If you are struggling with debts, and would like to feel in full control of your finances, you should consider improving your debt management skills.
Why?
Improving your debt management skills could allow you to:
• See exactly how many debts you have.
• See exactly how much you owe, and who you owe it to.
• See exactly how much you are required to pay towards your debts each month.
• See if you can actually afford to service your debts each month.
• Get a rough idea of when you should be debt free.
How?
Improving your debt management skills can actually be pretty easy.
The first you thing you should do is create a budget. This should help you see exactly how much money you are earning / receiving each month, along with exactly how much money you need to spend each month. Knowing these two figures should give you a rough idea of whether or not you will be able to afford to service your debts each month (providing you know how much they will cost you).
To find out the exact amount of money you have available to pay towards your debts each month, you should do the following:
Total monthly income minus total monthly essential expenditure (mortgage/rent payments, secured debt payments, utility bills, food, etc.).
The amount you are left with is called your 'disposable income' - and as mentioned, this is the money you will have available each month to pay towards your unsecured debts, as well as spending on non-essentials and saving for the future, if you can afford it.
Creating a budget is just one of the ways you could improve your debt management skills.
When?
In general, the sooner you take action to improve your debt management skills, the better. The earlier you address your problems, the easier they should be to tackle. If you simply leave your debts to grow and don't take action against them, they will probably get worse.
Thursday, 10 December 2009
Thursday, 3 December 2009
Bankruptcies Hit Retirement Communities
The recession is hitting elderly people where they live, literally. Financial problems have been mounting at a number of assisted-living and continuing-care communities, forcing some facilities into bankruptcies and inflicting new worries on residents and their families who thought their life plans were comfortably set. In recent weeks, Erickson Retirement Communities, which manages 19 continuing-care retirement communities in 11 states, declared bankruptcy. Sunrise Senior Living Inc. posted a quarterly loss of $82 million and announced plans to sell off 21 of its assisted-living communities. Nationally, smaller retirement communities are raising their prices, changing the way they operate, selling themselves off to bigger chains, or getting out of the business altogether. Many companies say they can't make a profit—or even succeed on a nonprofit basis—in an environment that combines the high cost of caring for elderly residents, restrictive Medicaid budgets, tight credit markets and fewer residents willing and able to pay top dollar for their care.
When a facility fails, it can have myriad effects on the residents. The good news is that no one gets kicked to the curb–at least not right away. "Nobody has ended up on the street, which is a primal fear when you're dealing with these places," says Jason Frank, an elder-law attorney in Baltimore. "But their fees can skyrocket, and they can become unaffordable. Then they can kick you out for nonpayment." In some cases, residents may find that the sizeable deposits they made to get their apartments in the first place have disappeared. (Continuing-care communities like Erickson's typically charge deposits of $150,000 or more, and assure residents that they can stay on the campus for the rest of their lives regardless of how their needs change, and that the deposits will be refundable to themselves or their heirs when they leave or die. But residents typically also have to pay monthly fees for care, and those fees can continue to increase. Assisted-living facilities like Sunrise generally require no deposits but charge a monthly pay-as-you-go-plan.) That's what happened to the 170 people who lived in Covenant at South Hills in Lebanon, Pa. Their deposits went up in smoke when their facility was sold in bankruptcy to Concordia Lutheran Ministries, which did not take on that liability. Several are now suing B'nai Brith Housing, the original operator of Covenant.
Erickson executives say that their bankruptcy filing will have no impact on residents. "We've refunded every single deposit in our 26-year history," says Tom Neubauer, the firm's executive vice president of sales. "People moving in are completely unaffected by all this." Erickson's corporate organization is complex, with each community (and that community's deposits) owned by a separate nonprofit entity that is not part of the bankruptcy filing.
But residents could face disruptions. Newer communities that haven't been completely built out yet may not have their assisted-living and nursing-home wings, so residents who need higher levels of care may end up being transferred to other facilities. Should various nonprofits not be able to resell units at the same price as the original buyers paid, those original buyers might not get their deposits back. And residents who run through their personal savings and their deposits paying for ever-higher levels of care will have to depend on an optional "benevolent fund" to cover their expenses.
Erickson has a solid reputation and good track record for keeping residents for the rest of their lives, but anyone shopping for retirement housing now should think thrice about the financial risks of their arrangements. "You've got to keep your eyes open," says Eric Carlson, director of the long-term-care project for the National Senior Citizens Law Center. "If you look at the agreements, sometimes what you're being promised is not that much. The provider may be reserving the right to force you to leave for various reasons." Often there's a generic "can't meet your needs" clause in the contract.
He recommends that refundable deposits be set aside in escrow accounts, and that anyone signing a long-term-care contract run it by an elderlaw attorney first. (They can be found at the National Academy of Elderlaw Attorneys.) His organization also has an online checklist of questions that should be asked before moving into a retirement or assisted-living community.
Carlson also says he generally prefers the financial advantages of the pay-as-you-go models, but even consumers who choose facilities that only charge rent on a monthly basis may not be saving their nest eggs for long. Sunrise has raised prices as it has gone through several quarters of financial trouble. It can cost $6,000 or more a month for quality assisted living, and $9,000 for nursing-home care. At those rates, it's not hard to run through life savings in a hurry, and then not every assisted-living facility will keep you. Many don't take Medicaid or other subsidies, and some facilities that had taken Medicaid have switched to no-Medicaid policies. That leaves those residents who have no assets with no place to live. Nationally, discharge-related complaints about nursing homes and assisted-living facilities have doubled in a decade—to 12,237 in 2008, according to the U.S. Administration on Aging. It's now the second-most-common complaint at nursing homes, behind "failure to respond to requests for assistance." And it's the third-most-common complaint at assisted-living facilities, behind problems with medication administration and disappointment with the food.
Complicated state rules can then force newly impoverished residents to go into nursing homes for at least a month so they can qualify for Medicaid, and then back out into another assisted-living facility, says Beverley Laubert, the long-term-care ombudsman for Ohio and president of the National Association of State Long-Term Care Ombudsman Programs. She and her colleagues are called in when facilities declare bankruptcy or force residents to relocate because of policy changes, but usually they can't force facilities to keep residents. Instead, they spend much of their time helping residents who thought they'd found their final homes look for new places to live in a market where, now, nothing is certain.
When a facility fails, it can have myriad effects on the residents. The good news is that no one gets kicked to the curb–at least not right away. "Nobody has ended up on the street, which is a primal fear when you're dealing with these places," says Jason Frank, an elder-law attorney in Baltimore. "But their fees can skyrocket, and they can become unaffordable. Then they can kick you out for nonpayment." In some cases, residents may find that the sizeable deposits they made to get their apartments in the first place have disappeared. (Continuing-care communities like Erickson's typically charge deposits of $150,000 or more, and assure residents that they can stay on the campus for the rest of their lives regardless of how their needs change, and that the deposits will be refundable to themselves or their heirs when they leave or die. But residents typically also have to pay monthly fees for care, and those fees can continue to increase. Assisted-living facilities like Sunrise generally require no deposits but charge a monthly pay-as-you-go-plan.) That's what happened to the 170 people who lived in Covenant at South Hills in Lebanon, Pa. Their deposits went up in smoke when their facility was sold in bankruptcy to Concordia Lutheran Ministries, which did not take on that liability. Several are now suing B'nai Brith Housing, the original operator of Covenant.
Erickson executives say that their bankruptcy filing will have no impact on residents. "We've refunded every single deposit in our 26-year history," says Tom Neubauer, the firm's executive vice president of sales. "People moving in are completely unaffected by all this." Erickson's corporate organization is complex, with each community (and that community's deposits) owned by a separate nonprofit entity that is not part of the bankruptcy filing.
But residents could face disruptions. Newer communities that haven't been completely built out yet may not have their assisted-living and nursing-home wings, so residents who need higher levels of care may end up being transferred to other facilities. Should various nonprofits not be able to resell units at the same price as the original buyers paid, those original buyers might not get their deposits back. And residents who run through their personal savings and their deposits paying for ever-higher levels of care will have to depend on an optional "benevolent fund" to cover their expenses.
Erickson has a solid reputation and good track record for keeping residents for the rest of their lives, but anyone shopping for retirement housing now should think thrice about the financial risks of their arrangements. "You've got to keep your eyes open," says Eric Carlson, director of the long-term-care project for the National Senior Citizens Law Center. "If you look at the agreements, sometimes what you're being promised is not that much. The provider may be reserving the right to force you to leave for various reasons." Often there's a generic "can't meet your needs" clause in the contract.
He recommends that refundable deposits be set aside in escrow accounts, and that anyone signing a long-term-care contract run it by an elderlaw attorney first. (They can be found at the National Academy of Elderlaw Attorneys.) His organization also has an online checklist of questions that should be asked before moving into a retirement or assisted-living community.
Carlson also says he generally prefers the financial advantages of the pay-as-you-go models, but even consumers who choose facilities that only charge rent on a monthly basis may not be saving their nest eggs for long. Sunrise has raised prices as it has gone through several quarters of financial trouble. It can cost $6,000 or more a month for quality assisted living, and $9,000 for nursing-home care. At those rates, it's not hard to run through life savings in a hurry, and then not every assisted-living facility will keep you. Many don't take Medicaid or other subsidies, and some facilities that had taken Medicaid have switched to no-Medicaid policies. That leaves those residents who have no assets with no place to live. Nationally, discharge-related complaints about nursing homes and assisted-living facilities have doubled in a decade—to 12,237 in 2008, according to the U.S. Administration on Aging. It's now the second-most-common complaint at nursing homes, behind "failure to respond to requests for assistance." And it's the third-most-common complaint at assisted-living facilities, behind problems with medication administration and disappointment with the food.
Complicated state rules can then force newly impoverished residents to go into nursing homes for at least a month so they can qualify for Medicaid, and then back out into another assisted-living facility, says Beverley Laubert, the long-term-care ombudsman for Ohio and president of the National Association of State Long-Term Care Ombudsman Programs. She and her colleagues are called in when facilities declare bankruptcy or force residents to relocate because of policy changes, but usually they can't force facilities to keep residents. Instead, they spend much of their time helping residents who thought they'd found their final homes look for new places to live in a market where, now, nothing is certain.
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