Using bankruptcy successfully is about more than just “wiping out” your debt. It requires a change in your spending habits and your overall approach to money. If you file for bankruptcy and return to your previous spending habits within a year or two, it won’t be long until you are in the same dire financial predicament that led you to bankruptcy.
If you want to use your bankruptcy as a springboard to improve your financial life, you need to evaluate your attitude toward money and stop using these common spending excuses:
1. I’ve Already Ruined My Credit, I Might as Well Indulge!
Many people are guilty of this. It is similar to the dieting mistake that leads you to eat an entire cake after dinner because you indulged in a French fry at lunch time. Unfortunately, like your diet, your financial life is going to suffer if you allow a small mistake to act as an excuse to make a large one. The goal of bankruptcy is to get things back on track and even small steps will make a difference. Not to mention developing the willpower to move forward and leave mistakes behind is going to help you in the long run.
2. But the Item I Want is On Sale!
Granted, you can save a lot of money by shopping sales, but you can also end up spending a lot you would otherwise have to put toward debt or savings because of them. Stores use sales to get you to spend money you would otherwise keep in your wallet. If an item is something you need to purchase at full price, go ahead and buy it on sale. But if you are only spending because it’s a great deal, walk away.
3. I’ve Worked So Hard and I Deserve to Treat Myself
Depending how far into the bankruptcy process you are and how strict you have been with your spending, you might feel you deserve a reward. Unfortunately, this feeling of entitlement can spiral out of control into a spending binge. No matter how diligent you have been with your spending since your bankruptcy, it is still better to put the money aside and take some time to think before making a purchase. If after a week or two you still have the desire to buy an item and it fits into your budget, you can make a smart decision that is not based on emotions.
4. Money is Headed My Way Soon! I Can Afford to Spend Now!
This is the financial equivalent of counting your chickens before they hatch. You should never spend money that is not already in your wallet or your bank account. And if you are still digging yourself out of a financial hole, you shouldn’t spend it once it arrives either.
5. I’ve Stuck with My Budget, Met My Payment Obligations, and Saved a Significant Chunk of Money… Now I Can Relax and Be Normal
Maybe – But wouldn’t you rather continue saving and feel secure that you can handle a financial emergency down the road? After bankruptcy, you are once again solely in charge of your money and if you want to succeed financially, you need to make smarter decisions than you made pre-bankruptcy. It might be time to invest your savings in a smart purchase, but it is important to consider the consequences and use what you have learned from your previous situation.
Interested in learning more about how retailers tempt you to overspend? Check out this article from Forbes.
Are you worried about your current financial situation? Did one or more of the phrases above sound all too familiar? You could be headed toward financial disaster. If things have gotten out of control or you have questions about bankruptcy, we can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 to speak with someone about debt collection and money management.