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How can you avoid debt after bankruptcy?

On Behalf of | Nov 11, 2020 | Firm News

Filing for bankruptcy in Michigan can provide you with a solution to reduce and effectively manage debt. With negotiations underway, you can look begin thinking about your future.

One action you can benefit from is assessing your financial habits and determining which changes will enable you to prevent uncontrollable debt from accumulating again.

Necessities vs. wants

A challenge for a lot of people is identifying the difference between necessities and wants. As you budget your money, establishing clear guidelines for separating needs and wants can help you stay out of unnecessary debt. You can split your expenditures between two columns: necessities and wants. Necessities will include housing, transportation, child care, utilities, food and education among other things. Wants may include cable tv, internet services, recreational vehicles and vacations.

One important note: you can continue to enjoy the things you love despite living on a budget. There are plenty of creative ways to finance a vacation or purchase supplies for your hobby without going into debt over it. For example, you could pick up a side job to provide temporary income while you save for a vacation. If you have the education and experience to provide services such as photography or hair styling, you could also barter or trade services with other professionals to save money for other things.

Establish an emergency fund

You never know when an emergency will create unforeseen circumstances and require money to fix. Medical expenses, car problems, divorce and economic difficulties are all problems you may encounter. Discover recommends that you establish an emergency fund and commit to contributing so much money each month. This safety net can provide invaluable protection and relief if you encounter unanticipated events that require financial support. Strategically using your emergency fund when needed can save you from racking up debt.