Ways to Avoid Ever Having to File Bankruptcy Again
When debt spirals out of control and becomes insurmountable, bankruptcy may be the only viable solution. However, as much as filing bankruptcy can bring relief, most people who go through bankruptcy never wish to go through it again. Wise financial management is the best preventative. Here are some tips that help people stay financially solvent:
- Maintain savings. Putting money aside and creating savings establishes a safety net for unexpected events that can take their toll on finances. Sudden illness, job loss, and divorce are financial drains. Many people end up filing bankruptcy to deal with such unexpected occurrences. However, a substantial savings could provide a solution for situations that can otherwise result in insolvency.
- Stay within a budget. Financial planning helps people spend within their means. Everyone should set up a budget that predicts expenses and income on a monthly basis. By sticking to a budget, people can work to have their desired lifestyle and also save money for the future or for emergencies.
- Rarely use credit. While having credit available as a source of funds is prudent, it is important to realize that buying on credit is more costly than cash spending. The money saved by not paying interest could be used for other purposes. Whenever possible, pay cash, or only use a credit card if paying off the balance every month.
- Regularly pay off debts. One way to remain debt-free is to pay off debts immediately and not allow them to mount up.
- Increase income and reduce spending. Solvency is a matter of maintaining a proper balance between earned income and spending. Finding other sources of income, whether making investments or taking on additional work, can increase income. Setting income targets provides more control over finances. Shopping through sales, using coupons, going to discount stores, and cutting back on unnecessary items can help reduce spending.
If struggling financially, consult an experienced bankruptcy lawyer about appropriate financial remedies.