How to make your financial planning?
The year 2020 has been financially devastating for many citizens. If your finances have been so damaged that there is no way out, getting into bankruptcy can greatly reduce your stress and help you to focus on a way back to financial health.
These are the basic financial knowledge that everyone must have. It will help to make the roadmap of your future. Once you go through this financial planning list, go for other savings and security plans.
Become a filing expert
Once you make the decision to file bankruptcy, you will probably need to work with a bankruptcy professional for the best results. While there are DIY bankruptcy packages out there, the risk of missing a step can devastate your credit for years to come, so be ready to hire someone to move forward.
One of the best things about having a professional on your side is that you have an advocate. This professional will help you by:
- sending out letters
- responding to creditors
- reducing the phone calls and threatening letters
You will be able to direct phone calls and other problems directly to your bankruptcy team and get some space of mind to work on the challenges you face.
Go back to cash
For the first month after you file, consider going back to cash for as many purchases as possible. If you need groceries, make a list that contains an estimated price for each item. Take out enough cash for what’s on your list and any tax.
Carrying cash is extremely powerful. If you find something on sale, you’ll need to make some quick decisions as to what you’ll leave off your list or pick up next time. With cash in your hand, there’s no risk of the embarrassment of having your card declined.
Create a budget
It is one of an essential topic of financial planning. Sit down with your credit card statements, your checkbook, and your bank statements to see where your money is going. There are things that you must pay for, including
- housing
- car
- insurance
- food
- utilities
- clothing
And they will need a line item in your budget. It’s also very necessary to have some joy in your life, so also make a list for
- entertainment of your choice
- take-out or restaurant meals
- travel
When your budget is tight, you may need to leave things off from the second list. However, the goal with a budget is to have a structure that covers your basic needs and the activities that give you joy.
Build an emergency fund
To start your emergency fund, schedule a zero-dollar spending weekend. This means that on Thursday morning, schedule meals and activities for ten days. Shop that evening so your cupboards are full and you don’t have to get out for ten days.
During these ten days, take a look at how you spend your time. Do you love going out to the movies, or is it the entertainment and family time that you like? Do you love going out to eat, or is it just nice to be pampered a bit?
Figuring out what it is that you really like about activities that take more than the monies in your baseline budget over these ten no-spend days can be illuminating. With these monies, consider taking twenty dollars to the nearest Dollar Store and stocking up on consumables including soaps, toothpaste, and cleaning products. Stick with your cash grocery habit and notice how much cheaper your trips are when you’re only buying food. Put the cash you now don’t need to spend into emergency savings and schedule another zero-dollar spending weekend.
Get in a credit check habit
Once you’re three months past the filing date, start checking your credit rating. Look for errors, but also look for anything still in collections and get this to the attention of your bankruptcy professional. These expenses should start to fall off of your report, or you should see a reduction in them if your bankruptcy team renegotiates the terms.
Many financial experts recommend that we have six months of living expenses in our emergency funds. While that’s a nice goal, it’s important to point out that much of the financial devastation caused by COVID-19 started early in 2020 and we’re not out of the woods yet. Even that ideal may not have been enough. Do not beat yourself up about your decision to seek bankruptcy protection.