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You and Your Money

PERSONAL FINANCE: Planning Your Future and Staying Bankruptcy Free

What exactly is bankruptcy? Bankruptcy is when your assets are tied up and you cannot pay your debts. There are a number of different bankruptcies that are open to individuals. These different bankruptcy options were created to help individuals and their special needs.

However, bankruptcy’s effects can last for years, including difficulty finding a job, getting insurance, renting an apartment, buying a home and financing a car. Bankruptcy can stay on your credit record for up to 10 years. The rest of this article will deal with ways to try and avoid bankruptcy.

As mentioned in previous articles a good budget is one of the most valuable financial tools you can have. Every individual or family needs to develop a budget and follow it. Impulse buying is not only dangerous for large expensive items, it can also be costly for smaller purchases that add up, killing your budget and pushing you further into debt.

When going to buy a large or expensive item a good rule of thumb is to go and look and leave your checkbook, credit card, or financing information at home. When looking to buy these large items go and look around at more than one place. There is usually more than one store or dealer in the area that has comparable products to look at.

The more places you visit the better idea you get of what a fair price is. Take time to evaluate the merchandise you have seen. When you do this, you will eliminate impulse buying or buying on emotion. When you have done your research and determined that you really need the item, then you are prepared to go and purchase it.

Living within your means creates a future of financial stability. There are many things that can be done to live within our means. Some of these things include driving nice, dependable vehicles, not the latest and greatest; and purchasing a home that meets your needs, not a large home which carries an astronomical mortgage. Don’t get caught up in trying to impress your neighbor by buying things you can’t afford or don’t need. There is only one person that can keep you from bankruptcy and that’s you. Have some self control.

If you find that you are really in overwhelming debt, there are steps that can be taken. Evaluate your financial circumstances. If you have large credit card debts that you can’t afford, contact the credit card company and try to work out a payment plan that works for you. If you have other large bills, try and contact these companies and see if they will work with you. Sit down and figure out what your debt to income ratio is.

This can be done by adding up how much take-home pay there is against how much there is in bills. If your debt ratio is close to or higher than your income, then you need to seriously evaluate your spending habits. Unavoidable medical expenses or disasters that cause major debt have to be dealt with on an individual basis and may require the advice of a competent financial planner. Day-to-day financial monitoring will help you improve your financial future.

If you need the help of a financial advisor, it will be worth your time to do your homework and find out who will be the best at helping you. There are a number of ways to go about finding a financial advisor. A good place to start is by asking friends and acquaintances if they know or have heard of anyone that is good. You can also check in the yellow pages.

However, be aware of billboards and radio/TV ads, and check with your local BBB. Once you have found a good potential advisor, ask them about their credentials and ask for references of satisfied customers. Ask how their work will help you and how it will effect your credit. Don’t be afraid to ask questions to find out if this is the right person to help you.

Remember this individual is going to give you advice that is going to effect your financial future. There are financial services that charge large service fees, and those that are non-profit that are less expensive. It will depend on what you feel comfortable with and who you think will give you the most help.

Finally, if you own a lot of expensive items, you may think about trying to sell off items to raise money to pay off debt. Consider getting a second job to help to bring in extra income. Look at borrowing against any reserves you may have. (Do this only after consulting a good professional advisor.)

Avoiding bankruptcy requires vigilance and determination. Bankruptcy and its long-term effects should be considered very carefully. Working hard to overcome financial woes will give you an improved sense of self-worth and well-being.