Making a Budget After Bankruptcy

Filing bankruptcy is often an effective way to discharge unmanageable debt, but it is only the first step in an overall plan to take control of your finances.  Without a good post-bankruptcy budget, you can easily fall into the same financial traps that caused your problems in the first place.  Bankruptcy is a good time to take stock of your financial habits and determine better ways to manage your money.  With the fresh start you receive from a bankruptcy discharge, you can truly change your spending habits and avoid financial problems in the future.

Making a Budget—The First Step

Many people avoid making a budget because they feel it will be restrictive.  In fact, the opposite is true.  Good budgeting frees you to enjoy life without worrying that you will not have the money to pay your bills, because everything is accounted for each month and you know exactly where your money is going. Making a budget is not difficult.  Simply calculate the money you take in each month from all sources, then list your expenses.  The difference between these two is your disposable income. Expenses should be categorized two ways:  fixed and variable expenses.  Fixed expenses are items that do not change, such as rent, insurance payments and car payments.  Variable expenses change from month to month, such as the amount of your electric bill.  A good way to estimate variable expenses is to review the past 12 months, add those amounts together and divide by 12.  This will help you account for variations due to seasons or other factors.

Making Good Financial Decisions

Once you have your budget, you can decide how much disposable income you can devote to other items.  You should definitely have a savings account; even if you can only put a few dollars a month away, it adds up and helps you pay for unexpected expenses.  You should also budget some money each month for entertainment or travel to avoid splurges.  You are much more likely to spend wisely if you plan your spending. Ultimately, you will make better financial decisions by planning your purchases, including items like clothing and personal items.  Planning helps you take control of your spending rather than letting it control you. If you need help filing for bankruptcy, talk to the attorneys at the Oswalt Law Group in Phoenix today.  We can help you determine the best way to handle your debt.