Times are tough. Non-business bankruptcies filed in federal courts in 2010 totalled 1,593,081, up 8.1 percent from 2009. If you live in fear of bankruptcy, now is the time to take control in the areas of your life over which you still have power. Financial problems won’t go away overnight, but taking action empowers you to get on track. You can always complete chapter 7 bankruptcy forms or chapter 13 bankruptcy forms before you meet with bankruptcy lawyers, but you may try cutting expenses in creative ways — it’s easier than you think.
Below is a list of common expenses identified by financial experts and credit counselors. Many of us throw our money into these expenses without giving it a second thought. Consider the three items on which you spend the most money – these are the areas you need to cut before looking for bankruptcy help. If you commit yourself to cutting back, these 10 tips could help you budget to avoid bankruptcy.
This includes dining in restaurants, attending movies and going for drinks, to name a few. These extracurricular activities are pricey and are luxuries you can do without, or you could compromise from time to time by trying the following:
Consider staying in and watching movies or playing multi-player video or board games with family or friends. Host a pot-luck dinner where everyone brings a dish and shares the expense. You can feed more people for less when you cook from scratch. Everyone needs time away from the house, so seek outdoor activities or community events that are free. You can typically find these listed on your municipal home page or local radio station’s site. If you have saved enough to splurge on seeing a movie in theatre, only go on “reel deal” night. Many theatres have reduced ticket prices one night each week; contact your local theatre for information. Catching a movie for less once every month or so is a good compromise – just be sure to avoid the overpriced concessions counter!
Cutting back on your entertainment budget will be a key part of your new strategy to avoid bankruptcy.
There’s really no excuse to pay full retail price for brand name clothes. There are many stores that offer deeply discounted designer lines, and box stores that cater specifically to people on a tight budget and want to look stylish. Do you live near a consignment shop? You can buy new or gently used brand name clothes for a very small percentage of the retail price. Another great option for families is to invite close friends, relatives and neighbors with children to come together for a clothing swap. Kids outgrow clothes before they have a chance to wear them out, so rather than lose the investment altogether, trade them for another child’s unworn or gently used items. Depending on how close the relationships are, the adults might be interested in trading from their closets, too.
Clothing and shoes are necessities, but once you get accustomed to making room for only the essential items, your clothing budget will no longer be a contributor to your risk of declaring bankrupt.
3. Coffee/ Specialty Coffee
Coffee drinkers are known to splurge on their daily “fix.” This typically runs anywhere from $1-5 per cup, depending on where you buy it. That can add up to $20-100 per month. Many workplaces have tea and coffee available for the staff at break periods – take advantage of that perk! If the office beverages are not to your liking, bring you own packages of herbal tea or a favorite coffee roast from home. This way, you can enjoy your “fix” for pennies a cup.
4. Work Lunches
When it comes to work, pack your own lunch and healthy snacks. It’s healthier for your wallet and might benefit your waistline, too. Grabbing $10-20 of cafeteria food or take-out each day will cost you upwards of $50-100 per week, or $200-400 per month. You can do without that expense. If you have school-aged kids, get them involved too! They will feel good about helping to bring positive changes to the family. From now on, you’re all going to “brown bag” it.
Cutting non-essentials such as take away lunches and specialty coffees from your list of approved expenses is an effective budget tip to avoid bankruptcy.
Like take-out lunches, cabs only appear “essential” when you didn’t take the time to plan ahead to make other arrangements. If you cannot walk to your destination, leave earlier so you can make your connections on the bus or subway. If public transportation isn’t available in your area, carpool with a coworker, or ask family or friends to give you a lift.
Public transit is smart, efficient and cost-effective compared to the costs of owning and maintaining a vehicle. If you require a vehicle for your job, take turns carpooling with a coworker to cut fuel costs by half. I live in an rural area where there are no busses, so I had to get creative to cut transportation costs. I save all my errands and run them at once. I’ve let my friends and family know that if they are considering getting me a gift for my birthday or holidays, I’d love the gift of gas cards for topping up my tank at the service station.
In addition to using public transportation and carpooling to cut transportation costs, you may also need to consider purchasing a less expensive vehicle, or reducing the number of family vehicles to one. The key to success when budgeting to avoid bankruptcy is to compromise wherever possible.
7. Beauty products/ makeup
Department store brands are beautiful but they fall squarely in the luxury category. You can’t justify paying high-end prices when you’re cutting expenses. I learned in university that the best value can be found in popular drugstore brands. Drugstores carry a huge assortment of beauty products that do a great job and are gentle and animal cruelty-free. Most drugstores have great loyalty rewards programs, so you earn deep discounts or free products as you shop over time. Win-win!
8. Gym membership
If you have a membership you don’t use, find out if you can give it up early or transfer it to another person. If you’re going on vacation, ask if you can get a refund for the time your membership will not be in use. Do a quick online search to find free fitness clubs and classes in your area, and spend more time outdoors.
Luxury items such as high-end makeup and gym memberships are usually among the first things to be stricken from a budget when an individual is facing filing bankrupt.
Food costs are high, but there is a lot of competition among grocery retailers that will benefit you if you do your homework. In addition to strictly avoiding high-end and overpriced grocery stores, your best bet is to spend time at home with sales flyers and make a grocery list of bargains you find – and only buy what is on your list. Also, if there are no coupons in your sales flyers, every grocery store has coupons posted in a highly visible area. Make use of them!
Everyone needs a roof to sleep under, so this may call for a compromise. To find ways to subsidize your rent or mortgage costs, get a roommate. Do you have a spare room that could bring in extra cash? If not, begin looking for a cheaper place, or a place that will lower costs for you in other areas. This can include lower rent or mortgage costs, lower heating costs, or a better transit system so you can leave your car at home and save the costs of fuel and regular wear and tear on your vehicle.
Food and housing costs are essential items in your budget and now you have strategies to empower you to get these expenses back on track. Taking the time to plan your meals around sales in the flyers will help you cut food expenses in your budget and downsizing your housing or sharing housing costs with another tenant are compromises that could divert you from scheduling a meeting with bankruptcy lawyers.
Commit yourself to cutting back, and integrate the above 10 tips into your budget to avoid bankruptcy.