What Do You Need to Look Out For with Debt Management Plans

debt management plans

For some people, they are drowning in a sea of debt. If you are having a hard time getting your debt under control and you can’t keep yourself on your debt repayments (after numerous tries), then you may want to check out a debt management plan as a possibility.

While you may use a debt management plan, you’re still responsible for your finances, so make sure you have the 411 about the company and your case. Here are some tips on how you can find a credit counseling company that would be a good fit for you.

How Debt Management Plans Worksdebt management plans

Typically when someone is on a debt management plan, they send in their debt payments to the credit counseling organization. The organization is then supposed take care of the debts based on a payment plan that the two parties agree to.

What consumers need to make sure is that the organization fulfills the plan and the payments are being divvied up accordingly. While no guarantee, working with an establish organization can reduce your chances of having problems come up.

Questions to Ask Before Signing Up

Before you have a company handle your bill payments you should ask some questions. The Federal Trade Commission offers some helpful suggestions:

  • What services does the organization offer?
  • Are you licensed or accredited to do business?
  • Will I have a written agreement with the plan?
  • Who will be helping me and my case? What are their qualifications?
  • How are your employees are paid?
  • How will you keep my information secure?
  • What fees are involved?

Make sure you’re completely comfortable and happy with their answers. Don’t sign anything unless you’ve read and agreed everything.

Thoughts on Debt Management Plans

You have to decide for yourself whether or not you need credit counseling help from an agency. Hopefully you’ll be on your way to eliminating your debt sooner rather than later. Have you ever used a debt management plan? Did it work well for you?

Photo Credit: Alan Cleaver

Changing Tax Rates And How They Will Affect 2013 Investing

investing and taxes

The fiscal-cliff compromise brokered by Congress and the President has changed how investors, particularly those in the medical field, are taxed in various arenas. Capital gains, defined as the increase in value of investment or real estate assets at the time of sale, are now taxed at higher rates for virtually every investor. Several provisions of the Affordable Care Act (aka “Obamacare”) also kicked in on January 1, which has left many physicians and medical instrument makers adjusting their 1040 forms. The following breaks down how the new laws affect your small business or medical practice. investing and taxes

Medical Excise Tax

The Medical Device Excise Tax (MDET) took effect on December 31, 2012, and caught several Americans and one large sporting good retailer completely off guard. A 2.3 percent “medical excise” charge showed up on a Cabela’s customer receipt and made its rounds online. The company blamed the tax on a “glitch” and promptly refunded everyone who was effected. But the tax is no glitch for doctors and device manufacturers. According to the IRS website, the 2.3 percent tax applies to “the sale of certain medical devices by the manufacturer or importer of the device.” Wheelchairs, artificial knees and hips; dental devices, pacemakers, imaging technology, and even surgical gloves are just some of the many items subject to the tax. Eyeglasses, hearing aids, contact lenses, and “any other medical device that the public generally buys at retail for individual use” are exempt from the tax. The 10 largest medical device manufacturers, including Johnson and Johnson and Medtronic, will account for 86 percent of the effected sales, according to Medcitynews.com. Medical providers will have to decide whether to pass these costs to their patients, or find some other way to make up for the shortfall.

Short Term Gains

Any profitable investment sold less than one year after purchase is a short-term capital gain. This is also referred to as unearned income. The tax rate for short-term capital gains remains the same for your current tax bracket. For example, the 2013 tax rate for an individual making $8,925 to $36,250 is 15 percent. Therefore, profits on investments sold less than a year after the initial purchase will be taxed at 15 percent. Smaller businesses and medical practices (those earning less than $400,000 per year) can offset any potential capital gain taxes by charging day-to-day expenses on a small business credit card and using their statements to keep track of expenses incurred for that year.

Long Term Gains

A long-term capital gain is profit made from an investment held for more than one year. The fiscal-cliff compromise ended a zero percent long-term capital gains rate for the $0 to $36,250 income brackets, which was in effect from 2008 to 2012. There was previously a 15 percent long-term rate for all earners above the aforementioned threshold. All long-term investments, including property, are now taxed at a 20 percent rate. The Affordable Care Act also tacks on an additional 3.8 percent Medicare surtax on capital gains for those making over $400,000 as individuals. The 23.8 percent rate, including the surtax, is the highest rate on capital gains since the Clinton Administration. It is also somewhat of a double-dip into the pockets of many medical professionals. The 2.3 percent MDET, the 8.8 percent long-term capital gains increase on $400,000 per year or more earners, and the 35 percent to 39.6 percent increase on income taxes, all effect a vast majority of the aforementioned individuals.

The Precious Metal Exception

The Internal Revenue Service requires everyone to report all capital gains, including winnings from lotteries and other forms of gambling. The one type of investment exempted from any and all capital gains by federal law is precious metals. The caveat here is that the actual gold, silver or platinum bullion is exempt, while precious metal ETFs and funds are not. For instance, if you owned 20 ounces of gold in the form of ETF shares in 2003, you will turn a 500-plus percent profit on the investment today. The 20-23.8 percent tax will apply to the shares, but not on physical gold bars and coins that you purchased at the same time. It behooves those who have been most effected by tax increases (medical practitioners) to diversify and avoid as many taxes as possible.

Using ISeeCars to Buy Your Next Car

reliable used car scion tc

I mentioned earlier this week that it’s possible to avoid a bad car loan when shopping for a car. Today I want to share how you can use ISeeCars to find a reliable used car within your budget.

What to Look For in Your Next Car

If you’re searching for your next car and want to get the most bang for you buck, there are a few things you need to consider with the make and models you’re looking at: reliable used car scion tc

  • Good Gas Mileage: Gasoline can become a huge monthly expense if you don’t shop wisely. Take a moment to shift through to see which cars give you great gas mileage.
  • Solid Reliability: Minimize the chances of having to take your car into the shop constantly by only shopping car models with history of reliability. I shared some of Consumer Reports’ top picks on reliable used cars here.
  • Cheap (in Price) Parts: I learned from experience that not all car parts are equal. When you take your car to the shop to get repaired, the cost of replacing bad or worn parts can vary significantly based on the car you drive. You’re on a fixed budget, check with local shops and online to get an idea of what a typical repairs would cost you.

Using Private Sellers vs Dealerships

Now that you have an idea of what you’re looking for, now it’s time to scour your area for a car. When we were hunting for our family sedan last year we looked at both private sellers and local dealerships.

Take your time and whittle down the list based on the previously mentioned criteria and your personal preference.

Once you have an idea of what price range cars are selling for, you can determine of the seller is being reasonable or not. If they are too high, you can use the data you gathered from your searches to negotiate with them on getting a competitive price.

Don’t forget to also check out the car on CarFax to make sure everything looked in order in the car’s history. You don’t want buy a lemon. This advice applies to both dealerships and private sellers. We had a car salesman lower his price by almost $2k (still was too expensive).

It takes a just a bit of legwork, but doing your research ahead of time will save you money in the short term and over the life of your next car.

Thoughts on Buying Your Next Car

I’d love to hear your thoughts. How many of you are thinking of a buying a car in the near future? What features are you looking for in your next vehicle?

Photo Credit: Brett Levin Photography