Setting Up a Budget
When you file for bankruptcy, you may feel slightly depressed or embarrassed over the fact that you were unable to pay your debts. This is very normal, and you should remember that most people do not get into bankruptcy situations on purpose. Sometimes a job loss, an illness or other factors outside of our control force us to consider filing bankruptcy.
On the other hand, there is nothing wrong with setting up a healthy budget either before or after bankruptcy so that your future spending is under control. If you have never used a budget before, you will be pleasantly surprised at how easy it is to create one and how much stress it can take off of your daily life. Here are some steps to setting up a workable budget and sticking to it:
- First, gather all of your bills. This would be everything from your rent or house payment to your light bill to your credit card bills and car payment. It is very important to include everything, as budget breakers often come in the form of an unplanned-for expense. Be sure to include things like taxes or car insurance that may not occur every month. For those expenses, divide the amount by the number of months they cover to get a monthly estimate.
- Next, write down the minimum payment on each bill. You may make more than the minimum payment per month, but the idea is to get a “bottom line” of everything that you will be spending throughout the month.
- Finally, create categories for spending that varies from month to month. A good way to do this is to look back over a couple of months of spending to find amounts for groceries, personal care and other variable expenses. Be sure to include amounts for entertainment and other “fun” items, but use reasonable figures. One of the reasons for creating a budget is to control spending.
Once you have these figures, add them up. This is the minimum amount you must make to pay your bills each month.
Once you see this number in black and white, it is much easier to make a decision on whether you will be able to meet your basic expenses. If you cannot, bankruptcy may be the answer.
If you are able to meet your monthly expenses, take any extra cash and apply it to debt that can be paid off.
If you are considering bankruptcy, contact the Amerio Law Firm in Sacramento. Our experienced attorneys can help you decide if bankruptcy is the right choice for you.