In 2016, nearly 800,000 Americans filed for bankruptcy. Since the 1980s, this figure has steadily risen, as people increasingly look to their credit cards to make major purchases. Despite the ease at which one can accrue debt, there are ways to take control of your finances. The team from Sam Turco Law Offices in Lincoln and Omaha, NE, has a few key tips to help you avoid bankruptcy.
Protect Your Finances: How to Avoid Bankruptcy
1. Don’t Consolidate Debt
Unless it’s your last chance to avoid bankruptcy, it’s not recommended to consolidate your debt. In theory, bundling debt together and refinancing it is a solid practice; however, many people become accustomed to the initial increased cash flow and lower monthly payments that come with consolidating debt. By encouraging a borrower’s mentality, this can lead to an even worse financial situation months or years down the road. If you want to diminish your debt quickly, you may want to skip debt consolidation and go straight for more effective payment strategies.
2. Avoid Interest-Only Minimum Payments
If you have a little leeway in your end-of-month budget, you should be making more than minimum payments. If you tend to stick to minimum payments to accommodate your lifestyle, it will only put you in a larger financial bind. You don’t have to pay your balance in full, but if possible, make a sizable dent in your monthly payments.
3. Establish Emergency Funds
It’s advisable to save nine months to a year of your income, if possible. If you can’t meet this goal, aim for the equivalent of at least six months’ worth of expenses. You never know when an emergency might happen and threaten your financial security.
4. Learn the Basics of Budgeting
It’s important to learn budgeting fundamentals, make a financial plan, and stick to your goals. To start, you should never spend more than you earn. However, many people break the very first rule of budgeting, which can quickly lead to a lot of debt and, ultimately, filing for bankruptcy. Even the smallest of expenses can quickly add up, so it’s crucial to tally up everything.
If you need help avoiding or filing for bankruptcy, consult the experienced lawyers from Sam Turco Law Offices. They’ll help you understand your options and make the right decision for your financial future. To speak with a helpful representative, call the team today at (402) 614-7171. For more information, visit the law firm online.