In Canada today, consumer debt is totaling near $2 trillion. With the Bank of Canada gradually raising interest rates, just to service the debt is beginning to prove to be an impossible task.
Because most Canadians live paycheque to paycheque or are having a hard time paying their bills and debt on time, one in six consumers will eventually go bankrupt. It is estimated that as many as 150,000 Canadians always file a consumer proposal every year.
Nobody ever aims to file for bankruptcy, but it happens, either from foolish choices or tragic changes in your life. For some, however, bankruptcy can finally relieve you of the burden and stress that comes with owing a vast sum of money to creditors.
The primary challenge for bankrupt households? Staying out of debt. Should you return to your old financial patterns then it is inevitable that you’ll endure pecuniary problems yet again.
Want to avoid it? Here are five major factors to think about after filing for bankruptcy:
1. Ditch the Plastic, Use Cash
Who knew that a 3×2 piece of plastic can cause so many personal issues? It does. But you can’t blame the credit card for your fiscal woes. It is a tool like anything else, and it is up to you how you manage such a major responsibility.
After you have filed for bankruptcy, it would be a prudent step to ditch the plastic (for the most part) and rely mostly on cash. From your groceries to your weekend coffee, you must aim to pay for a bulk of your transactions with banknotes and change.
This will institute a rule: if you don’t have the money on you to buy something, then don’t buy it.
2. Pay Attention to Your Credit Report
Not too many consumers pay close attention to their credit reports. This is the case for a couple of reasons. First, it isn’t free access unlike our neighbours to the south. Second, we’re too lazy.
That said, moving forward, as you live a life in bankruptcy, you need to start checking your credit report annually, even if it comes with a $20 or $50 price-tag.
You don’t want to be the victim of identity theft or experience a lower score because of an error.
3. Be Careful How You Spend Money
In other words, you need to establish a monthly budget and you must stick to it.
One of the primary factors for why consumers get into debt so easily is because they are not careful in how they dish out their hard-earned money. They will have an expensive cable package, a top-of-the-line smartphone data plan, a weekly trip to the movies, and a habit of going out to dinner at least three times a week.
A budget allows you to see where your earnings are going to.
We have essentials but eating out is not one of them.
4. Pay All Your Bills on Time
This is a simple concept but so many people have difficulties with this one.
Paying your bills on time should be the rule, not the exception. A common excuse why customers don’t pay the electricity, cable, and credit card bills on time is because they’re scattered all over the calendar. Solution? Request the companies to make your bills due on the same day as all of the other bills.
Ha! See? No more excuses!
5. Financing a Purchase? Save up Instead
We need instant gratification to give us a shot of dopamine in our brains. This is why we constantly reach for our smartphones, make daily trips to Starbucks, and buy things we can’t possibly afford.
Ditto for financing a purchase.
Mephistophelean retailers have found a way for shoppers to get their hands on something even if they don’t have the means to pay for the product: financing.
A barbecue, a big screen television, a new automobile. Businesses extend monthly financing to ensure that the customers can be gratified and part way with their money.
Big mistake! The elementary answer to this problem – and it can be difficult, believe us! – is to simply save up for that big-ticket item. And, you know what? Before you know it, you won’t even want that thing anymore anyway, particularly when you see how much money you have accumulated.
Bankruptcy is a hard choice to make. It is embarrassing, it is stressful to go through, and it is even a massive slap to your wallet (it costs around $2,000 to file for bankruptcy). Unfortunately, life happens and you have no other choice but to be delinquent.
To ensure that you don’t suffer through this entire ordeal again, you need to become fiscally responsible. It starts by adopting these suggestions and heeding the advice of personal finance experts. You can do it. Everyone believes in you!