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Creating a Budget After Bankruptcy in Massachusetts

Many of our Massachusetts bankruptcy clients ask us, how do we do it right this time? How can we budget so that we don’t end up this way again? We have searched numerous books and blogs and there is ample information out there for creating budgets following bankruptcy. Perhaps the most important thing is to be totally devoted to making it work. Change your money management habits in order to avoid bankruptcy.
The experts all seem to agree on several points:

  • Start with gathering all of your financial statements so you can determine what you are spending.
  • Determine all your sources of income; this may require more work than you think, because, for example, there may be some rental income from an adult child, or a regular check from a parent.
  • Spend some real time determining your monthly expenses. If you charge everything to a credit or debit card, this just takes a little time to review. But if you are like most people, you have some checks, some automatic withdrawals, some cash withdrawals, and some charged items.
  • Figure out what expenses are fixed, such as rent, car payments, etc. Look carefully to see if they can be reduced, such as by finding a cheaper apartment, refinancing, or looking for a less expensive model vehicle. Next, scrutinize your monthly expenses to determine which are not variable. Here is where you can make immediate adjustments – buy a coffee maker instead of the $4 latte; bring lunch to work instead of the $6 pizza; watch television once in a while instead of the $25 movie and popcorn.
  • Refigure the numbers to determine where you can save. Keep refiguring until you come up with a written plan.
  • Review, edit, and revise the plan monthly, in writing. This way you can keep track of your accomplishments and achievements.