When it comes to creating a stronger financial foundation after personal bankruptcy, it is often helpful to take a close look at the path, while also maintaining a forward-focused plan of action. That involves giving careful consideration to how one’s debt troubles became so pronounced, and taking active steps toward choosing a different path in the years that follow a successful bankruptcy. As with so many issues, debt management is aided by having a solid understanding of how things went awry. Tennessee residents should take the time to examine their history as they craft their future.
For so many people, high levels of debt were the result of allowing spending to keep pace with financial success. As people achieve and grow in their careers, they often begin to earn higher levels of income. All too often, those increases are matched with increasing expenses, as families feel that they must live up to their new economic standing. That can mean a bigger home, a better neighborhood and more of the trappings of success. Of course, there is nothing wrong with enjoying the fruits of one’s labor.
However, the mistake comes with taking on so much new debt that the family has little to no breathing room in their monthly budget. That can be a problem if a financial strain arises, such as the loss of a job or an unexpected illness or injury. Faced with a sudden shift in wealth, families may have to rely upon credit to cover their monthly living expenses, a situation that can quickly deteriorate.
The way out of that spiral is often through personal bankruptcy. Once that process is complete, Tennessee families can begin to rebuild a strong financial foundation with a new take on debt management. Understanding how they arrived at a financial crisis is instrumental in avoiding a similar outcome in the future. If there is one thing that bankruptcy and high debt illustrates, it is the need to have a healthy emergency fund and plenty of monthly wiggle room in one’s budget.
Source: nerdwallet.com, “How I Ditched Debt: My Shiny Nickels“, Anna Helhoski, April 4, 2017