The theme of making resolutions for the New Year is hard to ignore when it comes to dishing bankruptcy advice and related financial insight. It seems that every year, our resolutions become more important. Most likely, that's because we feel more mature in age, but not in our financial outlook. Given the way 2009 went for most folks or for those who filed bankruptcy, that's an easy-to-understand feeling.
So what are you going to do differently this year? Here are some ideas from a recent article in The Wall Street Journal, written by Dave Kansas, as reprinted in the Raleigh News & Observer.
Establish a concrete savings plan
It doesn't matter how little, but resolve to put some money away with every paycheck. The recession has taught a lot of Americans how important savings can be, especially in the face of unemployment. The feel-good stories about "getting back to basics" and keeping money under the mattress are -- for most of us -- just that: stories. But it's much easier than you think to make such a strategy a reality. Whatever the amount---$10, $25 or even $50---the point is to make it a habit, especially if a recent Chapter 7 bankruptcy has given you a fresh start. You may not realize it, but time is an investor's best strategy. In a few years, you'll soon realize that interest can actually work for you, not just against you. Put it away and keep it away.
Build an emergency fund
This concept is closely related to your savings plan, but the intent is different. This money, once established, should be considered more liquid. That is, it may not be in place for the long term. Determine how much money you would need, when conserving, for three to five months of bills, groceries and rent or mortgage. Consider this fund a form of insurance against the same type of life emergencies that may have led to your bankruptcy. You can use your savings plan to help build it and once at a comfortable level, leave it alone and use the excess for your savings plan.
Change credit cards, preferably to one that requires full payment each month
Although you may have already done so, consider this a reminder to shred any credit card account that does not offer the absolute best terms available. Be stingy. If you have to resort solely to a debit card, do it. After all, they are accepted anywhere traditional credit cards are taken but they limit the amount you can spend. Also, look into cards that require that the balance be paid in full every month. The comfort in knowing you do not carry any debt is very beneficial and you'll feel a terrific sense of accomplishment.
Wait? What happened to staycations and storing money under the mattress?
Look, being conservative with your money is always a great idea---but remember why we have money. To do stuff and to enjoy life! It's okay to reward yourself within reason and in fact, personal entertainment should be a line item in your monthly budget. You need to live. Plus, keeping yourself bottled up under the confines of an over-zealous savings strategy will only lead to more frustration and an inability to ever spend without regret. Your savings plan should include things like the occasional weekend trip, nights out or tickets to the big game. Don't beat yourself up about every purchase, especially if you have worked hard for it. Spend some of your hard-earned money as a reward for saving alot of it.
Take every advantage your fresh start in bankruptcy has given you. 2010 is a new year, the year you'll begin to bounce back from bankruptcy. Make 2010 a ten out of ten.