In the modern era, even though the standard of living been improved very much, but still there are many people are struggling in making a living and most of them are just having insufficient financing to maintain their daily life.
We can observe there are many people who are heavy in debt and some even facing bankruptcy. In order for you to get to avoid such a situation, you may want to read through this article to find out some ways for you to avoid bankruptcy.
1. Without having a plan when coming to an emergency
Many people are living very close to their budgets boundary. If you only have money that able to cover your monthly expenses without putting some of your money into saving, where can you get money in case of an emergency like if your house water pipes are broken and need to fix immediately? Or when you are having unexpected emergency medical bills without insurance coverage?
Therefore, to avoid any mishap happen to you, it is essential for you to have a fund saving for emergency expenses. If you are not having any budget with your monthly income, then you should now check out which items are of luxury and of no necessity then cut them off so that you can have excess money every month to save for emergency use.
2. Spending money on big-ticket items that you not really need
A lot of people like to buy big-ticket luxurious items which they not really need. Many people are buying things with impulse like when they see a cool trendy car on TV commercials, a picture of branded clothing on magazine or new tech electronics device at a shopping complex.
For these people, they should ask themselves whether they really need them before paying the money since these items just take away your money from your pocket and only can provide you a very short term of happiness but then will follow with long term suffering.
3. Giving expensive gifts for family and friends
This can be simply similar to the previously mentioned point. The significant variation is the fact that some people experience difficulty by not buying things for themselves, but with buying things for other people like their family members or friends.
Selflessness is good, however, it does not necessary to be too expensive for you to do thing like this. You also don’t want to let your family and friends feel guilty by accepting your expensive gifts and caused you to file for bankruptcy.
4. Pile up small expenditures
If you can’t save money every month and not knowing where actually all your money goes, this is due to you didn’t keep any tracking record for all your expenses that carry with a small amount of money.
If you go to the grocery store to buy magazines and bread, having lunch in a cafe, buying snacks on your way back home, all these wills spent you for just a couple of dollars and you never bother to jot them down.
However, in order to get a better picture on how you spending your money even these items are not really significant, you should keeping yourself a small booklet in your pocket or in your purse, or in your cellphones that come with organizer which is very common with today available phones in the market.
Record all your minor expenses down so that you can keep track of your monthly expenses by knowing where actually all your money goes.
5. Didn’t practice any saving habit
If you have tried a lot of effort to make money but end up finding you owe even more money, you should know there is something wrong and the saving habit might not be your cup for tea for you to do so.
But, in order to keep you safe for an emergency, you should be starting out by keeping aside a small portion say $100 of your salary into a savings account every month. Once something unexpected happens and you are needing money to resolve it, you may not going to get too worried about it since your savings account is having enough money to take care of such an emergency and you don’t have to declare bankruptcy because of this.
6. Without keeping track of your money
What is the amount of money do you have in your bank account? How much money do you have for your savings? Have you paid back all your credit card payments? If you can’t have a clear answer for these 3 questions, chances are you are overspending with the money that you made every month.
7. High defaulting amount of money on your credit card
For many people, the debt that they have is most likely related to credit card overdue. The reason why people not able to pay back their credit card debt is many treating credit card as free money for them to spend without planning on how they to pay back later on.
Another reason is due to the fact that most people don’t know about the rate of interest that they need to pay if their credit card debt is due. Therefore, it is better for those who can’t control spending to use cash to pay for all items that they buy instead of paying with a credit card.
8. Allowing late fees to pile up
Almost everyone is ever experienced with late payment for their bills. It is not a big deal for you to make late payments sometime. However, if you are always paying your bills late, then the late fees and surcharges are going to pile up and sometimes can be even more than the amount of the bill itself for the amount of money that you need to pay back.
9. Delinquency bills
This can be quite significant, but some people just totally ignore these. Once you didn’t make your payment on time back to your creditors, the creditors are having the right to enforce collection action against you. However, if you really can’t make your payment on time, you should discuss with them honestly and most of the time they are going to be lenient by extending you a grace period for you t repay your debt.
10. Your expenses are much more than your earning
We should always keep this word in our mind: Always live below your mean. Even though this sounds so simple, but many people just not able to carry out such practice, its simple, but not that easy when coming to practice. However, once you start to practice such living after some time you are going to used it and will start accumulating your wealth and the word of bankruptcy will leave you far far away.