Declaring bankruptcy is a difficult decision to make. It does give you a clean slate of sorts, but you also need to move forward with a new resolve to change, or it will happen again. If you are trying to rebuild your life after a Chapter 7 or Chapter 13 bankruptcy, read our tips and trips below.
Learn to Budget
If you do not know how to effectively budget your money, go to a financial adviser to help you make a plan for your money. Learn to manage your cash flow and spend less than you earn. Make a budget and be vigilant in keeping it. Stop trying to keep up with the Joneses, and worry about yourself. Pay all of your bills in a timely manner and prioritize your spending.
Stop Buying Things That You Do Not Need
Live a “no-frills” lifestyle for a time after your bankruptcy. Make a shopping list every time you go to the store, and stick to it. Don’t buy treats and other things that you don’t need. Stop buying clothes, shoes, fancy cars, etc. Live the basics and take care of yourself and your finances. If you need to, make a penny jar for activities. Save your coins and after you fill the jar, use that money to splurge a little.
Rebuild Your Credit
Find a credit card, preferably a secured credit card, to help you rebuild your credit. Secured credit cards require you to deposit a certain amount into a bank account, and that amount is your credit limit. Try to avoid high fees, and make sure that you pay off your card every month. Remember not to spend any more than you can actually pay off. You will have higher interest rates than you did before, but if you pay off your card every month, you won’t have to pay the extra on interest.
Use Cash
Every month or every paycheck, take out the amount of cash that you will need to pay your bills and to grocery shop. Once the cash is gone, you cannot spend more. There is something about paying in cash that actually stops you from spending more — you physically see the consequences of your actions.
Be Patient
Recovering after bankruptcy takes time. Don’t get too frustrated with yourself if you are not back on your feet in a few months. It takes time to repair the damage of bankruptcy. It stays on your credit for up to ten years, and it’s ok to take time putting your life back together.