Living beyond your means is almost an American pastime; but it didn't use to be this way. Long before consumer credit became the norm, Americans made it a rule to live within their means. For the debtor who is exiting bankruptcy, becoming in tune with this seemingly lost tradition (which seems to be making a bit of a comeback) is necessary if they want to financially survive after bankruptcy.
Below are a few rules every post-bankruptcy debtor should follow if they want to spend less than they earn and avoid a second bankruptcy filing:
- Only purchase a house that you can afford even if your salary was significantly reduced. Whether you've filed bankruptcy or not, finding affordable housing is challenging. But it is critical to those who want to financially strive after bankruptcy. Foreclosure, one of the leading causes of bankruptcy, is at its root caused by homeowners purchasing homes which they can barely afford. That's why downsizing your mortgage is the first step to post-bankruptcy survival.
- Don't try to keep up with the Jones or the Giudices after bankruptcy. It can be tempting to keep up with the wealthy and trendy amongst us, even if we are just getting on our feet after bankruptcy. But trying to purchase the latest clothes and gadgets which not only have one-time costs but ongoing costs, is something you can ill-afford as you try to rebuild your finances after bankruptcy. Ask yourself, do I really need the latest phone or computer gadget and the associated programs which will cost me hundreds of dollars a month?
- Avoid becoming car poor after bankruptcy. We know that it is popular to trade-up your vehicle every 3 to 5 years but it may not be smart to do this when you're trying to save for retirement, invest and save for your kid's college education after bankruptcy.