Climbing Back from Bankruptcy

Right now, rebuilding may be the furthest thing from your mind. But, even though bankruptcy might not be anyone's first choice of things to happen to them, it offers a second chance for you to begin again-making better choices and smarter use of your dollars.

Start again without credit cards. For many people, it's mishandling credit that got them into trouble in the first place. So, be slow to return to plastic. Instead, buy with cash until you have a good feel for how much money you really have every month, and just how much you can buy with that amount of income. Basically, learn to live within your means.

Consider making a budget. When you can see it right in front of you in black-and-white where your money has to go each month, to the groceries, gas for the car, or other bills, it's a lot harder to blow the wad. Budgets are great reality checks on unconscious spending binges.

Watch what you buy, and when you buy it. Without credit, you might not be able to act on your urges the way you used to, but eventually you'll likely have credit back in your life. Now might be the time to observe when temptation hits you, and what you can do to resist those terrific buys that got you into trouble last time round. Do you go mad not being able to buy something if you spend a few hours in the mall? Maybe you'd be better off choosing the ballpark on Saturday afternoon. Learn to change the habits that lead to uncontrolled spending.

Make a pact. Agree with someone-your spouse or partner or best friend-that each of you has veto power over the other's purchases. So if you do spin momentarily out of control, that person can send you straight back to the store with your buying spree. Or take it back for you, if necessary.

Are you a sneak-it-in buyer? Buying purchases and then hiding them until they can be safely slipped into the household? That habit can be quickly nipped in the bud by tracking your spending with the whole family each week. If you're keeping a budget, and only using cash, it's much harder to hide that DVD habit you've got going.

Recovering from a bankruptcy is hard work, but not impossible. With a few budget guidelines, you can come back to a bright-and solvent-financial future.

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