Northern Virginia Law Blog

Americans spend about 10 percent of their monthly income on debts such as auto loans and credit cards. While that may not be a dangerous level for most people, it is a good idea for Virginia residents to know where that debt is going. As a general rule, student and auto loans are easier to manage compared to credit card debt because of the difference in interest charged.

Those who struggle to avoid using their credit cards should use a debit card to make purchases instead. Making a budget can be an effective way for a person to understand his or her financial health and make changes if necessary such as shopping less often. According to LendingTree, consumer debt is going to reach $4 trillion by the end of 2018. Despite this increase in debt totals, the credit card delinquency rate is only 2.4 percent.

Many people in Virginia and across the country are struggling with overwhelming debt, especially as credit card fees and interest rates mount. In March of 2018, the U.S. Federal Reserve announced an increase in the federal funds interest rate from 1.5 percent to 1.75 percent. Even though this rate is not a consumer rate and reflects a bank-to-bank lending rate, it is used as a benchmark for consumer loans, credit accounts and even savings accounts. An increase in the federal funds rate means that interest rates on consumer debt rise as well.

Because credit cards often have a variable interest rate, the escalating fed funds rate can be reflected in credit card rates, making it more expensive to carry credit card debt from month to month. Because credit cards use compound interest, a person's existing balance can also become costlier. The Federal Reserve itself noted that average interest rates for credit cards sat at 15.32 percent APR in February 2018, an increase from 14.99 percent in November 2017.

When a Virginia resident passes away, his or her assets will be distributed to other parties. A Will can ensure that those assets are distributed in accordance to the deceased's wishes. However, simply having a Will doesn't mean that an estate plan is complete.

Ideally, an estate holder will have a financial power of attorney, a health care directive, a Will and a living trust. Assets in such a trust can be used for a person's benefit while alive and then pass to a beneficiary without the need to go through probate. The durable power of attorney entrusts another party to make decisions related to paying bills, filing tax returns or other designated tasks. With a health care directive, an estate holder can address consent issues regarding medical treatment.

A will is one of the most common legal documents around. It serves the very useful purpose for the will's maker of expressing clearly to the state and to potential heirs how an estate should be handled upon the author's death.

Many would likely agree that a will is such a common sense device to ensure that your desires are known and that your successors are relieved of difficult decisions that it is hard to fathom why everyone doesn't have one. Yet, the truth is that many people do not. Even when a will is in place, it often isn't properly updated to reflect changes of life that have occurred.