and taking the kids to their various activities causes that bright orange ‘empty’ light to pierce right through you at least once a week.

There are two ways that you can make your regular trip to the pump a little less painful.

     > Check the prices of various gas stations in your area.

Chances are, you have at least half a dozen gas stations within a five-mile radius from your home and/or workplace. If you’re rolling your eyes thinking, “I don’t have time to drive around to each gas station to compare prices,” we’ve got a modern solution!

Using apps or websites such as GasBuddy allows you to compare prices at the click of a button.

All you have to do is enter your zip code, and all of the gas stations in your immediate area are listed with their current gas prices for regular, mid-grade, premium, or diesel. While saving $0.10 a gallon may not seem worth the effort, it truly adds up!

     > Take advantage of your grocery store rewards points.

If you regularly shop at grocery stores that offer gas rewards, you’ll gain even greater savings. For example, if you shop at a New Albany or Louisville Kroger, you can get a reduction of up to $1.00 per gallon just for buying groceries and using your Kroger card!

If you primarily buy your family groceries at a store like Kroger or Costco, you’ll definitely want to take advantage of their fuel rewards, as you could save up to $80 a month if you’re filling up your tank once a week.

2.) Groceries

Speaking of grocery store fuel points, another way that you can save money is to price shop at your local grocery stores. The best way to do that is to check weekly circulars for sales, use your rewards cards, and utilize coupons.

While all of these things used to take a lot of time and effort, everything is now at your fingertips in the digital world.

     > Utilize grocery apps!

There are various apps and websites (similar to GasBuddy) that compare sale prices, provide coupons, and even create grocery lists! The Grocery Pal app does all of those things, and you don’t have to cut coupons or drive from store to store just to do price checks.

     > Sign up for e-mail alerts.

If there are certain stores in Louisville where you buy your groceries and toiletries on a regular basis, sign up for their weekly online circulars. Seeing them in your Inbox is a good reminder to look for sales before you put your grocery list together.

You can meal plan based on what’s on sale that week, and even stock up on items that don’t require refrigeration.

Now that we live in a digital world, you don’t have to cut coupons or mail in rebates. Everything is at the tips of your fingers with apps, email subscriptions, and online discount codes.

3.) Clothing

If you have children, you know that they outgrow clothes and shoes in the blink of an eye, which is why shopping the sale rack is an absolute-must.

If you can obtain gently-used hand-me-downs from family or friends, that alone will save you hundreds (or even thousands) of dollars a year. If you need to buy, make sure that you check out clearance racks and use coupons on top of that.

     > Combine your discounts for maximum savings.

At places like Kohl’s and other department stores, you can usually use coupons on sale and clearance items. For example, at Kohl’s, if you find a jacket that was originally $60, and it’s 70% off, you’re saving $42 right off the bat.

While a grand total of $18 is awesome, you can also apply a 20% off coupon for a final total of $14.40! A total savings of $46.40 on one item means that you can allocate your savings for other sale or clearance items. It’s a good feeling when you can walk out of the store with a jacket, a pair of tennis shoes, a pair of pants, and a shirt for under $50 total.

When you bargain shop and use coupons, it’s possible to get several new clothing items for the price of one!

     > Shop end-of-season sales.

The best places to shop are the places that have amazing sales at the end of each season. Planning ahead can save a ton of money, especially when it comes to kids’ clothing. If you have a newborn in January and go to an end-of-winter sale in February, you can stock up on size 12-month winter clothes for the following year.

Many places offer up to 90% off when they really want to get rid of clothing that will be out of season in order to make room for the next weather-appropriate attire.

4.) Coffee (Yes, this is counted as a need.)

While coffee isn’t technically a necessity, for most of us, it keeps us going in the daily grind. While it would be nice to buy coffee every day on the way to work, that can easily add up to $15 a week (for just a large black coffee).

While making your own coffee at home isn’t nearly as exciting, it can save you $50 to $100 a month depending on what type of coffee drink you buy each day. If your taste is too sophisticated for Folgers made in a Mr. Coffee, here are some ways to get high-quality java and still save:

     > Invest in a do-it-yourself coffee machine.

Just because you make your coffee at home, doesn’t mean you have to sacrifice on taste or convenience.

If you don’t mind doing a couple minutes of prep work, you can get a nice French press for under $20. If you want something that’s a little quicker, you can get a small Chemex and a box of filters for about $50.

     > Find a Keurig machine on sale.

If the snooze button is your friend and you don’t have time to boil water and measure coffee grounds in the morning, a Keurig would be a wise investment. While these machines are pricier, looking for a sale and using a coupon makes it all worth it.

A Keurig that’s normally $79, is only $59 with a 25% off coupon. You would spend that much in one month on regular black coffee from your local shop!

coupons louisville ky

Implementing all of these tips can add up to hundreds of dollars in savings each month, which means you’ll have a few thousand dollars annually that can be put into an emergency fund or be used to pay off consumer debt and student loans.

While broad New Year’s financial resolutions can be hard to keep, these specific steps can help you stay within budget. Before you know it, you’ll no longer need these ‘resolutions’ every year because these practical tips will become a way of life!

Are there other ways that you save money on everyday items? Share your ideas or the inside scoop on the best apps in the comments below!

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5 Ways to Teach Young Children About Money

5 Ways to Teach Young Children About Money

By Tracy L. Hirsch

At what age should I start teaching my kids about finances? The answer may surprise you.

A large number of millennials (young adults in their early 20’s to late 30’s) feel as though they need more education and guidance in regards to finances. Many of them say that they wished their high school and college institutions would have provided financial literacy courses to prepare them for the real world.

The good news is that more and more states, including Kentucky, are now passing legislation that requires all public high schools to provide a financial literacy class or program as part of the coursework necessary to graduate.

While this is a huge step in the right direction, it’s even more beneficial to teach kids about money before they’re juniors and seniors in high school.

Believe it or not, children can be taught basic financial concepts before they even start Kindergarten. While you obviously won’t be teaching them about stocks, bonds, and Roth IRAs, you can use the basic building blocks of financial responsibility to lay a foundation for those advanced topics later on in life.

Here are five ways to teach young children about money before they even start school:

1.) Pay for things in cash when you have your kids with you.

When possible, try to plan ahead for trips to the grocery store and stops at the gas pump by taking out cash to pay for those things. This has two benefits: First, it curtails the temptation to max out your credit cards, and second, it shows your children a tangible form of currency.

Seeing the money in your hands get handed over to the cashier shows them that they have to give up those pieces of green paper and coins in exchange for necessities. If you use credit cards, it looks as though you’re obtaining things for free by swiping a card that you get to keep with you at all times.

Since a credit card is an abstract thing to a small child, it helps to not only pay for things in cash, but to allow your child to physically touch the money and be the one to give it to the cashier.

You can start teaching your kids about basic money concepts by the time they’re two or three years old. 

2.) Explain what ‘money’ actually is. While this is something that we as adults take for granted, it can be helpful to sit down with your young children and show them cash while explaining what it’s used for.

For example, it can be helpful for them to hear, “Do you remember when you went with daddy to the grocery store yesterday? When we bought those apples and grapes, we had to pay for them with money. Money looks like this: these are dollar bills, and these are coins. Mommy and daddy go to work so that we can get these dollar bills and coins to pay for food. We also save some of our money in a bank.”

If your children get a quarter every time they wipe off the kitchen table, explain to them that they are earning money for their work. When they earn money (or receive it as a gift), you can show them how to do a basic budget, starting with the suggestion below.

3.) Give your children a modern piggy bank or savings box.

It’s important for your children to know what to do with their money when they receive it, so provide them with a designated container for their cash.

Instead of using an old-fashioned piggy bank, purchase a modern one with three compartments (like this Moonjar bank), that has them separate their earnings into three categories: saving, spending, and donating.

This shows them that they can’t spend all of the money that they earn, and that they need to save some of it for larger purchases in the future (such as a special educational toy or electronic).

They also learn the importance of giving back and helping those in need by setting aside a portion of money to give to their church, local charity, and/or a fundraiser.

teach kids about money Kentucky

4.) Read books and play educational games with your children that teach basic financial concepts.

Games such as Monopoly Jr. and Artisoplay Money Wise Kids are a great way to make learning about money fun. It’s also an opportunity to bond with your children! It allows you to sit back and let the game teach them about money while you focus on spending quality time with your kiddos.

In addition to games, reading stories about kids who work to earn money are a great way to drive home the message of financial responsibility (in an easy-to-understand manner). A book set, such as “Junior’s Adventures” is the perfect way to implement these concepts.

5.) Find toys that implement the use of play money.

If your kids like to play “grocery store” and “restaurant” (or similar scenarios where they get to use their imagination), bring play money into the equation. Buy them a cash register or play money set where they have to ‘pay’ for their groceries or dinner and dessert.

Using fake money in their imaginary transactions will further support the other subtle lessons that you’re teaching them about finances.

At first glance, it may seem impossible to teach preschool-age children about financial responsibility. However, as you can see, there are multiple ways to teach your young children about how to wisely spend money, the importance of hard work, and why they need a savings account.

                                              *****

Are there other effective tools and resources that you’ve used to help your young children become financially literate? Share them with us in the comments below!

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5 Good Reasons to File Your Tax Return Early This Year (and Every Year)

5 Good Reasons to File Your Tax Return Early This Year (and Every Year)

By Tracy L. Hirsch

Filing your federal tax return at the beginning of the year has multiple advantages, both financially and emotionally.

Nobody enjoys filing their tax returns. Taking time and effort (and money if you hire someone to do them for you) to do something boring and anxiety-inducing isn’t at the top of most people’s “must do immediately” list.

Most of us put it off as long as possible, however, the sooner you get it over with, the more benefits you’ll enjoy.

Here are five good incentives to file your federal tax return now:

1.) You’ll receive your tax refund more quickly.

If you know that you’re going to get a 2019 tax refund, you’ll receive it a lot sooner if you file your return at the beginning of the year. If you’re looking to update your kitchen cabinets, pay off a small amount of credit card debt, or take a vacation, you’ll most likely be able to do it by the end of February instead of the end of April if you do your tax filing this week.

Who doesn’t want their hard-earned money as soon as possible? If you file electronically, you’ll get your refund even sooner as opposed to requesting a mailed check. A refund in your bank account in a matter of days? Yes, please!

Filing your taxes early with the IRS (and the Kentucky Department of Revenue) has major benefits, one of them being that you’ll get your refund sooner.

2.) You’ll have more time to pay any taxes that you might owe.

If you aren’t receiving a refund this year, and actually owe money instead, it’s still a good idea to file your tax return early. While no one wants to have to owe taxes, it’s best to complete your filing in January or February since you still don’t have to pay what you owe until April 15th.

There are two advantages to this. First, you’ll find out exactly what you owe. In an ideal situation, you might be surprised to find out that you owe less than you had guessed! However, if you owe a lot more than you thought you would, filing early gives you plenty of time to weigh your options.

Second, if you file early, you’ll know how much to save so that you can pay your taxes in full. If you determine that you owe a small enough amount to pay in full by mid-April, you’ll have at least two full months to set money aside.

This not only helps you avoid getting stuck with a huge tax bill right after you file (if you wait to file at the beginning of April), but also avoids a high amount of anxiety. Feeling prepared and having a plan will save you an enormous amount of emotional distress, and we could all use less stress!

3.) You’ll avoid having to file a costly tax extension.

Speaking of stress, staying organized will help you avoid the angst that comes with filing an extension. One of the most common reasons for filing an extension is due to the inability to pay what is owed. While an extension may seem like a good idea, it actually makes things a lot worse.

An extension does give you extra time to file your tax return, however it doesn’t give you extra time to pay what you owe. If you don’t pay what you owe by April 15th, the IRS will tack penalty fees and interest onto your outstanding tax balance.

That’s why it’s a good idea to file early, so that you have time to put a plan in place. If you know that you owe way more than you could possibly pay, it’s best to meet with a local bankruptcy attorney to see if you qualify for a Chapter 13 bankruptcy.

This will help you reorganize your debts so that you can pay your taxes in monthly installments (in addition to any other debts you may have), which is a much better option than not paying at all.

tax filing Kentucky

4.) You’ll help prevent tax-related identity theft.

Whenever you open a bank account, purchase a home, file your taxes, or complete any other type of transaction that requires your social security number, be sure to keep it as secure as possible. Never send your SSN through an unencrypted email, text message, or social media private messaging account.

Ideally, you’ll give it directly to a banker or CPA in person, or fax or send it in the mail if you can’t deliver the paperwork yourself. There are lots of reasons to be extra careful with your SSN, and one of them is to avoid a fraudulent tax return in your name. Criminals who obtain your SSN can use it to intercept your tax refund and keep it for themselves.

They usually do this early in the tax season since they know that a majority of tax payers don’t file until March or April. In order to avoid the likelihood of this happening, file your taxes as early as possible so that criminals don’t even have the opportunity to steal your refund!

5.) You’ll be able to obtain important financial information for a big life event.

Are you planning on going to grad school or buying a new home? If so, you should file your tax return early. Students need the information on their 1040 form so that they can apply for financial aid, and prospective home buyers need to show proof of income with their completed tax return.

Filing your tax return early gives you plenty of time to gather all pertinent financial documents so that you can start the home buying process or financial aid process sooner than you expected. If you’ve been eyeing your dream home recently, filing your tax return now might help you obtain it!

As you can see, there aren’t really any downsides to filing your federal tax return early in the tax season. So go ahead and carve out some time this week to do it – your bank account and blood pressure will thank you!

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How Does Filing a Chapter 7 Bankruptcy Affect My Tax Refund?

How Does Filing a Chapter 7 Bankruptcy Affect My Tax Refund?

By Tracy L. Hirsch

When a Chapter 7 bankruptcy petition is filed in Kentucky, there is a court appointed trustee assigned to your case. The trustee’s job is to determine if there are any unprotected assets that can be sold or collected in order to distribute funds to creditors in the case.

A tax refund is an asset in a bankruptcy case, regardless of whether the refund has been received or not. Therefore, the refund, or expected refund, is an asset that must be disclosed in the Chapter 7 bankruptcy petition and exempted by any applicable exemption.

Depending on the state the the debtor files the bankruptcy petition in, there may or may not be an available exemption to protect the tax refund or a portion of it.

Both Kentucky and Indiana do, however, provide an unlimited exemption for any portion of the refund that is based upon Earned Income Credit.

All tax refunds must be disclosed in any bankruptcy case, including Chapter 7 and Chapter 13.

In Kentucky, debtors may utilize federal exemptions, which are much more generous than state exemptions when it comes to protecting cash or cash equivalent assets such as tax refunds.

Each individual who files in Kentucky is entitled to claim a $1,225.00 “wildcard” exemption that can protect cash, checking account balances, tax refunds and other miscellaneous assets that are not otherwise covered by an exemption.

In addition to the wildcard exemption, a debtor may use up to $11,500.00 of the unused portion of their homestead exemption. In the case of an individual debtor that does not have equity in any real estate, they could potentially protect cash and other cash equivalents up to $12,725.00.

tax refund Kentucky

Indiana follows its own set of state exemptions which are limited when it come to cash and other intangible personal property. An upcoming tax refund is an asset that is dealt with in the same manner as cash on hand or in a checking or savings account.

Based on Indiana exemptions, each debtor may exempt only $350.00 in intangible personal property. Therefore, in the case of an individual debtor that is expecting a significant tax refund, there is a high likelihood that he or she may lose that refund if they file their case before the refund is received and spent.

In most cases, the timing of the bankruptcy petition is key. Therefore, it is imperative to discuss any tax refund issues with a local Louisville attorney before filing your Chapter 7 bankruptcy case.

If you’d like to learn more about the differences between a Chapter 7 bankruptcy and Chapter 13 bankruptcy (and which one is right for you), call or text me today at (502) 435-2593.

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I Prepared My Federal Tax Return, and I Can’t Afford to Pay the Taxes that I Owe. Now What?

I Prepared My Federal Tax Return, and I Can’t Afford to Pay the Taxes that I Owe. Now What?

By Tracy L. Hirsch

If you owe more money than you can afford to pay, don’t panic. There are steps that you can take to avoid major penalties from the IRS.

If you’ve prepared your 2018 federal tax return and realize that you owe a large amount to the IRS, you might think that the situation is hopeless. While it’s a stressful situation for sure, there are options to keep the IRS from calling (and to keep your blood pressure down).

Here are the basic do’s and don’ts when you have a hefty federal tax return balance:

1.) DO file your tax return(s).

If you’ve taken the steps to prepare your tax return, and found out that you owe way more than you thought you would, it might be tempting to not file your taxes at all. However, if you do that, it will only make matters worse.

Not only should you file your tax return, but it’s also imperative that you file on time. While it’s true that the IRS does implement a penalty for failing to pay, you’ll also incur a penalty for filing past the deadline (April 15th).

So even if you determine that you can’t pay what you owe in full, the first step is to file well before the deadline (ideally in January or February) so that you don’t get slammed with a late-payment penalty.

If you neglected to file your taxes last year and/or the year before, it’s important to file those along with this year’s tax return, as you’ve probably already accumulated interest from the penalties on the previous years’ taxes that you owe.

Once you’re up-to-date on filing, there are options for paying your current and past due taxes when you’re unable to pay the lump sum at one time.

If you can’t afford to pay the federal taxes that you owe, don’t avoid filing your return. You have other alternatives that won’t get you in trouble with the IRS.

2.) DO find out if you qualify for an IRS payment plan.

If you only owe a few thousand dollars, it might be beneficial to apply for a short-term installment agreement with IRS Form 9465. A short-term IRS payment plan gives you 120 days to pay the taxes that you owe.

It should be noted that you’ll still have interest applied to this, however, the fees will be much lower when avoiding the late-filing fees.

This is why it’s important to file this year’s tax return on time, so that your interest and fees will be kept at a minimum. Even with the interest that you’ll accrue from the IRS payment plan, it’ll be lower than the interest from a personal loan or credit card.

In addition to that, you won’t be receiving phone calls from the IRS, or worse, a notice that they’ve filed a federal tax lien against you.

You’ll need to calculate how much you owe, and whether or not you can pay it within the time frame allotted by the IRS. For example, if you know that you owe $4,000 this year, and you can afford to pay $1,000 a month (plus applicable interest), you’ll be able to pay your taxes in full within the 120-day/4-month period.

This would allow you to pay all of your taxes without getting into hot water with the IRS since you’d set up a plan where you’d agree to pay all of your taxes within the 120-day time frame.

3.) DO speak with a local bankruptcy attorney.

While some may only owe a few thousand dollars in federal taxes, many often owe tens or hundreds of thousands, which is impossible to pay off, even with an IRS payment plan.

While the IRS does offer a long-term payment plan, it’s only for those who owe less than $50,000. Even if you owe slightly less than that amount in taxes and back taxes, you’ll still be paying a lot of interest on those taxes.

If you owe more than $50,000 (or even an amount below that which is beyond your ability to pay), one of the best options is to file for a Chapter 13 bankruptcy. An experienced attorney who focuses on Chapter 13 bankruptcies can help you set up a repayment plan that would be much more affordable that trying to pay on your own.

Not only can you set up a reasonable and affordable tax payment plan through your bankruptcy filing, you’ll also be able to keep your house and your car by including those in your bankruptcy case as well.

While filing for bankruptcy may seem like a “last resort,” it’s actually a wise decision since you’ll avoid the risk of having your wages garnished and you’ll protect your valuable assets, such as your home and vehicle in the process.

tax return Kentucky 2019

4.) DON’T ignore your tax issues.

If you owe a large sum to the IRS, it’s tempting to want to bury your head in the sand and hope that it’ll all magically disappear. The reality is that things will only get worse the longer that you avoid filing and paying your taxes.

If you owe way more than you could possibly pay in one lump sum or in a short-term IRS payment plan, contact a local bankruptcy lawyer to see what your options are in regards to filing for bankruptcy.

At Hirsch Law, we always offer free consultations, and are here to provide you with the most realistic options that will protect your bank account, car, and home. For more information, call (502) 435-2593 to find out if Chapter 13 bankruptcy is right for you.

Consultations are available on weekdays, evenings, and even Saturdays at our convenient Louisville location. If you want to rest easy at night without worrying about the IRS coming after you, we’re ready to help!

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If you work for JCPS, please read this!

If you work for JCPS, please read this!

By Tracy L. Hirsch

Find out if you’re one of the 4,000 JCPS employees who may be getting double-charged for your 2019 insurance plans, and what to do about it.

What you should be aware of right now.

It was recently brought to my attention by my friend that she, along with a few thousand other Jefferson County Public School employees, are being charged for two dental plans and two vision plans this year. The only way to know if you are one of them is to look at your pay stub or log into your online employee portal.

Since most JCPS employees have direct deposit, and therefore may not look closely at their pay stubs or bank accounts, I want to encourage you to look at your most recent pay stub and log into your online employee portal to see if you’re one of the employees who is currently enrolled in all four plans.

Those who are currently enrolled for two dental and two vision plans should have received a letter from JCPS, telling them that they are currently enrolled in a JCPS vision plan (EyeMed Vision) and a KY State vision plan (Anthem Vision), as well as a JCPS dental plan (Delta Dental) and a KY State dental plan (Anthem Dental). The letter also outlines how to rectify the situation.

How this happened.

For those who have dependents, they noticed a large increase in what was taken out of their paycheck at the start of this year (compared to last month), and started asking questions.

It turns out that employees were instructed by JCPS to log into their online employee portals at the end of 2018 (during Open Enrollment) to verify that they didn’t want to make changes to their health, dental, or vision plans for 2019.

When employees logged in, some of them saw the option to add a dental plan and vision plan, and assumed that they weren’t currently enrolled in one since they were being asked if they wanted to enroll in the State vision and dental plans (i.e. Anthem Vision and Dental).

Since employees were never required to log into their portals every year for insurance purposes in the past, many employees interpreted the prompt inside the portal to mean that, from here on out, they would have to manually add dental and vision plans to their healthcare plans.

That actually wasn’t the case, but because it was unclear, over 4,000 employees enrolled for the State (Anthem plans) in their employee portals, and are now being charged for both of the State (Anthem) plans and both of the JCPS plans.

Basically, JCPS was giving employees more dental and vision options, but didn’t make it clear that if an employee were to choose the State (Anthem) dental and vision plans, that they would have to cancel the JCPS dental and vision plans (which they were automatically enrolled in) in order to not be charged for all four plans.

Double check your pay stubs to see if there’s a noticeable difference in your net income. If there is, you may be double enrolled in two vision plans and two dental plans.

What this means (and how it might be affecting you).

This means that, as stated above, all JCPS employees were automatically enrolled in JCPS’s employee vision and dental plans for 2019 (as they have been in years past), and that those who manually added the State (Anthem) vision and dental plans from their portal accounts are now being charged for all four plans.

If you are one of these employees, this means that every single month in 2019, you will be charged for two different vision plans and two different dental plans when you obviously only need one of each.

If you want to avoid being charged for the State (Anthem) dental and vision plans that you manually added in your employee portal, you can have them removed. Here’s how:

What to do about it.

You should have received a letter in the mail a few weeks ago from JCPS informing you that you are currently enrolled in two dental plans and two vision plans for 2019, and are therefore being charged for four plans total.

In the letter, it states that in order to only stay enrolled in one dental plan and one vision plan, here’s what you need to do immediately:

1.) Decide which plans you want to keep and which ones you don’t.

     > To see the benefits of the JCPS plans (EyeMed Vision and Delta Dental), go to:

     Jefferson.kyschools.us> Employees > Benefits > Benefits and Plan Information > Voluntary Benefits >*select “dental” or “vision”*

     > To see the benefits of the Anthem plans (Anthem Vision and Anthem Dental):

     Kehp.ky.gov > Benefits > Dental, Vision, Life Insurance >*select “dental” or “vision”*

student loans Kentucky

2.) Contact the JCPS Benefits Department to request the appropriate forms for cancelling your unwanted plans. There are three ways to contact them:

     > E-mail your Benefits Coordinator

  •      > Call the JCPS Benefits Department at (502) 485-3436.
  •      > Stop by the Benefits Department located in the VanHoose Education Center.

          3332 Newburg Road

          2nd Floor

          Louisville, KY 40218

Hours are Monday – Friday from 7:30 am – 4:30 pm. No appointment is necessary.

Please share this information if you have friends or family members who work for JCPS, as this could save them from overpaying several hundred dollars this year!

**[If you are part of the JCPS teacher’s union, and feel that you should be reimbursed, contact your union representative. If you have any additional questions, be sure to use one of the contact methods above, as our law office is not employed by or affiliated with JCPS.]**

             >> This blog post was written in January of 2019. <<

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Chapter 7 Bankruptcy vs Chapter 13 Bankruptcy: Which is the Better Choice?

Chapter 7 Bankruptcy vs Chapter 13 Bankruptcy: Which is the Better Choice?

By Tracy L. Hirsch

If you have a mountain of debt that’s keeping you up at night, and you’re not sure how to get on the right track, filing for bankruptcy can be a viable option.

While many people assume that the term “bankruptcy” is equivalent to a four-letter word, it can actually be the impetus to a fresh start where you can gain true financial freedom. If you’ve been researching your options, you’ve probably noticed that there are two types for individuals.

When it comes to Chapter 7 vs Chapter 13 bankruptcy, which is the best choice?

Each option is based on your annual income, personal assets, and total amount of debt. If you’re unsure which option is best for you, your local Louisville bankruptcy attorney can provide legal advice for your specific situation, and help you start the filing process.

In the meantime, here is some helpful information to help you make an informed decision about which option will most likely help you.

There are many factors when determining whether a Chapter 7 or Chapter 13 will give you the most protection. That’s why it’s important to meet with an experienced bankruptcy attorney — to help you make the right choice.

Chapter 7

We’ll start with Chapter 7 Bankruptcy since this is a more popular option for people needing complete financial relief. Filing for a Chapter 7 is an option if you don’t have enough income to make monthly payments toward your total amount of debt.

It’s also known as a “discharge of debts,” meaning that once you have concluded your bankruptcy case (which takes approximately ninety days for a Chapter 7), your liability for many of your credit card balances, medical debts, and other unsecured bills are wiped out.

You can only file for this type of bankruptcy if your income is too low to repay a portion of your debt (a determination that is made based upon your income and household size).

Because Chapter 7 is known as a “liquidation” of assets, many people fear that they’ll have to turn over their personal assets (home, equity in the home, vehicle, etc.) to the court in order to pay off the debts that they owe, but in almost all cases that is simply not true.

There are many exemptions available that allow debtors to protect their real estate, vehicles, household goods, and many other items, including cash. However, you must remain current on your mortgage and car loan payments in order to diminish the risk of losing your home and/or car.

If you qualify for and file a Chapter 7, you are legally released from any obligation to repay any remaining debt. Chapter 7 bankruptcy will stay on your credit report for ten years, but will wipe away all of your debt based on income and other qualifying hardships and individual expenses.

There are certain types of debts that are excluded from discharge, and your bankruptcy attorney can discuss that with you during your consultation.

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Chapter 13

When looking into the details regarding chapter 7 vs chapter 13 bankruptcy, most people qualify for Chapter 13. Filing for Chapter 13 Bankruptcy is an option that allows you to pay back at least a portion of your debts over a time period of three to five years.

A Chapter 13 is usually the best option if you make a livable wage, and do not want to risk losing your home, your car, and other valuable assets. It is also much less expensive upfront to file for Chapter 13 bankruptcy and is a great option for individuals already being garnished that have little money for upfront costs.

If you’re not current on your mortgage or car payments, and are facing an impending foreclosure on your house or a repossession on your car, a Chapter 13 can help you keep those assets, while allowing you to make lower monthly payments toward your unsecured debt (credit cards, medical bills, etc.).

If approved, the court will set up a monthly repayment plan (where most of your debts are rolled into one monthly payment) if your income level shows that you can afford the monthly payments. You keep your personal assets, such as your home and vehicle, and if you’re behind on your mortgage payments, they will integrate that past-due amount into your repayment plan.

In many situations, a Chapter 13 Bankruptcy can even help lower interest rates on high interest car loans and furniture installment loans. Old tax liability can be included in a Chapter 13 repayment plan as well.

Under Chapter 13, you have to adhere to a budget that is monitored by the court, and you are assigned a trustee to whom you send your monthly payment. Your trustee uses your monthly payment to pay your creditors (the people and/or companies to whom you owe money). This means that creditors cannot call you and ask you for money, as you are now legally protected due to the bankruptcy filing.

This type of bankruptcy will stay on your credit report for seven years, but will help you keep your most valuable assets while paying back your debt.

What Are My Next Steps?

I offer free consultations, where we meet in person to discuss your financial situation, and create a plan that will give you a fresh start.

To schedule your consultation, please call me or text me at (502) 435-2593. I look forward to working with you!

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Facing Foreclosure? Here’s How Filing for Bankruptcy Can Stop It.

Facing Foreclosure? Here’s How Filing for Bankruptcy Can Stop It.

By Tracy L. Hirsch

If you’ve recently received a foreclosure letter, you’re probably worried that you’re going to lose your home. The thought of having to move, find a new living situation, and leave the place where you and your family have made memories is stressful and heartbreaking. 

While it may feel like a hopeless situation, there are multiple options to stop a Kentucky foreclosure on your home, and filing for Chapter 13 bankruptcy is one of them.

Whether you got behind on your mortgage payments due to loss of a job, illness, or other hardship, filing for bankruptcy will buy you extra time to find another job or recover financially from a disability while still keeping your home. As long as you file before the sale of your home, the foreclosure will immediately cease.

Don’t give up hope if you’ve received a foreclosure notice. A Chapter 13 bankruptcy may help you save it.

How Is That Possible?

Under federal law, mortgage lenders are prohibited from trying to collect your past-due amount in one lump sum when you file a Chapter 13 bankruptcy petition.

They are also required to work with you, along with any other creditors that you may have, to come up with a realistic repayment plan so that you can achieve financial stability again.

This not only gives you an opportunity to keep your home and repay your mortgage loan, but also gives you an opportunity to make payments on any unsecured debts, such as credit cards and medical bills.

front door

If you’re trying to get back on your feet after getting laid off, recovering from surgery or illness, or after acquiring excessive credit card debt, Chapter 13 bankruptcy may be the solution for you.

The court will work with you to create a reasonable monthly payment that is commensurate with your income and the size of your household, and you won’t lose your home when you make those payments every month.

Hirsch Law Is Here For You

If you’re facing a Kentucky foreclosure, and want to stop it immediately, give me a call today to set up a free consultation. Filing for bankruptcy in order to save your home doesn’t have to be confusing and overwhelming. I can explain everything you need to know, and help you get back on track.

Text or call me at (502) 435-2593, or send me an e-mail at tracy@hirschbklaw.com.

I’ll work hard to help you stop a foreclosure as quickly as possible, and will meet with you in the evening or over the weekend if need be. I look forward to speaking with you!

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Creating a Stable Financial Future: 5 Important Tips for Millennials

Creating a Stable Financial Future: 5 Important Tips for Millennials

By Tracy L. Hirsch

Are you in your 20’s or 30’s (or know someone who is), and feel overwhelmed by budgeting, student loans, credit, and retirement? You’re not alone. Here are 5 practical steps to help you establish a path to financial stability.

A recent survey from Ally Financial found that approximately 52% of millennials feel that they need guidance in managing their finances, and they’re worried about adequately planning for their future.

It’s understandable, as the financial landscape for millennials looks a lot different than it did for their parents.

With traditional pension plans falling by the wayside, and many employers no longer offering retirement plans or healthcare coverage, millennials are feeling the weight of the changing economy.

Add that to the stress of paying off student loans in unprecedented amounts (i.e. extremely high), and the future often appears bleak.

The good news is that there’s hope for a stable financial future for millennials. However, their financial planning strategy will look somewhat different than their parents’ and grandparents’ did.

If you’re in your 20’s or 30’s, and are concerned about having too much debt and too little savings, here are five tips for getting on the right track:

1.) Create a job plan.

When looking at the job market just a few decades ago compared to now, it has changed drastically.

The majority of Baby Boomers and those in Generation X (i.e. your grandparents and parents) spent their entire careers working for one company, or at the very least, a decade or two before moving onto another company.

The reason for this is that they were usually promoted within the company and were able to work their way up to a higher position. Unfortunately, in the current job market, you often have to seek out another company in order to get a raise and/or promotion. Sometimes, another company reaches out to you.

Either way, in order to stay in the loop in regards to new job opportunities, create a LinkedIn account and join other networking groups to make yourself visible online and in your community.

Additionally, make sure that your resume is up to date, as well as your professional skills. If there are specific skill sets in your field that will give you a competitive edge, take some online courses and get certified in those areas so that you can add that to your resume.

You may even want to do some freelance work to gain additional experience in those areas too.

While most older adults assume that millennials have been taught how to manage their finances, many of them have never had a financial course in high school or college.

2.) Invest in your retirement funds.

If you’re fortunate enough to have an employer (such as a large corporation) that offers an IRA or 401(k), then it’s definitely a good idea to take advantage of those benefits. This day and age, it’s even more important to put as much money as you can into those accounts since Social Security is not a guarantee.

With the monetary amounts being lowered every year, and the age for eligibility continually increasing, the likelihood of receiving the same amount of social security benefits that your grandparents and parents have is very slim.

While most large corporations still offer retirement perks, many small to mid-sized businesses are starting to dwindle down on the retirement options that they offer since it’s unaffordable and unsustainable. This means that you’ll have to start saving on your own.

Even if you have an IRA and a 401(k), you’ll still need to save outside of those if you want to retire early. If you don’t have those plans,you’ll need to set up a retirement savings account in addition to another separate savings accounts (which brings us to the next tip).

3.) Open two savings accounts.

In addition to a retirement savings account, you’ll also need a regular savings account that can double as an emergency fund and a ‘future purchases’ fund.

If you get laid off from your job or have unexpected medical bills, it’s important to have cash to pay for those needs. You’ll also want to stow money away for large purchases, such as a down payment on a house or a new car(as well as money for any repairs that those things may need down the road).

So exactly how much should you save? A good rule of thumb is to put at least 20% of your income into your regular savings account, and at least 10% into your retirement savings account (if possible, 15% or 20% if you don’t have an IRA or 401(k).

While this seems like a lot, you’ll be thankful that you did when need to make a large purchase or when you’re ready to exit the workforce.

student loans Kentucky

4.) Pay off your student loans as quickly as possible.

Most millennials have student loans, and for some, it’s more than $50,000. While it may seem impossible to get those loans paid off, it can be done in just a few short years if you put as much money as you can toward your balance.

In order to do that, it means not eating out, making your coffee at home, and cutting back on things that aren’t necessities. While it seems like these things won’t make much of a difference, they really do add up.

For example, if you purchase a large latte everyday on your way to work (Monday through Friday), and it costs $4.50 per latte, that’s $22.50 a week. That adds up to $90 a month, which means that you’re spending $1,080 a year on coffee!

That $1,080 can be put toward your student loans, in addition to any money that you’re currently spending on “extras.” While it may seem painful now to cut back on frills, you’ll be so thankful you did it when you’re finally free from those huge monthly payments.

5.) Don’t use credit cards for large purchases – budget instead!

It’s important to look at your net income, and create a monthly budget so that you’ll know how much you’ll have left to save each month after paying the bills for your basic necessities.

If you need to make a large purchase, plan ahead. Wait until you’ve saved enough money so that you can pay cash for it.

While it’s tempting to put appliances, electronics, and other large purchases on credit cards, you’ll regret it in the long run. Paying interest as high as 29.99% (depending on the card) causes stress-inducing debt in addition to any student loans that you already have.

Credit cards in and of themselves aren’t bad, and ironically, are actually necessary to build solid credit. However, you should only use a credit card for charging small purchases, such as gas and groceries, so that you’ll be able to pay it off in full every month.

Also, make sure to use less than a third of your credit limit and pay the balance on-time every month, as this will show that you’re a responsible borrower, and will increase your credit score.

While financial planning may look different for millennials than it did for previous generations, the basic tenet is still the same — save, save, and save some more!

Even if you’re only able to save a small amount each month while you’re paying off your student loans, those “small” amounts can add up to a large nest egg after several years.

Remember that living below your means now will give you a lot of freedom later on in life!

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