The economy appears to be on the mend across the country. In northern Illinois bankruptcy filings dropped 3.2% from 2012 to 2013. This improvement has given consumers more confidence to start spending again, which is good for the economy. However, when people get comfortable they begin to fall into old habits that may not be good for long term financial health. For those that have successfully filed for bankruptcy in the past it is important to avoid severe financial hardship in the future.
Live on Less – When you become comfortable financially you tend to spend more freely. An excellent solution to this is to take a portion of every paycheck and put it in a savings account. You may even want to open an account at a different bank to make it more inconvenient to access the money. By diverting a portion of your income you are building up a reserve fund and maintaining a lifestyle on less.
Cut Up Your Plastic – As you become a confident spender you risk falling back into debt. Although bankruptcy filings were down in 2013, credit card spending was up. High credit limits make it easy to spend beyond your means and if you don’t have the cash to pay the bill at the end of the month you start a cycle of debt and over spending. It does not take long to build credit card debt but it can take a very long time to get rid of it.
Share Expenses – Your housing and car are probably your most costly expenses. If you have the ability to take in a roommate you may be able to decrease your housing payment substantially. Additionally, if you can find a friend to carpool with, and you share gas expenses ,this will also save money. The more you can decrease your expenses the easier it will be to avoid severe financial hardship.
Make Extra Money – If you don’t want to compromise your lifestyle you should look for ways to make extra money. If your job gives you nights and weekends off, look into getting an additional job. If reducing spending is proving difficult try increasing your income to make up the difference!
The improvements in the current economy are reassuring. However overspending can quickly lead to severe financial hardship. The ultimate goal should be to live below your means and build a cushion that can help you survive in the event of unexpected medical bills or job loss.
When you are facing bankruptcy in Chicago it’s important to think of ways to change your spending habits to recover from financial hardship and move forward.
If you are wondering if bankruptcy may be right for you, contact Suburban Legal Group today and schedule a Free Bankruptcy Consultation. This no obligation consultation can help you put your financial future into perspective.
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Did You Know?
- Unemployment hit 9.9% at the end of 2009 and it's been trending down ever since.
The most common bankruptcy causes:
Poor financial decisions
Divorce or separation
55,094 people in northern Illinois filed bankruptcy in 2013, compared to 56,954 in 2012
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The article above appeared in the Suburban Legal Group "Debt, Mortgage, Bankruptcy, Foreclosure Newsletter". Issue – 36 | April 2014