The whole point of filing bankruptcy is to get a fresh start.  I call it “hitting the financial reset button.” However, the bankruptcy discharge that wipes out your debt is only the first step in getting that fresh start.  Just like a diet, once you have lost the weight you have to keep it off.  Once you have lost the debt, you have to keep from incurring more.

So what do you do?  In a diet you would change your eating habits; post bankruptcy, you must change your spending and overall financial habits.  Here are some tips.

Create a Budget. Take a look at that list of expenses from your bankruptcy petition.  That is your financial life from now on.  Stick to it.  But also be sure that the budget works. After you are finished paying them every month, is there any money left over?  If not, or you are deficit spending, you will have to tighten a few belts.  Cut expenses ruthlessly until you have money left over, which leads me to the second tip.

Save Some Money for a Rainy Day.  There is only so much you can plan.There are going to be unexpected expenses, so take some money every month and put it into savings.  That way, when your car needs repair or a refridgerator needs replacing, it won’t derail you.

Be Frugal.  Question every expense before you incur it.  Do you really need it?  Do you need every premium channel just to be sure you will have lots of movies to watch or would Netflix be just as good? If you have HBO just to watch Game of Thrones, perhaps being patient and buying the DVD of the season would be cheaper.

Plan for the Future.  While you are setting aside money for a rainy day, think about when you would like to retire.  Make sure you are contributing to your employer’s retirement plan or putting money into an IRA. Also, think about your children’s education.

Put money aside into an educational IRA or some other account, so when it is time for them to go to college, there is some money there.  This will also help to minimize or eliminate your need to borrow money when the time comes, thus extending debt payments potentially into your retirement.

Treat Yourself. Yes, that’s right.  Spend a little money on yourself every once in a while! There is something to be said for quality of life, and plodding away for years on a strict budget can be wearing, and you will be more likely to “fall off the wagon” financially.

Spend some of the money you save on yourself periodically as a reward.  That will help you to see the benefit of what you are doing and want to do it more.

These tips are hardly exclusive, but they make the point that your financial life has to change after your discharge.  It won’t be easy, but it will be worth it.

For more information, check out the links below on cutting expenses and repairing your credit.  The work isn’t over once your discharge comes in, but the work you continue to do will pay off!

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.