While bankruptcy can provide you a haven from financial insecurity, it will not automatically change for you the habits that may have led to your decision to file.
It's important for you to understand that you are not the only person who has ever overspent. Money was good, credit was easy and why shouldn't you live the lifestyle you deserve? Well, no one is telling you that you can't. However, it is important that you gain that lifestyle using reasonable financial judgment and the discipline to spend within your means. To do that, especially after bankruptcy, taking time to assess your spending habits is a critical exercise. You never know, a simple look at the numbers may reveal some recurring trends of which you were not aware that could lead right back down the spiral.
First and foremost, accept the fact that a in-depth look at your spending practices will reveal that you are probably wasting money unintentionally. And again, everyone is. Even those who you may believe are "rich" are wasting money. So, when perusing the monthly expenditures, keep an eye out for the little things. For example, the amounts spent on a lunch out here and there, the extravagant coffee, trendy soft drinks, packaged snacks or check-out aisle impulse buys. (Did you really need extra batteries just to put in the kitchen drawer?)
What about the extra channel cable package that you agreed to a few months back? At the time, the incentives were great. More channels! Less money! Well, the three-month promotion is long over and the only thing you are watching are dollars fly out of your checking account. Not exactly "appointment television", huh?
How many other promotional time periods have expired you may have forgotten about? Try looking at your credit cards. Credit card issuers make their profits on surprise interest rate adjustments. Even if you think you are still paying 6%, the odds are pretty good that some random expenditure or momentary spending milestone has triggered a double-digit spike in your interest rate or added a monthly fee. Be wary.
In this exercise, mindset is everything. Remember that wealth is relative. A salary of $100,000 per year is outstanding for some and paltry for others. The idea is to create a lifestyle around what you earn. And yes, there are a lot of societal pressures to have more, to buy this, to be seen in that. Take time to consider the real importance of material things. Seriously think about the value or benefit you get from buying a new car for $25,000, financed for seven years, versus the benefits of a buying a solid used car for $8,000 that you saved for or could pay off in under a year?
Think of buying cars as an investment. The point of investing in something is to receive a return on your asset. Well, cars are depreciating assets. And there is nothing worse than debt on a depreciating asset. In other words, you lose money on a new car. From that perspective, buying a reasonably priced, dependable used car for less money makes you a smarter investor.
Like your over-priced car, seek other things around the house that you could sell or replace to not only relieve debt but to alleviate your lifestyle from the need for "stuff." While it sounds a little bohemian, learn to be happy with less. And a good, in-depth analysis of where your monthly dollars are heading is the best start.
From the Law Offices of John T. Orcutt. Call today for your free initial consultation. +1-919-646-2654.
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