Whether you’re just filing for bankruptcy or you have recently received your bankruptcy discharge, you need a plan for your recovery and future financial goals.
Managing bankruptcy recovery during the holidays is a challenge, and it’s easy to slip up. You will need to employ some heavy-duty strategies to stay on target with your spending at this time of year.
Start a Savings Plan for Post-Bankruptcy Peace of Mind
As soon as you can after filing for bankruptcy — with your lawyer’s blessing, of course — begin setting some money aside from each paycheck. After paying your essential expenses, including your rent or mortgage, utilities and your car payment, put some cash into a savings account. This money should remain untouched unless you have an emergency, so put it into an account that you cannot easily access.
The more you can save each month, the better. But starting small is fine, so set aside whatever amount you can afford. Even $10 per paycheck will add up, and you can always work toward increasing that amount.
The intent here is twofold. First, it provides security and peace of mind in case you have an unexpected expense after bankruptcy. But perhaps more important, it gets you into the habit of saving money.
Create a Holiday Budget to Avoid Overspending After Bankruptcy
Holiday advertising campaigns portray the season with a focus on spending, and gifts, travel and entertaining costs can quickly add up. The key to not overspending after bankruptcy is to create a budget that you can — and will — stick to.
Plan for your expected costs, but leave yourself a little wiggle room for flexibility.
No matter what happens, remain focused on your bankruptcy budget. It may be tempting to buy your child another gift or to go out for celebratory drinks with your friends after work. But if you’ve already maxed out your budget, that can be a recipe for disaster.
When you’re tempted to blow your holiday budget, you may try to rationalize it by promising yourself that you’ll cut spending somewhere else. Ignore that inner voice! It will lead you astray! Instead, focus on your after-bankruptcy financial goals and the satisfaction you’ll get when you don’t overspend this holiday season.
After Bankruptcy, Stick with Cash for Holiday Spending
Once you receive your bankruptcy discharge, you will begin getting tons of credit card offers in the mail. As tempting as these will be, shred each one promptly and stick to cash for holiday spending.
As you will learn, using one credit card and paying it off every month can help you rebuild your credit after bankruptcy. However, none of the unsolicited credit offers you receive after your bankruptcy discharge will offer reasonable fees or interest rates.
Besides, with a credit card, it’s far too easy to blow your budget and spend more than you should during the holidays. In fact, don’t even use your debit card during the holidays, lest you cut into your necessary living expenses budget. Keep cash on hand instead, and you’ll always be able to track how your gift shopping or an evening out affects your holiday budget.
If you need assistance with mounting bills and a challenging financial situation, the experienced Utah bankruptcy attorneys at Lewis Adams & Associates can help. Contact our West Jordan, Utah, office today to schedule a complimentary bankruptcy consultation.