There is no shame in bankruptcy. That is a point we have tried to emphasis throughout this site. Things happen, and you sometimes need help to get through it. While it is better to file for bankruptcy rather than let debts that you can’t afford to repay pile up, it is even better to not place yourself in that position in the first place. In light of that, we plan to highlight some of the most common financial mistakes that people make that cause them to seek advice from a bankruptcy lawyer Port St Lucie.
Not Saving for a Rainy Day
It seems like ever since the turn of the century, the US economy has been struggling in one form or another. From the dot-com bubble bursting at the turn of the century to the real estate crash to recession, the 21st century has been fraught with hardship. Some of us lost cars, homes, retirement funds, and college funds in the turmoil and are still struggling to rebuild. Others, however, appear to have ridden through the storm without a scratch, and not all of those people are individuals we would describe as particularly wealthy.
One of the secrets to surviving hard times is savings. Savings are critical to surviving the bad times, and most financial experts recommend you have enough stored away to live for three months. Not only do the savings allow you to fix those expensive emergencies that crop up, but also serve as a buffer in the event of sudden job loss. You might be thinking that you are living paycheck to paycheck as it is and have no room to save, and while such cases do exist, more often we find that the difficulty making ends meet comes down to…
Not Budgeting Properly
You probably have an idea in your head what your monthly payments are for things like cable, internet, mortgage, car payments, Netflix, and more. All of these expenses should be factored into your budget, but what about the little things? The daily Starbucks runs or the fast-food lunch breaks. These seemingly minor expenditures can easily add up. Even $5 per day in miscellaneous spending can add up to $100 per month.
When planning a budget, factor in these miscellaneous expenses in addition to the monthly payments and the big expenses. Even if it is only a $10/month expense, add it to your budget. When time comes to tighten the belt, you will often find expenditures that you can do without to free up the few extra dollars you need to make ends meet.
Relying on Credit Cards
We are not saying you have to outright destroy your credit cards, but you should not rely on them too heavily. If you find yourself having to use credit cards to make ends meet every month, you are spending more than you are earning, which is one of the biggest mistakes you can make in personal finance. Sometimes you do need those credit cards, and that’s fine, but just remember that a credit card is essentially a loan. That means that whatever you buy on credit is automatically more expensive (due to interest) than something you pay cash for.
Do not depend on credit cards, and if you do use them, repay the balance as quickly as you are financially able. Making only minimum payments simply compounds the debt, causing you to pay as much as double what you thought you had paid for an item.
These are just a few of the tips to help you avoid financial ruin. However, even if you follow this advice and the advice of other financial experts religiously, mistakes happen. If you find yourself simply unable to make ends meet regardless of what you do, and the debt on your shoulders is becoming unmanageable, that is when you need a qualified bankruptcy lawyer Port St Lucie to lend you a hand. While avoiding bankruptcy is ideal, letting your debt get out of hand and refusing to file is worse.
