Budgeting After Bankruptcy (Part One)

03 Jun Budgeting After Bankruptcy (Part One)

Bankruptcy is about a fresh start, a new beginning. For many people, that means establishing good spending and saving habits.

To be sure, not everyone who files bankruptcy does so because of spendthrift ways. But many do. And even those who file because of the big three causes (job loss, divorce, medical) could use some help with their budgets.

“But I Hate Talking about Budgets!”

Me, too. Let’s face it: budgeting is about as much fun as a root canal. But sometimes both are necessary. The goal of these posts will be to come up with a streamlined, simple approach to budgeting. It’s not ideal, but it’s a whole lot better than bumbling through life with no goals or progress. And it’s definitely not going to be as painful as a root canal.

The Goal

The goal is to gradually increase your net worth. That sounds like a business school concept, but it’s pretty simple. Before you filed bankruptcy, you probably had a negative net worth. For example, if you had $300,000 of debt (car loans, credit cards, medical debt, mortgage balances) and $200,000 of assets (cars, house, savings, 401(k)), you had a negative net worth of $100,000. Filing bankruptcy probably changed that imbalance somewhat–let’s say you got rid of $75,000 of unsecured debt in the process, but you still have a ways to go before you break even. And you have even further to go before you have a positive net worth.

This isn’t rocket science…

Fixing this is pretty simple. You need to take in more than you spend. It’s like the exact opposite of losing weight were you “spend” more calories than you take in. Over time, the surplus will help you create wealth. You want to get financially “fat;” the goal is to have your net worth increase. You want asset values to go up and liabilities (debts) to go down.

Over the next few posts, I’ll discuss what your goals should be and why, and I’ll show you some very basic ways to get there. Of course, it’s up to you to take these steps.

Related Posts Plugin for WordPress, Blogger...
The following two tabs change content below.
Russell A. DeMott is a Charleston, South Carolina bankruptcy lawyer who represents consumer debtors in Chapter 7 and Chapter 13 bankruptcy. He is the author of the Charleston Bankruptcy Blog. He is also a member of the South Carolina Bankruptcy Blog. He files bankruptcy cases for clients in the Charleston, South Carolina division, which runs from Myrtle Beach to Beaufort. The DeMott Law Firm also represents clients in foreclosure defense and mortgage modification. You can also connect with Russ on Google Plus Russell DeMott. Russ can be contacted directly at (843) 695-0830 or by email at russ@demottlawfirm.com.
No Comments

Sorry, the comment form is closed at this time.