One of the most important things a couple can do before retirement is get in sync with their finances. If a couple is out of sync, the retirement It will aggravate that division. The big issues are not discussed until after the retirement, when both spouses can clearly see the mismatch. As a result, these couples find it difficult to agree on even the most basic financial matters.

What is it like to be in tune with your finances? In my experience, it involves creating a financial plan (and understanding its various levers), developing a vision for retiree life, and setting clear expectations with one another. Let's look at each piece in more detail.

Know the levers of your financial plan

Every couple needs a financial plan for their retirement, and it is important that both spouses understand the specific levers of that plan. One lever is income: Social Security, a pension or 401(k) plan, rental houses, etc. Another lever is spending (more on that below).

Another lever is how the money is being invested and what the expected rate of return will be. A 2% rate of return will be very different to the outcome of the plan than an 8% rate of return. The risk tolerance of each person is linked to the discussion. If you're okay with more risk in your portfolio while your spouse prefers to play it safe, an advisor can help you find that middle ground.

Another relevant lever is life expectancy for both you and your spouse. Our days aren't guaranteed, obviously, but if you expect to live to be 90, your money should last longer.

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Let us now return to what could be called the most important lever for a financial plan: spending. What I often see is that one spouse is in charge of paying the bills, while the other is in charge of the investments. Operating in silos is not recommended as the retirement. It is much better for both spouses to know what the other is doing in terms of their resources. If your spouse were to pass away, the last thing you want to do in the middle of your grief is find out what bills need to be paid, when, or where your money has been invested.

The second part of getting in sync with your spending is knowing what you spend each month. It can be burdensome to track every penny you spend, but without that awareness of your spending, you can't effectively deploy your capital across the board. retirement.

Decide what retirement looks like

Knowing the levers of your financial plan to be in sync with your finances is a job that must be done with a purpose. What are you and your spouse retiring to? Do not leave this until you are on the threshold of retirement. Two years early (or even sooner; five years would be ideal), it's time to have a conversation about what retirement life will be like.

People struggling to pay their debts in a crippled COVID-19 economy they can't avoid tough decisions, but they shouldn't let it crush them, says a University of Alberta financial expert.

Feelings of fear, frustration or shame can overwhelm the lucid thinking needed to cope with tough times, but try not to internalize it, advised Mike Maier, an accounting expert at the Alberta School of Business.

"Don't define your self worth by what you have," he said. "That can lead to low self-esteem and make it difficult to think about the future and how to build towards it." You have to keep that orientation towards the future, knowing that things will get better.

Although circumstances differ for everyone, it's smart to develop a plan to deal with money crises at home and avoid more. debts, he advised.

Prioritize your needs
Cut your family budget as much as you can to cover the most basic needs, food and shelter first.

“Food bills can be cut – sometimes by a lot. Don't buy junk food, focus on nutritious options and cook more at home instead of ordering out," Maier said.

To pay the rent, people who don't have money should take full advantage of government programs like the Canada Emergency Response Benefit, which offer some short-term relief to help bridge the gap, Maier said.

Similarly, homeowners who can't keep up with their mortgage payments should talk to their banks about deferring those payments for up to six months, a move recently encouraged by the federal government. This will cost the homeowner more in future interest payments, but provides some interim protection for people who have already invested a lot of money in their homes.

"It's a much better option than losing the capital you already have," Maier said.

Transportation is the other basic need that people may have if they need a vehicle to get to work, now or in the future. Continue to make the loan payments on that vehicle, but consider selling second- or third-family vehicles.

Consider debt payment options
Depending on whether you still have an income, there are a couple of options for handling large debtsMaier said.

Those with a stable source of income, even a reduced one, should try to make minimum payments on their debts. A loan will take longer to pay off, but keeping the minimum payments helps protect your credit rating in the long run. They should also ask lenders to consider lower interest rates.

“If the situation is serious enough, they should ask for help; if possible, they should avoid filing for bankruptcy," Maier said.

People without a stable income face more difficult decisions, he said.

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“If you have no income or are unemployed and have no prospects for getting better, you are going to have to consider filing for bankruptcy or doing a consumer proposal, a court-supervised process that has a professional working with creditors on your name to develop a payment plan for the debts«.

Unfortunately, both measures will hurt a person's credit rating for some time: bankruptcy stays on the credit file for seven years, and consumer debt proposal for three years after the proposal process is complete.

For assistance, individuals should turn to licensed insolvency trustees, that is, federally regulated professionals who advise on whether bankruptcy or a consumer proposal is the most viable option. They can also deal with creditors on behalf of the debtor, Maier added.

When it comes to the debt of a deceased, the responsibility will depend on the relationship. For example, children and grandchildren, as well as other family members, are not legally responsible for the debts of the deceased. However, if you sign a loan with the deceased, You will be legally obligated to pay the debt.

Spouses, on the other hand, may be liable depending on their state of residence and the type of debt involved.

If you live in a community property state, you as a spouse will be responsible for any unpaid debts, particularly those incurred since you were married. For example, if your spouse has a car loan, a couple of credit cards, and business debt, you will be responsible for the debts of the deceased,

Naturally, any loans you are required to repay jointly will be your responsibility no matter what state you live in.

What happens if you do not pay the debts of the deceased person
If you are legally responsible for paying the debt of the deceased, a creditor will go after you the same way they would any other type of debt.

If a payment hasn't been made in a while, the account will most likely go into collection. That will show up on your credit report, plus you will be harassed by the collection agency on a regular basis. This will include a combination of threatening letters and phone calls.

If you are unable to pay off the collection account, the creditor may request a judgment against you. If they do, they can garnish your wages and/or bank accounts.

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If you are retired, the creditor will not be able to pursue you. For example, a creditor cannot garnish income from Social Security, veteran's benefits, or federal and civil service retirement benefits. In addition, defined contribution retirement plans, like 401(k) plans, are exempt from creditor claims. And in most states, IRAs are also exempt.

However, please note that other assets may be subject to seizure. That can include pension income, income from work, non-retirement savings and investments, and real estate equity.

Even if you don't have any income or assets that a creditor can garnish, they may continue to hound you into paying up. And if you receive income or garnishable property in the future, the creditor can pursue it, even if the owner has deceased. 

If you are one of the many who are experiencing some type of financial difficulties Right now – whether it's because you've recently been laid off, had a reduction in work hours, or are simply worried that your job is at risk – experts suggest using this cash windfall to make sure your basic needs are met.

But for those who still have a paycheck and therefore find it easier to pay essential expenses, you may want to consider using this extra money to pay off any high-interest credit card debt you may have, and help pass the financial difficulties.

Here are the four signs that allow you to pay off your credit card debt with your stimulus check.

1. You can pay for groceries and any other basic needs
Many Americans are struggling right now to keep food on the table, so make sure you can afford it before you use stimulus money for anything else. Many major banks are helping people through financial hardship programs when it comes to their mortgage and other loans, but keeping your family fed should be the first place you look to spend any extra money.

 2. Your rent or mortgage is covered
If you can afford to buy necessary food and groceries for your family, the next thing you should do is keep a roof over your head. Housing payments are defined as "high priority debt" by the National Consumer Law Center (NCLC) in their debt management book, "Surviving Debt" (available for free during the coronavirus emergency).

Housing may be one of your biggest expenses, so if you can afford to pay rent right now, this is a big step and a possible sign that you will be able to use your stimulus check to pay off other debt and ease your financial difficulties.

3. You can afford to pay your high-priority bills on time
Along with your home, you'll want to make sure your utilities like water, sewer, electric, and gas are paid for. Your utility bills, as well as any outstanding car loan or lease bills.

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If you're able to pay these bills – and ideally on time so as not to hurt your credit score – you're in a better position to use your stimulus money to pay off credit card debt.

4. You have money saved in an emergency savings fund
It may make sense to use your stimulus check to pay off your credit card debt if you already have a sizable amount of cash stashed away in an emergency savings fund. Experts generally advise saving three to six months of expenses, and most suggest aiming for six months of expenses in times of financial difficulties.

As you figure out how much to put in your emergency fund, it's okay to only include your essential expenses in the equation. For example, your ideal budget might be $4,000 per month when you are gainfully employed and can afford to spend money on things like entertainment, dining out, new clothes, hobbies, and other additional products or experiences that increase your quality of life. But if you only spend $3,000 on necessities each month, a six-month emergency fund would be $18,000, and you wouldn't necessarily have to save the higher amount of $24,000 before you could start paying down the debt. .

If you are struggling with your credit card debt, a nonprofit debt consolidation company can help. A nonprofit debt consolidation company will contact your credit card companies to reduce the interest you pay on your credit card balances. As a result, you will have to pay a smaller amount of interest each month. Lowering your interest charges will help you pay off your credit card debt.

Another significant benefit is the convenience you will get. The company will take away your entire monthly payment and pay the amount owed to each credit card company separately. So instead of going through the hassle of making multiple payments, you can pay the full amount for the month to your nonprofit debt consolidation company and let them take care of the rest.

What is nonprofit debt consolidation?
Nonprofit debt consolidation companies are, as the name implies, nonprofit organizations that can help you pay off your debts. They usually deal with credit card debt. Since they do not make loans, you cannot refinance student loans, auto loans, home loans, or similar loans with these organizations.

However, since they are non-profit organizations, they must operate according to the rules and regulations set by the government in order to maintain their non-profit status. This high standard can work in your favor and help you get out of the debt trap.

National Foundation for Credit Counseling
Several of the leading nonprofit debt consolidation companies are members of the National Foundation for Credit Counseling (NFCC), which is the oldest and largest financial counseling organization in the United States.

The NFCC and its members have a mission to promote responsible financial habits through their advisory services. They also educate ordinary consumers about good personal financial habits. Member organizations also certify and train professional counselors to offer their expertise in the fields of student loans, home buying, wealth management plans, credit card debt, and bankruptcy due to coronavirus.

All NFCC members must be accredited by the Council on Accreditation (COA). The COA is an independent organization that reviews social service programs around the world.

The Debt Management Plan
To come up with a workable debt management plan, nonprofit debt consolidation companies often start with free credit counseling. They will then list several options that can help their clients become debt free.

nonprofit debt consolidation vs. debt settlement
The process is fairly simple. The nonprofit debt consolidation organization will first understand your specific financial scenario to create a budget, and then list options that can help you achieve financial freedom.

The initial credit counseling session can last approximately one hour. During this session, a certified financial advisor will listen to your challenges and needs, then develop a personalized strategy to pay off your debt. These counselors have experience in budgeting, debt management, and consumer credit.

The nonprofit form will only include you in their debt management program if you qualify. Not everyone qualifies for these programs. The nonprofit organization will help you with your spending habits, budgets, and other aspects of personal finance.

They can suggest a debt consolidation loan or help you find another way to navigate the debt consolidation process. credit card debt,, depending on your situation. If your financial situation is too dire, then they may recommend bankruptcy.

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How does it work
This is how a debt management program works. The nonprofit debt consolidation company negotiates on your behalf to reduce your credit card debt, unpaid They try to lower the interest rate and combine all the debt into one. In many cases, they can reduce the interest rate by 8 to 9 percent. Sometimes they can lower the interest rate even more.

These measures will help you pay off your debt more quickly. A key advantage of working with a nonprofit debt consolidation company is that you don't need to get an additional loan to pay off your debts, which could easily add to your problems.