How to Save Money on Groceries

If you have a family, grocery shopping is probably one of your top two or three monthly expenses, right behind your house payment and health insurance. But the good news is that, unlike the other two, you have a strong measure of control over the size of your grocery bill. There are ways to save money on groceries and to take a big chunk out of your food budget.

1. Set a budget and stick to it!

One of the tactics that I found to work best is to set a budget before you even go shopping, and stick to it no matter what. That will prevent over-buying, impulse purchases, and the potential to buy too much of a single item simply because it’s on sale.

I’ll set a budget – say $200 – and that will force me to pay close attention to prices. If at the end of my trip, it looks as if the bill will be over $200, I’ll start putting items back. In any grocery run there are always items that you absolutely need, and others that you simply want. Some of the items in the “want” category will be prime candidates to be put back so that I can stay in budget. And best of all, what you don’t buy, you don’t miss!

2. Have a shopping list and a calculator.

In order to stay within a predetermined budget, it helps to have a list. On the list, you know exactly what you need – and just as important – what you don’t need. By sticking with your list, you have a better chance to avoid overspending. But a list does something else that is also critical: it allows you to prioritize your purchases.

What I will sometimes do is place items on my list in descending order of importance. For example, if I know that we need milk and eggs (heck, we always do) those will be at the top of the list. Other items that we want, but don’t necessarily need, will be toward the bottom of the list, giving the option not to buy if it looks like I’ll exceed my budget.

By bringing along a calculator you can tally up a running balance on your purchases. The running total will also help motivate you to make substitutions for lower-priced alternatives.

3. Never go shopping when you’re hungry.

This recommendation is virtually standard issue on any article dealing with grocery shopping, but it’s worth repeating. If you’re hungry, not only are you likely to buy more than you would otherwise, but you’re also more likely to buy impulse items. And impulse purchases are typically more expensive than other options.

If you don’t have time to have a meal before going shopping, it would be worth spending a couple of dollars to get a hot dog or a slice of pizza a half an hour so before you go to the store. Think of it as insurance against even more spending later.

4. Always shop alone.

Some people prefer to have an “assistant” – usually one of the children – accompany them on grocery shopping trips. While it can sometimes be an advantage to have a helper in tow, it’s important realize that the helper is also a consumer. That means that they will have their own purchase priorities, and it can spill over into your grocery budget. Chances are, you’ll spend less money if you go it alone.

5. Make fewer trips.

One of the very best and most productive grocery shopping strategies is to make as few trips as possible. It’s not just the time you spend and the gas and wear and tear on your car, but the fact that more trips usually results in more money spent.

If you have ever gone to the store to get “just milk and bread,” you know that it never works out that way. You’ll probably add a few odds and ends and spend more than you ever intended. How does that happen? It’s amazing how much you “need” once you walk into a store full of food.

By making fewer trips to the grocery store, you’re cutting out the temptation to buy what you don’t absolutely need. When it comes to shopping for just about anything, the more time we spend at the store, the more money we’ll spend. Think of it as a shopping minimization tactic – and one that works!

6. Avoid prepared foods and pretty packaging.

Grocery stores across the country are increasing the amount of shelf space that they dedicate to prepared foods. While these may be convenient, they are hardly a bargain. The more preparation that is involved in any food, the more expensive it will be.

Another warning sign that you’ll pay too much is pretty packaging. As a rule, the more attractively packaged an item is, the more expensive it will be. Food companies and grocery stores know this, and that’s why the products will be so prominently displayed. Pretty packages may mean more eye appeal, but you’re not eating the package. In most cases, the item in the pretty package will taste no better than the cheaper competitor that’s wrapped in cellophane.

7. Pay by debit card.

There’s some debate on this – many people maintain it doesn’t matter whether you pay by debit or credit, but I don’t agree. When you pay by debit card, the money is immediately removed from your budget. When you pay by credit card, there’s a fudge factor – the money isn’t immediately withdrawn from your budget, and the option exists to pay later.

That’s a game changer! If I don’t necessarily have to pay for something now, I’ve got some wiggle room in my budget. That puts my budget on wobbly legs, and opens the possibility that I‘ll spend the next six months paying for that gallon of ice cream that I‘ll eat next week. Translation: Debit cards remove the “pay later” option, and force you to stay on budget.

What strategies do you use to save money on groceries? Leave a comment!

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5 Mistakes to Avoid as a Real Estate Investor

There is a learning curve with everything we learn in life. Mistakes are what usually separate those who succeed and those who move on to other ideas. Sometimes it is luck or a mentor that saves an individual from those ever-present land mines. Sometimes it is reading an article that connects with them. Hopefully reading this will help you keep some of those mistakes to a minimum.

This is Not a Hobby

Real estate investing is a serious business filled with experienced people, both professional and not so. If not taken seriously, you risk damaging opportunities before you even get started. Just like any other industry and business, it is about building a brand. To start, you need a business card. Leave them everywhere – on bulletin boards in coffee shops, garages and anywhere else you can pin them up for free.

Websites, blogs and articles can also help you get your name out there. Connect with the other business people in your area. Use Facebook, LinkedIn and Twitter to start building a web presence. You also need to set yourself apart from the “amateurs” by setting up an LLC, getting a Federal Tax ID number and opening a business checking account.

Education is Key

Everything you need to know in real estate investing does not end with your first purchase. Sometimes the key to getting an edge on your competition is keeping abreast of all new trends, strategies and techniques being used in this business. Keep reading blogs, websites, articles and books on real estate investing.

Don’t Forget Technology

Some real estate investors are “old school.” They still work through paperwork, rifle through court documents and carry everything they need to know in their notebook. This may work for them, but in some cases, they have no idea what opportunities are going right by them. 92% of all sales start online. You need to create a website and use the Internet to search for opportunities.

Real Estate Agents are Not the Enemy

Realtors are not uneducated investors, and often uncover opportunities in their daily business. Yes, there are commissions involved, but it may be worth the fee. Finding the right realtor who understands what you are trying to do can be a very worthwhile relationship.

Use the Media

Becoming a “local expert” can open doors all over for either more or larger opportunities. Media of all kinds (TV, print, Internet, etc.) are always looking for credible sources and interview targets for quotes. There are ways to get on the radar of the press. One way is actually reaching out to a local establishment explaining a real estate-related concept or principle – keeping in mind that it has to have a local spin. If you’re feeling particularly bold, issue a press release.

One other way is taking advantage of the website Helpareporter.com. Over 50,000 journalists from around the country use this service looking for experts and quotes. A list of queries is sent out to all subscribers three times a day. It is very possible you could position yourself as an expert using this service where journalists will search you out for quotes regularly. Any and all quotes can be used in any of your other marketing.

With a little effort, you can set yourself apart from the crowd and increase your visibility and your credibility. The more mistakes and landmines you avoid, the better off you will be. Take advantage of these ideas and keep learning from others. It can only help you in the long run. Go ahead, give it a try!

Are you a real estate investor? What tips do you have for the readers? Leave a comment!

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Short Term Disability Insurance Pros and Cons

As Americans, we are proud of our ability to work. We like knowing that can provide for our families. However, what happens when an illness or injury prevents you from going to work? What happens to your income in those cases?

While your health insurance policy might cover the costs associated with treating the injury, or with hospitalization, this type of insurance can’t replace the income you lose when you can’t go into work. For that sort of help with your financial situation, you need short term disability insurance.

What is Short Term Disability Insurance?

The point of short term disability is to provide you with income in the event that you are unable to work temporarily. It’s important to understand that short term disability is specifically meant for situations in which you are hurt and there are no other sources of insurance coverage.

For instance, if you are injured at work, your company’s worker’s compensation insurance will cover the costs involved. If you are injured by someone else in a car accident, the other driver’s liability insurance will cover your costs. Disability is meant to help replace your income when you are sick for a long period of time, or injured in some way that isn’t already covered.

The Pros and Cons of Short Term Disability Insurance

Before you decide to buy short term disability insurance, it’s important to understand the pros and cons involved. Here are some things to think about:

• Pros: Short term disability can provide you with some income if you can’t get to work due to sickness or injury. In many cases, you can receive between 40% and 65% of your income. This can be a great help as a supplement to your emergency savings while you are unable to work. In some cases short term disability can be very affordable, especially if it is offered as a group plan through your work.
• Cons: There are downsides to short term disability insurance, however. First of all, there are usually caps on your coverage. You might only receive up to a certain total amount of help for your income. Additionally, there might be a cap, anywhere between three months and two years, that limits the amount of time you can receive disability insurance. It’s also important to consider the requirements. There might be a waiting period of between seven days and 30 days before you start receiving benefits, depending on the policy.

As with all insurance policies, it’s important to carefully consider your needs before committing. Short term disability is meant to shore you up during a temporary crisis. If you plan really well, you might be able to build up your emergency fund to a point where you could cover your needs on your own in the event that an illness or injury prevents you from going to work. However, if you aren’t sure of your emergency fund’s ability to handle the problem, you need to consider short term disability insurance.

And, as always, read the fine print. Find out if there are conditions or circumstances that disqualify you for payouts, and make sure you understand any waiting periods and caps. When integrated with the rest of your overall financial plan, short term disability insurance can be a great help and provide you with peace of mind. Just make sure it’s right for you first.

Do you have or think you need short term disability insurance? Leave a comment and tell us your story!

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5 Ways to Avoid a Financial Collapse

It can be difficult to be faced with financial collapse. When you find yourself considering bankruptcy, you might wonder how you got to this point. It’s not always completely your fault, either. From medical bills to unexpected events, there is a chance that personal financial collapse is around the corner.

In order to reduce the chances that you will find yourself facing a personal financial collapse, here are five actions to take:

1. Pay attention to your financial situation.

The first thing you have to do is honestly evaluate your financial situation. Look at where you’re at. Are you spending more than you earn each month? If you were to experience a medical emergency, would you have the resources to make up for the fact that you might miss work? Are you ready for a natural disaster?

Look at where you stand with your finances in terms of debt, assets, and general financial readiness. Knowing where you stand is the first step toward shoring up your finances so that you can avoid a financial collapse down the road.

2. Purchase adequate insurance.

If you can, purchase adequate insurance. The right insurance policies can protect your assets and keep you from becoming financially devastated in an unexpected situation. A good health insurance policy can ensure that you can better afford the costs associated with a medical emergency. Home and car insurance policies protect expensive items, allowing you to replace them  without breaking the bank. Even life insurance can help your family avoid financial collapse if you suddenly pass on. Make sure that your assets are protected so that you don’t have to devastate your finances replacing what you’ve lost.

3. Pay down high interest debt.

High-interest debt drains your wealth away, reducing your available resources. As a result, it’s important to pay it down if you want to shore up your financial situation. When you carry a lot of debt, it puts you in a precarious situation. It means that you have fewer options when an emergency forces your hand. When you have debt already, unexpected expenses can push you over the edge, becoming the straw that breaks the camel’s back. Pay down your high interest debt, and you will be better positioned to handle financial emergencies.

4. Build your emergency fund.

A good emergency fund can help you get through tough times and avoid financial collapse. When combined with proper insurance policies, an emergency fund can help ensure that you keep the cash flow coming, even if you are sick or injured and can’t work, or if you lose your job. While your emergency fund won’t completely save you, it can help take the edge off. Your emergency fund can give you breathing room and help you prevent financial collapse.

5. Continue developing your skills.

No matter your situation, you can benefit if you are willing to develop your skills and keep on learning. If you have a marketable skill, it is easier to find a job after you are fired. The right skills and knowledge can also help you start a side gig, or even a full-blown business.

The right investing knowledge can help you build a good emergency fund and prepare for a prosperous retirement. Keep developing your skills and knowledge, and grow as a person, and you’ll be better prepared for a number of setbacks, and even be able to keep yourself from complete financial collapse – especially if you combine your continued growth with the other actions listed above.

What do you think? How do you prepare yourself to avoid financial collapse?

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How to Find Charities that Spend Donations Wisely

Giving is an important part of cultivating well-rounded finances. Donating to charity can be a good use of your money, and it can help you feel good about what you’re doing to make the world a better place.

Unfortunately, just giving your money isn’t always enough. There are few things in this world more disappointing than being generous to a cause that you think is worthy, only to find out that the charity isn’t using its money wisely.

Costs Associated with Running a Charity

The reality is that there are costs associated with running any organization – and this includes non-profit organizations. Even charities need to pay some of their administrators and executives (or there might not be capable people who can afford to help out), and there are costs associated with renting buildings and sending out fundraising materials. All of these are costs that come on top of spending money on a stated mission.

Even though these costs are realities for many charities, though, it’s not an excuse to use money unwisely. There are charities that spend so much on CEO and other executive compensation that there is comparatively little left to actually help those the charity is designed to help. There are also charities that focus so much on fundraising, and that spend so much money on trying to raise funds, that causes fall to the wayside.

Rather than giving to charities that spend a lot of money on things that don’t actually advance the cause or make life better for others, it makes sense to put your money to the best use by focusing on charities that spend donations wisely.

Vetting Charities Before Donating

Before you give money to a charity, do your best to vet it. One of the best tools available is CharityNavigator.org. Charity Navigator breaks down different charities by looking at organizations required to submit IRS Form 990. This form amounts to a public disclosure of what charities are doing with their funds. (Some tax-exempt donations, such as to churches, are hard to vet if there isn’t a requirement to file a Form 990 with the IRS.)

You can see how much of your donation dollar is going to executive compensation, as well as how much goes to other program costs. Charity Navigator also rates charities on their accountability and transparency.

One of the rules of thumb is to donate to charities that spend 75% or more of the donations they receive on the mission. When you look at a break down, you might be surprised to find that even some of the most well-known charities are somewhat inefficient when it comes to the amount of your donation that actually goes toward forwarding the mission. Some of the best charities, like the American Red Cross and Feeding America, put more than 90% of the donations they receive to work helping those in need.

I also like the idea of giving locally, where you can see the results of your donation in the community. You might even be able to sit on the board of a local charity and make sure that the donations coming in are spent as they should be. I like to donate to the local food bank, since I know the money is being used wisely, and I can even see the positive results of the food bank in the community.

What do you think? How do you find charities that spend donations wisely? Leave a comment!

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How to Save Money on Road Trips

One of my favorite things in the world is the road trip. I like that you can see a lot fun landmarks and discover new activities while on the road. Plus, a road trip offers a certain amount of flexibility that you won’t find when you are required to meet a certain schedule to catch your plane.

Unfortunately, with the cost of gas and lodging, a road trip can get expensive. (Although, the bigger your family, the most cost-efficient a road trip is.) If you are going on a road trip, here are a few things you can do to save money:

1. Look for discounts.

Your first step is to look ahead to your route and identify discounts. Do you belong to a loyalty program associated with hotels along the way? Stay for free if you have enough points, or use your road trip as a way to rack up the points that can be used on future trips. You can even use travel apps on your mobile device to find last-minute deals as you travel, looking for lodging each night, rather than booking ahead of time.

It’s also possible to sign up for city-specific daily deals and then reap the benefits in discounts on local activities. Or, contact the local Chamber of Commerce or Visitors’ Bureau. You can usually get a list of free and low-cost attractions and activities to enjoy while on your road trip.

2. Keep your car in good shape.

One of the best ways to save money on a road trip is to take good care of your car all the time. Keep up with maintenance, and keep your car clean and cared for, and you’ll get better gas mileage. You’ll also have a better chance of avoiding breakdowns. I’ve had my car towed 40 miles out down a dirt road (although that was the result of hitting a big rock, and not poor car maintenance). That’s about expensive as it gets when it comes to road trips. Keep your car in good condition and drive defensively, and you’ll avoid costly breakdowns.

3. Bring your own food.

Growing up, my parents always stocked a cooler full of food for our road trips. If we needed to restock, they drove into town to look for a grocery store, rather than buying expensive items at a gas station. Ice could be replaced at the hotel. Frequently, my parents brought the little hibachi along as well, providing us with the means to cook hot dogs and other foods in a park, rather than having to pay for food at a restaurant. Bring some of your own food, and you’ll save money while traveling.

4. Skip the souvenirs.

The cost of souvenirs can really add up. Not only that, but they can take up a lot of room in your car – and your home after the trip is over. Instead of buying expensive souvenirs, I like to buy a postcard that can be kept with other postcards in a shoebox. We also buy a single fridge magnet, something that’s a fun thing for our family to do. You don’t need a lot of fancy souvenirs. Take pictures and you’ll have good memories without the cost and the clutter.

5. Consider camping.

I have yet to get into this as a way to save money on lodging. However, it’s a good alternative. Bring a tent (or be willing to sleep in your car), and you can pay $10 to $25 a night for your lodging, instead of paying $60 or more for a hotel. Some campgrounds even have showers (you might have to pay $3 to $5 for their use). If you are adventurous, this can work out well.

What do you think? How do you save money on a road trip? Leave a comment!

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Investing in Real Estate in Your IRA

At one time, investors set up their IRAs and purchased stocks, bonds, mutual funds and ETFs. Historically, this is how investing in IRAs has been. Investing in these products is still a very important piece of the puzzle and can create very positive long-term returns. However, using the philosophy of diversification, an increasingly popular idea is investing in actual real estate.

Can it really be done?

According to IRS Code Section 401 IRC 408(a)(3), life insurance contracts are prohibited from being held in IRAs. Further limits are listed in IRS Publication 590 where it states that an IRA will be hit with additional taxes if invested in collectibles. Those are the only limitations as far as IRS code, confirming that IRA assets may be invested in other products, such as real property.

It isn’t as simple as calling up your broker and purchasing the apartment complex down the street though. There are still a few hoops to jump through. The first thing to realize and deal with is not all IRAs and custodians allow non-traditional investments. A self-directed IRA or an IRA LLC must be created. Then a custodian that allows these investments that is also a registered trust company must be found.

One Major Stipulation

The IRS makes one thing clear about these types of investments. The property must benefit the IRA and not be for the investor’s personal benefit. This sounds very confusing, but there is some clarification offered. IRS Publication 590 has a list of prohibited transactions that would be considered “self-dealing.” Basically this means that these moves would be solely for benefit of the investor. To explain, take a look at the transactions not allowed:

• An investor cannot use their IRA as security for a loan.
• They cannot sell property to their IRA.
• They cannot purchase property for personal use (present or future) with IRA funds.
• Nor receive unreasonable compensation for managing their IRA.

If the investor, or their relatives/beneficiaries commit any of the above violations, the account loses IRA status in the eyes of the IRS as of January 1^st of the year in which the violation occurs.

Another thing that an investor must be aware of before making such a movement is that all expenses for the property must be paid by the IRA and all income/rent must be paid to the IRA. The investor cannot use their personal bank account to pay for any major repairs to the property, nor can they take any of the rental income generated from that property to pay personal expenses.

What are the benefits?

Owning real estate has four true benefits to the investor:

• An investment that does not correlate to the stock or bond markets and helps create more diversification.
• A steady stream of funds being added to the account to cover expenses and future investments.
• The income generated from the property is tax-free (IRAs are taxed upon distribution to the investor at the current income rate and not before).
• Historically, real estate has increased in value regularly. All profits from the future sale would be non-taxable if kept in the IRA.

As stated above, this idea isn’t as easy as picking up the phone and calling your broker. It may be something worth looking into though.

What are your thoughts or questions about investing in real estate in your IRA? Leave a comment!

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How Much House Can You Afford?

When you’re buying a home it seems there’s always a price difference between the property you want and how much house you can afford.

As we’ve looked at houses we’ve seen examples of people who took out a home loan they obviously couldn’t afford and are now struggling to pay the mortgage on the house. Some of those houses are now up for short sale or even in foreclosure.

Buying More Than You Can Afford

In some cases it was a first-time home buyer who wasn’t exactly sure how to buy a house that would fit into their budget long-term. A few years ago they could put no money down by taking out a second mortgage to cover the down payment and paying only the closing costs.

Known as an 80/20 loan, it allowed buyers to avoid private mortgage insurance and let them do 100% financing on a house. Even worse some people would go with adjustable rate mortgages (ARM) to make their payments lower so they could afford a more expensive house. Unfortunately we all saw what happened when the ARM rates adjusted and so many people were unable to make their house payments.

Bank Financing Rules

Banks are much tighter with lending these days so it’s harder to get approved for a home loan.  The system doesn’t make it as easy as it was to borrow more than you should but if you have a good credit score and low debt you can still get a loan for more than you can afford.

The loan officer who worked on our mortgage pre-approval told me on the phone she could approve us for $200,000 more than we were asking for based on our credit score and debt to income ratio. Even though we’ve been careful with our savings and credit over the last 10 years, it doesn’t make sense financially for our family to be borrowing around a half-million dollars for a house. Keep in mind that what the bank approves you doesn’t mean that you can afford it.

Mortgaging Your Future

Deciding how much house you can afford depends not just what the bank thinks of your finances but also what your plans are for the future. Simply because you can afford a house this year doesn’t mean that you’ll have enough money to make payments two years from now.

Say, for instance, you’re a two-income family but one parent wants to stay at home once you have kids. You might be able to afford the house you want now but what will happen a few years down the road when the kids show up?

As an example, there’s a house my wife would love to buy that meets all of our criteria but one, it’s just too expensive. We could afford it if my wife went back to work, but she wants to stay at home with the kids while they’re young. If we’d have bought a more expensive house 10 years ago, she wouldn’t have that option now.

There are many reasons why your income might change in the future so be sure to consider those when evaluating a house. If you take out a big mortgage it could limit your options later on.

Being House Poor

Borrowing more money than you should for a mortgage can affect your present, not just your future. The term “house poor” is used to describe a person or family who bought near the top of their price range and spends all their money paying the mortgage, interest, insurance, and taxes.

We were house poor when we bought our home 10 years ago and it was kind of stressful at times. We had a nice new house but no money to buy furniture for it. When our friends invited us out we had to decline since we had no money.

This can be tough not just from a comfort standard, never having any extra spending cash, but also if you hit hard times you don’t have a cushion. Fortunately for us we were at the start of our careers and our earning ability increased to match the monthly mortgage payment we owed.

Beware of Pressure to Buy

When you’re in the market for a house the pressure is always there to buy a bigger house. Multiple people benefit from you spending more money on a more expensive, nicer home:

• Real estate agent earns more commission
• Bank earns more interest
• Friends and family enjoy more ammenities (ie: neighborhood pool, community golf course)

It’s not just outside pressure, the demands can come from inside your family as well. Your spouse or kids might be lobbying you to buy a house that you know your family can’t afford. Or maybe you found a house that has features you’ve always wanted and you’re really tempted to go after it, even though it would stretch your budget. Just know that the pressure will be there and the smart thing to do is to ignore it.

How Much Should You Spend on a House?

The last few years in the real estate market have shown us what can happen when people buy more house than they can afford.  As we’ve covered above, here are some key points to helping you avoid ending up with a mortgage that’s too big for you:

• Borrow what you can actually cover, not what the bank thinks you can afford.
• Know your life plans so you don’t mortgage your future.
• Leave a buffer so you’re not house poor.
• Avoid pressure and combat it with logic.

If you find a house you want to buy figure out your total costs; this means closing costs as well as the ongoing costs of principal and interest payments, taxes, insurance, and home maintenance. Run those costs against the checklist above to see if the amount you want to borrow makes sense today, tomorrow, and 10 years from now.

Are you in the market for a house? What are some guidelines you’re using to buy your next home?

This article was originally published on July 17th, 2010.

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What Assets Can You Keep in a Bankruptcy?

Many people who are carrying enormous amounts of debt are reluctant to file for bankruptcy out of fear that they will “lose everything.” That conjures up visions of being penniless and walking the streets with little more than the clothes on your back. Obviously, no one would choose that outcome if they could possibly avoid it – even if it means bearing the pain of carrying unsustainable debt loads a little bit longer.

Fortunately, filing for bankruptcy does not involve losing everything you have. How much you can keep depends upon what type of bankruptcy you file – Chapter 13 or Chapter 7. Chapter 13 initiates a multiyear repayment plan, and generally allows you to keep most of your assets. One of the most popular reasons people file for Chapter 13, rather than Chapter 7, is that it generally allows you to keep your home.

Chapter 7 on the other hand, cuts deeper into your personal assets. Your debts will be instantaneously liquidated, then any excess assets that you own will be taken by the courts, sold and the cash distributed to settle your debts. But even under Chapter 7, you can still retain some assets, and often a surprisingly large amount.

The amount of assets you are able to retain under bankruptcy depends upon your individual state law. There are federal bankruptcy exemption provisions that loosely provide guidance for the amount of assets that you are allowed to retain, but states are not required to recognize these exemptions. A few states actually do, but most have modified them to the degree that they can look substantially different.

How much you can retain of any given asset, will depend upon the nature of the asset, and individual state bankruptcy exemption laws.

Retirement Assets

This is an asset class that enjoys a very high level of exemption under bankruptcy laws, whether federal or state. Under federal exemptions, you can retain 100% of the money in any retirement account that is exempt from taxation, though there is a $1,245,475 limit on IRAs, both traditional and Roth.

State exemptions vary, but also tend to be very generous. For example, Florida also exempts the full amount of retirement plans, but cuts the exemption for IRAs slightly to $1,171,650. There are variations in the exemption levels for each state, but as you can see, for most people their retirements accounts will be protected.

Some Real Estate Equity

Real estate (or homestead) exemptions probably vary more widely from state to state than any other exemption provision, though they are limited to owner-occupied homes only.

The federal real estate exemption allows you to protect $22,975 in real estate equity in a bankruptcy filing. (Equity is the difference between what your house is worth and how much money you owe on it).

By contrast, California allows a real estate equity exemption of up to $75,000 for a single person or $100,000 for a family. But Florida allows an even more generous exemption – it’s unlimited, though you must own the property for at least 1,215 days, otherwise it’s greatly reduced. Yet there is an unusual provision: The property cannot be larger than half an acre in a municipality or 160 acres outside.

At the opposite end of the spectrum, Illinois limits the exemption to $15,000, though married couples can double the amount.

Your Cars – Within Limits

Like real estate, bankruptcy laws allow you to exempt a certain amount of equity in your car. This is particularly important because having a car after bankruptcy is something you will need in order to make a living.

Federal law exempts $3,675 in motor vehicle equity, but the provision varies considerably from state to state. Florida allows $1,000, while California exempts $2,300 in equity.

Insurance Policies and Annuities

Federal bankruptcy provisions exempt life insurance policies that have not matured and up to $12,250 in loan value of life insurance policies.

In Illinois life insurance, annuity proceeds or cash value are exempt if the beneficiary is a child, parent, spouse or other dependent. Florida also exempts life insurance, annuity proceeds or cash value if beneficiary is a child, parent, spouse or other dependent of the person/couple filing for bankruptcy.

Furniture, Household Goods, Jewelry and Clothing

Federal bankruptcy exemptions allow for $12,250 total value of personal possessions, or $575 per individual item. It also allows $1,550 for jewelry. Florida, by contrast, limit’s the total exemptions for personal possessions to just $1,000, while California exempts “all reasonably necessary appliances, furnishings, clothes and food,” plus up to $5,000 in jewelry, family heirlooms or art.

“Tools of Trade”

Most states will allow a business person or tradesman to keep a certain value in tools. Federal provisions exempt $2,300 for tools of trade, but again, it varies in each state. Illinois limit’s the exemption to $1,500, but California expands it to $5,000.

“Wildcard Exemption”

This is a catch-all bankruptcy exemption amount that allows you to exclude larger amounts of other exemptions. Under federal law, you can use this provision to exempt $1,225 plus $11,500 of any unused portion of your homestead exemption to exempt any type of property.

Florida and Illinois allow a wildcard exemption of $4,000 each, however in the case of Florida you can only claim it if you don’t use the homestead exemption.

There are enough exemptions under bankruptcy laws that filing will hardly leave you with nothing. For the most part, exemptions will allow to keep just enough to begin rebuilding your life – and that’s the most basic purpose for filing for bankruptcy.

Have you been through bankruptcy? What was your experience? Share with and help others in the comments!

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Priceline vs. Orbitz vs. Expedia vs. Kayak: Which Travel Site Wins?

It’s that time of the year where everybody is staring out their office window dreaming of the beach or some other destination to get away from it all. With the vast amount of travel sites out there, how do you decide which one to use? The commercials may be cute, but that isn’t the reason to make them your choice.

Let’s put some travel sites to the test. If we put Priceline, Orbitz, Expedia and Kayak against each other, which one would give us the best deal? Let’s say we want to go to Miami, the week before Labor Day, the perfect way to finish out the summer.

Priceline

I want to leave the kids at home, but will need airfare and a car. Looking at the calendar, I choose to leave my home airport of Greenville-Spartanburg, SC on Saturday, August 24th and return the next Saturday. The most “popular” package puts my wife and I at the Four Seasons Hotel Miami. With hotel, airfare and car combined, my deal is $1,146.97/person. That’s pretty good for a five star hotel, but what if I’m on a budget? How about $620.29/person to stay at the Days Inn Miami Airport North. Nothing says romance like a one star hotel with a 4.7 user rating. My wife deserves better, so let’s set some filters and pick a place that at least got an 8 by Priceline users . . . the Doubletree Hotel and Miami Airport Convention Center for $725.

This site does not charge any booking or cancellation fees and taxes are included. Not bad Priceline Negotiator. Let’s see what your competition has to say.

Orbitz

After typing in the same criteria, the Four Seasons did not even show on the first page. With a little digging, I found it for a much higher price at $1,357/person. The Days Inn came in at $663/person and the Doubletree at $782. This site has a 110% price assurance guarantee. Maybe if I show them Priceline’s prices, I’ll get a better deal . . . . Like our previous website, there are no booking or cancellation fees.

Expedia

Once again, I type in the same criteria and find that the Four Seasons through this site will cost me $1,155/person. The Days Inn comes in at $675 and the Doubletree at $715 which is cheaper, but the flight was in the late afternoon compared to Priceline’s morning flight, which would give me most of the day on the beach. There is another price guarantee on this but there are service fees, which are not disclosed completely and no disclosure of cancellation fees.

Kayak

With all I’ve heard about this site, and how it searches thousands of sites for you, this must surely be the place to get the best deal, right? I type in the same criteria as the previous three and search for my three hotels. The “packages” are much more limited here and are pulled from other sites. None of the three hotels I have used previously show here, although I had no problems creating packages on the others. When I search for the Four Seasons Hotel just to see what it would cost for the room, the site gives me a quote of $192/night or $1,344 for the week. That’s more than the whole package at Priceline. Maybe it’s user error, but I’m really unhappy with this site and decide to move on.

After all is said and done, William Shatner’s kung fu wins. Priceline clearly came in with the better price. This does not mean you can’t find better prices on other sites. This was just one search and set of criteria. Either way, I know if I need to use a travel site, I will not be using Kayak and Priceline will be the first place I go.

What’s your favorite travel site? Leave a comment!

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