There's been a lot of buzz lately about the Giudice family and how they're overspending and not doing what they're supposed to do as they get a second chance in bankruptcy. Now apparently word is out that another Giudice family member, Pete Giudice and his wife also filed Chapter 7 bankruptcy with $2 million in debt. And of course the celebrity bloggers are talking about how financial trouble must be a family affair for the Giudices. Well, the fact is that financial trouble is a family affair for a lot of Americans and we only notice it in the Giudices because their lives are broadcast on TV for all to see. But even for the most determined of us, we need to develop a new set of family financial values if we plan to survive bankruptcy. The core of that family philosophy really needs to be "low-debt." It's difficult to begin thinking about having "low-debt" values when we are a society who have bought into the idea of using debt to bridge the gap between our wants and our true incomes.
Below are a few family financial values you may want to implement after exiting bankruptcy to truly take advantage of your second chance:
- Pay cash for everyday items instead of using your credit card. Eventually, after you begin to rebuild your credit after bankruptcy, you will once again procure credit cards. The trick to avoiding a second bankruptcy will be avoiding using those credit cards to pay for the things instead of cash.
- Pay cash for your vehicle. If you must finance a car only do so if you can pay it off in the short-term and you're getting a good deal on both the price of the car and the interest rate. Most people end up in bankruptcy because something has happened, (job loss, illness, divorce etc.) that has reduced their income and made it impossible for them to meet their debt obligations. When you finance a vehicle, what you're saying is that "I pledge to use my future income to pay for this car." But the risk is that your future income may be lower than expected and that's where the gap is created that sends many into bankruptcy.
- Save at least 3 to 5 months of expenses in case of an emergency. When your car breaks down, you have an unexpected medical expense or something else comes up, having an emergency fund will help to prevent you from leaning on your credit cards and eventually racking up enormous amounts of debt. Failing to have an emergency fund after bankruptcy increases your chances of running into financial trouble again.