This summer, one of my big goals is to declutter my house and actually get rid of things. I have had a bin of clothes to donate sitting in my office for I don’t know how long, and at this point, it’s overflowing. I also know there’s a box of donations in the back of the coat closet. That stuff is probably going to have to be washed, because I’m fairly convinced one of the cats has been sleeping in it.
I’ve also got a ton of paperback books that I need to get rid of. Don’t worry, library fans. I’m keeping quite a few books, but there are a number of books that it’s time to part with. I won’t end up reading them again, so why hang onto them?
When I have taken items to donation centers in the past, I haven’t bothered with getting a receipt. It seemed like too much work to log everything I donated and then enter it all into my taxes. But I decided to give it a shot this year. I always itemize my deductions, so why not?
But how do you figure out what your items are worth?
Goodwill provides a value guide to use when figuring out what your items are worth. If nothing else, it’s a starting place to decide whether or not it’s worth it to you to even record the donations.
I use TurboTax to do my taxes, and I use the ItsDeductible program to track all of my cash donations, so I decided to check it out for physical donations as well. The site is awesome. For donations of “items,” you can log the date and location of your donation and then search for the type of item to log it. My last donation included 19 pairs of pants. So I did a search, found women’s pants, and logged them in. The program gives you the option for high value or medium value. I have listed all of my items as medium value. Even though some of the clothes are still new with tags, I figured medium value was the easiest option. Those 19 pairs of pants? They’re worth $114 in deductions!
Of course, I don’t know how this is all going to play out when I do my taxes. I know that deductions totaling under $500 require less paperwork, and I’m going to be over $500 for the year. That means I will have to fill out form 8283. I know that deductions over $5000 require significantly more paperwork and there is no chance of me being in that range. So my current plan is to continue to donate and then wait and see how it plays out on my taxes. I’m hoping that itsDeductible will take care of most of it for me. And I am making sure to get a receipt and keep a detailed list of the items donated with each receipt.
If you already have your taxes done by a professional, then absolutely, keep track of all of your donations! Make sure you have good receipts and notes on what you donated. That’s the key.
I figure that in the worst case, I take a deduction of under $500 and I have cleaned out my house and done something good for a great organization. Still seems like a win-win situation for me.
There are lots of methods and ideas you can try, and people you can turn to when repayments deadlines are looming over you. Here’s what you should do.
The first step to take when you find yourself in a debt crisis is talk to someone who knows what they’re talking about. Independent and unbiased financial advice can be vital in finding a way out of the mess you’re in. Go to the citizens advice bureau for this kind of advice, they’ll be able to offer you unbiased guidance.
They won’t be able to offer you a concrete solution to your problems, but they will be able to give you a good starting point. They’ll tell you where to turn to next and set you on the right path. Most importantly, they’ll be able to make sure that you don’t make any further mistakes going forward because that could make things even worse.
Debt consolidation loans allow you to move all your many debts and repayments into one manageable loan. The loan you take out will all go on paying off your existing creditors meaning that all your existing debts will be wiped out by the loan you take out. This will leave you with one large repayment to take care of rather than lots of smaller ones.
This doesn’t always help to wipe out your debts as such. But what it does do is help make your debts more manageable and easy to keep control off. When you have lots of debts to take care of, you can easily miss repayment deadlines, and then the situation can become even worse if you have to pay late fees.
New Income Streams
If you need money, it’s a good idea to think about new ways in which you can find income streams. It might be that your wage isn’t bringing in enough money to the household. If this is the case, you should look at the options that are open to you. For example, if you live near a commuter station, you could rent out your driveway to people looking to save on parking fees.
This also works if you live near a popular sports stadium. Fans are always looking for cheaper places to park on a matchday, so renting out your driveway will be sure to bring you in a bit of extra cash. There are lots of ideas; you just need to sit down with your family and brainstorm the best ideas you can think of.
If you have one immediate deadline that you can’t avoid, taking out a new loan to cover you is an option you should think about. Of course, it doesn’t get rid of your debt problems, but it can help push back your deadline and move your debt to another lender. It’s a good way of avoiding late fees that can easily stack up.
If the debt is only a small amount and it needs to be paid off quickly, payday loans are also an option. Some payday lenders are better than others though, so make sure you use one that is reputable and responsible. The key is to do your research before you take out the loan.
If you don’t want to turn to a conventional lender, it might be a better option to talk to a close family member and see if they can give you the money you need. Borrowing money from family members isn’t ideal because it can cause rifts and arguments further down the line if the money isn’t paid back.
But, on the other hand, there are a number of distinct advantages associated with borrowing from family. First of all, family members probably won’t charge you interest and demand late fees if you struggle to pay the money back. Whereas banks and other lenders certainly would demand these things though.
Making Cut Backs
When you have debt repayments coming up, finding money alone isn’t enough. You also need to make cut backs and think about where you can save money in other areas of your life. There are lots of ways in which you can cut back and save money if you put in the effort and think about it carefully.
For example, you could think about how much you use your car and try to walk or cycle instead of driving. This will save you a lot of money in fuel costs if you keep it up over a long period of time. That money can then go towards paying back your debts. That’s just one example, but there are hundreds of others like it.
Downsizing Your Home
Downsizing your home is a huge step, and it’s probably not the kind of thing you choose to do lightly. But it is something to consider if you have no other options open to you. It can be a sensible thing to do if you have a home that’s too big for you, there’s no sense in paying more for it than you have to.
A lot of older people are left with homes that are too big for them after their children leave home. They could then be left with big mortgage repayments and more space than they really need. Downsizing your home will free up a bit of extra cash that you can use to repay some of your debts.
Selling Unwanted Items
Over the years, we all amass lots of items and possessions most of which we don’t really need if we’re honest. All of this stuff can give you the opportunity to make a bit of cash when you’re in need of quick cash. Even if you might think that you don’t have anything that is worth very much, there is probably someone will be interested in buying it.
One man’s junk is another man’s treasure. Having a clear out will allow you to put on a big sale and raise some much-needed cash. It is only a short-term solution though, and it’s the kind of thing that you can only really do once. But if it helps you pay off your debts, it can only be a good thing.
It can be easy to get isolated and trapped in your debts when you’re missing repayment deadlines, so try to follow these tips and clear your debts quickly.
Well, another three months have passed (almost), so it’s time to check out my net worth.
It’s been a busy three months, financially speaking. I finally got rid of my old car and bought a new car. So I fully assumed my net worth calculations wouldn’t be so great. Even though the car’s only around a month old, I still used my standard practice of checking the Kelley Blue Book value to use in the net worth calculations. It’s pretty sad how much a car depreciates once it’s driven off the lot. Yes, this is a reason you should buy a used car. I don’t care, I still bought a new car and I love it. Along with the new car comes a car loan. I actually plan to pay this off well before it’s due, but for now, I’m making the standard payments.
My cash accounts are mixed. I didn’t put much into cash savings. And by that, I mean I didn’t save anything. Not the best plan, all in all. I’m trying to work things so I can put more money into savings every month.
My investments are also mixed. Some went up, others slipped a bit. My retirement accounts are still looking good though, and those are important numbers. I’m continuing my automatic contributions, and planning a nice, comfortable retirement in 30+ years.
In home ownership news, I’m still chipping away at my mortgage, and according to Zillow, the value of my home increased. I expect that to drop slightly. A home across the street is currently on sale and they’ve had to drop the price a few times. My house has been upgraded more recently (kitchen, flooring, etc), so in actuality, I’m sure my home would bring a higher price, but Zillow would consider our houses similar when figuring out the value.
So what are the end numbers? Well, my overall net worth went up 1.9%. It’s a move in the right direction, but it’s also the smallest change I’ve had in a long time. The car purchase was definitely a big hit (I currently owe more than the value of my car, according to KBB), but the cash accounts aren’t doing great either. The lesson here is that I need to work more on saving. This month, for example, I spent way too much money going out to meals with friends. It’s awesome to spend time with people, but if I’m going to do that, I need to cut back in other areas. It’s a theme that you’ll see repeated here. I need to work on spending less and saving more.
When I was a kid, one of my favorite annual events was the arrival of the Sears Holiday Catalog. This was a giant book, multiple inches thick (at least in my childhood memory) filled with all sorts of wonderful gifts that could be purchased. Of course, I ignored all the boring household and clothing sections and immediately turned to the toys. Oh, the glorious toy section. So many awesome things to look at and bookmark and wish and hope for Santa to bring.
I still sort of do that, though not with the Sears catalog. I don’t even know if it still exists, and if it does, it doesn’t get delivered to my house.
These days, much of my shopping is done online and let’s be honest, it’s all too easy to just press a few keys and boom! The item is on its way to you. But that’s not really the most frugal way to shop, nor is it great for anyone trying to stick to a budget.
So what I do is a lot like what I do when I was a kid. I make a wishlist.
I do this in a couple of ways. In my paper planner (yes, I still keep a paper planner), I have a running list of things I want to buy. Not specific brands or styles, just things I want. A deep freeze for my basement. A power meter for my bike. Et cetera. The list is there for me to refer to and save for.
But then there are the things that I know that I want, I’m just not ready to buy them. They might be big things or they might be small inexpensive things, like a new book. In that case, I keep an online wishlist. Mine happens to be on Amazon.com. They have a great widget that you can install on your browser so you can just click and add an item to your list, regardless of whether it’s sold at Amazon or elsewhere. I’m not shilling for Amazon in this post, it’s just what I use. I know other people use Pinterest in a similar manner.
It’s a great way to keep track of items I would like to buy, and then, when I’m looking to purchase a book for a trip, I know where to go to figure out what I want to buy. It also keeps me from the small impulse purchases. I don’t need it now, I’ll just write it down and wait. Many people use this to determine whether or not to make larger purchases as well. Write it down and wait. If you still want it in a few days, then consider it.
Try the wishlist plan for yourself. It’s amazing how such a simple plan can save you money.
The weight of debt is like a crushing anvil above your head. It never leaves, and it edges closer and closer to complete collapse. Living with this dark cloud and unrelenting burden is awful. If you’re reading this, then you already know the pain! Your debt has gotten way out of control and you’re struggling to cope. Trust us, we’ve been there, we understand your pain. Today we’re going to help you tackle this mountain and get rid of it for good.
Face up to it
The first thing you need to do is square up to your debt. Look it in the face and understand the enormity of what you face. Trust us, this is the worst part of the whole process. When we’re in debt, we tend to avoid looking at our statements and never glance at the bank account. That needs to change. Dive in, add it all up and get a sense of what you’re working with. It’s big, but you knew that anyway. Now you know exactly how big.
One option is to simply declare bankruptcy. You’ll apply to the courts and they’ll judge whether you reach the necessary criteria. Bankruptcy will wipe your slate clean, but at the cost of many of your assets and reputation. But, it’s a chance to rebuild your life, and you can still borrow money to get started. Through FHA loans and bankruptcy, you can begin fresh and take a new approach.
Prioritise your debts
If you don’t want to risk losing assets or reputation, there’s no other choice but to pay it all off! It all starts by prioritising the imminent amounts. It’s probably best to start with your credit cards. Tackle the highest interest cards first by paying off more than the monthly minimum. (Keep paying the minimum on your other cards too).
Negotiate with your lenders
Most of those in debt are scared to call their lenders and negotiate a deal. They think they’ll simply draw attention to how bad things are. In fact, the opposite is true. Your lenders want to get their money back, and they’ll be more than happy to make arrangements. Speak to someone and make a deal that works for both of you.
Consolidate your loans
The difficulty with debt is keeping track of what you owe. There are overdraft fees, multiple credit card bills, mortgage payments and pay day loans. Keeping on top of them all is a nightmare. Consolidate them into one payment and the process will become much simpler. You’ll owe money to just one lender, and you’ll keep track of the payments.
Change your lifestyle and make sure it doesn’t happen again
While you’re paying off the debt, make critical changes to your lifestyle. Downsize your property and start budgeting correctly. Live a more frugal life for a period until the debt is gone. Once you’ve finally cleared the burden, take steps to ensure it never happens again. Cut up the credit cards and live within your means. Set yourself strict budgets and start saving!
Cutting debt out of your life is one of the toughest things you can do. Follow these steps and you’ll finally be free of the dark cloud. Good luck!