Budgeting After Bankruptcy

Budgeting After Bankruptcy

While filing bankruptcy is a big step towards your financial fresh start, it is only the first step. Debtors who benefit the most from their bankruptcy make sure that they improve their financial skills after bankruptcy so that they can increase the chances that they will never need to file bankruptcy again. One of the most important skills a debtor can use after bankruptcy is the skill of budgeting.

When most people hear the word budget they think of something painful and difficult; but below are three virtually painless ways to budget after your bankruptcy discharge:

Track Your Spending

After you exit bankruptcy, take a month to track everything you spend. Don’t cheat on this exercise. Write done every single dime that you spend on anything for 30 days. This way you will discover exactly where you are spending your money when you don’t have a budget.

Pick out the Things That You Enjoy Doing But are Costing You Money

Next, pick out the things that you enjoy doing but are costing you money. Don’t panic, you didn’t file bankruptcy just so you would have to get rid of all of your fun activities afterward, but we want you to find a way to enjoy these activities with less expense. For example, if you eat at a restaurant for lunch every day, you may want to cut  back to eating lunch at a restaurant only once or twice a week so that you can free up that money for savings or other important items after your bankruptcy discharge.

Allocate Your Money Properly After Bankruptcy

You should not spend more than one-third of your income on housing expenses such as rent and utilities. And you should be saving at least 10 percent of your income in an emergency fund and/or retirement account. One of the reasons so many debtors need bankruptcy is that they were not prepared for the inevitable setbacks that life sends our way and they relied on credit when emergencies hit.