People end up filing for bankruptcy for many reasons, but one of these reasons is due to a lack of knowledge in money management. Irresponsible decisions and actions can cause you to have serious financial problems, and you might decide to file for bankruptcy to get out of this mess. The only problem is that if you do not make the right changes, you may end up in the same mess later on in the future. Here are three things you will need to learn after filing for bankruptcy, and these things will help prevent you from ending up in the same financial situation again.
Set New Goals, Objectives, and Strategies
According to Bankruptcy Canada, about 10% of people that file for bankruptcy have already filed for bankruptcy at least once in the past. If you do not do something different with the way you handle your finances, you may end up as one of the 10%. In order to avoid falling into the same trap, you must consciously make the decision to change, and this can involve setting up goals and strategies to follow.
You may need to talk to your bankruptcy trustee about this, or you may want to talk to a professional financial counselor, but you must begin living in ways that are different than what you are used to.
Take your Credit Counselling Classes Seriously
One of the ways you can learn how to do this is through the credit counselling courses you must take. When you file for bankruptcy, you will be required to take of these classes. You can take these in a classroom or online, and the goal is to educate you about money management.
Some of the things you will learn include:
- How to set up a budget
- How to cut your spending
- Ways to save money
- Tips for living within your means
These courses will teach you a variety of different things, and this information is very valuable if you can learn to apply it.
Apply What you Learn
Learning to apply the techniques and strategies you learn is often the hard part, but if you set your mind to it, you can accomplish it. Here are some tips that you can incorporate into your new lifestyle that will help you stay debt-free:
Build your Credit
Filing for bankruptcy will leave an R-9 rating on your credit report, and this rating will stay for at least six years. Even though it stays that long, there are ways to improve your credit score during this time. One way is to avoid racking up any debt. Another way is to take a loan or get a credit card to use simply to build up a payment history.
By building up your credit, your score will improve faster. This will help you have the ability to get good interest rates on loans in the future.
Pay with Cash
Living within your means is a process that involves spending less money than what you earn, and the best way to do this is by paying cash for the things you buy. If you end up getting a credit card, you can use it, but always make sure you pay the full balance off when you receive the statement.
By paying cash for things, you will not rack up debt, and it may actually help you cut your spending habits.
If you still have your house and car after filing for bankruptcy, you may want to consider downsizing. You could sell your house and buy a smaller one. This could reduce your monthly expenses, and it could help you stay out of debt. You could also sell your car and buy a used one that is cheaper. Anything you can do to cut back on your spending will make a difference.