On Avoiding Bankruptcy: 5 Financial Tips
When times get tough, the tough sometimes want to indulge in a little shopping. But retail therapy and reactive spending can be big contributors to a personal credit crunch.
There are things you can do to remain financially healthy if you're not now in trouble and to avoid bankruptcy if you're on the brink. If you start thinking carefully about expenses, you can bring yourself back from the edge of financial disaster without too much pain and a lot of gain.
5 Financial Health Tips
- Use cash only: If you are having trouble with credit cards and your monthly minimums keep ballooning, cut the cards. Like an umbilical cord, a credit card is not something to rely on for the rest of your life. Use them wisely. Pay as much as possible every month. If you have not done that, start now ... and pick up the phone.
- Call your creditors: When you cannot make a payment you probably want to hide, not confront the company making demands. But if you face facts and pick up the phone, you might find that creditors are receptive to negotiation. They can also eliminate certain fees if you say please and thank you and explain your situation politely.
- Know the score: However painful your credit rating, you should know it. Find out where you stand now. The news might be bad but credit scores can improve almost as quickly as they can fall, so preserve yours or turn improvement into a monthly game. Either way, knowing the score is important, as it can impact more than just your ability to borrow money. In some professions, it is considered in licensing or employment decisions.
- Cut the fat: No, this is not a reference to your diet, unless it includes eating out all the time, costly coffees, or fancy supermarkets. No one is suggesting that life is about the crude minimum. But cultivate a taste for the finery of simple things. You don't have to eat junk to keep costs down, nor must you dress like a pauper. But surely there are some extras that you can easily eliminate.
- Train in savings: If you have money saved, you don't need to borrow. But when you're always paying interest on a bunch of borrowed money, you can't really save. Or can you? Experts suggest starting large, cutting out big extravagances, but small will also work if you save steadily. You know that coffee you cut out two tips ago? It cost five dollars a day which adds up to $1825 a year. Imagine if you applied that to debt service or savings! In just a few years you could buy yourself something fancy or just enjoy breathing easy, debt free.
Talk to a Lawyer
If you're having trouble managing your money and debts, consult with counsel. Bankruptcy is an option many have exercised to begin solving their financial problems. Get advice before you make any moves. Talk to a lawyer.