In our current economy many people are facing bankruptcy. So I thought it would be timely to explore some simple tips on how bankruptcy can be avoided. According to a 2008 survey by the American Payroll Association, 71 percent of American workers are living paycheck to paycheck. If you are one of the many who live paycheck to paycheck, or if you have fallen behind, these tips may help you keep your head above water.
How many times have we heard the importance of setting up a budget. Well what is a budget and how can you work on one easily? This can be as simple as making a spreadsheet or listing out all your expenses. Many people who have done this simple exercise have discovered that they aren't earning enough to cover all their expenses. And this list can help you identify areas that may need trimming. Trips the the vending machine or the coffee shop may seem innocent enough but when you add up what the average person spends on this it can be quite shocking.
Developing a budget is fundamental to reaching your financial goals. Many people find themselves in debt not because of mismanagement, but because they don't have a plan. By creating a budget that accounts for every spending category and dollar that you spend each month, you can see where your money is actually going. By sticking to the budget, you can regain control and be sure that you financial plans are being fulfilled.
As part of your budget planning don't forget to set aside an amount for emergencies. You can build-up your rainy day fund by putting away a small amount each week or some people even set up a percentage of their income to go into a special account each week. With this in place you won't get caught short if your car needs new tires or you need to handle an unexpected health problem.
Automatic deduction is a helpful way to stick to your budget is by allowing your regular bills and expenses to be paid directly from a checking account. By setting up automatic deduction, you can be sure that your bills are paid on time and in full.
If you are living paycheck to paycheck, it is important to streamline your budget in any way possible, and one of the easiest ways to do that is by cutting out any excess expenditures. Look at where these expenditures occur and either budget for them, reduce them, or eliminate them completely. Do you really need those extra cable channels and are you on the right cell phone plan? Some simple belt-tightening can go a long way.
If you can't spend less then make more. Look at doing some extra part-time work or perhaps there is an opportunity for some overtime. Are there any items taking up space at home that you're not using that could be sold? Consider renting out that spare-room for some extra cash.
If you find yourself falling behind on payments to your creditors, you might as well contact them and negotiate a new agreement. Your creditors would rather get some money than none at all. By taking the initiative to contact them, you may even be viewed more favorably. Let them know what you can afford to pay each month based on your budget and more often than not they'll be willing to work with you.
Be wary of credit scams, when searching the Internet, anyone would think that getting out of debt is no big deal. There are a many quick and easy ways to get out of debt through debt management, debt settlement, credit counseling, or some other solution. While some of these solutions can be helpful, some are no more than scams. In particular be careful of solutions that require you to pay money upfront. If they sound too good to be true then they probably are.
Find out if bankruptcy is right for you. Some people may be too deep in debt for any of the above solutions to realistically work for them. That's when bankruptcy is a good option. Declaring bankruptcy will stop the collection calls but not all types of debt will be forgiven. So it's important that you understand your options and the future consequences of declaring bankruptcy. I offer a free initial consultation where you can get your questions answered. If you are seriously considering bankruptcy and you live in Southern California, please don't hesitate to contact me as I'm very experienced in dealing with bankruptcy and I'm here to help. While the process appears complicated, a California bankruptcy attorney will be able to help you understand your options and avoid making bad decisions. After all, you get one chance to file bankruptcy right the first time.