Living paycheck to paycheck
Do you deposit money in your savings account regularly? If you had an emergency now, do you have an emergency fund that can help you get through for at least 3 months? Even when we’re doing well and the economy is prosperous, we can’t consistently answer yes to these questions because we just love to spend.

In my post about “things you should never do with money” I mentioned that we as consumers have many distractions and our attention is often diverted to the popular trends causing our “want list” to grow. It really is a matter of discipline and a willingness to break bad habits. No one likes to be pessimistic about their own finances and some do not even like to talk about them with their spouse or relatives. But denying yourself the reality of your situation will only worsen the outlook of your future.

Throughout the country more and more people are living paycheck to paycheck, and there are of course circumstances in which you simply do not have any control over this because of other larger and more serious debts that are sometimes acquired through unforeseen events. But for the spendaholics, you do have some control over what you get into debt for and that’s where you would need to begin to fix your bad spending habits.

Economize on everything
Take a look around your home and try to think about what in that house you’re still paying for. Obviously your furniture is a necessity, but what purchases did you make that are not really that practical and yet you impulsively bought. Perhaps that fancy mirror above your fire place, or that decorative set of vases you couldn’t resist. These are all impulse buys, and you probably have more on your list that you eyed last time you were at the mall.

Outside of these impulse buys, which you need to stop doing, there maybe other things that you consume that you don’t really need. Do you pay for premium channels? You may want to consider bringing your cable service to a more basic level. Do you have every little feature the phone company offers on your phone service? How often do you use them and do you really think they’re beneficial? How about just cutting the land line out completely and using your cell phone instead?

Do you really need a low deductible on your car insurance? Many people think it’s a good idea to have a low deductible, when they have had a good driving record almost all their lives. If you’re a responsible driver, you should not be worried about this. Your insurance company is going to encourage this because they make more from you this way. It’s a good seller and a lot of people are doing it benefiting mostly their insurance companies.

Does your credit card company contact you often to offer you savings programs? They will tell you that if you buy through their programs you can save enormously when using your credit card. The program of course costs $29 a month charged to your credit card. Don’t take the bait, it’s all another way for them to make money off of you. You’re better off cutting coupons for savings. As a matter of fact stop using your credit card as much and use it only for things you need when you’re out of cash. Everyone sometimes forgets that that’s what credit cards are for and not to buy the latest gadget you just have to have.

To some people having a social life is everything and this means going out to dinner with friends, going to public places for drinks and company, it’s all fine and great, but how often do you this? If you’re out every weekend “socializing” in public places more than likely you’re shelling out $50 to $100 dollars a night depending on where you life. If after paying your bills, you use whatever you have left of your paycheck to party, you’ve got some serious deficits building up.

Utility bills are always up and down and it’s hard to regulate especially if you have a large family, so cutting down on utilities can be tough, but if you concentrate on regularly cutting down on everything above your paychecks should start making their way into your savings account more often.

What other services do you subscribe to that you hardly ever use? This includes magazine and newspaper subscriptions, newsletters etc. Make it a priority to start growing your savings account balance. If it’s difficult for you to break the habits, try increasing your contributions into your 401k, IRA or sponsored savings account, that way you only have enough to spend on bills you must pay.

Whatever approach you choose is fine as long as you begin sending more of your paycheck into an account where it will serve you better in the future, and as long as you begin now.

When the United States Comptroller General speaks about the state of the economy, you might want to listen. Who is the comptroller general? Well he happens to be the guy that keeps tabs on the many expenditures the country has and runs all internal audits on the financial proceeds of our government. America is going bankrupt and no one seems to care.

This is very serious, it’s down right scary and I think you’ll agree. What’s most disturbing about this report is what is said about government officials who already know about this looming event and are not even willing to talk about it. I find it hard to deny that this is not only possible, but it could already be in progress. America going bankrupt would simply mean another great depression that could last for many years, and if the spending habits do not change, how can it not go to this?

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When we look to the fed for an answer to this, it is often the same solution, which is to print billions of dollars more and force feed it to the economy. The idea is that we can pay for it later or it’ll pay for itself one way or another. This has been going on for decades and it has debased the value of the dollar to shameful lows and it really doesn’t seem possible that it can bounce back.

Personal bankruptcy cases are on the rise. Hundreds of thousands of Americans declared bankruptcy in 2007 and the rate of filing has not slowed down in 2008. A tough economic state and lack of stable employment and job security are only part of the reason. Personal spending habits have certainly contributed to record levels of credit card debt and the current housing market has left many with high balance loans and depreciating values in many parts of the country.

Filing for personal bankruptcy is a tough decision and whatever the circumstances may be for you, it’s important that you educate yourself as much as you can and carefully assess your own financial situation before you proceed with filing bankruptcy. There are several types of bankruptcy that cover not only individuals but small and large businesses and of course special codes for corporations. Chapter 7 and Chapter 13 are the two types of personal bankruptcy and the most commonly filed, Chapter 11 is similar to chapter 13 though this is what an LLC, partnership or corporation would want to file.

This is a quick explanation of what filing bankruptcy is all about, what it does and the effects it can have on your financial future. Please check out the links above for detailed explanations on bankruptcy chapter 7, chapter 13 and chapter 11.

Please take note that none of content here is meant as legal advice nor is it intended to encourage anyone to file for bankruptcy. This option should be a last resort, there are alternatives to bankruptcy that you should consider before filing.

What is bankruptcy?

Bankruptcy is a legal proceeding in which people, companies or corporate entities who can no longer afford to pay their creditors, can get protection through a court order called “The Order of Relief”. Bankruptcy offers a fresh financial start and these benefits are afforded to all by federal law, therefore all bankruptcy cases are handled in federal courts. Bankruptcy puts into effect the order of relief also known as the automatic stay which stops your creditors from attempting to collect payments from you, that is until your debts are sorted out through court proceedings. The automatic stay is further explained in the Chapter 7 page.

During the process of filing bankruptcy you will need to provide specific documentation such as past tax returns, proof of income, a breakdown of all your debts, all property and assets you own, etc. It is possible to file your bankruptcy case alone but the paperwork is complicated and can be confusing. Hiring a law firm that specializes in personal bankruptcy cases is usually the best thing to do. These services aren’t always cheap though, and if you’re struggling to pay your creditors you may have trouble paying the fees for these services, which often need to be paid up front. So it’s important you prepare in advance and allocate some funds early on when you begin to consider filing bankruptcy.

There are a few chapters in the US bankruptcy code. Chapters 7, 9, 11, 12, 13, and 15. You will get a detailed explanation of chapters 7, chapter 11 and chapter 13 on this site since they are the most common forms for individuals, partnerships and small businesses. It’s easier for a bankruptcy attorney to determine which bankruptcy chapter you qualify to file, however by learning about what each chapter does and how they work you will get a good idea for which one will fit you best. Here’s some of the information you’ll need to provide before you file:

What happens after bankruptcy?

Neither one of these chapters will make it easier on your credit once you get a bankruptcy discharge. The difficulties after bankruptcy obtaining credit, renting a place to live, and qualifying for certain jobs will be the same. Unfortunately the fresh financial start can be hard to embrace when you file bankruptcy since it takes time to rebuild you financial life again. The hardships can continue if you do not prepare to file bankruptcy in advance. Normally after bankruptcy, most credit providers will not want to deal with you. The ones who will, can impose high interest rates and/or high security deposits because of your recent bankruptcy case.

When you file you will be required to take bankruptcy counseling courses, also known as credit counseling, from an agency approved by the US Trustee . You can find a list of approved agencies at this link: US Trustee Approved Credit Counseling Agencies. The costs are usually moderate, $20 to $30 dollars should be a good range to stick to. You will need to take the first part of this personal bankruptcy training before filing and then the second part before you get discharged.

Consider your case carefully and don’t forget that there are bankruptcy alternatives that depending on your situation may be feasible options to consider before going through with filing your case.