How bankruptcy helps to balance your budget
Susan Robicsek, author of the Bankruptcy Law Network recently posted an important article on balanced budgets and bankruptcy. Since one of the top reasons marriages end in divorce involves financial strain, I think this article may provide benefit to many folks.
When you rely on credit cards to cover things that don’t come up every month like car repairs, house repairs or medical issues, you have to recognize that your budget is not balanced. These things will come up and shouldn’t be a surprise when they do. In fact, there is little anyone can do to avoid them.
Maybe you use credit cards to buy groceries, because your paycheck goes to pay your other bills, like your rent/mortgage, car payment and credit cards or other revolving debt accounts.
If you are using credit to cover your living expenses or “emergencies”, you are spending more than you make to cover the things that occur in your life. When you have to borrow to pay for things you can’t afford now, you will pay back more when you consider the interest. So if you couldn’t afford to have something to begin with, why will it be easier to pay back more over time?
A balanced budget means that you make at least as much as you spend, but living paycheck to paycheck isn’t balanced. A balanced budget means that you make enough to cover your monthly expenses AND put away for the things that don’t come up every month, like car/house repairs, medical/dental needs, clothing, or other things that we don’t use every month. A really well balanced budget means that you make more than you spend, are able to put away for those things that don’t come up every month, AND you are able to save for long term goals, like special vacations, college for your children, and your own retirement.
Sometimes bankruptcy can be a tool to help someone get their budget balanced again. If you aren’t in a position to put away money to cover those things that come up from time to time like car/house repairs, medical/dental needs, clothing, etc. , but you could be if your didn’t have to pay credit cards, medical bills , or other revolving debts, then you might consider speaking to a bankruptcy attorney to see if a Chapter 7 or Chapter 13 bankruptcy could help eliminate those revolving debts, or at least reduce what you have to pay each month.
