Simple Ways to Avoid Filing Bankruptcy

My grandparents used to tell me to save ten percent of what I earn for a rainy day. This is such a simple concept that makes life so much easier if you follow it. Spending everything you earn leaves you with no way to cope with unexpected expenses like medical bills, car repairs or insurance deductibles after a car accident, funeral costs when a family member dies, and traffic tickets. If you don’t have savings to pay for these types of expenses you may be forced to use a credit card. Since you didn’t have the money to pay cash for the expense you probably don’t have money to pay off the credit card when the payment comes due, which means a monthly payment for the credit card has to be added to your budget making you less able to cope with the next unexpected expense.

Saving ten percent of your income means that you have to reduce your expenses to make the money available to save each month. When I meet with clients and review their budget they often tell me that they don’t have any way they can reduce their expenses. After about five minutes of reviewing the documents I can usually find $500 or more in unnecessary monthly expenses that can be removed from the budget, giving them the ability to save. When reviewing your budget consider the following items. Look at how much you spend on electricity each month. One way to reduce your electricity bill is to turn the temperature up if you are using your air conditioner and use fans instead. Ceiling fans are much more efficient than central air. Consider how much you spend each month on your cable or satellite television bill. Do you really need all of those channels? It is very likely that you watch a small fraction of the television channels you are paying for. Eating out is a big expense for a lot of people. If a family of four eats out for dinner twice a week, they may be able to save hundreds of dollars a month by eating at home instead of going out one of those times each week. Simple changes like these can allow you to save ten percent of your income each month and prevent a downward spiral into bankruptcy if an unexpected expense arises.