If your financial life has taken a blow recently and you think that bankruptcy is the only option available, think again. Thousands of people have become victims of bankruptcy after the recent global meltdown, however that should not give you any reason not to fight back your shabby financial condition. You can avoid bankruptcy by just following some simple steps, read on to know how you can go about it.
1) Live within your budget: The formula for this simple; if you can’t afford something with what is there in your wallet you better do not buy it at all. Living within your affordability will help you to avoid debt. Focus on your needs rather than wants and purchase only what you really require. Then you will surely be surprised at the amount you save up.
2) Understand the difference between an asset and a liability: This is very important to help you make informed financial decisions. For example, many people take a car to be an asset when in reality it is a liability. The car will begin to lose its worth from the moment you start using it.
3) Money backed by collateral: If you are borrowing money that is backed by collateral, be sure that you have a long term and a short term strategy in place to clear your debt repayments. If you are not careful here, you can end up incurring a huge debt.
4) Save up enough cash to cover your basic needs: Yes, build up an emergency fund. A fund like this can bail you out of a major financial crisis. You do not want to borrow money from somebody when you are already in need of it badly, in such situations an emergency fund can be the best solution.
5) How about working more? : If you really want to save more money, you can find a second or a third job. If you are married, you can ask your partner to do some part-time work from home. The means are endless, you just need to be creative and come up with new ideas so that you can paint a better financial picture of yourself.
Keep these points in mind and you will do good to prepare a solid financial foundation for yourself. What’s more, it will also help you develop discipline in your financial life and help you avoid bankruptcy!