If you have already filed for bankruptcy once in your life, then you likely already know that you do not want to do it again. While bankruptcy can be very helpful in many situations, it also has its drawbacks. If you can avoid it, then you want to do just that at all costs. Getting your life back on track and learning new financial habits can help you avoid a second bankruptcy. Use these tips to stay frugal and live within your means.
Tips to Follow to Avoid Bankruptcy
freedom from expenses but you should only purchase what you can afford. One thing to consider doing is getting a used car and paying for it with cash instead of taking out a loan. After that, you can save up for a new car later. This type of spending should be practiced in all big financial decisions after bankruptcy. If you don’t and you purchase things you really cannot afford, you will end up back in debt that you cannot pay.- Develop a budget. The best way to live within your means is to track what you can spend and budget your income. Creating a budget can be difficult but if you start with your income, subtract the basics, and make a plan for the remaining money, then you will always know where you stand financially and how much you can spend elsewhere.
- Save up for an emergency. When you finally get back on your feet financially, one thing you should try to do is save up an emergency fund. This is a great thing to have because you will never know when you will need to dip into it for an emergency. Plus, wouldn’t it be better for you to borrow from yourself for an emergency than to borrow from a lender?
- Build credit but avoid credit cards. Credit is important and bankruptcy can ruin your credit score for a while. However, you should focus on getting new credit once the bankruptcy is off your record and you have practiced being financially frugal. When you are looking at new credit options, you want to get smart types of credit. One thing to look at is a bank card that acts like a credit card. You put money into the card and use it as a credit card. This can help you build up credit with money you already have. At the same time, you want to avoid the typical credit cards because that is an easy way to spend money you do not have. Other types of good credit to consider include a mortgage, student debt, and even a car loan. Of course, you will only want to do these once you are financially stable again.
