Sunday, December 21st 2014

Bankruptcy – Don’t Let That Happen To You

by Mr Credit Card

Today’s weekend post comes from Financially Poor, who used to be a bankruptcy counselor. One of his most interesting post on his blog is the one question that will change your spending habits.

Bankruptcy isn’t an easy thing to go through emotionally. Having a crap load of debt isn’t easy either. Both of those choices aren’t good for anyone.

Being a bankruptcy counselor I hear a lot of different stories of how people got to the point of filing for bankruptcy. Sometimes it’s filled with sad stories about how they were diagnosed with cancer or lost a spouse. Those are very traumatic experiences that can cause you to get into bad situations or make bad decisions.

 I also hear stories about people who just got out of control with money and had bad money management. Here are a few common threads that I’ve noticed in the majority of people that are filing bankruptcy.

Not expecting the unexpected

Things happen in life that you can’t always plan for. But that’s no excuse for taking life for granted and not expecting the possible. It’s very possible, especially in this day and age, to lose your job, or even get hurt or sick. I’m not saying it’s going to happen but you should have a plan in place in case you lose income in your household.

Here’s what you should have in place:

  • A plan of which expenses you can cut back
  • emergency fund with at least 6 months of expenses covered
  • Having just those two things can help you live a long time without any income.

    Overextending

    Credit is a tool used to things that are out of our immediate reach. Used reasonably it can be very helpful in acquiring things that can better our life. But if it’s used irresponsibly and more credit is extended to you than you can afford if something happens in your life, then you’ll be in trouble.

    Make sure you:

  • Don’t use extra income (ex. commission, bonuses, etc.) in your budget for large purchases
  • Have a budget to make sure you can afford the extra credit payments
  • Control

    This goes with the overextending, but it also needs its own mentioning. Learn to control yourself. You don’t always need the newest and best thing. Think about how kids love shiny things. That’s pretty much what it’s like when you have to have the newest and the best. Learn to live modestly and you will have more than you’ve ever wanted.

    One Response to “Bankruptcy – Don’t Let That Happen To You”

    1. Financial bondage Says:

      I was there once. Hopefully never again. It’s not a fun place to visit.

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