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Depending on the type of bankruptcy filed, repaying debts could take a few months or up to five years to complete. Afterward, debtors have peace of mind knowing the financial slate is wiped clean and they can start rebuilding their credit. Creating a budget after the case concludes, as outlined below, is how many people avoid future financial strain.

3 Ways to Create a Budget After Bankruptcy Is Over

1. Monitor Spending

After certain debts are discharged and others are paid back, you will not have to devote a sizable portion of each paycheck to overdue payments. For at least a month after the bankruptcy case, keep a detailed list of all transactions. This will provide insight into your spending habits and what non-essential costs you can go without.

Write down the information in a ledger or download an expense-tracking or money-management app. PocketGuard®, for example, allows users to plug in their financial information to find out how much money is left for spending after paying bills.

2. Allocate Funds

Reedsburg-Wisconsin-bankruptcyOnce non-essential expenses are removed from the equation, set up a chart to allocate funds from monthly income after taxes are taken out. Use the “50/30/20” rule as a guide.

This refers to 50% of income going towards necessities, such as groceries, rent, and insurance payments. 30% of earnings can be for dining out, renting movies, and other non-essential expenses. The remaining 20% should be put in a savings account for emergencies.

3. Refrain From Credit Card Use

Relying on credit cards might have led to the financial hardship in the first place. Only use a credit card for funds needed in emergencies. Using credit cards for daily purchases should be avoided, as it is easy to overspend or end up buying items you cannot afford, which can spiral into more debt problems.

 

For help filing for bankruptcy, contact the attorneys at LaRowe Gerlach Taggart LLP in Reedsburg, WI. With over a century of combined experience in bankruptcy, estate, and business law, the counselors protect the personal and professional interests of clients throughout Sauk County and safeguard the futures of their families. Find answers to common questions online and call (608) 524-8231 to discuss the specifics of your case. 

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