These Tips Can Help You Avoid Bankruptcy

These Tips Can Help You Avoid Bankruptcy

These Tips Can Help You Avoid Bankruptcy

Bankruptcy is now a common way for people to get a fresh start and eliminate the mountain of debt that has been plaguing them. Rich people whose net worth are in the 7+ digits range probably do not worry about money like you and I. Even rich people are sometimes subjected to bankruptcy to protect their remaining wealth intact. You avoid this financial crisis or bankruptcy if you just abide by some of the following basic tips:

Tip #1 - create a budget

If you want to have a better financial future, your first order of business is to create this budget which will help you steer yourself through most financial transactions. You should always have a budget that you can base all your spendings on. Once you have a budget in place, you know exactly what you are spending on each month. Only when you know what you are spending on each and every month, then you will be able to determine if this kind of expense can be lowered. For example if you spend $0.50 a day on buying newspaper and you work 5 days a week for 52 weeks. That's a total spending of $130/year ($0.50 x 5 days x 52 weeks) on newspaper. Once you realized you are spending $130/year on newspaper, you can find a cheaper alternative by subscribing to the newspaper and not buy it off a newstand. Subscribing to a newspaper annually will generally cost about $50 a year. So just by using the budget, you found an expense that you can save you $80 a year ($130-$50).

Tip #2 - use only cash

If you are spending using only cash (debit card included) that you have, then you not likely to incur any debt through the use of credit (for example credit cards). Once you get into the habit of only using cash, you will never amass debt such as credit card debt. Once you find yourself spending only what you have, and not using any credit for purchases, you will never have to face bankruptcy.

Tip #3 - negotiate with your creditors

Creditors do not want to lose you as a customer because they want to keep your loan forever. The longer that the creditor has your loan, the more interest income they can make. The creditors know how fragile this economy has become and many consumers are having difficulties repaying their debt. Call your creditors because they know how difficult this market has become. Your creditors mostly likely will want to work out a favorable payment instead of losing you to bankruptcy protection.

Tip #4 - buy only the necessities in life

What is a necessity is different to everyone. You need to convince yourself what is really necessary in order for you to live and what is just a "luxury" at this point. With the help of the budget, you will find certain expenses in your life are actually unnecessary. Why do you need to spend $5 a day on Starbucks coffee, when you can just as easily spend $2 a day on Dunkin Donuts coffee? If the purpose of the coffee is to keep yourself awake and alert, then Starbucks coffee is unnecessary in your life. Take the time and effort to go through your budget thoroughly. You should be able to find expenses that you can reduce or eliminate over time.

If you are looking for additional tips, dos and don'ts regarding the topic of bankruptcy, please visit tofilebankruptcy.com.

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