subject: Better Money Management Tips and Bankruptcy Basics [print this page] If there's one aspect in your life that you need total control over, it's none other than your finances. But what if you find yourself in a situation when you have acquired more debt that you can handle?
In a world which mostly relies on a credit system, it is pretty hard to get by without incurring debt and utilizing your credit card. Over time, these debts may pile up one after another which leaves you with an option to either pay the minimal fee or the full amount of what you owe. But what if the debts pile up and you are left with more credit than your finances can actually handle?
No matter how good you are in managing your finances, there is a possibility for you to over-borrow or spend beyond your means. It is exactly to prevent things like these from happening which is the reason why you need to understand debt, money management and bankruptcy.
Managing Your Money & Understanding Debt
Naturally, in order for you to not get knee-deep in debt, what you can do is try to avoid debt in the first place. Maybe you can setup a budgeting system if you are in charge of the finances in your household. Monitor the amount of money that comes in and deduct your monthly expense from it. Set a limit amount for what you can charge against your credit card use cash as often as possible.
Now, in terms of debt management, the rule of thumb to keep in mind is that some debts are more important than others. If you have several credit card accounts, for example, you need to pay off at least the minimum amount of what you owe on the card which has the highest interest rate. When you put off paying a due credit card bill, the interest rates would pile up, leaving you with a mountain of debt to deal with later on.
The next most important debt that you have is your mortgage loan. Depending on your monthly salary, this is something that you should really set aside the funds for. Otherwise, you are risking having your home foreclosed if you become delinquent with the payments. If you have a car loan, set aside money for that as well.
These two loans are called secured loans because you are borrowing money against the value of your property that is why they should be prioritized at all times. Credit card debts, on the other hand, are considered unsecured debts because you are not borrowing money against a secured property that you own.
The Pros & Cons of Filing for Bankruptcy
If worse comes to worst and you are already on the brink of filing for bankruptcy, it is important to know the pros and cons of filing for it. Depending on the current state of your finances, you can either file for a Chapter 7 or Chapter 13 bankruptcy.
If you have more debt that you can actually handle, filing for bankruptcy might actually be better all the way round because your home can be saved from foreclosure and your debts might be written off. Always consult a lawyer who is an expert in helping people with bankruptcy cases if you are considering taking this route.
There is absolutely no harm in admitting that you need professional help if you think that your debts are too massive for you to handle by yourself. If the obvious solution is to file for bankruptcy, have an overall picture of your finances and see if it is the best way for you to go or if there are other alternatives that you can consider.
Better Money Management Tips and Bankruptcy Basics
