You don’t know what you’re missing until it’s gone. That’s what happens when you eat chocolate a bit too fast for your own good, ran out of toilet paper while in the bathroom or when you’re printing something and you forgot to refill the ink cartridge. When you find yourself struggling to find the money to eat, pay bills or just simply live, that’s when you know you’ve spent money more than you should.
Finding yourself in debt is easy; getting out of it is tougher. You might’ve considered looking for a lawyer to help you file Chapter 7 bankruptcy. You’ve reached out to friends, colleagues, parents, extended family and asked them to spare some cash. But once the dust settles and you’re out of debt, have you asked yourself: Is there a life after debt?
Recovering after a debt settlement takes a long time. Here are a few ways you can bounce back after such a financial ordeal.
Know the Root Cause of Your Burden
Before you need to do anything, it’s important to take a very introspective look at your finances. What happened? What caused your loss of money? If it’s just a financial setback, then make sure that you’ve resolved everything there is to resolve. If it’s a mistake of your own doing, such as poor money and impulsive shopping habits, then be sure that you won’t fall in the same pitfall ever again.
Create a Detailed Budget Plan
Knowing where you’re going with your money will help you navigate through life while spending money wisely. Create yourself a detailed budget plan, complete with your total daily expenses, how much you can save up a day, the bills you need to pay for the month and how many went to the party. You can also ask a credit counselor to help you with your budgeting plan.
Build an Emergency Fund
Having an emergency fund lets you save up and pay for whatever financial need that would sneak up on you. Just spare a few bucks a day for your fund and let it only be accessible when you need money. That way, you won’t be able to take out the money unless it’s for the dire and the unexpected.
Start Immediately to Rebuild Your Credit Score
Having a good credit score opens a lot of doors and opportunities for you. To rebuild your credit score, you need to take out credit—which sounds counterintuitive considering you got here because you’re almost or you’re already bankrupt. Some banks provide credit-builder loans that help you get yourself up after a poor credit rating. You can also mooch off some points from being cosigned or become an authorized user of a credit card of a good friend or a family member. Their good spending habits, as long as you don’t do anything to jeopardize them, will boost up your score bit by bit.
Don’t Get Cocky
Once you fully recovered from your fumble, don’t get too confident just yet. When it comes to finances, you always need to be on the lookout whether you’re in the green or in the red. If the banks see that you’re paying off your card properly, they’ll increase your credit limit. The higher the credit limit, the harder the temptation. If you slide back into your old habits, you lose everything you worked hard for.
Managing your finances is a balancing act. Bouncing back from a bad credit, a financial disaster or bankruptcy requires you to work twice as hard just to get back to a healthy financial state. In the end, the second chance is worth the effort.