Once you’ve made the decision to move forward with a bankruptcy filing, your next step should be planning for the future. If your bankruptcy was the result of a medical emergency or some other unexpected disaster, that’s one thing – but if your debt arose from misguided money handling, you need to change your way of doing things. You don’t want to mess up that clean slate with the spending habits that led to your financial trouble. The first thing you need to do is build a budget – and stick to it.

If this is the first time you’ve ever thought about having a budget, take heart. It is not a hard thing to do. Here are some simple steps to guide you through the process:

• Identify fixed expenses, variable expenses and irregular expenses. You do this by looking at what you pay out each month and entering each expense into a column headed with one of these three categories. Fixed expenses are things like your mortgage or rent, your car payment, subscriptions and other expenses that are the same each month. Variable expenses are things that change each month, like the amount you spend on food or clothes. And irregular expenses are things that you only spend on occasionally, like insurance payments that only get charged a couple of times each year, or the cost of doctors’ appointments or buying gifts for friends and family.
• Figure out how much you’d like to save each month. You need to start saving money, so don’t ignore this step. Ten percent of your net income is a good starting point.
• Now compare your income with what you’re spending. Do they match? If not then you need to cut your spending. Review your fixed expenses to see how much you can get rid of or reduce. If you are paying for subscriptions, do you need all of them? Can you lower your cable bill by cutting out channels you don’t really need? Are you using your gym membership enough to make the expense worthwhile? Now do the same with your variable expenses. Are you going out drinking with friends twice a week? What if you just went out once, or once every other week. Are you buying coffee at a coffee shop instead of making it at home? Do the same with your irregular expenses. Have you been overly generous with your gift-giving? See if you can cut out enough to be equal to the amount that you’ve set aside for savings. More than that figure would be better.

Once you’ve brought your income and your spending and savings into alignment, write down the amount that you are allowed to spend each month, how much you want to save, and make a plan to stick to it. If you need help with filing for bankruptcy, we can help. Contact us today to set up a time to discuss your situation.