It’s easy to do. You don’t intend to mess up your fresh financial start after being discharged from bankruptcy, but there are some people who apparently didn’t learn their lesson. If you don’t change your ways, you’re heading for another bankruptcy – or at a minimum, more bad (and new) credit on your credit reports. You could get evicted or lose your house, have your car repossessed or have your utilities cut off.
If you haven’t made financial literacy a priority after your discharge from bankruptcy – assuming that was a contributing factor to you becoming bankrupt – it’s time to start making it a priority. Seeing as most, if not all of your bills and financial obligations were discharged in your bankruptcy – it should be easier than before, since you have less debt to pay off and only your current bills.
Are You Under-Earning? Are Your Housing Costs High?
You may have heard that housing costs should consume no more than 35% of your income. So if you are paying rent (or were lucky enough to get a mortgage) that is $900 a month, and you bring in $1800 a month (or less) – you’re heading for trouble. That’s 50% of your income on housing. I’ve heard of people spending 65% of their take home pay on housing. Maybe this is because they are under-earners or in a low income bracket. It may be possible to keep it up for a few months, but sooner or later, it will catch up with you. You may have to short change some of your other bills, or just make minimum payments, which is never a good thing.
How to Bring Your Housing Costs Down
If you’re in this situation, you either need to move to a cheaper place (easier if you’re renting) or earn more money. See if you can get more hours at work or take on an extra part time job. If you’re self-employed, see if you can take on more profitable projects, raise rates if possible, take on more clients, or take a part time job. I know that’s hard to do if you’re a die hard entrepreneur.
Falling Into the Coffee Shop & Restaurant Trap
Do you eat out at restaurants or buy coffee on the go? Once or twice a month for a treat is OK, but if you stop at Tim Horton’s once or twice a day for coffee, and possibly more, you’ll be surprised how fast those purchases add up. And if you find yourself in a rush and don’t have time to pack a lunch to take to work, you probably spend at close $10 on a fast food lunch – even more if you go to a fancier restaurant with waiters and waitresses. Easy $15 with tax and tip, at a minimum. And then on the way home, after a long day at work, isn’t it just easier to go to the drive through and spend $20 to $30 on supper for your family? Or about the same to order in some pizza?
That food is expensive, and probably not nearly as nutritious as you could make at home. Trust me. Once I started writing down my purchases, or even just looking at my bank statement for debit card purchases, I realized there were quite a few days where I’d spend $10 or $20, sometimes even $30 on food. And I had perfectly good food at home! It just needed to be prepared.
During the really lean times, when I had to skip grocery shopping for a week and didn’t have any money for restaurants, it was amazing how many tasty and satisfying meals I was able to prepare at home. Just check your fridge, freezer and cupboards.
Your Chance to Make a Fresh Financial Start After Bankruptcy?
Looking back at this, it’s no wonder I was often short of money in the days before I filed bankruptcy. Between rent, eating out and car expenses, I often had no money left to pay the bills. I had to really try hard not to let this happen again. Don’t let it happen to you either. Life after bankruptcy is your chance to make a fresh financial start and establish new and improved ways of managing your money. If you need help and wish that you could be on one of those debt makeover reality TV shows, just buy Gail Vaz Oxlade’s book “Debt Free Forever.” I reviewed it last year. You may know her as the host of the popular Canadian reality TV show “Till Debt Do Us Part.” Although not originally intended for ex-bankrupt Canadians, much of what she writes about can definitely be useful to anyone – bankrupt or not!
Whatever you do, don’t let yourself go back to your old ways. If you catch yourself doing it, make sure you take care of it right away, before it becomes a big problem.