Congratulations! You have completed your bankruptcy case. You have taken the first step in improving your financial well-being for you and for your family. Most debtors feel an overwhelming sense of relief when they complete their bankruptcy case. They are free from the fear of losing their property, the anxiety of dealing with creditors and debt collectors, and the sense of hopelessness of never being able to climb out of debt. While you may be a little nervous about spending money, it is also a wonderful feeling to know that you can now afford the necessities your family needs. You can now focus on your life after bankruptcy rather than worrying about how you will pay your debts.
Your Life After Bankruptcy
Life after bankruptcy will likely include taking on some form of debt such as a new car loan or modest credit card debt. This may be scary at first, but you should not be worried about this debt as long you use your past as a learning experience. Your credit counseling course and financial management course that you completed as part of the bankruptcy process gave you valuable information and tips that will help you improve your financial well-being. Below are additional tips that will help you continue to improve your financial well-being for your life after bankruptcy.
1.) Make a budget
Many people believe that living within a budget is the same thing as denying themselves of what they want; however, using a budget is actually the best way to get what you want. Budgets help us ensure that we are not spending more than we earn and bring light to unnecessary spending. Your debt education course provides information on creating and using budgets. You can also get information and online budgeting tools with websites such as Mint and LearnVest. By managing your finances, you will save more money; therefore, you will be able to afford the things that you truly want.
2.) Set financial goals.
Setting short-term and long-term financial goals is very important for your life after bankruptcy. It is very difficult to get somewhere without knowing where you are headed. Financial goals provide you with the direction you need to take and allow you to develop steps to reach those goals. By focusing on the steps to achieve your goals, you will make better financial decisions along the way.
3.) Save for emergencies
One of the reasons people get into financial trouble is because they are not prepared for emergencies. We all experience financial emergencies when we least expect them. Our car breaks down, our refrigerator stops working, we need to have emergency surgery, or the hot water heater breaks. If you do not have an emergency savings account, you must turn to credit in order to handle the emergency. When you prepare your personal budget, include an area for both emergency savings and regular savings. Make these items “bills” so that you “pay” yourself each month as you do your utilities, rent, food, etc. If possible, make saving automatic with direct deposit from your paycheck or checking account.
4.) Don’t buy items that are not necessary
You may have heard this before but it is true nonetheless – there is a difference between a “need” and a “want.” It is sometimes difficult to distinguish between a want and a need; however, it is essential that you stop spending money on unnecessary purchases until you have rebuilt your finances. Your life after bankruptcy will be much better if you work hard to build your emergency savings account and your regular savings so that you can weather a financial crisis without going back into debt. In order to do this, you will need to make sacrifices as you build your savings. Begin doing this by cutting out unnecessary spending.
5.) Use credit cards wisely and pay them off in full at the end of the month
Some debtors swear they will never use credit cards again; however, your life after bankruptcy will include some type of credit. Your debt education course has useful information about using credit wisely such as paying the balance in full at the end of each month. Another way to manage credit wisely is to charge only an amount equal to what you can pay in full within six months. Some debtors find that secured credit cards help them learn how to use credit wisely. Of course, if you do not “need” an item, do not use credit to purchase that item.
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