One of the most common reasons that individuals fall into a financial crisis and decide that bankruptcy is the best option for them is poor financial stewardship, specifically when it comes to credit.
Though medical expenses and job loss are ranked higher than poor personal finance for reasons that people file for bankruptcy, those two issues are far more dependent on outside forces than personal financial responsibility.
Given that each person is the most important player in their own financial stewardship, we want to give our clients, potential clients, and readers practical tips about how they can make better financial decisions in order to avoid bankruptcy.
DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.
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Tip #1: Control Your Spending on Credit
People incur credit when making a purchase that either costs more than the cash they have on hand or more cash than they want to spend at one time.
Incurring debt through credit is not always a bad thing.
For example, one of the most effective ways that Americans build personal wealth is through home ownership. Most people don’t just casually have $300,000 sitting in their bank accounts, so they take out a mortgage and purchase their home on credit.
Many, however, incur debt less strategically than for the purpose of building long-term wealth. They often incur debt on purchases that are much less important than a home–expensive cars, a TV, clothes, the newest iPhone, etc.
One of the major problems with excessive spending on credit is that people begin to run up credit card bills and have no realistic plan to pay off the debt in the coming months, years, or decades. Eventually, they default on the loan or miss one too many credit card payments and creditors come ready to make them pay their debts.
The best way to avoid finding yourself neck-deep in debt with unending calls from creditors is to manage your spending from the beginning. Unless you have a clear plan to pay back your debts and the discipline to stick to that plan, don’t purchase using credit.
Tip #2: Avoid Quick Loans
Often when individuals are short on cash and a bill comes due, they see no other option, but to go to quick loan, payday loan, title loan, etc. business in order to get the money needed to pay the expense.
The problem with borrowing money from these predatory establishments, though, is that they lend at extremely high interest rates. These companies usually lend to individuals who are already financially vulnerable. When these individuals begin to pay off the massive interest on the relatively small loan, they quickly realize that borrowing from a quick loan company was a mistake.
For more information on payday loans read our article, here.
A Few Alternatives to Quick Loans
Churches & Non-profits
For expenses like grocery bills, one-time rent payments, bus fares for a job interview, etc. local churches, other faith-based organizations, and community non-profits are often willing to help fit the bill.
Here is a list of Auburn/Opelika Churches.
Though it may take a bit of humility to ask, assistance from responsible family members can be one of the safest ways to borrow money and often at no or very little interest.
Alternative Sources of Cash
Now more than ever there are alternative ways for individuals to make a quick buck honestly and with no strings attached, like high interest rates.
David S. Clark, An Auburn/Opelika Bankruptcy Attorney
If you have followed these tips, yet still find yourself in a financial crisis, bankruptcy may be the best option for you. David S. Clark is an Auburn & Opelika bankruptcy attorney who helps clients throughout the entire bankruptcy process.
We can help you determine whether Chapter 7 or Chapter 13 bankruptcy is the best option for you. For a free case consultation, contact David S. Clark, Attorney at Law today!
DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.