The best way to prevent bankruptcy is through fiscal responsibility. Building healthy budgeting routines is one of the keys to staying above water with your finances.
Finding balance with your finances can be a challenging pursuit. When spending gets out of control or simply more than you can afford, bankruptcy could be looming. That’s why it’s so important to develop positive financial skills like responsible budgeting to help prevent bankruptcy. Here are some of the most effective and simple budgeting tips for you to implement when looking to prevent 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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Live Within Your Means
Living a life of financial excess can seem tantalizing, but maintaining responsible spending habits and staying out of debt is a much more critical and rewarding practice. Know your financial means, and don’t spend beyond them. Learn to say no to certain expenses in order to save money and avoid bankruptcy. One of the easiest ways to fall into bankruptcy in Alabama is to live outside of your means.
Paying down debt, such as credit card debt, medical debt, or housing money that you owe is a much more worthwhile practice than spending incessantly on unnecessary luxuries. The effects of bankruptcy can be difficult and long lasting, so learning to budget effectively is crucial. Living within your means leads to a more enjoyable life in the long run. Without having the threat of debt and bankruptcy looming over your shoulder, you will have the peace of mind that allows you to enjoy life more freely.
Set a Grocery/Food Budget
Tracking how much money you typically spend at the grocery store and eating out per week is a great first step. Once you establish your typical spending habits, you can analyze them and see where you can start to save. Bankruptcy can sneak up on you if you don’t prepare for it, so be sure to plan accordingly.
Look for ways to cut down on food spending. Some common ways to save money and avoid bankruptcy are limiting the number of times you eat out per week, bringing lunch to work, changing your diet, and more. By tracking how much you have been spending and finding ways to lower the amount of money you spend on food, you will be taking a valuable step in preventing bankruptcy.
A good ballpark to aim for is to not spend more than 10-15% of your take-home income on food, depending on your needs. By setting a fixed budget for food, you will be less prone to impulsive spending, thereby saving more money. Remember, setting a grocery budget won’t save you money unless you stick to it. Hold yourself and your family accountable and encourage each other to join in the mission of lowering the risk of bankruptcy.
Budget for Your Place of Living
A general rule of thumb is that your home should cost you no more than 30% of your income. This is important to keep in mind when preventing bankruptcy, as home payments and rent can be some of the most expensive you will typically have. Apply this general budgeting rule and see if your current living situation fits it or not. If you are spending too much of your income on housing, changing to a more affordable situation can be a worthwhile method of preventing future bankruptcy.
This method of preventing bankruptcy can be more challenging than others due to limited options & other reasons. It can also require more effort than some of the more instant and easy methods of saving money on this list, but because of the potentially high dollar amount you may be spending on rent or house payments, it is absolutely an aspect of your budget that needs to be examined to best help prevent bankruptcy in the future.
Be Aware of Your Spending
One quick way to lose money and increase the risk of bankruptcy is by being unaware of repeating services and subscriptions that you are automatically charged for. Streaming services, online journals, magazine subscriptions & more can easily be forgotten about and begin accumulating heavy payments without immediately being noticed. Make sure you monitor your credit and debit card usage through online tracking systems to make sure you aren’t being charged for services that you don’t use.
Consider the monthly paid subscriptions that you currently pay for, and look to see if you could go without any of them, especially if they are expensive. Free trials that then automatically roll into paid subscriptions are common causes of financial hardships. Be aware of your spending so that bankruptcy doesn’t unexpectedly creep up on you.
Adopt Healthy Saving Habits
Everyone’s budget is different, but try consistently putting money away for an emergency, even if the amount is small. Setting a routine saving plan for every paycheck is a great way to consistently save money that can be used in the case of a financial emergency. Another good rule of thumb is to try saving 20% of your monthly income every month. Building up a healthy amount of savings is a great way to prevent bankruptcy and other potential financial hardships.
David S. Clark: Auburn and Opelika’s Experienced Bankruptcy Attorney
Developing strong budgeting habits and fiscal responsibility is one of the most effective and important ways to prevent bankruptcy in Alabama. If you have financial difficulties and face the possibility of bankruptcy in Auburn or Opelika, Alabama, David S. Clark can help you find relief. Don’t face the burden of bankruptcy alone.
Whether you are seeking to file for Chapter 7 or Chapter 13 bankruptcy, David S. Clark can help you every step of the way. For more information, contact David S. Clark 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.
