Bankruptcy – General Post-Bankruptcy Financial Management Comments
Bankruptcy – General Post-Bankruptcy Financial Advice
BANKRUPTCY – GENERAL POST-BANKRUPTCY ADVICE:
You have just come through a difficult financial period. Loss of job, poor health, divorce, bad spending habits and other factors left you with impossible to repay debts. You filed a bankruptcy case to get some relief from these problems. Hopefully, it has helped. But bankruptcy relief is only for things in the past. Bankruptcy levels the playing field and gives you a clean or cleaner start to a better financial future. But the future is up to you.
As part of your bankruptcy case, you took a course on financial management. Several of my clients have told me it contained some good ideas and helped them better manage their monthly bills. Perhaps you also picked up some useful tips in that course. Here are some things that I think are essential to establishing and maintaining a healthy financial life and future. They are as follows:
1. Establish A Budget: You cannot manage or control what you cannot see. You set up simple household budget in your bankruptcy case when Schedule I (Income) and Schedule J (Expenses) were completed, and it can be used as a starting point for your new budget. Your budget should include:
a. Itemize what you spend each month on each type of expense. Have a separate line or item to break out the details of your spending (Example: Utilities: Electricity, Gas, Water & Sewer, Trash Service, Home Alarm, etc.).
b. Some expenses should be itemized weekly : Some budget items are purchased weekly or bi-weekly. (Example: Food: Week 1 – $100.00; Week 2 – $125.00; Week 3 – $90.00; Week 4 – $100.00). Your budget should reflect this spending pattern so that you understand how much you will need to spend at the end of a period. And remember that some months have 5 weeks in them, and that you may spend more on Thanksgiving and Christmas dinners than you do for a whole weeks-worth of groceries.
c. Do a monthly budget for the current month and for the next 6 or even 12 months. Expenses do not always come at the same time of each month. Your trash bill may be once every three months. The car tag and tax is once a year. Car insurance may be a big payment this month and then 2 or 3 smaller payments the following months. Your heating bill is much higher in the winter. A budget for several months will help you understand what you must pay, when you must pay it and how you will pay it.
d. Budget your income on a monthly basis too. As with expenses, income is not always regular. If you are paid every two weeks, then the days you are paid vary each month. It is almost as important to know when you will be paid as it is to know how much you will be paid.
2. Compare Your Budget To Your Actual Income and Expenses: Establishing a budget tells you what you think you will have to spend. Compare your actual income and expenses to what you budgeted each month. You can then see what happened in your real financial world. “I budgeted $150.00 for electricity but the bill was $175.00”. Now you know that you must do something to keep to your budget (examples: turn of lights when not in the room; turn up the temperature on the air conditioner; cancel premium cable TV channels; etc.).
3. Keep A Checkbook Register: In this modern computer, wireless internet and information age, fewer and fewer people keep a checkbook register. I see it all the time. People check online to see what the balance is in their checking account, and that determines what they spend. If there is money there, they will spend it. A check register is like a mini budget. You look at it and it tells you not just what your balance is but what your history of spending is. “Today is the 20th. I paid my electricity bill on the 25th of last month. It was $175.00. If I spend $100 on shoes, I will not have enough money left to pay my electric bill and buy groceries until the next payday.” If you do not keep a budget, then you MUST keep a checkbook register.
4. Watch Spending On Small Item Purchases: You will be amazed at how much money you spend on purchasing small items. Coffee every day at Starbucks. Candy bars at a convenience store. Soft drink with your meal at McD’s. Any of those little items that are near a cash register in a store. I stopped buying anything at a convenience store other than gas (no coffee, no candy, no sweet rolls, etc.). In a month, I saved over $60.00.
5. Don’t Spend on Things You Do Not Need Or Will Not Use: Look arround your house. How many things are there that you NEVER use or used only a few times. Or worse, you have 2 or 3 of widgets and never use any of them. Simply put, think before you buy. Turn off the home shopping show. Stop and look at your shopping basket before you get to the checkout register, and take back to the shelf anything you just picked-up or just don’t really need.
6. Never Buy Anything Based On The Amount Of The Monthly Payment: If the car dealer, realtor or salesman wants to talk about amount of the monthly payment but hurries over the price, interest rate and number of payments, then you can be sure that you are about to be on the deceived and on the short end of the stick. Anytime a salesman tells you “We can get you into this new car for $300.00 per month”, then he has really told you nothing. Get the details. Figure out how much IN TOTAL you will pay for your purchase. $300 per month for 36 months is $10,800.00, but $300 per month for 60 months is $18,000.00. If you cannot figure it out yourself, then ask someone not involved in the transaction to help.
7. Never Buy Something That Has A Useful Life Shorter Than The Length Of The Payment Plan: Cars and electronic equipment are the prime culprits in this area. A new computer or game player will be functionally obsolete in 2 or 3 years, but the dealer offers you a payment plan for 4 or even 5 years. Car is financed for 6 or 7 years with a dealer warranty of 100,000 miles. You put 30,000 miles a year on a car and you know you will need new tires, a battery and repairs for years after the warranty expires but before the car is paid for. That is not the right car or deal for you.
8. Never Pay Late Charges: Late charges are money for nothing. Watch your bills, your budget and your check register. Make sure to pay those utility and other bills on time if at all possible.
9. Never Buy Anything That Is Only At This Price Today: The price will be the same or even less tomorrow, a few days from now or a month from now. If the sales price is only good for today or “until you leave”, then something is wrong with the product, or there is a better and cheaper product in the store next door, or the salesman knows you do not need the product, or someone is lying. Call their bluff. Wait a week or two and, if you still want the product, go back and offer them the old sales price.
Contacting the Right Attorney: Bankruptcy can be a complicated matter. The responses to these Frequently Asked Questions are general in nature, and are not intended to provide legal advice for specific cases. A consultation with a Georgia bankruptcy attorney can provide you with the information you need to determine which option best addresses your circumstances. As a solo practitioner, I am able to give more time and personalized attention to my clients. I will personally communicate with creditors or banks to resolve your issues. Your case will never be handed down to a legal assistant or other staff member.
NOTICE: The services or benefits offered are bankruptcy relief under the provisions of the U.S. Bankruptcy Code. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.