Nine (9) Tips to Avoid Personal Bankruptcy

Nine (9) Tips to Avoid Personal Bankruptcy.

Bankruptcy is a situation that arises when an individual, groups or corporate bodies cannot meet its debt obligations. Personal bankruptcy therefore, arises when an individual cannot meet his financial obligations as they mature. The purpose of this article is to help individual see what is needed to be done to avoid this chapter that is better left unread. It is not intended at providing legal counsel or recommendations. If you are interest in a financially secured life for yourself and your family, then it is strongly recommended that you pay undivided attention to the following.

Educate your children.

Parents must help their children to appreciate the fact that life is not always a bird of rose. Help your children to cultivate good financial habit. Help them to see the benefits that can result from taking up menial jobs. The benefits are manifold. They will come to realize how difficult it could be to earn a leaving in today’s world. They will be able to cut down on their spending; this will also reduce the burden on you. This will help them to share your feelings about earning a leaving, thus, their thinking is adjusted, and then they may become more financially responsible

Establish and maintain good saving habit

The first and most important step in this direction is to have a savings account and saves consistently in it. The amount to be saved at the end of each period or month must be determined well in advance. This will help you to follow an establish standard and, when there is a variation it would be noted quickly. Therefore, do not allow your saving to be dictated by emotion or spurs-of-the-moment.

Establish a budget.

A budget is a writing document detailing your expected revenues and expenditures over a period of time, usually monthly. The budget must not be abstract or imagine. It must be clearly spelt out and written down. You must take note that there is little or nothing you can do to influence you earnings. That been the case, you must maintain a strict budget. A good budget enables you to look into the future and adjust your spending so as to meet obligations as they mature.

Save in case of emergency.

Emergency funds afford you the opportunity of caring for contingency without interrupting your budget very much. In today’s world emergencies including natural disasters can arise so suddenly. There should be provision for an emergency fund, so that you don’t result to overdrafts. An emergency fund of up to one thousand and two hundred (1200) U.S dollar or more may help in achieving a relatively stable financing. This needs no be built in a day. Therefore start today and remain consistent. In time you might come to have an acceptable emergency fund, able to carter for medium size emergency. Thus allowing your budget to carter for expected obligations.

Learn to do without

People who leave in land of limited resources have learnt to do without a lot of life’s necessities, not by choice, but compulsorily. If in Africa, Asia and Latin America, many of our brothers can endure lack of basic necessities of life, we who leave in affluent lands should also learn to do without some luxurious items that can plunge us to debt and ruined financial life. We can set aside fund to support charitable organizations and our brothers in poverty stricken lands. It would not be ideal to eat ourselves to death while our African and Asian brothers are starving to death.

Regular maintenance

Can you learn to change a flat tyre, remove and service a spark plug, gauge your engine oil, brake oil, and engine’s radiator water? All these you can be done at no extra cost, but it cost substantial amount to engage the service of an expert no matter how small the problem might seem to be. Checking your engine oil and engine’s radiator water regularly helps your car to perform optimally. This has a multiplier effect. Household items also needs regular maintenances.

Avoid unnecessary expenses.

Check your budget once more. What do you find? Can you cut do on gas usage? Can you move into smaller apartment? It is worth the while if you can move into area you pay lower rent. Can you make do with smaller car? Has your children leave home? If yes, is it possible to review your budget? These questions and related ones must be given due consideration if you do not want to open the unwanted page.

Get rid of unused household items

Household items not currently in use can be sold or given out as an outright gift. Selling off unused household items may result in more cash in hand. Even if is giving out as gift it will spare you the cost of maintenances from time to time. In time you may discover that a smaller apartment is sufficient for you. How can you determine which items are not needed? Well, when was the last time you use the other refrigerator? Do you have a set of electronics you not touch since you bought them? Are there some pieces of clothing you have not touch since you bought them? Do you have a car you consider old model? These and others like that may constitute unwanted possessions. Then, it is financially prudent that you get rid of them as soon as possible.

Do not overdrawn your account

“More than a third of adults with bank account are relying on their overdrafts to keep them afloat”, says The Daily Telegraph of London. Why? An overdraft, instead of being viewed, as an emergency credit, has become an “absolute necessity” for the 3.5 million Britons who are permanently overdrawn. According to Keith Tondeur, chief executive of charity credit action, this is the result of “instant gratification culture that engulfs our society”. He therefore warns: “millions of us are permanently leaving beyond our means and the lack of even basic money education means most of us haven’t the faintest idea of how much this is costing us”. It is most disturbing to note that most overdrafts are used for things that can be considered frivolous. Those who regularly overdrawn their account experience unacceptably low-credit rating. This would be an invitation to bankruptcy.