Going through bankruptcy once can cause a ripple effect that lasts a number of years. Preventing another bankruptcy requires you to thoroughly assess what went wrong the first time so you can make changes right away.
Knowing some strategies for managing your money can help you identify your next steps. With the right tools and a proactive attitude, you can prevent another bankruptcy from disrupting your life.
Plan ahead
Just because you have experienced a rattling financial blow does not mean you have to forfeit your dreams for the future. Think about your financial goals. Carefully assess your past and look for the reasons that caused you to go bankrupt. This could include unexpected medical bills, poor money management, a family business going belly up or falling prey to a scam.
Completely redo your budget. Make a list of your income and expenses. Prioritize your expenses in order of need. Identify places where you can cut back on spending. For example, cable tv, food delivery and high-end clothing purchases. Eventually, you can add these things back in but not until you have your finances under control.
Spend wisely
There is often a lot of emphasis on saving after a bankruptcy. This is not bad advice, but it is equally as important to spend wisely too. There are strategic ways to spend money that can help you rebuild your credit score and financial rapport. According to CNBC, after bankruptcy, mix the types of credit you apply for. Consider a secured credit card as well. Live completely within your means and make any credit payments in full and on time.
As you gradually rebuild your finances, you might want to diversify the way you save and invest your money. Doing this can help you build compound interest which can improve your financial stability. Contrary to what many think, one experience with bankruptcy does not have to dictate the remainder of your life.
