Your Lifestyle After Bankruptcy: Dining Out, Taking Vacations, And More!
by Richard Fonfrias,
J.D. Chicago’s Financial Rescue &
Fonfrias Law Group, LLC
No question, your life after bankruptcy will be much better.
You won’t have collection agencies calling you. You won’t receive letters from banks. And the “final notices” you’ve received in the past will dry up.
Plus, you’ll learn new money habits that will ensure that you and your family enjoy a sound financial future.
What’s more, you can start working immediately to rebuild your credit.
You may be able to buy a good resale car. Many dealerships work with buyers who have filed bankruptcy to help them get back on their feet again.
Many banks and credit unions offer secured credit cards for people who have gone through hard times. They will help you set up a bank account and then you deposit money into that account. Then every time you “charge” a purchase to your credit card, the money is deducted from your bank account. This is what makes the card secured, from the bank’s point of view.
The bank then reports to the credit bureaus your record of on-time payments, which starts your credit score climbing again. As the months pass, you’ll be able to borrow money without collateral – and even purchase a home.
So whatever the reason for your bankruptcy – such as medical bills, a job loss, or some type of emergency – you’ll be free from your debts and well on your way to restoring a good credit score.
Here are common questions that many people ask:
“Can we go out to dinner after we file bankruptcy, or must we eat at home?”
Yes, you can go out to dinner. But instead of eating out three times each week, cut it down to twice or even once. And instead of choosing your favorite French restaurant, eat American food at restaurants that are much less expensive. In fact, you may discover many excellent restaurants that you once ignored simply because now you need to watch your expenses.
So when it comes to eating out, ask yourself if you could fine a suitable, less-costly alternative that won’t cause you to have a stroke when you see the bill.
The bottom line is whether your dining out expense is reasonable based on your current income and spending habits.
Another common question:
“Can we take a vacation after we file bankruptcy – or is this and other lifestyle expenses now off-limits?”
My answer about taking a vacation is similar to my answer about dining out. Yes, you and your family can take a vacation. In fact, you need a vacation. But rather than going skiing in the Swiss Alps for two weeks, how about a one-week vacation at home – or at a national park where you could hike, bike, or ride horseback at a fraction of the cost of a luxury vacation. A vacation at a national park is a good way to spend quality time with your family and experience nature, far removed from the noise and hubbub of city life.
Whenever you’re considering any type of expense, ask yourself: Is there a cheaper and reasonable alternative available? This will help you develop better money habits and still allow you to enjoy the things you like to do.
Next – and this lies at the very core of your bankruptcy experience, follow these money-management and credit recovery tips:
1. Create a budget. You must be able to see on paper how much money you bring in and how much money you spend. And the amount you bring in must be greater than the amount you spend. It’s that simple. You’ll find in-depth information about budgeting in my new book, RICH’S Common Sense Guide to Erasing Debt and Building Wealth in Tough Times, which is available at Amazon.com.
2. Start rebuilding your credit. You do this through pre-paid credit cards and borrowing small amounts of money. Over the next few years you’ll have a better credit rating than you had before you filed for bankruptcy. Again, go to my book for proven tips and strategies that explain how to do this.
3. Start improving your credit score. As you rebuild your credit and make payments on time, your credit score will rise. In fact, in just two to four years, you will likely be able to get a mortgage to buy a home. Not a huge, flashy home. But a home that fits your budget and income. The first steps you take will be small, but this is how you rebuild your credit.
4. Guard against identity theft. Every night on the news you see reports of people hacking into computers to get your personal, private information. The hackers find their ways into computers at banks, credit card companies, and stores that have your social security number and other confidential information. Do everything possible to protect your identity. After all, you’re working hard to build good credit and you don’t want someone else destroying it at the same time.
5. Stay out of debt. This should go without saying. It’s one thing to be optimistic about the future, but quite another to go into debt based on that optimism. Here’s what we’ve learned from our recent financial meltdown: No amount of optimism and positive thinking will matter if banks and financial giants control the market and you lose your job, your income and your home. You must guard against what could happen, and remain positive based on the fact that you’re not taking on debts that you cannot pay. You’ve been through bankruptcy and gotten rid of most or all of your bills. Now you can use what you’ve learned to make good financial choices that will benefit you and your family.